Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q2 2021 Earnings Presentation
37 slides from Valmont Industries's earnings presentation, Jul 22, 2021
Slide 1: Second Quarter Earnings Presentation
Valmont Industries, Inc. Second Quarter Earnings Presentation July 22, 2021 © 2021 Valmont® Industries, Inc.
Slide 2: Disclosure Regarding Forward-Looking Statements
Disclosure Regarding Forward-Looking Statements These slides contain (and the accompanying oral discussion will contain) “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other f
Slide 3: Steve Kaniewski, President & Chief Executive Officer
STEVE KANIEWSKI PRESIDENT & CHIEF EXECUTIVE OFFICER 3 July 22, 2021 | Valmont Industries, Inc. | 2Q 2021 Earnings Presentation
Slide 4: 2Q 2021 Segment Sales and Segment Summaries
2Q 2021 Segment Sales and Segment Summaries TOTAL 2Q 2021 SALES: $894.6M $267.9M $269.4M $98.2M $282.0M Utility Support Engineered Support Coatings Irrigation Structures Structures N.A.: $156.1M | International: $125.9M 29.9% of Sales 30.1% of Sales 11.0% of Sales 31.5% of Sales SEGMENT SUMMARIES •
Slide 5: Prospera Technologies Update: Expanding Irrigation Technology Leadership
Prospera Technologies Update: Continuing to Expand Our Irrigation Technology Leadership Key Stats Award-winning, Global Leader in AI and Machine-Learning Founded 2014 Strong Value Proposition • Accelerating innovation through investments in recurring revenue services Headquarters Austin, TX • Expe
Slide 6: Accelerated Growth and New Product Innovations in Solar Business
Accelerated Growth and New Product Innovations in Solar Business Total Projects Awarded in 2Q 2021 ($72M) Valmont Solar Solutions - Utility • Awarded projects totaling $47M in 2Q 2021 • 30+ orders for the North American Market over past 18 months • Completed several sunbelt region projects Valmont S
Slide 7: ESG Excellence as a Foundation
ESG Excellence as a Foundation Reiterating Our 2021 Investor Day ESG Initiatives ENVIRONMENTAL SOCIAL GOVERNANCE Sustainably building upon a Empowering our workforce, Operating ethically and foundation focused on managing customers and communities managing oversight through risks and improving effic
Slide 8: Avner Applbaum, EVP & Chief Financial Officer
AVNER APPLBAUM EVP & CHIEF FINANCIAL OFFICER 8 July 22, 2021 | Valmont Industries, Inc. | 2Q 2021 Earnings Presentation
Slide 9: 2Q 2021 Financial Summary
2Q 2021 Financial Summary $M, except for per share amounts Sales Operating Income Diluted EPS GAAP Adjusted1 GAAP Adjusted1 29.9% 90.2% 38.4% 172.6% 53.0% $894.6 $90.9 $3.06 $82.6 $2.89 $688.8 $65.7 $2.00 $43.4 $1.06 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 • Record second quarter sales; si
Slide 10: 2Q 2021 Results | Utility Support Structures
2Q 2021 Results | Utility Support Structures ($M) Key Statistics Sales Operating Income 2020 Sales $ 231.3 15.8% GAAP Adjusted1 Intersegment Sales (2.8) $267.9 $231.3 Volume 28.6 $25.3 $21.7 $21.2 Pricing/Mix 8.5 $15.0 Acquisitions/Divestiture - Currency Translation 2.3 2021 Sales $ 267.9 2021 2020
Slide 11: 2Q 2021 Results | Engineered Support Structures
2Q 2021 Results | Engineered Support Structures ($M) Key Statistics Sales Operating Income1 2020 Sales $ 253.4 6.3% Intersegment Sales (4.5) $269.4 $31.9 $253.4 Volume (2.4) $22.9 Pricing/Mix 11.4 Acquisitions/Divestiture - $4.8 Currency Translation 11.5 2021 Sales $ 269.4 2021 2020 2021 2020 2020 A
Slide 12: 2Q 2021 Results | Coatings
2Q 2021 Results | Coatings ($M) Key Statistics Sales Operating Income1 2020 Sales $ 80.0 22.7% Intersegment Sales 3.2 $98.2 $14.7 Volume 6.0 $80.0 $10.1 $10.4 Pricing/Mix 5.1 Acquisitions/Divestiture 0.1 Currency Translation 3.8 2021 Sales $ 98.2 2021 2020 2021 2020 2020 Adj. COMMENTARY • Sales incr
Slide 13: 2Q 2021 Results | Irrigation
2Q 2021 Results | Irrigation ($M) Key Statistics Sales Operating Income1 2020 Sales $ 150.6 57.6% 144.0% Intersegment Sales 0.3 $156.1 $42.0 $42.9 Volume 89.7 $125.9 $99.0 Pricing/Mix 38.6 $51.6 $22.4 Acquisitions/Divestiture 1.1 Currency Translation 1.7 North America International 2021 Sales $ 282.
Slide 14: 2Q 2021 Cash Flow Highlights
2Q 2021 Cash Flow Highlights 2Q Cash Flow | FCF Reconciliation Cash and Debt Highlights YTD ($M) Net Cash Flows from Operating Activities $ 6/26/2021 70.2 $199.3M Net Cash Flows from Investing Activities (361.4) ($188.0M ex-U.S.) Cash at 6/26/2021 Net Cash Flows from Financing Activities 90.1 Net Ca
Slide 15: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation 2021 YTD Capital Deployment: $404M • 2021 CapEx expected to be $110M - $120M Capital • Investments to support strategic growth initiatives and Expenditures Growing Our Industry 4.0 advanced manufacturing Business $313 • Strategic fit + market expansion Acquisi
Slide 16: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity AS OF JUNE 26, 2021 Cash $199.3M Available Credit under Revolving Credit Facility2 $452.9M Total Debt (Long-term) $860.9M Cash $199.3M Shareholders’ Equity $1,321.5M Total Available Liquidity $652.2M Total Debt to Adj. EBITDA1 2.3x ► Long-term debt of $860.9M, most
Slide 17: 2Q 2021 / Full Year 2021 Outlook and Key Assumptions
2Q 2021 / Full Year 2021 Outlook and Key Assumptions PREVIOUS CURRENT FY21 OUTLOOK1 FY21 OUTLOOK1 KEY ASSUMPTIONS 9% – 14% 16% – 19% • Favorable foreign currency translation impact of Increase in Net Sales Increase in Net Sales ~2% of Net Sales YoY YoY • Expect 2H21 tax rate of ~25.0%; no tax law ch
Slide 18: 2021 Segment Outlook
2021 Segment Outlook • Expect quality of earnings to meaningfully improve in 3Q and 2H 2021 as pricing becomes more aligned with steel cost inflation USS • Strong backlog indicative of long-term market drivers of grid resiliency and the increasing use of renewable energy • Expect some short-term sof
Slide 19: Fundamental Market Drivers Remain Resilient
Fundamental Market Drivers Remain Resilient USS ESS COATINGS IRRIGATION • Strong backlog demonstrates • Critical need for infrastructure • Closely following general macro- • Global ag market fundamentals ongoing demand and necessity for investment provides very good economic trends remain strong ren
Slide 20: Summary
Summary Ability to navigate and capitalize on challenging market dynamics demonstrates 01 the strength and sustainability of our business and long-term strategy, favorable end- market trends and strong price leadership in the marketplace Remain focused on the execution of our strategy fueled by our
Slide 21: Q&A
Q&A 21 July 22, 2021 | Valmont Industries, Inc. | 2Q 2021 Earnings Presentation
Slide 22: Appendix
APPENDIX 22 July 22, 2021 | Valmont Industries, Inc. | 2Q 2021 Earnings Presentation
Slide 23: 2Q 2021 Financial Summary
2Q 2021 Financial Summary $M, except for per share amounts Net Sales 2021 2020 Change YTD 2021 YTD 2020 Change Utility Support Structures $ 267.9 $ 231.3 15.8% $ 521.0 $ 456.8 14.1% Engineered Support Structures 269.4 253.4 6.3% 491.7 484.1 1.6% Coatings 98.2 80.0 22.7% 191.4 168.1 13.9% Irrigation
Slide 24: Steel Material Index Trends 2020-2021 YTD
Steel Material Index Trends 2020-2021 YTD Since last quarter, the AMM material index has increased from $1,190 to $1,500; an increase of 310 points or 26.1%. Source: FastMarketsAMM. 24 July 22, 2021 | Valmont Industries, Inc. | 2Q 2021 Earnings Presentation
Slide 25: State Transportation Investment Funding Measures
State Transportation Investment Funding Measures • State legislators in 44 states introduced 188 transportation funding measures in the first half of 2021 • Funding Approved in 2021 Legislative Session: $29,383,725,783 • One-time funding bills, including allocation of federal Covid-19 relief funds,
Slide 26: State Transportation Investment Funding Measures by Type
State Transportation Investment Funding Measures by Type Source: Transportation Investment Advocacy Center. 26 July 22, 2021 | Valmont Industries, Inc. | 2Q 2021 Earnings Presentation
Slide 27: 5G Adoption Forecast and Capex Spend Post-COVID
5G Adoption Forecast and Capex Spend Post-COVID Source: GSM Association. 27 July 22, 2021 | Valmont Industries, Inc. | 2Q 2021 Earnings Presentation
Slide 28: U.S. Net Farm Income
U.S. Net Farm Income Net Farm Income w/ Government Payments 140 121 120 111 100 93 82 83 82 76 75 80 62 86 60 ($B) 83 61 71 68 64 40 49 46 20 22 25 10 11 13 12 14 0 2014 2015 2016 2017 2018 2019 2020F 2021F Dir. Gov't Payments NFI, less Gov't Payments Source: USDA Farm Income Data, Updated February
Slide 29: U.S. Net Cash Farm Income by Year
U.S. Net Cash Farm Income by Year Source: USDA, American Farm Bureau Federation 29 July 22, 2021 | Valmont Industries, Inc. | 2Q 2021 Earnings Presentation
Slide 30: 2011-2020 Historical Free Cash Flow
2011-2020 Historical Free Cash Flow1 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 ($M) Net cash flows from operating activities $ 149.7 $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 Net cash flows from investing activities (84.1) (136.7) (131.7) (256.9) (48.2) (53.0) (
Slide 31: Strong Free Cash Flow throughout the Cycle
Strong Free Cash Flow throughout the Cycle 2011 – 2020 Free Cash Flow1 ($M) Years of rapid raw material cost inflation 290 227 210 210 175 10-yr Avg. $154M GAAP 1.34X 100 101 Adj. 0.91X 78 81 67 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Historical FCF Conversion by Year1 GAAP 0.29X 0.43X 1.0
Slide 32: Calculation of Adjusted EBITDA and Leverage Ratio
Calculation of Adjusted EBITDA and Leverage Ratio Certain of our debt agreements contain covenants that require us to maintain certain coverage ratios. Our Debt/Adjusted EBITDA may not exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions) of the prior four quarte
Slide 33: Summary of Effect of Significant Non-Recurring Items on Reported Results
Summary of Effect of Significant Non-Recurring Items on Reported Results 33 July 22, 2021 | Valmont Industries, Inc. | 2Q 2021 Earnings Presentation
Slide 34: Summary of Effect of Significant Non-Recurring Items on Reported Results
Summary of Effect of Significant Non-Recurring Items on Reported Results 34 July 22, 2021 | Valmont Industries, Inc. | 2Q 2021 Earnings Presentation
Slide 35: Summary of Effect of Significant Non-Recurring Items on Reported Results
Summary of Effect of Significant Non-Recurring Items on Reported Results 35 July 22, 2021 | Valmont Industries, Inc. | 2Q 2021 Earnings Presentation
Slide 36: Summary of Effect of Significant Non-Recurring Items on Reported Results
Summary of Effect of Significant Non-Recurring Items on Reported Results 36 July 22, 2021 | Valmont Industries, Inc. | 2Q 2021 Earnings Presentation
Slide 37: Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings
Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings 37 July 22, 2021 | Valmont Industries, Inc. | 2Q 2021 Earnings Presentation