Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Investor Day (October 2015)
31 slides from Valmont Industries's investor day presentation, Oct 28, 2015
Slide 1: Forward-looking Statement Disclosure
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 factors that could cause the actual results of th
Slide 2: Valmont: Solutions to World Scale Problems
COATINGS ENGINEERED INFRASTRUCTURE PRODUCTS UTILITY SUPPORT STRUCTURES IRRIGATION Valmont: Solutions to World Scale Problems Excluding energy, annual investment in infrastructure is likely to account for 2.5% of global GDP.1 “The United States is a SUPERPOWER with a third world transmission grid.” 3
Slide 3: Valmont in a Nutshell
Valmont in a Nutshell Focus on profitable niches in markets with compelling demand drivers for our products. Number one or two in served markets. Our customers will pay for the added value we produce through engineering and service In return, customers get products that are customized, reliable and
Slide 4: Barry A. Ruffalo, Executive Vice President
Barry A. Ruffalo Executive Vice President Joined Valmont 2015 20 year career 9 years with Lindsay Corporation President – Irrigation President – Infrastructure 11 years with Joy Global & Case New Holland Joy Global - Director of North America Operations CNH - Global Product line P&L and Operations M
Slide 5: Fit For Growth
Fit For Growth What is Fit For Growth? Clearly defined goals Drive shareholder Value Focus on strategic growth Drive investments Meet and exceed customer expectations Costs line up with goals Deploy resources toward them efficiently and effectively The organization structure supports success Sustain
Slide 6: Valmont Fit For Growth
Fit For Growth Valmont Fit For Growth Corporate Optimize structure to support value creation Segments Capacity analysis - Right size the business Lean Operations Potential back office consolidation Value of One Valmont Global footprint Buying power Best practice sharing 7
Slide 7: Restructuring Plan
Restructuring Plan Asia/Australia Consolidated production of Access and Coatings facilities North America Consolidated concrete production Relocated Utility production from Brenham facility to others in network Consolidated Composite Structure Production to fewer sites Consolidated Galvanizing Produ
Slide 8: Fit For Growth - Restructuring & Cost Reductions
Fit For Growth - Restructuring & Cost Reductions Restructuring charge – approximately $30 million $23.8 million incurred through September 2015 Most of remainder expected to be incurred by year-end 2015 Estimated Annualized Cost Savings $30 million, mainly in 2016 Expectation for streamlined operati
Slide 9: David M. LeBlanc, Group President Engineered Infrastructure Products
David M. LeBlanc Group President Engineered Infrastructure Products Joined Valmont 2015 25 year career managing global industrial businesses 20+ years with Lincoln Electric, leader in arc welding products 16 years living overseas 8 yrs – Mexico City 5 yrs – Europe 3 yrs – China Early career with GE
Slide 10: Institutional Expertise and Global Reach
Institutional Expertise and Global Reach Segment Summary: $1.025 bil; 60% International 40 sites Driving global growth through mechanical design, fabrication, & commercial excellence Serving Civil & Industrial Infrastructure Markets Engineered Infrastructure Products Segment Summary Engineered Suppo
Slide 11: Engineered Infrastructure Products: A Tale of Two Market Spaces
Engineered Infrastructure Products A Tale of Two Market Spaces Global Structures Market Stable North America providing steady growth EMEA sluggish APAC delivering strong growth through 4G Telecom buildout Fragmented regions provide inorganic growth opportunities Drive The Core Business Model Mining
Slide 12: Engineered Infrastructure Products Strategic Summary
Engineered Infrastructure Products Strategic Summary Delivering a Broad Value Proposition Leveraging Scale in Engineering & Breadth of Product Line Driving Operational Excellence Deep Institutional Knowledge Across the Value Chain Deploying an Unmatched Global Supply Network Winning against Increasi
Slide 13: Stephen G. Kaniewski: Group President Utility Support Structures
Stephen G. Kaniewski: Group President Utility Support Structures In Various Management Positions and Industries Since 1995 Belden Inc. 1999-2010 11 years working overseas 8 yrs – Mexico 3 yrs – combined EMEA, India, China Half of Career in Operations, Half in Information Technology For Valmont Previ
Slide 14: Current Initiatives
Current Initiatives Return to Double-digit Operating Profit Percentage Adjust Sales and Operations to Product Mix Changes i.e. Substation Focus from Driving Growth to Reducing Cost Modify Cost Structure to Variable Cost Establish an Improved Market Price for our Products 15
Slide 15: Current Market Conditions
Current Market Conditions Decline in North American Volumes Deferred investment by customers – mandated coal retirements Canadian sales slowdown as oil investment declined Change in mix from large jumbo structures to a traditional mix in transmission Capitalize on Growing Substation Market Competiti
Slide 16: Management Response
Management Response Consolidation of Facilities Redeployed Production Equipment from Mansfield and Brenham at cost of $5.0 million Working Similar Number of Man-hours to 2013 Mix Shift to More Labor Intensive Increased Number of Smaller Sized Poles and More Substation Plants are ‘full’ Centralizatio
Slide 17: Competitive Environment
Competitive Environment Major Competitors Trinity Meyer Sabre/Fort Worth Tower Various others – all relatively small but capable of taking jobs up to $10M Valmont Competitive Advantages Track Record of Delivery, Quality, and Performance Engineering Capability Best Geographic Footprint Including Low-
Slide 18: Industry Barriers to Entry
Utilities and Transmission companies slow to change and no large incentive to qualify new players Poles are small piece of overall project spend, ~10-15%, not worth risk in deliveries or quality Large capital investment needed for equipment Steel pricing advantage comes through volume, small players
Slide 19: Strategic Focus
Strategic Focus Strategy to Win and Long-Term Growth Continue to replace wood transmission with concrete and steel options New products that expand our served market – Lattice alternatives, Wood replacements Strong relationships with addition of alliances with key EPC’s Continued operational leverag
Slide 20: Coatings: Mogens Bay
Challenges Mostly in Australia US Custom Portfolio Running Well, Need to Offset Lower Internal Volumes with Custom Work Underweighted North American Oil and Gas Exposure Greater North American Agriculture Exposure Coatings: Mogens Bay 21
Slide 21: Irrigation: Mogens Bay
Irrigation: Mogens Bay High Correlation with Farm Income: 2016 Outlook Lower Industry Pricing Disciplined: Greatest Risk New Product Development and Technology Value Add Dealer Network Greatest Asset International Growth and Development Accelerating 22
Slide 22: Interdependent Operations
Interdependent Operations Common Raw Material Prices and Terms (e.g. steel) are Negotiated Regionally to Leverage Buying Power Large Share of Coatings and Tubing Production are for Other Valmont Segments International Pole Structures Operations Produce EIP and Utility Products from Same Physical Fac
Slide 23: Mark Jaksich, EVP and CFO: Currency Trend
Q4 Q1 Mark Jaksich, EVP and CFO: Currency Trend 24
Slide 24: Incentive Compensation
Incentive Compensation Short-term Incentives Business Units Corporate – Short Term Long-term – Performance Share Plan 3 year plan - based on a combination of Operating income growth ROIC Performance shares valued at 30 day average closing stock price Settlement partially in shares if ownership guide
Slide 25: Cash Flows, Liquidity and Taxes
Cash Flows, Liquidity and Taxes Free Cash Flows – Operating Cash Flow less Capital Expenditures) Average 2011 to 2014 - $135 million Capital Spending- $50 million estimated for 2015 Liquidity Cash balances - $313 million at September 2015 Revolving Credit Agreement $600 million – plus $200 million a
Slide 26: Capital Allocation Philosophy
Capital Allocation Philosophy Priority 1: Working Capital Investment to Support Sales Growth Priority 2: Capital Expenditures Approximately $175 million 2014-2016 Priority 3: Acquisitions Priority 4: Dividends in Range of 15% Prior Year Earnings Priority 5: Share Repurchase: up to $500 million autho
Slide 27: Appendix: Reg G Reconciliation
Appendix: Reg G Reconciliation VALMONT INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS REGULATION G RECONCILIATION (Dollars in thousands, except per share amounts) (unaudited) The non-GAAP tables below disclose the impact on (a) diluted earn
Slide 28: Reg G Reconciliation
Reg G Reconciliation Third Quarter Ended Sept. 27, 2014 Diluted earnings per share Year-to-Date Sept. 27, 2014 Diluted earnings per share Net earnings attributable to Valmont Industries, Inc. - as reported $ 23,559 $ 0.92 $ 143,515 $ 5.43 Costs related to refinancing of debt - after tax 24,171 0.95
Slide 29: Reg G Reconciliation: Segment Operating Income
Reg G Reconciliation 30 For the Third Quarter Ended Sept. 26, 2015 Segment Operating Income Reconciliation Engineered Infrastructure Products Utility Support Structures Coatings Irrigation Other/ Corporate Operating income - as reported $ 14,154 $ 14,505 $ 3145 $ 10,539 $ (5,331) Restructuring expen
Slide 30: Reg G Reconciliation
Reg G Reconciliation Engineered Infrastructure Uatity Support ‘Scament Operating Income Reconciliation Products Structures Coatings Irrigation __Other/ Corporate Operating income -as reported Ss 14iss s 1405s aus s 10339 $8,381) Restructuring expenses: before tax 4.568 L139 806 2 2215 Inmpairment of
Slide 31: Valmont: Conserving Resources. Improving Life.
valmont ¥ Conserving Resources. Improving Life. 71 a |