Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q1 2024 Earnings Presentation
26 slides from Valmont Industries's earnings presentation, May 2, 2024
Slide 1: Q1 2024 Earnings Presentation
Q1 2024 Earnings Presentation May 2, 2024 © 2024 Valmont® Industries, Inc.
Slide 2: Today's Agenda
Today’s Agenda 01 Q1 2024 Results & Market Dynamics 02 2024 Strategic Priorities 03 Updated 2024 Outlook and Guidance 04 Q&A 2 May 2, 2024 | Valmont Industries, Inc.
Slide 3: 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 4: CEO Opening Comments
CEO Opening Comments Avner Applbaum, President & CEO 4 May 2, 2024 | Valmont Industries, Inc.
Slide 5: Q1 2024 Financials and Key Messages
Q1 2024 Financials and Key Messages $0.98B (8.0%) 13.5% $4.32 $23M $12M Net Sales Y/Y Net Sales Operating Margin Diluted EPS Operating Cash Flow Cash Returned to Shareholders Great start to 2024 as the global Valmont team achieved outstanding results that exceeded expectations, expanding operating m
Slide 6: Attractive Markets with Multi-Year Drivers
Attractive Markets with Multi-Year Drivers Infrastructure Agriculture • Benefiting from several long-term, secular growth drivers • Global irrigation demand is driven by climate change, water scarcity and sustainability considerations • Utilities are sustaining elevated capex spending due to the ene
Slide 7: 2024 Strategic Priorities Aligned with Valmont Business Model Focus Areas
2024 Strategic Priorities Aligned with Valmont Business Model Focus Areas High-Performance Culture Driving market leadership and fostering innovation; living our core values on the journey toward excellence Return on Invested Capital (ROIC) Strategically focused on core competencies to optimize ROIC
Slide 8: Financial Results and Outlook
Financial Results and Outlook Tim Francis, Interim CFO 8 May 2, 2024 | Valmont Industries, Inc.
Slide 9: Q1 2024 Financial Summary
Q1 2024 Financial Summary • Sales lower Y/Y with decreases in both Infrastructure (down 1.7%) and Agriculture (down 22.1%); strategic pricing and favorable mix partially offset lower volumes $M, except EPS 2024 2023 % • Operating margin expanded 240 bps on commercial execution, including Net Sales 9
Slide 10: Q1 2024 Results | Infrastructure
Q1 2024 Results | Infrastructure Sales ($M) Operating Income ($M) -1.7% +24.9% • Sales decreased as higher volumes $736.1 in TD&S and Solar, driven by strong $723.6 $117.9 utility market demand, plus favorable $94.4 pricing across the portfolio were more than offset by significantly lower 16.4% 12.9
Slide 11: Q1 2024 Results | Agriculture
• North America sales were lower as Q1 2024 Results | Agriculture Q1 2023 benefited from the ongoing delivery of elevated backlog; positive signs emerging as order rates are Sales ($M) Operating Income ($M) trending higher Y/Y -22.1% -23.2% $332.2 $53.3 • Average system selling prices in $258.7 $41.
Slide 12: Building Solid Financial Foundation
Building Solid Financial Foundation • Strong Q1 2024 Operating Cash Flows on earnings growth • Expect to generate strong cash flow in 2024 as earnings increase and we maintain focus on diligent working capital management • Long-term debt mostly Free Cash Flows ($M) YTD 3/30/2024 Liquidity ($M) 3/30/
Slide 13: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation 2024 First Quarter Capital Deployment: $27M Growing Our Business Returning Cash to Shareholders $15M N/A N/A $12M Capital Expenditures Acquisitions Share Repurchases Dividends • We continue to invest in • Targeting adjacent opportunities • Completed $120.0M Ac
Slide 14: Raising 2024 Outlook and Updating Key Assumptions
Raising 2024 Outlook and Updating Key Assumptions (2.0%) – 0.5% $15.40 – $16.40 Change In Net Sales Y/Y GAAP Diluted EPS Previous outlook: (3.0%) – Flat Previous outlook: $14.25 – $15.50 Segment Assumptions Key Assumptions Other Modeling Considerations • Infrastructure volumes are expected to • Effe
Slide 15: Valmont Team Is Executing Our Strategy and Performing Well in Dynamic Market
Valmont Team Is Executing Our Strategy and Performing Well in Dynamic Market Actively managing what we can control • Driving commercial excellence across our markets • Focusing on our core competencies as competitive advantages • Enhancing productivity through operational excellence Proactively taki
Slide 16: Q&A
Q&A 16 May 2, 2024 | Valmont Industries, Inc.
Slide 17: Appendix
Appendix 17 May 2, 2024 | Valmont Industries, Inc.
Slide 18: Long-Term Financial Targets
Long-Term Financial Targets Net Sales Operating Return on Invested Net Earnings Growth1 Margin Capital FCF Conversion Approaching MSD+ Mid-Teens High-Teens 100% Serving markets with Strategic pricing to align A disciplined and efficient Managing net working positive growth outlook with value we deli
Slide 19: Actual and Projected Transmission Investment
Actual and Projected Transmission Investment Source: Edison Electric Institute Business Analytics Group 19 May 2, 2024 | Valmont Industries, Inc. Updated January 2024
Slide 20: Infrastructure Investment and Jobs Act (IIJA)
Infrastructure Investment and Jobs Act (IIJA) Infrastructure Investment and Jobs Act Spending Breakdown (In Order - Most to Least) Previously-Passed Transportation Funding | $650B Roads, Bridges and Related Programs | $111B Energy, Power and Electric Grid Reliability | $107.5B Freight and Passenger
Slide 21: U.S. Net Cash Farm Income by Year
U.S. Net Cash Farm Income by Year Source: USDA 21 May 2, 2024 | Valmont Industries, Inc. Updated February 7, 2024
Slide 22: U.S. Drought Condition
U.S. Drought Condition Source: Drought Monitor 22 May 2, 2024 | Valmont Industries, Inc. Updated April 23, 2024
Slide 23: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures Dollars in thousands The non-GAAP table below discloses the impacts of the realignment charges and non-recurring charges associated with major scope changes for two strategic projects initiated by departed senior leadership
Slide 24: Historical Free Cash Flow (2014 – 2023)
Historical Free Cash Flow1,2 (2014 – 2023) Dollars in millions 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Net cash flows from operating activities $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 $ 65.9 $ 326.3 $ 306.8 Net cash flows from investing activities (256.9) (48.2) (53.0) (49.
Slide 25: Free Cash Flow Throughout the Cycle
Free Cash Flow Throughout the Cycle Dollars in millions 2014 – 2023 Free Cash Flow1 Years of rapid raw material cost inflation 350 300 250 227 233 210 210 210 200 175 148 10-yr Avg. $148M 150 GAAP 1.37X 101 100 78 81 Adj. 0.87X 50 - (50) (42) (100) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1
Slide 26: Calculation of Adjusted EBITDA and Leverage Ratio
Calculation of Adjusted EBITDA and Leverage Ratio Dollars in thousands Certain of our debt agreements contain covenants that require us to maintain certain coverage ratios. Our Debt to Adjusted EBITDA may not exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions)