Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Investor Presentation (June 2020)
28 slides from Valmont Industries's investor presentation, Jun 9, 2020
Slide 1: Valmont Industries, Inc. Investor Presentation June 2020
Valmont Industries, Inc. Investor Presentation June 2020
Slide 2: Forward-looking Statement Disclosure
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
Slide 3: Valmont Snapshot (NYSE: VMI)
Valmont Snapshot (NYSE: VMI) Company Profile Omaha, NE $2.77B $2.7B 23 87 9,800 Headquarters 2019 Sales Market Cap1 Countries Served Manufacturing Sites Total Employees 2019 Revenue Mix ($M) $301 $51 $66 . ESS . ESS 32% $1,002 $579 . Utility . Utility . U.S. Segment2 Operating Geography . Irrigation
Slide 4: Valmont Business Model
Valmont Business Model Strong, Global, and Enduring Drivers Operational Focus Competitive Strengths Total Value Impact Focus Culture and Talent VALUE Niche Markets CREATION Engineering Growth Discipline Leverage Products, Markets, and Capabilities Global Mindset / Footprint 13.7% Total Compounded An
Slide 5: Solutions Supporting Agriculture and Infrastructure Growth
Solutions Supporting Agriculture and Infrastructure Growth Engineered Support Structures Utility Support Structures Coatings Irrigation • Lighting and traffic structures • Substations • Technology solutions • Advanced, integrated technology solutions • Wireless communications products • Renewable ge
Slide 6: Engineered Support Structures at a Glance
Engineered Support Structures at a Glance Market Drivers Products and Solutions Portfolio • Need for increased transportation spend Transportation • Explosion of demand on wireless networks • Shift to 5G is driving network upgrades • Demand for integrated solutions will continue to develop and evolv
Slide 7: Utility Support Structures at a Glance
Utility Support Structures at a Glance Market Drivers Products and Solutions Portfolio Reliability, grid hardening, regulatory impetus, and renewable generation Transmission Structures Substations • Historical underinvestment in the grid • Increases in renewable and distributed generation • Demand f
Slide 8: Coatings at a Glance
Coatings at a Glance Market Drivers Products and Solutions Portfolio • Coatings demand typically correlated to industrial production Galvanizing • Infrastructure investments promote coatings demand • Cost of corrosion is a major financial burden on economies Strategic Addressable Market Expansion Ap
Slide 9: Irrigation at a Glance: Valley
Irrigation at a Glance: Valley® Market Drivers Products and Solutions Portfolio Long-term Center Pivots and Machines2 Control Panels • Constraints on freshwater resources and demand on food production • Gov’ts’ desire to become more self-sufficient in food production • Large installed base of machin
Slide 10: Strong Peak to Trough Performance
Strong Peak to Trough Performance Sales and Operating Income ($M) Sales Adjusted Operating Income1 $700 $3,500 $3,304 $3,123 $3,030 Peak $600 $3,000 $2,746 $2,757 $2,767 $2,662 $2,619 $473 $2,522 $500 $2,500 $1,976 $382 $400 $2,000 $358 Trough $300 $1,500 Trough $263 $256 $267 $269 $238 1 $238 $200
Slide 11: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet Debt and Liquidity Profile 5-Year Historical Debt / Adjusted EBITDA1 2.7x $294.6M ($149.5M ex-U.S.) 2.4x 2.3x 2.2x 2.2x Cash at 3/28/20 1.5-2.5x Target $600M Revolving Credit Facility, Expires 2022 $200M Accordion Feature 2015 2016 2017 2018 2019 $796.6M Credit Rati
Slide 12: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation 1Q 2020 Capital Deployment: $61M • Working capital investment to support investments in Capital ($M) people, technology and systems Expenditures • 2020 Capex expected to be $75M - $90M $24 • Strategic fit + market expansion $20 Business • Returns exceeding cos
Slide 13: Strong Balance Sheet and Liquidity to Endure COVID-19 Uncertainty
Strong Balance Sheet and Liquidity to Endure COVID-19 Uncertainty As of June 5, 2020 Cash1 ~$400.0M Available Credit under Revolving Credit Facility4 $471.0M Total Debt (Long-term) 2 $796.6M Cash ~400.0M Shareholders’ Equity2 $1,110.1M Total Available Liquidity ~$871.0M Total Debt to Adj. EBITDA3 2.
Slide 14: 2Q 2020 Outlook and Assumptions
2Q 2020 Outlook and Assumptions BACKGROUND • Strong 1Q performance – were on track to reaffirm FY2020 outlook • Given market conditions due to COVID-19 and future market uncertainty, we withdrew full-year 2020 guidance • 2Q19 non-recurring items: $3M Coatings legal expense and $3M Utility customer a
Slide 15: COVID-19 Pandemic Plan and Safety Protocols
COVID-19 Pandemic Plan and Safety Protocols Valmont has implemented enhanced protocols in response to COVID-19, including recommendations and requirements issued by the Centers for Disease Control and Prevention (“CDC”), World Health Organization (“WHO”) and local, state and national health authorit
Slide 16: Key Observations Related to COVID-19
Key Observations Related to COVID-19 • Valmont products and solutions support critical infrastructure sectors as defined by the Department of Homeland 01 Security (CISA.gov) and similar global government agencies. – Communication: Wireless communication structures and components (ESS) – Energy: Util
Slide 17: Future Impact of COVID-19 Varies Across Diversified Portfolio
Future Impact of COVID-19 Varies Across Diversified Portfolio Valmont FY2019 Segment Operating Income ($M) Estimated Risk Profile Due to COVID-19 UTILITY ESS • Supports critical infrastructure sector (Energy) to help ensure • Variety of demand drivers across multiple product lines and geographies un
Slide 18: Fundamental Market Drivers
Fundamental Market Drivers ESS USS COATINGS IRRIGATION • Continued government • Our record backlog suggests • Business closely follows • Our mission-critical products investments in infrastructure ongoing demand and necessity industrial production trends and technology supports the development acros
Slide 19: Long-term Financial Targets Focused on Growth
Long-term Financial Targets Focused on Growth 5% ̶ 10% > 10% > 10% > 1.0x > 12% Net Earnings Revenue Growth1 EPS Growth ROIC FCF Conversion Operating Margin 1 5% organic. Acquisitions over time are necessary to achieve top end of range. 19 | June 2020 | Valmont Industries, Inc. | Investor Presentati
Slide 20: Why Valmont?
Why Valmont? Expanding our view of addressable market to leverage existing 01 global platform 02 Management team reshaping the organization to align with growth 03 Long-term, enduring growth drivers across all segments 04 Incorporating technology into all products and solutions 05 Sensible capital a
Slide 21: Appendix
APPENDIX 21 | June 2020 | Valmont Industries, Inc. | Investor Presentation
Slide 22: 2018 - 2019 Financials Retrospectively Adjusted from LIFO to FIFO Change
2018 - 2019 Financials Retrospectively Adjusted from LIFO to FIFO Change Valmont Industries, Inc. Retrospectively Adjusted from LIFO to FIFO Change First Quarter 2019 Second Quarter 2019 Third Quarter 2019 Fourth Quarter 2019 Fiscal Year 2019 As Previously Retrospectively As Previously Retrospective
Slide 23: 2010 - 2019 Historical Free Cash Flow
2010 - 2019 Historical Free Cash Flow1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Net cash flows from operating activities $ 152.2 $ 149.7 $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 Net cash flows from investing activities (262.7) (84.1) (136.7) (131.7) (256.9) (48.2) (53
Slide 24: Strong Free Cash Flow throughout The Cycle
Strong Free Cash Flow throughout The Cycle 1 2010 – 2019 Free Cash Flow ($M) Years of Rapid Raw Material Cost Inflation $290 $227 $210 $175 $144 $116 $100 $101 $78 $81 $67 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 10 Year Avg Historical FCF Conversion by Year1 GAAP 1.23X .29X 0.43X 1.04X 0.5
Slide 25: Summary of Effect of Significant Non-recurring Items on Reported Results
Summary of Effect of Significant Non-recurring Items on Reported Results VALMONT INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON OPERATING INCOME REG G RECONCILIATION 25 | June 2020 | Valmont Industries, Inc. | Investor Presentation
Slide 26: Summary of Effect of Significant Non-recurring Items on Reported Results (Continued)
Summary of Effect of Significant Non-recurring Items on Reported Results VALMONT INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON OPERATING INCOME REG G RECONCILIATION (CONTINUED) YTD YTD Increase 2016 Operating Income Reconciliation 12'31'16 12'26'15 from 20
Slide 27: 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 28: Reconciliation of Adjusted EBITDA to GAAP Figures
Reconciliation of Adjusted EBITDA to GAAP Figures Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) is one of our key financial ratios in that it is the basis for determining our maximum borrowing capacity at any one time. We calculate "Further Adjusted EBITDA" by addi
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