Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q4 2018 Earnings Presentation
27 slides from Valmont Industries's earnings presentation, Feb 21, 2019
Slide 1: Fourth Quarter and Full Year 2018 Earnings Presentation
Valmont Industries, Inc. Fourth Quarter and Full Year 2018 Earnings Presentation February 21, 2019
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: 2018 Fourth Quarter Summary
2018 Fourth Quarter Summary $M, except for per share amounts Revenue Operating Income Diluted EPS (2.5%) (43.2%) +3.5% NM +12.0% $715.0 $63.9 $66.1 $63.9 $697.4 $1.87 $1.67 $36.3 $0.80 $(0.16) 1 2018 2017 GAAP Adjusted GAAP Adjusted 1 2018 2017 2018 2017 • Sales growth in ESS and Coatings • GAAP ope
Slide 4: 2018 Full Year Summary
2018 Full Year Summary $M, except for per share amounts Revenue Operating Income Diluted EPS +0.4% (24.3%) +0.9% (17.8%) +8.9% $2,757.1 $2,746.0 $267.1 $269.4 $267.1 $7.59 $6.97 $202.3 $5.11 $4.20 2018 2017 GAAP Adjusted 1 GAAP Adjusted 1 2018 2017 2018 2017 • Growth in ESS and Coatings segments • G
Slide 5: 2018 Operations Transformation
2018 Operations Transformation Announced in first quarter of 2018; substantially completed in December 2018 Goals to position the businesses for growth Simplify operations Improve efficiency in supply chain Optimize global business model Closed five facilities in 2018; two additional occurring
Slide 6: Fourth Quarter and Full 2018 Financial Summary
Fourth Quarter and Full 2018 Financial Summary $M, except for per share amounts Net Sales 2018 2017 Change FY 2018 FY 2017 Change Engineered Support Structures $ 259.7 $ 250.1 3.8% $ 986.9 $ 938.1 5.2% Utility Support Structures 233.3 243.4 (4.1%) 859.2 859.1 - Coatings 86.4 83.0 4.0% 353.4 318.9 10
Slide 7: 2018 Cash Flow Highlights
2018 Cash Flow Highlights ($M) 2018 Free Cash Flow Cash and Debt Highlights 2018 2017 Operating Cash Flow $153.0 $133.1 $313.2M ($203.6M ex-U.S.) Capital ($72.0) ($55.3) Cash at 12/29/2018 Expenditures Free Cash Flow $81.0 $77.8 $753.3M Net Earnings $94.4 $116.2 Total Debt FCF to 0.86X 0.67X Net Ear
Slide 8: Capital Allocation | A Balanced Approach
Capital Allocation | A Balanced Approach ($M) 2018 Capital Deployment: $364M Capital • Working capital investment to support investments in people, technology and systems Growing Our Expenditures • CapEx of $72M in 2018 Business $143 $115 • Strategic fit + market expansion Acquisitions • Returns exc
Slide 9: 2019 Financial Guidance and Key Assumptions
2019 Financial Guidance and Key Assumptions 2019 Annual Financial Guidance and Key Metrics KEY ASSUMPTIONS • Revenue growth: evenly Diluted divided between and EPS $8.10 – $8.90 organic and completed acquisitions Revenue Growth1 7% – 8% • Raw material inflation expected flat to slightly deflationary
Slide 10: 2019 Summary
2019 Summary 01 02 03 04 05 Expect revenue Acquisition 2018 Operations Committed to Continuing focus and profitability integration on Transformation price leadership on Lean and Agile growth in all track, building on has simplified and and discipline to drive margin businesses new products and stren
Slide 11: Valmont-Prospera Partnership
Valmont-Prospera Partnership The Pursuit of Autonomous Crop Management First of its kind, exclusive partnership specific to mechanized irrigation Transformation of the pivot into a complete crop management machine 60,000+ connections share intelligence with the pivot, and integration of data science
Slide 12: Valmont-Prospera Partnership
Valmont-Prospera Partnership Award-winning machine vision and AI company founded in 2014 Proven analytics and algorithms to provide irrigation and crop growth recommendations $5B of production monitored annually Optimizing Agriculture with Data 12 | February 21, 2019 | Valmont Industries, Inc. | Q4
Slide 13: Putting Data Into Action – The Three A's
Valmont-Prospera Partnership Putting Data Into Action – “The Three A’s” Acquisition Analysis Action Constant crop Data analyzed in the Post-analysis monitoring with an cloud by powerful AI recommendations array of sensors on engines, computer sent to the field, the pivot, to satellite vision, and pr
Slide 14: Appendix
APPENDIX 14 | February 21, 2019 | Valmont Industries, Inc. | 4Q 2018 Earnings Presentation
Slide 15: Fourth Quarter Highlights | Operating Income GAAP
Fourth Quarter Highlights | Operating Income GAAP Operating Income Operating Income Increase Operating Income Operating Income ($M) 4Q 2018 4Q 2017 (Decrease) % 4Q 2018 % 4Q 2017 Engineered Support Structures $ (1.6) $ 16.3 $ (17.9) (0.6%) 6.5% Utility Support Structures 18.5 28.4 (9.9) 7.9% 11.7% C
Slide 16: Fourth Quarter Highlights | Operating Income Adjusted
Fourth Quarter Highlights | Operating Income Adjusted Adj. Operating Operating Income Increase Operating Income Operating Income ($M) Income 4Q 20181 4Q 2017 (no-adj.) (Decrease) % 4Q 2018 % 4Q 2017 Engineered Support Structures $ 20.2 $ 16.3 $ 3.9 7.8% 6.5% Utility Support Structures 25.9 28.4 (2.5
Slide 17: 4Q Results | Engineered Support Structures
4Q Results | Engineered Support Structures ($M) Key Statistics Revenue Operating Income 2017 Revenue1 $ 243.2 Volume 7.6 $257.0 $20.2 $243.2 $16.3 Pricing/Mix 8.7 Acquisitions 4.9 Currency Translation (7.4) ($1.6) 2018 Revenue1 $ 257.0 2018 2017 2018 2018 Adj. 2017 COMMENTARY • Higher sales led by p
Slide 18: 4Q Results | Utility Support Structures
4Q Results | Utility Support Structures ($M) Key Statistics Revenue Operating Income 2017 Revenue1 $ 243.0 Volume (33.3) $28.4 $230.9 $243.0 $25.9 Pricing/Mix 9.8 $18.5 Acquisitions 12.3 Currency Translation (0.9) 2018 Revenue1 $ 230.9 2018 2017 2018 2018 Adj. 2017 COMMENTARY • Sales impacted by a s
Slide 19: 4Q Results | Coatings
4Q Results | Coatings ($M) Key Statistics Revenue Operating Income 2017 Revenue1 $ 65.2 Volume 0.3 $69.2 $14.2 $14.6 $14.1 $65.2 Pricing/Mix 2.3 Acquisitions 2.8 Currency Translation (1.4) 2018 Revenue1 $ 69.2 2018 2017 2018 2018 Adj 2017 COMMENTARY • Global sales grew from pricing actions taken ear
Slide 20: 4Q Results | Irrigation
4Q Results | Irrigation ($M) Key Statistics Revenue Total Operating Income 2017 Revenue1 $ 147.7 Volume (12.8) $82.4 $75.7 $18.3 $72.0 $14.8 Pricing/Mix 3.3 $57.8 Acquisitions 5.5 Currency Translation (3.4) North America International 2018 Revenue1 $ 140.3 2018 2017 2018 2017 COMMENTARY • North Amer
Slide 21: 2009-2018 Historical Free Cash Flow
2009-2018 Historical Free Cash Flow1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Net cash flows from operating activities $ 349.5 $ 152.2 $ 149.7 $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 Net cash flows from investing activities (43.6) (262.7) (84.1) (136.7) (131.7) (256.9) (48.2
Slide 22: Strong Free Cash Flow Throughout The Cycle
Strong Free Cash Flow Throughout The Cycle 2009 – 2018 Free Cash Flow1 ($M) Years of rapid raw material cost inflation 305 290 10-yr Avg. $154M 227 GAAP 1.38X Adj. 0.97X 161 154 116 100 101 90 67 80 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 10 Year Avg Historical FCF Conversion by Year1 GAAP
Slide 23: Calculation of Adjusted EBITDA & Leverage Ratio
Calculation of Adjusted EBITDA & 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 quarters
Slide 24: 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 REPORTED 2018 RESULTS REGULATION G RECONCILIATION (Dollars in thousands, except per share amounts) (unaudited) The non-GAAP table
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 REPORTED 2017 RESULTS REGULATION G RECONCILIATION (Dollars in thousands, except per share amounts) (unaudited) The non-GAAP table
Slide 26: Summary of Effect of Significant Non-recurring Items on Reported Results
Summary of Effect of Significant Non-recurring Items on Reported Results Thirteen Thirteen Weeks Ended weeks ended Year ended Year ended December 29, December 30, December 29, December 30, Operating Income Reconciliation 2018 2017 2018 2017 Operating income - as reported $ 36,290 $ 63,885 $ 202,280
Slide 27: Summary of Effect of Significant Non-recurring Items on Reported Results
Summary of Effect of Significant Non-recurring Items on Reported Results For the Fourth Quarter Ended Dec 29, 2018 Engineered Utility Support Support Other/ Segment Operating Income Reconciliation Structures Structures Coatings Irrigation Corporate Operating income - as reported $ (1,635) $ 18,468 $