Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q4 2019 Earnings Presentation
27 slides from Valmont Industries's earnings presentation, Feb 20, 2020
Slide 1: Fourth Quarter and Full Year 2019 Earnings Presentation
Valmont Industries, Inc. Fourth Quarter and Full Year 2019 Earnings Presentation February 20, 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: 4Q 2019 Segment Revenue and Segment Summaries
4Q 2019 Segment Revenue and Segment Summaries TOTAL 4Q 2019 REVENUE: $683.6M $255.2M $231.9M $89.7M $133.0M Engineered Support Utility Support Coatings Irrigation Structures Structures N.A.: $84.5M | International: $48.5M 37.3% of Sales 33.9% of Sales 13.1% of Sales 19.5% of Sales SEGMENT SUMMARIES
Slide 4: Full Year 2019 Segment Revenue and Market Drivers
Full Year 2019 Segment Revenue and Market Drivers TOTAL 2019 REVENUE: $2,767.0M $1,012.3M $890.6M $367.8M $585.2M Engineered Support Utility Support Coatings Irrigation Structures Structures N.A.: $378.6M | International: $206.6M 36.6% of Sales 32.2% of Sales 13.3% of Sales 21.1% of Sales MARKET DRI
Slide 5: Key Initiatives to Accelerate Innovation and Technology
Key Initiatives to Accelerate Innovation and Technology ESS USS COATINGS IRRIGATION • Increasing smart pole technology • Piloting beacon technology on power • GalvTrac: optimizing zinc application • Increasing adoption of AgSense, solutions investment grid structures to help identify and by integrat
Slide 6: 2019 Fourth Quarter Summary
2019 Fourth Quarter Summary $M, except for per share amounts Revenue Operating Income Diluted EPS (2.0%) +51.7% (16.8%) +107.5% (11.2%) $66.1 $697.4 $1.87 $683.6 $55.0 $55.0 $1.66 $1.66 $36.3 $0.80 2019 2018 GAAP Adjusted 1 GAAP Adjusted 1 2019 2018 2019 2018 • Higher sales in North American markets
Slide 7: 2019 Full Year Summary
2019 Full Year Summary $M, except for per share amounts Revenue Operating Income Diluted EPS +0.4% +17.5% (11.8%) +68.1% (7.0%) $2,767.0 $2,757.1 $269.4 $7.59 $237.7 $237.7 $7.06 $7.06 $202.3 $4.20 2019 2018 GAAP Adjusted 1 GAAP Adjusted 1 2019 2018 2019 2018 • Pricing strategies, sales from recent
Slide 8: 2019 Cash Flow Highlights
2019 Cash Flow Highlights 2019 Full Year Cash Flow | FCF Reconciliation Cash and Debt Highlights YTD ($M) Net Cash Flows from Operating Activities $ 12/28/19 307.6 $353.5M Net Cash Flows from Investing Activities (168.2) ($165.6M ex-U.S.) Cash at 12/28/2019 Net Cash Flows from Financing Activities (
Slide 9: Capital Allocation | A Balanced Approach
Capital Allocation | A Balanced Approach ($M) 2019 Capital Deployment: $275M Capital • Working capital investment to support investments in people, technology and systems Expenditures Growing Our • CapEx of $97M in 2019 Business $97 $82 • Strategic fit + market expansion Acquisitions • Returns excee
Slide 10: 2020 Financial Guidance and Key Assumptions
2020 Financial Guidance and Key Assumptions 2020 Annual Financial Guidance and Key Metrics KEY ASSUMPTIONS • Revenue growth Diluted primarily organic EPS $7.30 – $8.00 • Raw material and freight Revenue costs expected similar Growth1 4% - 7% to 2019 • No material impact from Operating Margin Improve
Slide 11: 2020 Market Drivers and Outlook by Segment
2020 Market Drivers and Outlook by Segment • Continued government investments in infrastructure development (i.e., lighting and traffic) ESS • Continued growth of wireless communication products and components; anticipate 5G investments to accelerate in 2H20 • Accelerating the strategic evaluation o
Slide 12: 2020 Outlook
2020 Outlook 01 02 03 04 05 Expect revenue Strategically Expect Coatings Expect raw Continuing to growth of 4% - adding targeted business to be flat materials and perform against 7% driven by capacity to with 2019; freight to remain our stated capital infrastructure existing NA steel Cautiously rela
Slide 13: Appendix
APPENDIX 13 | February 20, 2020 | Valmont Industries, Inc. | 4Q 2019 Earnings Presentation
Slide 14: Fourth Quarter and Full Year 2019 Financial Summary
Fourth Quarter and Full Year 2019 Financial Summary $M, except for per share amounts Net Sales 2019 2018 Change FY 2019 FY 2018 Change Engineered Support Structures $ 255.2 $ 259.7 (1.7%) $ 1,012.3 $ 986.9 2.6% Utility Support Structures 231.9 233.3 (0.6%) 890.6 859.2 3.7% Coatings 89.7 86.4 3.8% 36
Slide 15: 2019 Diluted EPS Excluding One-Time Items
2019 Diluted EPS Excluding One-Time Items The non-GAAP table below discloses the impact on diluted earnings per share from certain non-recurring events that occurred during 2019 and the 2020 acquisition of the 49% non-controlling interest ownership of the consolidated subsidiary AgSense. We believe
Slide 16: 4Q Results | Engineered Support Structures
4Q Results | Engineered Support Structures ($M) Key Statistics Revenue Operating Income 2018 Revenue1 $ 257.0 Volume (10.1) $250.0 $257.0 $20.2 Pricing/Mix (0.5) $10.5 Acquisitions 7.1 Currency Translation (3.5) ($1.6) 2019 Revenue1 $ 250.0 2019 2018 2019 2018 2018 Adj. COMMENTARY • Record fourth qu
Slide 17: 4Q Results | Utility Support Structures
4Q Results | Utility Support Structures ($M) Key Statistics Revenue Operating Income 2018 Revenue1 $ 230.9 Volume (12.4) $229.1 $230.9 $26.3 $25.9 Pricing/Mix 11.4 $18.5 Acquisitions - Currency Translation (0.8) 2019 Revenue1 $ 229.1 2019 2018 2019 2018 2018 Adj. COMMENTARY • Favorable pricing in No
Slide 18: 4Q Results | Coatings
4Q Results | Coatings ($M) Key Statistics Revenue Operating Income 2018 Revenue1 $ 69.2 Volume (1.4) $72.4 $69.2 $14.2 $14.6 $12.0 Pricing/Mix 2.1 Acquisitions 3.2 Currency Translation (0.7) 2019 Revenue1 $ 72.4 2019 2018 2019 2018 2018 Adj COMMENTARY • Sales from recent acquisitions and continued p
Slide 19: 4Q Results | Irrigation
4Q Results | Irrigation ($M) Key Statistics Revenue Total Operating Income 2018 Revenue1 $ 140.3 Volume (6.0) $83.5 $82.4 $14.8 $15.0 Pricing/Mix (0.9) $48.5 $57.8 $11.8 Acquisitions - Currency Translation (1.4) North America International 2019 Revenue1 $ 132.0 2019 2018 2018 Adj. 2019 2018 COMMENTA
Slide 20: New State-of-the-Art Manufacturing Facility Opens in Poland
New State-of-the-Art Manufacturing Facility Opens in Poland 20 | February 20, 2020 | Valmont Industries, Inc. | 4Q 2019 Earnings Presentation
Slide 21: Australia Construction Market Dynamics and Drivers
Australia Construction Market Dynamics and Drivers Construction outlook • Total engineering construction significantly dropped from ‘18 to ‘19 • Total engineering construction segment expected to remain low in ‘20 • Total construction work done is expected to fall back to a decade low in FY20, befor
Slide 22: 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) (53.0
Slide 23: Strong Free Cash Flow Throughout The Cycle
Strong Free Cash Flow Throughout The Cycle 2010 – 2019 Free Cash Flow1 ($M) Years of rapid raw material cost inflation 350 300 250 290 10-yr Avg. $144M 200 227 GAAP 1.31X 210 Adj. 0.91X 150 175 100 144 116 100 101 81 50 67 78 - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 10 Year Avg Historical
Slide 24: 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 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 2018 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 Weeks Ended Year ended December 29, December 29, Operating Income Reconciliation 2018 2018 Operating income - as reported $ 36,290 $ 202,280 Impairment of goodwill and tradename — 15,780 Restructuring and related asset
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 $