Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Investor Presentation (November 2018)
33 slides from Valmont Industries's investor presentation, Nov 6, 2018
Slide 1: 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 2: Valmont at a Glance
Valmont at a Glance Delivering Solutions For Agriculture and Infrastructure Development 3 November 2018 Valmont Industries, Inc. Headquarters Omaha, NE 2017 Sales $2.7B1 Market Cap $2.9B2 Countries of Operation 23 Manufacturing Sites 80+ Total Employees >10,000 Company Profile 2017 Mix ($M) By Reven
Slide 3: Valmont Business Model
Valmont Business Model 16.5% Total Compounded Annualized Return Over the Past 15 Years1 4 November 2018 Valmont Industries, Inc. Strong, Global, and Enduring Drivers Competitive Strengths Growth Discipline Total Value Impact Focus Niche Markets Leverage Products, Markets, and Capabilities VALUE CREA
Slide 4: ESS at a Glance
ESS at a Glance 5 November 2018 Valmont Industries, Inc. Market Drivers Addressable Market Expansion Product and Solutions Portfolio Transportation Communication Construction Systems Need for increased spend on transportation Explosion of demand on wireless networks Shift to 5G will drive network up
Slide 5: Utility Support Structures at a Glance
Utility Support Structures at a Glance 6 November 2018 Valmont Industries, Inc. Addressable Market Expansion Transmission Structures Distribution Poles Substations Renewable Energy Solutions Inspection Services Product and Solutions Portfolio Reliability, grid hardening, regulatory impetus, and rene
Slide 6: Coatings at a Glance
Coatings at a Glance Market Drivers Galvanizing Applied Coatings Value-Added Services Addressable Market Expansion Product and Solutions Portfolio Coatings demand typically correlated to industrial production Infrastructure investments promote coatings demand Cost of corrosion is a major financial b
Slide 7: Irrigation at a Glance
Irrigation at a Glance Valley® 8 November 2018 Valmont Industries, Inc. Market Drivers Center Pivots & Machines1 Control Panels Remote Telemetry Variable Rate Irrigation Water Management Product and Solutions Portfolio Addressable Market Expansion Long-term: Constraints on fresh water resources and
Slide 8: Financial Overview
FINANCIAL OVERVIEW 9 November 2018 Valmont Industries, Inc.
Slide 9: Strong Peak to Trough Performance
Strong Peak to Trough Performance 10 November 2018 Valmont Industries, Inc. Peak Sales and Operating Income1 ($M) 1 Excludes restructuring charges, impairments and significant one-time adjustments. Please see Company’s Reg. G table at end of presentation. $132 $243 1 $1,907 $1,787 $1,976 $2,662 $3,0
Slide 10: 2017 and 2018 Financial Results Through Third Quarter
2017 and 2018 Financial Results Through Third Quarter NET SALES U.S. Dollars in millions except per share amounts 2018 2017 Engineered Support Structures $727.2 $688.0 Utility Support Structures 625.9 615.7 Coatings 267.0 235.8 Irrigation 491.1 502.9 Other 23.1 60.5 Intersegment Sales (74.4) (72.0)
Slide 11: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet Maintain Investment Grade Rating; Target Debt/EBITDA of 1.5-2.5x 12 November 2018 Valmont Industries, Inc. Debt and Liquidity Profile 5-Year Historical Debt/Adjusted EBITDA1 Cash at 9/29/2018 $296M ($259M ex. US) Total Debt, 9/29/2018 $740M Revolving Credit Facility
Slide 12: Capital Allocation Scorecard – A Balanced Approach
Capital Allocation Scorecard – A Balanced Approach 13 November 2018 Valmont Industries, Inc. Business Growth Return of Capital to Shareholders USD in Millions Working capital investment to support business growth CapEx of ~$60 - 80MM annually Capital Expenditures Strategic fit + market expansion Ret
Slide 13: 10 Year Historical Free Cash Flow
10 Year Historical Free Cash Flow1 10 Year Average FCF is $146M; Last 5 Years Has Averaged $176M Free Cash Flow (USD in $millions) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Net cash flows from Operating Activities $ 52.6 $ 349.5 $ 152.2 $ 149.7 $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 219.2 $ 145.7
Slide 14: Strong Free Cash Flow Throughout The Cycle
Strong Free Cash Flow Throughout The Cycle Years of rapid raw material cost inflation GAAP 0.01X 2.03X 1.23X 0.29X 0.43X 1.04X 0.55X 5.65X 0.93X 0.78X Adj. 0.01X 2.03X 1.23X 0.41X 0.43X 0.98X 0.54X 2.00X 1.17X 0.57X Historical FCF Conversion by Year1 2008 – 2017 Free Cash Flow1 ($M) 15 November 2018
Slide 15: Company Financial Targets
Company Financial Targets 16 November 2018 Valmont Industries, Inc. Financial Target Long-Term Goal Revenue Growth1 5% ̶ 10% EPS Growth > 10% ROIC > 10% FCF Conversion > 1.0x Net Earnings Operating Margin > 12% 1 5% organic. Acquisitions over time are necessary to achieve top end of range. New in 20
Slide 16: Why Valmont?
Why Valmont? Expanding Our View of Addressable Market to Leverage Existing Global Platform Management Team is Reshaping the Organization to Align with Growth Agriculture and Infrastructure Provide Good Investment Opportunities Sensible Capital Allocation and ROIC Focus Will Remain 17 November 2018 V
Slide 17: Thank You
THANK YOU 18 November 2018 Valmont Industries, Inc.
Slide 18: Appendix
APPENDIX 19 November 2018 Valmont Industries, Inc.
Slide 19: 2018 Operations Transformation and Restructuring
2018 Operations Transformation and Restructuring 2018 full-year estimated expenses of $27.0M $19.0M cash, $8.0M non-cash $17.7M of pre-tax expenses incurred through Q3 Most of the expenses are in the ESS segment, mainly in China and Australia Expected Realized Savings $8M in 2018 $8M in 2019 Remaind
Slide 20: Broad Global Footprint is a Competitive Differentiator
Manufacturing Facility Broad Global Footprint is a Competitive Differentiator 21 November 2018 Valmont Industries, Inc. #1 or #2 In All Market We Serve In Our Industries 2017 Revenue by Geography 67% AMERICAS 10% EMEA 23% APAC
Slide 21: Solutions That Support Agriculture and Infrastructure Growth
Solutions That Support Agriculture and Infrastructure Growth 22 November 2018 Valmont Industries, Inc. ENGINEERED SUPPORT STRUCTURES (ESS) UTILITY SUPPORT STRUCTURES (USS) COATINGS IRRIGATION Lighting and traffic structures Highway safety products Wireless communications products and components Indu
Slide 22: Fiscal 2017 Results
Fiscal 2017 Results 23 November 2018 Valmont Industries, Inc. Total Sales (in thousands) 2017 2016 Yr-Yr Change Engineered Support Structures $ 938,102 $ 906,719 3.5% Utility Support Structures 859,115 736,364 16.7% Coatings 318,891 289,481 10.2% Irrigation 652,430 575,204 13.4% Other 76,300 83,110
Slide 23: Leading With Innovative Products and Solutions
Leading With Innovative Products and Solutions 24 November 2018 Valmont Industries, Inc. CEC Substation Atmosphere™ Façade GalvTrac™ PyraMAX™ Valley Irrigation Exchange Valley SchedulingTM Drone Inspection ICON™ Smart Panels AgSense and BaseStation3™ Coatings Connector™ T h e N e w V a l l e y I C O
Slide 24: Elevating Our Commitment to Corporate Sustainability
Elevating Our Commitment to Corporate Sustainability Aggregating global data for improved measurement Green Teams in every facility Reductions in electricity consumption and landfill waste Elevating sustainability throughout our organization Enhanced global data analytics and metrics to establish an
Slide 25: 2018 Acquisitions YTD
2018 Acquisitions YTD 26 November 2018 Valmont Industries, Inc.
Slide 26: Reg G Reconciliation
Reg G Reconciliation 27 November 2018 Valmont Industries, Inc. VALMONT INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS (Dollars in thousands, except per share amounts) (unaudited) The non-GAAP tables below disclose the impact on (a) diluted
Slide 27: Reg G Reconciliation – Continued
Reg G Reconciliation – Continued VALMONT INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON OPERATING INCOME REG G RECONCILIATION (Continued) 1 Other non-recurring charges (pre-tax) in 2015 are the $17,000 provision for a Utility commercial settlement and the $
Slide 28: Reg G Reconciliation – Continued
Reg G Reconciliation – Continued 29 November 2018 Valmont Industries, Inc.
Slide 29: Reg G Reconciliation - Continued
Reg G Reconciliation - Continued Operating Income Reconciliation 13 Weeks Ended Sept 29, 2018 13 Weeks Ended Sept 30, 2017 39 Weeks Ended Sept 29, 2018 39 Weeks Ended Sept 30, 2017 Operating income - as reported 38,360 $ 60,090 $ 165,990 $ 203,196 $ Impairment of goodwill and tradename 15,780 - 15,7
Slide 30: Reg G Reconciliation - Continued
Reg G Reconciliation - Continued 13 Weeks Ended Sept 29, 2018 Diluted earnings per share 39 Weeks Ended Sept 29, 2018 Diluted earnings per share Net earnings attributable to Valmont Industries, Inc. - as reported 4,448 $ 0.20 $ 76,689 $ 3.40 $ Debt refinancing expenses, pre-tax 14,820 0.66 14,820 0.
Slide 31: Reconciliation of Adjusted EBITDA to GAAP Figures
Reconciliation of Adjusted EBITDA to GAAP Figures 32 November 2018 Valmont Industries, Inc. 1 Other non-recurring transactions in 2015 are the $7,003 allowance for doubtful accounts recorded in the Irrigation segment and the $17,000 accrual recorded for the utility commercial settlement. Earnings be
Slide 32: Calculation of Free Cash Flows
Calculation of Free Cash Flows 33 November 2018 Valmont Industries, Inc. We believe that Free Cash Flow is a useful performance measure for management and useful to investors as the basis for comparing our performance with other companies. Our measure of Free Cash Flow may not be directly comparable
Slide 33: Calculation of Free Cash Flows
y/ Calculation of Free Cash Flows Wie beteve that Free Cash Flow i a use perfomance measure for management and weft investors as the basis fo comparing ou performance wih oer companies. Out measure of Free ‘Gash Fow may not be dec comparable to siiar measures used by cher companies, 2008 200 FT or 7
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