Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q1 2017 Earnings Presentation
13 slides from Valmont Industries's earnings presentation, Apr 20, 2017
Slide 1: Forward-looking Statement Disclosure
2 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 could cause the actual results of
Slide 2: First Quarter Highlights
3 Net Sales grew 7% with increases in all segments1 Utility Support Structures revenues increased 21% Operating income grew 3% Operating income as a percent of sales is 10.1% in 2017 compared to 10.5% in 2016 GAAP Diluted earnings per share increase 18.6% from $1.45 to $1.72 Reconfirm fiscal 2017 ea
Slide 3: Financial Highlights—First Quarter
4 NET SALES Dollars in millions except per share amounts 2017 2016 Percent Change Engineered Support Structures $180.6 $176.9 2.0% Utility Support Structures 174.6 144.5 20.8% Coatings 73.5 68.6 7.1% Energy & Mining 78.0 72.5 7.6% Irrigation 167.2 158.5 5.5% Intersegment Sales (36.4) (24.4) NM Net S
Slide 4: Financial Highlights Operating Income
5 Dollars in millions Operating Income 1Q 2017 Operating Income 1Q 2016 Increase /Decrease Operating Income Percent 1Q 2017 Operating Income Percent 1Q 2016 Engineered Support Structures $9.2 $12.5 (26.4%) 5.2% 7.1% Utility Support Structures 22.7 14.4 NM 13.0% 10.0% Coatings 9.4 11.4 (17.5%) 12.8%
Slide 5: Engineered Support Structures
6 Engineered Support Structures 2016 Revenue $166.0 Volume (4.6) Pricing/Mix 1.0 Acquisitions - Currency Translation (2.0) 2017 Revenue $160.4 Slightly lower traffic and lighting sales volumes in North America and EMEA. Wireless communication sales increased with North America volume improvements of
Slide 6: Utility Support Structures
7 Utility Support Structures 2016 Revenue $144.3 Volume 28.1 Pricing/Mix 2.0 Acquisitions - Currency Translation - 2017 Revenue $174.4 Sales volume increased in both steel and concrete in North America. Higher cost of steel also partially contributed to increase in sales. Operating income increased
Slide 7: Coatings
8 Coatings 2016 Revenue $58.8 Volume (4.0) Pricing/Mix 4.1 Acquisitions - Currency Translation 0.4 2017 Revenue $59.3 Lower external sales volumes were primarily attributed to the solar/alternative energy customer base. Greater sales mix of intercompany volumes Lower operating income attributed to:
Slide 8: Energy and Mining
9 Energy and Mining 2016 Revenue $70.8 Volume 5.1 Pricing/Mix 1.3 Acquisitions - Currency Translation 0.8 2017 Revenue $78.0 Access Systems and Grinding Media sales increased; rising iron ore prices a favorable driver Offshore wind energy demand solid with increased sales volumes Operating income in
Slide 9: Irrigation
10 Irrigation 2016 Revenue $156.7 Volume 5.6 Pricing/Mix (1.6) Acquisitions - Currency Translation 4.7 2017 Revenue $165.4 International markets benefit from stronger Latin American demand North America sales increased slightly in Q1 2017 as compared to 2016 Industry pricing conditions remain compet
Slide 10: Free Cash Flow and Conversion – 2017 & 2016
Free Cash Flow and Conversion – 2017 & 2016 11 2017 2016 Operating Cash Flow $36.0 $80.5 CapEx (14.2) (14.0) Free Cash Flows $21.8 $66.5 Net Earnings $39.0 $33.0 Free Cash Flows to Net Earnings 0.6 2.0 Stated Goal – 1.0X Investment in working capital arising from increase in sales resulted in lower
Slide 11: Balance Sheet – 1Q 2017
1Q 2017 Actual Credit Rating 12 Balance Sheet – 1Q 2017 Goal: Maintain Investment-grade rating; Keep Debt/EBITDA from 1.5 to 2.5x Free Cash Flow $22M YTD Cash At 4/1/2017 $425M ($327 Ex. US) Total Debt $757M Debt/Adjusted EBITDA* 2.29X Adjusted S&P BBB+ Negative Moody’s Baa3 Stable * See the Company
Slide 12: Calculation of Adjusted EBITDA & Leverage Ratio
Valmont – Calculation of Adjusted EBITDA & Leverage Ratio 13 Last 4 fiscal quarters (March 27, 2016 to April 1, 2017) TTM 1 4/1/2017 Net earnings attributable to Valmont Industries, Inc. $179,242 Interest expense 42,386 Income tax expense 41,156 Depreciation and amortization expense 82,645 EBITDA 34
Slide 13: Calculation of Adjusted EBITDA & Leverage Ratio
Valmont - Calculation of Adjusted EBITDA & Leverage Ratio TM? 4/1/2017 Net earnings attributable to Valmont Industries, Inc. $179,242 Interest expense 42,386 Income tax expense 41,156 Depreciation and amortization expense 82,645 EBITDA 345,429 Reversal of contingent liability (16,591) Impairment of