Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q3 2024 Earnings Presentation
32 slides from Valmont Industries's earnings presentation, Oct 23, 2024
Slide 1: Q3 2024 Earnings Presentation
Q3 2024 Earnings Presentation October 23, 2024 © 2024 Valmont® Industries, Inc.
Slide 2: Today's Agenda
Today’s Agenda • Q3 2024 Results & Key Messages • Current Market Dynamics & Long-term Megatrends • 2024 Outlook & Guidance • Q&A 2 October 23, 2024 | Valmont Industries, Inc.
Slide 3: Disclosure Regarding Forward-Looking Statements
Disclosure Regarding Forward-Looking Statements 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 f
Slide 4: CEO Opening Comments
CEO Opening Comments Avner Applbaum, President & CEO 4 October 23, 2024 | Valmont Industries, Inc.
Slide 5: Q3 2024 Results and Key Messages
Q3 2024 Results and Key Messages NET SALES $1.02B OPERATING MARGIN 12.3% OPERATING CASH FLOWS DOWN 2.9% Y/Y UP Y/Y $225 MILLION The global Valmont team delivered solid performance including year- over-year growth in operating profit and operating margin, and strong operating cash flows Serving marke
Slide 6: Infrastructure Market Drivers
Infrastructure Market Drivers Steady-to-improving near-term demand across our markets, with positive long-term drivers Near-Term Demand Global Megatrends Sustained and elevated Utility capex to support grid hardening initiatives, power load growth, and the energy transition Lighting and Transportati
Slide 7: Agriculture Market Drivers
Agriculture Market Drivers Outlook for sustained long-term growth remains strong, despite short-term demand headwinds Near-Term Demand Global Megatrends North American grower sentiment remains muted due to expected net farm income decline this year and the downward trend in grain prices Brazilian ex
Slide 8: Experienced Executive Leadership Team
Experienced Executive Leadership Team The right team in place to lead Valmont forward and further advance execution of our strategy Avner M. Applbaum Thomas Liguori Diane M. Larkin J. Timothy Donahue Darryl R. Matthews President & Chief EVP, Chief Financial EVP, Global Group President, Group Preside
Slide 9: Financial Results and Outlook
Financial Results and Outlook Tom Liguori, EVP & CFO 9 October 23, 2024 | Valmont Industries, Inc.
Slide 10: Q3 2024 Financial Summary
Q3 2024 Financial Summary • Net sales decreased 2.9% compared to last year as growth in Infrastructure was offset by softer demand in Agriculture GAAP Adjusted2 • Operating margin expanded on $M, except EPS Q3 2024 Q3 2023 % Q3 2023 % commercial and operational execution demonstrated by pricing Net
Slide 11: Q3 2024 Results | Infrastructure
Q3 2024 Results | Infrastructure • Utility volumes were significantly higher due to favorable project mix Sales ($M) Operating Income ($M) and higher volumes of distribution +0.5% GAAP: +19.6% Adjusted1: +14.5% and substation products $123.7 $123.7 • Lower L&T volumes were driven by $758.6 $755.1 li
Slide 12: Q3 2024 Results | Agriculture
Q3 2024 Results | Agriculture Sales ($M) Operating Income ($M) • North America volumes were slightly -11.1% GAAP: NM Adjusted1: -25.0% lower due to continued muted grower $28.9 $28.9 $38.5 sentiment, partially offset by storm $298.5 replacement orders; average $265.3 11.0% 11.0% 13.0% irrigation sel
Slide 13: Building Solid Financial Foundation
Building Solid Financial Foundation • Q3 2024 Operating Cash Flows were $225 Million, bringing our YTD Operating Cash Flows to $379 Million • During the quarter we reduced borrowings on our revolving line of credit by $120M, and Net Debt to Adjusted EBITDA1 is 1.2 times Free Cash Flows ($M) YTD 9/28
Slide 14: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation 2024 Year-to-Date Capital Deployment: $145M Growing Our Business Returning Cash to Shareholders $54M N/A $55M $36M Capital Expenditures Acquisitions Share Repurchases Dividends • We continue to invest in • Targeting opportunities that fit • ~$81M remains on th
Slide 15: Reaffirming 2024 Outlook & Providing Key Assumptions
Reaffirming 2024 Outlook & Providing Key Assumptions (3.5%) – (1.5%) $16.50 – $17.30 Change In Net Sales Y/Y GAAP Diluted EPS Segment Assumptions Key Assumptions No change from prior outlook: Effective tax rate expected to be slightly below 26.0% Infrastructure: • Net sales expected to be Flat to up
Slide 16: CFO Closing Comments
CFO Closing Comments Tom Liguori, EVP & CFO 16 October 23, 2024 | Valmont Industries, Inc.
Slide 17: Q&A
Q&A 17 October 23, 2024 | Valmont Industries, Inc.
Slide 18: Appendix
Appendix 18 October 23, 2024 | Valmont Industries, Inc.
Slide 19: Committed to Long-Term Financial Targets
Committed to Long-Term Financial Targets Net Sales Operating Return on Invested Net Earnings Growth1 Margin Capital FCF Conversion Approaching MSD+ Mid-Teens High-Teens 100% Serving markets with Strategic pricing to align A disciplined and efficient Managing net working positive growth outlook with
Slide 20: Steel Material Index Trends
Steel Material Index Trends AMM Steel Material Index National Mills Carbon Grade Cut to Length and Coiled / Hot Rolled Plate Average • The contractual price impact 2020 through 2024 YTD from steel index deflation has led to lower revenues during 2024 which are expected to continue into 2025 • Steel
Slide 21: Utility Industry Capital Expenditures
Utility Industry Capital Expenditures Chart represents total company spending of U.S. Investor-Owned Electric Utilities, consolidated at the parent or appropriate holding company. At the industry level, CapEx tends to be overestimated for the current, or first, year’s projection and underestimated f
Slide 22: Infrastructure Investment and Jobs Act (IIJA)
Infrastructure Investment and Jobs Act (IIJA) Infrastructure Investment and Jobs Act Spending Breakdown (In Order - Most to Least) Previously-Passed Transportation Funding | $650B Roads, Bridges and Related Programs | $111B Energy, Power and Electric Grid Reliability | $107.5B Freight and Passenger
Slide 23: Wireless Carrier Spending
Wireless Carrier Spending US Wireless CapEx & 5G Auction Spend (US$ billions, 2019-2026E) 140 Auction 107: C-Band (3.7 GHz) Auction 110: 3.45 GHz Band 120 100 Auction 108: 2.5 GHz Band 80 60 Auction 105: 3.5 GHz Band 40 20 0 2019 2020 2021 2022 2023 2024e 2025e 2026e The data does not include invest
Slide 24: Single Family Housing Starts Market Forecast
Single Family Housing Starts Market Forecast $350 $300 $250 $200 Billions $150 $100 $50 $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Actual Starts Current Forecast Previous Forecast Source: CMD Forecast Data Updated February 2024 24 October 23, 2024 | Valmo
Slide 25: U.S. Net Cash Farm Income by Year
U.S. Net Cash Farm Income by Year Source: USDA Updated September 5, 2024 25 October 23, 2024 | Valmont Industries, Inc.
Slide 26: U.S. Drought Condition
U.S. Drought Condition Source: Drought Monitor Updated October 15, 2024 26 October 23, 2024 | Valmont Industries, Inc.
Slide 27: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures Dollars in thousands, except per-share amounts The non-GAAP table below discloses the impact of impairment of goodwill and other intangible assets, realignment charges, intangible asset amortization (Prospera), and stock- b
Slide 28: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures Dollars in thousands The non-GAAP tables below disclose the impact of impairment of long-lived assets, realignment charges, intangible asset amortization (Prospera), and stock-based compensation recognized for the Prospera
Slide 29: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures Dollars in thousands Excluding significant non-recurring items from the third quarter of fiscal 2023 from the calculation of effective tax rate, which we refer to as “Adjusted Effective Tax Rate”, is a non- GAAP measure. Ad
Slide 30: Historical Free Cash Flow (2014 – 2023)
Historical Free Cash Flow1,2 (2014 – 2023) Dollars in millions 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Net cash flows from operating activities $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 $ 65.9 $ 326.3 $ 306.8 Net cash flows from investing activities (256.9) (48.2) (53.0) (49.
Slide 31: Free Cash Flow Throughout the Cycle
Free Cash Flow Throughout the Cycle Dollars in millions 2014 – 2023 Free Cash Flow1 Years of rapid raw material cost inflation 350 300 250 227 233 210 210 210 200 175 148 10-yr Avg. $148M 150 GAAP 1.37X 101 100 78 81 Adj. 0.87X 50 - (50) (42) (100) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1
Slide 32: Calculation of Adjusted EBITDA and Leverage Ratio
Calculation of Adjusted EBITDA and Leverage Ratio Dollars in thousands Certain of our debt agreements contain covenants that require us to maintain certain coverage ratios. Our Debt to Adjusted EBITDA may not exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions)