Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q1 2016 Earnings Presentation
16 slides from Valmont Industries's earnings presentation, Apr 21, 2016
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 Benefits of restructuring and other productivity Improvements drive improved earnings despite lower revenues Revenues down 11%; 27% of the decline was foreign currency translation. Operating income rose 8% including $1.1 million negative foreign exchange impact. Operating income was 10.5% of net s
Slide 3: Financial Highlights
4 Dollars in millions except per share amounts 2015 2016 Percent Change Engineered Support Structures $178.9 $177.0 (0.5%) Utility Support Structures 176.3 144.5 (18.0% Coatings 74.3 68.5 (7.8%) Energy & Mining 88.1 72.4 (17.7%) Irrigation 174.6 158.5 (9.2%) Other 2.2 - Intersegment Sales (23.0) (24
Slide 4: Financial Highlights – Operating Income
5 Dollars in millions Operating Income 1Q 2015 Operating Income 1Q 2016 Increase /Decrease Operating Income Percent 1Q 2015 Operating Income Percent 1Q 2016 Engineered Support Structures $9.5 $14.2 48.6% 5.3% 7.9% Utility Support Structures 15.4 14.8 (3.8%) 8.7% 10.2% Coatings 11.0 11.4 3.8% 14.8% 1
Slide 5: Engineered Support Structures
6 Engineered Support Structures 2015 Revenue $170.8 Volume 6.7 Pricing/Mix (5.9) Acquisitions - Currency Translation (5.6) 2016 Revenue $166.0 North America Lighting and Traffic revenue stable Major European project sale last year did not repeat Asia Pacific benefitting from 4G wireless buildout in
Slide 6: Utility Support Structures
7 Utility Support Structures 2015 Revenue $176.1 Volume (16.5) Pricing/Mix (15.3) Acquisitions - Currency Translation - 2016 Revenue $144.3 Unfavorable mix comparisons to last year in terms of structure size More bid market work than last year Lower steel costs contributed significantly to decreased
Slide 7: Coatings
8 Coatings 2015 Revenue $61.8 Volume (1.4) Pricing/Mix (1.1) Acquisitions 1.9 Currency Translation (2.4) 2016 Revenue $58.8 Less internal utility and irrigation volumes Australia volumes below last year Lower zinc costs this quarter Construction on new Texas plant on schedule $ in millions Sales Net
Slide 8: Energy and Mining
9 Energy and Mining 2015 Revenue $88.1 Volume (9.1) Pricing/Mix (2.2) Acquisitions - Currency Translation (5.9) 2016 Revenue $70.8 Volume challenged in all markets due to energy and mining weakness Structures and rotor housing orders for offshore wind energy strong Growing access systems sales in ci
Slide 9: Irrigation
10 Irrigation 2015 Revenue $172.8 Volume (9.6) Pricing/Mix (0.5) Acquisitions - Currency Translation (6.0) 2016 Revenue $156.7 US Net Farm Income down 37% to $56.4 billion, below 10 year average Solid capacity and operational management International markets benefit from diversification and projects
Slide 10: Free Cash Flow – Improved Over 2015 and > Net Income
11 2015 2016 Change Net Income $31.5 $34.2 $2.7 Deprec/Amort 23.9 20.6 (3.3) Working Capital Reduction 4.7 16.4 11.7 Other (4.6) 9.3 14.9 Operating CF 55.5 80.5 25.0 CapEx (16.6) (14.0) 2.6 Free Cash Flow $38.9 $66.5 $27.5 Free Cash Flow – Improved Over 2015 and > Net Income No pension plan contribu
Slide 11: Balance Sheet – 1Q 2016
1Q 2016 Actual Credit Rating 12 Balance Sheet – 1Q 2016 Goal: Maintain Investment-grade rating; Keep Debt/EBITDA from 1.5 to 2.5x Free Cash Flow $66.5M Q1 Cash At 03/31 $388M ($307 Ex. US) Total Debt $760M Debt/Adjusted EBITDA 2.71x Adjusted S&P BBB+ Negative Moody’s Baa3 Stable See the Company’s Re
Slide 12: Summary – Positive Q1 Comparisons Despite Headwinds
13 Improved Profitability and EPS Despite Top-Line Challenges Positive Effects from Restructuring and Productivity Improvements Utility segment returned to double-digit operating profit Good quality of earnings in Irrigation despite lower sales Strong Balance Sheet and Liquidity Free Cash Flow Excee
Slide 13: Operating Income Reconciliation
Unaudited and in 000's For the Fi rst Quarter Ended March 28, 2015 Engineered Support Structures Utility Support Structures Other/ Corporate Energy & Mi ni ng Segment Operating Inco me Reco nciliatio n Co atings Irrigatio n TOTAL Operating income (loss) - as reported $ 9,450 $ 4,366 $ 15,357 $ 10,99
Slide 14: Valmont – Recast 2015 Segment Figures (Cont.)
15 Valmont – Recast 2015 Segment Figures (Cont.) Valmont – Recast 2015 Segment Figures (Cont.) For the Fourth Quarter Ended Dec. 26, 2015
Slide 15: Valmont – Calculation of Adjusted EBITDA and Leverage Ratio
16 Valmont – Calculation of Adjusted EBITDA and Leverage Ratio Valmont – Calculation of Adjusted EBITDA and Leverage Ratio Adjusted EBITDA 280,824
Slide 16: Valmont – Calculation of Adjusted EBITDA and Leverage Ratio
Valmont — Calculation of Adjusted EBITDA and Leverage Ratio Debt Coverage Calculation 1T™ Mareh 26, Net eamings attributable to Valmont Industries, Ine Interest expense Income tax expense Depreciation and amortization expense EBITDA 219,018 Impairment of goodwill and intangible assets 41,970 Impairm