Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q1 2021 Earnings Presentation
33 slides from Valmont Industries's earnings presentation, Apr 22, 2021
Slide 1: First Quarter Earnings Presentation
Valmont Industries, Inc. First Quarter Earnings Presentation April 22, 2021 © 2021 Valmont® Industries, Inc.
Slide 2: 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 3: Steve Kaniewski, President & Chief Executive Officer
STEVE KANIEWSKI PRESIDENT & CHIEF EXECUTIVE OFFICER 3 April 22, 2021 | Valmont Industries, Inc. | 1Q 2021 Earnings Presentation
Slide 4: 1Q 2021 Segment Sales and Segment Summaries
1Q 2021 Segment Sales and Segment Summaries TOTAL 1Q 2021 SALES: $774.9M $253.1M $222.3M $93.3M $229.7M Utility Support Engineered Support Coatings Irrigation Structures Structures N.A.: $122.8M | International: $106.9M 32.7% of Sales 28.7% of Sales 12.0% of Sales 29.6% of Sales SEGMENT SUMMARIES •
Slide 5: Update on American Jobs Plan
Update on American Jobs Plan • Announced in March 2021 by President Biden with an estimated value >$2.0T • Multi-year stimulus package allocates − $620B to modernize roads, bridges and highways − $100B to electrical grid investments − $100B to high-speed broadband investments • Areas of increased em
Slide 6: Engraining ESG in Our DNA
Engraining ESG in Our DNA • Published Annual Sustainability Report in March 2021 • Announced 2025 Sustainability Goals − Carbon Intensity − Global Electricity − Global Combustion Fuel − Water Standards • Earth Day celebration: commemorating installation of 1-megawatt solar field at Valley, NE campus
Slide 7: Avner Applbaum, EVP & Chief Financial Officer
AVNER APPLBAUM EVP & CHIEF FINANCIAL OFFICER 7 April 22, 2021 | Valmont Industries, Inc. | 1Q 2021 Earnings Presentation
Slide 8: 1Q 2021 Financial Summary
1Q 2021 Financial Summary $M, except for per share amounts Sales Operating Income Diluted EPS 14.9% 15.4% 29.1% $774.9 $77.2 $2.57 $66.9 $1.99 $674.2 2021 2020 2021 2020 • Significantly higher sales in Irrigation and Utility • Operating income growth driven by: • Higher operating income and a favora
Slide 9: 1Q 2021 Results | Utility Support Structures
1Q 2021 Results | Utility Support Structures ($M) Key Statistics Sales Operating Income 2020 Sales1 $ 222.9 13.3% (21.9%) Volume 31.5 $252.7 $27.7 Pricing/Mix (5.7) $222.9 $21.7 Acquisitions/Divestiture 2.2 Currency Translation 1.8 2021 Sales1 $ 252.7 2021 2020 2021 2020 COMMENTARY • Higher volumes
Slide 10: 1Q 2021 Results | Engineered Support Structures
1Q 2021 Results | Engineered Support Structures ($M) Key Statistics Sales Operating Income 2020 Sales1 $ 227.4 (2.3%) 25.1% Volume (19.2) $222.2 $227.4 $19.9 Pricing/Mix 5.4 $15.9 Acquisitions/Divestiture - Currency Translation 8.6 2021 Sales1 $ 222.2 2021 2020 2021 2020 COMMENTARY • Higher wireless
Slide 11: 1Q 2021 Results | Coatings
1Q 2021 Results | Coatings ($M) Key Statistics Sales Operating Income 2020 Sales1 $ 68.6 4.4% 16.4% Volume (3.4) $71.6 $12.9 $68.6 $11.1 Pricing/Mix 3.1 Acquisitions/Divestiture - Currency Translation 3.3 2021 Sales1 $ 71.6 2021 2020 2021 2020 COMMENTARY • Segment continues to improve with general e
Slide 12: 1Q 2021 Results | Irrigation
1Q 2021 Results | Irrigation ($M) Key Statistics Sales Operating Income 2020 Sales1 $ 155.3 15.6% 113.1% 63.7% $121.5 $38.7 Volume 58.9 $105.1 $106.9 $23.7 Pricing/Mix 15.5 $50.2 Acquisitions/Divestiture 4.8 Currency Translation (6.1) North America International 2021 Sales1 $ 228.4 2021 2020 2021 20
Slide 13: 1Q 2021 Cash Flow Highlights
1Q 2021 Cash Flow Highlights 1Q Cash Flow | FCF Reconciliation Cash and Debt Highlights YTD ($M) Net Cash Flows from Operating Activities $ 3/27/2021 33.2 $391.5M Net Cash Flows from Investing Activities (29.3) ($197.1M ex-U.S.) Cash at 3/27/2021 Net Cash Flows from Financing Activities (10.7) Net C
Slide 14: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation 2021 YTD Capital Deployment: $49M • 2021 CapEx expected to be $110M - $120M Capital • Investments to support strategic growth initiatives and Expenditures Growing Our $28 Industry 4.0 advanced manufacturing Business • Strategic fit + market expansion Acquisiti
Slide 15: Strong Balance Sheet and Liquidity to Endure COVID-19 Uncertainty
Strong Balance Sheet and Liquidity to Endure COVID-19 Uncertainty AS OF MARCH 27, 2021 Cash $391.5M Available Credit under Revolving Credit Facility2 $585.4M Total Debt (Long-term) $729.6M Cash $391.5M Shareholders’ Equity $1,250.1M Total Available Liquidity $976.9M Total Debt to Adj. EBITDA1 2.1x N
Slide 16: 2Q 2021 / Full Year 2021 Outlook and Key Assumptions
2Q 2021 / Full Year 2021 Outlook and Key Assumptions 2Q21 OUTLOOK1 FY21 OUTLOOK1 KEY ASSUMPTIONS • Favorable foreign currency translation impact of ~2% of Net $805M – $830M 9% – 14% Sales Net Sales, an increase of Increase in Net Sales 17% - 20% YoY YoY • In Utility Support Structures, significant r
Slide 17: 2021 Segment Market Trends
2021 Segment Market Trends • Strong backlog provides good visibility • Expect quality of earnings to improve beginning in 2Q USS • Contractual increases in selling prices will begin offsetting steel cost inflation; expect a meaningful improvement in gross profit margins to accelerate in the 2H21 as
Slide 18: Fundamental Market Drivers Remain Resilient
Fundamental Market Drivers Remain Resilient USS ESS COATINGS IRRIGATION • Record backlog demonstrates ongoing • Short-term market softness in • Closely following industrial production • Net farm income improvements have demand and necessity for renewables, transportation trends and general economic
Slide 19: Summary
Summary Execution focus and benefit of positive market tailwinds across businesses have 01 led to a great start to 2021 – expected to extend into 2022 Expect solid operating performance and strong EPS accretion in 2021; managing 02 through current inflationary environment very well through proactive
Slide 20: Q&A
Q&A 20 April 22, 2021 | Valmont Industries, Inc. | 1Q 2021 Earnings Presentation
Slide 21: Appendix
APPENDIX 21 April 22, 2021 | Valmont Industries, Inc. | 1Q 2021 Earnings Presentation
Slide 22: 1Q 2021 Financial Summary
1Q 2021 Financial Summary $M, except for per share amounts Net Sales 2021 2020 Change Engineered Support Structures $ 222.3 $ 230.7 (3.6%) Utility Support Structures 253.1 225.5 12.3% Coatings 93.3 88.1 5.9% Irrigation 229.7 156.7 46.5% Intersegment Sales (23.5) (26.8) NM Net Sales $ 774.9 $ 674.2 1
Slide 23: Steel Material Index Trends 2020-2021 YTD
Steel Material Index Trends 2020-2021 YTD The steel material index has increased 131.1% from its lowest point (515.0) in 2020 to the current 1190.0 level recorded this week. Source: FastMarketsAMM. 23 April 22, 2021 | Valmont Industries, Inc. | 1Q 2021 Earnings Presentation
Slide 24: State Transportation Investment Funding Measures
State Transportation Investment Funding Measures • State legislators in 32 states introduced 113 transportation funding measures in the first two months of 2021 • Funding Approved in 2021 Sessions: $16,500,008,000 • 31 one-time funding bills. 17 reoccurring revenue bills • 20 bills to increase gas t
Slide 25: State Transportation Investment Funding Measures by Type
State Transportation Investment Funding Measures by Type Source: Transportation Investment Advocacy Center 25 April 22, 2021 | Valmont Industries, Inc. | 1Q 2021 Earnings Presentation
Slide 26: 5G Adoption Forecast and Capex Spend Post-COVID
5G Adoption Forecast and Capex Spend Post-COVID Source: GSM Association 26 April 22, 2021 | Valmont Industries, Inc. | 1Q 2021 Earnings Presentation
Slide 27: U.S. Net Farm Income
U.S. Net Farm Income Net Farm Income w/ Government Payments 140 121 120 111 100 93 82 83 82 76 75 80 62 86 60 ($B) 83 61 71 68 64 40 49 46 20 22 25 10 11 13 12 14 0 2014 2015 2016 2017 2018 2019 2020F 2021F Dir. Gov't Payments NFI, less Gov't Payments Source: USDA Farm Income Data, Updated February
Slide 28: U.S. Commodity Price Trends and Forecast
U.S. Commodity Price Trends and Forecast US CORN - $/bu US SOYBEANS - $/bu $6.00 Since August 1st 2020 $15.00 $5.50 $14.00 $5.00 • Corn up +85% $13.00 $4.50 • Soybeans up +60% $12.00 $11.00 $4.00 • Cotton up +30% $10.00 $3.50 • Wheat up +30% $9.00 $3.00 $8.00 $2.50 $7.00 $2.00 $6.00 Jul-20 Aug-20 Se
Slide 29: US Commodity Price Trends, July 2020 – Apr 2021
US Commodity Price Trends, July 2020 – Apr 2021 Source: Investing.com. 29 April 22, 2021 | Valmont Industries, Inc. | 1Q 2021 Earnings Presentation
Slide 30: U.S. Net Cash Farm Income by Year
U.S. Net Cash Farm Income by Year Source: USDA, American Farm Bureau Federation 30 April 22, 2021 | Valmont Industries, Inc. | 1Q 2021 Earnings Presentation
Slide 31: 2011-2020 Historical Free Cash Flow
2011-2020 Historical Free Cash Flow1 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 ($M) Net cash flows from operating activities $ 149.7 $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 Net cash flows from investing activities (84.1) (136.7) (131.7) (256.9) (48.2) (53.0) (
Slide 32: Strong Free Cash Flow throughout the Cycle
Strong Free Cash Flow throughout the Cycle 2011 – 2020 Free Cash Flow1 ($M) Years of rapid raw material cost inflation 290 227 210 210 175 10-yr Avg. $154M GAAP 1.34X 100 101 Adj. 0.91X 78 81 67 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Historical FCF Conversion by Year1 GAAP 0.29X 0.43X 1.0
Slide 33: Calculation of Adjusted EBITDA and Leverage Ratio
Calculation of Adjusted EBITDA and 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 quarte