Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q3 2023 Earnings Presentation
36 slides from Valmont Industries's earnings presentation, Oct 26, 2023
Slide 1: 3Q 2023 Earnings Presentation
3Q 2023 Earnings Presentation October 26, 2023
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: CEO Opening Comments
CEO Opening Comments Avner Applbaum President and CEO
Slide 4: 3Q 2023 Financials and Key Messages
3Q 2023 Financials and Key Messages $1.05B (4.3%) (2.3%) 11.5% ($2.34) $4.12 $81M $44M Net Sales Y/Y Net Sales Operating Margin Adj. Operating Margin1 GAAP Diluted EPS Adj. Diluted EPS1 Operating Cash Flow Cash Returned to Shareholders The global Valmont team continued to perform well, delivering so
Slide 5: Performing Well in Current Market Conditions
Performing Well in Current Market Conditions Infrastructure Agriculture • Benefiting from several long-term, secular growth drivers • U.S. net farm income levels are expected to be relatively strong; however, as farmers see a decline from the substantial profit margins seen in 2021 • Utilities incre
Slide 6: Aligning Organization to Strategy and Improving Cost Structure
Aligning Organization to Strategy and Improving Cost Structure Reorganization and Early Retirement Program Ag Tech Impairment • Create synergies and optimize our support structure for scale • Slower adoption rate of Prospera’s agronomy technology solutions; near-term softness in North America • Simp
Slide 7: Aligned Around Core Strategic Priorities
Aligned Around Core Strategic Priorities Executive Leadership Team Delivering Profitable Growth • Leveraging our competitive advantages that have enabled us to be the trusted partner of choice • Grow through natural adjacencies and geographic expansion Avner M. Applbaum Timothy P. Francis Diane M. L
Slide 8: Financial Results and Outlook
Financial Results and Outlook Tim Francis Interim CFO
Slide 9: 3Q 2023 Financial Summary
3Q 2023 Financial Summary • Infrastructure sales comparable to last year, offset by lower Agriculture sales GAAP Adjusted1 • GAAP operating margin decreased to (2.3%); Adjusted1 operating margin increased to 11.5% $M, except EPS 3Q 2023 3Q 2022 Y/Y 3Q 2023 3Q 2022 Y/Y reflecting higher pricing and d
Slide 10: 3Q 2023 Results | Infrastructure
3Q 2023 Results | Infrastructure Sales ($M) Operating Income ($M) -0.1% GAAP: +11.8% Adjusted1: -+16.8% $108.0 $755.5 $755.1 $103.4 • Sales comparable to last year driven by higher volumes in Solar, L&T, and TD&S $92.5 $92.5 • Lower Telecom volumes and lower pricing 12.3% 13.7% 12.3% 14.3% associate
Slide 11: 3Q 2023 Results | Agriculture
3Q 2023 Results | Agriculture Sales ($M) Operating Income ($M) -8.8% GAAP: NM Adjusted1: -18.8% • Sales down 8.8% as higher International $327.3 volumes were more than offset by lower North $43.3 $47.4 $38.5 America volumes $298.5 13.3% 14.6% 13.0% • North America sales were lower as farmer 2022 202
Slide 12: YTD Cash Flow Highlights
YTD Cash Flow Highlights $M YTD 09/30/2023 Net Cash Flows from Operating Activities $ 191 Net Cash Flows from Investing Activities (89) Net Cash Flows from Financing Activities (111) Net Cash Flows from Operating Activities $ 191 Purchase of Property, Plant, & Equipment (71) Free Cash Flows $ 120 Di
Slide 13: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation 2023 Year-to-Date Capital Deployment: $307M Growing Our Business Returning Cash To Shareholders $71M $32M $167M $37M Capital Expenditures Acquisitions Share Repurchases Dividends • Q3 Capex of $26M as we • Targeting high growth • Q3 Share Repurchase of • Q3 Di
Slide 14: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity • Long-term debt mostly fixed- rate, with long-dated maturities to 2044 and 2054 • Total Debt to Adjusted As of September 30, 2023 EBITDA remains within our Cash $173 M desired range of 1.5 to 2.5 times Total Long-Term Debt $977 M Shareholders' Equity $1,559 M • St
Slide 15: Updated Full Year 2023 Outlook and Key Assumptions
Updated Full Year 2023 Outlook and Key Assumptions2 Previous Outlook with Revised Outlook1 Key Assumptions Updated Adjustments1 • The previous adjusted EPS outlook has been updated to 0%––7% 4% 2% (3%) – (4%) remove the adjustments associated with the Prospera Increase IncreaseinInNet NetSales Sales
Slide 16: Valmont Team is Executing Our Strategy and Performing Well in Dynamic Market
Valmont Team is Executing Our Strategy and Performing Well in Dynamic Market Controlling what we can control to maximize financial performance • Streamlining the organization to align with our strategy • Fully realize benefits of ongoing strategic initiatives • Enable a more efficient and effective
Slide 17: CONSERVING RESOURCES. IMPROVING Lire: Valmont
CONSERVING RESOURCES. IMPROVING Lire: Valmont
Slide 18: Appendix
Appendix CONSERVING RESOURCES. IMPROVING Lire’ Valmont V
Slide 19: U.S. Electric Utilities Capital Expenditures
U.S. Electric Utilities Capital Expenditures Source: EEI Finance Department, member company reports, and S&P Global Market Intelligence (updated July 2023). 19
Slide 20: 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 21: 5G Adoption and Capex Spend Forecasts
5G Adoption and Capex Spend Forecasts Source: GSMA Intelligence- The Mobile Economy 2023 21
Slide 22: U.S. Net Cash Farm Income by Year
U.S. Net Cash Farm Income by Year Source: USDA (August 31, 2023) 22
Slide 23: U.S. Drought Condition
U.S. Drought Condition Source: Drought Monitor (October 17, 2023) 23
Slide 24: Steel Material Index Trends 2020-2023 YTD
Steel Material Index Trends 2020-2023 YTD • The spike in steel costs during the first four months of the year is expected to slightly reduce our Infrastructure operating income margin for the second half of the year compared to the strong second quarter results • Cost changes impact TD&S the most be
Slide 25: 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 tables below disclose the impact of impairment of long-lived assets, realignment charges, intangible asset amortization (Prospera), and stock-based compensation re
Slide 26: 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 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 tables below disclose the impact of intangible asset amortization (Prospera) and stock-based compensation recognized for the Prospera employees on fiscal 2022 resu
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 intangible asset amortization (Prospera) and stock-based compensation recognized for the Prospera employees on fiscal 2022 results. We believe the adjust
Slide 29: Reconciliation of Forecasted GAAP and Adjusted Earnings
Reconciliation of Forecasted GAAP and Adjusted Earnings Dollars in thousands, except per share amounts The non-GAAP tables below disclose the impact on the range of estimated diluted earnings per share of the (1) impairment of long-lived assets, (2) realignment charges, and (3) non-recurring tax ben
Slide 30: Reconciliation of Forecasted GAAP and Adjusted Earnings
Reconciliation of Forecasted GAAP and Adjusted Earnings Dollars in thousands, except per share amounts The non-GAAP tables below disclose the impact on the range of estimated diluted earnings per share of the (1) amortization of intangible assets (Prospera) and (2) stock-based compensation for Prosp
Slide 31: Reconciliation of Forecasted GAAP and Adjusted Earnings
Reconciliation of Forecasted GAAP and Adjusted Earnings Dollars in thousands, except per share amounts The non-GAAP tables below disclose the impact on the range of estimated diluted earnings per share of the (1) amortization of intangible assets (Prospera) and (2) stock-based compensation for Prosp
Slide 32: Reconciliation of Excluding Other Segment Net Sales
Reconciliation of Excluding Other Segment Net Sales Dollars in thousands Excluding Other segment net sales from the third quarter and first three quarters of fiscal 2022, which we refer to in this reconciliation as “Adjusted Net Sales” is a non-GAAP measure. The Other segment net sales were generate
Slide 33: Reconciliation of Adjusted Effective Tax Rate
Reconciliation of Adjusted Effective Tax Rate 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. Adjusted Effective Tax Rate should
Slide 34: 2013 – 2022 Historical Free Cash Flow
2013 – 2022 Historical Free Cash Flow1,2 Dollars in millions 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Net cash flows from operating activities $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 $ 65.9 $ 326.3 Net cash flows from investing activities (131.7) (256.9) (48.2) (53.0
Slide 35: Strong Free Cash Flow throughout the Cycle
Strong Free Cash Flow throughout the Cycle Dollars in millions 2013 – 2022 Free Cash Flow1 350 Years of rapid raw material cost inflation 300 290 250 227 233 210 210 200 175 156 150 101 10-yr Avg. $156M 100 78 81 GAAP 1.33X 50 Adj. 0.83X - (50) (42) (100) 2013 2014 2015 2016 2017 2018 2019 2020 2021
Slide 36: 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/Adjusted EBITDA may not exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions) of