Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — CJS Investor Conference "New Ideas for the New Year" 2018
33 slides from Valmont Industries's conference presentation, Jan 9, 2018
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: Valmont Snapshot
Valmont Snapshot Focused On Agriculture And Infrastructure End Markets Market-Cap $3.7 B* 2016 Sales $2.5 B Global Footprint 84 Manufacturing Sites in 23 Countries Employees ~10,000, Including 500 Engineers #1 or #2 in All of Our Markets 2016 Revenue 3 *Market-Cap as of 12/31/2017 61% 13% 11% 10% 5%
Slide 3: Valmont Business Model
Valmont Business Model TOTAL VALUE IMPACT FOCUS TVI NICHE MARKETS LEVERAGE PRODUCTS, MARKETS, CAPABILITIES GLOBAL MINDSET/ FOOTPRINT ENGINEERING OPERATIONAL FOCUS CULTURE &TALENT GROWTH DISCIPLINE COMPETITIVE STRENGTHS Strong, Global, Enduring Drivers Expand Global Reach VALUE CREATION 4
Slide 4: We Offer Solutions to World Scale Problems
We Offer Solutions to World Scale Problems Economic Growth Requires Quality Infrastructure Center Pivot Irrigation Equipment Technology (Telemetry, Big Data) and Services Lighting and Traffic Poles Wireless Communication Structures Utility Structures Access Systems Corrosion Protection Agriculture N
Slide 5: Irrigation
Irrigation 6 Agriculture is the Largest Consumer of the World’s Available Fresh Water Type of Irrigation Efficiency Range Gravity/Flood 50-85% Drip 75-95% Mechanized (Pivot) 75-95% Valley® is The Leader in Precision Irrigation Agriculture ~2/3 Other Freshwater ~1/3 Freshwater ~3% Source: FAO
Slide 6: Engineered Support Structures
Engineered Support Structures 7 Sizeable Worldwide Infrastructure Spending Growth Expected Primary Global End Markets Traffic signal, tramway & roadway lighting Residential street lighting & area lighting Highway safety, guardrail, bridge and pedestrian barriers Wireless communication structures and
Slide 7: Utility Support Structures
Utility Support Structures 8 Reliability, Renewables and Integration Will Continue to Drive Transmission Investment Global Market Drivers Grid reliability growing in importance Shift to natural gas, solar and wind will continue U.S. FERC 1000 – Integration of Power Markets Continued global investmen
Slide 8: Coatings
Coatings 9 Corrosion Costs the U.S. $400B+ Annually* Three Key Product and Service Areas Hot Dip Galvanizing Paint Systems Powder Coating Liquid Painting Electro-Deposition Finishing Other Applications Transportation Sub-Assembly *NACE (National Association of Corrosion Engineers) Global Market Driv
Slide 9: Energy and Mining
Energy and Mining 10 Revenue By End Market Transforming Business From Dependency on Oil, Gas and Mining Offshore & Construction Access Systems Mining Consumables Revenue By Business Best in Class Technical Depth Drives Continuous Differentiation Leading Brand Recognition Low Cost Manufacturing Footp
Slide 10: Financial Results Compared With Stated Goals
11 Financial Results Compared With Stated Goals Metric Goal 2016 2017 2016 Adjusted 2017 Adjusted Revenue Growth 5-10% -3.7% 10.0%1 -3.7% 10.0%1 EPS Growth > 10% 346.2% 16.3%1 14.0% 9.8%1 Average ROIC3(after-tax) > 10% 4.6% 9.5%2 10.0% 10.3%2 Average Free Cash Flow Conversion > 1.0x net earnings 0.9
Slide 11: Acquisitions are a Key to Valmont's Growth
Acquisitions are a Key to Valmont’s Growth $B 15-Yr Total Growth Rate of 14% 15-Yr Organic Growth Rate of 3% 12
Slide 12: Capital Allocation Philosophy
Capital Allocation Philosophy Support Growth & Operations of Existing Businesses Bolt-on Acquisitions Return Cash to Shareholders Working Capital Investment to Support Sales Growth Capital Expenditures - $60M to $80M annually Acquisitions Must Fit Strategically Clear path to returns exceeding cost o
Slide 13: Liquidity
Liquidity Credit Rating Cash and Debt Highlights – 3Q 2017 14 Free Cash Flow $95M YTD Cash At 9/30/2017 $493M (75% Offshore) Total Debt $755M Debt/Adjusted EBITDA* 2.19 Adjusted S&P BBB+ Stable Moody’s Baa3 Stable * See the Company’s Reg G reconciliation at end of presentation. Debt Maturities – in
Slide 14: Estimated Impact of Tax Cuts and Jobs Act
Estimated Impact of Tax Cuts and Jobs Act 15 Estimated one-time tax expense of $35-$40MM*; approximately $25MM non-cash* Remeasurement of deferred tax balances and deemed repatriation of foreign earnings Not expected to have a significant impact on 2018 cash flows Effective tax rate for 2018 and bey
Slide 15: 2018 Opportunities and Risks
16 Opportunity Risk 2018 Opportunities and Risks Engineered Support Structures U.S. infrastructure spending plan Wireless communication product demand Steel price volatility Political debates on infrastructure spending Utility Support Structures Product & market expansion initiatives Increased empha
Slide 16: Management Aligned with Shareholders
Management Aligned with Shareholders Management Ownership Officers and Directors own 3.3%* Incentive Compensation Long-term based on Return on Invested Capital and Operating Income Growth Short-term for Corporate Executives based on Net Earnings Short-term for Business Unit Management based on EBIT
Slide 17: Summary
Summary 18 Portfolio of businesses with attractive long-term secular growth characteristics Disciplined growth strategy leveraging our products, market reach and core competencies Balance sheet strong generating good cash flow; plenty of liquidity to pursue growth and M&A
Slide 18: Summary
= Portfolio of businesses with attractive long-term secular growth characteristics = Disciplined growth strategy leveraging our products, market reach and core competencies = Balance sheet strong generating good cash flow; plenty of liquidity to pursue growth and M&A 2018 investor Presentation
Slide 19: Irrigation Valley Products and Solutions
Irrigation 20 Valley Products and Solutions
Slide 20: Engineered Support Structures Product Overview
Engineered Support Structures Product Overview Roadway & Residential; High Mast & Sports Lighting Traffic & Mass Transit; Telecommunications Towers 21
Slide 21: Utility Support Structures Product Overview
Utility Support Structures 22 Product Overview
Slide 22: Coatings Product and Services Overview
Coatings 23 Product and Services Overview
Slide 23: Energy and Mining Product Overview
Energy and Mining Product Overview Up to 40’ diameter 24
Slide 24: Nine Month Summarized Financial Results
Nine Month Summarized Financial Results NET SALES Dollars in millions except per share amounts 2017 2016 Percent Change Engineered Support Structures 619.6 584.1 6.1% Utility Support Structures 539.0 446.4 20.7% Coatings 235.8 214.0 10.2% Energy & Mining 234.9 234.7 0.1% Irrigation 502.9 438.5 14.7%
Slide 25: Valmont Historical Performance
Valmont Historical Performance 26 Revenue $B 1 Excluding impact of restructuring, impairment and certain non-recurring charges. 2Please see Company’s Reg. G table at end of presentation. 5.0%(2) GAAP Operating Income % 10.1%(1) GAAP (2) (1) (2) $2.0 $2.7 $3.0 $3.3 $3.1 $2.6 $2.5 $2.0 9.0% 9.9% 12.6%
Slide 26: Recast 2015 Segment Figures and Non-recurring Items
27 Valmont – Recast 2015 Segment Figures Valmont – Summary of Effect of Significant Non-recurring Items on Reported Results VALMONT INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS REGULATION G RECONCILIATION (Dollars in thousands, except per
Slide 27: Summary of Effect of Significant Non-recurring Items on Reported Results
28 Summary of Effect of Significant Non-recurring Items on Reported Results VALMONT INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS REGULATION G RECONCILIATION (Dollars in thousands, except per share amounts) (unaudited) The non-GAAP tables
Slide 28: Operating Income Reconciliation
29 Valmont – Summary of Effect of Significant Non-recurring Items on Reported Results VALMONT INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED OPERATING INCOME REGULATION G RECONCILIATION (Continued) Operating Income Reconciliation Year-to-Date Dec.
Slide 29: Condensed Consolidated Statements of Earnings
30 Summary of Effect of Significant Non-recurring Items on Reported Results VALMONT INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in thousands, except per share amounts) (unaudited) Third Quarter Year-to-Date 13 Weeks Ended 39 Weeks Ended 30-Sep-17 24-Sep-1
Slide 30: Calculation of Adjusted EBITDA & Leverage Ratio
Calculation of Adjusted EBITDA & Leverage Ratio 31 Last 4 fiscal quarters (September 25, 2016 to September 30, 2017) 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 of the prior four qu
Slide 31: Calculation of Return on Invested Capital
32 Calculation of Return on Invested Capital Return on Invested Capital (“ROIC”) is calculated as Operating Income (after-tax) divided by the average of beginning and ending Invested Capital. Invested Capital represents total assets minus total liabilities (excluding interest-bearing debt). Return o
Slide 32: CJS Investor Conference "New Ideas for the New Year"
CJS INVESTOR CONFERENCE “NEW IDEAS FOR THE NEW YEAR” January 10, 2018
Slide 33: Valmont: Conserving Resources. Improving Life.
valmont ¥ Conserving Resources. Improving Life.
Valmont Industries — CJS Investor Conference "New Ideas for the New Year" 2018 on 6ix