Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q2 2016 Earnings Presentation
18 slides from Valmont Industries's earnings presentation, 2016
Slide 1: 2Q 2016 Earnings Call Presentation
2Q 2016 Earnings Call Presentation Valmont Industries. Inc. | 2016 Investor Day
Slide 2: Forward-looking Statement Disclosure
Forward-looking Statement Disclosure 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 tha
Slide 3: Second Quarter Highlights
Second Quarter Highlights Benefits of restructuring and other productivity improvements drive improved earnings despite lower revenues Revenues down 6% GAAP Operating income rises 33%, adjusted rises 5%*. Operating income 11.2% of net sales compared to 7.9% in 2015, (10.0% excluding restruct
Slide 4: Financial Highlights
Financial Highlights NET SALES 2015 2016 Percent Dollars in millions except per share amounts Change Engineered Support Structures $200.8 $203.9 1.5% Utility Support Structures 162.9 151.2 (7.1%) Coatings 76.1 75.3 (1.0%) Energy & Mining 86.3 80.7 (6.5%) Irrigation 173.3 152.3 (12.1%) Other 2.3 - In
Slide 5: Financial Highlights Operating Income GAAP
Financial Highlights Operating Income GAAP Dollars in millions Operating Operating Increase Operating Operating Income 2Q Income 2Q /Decrease Income Percent Income Percent 2015 2016 2Q 2015 2Q 2016 Engineered Support $16.2 $21.0 29.6% 8.1% 10.3% Structures Utility Support 10.4 17.5 68.3% 6.4% 11.6%
Slide 6: Financial Highlights Operating Income Adjusted
Financial Highlights Operating Income Adjusted* Dollars in millions Adjusted Operating Increase Operating Operating Operating Income 2Q /Decrease Income Percent Income Percent Income 2Q 2016 2Q 2015 2Q 2016 2015 * Engineered Support $19.2 $21.0 8.8% 9.6% 10.3% Structures Utility Support 12.9 17.5 35
Slide 7: Engineered Support Structures
Engineered Support Structures $ in millions Sales Net of Intercompany Activity 2015 Revenue $196.6 Volume 3.2 Pricing/Mix (0.7) Acquisitions - Currency Translation (3.3) 2016 Revenue $195.8 * • North America Lighting and Traffic revenue flat – orders are improving. Rest of world down • Asia Pacific
Slide 8: Utility Support Structures
Utility Support Structures $ in millions Sales Net of Intercompany Activity 2015 Revenue $162.6 Volume 10.0 Pricing/Mix (21.4) Acquisitions - Currency Translation - 2016 Revenue $151.2 * • Lower steel costs lead to revenue decrease through pricing • Volumes higher • Mix contains more smaller project
Slide 9: Coatings
Coatings $ in millions Sales Net of Intercompany Activity 2015 Revenue $63.9 Volume 0.7 Pricing/Mix (1.9) Acquisitions 2.0 Currency Translation (1.3) 2016 Revenue $63.4 * • Less internal volumes, increased custom volumes, benefit of American Galvanizing acquisition last year • Australia volumes stab
Slide 10: Energy and Mining
Energy and Mining $ in millions Sales Net of Intercompany Activity 2015 Revenue $86.3 Volume (2.4) Pricing/Mix (2.4) Acquisitions - Currency Translation (2.2) 2016 Revenue $79.3 * • Volume challenged in Access and Donhad due to energy and mining weakness • Structures and rotor housing orders for off
Slide 11: Irrigation
Irrigation $ in millions Sales Net of Intercompany Activity 2015 Revenue $171.6 Volume (16.5) Pricing/Mix (0.9) Acquisitions - Currency Translation (3.7) 2016 Revenue $150.5 * • Recent USDA supply/demand forecasts bearish to crop prices • International markets benefit from diversification and projec
Slide 12: YTD Free Cash Flow
YTD Free Cash Flow Dollars in Millions 2015 2016 Change Net Income $60.9 $77.6 $16.7 Deprec/Amort 47.7 40.8 (6.9) Working Capital (Incr/Decr) 7.8 (33.6) (41.4) Other 1.9 8.8 7.0 Operating CF 118.3 93.6 (24.7) CapEx (24.7) (26.0) (1.3) Free Cash Flow $93.6 $67.6 ($26.0) • No pension plan contribution
Slide 13: Balance Sheet – 2Q 2016
Balance Sheet – 2Q 2016 Goal: Maintain Investment-grade rating; Keep Debt/EBITDA from 1.5 to 2.5x 2Q 2016 Actual Credit Rating Free Cash Flow $67.7M YTD S&P BBB+ Negative Cash At 06/25 $344M ($278 Ex. US) Moody’s Baa3 Stable Total Debt $761M Debt Maturities – in Millions Debt/Adjusted 2.65X Adjusted
Slide 14: Summary – Positive Q2 Comparisons Despite Headwinds
Summary – Positive Q2 Comparisons Despite Positive Q1 Comparisons Despite Headwinds in Irrigation and E&M Improved Profitability and EPS Despite Top-Line Challenges – Positive Effects from Restructuring and Productivity Improvements – Utility segment returned to double-digit operating profit – Goo
Slide 15: Summary of Effect of Significant Non-recurring Items on Reported Results
Valmont – Summary of Effect of Significant Non-recurring Items on Reported Results Valmont – Recast 2015 Segment Figures Second Diluted Diluted Quarter Ended earnings per Year-to-Date earnings per June 27, 2015 share June 27, 2015 share Net earnings attributable to Valmont Industries, Inc. - as repo
Slide 16: Recast 2015 Segment Figures by Quarter
Valmont – Recast 2015 Segment Figures by Quarter Valmont – Recast 2015 Segment Figures Valmont Industries, Inc. Results by Segment Fiscal 2015 Unaudited and in 000's For the First Quarter Ended March 28, 2015 Engineered Utility Support Energy & Support Other/ Segment Operating Income Reconciliation
Slide 17: Recast 2015 Segment Figures (Cont.)
Valmont – Recast 2015 Segment Figures (Cont.) Unaudited and in 000's For the Third Quarter Ended Sept. 27, 2015 Engineered Utility Support Energy & Support Other/ Segment Operating Income Reconciliation Structures Mining Structures Coatings Irrigation Corporate TOTAL Operating income (loss) - as rep
Slide 18: Calculation of Adjusted EBITDA and Leverage Ratio
Valmont – Calculation of Adjusted EBITDA and Leverage Ratio Valmont – Calculation of Adjusted EBITDA and Leverage Ratio Trailing 12 Debt Coverage Calculation Months 6/25/2016 Net earnings attributable to Valmont Industries, Inc. $ 56,500 Interest expense 41,959 Income tax expense 52,047 Depreciation