Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Investor Presentation (January 2017)
25 slides from Valmont Industries's investor presentation, Jan 10, 2017
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 $3.3 B 2015 Sales $2.6 B Global Footprint 81 Manufacturing Sites in 23 Countries Employees 10,700, Incl. 500 Engineers #1 or #2 in All of Our Markets 2015 Revenue 3 65% 14% 11% 7% 3% by Geography U.S. ANZ EMEA Asia Oth
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: Strong, Global, Enduring Drivers
Strong, Global, Enduring Drivers 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 Needs to In
Slide 5: Historical Performance
Valmont Historical Performance 2013 Was Top Of The Cycle For Valmont With $3.3B Revenue And 14.3% Operating Income At The Peak $m 1 Excluding impact of restructuring, impairment and certain non-recurring charges. 2Please see Company’s Reg. G table at end of presentation. 5.0% GAAP (2) (1) 6 $2.0 $2.
Slide 6: Nine Month Operating Income GAAP
Nine Month Operating Income GAAP 7 Operating Income (in millions) 2015 2016 Yr-Yr Change % of Sales 2015 % of Sales 2016 Engineered Support Structures $45.7 $54.8 19.7% 7.9% 9.4% Utility Support Structures 40.3 48.3 20.0% 8.0% 10.8% Coatings 22.0 37.1 68.7% 9.7% 17.4% Energy & Mining 2.8 9.2 233.5%
Slide 7: Nine Month Operating Income Adjusted
Nine Month Operating Income Adjusted* 8 Adjusted Operating Income (in millions) 2015 2016 Yr-Yr Change % of Sales 2015 % of Sales 2016 Engineered SupportStructures $51.0 $55.3 8.5% 8.8% 9.5% Utility Support Structures 43.9 48.9 11.3% 8.7% 10.9% Coatings 37.8 37.7 (0.3%) 16.7% 17.6% Energy & Mining 1
Slide 8: Long-term Financial Objectives
Metric Goal 2011-2015 5 yr. Average Revenue Growth 5-10% 9.2% EPS Growth > 10% 9.5% ROIC > 10% 11.6% Free Cash Flow Conversion > 1.0x net earnings 0.82 Long-term Financial Objectives 9
Slide 9: Growth Track Record: Organic and Acquisition
Growth Track Record: Organic and Acquisition $B 15-Yr Total Growth Rate of 14% 15-Yr Organic Growth Rate of 3% 10
Slide 10: 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 11: Balance Sheet – 3Q 2016
3Q 2016 Credit Rating Balance Sheet – 3Q 2016 Goal: Maintain Investment-grade rating; Keep Debt/EBITDA from 1.5 to 2.5x Free Cash Flow $85.0M YTD Cash At 9/27 $349M ($296 Ex. US) Total Debt $757M Debt/Adjusted EBITDA 2.63x Adjusted S&P BBB+ Negative Moody’s Baa3 Stable See the Company’s Reg G reconc
Slide 12: Liquidity and Debt Maturities
$349M Cash $600M Revolver With $200M Accordion Feature None Drawn Avg. FCF ~$150M ($227M in ’15) More Than Ample Liquidity And Debt Is Mostly Long Dated Maturities Liquidity and Debt Maturities Liquidity > $1 B No Issue With Maturities Liquidity Debt Maturities 13 $250 $250 $250 '16 '17 '18 '19 20 '
Slide 13: 2017 Opportunities and Risks
14 Opportunity Risk 2017 Opportunities and Risks Engineered Support Structures U.S. highway bill Recovery in telecom demand Steel price volatility Emerging market instability Utility Support Structures Bigger project pipeline New product penetration Policy attitude change towards renewables or regul
Slide 14: Summary
Portfolio of businesses with attractive long-term secular growth characteristics 2016 shaping Up to deliver improved EPS over adjusted 2015 Cost savings through restructuring Strong market position across segments maintained Steel price volatility managed well Cash flow and balance sheet remain stro
Slide 15: Summary
Summary = Portfolio of businesses with attractive long-term secular growth characteristics = 2016 shaping Up to deliver improved EPS over adjusted 2015 - Cost savings through restructuring — Strong market position across segments maintained - Steel price volatility managed well = Cash flow and balan
Slide 16: Recast 2015 Segment Figures
Valmont – Recast 2015 Segment Figures We believe it is useful when considering Company performance for the non-GAAP adjusted net earnings to be considered by management and investors with the related reported GAAP measures. 17 SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS
Slide 17: Reconciliation to GAAP tables
18 Third Quarter Ended Sept. 26, 2015 Diluted earnings per share Year-to-Date Sept. 26, 2015 Diluted earnings per share Net earnings attributable to Valmont Industries, Inc. - as reported $ 12,066 $ 0.52 $ 70,678 $ 3.00 Restructuring expenses - after tax 6,310 0.27 16,634 0.71 Impairment of goodwill
Slide 18: Segment Operating Income Reconciliation, YTD 2016
19 For Year-to-Date PeriodEnded Sept. 24, 2016 Segment Operating Income Reconciliation Operating Income- As Reported Restructuring expenses - before tax Adjusted Operating Income Net Sales Engineered Support Structures $ 54,753 $ 587 $ 55,340 $ 584,071 Op Inc. & Adjusted Op Inc. as a % of Sales 9.4%
Slide 19: Segment Operating Income Reconciliation, YTD 2015
20 For Year-to-Date PeriodEnded Sept. 26, 2015 Segment Operating Income Reconciliation Operating Income- As Reported Restructuring expenses - before tax Impairment of goodwill and TM - before tax Adjusted Operating Income Net Sales Engineered Support Structures $ 45,742 $ 5,210 $ - $ 50,952 $ 578,07
Slide 20: Effect of Significant Non-recurring Items on Full Year 2015 Results
Valmont – Summary of Effect of Significant Non-recurring Items on Reported Full Year 2015 Results 21 We believe it is useful when considering Company performance for the non-GAAP adjusted net earnings to be considered by management and investors with the related reported GAAP measures. NM NM
Slide 21: Recast 2015 Segment Figures by Quarter
Valmont – Recast 2015 Segment Figures Valmont – Recast 2015 Segment Figures by Quarter We believe it is useful when considering Company performance for the non-GAAP adjusted net earnings to be considered by management and investors with the related reported GAAP measures. 22 Valmont Industries, Inc.
Slide 22: Recast 2015 Segment Figures (Cont.)
Valmont – Recast 2015 Segment Figures (Cont.) We believe it is useful when considering Company performance for the non-GAAP adjusted net earnings to be considered by management and investors with the related reported GAAP measures. 23 Unaudited and in 000's For the Third Quarter Ended Sept. 27, 2015
Slide 23: Calculation of Adjusted EBITDA and Leverage Ratio
Valmont – Calculation of Adjusted EBITDA and Leverage Ratio Valmont – Calculation of Adjusted EBITDA and Leverage Ratio 24 Debt Coverage Calculation Trailing 12 Months 9/24/2016 Net earnings attributable to Valmont Industries, Inc. $ 72,607 Interest expense 44,417 Income tax expense 54,297 Depreciat
Slide 24: Calculation of Adjusted EBITDA and Leverage Ratio
Valmont — Calculation of Adjusted EBITDA and Leverage Ratio Trailing 12 Debt Coverage Calculation Months 2224/2016 Net eamings attributable to Valmont Industries, Ine. Ss 72,607 Interest expense 44417 Income tax expense 34,297 Depreciation and amortization expense 81,527 EBITDA "252,848 Impairment o
Slide 25: Valmont: Conserving Resources. Improving Life.
valmont ¥ Conserving Resources. Improving Life.
Valmont Industries — Investor Presentation (January 2017) on 6ix