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Valmont Reports First Quarter 2022 Results and Raises Full-Year Guidance

April 20, 2022

Achieved Record First-Quarter Sales and Earnings per Share

Valmont Industries, Inc. (NYSE: VMI), a global leader that provides vital infrastructure and advances agricultural productivity while driving innovation through technology, today reported financial results for the first quarter ended March 26, 2022.

First Quarter 2022 Highlights (all metrics compared to First Quarter 2021 unless otherwise noted)

  • First Quarter Record Net Sales increased 26.6% to $980.8 million.
  • Operating Income increased to $94.8 million, or 9.7% of net sales ($99.0 million or 10.1% adjusted1) compared to $77.2 million or 10.0% of net sales
  • First Quarter Record Diluted Earnings per Share (EPS) of $2.90 ($3.07 adjusted1) compared to $2.57
  • Record backlog of $1.8 billion, reflecting improved pricing and continued strong market demand across the portfolio
  • Announced a 10% quarterly dividend increase, from $0.50 to $0.55 ($2.00 to $2.20 annualized)
  • Realigned financial reporting from four reportable segments to two: Infrastructure and Agriculture
    • Infrastructure includes the previous segments of Utility Support Structures, Engineered Support Structures and Coatings
    • Agriculture is a renaming of the previous Irrigation segment
    • Elevates the focus on capital allocation, technology development and market growth strategies
  • Released the Valmont 2022 Sustainability Report and enhanced the Company's dedicated Sustainability website while updating key disclosures and highlighting Valmont products and solutions that support ESG principles

Key Financial Metrics

First Quarter 2022

GAAP

 

Adjusted1

(000's except per share amounts)

03/26/2022

1Q 2022

 

03/27/2021

1Q 2021

 

vs. 1Q 2021

 

03/26/2022

1Q 2022

 

03/27/2021

1Q 2021

vs. 1Q 2021

Net Sales

$

980,820

 

 

$

774,886

 

26.6

%

 

$

980,820

 

 

$

774,886

 

26.6

%

Operating Income

 

94,842

 

 

 

77,211

 

22.8

%

 

 

98,985

 

 

 

77,211

 

28.2

%

Operating Income as a % of Net Sales

 

9.7

%

 

 

10.0

%

 

 

 

10.1

%

 

 

10.0

%

 

Net Earnings

 

62,311

 

 

 

55,014

 

13.3

%

 

 

65,888

 

 

 

55,014

 

19.8

%

Diluted Earnings Per Share

$

2.90

 

 

$

2.57

 

12.8

%

 

$

3.07

 

 

$

2.57

 

19.5

%

Average Shares Outstanding

 

21,492

 

 

 

21,429

 

 

 

 

21,492

 

 

 

21,429

 

 

"We delivered strong financial results in our first quarter, exceeding our expectations and achieving another quarter of record sales," said Stephen G. Kaniewski, President and Chief Executive Officer. "I am very pleased with our relentless focus on price management, operational excellence and the realization of increasing strong demand across the portfolio. Through these actions, we achieved first-quarter adjusted operating margins of 10.1% and record first-quarter adjusted earnings per share of $3.07. We are seeing strong demand across global infrastructure markets, especially in our key growth businesses including products and solutions for utility and telecommunications markets. Agricultural market conditions continue to be very favorable, which is leading to increasing demand for irrigation equipment and technology solutions globally. I want to recognize our Valmont teams around the world as they continue to drive our momentum and success. We continue executing on our strategy of creating sustainable growth initiatives across our businesses and long-term value for our shareholders."

Kaniewski continued, "During the quarter, we realigned our segment structure from four reportable segments to two, Infrastructure and Agriculture, to reflect how the businesses are managed, while elevating our focus on capital allocation, technology, talent development, and market growth strategies. In parallel with the segment realignment, we are also centralizing operations of our global manufacturing footprint across both segments to focus on improving productivity, increasing output, and driving efficient capital allocation. We remain committed to our tagline of Conserving Resources. Improving Life®. as we simplify our company structure to more effectively articulate our strategy and purpose."

First Quarter 2022 Segment Review

Infrastructure (69.1% of Net Sales)

Products and solutions to serve the infrastructure markets of utility, renewable energy, lighting, transportation and telecommunications, and coatings services to preserve and protect metal products

Sales of $680.7 million grew 23.8% year-over-year with sales growth across most product lines. Higher sales were driven by favorable pricing globally, primarily in the transmission, distribution, and substation (TD&S), and lighting and transportation (L&T) product lines, and higher volumes, primarily in telecommunications.

Operating Income improved 42.3% to $77.5 million or 11.4% of sales compared to $54.4 million or 9.9% of sales in 2021, driven by favorable pricing and improved fixed-cost leverage, including SG&A.

Agriculture (30.9% of Net Sales)

Center pivot and linear irrigation equipment for agricultural markets, including parts and tubular products; advanced technology solutions for precision agriculture

Sales of $306.6 million increased 33.5% year-over-year. Sales growth was led by higher average selling prices of irrigation equipment globally, higher volumes in North American markets and higher technology sales, partially offset by lower international project sales.

Operating Income was $37.5 million, or 12.2% of sales ($41.6 million or 13.7% adjusted1) compared to $38.7 million or 16.9% of sales in 2021. The benefit of higher average selling prices during the quarter was more than offset by higher SG&A, including incremental SG&A from the Prospera acquisition.

Realignment of Reporting Segments

On April 6, 2022, the Company announced that it had realigned its reporting segment structure beginning with its first quarter 2022 financial results. The new reporting segments are Infrastructure (includes the previous segments of Utility Support Structures, Engineered Support Structures and Coatings) and Agriculture (a renaming of the previous Irrigation segment). A recast of comparable prior-year segment financial information for 2020 and 2021 affected by the change is available in a summary presentation on the Investors page at Valmont.com. The Company's historical GAAP balance sheet, income statement and cash flows are not affected.

Balance Sheet, Liquidity and Capital Allocation

First quarter cash flows from operations were $2.7 million, primarily reflecting higher net working capital levels compared to year-end 2021, in support of strong customer demand. At the end of the first quarter, cash and cash equivalents were $149.7 million. During the quarter, Moody's reaffirmed the Company's Baa3/Stable credit rating.

Updating Full Year 2022 Financial Outlook and Key Assumptions

The Company is increasing its 2022 full-year net sales and diluted earnings per share outlook from the previous indications that were communicated last quarter, and is providing key assumptions for the year.

2022 Full Year Financial Outlook

Previous Outlook

 

 

Revised Outlook

Net Sales Growth (vs. PY)

9% to 14%

 

 

11% to 17%

GAAP Diluted EPS1

$11.55 to $12.30

 

 

$12.30 to $12.80

Adjusted Diluted EPS1

$12.25 to $13.00

 

 

$13.00 to $13.50

Tax Rate

~ 25.0%

 

 

~26.5%

FX Translation Impact on Net Sales

~ 1.0%

 

 

0.0%

  • No expected foreign currency translation impact on net sales vs. prior year
  • 2022 tax rate of approximately 26.5% due to the expected geographic mix of earnings
  • Capital expenditures to be in the range of $110.0 - $120.0 million to support strategic growth and Industry 4.0 advanced manufacturing initiatives

Kaniewski added, "We are increasing our 2022 outlook due to several positive factors. We've had a very strong start to the year, as our teams have continued to execute from a position of strength to drive growth and performance, with significant momentum supported by strong, global market drivers across our businesses. We entered the second quarter with a record backlog of more than $1.8 billion, reflecting strong market demand and providing a solid line of sight for us through 2022. In the Infrastructure segment, the need for critical infrastructure investment globally gives us confidence in the long-term market growth trends. In Agriculture, favorable market trends globally are providing strong momentum. Across the portfolio, we continue to execute pricing strategies to manage broad-based inflation and leverage the strength of our organization and global supply chain to deliver value-added products and innovative solutions to our customers. Additionally, our balance sheet is strong and gives us flexibility to execute our long-term strategic plan. Our strategy remains focused on long-term profitable growth, with an organizational emphasis on ESG principles, return on invested capital, operational excellence and strengthening our organization for the future."

A live audio discussion with Stephen G. Kaniewski, President and Chief Executive Officer, Aaron Schapper, Group President, Infrastructure, and Avner M. Applbaum, Executive Vice President and Chief Financial Officer, will be accessible by telephone on Thursday, April 21, 2022 at 8:00 a.m. CDT by dialing 1-877-407-6184 or 1-201-389-0877 (no Conference ID needed), or via webcast by pointing browsers to this link: Valmont Industries 1Q 2022 Earnings Conference Call. A slide presentation will simultaneously be available for download on the Investors page at valmont.com. A replay of the event can be accessed two hours after the call at the above link or by telephone at 1-877-660-6853 or 1-201-612-7415. Please use conference identification number 13728740. The replay will be available through 10:59 p.m. CDT on April 28, 2022.

About Valmont Industries, Inc.

For over 75 years, Valmont® has been a global leader in creating vital infrastructure and advancing agricultural productivity. Today, we remain committed to doing more with less by innovating through technology. Learn more about how we’re Conserving Resources. Improving Life.® at valmont.com.

Concerning Forward-Looking Statements

This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which Valmont operates, as well as management’s perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances. As you read and consider this release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond Valmont’s control) and assumptions. Although management believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Valmont’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include among other things, the continuing and developing effects of COVID-19 including the effects of the outbreak on the general economy and the specific economic effects on the Company’s business and that of its customers and suppliers, risk factors described from time to time in Valmont’s reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw material, availability and market acceptance of new products, product pricing, domestic and international competitive environments, geopolitical risks, and actions and policy changes of domestic and foreign governments. The Company cautions that any forward-looking statement included in this press release is made as of the date of this press release and the Company does not undertake to update any forward-looking statement.

1 Please see Reg G reconciliation to GAAP measures at end of document

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per share amounts)

(unaudited)

 

 

First Quarter

 

 

13 Weeks Ended

 

 

 

 

 

26-Mar-22

 

27-Mar-21

Net sales

$

980,820

 

 

$

774,886

 

Cost of sales

 

731,634

 

 

 

570,332

 

Gross profit

 

249,186

 

 

 

204,554

 

Selling, general and administrative expenses

 

154,344

 

 

 

127,343

 

Operating income

 

94,842

 

 

 

77,211

 

Other income (expense)

 

 

 

Interest expense

 

(11,263

)

 

 

(9,999

)

Interest income

 

227

 

 

 

311

 

Loss on investments (unrealized)

 

(1,063

)

 

 

(109

)

Other

 

3,642

 

 

 

3,449

 

Other income (expense), net

 

(8,457

)

 

 

(6,348

)

Earnings before income taxes

 

86,385

 

 

 

70,863

 

Income tax expense

 

23,121

 

 

 

15,502

 

Equity in loss of nonconsolidated subsidiaries

 

(358

)

 

 

(360

)

Net earnings

 

62,906

 

 

 

55,001

 

Less: (earnings)/loss attributable to non-controlling interests

 

(595

)

 

 

13

 

Net earnings attributable to Valmont Industries, Inc.

$

62,311

 

 

$

55,014

 

 

 

 

 

Average shares outstanding (000's) - Basic

 

21,279

 

 

 

21,179

 

Earnings per share - Basic

$

2.93

 

 

$

2.60

 

 

 

 

 

Average shares outstanding (000's) - Diluted

 

21,492

 

 

 

21,429

 

Earnings per share - Diluted

$

2.90

 

 

$

2.57

 

 

 

 

 

Cash dividends per share

$

0.55

 

 

$

0.50

 

 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OPERATING RESULTS

(Dollars in thousands)

(Unaudited)

 

 

First Quarter

 

 

13 Weeks Ended

 

 

26-Mar-22

 

27-Mar-21

Net sales

 

 

 

Infrastructure

$

680,726

 

 

$

549,646

 

Agriculture

 

306,580

 

 

 

229,664

 

Total

 

987,306

 

 

 

779,310

 

Less: Intersegment sales

 

(6,486

)

 

 

(4,424

)

Total

$

980,820

 

 

$

774,886

 

 

 

 

 

Operating Income

 

 

 

Infrastructure

$

77,507

 

 

$

54,449

 

Agriculture

 

37,475

 

 

 

38,748

 

Corporate

 

(20,140

)

 

 

(15,986

)

Total

$

94,842

 

 

$

77,211

 

Valmont has aggregated its business segments into two global reportable segments as follows.

Infrastructure : This segment consists of the manufacture and distribution of products and solutions to serve infrastructure markets of utility, renewable energy, lighting, transportation and telecommunications, and coatings services to preserve and protect metal products.

Agriculture : This segment consists of the manufacture of center pivot and linear irrigation equipment for agricultural markets, including parts and tubular products, and advanced technology solutions for precision agriculture.

 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OPERATING RESULTS

(Dollars in thousands)

(Unaudited)

 

 

Thirteen Weeks ended March 26, 2022

 

 

Infrastructure

 

Agriculture

 

Intersegment

Sales

 

Consolidated

Geographical market:

 

 

 

 

 

 

 

North America

$

505,980

 

$

198,109

$

(6,486

)

 

$

697,603

International

 

174,746

 

 

108,471

 

 

 

 

 

283,217

Total

$

680,726

 

$

306,580

 

$

(6,486

)

 

$

980,820

 

 

 

 

 

 

 

 

Product line:

 

 

 

 

 

 

 

Transmission, Distribution and Substation (TD&S)

$

281,600

 

$

 

$

 

 

$

281,600

Lighting and Transportation (L&T)

 

212,767

 

 

 

 

 

 

 

212,767

Coatings

 

81,976

 

 

 

(3,101

)

 

 

78,875

Telecommunications

 

61,396

 

 

 

 

 

 

61,396

Renewable Energy

 

42,987

 

 

 

 

 

 

42,987

Irrigation Equipment and Parts, excluding Technology

 

 

 

278,034

 

 

(3,385

)

 

 

274,649

Technology Products and Services

 

 

 

28,546

 

 

 

 

 

28,546

Total

$

680,726

 

$

306,580

 

$

(6,486

)

 

$

980,820

 

Thirteen weeks ended March 27, 2021

 

Infrastructure

 

Agriculture

 

Intersegment

Sales

 

Consolidated

Geographical market:

 

 

 

 

 

 

 

North America

$

385,734

 

$

128,865

$

(4,424

)

 

$

510,175

International

 

163,912

 

 

100,799

 

 

 

 

 

264,711

Total

$

549,646

 

$

229,664

 

$

(4,424

)

 

$

774,886

 

 

 

 

 

 

 

 

Product line:

 

 

 

 

 

 

 

Transmission, Distribution and Substation (TD&S)

$

208,444

 

$

 

$

 

 

$

208,444

Lighting and Transportation (L&T)

 

176,516

 

 

 

 

 

 

 

176,516

Coatings

 

74,793

 

 

 

(3,201

)

 

 

71,592

Telecommunications

 

45,640

 

 

 

 

 

 

45,640

Renewable Energy

 

44,253

 

 

 

 

 

 

44,253

Irrigation Equipment and Parts, excluding Technology

 

 

 

207,258

 

 

(1,223

)

 

 

206,035

Technology Products and Services

 

 

 

22,406

 

 

 

 

 

22,406

Total

$

549,646

 

$

229,664

 

$

(4,424

)

 

$

774,886

 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

 

 

26-Mar-22

 

25-Dec-21

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

149,700

 

$

177,232

Accounts receivable, net

 

616,538

 

 

571,593

Inventories

 

807,471

 

 

728,834

Contract asset - costs and profits in excess of billings

 

161,633

 

 

142,643

Prepaid expenses and other assets

 

105,233

 

 

83,646

Refundable income taxes

 

 

 

8,815

Total current assets

 

1,840,575

 

 

1,712,763

Property, plant and equipment, net

 

610,218

 

 

598,605

Goodwill and other assets

 

1,130,690

 

 

1,135,881

 

$

3,581,483

 

$

3,447,249

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Current installments of long-term debt

$

4,226

 

$

4,884

Notes payable to banks

 

8,380

 

 

13,439

Accounts payable

 

404,410

 

 

347,841

Accrued expenses

 

215,082

 

 

253,330

Contract liability - billings in excess of costs and earnings

 

168,794

 

 

135,746

Dividend payable

 

11,721

 

 

10,616

Total current liabilities

 

818,687

 

 

765,856

Long-term debt, excluding current installments

 

963,065

 

 

947,072

Operating lease liabilities

 

146,493

 

 

147,759

Other long-term liabilities

 

148,747

 

 

172,965

Shareholders' equity

 

1,504,491

 

 

1,413,597

 

$

3,581,483

 

$

3,447,249

 
 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

 

 

First Quarter

 

 

13 Weeks Ended

 

 

26-Mar-22

 

27-Mar-21

Cash flows from operating activities

 

 

 

Net Earnings

$

62,906

 

 

$

55,001

 

Depreciation and amortization

 

23,884

 

 

 

21,031

 

Contribution to defined benefit pension plan

 

 

 

 

(964

)

Change in working capital

 

(91,929

)

 

 

(54,500

)

Other

 

7,842

 

 

 

12,585

 

Net cash flows from operating activities

 

2,703

 

 

 

33,153

 

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of property, plant, and equipment

 

(27,095

)

 

 

(27,565

)

Other

 

(2,005

)

 

 

(1,743

)

Net cash flows from investing activities

 

(29,100

)

 

 

(29,308

)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from long-term borrowings

 

97,000

 

 

 

4,181

 

Principal payments on long-term borrowings

 

(82,529

)

 

 

(712

)

Net (payments)/proceeds on short-term borrowings

 

(5,562

)

 

 

3,975

 

Purchase of treasury shares

 

 

 

 

(11,131

)

Dividends paid

 

(10,616

)

 

 

(9,556

)

Other

 

(1,814

)

 

 

2,593

 

Net cash flows from financing activities

 

(3,521

)

 

 

(10,650

)

Effect of exchange rates on cash and cash equivalents

 

2,386

 

 

 

(2,463

)

Net change in cash and cash equivalents

 

(27,532

)

 

 

(9,268

)

Cash and cash equivalents - beginning of year

 

177,232

 

 

 

400,726

 

Cash and cash equivalents - end of period

$

149,700

 

 

$

391,458

 

 

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 below disclose the impact of (1) intangible asset amortization (Prospera) and (2) stock-based compensation recognized for the Prospera employees. Amounts may be impacted by rounding. We believe the adjustments for Prospera allow for a better comparison of future Agriculture segment performance as compared to historical results. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the related reported GAAP measures.

 

Thirteen

 

Diluted

 

weeks ended

 

earnings per

 

March 26, 2022

 

share

Net earnings attributable to Valmont Industries, Inc. - as reported

$

62,311

 

 

$

2.90

 

Prospera intangible asset amortization

 

1,645

 

 

 

0.08

 

Stock-based compensation - Prospera

 

2,498

 

 

 

0.12

 

Total Adjustments, pre-tax1

 

4,143

 

 

 

0.19

 

Tax effect of adjustments2

 

(566

)

 

 

(0.03

)

Net earnings attributable to Valmont Industries, Inc. - Adjusted1

$

65,888

 

 

$

3.07

 

Average shares outstanding (000’s) - Diluted

 

 

 

21,492

 

1Earnings per share includes rounding

2The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.

 

 

Thirteen weeks ended March 26, 2022

Operating Income Reconciliation

 

Infrastructure

 

Agriculture

 

Corporate

 

Valmont

Operating income - as reported

 

$

77,507

 

 

$

37,475

 

 

$

(20,140

)

 

$

94,842

 

Stock-based compensation - Prospera

 

 

 

 

 

2,498

 

 

 

 

 

 

2,498

 

Prospera intangible asset amortization

 

 

 

 

 

1,645

 

 

 

 

 

 

1,645

 

Adjusted Operating Income

 

$

77,507

 

 

$

41,618

 

 

$

(20,140

)

 

$

98,985

 

Net Sales - as reported

 

 

677,625

 

 

 

303,195

 

 

 

NM

 

 

 

980,820

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Sales

 

 

11.4

%

 

 

12.4

%

 

 

NM

 

 

 

9.7

%

Adjusted Operating Income as a % of Sales

 

 

11.4

%

 

 

13.7

%

 

 

NM

 

 

 

10.1

%

 

 

 

 

 

 

 

 

 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

REGULATION G 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 the intangible asset (Prospera) and (2) stock-based compensation for Prospera employees. We believe the adjustments for Prospera allow for a better comparison of future Agriculture segment performance as compared to historical results. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings to be taken into consideration by management and investors with the related reported GAAP measures.

 

 

 

 

 

 

Reconciliation of Range of Net Earnings - 2022 Guidance

Low End

 

High End

 

Adjustments

Estimated net earnings - GAAP

$

266,000

 

$

277,000

 

 

Prospera intangible asset (proprietary technology) amortization, pre-tax

 

 

 

 

 

6,800

 

Stock-based compensation - Prospera, pre-tax

 

 

 

 

 

10,000

 

Total pre-tax adjustments

 

 

 

 

 

16,800

 

Estimated tax benefit from above expenses*

 

 

 

 

 

(2,200

)

 

 

 

 

 

 

Total Adjustments, after-tax

 

 

 

 

$

14,600

 

Estimated net earnings - Adjusted

$

280,600

 

$

291,600

 

 

Diluted Earnings Per Share Range - GAAP

$

12.30

 

$

12.80

 

 

Diluted Earnings Per Share Range - Adjusted

$

13.00

 

$

13.50

 

 

_______________

* The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.

 

Source: Valmont Industries, Inc.

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