Valmont Reports Third Quarter 2021 Results

OMAHA, Neb.–()–Valmont Industries, Inc. (NYSE: VMI), a leading global provider of engineered products and services for infrastructure development and irrigation equipment and services for agriculture, today reported financial results for the third quarter ended September 25, 2021.

Third Quarter 2021 Highlights (all metrics compared to Third Quarter 2020 unless otherwise noted)

  • Record Third-Quarter Net Sales of $868.8 million, an increase of 18.4%, with growth in all segments led by significantly higher Irrigation sales
  • Operating Income improved to $76.2 million, or 8.8% of sales ($80.4 million or 9.3% adjusted1) compared to $61.5 million or 8.4% of sales last year ($67.1 million or 9.1% adjusted1), despite ongoing inflationary pressures and supply chain disruptions
  • Diluted Earnings per Share (EPS) improved to $2.40 ($2.57 adjusted1) compared to $1.84 ($1.99 adjusted1)
  • Record global backlog of more than $1.5 billion, an increase of 35.0% since the end of fiscal 2020, reflecting improved pricing and continued strong market demand
  • Raising the bottom end of full-year GAAP diluted EPS guidance to a new range of $10.10 to $10.60 (Adjusted diluted EPS to $10.60 to $11.10)1.

Key Financial Metrics

Third Quarter

GAAP

 

Adjusted1

 

(000’s except per share amounts)

09/25/2021

3Q 2021

 

09/26/2020

3Q 2020

 

vs. 3Q 2020

 

09/25/2021

3Q 2021

 

09/26/2020

3Q 2020

vs. 3Q 2020

Net Sales

$

868,782

 

 

$

733,970

 

18.4%

 

$

868,782

 

 

$

733,970

 

18.4%

Operating Income

76,195

 

 

61,479

 

23.9%

 

80,433

 

 

67,111

 

19.9%

Operating Income as a % of Net Sales

8.8

%

 

8.4

%

 

 

9.3

%

 

9.1

%

 

Net Earnings

51,650

 

 

39,342

 

31.3%

 

55,284

 

 

42,670

 

29.6%

Diluted Earnings Per Share

$

2.40

 

 

$

1.84

 

30.4%

 

$

2.57

 

 

$

1.99

 

29.1%

Average Shares Outstanding

21,552

 

 

21,416

 

 

 

21,552

 

 

21,416

 

 

 

 

 

 

 

 

 

 

 

 

Year-To-Date

GAAP

 

Adjusted1

 

 

09/25/2021

YTD 2021

 

09/26/2020

YTD 2020

vs. YTD 2020

 

09/25/2021

YTD 2021

 

09/26/2020

YTD 2020

vs. YTD 2020

Net Sales

$

2,538,297

 

 

$

2,096,978

 

21.0%

 

$

2,538,297

 

 

$

2,096,978

 

21.0%

Operating Income

236,031

 

 

171,814

 

37.4%

 

248,494

 

 

199,663

 

24.5%

Operating Income as a % of Net Sales

9.3

%

 

8.2

%

 

 

9.8

%

 

9.5

%

 

Net Earnings

168,774

 

 

104,878

 

60.9%

 

176,060

 

 

128,446

 

37.1%

Diluted Earnings Per Share

$

7.86

 

 

$

4.89

 

60.7%

 

$

8.20

 

 

$

5.99

 

36.9%

Average Shares Outstanding

21,483

 

 

21,453

 

 

 

21,483

 

 

21,453

 

 

We have continued building positive momentum in 2021 with another quarter of strong sales and operating performance,” said Stephen G. Kaniewski, President and Chief Executive Officer. “Our results reflect the benefits of focused pricing actions and our growth strategies, combined with the strength of our businesses and execution by our global teams. Through these actions, we achieved record third-quarter sales, grew adjusted operating income 20 percent year-over-year and delivered adjusted diluted earnings per share growth of 30 percent, despite ongoing inflationary pressures of higher raw materials, freight and labor. Sales growth this quarter was once again led by significantly higher sales in Irrigation, as strong global agricultural market fundamentals are driving positive farmer sentiment, and deliveries of the large Egypt project continued. Robust market demand for improving grid resiliency and renewable energy usage, and increased pricing are driving continued sales growth in Utility Support Structures. Higher sales in Engineered Support Structures were led by a focus on pricing and growth of wireless communication products and components, and solid execution globally helped drive this segment’s third-quarter operating profit margins above 12 percent for the first time. Sales growth in Coatings was led by pricing and improved industrial production levels compared to last year.”

Kaniewski continued, “Year-to-date, we have delivered strong results driven by the engagement and focus of our employees and successful execution of our strategies, in spite of a challenging macro environment. I am incredibly proud of the way our team continues to perform and would like to thank our employees for their hard work in delivering these results and continuing to provide exceptional service to our customers.”

Third Quarter 2021 Segment Review

Infrastructure

Utility Support Structures Segment (31.8% of Sales)

Steel, concrete and composite structures for utility markets, including transmission, distribution, substations, renewable energy generation equipment and drone inspection services

Sales of $276.5 million grew slightly year-over-year. Significantly higher pricing and higher volumes in North American markets due to utilities’ ongoing investments in grid resiliency were mostly offset by lower global generation sales primarily related to large projects in 2020 that did not repeat this year.

Operating Income was $24.6 million or 8.9% of sales compared to $25.9 million or 9.4% of sales ($29.2 million or 10.6% adjusted1) in 2020. Higher average selling prices were more than offset by the impact of continued raw material cost inflation that was not fully recovered through pricing mechanisms during the quarter, and lower global generation product sales.

Engineered Support Structures Segment (32.4% of Sales)

Poles, towers and components for the lighting, transportation and wireless communication markets, engineered access systems, integrated structure solutions for smart cities, and highway safety products

Sales of $281.1 million increased 10.0% year-over-year, due to favorable pricing in all regions and higher sales of wireless communication products and components.

Lighting and transportation sales of $188.6 million increased 3.9% year-over-year, as favorable pricing and higher commercial lighting sales more than offset lower transportation volumes in most regions.

Wireless communication products and components sales of $63.4 million increased 25.2% year-over-year. Capital investments from wireless carriers supporting 5G buildouts, and favorable pricing led to sales growth.

Access systems sales of $29.1 million increased 24.3% year-over-year, primarily due to improved end markets in Australia.

Operating Income improved to $34.4 million or 12.2% of sales compared to $25.4 million or 9.9% of sales ($26.4 million or 10.3% adjusted1) in 2020. Profitability improvement was driven by favorable pricing and improved fixed cost leverage.

Coatings Segment (11.1% of Sales)

Galvanizing, painting and anodizing services to preserve and protect metal products

Sales of $96.7 million increased 10.0% year-over-year, due to higher average selling prices and sales from the new greenfield facility in Pittsburgh, PA that commenced operations earlier this year.

Operating Income was $12.5 million or 12.9% of sales compared to $12.4 million or 14.1% of sales ($13.7 million or 15.6% adjusted1) in 2020. Lower profitability was driven by higher cost inflation that was not yet fully recovered by price, and startup costs related to the new Pittsburgh facility.

Agriculture

Irrigation Segment (27.7% of Sales)

Center pivots and linear irrigation equipment for agricultural markets, including parts, services, and tubular products, and advanced technology solutions for water management and precision agriculture

Global sales of $240.3 million increased 72.6% year-over-year, due to higher volumes in all markets, particularly Egypt, North America and Brazil, favorable pricing, and higher technology sales.

North American sales of $116.3 million grew 53.4% compared to 2020. Sales growth was led by favorable pricing, higher volumes due to continued strength in agricultural markets and higher industrial tubing sales.

International sales of $124.0 million nearly doubled year-over-year. Sales growth was led by continued strong demand, including deliveries of the large Egypt project and higher sales in Brazil, Africa and Europe.

Global backlog increased 26.0% year-over-year to $388.0 million, demonstrating the underlying strength in agricultural markets globally.

Operating Income improved to $27.7 million, or 11.5% of sales ($32.0 million or 13.3% adjusted1) compared to $14.7 million, or 10.6% of sales in 2020. Profitability growth was driven by higher volumes, favorable pricing and improved operational efficiencies, partially offset by SG&A expense from the recent Prospera acquisition.

Global Supply Chain and Continuation of COVID-19 Safety Protocols

Since the start of the pandemic, the Company has been taking measured and deliberate steps to strengthen its global supply chain. Through its strong relationships with many strategic suppliers, Valmont has experienced no significant supply disruptions, and has been able to continue procuring raw materials and components critical to its operations, including steel, aluminum and zinc. Other supply constraints have been largely mitigated by effectively utilizing the Company’s global footprint.

Valmont monitors health advisories on a continuous basis and will continue to follow CDC, WHO and local guidelines to protect the safety, health and well-being of employees, customers, suppliers and communities.

Balance Sheet, Liquidity and Capital Allocation

Year-to-date cash flows from operations are $61.8 million, primarily reflecting higher levels of net working capital to proactively manage supply chain disruptions and support strong sales growth. At the end of third quarter, cash and cash equivalents were $170.0 million. Valmont purchased $2.5 million of company stock in the third quarter, and $123.9 million remains on the current authorization with no expiration. The Company remains committed to maintaining its Investment Grade credit rating.

2021 Financial Outlook and Key Assumptions

The Company is raising the bottom end of its full-year diluted EPS guidance range and reaffirming key assumptions for the remainder of 2021. GAAP diluted EPS is now expected to be $10.10 to $10.60 and adjusted diluted EPS is now expected to be $10.60 to $11.101. Full-year Net Sales growth is expected to be 17% to 18%, and Irrigation segment sales growth is expected to be 50% to 53%. The revised guidance reflects the Company’s year-to-date results, strength in global agricultural markets, continued favorable end-market demand across all businesses and expected recovery of cost inflation.

2021 Full Year Financial Outlook

Previous Outlook

Revised Outlook

Net Sales Growth (vs. PY)

16% to 19%

17% to 18%

Irrigation Segment Sales Growth (vs. PY)

45% to 50%

50% to 53%

GAAP Diluted EPS1

$9.90 to $10.60

$10.10 to $10.60

Adjusted Diluted EPS1

$10.40 to $11.10

$10.60 to $11.10

2021 Key Assumptions

  • Favorable foreign currency translation impact of approximately 1.0% of Net Sales
  • Fourth quarter tax rate of approximately 24.0%
  • Capital expenditures to be in the range of $110 – $120 million to support strategic growth and Industry 4.0 advanced manufacturing initiatives
  • No pandemic-driven closures of large manufacturing facilities, workforce disruptions, or significant supply chain interruptions

The strong market drivers we are seeing across our businesses, and our team’s proven ability to manage through this unprecedented macro environment give us confidence about the remainder of this year,” Kaniewski added. “We entered the fourth quarter with a record backlog of more than $1.5 billion reflecting strong market demand. In the Utility Support Structures segment, despite continued steel cost increases, we expect sequential margin improvement as pricing becomes more aligned with inflation. Our backlog of more than $760.0 million in this segment is indicative of the long-term market drivers of grid resiliency and the increasing use of renewable energy. In Engineered Support Structures, the long-term need for critical infrastructure investment globally, including current and future stimulus programs, gives us confidence in future growth. We are benefiting from increasing demand in wireless communications markets as 5G build-outs are accelerating. Our Coatings business has been trending in-line with industrial production levels. In Irrigation, a solid international project pipeline and favorable market trends globally are providing strong momentum well into next year. Across the portfolio, we continue to quickly execute pricing strategies to recover the impact of inflation and leverage the strength of our global supply chain. Additionally, our balance sheet remains strong, giving us flexibility to execute our long-term strategic plan.”

Kaniewski continued, “Strong market demand, the strength of our operations, and our continued pricing actions across the portfolio give us confidence as we look ahead to next year. In 2022 we expect sales growth of 7% to 12% and earnings per share growth of 13% to 15%, in line with the 3- to-5 year growth targets we communicated at our May 2021 Investor Day. We are in a position of strength with a diverse and talented team who are driven by our core values to deliver results for our customers and our stakeholders.”

A live audio discussion with Stephen G. Kaniewski, President and Chief Executive Officer, and Avner M. Applbaum, Executive Vice President and Chief Financial Officer, will be accessible by telephone on Thursday, October 21, 2021 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 3Q 2021 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 13713723. The replay will be available through 10:59 p.m. CDT on October 28, 2021.

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, 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)

 

 

Third Quarter

 

Year-to-Date

 

13 Weeks Ended

 

39 Weeks Ended

 

 

 

 

 

 

 

 

 

25-Sep-21

 

26-Sep-20

 

25-Sep-21

 

26-Sep-20

Net sales

$

868,782

 

 

$

733,970

 

 

$

2,538,297

 

 

$

2,096,978

 

Cost of sales

641,378

 

 

543,223

 

 

1,876,692

 

 

1,536,045

 

Gross profit

227,404

 

 

190,747

 

 

661,605

 

 

560,933

 

Selling, general and administrative expenses

151,209

 

 

129,268

 

 

425,574

 

 

372,481

 

Impairment of goodwill and intangible assets

 

 

 

 

 

 

16,638

 

Operating income

76,195

 

 

61,479

 

 

236,031

 

 

171,814

 

Other income (expense)

 

 

 

 

 

 

 

Interest expense

(11,031

)

 

(10,454

)

 

(31,466

)

 

(30,566

)

Interest income

397

 

 

430

 

 

894

 

 

1,931

 

Gain on investments (unrealized)

488

 

 

900

 

 

1,556

 

 

1,102

 

Other

2,644

 

 

233

 

 

10,297

 

 

1,349

 

Other income (expense), net

(7,502

)

 

(8,891

)

 

(18,719

)

 

(26,184

)

Earnings before income taxes

68,693

 

 

52,588

 

 

217,312

 

 

145,630

 

Income tax expense

16,080

 

 

12,084

 

 

46,322

 

 

39,172

 

Equity in (loss) of nonconsolidated subsidiaries

(360

)

 

(276

)

 

(1,079

)

 

(755

)

Net earnings

52,253

 

 

40,228

 

 

169,911

 

 

105,703

 

Less: Loss (earnings) attributable to non-controlling interests

(603

)

 

(886

)

 

(1,137

)

 

(825

)

Net earnings attributable to Valmont Industries, Inc.

$

51,650

 

 

$

39,342

 

 

$

168,774

 

 

$

104,878

 

 

 

 

 

 

 

 

 

Average shares outstanding (000’s) – Basic

21,175

 

 

21,309

 

 

21,182

 

 

21,358

 

Earnings per share – Basic

$

2.44

 

 

$

1.85

 

 

$

7.97

 

 

$

4.91

 

 

 

 

 

 

 

 

 

Average shares outstanding (000’s) – Diluted

21,552

 

 

21,416

 

 

21,483

 

 

21,453

 

Earnings per share – Diluted

$

2.40

 

 

$

1.84

 

 

$

7.86

 

 

$

4.89

 

 

 

 

 

 

 

 

 

Cash dividends per share

$

0.500

 

 

$

0.450

 

 

$

1.500

 

 

$

1.350

 

 

 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OPERATING RESULTS

(Dollars in thousands)

(unaudited)

 

 

Third Quarter

 

Year-to-Date

 

13 Weeks Ended

 

39 Weeks Ended

 

25-Sep-21

 

26-Sep-20

 

25-Sep-21

 

26-Sep-20

Net sales

 

 

 

 

 

 

 

Utility Support Structures

$

276,502

 

 

$

274,393

 

 

$

797,498

 

 

$

731,178

 

Engineered Support Structures

281,097

 

 

255,656

 

 

772,813

 

 

739,783

 

Coatings

96,685

 

 

87,886

 

 

288,131

 

 

255,976

 

Infrastructure products

654,284

 

 

617,935

 

 

1,858,442

 

 

1,726,937

 

Irrigation

240,331

 

 

139,209

 

 

751,960

 

 

446,568

 

Less: Intersegment sales

(25,833

)

 

(23,174

)

 

(72,105

)

 

(76,527

)

Total

$

868,782

 

 

$

733,970

 

 

$

2,538,297

 

 

$

2,096,978

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

Utility Support Structures

$

24,561

 

 

$

25,881

 

 

$

61,168

 

 

$

75,255

 

Engineered Support Structures

34,383

 

 

25,434

 

 

86,235

 

 

46,183

 

Coatings

12,478

 

 

12,416

 

 

40,018

 

 

33,618

 

Infrastructure products

71,422

 

 

63,731

 

 

187,421

 

 

155,056

 

Irrigation

27,735

 

 

14,687

 

 

108,467

 

 

60,701

 

Corporate

(22,962

)

 

(16,939

)

 

(59,857

)

 

(43,943

)

Total

$

76,195

 

 

$

61,479

 

 

$

236,031

 

 

$

171,814

 

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

Utility Support Structures: This segment consists of the manufacture of steel, concrete and composite structures for utility markets, including transmission, distribution, substations, renewable energy generation equipment and drone inspection services.

Engineered Support Structures: This segment consists of the manufacture and distribution of poles, towers and components for the lighting, transportation and wireless communication markets, engineered access systems, integrated structure solutions for smart cities, and highway safety products.

Coatings: This segment consists of global galvanizing, painting and anodizing services to preserve and protect metal products.

Irrigation: This segment consists of the global manufacture of center pivots and linear irrigation equipment for agricultural markets, including, parts, services, and tubular products, and advanced technology solutions for water management and precision agriculture

 

 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

 

 

25-Sep-21

 

26-Dec-20

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

169,795

 

 

$

400,726

 

Accounts receivable, net

537,693

 

 

511,714

 

Inventories

655,903

 

 

448,941

 

Contract asset – costs and profits in excess of billings

155,417

 

 

123,495

 

Prepaid expenses and other assets

95,965

 

 

59,804

 

Refundable income taxes

 

 

9,945

 

Total current assets

1,614,773

 

 

1,554,625

 

Property, plant and equipment, net

617,313

 

 

597,727

 

Goodwill and other assets

1,179,178

 

 

800,808

 

 

$

3,411,264

 

 

$

2,953,160

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Current installments of long-term debt

$

4,803

 

 

$

2,748

 

Notes payable to banks

13,765

 

 

35,147

 

Accounts payable

338,723

 

 

268,099

 

Accrued expenses

241,058

 

 

227,735

 

Contract liability – billings in excess of costs and earnings

138,286

 

 

130,018

 

Income taxes payable

3,734

 

 

 

Dividend payable

10,610

 

 

9,556

 

Total current liabilities

750,979

 

 

673,303

 

Long-term debt, excluding current installments

897,488

 

 

728,431

 

Operating lease liabilities

148,031

 

 

80,202

 

Other long-term liabilities

270,034

 

 

263,388

 

Shareholders’ equity

1,344,732

 

 

1,207,836

 

 

$

3,411,264

 

 

$

2,953,160

 

 

 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

 

 

Third Quarter

 

39 Weeks Ended

 

25-Sep-21

 

26-Sep-20

Cash flows from operating activities

 

 

 

Net Earnings

$

169,911

 

 

$

105,703

 

Depreciation and amortization

67,764

 

 

61,523

 

Impairment of long-lived assets

 

 

19,449

 

Contribution to defined benefit pension plan

(970

)

 

(17,398

)

Change in working capital

(157,473

)

 

119,617

 

Other

(17,403

)

 

(15,848

)

Net cash flows from operating activities

61,829

 

 

273,046

 

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of property, plant, and equipment

(80,509

)

 

(70,960

)

Acquisitions

(312,500

)

 

(15,862

)

Other

3,546

 

 

15,437

 

Net cash flows from investing activities

(389,463

)

 

(71,385

)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from long-term borrowings

236,710

 

 

88,872

 

Principal payments on long-term borrowings

(66,128

)

 

(76,417

)

Payments on short-term borrowings

(20,463

)

 

(6,462

)

Purchase of treasury shares

(24,101

)

 

(28,006

)

Purchase of noncontrolling interest

 

 

(55,916

)

Dividends paid

(30,794

)

 

(27,316

)

Other

5,792

 

 

(4,739

)

Net cash flows from financing activities

101,016

 

 

(109,984

)

Effect of exchange rates on cash and cash equivalents

(4,313

)

 

(2,164

)

Net change in cash and cash equivalents

(230,931

)

 

89,513

 

Cash and cash equivalents – beginning of year

400,726

 

 

353,542

 

Cash and cash equivalents – end of period

$

169,795

 

 

$

443,055

 

 

 

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) the intangible asset amortization and stock-based compensation recognized on the Prospera subsidiary, 2) a write off a receivable following arbitration of a commercial transaction from 2014, 3) acquisition diligence, 4) restructuring expenses on segment operating income and net earnings and 6) the impact of the U.K. tax rate change on net earnings (adjusts statutory tax rate from 19% to 25%). Amounts may be impacted by rounding. We believe the adjustments for Prospera allow for a better comparison of future Irrigation 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

 

Thirty-nine

 

Diluted

 

weeks ended

September 25,

 

earnings per

 

weeks ended

September 25,

 

earnings per

 

2021

 

share

 

2021

 

share

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

$

51,650

 

 

$

2.40

 

 

$

168,774

 

 

$

7.86

 

Prospera intangible asset amortization

 

1,926

 

 

 

0.09

 

 

 

1,926

 

 

 

0.09

 

Stock-based compensation – Prospera subsidiary

 

2,312

 

 

 

0.11

 

 

 

2,312

 

 

 

0.11

 

Write-off of a receivable, pre-tax

 

 

 

 

 

 

 

5,545

 

 

 

0.26

 

Acquisition diligence expense, pre-tax

 

 

 

 

 

 

 

1,120

 

 

 

0.05

 

Restructuring expense, pre-tax

 

 

 

 

 

 

 

1,560

 

 

 

0.07

 

Total Adjustments

 

4,238

 

 

 

0.20

 

 

 

12,463

 

 

 

0.58

 

Change in U.K. statutory tax rate

 

 

 

 

 

 

 

(2,819

)

 

 

(0.13

)

Tax effect of adjustments *

 

(604

)

 

 

(0.03

)

 

 

(2,358

)

 

 

(0.11

)

Net earnings attributable to Valmont Industries, Inc. – Adjusted

$

55,284

 

 

$

2.57

 

 

$

176,060

 

 

$

8.20

 

Average shares outstanding (000’s) – Diluted

 

 

 

21,552

 

 

 

 

 

21,483

 

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

  

 

 

Thirteen weeks ended September 25, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Reconciliation

 

Engineered

Support

Structures

 

Utility

Support

Structures

 

Coatings

 

Irrigation

 

Corporate

 

Valmont

Operating income – as reported

 

$

34,383

 

 

$

24,561

 

 

$

12,478

 

 

$

27,735

 

 

$

(22,962

)

 

$

76,195

 

Prospera intangible asset amortization

 

 

 

 

 

 

 

1,926

 

 

 

 

1,926

 

Stock-based compensation – Prospera subsidiary

 

 

 

 

 

 

 

2,312

 

 

 

 

2,312

 

Adjusted Operating Income

 

$

34,383

 

 

$

24,561

 

 

$

12,478

 

 

$

31,973

 

 

$

(22,962

)

 

$

80,433

 

Net Sales – as reported

 

281,097

 

 

276,502

 

 

96,685

 

 

240,331

 

 

NM

 

 

868,782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Sales

 

12.2

%

 

8.9

%

 

12.9

%

 

11.5

%

 

NM

 

 

8.8

%

Adjusted Operating Income as a % of Sales

 

12.2

%

 

8.9

%

 

12.9

%

 

13.3

%

 

NM

 

 

9.3

%

  

 

 

Thirty-nine weeks ended September 25, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Reconciliation

 

Engineered

Support

Structures

 

Utility

Support

Structures

 

Coatings

 

Irrigation

 

Corporate

 

Valmont

Operating income – as reported

 

$

86,235

 

 

$

61,168

 

 

$

40,018

 

 

$

108,467

 

 

$

(59,857

)

 

$

236,031

 

Prospera intangible asset amortization

 

 

 

 

 

 

 

1,926

 

 

 

 

1,926

 

Stock-based compensation – Prospera subsidiary

 

 

 

 

 

 

 

2,312

 

 

 

 

2,312

 

Write off a receivable, pre-tax

 

 

 

5,545

 

 

 

 

 

 

 

 

5,545

 

Acquisition diligence expense, pre-tax

 

 

 

 

 

 

 

 

 

1,120

 

 

1,120

 

Restructuring expense, pre-tax

 

 

 

650

 

 

 

 

910

 

 

 

 

1,560

 

Adjusted Operating Income

 

$

86,235

 

 

$

67,363

 

 

$

40,018

 

 

$

113,615

 

 

$

(58,737

)

 

$

248,494

 

Net Sales – as reported

 

772,813

 

 

797,498

 

 

288,131

 

 

751,960

 

 

NM

 

 

2,538,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Sales

 

11.2

%

 

7.7

%

 

13.9

%

 

14.4

%

 

NM

 

 

9.3

%

Adjusted Operating Income as a % of Sales

 

11.2

%

 

8.4

%

 

13.9

%

 

15.1

%

 

NM

 

 

9.8

%

 

The non-GAAP tables below disclose the impact of impairment of goodwill, tradenames, and a facility, restructuring costs on segment operating income and net earnings as well as the impact of the U.K. tax rate change on net earnings (adjusts statutory tax rate from 17% to 19%). Amounts may be impacted by rounding. 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 for the second quarter and first half of fiscal 2020.

 

Thirteen

 

Diluted

 

Thirty-nine

 

Diluted

 

weeks ended

September 26,

 

earnings per

 

weeks ended

September 26,

 

earnings per

 

2020

 

share

 

2020

 

share

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

$

39,342

 

 

$

1.84

 

 

$

104,878

 

 

$

4.89

 

Impairment of goodwill and tradename, pre-tax

 

 

 

 

 

 

 

16,638

 

 

 

0.78

 

Restructuring and related asset impairment costs – pre-tax

 

5,632

 

 

 

0.26

 

 

 

11,211

 

 

 

0.52

 

Total Adjustments

 

5,632

 

 

 

0.26

 

 

 

27,849

 

 

 

1.30

 

Tax effect of adjustments *

 

(776

)

 

 

(0.04

)

 

 

(2,753

)

 

 

(0.13

)

UK tax rate change

 

(1,528

)

 

 

(0.07

)

 

 

(1,528

)

 

 

(0.07

)

Net earnings attributable to Valmont Industries, Inc. – Adjusted

$

42,670

 

 

$

1.99

 

 

$

128,446

 

 

$

5.99

 

Average shares outstanding (000’s) – Diluted

 

 

 

21,416

 

 

 

 

 

21,453

 

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

  

 

 

Thirteen weeks ended September 26, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Reconciliation

 

Engineered

Support

Structures

 

Utility

Support

Structures

 

Coatings

 

Irrigation

 

Corporate

 

Valmont

Operating income – as reported

 

$

25,434

 

 

$

25,881

 

 

$

12,416

 

 

$

14,687

 

 

$

(16,939

)

 

$

61,479

 

Impairment of goodwill and tradename

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and related asset impairment costs

 

902

 

 

3,301

 

 

1,284

 

 

 

 

145

 

 

5,632

 

Adjusted Operating Income

 

$

26,336

 

 

$

29,182

 

 

$

13,700

 

 

$

14,687

 

 

$

(16,794

)

 

$

67,111

 

Net Sales – as reported

 

255,656

 

 

274,393

 

 

87,886

 

 

139,209

 

 

NM

 

 

733,970

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Sales

 

9.9

%

 

9.4

%

 

14.1

%

 

10.6

%

 

NM

 

 

8.4

%

Adjusted Operating Income as a % of Sales

 

10.3

%

 

10.6

%

 

15.6

%

 

10.6

%

 

NM

 

 

9.1

%

  

 

 

Thirty-nine weeks ended September 26, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Reconciliation

 

Engineered

Support

Structures

 

Utility

Support

Structures

 

Coatings

 

Irrigation

 

Corporate

 

Valmont

Operating income – as reported

 

$

46,183

 

 

$

75,255

 

 

$

33,618

 

 

$

60,701

 

 

$

(43,943

)

 

$

171,814

 

Impairment of goodwill and tradename

 

16,638

 

 

 

 

 

 

 

 

 

 

16,638

 

Restructuring and related asset impairment costs

 

2,364

 

 

6,975

 

 

1,506

 

 

 

 

366

 

 

11,211

 

Adjusted Operating Income

 

$

65,185

 

 

$

82,230

 

 

$

35,124

 

 

$

60,701

 

 

$

(43,577

)

 

$

199,663

 

Net Sales – as reported

 

739,783

 

 

731,178

 

 

255,976

 

 

446,568

 

 

NM

 

 

2,096,978

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Sales

 

6.2

%

 

10.3

%

 

13.1

%

 

13.6

%

 

NM

 

 

8.2

%

Adjusted Operating Income as a % of Sales

 

8.8

%

 

11.2

%

 

13.7

%

 

13.6

%

 

NM

 

 

9.5

%

 

 

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) write off a receivable following arbitration 2) restructuring costs, 3) acquisition diligence costs and 4) six months of (a) amortization of the technology intangible asset (Prospera Technologies) and (b) share-based compensation for Prospera employees and 5) the increase in the U.K. statutory tax rate. We believe the adjustments for Prospera allow for a better comparison of future Irrigation 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 for fiscal 2021.

 

 

 

 

 

 

Reconciliation of Range of Net Earnings – Full Year 2021

Low End

 

High End

 

Adjustments

Estimated net earnings – GAAP

$

217,000

 

 

$

228,000

 

 

 

Write-off of a receivable, pre-tax

 

 

 

 

5,545

 

Acquisition diligence expense, pre-tax

 

 

 

 

1,120

 

Estimated restructuring expense, pre-tax

 

 

 

 

1,560

 

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

 

 

 

 

3,750

 

Share-based compensation – Prospera (ML & AI subsidiary), pre-tax

 

 

 

 

4,950

 

Total pre-tax adjustments

 

 

 

 

16,925

 

Estimated tax benefit from above expenses*

 

 

 

 

(3,106

)

Change in U.K. statutory tax rate

 

 

 

 

(2,819

)

Total Adjustments, after-tax

 

 

 

 

$

11,000

 

Estimated net earnings – Adjusted

$

228,000

 

 

$

239,000

 

 

 

Diluted Earnings Per Share Range – GAAP

$

10.10

 

 

$

10.60

 

 

 

Diluted Earnings Per Share Range – Adjusted

$

10.60

 

 

$

11.10

 

 

 

____________________

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

 

Source