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Exhibit 99.1
| FOR IMMEDIATE RELEASE | |
| | |
Contact: | Renee Campbell | |
Email: | renee.campbell@valmont.com | |
Date: | October 26, 2022 | |
Valmont Reports Third Quarter 2022 Results
Record Sales and Earnings Reflect Continued Strong Demand Across Infrastructure and Agriculture Markets
Providing Preliminary Sales and Earnings Per Share Guidance for 2023
Omaha, NE - 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 third quarter ended September 24, 2022.
Third Quarter 2022 Highlights (all metrics compared to Third Quarter 2021 unless otherwise noted)
| ● | Record Third Quarter Net Sales of $1.1 billion increased 26.3% |
| ● | Operating Income increased 44.3% to $110.0 million, or 10.0% of net sales (increased 41.9% to $114.1 million or 10.4% adjusted1) compared to $76.2 million or 8.8% of net sales ($80.4 million or 9.3% adjusted1) |
| ● | Record Third Quarter Diluted Earnings per Share (EPS) of $3.34 ($3.49 adjusted1) compared to $2.40 ($2.57 adjusted1) |
| ● | Generated strong third quarter operating cash flows of $116 million driven by better overall working capital management including a reduction in inventory compared to second quarter 2022 |
| ● | Record backlog of $2.0 billion, an increase of 25.4% or $412 million since the end of fiscal 2021 and sequentially higher due to continued strong market demand across the portfolio |
| ● | Returned $22.4 million to shareholders through dividends and share repurchases |
1 Please see Reg G reconciliation to GAAP measures at end of document
Key Financial Metrics
Third Quarter 2022 | | GAAP | | Adjusted1 | | |||||||||||||
(000's except per share amounts) |
| 09/24/2022 |
| 09/25/2021 |
| |
| 09/24/2022 |
| 09/25/2021 |
| | | |||||
| | Q3 2022 | | Q3 2021 | | vs. Q3 2021 | | Q3 2022 | | Q3 2021 | | vs. Q3 2021 | | |||||
Net Sales | | $ | 1,097,382 | | $ | 868,782 | | 26.3 | % | | $ | 1,097,382 | | $ | 868,782 | | 26.3 | % |
Operating Income | | | 109,972 | | | 76,195 | | 44.3 | % | | | 114,147 | | | 80,433 | | 41.9 | % |
Operating Income as a % of Net Sales | | | 10.0 | % | | 8.8 | % | | | | | 10.4 | % | | 9.3 | % | | |
Net Earnings | | | 72,112 | | | 51,650 | | 39.6 | % | | | 75,313 | | | 55,284 | | 36.2 | % |
Diluted Earnings Per Share | | $ | 3.34 | | $ | 2.40 | | 39.2 | % | | $ | 3.49 | | $ | 2.57 | | 35.8 | % |
Average Shares Outstanding | | | 21,605 | | | 21,552 | | | | | | 21,605 | | | 21,552 | |
| |
YTD 2022 | | GAAP | | Adjusted1 | | |||||||||||||
(000's except per share amounts) |
| 09/24/2022 |
| 09/25/2021 |
| |
| 09/24/2022 |
| 09/25/2021 |
| | | |||||
| | FY 2022 | | FY 2021 | | vs. FY 2021 | | FY 2022 | | FY 2021 | | vs. FY 2021 | | |||||
Net Sales | | $ | 3,213,734 | | $ | 2,538,297 | | 26.6 | % | | $ | 3,213,734 | | $ | 2,538,297 | | 26.6 | % |
Operating Income | | | 323,533 | | | 236,031 | | 37.1 | % | | | 335,991 | | | 248,494 | | 35.2 | % |
Operating Income as a % of Net Sales | | | 10.1 | % | | 9.3 | % | | | | | 10.5 | % | | 9.8 | % |
| |
Net Earnings | | | 210,531 | | | 168,774 | | 24.7 | % | | | 220,883 | | | 176,060 | | 25.5 | % |
Diluted Earnings Per Share | | $ | 9.77 | | $ | 7.86 | | 24.3 | % | | $ | 10.25 | | $ | 8.20 | | 25.0 | % |
Average Shares Outstanding | | | 21,546 | | | 21,483 | | | | | | 21,546 | | | 21,483 | |
| |
“I am extremely pleased with the outstanding performance and record results delivered by the entire Valmont team this quarter,” said Stephen G. Kaniewski, President and Chief Executive Officer. “We continue to see strong demand globally for our products and solutions across infrastructure and agriculture markets. Broad-based infrastructure market strength is being driven by continued investments in grid resiliency and upgrades to aging infrastructure, ongoing demand for renewable power and clean energy solutions and the 5G network transition. Agriculture markets remain extremely favorable, as elevated commodity prices are being driven by tighter global grain supplies, ongoing demand for increased food production and a heightened focus on food security concerns. The typical seasonal decline in third quarter North America agriculture sales was less pronounced this year due to ongoing delivery of backlog and strong demand throughout the quarter. Despite continued challenges of inflation and supply chain volatility, we delivered record third quarter earnings per share as our team continues to live our core values of passion, integrity, and continuous improvement, with an unwavering focus on delivering results. Across our global portfolio we remain committed to the execution of our growth strategy while also improving profitability and delivering long-term value for our shareholders.”
Third Quarter 2022 Segment Review
Infrastructure (70.5% of Net Sales)
Products and solutions to serve the infrastructure markets of utility, renewable energy, lighting, transportation and telecommunications, and coatings services to preserve metal products
Sales of $778.4 million grew 22.7% year-over-year with double-digit sales growth across all product lines, net of 2.3% unfavorable foreign currency translation impacts. Higher sales were driven by favorable pricing globally, primarily in the Transmission, Distribution and Substation (TD&S), Lighting and Transportation (L&T), and Telecommunications product lines, higher volumes, notably in the Renewable Energy product line, and sales from the ConcealFab acquisition.
Operating Income improved to $93.6 million or 12.1% of net sales compared to $71.4 million or 11.3% in 2021, driven by favorable pricing and higher volumes.
1 Please see Reg G reconciliation to GAAP measures at end of document
Agriculture (29.5% 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 $327.3 million increased 36.2% year-over-year, with sales growth across North America and International markets, led by higher average selling prices of irrigation equipment and higher volumes, partially offset by lower project sales to Egypt. In Brazil, sales nearly doubled year-over-year, demonstrating continued robust market demand for irrigation equipment and ag solar products.
Operating Income improved to $43.3 million, or 13.3% of net sales ($47.4 million or 14.6% adjusted1) compared to $27.7 million or 11.7% of net sales ($32.0 million or 13.5% adjusted1) in 2021. The benefit of higher average selling prices and additional volume leverage was partially offset by higher SG&A, including incremental R&D expense for technology investments.
Balance Sheet, Liquidity and Capital Allocation
The Company generated year-to-date operating cash flows of $184 million through strong earnings and managing working capital while supporting strong revenue growth. At the end of the third quarter, cash and cash equivalents were $166 million. Valmont purchased approximately $11 million of company stock in the third quarter and approximately $101 million remains on the current authorization with no expiration.
Updating Full Year 2022 Financial Outlook and Key Assumptions and Providing 2023 Indications
The Company is updating its 2022 full-year net sales and diluted earnings per share outlook that were communicated last quarter and providing updated key assumptions for the year.
2022 Full Year Financial Outlook | | Previous Outlook | Revised Outlook |
Net Sales Growth (vs. PY) | | 20% to 21% | ~ 22% |
GAAP Diluted EPS1 | | $12.90 to $13.30 | $12.95 to $13.30 |
Adjusted Diluted EPS1 | | $13.60 to $14.00 | $13.65 to $14.00 |
Tax Rate | | ~ 27.5% | ~ 27.5% |
FX Translation Impact on Net Sales | | ~ (2.0%) | ~ (2.0%) |
Capital Expenditures | | $110 to $120 million | $95 to $105 million |
| ● | Revised net sales growth to reflect third quarter 2022 results |
| ● | Revised Diluted EPS to reflect expected mix of earnings and timing of project deliveries |
| ● | Capital expenditures now expected to be in the range of $95 - $105 million due to extended machinery lead times |
| ● | Providing indicative guidance for 2023 of net sales growth in the range of 6% to 9% and diluted EPS growth in the range of 11% to 15% |
Kaniewski continued, “The strong market drivers we are seeing across our businesses, our continued track record of execution and a record backlog of ~$2 billion, give us confidence going forward. The long-term need for critical infrastructure investment globally, including current and future stimulus programs, are driving sustainable demand across our Infrastructure businesses. Favorable agriculture market trends across global markets and a strong international project pipeline are providing momentum for our Agriculture business well into next year.”
Added Kaniewski, "Looking ahead to 2023, we believe favorable market conditions and strong demand will continue, and our robust backlog and ongoing pricing strategies across the portfolio give us confidence in revenue and profitability growth next year. In 2023, we expect sales growth of 6% to 9% and earnings per share growth of 11% to 15%. Through our diversified business portfolio, return on invested capital focus, and
1 Please see Reg G reconciliation to GAAP measures at end of document
organizational emphasis on ESG principles, we are in a position of strength with a talented team who are driven by our core values to deliver results for our customers and our stakeholders. We remain focused on what we can control: leveraging our business model and Valmont team to deliver innovative products and solutions to our customers, advancing operational excellence, and executing on strategic initiatives that drive sustainable, profitable growth. Additionally, our balance sheet remains strong, giving us flexibility to execute our long-term strategic plan.”
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 27, 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 3Q 2022 Earnings Conference Call. A slide presentation will simultaneously be available for download on the Investors page of valmont.com. A replay of the event can be accessed three hours after the call at the above link or by telephone at 1-877-660-6853 or 1-201-612-7415. Please use access code 13733566. The replay will be available through 10:59 p.m. CDT on November 03, 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 the pandemic 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)
| | Third Quarter | | Year-to-Date | ||||||||
| | 13 Weeks Ended | | 39 Weeks Ended | ||||||||
| | 09/24/2022 |
| 09/25/2021 |
| 09/24/2022 |
| 09/25/2021 | ||||
Net sales | | $ | 1,097,382 | | $ | 868,782 | | $ | 3,213,734 | | $ | 2,538,297 |
Cost of sales | | | 811,904 | | | 641,378 | | | 2,386,469 | | | 1,876,692 |
Gross profit | | | 285,478 | | | 227,404 | | | 827,265 | | | 661,605 |
Selling, general and administrative expenses | | | 175,506 | | | 151,209 | | | 503,732 | | | 425,574 |
Operating income | | | 109,972 | | | 76,195 | | | 323,533 | | | 236,031 |
Other income (expense) | | |
| | |
| | |
| | |
|
Interest expense | | | (11,629) | | | (11,031) | | | (34,278) | | | (31,466) |
Interest income | | | 507 | | | 397 | | | 1,019 | | | 894 |
Gain (loss) on investments (unrealized) | | | (901) | | | 488 | | | (4,306) | | | 1,556 |
Other | | | 2,822 | | | 2,644 | | | 8,537 | | | 10,297 |
Other income (expense), net | | | (9,201) | | | (7,502) | | | (29,028) | | | (18,719) |
Earnings before income taxes | | | 100,771 | | | 68,693 | | | 294,505 | | | 217,312 |
Income tax expense | | | 27,823 | | | 16,080 | | | 80,531 | | | 46,322 |
Equity in loss of nonconsolidated subsidiaries | | | (18) | | | (360) | | | (931) | | | (1,079) |
Net earnings | | | 72,930 | | | 52,253 | | | 213,043 | | | 169,911 |
Less: earnings attributable to non-controlling interests | | | (818) | | | (603) | | | (2,512) | | | (1,137) |
Net earnings attributable to Valmont Industries, Inc. | | $ | 72,112 | | $ | 51,650 | | $ | 210,531 | | $ | 168,774 |
| | | | | | | | | | | | |
Average shares outstanding (000's) - Basic | | | 21,332 | | | 21,175 | | | 21,308 | | | 21,182 |
Earnings per share - Basic | | $ | 3.38 | | $ | 2.44 | | $ | 9.88 | | $ | 7.97 |
| | | | | | | | | | | | |
Average shares outstanding (000's) - Diluted | | | 21,605 | | | 21,552 | | | 21,546 | | | 21,483 |
Earnings per share - Diluted | | $ | 3.34 | | $ | 2.40 | | $ | 9.77 | | $ | 7.86 |
| | | | | | | | | | | | |
Cash dividends per share | | $ | 0.55 | | $ | 0.50 | | $ | 1.65 | | $ | 1.50 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
| | | Third Quarter | | | Year-to-Date | ||||||
| | 13 Weeks Ended | | 39 Weeks Ended | ||||||||
| | 09/24/2022 |
| 09/25/2021 |
| 09/24/2022 |
| 09/25/2021 | ||||
Net sales | | | | | | | | | | | | |
Infrastructure | | $ | 778,353 | | $ | 634,283 | | $ | 2,224,029 | | $ | 1,801,533 |
Agriculture | | | 327,261 | | | 240,331 | | | 1,011,606 | | | 751,960 |
Total | | | 1,105,614 | | | 874,614 | | | 3,235,635 | | | 2,553,493 |
Less: Intersegment sales | | | (8,232) | | | (5,832) | | | (21,901) | | | (15,196) |
Total | | $ | 1,097,382 | | $ | 868,782 | | $ | 3,213,734 | | $ | 2,538,297 |
| | | | | | | | | | | | |
Operating Income | | |
| | |
| | |
| | |
|
Infrastructure | | $ | 93,572 | | $ | 71,422 | | $ | 255,722 | | $ | 187,421 |
Agriculture | | | 43,258 | | | 27,735 | | | 138,779 | | | 108,467 |
Corporate | | | (26,858) | | | (22,962) | | | (70,968) | | | (59,857) |
Total | | $ | 109,972 | | $ | 76,195 | | $ | 323,533 | | $ | 236,031 |
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 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 September 24, 2022 | ||||||||||
| | | | | | | | Intersegment | | | | |
|
| Infrastructure |
| Agriculture |
| Sales |
| Consolidated | ||||
Geographical market: | | | | | | | | | | | | |
North America | | $ | 579,628 | | $ | 178,626 | | $ | (7,114) | | $ | 751,140 |
International | | | 198,725 | | | 148,635 | | | (1,118) | | | 346,242 |
Total | | $ | 778,353 | | $ | 327,261 | | $ | (8,232) | | $ | 1,097,382 |
| | | | | | | | | | | | |
Product line: | | |
| | |
| | |
| | |
|
Transmission, Distribution and Substation | | $ | 304,781 | | $ | — | | $ | — | | $ | 304,781 |
Lighting and Transportation | | | 241,590 | | | — | | | — | | | 241,590 |
Coatings | | | 91,969 | | | — | | | (3,994) | | | 87,975 |
Telecommunications | | | 92,830 | | | — | | | — | | | 92,830 |
Renewable Energy | | | 47,183 | | | — | | | (1,118) | | | 46,065 |
Irrigation Equipment and Parts, | | | | | | | | | | | | |
excluding Technology | | | — | | | 303,003 | | | (3,120) | | | 299,883 |
Technology Products and Services | | | — | | | 24,258 | | | — | | | 24,258 |
Total | | $ | 778,353 | | $ | 327,261 | | $ | (8,232) | | $ | 1,097,382 |
| | Thirteen weeks ended September 25, 2021 | ||||||||||
| | | | | | | | Intersegment | | | | |
|
| Infrastructure |
| Agriculture |
| Sales |
| Consolidated | ||||
Geographical market: | | | | | | | | | | | | |
North America | | $ | 439,610 | | $ | 116,308 | | $ | (5,832) | | $ | 550,086 |
International | | | 194,673 | | | 124,023 | | | — | | | 318,696 |
Total | | $ | 634,283 | | $ | 240,331 | | $ | (5,832) | | $ | 868,782 |
| | | | | | | | | | | | |
Product line: | | | | | | | | | | | | |
Transmission, Distribution and Substation | | $ | 239,572 | | $ | — | | $ | — | | $ | 239,572 |
Lighting and Transportation | | | 217,962 | | | — | | | — | | | 217,962 |
Coatings | | | 76,761 | | | — | | | (1,826) | | | 74,935 |
Telecommunications | | | 63,088 | | | — | | | — | | | 63,088 |
Renewable Energy | | | 36,900 | | | — | | | — | | | 36,900 |
Irrigation Equipment and Parts, | | | | | | | | | | | | |
excluding Technology | | | — | | | 218,892 | | | (4,006) | | | 214,886 |
Technology Products and Services | | | — | | | 21,439 | | | — | | | 21,439 |
Total | | $ | 634,283 | | $ | 240,331 | | $ | (5,832) | | $ | 868,782 |
| | Thirty-nine weeks ended September 24, 2022 | ||||||||||
| | | | | | | | Intersegment | | | | |
|
| Infrastructure |
| Agriculture |
| Sales |
| Consolidated | ||||
Geographical market: | | | | | | | | | | | | |
North America | | $ | 1,645,472 | | $ | 564,369 | | $ | (20,316) | | $ | 2,189,525 |
International | | | 578,557 | | | 447,237 | | | (1,585) | | | 1,024,209 |
Total | | $ | 2,224,029 | | $ | 1,011,606 | | $ | (21,901) | | $ | 3,213,734 |
| | | | | | | | | | | | |
Product line: | | | | | | | | | | | | |
Transmission, Distribution and Substation | | $ | 882,216 | | $ | — | | $ | — | | $ | 882,216 |
Lighting and Transportation | | | 701,009 | | | — | | | — | | | 701,009 |
Coatings | | | 264,266 | | | — | | | (11,295) | | | 252,971 |
Telecommunications | | | 232,765 | | | — | | | — | | | 232,765 |
Renewable Energy | | | 143,773 | | | — | | | (1,118) | | | 142,655 |
Irrigation Equipment and Parts, | | | | | | | | | | | | |
excluding Technology | | | — | | | 928,622 | | | (9,488) | | | 919,134 |
Technology Products and Services | | | — | | | 82,984 | | | — | | | 82,984 |
Total | | $ | 2,224,029 | | $ | 1,011,606 | | $ | (21,901) | | $ | 3,213,734 |
| | Thirty-nine weeks ended September 25, 2021 | ||||||||||
| | | | | | | | Intersegment | | | | |
|
| Infrastructure |
| Agriculture |
| Sales |
| Consolidated | ||||
Geographical market: | | | | | | | | | | | | |
North America | | $ | 1,246,512 | | $ | 395,096 | | $ | (15,196) | | $ | 1,626,412 |
International | | | 555,021 | | | 356,864 | | | — | | | 911,885 |
Total | | $ | 1,801,533 | | $ | 751,960 | | $ | (15,196) | | $ | 2,538,297 |
| | | | | | | | | | | | |
Product line: | | |
| | |
| | |
| | | |
Transmission, Distribution and Substation | | $ | 668,474 | | $ | — | | $ | — | | $ | 668,474 |
Lighting and Transportation | | | 609,725 | | | — | | | — | | | 609,725 |
Coatings | | | 231,900 | | | — | | | (7,823) | | | 224,077 |
Telecommunications | | | 162,830 | | | — | | | — | | | 162,830 |
Renewable Energy | | | 128,604 | | | — | | | — | | | 128,604 |
Irrigation Equipment and Parts, | | | | | | | | | | | | |
excluding Technology | | | — | | | 679,600 | | | (7,373) | | | 672,227 |
Technology Products and Services | | | — | | | 72,360 | | | — | | | 72,360 |
Total | | $ | 1,801,533 | | $ | 751,960 | | $ | (15,196) | | $ | 2,538,297 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
| | 09/24/2022 |
| 12/25/2021 | ||
ASSETS | | | | | | |
Current assets: | | | | | | |
Cash and cash equivalents | | $ | 166,221 | | $ | 177,232 |
Accounts receivable, net | | | 614,411 | | | 571,593 |
Inventories | | | 746,282 | | | 728,834 |
Contract asset - costs and profits in excess of billings | | | 215,684 | | | 142,643 |
Prepaid expenses and other assets | | | 107,476 | | | 83,646 |
Refundable income taxes | | | — | | | 8,815 |
Total current assets | | | 1,850,074 | | | 1,712,763 |
Property, plant and equipment, net | | | 596,850 | | | 598,605 |
Goodwill and other assets | | | 1,174,805 | | | 1,135,881 |
| | $ | 3,621,729 | | $ | 3,447,249 |
| | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | |
| | |
|
Current liabilities: | | |
| | |
|
Current installments of long-term debt | | $ | 2,106 | | $ | 4,884 |
Notes payable to banks | | | 4,935 | | | 13,439 |
Accounts payable | | | 376,508 | | | 347,841 |
Accrued expenses | | | 261,900 | | | 253,330 |
Contract liability - billings in excess of costs and earnings | | | 200,341 | | | 135,746 |
Income taxes payable | | | 10,668 | | | — |
Dividend payable | | | 11,733 | | | 10,616 |
Total current liabilities | | | 868,191 | | | 765,856 |
Long-term debt, excluding current installments | | | 935,129 | | | 947,072 |
Operating lease liabilities | | | 156,860 | | | 147,759 |
Other long-term liabilities | | | 88,798 | | | 172,965 |
Shareholders' equity | | | 1,572,751 | | | 1,413,597 |
| | $ | 3,621,729 | | $ | 3,447,249 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
| | 39 Weeks Ended | ||||
| | 09/24/2022 |
| 09/25/2021 | ||
Cash flows from operating activities | | | | | | |
Net Earnings | | $ | 213,043 | | $ | 169,911 |
Depreciation and amortization | | | 72,803 | | | 67,764 |
Contribution to defined benefit pension plan | | | (17,155) | | | (970) |
Change in working capital | | | (96,995) | | | (183,030) |
Other | | | 12,030 | | | 8,154 |
Net cash flows from operating activities | | | 183,726 | | | 61,829 |
| | | | | | |
Cash flows from investing activities | | |
| | |
|
Purchase of property, plant, and equipment | | | (67,122) | | | (80,509) |
Acquisitions | | | (39,287) | | | (312,500) |
Other | | | (37) | | | 3,546 |
Net cash flows from investing activities | | | (106,446) | | | (389,463) |
| | | | | | |
Cash flows from financing activities | | |
| | |
|
Proceeds from long-term borrowings | | | 235,470 | | | 236,710 |
Principal payments on long-term borrowings | | | (251,155) | | | (66,128) |
Net payments on short-term borrowings | | | (8,229) | | | (20,463) |
Purchase of treasury shares | | | (20,491) | | | (24,101) |
Purchase of noncontrolling interest | | | (7,338) | | | — |
Dividends paid | | | (34,080) | | | (30,794) |
Other | | | 6,680 | | | 5,792 |
Net cash flows from financing activities | | | (79,143) | | | 101,016 |
Effect of exchange rates on cash and cash equivalents | | | (9,148) | | | (4,313) |
Net change in cash and cash equivalents | | | (11,011) | | | (230,931) |
Cash and cash equivalents - beginning of year | | | 177,232 | | | 400,726 |
Cash and cash equivalents - end of period | | $ | 166,221 | | $ | 169,795 |
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 intangible asset amortization (Prospera) and stock-based compensation recognized for the Prospera employees on fiscal 2022 and 2021 results. We believe the adjustments for Prospera allow for a better investor understanding of Agriculture segment performance related to traditional segment products. The non-GAAP tables below also disclose the impact of a write off a receivable following arbitration of a commercial transaction from 2014, acquisition diligence and restructuring expenses on segment operating income and net earnings as well as the impact of the U.K. tax rate change on net earnings (adjusts GAAP tax rate from 19.0% to 22.5%) on fiscal 2021 results. 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.
| | Thirteen | | Diluted | | Thirty-nine | | Diluted | ||||
| | weeks ended | | earnings per | | weeks ended | | earnings per | ||||
| | September 24, 2022 | | share | | September 24, 2022 | | share | ||||
Net earnings attributable to Valmont Industries, Inc. - as reported | | $ | 72,112 | | $ | 3.34 | | $ | 210,531 | | $ | 9.77 |
Prospera intangible asset amortization | | | 1,645 | | | 0.08 | | | 4,935 | | | 0.23 |
Stock-based compensation - Prospera | | | 2,530 | | | 0.12 | | | 7,523 | | | 0.35 |
Total Adjustments, pre-tax1 | | | 4,175 | | | 0.19 | | | 12,458 | | | 0.58 |
Tax effect of adjustments2 | | | (974) | | | (0.05) | | | (2,106) | | | (0.10) |
Net earnings attributable to Valmont Industries, Inc. - Adjusted1 | | $ | 75,313 | | $ | 3.49 | | $ | 220,883 | | $ | 10.25 |
Average shares outstanding (000’s) - Diluted | | | | | | 21,605 | | |
| | | 21,546 |
| | Thirteen | | Diluted | | Thirty-nine | | Diluted | ||||
| | weeks ended | | earnings per | | weeks ended | | earnings per | ||||
| | September 25, 2021 | | share | | September 25, 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 | | | 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, pre-tax1 | | | 4,238 | | | 0.20 | | | 12,463 | | | 0.58 |
Change in U.K. statutory tax rate | | | — | | | — | | | (2,819) | | | (0.13) |
Tax effect of adjustments2 | | | (604) | | | (0.03) | | | (2,358) | | | (0.11) |
Net earnings attributable to Valmont Industries, Inc. - Adjusted1 | | $ | 55,284 | | $ | 2.57 | | $ | 176,060 | | $ | 8.20 |
Average shares outstanding (000’s) - Diluted | | | | | | 21,552 | | |
| | | 21,483 |
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 September 24, 2022 | | ||||||||||
Operating Income Reconciliation | | Infrastructure |
| Agriculture |
| Corporate |
| Valmont | |||||
Operating income - as reported | | $ | 93,572 | | $ | 43,258 | | $ | (26,858) | | $ | 109,972 | |
Stock-based compensation - Prospera | | | — | | | 2,530 | | | — | | | 2,530 | |
Prospera intangible asset amortization | | | — | | | 1,645 | | | — | | | 1,645 | |
Adjusted Operating Income | | $ | 93,572 | | $ | 47,433 | | $ | (26,858) | | $ | 114,147 | |
Net Sales - as reported | | | 773,241 | | | 324,141 | | | NM | | | 1,097,382 | |
| | | | | | | | | | | | | |
Operating Income as a % of Net Sales | | | 12.1 | % | | 13.3 | % | | NM | | | 10.0 | % |
Adjusted Operating Income as a % of Net Sales | | | 12.1 | % | | 14.6 | % | | NM | | | 10.4 | % |
| | Thirteen weeks ended September 25, 2021 | | ||||||||||
Operating Income Reconciliation | | Infrastructure |
| Agriculture |
| Corporate |
| Valmont | |||||
Operating income - as reported | | $ | 71,422 | | $ | 27,735 | | $ | (22,962) | | $ | 76,195 | |
Prospera intangible asset amortization | | | — | | | 1,926 | | | — | | | 1,926 | |
Stock-based compensation - Prospera | | | — | | | 2,312 | | | — | | | 2,312 | |
Adjusted Operating Income | | $ | 71,422 | | $ | 31,973 | | $ | (22,962) | | $ | 80,433 | |
Net Sales - as reported | | | 632,457 | | | 236,325 | | | NM | | | 868,782 | |
| | | | | | | | | | | | | |
Operating Income as a % of Net Sales | | | 11.3 | % | | 11.7 | % | | NM | | | 8.8 | % |
Adjusted Operating Income as a % of Net Sales | | | 11.3 | % | | 13.5 | % | | NM | | | 9.3 | % |
| | Thirty-nine weeks ended September 24, 2022 | | ||||||||||
Operating Income Reconciliation | | Infrastructure |
| Agriculture |
| Corporate |
| Valmont | |||||
Operating income - as reported | | $ | 255,722 | | $ | 138,779 | | $ | (70,968) | | $ | 323,533 | |
Stock-based compensation - Prospera | | | — | | | 7,523 | | | — | | | 7,523 | |
Prospera intangible asset amortization | | | — | | | 4,935 | | | — | | | 4,935 | |
Adjusted Operating Income | | $ | 255,722 | | $ | 151,237 | | $ | (70,968) | | $ | 335,991 | |
Net Sales - as reported | | | 2,211,616 | | | 1,002,118 | | | NM | | | 3,213,734 | |
| | | | | | | | | | | | | |
Operating Income as a % of Net Sales | | | 11.6 | % | | 13.8 | % | | NM | | | 10.1 | % |
Adjusted Operating Income as a % of Net Sales | | | 11.6 | % | | 15.1 | % | | NM | | | 10.5 | % |
| | Thirty-nine weeks ended September 25, 2021 | | ||||||||||
Operating Income Reconciliation | | Infrastructure |
| Agriculture |
| Corporate |
| Valmont | |||||
Operating income - as reported | | $ | 187,421 | | $ | 108,467 | | $ | (59,857) | | $ | 236,031 | |
Prospera intangible asset amortization | | | — | | | 1,926 | | | — | | | 1,926 | |
Stock-based compensation - Prospera | | | — | | | 2,312 | | | — | | | 2,312 | |
Write-off of 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 | | $ | 193,616 | | $ | 113,615 | | $ | (58,737) | | $ | 248,494 | |
Net Sales - as reported | | | 1,793,710 | | | 744,587 | | | NM | | | 2,538,297 | |
| | | | | | | | | | | | | |
Operating Income as a % of Net Sales | | | 10.4 | % | | 14.6 | % | | NM | | | 9.3 | % |
Adjusted Operating Income as a % of Net Sales | | | 10.8 | % | | 15.3 | % | | NM | | | 9.8 | % |
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 investor understanding of Agriculture segment performance related to traditional segment products. 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 | | $ | 279,500 | | $ | 287,200 | | | |
Prospera intangible asset (proprietary technology) amortization, pre-tax | | | | | | | | | 6,700 |
Stock-based compensation - Prospera, pre-tax | | | | | | | | | 10,000 |
Total pre-tax adjustments | | | | | | | | | 16,700 |
Estimated tax benefit from above expenses* | | | | | |
| | | (2,500) |
| | | | | | | | | |
Total Adjustments, after-tax | | | | | |
| | $ | 14,200 |
Estimated net earnings - Adjusted | | $ | 293,700 | | $ | 301,400 | | |
|
Diluted Earnings Per Share Range - GAAP | | $ | 12.95 | | $ | 13.30 | | |
|
Diluted Earnings Per Share Range - Adjusted | | $ | 13.65 | | $ | 14.00 | | |
|
* The tax effect of adjustments is calculated based on the estimated income tax rate in each applicable jurisdiction.
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