Valmont Industries, Inc. Third Quarter 2019 Earnings Presentation October 24, 2019
Forward-looking Statement Disclosure These slides contain (and the accompanying oral discussion will contain) “forward -looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company’s customers and suppliers, competitor responses to the Company’s products and services, the overall market acceptance of such products and services, the integration of acquisitions and other factors disclosed in the Company’s periodic reports filed with the Securities and Exchange Commission. Consequently such forward-looking statements should be regarded as the Company’s current plans, estimates and beliefs. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. 2 | October 24, 2019 | Valmont Industries, Inc. | Q3 2019 Earnings Presentation
3Q 2019 Segment Revenue and Market Drivers TOTAL 3Q 2019 REVENUE: $690.3M $268.1M $205.0M $93.0M $144.1M Engineered Support Utility Support Coatings Irrigation Structures Structures N.A.: $82.8M | International: $61.3M 13.5% of Sales 20.9% of Sales 38.8% of Sales 29.7% of Sales MARKET DRIVERS • Continued state and local • Acceleration to replace aging • External market demand • U.S. agriculture market remains government spending in North infrastructure in North America generally follows industrial challenging; macro conditions America markets transmission markets production levels continue to weigh on sentiment • Carriers’ expansion of 4G • Regulatory pressure on utilities to • Demand from ESS, Utility and • Technology growth is a green networks and 5G site preparation replace wood structures with Irrigation segments provides shoot steel & concrete steady baseload Organic Growth and Acquisitions Support Long-Term Revenue Growth Targets 3 | October 24, 2019 | Valmont Industries, Inc. | Q3 2019 Earnings Presentation
3Q 2019 Summary $M, except for per share amounts Revenue Operating Income Diluted EPS +1.7% +66.5% +1.0% +825% +1.6% $690.3 $678.7 $63.9 $63.9 $63.2 $1.85 $1.85 $1.82 $38.4 $0.20 1 1 2019 2018 GAAP Adjusted GAAP Adjusted 2019 2018 2019 2018 • Higher sales in ESS, Irrigation & Coatings • Operating Income of $63.9M (9.3% of sales) • Diluted EPS of $1.85 • Sales growth led by wireless • 2019 includes a ($0.24) unfavorable impact grew 66.5% vs. 2018 GAAP results, and communication & transportation demand, 1.0% vs. 2018 adjusted results from nonrecurring expenses in the ESS • $5.6M change to LIFO vs. 2018 from revenue from acquisitions & sustained segment • Capacity constraints & operational pricing discipline significant steel cost volatility during 2018 and 2019 inefficiencies in infrastructure operations pressured earnings 1 Please see Reg G reconciliation of non-GAAP financial measures to GAAP measures at end of the document 4 | October 24, 2019 | Valmont Industries, Inc. | Q3 2019 Earnings Presentation
3Q Results | Engineered Support Structures ($M) Key Statistics Revenue Operating Income 2018 Revenue 1 $248.4 Volume 15.0 $21.8 $22.8 $266.5 $248.4 $16.5 Pricing/Mix 0.5 Acquisitions 8.4 Currency Translation (5.8) 2019 Revenue 1 $ 266.5 2019 2018 2019 2018 2018 Adj COMMENTARY • Higher sales driven by transportation and wireless communication demand, notably in North America markets • Strong backlogs and a favorable pricing environment have kept lead times extended across the industry • Wireless communication structures and components sales grew >30% in 3Q; 70% growth in North American markets • Access Systems sales down from lower volumes and unfavorable FX • Lower Op Inc from a nonrecurring, ($7.5M) loss in Access Systems that offset improved profitability in North America transportation and wireless communication markets Note: Please see Reg G reconciliation of non-GAAP financial measures to GAAP measures at end of the document; 1 Net sales after intersegment eliminations 5 | October 24, 2019 | Valmont Industries, Inc. | Q3 2019 Earnings Presentation
3Q Results | Utility Support Structures ($M) Key Statistics Revenue Operating Income 2018 Revenue 1 $218.0 Volume (27.7) $218.0 $204.2 Pricing/Mix 12.8 $20.4 $20.0 Acquisitions 2.1 Currency Translation (1.0) $2.1 2019 Revenue 1 $ 204.2 2019 2018 2019 2018 2018 Adj COMMENTARY • Sales decreased from less available market capacity in China, lower production levels in North American factories, and smaller project sizes in international markets • Rapid increases in demand driven by transmission project acceleration to replace aging infrastructure and greater regulatory pressure to replace wood structures have constrained capacity and labor availability • Flat Op Inc as improved profitability from pricing actions were muted by insufficient capacity, notably in our China facilities and a plant closure in North America in early 2019 Note: Please see Reg G reconciliation of non-GAAP financial measures to GAAP measures at end of the document; 1 Net sales after intersegment eliminations 6 | October 24, 2019 | Valmont Industries, Inc. | Q3 2019 Earnings Presentation
3Q Results | Coatings ($M) Key Statistics Revenue Operating Income 2018 Revenue 1 $74.5 Volume (6.1) $76.9 $74.5 $14.4 $13.9 Pricing/Mix 2.8 Acquisitions 6.9 Currency Translation (1.2) 2019 Revenue 1 $ 76.9 2019 2018 2019 2018 COMMENTARY • Sales growth was slightly higher than GDP levels, led by recent acquisitions and continued pricing discipline in a favorable raw material cost environment • Lower external market volumes impacted sales and profitability late in the quarter, offset by higher internal baseload Note: Please see Reg G reconciliation of non-GAAP financial measures to GAAP measures at end of the document; 1 Net sales after intersegment eliminations 7 | October 24, 2019 | Valmont Industries, Inc. | Q3 2019 Earnings Presentation
3Q Results | Irrigation ($M) Key Statistics Revenue Total Operating Income 2018 Revenue 1 $137.8 $21.3 Volume 9.0 $18.2 $81.4 $75.8 Pricing/Mix (3.5) $61.3 $62.0 Acquisitions - Currency Translation (0.6) North America International 2019 2018 2019 Revenue 1 $ 142.7 2019 2018 COMMENTARY • Globally, gross sales increased 2.9%; North American sales increased 6.0%, with a 1.0% sales decrease in International markets • Sales growth in whole systems, aftermarket parts and technology lifted North America revenues, offset by lower sales of industrial tubing products • Higher project sales in the Middle East region and solid demand in Brazil were offset by lower volumes in the APAC region • A more profitable sales mix was more than offset by lower volumes in international markets and industrial tubing, and higher R&D expenses from technology growth investments Note: Please see Reg G reconciliation of non-GAAP financial measures to GAAP measures at end of the document; 1 Net sales after intersegment eliminations 8 | October 24, 2019 | Valmont Industries, Inc. | Q3 2019 Earnings Presentation
YTD Cash Flow Highlights 2019 YTD Cash Flow | FCF Reconciliation Cash and Debt Highlights YTD YTD 9/30/19 9/29/18 $327.2M ($M) Net Cash Flows from Operating Activities $ 239.2 $ 68.1 ($139.0 ex-U.S.) (139.2) (113.4) Net Cash Flows from Investing Activities Cash at 09/28/2019 Net Cash Flows from Financing Activities (82.7) (136.7) $764.5M Net Cash Flows from Operating Activities $ 239.2 $ 68.1 Total Long-Term Debt at 09/28/2019 (72.0) (48.9) Purchase of Property, Plant & Equipment $ 167.2 $ 19.2 Free Cash Flows 9 | October 24, 2019 | Valmont Industries, Inc. | Q3 2019 Earnings Presentation
Capital Allocation | A Balanced Approach ($M) 2019 YTD Capital Deployment • Working capital investment to support investments in people, technology and systems Capital • 3Q spending driven by 4 factory expansions to support Growing Our Expenditures strong global market demand $82 Business • Total CapEx of $90-$100M expected in 2019 $72 • Strategic fit + market expansion • Returns exceeding cost of capital within 3 years Acquisitions • $82M excludes the purchase of the remaining 20% of $55 the non-controlling interest in Walpar for $23M Returning Cash to • Opportunistic approach Share $25 Shareholders • Supported by free cash flows Repurchases • $212M remains on current authorization on 09/28/19 • Payout ratio target: 15% of earnings Dividends Capital Acquisitions Share Dividends • Current payout: ~ 20% Expenditures Repurchases Aligned with Capital Allocation Commitments Announced in 2014 10 | October 24, 2019 | Valmont Industries, Inc. | Q3 2019 Earnings Presentation
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