Valmont Industries, Inc. Fourth Quarter and Full Year 2019 Earnings Presentation February 20, 2020
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 | February 20, 2020 | Valmont Industries, Inc. | 4Q 2019 Earnings Presentation
4Q 2019 Segment Revenue and Segment Summaries TOTAL 4Q 2019 REVENUE: $683.6M $255.2M $231.9M $89.7M $133.0M Engineered Support Utility Support Coatings Irrigation Structures Structures N.A.: $84.5M | International: $48.5M 13.1% of Sales 19.5% of Sales 37.3% of Sales 33.9% of Sales SEGMENT SUMMARIES • Strong demand from continued • Favorable pricing in North • Acquisition revenue and • North American sales led by state/local government spending American markets offset by lower disciplined pricing drove sales higher sales of systems, production levels vs. 2018 due to growth technology solutions and • 25.0% growth in wireless a plant closure aftermarket parts, offset by lower communication and components • Demand from other Valmont tubing sales led to record 4Q sales • Project timing delays led to lower segments provided good sales of solar tracker solutions baseload in 4Q, while external • International sales decreased • Significantly lower sales in volumes were lower 25% due to lower project sales in Access Systems from weak • Sales were $27M higher the EMEA region Australia markets compared to 3Q 2019 3 | February 20, 2020 | Valmont Industries, Inc. | 4Q 2019 Earnings Presentation
Full Year 2019 Segment Revenue and Market Drivers TOTAL 2019 REVENUE: $2,767.0M $1,012.3M $890.6M $367.8M $585.2M Engineered Support Utility Support Coatings Irrigation Structures Structures N.A.: $378.6M | International: $206.6M 13.3% of Sales 21.1% of Sales 36.6% of Sales 32.2% 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 • Shift to renewable energy • Demand from ESS, Utility and • Advanced technology growth is a networks and 5G site preparation sources is driving demand Irrigation segments provides green shoot steady baseload Organic Growth and Acquisitions Support Long-Term Revenue Growth Targets 4 | February 20, 2020 | Valmont Industries, Inc. | 4Q 2019 Earnings Presentation
Key Initiatives to Accelerate Innovation and Technology ESS USS COATINGS IRRIGATION • Increasing smart pole technology • Piloting beacon technology on power • GalvTrac: optimizing zinc application • Increasing adoption of AgSense, solutions investment grid structures to help identify and by integrated standard recipes and which has led to 95,000+ connected remediate line conditions on a real- repeatable processes devices in the field • Increasing demand for small cell time basis structures and integrated • Coating Connector: providing • Introduction of Valley 365, a cloud- concealment solutions • Utilizing drone technology to quickly customers with real-time order status based, single sign-on platform for assess and identify issues, reducing visibility with interactive capabilities to connected crop mgmt. environmental impact and cost communicate specific instructions • Valley Insights: partnered and launched in 2019 with Prospera Technologies; uses advanced AI to virtually detect and provide remediation for crop health issues Increasing Investments in Technology and New Product Development is Key to Long-term Growth 5 | February 20, 2020 | Valmont Industries, Inc. | 4Q 2019 Earnings Presentation
2019 Fourth Quarter Summary $M, except for per share amounts Revenue Operating Income Diluted EPS (2.0%) +51.7% (16.8%) +107.5% (11.2%) $66.1 $697.4 $1.87 $683.6 $55.0 $55.0 $1.66 $1.66 $36.3 $0.80 1 1 2019 2018 GAAP Adjusted GAAP Adjusted 2019 2018 2019 2018 • Higher sales in North American markets • Operating income was 8.1% of sales, • EPS impacted primarily by poor Access across all segments offset by substantially primarily impacted by poor performance in Systems performance lower sales of Access Systems products the Access Systems product line in Australia and lower International Irrigation sales 1 Please see Reg G reconciliation of non-GAAP financial measures to GAAP measures at end of the document 6 | February 20, 2020 | Valmont Industries, Inc. | 4Q 2019 Earnings Presentation
2019 Full Year Summary $M, except for per share amounts Revenue Operating Income Diluted EPS +0.4% +17.5% (11.8%) +68.1% (7.0%) $2,767.0 $2,757.1 $269.4 $7.59 $237.7 $237.7 $7.06 $7.06 $202.3 $4.20 1 1 2019 2018 GAAP Adjusted GAAP Adjusted 2019 2018 2019 2018 • Pricing strategies, sales from recent • Operating income was 8.6% of sales, • EPS impacted by several one-time events acquisitions, and growth of wireless impacted by $26 million lower operating during the year and very weak performance communication sales were offset by lower income in the Irrigation segment, and poor in Access Systems Utility volumes and lower international performance in Access Systems irrigation project sales 1 Please see Reg G reconciliation of non-GAAP financial measures to GAAP measures at end of the document 7 | February 20, 2020 | Valmont Industries, Inc. | 4Q 2019 Earnings Presentation
2019 Cash Flow Highlights 2019 Full Year Cash Flow | FCF Reconciliation Cash and Debt Highlights YTD $353.5M 12/28/19 ($M) $ 307.6 Net Cash Flows from Operating Activities ($165.6M ex-U.S.) (168.2) Net Cash Flows from Investing Activities Cash at 12/28/2019 (99.0) Net Cash Flows from Financing Activities $787.5M $ 307.6 Net Cash Flows from Operating Activities Total Long-Term Debt at 12/28/2019 (97.4) Purchase of Property, Plant & Equipment $ 210.2 Free Cash Flows 8 | February 20, 2020 | Valmont Industries, Inc. | 4Q 2019 Earnings Presentation
Capital Allocation | A Balanced Approach ($M) 2019 Capital Deployment: $275M • Working capital investment to support investments in Capital people, technology and systems Growing Our Expenditures • CapEx of $97M in 2019 Business $97 $82 • Strategic fit + market expansion Acquisitions • Returns exceeding cost of capital within 3 years $63 Returning Cash to • Opportunistic approach Share • Supported by FCF $33 Shareholders Repurchases • $204M remains on current authorization as of 12/28/19 • Payout ratio target: 15% of earnings Dividends • Current payout: 21% Capital Acquisitions Share Dividends Expenditures Repurchases Aligned with Capital Allocation Commitments Announced in 2014 9 | February 20, 2020 | Valmont Industries, Inc. | 4Q 2019 Earnings Presentation
2020 Financial Guidance and Key Assumptions KEY ASSUMPTIONS 2020 Annual Financial Guidance and Key Metrics • Revenue growth primarily organic Diluted $7.30 – $8.00 EPS • Raw material and freight costs expected similar Revenue 4% - 7% to 2019 Growth 1 • No material impact from Operating Margin 10 – 40 bps foreign exchange Improvement translation Global Effective Tax • No further decline in ~ 25.0 % Rate agriculture market fundamentals $100M - $125M Capital Expenditures • ROIC ~ 10% 1 Additional 2020 acquisitions not included in guidance 10 | February 20, 2020 | Valmont Industries, Inc. | 4Q 2019 Earnings Presentation
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