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Valmont Reports Fourth Quarter and Full Year 2022 Results

Business Wire - Wed Feb 22, 2023

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 fourth quarter and fiscal year ended December 31, 2022.

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

  • Net Sales of $1.1 billion increased 17.5%, a fourth quarter record
  • Operating Income increased 116.2% to $109.7 million, or 9.7% of net sales (increased 32.9% to $113.7 million or 10.1% adjusted1) compared to $50.8 million or 5.3% of net sales ($85.6 million or 8.9% adjusted1)
  • Diluted Earnings per Share (“EPS”) of $1.86 ($3.57 adjusted1) compared to $1.25 ($2.73 adjusted1)
    • GAAP EPS includes a pre-tax loss of $33.3 million or $1.54 per diluted share from the divestiture of the offshore wind energy structures business
  • Generated strong operating cash flows of $142.5 million
  • Repurchased 60,200 shares of company stock for $20.0 million
  • Announced and completed the divestiture of the offshore wind energy structures business, Valmont SMTM, which had been reported in the Renewable Energy product line in the Infrastructure segment and is now reported as “Other”
  • Incurred GAAP tax rate of 40.6%; adjusted tax rate was 27.4% excluding the loss generated from the divested offshore wind energy structures business which provided no tax benefit

Full Year 2022 Highlights (all metrics compared to Full Year 2021 unless otherwise noted)

  • Record Net Sales of $4.3 billion, an increase of 24.1%
    • Strong sales growth as Infrastructure grew to a record $2.9 billion and Agriculture grew to a record $1.3 billion, including 17.6% growth in agriculture technology products and services
  • Operating Income increased 51.1% to $433.2 million, or 10.0% of net sales (increased 34.6% to $449.7 million or 10.3% adjusted1) compared to $286.8 million or 8.2% of net sales ($334.0 million or 9.5% adjusted1)
    • Higher operating income was led by favorable pricing and volume growth in both Infrastructure and Agriculture
  • Diluted EPS of $11.62 ($13.82 adjusted1) compared to $9.10 ($10.92 adjusted1)
  • Generated strong operating cash flows of $326.3 million, a significant improvement compared to 2021, driven by higher net earnings and improvements in working capital performance
  • Capital expenditures were $93.3 million, including approximately $30.0 million for strategic investments including a new concrete utility structures facility in Bristol, Indiana and irrigation capacity expansions in Brazil and Dubai
  • Deployed $39.3 million of cash to acquire a majority interest in ConcealFab, accelerating the Infrastructure segment’s global telecommunications growth strategy
  • Returned $86.3 million of capital to shareholders through dividends of $45.8 million and share repurchases of $40.5 million
  • Achieved Return on Invested Capital of 12.9% (13.3% adjusted1)
  • Year-end backlog of approximately $1.7 billion, an increase of 2.1% since the end of fiscal 2021, reflecting sustained pricing and continued strong market demand across the portfolio
  • Realigned financial reporting from four reportable segments to two: Infrastructure and Agriculture, to elevate focus on market growth strategies, capital allocation, and technology development

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

Key Financial Metrics

 Fourth Quarter 2022

 

GAAP

 

Adjusted1

 

 

 

14 weeks

 

13 weeks

 

 

 

 

14 weeks

 

13 weeks

 

 

 

 (000's except per share amounts)

    

12/31/2022

    

12/25/2021

    

 

    

 

12/31/2022

    

12/25/2021

    

 

 

 

 

Q4 2022

 

Q4 2021

 

vs. Q4 2021

 

 

Q4 2022

 

Q4 2021

 

vs. Q4 2021

 

 Net Sales

 

$

 1,131,516

 

$

963,278

 

17.5

%  

 

$

 1,131,516

 

$

 963,278

 

17.5

%

 Operating Income

 

 

 109,716

 

 

 50,754

 

116.2

%  

 

 

 113,734

 

 

 85,555

 

32.9

%

 Operating Income as a % of Net Sales

 

 

9.7

%  

 

5.3

%  

 

 

 

 

10.1

%  

 

8.9

%  

 

 

 Net Earnings

 

 

 40,332

 

 

 26,856

 

50.2

%  

 

 

 77,256

 

 

 58,751

 

31.5

%

 Diluted Earnings Per Share

 

$

1.86

 

$

1.25

 

48.8

%  

 

$

3.57

 

$

2.73

 

30.8

%

 Average Shares Outstanding

 

 

 21,656

 

 

 21,523

 

 

 

 

 

 21,656

 

 

 21,523

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Full Year 2022

 

GAAP

 

Adjusted1

 

 

 

53 weeks

 

52 weeks

 

 

 

 

53 weeks

 

52 weeks

 

 

 

 (000's except per share amounts)

    

12/31/2022

    

12/25/2021

    

 

    

 

12/31/2022

    

12/25/2021

    

 

 

 

 

FY 2022

 

FY 2021

 

vs. FY 2021

 

 

FY 2022

 

FY 2021

 

vs. FY 2021

 

 Net Sales

 

$

 4,345,250

 

$

 3,501,575

 

24.1

%  

 

$

 4,345,250

 

$

 3,501,575

 

24.1

%

 Operating Income

 

 

 433,249

 

 

 286,785

 

51.1

%  

 

 

 449,725

 

 

 334,049

 

34.6

%

 Operating Income as a % of Net Sales

 

 

10.0

%  

 

8.2

%  

 

 

 

 

10.3

%  

 

9.5

%  

  

 

 Net Earnings

 

 

 250,863

 

 

 195,630

 

28.2

%  

 

 

 298,139

 

 

 234,811

 

27.0

%

 Diluted Earnings Per Share

 

$

11.62

 

$

9.10

 

27.7

%  

 

$

13.82

 

$

10.92

 

26.6

%

 Average Shares Outstanding

 

 

 21,580

 

 

 21,493

 

 

 

 

 

 21,580

 

 

 21,493

 

  

 

“The Valmont team delivered another strong quarter of continued growth and outstanding performance, achieving record net sales and further margin improvement year-over-year,” said Stephen G. Kaniewski, President and Chief Executive Officer. “These results were driven by a continued commitment to our disciplined pricing strategies, robust demand for our industry-leading products and services, and solid execution by our global teams. Ongoing investments in grid reliability, transportation infrastructure, 5G buildouts, and the clean energy transition are leading to a multi-year runway for growth across our Infrastructure businesses. Continued positive agriculture market fundamentals are driving demand for our irrigation products and technology solutions as elevated commodity prices, global drought conditions and ongoing food security concerns are all supporting market demand. I am very pleased with our ability to effectively manage our operations to best serve our customers and meet this broad-based demand. Our results further demonstrate the value of our long-term strategy led by sustainable growth initiatives across our businesses, operational excellence and price leadership.”

Kaniewski added, “Reflecting on 2022, our full-year results exceeded the goals we set at the beginning of the year, despite a continued volatile environment, demonstrating the resiliency and relentless focus of our global team. We achieved record net sales of $4.3 billion and delivered record diluted earnings per share of $13.82 on an adjusted basis, an increase of 26.5% year-over-year. We significantly improved return on invested capital through strategic capital allocation and improved working capital performance, which also contributed to a substantial improvement in free cash flow. We continue to profitably grow and perform at a high level, leveraging the strength and sustainability of our Valmont business model. I am extremely proud of our team of more than 11,000 employees around the world and want to congratulate and thank them for their dedication, hard work, and execution. Together, we remain committed to providing our customers with vital infrastructure products and solutions to advance agricultural productivity with an unwavering focus on employee safety and increasing shareholder value."

Fourth Quarter 2022 Segment Review

Infrastructure (67.6% 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 $771.3 million grew 15.0% year-over-year with double-digit sales growth across all product lines, net of 2.7% unfavorable foreign currency translation impacts. Higher sales were driven by favorable pricing globally, higher volumes, notably in the Lighting and Transportation and Renewable Energy product lines, and sales from the ConcealFab acquisition.

Operating Income improved to $99.6 million or 13.0% of net sales compared to $77.3 million or 11.6% of net sales ($77.8 million or 11.6% adjusted1) in 2021, driven by favorable pricing and higher volumes.

Agriculture (29.4% 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 $335.1 million increased 21.1% year-over-year, with global sales growth led by higher average selling prices of irrigation equipment and higher volumes, primarily driven by continued strength in North America and Brazil, and higher sales of technology products and services.

Operating Income improved to $40.5 million, or 12.2% of net sales ($44.5 million or 13.4% adjusted1) compared to $28.6 million or 10.5% of net sales ($33.0 million or 12.1% 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.

Other (3.0% of Net Sales)

Offshore wind energy structures business

Sales of $33.3 million grew 44.1% year-over-year and operating income was $1.4 million compared to an operating loss of $31.3 million in 2021. As previously announced, the divestiture of the offshore wind energy structures business was completed in December 2022.

Balance Sheet, Liquidity, and Capital Allocation

The Company generated full-year 2022 operating cash flows of $326.3 million through strong earnings and effectively managing working capital while supporting strong sales growth. At the end of 2022, cash and cash equivalents were $185.4 million. Valmont purchased $20.0 million of company stock in the fourth quarter and $81.4 million remains on the current authorization with no expiration.

Providing 2023 Full Year Financial Outlook and Key Assumptions

Based on an unchanged positive outlook for underlying business growth across the portfolio that was highlighted last quarter, the Company is providing its 2023 full-year net sales and diluted earnings per share outlook and key assumptions for the year.

  • Net Sales Growth (vs. PY) of 4% to 7%, which reflects the divestiture of the offshore wind energy structures business
  • GAAP Diluted Earnings per Share of $14.70 to $15.25 ($15.35 to $15.90 adjusted1)
  • Effective tax rate of 28% to 29%, primarily due to expected geographic mix of earnings
  • Minimal expected foreign currency translation impact to net sales
  • Capital expenditures expected to be in the range of $105 to $125 million to support strategic growth and digital transformation initiatives
  • Continued elevated inflation, stabilizing raw material costs and ongoing R&D investments

Kaniewski continued, “We are excited and confident about the opportunity to drive multi-year revenue and profitability growth by capitalizing on the strong market drivers across our businesses and continuing to support our customers. These factors, along with our proven track record of execution and a backlog of $1.7 billion, give us confidence in our 2023 outlook. The long-term need for critical infrastructure investment globally is driving sustainable demand across our Infrastructure businesses. Favorable agriculture economics and market trends globally, a strong international project pipeline and increasing adoption of innovative technology solutions are providing momentum for our Agriculture business. Our balance sheet remains strong, giving us the flexibility to execute on our strategies. We enter this year from a position of strength with a talented team and are investing in the future to meet the needs of our customers and deliver value to 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, February 23, 2023 at 8:00 a.m. CST 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 4Q and Full Year 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 13734761. The replay will be available through 10:59 p.m. CST on March 02, 2023.

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.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter

 

Year-to-Date

 

 

14 and 13 Weeks Ended

 

53 and 52 Weeks Ended

 

 

31-Dec-22

 

25-Dec-21

 

31-Dec-22

 

25-Dec-21

Net sales

 

$

1,131,516

 

 

$

963,278

 

 

$

4,345,250

 

 

$

3,501,575

 

Cost of sales

 

 

832,557

 

 

 

740,994

 

 

 

3,219,026

 

 

 

2,617,686

 

Gross profit

 

 

298,959

 

 

 

222,284

 

 

 

1,126,224

 

 

 

883,889

 

Selling, general, and administrative expenses

 

 

189,243

 

 

 

165,034

 

 

 

692,975

 

 

 

590,608

 

Impairment of goodwill and intangible assets

 

 

 

 

 

6,496

 

 

 

 

 

 

6,496

 

Operating income

 

 

109,716

 

 

 

50,754

 

 

 

433,249

 

 

 

286,785

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(13,256

)

 

 

(11,146

)

 

 

(47,534

)

 

 

(42,612

)

Interest income

 

 

996

 

 

 

298

 

 

 

2,015

 

 

 

1,192

 

Gain (loss) on investments (unrealized)

 

 

932

 

 

 

364

 

 

 

(3,374

)

 

 

1,920

 

Loss from divestiture of offshore wind energy structures business

 

 

(33,273

)

 

 

 

 

 

(33,273

)

 

 

 

Other

 

 

4,268

 

 

 

2,501

 

 

 

12,805

 

 

 

12,798

 

Other income (expense), net

 

 

(40,333

)

 

 

(7,983

)

 

 

(69,361

)

 

 

(26,702

)

Earnings before income taxes

 

 

69,383

 

 

 

42,771

 

 

 

363,888

 

 

 

260,083

 

Income tax expense

 

 

28,156

 

 

 

15,092

 

 

 

108,687

 

 

 

61,414

 

Equity in earnings (loss) of nonconsolidated subsidiaries

 

 

(19

)

 

 

135

 

 

 

(950

)

 

 

(944

)

Net earnings

 

 

41,208

 

 

 

27,814

 

 

 

254,251

 

 

 

197,725

 

Less: Earnings attributable to non-controlling interests

 

 

(876

)

 

 

(958

)

 

 

(3,388

)

 

 

(2,095

)

Net earnings attributable to Valmont Industries, Inc.

 

$

40,332

 

 

$

26,856

 

 

$

250,863

 

 

$

195,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding (000's) - Basic

 

 

21,319

 

 

 

21,227

 

 

 

21,311

 

 

 

21,193

 

Earnings per share - Basic

 

$

1.89

 

 

$

1.27

 

 

$

11.77

 

 

$

9.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding (000's) - Diluted

 

 

21,656

 

 

 

21,523

 

 

 

21,580

 

 

 

21,493

 

Earnings per share - Diluted

 

$

1.86

 

 

$

1.25

 

 

$

11.62

 

 

$

9.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends per share

 

$

0.55

 

 

$

0.50

 

 

$

2.20

 

 

$

2.00

 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OPERATING RESULTS

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter

 

Year-to-Date

 

 

14 and 13 Weeks Ended

 

53 and 52 Weeks Ended

 

 

31-Dec-22

 

25-Dec-21

 

31-Dec-22

 

25-Dec-21

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

Infrastructure

 

$

771,337

 

 

$

670,481

 

 

$

2,928,419

 

 

$

2,372,100

 

Agriculture

 

 

335,066

 

 

 

276,757

 

 

 

1,346,672

 

 

 

1,028,717

 

Other

 

 

33,272

 

 

 

23,087

 

 

 

100,219

 

 

 

123,001

 

Total

 

 

1,139,675

 

 

 

970,325

 

 

 

4,375,310

 

 

 

3,523,818

 

Less: Intersegment sales

 

 

(8,159

)

 

 

(7,047

)

 

 

(30,060

)

 

 

(22,243

)

Total

 

$

1,131,516

 

 

$

963,278

 

 

$

4,345,250

 

 

$

3,501,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

Infrastructure

 

$

99,591

 

 

$

77,253

 

 

$

354,499

 

 

$

273,598

 

Agriculture

 

 

40,484

 

 

 

28,560

 

 

 

179,263

 

 

 

137,027

 

Other

 

 

1,445

 

 

 

(31,268

)

 

 

2,259

 

 

 

(40,192

)

Corporate

 

 

(31,804

)

 

 

(23,791

)

 

 

(102,772

)

 

 

(83,648

)

Total

 

$

109,716

 

 

$

50,754

 

 

$

433,249

 

 

$

286,785

 

The backlog of orders for the principal products manufactured and marketed was $1,656.4 million at the end of the 2022 fiscal year and $1,621.9 at the end of the 2021 fiscal year. An order is reported in our backlog upon receipt of a purchase order from the customer or execution of a sales order contract. We anticipate that most of the 2022 backlog of orders will be filled during fiscal year 2023. At year-end, the segments with backlog were as follows (dollar amounts in millions):

 

 

12/31/2022

 

12/25/2021

Infrastructure

 

$

1,339.1

 

$

1,086.3

Agriculture

 

 

317.3

 

 

471.0

Other

 

 

 

 

64.6

 

 

$

1,656.4

 

$

1,621.9

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 components and linear irrigation equipment for agricultural markets, including parts and tubular products, and advanced technology solutions for precision agriculture.

In addition to these two reportable segments, the Company had a business and related activities that is not more than 10% of consolidated sales, operating income, or assets. This includes the offshore wind energy structures business and was reported in the “Other” segment until its divestiture in 2022.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OPERATING RESULTS

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourteen weeks ended December 31, 2022

 

 

 

 

 

 

 

 

 

 

Intersegment

 

 

 

 

    

Infrastructure

    

Agriculture

    

Other

 

Sales

    

Consolidated

Geographical market:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

 588,867

 

$

 202,560

 

$

 —

 

$

 (5,932

)

 

$

 785,495

International

 

 

 182,470

 

 

 132,506

 

 

 33,272

 

 

 (2,227

)

 

 

 346,021

Total

 

$

 771,337

 

$

 335,066

 

$

 33,272

 

$

 (8,159

)

 

$

 1,131,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product line:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Transmission, Distribution, and Substation

 

$

 302,444

 

$

 —

 

$

 —

 

$

 —

 

 

$

 302,444

Lighting and Transportation

 

 

 239,453

 

 

 —

 

 

 —

 

 

 —

 

 

 

 239,453

Coatings

 

 

 92,441

 

 

 —

 

 

 —

 

 

 (4,032

)

 

 

 88,409

Telecommunications

 

 

 87,577

 

 

 —

 

 

 —

 

 

 —

 

 

 

 87,577

Renewable Energy

 

 

 49,422

 

 

 —

 

 

 33,272

 

 

 (2,228

)

 

 

 80,466

Irrigation Equipment and Parts, excluding Technology

 

 

 —

 

 

 302,965

 

 

 —

 

 

 (1,899

)

 

 

 301,066

Technology Products and Services

 

 

 —

 

 

 32,101

 

 

 —

 

 

 —

 

 

 

 32,101

Total

 

$

 771,337

 

$

 335,066

 

$

 33,272

 

$

 (8,159

)

 

$

 1,131,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Thirteen weeks ended December 25, 2021

 

 

 

 

 

 

 

 

 

 

Intersegment

 

 

 

 

    

Infrastructure

    

Agriculture

    

Other

 

Sales

    

Consolidated

Geographical market:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

 478,019

 

$

 150,478

 

$

 —

 

$

 (7,047

)

 

$

 621,450

International

 

 

 192,462

 

 

 126,279

 

 

 23,087

 

 

 —

 

 

 

 341,828

Total

 

$

 670,481

 

$

 276,757

 

$

 23,087

 

$

 (7,047

)

 

$

 963,278

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product line:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transmission, Distribution, and Substation

 

$

 266,625

 

$

 —

 

$

 —

 

$

 —

 

 

$

 266,625

Lighting and Transportation

 

 

 216,198

 

 

 —

 

 

 —

 

 

 —

 

 

 

 216,198

Coatings

 

 

 77,747

 

 

 —

 

 

 —

 

 

 (2,752

)

 

 

 74,995

Telecommunications

 

 

 75,697

 

 

 —

 

 

 —

 

 

 —

 

 

 

 75,697

Renewable Energy

 

 

 34,214

 

 

 —

 

 

 23,087

 

 

 —

 

 

 

 57,301

Irrigation Equipment and Parts, excluding Technology

 

 

 ��

 

 

 251,258

 

 

 —

 

 

 (4,295

)

 

 

 246,963

Technology Products and Services

 

 

 —

 

 

 25,499

 

 

 —

 

 

 —

 

 

 

 25,499

Total

 

$

 670,481

 

$

 276,757

 

$

 23,087

 

$

 (7,047

)

 

$

 963,278

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OPERATING RESULTS

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fifty-three weeks ended December 31, 2022

 

 

 

 

 

 

 

 

 

 

Intersegment

 

 

 

 

    

Infrastructure

    

Agriculture

    

Other

 

 Sales

    

Consolidated

Geographical market:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

 2,234,339

 

$

 766,929

 

$

 —

 

$

 (26,248

)

 

$

 2,975,020

International

 

 

 694,080

 

 

 579,743

 

 

 100,219

 

 

 (3,812

)

 

 

 1,370,230

Total

 

$

 2,928,419

 

$

 1,346,672

 

$

 100,219

 

$

 (30,060

)

 

$

 4,345,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product line:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transmission, Distribution, and Substation

 

$

 1,184,660

 

$

 —

 

$

 —

 

$

 —

 

 

$

 1,184,660

Lighting and Transportation

 

 

 940,462

 

 

 —

 

 

 —

 

 

 —

 

 

 

 940,462

Coatings

 

 

 356,707

 

 

 —

 

 

 —

 

 

 (15,327

)

 

 

 341,380

Telecommunications

 

 

 320,342

 

 

 —

 

 

 —

 

 

 —

 

 

 

 320,342

Renewable Energy

 

 

 126,248

 

 

 —

 

 

 100,219

 

 

 (3,346

)

 

 

 223,121

Irrigation Equipment and Parts, excluding Technology

 

 

 —

 

 

 1,231,587

 

 

 —

 

 

 (11,387

)

 

 

 1,220,200

Technology Products and Services

 

 

 —

 

 

 115,085

 

 

 —

 

 

 —

 

 

 

 115,085

Total

 

$

 2,928,419

 

$

 1,346,672

 

$

 100,219

 

$

 (30,060

)

 

$

 4,345,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fifty-two weeks ended December 25, 2021

 

 

 

 

 

 

 

 

 

 

Intersegment

 

 

 

 

    

Infrastructure

    

Agriculture

    

Other

 

 Sales

    

Consolidated

Geographical market:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

 1,724,531

 

$

 545,574

 

$

 —

 

$

 (22,243

)

 

$

 2,247,862

International

 

 

 647,569

 

 

 483,143

 

 

 123,001

 

 

 —

 

 

 

 1,253,713

Total

 

$

 2,372,100

 

$

 1,028,717

 

$

 123,001

 

$

 (22,243

)

 

$

 3,501,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product line:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Transmission, Distribution, and Substation

 

$

 935,099

 

$

 —

 

$

 —

 

$

 —

 

 

$

 935,099

Lighting and Transportation

 

 

 825,923

 

 

 —

 

 

 —

 

 

 —

 

 

 

 825,923

Coatings

 

 

 309,647

 

 

 —

 

 

 —

 

 

 (10,575

)

 

 

 299,072

Telecommunications

 

 

 238,527

 

 

 —

 

 

 —

 

 

 —

 

 

 

 238,527

Renewable Energy

 

 

 62,904

 

 

 —

 

 

 123,001

 

 

 —

 

 

 

 185,905

Irrigation Equipment and Parts, excluding Technology

 

 

 —

 

 

 930,858

 

 

 —

 

 

 (11,668

)

 

 

 919,190

Technology Products and Services

 

 

 —

 

 

 97,859

 

 

 —

 

 

 —

 

 

 

 97,859

Total

 

$

 2,372,100

 

$

 1,028,717

 

$

 123,001

 

$

 (22,243

)

 

$

 3,501,575

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

12/31/2022

 

12/25/2021

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

185,406

 

$

177,232

Accounts receivable, net

 

 

604,181

 

 

571,593

Inventories

 

 

728,762

 

 

728,834

Contract assets - costs and profits in excess of billings

 

 

174,539

 

 

142,643

Prepaid expenses and other assets

 

 

87,697

 

 

83,646

Refundable income taxes

 

 

 

 

8,815

Total current assets

 

 

1,780,585

 

 

1,712,763

Property, plant, and equipment, net

 

 

595,578

 

 

598,605

Goodwill and other assets

 

 

1,180,833

 

 

1,135,881

 

 

$

3,556,996

 

$

3,447,249

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current installments of long-term debt

 

$

1,194

 

$

4,884

Notes payable to banks

 

 

5,846

 

 

13,439

Accounts payable

 

 

360,312

 

 

347,841

Accrued expenses

 

 

248,320

 

 

253,330

Contract liabilities - billings in excess of costs and earnings

 

 

172,915

 

 

135,746

Income taxes payable

 

 

3,664

 

 

Dividends payable

 

 

11,742

 

 

10,616

Total current liabilities

 

 

803,993

 

 

765,856

Long-term debt, excluding current installments

 

 

870,935

 

 

947,072

Operating lease liabilities

 

 

155,469

 

 

147,759

Other long-term liabilities

 

 

84,887

 

 

172,965

Shareholders' equity

 

 

1,641,712

 

 

1,413,597

 

 

$

3,556,996

 

$

3,447,249

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

53 Weeks Ended

 

52 Weeks Ended

 

 

31-Dec-22

 

25-Dec-21

Cash flows from operating activities

 

 

 

 

 

 

Net Earnings

 

$

254,251

 

 

$

197,725

 

Depreciation and amortization

 

 

97,167

 

 

 

92,577

 

Impairment of long-lived assets

 

 

 

 

 

27,911

 

Contribution to defined benefit pension plan

 

 

(17,155

)

 

 

(1,924

)

Loss on sale of offshore wind energy structures business

 

 

33,273

 

 

 

 

Change in working capital

 

 

(56,092

)

 

 

(284,739

)

Other

 

 

14,821

 

 

 

34,388

 

Net cash flows from operating activities

 

 

326,265

 

 

 

65,938

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Purchase of property, plant, and equipment

 

 

(93,288

)

 

 

(107,790

)

Acquisitions

 

 

(39,287

)

 

 

(312,500

)

Other

 

 

495

 

 

 

2,982

 

Net cash flows from investing activities

 

 

(132,080

)

 

 

(417,308

)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from long-term borrowings

 

 

253,999

 

 

 

312,485

 

Principal payments on long-term borrowings

 

 

(336,403

)

 

 

(91,313

)

Net payments on short-term borrowings

 

 

(7,577

)

 

 

(20,241

)

Purchase of treasury shares

 

 

(40,474

)

 

 

(26,100

)

Dividends to noncontrolling interests

 

 

(714

)

 

 

 

Purchase of noncontrolling interests

 

 

(7,338

)

 

 

 

Dividends paid

 

 

(45,813

)

 

 

(41,412

)

Other

 

 

2,415

 

 

 

81

 

Net cash flows from financing activities

 

 

(181,905

)

 

 

133,500

 

Effect of exchange rates on cash and cash equivalents

 

 

(4,106

)

 

 

(5,624

)

Net change in cash and cash equivalents

 

 

8,174

 

 

 

(223,494

)

Cash and cash equivalents - beginning of year

 

 

177,232

 

 

 

400,726

 

Cash and cash equivalents - end of period

 

$

185,406

 

 

$

177,232

 

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 the loss from the divestiture of the offshore wind energy structures business on fiscal 2022 results. Further, 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 the nonrecurring impairment of long-lived assets for the offshore wind energy structures business, a write off a receivable following arbitration of a commercial transaction from 2014, acquisition diligence, severance 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.

 

 

 

 

 

 

 

 

 

 

 

Fourteen

 

Diluted

 

Fifty-three

 

Diluted

 

 

weeks ended

 

earnings per

 

weeks ended

 

earnings per

 

 

December 31,

2022

 

share

 

December 31,

2022

 

share

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

 

$

40,332

 

 

$

1.86

 

 

$

250,863

 

 

$

11.62

 

Loss from divestiture of offshore wind energy structures business

 

 

33,273

 

 

 

1.54

 

 

 

33,273

 

 

 

1.54

 

Prospera intangible asset amortization

 

 

1,645

 

 

 

0.08

 

 

 

6,580

 

 

 

0.30

 

Stock-based compensation - Prospera

 

 

2,373

 

 

 

0.11

 

 

 

9,896

 

 

 

0.46

 

Total Adjustments, pre-tax1

 

 

37,291

 

 

 

1.72

 

 

 

49,749

 

 

 

2.31

 

Tax effect of adjustments2

 

 

(367

)

 

 

(0.02

)

 

 

(2,473

)

 

 

(0.11

)

Net earnings attributable to Valmont Industries, Inc. - Adjusted1

 

$

77,256

 

 

$

3.57

 

 

$

298,139

 

 

$

13.82

 

Average shares outstanding (000’s) - Diluted

 

 

 

 

21,656

 

 

 

 

 

21,580

 

 

   

 

 

 

 Thirteen

 

 Diluted

 

Fifty-two

 

Diluted

 

 

 weeks ended

 

 earnings per

 

weeks ended

 

earnings per

 

 

 December 25,

2021

 

 share

 

December 25,

2021

 

share

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

 $

26,856

 $

1.25

 $

195,630

 

$

9.10

Impairment of long-lived assets - offshore wind energy structures business

 

 27,911

 

1.30

 

27,911

 

1.30

Prospera intangible asset amortization

 

 1,470

 

0.07

 

3,396

 

0.16

Stock-based compensation - Prospera

 

 2,928

 

0.14

 

5,240

 

0.24

Write-off of a receivable, pre-tax

 

 

 

 

5,545

 

0.26

Acquisition diligence expense, pre-tax

 

 

 

 

1,120

 

0.05

Severance expense, pre-tax

 

 2,492

 

0.12

 

4,052

 

0.19

Total Adjustments, pre-tax1

 

 34,801

 

1.62

 

47,264

 

2.20

Change in U.K. statutory tax rate

 

 

 

 

(2,819

)

 

(0.13

)

Valuation allowance against offshore wind energy structures business' tax assets

 

 5,076

 

0.24

 

5,076

 

0.24

Tax effect of adjustments2

 

 (7,982

) 

(0.37

) 

(10,340

)

 

(0.48

)

Net earnings attributable to Valmont Industries, Inc. - Adjusted1

 $

58,751

 $

2.73

 $

234,811

 

$

10.92

Average shares outstanding (000’s) - Diluted

   

21,523

 

 

21,493

 

1Earnings per share includes rounding

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourteen weeks ended December 31, 2022

Operating Income Reconciliation

 

Infrastructure    

 

Agriculture    

 

Other 

 

Corporate

    

Valmont

Operating income - as reported

 

$

99,591

 

 

$

40,484

 

 

$

1,445

 

 

$

(31,804

)

 

$

109,716

 

Stock-based compensation - Prospera

 

 

 

 

 

2,373

 

 

 

 

 

 

 

 

 

2,373

 

Prospera intangible asset amortization

 

 

 

 

 

1,645

 

 

 

 

 

 

 

 

 

1,645

 

Adjusted Operating Income

 

$

99,591

 

 

$

44,502

 

 

$

1,445

 

 

$

(31,804

)

 

$

113,734

 

Net Sales - as reported

 

 

765,077

 

 

 

333,167

 

 

 

33,272

 

 

 

NM

 

 

 

1,131,516

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Net Sales

 

 

13.0

%

 

 

12.2

%

 

 

4.3

%

 

 

NM

 

 

 

9.7

%

Adj. Operating Income as a % of Net Sales

 

 

13.0

%

 

 

13.4

%

 

 

4.3

%

 

 

NM

 

 

 

10.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen weeks ended December 25, 2021 

Operating Income Reconciliation

 

Infrastructure    

 

Agriculture    

 

Other 

 

Corporate    

Valmont

Operating income - as reported

 

$

77,253

 

 

$

28,560

 

 

$

(31,268

)

 

$

(23,791

)

 

$

50,754

 

Impairment of long-lived assets

 

 

 

 

 

 

 

 

27,911

 

 

 

 

 

 

27,911

 

Stock-based compensation

 

 

 

 

 

2,928

 

 

 

 

 

 

 

 

 

2,928

 

Prospera intangible asset amortization

 

 

 

 

 

1,470

 

 

 

 

 

 

 

 

 

1,470

 

Severance expense, pre-tax

 

 

500

 

 

 

 

 

 

1,992

 

 

 

 

 

 

2,492

 

Adjusted Operating Income

 

$

77,753

 

 

$

32,958

 

 

$

(1,365

)

 

$

(23,791

)

 

$

85,555

 

Net Sales - as reported

 

 

667,728

 

 

 

272,463

 

 

 

23,087

 

 

 

NM

 

 

 

963,278

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Net Sales

 

 

11.6

%

 

 

10.5

%

 

 

(135.4

)%

 

 

NM

 

 

 

5.3

%

Adj. Operating Income as a % of Net Sales

 

 

11.6

%

 

 

12.1

%

 

 

(5.9

)%

 

 

NM

 

 

 

8.9

%

 

 

 

 

 

 

 

 

 

 

 

Fifty-three weeks ended December 31, 2022

Operating Income Reconciliation

 

Infrastructure    

 

Agriculture    

 

Other 

 

Corporate

    Valmont

Operating income - as reported

 

$

354,499

 

 

$

179,263

 

 

$

2,259

 

 

$

(102,772

)

 

$

433,249

 

Stock-based compensation - Prospera

 

 

 

 

 

9,896

 

 

 

 

 

 

 

 

 

9,896

 

Prospera intangible asset amortization

 

 

 

 

 

6,580

 

 

 

 

 

 

 

 

 

6,580

 

Adjusted Operating Income

 

$

354,499

 

 

$

195,739

 

 

$

2,259

 

 

$

(102,772

)

 

$

449,725

 

Net Sales - as reported

 

 

2,909,746

 

 

 

1,335,285

 

 

 

100,219

 

 

 

NM

 

 

 

4,345,250

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Net Sales

 

 

12.2

%

 

 

13.4

%

 

 

2.3

%

 

 

NM

 

 

 

10.0

%

Adj. Operating Income as a % of Net Sales

 

 

12.2

%

 

 

14.7

%

 

 

2.3

%

 

 

NM

 

 

 

10.3

%

 

 

 

 

 

 

 

 

 

 

Fifty-two weeks ended December 25, 2021 

Operating Income Reconciliation

Infrastructure    

 

Agriculture    

 

Other 

 

Corporate

    

Valmont

Operating income - as reported

$

273,598

 

 

$

137,027

 

 

$

(40,192

)

 

$

(83,648

)

 

$

286,785

 

Impairment of long-lived assets

 

 

 

 

 

 

 

27,911

 

 

 

 

 

 

27,911

 

Prospera intangible asset amortization

 

 

 

 

3,396

 

 

 

 

 

 

 

 

 

3,396

 

Stock-based compensation - Prospera

 

 

 

 

5,240

 

 

 

 

 

 

 

 

 

5,240

 

Write-off of a receivable, pre-tax

 

 

 

 

 

 

 

5,545

 

 

 

 

 

 

5,545

 

Acquisition diligence expense, pre-tax

 

 

 

 

 

 

 

 

 

 

1,120

 

 

 

1,120

 

Severance expense, pre-tax

 

500

 

 

 

910

 

 

 

2,642

 

 

 

 

 

 

4,052

 

Adjusted Operating Income

$

274,098

 

 

$

146,573

 

 

$

(4,094

)

 

$

(82,528

)

 

$

334,049

 

Net Sales - as reported

 

2,361,524

 

 

 

1,017,050

 

 

 

123,001

 

 

 

NM

 

 

 

3,501,575

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Net Sales

 

11.6

%

 

 

13.5

%

 

 

(32.7

)%

 

 

NM

 

 

 

8.2

%

Adj. Operating Income as a % of Net Sales

 

11.6

%

 

 

14.4

%

 

 

(3.3

)%

 

 

NM

 

 

 

9.5

%

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

REGULATION G RECONCILIATION OF ADJUSTED RETURN ON INVESTED CAPITAL

(Dollars in thousands)

(unaudited)

Return on Invested Capital is a non-GAAP measure. Accordingly, Invested Capital and Return on Invested Capital should not be considered in isolation or as a substitute for net earnings, cash flows from operations or other income or cash flow data prepared in accordance with GAAP, or as a measure of our operating performance or liquidity. The table below shows how Invested Capital and Return on Invested Capital are calculated from our income statement and balance sheet. Return on Invested Capital is calculated as Operating Income (after-tax) divided by average of beginning and ending Invested Capital. Invested Capital represents total assets minus total liabilities (excluding interest-bearing debt). Return on Invested Capital is one of our key operating ratios, as it allows investors to analyze our operating performance in light of the amount of investment required to generate our operating profit. Return on Invested Capital is also a measure used to determine management incentives.

 

 

2022

Operating income

 

$

433,249

 

Adjusted effective tax rate1

 

 

27.7

%

Tax effect on operating income

 

 

(119,872

)

After-tax operating income

 

 

313,377

 

Average invested capital

 

 

2,437,232

 

Return on invested capital

 

 

12.9

%

 

 

 

 

 

 

 

 

Adjusted operating income

 

 

449,725

 

Adjusted effective tax rate1

 

 

27.7

%

Tax effect on operating income

 

 

(124,431

)

After-tax operating income

 

 

325,294

 

Average invested capital

 

 

2,437,232

 

Adjusted return on invested capital

 

 

13.3

%

 

 

 

 

 

 

 

 

Total assets

 

 

3,556,996

 

Less: Accounts payable

 

 

(360,312

)

Less: Accrued expenses

 

 

(248,320

)

Less: Income taxes payable

 

 

(3,664

)

Less: Defined benefit pension asset

 

 

(24,216

)

Less: Deferred compensation

 

 

(30,316

)

Less: Other noncurrent liabilities

 

 

(13,480

)

Less: Dividends payable

 

 

(11,742

)

Less: Lease liability

 

 

(155,469

)

Less: Contract liability

 

 

(172,915

)

Less: Deferred tax liability

 

 

(41,091

)

Total invested capital

 

$

2,495,471

 

Beginning of year invested capital

 

$

2,378,992

 

Average invested capital

 

$

2,437,232

 

1The adjusted effective tax rate for 2022 excludes the $33,273 loss from divestiture of the offshore wind energy structures business which is not deductible for tax purposes. The effective tax rate including the loss on the divestiture is 29.9%.

 

Return on invested capital, as presented, may not be comparable to similarly titled measures of other companies.

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 - 2023 Guidance

 

Low End

 

High End

 

Adjustments

Estimated net earnings - GAAP

 

$

318,900

 

$

330,800

 

 

 

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

 

$

333,100

 

$

345,000

 

 

 

Diluted Earnings Per Share Range - GAAP

 

$

14.70

 

$

15.25

 

 

 

Diluted Earnings Per Share Range - Adjusted

 

$

15.35

 

$

15.90

 

 

 

 

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