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Valmont Reports Fourth Quarter and Full Year 2021 Results; Achieved Record Annual Sales of $3.5 Billion

Valmont Industries, Inc. (NYSE: VMI), a leading global provider of engineered products and services for infrastructure development and irrigation equipment and services for agriculture, today reported financial results for the fourth quarter and fiscal year ended December 25, 2021.

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

  • Record Net Sales of $963.3 million increased 20.7%, with growth in all segments led by significantly higher Irrigation sales
  • Operating Income of $50.8 million, or 5.3% of sales ($85.6 million or 8.9% adjusted1) compared to $54.1 million or 6.8% of sales ($68.8 million or 8.6% adjusted1)
  • Diluted Earnings per Share (EPS) of $1.25 ($2.73 adjusted1) compared to $1.68 ($2.20 adjusted1)
  • Repurchased 8,800 shares of company stock for $2.0 million at an average price of $227.22 per share
  • Incurred a higher GAAP tax rate of 35.3% due to recognizing a $5.0 million valuation allowance against deferred tax assets for the wind structures subsidiary; tax rate on an adjusted basis was lower, driven by a more favorable geographic mix of earnings
  • Record year-end backlog of more than $1.6 billion, an increase of more than 40.0% since the end of fiscal 2020, and an increase of more than 5.0% since the end of third quarter 2021, reflecting improved pricing and continued strong market demand across the portfolio

Full Year 2021 Highlights (all metrics compared to Full Year 2020 unless otherwise noted)

  • Record Net Sales of $3.5 billion, an increase of 20.9%
    • Sales growth in all segments, led by Irrigation which grew 59.3% to a record $1.03 billion
  • Operating income improved to $286.8 million or 8.2% of sales ($334.0 million or 9.5% adjusted1), compared to $226.0 million or 7.8% of sales ($268.5 million or 9.3% adjusted1)
    • Higher operating income was led by favorable pricing and higher volumes, including significant volume growth in Irrigation, and operating margins of nearly 11.0% in Engineered Support Structures
  • Diluted EPS of $9.10 ($10.92 adjusted1) compared to $6.57 ($8.18 adjusted1)
  • Capital expenditures were $108.0 million, including approximately $45.0 million for strategic investments, which included a new spun concrete utility distribution pole facility in Bristol, Indiana, capacity expansion of infrastructure facilities in Mexico, and technology investments across the organization, all to support global market growth
  • Deployed $313.0 million of cash for two acquisitions, both in the Irrigation segment: Prospera Technologies Ltd. and PivoTrac, accelerating the Company's global Ag Tech growth strategy
  • Returned $67.5 million of capital to shareholders through share repurchases of $26.1 million and dividends of $41.4 million
  • Enhanced ESG, a top strategic imperative and part of the Company's long-standing tagline of 'Conserving Resources. Improving Life.® '
    • Enhanced the 2021 Valmont Sustainability Report and launched a dedicated Sustainability website, while updating key disclosures and highlighting Valmont products and solutions that support ESG principles
    • Established new environmental and diversity goals for 2025 and 2030
    • Initiated Global Reporting Initiative (GRI) reporting to align with current GRI Standards and alignment with Sustainability Accounting Standards Board (SASB), Task Force on Climate-Related Financial Disclosures (TCFD) frameworks, and four of the seventeen United Nations Sustainable Development Goals (SDGs):
      • SDG 2: Zero Hunger
      • SDG 7: Affordable and Clean Energy
      • SDG 9: Industry, Innovation and Infrastructure
      • SDG 11: Sustainable Cities and Communities

Key Financial Metrics

Fourth Quarter 2021

GAAP

 

Adjusted1

 

(000's except per share amounts)

12/25/2021

4Q 2021

 

12/26/2020

4Q 2020

 

vs. 4Q 2020

 

12/25/2021

4Q 2021

 

12/26/2020

4Q 2020

vs. 4Q 2020

Net Sales

$

963,278

 

 

$

798,377

 

20.7%

 

$

963,278

 

 

$

798,377

 

20.7%

Operating Income

 

50,754

 

 

 

54,139

 

(6.3)%

 

 

85,555

 

 

 

68,799

 

24.4%

Operating Income as a % of Net Sales

 

5.3

%

 

 

6.8

%

 

 

 

8.9

%

 

 

8.6

%

 

Net Earnings

 

26,856

 

 

 

35,815

 

(25.0)%

 

 

58,751

 

 

 

46,856

 

25.4%

Diluted Earnings Per Share

$

1.25

 

 

$

1.68

 

(25.6)%

 

$

2.73

 

 

$

2.20

 

24.1%

Average Shares Outstanding

 

21,523

 

 

 

21,342

 

 

 

 

21,523

 

 

 

21,342

 

 

 

 

 

 

 

 

 

 

 

 

Full Year 2021

GAAP

 

Adjusted1

 

(000's except per share amounts)

12/25/2021

FY 2021

 

12/26/2020

FY 2020

vs. FY 2020

 

12/25/2021

FY 2021

 

12/26/2020

FY 2020

vs. FY 2020

Net Sales

$

3,501,575

 

 

$

2,895,355

 

20.9%

 

$

3,501,575

 

 

$

2,895,355

 

20.9%

Operating Income

 

286,785

 

 

 

225,953

 

26.9%

 

 

334,049

 

 

 

268,462

 

24.4%

Operating Income as a % of Net Sales

 

8.2

%

 

 

7.8

%

 

 

 

9.5

%

 

 

9.3

%

 

Net Earnings

 

195,630

 

 

 

140,693

 

39.0%

 

 

234,811

 

 

 

175,302

 

33.9%

Diluted Earnings Per Share

$

9.10

 

 

$

6.57

 

38.5%

 

$

10.92

 

 

$

8.18

 

33.5%

Average Shares Outstanding

 

21,493

 

 

 

21,425

 

 

 

 

21,493

 

 

 

21,425

 

 

"We achieved record sales for the second consecutive quarter through continued price management and strong market demand, while remaining highly focused on operational excellence and execution," said Stephen G. Kaniewski, President and Chief Executive Officer. "Our team delivered a solid fourth-quarter performance as we maintained our relentless focus on serving our customers in a challenging macro environment. I am very pleased with our ability to effectively manage our operations to meet growing demand despite continued wide-spread inflationary pressures and supply chain volatility. We also benefited from actions to improve productivity and control costs, which helped offset the margin impact of COVID-related labor inefficiencies and absenteeism in certain facilities during the quarter. Through these actions, we grew fourth quarter adjusted operating income 24.4 percent year-over-year and delivered adjusted diluted earnings per share growth of 26.0 percent. These results further demonstrate the value of our long-term strategy led by sustainable growth initiatives across our businesses, operational excellence and price leadership."

Kaniewski continued, "Reflecting on 2021 and our 75th year as a company, our full-year results exceeded the goals we set at the beginning of the year, despite an extraordinary business environment, demonstrating the resiliency of our global team of 11,000 employees. We achieved record net sales of $3.5 billion and delivered adjusted earnings per share of $10.92, an increase of 33.5 percent year-over-year. These results were driven by continued pricing actions, market expansion and investments in innovative technologies. We improved return on invested capital through productivity enhancements and lean efforts while strategically expanding capacity. I am extremely proud of our team 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 and solutions to advance agricultural productivity with an unwavering focus on employee safety and increasing shareholder value."

Fourth Quarter 2021 Segment Review

Infrastructure

Utility Support Structures Segment (33.6% of Sales)

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

Sales of $324.0 million grew 19.5% year-over-year. Sales growth was driven by significantly higher pricing and higher sales of solar tracker solutions driven by utilities' continued investments in grid modernization and renewable energy markets, partially offset by lower volumes of offshore wind structures.

Global backlog of $774.0 million is indicative of the long-term market drivers of grid modernization and strengthening renewable energy markets globally.

Operating Income was $6.5 million or 2.0% of sales ($36.9 million or 11.4% adjusted1) compared to $25.6 million or 9.4% of sales ($28.0 million or 10.3% adjusted1) in 2020. GAAP operating income includes pre-tax charges of $27.9 million attributed to the offshore wind structures product line, due to an impairment of long-lived assets. Adjusted operating income increased due to favorable pricing and a more favorable mix of products.

Engineered Support Structures Segment (30.3% of Sales)

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

Sales of $291.9 million increased 14.0% year-over-year led by favorable pricing and higher volumes of wireless communication products.

Lighting and transportation sales of $188.2 million increased 3.1% year-over-year, as favorable pricing and higher international sales more than offset lower volumes in North America, primarily in transportation markets.

Wireless communication products sales of $76.1 million increased 50.9% year-over-year. Higher demand globally due to wireless carriers increasing capital investments in 5G buildouts, and favorable pricing led to the sales growth.

Access Systems sales of $27.6 million increased 20.2% year-over-year, primarily due to improved end markets in Australia.

Global backlog increased more than 50.0% year-over-year to $377.0 million, indicative of continued investments in transportation infrastructure and growing demand in wireless communications markets and 5G deployment.

Operating Income improved to $29.2 million or 10.0% of sales compared to $19.2 million or 7.5% of sales ($24.4 million or 9.5% adjusted1) in 2020. Profitability improvement was driven by favorable pricing and improved fixed cost leverage, partially offset by lower North American transportation volumes.

Coatings Segment (10.2% of Sales)

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

Sales of $98.2 million increased 9.9% year-over-year due to higher average selling prices and sales from the new greenfield facility in Pittsburgh, PA that commenced operations in 2021.

Operating Income was $10.3 million or 10.5% of sales compared to $9.4 million or 10.5% of sales ($11.8 million or 13.2% adjusted1) in 2020. Profitability was impacted by operational impacts due to COVID-related labor inefficiencies, pricing actions that did not fully recover broad-based inflation, and a higher mix of internal volumes.

Agriculture

Irrigation Segment (28.7% of Sales)

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

Global sales of $276.8 million increased 38.9% year-over-year due to higher average selling prices, higher volumes in all markets, particularly North America and Brazil, and higher technology sales.

North American sales of $150.5 million grew 55.1% compared to 2020. Sales growth was led by favorable pricing, higher volumes due to continued strength in agricultural markets and higher industrial tubing sales.

International sales of $126.3 million grew 23.5% year-over-year. Sales growth was led by continued strong demand in Brazil, Europe and Australia, and ongoing deliveries of the large Egypt project which commenced in the fourth quarter of 2020.

Full-year technology sales of $97.9 million increased more than 45.0% year-over-year, driven by growers' increasing demand for connected crop management and advanced analytics to reduce input costs, increase productivity and improve crop yields.

Global backlog increased 43.5% year-over-year to $471.0 million, demonstrating the underlying strength in agricultural markets globally.

Operating Income was $28.6 million, or 10.3% of sales ($33.0 million or 11.9% adjusted1) compared to $22.3 million or 11.2% of sales ($25.3 million or 12.7% adjusted1) in 2020. Operating income increased due to higher volumes and pricing actions. Operating margins were partially impacted by higher input costs that were not fully recovered by price and incremental SG&A expense from the Prospera acquisition completed in May 2021.

Non-Cash Impairment Charge on Long-Lived Assets

Valmont has previously highlighted significant, adverse challenges in the wind energy market in Northern Europe. The market environment has remained extremely competitive, despite the recent approval of protective tariffs in that region. A required impairment test in November 2021 showed that the offshore and other complex steel structures reporting unit will not generate sufficient cash flows to recover the carrying value of its long-lived assets. As a result, a $27.9 million non-cash, pre-tax impairment of customer relationship intangible asset, trade name, and property, plant, and equipment was recognized.

Balance Sheet, Liquidity and Capital Allocation

Year-to-date cash flows from operations were $65.9 million, primarily reflecting higher levels of net working capital to proactively manage supply chain volatility and support strong customer demand. At the end of the fourth quarter, cash and cash equivalents were $177.2 million. Valmont purchased $2.0 million of company stock in the fourth quarter and $121.9 million remains on the current authorization with no expiration. During the quarter, Fitch reaffirmed the Company's BBB-/Stable credit rating.

Updating Full Year 2022 Financial Outlook and Key Assumptions

The Company is increasing its 2022 full-year net sales and diluted earnings per share outlook from the previous indications that were communicated last quarter, and providing key assumptions for the year.

  • Net Sales estimated to be $3.8 - $4.0 billion, an increase of 9.0% - 14.0% vs. prior year
  • Unfavorable foreign currency translation impact of approximately 1.0% of Net Sales
  • Diluted Earnings per Share estimated to be $11.55 - $12.30 GAAP ($12.25 - $13.00 adjusted1)
  • Tax rate of approximately 25.0%
  • Capital expenditures to be in the range of $110.0 - $120.0 million to support strategic growth initiatives and Industry 4.0 advanced manufacturing initiatives

Kaniewski continued, "As we turn our focus to this year, the safety and well-being of our employees remains our number one imperative, while we continue to execute and drive growth and performance. We entered 2022 from a position of strength and significant momentum in our business, with a team driven by our core values to deliver results for our stakeholders. This momentum is accelerating through the early stages of the year, and we are increasing our 2022 outlook due to several positive factors. Our record backlog of more than $1.6 billion reflects strong global market demand across the portfolio, and our customers' confidence in our ability to deliver products and innovative solutions. We continue to implement pricing strategies to recover the impact of broad-based inflation. Additionally, our strong balance sheet and cash flows give us flexibility to execute our long-term strategic plan. We remain focused on long-term growth, with an emphasis on ESG principles, return on invested capital, operational excellence and recurring technology revenue. We look forward to delivering another year of strong financial performance in 2022."

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 17, 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 4Q and Full Year 2021 Earnings Conference Call. A slide presentation will simultaneously be available for download on the Investors page at valmont.com. A replay of the event can be accessed two hours after the call at the above link or by telephone at 1-877-660-6853 or 1-201-612-7415. Please use conference identification number 13726874. The replay will be available through 10:59 p.m. CST on February 24, 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 COVID-19 including the effects of the outbreak on the general economy and the specific economic effects on the Company’s business and that of its customers and suppliers, risk factors described from time to time in Valmont’s reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw material, availability and market acceptance of new products, product pricing, domestic and international competitive environments, and actions and policy changes of domestic and foreign governments. The Company cautions that any forward-looking statement included in this press release is made as of the date of this press release and the Company does not undertake to update any forward-looking statement.

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

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per share amounts)

(unaudited)

 

 

Fourth Quarter

 

Year-to-Date

 

13 Weeks Ended

 

Year Ended

 

 

 

 

 

 

 

 

 

25-Dec-21

 

26-Dec-20

 

25-Dec-21

 

26-Dec-20

Net sales

$

963,278

 

 

$

798,377

 

 

$

3,501,575

 

 

$

2,895,355

 

Cost of sales

 

740,994

 

 

 

593,796

 

 

 

2,617,686

 

 

 

2,129,841

 

Gross profit

 

222,284

 

 

 

204,581

 

 

 

883,889

 

 

 

765,514

 

Selling, general and administrative expenses

 

165,034

 

 

 

150,442

 

 

 

590,608

 

 

 

522,923

 

Impairment of goodwill and intangible assets

 

6,496

 

 

 

 

 

 

6,496

 

 

 

16,638

 

Operating income

 

50,754

 

 

 

54,139

 

 

 

286,785

 

 

 

225,953

 

Other income (expense)

 

 

 

 

 

 

 

Interest expense

 

(11,146

)

 

 

(10,509

)

 

 

(42,612

)

 

 

(41,075

)

Interest income

 

298

 

 

 

443

 

 

 

1,192

 

 

 

2,374

 

Gain on investments (unrealized)

 

364

 

 

 

1,341

 

 

 

1,920

 

 

 

2,443

 

Other

 

2,501

 

 

 

1,724

 

 

 

12,798

 

 

 

3,073

 

Other income (expense), net

 

(7,983

)

 

 

(7,001

)

 

 

(26,702

)

 

 

(33,185

)

Earnings before income taxes

 

42,771

 

 

 

47,138

 

 

 

260,083

 

 

 

192,768

 

Income tax expense

 

15,092

 

 

 

10,443

 

 

 

61,414

 

 

 

49,615

 

Equity in (loss) of nonconsolidated subsidiaries

 

135

 

 

 

(249

)

 

 

(944

)

 

 

(1,004

)

Net earnings

 

27,814

 

 

 

36,446

 

 

 

197,725

 

 

 

142,149

 

Less: earnings attributable to non-controlling interests

 

(958

)

 

 

(631

)

 

 

(2,095

)

 

 

(1,456

)

Net earnings attributable to Valmont Industries, Inc.

$

26,856

 

 

$

35,815

 

 

$

195,630

 

 

$

140,693

 

 

 

 

 

 

 

 

 

Average shares outstanding (000's) - Basic

 

21,227

 

 

 

21,184

 

 

 

21,193

 

 

 

21,315

 

Earnings per share - Basic

$

1.27

 

 

$

1.69

 

 

$

9.23

 

 

$

6.60

 

 

 

 

 

 

 

 

 

Average shares outstanding (000's) - Diluted

 

21,523

 

 

 

21,342

 

 

 

21,493

 

 

 

21,425

 

Earnings per share - Diluted

$

1.25

 

 

$

1.68

 

 

$

9.10

 

 

$

6.57

 

 

 

 

 

 

 

 

 

Cash dividends per share

$

0.500

 

 

$

0.450

 

 

$

2.000

 

 

$

1.800

 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OPERATING RESULTS

(Dollars in thousands)

(unaudited)

 

 

Fourth Quarter

 

Year-to-Date

 

13 Weeks Ended

 

Year Ended

 

25-Dec-21

 

26-Dec-20

 

25-Dec-21

 

26-Dec-20

Net sales

 

 

 

 

 

 

 

Utility Support Structures

$

324,012

 

 

$

271,031

 

 

$

1,121,510

 

 

$

1,002,209

 

Engineered Support Structures

 

291,948

 

 

 

256,057

 

 

 

1,064,761

 

 

 

995,840

 

Coatings

 

98,182

 

 

 

89,336

 

 

 

386,313

 

 

 

345,312

 

Infrastructure products

 

714,142

 

 

 

616,424

 

 

 

2,572,584

 

 

 

2,343,361

 

Irrigation

 

276,757

 

 

 

199,263

 

 

 

1,028,717

 

 

 

645,831

 

Less: Intersegment sales

 

(27,621

)

 

 

(17,310

)

 

 

(99,726

)

 

 

(93,837

)

Total

$

963,278

 

 

$

798,377

 

 

$

3,501,575

 

 

$

2,895,355

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

Utility Support Structures

$

6,456

 

 

$

25,600

 

 

$

67,624

 

 

$

100,855

 

Engineered Support Structures

 

29,182

 

 

 

19,159

 

 

 

115,417

 

 

 

65,342

 

Coatings

 

10,347

 

 

 

9,357

 

 

 

50,365

 

 

 

42,975

 

Infrastructure products

 

45,985

 

 

 

54,116

 

 

 

233,406

 

 

 

209,172

 

Irrigation

 

28,560

 

 

 

22,345

 

 

 

137,027

 

 

 

83,046

 

Corporate

 

(23,791

)

 

 

(22,322

)

 

 

(83,648

)

 

 

(66,265

)

Total

$

50,754

 

 

$

54,139

 

 

$

286,785

 

 

$

225,953

 

The backlog of orders for the principal products manufactured and marketed was $1,621.9 million at the end of the 2021 fiscal year and $1,139.1 million at the end of the 2020 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 2021 backlog of orders will be filled during fiscal year 2022 . At year-end, the segments with backlog were as follows (dollar amounts in millions):

 

12/25/2021

 

12/26/2020

Engineered Support Structures

$

376.9

 

$

247.1

Utility Support Structures

 

773.9

 

 

563.3

Irrigation

 

471.0

 

 

328.3

Coatings

 

0.1

 

 

0.4

 

$

1,621.9

 

$

1,139.1

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

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

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

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

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

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

 

 

25-Dec-21

 

26-Dec-20

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

177,232

 

$

400,726

Accounts receivable, net

 

571,593

 

 

511,714

Inventories

 

728,834

 

 

448,941

Contract asset - costs and profits in excess of billings

 

142,643

 

 

123,495

Prepaid expenses and other assets

 

83,646

 

 

59,804

Refundable income taxes

 

8,815

 

 

9,945

Total current assets

 

1,712,763

 

 

1,554,625

Property, plant and equipment, net

 

598,605

 

 

597,727

Goodwill and other assets

 

1,135,881

 

 

800,808

 

$

3,447,249

 

$

2,953,160

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Current installments of long-term debt

$

4,884

 

$

2,748

Notes payable to banks

 

13,439

 

 

35,147

Accounts payable

 

347,841

 

 

268,099

Accrued expenses

 

253,330

 

 

227,735

Contract liability - billings in excess of costs and earnings

 

135,746

 

 

130,018

Dividend payable

 

10,616

 

 

9,556

Total current liabilities

 

765,856

 

 

673,303

Long-term debt, excluding current installments

 

947,072

 

 

728,431

Operating lease liabilities

 

147,759

 

 

80,202

Other long-term liabilities

 

172,965

 

 

263,388

Shareholders' equity

 

1,413,597

 

 

1,207,836

 

$

3,447,249

 

$

2,953,160

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

 

 

Fourth Quarter

 

52 Weeks Ended

 

25-Dec-21

 

26-Dec-20

Cash flows from operating activities

 

 

 

Net Earnings

$

197,725

 

 

$

142,149

 

Depreciation and amortization

 

92,577

 

 

 

82,892

 

Impairment of long-lived assets

 

27,911

 

 

 

20,389

 

Contribution to defined benefit pension plan

 

(1,924

)

 

 

(35,399

)

Change in working capital

 

(284,739

)

 

 

52,282

 

Other

 

34,388

 

 

 

53,981

 

Net cash flows from operating activities

 

65,938

 

 

 

316,294

 

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of property, plant, and equipment

 

(107,790

)

 

 

(106,700

)

Acquisitions

 

(312,500

)

 

 

(15,862

)

Other

 

2,982

 

 

 

18,533

 

Net cash flows from investing activities

 

(417,308

)

 

 

(104,029

)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from long-term borrowings

 

312,485

 

 

 

88,872

 

Principal payments on long-term borrowings

 

(91,313

)

 

 

(121,665

)

Net payments on short-term borrowings

 

(20,241

)

 

 

13,044

 

Purchase of treasury shares

 

(26,100

)

 

 

(56,491

)

Purchase of noncontrolling interest

 

 

 

 

(59,416

)

Dividends paid

 

(41,412

)

 

 

(36,930

)

Other

 

81

 

 

 

(1,170

)

Net cash flows from financing activities

 

133,500

 

 

 

(173,756

)

Effect of exchange rates on cash and cash equivalents

 

(5,624

)

 

 

8,675

 

Net change in cash and cash equivalents

 

(223,494

)

 

 

47,184

 

Cash and cash equivalents - beginning of year

 

400,726

 

 

 

353,542

 

Cash and cash equivalents - end of period

$

177,232

 

 

$

400,726

 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS

REGULATION G RECONCILIATION

(Dollars in thousands, except per share amounts)

(unaudited)

The non-GAAP tables below disclose the impact of 1) the nonrecurring impairment of long-lived assets for the offshore and other steel structures reporting unit (SM) 2) intangible asset amortization and stock-based compensation recognized on the Prospera subsidiary, 3) a write off a receivable following arbitration of a commercial transaction from 2014, 4) acquisition diligence, 5) severance expenses on segment operating income and net earnings and 6) the impact of the U.K. tax rate change on net earnings (adjusts statutory tax rate from 19% to 25%). Amounts may be impacted by rounding. We believe the adjustments for Prospera allow for a better comparison of future Irrigation segment performance as compared to historical results. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the related reported GAAP measures.

 

Thirteen

weeks ended

December 25,

2021

 

Diluted

earnings per

share

 

Year ended

December 25,

2021

 

Diluted

earnings per

share

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

$

26,856

 

 

$

1.25

 

 

$

195,630

 

 

$

9.10

 

Impairment of long-lived assets - Offshore structures (SM)

 

27,911

 

 

 

1.30

 

 

 

27,911

 

 

 

1.30

 

Prospera intangible asset amortization

 

1,470

 

 

 

0.07

 

 

 

3,396

 

 

 

0.16

 

Stock-based compensation - Prospera subsidiary

 

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 structures (SM) 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.

 

 

Thirteen weeks ended December 25, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Reconciliation

 

Engineered

Support

Structures

 

Utility

Support

Structures

 

Coatings

 

Irrigation

 

Corporate

 

Valmont

Operating income - as reported

 

$

29,182

 

 

$

6,456

 

 

$

10,347

 

 

$

28,560

 

 

$

(23,791

)

 

$

50,754

 

Impairment of long-lived assets - Offshore structures (SM)

 

 

 

 

 

27,911

 

 

 

 

 

 

 

 

 

 

 

 

27,911

 

Stock-based compensation - Prospera subsidiary

 

 

 

 

 

 

 

 

 

 

 

2,928

 

 

 

 

 

 

2,928

 

Prospera intangible asset amortization

 

 

 

 

 

 

 

 

 

 

 

1,470

 

 

 

 

 

 

1,470

 

Severance expense, pre-tax

 

 

 

 

2,492

 

 

 

 

 

 

 

 

 

 

 

 

2,492

 

Adjusted Operating Income

 

$

29,182

 

 

$

36,859

 

 

$

10,347

 

 

$

32,958

 

 

$

(23,791

)

 

$

85,555

 

Net Sales - as reported

 

 

291,948

 

 

 

324,012

 

 

 

98,182

 

 

 

276,757

 

 

 

NM

 

 

 

963,278

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Sales

 

 

10.0

%

 

 

2.0

%

 

 

10.5

%

 

 

10.3

%

 

 

NM

 

 

 

5.3

%

Adjusted Operating Income as a % of Sales

 

 

10.0

%

 

 

11.4

%

 

 

10.5

%

 

 

11.9

%

 

 

NM

 

 

 

8.9

%

 
 
 

Fifty-two weeks ended December 25, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Reconciliation

 

Engineered

Support

Structures

 

Utility

Support

Structures

 

Coatings

 

Irrigation

 

Corporate

 

Valmont

Operating income - as reported

 

$

115,417

 

 

$

67,624

 

 

$

50,365

 

 

$

137,027

 

 

$

(83,648

)

 

$

286,785

 

Impairment of long-lived assets - Offshore structures (SM)

 

 

 

 

 

27,911

 

 

 

 

 

 

 

 

 

 

 

 

27,911

 

Prospera intangible asset amortization

 

 

 

 

 

 

 

 

 

 

 

3,396

 

 

 

 

 

 

3,396

 

Stock-based compensation - Prospera subsidiary

 

 

 

 

 

 

 

 

 

 

 

5,240

 

 

 

 

 

 

5,240

 

Write off a receivable, pre-tax

 

 

 

 

 

5,545

 

 

 

 

 

 

 

 

 

 

 

 

5,545

 

Acquisition diligence expense, pre-tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,120

 

 

 

1,120

 

Severance expense, pre-tax

 

 

 

 

 

3,142

 

 

 

 

 

 

910

 

 

 

 

 

 

4,052

 

Adjusted Operating Income

 

$

115,417

 

 

$

104,222

 

 

$

50,365

 

 

$

146,573

 

 

$

(82,528

)

 

$

334,049

 

Net Sales - as reported

 

 

1,064,761

 

 

 

1,121,510

 

 

 

386,313

 

 

 

1,028,717

 

 

 

NM

 

 

 

3,501,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Sales

 

 

10.8

%

 

 

6.0

%

 

 

13.0

%

 

 

13.3

%

 

 

NM

 

 

 

8.2

%

Adjusted Operating Income as a % of Sales

 

 

10.8

%

 

 

9.3

%

 

 

13.0

%

 

 

14.2

%

 

 

NM

 

 

 

9.5

%

The non-GAAP tables below disclose the impact of impairment of goodwill, tradenames, and a facility, restructuring costs on segment operating income and net earnings as well as the impact of the U.K. tax rate change on net earnings (adjusts statutory tax rate from 17% to 19%). Amounts may be impacted by rounding. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the related reported GAAP measures for the second quarter and first half of fiscal 2020.

 

Thirteen

weeks ended

December 26,

2020

 

Diluted

earnings per

share

 

Fifty-two

weeks ended

December 26,

2020

 

Diluted

earnings per

share

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

$

35,815

 

 

$

1.68

 

 

$

140,693

 

 

$

6.57

 

Impairment of goodwill and tradename, pre-tax

 

 

 

 

 

 

 

16,638

 

 

 

0.78

 

Restructuring and related asset impairment costs - pre-tax

 

14,660

 

 

 

0.69

 

 

 

25,871

 

 

 

1.21

 

Total Adjustments

 

14,660

 

 

 

0.69

 

 

 

42,509

 

 

 

1.98

 

Tax effect of adjustments *

 

(3,619

)

 

 

(0.17

)

 

 

(6,372

)

 

 

(0.30

)

UK tax rate change

 

 

 

 

 

 

 

(1,528

)

 

 

(0.07

)

 

Net earnings attributable to Valmont Industries, Inc. - Adjusted

$

46,856

 

 

$

2.20

 

 

$

175,302

 

 

$

8.18

 

 

Average shares outstanding (000’s) - Diluted

 

 

 

21,342

 

 

 

 

 

21,425

 

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

 

 

Thirteen weeks ended December 26, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Reconciliation

 

Engineered

Support

Structures

 

Utility

Support

Structures

 

Coatings

 

Irrigation

 

Corporate

 

Valmont

Operating income - as reported

 

$

19,159

 

 

$

25,600

 

 

$

9,357

 

 

$

22,345

 

 

$

(22,322

)

 

$

54,139

 

Restructuring and related asset impairment costs

 

 

5,220

 

 

 

2,388

 

 

 

2,445

 

 

 

2,968

 

 

 

1,639

 

 

 

14,660

 

Adjusted Operating Income

 

$

24,379

 

 

$

27,988

 

 

$

11,802

 

 

$

25,313

 

 

$

(20,683

)

 

$

68,799

 

Net Sales - as reported

 

 

256,057

 

 

 

271,031

 

 

 

89,336

 

 

 

199,263

 

 

 

NM

 

 

 

798,377

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Sales

 

 

7.5

%

 

 

9.4

%

 

 

10.5

%

 

 

11.2

%

 

 

NM

 

 

 

6.8

%

Adjusted Operating Income as a % of Sales

 

 

9.5

%

 

 

10.3

%

 

 

13.2

%

 

 

12.7

%

 

 

NM

 

 

 

8.6

%

 
 
 

 

 

Fifty-two weeks ended December 26, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Reconciliation

 

Engineered

Support

Structures

 

Utility

Support

Structures

 

Coatings

 

Irrigation

 

Corporate

 

Valmont

Operating income - as reported

 

$

65,342

 

 

$

100,855

 

 

$

42,975

 

 

$

83,046

 

 

$

(66,265

)

 

$

225,953

 

Impairment of goodwill and tradename

 

 

16,638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,638

 

Restructuring and related asset impairment costs

 

 

7,584

 

 

 

9,363

 

 

 

3,951

 

 

 

2,968

 

 

 

2,005

 

 

 

25,871

 

Adjusted Operating Income

 

$

89,564

 

 

$

110,218

 

 

$

46,926

 

 

$

86,014

 

 

$

(64,260

)

 

$

268,462

 

Net Sales - as reported

 

 

995,840

 

 

 

1,002,209

 

 

 

345,312

 

 

 

645,831

 

 

 

NM

 

 

 

2,895,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Sales

 

 

6.6

%

 

 

10.1

%

 

 

12.4

%

 

 

12.9

%

 

 

NM

 

 

 

7.8

%

Adjusted Operating Income as a % of Sales

 

 

9.0

%

 

 

11.0

%

 

 

13.6

%

 

 

13.3

%

 

 

NM

 

 

 

9.3

%

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 technology intangible asset (Prospera Technologies) and (2) share-based compensation for Prospera employees. We believe the adjustments for Prospera allow for a better comparison of future Irrigation segment performance as compared to historical results. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings to be taken into consideration by management and investors with the related reported GAAP measures.

 

 

 

 

 

 

Reconciliation of Range of Net Earnings - 2022 Guidance

Low End

 

High End

 

Adjustments

Estimated net earnings - GAAP

$

249,750

 

$

266,250

 

 

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

 

 

 

 

 

6,950

 

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

 

 

 

 

 

10,000

 

Total pre-tax adjustments

 

 

 

 

 

16,950

 

Estimated tax benefit from above expenses*

 

 

 

 

 

(2,200

)

 

 

 

 

 

 

Total Adjustments, after-tax

 

 

 

 

$

14,750

 

Estimated net earnings - Adjusted

$

264,500

 

$

281,000

 

 

Diluted Earnings Per Share Range - GAAP

$

11.55

 

$

12.30

 

 

Diluted Earnings Per Share Range - Adjusted

$

12.25

 

$

13.00

 

 

 

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

 

Contacts

Renee Campbell

+1 402.963.1057

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