Valmont Industries, Inc. (NYSE: VMI), a global leader that
provides vital infrastructure and advances agricultural
productivity while driving innovation through technology, today
reported financial results for the third quarter ended September
30, 2023.
President and Chief Executive Officer Avner M. Applbaum
commented, “Our global teams performed extremely well during the
third quarter, expanding gross profit and delivering strong
third-quarter adjusted earnings per share against a dynamic demand
environment. In Infrastructure, our solid results reflect volume
growth from continued strong market demand, and we achieved
operating margin improvement year-over-year despite near-term
headwinds in telecommunications markets. In Agriculture,
international sales growth was led by EMEA project sales and
Brazil, where we recognized another quarter of record sales. As
expected, North America agriculture sales decreased year-over-year
due to continued muted farmer sentiment and third quarter 2022
benefited from the ongoing delivery of elevated backlog. I’m very
pleased with our reduction in inventory which helped deliver strong
operating cash flows.
“In the third quarter, we also recorded an impairment of
goodwill and intangible assets in the Agriculture Technology
reporting unit, primarily driven by significantly slower growth of
Prospera’s agronomy technology solutions compared to the original
financial projections.
“A few weeks ago, the leadership team and I met to discuss our
strategy. From where I stand today, our core strategic priorities
remain intact. While we will continue prioritizing growth
initiatives, looking ahead we will invest with discipline to
strengthen our core businesses, and proactively make decisions in
conjunction with market cycles. Going forward, we will also ensure
new innovation is introduced with the purpose of meeting the
immediate needs of our customers. In addition, to align our
organization with our strategy, today we are announcing an
organizational realignment program to streamline administrative
support of our business segments. This realignment, which is
expected to be recovered through lower operating costs within 12
months, will enable a more efficient and effective structure for
driving long-term profitable growth while reducing costs.”
Third Quarter 2023 Highlights (all metrics compared to Third
Quarter 2022 unless otherwise noted)
- Net Sales of $1.1 billion decreased 4.3%; accounting for the
2022 divestiture of the offshore wind energy structures business,
reported in the “Other” segment, Net Sales decreased 2.3%1
- Operating Income (Loss) was ($24.2) million [$120.8 million or
11.5% of net sales adjusted1] compared to $110.0 million or 10.0%
of net sales in 2022 [$114.1 million or 10.6% of net sales
adjusted1]
- Operating Income (Loss) includes non-cash pre-tax goodwill and
intangible asset impairment charges of $137.3 million related to
the Agriculture Technology reporting unit [$133.3 million
after-tax] and $4.2 million of pre-tax cash expenses related to the
organizational realignment program
- Diluted Earnings (Loss) per Share (“EPS”) of ($2.34) [$4.12
adjusted1] compared to $3.34 in 2022 [$3.49 adjusted1]
- GAAP effective tax rate of (44.6)% reflects the impairment of
goodwill for which there is no tax deduction; adjusted effective
tax rate of 22.2%1 was driven by favorable legislation regarding
usage of foreign tax credits generated in Brazil and benefits from
research and development expenses
- Generated strong operating cash flows of $81.3 million in the
third quarter and $190.9 million year-to-date; cash and cash
equivalents at the end of the third quarter were $172.6
million
- Returned $44.2 million to shareholders through dividends and
share repurchases including repurchasing approximately 126,500
shares of Company stock for $31.5 million
- Completed the acquisition of HR Products, a leading wholesale
supplier of irrigation parts in Australia
- Providing updated 2023 full-year outlook and announcing an
organizational realignment program to enable a more efficient and
effective administrative structure for driving long-term profitable
growth
1Please see Reg G reconciliation to GAAP measures at end of
document
Key Financial Metrics
Third Quarter 2023
GAAP
Adjusted1
(000's except per share amounts)
09/30/2023
09/24/2022
09/30/2023
09/24/2022
Q3 2023
Q3 2022
vs. Q3 2022
Q3 2023
Q3 2022
vs. Q3 2022
Net Sales
$
1,050,295
$
1,097,382
(4.3
)
%
$
1,050,295
$
1,074,521
(2.3
)
%
Operating Income (Loss)
(24,190
)
109,972
NM
120,834
114,147
5.9
%
Operating Inc. (Loss) as a % of Net
Sales
(2.3
)
%
10.0
%
11.5
%
10.6
%
Net Earnings (Loss)
(49,028
)
72,112
NM
86,976
75,313
15.5
%
Diluted Earnings (Loss) Per Share
$
(2.34
)
$
3.34
NM
$
4.12
$
3.49
18.1
%
Average Shares Outstanding
20,951
21,605
21,131
21,605
Year-to-Date 2023
GAAP
Adjusted1
(000's except per share amounts)
09/30/2023
09/24/2022
09/30/2023
09/24/2022
FY 2023
FY 2022
vs. FY 2022
FY 2023
FY 2022
vs. FY 2022
Net Sales
$
3,159,072
$
3,213,734
(1.7
)
%
$
3,159,072
$
3,146,787
0.4
%
Operating Income
228,009
323,533
(29.5
)
%
380,601
335,991
13.3
%
Operating Income as a % of Net Sales
7.2
%
10.1
%
12.0
%
10.7
%
Net Earnings
114,888
210,531
(45.4
)
%
257,368
220,883
16.5
%
Diluted Earnings Per Share
$
5.40
$
9.77
(44.8
)
%
$
12.09
$
10.25
17.9
%
Average Shares Outstanding
21,290
21,546
21,290
21,546
Third Quarter 2023 Segment Review
Infrastructure (71.8% of Net
Sales)
Products and solutions to serve the infrastructure markets of
utility, solar, lighting, transportation, and telecommunications,
along with coatings services to preserve metal products
Sales of $755.1 million were comparable with last year, driven
by higher volumes, notably in the Solar, Lighting and
Transportation (“L&T”) and Transmission, Distribution, and
Substation (“TD&S”) product lines. Lower Telecommunications
volumes and lower pricing associated with a reduced cost of steel
in the TD&S product line more than offset higher pricing across
the rest of the portfolio.
Operating Income improved to $103.4 million or 13.7% of net
sales [$108.0 million or 14.3% adjusted1] compared to $92.5 million
or 12.3% of net sales in the third quarter of 2022 as pricing not
linked to steel commodity costs was higher and the Company took
deliberate actions to improve overall cost of goods sold.
Agriculture (28.2% of Net
Sales)
Center pivot components and linear irrigation equipment for
agricultural markets, including parts and tubular products;
advanced technology solutions for precision agriculture
Sales of $298.5 million decreased 8.8% year-over-year as higher
international sales were more than offset by lower sales in North
America. Sales of agriculture technology products and services
globally were similar to last year.
In North America, the sales decrease was primarily driven by
lower irrigation equipment sales volumes. As expected, farmer
sentiment remained somewhat muted during the quarter and the third
quarter of 2022 benefited from the ongoing delivery of elevated
backlog. Average irrigation equipment selling prices were
comparable with last year. International sales growth was driven by
higher project sales in the EMEA region, a record sales quarter in
Brazil, and higher sales in Argentina. Third quarter 2023 also
benefited from approximately $5.5 million of favorable foreign
currency translation impacts compared to last year.
Operating Income (Loss) was ($99.7) million [$38.5 million or
13.0% of net sales adjusted1] compared to $43.3 million or 13.3% of
net sales in the third quarter of 2022 [$47.4 million or 14.6%
adjusted1]. A $137.3 million impairment of goodwill and intangible
assets led to the operating loss in the quarter, as described later
in the press release.
Other
Offshore wind energy structures business
As previously announced, the divestiture of the offshore wind
energy structures business was completed in December 2022. In the
third quarter of 2022, the subsequently-divested business generated
sales of $22.9 million and operating income of $1.1 million.
Non-Cash Goodwill and Intangible Asset Impairment Charge of
Agriculture Technology
During the third quarter of 2023, Valmont completed its annual
impairment testing of goodwill and certain intangible assets. As a
result of the impairment analysis, it was concluded that the
carrying value of the Agriculture Technology reporting unit
exceeded its market value. As such, the Company recorded an
impairment loss on goodwill and certain intangible assets of $137.3
million. Significantly slower growth of Prospera’s agronomy
technology solutions compared to the original financial projections
was the primary driver of the impairment. The recent decline in the
North American agriculture market was also a contributing factor.
The impairment charge did not affect the Company’s liquidity or
cash flows from operating activities.
Balance Sheet, Liquidity, and Capital Allocation
The Company generated strong third quarter 2023 operating cash
flows of $81.3 million through effectively managing working
capital, specifically inventory. At the end of the third quarter of
2023, cash and cash equivalents were $172.6 million. During the
third quarter of 2023, Valmont repurchased $31.5 million of Company
stock, with $314.7 million remaining on the authorized share
repurchase program.
Organizational Realignment Program
Today, Valmont is announcing a broad organizational realignment
program which better aligns the Company’s administrative support
structure to its strategy by reducing layers of management,
offering a voluntary early retirement program and other headcount
reductions. These actions are expected to enable a more efficient
and effective administrative structure for driving long-term
profitable growth while still investing in growth initiatives. The
program affects both reportable segments as well as corporate, and
is targeted to take place during 2023. Cash expenses are expected
to be between $33 and $36 million and are expected to be recovered
through lower operating costs within 12 months. Of the above cost
estimates, $4.2 million of pre-tax cash expenses related to the
realignment program were incurred during the third quarter
2023.
Updating 2023 Full Year Financial Outlook and Key
Assumptions
Taking into consideration third quarter sales and diluted
earnings per share results, the expected timing of international
agriculture project shipments and the near-term demand outlook for
telecommunications markets, the Company is updating its full-year
net sales growth and earnings per share outlook from the previous
indications that were communicated last quarter and providing
updated key assumptions for the year.
2023 Full Year Financial
Outlook
Previous Outlook with Updated
Adjustments1
Revised Outlook1
Net Sales Growth (vs. PY)
0% to 2%
(3%) to (4%)
GAAP Diluted Earnings per Share
$14.80 to $15.35
$7.20 to $7.50
Adjusted Diluted Earnings per Share1
$14.80 to $15.35
$14.80 to $15.10
- The impairment charge significantly reduces the future Prospera
technology intangible asset amortization, and the realignment
program announced in this release lowers future stock-based
compensation to be recognized for Prospera employees. The Previous
Adjusted Diluted Earnings per Share Outlook has been updated to
remove the Prospera adjustments of approximately 65 cents per
diluted share from the prior Outlook for comparison to the Revised
Outlook
- Expect full-year operating margin improvement compared to
2022
- 2022 sales include $100 million from the offshore wind energy
structures business which was divested at the end of fiscal
2022
- GAAP effective tax rate of 36% to 36.5% due to the
non-deductibility of the goodwill impairment; Adjusted effective
tax rate of 26% to 26.5% due to recent favorable U.S. tax
legislation
- Minimal expected foreign currency translation impact to net
sales
- Capital expenditures expected to be in the range of $100 to
$110 million to support strategic growth initiatives
Applbaum continued, “The Valmont team continues to perform well,
optimizing margins and earnings while generating strong cash flows,
positioning us for profitable growth as we streamline the
organization. The long-term outlook across all our end markets
remains very positive, while acknowledging near-term headwinds in
certain markets. Our management team and organization are united
around our strategic priorities, with a focus on initiatives that
deliver a compelling value proposition to our customers and drive
long-term shareholder value. I am excited about Valmont’s journey
as a company that maximizes financial performance through the
cycles, made possible by an unwavering discipline on capital
allocation and ROIC.”
A live audio discussion with Avner M. Applbaum, President and
Chief Executive Officer, and Timothy P. Francis, Interim Chief
Financial Officer, will be accessible by telephone on Thursday,
October 26, 2023 at 8:00 a.m. CDT by dialing 1-877-407-6184 or
1-201-389-0877 (no Conference ID needed), or via webcast by
pointing browsers to this link: Valmont Industries 3Q 2023 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 13734765. The replay will be available
through 10:59 p.m. CDT on Thursday, November 2, 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, 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.
Website and Social Media Disclosure
The Company uses its website and social media channels
identified on its website as channels of distribution of Company
information. The information that the Company posts through these
channels may be deemed material. Accordingly, investors should
monitor these channels, in addition to following the Company’s
press releases, Securities and Exchange Commission filings, and
public conference calls and webcasts. The contents of the Company’s
website and social media channels are not part of this press
release.
VALMONT INDUSTRIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Dollars in thousands, except per
share amounts)
(Unaudited)
Thirteen weeks ended
Thirty-nine weeks
ended
September 30,
September 24,
September 30,
September 24,
2023
2022
2023
2022
Net sales
$
1,050,295
$
1,097,382
$
3,159,072
$
3,213,734
Cost of sales
735,184
811,904
2,205,979
2,386,469
Gross profit
315,111
285,478
953,093
827,265
Selling, general, and administrative
expenses
194,277
175,506
580,060
503,732
Impairment of long-lived assets
140,844
—
140,844
—
Realignment charges
4,180
—
4,180
—
Operating income (loss)
(24,190
)
109,972
228,009
323,533
Other income (expense)
Interest expense
(13,472
)
(11,629
)
(41,494
)
(34,278
)
Interest income
3,186
507
4,579
1,019
Gain (loss) on investments -
unrealized
(344
)
(901
)
1,791
(4,306
)
Other
165
2,822
(1,599
)
8,537
Other income (expense), net
(10,465
)
(9,201
)
(36,723
)
(29,028
)
Earnings (loss) before income taxes and
equity in loss of nonconsolidated subsidiaries
(34,655
)
100,771
191,286
294,505
Income tax expense
15,461
27,823
79,239
80,531
Equity in loss of nonconsolidated
subsidiaries
(199
)
(18
)
(1,219
)
(931
)
Net earnings (loss)
(50,315
)
72,930
110,828
213,043
Loss (earnings) attributable to
non-controlling interests
1,287
(818
)
4,060
(2,512
)
Net earnings (loss) attributable to
Valmont Industries, Inc.
$
(49,028
)
$
72,112
$
114,888
$
210,531
Average shares outstanding (000's) -
Basic
20,951
21,332
21,083
21,308
Earnings (loss) per share - Basic
$
(2.34
)
$
3.38
$
5.45
$
9.88
Average shares outstanding (000's) -
Diluted
20,951
21,605
21,290
21,546
Earnings (loss) per share - Diluted
$
(2.34
)
$
3.34
$
5.40
$
9.77
Cash dividends per share
$
0.60
$
0.55
$
1.80
$
1.65
VALMONT INDUSTRIES, INC. AND
SUBSIDIARIES
SUMMARY OPERATING
RESULTS
(Dollars in thousands)
(Unaudited)
Thirteen weeks ended
Thirty-nine weeks
ended
September 30,
September 24,
September 30,
September 24,
2023
2022
2023
2022
Net sales
Infrastructure
$
755,076
$
755,492
$
2,261,777
$
2,157,082
Agriculture
298,483
327,261
910,579
1,011,606
Other
—
22,861
—
66,947
Total
1,053,559
1,105,614
3,172,356
3,235,635
Less: Intersegment sales
(3,264
)
(8,232
)
(13,284
)
(21,901
)
Total
$
1,050,295
$
1,097,382
$
3,159,072
$
3,213,734
Operating income (loss)
Infrastructure
$
103,401
$
92,465
$
313,703
$
254,908
Agriculture
(99,670
)
43,258
2,904
138,779
Other
—
1,107
—
814
Corporate
(27,921
)
(26,858
)
(88,598
)
(70,968
)
Total
$
(24,190
)
$
109,972
$
228,009
$
323,533
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 the
infrastructure markets of utility, solar, lighting, transportation,
and telecommunications, along with 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 in 2022 that were not more than 10%
of consolidated sales, operating income, or assets. This comprised
the offshore wind energy structures business which was reported in
the “Other” segment until its divestiture in December 2022.
VALMONT INDUSTRIES, INC. AND
SUBSIDIARIES
SUMMARY OPERATING
RESULTS
(Dollars in thousands)
(Unaudited)
Thirteen weeks ended September
30, 2023
Sales
Infrastructure
Agriculture
Other
Intersegment
Consolidated
Geographical Market:
North America
$
572,239
$
126,828
$
—
$
(3,055
)
$
696,012
International
182,837
171,655
—
(209
)
354,283
Total
$
755,076
$
298,483
$
—
$
(3,264
)
$
1,050,295
Product Line:
Transmission, Distribution, and
Substation
$
297,967
$
—
$
—
$
—
$
297,967
Lighting and Transportation
252,603
—
—
—
252,603
Coatings
88,967
—
—
(1,241
)
87,726
Telecommunications
59,630
—
—
—
59,630
Solar
55,909
—
—
(209
)
55,700
Irrigation Equipment and Parts
—
273,639
—
(1,814
)
271,825
Technology Products and Services
—
24,844
—
—
24,844
Total
$
755,076
$
298,483
$
—
$
(3,264
)
$
1,050,295
Thirteen weeks ended September
24, 2022
Sales
Infrastructure
Agriculture
Other
Intersegment
Consolidated
Geographical Market:
North America
$
579,628
$
178,626
$
—
$
(7,114
)
$
751,140
International
175,864
148,635
22,861
(1,118
)
346,242
Total
$
755,492
$
327,261
$
22,861
$
(8,232
)
$
1,097,382
Product Line:
Transmission, Distribution, and
Substation
$
304,781
$
—
$
—
$
—
$
304,781
Lighting and Transportation
241,590
—
—
—
241,590
Coatings
91,969
—
—
(3,994
)
87,975
Telecommunications
92,830
—
—
—
92,830
Solar
24,322
—
22,861
(1,118
)
46,065
Irrigation Equipment and Parts
—
303,003
—
(3,120
)
299,883
Technology Products and Services
—
24,258
—
—
24,258
Total
$
755,492
$
327,261
$
22,861
$
(8,232
)
$
1,097,382
VALMONT INDUSTRIES, INC. AND
SUBSIDIARIES
SUMMARY OPERATING
RESULTS
(Dollars in thousands)
(Unaudited)
Thirty-nine weeks ended
September 30, 2023
Sales
Infrastructure
Agriculture
Other
Intersegment
Consolidated
Geographical Market:
North America
$
1,743,635
$
450,678
$
—
$
(12,042
)
$
2,182,271
International
518,142
459,901
—
(1,242
)
976,801
Total
$
2,261,777
$
910,579
$
—
$
(13,284
)
$
3,159,072
Product Line:
Transmission, Distribution, and
Substation
$
927,094
$
—
$
—
$
—
$
927,094
Lighting and Transportation
727,862
—
—
—
727,862
Coatings
270,201
—
—
(6,611
)
263,590
Telecommunications
195,505
—
—
—
195,505
Solar
141,115
—
—
(1,242
)
139,873
Irrigation Equipment and Parts
—
825,277
—
(5,431
)
819,846
Technology Products and Services
—
85,302
—
—
85,302
Total
$
2,261,777
$
910,579
$
—
$
(13,284
)
$
3,159,072
Thirty-nine weeks ended
September 24, 2022
Sales
Infrastructure
Agriculture
Other
Intersegment
Consolidated
Geographical Market:
North America
$
1,645,472
$
564,369
$
—
$
(20,316
)
$
2,189,525
International
511,610
447,237
66,947
(1,585
)
1,024,209
Total
$
2,157,082
$
1,011,606
$
66,947
$
(21,901
)
$
3,213,734
Product Line:
Transmission, Distribution, and
Substation
$
882,216
$
—
$
—
$
—
$
882,216
Lighting and Transportation
701,009
—
—
—
701,009
Coatings
264,266
—
—
(11,295
)
252,971
Telecommunications
232,765
—
—
—
232,765
Solar
76,826
—
66,947
(1,118
)
142,655
Irrigation Equipment and Parts
—
928,622
—
(9,488
)
919,134
Technology Products and Services
—
82,984
—
—
82,984
Total
$
2,157,082
$
1,011,606
$
66,947
$
(21,901
)
$
3,213,734
VALMONT INDUSTRIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Dollars in thousands)
(Unaudited)
September 30,
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
172,566
$
185,406
Receivables, net
673,999
604,181
Inventories
693,629
728,762
Contract assets
169,931
174,539
Prepaid expenses and other current
assets
97,302
87,697
Total current assets
1,807,427
1,780,585
Property, plant, and equipment, net
603,979
595,578
Goodwill and other non-current assets
1,074,773
1,180,833
Total assets
$
3,486,179
$
3,556,996
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current installments of long-term debt
$
941
$
1,194
Notes payable to banks
3,639
5,846
Accounts payable
355,934
360,312
Accrued expenses
260,873
248,320
Contract liabilities
88,600
172,915
Income taxes payable
2,062
3,664
Dividends payable
12,533
11,742
Total current liabilities
724,582
803,993
Long-term debt, excluding current
installments
977,260
870,935
Operating lease liabilities
160,521
155,469
Other non-current liabilities
65,104
84,887
Total liabilities
1,927,467
1,915,284
Shareholders' equity
1,558,712
1,641,712
Total liabilities and shareholders'
equity
$
3,486,179
$
3,556,996
VALMONT INDUSTRIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Thirty-nine weeks
ended
September 30,
September 24,
2023
2022
Cash flows from operating activities:
Net earnings
$
110,828
$
213,043
Depreciation and amortization
73,638
72,803
Contribution to defined benefit pension
plan
(15,259
)
(17,155
)
Impairment of long-lived assets
140,844
—
Gain on divestiture
(2,994
)
—
Change in working capital
(110,550
)
(96,995
)
Other
(5,639
)
12,030
Net cash flows provided by operating
activities
190,868
183,726
Cash flows from investing activities:
Purchase of property, plant, and
equipment
(71,233
)
(67,122
)
Proceeds from divestiture, net of cash
divested
6,369
—
Proceeds from sale of assets
1,565
71
Proceeds from property damage insurance
claims
6,770
—
Acquisitions, net of cash acquired
(31,839
)
(39,287
)
Other
(898
)
(108
)
Net cash flows used in investing
activities
(89,266
)
(106,446
)
Cash flows from financing activities:
Proceeds from short-term borrowings
24,649
4,137
Payments on short-term borrowings
(27,290
)
(12,366
)
Proceeds from long-term borrowings
215,012
235,470
Principal payments on long-term
borrowings
(109,335
)
(251,155
)
Proceeds from settlement of financial
derivatives
—
2,243
Dividends paid
(36,983
)
(34,080
)
Dividends to noncontrolling interests
(662
)
—
Purchase of noncontrolling interests
—
(7,338
)
Purchase of treasury shares
(166,663
)
(20,491
)
Proceeds from exercises under stock
plans
5,348
8,778
Other
(15,567
)
(4,341
)
Net cash flows used in financing
activities
(111,491
)
(79,143
)
Effect of exchange rates on cash and cash
equivalents
(2,951
)
(9,148
)
Net change in cash and cash
equivalents
(12,840
)
(11,011
)
Cash and cash equivalents - beginning of
year
185,406
177,232
Cash and cash equivalents - end of
period
$
172,566
$
166,221
VALMONT INDUSTRIES, INC. AND
SUBSIDIARIES SUMMARY OF EFFECT OF 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 impairment
of long-lived assets, realignment charges, intangible asset
amortization (Prospera), and stock-based compensation recognized
for the Prospera employees on fiscal 2023 and 2022 results, as well
as the impact of non-recurring tax benefit items on net earnings.
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.
We previously presented non-GAAP financial measures adjusted for
Prospera intangible asset amortization and stock-based compensation
recognized for the Prospera employees for a better investor
understanding of Agriculture segment performance related to
traditional segment products. The Company conducted its annual
impairment testing of intangible asset value as of September 2,
2023 and significantly reduced the Prospera intangible asset value.
Additionally, the board approved certain realignment plans
subsequent to the third quarter of fiscal 2023 that significantly
affected the compensation recognized for the Prospera employees. As
a result of this, we do not consider our historical adjustments
related to Prospera to arrive at non-GAAP financial measures to be
relevant to investor understanding of third quarter and future
segment performance.
Thirteen
Thirty-nine
weeks ended
Diluted
weeks ended
Diluted
September
earnings (loss)
September
earnings per
30, 2023
per share1,2
30, 2023
share2
Net earnings (loss) attrib. to Valmont
Industries, Inc. - as reported
$
(49,028
)
$
(2.32
)
$
114,888
$
5.40
Impairment of long-lived assets
140,844
6.67
140,844
6.62
Realignment charges
4,180
0.20
4,180
0.20
Prospera intangible asset amortization
—
—
3,290
0.15
Prospera stock-based compensation
—
—
4,278
0.20
Total adjustments, pre-tax
145,024
6.86
152,592
7.17
Tax effect of adjustments3
(5,432
)
(0.26
)
(6,524
)
(0.31
)
Non-recurring tax benefit items
(3,588
)
(0.17
)
(3,588
)
(0.17
)
Net earnings attributable to Valmont
Industries, Inc. - adjusted
$
86,976
$
4.12
$
257,368
$
12.09
Average shares outstanding (000’s) -
diluted
21,131
21,290
Thirteen
Thirty-nine
weeks ended
Diluted
weeks ended
Diluted
September
earnings per
September
earnings per
24, 2022
share2
24, 2022
share2
Net earnings attributable to Valmont
Industries, Inc. - as reported
$
72,112
$
3.34
$
210,531
$
9.77
Prospera intangible asset amortization
1,645
0.08
4,935
0.23
Prospera stock-based compensation
2,530
0.12
7,523
0.35
Total adjustments, pre-tax
4,175
0.19
12,458
0.58
Tax effect of adjustments3
(974
)
(0.05
)
(2,106
)
(0.10
)
Net earnings attributable to Valmont
Industries, Inc. - adjusted
$
75,313
$
3.49
$
220,883
$
10.25
Average shares outstanding (000’s) -
diluted
21,605
21,546
1In the third quarter of fiscal 2023, we reported a GAAP net
loss. In periods in which we recognize a net loss, we exclude the
impact of outstanding stock awards from the diluted loss per share
calculation, as their inclusion would have an anti-dilutive effect.
The adjusted diluted earnings per share calculation includes the
impact of outstanding stock awards.
2Earnings (loss) per share includes rounding.
3The tax effect of adjustments is calculated based on the income
tax rate in each applicable jurisdiction.
VALMONT INDUSTRIES, INC. AND
SUBSIDIARIES SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING
ITEMS ON REPORTED RESULTS REGULATION G RECONCILIATION
(Dollars in thousands) (Unaudited)
The non-GAAP tables below disclose the impacts of the impairment
of long-lived assets, realignment charges, intangible asset
amortization (Prospera) and stock-based compensation recognized for
the Prospera employees on fiscal 2023 and 2022 results. Amounts may
be impacted by rounding. We believe it is useful when considering
company performance for the non-GAAP adjusted net earnings and
operating income to be taken into consideration by management and
investors with the related reported GAAP measures.
Thirteen weeks ended September
30, 2023
Operating Income (Loss)
Reconciliation
Infrastructure
Agriculture
Other
Corporate
Consolidated
Operating income (loss) - as reported
$
103,401
$
(99,670
)
$
—
$
(27,921
)
$
(24,190
)
Impairment of long-lived assets
3,571
137,273
—
—
140,844
Realignment charges
1,069
907
—
2,204
4,180
Adjusted operating income
$
108,041
$
38,510
$
—
$
(25,717
)
$
120,834
Net sales - as reported
753,626
296,669
—
—
1,050,295
Operating income (loss) as a % of net
sales
13.7
%
(33.6
)
%
NM
NM
(2.3
)
%
Adj. operating income as a % of adj. net
sales
14.3
%
13.0
%
NM
NM
11.5
%
Thirteen weeks ended September
24, 2022
Operating Income Reconciliation
Infrastructure
Agriculture
Other
Corporate
Consolidated
Operating income - as reported
$
92,465
$
43,258
$
1,107
$
(26,858
)
$
109,972
Prospera intangible asset amortization
—
1,645
—
—
1,645
Prospera stock-based compensation
—
2,530
—
—
2,530
Adjusted operating income
$
92,465
$
47,433
$
1,107
$
(26,858
)
$
114,147
Net sales - as reported
750,380
324,141
22,861
—
1,097,382
Adjusted net sales
750,380
324,141
—
—
1,074,521
Operating income as a % of net sales
12.3
%
13.3
%
4.8
%
NM
10.0
%
Adj. operating income as a % of net
sales
12.3
%
14.6
%
4.8
%
NM
10.4
%
Adj. operating income as a % of adj. net
sales
12.3
%
14.6
%
NM
NM
10.6
%
Thirty-nine weeks ended
September 30, 2023
Operating Income Reconciliation
Infrastructure
Agriculture
Other
Corporate
Consolidated
Operating income - as reported
$
313,703
$
2,904
$
—
$
(88,598
)
$
228,009
Impairment of long-lived assets
3,571
137,273
—
—
140,844
Realignment charges
1,069
907
—
2,204
4,180
Prospera intangible asset amortization
—
3,290
—
—
3,290
Prospera stock-based compensation
—
4,278
—
—
4,278
Adjusted operating income
$
318,343
$
148,652
$
—
$
(86,394
)
$
380,601
Net sales - as reported
2,253,924
905,148
—
—
3,159,072
Operating income as a % of net sales
13.9
%
0.3
%
NM
NM
7.2
%
Adj. operating income as a % of adj. net
sales
14.1
%
16.4
%
NM
NM
12.0
%
Thirty-nine weeks ended
September 24, 2022
Operating Income Reconciliation
Infrastructure
Agriculture
Other
Corporate
Consolidated
Operating income - as reported
$
254,908
$
138,779
$
814
$
(70,968
)
$
323,533
Prospera intangible asset amortization
—
4,935
—
—
4,935
Prospera stock-based compensation
—
7,523
—
—
7,523
Adjusted operating income
$
254,908
$
151,237
$
814
$
(70,968
)
$
335,991
Net sales - as reported
2,144,669
1,002,118
66,947
—
3,213,734
Adjusted net sales
2,144,669
1,002,118
—
—
3,146,787
Operating income as a % of net sales
11.9
%
13.8
%
1.2
%
NM
10.1
%
Adj. operating income as a % of net
sales
11.9
%
15.1
%
1.2
%
NM
10.5
%
Adj. operating income as a % of adj. net
sales
11.9
%
15.1
%
NM
NM
10.7
%
VALMONT INDUSTRIES, INC. AND
SUBSIDIARIES REGULATION G RECONCILIATION OF EXCLUDING OTHER
SEGMENT NET SALES (Dollars in thousands) (Unaudited)
Excluding Other segment net sales from the third quarter and
first three quarters of fiscal 2022, which we refer to in this
reconciliation as “Adjusted Net Sales”, is a non-GAAP measure. The
Other segment net sales were generated by the offshore wind energy
structures business which was divested in December 2022. Adjusted
Net Sales 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
Adjusted Net Sales is calculated from the Company’s Statements of
Operations. Adjusted Net Sales is calculated as total net sales
less Other segment net sales. Adjusted Net Sales allows investors
to analyze our operating performance in light of the amount of net
sales less net sales of a divested business.
Thirteen weeks ended
Thirty-nine weeks
ended
September 30,
September 24,
Percent
September 30,
September 24,
Percent
2023
2022
Change
2023
2022
Change
Net sales
$
1,050,295
$
1,097,382
(4.3
)%
$
3,159,072
$
3,213,734
(1.7
)%
Less: Other segment net sales
—
(22,861
)
NM
—
(66,947
)
NM
Adjusted net sales
$
1,050,295
$
1,074,521
(2.3
)%
$
3,159,072
$
3,146,787
0.4
%
VALMONT INDUSTRIES, INC. AND
SUBSIDIARIES REGULATION G RECONCILIATION OF ADJUSTED
EFFECTIVE TAX RATE (Dollars in thousands) (Unaudited)
Excluding significant non-recurring items from the third quarter
of fiscal 2023 from the calculation of effective tax rate, which we
refer to as “Adjusted Effective Tax Rate”, is a non-GAAP measure.
Adjusted Effective Tax Rate should not be considered in isolation
or as a substitute for the effective tax rate prepared in
accordance with GAAP. The table below shows how Adjusted Effective
Tax Rate is calculated from the Company’s Statements of Operations.
Adjusted Effective Tax Rate is calculated as total earnings (loss)
before income taxes plus the significant non-recurring items of
impairment of goodwill and intangible assets, realignment charges,
and non-recurring tax benefit items. Adjusted Effective Tax Rate
allows investors to analyze our effective tax rate in light of
these non-recurring items.
Thirteen weeks ended September
30, 2023
Earnings (loss) before income
taxes and equity in loss of nonconsolidated subsidiaries
Income tax
expense
Effective tax
rate
As reported
$
(34,655
)
$
15,461
(44.6
)%
Impairment of long-lived assets
140,844
4,387
Realignment charges
4,180
1,045
Non-recurring tax benefit items
—
3,588
Adjusted
$
110,369
$
24,481
22.2
%
VALMONT INDUSTRIES, INC. AND
SUBSIDIARIES REGULATION G RECONCILIATION OF FORECASTED GAAP
AND ADJUSTED EARNINGS (Dollars in thousands, except per share
amounts) (Unaudited)
The non-GAAP tables below discloses the impact on the range of
estimated diluted earnings per share of the (1) amortization of
intangible assets (Prospera), (2) stock-based compensation for
Prospera employees, (3) impairment of long-lived assets, (4)
realignment charges, and (5) non-recurring tax benefit items. 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 Revised Guidance1
Low End
High End
Adjustments
Estimated net earnings - GAAP
$
154,000
$
160,400
Impairment of long-lived assets,
pre-tax
$
141,000
Realignment charges, pre-tax
36,000
Total pre-tax adjustments
177,000
Estimated tax benefit from above
expenses2
(12,900
)
Non-recurring tax benefit items
(3,600
)
Total adjustments, after-tax
$
160,500
Estimated net earnings - Adjusted
$
314,500
$
320,900
Diluted Earnings per Share Range -
GAAP3
$
7.20
$
7.50
Diluted Earnings per Share Range -
Adjusted3
$
14.80
$
15.10
2023 Previous Guidance1
Low End
High End
Adjustments
Estimated net earnings - GAAP
$
318,250
$
330,050
Prospera intangible asset (proprietary
technology) amortization, pre-tax
$
6,600
Prospera stock-based compensation,
pre-tax
9,800
Total pre-tax adjustments
16,400
Estimated tax benefit from above
expenses2
(2,450
)
Total adjustments, after-tax
$
13,950
Estimated net earnings - Adjusted
$
332,200
$
344,000
Diluted Earnings per Share Range -
GAAP3
$
14.80
$
15.35
Diluted Earnings per Share Range -
Adjusted3
$
15.45
$
16.00
2023 Revised Previous Guidance1
Low End
High End
Adjustments
Estimated net earnings - GAAP
$
318,250
$
330,050
Prospera intangible asset (proprietary
technology) amortization, pre-tax
$
—
Prospera stock-based compensation,
pre-tax
—
Total pre-tax adjustments
—
Estimated tax benefit from above
expenses2
—
Total adjustments, after-tax
$
—
Estimated net earnings - Adjusted
$
318,250
$
330,050
Diluted Earnings per Share Range -
GAAP3
$
14.80
$
15.35
Diluted Earnings per Share Range -
Adjusted3
$
14.80
$
15.35
1 See accompanying press release for our key assumptions
2 The tax effect of adjustments is calculated based on the
estimated income tax rate in each applicable jurisdiction
3 Assumes weighted average shares outstanding of 21.3M for
revised guidance and 21.5M for previous and revised previous
guidance, and includes rounding
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231025120387/en/
Renee Campbell renee.campbell@valmont.com
Valmont Industries (NYSE:VMI)
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