Valmont reports third quarter 2022 results
Omaha, neb.--(business wire)--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 24, 2022. third quarter 2022 highlights (all metrics compared to third quarter 2021 unless otherwise noted) record third quarter net sales of $1.1 billion increased 26.3% operating income increased 44.3% to $110.0 million, or 10.0% of net sales (increased 41.9% to $114.1 million or 10.4% adjusted1) compared to $76.2 million or 8.8% of net sales ($80.4 million or 9.3% adjusted1) record third quarter diluted earnings per share (eps) of $3.34 ($3.49 adjusted1) compared to $2.40 ($2.57 adjusted1) generated strong third quarter operating cash flows of $116 million driven by better overall working capital management including a reduction in inventory compared to second quarter 2022 record backlog of $2.0 billion, an increase of 25.4% or $412 million since the end of fiscal 2021 and sequentially higher due to continued strong market demand across the portfolio returned $22.4 million to shareholders through dividends and share repurchases key financial metrics third quarter 2022 gaap adjusted1 (000's except per share amounts) 09/24/2022 09/25/2021 09/24/2022 09/25/2021 q3 2022 q3 2021 vs. q3 2021 q3 2022 q3 2021 vs. q3 2021 net sales $ 1,097,382 $ 868,782 26.3 % $ 1,097,382 $ 868,782 26.3 % operating income 109,972 76,195 44.3 % 114,147 80,433 41.9 % operating income as a % of net sales 10.0 % 8.8 % 10.4 % 9.3 % net earnings 72,112 51,650 39.6 % 75,313 55,284 36.2 % diluted earnings per share $ 3.34 $ 2.40 39.2 % $ 3.49 $ 2.57 35.8 % average shares outstanding 21,605 21,552 21,605 21,552 ytd 2022 gaap adjusted1 (000's except per share amounts) 09/24/2022 09/25/2021 09/24/2022 09/25/2021 fy 2022 fy 2021 vs. fy 2021 fy 2022 fy 2021 vs. fy 2021 net sales $ 3,213,734 $ 2,538,297 26.6 % $ 3,213,734 $ 2,538,297 26.6 % operating income 323,533 236,031 37.1 % 335,991 248,494 35.2 % operating income as a % of net sales 10.1 % 9.3 % 10.5 % 9.8 % net earnings 210,531 168,774 24.7 % 220,883 176,060 25.5 % diluted earnings per share $ 9.77 $ 7.86 24.3 % $ 10.25 $ 8.20 25.0 % average shares outstanding 21,546 21,483 21,546 21,483 “i am extremely pleased with the outstanding performance and record results delivered by the entire valmont team this quarter,” said stephen g. kaniewski, president and chief executive officer. “we continue to see strong demand globally for our products and solutions across infrastructure and agriculture markets. broad-based infrastructure market strength is being driven by continued investments in grid resiliency and upgrades to aging infrastructure, ongoing demand for renewable power and clean energy solutions and the 5g network transition. agriculture markets remain extremely favorable, as elevated commodity prices are being driven by tighter global grain supplies, ongoing demand for increased food production and a heightened focus on food security concerns. the typical seasonal decline in third quarter north america agriculture sales was less pronounced this year due to ongoing delivery of backlog and strong demand throughout the quarter. despite continued challenges of inflation and supply chain volatility, we delivered record third quarter earnings per share as our team continues to live our core values of passion, integrity, and continuous improvement, with an unwavering focus on delivering results. across our global portfolio we remain committed to the execution of our growth strategy while also improving profitability and delivering long-term value for our shareholders.” third quarter 2022 segment review infrastructure (70.5% 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 $778.4 million grew 22.7% year-over-year with double-digit sales growth across all product lines, net of 2.3% unfavorable foreign currency translation impacts. higher sales were driven by favorable pricing globally, primarily in the transmission, distribution and substation (td&s), lighting and transportation (l&t), and telecommunications product lines, higher volumes, notably in the renewable energy product line, and sales from the concealfab acquisition. operating income improved to $93.6 million or 12.1% of net sales compared to $71.4 million or 11.3% in 2021, driven by favorable pricing and higher volumes. agriculture (29.5% 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 $327.3 million increased 36.2% year-over-year, with sales growth across north america and international markets, led by higher average selling prices of irrigation equipment and higher volumes, partially offset by lower project sales to egypt. in brazil, sales nearly doubled year-over-year, demonstrating continued robust market demand for irrigation equipment and ag solar products. operating income improved to $43.3 million, or 13.3% of net sales ($47.4 million or 14.6% adjusted1) compared to $27.7 million or 11.7% of net sales ($32.0 million or 13.5% 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. balance sheet, liquidity and capital allocation the company generated year-to-date operating cash flows of $184 million through strong earnings and managing working capital while supporting strong revenue growth. at the end of the third quarter, cash and cash equivalents were $166 million. valmont purchased approximately $11 million of company stock in the third quarter and approximately $101 million remains on the current authorization with no expiration. updating full year 2022 financial outlook and key assumptions and providing 2023 indications the company is updating its 2022 full-year net sales and diluted earnings per share outlook that were communicated last quarter and providing updated key assumptions for the year. 2022 full year financial outlook previous outlook revised outlook net sales growth (vs. py) 20% to 21% ~ 22% gaap diluted eps1 $12.90 to $13.30 $12.95 to $13.30 adjusted diluted eps1 $13.60 to $14.00 $13.65 to $14.00 tax rate ~ 27.5% ~ 27.5% fx translation impact on net sales ~ (2.0%) ~ (2.0%) capital expenditures $110 to $120 million $95 to $105 million revised net sales growth to reflect third quarter 2022 results revised diluted eps to reflect expected mix of earnings and timing of project deliveries capital expenditures now expected to be in the range of $95 - $105 million due to extended machinery lead times providing indicative guidance for 2023 of net sales growth in the range of 6% to 9% and diluted eps growth in the range of 11% to 15% kaniewski continued, “the strong market drivers we are seeing across our businesses, our continued track record of execution and a record backlog of ~$2 billion, give us confidence going forward. the long-term need for critical infrastructure investment globally, including current and future stimulus programs, are driving sustainable demand across our infrastructure businesses. favorable agriculture market trends across global markets and a strong international project pipeline are providing momentum for our agriculture business well into next year.” added kaniewski, "looking ahead to 2023, we believe favorable market conditions and strong demand will continue, and our robust backlog and ongoing pricing strategies across the portfolio give us confidence in revenue and profitability growth next year. in 2023, we expect sales growth of 6% to 9% and earnings per share growth of 11% to 15%. through our diversified business portfolio, return on invested capital focus, and organizational emphasis on esg principles, we are in a position of strength with a talented team who are driven by our core values to deliver results for our customers and our stakeholders. we remain focused on what we can control: leveraging our business model and valmont team to deliver innovative products and solutions to our customers, advancing operational excellence, and executing on strategic initiatives that drive sustainable, profitable growth. additionally, our balance sheet remains strong, giving us flexibility to execute our long-term strategic plan.” 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, october 27, 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 3q 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 13733566. the replay will be available through 10:59 p.m. cdt on november 03, 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 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. 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) third quarter year-to-date 13 weeks ended 39 weeks ended 09/24/2022 09/25/2021 09/24/2022 09/25/2021 net sales $ 1,097,382 $ 868,782 $ 3,213,734 $ 2,538,297 cost of sales 811,904 641,378 2,386,469 1,876,692 gross profit 285,478 227,404 827,265 661,605 selling, general and administrative expenses 175,506 151,209 503,732 425,574 operating income 109,972 76,195 323,533 236,031 other income (expense) interest expense (11,629 ) (11,031 ) (34,278 ) (31,466 ) interest income 507 397 1,019 894 gain (loss) on investments (unrealized) (901 ) 488 (4,306 ) 1,556 other 2,822 2,644 8,537 10,297 other income (expense), net (9,201 ) (7,502 ) (29,028 ) (18,719 ) earnings before income taxes 100,771 68,693 294,505 217,312 income tax expense 27,823 16,080 80,531 46,322 equity in loss of nonconsolidated subsidiaries (18 ) (360 ) (931 ) (1,079 ) net earnings 72,930 52,253 213,043 169,911 less: earnings attributable to non-controlling interests (818 ) (603 ) (2,512 ) (1,137 ) net earnings attributable to valmont industries, inc. $ 72,112 $ 51,650 $ 210,531 $ 168,774 average shares outstanding (000's) - basic 21,332 21,175 21,308 21,182 earnings per share - basic $ 3.38 $ 2.44 $ 9.88 $ 7.97 average shares outstanding (000's) - diluted 21,605 21,552 21,546 21,483 earnings per share - diluted $ 3.34 $ 2.40 $ 9.77 $ 7.86 cash dividends per share $ 0.55 $ 0.50 $ 1.65 $ 1.50 valmont industries, inc. and subsidiaries summary operating results (dollars in thousands) (unaudited) third quarter year-to-date 13 weeks ended 39 weeks ended 09/24/2022 09/25/2021 09/24/2022 09/25/2021 net sales infrastructure $ 778,353 $ 634,283 $ 2,224,029 $ 1,801,533 agriculture 327,261 240,331 1,011,606 751,960 total 1,105,614 874,614 3,235,635 2,553,493 less: intersegment sales (8,232 ) (5,832 ) (21,901 ) (15,196 ) total $ 1,097,382 $ 868,782 $ 3,213,734 $ 2,538,297 operating income infrastructure $ 93,572 $ 71,422 $ 255,722 $ 187,421 agriculture 43,258 27,735 138,779 108,467 corporate (26,858 ) (22,962 ) (70,968 ) (59,857 ) total $ 109,972 $ 76,195 $ 323,533 $ 236,031 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 and linear irrigation equipment for agricultural markets, including parts and tubular products, and advanced technology solutions for precision agriculture. valmont industries, inc. and subsidiaries summary operating results (dollars in thousands) (unaudited) thirteen weeks ended september 24, 2022 intersegment infrastructure agriculture sales consolidated geographical market: north america $ 579,628 $ 178,626 $ (7,114 ) $ 751,140 international 198,725 148,635 (1,118 ) 346,242 total $ 778,353 $ 327,261 $ (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 renewable energy 47,183 — (1,118 ) 46,065 irrigation equipment and parts, excluding technology — 303,003 (3,120 ) 299,883 technology products and services — 24,258 — 24,258 total $ 778,353 $ 327,261 $ (8,232 ) $ 1,097,382 thirteen weeks ended september 25, 2021 intersegment infrastructure agriculture sales consolidated geographical market: north america $ 439,610 $ 116,308 $ (5,832 ) $ 550,086 international 194,673 124,023 — 318,696 total $ 634,283 $ 240,331 $ (5,832 ) $ 868,782 product line: transmission, distribution and substation $ 239,572 $ — $ — $ 239,572 lighting and transportation 217,962 — — 217,962 coatings 76,761 — (1,826 ) 74,935 telecommunications 63,088 — — 63,088 renewable energy 36,900 — — 36,900 irrigation equipment and parts, excluding technology — 218,892 (4,006 ) 214,886 technology products and services — 21,439 — 21,439 total $ 634,283 $ 240,331 $ (5,832 ) $ 868,782 thirty-nine weeks ended september 24, 2022 intersegment infrastructure agriculture sales consolidated geographical market: north america $ 1,645,472 $ 564,369 $ (20,316 ) $ 2,189,525 international 578,557 447,237 (1,585 ) 1,024,209 total $ 2,224,029 $ 1,011,606 $ (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 renewable energy 143,773 — (1,118 ) 142,655 irrigation equipment and parts, excluding technology — 928,622 (9,488 ) 919,134 technology products and services — 82,984 — 82,984 total $ 2,224,029 $ 1,011,606 $ (21,901 ) $ 3,213,734 thirty-nine weeks ended september 25, 2021 intersegment infrastructure agriculture sales consolidated geographical market: north america $ 1,246,512 $ 395,096 $ (15,196 ) $ 1,626,412 international 555,021 356,864 — 911,885 total $ 1,801,533 $ 751,960 $ (15,196 ) $ 2,538,297 product line: transmission, distribution and substation $ 668,474 $ — $ — $ 668,474 lighting and transportation 609,725 — — 609,725 coatings 231,900 — (7,823 ) 224,077 telecommunications 162,830 — — 162,830 renewable energy 128,604 — — 128,604 irrigation equipment and parts, excluding technology — 679,600 (7,373 ) 672,227 technology products and services — 72,360 — 72,360 total $ 1,801,533 $ 751,960 $ (15,196 ) $ 2,538,297 valmont industries, inc. and subsidiaries condensed consolidated balance sheets (dollars in thousands) (unaudited) 09/24/2022 12/25/2021 assets current assets: cash and cash equivalents $ 166,221 $ 177,232 accounts receivable, net 614,411 571,593 inventories 746,282 728,834 contract asset - costs and profits in excess of billings 215,684 142,643 prepaid expenses and other assets 107,476 83,646 refundable income taxes — 8,815 total current assets 1,850,074 1,712,763 property, plant and equipment, net 596,850 598,605 goodwill and other assets 1,174,805 1,135,881 $ 3,621,729 $ 3,447,249 liabilities and shareholders' equity current liabilities: current installments of long-term debt $ 2,106 $ 4,884 notes payable to banks 4,935 13,439 accounts payable 376,508 347,841 accrued expenses 261,900 253,330 contract liability - billings in excess of costs and earnings 200,341 135,746 income taxes payable 10,668 — dividend payable 11,733 10,616 total current liabilities 868,191 765,856 long-term debt, excluding current installments 935,129 947,072 operating lease liabilities 156,860 147,759 other long-term liabilities 88,798 172,965 shareholders' equity 1,572,751 1,413,597 $ 3,621,729 $ 3,447,249 valmont industries, inc. and subsidiaries condensed consolidated statements of cash flows (dollars in thousands) (unaudited) 39 weeks ended 09/24/2022 09/25/2021 cash flows from operating activities net earnings $ 213,043 $ 169,911 depreciation and amortization 72,803 67,764 contribution to defined benefit pension plan (17,155 ) (970 ) change in working capital (96,995 ) (183,030 ) other 12,030 8,154 net cash flows from operating activities 183,726 61,829 cash flows from investing activities purchase of property, plant, and equipment (67,122 ) (80,509 ) acquisitions (39,287 ) (312,500 ) other (37 ) 3,546 net cash flows from investing activities (106,446 ) (389,463 ) cash flows from financing activities proceeds from long-term borrowings 235,470 236,710 principal payments on long-term borrowings (251,155 ) (66,128 ) net payments on short-term borrowings (8,229 ) (20,463 ) purchase of treasury shares (20,491 ) (24,101 ) purchase of noncontrolling interest (7,338 ) — dividends paid (34,080 ) (30,794 ) other 6,680 5,792 net cash flows from financing activities (79,143 ) 101,016 effect of exchange rates on cash and cash equivalents (9,148 ) (4,313 ) net change in cash and cash equivalents (11,011 ) (230,931 ) cash and cash equivalents - beginning of year 177,232 400,726 cash and cash equivalents - end of period $ 166,221 $ 169,795 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 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 a write off a receivable following arbitration of a commercial transaction from 2014, acquisition diligence and restructuring 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. thirteen diluted thirty-nine diluted weeks ended earnings per weeks ended earnings per september 24, 2022 share september 24, 2022 share 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 stock-based compensation - prospera 2,530 0.12 7,523 0.35 total adjustments, pre-tax1 4,175 0.19 12,458 0.58 tax effect of adjustments2 (974 ) (0.05 ) (2,106 ) (0.10 ) net earnings attributable to valmont industries, inc. - adjusted1 $ 75,313 $ 3.49 $ 220,883 $ 10.25 average shares outstanding (000’s) - diluted 21,605 21,546 thirteen diluted thirty-nine diluted weeks ended earnings per weeks ended earnings per september 25, 2021 share september 25, 2021 share net earnings attributable to valmont industries, inc. - as reported $ 51,650 $ 2.40 $ 168,774 $ 7.86 prospera intangible asset amortization 1,926 0.09 1,926 0.09 stock-based compensation - prospera 2,312 0.11 2,312 0.11 write-off of a receivable, pre-tax — — 5,545 0.26 acquisition diligence expense, pre-tax — — 1,120 0.05 restructuring expense, pre-tax — — 1,560 0.07 total adjustments, pre-tax1 4,238 0.20 12,463 0.58 change in u.k. statutory tax rate — — (2,819 ) (0.13 ) tax effect of adjustments2 (604 ) (0.03 ) (2,358 ) (0.11 ) net earnings attributable to valmont industries, inc. - adjusted1 $ 55,284 $ 2.57 $ 176,060 $ 8.20 average shares outstanding (000’s) - diluted 21,552 21,483 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 september 24, 2022 operating income reconciliation infrastructure agriculture corporate valmont operating income - as reported $ 93,572 $ 43,258 $ (26,858 ) $ 109,972 stock-based compensation - prospera — 2,530 — 2,530 prospera intangible asset amortization — 1,645 — 1,645 adjusted operating income $ 93,572 $ 47,433 $ (26,858 ) $ 114,147 net sales - as reported 773,241 324,141 nm 1,097,382 operating income as a % of net sales 12.1 % 13.3 % nm 10.0 % adjusted operating income as a % of net sales 12.1 % 14.6 % nm 10.4 % thirteen weeks ended september 25, 2021 operating income reconciliation infrastructure agriculture corporate valmont operating income - as reported $ 71,422 $ 27,735 $ (22,962) $ 76,195 prospera intangible asset amortization — 1,926 — 1,926 stock-based compensation - prospera — 2,312 — 2,312 adjusted operating income $ 71,422 $ 31,973 $ (22,962) $ 80,433 net sales - as reported 632,457 236,325 nm 868,782 operating income as a % of net sales 11.3 % 11.7 % nm 8.8 % adjusted operating income as a % of net sales 11.3 % 13.5 % nm 9.3 % thirty-nine weeks ended september 24, 2022 operating income reconciliation infrastructure agriculture corporate valmont operating income - as reported $ 255,722 $ 138,779 $ (70,968) $ 323,533 stock-based compensation - prospera — 7,523 — 7,523 prospera intangible asset amortization — 4,935 — 4,935 adjusted operating income $ 255,722 $ 151,237 $ (70,968) $ 335,991 net sales - as reported 2,211,616 1,002,118 nm 3,213,734 operating income as a % of net sales 11.6 % 13.8 % nm 10.1 % adjusted operating income as a % of net sales 11.6 % 15.1 % nm 10.5 % thirty-nine weeks ended september 25, 2021 operating income reconciliation infrastructure agriculture corporate valmont operating income - as reported $ 187,421 $ 108,467 $ (59,857) $ 236,031 prospera intangible asset amortization — 1,926 — 1,926 stock-based compensation - prospera — 2,312 — 2,312 write-off of a receivable, pre-tax 5,545 — — 5,545 acquisition diligence expense, pre-tax — — 1,120 1,120 restructuring expense, pre-tax 650 910 — 1,560 adjusted operating income $ 193,616 $ 113,615 $ (58,737) $ 248,494 net sales - as reported 1,793,710 744,587 nm 2,538,297 operating income as a % of net sales 10.4 % 14.6 % nm 9.3 % adjusted operating income as a % of net sales 10.8 % 15.3 % nm 9.8 % 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 - 2022 guidance low end high end adjustments estimated net earnings - gaap $ 279,500 $ 287,200 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 $ 293,700 $ 301,400 diluted earnings per share range - gaap $ 12.95 $ 13.30 diluted earnings per share range - adjusted $ 13.65 $ 14.00 ______________________
