EX-99.1 2 vmi-20231023xex99d1.htm EX-99.1
Graphic

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:

Renee Campbell

Email:

renee.campbell@valmont.com

Date:

October 25, 2023

Valmont Reports Third Quarter 2023 Results and
Updates Full-Year Financial Outlook

Omaha, NE - 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.”

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


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]
oOperating 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]
oGAAP 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

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

  

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


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.

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


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.

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


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.

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


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.

###

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


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

###