Exhibit 99.1

 

 

News Release

For Immediate Release

 

 

Contact:

Renee Campbell

October 23, 2018

 

402-963-1057

 

 

Valmont Reports Third Quarter 2018 Results

 

Omaha, NE - Valmont Industries, Inc. (NYSE: VMI), a leading global provider of engineered products and services for infrastructure development and irrigation equipment and services for agriculture, today reported third quarter 2018 results.

 

Third Quarter 2018 Financial Summary

 

 

 

GAAP

 

Adjusted(1)

 

 

 

9/29/2018

 

9/30/2017

 

vs.

 

9/29/2018

 

9/30/2017

 

vs.

 

 

 

Q3 2018

 

Q3 2017

 

Q3 2017

 

Q3 2018

 

Q3 2017

 

Q3 2017

 

Revenue

 

$

678,692

 

$

680,779

 

down 0.3%

 

$

678,692

 

$

680,779

 

down 0.3%

 

Operating Income

 

$

38,360

 

$

60,090

 

down 36.2%

 

$

63,242

 

$

60,090

 

up 5.2%

 

Operating Income as a % of Net Sales

 

5.7

%

8.8

%

 

 

9.3

%

8.8

%

 

 

Net Earnings

 

$

4,448

 

$

35,208

 

down 87.5%

 

$

40,728

 

$

35,208

 

up 15.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

0.20

 

$

1.55

 

down 87.1%

 

$

1.82

 

$

1.55

 

up 17.4%

 

Average Shares Outstanding

 

22,352

 

22,751

 

 

 

22,352

 

22,751

 

 

 

 

Third Quarter 2018 Highlights

 

·                  Revenue of $678.7 million was down slightly compared to last year, as revenue gains in the Engineered Support Structures, Utility Support Structures and Coatings segments were offset by lower sales in Irrigation and unfavorable currency impacts of $12.6 million (1.9% of sales)

 

·                  North America Irrigation sales growth was driven by higher volumes and recent acquisitions, supported by increased sales of advanced, integrated technology

 


(1)Please see Reg G reconciliation of non-GAAP financial measures to GAAP measures at end of the document.

 

- more -

 


 

solutions, offset by extended project timeframes and lower revenues in Brazil, which led to lower sales in international markets

 

·                  Excluding 2017 grinding media revenue of $19.8 million, third-quarter revenue from continuing operations grew 2.7%

 

·                  GAAP operating income was 5.7% of sales. Adjusted operating income(1) of 9.3% improved 40 bps compared to 2017, driven by favorable results in the Engineered Support Structures and Irrigation segments

 

·                  GAAP EPS of $0.20 includes the following pre-tax expenses: a non-cash goodwill impairment charge ($0.71), debt refinancing costs ($0.66), restructuring expenses ($0.28), and costs related to M&A activity ($0.13); adjusted EPS(1) of $1.82 increased 17.4% over last year; currency translation unfavorably impacted EPS by $0.04

 

·                  Deployed capital totaling $116.0 million for three acquisitions - two in the Utility Support Structures segment, and one in the Engineered Support Structures segment, advancing addressable market growth strategies communicated at the Company’s Investor Day

 

·                  Repurchased 309,200 shares of stock for $42.9 million, at an average price of $138.81 per share

 

·                  Completed the previously-announced redemption of 6.625% Senior Notes due in 2020, resulting in a pre-tax charge of $14.8 million ($11.0 million after-tax, or $0.49 cents per share)

 

·                  Updating 2018 revenue guidance to a range of $2.75 - $2.80 billion, and adjusted EPS(1) guidance to a range of $7.50 - $7.65, to reflect anticipated incremental LIFO expense and unfavorable currency impacts

 

“Our emphasis on pricing actions and operational improvements positioned us well to achieve good operating profit growth this quarter, despite an inflationary environment and enacted tariffs,” said Stephen G. Kaniewski, President and Chief Executive Officer. “Consistent with our focus on capital deployment, we completed three acquisitions that advance our growth strategy into adjacent markets, and repurchased $43 million of shares in the third quarter. We believe the actions we’ve taken this year to optimize our operational footprint and supply chain should leave us well-positioned by year-end 2018 to further execute on our addressable market growth strategy.”

 


(1)Please see Reg G reconciliation of GAAP operating income, net earnings and EPS to Adjusted figures at end of document

 

- more -

 


 

Third Quarter 2018 Segment Review

 

Infrastructure

 

Engineered Support Structures Segment (37% of Sales)

 

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

 

Sales of $251.5 million were 2.1% higher than the prior year. Sales growth was driven by solid volume in the North America transportation market, offset by significantly lower volume for wireless communication structures in China, and unfavorable currency translation impact. Sales of Access Systems products were slightly below last year.

 

Higher sales of lighting and traffic products were led by solid transportation demand in North America, as states continue to enact legislation to fund infrastructure growth. Pricing actions taken earlier in the year also contributed to revenue growth. Sales of transportation structures in Europe were higher, as general market conditions continue to stabilize, supported by government infrastructure funding. In the Asia Pacific region, sales of highway safety products approximated last year, supported by government investments in road safety.

 

Sales of wireless communication products and components were lower compared to last year. A temporary pause in spending due to carriers focusing on 5G site preparation, and uncertainty of pending regulations on fee limits, muted demand. In the Asia Pacific region, demand was significantly lower from reduced spending by the largest wireless carrier in China and a decrease in export projects.

 

Operating income was $16.5 million, or 6.6% of sales ($22.8 million, or 9.1% adjusted(1)) compared to $17.0 million or 6.9% of sales last year. Pricing actions to recover higher steel costs, and improved factory leverage in North America contributed to margin improvement, offset by lower volumes in China.

 

During the quarter, the Company acquired full control of Walpar, LLC, an industry-leading manufacturer of overhead sign structures for the North America transportation market. The acquisition drives adjacent market growth that supports intelligent transportation systems and smart city initiatives.

 

Utility Support Structures Segment (32% of Sales)

 

Steel and concrete structures for global utility transmission, distribution and generation applications, renewable energy generation equipment, and inspection services

 

Sales of $218.3 million increased 6.6% compared to last year. In North America, pricing to recover steel cost increases was partially offset by a less favorable product mix driven by continued market demand for smaller structures. Sales of offshore wind products in Northern Europe decreased nearly 10% from 2017 levels, due to a challenging competitive market environment.

 


(1)Please see Reg G reconciliation of GAAP operating income, net earnings and EPS to Adjusted figures at end of document

 

- more -

 


 

Operating income was $2.1 million, or 1.0% of sales ($20.0 million, or 9.2% adjusted(1)) compared to $22.8 million or 11.2% of sales last year. Profitability was lower due to factory inefficiencies caused by a less favorable product mix. Results were also unfavorably impacted by significant underperformance in the offshore wind business. Non-cash goodwill impairment charges of $15.8 million were incurred during the quarter, and further outlined in the “Non-Cash Goodwill Impairment Charge” section later in the release.

 

During the quarter, the Company acquired the operational assets of Derit Infrastructure Pvt. Ltd., a manufacturing facility located in Vadodara, India, with capabilities to produce steel lattice structures for the utility and wireless communication markets. The Company also acquired a 75% majority stake in Convert Italia, SpA, a designer and provider of single-axis engineered solar tracker solutions. Both acquisitions drive sustainable global growth and strengthen the Company’s market position.

 

Coatings Segment (13% of Sales)

 

Global galvanizing, painting and anodizing services to preserve and protect metal products

 

Global sales of $90.4 million were 9.5% higher than last year. In North America, pricing to recover zinc cost increases and strong industrial demand, drove higher sales. In the Asia Pacific region, higher volumes in Australia led by firm industrial demand and improved market conditions, contributed to sales growth.

 

Operating income of $14.4 million, or 15.9% of sales, was in line with last year’s results. Price recovery of higher zinc costs and improved operating leverage, were offset by higher SG&A expense and unfavorable currency translation.

 

During the quarter, the Company entered into a definitive agreement to acquire CSP Coatings Systems of Auckland, New Zealand, to further strengthen the Company’s Asia-Pacific market position. The transaction was completed on October 18, 2018, funded with cash on hand.

 

Agriculture

 

Irrigation Segment (21% of Sales)

 

Agricultural irrigation equipment, parts, services and tubular products, water management solutions, and technology for precision agriculture

 

Global sales of $140.2 million were 4.9% below last year. Sales grew in North America, while sales in international markets were lower.

 

North America revenues increased more than 16%, despite continued market uncertainty from tariffs and trade policies, and low net farm income levels. Sales from Torrent Engineering, acquired earlier this year, contributed to favorable comparisons. The Company’s

 


(1)Please see Reg G reconciliation of GAAP operating income, net earnings and EPS to Adjusted figures at end of document

 

- more -

 


 

strategy to drive adoption of its advanced technology products and services also led to higher sales, including the recent North American expansion of its Valley SchedulingTM advanced irrigation management solution.

 

International sales were down 23% compared to last year, due to lower volumes in emerging markets and unfavorable currency translation impacts. Excluding currency effects, sales were down 17%. While market demand in Brazil remains strong, extended approvals for government-sponsored financing programs and uncertainty of current political outcomes, also negatively impacted sales in that region.

 

Operating income was higher at $21.3 million, or 15.2% of sales, compared to $18.2 million, or 12.4% of sales in 2017. Successful price recovery of steel cost inflation and improved pricing actions, were partially offset by decreased operating leverage and currency impacts.

 

Operations Transformation Update

 

The Company continued execution of its operations transformation strategy during the quarter, primarily in China. The Engineered Support Structures manufacturing facility located in the Shandong province was closed, and the consolidation of three Access Systems facilities into a single location in the Shanghai province was completed. Pre-tax restructuring expenses for the quarter were $6.3 million, $1.4 million of which were non-cash asset impairments.

 

Additional evaluations of local market conditions, and the closure of the Shandong facility have led to an increase in anticipated full-year 2018 restructuring expenses from the previously communicated $20.0 million, to a new estimate of $27.0 million ($19.0 million cash and $8.0 million non-cash). $8.0 million of anticipated savings is expected to be realized in 2018, and is included in 2018 EPS guidance. An additional $8.0 million is expected to be recovered in 2019, with the balance to be recovered thereafter. Separately, the Company is also assessing options to address near-term challenges in the wind energy market.

 

Non-Cash Goodwill Impairment Charge

 

The Company previously highlighted significant, adverse challenges in the wind energy market in Northern Europe. A lack of protective tariffs led to an extremely competitive environment in that region. During the third quarter, the Company performed its annual impairment test of goodwill. Lower, near-term financial projections resulted in the estimated fair value of the offshore and other complex steel structures reporting unit, to be below the Company’s investment in this business. As a result, impairments of $15.8 million were recorded, which represents all of the goodwill and a portion of the Valmont SM tradename.

 

2018 Outlook

 

The Company’s updated 2018 guidance is as follows.

 


(1)Please see Reg G reconciliation of GAAP operating income, net earnings and EPS to Adjusted figures at end of document

 

- more -

 


 

 

 

2018 Prior Guidance

 

2018 Revised Guidance

GAAP Diluted EPS(2)

 

$6.12 - 6.22

 

$4.95 - $5.10

Adjusted Diluted EPS(1)

 

$7.55 - $7.65

 

$7.50 - $7.65

Revenue(3)

 

$2.80 Billion

 

$2.75 - $2.80 Billion

Operating Profitability Growth(4)

 

25 bps

 

10 bps

Free Cash Flow

 

1x Net Earnings

 

0.60 – 0.65x Net Earnings

ROIC (after tax)

 

>10%

 

>10%

 

Mr. Kaniewski stated, “We are updating our 2018 guidance to reflect anticipated impacts of incremental LIFO inventory expense resulting from raw material inflation and higher inventory levels, and expected impacts from currency translation.”

 

Added Mr. Kaniewski, “As we consider our outlook for the balance of 2018, we expect fourth quarter revenues to be in line with last year. Sales growth in the Engineered Support Structures segment is supported by strong economic demand. We expect Utility segment volumes to be lower from a less favorable product mix in North America, and continued, unfavorable comparisons in the offshore wind business. As always, project movements, weather events and product mix changes can impact sales. In the Coatings segment, we expect revenue to be similar to last year. Irrigation segment sales are anticipated to be comparable to last year, but can be impacted by North American harvest outcomes and timing of international projects. Our expected results across all segments account for current levels of freight, labor, and raw materials, and the anticipated impact of the most recently enacted tariffs.”

 

A live audio discussion with Stephen G. Kaniewski, President and Chief Executive Officer, and Mark C. Jaksich, Executive Vice President and Chief Financial Officer, will be accessible by telephone on Wednesday, October 24, 2018 at 8:00 am 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 Q3 2018 Earnings Conference Call.  A slide presentation will simultaneously be available on the Investors page at www.valmont.com. A replay of the event can be accessed two hours after the call at the above link or by telephone at 1-877-660-6853 or 1-201-612-7415. Please use conference identification number 13680597. The replay will be available through 10:59 p.m. CDT on October 31, 2018.

 

Valmont is a global leader, designing and manufacturing engineered products that support global infrastructure development and agricultural productivity. Its products for infrastructure serve highway, transportation, wireless communication, electric transmission, and industrial construction and energy markets. Its irrigation equipment and services for large-scale agriculture improves farm productivity while conserving fresh water resources. In addition, Valmont provides coatings services that protect against corrosion and improve the service lives of steel and other metal products.

 


(1)Please see Reg G reconciliation of GAAP operating income, net earnings and EPS to Adjusted figures at end of document

 

- more -

 


 

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, 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 of GAAP operating income, net earnings and EPS to Adjusted figures at end of document

(2)Change to GAAP guidance the result of increased pre-tax expenses for goodwill impairment charge, restructuring activities, debt refinancing, and M&A

(3)Revenue excludes future 2018 acquisition activity

(4)Excludes expenses for goodwill impairment charge, restructuring activities, debt refinancing, and M&A

 



 

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

 

 

 

29-Sep-18

 

30-Sep-17

 

29-Sep-18

 

30-Sep-17

 

Net sales

 

$

678,692

 

$

680,779

 

$

2,059,781

 

$

2,030,989

 

Cost of sales

 

514,352

 

517,185

 

1,551,202

 

1,519,510

 

Gross profit

 

164,340

 

163,594

 

508,579

 

511,479

 

Selling, general and administrative expenses

 

110,200

 

103,504

 

326,809

 

308,283

 

Impairment of goodwill and tradename

 

15,780

 

 

15,780

 

 

Operating income

 

38,360

 

60,090

 

165,990

 

203,196

 

Other income (expense)

 

 

 

 

 

 

 

 

 

Interest expense

 

(10,954

)

(11,190

)

(33,819

)

(33,312

)

Interest income

 

1,000

 

1,311

 

3,713

 

3,205

 

Debt refinancing expenses

 

(14,820

)

 

(14,820

)

 

Loss from divestiture of grinding media business (Donhad)

 

 

 

(6,084

)

 

Other

 

2,496

 

350

 

3,199

 

1,203

 

 

 

(22,278

)

(9,529

)

(47,811

)

(28,904

)

Earnings before income taxes

 

16,082

 

50,561

 

118,179

 

174,292

 

Income tax expense

 

9,091

 

13,895

 

36,028

 

50,343

 

Net earnings

 

6,991

 

36,666

 

82,151

 

123,949

 

Less: Earnings attributable to non-controlling interests

 

(2,543

)

(1,458

)

(5,462

)

(4,098

)

Net earnings attributable to Valmont Industries, Inc.

 

$

4,448

 

$

35,208

 

$

76,689

 

$

119,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding (000’s) - Basic

 

22,215

 

22,527

 

22,421

 

22,505

 

Earnings per share - Basic

 

$

0.20

 

$

1.56

 

$

3.42

 

$

5.33

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding (000’s) - Diluted

 

22,352

 

22,751

 

22,574

 

22,717

 

Earnings per share - Diluted

 

$

0.20

 

$

1.55

 

$

3.40

 

$

5.28

 

 

 

 

 

 

 

 

 

 

 

Cash dividends per share

 

$

0.375

 

$

0.375

 

$

1.125

 

$

1.125

 

 

-more-

 



 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OPERATING RESULTS

(Dollars in thousands)

(unaudited)

 

 

 

Third Quarter

 

Year-to-Date

 

 

 

13 Weeks Ended

 

39 Weeks Ended

 

 

 

29-Sep-18

 

30-Sep-17

 

29-Sep-18

 

30-Sep-17

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

Engineered Support Structures

 

$

251,524

 

$

246,264

 

$

727,189

 

$

688,016

 

Utility Support Structures

 

218,269

 

204,809

 

625,850

 

615,678

 

Coatings

 

90,433

 

82,593

 

266,952

 

235,842

 

Infrastructure products

 

560,226

 

533,666

 

1,619,991

 

1,539,536

 

 

 

 

 

 

 

 

 

 

 

Irrigation

 

140,175

 

147,428

 

491,064

 

502,939

 

Other

 

 

19,800

 

23,080

 

60,466

 

Less: Intersegment sales

 

(21,709

)

(20,115

)

(74,354

)

(71,952

)

Total

 

$

678,692

 

$

680,779

 

$

2,059,781

 

$

2,030,989

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

 

 

Engineered Support Structures

 

16,499

 

16,986

 

36,411

 

46,738

 

Utility Support Structures

 

2,090

 

22,845

 

46,298

 

69,446

 

Coatings

 

14,373

 

14,577

 

41,108

 

36,091

 

Infrastructure products

 

32,962

 

54,408

 

123,817

 

152,275

 

 

 

 

 

 

 

 

 

 

 

Irrigation

 

21,302

 

18,235

 

82,917

 

83,196

 

Other

 

 

(217

)

(913

)

3,728

 

Adjustment to LIFO inventory valuation method

 

(2,780

)

(1,626

)

(5,512

)

(2,839

)

Corporate

 

(13,124

)

(10,710

)

(34,319

)

(33,164

)

Total

 

$

38,360

 

$

60,090

 

$

165,990

 

$

203,196

 

 

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

 

Engineered Support Structures: This segment consists of the manufacture of engineered metal and composite pole, towers, and components for global lighting, traffic, and wireless communication markets, engineered access systems, integrated structure solutions for smart cities, and highway safety products.

 

Utility Support Structures: This segment consists of the manufacture of engineered steel and concrete structures for the global utility transmission, distribution, and generation applications, renewable energy generation equipment, and inspection services.

 

Coatings: This segment consists of global galvanizing, painting and anodizing services.

 

Irrigation: This segment consists of the global manufacture of agricultural irrigation equipment, parts and services, tubular products, water management solutions, and technology for precision agriculture.

 

In addition to these four reportable segments, the Company had other businesses and activities that individually are not more than 10% of consolidated sales, operating income or assets. This includes the manufacture of forged steel grinding media and reported in the “Other” category until its divestiture.

 

-more-

 



 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

 

 

 

29-Sep-18

 

30-Sep-17

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

295,622

 

$

493,490

 

Accounts receivable, net

 

500,406

 

492,842

 

Inventories

 

399,905

 

403,234

 

Prepaid expenses

 

153,275

 

50,064

 

Refundable and deferred income taxes

 

13,182

 

8,493

 

Total current assets

 

1,362,390

 

1,448,123

 

Property, plant and equipment, net

 

507,721

 

522,424

 

Goodwill and other intangible assets

 

568,287

 

478,844

 

Other assets

 

124,680

 

160,780

 

 

 

$

2,563,078

 

$

2,610,171

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current installments of long-term debt

 

$

829

 

$

949

 

Notes payable to banks

 

3,328

 

197

 

Accounts payable

 

200,468

 

216,104

 

Accrued expenses

 

187,772

 

187,732

 

Dividend payable

 

8,310

 

8,478

 

Total current liabilities

 

400,707

 

413,460

 

Long-term debt, excluding current installments

 

736,185

 

754,202

 

Other long-term liabilities

 

292,438

 

289,914

 

Shareholders’ equity

 

1,133,748

 

1,152,595

 

 

 

$

2,563,078

 

$

2,610,171

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands) and unaudited

 

 

 

YTD

 

YTD

 

 

 

29-Sep-18

 

30-Sep-17

 

Cash flows from operating activities

 

 

 

 

 

Net Earnings

 

$

82,151

 

$

123,949

 

Depreciation and amortization

 

62,018

 

63,500

 

Impairment of long-lived assets

 

19,977

 

 

Loss from divestiture of grinding media business

 

6,084

 

 

Contribution to defined benefit pension plan

 

(1,555

)

(26,064

)

Change in working capital

 

(96,912

)

(43,713

)

Other

 

(3,710

)

4,164

 

Net cash flows from operating activities

 

68,053

 

121,836

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchase of property, plant, and equipment

 

(48,919

)

(39,898

)

Proceeds from sale of assets

 

64,786

 

1,575

 

Acquisitions

 

(125,309

)

(5,362

)

Other

 

(3,992

)

1,661

 

Net cash flows from investing activities

 

(113,434

)

(42,024

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Proceeds from long-term borrowings

 

236,936

 

 

Net borrowings on short and long-term agreements

 

(249,734

)

(1,207

)

Purchase of treasury shares

 

(86,919

)

 

Purchase of noncontrolling interest

 

(5,510

)

 

Dividends paid

 

(25,415

)

(25,386

)

Other

 

(6,065

)

4,622

 

Net cash flows from financing activities

 

(136,707

)

(21,971

)

Effect of exchange rates on cash and cash equivalents

 

(15,095

)

23,133

 

Net change in cash and cash equivalents

 

(197,183

)

80,974

 

Cash and cash equivalents - beginning of year

 

492,805

 

412,516

 

Cash and cash equivalents - end of period

 

$

295,622

 

$

493,490

 

 

-more-

 



 

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 on (a) diluted earnings per share of (1) debt refinancing expenses (2) impairment of goodwill and tradename (3) restructuring costs (4) acquisition diligence expenses and (5) the loss from divestiture of Donhad, (b) operating income from these expenses, and (c) segment operating income for these items. 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.

 

 

 

13 Weeks
Ended Sept 29,
2018

 

Diluted
earnings per
share

 

39 Weeks
Ended Sept 29,
2018

 

Diluted
earnings per
share

 

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

 

$

4,448

 

$

0.20

 

$

76,689

 

$

3.40

 

Debt refinancing expenses, pre-tax

 

14,820

 

0.66

 

14,820

 

0.66

 

Impairment of goodwill and tradename, pre-tax

 

15,780

 

0.71

 

15,780

 

0.70

 

Restructuring expenses, pre-tax

 

6,243

 

0.28

 

17,662

 

0.78

 

Acquisition diligence costs, pre-tax

 

2,859

 

0.13

 

3,840

 

0.17

 

Loss from divestiture of grinding media business, pre-tax

 

 

 

6,084

 

0.27

 

Total Adjustments

 

39,702

 

1.78

 

58,186

 

2.58

 

Tax effect of adjustments *

 

(2,931

)

(0.13

)

(5,360

)

(0.24

)

Completion of 2017 tax reform adjustment

 

(491

)

(0.02

)

(491

)

(0.02

)

Net earnings attributable to Valmont Industries, Inc. - Adjusted

 

$

40,728

 

$

1.82

 

$

129,024

 

$

5.72

 

Average shares outstanding (000’s) - Diluted

 

 

 

22,352

 

 

 

22,574

 

 


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

 

Operating Income Reconciliation

 

13 Weeks
Ended Sept 29,
2018

 

13 Weeks
Ended Sept 30,
2017

 

39 Weeks
Ended Sept 29,
2018

 

39 Weeks
Ended Sept
30, 2017

 

Operating income - as reported

 

$

38,360

 

$

60,090

 

$

165,990

 

$

203,196

 

Impairment of goodwill and tradename

 

15,780

 

 

15,780

 

 

Restructuring expenses

 

6,243

 

 

17,662

 

 

Acquisition diligence costs

 

2,859

 

 

3,840

 

 

Adjusted Operating Income

 

$

63,242

 

$

60,090

 

$

203,272

 

$

203,196

 

Net Sales - as reported

 

$

678,692

 

$

680,779

 

$

2,059,781

 

$

2,030,989

 

Operating Income as a % of Sales

 

5.7

%

8.8

%

8.1

%

10.0

%

Adjusted Operating Income as a % of Adjusted Sales

 

9.3

%

8.8

%

9.9

%

10.0

%

 

For the Third Quarter Ended Sept 29, 2018

 

Segment Operating Income Reconciliation

 

Engineered
Support
Structures

 

Utility Support
Structures

 

Coatings

 

Irrigation

 

Other/
Corporate

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income - as reported

 

$

16,499

 

$

2,090

 

$

14,373

 

$

21,302

 

$

(15,904

)

 

 

 

 

 

 

 

 

 

 

 

 

Impairment of goodwill and tradename

 

 

15,780

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring expenses

 

5,746

 

497

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition diligence costs

 

553

 

1,672

 

 

 

634

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income

 

$

22,798

 

$

20,039

 

$

14,373

 

$

21,302

 

$

(15,270

)

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

251,524

 

218,269

 

90,433

 

140,175

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Sales

 

6.6

%

1.0

%

15.9

%

15.2

%

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income as a % of Sales

 

9.1

%

9.2

%

15.9

%

15.2

%

NM

 

 

For the Third Quarter Ended Sept 30, 2017

 

Operating income - as reported

 

$

16,986

 

$

22,845

 

$

14,577

 

$

18,235

 

$

(12,553

)

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

246,264

 

204,809

 

82,593

 

147,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Sales

 

6.9

%

11.2

%

17.6

%

12.4

%

NM

 

 



 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON ESTIMATED 2018 RESULTS

REGULATION G RECONCILIATION

(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 (1) restructuring costs related to the 2018 Plan (2) preliminary loss from the divestiture of the grinding media business, which occurred on April 30, 2018 (3) impairment of goodwill and tradename (4) acquisition diligence costs, and (5) certain refinancing expenses associated with redemption of bonds completed in the third quarter of 2018.  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 as non-recurring transactions were or expected to be recognized in 2018.

 

Reconciliation of Range of Net Earnings - Full Year 2018

 

Low End

 

High End

 

Adjustments

 

Estimated Net (loss)/earnings - GAAP

 

$

111,300

 

$

114,700

 

 

 

 

 

 

 

 

 

 

 

Estimated restructuring expense, pre-tax

 

 

 

 

 

27,000

 

 

 

 

 

 

 

 

 

Impairment of goodwill & tradename, pre-tax

 

 

 

 

 

15,780

 

 

 

 

 

 

 

 

 

Acquisition diligence costs, pre-tax

 

 

 

 

 

3,840

 

 

 

 

 

 

 

 

 

Estimated pre-tax loss from Divestiture of Donhad

 

 

 

 

 

6,084

 

 

 

 

 

 

 

 

 

Redemption of long-term debt expenses, pre-tax

 

 

 

 

 

14,820

 

 

 

 

 

 

 

 

 

Total pre-tax adjustments

 

 

 

 

 

67,524

 

 

 

 

 

 

 

 

 

Estimated tax benefit from above expenses*

 

 

 

 

 

(10,024

)

 

 

 

 

 

 

 

 

Total Adjustments, after-tax

 

 

 

 

 

$

57,500

 

 

 

 

 

 

 

 

 

Estimated Net (loss)/earnings - Adjusted

 

$

168,800

 

$

172,200

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share Range - GAAP

 

$

4.95

 

$

5.10

 

 

 

Diluted Earnings Per Share Range - Adjusted

 

$

7.50

 

$

7.65

 

 

 

 


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

 

-END-

 


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