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

Valmont Industries, Inc. (NYSE: VMI), a global leader that provides vital infrastructure and advances agricultural productivity while driving innovation through technology, today reported financial results for the third quarter ended September 30, 2023.

President and Chief Executive Officer Avner M. Applbaum commented, “Our global teams performed extremely well during the third quarter, expanding gross profit and delivering strong third-quarter adjusted earnings per share against a dynamic demand environment. In Infrastructure, our solid results reflect volume growth from continued strong market demand, and we achieved operating margin improvement year-over-year despite near-term headwinds in telecommunications markets. In Agriculture, international sales growth was led by EMEA project sales and Brazil, where we recognized another quarter of record sales. As expected, North America agriculture sales decreased year-over-year due to continued muted farmer sentiment and third quarter 2022 benefited from the ongoing delivery of elevated backlog. I’m very pleased with our reduction in inventory which helped deliver strong operating cash flows.

“In the third quarter, we also recorded an impairment of goodwill and intangible assets in the Agriculture Technology reporting unit, primarily driven by significantly slower growth of Prospera’s agronomy technology solutions compared to the original financial projections.

“A few weeks ago, the leadership team and I met to discuss our strategy. From where I stand today, our core strategic priorities remain intact. While we will continue prioritizing growth initiatives, looking ahead we will invest with discipline to strengthen our core businesses, and proactively make decisions in conjunction with market cycles. Going forward, we will also ensure new innovation is introduced with the purpose of meeting the immediate needs of our customers. In addition, to align our organization with our strategy, today we are announcing an organizational realignment program to streamline administrative support of our business segments. This realignment, which is expected to be recovered through lower operating costs within 12 months, will enable a more efficient and effective structure for driving long-term profitable growth while reducing costs.”

Third Quarter 2023 Highlights (all metrics compared to Third Quarter 2022 unless otherwise noted)

• Net Sales of $1.1 billion decreased 4.3%; accounting for the 2022 divestiture of the offshore wind energy structures business, reported in the “Other” segment, Net Sales decreased 2.3%¹
• Operating Income (Loss) was ($24.2) million [$120.8 million or 11.5% of net sales adjusted¹] compared to $110.0 million or 10.0% of net sales in 2022 [$114.1 million or 10.6% of net sales adjusted¹]
  • Operating Income (Loss) includes non-cash pre-tax goodwill and intangible asset impairment charges of $137.3 million related to the Agriculture Technology reporting unit [$133.3 million after-tax] and $4.2 million of pre-tax cash expenses related to the organizational realignment program
• Diluted Earnings (Loss) per Share (“EPS”) of ($2.34) [$4.12 adjusted¹] compared to $3.34 in 2022 [$3.49 adjusted¹]
  • GAAP effective tax rate of (44.6)% reflects the impairment of goodwill for which there is no tax deduction; adjusted effective tax rate of 22.2%¹ was driven by favorable legislation regarding usage of foreign tax credits generated in Brazil and benefits from research and development expenses
• Generated strong operating cash flows of $81.3 million in the third quarter and $190.9 million year-to-date; cash and cash equivalents at the end of the third quarter were $172.6 million
• Returned $44.2 million to shareholders through dividends and share repurchases including repurchasing approximately 126,500 shares of Company stock for $31.5 million
• Completed the acquisition of HR Products, a leading wholesale supplier of irrigation parts in Australia
• Providing updated 2023 full-year outlook and announcing an organizational realignment program to enable a more efficient and effective administrative structure for driving long-term profitable growth

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

Key Financial Metrics
Third Quarter 2023		GAAP										Adjusted1
(000's except per share amounts)		09/30/2023				09/24/2022							09/30/2023			09/24/2022
		Q3 2023				Q3 2022			vs. Q3 2022				Q3 2023			Q3 2022			vs. Q3 2022
Net Sales		$	1,050,295			$	1,097,382		(4.3	)	%		$	1,050,295		$	1,074,521		(2.3	)	%
Operating Income (Loss)			(24,190	)			109,972		NM					120,834			114,147		5.9		%
Operating Inc. (Loss) as a % of Net Sales			(2.3	)	%		10.0	%						11.5	%		10.6	%
Net Earnings (Loss)			(49,028	)			72,112		NM					86,976			75,313		15.5		%
Diluted Earnings (Loss) Per Share		$	(2.34	)		$	3.34		NM				$	4.12		$	3.49		18.1		%
Average Shares Outstanding			20,951				21,605							21,131			21,605
Year-to-Date 2023		GAAP										Adjusted1
(000's except per share amounts)		09/30/2023				09/24/2022							09/30/2023			09/24/2022
		FY 2023				FY 2022			vs. FY 2022				FY 2023			FY 2022			vs. FY 2022
Net Sales		$	3,159,072			$	3,213,734		(1.7	)	%		$	3,159,072		$	3,146,787		0.4		%
Operating Income			228,009				323,533		(29.5	)	%			380,601			335,991		13.3		%
Operating Income as a % of Net Sales			7.2		%		10.1	%						12.0	%		10.7	%
Net Earnings			114,888				210,531		(45.4	)	%			257,368			220,883		16.5		%
Diluted Earnings Per Share		$	5.40			$	9.77		(44.8	)	%		$	12.09		$	10.25		17.9		%
Average Shares Outstanding			21,290				21,546							21,290			21,546

Third Quarter 2023 Segment Review

Infrastructure (71.8% of Net Sales)

Products and solutions to serve the infrastructure markets of utility, solar, lighting, transportation, and telecommunications, along with coatings services to preserve metal products

Sales of $755.1 million were comparable with last year, driven by higher volumes, notably in the Solar, Lighting and Transportation (“L&T”) and Transmission, Distribution, and Substation (“TD&S”) product lines. Lower Telecommunications volumes and lower pricing associated with a reduced cost of steel in the TD&S product line more than offset higher pricing across the rest of the portfolio.

Operating Income improved to $103.4 million or 13.7% of net sales [$108.0 million or 14.3% adjusted¹] compared to $92.5 million or 12.3% of net sales in the third quarter of 2022 as pricing not linked to steel commodity costs was higher and the Company took deliberate actions to improve overall cost of goods sold.

Agriculture (28.2% of Net Sales)

Center pivot components and linear irrigation equipment for agricultural markets, including parts and tubular products; advanced technology solutions for precision agriculture

Sales of $298.5 million decreased 8.8% year-over-year as higher international sales were more than offset by lower sales in North America. Sales of agriculture technology products and services globally were similar to last year.

In North America, the sales decrease was primarily driven by lower irrigation equipment sales volumes. As expected, farmer sentiment remained somewhat muted during the quarter and the third quarter of 2022 benefited from the ongoing delivery of elevated backlog. Average irrigation equipment selling prices were comparable with last year. International sales growth was driven by higher project sales in the EMEA region, a record sales quarter in Brazil, and higher sales in Argentina. Third quarter 2023 also benefited from approximately $5.5 million of favorable foreign currency translation impacts compared to last year.

Operating Income (Loss) was ($99.7) million [$38.5 million or 13.0% of net sales adjusted¹] compared to $43.3 million or 13.3% of net sales in the third quarter of 2022 [$47.4 million or 14.6% adjusted¹]. A $137.3 million impairment of goodwill and intangible assets led to the operating loss in the quarter, as described later in the press release.

Other

Offshore wind energy structures business

As previously announced, the divestiture of the offshore wind energy structures business was completed in December 2022. In the third quarter of 2022, the subsequently-divested business generated sales of $22.9 million and operating income of $1.1 million.

Non-Cash Goodwill and Intangible Asset Impairment Charge of Agriculture Technology

During the third quarter of 2023, Valmont completed its annual impairment testing of goodwill and certain intangible assets. As a result of the impairment analysis, it was concluded that the carrying value of the Agriculture Technology reporting unit exceeded its market value. As such, the Company recorded an impairment loss on goodwill and certain intangible assets of $137.3 million. Significantly slower growth of Prospera’s agronomy technology solutions compared to the original financial projections was the primary driver of the impairment. The recent decline in the North American agriculture market was also a contributing factor. The impairment charge did not affect the Company’s liquidity or cash flows from operating activities.

Balance Sheet, Liquidity, and Capital Allocation

The Company generated strong third quarter 2023 operating cash flows of $81.3 million through effectively managing working capital, specifically inventory. At the end of the third quarter of 2023, cash and cash equivalents were $172.6 million. During the third quarter of 2023, Valmont repurchased $31.5 million of Company stock, with $314.7 million remaining on the authorized share repurchase program.

Organizational Realignment Program

Today, Valmont is announcing a broad organizational realignment program which better aligns the Company’s administrative support structure to its strategy by reducing layers of management, offering a voluntary early retirement program and other headcount reductions. These actions are expected to enable a more efficient and effective administrative structure for driving long-term profitable growth while still investing in growth initiatives. The program affects both reportable segments as well as corporate, and is targeted to take place during 2023. Cash expenses are expected to be between $33 and $36 million and are expected to be recovered through lower operating costs within 12 months. Of the above cost estimates, $4.2 million of pre-tax cash expenses related to the realignment program were incurred during the third quarter 2023.

Updating 2023 Full Year Financial Outlook and Key Assumptions

Taking into consideration third quarter sales and diluted earnings per share results, the expected timing of international agriculture project shipments and the near-term demand outlook for telecommunications markets, the Company is updating its full-year net sales growth and earnings per share outlook from the previous indications that were communicated last quarter and providing updated key assumptions for the year.

2023 Full Year Financial Outlook	Previous Outlook with Updated Adjustments1	Revised Outlook1
Net Sales Growth (vs. PY)	0% to 2%	(3%) to (4%)
GAAP Diluted Earnings per Share	$14.80 to $15.35	$7.20 to $7.50
Adjusted Diluted Earnings per Share1	$14.80 to $15.35	$14.80 to $15.10

• The impairment charge significantly reduces the future Prospera technology intangible asset amortization, and the realignment program announced in this release lowers future stock-based compensation to be recognized for Prospera employees. The Previous Adjusted Diluted Earnings per Share Outlook has been updated to remove the Prospera adjustments of approximately 65 cents per diluted share from the prior Outlook for comparison to the Revised Outlook
• Expect full-year operating margin improvement compared to 2022
• 2022 sales include $100 million from the offshore wind energy structures business which was divested at the end of fiscal 2022
• GAAP effective tax rate of 36% to 36.5% due to the non-deductibility of the goodwill impairment; Adjusted effective tax rate of 26% to 26.5% due to recent favorable U.S. tax legislation
• Minimal expected foreign currency translation impact to net sales
• Capital expenditures expected to be in the range of $100 to $110 million to support strategic growth initiatives

Applbaum continued, “The Valmont team continues to perform well, optimizing margins and earnings while generating strong cash flows, positioning us for profitable growth as we streamline the organization. The long-term outlook across all our end markets remains very positive, while acknowledging near-term headwinds in certain markets. Our management team and organization are united around our strategic priorities, with a focus on initiatives that deliver a compelling value proposition to our customers and drive long-term shareholder value. I am excited about Valmont’s journey as a company that maximizes financial performance through the cycles, made possible by an unwavering discipline on capital allocation and ROIC.”

A live audio discussion with Avner M. Applbaum, President and Chief Executive Officer, and Timothy P. Francis, Interim Chief Financial Officer, will be accessible by telephone on Thursday, October 26, 2023 at 8:00 a.m. CDT by dialing 1-877-407-6184 or 1-201-389-0877 (no Conference ID needed), or via webcast by pointing browsers to this link: Valmont Industries 3Q 2023 Earnings Conference Call. A slide presentation will simultaneously be available for download on the Investors page of valmont.com. A replay of the event can be accessed three hours after the call at the above link or by telephone at 1-877-660-6853 or 1-201-612-7415. Please use access code 13734765. The replay will be available through 10:59 p.m. CDT on Thursday, November 2, 2023.

About Valmont Industries, Inc.

For over 75 years, Valmont has been a global leader in creating vital infrastructure and advancing agricultural productivity. Today, we remain committed to doing more with less by innovating through technology. Learn more about how we’re Conserving Resources. Improving Life. at valmont.com.

Concerning Forward-Looking Statements

This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which Valmont operates, as well as management’s perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances. As you read and consider this release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond Valmont’s control) and assumptions. Although management believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Valmont’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include, among other things, risk factors described from time to time in Valmont’s reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw material, availability and market acceptance of new products, product pricing, domestic and international competitive environments, geopolitical risks, and actions and policy changes of domestic and foreign governments. The Company cautions that any forward-looking statement included in this press release is made as of the date of this press release and the Company does not undertake to update any forward-looking statement.

Website and Social Media Disclosure

The Company uses its website and social media channels identified on its website as channels of distribution of Company information. The information that the Company posts through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following the Company’s press releases, Securities and Exchange Commission filings, and public conference calls and webcasts. The contents of the Company’s website and social media channels are not part of this press release.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
		Thirteen weeks ended								Thirty-nine weeks ended
		September 30,				September 24,				September 30,				September 24,
		2023				2022				2023				2022
Net sales		$	1,050,295			$	1,097,382			$	3,159,072			$	3,213,734
Cost of sales			735,184				811,904				2,205,979				2,386,469
Gross profit			315,111				285,478				953,093				827,265
Selling, general, and administrative expenses			194,277				175,506				580,060				503,732
Impairment of long-lived assets			140,844				—				140,844				—
Realignment charges			4,180				—				4,180				—
Operating income (loss)			(24,190	)			109,972				228,009				323,533
Other income (expense)
Interest expense			(13,472	)			(11,629	)			(41,494	)			(34,278	)
Interest income			3,186				507				4,579				1,019
Gain (loss) on investments - unrealized			(344	)			(901	)			1,791				(4,306	)
Other			165				2,822				(1,599	)			8,537
Other income (expense), net			(10,465	)			(9,201	)			(36,723	)			(29,028	)
Earnings (loss) before income taxes and equity in loss of nonconsolidated subsidiaries			(34,655	)			100,771				191,286				294,505
Income tax expense			15,461				27,823				79,239				80,531
Equity in loss of nonconsolidated subsidiaries			(199	)			(18	)			(1,219	)			(931	)
Net earnings (loss)			(50,315	)			72,930				110,828				213,043
Loss (earnings) attributable to non-controlling interests			1,287				(818	)			4,060				(2,512	)
Net earnings (loss) attributable to Valmont Industries, Inc.		$	(49,028	)		$	72,112			$	114,888			$	210,531
Average shares outstanding (000's) - Basic			20,951				21,332				21,083				21,308
Earnings (loss) per share - Basic		$	(2.34	)		$	3.38			$	5.45			$	9.88
Average shares outstanding (000's) - Diluted			20,951				21,605				21,290				21,546
Earnings (loss) per share - Diluted		$	(2.34	)		$	3.34			$	5.40			$	9.77
Cash dividends per share		$	0.60			$	0.55			$	1.80			$	1.65

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
		Thirteen weeks ended								Thirty-nine weeks ended
		September 30,				September 24,				September 30,				September 24,
		2023				2022				2023				2022
Net sales
Infrastructure		$	755,076			$	755,492			$	2,261,777			$	2,157,082
Agriculture			298,483				327,261				910,579				1,011,606
Other			—				22,861				—				66,947
Total			1,053,559				1,105,614				3,172,356				3,235,635
Less: Intersegment sales			(3,264	)			(8,232	)			(13,284	)			(21,901	)
Total		$	1,050,295			$	1,097,382			$	3,159,072			$	3,213,734
Operating income (loss)
Infrastructure		$	103,401			$	92,465			$	313,703			$	254,908
Agriculture			(99,670	)			43,258				2,904				138,779
Other			—				1,107				—				814
Corporate			(27,921	)			(26,858	)			(88,598	)			(70,968	)
Total		$	(24,190	)		$	109,972			$	228,009			$	323,533

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

Infrastructure: This segment consists of the manufacture and distribution of products and solutions to serve the infrastructure markets of utility, solar, lighting, transportation, and telecommunications, along with coatings services to preserve metal products.

Agriculture: This segment consists of the manufacture of center pivot components and linear irrigation equipment for agricultural markets, including parts and tubular products, and advanced technology solutions for precision agriculture.

In addition to these two reportable segments, the Company had a business and related activities in 2022 that were not more than 10% of consolidated sales, operating income, or assets. This comprised the offshore wind energy structures business which was reported in the “Other” segment until its divestiture in December 2022.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
		Thirteen weeks ended September 30, 2023
Sales		Infrastructure			Agriculture			Other			Intersegment				Consolidated
Geographical Market:
North America		$	572,239		$	126,828		$	—		$	(3,055	)		$	696,012
International			182,837			171,655			—			(209	)			354,283
Total		$	755,076		$	298,483		$	—		$	(3,264	)		$	1,050,295
Product Line:
Transmission, Distribution, and Substation		$	297,967		$	—		$	—		$	—			$	297,967
Lighting and Transportation			252,603			—			—			—				252,603
Coatings			88,967			—			—			(1,241	)			87,726
Telecommunications			59,630			—			—			—				59,630
Solar			55,909			—			—			(209	)			55,700
Irrigation Equipment and Parts			—			273,639			—			(1,814	)			271,825
Technology Products and Services			—			24,844			—			—				24,844
Total		$	755,076		$	298,483		$	—		$	(3,264	)		$	1,050,295
		Thirteen weeks ended September 24, 2022
Sales		Infrastructure			Agriculture			Other			Intersegment				Consolidated
Geographical Market:
North America		$	579,628		$	178,626		$	—		$	(7,114	)		$	751,140
International			175,864			148,635			22,861			(1,118	)			346,242
Total		$	755,492		$	327,261		$	22,861		$	(8,232	)		$	1,097,382
Product Line:
Transmission, Distribution, and Substation		$	304,781		$	—		$	—		$	—			$	304,781
Lighting and Transportation			241,590			—			—			—				241,590
Coatings			91,969			—			—			(3,994	)			87,975
Telecommunications			92,830			—			—			—				92,830
Solar			24,322			—			22,861			(1,118	)			46,065
Irrigation Equipment and Parts			—			303,003			—			(3,120	)			299,883
Technology Products and Services			—			24,258			—			—				24,258
Total		$	755,492		$	327,261		$	22,861		$	(8,232	)		$	1,097,382

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
		Thirty-nine weeks ended September 30, 2023
Sales		Infrastructure			Agriculture			Other			Intersegment				Consolidated
Geographical Market:
North America		$	1,743,635		$	450,678		$	—		$	(12,042	)		$	2,182,271
International			518,142			459,901			—			(1,242	)			976,801
Total		$	2,261,777		$	910,579		$	—		$	(13,284	)		$	3,159,072
Product Line:
Transmission, Distribution, and Substation		$	927,094		$	—		$	—		$	—			$	927,094
Lighting and Transportation			727,862			—			—			—				727,862
Coatings			270,201			—			—			(6,611	)			263,590
Telecommunications			195,505			—			—			—				195,505
Solar			141,115			—			—			(1,242	)			139,873
Irrigation Equipment and Parts			—			825,277			—			(5,431	)			819,846
Technology Products and Services			—			85,302			—			—				85,302
Total		$	2,261,777		$	910,579		$	—		$	(13,284	)		$	3,159,072
		Thirty-nine weeks ended September 24, 2022
Sales		Infrastructure			Agriculture			Other			Intersegment				Consolidated
Geographical Market:
North America		$	1,645,472		$	564,369		$	—		$	(20,316	)		$	2,189,525
International			511,610			447,237			66,947			(1,585	)			1,024,209
Total		$	2,157,082		$	1,011,606		$	66,947		$	(21,901	)		$	3,213,734
Product Line:
Transmission, Distribution, and Substation		$	882,216		$	—		$	—		$	—			$	882,216
Lighting and Transportation			701,009			—			—			—				701,009
Coatings			264,266			—			—			(11,295	)			252,971
Telecommunications			232,765			—			—			—				232,765
Solar			76,826			—			66,947			(1,118	)			142,655
Irrigation Equipment and Parts			—			928,622			—			(9,488	)			919,134
Technology Products and Services			—			82,984			—			—				82,984
Total		$	2,157,082		$	1,011,606		$	66,947		$	(21,901	)		$	3,213,734

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
		September 30,			December 31,
		2023			2022
ASSETS
Current assets:
Cash and cash equivalents		$	172,566		$	185,406
Receivables, net			673,999			604,181
Inventories			693,629			728,762
Contract assets			169,931			174,539
Prepaid expenses and other current assets			97,302			87,697
Total current assets			1,807,427			1,780,585
Property, plant, and equipment, net			603,979			595,578
Goodwill and other non-current assets			1,074,773			1,180,833
Total assets		$	3,486,179		$	3,556,996
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt		$	941		$	1,194
Notes payable to banks			3,639			5,846
Accounts payable			355,934			360,312
Accrued expenses			260,873			248,320
Contract liabilities			88,600			172,915
Income taxes payable			2,062			3,664
Dividends payable			12,533			11,742
Total current liabilities			724,582			803,993
Long-term debt, excluding current installments			977,260			870,935
Operating lease liabilities			160,521			155,469
Other non-current liabilities			65,104			84,887
Total liabilities			1,927,467			1,915,284
Shareholders' equity			1,558,712			1,641,712
Total liabilities and shareholders' equity		$	3,486,179		$	3,556,996

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
		Thirty-nine weeks ended
		September 30,				September 24,
		2023				2022
Cash flows from operating activities:
Net earnings		$	110,828			$	213,043
Depreciation and amortization			73,638				72,803
Contribution to defined benefit pension plan			(15,259	)			(17,155	)
Impairment of long-lived assets			140,844				—
Gain on divestiture			(2,994	)			—
Change in working capital			(110,550	)			(96,995	)
Other			(5,639	)			12,030
Net cash flows provided by operating activities			190,868				183,726
Cash flows from investing activities:
Purchase of property, plant, and equipment			(71,233	)			(67,122	)
Proceeds from divestiture, net of cash divested			6,369				—
Proceeds from sale of assets			1,565				71
Proceeds from property damage insurance claims			6,770				—
Acquisitions, net of cash acquired			(31,839	)			(39,287	)
Other			(898	)			(108	)
Net cash flows used in investing activities			(89,266	)			(106,446	)
Cash flows from financing activities:
Proceeds from short-term borrowings			24,649				4,137
Payments on short-term borrowings			(27,290	)			(12,366	)
Proceeds from long-term borrowings			215,012				235,470
Principal payments on long-term borrowings			(109,335	)			(251,155	)
Proceeds from settlement of financial derivatives			—				2,243
Dividends paid			(36,983	)			(34,080	)
Dividends to noncontrolling interests			(662	)			—
Purchase of noncontrolling interests			—				(7,338	)
Purchase of treasury shares			(166,663	)			(20,491	)
Proceeds from exercises under stock plans			5,348				8,778
Other			(15,567	)			(4,341	)
Net cash flows used in financing activities			(111,491	)			(79,143	)
Effect of exchange rates on cash and cash equivalents			(2,951	)			(9,148	)
Net change in cash and cash equivalents			(12,840	)			(11,011	)
Cash and cash equivalents - beginning of year			185,406				177,232
Cash and cash equivalents - end of period		$	172,566			$	166,221

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OF EFFECT OF ITEMS ON REPORTED RESULTS
REGULATION G RECONCILIATION
(Dollars in thousands, except per share amounts)
(Unaudited)

The non-GAAP tables below disclose the impact of the impairment of long-lived assets, realignment charges, intangible asset amortization (Prospera), and stock-based compensation recognized for the Prospera employees on fiscal 2023 and 2022 results, as well as the impact of non-recurring tax benefit items on net earnings. Amounts may be impacted by rounding. We believe it is useful when considering Company performance for the non-GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the related reported GAAP measures.

We previously presented non-GAAP financial measures adjusted for Prospera intangible asset amortization and stock-based compensation recognized for the Prospera employees for a better investor understanding of Agriculture segment performance related to traditional segment products. The Company conducted its annual impairment testing of intangible asset value as of September 2, 2023 and significantly reduced the Prospera intangible asset value. Additionally, the board approved certain realignment plans subsequent to the third quarter of fiscal 2023 that significantly affected the compensation recognized for the Prospera employees. As a result of this, we do not consider our historical adjustments related to Prospera to arrive at non-GAAP financial measures to be relevant to investor understanding of third quarter and future segment performance.

		Thirteen								Thirty-nine
		weeks ended				Diluted				weeks ended				Diluted
		September				earnings (loss)				September				earnings per
		30, 2023				per share1,2				30, 2023				share2
Net earnings (loss) attrib. to Valmont Industries, Inc. - as reported		$	(49,028	)		$	(2.32	)		$	114,888			$	5.40
Impairment of long-lived assets			140,844				6.67				140,844				6.62
Realignment charges			4,180				0.20				4,180				0.20
Prospera intangible asset amortization			—				—				3,290				0.15
Prospera stock-based compensation			—				—				4,278				0.20
Total adjustments, pre-tax			145,024				6.86				152,592				7.17
Tax effect of adjustments3			(5,432	)			(0.26	)			(6,524	)			(0.31	)
Non-recurring tax benefit items			(3,588	)			(0.17	)			(3,588	)			(0.17	)
Net earnings attributable to Valmont Industries, Inc. - adjusted		$	86,976			$	4.12			$	257,368			$	12.09
Average shares outstanding (000’s) - diluted							21,131								21,290
		Thirteen								Thirty-nine
		weeks ended				Diluted				weeks ended				Diluted
		September				earnings per				September				earnings per
		24, 2022				share2				24, 2022				share2
Net earnings attributable to Valmont Industries, Inc. - as reported		$	72,112			$	3.34			$	210,531			$	9.77
Prospera intangible asset amortization			1,645				0.08				4,935				0.23
Prospera stock-based compensation			2,530				0.12				7,523				0.35
Total adjustments, pre-tax			4,175				0.19				12,458				0.58
Tax effect of adjustments3			(974	)			(0.05	)			(2,106	)			(0.10	)
Net earnings attributable to Valmont Industries, Inc. - adjusted		$	75,313			$	3.49			$	220,883			$	10.25
Average shares outstanding (000’s) - diluted							21,605								21,546

¹In the third quarter of fiscal 2023, we reported a GAAP net loss. In periods in which we recognize a net loss, we exclude the impact of outstanding stock awards from the diluted loss per share calculation, as their inclusion would have an anti-dilutive effect. The adjusted diluted earnings per share calculation includes the impact of outstanding stock awards.

²Earnings (loss) per share includes rounding.

³The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS
REGULATION G RECONCILIATION
(Dollars in thousands)
(Unaudited)

The non-GAAP tables below disclose the impacts of the impairment of long-lived assets, realignment charges, intangible asset amortization (Prospera) and stock-based compensation recognized for the Prospera employees on fiscal 2023 and 2022 results. Amounts may be impacted by rounding. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the related reported GAAP measures.

		Thirteen weeks ended September 30, 2023
Operating Income (Loss) Reconciliation		Infrastructure			Agriculture				Other			Corporate				Consolidated
Operating income (loss) - as reported		$	103,401		$	(99,670	)		$	—		$	(27,921	)		$	(24,190	)
Impairment of long-lived assets			3,571			137,273				—			—				140,844
Realignment charges			1,069			907				—			2,204				4,180
Adjusted operating income		$	108,041		$	38,510			$	—		$	(25,717	)		$	120,834
Net sales - as reported			753,626			296,669				—			—				1,050,295
Operating income (loss) as a % of net sales			13.7	%		(33.6	)	%		NM			NM				(2.3	)	%
Adj. operating income as a % of adj. net sales			14.3	%		13.0		%		NM			NM				11.5		%

		Thirteen weeks ended September 24, 2022
Operating Income Reconciliation		Infrastructure			Agriculture			Other			Corporate				Consolidated
Operating income - as reported		$	92,465		$	43,258		$	1,107		$	(26,858	)		$	109,972
Prospera intangible asset amortization			—			1,645			—			—				1,645
Prospera stock-based compensation			—			2,530			—			—				2,530
Adjusted operating income		$	92,465		$	47,433		$	1,107		$	(26,858	)		$	114,147
Net sales - as reported			750,380			324,141			22,861			—				1,097,382
Adjusted net sales			750,380			324,141			—			—				1,074,521
Operating income as a % of net sales			12.3	%		13.3	%		4.8	%		NM				10.0	%
Adj. operating income as a % of net sales			12.3	%		14.6	%		4.8	%		NM				10.4	%
Adj. operating income as a % of adj. net sales			12.3	%		14.6	%		NM			NM				10.6	%

		Thirty-nine weeks ended September 30, 2023
Operating Income Reconciliation		Infrastructure			Agriculture			Other			Corporate				Consolidated
Operating income - as reported		$	313,703		$	2,904		$	—		$	(88,598	)		$	228,009
Impairment of long-lived assets			3,571			137,273			—			—				140,844
Realignment charges			1,069			907			—			2,204				4,180
Prospera intangible asset amortization			—			3,290			—			—				3,290
Prospera stock-based compensation			—			4,278			—			—				4,278
Adjusted operating income		$	318,343		$	148,652		$	—		$	(86,394	)		$	380,601
Net sales - as reported			2,253,924			905,148			—			—				3,159,072
Operating income as a % of net sales			13.9	%		0.3	%		NM			NM				7.2	%
Adj. operating income as a % of adj. net sales			14.1	%		16.4	%		NM			NM				12.0	%

		Thirty-nine weeks ended September 24, 2022
Operating Income Reconciliation		Infrastructure			Agriculture			Other			Corporate				Consolidated
Operating income - as reported		$	254,908		$	138,779		$	814		$	(70,968	)		$	323,533
Prospera intangible asset amortization			—			4,935			—			—				4,935
Prospera stock-based compensation			—			7,523			—			—				7,523
Adjusted operating income		$	254,908		$	151,237		$	814		$	(70,968	)		$	335,991
Net sales - as reported			2,144,669			1,002,118			66,947			—				3,213,734
Adjusted net sales			2,144,669			1,002,118			—			—				3,146,787
Operating income as a % of net sales			11.9	%		13.8	%		1.2	%		NM				10.1	%
Adj. operating income as a % of net sales			11.9	%		15.1	%		1.2	%		NM				10.5	%
Adj. operating income as a % of adj. net sales			11.9	%		15.1	%		NM			NM				10.7	%

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
REGULATION G RECONCILIATION OF EXCLUDING OTHER SEGMENT NET SALES
(Dollars in thousands)
(Unaudited)

Excluding Other segment net sales from the third quarter and first three quarters of fiscal 2022, which we refer to in this reconciliation as “Adjusted Net Sales”, is a non-GAAP measure. The Other segment net sales were generated by the offshore wind energy structures business which was divested in December 2022. Adjusted Net Sales should not be considered in isolation or as a substitute for net earnings, cash flows from operations or other income or cash flow data prepared in accordance with GAAP, or as a measure of our operating performance or liquidity. The table below shows how Adjusted Net Sales is calculated from the Company’s Statements of Operations. Adjusted Net Sales is calculated as total net sales less Other segment net sales. Adjusted Net Sales allows investors to analyze our operating performance in light of the amount of net sales less net sales of a divested business.

		Thirteen weeks ended											Thirty-nine weeks ended
		September 30,			September 24,				Percent				September 30,			September 24,				Percent
		2023			2022				Change				2023			2022				Change
Net sales		$	1,050,295		$	1,097,382				(4.3	)%		$	3,159,072		$	3,213,734				(1.7	)%
Less: Other segment net sales			—			(22,861	)			NM				—			(66,947	)			NM
Adjusted net sales		$	1,050,295		$	1,074,521				(2.3	)%		$	3,159,072		$	3,146,787				0.4	%

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
REGULATION G RECONCILIATION OF ADJUSTED EFFECTIVE TAX RATE
(Dollars in thousands)
(Unaudited)

Excluding significant non-recurring items from the third quarter of fiscal 2023 from the calculation of effective tax rate, which we refer to as “Adjusted Effective Tax Rate”, is a non-GAAP measure. Adjusted Effective Tax Rate should not be considered in isolation or as a substitute for the effective tax rate prepared in accordance with GAAP. The table below shows how Adjusted Effective Tax Rate is calculated from the Company’s Statements of Operations. Adjusted Effective Tax Rate is calculated as total earnings (loss) before income taxes plus the significant non-recurring items of impairment of goodwill and intangible assets, realignment charges, and non-recurring tax benefit items. Adjusted Effective Tax Rate allows investors to analyze our effective tax rate in light of these non-recurring items.

		Thirteen weeks ended September 30, 2023
		Earnings (loss) before income taxes and equity in loss of nonconsolidated subsidiaries				Income tax expense			Effective tax rate
As reported		$	(34,655	)		$	15,461			(44.6	)%
Impairment of long-lived assets			140,844				4,387
Realignment charges			4,180				1,045
Non-recurring tax benefit items			—				3,588
Adjusted		$	110,369			$	24,481			22.2	%

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
REGULATION G RECONCILIATION OF FORECASTED GAAP AND ADJUSTED EARNINGS
(Dollars in thousands, except per share amounts)
(Unaudited)

The non-GAAP tables below discloses the impact on the range of estimated diluted earnings per share of the (1) amortization of intangible assets (Prospera), (2) stock-based compensation for Prospera employees, (3) impairment of long-lived assets, (4) realignment charges, and (5) non-recurring tax benefit items. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings to be taken into consideration by management and investors with the related reported GAAP measures.

Reconciliation of Range of Net Earnings

2023 Revised Guidance1		Low End			High End			Adjustments
Estimated net earnings - GAAP		$	154,000		$	160,400
Impairment of long-lived assets, pre-tax								$	141,000
Realignment charges, pre-tax									36,000
Total pre-tax adjustments									177,000
Estimated tax benefit from above expenses2									(12,900	)
Non-recurring tax benefit items									(3,600	)
Total adjustments, after-tax								$	160,500
Estimated net earnings - Adjusted		$	314,500		$	320,900
Diluted Earnings per Share Range - GAAP3		$	7.20		$	7.50
Diluted Earnings per Share Range - Adjusted3		$	14.80		$	15.10
2023 Previous Guidance1		Low End			High End			Adjustments
Estimated net earnings - GAAP		$	318,250		$	330,050
Prospera intangible asset (proprietary technology) amortization, pre-tax								$	6,600
Prospera stock-based compensation, pre-tax									9,800
Total pre-tax adjustments									16,400
Estimated tax benefit from above expenses2									(2,450	)
Total adjustments, after-tax								$	13,950
Estimated net earnings - Adjusted		$	332,200		$	344,000
Diluted Earnings per Share Range - GAAP3		$	14.80		$	15.35
Diluted Earnings per Share Range - Adjusted3		$	15.45		$	16.00
2023 Revised Previous Guidance1		Low End			High End			Adjustments
Estimated net earnings - GAAP		$	318,250		$	330,050
Prospera intangible asset (proprietary technology) amortization, pre-tax								$	—
Prospera stock-based compensation, pre-tax									—
Total pre-tax adjustments									—
Estimated tax benefit from above expenses2									—
Total adjustments, after-tax								$	—
Estimated net earnings - Adjusted		$	318,250		$	330,050
Diluted Earnings per Share Range - GAAP3		$	14.80		$	15.35
Diluted Earnings per Share Range - Adjusted3		$	14.80		$	15.35

¹ See accompanying press release for our key assumptions

² The tax effect of adjustments is calculated based on the estimated income tax rate in each applicable jurisdiction

³ Assumes weighted average shares outstanding of 21.3M for revised guidance and 21.5M for previous and revised previous guidance, and includes rounding

View source version on businesswire.com: https://www.businesswire.com/news/home/20231025120387/en/

The Valmont Industries Stock at the time of publication of the news with a raise of +0,92 % to 219USD on Lang & Schwarz stock exchange (25. Oktober 2023, 22:30 Uhr).