10-Q 1 vmi-20220924x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 24, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to

Commission file number 1-31429

Valmont Industries, Inc.

(Exact name of registrant as specified in its charter)

Delaware

47-0351813

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

15000 Valmont Plaza,

Omaha, Nebraska

68154

(Address of Principal Executive Offices)

(Zip Code)

(402963-1000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

  

Trading Symbol(s)

  

Name of each exchange on which registered

Common Stock $1.00 par value

VMI

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non‑accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

21,333,058

Outstanding shares of common stock as of October 27, 2022

VALMONT INDUSTRIES, INC

INDEX TO FORM 10-Q

   

Page No.

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited):

Condensed Consolidated Statements of Earnings for the thirteen and thirty-nine

weeks ended September 24, 2022 and September 25, 2021

3

Condensed Consolidated Statements of Comprehensive Income for the thirteen and

thirty-nine weeks ended September 24, 2022 and September 25, 2021

4

Condensed Consolidated Balance Sheets as of September 24, 2022 and

December 25, 2021

5

Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks

ended September 24, 2022 and September 25, 2021

6

Condensed Consolidated Statements of Shareholders’ Equity for the thirteen

and thirty-nine weeks ended September 24, 2022 and September 25, 2021

7

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of

Operations

26

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37

Item 4.

Controls and Procedures

37

PART II. OTHER INFORMATION

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

38

Item 6.

Exhibits

39

Signatures

40

2

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per share amounts)

(Unaudited)

Thirteen weeks ended

Thirty-nine weeks ended

September 24,

September 25,

September 24,

September 25,

2022

    

2021

    

2022

    

2021

Product sales

$

999,131

$

782,694

$

2,926,290

$

2,283,460

Services sales

 

98,251

 

86,088

 

287,444

 

254,837

Net sales

 

1,097,382

 

868,782

 

3,213,734

 

2,538,297

Product cost of sales

 

739,353

 

585,986

 

2,193,846

 

1,712,721

Services cost of sales

 

72,551

 

55,392

 

192,623

 

163,971

Total cost of sales

 

811,904

 

641,378

 

2,386,469

 

1,876,692

Gross profit

 

285,478

 

227,404

 

827,265

 

661,605

Selling, general and administrative expenses

 

175,506

 

151,209

 

503,732

 

425,574

Operating income

 

109,972

 

76,195

 

323,533

 

236,031

Other income (expenses):

 

  

 

  

 

  

 

  

Interest expense

 

(11,629)

 

(11,031)

 

(34,278)

 

(31,466)

Interest income

 

507

 

397

 

1,019

 

894

Gain (loss) on investments - unrealized

 

(901)

 

488

 

(4,306)

 

1,556

Other

 

2,822

 

2,644

 

8,537

 

10,297

 

(9,201)

 

(7,502)

 

(29,028)

 

(18,719)

Earnings before income taxes

 

100,771

 

68,693

 

294,505

 

217,312

Income tax expense:

 

  

 

  

 

  

 

  

Current

 

33,278

 

21,109

 

83,311

 

55,069

Deferred

 

(5,455)

 

(5,029)

 

(2,780)

 

(8,747)

 

27,823

 

16,080

 

80,531

 

46,322

Earnings before equity in earnings of nonconsolidated subsidiaries

 

72,948

 

52,613

 

213,974

 

170,990

Equity in loss of nonconsolidated subsidiaries

 

(18)

(360)

(931)

(1,079)

Net earnings

 

72,930

 

52,253

 

213,043

 

169,911

Less: earnings attributable to noncontrolling interests

 

(818)

 

(603)

 

(2,512)

 

(1,137)

Net earnings attributable to Valmont Industries, Inc.

$

72,112

$

51,650

$

210,531

$

168,774

Earnings per share:

 

 

  

 

  

 

  

Basic

$

3.38

$

2.44

$

9.88

$

7.97

Diluted

$

3.34

$

2.40

$

9.77

$

7.86

See accompanying notes to condensed consolidated financial statements.

3

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

Thirteen Weeks Ended

Thirty-nine weeks ended

September 24,

September 25,

September 24,

September 25,

2022

    

2021

    

2022

    

2021

Net earnings

$

72,930

$

52,253

$

213,043

$

169,911

Other comprehensive income (loss), net of tax:

 

  

 

  

 

  

 

  

Foreign currency translation adjustments:

 

  

 

  

 

  

 

  

Unrealized translation loss

 

(46,000)

 

(15,018)

 

(78,050)

 

(16,961)

Gain (loss) on hedging activities:

 

  

 

  

 

  

 

  

Cash flow hedges

 

 

307

 

 

16

Amortization cost included in interest expense

 

(16)

 

(16)

 

(48)

 

(48)

Commodity hedges

 

(2,233)

 

(5,754)

 

(1,185)

 

20,500

Realized (gain) loss on commodity hedges recorded in earnings

 

1,546

 

(9,870)

 

1,048

 

(10,140)

Cross currency swaps

 

5,592

 

2,530

 

10,873

 

4,041

Defined Benefit Pension Plan:

Actuarial loss

 

115

 

163

 

371

 

1,838

Other comprehensive loss

 

(40,996)

 

(27,658)

 

(66,991)

 

(754)

Comprehensive income

 

31,934

 

24,595

 

146,052

 

169,157

Comprehensive (income) loss attributable to noncontrolling interests

 

242

 

268

 

(514)

 

(819)

Comprehensive income attributable to Valmont Industries, Inc.

$

32,176

$

24,863

$

145,538

$

168,338

See accompanying notes to condensed consolidated financial statements.

4

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

    

September 24,

    

December 25,

    

2022

    

2021

ASSETS

Current assets:

  

 

  

Cash and cash equivalents

$

166,221

$

177,232

Receivables, net

 

614,411

 

571,593

Inventories

 

746,282

 

728,834

Contract assets

 

215,684

 

142,643

Prepaid expenses and other assets

 

107,476

 

83,646

Refundable income taxes

 

 

8,815

Total current assets

 

1,850,074

 

1,712,763

Property, plant and equipment, at cost

 

1,426,883

 

1,422,101

Less accumulated depreciation and amortization

 

830,033

 

823,496

Net property, plant and equipment

 

596,850

 

598,605

Goodwill

 

728,587

 

708,566

Other intangible assets, net

 

182,796

 

175,364

Other assets

 

263,422

 

251,951

Total assets

$

3,621,729

$

3,447,249

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

  

 

  

Current liabilities:

 

  

 

  

Current installments of long-term debt

$

2,106

$

4,884

Notes payable to banks

 

4,935

 

13,439

Accounts payable

 

376,508

 

347,841

Accrued employee compensation and benefits

 

125,565

 

144,559

Contract liabilities

 

200,341

 

135,746

Other accrued expenses

 

136,335

 

108,771

Income taxes payable

10,668

Dividends payable

 

11,733

 

10,616

Total current liabilities

 

868,191

 

765,856

Deferred income taxes

 

48,542

 

47,849

Long-term debt, excluding current installments

 

935,129

 

947,072

Defined benefit pension liability

 

 

536

Operating lease liabilities

 

156,860

 

147,759

Deferred compensation

 

28,754

 

35,373

Other noncurrent liabilities

 

11,502

 

89,207

Shareholders’ equity:

 

  

 

  

Common stock of $1 par value -

 

 

Authorized 75,000,000 shares; 27,900,000 issued

 

27,900

 

27,900

Additional paid in capital

 

13,251

 

1,479

Retained earnings

 

2,569,641

 

2,394,307

Accumulated other comprehensive loss

 

(328,120)

 

(263,127)

Treasury stock

 

(769,941)

 

(773,712)

Total Valmont Industries, Inc. shareholders’ equity

 

1,512,731

 

1,386,847

Noncontrolling interest in consolidated subsidiaries

 

60,020

 

26,750

Total shareholders’ equity

1,572,751

1,413,597

Total liabilities and shareholders’ equity

$

3,621,729

$

3,447,249

See accompanying notes to condensed consolidated financial statements.

5

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

    

Thirty-nine weeks ended

September 24,

September 25,

2022

    

2021

Cash flows from operating activities:

  

 

  

Net earnings

$

213,043

$

169,911

Adjustments to reconcile net earnings to net cash flows from operations:

 

 

Depreciation and amortization

 

72,803

 

67,764

Stock-based compensation

 

29,998

 

17,895

Defined benefit pension plan benefit

(7,597)

(11,051)

Contribution to defined benefit pension plan

 

(17,155)

 

(970)

Loss (gain) on sale of property, plant and equipment

 

790

 

(1,250)

Equity in loss in nonconsolidated subsidiaries

 

931

 

1,079

Deferred income taxes

 

(2,780)

 

(8,747)

Changes in assets and liabilities:

 

 

Receivables

 

(60,450)

 

(30,709)

Inventories

 

(31,143)

 

(211,273)

Prepaid expenses and other assets (current and non-current)

 

6,738

 

(21,589)

Contract assets

 

(76,887)

 

(33,199)

Accounts payable

 

37,787

 

76,916

Accrued expenses

 

10,904

 

15,523

Contract liabilities

 

(10,051)

 

6,768

Other noncurrent liabilities

 

(9,312)

 

10,228

Income taxes payable/refundable

 

26,107

 

14,533

Net cash flows from operating activities

 

183,726

 

61,829

Cash flows from investing activities:

 

 

Purchase of property, plant and equipment

 

(67,122)

 

(80,509)

Proceeds from sale of assets

 

71

 

1,655

Acquisitions, net of cash acquired

 

(39,287)

 

(312,500)

Other, net

(108)

1,891

Net cash flows from investing activities

 

(106,446)

 

(389,463)

Cash flows from financing activities:

 

 

Proceeds from short-term borrowings

 

4,137

 

3,191

Payments on short-term borrowings

 

(12,366)

 

(23,654)

Proceeds from long-term borrowings

 

235,470

 

236,710

Principal payments on long-term borrowings

 

(251,155)

 

(66,128)

Settlement of financial derivatives

 

2,243

 

Dividends paid

 

(34,080)

 

(30,794)

Purchase of noncontrolling interests

 

(7,338)

 

Purchase of treasury shares

 

(20,491)

 

(24,101)

Proceeds from exercises under stock plans

 

8,778

 

22,747

Purchase of common treasury shares—stock plan exercises

 

(4,341)

 

(16,955)

Net cash flows from financing activities

 

(79,143)

 

101,016

Effect of exchange rate changes on cash and cash equivalents

 

(9,148)

 

(4,313)

Net change in cash and cash equivalents

 

(11,011)

 

(230,931)

Cash and cash equivalents—beginning of year

 

177,232

 

400,726

Cash and cash equivalents—end of period

$

166,221

$

169,795

See accompanying notes to condensed consolidated financial statements

6

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Dollars in thousands)

(Unaudited)

    

    

    

    

Accumulated

    

    

Noncontrolling

    

Additional

other

interest in

Total

Common

paid-in

Retained

comprehensive

Treasury

consolidated

shareholders’

    

stock

    

capital

    

earnings

    

loss

    

stock

    

subsidiaries

    

equity

Balance at June 26, 2021

$

27,900

$

$

2,337,015

$

(283,435)

$

(786,857)

$

26,861

$

1,321,484

Net earnings

 

 

 

51,650

 

 

 

603

 

52,253

Other comprehensive loss

 

 

 

 

(26,787)

 

 

(871)

 

(27,658)

Cash dividends declared ($0.50 per share)

 

 

 

(10,617)

 

 

 

 

(10,617)

Purchase of treasury shares; 10,759 shares acquired

 

 

 

 

 

(2,500)

 

 

(2,500)

Stock plan exercises; 144 shares acquired

 

 

 

 

 

(33)

 

 

(33)

Stock options exercised; 20,749 shares issued

 

 

(2,194)

 

27

 

 

5,023

 

 

2,856

Stock option expense

 

 

618

 

 

 

 

 

618

Stock awards; 494 shares issued

 

 

8,244

 

 

 

85

 

 

8,329

Balance at September 25, 2021

$

27,900

$

6,668

$

2,378,075

$

(310,222)

$

(784,282)

$

26,593

$

1,344,732

Balance at June 25, 2022

$

27,900

$

4,321

$

2,509,262

$

(288,184)

$

(764,917)

$

64,768

1,553,150

Net earnings

 

 

 

72,112

 

 

 

818

 

72,930

Other comprehensive loss

 

 

 

 

(39,936)

 

 

(1,060)

 

(40,996)

Cash dividends declared ($0.55 per share)

 

 

 

(11,733)

 

 

 

 

(11,733)

Purchase of noncontrolling interest

 

 

1,410

 

 

 

 

(4,456)

 

(3,046)

Addition of noncontrolling interest due to acquisition

 

 

 

 

 

 

(50)

 

(50)

Purchase of treasury shares; 38,606 shares acquired

 

 

 

 

 

(10,715)

 

 

(10,715)

Stock plan exercises; 507 shares acquired

 

 

 

 

 

(136)

 

 

(136)

Stock options exercised; 20,448 shares issued

(2,859)

5,791

2,932

Stock option expense

749

749

Stock awards; 270 shares issued

 

 

9,630

 

 

 

36

 

 

9,666

Balance at September 24, 2022

$

27,900

$

13,251

$

2,569,641

$

(328,120)

$

(769,941)

$

60,020

$

1,572,751

See accompanying notes to the condensed consolidated financial statements.

7

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Dollars in thousands)

(Unaudited)

    

    

    

    

Accumulated

    

    

Noncontrolling

    

Additional

other

interest in

Total

Common

paid-in

Retained

comprehensive

Treasury

consolidated

shareholders’

stock

capital

earnings

loss

stock

subsidiaries

equity

Balance at December 26, 2020

$

27,900

$

335

$

2,245,035

$

(309,786)

$

(781,422)

$

25,774

$

1,207,836

Net earnings

 

 

 

168,774

 

 

 

1,137

 

169,911

Other comprehensive loss

 

 

 

 

(436)

 

 

(318)

 

(754)

Cash dividends declared ($1.50 per share)

 

 

 

(31,848)

 

 

 

 

(31,848)

Purchase of treasury shares; 103,056 shares acquired

 

 

 

 

 

(24,100)

 

 

(24,100)

Stock plan exercises; 71,412 shares acquired

 

 

 

 

 

(16,955)

 

 

(16,955)

Stock options exercised; 164,872 shares issued

 

 

(10,294)

 

(3,886)

 

 

36,927

 

 

22,747

Stock option expense

 

 

1,885

 

 

 

 

 

1,885

Stock awards; 9,554 shares issued

 

 

14,742

 

 

 

1,268

 

 

16,010

Balance at September 25, 2021

$

27,900

$

6,668

$

2,378,075

$

(310,222)

$

(784,282)

$

26,593

$

1,344,732

Balance at December 25, 2021

$

27,900

$

1,479

$

2,394,307

$

(263,127)

$

(773,712)

$

26,750