Valmont Industries, a global provider of engineered products and services for infrastructure development and irrigation equipment and services for agriculture, reported financial results for the fourth quarter and fiscal year ended Dec. 25, 2021.
Fourth Quarter 2021 Highlights (all metrics compared to fourth quarter 2020 unless otherwise noted)
- Record Net Sales of $963.3 million increased 20.7%, with growth in all segments led by significantly higher Irrigation sales
- Operating Income of $50.8 million, or 5.3% of sales ($85.6 million or 8.9% adjusted) compared to $54.1 million or 6.8% of sales ($68.8 million or 8.6% adjusted)
- Repurchased 8,800 shares of company stock for $2.0 million at an average price of $227.22 per share
- Record year-end backlog of more than $1.6 billion, an increase of more than 40% since the end of fiscal 2020, and an increase of more than 5% since the end of third quarter 2021, reflecting improved pricing and continued strong market demand across the portfolio
Full Year 2021 Highlights (all metrics compared to full year 2020 unless otherwise noted)
- Record Net Sales of $3.5 billion, an increase of 20.9%
- Sales growth in all segments, led by Irrigation which grew 59.3% to a record $1.03 billion
- Operating income improved to $286.8 million or 8.2% of sales ($334 million or 9.5% adjusted), compared to $226 million or 7.8% of sales ($268.5 million or 9.3% adjusted)
- Higher operating income was led by favorable pricing and higher volumes, including significant volume growth in Irrigation, and operating margins of nearly 11% in Engineered Support Structures
- Diluted EPS of $9.10 ($10.92 adjusted) compared to $6.57 ($8.18 adjusted)
- Capital expenditures were $108 million, including approximately $45 million for strategic investments, which included a new spun concrete utility distribution pole facility in Bristol, Ind., capacity expansion of infrastructure facilities in Mexico, and technology investments across the organization, all to support global market growth
- Deployed $313.0 million of cash for two acquisitions, both in the Irrigation segment: Prospera Technologies Ltd. and PivoTrac, accelerating the Company's global Ag Tech growth strategy
"We achieved record sales for the second consecutive quarter through continued price management and strong market demand, while remaining highly focused on operational excellence and execution," said Stephen G. Kaniewski, President and Chief Executive Officer. "Our team delivered a solid fourth-quarter performance as we maintained our relentless focus on serving our customers in a challenging macro environment. I am very pleased with our ability to effectively manage our operations to meet growing demand despite continued wide-spread inflationary pressures and supply chain volatility. We also benefited from actions to improve productivity and control costs, which helped offset the margin impact of COVID-related labor inefficiencies and absenteeism in certain facilities during the quarter. Through these actions, we grew fourth quarter adjusted operating income 24.4 percent year-over-year and delivered adjusted diluted earnings per share growth of 26.0 percent. These results further demonstrate the value of our long-term strategy led by sustainable growth initiatives across our businesses, operational excellence and price leadership."
Irrigation Segment (28.7% of Sales)
Global sales of $276.8 million increased 38.9% year-over-year due to higher average selling prices, higher volumes in all markets, particularly North America and Brazil, and higher technology sales.
North American sales of $150.5 million grew 55.1% compared to 2020. Sales growth was led by favorable pricing, higher volumes due to continued strength in agricultural markets and higher industrial tubing sales.
International sales of $126.3 million grew 23.5% year-over-year. Sales growth was led by continued strong demand in Brazil, Europe and Australia, and ongoing deliveries of the large Egypt project which commenced in the fourth quarter of 2020.
Full-year technology sales of $97.9 million increased more than 45% year-over-year, driven by growers' increasing demand for connected crop management and advanced analytics to reduce input costs, increase productivity and improve crop yields.
Global backlog increased 43.5% year-over-year to $471 million, demonstrating the underlying strength in agricultural markets globally.
Operating Income was $28.6 million, or 10.3% of sales ($33.0 million or 11.9% adjusted) compared to $22.3 million or 11.2% of sales ($25.3 million or 12.7% adjusted) in 2020. Operating income increased due to higher volumes and pricing actions. Operating margins were partially impacted by higher input costs that were not fully recovered by price and incremental SG&A expense from the Prospera acquisition completed in May 2021.
Updating Full Year 2022 Financial Outlook and Key Assumptions
The Company is increasing its 2022 full-year net sales and diluted earnings per share outlook from the previous indications that were communicated last quarter, and providing key assumptions for the year.
- Net Sales estimated to be $3.8-$4 billion, an increase of 9%-14% vs. prior year
- Unfavorable foreign currency translation impact of approximately 1% of Net Sales
- Tax rate of approximately 25%
- Capital expenditures to be in the range of $110-$120 million to support strategic growth initiatives and Industry 4.0 advanced manufacturing initiatives