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 26, 202025, 2021
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.) |
One15000 Valmont Plaza, | |
Omaha, | Nebraska | 68154-521568154 |
(Address of Principal Executive Offices) | (Zip Code) |
(402) 963-1000
(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 x No o
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 x No o
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No x
21,252,81021,224,185
Outstanding shares of common stock as of October 22, 2020
VALMONT INDUSTRIES, INC.INC
INDEX TO FORM 10-Q
| | | | | | | | |
| | Page No. |
| PART I. FINANCIAL INFORMATION | |
Item 1. | | |
| | |
| weeks ended September 26, 2020 and September 28, 2019 | |
| | |
| and thirty-nine weeks ended September 26, 2020 and September 28, 2019 | |
| Condensed Consolidated Balance Sheets as of September 26, 2020 and December 28, | |
| 2019 | |
| Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended | |
| September 26, 2020 and September 28, 2019 | |
| Condensed Consolidated Statements of Shareholders' Equity for the thirteen and | |
| thirty-nine weeks ended September 26, 2020 and September 28, 2019 | |
| Notes to Condensed Consolidated Financial Statements | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
| | |
| PART II. OTHER INFORMATION | |
Item 1A. | Risk Factors | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
| | |
Item 6. | Exhibits | |
Signatures | |
| | |
| | |
| | |
| | | | | | | | |
| | Page No. |
| PART I. FINANCIAL INFORMATION | |
Item 1. | | |
| | |
| weeks ended September 25, 2021 and September 26, 2020 | |
| | |
| and thirty-nine weeks ended September 25, 2021 and September 26, 2020 | |
| Condensed Consolidated Balance Sheets as of September 25, 2021 and | |
| December 26, 2020 | |
| Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks | |
| ended September 25, 2021 and September 26, 2020 | |
| Condensed Consolidated Statements of Shareholders' Equity for the thirteen and | |
| thirty-nine weeks ended September 25, 2021 and September 26, 2020 | |
| Notes to Condensed Consolidated Financial Statements | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
| | |
| PART II. OTHER INFORMATION | |
Item 1A. | Risk Factors | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
| | |
Item 6. | Exhibits | |
Signatures | |
| | |
| | |
| | |
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 26, 2020 | | September 28, 2019 | | September 26, 2020 | | September 28, 2019 |
Product sales | $ | 657,703 | | | $ | 605,439 | | | $ | 1,874,199 | | | $ | 1,829,919 | |
Services sales | 76,267 | | | 84,901 | | | 222,779 | | | 253,431 | |
Net sales | 733,970 | | | 690,340 | | | 2,096,978 | | | 2,083,350 | |
Product cost of sales | 494,812 | | | 460,549 | | | 1,392,595 | | | 1,398,775 | |
Services cost of sales | 48,411 | | | 56,504 | | | 143,450 | | | 168,485 | |
Total cost of sales | 543,223 | | | 517,053 | | | 1,536,045 | | | 1,567,260 | |
Gross profit | 190,747 | | | 173,287 | | | 560,933 | | | 516,090 | |
Selling, general and administrative expenses | 129,268 | | | 112,223 | | | 372,481 | | | 338,950 | |
Impairment of goodwill and trade names | 0 | | | 0 | | | 16,638 | | | 0 | |
Operating income | 61,479 | | | 61,064 | | | 171,814 | | | 177,140 | |
Other income (expenses): | | | | | | | |
Interest expense | (10,454) | | | (9,976) | | | (30,566) | | | (29,971) | |
Interest income | 430 | | | 969 | | | 1,931 | | | 2,815 | |
Gain on investments (unrealized) | 900 | | | 402 | | | 1,102 | | | 4,754 | |
| | | | | | | |
| | | | | | | |
Other | 233 | | | 768 | | | 1,349 | | | 1,938 | |
| (8,891) | | | (7,837) | | | (26,184) | | | (20,464) | |
Earnings before income taxes | 52,588 | | | 53,227 | | | 145,630 | | | 156,676 | |
Income tax expense (benefit): | | | | | | | |
Current | 14,968 | | | 11,675 | | | 42,922 | | | 31,668 | |
Deferred | (2,884) | | | 1,388 | | | (3,750) | | | 7,098 | |
| 12,084 | | | 13,063 | | | 39,172 | | | 38,766 | |
Earnings before equity in earnings of nonconsolidated subsidiaries | 40,504 | | | 40,164 | | | 106,458 | | | 117,910 | |
Equity in loss of nonconsolidated subsidiaries | (276) | | | 0 | | | (755) | | | 0 | |
Net earnings | 40,228 | | | 40,164 | | | 105,703 | | | 117,910 | |
Less: earnings attributable to noncontrolling interests | (886) | | | (2,119) | | | (825) | | | (4,042) | |
Net earnings attributable to Valmont Industries, Inc. | $ | 39,342 | | | $ | 38,045 | | | $ | 104,878 | | | $ | 113,868 | |
Earnings per share: | | | | | | | |
Basic | $ | 1.85 | | | $ | 1.76 | | | $ | 4.91 | | | $ | 5.24 | |
Diluted | $ | 1.84 | | | $ | 1.75 | | | $ | 4.89 | | | $ | 5.22 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Thirty-nine weeks ended |
| September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 |
Product sales | $ | 782,694 | | | $ | 657,703 | | | $ | 2,283,460 | | | $ | 1,874,199 | |
Services sales | 86,088 | | | 76,267 | | | 254,837 | | | 222,779 | |
Net sales | 868,782 | | | 733,970 | | | 2,538,297 | | | 2,096,978 | |
Product cost of sales | 585,986 | | | 494,812 | | | 1,712,721 | | | 1,392,595 | |
Services cost of sales | 55,392 | | | 48,411 | | | 163,971 | | | 143,450 | |
Total cost of sales | 641,378 | | | 543,223 | | | 1,876,692 | | | 1,536,045 | |
Gross profit | 227,404 | | | 190,747 | | | 661,605 | | | 560,933 | |
Selling, general and administrative expenses | 151,209 | | | 129,268 | | | 425,574 | | | 372,481 | |
Impairment of goodwill and trade names | — | | | — | | | — | | | 16,638 | |
Operating income | 76,195 | | | 61,479 | | | 236,031 | | | 171,814 | |
Other income (expenses): | | | | | | | |
Interest expense | (11,031) | | | (10,454) | | | (31,466) | | | (30,566) | |
Interest income | 397 | | | 430 | | | 894 | | | 1,931 | |
Gain on investments (unrealized) | 488 | | | 900 | | | 1,556 | | | 1,102 | |
| | | | | | | |
| | | | | | | |
Other | 2,644 | | | 233 | | | 10,297 | | | 1,349 | |
| (7,502) | | | (8,891) | | | (18,719) | | | (26,184) | |
Earnings before income taxes | 68,693 | | | 52,588 | | | 217,312 | | | 145,630 | |
Income tax expense: | | | | | | | |
Current | 21,109 | | | 14,968 | | | 55,069 | | | 42,922 | |
Deferred | (5,029) | | | (2,884) | | | (8,747) | | | (3,750) | |
| 16,080 | | | 12,084 | | | 46,322 | | | 39,172 | |
Earnings before equity in earnings of nonconsolidated subsidiaries | 52,613 | | | 40,504 | | | 170,990 | | | 106,458 | |
Equity in loss of nonconsolidated subsidiaries | (360) | | | (276) | | | (1,079) | | | (755) | |
Net earnings | 52,253 | | | 40,228 | | | 169,911 | | | 105,703 | |
Less: Earnings attributable to noncontrolling interests | (603) | | | (886) | | | (1,137) | | | (825) | |
Net earnings attributable to Valmont Industries, Inc. | $ | 51,650 | | | $ | 39,342 | | | $ | 168,774 | | | $ | 104,878 | |
Earnings per share: | | | | | | | |
Basic | $ | 2.44 | | | $ | 1.85 | | | $ | 7.97 | | | $ | 4.91 | |
Diluted | $ | 2.40 | | | $ | 1.84 | | | $ | 7.86 | | | $ | 4.89 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
See accompanying notes to condensed consolidated financial statements.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
| | | Thirteen Weeks Ended | | Thirty-nine Weeks Ended | | Thirteen Weeks Ended | | Thirty-nine weeks ended |
| | September 26, 2020 | | September 28, 2019 | | September 26, 2020 | | September 28, 2019 | | September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 |
Net earnings | Net earnings | 40,228 | | | 40,164 | | | 105,703 | | | 117,910 | | Net earnings | $ | 52,253 | | | $ | 40,228 | | | $ | 169,911 | | | $ | 105,703 | |
Other comprehensive income (loss), net of tax: | Other comprehensive income (loss), net of tax: | | | | | | | | Other comprehensive income (loss), net of tax: | | | | | | | |
Foreign currency translation adjustments: | Foreign currency translation adjustments: | | Foreign currency translation adjustments: | |
Unrealized translation gain (loss) | Unrealized translation gain (loss) | 14,391 | | | (23,781) | | | (16,102) | | | (20,466) | | Unrealized translation gain (loss) | (15,018) | | | 14,391 | | | (16,961) | | | (16,102) | |
| Gain (loss) on hedging activities: | Gain (loss) on hedging activities: | | Gain (loss) on hedging activities: | |
Net investment hedges | Net investment hedges | 0 | | | 2,580 | | | 7,284 | | | 3,360 | | Net investment hedges | — | | | — | | | — | | | 7,284 | |
Cash flow hedges | Cash flow hedges | (26) | | | 0 | | | 344 | | | 0 | | Cash flow hedges | 307 | | | (26) | | | 16 | | | 344 | |
| Amortization cost included in interest expense | Amortization cost included in interest expense | (16) | | | (16) | | | (48) | | | (48) | | Amortization cost included in interest expense | (16) | | | (16) | | | (48) | | | (48) | |
| Commodity hedges | Commodity hedges | 0 | | | (21) | | | 0 | | | (2,130) | | Commodity hedges | (5,754) | | | — | | | 20,500 | | | — | |
Realized gain on commodity hedges recorded in earnings | Realized gain on commodity hedges recorded in earnings | 0 | | | 1,329 | | | 0 | | | 1,329 | | Realized gain on commodity hedges recorded in earnings | (9,870) | | | — | | | (10,140) | | | — | |
Cross currency swaps | Cross currency swaps | (3,725) | | | 5,443 | | | 570 | | | 3,771 | | Cross currency swaps | 2,530 | | | (3,725) | | | 4,041 | | | 570 | |
Defined Benefit Pension Plan: | | Defined Benefit Pension Plan: | |
| Actuarial loss | | Actuarial loss | 163 | | | — | | | 1,838 | | | — | |
Other comprehensive income (loss) | Other comprehensive income (loss) | 10,624 | | | (14,466) | | | (7,952) | | | (14,184) | | Other comprehensive income (loss) | (27,658) | | | 10,624 | | | (754) | | | (7,952) | |
Comprehensive income | Comprehensive income | 50,852 | | | 25,698 | | | 97,751 | | | 103,726 | | Comprehensive income | 24,595 | | | 50,852 | | | 169,157 | | | 97,751 | |
Comprehensive income attributable to noncontrolling interests | (1,358) | | | (1,297) | | | (1,785) | | | (3,390) | | |
Comprehensive (income) loss attributable to noncontrolling interests | | Comprehensive (income) loss attributable to noncontrolling interests | 268 | | | (1,358) | | | (819) | | | (1,785) | |
Comprehensive income attributable to Valmont Industries, Inc. | Comprehensive income attributable to Valmont Industries, Inc. | $ | 49,494 | | | $ | 24,401 | | | $ | 95,966 | | | $ | 100,336 | | Comprehensive income attributable to Valmont Industries, Inc. | $ | 24,863 | | | $ | 49,494 | | | $ | 168,338 | | | $ | 95,966 | |
See accompanying notes to condensed consolidated financial statements.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | |
| September 26, 2020 | | December 28, 2019 |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 443,055 | | | $ | 353,542 | |
Receivables, net | 502,004 | | | 480,000 | |
Inventories | 448,088 | | | 418,370 | |
Contract assets | 113,254 | | | 141,322 | |
Prepaid expenses and other assets | 51,745 | | | 32,043 | |
Refundable income taxes | 0 | | | 6,947 | |
Total current assets | 1,558,146 | | | 1,432,224 | |
Property, plant and equipment, at cost | 1,295,639 | | | 1,245,261 | |
Less accumulated depreciation and amortization | 722,286 | | | 687,132 | |
Net property, plant and equipment | 573,353 | | | 558,129 | |
| | | |
Goodwill | 421,947 | | | 428,864 | |
Other intangible assets, net | 167,681 | | | 175,742 | |
Other assets | 202,783 | | | 212,257 | |
Total assets | $ | 2,923,910 | | | $ | 2,807,216 | |
| | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
Current liabilities: | | | |
Current installments of long-term debt | $ | 1,922 | | | $ | 760 | |
Notes payable to banks | 14,227 | | | 21,774 | |
Accounts payable | 269,113 | | | 197,957 | |
Accrued employee compensation and benefits | 114,310 | | | 83,528 | |
Contract liabilities | 116,470 | | | 117,945 | |
Other accrued expenses | 97,539 | | | 83,736 | |
Income taxes payable | 724 | | | 0 | |
| | | |
Dividends payable | 9,614 | | | 8,079 | |
Total current liabilities | 623,919 | | | 513,779 | |
Deferred income taxes | 51,280 | | | 58,906 | |
Long-term debt, excluding current installments | 779,788 | | | 764,944 | |
Defined benefit pension liability | 113,380 | | | 140,007 | |
Operating lease liabilities | 77,705 | | | 85,817 | |
Deferred compensation | 42,587 | | | 45,114 | |
Other noncurrent liabilities | 45,587 | | | 8,904 | |
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 | 8,493 | | | 0 | |
Retained earnings | 2,219,182 | | | 2,173,802 | |
Accumulated other comprehensive loss | (322,334) | | | (313,422) | |
Treasury stock | (770,802) | | | (743,942) | |
Total Valmont Industries, Inc. shareholders’ equity | 1,162,439 | | | 1,144,338 | |
Noncontrolling interest in consolidated subsidiaries | 27,225 | | | 45,407 | |
Total shareholders’ equity | 1,189,664 | | | 1,189,745 | |
Total liabilities and shareholders’ equity | $ | 2,923,910 | | | $ | 2,807,216 | |
| | | | | | | | | | | |
| September 25, 2021 | | December 26, 2020 |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 169,795 | | | $ | 400,726 | |
Receivables, net | 537,693 | | | 511,714 | |
Inventories | 655,903 | | | 448,941 | |
Contract assets | 155,417 | | | 123,495 | |
Prepaid expenses and other assets | 95,965 | | | 59,804 | |
Refundable income taxes | — | | | 9,945 | |
Total current assets | 1,614,773 | | | 1,554,625 | |
Property, plant and equipment, at cost | 1,383,892 | | | 1,341,380 | |
Less accumulated depreciation and amortization | 766,579 | | | 743,653 | |
Net property, plant and equipment | 617,313 | | | 597,727 | |
| | | |
Goodwill | 709,462 | | | 430,322 | |
Other intangible assets, net | 193,449 | | | 167,193 | |
Other assets | 276,267 | | | 203,293 | |
Total assets | $ | 3,411,264 | | | $ | 2,953,160 | |
| | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
Current liabilities: | | | |
Current installments of long-term debt | $ | 4,803 | | | $ | 2,748 | |
Notes payable to banks | 13,765 | | | 35,147 | |
Accounts payable | 338,723 | | | 268,099 | |
Accrued employee compensation and benefits | 124,212 | | | 137,939 | |
Contract liabilities | 138,286 | | | 130,018 | |
Other accrued expenses | 116,846 | | | 89,796 | |
Income taxes payable | 3,734 | | | — | |
| | | |
Dividends payable | 10,610 | | | 9,556 | |
Total current liabilities | 750,979 | | | 673,303 | |
Deferred income taxes | 45,863 | | | 41,689 | |
Long-term debt, excluding current installments | 897,488 | | | 728,431 | |
Defined benefit pension liability | 105,175 | | | 118,523 | |
Operating lease liabilities | 148,031 | | | 80,202 | |
Deferred compensation | 34,723 | | | 44,519 | |
Other noncurrent liabilities | 84,273 | | | 58,657 | |
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 | 6,668 | | | 335 | |
Retained earnings | 2,378,075 | | | 2,245,035 | |
Accumulated other comprehensive loss | (310,222) | | | (309,786) | |
Treasury stock | (784,282) | | | (781,422) | |
Total Valmont Industries, Inc. shareholders’ equity | 1,318,139 | | | 1,182,062 | |
Noncontrolling interest in consolidated subsidiaries | 26,593 | | | 25,774 | |
Total shareholders’ equity | 1,344,732 | | | 1,207,836 | |
Total liabilities and shareholders’ equity | $ | 3,411,264 | | | $ | 2,953,160 | |
See accompanying notes to condensed consolidated financial statements.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | |
| Thirty-nine weeks ended |
| September 26, 2020 | | | September 28, 2019 |
Cash flows from operating activities: | | | | |
Net earnings | $ | 105,703 | | | | $ | 117,910 | |
Adjustments to reconcile net earnings to net cash flows from operations: | | | | |
Depreciation and amortization | 61,523 | | | | 60,424 | |
Noncash loss (gain) on trading securities | 39 | | | | (48) | |
Impairment of property, plant and equipment | 2,811 | | | | 0 | |
Impairment of goodwill & intangible assets | 16,638 | | | | 0 | |
| | | | |
Stock-based compensation | 8,736 | | | | 8,889 | |
| | | | |
Defined benefit pension plan benefit | (5,401) | | | | (382) | |
Contribution to defined benefit pension plan | (17,398) | | | | (17,426) | |
Gain on sale of property, plant and equipment | (60) | | | | (465) | |
Equity in loss in nonconsolidated subsidiaries | 755 | | | | 0 | |
Deferred income taxes | (3,750) | | | | 7,098 | |
Changes in assets and liabilities: | | | | |
Receivables | (26,298) | | | | (21,117) | |
Inventories | (32,992) | | | | 9,502 | |
Prepaid expenses and other assets | (19,157) | | | | (14,451) | |
Contract assets | 28,597 | | | | (7,850) | |
Accounts payable | 63,627 | | | | (19,256) | |
Accrued expenses | 61,122 | | | | 10,928 | |
Contract liabilities | (1,475) | | | | 118,973 | |
Other noncurrent liabilities | 20,982 | | | | (4,563) | |
Income taxes payable/refundable | 9,044 | | | | (8,936) | |
Net cash flows from operating activities | 273,046 | | | | 239,230 | |
Cash flows from investing activities: | | | | |
Purchase of property, plant and equipment | (70,960) | | | | (71,981) | |
Proceeds from sale of assets | 911 | | | | 1,325 | |
Acquisitions, net of cash acquired | (15,862) | | | | (81,841) | |
| | | | |
Settlement of net investment hedges | 11,983 | | | | 11,184 | |
Other, net | 2,543 | | | | 2,117 | |
Net cash flows from investing activities | (71,385) | | | | (139,196) | |
Cash flows from financing activities: | | | | |
Proceeds from short-term agreements | 4,251 | | | | 14,392 | |
Payments on short-term agreements | (10,713) | | | | (5,108) | |
Proceeds from long-term borrowings | 88,872 | | | | 31,000 | |
Principal payments on long-term borrowings | (76,417) | | | | (10,578) | |
| | | | |
| | | | |
Dividends paid | (27,316) | | | | (24,554) | |
Dividends to noncontrolling interest | (5,642) | | | | (6,549) | |
Purchase of noncontrolling interest | (55,916) | | | | (27,845) | |
Purchase of treasury shares | (28,006) | | | | (55,172) | |
Proceeds from exercises under stock plans | 980 | | | | 3,211 | |
Purchase of common treasury shares—stock plan exercises | (77) | | | | (1,456) | |
Net cash flows from financing activities | (109,984) | | | | (82,659) | |
Effect of exchange rate changes on cash and cash equivalents | (2,164) | | | | (3,385) | |
Net change in cash and cash equivalents | 89,513 | | | | 13,990 | |
Cash, cash equivalents, and restricted cash—beginning of year | 353,542 | | | | 313,210 | |
Cash, cash equivalents, and restricted cash—end of period | $ | 443,055 | | | | $ | 327,200 | |
| | | | | | | | | | | | |
| Thirty-nine weeks ended |
| September 25, 2021 | | | September 26, 2020 |
Cash flows from operating activities: | | | | |
Net earnings | $ | 169,911 | | | | $ | 105,703 | |
Adjustments to reconcile net earnings to net cash flows from operations: | | | | |
Depreciation and amortization | 67,764 | | | | 61,523 | |
Noncash loss on trading securities | — | | | | 39 | |
Impairment of property, plant and equipment | — | | | | 2,811 | |
Impairment of goodwill & intangible assets | — | | | | 16,638 | |
| | | | |
Stock-based compensation | 17,895 | | | | 8,736 | |
| | | | |
Defined benefit pension plan benefit | (11,051) | | | | (5,401) | |
Contribution to defined benefit pension plan | (970) | | | | (17,398) | |
Gain on sale of property, plant and equipment | (1,250) | | | | (60) | |
Equity in loss in nonconsolidated subsidiaries | 1,079 | | | | 755 | |
Deferred income taxes | (8,747) | | | | (3,750) | |
Changes in assets and liabilities: | | | | |
Receivables | (30,709) | | | | (26,298) | |
Inventories | (211,273) | | | | (32,992) | |
Prepaid expenses and other assets (current and non-current) | (21,589) | | | | (19,157) | |
Contract assets | (33,199) | | | | 28,597 | |
Accounts payable | 76,916 | | | | 63,627 | |
Accrued expenses | 15,523 | | | | 61,122 | |
Contract liabilities | 6,768 | | | | (1,475) | |
Other noncurrent liabilities | 10,228 | | | | 20,982 | |
Income taxes payable/refundable | 14,533 | | | | 9,044 | |
Net cash flows from operating activities | 61,829 | | | | 273,046 | |
Cash flows from investing activities: | | | | |
Purchase of property, plant and equipment | (80,509) | | | | (70,960) | |
Proceeds from sale of assets | 1,655 | | | | 911 | |
Acquisitions, net of cash acquired | (312,500) | | | | (15,862) | |
| | | | |
Settlement of net investment hedges | — | | | | 11,983 | |
Other, net | 1,891 | | | | 2,543 | |
Net cash flows from investing activities | (389,463) | | | | (71,385) | |
Cash flows from financing activities: | | | | |
Proceeds from short-term borrowings | 3,191 | | | | 4,251 | |
Payments on short-term borrowings | (23,654) | | | | (10,713) | |
Proceeds from long-term borrowings | 236,710 | | | | 88,872 | |
Principal payments on long-term borrowings | (66,128) | | | | (76,417) | |
| | | | |
| | | | |
Dividends paid | (30,794) | | | | (27,316) | |
Dividends to noncontrolling interest | — | | | | (5,642) | |
Purchase of noncontrolling interest | — | | | | (55,916) | |
Purchase of treasury shares | (24,101) | | | | (28,006) | |
Proceeds from exercises under stock plans | 22,747 | | | | 980 | |
Purchase of common treasury shares—stock plan exercises | (16,955) | | | | (77) | |
Net cash flows from financing activities | 101,016 | | | | (109,984) | |
Effect of exchange rate changes on cash and cash equivalents | (4,313) | | | | (2,164) | |
Net change in cash and cash equivalents | (230,931) | | | | 89,513 | |
Cash and cash equivalents—beginning of year | 400,726 | | | | 353,542 | |
Cash and cash equivalents—end of period | $ | 169,795 | | | | $ | 443,055 | |
See accompanying notes to condensed consolidated financial statements.statements
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock | | Additional paid-in capital | | Retained earnings | | Accumulated other comprehensive income (loss) | | Treasury stock | | Noncontrolling interest in consolidated subsidiaries | | Total shareholders’ equity |
Balance at 6/29/2019 (1) | $ | 27,900 | | | $ | 0 | | | $ | 2,123,754 | | | $ | (303,072) | | | $ | (728,680) | | | $ | 45,272 | | | $ | 1,165,174 | |
Net earnings | — | | | — | | | 38,045 | | | — | | | — | | | 2,119 | | | 40,164 | |
Other comprehensive income (loss) | — | | | — | | | — | | | (13,645) | | | — | | | (821) | | | (14,466) | |
Cash dividends declared ($0.375 per share) | — | | | — | | | (8,085) | | | — | | | — | | | — | | | (8,085) | |
Dividends to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | (2,090) | | | (2,090) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Purchase of treasury shares; 126,734 shares acquired | — | | | — | | | — | | | — | | | (16,822) | | | — | | | (16,822) | |
Stock plan exercises; 4,403 shares acquired | — | | | — | | | — | | | — | | | (629) | | | — | | | (629) | |
Stock options exercised; 12,586 shares issued | — | | | (2,514) | | | 2,190 | | | — | | | 1,791 | | | — | | | 1,467 | |
| | | | | | | | | | | | | |
Stock option expense | — | | | 600 | | | — | | | — | | | — | | | — | | | 600 | |
Stock awards; 223 shares issued | — | | | 1,914 | | | — | | | — | | | 5 | | | — | | | 1,919 | |
Balance at 9/28/2019 (1) | $ | 27,900 | | | $ | 0 | | | $ | 2,155,904 | | | $ | (316,717) | | | $ | (744,335) | | | $ | 44,480 | | | $ | 1,167,232 | |
Balance at June 27, 2020 | $ | 27,900 | | | $ | 0 | | | $ | 2,194,916 | | | $ | (332,486) | | | $ | (763,495) | | | $ | 25,867 | | | 1,152,702 | |
Net earnings | — | | | — | | | 39,342 | | | — | | | — | | | 886 | | | 40,228 | |
Other comprehensive income (loss) | — | | | — | | | — | | | 10,152 | | | — | | | 472 | | | 10,624 | |
Cash dividends declared ($0.45 per share) | — | | | — | | | (9,614) | | | — | | | — | | | — | | | (9,614) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Purchase of treasury shares; 60,645 shares acquired | — | | | — | | | — | | | — | | | (7,525) | | | — | | | (7,525) | |
Stock plan exercises; 580 shares acquired | — | | | — | | | — | | | — | | | (72) | | | — | | | (72) | |
Stock options exercised; 2,616 shares issued | — | | | 5,461 | | | (5,462) | | | — | | | 257 | | | — | | | 256 | |
| | | | | | | | | | | | | |
Stock option expense | — | | | 686 | | | — | | | — | | | — | | | — | | | 686 | |
Stock awards; 253 shares issued | — | | | 2,346 | | | — | | | — | | | 33 | | | — | | | 2,379 | |
Balance at September 26, 2020 | $ | 27,900 | | | $ | 8,493 | | | $ | 2,219,182 | | | $ | (322,334) | | | $ | (770,802) | | | $ | 27,225 | | | $ | 1,189,664 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock | | Additional paid-in capital | | Retained earnings | | Accumulated other comprehensive income (loss) | | Treasury stock | | Noncontrolling interest in consolidated subsidiaries | | Total shareholders’ equity |
Balance at June 27, 2020 | $ | 27,900 | | | $ | — | | | $ | 2,194,916 | | | $ | (332,486) | | | $ | (763,495) | | | $ | 25,867 | | | $ | 1,152,702 | |
Net earnings | — | | | — | | | 39,342 | | | — | | | — | | | 886 | | | 40,228 | |
Other comprehensive income (loss) | — | | | — | | | — | | | 10,152 | | | — | | | 472 | | | 10,624 | |
Cash dividends declared ($0.45 per share) | — | | | — | | | (9,614) | | | — | | | — | | | — | | | (9,614) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Purchase of treasury shares; 60,645 shares acquired | — | | | — | | | — | | | — | | | (7,525) | | | — | | | (7,525) | |
Stock plan exercises; 580 shares acquired | — | | | — | | | — | | | — | | | (72) | | | — | | | (72) | |
Stock options exercised; 2,616 shares issued | — | | | 5,461 | | | (5,462) | | | — | | | 257 | | | — | | | 256 | |
Stock option expense | — | | | 686 | | | — | | | — | | | — | | | — | | | 686 | |
Stock awards; 253 shares issued | — | | | 2,346 | | | — | | | — | | | 33 | | | — | | | 2,379 | |
Balance at September 26, 2020 | $ | 27,900 | | | $ | 8,493 | | | $ | 2,219,182 | | | $ | (322,334) | | | $ | (770,802) | | | $ | 27,225 | | | $ | 1,189,664 | |
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 income | — | | | — | | | — | | | (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 | |
(1) The retained earnings balance has been revised from the amounts previously reported as a result of the change in inventory valuation method from LIFO to FIFO. Refer to Note 1 for additional information.
See accompanying notes to the condensed consolidated financial statements.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Dollars in thousands)
(Unaudited)
| | | Common stock | | Additional paid-in capital | | Retained earnings | | Accumulated other comprehensive income (loss) | | Treasury stock | | Noncontrolling interest in consolidated subsidiaries | | Total shareholders’ equity | | Common stock | | Additional paid-in capital | | Retained earnings | | Accumulated other comprehensive income (loss) | | Treasury stock | | Noncontrolling interest in consolidated subsidiaries | | Total shareholders’ equity |
Balance at 12/29/2018 (1) | $ | 27,900 | | | $ | 0 | | | $ | 2,067,811 | | | $ | (303,185) | | | $ | (692,549) | | | $ | 75,761 | | | $ | 1,175,738 | | |
Net earnings | — | | | — | | | 113,868 | | | — | | | — | | | 4,042 | | | 117,910 | | |
Other comprehensive income (loss) | — | | | — | | | — | | | (13,532) | | | — | | | (652) | | | (14,184) | | |
Cash dividends declared ($1.125 per share) | — | | | — | | | (24,424) | | | — | | | — | | | — | | | (24,424) | | |
Dividends to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | (6,549) | | | (6,549) | | |
Impact of ASC 842 adoption | — | | | — | | | (8,886) | | | — | | | — | | | — | | | (8,886) | | |
| Purchase of noncontrolling interest | — | | | 277 | | | — | | | — | | | — | | | (28,122) | | | (27,845) | | |
Purchase of treasury shares; 433,463 shares acquired | — | | | — | | | — | | | — | | | (55,172) | | | — | | | (55,172) | | |
Stock plan exercises; 10,499 shares acquired | — | | | — | | | — | | | — | | | (1,456) | | | — | | | (1,456) | | |
Stock options exercised; 28,493 shares issued | — | | | (7,756) | | | 7,535 | | | — | | | 3,432 | | | — | | | 3,211 | | |
| Stock option expense | — | | | 2,056 | | | — | | | — | | | — | | | — | | | 2,056 | | |
Stock awards; 10,550 shares issued | — | | | 5,423 | | | — | | | — | | | 1,410 | | | — | | | 6,833 | | |
Balance at 9/28/2019 (1) | $ | 27,900 | | | $ | 0 | | | $ | 2,155,904 | | | $ | (316,717) | | | $ | (744,335) | | | $ | 44,480 | | | $ | 1,167,232 | | |
Balance at 12/28/2019 (1) | $ | 27,900 | | | $ | 0 | | | $ | 2,173,802 | | | $ | (313,422) | | | $ | (743,942) | | | $ | 45,407 | | | $ | 1,189,745 | | |
Balance at December 28, 2019 | | Balance at December 28, 2019 | $ | 27,900 | | | $ | — | | | $ | 2,173,802 | | | $ | (313,422) | | | $ | (743,942) | | | $ | 45,407 | | | $ | 1,189,745 | |
Net earnings | Net earnings | — | | | — | | | 104,878 | | | — | | | — | | | 825 | | | 105,703 | | Net earnings | — | | | — | | | 104,878 | | | — | | | — | | | 825 | | | 105,703 | |
Other comprehensive income (loss) | Other comprehensive income (loss) | — | | | — | | | — | | | (8,912) | | | — | | | 960 | | | (7,952) | | Other comprehensive income (loss) | — | | | — | | | — | | | (8,912) | | | — | | | 960 | | | (7,952) | |
Cash dividends declared ($1.35 per share) | Cash dividends declared ($1.35 per share) | — | | | — | | | (28,837) | | | — | | | — | | | — | | | (28,837) | | Cash dividends declared ($1.35 per share) | — | | | — | | | (28,837) | | | — | | | — | | | — | | | (28,837) | |
Dividends to noncontrolling interests | Dividends to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | (5,642) | | | (5,642) | | Dividends to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | (5,642) | | | (5,642) | |
Purchase of noncontrolling interest | Purchase of noncontrolling interest | — | | 0 | | | (30,661) | | | — | | — | | (19,450) | | | (50,111) | | Purchase of noncontrolling interest | — | | | — | | | (30,661) | | | — | | | — | | | (19,450) | | | (50,111) | |
Addition of noncontrolling interest | | Addition of noncontrolling interest | — | | | — | | | — | | | — | | | — | | | 5,125 | | | 5,125 | |
| Addition of noncontrolling interest | — | | | — | | | — | | | — | | | — | | | 5,125 | | | 5,125 | | |
Purchase of treasury shares; 251,136 shares acquired | Purchase of treasury shares; 251,136 shares acquired | — | | | — | | | — | | | — | | | (28,006) | | | — | | | (28,006) | | Purchase of treasury shares; 251,136 shares acquired | — | | | — | | | — | | | — | | | (28,006) | | | — | | | (28,006) | |
Stock plan exercises; 617 shares acquired | Stock plan exercises; 617 shares acquired | — | | | — | | | — | | | — | | | (77) | | | — | | | (77) | | Stock plan exercises; 617 shares acquired | — | | | — | | | — | | | — | | | (77) | | | — | | | (77) | |
Stock options exercised; 4,100 shares issued | Stock options exercised; 4,100 shares issued | — | | | 244 | | | — | | | — | | | 736 | | | — | | | 980 | | Stock options exercised; 4,100 shares issued | — | | | 244 | | | — | | | — | | | 736 | | | — | | | 980 | |
| Stock option expense | Stock option expense | — | | | 1,909 | | | — | | | — | | | — | | | — | | | 1,909 | | Stock option expense | — | | | 1,909 | | | — | | | — | | | — | | | — | | | 1,909 | |
Stock awards; 8,957 shares issued | Stock awards; 8,957 shares issued | — | | | 6,340 | | | — | | | — | | | 487 | | | — | | | 6,827 | | Stock awards; 8,957 shares issued | — | | | 6,340 | | | — | | | — | | | 487 | | | — | | | 6,827 | |
Balance at 9/26/2020 (1) | $ | 27,900 | | | $ | 8,493 | | | $ | 2,219,182 | | | $ | (322,334) | | | $ | (770,802) | | | $ | 27,225 | | | $ | 1,189,664 | | |
Balance at September 26, 2020 | | Balance at September 26, 2020 | $ | 27,900 | | | $ | 8,493 | | | $ | 2,219,182 | | | $ | (322,334) | | | $ | (770,802) | | | $ | 27,225 | | | $ | 1,189,664 | |
Balance at December 26, 2020 | | Balance at December 26, 2020 | $ | 27,900 | | | $ | 335 | | | $ | 2,245,035 | | | $ | (309,786) | | | $ | (781,422) | | | $ | 25,774 | | | $ | 1,207,836 | |
Net earnings | | Net earnings | — | | | — | | | 168,774 | | | — | | | — | | | 1,137 | | | 169,911 | |
Other comprehensive income | | Other comprehensive income | — | | | — | | | — | | | (436) | | | — | | | (318) | | | (754) | |
Cash dividends declared ($1.50 per share) | | Cash dividends declared ($1.50 per share) | — | | | — | | | (31,848) | | | — | | | — | | | — | | | (31,848) | |
| | Purchase of treasury shares; 103,056 shares acquired | | Purchase of treasury shares; 103,056 shares acquired | — | | | — | | | — | | | — | | | (24,100) | | | — | | | (24,100) | |
Stock plan exercises; 71,412 shares acquired | | Stock plan exercises; 71,412 shares acquired | — | | | — | | | — | | | — | | | (16,955) | | | — | | | (16,955) | |
Stock options exercised; 164,872 shares issued | | Stock options exercised; 164,872 shares issued | — | | | (10,294) | | | (3,886) | | | — | | | 36,927 | | | — | | | 22,747 | |
Stock option expense | | Stock option expense | — | | | 1,885 | | | — | | | — | | | — | | | — | | | 1,885 | |
Stock awards; 9,554 shares issued | | Stock awards; 9,554 shares issued | — | | | 14,742 | | | — | | | — | | | 1,268 | | | — | | | 16,010 | |
Balance at September 25, 2021 | | Balance at September 25, 2021 | $ | 27,900 | | | $ | 6,668 | | | $ | 2,378,075 | | | $ | (310,222) | | | $ | (784,282) | | | $ | 26,593 | | | $ | 1,344,732 | |
(1) The retained earnings balance has been revised from the amounts previously reported as a result of the change in inventory valuation method from LIFO to FIFO. Refer to Note 1 for additional information.
See accompanying notes to the condensed consolidated financial statements.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Condensed Consolidated Financial Statements
The Condensed Consolidated Balance Sheet as of September 26, 2020,25, 2021, the Condensed Consolidated Statements of Earnings, Comprehensive Income, and Shareholders' Equity for the thirteen and thirty-nine weeks ended September 26, 202025, 2021 and September 28, 2019,26, 2020, and the Condensed Consolidated StatementsStatement of Cash Flows for the thirty-nine week periodsweeks then ended have been prepared by the Company,Valmont Industries Inc. (the Company), without audit. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial statements as of September 26, 202025, 2021 and for all periods presented.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2019. The accounting policies and methods of computation followed in these interim financial statements are the same as those followed in the financial statements for the year ended December 28, 2019 with the exception of the change in method of accounting for certain inventory, previously accounted for on the LIFO basis, so that now all inventory is valued on the FIFO basis. In addition, the Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326)and early adopted Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant's Securities as released by the Securities and Exchange Commission that are discussed further at the end of footnote 1.26, 2020. The results of operations for the period ended September 26, 202025, 2021 are not necessarily indicative of the operating results for the full year.
Inventories
Inventory is valued at the lower of cost, determined on the first-in, first-out (FIFO) method or market. Finished goods and manufactured goods inventories include the costs of acquired raw materials and related factory labor and overhead charges required to convert raw materials to manufactured and finished goods.
Inventories consisted of the following:
| | | | | | | | | | | |
| September 26, 2020 | | December 28, 2019 |
Raw materials and purchased parts | $ | 153,708 | | | $ | 158,314 | |
Work-in-process | 25,335 | | | 38,088 | |
Finished goods and manufactured goods | 269,045 | | | 221,968 | |
| 448,088 | | | 418,370 | |
Effective December 29, 2019, the first day of fiscal 2020, the Company changed its method of accounting for certain of its inventory, previously accounted for on the LIFO basis, so that now all inventory is valued on the FIFO basis. The Company believes this change is preferable as it provides a better matching of costs with the physical flow of goods, more accurately reflects the current value of inventory presented on the Company’s Condensed Consolidated Balance Sheets, and standardizes the Company’s inventory valuation methodology.
In accordance with ASC 250, Accounting Changes and Error Corrections, this change in method of accounting for certain inventories has been retrospectively applied to the earliest period presented. As a result of the retrospective change, the cumulative effect to retained earnings as of December 29, 2018 and December 28, 2019 was an increase of $40,215 and $32,854, respectively. This change did not affect the Company's previously reported cash flows from operating, investing, or financing activities.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
The impact of the change from LIFO to FIFO on the Company’s Condensed Consolidated Statements of Earnings and Comprehensive Income for the thirteen and thirty-nine weeks ended September 28, 2019 is as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | Thirty-nine weeks ended | |
(in 000's, except earnings per share) | As Previously Reported | Retrospectively Adjusted | Adjustment | | As Previously Reported | Retrospectively Adjusted | Adjustment |
Cost of sales | 514,254 | 517,053 | 2,799 | | 1,561,721 | 1,567,260 | 5,539 |
Operating income | 63,863 | 61,064 | (2,799) | | 182,679 | 177,140 | (5,539) |
Income tax expense | 13,763 | 13,063 | (700) | | 40,151 | 38,766 | (1,385) |
Net earnings attributed to Valmont Industries, Inc | 40,144 | 38,045 | (2,099) | | 118,022 | 113,868 | (4,154) |
Comprehensive (loss) income | 27,797 | 25,698 | (2,099) | | 107,880 | 103,726 | (4,154) |
Net earnings per diluted share | 1.85 | 1.75 | (0.10) | | 5.41 | 5.22 | (0.19) |
The Company applied this change retrospectively to the earliest period presented. The resulting impact to the Condensed Consolidated Balance Sheet as of December 28, 2019 is as follows:
| | | | | | | | | | | |
| December 28, 2019 |
Consolidated Balance Sheet | As Previously Reported | Adjustment | Retrospectively Adjusted |
Inventory | 374,565 | 43,805 | 418,370 |
Deferred income tax liability | 47,955 | 10,951 | 58,906 |
Retained earnings | 2,140,948 | 32,854 | 2,173,802 |
| | | | | | | | | | | |
| September 25, 2021 | | December 26, 2020 |
Raw materials and purchased parts | $ | 209,090 | | | $ | 155,512 | |
Work-in-process | 45,213 | | | 33,632 | |
Finished goods and manufactured goods | 401,600 | | | 259,797 | |
Total Inventory | $ | 655,903 | | | $ | 448,941 | |
| | | |
| | | |
Income Taxes
Earnings beforebefore income taxes for the thirteen and thirty-nine weeks ended September 26, 202025, 2021 and September 28, 2019,26, 2020, were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Thirty-nine weeks ended |
| 2020 | | 2019 | | 2020 | | 2019 |
United States | $ | 33,610 | | | $ | 42,098 | | | $ | 141,347 | | | $ | 128,878 | |
Foreign | 18,978 | | | 11,129 | | | 4,283 | | | 27,798 | |
| $ | 52,588 | | | $ | 53,227 | | | $ | 145,630 | | | $ | 156,676 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Thirty-nine weeks ended |
| 2021 | | 2020 | | 2021 | | 2020 |
United States | $ | 47,784 | | | $ | 33,610 | | | $ | 156,028 | | | $ | 141,347 | |
Foreign | 20,909 | | | 18,978 | | | 61,284 | | | 4,283 | |
| $ | 68,693 | | | $ | 52,588 | | | $ | 217,312 | | | $ | 145,630 | |
| | | | | | | |
| | | | | | | |
Pension Benefits
The Company incurs expenses in connection with the Delta Pension Plan ("DPP"). The DPP was acquired as part of the Delta plc acquisition in fiscal 2010 and has no members that are active employees. In order to measure expense and the related benefit obligation, various assumptions are made including discount rates used to value the obligation, expected return on plan assets used to fund these expenses and estimated future inflation rates. These assumptions are based on historical experience as well as current facts and circumstances. An actuarial analysis is used to measure the expense and liability associated with pension benefits.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
experience as well as current facts and circumstances. An actuarial analysis is used to measure the expense and liability associated with pension benefits.
The components of the net periodic pension (benefit) expense for the thirteen and thirty-nine weeks ended September 26, 202025, 2021 and September 28, 201926, 2020 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Thirty-nine weeks ended |
Net periodic (benefit) expense: | 2020 | | 2019 | | 2020 | | 2019 |
Interest cost | $ | 3,285 | | | $ | 4,075 | | | $ | 9,569 | | | $ | 12,602 | |
Expected return on plan assets | (5,887) | | | (4,815) | | | (17,149) | | | (14,893) | |
Amortization of actuarial loss | 748 | | | 617 | | | 2,179 | | | 1,909 | |
Net periodic (benefit) expense | $ | (1,854) | | | $ | (123) | | | $ | (5,401) | | | $ | (382) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Thirty-nine weeks ended |
Net periodic (benefit) expense: | 2021 | | 2020 | | 2021 | | 2020 |
Interest cost | $ | 2,479 | | | $ | 3,285 | | | $ | 7,508 | | | $ | 9,569 | |
Expected return on plan assets | (6,957) | | | (5,887) | | | (21,061) | | | (17,149) | |
Amortization of actuarial loss | 827 | | | 748 | | | 2,502 | | | 2,179 | |
Net periodic (benefit) expense | $ | (3,651) | | | $ | (1,854) | | | $ | (11,051) | | | $ | (5,401) | |
Stock Plans
The Company maintains stock-based compensation plans approved by the shareholders, which provide that the Human Resource Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and bonuses of common stock. At September 26, 2020, 1,189,407 25, 2021,453,718shares of common stock remained available for issuance under the plans.
Under the plans, the exercise price of each option equals the closing market price at the date of the grant. Options vest beginning on the first anniversary of the grant in equal amounts over three years to six years or on the grant's fifth anniversary. Expiration of grants is seven years to ten years from the date of grant. Restricted stock units and awards generally vest in equal installments over three years beginning on the first anniversary of the grant.
The Company's compensation expense (included in selling, general and administrative expenses) and associated income tax benefits related to stock options and restricted stock for the thirteen and thirty-nine weeks ended September 26, 202025, 2021 and September 28, 2019,26, 2020, respectively, were as follows: | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Thirty-nine weeks ended |
| 2021 | | 2020 | | 2021 | | 2020 |
Compensation expense | $ | 8,947 | | | $ | 3,065 | | | $ | 17,895 | | | $ | 8,736 | |
Income tax benefits | 2,237 | | | 766 | | | 4,474 | | | 2,184 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Thirty-nine weeks ended |
| 2020 | | 2019 | | 2020 | | 2019 |
Compensation expense | $ | 3,065 | | | $ | 2,519 | | | $ | 8,736 | | | $ | 8,889 | |
Income tax benefits | 766 | | | 630 | | | 2,184 | | | 2,222 | |
During the third quarter of 2021, the Company granted approximately 143,859 restricted shares, worth approximately $38,000, to certain employees of Prospera Technologies, Ltd. ("Prospera"). These restricted shares vest in equal installments over four years, and require the employees to continue employment over those four years. As such, the related compensation expense will be incurred over the vesting period.Fair Value
The Company applies the provisions of Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820 apply to other accounting pronouncements that require or permit fair value measurements. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
ASC 820 establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.
Trading Securities: The assets and liabilities recorded for the investments held in the Valmont Deferred Compensation Plan at September 26, 202025, 2021 of $33,709$29,481 ($36,29035,125 at December 28, 2019)26, 2020) represent mutual funds, invested in debt and equity securities, classified as trading securities in accordance with Accounting Standards Codification ("ASC") 320, Accounting for Certain Investments in Debt and Equity Securities, considering the employee's ability to change investment allocation of their deferred compensation at any time. The Company's ownership of shares in Delta EMD Pty. Ltd. (JSE:DTA) is also classified as trading securities. The shares are valued at $172$99 and $210$202 as of September 26, 202025, 2021 and December 28, 2019,26, 2020, respectively, which is the estimated fair value. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.
Derivative Financial Instruments: The fair value of foreign currency and commodity forward contracts, and cross currency contracts is based on a valuation model that discounts cash flows resulting from the differential between the contract price and the market-based forward rate. | | | | | | | | | | | | | | | | | | | | | | | |
| | | Fair Value Measurement Using: |
| Carrying Value September 25, 2021 | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) |
Assets: | | | | | | | |
Trading Securities | $ | 29,580 | | | $ | 29,580 | | | $ | — | | | $ | — | |
Derivative financial instruments, net | 7,001 | | | — | | | 7,001 | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Fair Value Measurement Using: |
| Carrying Value September 26, 2020 | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) |
Assets: | | | | | | | |
Trading Securities | $ | 33,881 | | | $ | 33,881 | | | $ | 0 | | | $ | 0 | |
Derivative financial instruments, net | 3,548 | | | 0 | | | 3,548 | | | 0 | |
| | | Fair Value Measurement Using: | | Fair Value Measurement Using: |
| | Carrying Value December 28, 2019 | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Carrying Value December 26, 2020 | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) |
Assets: | Assets: | | | | | | | | Assets: | | | | | | | |
Trading Securities | Trading Securities | $ | 36,500 | | | $ | 36,500 | | | $ | 0 | | | $ | 0 | | Trading Securities | $ | 35,327 | | | $ | 35,327 | | | $ | — | | | $ | — | |
Liabilities: | | Liabilities: | |
Derivative financial instruments, net | Derivative financial instruments, net | 3,247 | | | 0 | | | 3,247 | | | 0 | | Derivative financial instruments, net | (5,911) | | | — | | | (5,911) | | | — | |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
Long-Lived Assets
The Company's other non-financial assets include goodwill and other intangible assets, which are classified as Level 3 items. These assets are measured at fair value on a non-recurring basis as part of annual impairment testing. Note 4 to these condensed consolidated financial statements contain additional information related to goodwill and intangible asset impairments recognized in fiscal 2020.
The Company is monitoring the outlook for wind energy in Northern Europe which would affect the net sales and gross profit assumptions in the cash flow projections for the Company’s offshore and other complex steel structures reporting unit. This reporting unit has net property, plant, and equipment of $38,694, the Valmont SM trade name of $8,386, and a customer relationship, net of accumulated amortization, of $4,927. If the market outlook declines further, the Company will have to analyze the recoverability of the long-lived assets which may result in the recognition of an impairment.
Leases
The Company's operating leases are included in other assets and operating lease liabilities. During the second quarter of 2021, the Company commenced on a new corporate headquarters operating lease with straight-line annual expense of approximately $5,100, a 2% annual increase in lease payment, and a 25 year term. In recognition of this lease, an operating lease asset of $71,853 and an operating lease long-term liability of $71,196 was incurred. These amounts are included within other assets and operating lease liabilities, respectively, in the Condensed Consolidated Balance Sheets as of September 25, 2021.
Comprehensive Income (Loss)
Comprehensive income (loss) includes net earnings, currency translation adjustments, certain derivative-related activity and changes in net actuarial gains/losses from a pension plan. Results of operations for foreign subsidiaries are translated using the average exchange rates during the period. Assets and liabilities are translated at the exchange rates in effect on the balance sheet dates. Accumulated other comprehensive income (loss) consisted of the following at September 26, 202025, 2021 and December 28, 2019:
| | | | | | | | | | | | | | | | | | | | | | | |
| Foreign Currency Translation Adjustments | | Gain on Hedging Activities | | Defined Benefit Pension Plan | | Accumulated Other Comprehensive Loss |
Balance at December 28, 2019 | $ | (232,575) | | | $ | 14,076 | | | $ | (94,923) | | | $ | (313,422) | |
Current-period comprehensive income (loss) | (17,062) | | | 8,150 | | | 0 | | | (8,912) | |
| | | | | | | |
Balance at September 26, 2020 | $ | (249,637) | | | $ | 22,226 | | | $ | (94,923) | | | $ | (322,334) | |
26, 2020: | | | | | | | | | | | | | | | | | | | | | | | |
| Foreign Currency Translation Adjustments | | Gain on Hedging Activities | | Defined Benefit Pension Plan | | Accumulated Other Comprehensive Loss |
Balance at December 26, 2020 | $ | (213,064) | | | $ | 15,550 | | | $ | (112,272) | | | $ | (309,786) | |
Current-period comprehensive income (loss) | (16,643) | | | 14,369 | | | 1,838 | | | (436) | |
Balance at September 25, 2021 | $ | (229,707) | | | $ | 29,919 | | | $ | (110,434) | | | $ | (310,222) | |
Revenue Recognition
The Company determines the appropriate revenue recognition for our contracts by analyzing the type, terms and conditions of each contract or arrangement with a customer. Contracts with customers for all businesses are fixed-price with sales tax excluded from revenue, and do not include variable consideration. Discounts included in contracts with customers, typically early pay discounts, are recorded as a reduction of net sales in the period in which the sale is recognized. Contract revenues are classified as product when the performance obligation is related to the manufacturing of goods. Contract revenues are classified as service when the performance obligation is the performance of a service. Service revenue is primarily related to the Coatings segment.
Customer acceptance provisions exist only in the design stage of our products and acceptance of the design by the customer is required before the project is manufactured and delivered to the customer. The Company is not entitled to any compensation solely based on design of the product and does not recognize revenue associated with the design stage. There is one performance obligation for revenue recognition. No general rights of return exist for customers once the product has been delivered and the Company establishes provisions for estimated warranties. The Company does not sell extended warranties for any of its products.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
Shipping and handling costs associated with sales are recorded as cost of goods sold. The Company elected to use the practical expedient of treating freight as a fulfillment obligation instead of a separate performance obligation and ratably recognize freight expense as the structure is being manufactured, when the revenue from the associated customer contract is being recognized over time. With the exception of the Utility segment and the wireless communication structures product line, the Company’s inventory is interchangeable for a variety of each segment’s customers. The Company elected the practical expedient to not disclose the partially satisfied performance obligation at the end of the period when the contract has an original expected duration of one year or less. In addition, the Company elected the practical expedient to not adjust the amount of consideration to be received in a contract for any significant financing component if payment is expected within twelve months of transfer of control of goods or services; the Company expects all consideration to be received in one year or less at contract inception.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
services.Segment and Product Line Revenue Recognition
The global Utility segment revenues are derived from manufactured steel and concrete structures for the North America utility industry and offshore and other complex structures used in energy generation and distribution outside of the United States. Steel and concrete utility structures are engineered to customer specifications resulting in limited ability to sell the structure to a different customer if an order is canceled after production commences. The continuous transfer of control to the customer is evidenced either by contractual termination clauses or by our rights to payment for work performed to-date plus a reasonable profit as the products do not have an alternative use to the Company. Since control is transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment. For our steel and concrete utility and wireless communication structure product lines, we generally recognize revenue on an inputs basis, using total production hours incurred to-date for each order as a percentage of total hours estimated to produce the order. The completion percentage is applied to the order’s total revenue and total estimated costs to determine reported revenue, cost of goods sold and gross profit. Production of an order, once started, is typically completed within three months. Revenue from the offshore and other complex structures business is also recognized using an inputs method, based on the ratio of costs incurred to dateto-date to the total estimated costs at completion of the performance obligation. External sales agents are used in certain sales of steel and concrete structures; the Company has chosen to use the practical expedient to expense estimated commissions owed to third parties by recognizing them proportionately as the goods are manufactured.
The global ESS segment revenues are derived from the manufacture and distribution of engineered metal, composite structurespoles, towers, and components for lighting, transportation, and traffic and roadwayhighway safety, engineered access systems, and wireless communication.communication markets. For the lighting, transportation, and traffic and roadwayhighway safety product lines, revenue is recognized upon shipment or delivery of goods to the customer depending on contract terms, which is the same point in time that the customer is billed. For Access Systems, revenue is generally recognized upon delivery of goods to the customer which is the same point in time that the customer is billed. The wireless communication product line has large regional customers who have unique product specifications for communication structures. When the customer contract includes a cancellation clause that would require them to pay for work completed plus a reasonable margin if an order was canceled, revenue is recognized over time based on hours worked as a percent of total estimated hours to complete production. For the remaining wireless communication product line customers which do not provide a contractual right to bill for work completed on a canceled order, revenue is recognized upon shipment or delivery of the goods to the customer which is the same point in time that the customer is billed.
The global Coatings segment revenues are derived by providing coating services to customers’ products, which include galvanizing, anodizing, and powder coating. Revenue is recognized once the coating service has been performed and the goods are ready to be picked up or delivered to the customer which is the same time that the customer is billed.
The global Irrigation segment revenues are derived from the manufacture of agricultural irrigation equipment and related parts and services for the agricultural industry and tubular products for industrial customers. Revenue recognition for the irrigation segment is generally upon shipment of the goods to the customer which is the same point in time that the customer is billed. The remote monitoring subscription services are primarily billed annually and revenue is recognized on a straight-line basis over the subsequent twelve months.
Disaggregation of revenue by product line is disclosed in the Segment footnote. A breakdown by segment of revenue recognized over time and at a point in time for the thirteen and thirty-nine weeks ended September 26, 202025, 2021 and September 28, 201926, 2020 is as follows:
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
| | | Point in Time | | Over Time | | Point in Time | | Over Time | | Point in Time | | Over Time | | Point in Time | | Over Time |
| | Thirteen weeks ended September 26, 2020 | | Thirteen weeks ended September 26, 2020 | | Thirty-nine weeks ended September 26, 2020 | | Thirty-nine weeks ended September 26, 2020 | | Thirteen weeks ended September 25, 2021 | | Thirteen weeks ended September 25, 2021 | | Thirty-nine weeks ended September 25, 2021 | | Thirty-nine weeks ended September 25, 2021 |
Utility Support Structures | Utility Support Structures | $ | 43,287 | | | $ | 229,192 | | | $ | 56,830 | | | $ | 667,070 | | Utility Support Structures | $ | 12,834 | | | $ | 263,668 | | | $ | 28,255 | | | $ | 768,808 | |
Engineered Support Structures | Engineered Support Structures | 244,785 | | | 10,160 | | | 697,491 | | | 33,693 | | Engineered Support Structures | 271,277 | | | 9,772 | | | 745,125 | | | 27,420 | |
Coatings | Coatings | 68,698 | | | 0 | | | 199,955 | | | 0 | | Coatings | 74,906 | | | — | | | 224,102 | | | — | |
Irrigation | Irrigation | 133,999 | | | 3,849 | | | 430,729 | | | 11,210 | | Irrigation | 230,273 | | | 6,052 | | | 729,813 | | | 14,774 | |
| Total | Total | $ | 490,769 | | | $ | 243,201 | | | $ | 1,385,005 | | | $ | 711,973 | | Total | $ | 589,290 | | | $ | 279,492 | | | $ | 1,727,295 | | | $ | 811,002 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Point in Time | | Over Time | | Point in Time | | Over Time |
| Thirteen weeks ended September 26, 2020 | | Thirteen weeks ended September 26, 2020 | | Thirty-nine weeks ended September 26, 2020 | | Thirty-nine weeks ended September 26, 2020 |
Utility Support Structures | $ | 43,287 | | | $ | 229,192 | | | $ | 56,830 | | | $ | 667,070 | |
Engineered Support Structures | 244,785 | | | 10,160 | | | 697,491 | | | 33,693 | |
Coatings | 68,698 | | | — | | | 199,955 | | | — | |
Irrigation | 133,999 | | | 3,849 | | | 430,729 | | | 11,210 | |
Total | $ | 490,769 | | | $ | 243,201 | | | $ | 1,385,005 | | | $ | 711,973 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| Point in Time | | Over Time | | Point in Time | | Over Time |
| Thirteen weeks ended September 28, 2019 | | Thirteen weeks ended September 28, 2019 | | Thirty-nine weeks ended September 28, 2019 | | Thirty-nine weeks ended September 28, 2019 |
Utility Support Structures | $ | 3,418 | | | $ | 200,778 | | | $ | 43,642 | | | $ | 612,821 | |
Engineered Support Structures | 252,501 | | | 13,993 | | | 713,574 | | | 38,454 | |
Coatings | 76,922 | | | 0 | | | 228,242 | | | 0 | |
Irrigation | 139,093 | | | 3,635 | | | 436,907 | | | 9,710 | |
| | | | | | | |
Total | $ | 471,934 | | | $ | 218,406 | | | $ | 1,422,365 | | | $ | 660,985 | |
The Company's contract asset as of September 25, 2021 and December 26, 2020 was $155,417 and December 28, 2019 was $113,254 and $141,322,$123,495,
respectively. Both steel and concrete utility customers are generally invoiced upon shipment or delivery of the goods to the customer's specified location with few customers that make up-front or progress payments. The offshore and complex steel structures business invoices customers a number of ways including advanced billings, progress billings, and billings upon shipment.
At September 25, 2021 and December 26, 2020, and December 28, 2019, thetotal contract liabilities for revenue recognized over time was $153,619were $203,198 and $117,945,$170,919, respectively. At September 2020, $116,47025, 2021, $138,286 is recorded as contract liabilities and $37,149$64,912 is recorded as other noncurrent liabilities on the condensed consolidated balance sheets. During the thirteen and thirty-nine weeks ended September 26, 2020,25, 2021, the Company recognized $18,981 and $88,350 of revenue that was included in the liability as of December 26, 2020. In the thirteen and thirty-nine weeks ended September 26, 2020, the Company recognized $16,333 and$55,610 $55,610 of revenue that was included in the liability as of December 28, 2019. In the thirteen and thirty-nine weeks ended September 28, 2019, the Company recognized $314 and $2,242 of revenue that was included in the liability as of December 29, 2018. The revenue recognized was due to applying advance payments received for performance obligations completed during the period. At September 25, 2021, the Company had $124,767 of remaining performance obligations on contracts with an original expected duration of one year or more and expects to complete the remaining performance obligations on these contracts within the next 12 to 24 months.
Recently Adopted Accounting Pronouncements and Guarantors Disclosures
In June 2016,December 2019, the FASB issued ASUAccounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326)2018-14 (ASU 2019-12), MeasurementIncome Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting and disclosure requirements for income taxes by clarifying existing guidance to improve consistency in application of Credit Losses on Financial Instruments. The standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables. This update was intended to provide financial statement users with more decision-useful information about the expected credit losses.Accounting Standards Codification (ASC) 740. The Company adopted this ASU instandard on the first quarterday of 2020. The adoption of the ASU No. 2016-13fiscal 2021 and it did not have a significantmaterial impact on the Company's condensed consolidated financial statements.
Recently Issued Accounting Pronouncements (not yet adopted)
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
The Company early adoptedIn March 2020, the FASB issued Accounting Standards Update No. 2020-04 (ASU 2020-04), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Disclosures About GuarantorsReporting, which provides optional expedients and Issuers of Guaranteed Securitiesexceptions for applying GAAP principles to contracts, hedging relationships, and Affiliates Whose Securities Collateralize a Registrant’s Securities rules as releasedother transactions that reference London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued due to reference rate reform. . In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, which clarified that certain optional expedients and exceptions in Topic 848 apply to derivative instruments that are affected by the Securities and Exchange Commission on March 2, 2020, which simplify the disclosure requirements relateddiscounting transition due to the Company’s registered debt securities, guaranteed by certain of its subsidiaries, under Rule 3-10 and Rule 13-01 of Regulation S-X. The final rules permit the simplified disclosures to be provided either in a footnote to the Company’s consolidated financial statements or in management’s discussion and analysis of financial condition and results of operations.reference rate reform. The Company has electednot used any of the accommodations to provide the simplified disclosure within Management’s Discussion and Analysis of Financial Condition and Results of Operations.date, but may use them up until December 31, 2022.
(2) ACQUISITIONS
On May 12, 2021, the Company acquired the outstanding shares of Prospera, an artificial intelligence company focused on machine learning and computer vision in agriculture, for $300,000 in cash (net of cash acquired). The acquisition of Prospera, located in Tel Aviv, Israel, allows the Company to accelerate innovation with machine learning for agronomy and will be reported in the Irrigation segment. The preliminary fair values assigned were $269,859 for goodwill, $37,300 for developed technology, trade name of $2,900, property, plant, and equipment of $1,063, deferred tax liability of $9,246, and the remainder to net working capital. Goodwill is not deductible for tax purposes and the developed technology asset will be amortized over 5 years. The amount allocated to goodwill was primarily attributable to anticipated synergies and other intangibles that do not qualify for separate recognition. The Company expects to finalize the purchase price allocation in the fourth quarter of 2021.
On April 20, 2021 the Company acquired the assets of PivoTrac for $12,500 in cash. The agreed upon purchase price was $14,000, with $1,500 being held back for seller representations and warranties that will be settled within 12 months of the acquisition date. The acquisition of PivoTrac, located in Texas, allows the Company to advance its technology strategy and increase its number of connected agricultural devices and will be reported in the Irrigation segment. The preliminary fair values assigned were $10,800 for goodwill, $2,627 for customer relationships, and the remainder is net working capital. Goodwill is not deductible for tax purposes and the customer relationship will be amortized over 10 years. The Company expects the purchase price allocation to be finalized in the second quarter of 2022.
On May 29, 2020, the Company acquired 55% of Energia Solar do Brasil ("Solbras") for $4,308. Approximately $646 of the purchase price iswas contingent on seller representations and warranties that will bewas settled within 12 monthsfor the full amount in the second quarter of the acquisition date.2021. Solbras is a leading provider of solar energy solutions for agriculture. In the preliminary purchase price allocation, goodwill of $3,341 and customer relationships of $3,718 were recorded and the remainder is net working capital. Goodwill is not deductible for tax purposes and the customer relationship will be amortized over 8 years. The acquisition of Solbras, located in Brazil, allows the Company to expand its product offerings in the Irrigation segment to include not only pivots, but also a sustainable and low-cost energy source to provide electricity to the units. The Company expects to finalizefinalized the purchase price allocation in the fourth quarter of 2020. Proforma disclosures were omitted as this business does not have a significant impact on the Company's financial results.
On May 13, 2019,March 6, 2020, the Company acquired 75% of KC Utility Packaging, LLC for $4,200. Approximately $400 of the assetspurchase price was contingent on seller representations and warranties and was settled for the full amount in the first quarter of Connect-It Wireless, Inc. ("Connect-It") for $6,034 in cash. Connect-It operates in Florida and is a manufacturer and distributor of wireless site components and safety products.2021. The Company name was subsequently changed to Valmont Substations LLC. The acquisition was made to expand the Company's utility substation product offering. In the purchase price allocation, goodwill of $3,299 and$1,100, customer relationships of $828$4,000, and other intangibles of $500 were recorded and the remainder is net working capital. A portion of the goodwill is deductible for tax purposes. Connect-It is included in the ESS segment and was acquired to expand the Company's wireless component distribution network.recorded. The Company finalized the purchase price allocation in the fourth quarter of 2019.2020.
On February 11, 2019,Proforma disclosures were omitted for these acquisitions as the Company acquiredthey do not have a significant impact on the outstanding shares of United Galvanizing ("United"), a provider of coatings services with an agreed upon purchase price of $28,000, with $2,000 being contingent on seller representations and warranties that was settled in the first quarter of 2020 for $1,522. On December 31, 2018, the Company acquired the assets of Larson Camouflage ("Larson"), an industry leading provider of architectural and camouflage concealment solutions for the wireless telecommunication market with an agreed upon purchase price of $34,562, with 10% being held back for seller representations and warranties that was settled in the first quarter of 2020 for $3,481.Company's financial results.
Acquisitions of Noncontrolling Interests
In February 2020, the Company acquired the remaining 49% of AgSense that it did not own for $43,983, which includes a holdback payment of $2,200 that was made in the second quarter of 2020. The Company finalized the accounting for owning 100% of AgSense in the second quarter of 2020 which resulted in the recognition of a deferred tax asset of
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
approximately $7,700. In the first quarter of 2020, the Company acquired 16% of the remaining 25% that it did not own of Convert Italia for a cash payment of $11,750. The purchase agreement also settled the escrow funds which the Company had paid at date of acquisition. In April 2019, the Company acquired the remaining 4.8% of Valmont SM that it did not own for $4,763.
As these transactions were for the acquisition of all or part of the remaining shares of a consolidated subsidiary with no change in control, they were recorded within shareholders' equity and as a financing activity in the Condensed Consolidated Statements of Cash Flows.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
(3) RESTRUCTURING ACTIVITIES
TheIn 2020, the Company is executing a restructuring program focused onexecuted certain regional restructuring activities (the "2020 Plan") of up to $20,000 expected to occur across allprimarily in the ESS and Utility segments to reduce employment levels (includingand a U.S. specific early retirement program for administrative employees)covering all segments. The 2020 Plan included the closure of 1 U.S. Coatings facility and exit under-performing locations.
The following pre-tax expensesrestructuring activities were recognized duringcompleted by the end of 2020. For the third quarter of 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | ESS | | Utility | | Coatings | | Corporate | | Total |
Severance | | $ | 0 | | | $ | 0 | | | $ | 289 | | | $ | 0 | | | $ | 289 | |
Other cash restructuring expenses | | 0 | | | 267 | | | 564 | | | 0 | | | 831 | |
Asset impairments | | 0 | | | 312 | | | 241 | | | 0 | | | 553 | |
Total cost of sales | | 0 | | | 579 | | | 1,094 | | | 0 | | | 1,673 | |
| | | | | | | | | | |
Severance | | 0 | | | 0 | | | 30 | | | 0 | | | 30 | |
Other cash restructuring expenses | | 902 | | | 0 | | | 160 | | 145 | | | 1,207 | |
| | | | | | | | | | |
Total selling, general and administrative expenses | | 902 | | | 0 | | | 190 | | | 145 | | | 1,237 | |
Consolidated total | | $ | 902 | | | $ | 579 | | | $ | 1,284 | | | $ | 145 | | | $ | 2,910 | |
In theand first nine-monthsthree quarters of 2020, the Company recognized the following pre-taxrecorded restructuring expenses:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | ESS | | Utility | | Coatings | | Corporate | | Total |
Severance | | $ | 399 | | | $ | 0 | | | $ | 424 | | | $ | 0 | | | $ | 823 | |
Other cash restructuring expenses | | 48 | | | 1,070 | | | 596 | | | 0 | | | 1,714 | |
Asset impairments | | 0 | | | 2,570 | | | 241 | | 0 | | | 2,811 | |
Total cost of sales | | 447 | | | 3,640 | | | 1,261 | | | 0 | | | 5,348 | |
| | | | | | | | | | |
Severance | | 242 | | | 613 | | | 85 | | | 221 | | | 1,161 | |
Other cash restructuring expenses | | 1,675 | | | 0 | | | 160 | | | 145 | | | 1,980 | |
| | | | | | | | | | |
Total selling, general and administrative expenses | | 1,917 | | | 613 | | | 245 | | | 366 | | | 3,141 | |
Consolidated total | | $ | 2,364 | | | $ | 4,253 | | | $ | 1,506 | | | $ | 366 | | | $ | 8,489 | |
expenses in cost of sales and selling, general, and administrative expenses of $2,910 and $8,489, respectively.
LiabilitiesChanges in liabilities recorded for the restructuring plans were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Recognized Restructuring Expense | | Costs Paid or Otherwise Settled | | Balance at September 26, 2020 |
Severance | | $ | 1,984 | | | $ | 1,984 | | | $ | 0 | |
Other cash restructuring expenses | | 3,694 | | | 2,891 | | | 803 | |
Total | | $ | 5,678 | | | $ | 4,875 | | | $ | 803 | |
| | | | | | | | | | | | | | | | | | | | |
| | Balance at December 26, 2020 | | Costs Paid or Otherwise Settled | | Balance at September 25, 2021 |
Severance | | $ | 12,660 | | | $ | (12,660) | | | $ | — | |
(4) GOODWILL AND INTANGIBLE ASSETS
Amortized Intangible Assets
The components of amortized intangible assets at September 25, 2021 and December 26, 2020 were as follows: | | | | | | | | | | | | | | | | | |
| September 25, 2021 |
| Gross Carrying Amount | | Accumulated Amortization | | Weighted Average Life |
Customer Relationships | $ | 239,493 | | | $ | 166,857 | | | 13 years |
| | | | | |
Patents & Proprietary Technology | 63,109 | | | 12,318 | | | 8 years |
Other | 7,469 | | | 6,828 | | | 4 years |
| $ | 310,071 | | | $ | 186,003 | | | |
| | | | | | | | | | | | | | | | | |
| December 26, 2020 |
| Gross Carrying Amount | | Accumulated Amortization | | Weighted Average Life |
Customer Relationships | $ | 237,232 | | | $ | 155,760 | | | 13 years |
| | | | | |
Patents & Proprietary Technology | 26,208 | | | 8,301 | | | 14 years |
Other | 7,602 | | | 6,786 | | | 4 years |
| $ | 271,042 | | | $ | 170,847 | | | |
Amortization expense for intangible assets for the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020, respectively was as follows:
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
(4) GOODWILL AND INTANGIBLE ASSETS
Amortized Intangible Assets | | | | | | | | | | | | | | | | | | | | |
Thirteen weeks ended | | Thirty-nine weeks ended |
2021 | | 2020 | | 2021 | | 2020 |
$ | 6,137 | | | $ | 4,518 | | | $ | 15,551 | | | $ | 13,621 | |
The components of amortized intangible assets at September 26, 2020 and December 28, 2019 were as follows:
| | | | | | | | | | | | | | | | | |
| September 26, 2020 |
| Gross Carrying Amount | | Accumulated Amortization | | Weighted Average Life |
Customer Relationships | $ | 232,511 | | | $ | 148,198 | | | 13 years |
| | | | | |
Patents & Proprietary Technology | 25,240 | | | 7,699 | | | 14 years |
Other | 7,492 | | | 6,553 | | | 4 years |
| $ | 265,243 | | | $ | 162,450 | | | |
| | | | | | | | | | | | | | | | | |
| December 28, 2019 |
| Gross Carrying Amount | | Accumulated Amortization | | Weighted Average Life |
Customer Relationships | $ | 237,626 | | | $ | 149,720 | | | 13 years |
| | | | | |
Patents & Proprietary Technology | 24,068 | | | 6,358 | | | 14 years |
Other | 8,054 | | | 7,035 | | | 5 years |
| $ | 269,748 | | | $ | 163,113 | | | |
Amortization expense for intangible assets for the thirteen and thirty-nine weeks ended September 26, 2020 and September 28, 2019, respectively was as follows:
| | | | | | | | | | | | | | | | | | | | |
Thirteen weeks ended | | Thirty-nine weeks ended |
2020 | | 2019 | | 2020 | | 2019 |
$ | 4,518 | | | $ | 4,484 | | | $ | 13,621 | | | $ | 13,506 | |
Estimated annual amortization expense related to finite-lived intangible assets is as follows:
| | | | | |
| Estimated Amortization Expense |
2020 | $ | 17,687 | |
2021 | 15,005 | |
2022 | 13,027 | |
2023 | 11,086 | |
2024 | 9,446 | |
| | | | | |
| Estimated Amortization Expense |
2021 | $ | 21,392 | |
2022 | 21,062 | |
2023 | 19,261 | |
2024 | 17,324 | |
2025 | 15,868 | |
The useful lives assigned to finite-lived intangible assets included consideration of factors such as the Company’s past and expected experience related to customer retention rates, the remaining legal or contractual life of the underlying arrangement that resulted in the recognition of the intangible asset and the Company’s expected use of the intangible asset.
Non-amortized intangible assets
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
Intangible assets with indefinite lives are not amortized and consist solely of trade names. The carrying value of trade names at September 26, 202025, 2021 and December 28, 201926, 2020 are as follows:
| | | | | | | | | | | | | | | | | |
| September 26, 2020 | | December 28, 2019 | | Year Acquired |
Newmark | $ | 11,111 | | | $ | 11,111 | | | 2004 |
Webforge | 7,489 | | | 9,143 | | | 2010 |
Convert Italia S.p.A | 8,721 | | | 8,378 | | | 2018 |
Valmont SM | 8,317 | | | 7,966 | | | 2014 |
Ingal EPS/Ingal Civil Products | 7,261 | | | 7,454 | | | 2010 |
Walpar | 3,500 | | | 3,500 | | | 2018 |
Shakespeare | 4,000 | | | 4,000 | | | 2014 |
Other | 14,489 | | | 17,555 | | | |
| $ | 64,888 | | | $ | 69,107 | | | |
| | | | | | | | | | | | | | | | | |
| September 25, 2021 | | December 26, 2020 | | Year Acquired |
Newmark | $ | 11,111 | | | $ | 11,111 | | | 2004 |
Webforge | 8,035 | | | 7,972 | | | 2010 |
Convert Italia S.p.A | 8,790 | | | 9,137 | | | 2018 |
Valmont SM | 8,386 | | | 8,720 | | | 2014 |
Ingal EPS/Ingal Civil Products | 7,790 | | | 7,730 | | | 2010 |
Walpar | 3,500 | | | 3,500 | | | 2018 |
Shakespeare | 4,000 | | | 4,000 | | | 2014 |
Other | 17,769 | | | 14,828 | | | Various |
| $ | 69,381 | | | $ | 66,998 | | | |
In its determination of these intangible assets as indefinite-lived, the Company considered such factors as its expected future use of the intangible asset, legal, regulatory, technological and competitive factors that may impact the useful life or value of the intangible asset and the expected costs to maintain the value of the intangible asset. The Company expects that these intangible assets will maintain their value indefinitely. Accordingly, these assets are not amortized.
The Company’s trade names were tested for impairment in the third quarteras of 2020.August 28, 2021. The values of each trade name waswere determined using the relief-from-royalty method. Based on this evaluation, 0no trade names were determined to be impaired. In conjunction with an interim second quarter 2020 goodwill impairment test, impairment indicators were noted for the Webforge and Locker trade names requiring an interim impairment test. As a result, an impairment charge of approximately $3,900 was recognized against these 2 trade names in fiscal 2020.
Goodwill
The carrying amount of goodwill by segment as of September 26, 2020 and December 28, 2019 was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Engineered Support Structures Segment | | Utility Support Structures Segment | | Coatings Segment | | Irrigation Segment | | | | Total |
Gross Balance December 28, 2019 | $ | 228,634 | | | $ | 130,594 | | | $ | 93,747 | | | $ | 25,136 | | | | | $ | 478,111 | |
Accumulated impairment losses | (18,670) | | | (14,355) | | | (16,222) | | | 0 | | | | | (49,247) | |
Balance at December 28, 2019 | 209,964 | | | 116,239 | | | 77,525 | | | 25,136 | | | | | 428,864 | |
Acquisitions | 0 | | | 1,100 | | | 0 | | | 5,038 | | | | | 6,138 | |
Asset impairment | (12,575) | | | 0 | | | 0 | | | 0 | | | | | (12,575) | |
| | | | | | | | | | | |
Foreign currency translation | (1,605) | | | 1,629 | | | (409) | | | (95) | | | | | (480) | |
Balance at September 26, 2020 | $ | 195,784 | | | $ | 118,968 | | | $ | 77,116 | | | $ | 30,079 | | | | | $ | 421,947 | |
The Company’s annual impairment test of goodwill was performed during the third quarter of 2020, using primarily the discounted cash flow method. The estimated fair value of all of our reporting units exceeded their respective carrying value, so 0 goodwill was impaired.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
In AprilGoodwill
The carrying amount of goodwill by segment as of September 25, 2021 and December 26, 2020 was as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Engineered Support Structures Segment | | Utility Support Structures Segment | | Coatings Segment | | Irrigation Segment | | | | Total |
Gross Balance December 26, 2020 | $ | 232,323 | | | $ | 135,335 | | | $ | 94,309 | | | $ | 30,177 | | | | | $ | 492,144 | |
Accumulated impairment losses | (31,245) | | | (14,355) | | | (16,222) | | | — | | | | | (61,822) | |
Balance at December 26, 2020 | 201,078 | | | 120,980 | | | 78,087 | | | 30,177 | | | | | 430,322 | |
Acquisitions | — | | | — | | | — | | | 280,659 | | | | | 280,659 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Foreign currency translation | 170 | | | (1,731) | | | 129 | | | (87) | | | | | (1,519) | |
Balance at September 25, 2021 | $ | 201,248 | | | $ | 119,249 | | | $ | 78,216 | | | $ | 310,749 | | | | | $ | 709,462 | |
The Company’s annual impairment test of goodwill was performed as of August 28, 2021, using primarily the price of a barrel of oil began a large decline and various economic forecasts show the lower price of oil will continue into the next few years. This lower price for oil and a revised assessment of the Australian market performed in conjunction with the executed restructuring activitiesdiscounted cash flow method. During fiscal 2021, no goodwill impairment has been recorded.
An interim impairment test was required the Company to re-assess the financial projections for the Access Systems reporting unit. This resulted in lower projected net sales, operating income, and cash flows for this reporting unit, resulting in the need for an interim impairment test. The resultssecond quarter of the2020 and that test showed that the Access Systems reporting unit's carrying value was higher than its estimated fair value. Accordingly, the Company recorded a $12,575 impairment of access system'sAccess System's goodwill in the second quarter offiscal 2020.
(5) CASH FLOW SUPPLEMENTARY INFORMATION
The Company considers all highly liquid temporary cash investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the thirty-nine weeks ended September 26, 202025, 2021 and September 28, 201926, 2020 were as follows:
| | | | | | | | | | | |
| 2020 | | 2019 |
Interest | $ | 20,298 | | | $ | 19,440 | |
Income taxes | 35,803 | | | 39,850 | |
| | | | | | | | | | | |
| 2021 | | 2020 |
Interest | $ | 20,716 | | | $ | 20,298 | |
Income taxes | 40,113 | | | 35,803 | |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
(6) EARNINGS PER SHARE
The following table provides a reconciliation between Basic and Diluted earnings per share (EPS):
| | | | | | | | | | | | | | | | | |
| Basic EPS | | Dilutive Effect of Stock Options | | Diluted EPS |
Thirteen weeks ended September 26, 2020: | | | | | |
Net earnings attributable to Valmont Industries, Inc. | $ | 39,342 | | | $ | 0 | | | $ | 39,342 | |
Weighted average shares outstanding (000's) | 21,309 | | | 107 | | | 21,416 | |
Per share amount | $ | 1.85 | | | $ | (0.01) | | | $ | 1.84 | |
Thirteen weeks ended September 28, 2019: | | | | | |
Net earnings attributable to Valmont Industries, Inc. | $ | 38,045 | | | $ | 0 | | | $ | 38,045 | |
Weighted average shares outstanding (000's) | 21,556 | | | 128 | | | 21,684 | |
Per share amount | $ | 1.76 | | | $ | (0.01) | | | $ | 1.75 | |
Thirty-nine weeks ended September 26, 2020 | | | | | |
Net earnings attributable to Valmont Industries, Inc. | $ | 104,878 | | | $ | 0 | | | $ | 104,878 | |
Weighted average shares outstanding (000's) | 21,358 | | | 95 | | | 21,453 | |
Per share amount | $ | 4.91 | | | $ | (0.02) | | | $ | 4.89 | |
Thirty-nine weeks ended September 28, 2019: | | | | | |
Net earnings attributable to Valmont Industries, Inc. | $ | 113,868 | | | $ | 0 | | | $ | 113,868 | |
Weighted average shares outstanding (000's) | 21,725 | | | 101 | | | 21,826 | |
Per share amount | $ | 5.24 | | | $ | (0.02) | | | $ | 5.22 | |
| | | | | | | | | | | | | | | | | |
| Basic EPS | | Dilutive Effect of Stock Options | | Diluted EPS |
Thirteen weeks ended September 25, 2021: | | | | | |
Net earnings attributable to Valmont Industries, Inc. | $ | 51,650 | | | $ | — | | | $ | 51,650 | |
Weighted average shares outstanding (000's) | 21,175 | | | 377 | | | 21,552 | |
Per share amount | $ | 2.44 | | | $ | (0.04) | | | $ | 2.40 | |
Thirteen weeks ended September 26, 2020: | | | | | |
Net earnings attributable to Valmont Industries, Inc. | $ | 39,342 | | | $ | — | | | $ | 39,342 | |
Weighted average shares outstanding (000's) | 21,309 | | | 107 | | | 21,416 | |
Per share amount | $ | 1.85 | | | $ | (0.01) | | | $ | 1.84 | |
Thirty-nine weeks ended September 25, 2021 | | | | | |
Net earnings attributable to Valmont Industries, Inc. | $ | 168,774 | | | $ | — | | | $ | 168,774 | |
Weighted average shares outstanding (000's) | 21,182 | | | 301 | | | 21,483 | |
Per share amount | $ | 7.97 | | | $ | (0.11) | | | $ | 7.86 | |
Thirty-nine weeks ended September 26, 2020: | | | | | |
Net earnings attributable to Valmont Industries, Inc. | $ | 104,878 | | | $ | — | | | $ | 104,878 | |
Weighted average shares outstanding (000's) | 21,358 | | | 95 | | | 21,453 | |
Per share amount | $ | 4.91 | | | $ | (0.02) | | | $ | 4.89 | |
At September 25, 2021 and September 26, 2020, and September 28, 2019, there were 296,9660 and 177,153296,966 outstanding stock options with exercise prices exceeding the market price of common stock that were excluded from the computation of diluted earnings per share, respectively.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
(7) DERIVATIVE FINANCIAL INSTRUMENTS
The Company manages interest rate risk, commodity price risk, and foreign currency risk related to foreign currency denominated transactions and investments in foreign subsidiaries. Depending on the circumstances, the Company may manage these risks by utilizing derivative financial instruments. Some derivative financial instruments are marked to market and recorded in the Company's consolidated statements of earnings, while others may be accounted for as fair value, cash flow, or net investment hedges. Derivative financial instruments have credit and market risk. The Company manages these risks of derivative instruments by monitoring limits as to the types and degree of risk that can be taken, and by entering into transactions with counterparties who are recognized, stable multinational banks. Any gains or losses from net investment hedge activities remain in OCI until either the sale or substantially complete liquidation of the related subsidiaries.
Fair value of derivative instruments at September 26, 202025, 2021 and December 28, 201926, 2020 are as follows: | | | | | | | | | | | | | | | | | | | |
Derivatives designated as hedging instruments: | Balance sheet location | | September 25, 2021 | | December 26, 2020 | | |
| | | | | | | |
Commodity forward contracts | Prepaid expenses and other assets | | $ | 7,623 | | | $ | — | | | |
Foreign currency forward contracts | Prepaid expenses and other assets | | — | | | 724 | | | |
Foreign currency forward contracts | Accrued expenses | | (84) | | | — | | | |
Cross currency swap contracts | Prepaid expenses and other assets | | 1,309 | | | 600 | | | |
Cross currency swap contracts | Accrued expenses | | (1,847) | | | (7,235) | | | |
| | | $ | 7,001 | | | $ | (5,911) | | | |
| | | | | | | | | | | | | | | | | | | |
Derivatives designated as hedging instruments: | Balance sheet location | | September 26, 2020 | | December 28, 2019 | | |
| | | | | | | |
| | | | | | | |
Foreign currency forward contracts | Prepaid expenses and other assets | | $ | 1,021 | | | $ | 2,119 | | | |
| | | | | | | |
Cross currency swap contracts | Prepaid expenses and other assets | | 2,527 | | | 1,128 | | | |
| | | | | | | |
| | | $ | 3,548 | | | $ | 3,247 | | | |
Gains (losses) on derivatives recognized in the condensed consolidated statements of earnings for the thirteen and thirty-nine weeks ended September 26, 202025, 2021 and September 28, 201926, 2020 are as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Thirteen weeks ended | | Thirty-nine weeks ended | | |
| Statements of earnings location | | September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 | | |
Commodity forward contracts | Product cost of sales | | $ | 9,870 | | | $ | — | | | $ | 10,140 | | | $ | — | | | |
Foreign currency forward contracts | Other income | | 187 | | | 116 | | | 123 | | | 146 | | | |
Foreign currency forward contracts | Product sales | | — | | | 1,017 | | | — | | | 1,169 | | | |
Interest rate hedge amortization | Interest expense | | (16) | | | (16) | | | (48) | | | (48) | | | |
Cross currency swap contracts | Interest expense | | 691 | | | 649 | | | 2,060 | | | 2,111 | | | |
| | | $ | 10,732 | | | $ | 1,766 | | | $ | 12,275 | | | $ | 3,378 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Thirteen weeks ended | | Thirty-nine weeks ended | | |
| Statements of earnings location | | September 26, 2020 | | September 28, 2019 | | September 26, 2020 | | September 28, 2019 | | |
Commodity forward contracts | Product cost of sales | | $ | 0 | | | $ | (1,329) | | | $ | 0 | | | $ | (1,425) | | | |
Foreign currency forward contracts | Other income | | 116 | | | 123 | | | 146 | | | 827 | | | |
Foreign currency forward contracts | Product sales | | 1,017 | | | 0 | | | 1,169 | | | 0 | | | |
Interest rate hedge amortization | Interest expense | | (16) | | | (16) | | | (48) | | | (48) | | | |
Cross currency swap contracts | Interest expense | | 649 | | | 769 | | | 2,111 | | | 2,096 | | | |
| | | $ | 1,766 | | | $ | (453) | | | $ | 3,378 | | | $ | 1,450 | | | |
Cash Flow Hedges
In 2019,During the first three quarters of 2021, the Company entered into steel hot rolled coil (HRC) forward contracts that qualifiedqualify as a cash flow hedge of the variability in cash flows attributable to future steel purchases. The forward contracts had a notional amount of $12,128$39,731 for the total purchase of 3,50041,000 short tons for each month from May 20192021 to September 2019.June 2022. The gain/(loss) realized upon settlement iswill be recorded in product cost of sales in the condensed consolidated statements of earnings over average inventory turns. The forward contracts were closed out in
During the third quarterfirst half of 2019.
In May 2020,2021, a Brazilian subsidiary with a Real functional currency entered into foreign currency forward contracts to mitigate foreign currency risk related to a customer order with components purchased in Euros. The forward contract,contracts, which qualifiesqualify as a cash flow hedge, has a final maturity date of December 2020matured in July and aSeptember 2021 and had notional amountamounts to buy 4,5003,800 euros in exchange for a stated amount of Brazilian Real. In March 2020,During the first half of 2021, a subsidiary with a Euro functional currency entered into a foreign currency forward contractscontract to mitigate foreign currency risk related to a large customer order denominated in U.S. dollars. The forward contract, which qualifies as a cash flowfair value hedge, has a final maturity date of Junematures in December 2021 and has a notional amount to sell $27,500$2,000 in exchange for a stated amount of Euros.
Net Investment Hedges
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
Net Investment Hedges
In the second quarter of 2020, the Company early settled their Australian dollar denominated forward currency contracts and received proceeds of $11,983. In the second quarter of 2019, all existing net investment hedges were early settled and the Company received proceeds of $11,184. The proceeds/gain from these settlements (net of tax) will remain in Other Comprehensive Income (OCI) until either the sale or substantially complete liquidation of the related subsidiaries.
In the second quarter of 2019, the Company entered into 2 fixed-for-fixed cross currency swaps (“CCS”), swapping U.S. dollar principal and interest payments on a portion of its 5.00% senior unsecured notes due 2044 for Danish krone (DKK) and Euro denominated payments. The CCS were entered into in order to mitigate foreign currency risk on the Company's Euro and DKK investments and to reduce interest expense. Interest is exchanged twice per year on April 1 and October 1.
Key terms of the two CCS are as follows:
| | | | | | | | | | | | | | |
Currency | Notional Amount | Termination Date | Swapped Interest Rate | Set Settlement Amount |
Danish Krone (DKK) | $ | 50,000 | | April 1, 2024 | 2.68% | DKK 333,625 |
Euro | $ | 80,000 | | April 1, 2024 | 2.825% | €71,550 |
The Company designated the full notional amount of the 2 CCS ($130,000) as a hedge of the net investment in certain Danish and European subsidiaries under the spot method, with all changes in the fair value of the CCS that are included in the assessment of effectiveness (changes due to spot foreign exchange rates) are recorded as cumulative foreign currency translation within OCI, and will remain in OCI until either the sale or substantially complete liquidation of the related subsidiaries.OCI. Net interest receipts will be recorded as a reduction of interest expense over the life of the CCS.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
(8) BUSINESS SEGMENTS
The Company has 4 reportable segments based on its management structure. Each segment is global in nature with a manager responsible for segment operational performance and the allocation of capital within the segment. Net corporate expense is net of certain service-related expenses that are allocated to business units generally on the basis of employee headcounts.
Reportable segments are as follows:
UTILITY SUPPORT STRUCTURES: This segment consists of the manufacture of engineered steel, concrete and composite structures for the utility markets, including transmission, distribution, substations, and renewable energy generation equipment and drone inspection services;
ENGINEERED SUPPORT STRUCTURES: This segment consists of the manufacture and distribution of engineered metal and composite poles, towers, and components for 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 utility transmission, distribution, substations, and renewable energy generation equipment;
COATINGS: This segment consists of galvanizing, painting, and anodizing services to preserve and protect metal products; and
IRRIGATION: This segment consists of the manufacture of agriculturalcenter pivot and linear irrigation equipment for agricultural markets, including parts, services and tubular products, and advanced technology solutions for water management solutions, and technology for precision agriculture.
The Company evaluates the performance of its business segments based upon operating income and invested capital. The Company does not allocate interest expense, non-operating income and deductions, or income taxes to its business segments.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
Summary by Business
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Thirty-nine weeks ended |
| September 26, 2020 | | September 28, 2019 | | September 26, 2020 | | September 28, 2019 |
SALES: | | | | | | | |
Engineered Support Structures segment: | | | | | | | |
Lighting, Traffic, and Highway Safety Products | $ | 181,571 | | | $ | 191,262 | | | $ | 534,585 | | | $ | 530,021 | |
Communication Products | 50,677 | | | 48,391 | | | 139,759 | | | 138,710 | |
Access Systems | 23,408 | | | 28,405 | | | 65,439 | | | 88,363 | |
Engineered Support Structures segment | 255,656 | | | 268,058 | | | 739,783 | | | 757,094 | |
Utility Support Structures segment: | | | | | | | |
Steel | 156,082 | | | 153,433 | | | 482,430 | | | 460,309 | |
Concrete | 39,215 | | | 28,011 | | | 120,653 | | | 88,415 | |
Engineered Solar Tracker Solutions | 43,287 | | | 3,418 | | | 56,830 | | | 43,642 | |
Offshore and Other Complex Steel Structures | 35,809 | | | 20,096 | | | 71,265 | | | 66,343 | |
Utility Support Structures segment | 274,393 | | | 204,958 | | | 731,178 | | | 658,709 | |
Coatings segment | 87,886 | | | 92,957 | | | 255,976 | | | 278,142 | |
Irrigation segment: | | | | | | | |
North America | 75,803 | | | 82,840 | | | 281,397 | | | 294,127 | |
International | 63,406 | | | 61,340 | | | 165,171 | | | 158,054 | |
Irrigation segment | 139,209 | | | 144,180 | | | 446,568 | | | 452,181 | |
| | | | | | | |
Total | 757,144 | | | 710,153 | | | 2,173,505 | | | 2,146,126 | |
INTERSEGMENT SALES: | | | | | | | |
Engineered Support Structures segment | 711 | | | 1,564 | | | 8,599 | | | 5,066 | |
Utility Support Structures segment | 1,914 | | | 762 | | | 7,278 | | | 2,246 | |
Coatings segment | 19,188 | | | 16,035 | | | 56,021 | | | 49,900 | |
Irrigation segment | 1,361 | | | 1,452 | | | 4,629 | | | 5,564 | |
| | | | | | | |
Total | 23,174 | | | 19,813 | | | 76,527 | | | 62,776 | |
NET SALES: | | | | | | | |
Engineered Support Structures segment | 254,945 | | | 266,494 | | | 731,184 | | | 752,028 | |
Utility Support Structures segment | 272,479 | | | 204,196 | | | 723,900 | | | 656,463 | |
Coatings segment | 68,698 | | | 76,922 | | | 199,955 | | | 228,242 | |
Irrigation segment | 137,848 | | | 142,728 | | | 441,939 | | | 446,617 | |
| | | | | | | |
Total | $ | 733,970 | | | $ | 690,340 | | | $ | 2,096,978 | | | $ | 2,083,350 | |
| | | | | | | |
OPERATING INCOME: | | | | | | | |
Engineered Support Structures segment | $ | 25,434 | | | $ | 21,825 | | | $ | 46,183 | | | $ | 55,152 | |
Utility Support Structures segment | 25,881 | | | 20,362 | | | 75,255 | | | 61,443 | |
Coatings segment | 12,416 | | | 13,865 | | | 33,618 | | | 39,037 | |
Irrigation segment | 14,687 | | | 18,204 | | | 60,701 | | | 59,868 | |
| | | | | | | |
| | | | | | | |
Corporate | (16,939) | | | (13,192) | | | (43,943) | | | (38,360) | |
Total | $ | 61,479 | | | $ | 61,064 | | | $ | 171,814 | | | $ | 177,140 | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Thirty-nine weeks ended |
| September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 |
SALES: | | | | | | | |
Utility Support Structures segment: | | | | | | | |
Steel | $ | 199,946 | | | $ | 156,082 | | | $ | 545,417 | | | $ | 482,430 | |
Concrete | 39,656 | | | 39,215 | | | 123,477 | | | 120,653 | |
Engineered Solar Tracker Solutions | 13,224 | | | 43,287 | | | 28,690 | | | 56,830 | |
Offshore and Other Complex Steel Structures | 23,676 | | | 35,809 | | | 99,914 | | | 71,265 | |
Utility Support Structures segment | $ | 276,502 | | | $ | 274,393 | | | $ | 797,498 | | | $ | 731,178 | |
Engineered Support Structures segment: | | | | | | | |
Lighting, Traffic, and Highway Safety Products | $ | 188,589 | | | $ | 181,571 | | | $ | 529,432 | | | $ | 534,585 | |
Communication Products | 63,424 | | | 50,677 | | | 164,055 | | | 139,759 | |
Access Systems | 29,084 | | | 23,408 | | | 79,326 | | | 65,439 | |
Engineered Support Structures segment | 281,097 | | | 255,656 | | | 772,813 | | | 739,783 | |
Coatings segment | 96,685 | | | 87,886 | | | 288,131 | | | 255,976 | |
Irrigation segment: | | | | | | | |
North America | 116,308 | | | 75,803 | | | 395,096 | | | 281,397 | |
International | 124,023 | | | 63,406 | | | 356,864 | | | 165,171 | |
Irrigation segment | 240,331 | | | 139,209 | | | 751,960 | | | 446,568 | |
| | | | | | | |
Total | 894,615 | | | 757,144 | | | 2,610,402 | | | 2,173,505 | |
INTERSEGMENT SALES: | | | | | | | |
Utility Support Structures segment | — | | | 1,914 | | | 435 | | | 7,278 | |
Engineered Support Structures segment | 48 | | | 711 | | | 268 | | | 8,599 | |
Coatings segment | 21,779 | | | 19,188 | | | 64,029 | | | 56,021 | |
Irrigation segment | 4,006 | | | 1,361 | | | 7,373 | | | 4,629 | |
| | | | | | | |
Total | 25,833 | | | 23,174 | | | 72,105 | | | 76,527 | |
NET SALES: | | | | | | | |
Utility Support Structures segment | 276,502 | | | 272,479 | | | 797,063 | | | 723,900 | |
Engineered Support Structures segment | 281,049 | | | 254,945 | | | 772,545 | | | 731,184 | |
Coatings segment | 74,906 | | | 68,698 | | | 224,102 | | | 199,955 | |
Irrigation segment | 236,325 | | | 137,848 | | | 744,587 | | | 441,939 | |
| | | | | | | |
Total | $ | 868,782 | | | $ | 733,970 | | | $ | 2,538,297 | | | $ | 2,096,978 | |
| | | | | | | |
OPERATING INCOME: | | | | | | | |
Utility Support Structures segment | $ | 24,561 | | | $ | 25,881 | | | $ | 61,168 | | | $ | 75,255 | |
Engineered Support Structures segment | 34,383 | | | 25,434 | | | 86,235 | | | 46,183 | |
Coatings segment | 12,478 | | | 12,416 | | | 40,018 | | | 33,618 | |
Irrigation segment | 27,735 | | | 14,687 | | | 108,467 | | | 60,701 | |
| | | | | | | |
| | | | | | | |
Corporate | (22,962) | | | (16,939) | | | (59,857) | | | (43,943) | |
Total | $ | 76,195 | | | $ | 61,479 | | | $ | 236,031 | | | $ | 171,814 | |
| | | | | | | |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
(9) SUBSEQUENT EVENT
On October 18, 2021, subsequent to the end of our third quarter of 2021, the Company and its wholly-owned subsidiaries Valmont Industries Holland B.V. and Valmont Group Pty. Ltd., as Borrowers, entered into a Second Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, and the other lenders party thereto (the “Restated Credit Agreement”). The Restated Credit Agreement amends and restates the First Amended and Restated Credit Agreement dated as of October 18, 2017 among the Borrowers, the Administrative Agent and the other lenders party thereto (as amended, the “Original Credit Agreement”) The changes to the Restated Credit Agreement are as follows:
a.an increase in the commitments under the credit facility from $600 million to $800 million;
b.an increase in the accordion under the credit facility from $200 million to $300 million;
c.an extension of the maturity date of the credit facility from October 18, 2022 to October 18, 2026;
d.replacement of LIBOR as the benchmark interest rate with SOFR;
e.removal of the interest coverage ratio (adjusted EBITDA / interest expense) as a covenant;
f.a modification of the leverage ratio (interest-bearing debt / adjusted EBITDA) to deduct unrestricted cash in excess of $50 million (but not exceeding $500 million) from interest-bearing debt.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Management’s discussion and analysis 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 the Company 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. These statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company’s control) and assumptions. Management believes that these forward-looking statements are based on reasonable assumptions. Many factors could affect the Company’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include, among other things, the continuing and developing effects of COVID-19 including the effects of the outbreak on the general economy and the specific effects on the Company's business and that of its customers and suppliers, risk factors described from time to time in the Company’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 materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, and actions and policy changes of domestic and foreign governments.
This discussion should be read in conjunction with the financial statements and notes thereto, and the management's discussion and analysis included in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2019.26, 2020. Segment net sales in the table below and elsewhere are presented net of intersegment sales. See Note 8 of our condensed consolidated financial statements for additional information on segment sales and intersegment sales.
Results of Operations (Dollars in millions, except per share amounts)
| | | Thirteen weeks ended | | Thirty-nine weeks ended | | Thirteen weeks ended | | Thirty-nine weeks ended |
| | September 26, 2020 | | September 28, 2019 | | % Incr. (Decr.) | | September 26, 2020 | | September 28, 2019 | | % Incr. (Decr.) | | September 25, 2021 | | September 26, 2020 | | % Incr. (Decr.) | | September 25, 2021 | | September 26, 2020 | | % Incr. (Decr.) |
Consolidated | Consolidated | | Consolidated | |
Net sales | Net sales | $ | 734.0 | | | $ | 690.3 | | | 6.3 | % | | $ | 2,097.0 | | | $ | 2,083.4 | | | 0.7 | % | Net sales | $ | 868.8 | | | $ | 734.0 | | | 18.4 | % | | $ | 2,538.3 | | | $ | 2,097.0 | | | 21.0 | % |
Gross profit | Gross profit | 190.7 | | | 173.3 | | | 10.0 | % | | 560.9 | | | 516.1 | | | 8.7 | % | Gross profit | 227.4 | | | 190.7 | | | 19.2 | % | | 661.6 | | | 560.9 | | | 18.0 | % |
as a percent of sales | as a percent of sales | 26.0 | % | | 25.1 | % | | 26.7 | % | | 24.8 | % | | as a percent of sales | 26.2 | % | | 26.0 | % | | 26.1 | % | | 26.7 | % | |
SG&A expense (1) | SG&A expense (1) | 129.3 | | | 112.2 | | | 15.2 | % | | 389.1 | | | $ | 339.0 | | | 14.8 | % | SG&A expense (1) | 151.2 | | | 129.3 | | | 16.9 | % | | 425.6 | | | $ | 389.1 | | | 9.4 | % |
as a percent of sales | as a percent of sales | 17.6 | % | | 16.3 | % | | 18.6 | % | | 16.3 | % | | as a percent of sales | 17.4 | % | | 17.6 | % | | 16.8 | % | | 18.6 | % | |
Operating income | Operating income | 61.5 | | | 61.1 | | | 0.7 | % | | 171.8 | | | 177.1 | | | (3.0) | % | Operating income | 76.2 | | | 61.5 | | | 23.9 | % | | 236.0 | | | 171.8 | | | 37.4 | % |
as a percent of sales | as a percent of sales | 8.4 | % | | 8.9 | % | | 8.2 | % | | 8.5 | % | | as a percent of sales | 8.8 | % | | 8.4 | % | | 9.3 | % | | 8.2 | % | |
Net interest expense | Net interest expense | 10.0 | | | 9.0 | | | 11.1 | % | | 28.6 | | | 27.2 | | | 5.1 | % | Net interest expense | 10.6 | | | 10.0 | | | 6.0 | % | | 30.6 | | | 28.6 | | | 7.0 | % |
| Effective tax rate | Effective tax rate | 23.0 | % | | 24.5 | % | | 26.9 | % | | 24.7 | % | | Effective tax rate | 23.4 | % | | 23.0 | % | | 21.3 | % | | 26.9 | % | |
Net earnings | Net earnings | $ | 39.3 | | | $ | 38.0 | | | 3.4 | % | | $ | 104.9 | | | $ | 113.9 | | | (7.9) | % | Net earnings | $ | 51.7 | | | $ | 39.3 | | | 31.6 | % | | $ | 168.8 | | | $ | 104.9 | | | 60.9 | % |
Diluted earnings per share | Diluted earnings per share | $ | 1.84 | | | $ | 1.75 | | | 5.1 | % | | $ | 4.89 | | | $ | 5.22 | | | (6.3) | % | Diluted earnings per share | $ | 2.40 | | | $ | 1.84 | | | 30.4 | % | | $ | 7.86 | | | $ | 4.89 | | | 60.7 | % |
Engineered Support Structures (ESS) | | |
Utility Support Structures (Utility) | | Utility Support Structures (Utility) | |
Net sales | Net sales | $ | 255.0 | | | $ | 266.5 | | | (4.3) | % | | $ | 731.2 | | | $ | 752.0 | | | (2.8) | % | Net sales | $ | 276.5 | | | $ | 272.5 | | | 1.5 | % | | $ | 797.1 | | | $ | 723.9 | | | 10.1 | % |
Gross profit | Gross profit | 71.3 | | | 62.4 | | | 14.3 | % | | 201.4 | | | 177.8 | | | 13.3 | % | Gross profit | 53.5 | | | 54.7 | | | (2.2) | % | | 149.3 | | | 156.1 | | | (4.4) | % |
SG&A expense | SG&A expense | 45.8 | | | 40.5 | | | 13.1 | % | | 155.2 | | | 122.6 | | | 26.6 | % | SG&A expense | 28.9 | | | 28.8 | | | 0.3 | % | | 88.1 | | | 80.8 | | | 9.0 | % |
Operating income | Operating income | 25.5 | | | 21.9 | | | 16.4 | % | | 46.2 | | | 55.2 | | | (16.3) | % | Operating income | 24.6 | | | 25.9 | | | (5.0) | % | | 61.2 | | | 75.3 | | | (18.7) | % |
Utility Support Structures (Utility) | | |
Engineered Support Structures (ESS) | | Engineered Support Structures (ESS) | |
Net sales | Net sales | $ | 272.5 | | | $ | 204.2 | | | 33.4 | % | | $ | 723.9 | | | $ | 656.5 | | | 10.3 | % | Net sales | $ | 281.0 | | | $ | 255.0 | | | 10.2 | % | | $ | 772.5 | | | $ | 731.2 | | | 5.6 | % |
Gross profit | Gross profit | 54.7 | | | 44.0 | | | 24.3 | % | | 156.1 | | | 133.6 | | | 16.8 | % | Gross profit | 79.9 | | | 71.3 | | | 12.1 | % | | 219.6 | | | 201.4 | | | 9.0 | % |
SG&A expense | SG&A expense | 28.8 | | | 23.7 | | | 21.5 | % | | 80.8 | | | 72.2 | | | 11.9 | % | SG&A expense | 45.6 | | | 45.8 | | | (0.4) | % | | 133.4 | | | 155.2 | | | (14.0) | % |
Operating income | Operating income | 25.9 | | | 20.3 | | | 27.6 | % | | 75.3 | | | 61.4 | | | 22.6 | % | Operating income | 34.3 | | | 25.5 | | | 34.5 | % | | 86.2 | | | 46.2 | | | 86.6 | % |
Coatings | Coatings | | Coatings | |
Net sales | Net sales | $ | 68.7 | | | $ | 76.9 | | | (10.7) | % | | $ | 200.0 | | | $ | 228.3 | | | (12.4) | % | Net sales | $ | 74.9 | | | $ | 68.7 | | | 9.0 | % | | $ | 224.1 | | | $ | 200.0 | | | 12.1 | % |
Gross profit | Gross profit | 22.6 | | | 24.0 | | | (5.8) | % | | 64.2 | | | 71.7 | | | (10.5) | % | Gross profit | 22.9 | | | 22.6 | | | 1.3 | % | | 71.1 | | | 64.2 | | | 10.7 | % |
SG&A expense | SG&A expense | 10.2 | | | 10.1 | | | 1.0 | % | | 30.6 | | | 32.7 | | | (6.4) | % | SG&A expense | 10.4 | | | 10.2 | | | 2.0 | % | | 31.1 | | | 30.6 | | | 1.6 | % |
Operating income | Operating income | 12.4 | | | 13.9 | | | (10.8) | % | | 33.6 | | | 39.0 | | | (13.8) | % | Operating income | 12.5 | | | 12.4 | | | 0.8 | % | | 40.0 | | | 33.6 | | | 19.0 | % |
Irrigation | Irrigation | | Irrigation | |
Net sales | Net sales | $ | 137.8 | | | $ | 142.7 | | | (3.4) | % | | $ | 441.9 | | | $ | 446.6 | | | (1.1) | % | Net sales | $ | 236.4 | | | $ | 137.8 | | | 71.6 | % | | $ | 744.6 | | | $ | 441.9 | | | 68.5 | % |
Gross profit | Gross profit | 42.2 | | | 42.9 | | | (1.6) | % | | 139.2 | | | 133.0 | | | 4.7 | % | Gross profit | 70.7 | | | 42.2 | | | 67.5 | % | | 220.9 | | | 139.2 | | | 58.7 | % |
SG&A expense | SG&A expense | 27.5 | | | 24.7 | | | 11.3 | % | | 78.5 | | | 73.1 | | | 7.4 | % | SG&A expense | 42.9 | | | 27.5 | | | 56.0 | % | | 112.4 | | | 78.5 | | | 43.2 | % |
Operating income | Operating income | 14.7 | | | 18.2 | | | (19.2) | % | | 60.7 | | | 59.9 | | | 1.3 | % | Operating income | 27.8 | | | 14.7 | | | 89.1 | % | | 108.5 | | | 60.7 | | | 78.7 | % |
| Net corporate expense | Net corporate expense | | Net corporate expense | |
Gross profit | | Gross profit | $ | 0.3 | | | — | | | NM | | $ | 0.6 | | | $ | — | | | NM |
SG&A | SG&A | $ | 17.0 | | | $ | 13.2 | | | 28.8 | % | | $ | 44.0 | | | $ | 38.4 | | | 14.6 | % | SG&A | $ | 23.3 | | | $ | 17.0 | | | 37.1 | % | | $ | 60.5 | | | $ | 44.0 | | | 37.5 | % |
Operating loss | Operating loss | (17.0) | | | (13.2) | | | (28.8) | % | | (44.0) | | | (38.4) | | | (14.6) | % | Operating loss | (23.0) | | | (17.0) | | | (35.3) | % | | (59.9) | | | (44.0) | | | (36.1) | % |
(1) The thirty-nine weeks ended September 26, 2020 includes impairment of goodwill and intangible assets.
Overview
On a consolidated basis, net sales were higher in the third quarter and first three quarters of 2020,2021, as compared to the same periods in 2019, due toof 2020, with higher sales in the Utility segment that was partially offset by lower sales in ESS, Coatings, and Irrigationall segments. The change in net sales in the third quarter and first three quarters of fiscal 2020,2021, as compared with the same periodsperiod in 2019,2020, is as follows: | | | | | | | | | | | | | | | | | | | |
| Third quarter |
| Total | Utility | ESS | Coatings | Irrigation | | |
Sales - 2020 | $ | 734.0 | | $ | 272.5 | | $ | 255.0 | | $ | 68.7 | | $ | 137.8 | | | |
Volume | 32.6 | | (22.3) | | (1.3) | | 0.5 | | 55.7 | | | |
Pricing/mix | 91.1 | | 25.6 | | 21.6 | | 4.6 | | 39.3 | | | |
Acquisition/(divestiture) | 1.2 | | — | | — | | — | | 1.2 | | | |
Currency translation | 9.9 | | 0.7 | | 5.8 | | 1.1 | | 2.3 | | | |
Sales - 2021 | $ | 868.8 | | $ | 276.5 | | $ | 281.1 | | $ | 74.9 | | $ | 236.3 | | | |
| | | | | | | | | | | | | | | | | | |
| Third quarter |
| Total | ESS | Utility | Coatings | Irrigation | |
Sales - 2019 | $ | 690.3 | | $ | 266.5 | | $ | 204.2 | | $ | 76.9 | | $ | 142.7 | | |
Volume | 60.0 | | (17.2) | | 83.2 | | (8.9) | | 2.9 | | |
Pricing/mix | (16.8) | | 2.5 | | (17.2) | | — | | (2.1) | | |
Acquisition/(divestiture) | 2.3 | | — | | 1.7 | | — | | 0.6 | | |
Currency translation | (1.8) | | 3.2 | | 0.6 | | 0.7 | | (6.3) | | |
Sales - 2020 | $ | 734.0 | | $ | 255.0 | | $ | 272.5 | | $ | 68.7 | | $ | 137.8 | | |
| | | | | | | | | | | | | | | | | | |
| Year-to-date |
| Total | ESS | Utility | Coatings | Irrigation | |
Sales - 2019 | $ | 2083.4 | | $ | 752.0 | | $ | 656.5 | | $ | 228.3 | | $ | 446.6 | | |
Volume | 50.9 | | (20.8) | | 76.2 | | (22.3) | | 17.8 | | |
Pricing/mix | (16.2) | | 5.7 | | (11.9) | | (3.6) | | (6.4) | | |
Acquisition/(divestiture) | 4.6 | | 2.6 | | 3.5 | | — | | (1.5) | | |
Currency translation | (25.7) | | (8.3) | | (0.4) | | (2.4) | | (14.6) | | |
Sales - 2020 | $ | 2,097.0 | | $ | 731.2 | | $ | 723.9 | | $ | 200.0 | | $ | 441.9 | | |
| | | | | | | | | | | | | | | | | | | |
| Year-to-Date |
| Total | Utility | ESS | Coatings | Irrigation | | |
Sales - 2020 | $ | 2,097.0 | | $ | 723.9 | | $ | 731.2 | | $ | 200.0 | | $ | 441.9 | | | |
Volume | 222.5 | | 37.9 | | (22.9) | | 3.2 | | 204.3 | | | |
Pricing/mix | 173.0 | | 28.4 | | 38.4 | | 12.8 | | 93.4 | | | |
Acquisition/(divestiture) | 9.2 | | 2.2 | | — | | — | | 7.0 | | | |
Currency translation | 36.6 | | 4.7 | | 25.9 | | 8.1 | | (2.1) | | | |
Sales - 2021 | $ | 2,538.3 | | $ | 797.1 | | $ | 772.6 | | $ | 224.1 | | $ | 744.5 | | | |
Volume effects are estimated based on a physical production or sales measure. Since products we sell are not uniform in nature, pricing and mix relate to a combination of changes in sales prices and the attributes of the product sold. Accordingly, pricing and mix changes do not necessarily result in operating income changes.
Average steel prices for both hot rolled coil and plate were lowerhigher in North America and China in the third quarter and first three quarters of 2020,2021, as compared to 2019,2020, contributing to lowerhigher cost of sales and improvedlower gross profit.profit margin for the Utility segment and the overall Company as raw material cost inflation was not fully recovered through selling pricing mechanisms.
The Company acquired the following businesses:
•InPivoTrac in the second quarter of 2021, an agricultural technology company that offers solutions focused on remote monitoring of center pivot irrigation machines (Irrigation).
•Prospera in the second quarter of 2021, a privately-held Israeli-based artificial intelligence company, focused on machine learning and computer vision in agriculture (Irrigation).
•KC Utility Packaging ("Valmont Substation") in the first quarter of 2020, we acquireda provider of engineering, design, and packaging services in the remaining 49% of AgSense that the Company did not own(Irrigation).
•In the first quarter of 2020, we acquired 16% of the remaining 25% of Convert Italia that the Company did not ownsubstation market (Utility).
•Energia Solar Do Brasil ("Solbras") in the second quarter of 2020, a leading provider of solar energy solutions for agriculture (Irrigation).
COVID-19 Impact on Financial Results and Liquidity
We are considered an essential business because of the products and services that serve critical infrastructure sectors as defined by many governments around the world. All ourOur significant manufacturing facilities are open and fully operational as of September 26, 2020. Our25, 2021. Certain foreign manufacturing facilities in Argentina, France, Malaysia, New Zealand, Philippines, and South Africa were temporarily closed for part of of the first half of 2020 due to government mandates. We continue to monitor incidence of COVID-19 on a continuous basis, particularly in areas reporting recent increases in infection. To protect the
safety, health and well-being of employees, customers, suppliers and communities, CDC and WHO guidelines are being followed in all facilities.
We generated strong$61.8 million of cash flows from operating activities during the first three quarters of 2020 and expect cash flows from operating activities, net of capital expenditures, to be in excess of net earnings for the full fiscal 2020 year.2021. Our main focus is to maintain liquidity to support the working capital needs of our operations and maintain our investment grade credit rating.
The ultimate magnitude of COVID-19, including the extent of its impact on the Company’s financial and operational results, cash balances and available borrowings on our line of credit, will be determined by the length of time the pandemic continues, its effect on the demand for the Company’s products and services and supply chain, as well as the effect of governmental regulations imposed in response to the pandemic.
Backlog
The backlog of unshipped orders at September 25, 2021 was approximately $1.5 billion compared with approximately $1.1 billion at December 26, 2020. The increase is primarily attributed to the receipt of three additional purchase orders during the first three quarters of 2021 totaling approximately $267 million for a large Utility project in North America. We expect the backlog to be fulfilled within the subsequent 12 months with the exception of $175 million primarily related to these three new Utility orders.
Currency Translation
In the third quarter and first three quarters of 2020,2021, we realized a decreasean increase in operating profit,income, as compared with 2019,2020, due in part to currency translation effects associated with a stronger U.S. dollar against most foreign currencies.effects. The breakdown of this effect by segment was as follows:
| | | | | | | | | | | | | | | | | | | | |
| |
| Total | ESS | Utility | Coatings | Irrigation | Corporate |
Third quarter | $ | (1.4) | | $ | — | | $ | (0.2) | | $ | 0.1 | | $ | (1.3) | | $ | — | |
| | | | | | |
Year-to-date | $ | (2.7) | | $ | (0.6) | | $ | — | | $ | (0.2) | | $ | (1.9) | | $ | — | |
| | | | | | | | | | | | | | | | | | | | |
| |
| Total | Utility | ESS | Coatings | Irrigation | Corporate |
Third quarter | $ | 1.5 | | $ | — | | $ | 0.9 | | $ | 0.2 | | $ | 0.4 | | $ | — | |
| | | | | | |
Year-to-date | $ | 0.3 | | $ | (0.8) | | $ | 1.0 | | $ | 1.3 | | $ | (0.3) | | $ | (0.9) | |
Gross Profit, SG&A, and Operating Income
At a consolidated level, gross profit as a percent of sales was relatively flat in the third quarter and lower in the first three quarters of 2021, as compared with the same periods in 2020, due to higher inraw material costs across the Company, somewhat offset by improved selling prices and sales mix. In the third quarter and first three quarters of 2020, as compared with the same periods in 2019, due to lower raw material costs across the Company, improved selling prices across our infrastructure businesses, and improved volumes for the Irrigation segment and associated operating leverage of fixed costs. In the third quarter of 20202021 as compared to 2019,2020, gross profit was higher for ESS andall operating segments except the Utility but lower for Coatings and Irrigation. On a year-to-date basis, gross profit improved for the ESS, Utility, and Irrigation segments in 2020, but was lower for Coatings due to lower sales volumes.segment.
SG&A expenses increased in the third quarter and first three quarters of 2020,2021 as compared to the same periods in 2019.2020. The increase in the third quarter and first three quarters of 2021 over the same period of 2020 was due to recordinghigher incentives due to improved operations, salary merit increases, foreign currency translation effects, and SG&A contributed from the recent acquisition of Prospera and PivoTrac, and intangible asset amortization from such acquisitions. The increase for the first three quarters of 2021 versus 2020 were somewhat offset by a reduction in certain restructuring expenses, and a partial impairment of goodwill and tradename for the Access Systems business higher compensation related costs including sales commissions for the North American infrastructure businesses, higher incentives due to improved operations, and restructuring activities. These increases were partially offset by lower travel costs, foreign currency translation effects, and reduced SG&A deferred compensation expensethat did not recur in the first three quarters of 2020 (offset by an increase of the same amount in other expense).2021.
In the third quarter and first three quarters of 2020,2021, as compared to the third quartersame periods of 2019,2020, operating income was higher in the UtilityIrrigation, ESS, and ESSCoatings segments and lower forin the Irrigation and Coatings segments.Utility segment. The overall increase in consolidated operating income in the third quarter can beis primarily attributed to higher utilityirrigation sales volumesvolume and an approximate $7.0 million loss recognized on certain access systems projectspricing actions in 2019 that did not recur. Operatingboth Irrigation and ESS, somewhat offset by the decrease in gross profit in Utility with higher average selling prices more than offset by the impact of the cost of steel and lower offshore product sales, as well as increases in SG&A expenses. The increase in consolidated operating income decreased in the first three quarters of 2020 as comparedis primarily attributed to higher irrigation sales volumes, pricing actions in both Irrigation and ESS, the same period in 2019, due to thepartial goodwill and tradename impairment recognized in 2020 that did not recur in 2021; somewhat offset by the decrease in gross profit in Utility due to the same factors mentioned above for the Access Systems business, certain restructuring activities,third quarter and lower volumes for the Coatings businesses. The decrease was partially offset by lower raw material costs and improved sales volumesincreases in the Irrigation and Utility segments.SG&A expenses.
Net Interest Expense and Debt
Net interestInterest expense in the third quarter and first three quarters of 2020 was higher than2021 approximated the same periodsamount recognized in 2019.2020. Interest income was lower in the third quarter and first three quarters of 2020,2021, as compared to 2019,2020, due to lower interest rates.rates on cash equivalents and lower overall related balances of cash equivalents throughout 2021.
Other Income/Expenses
The change in other income/expenses in the third quarter and first three quarters of 2020,2021, as compared to 2019,2020, was primarily due to a higher pension benefit of $1.8 million, and the change in valuation of deferred compensation assets which resulted in additionallower other income of $0.4 million. The change in other income/expenses in the first three quarters of 2021, as compared to 2020, was primarily due to a higher pension benefit of $5.6 million and the change in valuation of deferred compensation assets which resulted in higher other income of $0.5 million and reduced other incomemillion. The change in valuation of $3.7 million, respectively. This amountdeferred compensation is shown as "Gain on investments (unrealized)" on the condensed consolidated statements of earnings. The change related to deferred compensation assets are offset by an opposite change of the same amount in SG&A expense. The remaining change was primarily due to fluctuations in foreign currency transaction gains/losses that was lessmore favorable in 2020.2021.
Income Tax Expense
Our effective income tax rate in the third quarter and first three quarters of 20202021 was 23.4% and 21.3%, compared to 23.0% and 26.9%, compared to 24.5% and 24.7% in the third quarter and first three quarters of 2019.2020. On a year-to-date basis, the increasedecrease in the effective tax rate is aprimarily the result of a U.S. tax benefit related to foreign taxes paid which did not occur in 2020 in addition to the 2020 partial impairment of goodwill and tradename for the Access Systems business that iswas not fully tax deductible. An increase in the U.K. corporate tax rate effective in the third quarter of 2020 provided a one time deferred tax benefit of $1.5 million reducing the effective tax rate.
Earnings Attributable to Noncontrolling Interests
Earnings attributable to noncontrolling interests was lowerand equity in loss of nonconsolidated subsidiaries were consistent in the third quarter and first three quarters of 2020,2021 as compared to 2019. The decrease can be attributed to the acquisition of the remaining noncontrolling interests of AgSense and partial acquisition of the noncontrolling interest of Convert in the first quarter of 2020.
Cash Flows from Operations
Our cash flows provided by operations was $273.0 $61.8 million in the first three quarters of fiscal 2020,2021, as compared with $239.2$273.0 million provided by operations in the first three quarters of 2019.2020. The increasedecrease in operating cash flow in the first three quarters of 2020,2021, as compared with 2019,2020, was due to improved working capital management. Working capital is higher primarily due to an increase in cash balances.inventory, partially offset by an increase in advance payments received for performance obligations.
ESSUtility segment
Net sales were lower in the third quarter and first three quarters of 2020 as compared to 2019, primarily driven by lower sales volumes. Lighting, traffic, and highway safety product sales and access systems sales volumes were lower in the third quarter of 2020 as compared to 2019, while communication product sales volumes were higher. In the first three quarters of 2020, sales were higher for the lighting, traffic, and highway safety and communication products businesses and lower for access systems.
Global lighting, traffic, and highway safety product sales in the third quarter and first three quarters of 2020 was modestly lower by $9.7 million and higher by $4.6 million, as compared to the same periods in fiscal 2019. Sales volumes decreased in North America in the third quarter of 2020, attributable to higher shipments in the third quarter of 2019 resulting from the recovery from a flood event in early 2019 at one of our facilities. On a year-to-date basis, sales volumes in North America increased due to strong backlogs in transportation markets. Europe sales volumes were lower in the third quarter and first three quarters due to the ceasing of operations in Morocco, the temporary plant shutdown and continued slower markets in France due to COVID-19, and unfavorable foreign currency translation effects. Lighting, traffic, and highway safety product sales in the Asia-Pacific region decreased in the third quarter and first three quarters of 2020, as compared to 2019, due primarily to continued market weakness in India attributed to COVID-19.
Communication product line sales were higher by $2.3 million and $1.1 million in the third quarter and first three quarters of 2020, as compared with the same periods in 2019. Communication product sales in Europe improved due to an increase in volume in the U.K. and Asia-Pacific sales volumes increased marginally. In North America, communication product sales volumes decreased in the third quarter and first three quarters of 2020 due to lower demand for communication components.
Access Systems product line net sales decreased in the third quarter and first three quarters of 2020, as compared to 2019, by $5.0 million and $22.9 million. The product line exited selling detention center systems and portions of the industrial product line which contributed to the sales decline along with unfavorable foreign currency translation effects. For the first half of 2020, subdued construction spending in Australia also contributed to a decrease in sales volume.
Gross profit was higher in the third quarter and first three quarters of 2020, as compared to 2019, due to lower cost of raw materials across the segment and an approximate $7.0 million loss recognized on certain access systems projects in the third quarter of 2019 that did not recur. SG&A spending was higher in the third quarter of 2020 versus 2019 due to higher sales commissions and incentives due to improved operations in North America. For the first three quarters of 2020, SG&A also increased due to recording a partial goodwill and tradename impairment for the Access Systems business of $16.6 million, Operating income decreased in the first three quarters of 2020 due to the goodwill and tradename impairment of the Access Systems business, partially offset by lower raw material costs for all businesses and a loss recorded on certain access systems projects in third quarter of 2019.
Utility segment
In the Utility segment, sales increased in the third quarter and first three quarters of 2020,2021 as compared with 2019,2020, primarily due to large project work forhigher average selling prices in the international solar tracking solutionssteel product line and improved sales volumes for steel and concrete structures in North America.line. A number of our sales contracts in North America contain provisionsmechanisms that tie the sales price to published steel index pricing at the time our customer issues their purchase order. This resulted in a decreaseincreases to the average selling prices for our steel utility structures product line for the third quarter and first three quarters of 2020,2021, as compared with 2019.
Offshore and solar tracking solutions sales increased in2020. For the third quarter and first three quarters of 2021, sales of concrete structures approximated the amount recognized in fiscal 2020, as compared to 2019, due to a large increaseslightly lower volumes were offset by increases in average selling prices and improved product mix.
Offshore sales volumes in the third quarter. The increase for both businesses can be attributed to large projects in the third quarter of 2020.
Gross profit increaseddecreased in the third quarter and increased in the first three quarters of 2020,2021, as compared to 2019,2020, due to highera large decrease in sales volumes and its associated operating leverage of fixed costs. In addition, the business incurred approximately $3.0 million of inspection costs during 2019 to finalize the requirements from a 2015 commercial settlement. Partially offsetting that 2019 charge was a $2.8 million impairment of a facility in 2020 that is classified as an asset held for sale. SG&A expense was highervolume in the third quarter and first three quarters of 2020, as compared with 2019, due to higher incentives due to improved operating results in North America and a $2.7 million allowance recognized in third quarter 2020 against an international accounts receivable. The increase in operating income for the third quarter 2020, as compared with 2019, is primarily due to higher sales volumes. The improvement in operating income margin in 2020 versus 2019 is also attributed to disciplined product pricing; gross profit margins increased as lower raw material coststhat was slightly more than offset by higher volumes in the effect on net sales from lower average selling prices.
Coatings segment
Coatings segmentfirst half of 2021. Solar tracker solution sales decreased in the third quarter and first three quarters of 2021, as compared to 2020, due to lower volumes.
Gross profit decreased in the third quarter and first three quarters of 2021, as compared to 2020, due to the rapid steel cost inflation that could not be fully recovered through pricing mechanisms for the steel structures product line, as well as the decreased volumes in the solar tracker solutions product line. SG&A expense was relatively flat in the third quarter, as compared with 2020. SG&A expense was higher in the first three quarters, as compared with 2020, due primarily to a $5.5 million write-off of a receivable following arbitration within the offshore and other complex structures product line. The decrease in operating income for the third quarter of 2021, as compared with 2020, is primarily due to higher average selling prices more than offset by the impact of the cost of steel and lower offshore product sales. The decrease in operating income
for the first three quarters of 2021, as compared with 2020, is primarily due to the increase in the cost of steel that could not be fully recovered through higher average selling prices and the $5.5 million receivable write-off recognized in 2021.
ESS segment
Net sales in the third quarter of 2021, as compared to 2020, increased across the three product lines from pricing actions and due to favorable currency translation effect of $5.8 million. Net sales increased in the first three quarters of 2021 as compared to 2020, driven by $25.9 million of favorable foreign currency translation, higher average selling prices across the three product lines, partially offset by lower sales volumes of lighting, traffic and highway safety products.
Global lighting, traffic, and highway safety product sales in the third quarter of 2021 increased by $7.0 million, as compared to the same periodsperiod in 2019, due to lower volumes in North America and Asia, reduced sales pricingfiscal 2020, primarily attributed to higher average selling price partially offset by lower zinc costs, and unfavorable foreign currency translation.sales volumes across most regions. Sales volumes decreased in North America in the third quarter and first three quarters of 2020, as compared2021, attributed to 2019, due primarily to decreased industrial production attributed largely to the economic impacts from COVID-19. In Asia-Pacific region, sales volumes improveda slowdown in Australia, which were more than offset by decreasedorder volumes in Asia that were impacted by the continued slowdown caused by the economic impacts from COVID-19. Sales pricing also declined in Asia-Pacificlatter half of 2020 due to lower zinc costsdelays in approving the FAST Act extension. Europe sales of lighting and customer mix.
SG&A expense was flat fortraffic products were similar in the third quarter of 2021 versus 2020 and lower inhigher for the first three quarters of 2021 versus 2020, as compared to 2019, due to one-time expenses associated with a legal settlementCOVID mandated plant closures in 2019. Operating income was lower2020 that did not recur in 2021. Lighting, traffic, and highway safety product sales in the Asia-Pacific region increased in the third quarter and first three quarters of 2021, as compared to 2020, due to improved volumes of highway safety products and favorable currency translation.
Communication product line sales were higher by $12.7 and $24.2 million in the third quarter and first three quarters of 2021, as compared with the same periods in 2020. In North America, communication product selling prices increased in the third quarter and first three quarters of 2021, as well as increases in sales volumes in the third quarter and first three quarters of 2021 due to higher demand for communication structures and components. Communication product sales also improved due to an increase in sales volumes in the U.K. and Asia-Pacific. 5G deployments continue to increase market opportunities across all regions.
Access Systems product line net sales increased in the third quarter of 2021, as compared to 2020, by $5.7 million due to favorable currency translation effects and higher sales volumes. The sales improvement on a year-to-date basis can be attributed to the favorable currency translation effects and the higher second and third quarter sales volumes.
Gross profit was higher in the third quarter and first three quarters of 2021, as compared to 2020, primarily due to selling price management that expanded margins in a rising commodity cost environment and improved performance by the access systems product line. SG&A spending was lower for the first three quarters of 2021 versus 2020 due primarily to the $16.6 million partial impairment of goodwill and tradenames within the access systems product line recognized in 2020 which did not recur in 2021. Operating income increased in the third quarter and first three quarters of 2021 due to improved average selling prices and the $16.6 million impairment recognized in 2020 which did not recur in 2021.
Coatings segment
Coatings segment sales increased in the third quarter and first three quarters of 2021, as compared to the same periods in 2019,2020, due to higher average selling prices and favorable foreign currency translation. In North America, a modest improvement in sales volume combined with the increase in average selling prices to counteract the higher cost of zinc resulted in an increase in net sales in the third quarter and first three quarters of 2021. In Asia-Pacific region, sales improved in all regions in 2021 due to sales price increases, higher volumes, and favorable foreign currency translation.
The gross profit margin decreased in the third quarter of 2021, as compared to 2020, as inflation in costs (zinc and labor) were not fully offset by the increase in average selling prices. SG&A expense was similar in the third quarter and first three quarters of 2021, as compared to 2020. Operating income was higher in the first three quarters of 2021, compared to the same period in 2020, due to improved sales pricing, volume decreases in North Americaincreases, and Asia andfavorable foreign currency translation, partially offset by startup costs related to the associated operating deleverage of fixed costs.new Pittsburgh facility.
Irrigation segment
The decreaseincrease in Irrigation segment net sales in the third quarter and first three quarters of 2020,2021, as compared to 2019,2020, is primarily due to unfavorable foreign currency translation effects (primarily Brazil real) that were partially offset bystrong sales volume improvements in international markets. Brazil, Australia, and Argentina drove thealmost all markets, as well as higher average selling prices. The sales volume improvements for international irrigation along withwas primarily due to deliveries on the acquisition of Solbras, which was partially offset by unfavorable currency translation effects from a weaker Brazil realmulti-year Egypt project and South African rand.higher sales in Brazil. In North America, slightly higher sales volumes for irrigation systems was more than offsetand parts were driven by decrease in sales volumes of other products, including industrial tubing. For the first three quarters of 2020, salesimproved agricultural commodity prices. Sales of technology-related products and services continue to increase, as growers continued adoption of technology to reduce costs and enhance profitability.
The increase in gross profit in 2021 as compared to 2020 is primarily attributed to the sales volume growth and partially attributed to the significant increase in average selling prices for the industrial tubing product line. SG&A was higher in the third quarter and first three quarters of 2020,2021, as compared to 2019,2020, due to approximately $8.5 million of SG&A from the recently acquired Prospera and PivoTrac, and higher product development expenses.incentive expense due to improved operating results. Operating income for the segment decreasedincreased in the third quarter2021 due to higher product development expenses and unfavorable currency translation effects. Operating income increased in the first three quarters of 2020 over 2019, as a result of lower raw material costs and higherimproved global sales volumes in international markets.and pricing.
Net corporate expense
Corporate SG&A expense was higher in the third quarter and first three quarters of 2020,2021, as compared to 2019.2020. The increase in the third quarter is attributedprimarily due to higher incentive accruals related to improved business performance. The increase in the first three quarters of 2021,as compared to 2020, is due to higher incentive accruals, an increase in stock compensation expense, partially offset by the changeand an increase in valuation of deferred compensation assets which resulted in lower expense of $3.7 million. The change in deferred compensation plan assets is offset by the same amount in other income/expenses.acquisition diligence expense.
Liquidity and Capital Resources
Cash Flows
Working Capital and Operating Cash Flows-Net working capital was $934.2$863.8 million at September 26, 2020,25, 2021, as compared to $918.4$881.3 million at December 28, 2019.26, 2020. The increasedecrease in net working capital in 20202021 is attributed to a decrease in cash and cash equivalents due to the recent business acquisitions and an increase in cashaccounts payable, partially offset by an increase in inventory and receivable balances. Cash flow provided by operations was $61.8 million in the first three quarters of 2021, as compared with $273.0 million in the first three quarters of 2020, as compared with $239.2 million in the first three quarters of 2019.2020. The increasedecrease in operating cash flows in 2020,2021, as compared to 2019,2020, was primarily the result of improved working capital management.an increased inventory balance that was partially offset by an increase in customer advances payments (contract liabilities) and lower pension plan contributions. The required 2021 pension contribution was made in the fourth quarter of 2020.
Investing Cash Flows-Capital spending in the first three quarters of fiscal 2020 was $71.0 million, as compared to $72.0 million for the same period in 2019.- The decreaseincrease in investing cash outflows in the first three quarters quarter of 2020,2021, as compared to 2019,2020, can be attributed to a reduction in cash$312.5 million paid for acquisitions.acquisitions occurring during 2021 as compared to $15.9 million paid in 2020. Capital spending in the first three quarters of fiscal 2021 was $80.5 million, as compared to $71.0 million for the same period in 2020. We expect our capital expenditures to be between $85.0in the range of $110 million and $95.0to $120 million for fiscal 2020.2021.
Financing Cash Flows-Our total interest-bearing debt was $795.9$916.1 million at September 26, 202025, 2021 and $787.5$766.3 million at December 28, 2019.26, 2020. Financing cash outflows wereflows changed from an outflow of $110.0 million and $82.7 million in the first three quarters of 2020 and 2019, respectively. The increase in financing cash outflowsto an inflow of $101.0 million in the first three quarters of 2020, as compared2021. The financing cash inflow in the first three quarters of 2021 was primarily the result of our borrowing on the revolving credit agreement to 2019,partially fund the Prospera acquisition, slightly offset by principal payments on our debt, dividends paid, and the purchase of treasury shares. The financing cash outflow for the first three quarters of 2020 was due primarily to the higher amounts paid to purchase of noncontrolling interests, principal payments on our debt, dividends paid, and lower netthe purchase of treasury shares; somewhat offset by our debt borrowings.
Guarantor Summarized Financial Information
We are providing the following information in compliance with Rule 3-10 and Rule 13-01 of Regulation S-X with respect to our two tranches of senior unsecured notes. All of the senior notes are guaranteed, jointly, severally, fully and unconditionally (subject to certain customary release provisions, including sale of the subsidiary guarantor, or sale of all or substantially all of its assets) by certain of the Company’s current and future direct and indirect domestic and foreign subsidiaries (collectively the “Guarantors”). The Parent is the Issuer of the notes and consolidates all Guarantors.
The financial information of Issuer and Guarantors is presented on a combined basis with intercompany balances and transactions between Issuer and Guarantors eliminated. The Issuer’s or Guarantors' amounts due from, amounts due to, and transactions with non-guarantor subsidiaries are separately disclosed.
Combined financial information is as follows:
Combined financial information is as follows:
Supplemental Combined Parent and Guarantors Financial Information
For the thirteen and thirty-nine weeks ended September 26, 202025, 2021 and September 28, 2019
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Thirty-nine weeks ended |
Dollars in thousands | September 26, 2020 | | September 28, 2019 | | September 26, 2020 | | September 28, 2019 |
Net sales | $ | 438,947 | | | $ | 433,533 | | | $ | 1,377,294 | | | $ | 1,314,108 | |
Gross Profit | 115,116 | | 114,538 | | 385,314 | | 340,645 |
Operating income | 35,261 | | 44,846 | | 149,866 | | 137,343 |
Net earnings | 13,760 | | 24,083 | | 87,235 | | 82,349 |
Net earnings attributable to Valmont Industries, Inc. | 13,759 | | 24,083 | | 87,249 | | 82,349 |
26, 2020 | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Thirty-nine weeks ended |
Dollars in thousands | September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 |
Net sales | $ | 520,188 | | | $ | 438,947 | | | $ | 1,551,701 | | | $ | 1,377,294 | |
Gross Profit | 143,724 | | 115,116 | | 426,167 | | 385,314 |
Operating income | 49,166 | | 35,261 | | 159,994 | | 149,866 |
Net earnings | 26,125 | | 13,760 | | 92,200 | | 87,235 |
Net earnings attributable to Valmont Industries, Inc. | 26,098 | | 13,759 | | 92,090 | | 87,249 |
Supplemental Combined Parent and Guarantors Financial Information
September 26, 202025, 2021 and December 28, 201926, 2020
| Dollars in thousands | Dollars in thousands | September 26, 2020 | | December 28, 2019 | Dollars in thousands | September 25, 2021 | | December 26, 2020 |
Current assets | Current assets | $ | 777,934 | | | $ | 728,457 | | Current assets | $ | 729,047 | | | $ | 738,437 | |
Noncurrent assets | Noncurrent assets | 374,796 | | | 354,173 | | Noncurrent assets | 813,116 | | | 701,571 | |
Current liabilities | Current liabilities | 295,544 | | | 312,984 | | Current liabilities | 371,801 | | | 321,979 | |
Noncurrent liabilities | Noncurrent liabilities | 1,121,280 | | | 1,076,491 | | Noncurrent liabilities | 1,287,332 | | | 1,100,657 | |
Noncontrolling interest in consolidated subsidiaries | Noncontrolling interest in consolidated subsidiaries | 1,585 | | | — | | Noncontrolling interest in consolidated subsidiaries | 1,757 | | | 1,738 | |
Included in noncurrent assets is a due from non-guarantor subsidiaries receivable of $83,977$99,251 and $54,915$88,309 at September 26, 202025, 2021 and December 28, 2019.26, 2020. Included in noncurrent liabilities is a due to non-guarantor subsidiaries payable of $262,680$279,108 and $249,056$262,935 at September 26, 202025, 2021 and December 28, 2019.26, 2020.
Financing and Capital
The Board of Directors authorized the purchase of $250 million of the Company's shares without an expiration date in October 2018. The share purchases will be funded from available working capital and short-term borrowings and will be made subject to market and economic conditions. We are not obligated to make any share repurchases under the share repurchase program and we may discontinue the share repurchase program at any time. Share repurchases were temporarily suspended at the end of the first quarter of 2020 until September 2020 as a precaution to preserve liquidity. We acquired 251,136103,056 treasury shares for approximately $28.0$24.1 million under our share repurchase program during the first three quarters of 2020.2021. As of September 26, 2020,25, 2021, we have approximately $176.4$123.9 million open under this authorization to repurchase shares in the future.
Our capital allocation philosophy announcement included our intention to manage our capital structure to maintain our investment grade debt rating. Our most recent ratings were Baa3 by Moody's Investors Services, Inc., BBB- rating by Fitch Rating Services, and BBB+ rating by Standard and Poor's Rating Services. We expect to maintain a leverage ratio which will support our current investment grade debt rating.
Our debt financing at September 26, 202025, 2021 is primarily long-term debt consisting of:
•$450 million face value ($436.5 million carrying value) of senior unsecured notes that bear interest at 5.00% per annum and are due in October 2044.
•$305 million face value ($297.6 million carrying value) of unsecured notes that bear interest at 5.25% per annum and are due in October 2054.
•We are allowed to repurchase the notes at specified prepayment premiums. Both tranches of these notes are guaranteed by certain of our subsidiaries.
At September 25, 2021 and December 26, 2020, and December 28, 2019, we had $41.9$168.1 million and $29.0 millionno outstanding borrowings under our revolving credit agreement, respectively. The revolving credit agreement contains certain financial covenants that may limit our additional borrowing capability under the agreement. At September 26, 2020,25, 2021, we had the ability to borrow $542.6$415.6 million under this facility, after consideration of standby letters of credit of $15.5$16.3 million associated with certain insurance obligations and international sales commitments. We also maintain certain short-term bank lines of credit totaling $134.2$139.7 million, $120.0$126.6 million of which was unused at September 26, 2020.25, 2021.
Our senior unsecured notes and revolving credit agreement each contain cross-default provisions which permit the acceleration of our indebtedness to them if we default on other indebtedness that results in, or permits, the acceleration of such other indebtedness.
On October 18, 2021, we along with our wholly-owned subsidiaries Valmont Industries Holland B.V. and Valmont Group Pty. Ltd., as borrowers, entered into an amendment and restatement of our revolving credit agreement with our lenders. The maturity date of the revolving credit facility was extended to October 18, 2026.
Borrowings under the amended and restated revolving credit agreement will bear interest, payable quarterly, monthly or at the end of any interest period (depending on the type of borrowing), at our option, at either:
• term SOFR (based on one, three, or six month interest periods, as selected by us) plus a ten basis point adjustment plus a spread of 100 to 162.5 basis points, depending on the credit rating of our senior, unsecured, long-term debt;
• the higher of (i) the prime lending rate, (ii) an overnight bank rate plus 50 basis points and (ii) term SOFR (based on a 1 month interest period) plus a 110 basis point adjustment plus, in each case, a spread of 0 to 62.5 basis points, depending on the credit rating of the Company’s senior, unsecured, long-term debt; or
• daily simple SOFR plus a 10 basis point adjustment plus a spread of 100 to 162.5 basis points, depending on the credit rating of our senior, unsecured, long-term debt.
A commitment fee, payable quarterly, is also required under the amended and restated revolving credit agreement which accrues at 10 to 25 basis points, depending on the credit rating of our senior, unsecured, long-term debt, on the average daily unused portion of the commitments under the amended and restated revolving credit agreement.
The amended and restated revolving credit agreement requires maintenance of a leverage ratio, measured as of the last day of each of our fiscal quarters, of 3.50:1 or less. The leverage ratio is the ratio of: (a) interest-bearing debt minus unrestricted cash in excess of $50 million (but not exceeding $500 million); to (b) adjusted EBITDA. The debt agreements contain covenants that require usprovide a modification of the definition of “EBITDA” to maintain certain coverage ratiosadd-back any non-cash stock based compensation in any trailing twelve month period and may limit us with respect to certain business activities, including capital expenditures. The debt agreements allow us to add estimated EBITDA from acquired businesses for periods we did not own the acquired business. The debt agreements also provide for an adjustment to EBITDA, subject to certain limitations, for non-cash charges or gains that are non-recurring in nature.
Our key debt covenants are as follows:
•Leverage The leverage ratio - Interest-bearing debt is notpermitted to exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDAincrease from 3.50:1 to 3:75:1 for the four consecutive fiscal quarters after certain material acquisitions)acquisitions.
The amended and restated revolving credit agreement also contains customary affirmative and negative covenants for credit facilities of this type, including, among others, limitations on us and our subsidiaries with respect to indebtedness, liens, mergers and acquisitions, investments, dispositions of assets, restricted payments, transactions with affiliates and prepayments of indebtedness. The amended and restated revolving credit agreement also provides for acceleration of the prior four quarters;obligations thereunder and exercise of other enforcement remedies upon the occurrence of customary events of default (subject to customary grace periods, as applicable).
•Interest earned ratio - Adjusted EBITDA over the prior four quarters must be at least 2.5X our interest expense over the same period.
At September 26, 2020,25, 2021, we were in compliance with all covenants related to the debt agreements. The key covenant calculationscalculation at September 26, 2020 were25, 2021 was as follows (in 000's):
| | | | | |
Interest-bearing debt | $ | 795,937916,056 | |
| |
Less: Cash and cash equivalents in excess of $50 million | 119,795 | |
Net indebtedness | $ | 796,261 | |
Adjusted EBITDA-last four quarters | 344,627429,775 | |
Leverage ratio | 2.311.85 | |
| |
Adjusted EBITDA-last four quarters | $ | 344,627 | |
Interest expense-last four quarters | 40,748 | |
Interest earned ratio | 8.46 | |
The calculation of Adjusted EBITDA-last four quarters (October 29, 2019(September 26, 2020 through September 26, 2020)25, 2021) is as follows. The last four quarters information ended September 26, 202025, 2021 is calculated by taking the full fiscal year ended December 28, 2019,26, 2020, subtracting the first three quarters ended September 28, 2019,26, 2020, and adding the first three quarters ended September 26, 2020.25, 2021.
| | | | | |
Net cash flows from operations | $ | 341,430105,077 | |
Interest expense | 40,74841,976 | |
Income tax expense | 50,61356,765 | |
Impairment of property, plant and equipment | (2,811)(940) | |
Impairment of goodwill and intangible assets | (16,638) | |
Change in investment | 85 | |
Deferred income tax benefit | 6,9086,394 | |
Noncontrolling interest | (2,481) | |
Stock-based compensation | (11,434)(1,767) | |
Pension plan expense | 5,53212,961 | |
Contribution to pension plan | 18,43318,971 | |
Changes in assets and liabilities | (112,236)177,260 | |
Other | 1,351 (199) | |
EBITDA | 319,500416,498 | |
Cash restructuring expenses | 5,67813,277 | |
| |
Impairment of goodwill and intangible assets | 16,638 | |
Impairment of property, plant and equipment | 2,811 | |
| |
Adjusted EBITDA | $ | 344,627429,775 | |
| |
| |
| | | | | |
Net earnings attributable to Valmont Industries, Inc. | $ | 144,778204,590 | |
Interest expense | 40,74841,976 | |
Income tax expense | 50,61356,765 | |
Stock-based compensation | 24,034 | |
Depreciation and amortization expense | 83,36189,133 | |
EBITDA | 319,500416,498 | |
Cash restructuring expenses | 5,67813,277 | |
| |
Impairment of goodwill and intangible assets | 16,638 | |
Impairment of property, plant, and equipment | 2,811 | |
Adjusted EBITDA | $ | 344,627429,775 | |
| |
| |
Our businesses are cyclical, but we have diversity in our markets from a product, customer and a geographical standpoint. We have demonstrated the ability to effectively manage through business cycles and maintain liquidity. We have consistently generated operating cash flows in excess of our capital expenditures. Based on our available credit facilities, recent issuance of senior unsecured notes and our history of positive operational cash flows, we believe that we have adequate liquidity to meet our needs.
We have cash balances of $443.1$169.8 million at September 26, 2020,25, 2021, approximately $221.7$145.0 million is held in our non-U.S. subsidiaries. If we distributed our foreign cash balances certain taxes would be applicable. At September 26, 2020,25, 2021, we have a liability for foreign withholding taxes and U.S. state income taxes of $3.3$3.4 million and $0.8$0.7 million, respectively.
Financial Obligations and Financial Commitments
There have been no material changes to our financial obligations and financial commitments as described on page 34-35 in our Form 10-K for the fiscal year ended December 28, 2019.26, 2020 with the exception of the following:
During the second quarter of 2021 the Company, the Company commenced on a new corporate headquarters operating lease with straight-line annual expense of approximately $5,100, a 2% annual increase in lease payment, and a 25 year term. In recognition of this lease, an operating lease asset of $71,853 and an operating lease long-term liability of $71,196 was incurred. These amounts are included within other assets and operating lease liabilities, respectively, in the Condensed Consolidated Balance Sheets as of September 25, 2021.
Off Balance Sheet Arrangements
There have been no material changes in our off balance sheet arrangements as described on page 3538 in our Form 10-K for the fiscal year ended December 28, 2019.26, 2020.
Critical Accounting Policies
There were no changes in our critical accounting policies as described on pages 37-4039-42 in our Form 10-K for the fiscal year ended December 28, 201926, 2020 during the ninethree months ended September 26, 2020, with the exception of the change in method of accounting for certain inventory, previously accounted for on the LIFO basis, so that now all inventory is valued on the FIFO basis.25, 2021.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There were no material changes in the company's market risk during the quarter ended September 26, 2020.25, 2021. For additional information, refer to the section "Risk Management" in our Form 10-K for the fiscal year ended December 28, 2019.26, 2020.
Item 4. Controls and Procedures
The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports the Company files or submits under the Securities Exchange Act of 1934 is (1) accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.
No changes in the Company's internal control over financial reporting occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1A – Risk Factors
There have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussion of the Company’s risk factors under Part I, Item 1A in each of the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2019 and Quarterly Report on Form 10-Q for the quarter ended March 28,26, 2020.
PART II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Period | | Total Number of Shares Purchased | | Average Price paid per share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Approximate Dollar Value of Maximum Number of Shares that may yet be Purchased under the Program (1) |
June 28, 2020 to July 25, 2020 | — | | | $ | — | | | — | | | $ | 176,445,000 | |
July 26, 2020 to August 29, 2020 | — | | | — | | | — | | | 176,445,000 | |
August 30, 2020 to September 26, 2020 | 60,645 | | | 124.08 | | | 60,645 | | | 176,445,000 | |
Total | 60,645 | | | $ | 124.08 | | | 60,645 | | | $ | 176,445,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Period | | Total Number of Shares Purchased | | Average Price paid per share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Approximate Dollar Value of Maximum Number of Shares that may yet be Purchased under the Program (1) |
June 27, 2021 to July 24, 2021 | — | | | $ | — | | | — | | | $ | 126,356,000 | |
July 25, 2021 to August 28, 2021 | 10,759 | | | 232.37 | | | 10,759 | | | 123,856,000 | |
August 29, 2021 to September 25, 2021 | — | | | — | | | — | | | 123,856,000 | |
Total | 10,759 | | | $ | 232.37 | | | 10,759 | | | $ | 123,856,000 | |
(1) On May 13, 2014, we announced a new capital allocation philosophy which included a share repurchase program. Specifically, the Board of Directors authorized the purchase of up to $500 million of the Company's outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately-negotiated transactions. On February 24, 2015 and again on October 31, 2018, the Board of Directors authorized an additional purchase of up to $250 million of the Company's outstanding common stock with no stated expiration date.date bringing total authorization to $1.0 billion. As of September 26, 2020,25, 2021, we have acquired 6,173,5906,466,629 shares for approximately $823.6$876.1 million under this share repurchase program.
Item 6. Exhibits
(a) Exhibits
| | | | | | | | |
Exhibit No. | | Description |
| | Second Amended and Restated Credit Agreement, dated as of October 18, 2021, among the Company, Valmont Industries Holland B.V. and Valmont Group Pty. Ltd., as Borrowers, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other lenders party thereto.This document was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated October 18, 2021 (Commission file number 001-31429) and herein incorporated by reference. |
| | List of Issuer and Guarantor Subsidiaries. This document was filed as Exhibit 22.1 to the Company's Quarterly Report on Form 10-Q (Commission file number 001-31429) for the quarter ended March 28, 2020 and is incorporated herein by this reference. |
| | Section 302 Certificate of Chief Executive Officer |
| | Section 302 Certificate of Chief Financial Officer |
| | Section 906 Certifications of Chief Executive Officer and Chief Financial Officer |
101 | | The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended September 26, 2020,25, 2021, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders' Equity, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information. |
104 | | Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101) |
* Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf and by the undersigned hereunto duly authorized.
| | | | | |
| VALMONT INDUSTRIES, INC. (Registrant) |
| /s/ AVNER M. APPLBAUM |
| Avner M. Applbaum Executive Vice President and Chief Financial Officer |
Dated this 27ththe 28th day of October, 2020.2021.