Valmont Industries (VMI) FY Conference Summary Company Overview - Valmont Industries is a Fortune 1,000 company headquartered in Omaha, Nebraska, with nearly 80 years of history [7] - Generated approximately $4.1 billion in net sales last year, with a current market cap around $6.5 billion [8] - Operates in over 100 countries with 83 manufacturing facilities and a workforce of about 11,000 [8] - Revenue distribution: over 70% from the US and Canada, with the remainder from EMEA, Latin America, and Asia Pacific [8] Industry Position - Holds a 40-45% market share in North American high voltage electricity transmission structures [3] - Global leader in irrigation with a 40% market share [4] - Significant presence in highway structures and telecommunications [4] Business Segments Infrastructure - Largest segment with nearly $3 billion in sales and a strong operating margin of 16.6% [8] - Strong demand driven by rising electricity consumption, aging grid infrastructure, and renewable energy build-out [11] - Focus on utility, lighting, transportation, and telecom products [10] - Telecom business benefits from carrier spending and 5G build-out [13] Agriculture - Accounts for just over $1 billion in sales, with a focus on irrigation equipment and parts [8] - Strong dealer network enhances customer loyalty and aftermarket parts sales [17] - Demand influenced by net farm income, commodity prices, and farm consolidation [18] - International sales are approximately 50% of total sales, with growth in regions like Brazil and the Middle East [22] Strategic Initiatives - Focus on expanding capacity to meet demand in the utility business, with a planned $100 million annual CapEx [37] - Emphasis on technology improvements, including a unified app for farmers and an e-commerce platform for parts [31][19] - Targeting higher-margin areas in agriculture, particularly international markets and technology products [39] Financial Performance - Revenue growth plateaued due to North American agriculture pullback and solar industry challenges [34] - Operating income and earnings per share have more than doubled over the last five years [36] - Corporate costs are being targeted for reduction to improve efficiency [40] Global Megatrends - Infrastructure investment driven by energy transition, aging infrastructure, and technology demands [23][24][25] - Agriculture trends focused on food security, sustainability, and population growth [26][27] Challenges and Opportunities - Addressing lower margins in international agriculture, particularly in the Middle East, through improved supply chain management [54][55] - Mitigating impacts of steel tariffs through strategic sourcing and customer negotiations [58][60] - Continuous improvement in factory throughput and productivity to enhance margins [68] Shareholder Returns - 50% of capital allocation focused on reinvestment in the business, with the other 50% on shareholder returns [45] - Announced a $700 million increase in share repurchase authorization, representing about 10% of market cap [46] - Aiming for consistent dividend increases, with a recent 13% year-over-year increase [47] Conclusion - Valmont Industries is well-positioned to capitalize on global megatrends in infrastructure and agriculture, with a focus on growth, margin expansion, and shareholder returns [28][47]

Core Viewpoint - Valmont Industries (VMI) shares have increased by approximately 9.3% since the last earnings report, outperforming the S&P 500, but there are concerns about whether this positive trend will continue leading up to the next earnings release [1] Estimates Movement - Estimates for Valmont have trended downward over the past month, indicating a potential shift in investor sentiment [2] VGM Scores - Valmont currently holds a Growth Score of B, a Momentum Score of D, and a Value Score of B, resulting in an aggregate VGM Score of B, which is relevant for investors not focused on a single strategy [3] Outlook - The downward trend in estimates suggests a negative shift, and Valmont holds a Zacks Rank of 3 (Hold), indicating expectations for an in-line return in the coming months [4]

Valmont Industries, Inc. (VMI) reported a first-quarter 2025 profit of $87.3 million or $4.32 per share. This compares to the profit of $87.8 million or $4.32 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $4.24.The company’s revenues were $969.3 million in the quarter, down 0.9% year over year. The top line missed the Zacks Consensus Estimate of $975.6 million.(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)VMI’s Segment ReviewThe first-quar ...

Disclosure Regarding Forward-Looking Statements These slides (and the accompanying oral discussion) contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on assumptions made by management, considering its experience in the industries where Valmont operates, perceptions of historical trends, current conditions, expected future developments, and other relevant factors. It is important to note that these statements are not guar ...

Core Insights - Valmont Industries reported quarterly earnings of $4.32 per share, exceeding the Zacks Consensus Estimate of $4.24 per share, with an earnings surprise of 1.89% [1] - The company posted revenues of $969.31 million for the quarter, missing the Zacks Consensus Estimate by 0.64%, compared to $977.83 million in the same quarter last year [2] - Valmont has surpassed consensus EPS estimates in all four of the last quarters, while it has topped revenue estimates twice during the same period [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $4.72 on revenues of $1.04 billion, and for the current fiscal year, it is $18.01 on revenues of $4.09 billion [7] - The estimate revisions trend for Valmont is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Steel - Pipe and Tube industry, to which Valmont belongs, is currently ranked in the bottom 24% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Valmont's stock performance [5]

Financial Data and Key Metrics Changes - Consolidated net sales for Q1 2025 were $969.3 million, a decrease of 0.9% year-over-year, but increased modestly on a constant currency basis [35][46] - Gross margin was 30%, down 130 basis points from the prior year, primarily due to a higher mix of international projects in the agriculture segment [35] - Operating income was $128.3 million, representing 13.2% of sales, with diluted earnings per share at $4.32, consistent with the prior year [35][46] Business Line Data and Key Metrics Changes - Infrastructure sales decreased by 2.4%, with utility sales increasing by 2.4% driven by higher volumes and average selling prices [37] - Agriculture sales increased by 3.3%, approximately 6% on a constant currency basis, with international sales significantly up, particularly in the EMEA region and Brazil [40][41] Market Data and Key Metrics Changes - North American market conditions for agriculture remain challenged, with projected declines in corn and soybean prices [26] - The telecommunications business saw strong sales growth of nearly 30%, driven by favorable carrier spending [39] Company Strategy and Development Direction - The company is focused on capturing the global infrastructure wave by expanding capabilities and optimizing capacity, with a $30 million investment in CapEx for Q1 2025 [11][12] - A local-for-local supply chain strategy has been implemented to reduce exposure to tariffs and better serve global customers [9][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating disruptions while positioning the business for long-term growth, despite slight declines in consolidated net sales [6][7] - The outlook for 2025 remains optimistic, with net sales projected between $4.0 billion and $4.2 billion and diluted earnings per share expected between $17.20 and $18.80 [46][53] Other Important Information - The company is actively mitigating near-term tariffs, with a comprehensive plan to offset an estimated $80 million in tariff exposure [48][50] - A 13% dividend increase was announced during the quarter, and a stock repurchase program of $700 million was initiated [44] Q&A Session Summary Question: Have price actions been implemented to offset all of the tariff impacts to date? - Management indicated that about half of the $80 million tariff exposure is being addressed through pricing actions, with expectations for higher pricing and possibly lower volumes included in guidance [58][60] Question: What is the outlook for the telecom business for the rest of the year? - Management expressed strong confidence in continued growth in telecom, driven by carrier investments in 5G upgrades and modernization [63][64] Question: What is the expectation for volume growth in the utility and lighting & transportation segments? - Management expects mid-single-digit volume growth for infrastructure, excluding solar, with improvements noted in order rates for lighting [108][117] Question: How is the company managing its tariff situation and USMCA compliance? - Management confirmed that their Mexico operations are USMCA compliant and emphasized ongoing efforts to manage tariffs and costs effectively [121][122]

Financial Performance - Net sales for Q1 2025 decreased by 0.9% to $969.3 million compared to $977.8 million in Q1 2024, with a 0.5% increase in constant currency[5]. - Operating income was $128.3 million, representing 13.2% of net sales, down from $131.6 million or 13.5% of net sales in the prior year[5]. - Diluted earnings per share remained unchanged at $4.32 compared to the previous year[5]. - Net earnings for the thirteen weeks ended March 29, 2025, were $86.663 million, slightly down from $88.429 million in the prior year, a decrease of about 2.0%[31]. - The adjusted EBITDA for the four fiscal quarters ended March 29, 2025, was $640.829 million, providing insights into the company's core operating performance[36]. Cash Flow and Liquidity - Operating cash flows increased significantly to $65.1 million from $23.3 million, with cash and cash equivalents at $184.4 million and a net leverage ratio of approximately 1.0x[5]. - Cash and cash equivalents increased to $184.399 million as of March 29, 2025, compared to $164.315 million at the end of 2024, marking an increase of approximately 12.5%[29]. - The leverage ratio as of March 29, 2025, was 0.97, indicating a stable financial position relative to debt levels[38]. - The company reported a net cash flow from operating activities of $65.130 million for the thirteen weeks ended March 29, 2025, compared to $23.332 million in the same period in 2024, showing a significant improvement[31]. Segment Performance - Infrastructure segment sales decreased by 2.4% to $706.2 million, while Agriculture segment sales increased by 3.3% to $267.3 million[7][10]. - Operating income in the Agriculture segment decreased by 11.6% to $36.2 million, or 13.6% of net sales, due to volume declines in North America[12]. - North America sales for the Infrastructure segment increased to $577.197 million from $568.572 million year-over-year, reflecting a growth of about 1.1%[27]. - The Infrastructure segment's sales totaled $706.221 million for the thirteen weeks ended March 29, 2025, down from $723.614 million in the prior year, a decline of approximately 2.4%[27]. - Net sales for the thirteen weeks ended March 29, 2025, totaled $969,314, with Infrastructure contributing $703,491 and Agriculture $265,823[42]. Outlook and Projections - The company reaffirmed its full-year 2025 financial outlook, projecting net sales between $4.0 billion and $4.2 billion and diluted earnings per share between $17.20 and $18.80[14]. - Capital expenditures for 2025 are expected to be between $140 million and $160 million[14]. - Fiscal 2025 net sales outlook ranges from $4,000,000 to $4,200,000, with a low end of $3,025,000 for Infrastructure and $975,000 for Agriculture[42]. - Year-over-year change in net sales is projected at (1.8)% for consolidated sales, with Infrastructure at 0.9% and Agriculture at (9.4)%[42]. - The company anticipates a net sales range of $3,160,000 to $4,060,000 in constant currency for Fiscal 2025[42]. Foreign Exchange Impact - The impact of foreign exchange on net sales for the same period was $13,153, with $6,070 for Infrastructure and $7,083 for Agriculture[42]. - The company expects a foreign exchange impact of $60,000 on net sales for Fiscal 2025, with $25,000 attributed to Infrastructure and $35,000 to Agriculture[42]. - The projected year-over-year change in net sales at constant currency is (1.1)% for consolidated sales, with Infrastructure at 2.1% and Agriculture at (7.1)%[42]. - The foreign exchange rates assumed for translation effects include BRL/USD at 5.90, AUD/USD at 1.58, and EUR/USD at 0.96[42]. - The company reported a net sales increase of 6.6% in constant currency for Agriculture in the thirteen weeks ended March 29, 2025[42]. Shareholder Returns - The company plans to return $12.0 million to shareholders in dividends, increasing the quarterly dividend by 13% to $0.68 per diluted share[5]. Backlog and Current Assets - The total backlog as of March 29, 2025, was $1,489.2 million, up from $1,436.7 million at the end of 2024, indicating an increase of approximately 3.6%[40]. - The company’s total current assets increased to $1,722.817 million as of March 29, 2025, from $1,683.392 million at the end of 2024, reflecting a growth of about 2.3%[29].

Company Overview - Valmont Industries (VMI) shares increased by 4.7% to $298.97 in the last trading session, following a significant volume of shares traded, contrasting with an 18.2% loss over the past four weeks [1] Tariff Impact and Mitigation Strategies - Valmont provided an update on the estimated impacts of U.S. tariffs on imports from Mexico, Canada, and China, as well as on imported steel and aluminum, detailing mitigation strategies such as pricing actions, cost control, productivity improvements, and supply-chain optimizations [2] - The company anticipates being cost-neutral on a dollar basis in the second half of fiscal 2025, even without USMCA tariff exclusions for imports from Mexico and Canada [3] Earnings Expectations - Valmont is expected to report quarterly earnings of $4.23 per share, reflecting a year-over-year decrease of 2.1%, with revenues projected at $977.37 million, down 0.1% from the previous year [4] - The consensus EPS estimate for the quarter has been revised 1.6% higher over the last 30 days, indicating a positive trend in earnings estimate revisions, which typically correlates with stock price appreciation [5] Industry Context - Valmont operates within the Zacks Steel - Pipe and Tube industry, where another company, Tenaris S.A. (TS), closed 0.7% higher at $39.63, with a 4.3% return over the past month [5] - Tenaris' consensus EPS estimate for the upcoming report has increased by 17.3% over the past month, although it represents a year-over-year decrease of 37.8% [6]

Core Viewpoint - Valmont Industries (VMI) shares have declined approximately 9.9% since the last earnings report, underperforming the S&P 500, raising questions about future performance leading up to the next earnings release [1] Group 1: Earnings and Estimates - Recent estimates for Valmont have trended upward over the past month, indicating a positive outlook [2][4] - The most recent earnings report highlighted important catalysts that may influence future performance [1] Group 2: VGM Scores - Valmont currently holds a strong Growth Score of A, while its Momentum Score is rated B, and it has a C grade for Value, placing it in the middle 20% for that investment strategy [3] - The aggregate VGM Score for Valmont is A, which is significant for investors not focused on a single strategy [3] Group 3: Outlook - The upward trend in estimates suggests a promising outlook for Valmont, with a Zacks Rank of 3 (Hold), indicating expectations for an in-line return in the coming months [4]

Business Segments - Valmont Industries operates in two reportable segments: Infrastructure and Agriculture, focusing on manufacturing products and services for infrastructure and agricultural markets[11][12][34]. - The Infrastructure segment includes utility structures, lighting and transportation solutions, coatings services, telecommunications products, and solar trackers, addressing the growing demand for reliable energy and infrastructure resilience[15][18][19][20][26]. - The Agriculture segment manufactures center pivot and linear irrigation equipment, with a focus on enhancing agricultural productivity and water conservation, serving fields from four to over 500 acres[34][36]. Government and Market Demand - The U.S. government is investing in infrastructure improvements through the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), which allocate resources for enhancing bridges, public safety, and modernizing the electrical grid[18][19]. - The demand for mechanized irrigation systems is driven by factors such as water scarcity, government support programs, and the need for efficient farming solutions, with potential water application efficiency improvements of 40% to 90% compared to traditional methods[36][39]. - The U.S. Department of Agriculture forecasted U.S. net farm income for 2025 to be $180.1 billion, a 29.5% increase compared to 2024, which may positively impact sales of mechanized irrigation equipment[66]. Technology and Innovation - Valmont's technology solutions in agriculture include over 150,000 connected devices for monitoring and optimizing irrigation, which help farmers improve crop yields and conserve resources[34][35]. - The company acquired Prospera Technologies, Ltd. in fiscal 2021 to enhance its capabilities in artificial intelligence and machine learning for agronomic monitoring[34]. Competitive Position - Valmont maintains a competitive edge in the mechanized irrigation industry, recognized as a leader among four main participants, focusing on product durability, reliability, and service capabilities[40]. - The company’s competitive strategy emphasizes delivering high-value, innovative solutions at competitive prices, leveraging extensive production capacity across its facilities[27][28]. Financial Performance - Consolidated net sales for fiscal 2024 were $4,075,034, a decrease of 2.4% compared to $4,174,598 in fiscal 2023[159]. - Gross profit increased to $1,241,212 in fiscal 2024, representing a 0.4% increase from $1,236,034 in fiscal 2023, with gross profit as a percentage of net sales rising to 30.5%[159]. - Operating income surged by 79.9% to $524,584 in fiscal 2024, compared to $291,557 in fiscal 2023, driven by lower selling, general, and administrative expenses[159]. - Net earnings attributable to Valmont Industries, Inc. increased by 130.9% to $348,259 in fiscal 2024, with diluted earnings per share rising to $17.19, a 153.5% increase from $6.78 in fiscal 2023[159]. Order Backlog and Future Outlook - As of December 28, 2024, the company's backlog of orders for principal products was $1,436.7 million, down from $1,465.5 million as of December 30, 2023[52]. - The company anticipates that the majority of the fiscal 2024 backlog will be fulfilled in fiscal 2025, indicating a positive outlook for future revenue[52]. - The consolidated backlog of unshipped orders as of December 28, 2024, was approximately $1.4 billion, down from $1.5 billion as of December 30, 2023[176]. Shareholder Returns - The company paid a total of $48.4 million in dividends in fiscal 2024, a decrease from $49.5 million in fiscal 2023[152]. - The Board of Directors approved a quarterly cash dividend of $0.68 per share, representing an increase of over 13%[204]. - The company has repurchased 8,235,697 shares for approximately $1,334.0 million under its share repurchase program[153]. - The total authorization for the share repurchase program is $1,400.0 million, with no expiration date[153]. Risks and Challenges - Legal and regulatory risks, including trade policies and tariffs, could adversely affect the company's business, potentially leading to a decline in sales and profits[82]. - The company faces strong competition in its markets, which may pressure margins and require adjustments in pricing strategies[102]. - Rising interest rates have increased the company's borrowing costs, impacting its financial flexibility[95]. - The company is facing rising insurance premiums and costs due to increased frequency of extreme weather events[120]. - Compliance with climate change regulations may result in higher costs for raw materials and transportation[118]. Operational Insights - The company employed a total of 10,986 employees as of December 28, 2024, with 6,355 in the U.S. and 4,631 internationally[54][56]. - The company operates over 80 manufacturing plants across six continents, with 30% of net sales influenced by global trade relations[82]. - The company maintains strong relationships with major steel producers to mitigate risks related to raw material availability and pricing fluctuations[48]. - The cost of steel has historically constituted approximately one-third of the manufacturing cost, with a hypothetical 20% change in steel prices potentially affecting net sales by approximately $110.0 million[72]. Acquisitions and Divestitures - The company acquired an additional 9% of ConcealFab, Inc. and the remaining 25% of Valmont Substations, LLC, enhancing its infrastructure segment[46]. - The company divested its extractive business and George Industries, focusing on core operations in the infrastructure segment[46][51]. - The company acquired HR Products for $37.3 million in fiscal 2023, enhancing its Agriculture segment[168].