3Q 2023 Earnings Presentation Disclosure Regarding Forward-Looking Statements These slides contain (and the accompanying oral discussion will contain) “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business condi ...

2Q 2023 Earnings Presentation Disclosure Regarding Forward-Looking Statements These slides contain (and the accompanying oral discussion will contain) “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business condi ...

Financial Performance - Consolidated net sales for the second quarter of fiscal 2023 were $2,108.8 million, a decrease of 7.9% compared to $2,116.4 million in the same period of fiscal 2022[103] - Gross profit increased to $329.4 million in the second quarter of fiscal 2023, representing a 12.6% increase from $292.6 million in the second quarter of fiscal 2022[103] - Operating income for the second quarter of fiscal 2023 was $133.7 million, up 12.6% from $118.7 million in the second quarter of fiscal 2022[103] - Net earnings attributable to Valmont Industries, Inc. increased by 17.4% to $89.4 million in the second quarter of fiscal 2023, compared to $76.1 million in the same period of fiscal 2022[103] - Net sales for the twenty-six weeks ended July 1, 2023, were $1.401 billion, slightly up from $1.396 billion for the same period in 2022[166] - Gross profit for the same period was $401.8 million, compared to $345.3 million in the prior year, indicating a significant improvement[166] - Operating income increased to $158.0 million for the twenty-six weeks ended July 1, 2023, from $142.1 million in the same period of 2022[166] Tax and Compliance - The effective tax rate for the second quarter of fiscal 2023 was 26.4%, down from 27.6% in the same period of fiscal 2022[123] - The company is in compliance with all covenants related to its debt agreements as of July 1, 2023[156] Sales and Segment Performance - Infrastructure segment total sales for the second quarter of fiscal 2023 were $770.6 million, an increase of 4.2% compared to $739.5 million in the same period of fiscal 2022[127] - Solar sales in the second quarter of fiscal 2023 increased by 82.1% to $51.3 million, up from $28.2 million in the same period of fiscal 2022[127] - Agriculture segment total sales decreased by 25.9% to $279.9 million in the second quarter of fiscal 2023, down from $377.8 million in the same period of fiscal 2022[134] - North America sales in the Agriculture segment decreased by 30.7% to $140.9 million in the second quarter of fiscal 2023, compared to $203.5 million in the same period of fiscal 2022[134] Expenses and Cash Flow - Selling, general, and administrative expenses increased to $195.7 million in the second quarter of fiscal 2023, a 12.5% increase from $173.9 million in the same period of fiscal 2022[103] - SG&A expenses increased in the second quarter of fiscal 2023 due to higher employment costs and incremental expenses from the acquisition of ConcealFab, totaling $2.2 million[133] - Cash flows from operating activities were $109.5 million in the first half of fiscal 2023, compared to $68.0 million in the first half of fiscal 2022[126] - The company reported net cash flows provided by operating activities of $109.5 million for the first half of fiscal 2023, an increase from $68.0 million in the same period of fiscal 2022[161] Debt and Capital Management - As of July 1, 2023, the company had outstanding borrowings of $222.7 million under its revolving credit facility, up from $140.5 million as of December 31, 2022[149] - The company plans to maintain a debt to invested capital ratio that supports its current investment grade debt rating[140] - Total interest-bearing debt increased to $955.4 million as of July 1, 2023, up from $878.0 million as of December 31, 2022[163] - Adjusted EBITDA for the last four fiscal quarters was $622.4 million, with a leverage ratio of 1.39 as of July 1, 2023, well below the covenant limit of 3.50[171][173] Acquisitions and Divestitures - The company entered into an agreement to acquire HR Products for approximately $40 million USD, expected to close in the third quarter of fiscal 2023[108] - The company divested Torrent Engineering and Equipment in the second quarter of fiscal 2023, impacting the Agriculture segment[109] Currency Effects and Liabilities - The company experienced unfavorable currency translation effects of $8.4 million and $19.2 million for the second quarter and first half of fiscal 2023, respectively[127] - The company has a liability for foreign withholding taxes and U.S. state income taxes totaling $3.0 million as of July 1, 2023[159] Dividend - The company authorized an increase in the quarterly cash dividend to $0.60 per share, a 9% increase from the previous dividend of $0.55 per share[142]

Valmont Industries, Inc. (NYSE:VMI) Q2 2023 Earnings Conference Call July 27, 2023 9:00 AM ET Company Participants Renee Campbell - SVP of IR & Treasurer Avner Applbaum - CEO & President Timothy Francis - Interim CFO and SVP & Finance Business Partner, Global Operations Conference Call Participants Brian Drab - William Blair & Company Brent Thielman - D.A. Davidson & Co. Brian Wright - ROTH MKM Partners Christopher Moore - CJS Securities Jonathan Braatz - Kansas City Capital Associates Adam Farley - Stifel, ...

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 April 1, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 15000 Valmont Plaza, Omaha, Nebraska 68154 (Address of Principal Executive Offices) (Zip Code) (402) 963-1000 (Registrant's telephone number, including area code) (Former name, f ...

Financial Data and Key Metrics Changes - Net sales increased by 8.3% to $1.1 billion, driven by sustainable pricing and volume growth in both segments [18] - Adjusted operating income grew by 23.4% to $122.1 million, with operating margins increasing to 11.5% [18] - Adjusted earnings per share rose by 17.6% to $3.61, attributed to higher operating income [18] Business Line Data and Key Metrics Changes - Infrastructure segment net sales reached $736.1 million, growing by 11.2% year-over-year, with record sales in TDNS and double-digit growth in solar [18][19] - Agriculture segment net sales were $332.2 million, an increase of 8.3% year-over-year, with strong growth in international markets, particularly Brazil, where volumes grew nearly 50% [19][20] Market Data and Key Metrics Changes - Utility spending is expected to increase by 10% in 2023, indicating resilience despite economic concerns [9] - The solar business backlog is three times higher than a year ago, reflecting strong demand driven by the renewable energy transition [10] - International agricultural markets remain strong, particularly in Brazil, which has seen a 10% annual increase in agricultural exports over the past 20 years [11][12] Company Strategy and Development Direction - The company is focused on expanding niche markets and enhancing product leadership through strategic pricing and operational efficiencies [7][8] - Investments in technology and innovation are aimed at solving customer challenges and driving growth [26][27] - The company is committed to sustainability, with plans to publish a 2023 sustainability report highlighting ESG progress [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic challenges, citing robust demand and strategic execution [6][26] - The outlook for 2023 includes expected sales growth of 4% to 7% and adjusted diluted earnings per share growth of 12% to 16% [22][24] - Management noted that while inflationary pressures remain, they are well-positioned to manage costs and maintain margins [8][24] Other Important Information - The company announced a $400 million share repurchase authorization and an increase in quarterly dividends, reflecting confidence in sustained earnings growth [21] - The total backlog at the end of the quarter was $1.6 billion, indicating strong market demand and visibility for future projects [24][25] Q&A Session Summary Question: Insights on Brazil's market strength and Valmont's business model - Management highlighted efforts to expand the dealer network and local capacity in Brazil, which has led to significant growth [30][31] Question: Comparison of confidence in North America versus international markets - Management expressed strong confidence in Brazil and noted that agricultural fundamentals remain positive globally [32][34] Question: Domestic agricultural market dynamics and expected normalization - Management acknowledged pull-forward demand and negative farmer sentiment but expects a return to normalized order flow in the second half of the year [37][38] Question: Impact of rising steel prices on farmers and irrigation spending - Management indicated that recent price increases are manageable and do not expect significant elasticity issues in the market [41][42] Question: International project pipeline and competitiveness - Management confirmed a strong pipeline of projects, with competitive dynamics varying by project size [49][56] Question: Updates on lead times in transmission - Management reported that lead times remain around 40 weeks, with expectations for improvement as operations grow [58][60] Question: R&D spending trends and opportunities - Management indicated an increase in R&D spending, focusing on AgTech and technology solutions to enhance product offerings [71][73] Question: Potential impacts of the Farm Bill on the agricultural business - Management does not expect significant changes from the Farm Bill but is monitoring environmental considerations that could benefit their technology solutions [79][80]

[PART I](index=3&type=section&id=Part%20I) Part I covers Valmont Industries' global business, strategic growth, segment operations, risk factors, and executive leadership [ITEM 1. BUSINESS](index=3&type=section&id=Item%201.%20Business) Valmont Industries is a diversified global manufacturer for infrastructure and agriculture, driven by strategic growth, acquisitions, and a realigned two-segment structure [General Business Description](index=3&type=section&id=General%20Business%20Description) - Valmont Industries is a diversified manufacturer providing products and services for infrastructure and agriculture markets, aiming to create safer, cleaner, more efficient, and better-connected communities, and help growers increase crop yields with fewer inputs[10](index=10&type=chunk) - The company operates in two reporting segments: Infrastructure and Agriculture. The Infrastructure segment includes Transmission, Distribution, and Substation; Lighting and Transportation; Coatings; Telecommunications; and Renewable Energy product lines. The Agriculture segment focuses on mechanized irrigation equipment and related services, including precision agriculture technology[10](index=10&type=chunk)[11](index=11&type=chunk) - Customers for Infrastructure products include municipalities, government entities, commercial lighting fixture manufacturers (OEMs), contractors, and telecommunications and utility companies. Agriculture segment customers in the U.S. are dealers who resell to farmers. Both segments also serve the general manufacturing sector[12](index=12&type=chunk) [Business Strategy](index=3&type=section&id=Business%20Strategy) - Valmont's growth strategy involves increasing market penetration by differentiating products through superior customer service, engineering, technology, and quality. This includes expanding sales of existing products into new geographic areas (e.g., Europe, Middle East, North Africa, Poland, India, UAE, Egypt, Africa) and developing new products for existing markets (e.g., spun concrete distribution poles, steel bridge girders, wireless communication concealment solutions)[14](index=14&type=chunk)[15](index=15&type=chunk)[18](index=18&type=chunk) - The company also pursues growth by developing new products for new markets or leveraging core competencies, exemplified by the growth of its Coatings product line and expansion into decorative lighting. Acquisitions are a key component of this strategy, such as ConcealFab (5G infrastructure), Prospera Technologies (AI in agriculture), Solbras (solar energy for agriculture), and Convert Italia S.p.A. (solar tracking solutions)[19](index=19&type=chunk) [Acquisitions and Divestitures](index=5&type=section&id=Acquisitions%20and%20Divestitures) - Significant acquisitions from 2018-2022 include: ConcealFab (5G infrastructure, 2022), Prospera Technologies (AI in agriculture, 2021), PivoTrac (remote irrigation monitoring, 2021), Solbras (solar solutions for agriculture, 2020), KC Utility Packaging (utility substation products, 2020), AgSense (remaining 49%, 2020), Torrent Engineering and Equipment (prepackaged pump stations, 2020), Irrigation Components International (agricultural irrigation parts, 2020), Walpar (overhead sign structures, 2020), Convert Italia S.p.A. (engineered solar tracker solutions, 2018/2022), Derit (steel lattice structures, 2018), CSP Coating Systems (galvanizing, 2018), Larson Camouflage (wireless communication concealment, 2018), United Galvanizing (galvanizing, 2019), and Connect-It Wireless, Inc. (wireless site components, 2019)[22](index=22&type=chunk)[28](index=28&type=chunk) - The company divested Donhad (grinding media producer) in 2018 and Valmont SM (wind energy structures business) in 2022[24](index=24&type=chunk) [Segments and Product Lines](index=7&type=section&id=Segments%20and%20Product%20Lines) - In Q1 2022, Valmont realigned to two reportable segments: Infrastructure and Agriculture. The Infrastructure segment combines previous Utility Support Structures, Engineered Support Structures, and Coatings segments[25](index=25&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk) - The Infrastructure segment manufactures and distributes products for utility (Transmission, Distribution, Substation), renewable energy (solar tracking solutions), lighting, transportation (poles, structures, highway safety, bridge systems), telecommunications (wireless communication structures, 5G solutions), and provides coatings services (galvanizing, anodizing, painting)[10](index=10&type=chunk)[29](index=29&type=chunk)[32](index=32&type=chunk)[36](index=36&type=chunk) - The Agriculture segment manufactures center pivot and linear irrigation equipment (Valley brand), related parts, tubular products, and advanced technology solutions for precision agriculture (e.g., remote management, AI/machine learning for crop anomaly detection)[11](index=11&type=chunk)[30](index=30&type=chunk)[49](index=49&type=chunk) - Key market drivers for Infrastructure include government spending programs (e.g., U.S. Infrastructure Investment and Jobs Act, Inflation Reduction Act), grid hardening, increased electrical consumption, smart city initiatives, and demand for wireless communication (5G)[35](index=35&type=chunk)[37](index=37&type=chunk)[39](index=39&type=chunk) - Key market drivers for Agriculture include expected return on investment for growers, net farm income, commodity prices, interest rates, government support programs, water regulations, and global food security concerns driving efficient water use[48](index=48&type=chunk)[52](index=52&type=chunk) - Competition is strong across all markets, with Valmont competing on product quality, engineering expertise, customer service, and timely delivery. Pricing can be highly competitive, especially in weak markets or with strong local currencies[41](index=41&type=chunk)[42](index=42&type=chunk)[53](index=53&type=chunk) - Distribution methods vary by segment: direct sales force and commissioned agents for lighting/transportation, direct sales to utilities/developers for TD&S/Renewable Energy, direct sales force for Coatings, and independent dealers for Agriculture[43](index=43&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[54](index=54&type=chunk) [General Company Information](index=16&type=section&id=General%20Company%20Information) - Primary raw materials include hot rolled steel coil and plate, zinc, and other carbon steel products, which are generally readily available[56](index=56&type=chunk) - Sales are somewhat seasonal, with mechanized irrigation equipment sales higher in spring and fall, and infrastructure product sales higher in summer and fall[58](index=58&type=chunk) - The company is not dependent on a single customer or very few customers for a material part of any segment's business[59](index=59&type=chunk) Backlog of Orders (2022 vs. 2021) | Segment | 12/31/2022 ($ millions) | 12/25/2021 ($ millions) | | :------------- | :---------------------- | :---------------------- | | Infrastructure | $1,339.1 | $1,086.3 | | Agriculture | $317.3 | $471.0 | | Other | — | $64.6 | | **Total** | **$1,656.4** | **$1,621.9** | - As of December 31, 2022, Valmont had **11,364 employees**, with **6,599 in the United States** and **4,765 in foreign countries**. The company emphasizes diversity, inclusion, voluntary employment, and a healthy/safe workplace[62](index=62&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[68](index=68&type=chunk) - Valmont Industries operates in two primary segments: Infrastructure and Agriculture, following a realignment in Q1 2022[10](index=10&type=chunk)[25](index=25&type=chunk)[306](index=306&type=chunk)[307](index=307&type=chunk) - The company's business strategy includes increasing market penetration, expanding into new geographic markets (e.g., Europe, Middle East, North Africa, Poland, India, UAE, Egypt, Africa for Agriculture), developing new products for existing markets (e.g., spun concrete poles, steel bridge girders, wireless concealment), and diversifying through new products/markets leveraging core competencies (e.g., Coatings, Renewable Energy)[14](index=14&type=chunk)[15](index=15&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - Key acquisitions in recent years include ConcealFab (5G infrastructure, 2022), Prospera Technologies (AI in agriculture, 2021), PivoTrac (remote irrigation monitoring, 2021), Solbras (solar energy for agriculture, 2020), and KC Utility Packaging (utility substation products, 2020)[19](index=19&type=chunk)[28](index=28&type=chunk)[161](index=161&type=chunk)[170](index=170&type=chunk)[350](index=350&type=chunk)[352](index=352&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk)[356](index=356&type=chunk) - The company divested its offshore wind energy structures business (Valmont SM) in Denmark in 2022[24](index=24&type=chunk)[163](index=163&type=chunk)[189](index=189&type=chunk)[363](index=363&type=chunk) - Approximately **32% of Valmont's 2022 net sales** were generated outside of North America[12](index=12&type=chunk)[99](index=99&type=chunk) Backlog of Orders (2022 vs. 2021) | Segment | 12/31/2022 ($ millions) | 12/25/2021 ($ millions) | | :------------- | :---------------------- | :---------------------- | | Infrastructure | $1,339.1 | $1,086.3 | | Agriculture | $317.3 | $471.0 | | Other | — | $64.6 | | **Total** | **$1,656.4** | **$1,621.9** | [ITEM 1A. RISK FACTORS](index=20&type=section&id=Item%201A.%20Risk%20Factors) Valmont faces significant risks from cyclical market demand, commodity price volatility, foreign currency fluctuations, substantial indebtedness, and operational challenges in global markets - Sales are sensitive to cyclical industries such as electric utilities, agriculture, and wireless communications, which can lead to significant fluctuations in sales and operating income[73](index=73&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[78](index=78&type=chunk)[80](index=80&type=chunk) - Volatility in key commodity prices (steel, aluminum, zinc, natural gas, fuel) can increase operating costs and reduce profitability, especially for fixed-price contracts in the Infrastructure segment[81](index=81&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - Demand for infrastructure products is highly dependent on government spending programs (e.g., IIJA, IRA) and overall construction activity, which can be affected by economic weakness, interest rates, and adverse weather[86](index=86&type=chunk)[88](index=88&type=chunk)[92](index=92&type=chunk) - International sales (**32% of 2022 net sales**) expose the company to currency fluctuations, foreign exchange controls, and devaluations, which can negatively impact reported earnings[93](index=93&type=chunk)[94](index=94&type=chunk)[99](index=99&type=chunk) - Risks of doing business in foreign markets include political/economic instability, trade disputes, tariffs, and difficulties in managing foreign operations[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - The company's substantial indebtedness (**$878.0 million at Dec 31, 2022**) could impair its ability to operate, react to business changes, comply with debt covenants, and make payments[109](index=109&type=chunk)[226](index=226&type=chunk) - Challenges in attracting and retaining skilled labor and management talent could adversely affect profitable growth[115](index=115&type=chunk) - Cybercrime and information technology system compromises pose significant risks to data security, innovations (AI, IoT), and operations[127](index=127&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=36&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - No unresolved staff comments were reported[129](index=129&type=chunk) [ITEM 2. PROPERTIES](index=36&type=section&id=Item%202.%20Properties) Valmont operates over 80 manufacturing plants globally, with corporate headquarters in Omaha, Nebraska, and facilities deemed adequate for current and future operations - Corporate headquarters are in Omaha, Nebraska (leased until 2046), with a management headquarters in Sydney, Australia[130](index=130&type=chunk) - The company operates over **80 manufacturing plants globally**, with principal locations in Valley, McCook (Nebraska), Tulsa (Oklahoma), Brenham (Texas), Charmeil (France), Uberaba (Brazil), Monterrey (Mexico), Siedlce (Poland), Shanghai (China), and Dubai (UAE)[99](index=99&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - Manufacturing capabilities and capacities are considered adequate, with capital spending focused on replacement, operational efficiencies, and capacity expansion[132](index=132&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=38&type=section&id=Item%203.%20Legal%20Proceedings) Valmont Industries is not a party to any material legal proceedings, though it is involved in routine litigation incidental to its businesses - The company is not involved in any material legal proceedings[136](index=136&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to Valmont Industries - Mine safety disclosures are not applicable[137](index=137&type=chunk) [Information about our Executive Officers](index=38&type=section&id=Information%20about%20our%20Executive%20Officers) This section details Valmont Industries' current executive officers, their positions, and relevant business experience over the past five years - Key executive officers include Stephen G. Kaniewski (President and CEO since Dec 2017), Avner M. Applbaum (EVP and CFO since Mar 2020), and Diane Larkin (EVP, Global Operations since June 2020)[138](index=138&type=chunk)[139](index=139&type=chunk) - Other executive officers include Aaron Schapper (Group President, Infrastructure), Renee L. Campbell (SVP, Investor Relations and Treasurer), Timothy P. Francis (SVP and Finance Business Partner – Global Operations), Gene Padgett (SVP, Finance and Chief Accounting Officer), T. Mitchell Parnell (EVP, Chief Human Resources Officer), Claudio O. Laterreur (SVP and Chief Information Officer), and R. Andrew Massey (VP and Chief Legal & Compliance Officer)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) [PART II](index=41&type=section&id=Part%20II) Part II provides details on Valmont's common stock market, management's discussion and analysis of financial performance, and the consolidated financial statements with supplementary data [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES](index=41&type=section&id=Item%205.%20Market%20For%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters,%20And%20Issuer%20Purchases%20Of%20Equity%20Securities) Valmont's common stock trades on the NYSE, with details on shareholder numbers and the company's ongoing share repurchase program, including recent authorizations - Valmont's common stock (VMI) is traded on the New York Stock Exchange[3](index=3&type=chunk)[146](index=146&type=chunk) - As of December 31, 2022, there were approximately **36,163 shareholders** of common stock[146](index=146&type=chunk) Issuer Purchases of Equity Securities (Q4 2022) | Period | Total Shares Purchased | Average Price Paid per Share | 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) | | :------------------------------------ | :--------------------- | :--------------------------- | :---------------------------------------------- | :------------------------------------------------------------------------------------------------ | | September 25, 2022 to October 22, 2022 | — | $— | — | $101,371,000 | | October 23, 2022 to November 26, 2022 | 26,995 | $328.93 | 26,995 | $92,523,000 | | November 27, 2022 to December 31, 2022 | 33,207 | $334.38 | 33,207 | $81,419,000 | | **Total** | **60,202** | **$331.94** | **60,202** | **$81,419,000** | - As of December 31, 2022, Valmont had acquired **6,613,018 shares** for approximately **$918.6 million** under its share repurchase program. Subsequent to year-end, on February 27, 2023, the Board authorized an additional **$400 million** for the program[149](index=149&type=chunk)[206](index=206&type=chunk)[345](index=345&type=chunk) [ITEM 6. [RESERVED]](index=42&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION](index=42&type=section&id=Item%207.%20Management's%20Discussion%20And%20Analysis%20Of%20Financial%20Condition%20And%20Results%20Of%20Operation) MD&A covers Valmont's strong 2022 financial performance, driven by sales growth and improved profitability, alongside liquidity management and key market risks [General Overview and Segment Realignment](index=42&type=section&id=General%20Overview%20and%20Segment%20Realignment) - Valmont's management discussion and analysis includes forward-looking statements based on assumptions about industry conditions, market circumstances, and company performance[151](index=151&type=chunk) - In Q1 2022, the company realigned its reporting structure to two segments: Infrastructure and Agriculture, based on market dynamics. This change was driven by the Chief Operating Decision Maker's new management structure for resource allocation and performance evaluation[154](index=154&type=chunk)[165](index=165&type=chunk) - The Infrastructure segment now includes Utility Support Structures, Engineered Support Structures, and Coatings. All prior period segment information has been recast to reflect this change[154](index=154&type=chunk)[165](index=165&type=chunk) [Results of Operations: Fiscal 2022 vs. Fiscal 2021](index=44&type=section&id=Results%20of%20Operations%3A%20Fiscal%202022%20vs.%20Fiscal%202021) - Net sales increased by **24.1% in 2022** compared to 2021, driven by higher sales in both Infrastructure and Agriculture segments. The 53rd week in fiscal 2022 contributed approximately **$80.8 million to net sales**[156](index=156&type=chunk) Sales Drivers (2022 vs. 2021) | Driver | Total ($ millions) | Infrastructure ($ millions) | Agriculture ($ millions) | Other ($ millions) | | :------------------ | :----------------- | :-------------------------- | :----------------------- | :----------------- | | Sales - 2021 | $3,501.6 | $2,361.5 | $1,017.1 | $123.0 | | Volume | $184.0 | $108.7 | $88.9 | $(13.6) | | Pricing / mix | $686.5 | $459.4 | $223.1 | $4.0 | | Acquisition | $30.1 | $28.8 | $1.3 | — | | Currency translation | $(57.0) | $(48.7) | $4.9 | $(13.2) | | **Sales - 2022** | **$4,345.2** | **$2,909.7** | **$1,335.3** | **$100.2** | - Gross profit margin increased in 2022 (**25.9%**) compared to 2021 (**25.2%**), as customer pricing mechanisms and selling price practices effectively recovered price inflation despite higher raw material and labor costs[158](index=158&type=chunk)[168](index=168&type=chunk) - SG&A expense increased due to incremental costs from the Prospera acquisition (intangible asset amortization, stock-based compensation, R&D), higher incentives, salary merit increases, and increased travel costs. This was partially offset by the non-recurrence of a **$27.9 million impairment charge** and a **$5.5 million receivable write-off** in the Other segment from 2021[169](index=169&type=chunk)[171](index=171&type=chunk) - Operating income increased by **51.1% in 2022**, with both Infrastructure (**29.6%**) and Agriculture (**30.8%**) segments showing strong growth[155](index=155&type=chunk) - The effective tax rate increased to **29.9% in 2022** from **23.6% in 2021**, primarily due to a change in geographical earnings and a **$33.3 million non-deductible loss** from the divestiture of the offshore wind energy structures business[174](index=174&type=chunk) Infrastructure Segment Sales by Product Line (2022 vs. 2021) | Product Line | 2022 ($ millions) | 2021 ($ millions) | Change ($ millions) | % Change | | :-------------------------------- | :---------------- | :---------------- | :------------------ | :--------- | | Transmission, Distribution, and Substation | $1,184.7 | $935.1 | $249.6 | 26.7% | | Lighting & Transportation | $940.5 | $825.9 | $114.6 | 13.9% | | Coatings | $356.7 | $309.7 | $47.0 | 15.2% | | Telecommunications | $320.3 | $238.5 | $81.8 | 34.3% | | Renewable Energy | $126.2 | $62.9 | $63.3 | 100.6% | | **Total** | **$2,928.4** | **$2,372.1** | **$556.3** | **23.5%** | - Agriculture segment net sales increased by **31.3% in 2022**, driven by higher average selling prices (approx. **22%**) and increased sales volumes in North America due to improved commodity prices. Technology-related product sales increased by **$17.2 million**[155](index=155&type=chunk)[187](index=187&type=chunk) - The 'Other' segment reported a **$33.3 million loss** from the divestiture of the offshore wind energy structures business in 2022, compared to a **$40.2 million operating loss in 2021** (which included a **$27.9 million impairment charge**)[155](index=155&type=chunk)[163](index=163&type=chunk)[189](index=189&type=chunk) [Results of Operations: Fiscal 2021 vs. Fiscal 2020](index=52&type=section&id=Fiscal%202021%20Compared%20With%20Fiscal%202020) - Infrastructure segment net sales increased by **$226.3 million in 2021** compared to 2020, primarily due to higher average selling prices across all product lines and **$33.3 million of favorable foreign currency translation effects**[191](index=191&type=chunk) - TD&S product line sales increased by **$139.4 million**, reflecting significant steel cost inflation. Telecommunications sales rose by **$52.3 million** due to strong 5G demand and higher selling prices[192](index=192&type=chunk)[194](index=194&type=chunk) - Agriculture segment net sales increased by **$377.0 million in 2021**, driven by higher sales volumes in most markets, increased average selling prices, and growth in technology-related products and services (strengthened by Prospera and PivoTrac acquisitions)[199](index=199&type=chunk) - The 'Other' segment's gross profit decreased in 2021 due to a **$21.4 million impairment of long-lived assets**, and SG&A increased due to **$6.5 million in intangible asset impairments** and a **$5.5 million write-off of accounts receivable**[201](index=201&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20And%20Capital%20Resources) - Valmont's capital allocation philosophy prioritizes working capital and capital expenditure investments, dividends (generally **20% of prior year's diluted net earnings**), acquisitions, and share repurchases[202](index=202&type=chunk)[203](index=203&type=chunk) - The company aims to maintain an investment-grade debt rating (Baa3 by Moody's, BBB- by Fitch, BBB+ by S&P), with a target debt to invested capital ratio supporting this rating[202](index=202&type=chunk)[205](index=205&type=chunk) - Debt financing at December 31, 2022, primarily consisted of **$450 million in 5.00% senior unsecured notes due 2044**, **$305 million in 5.25% senior unsecured notes due 2054**, and **$140.5 million outstanding** on an **$800 million revolving credit facility**[207](index=207&type=chunk)[208](index=208&type=chunk)[213](index=213&type=chunk)[114](index=114&type=chunk) - As of December 31, 2022, the company had **$659.4 million available** under its revolving credit facility and **$119.2 million unused** from short-term bank lines of credit[213](index=213&type=chunk) - The revolving credit facility includes a financial leverage ratio covenant (debt to Adjusted EBITDA of **3.50:1 or less**, with temporary increases to **3.75:1** after material acquisitions), which the company was in compliance with at December 31, 2022[215](index=215&type=chunk)[217](index=217&type=chunk)[392](index=392&type=chunk) Contractual Cash Obligations (as of Dec 31, 2022) | Contractual Obligations | Total ($ millions) | Next 12 months ($ millions) | Thereafter ($ millions) | | :---------------------------- | :----------------- | :-------------------------- | :---------------------- | | Long-term debt | $899.1 | $1.2 | $897.9 | | Interest | $1,070.3 | $40.4 | $1,029.9 | | Delta pension plan contributions | $206.8 | $16.0 | $190.8 | | Operating leases | $235.4 | $23.2 | $212.2 | | **Total** | **$2,411.6** | **$80.8** | **$2,330.8** | Cash Flow Data (2022 vs. 2021 vs. 2020) | Cash Flow Activity | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :------------------------------ | :----------------- | :----------------- | :----------------- | | Net cash flows from operating activities | $326,265 | $65,938 | $316,294 | | Net cash flows from investing activities | $(132,080) | $(417,308) | $(104,029) | | Net cash flows from financing activities | $(181,905) | $133,500 | $(173,756) | - Investing cash flows in 2022 included **$93.3 million in capital spending** and **$39.3 million for the ConcealFab acquisition**. In 2021, it included **$107.8 million in capital spending** and **$312.5 million for two Agriculture segment acquisitions** (Prospera and PivoTrac)[225](index=225&type=chunk) - Financing cash flows in 2022 included **$336.4 million in principal payments on long-term debt**, offset by **$254.0 million in new borrowings**, **$45.8 million in dividends paid**, and **$40.5 million in treasury share purchases**[226](index=226&type=chunk) [Guarantor Summarized Financial Information](index=62&type=section&id=Guarantor%20Summarized%20Financial%20Information) - The company's senior unsecured notes are guaranteed by certain direct and indirect domestic and foreign subsidiaries (Guarantors)[228](index=228&type=chunk) Supplemental Combined Parent and Guarantors Financial Information (2022 vs. 2021 vs. 2020) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :------------------------- | :----------------- | :----------------- | :----------------- | | Net sales | $2,876,425 | $2,139,427 | $1,854,141 | | Gross Profit | $695,211 | $574,128 | $512,880 | | Operating income | $268,142 | $208,041 | $180,206 | | Net earnings | $167,114 | $120,655 | $106,404 | | Net earnings attributable to Valmont Industries, Inc. | $167,220 | $120,458 | $102,266 | Supplemental Combined Parent and Guarantors Balance Sheet (2022 vs. 2021) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | | :------------------------- | :----------------- | :----------------- | | Current assets | $769,263 | $801,797 | | Noncurrent assets | $925,088 | $807,294 | | Current liabilities | $459,961 | $383,394 | | Noncurrent liabilities | $1,189,548 | $1,305,756 | | Noncontrolling interest in consolidated subsidiaries | $1,612 | $1,844 | [Selected Financial Measures](index=63&type=section&id=Selected%20Financial%20Measures) - Return on Invested Capital (ROIC) is a non-GAAP measure calculated as after-tax operating income divided by average invested capital. It is a key operating ratio used to analyze performance and determine management incentives[234](index=234&type=chunk) Return on Invested Capital (2022 vs. 2021 vs. 2020) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :------------------------- | :----------------- | :----------------- | :----------------- | | Operating income | $433,249 | $286,785 | $225,953 | | After-tax operating income | $313,377 | $219,104 | $171,272 | | Average invested capital | $2,437,232 | $2,176,577 | $1,975,693 | | **Return on invested capital** | **12.9%** | **10.1%** | **8.7%** | - Adjusted EBITDA is a non-GAAP measure used to determine maximum borrowing capacity under bank credit agreements, which contain a financial covenant that total interest-bearing debt not exceed **3.50x Adjusted EBITDA** (or **3.75x** after certain material acquisitions)[238](index=238&type=chunk) Adjusted EBITDA (2022 vs. 2021 vs. 2020) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :------------------------- | :----------------- | :----------------- | :----------------- | | Net earnings attributable to Valmont Industries, Inc. | $250,863 | $195,630 | $140,693 | | EBITDA | $546,101 | $420,953 | $329,149 | | Impairment of long-lived assets | — | $27,911 | $20,389 | | Loss on divestiture of offshore wind energy structures business | $33,273 | — | — | | Cash restructuring expenses | — | — | $18,955 | | **Adjusted EBITDA** | **$579,374** | **$448,864** | **$368,493** | Leverage Ratio (2022 vs. 2021 vs. 2020) | Metric | 2022 | 2021 | 2020 | | :------------------------- | :----------------- | :----------------- | :----------------- | | Interest-bearing debt | $877,975 | $965,395 | $766,326 | | Less: Cash and cash equivalents in excess of $50 million | $135,406 | $127,232 | $350,726 | | Net indebtedness | $742,569 | $838,163 | $415,600 | | Adjusted EBITDA | $579,374 | $448,864 | $368,493 | | **Leverage Ratio** | **1.28** | **1.87** | **1.13** | [Market Risk](index=67&type=section&id=Market%20Risk) - The company is exposed to market risks related to interest rates, foreign currency exchange rates, and commodity prices (steel, aluminum, zinc, natural gas). Derivative financial instruments are used to hedge these exposures, not for trading[243](index=243&type=chunk)[245](index=245&type=chunk) - A hypothetical **20% change in steel prices** would affect net sales in the TD&S product line by approximately **$95 million for 2022**, as steel costs represent about **50% of net sales** in this line[243](index=243&type=chunk) - A hypothetical **10% change in interest rates** would have affected interest expense by approximately **$0.8 million in 2022** and **$0.4 million in 2021**. A **10% change in the U.S. dollar's value** would impact reported cash balances by approximately **$11.2 million in 2022** and **$13.6 million in 2021**[246](index=246&type=chunk)[248](index=248&type=chunk) - As of December 31, 2022, the company had open steel hot rolled coil forward contracts with a notional amount of **$9.8 million** and natural gas swaps with a notional value of **$7.0 million** to mitigate commodity price risk[250](index=250&type=chunk)[251](index=251&type=chunk) [Critical Accounting Policies](index=69&type=section&id=Critical%20Accounting%20Policies) - Critical accounting policies involve significant management judgments and estimates, including impairments of long-lived assets (property, plant, equipment, goodwill, intangibles), income taxes, revenue recognition, inventory obsolescence, and pension benefits[252](index=252&type=chunk)[254](index=254&type=chunk) - Goodwill impairment is annually evaluated using discounted cash flows and a market approach for the solar tracking unit. No goodwill impairment was recorded in 2022 or 2021[256](index=256&type=chunk)[257](index=257&type=chunk)[376](index=376&type=chunk) - Revenue recognition for TD&S and certain telecommunication structures is recognized over time, based on production hours incurred as a percentage of total estimated hours, due to customer-specific engineering and contractual payment rights[273](index=273&type=chunk)[274](index=274&type=chunk)[337](index=337&type=chunk) - For most other products (lighting, transportation, majority of telecommunications, irrigation equipment), revenue is recognized at a point in time, typically upon shipment or delivery[338](index=338&type=chunk)[339](index=339&type=chunk)[340](index=340&type=chunk) - The company records valuation allowances for deferred tax assets based on future taxable income expectations and tax-planning strategies. At December 31, 2022, a valuation allowance of **$43.4 million** was in place against **$67.2 million in tax credits and loss carryforwards**[263](index=263&type=chunk)[264](index=264&type=chunk)[382](index=382&type=chunk) - Pension benefits are measured using actuarial methods, with critical assumptions including discount rate (**4.80% at Dec 31, 2022**) and expected return on plan assets (**4.85% for 2023**). The Delta Pension Plan was overfunded by approximately **£20.1 million ($24.2 million)** at December 31, 2022[114](index=114&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[442](index=442&type=chunk) Consolidated Financial Highlights (2022 vs. 2021 vs. 2020) | Metric | 2022 ($ millions) | 2021 ($ millions) | 2020 ($ millions) | Change 2022-2021 (%) | | :------------------------- | :---------------- | :---------------- | :---------------- | :------------------- | | Net sales | $4,345.2 | $3,501.6 | $2,895.4 | 24.1% | | Gross profit | $1,126.3 | $883.9 | $765.5 | 27.4% | | Gross profit as % of sales | 25.9% | 25.2% | 26.4% | | | SG&A expense | $693.0 | $597.1 | $539.6 | 16.1% | | SG&A as % of sales | 15.9% | 17.1% | 18.6% | | | Operating income | $433.3 | $286.8 | $225.9 | 51.1% | | Operating income as % of sales | 10.0% | 8.2% | 7.8% | | | Net interest expense | $45.5 | $41.4 | $38.7 | 9.9% | | Effective tax rate | 29.9% | 23.6% | 25.7% | | | Net earnings | $250.9 | $195.6 | $140.7 | 28.3% | | Diluted earnings per share | $11.62 | $9.10 | $6.57 | 27.7% | - The company realigned its reportable segments to Infrastructure and Agriculture in Q1 2022, with all prior period information recast[154](index=154&type=chunk)[165](index=165&type=chunk) - Fiscal year 2022 included **53 weeks**, contributing approximately **$80.8 million in net sales** and **$5.3 million in net earnings**[156](index=156&type=chunk)[309](index=309&type=chunk) - Operating cash flows significantly increased to **$326.3 million in 2022** from **$65.9 million in 2021**, primarily due to higher net earnings and a stabilization of working capital levels[176](index=176&type=chunk)[224](index=224&type=chunk) - The company maintains an investment-grade debt rating and has adequate liquidity to meet future needs, supported by available credit facilities and positive operational cash flows[202](index=202&type=chunk)[205](index=205&type=chunk)[222](index=222&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=77&type=section&id=Item%207A.%20Quantitative%20And%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to the 'MARKET RISK' discussion within Item 7 for quantitative and qualitative disclosures about market risk - Quantitative and qualitative disclosures about market risk are provided under the 'MARKET RISK' section within Item 7 of this report[278](index=278&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=78&type=section&id=Item%208.%20Financial%20Statements%20And%20Supplementary%20Data) This section presents Valmont's audited consolidated financial statements for the three-year period ended December 31, 2022, with an unqualified opinion from Deloitte & Touche LLP [Report of Independent Registered Public Accounting Firm](index=79&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) - Deloitte & Touche LLP provided an unqualified opinion on the consolidated financial statements for the three-year period ended December 31, 2022, and on the effectiveness of internal control over financial reporting as of December 31, 2022[282](index=282&type=chunk)[283](index=283&type=chunk)[484](index=484&type=chunk)[485](index=485&type=chunk) - Goodwill for certain reporting units was identified as a critical audit matter due to the significant estimates and assumptions required for fair value estimation and the difference between fair values and carrying values[287](index=287&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk) [Consolidated Statements of Earnings](index=82&type=section&id=Consolidated%20Statements%20of%20Earnings) Consolidated Statements of Earnings (2022 vs. 2021 vs. 2020) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :---------------------------------------------- | :----------------- | :----------------- | :----------------- | | Net sales | $4,345,250 | $3,501,575 | $2,895,355 | | Gross profit | $1,126,224 | $883,889 | $765,514 | | Selling, general, and administrative expenses | $692,975 | $590,608 | $522,923 | | Operating income | $433,249 | $286,785 | $225,953 | | Earnings before income taxes | $363,888 | $260,083 | $192,768 | | Income tax expense | $108,687 | $61,414 | $49,615 | | Net earnings attributable to Valmont Industries, Inc. | $250,863 | $195,630 | $140,693 | | Diluted earnings per share | $11.62 | $9.10 | $6.57 | [Consolidated Statements of Comprehensive Income](index=83&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income (2022 vs. 2021 vs. 2020) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :---------------------------------------------- | :----------------- | :----------------- | :----------------- | | Net earnings | $254,251 | $197,725 | $142,149 | | Other comprehensive income (loss), net of tax | $(13,097) | $45,540 | $5,608 | | Comprehensive income attributable to Valmont Industries, Inc. | $239,081 | $242,289 | $144,329 | - Other comprehensive income (loss) in 2022 was primarily impacted by negative foreign currency translation adjustments and realized loss on offshore wind energy structures business, partially offset by gains on hedging activities and defined benefit pension plan[297](index=297&type=chunk) [Consolidated Balance Sheets](index=84&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets (as of Dec 31, 2022 vs. Dec 25, 2021) | Asset/Liability/Equity | 2022 ($ thousands) | 2021 ($ thousands) | | :-------------------------------------- | :----------------- | :----------------- | | Total current assets | $1,780,585 | $1,712,763 | | Net property, plant and equipment | $595,578 | $598,605 | | Goodwill | $739,861 | $708,566 | | Total assets | $3,556,996 | $3,447,249 | | Total current liabilities | $803,993 | $765,856 | | Long-term debt, excluding current installments | $870,935 | $947,072 | | Total liabilities and shareholders' equity | $3,556,996 | $3,447,249 | - Total assets increased to **$3,556.9 million in 2022** from **$3,447.2 million in 2021**, driven by increases in receivables, contract assets, and goodwill[299](index=299&type=chunk) - Total long-term debt decreased to **$870.9 million in 2022** from **$947.1 million in 2021**[299](index=299&type=chunk) [Consolidated Statements of Cash Flows](index=85&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (2022 vs. 2021 vs. 2020) | Cash Flow Activity | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :------------------------------ | :----------------- | :----------------- | :----------------- | | Net cash flows from operating activities | $326,265 | $65,938 | $316,294 | | Net cash flows from investing activities | $(132,080) | $(417,308) | $(104,029) | | Net cash flows from financing activities | $(181,905) | $133,500 | $(173,756) | | Net change in cash and cash equivalents | $8,174 | $(223,494) | $47,184 | | Cash and cash equivalents—end of period | $185,406 | $177,232 | $400,726 | - Operating cash flows significantly increased in 2022 to **$326.3 million**, compared to **$65.9 million in 2021**, primarily due to higher net earnings and improved working capital management[300](index=300&type=chunk) - Investing activities in 2022 included **$93.3 million in capital expenditures** and **$39.3 million for acquisitions**. In 2021, acquisitions totaled **$312.5 million**[300](index=300&type=chunk) - Financing activities in 2022 resulted in a net cash outflow of **$181.9 million**, primarily due to principal payments on long-term debt, dividends paid, and treasury share purchases[300](index=300&type=chunk) [Consolidated Statements of Shareholders' Equity](index=86&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Consolidated Statements of Shareholders' Equity (2022 vs. 2021 vs. 2020) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :---------------------------------------------- | :----------------- | :----------------- | :----------------- | | Total Valmont Industries, Inc. shareholders' equity | $1,580,847 | $1,386,847 | $1,182,062 | | Noncontrolling interest in consolidated subsidiaries | $60,865 | $26,750 | $25,774 | | **Total shareholders' equity** | **$1,641,712** | **$1,413,597** | **$1,207,836** | - Total shareholders' equity increased to **$1,641.7 million in 2022** from **$1,413.6 million in 2021**, driven by net earnings and an increase in noncontrolling interest, partially offset by cash dividends and treasury share purchases[301](index=301&type=chunk) [Notes to Consolidated Financial Statements](index=88&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The notes provide detailed information on significant accounting policies, including principles of consolidation, cash overdrafts, change in reportable segments, fiscal year, accounts receivable, inventories, long-lived assets, leases, income taxes, warranties, pension benefits, stock plans, fair value measurements, and derivative instruments[303](index=303&type=chunk)[304](index=304&type=chunk)[305](index=305&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk)[322](index=322&type=chunk)[323](index=323&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk)[327](index=327&type=chunk)[328](index=328&type=chunk) - Key acquisitions in 2022 included **51% of ConcealFab for $39.3 million**, and in 2021, Prospera Technologies for **$300 million** and PivoTrac for **$12.5 million**[350](index=350&type=chunk)[352](index=352&type=chunk)[354](index=354&type=chunk) - The company divested Valmont SM, its offshore wind energy structures business, in November 2022, resulting in a pre-tax loss of **$33.3 million**[363](index=363&type=chunk)[366](index=366&type=chunk) - Long-term debt at December 31, 2022, included **$450 million in 5.00% senior unsecured notes due 2044** and **$305 million in 5.25% senior unsecured notes due 2054**, along with **$140.5 million outstanding** on the revolving credit facility[387](index=387&type=chunk)[388](index=388&type=chunk)[391](index=391&type=chunk) - Total stock-based compensation expense was **$41.9 million in 2022**, **$28.7 million in 2021**, and **$14.9 million in 2020**[396](index=396&type=chunk) - The Delta Pension Plan was overfunded by **$24.2 million** at December 31, 2022, compared to an underfunded status of **$0.5 million** at December 25, 2021, primarily due to an actuarial gain from an increased discount rate[437](index=437&type=chunk)[440](index=440&type=chunk) Disaggregation of Revenue by Product Line (2022 vs. 2021 vs. 2020) | Segment/Product Line | 2022 Point in Time ($ thousands) | 2022 Over Time ($ thousands) | 2021 Point in Time ($ thousands) | 2021 Over Time ($ thousands) | 2020 Point in Time ($ thousands) | 2020 Over Time ($ thousands) | | :-------------------------------- | :------------------------------- | :--------------------------- | :------------------------------- | :--------------------------- | :------------------------------- | :--------------------------- | | Infrastructure | $1,687,458 | $1,222,288 | $1,388,297 | $973,227 | $1,296,497 | $838,703 | | Agriculture | $1,307,681 | $27,604 | $996,278 | $20,772 | $624,831 | $15,261 | | Other | — | $100,219 | — | $123,001 | — | $120,063 | | **Total** | **$2,995,139** | **$1,350,111** | **$2,384,575** | **$1,117,000** | **$1,921,328** | **$974,027** | - The consolidated financial statements include: Consolidated Statements of Earnings, Consolidated Statements of Comprehensive Income, Consolidated Balance Sheets, Consolidated Statements of Cash Flows, and Consolidated Statements of Shareholders' Equity[280](index=280&type=chunk)[505](index=505&type=chunk) - Deloitte & Touche LLP, the independent registered public accounting firm, issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022[282](index=282&type=chunk)[283](index=283&type=chunk)[484](index=484&type=chunk)[485](index=485&type=chunk) - A critical audit matter identified was goodwill for certain reporting units, due to significant management estimates and assumptions in fair value calculations, requiring extensive auditor judgment and involvement of fair value specialists[287](index=287&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk) [PART III](index=153&type=section&id=Part%20III) Part III incorporates information on Valmont's directors, executive officers, corporate governance, executive compensation, security ownership, and principal accountant fees by reference to the Proxy Statement [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE](index=153&type=section&id=Item%2010.%20Directors,%20Executive%20Officers,%20And%20Corporate%20Governance) Information on Valmont's directors, executive officers, and corporate governance is incorporated by reference from the Proxy Statement, including the Code of Ethics - Information on directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and director independence is incorporated by reference from the Proxy Statement[497](index=497&type=chunk)[499](index=499&type=chunk)[500](index=500&type=chunk)[501](index=501&type=chunk) - The company has a Code of Ethics for Senior Officers (CEO, CFO, Controller) published on its website, with disclosures for amendments or waivers made via the website[498](index=498&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=153&type=section&id=Item%2011.%20Executive%20Compensation) This item refers to Item 10 for information on executive compensation - Information on executive compensation is incorporated by reference from the Proxy Statement, as noted in Item 10[497](index=497&type=chunk)[499](index=499&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=153&type=section&id=Item%2012.%20Security%20Ownership%20Of%20Certain%20Beneficial%20Owners%20And%20Management%20And%20Related%20Stockholder%20Matters) This item refers to the Proxy Statement for information on security ownership of certain beneficial owners and management, and related stockholder matters - Information on security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the Proxy Statement[500](index=500&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=153&type=section&id=Item%2013.%20Certain%20Relationships%20And%20Related%20Transactions,%20And%20Director%20Independence) This item refers to Item 10 for information on certain relationships and related transactions, and director independence - Information on certain relationships and related transactions, and director independence, is incorporated by reference from the Proxy Statement, as noted in Item 10[497](index=497&type=chunk)[501](index=501&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES](index=153&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20And%20Services) This item refers to the Proxy Statement for information on principal accountant fees and services - Information on principal accountant fees and services is incorporated by reference to the 'Ratification of Appointment of Independent Auditors' section in the Proxy Statement[502](index=502&type=chunk) [PART IV](index=154&type=section&id=Part%20IV) Part IV lists the consolidated financial statements, provides an index to various exhibits, and includes the official signatures for the Form 10-K filing [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](index=154&type=section&id=Item%2015.%20Exhibits%20And%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements and provides an index to various exhibits, including corporate governance documents, debt agreements, and certifications - The consolidated financial statements and related notes are included in this report[505](index=505&type=chunk) - The section provides an index to exhibits, including corporate governance documents (Certificate of Incorporation, By-Laws), debt agreements (Credit Agreement, Indentures), stock plans (2013, 2018, 2022 Stock Plans), and various certifications (Section 302, Section 906)[506](index=506&type=chunk)[508](index=508&type=chunk)[509](index=509&type=chunk)[510](index=510&type=chunk) - Certain instruments related to the registrant's long-term debt are not filed with this Form 10-K but will be furnished to the SEC upon request[511](index=511&type=chunk) [ITEM 16. FORM 10-K SUMMARY](index=160&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable for this report - Form 10-K Summary is not applicable[514](index=514&type=chunk) [SIGNATURES](index=161&type=section&id=Signatures) The report is duly signed on March 1, 2023, by key executive officers and other directors via power of attorney - The report was signed on March 1, 2023, by Stephen G. Kaniewski (President and CEO), Avner M. Applbaum (EVP and CFO), and Gene Padgett (SVP and Chief Accounting Officer)[517](index=517&type=chunk)[518](index=518&type=chunk)[520](index=520&type=chunk) - Other directors' signatures are provided by Stephen G. Kaniewski as Attorney-in-Fact[520](index=520&type=chunk)[521](index=521&type=chunk)

Valmont Industries, Inc. (NYSE:VMI) Q4 2022 Earnings Conference Call February 23, 2023 9:00 AM ET Company Participants Renee Campbell - Senior Vice President, Investor Relations & Treasurer Steve Kaniewski - President & Chief Executive Officer Avner Applbaum - Executive Vice President & Chief Financial Officer Conference Call Participants Chris Moore - CJS Securities Brian Drab - William Blair Jon Braatz - Kansas City Capital Adam Farley - Stifel Operator Greetings and welcome to the Valmont Industries Inc ...

Financial Data and Key Metrics Changes - Sales reached $1.1 billion, a 26% year-over-year increase, marking the eighth consecutive quarter of double-digit year-over-year sales growth [11][19] - Operating income grew 42% to $114.1 million, with operating margins increasing to 10.4% [19] - Diluted earnings per share increased by 36% to $3.49, driven by higher operating income [19] Business Line Data and Key Metrics Changes - Infrastructure sales amounted to $778.4 million, up 23% year-over-year, supported by investments in grid resiliency and renewable energy [11][19] - Agriculture sales grew 36% year-over-year to $327.3 million, driven by strong global demand for food production and favorable farmer sentiment [12][19] - Ag tech sales reached approximately $83 million year-to-date, a 15% increase over the previous year, with expectations to exceed $100 million for the full year [13][17] Market Data and Key Metrics Changes - Demand remains elevated across all end markets despite macroeconomic volatility, reflecting ongoing investments in global infrastructure and agriculture [9][11] - The company anticipates long-term tailwinds from government spending initiatives, including the Infrastructure Investment and Jobs Act and the Inflation Reduction Act [11][12] Company Strategy and Development Direction - The company is focused on operational excellence with an ESG emphasis, expanding market reach, and leveraging technology for productive disruption [13][25] - Strategic acquisitions, such as ConcealFab, are aimed at enhancing growth opportunities in high-demand markets [13][70] - The company is committed to disciplined capital allocation, balancing organic growth with potential acquisitions [21][70] Management's Comments on Operating Environment and Future Outlook - Management acknowledges growing economic uncertainty but believes demand for products is less sensitive to general economic factors [24] - The company expects 2023 year-over-year sales growth of 6% to 9% and EPS growth of 11% to 15%, assuming steady market demand and stabilized raw material costs [23][24] - Management remains confident in the company's ability to navigate external challenges and deliver value to customers and shareholders [17][25] Other Important Information - Year-to-date free cash flow reached $117 million, reflecting improved working capital management [20] - The company reduced total borrowing by approximately $60 million, strengthening its balance sheet [21] Q&A Session Summary Question: Visibility for 2023 and sub-segment impacts from interest rates - Management indicated that all end markets are in good shape and not significantly susceptible to interest rate increases, with strong drivers across all markets [27][28] Question: Sustainability of telecom sales growth - Management noted that telecom sales have historically been lumpy but expect smoother rollouts moving forward due to consistent carrier investments [30] Question: Impact of steel prices on pricing strategy - Management confirmed that while steel prices are moderating, they maintain pricing discipline and have not needed to reduce prices due to strong demand [34][35] Question: Timing and implications of the Inflation Reduction Act - Management stated that the infrastructure bill is beginning to influence demand, while benefits from the Inflation Reduction Act will materialize in 2023 [38] Question: Inventory corrections in the channel - Management reported low inventory levels in agriculture and minimal impact from inventory corrections in other segments [40][41] Question: Pricing strategy in agriculture - Management emphasized their intent to be a price leader and maintain value-based pricing despite uncertainties in the market [60][61] Question: Impact of Hurricane Ian on backlog - Management explained that Hurricane Ian would lead to a temporary reshuffling of backlog but reinforced long-term demand for grid hardening [66][67] Question: M&A activity and capital allocation - Management expressed confidence in their capital position and a strong pipeline for acquisitions, focusing on areas that drive growth and synergies [70] Question: Interest in utility-scale projects - Management clarified that they remain interested in utility-scale projects but will be selective based on profitability [73] Question: Prospects for large-scale irrigation projects in Africa and the Middle East - Management indicated a strong pipeline for large irrigation projects driven by food security and local production needs [75]