Valmont(VMI) - 2024 Q4 - Annual Report

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].