Valmont(VMI) - 2025 Q2 - Quarterly Results

Q2 2025 Financial & Operational Overview Valmont's Q2 2025 performance saw a 1.0% net sales increase to $1.05 billion, alongside a GAAP net loss of $30.3 million due to significant one-time charges, while adjusted diluted EPS was $4.88, and the full-year 2025 adjusted EPS outlook was raised Key Financial & Operational Highlights Valmont reported a 1.0% increase in Q2 2025 net sales to $1.05 billion, but recorded a GAAP net loss of $30.3 million, or ($1.53) per share, primarily due to $112.1 million in one-time charges for organizational realignment and asset impairments, while adjusted diluted EPS was $4.88, and the company demonstrated strong cash flow, returned $113.6 million to shareholders, and raised its full-year 2025 adjusted EPS outlook Q2 2025 Financial Summary | Metric | Q2 2025 GAAP | Q2 2025 Adjusted | Q2 2024 GAAP | | :--- | :--- | :--- | :--- | | Net Sales | $1.05 B | $1.05 B | $1.04 B | | Operating Income | $29.3 M | $141.4 M | $147.3 M | | Net Earnings (Loss) | ($30.3 M) | $97.2 M | $99.7 M | | Diluted EPS (Loss) | ($1.53) | $4.88 | $4.91 | - The company recorded significant one-time charges totaling $112.1 million, consisting of $91.3 million in non-cash asset impairments (primarily for Solar and Access Systems), $9.8 million in cash realignment charges, and $10.9 million in other non-recurring costs[5] - Capital allocation activities in Q2 included returning $113.6 million to shareholders ($100.0 million in share repurchases and $13.6 million in dividends) and investing $32.0 million in capital expenditures[9] - Total backlog increased by $139.2 million (9.7%) since year-end 2024, driven by continued strong demand in the Infrastructure segment[9] - The company raised its full-year 2025 adjusted diluted EPS outlook to a new range of $17.50 to $19.50[9] Segment Performance The Infrastructure segment's sales were nearly flat at $765.5 million, as growth in Utility and Telecommunications was offset by a significant decline in Solar and softer international demand, with its GAAP operating income falling sharply to $25.9 million due to an $89.4 million impairment charge, while the Agriculture segment's sales grew 2.7% to $289.4 million, driven by strong international sales in EMEA and Brazil, which compensated for market softness in North America, and its adjusted operating income and margin improved Q2 2025 Segment Financials | Segment | Q2 2025 Net Sales | YoY Change | Q2 2025 Adj. Operating Income | Adj. Operating Margin | | :--- | :--- | :--- | :--- | :--- | | Infrastructure | $765.5 M | ~0% | $124.6 M | 16.3% | | Agriculture | $289.4 M | +2.7% | $44.8 M | 15.6% | - Infrastructure growth was led by higher volumes and pricing in Utility and strong demand in Telecommunications, but was offset by a significant decline in Solar sales volumes[8] - Agriculture's growth was fueled by a significant increase in international sales, particularly in the EMEA region and Brazil, which more than offset a decline in North America[12] Full-Year 2025 Outlook Valmont raised its full-year 2025 adjusted diluted EPS outlook to a range of $17.50 to $19.50, up from the previous range of $17.20 to $18.80, while maintaining its net sales forecast of $4.0 to $4.2 billion and its capital expenditures guidance of $140 to $160 million Full-Year 2025 Financial Outlook | Metric | Previous Outlook | Updated Outlook | | :--- | :--- | :--- | | Net Sales | $4.0 to $4.2 billion | No change | | Adjusted Diluted EPS | $17.20 to $18.80 | $17.50 to $19.50 | | Capital Expenditures | $140 to $160 million | No change | | Adjusted Effective Tax Rate | ~26.0% | No change | - The outlook is based on current plans to mitigate tariff impacts and assumes steel costs are aligned with futures markets as of July 21, 2025[18] Detailed Financial Statements This section provides a comprehensive overview of Valmont's financial position and performance through its consolidated statements of operations, balance sheets, and cash flows Consolidated Statements of Operations For Q2 2025, Valmont reported a net loss attributable to the company of $4.0 million, a significant downturn from the $99.7 million in net earnings in Q2 2024, primarily driven by a $91.3 million impairment of long-lived assets and $8.9 million in realignment charges, which caused operating income to fall 80.1% to $29.3 million, while gross profit remained relatively stable year-over-year Condensed Consolidated Statements of Operations (Amounts in Millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net sales | $1.05 B | $1.04 B | +1.0% | | Gross profit | $321.2 M | $320.3 M | +0.3% | | Operating income | $29.3 M | $147.3 M | -80.1% | | Net earnings (loss) attributable to VMI | ($4.0 M) | $99.7 M | NM | - The significant drop in operating income and net earnings was directly caused by newly recorded expenses in Q2 2025: Impairment of long-lived assets ($91.3 million) and Realignment charges ($8.9 million)[24] Consolidated Balance Sheets As of June 28, 2025, the company's balance sheet remained solid with total assets of $3.35 billion, a slight increase from year-end 2024, cash and cash equivalents grew to $208.5 million from $164.3 million, total liabilities were stable at $1.73 billion, while shareholders' equity stood at $1.53 billion Condensed Consolidated Balance Sheets (Amounts in Millions) | Metric | June 28, 2025 | Dec 28, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $208.5 M | $164.3 M | | Total current assets | $1.74 B | $1.68 B | | Total assets | $3.35 B | $3.33 B | | Total liabilities | $1.73 B | $1.74 B | | Shareholders' equity | $1.53 B | $1.54 B | Consolidated Statements of Cash Flows For the first half of 2025, net cash from operating activities increased significantly to $232.7 million from $154.1 million in the prior-year period, driven by non-cash impairment charges and better working capital management, while the company used $64.3 million in investing activities, primarily for capital expenditures, and $131.2 million in financing activities, which included $100.0 million for share repurchases Condensed Consolidated Statements of Cash Flows (Amounts in Millions) | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $232.7 M | $154.1 M | | Net cash from investing activities | ($64.3 M) | ($36.5 M) | | Net cash from financing activities | ($131.2 M) | ($150.9 M) | | Net change in cash | $44.2 M | ($39.9 M) | - Major uses of cash in the first half of 2025 included $100.0 million for stock repurchases and $62.3 million for purchases of property, plant, and equipment[34] Non-GAAP Measures & Reconciliations This section details Valmont's use of non-GAAP financial measures and provides comprehensive reconciliations to their GAAP equivalents, offering enhanced transparency into core operational performance Use of Non-GAAP Financial Measures Valmont utilizes non-GAAP financial measures like Adjusted Operating Income, Adjusted EPS, Adjusted EBITDA, and Free Cash Flow to supplement its GAAP results, as management believes these metrics provide a clearer view of core operating performance by excluding items such as restructuring costs, asset impairments, and other non-recurring charges, thereby enhancing comparability across periods - The company uses non-GAAP measures to assess performance, evaluate profitability, inform executive compensation, and increase transparency for investors[36] - Key non-GAAP measures include Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Earnings, Adjusted Diluted EPS, Adjusted EBITDA, Leverage Ratio, and Free Cash Flow[37] - Adjustments typically exclude items not considered part of core operations, such as acquisition costs, realignment expenses, goodwill impairment, and other non-recurring items[37] Regulation G Reconciliations The report provides detailed reconciliations from GAAP to non-GAAP figures, showing that for Q2 2025, consolidated operating income of $29.3 million was adjusted by $112.1 million for impairments, realignment, and other charges to arrive at an adjusted operating income of $141.4 million, and the GAAP net loss per share of ($1.53) was reconciled to an adjusted diluted EPS of $4.88, with the company's leverage ratio calculated at 0.95x based on an Adjusted EBITDA of $627.4 million for the trailing four quarters Q2 2025 Operating Income Reconciliation (Amounts in Millions) | Metric | Amount | | :--- | :--- | | Operating income - as reported | $29.3 M | | Impairment of long-lived assets | $91.3 M | | Realignment charges | $9.8 M | | Other non-recurring charges | $10.9 M | | Adjusted operating income | $141.4 M | Q2 2025 Diluted EPS Reconciliation | Metric | Per Share | | :--- | :--- | | Diluted EPS (Loss) - as reported | ($1.53) | | Adjustments (Impairment, Realignment, etc.), net of tax | $6.41 | | Adjusted Diluted EPS | $4.88 | - Adjusted EBITDA for the four fiscal quarters ending June 28, 2025, was $627.4 million[49] - The company's leverage ratio (Net Indebtedness / Adjusted EBITDA) was 0.95x as of June 28, 2025[51] Other Key Metrics This section highlights additional key operational metrics, specifically focusing on the company's backlog performance across its segments Backlog The company's total backlog increased by 9.7% to $1.58 billion as of June 28, 2025, compared to $1.44 billion at the end of fiscal 2024, with this growth entirely driven by the Infrastructure segment, whose backlog grew to $1.46 billion, while the Agriculture segment's backlog declined to $114.1 million Backlog by Segment (Amounts in Billions/Millions) | Backlog | June 28, 2025 | Dec 28, 2024 | Change | | :--- | :--- | :--- | :--- | | Infrastructure | $1.46 B | $1.27 B | +14.8% | | Agriculture | $114.1 M | $163.4 M | -30.2% | | Total backlog | $1.58 B | $1.44 B | +9.7% | - The growth in total backlog was driven by continued strength in Infrastructure demand[9]