VALMONT INDUSTRIES INC Q1 FY2025 earnings call

• Highlights: Demand resilient in most markets amid macro environment. Secular trends like energy transition and infrastructure investment create opportunities. Backlog at $1.5B. Net sales down slightly but constant currency up, margins and EPS stable. Streamlined organization for efficiency. CapEx investment of ~$30M in first quarter, with utility expansion in Texas progressing. Agriculture focused on dealer excellence and AgTech platform. - Objectives: Expand capabilities and optimize capacity across footprint. Position agriculture business for long-term growth through dealer excellence, production, and customer-centric innovation.

Infrastructure: First quarter sales decreased 2.4%. Utility sales increased 2.4% due to higher volumes and average selling prices, though concrete distribution structures were impacted by a key customer shift. Telecom sales grew nearly 30% driven by favorable carrier spending. Solar sales declined over 50% due to soft market and strategic exit of low-margin projects. Infrastructure operating income decreased slightly, but operating margin improved to 16.7% of net sales. Agriculture: Sales increased 3.3% (6% on constant currency). North America had lower irrigation equipment volumes and selling prices due to market softness, while international sales, led by EMEA and Brazil, increased significantly. Agriculture operating income decreased, but lower SG&A offset some of the lower gross margin.

• Reaffirmed full-year net sales range $4.0 to $4.2 billion and EPS range $17.20 to $18.80, expecting to land above midpoint. Tariffs managed to be cost neutral for the year. CapEx investment in capacity expansion. Dividends increased by 13%, and stock repurchase program initiated with $700M authorization.

• Tariffs and foreign exchange impacts. Economic pressures affecting some business pockets. Market softness in solar and certain international markets. Policy uncertainty in solar and ag markets.

Q: Have price actions been implemented to offset all of the tariff impacts to date? And is there any type of lag that we should expect from pricing?

A: The team mitigated tariffs, aiming for total year cost neutrality. About half of $80M tariff exposure is via pricing, with the other half via supply chain. Things in backlog generally not repriced, so bid market pricing is immediate, but backlog effects seen more in second half.

Q: Telecom growth, outlook?

A: Strong Q1 growth (nearly 30%) due to favorable carrier spending. Carriers continuing to spend on 5G upgrades, modernization, etc., with positive long-term outlook.

Q: Steel prices, impact on earnings?

A: Steel prices moderating, supply chain efforts to use local US steel, with better line of sight to year-end costs, net net positive.

Q: International sales exposure, demand handicaps?

A: Monitoring Australia lighting market, which had a slow start but order rates improving. Australian government infrastructure spending helps. Europe results solid, mostly Australia lighting is key area of monitoring.

Q: Brazil ag market trends?

A: Brazil market stabilized, order activity increasing in Q1, Q2 expected strong. Margins still under pressure but improving, and investing in dealers for future growth.

Q: North American irrigation market outlook?

A: Tough environment due to lower grain prices and trade uncertainty, but investing in technology (Accent 365) and strategic accounts to be ready when market recovers.

Q: Tariffs impact on full year?

A: First quarter tariffs cost $3M, but full year expected to be cost neutral, with recovery in rest of year.

Q: Volume growth in utility and L&T?

A: Confident in forecast with $1.5B backlog, capacity investments ramping. Lighting order rates improving, transportation demand solid, supported by infrastructure bill long term.

Q: USMCA compliance and tariffs clarity?

A: Mexico operations USMCA compliant. Managing through near-term tariffs while focusing on long-term actions like cost work, capacity expansion, and share repurchases for EPS accretion.