VALMONT INDUSTRIES INC Q4 FY2025 earnings call

• 2025 was a solid year for Valmont with strong performance in mixed demand environment, strengthened core. • In Utility, customer demand for large-scale projects strong, increased capacity and deployed AI-enabled tools. • In Agriculture, made progress on structural programs, drove value through cost management and innovation. • Infrastructure market update: Utility has $1.5 billion backlog up 22%, Lighting & Transportation has positive outlook, Coatings positioned for growth, Telecommunications carrier capital spending normalized, acquired remaining 40% of ConcealFab. • Agriculture demand outlook: North America stable, International mixed, acquired remaining 80% of Rational Mind. • 2026 outlook: positioned for strong growth, celebrate 80th anniversary, plan Investor Day on June 16. • 2026 guidance: net sales projected between $4.2 billion to $4.4 billion, diluted earnings per share projected in range of $20.50 to $23.50

Infrastructure sales of $819 million grew 7.2% compared to last year. Utility sales grew 21%, Lighting & Transportation declined 5.3%, Coatings sales increased 6.3%, Telecommunication sales were similar to prior year, Solar sales declined. Fourth quarter agriculture sales decreased 19.9% year-over-year to $222.7 million, had an operating loss of $3.3 million in the fourth quarter. Full year net sales of $4.1 billion increased slightly year-over-year, operating income increased to $538 million or 13.1% of revenue, adjusted diluted earnings per share was $19.09, an increase of 11.1% over 2024

• Net sales projected to be between $4.2 billion to $4.4 billion. • Diluted earnings per share projected in range of $20.50 to $23.50. • Factors contributing to top end: additional utility revenue, improved agriculture market. • Factors contributing to low end: unanticipated delays in capacity expansion, tariff changes. • Drivers of 2026 guidance: growth in Infrastructure (price and volume, primarily Utility), growth in Agriculture aftermarket and technology but decrease in volume, earnings growth in Infrastructure (primarily Utility), improved earnings in Brazil, exit of certain solar markets, profits from wholly owned businesses, benefit from lower share count, reduced earnings from Ag due to lower volumes, tax rate return to normal 26%, adjusted for potential risk

• Unanticipated delays in capacity expansion plans, such as equipment or construction delays. • Changes to tariff regulations that require time to take hold and mitigate any increase in tariffs. • Global tariffs, commodity and steel cost or other unforeseen events could impact results

Q: On the Utility side, could you talk us through your confidence in the continued strong demand for this segment? And have you seen any changes in customer investment appetite or competitive landscape, please?

A: We feel very confident with the strength in the Utility market that has several strong drivers such as electrification, AI and data centers, industrial onshoring, aging infrastructure replacement. We're tied in to customers' multiyear plans and our backlog is $1.5 billion.

Q: A follow-up on Ag. Could you talk about excluding onetime items, what specific actions are you being taken to restore agriculture margins? And when do you expect to see a meaningful recovery?

A: We expect to see a meaningful recovery in Q1 of 2026. Took steps like hiring new legal counsel, replacing finance leader in Brazil, North America Ag has double-digit operating margin.

Q: I guess I'll start with trying to put a finer point on the Ag margins, double-digit, a pretty big range there, Tom. Is there any kind of finer point you can put on where you expect them to be in the first quarter and where you expect them to be for the full year?

A: We think we'll be in the low teens in the first quarter, maybe approaching the mid-teens by the end of the year.

Q: The increasing capital spending in 2026 over 2025, which is probably a good thing, right? I assume that's going to Utility capacity expansions. So can you talk about kind of what you're doing there?

A: We're going to spend $170 million to $200 million in 2026 primarily directed towards Utility. It's disciplined scaling, adding capacity where demand is visible with very strong returns.

Q: Maybe just talk a little bit about balance sheet. Are there certain areas, perhaps product lines where Valmont is using -- could be using its balance sheet to trade better price for less prepayments?

A: We're a leader in the markets, not looking to trade balance sheet for price. We have low leverage for growth, working capital improvements.

Q: Got it. Makes sense. And maybe just on the Ag side in terms of obviously still soft market. But what types of things can you do perhaps to get a higher share on the aftermarket parts side of a soft Ag market. You guys are the replacement process is, I guess, one of your strengths, making things very easy for the farmers and dealers. Maybe could you just talk in terms of kind of the aftermarket side of things and kind of momentum that you might have there?

A: Put a lot of resources into e-commerce system, working on proper inventory positioning in international regions.

Q: I want to follow up on Utility. I appreciate the outlook bridge as well in the deck. But the $150 million in growth assumed for the Utility piece, '26 versus '25. I guess if we assume sort of a stable steel price environment, is there still sort of a higher potential ceiling for that business this year? Or does that sort of limit out just based on the capacity you'll have in place this year?

A: Definitely see some upside in Utility.

Q: And then on the Ag side, Tom, I think I heard you mention looking towards some -- maybe some potential wins on the project side, maybe more midyear. Does the outlook for that business sort of assume kind of pressure through first half then a stronger second half contingent on winning these projects? Maybe if you could just clarify that.

A: We'll have a slower first quarter, probably a slower first half and as these come in, that will improve.

Q: I just wanted to follow up on that Utility growth. This bridge is really helpful. And of course, I think $150 million incremental in utility indicates about 10% growth in the outlook for Utility for 2026. I'm just wondering, is that how to think about it? And then how do you expect price and volume to contribute to that 10% growth proportionately?

A: In '25, more price than volume. In '26, more volume than price, starting to see drop-through from capacity expansions in mid- to upper 20%, even approaching 30%.

Q: And on the nonutility infrastructure piece, it looks like that will be up about 3%. I'm just wondering, is it fair to assume that you get some more growth maybe in Telecom, but Lighting & Transportation and Coatings is roughly flat? Or do you see any growth in those other pieces?

A: We still have growth in all 3 meaning, Coatings as well.

Q: For Coatings, obviously, tailwind within your intersegment work that you do for your Utility business and data center AI. What other tailwinds does that business see from data center and AI?

A: Structurally supports internal business, strong third-party business with high Net Promoter Score, aligned with growth in Midwest, Southwest, data centers and AI.

Q: And can I just sneak in one more to Tom. Tom, I think on the last call, it was -- you mentioned that the incremental margins -- operating margins on the additional capacity and Utility were coming in. I think you're phrasing was something like well above 20%. How is that incremental margin on that additional capacity looking lately?

A: It's mid- to upper 20% range, approaching 30% through 2026