Valmont Industries Q1 2025 Earnings Report

Valmont Industries EPS Results

• Actual EPS: $4.32
• Consensus EPS: $4.24
• Beat/Miss: Beat by +$0.08
• One Year Ago EPS: N/A

Valmont Industries Revenue Results

• Actual Revenue: $969.31 million
• Expected Revenue: $976.04 million
• Beat/Miss: Missed by -$6.72 million
• YoY Revenue Growth: N/A

Valmont Industries Announcement Details

• Quarter: Q1 2025
• Date: 4/22/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, April 22, 2025
• Conference Call Time: 9:00AM ET

Valmont Industries (NYSE:VMI) operates as manufacturer of products and services for infrastructure and agriculture markets in the United States, Australia, Brazil, and internationally. It operates through two segments, Infrastructure and Agriculture. The company manufactures and distributes steel, pre-stressed concrete, composite structures for electrical transmission, substation, and distribution applications; and designs, engineers, and manufactures metal, steel, wood, aluminum, and composite poles and structures for lighting and transportation applications. It also offers galvanizing, anodizing, painting, and powder coating services for paint products; towers, small cell structures, camouflage concealment solutions, passive intermodulation mitigation equipment, and components for wireless communication markets; and solar single-axis tracker product, an integrated system of steel structures, electric motors, and electronic controllers, as well as provides coatings services to preserve metal products. In addition, the company manufactures center pivot components and linear irrigation equipment for the agricultural markets, such as parts and tubular products for industrial customers; advanced technology solutions for agricultural sector; mechanical irrigation equipment and service parts under the Valley brand name. It serves municipalities and government entities, commercial lighting fixtures manufacturing companies, contractors, telecommunications and utility companies, and farmers, as well as the general manufacturing sector. Valmont Industries, Inc. was founded in 1946 and is headquartered in Omaha, Nebraska.

Valmont Industries Q1 2025 Earnings Call Transcript

Key Takeaways

• Demand Resilience & Backlog: Demand across most markets remained healthy, driving a growing backlog of $1.5 billion despite dynamic macro conditions.
• Stable Financial Performance: Q1 net sales of $969.3 million and EPS of $4.32 held steady year-over-year, with gross margin of 30% and operating margin of 13.2% maintained through SG&A cost reductions.
• Tariff Mitigation: The company expects to be tariff-cost neutral in fiscal 2025 by leveraging price actions, US-sourced steel, USMCA-compliant Mexico operations, and shifting coatings work to domestic facilities.
• Capacity Expansion & CapEx: Committed $30 million in Q1 to high-return utility production upgrades, including Brenham, TX expansion, with every $100 million invested projected to generate $100 million in new revenue and $20 million+ in operating income.
• Agriculture Growth Initiatives & Guidance: Agriculture sales rose 3.3% on stronger international projects, with new aftermarket ecommerce and the Accent 365 AgTech platform driving higher-margin, digital irrigation solutions; full-year guidance reaffirmed at $4.0–4.2 billion in sales and $17.20–18.80 EPS.

Presentation

[Operator]

Greetings. Welcome to Valmont Industries Incorporated First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.

[Operator]

I will now turn the conference over to your host, Renee Campbell, Senior Vice President of Investor Relations and Treasurer. Ms. Campbell, you may begin.

[Renee Campbell, SVP of IR & Treasurer at Valmont Industries]

Good morning, everyone, and thank you for joining us. With me today are Abner Appelbaum, President and Chief Executive Officer Tom Ligori, Executive Vice President and Chief Financial Officer and Tim Francis, Chief Accounting Officer. Earlier this morning, we issued a press release announcing our first quarter twenty twenty five results. That press release and the presentation for today's webcast are available on the Investors page of our website at valmont.com. A replay of the webcast will be available later this morning.

[Renee Campbell, SVP of IR & Treasurer at Valmont Industries]

We'll begin today's call with prepared remarks and then open it up for questions. Please note that this call is subject to our disclosure on forward looking statements, which is outlined on slide two of the presentation and will be read in full after Q and A. With that, I'd now like to turn the call over to Abner.

[Avner Applbaum, CEO & President at Valmont Industries]

Thank you, Renee. Good morning, everyone, and thank you for joining us. I'd like to start with first quarter highlights summarized on slide four. Demand across most of our markets has remained resilient amid a dynamic macro environment. Secular megatrends, such as the energy transition and infrastructure investment, continue to create meaningful opportunities for our business.

[Avner Applbaum, CEO & President at Valmont Industries]

While pockets of the business are more exposed to economic pressures, overall order activity and volume growth remain healthy as reflected in our growing backlog of $1,500,000,000 We're confident in our ability to manage through disruptions while positioning the business to capture long term growth. While consolidated net sales were down slightly, they increased modestly on a constant currency basis with both operating margins and earnings per share remaining stable. Our financial performance is a result of our disciplined execution against our strategic priorities. We've streamlined the organization to operate more efficiently, and our operational and commercial excellence initiative are delivering tangible results. Driven by continuous improvement culture, we're strengthening our position to grow as certain markets recover.

[Avner Applbaum, CEO & President at Valmont Industries]

Importantly, our market leadership and commitment to deliver premier quality and service to our customers continues to set us apart in infrastructure and agriculture. We're also actively mitigating near term tariff risks. With 24 manufacturing and 18 coatings facilities across The United States, we're well positioned to meet domestic demand. A few years ago, we began implementing a local for local supply chain strategy to better serve our global customers, and that work is paying off, helping to reduce our exposure today. We're also seeing success from other proactive efforts across the business.

[Avner Applbaum, CEO & President at Valmont Industries]

Tom will share more details later in the call. Turning to slide five. I'd like to share an update on a few of our twenty twenty five critical objectives that I introduced last quarter. We're executing our strategy to catch the global infrastructure wave by expanding capabilities and optimizing capacity across our footprint. In the first quarter, we invested approximately $30,000,000 in CapEx with a significant portion directed towards increasing utility production.

[Avner Applbaum, CEO & President at Valmont Industries]

Our expansion in Brenham, Texas is progressing as planned and is expected to be fully operational by year end. We're prioritizing high return capacity expansion investments, scaling up our existing facilities to operate with greater efficiency and capture future growth. This quarter, we continued equipment upgrades in Tulsa, Oklahoma and also started new productivity investments at our manufacturing facilities in Florida and Kansas. Our second objective is positioning our agriculture business for long term growth. Lower crop prices have pressured global ag markets and net farm income since late twenty twenty three.

[Avner Applbaum, CEO & President at Valmont Industries]

While conditions remain challenged, we're using this time to enhance our competitive strengths, including dealer excellence, production and aftermarket capabilities, and customer centric innovation. These efforts will position the business to emerge stronger when the cycle recovers. As an example, expanding our aftermarket parts business is a key priority, delivering high margin revenue. Our new ecommerce platform enhances the customer experience with faster access to a broader range of parts and seamless direct ordering. Additionally, our new AgTech platform, Accent three sixty five, has received positive early feedback for its performance and ease of use.

[Avner Applbaum, CEO & President at Valmont Industries]

We're very pleased with customer adoption rates, and initial benefits are tracking in line with our growth plans. As the market leader, investing in digital tools for more precise irrigation is essential. We're helping growers increase productivity with fewer inputs, improving yields, and resource efficiency. We're also allocating capital and talent with discipline and our focus on ensuring resources are directed where they can have the greatest impact for our customers and our business. Our people at the center of our success, investing in their safety, well-being, and talent development is essential to our future.

[Avner Applbaum, CEO & President at Valmont Industries]

Our progress on these five objectives reflects the dedication of our global Valmont team. I'm proud of what we achieved together. As we continue to execute, 2025 is shaping up to be a pivotal year that positions us for long term success. Now turning to slide six for an infrastructure market update, starting with utility, our largest product line. The business continues to show healthy volume growth driven by long term demand drivers such as rising energy usage and the need to replace aging infrastructure.

[Avner Applbaum, CEO & President at Valmont Industries]

Our focus on value based pricing and commercial execution has driven strong performance in a capacity constrained environment. The capacity additions mentioned earlier will begin ramping in the second half of this year, setting us up well for continued growth. Moving to lighting and transportation. US transportation demand remains strong. Lighting markets have been soft, but we're starting to see stabilizing order trends.

[Avner Applbaum, CEO & President at Valmont Industries]

Consistent with historical patterns, roughly 40% of total L and T sales are international, where we're expecting mixed regional market performance this year. Our coatings business serves a variety of markets and typically follows industrial production and regional GDP trends while also supporting our internal demand. Growth in North America was offset by a softness in international markets. Telecommunications sales are growing as carrier spending has recovered from softer 2024 levels. Our components business leads the market with exceptional customer service and a product portfolio that aligns closely with carrier programs.

[Avner Applbaum, CEO & President at Valmont Industries]

Our geographic presence is a key competitive advantage with 11 strategically located warehouses enabling next day delivery to most of The US market. Looking ahead, telecom has a positive long term outlook supported by ongoing network expansion, modernization efforts, and the need for greater connectivity. In solar, as expected, sales declined this quarter, reflecting softer market conditions and our strategic decision to exit lower return projects. In The US, policy uncertainty is impacting market activity. However, current European regulations are driving industry innovation and the adoption of agrivoltaic application that I mentioned last quarter.

[Avner Applbaum, CEO & President at Valmont Industries]

Our team remains focused and agile in navigating this dynamic environment. Across the portfolio, we serve customers and markets aligned with multiyear secular megatrends. Our capacity and capability investments address the growing complexity of customer demand where our expertise brings the most value and impact. It reinforces our market leadership while positioning us for long term growth. Turning to slide seven for an agriculture market update.

[Avner Applbaum, CEO & President at Valmont Industries]

North American market conditions remain challenged. Corn and soybean prices, which are key indicators of demand, are projected to decline mid single digit this year. These factors, along with ongoing trade policy uncertainty, are causing farmers to be more cautious with capital investment decisions. In the meantime, our Valley dealer network is working closely with growers to ensure we're ready to meet their irrigation needs as the cycle improves. We're leaning into our strategy to grow strategic account partnership by deepening relationship with large growers.

[Avner Applbaum, CEO & President at Valmont Industries]

These collaborations reflect our unique strength and ability to deliver meaningful, scalable solutions. In Brazil, our largest international market, grower sentiment is improving. We're encouraged by early signs of market stabilization, including a return to volume growth in the first quarter. Earlier this month, we welcomed our Brazilian dealers to our Nebraska facilities to share best practices, align on priorities, and strengthen collaboration. I was once again reminded of the impressive industry knowledge and customer relationships of our dealers, which reflects their deep passion for the business.

[Avner Applbaum, CEO & President at Valmont Industries]

The team is energized. They're looking forward to the annual AGRA show next week and remain confident in the long term opportunities in the region. International projects are a bright spot for our business. In The Middle East, demand is strong as nations place the highest priority on building sustainable, resilient food system. The $45,000,000 project we previously announced is on track, and our robust pipeline in the region continues to grow.

[Avner Applbaum, CEO & President at Valmont Industries]

To meet rising demand, our Dubai manufacturing facility has nearly doubled its output from a year ago. Our strong dealer network and proven ability to execute large scale projects gives us competitive advantage. We're proud to play a vital role in addressing the global need for a secure, sustainable food supply. Our irrigation solutions help growers do more with less, demonstrating Valmont's ability to deliver meaningful value. In summary, we've had a good start to 2025 despite a dynamic economic backdrop, and the actions we're taking to improve performance give us confidence in delivering strong results this year and beyond.

[Avner Applbaum, CEO & President at Valmont Industries]

I'll now turn the call over to Tom to review our first quarter financial results and 2025 outlook.

[Thomas Liguori, CFO at Valmont Industries]

Thank you, Adler. Good morning, everyone. Our team operated well in a rapidly evolving environment during the first quarter. We continue to make progress with our capacity and margin expansion initiatives. I wanna thank our team for their actions to control costs in the first quarter and the work performed to mitigate tariffs.

[Thomas Liguori, CFO at Valmont Industries]

Their efforts are helping to secure solid financial results for full year 2025. Turning to Slide nine. First quarter net sales of 969,300,000.0 decreased 0.9 year over year. Gross margin of 30% decreased 130 basis points from the prior year. The decrease was in our agriculture segment, primarily due to a higher mix of international projects that carry lower margins.

[Thomas Liguori, CFO at Valmont Industries]

The gross margin decline was largely offset by lower SG and A due to cost reduction activities. Operating income was $128,300,000 or 13.2% of sales. Below the line, interest expense decreased due to lower debt. We incurred $2,700,000 of other expense, primarily due to foreign exchange impacts. Our diluted earnings per share was $4.32 in line with prior year period.

[Thomas Liguori, CFO at Valmont Industries]

Our first quarter results include $3,000,000 of costs for tariffs or $0.11 per share. Turning to the segments on Slide 10. First quarter infrastructure sales decreased 2.4%. Growth in telecom and utility was largely offset by significantly lower sales in solar along with softer results in lighting and transportation. Utility sales increased 2.4%, driven by higher volumes and higher average selling prices.

[Thomas Liguori, CFO at Valmont Industries]

Sales of concrete distribution structures were impacted by a strategic shift by a key customer, which reduced volumes at that facility. This was a project specific decision with no impact on other concrete operations. Our utility backlog remains strong, and we're actively supporting our utility partners with their long term grid hardening efforts. Excluding concrete, our steel utility business grew 8% year over year. Lower sales in lighting and transportation and coatings were primarily due to softness in international markets.

[Thomas Liguori, CFO at Valmont Industries]

Our telecommunications business saw strong sales growth of nearly 30%, driven by favorable carrier spending. Solar sales declined by more than 50%, reflecting lower volumes, including the company's strategic decision in 2024 to exit low margin projects. Infrastructure operating income decreased slightly to 117,200,000.0. Operating margin improved 30 basis points to 16.7% of net sales. The improvement was largely due to lower SG and A expenses.

[Thomas Liguori, CFO at Valmont Industries]

Moving to Slide 11. First quarter agriculture sales increased 3.3%, an increase of approximately 6% on a constant currency basis. In North America, irrigation equipment volumes and selling prices were lower due to continued market softness amid lower grain prices. International sales increased significantly, led by strength in the EMEA region and higher volumes in Brazil. Agriculture operating income decreased to $36,200,000 or 13.6% of net sales.

[Thomas Liguori, CFO at Valmont Industries]

Lower gross margin due to the higher mix of international projects was partially offset by lower SG and A expenses. Moving to Slide 12 and our cash, liquidity and capital allocation priorities. Our liquidity remains strong. We ended the quarter with $184,400,000 of cash and approximately $800,000,000 of available liquidity on our revolving credit facility. We generated operating cash flow of $65,100,000 through earnings and lower inventory.

[Thomas Liguori, CFO at Valmont Industries]

Our net debt leverage was below one times. We remain committed to a balanced approach to capital allocation, deploying approximately half of our capital toward reinvesting in our business and the other half to shareholder returns. In the first quarter, we invested $30,300,000 in CapEx, primarily to expand capacity in our Infrastructure segment with a focus on utility. We are pleased with our progress in expanding our manufacturing capacity for the coming years. We expect that for every hundred million dollars we invest in capacities, we can generate over 100,000,000 in annual new revenue and $20,000,000 plus in operating income, delivering over $1 of diluted earnings per share.

[Thomas Liguori, CFO at Valmont Industries]

We returned $12,000,000 to shareholders through dividends and announced a 13% dividend increase during the quarter. In addition, we initiated a trading program in the first quarter to begin executing our $700,000,000 stock repurchase program. The program included a thirty day waiting period, so repurchases began in the second quarter. Through April 18, we've repurchased $59,000,000 of shares in the second quarter at an average price of $269 per share. Turning to our 2025 outlook on Slide 13.

[Thomas Liguori, CFO at Valmont Industries]

We are reaffirming our full year expectations. Net sales are projected to be in the range of $4,000,000,000 to 4,200,000,000.0 Diluted earnings per share is expected to be in the range of $17.2 to $18.8 For second quarter, we expect both sales and earnings per share to be above first quarter levels. While we are maintaining our 2025 guidance ranges, we now expect full year EPS to land above the midpoint, inclusive of tariffs. Regarding tariffs, our outlook includes tariffs as of April 18. Always keep in mind, for our US based customers, the vast majority of products shipped to them come from one of our 24 manufacturing facilities in The United States, significantly reducing our exposure.

[Thomas Liguori, CFO at Valmont Industries]

When we started assessing potential tariff impacts earlier this year, we estimated our total gross exposure could reach $80,000,000. In response, our teams developed and are in the process of implementing comprehensive plans to mitigate the impact of tariffs this year, starting with price. As a market leader in both segments, we are working with customers to fairly reflect the increased cost of tariffs and pricing. We've increased the use of US sourced steel in our Mexico operations and shifted some coatings work to our own US based galvanizing facilities. Products from our Mexico plant remain USMCA compliant, with the majority of steel US melted and poured.

[Thomas Liguori, CFO at Valmont Industries]

Our supply chain teams are focused on local sourcing as well as working with suppliers on cost sharing initiatives. We are working with US suppliers to provide components that were previously sourced internationally. Lastly, we are using advanced tools to improve scheduling and drive higher productivity in our Mexico operations. We believe these actions will enable us to be cost neutral with respect to tariffs on a dollar basis in fiscal twenty twenty five. Beyond mitigating tariffs, we are also taking actions to further optimize our cost structure.

[Thomas Liguori, CFO at Valmont Industries]

Our teams are focused on efficiency and productivity improvements in both our factories as well as back office operations. Our procurement teams are actively working to reduce our spend on indirect materials and services. At corporate, we are closely evaluating our use of outside service providers with the intent to leverage our internal talent to perform more work in house more cost effectively. Results so far are promising, and we believe the savings will be sustainable beyond 2025. We truly believe that the work our teams are doing to mitigate tariffs and optimize our cost structure makes us a stronger company that would benefit Belmont for years to come.

[Thomas Liguori, CFO at Valmont Industries]

To summarize on slide 14, we remain optimistic about our 2025 outlook and beyond. Our teams are executing well with businesses aligned to end markets supported by long term global megatrends. We're advancing growth initiatives, managing tariffs, driving cost efficiencies, and investing in capacity to better serve our customers. With clear competitive advantages, a focused strategy, and strong cash flow, we are well positioned to create lasting value for our customers, employees and shareholders. I will now turn the call over to Renee.

[Renee Campbell, SVP of IR & Treasurer at Valmont Industries]

Thank you, Tom. At this time, the operator will open up the call for questions.

[Operator]

Thank you. At this time, we'll be conducting a question and answer And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To allow as Our first question is from Nathan Jones with Stifel. Please proceed.

[Adam Farley, Associate Analyst at Stifel Financial]

Good morning. This is Adam Farley on for Nathan. I wanted to start with pricing actions. 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?

[Thomas Liguori, CFO at Valmont Industries]

Well, first of all, I think the team did a really good job on mitigating tariffs. And I wanna reiterate, for the total year, we'll be cost neutral, which we believe is very positive. And it'll be cost neutral for both segments. It'll make us have a strong second half. To your question on pricing, you know, we mentioned that we had 80,000,000 of tariff exposure.

[Thomas Liguori, CFO at Valmont Industries]

About half of that is through pricing, and the other half is through really supply chain movements and activities to to to avoid avoid tariffs. You know, I think as you look through the year and you look at our guidance, we expect higher pricing, possibly lower volumes. That's included in our guidance. But we feel very good about where we are. With respect to lags on pricing, yeah, things that are in backlog are generally not repriced.

[Thomas Liguori, CFO at Valmont Industries]

So, you know, in utility, the bid market, that's pretty much, you know, immediate passed on backlog. We'll we'll see the, you know, effect on on that more in the second half as we have new orders being produced. Hope that helps.

[Adam Farley, Associate Analyst at Stifel Financial]

Yeah. That's that's very helpful. Maybe shifting to telecom. I mean, a really strong quarter here, 30% growth in telecom. How should we think about that business for the rest of the year?

[Adam Farley, Associate Analyst at Stifel Financial]

I mean, do we should we expect this normalization to continue? Or are there any early signs of maybe carriers deferring spending?

[Avner Applbaum, CEO & President at Valmont Industries]

Hey. Good morning, Adam. So overall, we're very pleased with our, Q1 growth of, over 30% in telecom. So we've definitely seen stabilization after a couple of years where carriers, reduce their spending. And now the carriers are continuing to spend and, focusing on the five g upgrades on modernization, expansion, etcetera.

[Avner Applbaum, CEO & President at Valmont Industries]

So our order rates continue to be strong, and I believe the carriers will continue continue to invest. I mean, they're they're investing in the future. You know, if you look at and we're tied very closely with a lot of their in with a lot of their investments and their programs. You know, I'll give you an example. You know, AT and T, they're they're focused on the multiyear RAN transition, and we're well well equipped to support them in their growth.

[Avner Applbaum, CEO & President at Valmont Industries]

And that's been a lot of our demand. In fact, if you see this morning, just Verizon came out with their, earnings, and they, reaffirmed their CapEx spend and their outlook for the year. So I'd say overall, we're we're gonna keep on monitoring the, order intake pretty closely. But, the carriers are continuing to spend, and we believe they're focused on the long term. And we will continue to support them, and we're well equipped equipped to do so.

[Adam Farley, Associate Analyst at Stifel Financial]

Great. Thank you for taking my questions.

[Operator]

Our next question is from Chris Moore with CJS Securities. Please proceed.

[Chris Moore, Senior Analyst at CJS Securities]

Hey. Good morning. Thanks for taking a couple. Yeah. So, on the steel side, it sounds like you're you're talking about pricing as of 04/21.

[Chris Moore, Senior Analyst at CJS Securities]

Just theoretically, steel does increase meaning from from here, does that just you know, you you can't reprice some of the back does that just push out, you know, that that some of the two h earnings a a little bit further?

[Thomas Liguori, CFO at Valmont Industries]

Yeah. Well, this is what we're seeing. You know, prices for steel went up. They're starting to moderate. If you look at futures in the second half, they've they've actually come down.

[Thomas Liguori, CFO at Valmont Industries]

So that is reflected in our guidance. But, you know, we visited a steel supplier in the last two weeks, the largest plate producer in The US, and and they have capacity. They invested in their plant in Houston. Houston is close to our Brenham and Monterey facilities. So we're talking to them about, you know, how can we use their steel at a lower freight cost.

[Thomas Liguori, CFO at Valmont Industries]

They're also talking to us about more value added operations that they can perform, like cutting the steel, doing some base plates. So, you know, whereas February, March steel was very volatile, I think we we have a better line of sight and and road map to where we'll be toward the end of the year.

[Thomas Liguori, CFO at Valmont Industries]

And net net, I'd I'd

[Thomas Liguori, CFO at Valmont Industries]

say it's a it's positive to us.

[Chris Moore, Senior Analyst at CJS Securities]

Got it. Very helpful. The EPS guide stayed 17.2 to $18.8 It sounds like you have more confidence that you'll get above that midpoint. Is that a margin discussion? Are you more comfortable you get closer to the high end of the revenue guide?

[Chris Moore, Senior Analyst at CJS Securities]

Just, you know, any thoughts there.

[Thomas Liguori, CFO at Valmont Industries]

You know, we think we have a good shot at being above the midpoint for both revenue and EPS. And we feel better today. We're in a better position today than we were during our earnings call because of the work on on tariff mitigation. But just as importantly, you know, we've taken a fresh look at our cost structure, and the results are promising. That is not included in our guidance, and it could be upside, you know, later in the year.

[Thomas Liguori, CFO at Valmont Industries]

But, you know, let me just talk a little bit about the cost initiatives. You know, we're looking at the, productivity in our factories. Abner and I went to Monterey earlier this quarter. We're really happy with the improvements being made there. You know, we're focused on making sure they have steel and material in their first operations all of their time.

[Thomas Liguori, CFO at Valmont Industries]

We get a better flow through Monterey. We have a lower average cost per pull, so to speak. We went to our El Dorado facility. Same story. We're investing in CapEx for capacity, but it's also gonna improve flow and and improve our cost.

[Thomas Liguori, CFO at Valmont Industries]

But it's not just in factories. You know, we're looking at our back office. We're looking at our organization. You know, we have a an effort underway in corporate to take a look at let's do it zero based. Let's what really should be done in corporate?

[Thomas Liguori, CFO at Valmont Industries]

What should be done in segment? What should the cost of that be? And, you know, just as important, we're working with our suppliers. I'm really happy with the progress of our procurement teams on both steel, which we just talked about, but with our our indirect. And when we look at these, you know, cost initiatives, you know, altogether, they could be quite sizable, 15 to 20,000,000 once they're implemented.

[Thomas Liguori, CFO at Valmont Industries]

So we're in the early stages of that work, but, you know, we feel that it's in a good place. And and that's why we're pretty confident about our total year 2025 and and beyond.

[Chris Moore, Senior Analyst at CJS Securities]

Perfect. I'll leave it there. Thanks, guys.

[Operator]

Our next question is from Brent Thielman with D. A. Davidson. Please proceed.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Hey, great. Thanks. Good morning. I had a question on the infrastructure segment. It sounds like pretty solid demand across the board in The U.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

S. But I was curious just on the international sales exposure that you have. Are there some areas that you're monitoring? You know, what's sort of handicapped in the guidance from a demand perspective for that business group in particular?

[Avner Applbaum, CEO & President at Valmont Industries]

Hey. Good morning. So overall, you know, we do we do, we're a global company, and we we do operate in in global markets. And, you know, what we noted in the call is we had a a slow start to the year, mostly in our, Asia Pac, specifically in Australia. Coming into the year, we we had a a weak backlog mostly on the lighting side, and it just took a while for that to, pick up.

[Avner Applbaum, CEO & President at Valmont Industries]

And we are positively we're happy about what we're seeing now in that business. The order rate has been has been improving, in that region. And on top of that, you're also seeing the Australian government spending more money in infrastructure that helps our business there as well. So, you know, we're we're monitoring all the markets that we participate in. Our results in Europe were actually pretty solid for the quarter.

[Avner Applbaum, CEO & President at Valmont Industries]

So it's mostly around Australia. The lighting is where I'd highlight, but we're we're pleasantly, we're we're happy with where we're seeing that the order, is trending today, and that is all factored into, our guidance.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Okay. Appreciate that. And then maybe just on ag, you look Brazil had been a meaningful market for you in preceding years. It sounds like you're starting to see some green shoots there. Abner, I don't know if you can elaborate on maybe the order trends you're seeing in that market, if this is a true recovery or just some catch up.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

I know you had a tough year last year there, but curious any comments you have around Brazil.

[Avner Applbaum, CEO & President at Valmont Industries]

Yeah. So, you know, I mentioned we had the, Brazil Dealers here in, in Omaha last week. We actually had a great meeting and conversations with the, with our dealers there. And, we believe it kind of bottomed out in Brazil. And after a tough year, we're seeing stabilization.

[Avner Applbaum, CEO & President at Valmont Industries]

We're seeing order activity increasing into q one. Q '2 should also be a strong quarter for us. But, Yedi, you know, it's still still not has recovered. I mean, the, the margins are still under pressure there. The soy, the EBITDA margins are not as high as as they were in the past, but improving.

[Avner Applbaum, CEO & President at Valmont Industries]

They're still profitable, and, we're investing with our dealers in in our growth and the potential, and we know that that region will drive growth, in the future. You know, in fact, I did have an opportunity to speak with a leading economist from Sao Paulo and a and a former executive from the Brazilian market. And while they're cautious about the short term, very excited about the long term. You know? Even if there are more of these trade tensions between US and China, you know, Brazil Brazil is gonna benefit from that.

[Avner Applbaum, CEO & President at Valmont Industries]

The overall global demand is not gonna decrease. And even if it stays the same and The US Farmer could negatively impact it, the Brazilian farmer will will benefit from that, and they're they're investing there in infrastructure and in investments to support the growth. So, you know, we'll continue watching it. There's there's not a strong backlog there, but we're pleased with the, order activity improving. And, you know, on top of that, we also have our, Middle East Africa project pipeline.

[Avner Applbaum, CEO & President at Valmont Industries]

That is very strong. That is robust. We're we're we're having a strong year in that area, you know, around the food security and countries are continuing to invest there. So I'd say even with a weaker North America, environment, we should expect Brazil into, and, the rest of the world to offset the weakness. Overall, pretty pretty positive signs, and we'll keep on monitoring that.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Very good. Thank you.

[Operator]

Our next question is from John Bradz with Kansas City Capital. Please proceed.

[Jon Braatz, Equity Analyst at Kansas City Capital Associates]

Good morning, everyone.

[Renee Campbell, SVP of IR & Treasurer at Valmont Industries]

Good morning.

[Jon Braatz, Equity Analyst at Kansas City Capital Associates]

Avner or or Tom, you know, relative maybe where what you were thinking early on in

[Jon Braatz, Equity Analyst at Kansas City Capital Associates]

the

[Jon Braatz, Equity Analyst at Kansas City Capital Associates]

year, is your expectation for the North American irrigation market a little weaker today than three months ago?

[Avner Applbaum, CEO & President at Valmont Industries]

The short answer is yes. We're we're gonna expect a a tough environment. You know, in this type of uncertainty, The US Farmer, as we all know, he's gonna he's gonna he's gonna wait on the sidelines. And and we see that, and we didn't expect to have a good year, and it's it's gonna be a challenging year, for us. Having said that, you know, we're we're not gonna sit on the sideline.

[Avner Applbaum, CEO & President at Valmont Industries]

We continue to invest. We're investing our in technology. As I mentioned, we're very pleased with the early adoption of our Accents three sixty five with our iPhone solution, connecting more of our pivots, creating that ecosystem, providing the growers with value proposition, making sure their equipment, is up and running when they need it, and irrigating optimally. So and and focusing with our strategic accounts. So we can we're gonna continue to invest.

[Avner Applbaum, CEO & President at Valmont Industries]

So when the market recovers, we'll be ready, to execute, but we we we should expect a a tough year in North America in the ag Okay.

[Jon Braatz, Equity Analyst at Kansas City Capital Associates]

Tom, just a point of clarification. You mentioned in the first quarter, tariffs cost you $3,000,000 and your expectation for the full year is for it to be cost neutral. Are you suggesting that you're going to recover those $3,000,000 costs $3,000,000 in costs in the, last three quarters of the year?

[Thomas Liguori, CFO at Valmont Industries]

Yes. Yes.

[Jon Braatz, Equity Analyst at Kansas City Capital Associates]

Okay. Okay. So tariffs are a positive then?

[Thomas Liguori, CFO at Valmont Industries]

For the rest

[Thomas Liguori, CFO at Valmont Industries]

of the year.

[Jon Braatz, Equity Analyst at Kansas City Capital Associates]

Yeah. For the

[Jon Braatz, Equity Analyst at Kansas City Capital Associates]

okay. Alright. Alright. Thank you very much.

[Avner Applbaum, CEO & President at Valmont Industries]

Yeah. Thank you. I'll I'll just add a little bit more color on on the tariffs because, you know, it's obviously top of mind. I do wanna point out and use this opportunity that I'm very pleased with the work our teams have done to manage it manage the impact of tariffs. You know, we we they operated with a sense of urgency.

[Avner Applbaum, CEO & President at Valmont Industries]

You know, tariffs is not new for us. We we've been dealing with tariffs for as a global company for for decades. And, we we just we just got on it, and, you know, Tom gave all the detail about about mitigating it. But, you know, as as you think about us as a company and, you know, with our presence in North America, I mean, we our engineering structures, they're they're heavy. Right?

[Avner Applbaum, CEO & President at Valmont Industries]

So if you think about it, but by that was by definition. We're not gonna be importing things from around the world. So, you know, our our footprint here is in North America to support North America. We took these actions to, local for local and overall mitigating everywhere else. I do wanna use that opportunity just to say a very nice job by the team mitigating it.

[Thomas Liguori, CFO at Valmont Industries]

Okay. Thank you.

[Operator]

Our next question is from Brian Drab with William Blair. Please proceed.

[Brian Drab, Co-Group Head–Industrials at William Blair]

Hi. Thanks for taking my questions. I

[Brian Drab, Co-Group Head–Industrials at William Blair]

first wanted to

[Brian Drab, Co-Group Head–Industrials at William Blair]

see if you could just put a finer point on the expectation for volume growth in utility and L and T this year? And and what what is specifically, what does the highway market look like in in 2025? And should we stop asking about are we gonna see, you know, impact from the highway portion of the infrastructure bill, or or is this the year?

[Avner Applbaum, CEO & President at Valmont Industries]

Yeah. You know, I'll I'll start up with with the with the high level. You know, for for the, growth for the year for for Valmont, you know, we have we have high level of confidence in our forecast. And I'll just give you the the main factors is is why we feel, confident about our growth. You know, we're going into we have a we have a billion and a half of a backlog, which has increased, over the quarter, just just reflecting the strong demand we have in the utility space, in our projects in in Middle East.

[Avner Applbaum, CEO & President at Valmont Industries]

You know, on top of that, we continue to invest in capacity. Our capacity investments, they're ramping up. They're they're they're they're gonna support our growth as well. Specifically on the lighting and transportation. Right?

[Avner Applbaum, CEO & President at Valmont Industries]

The lighting activity, we started off. We had a a slow start to the year, but the order rate has been, improving for us. So that is a positive sign. Although the lighting business will be impacted, over the long term from pressure around for recession is to have. Around the transportation, that's been solid, solid, demand for us over the last several years.

[Avner Applbaum, CEO & President at Valmont Industries]

To your point, how much of that is driven by the infrastructure app? It's hard to see exactly, but that does support a continuous strength for us in that business. And overall, we mentioned the pricing, the actions that we took that support sort of our outlook. So overall, you know, it's it's we'll keep it's a dynamic environment. So we'll keep on on managing and and monitoring, but a lot of our business, they just they have they have long term drivers and and long term megatrends, and and those are not those are not changing.

[Avner Applbaum, CEO & President at Valmont Industries]

You know, the need for for energy, connectivity, hardening, food security, water scarcity. All those long term drivers are there, and we're operating with discipline. And we're we're positioned to to capitalize on them and continue to drive growth.

[Brian Drab, Co-Group Head–Industrials at William Blair]

Okay. Thank you. I'm just trying to gauge, you know, which of your businesses are or or what what your expectation is for volume growth or or decline in in the businesses in '25 just because, you know, you're you're forecasting sales to be flat for for the year, really, at the at the midpoint. And I know there's strength you were talking about strength in some segments, and and it's soft in domestic irrigation. So I'm I'm like, for example, I guess domestic irrigation is gonna be down volume, but international irrigation is gonna be up with strong international project activity in Brazil recovering.

[Brian Drab, Co-Group Head–Industrials at William Blair]

I I just don't know on the infrastructure side, you know, can you can you make any more precise comments on what what your expect expectation is for, volume growth or decline? Are we expecting because we just started off the year down for L and T significantly. Like, is that a business that we think by the end of the year can actually see volume growth? Or is it going to have a challenged year? And and and I'm just wondering that for all all the subsegments.

[Avner Applbaum, CEO & President at Valmont Industries]

Yeah. You know, I'll I'll just give you the high level. Yeah. When you when you look at the infrastructure, you we should expect mid mid single digit volume growth for for the infrastructure. With expecting you know, with with the exception of solar, we should see growth in in each one of those businesses on on the volume side and overall very close to our long term targets of of mid single digit plus.

[Avner Applbaum, CEO & President at Valmont Industries]

And that is after accounting from some of the deselections we've done last year, the strategic deselections to improve our business performance with FX headwinds. So overall, we should have a good volume growth and and sales growth in infrastructure. So hopefully, answers your question.

[Brian Drab, Co-Group Head–Industrials at William Blair]

Okay. And then the the last question I have is, you know, how how has your if you could give us any insight into how your impression of your tariff situation, your USMCA compliance, has changed, given, you know, that you you you did highlight, you know, how you have the significant shipments from Mexico into The US. And, first, you thought they wouldn't be tariffed if if it was US steel, then maybe it was gonna be tariffed if it's US steel. Now, you know, how how has what has changed in the clarity you've been given in terms of USMCA compliance, I guess? And I don't know.

[Brian Drab, Co-Group Head–Industrials at William Blair]

Just any insight into how that has played out and and, you know, your impression of those those rules that you have to play by.

[Thomas Liguori, CFO at Valmont Industries]

Brian, our Mexico operations are USMCA compliant. We feel very good about that. And, you know, I would just add, you know, we're we're all concerned about the economy. We're all concerned about tariffs and every day we come into work, and and we we manage the tariffs and we manage our cost. And if events change going forward, well, we manage the tariffs going forward.

[Thomas Liguori, CFO at Valmont Industries]

But while we come in every day to look at tariffs and costs, we're focused on the long term. And I I think that's something that, you know, we really wanna get across in the in the call. Think about everything that we've talked about just on the call so far. We talked about cost cost work that could be 20,000,000 or above. We talked about expanding capacity to meet be able to meet this volume growth in utility, and and every time we spend a hundred million, we'll get a dollar EPS going forward.

[Thomas Liguori, CFO at Valmont Industries]

We're actively, excuse me, we're actively repurchasing our shares. Our share repurchase authorization is 700,000,000. That's over 10 percent of our our market cap, especially today. And we know we have we have some upside in international ag, and that's both on our tech products more. So, you know, we feel that we're managing through the near term.

[Thomas Liguori, CFO at Valmont Industries]

We're concerned about the economy, but we think we're putting in actions that are very accretive to EPS over the next two to three years, and we don't need a great economy to be accretive to EPS. We need a decent economy, and and that's why we feel pretty good about this.

[Brian Drab, Co-Group Head–Industrials at William Blair]

Got it. Thank you very much.

[Operator]

We have reached the end of our question and answer session. I will now turn the call over to Renee Campbell for closing remarks.

[Renee Campbell, SVP of IR & Treasurer at Valmont Industries]

Thank you for joining us today. A replay of this call will be available for playback on our website and by phone for the next seven days. We look forward to speaking with you again next quarter.

This release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on assumptions made by management considering its experience in the industry where Valmont operates, perceptions of historical trends, current conditions, expected future developments and other relevant factors. It is important to note that these statements are not guarantees of future performance or results. They involve risks, uncertainties, some of which are beyond Valmont's control and assumptions. While management believes these forward statements are based on reasonable assumptions, numerous factors could cause actual results to differ materially from those anticipated.

These factors include, among other things, risks described in Valmont's reports to the Securities and Exchange Commission, SEC, the company's actual cash flows and net income, future economic and market circumstances, industry conditions, company performance and financial results, operational efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, geopolitical risks and actions, and policy changes by domestic and foreign governments. The company cautions that any forward looking statements in this release are made as of its publication date and does not undertake to update these statements except as required by law.

[Operator]

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Participants

Executives

• Renee Campbell, SVP of IR & Treasurer
• Avner Applbaum, CEO & President
• Thomas Liguori, CFO

Analysts

• Adam Farley, Associate Analyst at Stifel Financial
• Chris Moore, Senior Analyst at CJS Securities
• Brent Thielman, MD & Senior Research Analyst at D.A. Davidson
• Jon Braatz, Equity Analyst at Kansas City Capital Associates
• Brian Drab, Co-Group Head–Industrials at William Blair