Valmont Industries Q3 Earnings Call Highlights

Key Points

• Strong third-quarter results: Sales rose 5.5% to $1.1 billion, operating margin expanded to 15.7%, and diluted EPS increased 25.3% to $6.24. Valmont raised its full-year adjusted EPS guidance to $22.75–$23.75 while maintaining its sales outlook.
• Utility-led infrastructure demand remained robust: Infrastructure sales grew 9.1%, driven by 23% growth in North American utility sales and a backlog that reached $1.8 billion. The company is expanding utility-steel capacity and expects significantly higher growth capital investment in 2027.
• Near-term pressures remain: Rising steel and other input costs, business mix and the absence of one-time benefits are expected to weigh on fourth-quarter margins. Telecom demand remains weak after the 5G buildout, while international agriculture sales declined sharply despite storm-related strength in North America.

Valmont Industries NYSE: VMI reported higher third-quarter sales, operating profit and earnings, led by growth in its North American utility and coatings businesses, while management raised its full-year adjusted earnings outlook despite expected fourth-quarter pressure from higher input costs and business mix.

Net sales increased 5.5% year over year to $1.1 billion. Operating income rose to $172.8 million, and operating margin expanded 220 basis points to 15.7%. Diluted earnings per share increased 25.3% from the prior-year period to $6.24.

President and Chief Executive Officer Avner Applbaum said the quarter reflected continued momentum in infrastructure markets where the company holds strong positions, particularly utility-grid investment. He also pointed to North American agriculture growth driven by storm-related replacement demand, though he said that performance did not indicate a broad recovery in agricultural equipment markets.

Utility and coatings drive infrastructure growth

Infrastructure sales rose 9.1% to $882.1 million in the third quarter. North American utility sales increased 23%, supported by both higher pricing and volume growth, while North American coatings sales grew 13.8% on demand tied to infrastructure and data-center projects.

Applbaum said utilities are investing to modernize the grid, add capacity and improve resilience as power demand rises. Valmont’s infrastructure backlog reached $1.8 billion during the quarter as more opportunities in its customer pipeline converted into orders. He said the majority of backlog growth was tied to utility customers and that the company’s pipeline through 2029 had strengthened.

“We are more confident now in our goal,” Applbaum said in response to an analyst question about the company’s utility outlook. He cited customer spending plans, increased load-growth commitments, artificial intelligence-related investment, electric-vehicle activity, domestic manufacturing and the need for grid hardening after storms.

Valmont said it had installed and commissioned about 20% of the incremental utility-steel production capacity needed to support its 2029 plan through the third quarter. The company expects to double growth capital investment in 2027 from the level planned for 2026, with expansion directed toward utility and coatings operations.

Management said industry lead times have lengthened as demand has grown and new capacity has ramped. Applbaum said the company was booking utility business well into 2028, while customers’ plans extend to 2030 and, in some cases, beyond.

Infrastructure operating income increased to $154.8 million, although the segment’s operating margin declined to 17.6% from 17.8% a year earlier. Higher utility and coatings pricing and volumes were partly offset by material-cost increases, utility-capacity ramp costs and lower telecom contribution.

Chief Financial Officer John Schwietz said steel prices on the third-party index used for contractual pass-throughs were approximately 50% above prior-year levels. Because utility orders can remain in backlog for an extended period, input-cost changes reach results before related pricing adjustments are reflected in revenue. He said the catch-up process typically takes two to three quarters in a stable cost environment.

Schwietz said the price-cost effect modestly pressured third-quarter margins and was expected to create greater margin pressure in the fourth quarter as inflation accelerated. He said margins could resume expanding if cost inflation moderates, even without a complete stabilization in costs.

Telecom remains soft; international utility contract added

North American lighting and transportation sales declined 2.2% on lower volumes. Management said transportation markets were healthy, while lighting continued to face softer residential and commercial construction activity. The company is pursuing targeted lighting growth in Texas through work with utilities and municipalities, Applbaum said.

North American telecom sales fell 33.8% as carriers reduced or delayed capital spending following the peak of the 5G buildout. Applbaum said carriers were being selective on site modifications and shifting some capital allocation into 2027. While the company sees possible improvement later in 2027, he said Valmont has limited visibility and expects soft conditions to persist in the near term.

International infrastructure sales increased 5.5%, helped by pricing actions and favorable foreign exchange. Valmont also secured a contract in Europe to supply distribution poles to a major utility, expanding its participation in grid investment, according to management.

Agriculture margins improve despite international weakness

Agriculture sales declined 6.4% to $226 million. North American sales increased 15.8%, driven by storm-replacement orders and favorable pricing, while international sales fell 25.3% because of lower volumes in the Middle East and Brazil.

Applbaum said farmers facing storm damage turned to Valmont and its dealer network to restore irrigation systems during a critical operating period. Schwietz said storm-related demand was substantially responsible for North America’s growth during the quarter.

Agriculture operating income rose to $40.1 million, or 17.9% of sales, from $23.2 million, or 9.7% of sales, a year earlier. The result included about $7 million in one-time benefits, primarily recoveries in South America, Schwietz said. Excluding those items, the operating margin was just above 14%, aided by the greater North American sales mix, pricing and storm demand.

Aftermarket-parts sales increased approximately 12%, while technology-services revenue rose 7%, despite softer equipment demand. Management said higher input costs and lower grain prices continued to pressure farm economics in North America, while Brazil faced elevated interest rates and input costs.

In the Middle East, conflict and high shipping costs continued to delay projects. Valmont said it won a $100 million North Africa project involving its technology and water-management offerings. Shipments are expected to begin in the first half of 2027, with the project expected to run for roughly 18 months to two years. Schwietz said its operating margin is slightly below the company’s baseline level for large projects, but not significantly so.

Guidance reaffirmed as earnings outlook rises

Valmont reaffirmed its 2026 sales outlook of $4.3 billion to $4.45 billion, including infrastructure revenue of $3.4 billion to $3.5 billion and agriculture revenue of $900 million to $950 million. The company raised its adjusted diluted earnings-per-share guidance to $22.75 to $23.75 for the year.

Management expects fourth-quarter earnings and margins to moderate from third-quarter levels because of rising input costs, business mix and the absence of certain third-quarter benefits. Capital expenditure guidance remained unchanged at $170 million to $200 million.

Operating cash flow totaled $100.5 million in the quarter, including $40 million of accelerated receivable collections. Valmont ended the period with $122 million in cash and net-debt leverage of about 0.9 times. The company invested about $46 million in capital expenditures and returned $97 million to shareholders through $82 million in share repurchases and $15 million in dividends.

About Valmont Industries (NYSE:VMI)

Valmont Industries, Inc is a global manufacturer of engineered products and services serving the infrastructure and agricultural markets. Founded in 1946 and headquartered in Omaha, Nebraska, the company operates through businesses focused on infrastructure, coatings, and water management.

Its infrastructure products include utility and transmission structures, lighting and traffic poles, highway and transportation structures, and related support systems. Valmont also provides hot-dip galvanizing and other protective coatings designed to extend the service life of steel products used in industrial, infrastructure, and commercial applications.

In agriculture, the company manufactures mechanized irrigation equipment, including center-pivot and linear irrigation systems, as well as agricultural products and services intended to support water conservation and crop production.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.