Q3 2021 Valmont Industries Inc Earnings Call
Greetings and welcome to the download industry, Inc, third quarter 'twenty 'twenty.
Earnings Conference call.
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I will now turn the conference over to your host Renee Campbell, Vice President Investor Relations and corporate Communications MS. Campbell you may begin. Thank you and good morning, welcome to Belmont Industries third quarter 2021 earnings call with.
With me on today's call are Steve Kaniewski, President and Chief Executive Officer.
After Apple bomb Executive Vice President and Chief Financial Officer.
And Tim Francis Senior Vice President and corporate controller.
This morning, Steve will provide a brief summary of our third quarter results and comment on our strategy and long term.
Term business outlook Avner.
Avner will review, our financial performance and provide an outlook for the balance of 2021 with closing remarks from Steve This will be followed by Q&A.
A live webcast of the presentation will accompany today's discussion and is available for download from the webcast or on the investors page at Belmont.
<unk> Dot com.
A replay of today's call will be available for the next seven days. Please.
Please also note that this call is subject to our disclosure on forward looking statements, which applies to today's discussion and as outlined on slide two of the presentation.
It will also be read in full at the end of today's call.
I would now like.
I turn the call over to our President and Chief Executive Officer, Steve Kaniewski.
Thank you Renee and good morning, everyone and thank you for joining.
Today, I would like to begin by sharing some opening comments and then provide a brief overview of the quarter.
Before I do that I want to take a moment to recognize the contribution.
Walter Scott Junior who serves on our board for more than 40 years and passed away late last month.
Well, if there was an incredible individual whose wisdom and leadership are critical to Vermont success over the years.
This loss is felt deeply by those who knew him and the entire Omaha community.
Walters Council kindness, and Mentorship will truly be missed by all of us at Donlin.
Moving on to the business our strong performance this quarter once again demonstrated the solid demand across our businesses and the consistent execution of our growth strategy.
Even amid a challenging.
<unk> full environment.
Like most others, we have safety impacts with broad based inflation, the COVID-19, Delta variant and labor and supply chain disruptions.
Government mandated lockdowns in Australia, and workforce Quarantines in North America, including Mexico, and the southeast United States impacted.
<unk> <unk> and coating facilities.
Supply chain disruptions affect the timing of some shipments in our irrigation and solar businesses.
Like this we delivered a strong quarter of growth and profitability.
Our commercial and operations teams are managing exceptionally well through these unique dynamics with focus and perseverance.
While continuing to prioritize employee safety and serve our customers I'm extremely proud of our team's execution throughout this year.
Now, let me move to a brief overview of our third quarter summarized on slide four of the presentation.
Record third quarter sales 868.
Certainly.
Increased more than 18% compared to last year.
Sales growth was realized in all segments led by higher pricing and strong broad based market demand.
Securely substantial sales growth and irrigation.
Moving to the segments and starting with utility.
Sales of 200.
$886 $5 million grew slightly compared to last year.
Significantly higher pricing and higher volumes were mostly offset by renewable energy projects that did not repeat.
Or that were pushed into future quarters due to customers supply chain disruptions.
North American utilities have.
Switching to our planned investments in transmission and distribution projects, even exceeding recent years of higher capital spending.
Further proposed capacity additions and the renewable energy sector are favorable demand drivers across our utility business.
We see strong demand continuing as both utilities and developers.
<unk>.
<unk> have been increasing their forecast of additional projects over the next several years to comply with mandates to increase renewable energy generation.
Moving to engineered support structures sales of $281 $1 million increased 10% year over year led by favorable pricing.
Been in key markets and sales growth of more than 25% and wireless communication products and components.
Pricing improvements across all product lines continued this quarter and international markets are benefiting from higher stimulus and infrastructure investments, especially in Australia.
<unk> build outs and significant.
And all things by the major carriers are driving demand in our wireless communications business, providing a good line of sight into 2022.
Turning to coatings sales of $96 $7 million grew 10% year over year, driven by higher pricing improved general end market demand.
Anybody else from our new Greenfield facility in Pittsburgh.
Moving to irrigation.
Global sales of $243 million grew more than 72% year over year with sales growth in all regions.
And higher sales of technology solutions.
In North America sales grew nearly.
Nearly 55% as strong market fundamentals and improved net farm income projections continue to positively impact farmer.
Generating very strong order flow.
International sales doubled year over year led by solid demand from the middle East and Africa, including the ongoing deliveries.
And Ctrip project.
And another record quarter of sales in Brazil.
Last quarter, we highlighted our acquisition of Prosper technologies.
Integration is going well and we are making substantial progress building on our new strategy to grow recurring revenue services.
We are on track to meet the financial.
Of the east that was shared last quarter and look forward to sharing progress towards these goals in the future.
In irrigation, we have a unique market advantage due to our global footprint and highly differentiated AI solutions, both critical components of our growth strategy.
Over the past year, we have been.
Increasing opportunities for local manufacturing in the markets, we serve especially in light of the challenging supply chain environment labor availability and higher freight costs.
For example, we recently localize some of our electronics Assembly and our devices.
And are increasing the total capacity and our Brazil.
Bill factory by 50%.
<unk> us for long term international market growth, while we continue enhancing service to our dealers and customers.
We are also very pleased that our irrigation backlog at the end of third quarter was $388 million up 26% year over.
Year.
Turning to slide five as.
As we've said before ESG is embedded into the core of our company's purpose.
And there are many ways, our products and services to conserve resources and improve life.
One recent example of this is.
It's using solar solutions to transform the sedan.
And so a prosperous and sustainable region for agricultural production.
Sudan is the third largest country on the African continent.
Agriculture is quickly becoming its primary economic driver.
Accounting for 40% of the nation's GDP and employing close to 80% of our local workforce.
But eric conditions, and a lack of direct access to electricity in the region are hindering its expansion.
To help overcome these challenges our valmont solar team recently installed a PV plant to bring power to center pivots.
Sunlight is captured and transplanted immediately into electricity.
Eliminating the need.
Need for a battery or secondary energy source.
We're proud to have initiated this project powering pivots by solar energy, 100% independent from the grid.
Our innovative solutions are leading the way for precision agriculture, and Sudan opening doors to other solutions that will enhance productivity.
Empower local communities solve food security issues and help build a more sustainable world.
With that I will now turn the call over to Avner for our third quarter financial review at 2021.
Thank you, Steve and good morning, everyone.
Turning to slide seven and third.
First of all my comments will focus on the adjusted results as outlined in the press release and in the Reg G disclosure in the presentation.
Operating income of $80 4 million or nine 3% of sales for 20% year over year, driven by higher volumes in irrigation.
Quarter and favorable pricing, notably in engineered support structures.
Diluted earnings per share of $2 57.
Grew 30% compared to last year, primarily driven by higher operating income and a more favorable tax rate of 23, 5%, which was realized through the execution.
Of certain tax planning strategy.
Turning to the segment on slide eight and utility support structures operating income of $24 6 million or eight 9% of sales.
Increased 170 basis points compared to last year.
Material costs continue to increase.
<unk> the quarter impacting our ability to fully recover cost through our pricing mechanism leading to lower than expected March.
Also the impact of workforce current team in a few north American facilities led to operational inefficiencies, which we do not expect to repeat.
Increased during the slide nine.
In engineered support structures operating income increased to $34 4 million or 12, 2% of sales.
Third quarter record.
The benefits of proactive pricing actions have more than offset the impact of continued rapid cost inflation.
Better.
These cost leverage including SG&A also contributed to positive results.
Turning to slide 10 in the coating segment operating income of $12 5 million or 12, 9% of sales decreased 270 basis points year over year.
Profitability.
<unk> was impacted by a lag in pricing to recover higher inflation costs.
Including raw material and labor and startup costs at the Pittsburgh facility.
Moving to slide 11 in the irrigation segment operating income of $32 million more than doubled compared to last year and operating margin of 13.
13, 3% of sales improved 270 basis points year over year.
Significantly higher volumes and favorable pricing were partially offset by higher SG&A expenses from the recent press for acquisition.
We're also extremely pleased with the profitability of our industrial tubing business.
And international margin improvement led by consistent and proactive pricing actions, taking by our global team.
Turning to cash flow on slide 12 year to date, we have delivered operating cash flows of $62 million with a use of cash this quarter of $8 4 million.
That reflects.
Our working capital levels to support strong sales growth.
For the balance of the year, we expect inventory levels to remain elevated to help mitigate supply chain supply chain disruption and strategically.
<unk> raw material availability to support strong sales growth <unk>.
Accounts receivable also increased in line with sales growth as our historical results have shown we will see improvements in working capital as.
As inflation subsides.
Turning to slide 13 for a summary of capital deployment year.
<unk> capital spending of $81 million includes $33 million for strategic growth investments and $55 million of capital was returned to shareholders through dividends and share repurchases ending the quarter with approximately $170 million of cash.
Moving now to slide 14.
Our balance sheet remains strong based on our recently amended revolving credit facility, our net debt to adjusted EBITDA of 185 times remains within our desired range of one and a half to two and a half.
Let me now turn to slide 15 for an update to our 2021 out including a few key metrics and assumptions.
We are increasing our earnings expectations for fiscal 2021 by narrowing the EPS guidance range to $10 60 to $11 10.
This reflects strong market demand and our solid execution this year and our confidence in our ability to continue this performance.
Other metrics.
Nick N assumptions, including tax rate and currency impacts are summarized on this slide and in the press release.
Turning to our segment outlook on slide 16.
In utility support structures, we expect operating margins to improve sequentially as pricing becomes more aligned with steel cost inflation.
Moving to engineered.
Our it support structures, we expect continued stable market condition in North American transportation market and order rates are beginning to improve.
Demand for wireless communication products and components remains very strong and we are on track to grow sales, 15% to 20% in line with expected market growth.
Moving to coating, we remained focus on pricing actions and providing value to our customers.
Moving to irrigation, we now expect sales to grow 15% to 53%. This year based on the strength in global underlying AG fundamentals and a strong global backlog.
Looking ahead to 2022.
Strong market demand across our businesses, the strength and flexibility of our global teams and our continued pricing strategies give us confidence in achieving sales growth of 7% to 12% and earnings per share growth of 13% to 15% in line with the three to five year growth targets.
We communicated at our Investor day in May.
With that I will now turn the call back over to Steve.
Thank you avner.
Turning to slide 17, the long term drivers of our businesses remain solid as evidenced by our record global backlog of more than $1 5 billion.
Of 35.
That we have year end 2020.
These demand drivers are in place to sustain this momentum into 2022, and our business portfolio is well positioned for growth.
We also continue to take pricing actions across our businesses where needed.
Like others, we are closely monitoring inflation supply.
Hi chain disruptions and proven.
We are ready to take additional appropriate actions to address these issues across all our businesses as needed.
Meanwhile, our focus on following state and local regulations to keep our employees and customers safe has not wavered.
Turning to slide 18 in summary.
I am very pleased with our strong third quarter results and our team's ability to navigate through challenging market dynamics.
We've demonstrated our ability to grow sales through innovation and execution, while being flexible in responding quickly to meet customer needs.
We've improved operating margins by executing on our pricing.
<unk> strategies and advancing operational excellence across our footprint.
And we have invested in our employees and technology to drive new products and services.
And build upon the strength of our operations.
Throughout 2021, we have been disciplined in allocating capital to high growth strategic investments.
While also returning capital to shareholders through dividends and share repurchases.
Looking ahead to 2022, we are confident in our plan to deliver the outlook that we have communicated and remain focused on execution and our ESG principles to build.
Our success, while creating additional stakeholder value.
Value and improving our return on invested capital.
I will now turn the call back over to Rene.
Thank you Steve at this time, the operator will open up the call for questions.
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Our first question comes from the line of Brian Drab with William Blair. Please.
With your question.
Hi, Good morning, Thanks for taking my question could you just begin by quickly repeating that 2022 guide I'm not sure I got all of it.
Yes, Brian This is Steve the 2022 guide was that we reaffirmed our sales growth of 7% to 12%.
Proceed to an EPS of 13% to 15%.
So that was what we communicated at our Investor day, and so we now feel pretty confident about how we look in 2022.
Got it okay. Yeah, that's what I had written down and so is that implying some.
Hurting margin <unk>.
Expansion.
2022, obviously, there given the EPS growth is greater is that right.
That's correct.
And Steve.
Steve can you.
Talk about what the assumption for steel prices is going forward and do you have enough lower price steel.
Op docs such that this last leg up in steel prices won't win margins materially.
Well, if you look at the <unk>.
S business I think we've accounted for even the current inflation fairly well.
There is still some inflation that we will see in the fourth quarter.
And utility.
And still continue to see some inflation in the fourth quarter.
Albeit we will see margin improvement of about 150 basis points on a sequential basis, but it would take US right now with utility Avner and went to about the second quarter to really be through with that if steel just kind.
We will where it is you know in third quarter, we still saw about 20.
23% overall steel inflation.
It was actually consistent with first and second quarter. So.
Now that it is plateauing.
Again, all things being equal as you look out if it doesn't continue.
We will have.
Stable a bit more drag in fourth quarter.
First quarter a little bit.
And then my second quarter, we should be holding.
Right. Okay, and then just maybe if I can ask one more.
Given we're talking a little bit about 2022.
In the utility outlook, so like what are some of the indicators that you're seeing.
From customers in our.
Market reports that give you confidence in growth in utility and in 2022, and what kind of growth are you expecting in that segment. If I can ask I know, you're not maybe guiding for the segments, but thanks.
Oh, just overall that the market continues to remain robust.
The renewable energy mandates or generation from renewables is a positive driver in the marketplace grid hardening has continued to be a positive momentum for us. There are some of the issues that you see in the solar generation area, particularly.
<unk> module availability, which kind of delayed some of the projects in 'twenty one.
We will get better in 2022, albeit maybe not to where everybody wants it to be but definitely better.
And we actually have strong backlog in both the generation side and our traditional.
<unk>.
Transmission and distribution side.
As we look into 2022, so everything we're hearing both from customers.
And from.
The order flow coming in would suggest that the market will remain robust.
Robust theres not been any kind of issues where customers are canceling.
Orders because of the inflation.
And again I'll just.
Bring it back up we're such a small part of an overall project cost tend to maybe 15%.
Even if our product in slates.
Other factors that really make or break.
When the project moves forward.
Okay. Thanks for the details.
Got it.
Alright.
Thank you. Our next question comes from the line of Nathan Jones with Stifel. Please proceed with your question.
Good morning, everyone.
Good morning Nathan.
Yeah.
I wanted to start off.
And obviously a lot of growth here, there's a lot of inflation.
A fair amount of that growth is coming from price, but I think you've communicated pretty well there.
A lot of growth coming from volume here as well is there any color you can give us on price versus volume and the growth love. It by segment, if you could do that and.
And are there any places where you're starting to see capacity constraints within your own manufacturing footprint, where we might need to make some investments here going forward.
Sure.
Hey, Nathan.
So if we go look at.
Pricing volume you know if I start off with.
So if I look at the utility.
<unk> as an example, we're definitely seeing a lot coming through pricing, Steve mentioned that a little earlier right with the steel inflation and the pricing mechanism, where we do see.
Pricing going in utility.
On the volume side, we mentioned that on the on the global generation.
We did have some project timing so it did have some <unk>.
Reduction there offset by increased volume on the.
Other part of the utility businesses, if you will.
Look at it.
The DFS again, with our with our pricing actions and strategies around there we're seeing significantly coming.
Through pricing Youre seeing a lot of volume coming through the the telecom business in the magnitude of.
25% or so offset with some of the.
Some of the decline that youre seeing in the <unk>.
I think in traffic that we are.
Expressed earlier in the year, and we expect that as well.
Yeah, moving moving to <unk>.
Coatings, but we're seeing also there we're seeing a lot of a lot of pricing coming through there.
And some volume that we mentioned through our new facility as an example, and then finally in irrigation I think our ambition to be a pretty good mix there coming through both.
Volume and pricing I mean, we've been.
Planning throughout the year.
A lot of pricing actions.
And all of our businesses.
And the volume and overall, we've seen that the order flow has been very good across all the businesses evidenced by our strong backlog and the strong sales we had in.
In the quarter.
And in front of the capacity side, Nathan I think we're in good shape and irrigation.
If you recall going back to the last peak in 2013.
We were producing a lot more just in the U S facilities.
We've increased a lot of the international facilities to be much more self sufficient.
I got it here.
And North American order volume flow was still stronger back then than it is now so are we.
We have to watch or people in supply chain, but from a brick and mortar perspective, we're in good shape coatings, obviously good shape E.
E S. S. A we're in good shape to meet the growth and then utility.
We're really pushing the.
It's not customer excellence automation with some of the AI welding that we're doing.
We will always look at our footprint.
And look at what we have to do from a timing perspective to add capacity, we want to be very cognizant of the capacity to pricing in the market.
And if we need to do something from a brick and mortar perspective, we obviously have the ability to do so nothing eminent at this point.
Okay.
A question on irrigation channel checks are indicating very strong demand and extended lead times domestically do you feel like.
This could drive an early start to the selling season. This year for customers to try and water ahead of days longer lead times, maybe better than typical seasonality as we get into full queue and <unk> next year.
It has nathan.
Order flow, even though over the past months.
It was very robust, even though their slot in the fields.
Harvest.
Between supply chain constraints that they're hearing about in the news.
You know.
It doesn't take.
All the farm journals are predicting long lead time. So I think people are trying to get ahead of that and anticipated price increase.
People really are trying to make sure that they are in good position for the plant season next year.
So as I mentioned, we have seen good order flow straight through and the October timeframe, which we typically wouldn't seats or more late in November. So I think that assumption is correct.
So it sounds like Oh. These price increases are not having a negative impact on demand in the irrigation market yet a though.
No I think you know if you look at particularly our product. If we say you typically get a three year payback and a regular market at one and.
High commodity price environment, while we're pushing through.
It has not gone to our.
Cause any kind of.
Market degradation.
So far everything is moving through.
We recently announced another price increase.
And that is moving through as well so that'll be a.
Fixed price increase.
These are necessary to make sure we can have labor in the supply chain.
Use that are out there I continued to address so.
No.
It's going well.
Great. Thanks for taking my question.
Yeah.
Thank.
Our next question comes from the line of Jon Braatz with Kansas City Capital. Please proceed with your question.
Good morning, Steve Avner.
Bryant.
Returning to the international.
Our irrigation piece of the business on the international side outside of Brazil.
Is the.
Good as robust as it is.
And as strong as it has been and have you seen any change in in and and and demand in those markets outside of Brazil.
No.
Every market right now is experiencing growth John.
And in particular, I would say eastern.
Margaret.
Central Asia.
Even the Australia market has rebounded quite nicely.
And Africa.
Africa, obviously, we've called that out you know pretty frequently Africa continues to see more and more growth. So really as you look around Brazil just happened.
Stern exceptional.
With the growth that we've seen there, but the other markets are performing very well.
Okay, Okay, and then secondly.
And on the on the Sudan project. The Solar project did you do the entire E. P. C piece of the project or did you just.
Solar tracker.
What what was your the extent of your work on that project.
So we worked with the.
Local customer Oh, they did some of the work.
As they have some engineering and design capabilities.
Just provoke did a good portion of the work as well so I would say it was kind of a combined D. P. C type of project.
Because it was kind of a first of its kind.
In that sense. So we did more than we would traditionally do.
But not as much as a truly P C.
And then is that something where your capabilities are those capabilities can be applied elsewhere, and you could we see more and more of that in the future.
Absolutely, it's something that we do.
Showcase the husker harvest days.
Here in Nebraska last month.
Okay, and that's something that we will be expanding outside of that footprint right.
Right now what it really is allowing us to do is to create new Tam.
In places that did not have grid power.
And so that was kind of a proof of concept is can we put this out there there's no power.
Our no Gen sets.
And and really make a sustainable harm.
Operating on its own and so we've done it there we're doing things like it in Brazil, as well and.
He is hydro power becomes more constrained.
So we think this is will be a significant.
The advantage for us as we move forward.
Okay. Okay. One last question here domestically solar tracker projects on utility size Ah Ah Ah projects are you have you been awarded any contracts.
Yeah, we.
Have some utility scale that I'll say that.
Market for utility, but not.
Maybe you know a 100 megawatts or two megawatts Butler.
They are sizable enough and we're still continuing on the developer market.
For the distributed generation quite well in our backlog over the quarter did decrease.
Pretty nicely as compared to the second quarter.
Okay. Thank you Steve.
Thank you. Our next question comes from the line of Chris Moore with CJS Securities. Please proceed with your question.
Hey, good morning, Yeah, maybe just ask the the price volume question, a little bit differently. So guidance is.
17% to 18% sales growth in fiscal 'twenty one.
What's what's the rough breakdown between pricing and volume there.
Chris just to get a detailed you you're meeting for the whole year, how much well.
Yeah, right I'm, just trying to get a picture for the year.
In terms of I assume most of it is is on the on the pricing side or just trying to get a sense. You know is what's volume driven irrigation is the big driver there, but you know kind of overall trying to understand better.
Yeah.
Maybe I'll end on.
This is Tim Francis I.
The area through the first three quarters of the year, where at a split you know you've got the 1% for currency.
And then your split probably more 60 40 volume versus price and I would tell you that's probably going.
I would tell you it's a 50 50 for Q4.
So that's probably going to average you back down to.
50 545.
55 volume.
Correct.
Okay.
Gotcha.
And other than.
The clarification is there any one segment, that's really kind of driving the volume growth.
On a year over year basis coating it.
Seeing improvement because they had such COVID-19 issues in the first half of last year.
Yes, that's.
Coating or excuse me COVID-19 restrictions in the first half of the year. So our first half of it that way.
The telecom growth is the majority of that is.
And then in utility.
There is some volume, but mostly price.
Okay.
Got it very helpful and just and on the solar market.
During Investor Day, you were talking about.
Second half catch up it sounds like there was no supply chain issues.
Hum.
Are you seeing any improvement in pricing that you were hoping for and you know.
At reasonable too.
Kind of expect that that the market will be a little bit more rational.
Good question, Yes, we are seeing better pricing.
I think the market as a whole has had to digest that steel has changed the game.
Obviously module cost will be different than they.
They were in the past. So we had said that the idea that you had a cost minus every year.
We think that that paradigm.
It's pretty much broke at this point and a good way for us.
Our backlog right now is that pricing that we wanted.
And if.
There was pricing that was not advantageous than we were willing to lose those orders so.
Our growth at least for US is at margins that we believe are appropriate where the business is right now.
Got it I appreciate it I'll leave it there.
Thanks, Chris.
Thank you as a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.
Our next question comes from the line of Brent Thielman with D. A Davidson. Please proceed with your question.
Oh, Thank you good morning.
Hi, Brett.
I guess first question on the utility business sort of looking into the future for margins or potential for margins. When you look at the mix backlog in that segment. Today is there anything advantageous to that beyond the pricing the cost discussion I'm thinking more about.
Factory efficiencies you can gain.
On the larger orders things like that that they can represent a real tailwind for margins next year for that segment.
Brendan I think it's it's basically a traditional mix of what we've seen over the last few years.
We still have obviously the large order in the south east, which is advantageous to us.
And I think that goes through.
Part of 2023 at this point, so that plays nicely for us, but the mix of large pools with large orders versus smaller poles and many more of them.
I think that is about where we see it that said we.
I've been pushing pricing not just for pure <unk>.
Inflation recovery, but also because of the market robustness, so as contracts come up.
We're looking at that and trying to move up price change terms and conditions do things that are are more advantageous.
I think when the factory efficiency side, we probably have a lot more.
In there because we've had the.
The fits and starts of Covid and quarantines we've.
We've had Ah.
Also the labor availability issue that has played in and so something.
Thing that we're working on very hard there. So I would say those would be more of the additional to the the inflation recovery, but the inflation recovery will be significant.
And we see that in the backlog and we can see the average selling prices moving up.
So if theres no fundamental issues.
In utility at this point.
Okay.
Steve can you talk about that the inroads you're making in the D. Within the T&D the distribution side within that segment.
Yeah, I think it's it's early on.
From the.
The new products that we're bringing to market.
So we have some things that we'll be introducing over the next year.
The other things that I think will play into the improved margin and growth performance is around our services.
And we're doing a lot more in the way of inspection services drawn services, we highlighted some of that at the Investor Day. We're.
We're seeing some nice orders now coming to the backlog.
And it goes without saying that those are at very nice margins as compared to the historical products business.
And so.
I think all of those things combined really touch the D. Because you now start to look at the entire.
Grid.
And so the fiberglass market has continued to expand quite nicely.
Which not just cross arms, but even you know fiberglass polls and we have some real lightweight concrete solutions.
We think will really make us much more competitive against wood so more.
More to come on that.
Very good.
One more on E S S.
This seems to be the first quarter that I can recall.
I guess, a better outlook or improved outlook for transportation related volume.
What do you see it now and what does that mean I guess.
For the overall segment.
Yeah, despite that it's been doing quite well given that's been working against you.
Yeah, you know we had anticipated in the first two quarters with volume being down kind of played out that well played out that way.
And then we saw and what we've been seeing is you know much better order flow and order inquiries.
And.
That's not just in the U S and the international markets as well.
And so that is why we think we'll see continued volume.
Expansion in E. S S, particularly as we look into 2020 two.
No a lot of.
We always say that the federal government supplies about 25% of the money.
In the U S towards Iowa.
It gets about 90% of the headlines.
But the other 75% of spend is done by states.
And I think particularly states coming out of Covid are seeing improved.
Yes.
Seats, plus the stimulus money that they had.
Most states balance sheets are in very good shape.
And they want to spend on infrastructure to create jobs locally and to show their constituents.
Progress so.
That's what we have more confidence in.
Tac as we go forward.
It's it's just infrastructure is a good thing to do and.
Really it was.
For the last 18 months or 20 months of Covid.
Most people couldn't get on everything they wanted to do so there's a little bit of catch up effect plus.
The fact that I think.
Financials.
We're much better.
Very good thank you.
Thank you ladies and gentlemen, we have reached the end of the question and answer session. I will now turn the call over to Renee Campbell for closing remarks.
Thank you for joining us today as mentioned today's call will be available.
Playback on our website or by phone for the next seven days.
Forward to speaking with you again next quarter.
Included in this discussion are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These forward looking statements are based on assumptions that management.
Available in light of experience in the industries and with Valmont operates as well as management's perceptions of historical trends current conditions expected future developments and other factors believed to be appropriate under the circumstances.
As you listen to and consider these comments you should understand that these.
These statements are not guarantees of performance or results.
They involve risks uncertainties, some of which are beyond <unk> control and assumptions.
Management believes that these forward looking statements are based on reasonable assumptions you should be aware that many factors could affect belmont actual financial results and cause.
All of them to differ materially from those anticipated in the forward looking statements.
These factors include among other things risk factors described from time to time in Vermont reports to the Securities and Exchange Commission as well as future economic and market circumstances industry conditions company performance.
Financial results operating efficiencies availability and price of raw material availability and market acceptance of new products product pricing domestic and international competitive environments and actions and policy changes of domestic.
And foreign governments the company cautions that any forward.
Any statements included in this discussion is made as of the date of this discussion and the company does not undertake to update any forward looking statements. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.