Q4 2021 Valmont Industries Inc Earnings Call

[music].

Speaker 1: Greetings. Welcome to Vollmouth Industries, Inc. fourth quarter and full year 2021 results.

Greetings welcome to Valmont interest Reis, Inc, fourth quarter and full year 2021 results.

Speaker 1: At this time, all participants are in a listen-only mode. A question and answer session will follow.

At this time all participants are in a listen only mode.

A question and answer session will follow the formal presentation.

Speaker 1: We ask that you please limit yourself to one question and one brief follow-up question and return to the

We ask that you. Please limit yourself to one question and one brief follow up question and return to the queue.

Speaker 1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Please note that this conference is being recorded.

Speaker 1: I will now turn the conference over to your host, Renee Campbell, Senior Vice President, Investor Relations and Treasurer. Ms. Campbell, you may begin.

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

Speaker 2: Thank you and good morning. Welcome to Belmont Industries' fourth quarter and full year 2021 earnings call. With me today are Steve Kaniefsky, President and Chief Executive Officer, Abner Appelbaum, Executive Vice President and Chief Financial Officer,

Thank you and good morning, welcome to Belmont Industries fourth quarter and full year 2021 earnings call with me today are Steve Kaniewski, President and Chief Executive Officer.

Abel, Bob Executive Vice President and Chief Financial Officer, and Tim Francis Senior Vice President corporate controller.

Speaker 2: and Kim Francis, Senior Vice President and Corporate Controller.

Speaker 2: This morning, Steve will provide a brief summary of our fourth quarter and full year results, commenting on our markets and long-term business strategy.

This morning, Steve will provide a brief summary of our fourth quarter and full year results, commenting on our markets and long term business strategy.

Speaker 2: Avner will review our financial performance and provide our outlook and indications for 2022, with closing remarks from Steve. This will be.

<unk> will review, our financial performance and provide our outlook and indications for 2022 with closing remarks from Steve This will be followed by Q&A.

A live webcast of the presentation will accompany today's call and is available for download from the webcast or on the investors page at Valmont Dot com.

Speaker 2: A live webcast of the presentation will accompany today's call and is available for download from the webcast or on the investors page at Belmont.com. A replay will be available on our website later this morning.

A replay will be available on our website later this morning.

Speaker 2: Please note that this call is subject to our disclosure on forward-looking statements, which applies to today's discussion, is outlined on slide two of the presentation, and will be read in full at the end of the call.

Please note that this call is subject to our disclosure on forward looking statements, which applies to today's discussion is outlined on slide two of the presentation and will be read in full at the end of the call.

Speaker 2: I would now like to turn the call over to our President and Chief Executive Officer, Steve Kinyewski. Thank you, Renee.

I'd now like to 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 us.

Speaker 1: Before reviewing our fourth quarter and full year highlights, I would like to acknowledge and thank our global team of 11,000 employees for their tremendous performance operating through another year of ongoing pandemic impacts and supply chain volatility.

Before reviewing our fourth quarter and full year highlights I would like to acknowledge and thank our global team of 11000 employees for their tremendous performance operating through another year ongoing pandemic impacts and supply chain volatility.

Speaker 1: I could not be more proud of their hard work and dedication to serving our customers with innovative and essential products and services.

I cannot be more proud of their hard work and dedication to serving our customers with innovative kind of essential products and services.

Speaker 1: Throughout this year, they have remained true to our core values, operating with passion and integrity, driving continuous improvement, and delivering results, while prioritizing safety in our workplace and in our communities.

Throughout this year. They have remained true to our core values operating with passion and integrity driving continuous improvement and delivering results.

While prioritizing safety in our workplace and in our communities.

Moving on to the business.

Speaker 1: Our solid performance this quarter once again demonstrated strong demand across the portfolio and consistent execution of our growth strategy.

Our solid performance this quarter once again demonstrated strong demand across the portfolio.

Assistant execution of our growth strategy we.

Speaker 1: We delivered record sales and grew adjusted operating income 24% year-over-year, reflecting the resiliency of our business and execution by our team.

We delivered record sales and grew adjusted operating income of 24% year over year, reflecting the resiliency of our business and execution by our teams.

Like many others, we are basically impacts of broad based inflation supply chain, a pandemic driven labor constraints impacting belmont, our customers and our suppliers.

Speaker 1: Like many others, we have faced the impacts of broad-based inflation, supply chain, and pandemic-driven labor constraints impacting Belmont, our customers, and our suppliers.

Speaker 1: While we have been managing through this environment well, these constraints challenged our ability to achieve full productivity levels in many of our North American facilities in the quarter.

While we have been managing through this environment well these constraints challenged our ability to achieve full productivity levels in many of our north American facilities in the quarter.

Speaker 1: Now, let me move to a brief fourth quarter overview summarized on slide four of the presentation.

Now, let me move to a brief fourth quarter overview summarized on slide four of the presentation.

Net sales of $963 $3 million, a fourth quarter record increase more than 20% year over year.

Speaker 1: Net sales of $963.3 million, a fourth quarter record, increased more than 20% year over year.

Speaker 1: Sales growth was realized in all segments, led by higher pricing and strong, broad-based market demand, with another quarter of significant growth.

Sales growth was realized in all segments led by higher pricing and strong broad based market demand.

With another quarter of significant growth in irrigation.

Speaker 1: Moving to the segments and starting with utility. Sales of $324 million grew nearly 20% year over year.

Moving to the segments and starting with utility sale.

Sales of $324 million grew nearly 20% year over year.

Speaker 1: led by substantially higher pricing and strong underlying demand as utilities continue to invest in upgrading and hardening the grid.

Led by substantially higher pricing and strong underlying demand as utilities continue to invest in upgrading and hardening the grid.

Speaker 1: Additionally, sales of solar tracker solutions were higher, driven by increasing investments for renewable energy generation.

Additionally, sales of solar tracker solutions were higher driven by increasing investments for renewable energy generation.

This is providing a favorable demand driver for us in 2022 and beyond.

Speaker 1: This is providing a favorable demand driver for us in 2022 and beyond, as our backlog of utility scale and distributed generation projects has grown three times compared to one year ago.

Is there a backlog of utility scale and distributed generation projects has grown three times compared to one year ago.

Additionally, our broad product portfolio uniquely positions us to supply every type of electric grid structure within the utility market.

Speaker 1: Additionally, our broad product portfolio uniquely positions us to supply every type of electric grid structure within the utility market, and we are making

We are making strategic investments in capacity and technology to meet the growing market demand.

Speaker 1: capacity, and technology to meet the growing market demand.

Moving to engineered support structures.

Speaker 1: sales of $291.9 million, grew 14% year over year, led by favorable pricing in all markets.

Sales of $291 $9 billion grew 14% year over year led by favorable pricing in all markets.

Speaker 1: and sales growth of more than 50% in wireless communication products.

And sales growth of more than 50% and wireless communication products.

Our swift and deliberate pricing actions in this segment benefited us throughout the year.

Speaker 1: Our swift and deliberate pricing actions in this segment benefited us throughout the year.

Speaker 1: And international markets continue to benefit from higher stimulus and infrastructure investments.

In international markets continued to benefit from higher stimulus and infrastructure investments, especially in Australia.

Demand in our wireless communications business remains very strong driven by fiber build outs and significant investments by the major wireless carriers.

Speaker 1: Demand in our wireless communications business remains very strong, driven by 5G build-outs and significant investments by the major wireless carriers.

Turning to coatings sales of $98 $2 million grew nearly 10% year over year, driven by higher average selling prices improved general and market demand and sales from our new Green facility Greenfield facility in Pittsburgh.

Speaker 1: Sales of $98.2 million grew nearly 10% year over year, driven by higher average selling prices, improved general and market demand, and sales from our new greenfield facility in Pittsburgh.

Moving to irrigation.

Speaker 1: Global sales of $276.8 million grew nearly 40% year over year.

Global sales of $276 $8 million grew nearly 40% year over year.

Speaker 1: It fails growth in all regions and higher sales of technology solutions. In North America

With sales growth in all regions and higher sales of technology solutions.

In North America sales grew 55%.

Speaker 1: We continue to benefit from strong underlying market fundamentals and positive net farm income projections, which are driving farmer sentiment, as reflected in very strong order plans.

We continued to benefit from strong underlying market fundamentals and positive net farm income projections, which are driving farmer sentiment as reflected in very strong order flow.

International sales grew just over 23% year over year.

Speaker 1: International sales grew just over 23% year over year.

Speaker 1: We achieved another record quarter of sales in Brazil, and solid demand in Europe , Australia, Middle East, and Africa is giving us a good line of sight into 2022, including ongoing deliveries to our Egypt project.

We achieved another record quarter of sales in Brazil, and solid demand in Europe , Australia, Middle East and Africa, because giving us a good line of sight into 2020 two.

Quoting ongoing deliveries, our Egypt project.

Last quarter, we highlighted our differentiated solar solutions for agriculture.

Speaker 1: Last quarter, we highlighted our differentiated solar solutions for agriculture.

Speaker 1: Our market expansion strategy is leading to growth in North America, Africa, and Europe . And I'm pleased that sales are expected to more than double in 2022 based on market demand and the current pipeline of orders. Turning to the.

Our market expansion strategy is leading to growth in North America Africa, and Europe , and I'm pleased that sales are expected to more than double in 2022 based on market demand and the current pipeline of orders.

Turning to the full year summary on slide five.

Speaker 1: Net sales grew 21% year-over-year to a record $3.5 billion, driven by delivery.

Net sales grew 21% year over year to a record $3 $5 billion.

Driven by deliberate pricing strategies.

Speaker 1: strong markets in our businesses, and focused execution by our teams.

Strong markets and our businesses and focused execution by our teams.

We achieved considerable growth in all segments exceeding our expectations for both revenue and earnings.

Speaker 1: exceeding our expectations for both revenue and earnings.

Speaker 1: through strategic capacity expansions and lean methodology.

Her strategic capacity expansions and lean methodologies, we successfully added incremental volume within our existing facilities.

Speaker 1: Successfully added incremental volume within our existing facility

Speaker 1: testament to the hard work by our operations and planning teams.

A testament to the hard work by our operations and planning teams.

Turning to the segments.

Speaker 1: Strong sales growth of 12% in utility support structures led to sales of $1.1 billion.

<unk> sales growth of 12% and utility support structures led to sales of $1 $1 billion.

Speaker 1: driven by pricing actions and continued robust demand for good resiliency and renewables.

Driven by pricing actions and continued robust demand for grid resiliency and renewables.

In engineered support structures sales grew six 9% to $1 $1 billion, despite lower transportation volumes in North America as expected.

Speaker 1: sales grew 6.9% to $1.1 billion.

Speaker 1: despite lower transportation volumes in North America as expected.

Speaker 1: Our relentless focus on pricing actions and improved operational performance benefited us throughout the year.

Our relentless focus on pricing actions and improved operational performance benefited us throughout the year.

Additionally growth of wireless communication products grew 26% year over year to $240 million exceeding our expectations.

Speaker 1: Additionally, growth of wireless communication products grew 26% year-over-year to $240 million, exceeding

Speaker 1: Turning to codings, sales grew nearly 12% to $386 million. Tracking in line with improved industrial production levels globally.

Turning to coatings sales grew nearly 12% to $386 million tracking inline with improved industrial production levels globally.

Speaker 1: favorable pricing, higher volumes, and favorable currency impacts contributed to sales.

Favorable pricing higher volumes and favorable currency impacts contributed to sales growth.

Turning to irrigation sales grew nearly 60% to more than $1 billion a record for palmar supported.

Speaker 1: Turning to irrigation, sales grew nearly 60% to more than $1 billion, a record for Valmont.

Speaker 1: Supported by 2021 projected net farm income levels, which increased to approximately $120 billion. The highest level has

Supported by 2021 projected net farm income levels, which increased to approximately $120 billion the highest level since 2013.

Speaker 1: In addition, the long-term market drivers of food security, resource conservation, and reduction of input costs are supporting solid demand of our innovative products and solutions globally.

In addition, the long term market drivers food security resource conservation and reduction of input costs are supporting solid demand of our innovative products and solutions globally.

In Brazil.

Speaker 1: In Brazil, revenue more than doubled year over year and we achieved higher sales in Europe , Australia and Middle East markets.

Revenue more than doubled year over year, and we achieved higher sales in Europe , Australia, and middle East markets.

Speaker 1: Sales of irrigation technology solutions approached $100 million.

Sales of irrigation technology solutions approached $100 million growing 45% year over year in line with our expectations.

Speaker 1: growing 45% year-over-year in line with our expectations.

Speaker 1: The acquisition of Prospera Technologies this past year accelerated our commitment to make the farm more efficient.

The acquisition of Prosper technologies, this past year accelerated our commitment to make the far more efficient.

Speaker 1: and increase productivity while considerably improving sustainability.

And increase productivity, while considerably improving sustainability.

Speaker 1: This past year, we focused heavily on integrating the team and executing our strategy to scale and expand market presence.

This past year, we focused heavily on integrating the team and executing our strategy to scale and expand market presence.

Speaker 1: we enter 2022, we are targeting growth of subscriptions under a recurring revenue model.

As we entered 2022, we are targeting growth of subscriptions under a recurring revenue model.

Speaker 1: Turning to slide six, during 2021 we took significant steps to advance our ESC strategy and communication capped by an overall improvement in ISS scores for environment and social since the beginning of the year.

Turning to slide six during 2020 , one we took significant steps to advance our ESG strategy and communications.

Capped by an overall improvement in ISS scores for environment and social since the beginning of the year.

Speaker 1: I look forward to the release of our 2022 Sustainability Report in late March.

I look forward to the release of our 2022 sustainability report in late March.

Speaker 1: Over the past year, we have made remarkable strides to minimize our environmental impact while delivering increasingly efficient and sustainable solutions for our customers that support critical ESG principles.

Over the past year, we have made remarkable strides to minimize our environmental impact, while delivering increasingly efficient and sustainable solutions for our customers that support critical ESG principles.

Speaker 1: This year's Enhanced Report highlights additional programs and goals, and alignment to new framework

This year's enhanced report highlights additional programs angles.

The alignment of new frameworks, including the United Nations Sustainable development goals.

Speaker 1: including the United Nations Sustainable Development Goals, SASB, and TCFD, along with our continued commitments to invest in sustainable solutions and technology that will positively impact the future of our state.

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Along with our continued commitment to invest in sustainable solutions and technology that will positively impact the future of our stakeholders.

Speaker 1: I'm happy to announce that upon the release of our 2022 report, we plan to host a conference call to highlight our accomplishments throughout the year and share more about our ESG journey at Velma.

I'm happy to announce that upon the release of our 2022 report.

Planned to host a conference call to highlight our accomplishments throughout the year and share more about our ESG journey at Belmont.

Speaker 1: With that, I will now turn the call over to Abner for our 2021 Financial Review and 2022 Outlooks. Thank you, Steve.

With that I will now turn the call over to Aaron for our 2021 financial review and 2022 outlook. Thank.

Thank you, Steve and good morning, everyone.

Speaker 1: Turning to slide eight and fourth quarter results, my comments will focus on the adjusted results as outlined in the press release and in the Reg G disclosure and the presentation appendix.

Turning to slide eight and fourth quarter results My comments will focus on the adjusted results as outlined in the press release and in the Reg G disclosure in the presentation appendix.

Speaker 1: Fourth quarter operating income of $85.6 million, or 8.9% of sales, grew 24.4% year-over-year, driven by higher volumes in irrigation and favorable pricing, notably in engineered support structures.

Fourth quarter operating income of $85 $6 million or eight 9% of sales grew 24, 4% year over year driven by higher volumes in irrigation.

Favorable pricing, notably in engineered support structures.

Diluted earnings per share of $2 73.

Speaker 1: Diluted earnings per share of $2.73 grew 24% compared to last year, primarily driven by higher operating income and a more favorable tax rate of approximately 22%, which was realized through the execution of CERN tax planning strategies.

Grew 24% compared to last year, primarily driven by higher operating income and a more favorable tax rate of approximately 22%, which was realized through the execution of certain tax planning strategies.

Speaker 1: We also delivered return on invested capital on an adjusted basis of 11.7 percent, an increase of nearly 16 percent year over year, and the highest level for Valmont since 2013.

We also delivered return on invested capital.

The basis of 11, 7%, an increase of nearly 16% year over year and the highest level for belmond since 2013.

Speaker 1: Tune into the segment and starting with our infrastructure businesses on slide nine.

Turning to the segments and starting with our infrastructure businesses on slide nine.

Speaker 1: In utility support structures, operating income of $36.9 million, or 11.4% of sales, increased 110 basis points compared to last year, as the benefits of price recovery through contractual mechanisms became more aligned with raw material costs.

Utility support structures operating income of $36 $9 million or 11, 4% of sales increased 110 basis points compared to last year as the benefits of price recovery through contractual mechanisms became more aligned with raw material costs.

Speaker 1: I want to take a moment to comment on the wind business in Northern Europe .

I wanted to take a moment to comment on the wind business in northern Europe .

During the fourth quarter European Union announced a lower than anticipated tariff rate that will be imposed on imports of steel wind towers.

Speaker 1: During the fourth quarter, the European Union announced a lower-than-anticipated tariff rate that will be imposed on imports of steel wind towers.

Speaker 1: This led to a required impairment test, which resulted in a pre-tax non-cash impairment of $27.9 million related to long-lived assets.

This led to a required impairment tests, which resulted in a pretax noncash impairment of $27 $9 million related to long lived assets.

Speaker 1: Our local management team has taken strategic action to reduce cost and increase gross profit.

Local management team has taken strategic action to reduce costs and increased gross profit.

Speaker 1: These actions are expected to limit anticipated losses in 2022 and position the business to best serve our customers in the future.

These actions are expected to limit anticipated losses in 2020 to position the business to best serve our customers in the future.

Moving to slide 10, and engineered support structures operating income increased to $29 $2 million or 10% of sales an improvement of 50 basis points year over year.

Speaker 1: Operating income increased to $29.2 million, or 10% of sales, an improvement of 50 basis points year over year.

Speaker 1: We continue to benefit from pricing actions, which more than offset the impact of cost inflation.

We continue to benefit from pricing actions, which more than offset the impact of cost inflation.

Speaker 1: Better fixed cost leverage, including SG&A, also contributed to positive results.

Better fixed cost leverage, including SG&A also contributed to positive results.

Speaker 1: I'm also very pleased that we achieved full year operating margins of 10.8% of sales, an improvement of 180 basis points year over year.

I'm also very pleased that we achieved full year operating margin of 10, 8% of sales an improvement of 180 basis points year over year.

Speaker 1: Turning to slide 11, in the coding segment, operating income of $10.3 million, or 10.5% of sales, decreased 270 basis points year over year.

Turning to slide 11 in the coating segment operating income of $10 $3 million or 10, 5% of sales decreased 270 basis points year over year.

Speaker 1: Profitability was impacted by a lag in pricing to recover higher cost inflation, including raw materials, labor and freight, and operational impacts due to COVID-related labor inefficiencies in many of our facilities.

Profitability was impacted by a lag in pricing to recover higher cost inflation, including raw materials labor and freight.

And operational impacts due to COVID-19 related labor inefficiencies and many of our facilities.

Speaker 1: margins were also impacted by a higher mix of internal volumes compared to last year.

Margins were also impacted by a higher mix of internal volumes compared to last year.

Speaker 1: Moving to slide 12, in the irrigation segment, operating income of $33 million or 11.9% of sales decreased 80 basis points year over year.

Moving to slide 12.

Irrigation segment operating income of $33 million or 11, 9% of sales decreased 80 basis points year over year.

Speaker 1: Profitability improvement from higher volumes and the benefit of continued pricing action were more than offset by higher input costs that were not fully recovered by price and incremental SG&A expense from the Prospera acquisition completed earlier.

<unk> ability improvement from higher volumes and the benefit of continued pricing actions were more than offset by higher input costs that were not fully recovered by price.

Incremental SG&A expense from the Prosper acquisition completed earlier this year.

Turning to cash flow on slide 13.

Speaker 1: Turning to cash flow on slide 13, in 2021, we delivered operating cash flows of $65.9 million, reflecting higher working capital levels to support strong sales.

2021 we delivered operating cash flows of $65 $9 million, reflecting higher working capital levels to support strong sales growth.

Speaker 1: As we've stated in prior quarters, we took decisive action to strategically source raw material throughout the year to help secure availability and meet strong customer demand.

As we stated in our prior quarters, we took decisive action to strategically source raw materials throughout the year to help secure availability to meet strong customer demand.

Speaker 1: We expect to continue these actions in the first half of the year to help mitigate supply chain volatility and expect a notable improvement in cash and working capital levels in the second half of the year.

We expect to continue these actions in the first half of the year to help mitigate supply chain volatility and expect a notable improvement in cash and working capital levels.

The second half of the year.

Speaker 1: As we have repeatedly demonstrated in the past, we're confident that our actions as a team will help us deliver strong cash flow as supply chain and material costs stabilize with full year operating cash flows expected to significantly exceed net earnings in 2022.

As we have repeatedly demonstrated in the past, we're confident that our actions as a team will help us deliver strong cash flow our supply chain and material costs stabilize with full year operating cash flows expected to significantly exceed net earnings in 2022.

Speaker 1: Turning to slide 14 for a summary of capital deployment.

Turning to slide 14 for a summary of capital deployment.

Speaker 1: 2021 capital spending of $108 million included $45 million for strategic growth investment.

21 capital spending of $108 million included $45 million for strategic growth investments.

Speaker 1: Additionally, $67 million of capital was returned to shareholders through dividends and share repurchases, ending the quarter with approximately $177 million of cash.

Additionally, $67 billion of capital was returned to shareholders through dividends and share repurchases ending the quarter with approximately $177 billion of cash.

Speaker 1: By far, the largest use of cash from a capital deployment perspective was the $313 million for two acquisitions in the irrigation segment.

By far the largest use of cash from a capital deployment perspective, what's the $313 million for two acquisitions in the irrigation segment.

Speaker 1: Prospera Technologies, and Pivotracks, both of which fit our long-term ag tech strategy.

Prospera technologies don't pivot track.

Both of which fit our long term strategy.

Speaker 1: We continue to maintain a balanced approach to capital allocation that enables us to grow our business while returning cash to shareholders.

We continue to maintain a balanced approach to capital allocation that enables us to grow our business, while returning cash to shareholders.

Moving now to slide 15.

Speaker 1: Our balance sheet remains strong and total debt to adjusted EBITDA of 1.9 times remains within our desired range of one and a half to two and a half times.

Our balance sheet remains strong and total debt to adjusted EBITDA of one nine times remains within our desired range of one and a half to two and a half times.

Speaker 1: Let me now turn to slide 16 for our 2022 outlook, including a few key metrics and assumptions.

Let me now turn to slide 16 for our 2022 outlook, including a few key metrics and assumptions.

Speaker 1: We're increasing the 2022 full-year guidance metrics that we stated last quarter. Net sales are now expected to increase 9% to 14% year over year to a range of $3.8 to $4 billion.

We're increasing the 2022 full year guidance guidance metrics that we stated last quarter.

Net sales are now expected to increase 9% to 14% year over year to a range of three $8 billion to $4 billion.

Speaker 1: which assumes an unfavorable foreign currency translation impact of 1% of net sales.

Which assumes an unfavorable foreign currency translation impact of 1% up in itself.

Speaker 1: Adjusted earnings per share is now estimated to increase 12 to 19 percent year-over-year to a range of $12.25 to $13, excluding any further restructuring activity.

Adjusted earnings per share is now estimated to increase close to 19% year over year to a range of $12 25 to $13, excluding any further restructuring activities.

Speaker 1: These metrics reflect strong market demand, our solid execution in 2021, and our confidence in our ability to continue this performance. We also assume that steel core

These metrics reflect strong market demand, our solid execution in 2021, and our confidence in our ability to continue this performance.

We also assume that steel costs for the year are stabilized.

Speaker 1: Other metrics and assumptions are summarized on the slide and in the press.

Other metrics and assumptions are summarized on this slide and in the press release.

Speaker 1: I want to also briefly comment on the operating margin expectations for the year.

I wanted to also briefly comment on the operating margin expectations for the year.

Speaker 1: The rising cost of wages, logistics, and other broad-based inputs have not subsided and we continue to work through some higher cost inventory.

The rising cost of wages logistics and other broad based inputs have not subsided and we continue to work through some higher cost inventory.

Speaker 1: As such, we will continue implementing additional price actions as needed across our businesses to offset cost increases, and we expect these higher costs will be fully offset during the course of 2022.

As such we will continue implementing additional price actions as needed across our businesses to offset cost increases and we expect these higher costs will be fully offset during the course of 2022.

Speaker 1: We anticipate some difficulty to gain operating leverage on higher sales in the first half of the year as we work through the higher cost inventory and other inflationary pressures.

We anticipate some difficulty to gain operating leverage on higher sales in the first half of the year as we work through the higher cost inventory and other inflationary pressures.

Speaker 1: We expect margin improvement year over year as pricing becomes more aligned with cost throughout the remainder of 2022.

We expect margin improvement year over year as pricing becomes more aligned with costs throughout the remainder of 2022.

Speaker 1: Additionally, investments in technology and strategic growth initiatives across the portfolio remain a high priority for us this year.

Additionally, investments in technology and strategic growth initiatives across the portfolio remain a high priority for us this year.

Speaker 1: Finally, for modeling purposes, we will recognize a full year of SG&A associated with the Prospera acquisition and irrigation.

Finally for modeling purposes, we will recognize a full year of SG&A associated with the prospera acquisition in the irrigation segment.

Speaker 1: To summarize, the strong market demand across our businesses, strength and flexibility of our global teams, and our continued pricing strategies give us confidence in achieving our sales and earnings per share targets. With that, I will now

To summarize the strong market demand across our businesses strength and flexibility of our global teams and our continued pricing strategies give us confidence in achieving our sales and earnings per share targets.

With that I will now turn the call back over to Steve.

Speaker 1: Thank you Abner. Turning to slide 17, we are benefiting from the long-term drivers in all of our businesses.

Thank you avner.

Turning to slide 17, we have been.

Bidding from the long term drivers in all of our businesses.

Speaker 1: as evidenced by our record global backlog of more than $1.6 billion, an increase of 40% from year to year.

Evidenced by our record global backlog of more than $1 $6 billion, an increase of 40% from year end 2020.

Speaker 1: These demand drivers are providing momentum as we enter 2022 and our business portfolio is well positioned for growth.

These demand drivers are providing momentum as we enter 2022 and our business portfolio is well positioned for growth.

Speaker 1: Like others, we are closely monitoring inflation, supply chain volatility, and labor availability.

Like others, we are closely monitoring inflation supply chain volatility and labor labor availability.

Speaker 1: We are ready to take additional actions to address these issues across all our businesses as needed.

We are ready to take additional actions to address these issues across all our businesses as needed.

Speaker 1: Moving to the segment on slide 18, in utility support structures, we expect solid margin improvement from strong market demand and the benefit of previous pricing actions.

Moving to the segments on slide 18, and utility support structures, we expect solid margin improvement from strong market demand and the benefit of previous pricing actions.

Speaker 1: Turning to engineered support structures, we expect continued stable market conditions in North American transportation markets and order rates

Turning to engineered support structures, we expect continued stable market conditions in North American transportation markets.

And order rates continuing to improve.

Speaker 1: Demand for wireless communication products and components remains very

Demand for wireless communication products and components remains very strong and we are on track to grow sales, 10% to 15% this year.

Speaker 1: and we are on track to grow sales 10-15% this year, in line with expected markets.

In line with expected market growth.

Moving to coatings, we remain focused on pricing actions to recover cost inflation of zinc and other broad based inflationary items.

Speaker 1: and expect continued improvement in industrial production levels globally.

And expect continued improvement in industrial production levels globally.

Moving to irrigation, we expect a strong year based on strength and global underlying fundamentals.

Our robust global backlog and continued technology adoption.

We're taking deliberate steps to address labor constraints and employee retention, notably in our U S facilities.

We're doing so through a deliberate approach that's specific to the markets, where our factories are located.

Speaker 1: working with communities and enhancing training programs to attract and retain talent.

Working with communities and enhancing training programs.

And retain talent.

Speaker 1: Turning to slide 19, in summary, I'm very pleased with our strong results and our team's ability to navigate through challenging market dynamics.

Turning to slide 19 in summary.

I'm very pleased with our strong results and our team's ability to navigate through challenging market dynamics.

Speaker 1: We've demonstrated our ability to grow sales through innovation and execution while being flexible and responding quickly to meet customer needs.

We've demonstrated our ability to grow sales through innovation and execution, while being flexible and responding quickly to meet customer needs.

Speaker 1: We've increased operating income by executing on our pricing strategies and advancing operational excellence across our footprint.

We've increased operating income by executing on our pricing strategies and advancing operational excellence across our footprint.

Speaker 1: And we have invested in our employees and technologies to drive new products and services and build upon the strengths.

And we have invested in our employees and technologies to drive new products and services and <unk>.

Build upon the strength of our operations.

Speaker 1: We remain disciplined in allocating capital to high growth strategic investments, while also returning capital to shareholders through dividends and share repurchase.

We remain disciplined in allocating capital to high growth strategic investments, while also returning capital to shareholders through dividends and share repurchases.

Speaker 1: When we entered 2021, our focus was on managing what we could control, and that's exactly what we've done.

When we entered 2021, our focus was on managing what we could control and that's exactly what we've done.

Speaker 1: As we look ahead to 2022, we plan to apply the same focus on execution, serving our customers, and ESG principles to further build upon our success, while maintaining investments for growth, generating positive operating cash flow, and improving return on invested capital. I will now turn the call.

As we look ahead to 2022 we plan to apply the same focus on execution, serving our customers and ESG principles.

Other build upon our success, while maintaining investments for growth generating positive operating cash flow and improving return on invested capital.

I will now turn the call back over to Rene.

Speaker 2: Thank you Steve. At this time the operator will open up the call for questions.

Thank you Steve at this time, the operator will open up the call for questions.

Yeah.

Speaker 3: Thank you. At this time, we'll be conducting a question and answer session.

Thank you at this time, we'll be conducting a question and answer session.

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One moment, please while we poll for questions.

Speaker 3: Our first question today is from Chris Moore of CJS Securities. Please proceed with your question. Hey, good morning, guys.

Our first question today is from Chris Moore of CJS Securities. Please proceed with your question.

Hey, good morning, guys. Thanks for taking a couple of questions.

Speaker 4: When you look at the fiscal 22 revenue guide, 9 to 14 percent, roughly how does that break down between volume growth and price growth overall?

Yeah. When you look at the fiscal 'twenty two revenue Sky revenue Guide, you know 9% to 14%.

Roughly how does that break down between volume growth and price growth overall.

Yeah, Hi, I'll take that good morning. This is out there.

Speaker 5: Yeah, hi, I'll take that good morning. This is out there. So if you look at the lower part of the range, you know, you get more volume than pricing. And then if you look at the higher part of the range, you'll get more pricing than volume and a lot of the pricing is, you know, dependent on Kind of the steel as we have our pricing mechanism with utility. So I say more volume the pricing on the lower end and higher pricing and then volume on the higher

So if you look at the lower part of the range you know you you'd get more volume than pricing.

And then if you look at the higher part of the range, you'll get more pricing than volume, but a lot of the pricing is it dependent on kind of the steel as we have our pricing mechanisms with utilities. So I'd say more broadly in the pricing on the lower end and higher pricing than ballroom on the higher end.

Speaker 4: Got it. That's helpful. I think we're probably

Got it that's helpful.

Probably.

Speaker 4: gotten a little spoiled by you providing, you know, some specific near-term along with the annual guidance, can you provide any more, you know, kind of specific thoughts on, you know, kind of the Q1 outlook? I know you had said that, you know, margins should be improving second half of the year. Anything else in terms of Q1 that we should be thinking about?

<unk> gotten a little spoiled by you providing you know some specific near term along with the annual guidance is can you provide any more kind of specific thoughts on you know kind of the the Q1 outlook. I know you had said that you know margins should be improving second half of the year anything else in terms of Q1 that we should be thinking about.

Speaker 5: Yeah, sure. Well, so first of all, we remember Q1 does have a bit seasonality in some of our businesses, so we always need to factor that in overall, right? We still have we still have some inflation working through some higher cost inventory and we did start the year. We had a little bit of a covert impact with Omicron, so all that kind of factor into the guidance and and we will continue to see strength and continued margin expansion throughout the year.

Yeah sure well so first of all we just remember Q1 does have a big seasonality in some of our businesses. So we always need to factor that in.

Overall like we still have we still have some inflation working through some higher cost inventory.

And we did start the year, we had a little bit of a COVID-19 impact without them across all that kind of factor into the guidance and.

We'll continue to see strength and continued margin expansion throughout the year.

Speaker 4: Got it. Last one for me. On the irrigation front, as the EGF contract rolls off at the end of 2022, do you have enough visibility in 2023 to know if there will be a meaningful gap on the international revenue side?

Got it last one for me so.

I mean on the irrigation front as the Egypt contract rolls off at the end of 'twenty 'twenty. Two do you have enough visibility in 2023 to know if there will be you know a meaningful gap on your international revenue side.

So Chris this is Steve I would I would say that when we put together our guidance.

Speaker 1: So Chris, this is Steve, I would say that when we put together our guidance

Speaker 1: If you look at the low end, we assume maybe about $25 million for this year related to that project. On the high side, about $75 million, so you take the midpoint around $50 million. We have enough as we look into the pipeline for 2023 that that would then continue probably around that level of $50 million just on a normal pipeline basis, so we don't see a big gap developing between 2022 and 2023.

If you look at the low end, we assume maybe about 25 million for this year are.

Related to that project on the high side about $75 million.

So you take the midpoint around 50, we have enough as we look into the pipeline for 2023.

That would then continue.

Probably around that level of 50, just on a normal pipeline basis. So we don't see a big gap developing between 2020 to 'twenty two 'twenty three.

Got it I appreciate it guys I'll jump back in line.

Speaker 3: The next question is from Brian Drabb of William Blair, please proceed with your question.

The next question is from Brian Drab of William Blair. Please proceed with your question.

Hi.

Speaker 6: Hi. Thanks very much. Just following on the Egypt project, I thought that that was running more, Steve, at like a $25 million a quarter run rate. Has something changed there? I thought it was, what was it, $240 million and started in the fourth quarter of

Thanks very much.

Just following on to the Egypt project I thought that that was running more Steve it at like a $25 million a quarter run rate is.

<unk>.

Change there if there was what it was at $240 million and started in the fourth quarter of <unk>.

Of 'twenty right.

Speaker 6: Yeah, what 19? Yeah, there are 20 I guess. Yeah, so I thought it was going to run 25 million a quarter all the way through 20

Yeah Yeah.

'twenty I guess, yeah. So I thought it was gonna run 25 million a quarter all the way through 'twenty two.

Speaker 1: Yeah, they're a little behind in the infrastructure there locally, in terms of canals, roads, and other things, and so there's been already a little bit of a pullback in shipments in the fourth quarter of 21, and then as we go in, that's about what we're anticipating. So there will be some carryover into 23, as that happens.

Yeah, there are they're a little behind in the infrastructure there locally in.

Terms of canals roads, and other things and so there's been already a little bit of a pullback in shipments.

In the fourth quarter of 'twenty, one and then as we go and that's about what we are anticipating so there will be some carryover into 'twenty three.

Does that infer.

Speaker 1: infrastructure gets built out. So if they were keeping up completely on pace on that side, then your original assumption would have been correct.

Infrastructure gets built out.

So if they were keeping up completely on pace on that side than your original assumption would have been correct.

Speaker 6: Okay, so some of this project, this specific project, will carry over into 23. And then also, is there potential for add-ons to this project following the completion?

Okay. So some of this project the specific project will carry over into 'twenty three.

And then also is there a potential for add ons to this project.

You know following the completion of the state.

Speaker 1: Yeah, President Al-Sisi had just visited in December the site.

Yeah, President Al Sushi I just visited a in December at the site.

Speaker 1: very excited about the progress and the fact that they're already producing a lot of crops. You know, and talk.

Very excited about the progress and the fact that they're already producing a lot of crap.

And talked.

Speaker 1: up the agricultural story in Egypt, and so we do see a pretty strong pipeline, not just with our customer, but there's other customers in Egypt as well, and so there's a very distinct possibility of follow-up projects coming out of this pipeline.

Up the agricultural story in Egypt, and so we do see a pretty strong pipeline not just with our customer, but theres other customers in Egypt, as well and so.

There's a very distinct possibility of follow up projects coming out of this project.

Speaker 6: Okay, great. And then you gave such an optimistic and positive forecast for 2022 on the top line. Has the infrastructure bill influenced

Okay great.

And then you gave such as optimistic and positive forecast for 2022 and the <unk>.

Topline as the infrastructure build influenced.

Speaker 6: Is that possibly still more of a 2023 impact on Belmont?

Your forecast or is that still.

Is that possibly still more of a 'twenty 'twenty three impact on unveil mind.

Speaker 1: That's correct. It's what we've included in 2022 is basically, you know, the current pipeline, I'll say pre-infrastructure bill.

Yeah, that's correct. It's a what we've included in 2022 is basically yeah.

Current pipeline I'll say pre infrastructure Bill.

Speaker 1: That will help as we go into 23 and 24 specifically, but right now a lot of that is coming from the utility industry, the stronger irrigation numbers, the pretty robust telecom numbers that we've been seeing come through the pipeline, and then just the general pickup of industrial production.

That will help as we go into 'twenty, three and 'twenty four specifically.

But right now a lot of that is coming from the utility industry is the stronger irrigation numbers are but they're.

Pretty robust.

[noise] telecom numbers that we've been seeing come through the pipeline and then the just the general pick up of industrial production.

Helping coatings.

Speaker 6: Got it. And then last one for me is, since we talked to you a couple months ago, like three months ago, or heard from you on the third quarter call, what has changed, what are the most significant changes that you've seen that influenced the increase in the guidance for 2022?

Got it and then last one for me is.

Since we talked to you a couple of months ago I used to be like three months ago or heard from you on that on the third quarter call what has.

<unk> what are the most significant changes that you've seen that influenced.

Influenced the increase in the guidance for 2022.

Speaker 1: Again, it's just a strong pipeline of orders. I think our operational execution through that time period allows us and gives us.

But again, it's just a strong pipeline.

Orders are I think our operational execution.

Through that time period allows us and it gives us a good visibility into what we can produce coming into the year.

Speaker 1: good visibility into what we can produce coming into the year. I think the fact that the pricing

I think the fact that the pricing and.

Speaker 1: The great work done by the teams on pricing is enhancing some of that and just the general ability to kind of motor through some of the supply chain constraints, COVID issues.

The great work done by the teams on pricing is enhancing some of that.

And just the general ability to kind of motor through some of the supply chain constraints COVID-19 issues et cetera. So you know we were taking a conservative view.

Speaker 1: So, you know, we were taking a conservative view early on and as we've gotten closer to the year, we can see a better path forward.

Early on and as we've gotten closer to the year, we can see a better path forward.

Got it thank you very much.

Yeah.

The next question is from Brent Thielman of D. A Davidson. Please proceed with your question.

Speaker 3: The next question is from Brent Pielman of D.A. Davidson, please proceed with your question.

Okay, great. Thank you.

Speaker 7: Great, thank you. The utility business historically has had longer lead times. Steve, just wondering how much of that year-end backlog you think will convert in 2022 versus the out-year?

The utility business historically has had longer lead times, Steve just wondering how much of that year end backlog do you think will convert in 2022.

Versus the out years.

Speaker 5: Yeah, I can take that, but at this point, the majority of backlog is for 2022. we have, you know, we have several long term projects that kind of go into 2023. but the way I look at it, I'd say that the vast majority is it is for the upcoming.

Yeah, Hey, this is either I can take that but at this point the majority of the backlog is for 2022 we have.

Several long term projects that kind of go into 2023, but the way I look at it I'd say that the vast majority of it is for the upcoming year.

Okay.

Speaker 7: Okay. And I guess my follow-up would be on the solar tracker business. Sounds like things are moving along well there. Could you talk about the impacts of supply chain issues around that business in particular? Certainly heard some challenges in certain places, and I guess to what degree that's kind of disrupted talk?

And I guess my follow up would be on that our solar tracker business. It sounds like things are moving along well there could.

Could you could you talk about the impact the supply chain issues around that business in particular, and we heard from some challenges in certain places and I guess to what degree that's kind of disrupted timing of projects.

Speaker 1: Yeah, Brent, you know, when we look at 21, we were, I'll say, disappointed in the fact that we couldn't get more out, both on the customer side, the projects that got pushed because of module availability, and then just the general upheaval with steel and what that kind of did to a lot of projects.

Yeah, Brian .

When we look at 'twenty, one we were I'll say disappointed in the fact that we couldn't get more out.

Both on the customer side.

The projects that got pushed because of module availability.

And then just a general upheaval with steel and what that kind of did to a lot of projects. So you know, we only did maybe little over 60 million.

Speaker 1: So, you know, we only did maybe a little over 60 million in 21, we expect that to kind of double next year or into 2022, as a lot of those issues, I won't say are going away, but are being temporary.

In 'twenty, one we expect that to kind of double next year or into 2022.

As a lot of those issues I won't say, you're calling away, but are being tempered.

Speaker 1: Much like you see in the automotive industry, there's some supply coming online, there's better availability of modules, and I think that the market has generally understood kind of the steel dynamics that are out there. And so that's allowing more projects to move forward. And our distributed generation approach, which is a little different than most, is also helping us give us a lot more visibility to, you know...

Like you see in the automotive industry.

Theirs.

Some supply coming online.

Better availability of modules.

And I think the market is generally understood kind of the steel dynamics that are out there and so that's allowing more projects to move forward and you know our distributed generation.

<unk>, which is a little different than most is also helping us give us a lot more visibility.

Two.

Speaker 1: being able to ship these smaller projects more frequently. And so that kind of limits our risk from the one big project being pushed and then that kind of upending our forecast.

Being able to ship.

Chip you know the smaller projects more frequently and so that kind of limits our risk from you know the one big project being pushed.

And then that kind of up ending our forecast.

Yeah.

Really helpful. Thank you.

Okay.

Speaker 3: The next question comes from Ryan Connors of Boehning and Scattergood. Please proceed with your question.

The next question comes from Ryan Connors of Boenning and Scattergood. Please proceed with your question.

Speaker 6: Great, thanks for taking my question. I wanted to sort of unpack this offshore wind issue a little bit. I mean, it's a pretty big number, especially for a relatively discreet business. I understand you're kind of trying to pass it off as being, you know, one time, not material, but

Great. Thanks for taking my question.

I wanted to sort of unpack this offshore wind yes.

The issue a little bit I mean, it's a pretty big number, especially for a relatively discrete business I understand.

Can you kind of trying to trying to pass it off as being you know one time not material but.

Speaker 6: Avner, your comments about cost-cutting there on an ongoing basis and the team there trying to take action suggest that there is actually a fundamental impact here to the competitiveness of that business. Can you just unpack that for us a little bit? To what extent is this tariff issue an issue for that business rather than just a one-timer that we shouldn't really pay attention to?

So after your comments about cost cutting there.

On an ongoing basis and the team they're trying to to sort of take action suggest that there is actually a fundamental impact here to the competitiveness the competitiveness of that.

Business. So can you just it's just kind of unpack that for us a little bit I mean to what extent is this this tariff issue and issue for that business, rather than just sort of a one timer that we shouldn't really pay attention to.

Yeah, Ryan this is Steve.

You know when you look at the wind business, particularly in Europe . This has been a challenge we've been under for frankly, the last couple of years.

Speaker 1: You know, when you look at the wind business, particularly in Europe , this has been a challenge we've been under for, frankly, the last couple of years and.

And volumes.

Speaker 1: historically are down and there's definitely forecast out there for volumes to pick back up a lot of strong data that suggests over the next

Historically are down.

And there's definitely forecast out there for volumes to pick back up.

A lot of strong data that suggests over the next let's say two to three years, we will see an uplift in volume.

Speaker 1: two to three years, we'll see an uplift in volume.

Speaker 1: But when you get a very tight volume market and then don't have the protections that let's say the U.S. wind market enjoys, that's really what's affecting us in having to kind of re-evaluate the cost structure of the business. And so, you know, we've been trimming costs over the last couple of years. We've been doing a lot of self-help that's not been in any of the adjusted earnings. We've really been just kind of going at it and working that angle.

But when you get a very tight volume market and then don't have the protections that let's say the U S wind market enjoys.

That's really what's affecting us and having to kind of reevaluate the cost structure of the business and so you know we've been trimming costs over the last couple of years, we've been doing a lot of self help that's not been in any of the adjusted earnings.

We've really been just kind of going at it and and working that angle, we do and we are optimistic that the team there will be able to capitalize as volume recovers.

Speaker 1: We do, and we are optimistic that the team there will be able to capitalize as volume recovers in the markets because we are one of the few players left.

And in the markets because we are one of the few players left specifically in Europe that can do rotor houses.

Speaker 1: specifically in Europe that can do rotor houses and some of the larger offshore wind structures. So there will always be an element that they will have to buy from Europe just for lead time purposes. There could be also some strategic purchasing done by countries to make sure they secure local content.

Some of the larger offshore wind structure. So there will always be an element that they will have to buy from Europe , just for a lead time purposes.

There could be also some strategic purchasing done by countries to make sure they secure local content.

Speaker 1: So the combination of other bankruptcies that have occurred in the industry we would have liked to have gotten more help

So with the combination of other bankruptcies that have occurred in the industry.

We would've liked and got more helps here because that would've been a quicker recovery for us, but we still do see a path to get back to profitability, but not in.

Speaker 1: here because that would have been a quicker recovery for us, but we still do see a path to get back to profitability, but not in 2022.

2020 two.

Speaker 6: Okay. So, but just conceptually, is it fair to say that, you know, certain types of one-timers, a discrete tax hit, or closing down a defined benefit plan or something, I think we're comfortable looking at those as just complete, not related to the fundamentals of the business. I mean, is it safe to say that this...

Okay.

So, but just conceptually is it fair to say that you know.

Certain types of one time or as a discrete tax hit or closing down a defined benefit plan or something I think we're comfortable looking at those as just complete not related to the fundamentals of the business I mean is it safe to say that this.

Speaker 6: this charge and the impairment does actually reflect some fundamental difference in how the business is viewed from a profitability and competitive standpoint. Is that a fair contrast to draw?

This charge and the impairment does actually reflect some fundamental.

The difference in how the business is viewed it from a profitability and competitive standpoint is that is that a fair contrast to draw.

Yes.

Speaker 5: Yeah, I would say so, looking at your future income and your discounted cash flows, etc. So the answer to that would be yes.

Yeah.

I'm looking at your.

Future income and your peers.

Discount the cash flows et cetera. So that's the answer to that would be yes, okay and I had one more just on irrigation.

Speaker 6: Okay. And I had one more just on irrigation. There's been a lot of talk about the bullish side of irrigation, and we're there. We think that it's a great outlook. But there has been some talk recently about the fact that farmers are also facing their own inflationary challenges. Fertilizer costs are way up, and that that could lead to a plateauing or a stalling of farm income despite the high commodity prices. What's your take on that side of things?

You know, there's there's been a lot of talk about the bullish side of irrigation and where there like we think that there's a great outlook, but there has been some talk recently about the fact that farmers are also facing their own inflationary challenges fertilizer costs are way up and then that that could lead to a plateauing or a stalling of farm income despite the high commodity prices.

What's your take on that side of things.

Speaker 1: No, at present, the models that are out there show that that farm income is still growing faster than the inflation.

At present the models that are out there show that that farm income is still growing faster than the inflation.

Speaker 1: And so we remain, I'll say, cautiously optimistic that that dynamic will continue. I think the other thing that probably not...

And so we remain cautiously optimistic that that dynamic will continue.

The other thing that probably not.

Speaker 1: You know, nobody knows exactly yet, but it's been pretty dry around the

No nobody knows exactly yet, but it's been pretty dry around the world.

Speaker 1: and we know historically that when you see both in South America and North America these dry conditions

And we know historically that when you see both in South America to North America, you dry conditions.

Speaker 1: That usually is a little more bullish for commodity prices.

That usually is a little more bullish for commodity prices.

Speaker 1: particularly as we get later into the spring, and the effects of that are seen. So I think, right now, the combination of net farm income kind of exceeding inflation and not the best growing conditions.

Particularly as we get later in the spring and the effects of that are seen so I think right now the combination of their farm income kind of exceeding inflation.

And not the best growing conditions.

You know should remain to the benefit of those who can produce and have the water to produce good yields.

Speaker 1: should remain to the benefit of those who can produce and have the water to produce good yields going forward.

Going forward.

Got it.

Hey, Thanks for your time good luck.

Thanks Ryan.

The next question is from Nathan Jones of Stifel. Please proceed with your question.

Speaker 3: The next question is from Nathan Jones of Stiefel. Please proceed with your question.

Good morning, everyone.

Speaker 7: If I'm re-asking a question, just tell me to read the transcript my phone cut out at the start of Q&A. I just want to ask a question around that 9% to 14% revenue guidance. I want to see if we can get some color on, you know, what's price versus volume in that and then what are the pivot points between the high and low end of guidance.

Good morning Nathan.

If I'm re asking your question just tell me to read the transcript my phone cut out at the start of the Q&A.

I just wanted to ask a question around that 9% to 14% revenue guidance I wanted to see if we could get some color on you know what price does fall you eat that and then what are the what are the pivot points between the high and low end of guidance.

Speaker 8: Okay. So, overall, when you look at the volume part, I'd say, you know, look at it as a mid-single digit volume for the year. The pricing, right, Steve mentioned a little bit about the Egypt order, right, that that kind of can go from, you know, $25 to $75 million, so factor that in as well.

Okay. So overall when you look at the volume part I'd say look at it as a mid single digit volume for the year the pricing by the week, Steve mentioned, a little bit about the Egypt order right at that kind of can go from $25 million to $75 million, So factor that in as well and then on the lower end.

Speaker 8: And then on the lower end versus the higher end, right, the big difference there is going to be the pricing. And a lot of that is based on kind of the utility mechanisms for pricing as it relates to steel costs. So that's kind of how I would.

First is the higher end with the big difference there is gonna be the pricing.

And a lot of that is based on kind of the utility mechanisms for our pricing as it relates to steel costs. So that's kind of how I would look at it.

Speaker 7: The utility margins did pick up significantly, we've been talking for a few quarters about that contractual catch-up to steel prices. Have you caught up now on those contracts that have the escalators in them, or is there still reset to go in those contracts that should be a tailwind to margins as we get into 2020?

The utility margin did pick up significantly we'd be talking for a few quarters about that contractual catch up the steel prices have.

Have you caught up now on on those contracts that have the escalators in them or is there still.

<unk> reached out to go and nice contracts that should be a China waiting two to margins as we get into 2020 two.

Yeah, we haven't quite caught up yet, but you will see some headwinds.

Speaker 8: Yeah, we haven't quite caught up yet. You will see some headwinds in Q1, slightly in Q2, but as you go throughout the year, you'll see significant margin expansion.

Headwinds in Q1.

Slightly in Q2, but as we go throughout the year, you'll you'll see a significant margin expansion.

Speaker 7: And last one for me, you did mention adding some capacity in specific areas of the business.

And last one from me you did mention adding some capacity in specific areas of the business.

Speaker 7: With mid-single-digit volume growth expected in 2022, are there other areas of the business where you're starting to butt up against capacity limitations? Is there a requirement for some additional capex to expand capacity? Stanley Culley can give us around that.

With mid single digit volume growth you're expecting in 2022 are there other areas of the business, where you started to butt up against capacity limitations.

Is that recall and if there's some additional capex to expand capacity stay any color you can give us around that.

Yeah, Nathan nothing really from the base business perspective, our operations teams and lean teams has done a great job of giving us additional capacity with the current footprint.

Speaker 1: Yeah, they've been nothing really from the base business perspective, our operations teams and lean teams have done a great job of giving us additional capacity with the current footprint. Yeah, as it pertains to.

As it pertains to kind of growth.

Speaker 1: We have a new concrete facility in the utility segment that will come on that's growth-oriented. We're looking at some diversification of our supply chain around the world, particularly in irrigation.

We have a new concrete facility and the utility segment that will come on and that is growth oriented.

We're looking at some diversification of our supply chain around the world, particularly in irrigation.

Speaker 1: So some expansion in Brazil and we're completing some expansion in Dubai.

Oh, some expansion in Brazil, and we're completing some expansion in Dubai.

Speaker 1: But most of what we're doing is either, you know, capacity maintenance, industry 4.0, or these strategic additions for growth markets.

But most of what we're doing is either you know capacity maintenance indiscreet 4.0 poor these strategic additions for across markets.

Great. Thanks for taking my questions.

Thanks.

Speaker 3: As a reminder, if you would like to ask a question, please press star 1 on your telephone.

As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.

Speaker 3: Our next question is from Brian Drab of William Blair. Please proceed with your question.

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

Speaker 1: Thanks. I just wanted to follow up and ask, given the backlog is up more than 40 percent, first of all, how does that break down between price and higher prices and volume? And why couldn't your revenue be up much more than what you've guided, given you're going into the year with such a strong backlog, especially given when you look at how much backlog was up a little over 20 percent going into.

Well. Thanks, I just wanted to follow up and ask given the backlog is up more than 40% and do it.

First of all what what how does that breakdown between pricing and higher prices and volume.

And Ah why couldn't you revenue be up much more than what you've guided given you're going into the year with such strong backlog, especially given when you look at.

How much backlog was up a little over 20% going into.

Speaker 1: 21 and then you grew revenue kind of commensurate with that.

'twenty one and then you you grew revenue kind of commensurate with that.

Speaker 5: Yeah, so when you look at the at the backlog, the majority of the backlog is pricing. When you look at the volume, if you take out some specific project or some project timing, it's mid to high single digit volume growth. And both of those factors kind of support our 2022 guidance. So that's kind of how I referred to the backlog.

Yeah. So when you look at the at the backlog. The majority of tobacco is pricing are when you look at the volume if you take out some.

Specific projects with some project timing at its mid to high single digit volume growth.

And both of those factors kind of support our 2022 guidance. So that's kind of how I.

Referred to the to the backlog.

Speaker 9: And right now, the overall revenue, you know, this is where we feel comfortable, both on the kind of the low side and the high side, based on just constraints still out there in supply chain, potential reactions to inflation by our customers. Now, if all those things were to moderate and to life moves back to kind of a pre coded era, then there obviously could be more upside. But this is where we feel comfortable.

And right now.

Overall revenue.

This is where we feel comfortable both on the kind of the low side and the high side.

Based on just constraints still out there and supply chain.

Potential reactions to inflation by our customers.

Now if all of those things were to moderate and to life.

Life moves back to kind of a pre COVID-19 .

Era, then you know there there obviously it could be more upside, but this is where we feel comfortable right now.

Speaker 1: Okay. And Abner, just to clarify.

Okay.

Just to clarify.

Speaker 1: said that if you adjust for some specific projects, volume is up mid to high single digits, but...

Said that if you adjust for some specific projects volume is up mid to high single digits, but it.

Speaker 1: Why would we adjust specific projects out there when those are going to generate revenue, right? Yeah, and I'll just give you an example, like if you look at the large Egypt project, right, when we booked it at $240 million, as you eat through that backlog, right, so that backlog will shrink over time until the project is done. So I'm just trying to kind of exclude those to give you a better flavor of kind of the volume growth that we have projected based on that.

Why why would we adjust specific projects out there that they're going to generate revenue right, yeah and I'll just give you. An example, like if you if you look at the at the large Egypt project right. When we when we booked it at 240 million as you eat through that backlog right.

Alright, so that back what will shrink over time until the project is done so I'm just trying to kind of exclude those to give you a better flavor of kind of the the volume growth that we have projected.

Just on our backlog.

Okay. So like the run rate increase is a mid to high single digits, but.

Speaker 1: So, like the run rate increase is mid to high single digits, but would I be too optimistic to think that there could be?

Would I be too optimistic to think that there could be potentially.

Speaker 1: potentially upside if you got through all this backlog in 22, no matter where it came

Potentially upside to get me if you. If you went through as you got through all of this backlog in 'twenty, two and no matter where it came from.

Speaker 1: It seems like you could exceed the potentially exceed the revenue guidance if you if you work throughout whether it's volume or

It seems like you could you could exceed the potentially exceed the revenue guidance. If if you if you.

Worked through whether its volume or price.

Speaker 5: Yeah, I mean, as Steve said, right, as we as we kind of work through our productivity and get through COVID and, you know, bookings throughout the next several months and quarters, then the answer to that would be yes.

Yeah, I mean, there's as Steve said right as we've as we've kind of worked through our productivity and get through Covid bookings throughout the next several months and quarters, then the answer to that would be it.

Okay. Thanks, and then I just wanted to ask you did you've done there.

Speaker 1: I just wanted to ask you, did I miss an update on the solar tracker business specifically? Is there anything you can tell us about that in terms of what the revenue was for 2021 and what the growth is expected to be in 2022 and how share, if you're gaining a share in that market in the United States?

I missed the an update on the solar tracker business, specifically is there anything you could tell us about that in terms of what the revenue was for 'twenty, one and what the growth is expected to be in 'twenty, two and how sure are if you're if you're gaining a share in that market in the in the.

In the United States.

Speaker 9: Yeah, Brian , I mentioned that we did a little over 60 million and 21 and would expect that to kind of double in 2020.

Yeah, Brian I mentioned that we did a little over $60 million in 'twenty, one and would expect that to kind of double in 2022.

Speaker 9: And it's a combination of we know how to price it. We're not doing singular large projects, but a lot of different small projects.

And it's it's a combination of you know we know how to price. It we're not doing singular large projects, but a lot of different small projects.

Speaker 9: as a total envelope so that we have a little more consistency in the revenue.

The total envelope so that we have a little more consistency in the revenue.

About the quarters.

And are you getting more traction outside of Europe with that business, though.

Speaker 1: And are you getting more traction outside of Europe with that business now?

Speaker 5: Of course. Oh yeah. We got a backlog here in the U.S. Obviously Brazil is a big market for us and the DG is kind of scattered throughout. So that's where our international footprint and the fact that we do business in all these countries already is really helpful to us.

Of course, Oh, Yeah, Yeah, we got backlog here in the U S. Obviously, Brazil is a big market for us.

And the D. G is kind of scattered throughout so that's where our international footprint and the fact that we do business in all these countries already.

It was really helpful to us.

Got it okay. Thank you very much.

Speaker 3: The next question is from John Brotz of Kansas City Capital. Please proceed with your question. Morning, everyone. Steve, you know, it's a very favorable market out there in the agricultural area, and I could see maybe some incentive for growers to try and squeeze as many bushels per acre out of their production.

The next question is from Jon Braatz of Kansas City Capital. Please proceed with your question good morning, everyone.

Steve.

It's a very favorable market out there in the agricultural area.

I could see maybe some incentive for.

Growers to try and squeeze as many bushels per acre out of everything all of their production and.

Speaker 10: Given this environment, are you seeing any acceleration or greater interest in some of your agricultural technology products? The environment's pretty favorable. They have the cash. Are you seeing any additional momentum in adoption?

Given this environment are you seeing any acceleration or greater interest in some of your agricultural technology products.

You know the environment is pretty favorable they have the cash are you seen.

Any additional momentum and adoption.

Oh, yes, absolutely.

Speaker 9: Yes, absolutely, John . We see a lot of traction across the technology portfolio. It's both a combination of...

Absolutely John we've seen a lot of traction across the technology portfolio.

It's both a combination of.

Speaker 9: you know, productivity, that they get more yield. It's the fact that there are inflationary pressures on the inputs. So anything we can do to limit that input, they look at that as a cost savings.

You know productivity that they get more yield.

It's the fact that there are inflationary pressures on the inputs. So anything we can do to limit that input.

They look at that as a cost savings.

Speaker 9: And, you know, kind of also just the overall labor availability slash productivity issue.

And you know kind of also just the overall labor availability slash productivity issue.

Speaker 9: All of these solutions really cut down the need to go out to the field, to have people that are constantly circling back to different fields.

You know all of these solutions really cut down the need to go out to the field.

To have people that are constantly circling back to a different fields and that now you know if you take the early generation of technology with kind of the remote telemetry that's already proven its point and so most growers.

Speaker 9: And that now, you know, if you take the early generation of technology with kind of the remote telemetry, that's already proved its point. And so most growers

Speaker 9: no matter how long they've been in the business, realize that that is a true savings of time and money.

No matter, what you know how long they've been in the business realized that that is a true savings.

Savings of time and money.

Speaker 9: And so now, as we bring more products and services into the technology area, they're more willing to take a look and they're signing up to try things.

And so now as we bring more products and services into the technology area, they're more willing to take a look and they're signing up to try things and you know it's not so easy to get equipment right now so they have to put cash somewhere.

Speaker 9: And, you know, it's not so easy to get equipment right now, so they have to put cash somewhere. So that's also a favorable thing for us and why we saw the 45% growth that we did in 2021. So we're really optimistic as we look forward to people getting more accustomed to the technologies as a way to get that additional five bushels or ten bushels per acre.

So that's also a favorable thing for us and why are we saw a 45% growth that we did in <unk> 'twenty 'twenty. One so we're really optimistic as we look forward.

So people are getting more accustomed to the technologies as a way to get that additional five bushels of 10 bushels per acre.

Speaker 9: But we think ultimately our solutions will do even more than that. But they're satisfied even just getting those kind of incremental gains. But we do believe that there's substantial gains that will be had as we go forward.

But we think ultimately our solutions will do even more than that.

But they're satisfied even just getting those kind of incremental gains, but we do believe that there's a substantial gains that will be had as we go forward.

Speaker 10: Thank you. Two follow-up questions. Can you give us an update on your pilot program or pilot project in Uzbekistan?

Great. Thank you two follow up questions can you give us an update on on your pilot program, our pilot project in Uzbekistan and.

Speaker 10: And secondly, credit availability is always important in Brazil. Any change in that dynamic as we enter into 2022 and 2023?

And secondly, credit availability is always important in Brazil any change in that dynamic as a as we enter into the 2022 and 'twenty 'twenty three.

Sure. The first one is Kazakhstan.

Speaker 9: Sure, the first one is Kazakhstan. And with Kazakhstan, obviously there were some geopolitical issues that occurred there. Our story there is we really helped the government to address some of those inequality issues, rural income.

And with Kazakhstan.

There were some geopolitical issues.

That occurred there our story there is we really helped the government to address some of those in a quality issues rural income overall.

Speaker 9: overall income for the country. So we're still moving forward. We always take a look and make sure that everything is stable first. But that will continue and we're very excited about the market. We saw a lot of organic growth in the market before our plant goes in already over the last two years. So it's been a very supportive market for growth as we go.

Overall income from the country.

So we're still moving forward. We are we always take a look and make sure that everything is stable first.

But that will continue and we're very excited about the market. We saw a lot of organic growth in the market before a plant goes in already over the last two years. So it's been a very supportive market for growth as.

As we go.

You know as we.

Try to determine where the.

Speaker 9: try to determine where the overall Kazakhstan business will go going forward, we look at that as a real...

Overall, Kazakhstan business will go going forward.

Yeah, we look at that as a real.

Speaker 9: driver for the region all around as we go there. What was the second part of your question, Tom? About credit and availability in Brazil as we go through 2023.

Driver for the region.

All around us.

What was the second part of your question.

About credit availability in Brazil, as we go through 2023.

Speaker 9: Yeah, right now there's no changes, you know, the Brazilian government has been supporting the FUNAMI program quite well, they have a good economist team that really look at that.

Yeah right now there's no changes you know the Brazilian government has been.

Supporting the phenomenal program quite well they have a good economist teams that really look at that.

Speaker 9: The growth in Brazil is notable because if it keeps going at this kind of pace, it will match the U.S. market probably within the decade.

Yeah.

The growth in Brazil is notable because it will if it keeps going at this kind of pace will match the U S market.

In the decade.

Speaker 9: in terms of overall agricultural productivity, especially because they can do two or three harvests a year. So we're very optimistic about that business, no credit changes. There are some favorable tax laws around solar and ag solar with net metering changes that are going on in Brazil. So everything points to continued growth there.

In terms of overall agricultural productivity, especially because they can do two or three a.

Harvest a year so.

We're very optimistic about that business they'll try to changes there are some favorable tax laws around solar and solar are with.

With net metering changes that are going on in Brazil, So everything points to continued growth there.

Okay. Thank you.

Yeah.

Yeah.

Speaker 3: We have reached the end of the question and answer session, and I will now turn the call over to Renee Campbell for closing remarks.

We have reached the end of our question and answer session and 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 for playback on our website or by phone for the next seven days, we look forward to speaking with you again next quarter.

Speaker 2: Thank you for joining us today. As mentioned, today's call will be available for playback on our website or by phone for the next seven days. We look 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 has made in light of experience in the industries in which zama operates as well as management's perceptions of historical trends current conditions.

Speaker 1: Included in this discussion are forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1994.

Speaker 1: These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which 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 it, I hope you find it helpful.

Additional expected future developments and other factors believed to be appropriate under the circumstances.

As you listen to and consider these comments.

Speaker 1: You should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties, some of which are beyond Valmont's control, and assumptions

You should understand that these statements are not guarantees of performance or results. They involve risks uncertainties some of which are beyond belmond <unk> control and assumptions.

Speaker 1: Although management believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Valmont's actual financial results and cause them to differ materially from those anticipated in the forward-looking statement.

Although management believes that these forward looking statements are based on reasonable assumptions you should be aware that many factors could affect how much actual financial results and cause them to differ materially from those anticipated in the forward looking statements. These factors include among other things are continuing and developing effects of COVID-19.

Speaker 1: These factors include, among other things, the continuing and developing effects of COVID-19, including the effects of the outbreak on the general economy and the specific economic effects on the company's business.

<unk>, including the effects of the outbreak on the general economy, and the specific economic effects on the company's business.

Speaker 1: and that of its customers and suppliers. Risk factors described from time to time in Valmont's reports to the Securities and Exchange Commission, as well as future economic

And then if its customers and suppliers risk factors described from time to time in its almost reports to the securities and exchange Commission as well as future economic and market circumstances.

Sri conditions company performance and financial results operating efficiencies availability and price of raw material availability and market acceptance of new products product pricing domestic and international.

Speaker 1: company performance and financial results, operator efficiencies, availability and price of raw material, availability and market acceptance of new products, product pricing, domestic and international.

Speaker 1: competitive environments, and actions and policy changes of domestic and foreign governments.

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Speaker 1: The company cautions that any forward-looking statement included in this discussion is made as of the date of this discussion and the company does not undertake to update any forward-looking statement.

The company cautions that any forward looking 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 statement.

Yeah.

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