Q3 2023 Valmont Industries Inc Earnings Call

Greetings welcome to Belmond industries third quarter 2023 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

We ask that you. Please limit yourself to one question and one brief follow up question and return to the queue. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to your host Renee Campbell Senior Vice President.

<unk> Investor Relations and Treasurer, Ms. Campbell you may begin.

Thank you and good morning, welcome to Belmont Industries third quarter 2023 earnings call with me today are all neuropathy, Baum, President and Chief Executive Officer.

Tim Francis interim Chief Financial Officer, and Jean Paget, Senior Vice President and Chief Accounting Officer.

This morning, I will provide a brief summary of our third quarter results, commenting on our markets and long term business strategy.

Following that Tim will review, our financial performance and provide our current outlook and indications for 2023 with closing remarks from up here.

This will be followed by Q&A.

Live webcast of the presentation will accompany today's call and is available for download from the webcast or on the investors site at Belmont Dot com.

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

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

Finally, if you would like to be notified when Belmont publishes news releases and other information. Please sign up for email alerts through our Investor site. We also encourage investors and others interested in our company to follow Belmont and our brands on the social media channels listed on our website.

With that I would now like to turn the call over to our President and Chief Executive Officer, and Theyre up a lot.

Thank you Renee.

Morning, everyone and thank you for joining us.

I want to first say, how proud I am of our global Belmond team as they navigate a dynamic demand environment and demonstrate their unwavering support to our mission and core values.

It is the teams customer centric culture, driving innovation and delivering results that ultimately gives me confidence of our success now and into the future.

During my first quarter as CEO I've made it a priority to hear directly from our employees.

Customers.

Healers and shareholders. These.

These conversations were valuable and insightful and I am appreciative of all the people I have had the opportunity to me.

Yes.

Before moving forward with our quarterly review I would like to briefly comment on the recent tragic events in Israel.

The safety and wellbeing of our development colleagues in Israel is our primary concern.

I'm thankful to report all of our employees and their families are safe.

Including my own as both my wife, and I have family in our home country.

The loss of innocent lives. During this escalating violence has been staggering.

And our Hearts go out to all those affected by the senseless tragedy.

Now, let me return to our third quarter results and key messages shown on slide four.

Our belmond team continue to perform extremely well across both segments.

It brings solid third quarter results.

Adjusted operating margin and adjusted diluted earnings per share improved significantly year over year.

While navigating a dynamic market demand environment.

That is pressuring topline growth.

We also generated strong operating cash flow as we managed working capital, allowing us to support our balanced capital deployment strategy and returned cash to shareholders.

Infrastructure demand remains robust globally as nearly all of our end markets are experiencing multiyear secular growth drivers.

And global Agriculture market fundamentals remain relatively strong.

I will say more about our end markets in a few moments.

The strong performance of our global operations team and pricing strategies in both segments.

Have ensured we are driving margin expansion amid lower sales and ongoing inflation, while capturing the value we add to our customers.

And finally, we have announced the necessary actions to position <unk> for long term success.

Quoting and the organizational realignment program and executive leadership changes.

These actions improve our ability to support our business streamline decision, making and improve efficiency.

Turning to slide five for an update on our markets.

Within infrastructure.

Utility demand remains robust as utilities continue to increase capex spending to support a safe secure and reliable grid system.

North America's power grid is benefiting from several demand drivers, including the need to increased grid resiliency and reliability support power load growth and capitalize on favorable government policies designed to accelerate the energy transition.

<unk> is expected to provide tailwind to our solar business as the industry opposite obtained clarity on manufacturing tax credit details.

Meanwhile, global solar demand remained strong due to the extension of the 10 year investment tax credit in the U S and favorable international renewable energy policies.

Road construction investment continues to support transportation demand globally.

The release of <unk> funding has been slower than anticipated.

As inflation higher interest rates and labor constraints are delaying some projects.

Although we're not yet seeing orders from this program our transportation products are typically purchased nine to 12 months following funding appropriations.

Commercial lighting markets are experiencing some near term softness from the impacts of higher interest rates inflation and declining single family housing starts.

Telecom remains muted as carrier reduced capex spending following our record levels of investment.

Well some of our markets are faced with near term macroeconomic challenges.

Infrastructure demand remained strong with several long term drivers.

Our flexible manufacturing footprint and strong commercial partnership uniquely positions us to deliver value to our customers and drive profitable growth well into the future.

Turning to agriculture.

In North American markets, the latest USDA projections reaffirm that 'twenty two 'twenty three net farm income levels are expected to be at historically high levels.

While farmer economics remain healthy sentiment remains somewhat muted coming off the substantial profit margins tech or a recognized in 2021 and 'twenty to 'twenty two.

We are seeing signs of positive trends this quarter as order levels for irrigation systems are tracking ahead of last year.

International Agriculture fundamentals remain robust.

Brazil has been strong this year and we achieved another record quarter of sales.

The market continues to experience increasing level of production and expansion of irrigated acres.

Brazil is expected to be the fastest growing AG market in the world and it remains a key part of our long term growth strategy.

In other regions, our leadership position and project pipeline support ongoing demand and shipments of the large Egypt project are expected to continue through 2024.

In summary, global agriculture markets.

Are still in a position of relative strength are.

Our value proposition and the long term demand trend set us up for continued profitable growth.

Turning to slide six.

Today, we are announcing specific actions to better align our organization to our strategy and improve our cost structure.

After evaluating the administrative support within each business segment and corporate we have taken actions to create synergies and optimize our structure.

We are simplifying reporting lines, improving our visibility across the organization.

Driving accountability to achieve results.

These are net positives that help us scale the organization to efficiently focus on our priorities and drive strategy to improve profitability.

We don't take these actions lightly but they are necessary to set us up for long term success.

Next while Tim will provide more detail later in the call I'd like to briefly address the impairment charges to goodwill and intangible assets in the agriculture technology reporting unit.

These charges reflect much lower adoption rate of prosperity agronomy technology solutions compared to original assumptions.

Going forward our go to market approach is to ensure innovation is introduced with the purpose of meeting the immediate needs of our irrigation customers.

As the market leader in advanced irrigation technology solutions, we're excited about the growth and partnership opportunities or investment creates for us to deliver additional crop and water management solutions to our growers.

We're committed to harnessing the power of evolving AI and machine learning technologies, and we will continue investing in R&D.

Moving to slide seven I now would like to share an update on our executive leadership team, our strategic priorities and forward expectations.

Aaron Schapper has been named group President Agriculture, and our Chief strategy Officer, which is a new role for the organization.

Aaron previously held numerous leadership roles within our irrigation business.

Most recently served as group President infrastructure.

As Chief strategy officer, and will develop opportunities to leverage commercial and technology strategies and create a strategic roadmap for growth across the company.

Tim Donahue has backfill Aaron's role as group President infrastructure in this role he will lead commercial growth strategies and foster collaboration across all infrastructures product lines to deliver value added solutions for our customers that drive profitability and ROIC improve.

Tim was most recently EVP corporate business development and previously was the president of the former <unk> segment.

Diane American remains our EVP of global operations, leaving strategy to support capacity growth, including meaningful productivity enhancements across our businesses through operational excellence.

Our entire executive team will lead their respective areas with a sharp focus on data back decision, making and tighter processes around investment decisions.

I am confident this is the right team to help us achieve our strategic objectives.

A few weeks ago, the leadership team and I met to discuss our strategy in light of my transition into the CEO role.

The most important outcome from those meetings that I wanted us to achieve was to affirm that our core strategic priorities remain intact at.

At the same time as is common when there are changes in leadership as CEO I started prioritizing certain aspects of our strategy.

Differently than my predecessor.

At our Investor day, we highlighted initiatives that deliver profitable growth based on leveraging our competitive advantages.

Last few years, we experienced tremendous growth, which drove the ability to explore several investment opportunities.

While we continue prioritizing growth initiatives looking ahead, we will invest with discipline and proactively make decisions in conjunction with market cycles.

We remain focused on new products and solutions that solve our customers' most pressing challenges, while specifically strengthening our core businesses and prioritizing high value revenue.

Through this lens.

The pace of some of our initiatives may change.

For example, the Bottomline impact from our agriculture growth initiatives will be more will be more measured than our previous commentary may have indicated.

And will it be more realistic about anticipated rate of change to our business mix.

We still hold an unshakable belief that we can and should bring advanced solutions to our customers.

Our innovation funnel includes a mix of projects with longer payback horizons.

Others with more immediate impacts such as a robust solar business.

Our newly launched eco friendly concrete utility poles.

Summary, our management team and organization are United around our strategic priorities with a focus on initiatives that deliver compelling value proposition to our customers.

I'm excited about that months journey as a company that maximizes financial performance through the cycles made possible by an unwavering discipline on capital allocation and our ROIC seat.

Now I'll turn it over to Tim for our third quarter financial review and updated outlook.

Thank you avner and good morning, everyone.

Turning to slide nine in third 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.

Third quarter net sales of $1 $1 billion decreased four 3%.

As infrastructure sales were comparable to last year.

Offset by lower agriculture sales.

Accounting for the 2022 divestiture of the offshore wind business reported in the other segment.

Sales decreased two 3% year over year.

Despite lower sales operating income increased five 9% to $128 million and operating margins increased to 11, 5%.

Reflecting higher pricing that was not linked to steel commodity costs and deliberate actions to improve overall cost of goods sold.

Diluted earnings per share grew 18, 1% to $4.12 a third quarter record.

A favorable tax rate driven by a recent legislation regarding usage of foreign tax credits generated in Brazil.

And benefits from R&D expenses.

Along with ongoing actions to improve profitability drove the EPS improvement.

As I have mentioned earlier, we initiated an organizational realignment program.

Drive cost optimization.

Simplify our operating structure and strengthen our shared service model.

We estimate 2023 cash expense in the range of $33 million to $36 million.

Approximately $16 million will be recognized within the infrastructure segment.

With the remainder split evenly between the agriculture segment incorporate.

These cash charges are expected to be recovered through lower operating costs within 12 months.

Turning to the segments on slide 10 infrastructure sales of $755 $1 million were comparable to last year.

Driven by higher volumes, notably in the solar L. N T N T D&S product lines.

Lower telecommunications volumes and lower pricing associated with the reduced cost of steel and the <unk> product line.

More than offset higher pricing across the rest of the portfolio.

Operating income increased to $108 million or 14, 3% of net sales.

Deliberate actions to improve cost of goods sold drove the margin improvement.

Moving to slide 11, agriculture sales of $298 $5 million decreased eight 8% year over year.

Higher international volumes were more than offset by lower North America volumes, and a slightly less favorable product mix.

In North America sales were lower as farmer sentiment remains somewhat muted.

In the third quarter of 2022 benefited from the ongoing delivery of elevated backlog.

International sales were higher due to higher project sales in EMEA region and growth in Brazil.

Additionally, sales of agricultural technology products and services were similar to last year.

Operating income decreased to $38 $5 million or 13% of net sales.

Improvement in gross profit margins, partially attributed to deflation in the cost of steel was more than offset by higher SG&A.

As I've never met shouldn't earlier during the third quarter, we performed our annual impairment testing of goodwill and other intangible assets and concluded that the carrying value of the agriculture technology reporting unit exceeded its market value leading to an impairment of approximately $137 million.

The impairment tests considers several factors the most important of which are projected operational cash flows and the after tax discount rate.

Significantly slower growth and grower adoption rates in prosperity Agronomy technology solutions resulted in much lower financial projections than originally modeled.

Other contributing factors to the impairment charge were the recent decline in the North American agriculture market.

And a higher discount rate attributed to higher interest rates.

Turning to cash flows on slide 12 third quarter operating cash flows of $81 $3 million were driven by diligent working capital management, primarily reductions in inventory.

Turning to slide 13 for summary of year to date capital deployment.

In the third quarter capital expenditures were $26 million as we continue invest in strategic capacity expansions.

Through our balanced capital allocation framework, we are focused on enhancing shareholder value.

In the third quarter, we returned approximately $44 million to shareholders through dividends and share repurchases ending the quarter with approximately $173 million in cash.

Moving to slide 14.

Total debt to adjusted EBITDA of one five times. So it was within our desired range of one five to two five times.

Our cash balances.

All of our credit.

And flexible balance sheet provide us with ample liquidity to execute our capital allocation strategy.

Greetings.

Unknown Executive: Welcome to Valmont Industries, third quarter, 2023 earnings conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. We ask that you please limit yourself to one question and one brief follow-up question and return to the queue. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded.

I would now like to review our updated 2023 outlook as shown on slide 15.

Given the timing of international agriculture projects shipments and continued near term softness softness and telecommunications markets.

We now expect full year sales to decrease between 3% to 4% compared to last year.

Renee Campbell: I will now turn the conference over to your host, Renee Campbell, senior-based president, investor relations and treasurer. Ms. Campbell, you may begin. Thank you and good morning.

Despite lower volumes, we expect operating margin improvement year over year, and our strong third quarter results carryforward into our full year EPS growth expectations.

Renee Campbell: Welcome to Valmont Industries, third quarter, 2023 earnings call. With me today are Avner Applbaum, president and chief executive officer, Tim Francis, interim chief financial officer, and gene pageant senior vice president and chief accounting officer. This morning, Avner will provide a brief summary of our third quarter results, commenting on our markets and long-term business strategy. Following that, Tim will review our financial performance and provide our current outlook and indications for 2023 with closing remarks from Avner.

I'd also like to note that the previous adjusted EPS outlook has been updated to remove adjustments associated with the prosper technology intangible asset amortization and stock based compensation totaling approximately 65 per share.

We believe these revisions provide better transparency to investors going forward.

And they became less meaningful to separately disclose as operating income has grown.

Turning to the segments continued strength across infrastructure markets supporting our expectations for higher sales this year.

Renee Campbell: This will be followed by Q&A. A live webcast of the presentation will accompany today's call and is available for downloads from the webcast or on the investor's site at valmont.com. A replay will be available on our website later this morning. 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 and full at the end of today's call. Finally, if you would like to be notified when Valmont publishes news releases and other information, please sign up for email alerts through our investor's site.

Oh culture, we expect fourth quarter international sales to be higher compared to prior year.

This will be more than offset by lower North America sales as 2022 benefited from shipment of elevated backlog are.

The higher sales mix of international projects will slightly reduce agriculture segment profitability in the fourth quarter as compared to last year.

As a reminder, the timing of international project shipments can be hard to predict from quarter to quarter.

Renee Campbell: We also encourage investors and others interested in our company to follow Valmont and our brands on the social media channel listed on our website.

We assume a full year adjusted effective tax rate of 26% to 26, 5% when considering the favorable tax legislation in third quarter that I previously mentioned.

Renee Campbell: With that, I would now like to turn the call over to our president and chief executive officer, Avner Applbaum. Thank you, in it.

To summarize we are leveraging our global scale to improve margins drive strong cash generation and generate sustainable shareholder value.

Avner Applbaum: Good morning, everyone, and thank you for joining us. I want to first say how proud I am of our global Valmont team is a navigate a dynamic demand environment and demonstrate their unwavering support to our mission and core values. It is the team's customer-centric culture driving innovation and delivering results that ultimately gives me confidence of our success now and into the future. Through my first quarter, I see I made it a priority to hear directly from our employees, customers, dealers, and shareholders. These conversations were valuable and insightful and I am appreciative of all the people I have had the opportunity to meet.

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

Thank you Tim.

Continuing my comments on slide 16.

I am proud of our team's ability to execute our strategy driving solid results, while navigating current market dynamics.

We remain focused on controlling the things we can control to hit our financial targets and improve our quality of earnings.

We're taking actions to enable a more efficient and effective organizational structure to fully realize the benefits of ongoing strategic initiatives.

With a continued focus on delivering high value solutions through investments and innovation.

We are confident our diversified portfolio with compelling long term drivers and our focused strategy positions of L mind for success now and into the future.

Avner Applbaum: Before moving forward with our quarterly review, I would like to briefly comment on the recent tragic events in Israel. The safety and well-being of our Valmont colleagues in Israel is our primary concern. I am thankful to report all of our employees and their families there are safe, including my own, as both my wife and I, have family in our home country. The loss of innocent life during this escalating violence has been staggering, and our hearts go out to all those affected by this senseless tragedy.

I will now turn the call back over to rent it.

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

Thank you at this time, we'll be conducting a question and answer session. If he would like to ask a question. Please press star one on your kind of phone keypad, a confirmation tone will indicate your line is in the question. Kim you May Press Star two if he would like to remove your question from the queue and for participants using speaker equipment.

Avner Applbaum: Now let me return to our third quarter results and key messages shown on both segments, delivering solid third quarter results. Adjusted operating margins and adjusted diluted earnings per share, improved significantly year over year, while navigating a dynamic market demand environment that is pressuring top line growth. We also generated strong operating cash flow as we manage working capital, allowing us to support our balanced capital deployment strategy and return cash to shareholders. Infrastructure demand remains robust globally, as nearly all of our end markets are experiencing multi-year secular growth drivers and global agriculture market fundamentals remain relatively strong.

It would be necessary to pick up your handset before pressing the star keys.

To allow as many questions as possible. Please limit yourself to one question and one follow up question. One moment. Please while we poll for questions.

Our first question is from Nathan Jones with Stifel. Please proceed.

No you said it was running at.

Good morning, everyone.

Good morning.

I guess I'll start off I know you made some comments about you know some.

So at least minor changes if not major changes in the strategy here going forward.

So I guess the question first is can you expand on those kinds of things what are some more details on what the changes to the strategy.

And then the financial targets that valmont laid out in May do those still hold I mean, it sounds like maybe a bit more measured pace on investment. So it may be the growth numbers are towards the lower end, but the realignment.

Avner Applbaum: I will say more about our end markets in a few moments. The strong performance of our global operations team and pricing strategies in both segments have ensured we are driving margin expansion amid lower sales, and I'm going inflation while capturing the value we add to our customers.

I didn't say, maybe the margin at the higher end just any more color you can give us on kind of what's changing strategically within the business.

Avner Applbaum: And finally, we have announced necessary actions to position Valmont for long term success, including an organizational realignment program and executive leadership changes. These actions improve our ability to support our business, streamline decision making and improve efficiency.

Okay. Thank you for the questions. Okay, Let me start off with the strategy and as I mentioned, we really evaluated our strategy and conclusion was is we have a robust.

And very targeted strategy around our.

Core competencies, we have very strong markets going forward in both infrastructure and agriculture, and we were able to really continue to focus on the areas where we could.

Avner Applbaum: Turning to slide five for an update on our markets. With an infrastructure, utility demand remains robust, as utilities continue to increase cap expending to support a safe, secure and reliable grid system. North America's power grid is benefiting from several demand drivers, including the need to increase grid resiliency and reliability, support power load growth, and capitalize unfavorable government policies designed to accelerate the energy transition. The IRA is expected to provide two wins to our solar business as the industry obtained clarity on manufacturing tax credit details.

Focus on our customers' most challenging and pressing needs and we will continue to support those areas on growing in both of those segments.

I need to give you some specific examples.

Maybe I could touch to for instance, the drilling services, we actually just put a press release a few days ago. You know one area that we've found that it's really compelling to us for instance is telecom right. The climbers have these companies need climbers they need to claim towers, a shortage of people, we could with our drilling services really supplement them.

To be more safe and and solve their problem, but there are a lot of.

Avner Applbaum: Meanwhile, global solar demand remains strong due to the extension of the 10-year investment tax credit in the U.S, and favorable international renewable energy policies. Road construction investment continues to support transportation demand globally. The release of IIA funding has been slower than anticipated, as inflation, higher interest rates, and labor constraints are doing some progress. Although we are not yet seeing orders from this program, our transportation products are typically purchased 9-12 months following funding appropriate.

The areas, we're focusing on John's for instance, and some of them was really cool technology around the utility area, we could really help them.

Claim their pulse, but it's not really their pressing needs, but today unusually could fall to the back of the line when they look at their own O&M spend so we're going to really focus on how can we help them solve their pressing needs either in utility space or in the telecom space and really go.

After those areas, where we could help solve our customers' most pressing needs.

But overall I'm right. This strategy is solid and we're confident in our ability to continue to drive significant growth in both of our segments.

Avner Applbaum: Commercial lighting markets are experiencing some near-term softness from the impacts of higher interest rates, inflation, and declining single-family housing starts. Telecom remains muted as carrier reduced cap expending, following record levels of investment. While some of our markets are faced with near-term macroeconomic challenges, broad-based infrastructure demand remains strong with several long-term drivers. Our flexible manufacturing footprint and strong commercial partnership uniquely positioned us to deliver value to our customers and drive profitable growth well into the future.

Now specifically to the five year targets that we provided during investment at our Investor Day and you your points are valid there.

You know as you go into any.

Long term.

Strategy and financial protections right you you'll look at the markets you look at the initiatives and.

I look at them today, as we start off where our first year instead of just five years. It is weaker than we anticipated and of course, our starting point is gonna be a little bit lower.

Avner Applbaum: Turning to agriculture, in North American markets, the latest USDA projections reaffirmed the 2023 net-form income levels are expected to be at historically high levels. While far-mer economics remain healthy, sentiment remains so muted coming off the substantial profit margins that were recognized in 2021 and 2022. We are seeing signs of positive trends as order levels for irrigation systems are tracking ahead of last year. International Agriculture Fundamentals remain robust. Brazil has been strong this year, and we achieved another record quarter of sales as the market continues to experience the increasing level of production and expansion of irrigated acres.

Of course, we want.

Assume a cycle and we have but it did the timing of some of our growth could be a little different and that could impact our long term.

Growth that was specifically as it relates to some of these and it should have yes, you know specifically, we talked about prospera, we had some forecast and therefore, our for our growth and it's not going to be as.

As high as we expected.

I'm just trying to balance every outlook anywhere between you know you always have the optimism versus a realism as you go into our strategic plan and some of these initiatives have more on more on the optimistic side.

And we're going to take a more measured approach 12 out of these initiatives again to make sure we're really focusing on the core supporting our customers and really how do we drive the strongest value both to our customers and to our shareholders.

Avner Applbaum: Brazil is expected to be the fastest growing ag market in the world and it remains a key part of our long-term growth strategy. In other regions, our leadership position and project pipeline support ongoing demand and shipments of the large Egypt project are expected to continue through 2024.

So that's kind of on the on the sales side.

Very feel really good about to be.

The Orange are the financial targets, we're making good progress on our operating margin quality of improvement we continue to show progress quarter after quarter, including in Q3, so making great progress on the operating margin, making great progress on the Aro I see yes, we have a focus on driving.

Avner Applbaum: In summary, global agriculture markets are still in a position of relative strength. Our value proposition and the long-term demand trend set us up for continued profitable growth.

Avner Applbaum: Turning to slide six, today we are announcing specific actions to better align our organization to our strategy and improve our cost structure. After evaluating the administrative support within each business segment and corporate, we have taken actions to create synergies and optimize our structure. We are simplifying reporting lines, improving our visibility across the organization, and driving our accountability to achieve results. These are net positives that help us scale the organization to efficiently focus on our priorities and drive strategy to improve profitability. We don't take these actions lightly, but they are necessary to set us up for long-term success.

Our capital efficiencies.

Our profitability and so what so overall at a very high level very excited about our outlook for the next five years, we got good tailwind in our markets. The secular drivers are very strong and we're.

Planning to execute on our plan to drive shareholder value.

Thanks for that color I guess my follow up question is gonna be on pricing.

You're obviously seeing some headwinds in pricing.

On.

On D D.

The utility pole business, where you can track so they have to pass a distilled.

Steel pricing back through.

And we obviously saw it lag on the way up and say you know we will see a catch up on the way down here can you just talk about the aggregate pricing impact we're looking at maybe in the fourth quarter and as you look into next year.

Avner Applbaum: Next, while Tim will provide more detail later in the call, I'd like to briefly address the impairment charges to goodwill and intangible assets in the agriculture technology reporting unit. These charges reflect a much lower adoption rate of prosperous agronomy to technology solutions compared to original assumptions. . Going forward, our go-to-market approach is to ensure innovation is introduced with the purpose of meeting the immediate needs of our irrigation customers. As the market leader and advanced irrigation technology solutions were excited about the growth and partnership opportunities, our investment creates for us to deliver additional crop and water management solutions to our growers. We're committed to harnessing the power of evolving AI and machine learning technologies and we'll continue investing in R&D.

Obviously, some headwinds in the utility business do you still see pricing opportunities in other parts of the business and then if you're seeing any pricing pressure in the AG business. As you know demand is a bit weaker there in the U S along with the the lowest steel prices.

Good morning.

Nathan It's Tim I'll take that one so we are let me start off we're very pleased across the infrastructure business.

In terms of what we've been able to do with pricing.

Wendy it's it's in our businesses that don't have that contractual mechanism tied to steel cost indices.

As you alluded to there's been tremendous volatility in the cost of steel its been as low as $670 all the way up to $1200 kind of in the middle of second quarter.

Avner Applbaum: Moving to slide seven, I now would like to share an update on our executive leadership team, our strategic priorities and forward expectations. Aaron Shapper has been named Group President Agriculture and our Chief Strategy Officer, which is a new role for the organization. Aaron previously had numerous leadership roles within our irrigation business and most recently served as Group President Infrastructure. As Chief Strategy Officer, Aaron will develop opportunities to leverage commercial and technology strategies and create a strategic roadmap for growth across the company.

That dynamic.

He's probably going to continue right we got the.

United Autoworkers strike.

That that might get resolved with four today might not.

But but we could we expect to see that continued volatility in the cost of steel, but we expect to be able to maintain good margins in those contracts, where we have that that mechanism.

<unk> to the steel indices.

But then there was the other part of course of our utility business, which is the bid market and there I would also like to comment that we continue to see strong pricing.

Avner Applbaum: Tim Danna, you, has backfilled Aaron's role as Group President Infrastructure. In this role, he will lead commercial growth strategies and foster collaboration across all infrastructure's product lines to deliver value add solution to our customers that drive profitability and ROIC improvements. Tim was most recently EVP corporate business development and previously was the President of the former ESS segment. Diane Lerkin remains our EVP of global operations leading strategy to support capacity growth including meaningful productivity enhancement across our businesses through operational excellence.

As we tried to get more orders there.

Turning to agriculture, and we see no change in our philosophy of being a leader on price.

So let me add to that Nathan.

Several weeks ago, I went out to our dealer conference out in Boise, Idaho and spend time with some of our dealers out there and really there was no discussion about pricing there very happy with the value they get from our pivot there, we're very happy with her but the value proposition with our technology offering.

And we continue to maintain that strong partnership with our dealers and help drive value to our growers. So we can keep on maintaining our leadership position in that market and evaluate the situation as going forward.

Avner Applbaum: Our entire executive team will lead their respective areas with a sharp focus on data back decision making and type processes around investment decisions. I am confident this is a right team to help us achieve our strategic objectives.

Great. Thanks for taking my questions.

Avner Applbaum: A few weeks ago, the leadership team and I met to discuss our strategy in light of my transition into the CEO role. The most important outcomes from those meetings that I wanted us to achieve was to affirm that our core strategic priorities remain intact. At the same time, as is common when there are changes in leadership, as CEO, I started prioritizing certain aspects of our strategy differently than my predecessor. On our investor day, we highlighted initiatives that deliver profitable growth based on leveraging our competitive advantages.

Okay.

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

Hey, good morning, Thanks for taking a few questions yeah, maybe we could start with with Prospera. So obviously investor day was disgusting.

Very positive terms.

Already seen some signs of some softness in our North American AG, just trying to understand kind of what has changed between now and then and then perhaps is as part of that question is you know the the time frame on that Prospera analysis is it was it more heavily weighted are you know when you when you're doing the calculations.

You know figure out that the the goodwill impairment.

Avner Applbaum: The last few years, we experienced tremendous growth which drove the ability to explore several investment opportunities. While we continue prioritizing growth initiatives, looking ahead, we will invest with discipline and proactively make decisions in conjunction with market sites. We remain focused on products and solutions that solve our customers' most pressing challenges while specifically strengthening our core businesses and prioritizing high value revenue. Through this lens, the pace of some of our initiatives may change.

Yep. Thanks.

Thanks for the question, let me start off with the just.

Some background and overview on prospera.

Tim can then address kind of the timing of the of the impairment, but you know what I'd like to go back to just several years before we actually started a partnership with prospera in 2019.

And really the vision was to transform the center pivot to from an irrigation machine twin autonomous crop management you know so we can really enhance crop precision we could save the growers time reduce costs optimize land usage and of course to increase yields.

Avner Applbaum: For example, the bottom line impact from our agriculture growth initiatives will be more measured than our previous commentatory may have indicated and will be more realistic about anticipated rate of change to our business links. We still hold an unshakable belief that we can and should bring advanced solutions to our customers. Our innovations funnel includes a mix of projects with longer payback horizons and others with more immediate impacts such as our robust solar business and our newly launched eco-friendly concrete utility poles. In summary, our management team and organization are united around their strategic priorities with a focus on initiatives that deliver compelling value proposition to our customers.

Fast forward 2021.

There was a decision to expand the strategy.

Hey, we're venturing beyond traditional pivot acres.

And really pursuing recurring revenue from subscription based agronomy Tech solutions and as we mentioned that strategy really didn't pan out as.

As planned.

We're going back to the original view, how can we provide autonomous crop management, how could we use all all the technology suite that we offer to our growers anywhere from remote monitoring control irrigation optimization and of course, the agronomy insight that we're very.

Pleased with the technology around the agronomy, the AI and the machine learning and as I mentioned I was just meeting some dealers and some of our Agronomy partners are extremely excited about this technology really help them solve some of their.

Avner Applbaum: I'm excited about Valmont's journey as a company that maximizes financial performance through the cycles made possible by an unwavering discipline on capital allocation and ROIC.

Timothy Francis: Now I'll turn it over to Tim for a third quarter financial review and updated outlets. Thank you, Abner, and good morning, everyone. Turning to slide 9 and third quarter results, my comments will focus on the adjusted results as outlined in the press release and in the RIGG disclosure in the presentation appendix. Third quarter net sales of $1.1 billion decreased 4.3 percent as infrastructure sales were comparable to last year offset by lower agriculture sales.

Its problems our dealers are excited our growers are excited but really we're going to focus on the core the core of our business is how do we help solve the growers.

Most immediate needs and do more with less and improve their yields et cetera.

So we continue to manage our entire <unk> suite and then we are leaders in that space, we have revenue of overall pick up great.

Greater than $100 million, and we will continue to build on that and expand while we keep on focusing on the growers and solving their solutions.

Timothy Francis: Accounting for the 2022 divestiture of the offshore wind business reported in the other segment, sales decreased 2.3 percent year over year. Despite lower sales, operating income increased 5.9 percent to 120.8 million dollars and operating margins increased to 11.5 percent. Reflecting higher pricing that was not linked to steel commodity costs and delivered actions to improve overall costs of goods sold. Deluted earnings per share grew 18.1 percent to $4.12 a third quarter record. A favorable tax rate driven by recent legislation regarding usage of foreign tax credits generated in Brazil and benefits from R&D expenses, along with ongoing actions to improve profitability, drove the EPS improvement.

And I'll jump in and answer your question I think it was specific on the timing. So I dropped one attention to you. If you go back and look at corn futures in the United States in mid May they were still strong compared to the pricing that you can see today of let's say $4 or $4 90.

So at the time of Investor day, there really wasn't this indication yet of a downward more downward North American AG market.

And what we have seen this happen today.

As you look at goodwill and certain intangible assets you're required to test them annually.

Our annual testing date is the end of August so qualitatively, we really didn't have a reason to do a test between our annual impairment tests. So of course, we would've done to test third quarter of last year, we had to do with test third quarter of this year. There was nothing qualitatively they told us we needed.

Timothy Francis: As Avner mentioned earlier, we initiated an organizational re-alignment program to drive cost optimization, simplify our operating structure and strengthen our shared service model. We estimate 2023 cash expense in the range of $33 to $36 million, dollars. Approximately $16 million will be recognized within the infrastructure segment, with the remainder split evenly between the agriculture segment and corporate. These cash chargers are expected to be recovered through lower operating costs within 12 months. Turning to the segments in slide 10, infrastructure sales of $75.1 million will compare both last year, driven by higher volumes, notably in the solar, L&T, and PDNAS product lines.

To do a test in that interim period between our two annual testing dates.

Got it and maybe just one follow up for me so the.

It sounds like from what I have said the recurring kind of strategy had not been it had not been.

Working to the extent that that you were hoping it was his decision here.

Does that is that it all kind of part and parcel of the new strategy or this. This this would have happened regardless is this is not just a you know kind of a management decision to have a little less focus on on the press parasite.

No absolutely not where we're very much focused and we do believe it has a value proposition now I'll just point out of course, we like every other company, we like recurring revenue, which is recurring and how strong margins and we'll keep on benefiting from that we're not necessarily going to go after recurring revenue revenue if that is.

Timothy Francis: Lower telecommunication, volumes, and lower pricing associated with the reduced cost of steel in the TES product line, more than offset higher pricing across the rest of the portfolio. Operating income increased to $108 million, or 14.3% of net sales. Delivered actions to improve cost of goods sold, drove the margin improvement. Moving to slide 11, agriculture sales of $298.5 million decreased 8.8% year over year. Higher international volumes were more than offset by lower North America volumes, and a slightly less favorable product mix.

If we're solving a problem for our customer and the the outcome of that is that we can provide recurring revenue that that is a great outcome, but we're not going to go like I said, you know specifically outside of our core to try and drive recurring revenue.

Got it I will leave it there I appreciate it.

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

Hey, great. Thanks, Hey, after that that the realignment and sort of new initiatives that you're putting in place.

Do you expect these to be largely complete prior to year end, such that the business and the cost structure sort of positioned how you want it to be as we go into 2024 is this going to be inaccurate.

Timothy Francis: In North America, sales were lower as farmer sentiment remained somewhat muted, and the third quarter of 2022 benefited from the ongoing delivery of elevated backlog. International sales were higher due to higher project sales in the MIA region and growth in Brazil. Additionally, sales of agriculture technology products and services were similar to last year. Operating income decreased to $38.5 million, or 13% of net sales. Improvement and growth profit margins, partially attributed to deflation in the cost of steel, was more than offset by higher SGNA.

Bill is what well into next year.

Yeah. Thanks for the question so.

We took this realignment.

And I will mention that we never take it lightly when this has involved employees, but it's really what we need to do for this organization in order to drive us forward and it really helps us as we continue to drive our strategy really helps us to be more focused and helps us to streamline processes make stronger.

Timothy Francis: As I've mentioned earlier, during the third quarter, we performed our annual impairment testing of goodwill and other intangible assets, and concluded that the carrying value of the agriculture technology reporting unit exceeded its market value, leading to an impairment of approximately $137 million. The impairment test considers several factors, the most important of which are projected operational cash flows, and the after-tax discount rate. Significantly slower growth and grower adoption rates in prosperous agronomy technology solutions resulted in much slower financial projections than originally modeled.

Wait for a decision.

By kind of reducing some of the management layers, we get better visibility into the business.

And these actions I believe will really drive significant value going forward.

To answer specifically your question, yes, we should be pretty much done with the with the alignment by the end of the year a lot of the actions we've already have already taken place we put the management team in place and we're ready to move forward, but there's a.

Realigned organization.

Okay. I appreciate that and then can you just remind us that the project based business visibility.

That you have.

To execute.

Timothy Francis: Other contributing factors to the impairment charge were the recent decline in the North American agriculture market, and a higher discount rate attributed to higher interest rates. Turning to cash flows on slide 12, third quarter operating cash flows of $81.3 million were driven by diligent working capital management, primarily reductions in inventory. Turning to slide 13 for summary of year-to-date capital deployment. In the third quarter capital expenditures were $26 million, as we continue to invest in strategic capacity expansion.

I guess in the fourth quarter and maybe into 'twenty four I guess I'm speaking specifically Egypt.

Hum.

Any help in terms of what the contribution could be over the next several quarters and how does the conversion of that pipeline of business.

<unk> at all in terms of converting sort of opportunities out there in the actual orders or theres still some good prospects to add to that backlog and near term.

Yep.

Okay. So overall this a large each of project that we won which really provides egypt with a lot of their food security, which today, we kind of you know they refer to it as you know there are national security as part of our approach to that region, where we could really help these.

Timothy Francis: Through our balanced capital allocation framework, we are focused on enhancing shareholder value. In the third quarter, we return to approximately $44 million to shareholders through dividends and sharing purchases, ending the quarter with approximately $173 million in cash. Moving to slide 14, total debt to adjusted EBIDA of 1.5 times was within our desired range of 1.5 to 2.5 times. Our cash balances, available credit and flexible balance sheet, provide us with ample liquidity to execute our capital allocation strategy.

Country dry food security specifically this project is going into 'twenty 'twenty four and we'll continue in <unk>.

Projects can always move right now anticipation is would go into.

The rest of 2024 and of course, we are watching very closely the conflict in the middle East and evaluating if that has any impact on us going forward, but we continue to.

Timothy Francis: I would now like to review our updated 2023 outlook as shown on slide 15. Given the timing of international agriculture project shipments and continued near-term toughness and toughness in telecommunications markets, we now expect full-year sales to decrease between 3 to 4% compared to last year. Despite lower volumes, we expect operating margin improvement year over year, and our strong third quarter results carried forward into our full-year EPS growth expectations. I'd also like to note that the previous adjusted EPS outlook has been updated to remove adjustments associated with the Prospera technology and tangible asset amortization and stock-based compensation, totaling approximately $0.65 per share.

Be excited about the region, we believe we have a very strong.

Value proposition there with our have the strong presence we have in that area in Dubai, we have good relationships with these with the customers.

And these countries.

And we continue to manage our pipeline and being very disciplined around our projects that we pursue and looking forward to since you know driving a strong sales in that region.

Okay. Thank you.

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

Good morning, Thanks for taking my questions.

I just wonder if you could make any comment as you look into next year around what you expect for sales volume in the various businesses from utility to highway Poles to international and domestic irrigation just even a rough range, where do you think these businesses are going to be in terms of sales.

Timothy Francis: We believe these revisions provide better transparency to investors going forward, and they became less meaningful to separately disclose as operating income has grown. Turning to the segments, continued strength across infrastructure markets support our expectations for higher sales this year. In agriculture, we expect fourth quarter international sales to be higher compared to prior year. This will be more than offset by lower North America sales as 2022 benefited from shipment of elevated backlog.

William.

Next year.

Hey, Brian It's Tim I'll take that question at a high level it could be a very dynamic market environment as we've seen this year.

So I'll start with infrastructure, we expect to see the strength in the two utility product lines like we've seen this year.

We do see a continued muted demand in the telecommunications market and then the commercial piece our balance sheet.

Timothy Francis: A higher sales mix of international projects will slightly reduce agriculture segment profitability in the fourth quarter as compared to last year. As a reminder, the timing of international project shipments can be hard to predict from quarter to quarter. We assume a full-year adjusted effective tax rate of 26% to 26.5% when considering the favorable tax legislation in third quarter that I previously mentioned.

In agriculture.

We expect to end this year with.

With a more historical normal backlog, so lower than the global backlog, we saw in 2022 and although our recent order rates in North America have improved year over year.

We will provide of course, a comprehensive outlook in February on 'twenty 'twenty four when we released our fourth quarter earnings are another key aspect I would say is the USDA will release their net farm income projections in December that'll be a key component of that outlook that we do provide in February.

Timothy Francis: To summarize, we are leveraging our global scale to improve margins, drive strong cash generation, and generate sustainable shareholder value.

Avner Applbaum: With that, I will now turn the call back over to Amber. Thank you, Tim. Continuing my comments on slide 16, I am proud of our team's ability to execute our strategy driving solid results while navigating cart market dynamics. We remain focused on controlling the things we can control to hit our financial targets and improve our quality of earnings. We are taking actions to enable a more efficient and effective organizational structure to fully realize the benefits of ongoing strategic initiatives, with a continued focus on delivering high-value solutions through investments and innovation.

You just alluded to we do see a solid pipeline of international projects.

Yeah.

Yep.

Okay.

And on the infrastructure side.

Utility Poles business next year.

My understanding is that lead times are still very high.

Hi, and that business is basically more demand and supply are you doing some things to free up some capacity.

Shouldn't that be a growth business and in terms of volume in 2024.

Charlie Let me add a little more color on that.

Absolutely that has a very strong growth.

Business for us and not only for the next year, but for the for the next decade, and we we've taken specific steps to actually improve our lead times and actually were able to test during this quarter to get them below 30 weeks, which is which is a really great spot spot for us to you and of course, we have different product lines and different.

Avner Applbaum: We are confident our diversified portfolio with compelling long-term drivers and our focus strategy positions Valmont for success now and into the future.

Renee Campbell: I will now turn the call back over to Renate. Thank you, Anna.

Unknown Executive: At this time, the operator will open up the call for questions. Thank you. At this time, we'll be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue and for a participant choosing speaker equipment and maybe necessary to pick up your handset before pressing the star keys. To allow as many questions as possible, please limit yourselves to one question and one follow-up question. One moment, please, will we pull for questions.

Within that.

[noise] business. So you know some of the lead times are greater than others, but in our main kind of steel area, we've been able to drop it below 30 weeks, which really keeps us are supporting our customers being very competitive in that area.

Cheap on triangle, finding opportunity to capitalize on this very strong market. If it's anywhere in the transmission area to the distribution Substations, where we're seeing tremendous growth. We're really have great products in that area that can support a lot of the energy transition so absolutely.

We're very excited about the utility space with our flexible footprint with a oh amount of products. So we have the innovation we have going on there really to help support these utilities as they look forward to harden the grid.

Nathan Jones: Our first question is from Nathan Jones with Steve Foll, please proceed. Nathan, anyone?

Avner Applbaum: Good morning, everyone. Good morning. I guess I'll start off, Abner. You made some comments about, you know, some at least minor changes if not major changes in the strategy here going forward. So I guess the question first is, can you expand on those kinds of things? What are some more details on what the changes to the strategy are? And then the financial targets that Valmont laid out in May, did those still hold?

<unk> addressed the low drove the electrification.

Avner Applbaum: I mean, it sounds like maybe a bit more measured pace on investments, so maybe the growth numbers are towards the lower end, but the realignment adds to margins, so maybe the margin at the higher end. Just any more colleague you can give us on kind of what's changing strategically within the business. Okay, thank you, Nathan, for the questions. Okay, let me start off with the strategy. And as I mentioned, we really evaluated our strategy, and conclusion was, is we have a robust and very targeted strategy around our core competencies.

Connectivity to other renewable.

Sources. So overall, yes, we're very excited about the utility space.

Okay.

I'm just trying to get to thank you I'm trying to get a sense for what you have in your mind right now about next year in terms of volume growth for the business because I I get that telecom will be muted probably down again next year commercial stuff.

These arent huge parts of the business I mean high highway infrastructure utility International AG I mean, I think those are her up domestic CAG is more of a question Mark.

Overall for the business.

I mean nominal sales growth be volatile steel price to some extent, but.

I think what is this a portfolio that you think going into next year as it grows in terms of volume or not.

Yeah. This is Tim I would say for the on the infrastructure side.

There will be the growth in tea DNS and the transportation piece of L. N T. So I would tell you I would expect based on what I know today that we would see seeing seeing low single digit volume growth in 2024 in the infrastructure segment.

Avner Applbaum: We have very strong markets going forward in both infrastructure and agriculture, and we will really continue to focus on the areas where we could focus on our customers' most challenging and pressing needs. And we will continue to support those areas on growing in both of those segments. If I need to give you some specific examples, maybe I could touch to, for instance, the drone services we actually just put a press release a few days ago.

And you know maybe maybe I'll just brought in a little bit the conversation around the agriculture, and we will provide a lot more information during our next earnings call as we provide the outlook for the year.

Avner Applbaum: You know, in one area that we found that it's really compelling to us, for instance, this is telecom. The climbers have these companies need climbers, they need to climb towers, there's shortage of people. We could with our drone services really supplement them to be more safe and solve their problem. Now, there are a lot of areas where we're focusing on drones, for instance, some of them was really cool technology around the utility area we could really help them.

We're really now I'm looking at the trends in agriculture.

We just take a step back we.

We had record years for the farmers net farm income.

Record levels going.

Going into 'twenty, one 'twenty two are the farmers made a lot of money.

Commodities were elevated you've seen corn was around seven and which is the main crop for the U S. Soy was around 17 or 18, which is the main crop for Brazil.

Avner Applbaum: Clean their polls, but it's not really their pressing needs today and usually could fall to the back of the line when they look at their O&M spends, so we're going to really focus on, you know, how can we help them solve their pressing needs, either in utility space or in the telecom space and really go after those areas where we could help solve our customers, most pressing needs. Our strategy is solid, we're confident in our ability to continue to drive significant growth in both of our segments.

They had tremendous years now as you as we move into as we moved into this year that as we move into next year.

Overall globally, I would say that the farmers getting a little bit squeezed because interest rates are higher there was higher inflation.

Commodities are a little bit Ah at.

Lower levels, so he's being squeezed he always looks that compares with the prior years, but overall they they made really good profits. They made good money they have very strong balance sheets and the other question is.

Are they going to continue to invest now for the future are they going to be a little more muted. We have seen we're very encouraged by the increased order rates in Q4, but we're really as we're as its been up everything NAMIC environment. We're just going to wait a few more months were gonna see how they end up the year, we'll have them New USDA report.

Avner Applbaum: Now specifically to the five year targets that we provided during investment, our investor day, and your point for our valid there, you know, as you go into any long term strategy and financial projections, right. You look at the markets, you look at the initiative and as I look at them today, as we start off, we are first year into the five years is weaker than we anticipated. I mean, of course, our starting point is going to be a little bit lower.

Coming out in December we'll see how the tsunami impacts Brazil. So theres just a lot of moving pieces and over the next few months, we'll have a lot more visibility and we'll be able to give.

Avner Applbaum: Of course, we would assume a cycle and we have. But, you know, the timing of some of our growth could be a little different and that could impact our long term growth. Now, specifically as it relates to some of these initiatives, yes, you know, specifically we talked about Prospera. We had some forecast in there for our growth and it's not going to be as high as we expected. And he's trying to balance in every outlook anywhere between, you know, you always have the optimism versus realism as you go into a strategic plan and some of these initiatives have were on more on the optimistic side.

Our analysts and our investors are really good feel for how does 2024 hour shaping out.

Okay. Thanks very much.

Our next question is from Ryan Connors with North Coast Research. Please proceed.

Great. Thanks for taking my question and I'm glad to hear your employees and family are safe and sound there.

I wanted to go back to Prospera and talk about that from a bit of a different angle in terms of.

In terms of process what was what was learned in the process, what what went wrong in the process.

I know you mentioned that was a partnership so I assume it was a negotiated deal and not an auction I mean, what was talk about the price discovery part of the process that got you to the 300 million valuation.

And just anything you can tell us about about the process due diligence valuation and what was learned and what could change what can be improved going forward on capital deployment.

Avner Applbaum: And we're going to take a more measured approach to a lot of these initiatives again to make sure we're really focusing on the core supporting our customers and really how do we drive the strongest value both to our customers and to our shareholders. So, that's kind of on the sales side. Very feel really good about the, the range or the financial targets, you know, we're making good progress on our operating margin quality of improvement.

Thank you Rob for your question and thanks, Thanks for the comments as well.

You know overall, when we went in and acquired Prospera.

Like you mentioned, we had a partnership that that went back to 2019. It was a transformative acquisition. It was a company with with minimal revenue a very exciting technology, a very exciting value proposition with really a tremendous amount of potential and we still believe there is tremendous amount of potential.

Avner Applbaum: We continue to show progress quarter after quarter, including in Q3, so making great progress on the operating margin, making great progress on the ROIC as we have to focus on driving our capital efficiencies. Improve profitability and so on. So overall at a very high level, very excited about our outlook over for the next five years. We got good tailwind in our markets. The singular drivers are very strong and we're planning to execute on our plan to drive shareholder value. Thanks for that color.

So although some of the assumptions are regarding some of the growth and the adoption rate of growers in general didn't didn't pan out and.

It's a new space for us, but in general I would say that tech in agriculture is an evolving space.

For us and for the whole industry and we made some.

<unk> at the time that that really didn't pan out and of course, there's tremendous amount of due diligence that goes into every company that we buy.

Timothy Francis: I guess my follow up question is going to be on pricing. You're obviously seeing some headwinds in pricing on on the utility pole business where you can actually have to pass this deal pricing back through. And we obviously start lag on the way up and so we'll see it catch up on the way down here. Can you just talk about the aggregate pricing impact we're looking at maybe in the fourth quarter and as you look into next year, we've obviously some headwinds in the utility business.

Putting the projections as well as the as the purchase price.

I think what is more important is really looking forward and as I looked at acquisitions. Looking forward is we're really going to be focused on companies that have full alignment with our strategic plans that really tie to our core businesses. Our core competencies how can we expand the offer.

To our customers how could we expand the reach and expand our capacity our capability, but are really tied to our core businesses and in fact I've already started to go through our portfolio to our funnel of companies are really looking at the ones that are not core to us are ones that we're just we're not going to pursue so that's on the street.

Timothy Francis: Do you still see pricing opportunities and other parts of the business and then if you're seeing any pricing pressure in the ag business as demand is a bit weaker there in the US. Yes, along with the lowest deal projects.

Timothy Francis: Good morning, Nathan, it's Tim, I'll take that one. So we are, let me start off, we're very pleased across the infrastructure business in terms of what we've been able to do with pricing when it's, it's in our businesses that don't have that contractual mechanism tied to steel costs indices. As you alluded to, there has been tremendous volatility in the cost of steel. It's been as low as $670 all the way up to $1,200 kind of in the middle of second quarter.

T J side under Phil on the financial filter side, but we have specific criterias, there, which apply to our overall our criterias for beating cost of capital was three years, and we will stick to those financial criteria and making sure that every acquisition both fits distress strategy.

As well as the financial filters to make sure we will drive.

Timothy Francis: That dynamic is probably going to continue, right? We got the United auto worker strike. That might get resolved with for today might not, but we expect to see that continued volatility in the cost of steel. But we expect to be able to maintain good margins in those contracts where we have that mechanism tied to the steel indices. But then there's the other part of course of our utility business, which is the bid market.

Value to our shareholders and to our customer.

Customers.

We acquire companies so.

You won't see that going forward, we will.

You will not see transformation transformative companies at this magnitude going forward, they're gonna be a lot more closely tied to the court.

Got it Okay fair enough.

And then my second one I wanted to go back to the electric transmission discussion there a minute ago.

Obviously these are very long lead time projects, sometimes years, or even a decade or more and planning so spy.

A spike in interest rates is not going to impact your near term project funnel or 'twenty 'twenty four but obviously some of the renewable generation utilities have gotten absolutely demolished since this interest rates Spike took place and the concern is.

Timothy Francis: And there, I'd also like to comment that we continue to see strong pricing as we try to get more orders there. Turning to agriculture, we see no change in our philosophy of being a leader on price. And let me add to that Nathan, you know, just several weeks ago, I went out to our dealer conference out in Boise, Idaho, and spend time with some of our dealers out there. And really there was no discussion about pricing.

A slowdown in rate base growth as some of those renewable projects don't happen so logically.

Logically at some point that would impact transmission investment I would assume so.

What are your thoughts on that.

What's kind of timeline that lag effect might be on the transmission business.

Hum.

An interesting question and an interesting dynamic actually what we are seeing that the higher interest rate the higher inflation.

Timothy Francis: They're very happy with the value they get from our pivot. They were very happy with our, with the value proposition, with our technology offering. And we continue to maintain that strong partnership with our dealers and help drive value to our growers. So, you know, we keep on maintaining our leadership position in that market and evaluate the situation as we move forward. Great.

Nathan Jones: Thanks for taking my question.

Higher costs in general are are there, they're actually impacting D V D season, and these players in the space because if you look at their at their source of income.

Actually no it was impacted by by by two things one we actually had a mild summer. So their income what was lower and in fact some of their rates are fixed over the next several years. So their their topline is squeezed or.

Christopher Moore: Our next question is from Chris Moore with CDS securities. Please proceed. Hey, good morning. Thanks for taking a few questions. Yeah, maybe we could start with Prospera. So obviously, investor day was discussed in very positive terms. You know, I've already seen some signs of softness in North America Ag. Just trying to understand kind of what has changed between now and then and then perhaps as part of that question is, you know, the time frame on the Prospera analysis is it more heavily weighted when you're doing the calculations to figure out the goodwill impairment. Thanks for the question.

It remains the same and their profit actually get squeezed in some areas. So we are seeing.

Project movements, where they're actually applying their discretion in deciding what projects. They wanted to work on now versus delay.

Into the future now thankfully the demand is so strong.

And one of our really strong capabilities is our dynamic and flexible.

Print, where we have the ability to pull projects, then push projects out and really support our customers.

They go through their.

Avner Applbaum: Let me start off with some background and overview on Prospera, Kim can then address the timing of the impairment. I'd like to go back to just several years where we actually started a partnership with Prospera in 2019 and really the vision was to transform the center pivot to from an irrigation machine to an autonomous crop management. So we could really enhance crop precision, we could save the growers time, reduce costs, optimize land usage, and of course increase yields.

Through their process.

Planning their orders so we are seeing a lot of movement.

For the outside you won't see that because we really have great processes and great footprint to address that so it might be seamless, but theres a lot of a lot of work that goes.

Avner Applbaum: Fast forward 2021, there was a decision to expand the strategy, able to prevent beyond traditional pivot acres and really pursuing recurring revenue from a subscription based agronomy tech solutions. And as we mentioned, that strategy really didn't pan out as planned. We're going back to the original view of how can we provide autonomous crop management? How could we use all the technology suite that we offered to our growers anywhere from remote monitoring control, irrigation optimization, and of course the agronomic insight that we're very pleased with the technology around the agronomy, the AI and the machine learning.

Behind the scenes, where we're actually able to continue to drive the growth. So we're really.

The demand is going to outpace the supply and therefore, we will continue driving the.

Gross now specifically on solar Yeah, you won't you are seeing a lot of the players in the space that are definitely impacted by higher interest rates higher financing.

What we are seeing that but.

It's a it's a very high growth business and we're able to continue to grow and where we really play in the D. G space, where we're able to get a lot of good momentum. We are globally. So we're getting benefits from all the regions that were.

Currently operating in so there's a lot of moving pieces I'd say in general the whole economy, you are seeing impacts from.

Interest rates and inflation and labor constraints, but without with our competencies with the strong markets, where we're able to navigate through these times and really drive growth high growth in Peru, both T D N S and solar.

Yeah.

Understood. Thanks for your time.

Avner Applbaum: And as I mentioned, I was just meeting some dealers and some of our agronomy partners are extremely excited about this technology can really help and solve some of their biggest problems. Our dealers are excited, our growers are excited, but really we're going to focus on the core. The core of our business is how do we help solve the growers most immediate needs and do more with less and improve their yields, et cetera.

Yeah.

Our final question is from Brian Wright with breath M. Can please proceed.

Thanks, Good morning, just wanted to.

Take a little deeper on act.

The coming from the improved order rates in North America year over year I mean.

Are you kind of indicating that the north American revenues in the fourth quarter should be you know should have should should stabilize year over year or even be up slightly based on what you're seeing at least as of right now to start if we could start with that and then I've got a couple of follow up on that.

Avner Applbaum: So we continue to manage our entire tech suite and we are leaders in that space, we have revenue of overall tech of greater than $100 million and we will continue to build on that and expand while we keep on focusing on the growers and solving their solutions.

This is Tom I'll take that question.

North America, frankly globally for agriculture, a little bit more dynamic than that right.

Backlog.

We had such a record backlog for the past few years and we've been.

Avner Applbaum: And I'll jump in and after your question, I think it was specific on the timing. So I draw one attention to you. If you go back and look at corn futures in the United States in mid-May, they were still strong compared to the pricing that you can see today of what say $4 or $4.90. So at the time of investor day, there really wasn't this indication yet of a downward, more downward North American market than what we have seen has happened today.

Immediately reducing that backlog back down to what it's been more like historical norms through 2023.

So although we are.

Excited to see the order rates improving.

You got to also think about it from the backlog perspective is.

And then Brian I just wanted one more point right. We we've already seen throughout the last 12 months that that a month is not a trend and right and so we are really being very measured we're going to really take a close. We're excited it was very nice to see the order rate increase year over year that it's a very good sign but again, but let's wait a few more.

Avner Applbaum: As you look at Goodwill and certain intangible assets, you're required to test them annually. Our annual testing date is the end of August. So qualitatively, we really didn't have a reason to do a test between our annual impairment tests. So of course we would have done a test third quarter of last year. We had to do a test third quarter of this year. There was nothing qualitatively that told us we needed to do a test in that interim period between our two annual tests.

And see how that all pans out as we kind of continue looking forward. We're excited it's always good to see that the order rate going up but again, it's been very dynamic. So we're gonna be very cautious about kind of how we look at that business in the short term.

Okay and then my my my follow up is is the indication on to them.

Avner Applbaum: I got it. And maybe just one follow-up for me. So it sounds like from what Avner said, the recurring kind of strategy had not been working to the extent that you were hoping it was. Is the decision here? Is that it all kind of a part and parcel of the new strategy or this would have happened regardless? This is not a management decision to have a little less focus on the press parasite?

The profit level being lower year over year and that's that's just a function of typically there's more of an international.

It's just that there's more of an international mix in the third quarter. There and then there is in the fourth quarter or so so the operating profit will be down third quarter to fourth quarter was that meant to be a sequential.

Comment or was that a year over your comment as far as the operating profit I just wanted to make sure I got that right.

I believe it was more of a year over year comment he goes back to my soccer.

Avner Applbaum: Absolutely, not. We're very much focused. We do believe it has a valid proposition. I'll just point out, of course, we like every other company. We like recurring revenue which is recurring, it has from margins and we'll keep on benefiting from that. We're not necessarily going to go after recurring revenue. If that is, if we're solving a problem for our customer and the outcome of that is that we can provide recurring revenue, that's that is a great outcome. But we're not going to go, like I said, specifically outside our core to try and drive recurring revenue. Got it. I will leave it there.

Christopher Moore: I appreciate it.

But yes, it'll be down year old, let me be more definitive it'll be down year over year and it's due to the higher mix of international project sales this year versus last year.

Okay, and then one last one if I could just.

On the international for the fourth quarter and the orders I know you know the rainfall has been pretty.

Sparse and in Mato Grasso for September and October. So so just kind of any kind of order level commentary that we're seeing you know early fourth quarter.

Brent Thielman: Our next question is from Brent Sealman with DA Davidson. Please proceed. Great. Thanks. Avner, the realignment and sort of new initiatives that you're putting in place. Do you expect these to be largely complete prior to year end such that the business and the cost structure sort of positioned how you want it to be as we go into 2024?

And internationally.

Yeah, So again, where we're monitoring kind of our order intake it a little bit different dynamic a comparison year over year, just because of how the phenomena played out last year was it was for full year and now they're doing it quarterly so that is impacting some of the order patterns, we're actually digging into that as we speak to try to get a better understanding how much is driven.

But the order intake how much is based based on just to kind of the pricing of the soybeans, So where we're looking at it right now we'll be able to provide a lot more color as we go into the next several months.

Avner Applbaum: Is this going to be an effort that feels well in the next year? Yeah, thanks for the question. So, overall, we took this realignment and I will mention that we never take it lightly when this is involved employees, but it's really what we need to do for this organization in order to drive us forward and it really helps us as we continue to drive our strategy. It really helps us to be more focused.

Okay. Thank you so much.

Thank you. This will conclude 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 for playback on our website or by phone for the next seven days, we look forward to speaking with you again next quarter.

Avner Applbaum: It helps us to streamline processes, make stronger, quicker decision by kind of reducing some of the management layers. We get better visibility into the business and these actions, I believe, will really drive significant value going forward and pants are specifically your question. Yes, we should be pretty much done with the alignment by the end of the year. A lot of the actions we've already taken place. We put the management team in place and we're ready to move forward with this realigned organization.

Included in this discussion are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Avner Applbaum: Okay, appreciate that.

These forward looking statements are based on assumptions that management has made in light of experience in the industries in which <unk> 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 statements are not guarantees of performance or results.

Avner Applbaum: And then can you just remind us that the project-based business visibility that you have to execute, I guess, in the fourth quarter and maybe into 24, I guess I'm speaking specifically Egypt. Any help in terms of what the contribution could be over the next several quarters and has the conversion of that pipeline of business changed it all in terms of converting opportunities out there in the actual orders or there's still some good prospects and got back run, in your term.

They involve risks uncertainties, some of which are beyond the belmond <unk> control and assumptions.

Although management believes that these forward looking statements are based on reasonable assumptions you should be aware that many factors could affect valmont actual financial results and cause 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 and as that month's reports to the securities and Exchange Commission as well as future economic and market circumstances industry conditions.

Avner Applbaum: Yeah, okay. So, overall, this large-eager project that we want, which really provides Egypt with a lot of their food security, which today we kind of, you know, they've referred to that as, you know, their national security mispart of our approach to that region where we could really help these countries drive food security. Specifically, this project is going into 2024 and we'll continue and projects can always move right now anticipation is, would go into the rest of 2024.

Performance and 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 for government.

<unk> 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 statements. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Yeah.

Avner Applbaum: And of course, we are watching very closely the conflict in the Middle East and evaluating if that has any impact on us going forward, but we continue to be excited about the region. We believe we have a very strong value proposition there with our, have the strong presence we have in that area in Dubai, we have good relationships with the customers in these countries. And we continue to manage our pipeline being very disciplined around projects that we pursue. And looking forward to continuing driving us strong self in that region.

Okay.

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Okay.

Okay.

Avner Applbaum: Okay, thank you.

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Okay.

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Brian Wright: Our next question is from Brian Drive with William Blair, please proceed. Good morning. Thanks for taking my question.

Timothy Francis: Just wonder if you could make any comment as you look into next year around what you expect for sales volume in the various businesses from utility, the highway, poles, to international and domestic irrigation, just even a, you know, rough range. Where do you think these businesses are going to be in terms of sales volume next year? Hey, Brian. It's Tim. I'll take that question. At a high level, it could be a very dynamic market environment as we've seen this year.

Hum.

Okay.

Timothy Francis: So I'll start with infrastructure. We expect to see the strength in the two utility product lines like we've seen this year. But we do see continue muted demand in the telecommunication market and then the commercial piece of L&T. In agriculture, we expect to end this year with a more historical normal backlog. So lower than the global backlog we saw in 2022. Although our recent order rates in North America have improved year over year.

[music].

Timothy Francis: We will provide, of course, a comprehensive outlook in February on 2024 when we release our fourth quarter earnings. Another key aspect I would say is the USDA will release their net farm income projections in December. That will be a key component of that outlook that we do provide in February. As Avner just alluded to, we do see a solid pipeline of international projects. Okay.

Timothy Francis: On the infrastructure side, I mean, in the utility polls business next year, my understand the lead times are still very High in that business is basically more demand than supply. Are you doing some things to free up some capacity? Shouldn't that be a growth business in terms of volume in 2024? Sure, let me add a little more color on that. Absolutely. That is a very strong growth business for us and not only for the next year, but for the next decade.

Timothy Francis: We've taken specific steps to actually improve our lead times and actually were able to during this quarter to get them below 30 weeks, which is a really great spot for us to you. Of course, we have different product lines and different within that business, so some of the lead times are greater than others. But in our main kind of steel area, we've been able to drop it below 30 weeks, which really keeps us supporting our customers, being very competitive in that area.

Timothy Francis: And keep on finding opportunity to capitalize on this very strong market, if it's anywhere in the transmission area to the distribution, to substations where we're seeing tremendous growth. We really have great products in that area that can support a lot of the energy transition. So absolutely, we're very excited about the utility space with our flexible footprint, with a amount of products that we have, the innovation we have going on there really to help support these utilities as they look forward to harden the grid, address the load growth, the electrification, the connectivity to other renewable sources. So overall, yes, we're very excited about the utility space. Okay, I guess I'm just trying to get thank you.

Timothy Francis: I'm trying to get a sense for what you have in your mind right now about next year in terms of volume growth for the business, because I get that telecom will be muted, probably down again next year commercial stuff. These aren't huge parts of the business. I mean, highway infrastructure, utility, international ag. I mean, I think those are part of domestic ag is more of a question mark. I mean, overall for the business, I mean, nominal sales will be volatile, steel price to some extent, but is this a portfolio that you think going into next year grows in terms of volume or not?

Timothy Francis: Yeah, this is Tim. I would say for the on the infrastructure side, there will be the growth in TD and S and the transportation piece of L and T. So I would tell you I would expect based on what I know today that we would see seeing single single digit volume growth in 2024 in the infrastructure segment.

Timothy Francis: And you know, maybe I'll just broaden a little bit the conversation around the agriculture and we will provide a lot more information during our next earnings call as we provide the outlook for the year. But we're really now looking at the trends in agriculture. I mean, if we just take a step back, we had record years for the farmers net farm income was record levels going into 21, 22, the farmers made a lot of money.

Timothy Francis: The commodities were elevated. You've seen corn was around seven and which is the main crop for the US. So I was around 17 or 18, which is the main crop for Brazil. They had tremendous years. Now as we move into as we move into this year and as we move into next year overall globally, I'd say that the farmers getting a little bit squeezed because interest rates are higher. There's higher inflation commodities are a little bit lower levels.

Timothy Francis: So he's being squeezed. He always looks at compares it to prior years. But overall they made really good profits. They made good money. They have very strong balance sheets. And now the question is, are they going to continue to invest now for the future? Are they going to be a little more muted? We have seen, we're very encouraged by the increased order rates in Q4. But we're really as we're, as it's been a very dynamic environment, we're just going to wait a few more months. We're going to see how they end up the year. We'll have them new USDA report coming out in December. We'll see how the tsunami impacts Brazil. So there's just a lot of moving pieces.

Timothy Francis: And over the next few months, we'll have a lot more visibility and we'll be able to give our analysts and our investors a really good deal for how does 2024 outshade. Yeah. Okay.

Brian Wright: Thanks very much.

Ryan Connors: Our next question is from Ryan Connors with North Coast Research. Please proceed. Great.

Avner Applbaum: Thanks for taking my question and I'm glad to hear your your employees and family are safe and sound there. Wanted to go back to Prospera and talk about that from a bit of a different angle in terms of terms of process. You know, what was what was learned in the process? What went wrong in the process? You know, I know you mentioned that was a partnership. So I assume it was a negotiated deal and not an auction.

Avner Applbaum: I mean, what was talk about the price discovery part of the process that got you to the 300 million valuation. And just anything you can tell us about about the process due diligence valuation and what was learned and what can change, you know, what can be improved going forward on capital deployment. Thank you, Rand, for your question and thanks. Thanks for your comments as well. You know, overall, when we went and acquired Prospera, like you mentioned, we had a partnership that went back to 2019.

Avner Applbaum: It was a transformative acquisition. It was a company with minimal revenue, a very exciting technology, a very exciting value proposition with really tremendous amount of potential. So when we still believe there is tremendous amount of potential, although some of the assumptions regarding some of the growth and the adoption rate of growers in general didn't didn't pan out and it's a new space for us. But in general, I would say that tech and agriculture is an evolving space for us and for the whole industry.

Avner Applbaum: And we made some assumptions at the time that really didn't pan out. And of course, this tremendous amount of due diligence echoes into every company that we buy, including the projection as well as the purchase price. I think what is more important is really looking forward and as I look at acquisitions looking forward is we're really going to be focused on companies that have full alignment with our strategic plans that really tied to our core businesses, our core competencies.

Avner Applbaum: How can we expand the offering to our customers, how could we expand the region, expand our capacity, our capabilities, but are really tied to our core businesses. And in fact, I've already started to go through our final of companies and really looking at the ones that are not core to us are ones that we're not going to pursue. So that's on the strategic side. On the financial filter side, we have specific criteria that would apply to our overall criteria for beating cost of capital was three years.

Avner Applbaum: And we will stick to those financial criteria and making sure that every acquisition both fits the strategy as well as the financial filters to make sure we will drive value to our shareholders and to our customers while we acquire companies. You will see that going forward. You will not see transformative, transformative companies at this magnitude going forward. They're going to be a lot more close and tied to the core. Got it.

Avner Applbaum: Okay, fair enough. And then my second one, I wanted to go back to the electric transmission discussion there a minute ago. And, you know, obviously, these are very long lead time projects. Sometimes years are even a decade or more in planning. So, you know, a spike in interest rates is not going to impact your near term project funnel or 2024. But, obviously, some of the renewable generation utilities have gotten absolutely demolished since this interest rate spike took place.

Avner Applbaum: And the concern is, you know, a slow down and rate base growth as some of those renewable projects don't happen. So, you know, logically, at some point, that would impact transmission investment, I would assume. So, what are your thoughts on that? And what kind of timeline that lag effect might be on the transmission business? It's actually an interesting question and interesting dynamic. Actually, what we are seeing that the higher interest rate, the higher inflation, higher cost in general are, they're actually impacting DCC's and these players in the space.

Avner Applbaum: Because if you look at their source of income, actually, now it was impacted by two things. One, we actually had a mild summer. So, their income was lower. And in fact, some of their rates are fixed over the next several years. So, their top line is squeezed or remains the same. And their profit actually gets squeezed in some areas. So, we are seeing project movements where they're actually applying their discretion and deciding what project they want to work on now versus delay into the future.

Avner Applbaum: Now, thankfully, the demand is so strong. And one of our really strong capabilities is our dynamic and flexible footprint. And we have the ability to pull projects and push projects out and really support our customers as they go through their process of planning their orders. So, we are seeing a lot of movement for the outside. You won't see that because we really have great processes and great footprint to address that. So, it might be seamless, but there's a lot of work that goes behind the scenes where we're actually able to continue to drive the growth.

Avner Applbaum: So, really, the demand is going to outpace the supply and therefore we will continue driving the growth. Now, specifically on solar, yeah, you are seeing a lot of the players in the space that are definitely impacted by higher interest rates, higher financing. We are seeing that, but it's a very high growth business and we're able to continue to grow and we really play in the DG space where we're able to get a lot of good momentum.

Avner Applbaum: We are globally, so we're getting benefits from all the regions that we're currently operating in. So, there's a lot of moving pieces, I think, in general, the whole economy. You are seeing impacts from interest rates and inflation and labor constraints, but without with our competencies, with the strong markets, we're able to navigate through these kinds and really drive growth, high growth and both TDNS and so.

Ryan Connors: Thanks for your time.

Brian Wright: Our final question is from Brian Wright with Russ MKM. Please proceed. Thanks. Good morning. Just wanted to pick a little deeper on Ag. The comments on the improved order rates in North America year over year.

Brian Wright: I mean, are you kind of indicating that North American revenues in the fourth quarter should be, you know, should have should should stabilize year over year or even be up slightly based on what you're seeing at least as of right now to start it's who could start with that and then I've got a couple of follow up from that. This is Tim, I'll take that question. So North America, frankly, globally for agriculture it's a little bit more dynamic than that, right?

Brian Wright: The backlog, we had such a record backlog for the past few years and we've been meaningfully reducing that backlog back down to what has been more like historical norms through 2023. So although we are excited to see the order rates improving, you got to also think about it from the backlog perspective as well. And Brian, I just want to have one more point, right? We've already seen throughout the last 12 months that a month is not a trend and right and so we are really being very measured.

Brian Wright: We're going to really take a closer. We're excited. It was very nice to see the order rate increase year over year that it's a very good sign. But again, let's wait a few more months and see how that all pans out as we kind of continue looking forward. We're excited. It's always good to see the order rate going up, but again, it's been very dynamic. So we're going to be very cautious about kind of how we look at that business in the short term.

Timothy Francis: Okay. And my follow up is the indication on the profit level being lower year over year. And that's just a function of typically there's more of an international. It's just that there's more of an international mix on the third quarter there and then there's in the fourth quarter. So the operating profit will be down third quarter to fourth quarter with that meant to be a sequential comment or was that a year over your comment as far as the operating profit.

Timothy Francis: I just want to make sure I got that right. I believe it was more of a year over year comment. I'm going back to my talker. But yes, it'll be down year. Let me be more definitive. It'll be down year over year. And it's due to the higher mix of international project sales this year versus last year. Okay.

Timothy Francis: And in one last one, if I could just aren't on the international for the fourth quarter in the orders. I know, you know, the rainfall has been pretty sparse and in Montagrato for September and October. So just kind of any kind of order level commentary that we're seeing, you know, early fourth quarter in international. Yeah, so again, we're monitoring kind of our order intake a little bit different dynamic comparison year over year just because of how the tsunami played out last year was it was for a full year and now they're doing it quarterly.

Timothy Francis: So that is impacting some of the order patterns. We're actually digging into that as we speak to try to get a better understanding how much is driven just by the order intake, how much is based based on just kind of the pricing of the soybean. So we're looking at it right now.

Brian Wright: We'll be able to provide a lot more color as we go into the next several. Okay, thank you so much.

Unknown Executive: Thank you.

Renee Campbell: This will conclude the question and answer session.

Renee Campbell: 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.

Renee Campbell: We look forward to speaking with you again next quarter. Included in this discussion are forward booking 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 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.

Renee Campbell: As you listen to and consider these comments, 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. 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. These factors include, among other things, risk factors described from time to time in Valmont's reports to the securities and exchange commission, as well as future economic and market circumstances, industry conditions, company performance, and financial results.

Renee Campbell: 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 questions that any forward looking statement included in this discussion is made as of the day of this discussion, and the company does not undertake to update any forward looking statement.

Unknown Executive: This concludes today's teleconference. You made this connect your lines at this time. Thank you for your participation.