Q2 2024 Valmont Industries Inc Earnings Call

Unknown Executive: Star zero on your telephone keypad.

Todd.

Unknown Executive: As a reminder, this conference is being recorded.

As a reminder, this conference is being recorded.

Renee Campbell: It is now my pleasure to introduce your host, Renee Campbell, Senior Vice President, Vester Relations, and Treasurer. Thank you, you may begin.

Speaker Change: It is now my pleasure to introduce your host Renee Campbell Senior Vice President Investor Relations and Treasurer. Thank you you may begin.

Operator: Star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Renee Campbell, Senior Vice President, Investor Relations, and Treasurer. Thank you. You may begin. Thank you and good morning.

Avner Applbaum: Thank you and good morning.

Renee L. Campbell: Thank you and good morning, welcome to Valmont industries second quarter 2024 earnings call.

Renee L. Campbell: Welcome to Valmont Industries' second quarter 2024 earnings call. With me today are Avner Applbaum, President and Chief Executive Officer, and Tim Francis, Interim Chief Financial Officer. This morning, Avner will provide a summary of our second quarter results.

Avner Applbaum: Welcome to Valmont Industries, Second Quarter, 2024 Earnings Call. With me today are Avner Applbaum, President and Chief Executive Officer, and Tim Francis, Interim Chief Financial Officer. This morning, Avner will provide a summary of our second quarter results, current market dynamics, and strategic priorities. Tim will review our second quarter financial performance and provide our updated outlook and indications for the year, with closing remarks from Avner.

Speaker Change: With me today are Abner, Apple Baum, President and Chief Executive Officer, and Tim Francis Interim Chief Financial Officer.

This morning, Andrew will provide a summary of our second quarter results current market dynamics and strategic priorities.

Renee L. Campbell: Current Market Dynamics and Strategic Priorities. Tim will review our second quarter financial performance and provide our updated outlook and indications for the year, with closing remarks from Avner. This will be followed by Q&A. A live webcast of the presentation will accompany today's call and is available for download from the webcast or on the investor's site at Valmont.com. A replay will be available on our website later this morning.

Speaker Change: Tim will review, our second quarter financial performance and provide our updated outlook and indications for the year with closing remarks from after this will be followed by Q&A.

Avner Applbaum: This will be followed by Q&A.

Speaker Change: 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.

We play will be available on our website later this morning.

Renee L. Campbell: Please note that this call is subject to our disclosure on forward-looking statements, which applies to today's discussion, is outlined on slide 3 of the presentation, and will be read in full at the end of today's call. Finally, to stay updated on Valmont's latest news releases and information, please sign up for email alerts on our investor site. We also invite you to follow Valmont and our brand on the social media channels linked on our website. With that, I would like to turn the call over to Avner. Thank you, Renee.

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

Speaker Change: Finally to stay updated with Belmont latest news releases and information. Please sign up for email alerts on our investors site. We also invite you to follow Belmont and our brands on the social media channels linked on our website.

Renee Campbell: Please sign up for email alerts on our investor's site. We also invite you to follow Valmont and our brand on the social media channels linked on our website.

Avner Applbaum: With that, I would like to turn the call over to Avner.

Speaker Change: With that I would like to turn the call over to Avner.

Avner Applbaum: Thank you, Rene.

Avner: Thank you Amy good morning, everyone and thank you for joining us.

Avner M. Applbaum: Good morning, everyone, and thank you for joining us. Beginning on slide 5, our second quarter results reflect the commitment of our 11,000 employees worldwide to delivering exceptional value through innovation, quality, and service. Their relentless dedication to customer satisfaction, operational excellence, and cost management has enhanced profitability and fostered resilience in dynamic market conditions. As a result, we expanded operating margins to 14.2%, up 140 basis points over last year, with diluted earnings per share growing to $4.91. I'm pleased with the progress we're making in delivering stronger results, even on comparable sales. However, infrastructure segment sales were lower year over year.

Avner Applbaum: Good morning, everyone, and thank you for joining us. Beginning on slide five, our second quarter results reflect the commitment of our 11,000 employees worldwide to delivering exceptional value through innovation, quality, and service. The relentless dedication, the customer satisfaction, operational excellence, and cost management has enhanced profitability and fostered resilience in dynamic market conditions. As a result, we expanded operating margins to 14.2%, up 140 basis points over last year, with diluted earnings per share growing to $4.91.

Avner: Beginning on slide five our second quarter results reflect the commitment of our 11000 employees worldwide for delivering exceptional value through innovation quality and service.

Avner: Their relentless dedication to customer satisfaction operational excellence.

Speaker Change: <unk> managed room has enhanced profitability and fostered resilience and dynamic market conditions.

Avner: As a result, we expanded operating margin to 14, 2%.

Avner: Mm 140 basis points over last year.

Avner: With diluted earnings per share growing to $4.91.

Avner Applbaum: I'm pleased with the progress we're making in delivering stronger results, even on comparable sales. Infrastructure segment sales were lower year over year, while volumes in transmission, distribution, and substation, which we refer to as utility, are higher. We produced a greater mix of distribution and substation products to accommodate our customers. This shift, along with slower telecom and solar volumes, and the effect of a lower seal index and price impact is sales growth. While a mix change can affect top-line growth in any given quarter, we always aim to enhance profitability and return on invested capital. By focusing on footprint flexibility and leveraging strong market demand, we're steadily expanding and adjusting our factory output to meet evolving customer needs.

Avner: I am pleased with the progress were making and delivering stronger results even on comparable sales.

Speaker Change: Infrastructure segment sales were lower year over year.

Avner M. Applbaum: While volumes in transmission, distribution, and substation, which we refer to as utility, were higher, we produced a greater mix of distribution and substation products this quarter to accommodate our customers. This shift, along with lower telecom and solar volumes and the effect of a lower steel index on price, impacted sales growth. While a mixed change can affect top-line growth in any given quarter, we always aim to enhance profitability and return on invested capital.

Speaker Change: While volumes in transmission distribution, and substation, which we referred to as utility or higher we produced a greater mix of distribution and substation products this quarter to accommodate our customers there.

Speaker Change: This shift along with slower telecom and solar volumes.

Speaker Change: And the effect of a lower steel index on price.

Speaker Change: <unk> sales growth.

Speaker Change: While the mix change can affect top line growth in any given quarter, we always aim to enhance profitability and return on invested capital.

Speaker Change: By focusing on footprint flexibility and leveraging strong market demand, we're steadily expanding and adjusting our factory output to meet evolving customer needs.

Avner M. Applbaum: By focusing on footprint flexibility and leveraging strong market demand, we're steadily expanding and adjusting our factory output to meet evolving customer needs. Additionally, we continue strategic pricing action to capture the value we provide. Agriculture segment sales were slightly higher this quarter.

Avner Applbaum: Additionally, we continue strategic pricing actions to capture the value we provide.

Speaker Change: Additionally, we continued strategic pricing actions to capture the value we provide.

Avner Applbaum: Agricultural segment sales were slightly higher this course. In North America, severe storm events in May and June, primarily in the Midwest and Southern US, drove strong demand for placement equipment. During this summer, an exceptionally severe weather, our team has shown an outstanding ability to quickly build and deliver equipment during the critical growing season. This responsiveness ensures our dealer and growers receive essential support precisely when they need it most.

Speaker Change: Agriculture segment sales were slightly higher this quarter.

Avner M. Applbaum: In North America, severe storm events in May and June, primarily in the Midwest and Southern U.S., drove strong demand for replacement equipment. During this summer of exceptionally severe weather, our team has shown an outstanding ability to quickly build and deliver equipment during the critical growing season. This responsiveness ensures our dealers and growers receive essential support precisely when they need it most. In international markets, continuing market softness in Brazil pressured growth this quarter.

Speaker Change: In North America severe storm events in May and June.

Speaker Change: Primarily in the Midwest and Southern U S drove strong demand for replacement equipment.

Speaker Change: During this summer up exceptionally severe weather our team has shown an outstanding ability to quickly build and deliver equipment during the critical growing season.

Speaker Change: This responsiveness ensures our dealer and growers receive essential support.

Speaker Change: Besides me when they need it most.

Avner Applbaum: In international markets, continuing market softness in Brazil pressured growth this quarter. Alternatively, we're seeing good momentum in our Middle East project business with a strong multi-year pipeline in the region.

Speaker Change: In international markets continued market softness in Brazil pressured growth this quarter.

Avner M. Applbaum: Alternatively, we're seeing good momentum in our Middle East project business with a strong multi-year pipeline in the region. Overall, I'm encouraged by our ability to execute and drive profitability. Our success demonstrates the strong corporate capabilities shared across our organization and the value creation potential enabled by the Valmont business model. Turning to slide 6 for current market dynamics and long-term megatrends for infrastructure businesses, starting with utility. Industry capex spending remains elevated.

Speaker Change: Alternatively, we're seeing good momentum in our Middle East project business with a strong multiyear pipeline in the region.

Avner Applbaum: Overall, I'm encouraged by our ability to execute and drive profitability. Our success demonstrates the strong corporate capabilities shared across our organization and the value creation potential enabled by the Valmont business model.

Speaker Change: Overall, I'm encouraged by our ability to execute and drive profitability.

Speaker Change: Our success demonstrates the strong core capabilities shared across our organization and the value creation potential enabled by development business model.

Avner Applbaum: Turning to site 6 for current market dynamics and long-term mega trends for infrastructure business. Starting with utility, industry cap extending remains elevated. We're at the beginning of a multi-year energy transition marked by significant changes in both energy consumption and generation. Valmont products play a crucial role in connecting renewable energy sources to the grid and supplying more electricity toward risk load growth. Additionally, aging infrastructure requires upgrades to create greater resiliency, increasing the demand for our steel, concrete, and hybrid products. The album for transportation remains strong, driven by a national priority to upgrade and expand critical infrastructure.

Speaker Change: Turning to slide six for current market dynamics and long term megatrends for infrastructure business.

Speaker Change: Starting with utility.

Speaker Change: Industry Capex spending remains elevated.

Avner M. Applbaum: We are at the beginning of a multi-year energy transition marked by significant changes in both energy consumption and generation. Valmont products play a crucial role in connecting renewable energy sources to the grid and supplying more electricity to address load growth. Additionally, aging infrastructure requires upgrades to create greater resiliency, increasing the demand for our steel, concrete, and hybrid products. The outlook for transportation remains strong, driven by a national priority to upgrade and expand critical infrastructure.

Speaker Change: We're at the beginning of a multiyear energy transition marked by significant changes in both energy consumption and generation.

Speaker Change: Belmond products play a crucial role in connecting renewable energy sources to the grid and supplying more electricity toysrus load growth.

Speaker Change: Additionally, aging infrastructure require upgrades to create greater resiliency, increasing the demand for steel concrete and hybrid products.

Speaker Change: The outlook for transportation remained strong driven by a national priority to upgrade and expand critical infrastructure.

Avner Applbaum: We expect IIGA funding to provide a solid tailwind to project financing for years to come, despite labor shortages and funding delays slowing project buildouts in the near term.

Avner M. Applbaum: We expect IIJA funding to provide a solid tailwind to project financing for years to come, despite labor shortages and funding delays slowing project build-outs in the near future. Commercial lighting markets remain muted but are expected to recover with single-family housing starts.

Speaker Change: We expect the IHA a funding to provide a solid tailwind to project financing for years to come despite labor shortages and funding delays slowing project build outs and the near term.

Speaker Change: Commercial lighting markets remained muted, but I expect it to recover with single family housing starts.

Avner Applbaum: Commercial lighting markets remain muted, but I expect it to recover with single-family housing starts. As we've previously discussed, telecom carriers have scaled that cap expand and are likely to maintain more normalized spending levels following a period of record investment. The increasing demand for data due to advanced technology and connected devices requires a robust and widespread network infrastructure. In solar, this market remains attractive with strong demand drivers. Solar continues to be the lowest cost energy solution supporting renewable energy objectives.

Speaker Change: As we've previously discussed telecom carriers by scale back Capex plans and are likely to maintain more normalized spending levels. Following a period of record investment.

Avner M. Applbaum: As we've previously discussed, telecom carriers have scaled back CAPEX plans and are likely to maintain more normalized spending levels following a period of record investment. The increasing demand for data due to advanced technology and connected devices requires a robust and widespread network infrastructure. In solar, this market remains attractive with strong demand. Solar continues to be the lowest cost energy solution supporting renewable energy objectives.

Speaker Change: The increasing demand for data due to advanced technology and connected devices requires a robust and widespread network infrastructure.

Speaker Change: In solar this market remains attractive with strong demand drivers solar continues to be the lowest cost energy solution supporting renewable energy objectives.

Avner Applbaum: We have made adjustments to our commercial strategies to enhance the profitability of this business, which I will highlight later on the call.

Avner M. Applbaum: We have made adjustments to our commercial strategies to enhance the profitability of this business, which I will highlight later in the call. Finally, our coatings business continues to align with GDP trends while supporting our internal production. These multi-year infrastructure megatrends are also driving demand for the superior corrosion protection provided by Zinc-Galvanized. Turning to slide 7 for current market dynamics and long-term megatrends for agriculture. While North American order rates trended higher this quarter due to the recent storm events, grower sentiment in the U.S. remains muted due to the expected decline in farm income this year and the downward trend in grain prices.

Speaker Change: We have made adjustments to our commercial strategies to enhance the profitability of this business, which I will highlight later on the call.

Avner Applbaum: Finally, our coatings business continues to align with GDP trends while supporting our internal production. These multi-year infrastructure mega trends are also driving demand for the superior corrosion protection providing by zinc galvanizing.

Speaker Change: Finally, our coatings business continues to align with GDP trends, while supporting our internal production.

Speaker Change: These multiyear infrastructure Mega trends are also driving demand for the superior corrosion protection, providing by zinc galvanizing.

Avner Applbaum: Turn it to slide seven for current market dynamics and long-term mega trends for the agriculture. business. While North American order rates trended higher this quarter due to the recent storm events, growers' sentiment in the US remains muted due to the expected decline in farm income this year and the downward trend in grain prices. International market demand is mixed. In Brazil, we are seeing continued soft demand as farm income remains pressured by lower grain prices. The recent renewal of the tsunami financing program reaffirms the Brazilian government support for agriculture with favorable irrigation loans to growers. While we anticipate continued market softness in the near term, Brazil remains a key part of our long-term growth strategy.

Speaker Change: Turning to slide seven for current market dynamics and long term megatrends in the agriculture business.

Speaker Change: While north American order rates trended higher this quarter due to the recent storm events grower sentiment in the U S remains muted due to the expected decline in net farm income this year and the downward trend in grain prices.

Avner M. Applbaum: International market demand is mixed. In Brazil, we are seeing continued soft demand as farm income remains pressured by lower grain prices. The recent renewal of the Tsunami Financing Program reaffirms the Brazilian government's support for agriculture, with favorable irrigation loans to grow it.

Speaker Change: International market demand is mixed in Brazil, we are seeing continued soft demand as farm income remains pressured by lower grain prices.

Speaker Change: The recent renewal of the tsunami financing program reaffirms the Brazilian government support for agriculture with favorable irrigation loans to growers.

Avner M. Applbaum: While we anticipate continued market softness in the near term, Brazil remains a key part of our long-term growth strategy. The pivot provides a compelling return on investment, made even stronger by the region's potential for a third growing season. The International Projects Pipeline remains strong and provides a multi-year line of sight. Our current project in Egypt and the $50 million in Middle East projects we announced last quarter remain on track. There is a rising demand to ensure food security globally, a challenge intensified by growing populations and geopolitical conflict.

Speaker Change: While we anticipate continued market softness in the near term, Brazil remains a key part of our long term growth strategy.

Avner Applbaum: The pivot provides a compelling return on investment made even stronger by the region's potential for a third growing season. The international project pipeline remains strong and provides a multi-year line of sight. Our current project in Egypt and the $50 million in Middle East projects we announced last quarter remain on track.

Speaker Change: The pivot provides a compelling return on investment made even stronger by the region's potential for third growing season.

Speaker Change: The International project pipeline remains strong and provides a multi year line of sight.

Speaker Change: Our current project in Egypt, and the $50 million.

Speaker Change: In Middle East projects, we announced last quarter remain on track.

Avner Applbaum: There is a rising demand to ensure food security globally, a challenge intensified with growing populations and geopolitical conflicts. With our manufacturing footprint, strong dealer network, and advanced technology solutions, we can deliver on these large projects, which are essential to our global growth strategy. That month's market meeting products and technology solutions improve productivity on the farm by optimizing resources such as water, labor, and other input costs. We are well positioned to build on our proven track record of successfully meeting growers' needs.

Speaker Change: There was a rising demand to ensure food security globally, a challenge intensified with growing populations and geopolitical conflicts.

Avner M. Applbaum: With our manufacturing footprint, strong dealer network, and advanced technology solutions, we can deliver on these large projects, which are essential to our global growth strategy. Valmont's market-leading products and technology solutions improve productivity on the farm by optimizing resources such as water, labor, and other inputs. We are well positioned to build on our proven track record of successfully meeting growers' needs. To summarize, in both segments, our outlook for sustained long-term growth remains strong, despite short-term demand headwinds in some of our markets. These multi-year megatrends drive demand and provide a solid foundation for future growth. We are positioning Valmont to capitalize on these trends while delivering long-term shareholder value. Turning to slide 8.

Speaker Change: With our manufacturing footprint strong dealer network and advanced technology solutions, we can deliver on these large projects, which are essential to our global growth strategy.

Speaker Change: That month's market, leading products and technology solutions improved productivity on the farm by optimizing resources, such as water labor and other input costs.

Speaker Change: We are well positioned to build on our proven track record of successfully meeting growers' needs.

Avner Applbaum: To summarize, in both segments, our outlook for sustained long-term growth remains strong, despite short-term demand headwinds from some of our markets. These multi-year mega trends drive demand and provide a solid foundation for future growers. We are positioning Velma to capitalize on these trends while delivering long-term shareholder value.

Speaker Change: To summarize in both segments our outlook for sustained long term growth remains strong despite short term demand headwinds in some of our markets.

Speaker Change: These are multiyear megatrends drive demand and provide a solid foundation for future growth.

Speaker Change: We are positioning Belmont to capitalize on these trends, while delivering long term shareholder value.

Avner Applbaum: Turning to slide 8, the Velma business model defines our approach to maximize value creation. Executing these strategic focus areas while upholding our core values strengthens my confidence and our ability to add for form our serve markets. Since stepping into the CEO role last year, I've worked with our team to refine our strategy and concentrate growth on the areas that align with our core competencies. By focusing on customer needs, we aim to enhance value and returns while providing the best support. We're beginning to see benefits of this refined strategy and the actions we're taking to align our team according.

Speaker Change: Turning to slide eight development.

Avner M. Applbaum: The Valmont business model defines our approach to maximize value creation. Executing these strategic focus areas while upholding our core values strengthens my confidence in our ability to outperform our served market. Since stepping into the CEO role last year, I've worked with our team to refine our strategy and concentrate growth in areas that align with our core competencies. By focusing on customer needs, we aim to enhance value and returns while providing the best support.

Speaker Change: Development business model defines our approach to maximize value creation.

Speaker Change: Executing these strategic focus areas, while upholding our core values strengthens my confidence in our ability to outperform our served markets.

Speaker Change: Since stepping into the CEO role last year I've worked with our team to refine our strategy and concentrate growth in areas that align with our core competencies.

Speaker Change: By focusing on customer needs, we aim to enhance value and returns while providing the best support.

Speaker Change: We're beginning to see benefit of this refined strategy and the actions, we're taking to align our team accordingly.

Avner M. Applbaum: We're beginning to see the benefits of this refined strategy and the actions we're taking to align our team accordingly. For example, last fall, we took steps to streamline the organization to create a more efficient and effective structure while reducing costs.

Avner Applbaum: For example, last fall, we took steps to streamline the organization to create a more efficient and effective structure while reducing costs. We are now more nimble and better able to make decisions while supporting our operations. The next step is responsibly focusing our commercial and operational teams on opportunities that deliver the greatest value and drive the highest return. This is captured by the phrase commercial execution and operational execution. We saw benefits from this refocus in utility discord as the team produced a greater mix of distribution and sub-patient structures, enhancing margins while accommodating our customers by allocating resources more effectively. We expect to achieve further efficiency as we advanced the strategy.

Speaker Change: For example, <unk>.

Speaker Change: This fall, we took steps to streamline the organization to create a more efficient and effective structure, while reducing costs.

Avner M. Applbaum: We are now more nimble and better able to make decisions while supporting our operation. The next step is refocusing our commercial and operational team on opportunities that deliver the greatest value and drive the highest return. This is captured by the phrase commercial execution and operational. We saw benefits from this refocus and utility this quarter, as the team produced a greater mix of distribution and substation structures, enhancing margins while accommodating our customers.

Speaker Change: We are now more nimble and better able to make decisions, while supporting our operations there.

Speaker Change: The next step is refocusing, our commercial and operational team and opportunities that deliver the greatest value and drive the highest return.

Speaker Change: This is captured by the phrase commercial execution and operational excellence.

Speaker Change: We saw benefits from this refocus and utility this quarter.

Speaker Change: As a team produced a greater mix of distribution and substation structures enhancing margins, while accommodating our customers.

Avner M. Applbaum: By allocating resources more effectively, we expect to achieve further efficiencies as we advance the strategy. Another great example is the actions we're taking in our solar business. We are exiting certain low-margin solar projects as we focus on enhancing profitability and return on invested capital.

Speaker Change: Allocating resources more effectively we expect to achieve further efficiencies as we advance the strategy.

Avner Applbaum: Another great example is the actions we're taking in our solar business. We are exiting certain low-margin solar projects as we focus on enhancing profitability and return on invested capital. While this approach will impact revenue growth this year, we believe that further enhances our competitiveness and drives sustained growth towards our profitability targets.

Speaker Change: Another Great example is the actions we're taking in our solar business. We are exiting certain low margin solar projects as we focus on enhancing profitability and return on invested capital.

Avner M. Applbaum: While this approach will impact revenue growth this year, we believe it further enhances our competitiveness and drives sustained growth towards our profitability target. We are excited about the future of our solar business. By building on our success in distributed generation, we are driving geographic expansion supported by a strong global organizational structure. We are dedicated to advancing industry standards and will continue investing to deliver innovative solutions that meet our customer needs. Sustainability is a core element of who we are and is embodied in our promise of conserving resources and improving life.

Speaker Change: While this approach will impact revenue growth. This year, we believe that further enhances our competitiveness and drive sustained growth towards our profitability targets.

Avner Applbaum: We are excited about the future of our solar business. By building on our success and distributed generation, we are driving geographic expansion supported by a strong global organizational structure. We are dedicated to advancing industry standards and will continue investing to deliver innovative solutions that meet our customers' needs.

Speaker Change: We are excited about the future of our solar business by building on our success and distributed generation were driving geographic expansion supported by our strong global organizational structure we.

Speaker Change: We are dedicated to advancing industry standards, and we will continue investing to deliver innovative solutions that meet our customer needs.

Avner Applbaum: Turning to side nine, sustainability is a core element of who we are and is embodied in our promise of conserving resources and improving lives. Last month, we published our nine Sustainability report. We have demonstrated our commitment toward 20-25 environmental goals by surpassing three of our four stated targets. ESG remains a core focus of ours as we view it as fundamental to good business practices. It creates efficiency and cost saving, improved safety, manages risk, and fosters innovation. I'm pleased to report notable improvements in our 2023 safety metrics, as a safe and engaged workforce is our highest priority.

Speaker Change: Turning to slide nine <unk>.

Speaker Change: Sustainability is a core element of who we are and as embodied in our promise of conserving resources and improving lives.

Speaker Change: Last month, we published our <unk> sustainability report, we have demonstrated our commitment towards 2025 environmental goals by surpassing three of our four stated targets ESG remains a core focus of ours as we view it as fundamental to good business practices it creates efficiencies.

Avner M. Applbaum: It creates efficiency and cost savings, improves safety, manages risk, and fosters innovation. The report also features several product case studies that demonstrate our innovative solutions addressing resource challenges for our customers. Now, I'll turn it over to Tim for our second quarter financial review in an updated 2024 hour. Diluted earnings per share of $4.91 increased 16.6% year over year.

Speaker Change: And cost savings improved safety manages risks and fosters innovation.

Speaker Change: I am pleased to report notable improvement in our 2023 safety metrics.

Speaker Change: The safe and engaged workforce is our highest priority.

Avner Applbaum: The report also features several product case studies that demonstrate our innovative solutions addressing resource challenges for our customers. We've been recognized externally for ESG initiatives, showcasing our global teams' dedication to these priorities.

Speaker Change: The report also feature features several product case studies that demonstrate our innovative solutions addressing resource challenges for our customers.

Speaker Change: We've been recognized externally for our ESG initiatives showcasing our global team's dedication to these priorities.

Avner Applbaum: To summarize, I am proud of our strong results. We are managing what we can and have ambitious plans to enhance our competitive position in dry, profitable growth. Our value to stronger as earnings and working capital management have resulted in good cash generation supporting our capital allocation strategy. Our outlook is positive as we build a sustainable, high-performance culture that supports our growth objectives.

Speaker Change: To summarize I'm.

Speaker Change: Our strong results, we are managing what we can and have ambitious plans to enhance our competitive position and drive profitable growth.

Speaker Change: Our balance sheet is stronger as earnings and working capital management have resulted in good cash generation supporting our capital allocation strategy.

Speaker Change: Our outlook is positive as we build a sustainable high performance culture that supports our growth objectives now I'll turn it over to Tim for a second quarter financial review and an updated 2020 for outlook.

Timothy Francis: Now, I'll turn it over to Tim for our second quarter financial review in an updated 2024 outlook.

Timothy Francis: Thank you, Abner, and good morning, everyone. Turning to slide 11 and second quarter results, net sales of $1 billion were similar to last year. Operating income increased 10.2% to $147.3 million, and operating margins improved to 14.2% of net sales. Devoted earnings per share of $4.91 increased 16.6% year-over-year. This includes a tax benefit of approximately $3 million, or $0.15 per share, due to the reduction of evaluation allowance on a tax loss carry forward in a foreign subsidiary. The steps we implemented to control expenses and reduce our cost structure continue to have a favorable impact on our profitability.

Timothy P. Francis: Thank you avner and good morning, everyone.

Timothy P. Francis: Turning to slide 11, and second quarter results net sales of $1 billion were similar to last year.

Timothy P. Francis: Operating income increased 10, 2% to $147 $3 million and operating margins improved to 14, 2% of net sales.

Timothy P. Francis: Diluted earnings per share of $4 91 incur.

Timothy P. Francis: Increased 16, 6% year over year.

Timothy P. Francis: This includes a tax benefit of approximately $3 million or <unk> 15 per share due.

Timothy P. Francis: Due to the reduction in the evaluation allowance. The steps we implemented to control expenses and reduce our cost structure continue to have a favorable impact on our profitability. However, telecommunications volumes were lower this quarter.

Speaker Change: Due to the reduction of a valuation allowance on a tax loss carryforward in a foreign subsidiary.

Speaker Change: The steps, we implemented to control expenses and reduce our cost structure continue to have a favorable impact on our profitability.

Timothy Francis: Turning to the segments in slide 12, infrastructure sales of $762.7 million decreased 1% year over year. We were pleased with higher volumes in utility, even as the mix this quarter shifted to more distribution and substation structures. Also, average selling prices for utility products are slightly higher year over year. Through pricing excellence, our commercial team secured projects at pricing levels that offset the contractual price impact from steel index deflation. Telecommunications volumes were lower this quarter, but we do not expect any further year-over-year decline in telecom sales for the rest of the year. Solar volumes were also lower due to project timing.

Speaker Change: Turning to the segments on slide 12 infrastructure sales of $762 $7 million decreased 1% year over year.

Speaker Change: We were pleased with higher volumes and utility even as the mix this quarter shifted to more distribution and substation structures.

Speaker Change: Also.

Speaker Change: Average selling prices for utility products were slightly higher year over year.

Speaker Change: Through pricing excellence, our commercial team secured projects at pricing levels that offset the contractual price impact from steel index deflation.

Speaker Change: Telecommunications volumes were lower this quarter.

Timothy P. Francis: But we do not expect any further year-over-year decline in telecom sales for the rest of the year. Moving to slide 13, agriculture sales of $281.7 million grew slightly year over year. However, average irrigation selling prices were lower compared to last year, primarily due to targeted regional pricing actions.

Speaker Change: But we do not expect any further year over year decline in telecom sales for the rest of the year.

Speaker Change: Solar volumes were also lower due to project timing.

Timothy Francis: Operating income increased to $133.6 million, or 17.6% of net sales. Operating margin improvement was driven by improved commercial execution, including pricing strategies, lower cost of goods sold due to declining steel costs, and reduced SG&A expenses. We have begun to realize the benefits from strategic investments in our manufacturing facilities, enabling us to increase production of higher-margin products. Moving to slide 13, agriculture sales of $281.7 million grew slightly year over year. In North America, irrigation equipment volumes were significantly higher, driven by a large increase in replacement sales due to severe weather impacts. Average irrigation selling prices were lower compared to last year, primarily due to targeted regional pricing actions.

Speaker Change: Operating income increased to $133 6 million or 17, 6% of net sales.

Speaker Change: Margin improvement was driven by improved commercial execution.

Speaker Change: Including pricing strategies.

Speaker Change: Lower cost of goods sold due to declining steel costs and reduced SG&A expenses.

Speaker Change: We have begun to realize the benefits from strategic investments in our manufacturing facilities.

Speaker Change: Enabling us to increase production of higher margin products.

Speaker Change: Moving to slide 13.

Speaker Change: Agriculture sales of $281 $7 million grew slightly year over year.

Speaker Change: In North America irrigation equipment volumes were significantly higher driven by a large increase in replacement sales due to severe weather impacts.

Speaker Change: Average irrigation selling prices were lower compared to last year, primarily due to targeted regional pricing actions.

Timothy Francis: International sales decreased, primarily driven by significantly lower sales in Brazil due to normalizing backlog levels and lower grain prices impacting growers' buying behavior. The lower sales were partially offset by higher Middle East projects and the contribution from HR products acquisition. Operating income decreased to $40 million, or 14.3% of net sales. The benefit of reduced SG&A expenses was more than offset by the impact of lower volumes and pricing in Brazil. Turning to cash flows in liquidity on slide 14, second quarter operating cash flows were $130.8 million, nearly 50% higher than the second quarter of 2023, and we ended the quarter with approximately $163 million in cash.

Speaker Change: International sales decreased primarily driven by significantly lower sales in Brazil.

Speaker Change: Due to normalizing backlog levels, and lower grain prices impacting growers buying behavior.

Speaker Change: The lower sales were partially offset by higher middle east projects and the contribution from HR products acquisitions.

Speaker Change: Okay.

Speaker Change: Operating income decreased to $40 million or 14, 3% of net sales the.

Speaker Change: The benefit of reduced SG&A expenses was more than offset by the impact of lower volumes and pricing in Brazil.

Speaker Change: Turning to cash flows and liquidity on slide 14.

Timothy P. Francis: Turning to cash flows and liquidity on slide 14, second quarter operating cash flows were $130.8 million, nearly 50% higher than the second quarter of 2023, and we ended the quarter with approximately $163 million in cash through Earnings Growth and Diligent Working Capital Management. Our infrastructure operations team is steadily making progress on approved capital projects to expand our production capacity. Our capital deployment approach balances growth investments with returning cash to shareholders. I will now share our updated 2024 outlook, as shown on slide 16.

Speaker Change: Second quarter operating cash flows were $138 million nearly 50% higher than the second quarter of 2023.

Speaker Change: And we ended the quarter with approximately $163 million in cash.

Timothy Francis: We expect strong cash flows throughout 2024 through earnings growth and diligent working capital management. During the quarter, we reduced borrowings on our revolving line of credit by $90 million, and total debt to adjusted EBITDA of 1.7 times is within our desired range of 1.5 to 2.5 times. In flexible balance sheet, provide us ample liquidity to execute our capital allocation strategy.

Speaker Change: We expect strong cash flows throughout 'twenty 'twenty four.

Speaker Change: Through earnings growth and diligent working capital management.

Speaker Change: During the quarter, we reduced borrowings on our revolving line of credit by $90 million.

Speaker Change: And total debt to adjusted EBITDA of one seven times is within our desired range of one five to two five times.

Speaker Change: Our cash balances available credit and flexible balance sheet provide us ample liquidity to execute our capital allocation strategy.

Timothy Francis: Turning to slide 15 for a summary of capital deployment. Your today capital spending was $33.3 million. Our infrastructure operations team is steadily making progress on approved capital projects to expand our production capacity. Our acquisition strategy is sharply focused on natural adjacencies to our core capabilities that would enhance our portfolio or expand our addressable markets. Our capital deployment approach balances growth investments with returning cash to shareholders. Year to date, we return to approximately $40 million of capital to shareholders through dividends and share repurchases. Over the past year, including our $120 million accelerated share repurchase program, we have returned approximately $275 million to shareholders through dividends and repurchases.

Speaker Change: Turning to slide 15 for a summary of capital deployment.

Speaker Change: Year to date capital spending was $33 $3 million.

Speaker Change: Our infrastructure operations team is steadily making progress unapproved capital projects to expand our production capacity.

Speaker Change: Our acquisition strategy is sharply focused on natural adjacencies to our core capabilities that would enhance our portfolio or expand our addressable markets.

Speaker Change: Our capital deployment approach balances growth investments with returning cash to shareholders.

Speaker Change: Year to date, we returned approximately $40 million of capital to shareholders through dividends and share repurchases.

Speaker Change: Over the past year, including our $120 million accelerated share repurchase program, we have returned approximately $275 million to shareholders through dividends and repurchases.

Timothy Francis: I will now share our updated 2024 outlook as shown on slide 16. We are revising our net sales outlook to a sales decline between 1.5 to 3.5 percent from prior year. This reflects a strategic commercial adjustment we are making in our solar product line that will impact full your sales but has minimal effect on the profitability of the total segment. Additionally, the contractual price impact from steel indexed depletion is leading us to adjust our expected increase in utility sales downward from previous outlook assumptions. As a result of these two factors, full-year infrastructure sales are now expected to be between flat to up 1.5 percent compared to the prior year.

Speaker Change: I will now share our updated 2024 outlook as shown on slide 16.

Timothy P. Francis: We are revising our net sales outlook to a sales decline between 1.5 to 3.5% from the prior year. Additionally, the contractual price impact from steel index depletion is leading us to adjust our expected increase in utility sales downward from previous outlook assumptions.

Speaker Change: We are revising our net sales outlook to a sales decline between one five to three 5% from prior year.

Speaker Change: This reflects a strategic commercial adjustment, we are making in our solar part product line that will impact full year sales, but has minimal effect on the profitability of the total segment.

Speaker Change: Additionally, the contractual price impact from steel index deflation is leading us to adjust our expected increase in utility sales downward from our previous outlook assumptions.

Timothy P. Francis: As a result of these two factors, full-year infrastructure sales are now expected to be. I'd like to take a moment and expand on that. However, this impact will be partially offset by reduced SG&A expenses compared to last year. Streamlining our administrative function. I'm confident in our ability to continue delivering value for our stakeholders. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: As a result of these two factors full year infrastructure sales are now expected to be.

Speaker Change: Be between flat to up one 5% compared to prior year.

Timothy Francis: In agriculture, our outlook remains unchanged, with segment sales expected to be down between 10 and 15 percent compared to the prior year. In North America, despite the additional storm-related sales in quarter, we do not expect an improvement in our sales outlook this year due to current US farm income projections and recent downward trends in grain prices. We also expect continued market softness and result. We remain focused on pricing excellence and increasing adoption of our technology solutions. Even with the downward revision to our sales projection, we are increasing our outlook for diluted earnings per share to a range of $16.50 to $17.30.

Speaker Change: In agriculture, our outlook remains unchanged with segment sales expected to be down between 10, and 15% compared to prior year.

Speaker Change: In North America. Despite the additional storm related sales this quarter, we do not expect an improvement in our sales outlook. This year.

Speaker Change: Due to current U S farm income projections and recent downward trends in grain prices.

Speaker Change: We also expect continued market softness in Brazil.

Speaker Change: We remain focused on pricing excellence and increasing adoption of our technology solutions.

Speaker Change: Even with the downward revision to our sales projection, we are increasing our outlook for diluted earnings per share to a range of $16 50.

Speaker Change: $217 30.

Timothy Francis: We also expect earnings per share for the second half of 2024 to be below first half results. I'd like to take a moment and expand on that. In infrastructure, we anticipate full-year gross profit margins to improve compared to 2023, although they may not reach the level seen in the first half of this year because steel costs will be more aligned with the contractual steel index pricing to our customers. In agriculture, we expect that a higher mix of international projects during the second half of the year will pressure segment margins. However, this impact will be partially offset by reduced S-GNA expenses compared to last year.

Speaker Change: We also expect earnings per share for the second half of 2024 to be below first half results I'd.

Speaker Change: I'd like to take a moment and expand on that.

Speaker Change: In infrastructure we.

Speaker Change: We anticipate full year gross profit margins to improve compared to 2023.

Speaker Change: Though they may not reach the levels seen in the first half of this year because steel costs will be more aligned with the contractual steel index pricing to our customers.

Speaker Change: In agriculture, we expect that a higher mix of international projects during the second half of the year will pressure segment margins.

Speaker Change: However, this impact will be partially offset by reduced SG&A expenses compared to last year.

Timothy Francis: As we noted last quarter, we expect second half segment operating margins to be similar to the fourth quarter of 2023, which were 10.3% on an adjusted basis. We expect full-year consolidated S-GNA to be a smaller percentage of net sales compared to last year, reflecting the meaningful process improvements we've implemented.

Speaker Change: As we noted last quarter, we expect second half segment operating margins to be similar to the fourth quarter of 2023, which were 10, 3% on an adjusted basis.

Speaker Change: We expect full year consolidated SG&A to be a smaller percentage of net sales compared to last year, reflecting the meaningful process improvements we've implemented.

Avner Applbaum: With that, I will now turn the call back over to Avner.

Albert: With that I will now turn the call back over to Albert Thank.

Avner Applbaum: Thank you, Tim.

Albert: Thank you Tim.

Avner Applbaum: Turning to slide 17.

Speaker Change: Turning to slide 17.

Avner Applbaum: I'd like to close by thanking our global team. We're actively managing what we can by driving commercial and operational excellence, leveraging key strengths, and enhancing productivity across the organization. Streamlining our administrative functions has the improved operating margins and is creating sustainable shareholder value. Today, our company is more resilient and making steady progress on our strategic initiative, positioning us to achieve our long-term financial targets. Our team is delivering innovative solutions to our customers and growing markets that address vital megatrones. I'm confident in our ability to continue delivering value for our stakeholders.

Albert Thank: Like to close by thanking our global team.

Speaker Change: We're actively managing what we can by driving commercial and operational excellence.

Speaker Change: Average and key strengths and enhancing productivity across the organization.

Speaker Change: Streamlining our administrative functions.

Speaker Change: The improved operating margins and is creating sustainable shareholder value.

Speaker Change: Today, our company is more resilient and making steady progress on our strategic initiatives positioning us to achieve our long term financial targets.

Albert: Our team is delivering.

Speaker Change: If any of those solutions to our customers and growing market that interests vital mega trials.

Albert: I am confident in our ability to continue delivering value for our stakeholders.

Renee Campbell: I'll now turn the call back over to Renée.

germinate: I'll now turn the call back over to germinate.

germinate: Thank you Donna at this time, the operator will open up the call for questions.

Renee Campbell: Thank you, Avner. At this time, the operator will open up the call for questions. Thank you.

Donna: Thank you.

Unknown Executive: We will now be conducting a question and answer session. We ask that all callers limit themselves to one question and one follow-up. If you have additional questions, you may recue, and those questions will be addressed, time permitting. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line of them a question cue. You may press star two if you would like to remove your question from the cue. For participants using speaker equipment, it may be necessary to pick up your hands up before pressing the star keys.

Speaker Change: We will now be conducting a question and answer session. We ask that all callers limit themselves to one question and one follow up if you have additional questions you may re queue and those questions will be addressed time permitting.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line of my question queue you.

Donna: You May press Star two if you would like to remove your question from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. When we look at our solar business, we've made a strategic decision to exit products that are really more commoditized. We cannot add our engineering expertise,

germinate: All participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Unknown Executive: One moment, please, while we pull for questions. Thank you.

germinate: Please while we poll for questions.

Albert: Thank you. Our first question comes from the line of Chris Moore with CJS Securities. Please proceed with your question.

Christopher Moore: Our first question comes from a line of Chris Moore with CJS Securities. Please proceed with your question. Hey, good morning, guys. Thanks for taking a couple of questions.

Christopher Paul Moore: Hey, good morning, guys. Thanks for taking a couple of questions.

Avner Applbaum: I was hoping maybe we just go a little bit deeper on solar, you know, kind of on the strategic adjustments, just trying to understand a little bit better in terms of some of the projects that you are going to be exiting and, you know, just how the overall strategy, you know, kind of impacts beyond 20. 4. Thank you for the question, Chris, and good morning. When we look at our solar business, we've made a strategic decision to exit products that are really more commoditized. We cannot add our engineering expertise. We initially started along this road when we were supported by one of our customers, but as we looked into it, it's just not a business that we can add value.

Christopher Paul Moore: I was hoping maybe just go a little bit deeper.

Christopher Paul Moore: On solar you know kind of on the strategic adjustments just trying to understand a little bit better in terms of some of the projects that you are going to be exiting and and you know just how has the overall strategy you know kind of impacts beyond 'twenty four.

Christopher Paul Moore: Thank you for the question, Chris and good morning.

Speaker Change: When we look at our solar business. We've made a we made a strategic decision to exit products that are really more commoditize, we cannot add our engineering expertise. We initially started along this road when we were supporting one of our customers, but as we looked into it.

Avner M. Applbaum: We initially started along this road when we were supporting one of our customers, but as we looked into it, it's just not a business that we can add value to or hit our financial targets. So what we're doing is we're focusing on the areas where we are, where we can drive that value and drive financial results. And mostly, it's in the DG space.

Christopher Paul Moore: It's not a business that we can add value.

Avner Applbaum: We can hit our financial targets. So what we're doing is we're focusing on the areas where we are when we can drive that value and drive financial results. And mostly is in the DG space. So on the DG space, where our margins, we are improving them year over year, we are a large stable player and a pretty much underserved market. So what we bring to the table there is our deep knowledge, expertise, and the local countries that we play. We have a good track record going 15 years or so, providing a solution that provides low operational costs, low maintenance costs.

Christopher Paul Moore: We can hit our financial targets. So what we're doing is we're focusing on the areas where we are.

Christopher Paul Moore: Well, we can drive that value and drive financial results and mostly as the D. G space. So under D. G space, where our margins we are improving them year over year. We are a large stable player in a pretty much under served market.

Avner M. Applbaum: So in the DG space, where our margins are improving year over year. We are a large, stable player in a pretty much underserved market. So what we bring to the table there is our deep knowledge and expertise in the local countries that we play in. We have a good track record of going 15 years or so, providing a solution that provides low operational costs and low maintenance costs. Actually, our tracker itself, it fits very well into the smaller fields. Some of these DG fields have odd shapes, and our product fits very well in that area.

Christopher Paul Moore: So what we bring to the table there is our deep in knowledge expertise and the local countries that we play while we have a good track record going 15 years or so are providing a solution that provides little operational costs or maintenance costs actually our tracker itself.

Avner Applbaum: Actually, our tracker itself, it suits very well into the smaller fields. Some of these DG fields have odd shapes, and our product fits very well in that area. That's easy to install and allows for labor flexibility. So when we look at the DG space, we're doing very well in that area. We've actually increased our revenue in that space around 30% year over year. We're very pleased with the results. We're able to support our customers in the utility space, providing them with additional products. So we're going to be highly focused on that area where we can drive strong growth.

Christopher Paul Moore: Suits very well into the smaller fields. Some of these D. G fields have odd shapes, and our product fits very well in that area, that's easy to install.

Christopher Paul Moore: And it allows for labor flexibility.

Christopher Paul Moore: So when we look at the DG space, we're doing very well in that area. We've actually increased our revenue in that space around 30% year over year. We're very pleased with that result, we're able to support our customers in the utility space, providing them with additional products.

Christopher Paul Moore: So we're gonna be highly focused on that area, where we can drive strong growth at market is growing.

Christopher Moore: That market is growing, you know, 8% to 10% every year. So we're going to keep on serving that market and continue all in that room. It's helpful. I appreciate it.

Christopher Paul Moore: 10% every year.

Christopher Paul Moore: So we're going to keep on serving that market.

Christopher Paul Moore: Continuing along that road.

Speaker Change: Got it that's helpful. I appreciate it.

Avner Applbaum: And maybe just my follow up. North America Ag was strong this quarter, replacement sales. The god for the year didn't change. Just trying to understand if the mix between, you know, the decline of North America versus international, is that changing at all, even though the overall 10% to 15% decline says the same. Yeah, Chris, let me start off. Give some background and then to jump in. But overall, we did have a strong quarter with storms. I would like to point out, you know, it is the unfortunate reality and a way of life for a grower where they get hit with these storms. I just want to point out, it's not a given that we get that business.

Speaker Change: And maybe just for my follow up North American AG was was strong this quarter.

Christopher Paul Moore: Replacement sales.

Speaker Change: The guide for the year didn't change just trying to understand if the if the mix between you know the decline of North America versus international is that changing at all even though the overall you know 10 to 15 per cent decline stays the same.

Speaker Change: Yeah, Chris Let me start off give some background and then Tim can jump in but overall, we did have a strong quarter with storms I would like to point out is the unfortunate.

Avner M. Applbaum: That's easy to install and allows for labor flexibility. Got it. It's helpful. I appreciate it. Maybe just for my follow-up, North America Ag was strong this quarter. Yeah, Chris, let me start off, give some background, and then Tim can jump in.

Speaker Change: <unk> in a way of life for a grower where they'd get hit with these storms.

Avner M. Applbaum: But overall, we did have a strong quarter with storms. I would like to point out, you know, it is the unfortunate reality and a way of life for a grower where they get hit by these storms. I just want to point out that it's not a given that we get that business. You know, we utilize our strong dealer network. We're ready there with emergency stock, and with our supply chain, and we're able to get the farmers up quickly in a very critical time for them. So we did have a very strong quarter. Very helpful. I will leave it there. Good morning, everyone.

Timothy P. Francis: That's what I pointed out it's not a given that we get that business. We will utilize our strong dealer network are already there with the emergency stock with our supply chain.

Avner Applbaum: You know, we utilize our strong dealer network. We're ready there with the emergency stock with our supply chain. And we're able to get the farmers up quickly in a very critical time for them. So we did have a very strong quarter. We look more globally and look at some of the macros. What we are seeing, at least even in this quarter since last quarter, is that the grains themselves, the crops pricing is lower. I mean, going into last quarter, corn was closer to five or six years old. And now it's closer to four. You look at soy was over 12.

Timothy P. Francis: And we're able to get the the farmers up quick.

Timothy P. Francis: Quickly in a in a very critical time for them. So we did have a very strong.

Timothy P. Francis: Quarter, when we look more globally and looked at some of the macros are what we are seeing at least even even in this quarter since last quarter is that the grain themselves. The crops pricing is lower I mean going into into last quarter corn was closer to five or six.

Timothy P. Francis: Year, or so and now it's closer to four you look at soy.

Timothy P. Francis: Over 12, now it's a little bit below 11, so it is putting additional pressure on.

Timothy Francis: Now it's a little bit below 11. So it is push putting additional pressure on the farmer. And right now, there's there's really no indication that that the yields won't won't be good. And, you know, stocks to use ratio is still pretty high. So when you kind of factor those in, where we're expecting to have a challenging year globally, both in North America and in Brazil. And Tim, if you want to add some color around that. Yeah. Good morning, Chris. It's Tim. To give a little bit more on the specifics, our current outlook would be that North America sales for the full year will decrease, approaching mid single digits.

Timothy P. Francis: On the farmer.

Timothy P. Francis: And right now, there's there's really no indication that that.

Timothy P. Francis: The yields what won't be good and stocks to use ratio is still pretty high. So when you kind of factor those in.

Timothy P. Francis: We're expecting to have a challenging year globally, both in North America and in Brazil, and some other if you want to add some color around that yes. Good morning, Chris It's Tim to give a little bit more on the specifics our current outlook would be that North America sales for the full year.

Speaker Change: Will decrease approaching mid single digits and then the decrease for international sales would be slightly more than the 15%.

Timothy Francis: And then the decrease for international sales would be slightly more than the 15%. And really, the avenue did a nice job, but just to summarize the reason for the changes, we did have the additional replacement volumes here in Q2. But we are moderating our outlook, both for North America and Brazil for the second half of the year. So we're going to have a little bit more of that.

Speaker Change: And really the average did a nice job, but just to summarize the reason for the changes we did have the additional replacement volumes here in Q2, but we are moderating.

Timothy P. Francis: Moderating our outlook, both for North America, and Brazil for the second half of the year.

Christopher Moore: Very helpful. I will leave it there. Thanks, guys.

Speaker Change: Very helpful. I will leave it there thanks guys.

Nathan Jones: Our next question comes from a line of Nathan Jones with Steeple. Please proceed with your question. Good morning, everyone. I want to settle for a few questions on pricing and on, I guess, price versus cost as well. You guys have talked about some specific areas for price declines in agriculture and the contractual price pastures and utility. You haven't talked about self-inning prices in any other part of the business, and still prices have come down a lot. So I'm interested to hear your views on whether you can hold on to that lower input costs, whether you have to give back some pricing in some other areas.

Speaker Change: Our next question comes from the line of Nathan Jones with Stifel. Please proceed with your question.

Nathan Hardie Jones: Good morning, everyone.

Nathan Hardie Jones: Good morning.

Nathan Hardie Jones: I wanted to start off with a few questions on on pricing and on.

Nathan Hardie Jones: I guess prognosis cost as well you guys had talked about.

Nathan Hardie Jones: Some.

Unknown Executive: Specific areas for price. Climbs in agriculture and the Contractual Price Postures in Utilities. Unknown Speaker The Transportation Area.

Nathan Hardie Jones: Some specific areas for price declines in agriculture and that the.

Speaker Change: The contractual price pass throughs and utility you Havent talked about softening prices in any other part of the business.

Speaker Change: And steel prices have come down a lot. So I'm interested to hear your views on whether you can hold onto that lower input costs, whether you will have to give back some pricing and some other areas and then what your views on that net of the input costs would be so do you expect that to be accretive to margins and accrue.

Nathan Jones: And then what your views on that net of the input cost would be. So do you expect that to be a creative to margins and a creative to income even if you're seeing some lower pricing? Perfect.

Speaker Change: Income, even if you were seeing some lower pricing.

Speaker Change: Perfect.

Avner Applbaum: Nathan, I'll start off just talk about the environment and our pricing strategies to can go then into detail. So we're going to continue to maintain our pricing leadership. We provide the valuable solutions to our customers. The demand is strong in a lot of our and markets. We talked about the utility space, the transportation area. There's strong market demand, and we provide our customers with the solutions, and we're going to price accordingly. So there is no expectation that we will take broad-based pricing reductions. We're going to maintain our pricing, and I don't see any reason for that.

Nathan: Nathan I'll start off just talk about the environment.

Nathan Hardie Jones: Our pricing strategies and can go into detail.

Nathan Hardie Jones: So we're going to continue to maintain our pricing leadership.

Nathan Hardie Jones: We provide.

Nathan Hardie Jones: Valuable solutions to our customers'.

Nathan Hardie Jones: The demand is strong and a lot of our end markets we talked about.

Nathan: The.

Unknown Executive: There's there's strong market demand, and we provide our customers with the solution, and we're going to price accordingly. So there is no expectation that we will take broad-based pricing reductions where we're going to maintain our pricing. And I don't see any reason for that.

Nathan: Utility space. The transportation area are there is there is strong market demand and we provide our customers with with these solutions and where we're going to price. Accordingly. So there is no expectation that we will take a broad based pricing reductions, where we're going to maintain.

Nathan: And we're going to maintain our pricing.

Nathan: And I don't see any any reason for that and even in the areas that we are adjusting pricing, it's very specific to every specific areas.

Timothy Francis: And even in the areas that we are adjusting pricing, it's very specific to every specific area. We mentioned in agriculture, it's surgical approach, also making sure we're maintaining our market share. But overall, right now, I don't see any reason why we would take any actions to preserve our pricing.

Nathan: We mentioned in agriculture.

Nathan: Surgical approach also making sure we're maintaining our market share but overall.

Nathan: Right now I don't I don't see any reason why we would take any actions to reduce pricing.

Timothy Francis: Nathan, it's Tim. Let me expand a little bit. I'm going to talk about TD&S, and I'll talk about agriculture. For TD&S, you know, about 50% of the sale of a utility structure is the cost of steel. And we have the contractual steel index in our client customer contracts. And we do expect a return to the cost of steel aligning to the contractual depletion we're seeing in that steel index as the year progresses.

Nathan: Nathan It's Tim let me expand a little bit I'm going to talk about TD nuts, and I'll talk about agriculture.

Speaker Change: For TD Ines.

Speaker Change: About 50% of the sale of our utility structure is the cost of steel.

Speaker Change: And we have the contractual steel index.

Speaker Change: In our alliance.

Speaker Change: Customer contracts.

Speaker Change: And we do expect a return to the cost of steel aligning to the contractual deflation, we're seeing in that steel index as the year progresses.

Nathan: And even in the areas that we are adjusting pricing, it's very specific to every specific area. As we mentioned in agriculture, it's a surgical approach, also making sure we're maintaining our market share. But overall, And then when you turn to agriculture, For most of the last 10 to 20 years, the combined margins of all of those infrastructure businesses have been 10-ish percent, a low double-digit kind of area, and we're pushing above mid-What's your view on the sustainability of that versus the market competing those back down to where long-term averages have been? Just any thoughts you can give us on that.

Speaker Change: And then when you turn to agriculture.

Timothy Francis: And then when you turn to agriculture, there are lots of components to pivot. There are center drives, there are tires, there are the electronics, there are pieces that go into a control panel. So because of all the different components that we see in a pivot, we don't see a dislocation of what's going on with price versus cost. And as we said in our opening remarks, you know, we are being very targeted on the regional pricing actions we're taking. Thanks for that.

Speaker Change:

Speaker Change: There are lots of components to pivot there are centered drives their tires. There. The electronics there are pieces that go into a control panel so because of all the different components that we see in in a pivot.

Speaker Change: We don't see a dislocation of what's going on with price versus cost and as we said in our opening remarks.

Speaker Change: We are being very targeted on the regional pricing actions were taken.

Speaker Change: Yeah.

Speaker Change: Thanks for that I guess my follow up questions on the infrastructure business and the total margin.

Nathan Jones: I guess my follow-up questions on the infrastructure business and the total margins there. For, you know, most of the last 10 to 20 years, the combined margins of all of those infrastructure businesses has been, you know, 10th percent low double digit kind of area, and we're, you know, pushing above mid teens at the moment. What you view on the sustainability of that versus the market competing those back down to where long term averages have been just any thought you can give us on that. Yeah, Nathan, so, you know, we did mention that specifically you look at the quarter. There are puts in takes, and we don't just look at it more broadly.

Speaker Change: For most of the last 10 to 20 years.

Speaker Change: The combined margins of all of those infrastructure businesses has been 10 ish percent low double digit kind of area.

Speaker Change: Pushing above mid teens.

Speaker Change: At the moment.

Speaker Change: What's your view on the sustainability of that the US is the market competing those back down to where long term averages have been.

Speaker Change: Just any thoughts you can give us on that.

Speaker Change: Yeah.

Speaker Change: Yeah, Nathan so yeah, we did mention that specifically you look at the quarter. There. There are puts and takes of adult just look at it more broadly.

Avner M. Applbaum: Yeah, Nathan, so, you know, we did mention that specifically, you look at the quarter, there are puts and takes, and we built it up, just look at it more broadly. We are, electrification of the grid, bringing more and more plants internally to the US, etc. So, so it is. I'll start off by saying it is a very strong market environment and expect that to continue. Now, we've taken actions internally as well.

Speaker Change: We are.

Avner Applbaum: We are; it's a different environment. First of all, then it's been over the last decade. I mean, we are seeing a lot of strong market demand and some of these mega trends, you know, once-in-a-lifetime energy transition. We're seeing load growth for the first time in decades, driven by electrification of the grid, bringing more and more plans internally to the US, et cetera. So it is; it is a very strong market environment and expecting that to continue. Now, we've taken actions internally as well. We've streamlined our organization. So we took out a DNA clause, which we get the benefit from the cost, but we're also more effective and efficient.

Speaker Change: It's a different environment first of all than it's been over the last decade. I mean, we are seeing a lot of strong market demand in some of these mega trends once in a lifetime energy transition, we're seeing load growth for the first time in decades driven by us.

Speaker Change:

Avner M. Applbaum: Electrification of the grid, bringing more and more plants.

Speaker Change: Internally.

Speaker Change: To the U S et.

Speaker Change: Et cetera. So it is it is I'll start off with it is a very strong market environment and expecting that to continue.

Avner M. Applbaum: We've streamlined our organization. So, we took out SG&A because we get the benefit from the cost, but we're also more effective and efficient. We manage our capacity very closely to make sure we can maximize our capacity, and we're driving continuous improvement, and we do that year in and year out to make sure we keep on driving our profitability. We're adding products, and over the years, we have now a much bigger portion of our business goes through concrete. That is very helpful.

Speaker Change: Now we've taken actions internally as well we've streamlined.

Speaker Change: We streamlined our organization. So we took out our SG&A costs, which we get the benefit from the cost, but we're also more effective and efficient.

Speaker Change: We've.

Avner Applbaum: We've, you know, we manage our capacity very closely to make sure we can maximize our capacity, and we're driving continuous improvement. And we do that year in and year out to make sure we keep on driving our profitability. We're adding products, and over the years, we have now a much bigger portion of our business goes through concrete that that is that is helpful. We do now more distribution and substation, specific in on the utility. So, you know, those are just some specific examples of what we're working on to overall continue to drive market expansion. And, you know, overall achieve our long term roles of increasing our margins over time.

We manage our capacity very closely to make sure we can maximize our capacity and we're driving continuous improvement and we do that year in an ear out to make sure we keep on driving our profitability, we're adding products over the years, we have now a much bigger.

Speaker Change: A portion of our business goes through concrete that that is a that is helpful. We do now more distribution and substation specific add on the utilities. So they know that.

Brent Edward Thielman: We do more distribution and substation work now, specifically on the utilities. Those are just some specific examples of what we're working on to overall continue to drive market expansion and overall achieve our long-term goals of increasing our margins over time. Our next question comes from the line of Brent Thielman with D.A. Davidson.

Speaker Change: These are just some specific examples of what we're what we're working on to overall continue to drive market expansion.

Speaker Change: Overall achieve our long term goals of increasing our margins overtime.

Avner Applbaum: So overall, I would say we should keep on seeing margins improving.

Speaker Change: So overall I would say, we should keep on seeing margins improving.

Nathan Jones: Excellent. Thanks very much for taking my questions.

Speaker Change: Excellent thanks, very much for taking my questions.

Speaker Change: Okay.

Brent Thielman: Our next question comes from a line of Brent Dealman with DA Davidson. Please proceed with your questions. Hey, thanks. Good morning.

Speaker Change: Our next question comes from the line of Brent Thielman with D. A Davidson. Please proceed with your question.

Brent Edward Thielman: Hey, thanks.

Brent Edward Thielman: Good morning, I guess, just a question within the infrastructure segment, Tim I caught your comments just in regards to the telecom business. It's obviously been.

Brent Thielman: That's just a question within the infrastructure segment. Tim, I caught your comments just in regards to the telecom business. It's obviously been, you know, a difficult area for you. It sounds like you maybe you're suggesting some stabilization here in the second half of the year. Any insights into what you're seeing from those customers and what gives you the confidence? Maybe that business is starting to reflect. Yeah, absolutely. Good morning. I'll take that question. Overall, we just take a step back and look at the telecom business. So, over the last several years, the telecom providers, they spend significant amount of tactics in or cash on both the Catholics.

Speaker Change: Difficult area for you it sounds like you.

Brent Edward Thielman: Maybe you're suggesting some stabilization here in the second half of the year any insights into what you're seeing from those customers and kind of what gives you the confidence maybe that business is starting to inflect.

Speaker Change: Yeah, absolutely good morning, I'll I'll take that question.

Speaker Change: Overall, if you just took a step back and look at the telecom business. So over the last several years.

Speaker Change: Telecom providers.

Brent Edward Thielman: <unk> significant amount of Capex.

Speaker Change: And or cash on both the Capex and spectrum.

Timothy Francis: And then, as they're trying to monetize their investments, they got hit with higher interest rates, with some pressure on the carrier. So we've seen over the last several years slow down spending less less in that area, but we are starting to see some stabilization. And we're, you know, we're cautiously optimistic. We're seeing better, better order intake at this point, but what we are seeing from the carriers: you know, they're not spending now. A lot of the resources and topics on specifically densification, which we initially thought would be the case. We're seeing them more focused on increasing capacity, operating more in the, you know, the midbed space on the suburban and urban areas.

Speaker Change: And then as as they're trying to monetize their investments they got hit with higher interest rates will put some pressure on the carrier. So we've seen over the last several years slowed down spending less less in that area, but we are starting to see some stabilization.

Brent Edward Thielman: And we're.

Speaker Change: Cautiously optimistic we're seeing better better order intake at this point.

Speaker Change: But what we are seeing from the carriers you know, they're not spending now.

Speaker Change: A lot of their resources topics on specifically Densification, which we initially thought would be the case, we're seeing them more focused on increasing capacity operating more in the mid band space on the suburban and urban areas. So they can actually add additional.

Timothy Francis: So they can actually add additional customers. So they're still working on strengthening their balance sheet. You know, you just heard AT&T yesterday talking about that, and they're heavily investing in the 5G space as well. So we're seeing more business as usual. I called that way. Our second half should absolutely be we should see some growth in telecom, which is positive for us. And when we look at our product offering, that fits well with what we can offer in that space specifically around, you know, our mid cell, our component business, some of our PIM product, and so on.

Speaker Change: Customers, so they're still working on strengthening their balance sheet.

Speaker Change: Heard AT&T yesterday talking about that and they're they're heavily investing in the five T space as well. So we're seeing more business as usual I'd call. It that way our second half should absolutely be we should see some growth in telecom, which is positive for us and when we look at our product offering.

Speaker Change: It's well within what we can offer in.

Speaker Change: In that space, specifically around <unk>.

Speaker Change: So our component business.

Speaker Change: Some of our <unk> product.

Speaker Change: And so on so overall I'd say, we're seeing positive signs and we're expecting to see more stabilization in our in the telecom area.

Brent Thielman: So overall, I think we're seeing positive signs, and we're expecting to see more stabilization in the telecom area. Okay, very good. I appreciate that.

Brent Edward Thielman: Yeah.

Brent Edward Thielman: Okay very good I appreciate that.

Avner Applbaum: And then on agriculture, it seems like the project-based business is giving you some offset, notwithstanding a tough kind of overall spending climate in that segment. Could you can you talk about the pipeline for those sorts of projects and visibility you have into those and what sort of visibility does that potentially when do you for 2025? I guess, especially if, in fact, you know, the sad weaker ag market persists. Yeah, so when you think about that area, I had different drivers than our specifically we talked before about North America and Brazil. When you look at that areas, which is driven by food security, water scarcity and seeing very good activity in North Africa, Middle East, etc.

Speaker Change: And then on agriculture.

Speaker Change: Seems like the project based business is giving us some offset notwithstanding a tough kind of overall spending climate in that segment could you talk about the pipeline for those sorts of projects and visibility you have into those and what what sort of visibility does that potentially when do you for 2020.

Brent Edward Thielman: Five.

Brent Edward Thielman: I guess, especially if its in fact weaker.

Speaker Change: Weaker AG market persists.

Brent Edward Thielman: Yeah what.

Speaker Change: So whether you think about that area has different.

Speaker Change: Drivers than our specifically, we talked before about North America in Brazil, when you look at areas, which is driven by.

Speaker Change: Food security order scarcity.

Speaker Change: And seeing very good activity.

Speaker Change: North Africa, Middle East et cetera, we are doing well on the.

Avner Applbaum: We are doing well on the projects that we currently have in hand, and we continue to be very active with our dealers in the space, working directly with customers well. And we have a pretty strong pipeline at this point. I was always hard to determine exactly the timing of each one of these projects. And when you look back, we had some very large projects over the last several years, but we kind of look to pre-COVID. And today, it's a lot more active, a lot more activity, and it looks very favorable on that end, and it is also some of the weakness in the area.

Tom Hayes: Please proceed with your question, projects that we currently have in hand. And we continue to be very active with our dealers in the space, working directly with customers as well. And, our next question comes from the line of Tom Hayes with CL King.

Speaker Change: Projects that we currently have in hand, and we continue to be very active with our dealers in the space are working directly with customers as well.

Tom Hayes: And.

Speaker Change: We are we have a pretty strong pipeline at this point and I was always hard to determine exactly the timing of each one of these projects.

Speaker Change: And when you when you look back we had some very large projects over the last several years, but when you kind of look to pre COVID-19.

Tom Hayes: Today, it's a lot more active a lot more activity.

Speaker Change: And it looks a very there.

Speaker Change: Very favorable on that and it is also getting some of the weakness.

Avner Applbaum: So I would say that is definitely a bright spot for us until the other markets, North America and Brazil, which we know the long term, it's going to be very strong for us based on water scarcity, labor, availability, sustainability, and all these drivers that we're aware of. So overall, I would say we're pretty positive on our pipeline in that area. Okay, thank you. Appreciate it.

Speaker Change: So I would say that is that is definitely a bright spot for us.

Tom Hayes: Until the other markets North America, and Brazil, which we know the long term is it's going to be very strong for us based on order scarcity of labor availability sustainability in all these drivers that we're at war. So overall I would say we're pretty positive.

Tom Hayes: On our pipeline in that area.

Tom Hayes: Okay. Thank you I appreciate it.

Thomas Hayes: Our next question comes to line of Tom Hayes with CL King. Please for you with your question. Good morning, Jim, and thanks for taking my questions. Good morning. I'm just wondering maybe you should follow up to Nathan's question on the pricing specifically on the irrigation business. You indicated in the quarter you took some targeted pricing actions. This is wondering if maybe you could quantify the magnitude of those actions. Were there more of a one-time or is that an ongoing review that you have as far as you're pricing in that market?

Tom Hayes: Our next question comes from the line of Tom Hayes with C. L. King. Please proceed with your question.

Tom Hayes: Good morning, gentlemen, thanks for taking my questions.

Tom Hayes: Good morning.

Tom Hayes: Please proceed with your question. I was just wondering, maybe just a follow-up to Nathan's question on pricing specifically for the irrigation business. You indicated in the quarter you took some targeted pricing actions. Just wondering if maybe you could quantify the magnitude of those actions.

Tom Hayes: Oh I was just wondering maybe just a follow up to Nathan's question on the pricing specifically on the irrigation business you indicated in the quarter you took some targeted pricing actions just was wondering.

Tom Hayes: If maybe you could kind of quantify that the magnitude of those actions in there where there was more of a one time or is that a kind of an ongoing review that you have as far as your pricing in that market.

Speaker Change: Yeah. So.

Timothy Francis: Thanks for the question. Pricing and irrigation is very specific for us. It is every grower; every region is different. Every pivot offering is different. And really, at this case we had to do some small adjustments in specific areas. But overall, our strategy is we are protecting our market share, and every region could have some different dynamics. Overall, I'd go back, and the pivot has a very strong value proposition for the grower. It could ensure he gets the yields he's looking for. He could help him optimize his cost. Without a pivot, you're basically not going to be able to get the yields that you're looking for.

Speaker Change: Thanks for the question.

Speaker Change: Pricing in aggregate, it's very specific for US you know it is.

Speaker Change: Is every every grower every region is different.

Speaker Change: Every pivot offering is different and really at this case.

Speaker Change: We had to do some small adjustments in a specific area, but overall our strategy is we are protecting our market share.

Ben: Ben you know every region could have some some different dynamics.

Speaker Change: Overall I would go back in the pivot is a very strong value proposition for the grower.

Speaker Change: It could ensure he you know he gets the yields were looking for he could help them optimize his.

Speaker Change: His cost.

Speaker Change: Without a pivot U.

Speaker Change: You're basically not going to be able to get the yields that you are looking for so.

Timothy Francis: So we will utilize our dealer network or our strong offering to make sure that we can address these needs.

Speaker Change: So we will utilize our dealer network.

Speaker Change: Our strong offering to make sure that we can address these needs. So again, it's it's like I said, it's a very specific and specific areas, we shouldn't expect us to to see broad based our pricing reductions in irrigation.

Thomas Hayes: So again, it's like I said, it's very specific and specific as we shouldn't expect us to see broad-based pricing reductions in irrigation. I appreciate that. Maybe you follow up on the application plans.

Speaker Change: I appreciate that maybe just to follow up on the capital allocation plans, maybe your thoughts on on the M&A environment, and where maybe you could be targeting that going forward. Thank you.

Avner M. Applbaum: And were those more of a one-time thing, or is that kind of an ongoing review that you have as far as your pricing in that market? I appreciate that. Maybe just a follow-up on the capital allocation plans, maybe your thoughts on the M&A environment, and where, maybe, you could be targeting that going forward. Thank you. So, you know, M&A is part of our capital allocation strategy; our number one priority is CapEx, and then we go right into acquisition. Thank you very much.

Avner Applbaum: Maybe your thoughts on the M&A environment and where maybe you could be targeting that going forward. Thank you. So the M&A is part of our type of allocation strategy. Our number one is Capix, and then we go right into acquisitions. I took a hard look at our pipeline and actually streamlined and reduced the size of the pipeline by taking out acquisitions that are not very strategic to us that either don't hit our financial criteria or our strategic criteria. So we could really add value they tied to our core competencies to the markets that were strong to our customers, the geographies that are appealing to us.

Avner M. Applbaum: So the you know M&A is part of our capital allocation strategy. Our number one is capex and then we go right into acquisitions.

Speaker Change: I took a hard look at our pipeline and actually streamline and reduce the size of the pipeline by taking out acquisitions that are not a very strategic to us that they either don't hit our financial criteria.

Speaker Change: Or our strategic criteria, so we could really add value.

Avner M. Applbaum: Hi.

Speaker Change: Core competencies to the markets that were strong to our customers. The geographies that are appealing to us. So we took a we took a hard look and streamlined.

Avner Applbaum: So we took a hard look and streamlined the acquisition, and right now we're continuing to build our pipeline, and there's no segment or area that we're focusing more than others. We're looking at the areas that we can that we can try to grow in strong synergies. There are a lot of opportunities in the TD&S space, which we are looking very closely at, as well as others. So you'll be hearing more from us over the next several quarters as we keep on building the pipeline. It's very difficult to time when these acquisitions will happen. But overall, that's going to be part of our strategy.

Avner M. Applbaum: Sure.

Speaker Change: The acquisitions and right now we're continuing to build our pipeline and there is no.

Speaker Change: Segment or area that were focusing more than others. We're looking at the areas that we can.

Speaker Change: That we can drive growth and strong synergies.

Speaker Change: There are a lot of opportunities on the T DNS space, which we are looking very closely.

Speaker Change: As well as other others, so you'll be hearing more from us over the next several quarters as we keep on building the pipeline. It is very difficult to time, when these acquisitions will happen, but overall.

Speaker Change: That's gonna be part of our strategy, we are generating strong earnings cash flows and we're going to put that to work.

Avner Applbaum: We're generating strong earnings, strong cash loads, and we're going to put that to work. Thank you very much.

Avner M. Applbaum: Thank you very much.

Avner M. Applbaum: Yeah.

Brian Drab: As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from a line of Brian Drab with William Blair. Please receive with your question. Hey, good morning. This is Tyler onto Brian. Appreciate you guys taking some questions.

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

Operator: As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from the line of Brian Drab with William Blair. Please proceed with your question. Hey, good morning. This is Tyler. I'm for Brian.

Speaker Change: Our next question comes from the line of Brian Drab with William Blair. Please proceed with your question.

Operator: Hey, Good morning. This is Tyler on for Brian I. Appreciate you guys, taking some questions first of all can you just elaborate on how a greater mix of distribution in substance in sales.

Brian Paul Drab: Appreciate you guys taking some questions. First of all, can you just elaborate on how a greater mix of distribution and substation sales negatively impacts sales? Pricing was higher year-over-year for this segment, so I'm just trying to understand the ebbs and flows of the different... Sales of TD&S, 50% of the sale is the cost of steel. So as we make fewer large transmission structures. Okay.

Brian Drab: First of all, can you just elaborate on how a greater mix of distribution and substation sales negatively impacts sales? Pressing was higher year over year for the segment. So I'm just trying to understand the adds and flows of the different myths.

Speaker Change: Negatively impact sales pricing was higher year over year for the segment. So I'm just trying to understand the ebbs and flows of the different months.

Timothy Francis: Sure, this is Tim. I'll take that one. So I'll go back a little bit to my comment about that. If you think about sales of TD&S, 50% of the sale is the cost of deal. So, as we make less large transmission structures, we are going to have less revenue. Now, we are excited about the ability of our commercial and our operations team to have increased the capacity to make the more distribution and substation structures to accommodate our customer demand. But again, all of us being equal, the smaller the structure, with 50% of its cost being the cost of deal, the less revenue we are going to have.

Brian Paul Drab: Sure. This is Tim I'll take that one so I'll go back a little bit to my comments about that if you think about.

Brian Paul Drab: Sales of T. D N S. 50% of our sale is the cost of steel so as we make less large transmission structures.

Speaker Change: We are going to have less revenue.

Brian Paul Drab: Now.

Speaker Change: We are excited about the ability of our commercial and our operations team to have increase the capacities to make them more distribution and substation structures to accommodate our customer demand, but again all else being equal the smaller the structure with 50% of its costs being the cost.

Speaker Change: Steel the less revenue we're gonna have.

Brian Paul Drab: Okay.

Timothy Francis: Got it. Yeah, that's pretty straightforward. I just want to confirm that pricing was so up. But the negative impact was mostly just transmissions ring down.

Speaker Change: Got it yeah, and it's pretty straightforward I just wanted to confirm if that pricing was still up.

Brian Paul Drab: Yeah, that's pretty straightforward. I just wanted to confirm that pricing was still up, with a negative impact. It was mostly just transmissions being down.

Speaker Change: That negative impact was mostly just transmission being down and my follow up question is can you just give examples of the higher margin promised you are producing.

Timothy Francis: And my follow-up question is, can you just give examples of the higher margin products you are producing due to the strategic investments in your manufacturing facilities? You mentioned on the call. I just want to get some examples of those. Sure, it would be back to the distribution and substation product lines. So every year, you know, we try to find that balance of taking orders from our alliance customers versus taking orders out in the bid market. As we looked at what was available in the bid market, we saw an opportunity to take more orders for the distribution and substation.

Unknown Executive: My follow-up question is, can you just give examples of the higher-margin products you are producing due to the strategic investments in your manufacturing facilities? You mentioned on the call that I just want to get some examples of those. Sure, it would be back to the distribution and substation product lines. So every year, you know, we try to find that balance of taking orders from our Alliance customers versus taking orders out in the bid market. As we looked at what was available in the bid market, we saw an opportunity to take more orders for the distribution network and substation. And we were pleased at the margin profile of those orders. Yeah,

Speaker Change: Strategic investments in your manufacturing facilities, you mentioned on the call I just wanted to get some examples of those.

Unknown Executive: Sure it would be back to the distribution and substation.

Unknown Executive: Product lines. So every year, we try to find that balance of taking orders from our alliance customers versus taking orders out of the bid market them as we looked at what was available in the bid market.

Unknown Executive:

Unknown Executive: We saw an opportunity to take more orders for the distribution and substation.

Timothy Francis: And we were pleased at the margin profile of those orders.

Speaker Change: And we were pleased at the margin profile of those orders Yeah. Let me just jump in and just take a step back and take a look at what we're very pleased with what we're seeing in these markets and in all areas of transmission distribution substation, where we're seeing strong growth strong demand.

Avner Applbaum: Let me just jump in and just take a step back and take a look at what we're very pleased with what we're seeing in these markets. In all areas of transmission distribution, substation, we're seeing strong growth, strong demand. And I wouldn't focus specifically on, you know, corners will also have movement, but there will always be movements, different mixes. In this quarter, we were able to support some of our customers with exactly what they needed, and we have a broad product offering. And we're able to address that. So we're very pleased that we're able to support our customers while driving high quality of earnings.

Unknown Executive: And let me just jump in and just take a step back and take a look at, you know, we're very pleased with what we're seeing in these markets and in all areas of transmission, distribution, and substation. We're seeing strong growth, strong demand. And I wouldn't focus specifically on, you know, quarters.

Unknown Executive: And I wouldn't focus specifically on the quarters will also have more there'll always be movements different mixes.

Unknown Executive: We'll also have movement, but there'll always be movements, different mixes. In this quarter, we were able to support some of our customers with exactly what they needed, and we have a broad product offering, and we're able to address that. So we're very pleased that we're able to support our customers while driving a high quality of earnings. But looking at all areas, I mean, all areas are up around transmission, distribution, substation, strong growth, and some of the distribution, which has been a focus for us. We're a very small part of that market. It's dominated by wood.

Unknown Executive: And this quarter, we were able to support some of our customers with exactly what they need it and we have a broad product offering and we're able to to address that so we're very pleased that we're able to support our customers, while driving a high quality of earnings but looking at all areas I mean, all areas are up.

Avner Applbaum: But looking at all areas, I mean, all areas are up around transmission distribution, substations, strong growth in some of the distribution, which has been a focus for us. We're a very small part of that market. It's dominated by wood, but as you go into hardening, we could offer solutions anywhere from skill to concrete, et cetera. So overall, I mean, looking at our backlog, looking at the demand, it's very strong, very pleased with our performance, and then we're going to continue to drive growth in that area.

Unknown Executive: Around transmission distribution substations.

Unknown Executive: Strong growth in some of the distribution, which has been a focus for us we're very small part of that of that market. It's dominated by wood, but as you go into a hardening, we could offer our solutions anywhere from steel to concrete.

Unknown Executive: But as you go into hardening, we could offer solutions anywhere from steel to concrete, et cetera. So overall, I mean, looking at our backlog, looking at the demand, it's very strong, very pleased with our performance, and we're going to continue to drive growth in that area. Okay, I really appreciate the color.

Unknown Executive: Et cetera, so overall I mean looking at our backlog looking at the demand is very strong.

Unknown Executive: I'm very pleased with our performance and we're going to continue to drive growth in that area.

Jonathan Braatz: Okay, really personal color, I'll pass it along. Our next question comes from a line of John Bratz with Oppenheimer. Please proceed with your question.

Unknown Executive: Okay.

Speaker Change: I'll pass it along.

Speaker Change: Our next question comes from the line of Jon Braatz with Oppenheimer. Please proceed with your question.

Jonathan Paul Braatz: I'll pass it along. Our next question comes from the line of John Braatz with Oppenheimer. Please proceed with your question. Good morning, everyone. In terms of your longer-term goals and Prospero's ability to add new technology to the irrigation business, and what are the plans for Prospera from this point forward? Thanks for the question.

Jonathan Braatz: Good morning, everyone. Good morning.

Speaker Change: Good morning, everyone.

Speaker Change: Good morning.

Avner Applbaum: Avner, last year you took, I made some major organizational changes at Prosperum and I'm wondering where Prosperum now sits in terms of your longer-term goals and Prosperum's ability to add new technology to the irrigation business and what are the plans for Prosperum from this point forward? Thanks for the question. Prosperum now has been more integrated into our business and into our tech organization. I started off with, we're focused on how do we provide the highest value to our growers through our offering, and we're going to be, we're focusing a lot more on the core and where are we very strong under irrigated acres, the pivot offering and how can we provide that value?

Jonathan Paul Braatz: Avner last year, you took oh he made some major.

Speaker Change: Organizational changes at prosperity, and I'm wondering where prosperity now sits.

Speaker Change: In terms of your longer term goals and Prospero is the ability to add new technology.

Speaker Change: To the agriculture to the irrigation business and you know what.

Speaker Change: What are the plans for prosper from from this point forward.

Speaker Change: Yeah. Thanks for the question.

Avner M. Applbaum: Prospera now has been more integrated into our business and into our tech organization. I'd start off by saying we're focused on how do we provide the highest value to our growers through our offering. And we're going to be, we're focusing a lot more on the core of where we are very strong under irrigated acres, the pivot offering, and how can we provide that value? So, Prospera is helping in those areas. And as we keep on developing the tech, which makes the farmer a lot more effective, he doesn't have to go out to the pivot. He can do things remotely.

Avner M. Applbaum: Don't Prospera now has been a more integrated into our into our business and a tour.

Avner M. Applbaum: Tech organization.

Avner M. Applbaum: I start off with where we're focused on how do we provide the highest value to our growers through our through our offering and we're gonna be we're focusing a lot more on the core on where are we very strong work under irrigated acres.

Avner M. Applbaum: Pivot offering and how can we provide that value.

Avner Applbaum: So Prosperum is helping in those areas, and as we keep on developing the tech which makes the farmer a lot more effective. He doesn't have to go out to the pivot. He can do things remotely. We're going to embed more data science; we're embedding of the pivot. So we will see the pivot getting smarter, more effective, helping them address their costs, anything from their power, input costs all the way to just being more effective. So, we're making great progress in that area where we're just being a lot more focused.

Avner M. Applbaum: So prosper are is helping in those areas and as we keep on developing the tech, which makes the farm or a lot more effective he doesn't have to go out to the pivot he can do things remotely.

Avner M. Applbaum: We're going to embed more data science, or I should say, more data science, and machine learning into the pivot into many aspects of the pivot. So, we will see the pivot getting smarter, more effective, helping them address their costs, anything from their power, input costs all the way to just being more efficient. So, we're making great progress in that area, where we're just being a lot more focused. Now, on top of that, Prospera has very strong talent that they brought in on the AI and ML side, and we're exploring opportunities for them to help us in other aspects of the business, including on the infrastructure side.

Avner M. Applbaum: We're going to embed more data science, we're embedding more I should say more data science machine learning into the pivot into many aspects of our of the pivot. So we will see the pivot getting smarter more effective helping them address their either their cost any anything from their power.

Avner M. Applbaum: Sure.

Avner M. Applbaum: Input costs, all the way to just being more and more effective.

Avner M. Applbaum: So.

Avner M. Applbaum: We're making great progress in that in that area.

Avner M. Applbaum: We're just being a lot more focus now on top of that our prospera has very strong talent that they brought in on the AI and ml side and we're exploring opportunities how they can help us and other aspects of the business, including on the infrastructure how can they help us on on the commercial and on the engineering in them.

Avner Applbaum: Now, on top of that, Prosperum has very strong talent that they brought in on the AI and NML side, and we're exploring opportunities how they can help us in other aspects of the business, including on the infrastructure, how can they help us on the commercial end, on the engineering end, on the manufacturing side. So there's a lot of great talent that we got and value that they will continue to add to the organization, specifically on the pivot as well as other areas.

Avner M. Applbaum: How could they help us on the commercial end, on the engineering end, on the manufacturing side? So there's a lot of great talent that we have and value that they will continue to add to the organization, specifically in the pivot, as well as other areas. So overall, I'm pretty excited about the opportunities for us to help the growers solve some of their most pressing problems, helping the growers be more productive, and Prospera is going to be a key part of that value proposition.

Avner M. Applbaum: The best manufacturing side, so there's a lot of great talent that we got and value that they will continue to add to the organization specifically on the pivot as well.

Avner M. Applbaum: Other areas.

Avner M. Applbaum: So overall I'm pretty excited about the opportunities for us to help.

Renee Campbell: So overall, I'm pretty excited about the opportunities for us to helping the growers solve some of their most pressing problems, helping the growers bring more productive, and Prosperum's going to be a key part of that value proposition. Okay, thank you, Governor. Thank you. We have no further questions at this time.

Avner M. Applbaum: Helping the grower solve some of their most pressing problems.

Avner M. Applbaum: Helping them to grow as being more productive.

Avner M. Applbaum: And prospera is gonna be a key part of that value proposition.

Evan: Okay. Thank you Evan.

Speaker Change: Thank you we have no further questions at this time Ms Campbell I'd like to turn the floor back over to you for closing comments.

Renee Campbell: Ms. Campbell, I'd like to turn the floor back over to you for closing comments. Thank you for joining us today. As mentioned, today's call will be available for playback on our website or by phone for the next seven days. We look forward to speaking with you again next quarter.

Speaker Change: 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 M. Applbaum: 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. The Bulletproof Exhibit. All rights reserved.

Unknown Executive: These slides contain, and the accompanying oral discussion will contain, forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other factors that could cause the actual results of the company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industry served by the company and its subsidiaries. The importance of such products and services, the integration of acquisitions and other factors disclosed in the company's periodic reports, followed with the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance, and financial results, operating efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, geopolitical risks, and actions and policy changes of domestic and foreign governments.

Avner M. Applbaum: These slides contain any accompanying oral discussion will contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, such statements involve known and unknown risks uncertainties and other factors that could cause the actual results of the company to differ materially from the results expressed or implied by such.

Speaker Change: <unk>, including general economic and business conditions conditions affecting the industry served by the company and its subsidiaries. The overall market acceptance of such products and services the integration of acquisitions and other factors disclosed in the company's periodic reports filed with the Securities and Exchange Commission as well as future economic and market circumstances.

Speaker Change: Industry conditions, Husky performance and financial results operating efficiencies availability and price of raw materials availability and market acceptance of new products product pricing domestic and international competitive environments geopolitical risks and actions and policy changes of domestic and foreign governments.

Unknown Executive: Consequently, such forward-looking statements should be regarded as the company's current plans, estimates, and beliefs.

Speaker Change: Sequentially such forward looking statements should be regarded as the Companys current plans estimates and beliefs and the company does not undertake and specifically disclaims any obligation to publicly release the results of any revisions to these forward looking statements that may be made to reflect any future events or circumstances. After the date of such statements or to reflect the occurrence of anticipated or.

Unknown Executive: The company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements, or to reflect the occurrence of anticipated or unanticipated events.

Speaker Change: Unanticipated events. This concludes today's teleconference. We thank you for your participation and you may disconnect your lines at this time.

Unknown Executive: This concludes today's teleconference. We thank you for your participation, and you may disconnect your lines at this time.

Avner M. Applbaum: Yeah.

Avner M. Applbaum: [music].