Q2 2025 Valmont Industries Inc Earnings Call
Greetings, welcome to Velma Industries Incorporated, SEI quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.
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Speaker Change: Please note this conference is being recorded, I will now turn this conference over to your host. Renee Campbell, senior vice president, investor relations and Treasurer Miss Campbell. You may begin
Renee Campbell: Good morning everyone and thank you for joining us.
Abner Applebomb: With me today are Abner applebomb, president, and chief executive officer.
Abner Applebomb: Tom mcgorry, Executive Vice, President and Chief Financial Officer and Tim Francis Chief accounting officer.
Abner Applebomb: Earlier this morning, we issued a press release announcing our second quarter 2025 results.
Abner Applebomb: Both the release and the presentation. For today's webcast are available on the investors page of our website, at valmont.com.
Abner Applebomb: A replay of the webcast will be available later this morning.
We'll begin today's call with prepared remarks and then open it up for questions.
Abner Applebomb: Please note that this call is subject to our disclosure on forward-looking statements which is outlined on slide 2 of the presentation and will be read in full after Q&A.
Abner Applebomb: With that. I now like to turn the call over to adner.
Speaker Change: Thank you, Renee.
Abner Applebomb: Good morning everyone and thank you for joining us.
Speaker Change: I'd like to start with second quarter, highlights and key messages summarize on slide 4.
Speaker Change: We delivered solid results, operational in this quarter reflecting the dedication and resilience of our Global development team.
Speaker Change: I want to thank our employees, for delivering our core values and delivering for our customers every day.
Sales Group modestly driven by strengthening utility Telecom and international agriculture.
Speaker Change: Our teams executed. Well, driving volume growth and key markets while advancing our long-term strategy.
Speaker Change: We remain deeply confident in the end markets, we serve which are supported by powerful long-term growth drivers.
Secular Mega Trends, including the energy. Transition infrastructure investment.
Speaker Change: And Global demand for food security offer, significant potential for our business.
We have intentionally aligned our unique strengths with these trends.
Speaker Change: When I became CEO. 2 years ago, we laid out a clear strategy.
Speaker Change: Simplify the business.
Speaker Change: Focus, where we lead?
Speaker Change: Flatten the organization.
Speaker Change: And direct our resources to the areas with the best long-term returns.
Speaker Change: That framework has not changed and we've executed consistently against it.
Speaker Change: This quarter represents the final step in the realignment. Work, we began in July 2023.
Speaker Change: We exited on profitable parts of solar.
Speaker Change: Toca hard. Look at access systems and completed. Targeted changes across a company removing layers.
Speaker Change: Reassigning talent and sharpening accountability.
Speaker Change: These actions resulted in 112 million of non-recurring charges.
But they were decisions that are fully aligned with the strategy we set from the start.
Speaker Change: Having now finished the realignment work, we have the right structure in place and our teams are focused.
Speaker Change: Or a stronger or in a stronger position to scale and execute more effectively.
Speaker Change: And drive long-term value creation.
Speaker Change: With that Foundation set, we're focused on what's next accelerating growth.
Speaker Change: Driving greater efficiency.
Speaker Change: And advancing Innovation to deliver greater value to our customers.
Speaker Change: That mindset is already part of how we operate.
Speaker Change: From adapting to changing Market needs to evolving our products.
Speaker Change: With a strong, balance sheet, and track record of consistent cash flow generation or investing in organic High return initiatives. That enhance customer impact and improve returns.
Learning to slide 5.
I'd like to provide an update on the progress we've made on our 2025 critical objectives.
In utility or capturing the infrastructure weights.
Speaker Change: Or scaling capacity.
Speaker Change: Staying close to the long term. Customer plans and improving execution.
Speaker Change: This is a business that's growing and we're investing to stay ahead.
Speaker Change: With an infrastructure, backlog approaching 1 and a half billion dollars demand for a products continues to outpace current capacity.
Or operating in an unprecedented utility investment cycle.
Speaker Change: According to a Jeffries utilities report issued in June us. Capex, is expected to exceed, 212 billion dollars this year. A 22% increase driven by electrification.
Speaker Change: Data center expansion and grid modernization.
Speaker Change: The next 5 years cycle is also accelerating to record levels.
Speaker Change: Capital is Shifting toward transmission and generation while distribution and substation spending remains strong.
Speaker Change: We are well positioned to meet this Demand with our engineered structures and codings services.
Speaker Change: Our 100 million dollar growth capex. Target for this year is on track.
Speaker Change: Focus on scaling, utility operations, and improving workflow across the footprints.
Speaker Change: At the same time, we're addressing areas that require operational Improvement.
Speaker Change: In lighting and transportation, we've made leadership and organizational changes to improve performance.
Speaker Change: and markets some of which are experiencing softer, demand,
Speaker Change: However, we remain confident in the long-term fundamentals.
Our focus is on improving execution, so that we're ready to capture growth as demand returns.
Speaker Change: Second.
Speaker Change: In agriculture.
Speaker Change: We've reshaped the business to be more resilient and globally balanced.
Speaker Change: We've streamlined the team at a dedicated aftermarket resources and we're executing well across key International markets.
Speaker Change: Brazil is very important market for us and is showing signs of stabilization.
Speaker Change: Our International project pipeline is stronger than ever.
Speaker Change: The Mia region continues to show momentum and we recently were awarded 20 million dollars of project work in Africa.
Speaker Change: While North America remains challenged.
Speaker Change: We're building for long-term with better agility.
Speaker Change: Stronger, margins and technology advancements for our for our Growers.
Speaker Change: And across the company we're focused on doing more with what we have from smarter scheduling.
the piloting AI at 8 of our infrastructure facilities,
Speaker Change: Or scaling throughput, without scaling costs.
Speaker Change: We're looking across systems.
Speaker Change: Teams and assets to make sure we're running as efficiently as we can, and setting ourselves up to support growth without adding complexity.
This also helps us execute with focus and invest in high-value Innovation to best serve our customers.
Speaker Change: Finally.
Speaker Change: Salmon, strengths lies in our people, their resilience values and commitment to a strong safety culture.
Speaker Change: Last month, we published our 10th Annual sustainability report, highlighting, many of our team's accomplishments.
Sustainability remains Central to our purpose of conserving, resources and improving life and a strategic competitive advantage that continues to shape our business.
Speaker Change: In summary, we've taken the hard steps refine the portfolio.
Speaker Change: Realign the structure.
Speaker Change: And tighten our Focus.
I'm proud of how this team has advanced and sharpened our strategy over the past year.
Speaker Change: We're executing with more Precision, more disciplined and clear returns.
Speaker Change: Now, we move forward from a stronger Foundation.
Speaker Change: Our priorities are the same, but our ability to deliver on them is better than ever.
Tom: I'll now turn the call over to Tom to Discord to discuss our second quarter Financial results and updated Outlook.
Thank you, Abner.
Tom: Good morning, everyone.
Tom: Turning slide 7.
Tom: I'd like to expand on the actions and Associated, 1-time, non-gaap items, recorded this quarter.
Tom: Delivered steps were taken to better align the organization.
Tom: And drive growth and profitability in the coming years.
Tom: We reduce our headcount.
Tom: Primarily in solar and North America agriculture to reflect near-term market conditions.
Tom: We transitioned many of these team members to support growth in infrastructure and international agriculture.
Tom: We reduce management layers across both segments, and corporate to enable quicker decisions and greater agility.
Tom: Manufacturing operations were integrated into the segments.
To drive accountability and improve collaboration between commercial and operations teams.
Tom: In addition to the realignment, we further refined our portfolio.
Tom: As you know, solar has been a growth headwind for some time.
Tom: Compounded by recent changes in government policy and regulation.
Tom: Therefore, the leadership team decided to exit North America.
Tom: And significantly downsize, our solar operations in Brazil.
Tom: For both our infrastructure and agriculture segments.
Tom: The second portfolio of action was within lighting and transportation.
Tom: We reviewed the performance and outlook for the APAC, access systems business.
Tom: Leading to a Goodwill impairment.
Tom: Tied to the revised Financial Outlook.
Tom: All in these actions resulted in the following non-recurring Financial impacts.
Tom: non-cash long-lived asset impairment charges of 91.3 million including
Tom: 71.1 million for Goodwill and intangibles related to the solar and access systems businesses.
Tom: And 20.2 million for other assets that will no longer be utilized.
Cash realignment. Charges of 9.8 million primarily savings.
Tom: Other non-recurring charges of 10.9 million. Primarily costed fulfilled contractually, required payments for system. Licenses no longer needed.
Tom: and,
Tom: An estimated liability to exit a joint venture, a solar business.
Tom: described in the footnote on pages, 2 and 5 of the press release as a change in Redemption value of redeemable, non-controlling interest,
Tom: Altogether.
Tom: These items, total 138.3 million.
Tom: Of which 105.5 million relates to our solar businesses.
Tom: 23.8 million to access systems.
Tom: And 9 million is within corporate and other businesses.
Tom: As a result of these actions, we expect annualized Savings of 22 million in 2026.
Tom: With 8 million realized in the second half of 2025.
Tom: Turning to slide 8 and our second quarter results on a gap basis.
Tom: Net sales at 1.05 billion increased 1% year-over-year.
Tom: We achieved sales growth in both segments.
Led by utility telecommunications and international agriculture.
Tom: Gross profit margin of 30.6%.
With slightly below prior year, due to lower International infrastructure. Profitability from lower sales.
Sgna expenses were 191.7 million.
Or 18.2% of revenues.
Tom: Gap, operating income was 29.3 Million.
Tom: Or 2.8% of net sales.
Tom: Below the line.
Tom: Interest expense decreased due to lower debt.
Tom: Gap diluted loss. Per share was $153,
Tom: Turning to slide 9.
Tom: My comments going forward, will focus on the adjusted results as outlined in the press release.
Tom: And in the reg G disclosure in the presentation of appendix.
Tom: Net sales were 1.05 billion.
Tom: Adjusted gross profit margin was 30.7%.
Total sg&a, expense.
Tom: Was 181.4 Million.
Tom: An increase of 8.4 million.
Due to higher variable selling cost and investments in it and AI related Technologies.
we expect sgna to be in the mid 170 million per quarter and the second half of 2025,
Tom: adjusted operating income was 141.4 Million.
Tom: Or 13.5% and that sales.
70 basis, point decrease from prior year,
Tom: And adjusted EPS, the clients slightly to 4.88 cents.
Tom: Both decline due to lower International infrastructure profitability.
Tom: Moving to our segment results on slide 10.
Infrastructure sales of 765.5 million were similar to last year.
Tom: Growth in utility and Telecom was largely offset by lower sales and solar.
Along with software, demand and lighting and transportation.
Utility sales, increased 5.4%.
Tom: Driven by higher volumes and pricing actions that more than offset lower steel costs pass throughs.
Tom: Lower sales and lighting, and transportation and Coatings for family due to softness and international markets.
Tom: Our telecommunication business, saw a strong sales, growth of more than 40%.
Tom: Driven by successful product alignment with key carrier programs.
Tom: Solar sales decline nearly 50% reflecting lower volume.
Tom: Adjusted operating income was 124.6. Million.
Tom: Operating margin decreased 130, basis points to 16.3% of net sales.
Tom: The decline was due to lower International profitability.
Tom: Primarily due to lower sales.
Tom: Turning to slide 11.
Tom: second quarter, agricultural, sales of 289.4 million, increased 2.7%
Tom: Reflecting strong execution. In key International markets,
Tom: In North America, irrigation equipment volumes declined due to fewer storm related replacement sales compared to last year.
Tom: Along with continued Market softness.
Tom: %.
Tom: Led by strength in the Amia region.
Tom: And higher volumes across all regions, including Brazil.
Tom: Adjusted operating income increased to 44.8 million or 15.6% of net sales.
Tom: Mostly driven by improved profitability in Amia and lower sgna in North America.
Tom: Moving to slide 12.
Tom: For cash liquidity and capital, allocation.
Tom: Operating cash flows reached a very healthy 167.6 million.
Tom: Distribute to the Valmont teams. Focus on cash and working Capital Management.
Tom: Networking Capital days. Have steadily decreased from 1118 days in q1 of 2024.
To below 90 this quarter.
Tom: We ended the quarter with 208.5 million of cash.
Tom: And no borrowings under our revolving credit facility.
Tom: As of July 10th, we extended the facility for another 5 years, maintaining 800 million in available liquidity,
Tom: to support our growth and capital allocation strategies.
Speaker Change: Thank you Val Montrezl team for successfully leading the extension.
Speaker Change: Our net debt, leverage remains below 1 time.
We remain committed to a balanced approach to Capital allocation.
Speaker Change: To deploy approximately half toward reinvesting, in our businesses.
Speaker Change: And have to shareholder returns.
Speaker Change: In the second quarter we invested 32 million in capex primarily for growth.
Speaker Change: We also returned 13.6 million through dividends.
Speaker Change: And repurchase 100 million of shares at an average price of 279.35.
Speaker Change: Turning to our updated, 2025 outlook on slide 13.
Speaker Change: Net sales are projected to be in the range of 4 to 4.2 billion.
Speaker Change: We're raising our full year adjusted diluted earnings per share, expectations to a range of 17.50 to $19.50.
Increasing the midpoint to $18.50 from $18.
Speaker Change: Regarding tariffs.
Speaker Change: All known tariffs are included in our Outlook.
Speaker Change: Moving to slide 4 G.
Speaker Change: We have a clear road map to grow our business.
Speaker Change: Driving revenue and ETS growth.
Speaker Change: While we've discussed elements of this strategy at recent investor conferences.
Speaker Change: In light of our second quarter actions.
Speaker Change: Abner and I want to reinforce the key value drivers supporting our long-term strategy and 5 critical objectives.
Speaker Change: First is catching the infrastructure wave.
Speaker Change: Utility represents about 35% of total company Revenue.
Speaker Change: With growth expected to xcelerate, we're scaling our capacity to meet sustained. Customer demand for high-quality on-time. Delivery of Engineers structures.
Speaker Change: As we speak, our teams are also on brake presses and welding equipment in multiple facilities.
Speaker Change: And our operations in AI teams are improving scheduling for greater throughput.
Speaker Change: These initiatives are unlocked at 350 to 400 million.
Speaker Change: In incremental, capacity and Revenue.
Speaker Change: We expect early benefits to be reflected in our fourth quarter financials.
Speaker Change: Second in agriculture, we're helping Farmers work smarter and operate more efficiently.
Speaker Change: Our new digital e-commerce platform makes it easier for Farmers to order parts directly from the field.
Improving repair speed and helping us grow our aftermarket revenues.
We also recently launched accents 365. Our Unified Remote Management app, that includes features like tire pressure monitoring with more capabilities on the way.
Speaker Change: Third, we're taking a disciplined approach to Resource allocation.
Speaker Change: Internally, our corporate cost team is driving a focused effort to improve efficiency.
Speaker Change: over time, we believe we can reduce corporate costs from about 3% of sales to under 2%
Speaker Change: while, at the same time,
Speaker Change: Deploying AI tools and data analytics to speed, execution and approved productivity.
Speaker Change: Externally.
Speaker Change: We're deploying Capital to drive shareholder value.
Speaker Change: We're pursuing tucking, Acquisitions tied to our Core Business. Executing on our 700 million share buyback program.
And plan for consistent annual dividend increases.
Bringing it all together.
Speaker Change: Growth and 7 to 12 dollars in additional EPS over the next 3 to 4 years.
Speaker Change: These drivers build on the strengths of our existing business and physician Valmont to deliver sustainable long-term shareholder value.
Speaker Change: Before we close, we want to recognize and thank the entire Valmont team.
This was a quarter of significant actions and accounting decisions.
Speaker Change: Yet the team remained focused on our value drivers, satisfying customers, delivering Revenue growth, discipline, execution,
Speaker Change: And generating exceptional cash flows.
Renee Campbell: With that, I will now turn the call over to Renee.
Speaker Change: Time. The operator will open up the
Speaker Change: time will be conducting a question and answer session.
Speaker Change: 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. You may press star 2. If you would like to remove your question from the queue.
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Nathan Jones: our first question is from Nathan Jones with stifel please proceed
Adam Farley: Yeah, thank you. Good morning. This is Adam Farley on for Nathan.
Speaker Change: Morning. Good morning morning.
Speaker Change: I wanted to start on the solar business. Um,
Speaker Change: Maybe you could talk about the decision to exit these pieces. What's left in the portfolio. And why being and solar at all is, is the right idea, going forward?
Speaker Change: And we are done with all the uh portfolio uh, actions that we've taken, we decided to exit the North American Solar.
Speaker Change: Uh Market due to the the environment. It it really no longer supported the scales or the returns that that we expect.
Add to that. The regulatory uncertainty was already a very competitive fragmented, volatile market. So we we decided and we were not able to provide strong returns, so we exited the market.
Speaker Change: Now, we have stayed in Italy. In Italy is a very different story. Uh, our Italy solar business, it's profitable.
Speaker Change: It's supported by EU funding.
It benefits from very strong brand Equity leadership position, we have strong engineering depth.
And strong customer Trust.
Speaker Change: It is also a market that we know very well and we continue to serve effectively.
Speaker Change: We've also decided to stay in Brazil. Now, Brazil, is is
Speaker Change: It is more about.
Speaker Change: Uh, so what we've done there, we built a lean, we've been a scalable platform, uh, and we do have a meaningful share their. Uh, so we're manning that that business we're managing with, uh, with discipline, we're monitoring the energy prices, the interest rates. Um, and we're basically aligning our capacity and demand.
Speaker Change: So to sum it up, you know, both of these businesses, they're aligned with our infrastructure strategy and we're running them with focus and return discipline.
Speaker Change: Okay, thank you for that caller. Um, does exiting the solar business? Add to eps?
Speaker Change: assuming it was lowered or lost making
Speaker Change: it was operating at a slight loss and it would be profitable in Q3 and Q4
Speaker Change: Okay, thank you. Um, and then maybe shifting gears to recent impacts from steel prices.
Um, how how does the impact of the increased tariff on steel? Impact, your outlook, um, are there any further price increases that are necessary at the current? Uh, price level?
Speaker Change: you know, when when we look at um,
Speaker Change: I I the way we look at pricing is it's the value that we provide to our customers, right? And and there's strong value, especially in this Dynamic environment. Um,
Speaker Change: Due to our, you know, strong innovative solutions, our engineering expertise, we have thrown manufacturing footprint and capabilities and a strong dealer Network.
Speaker Change: If it's our engineering structures, if it's our private, they provide strong Roi and their support their long-term, uh, strategy. Uh, so from that point of view, uh, we continue to take pricing leadership, um, and we haven't seen any impact on the demand Tommy. I want to just maybe add a little bit of flavor on the actions that we're taking and sure Abner, thank you. Um, you know, steal the pricing pricing is stable, which is very encouraging for us. And you may be referring to the, you know, the increases in tariffs on steel. We are using primarily Us Port and melted steel and and therefore we feel in a good position.
Speaker Change: in tariffs, in general, I I would add
Speaker Change: You know that we keep the term profit neutral and that's what we see right now.
Speaker Change: That's primarily because we have 24 plants in the US serving our us customers. But I also want to say, you know, our team Managed, IT very very well. And in addition to pricing that advert talked about it, it was about changing our supply chain, uh, changing sourcing making more things in the US. So to, you know, steal,
Speaker Change: We we feel very good about where it is today.
Great, thank you. Uh, over there.
Speaker Change: Thank you. Oh, our next question is from Chris Moore with CJs Securities. Please proceed
Speaker Change: Hey, good morning guys thanks for taking a couple. Uh yeah may maybe we can pick up on where Tom left off on on the roadmap adding you know 500 700 million Revenue 7 to 12 EPS. Obviously Lots can change over the next 3 to 4 years but
Sitting here today. Is it likely? You know, is that back half loaded or is it reasonably smooth to to to get there?
Speaker Change: Now it's it's smooth and it is definitely not backhand and loaded. Um, we expect to start seeing
Speaker Change: some of these improvements revenue and EPS in Q4.
We expect to step up in 2026. So we feel very confident about it. Chris
Speaker Change: Yeah. And you know, Chris, let me, let me, uh, right. A lot of these initiatives that we're taking to drive the, uh, uh, 7 to 12 dollars. EPS, um, are really grounded in in some of these strong Mega trends that we're seeing, uh, in our markets. You know, if we start with the cats, the infrastructure wave, um, we're seeing strong market demand D driven by uh really undeniable powerful Mega Trends. I think energy transition, electrification low.
Speaker Change: To grow. Um, I mentioned that Jeffrey's report earlier this morning, which is another data point. So we're seeing very strong demand in utility space, and we've already taken actions to Tom's point about investing in our capacity and capability anything from Capital to automation, Ai and talent. So, we're well on the way, uh, in our investments. We, we manage that very tightly, we have kpis align with that. Um,
Speaker Change: And we're very confident in our ability to to drive the utility space as well as um, agriculture.
Speaker Change: We're focusing on areas like aftermarket and actech, that provide very strong value proposition to the grower. Ultimately, you're having to grower in mind, uh, how do we help them achieve their goals, and their profitability levels and we have initiatives in place, we mentioned earlier around our e-commerce platform our accent, 365, icon Etc. So even in a tough
Speaker Change: Egg Market, we're able to, to scale and provide those um, those uh benefits to The Growers. So overall, uh, we are confident in our ability to execute on these plans and ultimately provide strong shareholder value.
Speaker Change: Got it really, really helpful. Uh, maybe my follow-up is, um, you were just talk a little bit about aging. I know you don't break out the, the margins separately, between International and North America. But can you maybe talk a little bit about on a relative basis, where the margins in international? Are now versus maybe a year or 2 ago and where they could be in a couple of years, you know? Given you know, some of the, the egg Tech, Etc. Just trying to understand the drivers.
Speaker Change: That's a good question. So the margins and international are improved from where they were a year or 2.
Speaker Change: To to better margins. You know in in our Mia business, they're very focused on.
There are large projects and we need to be very profitable on these large projects and there's been a lot of actions taken that. Give us great confidence uh going forward.
Speaker Change: Chris, I hope that answers your question.
Speaker Change: Yeah, it it does I guess just on a relative basis, a couple years out International versus North America. You see them at at at parody, you see 1 of them still being you know, meaningful.
Speaker Change: And North America at parody.
Speaker Change: Below. But
Speaker Change: Much. They've much closer closing the gap.
Speaker Change: Versus a couple of years ago.
Speaker Change: Perfect, I will leave it there. Thanks guys.
Hey, Chris.
Hi, good morning. Thank you for the time.
Speaker Change: Well, thank you for the question. Um, I'll start off with, you know, Telecom is not a, a backlog business, but having said that, um, Telecom came in very strong this quarter, you know, over 40% year-over-year. Um, and uh, that was really driven by, you know, increased carrier and power activity, you know, specifically around carrier, technology, upgrades additional Spectrum deployment, you know, particularly tied to 5D densification and fixed wireless access.
Speaker Change: And these are all components of the broader digital infrastructure expansion.
Speaker Change: but you know, beyond what's really important here is that, that beyond the market momentum,
Speaker Change: The growth reflects our competitive positions, you know, we we provide engineering support, we have fast and reliable turnaround, we have Integrated Solutions. Uh, that that really, if you think about the customer, it makes their execution much easier. Uh, we're expecting another strong quarter, uh, in Q3. Some of that is we do have some easier coms there. And Q4 is going to be more normalized growth, but still very strong. Um,
Speaker Change: Close to double digit growth in in that business. So overall, um, the carers are going to continue to spend. We are aligned very well and we should take that momentum into uh, 2026. Um, so Telecom, it's it's smaller part of our portfolio but it is very margin accretive and it's strategically aligned with our the long-term trends and the broadband and connectivity.
Speaker Change: Yeah, thank you. Um, did you perhaps just expand a little bit what these uh product alignments with the key carrier programs are?
Speaker Change: Yeah, so you know, when we talk about, you know I'll give an example, you know fix wireless access is is is a good example. Um but overall, right, as they work on the
Speaker Change: Spectrum of deployment in the mid sell small cell, you know, um, we we have a very strong product offering, um, to support both the, the carriers, the tower providers uh, to make sure they have um, all the engineered solutions. They need to, um,
Speaker Change: Support them any part of their, uh, deployment. So, as I mentioned, you know, we're aligned with their programs with a broad product offering any anything from, um, macro Towers concealment Solutions, um, components that go on on, um, on Towers, if it's antenna, mounts, Etc. So we're we're very Broad in the space and provide them, uh, strong set of solutions.
Speaker Change: That makes sense. Thank you so much. Um, and if I could just sneak 1 last 1 uh, for T and D, um,
I just wanted to just, um,
Speaker Change: Perhaps.
Speaker Change: Get a sense of whether you expect, um, uh, uh, greater second half versus, uh, 2024 second half. Um,
um,
Speaker Change: Yeah, that would be great.
Speaker Change: Okay sure. So overall, um, you know I just mentioned right. We we we it is supported by very strong um mega Trends and it's really uh across the board. Right transmission is the largest part of our business, but the spend is in transmission. It's in distribution, it's in, it's in substation. We're seeing strength in all in all of these, uh, 3 areas and we, we expect that to continue, uh, for the foreseeable future. Um, we continue to invest in our cap in our capacity and all that will support a very strong second half. We're going to, we're going to grow in excess of double digits, uh, in the second half of the year. So we're we're very pleased on how this is shaping out. In fact, last week we had the strongest production week ever, um, for Valmont. So it is, it is very encouraging to see and the future looks uh, um,
Speaker Change: Right in this area.
Speaker Change: All right, I appreciate the the color there. I'll help back in the line. Thank you so much.
Speaker Change: Our next question is from John Bratz with Kansas City, capital? Please proceed.
John Bratz: Good morning, everyone.
Uh, Tom could you go over the um SG sg&a costs increase in the um in the quarter. Um
Speaker Change: Um, can you give a give us a little bit more details of of uh, why it was so high?
John Bratz: A lot of movements John.
John Bratz: To the 1 mid 170 to range. You know, we did have a year-over-year we had higher variable uh selling costs, we had some higher spending in it. I would say that is uh
John Bratz: A 1-time type item you know we're we're putting a focus on better systems and using AI technology for a lot of our scheduling and and back office functions. Um, there were also some, you know, accounting type things. Uh we have a Deferred Compensation Plan and you know, the accounting is
John Bratz: It's a little tricky in that, the gains in that fund. Um, Shelf has that an accounting sgna expense? The that's offset below the line. Um, that you'll see is just a lot of lot of stuff going on, but
John Bratz: You know, we feel we have a good handle. We feel with the initiatives we have going on that there will be steadily. Um decreasing has a percent of Revenue going into 2026 and and please expect mid 170s.
John Bratz: For Q3 and Q4, okay?
John Bratz: Just that on the sgna, Tommy made very good points there. But, you know, as we move forward, we have a lot.
John Bratz: To improve our efficiency in that space, which really allows us to keep on investing, um, around tools such as AI, which we discussed, um, Innovation, Etc. So we're really managing that to both reduce our cost as well as provide room to invest in in our customers.
Speaker Change: Okay. And and Tom I think you mentioned that there's some um as you look ahead, some maybe some realignment costs associated with North American irrigation. Um are are we talking head? Headcount reduction or anything? Uh, anything like that.
John Bratz: no, so that that's
Speaker Change: and the, the
Speaker Change: To do that is in our Q2 financials. So
you should have some pretty clean financials going forward with improving revenues and improving margins.
Speaker Change: Okay. All right. Thank you very much. All right. Thank you. Thank you.
As a reminder to Star 1 on your telephone keypad, if you would like to ask a question, our next question is from Brian drive with William. Blair please proceed
Brian Drive: Hi, thanks for taking my question. I, I just want to start with a, A high level question. We talked a lot today about the wave of, uh, demand coming in infrastructure. I was just wondering if you could
Brian Drive: You know, talk a little bit more about what signs. You're seeing, what conversations you're having what um projects you're seeing, develop that give you the confidence.
to add, you know, it sounds like you're adding about 30% uh to your capacity and and uh
Brian Drive: Transmission and distribution. Um, I know it's more than you know, just the
Brian Drive: A report from a, an investment bank and other things, but I just like it. Like if you could give us some more tangible signs that this wave is really coming in the next year or 2 for you, that would be, that would be great.
Brian Drive: Strength in that market and energy transition. But of course, that's not how we make decisions. We are very close to the customers. Uh, we're the leader in that space. Uh, we have discussions with our customers on daily basis, uh, to align with their long, strategic goals. Um, so we are linked with them as they move forward and put their Capital plans and they work on their strategy. Uh, they come to us to help them provide strong Solutions, innovative solutions around how to support them with, our very large footprint, our
Brian Drive: Um, large capabilities and capacities around transmission distribution, substations around our steel concrete Composites. Um, so we, we were there we hear the voice of the customer, um, and which gives us, uh, a high level of level of confidence. Now, 1 last point on that is, of course, we we we watched the entire Market to assess the capacity. The the whole industry is under capacity. So we're very mindful of of that. So we're adding flexibility. Its capital is 1 area, but the other area that we're doing is, we're focusing on having the right Talent Automation. And we're piloting, AI, which I believe will be another strong driver for us to drive additional capacity and capability. So, this is pretty tangible. And, um, we have a 1 and a half.
Brian Drive: Billion dollar backlog, which is another indicator, um, which goes into next year and, um, we, we we feel pretty good about it.
Speaker Change: Great. Yeah, thanks AER. Um, can you uh, also just talk about the outlook for the lighting, you know, transportation business? Um,
You know that it was down about 10%. I think in the quarter uh is there something you know that you're seeing that could turn that around or uh is it still, you know, a lot of uncertainty with commercial construction Etc in a. And and is there any hope at at this point that, you know, the infrastructure bill that's not like 5 years old, um, is going to ultimately be a a Tailwind at all in that business. Thanks.
I'll start off by saying, you know, lnt it is a very profitable business. Uh, but you know, this quarter results did come in below our
Speaker Change: Conditions in Australia. Um,
Speaker Change: And we did have some execution challenges in both access and the US. Uh but you know we we took action.
Speaker Change: we simplified the structure, we
Speaker Change: Aligned our operations and our commercial teams uh and we strengthened some of our leadership, so these changes are in motion and we should expect to see improved performance. Uh, now as it relates to uh Tailwind that we're seeing in that markets, uh the dot spends remains strong. Um, even you know, even with or without the iija. The I mean it keeps To Be steady. There's a lot of Need for uh, to rebuild infrastructure. So the eot business remains strong, uh, lnt. Today is week, uh, mostly due to uh single family housing starts. But when you look into uh,
Speaker Change: And um, there's a shortage of housing. So we do know that it will, it will come back and we, uh, scale and position this business to to execute. So we will see steady performance over the next quarters and into 2026 driven by, uh, our execution efforts, uh,
Speaker Change: Okay. And then 1 more quick 1 just for I guess your time or anyone. But uh you know when you look at the longer term, uh, guidelines that you gave us for for the financial model today. I, I'm getting, you know, like low double digit earnings growth over that forecast, period that 3 to 4 years, maybe like 12%, is that I just want to make sure that
Speaker Change: Um, I'm aligned with uh, how you're thinking about it.
Speaker Change: All right, thank you. Everyone have a good day.
Speaker Change: Thank you. Thank you.
Speaker Change: We have reached the end of the question and answer session. I will now turn the call over to Renee, Campbell for closing remarks.
Renee Campbell: Thank you for joining us today.
Renee Campbell: A replay of this call will be available for playback on our website and buy phone for the next 7 days. And we look forward to speaking with you again, next quarter.
Renee Campbell: These lines and the accompanying oral discussion contain forward-looking statements within the meaning of the private Securities. Litigation Reform, Act of 1995.
Renee Campbell: Current conditions expected future developments and other relevant factors. It is important to note that these statements are not guarantees of future performance or results.
Renee Campbell: they involve risks uncertainties, some of which are beyond valmont's, control and assumptions,
Renee Campbell: While management believes these forward-looking statements are based on reasonable assumptions. Numerous factors could cause actual results to differ materially from those anticipated. These factors include among other things. Risks described in valmont's, reports to the Security and Exchange Commission SEC. The company's actual cash flows and net income future economic and market. Circumstances industry conditions, company performance and financial results. Operational 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 by domestic and foreign governments including tariffs.
Renee Campbell: The company, cautions that any forward-looking statements in, this release are made as of its publication date, and does not undertake to update these statements except as required by law.
Renee Campbell: The company's guidance includes certain non-gaap Financial measures adjusted diluted earnings per share and adjusted effective tax rate presented on a forward-looking basis. These measures are typically calculated by excluding the impact of items such as foreign exchange Acquisitions. Divestitures realignment or restructuring expenses. Good.
Goodwill or intangible asset impairment changes in tax laws or rates. Change in Redemption value of redeemable, non-controlling interests and other non-recurring items.
Reconciliations to the most directly comparable, gaap, Financial measures are not provided as the company cannot do. So without unreasonable effort, due to the inherent uncertainty and difficulty for predicting the timing and financial impact of such items. For the same reasons, the company cannot assess the likely significance of unavailable information, which could be material to Future results.
Renee Campbell: This book include today's conference, you may disconnect your lines at this time and thank you for your participation.