VALMONT INDUSTRIES INC

Valmont Industries is a diversified manufacturer of products and services for infrastructure and agriculture markets, founded in 1946 and headquartered in Omaha, Nebraska. The company operates in two reportable segments: Infrastructure, which includes utility, lighting and transportation, coatings, telecommunications, and solar product lines, and Agriculture, which includes irrigation equipment and parts and technology products and services. Key structural forces shaping competition include government funding initiatives such as the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, which are intended to allocate resources to enhance the nation's bridges, ensure public safety, update essential infrastructure, improve highway safety, and modernize the electrical grid. The company also benefits from increasing electricity consumption, an aging grid, and the expansion of renewable energy sources, which have intensified the need for enhanced transmission infrastructure.

In the Infrastructure sector, sales are often determined through competitive bidding processes, with contracts awarded to the lowest bidder that meets all necessary qualifications. The company establishes preferred-provider arrangements with certain key customers, typically lasting between three to five years and often renewed. The Coatings market is traditionally fragmented, consisting of many smaller, privately held companies competing on price and established customer relationships. In the Solar product line, the company primarily competes with other mid-sized market participants. In North America, the company is recognized as the leader among the main participants in the mechanized irrigation industry. Competitors differentiate themselves based on product durability, reliability, pricing and value proposition, quality, and the service capabilities of local dealers. In international markets, competition includes both major U.S. companies and privately owned local businesses.

The company generates revenue through the manufacture and distribution of products and solutions for infrastructure markets, including utility, lighting, transportation, telecommunications, and solar, along with coatings services, and through the manufacture of center pivot and linear irrigation equipment components for agricultural markets, including aftermarket parts and tubular products, and advanced technology solutions for precision agriculture. Revenue is recognized either over time or at a point in time depending on the product line. For the fiscal year ended December 27, 2025, total net sales were $4,104,102,000 ¹, with product sales of $3,670,596,000 ² and service sales of $433,506,000 ³. The company's primary customer segments include electric utilities, wireless carriers, engineering and construction firms, solar developers, independent power producers, and agricultural growers. The company markets its irrigation machines, technology offerings, and service parts through an extensive network of independent dealers, with approximately 250 dealer locations in North America and around 400 dealer locations covering international markets across more than 60 countries.

The Infrastructure segment consists of five product lines: Utility, Lighting and Transportation, Coatings, Telecommunications, and Solar. The Utility product line designs, engineers, and manufactures structures made of steel, pre-stressed concrete, and composites to support electrical transmission, substations, and distribution applications. For fiscal 2025, Utility product line sales were $1,511,053,000 ⁴, an increase of 10.4% ⁵ compared to fiscal 2024. The Lighting and Transportation product line designs, engineers, and manufactures poles and structures made of steel, aluminum, wood, and composites for lighting and transportation needs, with sales of $830,268,000 ⁶ in fiscal 2025, a decrease of 6.1% ⁷. The Coatings product line offers finishing services including galvanizing and painting, with sales of $362,209,000 ⁸ in fiscal 2025, an increase of 2.4% ⁹. The Telecommunications product line designs, manufactures, and distributes products for the wireless communication market, with sales of $313,882,000 ¹⁰ in fiscal 2025, an increase of 25.2% ¹¹. The Solar product line provides single-axis solar trackers, with sales of $81,622,000 ¹² in fiscal 2025, a decrease of 46.2% ¹³.

The Agriculture segment consists of two product lines: Irrigation Equipment and Parts, and Technology Products and Services. Under the Valley brand, the company manufactures and distributes center pivot and lateral move irrigation equipment, along with service parts. The company also produces tubular products for industrial customers. The Technology Products and Services line offers a comprehensive suite of technology solutions designed to enhance agricultural efficiency through advanced monitoring, analysis, and automation, with over 175,000 ¹⁴ connected devices. For fiscal 2025, North America Agriculture segment sales were $506,316,000 ¹⁵, a decrease of 11.3% ¹⁶, and International Agriculture segment sales were $514,434,000 ¹⁷, an increase of 0.2% ¹⁸. Total Agriculture segment sales were $1,014,370,000 ¹⁹ in fiscal 2025, a decrease of 5.8% ²⁰.

During fiscal 2025, the company acquired the remaining 40% of ConcealFab, Inc., a 5G infrastructure and PIM mitigation solutions company in Colorado included in the Infrastructure segment, for $81,822,000 ²¹. The company also acquired the remaining 45% of Solbras Energia Solar do Brasil S.A., a leading provider of solar energy solutions for agriculture in Brazil included in the Agriculture segment, for $14,246,000 ²². Additionally, the company acquired an additional approximately 30% of Valmont Irrigation Argentina B.V., an irrigation equipment distributor in Argentina included in the Agriculture segment, for $14,624,000 ²³. In fiscal 2025, the company completed a targeted organizational realignment resulting in pre-tax cash charges of $16,066,000 ²⁴. The company repurchased 607,583 ²⁵ shares of common stock for $198,089,000 ²⁶ during fiscal 2025. The Board of Directors increased the authorized capacity under the share repurchase program by $700,000,000 ²⁷, bringing the total authorization to $2,100,000,000 ²⁸. The company paid total dividends of $52,481,000 ²⁹ in fiscal 2025.

For fiscal 2025, consolidated net sales were $4,104,102,000 ³⁰, an increase of 0.7% ³¹ compared to $4,075,034,000 ³² in fiscal 2024. Gross profit was $1,239,936,000 ³³, a decrease of 0.1% ³⁴ compared to $1,241,212,000 ³⁵ in fiscal 2024. Operating income was $415,576,000 ³⁶, a decrease of 20.8% ³⁷ compared to $524,584,000 ³⁸ in fiscal 2024. Net earnings attributable to Valmont Industries, Inc. were $350,273,000 ³⁹, an increase of 0.6% ⁴⁰ compared to $348,259,000 ⁴¹ in fiscal 2024. Diluted earnings per share were $16.79 ⁴², a decrease of 2.3% ⁴³ compared to $17.19 ⁴⁴ in fiscal 2024. Net cash flows from operating activities were $456,484,000 ⁴⁵ in fiscal 2025, compared to $572,678,000 ⁴⁶ in fiscal 2024.

The company expects fiscal 2026 capital expenditures to range from $170,000,000 ⁴⁷ to $200,000,000 ⁴⁸. The increase in planned expenditures is driven by infrastructure-related growth opportunities. These investments will enhance output, improve adaptability to evolving needs, and expand manufacturing capacity, efficiency, and flexibility.

A significant growth vector for the Infrastructure segment is the utility industry in North America, which is increasing investment in critical electrical grid upgrades to improve reliability, integrate renewable energy sources, and expand transmission capacity. Increasing electricity consumption, an aging grid, and the expansion of renewable energy sources have intensified the need for enhanced transmission infrastructure. Demand from data center construction is increasing as cloud computing, artificial intelligence, and digitalization drive the need for reliable power infrastructure, transmission capacity, and grid resiliency to support energy-intensive facilities. The company is strategically investing in its manufacturing capabilities to increase flexible production capacity. The Telecommunications market is driven by growing demand for wireless communication and data services, including rapid increases in data consumption across mobile and connected devices. The continued expansion of 5G networks and rising connectivity and data usage needs are fueling long-term growth, requiring higher network density.

Another growth vector is the Agriculture segment, where the demand for mechanized irrigation arises from several sources: the conversion of traditional flood irrigation systems, the replacement of older mechanized systems that are beyond their useful life or technologically obsolete, and the transition from non-irrigated land to mechanized irrigation. Water scarcity is a key driver of demand, as agriculture consumes the majority of available freshwater. The company believes that mechanized irrigation can improve water application efficiency compared to traditional methods by delivering water uniformly to the root zone and minimizing runoff. The company is focused on navigating evolving market conditions and positioning the Agriculture business for long-term growth across both domestic and international markets. In international markets, government-sponsored irrigation initiatives aimed at food security further drive investments in mechanized irrigation systems.

Consolidated gross profit decreased by 0.1% in fiscal 2025, as compared to fiscal 2024, primarily attributable to lower sales volumes in North America within the Agriculture segment and reduced sales volumes in the L&T and Solar product lines within the Infrastructure segment. These impacts were partially offset by higher sales volumes and improved pricing in the Utility and Telecommunications product lines. Consolidated selling, general, and administrative expenses increased by 0.1% in fiscal 2025, primarily due to $24,200,000 ⁴⁹ of legal contingency reserves and $23,800,000 ⁵⁰ of expected credit losses in Brazil. These increases were partially offset by lower compensation and incentive costs, driven in part by the strategic realignment, as well as reduced research and development costs primarily as a result from the exit of the Prospera business. Consolidated operating income decreased by 20.8% in fiscal 2025, primarily due to the impairment of certain long-lived assets totaling $91,337,000 ⁵¹, realignment charges of $15,390,000 ⁵², and slightly higher SG&A expenses.

The company's capital spending programs focus on investments for replacement, achieving operational efficiencies, and expanding capacities where necessary. The company expects fiscal 2026 capital expenditures to range from $170,000,000 ⁵³ to $200,000,000 ⁵⁴. The increase in planned expenditures is driven by infrastructure-related growth opportunities. These investments will enhance output, improve adaptability to evolving needs, and expand manufacturing capacity, efficiency, and flexibility. As of December 27, 2025, the company had a total of 10,791 ⁵⁵ employees. The company relies on a skilled workforce and effective management, with key skills including engineering, welding, equipment maintenance, and the operation of complex manufacturing machinery.

The company plans to allocate approximately 50% of operating cash flow to high-return growth opportunities, focused on capital expenditures for strategic capacity expansion, primarily in the Infrastructure segment, and acquisitions that strategically augment the competitive position. The company plans to allocate the remaining approximately 50% of operating cash flow to shareholder returns through the form of share repurchases and dividends. In February 2025, the Board of Directors increased the authorized capacity under the share repurchase program by $700,000,000 ⁵⁶, bringing the total authorization to $2,100,000,000 ⁵⁷, with no stated expiration date. As of December 27, 2025, the company had approximately $567,000,000 ⁵⁸ of remaining capacity under the share repurchase program. Since the program's inception in May 2014, the company has repurchased approximately 8,800,000 ⁵⁹ shares for a total of $1,500,000,000 ⁶⁰. Subsequent to year end, on February 23, 2026, the Board of Directors approved a quarterly cash dividend on common stock of $0.77 ⁶¹ per share, or an annualized rate of $3.08 ⁶² per share, representing an increase of approximately 13% ⁶³. The company's credit ratings were Baa2 (stable outlook) by Moody's Ratings and BBB+ (stable outlook) by S&P Global Ratings.

The Agriculture business remains cyclical and is influenced by factors such as net farm income, commodity prices, weather volatility, geopolitical events, and farmer sentiment regarding future economic conditions. In the U.S., the company considers net farm income estimates published by the U.S. Department of Agriculture as a key indicator of grower purchasing capacity. In Brazil, the company monitors grain prices, projected farm input costs, interest rates, and net farm income trends, which collectively influence grower liquidity, credit conditions, and purchasing behavior. Lower levels of farm income have, at times, led to reduced demand for mechanized irrigation and tubing products. Farm income decreases when commodity prices, acreage planted, crop yields, government subsidies, and export levels decline. Additionally, weather conditions, potentially worsened by climate change, such as extreme drought, can limit water availability for irrigation and influence farmers' purchasing decisions.

The company faces headwinds from changes in prices and reduced availability of key commodities such as steel, aluminum, zinc, natural gas, and fuel, which may increase operating costs and likely reduce net sales and profitability. Hot-rolled steel coil and other carbon steel products have historically represented a substantial portion of the cost to manufacture products. Steel is particularly significant for the Utility product line, where the cost of steel has accounted for approximately 50% ⁶⁴ of net sales on average. A hypothetical 20% ⁶⁵ change in the price of steel would have affected net sales in this product line by approximately $110,000,000 ⁶⁶ for the fiscal year ended December 27, 2025. The company is also subject to currency fluctuations from international sales, with approximately 28% ⁶⁷ of fiscal 2025 net sales occurring outside the U.S. A 10% ⁶⁸ fluctuation in the U.S. dollar's value would have affected the reported cash balance by approximately $11,600,000 ⁶⁹ in fiscal 2025.

The company's sales are sensitive to market conditions in the industries where the ultimate consumers of its products operate, which have been highly cyclical and subject to substantial downturns. In fiscal 2025, sales to the U.S. electric utility industry were approximately $1,500,000,000 ⁷⁰, and utilities may defer purchases due to unfavorable regulatory environments, a slow U.S. economy, or financing constraints. The Agriculture segment is impacted by lower levels of farm income, which has led to reduced demand for mechanized irrigation and tubing products. Changes in prices and reduced availability of key commodities such as steel, aluminum, zinc, natural gas, and fuel may increase operating costs. Steel is particularly significant for the Utility product line, where the cost of steel has accounted for approximately 50% ⁷¹ of net sales on average, and a hypothetical 20% ⁷² change in the price of steel would have affected net sales in this product line by approximately $110,000,000 ⁷³ for fiscal 2025. The company is subject to currency fluctuations, with approximately 28% ⁷⁴ of fiscal 2025 net sales occurring outside the U.S., and a 10% ⁷⁵ fluctuation in the U.S. dollar's value would have affected the reported cash balance by approximately $11,600,000 ⁷⁶ in fiscal 2025. The company faces risks from trade policies and tariffs, including Section 232 tariffs on steel and aluminum, and imported approximately $220,000,000 ⁷⁷ of fabricated steel structures from Mexico into the U.S. during fiscal 2025. As of December 27, 2025, the company had a total of $829,477,000 ⁷⁸ in outstanding indebtedness, and the level of indebtedness may have significant consequences, including limiting funds available for operations and making the company more vulnerable in a downturn.

Management's message emphasizes a balanced approach to capital allocation, intending to present a balanced approach to maintaining disciplined investments in organic and inorganic growth opportunities while delivering meaningful capital returns to shareholders over the next three to five years. These priorities are expected to be supported by projected cash flow generation. The company plans to allocate approximately 50% of operating cash flow to high-return growth opportunities, focused on capital expenditures for strategic capacity expansion, primarily in the Infrastructure segment, and acquisitions that strategically augment the competitive position. The remaining approximately 50% of operating cash flow is planned to be allocated to shareholder returns through share repurchases and dividends. Management also emphasizes the company's commitment to maintaining a capital structure that supports its investment-grade credit rating, with credit ratings of Baa2 (stable outlook) by Moody's Ratings and BBB+ (stable outlook) by S&P Global Ratings. The company aims to manage its debt-to-invested capital ratio within levels that reinforce its investment-grade status. Management's forward-looking statements include the expectation that fiscal 2026 capital expenditures will range from $170,000,000 ⁷⁹ to $200,000,000 ⁸⁰.