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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 30, 2024

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 1-31429

Valmont Industries, Inc.

(Exact name of registrant as specified in its charter)

Delaware

47-0351813

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

15000 Valmont Plaza,

Omaha, Nebraska

68154

(Address of principal executive offices)

(Zip Code)

(402) 963-1000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

  

Trading Symbol(s)

  

Name of each exchange on which registered

Common Stock, $1.00 par value

VMI

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non‑accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 3, 2024, there were 20,191,600Close shares of the registrant’s common stock outstanding.

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

   

PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited):

Condensed Consolidated Statements of Earnings for the thirteen weeks ended March 30, 2024 and April 1, 2023

3

Condensed Consolidated Statements of Comprehensive Income for the thirteen weeks ended March 30, 2024 and April 1, 2023

4

Condensed Consolidated Balance Sheets as of March 30, 2024 and December 30, 2023

5

Condensed Consolidated Statements of Cash Flows for the thirteen weeks ended March 30, 2024 and April 1, 2023

6

Condensed Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interests for the thirteen weeks ended March 30, 2024 and April 1, 2023

7

Notes to Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30

Item 4.

Controls and Procedures

30

PART IIOTHER INFORMATION

Item 1.

Legal Proceedings

31

Item 1A.

Risk Factors

31

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 3.

Defaults Upon Senior Securities

31

Item 4.

Mine Safety Disclosures

31

Item 5.

Other Information

32

Item 6.

Exhibits

32

Signatures

33

2

Table of Contents

PART IFINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

delete

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per share amounts)

(Unaudited)

Thirteen weeks ended

March 30,

April 1,

2024

    

2023

Product sales

$

874,678

$

958,008

Service sales

 

103,150

 

104,473

Net sales

 

977,828

 

1,062,481

Product cost of sales

 

605,215

 

681,790

Service cost of sales

 

66,397

 

72,106

Total cost of sales

 

671,612

 

753,896

Gross profit

 

306,216

 

308,585

Selling, general, and administrative expenses

 

174,663

 

190,119

Operating income

 

131,553

 

118,466

Other income (expenses):

 

 

Interest expense

 

(16,221)

 

(13,105)

Interest income

 

1,779

 

830

Gain on deferred compensation investments

 

1,431

 

1,194

Other

 

(105)

 

(2,376)

Total other income (expenses)

 

(13,116)

 

(13,457)

Earnings before income taxes and equity in loss of nonconsolidated subsidiaries

 

118,437

 

105,009

Income tax expense:

 

  

 

  

Current

 

19,644

 

24,356

Deferred

 

10,344

 

7,487

Total income tax expense

 

29,988

 

31,843

Earnings before equity in loss of nonconsolidated subsidiaries

 

88,449

 

73,166

Equity in loss of nonconsolidated subsidiaries

 

(20)

(821)

Net earnings

 

88,429

 

72,345

Loss (earnings) attributable to redeemable noncontrolling interests

 

(607)

 

2,195

Net earnings attributable to Valmont Industries, Inc.

$

87,822

$

74,540

Net earnings attributable to Valmont Industries, Inc. per share:

 

 

  

Basic

$

4.35

$

3.50

Diluted

$

4.32

$

3.47

See accompanying Notes to Condensed Consolidated Financial Statements.

3

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

Thirteen weeks ended

March 30,

April 1,

2024

    

2023

Net earnings

$

88,429

$

72,345

Other comprehensive income (loss), net of tax:

 

  

 

  

Foreign currency translation adjustments:

 

  

 

  

Unrealized translation gain (loss)

 

(21,418)

 

8,189

Hedging activities:

 

  

 

  

Unrealized loss on commodity hedges

 

(561)

 

(1,476)

Realized loss (gain) on commodity hedges recorded in earnings

 

(717)

 

2,872

Unrealized gain (loss) on cross currency swaps

195

(591)

Amortization cost included in interest expense

 

(12)

 

(16)

Total hedging activities

(1,095)

789

Net gain on defined benefit pension plan

 

381

 

91

Total other comprehensive income (loss), net of tax

 

(22,132)

 

9,069

Comprehensive income

 

66,297

 

81,414

Comprehensive loss (income) attributable to redeemable noncontrolling interests

 

(450)

 

1,902

Comprehensive income attributable to Valmont Industries, Inc.

$

65,847

$

83,316

See accompanying Notes to Condensed Consolidated Financial Statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)

(Unaudited)

    

March 30,

December 30,

2024

    

2023

ASSETS

Current assets:

  

 

  

Cash and cash equivalents

$

169,195

$

203,041

Receivables, net

 

659,036

 

657,960

Inventories

 

668,743

 

658,428

Contract assets

 

191,483

 

175,721

Prepaid expenses and other current assets

 

91,114

 

92,479

Total current assets

 

1,779,571

 

1,787,629

Property, plant, and equipment, at cost

 

1,517,281

 

1,513,239

Less accumulated depreciation

 

(908,878)

 

(895,845)

Property, plant, and equipment, net

 

608,403

 

617,394

Goodwill

 

629,888

 

632,964

Other intangible assets, net

 

145,839

 

150,687

Defined pension benefit asset

33,433

 

15,404

Other non-current assets

 

268,247

 

273,370

Total assets

$

3,465,381

$

3,477,448

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS,
AND SHAREHOLDERS’ EQUITY

Current liabilities:

 

  

 

  

Current installments of long-term debt

$

620

$

719

Notes payable to banks

 

2,029

 

3,205

Accounts payable

 

327,414

 

358,311

Accrued employee compensation and benefits

 

89,100

 

130,861

Contract liabilities

 

84,041

 

70,978

Other accrued expenses

 

149,222

 

146,903

Income taxes payable

10,295

Dividends payable

 

12,113

 

12,125

Total current liabilities

 

674,834

 

723,102

Deferred income taxes

 

26,508

 

21,205

Long-term debt, excluding current installments

 

1,107,644

 

1,107,885

Operating lease liabilities

 

157,279

 

162,743

Deferred compensation

 

33,148

 

32,623

Other non-current liabilities

 

11,697

 

12,818

Total liabilities

2,011,110

2,060,376

Redeemable noncontrolling interests

 

44,980

 

62,792

Shareholders’ equity:

 

  

 

  

Common stock of $1 par value, authorized 75,000,000 shares; issued 27,900,000

 

27,900

 

27,900

Additional paid-in capital

 

5,668

 

Retained earnings

 

2,719,315

 

2,643,606

Accumulated other comprehensive loss

 

(295,211)

 

(273,236)

Treasury stock

 

(1,048,381)

 

(1,043,990)

Total shareholders’ equity

1,409,291

1,354,280

Total liabilities, redeemable noncontrolling interests, and shareholders’ equity

$

3,465,381

$

3,477,448

See accompanying Notes to Condensed Consolidated Financial Statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

    

Thirteen weeks ended

March 30,

April 1,

2024

    

2023

Cash flows from operating activities:

  

 

  

Net earnings

$

88,429

$

72,345

Adjustments to reconcile net earnings to net cash flows from operations:

 

 

Depreciation and amortization

 

23,536

 

24,558

Contribution to defined benefit pension plan

 

(16,714)

 

(15,259)

Stock-based compensation

 

7,183

 

8,689

Net periodic pension cost

158

61

Loss on sale of property, plant, and equipment

 

31

 

51

Equity in loss of nonconsolidated subsidiaries

 

20

 

821

Deferred income taxes

 

10,344

 

7,487

Changes in assets and liabilities:

 

 

Receivables

 

(8,699)

 

(42,175)

Inventories

 

(16,972)

 

9,052

Contract assets

 

(15,836)

 

14,695

Prepaid expenses and other assets (current and non-current)

 

(3,595)

 

(25,153)

Accounts payable

 

(27,561)

 

4,127

Contract liabilities

 

13,773

 

(22,559)

Accrued expenses

 

(38,465)

 

(36,551)

Income taxes payable / refundable

 

8,431

 

15,358

Other non-current liabilities

 

(731)

 

5,652

Net cash flows from operating activities

 

23,332

 

21,199

Cash flows from investing activities:

 

 

Purchase of property, plant, and equipment

 

(15,010)

 

(22,361)

Proceeds from sale of assets

 

140

 

1,021

Other, net

(3,769)

(449)

Net cash flows from investing activities

 

(18,639)

 

(21,789)

Cash flows from financing activities:

 

 

Proceeds from short-term borrowings

 

4,015

 

11,090

Payments on short-term borrowings

 

(5,151)

 

(5,788)

Proceeds from long-term borrowings

 

10

 

125,000

Principal payments on long-term borrowings

 

(175)

 

(10,796)

Proceeds from settlement of financial derivatives

 

2,711

 

Dividends paid

 

(12,126)

 

(11,742)

Dividends to redeemable noncontrolling interests

 

(664)

 

(654)

Purchase of redeemable noncontrolling interests

 

(17,745)

 

Purchase of treasury shares

 

 

(111,115)

Proceeds from exercises under stock plans

 

1,959

 

5,018

Tax withholdings on exercises under stock plans

 

(7,668)

 

(14,022)

Net cash flows from financing activities

 

(34,834)

 

(13,009)

Effect of exchange rate changes on cash and cash equivalents

 

(3,705)

 

1,141

Net change in cash and cash equivalents

 

(33,846)

 

(12,458)

Cash and cash equivalents—beginning of period

 

203,041

 

185,406

Cash and cash equivalents—end of period

$

169,195

$

172,948

See accompanying Notes to Condensed Consolidated Financial Statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

AND REDEEMABLE NONCONTROLLING INTERESTS

(Dollars in thousands, except per share amounts)

(Unaudited)

    

    

    

    

Accumulated

    

    

Additional

other

Total

Redeemable

Common

paid-in

Retained

comprehensive

Treasury

shareholders’

noncontrolling

stock

capital

earnings

loss

stock

equity

interests

Balance as of December 30, 2023

$

27,900

$

$

2,643,606

$

(273,236)

$

(1,043,990)

$

1,354,280

$

62,792

Net earnings

 

 

 

87,822

 

 

 

87,822

 

607

Other comprehensive loss

 

 

 

 

(21,975)

 

 

(21,975)

 

(157)

Cash dividends declared ($0.60 per share)

 

 

 

(12,113)

 

 

 

(12,113)

 

Purchase of redeemable noncontrolling interests

(147)

(147)

(17,598)

Dividends to redeemable noncontrolling interests

 

 

 

 

 

 

 

(664)

Purchase of treasury shares; 96,224 shares acquired

 

 

21,074

 

 

 

(21,124)

 

(50)

 

Stock option and incentive plans

 

(15,259)

16,733

1,474

Balance as of March 30, 2024

$

27,900

$

5,668

$

2,719,315

$

(295,211)

$

(1,048,381)

$

1,409,291

$

44,980

    

    

    

    

Accumulated

    

    

Additional

other

Total

Redeemable

Common

paid-in

Retained

comprehensive

Treasury

shareholders’

noncontrolling

    

stock

    

capital

    

earnings

    

income (loss)

    

stock

    

equity

interests

Balance as of December 31, 2022

$

27,900

$

$

2,593,039

$

(274,909)

$

(765,183)

$

1,580,847

$

60,865

Net earnings (loss)

 

 

 

74,540

 

 

 

74,540

 

(2,195)

Other comprehensive income

 

 

 

 

8,776

 

 

8,776

 

293

Cash dividends declared ($0.60 per share)

 

 

 

(12,634)

 

 

 

(12,634)

 

Dividends to redeemable noncontrolling interests

 

 

 

 

 

 

(662)

Purchase of treasury shares; 356,887 shares acquired

 

 

 

 

(111,115)

 

(111,115)

 

Stock option and incentive plans

 

(19,317)

19,002

(315)

Balance as of April 1, 2023

$

27,900

$

$

2,635,628

$

(266,133)

$

(857,296)

$

1,540,099

$

58,301

See accompanying Notes to Condensed Consolidated Financial Statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Condensed Consolidated Financial Statements

The Condensed Consolidated Balance Sheets as of March 30, 2024 and December 30, 2023 and the Condensed Consolidated Statements of Earnings, Comprehensive Income, Cash Flows, and Shareholders’ Equity and Redeemable Noncontrolling Interests for the thirteen weeks ended March 30, 2024 and April 1, 2023 have been prepared by Valmont Industries, Inc. (the “Company”) without audit. In the opinion of the Company’s management, all necessary adjustments, which include normal and recurring adjustments, have been made to present fairly the financial statements as of March 30, 2024 and for all periods presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023. The results of operations for the period ended March 30, 2024 are not necessarily indicative of the operating results for the full fiscal year.

Inventories

Inventories are valued at the lower of cost, determined by the first-in, first-out method, or net realizable value. Finished and manufactured goods inventories include the costs of acquired raw materials and the related factory labor and overhead charges required to convert raw materials to finished and manufactured goods.

Inventories as of March 30, 2024 and December 30, 2023 consisted of the following:

March 30,

December 30,

2024

    

2023

Raw materials and purchased parts

$

236,434

$

217,134

Work in process

 

41,214

 

37,826

Finished and manufactured goods

 

391,095

 

403,468

Total inventories

$

668,743

$

658,428

Geographical Markets

Earnings before income taxes and equity in loss of nonconsolidated subsidiaries for the thirteen weeks ended March 30, 2024 and April 1, 2023 were as follows:

    

Thirteen weeks ended

March 30,

April 1,

2024

    

2023

United States

$

86,212

$

31,858

Foreign

 

32,225

 

73,151

Earnings before income taxes and equity in loss of nonconsolidated subsidiaries

$

118,437

$

105,009

Pension Costs

The Company incurs costs in connection with the Delta Pension Plan (“DPP”). The DPP was acquired as part of the Delta PLC acquisition in fiscal 2010 and has no members who are active employees. In order to measure the cost and the related benefit obligation, various assumptions are made including the discount rates used to value the obligation, the expected return on plan assets used to fund the costs, and the estimated future inflation rates. These assumptions are based on historical experience as well as current facts and circumstances. An actuarial analysis is used to measure the cost and liability associated with pension benefits.

8

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

The components of the net periodic pension cost for the thirteen weeks ended March 30, 2024 and April 1, 2023 were as follows:

Thirteen weeks ended

March 30,

April 1,

2024

    

2023

Interest cost

$

5,242

$

5,256

Expected return on plan assets

 

(5,592)

 

(5,317)

Amortization of prior service costs

 

127

 

122

Amortization of net actuarial loss

 

381

 

Net periodic pension cost

$

158

$

61

Stock Plans

The Company maintains stock-based compensation plans approved by the shareholders, which provide that the Human Resources Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and bonuses of common stock. As of March 30, 2024, 1,451,535 shares of common stock remained available for issuance under the plans.

Stock options granted under the plans call for the exercise price of each option to equal the closing market price as of the date of the grant. Options vest beginning on the first anniversary of the grant date in equal amounts over three years or on the grant’s fifth-anniversary date. The expiration of grants is seven to ten years from the date of the award. Restricted stock units and awards generally vest in equal installments over three or four years beginning on the first anniversary of the grant.

The Company’s stock-based compensation (included in “Selling, general, and administrative expenses” in the Condensed Consolidated Statements of Earnings) and associated income tax benefits related to stock options and restricted stock awards for the thirteen weeks ended March 30, 2024 and April 1, 2023 were as follows:

Thirteen weeks ended

March 30,

April 1,

2024

    

2023

Stock-based compensation

$

7,183

$

8,689

Income tax benefits

 

1,796

 

2,172

Fair Value

The Company applies the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820, Fair Value Measurement (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820 apply to other accounting pronouncements that require or permit fair value measurements. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

9

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

ASC 820 establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.

The categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The following are descriptions of the valuation methodologies used for assets and liabilities measured at fair value.

Deferred Compensation Investments: The Company’s deferred compensation investments include mutual funds invested in debt and equity securities held in the Valmont Deferred Compensation Plan. Quoted market prices are available for these securities in an active market. The investments are included in “Other non-current assets” in the Condensed Consolidated Balance Sheets.

Derivative Financial Instruments: The fair values of foreign currency, commodity, and cross currency swap derivative contracts are based on valuation models that use market observable inputs including forward and spot prices for commodities and currencies.

Mutual Funds: The Company has short-term investments in various mutual funds.

Carrying Value

Fair Value Measurement Using:

March 30, 2024

Level 1

Level 2

Level 3

Deferred compensation investments

$

27,382

$

27,382

$

$

Derivative financial instruments, net

(1,507)

(1,507)

Cash and cash equivalents—mutual funds

508

508

Carrying Value

Fair Value Measurement Using:

December 30, 2023

Level 1

Level 2

Level 3

Deferred compensation investments

$

26,803

$

26,803

$

$

Derivative financial instruments, net

2,860

2,860

Cash and cash equivalents—mutual funds

6,258

6,258

Long-Lived Assets

The Company’s other non-financial assets include goodwill and other intangible assets, which are measured at fair value on a non-recurring basis using Level 3 inputs. See Note 5 for further information.

Leases

The Company’s operating lease right-of-use assets are included in “Other non-current assets” and the corresponding lease obligations are included in “Other accrued expenses” and “Operating lease liabilities” in the Condensed Consolidated Balance Sheets.

Comprehensive Income (Loss)

Comprehensive income (loss) includes net earnings, foreign currency translation adjustments, certain derivative-related activity, and changes in prior service costs and net actuarial losses from the pension plan. Results of operations for

10

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

foreign subsidiaries are translated using the average exchange rates during the period. Assets and liabilities are translated at the exchange rates in effect on the balance sheet dates. Accumulated other comprehensive income (loss) (“AOCI”) consisted of the following as of March 30, 2024 and December 30, 2023:

March 30,

December 30,

2024

    

2023

Foreign currency translation adjustments

$

(257,951)

$

(236,690)

Hedging activities

19,894

20,989

Defined benefit pension plan

(57,154)

(57,535)

Accumulated other comprehensive loss

$

(295,211)

$

(273,236)

Revenue Recognition

The Company determines the appropriate revenue recognition model for contracts by analyzing the type, terms, and conditions of each contract or arrangement with a customer. Contracts with customers for all businesses are fixed-price with sales tax excluded from revenue and do not include variable consideration. Discounts included in contracts with customers, typically early-pay discounts, are recorded as a reduction of net sales in the period in which the sale is recognized. Contract revenues are classified as “Product sales” when the performance obligation is related to the manufacturing and sale of goods. Contract revenues are classified as “Service sales” when the performance obligation is the performance of a service. Service revenue is primarily related to the Coatings product line and Technology Products and Services product line.

Customer acceptance provisions exist only in the design stage of our products (on a limited basis, the Company may agree to other acceptance terms), and acceptance of the design by the customer is required before manufacturing commences and the product is manufactured and delivered to the customer. The Company is generally not entitled to any compensation solely based on the design of the product and does not recognize this service as a separate performance obligation, therefore, no revenue is recognized for design services. No general rights of return exist for customers once the product has been delivered, and the Company establishes provisions for estimated warranties.

Shipping and handling costs associated with sales are recorded within cost of sales. The Company elected to use the practical expedient of treating freight as a fulfillment obligation instead of a separate performance obligation and ratably recognize freight expense as the structure is being manufactured when the revenue from the associated customer contract is being recognized over time. With the exception of the Transmission, Distribution, and Substation ("TD&S"), Solar, and Telecommunications product lines, the Company’s inventory is interchangeable for a variety of each segment’s customers. The Company has elected not to disclose the partially satisfied performance obligation at the end of the period when the contract has an original expected duration of one year or less. In addition, the Company does not adjust the amount of consideration to be received in a contract for any significant financing component if payment is expected within one year of transfer of control of goods or services.

Most of the Company’s customers are invoiced upon shipment or delivery of the goods to the customer’s specified location. As revenue is recognized over time, contract assets are recorded, and such contract assets are relieved when the customer is invoiced. As of March 30, 2024 and December 30, 2023, the Company’s contract assets totaled $191,483 and $175,721, respectively.

Certain customers are also invoiced by advanced billings or progress billings. When progress on performance obligations is less than the amount the customer has been billed, a contract liability is recognized. As of March 30, 2024 and December 30, 2023, total contract liabilities were $84,041 and $70,978, respectively, and were recorded as “Contract liabilities” in the Condensed Consolidated Balance Sheets. Additional details are as follows:

During the thirteen weeks ended March 30, 2024 and April 1, 2023, the Company recognized $34,279 and $58,939 of revenue that was included in the total contract liability as of December 30, 2023 and December 31, 2022, respectively. The revenue recognized was due to applying advance payments received for performance obligations completed during the period.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

As of March 30, 2024, the Company had no material remaining performance obligations on contracts with an expected duration of one year or more.

Segment and Product Line Revenue Recognition

Infrastructure Segment

Steel and concrete structures within the TD&S and Telecommunications product lines are engineered to customer specifications resulting in limited ability to sell the structures to a different customer if an order is canceled after production commences. The continuous transfer of control to the customer is evidenced either by contractual termination clauses or by rights to payment for work performed to date plus a reasonable profit as the products do not have an alternative use to the Company. Since control is transferred over time, revenue is recognized based on the extent of progress toward completion of the performance obligation. The selection of the method to measure progress toward completion requires judgment. For the structures manufactured within the TD&S and Telecommunications product lines, the Company generally recognizes revenue on an inputs basis, using total production hours incurred to date for each order as a percentage of total hours estimated to complete the order. The completion percentage is applied to the order’s total revenue and total estimated costs to determine reported revenue, cost of sales, and gross profit. Production of an order, once started, is typically completed within three months. Depending on the product sold, revenue from the Solar product line is recognized upon shipment or delivery of goods to the customer depending on contract terms, or by using an inputs method, based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. External sales agents are used in certain TD&S product line sales and the Company has chosen to expense estimated commissions owed to third parties by recognizing them proportionately as the goods are manufactured.

For the structures sold for the Lighting and Transportation product line and for the majority of Telecommunications products, revenue is recognized upon shipment or delivery of goods to the customer depending on contract terms, which is the same point in time that the customer is billed. Some large regional customers have unique product specifications for telecommunication structures. When the customer contract includes a cancellation clause that would require them to pay for work completed plus a reasonable margin if an order was canceled, revenue is recognized over time based on hours worked as a percent of total estimated hours to complete production.

The Coatings product line revenues are derived by providing coating services to customers’ products, which include galvanizing, anodizing, and powder coating. Revenue is recognized once the service has been performed and the goods are ready to be picked up or delivered to the customer, which is the same time that the customer is billed.

Agriculture Segment

Revenue recognition from the manufacture of irrigation equipment and related parts and services (including tubular products for industrial customers) is generally upon shipment of the goods to the customer which is the same point in time that the customer is billed. The remote monitoring subscription services recognized as part of the Technology Products and Services product line are primarily billed annually and revenue is recognized on a straight-line basis over the contract period.

The disaggregation of revenue by product line is disclosed in Note 9.

Supplier Finance Program

During fiscal 2019, the Company entered into an agreement with a third-party financial institution to facilitate a supplier finance program that allows qualifying suppliers to sell their receivables from the Company to the financial institution. These participating suppliers negotiate their outstanding receivable arrangements directly with the financial institution and the Company’s rights and obligations to suppliers are not impacted. The Company has no economic interest in a supplier’s decision to enter into these agreements. Once a qualifying supplier elects to participate in the supplier finance program and reaches an agreement with a financial institution, they elect which individual Company invoices they sell to the financial institution. The Company’s obligation is to make payment in the invoice amount negotiated with participating suppliers to the financial institution on the invoice due date, regardless of whether the individual invoice is sold by the

12

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

supplier to the financial institution. The financial institution pays the supplier on the invoice due date for any invoices that were not previously sold under the supplier finance program. The invoice amounts and scheduled payment terms are not impacted by the suppliers’ decisions to sell amounts under these arrangements. The payment of these obligations is included in “Net cash flows from operating activities” in the Condensed Consolidated Statements of Cash Flows. Included in “Accounts payable” in the Condensed Consolidated Balance Sheets as of March 30, 2024 and December 30, 2023 were $37,227 and $41,916 of outstanding payment obligations, respectively, that were sold to the financial institution under the Company’s supplier finance program.

Confirmed obligations outstanding as of December 30, 2023

$

41,916

Invoices confirmed during the period

55,255

Confirmed invoices paid during the period

 

(59,944)

Confirmed obligations outstanding as of March 30, 2024

$

37,227

Redeemable Noncontrolling Interests

Subsequent to the issuance of the Company’s Consolidated Financial Statements as of and for the period ended April 1, 2023, the Company identified an error in the presentation of “Noncontrolling interests in consolidated subsidiaries” of $60,865 as of December 31, 2022 and $58,301 as of April 1, 2023 that has been corrected in the current period. Such amounts were previously reported within “Total shareholders’ equity” and have been revised in the April 1, 2023 Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interests to be presented as “Redeemable noncontrolling interests” outside of “Total shareholders’ equity”. The Company has evaluated the materiality of this error based on an analysis of quantitative and qualitative factors and concluded it was not material to the prior period financial statements, individually or in aggregate.

Noncontrolling interests with redemption features that are not solely within the Company’s control are considered redeemable noncontrolling interests. The Company has redeemable noncontrolling interests in certain entities. The seller can require the Company to purchase their remaining ownership, known as a put right, for an amount and on a date specified in the applicable operating agreement. Likewise, the Company can require the seller to sell the Company their remaining ownership based on the same amount and timing, known as a call option.

As a result of these redemption features, the Company records the noncontrolling interests as redeemable and classifies the balances in temporary equity in the Condensed Consolidated Balance Sheets initially at its acquisition-date fair value. The Company adjusts the redeemable noncontrolling interests each reporting period for the net income (loss) attributable to the noncontrolling interests and any redemption value adjustments. The redeemable noncontrolling interest is accreted to the future redemption value using the effective interest method up to the date on which the put right becomes effective. Any accretion adjustment in the current reporting period of the redeemable noncontrolling interest is offset against retained earnings and impacts earnings used in the calculation of earnings per share in the reporting period.

As of March 30, 2024 and December 30, 2023, the redeemable noncontrolling interests were $44,980 and $62,792, respectively. The ultimate amount paid for the redeemable noncontrolling interests could be significantly different because the redemption amounts depend on the future results of the operations of the businesses.

Treasury Stock

Repurchased shares are recorded as “Treasury stock” and result in a reduction of “Shareholders’ equity” in the Condensed Consolidated Balance Sheets. When treasury shares are re-issued, the Company uses the last-in, first-out method, and the difference between the repurchase cost and re-issuance price is charged or credited to “Additional paid-in capital”.

In May 2014, the Company announced a capital allocation philosophy that covered a share repurchase program. Specifically, the Board of Directors at that time authorized the purchase of up to $500,000 of the Company’s outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately negotiated transactions. In February 2015 and again in October 2018, the Board of Directors authorized an additional purchase of up to $250,000 of the Company’s outstanding common stock with no stated expiration date. In February 2023, the Board of

13

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

Directors increased the amount remaining under the program by an additional $400,000, with no stated expiration date, bringing the total authorization to $1,400,000. As of March 30, 2024, the Company has acquired 7,991,948 shares for $1,263,892 under this share repurchase program.

In November 2023, the Company entered into an accelerated purchase agreement to repurchase $120,000 of the Company’s outstanding common stock (“November 2023 ASR”) with CitiBank, N.A. as counterparty. The November 2023 ASR was entered into under the Company’s previously announced share repurchase program described above. The Company pre-paid $120,000 in the fourth quarter of fiscal 2023 and received an initial delivery of 438,917 shares of common stock. The agreement was settled with the delivery of an additional 96,224 shares of common stock in the first quarter of fiscal 2024. The total number of shares ultimately delivered under the November 2023 ASR, and therefore the average purchase price paid per share of $224.24, was determined based on the volume-weighted average market price of the Company’s common stock during the term of the agreement, less a discount.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves the disclosures about reportable segments including more detailed information about a reportable segment’s expenses. This guidance will be effective for the fiscal year ending December 28, 2024 and the interim periods thereafter, with early adoption permitted. The guidance will have no effect on the Company’s results of operations as the changes are primarily disclosure related. The Company has elected not to early adopt.

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. This guidance will be effective on a prospective basis for the fiscal year ending December 27, 2025, with early adoption permitted. The guidance will have no effect on the Company’s results of operations as the changes are primarily disclosure related. The Company has elected not to early adopt.

(2) ACQUISITIONS

Acquisition of Business

On August 31, 2023, the Company acquired HR Products for $58,044 Australian dollars ($37,302 United States (“U.S.”) dollars) in cash (net of cash acquired) and subject to working capital adjustments. Of this amount, $7,200 Australian dollars ($4,626 U.S. dollars) was withheld by the Company at closing as a retention fund, to be settled in two equal payments at 12 and 24 months from the acquisition date for contingencies and disagreements. HR Products provides a broad range of irrigation products to serve the agriculture and landscaping industries and its operations are reported in the Agriculture segment. The acquisition strengthens the Company’s value proposition to customers in the key agriculture market of Australia by expanding its geographic footprint and accelerating its aftermarket parts presence. The customer relationships will be amortized over 13 years. The amount allocated to goodwill is attributable to anticipated synergies and other intangibles that do not qualify for separate recognition and is not deductible for tax purposes. The Company is currently completing its fair value assessment and expects to finalize the purchase price allocation by the third quarter of fiscal 2024.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed of HR Products as of the date of acquisition:

August 31,

2023

Current assets

$

24,153

Property, plant, and equipment

 

1,397

Goodwill

 

9,912

Customer relationships

11,503

Other non-current assets

 

3,997

Total fair value of assets acquired

50,962

Current liabilities

 

4,183

Operating lease liabilities

 

2,792

Deferred income taxes

 

3,450

Total fair value of liabilities assumed

10,425

Net assets acquired

$

40,537

Proforma disclosures were omitted for this acquisition as it does not have a significant impact on the Company’s financial results.

Acquisition-related costs incurred for the above acquisition were insignificant for all periods presented.

Acquisitions of Redeemable Noncontrolling Interests

In the first quarter of fiscal 2024, the Company acquired approximately 9% of ConcealFab for $7,227 and acquired the remaining portion of Valmont Substations, LLC for $10,518. These transactions were for the acquisitions of portions of the remaining shares of consolidated subsidiaries with no changes in control.

(3) DIVESTITURES

On April 30, 2023, the Company completed the sale of Torrent Engineering and Equipment, an integrator of prepackaged pump stations in Indiana, reported in the Agriculture segment, for net proceeds of $6,369. In the second quarter of fiscal 2023, a pre-tax gain of $2,994 was reported in “Other income (expenses)” in the Condensed Consolidated Statements of Earnings.

(4) REALIGNMENT ACTIVITIES

During the third quarter of fiscal 2023, management initiated a plan to streamline segment support across the Company and reduce costs through an organizational realignment program (the “Realignment Program”). The Realignment Program provided for a reduction in force through a voluntary early retirement program and other headcount reduction actions, which were completed as of December 30, 2023. The Board of Directors authorized the incurrence of cash charges up to $36,000 in connection with the Realignment Program.

During the fiscal year ended December 30, 2023, the Company recorded the following cumulative pre-tax expenses for the Realignment Program:

Infrastructure

Agriculture

Corporate

Total

Severance and other employee benefit costs

$

17,260

$

9,101

$

8,849

$

35,210

15

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

Changes in liabilities recorded for the Realignment Program were as follows:

    

Balance as of

    

Recognized

    

Costs Paid or

    

Balance as of

December 30,

Realignment

Otherwise

March 30,

2023

Expense

Settled

2024

Severance and other employee benefit costs

$

12,514

 

$

$

(9,835)

$

2,679

(5) GOODWILL AND INTANGIBLE ASSETS

Goodwill

The carrying amount of goodwill by segment as of March 30, 2024 and December 30, 2023 was as follows:

    

Infrastructure

    

Agriculture

    

Total

Gross balance as of December 30, 2023

$

478,663

$

323,683

$

802,346

Accumulated impairment losses

 

(49,382)

 

(120,000)

 

(169,382)

Balance as of December 30, 2023

 

429,281

 

203,683

632,964

Acquisition measurement period adjustment

 

 

735

 

735

Foreign currency translation

 

(2,588)

 

(1,223)

 

(3,811)

Balance as of March 30, 2024

$

426,693

$

203,195

$

629,888

Infrastructure

    

Agriculture

    

Total

Gross balance as of March 30, 2024

$

476,075

$

323,195

$

799,270

Accumulated impairment losses

(49,382)

(120,000)

(169,382)

Balance as of March 30, 2024

$

426,693

$

203,195

$

629,888

Intangible Assets

The components of intangible assets as of March 30, 2024 and December 30, 2023 were as follows:

March 30, 2024

 

December 30, 2023

Gross

 

Gross

Carrying

Accumulated

 

Carrying

Accumulated

    

Amount

    

Amortization

 

Amount

    

Amortization

Amortizing intangible assets:

Customer relationships

$

232,253

$

160,181

$

233,852

$

157,873

Patents & proprietary technology

 

59,243

 

45,710

 

59,311

 

45,416

Trade names

 

2,870

1,160

 

2,870

 

1,056

Other

 

4,732

 

4,520

 

4,787

 

4,538

Non-amortizing intangible assets:

Trade names

58,312

58,750

$

357,410

$

211,571

$

359,570

$

208,883

Amortizing intangible assets carry a remaining weighted-average life of approximately four years. Amortization expenses were $3,715 and $5,190 for the thirteen weeks ended March 30, 2024 and April 1, 2023, respectively. Based on amortizing intangible assets recognized in the Condensed Consolidated Balance Sheets as of March 30, 2024, amortization expense is estimated to average $10,169 for each of the next five fiscal years.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(6) CASH FLOW SUPPLEMENTARY INFORMATION

The Company considers all highly liquid temporary cash investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the thirteen weeks ended March 30, 2024 and April 1, 2023 were as follows:

    

Thirteen weeks ended

March 30,

April 1,

2024

    

2023

Interest

$

6,239

$

3,331

Income taxes

 

9,575

 

7,838

(7) EARNINGS PER SHARE

The following table provides a reconciliation between the earnings and average share amounts used to compute both basic and diluted earnings per share:

Thirteen weeks ended

March 30,

April 1,

2024

    

2023

Net earnings attributable to Valmont Industries, Inc.

$

87,822

$

74,540

Weighted average shares outstanding (000s):

Basic

20,188

21,269

Dilutive effect of various stock awards

133

243

Diluted

20,321

21,512

Net earnings attributable to Valmont Industries, Inc. per share:

Basic

$

4.35

$

3.50

Dilutive effect of various stock awards

(0.03)

(0.03)

Diluted

$

4.32

$

3.47

As of March 30, 2024 and April 1, 2023, there were 73,003 and 40,564 outstanding stock options with exercise prices exceeding the average market price of common stock during the applicable period that were excluded from the computation of diluted earnings per share, respectively.

(8) DERIVATIVE FINANCIAL INSTRUMENTS

The Company manages interest rate risk, commodity price risk, and foreign currency risk related to foreign currency denominated transactions and investments in foreign subsidiaries. Depending on the circumstances, the Company may manage these risks by utilizing derivative financial instruments. Some derivative financial instruments are marked to market and recorded in the Company’s Condensed Consolidated Statements of Earnings, while others may be accounted for as fair value, cash flow, or net investment hedges. Derivative financial instruments have credit and market risk. The Company manages these risks of derivative instruments by monitoring limits as to the types and degree of risk that can be taken and by entering into transactions with counterparties who are recognized, stable multinational banks. Any gains or losses from net investment hedge activities remain in AOCI until either the sale or substantially complete liquidation of the related subsidiaries.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

The fair value of derivative instruments as of March 30, 2024 and December 30, 2023 was as follows:

Condensed Consolidated

March 30,

December 30,

Derivatives designated as hedging instruments:

    

Balance Sheets location

2024

2023

Commodity contracts

Prepaid expenses and other current assets

$

432

$

2,520

Commodity contracts

Other accrued expenses

(1,123)

(1,586)

Cross currency swap contracts

 

Prepaid expenses and other current assets

129

 

1,938

Cross currency swap contracts

 

Other accrued expenses

(945)

 

(12)

$

(1,507)

$

2,860

Gains (losses) on derivatives recognized in the Condensed Consolidated Statements of Earnings for the thirteen weeks ended March 30, 2024 and April 1, 2023 were as follows:

    

Thirteen weeks ended

Condensed Consolidated

March 30,

April 1,

Derivatives designated as hedging instruments:

Statements of Earnings location

2024

    

2023

Commodity contracts

Product cost of sales

$

956

$

(3,985)

Foreign currency forward contracts

Other income (expenses)

 

97

Interest rate hedge amortization

Interest expense

(16)

 

(16)

Cross currency swap contracts

Interest expense

380

 

446

$

1,320

$

(3,458)

Cash Flow Hedges

The Company enters into commodity forward, swap, and option contracts that qualify as cash flow hedges of the variability in cash flows attributable to future purchases. The gain (loss) realized upon settlement for each will be recorded in “Product cost of sales” in the Condensed Consolidated Statements of Earnings in the period consumed. Notional amounts, purchase quantities, and maturity dates of these contracts as of March 30, 2024 were as follows:

    

Notional

Total

Commodity Type

Amount

Purchase Quantity

Maturity Dates

Hot rolled steel coil

$

10,183

12,000 short tons

 

April 2024 to August 2024

Natural gas

3,196

738,475 MMBtu

April 2024 to March 2026

Diesel fuel

453

1,890,000 gallons

April 2024 to December 2024

Net Investment Hedges

In order to mitigate foreign currency risk on the Company’s Euro investments and to reduce interest expense, the Company enters into fixed-for-fixed cross currency swaps (“CCS”), swapping U.S. dollar principal and interest payments on a portion of its 5.00% senior unsecured notes due in 2044 for foreign-currency‑denominated payments. Interest is exchanged twice per year on April 1 and October 1.

The Company designated the initial full notional amounts as hedges of the net investment in certain European subsidiaries under the spot method, with all changes in the fair value of the CCS that are included in the assessment of effectiveness (changes due to spot foreign exchange rates) recorded as cumulative foreign currency translation within AOCI. Net interest receipts will be recorded as a reduction of interest expense over the life of the CCS.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

Key terms of the CCS net investment hedges as of March 30, 2024 were as follows:

    

Notional

Swapped

Set Settlement

Currency

Amount

Termination Date

Interest Rate

Amount

Euro

$

80,000

April 1, 2029

 

3.461%

74,509

In the first quarter of fiscal 2024, a Euro net investment hedge entered into in fiscal 2019 was early settled and the Company received proceeds of $2,711, which will remain in AOCI until either the sale or substantially complete liquidation of the related subsidiaries.

(9) BUSINESS SEGMENTS & RELATED REVENUE INFORMATION

The Company has two reportable segments based on its management structure. Each segment is global in nature with a manager responsible for operational performance and the allocation of capital. Corporate expense is net of certain service-related expenses that are allocated to business units generally based on employee headcounts and sales dollars.

Reportable segments are as follows:

Infrastructure: This segment consists of the manufacture and distribution of products and solutions to serve the infrastructure markets of utility, solar, lighting and transportation, and telecommunications, along with coatings services to protect metal products.

Agriculture: This segment consists of the manufacture of center pivot components and linear irrigation equipment for agricultural markets, including parts and tubular products, and advanced technology solutions for precision agriculture.

The Company evaluates the performance of its reportable segments based on operating income and return on invested capital. The Company’s operating income for segment purposes excludes unallocated corporate general and administrative expenses, interest expenses, non-operating income and deductions, and income taxes.

Summary by Business Segment

    

Thirteen weeks ended

March 30,

    

April 1,

2024

2023

SALES:

Infrastructure

$

723,614

$

736,106

Agriculture

 

258,735

 

332,163

Total sales

 

982,349

 

1,068,269

INTERSEGMENT SALES:

 

  

 

Infrastructure

 

(2,881)

 

(3,966)

Agriculture

 

(1,640)

 

(1,822)

Total intersegment sales

 

(4,521)

 

(5,788)

NET SALES:

 

  

 

  

Infrastructure

 

720,733

 

732,140

Agriculture

 

257,095

 

330,341

Total net sales

$

977,828

$

1,062,481

OPERATING INCOME (LOSS):

 

  

 

  

Infrastructure

$

117,864

$

94,352

Agriculture

 

40,973

 

53,323

Corporate

 

(27,284)

 

(29,209)

Total operating income

$

131,553

$

118,466

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

    

Thirteen weeks ended March 30, 2024

Infrastructure

    

Agriculture

Intersegment

    

Consolidated

Geographical market:

  

 

  

  

 

  

North America

$

568,572

$

159,915

$

(4,466)

$

724,021

International

 

155,042

 

98,820

 

(55)

 

253,807

Total sales

$

723,614

$

258,735

$

(4,521)

$

977,828

Product line:

 

  

 

  

 

  

 

  

Transmission, Distribution, and Substation

$

325,256

$

$

$

325,256

Lighting and Transportation

 

222,096

 

 

 

222,096

Coatings

 

87,090

 

 

(2,826)

 

84,264

Telecommunications

 

53,961

 

 

 

53,961

Solar

 

35,211

 

 

(55)

 

35,156

Irrigation Equipment and Parts

 

 

233,120

 

(1,640)

 

231,480

Technology Products and Services

 

 

25,615

 

 

25,615

Total sales

$

723,614

$

258,735

$

(4,521)

$

977,828

    

Thirteen weeks ended April 1, 2023

Infrastructure

    

Agriculture

    

Intersegment

    

Consolidated

Geographical market:

  

 

  

 

  

 

  

North America

$

584,083

$

182,869

$

(5,374)

$

761,578

International

 

152,023

 

149,294

 

(414)

 

300,903

Total sales

$

736,106

$

332,163

$

(5,788)

$

1,062,481

Product line:

 

  

 

  

 

  

 

  

Transmission, Distribution, and Substation

$

314,820

$

$

$

314,820

Lighting and Transportation

 

229,136

 

 

 

229,136

Coatings

 

90,114

 

 

(3,552)

 

86,562

Telecommunications

 

68,137

 

 

 

68,137

Solar

 

33,899

 

 

(414)

 

33,485

Irrigation Equipment and Parts

 

 

299,181

 

(1,822)

 

297,359

Technology Products and Services

 

 

32,982

 

 

32,982

Total sales

$

736,106

$

332,163

$

(5,788)

$

1,062,481

A breakdown by segment of revenue recognized over time and revenue recognized at a point in time for the thirteen weeks ended March 30, 2024 and April 1, 2023 was as follows:

Thirteen weeks ended March 30, 2024

    

Point in Time

Over Time

Total

Infrastructure

$

389,935

$

330,798

$

720,733

Agriculture

 

250,760

6,335

 

257,095

Total net sales

$

640,695

$

337,133

$

977,828

Thirteen weeks ended April 1, 2023

Point in Time

    

Over Time

    

Total

Infrastructure

$

411,217

$

320,923

$

732,140

Agriculture

 

324,206

6,135

 

330,341

Total net sales

$

735,423

$

327,058

$

1,062,481

20

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

delete

Valmont Industries, Inc. (the “Company”, “Valmont”, “we”, “us”, or “our”), headquartered in Omaha, Nebraska, is a global leader that provides vital infrastructure and advances agricultural productivity while driving innovation through technology.

Forward-Looking Statements

Management’s discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which the Company operates, as well as management’s perceptions of historical trends, current conditions, expected future developments, and other factors believed to be appropriate under the circumstances. These statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company’s control), and assumptions. Management believes that these forward-looking statements are based on reasonable assumptions. Many factors could affect the Company’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include, among other things, risk factors described from time to time in the Company’s reports to 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, and actions and policy changes of domestic and foreign governments.

This discussion should be read in conjunction with the financial statements and notes thereto, and the management’s discussion and analysis included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023. Segment net sales in the table below and elsewhere are presented net of intersegment sales. See Note 9 of our Condensed Consolidated Financial Statements for additional information on segment sales and intersegment sales.

Executive Overview

Results of Operations

Thirteen weeks ended

 

March 30,

    

April 1,

Percent

Dollars in millions, except per share amounts

2024

2023

    

Change

 

Consolidated

Net sales

$

977.8

$

1,062.5

 

(8.0)

%

Gross profit

306.3

 

308.6

 

(0.8)

%

as a percent of net sales

31.3

%  

 

29.0

%  

  

Selling, general, and administrative expenses

174.7

 

190.1

 

(8.1)

%

as a percent of net sales

17.9

%  

 

17.9

%  

  

Operating income

131.6

 

118.5

 

11.0

%

as a percent of net sales

13.5

%  

 

11.1

%  

  

Net interest expense

14.4

 

12.3

 

17.7

%

Effective tax rate

25.3

%  

 

30.3

%  

  

Net earnings attributable to Valmont Industries, Inc.

87.8

74.5

 

17.8

%

Diluted earnings per share

$

4.32

$

3.47

 

24.5

%

Infrastructure

 

 

  

Net sales

$

720.7

$

732.2

 

(1.6)

%

Gross profit

 

217.7

200.5

 

8.6

%

Selling, general, and administrative expenses

 

99.8

106.1

 

(6.0)

%

Operating income

 

117.9

 

94.4

 

24.9

%

Agriculture

 

Net sales

$

257.1

$

330.3

 

(22.2)

%

Gross profit

 

88.6

108.1

 

(18.1)

%

Selling, general, and administrative expenses

 

47.6

54.8

 

(13.1)

%

Operating income

 

41.0

 

53.3

 

(23.2)

%

Corporate

 

 

 

  

Selling, general, and administrative expenses

$

27.3

$

29.2

 

(6.6)

%

Operating loss

 

(27.3)

 

(29.2)

 

(6.6)

%

21

Table of Contents

Overview, Including Items Impacting Comparability

On a consolidated basis, net sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, with lower sales in both the Agriculture and Infrastructure segments.

Steel prices for both hot rolled coil and plate have remained volatile over the past two fiscal years, especially in North America. Certain Transmission, Distribution, and Substation (“TD&S”) product line customers’ sales contracts include a contractual pricing mechanism, which adjusts to the changes in the cost of steel. Deflation in the cost of steel and its impact on average selling prices was more than offset by a favorable product mix and an increase in volume resulting in TD&S net sales increasing 3.3% during the first quarter of fiscal 2024, as compared to the same period of fiscal 2023. Strategic pricing initiatives across all Infrastructure segment product lines and a decrease in the average steel costs recognized in cost of goods sold resulted in the improved gross profit margin for the Infrastructure segment in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023.

During the third quarter of fiscal 2023, management initiated a plan to streamline segment support across the Company and reduce costs through an organizational realignment program (the “Realignment Program”). The Realignment Program provided for a reduction in force through a voluntary early retirement program and other headcount reduction actions, which were completed by the end of fiscal 2023. The Board of Directors authorized the incurrence of cash charges up to $36.0 million in connection with the Realignment Program of which $35.2 million were incurred in fiscal 2023 which included severance and other employee benefit costs totaling approximately $17.3 million within the Infrastructure segment, $9.1 million within the Agriculture segment, and $8.8 million within Corporate expense.

In the third quarter of fiscal 2023, the Company acquired HR Products, a leading wholesale supplier of irrigation parts in Australia, included in the Agriculture segment.

In the second quarter of fiscal 2023, the Company divested Torrent Engineering and Equipment, an integrator of prepackaged pump stations in Indiana, included in the Agriculture segment.

In the first quarter of fiscal 2023, selling, general, and administrative expenses (“SG&A”) in the Agriculture segment included amortization of identified intangible assets of $1.6 million and stock-based compensation expense of $2.0 million from the Prospera subsidiary acquired in fiscal 2021. Prospera intangible asset amortization and stock-based compensation expense was $0.1 million and $0.8 million, respectively, for the first quarter of fiscal 2024.

Macroeconomic Impacts on Financial Results and Liquidity

We continue to monitor several macroeconomic trends and geopolitical uncertainties that have impacted or may impact our business, including inflationary cost pressures, supply chain disruptions, changes in foreign currency exchange rates against the United States (“U.S.”) dollar, rising interest rates, ongoing international armed conflicts, and labor shortages.

Gross Profit, SG&A, and Operating Income

On a consolidated basis, gross profit decreased slightly in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to lower sales volumes primarily in the Agriculture segment. Gross profit as a percentage of sales increased in the first quarter of 2024, as compared to the same period of fiscal 2023, due to more favorable input costs and higher average selling prices primarily in the Infrastructure segment attributed to a favorable project mix.

Consolidated SG&A decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily driven by decreased compensation costs largely attributable to the Realignment Program in fiscal 2023.

Consolidated operating income for the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, was impacted by the lower SG&A as a result of the Realignment Program partially offset by decreased gross profit.

Net Interest Expense

Consolidated interest expense increased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to additional borrowings on the revolving line of credit along with higher interest rates.

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Other Income / Expenses (including Gain on Deferred Compensation Investments)

Amounts in “Gain on deferred compensation investments” included changes in the market value of deferred compensation assets which were offset by an equal opposite amount included in SG&A for the corresponding change in the valuation of deferred compensation liabilities. Other items included in “Other income (expenses)” for the first quarter of fiscal 2024 were pension costs of $0.2 million compared to pension costs of $0.1 million in the same period of fiscal 2023.

Income Tax Expense

Our effective income tax rate in the first quarter of fiscal 2024 was 25.3% as compared to 30.3% in the same period of fiscal 2023. The change in the effective tax rate was primarily the result of changes in the geographic mix of earnings.

Loss (Earnings) Attributable to Redeemable Noncontrolling Interests

Loss (earnings) attributable to redeemable noncontrolling interests reflected the operating results of the subsidiaries the Company does not own 100%.

Infrastructure Segment

Thirteen weeks ended

March 30,

April 1,

Dollar

Percent

Dollars in millions

    

2024

    

2023

    

Change

    

Change

Transmission, Distribution, and Substation

$

325.2

$

314.9

 

$

10.3

 

3.3

%

Lighting and Transportation

222.1

229.1

 

(7.0)

 

(3.1)

%

Coatings

87.1

90.1

 

(3.0)

 

(3.4)

%

Telecommunications

54.0

68.1

 

(14.1)

 

(20.8)

%

Solar

35.2

33.9

 

1.3

 

3.9

%

Total sales

$

723.6

$

736.1

$

(12.5)

 

(1.7)

%

Operating income

$

117.9

$

94.4

$

23.5

 

24.9

%

Infrastructure segment sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to decreased sales volumes in the Telecommunications, Coatings, and Lighting and Transportation product lines, partially offset by increased average selling prices across all product lines and increased sales volumes in the Transmission, Distribution, and Substation and Solar product lines. Infrastructure segment sales decreased in North America in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, while increasing slightly in International markets. International sales were impacted by unfavorable currency translation effects of $3.0 million for the first quarter of fiscal 2024 as compared to the same period of fiscal 2023.

Transmission, Distribution, and Substation product line sales increased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to increased average selling prices and increased sales volumes.

Lighting and Transportation sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to decreased sales volumes along with unfavorable currency translation effects totaling approximately $2.0 million.

Coatings sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to decreased volumes partially offset by slightly increased average selling prices. The decrease was also impacted by unfavorable currency translation effects totaling approximately $1.0 million.

Telecommunications sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to decreased sales volumes partially offset by increased average selling prices. We expect sales for Telecommunications to remain lower until network enhancement spending of the major carriers returns to more elevated levels. As the continued rollout and expansion of 5G wireless technology globally accelerates, sales of our products are expected to grow.

Solar sales increased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to increased sales volumes.

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Infrastructure gross profit and gross profit margin increased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to a favorable product mix contributing to increased average selling prices and deliberate actions to improve overall costs of goods sold. These items, partially offset by decreased sales volumes primarily in the Telecommunications product line, resulted in an overall increase in the amount of gross profit.

Infrastructure SG&A decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to decreased compensation costs primarily as a result of the Realignment Program along with decreased bad debt reserve charges that included approximately $2.7 million related to a Telecommunications customer that became insolvent in fiscal 2023.

Infrastructure operating income increased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, as decreased sales volumes were more than offset by gross profit improvements along with decreased SG&A.

Agriculture Segment

Thirteen weeks ended

March 30,

April 1,

Dollar

Percent

Dollars in millions

    

2024

    

2023

    

Change

    

Change

North America

$

159.9

$

182.9

 

$

(23.0)

 

(12.6)

%

International

98.8

149.3

 

(50.5)

 

(33.8)

%

Total sales

$

258.7

$

332.2

$

(73.5)

 

(22.1)

%

Operating income

$

41.0

$

53.3

$

(12.3)

 

(23.2)

%

Agriculture segment sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to decreased sales volumes and slightly lower average selling prices of irrigation equipment. In North America, the decrease in Agriculture sales for the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, was impacted by growers’ decisions to delay capital investments due to general economic uncertainty and a number of macroeconomic factors including higher interest rates and continued inflationary pressures. The first quarter of fiscal 2023 also comparatively benefited from the ongoing delivery of elevated backlog. International sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to decreased project sales in the Europe, Middle East, and Africa region and decreased sales in Brazil due to muted farmer sentiment attributed to lower agricultural commodity prices, partially offset by incremental sales from the HR Products acquisition totaling $10.1 million. Sales of Technology Products and Services decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023.

Our Agriculture business is cyclical and is impacted by changes in net farm income, commodity prices, weather volatility, geopolitical factors, and farmer sentiment related to future economic uncertainty. We continue to monitor the potential impacts of these factors on our financial results including estimated U.S. net farm income, as released annually by the U.S. Department of Agriculture. In Brazil, we also actively track changes in soybean and other crop prices and projected farm input costs to evaluate grower sentiment.

Irrigation Equipment and Parts sales in North America are expected to remain below prior-year levels for the remainder of fiscal 2024. The previous three years benefited from record levels of disaster relief and pandemic-related stimulus for farmers in North America which contributed to higher demand.

Agriculture segment gross profit decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to decreased sales volumes.

Agriculture segment SG&A decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to decreased compensation costs, largely attributable to the Realignment Program, along with lower intangible asset amortization expense as a result of the third quarter of fiscal 2023 impairment of certain Prospera amortizing proprietary technology.

Agriculture operating income decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to decreased sales volumes partially offset by decreased SG&A.

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Corporate

Corporate SG&A decreased for the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to decreased compensation and incentive costs primarily as a result of the Realignment Program in fiscal 2023.

Liquidity and Capital Resources

Capital Allocation Philosophy

We have historically funded our growth, capital spending, and acquisitions through a combination of operating cash flows and debt financing. The following are the capital allocation priorities for cash generated:

working capital and capital expenditure investments necessary for future sales growth,
dividends on common stock generally in the range of 15% of the prior fiscal year’s fully diluted net earnings,
acquisitions, and
return of capital to shareholders through share repurchases.

We intend to manage our capital structure to maintain our investment-grade debt rating. Our most recent ratings were Baa3 (stable outlook) by Moody’s Investors Service, Inc., BBB- (stable outlook) by Fitch Ratings, Inc., and BBB+ (stable outlook) by S&P Global Ratings. We expect to maintain a ratio of debt to invested capital which will support our current investment-grade debt rating.

In May 2014, the Board of Directors authorized the purchase of up to $500.0 million of the Company’s outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately negotiated transactions. The Board of Directors authorized an additional $250.0 million of share purchases in February 2015 and again in October 2018, and authorized an additional $400.0 million of share repurchases in February 2023. These authorizations have no expiration date. The purchases will be funded from available working capital and short-term borrowings and will be made subject to market and economic conditions. We are not obligated to make any repurchases and may discontinue the program at any time. As of March 30, 2024, we have acquired approximately 8.0 million shares for approximately $1,263.9 million under this share repurchase program.

In November 2023, we entered into an accelerated purchase agreement to repurchase $120.0 million of our outstanding common stock (“November 2023 ASR”) with CitiBank, N.A. as counterparty. The November 2023 ASR was entered into under our previously announced share repurchase program described above. The Company pre-paid $120.0 million in the fourth quarter of fiscal 2023 and received an initial delivery of 438,917 shares of common stock. The agreement was settled with the delivery of an additional 96,224 shares of common stock in the first quarter of fiscal 2024. The total number of shares ultimately delivered under the November 2023 ASR, and therefore the average purchase price paid per share of $224.24, was determined based on the volume-weighted average market price of our common stock during the term of the agreement, less a discount.

Supplier Finance Program

We have a supplier finance program agreement with a financial institution that allows qualifying suppliers, at their election and on terms they negotiate directly with the financial institution, to sell their receivables from the Company. A supplier’s voluntary participation in the program does not change our payment terms, amounts paid, or payment timing, or impact our liquidity, and we have no economic interest in a supplier’s decision to participate. As of March 30, 2024 and December 30, 2023, our accounts payable on our Condensed Consolidated Balance Sheets included $37.2 million and $41.9 million, respectively, of our payment obligations under this program.

Sources of Financing

Our debt financing as of March 30, 2024 consisted primarily of senior unsecured notes and borrowings on our revolving credit facility.

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Table of Contents

Senior Unsecured Notes

Our senior unsecured notes as of March 30, 2024 were:

$450.0 million face value ($433.7 million carrying value) notes that bear interest at 5.00% per annum and are due in October 2044, and
$305.0 million face value ($295.2 million carrying value) notes that bear interest at 5.25% per annum and are due in October 2054.

We are allowed to repurchase the notes subject to the payment of a make-whole premium. Both tranches of these notes are guaranteed by certain of our subsidiaries.

Revolving Credit Facility

Our revolving credit facility with JPMorgan Chase Bank, N.A., as Administrative Agent, and the other lenders party thereto, has a maturity date of October 18, 2026.

The revolving credit facility provides for $800.0 million of committed unsecured revolving credit loans with available borrowings thereunder to $400.0 million in foreign currencies. We may increase the credit facility by up to an additional $300.0 million at any time, subject to lenders increasing the amount of their commitments. The Company and our wholly owned subsidiaries, Valmont Industries Holland B.V. and Valmont Group Pty. Ltd., are authorized borrowers under the credit facility. The obligations arising under the revolving credit facility are guaranteed by the Company and its wholly owned subsidiaries, Valmont Telecommunications, Inc., Valmont Coatings, Inc., Valmont Newmark, Inc., and Valmont Queensland Pty. Ltd.

The interest rate on our borrowings will be, at our option, either:

(a)term Secured Overnight Financing Rate (“SOFR”) (based on a one-, three- or six-month interest period, as selected by the Company) plus a 10 basis point adjustment plus a spread of 100 to 162.5 basis points, depending on the credit rating of the Company’s senior unsecured long-term debt published by S&P Global Ratings and Moody’s Investors Service, Inc.;
(b)the higher of
the prime lending rate,
the overnight bank rate plus 50 basis points, and
term SOFR (based on a one-month interest period) plus 100 basis points,

plus, in each case, 0 to 62.5 basis points, depending on the credit rating of our senior unsecured long-term debt published by S&P Global Ratings and Moody’s Investors Service, Inc.; or

(c)daily simple SOFR plus a 10 basis point adjustment plus a spread of 100 to 162.5 basis points, depending on the credit rating of the Company’s senior unsecured long-term debt published by S&P Global Ratings and Moody’s Investors Service, Inc.

A commitment fee is also required under the revolving credit facility which accrues at 10 to 25 basis points, depending on the credit rating of our senior unsecured long-term debt published by S&P Global Ratings and Moody’s Investors Service, Inc., on the average daily unused portion of the commitments under the revolving credit agreement.

As of March 30, 2024 and December 30, 2023, we had outstanding borrowings of $377.5 million and $377.9 million, respectively, under the revolving credit facility. The revolving credit facility has a maturity date of October 18, 2026 and contains a financial covenant that may limit our additional borrowing capability under the agreement. As of March 30, 2024, we had the ability to borrow $422.3 million under this facility, after consideration of standby letters of credit of $0.2 million associated with certain insurance obligations. We also maintain certain short‑term bank lines of credit totaling $38.9 million, $36.9 million of which were unused as of March 30, 2024.

Our senior unsecured notes and revolving credit agreement each contain cross-default provisions which permit the acceleration of our indebtedness to them if we default on other indebtedness that results in, or permits, the acceleration of such other indebtedness.

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Table of Contents

The revolving credit facility requires maintenance of a financial leverage ratio, measured as of the last day of each of our fiscal quarters, of 3.50 or less. The leverage ratio is the ratio of (a) interest-bearing debt minus unrestricted cash in excess of $50.0 million (but not exceeding $500.0 million) to (b) earnings before interest, taxes, depreciation, and amortization, adjusted for non-cash stock-based compensation and non-cash charges or gains that are non-recurring in nature, subject to certain limitations (“Adjusted EBITDA”). The leverage ratio is permitted to increase from 3.50 to 3.75 for the four consecutive fiscal quarters after certain material acquisitions.

The revolving credit agreement also contains customary affirmative and negative covenants or credit facilities of this type, including, among others, limitations on us and our subsidiaries with respect to indebtedness, liens, mergers and acquisitions, investments, dispositions of assets, restricted payments, transactions with affiliates, and prepayments of indebtedness. The revolving credit agreement also provides for the acceleration of the obligations thereunder and the exercise of other enforcement remedies upon the occurrence of customary events of default (subject to customary grace periods, as applicable).

As of March 30, 2024, we were in compliance with all covenants related to these debt agreements.

The calculations of Adjusted EBITDA and the leverage ratio are presented in the tables below in “Selected Financial Measures”.

Cash Uses

Our principal cash requirements include working capital, capital expenditures, payments of principal and interest on our debt, payments of taxes, contributions to the pension plan, and, if market conditions warrant, occasional investments in, or acquisitions of, business ventures. In addition, we regularly evaluate our ability to pay dividends or repurchase stock, all consistent with the terms of our debt agreements.

Our businesses are cyclical, but we have diversity in our markets from a product, customer, and geographical standpoint. We have demonstrated the ability to effectively manage through business cycles and maintain liquidity. We have consistently generated operating cash flows in excess of our capital expenditures. Based on our available credit facilities, our senior unsecured notes, and our history of positive operational cash flows, we believe that we have adequate liquidity to meet our needs for fiscal 2024 and beyond.

We had cash balances of $169.2 million as of March 30, 2024 with approximately $134.8 million held in our non-U.S. subsidiaries. If we distributed our foreign cash balances, certain taxes would be applicable. As of March 30, 2024, we had a liability for foreign withholding taxes and U.S. state income taxes of $1.8 million and $0.8 million, respectively.

Cash Flows

The following table includes a summary of our cash flow information for the thirteen weeks ended March 30, 2024 and April 1, 2023:

Thirteen weeks ended

March 30,

April 1,

Dollars in thousands

    

2024

    

2023

Net cash flows from operating activities

$

23,332

$

21,199

Net cash flows from investing activities

 

(18,639)

 

(21,789)

Net cash flows from financing activities

 

(34,834)

 

(13,009)

Operating Cash Flows and Working Capital – Cash provided by operating activities totaled $23.3 million in the first quarter of fiscal 2024, as compared to $21.2 million in the same period of fiscal 2023. The change in operating cash flows was primarily the result of the increase in net earnings, partially offset by payments of severance and other employee benefit costs related to the Realignment Program totaling $9.8 million in the first quarter of fiscal 2024.

Investing Cash Flows – Cash used in investing activities totaled $18.6 million in the first quarter of fiscal 2024, as compared to $21.8 million in the same period of fiscal 2023. Investing activities in the first quarter of fiscal 2024 primarily included capital spending of $15.0 million. Investing activities in the first quarter of fiscal 2023 primarily included capital spending of $22.4 million. We expect our capital expenditures to be in the range of $110.0 million to $125.0 million for fiscal 2024.

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Table of Contents

Financing Cash Flows – Cash used in financing activities totaled $34.8 million in the first quarter of fiscal 2024, as compared to $13.0 million in the same period of fiscal 2023. Our total interest-bearing debt was $1,136.4 million as of March 30, 2024 and $1,138.1 million as of December 30, 2023. Financing activities in the first quarter of fiscal 2024 primarily consisted of borrowings on the revolving credit agreement and short-term notes of $4.0 million offset by principal payments on our long-term debt and short-term borrowings of $5.3 million, dividends paid of $12.1 million, the purchase of redeemable noncontrolling interests of $17.7 million, and the net activity from stock option and incentive plans of $5.7 million. Financing activities in the first quarter of fiscal 2023 primarily consisted of borrowings on the revolving credit agreement and short-term notes of $136.1 million offset by principal payments on our long-term debt and short-term borrowings of $16.6 million, dividends paid of $11.7 million, the purchase of treasury shares of $111.1 million, and the net activity from stock option and incentive plans of $9.0 million.

Guarantor Summarized Financial Information

We are providing the following information in compliance with Rule 3-10 and Rule 13-01 of Regulation S-X with respect to our two tranches of senior unsecured notes. All of the senior notes are guaranteed, jointly, severally, fully, and unconditionally (subject to certain customary release provisions, including the sale of the subsidiary guarantor, or the sale of all or substantially all of its assets), by certain of the Company’s current and future direct and indirect domestic and foreign subsidiaries (collectively the “Guarantors”). The Parent is the Issuer of the notes and consolidates all of the Guarantors.

The financial information of the Issuer and the Guarantors is presented on a combined basis with intercompany balances and transactions between the Issuer and the Guarantors eliminated. The Issuer’s or the Guarantors’ amounts due from, amounts due to, and transactions with non-guarantor subsidiaries are separately disclosed.

Combined financial information for the thirteen weeks ended March 30, 2024 and April 1, 2023 was as follows:

    

Thirteen weeks ended

March 30,

April 1,

Dollars in thousands

    

2024

2023

Net sales

$

682,162

$

715,471

Gross profit

 

209,640

 

191,495

Operating income

 

92,578

 

71,832

Net earnings

 

59,469

 

20,211

Net earnings attributable to Valmont Industries, Inc.

 

59,469

 

20,043

Combined financial information as of March 30, 2024 and December 30, 2023 was as follows:

    

March 30,

December 30,

Dollars in thousands

2024

    

2023

Current assets

$

806,521

$

777,539

Non-current assets

 

845,561

 

872,016

Current liabilities

 

332,091

 

361,211

Non-current liabilities

 

1,445,201

 

1,436,131

Redeemable noncontrolling interests

 

 

10,518

Included in non-current assets is a due from non-guarantor subsidiaries receivable of $110,747 and $136,904 as of March 30, 2024 and December 30, 2023, respectively. Included in non-current liabilities is a due to non-guarantor subsidiaries payable of $221,387 and $216,633 as of March 30, 2024 and December 30, 2023, respectively.

Selected Financial Measures

We are including the following financial measures for the Company.

Adjusted EBITDA – Adjusted EBITDA is one of our key financial ratios in that it is the basis for determining our maximum borrowing capacity at any one time. Our bank credit agreements contain a financial covenant that our total interest‑bearing debt not exceed 3.50 times Adjusted EBITDA (or 3.75 times Adjusted EBITDA after certain material acquisitions), calculated on a rolling four fiscal quarter basis. The bank credit agreements allow us to add estimated EBITDA from acquired businesses for periods in which we did not own the acquired businesses. The bank credit agreements also outline adjustments for non-cash stock-based compensation and non-cash charges or gains that are non-recurring in nature, subject to certain limitations, to be included in the calculation of Adjusted EBITDA. If this financial covenant is violated, we may incur additional financing costs or be required to pay the debt before its maturity date. Adjusted EBITDA is a non-

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Table of Contents

generally accepted accounting principles (“GAAP”) measure and, accordingly, should not be considered in isolation or as a substitute for net earnings, cash flows from operations, or other income or cash flow data prepared in accordance with GAAP or as a measure of our operating performance or liquidity.

The calculation of Adjusted EBITDA for the four fiscal quarters ended March 30, 2024 was as follows:

    

Four Fiscal

Quarters Ended

March 30,

Dollars in thousands

2024

Net cash flows provided by operating activities

$

308,908

Interest expense

 

59,924

Income tax expense

 

88,266

Impairment of long-lived assets

 

(140,844)

Deferred income tax benefit

 

15,791

Redeemable noncontrolling interests

 

3,136

Defined benefit pension plan cost

 

(346)

Contribution to defined benefit pension plan

 

18,800

Changes in assets and liabilities, net of acquisitions

 

92,662

Other

 

575

EBITDA

$

446,872

Impairment of long-lived assets

 

140,844

Realignment charges

35,210

Proforma acquisition adjustment

2,389

Adjusted EBITDA

$

625,315

    

Four Fiscal

Quarters Ended

March 30,

Dollars in thousands

2024

Net earnings attributable to Valmont Industries, Inc.

$

164,131

Interest expense

 

59,924

Income tax expense

 

88,266

Depreciation and amortization expense

 

96,838

Stock-based compensation

 

37,713

EBITDA

446,872

Impairment of long-lived assets

140,844

Realignment charges

35,210

Proforma acquisition adjustment

2,389

Adjusted EBITDA

$

625,315

Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

Leverage Ratio – The leverage ratio is calculated as the sum of interest-bearing debt minus unrestricted cash in excess of $50.0 million (but not exceeding $500.0 million) divided by Adjusted EBITDA. The leverage ratio is one of the key financial ratios in the covenants under our major debt agreements and the ratio cannot exceed 3.50 (or 3.75 after certain material acquisitions), calculated on a rolling four fiscal quarter basis. If those covenants are violated, we may incur additional financing costs or be required to pay the debt before its maturity date. The leverage ratio is a non-GAAP measure and, accordingly, should not be considered in isolation or as a substitute for net earnings, cash flows from operations, or other income or cash flow data prepared in accordance with GAAP or as a measure of our operating performance or liquidity.

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Table of Contents

The calculation of the leverage ratio as of March 30, 2024, was as follows:

    

March 30,

Dollars in thousands

2024

Interest-bearing debt, excluding origination fees and discounts of $26,138

$

1,136,431

Less: Cash and cash equivalents in excess of $50,000

 

119,195

Net indebtedness

$

1,017,236

Adjusted EBITDA

 

625,315

Leverage ratio

 

1.63

The leverage ratio, as presented, may not be comparable to similarly titled measures of other companies.

Financial Obligations and Commitments

There were no material changes in the Company’s financial obligations and commitments during the thirteen weeks ended March 30, 2024. For additional information on the Company’s financial obligations and commitments, refer to the “Cash Uses” section in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

Critical Accounting Estimates

There were no material changes in the Company’s critical accounting estimates during the thirteen weeks ended March 30, 2024. For additional information on the Company’s critical accounting policies, refer to the “Critical Accounting Policies” section in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

delete

There were no material changes in the Company’s market risk during the thirteen weeks ended March 30, 2024. For additional information on the Company’s market risk, refer to Part II, Item 7A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

ITEM 4. CONTROLS AND PROCEDURES

delete

Disclosure Controls and Procedures

The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed by the Company in the reports the Company files or submits under the Securities Exchange Act of 1934 is (1) accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized, and reported, within the periods specified in the Commission’s rules and forms.

Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Table of Contents

PART IIOTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There were no material changes in the Company’s legal proceedings during the thirteen weeks ended March 30, 2024. For additional information on the Company’s legal proceedings, refer to Part I, Item 3 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

ITEM 1A. RISK FACTORS

There were no material changes in the Company’s risk factors during the thirteen weeks ended March 30, 2024. For additional information on the Company’s risk factors, refer to Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Total Number of

Approximate Dollar

Shares Purchased

Value of Shares That

Total Number

Average

as Part of Publicly

May Yet Be Purchased

of Shares

Price Paid

Announced Plans

Under the Plans

Periods

    

Purchased

    

per Share

    

or Programs

    

or Programs (1)

December 31, 2023 to January 27, 2024

 

$

 

$

136,108,000

January 28, 2024 to March 2, 2024

 

November 2023 Accelerated Share Repurchase (2)

96,224

96,224

136,108,000

March 3, 2024 to March 30, 2024

 

 

 

 

136,108,000

Total

 

96,224

$

 

96,224

$

136,108,000

(1)On May 13, 2014, we announced a new capital allocation philosophy that covered both the quarterly dividend rate as well as a share repurchase program. The Board of Directors at that time authorized the purchase of up to $500.0 million of the Company’s outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately negotiated transactions. On February 24, 2015, and again on October 31, 2018, the Board of Directors authorized an additional purchase of up to $250.0 million of the Company’s outstanding common stock with no stated expiration date. On February 27, 2023, the Board of Directors increased the amount remaining under the program by an additional $400.0 million, with no stated expiration date, bringing the total authorization to $1,400.0 million. As of March 30, 2024, we have acquired 7,991,948 shares for approximately $1,263.9 million under this share repurchase program.
(2)In November 2023, we entered into an accelerated purchase agreement to repurchase $120.0 million of our outstanding common stock (“November 2023 ASR”) with CitiBank, N.A. as counterparty. The November 2023 ASR was entered into under our previously announced share repurchase program described above. The Company pre-paid $120.0 million in the fourth quarter of fiscal 2023 and received an initial delivery of 438,917 shares of common stock. The agreement was settled with the delivery of an additional 96,224 shares of common stock in the first quarter of fiscal 2024. The total number of shares ultimately delivered under the November 2023 ASR, and therefore the average purchase price paid per share of $224.24, was determined based on the volume-weighted average market price of our common stock during the term of the agreement, less a discount.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 5. OTHER INFORMATION

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Submission of Matters to a Vote of Security Holders

Valmont’s annual meeting of stockholders was held on May 6, 2024. The stockholders elected four directors to serve three-year terms, approved, on an advisory basis, a resolution approving Valmont’s named executive officer compensation, and ratified the appointment of Deloitte & Touche LLP as independent auditors for fiscal 2024. For the annual meeting, there were 20,184,457 shares outstanding and eligible to vote of which 18,604,737 were present at the meeting in person or by proxy. The tabulation for each matter voted upon at the meeting was as follows:

Election of Directors:

For

Withheld

Broker Non-Votes

Avner M. Applbaum

16,835,089

282,879

1,486,769

Daniel P. Neary

16,493,447

624,521

1,486,769

Theo Freye

15,953,759

1,164,209

1,486,769

Joan Robinson-Berry

16,896,197

221,771

1,486,769

Advisory vote on executive compensation:

For

16,342,236

Against

745,185

Abstain

30,547

Broker non-votes

1,486,769

Proposal to ratify the appointment of Deloitte & Touche LLP as independent auditors for fiscal 2024:

For

17,925,071

Against

627,422

Abstain

52,244

Broker non-votes

ITEM 6. EXHIBITS

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Exhibit No.

    

Description

22.1

List of Issuer and Guarantor Subsidiaries. This document was filed as Exhibit 22.1 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-31429) for the quarter ended September 25, 2021 and is incorporated herein by reference.

31.1*

Section 302 Certificate of Chief Executive Officer

31.2*

Section 302 Certificate of Chief Financial Officer

32.1*

Section 906 Certifications of Chief Executive Officer and Chief Financial Officer

101

The following financial information from Valmont’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interests, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information.

104

Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf and by the undersigned thereunto duly authorized.

VALMONT INDUSTRIES, INC.

/s/ TIMOTHY P. FRANCIS

Timothy P. Francis

Interim Chief Financial Officer

Dated the 8th day of May 2024

33