Valmont Industries, Inc.

Greetings and welcome to the Valmont Industries, Inc. first quarter 2019 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. We ask that you please limit yourselves to one question and one follow-up question and return to the queue. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Renee Campbell, Director, Investor Relations and Corporate Communications. Thank you. You may begin.

Thank you, Michelle. Good morning, and welcome to Valmont Industries' first quarter 2019 earnings call. With me today are Steve Konietzky, President and Chief Executive Officer, Mark Jaksic, Executive Vice President and Chief Financial Officer, and Tim Francis, Senior Vice President and Corporate Controller. This morning, Steve will provide an update on the Midwest flooding and a summary of our first quarter results, and Mark will provide additional details on financial performance. A slide presentation will accompany today's discussion, and a link to access the document can be found on the homepage of our website at valmont.com. Please download the presentation to follow along with today's call. A replay will be available for the next seven days. Instructions for accessing the replay are included in the press release, which can also be found on our website. Please note that this conference call is subject to our disclosure on forward-looking statements which applies to today's discussion and will be read in full at the end of this call. I would now like to turn the call over to our President and Chief Executive Officer, Steve Konieski.

Thank you, Renee. Good morning, everyone, and thank you for joining us. Before I summarize our first quarter results, I'd like to briefly speak about the recent historical flooding event that impacted the Midwest U.S. region, which was the largest widespread natural disaster in Nebraska state history. 76 out of 93 counties, or more than 80% of the state, have qualified for federal disaster aid from the flooding. When we learned that floodwaters were approaching our Valley of Nebraska manufacturing site on the morning of March 15th, we made the decision to preemptively close the campus. This was to ensure the safety of our employees who were already on site and those traveling to work that morning. By late that afternoon, floodwaters had surrounded the campus, making the roads and highways impassable. Our structures facility in Columbus and our coatings facility in West Point, Nebraska were also impacted, but with more minor effects. We were fortunate our levee system on the Valley Campus helped control the impacts of the flood, Interruptions to our business were minimized, enabling us to successfully reopen for production one week later. We are very thankful that our employees across all impacted facilities remain safe. I am extremely proud of our facilities and IT response teams, employees, and service providers who work diligently around the clock to return value to full production. Our ability to quickly resume operations is a testament to the strength of our operational excellence. which was key to ensuring the safety of our employees and minimizing disruptions to our customers. Mark will speak to the financial impacts from the flood later in the call. Let me now turn to a recap of our first quarter and slide three of the presentation. Net sales of 692.1 million were down slightly compared to last year. Excluding foreign currency translation and the divestiture of the grinding media business, Revenues grew 4.2% despite the flood impacts. Sales growth was led by pricing action across all segments and higher volumes in the engineered support structure segment. As expected, lower project sales in international irrigation markets and lower volumes in the utility segment decreased sales. Moving to the segment highlights, starting with engineered support structures, First quarter sales were $230.3 million, an increase of 2.4% over last year. We continue to benefit from very strong order flow, particularly in North America markets, resulting in higher backlogs and improved pricing across all product lines. Transportation market demand in North America remains solid, and we continue to see extended industry lead times. Globally, robust demand for wireless communication structures and components led sales to increase 25% over last year, supported by increasing coverage demand and momentum for small cell structures in advance of 5G build-outs. Our acquisition of Larson Camouflage is going well and is already contributing to positive results. Larson leads the industry in providing architectural and camouflage concealment solutions for the wireless telecommunication market, and integration is progressing very well. Plans to bring their solutions into global markets have already commenced, aligning with our strategy of geographic product expansion. In the utility support structure segment, sales of $243.9 million increased more than 16%. Sales of solar tracker structures from our acquisition of Convert Italia this past year drove higher sales. Pricing actions also contributed to sales growth. During the quarter, we secured the largest purchase order on record. This project will replace a large, aging 500 KV line of weathering steel with galvanized steel. We are partnering with our customer to provide a unique H-frame solution to enhance reliability in harsh weather environments. Revenue for this order is expected to commence in the third quarter of this year and extend into the first half of 2020. In the coating segment, Sales of 86.8 million grew 2.2%, led by revenues from acquisitions completed over the past year, and pricing across all regions. The integration of United Galvanizing in Houston, Texas is progressing well, furthering our strategy of geographic expansion. Texas is an important market for our structures businesses, so the acquisition will service internal demand as well as a wide range of end markets for custom galvanizing and Quirkote Applications. Turning to the irrigation segment, global sales of 152.8 million were 18.7% below last year, as expected. Lower international project sales in developing markets led to a tough comparison for the quarter. And in North America, sales of 108.5 million were only slightly below 2018. Average selling prices in North America were higher. from previous and recent pricing actions. Farmer sentiment has continued to be challenged by low net farm income levels and adverse weather conditions, particularly in the traditional corn belt and soybean markets, although we are seeing increasing support of underlying demand from other regions, such as California. I recently heard from four large growers there who confirmed that higher labor costs are driving a greater interest in mechanized irrigation and our advanced technology solutions. International irrigation revenues of $44.3 million decreased 43.3% from last year. As mentioned during our fourth quarter call, we expected lower sales this quarter from a large project in 2018 that did not repeat. The Brazil market has been trending as expected. AgriShow, the largest farm show in the region, will begin in a couple of weeks, giving us further confirmation of our expectations for the year. I would like now to turn the call over to Mark for the financial review.