Valmont Industries, Inc.

Greetings and welcome to the Valmont Industries second 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. 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, Vice President of Investor Relations and Corporate Communications. Thank you. You may begin.

Thank you, Jesse. Good morning, and welcome to Belmont Industries' second quarter 2019 earnings call. With me today are Steve Koniewski, President and Chief Executive Officer, Mark Jacek, Executive Vice President and Chief Financial Officer, and Tim Francis, Senior Vice President and Corporate Controller. This morning, Steve will provide a summary of our second 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 is located on the homepage of our website at Belmont.com. Please download the slide deck to follow along with today's call. A replay will be available for the next seven days, and instructions for accessing it are included in the press release, which is also located 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 Koniecki.

Thank you, Renee. Good morning, everyone, and thank you for joining us. I would like to start with slide three and a recap of our second quarter. Net sales of $700.9 million were 2.7% higher than last year, excluding currency impacts and revenue from last year's divested grinding media business, sales would have grown 5.5%. This growth was led by robust transportation and wireless communication demand in the engineered support structure segment and continued pricing discipline across all four segments. Moving to segment highlights. Starting with the engineered support structure segment, first quarter sales of $258.7 million increased 3.2% over last year. We continue to benefit from very strong order flow, particularly in North American transportation and wireless communication markets. This demand has resulted in higher backlogs, improved pricing, and extended lead times across the industry. Effects from the severe Midwest flooding that occurred in late March and resulted in the one-week closure of our Valley, Nebraska facility continue to impact this segment in the second quarter. While our teams have worked very hard to return to regular production and shipment schedules, continued strong order flow created a buildup of shipments, causing factory inefficiencies and delayed shipments. By adding resources and implementing process changes in our shipping area, these constraints are expected to be resolved during the third quarter. I want to thank all of our customers for their understanding during this time, and all who have worked with us to remedy the situation. Mark will speak in more detail on the flood recovery in his remarks. Globally, sales of wireless communication structures and components grew 20% over last year, supported by robust demand, particularly in North America. Carriers continue to invest in 4G and FirstNet expansions, and momentum for small cell structures in advance of 5G build-outs is also driving sales growth. During the quarter, we completed the acquisition of Connected Wireless, a Florida-based distributor of wireless site components. This acquisition is a strategic addition to our SitePro1 business, advancing our geographic expansion and addressable market growth strategies. Sales of access systems were slightly below last year due to unfavorable currency translation. In the utility support structure segment, sales of $209.8 million increased 6.3%, driven by sales from acquisition and improved pricing in bid markets. We have been pleasantly surprised by stronger than expected demand from grid hardening initiatives, which has caused our lead times and others across the industry to significantly increase from approximately 22 to 26 weeks to 30 to 34 weeks. As a result, we have taken immediate steps to add capacity in existing North America facilities and are developing longer-term plans to meet additional capacity requirements. Sales growth this quarter once again benefited from the solar tracker acquisition that was completed last year. I'm excited to share that later this week, we will officially launch our single-access tracker solution into the North American market. While we are very happy with the sales growth this year, as expected, we continue to work on supply chain synergies and are optimistic we will begin to see those benefits in 2020. As we said in prior calls, this business is largely project-based and revenue can be difficult to forecast each quarter. That said, the CAGRs in this market remain in the high teens and we expect revenues over time to stabilize as we expand our presence in other markets. Revenues in the offshore wind business were aligned with expected levels. and we anticipate higher sales in 2020. Turning to the coding segment, second quarter sales of 98.4 million grew 7.5%, led by sales from recent acquisitions and favorable pricing across all regions. Excluding currency impacts, sales would have increased 9.4%. As Inc. costs have stabilized, we continue to maintain pricing discipline and are utilizing technology to add value and improve the customer experience. Further, we are currently experiencing growth across all geographies, signaling strength in the end markets that we serve. Turning to the irrigation segment, global sales of 155.2 million were 4.8% below last year. In North America, sales of 102.8 million were 9.7% lower. Macro market conditions continue to weigh on farmer sentiment. Further, historical flooding A very wet spring across many parts of the U.S. and low net farm income levels all kept growers on the sidelines. Despite lower volumes in North America, average selling prices were higher due to sustained pricing discipline. On a positive note, we achieved our third highest month of technology sales in May, bringing our total connected devices to approximately 86,000. Growers are recognizing the value of adopting our advanced, easy-to-use technology solutions to improve yield and reduce input costs. Also this quarter, we divested the last company-owned dealership located in Pasco, Washington. This was done as a part of our growth strategy and belief that independently-owned irrigation dealerships support market growth and strengthen our overall presence in the market. International irrigation revenues of $52.4 million increased 6.7% versus last year. Excluding currency impacts, sales grew 11.5%. As expected, the Brazilian market is improving, and our team booked a record number of orders at this year's AgriShow, the largest annual farm show in the country. We also recently opened our first aftermarket parts distribution center in Sao Paulo State to support customers more quickly and efficiently and strengthen our leadership position in this critical market. Sales growth in Europe and Middle East markets this quarter helped offset lower sales in the Asia-Pacific region. A severe drought in parts of Australia and policy uncertainty in New Zealand have impacted demand in those markets this year. I recently returned from a visit to the Republic of Kazakhstan, where I met with President Tokayev, Prime Minister Mameen and Minister of Agriculture Amaraf. to discuss agricultural investment, productivity enhancement, and advanced technology in the region. Market development there is actually very similar to our early market strategy in Brazil. We're very excited to partner with the Kazakhstan ag community on future opportunities in this very important region, building on our geographic expansion strategy. I would like now to turn the call over to Mark for the financial review.