Valmont Industries, Inc.

Greetings and welcome to the Valmont Industries fourth quarter and full year 2019 earnings conference call. At this time, all participants are in 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's now my pleasure to introduce your host, Renee Campbell, Vice President, Investor Relations and Corporate Communications. Please go ahead.

Thank you, Kevin. Good morning, everyone, and welcome to Valmont Industries' fourth quarter and full year 2019 earnings call. With me today are Steve Konieski, 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 a brief summary of our fourth quarter and full year results, and Mark will provide additional details on financial performance as well as our outlook for 2020 followed by Q&A. A slide presentation will accompany today's discussion and is available for download on the investors page of our website at Belmont.com. A replay of today's call will be available for the next seven days and instructions for accessing it are included in the press release which was distributed yesterday and also located on the investors page of 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 Konefsky.

Thank you, Renee. Good morning, everyone, and thank you for joining us. I'd like to begin this morning by thanking our global team of nearly 10,000 associates for their performance this past year. While our full-year results did not meet all of our goals, We made significant progress in many areas in 2019 and achieved sales growth in three of our four segments. We elevated our commitment to drive lean and agile throughout the organization and accelerated innovation through new products and services. We also generated over $200 million in free cash flow through a heightened focus on working capital improvement. And we quickly responded to the impacts of a historic flooding event last spring. Minimizing customer and business disruptions during a period of very strong infrastructure market demand. All of these accomplishments are a real testament to the operational excellence of all of our global teams. With that, let me turn to a brief recap of our fourth quarter, summarized on slide three of the presentation. Net sales of $683.6 million declined 2% compared to last year. primarily due to significantly lower sales in two areas of our business, access systems and international irrigation. Sales in North American markets were higher across all segments despite a challenging agricultural market environment and reduced U.S. industrial production levels. The higher sales were led by strong demand in wireless communication and transportation markets, higher irrigation technology sales, revenue from recent acquisition and sustained pricing discipline. During the fourth quarter, we finalized the agreement to purchase the remaining 49% stake in AgSense for $44 million, a significant milestone in our technology strategy. Its profitable recurring revenue model has provided a growth platform for technology sales over the past five years and has accelerated our technology leadership position in the field. We are excited to welcome the AgSense team fully into the Valmont family. Turning to the full year summary on slide four, net sales of $2.8 billion were similar to last year. We achieved sales growth in all segments except irrigation, which was down nearly 8% compared to 2018, similar to other ag players and representative of continued pressure on net farm income. All segments benefited from disciplined pricing strategy and sales growth from recent acquisitions. and we were very pleased to achieve 25% growth in both wireless communication and irrigation technology sales in 2019. Offsetting sales growth were lower utility volumes due to a higher mix of smaller structures and less available capacity, as well as lower volumes in irrigation and coatings. In the engineered support structure segment, access system product sales were down 12% compared to last year. with most of the decline occurring in the fourth quarter. Recessionary construction markets in Australia led to significantly lower volumes for the year. Turning to slide five, during 2019, we made meaningful advances in our strategy to accelerate innovation and technology into our products and services. I'd like to take a few minutes to speak to you about some of these key initiatives across our businesses. In our engineered support structure segment, We have expanded growth of our innovative SmartPole technology solutions and are increasing investments in product development there. Investment in 5G networks is also accelerating, and we are capitalizing on cities' aversions to unsightly antenna locations, which is leading to increased demand for small cell structures and integrated concealment. All of these technologies are necessary elements of the smart city evolution, and our products have been favorably have been favorably received by the market. In our utility business, we are piloting beacon technology on power grid structures. This solution helps utility customers identify and remediate line conditions on a real-time basis at the source, reducing the time and cost of shutting down an entire section of the grid. We also have a dedicated team that utilizes drone technology to quickly assess and identify issues along power lines. reducing environmental impact and operator costs. We recently partnered with a local Nebraska utility to take detailed photos of structures along a large power line. This will allow our customer to quickly and efficiently assess required maintenance work and other issues without needing to use expensive cranes on the right of way. In our coating segment, our proprietary GalvTrack and Valmont Coatings connector technologies are unmatched in the industry. GalvTrack optimizes Inc. application by integrating standard recipes and repeatable processes across all of our global locations, a strong example of lean and standard work. The Codings Connector provides customers with real-time visibility to their order status with interactive capabilities to communicate specific instructions. Our strategy to quickly grow customer adoption has led to over 2,300 customers using the technology at 31 of our 37 global coatings locations. In irrigation, we continue to drive our technology leadership position forward. Technology sales in 2019 grew 25%, driven by the increased adoption of AgSense, which has led to more than 95,000 connected devices in the field. Last month, I attended our North American dealer meeting, where we announced Valley 365, our newest cloud-based single sign-on platform for connected crop management. Valley 365 eliminates the need to switch between multiple applications on a smartphone or other device. And the platform allows growers to collect, control, and analyze data to take action and remediate issues in the field. One of these applications is Valley Insights, which was launched in early 2019 with our partner, Prospera Technologies. Valley Insights uses advanced artificial intelligence to virtually detect and provide recommended remediation for crop health issues. Grower adoption has exceeded our expectations. We are already monitoring over 1.5 million acres and expect to monitor up to 5 million acres by the end of this year. As you can see, we continue to increase our investments in technology and new product development. Two very important and strategic pillars of our future growth strategy. Before I turn the call over to Mark for our financial results and a 2020 outlook, I want to briefly comment on the coronavirus situation. The health and safety of our team in China is our top priority. We are closely watching the situation and the impacts continue to unfold. As it does, our thoughts are with our Valmont China employees and their families, our customers and suppliers, and many others who have been impacted. I will now turn the call over to Mark.