Valmont Industries, Inc.

Greetings and welcome to the Valmont Industries first quarter 2021 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If you would like to ask a question, you may press star 1 on your telephone keypad. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Renee Campbell, Vice President of Investor Relations and Corporate Communications. Thank you, ma'am. You may begin.

Thank you, Donna, and good morning, everyone. Welcome to Valmont Industries' first quarter 2021 earnings call. With me on today's call are Steve Konieski, President and Chief Executive Officer, Avner Applbaum, 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 first quarter results and comment on our strategy and long-term business outlook. Avner will review our financial performance and provide trends and key assumptions for the second quarter and full year 2021 with closing remarks from Steve. This will be followed by Q&A. A live webcast of the slide presentation will accompany today's discussion and is available for download from the webcast or on the investors page at valmont.com. A replay of today's call will be available for the next seven days. Please note that this conference call is subject to our disclosure on forward-looking statements which applies to today's discussion and is outlined on slide two of the presentation. It will also 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 we recap our first quarter results, I would like to share some opening comments. On March 8th, we recognized our 75th anniversary as a company. We've come a long way since 1946, when our founder, Robert B. Daugherty, a young Marine coming home after World War II, started a fabrication shop in the small community of Valley, Nebraska. Our business has certainly evolved over the past 75 years, but over this time we have remained centered on serving our customers and delivering value through our focus on execution and our commitment to conserving resources and improving lives. As we reflect on our history, we're very proud of the impact we've had on the lives of employees, customers, suppliers, business partners, and all those we have touched. As we look forward, we are energized by the opportunity to continue expanding this impact long into the future. We are also excited to host our Virtual Investor Day coming up in May, where we will share more about our strategic vision for the company and have several of our business leaders provide greater insight into their businesses and markets. Now, let me take a moment to acknowledge our commercial teams for their quick and deliberate actions to adjust market prices in response to rapid inflationary pressures beginning in the fourth quarter of 2020. Our disciplined and deliberate strategy to be the price leader in all our markets enabled by our strong product portfolio has served us well in this unprecedented inflationary environment. I also want to recognize our operations teams who have been working hard since the onset of the pandemic and Redouble their efforts this past quarter to secure our supply chain. Through these diligent and focused efforts, we were able to avoid material disruptions in our operations and deliver solid operating income growth for the company. With that, let me start with a brief recap of our first quarter, summarized on slide four of the presentation. Net sales of $774.9 million increased $100.7 million or 14.9% compared to last year due to significantly higher sales in the irrigation and utility support structure segments. Starting with utility, sales of $253.1 million grew $27.7 million or 12.3% compared to last year. Strong demand for renewable energy generation and utilities increasing investments in grid hardening and resiliency continue to drive sales growth. Moving to engineered support structures, sales of $222.3 million decreased $8.4 million or 3.6% compared to last year. Favorable pricing, growth in wireless communication sales and favorable currency impacts were more than offset by anticipated lower transportation market volumes, as delays in the FAST Act approval during 2020 and the impacts from COVID-19 continue to affect the timing of road and construction projects. Wireless communication structures and component sales grew 20.6% compared to last year. Strong demand was led by carriers increasing their capital spending in support of 5G build-outs. as evidenced by significantly higher sales of our new small cell product offering and existing component sales. Favorable pricing in all regions also contributed to sales growth. Turning to coatings, sales of $93.3 million through $5.1 million, or 5.9% compared to last year, and improved sequentially from last quarter, primarily from more favorable pricing and improving end market demand. In irrigation, sales of $229.7 million grew $72.9 million, or 46.5% compared to last year, with growth across most global regions, including 34% growth in our technology sales this quarter. In North America, sales grew 15% year over year, Farmer sentiment has improved significantly, and the positive market drivers we mentioned last quarter are generating strong order flow. Agricultural commodity prices remain at multi-year highs, and net farm income levels are expected to remain elevated. Overall, world market demand for ethanol and very low feed and protein stocks in the U.S. and China are driving significantly higher demand for grain exports. International sales growth more than doubled compared to last year and was led by higher sales in the Middle East, European markets, and in Brazil, where we recognized another record quarter of sales in local currency. Deliveries of the multi-year project in Egypt continued during the quarter, and the project is tracking well. Sales in this segment were slightly below the range that we guided to last quarter. mainly due to a series of supply constraints of certain irrigation components. The strength of our global supply chain and the agility of our global footprint help mitigate the impact and others across our businesses and these constraints have improved as we've entered the second quarter. This is just timing and we expect these sales to be recognized in the second quarter. Scalability is one of the benefits of our portfolio. enabling us to purchase mill direct steel and minimizing disruption in the procurement of steel, zinc, and other metals to meet customer order commitments. Turning to slide five. Last month, President Biden revealed the American Jobs Plan, valued at more than $2 trillion. This multi-year stimulus package includes approximately $620 billion to modernize roads, bridges, and highways. 100 billion dollars allocated to electrical grid investments and 100 billion dollars focused on high-speed broadband investments. We recognize that additional details and approvals must be worked through, so the timing of these benefits are uncertain. However, we believe the administration's increased emphasis on upgrading aging infrastructure on our nation's roads and highways, reducing traffic congestion and carbon emissions, hardening the electrical grid, and increasing access to wireless connectivity across the country will provide longer-term funding, stability that will have a positive impact on our infrastructure businesses. Moving to slide six. Last month, we released our annual sustainability report, highlighting the contributions of our products and services to conserve resources, improve life, and build a more sustainable world. I'm proud to have also announced our 2025 sustainability goals for carbon intensity, global electricity, and global combustion fuel, along with setting water standards across the enterprise within this report. Later today, as a part of our Earth Day activities, we will commemorate the installation of our one megawatt solar field at our Valley Nebraska campus. We are proud to be operating the largest privately owned behind the grid solar field in the state of Nebraska. Covering more than four acres, it will provide our campus with 6% of its electricity needs. I want to congratulate our team and our business partners who work diligently on this project, strengthening our commitment to innovation with sustainability in mind. We look forward to providing more updates on our ESG initiatives at our Virtual Investor Day and throughout the year. With that, I will now turn the call over to Avner for our first quarter financial review and 2021 Outlook.