Valmont Industries, Inc.

Welcome to Valmont Industries, Inc. fourth quarter and full year 2021 results. 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 yourself to one question and one brief 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. Please note, this conference is being recorded. I will now turn the conference over to your host, Renee Campbell, Senior Vice President, Investor Relations and Treasurer. Ms. Campbell, you may begin.

Thank you and good morning. Welcome to Valmont Industries' fourth quarter and full year 2021 earnings call. With me today are Steve Konieski, President and Chief Executive Officer, Abner Appelbaum, 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, commenting on our markets and long-term business strategy. Avner will review our financial performance and provide our outlook and indications for 2022, with closing remarks from Steve. This will be followed by Q&A. A live webcast of the presentation will accompany today's call and is available for download from the webcast or on the investors page at valmont.com. A replay will be available on our website later this morning. Please note that this call is subject to our disclosure on forward-looking statements, which applies to today's discussion, is outlined on slide two of the presentation, and will be read in full at the end of the 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 reviewing our fourth quarter and full year highlights, I would like to acknowledge and thank our global team of 11,000 employees for their tremendous performance operating through another year of ongoing pandemic impacts and supply chain volatility. I could not be more proud of their hard work and dedication to serving our customers with innovative and essential products and services. Throughout this year, they have remained true to our core values. operating with passion and integrity, driving continuous improvement, and delivering results, while prioritizing safety in our workplace and in our communities. Moving on to the business. Our solid performance this quarter once again demonstrated strong demand across the portfolio and consistent execution of our growth strategies. We delivered record sales and grew adjusted operating income 24% year over year, reflecting the resiliency of our business and execution by our teams. Like many others, we have faced the impacts of broad-based inflation, supply chain and pandemic-driven labor constraints, impacting Valmont, our customers, and our suppliers. While we have been managing through this environment well, these constraints challenged our ability to achieve full productivity levels in many of our North American facilities in the quarter. Now, let me move to a brief fourth quarter overview, summarized on slide four of the presentation. Net sales of $963.3 million, a fourth quarter record, increased more than 20% year-over-year. Sales growth was realized in all segments, led by higher pricing and strong, broad-based market demand, with another quarter of significant growth in irrigations. Moving to the segments and starting with utility, sales of $324 million grew nearly 20% year-over-year, led by substantially higher pricing and strong underlying demand as utilities continued to invest in upgrading and hardening the grid. Additionally, sales of solar tracker solutions were higher, driven by increasing investments for renewable energy generation. This is providing a favorable demand driver for us in 2022 and beyond, as our backlog of utility scale and distributed generation projects has grown three times compared to one year ago. Additionally, our broad product portfolio uniquely positions us to supply every type of electric grid structure within the utility market, and we are making strategic investments in capacity and technology to meet the growing market demand. Moving to engineered support structures, sales of $291.9 million grew 14% year-over-year, led by favorable pricing in all markets, and sales growth of more than 50% in wireless communication products. Our swift and deliberate pricing actions in this segment benefited us throughout the year, and international markets continue to benefit from higher stimulus and infrastructure investments. especially in Australia. Demand in our wireless communications business remains very strong, driven by 5G build-outs and significant investments by the major wireless carriers. Turning to coding, sales of $98.2 million grew nearly 10% year-over-year, driven by higher average selling prices, improved general end-market demand, and sales from our new greenfield facility in Pittsburgh. Moving to irrigation, global sales of $276.8 million grew nearly 40% year-over-year, with sales growth in all regions and higher sales of technology solutions. In North America, sales grew 55%. We continue to benefit from strong underlying market fundamentals and positive net farm income projections, which are driving farmer sentiment as reflected in very strong order flow. International sales grew just over 23% year over year. We achieved another record quarter of sales in Brazil and solid demand in Europe, Australia, Middle East, and Africa is giving us a good line of sight into 2022, including ongoing deliveries of our Egypt project. Last quarter, we highlighted our differentiated solar solutions for agriculture. Our market expansion strategy is leading to growth in North America, Africa, and Europe. And I'm pleased that sales are expected to more than double in 2022 based on market demand and the current pipeline of orders. Turning to the full year summary on slide five, net sales grew 21% year over year to a record $3.5 billion. driven by deliberate pricing strategies, strong markets in our businesses, and focused execution by our teams. We achieved considerable growth in all segments, exceeding our expectations for both revenue and earnings. Through strategic capacity expansions and lean methodologies, we successfully added incremental volume within our existing facilities, a testament to the hard work by our operations and planning teams. Turning to the segments, strong sales growth of 12% in utility support structures led to sales of $1.1 billion, driven by pricing actions and continued robust demand for good resiliency and renewables. In engineered support structures, sales grew 6.9% to $1.1 billion. despite lower transportation volumes in North America as expected. Our relentless focus on pricing actions and improved operational performance benefited us throughout the year. Additionally, growth of wireless communication products grew 26% year-over-year to $240 million, exceeding our expectations. Turning to coatings, sales grew nearly 12% to $386 million, tracking in line with improved industrial production levels globally. Favorable pricing, higher volumes, and favorable currency impacts contributed to sales growth. Turning to irrigation, sales grew nearly 60% to more than $1 billion, a record for Valmont, supported by 2021 projected net farm income levels, which increased to approximately $120 billion. the highest level since 2013. In addition, the long-term market drivers of food security, resource conservation, and reduction of input costs are supporting solid demand of our innovative products and solutions globally. In Brazil, revenue more than doubled year over year, and we achieved higher sales in Europe, Australia, and Middle East markets. Sales of irrigation technology solutions approached $100 million, growing 45% year-over-year in line with our expectations. The acquisition of Prospera Technologies this past year accelerated our commitment to make the farm more efficient and increase productivity while considerably improving sustainability. This past year, we focused heavily on integrating the team and executing our strategy to scale and expand market presence. As we enter 2022, we are targeting growth of subscriptions under a recurring revenue model. Turning to slide six, during 2021, we took significant steps to advance our ESC strategy and communication, capped by an overall improvement in ISS scores for environment and social since the beginning of the year. I look forward to the release of our 2022 sustainability report in late March. Over the past year, we have made remarkable strides to minimize our environmental impact while delivering increasingly efficient and sustainable solutions for our customers that support critical ESG principles. This year's enhanced report highlights additional programs and goals and alignment to new frameworks, including the United Nations Sustainable Development Goals, FASB, and TCFD. along with our continued commitments to invest in sustainable solutions and technology that will positively impact the future of our stakeholders. I'm happy to announce that upon the release of our 2022 report, we plan to host a conference call to highlight our accomplishments throughout the year and share more about our ESG journey at Valmont. With that, I will now turn the call over to Adam for our 2021 financial review and 2022 outlook.