Valmont Industries, Inc.

Greetings and welcome to Valmont Industries Inc. 3rd Quarter 2022 Conference 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 yourself to one question and one follow-up and return to the queue to ask additional questions. 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' third quarter 2022 earnings call. With me today are Steve Koniewski, President and Chief Executive Officer, Abner Abelbaum, 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 third quarter results, commenting on our market and long-term business strategy. Abner will review our financial performance and provide our outlook and indications for 2022 and preliminary indications for 2023 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 Belmont.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 today's 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. On behalf of the entire Vermont team, I would like to start today's call by offering our thoughts to those impacted by the devastation caused by Hurricane Ian last month, which impacted seven of our facilities in Florida and the Carolinas. We are saddened by the loss of life and destruction we have witnessed and wish our team members, their families, and the people in the affected regions a swift recovery from this historic storm. This storm serves as a tragic reminder as to why we speak a lot about grid hardening and grid resiliency. Utilities and other infrastructure companies have invested and continue to invest in structures that will better withstand natural catastrophes. In the case of Ian, recovery efforts were sped along by having a more resilient infrastructure in place, allowing electricity and communication services to be restored very quickly, which is helping the region return to normalcy faster. the industry has done a tremendous job of improving the grid when considering the intensity of recent storms. However, there is still a significant amount of grid hardening yet to be done, specifically in areas susceptible to natural disasters. As an industry leader, we continue to innovate to provide better solutions, and we are proud to work with our customers globally to improve the resiliency of the grid. Turning to slide four, and a recap of our third quarter. Demand remains elevated across all of our end markets, despite macroeconomic volatility, reflecting the ongoing investments in global infrastructure and agriculture and our customers' preferences for our products. We achieved another quarter of record sales and earnings per share, driven by strong demand and the outstanding contributions of the entire Valmont team as they live out our core values. Our businesses have focused on technology-driven solutions to help our customers operate more sustainably. I am very proud of what we were able to accomplish this quarter. In addition to our team's flexibility and responsiveness to meet customer demand, we remain disciplined in our pricing strategies to ensure we are capturing the full value added by our distinct offerings, as well as staying ahead of inflation. specifically wage, energy, and administration expenses, such as health care and insurance. It's important to note that our approach to pricing is not to simply adjust for variations in cost, but to also lean into the value we offer through our highly engineered solutions, superior shift-complete on time, and unmatched support for our customers. Moving to third quarter results. Sales of $1.1 billion grew 26% year-over-year, driven by a combination of sustainable pricing and mid-single-digit volume growth, resulting in the eighth consecutive quarter of double-digit year-over-year sales growth. Infrastructure sales of $778.4 million grew 23% year-over-year, with strong sales across all product lines. Investments in greater resiliency and renewable energy sources, upgrades to aging infrastructure, and ongoing 5G build-outs continue to drive broad-based market strength globally for our products and solutions. Additionally, funding from the Infrastructure Investment and Jobs Act is being deployed, and we expect the Inflation Reduction Act to be appropriated during 2023, along with other government spending initiatives across global markets. We believe these are long-term tailwinds for our businesses. Agriculture sales of $327.3 million grew 36% year over year. The combination of strong global demand for increased food production, along with widespread drought conditions, is keeping farmer sentiment favorable, encouraging irrigation and technology investments. As we had expected, the impact of our typical third quarter seasonality was less pronounced this year, as we successfully delivered backlog from the second quarter. Ag market fundamentals and positive farmer sentiment have also contributed to our robust project pipeline, notably in the Middle East and Africa. Severe drought conditions are persisting across many key global markets, putting pressure on crop yields and expected stock levels. keeping global commodity prices elevated. Turning to slide five, we have been executing on our three strategic pillars of pursuing operational excellence with ESG focus, expanding the markets we serve, and using technology to drive productive disruption across all our organizations. We are seeing the benefits of our strategic approach as we build a more resilient business. As an example, we have grown our ag tech sales with attractive margins to approximately $83 million year-to-date, an increase of 15% over last year, on track for full-year sales to exceed $100 million. Another example is our focus on high growth opportunities in end markets with favorable and global long-term demand trends. We have done this through targeted investments in organic growth and strategic acquisitions, such as our recent purchase of ConcealFab in the telecommunications market. On slide six is an example of our sustainable solutions and a testament to our strategy and disciplined capital allocation framework. Over the past four years, we have successfully entered and grown our solar market presence, both in infrastructure and agriculture, through acquisition and investment. The acquisition of Convert Italia in 2018, later rebranded as Valmont Solar, marked our entrance into utility solar markets. Over time, we have solidified our strategic focus on distributed generation projects that offer a more attractive margin profile, less raw material risk, and faster completion than large-scale utility projects. Our key international markets of Europe, North Africa, and Brazil have more pronounced barriers to entry and favorable legislation that helps drive demand. At the same time, we have been successfully expanding our presence in the US and are targeting additional growth as we move forward. Our competitive advantages of manufacturing capabilities and a global supply chain are enhanced by our deep relationship with developers and utilities. This year, we expect to nearly double our sales to approximately $120 million and anticipate continued robust growth in 2023. In 2020, within the agriculture segment, we acquired a majority stake in Solbras. Their services have since been integrated with our world-class Valley Dealer Network to provide global ag solar solutions. With the Solbras investment, we became the sole global player in this underserved market, which has tremendous growth potential, allowing farmers to enjoy our scale for projects that are typically much smaller than utility or distributed generation. Also unique, our dealer network offers unparalleled service and support in every region of the world, positioning us to be the partner of choice for a variety of applications. Whether the grower is looking to meet scope three emission goals, realize tax credits and energy savings, or produce alternative power generation. Our Valley dealers are there to help. We expect continued strong growth in this business. Since entering the market, we are on track to exceed $100 million in ag solar sales by the end of this year. We are very pleased with the execution and performance of both solar teams as meaningful demand of renewable energy sources is expected to continue. In summary, we performed well during the third quarter, building on our momentum from the first half of the year. We are on track to deliver our best full-year earnings per share in the history of the company. Demand for our infrastructure and agricultural products remains robust, and our team is demonstrating our core values while providing outstanding customer service. Our focus on operational excellence is helping us to navigate external challenges, reinforcing our confidence that we are on the right path to deliver even greater value to our customers and to our shareholders in 2023 and beyond. With that, I will now turn the call over to Abner for the third quarter financial review and updated outlook.