Valmont Industries, Inc.

Greetings and welcome to the Valmont Industries Inc. fourth quarter and full year 2022 earnings 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 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 that 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 Belmont Industries' fourth quarter and full year 2022 earnings call. With me today are Steve Konieski, President and Chief Executive Officer, Avner Applebaum, Executive Vice President and Chief Financial Officer, and Jean Padgett, who joined Belmont as Senior Vice President and Chief Accounting Officer this past October. 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. Abner will review our financial performance and provide our current outlook and 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. Our fourth quarter was a great finish to what has been one of the best years in Belmont's history. I'm very pleased with our tremendous performance in delivering a record year of sales and profitability as we improve margins and achieve key milestones across our businesses. It is certainly a great time to be a part of Belmont. During our discussion this morning, we will mention many factors that contributed to our results. At the very top of that list is our global team of more than 11,000 employees. I want to deeply thank them for their hard work and dedication throughout this volatile year. Notably, our production teams around the world worked tirelessly in the face of supply chain challenges and the effects of lingering COVID restrictions. They persevered and performed vital work day after day to ensure we continued serving our customers. I truly believe that our global Valmont team is the most important factor contributing to our outstanding results. In addition, we have a business model rooted in our core values and focused intensely on areas that create value. This differentiated approach drives operational excellence across the organization and provides a level of resiliency that enables us to better navigate a challenging environment. It's also necessary to have an optimal organizational structure to help us reach our potential. This past year, we realigned our business segments from four to two, infrastructure and agriculture. This is more than a change in how we report results. It's an organizational strategy to drive efficient capital and resource allocation across the company. It also supports our goal to institute a culture of positive change by fostering collaboration, encouraging enterprise-wide innovation, and leveraging technology to advance productivity and accelerate business growth. In addition, as noted in the press release, during the fourth quarter, we announced and completed the divestiture of the offshore wind energy structures business, Belmont SM, which has been reported in the renewable energy product line the infrastructure segment and is now reported as other this past year we benefited from robust and market demand even in the face of challenging macroeconomic conditions including higher inflation and labor constraints as we have mentioned in the past our strategy is to intentionally grow our business in markets with long-term drivers that are supported by multi-year demand and growth trends the resiliency of these end markets coupled with our focus on operational excellence and serving our customers, contributed to our fourth quarter performance and will continue to propel our business forward. Now, let me move to a brief fourth quarter overview, summarized on slide five. Record fourth quarter sales of $1.1 billion, through 17.5%, driven by sustainable pricing and mid-single-digit volume growth. resulting in the ninth consecutive quarter of double-digit year-over-year sales growth. Moving to the segments, infrastructure sales of $771.3 million grew 15% year-over-year, with double-digit sales growth across all product lines, led by strong underlying market demand and favorable pricing. We believe the broad infrastructure build-out accelerating around the world is a multi-year event that will continue at least over the next three to five-year period. We are seeing demand across our infrastructure portfolio being driven by the benefit of broad-based stimulus programs, continued 5G build-outs, intensification efforts, and the energy transition to renewables. Utilities, developers, and governments around the world continue to deploy an increasing amount of capital on infrastructure hardening and resiliency initiatives, as evidenced by the current lead times for our large transmission structures, which have extended to more than 40 weeks. As such, we are continuing to make strategic investments in capacity and technology solutions to meet customer demand. Moving to agriculture, sales of $335.1 million grew 21.1% year-over-year, led by sustained pricing and volume growth, primarily driven by market strength in North America and Brazil. Farmer sentiment remains positive, supported by net farm income expected to exceed $160 billion for 2022, nearly 14% higher than 2021's record. 2023 net farm income levels are projected to remain elevated, and certain core input costs such as fertilizer, fuel, and pesticides, are expected to stabilize or potentially decline. In addition, the long-term market drivers of water conservation, global population growth, and ongoing food security concerns are supporting solid demand globally, encouraging irrigation and technology investments. These strong ag market fundamentals are also contributing to our robust international project pipelines, as evidenced by the new projects in Africa that we announced last month, which I will speak more about in a few minutes. Severe drought conditions are persisting across many key global markets, putting pressure on crop yields and expected stock levels, keeping global commodity prices above historical norms. We expect all of these market drivers to continue throughout 2023. Finally, as reported in other Offshore wind energy structure sales of $33.3 million grew 44.1% year over year. As mentioned, the divestiture of this business was completed at the end of 2022. Turning to the full year summary on slide six, sales grew 24.1% year over year to a record $4.3 billion, driven by deliberate pricing strategies, strong markets across our businesses, and focused execution by our teams. We achieved considerable growth across the portfolio and successfully added incremental volume within our existing facilities through strategic capacity expansions, improved operational efficiencies, and lean methodologies, while successfully navigating through difficult labor market constraints and lingering pandemic impacts earlier in the year. Turning to the segments. Infrastructure sales grew 23.5% year over year to a record $2.9 billion, with strong sales growth across all product lines. In agriculture, sales grew 31.3% year over year to a record $1.3 billion, with strong sales globally, including another record year of sales in Brazil. Agriculture technology sales grew 17.6% to $115 million, in line with our expectations. In 2022, we focused heavily on integrating the Prospera technology team with our market-leading irrigation and agronomy team services. I am very pleased with the progress towards our strategy to provide growers with technology solutions that make the farm more efficient and increase land productivity, while improving sustainability and reducing input costs. Turning to slide seven. I'd like to take a few minutes to highlight an example of how sustainability is ingrained in the fundamentals of our agriculture business. The number of people suffering from food insecurity around the world has been rising due to the pandemic and geopolitical tensions. We partner with countries to increase their local food production, which reduces their dependence on grain imports and creates self-sufficiency in supplying food to their growing populations. Supporting our agriculture growth strategies and the UN Sustainable Development Goal of Zero Hunger, we continue to expand our international irrigation presence. Last month, we secured an $85 million order for multiple projects in Africa. These projects will supply the region with irrigation equipment and advanced technology solutions to help meet the escalating demand for increased land productivity and reliable food production. utilizing our industry-leading technologies that provide remote monitoring and controls, together these projects will become one of the largest installations in the world of connected pivots, enabling our customer to maximize crop yields while reducing input costs. Our international project pipeline is supported by growing demand across many regions for irrigation technology and ag solar solutions, as well as our global operations team and local dealer presence. In summary, we achieved another great quarter and 2022 was another great year. End market demand for our infrastructure and agriculture solutions looks to be positive well into 2023 and we enter the year with great momentum and confidence. Before I turn the call over to Abner, I would like to highlight two important events that we are looking forward to this year. we plan to release our 2023 sustainability report in late April. Over the past year, we have continued to make 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 report will feature even more examples of how we are conserving resources and improving life for our stakeholders. Later this year, we plan to host a conference call to highlight our accomplishments and share more about our ESG journey at Belmont. Second, I'm excited to announce that we will be holding an investor day on Tuesday, May 23rd at the New York Stock Exchange. This will be an opportunity to connect with many of you face-to-face and present an updated look at our long-term strategy and financial targets. We will be providing details soon and I hope you are able to join us. With that, I will now turn the call over to Abner for our fourth quarter financial review and updated outlook.