Valmont Industries, Inc.

Greetings. Welcome to Valmont Industries Inc's fourth quarter and full year 2023 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 this conference is being recorded. I'll 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 2023 earnings call. With me today are Abner Applebaum, President and Chief Executive Officer, and Tim Francis, Interim Chief Financial Officer. This morning, Abner will provide a brief summary of our full year results and current market dynamics. Tim will review our fourth quarter financial results and provide our outlook and indications for 2024. Abner will close with an update on our long-term business strategy and new financial targets. 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 investor site 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 three of the presentation, and will be read in full at the end of today's call. Finally, if you would like to be notified when Belmont publishes news releases and other information, please sign up for email alerts through our investor site. We also encourage investors and others interested in our company to follow Belmont and our brands on the social media channels listed on our website. With that, I would now like to turn the call over to our President and Chief Executive Officer, Abner Applebaum.

Thank you, Renee. Good morning, everyone, and thank you for joining us. I'd like to begin my comments with the key messages on slide five by saying how proud I am of the Global Valmont team. We have navigated many challenges over the past year, yet I firmly believe we are a much stronger organization today than we were at the beginning of 2023. Together, we're making progress on achieving our strategic objectives, and this gives me confidence in our enduring success. Over the past year, we made some hard but necessary decisions, ones that have shaped us into a more resilient company capable of delivering long-term, sustainable value to our stakeholders. Turning to full-year highlights, The Valmont team executed well and delivered solid results in 2023. The dynamic demand environment we faced created top-line headwinds that adversely impacted our sales. Despite this, we expanded gross profit margins 370 basis points and adjusted operating margins 70 basis points. Our operations and commercial teams did a great job keeping cost under control and winning higher value business. As a result, adjusted earnings per share grew more than 8%. The team also achieved adjusted return on invested capital of 14%. We generated strong operating cash flows by managing working capital, supporting our disciplined capital deployment strategy of investing in growth and returning cash to our shareholders. In addition, to solid operating performance, we continue to follow our pricing strategy in both segments. We are driving margin expansion amid lower sales and ongoing inflation by capturing the value we add to our customers. Turning to the segments, infrastructure net sales increased 3% year-over-year due to higher average selling prices across the portfolio. Higher volumes in our solar business where sales grew more than 50% year-over-year, NTDNS were partially offset by much lower telecommunications volume. Agriculture net sales were down 12% year-over-year. Higher international sales were more than offset by lower volume in North America. As we wrap up 2023, I'm excited for our future. based upon favorable long-term demand drivers and the hard work, resiliency, and dedication of the Valmont team. Turning to slide six for an update on our markets, starting with infrastructure. Our favorable market outlook is relatively unchanged. This segment is supported by multi-year megatrends, such as the energy transition, grid resiliency efforts, and replacing aging infrastructure. These demand drivers are leading utilities to sustain their CAPEX spending at elevated levels. In addition, our solar business is supported by favorable policy and strong demand globally is expected to continue. Our lighting and transportation business is being supported by road construction investments and benefits from the IIJA are expected to be an incremental tailwind in the U.S. later this year. Wireless carriers have communicated reduced capex spending this year, which is leading to lingering softness in our telecom business. We are well positioned to quickly increase output when the market recovers and maintain confidence in the long-term opportunity for this business. Across all our infrastructure businesses, we continue to strategically invest in capacity and remain confident in the segments group. Moving to agriculture, we see market conditions softening. However, we remain positive about underlying ag fundamentals that are supporting long-term market demand. In North American markets, recent projections suggest a significant decline in U.S. farm income in 2024 compared to 2023 levels. Although income is projected to decline, we expect growers' balance sheet to remain strong. However, sentiment remains somewhat muted after coming off 2022 peak income levels. Currently, we are seeing order rates for irrigation systems tracking ahead of last year, which is a positive sign as we begin the year. Turning to international, retail markets can be impacted by similar drivers seen in North America. We have performed well in Brazil with three consecutive years of record irrigation However, sentiment and expected farm income levels are softening due to lower grain prices and higher interest rates. Weather conditions are also playing a role in crop stress and influencing planting decisions. Although these factors may impact short-term growth, Brazil remains one of the most attractive markets for Valmont and is a key part of our long-term strategy. In other regions, Our industry expertise and leading market position provide attractive project opportunities. Shipment of the previously announced Egypt project is expected to continue throughout 2024. These projects underscore our dedication to supply products and solutions that help address food security concerns while furthering sustainable development. They are also a testament to how our irrigation products and technology solutions provide compelling economics and return on investment for our customers. Technology is the anchor for our long-term global market leadership. It gives us a competitive advantage that enhances the return on a pivot, ultimately influencing favorable buying decisions. Now I'll turn it over to Tim for a fourth quarter financial review and 2024 outlook.