Valmont Industries, Inc.

Greetings, and welcome to the Valmont Industries second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Renee Campbell, Senior Vice President, Investor Relations, and Treasurer. Thank you. You may begin.

Thank you, and good morning. Welcome to Valmont Industries' second quarter 2024 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 summary of our second quarter results, current market dynamics, and strategic priorities. Tim will review our second quarter financial performance and provide our updated outlook and indications for the year with closing remarks from Abner. 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's 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, to stay updated with Belmont's latest news releases and information, please sign up for email alerts on our investor site. We also invite you to follow Belmont and our brand on the social media channels linked on our website. With that, I would like to turn the call over to Abner.

Thank you, Renee. Good morning, everyone, and thank you for joining us. Beginning on slide five, our second quarter results reflect the commitment of our 11,000 employees worldwide to delivering exceptional value through innovation, quality, and service. Their relentless dedication to customer satisfaction, operational excellence, and cost management has enhanced profitability and fostered resilience in dynamic market conditions. As a result, we expanded operating margins to 14.2%, up 140 basis points over last year, with diluted earnings per share growing to $4.91. I'm pleased with the progress we're making in delivering stronger results, even on comparable sales. Infrastructure segment sales were lower year over year, while volumes in transmission, distribution, and substation, which we refer to as utility, or higher, we produced a greater mix of distribution and substation products this quarter to accommodate our customers. This shift, along with lower telecom and solar volumes, and the effect of a lower steel index on price, impacted sales growth. While a mixed change can affect top-line growth in any given quarter, we always aim to enhance profitability and return on invested capital. By focusing on footprint flexibility and leveraging strong market demand, we are steadily expanding and adjusting our factory output to meet evolving customer needs. Additionally, we continue strategic pricing actions to capture the value we provide. Agriculture segment sales were slightly higher this quarter. In North America, severe storm events in May and June primarily in the Midwest and southern U.S., drove strong demand for replacement equipment. During this summer of exceptionally severe weather, our team has shown an outstanding ability to quickly build and deliver equipment during the critical growing season. This responsiveness ensures our dealer and growers receive essential support precisely when they need it most. In international markets, continuing market softness in Brazil pressured growth this quarter. Alternatively, we're seeing good momentum in our Middle East project business with a strong multi-year pipeline in the region. Overall, I'm encouraged by our ability to execute and drive profitability. Our success demonstrates the strong corporate capabilities shared across our organization and the value creation potential enabled by development business model. Turning to slide six for current market dynamics and long-term megatrends for infrastructure business. Starting with utility, industry capex spending remains elevated. We're at the beginning of a multi-year energy transition marked by significant changes in both energy consumption and generation. Belmont products play a crucial role in connecting renewable energy sources to the grid and supplying more electricity to address load growth. Additionally, aging infrastructure require upgrades to create greater resiliency, increasing the demand for steel, concrete, and hybrid products. The outlook for transportation remains strong, driven by a national priority to upgrade and expand critical infrastructure. We expect IIJA funding to provide a solid tailwind to project financing for years to come, despite labor shortages and funding delays slowing project build-outs in the near term. Commercial lighting markets remain muted, but are expected to recover with single-family housing starts. As we've previously discussed, telecom carriers have scaled back CapEx plans and are likely to maintain more normalized spending levels following a period of record investment. The increasing demand for data due to advanced technology and connected devices requires a robust and widespread network infrastructure. In solar, this market remains attractive with strong demand drivers. Solar continues to be the lowest-cost energy solution supporting renewable energy objectives. We have made adjustments to our commercial strategies to enhance the profitability of this business, which I will highlight later in the call. Finally, our coatings business continues to align with GDP trends while supporting our internal production. These multi-year infrastructure megatrends are also driving demand for the superior corrosion protection provided by zinc galvanizing. Turning to slide seven, for current market dynamics and long-term megatrends for the agriculture business. While North American order rates trended higher this quarter due to the recent storm events, grower sentiment in the U.S. remains muted due to the expected decline in ed farm income this year and the downward trend in grain prices. International market demand is mixed. In Brazil, we are seeing continued soft demand as farm income remains pressured by lower grain prices. The recent renewal of the tsunami financing program reaffirms the Brazilian government support for agriculture with favorable irrigation loans to growers. While we anticipate continued market softness in the near term, Brazil remains a key part of our long-term growth strategy. The pivot provides a compelling return on investment, made even stronger by the region's potential for a third growing season. The international project pipeline remains strong and provides a multi-year line of sight. Our current project in Egypt and the $50 million in Middle East projects we announced last quarter remain on track. There is a rising demand to ensure food security globally, a challenge intensified with growing populations and geopolitical conflicts. With our manufacturing footprint, strong dealer network, and advanced technology solutions we can deliver on these large projects, which are essential to our global growth strategy. Valmont's market-leading products and technology solutions improve productivity on the farm by optimizing resources such as water, labor, and other input costs. We're well-positioned to build on our proven track record of successfully meeting growers' needs. To summarize, In both segments, our outlook for sustained long-term growth remains strong, despite short-term demand headwinds in some of our markets. These multi-year megatrends drive demand and provide a solid foundation for future growth. We are positioning Valmont to capitalize on these trends while delivering long-term shareholder value. Turning to slide eight, the Valmont business model defines our approach to maximize value creation. Executing these strategic focus areas while upholding our core values strengthens my confidence in our ability to outperform our served markets. Since stepping into the CEO role last year, I've worked with our team to refine our strategy and concentrate growth on areas that align with our core competencies. By focusing on customer needs, we aim to enhance value and returns while providing the best support. We're beginning to see benefits of this refined strategy and the actions we're taking to align our team accordingly. For example, last fall we took steps to streamline the organization to create a more efficient and effective structure while reducing costs. We are now more nimble and better able to make decisions while supporting our operations. The next step is refocusing our commercial and operational team on opportunities that deliver the greatest value and drive the highest return. This is captured by the phrases commercial execution and operational excellence. We saw benefits from this refocus and utility this quarter, as the team produced a greater mix of distribution and substation structures, enhancing margins while accommodating our customers. By allocating resources more effectively, we expect to achieve further efficiencies as we advance the strategy. Another great example is the actions we're taking in our solar business. We are exiting certain low-margin solar projects as we focus on enhancing profitability and return on invested capital. While this approach will impact revenue growth this year, we believe it further enhances our competitiveness and drives sustained growth towards our profitability targets. We are excited about the future of our solar business, By building on our success and distributed generation, we are driving geographic expansion supported by a strong global organizational structure. We are dedicated to advancing industry standards and will continue investing to deliver innovative solutions that meet our customer needs. Turning to slide nine, sustainability is a core element of who we are and is embodied in our promise of conserving resources and improving lives. Last month, we published our ninth sustainability report. We have demonstrated our commitment toward 2025 environmental goals by surpassing three of our four stated targets. ESG remains a core focus of ours as we view it as fundamental to good business practices. It creates efficiency and cost savings, improves safety, manages risk, and fosters innovation. I'm pleased to report notable improvement in our 2023 safety metrics, as a safe and engaged workforce is our highest priority. The report also features several product case studies that demonstrate our innovative solutions addressing resource challenges for our customers. We've been recognized externally for our ESG initiative showcasing our global team's dedication to these priorities. To summarize, I am proud of our strong results. We are managing what we can and have ambitious plans to enhance our competitive position and drive profitable growth. Our balance sheet is stronger as earnings and working capital management have resulted in good cash generation supporting our capital allocation strategy. Our outlook is positive as we build a sustainable, high-performance culture that supports our growth objectives. Now, I'll turn it over to Tim for our second quarter financial review and an updated 2024 outlook.