• Fourth Quarter Net Sales: $1.0 billion, increased 2.1%.
• Fourth Quarter Operating Income: $120 million, increased nearly 20%.
• Fourth Quarter Operating Margin: 11.6% of net sales, increased 170 basis points.
• Fourth Quarter Earnings Per Share (EPS): $3.84, improved nearly 21%.
• Infrastructure Segment Sales: Increased 2.1% in the fourth quarter.
• Telecommunications Sales Growth: Nearly 31% increase in the fourth quarter.
• Solar Sales Decline: Approximately 35% decrease in the fourth quarter.
• Agriculture Segment Sales: Increased 2.3% in the fourth quarter.
• Full Year Net Sales: $4.1 billion, decreased 2.4%.
• Full Year Operating Income: $525 million, increased 10.9%.
• Full Year Operating Margin: 12.9% of net sales, increased 160 basis points.
• Full Year Earnings Per Share (EPS): $17.19, a record, improved nearly 15%.
• Full Year Operating Cash Flows: $573 million.
• 2025 Sales Outlook: Expected between $4.0 billion to $4.2 billion.
• 2025 EPS Outlook: Projected to be in the range of $17.20 to $18.80.
• Capital Allocation: $700 million buyback authorization and 13% increase in quarterly dividend.

• Warning! GuruFocus has detected 10 Warning Signs with GP.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Valmont Industries Inc (NYSE:VMI) reported a 20% increase in operating income for the fourth quarter, reaching $120 million.
• The company achieved a record earnings per share of $17.19 for the full year 2024, reflecting a 15% improvement.
• Valmont Industries Inc (NYSE:VMI) generated strong operating cash flows of $573 million for the year, reinforcing its financial position.
• The company is investing in capacity expansion and efficiency improvements, including a factory expansion in Texas and upgrades in Oklahoma.
• Valmont Industries Inc (NYSE:VMI) has a strong backlog and is well-positioned to capitalize on multi-year infrastructure megatrends, particularly in the utility market.

Negative Points

• Valmont Industries Inc (NYSE:VMI) faces challenges in the agriculture market due to declining corn and soybean prices, impacting capital investment decisions.
• The company anticipates a net volume decline in agriculture for 2025, with international sales growth offset by market softness in North America.
• Tariffs on China imports and steel and aluminum imports pose a potential headwind, with an estimated $0.20 to $0.40 impact on EPS.
• The solar segment experienced a 35% decline in sales, attributed to the strategic exit from lower margin projects.
• Valmont Industries Inc (NYSE:VMI) expects unfavorable currency translation rates to affect reported revenue in both infrastructure and agriculture segments.

Q & A Highlights

Q: Can you discuss the impact of foreign exchange on agriculture sales and the differences between North America and international markets? A: (Avner Applbaum, CEO) Both North American and Brazilian markets are pressured by corn and soy prices, impacting profitability. However, in North Africa and EMEA, we have a strong backlog and pipeline driven by food security needs. (Thomas Liguori, CFO) The agriculture team is focused on improving business for higher operating margins as growth returns, investing in aftermarket growth and product cost management.

Q: What are the expectations for operating margins in 2025, and what factors could influence them? A: (Thomas Liguori, CFO) We see opportunities in gross margins through aftermarket and product cost improvements. Infrastructure capacity and automation investments will improve efficiencies. SG&A costs are expected to decrease as a percentage of revenue. Tariffs could impact margins, but mitigation efforts are in place. We aim for mid-teens margins long-term.

Q: How are tariffs factored into your guidance, and how do you plan to manage their impact? A: (Avner Applbaum, CEO) We are closely monitoring trade policy changes. The impact of China tariffs and steel/aluminum import tariffs are included in our guidance. Most US customers are supplied from US plants, minimizing Mexico's impact. We are using pricing strategies, supplier negotiations, and operational adjustments to mitigate impacts. (Thomas Liguori, CFO) Our guidance reflects current steel cost futures and anticipated tariff impacts.

Q: Can you elaborate on the capital allocation priorities, particularly regarding growth investments and M&A? A: (Avner Applbaum, CEO) We are increasing CapEx to $150 million, focusing on North American plants to enhance capacity and flexibility. Investments also include R&D, engineering, and IT systems. M&A will focus on core areas with synergies, targeting companies with long-term growth drivers and cultural alignment. We aim for ROIC to exceed the cost of capital by year three.

Q: What is driving the increased focus on substations within the utility segment, and how do margins compare? A: (Avner Applbaum, CEO) Strong demand for substations is driven by data centers and renewable energy connections. Substations require complex engineering, offering strong margins. They are a growing part of our utility business, supporting transmission, distribution, and lighting solutions, with significant value provided to customers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.