Valmont Industries, Inc. Aktie

Hi, everyone. Welcome to the Valmont Industries presentation. I'm Garik Shmois. I'm an industrials analyst here at D.A. Davidson, and we're pleased to have the Valmont team with us. We have their CFO, John Schwietz. We have Renee Campbell, Senior Vice President, Capital Markets, Risk and Treasurer; and we have Casey Meyer, VP, Treasury and Investor Relations. They will do a presentation. And then afterwards, we have plenty of time for Q&A. So feel free if you have any questions, certainly, we'll offer audience participation. But if you do want to e-mail me questions, then I could read off. I'm at [email protected]. With that, I'll turn it over to Renee, who will get us started.

Awesome. Thanks, Garik. Thank you very much, everyone, for having us today. Thanks, D.A. Davidson. I know that some of you that are joining us may not be as familiar with Valmont. So we wanted to just walk you through a brief presentation to help with that understanding. So quickly, a reminder that our presentation and discussion today is subject to our disclosure on forward-looking statements, which is outlined here on the slide.

So with that, who is Valmont? I'll start by sharing that we are celebrating our 80th anniversary as a company this year. Valmont's story began in 1946 in Valley, Nebraska, which is just outside of Omaha, and it is still home to our largest facility in our manufacturing footprint today. In the early days, our founder, Robert Daugherty, saw an opportunity to help farmers become more productive. And in 1954, Valmont founded the mechanized irrigation industry with the center pivot, and we remain the market leader today. From there, we've really built on our expertise in steel forming and manufacturing. And in the '60s, we expanded irrigation tubing into tapered light poles, which really laid the foundation for what has now become a much bigger infrastructure business.

We became a public company in 1968 and began expanding internationally, both organically and also through acquisitions that added new capabilities and geographic reach. And we think that history matters because the Valmont of today was really built around our core strengths and our core values. We excel at solving difficult problems for our customers. We also engineer products for very demanding applications, and we manufacture reliably at scale. And over time, those capabilities have really given us leading positions in irrigation and infrastructure markets with very durable demand drivers. So today, Valmont is about $4.1 billion in revenue. That was in 2025, and we're between $9 billion and $10 billion in market cap. The most important takeaway, I think, from this slide is the shape of the company and how well it really aligns with the opportunities in front of us. Infrastructure now represents about 75% of sales, and that segment generated adjusted operating margins of 17.3% last year.

Agriculture represents the other 25% of sales. And while that market has been at a cyclical low for the past few years, we do hold a global leadership position with the Valley brand. And this really gives us a solid foundation to improve the consistency and quality of earnings through the cycle. At the enterprise level, North America is about 75% or 3/4 of our revenue, which gives us significant exposure to the strong utility investment cycle, which I'll touch on a little bit more in a few minutes. We really improved the earnings power of Valmont significantly over the past several years, and we believe we're still in the early stages of realizing our full potential. Our portfolio is aligned with durable global needs and secular growth drivers, such as more power, more connectivity, more resilient infrastructure and greater productivity from limited resources.

So starting with power. After decades of pretty flat electricity demand, load growth is expected to more than double over the next 5 years and likely beyond that. Data centers and AI are certainly important drivers, but the demand is really broader than that. It also reflects onshoring, industrial expansion, electrification and the need to connect new sources of generation to the grid. So our transmission and distribution and substation solutions, along with our telecom solutions really help move that power and information where it needs to go. More than 70% of the U.S. grid is over 25 years old. And so utilities are also investing in resiliency and ways to replace those aging assets and improving reliability. So our engineered structures and coating solutions also support that work, and our lighting and transportation products help modernize other essential infrastructure.

And then in agriculture, the challenge is really producing more food with the same amount of land and the same amount of water and energy and labor. Protein demand is expected to increase about 20% by 2035. So our irrigation systems, our center pivots and linears and our technology help growers improve yields while using fewer inputs. And it's clear that these markets provide a very strong backdrop, but we also know that demand alone does not create earnings. Our ability to execute is what we believe differentiates us, and we're highly focused to do just that. So how are we doing that? Well, our customers operate in pretty mission-critical environments where delays or failures can be extremely costly. And they need confidence or trust that a supplier or a partner can really solve either the engineering challenge or the manufacturing at scale challenge and deliver a quality product when promised. And that's really a lot of the value that Valmont provides. And it starts with our commercial relationships.

So one example in infrastructure, we have really deep technical expertise and long-standing partnerships with many of the leading utilities. And those relationships also help give us early visibility into projects and standards and changing requirements. In agriculture, we have a network of more than 600 dealer locations, and that really gives us unmatched proximity to growers and also supports the equipment throughout its life. Engineering is a very -- another very important differentiator. We have more than 40 years of utility structures engineering experience. Every project can involve different soil conditions, different wind loads, resiliency requirements, choices of material like steel or concrete. And our teams really know how to work through that complexity and develop the right solution in an efficient way.

And finally, we do have a scaled global manufacturing footprint and also integrated capabilities that are difficult to replicate at scale. And it supports cost efficiency, but it also allows us to reliably deliver these large complex projects because we have that flexibility. So when you put it all together, it's our commercial teams that are understanding the need of our customers, our engineers are solving for it and our operations deliver at scale. And it really is that whole system that helps us win in the marketplace. And the result of that is trust, and trust is really central to how we do win and grow. So I just want to touch briefly on this slide. This kind of shows how those capabilities that I just described really translate across our portfolio. So within infrastructure, North America utility is our largest business, with nearly $1.5 billion of sales in 2025, and it is our primary growth engine over the next several years.

And we just had an Investor Day back in June, where we outlined the path to that. We serve transmission, distribution and substation applications, and that really places us at the center of the grid investment cycle. And then our coatings business also participates in that growth opportunity. It was about $236 million of revenue last year. That's really just custom sales. Our coatings business also supports our internal needs as well. And both of those businesses really are benefiting from similar market drivers like grid investment, data centers, et cetera. And then the rest of infrastructure provides diversification and opportunities to improve performance. So North America Lighting and Transportation, about $500 million of sales last year, Telecom just under $300 million. And then we have about a $600 million international infrastructure business that kind of encompasses all of the products that we offer. And then agriculture was about $1 billion, just under $1 billion of sales last year.

So that business, again, is primarily center pivots, linear, corners, but we also have a strong aftermarket parts business. We also have tubing products and then a growing portfolio of technology solutions. So this overall diversification, we believe, has really served us well over the years and helped us remain resilient through market cycles. And at the same time, we're very clear about the direction that we want to take each of these businesses. We're investing to capture growth in utility. We're applying greater commercial and operating discipline across both segments to improve margins and returns. So before I turn it over to John, I just kind of go a little double-click deeper on the utility opportunity in front of us. Here is where you can really see the scale and visibility of that opportunity. Utilities in this country expect to invest about $1.4 trillion through 2030. And nearly half of that spending relates to transmission, distribution and substations, which, as I said, are the areas where we play.

Within that broader capital plan, we estimate a cumulative $53 billion serviceable market for the structures and solutions that we provide. We then narrow that to a $6.7 billion Valmont-specific pipeline through 2029. This pipeline is really informed to us by our customers. They have long planning cycles. We have that visibility that they share with us through our alliance relationships and partnerships. And we work with customers very early in the engineering and planning process, which again helps us understand what they expect to build and what they will need. And it's that pipeline that helps give us confidence in the opportunity ahead.

So coupled with our very deep customer relationships, we expect this demand to support North America utility sales of about $2.5 billion by the end of 2029. That represents about a 13% annual growth rate, about $1 billion of incremental revenue from where we are in 2025. And I think just the last important point that I will make is these drivers really go beyond 2030. Some of the drivers that I mentioned earlier really do create a long runway for continued investment over time. So with that, I will turn it over to John to walk us through the financials.

Thank you, Renee. So at Valmont, we see a clear and achievable path towards delivering $35 in EPS by the end of 2029. As compared to earnings per share in 2025, that represents a compound annual growth rate of 16.4%. This outlook is based only on organic initiatives that are already underway. The underlying drivers in our businesses are very durable. And although the projection goes through 2029, as Renee mentioned, the opportunity horizon stretches far into the next decade. Each of Valmont's businesses has a role to drive value creation in this path to $35 of EPS. Our primary driver is capturing above-market growth in the utility business. We see approximately $1 billion of incremental sales potential by capturing the demand in this utility super cycle. We consider this growth driver to be our most significant opportunity, and this contributes approximately $10 of incremental EPS to our outlook.

Although relatively smaller, the coatings business is also in this value driver. Our second value driver is strengthened to unlock efficiency and performance. This includes opportunities in our broader infrastructure portfolio, which includes lighting, traffic, telecommunications and international businesses. Here, we intend to build a stronger and more scalable business through strategic commercial initiatives and cost reductions. In agriculture, we are driving aftermarket parts growth, increasing technology product penetration and developing emerging markets. Altogether, we expect these strengthened efforts to contribute $300 million of incremental sales. That's about $200 million of incremental sales from the broader infrastructure portfolio and $100 million of incremental sales from agriculture.

After taking into account an unfavorable tax normalization impact of $1 of EPS, we expect a net $4 of incremental EPS in this value driver. And finally, our third value driver is Enable through disciplined resource allocation, which is optimization of capital and resources to the highest return opportunities, including advancing disciplined share repurchases. We expect a further $2 of incremental EPS from these Enable initiatives. Collectively, these initiatives support our long-term outlook of approximately $5.4 billion in sales and $35 of EPS by the end of 2029. Altogether, we believe Valmont is exceptionally well positioned for long-term value creation. By the end of 2029, we expect approximately $5.4 billion in sales, operating margins of 17%, earnings per share of roughly $35 and ROIC expanding to approximately 21%. Those targets reflect our strong confidence in both the underlying market opportunities and our ability to execute operationally.

What gives us conviction is the combination of strong utility market fundamentals, disciplined capital allocation, robust cash generation and a strong balance sheet. Our capital allocation framework remains highly disciplined and balanced. At a high level, we are allocating operating cash flow across 2 broad priorities: growing the business and returning cash to shareholders. Last year, we allocated capital equally between both priorities. Looking ahead, our primary focus is investing in high-return organic opportunities. We are increasing capital expenditures because we see highly attractive opportunities to expand utility capacity and throughput. In this business, we are seeing over $1 of annualized revenue for every $1 of CapEx deployed. We're seeing strong returns on invested capital and accelerated payback time horizons. Our second priority is returning excess capital to shareholders through programmatic share repurchases. We are continuing to execute on our most recent $700 million repurchase authorization.

Finally, M&A continues to be important for us. We pursue acquisition opportunities, which have a clear and strategic fit, targets that are within our core businesses or in adjacencies where we have clear and established rights to win. Any M&A must meet strict financial criteria, including EPS accretion and attractive ROIC thresholds. We expect to generate substantial financial capacity between 2026 and 2029 that will provide us with strategic flexibility. We project approximately $2.5 billion of operating cash flow generation over that period. We anticipate investing approximately $1 billion into capital expenditures, primarily for capacity expansion in utility manufacturing. After accounting for these capital expenditures, we expect to generate around $1.5 billion of free cash flow throughout this period.

Combined with our existing debt capacity, this creates approximately $2.7 billion of capital deployment capacity. That capacity supports multiple priorities simultaneously, growth investments, shareholder returns and strategic flexibility. We expect strong earnings growth and strong cash generation to reinforce each other to create a powerful compounding effect for our shareholders. Today, you've heard why Valmont is -- why the opportunity at Valmont is meaningful. Most importantly, how Valmont converts durable demand into shareholder value. We have leadership positions in essential markets. We have cultivated strong customer relationships, relationships built over decades. We have deep engineering capabilities while operating at scale to deliver when reliability matters to the customers.

Our capture, strengthen and Enable framework allows us to maximize those advantages. This is the system behind our path to $35 of EPS by 2029 and our ability to keep compounding well beyond this. And this remains our primary objective, creating durable long-term shareholder value. Thank you for your time, and we're happy to take questions.

Great. Thank you for that wonderful presentation. I guess I'll kick it off. A big theme in a number of the meetings I've been sitting in on is cost, given what's happening with freight and raw materials. Wondering if you could speak to your ability to absorb costs, what are some levers that you have? And what is the typical ability to price against costs?

Yes. Well, thank you for the question, and thanks for having us. So costs are increasing across the board. So as we look for our -- at our key input costs, steel, HRC is up about 40% year-to-date. Zinc is up about 35% year-to-date. Diesel is up about 85% year-to-date. So this is not an uncommon dynamic for our business. So we're managing these fluctuations often. Within our pricing in our contracts with our alliance customers, we have escalators and de-escalators around these key inputs. We reprice based on these indices and these inputs on a quarterly basis. So we're pretty effective in being able to pass on the costs that we see increasing.

That being said, there's a bit of a lag in timing. So we usually see costs impact the P&L or changes in costs impact the P&L about 2 quarters from now. And while the simultaneous improvement in pricing or change in pricing is usually about 4 quarters out. So there's about a 2-quarter lag. And in periods of increasing costs, that creates some short-term headwinds. And of course, the reverse is when costs are going down. So right now, we are managing through some short-term headwinds on the cost side, but this is not an uncommon dynamic. And for the long term, it's very positive.

Okay. You've spoken to a long-term planning horizon and even upside potential beyond '29 and the visibility that you have. I was wondering if you could maybe just unpack the visibility that you have in a little bit more detail, maybe both near term and long term, what you're hearing from customers.

Yes, sure. So our visibility, as you kind of heard me mention in the presentation, remains very strong. So you saw that $1.4 trillion number that utilities are investing. That's up from $1.1 trillion not that long ago. Another recent data point that I saw is that public utility CapEx for this year has increased 22% over last year, and that's on top of, I think, about a 20% increase from the prior year. So we have visibility to public information, investor-owned utility information. But I think more importantly, we also leverage that close relationship we have with so many of our customers.

So you've heard us talk about our alliance customers, the alliance relationships that we have, working with those utilities and those customers really closely, understanding their multiyear plans. They are planning along with us or we're planning along with them, I'll say, working on engineering solutions even in advance to understand what they're going to need. These are projects in the tens of millions of dollars. So they may not be going into our backlog right away. But through those relationships that we have, we know that we have that visibility. We know that, that will be coming. And that's the beauty of those relationships. We can reserve a certain amount of capacity for that. They commit to a certain amount of volume as well. And all of that is being driven by what I described earlier. Certainly, data centers and AI are a piece of it. But as I mentioned, it's electrification in general that's driving load growth. And there's also this whole idea of resiliency with climate becoming so much more volatile, utilities, in some cases, even have separate CapEx budgets just dedicated for hardening.

And we have steel, we have concrete. We have some composite solutions that can really help with that, and we see opportunity there. That alliance arrangement that I mentioned is also what gives us confidence to that $6.7 billion pipeline that I mentioned a few minutes ago, too. So we're really comfortable with the visibility across that planning period. We talk to our customers all the time. Those relationships really do help us understand what their priorities are. And then, of course, we do participate competitively in the bid market. And they -- all of those plans, we're again working with our close relationships with our customers to understand what their plans are. And coupled with all of that is really what gives us confidence that's driving the capacity increases that John mentioned.

Great. As utility continues to grow across different categories, transmission, distribution, substations. Just how are you thinking about the mix of the growth? And how does the mix variance perhaps influence margin expansion?

Yes. So I'll take the first part of that question with where we see the growth. So we do see the largest amount of growth coming from substation just because the size of substations continues to grow. So what we used to see as substations being in the couple of hundred thousand dollars per substation, those have jumped up into the millions. So it's not uncommon to see substations in the $1 million to $3 million per substation. As you get into those larger substations, there's just a lot less competition. So we're one of the few that can provide substations at that scale and complexity.

Now switching from an absolute dollar perspective, transmission is the biggest piece of our portfolio in that space. So we do see the most dollars coming from transmission and expect to continue to maintain, if not grow our market share in that space and then followed by distribution. So it is the smallest piece of that portfolio, mostly because we compete against wood structures. So as utilities invest in resiliency, we expect to gain additional market share. But out of the 3, we expect smaller growth in that space. John, do you want to touch on the margin?

Sure. From a margin perspective. So we report margins at the infrastructure segment level. And we don't break it out by product line. But what I can say is that utility margins are certainly accretive to infrastructure margins. Right now, with the new capacity that we're bringing on, we're seeing mid-20s with regards to incremental margins, mid-20s operating profit margin. So -- and that's really powered by our brownfield expansion strategy, which is allowing us to leverage our capacity growth, leverage essentially existing infrastructure, existing teams, existing customer relationships and really be able to keep those fixed costs pretty low and ramp up pretty quickly. So we're seeing nice accretion with those projects, and we would expect that to continue throughout our -- the 2029 framework to support overall expansion of margins.

Great. The ag business has been cyclically depressed. I guess, what indicators are you looking at to see signs of stabilization? And then you've been focused on the aftermarket part of the business. What are the opportunities there and perhaps dampening some of the cyclicality across ag?

Sure. So we believe North America and probably, I'd say, the Middle East as well are kind of at or near the bottom of where we see the cycle. In North America, we have decades of history that kind of shows that we're sort of at this level of replacement. Brazil is a little different. We haven't -- we don't have that history, and they have their own set of challenges tied to very high interest rates, like north of 12% as well as just a very tight credit environment. The indicators that we watch certainly are crop prices, corn prices, soybean prices, corn probably more relevant to North America, soybean more relevant to the Brazil market. But that alone is not the sole data point that really drives or changes farmer sentiment. You have to really think about the input cost increases that the farmers are pressured with.

Anecdotally, one of our local TV stations interviewed a farmer in Iowa who has a 10,000-acre operation, and he was saying that his diesel cost alone for this 2-month roughly harvest season will be $150,000 more than it was a year ago. I mean that's pretty meaningful. So we have seen crop prices tick up recently, but not enough to really overcome some of this very real inflation that growers are seeing. Now that being said, we've heard also talk of drought. And I would say drought in and of itself is not necessarily an indicator. It really kind of depends on where that takes place, what crops are being grown in those regions. And farmers still need to have sufficient income in order to feel good about making investments. So we're watching all those things very carefully. Back to Brazil. Again, we're watching what interest rates could do. It is an election year. That also kind of contributes to some hesitation on growers to make investments.

Also importantly, the investment that the Brazilian government makes towards agriculture has also come down about 40% from where it was a year ago. So again, it just is this persistent challenging environment. So we're watching all of those things. For our business, any sort of uptick in farmer sentiment to the positive, we will probably see pretty much right away. Our dealers do not stock channel inventory. We configure pivots to go straight to deliver straight to the field. Obviously, our dealers are an important part of the installation and the ongoing service. Garik, you asked about aftermarket parts. So all of this being said, when we talked about our 2029 framework, we did not assume a broad market recovery for agriculture.

So anything along those lines would be upside. But in the meantime, we are focused on growing our aftermarket parts business, our technology business. Those are both margin accretive. It builds resiliency for our ag business, but it also empowers our dealers to continue to also be profitable even when unit volumes may not be coming back right away. So I don't know. We're hearing a little bit on the fringe that things might be getting a bit better. We haven't really seen that in our business yet. But we've managed through many of these cycles before, and we will manage through as we have been yet again.

Sure. So something potentially to look out for and be encouraged by. Not to focus on another region or part of the market that's soft, the Middle East, just given the regional conflict there. I was just wondering if you could remind us how you're thinking about that through the '29 cycle and also just how you're thinking about the long-term opportunity in that region.

Yes. So Middle East market, we have been in that market for many, many years, and we've seen geopolitical events that can certainly affect the demand environment there. The conflict there that's happening today has really put a pause on many of the -- much of the project work, many of the projects that we normally would have seen at this time. We recognize that timing is outside of our control, but the long-term drivers for that region very much remain intact. So we really just see this as a timing issue and not a structural change. You've got food security that's really driving a lot of national investments for countries that really want to find a way to help feed their people and ensure that they have that.

Water scarcity. There's not a lot of arable land that's available in these regions. So water scarcity, lack of arable land, all of that points to if they want to put ag land into production, they have to be able to do it at scale and center pivot irrigation is really the only way you can do that at scale. So we remain very optimistic and positive over the medium and long term. Right now, it's just a very tough environment. But I think the other thing I would add is we've also become much more intentional about the types of projects that we do in that region.

We need to ensure that there's good returns. We do work closely with the dealers and the growers to understand their needs. We've worked with customers and growers to take what used to maybe be a 2-year multiyear project and break it down into smaller tranches. That just allows us to help manage the whole cost profile throughout the project, but it also helps the grower with just managing the overall installation and getting those machines up and running so that they can benefit from the yield enhancement that, that brings. So the team has done a lot of work around that over the last few years as well as just managing costs now in this current environment. But again, we remain positive on the long term for that market.

Great. I wanted to ask just on capital allocation. Just how you're thinking about -- and you broke it down in the slide presentation, but organic growth versus acquisitions versus repurchases, how did you decide that, that blend of capital allocation was the right one, especially considering the capacity that you're looking to add and the really the organic growth opportunities that are out there.

So we take a balanced and disciplined approach to capital allocation. And everything we look at comes from the lens of a risk-adjusted ROIC perspective. So at the moment, as we talked about, organic CapEx investments, especially supporting utility and coatings have very strong return profiles at the moment, very short payback periods, and we're leaning into that as a big part of our framework, as you mentioned.

Meanwhile, repurchases are part of our strategy as well for capital allocation, and we have a program in place for repurchases. So we lean in as shares are more attractive. M&A, M&A is an important piece. It's not a big piece of this framework, but we're -- certainly, we've got a funnel, and we've -- we're looking for targets that are closely aligned from a strategic perspective that are within our core or in adjacencies where we have a clear and established right to win. But they have to meet our thresholds, EPS accretion and ROIC thresholds. But -- so we're balanced, we're disciplined, and we've got a lot of optionality.

Okay. I wanted to ask about the 2029 targets that you have. How would you characterize the upside potential? I think there was maybe some meat on the bone that was left. And certainly, you have visibility, you believe, beyond this 2029 for very attractive growth into the next decade. How do you assess that upside potential? And then also, what could go wrong? What will be the downside risk?

Yes. So we're committed to the $35 of EPS in 2029. And our assumptions are based on the current reality of the operating environment, but there are upsides, as you said. So notable upside that we could see the utility market could accelerate more than what we planned in this framework. That's certainly a possibility that would give us a good deal of upside. Also ag in this framework, we did not assume really any sort of material return of the market. And historically speaking, we would see that within the next few years. And so if we see a mid-cycle return, there will be upside to that $35 EPS framework.

And again, the strong balance sheet. So we've got a lot of optionality, as I mentioned, in terms of share repurchases and strategic acquisitions. So there are certainly some areas of opportunity there. On the risk side, short term, we've talked about inflation. So I think we've covered that, that we've got short-term headwinds. Longer term, I'd say the same thing we hear from any industrial who works in a sort of multinational environment is the operating environment is more dynamic. And to the degree that there is any major change or disruptive change in trade policy or some sort of geopolitical event, that could impact sort of our framework. But for the most part, we feel very strong about our market, about the underlying drivers in our market and our ability to execute.

Okay. Well, I guess with that, we'll end there. I wanted to thank the Valmont team, John, Renee, Casey, and thank you all for your interest.

Greetings. Welcome to Valmont Industries, Inc. Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Renee Campbell, Senior Vice President, Capital Markets and Risk. Ms. Campbell, you may begin.

Good morning, everyone, and thank you for joining us. With me today are Avner Applbaum, President and Chief Executive Officer; John Schwietz, Executive Vice President and Chief Financial Officer; and Eric Johnson, Chief Accounting Officer. Earlier this morning, we issued a press release announcing our second quarter 2026 results. Both the release and the presentation for today's webcast are available on the Investors page of our website at valmont.com. A replay of the webcast will be available later this morning. To stay updated with Valmont's latest news releases and information, please sign up for e-mail alerts on our Investor site. We'll begin today's call with prepared remarks and then open it up for questions.

Please note that this call is subject to our disclosure on forward-looking statements, which is outlined on Slide 2 of the presentation and will be read in full after Q&A. With that, I'd now like to turn the call over to Avner.

Thank you, Renee. Good morning, everyone, and thank you for joining us. Turning to Slide 4. We delivered a strong second quarter that reflects the dedication of the global Valmont team and the execution of our strategy. Net sales increased 6.5%, adjusted operating margins expanded 130 basis points and adjusted earnings per share grew 25.8%. Based on this performance, we are raising our full year sales and earnings outlook. Infrastructure delivered another high-quality quarter, led by 34% growth in North America Utility and 17% growth in coatings.

Commercial execution, pricing discipline and ongoing investments in capacity and throughput continue to translate durable customer demand into profitable growth. Agriculture also performed well despite challenging market conditions. While sales remained under pressure, disciplined pricing and cost management drove another quarter of operating margin improvement, demonstrating the resilience of the business through the cycle.

Overall, our results demonstrate that the investments we are making, the operational improvements we're implementing and our capital allocation strategy are driving stronger financial performance and positioning the business for sustainable, profitable growth.

Turning to Slide 5. The quarter we just delivered is a good example of how these value drivers are translating into stronger financial performance. We're investing where we see the greatest opportunities to create value, especially in utility where capacity expansion and throughput improvements are supporting profitable growth. Across the rest of the portfolio, we're focused on improving commercial execution and operational performance to enhance returns through the cycle.

At the same time, our approach to capital allocation ensures we're investing behind our highest return opportunities while maintaining financial flexibility to create long-term shareholder value. These value drivers are embedded in how we operate the business every day, and you'll hear examples of each as we walk through our markets and financial results.

Turning to Slide 6. I'd like to review the current market environment and how our infrastructure businesses are performing within it, beginning with North America Utility. The favorable outlook for our business is being driven by a robust market environment. Demand continues to be supported by investment in grid modernization, power demand, data centers and electrification. Our conversations with customers reinforce that this is the early stages of a multiyear investment cycle. We are focused on delivering value through differentiated customer support, industry-leading innovation and continued improvements in system throughput.

North America Coatings is benefiting from the same infrastructure investments, driving our utility business. With one of the industry's largest galvanizing networks, we improve the durability, reliability and life cycle performance of steel infrastructure. This business is benefiting from higher internal volumes and growing third-party infrastructure demand.

In North America Lighting and Transportation, Transportation markets remain healthy, while Lighting is impacted by softer residential and commercial construction activity. Our priority is improving on-time delivery for our customers and manufacturing reliability. In North America Telecom, customer investment activity has moderated as carrier take a more selective approach to capital spending following the peak of the 5G deployment cycle.

We expect these conditions to persist through the balance of 2026. Our strategy is designed to strengthen performance across the portfolio, and telecom is a good example of that in action. Even with lower sales, we've maintained strong profitability through commercial execution, operational improvements and disciplined cost management. Over time, we remain confident that increasing data consumption, spectrum deployment and the need to expand network capacity will support future investments in the wireless infrastructure. Turning to international, we continue to leverage our local manufacturing footprint, engineering expertise and long-standing customer relationships to participate in infrastructure investment across our global markets.

We are also executing on our strategic initiative to strengthen these businesses. While it is still early in the process, we're encouraged by the progress we're seeing and expect these initiatives to continue supporting improved performance through the balance of the year.

Turning to Slide 7. Global agriculture market conditions remain challenged. In North America, tighter farm economics remain a constraint on capital spending and are contributing to cautious grower sentiment. In Brazil, the recently announced government crop plan, reduced financing rate for irrigation equipment, although overall funding allocated to irrigation is below last year's level. We are managing the business with discipline and remain confident in the long-term fundamentals of the Brazilian market.

In the Middle East, the primary business impacts are timing delays of certain customer projects as a result of the ongoing conflict in the region. While the underlying dynamics differ across regions, we expect the overall operating environment for agriculture to persist through the balance of the year. We are managing the business with discipline while investing in higher value opportunities, including aftermarket and technology solutions that enhance grow productivity.

That strategy is strengthening the quality and resilience of the business with aftermarket part sales growing approximately 6% and technology services increasing 7% in the second quarter despite softer equipment demand. I'll now turn the call over to John to review our second quarter financial results and updated 2026 outlook.

Thank you, Avner. Good morning, everyone. Our second quarter results reflect solid execution across the business, led by strong performance in North America Utility and our focus on operational discipline. Before turning to the financials, my comments going forward will compare to the adjusted results for 2025 as outlined in the Reg G disclosures in the press release and presentation appendix. I'll begin with our consolidated results before discussing our segment performance and updated outlook.

Turning to Slide 9. Net sales of $1.12 billion increased by 6.5% year-over-year, driven by sales growth in infrastructure, notably North America Utility. Operating income increased to $166.1 million and operating margin expanded 130 basis points to 14.8%, reflecting stronger operating performance across both segments. Our tax rate remained steady at approximately 26%. Diluted earnings per share was $6.14, a 25.8% increase from prior year.

Moving to our segment results on Slide 10. Beginning with infrastructure. Sales of $879 million grew 14.8% year-over-year. North America Utility sales increased 33.9%, driven by higher pricing and volume growth supported by a robust market environment. Sales in North America lighting and transportation declined 2.4% due to lower volumes.

North America Coatings sales increased 16.6%, supported by healthy infrastructure and data center demand. North America Telecom sales decreased 26.1%, reflecting lower carrier spending as customers shifted capital allocation priorities. International sales increased 7.4% due to favorable foreign exchange impacts and a slight increase in volume. Operating income increased to $154 million with operating margins expanding 130 basis points to 17.6%, driven by higher utility pricing and volumes. This strength was partially offset by higher inflationary input costs, primarily materials.

Turning to Slide 11. Second quarter agriculture sales decreased 15.8% year-over-year to $244 million. North America sales declined 2.3% as reduced volumes were partially offset by favorable pricing. International sales decreased 28.9% driven primarily by lower Middle East volumes. Outside of the Middle East, sales across our international markets were relatively flat. Importantly, operating margin was 16.5% in the quarter, improving 90 basis points year-over-year, supported by disciplined cost and risk management. These actions to improve efficiency and performance position us to expand margins when ag markets recover.

Moving to Slide 12 for cash liquidity and capital allocation. We delivered another quarter of healthy operating cash flow of $148 million. We ended the quarter with approximately $139 million of cash, while net debt leverage remained close to 1x. We are deploying capital in line with our balanced capital allocation strategy. During the quarter, we invested $36 million in capital expenditures, primarily to support utility capacity expansion. We repaid the remaining $60 million outstanding on our revolving credit facility, and returned $75 million to shareholders through $60 million of share repurchases and $15 million in dividends.

At quarter end, approximately $451 million remained available under our current share repurchase authorization. This balanced deployment of capital reflects our focus on investing in the highest return growth opportunities, while maintaining financial flexibility and returning capital to shareholders.

Turning to our 2026 outlook on Slide 13. We are increasing our full year guidance. Net sales are now projected to be between $4.3 billion and $4.45 billion. At the midpoint, this represents approximately 6.7% revenue growth for the year. We are increasing our infrastructure sales outlook to be between $3.4 billion to $3.5 billion, while maintaining our agriculture outlook.

In infrastructure, the higher sales outlook is driven by continued strength in North America Utility and Coatings. We expect volume growth to remain healthy through the balance of the year. Pricing is expected to remain favorable. Although year-over-year contribution will moderate as prior contractual pricing actions are fully annualized. Our agriculture outlook remains unchanged, and continues to reflect the normal North America seasonal pattern of lower sales in the second half of the year.

We are increasing our diluted earnings per share outlook to a range of $22.25 to $23.50. At the midpoint, this represents nearly 20% growth in adjusted EPS. The higher EPS outlook reflects continued strength in North America Utility and Coatings supported by volume growth and favorable pricing. While we expect raw material and freight costs to remain elevated to the balance of the year, pricing actions and operational execution are expected to support infrastructure operating margins at levels consistent with the first half of 2026.

In agriculture, consistent with normal seasonality, we expect operating margins to moderate in the second half. Our capital expenditure outlook remains unchanged at $170 million to $200 million. Spending will be weighted towards the second half of the year as we continue investing in capacity expansion to support future growth.

Moving to Slide 14. While it's only been a little more than a month since Investor Day, our second quarter results already provide tangible examples of the progress we're making against that road map. We are investing in our utility business through capacity expansion and operational improvements. Across the rest of the portfolio, we're advancing commercial initiatives, engineering excellence, and technology investments that improve productivity and support future growth. Combined with our capital allocation approach, our second quarter results demonstrate the early progress we're making against that road map.

Turning to Slide 15. Our long-term financial framework outlines the outcomes we're working to achieve. Using 2025 as the baseline, we're targeting 7% annual sales growth, expansion of operating margins to 17%, double-digit annual EPS growth and a return on invested capital of 21% by the end of 2029. The progress we've discussed today gives us continued confidence in achieving these objectives and creating long-term value for our shareholders. With that, I will now turn the call over to Renee.

Thank you, John. At this time, the operator will open up the call for questions.

[Operator Instructions] Our first question is from Chris Moore with CJS Securities.

Congrats on another strong quarter. Maybe we just start with telecom. Obviously, a soft quarter. I'm just trying to understand a little bit better on visibility here. For example, in January of '26, could you see that Q2 would be soft? I know you talked about -- we're at the 5G peak, could you see that Q2 would be soft as of January?

Chris, thank you for the question. The answer is this is a business that has low visibility. It is a quick turn business, doesn't typically have a backlog, and what we've seen from the carrier is that they've actually shifted their spending. We know there have been some significant leadership changes within these carriers, and they are looking at their expenditures and they're navigating their financial situations as they're being disciplined around their spend.

Now having said that, we are embedded with these customers, we have daily conversations with them, we're aligned with their programs, and we have a strong value proposition for these carriers around our engineering expertise and our quick turn. So the short answer is no, we did not see this. We actually, at this point, expecting to see this year down at the teens for the telecom business. We do know that the carriers will continue to spend. It will continue to build out the spectrum, and as they will continue with their build out, we'll continue to support them.

And maybe just my follow-up. Just in terms of ag in the Middle East, I know you have the Dubai facility that's more of a distribution facility that was operating at really minimal levels. Can you just talk a little bit more in terms of what's happening there? It sounds like more project timing, but anything else that you could talk about in terms of kind of expectations within the Middle East?

Of course. And just as a clarification, we actually do manufacture out of our Dubai facility. We do have a very solid, flexible model to ensure we can flex up and down as we need to scale up for projects. Right now, we're seeing very little activity in the region due to the conflict. The customers are delaying projects. We continue to be in touch with them, but at this point, our expectations are that this will remain for the short horizon, and we do believe these projects will take place. There is still a strong demand for food security in the region, so the long-term is very compelling, and we're well positioned within that region.

But as of today, projects have being delayed. And of course, the cost to support these projects at this time is extremely expensive with the situation there. So our expectations for the year is to be minimal projects, and as things evolve, we'll update accordingly.

Our next question is from Nathan Jones with Stifel.

I'll follow-up on ag. Outside of the disruptions in the Middle East, I think you said other international markets were roughly flat. The domestic market was down low single digits, so I'm sure there's some price in that and the volumes may be a little bit worse. Is there any way where you're seeing any green shoots in terms of the ag market or potentially hitting a bottom here? Any signs of anything good happening in any of those businesses?

Yes. I think that the -- I wouldn't say that we're seeing any green shoots today, but we are seeing stabilization within these businesses. If you really look at outside of the Middle East, our businesses are pretty much flat, so we are seeing stabilization the grower economics are still strained, both in North America and Brazil based on where the grains are today, the input cost financing out in Brazil, so the market remains strain in the near term.

What we're focusing is on our value proposition. We have the largest dealer network, we have a very large installed base to support our aftermarket and technology, and as I mentioned, we've actually seen single-digit growth in both our technology and aftermarket offering. We actually had a very good start to the year with our additional connections, technology connections, increasing our ecosystem with our growers.

So we're -- yes, it looks like right now, it's been very stable for us, and we're continuing to focus on the areas that we can control and continue driving value for our growers. And as we all know, the long term looks extremely positive for this business.

I think you've clearly seen some improvement and made some progress on the margin side in the ag business this year despite the lack of volume. I guess the follow-up question is, can you talk about what you think a sustainable level of margin would be at this level of volume, and then given the improvements that you've made to the business, what kind of incremental margins that we should see in the ag business when we eventually see the next up cycle?

Thank you, Nathan. Good question. So we were pleased with the result in Q2 of 16.5%. And so those Q2 margins were reflective of actions that we've taken to take out structural costs but also to strengthen risk management. The year-over-year comparison, of course, benefited from the nonrecurrence of some bad debt expense in Brazil. To answer your question about the sustainability for Q2, for a Q2, we consider 16% to be sustainable.

Now as we look ahead to the back half of the year, you're very familiar with this business, there is a seasonality component as the mix shifts away from North America, so we expect compression in our margins in the back half, we expect to be in the low teens in the back half of the year. To your question about what does this look like once there's a recovery, sort of a broader question, we did address this a bit at Investor Day, as you know, and we targeted about -- we thought about a 3-point growth in terms of a recovery for margins, so we would continue to hold that view.

Our next question is from Brian Drab with William Blair.

I just wanted to focus on the infrastructure business for a moment and the volume versus pricing that you saw, and if you can talk about the jump from first quarter infrastructure revenue closer to $800 million and then almost $880 million in the second quarter and just a very significant jump. I'm wondering how much of that was price versus volume. And then the follow-up -- or I'll just ask the follow-up now. The related question is, it seems like the -- if I'm doing the math right, that the incremental margins were a little bit lower than what -- on the sequential basis than they have been, so you got a big jump in revenue, but really not the commensurate operating margin that I would have expected, I guess, just a little bit lower. So I'm just wondering if there's anything going on there that you can talk about in that split between price and buying.

Thanks for the question, Brian. So we'll talk about this sequentially as you outlined in your question. So yes, we did have sequential growth. The sequential growth in infrastructure was driven mostly by price, but there was also a volume component there as well. The sequential incremental margins. I think what we're seeing here in terms of that bit of compression sequentially is the fact that we're seeing material cost inflation really accelerate, and we're seeing that that impact us in the short term here in Q2, and we expect that in Q3 as well, that is sequential.

As you know, as you look at this from a year-over-year perspective, of course, incrementals are very strong and growth is very strong in both price and volume.

Our next question is from Brent Thielman with Oppenheimer & Company.

Yes, I had a follow-up on the infrastructure margin, and I guess the follow-up is, could we still expect to see better second half infrastructure segment margins even with the telecom business working against you right now because I know that contributes relatively high margins, too.

Thanks for your question. So as we outlined in our comments earlier, our expectation is that the back half of infrastructure margins are consistent with the first half. we maintain that view. And really, as you mentioned, it's a modest impact from the telecom side, and so that is a little bit of compression. It is a highly accretive product line, as you know, but also really the impact is, again, that accelerated material cost inflation that we're seeing.

Steel is up 27% to 30% year-to-date, diesel is up 45% year-to-date depending on what you look at. The teams are doing a very good job of offsetting those cost increases with price and managing the cost, but there's still pretty significant cost in the short term. And so we remain consistent with our view that the back half will look like the first half from a profitability perspective.

Yes. And I'd like to just jump in and add a couple of comments. One on telecom, yes, it's our most accretive business. But we took significant actions to improve the profitability of this business, and it remains to be extremely profitable even at the lower volumes, and that has been part of our element of our strength and driver of our ultimate strategy, so we're very pleased with the continued strength in the telecom margins.

The second point I want to bring up, we are all seeing the inflationary pressure, but what's important to understand is manageable cost. There is timing between how we increase our pricing and how the cost is impacting our P&L, but it's not changing any of our customer demand, it does not impact our competitive position or the long-term margin trajectory, so I really see this as a short-term impact on our financials.

Okay. And then as a follow-up, I can't remember a time when the utility business didn't see a relatively material step-up in the second half versus the first half. Is there anything we need to be thinking about in terms of pull forward in the first half or other factors that might influence that? Or is that what we should be embedding in here as we work through our models for the second half?

So if you look at your models, the increase in guidance, the midpoint guidance that we have on sales you can assume that, that is broadly from the utility side, so that would insinuate -- as you know, the math would insinuate growth in the second half versus the first half.

Yes. And I'll add, as you look at seasonality, and I mean right now, it's really -- it's the capacity, right? I mean it's -- right now, it's capacity constrained and it's a system capacity anywhere from engineering to manufacturing, and that's going to really going to determine the level of growth. We're very confident in the numbers that John mentioned. But it's really going to be more on the supply end versus the demand end, and I will just make 1 more point is the demand environment continues to be robust and strong across all parts of the utility business, transmission distribution and substations evident by our backlog. But overall, the market continues to be extremely strong.

And if I could real quickly, should we think there's any proportionate difference between transmission, distribution and substation within that group in the second half?

No, not materially. No.

[Operator Instructions] Our next question is from Tomohiko Sano with JPMorgan.

I'd like to double quick on second half pricing for infrastructure business place. I'm on Slide 18. And how are the price realizations and input cost tariff environment involving including time line? What is your base case for infrastructure margin trajectory in second half, please?

Okay. Thank you for the question, Tomo. So I'll answer your second question first, and then we'll go to your first. Our expectation for the second half of infrastructure margins are to be consistent with the first half, so the dynamics on the pricing and the cost side. So Q2, of course, was an exceptional quarter for utility at 33.9%. That, as you know, was driven mainly by price but volume was also important at double digits. So the Q2 pricing we want to mention was -- did benefit from a very favorable mix of customer and contracts. And so as we look -- as we mentioned in our prepared remarks, as we look ahead, we expect that pricing will remain positive in terms of contribution in the second half, but it will moderate in terms of its year-over-year growth for us, so pricing, we expect to continue to grow.

Meanwhile, as we mentioned and as you can see on that graph there, material price inflation is coming in. And so we think net-net, that we'll be able to cover that with our price increases and that we will be consistent in the second half with our first half margins.

And 1 follow-up. You said international commercial operational initiatives are beginning to improve performance in infrastructure business. What is -- like where is this showing first gross margin win rates, lead times and utilizations? And what KPI should we track next quarter?

Yes. Thank you for the question. And we've just, I'd say, started the journey with our international businesses. And during Investor Day, we did share -- Greg, was up there sharing kind of how we're focusing on our a strengthened part of the business, and it's a broad approach from anywhere from our product line management through our operations, our engineering, so we are taking here a pretty broad approach to improving the business, it's really going to show up in 2 areas when you look at the financials. It's going to show up on top line as we focus on the value proposition we can provide for our customers and making sure we're operating in markets where they value what we have to offer and it can also show up on the bottom line on the margins.

I think those are the main KPIs that we're focused on. Still early days. We're pleased with what we're seeing. It's probably going to be more materially as you go into 2027 is when we're going to see really the benefits to start materializing the financials.

We have reached the end of our question-and-answer session. I will now turn the call over to Renee Campbell for closing remarks.

Thank you for joining us today. A replay of this call will be available for playback on our website and by phone for the next 7 days. We look forward to speaking with you again next quarter.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Hey everybody. Welcome to Valmont Industries 2026 Investor Day. I'm Renee Campbell, Senior Vice President, Capital Markets and Risk. It's hard to believe that this is my fourth Valmont Investor Day. It's great to see so many familiar faces here in the room, along with on the webcast. I'm joined today by my colleague, Casey Meyer, Vice President, Treasury and Investor Relations.

And together on behalf of the entire Valmont management team, thank you for joining us today as we are also celebrating our 80th year as a company this year. I'd also like to thank the teams from Convene and Open Exchange, along with our partners at Corbin Advisors for all of the work that went into bringing us together here today ready to share Valmont's story.

Before we begin, a reminder that today's discussion is subject to our disclosure on forward-looking statements. Actual results may differ materially from those expressed or implied and factors that could cause results to differ are noted on this slide as well as in our SEC filings and news releases.

Okay. With that, we have a very exciting agenda planned for you today. Avner Applbaum, our President and CEO, will kick us off by framing Valmont's strategy and the 3 value drivers behind our 2029 financial outlook: Capture, strengthen and enable. Specifically, capturing above-market growth in utility, strengthening our broader portfolio of businesses and enabling value creation through disciplined resource allocation. You'll then hear from Chris Colwell. Chris leads our North America infrastructure businesses, and he's going to take us deeper into North America utility and the exciting multiyear opportunity that's in front of us, being driven by grid investments, load growth, reliability and resiliency.

Within Chris' section, we'll have 2 fireside discussions. The first will be on what's driving this strong utility market and outlook, and that will be hosted by Joe Ulrich from Valmont and Jean Rollins from Power Insights. The second will be on innovation and operational excellence, led by Shannon Eggert and Amit Blesser with Valmont.

Next, you'll hear from Greg Turi. Greg leads our international infrastructure and telecom businesses, and he will share how we're applying a more consistent operating model across the portfolio to improve earnings quality and returns. We'll take a short break. And then after that, you'll hear from Darryl Matthews, who leads our Global Agriculture business, and he'll cover how we're strengthening our global irrigation leadership through aftermarket parts, technology solutions and growth in emerging markets. And then finally, John Schwietz, our Chief Financial Officer, will bring it all together with our financial outlook, including our path to $35 of earnings per share by the end of 2029.

A few logistical housekeeping items. We'll have 2 Q&A sessions. The first will be after the infrastructure portion of the presentation, and that will be about 20 minutes. And then we'll have a second one at the end of the prepared remarks. I think that's around 40 minutes.

[Operator Instructions] And we also ask that you please silence your phones. Also, for those who are attending here in person, we invite you to join us after the event today for an informal lunch along with the Valmont leadership team. We also have an irrigation technology display out in the common area, if you're interested in that. And restrooms are located to the left and straight back. You can also find today's presentation on our investor site at investors.valmont.com.

Before I turn it over to Avner, we have a short video for you this morning that really brings Valmont's story to life. For more than 80 years, much of our work has happened behind the scenes, but our impact is visible every day, supporting infrastructure, helping feed the world and living our purpose of conserving resources and improving life. I think it's a fitting way to connect our legacy to where we're headed next. So let's take a look.

[Presentation]

Good morning. It's great to be here. It's actually exciting times to be in New York City, not only for Valmont Industries. I know there are some other reasons to be excited here, but we're excited to share our story with you. And I love starting the day with this video because it really shows the impact that Valmont has.

Now at Valmont, we have 2 segments. We have Infrastructure and we have Agriculture. And within Infrastructure, our largest business unit is Utility. And Utility is going to be the main driver behind our next chapter of profitable growth.

And before we go into the presentation and the details behind that, I'd like to share with you the logic and why we have confidence in that path. This is a preview of the most important growth drivers you're going to hear today. You're going to hear a lot from Chris and his team, and they're going to go in a lot more details later. But I did want to share with you here right up front. It's been well covered. The utilities are going to spend $1.4 trillion by 2030. And out of that $1.4 trillion, there's $53 billion of transmission and distribution work that we at Valmont can serve, which then brings us to $6.7 billion of a high visible pipeline that is specific to Valmont through our alliance relationships. And that will translate to $2.5 billion by 2029, which is $1 billion higher than we are today at $1.5 billion.

You're going to hear all the details later. You're going to hear about our markets, you're going to hear about our customers, the actions we have in place, our capabilities and how we convert this demand into profitable growth. But before we get into those details, keep that utility growth in mind, I'd like to share with you how this day fits together.

So this is a financial headline for today. We expect to achieve $35 of earnings per share by 2029. That's a step-up of what you heard from us in the past. It's driven by our confidence, by the continued growth in the utility market, by the actions that we have underway and the stronger operating and financial foundation we've built. The rest of the day is going to be proof behind this path. We're going to start with the foundation, how it is more focused, how it's more efficient and how it's positioned for growth. And then we're going to go into utility. We're going to cover our strategy, our customer visibility, the overall markets and overall, how do we execute.

And then you're going to hear from Greg and Darryl about the rest of the portfolio, how it contributes more consistently and profitably over time. And then John is going to bring it all together. He's going to share with us our path to $35 and our capital allocation framework, how it drives shareholder value. So listen to those proof points as we go throughout the day.

So to understand why we have confidence in our goals, let me share with you where we are today and the foundation that we built. This is where we're today. We're a $4.1 billion company with leadership positions in both Infrastructure and Agriculture. What really -- what matters here on this slide is really the shape of the company. You can see we're primarily Infrastructure, we're primarily North America. And that lines up with the growth we're seeing in the utility market. Now within Agriculture, we have a leadership position. While long term, we're bumping along the bottom. The long term is attractive. We have strong irrigation leadership. We have aftermarket and technology offering, and we have a very large installed base.

And if you look at our 2025 financials here, you'll see $538 million profit and 13.1% operating profit margin. These financials have significantly improved over the last several years. I'd like to share with you the actions we took to get us here. One of the reasons we have confidence in the path is the foundation, it's more focused, it's more efficient. And we took deliberate actions to get here. So what we've done is we refined and refocused our portfolio. We made sure we're operating in markets where we have leadership positions, our customers value what we have to offer, and we have a clear path to strong earnings and profitable growth.

And then we aligned our organization against this portfolio. We brought our commercial and operation teams closer together. So we're closer to our customers and that we could execute better and drive clear accountability. And then we took our capital and our resources, and we put them on the highest return areas for better and faster decisions. And we've done all this with pretty much flat top line. So what does that mean? That means we created operating leverage within this company. So as we accelerate growth, that converts into higher quality earnings growth.

To me, the most exciting thing about this slide is we're just getting started. These are early innings of the full potential of Valmont. And this progress translated into value for our shareholders. It's pretty straightforward. We improved our performance, and it's showing up in our shareholder returns. It reflects a stronger and a more focused organization. And as we move forward with the same discipline around our capital with continued execution, we believe we're well positioned to keep on driving sustainable long-term value for our shareholders.

So how do we make this execution repeatable? It starts with our people and how we run the business. This is the leadership team that's been doing the work. They have deep Valmont experience, and they have broad industry expertise. They know our customers, they know our operations, and they run the business with discipline and urgency. You're going to hear from several of our leaders today. And in fact, the whole team is here, so I do hope you take the opportunity to meet them and spend some time with them. And this is a team that's going to take us through our next journey.

And behind this management team, I'd like to share with you our Board. I'm not going to go through this entire slide and their background. But what you can see from this Board is they're very experienced and their experience and expertise lines up directly with where we're taking the company. You can see expertise around operations, capital allocation, utility markets and overall supporting us achieving long-term shareholder value creation. So we covered the foundation. We covered our leadership team.

Let's switch gears and go through our portfolio and where we compete. So this is how our portfolio is organized, Infrastructure and Agriculture. Within Infrastructure, we support several essential markets. We'll start with North America Utility. That's the largest business. And today, that is our growth engine. And then we have North America Coatings, supports both our internal volume as well as our external customers. You're going to hear Chris and the team, they're going to take us a lot of details around both of those businesses. Then we have North America Lighting & Transportation. We have North America Telecom, and we have our International businesses. And Greg is going to share with you the actions we're taking to drive growth, to improve margins and how do we overall execute.

And then in Agriculture, we have our irrigation, we have our aftermarket, we have our technology offering. Darryl is going to share with us how we're improving the resiliency and the quality of earnings through the cycle. As you can see, this is a broad portfolio. It gives us several avenues for growth. But what's really important here is how these businesses line up directly with the markets that are essential with global, durable needs. So these are the markets. You can see the thread. The thread here is pretty simple. The world needs more power. They need more resilient infrastructure, and they need to get more out of our resources.

Let's start with utility. Power demand has been flat for several decades. And we've been able to offset growth with efficiencies, lighting efficiencies, appliances, how we construct buildings. Today, that has all changed. Over the next 5 years, we're expecting to see double the load growth. We've all heard about data centers, AI, clearly a major driver. But that's not the whole story. We're seeing industrial expansion. We're seeing electrification, interconnection of power sources to the grid. And overall, we're seeing more load. And this power has to move. It has to connect. It needs to be resilient. And that's where Valmont has a critical role to play with our transmission, distribution and substation solutions.

But not only do we need more power, this power needs to be resilient, and we need an efficient grid. So how do we do that? We need to replace aging assets. We need to harden the grid, and we need to create the backbone for the next cycle of energy use. And in fact, 70% of the U.S. grid is older than 25 years. And in fact, much of this grid was built in the '60s and the '70s. But when you look at the broader infrastructure, you can look at a lot of the products out there, if it's lighting or traffic structures or pivots in the field that are 20, 25 and 30 years old, they're nearing their end of their useful life.

And if you just look in general, look at roads and bridges, which are deteriorating and need to be replaced. And as they get replaced, you're typically replacing the entire corridor, which includes a lot of our products such as our sign and traffic structures and our lighting.

And now let's talk about our farmers. Our farmers have been tasked for many, many years and decades to do more with less. That's not changing. We continue to have growth in our population and the income levels are rising, especially middle-income countries, and they're requiring more protein, more animal protein, which requires feed grain, which continues to put pressure on our farmers. How do they do more with their existing resources with their land, with their water, energy and people. And that's where our precision irrigation, our aftermarket and technology play a critical role.

So as you can see, these markets line up directly with what Valmont has to offer. But the markets themselves don't create earnings. Execution does. So what allows Valmont to convert these markets into profitable growth? And why Valmont? So it's important to understand where our customers operate. They operate in mission-critical environments. Failure is extremely expensive. And when you look at these projects, they don't start when they're manufactured. They start when they're planning and engineering all the way through manufacturing and installation. Failure across the way, delays could affect reliability and cost our customers real money.

What our customers need, they need certainty, they need reliability and they need to make sure the job is done right. And that's why they come to Valmont because they know they can trust Valmont. And we're not talking about one capability. We're talking about a system of integrated capabilities that have built over decades around our customer relationship, our engineering expertise and our manufacturing scale. It's important to understand that this combination is extremely difficult to replicate. In my mind, it is unmatched by any company in the industry.

Let's talk about our commercial relationships. They're long, they're deep, and they include our utility alliances, our engineering collaboration. In agriculture, we have more than 600 dealer locations, the largest in the industry. And why are these relations important? Because they give us early visibility to our customer needs, to their projects, standards and overall changing requirements. And that allows us to provide them with solutions quickly and optimally.

And then our engineers, another differentiator. Our utility engineers have been at this for more than 40 years. And these are complex situations that we're solving for. These sites are very different. Each one of them is different, different soil, different wind conditions, different resiliency requirement, material, I could probably go on and on, but there are many, many factors that go in it. And because our engineers have been doing this for such a long time, they know how to solve for them and give our customers optimal solutions with speed and efficiency. And then our operations, where we could provide high-value manufacturing capabilities, supply chain capabilities. We can manufacture at scale and ability to deliver large projects reliably.

So if I put it together, our commercial teams understand our customer needs, our engineers will solve for them and our operations will deliver at scale. While we're selling products, what our customers are buying, they're buying trust. They're buying trust that the job gets done and the job gets done right. And then we have our strategy and our strategy to ensure that we're focusing these capabilities on the highest value areas across our portfolio. This is our strategy. As you can see, it's simple, but it's very effective.

Capture, how do we accelerate above-market growth in utility? Strengthen is about improving performance across the rest of infrastructure and agriculture. And then enable, how do we put capital and resources behind the areas that matter most. This is how we focus our company. This is how we decide where resources go. This is how we turn opportunities into earnings, cash flow and overall returns.

Let's start with capture. As I mentioned, utilities is our largest and most visible growth driver. This demand environment is fundamentally different than anything we've ever seen before. I'd like to put that scale in perspective. U.S. electricity demand is expected to increase by roughly 700 terawatt hours by 2030. That's equivalent to 14 New York Cities coming online. Think about that scale. But that -- not only that we need additional power, we need additional resiliency, replacement, interconnection. Think about a lot of these power sources, renewable sources are not where the energy is actually used. We have grid hardening. Combined, they provide us a multiyear investment cycle that goes well beyond 2029. And all this power needs to move from the generation to the end user, and that's where our transmission distribution and substation support the grid.

I'm not going to spend a lot more time on here because Chris and the team are going to go through all the details. I just want to make one more point. I mentioned that we have strong leadership position in these markets. And our customer relationships, which are driven by our alliance agreement, they give us visibility into this market that others just do not have. I'll give you an example of that. So in 2023, through our conversations with our alliance customers, we saw the need for additional capacity to support their strategy to support their needs.

We decided to invest in our Brenham, Texas facility. And when I say invest, that means preparing the facility, but it also means ordering long lead time capital, sometimes more than 10 year -- 2-year lead time. That means training people on the equipment. That means hiring and training welders. Well, we've done all that, and we're seeing the results today. And you'll actually see a pretty cool video that Shannon is going to share with you about some of the work that we did in our Brenham facility. So you're going to hear from Chris, you're going to hear from Joe and Jean around the markets. Amit and Shannon are going to cover some of the actions we're taking to improve our capacity and some of our differentiation in that area.

So Utility is the largest engine, but we have opportunities across the entire portfolio. And this is what strengthen is. It's how do we improve and strengthen the performance across the rest of the portfolio. I shared earlier how we improved the company, Valmont at the company level. I shared how we focused our portfolio. We aligned our resources. We ensured capital and resources go to the highest value opportunities. Well, now we're doing that one level deeper in the company. We're taking that to specific regions, to product lines, to customer choices and overall day-to-day execution. And Greg is going to cover what the actions we're taking in broader infrastructure.

And then in agriculture, it is a cyclical market. The market's been down. There's nothing we can do about that. But what we can do is we can decide how we run the business, not waiting for the cycle, taking specific actions today. We have a large installed base. We have strong offering around aftermarket and technology. And that's what we control, and that's what we're focusing. How do we add value to the growers. Give you an example here, AgSense 365, which we launched last year. It saves time and money for our growers, and it provides them with better irrigation management. And during the breaks, I encourage you to go outside and we have a booth there sharing some of that -- those capabilities. And that allows us to be more embedded with our customers. And for us, it drives double-digit recurring revenue at accretive margins. So we're taking the same discipline across the portfolio to drive better quality of earnings, consistency and returns.

So to capture and strengthen effectively, we have to put resources where they matter most. That's the role of Enable. Enable is how do we put the resources on the highest value opportunity. Now when I say resources, it's capital, but it's not only capital. It's our management, it's our talent, it's our tools.

So when -- I'll start with capital, and we put capital on the highest return opportunities. Today, that's investing capital in our utility business. It has the strongest ROI. We're going to hear from John about our exceptional balance sheet. our cash flow generation, our liquidity position, which gives us flexibility to fund growth, enhance returns and return capital to our shareholders. So that's capital. It's broader than just capital. It's how do we mobilize the entire organization across these opportunities.

Let me give you an example. We saw the growth in utility, and we identified several bottlenecks. We took our entire data science and AI team, and we put them on these bottlenecks, engineering, plant throughput. And you're going to hear from Amit. He's going to share with you some of the actions that we're taking. Still early days. It's very encouraging. I believe it has tremendous opportunity to unlock value. So overall, enable, we're aligning our capital and resources and maybe most important, our management focus on these opportunities.

So when you put capture and strengthen and enable together, you get the bridge to our 2029 financials. We expect to achieve $5.4 billion in sales and $35 of EPS by 2029. John is going to go into a lot of details and cover the financials, so I'm not going to do that. But I'd like to make 3 points on this slide. One, we have clear line of sight to our 2029 results. We have strong visibility to the market. We have levers in place, actions underway that are delivering results, high degree of confidence on achieving these numbers. So that's number one.

Number two, there are additional opportunities not baked into this plan. Let me share with you just a few. One, there's still opportunity for additional market growth within utility and additional opportunity for us to unlock capacity to drive additional growth within this plan. And then agriculture. Cyclical market, the market is down. It's been down for several years. It will cycle up. It always does, and we're going to hear from Darryl around that. We don't know exactly when it's going to cycle, very likely within this time horizon. We can't predict the timing. We did not include a broad ag recovery within this plan.

And then I mentioned our balance sheet, which gives us opportunity -- and our cash flow that we're going to generate through this period, which will give us opportunity to continue to invest in the business, continue to return capital to our shareholders, evaluate inorganic opportunities. We do not have any inorganic opportunities within this plan. So as you can see, we have additional opportunities to even make these numbers stronger.

The third point I'll make here, this does not end in 2029. You're going to hear about the utility market. Joe and Jean are going to go into detail and share with you some of the market drivers in utility. You're going to see they go through 2035 and beyond that. So additional opportunity for additional growth in utility market. On top of that, you're going to hear the actions we're taking to strengthen our portfolio, and you'll see some benefits in this time horizon but they're going to drive both growth, stronger quality of earnings beyond 2029. And these financials tie directly to our strategy and the actions on our place -- in place.

Let me bring this whole thing together for you. I don't think I'm exaggerating if I would say the market has experienced a historical demand cycle, something we've never seen before. The demand is just a starting point. How do we, Valmont, convert this into shareholder value? That's the system, the integrated system that we built. So we have these durable markets. We have our integrated system and our advantages around our market leadership, our embedded customer relationships, our engineering expertise and our manufacturing scale. I did mention this before. I'll mention it again because it's important. It's extremely difficult to replicate this system, and it's unmatched in the industry.

Then we have our strategy of capture, strengthen and enable, focus the advantages on the high priorities, and that gets us to our $35 of earnings by 2029 and positions us to continue to compound beyond that. So with that framework in mind, Chris will take the first dive into utility.

And Chris, why don't you take it away? Thank you.

Thank you, Avner. Good morning, everyone. All right. So wow, Avner could not have set that up better for our discussion this morning. To introduce myself, my name is Chris Colwell. I'm the President of our Infrastructure business focused on North America. I have been with the company over 15 years. During that entire time, I've been with our Utility segment. So I've been with that team for many years. As Avner noted, we've got a great market in front of us. But more importantly, we have a great team. We're the market leader, and we're very well positioned to take advantage of this opportunity.

Today, myself, members of our team are going to go over an update of our Utility segment, and we're going to talk to you a little bit about what our plans are and our vision is for the future, not only through 2029, but beyond that, as Avner said, we've got a runway in front of us. So we'll start this morning with just a little bit of a road map. What are we going to talk about today? Our goal is to leave you with an understanding of our market, our advantages and our plans to execute on this opportunity. We're going to start off with a market overview.

So this morning, our market is strong. Honestly, having been in the business for this long, I've never seen anything like it. Working with our customers, we get all of the confidence level that we see in this market running. It will go beyond 2029. Multiple drivers have converged. And as these have come together, it gives us a very durable outlook for the coming years. Next, we'll talk about our advantages. We'll outperform in this growing market through our capabilities, through our deep customer integration, as Avner talked about, and through proven execution. We've been doing this a long time, working with the same customers for years, demonstrating what we can actually do.

Our advantages go beyond just capacity. And as Avner said, we have a deep moat around us, if you will. Trust, confidence and execution is critically important in the utility segment. That is what our customers need. Reliability of electricity is a must. It's not a given. We have proven to our customers that we can support this type of need through our decades of performance, through our engineering excellence and through our manufacturing capabilities.

Given that, we'll then move on to our execution plans. A strong market doesn't mean that we're going to win. We have to execute upon this. So this is our focus. It runs all the way down through our business. We are very committed and confident in our ability to execute on this opportunity. So today, we're going to talk about how we convert this opportunity into earnings per share as we look forward.

For context, today, we're going to cover 2 of our business segments. Utility and our Coatings segment as well, somewhat as a peripheral. The reason why we put these together is they're both experiencing the same types of market drivers, and we see both of these businesses growing as we look forward. For our Utility segment, last year, approximately $1.5 billion. And over the past decade, our utility business has demonstrated that we can outgrow the market growth that's there. We have overperformed in this market.

From a Coatings perspective, a smaller business, $236 million. This is coming from custom external work. This does not include any of the significant support that they give utility internally. In this business, this has typically not been a growth business. It's been more GDP-driven business. We changed our strategy about 2 years ago and are now seeing the results of that strategic adjustment. We've now aligned that business to support the Utility segment, not the internal business, but the external. We now have a lot of volume coming in from data centers and from the same growth drivers that we're experiencing in the utility business. So combined, these businesses represent about $1.7 billion of baseload, and this base is very well positioned to grow significantly in the future.

So this morning, let's start with the market overview. Just as context for everyone, our products sit in the center of the utility ecosystem. Fundamentally, our products are the backbone of the grid. Generation needs to be connected and end customers need reliable electricity. Our products fit right in between that. We're generation source agnostic. So regardless of the type of generation, whether it be renewable energy, such as solar or wind, whether it be nuclear, whether it be coal, whatever it is, it has to be connected and we plug in.

In addition, we're the market leader in each of our product segments. In our transmission, substation, distribution and coatings businesses, we are the leader. We're very well positioned. In our transmission and substation businesses, we have significant share in that business. In our distribution business, that's primarily a wood market. And so there's a tremendous amount of upgrades that are needed, whether it be hardening from storms or whatever. So that not only represents the drivers we're feeling, but it's a market that we can penetrate. Because they're hardening that grid, we're very well positioned, and we are the market leader in the hardened solutions as we penetrate into that market.

So next, let's talk about our market drivers. Avner talked about this, and so we'll go a little bit deeper here. We have multiple market drivers that are impacting our business today. First, we'll start with load growth. The world needs power. There is no doubt about that. And the power consumption is increasing. After decades of efficiency-driven decline, that has reversed. And now we're seeing this power needing to be coming online. Of course, data centers are driving a tremendous amount of power need, but it's also other things. We're also having onshoring of manufacturing, general industrialization, the electrification, even with the political environment of EVs coming and going, electricity is needed. That's not going to reverse.

As such, our grid was put in place decades ago back into the 1960s, and as Avner said, 70% of it greater than 25 years ago. That grid wasn't set up to support the types of loads that are now going through it. So there's a tremendous amount of upgrades that are needed in this marketplace. In addition, reliability is critical and weather events, as you're all aware, the storms are getting bigger over the decades. They're getting of greater magnitude and hurricanes, wildfires, et cetera, create the need for a hardened grid. We have replaced infrastructure, for example, in New Orleans, where it's not the city of New Orleans power out. They needed a solution. Valmont is the company that they go to and turn to for that type of work because it's critically important. They need the confidence that electricity is going to get turned back on.

In addition, wildfires. We are hardening and replacing the West Coast. Everybody is aware of West Coast fires. The reality is, since the beginning of this year, fun fact and figure, 33,000 wildfires have occurred since January 1 of this year across North America. That's not in California, that's not on the West Coast. That's everywhere. Canada, the Midwest, everywhere. These drivers are real, they're significant, and they're not going away. And so as we look at this, this results in a huge capital outlay, as Avner talked about. $1.4 trillion is earmarked to be spent just over the next 5 years.

Of importance, this number isn't declining. It's growing. From the previous 5-year plan, it's up 21%. So previous to this, it was less, and they've taken it up to the $1.4 trillion. Every year, when they turn this over, it just keeps marching its way up, a massive need sitting out in front of us. Of note, nearly half of this CapEx is specifically targeted to transmission and distribution products, exactly where we play. It's rising exactly where Valmont has the strength, the scale, the expertise, the customer relationships. It's right in our wheelhouse.

We are now seeing this directly translate to Valmont. Our backlog is at the highest level in history. As importantly, we track many, many key performance indicators, as you're all aware. We track our requests for quotation that are coming in. As an example, in our substation business, the first quarter of this year compared to the first quarter of 2024, so we'll jump back here, a 4x increase in RFQs, 400% increase in substation alone, staggering. So as we see this work flowing through, that's just one example. We see the same type of thing in transmission and the same type of thing in distribution. All of this is now translating directly into our business.

So with that, I am very pleased to introduce 2 speakers this morning, 2 industry experts, I will say. First, I'd like to introduce Jean Rollins. Jean is a senior adviser at a company called Power Insights. Valmont uses third-party experts like Jean to help us to validate the market. We look, we hear, we see, are we right? Jean helps us to validate that type of view. Jean comes with decades of experience. She's been in our market over 30 years. And in our market, everyone knows Jean. She brings a wealth of knowledge. She has worked for McKinsey. She has worked for Dominion Energy. And in her current role, she provides consulting and expertise to manufacturers like ourselves, to investors, to our utility customers. Jean speaks with our customers literally every day. She helps to connect the dots for the industry. So we're really pleased to have Jean this morning.

In addition, I'd like to introduce Joe Ulrich. Joe is our Vice President and General Manager of our Utility segment. I've worked with Joe since I've been at the company. He's been here for over 25 years. Joe brings the expertise to the market. He also brings the expertise to the customers. So combined, they're going to share what they're seeing and hearing out there for you this morning.

So with that, please help me welcome Jean and Joe.

Chris, thanks for the introduction. Good morning, everybody. Jean, thanks again for spending some time with us here.

Thank you.

So Chris and Avner talked about it, $1.4 trillion in utility CapEx to be deployed over the next 5 years. What's driving that?

First of all, there's -- the platitudes we're all hearing really underestimate the scale of what we're looking at as an industry. And it's not just -- and everybody is hearing AI and AI is certainly a big driver of it. But before AI came on the scene, there were a number of other drivers, including, and so my sort of catch phrase on this is that AI is doing what renewables couldn't do and kick starting really an accelerated growth cycle of the grid. It's one thing to have new generation interconnecting, but when all these utilities see all that beautiful new load needing to be interconnected, it suddenly allows them to get moved faster than they're normally used to moving.

And Avner used the example of 24 New Yorks, and I use the example because Power Insights is based in Chicago, 28 -- he said 14 New Yorks, 28 Chicagos, that we need to add in terms of electricity between now and the end of the decade. And it's just a mind-boggling number.

So we see the 700 terawatt hours. We see the 300 gigawatts of new generation that needs to come on, and I agree it's a staggering number. Where we see that from a delivery standpoint, 65,000 additional new upgraded line miles. And I guess to put another kind of relationship on that, if we were to drive from here to L.A. and back, you would need to do that almost 13x in order to replicate the 65,000. So big numbers.

Exactly. Right.

Let's go into the 65,000 a little bit.

I think this is one of the most important things to hear is a lot of this grid forecasting you hear, you hear about new line miles. New line miles are only part of the equation. The most valuable asset that most utilities own today are right of ways. Those pieces of real estate, and they are going to do everything they possibly can to maximize the capacity of those right of ways. So we hear all this noise coming out of D.C. in particular, about we need new lines. Yes, we do need new lines. We've been hearing a lot about 765, 500 kV lines, which are arteries of the grid system. But you need a lot of capillaries coming off of those arteries. You've got to -- you don't connect data center into a 765 line. You don't connect a solar farm into a 765 line. You have to step that down and build smaller lines. And so for every mile of 765 or 500 you're building, you're going to have to build 3 to 5x that number of miles or upgrade 3 to 5x that amount.

And when I say upgrade, we're not talking about they're going to go mow the grass underneath. They're going to build new structures that double, in some cases, triple the capacity of that existing right of way.

A couple of things stand out. And I love your analogy, number one, with the capillaries and the arteries because if the generation is the heartbeat of the system, then you've got the large arteries from the backbone capillaries then are your step-downs from the kV ratings from that standpoint. I think a big piece for me is that as the market leader of 500 kV and below, that really means that Valmont is going to have the lion's share opportunity for those projects to be involved.

The other piece, let's not forget about substations. So if you're going to upgrade a transmission line, you're going to upgrade the substation. If you're going to put in a new line, generally speaking, there's one at the beginning, one at the end.

But that's changing. We've always seen, okay, a new one, you got one at the beginning, one at the end. But yesterday, I was flying out of Atlanta and south of Atlanta is sort of data center alley of the south. And I looked out and I saw 3 massive projects that we're sort of tracking in our infrastructure practice, data center projects. And all 3 of them, substantial substations on either side. Data centers want redundancy. They don't have just 1 circuit coming into a hyperscale data center. They'll have 2 circuits coming in because they need the protection and the redundancy.

So 2 massive not and very complicated substations with a lot of steel. But once you get inside the fence of the data center, you still have to -- that's just stepping it down to 138. You're going from Georgia Power system, which is 500, stepping it down to 138 in these substations, but you still have to step it down to a usable kV inside the data center. So inside the data center, there's another 5 to 6 to 7 smaller substations. So really, when you're going to meet that new load with a new line, you're actually going to end up with 2 massive ones and 5 to 6 smaller ones. And the amount of steel involved in that and the amount of engineering, every one of these substations are designed differently and require really intricate engineering.

And as you stated, that's not going to happen. It's happening. I talked about...

It's happening. Yes. I was looking at...

Let's talk about amount of RFQs that we have coming in.

Yes.

Let's jump back just a little bit to the high level $1.4 trillion in capital and put your hat on of a leadership or executive at a utility. How are they feeling about this? What are they doing about it?

I think some of them are a little bit like deer in the headlights a little bit, but I think they're coming around a bit, this unprecedented growth that you've seen. But your utility execs are not hired to take risk. So one of the first things that comes to mind is they have to look at their priorities and do they have the capital to execute these plans. And we have to remember, with all the noise out there, utilities are still going to be building probably 85% to 90% of this infrastructure. A lot of discussion about behind the meter, but most of this infrastructure is still going to be built by the local utility. And so you've got to have -- there will be governors to spend, and that's what keeps utility execs awake at night.

Affordability. We're all hearing for those of you who live in New Jersey, you know about electricity prices going up now. That is going to be a big political issue this year. And then critical components. It's still 3 to 5 years to get a transformer, a big transformer. And the one that I like to harp on a bit is labor availability. We've cut back on our immigration, and we are watching plummeting birth rates. So the average person aging into the workforce is dropping radically right now. And then finally, permitting. As much as -- it seems like such a soft issue, but it becomes a very hard issue in this industry. And that's why the real estate is so -- these right of ways are so valuable to utilities. If I can build something without having to permit a new right of way is the key. Even at the federal level, even if we get massive change at FERC and empower FERC more, you still have state, county, local permits that you have to go through, and they can stop projects. So there are natural governors.

So when you look at the 6% growth rate, I look at this and say, this is a conservative base case. It's not going to fall below that. There are a number of things that can happen to make it go higher. But if I was -- I'm a conservative forecaster, and this is sort of the position I take. I want to know what is my conservative sustainable. The beautiful part of this is those governors allow us to see this runway extending out way past 2030 because we need to continue building. We're not going to meet all the demand, and it will spill over for another 10 years. So we have a very long, very visible runway coming.

Many of us were at a conference earlier this month and the stakeholders that you mentioned were all convening talking about this, not just how are we going to get it done but we need to get this done. And what can we do to make this -- streamline this process as much as possible.

So if we look at that, the $1.4 trillion and a big portion of what we saw in the earlier slide did show transmission distribution and substation is a big portion of that capital that needs to be deployed, 46%. So that's $644 billion through transmission, distribution and substation. Now we know not all of that is structures or poles. You got to construct the line, you need other equipment. You've got engineering and other maintenance that goes into that. But of that $644 billion, 8% or $53 billion would be product-specific, poles and structures. So then we see with that $53 billion, we see the serviceable addressable market from 2026 going from $8 billion to 2030, $13 billion.

So as we sit here today, there's a highly visible Valmont-specific pipeline of $6.7 billion. We have confidence in this, not only because of the long planning cycles that we see, but also because of the engagement that we have with our partners. We're ingrained in their process. And with our alliance partnerships, we understand what is going to happen and when. We're helping them execute on the engineering early in the process and also helping them navigate through all of these steps that it takes. So with that, we understand how, when and what type of capital will be deployed. So that gives us that confidence in the line of sight to that $6.7 billion.

Well, I think the alliance partnership, and that's something with the young folks in my office that I sort of harp on a bit is never underestimate the value of these relationships when we're looking at market share of different investments. How good is this company's relationship with its customers. As a utility exec and having sat in that chair for a while, the one thing I need to know is that my vendor is going to deliver when they say they're going to deliver and that they're going to deliver a well-engineered, well-manufactured product. As we are looking at the further growth of data centers, in particular, they brought different contracting terms to the industry. We're starting to see more contracts now, both from -- on the load side and on the generation side, where if the utility does not have that interconnection ready, there are significant penalties. I've seen contracts where there have been actually penalties per second that an interconnection is late being brought online. And they are very large in scale.

So there's an added headache that now utility executives are facing that they are no longer controlling the total value chain that they have to meet these deadlines on time, and having reliable partners with deep background, deep histories that you know can deliver is incredibly important.

It's much at stake. There's a lot on the line.

A lot of money at stake.

So as we wrap this up, we talked about this. So 2x the need for power. And then as that culminates to we need more generation, 300 more gigawatts that needs to come on, that 65,000 new and upgraded line miles, that goes into that $1.4 trillion that we see in utility CapEx over the next 5 years. So that's 10% growth opportunity for us and a $53 billion serviceable addressable market.

All right.

Jean, thanks so much. Always great talking with you.

Great. Thanks for having me.

Outstanding. Thank you. Thanks, Joe. All right.

Thanks, Joe and Jean. That was great. So to recap, clearly, the market is strong. Demand is growing. The market drivers are not going away. Reliable electricity is needed. We're well positioned to take advantage of this. So let's talk about our advantages. First of all, our advantages are not easy to replicate. It takes time. It takes a lot of time. More importantly than the physical capacity and the amount of time it takes for that, it's those relationships, and it's that proven resume of work over the decades that cannot be replicated quickly.

For us, we see this advantage being more than just that physical capacity. It's our entire system. Trust is at the center of what's important to our customers. Customers trust us to execute reliably on these critically important projects, as Jean and Joe talked about. We earn this trust through our people, through our processes, through our demonstrated performance.

I'll start with customer relationships. How do we build that trust? It's our people to start with. From a customer relationship standpoint, we have a very tenured sales team and product leadership team that has been in our business for years, very stable. They know our customers. They're literally walking right in the hallways of our customers. We talk to them daily. They provide us with insight as to what their challenges are, what their projects are, how the movement of those projects are. We have a direct line of sight for what's happening, strong advantage over our competition. From an engineering standpoint, decades of experience in our engineering team. As importantly as the procurement relationship is with our customers, the engineering relationship is even more important.

In our business, the engineers are the ones that make the decisions because they have to have an engineered solution that is reliable. And so the procurement team often defers to what the engineers need. Our engineers know our customers' engineers. They've known them for years. We're embedded with those customers. We collaborate with those engineers. We collaborate with those engineers daily. In many cases, we're a custom engineered product, we have designed millions of designs over the years. These designs, we help to develop our customer standards. Every customer has a different standard that they require. We've helped them to not only develop them, we now hold the designs for those. And so as we go forward, we reach in, we'll pull out preexisting designs. The customers already know they work. They already have the confidence in that. So that is a huge advantage for us from an engineering perspective.

From a manufacturing perspective, we have 16 manufacturing locations across North America. We have 20 coatings manufacturers across North America. This aligns us perfectly to support logistically the supply chain to our customers, East Coast, West Coast and everywhere in between. So it does help from a freight standpoint, from a cost advantage standpoint, from a speed standpoint. These facilities have been built over years. And so we've learned over that time, how do you balance very large complex structures with small structures and everything in between so that we optimize those facilities.

Things flow through in a balanced plan, if you will. We're able to do the hard things. That's why our customers use us. They come to us because of the difficult challenging things that no one else can do. We have that advantage. Finally, from a footprint standpoint, redundancy, I think, is probably as important as anything. Our customers need reliable delivery. We have multiple facilities. We're in a manufacturing environment. Things go wrong. Sometimes things don't work the way that they're supposed to. We have multiple options so that we can ensure that if something happens, we can divert the work to a different facility to ensure we can keep up with these critically important projects.

And finally, product breadth. We've intentionally designed our product line so that we have multiple different material types, steel, concrete, composites, hybrid solutions. Every project is different. Every project needs something different in salty conditions, some product material types just don't make sense. We have all of these options that our customers can come to us for the solution and not to buy a product per se. So from all of those things, coupled together, our customers trust us.

For Valmont, Avner started, we're the capture portion of Valmont's portfolio strategy. We're very well positioned, as you've heard from a market perspective. Now it's in our hands to execute. Disciplined execution is what we're focused on. We do that through our customer strategies, our innovation and how we're deploying capital and capacity to achieve the support that the business needs. So execution is key, and that's what we're going to shift to now.

Okay. Let's talk a little bit about our customers. Jean and Joe talked a little bit about alliance customers and what that is. So let's give you a preview of kind of what -- how do we see the market and how do we see our customer base. We segment our customers into 2 different types. We have what we call strategic customers, strategic contract customers or alliances. These customers are made up by industry-leading investor-owned utilities. These are the leaders in the Utility segment. We do business with all of them, and we've done business with them for many, many years. We have alliance relationships with over 20 of these customers. The top 20 IOUs spend approximately 40% of the capital in our business. So these are the ones that are year in and year out, putting projects in place and spending the money to put these projects in place.

Why is that important to us? We dedicate a portion of our capacity to holding it for them. What that does is it gives us a very strong baseload of business. These customers are there. They reserve their capacity. They communicate their forecast, and they're communicating their forecast, not just for this year into 2027 and even 2028, they are now reserving the capacity because we have that contractual relationship and that long-term standing with them.

It provides us with reliability in a volatile world. We are a project-driven company. Projects things happen. projects ebb and flow. As projects move having this diversified baseload customers gives us confidence something moves out, something moves in, and over the course of time, it's steady. So we have a very reliable foundation for business.

In addition, we hold a certain percentage of our capacity less than that alliance capacity, but we hold it empty. We hold it for bid opportunities. What does this mean? I'll give an example that literally just happened this week. We had an industry leading IOU, actually two, but I'll talk about one, come to us, we have an alliance relationship in our transmission market. So they know us, they know who we are. We've done business with them forever. We do not have that kind of relationship in our substation business. They came to us in substation because the market has exploded. They can't get substations. They can't get them from their current supply base. They know that Valmont has available capacity. They approached us and they said, we have a critical substation that has to go in at the end of this year. Can you help us? Because of the way that we design our portfolio, we keep that open capacity for these kind of opportunities because they happen daily.

We don't take everything that comes. We're very strategic in what we're taking on. In this case, we said, yes, because they communicated next year, their substation business is staggering. We didn't know that because we didn't have that alliance kind of relationship. So we had some visibility, but not to the magnitude. What this does for us now is they are already now talking about giving us the alliance contract for next year's business, which equates to GBP 80 million of substation for next year. Just to put things in perspective, it is incredible, massive. That's how we use the strategic -- or the bid portion of our business. We're using it opportunistically to take advantage of those strategic needs as they come due.

So let's move on now to innovation. We're a custom engineered product line. We engineer and innovate daily. We are always solving problems or challenges that our customers have with constructability, total cost of installation, reliability, speed, all of those kind of things. That's what we do, and we address those challenges. On the innovation front, there are so many examples. It's hard to say if we do this or we do that, but I'll give you just one example in the substation business. We do preassembled substations. You've probably already seen that or heard that.

But what's -- why do we do that? And what's the advantage? Construction costs are far greater than the cost of our products. And so when you take a substation that are very large and complex like Jean talked about, they're hard to assemble in the field. And you're in harsh environments, winds blowing, heat, snow, whatever it is, we assemble those under roof. And what that means is now we can deliver a very high-quality product to the job site. It delivers and drops right on to the foundation. So what we do is we take months of construction in the field, and we turn that into weeks or days or even hours in some cases, there was a substation took 6 hours to drop it on and bolt it into place. The cost savings for our customers is staggering. It doesn't mean our products are cheaper. We have fundamentally shifted that value chain in our direction. So we are using that type of innovation every day to continue to drive value to our customers.

Next, I'd like to show you a very quick video. It's from a customer called OPPD, Omaha Public Power, in our home office -- where our home office and it shows an example of how we're working with our customers to innovate solutions for them. So let's watch.

[Presentation]

All right. So clearly, we're in a good place. We have very strong competitive advantages. We do this every day. That said, we'll turn our attention to capacity. Even with our competitive advantages, our customers still need our capacity. They need delivery, they need speed to market. And from an executional standpoint, that's now what we're focusing on is to make sure that we're providing that capacity in this very high-growth market.

The way that we look at capacity is not just physical capacity, it's total system capacity. I think you alluded to that a little bit earlier, Avner. We are dealing with capacity at all parts of our business. This gives you a little kind of a snapshot in terms of how we look at capacity. We have a front end of our business. We have then the back end of our business, which is our manufacturing piece.

From a physical capacity standpoint, we've got a strong advantage in the way that we're deploying capacity. We have 16 manufacturing fronts. And with those -- with that footprint, we're able to add capacity everywhere across 16 fronts, and that's exactly what we're doing. In effect, this is a brownfield kind of an approach. It enables us to respond with capacity much faster. We don't have to wait 2 years for a greenfield to go up. It doesn't mean greenfields are bad. But for us, capacity is literally coming on daily. It enables us to do so very flexibly. So if the market conditions change, we can adjust. We haven't put all of our eggs in a massive project to go and run for capacity, and we can do it extremely cost effectively. Able to do this in an affordable way where we don't have to deploy as much capital for every dollar of capacity that we're putting in place.

I can tell you just from what we're seeing today, capacity is now coming online daily. Every day, we are ramping the capacity. Our customers love it. They don't have to go somewhere and find it. They're right here with us. As this capacity comes online, we fill it, and our customers have a clear confidence in our ability to do so because we're demonstrating it every day. From a cost standpoint, I talked about, it requires less cost. So this does drive up our return on invested capital.

On the front end of our business, we also have to keep pace. And so we're doing that through digital tools. And what we're doing is unlocking capacity through artificial intelligence. And in a second, Amit and Shannon will talk about that. This is fascinating and it's working. For example, in our engineering front, we are using this kind of technology to dramatically speed up the throughput of our engineers, things that were more mundane, things that took more time that took days, weeks, even months now take hours. We're seeing this on that front.

In addition, scheduling improvements, 16 manufacturing locations, custom engineered product, hundreds of projects going through at once. How do you optimize the flow of all of this coming through our factories? A human being couldn't do it, and we've never been able to do it through a human being. AI is now helping us to solve. How do we balance all of these different things to optimize the throughput that's going through. So many, many exciting things happening. And I'm not an expert. So I'm going to turn it over to the experts to talk a little bit more about this.

First, I'd like to introduce Amit Blesser. Amit is our Chief AI and Digital Transformation Leader. Amit has been with our company over 5 years, and he brings over 20 years of AI and machine learning background with him. He and his team have put more of an impact on our business than I've ever seen in my life across all areas of our business.

In addition, I'd like to introduce Shannon Eggert. Shannon and I have worked together for the past 15 years. Shannon is our Senior Vice President of Operations. Shannon is the person that is helping us deploy the physical capacity Shannon brings a unique background from his perspective. He's also a commercial guy. And so he not only understands manufacturing and knows how to do this, but he knows the urgency and he knows what's important to our customers. So he brings that sense of urgency, that drive and that speed with him.

So with that said, help me welcome these 2. They'll talk to you much more about the details of what they're doing.

Thank you, Chris. Thank you. All right. Thank you, Chris. Good morning. Again, my name is Shannon Eggert, and I have the opportunity to lead the North America Infrastructure operations team. We've talked a lot about this market and how exciting it is. And one of the key factors of our success is going to be this incredibly strong system that we have built. This will enable our capacity increases and allow us to take advantage of this market growth.

This system was strengthened recently by an idea from Avner on creating a growth task force, and he asked me to lead this task force about 1.5 years ago. We really started to look at ourselves and challenge some of the things that we were looking at in our processes and put some meaningful improvements in this. We understood that our goals around capturing this market -- they could be done much more efficiently if we use new tools and technologies, and this is the beginning of where the AI team and those processes could really help us.

Amit, why don't you talk a little bit about how you and your team came in and really helped us in the operations function.

Sure. Thank you, Shannon, and good morning, everyone. Before answering, I would like to recognize Avner and the leadership team for early belief in our AI journey. And I'm saying that because it's not trivial for 80 years old industrial company to invest internally in an AI organization and taking that decision 1.5 years ago. So it's not trivial. So thank you.

Going back to your question, Shannon, I think that pretty early in the journey, we understood that AI can become a core operational capability that can help us to unlock hidden capacity across our footprint. We also realize that optimizing one function will just move the bottleneck from one place to another. So we need to optimize the entire system. So that means increasing throughput with our master scheduling, helping our engineers to be more productive, optimizing our supply chain. But maybe most importantly, we believe those capability can help us grow faster and be more productive than any industrial traditional model would typically allow.

Great. Thank you, Amit. Let's look at our footprint real quick. We've talked a lot about this, but here is an image that shows actually where our factories are. And as stated before, today, we have 16 manufacturing facilities that support our Utility business. Each one of these facilities offers a great chance to increase our capacity overall. In addition, we have multiple Coatings facilities that support these Utility businesses. In a few minutes, I'll talk about some examples of where we have added capacity and how this impacts our growth.

But I want you guys to understand that utility demand does not come in predictable shapes and sizes or even geographies, right? These are very different projects, custom engineered. We'll talk more about that. But the other advantage of our footprint is that we have interconnected them with a system. We talked a little bit about the system, and I'll go into that a little bit more. But as we look at these areas, we can better manage the utilization of our factories and supply these complex structures and projects by looking at utilization and moving things around so that we don't overtax certain areas of our businesses. Essentially, what we're doing is we are making the complexity of these projects an advantage instead of a detriment to our footprint.

Yes. As Shannon mentioned, our footprint is extensive. And traditionally, in industrial manufacturing, growth come from more labor, more machines, more facilities. But we believe that with AI, we can change the equation. Actually, we are starting to change the equation. So Shannon, let's share with them a little bit about how we're building the system to catch this growth.

Absolutely. Again, a reminder, utility structures are not widgets. These are highly engineered structures, complex projects, all having different engineering requirements, different material requirements, a whole gamut of things that can challenge any normal organization. And that's why we've invested in this entire system. As you can see here, the processes and the execution of each one of these ties to each other. I'm not going to really go into the first 3 buckets on this because although we do have a strong system, Amit and his team have really invested a lot of time in furthering the execution and our process efficiencies in this first one -- first 3. But I would like to mention a couple of key things that make us special in this market.

So first, I want to talk about our workforce. Regardless of how much we use digital tools and process improvements, we are going to need additional skilled labor to produce these products. I'm being -- specifically, I'm talking about welders. You cannot build utility structures without a great team of welding professionals. So in our footprint, what we've done is we have developed relationships in each one of the regions next to our factories with local technical colleges, high schools and even middle schools in some cases, where we are drumming up excitement for people to enter into the trades. In addition, we have built specific weld schools, Valmont weld schools with standardized curriculum certifications. Basically, we can build welders to staff up our factories and produce the complex projects that we have to.

The other place I'd like to talk about because this is specific to Valmont is in our advanced manufacturing technology team, okay? Valmont for years, we've been collecting the most experienced fabricators and manufacturing engineers that have ever worked for Valmont. And we put them all in one group. and we call them the machine builders because that's what they do. They build machines to build our products. These are proprietary custom equipment that fit directly into our factories that build our product better than off-the-shelf equipment you have. Anybody can go buy a laser. But if you can't have the equipment that builds utility structures specifically tied to that laser, you're going to be behind, right?

So one of the things that I would like to also mention in this entire system and the work that Amit is doing is one of our core beliefs. And that's really what we rely on to make the system in our factories that much better, and that is our continuous improvement mentality.

Amit, could you talk a little bit about the first 3 areas of this and how your team has really helped us take this to the next level?

Yes, sure. So the first area I would like to cover is master scheduling. Historically, master scheduling was heavily relied on fixed planning logic and human experience. And our team does an excellent job in that today. But with AI, we can optimize production at a level of granularity that was not possible before. We are moving from static planning logic to our dynamic machine level optimization. Our system can evaluate millions of scheduling combinations in real time, taking into account machine constraints, labor availability, customer prioritizations, enabling us a level of optimization that was -- simply was not practical before.

So the system is already implemented in production in 5 of our biggest North America utility sites with additional deployment underway. And while it's still early, the initial results are encouraging. And based on our internal analysis and initial user feedback, we believe these capabilities may support a directional improvement in throughput in the range of 3% to 5% over time. And this is without adding any labor, any machines to our facility that represents a pure throughput gain.

The next area I would like to cover is engineering. So Valmont has decades of proprietary engineering knowledge embedded across millions of design, specification, historical documents. And we believe this data is a major strategic advantage for us. So let me give you a few examples, and you will understand why. So when engineers start a new project today, there is a good chance that a similar design of what he is trying to sketch has already been created in the past. The challenge is to find it among millions of design that we already have. In many cases, engineers were unable to locate those designs and start from scratch. So now we have a system. They can take a screenshot of the design, input that in our system. The system will search on top of those millions of design and find the closest match. That help our teams to run faster and leveraging existing design as a starting point.

Another example. Today, engineers spend a significant amount of time reviewing customer specification documents. And those documents contain hundreds of pages, and it's taking time to read them and extract the data. So we develop a tool that can identify and highlight on top of those documents, the relevant data for the engineers. So now instead of reading hundreds of pages, the engineer can read only the relevant paragraph for them. And obviously, it's increasing their productivity. We're also applying AI to engineering quality validation, mainly to automate the process and reduce time.

I'm not going to go into details on that one. So taken together, these capabilities are creating a scalable engineering productivity platform built on decades of engineering and design data. And while it's still early, our directional analysis suggests this platform may support engineering productivity improvements in the range of 15% over time. This is already in production.

In supply chain, we are applying AI to inventory management to material flow and procurement decision, mainly to optimize our inventory levels to reduce our steel cost and maybe most importantly, to make sure we have the right material on the right time for production. More broadly, we are connecting customer orders engineering, material readiness and production execution into one unified operational environment. It's helping us to improve our visibility and our execution certainty across the value chain. And over time, we believe this capability may support meaningful improvements in our supply chain efficiency.

Taking a step back, these are not isolated tools. They are -- together, they represent a broader shift of how we operate the business. And importantly, those systems will continue to improve while adding them to more facilities, more workflows and operational environment. And because they are being built on decades of manufacturing, engineering and operational knowledge, we believe they can become a durable competitive advantage for Valmont over time. This is not about experimenting with technology. This is about building a more scalable, more cost-effective industrial company, ones that can grow faster and be more productive than any traditional model would typically allow.

Thank you, Amit. I love these examples. They really demonstrate the importance of technology and AI. AI does not replace good operations. What AI does is it makes good operations even better. So let me tell you a couple of stories with some examples of how we're deploying additional capacity across our footprint. The first one I would like to talk about is a project we just completed in our Monterrey operations, our Mexico operations, excuse me. Basically, we have operations in Mexico with 2 factories, and they supply back and forth to each other and build utility structures. And we had previously thought that we were constrained due to space and equipment. But we really took a hard look at these operations and analyze the utilization of every piece of equipment in this factory and found that we had underutilized equipment that we could take advantage of.

So we put a team together, analyze the flow through our assembly areas of this product type, and we relaid this out. We put the right equipment in. We used our advanced manufacturing technologies team to put specific equipment in here and balance this to maximize the utilization across the footprint of our high-value assets. And we -- in a sense, we doubled the throughput of our Escobedo facility and consumed the unutilized capacity there. And we have 16 factories. So this is going on all across our footprint. So this is an example of flow utilization -- flow optimization and balance utilization.

The next factor I'd like to talk about is our Jasper, Tennessee factory, okay? Jasper, Tennessee is a fairly large steel manufacturing facility, represents about 15% of our overall steel manufacturing capacity. And Jasper is a very good facility because they have an experienced leadership team. They have great relationships in the community. As a matter of fact, we're the employer of choice in the region. And we have customer approval from all of our customers so we can immediately ship from there. This is an example of where we took a look at some more underutilized equipment through product deselection activity that we went through last year. And we put together a brownfield project that adds roof line, adds custom equipment, advanced material handling equipment and took advantage of the strong leadership team and the ability to attract talent to bring this in. And this project will result in a 40% throughput increase for our Jasper, Tennessee facility in a relatively short period of time, very efficient -- with a very efficient capital spend.

These projects are successful because of the system we built and the improvements that we have taken here because we can manage customer demand, supply chain material availability to be at the factory exactly when the capacity comes online, so we don't disappoint our customers, and we don't leave any capacity on the table. So all of this allows us to manage our development, and we can do this over and over again.

The last thing I want to talk about was already mentioned by Avner earlier is our Brenham, Texas facility. And we are fully operational in Brenham, Texas facility. And this is one of our first brownfield examples where we took an 80-acre footprint that we had, and we had multiple small factories on this, and we needed the utility demand. So we specifically designed a utility factory connected to our other factories there, designed it for flow. What you're going to see here, pay close attention, I'll narrate the video a little bit, but improved safety, improved material flow, automated equipment and an overall visual shop implementation.

So I'll walk you through this briefly. This is an example of the flow of a utility pole all the way from start to finish. We start at one end of the factory and we bring in our raw plate in a rectangle. And then we use either plasma cutters or lasers and we turn this into a trapezoid, and we move all of this material with automated crane systems Megatech, we dispose of the scrap bring it all the way across, have quality processing checks and then we run it through one of the largest, most advanced press breaks in North America. This has controls, safety equipment, and then we move all of our product with conveyors and carts. And here is the first time you'll see an operator interact with the structure and they're just putting the lock bolts in so we can do the long seam welds.

Again, you'll see through this factory, start to finish. We have open bays. We have conveyor systems. The product flows in one end, out the other end, working not to backtrack, working not to have rework, not to waste any operations. We have automated equipment with visual factory floors so we can have people looking at screens that monitor things going on with our product through the manufacturing process. We have more equipment, hands free, so we're not physically drilling. We're not physically attaching the products and a great layout that allows us to use AGVs all in the mind of keeping our operators safe, productive and efficient. This is a great example of what we do at Valmont every day.

And with that, thank you for your time. Chris, please take it away.

Great job, guys. Thanks, Amit. Great job. Okay. So here, we'll wrap it up fairly quickly. First of all, what I would like to say is you can feel how we're running fast. We've got a lot of things happening on multiple fronts. That's a huge advantage. What I do want to make sure you understand is it is a very coordinated and intentional plan. We're very much aligned with the front end of the business, what the demand profile is, and we're watching competitive capacity closely so that as we're adding this capacity aggressively, we are also doing so open eyed so that we know what we're doing. We are the market leaders, and we want to make sure that our customers have us available for the capacity. And so we intend to be that market leader and to put this capacity in place, but we're doing so understanding what the bigger picture is.

All right. So with that said, we'll finish up with our path to value creation. You've gotten from Shannon and Amit that we have the scale, we have the footprint. We have the plan to be able to execute on this opportunity. We're not only putting in place the AI. We're -- it's not theoretical. We're actually doing it, and that's only going to increase as we move forward.

So as we turn forward, let's talk a little bit about what do we intend to do? First of all, we intend to grow our business by over $1 billion over the next couple of years. We intend to provide $10 of earnings per share in support of Valmont's target of $35 per share. The way that we're going to do this is on multiple fronts. Volume is a piece of this equation and a big part of what we have modeled in, but there are other things that are happening. We have a very strong demand profile, a disciplined selection of customers and mix so that we can manage the mix profitably and smartly, an active focus on improving our value proposition constantly so that we can continue to be a price leader in our industry and a highly visible project pipeline specific to Valmont, and that's important. The $6.7 billion that Jean and Joe talked about earlier, that's Valmont. That is our customers telling us, this is you, Valmont. So we have this pipeline in front of us.

Number two, unlocking that capacity, putting the capacity in place and leveraging the capacity. We're doing it smartly. We're doing it in areas that already have leadership, that already have the cost structure in place so that we can leverage that and that leverage drops to the bottom line. And then finally, converting all of these things with that high return capacity, utilizing less capital to put the capacity into place. So we have a good plan. We feel very confident with the plan.

And what I would like to leave you with then is you feeling that same confidence that we have. We're a rather conservative business. We don't make commitments that we can't live up to, and our intention is to live up to this commitment. North America Utility and Coatings will be a major growth component of our business looking out into the future. Our market opportunity is large, and it's durable. As Jean talked about, we have certain governors in the business that slow it down. That only means this volume extends further. We have a runway in front of us. Valmont has strong customer relationships. We have a long history of trust, performance, meaningful innovation, the differentiated capabilities and the manufacturing capabilities that we need. We are very well positioned with our customers that we've known for years. We have a clear path to the 2029 outlook to grow the business $1 billion and to help Valmont to achieve their $35 per share.

So with that, that will conclude our part of the discussion this morning. I thank all of you for joining us and look forward to having more conversations with you later on in the day. Thank you.

Okay. Thank you, Chris. Really some exciting stuff happening in utility. My name is Greg Turi, and I'm here to talk to you about the balance of the infrastructure portfolio. And I think Avner did a nice job of setting up some of the real important work that we're doing there. So first, just some background. I've been with Valmont over 16 years. And I started in Utility. And since then, I've had the opportunity to lead both domestic and international business units.

So what we're going to cover today is grounded in Valmont's core values. So delivering results through continuous improvement. We'll talk about how we are supporting the world's need for critical infrastructure and how we are market leaders with differentiation that aligns with Valmont's core. Most importantly, I'm going to reinforce the message that Avner delivered in the strengthened portion of his presentation, which is how we are applying a scalable operating system to this portion of the portfolio to expand earnings and increase returns. This operating system was born in utility well over a decade ago, and it combines commercial, engineering and operational disciplines to ensure our teams are working on the highest value opportunities.

So it's not about one particular investment or one particular initiative. This is about taking proven processes and principles, applying them across a broad set of businesses to drive incremental improvements that will expand earnings over time. Most importantly, we're going to do this without deploying capital.

So first, let me define the portfolio and the potential of some of the markets that we're supporting. So specifically here today, my portion of the presentation, I'm talking about North America Lighting & Transportation, North America Telecom and our International businesses. And although these businesses operate across geographies and product segments and customer sets, there are more similarities than there are differences. Avner mentioned, we are solving the world's most critical problems, and these problems cannot advance without the products that we offer in the business. These are the dynamics that underpin the long-term secular drivers that we have. Those are around transportation, energy, resiliency, safety and connectivity.

Now over time, one of these markets may have a small cycle or may have a disruption, but we believe between now and 2029, they present a low to mid-single-digit growth CAGR opportunity. And today, we're going to talk about expansion and ROIC, we get these teams aligned, we'll find upside growth in the business.

So before we talk about how the operating model works, let's first cover the on which we're going to create this value. So across these business we already possess differentiated capabilities. And as you've heard today and we'll continue to hear, it starts with trust and expertise. Our teams are the leaders in the industry. We have expertise across commercial, engineering and manufacturing, and it is that trust that allows us to sit with our customers, the voice of the customer and deliver some of the most innovative products in the industry and customer solutions.

This is what underpins our premium market position. We support this position through our global footprint and ensuring that we have reliable delivery and a strong customer experience. With these advantages, we're not here talking about new things we need to solve. The challenge today is how do we scale these advantages we already have more consistently across the portfolio. And this aligns extremely well with the strength and framework that Avner mentioned before. So even though we have strong leadership teams, we have differentiated capabilities and we're in stable markets, we do understand that there are portions of this portfolio that need to improve their performance.

And as Avner asked me to support a larger group of these businesses in the last year, I can tell you, I have done the work to personally go evaluate these businesses, and I found the differentiated capabilities that we discussed, but I also did find some of those improvement opportunities. And we know if we're going to create shareholder value, the improvements that we make have to be repeatable and they have to be scalable. And so to us, that means they have to be systemic. And that's ultimately why we are focused on taking this diverse portfolio of businesses and turning it into a more high-forming operating model.

So now let's get to that operating model and give you some details on what we're talking about. So in simple terms, this is a set of processes and principles that align our teams to work on the highest value opportunities. They ensure disciplined resource allocation and that our commercial teams and engineering teams are focused on asset utilization. The center of this process starts with our roles. And those roles not only own the product life cycle, but they also own product line profitability. And most importantly, they drive end-to-end cross-functional processes that align our commercial strategy with our engineering capabilities and with our manufacturing footprint.

So these teams drive processes that set customer strategy. The gate new opportunities. So it's a centralized role that's saying, yes, no, how much level of investment to each of these opportunities do we want to have. They set the engineering priorities, they drive pricing and they manage mix. So they're managing mix through the upfront portion of the business that then flows into our downstream facilities. Once done, this allows our team to not only price to the value of the product and solutions, but also to the expertise, the resources that we're providing and to the risk mitigation that comes from working with Valmont.

Now this has been highly effective in utility over the years. And in 2024, we implemented this process in North America Telecom. Now specifically in the structures portion of the business by rationalizing some customers and products, driving our engineering processes to scale and ensuring that those products that we released aligned with our facilities, we increased gross profit by 600 basis points and improved SG&A scale by 500. Now those are exceptional results. We don't expect them to exactly duplicate, but they do give you an idea of the type of opportunities that are available for us as we implement some of these disciplines.

In the last year, we've implemented product line management in North America L&T and most of our international businesses. And therefore, I'm really encouraged about the momentum we have, and I'm starting to see these businesses start to take on some of the pedigree of our best businesses in Valmont. From an engineering perspective, we talked about -- we've all talked about how our engineers are experts. Well, it's important that we treat them like the precious resources that they are. So we have a high bar for customized solutions for -- in these businesses. Customers that don't meet that bar, we also still provide a lane where they can get a solution that meets their needs with less engineering investment and providing more standardized products to flow through our facilities. When you align commercial and engineering to product line profitability, our facilities gain partners in working on productivity, throughput and their capacity utilization, overall reducing our cost to serve.

So the punchline is that these processes simultaneously ensure that our teams are working on customer value and driving shareholder value. A great example of this is our Telecom components business. So I'll just briefly cover this business. Telecom is driven both by investment and technology cycles. So it's imperative that our teams are very close to our customers. Now our engineers sit at the top of industry boards, and they're well respected in this space. And therefore, we have great connections with the carriers. That allows us to extract the voice of customer, develop innovative products and drive scalable spec position that we can use across the network and customer loyalty.

Now telecom does not only need innovative products, it also needs reliable delivery. And the way that telecom deploys is through a fragmented group of contractors that are typically working on 2-week planning cycles. So what do we do? We built a customer-facing delivery model that combines digital ease of access with local inventory. And today, we support most of our products in less than 24 hours. We support this model with our global footprint. So our teams have the ability to either source domestically or internationally to maximize the customer experience manage our inventory and make sure that our delivery performance is exceptional.

So this is an industry-leading value proposition. And our product line managers come through and price to value, which is why we maintain a premium position in this space. And the end result for Valmont is this is some of the most accretive margins that we have in the business at very low invested capital.

So let's wrap this up and connect to the financial outlook. So as we mentioned before, we're not reliant on one market. And in our modeling right now, we're really not relying on the market for much more than that stability and the benefit of those long-term secular drivers. The low to mid-single-digit growth opportunity that I provided before pros primarily from the work that we're going to do to focus our teams on the high-value opportunities, push our mix more in that direction and align our processes for better throughput.

So we scale this through common systems and tools and new supply models. And by after we scale that, the margin expansion comes first from better value propositions, that premium pricing, SG&A leverage through our teams and then better operating leverage in our facilities because we've managed the mix and gave better throughput to those. So we've seen the results of this in Utility. We've seen the results of it in North America Telecom. We're starting to see the results of it in some of these businesses. And together, this is an incremental $3 EPS contribution. And just for clarity, North America L&T, North America Telecom and the International Infrastructure businesses are the ones that are contributing to that $3 EPS. And again, we're not going to deploy a lot of capital to get this done. Avner has the teams aligned where our high-value opportunities, utility are getting the capital. We have a challenge to execute this, and we can do it without deploying substantial capital.

So just quickly to conclude, our markets are stable. We're in market leadership positions. We have great momentum moving forward. So in our plan, there is $200 million of incremental sales and $3 of incremental EPS. And just say, as a leader who's been at Valmont for over 16 years, has worked intimately in this model in the utility business, I have extremely high confidence that these results are coming. And once we unlock the value of the portfolio, there will be more.

So thank you for your attention. This concludes our morning presentation, and we're going to move to our first Q&A session.

Okay. I'd like to invite Avner, Chris and Greg back up on the stage.

[Operator Instructions] Start with Brent.

Brent Thielman with Oppenheimer. I guess just the first question in terms of the $1 billion in incremental utility revenue by 2029, all the discussion about AI and commercial excellence, all the things you guys are doing internally, just talk about how much more CapEx that's going to require to get you there?

Yes. So I'll take that question, Avner. This afternoon, a little bit later, John Schwietz will talk more about the specifics. But in general, we're executing some of the capital for the period that we're talking about, but we also see this market extending beyond 2029. And so there is some of the capital in the plan that is not supported with the revenue and the growth that falls beyond that time period.

We're going to see we're going to have a bridge there. It's going to show $1 billion of CapEx. We're going to show $750 million more geared towards these businesses, and we're going to get a little more detail. But overall, we have enough CapEx to support this plan beyond. And as we get more and more throughput through Shannon and Amit, we have opportunity to reduce the actual capital spend. So we're kind of -- as we go forward, we look ahead a year or 2, we make sure we have all the plans in place. And as we advance, we decide if we could get it through other actions.

Just with the customer plans, you talked about becoming larger, more complex, bigger projects. Can we think about the investments you're making, could that allow you to add new Alliance customers to what you already have?

Definitely. Yes, that's the intention. As we're adding the capabilities, as we're adding the capacity, as we're keeping some of that bid capacity open, that's exactly what that opportunity is. Take these strategic customers, bring them in, satisfy them and then bring them on in a more long-term contractual basis.

Brian Drab, William Blair. A couple of questions on the Utility business. The $6.7 billion pipeline is enormous, but you're already at a really strong run rate in that business. I think it's about $1.7 billion run rate that you're at now based on the first quarter, if you extrapolate that out to a year. What percentage of your -- if you take $6.7 billion and you divide it over the 5-year period, that's $1.4 billion a year. So like what percentage of your expected utility revenue is in that pipeline? Like what kind of probability do you put on the projects in that pipeline in that $6.7 billion? And then kind of where does the rest come from? And what visibility do you have to that?

Yes, great question. So a couple of things. First of all, for that pipeline that's out there, in our business. Some of this sits near -- some of it sits further out. So as this goes '27, '28, '29 and extends, it becomes a little bit more -- I wouldn't say volatile. It moves a little bit more. And so we have this pipeline through our customers, that's their plans. Their plans do change over time. So we try to take a very conservative approach to that. We know that, that pipeline is there. But we do know, based upon the $1.4 trillion of capital and the customers' published capital plans, they'll spend the money somewhere. And so we have the confidence on that portion of the business.

For the other work that's outside of these alliance customers, it historically represents 30%, 40% of our volume. We also have confidence in that today. Where does that come from? What we see through the request for quotation that are coming in is that pipeline is big. It's just not specific to Valmont. So we didn't put that in our numbers, but we do have high confidence. We win a portion of that work. We are the leading shareholder in that work. So we have confidence that some of that work will also come to us. So when we put the 2 together, we have this visibility based upon history, based upon what we know we've won in the past, we feel good with what we see.

And let me just add a little bit more flavor to that. Thanks, Chris. First of all, just to your math question, 6.7 billion is more than 80% of the sales utility need to achieve throughout this period, right? So high level of confidence. Chris talked about the bid market, other projects coming online. So a very high level of confidence on the overall. And these are specific numbers. We know what our alliance customers are spending capital on. We know the work we win. In some cases, we're sole source. In some cases, we're not. So this is pretty clear. This is strong visibility. Chris says things could move in and out, but we have high confidence in this visibility because we talk to our customers every day, and we see where they're spending their money.

You said it covers 80% of the 5-year?

Yes.

I'm going to have to look at that math again. But my follow-up question was just I want to make sure I'm framing this right in my mind that if you're at a run rate today of over $1.6 billion, $1.7 billion in the first quarter, and you're going to grow 13% as a CAGR over 5 years, at the end of that 5-year period, you're going to be doing like $3 billion in revenue in this business. Is that close to $3 billion in utility sales? Is that the...

A little bit less than -- on an annualized basis, yes. But if we add -- when we talk about the $1 billion, that's on an annualized basis of $1 billion extra at the end. So fundamentally, if we go from $1.5 billion, we're looking at about $2.5 billion in the 2029.

Yes. And don't look at every quarter specifically, right? We do see that projects move in and out. We had an exceptional Q1 quarter. But it's not linear, and this is based on a bottoms-up kind of gets us to that $2.5 billion.

Justin Bergner with Gabelli Funds. Very good discussion this morning. So you show a 10% serviceable addressable market growth over the forecast period, and you're forecasting 13% growth in your utility structures business. So 300 basis points better than the market. Can you maybe decompose that between the benefit from having more transmission in your portfolio than the serviceable addressable market and sort of outgrowth of the market that you expect?

Yes. Great question, Justin. Thank you. I'll start with Transmission. Transmission, the largest portion of our market. The way we're modeling this is strategy number one, make sure we maintain our leadership position in those core customers. We show that growth in that market at or slightly above market growth. Where we see kind of the incremental growth is coming from our substation market and our distribution market. From a dollar standpoint, transmission is very large. And so I think the dollars that come from the growth are going to come from transmission. For substation and distribution, we're penetrating the wood market, coupled with the substation market is on fire. And so there, we have capacity, competition doesn't have the capabilities that they have necessarily. So we see taking market share in both of those 2 locations. Hopefully, that answers your question.

That's very helpful. And I know that your utility forecasts are built off of some third-party estimates for market growth. Coming out of the panel discussion, how much sensitivity is there in those market forecasts to lower population growth that was mentioned as a constraint. But I mean, it would also be a constraint to some degree on demand. I assume it's not fully baked into some of these third-party market forecasts. But I imagine that's something you guys think about.

You're spot on. A couple of things. From a market standpoint, I think Jean said this, the market growth is there, but we factored that back. So we see capital spending down. We've kind of factored in those governors, as I think Jean called it. We tried to factor those into this market outlook so that we're very realistic. We're trying to be what's real out there. In reality, we don't base necessarily our forecasted projections on the market. We're looking at the market, and we're not saying, well, therefore, we're going to grow. We then take a look at specifics.

So this kind of falls back to now our specific customer feedback, specific capital spend, specific projects that we know. As we take these 2 things kind of separately, we can triangulate to say, hey, these are coming in we're something reasonable. But the growth that we see regardless of the market, that's the projection of growth that we're seeing, and this is coming directly from our customers or the level of bids in the market and what we know we typically get from that bid market.

Question, Pete?

Pete Grondin from Pennant Capital. Great job this morning. On your projections, obviously, you talked a lot about the market and market sizing and so forth, which are great. I'm curious when you think about the projections, how much you've thought about your position as part of an oligopoly and the pricing power you could potentially have? Did you factor that in at all? Is this more just top down? Or have you factored in sort of more idiosyncratic and sort of the pricing that could come from such demand?

Great question. The answer is what we've assumed in this model is not much price. We've assumed kind of a -- just the current rate of price. And so much of what you're seeing is volume. Absolutely, the price component will come in. So as we continue to see supply/demand, we're pushed through pricing discipline, we pushed our pricing to understand where are we coming in, I think there's upside.

I have a question from the chat from Tomo Sano with JPMorgan. He asks you rolled out the innovation initiatives and automation for a few select plants. What innings are you in as you scale out through other locations within the organization?

Would that be Utility specific or more as we scale out across more of the...

I think you can start with utility.

Yes, yes. So I would say we're in the mid-innings, if you will, maybe the early innings. We have 16 fronts that we're adding capacity on. Shannon had time to speak of a couple, but the reality is this is happening across all of our manufacturing locations. If you think about what we do, we have a constraint somewhere in one of our factories or somewhere in our system. We constantly break that constraint. And the law of physics, that constraint moves somewhere else. This is a never-ending process. We break the constraint, it moves. We look at what the next constraint will be. So on 16 different fronts physically, we are breaking these constraints and moving capacity forward.

From a front-end standpoint, engineering grafting, we do the same thing. What are our constraints? What do we see when we fix this? What do we see coming next, and we're constantly bringing this. So I would say we're in the early innings. I don't know that we'll ever not be in the early innings because it's a never-ending process of just continuous improvement, if you will.

Yes. And I'll just add a little bit of color to that. Thanks, Chris. is, first of all, on AI, you heard Amit. I mean, definitely, that is early innings. Very positive, some of the results that Amit shared, conservative in my mind, but there's a lot more to come from AI. And we're not even talking about physical AI, right? That's another lever that is just barely getting started. So there's a lot more to come. And what's great about our culture, about our employees, about our value of continuous improvement. Every day, our employees go into our plant and they say, how can we do things better? How can we get more throughput? How can we support our customers? So this is coming from many different directions, and the momentum is just going to keep on building.

And that's the power. It's coming from many different directions.

Another one that came into the web. Chris, I'm going to start with you on this one. John Braatz with Kansas City Capital. We hear more and more talk about public resistance to data centers, increasing utility bills and now taxing data centers. Should the political atmosphere change in 2028, are there real risks to the current industry forecast for the utility spending plans? And that might be one that you want Jean to weigh in a little bit on as well.

Yes. Jean, do you want to take this one to start and then I can follow up.

A lot to unpack. I think that the demand for AI is sort of unmeasurable. I've had some side conversations with and about what you all are doing and you're scratching the surface in terms of what can be done. And we're doing that all over the country, all over the world now. So while there -- I think there's going to have to be maybe less bravado on maybe some of the data center developers in a way of looking at how do we integrate ourselves into the communities better, maybe more distributed data center capacity instead of big concentrated centers, we distribute it. And then there will be the balance of balancing some of -- as we talked about, one of the governors is how do we keep prices at a manageable level.

Thank you, Jean. A couple of other things that I would just comment as a follow-up. As we look at the market, data centers are only one part of the equation. We have multiple long-term drivers that are in play. And so from an overall holistic standpoint, these drivers still exist and these drivers are still going to be there. Artificial intelligence and data centers aren't the same thing. AI certainly is driving data center. But data centers are here. I have a smart watch on. It's going somewhere to the cloud to a data center. We all phones -- they're going to the data center. We watch Netflix last night. They're going to the data center. So I don't know that data centers stop. These drivers exist. They're long term.

From a short-term standpoint, I'll say the $1.4 trillion of capital that our customers now have in front of them, I don't see that reversing. That is capital spend that they have in their plans. So that's going to be implemented. We do watch affordability. We've been to many conferences as you all have here over the past years. And we see this growing understanding from the hyperscalers. They're the ones that are going to have to pay for this that's coming on. They've got deep pockets and they're very willing to spend that money because they know that they need this.

So I would say, from a rate case standpoint, we're watching that closely. That's the press. That's what's going on. But I'd say from a hyperscaler, they're doing a lot working with utilities to make sure that doesn't flow through to the end customer.

Brian?

I realized that forecast is 4 years, not 5 years. Sorry, that's why you looked back at me and you guys think I'm idiot or that was a question.

No, no, I was doing the math.

I'm sorry about that. I should know after 20 years of this job to not ask questions that involve numbers real time like that. So -- but on that forecast, can you comment on 2 other things. What assumptions do you have around the price of steel? And secondly, I'm just thinking back to like the 2012, 2013 time period when all of this capacity came online and margins compressed. And why is this time different?

Yes. You've been around for a while. I appreciate those questions. First of all, from a steel perspective, we've assumed neutral. In our business, steel escalates, de-escalates. We haven't taken that into consideration. And really, from a customer standpoint, they don't take that into consideration for their budgets either. But the best we know today is what's the current level of steel, what's the current level of pricing. We've tried to hold that constant so that we're really looking at this from a volume perspective. Steel goes up, we see that price escalating. Steel comes down, it escalates a little bit that ebb and flow, but we've held that constant. As compared to 2013, '20, that was the CREZ built out in Texas. So it was that major project.

A little bit different today. These drivers are -- they're larger drivers. They go across a specific project or a specific customer, which is CREZ is a very isolated thing. And it was the gold rush. Everybody rushed in. They added a bunch of capacity, the thing spiked and then it came back down. This isn't the same thing because these really are durable. They are extending. This isn't going to be a 1- or a 2-year build-out. This is going to extend. As Jean and Joe talked about, there's no way, in my opinion, all of this 65,000 miles of grid plus the hundreds of thousands that need to be upgraded is going to happen in the next 3 years. This is going to go on and continue on for a decade. So it feels smoother. I think it is smoother. This is multiple customers coming in as opposed to a couple down in Texas. So that's my perspective.

Yes. And I'll just add, right? 100%, but we do look at the capacity. We look at it very close around the whole industry. We see what our competitors are doing. We see the demand. We keep on monitoring that. This is our belief. We believe there's going to be a lot of demand, but it's something that is one of our KPIs that we watch for.

We learned a hard lesson back then as did the industry. I think we've come a long way in terms of our process, our diligence in understanding that market. We also have people almost all of our team. They live through that period. They live today. They remember that. They understand that. So there's a lot of knowledge in our business today. But back then, did we see everything coming? Not the way we should have.

Time for maybe one more before the break.

Just another market question. The 6% CAGR on utility CapEx, what's the implied rate increases supporting that? Should we assume it grows with CapEx? How are you thinking about that?

Yes, yes. Again, I think we've held that rate increase piece constant because we don't know where that all leads. From that number that you see, it actually is a little bit more than that, and we've factored it back for the things that we see being headwinds. So we've tried to take a conservative look at that level of growth in the capital spend. And as Jean said, it probably needs to come up. And so I think there's this pressure to actually increase that, and that gets back to the $1.4 trillion. It went up 21% versus the previous 5-year outlook. We feel that, that could continue to rise. So it's a relatively conservative look at what that growth in capital spend is.

Great. Okay. So that concludes the first Q&A session for this morning. We're going to take a 15-minute break. So be back here just before 10 minutes to the hour, and then we'll resume with our Ag business. Thank you, everybody.

[Break]

So at this time, I would like to welcome to the stage, Darryl Matthews. Darryl leads our Global Ag business.

Good morning, everybody. We're going to talk about Agriculture and take you into a little bit about Agriculture and a little bit of background on that. I'm Darryl Matthews, as Renee said, President of Valmont Agriculture. I've been in agriculture for 30 years, been in both the crop protection industry, and I've also been in the ag technology space for quite a period of time. So I'm excited to be here. Look forward to talking to you about irrigation and what's happening in irrigation.

I think everybody in this room probably started this morning with a protein shake. And I'm going to talk to you about what's happening in the industry today and how much we're seeing protein expansion, as Avner talked about that earlier. That is driving some of this irrigation expansion, also weather volatility that we see every day and food security.

Agriculture at Valmont, we are a leader in mechanized irrigation with the right to win globally, anchored by Valley center pivots in our dealer network. We've got a clear alignment with Valmont's path to 35. We've got durable end markets focused in food, water and productivity. And then I'm going to talk to you about technology and aftermarket. It's our key strategy for our margin expansion. We're positioned in essential growing markets. International markets provide growth opportunity, but we're being selective to ensure quality over quantity. Ag's installed base creates a long-term recurring revenue base and an opportunity for margin expansion, which is unique to agriculture, this reoccurring revenue opportunity that we do have through our technology and our parts.

Let me take you through an overview of the business. We are approximately $1 billion in total revenue with 50% of that revenue in international and 50% of it in North America. After a few one-time 2025 adjustments, margins are back on a normal mid- to low teens trajectory. Our margin profile, as you can see, is 14.8% in Q1 '26 as our operating margin. So we've got a clear path to structural expansion.

Ag is transitioning to an improving margin business. Our portfolio today, we have an integrated offering of equipment, aftermarket and technology, enabling large-scale irrigation projects and international growth. 74% of our revenue is in irrigation equipment and 26% of it is in aftermarket and technology services. Every pivot we sell creates a long-term revenue annuity of $50,000. These pivots sit in the field for approximately 30 years. So it's important to understand that there is this long-term annuity that continues to renew through both the technology and the parts and service for that piece of equipment.

We've got strengthening margins via growing our aftermarket and tech. And our AgSense 365 digital platform enables differentiation in the marketplace. I encourage everybody in the room to take a chance to look at AgSense 365 and the technology that we have sitting outside that you can see how a pivot is run today and how much technology is in this business today. Our competitors sell equipment. We sell an entire ecosystem and a life cycle to our customers.

We're well positioned to capture long-term secular growth drivers. Ag's growth is structurally driven. Macro tailwinds of increasing food demand, protein shifts and needed productivity improvements are critical to our strategy as we go forward. As Avner alluded to, a 20% growth in global protein consumption is projected by 2035. 79% of production growth must come from yield, not an acreage increase. We are not making more acres on earth today, so we need to increase productivity in the current acres that we have today. Addressing this productivity challenge requires an additional 120,000 new center pivots.

Irrigation equals the highest ROI solution to this opportunity and productivity challenge. Valmont has the largest installed base with a 40% market share in a $2.5 billion serviceable addressable market. Pivot irrigation is also scalable, and it's a very high-efficiency solution. It offers a 38% water savings and a 71% yield improvement relative to rainfed crops. That drives a less than a 3-year payback period when you purchase a pivot. Our market leadership lets us know our customers better and serve the most profitable farm operations. Valmont Ag sells productivity and ROI to our customers.

I want to talk about the global opportunity at Valmont in agriculture, and I'm going to break it down into 2 regions: North America and International. We are currently below our 60-year average unit sales and at a historic floor of center pivot demand, which has been met 5 times in the past 35 years. We've been in agriculture for a very, very long time. We understand the agriculture market. This is something that we all need to recognize as Valmont. In North America, our sales over the last 35 years have shifted from 13% being replacement pivots to over 50%. This drives a more consistent, predictable revenue stream.

Farm consolidation in North America is driving double-digit growth in our strategic large acreage accounts. Large farms have a 3.5% to a 9% higher operating profit and continue to expand. Large operations invest in regular equipment purchases, making, again, as we transition to this replacement and to large accounts, this revenue opportunity more consistent. Internationally, the market fundamentals remain supportive of long-term growth. In Brazil, despite short-term headwinds, irrigation investment will continue as it ensures multiple crops and provides superior ROI relative to anywhere else in the world. 2026 represents the bottom of the cycle from our internal estimates and the 60 years that we've been in this business.

What is Valmont Agriculture's sustainable competitive advantage? At the core of our Ag business is a durable competitive moat, starting with our over 600 dealer network, which gives us an unmatched proximity to the customer and drives both equipment and aftermarket growth. We've built a significant installed base of 250,000 pivots globally. That's critical because it creates the reoccurring revenue stream through parts, service and the technology that I've been taking us through today. We are differentiated through technology where platforms like AgSense 365 are helping farmers improve uptime, reduce inputs and ultimately drive better yields. This ties directly to our value proposition.

We're delivering measurable ROI for our growers. And underpinning all of this is Valley's been in this business for 80 years. We're trusted and we perform in the field.

Growers look at a valley pivot much like the equipment they drive today, they're very proud to tell somebody that they own a Valley pivot. We are trusted and we perform in the field. AG is fully integrated into Valmont's long-term path to $35 EPS through strengthening our margin and mix profile. AG strengthens Valmont's value creation model.

Our installed base of 250,000 pivots globally drives aftermarket and technology growth. Aftermarket and technology is our primary driver of our margin expansion and recurring revenue growth.

Our 40% global technology penetration creates a strong recurring revenue stream with a runway for improved adoption and continued double-digit growth. I mentioned earlier, every pivot creates a $50,000 parts opportunity over its life cycle, which results in a $1.3 billion underpenetrated aftermarket opportunity for us to go and capture.

Our B2B e-commerce platform offers in-park identification and ordering directly from your cell phone. Our installed base creates a predictable aftermarket demand, and this is a key contributor to our margin expansion and EPS growth.

Next, I want to take you into our technology, and I'm going to share with you two technologies that we have today and share what that looks like and how that operates for a farmer. What you're about to see is a great example of how we're evolving beyond equipment into a more connected technology-enabled platform.

This is exactly how we're driving higher-value recurring revenue through technology and pivot innovation while strengthening our relationships with growers. Let me show you what that looks like today in practice.

[Presentation]

As you've seen in the video, machine diagnostics is what we were showing there. It creates multiple benefits. First for the customer, which is increasing productivity and reducing downtime and cost savings. It's a proactive service opportunity for our Valley dealers. And lastly, for Valmont, resulting in higher part sales and increased stickiness with our customers. Our installed base all of a sudden becomes a data plus services platform over a period of 30 years.

This is the future for scaling digital revenue for Valmont. Next, I want to talk about another technology in our portfolio, which is irrigation scheduling, which is the application of water across the field zone by zone according to the crop type and the soil type across the field.

Irrigation scheduling brings together our technology suite, resulting in a 15% reduction in water and energy use and an 18% yield increase in the example shown here at Terra Roxa farms in Brazil.

Irrigation scheduling has a 90% retention rate, showing the value growers see in this technology. I've shared with you two technologies and how much it drives for a farmer. For growers, it increases their ROI and it offers improved efficiency, therefore, resulting in a significant retention rate that we have in these technologies once growers see them, feel them and touch them. We're also capitalizing on increasing emerging market growth opportunities.

Brazil is massively underpenetrated in irrigated acres, which equals a multiyear growth engine. As you can see, there's a 6x opportunity in growth in irrigation acres in Brazil. In Middle East, Africa, water scarcity and food security is policy-driven demand, and we estimate a 17% increase in cereal production over the next 10 years.

Our international growth is disciplined and not targeted only at volume at any cost. It's disciplined, and we're looking at every opportunity and what aligns to the core values of Valmont. AG delivers a clear credible contribution to Valmont's $35 EPS. Margin expansion that I discussed is driven by our large installed base in the replacement cycle, our aftermarket growth and technology penetration and operational improvements.

AG is margin accretive, cash generative and an incremental EPS contributor at the baseline scenario. This assumes no market growth in AG, and we achieved $2 EPS over the period. So in summary, AG delivers a clear credible contribution to $35 EPS. We are a market leader in pivot irrigation, margin accretive through our aftermarket and technology double-digit growth. AG contributes mid-teens operating margin at our baseline scenario and approximately $2 of incremental EPS.

But then I want to talk about in the mid -- in our mid-cycle scenario, AG is high teens operating margin and greater than $2 incremental EPS. We believe during the planning period, something will happen in agriculture will begin to pick up, and that's when we see this opportunity of high teens operating margin when we see an adjustment in the market in agriculture. AG enhances the durability, quality and upside of the Valmont model.

Thank you very much. Next, I'll hand it off to John Schwietz, Chief Financial Officer of Valmont, and he will discuss our path to $35 EPS.

Thank you. All right. Good morning, and thank you for being with us today. My name is John Schwietz. I've been with Valmont for 17 years, half of the time with the utility business and half of the time with the agriculture business.

Today, we are pleased to share with you the exciting prospects that we have to create durable long-term shareholder value at Valmont. At Valmont, we see a clear and achievable path towards delivering $35 of EPS by the end of 2029. Now that path is supported by multiple initiatives that are already underway.

First, we are building on a strong operational foundation. This is through actions that we've taken over the last several years to optimize the portfolio, streamline operations and improve execution throughout the business. Second, we continue to drive organic revenue growth. This is particularly the case in our Utility segment. Third, we continue to see opportunities for structural margin expansion.

This is through commercial initiatives, operational excellence and scale leverage, we expect margins to continue improving over time. And finally, we are highly focused on cash generation and disciplined capital allocation. We are deploying capital to the areas of highest return for long-term value creation while maintaining a strong balance sheet and investment-grade discipline.

Taken together, these elements create a framework for sustainable EPS growth and long-term shareholder value creation. As Avner highlighted, this growth outlook is based on execution against clear and achievable value drivers and does not depend on any aggressive assumptions.

That point is important because integrity is a core value at Valmont, and it is central to how we think about value creation. We have already made strong progress in improving the quality and earnings power of the business. While revenue has remained relatively stable over the past several years, we've seen significant improvement in profitability and earnings generation.

Portfolio realignment efforts, commercial actions, operational initiatives and disciplined capital allocation have all contributed to meaningful earnings expansion. We have also been intentional about focusing on the areas of high-return probability and strategically exiting low-return areas where appropriate. The impact of our actions is reflected in our results.

We expect operating income to grow from $473 million in 2023 to an expected $633 million at the midpoint of our 2026 guidance. That represents an expected 10% compound annual growth rate of operating income. Meanwhile, we expect to increase margins from the low teens in 2023 to the mid-teens expected in 2026.

On the EPS side, we expect to grow EPS from approximately $15 a share in 2023 to an estimated $22.50 at the midpoint of our 2026 guidance. That represents an expected 14.5% compound annual growth rate of EPS. As you can see, we are building a structurally stronger business. Over the past few years, we have proven our ability to expand earnings even without meaningful revenue growth. Now with the growth opportunities right in front of us, the next phase of value creation becomes even more powerful.

Valmont continues to generate strong and durable operating cash flow. A few things are driving this. First, continued margin expansion through commercial initiatives, operational excellence and scale leverage. From 2023 to 2025, we have improved operating margin by 180 basis points. Second, disciplined working capital management remains a source of incremental value creation for us. Through operational execution and focus on efficiency, we are improving working capital productivity. And third, disciplined investment decisions are enabling us to generate more cash with greater efficiency. Strong cash generation gives us flexibility. It allows us to invest in high-return growth opportunities, fund strategic capital expenditures, support shareholder return of capital and maintain a strong balance sheet.

Speaking of balance sheet, we consider our balance sheet at Valmont to be a competitive advantage, and we currently operate with net leverage of approximately 1.1x EBITDA. This provides substantial flexibility while still allowing us to maintain a conservative fiscal posture. Our fixed term debt schedule is very advantageous with our next maturity not until 2044. We also maintain nearly $1 billion of total liquidity and continue to hold strong investment-grade credit ratings from both S&P and Moody's. Even with increased investment activity, we can still flex leverage up to approximately 2.5x EBITDA while remaining consistent with our investment-grade framework.

Our balance sheet strength gives us flexibility to invest in attractive growth opportunities and supports continued shareholder return of capital. This combination of low leverage, strong liquidity and robust cash generation creates significant optionality for us for future value creation. Our capital allocation framework remains highly disciplined and balanced. At a high level, we are allocating operating cash flows across two broad priorities: growing the business and returning cash to shareholders. Last year, we allocated capital across both priorities equally. Looking ahead, our primary focus is investing in high-return organic opportunities.

We are increasing capital expenditures, particularly because we see high-return opportunities in Utility to expand capacity and throughput. In Utility, we are currently seeing over $1 of annualized revenue for every $1 of CapEx deployed. We're seeing elevated ROICs and accelerated payback time horizons. Our second priority is shareholder returns through programmatic share repurchases. We are currently in the process of executing against a $700 million share purchase reauthorization.

We also remain committed to shareholder returns through consistent dividend growth. On the M&A side, we pursue opportunities which have a clear strategic fit. These are targets within our core businesses or in close adjacencies where we have a clear and established right to win. All targets must meet strict financial criteria, including EPS accretion and ROIC thresholds.

As you can see, capital allocation at Valmont is highly intentional. Now as Avner highlighted earlier this morning, our path to $35 of EPS is supported by clear achievable value drivers. And this outlook is based only on organic initiatives that are already underway. The underlying drivers in our businesses are very durable. And although this projection goes through 2029, the opportunity horizon stretches well into the next decade. Our most significant opportunity remains in Utility, where we see a clear path to $1 billion of incremental sales and $10 of incremental EPS.

Our second driver, strengthen to unlock efficiency and performance. Greg highlighted opportunities in the broader infrastructure portfolio to improve the strength and scalability of that business through commercial initiatives, engineering initiatives and operational excellence.

Darryl talked about in AG, the opportunities that we have to drive aftermarket parts growth and improve the penetration of our product tech. Altogether, we expect these strengthened efforts to contribute $300 million of incremental sales. That would be $200 million of incremental sales from the broader infrastructure portfolio and $100 million of incremental sales from the agriculture portfolio.

After taking into account a tax normalization of $1 of EPS, we expect a net $4 of incremental EPS from this overall value driver. Finally, in Enable, we ensure optimization of capital and resources to the highest return opportunities, including advancing disciplined share repurchases.

We expect a further $2 of incremental EPS from these Enable initiatives. Collectively, these value drivers support $5.4 billion of sales and $35 of EPS by the end of 2029. This is a structural and sustainable earnings growth story, and it is driven by long-term infrastructure secular demand, margin improvement, operational execution and disciplined capital allocation.

While $35 of EPS represents an important milestone, it is by no means a ceiling, and we do see meaningful upside opportunities. There are several scenarios where Utility could continue to accelerate as underlying trends drive additional investment in the electrical grid.

As Amit discussed earlier this morning, we are just beginning to see the impact of leveraging AI and automation tools on our business. Those tools have the potential to be a force multiplier for the future. Historically speaking, agriculture should normalize towards more mid-cycle conditions, providing additional upside over time. We are positioning ourselves to take advantage of that cycle once it does turn. In the strengthening initiatives, the broader infrastructure portfolio has the opportunity to create more value than we anticipate.

And finally, our strong balance sheet gives us significant flexibility for additional share repurchases and strategic acquisitions. We expect to generate substantial financial capacity between 2026 and 2029 that will provide us with strategic flexibility. We project approximately $2.5 billion of operating cash flow to be generated between 2026 and 2029.

Meanwhile, we expect to deploy about $1 billion of capital expenditures, and that's mainly to support the growth in the Utility business. After those capital expenditures, we expect to generate around $1.5 billion of free cash flow during this planned period. Now combined with our existing debt capacity, this creates approximately $2.7 billion of capital deployment capacity. That capacity supports multiple priorities simultaneously, growth investments, shareholder returns, strategic flexibility and balance sheet strength.

We expect strong earnings growth and cash flow generation to reinforce each other and create a compounding effect for Valmont shareholders. To summarize, we believe Valmont is exceptionally well positioned for long-term value creation. By the end of 2029, we expect $5.4 billion in sales, 17% operating margin, $35 of EPS and 21% ROIC. Those targets reflect both strong confidence in underlying market opportunities and in our ability to execute operationally.

What gives us conviction is a combination of strong utility market fundamentals, an optimized business platform, strong cash generation and a strong balance sheet. For we know that Valmont is a business that is capable of generating consistent, high-quality compounding growth over time, and that remains our primary objective, creating durable long-term shareholder value. Thank you for your time and for your interest in Valmont. And now I'll turn it over to Avner to conclude.

Thank you, John. So just a few words. Let me close where I started. What you heard today or I hope you heard today is the opportunity is meaningful. But more important than the opportunity is how at Valmont, we convert it into value. We have leadership positions in essential markets, customer relationships that are deep and were built over decades, engineering expertise and operating scale to deliver when reliability matters.

Jean actually just mentioned something that's stuck in my mind is what she said, CEOs of Utility companies are paid not to take risk. They need reliability. They need execution certainty, and that's what we deliver at Valmont. And then we have our strategy around Capture, Strengthen and Enable. How do we capture above-market growth in Utility? How do we Strengthen our broader portfolio and allocate capital to the highest opportunities. That's the system that drives EPS of $35 and our ability to compound beyond that.

So just before I turn it over to Q&A, I want to make one more point. We started today with a video that shares how quietly behind the scenes Valmont has an impact on the world. We help move power, we strengthen infrastructure, we support connectivity, and we support farmers' productivity.

And this only happens because of our people. Passion is one of our core values, and I see that in our employees every single day, how they support our customers, how they solve for complex situations and the pride they bring to their work every single day. And I'm proud to have the opportunity to lead Valmont in this important time in our very rich history.

I want to use this opportunity to thank our 11,000 employees for what they do every day, the passion that they bring to make this world a better place. So just to sum up the morning, the opportunity is meaningful. We have a clear strategy and the team is ready to execute. With that, I want to thank you for spending the day with us, and we will now turn it over to Renee for Q&A. Thank you.

I'd like to invite our 5 executive presenters back up on the stage.

Okay. Once again, a reminder, we've got a couple of mics in the room and chat function on the webcast.

Justin Ages, CJS Securities. On the agricultural business, what has been some of the headwinds to getting the technology out in the field? And does that differ between the North American market and the Brazilian market?

Sure. There is a difference between North America and the international market, in particular, Brazil. Some of the headwinds that we see in the international market is connectivity. Now that's rapidly changing as we see some of the opportunities with satellite connectivity. But certainly, that is starting to become less of a concern. Then the next stage is educating farmers on the capability of the technology. The biggest thing it does for a farmer is that if you're 3 hours away from a pivot and you want to turn that pivot on or off, the opportunity for that is significant in that you don't have all that travel time and you can monitor the pivot to understand what it's doing during that period.

And it's educating them on those things. And so our penetration rate in Brazil is lower than it is in North America. We're significantly higher in North America, and it's an education evolution that we need to move through on the technology. But soon as they see the technology and the opportunity, it grows pretty quickly.

And one more point is right that the farmers in Brazil are typically younger and they adopt technology quicker as well.

Brent Thielman with Oppenheimer again. A lot of detail on the organic growth drivers. I guess I'd just open up as an opportunity to talk about what M&A might look like for you over the next 4 years within the plan.

Yes, I'll start, and feel free to add. We have an active pipeline. We keep on looking at those opportunities that could really help our strategy, right? We're going to look at ones that are, as John mentioned, very close to our core, adjacent to our core. How could we add additional value to our customers? What capabilities can we add? It's either in a product, it could be with a customer, a region.

So it needs to be something that 1 plus 1 equals more than 2. So we have an active pipeline across our entire portfolio. But we're going to be disciplined. We have strong cash. Right now, the biggest opportunities for us are to invest in our business, returning capital to our shareholders, and we look at those acquisitions strategically.

So like I said, it's all organic because we didn't want to put any acquisitions that you don't exactly know the timing or the scale and the size. But it is part of our capital allocation framework, and we'll continue to evaluate them. And as we find the right ones that need to hit our strategic criteria that I mentioned, our financial criteria, they need to be meaningful as well unless they're adding a specific niche for technology or some other offering, but they need to hit our criteria, and then we'll keep finding the opportunities.

Brian Drab, William Blair again. First of all, I want to say 3 years has flashed by. And at the end of 2023, probably many of these people in the room were calling me and investors in general were so concerned you're doing like $3 in EPS in the fourth quarter of '23, $12 run rate, now you're forecasting $35 plus.

So congratulations to the whole team. It's kind of an amazing turnaround and the people that left the stock at that point, probably regret it a lot. On the irrigation business, maybe this is for Darryl. I thought it was interesting in the outlook. There wasn't a lot of focus on the -- you mentioned the international opportunities, but these huge projects in Egypt, I picked up, I think, on your comments that we want to be really disciplined. And I think some of these international projects, the margins have become more challenging.

So I was wondering if you could just elaborate on what the opportunity is within this, like, for example, like the future of Egypt project and some of these big drivers that we've had over the last 5 years going forward and then also Brazil in general.

Sure. So I'll talk about Egypt first. Future of Egypt is a large project, certainly and continues to go on in Egypt of them wanting to drive food security and development and growth of food within the country.

Those projects are challenging in the aspect of understanding what your true cost is and how long it takes to deliver. Often, those projects are 2-year delivery time lines. So you need to be very, very disciplined in when you're quoting and doing those projects to ensure that you are making good money and good return on your assets over that period of time.

And so we're being very, very disciplined in that. The other part that overlays that is you get some challenges in adjustments in steel or you get challenges in adjustments in freight. And so you need to be very disciplined when you're choosing these projects. There are other projects that are also not as large, but offer a lot more opportunities to provide a lot more extra services in pumps, in building out the network and everything else of getting the water to the pivot.

And those projects offer a lot more opportunity in profit and opportunity in bringing more scale to the project. And so we're looking at all of them and making sure that we're being very disciplined in both of those in Egypt. Second part of your question was Brazil. Brazil today -- the big thing to watch in Brazil today is access to credit and where the interest rates are moving to. Today, the interest rate is about 12.5%. That's higher than typically what a farmer expects.

They really start to move on purchasing irrigation equipment or all equipment in and around that 8% to 9%. So a very different market than here, 8% to 9% in this market, we'd all be screaming. They're used to that. 8% to 9% is when we see that market start to move. And that's really what I would be watching as to what's going on in Brazil.

One more quick follow-up on the irrigation space. So within the United States, you showed this chart, I think it's probably related to North America, but the replacement percentage of sales really increasing.

If I could just -- I don't want to be the sound pessimistic, but when I look at that, I think, well, maybe that is also a function of the irrigated acres are not expanding in the United States. And maybe we've gone through the transition from gravity flow or we're far down this path of transition from gravity to mechanized irrigation. Does that percentage of replacement actually kind of indicate that you're kind of fully penetrated in the United States, and it's just this building replacement. And the bigger question is just what is the outlook over the next 5 to 10 years for the U.S. given those trends?

No doubt, the North American market is more penetrated with irrigated acres. There is still flood irrigation in North America that is converting to center pivot irrigation because of the efficiency opportunity with center pivot. We do see that, but certainly, it is slower.

Majority of the growth in center pivot growth is going to come out of international and a higher penetration in that market. North America is slowing. That's why you're seeing the 13% to 50% replacement, but it is definitely slowing in a slower part of the global market as far as irrigated acres.

I'll just finish up the point. I'll just finish up with the point back to the projects in Middle East. I do want to use the opportunity. I just want to compliment Darryl and actually John in his prior role as managing international irrigation.

The performance of our Middle East is over the last several years has been improved dramatically around the profitability, their ROIC. And in fact, when I was in Dubai a little while ago, the entire team understood the actions that they took, the impact it has on our financials and the discipline that they're taking.

So that's a muscle we have now. And it's to Darryl's point, it's not growth at any cost. It's how do we grow, support our customers at the right profile, and we see that in our financials. So really nice job by the team on that.

Justin Bergner with Gabelli Funds again. A 2-part question on AG and then maybe a separate question on capital allocation.

On AG, the double-digit growth in aftermarket over the projection period, how does that compare to recent history? And it would appear that if you were to take your 40% market share in AG irrigation and apply it to the aftermarket, you could have a meaningfully larger aftermarket business than you have today. So I guess, what are the constraints there? Is it the lower penetration internationally versus North America or more competitive forces on the aftermarket side? Just anything you can add.

Sure. So the constraints that we see is more in our international market and ensuring that our dealer network is relatively close to the pivots. The other part is pivots in the international market are relatively new.

And when we really see parts and service demand start to come up is after about that 10- to 15-year period is when it requires more parts, right? So you have to look at the maturity of the market and how long those pivots have been there.

In the North American market, we are seeing and we continue to see significant growth in our parts and service component, and that is a key piece that drives for our growers and for our dealer network is continuing to drive that. We are bringing some other opportunities to the market where we are offering warranty extension and also I demonstrated machine diagnostics.

And that is where we're putting sensors on the pivot. That will appear in the aftermarket component. And we believe that, that increases the stickiness because, again, the grower is starting to see honest phone that he needs to replace a gearbox.

And so we believe that because that's tied into our technology, it's also going to tie into growth in our aftermarket piece. But today, we're around about 20% of our total revenue is aftermarket parts.

And the other part, right, which you identified was giving them better tools like the e-commerce solution, which you implemented and maybe just talk a little bit about that, too.

Sure. So we've got a new B2B. This is to our dealer network e-commerce solution, where you can look at a part on your phone have a 3-dimensional view of that part, you can also look at that part, and it will tell you when you say you need that part that there are other pieces that you need to buy, seals, gear bearings, things like that. And so that technology is new to our industry and really allows that purchase to be done in the field from your phone.

And then quickly on capital allocation. The $2 EPS growth contribution from capital allocation, should I assume like a framework whereby you're kind of either repurchasing shares or doing M&A that is at least equally accretive to your assumed benefit from repurchases and you'll kind of figure that out as the opportunities become available and maybe with an eye towards preserving some sort of leverage, whether it's the current leverage or something close to that?

John, do you want to take that one?

Sure. Yes. That's a fair assumption. So the plan assumes similar to the model that we showed in the presentation, the plan assumes essentially 40% to CapEx, which has a very high return at the moment, as you know, about 40% to share repurchases, 10% to dividend and then 10% to the rest.

That will change, of course, to your point, we are upward disciplined in this process, and we're always leaning into where we see the highest risk-adjusted returns. So as M&A becomes more attractive, if we have good opportunities, we'll lean into that and same with share repurchases. The $2 is share repurchases to directly answer your question.

Dan Moore, CJS Securities. I appreciate all the color this morning. That's been really, really insightful and very helpful. Two questions. One, just you talked about the upside to the 4- to 5-year plan, which there are several.

But what keeps you up at night most, whether it's supply chain constraints? Or what are the biggest risks to the plan from your perspective? And then second, any color on the cadence, both in terms of revenue growth, the trajectory of revenue growth and/or margin expansion over the planning period?

I want to start, John, then I'll...

Sure. I'm going to answer your second question, and I'll give it to Avner to answer the first one. So if you think about the EPS growth and the margin expansion, I think we'll see a relatively stable and gradual sort of uplift over the plan period.

A little sharper this year, I'd say. But overall, I mean, there's no step function necessarily in that. So I'll answer your first question, and I'll turn it to Avner. For me, it's sort of -- we have very, very strong markets. I don't worry about that.

We have a proven ability to execute. I don't really worry so much about that. It's the unknown unknowns for me, of course, being in my position, it's sort of -- it's a very dynamic operating environment. It is for everybody. And I'd say the unknown unknowns is what keeps me up at night.

Well, my answer, but yes, that's pretty much it. I mean we're -- as you could hear from the team, right, we're very confident in our plan. But we got to execute.

We have the right tools. We got the right people. We got the right strategy. So we're confident, but it's a big uplift for us. And keeps us up at night is like what else should we do? How else could we advance? There's hitting these numbers and then there's beyond. So how do we focus beyond the plan? If you ask me what I'm focused today, the team is going to execute on the plan, and we're going to hit the numbers. I want to be here 3 years in our next Investor Day and want to make the day as exciting as today. So that's what I'm focused on is like how do we continue this momentum beyond this plan horizon.

I'm going to take one from the web from Tomo Sano with JPMorgan, and Avner, I'll direct this one to you. Regarding disciplined capital allocation, you've been demonstrating strong returns and divestment over the past couple of years. What has been the cultural transformation for Valmont to achieve their 2029 targets? Specifically, how would you describe Valmont's team and culture to basically ensure that we're not overextending or being a little bit too asserted.

Yes. So we spoke a little bit about the core values. I'm going to mention a few of them. First of all, the mindset of continuous improvement of every single employee, which is one of our values, how do we come in every day and how do we make this company better. And we need to help our employees.

And that's where the resource allocation is critical. We can't do everything for everyone. And that's where we have to be disciplined about the markets that we're participating, the customer that we're supporting. Every single day, we need to decide do we want to support this customer? Do we want to sell this product.

And that is something critical for us to make sure our employees can be focused, giving them the tools through what Amit and Shannon are doing, helping them on the commercial front to understand the market and this culture has been built over several decades, and these are people that come in every day with passion for their work.

I mean, if you come visit any one of our facilities, you'll see the passion in everything that they do in welding, in supporting our customers in shipping. So we're fortunate to have a great culture. We just got to give them the tools, give them the vision and the strategy, which we have. And our employees are excited. They look forward to come in and keep on and serving our great purpose.

Any others from the audience? I'm going to take another one from the web. Greg, one for you. What role do product line leaders play in improving mix, pricing discipline and capacity utilization? And how are leaders held accountable differently under the new model?

Sure. Thank you. It's a great question. It's actually quite different than maybe a traditional business would be. So the product line leaders are owning product line profitability.

So a typical commercial might be looking down from revenue or maybe gross margin. These are looking all the way through -- all the way down to gross profit and how much absorption and leverage we're getting. So first, they start with that. And that's a different model than a traditional maybe GM or MD model who is managing a team of people who are driving their functional excellence.

So they'll set up those KPIs for themselves, and then they'll drive KPIs for the rest of the team that align with ensuring that we get that product line profitability. Well, of course, you want to go to the highest margin opportunities. You want to provide the less value. You want to extract every bit of price you can get and you want to have the best competitive advantage. But it still needs to work through the entire framework that we are working with, which is our large network of factories and facilities.

So the product line leaders are then looking back at, and this is how to the point about managing mix is they're looking about, okay, what do we have planned in this quarter or that quarter? What do we have planned this month or that month. And then they're varying, okay, I'm going to offer this price here. I'm going to offer that price there. I'm going to gate this one, this opportunity, not gate that one.

It changes really the entire mindset of the team where you have maybe an engineering team in the past who's thinking about getting throughput and doing the best for their jobs. Now our engineers are thinking about how much release are they putting to the shops, what's their overall productivity. They're watching what the run rates are.

So it is to and it goes directly what Avner spoke about before, and I'll give Avner credit in terms of the organizational alignment things he did early in his tenure. That's what has allowed us to be able to go do those. And then you add in the culture of continuous improvement, it becomes a full team effort driving product line profitability.

Yes. And to take off from what Greg said, the Utility segment, this model has been in place for 15 years. And so it's a very mature model. We have team leaders that clearly understand their role, they understand the business. It's a machine, if you will, it's a system. And so we have that system in place for the growth driver in our business. And now as we deploy this out further to extend that, it only gives us upside opportunity to further align the organization and to make this be a cultural change for the business.

Thank you. Another one that came in from the webcast, Chris. Why not build a large greenfield plant when demand is this strong? Maybe talk a little bit about brownfield plus as well.

Yes, yes. So first of all, I'll say greenfield isn't off the table. It's certainly out there. And we look at that. We have those conversations. Today, we have a brownfield approach, and then we have a brownfield plus approach. And Shannon talked about that. This is a self-made up acronym here.

The plus approach is utilizing our existing locations. So we have land, we have facilities and just expanding upon those spaces because now we can get the leverage out of our people, the leadership, the fixed cost that we have so that we just further leverage that business. So today, we look at demand, we look at our runway and our plans for capacity expansion. As we see this, we have enough bandwidth and capacity to be able to do it from a brownfield or a brownfield plus approach. As we look further, if greenfield is necessitated as we get to 2030 and beyond, certainly, that's an option for us.

Yes. I'll just add a few things there. A couple of things. One, we can do this very effectively, very cost effectively, both for us, but also for our customers, which is really important.

You heard the pressure on rates as an example and the cost on Utility. One of the reasons they come to us because we could do it a lot more cost effectively than others. Second, when I say than others, we have the system that we've been talking about this morning. It's very difficult to add capacity. It's not cutting a check and finding land and putting up a piece of equipment. It's all the things that we've been talking about having those commercial relationships, having the engineering expertise over decades, the operational flexibility, the redundancy, think about that.

You come to us, there are storms every day. And if competitor has a storm that ends up impacting the plant, they might be done. Not for us. We have that flexibility. So not only the cost advantage, but it's just the ability to add capacity is what differentiates us from the others.

Yes. One more thing. As Avner was talking, it made me think, in addition to all of this, speed is a critical competitive advantage for us, especially today with data centers.

A Utility would put this on, and it may take years in the planning. But today, that's converted. And in the new mindset, they're looking for 6 months. They're looking for 8 months. So this approach from our perspective, gives us a tremendous competitive advantage in that we can bring on capacity faster, which means it's higher value for these customers who have deep pockets and they can spend the money. So it kind of begins to build on itself. As long as we have this approach and this ability, we want to continue to drive it through this kind of mentality.

Brian?

I'm really afraid to ask a question here because I'm going to ask something that maybe you already talked about, but I don't remember you talking a lot about what the incremental margins are in the utility revenue coming online.

I think it's just been really impressive lately because you initially when you announced the capacity expansion, you said 20% or 20% plus and then it was well above 20%. And then I think it was even 25% or higher at one point. This business, historically, when you used to talk about the operating margin for Utility, it was, I think, more like mid-teens.

So how sustainable is that 20% plus margin -- EBIT margin on incremental capacity that's coming online? And given all the initiatives that you talked about related to AI and other productivity initiatives, could it be even higher going forward? So that's the first part.

John, do you want to take that?

Sure. Yes. Good question. Thanks for that. So let's break this up. First, as you know, right now, we break it up by infrastructure and AG in terms of operating margin, what we publish.

What we can say about the Utility product line is that they are accretive to infrastructure margins, to operating margins in infrastructure. So these incrementals that we're experiencing, to your point, are they range, of course, but the mid-20s is an appropriate number, I think, to think about these incrementals.

So certainly, this capacity addition is supporting -- driving up our margins in infrastructure and Utility as well. So we would see that -- to your last question, we would see that to continue to move forward that way as we go through all of our brownfield projects, of which we've got very good visibility of those through the end of really 2028 is when we get the last sort of revenue dollar that would come from those brownfields.

Then we move into brownfield plus, which I don't think would be quite as good. But I think for the next few years, we can assume that those incrementals, what we've said is going to be accurate. Does that answer your question?

Let me just add to that on your next question. So Amit said this, but I'll maybe repeat it just so it's clear, right? When we get some of these initiatives around AI and get more throughput, right, you mentioned this is without more capital. It's without more labor.

It goes right to the bottom line. That is really important. Now it's early days. I'm optimistic. I think Amit and his team and working with Shannon are going to get tremendous benefits. That could be material. Now having said that, right, we came out with targets here, $35, $5.4 billion. That's what we're aiming for. Yes, there's more opportunities. We're going to take advantage of every opportunity to exceed those numbers.

But I feel good about the targets that we gave. Those are the numbers that we're committed to. We're going to execute to these numbers, and we're going to keep on looking for opportunities to get them even better.

Yes. The only other thing I was going to ask is just to take a small step further is just thinking about the return on invested capital in the Utility business, which seems incredible.

You talked initially, again, when you laid out the capacity expansion plan initially, $100 million invested, $100 million in revenue. I think it's actually -- you're getting more than $100 million in revenue on the $100 million invested. The margins are higher.

So am I thinking along the correct lines that this -- you're getting somewhere along the lines of maybe it's like $250 million or maybe say it this way. I'm not going to go that big right now, like $25 million, $30 million in incremental EBIT for every $100 million that you're investing in capacity.

Yes. So broadly, you're directionally correct. So I would say that it depends on the project. But the truth is they are -- the ROICs are very strong in these projects in this pipeline that we have right now.

And working capital is pretty tight as well. So that helps juice the ROICs as well. So it is -- they're very attractive projects is what I'd say.

I'll make it easy, right? So when I get these capital requests from Shannon and Amit or Chris, not once did I have to say doesn't hit our threshold. There is a lot of room between our threshold at Valmont to these projects. They are all accretive. They all have quick returns of 1, 2 and 3 years. Every one of them that comes to my desk and John's desk is they are, let's sign, let's go, let's execute and support our customers and drive ROIC.

Just had a question on constraints for Utility capacity expansion. Obviously, it doesn't seem that capital is an issue. You've got plants. I'm wondering if labor is perhaps maybe the biggest thing holding you back.

And I know you've rolled out training and education for welders. How big a constraint is that? Is that the biggest thing in your worry list? And does it potentially bump up the idea of a greenfield just because it gives you a whole new geography to get more labor?

Yes, yes. Good question. So we think about capacity in terms of that system. So as we're building our capacity plans, we're thinking about the people side just as equally as we are the equipment side.

Today, as we've laid out this road map, we've got a road map for both the people side of the equation and all the engineering, welding, all of those functions to keep up. Based upon our footprint, based upon what we have, we've got that road map to not have that be a constraint. As we look at greenfields, there's the pros and cons of that.

It opens up new labor markets, for example, but it also requires the lack of leverage that we would get just from that knowledge and that leadership that would be right there. So at this stage, with our current brownfield, brownfield plus approach, we feel confident that we have the capacity plans in place to support labor definitely out there is a challenge for the industry. But for us, where we're located, we've got eyes on that plan of attacking that path.

And I agree, right? It's something we need to look very closely. We need to hire a lot of people to get this growth. The advantage is actually in our current locations because we're embedded with the communities. If you look at Omaha, if you look at Brenham, Texas, we're involved with schools and high schools and colleges.

Our name is out there. And when we have these hiring events, today, we get more people than we need. So that's actually, to me, it's going with plans that were already embedded with the communities gives us advantage. People want to come work for Valmont. And in many cases, we're the employer of choice. So but yes, we need to keep an eye. That is definitely something that's going to take some heavy lifting, hire all these people.

You mentioned you're embedded with the colleges. I mean how much of the labor force you need to hire is college educated engineers versus just trained welders? Or is that both welding schools, things like that?

I'd say it's both. Today, what we're mostly hiring, I mean, just scale-wise, it's a lot more welders. We have last I checked 2,110 welders in our portfolio.

So it's a lot more welders than engineers, but of course, the engineers have different scale. So we're going at both areas, and I think we've been very successful just this month, adding a lot of engineers.

And of note, the engineering doesn't have to be embedded with the manufacturing locations. So there, we have a much broader geography. We're able to put engineers in different locations. We have offices all around the country, not necessarily tied to the location of the manufacturing. So that does give us then that geographic expansion opportunity for the engineering side of the business.

We have time for maybe one more. Anybody in the room? Okay. I've got one on the web then Darryl, this one is for you. It's great to see AG margins back in the mid-teens level in 2026. Do you believe that you have now fully addressed some of the customer dealer issues that contributed to some of the challenged performance in Brazil over the last couple of years? And are there any -- is there anything else remaining in order to grow market share and achieve your longer-term projections?

Is that specific to Brazil? Specific to Brazil. Brazil's biggest challenge that we currently have today is access to credit. We've set up a significant opportunity. We've got 23 different options for a grower to walk in the door and say, what are the things that I can do if I want to buy a pivot and most of that is third-party financing, but we're bringing that in the way that they want to do that. Payment system in Brazil is barter and things like that, that growers like to do. And they've got lots of choice on how they can do that.

But that's probably the biggest challenge today in Brazil is access to credit. And they will start to move. I mentioned this earlier, in and around that 8% to 9% opportunity. The other piece with Brazil is access to electricity and getting the electricity to the field to expand and drive that. That takes quite a bit of time to get that all approved. It's generally a region that gets approved and then we show up and start the build-out of the pivots from there. But the biggest 2 pieces, I would say, is electricity and access to credit.

Very good. Well, that wraps up our final question-and-answer session. I want to thank all of our presenters today for doing a fantastic job. I want to thank everybody in the room for coming and on the web as well. A reminder, we do have lunch just outside of this room in the common area. So please join us if you can. And if you have any follow-up questions, please reach out to Casey or myself. Thanks, everybody.

All right. Good mid-morning. It's a nice day today, but we want to still continue the Intellectual Capital. Okay, I'm delighted to introduce another great American company. Valmont Industries is an industry leader in infrastructure products and advanced agricultural productivity. Some of my favorite products to see are the traffic light poles, I remind my kids where they come from and the pivot irrigation that we all know about those giant sprinklers that are just outside of town.

The company was founded in 1946 with $5,000 investment and what I found interesting is Valmont actually comes from a combination of two neighboring Nebraska towns, Valley and Fremont. There's about 20 million shares trading over $500, so it means a $10 billion market cap, which is an extraordinary feat for this company. And I would just report that -- for their latest quarterly earnings were up 27.5% and a record for the company. So we know they're executing and very well positioned to capitalize on global agriculture growth and more recently, the boom in the data centers.

So joining me are CEO, Avner Applbaum; and Senior Vice President, Renee Campbell. And I just want to acknowledge one thing today about this conference partnership because we've been coming out to Omaha for 17 years, and we have grown from a road trip to your facilities to like your market cap, the audience that we've been involved with here. So it is a true honor to be on stage with you, and I thank you for that partnership.

Thank you for the opportunity.

All right. So Valmont, maybe we'll just start with you, Avner. You became CEO in 2023, and the company just had record quarterly results. So how do you envision things going forward for the next 5 years? What are some of your goals after achieving some terrific results in the interim?

Thank you. And great to be here. Thanks for hosting us. And we're in exciting times at Valmont. Like you mentioned, we had record earnings, company is doing very well. And like you mentioned, I joined as -- became CEO a few years ago. And really, our focus was how do we set this company up for success. Aligning our portfolio where it needs to be, setting a strategy, putting extremely strong talent and leadership positions to execute on the next phase of growth.

So overall, we set a pretty simple strategy, which we refer to internally as a Path to 30. How do we get to $30 EPS? And what are our value drivers? And we look at it into 3 buckets. One of them is like how do we capture this growth ahead of us? And this is once in a lifetime growth that we're seeing in some of our areas like power generation, we'll talk about data centers, I'm sure a little later. So what are we going to do as a company? How do we capture putting the right resources, the right capital, utilizing our strength with our relationship, our core competencies to execute on that market. So that is one, capture.

The second part of our strategy is around strength and how do we strengthen these other businesses and positioning them for the next cycle of growth. If you talk about agriculture, that right now the market is in a trough, which is not -- which is typical for this environment, and other businesses. So we're working to focusing to strengthen the foundation. It could be around commercial, it could be around engineering, manufacturing, focusing on those businesses, so they will be ready to be our next growth engine.

And the third part is enable, like how do we enable the company to be successful. A key part of it is capital allocation. Putting the right capital in place, the right people in place on the top priorities, focusing on our people, our talent, how do we train, how do we develop providing digital tools, digital AI to support overall our strategy.

So those 3 buckets, I would summarize as we have very strong secular tailwinds. We have a strategy to execute. We put the capital and the resources and that equals to strong value creation.

So we got the recent announcement about the new CFO, John Schwietz, but he's been at the company insider since 2009. So not a total surprise on that. Maybe you could talk about him being elevated to this new leadership role. Does this signal any change in sort of the strategic views of capital allocation?

Yes. Thank you. So very excited about our new CFO, John Schwietz. He's been in the company for over 17 years, operated all parts of our business, infrastructure, agriculture, domestic, international, a lot of financial roles, business roles, which I find very important for a CFO to have a deep understanding of the business. So John has a deep understanding of our business, great part of our culture and the organization, and it's going to really help us to execute on the next phase of strategy.

We absolutely did not change any of our capital allocation philosophy, where we're first investing in ourselves and then we returned money to our shareholders. And ultimately, we are well on our way to keep on performing towards our overall strategy. So no change, just the exciting part of having John joining our executive team.

So in the latest quarterly call, and as you mentioned, the ag cycle that we're in, a little more challenging for some of your farmer customers. And you talked about providing support to them. I'm curious how do you do that? What does that actually mean? And then how important is that in the longer-term relationships with those customers and retaining them?

Yes, thank you. So this is the absolute right time for us to be leaning in and supporting our growers. As you heard from our friends at Lindsay earlier today, and as Avner mentioned, it's a very challenging time right now for growers, particularly North America growers. Brazil, they're facing higher input costs, higher fertilizer cost, availability of fertilizer, as an example, higher fuel cost. Interest rates have remained elevated, especially in Brazil, very tight credit markets.

And the price of key grains like corn and soybeans have not risen to the level where farmers are feeling very profitable. Their margins are pressured. And there's just a lot of headwinds. And as Avner mentioned, we're in year 3 or 4, I think of this current trough. So as the leader in this industry, and we founded the industry many years ago, we feel it's our responsibility to make sure that we are staying very close to our growers and supporting them during this time. It really starts with our dealer network.

We have the largest dealer network in the industry, the most profitable dealer network. They are exclusive to the Valley brand. And we have over 600 globally serving more than, I think, 60 countries outside of North America. That dealer is the face of the Valley brand to that grower. And we need to ensure that they are equipped very well to help support in terms of aftermarket service, service and support, warranty support, and helping our growers be as efficient as they possibly can, especially in this environment.

So it's really about farm productivity. And we heard Randy mention this a little bit earlier today. Water is still the #1 determinant of crop yield. And so we know that our growers can achieve at least a 25%, if not higher, yield improvement through pivot irrigation. So it really starts with that. And the ROI for a grower, even in a higher interest rate environment, is still very, very compelling. It's less than 5 years. In Brazil, it's even less than that because they can grow 3 crops a year, only though by using pivot irrigation.

So it's about helping them become more efficient, but it's also about helping them reduce input cost. So paired with the machine is our technology solutions. And not only can we help them start and stop the pivot remotely, which saves on time and labor. But we also, through our tech offerings and our AgSense 365 platform, we can help them with irrigation scheduling. We can help them with variable rate irrigation, so that they are optimizing the amount of water that is put on the field at any given time. So that also saves cost or at least helps them become more optimized or efficient with their cost.

And coupled with that as well, another form of support is parts. So when markets are challenging like they are now, that farmer may defer the purchase of a new machine for a period of time. But what that means is they're continuing to repair the machines that they have. So aftermarket parts, service and support is critical. We launched an e-commerce platform, I think, about a year ago, maybe a little over a year ago, and we've rolled that out in the process of rolling that out globally. And what that allows our dealers to do is to be very present in the field, ordering parts directly from us or from one of our distribution centers around the country, very much real time.

So it's really speed to market. And if you're a grower, and it's the middle of July and it's 100 degrees out and there's been no rain, you can't afford to have your pivot down for a very long period of time. So enabling the dealer to very quickly see what part is needed, order it and have it shipped and delivered direct to the field immediately is critical to them. How that translates for us then into revenue over time? It's -- it is -- we have a great base with our installed base of machines as well as new machine opportunities.

But that recurring revenue and aftermarket parts, which are part of the value drivers that Avner mentioned just a few minutes ago, helps us remain very close to the grower. The stickiness with the grower is important and really strengthens that partnership that we have with them through the dealer.

And I guess there's some secular or more cyclical agricultural components. But obviously, the Middle East has a unique dynamic in itself. And I wanted to just place this question to you. I mean we're getting updates that it's moving along, but we'll have to see. Maybe you could just give us a little feedback on 2 scenarios. First, a more quicker or a quicker resolution to this and some normalcy. What is that? How do you feel about that in terms of the impacts and the flow-through and getting back to some normalization?

And then on the other hand, if we do get a more extended period of conflict there, are we breaking more things in terms of the global cycle, et cetera or supply chains and inputs and so on? What does that look like as we potentially deal with more long-term conflict?

Well we're very familiar with the situation. And the largest impact is the closure of the Strait of Hormuz. We have a plant in Dubai. Let me start off with what we're -- the safety of our employees is the most important part, right? That is our focus, all our employees in the Middle East are safe. It does impact our Dubai facility. Our Dubai facility, we have paused our operation to support that region. However, we do have the largest global footprint in the industry. We have plants across the world. So we're able to continue to support that region out of our other locations.

Although the sentiment in that area, there's a lot of uncertainty. So we are seeing delays in some projects and investments. We do know that food security is one of the top priorities for that region, but we are seeing delay. The secondary impact is inflation, and Renee talked about some of the cost with the farmers, right, or their usage, fertilizer, fuel pricing, solar. It does have an impact on the farmers, which is just putting more stress, more delay in making a decision around investing in capital. So this sentiment is really, to me the #1 impact today with the addition of inflation.

Now if this goes on for a while, I don't think it dramatically changes the situation. It just prolongs the period where they're not going to be investing in capital equipment. The large percent of fertilizer for the world comes out of that Strait. It is available today. It's just more expensive. They already secured this growing season. Next growing season will be more expensive. But right now, we're not seeing any disruption to the supply chain, just more of an increase. So right now, it just could extend a period of time until we get back to normalization and increase in the cycle.

And just I want to add one other thing to that. To the extent that we actually got actually a more pronounced peace in that area, is -- do you think that could be a catalyst for growth? Are there any countries over there that are not necessarily served by you or...

Absolutely. I think, right, the more stable that the world is and the governance in that area, it -- food security is very critical for that whole region. It is important to them to grow food for their own citizens. In some cases, our project in one of those regions is so successful, and while -- they're watering deserts or actually even exporting, which we didn't predict happening. So absolutely, as there's more -- as this environment settles and there's more peace, then there's a lot of land available and water and financial to support that region.

I think it's important to add too, we've been operating in that region probably since the 70s, maybe even before that. So there's always been sort of a cycle of, I guess, disruption in that region. And we've lived through it. We understand sometimes there are certain markets that are available for a period of time and then there's a period of time when they're not. And that's really why our strategy of being diverse in terms of emerging markets, combination of emerging markets and more developed markets has worked well for us over time.

So we know that there will be some disruption and there is in the near term, but there are other regions, other countries within that area that have opportunity for development based on what Avner mentioned, the food security, which are very different drivers than, say, more developed markets.

Okay. Switching to the infrastructure business before the data center. What are some of the key characteristics that run across your infrastructure business? And where are you seeing growth outside of the utility structures?

Yes. So it's a great question because we have a pretty diverse portfolio of products within and across our infrastructure segment. Obviously, Utility is getting a lot of attention these days. And there's a lot of demand out there. The industry is basically out of capacity. But I think the common thread throughout what -- everything that we do starts with the markets that we're in. So we have strategically placed ourselves into markets with long cycle, durable secular demand drivers. So think about infrastructure, it's critical infrastructure. It is traffic structures, lighting structures, telecommunications structures and support, utility, obviously.

So that is very much a common denominator across that segment. We also work hard with our -- a lot of what we do is engineered to order. So we worked very hard over the years to being very close to our customer in terms of understanding their needs and getting in some cases, spec'ed into specific projects over time. So not every structure is highly engineered to order, but that is a commonality that -- and a muscle that we've developed over time. That serves us well. And we work closely with our customers to understand what those needs are.

We do believe it's a differentiator for us in the space. And as part of our portfolio, we also do coatings, hot-dip galvanizing, which protects the life of steel because most of what we do across our infrastructure business is making things out of steel. So that's another commonality.

Another one that I would mention is it's very -- these customers, these projects, it's very project-based type of work that we do. So we have developed knowledge and expertise across project management, and not only within our own 4 walls, but also understanding the construction cycle along with our customers so that we can ensure that we are shipping and delivering exactly when our customers need us to do that. Time is money in construction markets and cycles and across the infrastructure landscape.

So shipping complete on time, high-quality, reliability, the trust that our customers put in us in order to -- they know that we will do what we say we're going to do, and we execute on that is the same across all customers, all of those markets globally. Where we're seeing growth, again, Utility is really the big attention, shining star right now, but we are seeing growth across other parts of the business. I would start with our Coatings business because they are seeing the same benefits that the Utility business market drivers are providing.

So a lot of investment in infrastructure, data centers, there's a lot within a data center that actually does require some galvanizing. There's a lot within a substation, and we produce substations that require steel to be galvanized. So our Coatings business saw a 13% year-over-year increase in sales in the first quarter. It's typically more of a GDP-type business. So they're clearly benefiting from that.

We also, within our Lighting and Transportation business, are seeing growth coming from just general infrastructure investments globally. And then we have a Telecom business, which these days is mostly telecom components. So think about a site build-out. And carriers that -- we have all 3 carriers as our customers, and they can fluctuate or change the direction and the focus of their capital spend from time to time. So it can be a little bit, I'll say, lumpy in terms of growth, but the trajectory that we have seen and that we're expected to see over the next several years is very positive there. And that's also very much a speed-to-market business for us with very accretive margins.

So coming back to the Utility business. The growth rate for the demand for these products supporting all its build-out, just keeps surprising and accelerating. And my question to you is about the strategy, and I'm sure it's evolving daily. But how do you think about the trade-off between building out enough infrastructure to support all those products but also getting into a cycle that could potentially be fairly steep and then fall off pretty dramatically as well? And so I guess, could you give us a little insight into your strategy there, the capital allocation and your approach to market share within that framework and trying to protect your own build-out as well?

Yes. So we look very closely at the market projections, the growth rate as well as our capacity and capacity in the industry. Now not only do we look at industry reports, we talk to our customers and being the leader in the markets that we play, and if you look at Utility with a 35% market share, we work with all the large IOUs with all the utility customers. We're very much tied in to their plans. And there is very strong visibility to utility plans, the data center plans for 2, 3 and even 4 years. So we have a very good idea on how much we need to invest.

And typically, for us to invest in our businesses, it takes us about 2 years at the outer edge, so we can stay ahead of this at any given time to make sure we're staying ahead of demand, and we've done actually in Q1. We've done very well with 27% growth in this area. So we're staying ahead of it. Now we are looking at also a lot of their long-term plans, which, in many cases, go to 2035, and I really do not see at this point where there's going to be a steep decline or even decline because there are so many drivers that contribute to the growth that we're seeing now.

And I'm sure we talk a lot about data centers, but if we continue to talk about the connectivity to the renewable sources, we look at electrification, near-shoring. The fact that a lot of the grid is aged, we need resiliency, reliability. There are so many additional drivers that give us confidence that we're not going to get ahead of ourselves and put too much capacity in the industry. So overall, our plans are very balanced. And right now, that is our #1 priority across the company. How do we capture this growth by investing in our facilities to ensure and that includes many areas anywhere from capital to people to technology.

So what are some of the capacity investments that you are making in the Utility structure, but...

Yes...

And also, are you -- I mean is there anything that there's a constraint for those, whether it's human capital or certain things that you have to put in place for your manufacturing? Anything on that level?

Yes. So really building on what Avner was just saying, we have -- we, as you said, see tremendous demand in front of us. And we have multiyear very detailed action plans for capacity additions over the next few years. And our strategy and our approach is to take advantage of the footprint that we have. So they're brownfield expansions. And maybe I'll take a step back. We think of capacity in 3 different ways. Avner speaks to it in 3 different ways. One is physical capacity, there's operational capacity and there's commercial capacity.

So physical capacity we are doing brownfield expansions across around 20 or so sites that we have in North America. We're not doing exactly the same thing in every one of those locations, but we're listening to our customers, and we're understanding what they are going to need from us over the next several years. Projects are becoming bigger. They're becoming more complex. Load growth is driving so much of the demand, certainly in transmission, but also in substation.

So as Avner said, we are the leader -- market leader in transmission. We have a leadership position in substation as well, and they've kind of been going hand in hand. So we're adding things like press brakes. We're adding fit weld stations. We're pouring concrete and extending a building and putting up 4 walls and other types of equipment that can help us do more. And the beauty of a brownfield expansion is that Utilities have to approve your facility before they will accept product from that plant.

With the new greenfield that can take up to maybe 18 -- 12, 18 months. With the brownfield the facility is already approved. So we can see the benefits of that pretty immediately. There's also operational capacity. So think about debottlenecking and just ways to increase throughput and get more out of the plant. We are using AI tools for example, to help us with material planning, getting steel or other materials at the exact facility at the right time, saves a lot of time. So much of the production process is moving large structures from one place to another to another.

So how can we maybe relook at flow in any of our facilities and make some minor adjustments just to help that throughput. It doesn't require a ton of CapEx dollars that way. The third one is commercial. And this one I really like because it sort of ties everything together. Capacity is not just about any one of these, it really is the entire system. So when I say commercial, think of engineering and drafting. It starts with receiving a PO from our customer, but then there's a multiple-week process where we are going back and forth with them on getting their specs just right because every one of these structures is highly, highly engineered.

They all look the same perhaps from the road, but they aren't. So having the ability to do more in that area, we're also using AI there to help us be more efficient and help our teams be more efficient. We are actually hiring engineers and drafters, just like we are hiring additional people to work in production. But if we can become much more efficient over time, then that benefits us and it benefits our customers. Some of the second part of your question was...

So about the constraints in human capital and getting all the other stuff you need to support them.

So -- thank you. To that point, that is why some of this automation and technology that we're using is so important. We are actively always looking for people. We are many times in some of the towns and the cities that we are near, we're one of the larger employers. So we recognize that -- and we start early. So if we know that we are adding capacity because CapEx dollars spent today, we really won't benefit probably for another 9 to 12 months because of the ramp time that it takes.

So we start the hiring process early and that might mean that we have a little bit of overlap as those individuals are getting trained, but that's okay because we know we need them. And we'll partner a lot with local colleges and high schools to ensure that we're getting out in front of labor availability. So we watch it very closely. Our teams come in every single day and ask themselves, how can we do more with what we have, and it's a top priority for the company. Investing in ourselves has very attractive returns. And as Avner mentioned, it's our -- in terms of capital allocation, it's one of our top priorities.

So we have time for one more question. Traditionally, there haven't been that many acquisitions recently. What would potentially change that? What areas of interest might you be looking at? And given all the innovation that we're seeing, stuff to come ahead too as well, is that a catalyst for inorganic growth?

Yes. We're very disciplined around our capital allocation and acquisition specifically. Right now, there's so much opportunity ahead of us organically in our businesses, just capturing this growth, we have a very strong innovation pipeline as well. So we look at acquisitions very strategically. How can they add to either a market, a capability, a channel? So can it be a significant strategic add to the company? And when we find the right one, we're going to go after it. It needs to be meaningful. So we have a pipeline, we keep on looking at those opportunities. But right now, we're investing organically that's by far, the largest ROI, and it's really supportive of our strategy right now.

Terrific. On behalf of the Gabelli organization, thank you for being here today. And I'm going to turn it over to my colleague, Christopher Marangi. He's going to bring up John Rogers for our final segment. Thank you.

Greetings, and welcome to Valmont Industries 2026 Annual Shareholders Meeting. [Operator Instructions]

As a reminder, this conference is being recorded. I would now like to turn the call over to Valmont's Chairman of the Board, Mogens Bay. Thank you. You may begin.

Good morning. My name is Mogens Bay, and as Chairman of Valmont, it's my pleasure to welcome you to our Annual Meeting. Today's meeting is being audio webcast to our shareholders and will be made available for replay at our website, valmont.com.

We have four proposals that are outlined in Valmont's proxy statement to be voted upon at this meeting. We will then announce the results. All Valmont directors are present at today's meeting.

Greg Geyer of KPMG is participating in today's meeting, and KPMG is available to respond to any questions you may have about our financials. At this point, I call upon John Schwietz, CFO and Corporate Secretary, to read the required legal notice.

Mr. Chairman, this meeting is convened in accordance with the proxy mailed on March 11, 2026, to all shareholders of record as of March 2, 2026. We have received the affidavit of mailing from Broadridge stating that this mailing was complete and accurate.

Anita Gillespie has been appointed inspector of the election, and a list of all shareholders is available for review. The inspector has advised us that there were 19,547,213 shares outstanding and entitled to vote at this meeting. Of that number, more than 91% are represented by proxy at this time.

Thank you. There are four matters for shareholders to vote upon at this meeting: one, the election of four directors whose term will expire in 2029. The four directors are Mogens Bay, Ritu Favre, Rick Lanoha, Paul Maass.

Two, the approval of Valmont's employee stock purchase plan. Three, the advisory approval of the company's executive compensation; and fourth, to ratify the appointment of KPMG as independent auditors for fiscal 2026.

Those of you who did not vote by proxy or those who already voted by proxy and now wish to vote in person, now have the opportunity to do so. We will now consider the shareholder matters. May I have a motion and a second in favor of the four shareholder proposals?

Second.

Thank you. Is there any discussion? Please vote at this time if you have not already done so.

[Voting]

At this time, I declare the polls for each matter voted upon at this meeting closed and direct that the election inspector tabulate the ballots. Because more than a majority of our stock voted by proxy, I can now provide the voting results.

A majority of common shareholders who are present, both in person and by proxy, have voted for the four matters described in Valmont's proxy statement. All shareholder proposals have been approved.

Last week, Avner Applbaum, Valmont's CEO, provided a business update during the company's first quarter earnings conference call. I encourage our shareholders to listen to the replay, which is currently available on our website.

In addition, shareholders are always encouraged to contact our investment -- Investor Relations Officer, Renee Campbell, with any questions.

Thank you for participating in today's annual meeting. Since there is no further business to be considered, I declare the 2026 Annual Shareholders Meeting adjourned.

Thank you, ladies and gentlemen. This does conclude today's meeting. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Greetings. Welcome to Valmont Industries First Quarter 2026 earnings conference call. [Operator Instructions]. Please note this conference is being recorded. I will now turn the conference over to your host, Renee Campbell, Senior Vice President, Capital Markets and risk. Ms. Campbell, you may begin.

Good morning, everyone, and thank you for joining us. With me today are Avner Applbaum, President and Chief Executive Officer; John Schweiz, Executive Vice President and Chief Financial Officer; and Eric Johnson, Chief Accounting Officer.

Earlier this morning, we issued a press release announcing our first quarter 2026 results. Both the release and the presentation for today's webcast are available on the Investors page of our website at valmont.com. A replay of the webcast will be available later this morning.

To stay updated with Valmont's latest news releases and information, please sign up for e-mail alerts on our Investor site. We'll begin today's call with prepared remarks and then open it up for questions. Please note that this call is subject to our disclosure on forward-looking statements, which is outlined on Slide 2 of the presentation and will be read in full after Q&A.

With that, I'd now like to turn the call over to Avner.

Thank you, Renee. Good morning, everyone, and thank you for joining us. Turning to Slide 4. I'll start with a few key messages for the quarter. First, we delivered a strong start to the year with sales growth, record first quarter earnings per share and progress against our strategic priorities. This reflects our discipline and focused execution across the business.

We remain committed to serving customers, managing what we can control in advancing our value drivers. Our performance reflects the execution of our strategy. We're prioritizing high-value offerings, strengthening our core businesses and improving operational performance.

Our strategy is incurred in markets with durable demand drivers, most notably utility while continuing to improve the quality and resiliency of our earnings. Second, infrastructure is performing well, supported by a growing demand for energy.

This includes the need to expand the electrical grid to support data centers and the need to replace aging assets. Our capacity expansion plans are on track, and these actions are driving improvements in throughput and overall operational performance as reflected in the 27% sales growth in North America utility.

Third, in agriculture, we were able to grow in North America year-over-year due to favorable pricing. I also want to recognize our teams in Middle East who continue to navigate a very challenging environment. The safety and well-being of our employees remain our top priority. We are focused on supporting them as they manage through the ongoing situation.

We appreciate their commitment to 1 another and to our customers during this time. Turning to Slide 5 for a review of our current market dynamics, starting with North America utility. Our customers are implementing multiyear increases in capital spending, driving strong demand in utility infrastructure.

U.S. utilities are planning roughly $1.4 trillion of investment through 2030, up meaningfully from prior expectations driven by load growth, grid modernization and increasingly data center demand. This environment supports our growth outlook and the capacity expansions we have underway.

Industry supply remains constrained with extended lead times and favorable pricing and margins. North America Coatings is also capturing growth from infrastructure activity and increasing exposure to data center construction. Our galvanizing services play a critical role in protecting and extending the life of steel structures.

In North America Lighting and Transportation, market conditions remain mixed. In Lighting, demand continues to be impacted by softer housing activity and commercial development. In Transportation, the market is supported by stable infrastructure spending.

From an operational standpoint, we have made progress, but we are not yet where we want to be in terms of consistency. Our priority is improving performance to deliver reliably for our customers.

Turning to international infrastructure. Market conditions across Europe and Asia Pacific remained soft but stable. We are advancing commercial discipline and improving operational performance.

Turning to Slide 6. We Agriculture markets are navigating a dynamic environment as we begin the year. In North America, grower sentiment remains cautious, reflecting tighter farm economics supported by USDA data. Seasonal order patterns have been more muted with no meaningful acceleration in the spring selling season.

Taken together, current indicators, including input costs and overall farmer profitability, suggests the market will remain under pressure in the near term.

International markets are seeing variability in demand, ongoing challenges in the Middle East, including logistic constraints and reduced operating capacity are impacting activity and the pace of execution. At the onset of the conflict, our Dubai facility operated at a minimal level, prioritizing employee safety in alignment with local government guidance.

The plant has currently paused operations until conditions stabilize. We have mitigated some of this impact through our global manufacturing footprint, leveraging other facilities to support demand in the region. Long-term demand is supported by investment in food security and water infrastructure.

In Brazil, tight credit availability and delays in government-backed financing continue to weigh on near-term demand. Over the longer term, Brazil remains an attractive growth market, supported by favorable agronomics, multiple crop cycles and compelling returns on irrigation equipment.

We continue to advance our priorities in technology and aftermarket positioning agriculture to perform through the cycle.

Turning to Slide 7. I'd now like to welcome and introduce John Schwietz as Valmont's Chief Financial Officer. John has been with Valmont for more than 16 years with leadership roles across both our infrastructure and agriculture segments. He brings deep knowledge of the business and a strong track record of financial discipline and execution.

John leads with integrity and accountability, brings a passion for serving our customers and is deeply committed to continuous improvement and delivering results. This is a seamless transition as our strategy, value drivers and capital allocation priorities remain unchanged. We -- we're confident in John's leadership as we continue to build on our momentum.

I'll now turn the call over to John to review our first quarter financial results and updated 2026 outlook.

Thank you, Avner. Good morning, everyone, and thank you for joining us today. I'd like to start by thanking Avner and the Board for their confidence in me as I step into the CFO role. I appreciate the opportunity to build upon the strong foundation already in place. I look forward to working closely with our teams across Valmont to reinforce financial discipline, support our strategy, and deliver long-term value for our customers, employees and shareholders.

Turning to Slide 9. Net sales of $1.03 billion increased 6.2% year-over-year. driven by sales growth and infrastructure, particularly North America utility. Operating income increased to $155.6 million. and operating margins improved 190 basis points to 15.1%, reflecting stronger performance in both segments.

Our tax rate remained steady at approximately 26%. Diluted share was $5.51, a 27.5% increase from prior year.

Moving to our segment results on Slide 10. I want to start by highlighting a change to our infrastructure product line revenue reporting beginning this quarter. We have realigned to better reflect the markets that we serve and how we manage them.

We are now reporting our North America infrastructure businesses separately and have consolidated international infrastructure and global solar into 1 product line. A quarterly recast for 2025, reflecting these updates is included in the appendix of today's presentation.

Now moving to infrastructure results. Sales of $806 million grew 14.1% year-over-year. North America utility sales increased 27.4% driven by pricing and higher volumes. Sales in North America Lighting and Transportation declined 4.4% due to the production challenges as noted by Avnera.

North America coatings sales increased 13.3% supported by healthy infrastructure and data center demand. North America telecommunications sales decreased 3.9% as volume softened due to a shift in carrier spending allocation.

International infrastructure sales increased 6.9% due to favorable foreign exchange impacts. Operating income was $143 million or 17.8% of net sales. an increase of 110 basis points as a result of our pricing actions and fixed cost leverage.

Turning to Slide 11. First quarter agriculture sales decreased 15.1% year-over-year to $227 million, driven by lower international sales. North America agriculture increased 1.5% year-over-year. Importantly, operating margin improved to 14.8% in the quarter, returning to double-digit levels. This reflects the benefits of our continued focus on pricing, cost management, and risk mitigation.

Following up on last quarter, we reached a settlement on the material Brazil legal matter we previously discussed, and it was resolved within our existing accrual.

Moving to Slide 12. For Cash, liquidity and capital allocation. We had another quarter of healthy operating cash flows, generating $103.5 million. We ended the quarter with $160.2 million of cash and our net debt leverage is approximately 1x.

During the quarter, we invested $35 million in CapEx, primarily for utility capacity expansion. As previously discussed, we finalized the acquisition of Rational Mines and the purchase of the remaining minority shares of Concilfab for a combined $20 million.

We returned $71 million to shareholders, including $13 million through dividends and $58 million through share repurchases.

In February, we also increased our quarterly dividend by 13% to $0.77 per share or $3.08 on an annualized basis.

Turning to our 2026 outlook on Slide 13. We are increasing our full year EPS guidance. Net sales are projected to be between $4.2 billion to $4.4 billion. We are increasing infrastructure sales to be between $3.3 billion to $3.45 billion. This is offset by a decline in agriculture with sales to be between $0.9 billion to $0.95 billion.

In infrastructure, the increase is driven by North America utility. We expect pricing and volumes to remain elevated throughout the year. In agriculture, given recent changes in market conditions and project economics, primarily related to the Middle East conflict, we have become more selective in our pipeline aligning with our disciplined approach and focus on long-term value.

Diluted earnings per share are projected to be in the range of $21.50 to $23.50. At midpoint, this represents a 4.8% growth in revenue and a 17.9% growth in adjusted EPS. Higher pricing and volumes in North America utility are driving the increase in our EPS target of the tariff changes that went into effect on April 6.

These primarily affect a portion of our North America utility production sourced from Mexico. Importantly, we are mitigating much of this exposure by using primary U.S. milk and port steel which limits the incremental Section 232 tariff to 10%.

Looking ahead, we remain focused on what we can control and prioritizing opportunities that support sustainable, higher-quality earnings. With that, I'll turn the call back to Avner to review our value drivers.

Thank you, John. Moving to Slide 14. We continue to advance our 3 core value drivers, catching the infrastructure wave, positioning agriculture for growth and executing disciplined resource allocation -- these priorities are guiding how we invest in capacity, strengthen our product and technology offerings and align our cost structure supporting improved performance and more consistent profitable growth over time.

We continue to drive above-market growth in infrastructure through targeted investments in capacity and operational efficiency, and we're seeing the benefits reflected in our sales volume.

In agriculture, we are growing our presence in emerging markets and investing in aftermarket and technology to improve the mix of higher-margin business. Finally, our disciplined resource allocation initiatives are on track.

Overall, we are confident in our 2026 performance and achieving our long-term value driver targets. We look forward to sharing more details at our upcoming Investor Day on June 16. Before we close, I want to thank the entire Valmont team for their efforts navigating a dynamic first quarter. With that, I will now turn the call over to Renee.

Thank you, Avner. At this time, the operator will open up the call for questions.

[Operator Instructions] One moment while we poll for questions. Our first question is from Nathan Jones, SwitzStifel.

Good morning, everyone. I guess I'll start with a question on the 232 tariffs. We've been getting a lot of questions from investors, as I'm sure you guys have as well. I think the anticipation was probably that these new tariffs were going to be more impactful to Valmont than you guys are talking about them being -- can you maybe just provide a little bit more color on -- I know John said using Port and smelter U.S. Steel helps protect from that.

But can you just -- any more color you can give us around that? And then how you plan to mitigate that? -- with customers.

John, do you want to take that one?

Yes. Thank you. So Nathan, first, of course, we welcome the clarity that we got on April 6 with the updated regulations -- so our understanding of these rules are incorporated in our guidance. As you mentioned, really, the upside of this guidance is that we need to maximize U.S. port and melted steel. So that's what we've been doing for the last few quarters is maximizing that, and that's what we'll continue to do.

Of course, tariffs are changing, they adjust and as they adjust, we adjust our pricing and also our supply chains. This takes a little bit of time to take hold. But overall, we feel comfortable with it. And as we've mentioned on prior calls, the objective for us is to be tariff cost profit neutral. And so -- and that's what's incorporated in our guidance.

That's helpful. I guess my second question is around the U.S. utility business. Through the last 12 to 18 months, I think the company has been talking about effectively being out of capacity and having to increase CapEx to add capacity which it's been doing. But I think the story was kind of that $1 of CapEx was going to increase capacity by dollar -- and the business is clearly outperforming the level of CapEx that's going into it.

Can you talk a little bit about where the additional productivity is coming from or how we should think about $1 of CapEx now translating into maybe more than $1 of capacity?

Sure. So we are -- let me start up, we're very pleased with our quarterly results. I mean, we've grown utility by more than 27%. And to your point, a lot of the growth is driven by the strength in the environment with -- coupled with our investment in capacity, capital is clearly 1 of the areas that we're investing to increase our capacity, and we're going to invest between $170 million to $200 million this year, with the majority of that going into utility.

So capital is 1 lever, but let me just address it a little broader, right? It's a whole system of capacity increases. So we have our capital. We have our operational capacity, and we have our commercial capacity. So just to give a little bit more flavor to that, -- while we're adding capital, every day, our employees go into the shop and look for opportunities to increase our throughput.

And we are getting a lot of innovation, continuous improvement to drive the increased output. So as an example, in 1 of our plants, we're looking at bottlenecks, and we noticed that -- in some cases, if we add some labor, we will increase our output.

And we did a quick very successful hiring event, and we were able to increase the capacity at that site. We had another site where we saw that the flow was not perfect. We did a couple of Kaizen events. We got the flow significantly improved, just to name another example. So we have over -- we have 24 facilities in the U.S. Each 1 of them, we are taking many actions to drive the increased output.

And we should see this trend continue into Q2. We're expecting to see a very strong similar type growth or even better in the second quarter. And in fact, we should expect to see a very strong year in utility as well. So just to sum it up, we're taking many initiatives, capital being 1 of them. We are seeing that with capital, we're driving more than 1 for 1. So that is another area of an improvement. And we look forward to keep on capitalizing on the strength of this market.

Our next question is from Chris Moore with CJS Securities.

Recognizing you don't necessarily provide backlog on a quarterly basis. Can you give any big picture thoughts in terms of kind of what it looks like today versus kind of year-over-year or sequentially?

Yes, sure. So we are seeing -- sequentially, our backlog is relatively flat, but it has been up year-over-year -- and I think it's important to note, the backlog reflects the strength of our business, but it is only a data point, reflecting the strength in that market. So just to give a little bit more color, we do take an approach to managing our lead times.

We're currently improved our lead times. We have best lead times in the industry right now between 42 to 44 weeks on our bid market. We have a lot of projects in the pipeline that don't show up in the backlog with a lot of our alliance customers. It actually -- it's an advantage to us not to have them in the backlog. So you don't have to take too much risk as it relates to the pricing of steel, et cetera.

But overall, I think the most important point is we are seeing unprecedented demand in this market. We are -- I mentioned that the IOUs are planning to spend $1.4 trillion through 2030, which is significantly higher than we've seen just recently. So that's -- which was about $1.1 trillion. So call that about 27% increase in their projections.

So going into the year, we were thinking we're going to grow 8% to 10% on our utility. Well, right now, this year, it's going to be much stronger than that. We're probably going to see growth between mid-teens to high teens in the utility space. So overall, all indications are this market is robust as we have not seen it. like this for decades, and we're very pleased on where we are positioned with our backlog, our lead time and our alliance with our customers.

Very helpful. And maybe just 1 on ag. So maybe can you talk a little bit about rising fertilizer prices, potential impact on pivot demand, not necessarily for '26. It sounds like there could be kind of a lag in demand, but what might be felt in '27? And just how much visibility do you have on that front?

So there's not great visibility into 2027. But the way we look at it, fertilizer is an input cost, significant input cost, and it will have impact on farmers will put more pressure on their profitability, and they have been under pressure. So at this point, we continue to expect to have a challenging environment in 2026.

And we're focused on areas where we could drive farmer profitability. We're supporting our farmers with our aftermarket, our technology, enabling our dealers to ensure they can improve their profitability. And as we know, these markets have strong long-term fundamentals. And as the market will improve, we'll be ready to capitalize.

our next question is from Thomas Sano with JPMorgan.

John, congrats on your new role.

Thank you.

And for North America utility, could you comment on any changes in pricing or the competitive landscape on pricing power infrastructures. What gives you confidence in your ability to sustain or enhance pricing, especially as competitive dynamics evolve, please?

Thank you for the question. The market environment continues to be extremely strong right now. We always focus on value pricing. We are the leader in the market with the highest market share. And we provide the utilities with mission-critical products and solutions supported by our strength in our engineering our reliability, quality, on-time delivery.

And in this environment, there's very strong value in our offering, especially in a constrained environment. and the entire industry has been very disciplined around pricing. So while there will continue to be growth in this area and our competitors will continue to invest we remain very disciplined, taking pricing leadership and as evident by our Q1 performance, which had significant pricing in our performance pretty much demonstrates that there's no concern regarding pricing in this environment.

And follow-up on ag margins, have you hold up well despite lower sales. If the sales headwinds persist what structure -- structural mix factors do you see as most critical for sustaining or even expanding margins in this segment, please?

Yes. Thank you, Tom. So as you mentioned, ag margins did well this quarter. We're pleased with the result at 14.8%. So that was driven, as you know, by favorable pricing and also an improved product mix and regional mix.

As we look through the rest of the year, as you mentioned, there are some headwinds. And so if we look at our margins for the rest of the year in ag, we have the seasonality impact of moving more towards international, less in North America, that will put some pressure on our margins for the rest of the year. Also, the impact of the fixed cost deleverage in our Dubai facility will also add pressure to our margins.

So I'd say that we'll -- certainly, this year, we will be in the mid-teens to low teens for margins in Ag this year.

Our next question is from Brian Drab with William Blair.

Frank -- like Nathan, -- most of the questions lately have been around the Section 232. So I just wanted to ask 1 -- maybe the same question just in a little bit different way. But -- you have in the 10-K, I think that there's about $220 million worth of product in the utility business coming in from Mexico.

And I haven't found that 10% figure anywhere. So I'm just curious, is that part of the new structure? Is it stated that it's 10% if you're using also import U.S. steel for finished product coming in from Mexico? Or is that just kind of how your assessment after looking through everything?

And if so, given it's 10%, is this and you put that on the $220 million or so, so it's an incremental roughly $20 million in costs that you have to absorb?

Thank you for the question. So yes, 10% is part of the new regulation, and you're thinking about this the right way. So that's approximately the number from Mexico from our output for Mexico and exports to the United States. -- that varies year-by-year.

As I mentioned earlier about the transition of our supply chain. So -- the goal here is to maximize the U.S. melt and for steel, and that will reduce our tariff exposure and cost over time. That's what the teams are doing. And that will take some time. But we're making rapid progress in making sure that we adjust that to maximize our U.S. Melton Port steel. That will bring us closer to the incremental 10%.

Okay. But you can't size the incremental cost for us at all. You don't want to quantify that today. I don't want to press you too much on it, but that's what we're looking for.

Yes. So I'd say your general range, how you're thinking about it is approximately right.

And I'll just add, right, we're seeing strong growth, right? So that $220 million is going to easily be $250 million. So as we grow and capitalize on the market, well, we'll pay more tariffs. But of course, we make very strong margins out of our plant in Mexico. So no concerns on our end.

Right. Well, and it all just seems like my conclusion at the moment is it is kind of negligible given the size of that business and given the pricing power and given the pricing dynamics across the industry and what you're doing operationally. So but thanks for the clarification.

On the Utility business, also you mentioned that the price and volume drove the growth. You mentioned in the press release, you listed price first in the description of that strength. Can you just talk about the breakdown of price versus volume driving the business? And then also is the price being supported more just by steel kind of skyrocketing. Or is it and secondarily by the market demand?

Okay. So thanks for the question. So if we look at Q1, the 27% increase was driven primarily by price, as you know. It's important to note, though, that volume was an important contributor as well for Q1, that was in the double digits. As we look through the rest of the year, Avner noted mid-teens to upper teens and growth rate expectations for Utility, we expect that, Brian, to be a balance between price and volume for 2026.

As it is to your question about the price environment, Avner gave some good comments on what we're seeing in the price environment. To Anne's comments, we are pricing to market. We're constantly testing the top of that market. Yes, some of that is passed through contract pricing with regards to material escalations and then also logistics escalation.

So yes, that's a component of it. But as Avner mentioned, we have confidence in the overall pricing environment for utility.

We have reached the end of our question-and-answer session. I will now turn the call over to Renee Campbell for closing remarks.

Thanks, everyone, for joining us today. A replay of this call will be available for playback on our website and by phone for the next 7 days. We look forward to speaking with you again next quarter.

These slides and the accompanying oral discussion contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The -- these statements are based on assumptions made by management considering its experience in the industry's where Valmont operates, perceptions of historical trends, current conditions, expected future developments and other relevant factors.

It is important to note that these statements are not guarantees of future performance or results. They involve risks, uncertainties, some of which are beyond Valmont's control and assumptions. While management believes these forward-looking statements are based on reasonable assumptions, numerous factors could cause actual results to differ materially from those anticipated.

These factors include, among other things, risks described in Valmont's reports to the Securities and Exchange Commission, SEC, the company's actual cash flows and net income, future economic and market circumstances, industry conditions, company performance and financial results, operational efficiencies, availability and price of raw material, availability and market acceptance of new products, product pricing, domestic and international competitive environments, geopolitical risks and actions and policy changes by domestic and foreign governments, including tariffs.

The company cautions that any forward-looking statements in this release are made as of its publication date and does not undertake to update these statements, except as required by law.

The company's guidance includes certain non-GAAP financial measures, adjusted diluted earnings per share and adjusted effective tax rate presented on a forward-looking basis. These measures are typically calculated by excluding the impact of items such as foreign exchange, acquisitions, divestitures, realignment or restructuring expenses, goodwill or intangible asset impairment, changes in tax law change in redemption value of redeemable noncontrolling interests and other nonrecurring items.

Reconciliations to the most directly comparable GAAP financial measures are not provided, as the company cannot do so without unreasonable effort due to the inherent uncertainty and difficulty in predicting the timing and financial impact of such items.

For the same reasons, the company cannot assess the likely significance of unavailable information, which could be material to future results.

All right. Good afternoon, everyone. Thank you for joining Valmont Industries sessions. This is Tomohiko Sano, SMID cap industrials analyst at JPMorgan. With me, we have Avner Applbaum, President and CEO; Thomas Liguori, Executive Vice President and CFO, Renee Campbell, SVP, Capital Markets and Risk. So thank you, Avner, Tom and Renee for joining today.

So before we begin, I want to highlight why Valmont Industries is such a key participant of this conference. As a global leader in infrastructure and agriculture solutions, Valmont sits at the intersection of the powerful megatrends, electrification, grid modernization and food security, with a record backlog and disciplined capital allocations driving sustainable growth and margin expansions.

So Renee, to kick things off, I think it would be great to start with introductions to Valmont, like who they are -- who you are and then like what you do with the stories, please?

Perfect. Thank you, Tomo. And thanks very much again for having us here today. Good afternoon, everybody. Before we begin, I just want to briefly note that today's discussion will include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from those projected, and please refer to our SEC filings on our website for a discussion of those risk factors.

So with that, for those of you who may be less familiar with Valmont, we're a global leader in engineered infrastructure and agriculture productivity solutions. We recently celebrated 80 years as a company as of March 8 of this year. We were founded in 1946 in Valley, Nebraska, which is just outside of Omaha, where we're headquartered. And we pioneered the mechanized irrigation industry with the center pivot and that technology remains the industry global standard today.

Over time, we expanded that engineering expertise into infrastructure markets. And so today, about 75% of our business is infrastructure and 25% is agriculture. And we operate in more than 100 countries with about 70% of our revenue generated in North America.

On the infrastructure side, we provide highly engineered structures and solutions that support critical systems and networks from electric utility, transmission, distribution and substation structures, telecom components, lighting and transportation structures and galvanized coatings that extend the life of infrastructure products and assets. And on the ag side, through our Valley brand and our Valley dealer network, we help growers improve productivity and manage water and other inputs more efficiently with advanced irrigation systems and digital technology solutions.

Our portfolio is also aligned with several durable growth drivers, global growth drivers. So first is rising energy demand, connectivity, grid expansion, and that's really being driven by load growth, electrification, data centers, onshore manufacturing and overall industrial growth. Second is the need to replace aging infrastructure and drive resiliency across power, transportation as well as communication networks. And third is the increasing need for productivity and resource efficiency, notably in ag, where farmers and growers must produce more with limited land and water resources.

Strategically, we're focused on capturing these opportunities through specific value drivers, which we've outlined to achieve $25 to $30 of EPS over the next 3 to 4 years. Those include expanding capacity in our Infrastructure business, notably in utility, positioning ag for the next cycle through technology and aftermarket parts growth and maintaining disciplined resource and capital allocation.

And for capital allocation, our goal is to deploy roughly half of the cash that we generate toward growth and half toward shareholder returns, which we actually did about 50-50 in 2025. So we feel very good about our future. We're well positioned to deliver continuous revenue and earnings growth over the coming years, and you can visit our website to learn much more about us at valmont.com.

So Tomo, I'll turn it back over to you.

Thank you, Renee. And congratulation of 80th anniversary for the Valmont. And if you could talk about describing the company's core culture and values. Could you do that, Avner?

Sure. So first of all, Tomo, thank you for hosting us. We really appreciate the invitation and opportunity to share our story, which, as you mentioned, kind of goes back 80 years. And our core values start all the way from our founder, Robert Daugherty, around 4 core value around integrity, passion, continuous improvement and delivering results. And while I could talk about all of them, let me just focus on passion, which did start from Robert Daugherty had passion for the mechanized irrigation. As Renee said, we founded the industry. And why I really like passion is because it reflects all of our employees. They come to work, they're really passionate about what they do. If it's building a pole, if it's shipping, it's on our engineering side, if it's building a pivot, if it's our customer service, they all have passion because they see the impact we have on the world, and they see how their products have an impact in so many aspects.

And that I think, once you have the passion and employees bring that every day to work, it really -- all the other values follow around integrity, driving results and continuous improvement. And in fact, we do actually -- it shows also when we're hiring people. They want to come, they want to join Valmont. They want to make a difference in the world, and we're all proud of what we do.

Thank you, Avner. And then for the Valmont's DNA you talked about, have remained unchanged over the decades. And what recent cultural and/or organizational shifts are you most proud of?

Yes. And so if you think about these core values I just talked about it, they've been constant and consistent through the 80 years is; a, because the simplicity of them; and two, because of the effectiveness. So those have all stayed the same. Where really the focus we had over the last several years where I'm proud of the change and that we're doing today is it's really around focusing on the customer. I mean do we have a relentless focus today on how do we serve the customer, how do we help the customer solve their biggest challenges?

And when we innovate, we always have customer in mind. And that's really a shift that we've done over the last several years. We're always customer-centric, but we're making it easier for our employees to make decisions, to support the customers, every decision is having the customer in mind. And in fact, maybe I'll just quote again, our founder, Robert Daugherty. I was walking through one of our plants, and one employee walked over to me and said, I actually had the opportunity to work with Robert Daugherty, and this employee has been with our company for 50 years plus, which is not the only case we have because people, once they come, they join, they want to stay. And he said, we always have the customer in mind. But for me, my customer is the next operator in the sequence. If I'm welding and I move it on to the next operator or if I'm in accounting I think about the next one in line. So that's kind of the mindset we have.

Every person the next in the process is your customer and you want to make sure you make his job easiest as possible, you want to give them the best value you can. So what's kind of ingrained in our culture kind of supporting our customers.

And then let's talk about megatrends and growth strategies. How are these -- as Renee, you talked about some megatrends, and how are you looking at the opportunities for the long terms as well as how the Valmont is well positioned for capture those kind of infrastructures and agriculture perspective?

Okay. Thank you. I'll start with infrastructure, right? When we're seeing -- we're seeing the megatrends today around that's really impacting all our businesses, starting with the need for energy. I mean we see it in all aspects of the economy. And the one area I like to use as a microcosm, I like to point to Texas. If you think about Texas and you look, you look at North Texas, you have a lot of new data centers build in Texas. You have cities like Austin where you have a lot new population migrating to Texas. You see a lot more onshoring industrial manufacturing, see oil and gas, even Bitcoin mining. You see all this need for utilities and for infrastructure and for power. And we've also seen that grid that has failed several years ago. We've seen the [ ice ] storm. So not only do we need the power, we need the power to be resilient, and that's where we come in.

I mean we support transmission, distribution, substation, how do we make sure the power gets to the right end customer in this case. And we've also -- not only do you need all this power, there's also many different sources of power these days, anything from wind to solar, hydro, gas, et cetera. So wherever you're building that power source, you need to, again, move the power. So we definitely support that area. We're seeing that as a very strong mega trend.

And on top of that, like I said, we also need to make sure the power needs resiliency, and we need to support the replacement and the technology upgrades. A lot of the poles in this country are 60, 70 years old. They need to be replaced. So we have those megatrends. And when I talk about replacement, I could also refer to our pivots into irrigation. There's a lot of pivots in the field. They've been there for many years. We have the largest fleet. And part of upgrading, and we could dive into, double click in a little bit, but just adding -- replacing them and improving the technology. And then finally, there is the productivity, sustainability for many products.

I think using the pivot is another good example where how do you get more out of the current land and the water, and that's where that solution -- food security that comes on to that as well. So those are the main megatrends that we're seeing today, and I'm happy to kind of dive into how we play and what we're doing. But those are the kind of mega trends that are having a large impact on our business.

If I may dive in for infrastructures, could you talk about your market share positioning versus other competitors? And could you describe how you are differentiated from other competitors for -- in front of those megatrends for infrastructure?

Yes. So in these markets that we play, we're pretty much the leader in the market. We have the largest market share, the largest presence. And the reason we're the leader in that space, I really look at a differentiation in 3 separate pillars. One of them is around the engineering and innovation. I mean we have engineers that have been working with these customers for many, many years and decades in some cases. And we're able to help them solve their biggest challenges. So when they're building a line, when they're working on roads and need lightings or signs, if they're trying to build a farm and want to make sure they have -- they take into account the soil and the land, right, we have our engineers helping them with the best solution. So that's kind of on the engineering, on the innovation side.

Then we have the commercial area. We have the strongest channel. So if you look at irrigation, we have the strongest dealer network, the Valley dealer network. It's the largest, it's the strongest dealer network. And not only do you have the support, but they know -- the farmer knows that if at 4 a.m., his pivot is not working, he knows he can call the dealer at that point in time, and he will help him. We have the channel that we use with our DOT customers, et cetera, with deep understanding of the industry. And like I said, we have the customer-focused organization.

And then finally, the operations, the manufacturing, we have a very large scale of manufacturing, which offers various solutions to our customers in different locations. So on the pole side, we can do anything from steel to concrete, to composite, to aluminum, hybrid, et cetera. We could offer them distribution, substation and transmission solutions. If they want to work on hardening, again, we could provide them with some solutions with composites, some with concrete. And then local for local. We have plants around the world to support.

But the final point, which is the most important point is, we manufacture mission-critical assets. And it is most important for our customers to have it when they need it, the highest quality, at the right time, at the out location. Otherwise, it could be very costly to utility customers if they don't have the product on time, it could cost them millions. If you don't have the pivot on time for the growing system, it will cost the growing season. And to know that they can rely on us to get the products on time, so anyway -- all the way from engineering to delivering to the end user, is, I think, what it puts it all together, and that really differentiates us from our competition.

And then if you could talk about agriculture, how do you see the Valmont's irrigation and ag tech solutions contributing to global food securities and sustainable resource management? I see some headwinds around the agriculture business these days. But if you look at the long term, like how you contribute to all the global supply chains in the agriculture business?

Yes. So that's -- it's correct. We do have some headwinds today. The market has always been cyclical. It's in a trough now, been for several years. And since we can really impact the market dynamics, what we can do is we could support our dealers and growers at this time. And ultimately, our objective is to help the farmers be more productive and be more profitable, make the best use they can with the land that they have available, minimizing the use of water. And that's our focus. So how do we make sure the farmer can water the crops when he needs them to maximize ultimately the yield. So the technology has many elements to them. One is just from operating the farms. I mean the farmers are getting larger and larger, not practical for the farmer to be out on the field to check if his pivot is watering where it needs to work.

So giving them the tool so he could do it remotely from his phone, as an example, is critical. Making sure they could identify issues in the pivot before they happen, like, okay, if you're going to have a flat tire -- if you had the flat tire, it's already too late, your pivot is not working. So how could you identify that ahead of time and make sure we could provide them with support is another example. Our pivots are extremely robust, so nothing is immune for storms, but pretty much they can withhold a lot of storms.

We can help them maximize their whole field if it's using our linear solution, if we could -- a pivot to support the small field, the large fields, corners, et cetera, how do we help them maximize as we know that, that land is a finite resource. So those are areas. Maybe one more area is around the aftermarket. If you're missing a part for your pivot, how do we make sure it's very easy for them to order the parts, have it on a timely fashion so again so their pivot is not down. The whole idea is how to make sure that their pivot is running as effective when they need it. And of course, you mentioned food security, right. On the part of Middle East Africa, A lot of these countries want to provide food security. And we have, again, a robust solution that can operate in the deserts and you could look today at some satellite photos. And it's pretty impressive to see where the desert -- where it was desert 4 or 5 years ago and now you could see that they're growing wheat and providing for food. And in fact, it's been so successful that some of these countries are now using it to actually export so not only for food security.

So it's -- that's kind of the overall approach that we're taking is we're going to focus on our growers, our dealers, strengthen it, focus on growth areas like international in Brazil, so when the market returns, we'll be ready to capitalize.

And if you could share your outlook for key metrics such as Infrastructure segment sales growth, margin profiles as well as the international sales mix and aftermarket growth in Agriculture?

Sure. So let's start with Infrastructure. Infrastructure is 3/4 of our revenue. The largest piece of that is utility. Utility is growing 9% to 10% per year. Utility continues to exceed our expectations. In the fourth quarter, the growth was 20% year-over-year, and we expect the first quarter to be similar. So it's going exceptionally well. Overall, Infrastructure, about a 5% to 6% growth rate over the next 3 to 4 years.

Now for margin expansion, it is kind of linked to this idea of growing the utility business. We're spending about $100 million a year in CapEx to expand our capacity. And all of these are taking our existing plants and bringing in more capital equipment, brake presses, automated welding, material handling, and the idea is, can we add incremental capital to get more throughput? And if we do that, we'll get a lower unit cost. So when we look at our utility business, we know if we spend $100 million of CapEx, we'll get over $100 million of additional revenue every year, and the contribution margin is close to 30% and it adds $1 EPS. So it's a really exciting opportunity.

Last year, we spent $107 million. This year, we're going to be $130 million to $150 million of capacity expansion, and we would expect that for the next 2 to 3 years. So it's a really exciting story.

You asked margins, Tomo. So last year, Infrastructure operating margins were 17%. And in 3 to 4 years, really by 2029, we think it will be close to 20%. So good opportunity for us.

In the Agriculture business, that's about 25% of our revenues. As Avner said, the market has been soft. So in all of our guidance, in all of our 3-, 4-year targets, we're not going to assume a recovery in ag. If we get a recovery in ag, that will be upside. So when we look at ag, we're trying to position it for, let's get a higher mix of higher-margin business. So Avner described the aftermarket. That's the spare parts, that's the e-commerce. If the farmer can order from the field, see if it's in stock, get it delivered tomorrow, they're less price sensitive. So we're trying to grow that. Today, that's about 20% of our revenue, and we like to see that get up to 23%, 24% of our revenue and it's higher margin.

Then on the technology, today, a farmer controls their pivot from their phone app. And it's monitor and control, is predictive maintenance. That is a subscription-based model. So it's a small piece of our revenue, it's about 3% of our revenue, but it's very high gross margin, 70% to 80%. So every time we add connectivity, that adds to our margin.

When you look at penetration, North America is fairly well penetrated. But if you go to Brazil and Middle East, penetration rates are much, much lower, and that's really what the opportunity is because those are newer markets. So the pivots are -- they're not as old. They're newer and provides us a pretty good opportunity.

The third margin opportunity is really in our corporate costs. We've talked about our corporate costs. We're approaching 3% of our revenues. We see a path to get that below 2%. This year, it will be about 2.2%. And so if you put this all together, we call it our value drivers. What is our plan for 3 to 4 years out by 2029? So we think Infrastructure margins can go from 17% to about 20%. We think ag margins can go about 13% to 16%, total company, 16% to 17%. But more importantly, last year, earnings per share were $19, and we see that getting to $25 to $30.

Internally, we're very focused on -- internally, we call it the path to $30, and everybody is very excited about that. How do you get to $30 earnings per share? We've got 11,000 employees, each of them fit into either the Infrastructure growth, the ag positioning with aftermarket and technology or on the corporate side, and we feel very good about it.

Thank you, Tom. So what are the most important strategic investments for making sure that you capture these opportunities?

Yes, so, on the utility side, it's CapEx plain and simple. And that's our highest return opportunity for capital allocation. On the ag side, it's more people and technology, right? We're trying to develop systems that will advance our aftermarket to make it easier for the farmer to order, and the same with our technology. We have a software development team. We have AI tools being added to the predictive maintenance. And this is what -- it's all about increasing the productivity for farmers and lowering their cost.

On the corporate side, AI is a big part of it. Casey is using AI in Investor Relations. Our accounting teams are using it for the 10-K. It just goes on and on. Another piece of AI is, we have a fellow name Amit, which -- you'll see him at Investor Day if you come to Investor Day. And Amit is very creative. And one of the things we're focused on is how do we get better factory scheduling? And the whole idea is, right, if you can use AI tools to really aggregate orders, sequencing them better, make sure you got the right material at the right time, you're trying to improve the utilization of your factories. So thank of it in terms of, let's say, today, we're at 80% utilization, through AI tools, we can get to 85%, 86%. Well, not only is that better operating margins, but it means we need less CapEx to expand revenue. So there's a lot of really exciting things going on.

And I was impressed when I visited your headquarters and plants. And when you talk about the CapEx, like how you like plan to expand your CapEx by automation or expanding more facilities? And could you describe like how you manage the capital discipline plus the like making sure the margin profiles to capture those growth?

Yes. It's very detailed, but it's very easy to explain because if you came into any of our factories, we're starting with coil or plate steel, and we're cutting it, rolling it, welling it, adding arms, adding base plates, and this is all about getting more throughput for the factory. So how do you do that? You add brake presses, you automate the welding. And then material movement is a big part of it because these are very large structures, hundreds of feet long, very heavy, very hard to move. But that's what we do very well. We manufacture and we move large structures.

So a simple part of it is, if you really think of -- not if you really think of. Our model is spend $1 of CapEx, get over $1 of revenue, get a 30% contribution margin. If we could spend $100 million, we know we'll get $1 EPS. It proved out very well in 2025. In 2025, we spent $107 million on utility CapEx, and we expanded our revenue by $147 million. So it's actually -- now that we're seeing the proof of it, it's actually exceeding our expectations, Tomo.

And then if you could talk about -- touch on the divestment side of the solar business recently announced. And then could you talk about why and why now, the situations of the business?

Yes. So last year was really about getting the company positioned for this value driver path for the next 3 to 4 years, growing $500 million to $700 million of revenue and EPS up to $30. And there were different pieces that we had to prepared the organization for. One was the organization, which was reducing the layers in the organization. There's new leadership. But then the second part was rationalizing our portfolio. And we really did a deep dive on everything, looking at opportunity, where is the best use of capital, what was the return on investment? And we determined that the solar business, while it had its moments in our history, it's just we were better off taking the money and putting it into utilities. So we got out of the North America solar market. And right now solar is a small business, mostly in Europe for reporting. In 2026, we're not going to report solar anymore. We're going to change that and fold it into one of the other product lines.

Other than that, we determined all of our businesses were contributing and they had a very healthy future. What was the last part of your question?

Maybe like the -- so the divestments, like how you see the divestments in terms of the next portfolio...

Yes. Now that we're through the portfolio rationalization, we don't really see any further divestments. We're happy with all of our businesses. What we don't talk about is things like our international infrastructure, there's an opportunity to improve performance there. Our L&T business, opportunity to improve performance. Those are not part of the value drivers. And those are really our upsides and our risk mitigators.

And Tomo, other than the -- thank you, Tom, that was really comprehensive. Other than divesting businesses that don't have the right financial performance or criterias for us as a business, to me, the real benefit is around the focus, right? We have these tremendous megatrends, once in a lifetime opportunity. We, as a company, need to focus on those opportunities. And I think by getting rid of distractions, making sure every person in the organization know how he could support our path to $30, I think that that's significant and drives a lot of value for us. So we're going to take advantage of the current market conditions.

I would pause here and take questions from the audience.

Can you give us a quick update on the Dubai facility, its status? Is it -- are you able to manufacture? Are you able to send product? Or do you have an alternate plan to meet the needs of getting product into Africa or the Middle East? And then secondarily, also some disruptions, I think, in the global zinc markets, if you guys are experiencing that at all in North America or anywhere else?

Yes. So -- thanks for the question. Overall, right now, we're -- our Dubai facility is operating at a very minimal level right now. I mean the safety of our employees is right now the highest priority for us. And of course, there's also guidance that we're following from the government. So right now, we're really -- I see that plant as almost as a standstill. It's about 15% of the ag business. But right now, we are -- even through the Straight, we really can't get products in or out of Dubai, and they're -- right now, they're prioritizing food versus equipment. So that's the largest impact to our business today is that element of the business. And we do have many other facilities. So we have a China facility that actually could support some of our other products going more into Europe, not into the Middle East, Africa, but from Dubai we also support Europe, we can bring that from other locations so we're able to mitigate some of that. So overall, that is the largest impact for us.

We're able to flex down that facility pretty efficiently. So it's not going to be a material impact at this point in time. Other than that, around the commodity pricing, I mean, the largest impact are, you mentioned zinc, you mentioned aluminum. Those are the ones that have currently the largest -- could have the largest potential impact. We don't see any shortages at this time right now. It's just pricing. And we'll -- as that continues, we'll make sure we price appropriately so we could recover that cost. So a lot of what we're seeing right now is wait and see. As of now, we're not seeing a material impact, and we'll continue to monitor and put plans in place address the situation.

Thank you for great questions. Go ahead.

There's always been this great promise of smart cities where the infrastructure is -- builds into smartness, particularly around things like smart cars and EV and all that stuff. Where are we in that? Because it would seem that your capabilities are a potential connecting point through those -- through all that smart capability, and it hasn't seemed to materialize all that much, and it seems it could also potentially be a nice bow wave for you as well, too, at some point.

Yes. So I agree. We've been talking about smart cities for quite a while, and it really has not materialized. So really, what we're focusing right now is we're going to support the cities and the states as they're trying to build their infrastructure, but we're going to stick to where we're really good at, and that is engineering these solutions, if it's lighting solutions, if it's poles, streets, so they can add their capabilities to it. So we're going to kind of stick to our lane. And as we see these opportunities materialize, we'll just help with the infrastructure for it, but we're not going to play directly with providing those smart solutions.

The other thing that seems to always be this interesting, it's not a battleground, but it's like this tension between an engineering firm like a Jacobs or an AECOM that you certainly have a lot of expertise in your domain as well, too. But at some point, they start to certainly build knowledge in your domain. How do you start to make sure that you're protecting the value of your expertise particularly in an age of AI, where all of a sudden, consuming gobs and gobs of historical engineering data becomes something that takes place in half an hour?

Yes. It's a good question. And we're actually using AI as well to help our engineering with the non-value add. To me, as long as today as the judgment part, right? I mean, when you look at AI, you'll have the prediction and you'll have the judgment. As long as the judgment remains a critical part, the -- our customers, the utilities, which are also risk adverse, want to make sure that we can give them the right solution because a mistake on a drawing will cost -- could cost tens of millions of dollars. So just making sure you have that eye of the engineer is going to be critical for them. And on top of that is we give them the whole solution. So we'll start from the engineering, but then we'll go all the way commercially, all the way through our plans to the final product. if you're kind of disconnecting the two, it again creates some risk.

So we're keeping our eye on AI. We're leveraging AI. I don't see at this point where it actually comes in and eliminates all the engineering. We're utilizing it to help us be more productive. I still think there's still the element for kind of the judgment part that we're going to utilize our engineers.

Thank you for a great questions. So we wanted to wrap up here. So thank you very much, Avner, Tom, Renee and everyone for joining today.

Thank you.

[Audio Gap] Citi Investment Banking. Very pleased to host this morning the team from Valmont Industries. We've got Avner Applbaum, President and CEO; Tom Liguori, CFO; and Renee Campbell, who has many roles, Investor Relations and Treasury included. Very pleased to have the team here again this year on day 3. Lots of ground to cover. You had your earnings call earlier this week. And I think also importantly, an announced Investor Day coming up this year. So excited to get perspectives on Valmont as you see it today. So very much looking forward to it. Renee, I think a few words.

Thank you, David. Well, good morning, everybody. Thanks for joining us today here at the Citi Industrials Conference. Before I turn it over to Avner, I just want to briefly mention that today's presentation and discussion are subject to our disclosure on forward-looking statements, which you see here on the slide. And with that, Avner, I'll turn it over to you.

Thank you, Renee. Really excited to be here again this year, and thank you for the invitation, Citi. Some of you might not be familiar with our story. So I'd like to share why we believe we are a hidden gem, and it really comes down to the opportunities ahead of us and to our capabilities. And just setting the groundwork for why we're so excited about the future is if you just look at our great track record, since I joined in 2020, we've more than doubled our adjusted EPS. In fact, nearly tripled it by now and doubled our return on invested capital to that 17.6% and delivered very strong returns to our shareholders.

These results reflect our discipline, our portfolio discipline, our execution across the portfolio. And we're just getting started. You're going to hear from Tom in a little bit. We see a clear path to $500 million to $700 million in additional revenue, $25 to $30 in adjusted earnings per share over the next 3 to 4 years. And the execution is based on our 3 core strengths. One, we're leaders in markets that are growing with strong drivers like energy consumption and infrastructure replacement.

We're delivering unmatched value to our customers, providing engineering manufacturing expertise, and we're investing where it counts. And all this started nearly 80 years ago, and we're about to celebrate our 80th anniversary, all started in the Valley, Nebraska in 1946 by our founder, Robert Daugherty, we established the mechanized irrigation industry. We introduced the mechanized -- the center pivot. And we took that expertise into the infrastructure business, which is now the larger part of our portfolio.

As you can see, 75% of our portfolio now is infrastructure, 25% is agriculture. See we have a global footprint. We operate in more than 100 countries and 70% of our -- more than 70% of our business is in U.S., Canada. So how do we get there? We capitalize on the opportunities ahead of us and the market drivers. So I'd like to spend a couple of minutes on these market drivers. Let me start off with the energy demand. It's increasing. So we've seen for decades using less and less energy, driven by efficient appliances, efficient lighting, efficient behavior.

Now that a lot has changed. We're seeing load growth for the first time in years or, in fact, decades. And many drivers such as electrification, additional manufacturing, onshoring, reshoring, mega projects, oil and gas. And then, of course, there's AI and data centers. And we've seen a lot of data centers. You see one example of one out in Louisiana, which is planned that it will require double the power of the entire city of New Orleans as an example.

Now the good news for us is it doesn't matter what power generation, all that power needs to move from the power generation to the end resources, and that's where our transmission and distribution substation solutions come into place. On top of that, we have aged systems, and they need to be replaced. That can be anything from roads to lighting. You see a lot of utility -- lighting 25, 30 years at the end of their life. We see utility poles 60 to 70 years at the end of their life. We see pivots in the field that need to be replaced and upgraded and modernized. So that is another driver for us.

And then finally, productivity and resource efficiency. We need to do more with the resources that we have available. It could be land, it could be water. And one example for us is the pivot solution, which makes sure we could take efficient use of water, power and the land when the environment is just becoming tougher and tougher. So those are 3 main drivers. Now how do we take advantage of those market drivers. And it really comes down to what sets us apart from the competition. And 3 critical areas: leading engineering. So we have leading engineering in the market. We provide highly engineered solutions for our customers.

Let me give you an example of -- right now, we're working with utility customers in the Midwest and trying to address terrain and land. And we're supporting with our PyraMax solution, 2 PyraMax towers, each one of them around 340 feet. So think of a football field is the complexity and the size of some of these structures. Then around commercial execution, we have deep expertise in the market. We have a very strong channel, sales channel. And one good example is our dealer channel, Valley, we have the strongest dealer network. And the growers know they can call 24/7 of the dealers to make sure they can solve their biggest challenges.

And then finally, operational excellence, capabilities, expertise, scale in the manufacturing area. One example is our control environment construction substation, CES. So if you think about it, every time you have a transmission line, you need a substation. Well, we have the capabilities to build the substations in our plants and deliver them to the site. And if you think about the utility, it saves them labor cost, it gives them predictability and makes them execute with greater credibility in the area.

So I'd like to give a little bit of flavor about our portfolio. We have main 4 product lines. Utility is the largest and is growing, and we have comprehensive solutions. I mentioned transmission distribution substations. We have a variety of solutions from concrete to steel, hybrid composite and so on. And in the lighting and transportation, we can do lighting anywhere from street lighting to highway lighting, sign structures and again, a variety of materials, including aluminum in this case. And then we have our coatings, our galvanizing business.

How do we make sure that these structures can stand the environment, last for longer and actually 1/3 of that business supports our own internal business. And then finally, telecom. It doesn't matter what type -- where you are in the -- if you're in the 4G, 5G or 6G network, we're right there with our towers, with our components, with a high service model to make sure they can deploy the networks. So that is in the infrastructure side. If we switch over to the agriculture, what is really important for the growers is they need to have the exact water on their crop when they need it to make sure they can maximize yield, conserve water and adapt to weather. And that's exactly what we do.

On top of that, we provide technology. I mean, today, fleets are large. You want to make sure you can manage the fleet from your mobile device to make sure you can control it, to make sure you can make sure it's running when it needs to run and help the farmer be more efficient and more profitable. You can see our split is about 50-50 international and North America. We do know there's a challenging market today, but we do see opportunities for the future.

We do see growing regions like Brazil, where there's still a lot of land available for irrigation, opportunities for double crop in that region. And when rain is less predictable, you want to make sure you can secure your crops. So overall, while short term is challenging, the long-term opportunities are clear. We lead the market. We're expanding our value through the smart technology, and we're growing our footprint in areas where we see growth like Brazil and Middle East, Africa.

And with that, I will turn it over to Tom to share some of the -- some of our financials.

Thanks, Avner. So here's our financial performance over the last few years. And let's start with revenue on the left. So in the early years on this chart, that is from pricing. We are the market leader. We have differentiated products. As Avner said, in agriculture, it's about the reliability of the irrigation system and it's about technology. A farmer can control their irrigation from their home, from their phone, et cetera. In engineering -- I'm sorry, in utility, it's the engineering. Every pole is engineered to order.

It's our manufacturing scale to support our utility customers, and it's the reliability. If you're selling into utility, these are big projects, construction projects and the utility structure needs to be on time. So that has really helped our sales and the pricing execution. The middle years, this is a slowdown in ag, and we're also capacity constrained for our Utility business. We've started adding capacity. We're going to do more of that, and you can see the uptick in '26. Through that time, our operating margins have gone from 9.5% to over 14%, and we expect that to continue.

And again, that is from our pricing and good cost management and diluted EPS practically doubled through 2025, and we expect to get it to $22 in '26, adding to the EPS growth is lower interest expense, lower debt as well as share buyback. We have active share buyback program. So let's go to the next slide. And we think this is really important. This is how we see value creation to all of you in this room and listening to this call. Our main drivers for value creation are catch the infrastructure wave utility, position ag for growth, disciplined resource allocation.

In utility, it's all about adding capacity. So in each of our plants, we are adding brake presses, welding machines, automation. We're getting more throughput from the plants. That gives you 2 things: higher revenue capacity, but also a lower unit cost, which helps expand margins. In ag, we're taking this time during the slowdown to put resources on aftermarket and technology. Resources in this case would be more people, talent and as well as inventory for aftermarket. Aftermarket for any company is a higher-margin business and the technology is subscription-based. So we're running gross margins of 70% to 80%. So the intent here is, over time, higher mix of higher-margin business.

Disciplined resource allocation really 3 things. One is our corporate cost. It was approaching 3% of revenues. We think we can get that below 2%. The second is share repurchases. We have a $700 million board authorization from last year. We executed $200 million of it in 2025. And the third is acquisitions. We're looking at acquisitions that would add $200 million to $400 million of revenue, probably in the infrastructure space, could be agriculture.

All in all, the intent is to grow our revenues and our EPS. So we just reported 2025 2 days ago. 2025 was $4.1 billion of revenue. We're guided to this year at midpoint, $4.3 billion. And with the value drivers, we want to get that to $4.6 billion to $4.8 billion over 3 to 4 years. Our EPS, we reported for 2025 is $19.09. We're guiding $26 to $22, and we expect to be $25 to $30. And when we say 3 to 4 years, it's 2028 to 2029. So that is our value creation strategy. Everybody in our company is focused on these 3 initiatives.

And with that, I'm going to turn it over. David, you left that Enterprise Risk Manager. Renee also does our ERM.

Thank you. Thanks, Tom. So about a year ago, we shared our updated capital allocation priorities, which are really aimed at accelerating growth and increasing shareholder returns. So over the next 3 to 5 years, we expect to deploy roughly half of our cash to grow the business and the other half to return capital to shareholders. And actually, if you look at 2025 results, we were pretty much right around that 50-50 mark.

On the growth side, we are investing capital on high-return infrastructure capacity. You've heard Tom and Avner both talk about utility demand, very strong, very robust. So our capacity expansions are particularly focused on our utility business, and we do have visibility to demand for the next several years. We're increasing and have increased our annual CapEx run rate to approximately $150 million to $200 million in the near term to support that growth.

We'll also pursue acquisitions, but only where there is a clear strategic fit and/or a natural adjacency to our core, along with a compelling return on invested capital. And at the same time, we remain committed to shareholder returns. So last February, as Tom mentioned, our Board authorized a $700 million share repurchase program authorization. And we also increased our dividend at that time by 13%, which we aim to do on an annual basis around the first quarter. We feel it's important to have that predictability for our shareholders.

And our objective there is to grow our dividend consistently aligned with our earnings growth. So a very balanced approach that we believe supports both near-term performance and long-term value creation. So bringing it all together, why invest in Valmont? Well, Avner and Tom gave you a lot of compelling reasons. I would say, first, our portfolio is very much aligned with durable growth drivers, global market drivers.

As Avner mentioned, increasing energy demand, connectivity, grid expansion, they all require engineered infrastructure. Our customers in both segments are also focused on productivity and resource efficiency, doing more with less. And aging infrastructure, aging systems continue to require resilient replacement and modernization. And so these drivers really do support multiyear investment across both segments. And we're converting those into performance. So strong backlog in utility, capacity investments. Those really position us well to support that growth.

And in ag, even in a cautious market environment, our focus on technology and aftermarket and cost discipline supports profitability. And we're deploying capital in a balanced way, as I just mentioned, to support sustainable value creation.

So everything I mentioned reflects a company built for durability, which is something we're especially proud of, and that's a great segue to this slide. As Avner mentioned, we are celebrating our 80th anniversary as a company this year. It's a very special year for us. That's 8 decades of serving critical infrastructure and ag markets around the world. And while we have evolved a lot since 1946, I would tell you that our core values, which are passion, integrity, continuous improvement and delivering results have not changed, and they remain very central to how we operate and create value as we build on that legacy.

As David mentioned, we're also excited to share that we'll be hosting an Investor Day on Tuesday, June 16, in New York City. More details will be coming in the following weeks, but we'll do a deeper dive into our strategy and our long-term financial framework and the growth opportunities ahead.

So with that, David, I'll turn it back over to you.

Terrific. Maybe I'll start off with a number of questions. But look, thank you for the overview, really a compelling backdrop that you present here today. So with the earnings call earlier this week, maybe just start on a handful of questions there. You really emphasized exceptional utility demand, record backlog and the CapEx tied to capacity expansion. How much of '26 revenue on the utility side is already committed. And how far out does your line of sight extend?

Yes. Thank you. So when you look at -- I think backlog is one indication. And today, some of the lead times go a year, 50 weeks. And so we have great visibility into 2026. We're booking now into 2027. So the backlog is one element. But really, what's more important is the projects that our customers are working on, they're multiyear projects. In fact, when you look at our backlog today, it reflects projects they've been working on 4 years ago, 5 years ago and -- which gives us more confidence into the future because a lot of the projects now will give us strong tailwinds into the future.

And there are so many drivers that are driving the strength. I'd like to use Texas as a microchasm for what we're seeing in this country. So you think of Texas, North Texas, you see a lot of data centers coming up. You look at migration of people into Texas, look at Austin, that city is growing. A lot more industrial manufacturing, oil, gas, a lot more manufacturing, even seeing some Bitcoin mining in Texas.

So you see a lot of demand and Texas is another good example where they need to strengthen, rebuild the grid. So overall, we see a lot of growth in a lot of areas, and we're getting the information from our customers. We talk to our customers daily. We're embedded in their plans. We see their plans for the next 2, 3, 4, 5 years and beyond, which gives us very strong confidence in the market for the midterm, the long term, and we're -- that's where we're sharply focused on investing. And you saw our numbers, $170 million, $200 million in CapEx very strong ROI. We're investing in our plants, which are already approved by our customers, which has great management teams, and we're well on our way.

We had a really strong start in 2025 with the capital 2026. We're investing now in 2026, '27, '28. So overall, very excited about the utility space.

And in line with that, as you're investing CapEx in 2026 and 2027, how fast does this new capacity convert into revenue and margin?

Yes. So it's -- I'd say it depends. It's a mix, right? Some of the fruit of the investments we did last year, we're seeing today. In many cases, we get these done within a year. It really depends. Some of you need to expand the plant, so you get a little more infrastructure work on our plant. Some of it is equipment that could have some long lead times and some of it is automation, better workflow. In fact, we're relying on a very strong AI team that we have. And what we're doing in this space is we're focusing on how can we get more productivity at our plants, how do we make sure we have the right jobs in the right plants at the right sequence, and that is another initiative.

So I'd say right now, we have our capital that we spend. We have the right capital to support 2026. Some of it will come online throughout the year. We're working on 2027. So it's mix, but we're staying ahead of the demand to make sure we can support our customers' needs.

Terrific. And then just switching over to the ag side of the equation. Brazil onetime expense in 2025, confidence going forward and thoughts around ag rebound and levers that you're pulling to drive improvement on the ag margin side.

Yes. Tom, do you want to start on the...

Sure. So Brazil has an economy. It's going through a difficult time, very high interest rates, limited credit available and farmers are feeling that. So we did take some charges. We took them on credit losses anticipated as well as some of our legal cases, you have to go back to 2019. And to put it in perspective, really 2025 for us was a year of preparing for revenue growth and margin expansion. And we did a lot of work on the organization with layers. We did work on the portfolio. We exited some solar. But the third was we needed to get our financial exposures behind us.

So Avner and I, Renee, we spent a lot of time on this, and we feel they are behind us. And I'll say for the Brazilian -- our Brazilian team, they're very important to us. And Brazil will be a very important market to us for years to come. In the U.S., if you're a corn farmer, you get one crop a year. In Brazil, you get 3. So a pivot is very important. The payback is very much quicker in Brazil. So hey, we took our medicine, and we think a lot of health going forward.

Good. This past quarter, you also picked up the remaining 40% of ConcealFab. That has some pretty differentiated product pipeline. Just a few words on that as it fits into your broader M&A strategy.

Sure. So I'll start off with just specifically ConcealFab. We've been owning that for several years. And in telecom, we have a very strong value proposition. We have a very high service model, which really encompasses both our engineering expertise where we work directly with the large carriers to make sure we have the right products for them to build out their network. In many cases, we're spec-ed into some of their products.

We have a very strong delivery model where we can make sure the contractors have the products when they need them in the field. We have a strong supply chain to make sure we have the parts available. And overall, we're aligned with the customers wherever they are. When they were building out the network, we were right there to support them with the macro poles, with concealment, with the components to make sure they can build out their network. And now when the carriers are focusing more on execution on the 5G network before they move into 6G, more densification, better quality, we're right there with our offering. And what ConcealFab, it really expands our offering to some technology such as PIM basically getting rid of some interference in the network.

And now that we can combine fully these operations, we could really improve our channel, improve our offering. And we put our cash to use. It's a company that we already know, we already own, so we can get it, get some EPS accretion and more importantly, really help to support our customers. And that's -- like Renee said, right, on acquisitions, the first thing for us is always it's got to tie to our strategy. It has to tie to our leadership position in the markets that we play in. How do we provide stronger value to our customers. How do we expand our offering.

In some cases, it's products, could be capabilities, could be regions. It has to have a strong strategic fit. And then once we do determine there's a strategic fit, of course, it has to follow our financial criteria from being accretive year 1 and beating cost of capital in year 3. So we're being very disciplined. And fortunately, we have a lot of opportunities internally. We talked about all this CapEx. So that has the strongest ROI. We're going to keep on doubling down on investing in our business. And when the right acquisition comes up, we'll take that opportunity as well.

Terrific. Maybe to pivot to kind of your broader perspective on Valmont now that Avner reflecting on, you came into the CEO role 2.5 years ago and Tom, you came in externally more recently, really thinking about, okay, what changes have you made at Valmont and how -- what has stood out to you as kind of unexpected.

Yes. So when I took on the role, it was pretty clear that we just need to focus on our strengths, our core, the markets that are growing, and there's no need to look external for opportunities, focus on our company, we've been around for 80 years. We have a lot of strength. We have leadership. So let's double down. So the first thing we did is some of the products that just -- we didn't have the -- we weren't the right owner for those products or our customers weren't looking for those products, so we couldn't hit our financial threshold.

So we simplified our portfolio, eliminated products that didn't fit well. Then we also had too many layers in the organization. And when an employee or a sales rep is in front of the customers, they need to be able to make a decision quickly and to support the customer. So eliminating layers, so we're much closer to our customer. Then we also had more complexity across the organization, so really streamlined the organization, removed layers are areas of focus. And then we set clear priorities across the organization, like Tom mentioned, everybody in the organization knows what they are focused on. What value drivers are they focused on? Where are they focusing on growth. Where are they focusing on optimizing to make sure we have full alignment across the company.

Now where I was surprised, I think a couple of areas. One, how much benefit we get from really linking the commercial and the operation teams much closer and how much more value we're able to provide to our customers and ultimately to our shareholders by having them linked together. And when you look at the slide that I shared where we have our core capabilities, we really have a system. They're not a stand-alone. We have a fantastic channel. We have very strong engineering expertise. We have manufacturing at scale. They all need to work together in a system.

And then when they work at a system, we see incredible results. And we're seeing it in our results today, and we're going to see more of that going into next year. And maybe the other step was around innovation, right. The not going after that shiny object, but kind of when we started streamlining our innovation around what our customer needs and using our talent to support our customer, that creates strong value. So those are 2 areas. Very pleased. We are set to execute. I mean we have the strategy, we have the markets, we have the capabilities, getting great momentum going into 2026. We have our value drivers. So this is shaping up pretty well for us.

And Tom, anything to add given your perspectives?

No, I think we have a great team and a great culture. And as Avner said, this is all about providing focus. Renee with the capital allocation, we want to make this really clear to our investors, like what do we -- we want to be good stewards of your money and how do we do that and laying it out. And we're in many different markets. So with the value drivers is being very clear about it's utility, it's ag, aftermarket and tech, and it's about corporate costs and share repurchases. And no, I agree with Avner. Personally, I'm very happy to be here, and it's a pleasure to show up to work every day.

And let me just add, maybe the most important thing I neglected to share was the strong leadership we have in place today. We have a very strong, diverse management team. Of course, we brought Tom from the outside with a lot of experience in public companies. We brought Darryl Matthews from agriculture, decades of experience in agriculture operating in difficult markets and growth opportunities. And then we promoted 2 from the inside, Chris Colwell and Greg Turi, they've been with the company 14, 15 years, deep understanding of the markets in infrastructure, great understanding of our culture.

And then we promoted as well Jennifer Paisley, on the people side, again, been in the company. So we just have a very strong leadership team that understands where we need to head and are moving us forward.

I'm sure investors will have a chance to meet a number of those individuals at the Investor Day. So it would be great to see the depth there. I will open it up to any questions from the audience. But before I do that, really thinking about the vision, if we're sitting here 3 to 5 years from now, what will Valmont look like that tells investors that your strategy has worked and which outcomes are already starting to become visible today and what will require execution ahead.

Yes. And kind of along the theme of simplification and focus. And to me, the easiest way is we just look at those value drivers, we set very specific value drivers around our growth on the top line around our investments in infrastructure to capture the growth, our investments in agriculture in areas from aftermarket to technology to some of these regions that are seeing growth and some of the disciplined capital allocation.

So we have very specific KPIs that show us that we're heading in the right direction. It's through -- it could be utilization of our plants. It could be connected devices we have in the technology on the ag side. So we're tracking that very clearly. So to me, when you look out 3, 4 years, we're going to see us hitting those metrics. And on top of that, we have all the other business that will be strong contributors as they improve their performance, as we see market growth in telecom, in lighting and transportation, in coatings in our international markets. So they're going to contribute as well. And so I think it's going to be pretty simple for our investors to see that we're advancing our strategy, hitting our goals and setting us up to be a stronger and larger enterprise.

And maybe I would add, David, we didn't touch on it specifically in the slides, but all of this sits within a very strong balance sheet framework and gives us the flexibility to invest and deploy and pivot when we need to. Maintaining that flexibility is very important to our growth story and investment-grade credit rating is very important to the story as well.

So our net leverage today is right around 1x net earnings. I think that's a very important point to make that it really positions us well to do all the things that Avner just described as we look ahead for the next several years.

Terrific. Maybe I open it up to any questions from the audience.

You talked about the $150 million to $200 million of annual CapEx. And of course, there's kind of a balancing act between investing and expanding capacity, which seems like a really good idea now, but in the future, you may end up with a little bit too much. So how do you kind of balance that? And the industry adding capacity is kind of a self-consuming proposition because if you keep it tight, you can keep prices higher and maybe extend the cycle. So kind of how do you reconcile all of those things?

Yes. Sure. We're very mindful of capacity in industry. I mean people remember what happened over a decade ago, which I'm not going to go into details. It was a very different environment with some large projects going on. So a couple of things. One, we -- the most important thing is we talk to our customers every single day. And we see their growth plans into 2030, beyond 2030. So we -- being the leader with the largest market share, we pretty much have a very good feel for what is happening in the industry.

And it's not only one growth driver. I talked about many, right? And how great and big is AI going to be. It could be upside if AI really continues to grow. And if it doesn't, there's still so many growth drivers that will support, like I said, around electrification and industrial, and we're connecting more renewable. And so we look at that. So that's one.

Two, we measure the capacity industry very closely. We know all the players in the industry. We're very much aware of all their investments, and we have a very good feel for that. And right now, what we can see, there's absolutely more demand than supply. And there'll be more legs to this. So even as things slow down, there's still the whole element of grid resiliency, right? Like I mentioned, some of these poles are 60, 70 years. That's not the focus today for the most part. A lot of it is driving growth so they can drive -- support the economy and get the rate increases. But resiliency will follow as well.

And the third bullet is that's why exactly we're not doing greenfields. That's why we're supporting our own fields because if you create a lot of greenfield, right, and if the market stabilizes, then you might have capacity that can -- that you won't be able to use. So we're investing now in capital. I mentioned that all the other tools that we're doing around automation, AI, scheduling to make sure we can get more productivity without actually investing capital. So just to sum it up, we have a very good feel for the industry. We're staying very diligent and deliberate about our investments. And we have a good line of sight to the next 5 years at least. And we're working now with the -- with our customers on 2030 and beyond.

So good question. We are very mindful of making sure the industry is balanced. And you can also see based on our results, right, the pricing and the volume. There's significant value we provide our customers, and we're charging appropriately.

Okay. Any other questions? Maybe just to dig into that demand side of the equation, you're, of course, very close to your customers. So you have that visibility. As you think about the investor audience, what indicators would you point to as reliable indicators of your go-forward demand?

Yes. So I'd say, right, I mean, if you look at the short term, you look at the backlog. I mean, if you just in tune to some of these large investor-owned utilities, I mean, you see their plans. Their plans are visible. They're public in many cases. There's a lot of reports out there that could give the investors' confidence. Of course, we don't rely solely on them. We rely on our customers. But you can look at those drivers, and there are so many indications of like how much gigawatts you need to add this year versus how much you need to add all the way through 2030 and beyond.

And we're going to spend time on the Investor Day, giving our investors really clear understanding on each one of these drivers and how they impact our business. And for us, it's real. I mean you can generate power, but you got to get the power to the houses, to the communities, to the industries. For every line, you need the transmission, you need the substations, and we help them with these strong engineered solutions.

So as we just finished up, I just want to kind of end on that note is like we are we are set up well. We have great growth in many of our industries and our product lines, and we're supported to grow it. And in agriculture, we didn't spend a lot of time. We're bumping around the bottom, but there's still a lot of replacement going on, a lot of opportunities for us internationally, either around irrigating land and food security. And we're significantly lower than we were when this market was good. So there's -- you don't want to ever call the bottom, and I don't know when it starts going higher. But there's -- right now, there's a lot more upside than downside. So I feel pretty good about where that business is as we go forward.

Look, I think the audience, investors are very much looking forward to the upcoming Investor Day later this year, really interesting to kind of hear about all the demand drivers that you're facing. So very much appreciate the team coming back into the Citi conference. So Avner, Tom and Renee, thank you very much. Appreciate it.

Thank you very much.

Thank you.

Thanks for having us.

Greetings, and welcome to the Valmont Industries, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Renee Campbell, Senior Vice President, Capital Markets and Risk. Ms. Campbell, you may begin.

Good morning, everyone, and thank you for joining us. With me today are Avner Applbaum, President and Chief Executive Officer; Tom Liguori, Executive Vice President and Chief Financial Officer; and [ Eric Johnson ], Chief Accounting Officer.

Earlier this morning, we issued a press release announcing our fourth quarter and full year 2025 results. Both the release and the presentation for today's webcast are available on the Investors page of our website at valmont.com. A replay of the webcast will be available later this morning. To stay updated with Valmont's latest news releases and information, please sign up for e-mail alerts on our Investor site. We'll begin today's call with prepared remarks and then open it up for questions. Please note that this call is subject to our disclosure on forward-looking statements, which is outlined on Slide 2 of the presentation and will be read in full after Q&A.

With that, I'd now like to turn the call over to Avner.

Thank you, Renee. Good morning, everyone, and thank you for joining us. I'd like to start with the full year highlights and key messages summarized on Slide 4. 2025 was a solid year for Valmont. Our team delivered strong performance as they continue to navigate a mixed demand environment, delivering unique value-added solutions for our customers. We strengthened our core to support future value creation. Our track record of success is grounded in a clear understanding of our customers' need and our core strength in serving them. They're managing multiple demand drivers including load growth, aging infrastructure and increasing complexity.

In this environment, reliability, quality and on-time delivery, are critical to their financial and operational performance. Delivering consistently at scale requires disciplined execution and that discipline guided our actions throughout the year. We simplified the business, sharpened our priorities and aligned capital and resources where execution drives the greatest positive impact. As a result, Valmont is more resilient, more aligned and better positioned to support our customers. I want to thank our nearly 11,000 employees around the world for their dedication and efforts throughout the year. Their work has strengthened the foundation of the business and position Valmont well for what we expect to be strong growth in 2026 and beyond.

Turning to Slide 5. I I want to highlight how our actions in 2025 are providing us with momentum as we move into 2026. In Utility, customer demand for large-scale projects to support grid expansion and rising electricity load remains strong. This past year, we increased capacity to serve that demand through targeted investments in equipment, layout optimization and workflow redesign. We also began deploying AI-enabled scheduling and planning tools to improve throughput. Together, these actions position us to support continued growth in 2026 and beyond.

In Agriculture, we made progress this year on structural programs that improve profitability. In a challenging market, our customers are looking to their partners to help them do more with fewer resources. We'll continue to drive value through disciplined cost management and improving the customer experience with better parts availability and easier e-commerce ordering. We'll also advance integrated tech and innovation that improves efficiency for growers. Altogether, these efforts are positioning the business to emerge stronger when markets recover. Across the company, disciplined resource allocation, an unwavering commitment to safety and continuous improvement remains foundational to our performance.

Now turning to Slide 6 for an infrastructure market update, starting with Utility. Utilities are planning multiyear increases in capital spending to support load growth, grid expansion and resiliency. Data centers and AI-related infrastructure are contributing to that demand. Customers trust Valmont for complex transmission, distribution and substation projects where execution and reliability are critical. We entered 2026 with $1.5 billion in backlog, up 22% from a year ago, largely driven by Utility. As our incremental capacity comes online, we expect to convert that demand and support continued profitable growth. We remain a trusted partner of choice across the full project life cycle due to our market expertise, engineering capabilities and scale manufacturing.

Our Lighting & Transportation business enters 2026 with a positive and improving outlook. Transportation markets are supported by ongoing DOT programs, and infrastructure funding. In North America, lighting demand is stabilizing. International markets are also contributing to growth. Our focus remains on disciplined execution. We are enhancing service levels and operating performance as demand strengthens. Coatings is also positioned for growth in 2026. Demand is supported by infrastructure investment and expanding data center activity. This business remains a critical part of our value proposition. It protects steel structures, extends asset life, and supports the reliable long-term infrastructure performance. In telecommunications carrier capital spending has normalized.

Our components business continues to benefit from alignment with carrier programs and a high service operating model. During the fourth quarter, we acquired the remaining 40% of ConcealFab. Full ownership of ConcealFab adds control of differentiated technology and an innovative product pipeline to our portfolio. It strengthened our ability to support customers investing in 5G, broadband expansion and next-generation wireless deployment. Overall, Infrastructure enters 2026 from a position of strength. Demand trends are durable. Capacity investments are translating into better execution and improved throughput. Our focus on the right growth areas support continued momentum.

Turning to Slide 7. Looking at the demand outlook for Agriculture in 2026, we see North America as stable. International is likely to be down compared to the first half of 2025 but broadly in line with the second half. USDA forecasts suggest a cautious grower environment. Thus, we are not assuming a near-term recovery in North American equipment demand, and our outlook reflects a disciplined view of market fundamentals. At the same time, profitability is supported by pricing and cost discipline. Targeted investments in technology and our aftermarket platform are helping mitigate the impact of lower equipment volumes even in a softer market.

In Brazil, tight credit availability and delays in government-backed financing continue to weigh on near-term demand. Over the longer term, Brazil remains an attractive growth market, strong agronomic conditions, multiple crop cycles and a compelling ROI for irrigation equipment support future investment. In the Middle East and Africa, project activity is driven by food security priorities. Government-led investment continue to support large-scale irrigation projects. We continue to advance our strategic priorities in technology, aftermarket and international markets. These actions position Agriculture to emerge stronger through the cycle.

In January 2026, we acquired the remaining 80% of [ Rational Lines ], a Canada-based engineering firm with expertise in advanced irrigation controls, communication and connectivity. This acquisition strengthens the engineering capabilities of our Valley Irrigation platform and advances our technology road map, enhancing our digital capabilities that support our products, systems and our global dealer network.

Turning to Slide 8. As we look to 2026, Valmont is positioned for a strong year of growth with the capabilities and scale to execute and create long-term value. This year, we will celebrate our 80th anniversary. While the company has evolved significantly since its founding in 1946, the core values established at the beginning passion, integrity, continuous improvement and delivering results remains central to who we are. Guided by those values, we continue to invest in our people, capabilities and products to deliver more for our customers. Finally, I'm pleased to announce that we plan to host an Investor Day on Tuesday, June 16, in New York City. We look forward to sharing a deeper view of our strategy and long-term financial targets. More details will follow, and we hope you'll join us.

I'll now turn the call over to Tom to review our financial results and 2026 outlook.

Thank you, Avner. Good morning, everyone, and thank you for joining us today.

Turning to Slide 10. Our fourth quarter results include a few unusual items. So I'll start with a summary of our top level results and explain the impact of these items on our earnings per share. GAAP EPS of $9.05 includes a tax benefit of $78.5 million or $3.98 per share, primarily due to a U.S. tax deduction associated with the loss on our Prospera investment as we wound down business operations in 2025. The $78.5 million is excluded from adjusted EPS. It is also a cash flow benefit, approximately half of which is reflected in 2025 results, and the remainder is expected to benefit first half 2026 cash flows. Adjusted diluted earnings per share was $4.92, up 28.1% year-over-year. Adjusted EPS includes a $16.5 million legal reserve for our Brazil Agriculture business, related to cases involving various disputes dating as far back as 2019.

In the fourth quarter, we had an adverse court ruling on one of these cases, and for the others, entered into settlement discussions with parties involved, both of which led to the reserves. Adjusted EPS also includes $11 million of credit losses in Brazil. As we explained last quarter, Brazil is operating in a tight credit environment, which unfortunately is causing financial distress for farmers. For total year, Brazil Agriculture expenses include $24 million of legal reserves and $26 million of credit losses for a total of $50 million. We believe we have fully accrued and covered our financial exposures in Brazil and do not expect additional unusual expenses in the future. Combined, these expenses reduced adjusted EPS by $0.92 in the fourth quarter and $1.70 for the total year. The remainder of my comments will focus on the adjusted results. As outlined in the press release and in the Reg G disclosure in the presentation appendix.

Moving to our segment results on Slide 11. Infrastructure sales of $819 million grew 7.2% compared to last year. Utility sales grew 21%, driven by strong market conditions, favorable pricing, and higher volumes as a result of the capacity increases we have deployed. Congratulations to the Utility team on their strong performance. Sales in Lighting & Transportation declined 5.3%, due to continued weakness in the Asia Pacific market and North America production challenges that temporarily reduced output. In the fourth quarter, North America L&T orders were stable. As we entered 2026, order rates are trending up, and we anticipate having the production challenges resolved in the first half of the year. Coatings sales increased 6.3%, supported by healthy internal and external infrastructure demand. Telecommunications sales were similar to prior year. Solar sales declined due to our decision to exit certain markets. Operating income was $149.6 million or 18.3% of net sales, an increase of 230 basis points as a result of our pricing actions, volume growth in high-value offerings and lower SG&A.

Turning to Slide 12. Fourth quarter agriculture sales decreased 19.9% year-over-year to $222.7 million. North America markets remain challenged. International sales declined due to the weakened economic environment in Brazil and lower project sales in the Middle East. Our Agriculture segment had an operating loss of $3.3 million in the fourth quarter. The loss includes the $27.5 million of legal reserves and credit losses mentioned earlier. Excluding these expenses, operating income was $24.1 million or 10.9% of sales. We expect our agriculture segment to have double-digit operating margins in the first quarter of 2026 and remain there for the full year.

Turning to Slide 13 in our full year income statement. Net sales of $4.1 billion increased slightly year-over-year. Sales growth in Infrastructure, particularly Utility, was offset by lower Agriculture sales. Operating income increased to $538 million or 13.1% of revenue. Operating income includes the $50 million of expenses for the -- excluding these expenses, operating income would have been $588 million or 14.3% of revenue. Below the line, interest expense decreased due to lower debt. Our adjusted tax rate declined to 23.2% due to the geographic mix of earnings. And adjusted diluted earnings per share was $19.9, an increase of 11.1% over 2024.

Moving to Slide 14 for cash, liquidity and capital allocation. Fourth quarter operating cash flows were $111 million, bringing our full year total to $457 million. We ended the year with approximately $187 million of cash and net debt leverage of approximately 1x. We invested $145 million in CapEx, primarily for utility capacity expansion. Free cash flow totaled $311 million, representing approximately 90% of net earnings. We deployed $102 million to acquire the minority shares from some of our joint venture partners. The majority of this was related to ConcealFab, though we also acquired the minority share of Agriculture businesses in Brazil and Argentina. Buying after minority partners provides us with greater control and flexibility to run these businesses. We returned $250 million to shareholders, including $52 million through dividends and $198 million through share repurchases at an average price of $327.65.

Moving to Slide 15. We remain sharply focused on executing our key value drivers. To catch the infrastructure wave, we continue to invest in high return capacity expansion to drive revenue growth. During 2025, we deployed approximately $107 million of CapEx in our North America infrastructure business, which contributed to the $143 million of utility revenue growth. In Agriculture, we continue to invest in our aftermarket and technology businesses. Both of these initiatives are contributing tangible productivity benefits to our Agriculture customers as well as dealers. A milestone in the fourth quarter was that we started shipping our [ ICON+ ] control panels, which brings the AgSense 365 functionality to any pivot brand allowing growers to easily connect older or competitive machines. Lastly, our disciplined resource allocation initiatives are progressing. Corporate expense for the full year declined $13 million to $97.8 million or 2.4% of revenues.

I want to congratulate the corporate team for their work to streamline the organization and manage cost. In the fourth quarter, corporate expense declined to 1.9% of revenues compared to 2.9% last year. On the capital allocation front, we executed on our Board authorized $700 million share repurchase program with approximately $200 million repurchased in 2025. We also acquired the minority shares of our joint ventures in Telecom and Agriculture to $102 million. Bringing it all together, we are making progress toward a path to deliver $500 million to $700 million in revenue growth and $25 to $30 in EPS over the next 3 to 4 years.

Turning to our 2026 outlook on Slide 16. Net sales are projected to be between $4.2 billion to $4.4 billion. Diluted earnings per share are projected to be in the range of $20.50 to $23.50. At the midpoint, our guidance represents year-over-year revenue growth of 4.8% and EPS growth of 15.2%. Factors that would contribute to performance being at the top end of the range include additional utility revenue, that could results from our initiative to enhance factory scheduling or bringing on capacity faster than expected and/or an improved market environment in Agriculture during 2026.

Factors that will contribute to being at the low end of these ranges include unanticipated delays in our capacity expansion plans, such as equipment or construction delays or changes to tariff regulations that continue to evolve. When tariffs change, we alter our supply chains and adjust pricing. They'll both require time to take hold and mediate any increase in tariffs.

Turning to Slide 17. These graphs illustrate the major drivers of our 2026 guidance at midpoint. Starting with net sales. We expect growth in Infrastructure, both price and volume, primarily in Utility. In Agriculture, growth in aftermarket and Technology though a decrease in volume. For EPS, the drivers are earnings growth in Infrastructure, primarily Utility. Improved earnings in Brazil has recovered our legal and credit exposures last year in 2025. Improved earnings from our decision last year to exit certain solar markets, increased profits from the businesses we now wholly own such as ConcealFab, a benefit from lower share count due to our share repurchase program, reduced earnings from Ag due to lower volumes. We expect our tax rate to return to a more normal 26%. And we have also adjusted for potential risk, which could include changes in global tariffs, commodity and steel cost or other unforeseen events.

All in all, we are confident in our ability to achieve the midpoint of guidance. For the first quarter of 2026, we expect year-over-year growth in revenue and earnings per share. Before we close, we want to thank the entire Valmont team for their focus on moving our value drivers forward.

With that, I will now turn the call over to Renee.

Thank you, Tom. At this time, the operator will open up the call for questions.

[Operator Instructions] And our first question will come from Tomo Sano with JPMorgan.

On the Utility side, could you talk us through your confidence in the continued strong demand for this segment? And have you seen any changes in customer investment appetite or competitive landscape, please?

Well, thank you for your question. We feel very confident with the strength in the Utility market that has several strong drivers such as -- we're seeing electrification. We're seeing the AI and data centers, industrial onshoring, aging infrastructure replacement. So there are many drivers that support our outlook. On top of that, we have daily conversations with our customers, and we're tied in to their multiyear plans to make sure we're strongly aligned overall with their growth investments and it's evident by when you look at our backlog, roughly $1.5 billion. It gives a pretty strong support for our 2026 outlook. We're booking into 2027. And the utility customers are looking out the plans going through 2030 and beyond. So overall, to sum it up, we are very bullish about the utility market over the near and midterm future.

A follow-up on Ag. Could you talk about excluding onetime items, what specific actions are you being taken to restore agriculture margins? And when do you expect to see a meaningful recovery?

Thanks, Tom. Well, we expect to see a meaningful recovery in this current quarter, Q1 of 2026. And we did take some charges in the fourth quarter. The goal was to get these problems behind us. Let me add some color on this. I think it will be helpful.

We spent a lot of time with the Brazil team and did a deep dive of their balance sheet, their receivables, customer by customer, inventory and Avner and I went down to Sao Paulo. We met with our outside legal counsel to go through these cases. So we feel like we understand these exposures, and we feel like we have them covered. Now that said, the Brazil economy still has high interest rate. Crop prices are low. So not saying there will be none, but we feel we have covered it in our guidance going forward. We've taken a number of steps in Brazil to strengthen the foundation.

Tomo in the end, Brazil is an excellent market for us, which we believe is going to grow for years to come. They have multiple crop cycles. So the things we have taken, we did hire a new outside legal counsel. We added a lawyer. We replaced our finance leader there. So I think we've taken the appropriate steps there. So given that those are behind us, in the fourth quarter, we were at 10%, excluding those. We -- North America is doing quite well. Do you want to bring out that the North America team in Ag, they've been at a double-digit operating margin throughout 2025. So we think that's going to continue. In the Middle East, we expect to get more project wins as we get into the middle year that will help our margins. And we think Brazil, we're not expecting a lot from Brazil in our guidance for 2026, but we have a great team there and things going forward. So we think -- we believe and we're confident you will see a substantial uptick in our margins in Agriculture in our first quarter.

Our next question comes from Nathan Jones with Stifel.

I guess I'll start with trying to put a final point on the Ag margins. Double-digit a pretty big range there, Tom. Is there any kind of finer point you can put on where you expect them to be in the first quarter and where you expect them to be for the full year?

We think we'll be in the low teens in the first quarter, maybe approaching the mid-teens by the end of the year.

That's helpful. I guess the second question I'm interested in is the increase in capital spending in 2026 over 2025 which is probably a good thing, right? I assume that's going to Utility capacity expansions. So can you talk about kind of what you're doing there? I think you guys had talked about $100 million CapEx in that business to add $100 million capacity per year for the next few years. Is that now not enough to keep up with the demand. We need to ramp that up a little bit? And are you expecting to stay above that $100 million for the next few years?

Thank you, Nathan. Let me start off with what's behind the step-up in capital. And in our guidance, we said we're going to spend $170 million to $200 million in 2026, primarily directed towards Utility. We continue to see by durable multiyear demand, as I mentioned earlier, by load growth, grid expansion and resiliency. The approach we took, right, we're doing brownfield, we're adding equipment, we're modernizing our lines. We're improving it being our flow, increasing automation, using AI and all that is in our existing footprint which will increase our throughput. And it is all supported by the industry, our customer commitments, our customers' view and that's the disciplined approach we're taking.

We're going to see TD&S. We're going to see the Utility business grow high single digits, low double digits over the foreseeable future, probably to the end of this decade. And when we take those investments, they're adding incremental capacity, right? We're getting in excess of 20% on each one of those investments. And as we continue to optimize we're going to see more than that. So the -- overall, they're very high-return projects -- we believe that's the #1 area for us to invest. It supports our ROIC. It supports our path to [ 30 ].

Now specifically about your questions about $100 million, driving $100 million, we're actually very pleased with the output we're getting from their capital. And I can say that we're doing considerably better than $1 of investment for $1 in sale. And it's multiple projects or a little differently, but we're getting very strong ROI from our investments. So just to sum it up, right, it's disciplined scaling. We're adding the capacity where the demand is visible, and it has very strong returns.

Moving next to Chris Moore with CJS Securities.

Maybe just talk a little bit about balance sheet. Are there certain areas, perhaps product lines where Valmont is using -- could be using its balance sheet to trade better price for less prepayments?

Well, we're a leader in the markets. We're differentiated. We get good pricing. So we're not really looking at doing that. What we do see is we see opportunities to use our balance sheet to -- number one, we have low leverage gives us the cash to really explore all different types of opportunities. And Chris, actually, we see an opportunity in things like our working capital to continue to make improvements. I want to say, I think our team has done an excellent job on the inventory and receivables in bringing those down, we have some elevated what we call on the balance sheet contract assets, which is basically the work in process for our Utility customers. That's been kind of elevated because of the volume going through and we had some growing pains there. But we see an opportunity to bring down our working capital long term, it should be 90, 95 days. So I wouldn't say we're going to trade our balance sheet for price. I would say we're going to use our balance sheet for growth.

Got it. Makes sense. And maybe just on the Ag side in terms of, obviously, still soft market, but what types of things can you do perhaps to get a higher share on the aftermarket parts side of a soft Ag market. You guys are the replacement process is, I guess, one of your strengths making things very easy for the farmers and dealers. Maybe could you just talk in terms of kind of the aftermarket side of things? And kind of momentum that you might have there?

Yes. We've put a lot of resources into this. And I got to say the Ag team did an excellent job with the e-commerce system, the farmer can be in the field. they can figure out what part they need. They can place an order with the dealer and hopefully get it in the next day or so that's just job well done. We're working on is making sure we have the proper inventory position through the field. And I think the latest one is we want to take this and do more of it on our international regions. So more to come and there's more upside in that.

[Operator Instructions] and we'll go next to Brent Thielman with D.A. Davidson.

Yes, I wanted to follow up on Utility to appreciate the outlook bridge as well in the deck. But the $150 million in growth assumed for the Utility piece, '26 versus '25. I guess if we assume sort of a stable steel price environment, is there still sort of a higher potential ceiling for that business this year? Or does that sort of limit out just based on the capacity you have in place this year?

I got to say the operations team is doing a great job of getting the capacity in place. And I think you're asking is there some upside in the Utility. And definitely, we think there's some upside there.

Okay. And then on the Ag side, Tom, I think I heard you mention looking towards some -- maybe some potential wins on the project side, maybe more midyear. Does the outlook for that business sort of assume kind of pressure through first half then a stronger second half contingent on winning these projects? Maybe if you could just clarify that.

Yes. I think we'll have a slower first quarter, probably a slower first half and as these come in, that will improve. But...

Yes. Let me just add a little bit, right? The underlying demand drivers for that regions are intact, right? Food security, domestic production. But we take a very disciplined and selective approach to the projects it's important that we meet our financial thresholds. There are several opportunities. They didn't reach the finish line yet. We're pretty confident in the pipeline, our ability to convert them with -- in line with our financial criteria. So we're going to make sure when we win these projects, we're happy with the returns. Overall, as you know, it's a lumpy business, but the long-term drivers are solid.

Moving next to Brian Drab with William Blair.

I just wanted to follow up on that Utility growth. This bridge is really helpful. And of course, I think $150 million incremental in utility indicates about 10% growth in the outlook for Utility for 2026. I'm just wondering is that how to think about it? And then how do you expect price and volume to contribute to that 10% growth proportionally?

Yes. So you're correct in your assumptions. And most -- in '25, I would say there was more price than volume. In '26, there's more volume than price. We're starting to see drop-through from these capacity expansions in the mid- to upper 20%, even approaching 30%. So we feel really good about where the Utility business is.

Yes. And I'll just add, right, when you think about the volume and price, right, it really represents the strength in the market, but we think of price, we have a very strong value proposition for our customers in a constrained environment. It is mission-critical parts with high level of complexity. It needs to deliver on time with the highest quality to make sure we could support their operational needs. And it's significant value to our customers, and that is the price that we command in the market.

Got it. And then on the nonutility infrastructure piece, it looks like that will be up about 3%. I'm just wondering, is it fair to assume that you get some more growth maybe in Telecom, but Lighting & Transportation and Coatings is roughly flat? Or do you see any growth in those other pieces?

Yes, we'll have growth in all 3. Meaning, Coatings as well. So Coatings, Telecom, L&T.

Yes. At the highest level, right, Telecom, we see our carriers continue to invest in -- they are in the execution phase, they're investing in wireless and [ RAM ]. So we kind of see that growing in the low to mid-single digits. Coatings has a very strong driver around data centers and AI. And on the Lighting & Transportation, we're seeing good progress about the initiatives that we took in 2025 around by enhancing our leadership, investing in the operations, deselecting of noncore products and overall seen growth driven by DOT spend and stabilization in the international market. So at the high level, we should see growth across the Infrastructure segment.

Okay. For Coatings, obviously, tailwind within your intersegment work that you do for your Utility business and data center AI. What other tailwind does that business see from data center and AI?

Yes. So right, structurally, the Coatings business supports our internal business, which is a strong value proposition for our customers. But we have a strong third-party business within the Coatings with the highest Net Promoter Score in the industry, and it's broad-based, but we are taking a strategic approach to support the states, the regions, the industry where we're seeing growth, if you look at the Midwest or Southwest, where you're seeing a lot of good investments around infrastructure growth and data centers and AI. So we're aligned well and we should see that business contribute to our growth in 2026.

And can I just sneak in one more to Tom. Tom, I think on the last call, it was -- you mentioned that the incremental margins -- operating margins on the additional capacity and Utility were coming in I think you're phrasing was something like well above 20%. How is that incremental margin on that additional capacity looking lately?

It's mid- to upper 20% range. And actually, we think through 2026 is approaching 30%. So it's looking very positive. And why is that? That's because when we're adding this capacity, the whole approach is to add incremental capital, get more throughput to that journey, improve the flow, so we're getting a lower unit cost as well as discover and [ face ] overhead. So a plot to the [ ops ] team for the work you're doing.

And we have reached the end of the question-and-answer session. I will now turn the call over to Renee Campbell for closing remarks.

Thank you for joining us today. A replay of this call will be available for playback on our website and by phone for the next 7 days. We look forward to speaking with you again next quarter.

These slides and the accompanying oral discussion contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on assumptions made by management considering its experience and the industries where Valmont operates, perceptions of historical trends, current conditions, expected future developments and other relevant factors. It is important to note that these statements are not guarantees of future performance or results. They involve risks, uncertainties, some of which are beyond Valmont's control and assumptions.

While management believes these forward-looking statements are based on reasonable assumptions, numerous factors could cause actual results to differ materially from those anticipated. These factors include, among other things, risks described in Valmont's reports to the Securities and Exchange Commission, SEC, the company's actual cash flows and net income, future economic and market circumstances, industry conditions, company performance and financial results, operational efficiencies, availability and price of raw material, availability and market acceptance of new products, product pricing, domestic and international competitive environments, geopolitical risks and actions and policy changes by domestic and foreign governments, including tariffs. The company cautions that any forward-looking statements in this release are made as of its publication date and does not undertake to update these statements, except as required by law.

The company's guidance includes certain non-GAAP financial measures, adjusted diluted earnings per share and adjusted effective tax rate presented on a forward-looking basis. These measures are typically calculated by excluding the impact of items such as foreign exchange, acquisitions, divestitures, realignment or restructuring expenses, goodwill or intangible asset impairment, changes in tax laws or rates, change in redemption value of redeemable noncontrolling interests and other nonrecurring items. Reconciliations to the most directly comparable GAAP financial measures are not provided, as the company cannot do so without unreasonable effort due to the inherent uncertainty and difficulty in predicting the timing and financial impact of such items. For the same reasons, the company cannot assess the likely significance of unavailable information, which could be material to future results.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.

All right. Good morning, everyone. Let's go ahead and get started here. Welcome to the Valmont Industries presentation. My name is Trent Meyer, an industrial analyst here with Baird. And with me to tell more -- tell you more about Valmont is Avner Applbaum, President and Chief Executive Officer; and Renee Campbell, Senior Vice President, Investor Relations and Treasurer. Thank you in joining them. Today, guys, this is going to be a presentation, followed by a Q&A session at the end. If you guys have any questions, feel free to send me an e-mail or raise your hand when we get to that time.

With that, let me pass it to Renee.

Thank you, Trent. Well, good day, everyone. Thank you for joining us here today. Very excited to walk you through Valmont's strategy and growth opportunities over the next several years while we position the company for growth in our next phase of growth. Before we start, I just want to cover our disclosure on forward-looking statements, which applies to today's presentation as well as the discussion and Q&A and as outlined here on Slide 2.

With that, I'm going to turn it over to Avner to walk us through our strategy and growth potential. Avner?

Thanks, Renee. Thank you, Trent, for having us. Really excited to have the opportunity to share with you about Valmont Industries. Many of you may not be familiar with our story, although I'm pretty certain you've seen our products today even though you didn't know that's the case. So why do I believe Valmont is this hidden gem? Well, it really goes to the opportunities ahead of us, which I will share today with the strength in our markets and our capabilities to deliver against these opportunities with our strong market position.

So why am I so confident about our future? Let me just share a little bit of the groundwork. So when I joined the company around 2020, until today, we more than doubled our earnings per share. Our return on invested capital almost doubled to 16.4%. And at that time, we returned significant value to our shareholders. And these results reflect our portfolio discipline and our very focused execution against these priorities. And we're just getting started. We have plans to drive growth of $500 million to $700 million, to drive earnings per share, incremental earnings per share of $7 to $12 to get us to $25 to $30. And we've already started executing against this road map while I will share with you a little bit today.

So if you think about the 3 key strengths that we have that I believe will support our execution, one, we're leaders in markets that have very strong tailwinds, such as energy consumption and the need to replace critical infrastructure. We are the leaders in our space. We have unmatched value from our engineering expertise to our manufacturing, quality, delivery, broad portfolio, which our competitors cannot match. And we're investing where it counts. We're investing in areas where we could drive significant value. So this really didn't start in the last 5 years. We've been around since 1946, founded in Valley, Nebraska and our founder, Robert Daugherty, basically, established the mechanized irrigation industry, and we introduced the center pivot. But then we took the expertise in our engineering and manufacturing, and we took it to infrastructure, which today is our largest segment, which you can see here. So around 75% of our business is infrastructure, 25% is agriculture, operate in more than 100 countries, supported by 11,000 passionate and dedicated employees. You can see about 70% of our sales is in North America. The rest is globally. And there are big opportunities ahead of us, and our market cap is around $8 billion.

So since infrastructure is our biggest business. It's got very strong drivers. I'd like to start with infrastructure. If you look at these 3 drivers, combined, we refer to them as the infrastructure wave. And I'd like to share a little bit more about them. So I'm going to actually start with one, which may be a little less exciting around aging infrastructure. But the reality is the infrastructure needs to be replaced. A lot of the infrastructure in this country and around the world. In the U.S., it goes back to the '50s and '60s and it's reaching the end of its useful life. A couple of examples. If you just look at utility poles, 2/3 of them are wood, they've been around since the '60s, and they've reached or are reaching their infill, the useful life. And then you look around high-mast systems and roadway lighting, they were installed several decades ago, and also, they are reaching their end of their design life. So a lot of this replacement is planned, usually supported by bipartisan alignment, see programs like IIJA. But a lot of it is also unplanned, unfortunately. We see a lot of storms from ice storms to floods to hurricanes, fires, but the reality is it all needs to be replaced. And that's where we play a critical role here. We have structures from our utility poles to our lighting, structures, traffic, and all of them play a critical role in replacing some of this aged infrastructure.

Now let's move to an area that's a little more exciting. And it's around the energy transition and technology and data consumption. And I'll refer to them together because they're very much linked. So if you think about it over the last several decades, we've been using less power. It was driven by a lot more efficiency and appliances, think about washers and dryers, TVs, lighting, et cetera. So a lot less usage, but all that have changed, and we're actually seeing growth of power consumption, what we refer to as load growth, driven by many factors, electrification being one of them, electric cars, electric houses, electric plants, a lot more electrification in that area. We're seeing more onshore manufacturing, mega projects in oil and gas. And then, of course, there's AI, which is another main consumption. And when you think about AI, I just recently read, OpenAI said they have more than 700 million weekly users of ChatGPT, that's 4x more than it was just a year ago, and that requires a significant amount of power. And just to give a reference, so there's a data center plan for Louisiana. The power consumption is going to be twice as much as the city of New Orleans at its peak. Just think about that for a second, and that's just one data center.

So the bottom line is there's a lot of power needed and utility companies are going to find power sources. And it could be many. It could be solar, wind, nuclear, but the bottom line is they're going to need to move that power. And that is where we play a critical role. And on top of that, I mentioned AI and data centers, data centers as well, not only does it need a power, it also needs some of our other products like our lighting, our telecommunication for private network, galvanizing and so on. So over the last decades, we developed strong customer relationship, engineering and manufacturing expertise have a strong portfolio that could support a lot of these mega trends.

Here's a snapshot of our portfolio. And I'm not going to go into all the details, but I do want to share a few highlights. So let me start with utility, which is our largest product line and has the highest growth. And when our customers come to us, they come to us for our engineering expertise, our manufacturing expertise, and we have a broad portfolio, we could provide them with the transmission poles, distribution, substations. We can offer them steel. We can offer concrete, combination of them composite. So overall, we have a very large footprint as well as capabilities to support. On top of that, you look at our Lighting & Transportation. So there as well, we have a large portfolio around our sign structures, traffic structures, lighting. We could do street lighting, highway lighting, decorative lighting. And overall, we have a very good portfolio to support these end markets such as energy, transportation, communication.

Touching on Coatings. Coatings, we galvanize, we paint and that helps enhance the life of a lot of these products. And on top of that, it supports 1/3 of our own internal volume. Then looking at Telecom. Well, the build-out of Telecom, there's a lot more data, a lot more communication needed as the carriers grow out their 5G network. That's where we play in not only with our structures, but also with our components, the next day delivery to make sure they can achieve their goals on budget and on time. So as you can see, we're well positioned to support these drivers in the infrastructure space.

Now let's shift to agriculture. So agriculture, it is a cyclical business. It has the peaks, it has the troughs. Unfortunately, now we're in the trough. But we've been in this business for many decades. We've seen this many, many times, and we know to manage through these cycles. And in fact, even in the trough, it's a very good business. It's a peak, it's a great business. But even today, it's a very good business. But the long-term drivers are very solid, and I'll address them.

So if you start with food security, food security became a critical priority for many countries to make sure they can see their people. And this has been going on for a while, but it really got enhanced when you look at the COVID pandemic. You've seen some wars like the Russia, Ukraine, which disrupted supply of food. And these countries are taking actions to make sure they can see their people in areas that in the past could have not been irrigated and with our solutions, they're able to irrigate and provide for food. The next area is around the farmers, right? They're facing higher cost, labor constraints, and they basically have to do more with less, how do they maximize their land, and that's where they rely on precision, tech-enabled irrigation solutions. And finally, population growth. If you think about the next decade, there will be 600 to 700 more people on this planet, which is, I don't know, roughly 8% growth. But on top of that, and as important, people are being healthier, healthier diets, more protein, which require more grain. So you take that 8% growth, you could almost double it to the amount of food that needs to be grown. And that's where productivity becomes extremely critical.

If you look at our irrigation solutions compared to dry land, the yields you're going to get as an example, on corn, you'll get 280% yield increase; potatoes, you'll get 250%; soy, you'll get 200%. So what you're seeing here is this is not incremental gains. It's transformative gains in order to produce food. So overall, in the agriculture space, we're a leader in our markets. We have a stronger deal and strongest network. We have the best product innovation and overall, we are well positioned to support the next level of food security, profitability and sustainability.

Now a bit more about our irrigation business. Like I said, we're a leader in our markets, and that's where it all started. So growers look to our solutions to deliver exactly the water they need for the crops, when they need it for the right crops in order so they can maximize their yield, so they can serve water and address a lot of weather volatility. And it's really the only way to stay competitive in today's environment. And we're also utilizing our tech solutions, right? Today, the farms are larger and larger. Labor is scarce. You can't -- you don't have time to go out to the field. So today, you use technology to control the field from a -- from your hand from a mobile device to make sure you can get the right amount of water at the right time, at the right place, make sure your machine is operating when you need it to operate.

And when you look at the split of the sales, right, we're roughly half and half. And we do expect the international part of the business to grow more over the next decade. And that is driven by Brazil, which has a tremendous amount of hectares available for irrigation. They have great growing conditions with a pivot, they can actually get 3 crops, which would make them, of course, a lot more productive and a lot more profitable. On top of the Middle East, Africa, where they're investing in food security. So we do expect to see a shift more into our international sales. So overall, while it's a trough now, we are focused on the future, and we feel very good about the long-term drivers of this business.

And finally, so like I said, we have clear opportunities ahead of us with very strong markets, and we have the capabilities. So these are the value drivers. These are the areas of focus for us today. So the first one is utility. Utility, we're thinking -- seeing very strong demand. And we're investing in that area. We're investing in capacity. The industry is capacity constrained, and we are investing to make sure we can capture on this once in a generation cycle. Demand is accelerating. We're focused on capturing that growth. So that is number one.

In agriculture, we're setting the business for the growth. Right now, we're making sure our cost is where it needs to be, and we're investing in growth areas on the growers profitability. We're investing in that tech that I mentioned. We're investing in our aftermarket solution to make sure when the grower needs of parts, they could get it immediately when they need it, and that will be another driver for us. And then finally, disciplined approach to capital allocation in order to -- in order for us to continue to invest in the business. We're managing our cost and we're shifting the resources to the highest opportunities. We're looking at acquisitions, and on top of that, we're going to leverage share repurchase and dividends to return value to our shareholders.

Put it all together, we expect sales growth of $500 million to $700 million, getting us additional $7 to $12 of EPS. And we're going to leverage our strength in our business. One, we're leaders in these markets. These markets have very strong tailwinds, such as energy consumption and infrastructure replacement. We deliver unmatched value to our customers from our engineering to our manufacturing expertise. And again, our competitors cannot meet that. And we're investing and focusing where it can. So overall, we're pretty excited about the future and where that's taking us. And I'm going to invite Renee to share a little bit more about our performance and outlook.

Thank you, Avner. So I want to take a look at where we've been financially over the past several years. So if you start with net sales, we saw strong growth through about 2022. And then things begin to level off, and there's a few reasons for that. On the -- excuse me, on the utility side, as Avner mentioned, demand remains very strong, but we're capacity constrained. The whole industry is capacity constrained. And in agriculture, as Avner mentioned, we've seen a pullback. You don't have to go very far to look and understand. The North America farmer is very challenged right now. And we have recently been seeing some softness come out of Brazil as well, but other international ag markets have seen some growth. And over the past year or so, we've exited certain solar markets and rightsized that business to be focused on mostly Europe. But importantly, even with net sales plateauing, our operating income has doubled. And as Avner mentioned, our earnings per share have more than doubled over that same period. That speaks to the discipline and the strong execution by the Valmont team in managing costs, driving productivity and focusing on higher-value growth opportunities.

One thing I'd point out is that in our utility business, when steel prices move up and down, we do pass that change directly through to our contractual customers. So while that can also affect revenue at times, it does not impact profitability. And that's also why that even with revenue fluctuations, you see steady improvements in both margins and earnings per share. So I want to go a little bit deeper into what Avner mentioned about capital allocation. First, I will say, though, that we have a very strong balance sheet, exceptionally strong. Our leverage is about 1x or maybe a little bit below that. And our debt is all long-dated, fixed, maturing in 2044 and 2054, and we generate exceptionally strong cash flows. I think in 2024, we were just under $600 million of operating cash flow.

So let's talk about how we're going to put all of that to work over the next few years. Back in February, we announced an updated framework designed to accelerate investing in both organic and strategic opportunities while returning significant cash to our shareholders. And importantly, it is backed by that strong cash flow generation that I mentioned. So starting with the growth side. This is all about expanding capacity and investing in CapEx to support that strong demand that we see ahead, particularly in utility infrastructure. Our run rate is expected to be about $150 million per year over the next few years and about $100 million of that will be towards those growth opportunities. And we have said in the last couple of earnings call that for every $100 million or so of growth CapEx we invest, we expect at least that much in revenue and about $1 of EPS associated with that.

There's also a place for M&A, but we've been very clear. It's selective, it's strategic. We're looking at smaller tuck-in acquisitions that strengthen our core. In agriculture, that might mean something connected to water or irrigation. In infrastructure, we're focused on adding customers, expanding geographically, opportunities that really fit our model and enhance returns and deliver synergies. And then on the shareholder return side, it's equally disciplined. We announced a $700 million buyback authorization back in February, which is just under 10% of our market cap. We plan to execute that programmatically over the next 3 to 4 years.

And then for dividends, over the past 5 years or so, we've delivered about a 10% compound annual growth rate, but those increases have been somewhat inconsistent. So we raised the dividend in February by 13%, and we've made a commitment to establish a regular cadence, increasing it in the first quarter of every year going forward. So we're balancing growth with returns. We're investing where we see strong sustainable demand and at the same time, ensuring our shareholders benefit from that success.

So finally, bringing it all together, based on everything that we've talked about today, why invest in Valmont. Well, we're serving high-growth markets, as Avner walked us through earlier, and those are supported by many long-term secular demand trends. The biggest driver, of course, being utility where demand continues to outpace supply, and we are expanding capacity in our existing facilities to meet that. We're also well positioned in Lighting & Transportation and Telecom and International Agriculture. All of those have very attractive long-term growth opportunities tied to food security in the case of agriculture and infrastructure modernization and resiliency and growth in infrastructure. And we continue to look for strategic return focused M&A that complements those core businesses, those smaller tuck-ins that extend our reach, either geographically or in other ways. Second, we're expanding margins. We're generating significant cash flow, and that comes from everything that we talked about today, pricing excellence, operational efficiency, getting more throughput to our plants. And we're driving productivity across the organization, growing our higher-margin businesses and maintaining strong working capital discipline at the same time. That's what's allowed us to double our operating income and more than double our EPS even in a flat revenue environment.

And third, we're increasing shareholder returns through a disciplined and balanced capital allocation approach. And that commitment to both growth and returns ensures that as we do expand our earnings per share, our shareholders will directly benefit from that success. So looking ahead, we feel very good about the years ahead. We're serving these high-growth markets. We're expanding our profitability and we're returning meaningful value to shareholders, all while fulfilling our promise and our purpose of conserving resources and improving life.

So with that, I will hand it back over to you.

Awesome. And as a reminder everyone, if you have a question, feel free to e-mail me or raise your hand and we'll get this answered. So Avner, let's start with you. You took over about 2.5 years ago. Obviously, it's been a super dynamic macro environment, but you've done a great job on the margins and internally. Maybe talk about some of the changes that you've made at Valmont and maybe some of the surprises that have come along the way.

Thank you. Good question. So the -- over the last 2.5 years, we took several actions to position us to exactly where we are today. One was around just our portfolio. We need to make sure that we're very focused on our core competence and our core strength. So we look at the portfolio and in the areas that were either not core, not accretive, distractive, we eliminate them and we made sure our portfolio fits where it should be. We looked at the organization. We looked at our spans and layers and realized that we were not close enough to the customer. So we flattened the organization. So the entire organization is focused on serving our customers as well. We align our organization with leadership. We put leadership in place to make sure these leaders are aligned with our organization, with our strategy and so that is another area we took. We set the North Star for the organization. We took our -- as you saw here, our value drivers, our path to -- we refer to internally as our path to $30, to the $30 EPS. Every person in the organization knows exactly where we're heading. And we've seen the results throughout this year, and we're really excited about where this is taking us in the future.

Yes. So let's hit on that long-term EPS target for a second. Obviously, you laid out some of the pieces in the slide earlier, but why don't you just reframe for everyone in the room, what are the main drivers to that? What are the risk factors in achieving that EPS target? And what are the main sources of upside as you get [ sit here today ]?

The reason I'm excited about this opportunity is because it's within our control. So if we look at those 3 levers that I walked us through a little earlier today, right? The utility growth, we know that market is growing. That market is going to grow to nearly double digit. And with us being the leader in that market with our product portfolio, we will have the demand, and now we're focusing to make sure we have the right capacity and capability to deliver. So that's within our control. So that's number one. The number two, ag right now is in a trough, but we're focused on the areas that we can drive value to the growers, how could we make them more profitable with our technology offering, with aftermarket parts. So if you're in the field and you need a part, it's very easy. You go use our technology, you know exactly what part you need. So that pivot is running when you need it to run. And then finally, around our capital allocation and making sure we're focusing on our cost as well as tuck-in acquisitions and share buyback. So overall, that is within our control. That's why I feel very comfortable about our ability to reach those numbers. I look at it as more opportunity than downside risk. And the opportunities is -- but if the ag market comes back, that's going to be a plus. I'm not even talking about the other markets like our Lighting & Transportation, which had strong drivers. Telecom that has strong drivers. Coatings is a very solid business. So as these businesses perform, that will give us additional opportunities to actually exceed those targets of $25 to $30. So we have a clear road map. We're focused on it and have a lot of opportunity to even exceed those numbers.

So let's move to Infrastructure for a second. Obviously, I think the secular drivers are well laid out, really good opportunity for you guys ahead, but the margin performance has also been really good. You're adding capacity. So maybe just talk about what capacity you're adding, what investments you're making into that business, what is going to change and what the margin upside is over time in that business?

So when we think about capacity, right, it's not just adding equipment to the plants. And that is what we are doing, but we're not going out with a greenfield, right? The best ROI, the best way to drive value is to invest in our own facilities. We have the management teams in place. We have the cost. So that's the approach that we're taking. And we have plans that go all the way out to 2027 to make sure we're adding that capacity. But it's not just that. It's also investing in our engineering and our design, right, in our commercial assets to make sure we can support our customers. And so that's the approach that we're taking to make sure that we can deliver. Now while you're adding the capital, right, by default, you won't be as efficient as you'd like to be because you're training people, you're disrupting the plans, you're adding new equipment. So to me, that's the next lever, the next leg of this whole value creation is as we put new equipment, automation, train our employees, when that's going to be in place, we're actually going to start seeing efficiencies in our plans. So we like -- we say you get $100 million of revenue. You get more than 20% of OP, and that is today when you're investing. But over time, over the next several years, we're going to see that OP increasing and increasing.

Okay. Well, so let's move to ag for a second. You've talked about a lot of the North America pieces. Maybe let's move internationally, what's your growth strategy internationally in the Ag business, maybe review some of the current trends? And also any funding mechanism that may be impacting that business today?

So international market is also namely Brazil, it's challenged like North America is with the soy prices, where they are today. Credit is tight. There is still geopolitical risk. So the current environment, there's -- it's not great, right? But what we're doing is we're utilizing our largest dealer network, the best dealer network in the industry, which applies to Brazil as well. And we're focusing on the large farms and they're investing. They're looking at the long term. They see a lot of land available. Not only does it give them the extra crop, it also gives them some insurance, again, weather volatility. So we continue to invest in that area, Middle East Africa, like I mentioned, around the food security. That is another area where we're investing. We have our facility there in Dubai to support that region. We continue to invest in that region in all the opportunities ahead. So short term, we're going to manage our cost. We're going to invest in these opportunities to help farmer profitability. And overall, the cycle will change. And when it will come back, we'll be ready.

So let's end with this capital allocation strategy here. Obviously, very balanced dividend, share buyback, M&A. How do you think about when to deploy each of those different cases? What are the return philosophies of the organization? And maybe what's the actionability and composition of the M&A pipeline today?

Yes. So as I mentioned, it's a very balanced approach. We look at the different levers that we can pull. First and foremost, we are focused on CapEx, right? You heard us talk all morning about capacity constraints in the industry and the returns that we expect from investing in ourselves.

M&A, there are opportunities there. We're being very selective and careful, but we know that, that is an incremental part of our growth strategy and story. As far as returns, the $700 million buyback authorization, we are executing on that. We hope to, over the next 3 to 4 years get through that and be ready for the next phase. And then dividends, as I mentioned, be much more consistent as time goes on. So we really truthfully take a balanced approach to it. We know that if M&A opportunities are in front of us, we can maybe lean a little bit more into the buybacks and CapEx. As we grow, that will remain an important part of our strategy as well.

Awesome. Well, join me in thanking the Valmont team.

Greetings. Welcome to Valmont Industries, Inc. Third Quarter 2025 Earnings Conference Call. [Operator Instructions] 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.

Good morning, everyone, and thank you for joining us. With me today are Avner Applbaum, President and Chief Executive Officer; and Tom Liguori, Executive Vice President and Chief Financial Officer.

Earlier this morning, we issued a press release announcing our third quarter 2025 results. Both the release and the presentation for today's webcast are available on the Investors page of our website at valmont.com. A replay of the webcast will be available later this morning. To stay updated with Valmont's latest news releases and information, please sign up for e-mail alerts on our Investor site. We'll begin today's call with prepared remarks and then open it up for questions. Please note that this call is subject to our disclosure on forward-looking statements, which is outlined on Slide 2 of the presentation and will be read in full after Q&A.

With that, I'd now like to turn the call over to Avner.

Thank you, Renee. Good morning, everyone, and thank you for joining us. I'd like to start with third quarter highlights and key messages summarized on Slide 4. This quarter's results reflect the continued strength of our diversified portfolio and disciplined execution by the global Valmont team. We delivered net sales growth of 2.5% with double-digit growth in Utility and Telecom. Operating margin improved 120 basis points and diluted earnings per share improved 21%. With these results and the momentum across the organization, we are raising our full year earnings guidance, which Tom will discuss in more detail shortly.

Our strategy continues to guide our decisions and deliver results. We've simplified the business. We're focusing where we lead, and we're directing resources to our best opportunities. United around our shared objectives and a customer-first vision, our teams are driving innovation and executing with greater precision. We operate in attractive markets where our value proposition aligns with customer needs, positioning us to capture long-term opportunities. We have the right structure now in place, and we have a strong foundation for sustained value creation.

Looking ahead, we remain committed to accelerating growth, enhancing performance and investing in high-return initiatives that strengthen our leadership and deepen customer impact.

Turning to Slide 5. I'd like to provide a brief update on our 2025 critical objectives. Valmont is positioned to lead the North American utility market through an unprecedented investment cycle. We have a multipronged approach to growth, expanding capacity and strengthening operating capabilities. Most of our growth CapEx is directed to brownfield utility expansions that increase, upgrade or repurpose our existing facilities, enabling strong returns. We're also increasing throughput by addressing bottlenecks, improving material flow and implementing new technologies.

In Agriculture, we're building a more resilient business to improve margins through the cycle. We've aligned resources around key growth areas: aftermarket parts, technology and international markets. Aftermarket part sales grew year-over-year this quarter, driven empire by our new e-commerce system, which all North American dealers now use to provide industry-leading service and sales. An international rollout is planned in the upcoming quarters. These initiatives strengthen our leadership today and position us for faster growth and higher profitability ahead. Across the company, disciplined resource allocation, our relentless focus on safety and the dedication of our team remains central to our success. I'm proud of how our employees continue to embrace change and drive momentum with a continuous improvement mindset.

Now turning to Slide 6 for an Infrastructure market update, starting with Utility, our largest product line. This business continues to benefit from powerful long-term demand drivers. Data center expansion, manufacturing onshoring, major oil and gas projects and broader electrification are all contributing to significant load growth expectations. Rising energy consumption, aging infrastructure and resiliency needs are driving multiyear increases in customer capital plans.

Market forecasts call for transmission CapEx to grow at a 9% CAGR through 2029. Our customers continue to turn to Valmont to help them execute their multiyear plan across transmission, distribution and substation as they expand and modernize the grid. We're winning projects because of the value we deliver through our scale, engineering expertise and proven reliability. For example, we were recently awarded a $65 million extra high-voltage project from a leading engineering and construction firm in partnership with a large utility. This is one of several major wins that reflect Valmont's trusted ability to execute complex, large-scale work with consistency and quality.

Moving to Lighting & Transportation. The Asia Pacific market remains pressured alongside a softer lighting market in North America. Results were also impacted by operational factors. We know this business can perform better and we've simplified the structure, better aligned operations and commercial teams and strengthen leadership. The long-term fundamentals of this business remain solid. And these actions are improving focus and accountability, setting the stage for steadier performance ahead. The rest of Infrastructure business is performing as expected. We're focused on what sets Valmont apart, our scale, deep engineering expertise, trusted customer partnership and speed to market.

Turning to Slide 7 for an update on Agriculture. In North America, grower sentiment remains soft, as expected, record corn and soybean yields weigh in prices. The USDA expects 2025 crop receipts to decline about 2.5%, reflecting lower prices for both crops. In Brazil, the environment has turned more cautious. Growers are facing tighter credit, slower release of government financing and ongoing trade uncertainty leading many to delay large capital purchases, including pivots. These near-term pressures are part of the normal cycle following several strong years of farm profitability and investment. We know how to manage through cycles like this that's why we're staying focused on supporting growers' immediate needs while continuing to deliver customer-centric innovation for the future. And we're demonstrating that commitment in the field.

At recent farm shows, our Valley team showcased new technology, including the [ ICON Plus ] control panel, a major addition to the Valley Tech suite. It brings full AgSense 365 functionality to any pivot brand, allowing growers to easily connect older or competitive machines. This expands our addressable market and drives growth in recurring revenue. In Brazil, the long-term opportunity remains exceptional. Farmers can grow 2 to 3 crops per year with mechanized irrigation and the return on investment from pivot is meaningful. With vast under irrigated farmland, favorable growing conditions and strong order availability, Brazil will continue to be a key growth market.

In our other international markets, results reflect normal project timing. Several large Middle East projects shipped earlier this year, while last year's activity was more back-end loaded. Year-to-date, sales in the region are up double digits. Project demand remained strong. Government and corporate-led initiatives are longer term and less affected by short-term crop prices. We've invested in our presence and dealer capabilities to capture this growth. Overall, the long-term fundamentals in Agriculture remains strong, and the business continues to deliver solid returns even in a more challenging period. We remain focused on disciplined execution, advancing innovation and positioning us to lead as market conditions improve.

In summary, our strategy is delivering results. Execution has been strong and decisive actions across the portfolio are improving performance even in market facing near-term macro pressures. With momentum established and investment plans underway, our team is energized by the opportunities ahead and confident in the long-term fundamentals of the business.

I'll now turn the call over to Tom to discuss our third quarter financial results and updated outlook.

Thank you, Avner. Good morning, everyone, and thank you for joining us today. Our results are slightly better than expected, particularly the 21.2% growth in earnings per share. And I want to thank our team for their execution this quarter as well as the progress made advancing our value drivers, catching the infrastructure wave, positioning agriculture for growth, and disciplined resource allocation. We made progress in all 3.

Turning to Slide 9 in our third quarter income statement. Net sales of $1.05 billion increased 2.5% year-over-year. Sales growth in Infrastructure, particularly Utility was partially offset by lower agriculture sales. Gross profit margin of 30.4% increased 80 basis points from last year, with improvements seen in both segments. SG&A expenses of $177 million were flat year-over-year. Operating income increased to $141 million and operating margins of 13.5% improved 120 basis points driven by improved infrastructure results. Below the line, interest expense decreased due to lower debt. Our tax rate declined to 23.1% due to a more favorable geographic mix of earnings. Diluted earnings per share was $4.98, a notable step-up compared to historical third quarter performance.

Moving to our segment results on Slide 10. Infrastructure sales of $808.3 million grew 6.6% compared to last year. Utility sales increased 12.3%, driven by pricing and higher volumes. Sales in Lighting & Transportation declined 3.4%. Due to continued weakness in the Asia Pacific market, softer North America lighting demand and production challenges that reduced output. Coatings sales increased 9.7% supported by healthy infrastructure demand. Telecommunications sales grew 37%. Growth was supported by our quick turn order strategy and the strong alignment of our wireless components business with carrier programs. Solar sales declined due to our decision to exit certain markets. Solar revenues are expected to be approximately 2% of total company revenues going forward. And therefore, we anticipate consolidating Solar into another product line for reporting purposes starting in 2026. Operating income was $143.4 million or 17.8% of net sales, an increase of 150 basis points as a result of our pricing actions, growth in high-value offerings and an improved global cost structure.

Turning to Slide 11. Third quarter Agriculture sales decreased 9% year-over-year to $241.3 million. The North American market remains challenged, resulting in lower irrigation equipment volumes. International sales declined mostly due to the timing of Middle East project sales. In Brazil, while third quarter sales were steady, the economic environment weakened late in the quarter as farmers are facing significantly tighter credit. This also created some added pressure on customer payments. We conducted a review of the business and determined it was prudent to record additional reserves, including $11 million of bad debt expense. We continue to pursue collection of these accounts.

Both operating income and margins declined to $23.2 million or 9.7% of sales, primarily due to the higher bad debt expense. Excluding that expense, operating income was 14.1% of sales. While the Agriculture segment had a challenging financial quarter, we continue to invest in aftermarket and technology projects as we believe the long-term prospects are favorable based on the need to improve farmer productivity, feed a growing global population and food security.

Moving to Slide 12 for cash, liquidity and capital allocation. We had another quarter of healthy operating cash flows, generating $112.5 million. We ended the quarter with approximately $226 million of cash and net debt leverage remains below 1x. During the quarter, we invested $42 million in CapEx primarily for Utility capacity expansion. We returned $39 million to shareholders, including $13 million through dividends and approximately $26 million through share repurchases at an average price of $374.33.

Moving to Slide 13. Last quarter, we provided a financial road map highlighting our key value drivers. We remain sharply focused on execution. To catch the Infrastructure wave, we continue to invest in capacity and efficiency improvements and are starting to see the volume growth in our revenue. Through the third quarter, we've deployed $78 million of CapEx in our North America infrastructure businesses. Our team made significant progress in capacity expansion in our Brandon, Texas; Monterrey, Mexico and other North American facilities. Through these actions, we've increased our annual revenue capacity and infrastructure by $95 million, with more coming online in the fourth quarter. We're very pleased with the progress of our operations team and thank them for their efforts. Our close monitoring of industry capacity and the expansion plans of our peers, reinforces our view that demand will exceed supply, and we're planning accordingly.

In Agriculture, we have comprehensive growth plans in technology adoption, aftermarket parts and international markets. In the third quarter, aftermarket parts grew 15% year-over-year to approximately $52 million, reflecting the continued success of our e-commerce platform. AgSense revenues increased 8% year-over-year, largely due to the productivity benefits farmers are receiving from our technology tools to manage their irrigation. These initiatives are gaining traction, and we are beginning to see the benefits in our financials.

Lastly, our disciplined resource allocation initiatives are progressing. Third quarter corporate expense declined 6.4% to $25.1 million, the lowest level in 13 quarters. We benefited from the work to streamline the organization and we continue to pare back our outside service provider cost. At the same time, we're investing in initiatives that will drive longer-term benefits. For example, we recently kicked off a project to simplify our legal entity structure, which will improve internal efficiency, reduce compliance burden and strengthen treasury management.

On the capital allocation front, our share repurchase program continues with year-to-date repurchases of $125.8 million or approximately 427,000 shares. Bringing it all together, we are making progress toward our path to deliver $500 million to $700 million in revenue growth and $25 to $30 in EPS over the next 3 to 4 years.

Turning to our updated 2025 outlook on Slide 14. Net sales are projected to be approximately $4.1 billion, which is the midpoint of the previous range. We're raising our full year adjusted diluted earnings per share expectations to a range of $18.70 to $19.50, increasing the midpoint to $19.10.

Before we close, we want to thank the entire Valmont team for their focus on execution, moving our value drivers forward. I also want to welcome Eric Johnson as our new Chief Accounting Officer. Eric joined the team yesterday and brings a strong accounting and financial background in large-scale manufacturing and project businesses. From his prior roles at Conagra, Kiewit and KPMG. We look forward to working with you, Eric. Tim Francis, who many of you know, accepted a position in our international infrastructure group. Tim, we wish you good fortune and much success in working with the international team in your new role.

With that, I will now turn the call over to Renee.

Thank you, Tom. At this time, the operator will open up the call for questions.

[Operator Instructions] Our first question is from Nathan Jones with Stifel.

This is Adam Farley on for Nathan. I wanted to start on the infrastructure margins, very standout performer in the quarter at 17.8%. I believe that's an all-time record. I know you guys have had a number of ongoing margin improvement initiatives within the company over the last couple of years. Could you maybe talk about the most impactful of these initiatives and where the main opportunities remain to continue to expand margins?

Sure, Adam. Thank you for the question. So if you go back the last 2 to 3 years, the margin benefits have been a combination of pricing and costs. Pricing, we are the market leader. We do provide value-added engineering, on-time delivery and scale and customers are rolling -- customers value that. Cost, when Avner started, you took a number of cost actions, and they have drop through the bottom line. So that's why you see a good trend in our operating margins going forward.

From here onward, it really gets back to the value drivers. Our Utility expansion, we're very excited about that. And every incremental revenue dollar contributes over -- well over 20% of operating margin. But we also have good things going on in the Agriculture group. We have the aftermarket which is basically spare parts growing, and that's because of the e-commerce and ease of ordering that we've allowed with the farmers, and that's a higher-margin product. We also have our AgSense 365, which is a recurring revenue type model. And so if you think about it, it's really going forward higher mix, higher-margin mix of our revenue. And in general, when you look at the value drivers they are gaining traction, but it's early days. I'd say we're in the second innings of really reaching the potential of those. So I hope that answers your question, Adam.

That's very helpful. Maybe we can talk a little bit about the capacity additions in Utility. It looks like the business might be tracking above the $100 million of additional revenue for every $100 million of capacity. So could you just talk about if that's true? And then maybe just if there's any potential upside to capacity additions in Utility?

Yes, absolutely. Let me take that question, and I'd like to unpack that a little bit and just -- there's a lot of questions around capacity, so I'd like to give a bit of an overview.

Well, to answer your question, first of all, yes, there's additional opportunity for us to drive continuous growth. And overall, while we gave a benchmark of $100 million, we are on track to exceed that number and invest over the next several years to drive increased output. But let me just address the capacity for a moment. When you look at our capacity, I break it out to 3 layers, right? There's the physical capacity, which is our plants, our equipment, available hours, there's the operational capacity, which is the efficiency of the flow and the supply chain performance. And then, of course, there's a commercial capacity. So you talk about our ability to quote, engineer and deliver quickly. And it's not static. It flexes every day based on product and customer mix and we are operating at a high level of utilization levels. Our plants are running efficiently but we maintain flexibility to manage mix changes, respond quickly to surge in demand.

So we never want to be completely full that you lose your agility. And we continue to add the capacity as the demand grows, through our brownfield expansions through automation, process improvement, so we can stay responsive to our customer needs while we still maintain efficiency. So with goal to protect our delivery performance, but also we have to make sure that we could support our customers that they have storms or emergency or unexpected needs.

So to stay ahead, we're continuing to invest. We have plans to invest in 2025. We're well under way for our investment to drive growth in 2026 and beyond. To continue to drive we've shown that there's strong demand in that area of around 9% in transmission. And our goal is to keep investing in that space. So to sum it up, capacity, it's a system, it's capital, it's people, it's technology, they all work together. We're running efficiently. We're scaling intelligently, and we're positioning Valmont to capture the infrastructure growth while we maintain the agility that our customers depend on.

Our next question is from Chris Moore with CJS Securities.

Maybe just start on Utility. Obviously, very strong 12.3% growth. You called out pricing and volume, were they relatively equal contributors to that 12.3%?

Yes. Yes. And the pricing goes back -- remember the tariff actions we took in Q1, part of what enabled us to be profit-neutral from tariffs [indiscernible] on pricing. So those orders were placed in Q1, they were shipping in Q3. So half of this is pricing and half is volume.

Got it. Go ahead, I'm sorry.

Just saying that would continue into Q4.

Okay. Got it. Very helpful. And SG&A was 16.9%, something like that of revenue in Q3 is that sub 17%, is that a target moving forward? Is that realistic over the long term?

That's realistic, and that's where we'd like to be. I mean, there will be ups and downs in any given quarter. But yes, Chris, that is realistic.

Perfect. I will leave it there. I appreciate it.

Our next question is from Brent Thielman with D.A. Davidson.

Great. I guess just a question on the Agriculture business. It looks like the backlog is lower, but I know the project business can be sort of episodic. Are you seeing sort of industry fundamentals right now impacting the project business pipeline? In other words, are those opportunities lighting, should we read too much into this backlog? Just trying to get a sense for that.

Yes, it's a good question. And when you look at our project business, let me start off with like there is no change in the market environment. When the market environment continues to support the need for food security, really in that region. And that's the driver, which is different than what we've seen in like North America and Brazil, which is more of the crop prices. So the market continues to be strength, our pipeline is strong. And actually, we have a pretty good and diverse pipeline right now. So it's not just Middle East, it's not North Africa, it's South Africa. It's a more broader pipeline. We're really pleased where it stands right now, we'll support our 2026 goals.

We always need to keep in mind, there's always project timing. Last year was more back-end loaded. This year was more front-end loaded. So these things move overall. But we're happy year-to-date. We're up double digits, and we're looking forward to another strong year in that part of the world.

Okay. I appreciate that, Avner. And I guess a lot of good things going on in the Infrastructure segment. I guess I'll pick on L&T just a little bit. I mean, when you look at your backlog within the overall group and/or sort of order trends in Lighting & Transportation. Is there anything Avner to point to, which might suggest some stabilization on the horizon? Or you sort of expecting some softness to continue here?

Well, that's a fair question. We've seen in the Lighting & Transportation, continued softness in Lighting particularly in Asia Pac as well as weaker construction activity. In North America, again, also Lighting has been a little weak, but Transportation continues to be steady, driven by the need for critical infrastructure. But the reality is that this business should perform better. We did have some operational issues. But we've made meaningful progress on reshaping this business. We have new leadership in place. We have a simpler structure. We have a strong alignment between our commercial and operations team and focusing on our factory performance, delivery and cost discipline. All of these areas are improving, and we're seeing early traction.

Some of these elements are -- they're not going to be overnight. So some could take a little bit more time to play out. But really, what matters is the foundation is solid, we have clear plans, and we're confident in the direction and the momentum we're building. So overall, if I sum it up, I'd say Transportation is healthy, actions we're taking to strengthen the business are in play. And these -- and then we will see growth as these changes take place.

Our next question is from Brian Drab with William Blair.

I did want to go back to Utility just for a minute. And the reason is just that this is obviously a topic of a lot of discussion right now for you, given in part, the history of the last -- one of the last booms in demand for utility resulted in too much capacity coming online, and you really did a good job of addressing that today. But I just want if we could talk a little bit more about why is the expectation? And why have you achieved, as Tom said, well over 20% incremental margin -- operating margin on the utility capacity that's coming online. And I -- maybe I should clarify, too, you are talking about operating margin. And in the past, it's been much lower than that. So can you just talk a little bit about why is the margin that high? And what you're seeing in a little more detail across the industry that gives you confidence that people aren't bringing on too much capacity?

Perfect. I'll take that, and then Tom can share more information around the margins. And actually, I'm glad you brought that up since I spent already time on the capacity -- our internal capacity, but it is really important to understand the dynamics around the industry capacity because we do get that question a lot. So the simple truth is it's a high bar approval driven industry. It's not about building a plan. It's about decades of engineering know-how certified well procedures, material science and the ability to design and deliver the safety critical grid structures. And utilities, they don't add suppliers overnight, every facility, every product line need to be qualified and approved before they can supply 1 transmission or substation project. It takes time. You need proven field performance, you need deep customer relationship that build through for us, built through thousands of on-time delivery and problem solving in the field. And it's also an industry where there's only a few players that have the financial strength, supply chain depth, technical engineering capabilities, to really meaningfully add capacity.

They are long lead high investment programs, you need capital to build, you need people to execute and you need the customer trust. And we're one of those few players, and we're actually the leader in this space. And as I just mentioned, right, we have our healthy utilization of capacity at this time. So overall, I'd say the barriers to entry here are real, engineering, capital, manufacturing, supply chain and trust, and we manage and we monitor that the industry capacity very closely. And we could see its balance today. And even if at some point, the industry adds a little bit too much, demand will catch up quickly. So overall, we feel good of where we are. We're good on where the industry is right now, and we're in a strong position to maintain our leadership in this space. So that's how we kind of we look at the industry capacity and Tom can just share a little bit about the margins.

Sure. Brian, on the margins, very healthy margins from capacity expansion. We have good pricing for the reason that Avner just said, our engineering capability, our on-time delivery, our scale. But also keep in mind, these expansion projects, they're brownfield. So we're taking our existing plants, and we're adding welding stations, brake presses and other capital equipment. So we're getting more throughput from existing plants so we get the benefit of basically better fixed cost absorption. So both pricing and for brownfields why we get over 20% operating margin.

Okay. And then for my follow-up, can you just put a little bit of a finer point on what is driving current demand in Utility across the different product lines in terms of maybe large transmission structures, substations and other categories? And are you starting to see demand specifically related to the AI data center boom and tying those to the grid?

Yes, thanks. So we're seeing strong demand across the board, right? And first of all, in all product lines, transmission, distribution, substations, large projects, smaller projects, all these mega trends are real. If you look about the electrification, AI, grid connectivity, resiliency, everything we've been talking about the load growth that we haven't seen in a while. And of course, AI and data centers are key drivers as well. We know they're a large consumer of energy. So we don't see slowness in any area, all of our customers are showing extremely strong demand, where our backlog is well into 2026.

And the good thing right now, it's not one single driver, and it's not one single customer, right? It's very broad. And all indications are that this will continue to for a while on all the transmission, and then we'll add another leg to that when they're ready to focus more on hardening and reliability and -- so overall, to sum it up, I mean, we are very excited around where the utility is today with the strong drivers and our ability to execute based on our relationship with our customers, our engineering, manufacturing, that makes us a key partner to our customers. So overall, feel very positive.

[Operator Instructions] Our next question is from Tomohiko Sano with JPMorgan.

Good morning, everyone. My first question is Utilities segment pricing. You mentioned recent favorable pricing in the utility segment, but could you provide more color on outlook pricing trends, especially you talk about the 3 types of capacity expansions and competitors also expanding capacity going forward. How -- like would we think about the stepping up for the pricing trends for 2026 or beyond? Could you -- could we get more color on this, please?

So the pricing -- the pricing in this quarter most of it is because in the beginning of the year with our tariff mitigation plans, it was both supply chain changes, but we passed it on in pricing. And there's a delay from when you bid and one of these product shift. So we're seeing part of that. Going forward, that will continue. Our Head of Utility often talks about the bid market. The bid market is very strong. The demand supply remains tight. We are quoting very healthy margins and winning projects. So I think pricing outlook remains strong for at least the foreseeable future, if not for some time.

And my follow-up question is on Agricultural margins. So regarding the decline in Agriculture margin, you mentioned it was due to lower sales and bad debt expense of $11 million. Do you expect these levels of bad debt expense to continue in the fourth quarter and beyond?

Yes. So that's a really good question. I'm glad you asked that. So we worked with the Brazil team this quarter about exposures. And we did -- we thought it was prudent to book the $11 million of receivable reserves. But we are still attempting to make those collections. If we take that out, the operating margins for Ag are about 14%. So there are a few remaining issues that we're working to bring to resolution in the fourth quarter, and that is reflected in our guidance. And our whole intent here is to get these exposures behind us financially and put in processes so that they don't repeat, and we feel very good about that.

So I think when you look at Ag operating margins, Q4 could be another challenging quarter. But when we get into Q1, we believe we'll have these issues behind us. And even with the current revenues, we had flat revenues in Q1, you would see a double-digit operating margin, and that's what we would expect going forward.

Thanks. That's all I have, and congrats on the quarter.

We have reached the end of our question-and-answer session. I will now turn the call over to Renee Campbell for closing remarks.

Thank you for joining us today. A replay of this call will be available for playback on our website and by phone for the next 7 days. We look forward to speaking with you again next quarter.

These slides and the accompanying oral discussion contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on assumptions made by management considering its experience in the industry's where Valmont operates, perceptions of historical trends, current conditions, expected future developments and other relevant factors. It is important to note that these statements are not guarantees of future performance or results. They involve risks, uncertainties, some of which are beyond Valmont's control and assumptions.

While management believes these forward-looking statements are based on reasonable assumptions, numerous factors could cause actual results to differ materially from those anticipated. These factors include, among other things, risks described in Valmont's reports to the Securities and Exchange Commission, SEC, the company's actual cash flows and net income, future economic and market circumstances, industry conditions, company performance and financial results, operational efficiencies, availability and price of raw material, availability and market acceptance of new products, product pricing, domestic and international competitive environments, geopolitical risks and actions and policy changes by domestic and foreign governments, including tariffs. The company cautions that any forward-looking statements in this release are made as of its publication date and does not undertake to update these statements, except as required by law.

The company's guidance includes certain non-GAAP financial measures, adjusted diluted earnings per share and adjusted effective tax rate presented on a forward-looking basis. These measures are typically calculated by excluding the impact of items such as foreign exchange, acquisitions, divestitures, realignment or restructuring expenses, goodwill or intangible asset impairment changes in tax laws or rates, change in redemption value of redeemable noncontrolling interests and other nonrecurring items. Reconciliations to the most directly comparable GAAP financial measures are not provided, as the company cannot do so without unreasonable effort due to the inherent uncertainty and difficulty in predicting the timing and financial impact of such items. For the same reasons, the company cannot assess the likely significance of unavailable information, which could be material to future results.

This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.