VALMONT INDUSTRIES INC (VMI)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 was resilient: revenue $969.3M (-0.9% YoY), gross margin 30.0% (-130 bps YoY), operating margin 13.2% (-30 bps YoY), and EPS $4.32 (flat YoY). Infrastructure strength (Utility, Telecom) and international Ag offset Solar and North America Ag weakness .
• Small misses vs S&P Global consensus: revenue $969.3M vs $976.1M* and EPS $4.32 vs $4.357*; management reaffirmed FY25 outlook ($4.0–$4.2B sales, $17.20–$18.80 EPS, ~26% tax) and expects EPS “above the midpoint” for FY25 . Values with asterisks retrieved from S&P Global.
• Tariffs were a controllable headwind ($3M cost in Q1); management detailed pricing and supply chain actions to be cost neutral for FY25, with the recovery skewing to 2H as backlog reprices .
• Backlog increased to $1.49B (Infrastructure $1.33B) and capex focused on Utility capacity expansion positions the company for acceleration through 2025; buybacks began in April ($59M through 4/18) .

What Went Well and What Went Wrong

• What Went Well

  • Utility and Telecom strength; Telecom up nearly 30% YoY as carrier spending recovered; steel utility grew ~8% ex-concrete .
  • International Ag momentum (EMEA, Brazil stabilization) offset North America softness; Dubai facility output nearly doubled YoY to support Middle East projects .
  • Tariff mitigation plan underway (pricing, local-for-local sourcing, USMCA-compliant Mexico operations), with confidence in FY25 cost neutrality: “we believe these actions will enable us to be cost neutral...in fiscal 2025” .

• What Went Wrong

  • Gross margin contracted 130 bps YoY to 30.0% largely on Ag mix (higher international projects); Ag operating margin declined to 13.6% from 15.9% YoY .
  • Solar sales down significantly following strategic exit of low-margin projects; Lighting & Transportation and Coatings softer internationally .
  • North America Ag remained weak amid lower grain prices; management expects a “tough” domestic irrigation environment in 2025 .

Financial Results

Consolidated results versus prior two quarters and prior year

Consensus vs Actual (Q1 2025)

Values with asterisks retrieved from S&P Global.

Segment performance (Q1 2025 vs Q1 2024)

Product line mix (Q1 2025 vs Q1 2024)

KPIs

Guidance Changes

Tariff/assumptions: Company expects FY25 dollar cost neutrality under current tariffs; not assuming future tariff changes .

Earnings Call Themes & Trends

Management Commentary

• Strategic positioning: “Order activity and volume growth remain healthy as reflected in our burn backlog of $1.5 billion… our capacity additions… are expected to contribute to sales growth as the year progresses.”
• Tariffs: “We believe these actions will enable us to be cost neutral with respect to tariffs on a dollar basis in fiscal 2025.”
• Telecom: “We’re very pleased with our Q1 growth of over 30% in telecom… carriers will continue to invest.”
• Agriculture mix: “Lower gross margin due to the higher mix of international projects, was partially offset by lower SG&A expenses.”
• Capital returns: “Through April 18, we’ve repurchased $59 million of shares in the second quarter at an average price of $269 per share.”

Q&A Highlights

• Pricing/tariffs: ~$80M gross exposure; ~half covered by pricing, half by supply chain actions; backlog repricing lag means more benefit in 2H; Q1 tariff cost ~$3M to be recovered later in the year .
• Steel dynamics: Steel price volatility moderating; futures lower for 2H; sourcing adjustments (Houston supplier proximity) expected to aid costs/logistics .
• Outlook vs midpoint: Management expects to be above the midpoint for both revenue and EPS, with incremental upside from cost initiatives ($15–$20M) not in guidance yet .
• Geographic/segment nuances: Australia lighting started slow but improving; EMEA Ag strong; Brazil “bottomed” and stabilizing; North America Ag to remain weak in 2025 .
• Volume growth: Infrastructure mid-single-digit volume growth expected in 2025 ex-Solar, consistent with LT targets .

Estimates Context

• Q1 2025 printed slightly below consensus: revenue $969.3M vs $976.1M*, EPS $4.32 vs $4.357* . Values with asterisks retrieved from S&P Global.
• FY 2025 consensus implies the Street sits near the upper half of guidance: EPS $19.14* vs guidance $17.20–$18.80; revenue $4.11B* vs $4.0–$4.2B . Values with asterisks retrieved from S&P Global.
• Potential estimate revisions: 2H pricing/tariff offset and cost actions may support slight upward EPS revisions if execution continues and NA Ag stabilizes as expected (management sees “above midpoint” EPS) .

Key Takeaways for Investors

• Infrastructure (Utility, Telecom) remains the growth engine; backlogs and capacity additions position VMI for 2H acceleration despite Solar headwinds .
• Tariff mitigation is credible and underway; expect improving P&L impact through backlog turnover/pricing and supply chain localization into 2H .
• Ag mix weighs near term, but international projects and EMEA strength support earnings resiliency while NA Ag works through a cyclical trough .
• Cash generation remains solid with disciplined capex into high-return Utility capacity; leverage ~1.0x provides flexibility .
• Capital returns are active (dividend raised to $0.68; $700M authorization; $59M repurchased by 4/18), adding an underpin to EPS and TSR in 2025 .
• Near-term trading: Modest Q1 miss vs consensus, but reaffirmed guide and positive tariff/cost narrative are supportive; watch Telecom order rates, Utility backlog conversion, and tariff-policy developments .
• Medium-term thesis: Exposure to long-cycle grid hardening, 5G, coatings, and water/food security with improving cost structure argues for durable mid-cycle margins and FCF compounding .

S&P Global disclaimer: All values marked with an asterisk (*) are consensus estimates retrieved from S&P Global.