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VI

VALMONT INDUSTRIES INC (VMI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean top-line and adjusted EPS beat: revenue $1.05B vs $1.03B consensus (+1.8%); adjusted EPS $4.88 vs $4.78 consensus (+$0.10). GAAP EPS was a loss of ($1.53) due to $112.1M in one-time charges tied to solar exit, APAC access systems impairments, and realignment costs . Q2 2025 consensus values from S&P Global: Revenue $1.0316B*, EPS $4.78*.
  • Full-year 2025 adjusted EPS guidance was raised to $17.50–$19.50 (from $17.20–$18.80) with sales ranges unchanged, reflecting cost actions and portfolio realignment; tariffs expected to be profit-neutral on a dollar basis in 2025 .
  • Infrastructure demand is robust: utility and telecom strength offset solar/L&T softness; backlog rose to $1.576B (up 9.7% since YE), cash from operations was $167.6M, and net leverage ~0.95x; $100M buyback executed in Q2 .
  • Management highlighted utility capacity investments unlocking $350–$400M of incremental revenue capacity with early benefits expected in Q4; telecom grew >40% YoY; international ag margins improved; NA ag remained soft vs storm-driven 2024 comp .
  • Stock catalysts: raised EPS guidance; decisive solar exit (accretive from Q3); utility capacity ramp; strong cash generation and buybacks; tariff mitigation plan keeps profit neutral assumption intact .

What Went Well and What Went Wrong

What Went Well

  • Utility and telecom outperformed: “Utility sales increased 5.4%…telecommunications…strong sales growth of more than 40%,” with unprecedented utility capex backdrop and capacity additions unlocking $350–$400M incremental revenue; early benefits expected in Q4 .
  • International Agriculture strength and margin improvement: Ag sales +2.7% with EMEA strength and higher Brazil volumes; adjusted Ag margin rose to 15.6% (from 14.3%) on EMEA profitability and lower NA SG&A .
  • Strong cash generation and capital returns: Q2 operating cash flow $167.6M, cash $208.5M, leverage ratio 0.95x; $100M of shares repurchased and $13.6M in dividends paid in Q2 .

What Went Wrong

  • GAAP loss from non-recurring charges: $112.1M of charges (incl. $91.3M impairments—$71.1M Solar & Access Systems, $20.2M other assets; $9.8M severance; $10.9M license/other) drove GAAP EPS to ($1.53) and OI margin to 2.8% (13.5% adjusted, -70 bps YoY) .
  • Solar/L&T softness and lower international infrastructure profitability: solar sales down nearly 50% YoY; lighting & transportation and coatings were soft in international markets; adjusted infra margin fell to 16.3% (from 17.6%) on lower international sales .
  • North America agriculture demand remained weak; NA irrigation volumes fell on lower storm-related replacements and soft market; management still expects NA ag to be challenging near-term .

Financial Results

Revenue and EPS

MetricQ2 2024Q1 2025Q2 2025 Est.*Q2 2025 Actual
Revenue ($USD Billions)$1.040 $0.969 $1.0316*$1.051
GAAP Diluted EPS ($)$4.91 $4.32 —($1.53)
Adjusted Diluted EPS ($)$4.91 —$4.78*$4.88

Values marked with * are from S&P Global. Values retrieved from S&P Global.

Margins

MetricQ2 2024Q1 2025Q2 2025
Gross Margin % (GAAP)30.8% 30.0% 30.6%
Operating Margin % (GAAP)14.2% 13.2% 2.8%
Operating Margin % (Adjusted)14.2% —13.5%

Segment Performance

SegmentMetricQ2 2024Q1 2025Q2 2025
InfrastructureNet Sales ($M)$760.4 $703.5 $763.1
InfrastructureAdjusted OI Margin %17.6% 16.7% 16.3%
AgricultureNet Sales ($M)$279.3 $265.8 $287.5
AgricultureAdjusted OI Margin %14.3% 13.6% 15.6%

KPIs and Cash/Capital

KPIQ1 2025Q2 2025
Operating Cash Flow ($M)$65.1 $167.6
Capex ($M)$30.3 $32.0
Cash & Equivalents ($M)$184.4 $208.5
Net Leverage (x)~1.0x 0.95x
Share Repurchases ($M)$59 through 4/18 (Q2 to-date) $100 (Q2)

Backlog

MetricYE 2024Q2 2025
Total Backlog ($M)$1,436.7 $1,575.9
Infrastructure Backlog ($M)$1,273.3 $1,461.8

Q2 2025 vs Consensus (S&P Global)

MetricEstimate*ActualSurprise
Revenue ($B)$1.0316*$1.0505 +$0.0189B (+1.8%)*
Adjusted EPS ($)$4.78*$4.88 +$0.10 (+2.1%)*

Values marked with * are from S&P Global. Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY 2025$4.0–$4.2BNo changeMaintained
Infrastructure Net SalesFY 2025$3.02–$3.16BNo changeMaintained
Agriculture Net SalesFY 2025$0.98–$1.04BNo changeMaintained
Adjusted Diluted EPSFY 2025$17.20–$18.80$17.50–$19.50Raised
Capital ExpendituresFY 2025$140–$160MNo changeMaintained
Adjusted Effective Tax RateFY 2025~26%No changeMaintained
Tariffs (assumption)FY 2025Profit neutral (dollar basis)Profit neutral (dollar basis)Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Utility demand & capacityUtility sales +5.9% YoY; strong demand; planning 2025 growth .Capacity expansions underway (Brenham, Tulsa, FL, KS) to meet multi-year growth; backlog ~$1.5B .“Unprecedented” US utility capex cycle; AI-enabled scheduling; unlocking $350–$400M capacity; benefits in Q4 .Improving
TelecomRecovery underway; higher carrier spend .+~30% YoY; aligned with carrier programs; positive 2025 outlook .>40% YoY growth; strong through Q3; high-margin, strategically aligned .Improving
SolarNA declines after deselection of low-return projects .Sales >50% down YoY; policy uncertainty .Exit NA solar; downsize Brazil; Italy profitable; expected EPS accretive from Q3 .Portfolio refocus
L&T & CoatingsL&T +2.1% in Q4’24 but mixed markets .Intl softness (esp. Australia) weighed; stabilization emerging .Intl softness persists; leadership changes to improve execution .Mixed/Improving execution
Tariffs & steel2025 outlook included known tariffs .Teams mitigating ~$80M gross exposure; profit neutral planned; shift sourcing/localization .Profit neutral reiterated; primarily US poured/melted steel; stable steel pricing .Managed risk
International Ag & projectsIntl Ag growth; projects strong; NA slightly lower .EMEA strength; Brazil stabilizing; Middle East project pipeline robust .Intl strength continues; EMEA margins up; NA soft vs storm comp .Improving ex-NA

Management Commentary

  • “We delivered solid results operationally…strength in Utility, Telecommunications, and International Agriculture…we completed the realignment work…one-time charges…designed to increase agility…Looking ahead, we’re now focused on scaling innovation, investing in growth, and driving greater efficiency” – CEO Avner M. Applbaum .
  • “We are operating in an unprecedented utility investment cycle…US CapEx expected to exceed $212B this year…We’re unlocking $350–$400M in incremental capacity and revenue…We expect early benefits to be reflected in our fourth quarter financials” – CFO Tom Liguori .
  • “We decided to exit the North American solar market…Italy is profitable…Brazil is managed with discipline…[solar exit] was operating at a slight loss, and it will be profitable in Q3 and Q4” – CEO/CFO during Q&A .

Q&A Highlights

  • Solar exit and earnings: NA exit and Brazil downsizing reflect regulatory/return headwinds; expected to be EPS accretive starting Q3 as loss-making operations cease .
  • Tariffs/steel: Primarily US poured/melted steel usage; tariff plan remains “profit neutral”; supply chain localization and pricing actions underpin confidence; steel pricing stable/moderating into H2 based on futures .
  • Roadmap to growth: $500–$700M revenue and $7–$12 EPS uplift targeted over 3–4 years via utility capacity, AI-driven efficiency, cost actions, tuck-in M&A, and buybacks; improvements begin Q4 with a step-up in 2026 .
  • SG&A run-rate: Q2 SG&A elevated by variable selling and IT/AI investments; H2 quarterly SG&A expected in the mid-$170M range with further efficiency opportunities into 2026 .
  • T&D outlook: Strength across transmission, distribution, and substation; “strongest production week ever” last week; second-half utility revenue expected to grow in excess of double-digits YoY .

Estimates Context

  • Q2 2025 beat vs S&P Global consensus: revenue $1.0505B vs $1.0316B* (+1.8%); adjusted EPS $4.88 vs $4.78* (+2.1%) . Q2 consensus count: 5 estimates for revenue and EPS*.
  • Forward consensus (S&P Global): Q3 2025 revenue $1.0336B*, EPS $4.62*; Q4 2025 revenue $1.0454B*, EPS $4.96*. With management raising FY25 adjusted EPS to $17.50–$19.50, estimate revisions may trend up on higher H2 profitability and solar drag removal .
    Values marked with * are from S&P Global. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Clean beat/raise: Adjusted EPS and revenue beat, FY25 adjusted EPS guidance raised; GAAP loss is non-recurring and tied to portfolio realignment—a likely positive setup for H2 and into 2026 .
  • Utility-led H2 acceleration: Capacity investments and scheduling/AI are set to unlock $350–$400M incremental revenue capacity with early Q4 impact; utility backlog and end-market capex support multi-year growth .
  • Telecom as a margin accretive tailwind: >40% YoY growth with visibility into H2; aligned with carrier 5G densification and FWA programs .
  • Solar exit removes a drag: NA solar exit and Brazil resizing should lift run-rate margins; management expects the solar-related P&L to be profitable from Q3 onward .
  • Cash returns and balance sheet strength: Robust cash from operations ($167.6M in Q2), net leverage ~0.95x, and $100M buybacks in Q2 provide downside support and EPS accretion .
  • Watch lists: NA agriculture remains soft; international infra profitability is a swing factor; observe L&T international demand and SG&A execution to hit mid-$170M/quarter in H2 .
  • Trading implications: Raised EPS guidance, solar exit accretion, and Q4 utility ramp are near-term catalysts; beats in H2 and evidence of capacity throughput gains could drive multiple expansion, while tariff headlines and international infra demand remain key risks to monitor .