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VI

VALMONT INDUSTRIES INC (VMI)·Q3 2025 Earnings Summary

Executive Summary

  • Solid quarter with revenue up 2.5% to $1.05B, operating margin up 120 bps to 13.5%, and EPS up 21% to $4.98; strength in Utility and Telecom offset softer Agriculture and Solar .
  • Results beat Wall Street on EPS and revenue; company raised FY25 adjusted EPS outlook to $18.70–$19.50 (midpoint +$0.60) and cut tax-rate assumption to ~25% from ~26% .
  • Infrastructure delivered 17.8% operating margin (up 150 bps YoY) on pricing, volumes, and improved cost structure; backlog grew 20% YTD to $1.73B, driven by Utility .
  • Catalyst: Guidance raise, record-like Infrastructure margin, and visibility into multi‑year Utility demand (AI/data centers, electrification) with backlog extending well into 2026 .

What Went Well and What Went Wrong

What Went Well

  • Infrastructure outperformed: sales +6.6% to $808.3M; Utility sales +12.3%; Telecom +37% (call); segment margin 17.8% (+150 bps YoY) on pricing, volume, and cost improvements .
  • Backlog and cash generation: backlog +$293M since YE’24 to $1.73B; operating cash flow strong; net leverage ~0.9x .
  • Management execution and clarity: CEO emphasized focus on highest-return opportunities; CFO highlighted >20% incremental operating margin on added Utility capacity and disciplined SG&A .

What Went Wrong

  • Agriculture softness: segment sales -9% to $241.3M; operating margin 9.7% (down 130 bps YoY) with $11M Brazil bad debt reserve; North America demand soft; Middle East timing headwind .
  • Lighting & Transportation (L&T) pressure: continued softness in APAC and North America lighting; operational issues reduced output; actions underway but recovery will take time .
  • Solar decline by design: meaningful revenue drop following exit of certain markets; company expects Solar to be ~2% of revenue and to consolidate reporting from 2026 .

Financial Results

Headline financials (GAAP)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$1.02 $0.97 $1.05 $1.05
Gross Margin %29.6% 30.0% 30.6% 30.4%
Operating Income ($USD Millions)$125.7 $128.3 $29.3 $141.5
Operating Margin %12.3% 13.2% 2.8% 13.5%
Diluted EPS ($)$4.11 $4.32 ($1.53) $4.98

Note: Q2 GAAP results include $112.1M of non-recurring charges (impairment/realignment/other), depressing GAAP EPS; adjusted Q2 operating margin was 13.5% and adjusted EPS $4.88 .

Actual vs S&P Global Consensus – Q3 2025

MetricConsensus (S&P Global)*ActualResult
Revenue ($USD Billions)$1.0336*$1.04598 Beat
EPS (Primary, $)$4.62*$4.98 Beat
EBITDA ($USD Millions)$161.2*$163.1*Beat

*Values retrieved from S&P Global.

Segment performance and mix

MetricQ3 2024Q2 2025Q3 2025
Infrastructure Net Sales ($M)$756.4 $763.1 $806.6
Infrastructure Operating Margin %16.3% 3.4% (GAAP) 17.8%
Agriculture Net Sales ($M)$263.8 $287.5 $239.4
Agriculture Operating Margin %11.0% 12.5% 9.7%

Product line revenue (Q3 2025 vs Q3 2024)

Product Line ($M)Q3 2024Q3 2025
Utility$349.1 $391.9
Lighting & Transportation$222.5 $215.1
Coatings$85.8 $94.8
Telecommunications$64.3 $88.1
Solar$34.6 $16.6
Irrigation Equip & Parts$241.9 $219.0
Technology Products & Services$21.9 $20.4

KPIs and capital allocation

KPIQ2 2025Q3 2025
Total Backlog ($B)$1.576 $1.730
Infrastructure Backlog ($B)$1.462 $1.635
Agriculture Backlog ($M)$114.1 $95.1
Cash & Equivalents ($M)$208.5 $226.1
Net Leverage (Adj. EBITDA basis, x)0.95 0.91
CapEx in Quarter ($M)$32.0 $41.9
Share Repurchases in Quarter ($M)$100.0 $25.8
Dividends Paid in Quarter ($M)$13.6 $13.4

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY2025$4.0–$4.2B ~$4.1B Maintained midpoint specificity
Infrastructure Net SalesFY2025$3.02–$3.16B ~$3.1B Maintained midpoint specificity
Agriculture Net SalesFY2025$0.98–$1.04B ~$1.0B Maintained midpoint specificity
Adjusted Diluted EPSFY2025$17.50–$19.50 $18.70–$19.50 Raised (midpoint +$0.60)
Adjusted Effective Tax RateFY2025~26.0% ~25.0% Lowered
Capital ExpendituresFY2025$140–$160M No change Unchanged
Quarterly DividendOngoing$0.68 declared 7/28/25 [15 not read]$0.68 payable 1/15/26 Maintained

Key assumptions: steel aligned with futures; tariff mitigation plans expected to keep 2025 profit neutral on a dollar basis .

Earnings Call Themes & Trends

TopicQ1 2025 (prior two quarters)Q2 2025 (prior quarter)Q3 2025 (current)Trend
AI/data centers & grid demandStrength in Utility and Telecom demand drivers noted, capacity investments ramping Utility solid; roadmap to capture infrastructure demand Broad-based Utility demand; AI/data centers cited as key load growth driver; backlog into 2026 Strengthening visibility
Supply chain/capacity & throughputInfrastructure capacity investments ramping Brownfield expansions; +$78M CapEx YTD; added $95M annual rev capacity Exceeding capacity targets; >20% incremental op margin on added Utility capacity Improving throughput & mix
Tariffs/macroOutlook incorporates tariff mitigation; aim cost/profit neutral Tariff mitigation underpinning pricing; profit neutrality reiterated Pricing benefit from Q1 tariff actions flowing in Q3; bid market strong Neutralized via pricing/supply actions
Product performanceUtility/Telecom up; Solar down; NA Ag soft; Intl Ag strong Utility stable; Telecom up; Solar down; Intl Ag up Utility +12.3%; Telecom strong; L&T soft; Solar down; Ag down on NA softness & ME timing Mixed: Infra strong, Ag/L&T softer
Regional trendsIntl Ag strength (EMEA/Brazil), NA Ag soft Intl Ag strong; Brazil stabilizing Brazil tighter credit and collections pressure; ME project timing; NA Ag soft Brazil worsened; ME timing variable
Digital/tech in AgEmphasis on tech solutions Strategy focus on tech & intl Aftermarket +15% to ~$52M; AgSense +8%; e‑commerce platform scaling Growing recurring & aftermarket
Regulatory/legalTariffs embedded in outlook Same Same; guidance incorporates tariffs Managed

Management Commentary

  • CEO: “Infrastructure delivered solid growth, led by robust Utility demand… Given our results and the momentum across the organization, we’re raising our full‑year earnings guidance.”
  • CFO: “Operating margins of 13.5% improved 120 basis points… tax rate declined to 23.1% due to a more favorable geographic mix.”
  • CFO on Utility capacity: “Every incremental revenue dollar contributes well over 20% of operating margin… expansions are brownfield, improving fixed-cost absorption.”
  • CEO on demand drivers: “Data center expansion, manufacturing onshoring… broader electrification… Market forecasts call for transmission CapEx to grow at a 9% CAGR through 2029.”
  • CFO on Ag reserves: “Recorded additional reserves, including $11M of bad debt expense (Brazil)… excluding that, Ag operating income was 14.1% of sales.”

Q&A Highlights

  • Infrastructure margin sustainability: Management attributes 17.8% margin to pricing power, engineering scale, cost actions; sees >20% incremental operating margin on added Utility capacity .
  • Utility growth drivers and pricing: Demand tight; pricing healthy; tariff pass-through aided Q3; roughly half growth from pricing, half from volume; tailwinds to continue into Q4 .
  • L&T trajectory: Continued softness in APAC and NA lighting; operational fixes and leadership changes underway; expect gradual improvement .
  • Agriculture outlook: Q4 to remain challenging due to Brazil credit; expect double-digit Ag operating margin from Q1 as exposures are resolved .
  • Backlog breadth: Utility backlog extends well into 2026; demand broad across transmission, distribution, substations; AI/data center load growth additive .

Estimates Context

  • Q3 results exceeded S&P Global consensus: EPS $4.98 vs $4.62*, revenue $1.046B vs $1.034B*, EBITDA $163.1M* vs $161.2M* .
  • Forward estimate implications: Raise in FY25 EPS guidance and lower tax-rate assumption suggest upward bias to FY EPS models; segment mix shift toward Utility and Telecom supports margin assumptions; Ag estimates likely trimmed near term for Brazil credit/timing .
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat and raise: EPS and revenue beat alongside higher FY EPS range and lower tax-rate guidance; narrative skew remains positive .
  • Multi‑year Utility upcycle: Backlog into 2026 and AI/electrification tailwinds; brownfield expansions with >20% incremental margins support durable earnings power .
  • Margin mix improving: Infrastructure margin at 17.8% with Telecom strength and coatings resilience; expect continued benefit from pricing and throughput .
  • Agriculture is the swing factor: Near-term headwinds (NA demand, Brazil credit), but aftermarket/tech growth and project pipeline (ME/International) underpin medium-term recovery .
  • Cash returns intact: Continued dividends ($0.68/quarter) and opportunistic buybacks; leverage sub-1x provides flexibility for growth and returns .
  • Watch items: L&T operational improvements, Brazil receivables collections, and pace of Utility capacity ramp translating to revenue and margin capture .