Release Date: April 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Valmont Industries Inc (VMI, Financial) reported a strong backlog of $1.5 billion, indicating healthy order activity and volume growth.
- The company is actively mitigating tariff risks with a local for local supply chain strategy, reducing exposure to international tariffs.
- Valmont Industries Inc (VMI) is investing in capacity expansion, with $30 million in CapEx directed towards increasing utility production.
- The telecommunications segment saw a robust 30% growth, driven by carrier spending on 5G upgrades and modernization.
- Valmont Industries Inc (VMI) is implementing cost optimization initiatives, which could result in $15 million to $20 million in savings once fully implemented.
Negative Points
- Consolidated net sales decreased by 0.9% year-over-year, with a decline in gross margin due to a higher mix of lower-margin international projects.
- The agriculture segment is facing challenges due to lower crop prices and pressured farm income, impacting North American market conditions.
- Solar sales declined by more than 50%, reflecting lower volumes and the strategic decision to exit low-margin projects.
- The lighting markets have been soft, with international sales exposure facing challenges, particularly in the Asia-Pacific region.
- Tariffs resulted in a $3 million cost in the first quarter, although the company expects to be cost-neutral by the end of the year.
Q & A Highlights
Q: Have price actions been implemented to offset all of the tariff impacts to date, and is there any type of lag that we should expect from pricing?
A: Thomas Liguori, Executive Vice President and Chief Financial Officer, explained that the team has done a good job mitigating tariffs, aiming for cost neutrality for the year. About half of the $80 million tariff exposure is managed through pricing, with the rest through supply chain adjustments. There might be a lag in pricing as backlog items are generally not repriced, with effects more visible in the second half of the year.
Q: How should we think about the telecom business for the rest of the year, given the strong 30% growth in the first quarter?
A: Avner Applbaum, President and Chief Executive Officer, noted that telecom has stabilized after a period of reduced carrier spending. Carriers are investing in 5G upgrades and modernization, with strong order rates expected to continue. The company is closely aligned with carrier investments, such as AT&T's RAN transition, and remains optimistic about ongoing carrier spending.
Q: If steel prices increase significantly, how will that affect the second half earnings?
A: Thomas Liguori mentioned that while steel prices rose earlier, they are starting to moderate, with futures indicating a decline in the second half. The company is working with suppliers to reduce costs, including freight and value-added operations, which should positively impact the year's end results.
Q: Is the expectation for the North American irrigation market weaker now than it was three months ago?
A: Avner Applbaum confirmed that the North American irrigation market is expected to be challenging due to uncertainty, leading farmers to delay investments. Despite this, the company continues to invest in technology and strategic accounts to be ready when the market recovers.
Q: Can you elaborate on the order trends in Brazil and whether this indicates a true recovery?
A: Avner Applbaum stated that after a tough year, Brazil is showing signs of stabilization with increasing order activity. While margins remain under pressure, the company is investing with dealers for future growth, and the region is expected to benefit from global trade dynamics.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
