VALMONT INDUSTRIES INC 10-Q

Table of Contents ​ ​ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ​ ​ Form 10-Q (Mark One) ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 1, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to Commission file number 1-31429 ​ ​ Valmont Industries, Inc. (Exact name of registrant as specified in its charter) Delaware 47-0351813 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 15000 Valmont Plaza, ​ Omaha, Nebraska 68154 (Address of Principal Executive Offices) (Zip Code) ​ ( 402 ) 963-1000 (Registrant’s telephone number, including area code) ​ (Former name, former address and former fiscal year, if changed since last report) ​ ​ Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock $1.00 par value ​ VMI ​ New York Stock Exchange ​ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. ​ ​ ​ ​ ​ ​ ​ ​ Large accelerated filer ☒ Accelerated filer ☐ Non‑accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ ​ ​ ​ ​ ​ ​ ​ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ 21,012,778 Outstanding shares of common stock as of July 28, 2023 ​ ​ ​ Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES INDEX TO FORM 10-Q ​ ​ ​ ​ PART I. FINANCIAL INFORMATION ​ ​ Item 1. Financial Statements (Unaudited): ​ ​ ​ Condensed Consolidated Statements of Earnings for the thirteen and twenty-six weeks ended July 1, 2023 and June 25, 2022 ​ 3 ​ Condensed Consolidated Statements of Comprehensive Income for the thirteen and twenty-six weeks ended July 1, 2023 and June 25, 2022 ​ 4 ​ Condensed Consolidated Balance Sheets as of July 1, 2023 and December 31, 2022 ​ 5 ​ Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended July 1, 2023 and June 25, 2022 ​ 6 ​ Condensed Consolidated Statements of Shareholders’ Equity for the thirteen and twenty-six weeks ended July 1, 2023 and June 25, 2022 ​ 7 ​ Notes to Condensed Consolidated Financial Statements ​ 8 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 22 Item 3. Quantitative and Qualitative Disclosures about Market Risk ​ 32 Item 4. Controls and Procedures ​ 32 ​ ​ ​ ​ ​ PART II. OTHER INFORMATION ​ ​ Item 1A. Risk Factors ​ 33 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ​ 33 Item 6. Exhibits ​ 34 Signatures ​ 35 ​ ​ 2 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in thousands, except per share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ Twenty-six weeks ended ​ ​ July 1, ​ June 25, ​ July 1, ​ June 25, ​ ​ 2023 2022 2023 2022 Product sales ​ $ 945,873 ​ $ 1,036,289 ​ $ 1,903,881 ​ $ 1,927,159 Service sales ​ 100,423 ​ 99,243 ​ 204,896 ​ 189,193 Net sales ​ 1,046,296 ​ 1,135,532 ​ 2,108,777 ​ 2,116,352 Product cost of sales ​ 651,413 ​ 781,323 ​ 1,333,203 ​ 1,454,493 Service cost of sales ​ 65,486 ​ 61,608 ​ 137,592 ​ 120,072 Total cost of sales ​ 716,899 ​ 842,931 ​ 1,470,795 ​ 1,574,565 Gross profit ​ 329,397 ​ 292,601 ​ 637,982 ​ 541,787 Selling, general, and administrative expenses ​ 195,664 ​ 173,882 ​ 385,783 ​ 328,226 Operating income ​ 133,733 ​ 118,719 ​ 252,199 ​ 213,561 Other income (expenses): ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ( 14,917 ) ​ ( 11,386 ) ​ ( 28,022 ) ​ ( 22,649 ) Interest income ​ 563 ​ 285 ​ 1,393 ​ 512 Gain (loss) on investments - unrealized ​ 941 ​ ( 2,342 ) ​ 2,135 ​ ( 3,405 ) Other ​ 612 ​ 2,073 ​ ( 1,764 ) ​ 5,715 Total other income (expenses) ​ ( 12,801 ) ​ ( 11,370 ) ​ ( 26,258 ) ​ ( 19,827 ) Earnings before income taxes and equity in loss of nonconsolidated subsidiaries ​ 120,932 ​ 107,349 ​ 225,941 ​ 193,734 Income tax expense: ​ ​ ​ ​ Current ​ 37,791 ​ 27,620 ​ 62,147 ​ 50,033 Deferred ​ ( 5,856 ) ​ 1,967 ​ 1,631 ​ 2,675 Total income tax expense ​ 31,935 ​ 29,587 ​ 63,778 ​ 52,708 Earnings before equity in loss of nonconsolidated subsidiaries ​ 88,997 ​ 77,762 ​ 162,163 ​ 141,026 Equity in loss of nonconsolidated subsidiaries ​ ( 199 ) ​ ​ ( 555 ) ​ ​ ( 1,020 ) ​ ​ ( 913 ) Net earnings ​ 88,798 ​ 77,207 ​ 161,143 ​ 140,113 Loss (earnings) attributable to noncontrolling interests ​ 578 ​ ( 1,099 ) ​ 2,773 ​ ( 1,694 ) Net earnings attributable to Valmont Industries, Inc. ​ $ 89,376 ​ $ 76,108 ​ $ 163,916 ​ $ 138,419 Earnings per share: ​ ​ ​ ​ ​ Basic ​ $ 4.25 ​ $ 3.57 ​ $ 7.75 ​ $ 6.50 Diluted ​ $ 4.21 ​ $ 3.53 ​ $ 7.67 ​ $ 6.43 ​ ​ See accompanying notes to condensed consolidated financial statements. ​ ​ 3 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ Twenty-six weeks ended ​ ​ July 1, ​ June 25, ​ July 1, ​ June 25, ​ ​ 2023 2022 2023 2022 Net earnings ​ $ 88,798 ​ $ 77,207 ​ $ 161,143 ​ $ 140,113 Other comprehensive income (loss), net of tax: ​ ​ ​ ​ Foreign currency translation adjustments: ​ ​ ​ ​ Unrealized translation gain (loss) ​ 11,967 ​ ( 43,666 ) ​ 20,156 ​ ( 32,050 ) Hedging activities: ​ ​ ​ ​ Unrealized gain (loss) on commodity hedges ​ ( 1,339 ) ​ ( 19,512 ) ​ ( 2,815 ) ​ 1,048 Realized (gain) loss on commodity hedges recorded in earnings ​ 925 ​ 1,545 ​ 3,797 ​ ( 498 ) Unrealized gain (loss) on cross currency swaps ​ ​ ( 760 ) ​ ​ 3,470 ​ ​ ( 1,351 ) ​ ​ 5,281 Amortization cost included in interest expense ​ ( 12 ) ​ ( 16 ) ​ ( 28 ) ​ ( 32 ) Total hedging activities ​ ​ ( 1,186 ) ​ ​ ( 14,513 ) ​ ​ ( 397 ) ​ ​ 5,799 Net gain on defined benefit pension plan ​ 95 ​ 124 ​ 186 ​ 256 Other comprehensive income (loss) ​ 10,876 ​ ( 58,055 ) ​ 19,945 ​ ( 25,995 ) Comprehensive income ​ 99,674 ​ 19,152 ​ 181,088 ​ 114,118 Comprehensive (income) loss attributable to noncontrolling interests ​ 233 ​ 932 ​ 2,135 ​ ( 756 ) Comprehensive income attributable to Valmont Industries, Inc. ​ $ 99,907 ​ $ 20,084 ​ $ 183,223 ​ $ 113,362 ​ ​ See accompanying notes to condensed consolidated financial statements. ​ ​ 4 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except par values) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ July 1, ​ December 31, ​ ​ 2023 2022 ASSETS ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ Cash and cash equivalents ​ $ 166,907 ​ $ 185,406 Receivables, net ​ 651,133 ​ 604,181 Inventories ​ 729,738 ​ 728,762 Contract assets ​ 154,410 ​ 174,539 Prepaid expenses and other current assets ​ 99,994 ​ 87,697 Total current assets ​ 1,802,182 ​ 1,780,585 Property, plant, and equipment, at cost ​ 1,464,577 ​ 1,433,151 Less accumulated depreciation ​ ( 861,465 ) ​ ( 837,573 ) Property, plant, and equipment, net ​ 603,112 ​ 595,578 Goodwill ​ 744,271 ​ 739,861 Other intangible assets, net ​ 165,728 ​ 176,615 Defined pension benefit asset ​ ​ 43,045 ​ 24,216 Other non-current assets ​ 257,502 ​ 240,141 Total assets ​ $ 3,615,840 ​ $ 3,556,996 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ ​ ​ Current liabilities: ​ ​ Current installments of long-term debt ​ $ 1,041 ​ $ 1,194 Notes payable to banks ​ 1,665 ​ 5,846 Accounts payable ​ 346,000 ​ 360,312 Accrued employee compensation and benefits ​ 109,155 ​ 124,355 Contract liabilities ​ 124,230 ​ 172,915 Other accrued expenses ​ 131,344 ​ 123,965 Income taxes payable ​ ​ 23,152 ​ ​ 3,664 Dividends payable ​ 12,607 ​ 11,742 Total current liabilities ​ 749,194 ​ 803,993 Deferred income taxes ​ 38,390 ​ 41,091 Long-term debt, excluding current installments ​ 952,704 ​ 870,935 Operating lease liabilities ​ 161,795 ​ 155,469 Deferred compensation ​ 34,938 ​ 30,316 Other non-current liabilities ​ 8,527 ​ 13,480 Total liabilities ​ ​ 1,945,548 ​ ​ 1,915,284 Shareholders’ equity: ​ ​ Common stock of $ 1 par value ​ ​ ​ ​ Authorized 75,000,000 shares; 27,900,000 issued ​ 27,900 ​ 27,900 Retained earnings ​ 2,710,382 ​ 2,593,039 Accumulated other comprehensive loss ​ ( 255,602 ) ​ ( 274,909 ) Treasury stock ​ ( 870,456 ) ​ ( 765,183 ) Total Valmont Industries, Inc. shareholders’ equity ​ 1,612,224 ​ 1,580,847 Noncontrolling interest in consolidated subsidiaries ​ 58,068 ​ 60,865 Total shareholders’ equity ​ ​ 1,670,292 ​ ​ 1,641,712 Total liabilities and shareholders’ equity ​ $ 3,615,840 ​ $ 3,556,996 ​ ​ See accompanying notes to condensed consolidated financial statements. ​ 5 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ Twenty-six weeks ended ​ ​ July 1, ​ June 25, ​ ​ 2023 2022 Cash flows from operating activities: ​ ​ ​ Net earnings ​ $ 161,143 ​ $ 140,113 Adjustments to reconcile net earnings to net cash flows from operations: ​ ​ ​ ​ Depreciation and amortization ​ 48,792 ​ 48,012 Contribution to defined benefit pension plan ​ ( 15,259 ) ​ ( 17,155 ) Gain on divestiture ​ ​ ( 2,994 ) ​ ​ — Stock-based compensation ​ 19,856 ​ 19,583 Defined benefit pension plan expense (benefit) ​ ​ 122 ​ ​ ( 5,242 ) Loss on sale of property, plant, and equipment ​ 1,297 ​ 737 Equity in loss in nonconsolidated subsidiaries ​ 1,020 ​ 913 Deferred income taxes ​ 1,631 ​ 2,675 Changes in assets and liabilities: ​ ​ ​ ​ Receivables ​ ( 38,147 ) ​ ( 53,809 ) Inventories ​ 6,402 ​ ( 56,625 ) Prepaid expenses and other assets (current and non-current) ​ ( 26,001 ) ​ 5,369 Contract assets ​ 20,052 ​ ( 59,536 ) Accounts payable ​ ( 20,750 ) ​ 39,875 Accrued expenses ​ ( 11,202 ) ​ ( 16,034 ) Contract liabilities ​ ( 53,728 ) ​ 4,798 Other non-current liabilities ​ ( 7,083 ) ​ ( 6,447 ) Income taxes payable ​ 24,395 ​ 20,792 Net cash flows provided by operating activities ​ 109,546 ​ 68,019 Cash flows from investing activities: ​ ​ ​ ​ Purchase of property, plant, and equipment ​ ( 45,393 ) ​ ( 49,676 ) Proceeds from divestiture, net of cash divested ​ ​ 6,369 ​ — Proceeds from sale of assets ​ 1,261 ​ 45 Proceeds from property damage insurance claims ​ ​ 4,844 ​ — Acquisitions, net of cash acquired ​ — ​ ( 39,297 ) Other, net ​ ​ ( 1,127 ) ​ ​ 1,117 Net cash flows used in investing activities ​ ( 34,046 ) ​ ( 87,811 ) Cash flows from financing activities: ​ ​ ​ ​ Proceeds from short-term borrowings ​ 14,905 ​ — Payments on short-term borrowings ​ ( 19,598 ) ​ ( 9,155 ) Proceeds from long-term borrowings ​ 165,012 ​ 201,462 Principal payments on long-term borrowings ​ ( 84,105 ) ​ ( 156,973 ) Dividends paid ​ ( 24,376 ) ​ ( 22,337 ) Dividends to noncontrolling interest ​ ( 662 ) ​ — Purchase of noncontrolling interests ​ — ​ ( 4,292 ) Purchase of treasury shares ​ ( 135,115 ) ​ ( 9,776 ) Proceeds from exercises under stock plans ​ 5,201 ​ 5,846 Tax withholdings on exercises under stock plans ​ ( 15,416 ) ​ ( 4,205 ) Net cash flows (used in) provided by financing activities ​ ( 94,154 ) ​ 570 Effect of exchange rate changes on cash and cash equivalents ​ 155 ​ ( 3,431 ) Net change in cash and cash equivalents ​ ( 18,499 ) ​ ( 22,653 ) Cash and cash equivalents—beginning of period ​ 185,406 ​ 177,232 Cash and cash equivalents—end of period ​ $ 166,907 ​ $ 154,579 ​ ​ See accompanying notes to condensed consolidated financial statements. ​ 6 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Dollars in thousands, except per share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ Noncontrolling ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ other ​ ​ ​ ​ interest in ​ Total ​ ​ Common ​ paid-in ​ Retained ​ comprehensive ​ Treasury ​ consolidated ​ shareholders’ ​ stock capital earnings income (loss) stock subsidiaries equity Balance at December 25, 2021 ​ $ 27,900 ​ $ 1,479 ​ $ 2,394,307 ​ $ ( 263,127 ) ​ $ ( 773,712 ) ​ $ 26,750 ​ $ 1,413,597 Net earnings ​ — ​ — ​ 62,311 ​ — ​ — ​ 595 ​ 62,906 Other comprehensive income ​ — ​ — ​ — ​ 30,967 ​ — ​ 1,093 ​ 32,060 Cash dividends declared ($ 0.55 per share) ​ — ​ — ​ ( 11,721 ) ​ — ​ — ​ — ​ ( 11,721 ) Stock options and incentive plans ​ — ​ ​ 3,772 ​ ​ — ​ ​ — ​ ​ 3,877 ​ ​ — ​ ​ 7,649 Balance at March 26, 2022 ​ $ 27,900 ​ $ 5,251 ​ $ 2,444,897 ​ $ ( 232,160 ) ​ $ ( 769,835 ) ​ $ 28,438 ​ $ 1,504,491 Net earnings ​ — ​ — ​ 76,108 ​ — ​ — ​ 1,099 ​ 77,207 Other comprehensive loss ​ — ​ — ​ — ​ ( 56,024 ) ​ — ​ ( 2,031 ) ​ ( 58,055 ) Cash dividends declared ($ 0.55 per share) ​ — ​ — ​ ( 11,743 ) ​ — ​ — ​ — ​ ( 11,743 ) Purchase of noncontrolling interest ​ ​ — ​ ​ 189 ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 4,481 ) ​ ​ ( 4,292 ) Addition of noncontrolling interest due to acquisition ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 41,743 ​ ​ 41,743 Purchase of treasury shares; 38,804 shares acquired ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 9,776 ) ​ ​ — ​ ​ ( 9,776 ) Stock options and incentive plans ​ — ​ ​ ( 1,119 ) ​ ​ — ​ ​ — ​ ​ 14,694 ​ ​ — ​ ​ 13,575 Balance at June 25, 2022 ​ $ 27,900 ​ $ 4,321 ​ $ 2,509,262 ​ $ ( 288,184 ) ​ $ ( 764,917 ) ​ $ 64,768 ​ $ 1,553,150 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ Noncontrolling ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ other ​ ​ ​ ​ interest in ​ Total ​ ​ Common ​ paid-in ​ Retained ​ comprehensive ​ Treasury ​ consolidated ​ shareholders’ ​ ​ stock ​ capital ​ earnings ​ income (loss) ​ stock ​ subsidiaries ​ equity Balance at December 31, 2022 ​ $ 27,900 ​ $ — ​ $ 2,593,039 ​ $ ( 274,909 ) ​ $ ( 765,183 ) ​ $ 60,865 ​ $ 1,641,712 Net earnings (loss) ​ — ​ — ​ 74,540 ​ — ​ — ​ ( 2,195 ) ​ 72,345 Other comprehensive income ​ — ​ — ​ — ​ 8,776 ​ — ​ 293 ​ 9,069 Cash dividends declared ($ 0.60 per share) ​ — ​ — ​ ( 12,634 ) ​ — ​ — ​ — ​ ( 12,634 ) Dividends to noncontrolling interests ​ — ​ — ​ — ​ — ​ — ​ ( 662 ) ​ ( 662 ) Purchase of treasury shares; 356,887 shares acquired ​ — ​ — ​ — ​ — ​ ( 111,115 ) ​ — ​ ( 111,115 ) Stock options and incentive plans ​ — ​ ​ — ​ ​ ( 19,317 ) ​ ​ — ​ ​ 19,002 ​ ​ — ​ ​ ( 315 ) Balance at April 1, 2023 ​ $ 27,900 ​ $ — ​ $ 2,635,628 ​ $ ( 266,133 ) ​ $ ( 857,296 ) ​ $ 58,301 ​ $ 1,598,400 Net earnings (loss) ​ — ​ — ​ 89,376 ​ — ​ — ​ ( 578 ) ​ 88,798 Other comprehensive income ​ — ​ — ​ — ​ 10,531 ​ — ​ 345 ​ 10,876 Cash dividends declared ($ 0.60 per share) ​ — ​ — ​ ( 12,607 ) ​ — ​ — ​ — ​ ( 12,607 ) Purchase of treasury shares; 85,300 shares acquired ​ — ​ — ​ — ​ — ​ ( 25,132 ) ​ — ​ ( 25,132 ) Stock options and incentive plans ​ — ​ — ​ ( 2,015 ) ​ — ​ 11,972 ​ — ​ 9,957 Balance at July 1, 2023 ​ $ 27,900 ​ $ — ​ $ 2,710,382 ​ $ ( 255,602 ) ​ $ ( 870,456 ) ​ $ 58,068 ​ $ 1,670,292 ​ ​ See accompanying notes to the condensed consolidated financial statements. ​ ​ ​ ​ ​ 7 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) (1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Condensed Consolidated Financial Statements The Condensed Consolidated Balance Sheet as of July 1, 2023, the Condensed Consolidated Statements of Earnings, Comprehensive Income, and Shareholders’ Equity for the thirteen and twenty-six weeks ended July 1, 2023 and June 25, 2022, and the Condensed Consolidated Statements of Cash Flows for the twenty-six weeks then ended have been prepared by Valmont Industries, Inc. (the “Company”) without audit. In the opinion of management, all necessary adjustments, which include normal recurring adjustments, have been made to present fairly the financial statements as of July 1, 2023 and for all periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The results of operations for the period ended July 1, 2023 are not necessarily indicative of the operating results for the full fiscal year. Inventories Inventory is valued at the lower of cost, determined on the first-in, first-out method, or net realizable value. Finished goods and manufactured goods inventories include the costs of acquired raw materials and related factory labor and overhead charges required to convert raw materials to manufactured and finished goods. Inventories as of July 1, 2023 and December 31, 2022 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ July 1, ​ December 31, ​ ​ 2023 2022 Raw materials and purchased parts ​ $ 266,759 ​ $ 258,814 Work-in-process ​ 46,848 ​ 44,453 Finished goods and manufactured goods ​ 416,131 ​ 425,495 Total inventories ​ $ 729,738 ​ $ 728,762 ​ Geographical Markets Earnings before income taxes and equity in loss of nonconsolidated subsidiaries for the thirteen and twenty-six weeks ended July 1, 2023 and June 25, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ Twenty-six weeks ended ​ ​ July 1, ​ June 25, ​ July 1, ​ June 25, ​ ​ 2023 2022 2023 2022 United States ​ $ 77,066 ​ $ 62,214 ​ $ 108,924 ​ $ 123,031 Foreign ​ 43,866 ​ 45,135 ​ 117,017 ​ 70,703 Total earnings before income taxes and equity in loss of nonconsolidated subsidiaries ​ $ 120,932 ​ $ 107,349 ​ $ 225,941 ​ $ 193,734 ​ Pension Benefits The Company incurs expenses in connection with the Delta Pension Plan (“DPP”). The DPP was acquired as part of the Delta PLC acquisition in fiscal 2010 and has no members that are active employees. In order to measure the expense and the related benefit obligation, various assumptions are made including discount rates used to value the obligation, expected return on plan assets used to fund these expenses, and estimated future inflation rates. These assumptions are based on historical experience as well as current facts and circumstances. An actuarial analysis is used to measure the expense and liability associated with pension benefits. 8 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) The components of the net periodic pension (benefit) expense for the thirteen and twenty-six weeks ended July 1, 2023 and June 25, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ Twenty-six weeks ended ​ ​ July 1, ​ June 25, ​ July 1, ​ June 25, ​ ​ 2023 2022 2023 2022 Interest cost ​ $ 5,414 ​ $ 3,157 ​ $ 10,670 ​ $ 6,522 Expected return on plan assets ​ ( 5,477 ) ​ ( 5,818 ) ​ ( 10,794 ) ​ ( 12,020 ) Amortization of prior service cost ​ 124 ​ 124 ​ 246 ​ 256 Net periodic (benefit) expense ​ $ 61 ​ $ ( 2,537 ) ​ $ 122 ​ $ ( 5,242 ) ​ Stock Plans The Company maintains stock-based compensation plans approved by the shareholders, which provide that the Human Resources Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and bonuses of common stock. As of July 1, 2023, 1,630,007 shares of common stock remained available for issuance under the plans. Under the plans, the exercise price of each option equals the closing market price as of the date of the grant. Options vest beginning on the first anniversary of the grant date in equal amounts over three years or on the grant’s fifth anniversary date. Expiration of grants is seven to ten years from the date of the grant. Restricted stock units and awards generally vest in equal installments over three or four years beginning on the first anniversary of the grant. The Company’s compensation expense (included in “Selling, general, and administrative expenses” in the Condensed Consolidated Statements of Earnings) and associated income tax benefits related to stock options and restricted stock for the thirteen and twenty-six weeks ended July 1, 2023 and June 25, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ Twenty-six weeks ended ​ ​ July 1, ​ June 25, ​ July 1, ​ June 25, ​ ​ 2023 2022 2023 2022 Compensation expense ​ $ 11,167 ​ $ 10,120 ​ $ 19,856 ​ $ 19,583 Income tax benefits ​ 2,792 ​ 2,530 ​ 4,964 ​ 4,896 ​ Fair Value The Company applies the provisions of Accounting Standards Codification 820, Fair Value Measurement (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820 apply to other accounting pronouncements that require or permit fair value measurements. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 9 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) ASC 820 establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: ● Level 1: Quoted market prices in active markets for identical assets or liabilities. ● Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. ● Level 3: Unobservable inputs that are not corroborated by market data. The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodologies used for assets and liabilities measured at fair value. Trading Securities: The Company’s trading securities represent the investments held in the Valmont Deferred Compensation Plan (the “DCP”). The assets of the DCP as of July 1, 2023 of $ 29,388 ($ 25,008 as of December 31, 2022) represent mutual funds, invested in debt and equity securities, classified as trading securities in accordance with ASC 320, Investments – Debt and Equity Securities , considering the employee’s ability to change investment allocation of their deferred compensation at any time. Derivative Financial Instruments: The fair value of foreign currency and commodity forward contracts and cross currency swap contracts is based on a valuation model that discounts cash flows resulting from the differential between the contract price and the market-based forward rate. Mutual Funds: The Company has short-term investments in various mutual funds. Marketable Securities: The Company has short-term investments in various certificates of deposit. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying Value ​ Fair Value Measurement Using: ​ ​ July 1, 2023 ​ Level 1 ​ Level 2 ​ Level 3 Trading securities ​ $ 29,388 ​ $ 29,388 ​ $ — ​ $ — Derivative financial instruments, net ​ ​ 437 ​ ​ — ​ ​ 437 ​ ​ — Cash and cash equivalents - mutual funds ​ ​ 2,869 ​ ​ 2,869 ​ ​ — ​ ​ — Cash and cash equivalents - marketable securities ​ ​ 143 ​ ​ — ​ ​ 143 ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying Value ​ Fair Value Measurement Using: ​ ​ December 31, 2022 ​ Level 1 ​ Level 2 ​ Level 3 Trading securities ​ $ 25,008 ​ $ 25,008 ​ $ — ​ $ — Derivative financial instruments, net ​ ​ 1,404 ​ ​ — ​ ​ 1,404 ​ ​ — Cash and cash equivalents - mutual funds ​ ​ 7,205 ​ ​ 7,205 ​ ​ — ​ ​ — Cash and cash equivalents - marketable securities ​ ​ 136 ​ ​ — ​ ​ 136 ​ ​ — ​ Long-Lived Assets The Company’s other non-financial assets include goodwill and other intangible assets, which are classified as Level 3 items. These assets are measured at fair value on a non-recurring basis as part of annual impairment testing. Leases The Company’s operating lease right-of-use assets are included in “Other non-current assets” and the corresponding lease obligations are included in “Other accrued expenses” and “Operating lease liabilities” in the Condensed Consolidated Balance Sheets. 10 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) Comprehensive Income Comprehensive income includes net earnings, foreign currency translation adjustments, certain derivative-related activity, and changes in prior service cost from the pension plan. Results of operations for foreign subsidiaries are translated using the average exchange rates during the period. Assets and liabilities are translated at the exchange rates in effect on the balance sheet dates. Accumulated other comprehensive income (loss) (“AOCI”) consisted of the following as of July 1, 2023 and December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ ​ ​ ​ Accumulated ​ ​ Currency ​ ​ ​ Defined ​ Other ​ ​ Translation ​ Hedging ​ Benefit ​ Comprehensive ​ ​ Adjustments ​ Activities ​ Pension Plan ​ Income (Loss) Balance at December 31, 2022 ​ $ ( 260,799 ) ​ $ 20,099 ​ $ ( 34,209 ) ​ $ ( 274,909 ) Current period comprehensive income (loss) ​ 19,518 ​ ( 397 ) ​ 186 ​ 19,307 Balance at July 1, 2023 ​ $ ( 241,281 ) ​ $ 19,702 ​ $ ( 34,023 ) ​ $ ( 255,602 ) ​ Revenue Recognition The Company determines the appropriate revenue recognition model for contracts by analyzing the type, terms, and conditions of each contract or arrangement with a customer. Contracts with customers for all businesses are fixed-price with sales tax excluded from revenue and do not include variable consideration. Discounts included in contracts with customers, typically early pay discounts, are recorded as a reduction of net sales in the period in which the sale is recognized. Contract revenues are classified as “Product sales” when the performance obligation is related to the manufacturing and sale of goods. Contract revenues are classified as “Service sales” when the performance obligation is the performance of a service. Service revenue is primarily related to the Coatings and Technology Products and Services product lines. Customer acceptance provisions exist only in the design stage of our products (on a limited basis, the Company may agree to other acceptance terms), and acceptance of the design by the customer is required before the project is manufactured and delivered to the customer. The Company is not entitled to any compensation solely based on design of the product and does not recognize this service as a separate performance obligation and, therefore, no revenue is recognized with the design stage. No general rights of return exist for customers once the product has been delivered and the Company establishes provisions for estimated warranties. Shipping and handling costs associated with sales are recorded as cost of goods sold. The Company elected to use the practical expedient of treating freight as a fulfillment obligation instead of a separate performance obligation and ratably recognize freight expense as the structure is being manufactured when the revenue from the associated customer contract is being recognized over time. With the exception of the Transmission, Distribution, and Substation ("TD&S") product line, the Solar product line, and the Telecommunications product line, the Company’s inventory is interchangeable for a variety of each segment’s customers. The Company has elected to not disclose the partially satisfied performance obligation at the end of the period when the contract has an original expected duration of one year or less. In addition, the Company does not adjust the amount of consideration to be received in a contract for any significant financing component if payment is expected within twelve months of transfer of control of goods or services. The Company’s contract assets as of July 1, 2023 and December 31, 2022 totaled $ 154,410 and $ 174,539 , respectively. 11 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) While most of the Infrastructure segment customers are generally invoiced upon shipment or delivery of the goods to the customer’s specified location, certain customers are also invoiced by advanced billings or progress billings. As of July 1, 2023 and December 31, 2022, total contract liabilities were $ 124,380 and $ 178,531 , respectively. As of July 1, 2023, $ 124,230 was recorded as “Contract liabilities” and $ 150 was recorded as “Other non-current liabilities” in the Condensed Consolidated Balance Sheets. Additional details are as follows: ● During the thirteen and twenty-six weeks ended July 1, 2023, the Company recognized $ 41,217 and $ 100,157 of revenue that was included in the total contract liability as of December 31, 2022, respectively. The revenue recognized was due to applying advance payments received for performance obligations completed during the period. ● During the thirteen and twenty-six weeks ended June 25, 2022, the Company recognized $ 31,149 and $ 59,171 of revenue that was included in the total contract liability as of December 25, 2021, respectively. The revenue recognized was due to applying advance payments received for performance obligations completed during the period. ● As of July 1, 2023, the Company had $ 150 of remaining performance obligations on contracts with an original expected duration of one year or more and expects to complete the remaining performance obligations on these contracts within the next 12 to 24 months . Segment and Product Line Revenue Recognition Infrastructure Segment Steel and concrete utility structures within the TD&S product line are engineered to customer specifications resulting in limited ability to sell the structure to a different customer if an order is canceled after production commences. The continuous transfer of control to the customer is evidenced either by contractual termination clauses or by rights to payment for work performed to-date plus a reasonable profit as the products do not have an alternative use to the Company. Since control is transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment. For the TD&S and Telecommunications product lines, the Company generally recognizes revenue on an input basis, using total production hours incurred to-date for each order as a percentage of total hours estimated to produce the order. The completion percentage is applied to the order’s total revenue and total estimated costs to determine reported revenue, cost of goods sold, and gross profit. Production of an order, once started, is typically completed within three months. Depending on the product sold, revenue from the Solar product line is recognized both upon shipment or delivery of goods to the customer depending on contract terms, or by using an inputs method, based on the ratio of costs incurred to-date to the total estimated costs at completion of the performance obligation. External sales agents are used in certain TD&S sales and the Company has chosen to expense estimated commissions owed to third parties by recognizing them proportionately as the goods are manufactured. For the structures sold for Lighting and Transportation and for the majority of Telecommunications products, revenue is recognized upon shipment or delivery of goods to the customer depending on contract terms, which is the same point in time that the customer is billed. There are also large regional customers who have unique product specifications for telecommunication structures. When the customer contract includes a cancellation clause that would require them to pay for work completed plus a reasonable margin if an order was canceled, revenue is recognized over time based on hours worked as a percent of total estimated hours to complete production. The Coatings product line revenues are derived by providing coating services to customers’ products, which include galvanizing, anodizing, and powder coating. Revenue is recognized once the coating service has been performed and the goods are ready to be picked up or delivered to the customer, which is the same time that the customer is billed. 12 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) Agriculture Segment Revenue recognition from the manufacture of irrigation equipment and related parts and services (including tubular products for industrial customers) is generally upon shipment of the goods to the customer which is the same point in time that the customer is billed. The remote monitoring subscription services recognized as part of Technology Products and Services product line are primarily billed annually and revenue is recognized on a straight-line basis over the subsequent twelve months. Disaggregation of revenue by product line is disclosed in the “Business Segments & Related Revenue Information” footnote. Supplier Finance Program In the first quarter of 2023, the Company adopted Accounting Standards Update No. 2022-04, Liabilities – Supplier Finance Program (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations , as well as early adopted the amendment on rollforward information. During 2019, the Company entered into an agreement with a third-party financial institution to facilitate a supplier finance program which allows qualifying suppliers to sell their receivables from the Company to the financial institution. These participating suppliers negotiate their outstanding receivable arrangements directly with the financial institution and the Company’s rights and obligations to suppliers are not impacted. The Company has no economic interest in a supplier’s decision to enter into these agreements. Once a qualifying supplier elects to participate in the supplier finance program and reaches an agreement with a financial institution, they elect which individual Company invoices they sell to the financial institution. The Company’s obligation is to make payment in the invoice amount negotiated with participating suppliers to the financial institution on the invoice due date, regardless of whether the individual invoice is sold by the supplier to the financial institution. The financial institution pays the supplier on the invoice due date for any invoices that were not previously sold under the supplier finance program. The invoice amounts and scheduled payment terms are not impacted by the suppliers’ decisions to sell amounts under these arrangements. The payment of these obligations is included in “Net cash flows provided by operating activities” in the Condensed Consolidated Statements of Cash Flows. Included in “Accounts payable” in the Condensed Consolidated Balance Sheets as of July 1, 2023 and December 31, 2022 were $ 42,516 and $ 48,880 of outstanding payment obligations, respectively, that were sold to the financial institution under the Company’s supplier finance program. ​ ​ ​ ​ ​ Confirmed obligations outstanding at December 31, 2022 ​ $ 48,880 Invoices confirmed during the period ​ ​ 135,729 Confirmed invoices paid during the period ​ ( 142,093 ) Confirmed obligations outstanding at July 1, 2023 ​ $ 42,516 ​ 13 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) (2) ACQUISITIONS Acquisitions of Businesses On June 1, 2022, the Company acquired approximately 51 % of ConcealFab for $ 39,287 in cash (net of cash acquired) and subject to working capital adjustments. Approximately $ 1,850 of the purchase price was contingent on seller representations and warranties that will be settled within 18 months of the acquisition date. ConcealFab is located in Colorado Springs, Colorado, and its operations are reported in the Infrastructure segment. The acquisition was made to allow the Company to incorporate innovative 5G infrastructure and passive intermodulation mitigation solutions into our advanced Infrastructure portfolio. Goodwill is not deductible for tax purposes. The amount allocated to goodwill was primarily attributable to anticipated synergies and other intangibles that do not qualify for separate recognition. The Company finalized the purchase price allocation in the first quarter of fiscal 2023. The following table summarizes the fair values of the assets acquired and liabilities assumed of ConcealFab as of the date of acquisition: ​ ​ ​ ​ ​ ​ June 1, 2022 Current assets ​ $ 21,133 Property, plant, and equipment ​ 3,813 Goodwill ​ 42,465 Customer relationships ​ 26,200 Trade name ​ 5,000 Other non-current assets ​ 9,108 Total fair value of assets acquired ​ $ 107,719 Current liabilities ​ 6,658 Long-term debt ​ 2,038 Operating lease liabilities ​ 7,812 Deferred income taxes ​ 5,464 Other non-current liabilities ​ 12 Total fair value of liabilities assumed ​ $ 21,984 Noncontrolling interest in consolidated subsidiaries ​ 41,693 Net assets acquired ​ $ 44,042 ​ Proforma disclosures were omitted for this acquisition as it does not have a significant impact on the Company’s financial results. Acquisition-related costs incurred for the above acquisition were insignificant for all fiscal years presented. In July 2023, subsequent to the second quarter of fiscal 2023, the Company entered into a definitive agreement to acquire HR Products, a leading wholesale supplier of irrigation parts in Australia. The transaction is expected to close in the third quarter of fiscal 2023 with a total purchase price of approximately $ 60 million Australian dollars ($ 40 million United States (“U.S.”) dollars), subject to working capital adjustments. Acquisitions of Noncontrolling Interests On August 10, 2022, the Company acquired the remaining 9 % of Convert Italy S.p.A. for $ 3,046 . As this transaction was for the acquisition of all of the remaining shares of a consolidated subsidiary with no change in control, it was recorded within “Shareholders’ equity” in the Condensed Consolidated Balance Sheets and as “Cash flows from financing activities” in the Condensed Consolidated Statements of Cash Flows. On May 10, 2022, the Company acquired the remaining 20 % of Valmont West Coast Engineering Ltd. for $ 4,292 . As this transaction was for the acquisition of all of the remaining shares of a consolidated subsidiary with no change in control, it was recorded within “Shareholders’ equity” in the Condensed Consolidated Balance Sheets and as “Cash flows from financing activities” in the Condensed Consolidated Statements of Cash Flows. 14 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) (3) DIVESTITURES On April 30, 2023, the Company completed the sale of Torrent Engineering and Equipment, an integrator of prepackaged pump stations in Indiana, reported in the Agriculture segment, for net proceeds of $ 6,369 . A pre-tax gain of $ 2,994 is reported in “ Other income (expenses) ” in the Condensed Consolidated Statements of Earnings. On November 30, 2022, the Company completed the sale of Valmont SM, an offshore wind energy structures business in Denmark, reported in the Other segment. The business was sold because it did not align with the long-term strategic plans for the Company. The offshore wind energy structures business’ historical annual sales, operating income, and net assets are not significant for discontinued operations presentation. The offshore wind energy structures business had an operating income of $ 516 for the thirteen weeks ended June 25, 2022, and an operating loss of $ 293 for the twenty-six weeks ended June 25, 2022. At closing, in the fourth quarter of fiscal 2022, the Company received 90,000 Danish kroner ($ 12,570 U.S. dollars) with an additional 28,000 Danish kroner ($ 4,027 U.S. dollars) held in an escrow account subject to normal closing conditions before it will be released to the Company. The pre-tax loss recorded during the fourth quarter of fiscal 2022 from the divestiture was reported in “Other income (expenses)” in the Consolidated Statements of Earnings on Form 10-K. The loss was comprised of the proceeds and an asset recognized for the escrow funds not yet released from buyer, less deal-related costs and the net assets of the business. (4) GOODWILL AND INTANGIBLE ASSETS Intangible Assets The components of intangible assets as of July 1, 2023 and December 31, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 1, 2023 December 31, 2022 ​ ​ Gross ​ ​ ​ Gross ​ ​ ​ ​ ​ Carrying ​ Accumulated Carrying ​ Accumulated ​ Amount Amortization Amount Amortization Amortizing intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer relationships ​ $ 221,299 ​ $ 151,454 ​ $ 222,716 ​ $ 145,502 Patents & proprietary technology ​ 58,785 ​ 25,475 ​ 58,404 ​ 21,291 Trade names ​ 2,850 ​ 848 ​ 2,850 ​ 645 Other ​ 4,757 ​ 4,434 ​ 2,462 ​ 2,164 Non-amortizing intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Trade names ​ ​ 60,248 ​ ​ — ​ ​ 59,785 ​ ​ — ​ ​ $ 347,939 ​ $ 182,211 ​ $ 346,217 ​ $ 169,602 ​ Amortizing intangible assets carry a remaining weighted average life of approximately 12 years . Amortization expense was $ 5,225 and $ 10,415 for the thirteen and twenty-six weeks ended July 1, 2023, respectively, and $ 5,531 and $ 11,380 for the thirteen and twenty-six weeks ended June 25, 2022, respectively. Based on amortizing intangible assets recognized in the Condensed Consolidated Balance Sheets as of July 1, 2023, amortization expense is estimated to average $ 13,293 for each of the next five fiscal years. The useful lives assigned to finite-lived amortizing intangible assets included consideration of factors such as the Company’s past and expected experience related to customer retention rates, the remaining legal or contractual life of the underlying arrangement that resulted in the recognition of the intangible asset, and the Company’s expected use of the intangible asset. 15 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) In its determination of the non-amortizing intangible assets as indefinite-lived, the Company considered such factors as its expected future use of the intangible asset, legal, regulatory, technological, and competitive factors that may impact the useful life or value of the intangible asset, and the expected costs to maintain the value of the intangible asset. The Company expects that these intangible assets will maintain their value indefinitely. Accordingly, these assets are not amortized. The Company’s trade names were tested for impairment as of August 27, 2022. The values of each trade name were determined using the relief-from-royalty method. Based on this evaluation, no trade names were determined to be impaired. Goodwill The carrying amount of goodwill by segment as of July 1, 2023 and December 31, 2022 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Infrastructure Agriculture Total Gross balance at December 31, 2022 ​ $ 473,551 ​ $ 313,777 ​ $ 787,328 Accumulated impairment losses ​ ( 47,467 ) ​ — ​ ( 47,467 ) Balance at December 31, 2022 ​ 426,084 ​ 313,777 ​ ​ 739,861 Divestiture ​ ​ — ​ ​ ( 160 ) ​ ​ ( 160 ) Foreign currency translation ​ 4,166 ​ 404 ​ 4,570 Balance at July 1, 2023 ​ $ 430,250 ​ $ 314,021 ​ $ 744,271 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Infrastructure Agriculture Total Gross balance at July 1, 2023 ​ $ 477,717 ​ $ 314,021 ​ $ 791,738 Accumulated impairment losses ​ ​ ( 47,467 ) ​ ​ — ​ ​ ( 47,467 ) Balance at July 1, 2023 ​ $ 430,250 ​ $ 314,021 ​ $ 744,271 ​ The Company’s annual impairment test of goodwill was performed as of August 27, 2022, using primarily the discounted cash flow method. The estimated fair value of all the Company’s reporting units exceeded their respective carrying value, so no goodwill impairments were recorded. During fiscal 2023, no goodwill impairments have been recorded. (5) CASH FLOW SUPPLEMENTARY INFORMATION The Company considers all highly liquid temporary cash investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the twenty-six weeks ended July 1, 2023 and June 25, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Twenty-six weeks ended ​ ​ July 1, ​ June 25, ​ ​ 2023 2022 Interest ​ $ 27,387 ​ $ 22,221 Income taxes ​ 42,504 ​ 29,921 ​ ​ ​ 16 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) (6) EARNINGS PER SHARE The following table provides a reconciliation of the earnings and average share amounts used to compute both basic and diluted earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ Twenty-six weeks ended ​ ​ July 1, ​ June 25, ​ July 1, ​ June 25, ​ ​ 2023 2022 2023 2022 Net earnings attributable to Valmont Industries, Inc. ​ $ 89,376 ​ $ 76,108 ​ $ 163,916 ​ $ 138,419 Weighted average shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic weighted average shares outstanding ​ ​ 21,029 ​ ​ 21,313 ​ ​ 21,149 ​ ​ 21,296 Dilutive effect of various stock awards ​ ​ 200 ​ ​ 228 ​ ​ 221 ​ ​ 220 Diluted weighted average shares outstanding ​ ​ 21,229 ​ ​ 21,541 ​ ​ 21,370 ​ ​ 21,516 Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 4.25 ​ $ 3.57 ​ $ 7.75 ​ $ 6.50 Dilutive effect of various stock awards ​ ​ ( 0.04 ) ​ ​ ( 0.04 ) ​ ​ ( 0.08 ) ​ ​ ( 0.07 ) Diluted ​ $ 4.21 ​ $ 3.53 ​ $ 7.67 ​ $ 6.43 ​ As of July 1, 2023 and June 25, 2022, there were 40,564 and 47,223 outstanding stock options with exercise prices exceeding the market price of common stock that were excluded from the computation of diluted earnings per share, respectively. (7) DERIVATIVE FINANCIAL INSTRUMENTS The Company manages interest rate risk, commodity price risk, and foreign currency risk related to foreign currency denominated transactions and investments in foreign subsidiaries. Depending on the circumstances, the Company may manage these risks by utilizing derivative financial instruments. Some derivative financial instruments are marked to market and recorded in the Company’s Condensed Consolidated Statements of Earnings, while others may be accounted for as fair value, cash flow, or net investment hedges. Derivative financial instruments have credit and market risk. The Company manages these risks of derivative instruments by monitoring limits as to the types and degree of risk that can be taken and by entering into transactions with counterparties who are recognized, stable multinational banks. Any gains or losses from net investment hedge activities remain in AOCI until either the sale or substantially complete liquidation of the related subsidiaries. Fair value of derivative instruments as of July 1, 2023 and December 31, 2022 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 1, ​ December 31, Derivatives designated as hedging instruments: Balance Sheet location ​ 2023 ​ 2022 Commodity forward contracts ​ Prepaid expenses and other current assets ​ $ 93 ​ $ — Commodity forward contracts ​ Other accrued expenses ​ ​ ( 2,311 ) ​ ​ ( 3,854 ) Foreign currency forward contracts Prepaid expenses and other current assets ​ ​ — ​ 83 Cross currency swap contracts Prepaid expenses and other current assets ​ ​ 2,974 ​ 5,385 Cross currency swap contracts Other accrued expenses ​ ​ ( 319 ) ​ ( 210 ) ​ ​ ​ ​ $ 437 ​ $ 1,404 ​ 17 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) Gains (losses) on derivatives recognized in the Condensed Consolidated Statements of Earnings for the thirteen and twenty-six weeks ended July 1, 2023 and June 25, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ Twenty-six weeks ended Derivatives designated as ​ ​ ​ July 1, ​ June 25, ​ July 1, ​ June 25, hedging instruments: ​ Statement of Earnings location ​ 2023 2022 2023 2022 Commodity forward contracts ​ Product cost of sales ​ $ ( 1,078 ) ​ $ ( 1,545 ) ​ $ ( 5,063 ) ​ $ 498 Foreign currency forward contracts ​ Other income (expenses) ​ ​ 80 ​ ( 234 ) ​ ​ 177 ​ ( 85 ) Interest rate hedge amortization ​ Interest expense ​ ​ ( 16 ) ​ ( 16 ) ​ ​ ( 32 ) ​ ( 32 ) Cross currency swap contracts ​ Interest expense ​ ​ 449 ​ 733 ​ ​ 895 ​ 1,507 ​ ​ ​ ​ $ ( 565 ) ​ $ ( 1,062 ) ​ $ ( 4,023 ) ​ $ 1,888 ​ Cash Flow Hedges The Company enters into commodity forward contracts that qualify as cash flow hedges of the variability in cash flows attributable to future purchases. The gain (loss) realized upon settlement for each will be recorded in “Product cost of sales” in the Condensed Consolidated Statements of Earnings in the period consumed. Notional amounts, purchase quantities, and maturity dates of these forward contracts as of July 1, 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Notional ​ Total ​ Maturity Commodity Type ​ Amount ​ Purchase Quantity ​ Dates Steel hot rolled coil ​ $ 23,224 ​ 27,000 short tons July 2023 to March 2024 Natural gas ​ ​ 5,391 ​ 1,154,000 MMBtu ​ July 2023 to May 2025 Diesel fuel ​ ​ 755 ​ 1,890,000 gallons ​ July 2023 to March 2024 ​ During the first quarter of fiscal 2023, a subsidiary with a Euro functional currency entered into a foreign currency forward contract to mitigate foreign currency risk related to a large customer order denominated in U.S. dollars. The forward contract, which qualified as a fair value hedge, had a notional amount to sell $ 1,800 in exchange for a stated amount of Euros and matured in April 2023. Net Investment Hedges In 2019, the Company entered into two fixed-for-fixed cross currency swaps (“CCS”), swapping U.S. dollar principal and interest payments on a portion of its 5.00 % senior unsecured notes due in 2044 for Danish krone (“DKK”) and Euro denominated payments. The CCS were entered into in order to mitigate foreign currency risk on the Company’s Euro and DKK investments and to reduce interest expense. Interest is exchanged twice per year on April 1 and October 1. The Company designated the initial full notional amount of the two CCS ($ 130,000 ) as a hedge of the net investment in certain Danish and European subsidiaries under the spot method, with all changes in the fair value of the CCS that are included in the assessment of effectiveness (changes due to spot foreign exchange rates) recorded as cumulative foreign currency translation within AOCI. Net interest receipts will be recorded as a reduction of interest expense over the life of the CCS. During the second half of fiscal 2022, the Company settled the DKK CCS and received proceeds of $ 3,532 . Due to the sale of the offshore wind energy structures business in the fourth quarter of fiscal 2022, the Company reclassified the cumulative net investment hedge gain of $ 4,827 ($ 3,620 after tax) from AOCI to “Other income (expenses)” in the Consolidated Statements of Earnings as of December 31, 2022 on Form 10-K. Key terms of the Euro CCS are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Notional ​ ​ ​ Swapped ​ Set Settlement Currency ​ Amount ​ Termination Date ​ Interest Rate ​ Amount Euro ​ $ 80,000 ​ April 1, 2024 2.825 % ​ € 71,550 ​ ​ ​ 18 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) (8) BUSINESS SEGMENTS & RELATED REVENUE INFORMATION The Company has two reportable segments based on its management structure. Each segment is global in nature with a manager responsible for segment operational performance and the allocation of capital within the segment. Net corporate expense is net of certain service-related expenses that are allocated to business units generally on the basis of employee headcounts and sales dollars. Reportable segments are as follows: INFRASTRUCTURE: This segment consists of the manufacture and distribution of products and solutions to serve the infrastructure markets of utility, solar, lighting and transportation, and telecommunications, along with coatings services to preserve metal products. AGRICULTURE: This segment consists of the manufacture of center pivot components and linear irrigation equipment for agricultural markets, including parts and tubular products, and advanced technology solutions for precision agriculture. In addition to these two reportable segments, the Company had a business and related activities in fiscal 2022 that were not more than 10% of consolidated sales, operating income, or assets. This comprised the offshore wind energy structures business and was reported in the Other segment until its divestiture in the fourth quarter of fiscal 2022. The Company evaluates the performance of its reportable segments based upon operating income and return on invested capital. The Company’s operating income for segment purposes excludes unallocated corporate general and administrative expenses, interest expense, non-operating income and deductions, and income taxes. Summary by Business ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ Twenty-six weeks ended ​ ​ July 1, June 25, July 1, June 25, ​ ​ 2023 ​ 2022 ​ 2023 ​ 2022 SALES: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Infrastructure ​ $ 770,595 ​ $ 739,518 ​ $ 1,506,701 ​ $ 1,401,590 Agriculture ​ 279,933 ​ 377,765 ​ 612,096 ​ 684,345 Other ​ ​ — ​ ​ 25,432 ​ ​ — ​ ​ 44,086 Total ​ 1,050,528 ​ 1,142,715 ​ 2,118,797 ​ 2,130,021 INTERSEGMENT SALES: ​ ​ ​ ​ ​ ​ ​ Infrastructure ​ ( 2,437 ) ​ ( 4,200 ) ​ ( 6,403 ) ​ ( 7,301 ) Agriculture ​ ( 1,795 ) ​ ( 2,983 ) ​ ( 3,617 ) ​ ( 6,368 ) Total ​ ( 4,232 ) ​ ( 7,183 ) ​ ( 10,020 ) ​ ( 13,669 ) NET SALES: ​ ​ ​ ​ Infrastructure ​ 768,158 ​ 735,318 ​ 1,500,298 ​ 1,394,289 Agriculture ​ 278,138 ​ 374,782 ​ 608,479 ​ 677,977 Other ​ ​ — ​ 25,432 ​ — ​ 44,086 Total ​ $ 1,046,296 ​ $ 1,135,532 ​ $ 2,108,777 ​ $ 2,116,352 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING INCOME (LOSS): ​ ​ ​ ​ Infrastructure ​ $ 115,950 ​ $ 84,127 ​ $ 210,302 ​ $ 162,443 Agriculture ​ 49,251 ​ 58,046 ​ 102,574 ​ 95,521 Other ​ ​ — ​ 516 ​ — ​ ( 293 ) Corporate ​ ( 31,468 ) ​ ( 23,970 ) ​ ( 60,677 ) ​ ( 44,110 ) Total ​ $ 133,733 ​ $ 118,719 ​ $ 252,199 ​ $ 213,561 ​ ​ 19 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended July 1, 2023 ​ ​ Infrastructure Agriculture ​ Intersegment Sales Consolidated Geographical market: ​ ​ ​ ​ ​ ​ North America ​ $ 587,313 ​ $ 140,981 ​ $ ( 3,613 ) ​ $ 724,681 International ​ 183,282 ​ 138,952 ​ ( 619 ) ​ 321,615 Total ​ $ 770,595 ​ $ 279,933 ​ $ ( 4,232 ) ​ $ 1,046,296 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product line: ​ ​ ​ ​ Transmission, Distribution, and Substation ​ $ 314,307 ​ $ — ​ $ — ​ $ 314,307 Lighting and Transportation ​ 246,123 ​ — ​ — ​ 246,123 Coatings ​ 91,120 ​ — ​ ( 1,818 ) ​ 89,302 Telecommunications ​ 67,738 ​ — ​ — ​ 67,738 Solar ​ 51,307 ​ — ​ ( 619 ) ​ 50,688 Irrigation Equipment and Parts ​ — ​ 252,457 ​ ( 1,795 ) ​ 250,662 Technology Products and Services ​ — ​ 27,476 ​ — ​ 27,476 Total ​ $ 770,595 ​ $ 279,933 ​ $ ( 4,232 ) ​ $ 1,046,296 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twenty-six weeks ended July 1, 2023 ​ ​ Infrastructure Agriculture Intersegment Sales Consolidated Geographical market: ​ ​ ​ ​ ​ North America ​ $ 1,171,396 ​ $ 323,850 ​ $ ( 8,987 ) ​ $ 1,486,259 International ​ 335,305 ​ 288,246 ​ ( 1,033 ) ​ 622,518 Total ​ $ 1,506,701 ​ $ 612,096 ​ $ ( 10,020 ) ​ $ 2,108,777 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product line: ​ ​ ​ ​ Transmission, Distribution, and Substation ​ $ 629,127 ​ $ — ​ $ — ​ $ 629,127 Lighting and Transportation ​ 475,259 ​ — ​ — ​ 475,259 Coatings ​ 181,234 ​ — ​ ( 5,370 ) ​ 175,864 Telecommunications ​ 135,875 ​ — ​ — ​ 135,875 Solar ​ 85,206 ​ — ​ ( 1,033 ) ​ 84,173 Irrigation Equipment and Parts ​ — ​ 551,638 ​ ( 3,617 ) ​ 548,021 Technology Products and Services ​ — ​ 60,458 ​ — ​ 60,458 Total ​ $ 1,506,701 ​ $ 612,096 ​ $ ( 10,020 ) ​ $ 2,108,777 ​ ​ 20 Table of Contents VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended June 25, 2022 ​ ​ Infrastructure Agriculture Other ​ Intersegment Sales Consolidated Geographical market: ​ ​ ​ ​ ​ ​ ​ North America ​ $ 559,864 ​ $ 203,488 ​ $ — ​ $ ( 6,716 ) ​ $ 756,636 International ​ 179,654 ​ 174,277 ​ 25,432 ​ ( 467 ) ​ 378,896 Total ​ $ 739,518 ​ $ 377,765 ​ $ 25,432 ​ $ ( 7,183 ) ​ $ 1,135,532 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product line: ​ ​ ​ ​ ​ Transmission, Distribution, and Substation ​ $ 295,835 ​ $ — ​ $ — ​ $ — ​ $ 295,835 Lighting and Transportation ​ 246,652 ​ — ​ — ​ — ​ 246,652 Coatings ​ 90,321 ​ — ​ — ​ ( 4,200 ) ​ 86,121 Telecommunications ​ 78,539 ​ — ​ — ​ — ​ 78,539 Solar ​ 28,171 ​ — ​ 25,432 ​ — ​ 53,603 Irrigation Equipment and Parts ​ — ​ 347,585 ​ — ​ ( 2,983 ) ​ 344,602 Technology Products and Services ​ — ​ 30,180 ​ — ​ — ​ 30,180 Total ​ $ 739,518 ​ $ 377,765 ​ $ 25,432 ​ $ ( 7,183 ) ​ $ 1,135,532 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twenty-six weeks ended June 25, 2022 ​ ​ Infrastructure Agriculture ​ Other Intersegment Sales Consolidated Geographical market: ​ ​ ​ ​ ​ ​ ​ North America ​ $ 1,065,844 ​ $ 385,743 ​ $ — ​ $ ( 13,202 ) ​ $ 1,438,385 International ​ 335,746 ​ 298,602 ​ 44,086 ​ ( 467 ) ​ 677,967 Total ​ $ 1,401,590 ​ $ 684,345 ​ $ 44,086 ​ $ ( 13,669 ) ​ $ 2,116,352 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product line: ​ ​ ​ ​ ​ Transmission, Distribution, and Substation ​ $ 577,435 ​ $ — ​ $ — ​ $ — ​ $ 577,435 Lighting and Transportation ​ 459,419 ​ — ​ — ​ — ​ 459,419 Coatings ​ 172,297 ​ — ​ — ​ ( 7,301 ) ​ 164,996 Telecommunications ​ 139,935 ​ — ​ — ​ — ​ 139,935 Solar ​ 52,504 ​ — ​ 44,086 ​ — ​ 96,590 Irrigation Equipment and Parts ​ — ​ 625,619 ​ — ​ ( 6,368 ) ​ 619,251 Technology Products and Services ​ — ​ 58,726 ​ — ​ — ​ 58,726 Total ​ $ 1,401,590 ​ $ 684,345 ​ $ 44,086 ​ $ ( 13,669 ) ​ $ 2,116,352 ​ A breakdown by segment of revenue recognized over time and at a point in time for the thirteen and twenty-six weeks ended July 1, 2023 and June 25, 2022 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended July 1, 2023 Twenty-six weeks ended July 1, 2023 ​ Point in Time ​ Over Time ​ Total Point in Time ​ Over Time ​ Total Infrastructure ​ $ 451,885 ​ $ 316,273 ​ $ 768,158 ​ $ 863,102 ​ $ 637,196 ​ $ 1,500,298 Agriculture ​ 270,811 ​ ​ 7,327 ​ 278,138 ​ 595,017 ​ ​ 13,462 ​ 608,479 Total ​ $ 722,696 ​ $ 323,600 ​ $ 1,046,296 ​ $ 1,458,119 ​ $ 650,658 ​ $ 2,108,777 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended June 25, 2022 ​ Twenty-six weeks ended June 25, 2022 ​ ​ Point in Time Over Time Total ​ Point in Time Over Time Total Infrastructure ​ $ 429,291 ​ $ 306,027 ​ $ 735,318 ​ $ 798,481 ​ $ 595,808 ​ $ 1,394,289 Agriculture ​ 368,175 ​ ​ 6,607 ​ 374,782 ​ 665,781 ​ ​ 12,196 ​ 677,977 Other ​ ​ — ​ ​ 25,432 ​ 25,432 ​ ​ — ​ ​ 44,086 ​ 44,086 Total ​ $ 797,466 ​ $ 338,066 ​ $ 1,135,532 ​ $ 1,464,262 ​ $ 652,090 ​ $ 2,116,352 ​ ​ ​ ​ ​ ​ 21 Table of Contents Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which the Company operates, as well as management’s perceptions of historical trends, current conditions, expected future developments, and other factors believed to be appropriate under the circumstances. These statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company’s control), and assumptions. Management believes that these forward-looking statements are based on reasonable assumptions. Many factors could affect the Company’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include, among other things, risk factors described from time to time in the Company’s reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, geopolitical risks, and actions and policy changes of domestic and foreign governments. This discussion should be read in conjunction with the financial statements and notes thereto, and the management’s discussion and analysis included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Segment net sales in the table below and elsewhere are presented net of intersegment sales. See Note 8 of our Condensed Consolidated Financial Statements for additional information on segment sales and intersegment sales. Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ ​ ​ Twenty-six weeks ended ​ ​ Dollars in millions, except per share amounts ​ July 1, 2023 June 25, 2022 Percent Change ​ July 1, 2023 June 25, 2022 Percent Change Consolidated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 1,046.3 ​ $ 1,135.5 (7.9) % ​ $ 2,108.8 ​ $ 2,116.4 (0.4) % Gross profit ​ ​ 329.4 ​ 292.6 12.6 % ​ 638.0 ​ 541.8 17.8 % as a percent of sales ​ ​ 31.5 % 25.8 % ​ ​ 30.3 % 25.6 % ​ Selling, general, and administrative expenses ​ ​ 195.7 ​ 173.9 12.5 % ​ 385.8 ​ ​ 328.2 17.6 % as a percent of sales ​ ​ 18.7 % 15.3 % ​ ​ 18.3 % 15.5 % ​ Operating income ​ ​ 133.7 ​ 118.7 12.6 % ​ 252.2 ​ 213.6 18.1 % as a percent of sales ​ ​ 12.8 % 10.5 % ​ ​ 12.0 % 10.1 % ​ Net interest expense ​ ​ 14.4 ​ 11.1 29.3 % ​ 26.6 ​ 22.1 20.4 % Effective tax rate ​ ​ 26.4 % 27.6 % ​ ​ 28.2 % 27.2 % ​ Net earnings attributable to Valmont Industries, Inc. ​ ​ 89.4 ​ ​ 76.1 17.4 % ​ ​ 163.9 ​ ​ 138.4 18.4 % Diluted earnings per share ​ $ 4.21 ​ $ 3.53 19.3 % ​ $ 7.67 ​ $ 6.43 19.3 % Infrastructure ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 768.2 ​ $ 735.3 4.5 % ​ $ 1,500.3 ​ $ 1,394.3 7.6 % Gross profit ​ 224.8 ​ ​ 180.0 24.9 % ​ 425.3 ​ 346.1 22.9 % Selling, general, and administrative expenses ​ 108.9 ​ ​ 95.9 13.6 % ​ 215.0 ​ 183.6 17.1 % Operating income ​ 115.9 ​ 84.1 37.8 % ​ 210.3 ​ 162.5 29.4 % Agriculture ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 278.1 ​ $ 374.8 (25.8) % ​ $ 608.5 ​ $ 678.0 (10.3) % Gross profit ​ 104.6 ​ ​ 110.5 (5.3) % ​ 212.7 ​ 192.8 10.3 % Selling, general, and administrative expenses ​ 55.3 ​ ​ 52.4 5.5 % ​ 110.1 ​ 97.3 13.2 % Operating income ​ 49.3 ​ 58.1 (15.2) % ​ 102.6 ​ 95.5 7.4 % Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ — ​ $ 25.4 ​ NM ​ ​ $ — ​ $ 44.1 ​ NM ​ Gross profit ​ ​ — ​ ​ 2.1 ​ NM ​ ​ ​ — ​ ​ 2.9 ​ NM ​ Selling, general, and administrative expenses ​ ​ — ​ ​ 1.6 ​ NM ​ ​ ​ — ​ ​ 3.2 ​ NM ​ Operating income (loss) ​ ​ — ​ ​ 0.5 ​ NM ​ ​ ​ — ​ ​ (0.3) ​ NM ​ Corporate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general, and administrative expenses ​ $ 31.5 ​ $ 24.0 31.3 % ​ $ 60.7 ​ $ 44.1 37.6 % Operating loss ​ (31.5) ​ (24.0) 31.3 % ​ (60.7) ​ (44.1) 37.6 % ​ ​ 22 Table of Contents Overview, Including Items Impacting Comparability On a consolidated basis, net sales were lower in the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022, with lower sales in the Agriculture segment partially offset by higher sales in the Infrastructure segment. Both quarters of fiscal 2023 were also impacted by the decrease in sales in the Other segment due to the divestiture of the offshore wind energy structures business in the fourth quarter of fiscal 2022. Steel prices for both hot rolled coil and plate have remained volatile over the past two fiscal years, especially in North America. Decreases in the average cost of consumed steel combined with recent customer pricing strategy mechanisms more than offset overall decreases in volumes in both the Infrastructure and Agriculture segments on a consolidated basis for the second quarter and first half of fiscal 2023. ​ In July 2023, subsequent to the second quarter of fiscal 2023, the Company entered into a definitive agreement to acquire HR Products, a leading wholesale supplier of irrigation parts in Australia, for approximately $60 million Australian dollars ($40 million United States (“U.S.”) dollars), subject to working capital adjustments. The transaction is expected to close in the third quarter of fiscal 2023 and will be funded with cash on-hand. Its operations will be reported in the Agriculture segment. In the second quarter of fiscal 2022, the Company acquired approximately 51% of ConcealFab, a telecommunications technology company that offers 5G infrastructure and passive intermodulation mitigation solutions in Colorado, reported in the Infrastructure segment. In the second quarter of fiscal 2023, the Company divested Torrent Engineering and Equipment, an integrator of prepackaged pump stations in Indiana, reported in the Agriculture segment. In the fourth quarter of fiscal 2022, the Company divested Valmont SM, an offshore wind energy structures business in Denmark, reported in the Other segment. Non-cash items of note impacting the comparability of results from net earnings for the second quarter and first half of fiscal 2023 included amortization of identified intangible assets of $1.6 million ($1.3 million after-tax) and $3.3 million ($2.5 million after-tax), respectively, and stock-based compensation expense for the employees from the Prospera subsidiary acquired in the second quarter of fiscal 2021, totaling $2.3 million ($2.1 million after-tax) and $4.3 million ($3.9 million after-tax), respectively. These items were recognized within selling, general, and administrative expenses (“SG&A”) in the Agriculture segment. Non-cash items of note impacting the comparability of results from net earnings for the second quarter and first half of fiscal 2022 included amortization of identified intangible assets of $1.6 million ($1.3 million after-tax) and $3.3 million ($2.5 million after-tax), respectively, and stock-based compensation expense for the employees from the Prospera subsidiary acquired in the second quarter of fiscal 2021, totaling $2.5 million ($2.3 million after-tax) and $5.0 million ($4.6 million after-tax), respectively. These items were recognized within SG&A in the Agriculture segment. Macroeconomic Impacts on Financial Results and Liquidity We continue to monitor several macroeconomic and geopolitical trends that impacted our business, including inflationary cost pressures, supply chain disruptions, changes in foreign currency exchange rates against the U.S. dollar, rising interest rates, the ongoing Russia-Ukraine conflict, changing conditions from the COVID-19 pandemic, and labor shortages. Reportable Segments In addition to the two reportable segments, the Company had a business and related activities in fiscal 2022 that were not more than 10% of consolidated sales, operating income, or assets. This comprised the offshore wind energy structures business and was reported in the Other segment until its divestiture in the fourth quarter of fiscal 2022. All prior period information has been recast to reflect this change in reportable segments. See Note 8 to our Condensed Consolidated Financial Statements for additional information. 23 Table of Contents Backlog The consolidated backlog of unshipped orders as of July 1, 2023 was approximately $1.5 billion compared with approximately $1.7 billion as of December 31, 2022. Currency Translation In the second quarter and first half of fiscal 2023, we realized an increase in consolidated operating income, as compared with the same periods of fiscal 2022, despite negative currency translation effects. The breakdown of this effect by segment for the second quarter and the first half of 2023 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollars in millions Total Infrastructure Agriculture ​ Corporate Second quarter ​ $ (1.2) ​ $ (0.9) ​ $ (0.4) ​ $ 0.1 Year-to-date ​ ​ (2.0) ​ ​ (1.4) ​ ​ (0.7) ​ ​ 0.1 ​ Gross Profit, SG&A, and Operating Income At a consolidated level, gross profit and gross profit as a percentage of sales were higher in the second quarter and first half of fiscal 2023, as compared with the same periods of fiscal 2022. Gross profit mainly increased due to higher average selling prices and more favorable input costs more than offsetting lower sales volumes for the second quarter. Gross profit for the Infrastructure segment was higher in both the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022. Gross profit for the Agriculture segment was lower in the second quarter of fiscal 2023, as compared to the second quarter of fiscal 2022, primarily due to the impact of the lower sales volumes. The increase in consolidated SG&A in the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022, was primarily driven by increased compensation costs as a result of inflationary wage increases as well as incremental expenses related to the June 2022 acquisition of ConcealFab. In addition, the Company incurred additional bad debt reserve charges during the first half of fiscal 2023, as compared to the first half of 2022, including approximately $2.7 million related to a Telecommunications customer that became insolvent. The increase in consolidated operating income in the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022, was primarily due to the increase in gross profit partially offset by the increase in SG&A. Net Interest Expense Interest expense increased in the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022, primarily due to additional borrowings on the revolving line of credit along with increasing interest rates. Other Income / Expenses (including Gain (loss) on Investments - Unrealized) Amounts in “Gain (loss) on investments - unrealized" include changes in the market value of deferred compensation assets which are offset by an equal opposite amount included SG&A for the corresponding change in the valuation of deferred compensation liabilities. Other items included in other income / expenses are pension expense and a $3.0 million gain related to the sale of Torrent Engineering and Equipment in the second quarter of fiscal 2023. Pension expense for the second quarter of fiscal 2023 was $0.1 million compared to a benefit of $2.5 million for the second quarter of fiscal 2022. Pension expense for the first half of fiscal 2023 totaled $0.1 million compared to a benefit of $5.2 million for the first half of fiscal 2022. Income Tax Expense Our effective income tax rate in the second quarter and first half of fiscal 2023 was 26.4% and 28.2%, respectively, compared to 27.6% and 27.2% in the same periods of fiscal 2022. The change in the effective tax rate was primarily due to a change in geographic mix of earnings. 24 Table of Contents Loss (Earnings) Attributable to Noncontrolling Interests Loss (earnings) attributable to noncontrolling interests were lower in the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022, reflecting the operating results of the subsidiaries the Company does not own 100%. Cash Flows from Operating Activities Our cash flows provided by operating activities were $109.5 million in the first half of fiscal 2023, as compared with $68.0 million in the first half of fiscal 2022. The increase was primarily the result of the increase in net earnings and changes in working capital levels. Infrastructure Segment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ ​ ​ ​ ​ ​ ​ ​ July 1, ​ June 25, ​ Dollar ​ Percent Dollars in millions 2023 2022 Change Change Sales, gross of intercompany eliminations: ​ ​ ​ ​ ​ Transmission, Distribution, and Substation ​ $ 314.4 ​ $ 295.8 $ 18.6 6.2 % Lighting and Transportation ​ ​ 246.1 ​ ​ 246.7 ​ (0.6) (0.2) % Coatings ​ ​ 91.1 ​ ​ 90.3 ​ 0.8 0.9 % Telecommunications ​ ​ 67.7 ​ ​ 78.5 ​ (10.8) (13.8) % Solar ​ ​ 51.3 ​ ​ 28.2 ​ 23.1 82.1 % Total ​ $ 770.6 ​ $ 739.5 ​ $ 31.1 4.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income ​ $ 115.9 ​ $ 84.1 ​ $ 31.8 37.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twenty-six weeks ended ​ ​ ​ ​ ​ ​ ​ ​ July 1, ​ June 25, ​ Dollar ​ Percent Dollars in millions 2023 2022 Change Change Sales, gross of intercompany eliminations: ​ ​ ​ ​ ​ Transmission, Distribution, and Substation ​ $ 629.1 ​ $ 577.4 $ 51.7 9.0 % Lighting and Transportation ​ ​ 475.3 ​ ​ 459.4 ​ 15.9 3.5 % Coatings ​ ​ 181.2 ​ ​ 172.3 ​ 8.9 5.2 % Telecommunications ​ ​ 135.9 ​ ​ 139.9 ​ (4.0) (2.9) % Solar ​ ​ 85.2 ​ ​ 52.6 ​ 32.6 62.0 % Total ​ $ 1,506.7 ​ $ 1,401.6 ​ $ 105.1 7.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income ​ $ 210.3 ​ $ 162.5 ​ $ 47.8 29.4 % ​ Net sales in the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022, were higher by approximately $32.9 million and $106.0 million, respectively. This was primarily driven by increased average selling prices. Net sales for the first half of fiscal 2023 were also impacted by higher volumes compared to the first half of fiscal 2022. Increased volumes for the first quarter of fiscal 2023, as compared to the first quarter of fiscal 2022, were partially offset by decreased volumes for the second quarter of fiscal 2023, as compared to the second quarter of fiscal 2022, primarily related to Telecommunications. International sales were impacted by unfavorable currency translation effects of $8.4 million and $19.2 million for the second quarter and first half of fiscal 2023, respectively, as compared to the same periods of fiscal 2022. Transmission, Distribution, and Substation sales increased in the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022, primarily due to higher average selling prices and higher sales volumes. Lighting and Transportation sales were primarily flat in the second quarter and increased in the first half of fiscal 2023, as compared to the same periods of fiscal 2022. Sales for the second quarter of fiscal 2023, as compared to the same period of fiscal 2022, were impacted by a decrease in volume, offset by higher average sales prices. The increase for the first half of fiscal 2023, as compared to the first half of 2022, was driven by the benefit of comparatively higher volumes in the first quarter of fiscal 2023, as well as increased average selling prices in both quarters. The first quarter and first half of fiscal 2023 were also negatively impacted by unfavorable currency translation effects totaling approximately $4.2 million and $10.0 million, respectively, as compared to the same periods of fiscal 2022. 25 Table of Contents Telecommunications sales decreased in the second quarter and first half of fiscal 2023, as compared with the same periods of fiscal 2022, due primarily to decreased sales volumes. This was partially offset by increased sales from the second quarter of fiscal 2022 acquisition of ConcealFab along with higher average selling prices. Coatings sales increased in the second quarter and first half of fiscal 2023, as compared with the same periods of fiscal 2022, due to higher average selling prices. Solar sales increased in the second quarter and first half of fiscal 2023, as compared with the same periods of fiscal 2022, due to increased sales volumes. Gross profit and gross profit margin were higher in the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022. The customer contractual pricing mechanisms and selling price management initiatives led to an increase in average selling prices and improved profit margins. SG&A was higher in the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022, primarily due to higher employment costs mostly attributed to inflationary wage increases, incremental SG&A from the June 2022 acquisition of ConcealFab totaling $2.2 million and $5.4 for the second quarter and first half of 2023, as compared to the same periods of fiscal 2022, respectively, and increased bad debt reserve charges including approximately $2.7 million related to a Telecommunications customer that became insolvent. The increase in operating income for the second quarter and first half of fiscal 2023, as compared with the same periods of fiscal 2022, is also due to the increase in average selling prices and gross profit improvements. Agriculture Segment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ ​ ​ ​ ​ ​ ​ July 1, ​ June 25, Dollar Percent Dollars in millions 2023 2022 Change Change Sales, gross of intercompany eliminations: ​ ​ ​ ​ ​ North America ​ $ 140.9 ​ $ 203.5 $ (62.6) (30.7) % International ​ ​ 139.0 ​ ​ 174.3 ​ (35.3) (20.3) % Total ​ $ 279.9 ​ $ 377.8 ​ $ (97.9) (25.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income ​ $ 49.3 ​ $ 58.1 ​ $ (8.8) (15.2) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twenty-six weeks ended ​ ​ ​ ​ ​ ​ ​ ​ July 1, ​ June 25, ​ Dollar ​ Percent Dollars in millions 2023 2022 Change Change Sales, gross of intercompany eliminations: ​ ​ ​ ​ ​ North America ​ $ 323.9 ​ $ 385.7 $ (61.8) (16.0) % International ​ ​ 288.2 ​ ​ 298.6 ​ (10.4) (3.5) % Total ​ $ 612.1 ​ $ 684.3 ​ $ (72.2) (10.6) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income ​ $ 102.6 ​ $ 95.5 ​ $ 7.1 7.4 % ​ Agriculture segment net sales decreased for the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022. The benefit of higher average selling prices of irrigation equipment was more than offset by lower volumes. In North America, the decrease in sales for the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022, was impacted by growers’ decisions to delay capital investments this season due to general economic uncertainty and a number of macroeconomic factors including higher interest rates, continued inflationary pressures, and recessionary fears. The second quarter and first half of fiscal 2022 also comparatively benefited from the ongoing delivery of record fiscal 2021 year-end backlog. International sales decreased in the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022. Increased sales volumes in Brazil were more than offset by lower sales volumes in the Europe, Middle East, and Africa region, partially due to the timing of project sales. Sales of technology-related products and services decreased due to lower irrigation equipment volumes. Gross profit decreased in the second quarter and increased in the first half of fiscal 2023, as compared to the same periods of fiscal 2022. This was primarily attributed to higher average selling prices which was reduced by decreased volumes in the second quarter of fiscal 2023. SG&A was higher in the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022, primarily due to higher employment costs, mostly attributed to inflationary wage increases. Operating income was lower in the second quarter and higher in the first half of fiscal 2023, as compared to 26 Table of Contents the same periods of fiscal 2022. This was due primarily to the reduction in volume experienced in the second quarter of fiscal 2023. Other In November 2022, the Company completed the sale of Valmont SM, an offshore wind energy structures business with operations in Denmark. Corporate Corporate SG&A was higher in the second quarter and first half of fiscal 2023, as compared to the same periods of fiscal 2022. The increase is primarily due to inflationary wage and incentive increases, incremental expense from changes in the valuation of deferred compensation plan liabilities, and increased expense from our trade accounts receivable sale program attributed to higher interest rates. Charges related to changes in deferred compensation plan liabilities are offset by an opposite change in an equal amount included in “Other income (expenses)” for the change in deferred compensation plan assets. Liquidity and Capital Resources Capital Allocation Philosophy We have historically funded our growth, capital spending, and acquisitions through a combination of operating cash flows and debt financing. The following are the capital allocation priorities for cash generated: ● working capital and capital expenditure investments necessary for future sales growth; ● dividends on common stock in the range of 15% of the prior fiscal year’s fully diluted net earnings; ● acquisitions; and ● return of capital to shareholders through share repurchases. We intend to manage our capital structure to maintain our investment grade debt rating. Our most recent ratings were Baa3 by Moody’s Investors Service, Inc., BBB- by Fitch Ratings, Inc., and BBB+ by S&P Global Ratings. We would be willing to allow our debt rating to fall to BBB- to finance a special acquisition or other opportunity. We expect to maintain a ratio of debt to invested capital which will support our current investment grade debt rating. The Board of Directors in May 2014 authorized the purchase of up to $500 million of the Company’s outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately-negotiated transactions. The Board of Directors authorized an additional $250 million of share purchases in February 2015 and again in October 2018, and authorized an additional $400 million of share repurchases in February 2023. These authorizations have no expiration date. The purchases will be funded from available working capital and short-term borrowings and will be made subject to market and economic conditions. We are not obligated to make any repurchases and may discontinue the program at any time. As of July 1, 2023, we have acquired approximately 7.1 million shares for approximately $1,053.7 million under this share repurchase program. On February 28, 2023, the Company announced that the Board of Directors approved an increase to the quarterly cash dividend on the common stock to $0.60 per share, or a rate of $2.40 per share on an annualized basis, an increase of 9% from the prior quarterly cash dividend of $0.55 per share. Supplier Finance Program We have a supplier finance program agreement with a financial institution which allows qualifying suppliers, at their election and on terms they negotiate directly with the financial institution, to sell their receivables from the Company. A supplier’s voluntary participation in the program does not change our payment terms, amounts paid, payment timing, or impact our liquidity, and we have no economic interest in a supplier’s decision to participate. As of July 1, 2023 and December 31, 2022, our accounts payable on our Condensed Consolidated Balance Sheets included $42.5 million and $48.9 million, respectively, of our payment obligations under this program. 27 Table of Contents Sources of Financing Our debt financing as of July 1, 2023 consisted primarily of long‑term debt and borrowings on our revolving credit facility. Our long‑term debt as of July 1, 2023 principally consisted of: ● $450 million face value ($433.3 million carrying value) of senior unsecured notes that bear interest at 5.00% per annum and are due in October 2044. ● $305 million face value ($295.1 million carrying value) of senior unsecured notes that bear interest at 5.25% per annum and are due in October 2054. We are allowed to repurchase the notes subject to the payment of a make-whole premium. Both tranches of these notes are guaranteed by certain of our subsidiaries. Our revolving credit facility with JPMorgan Chase Bank, N.A., as Administrative Agent, and the other lenders party thereto, has a maturity date of October 18, 2026. The revolving credit facility provides for $800 million of committed unsecured revolving credit loans with available borrowings thereunder to $400 million in foreign currencies. We may increase the credit facility by up to an additional $300 million at any time, subject to lenders increasing the amount of their commitments. The Company and our wholly-owned subsidiaries, Valmont Industries Holland B.V. and Valmont Group Pty. Ltd., are authorized borrowers under the credit facility. The obligations arising under the revolving credit facility are guaranteed by the Company and its wholly-owned subsidiaries Valmont Telecommunications, Inc., Valmont Coatings, Inc., Valmont Newmark, Inc., and Valmont Queensland Pty. Ltd. The interest rate on our borrowings will be, at our option, either: (a) term Secured Overnight Financing Rate (“SOFR”) (based on a 1-, 3- or 6-month interest period, as selected by the Company) plus a 10 basis point adjustment plus a spread of 100 to 162.5 basis points, depending on the credit rating of the Company’s senior unsecured long-term debt published by S&P Global Ratings and Moody’s Investors Service, Inc.; (b) the higher of ● the prime lending rate, ● the overnight bank rate plus 50 basis points, and ● term SOFR (based on a one-month interest period) plus 100 basis points, plus, in each case, 0 to 62.5 basis points, depending on the credit rating of our senior, unsecured, long-term debt published by S&P Global Ratings and Moody’s Investors Service, Inc.; or (c) daily simple SOFR plus a 10 basis point adjustment plus a spread of 100 to 162.5 basis points, depending on the credit rating of the Company’s senior unsecured long-term debt published by S&P Global Ratings and Moody’s Investors Service, Inc. A commitment fee is also required under the revolving credit facility which accrues at 10 to 25 basis points, depending on the credit rating of our senior unsecured long-term debt published by S&P Global Ratings and Moody’s Investors Service, Inc., on the average daily unused portion of the commitments under the revolving credit agreement. As of July 1, 2023 and December 31, 2022, we had outstanding borrowings of $222.7 million and $140.5 million, respectively, under the revolving credit facility. The revolving credit facility has a maturity date of October 18, 2026 and contains a financial covenant that may limit our additional borrowing capability under the agreement. As of July 1, 2023, we had the ability to borrow $577.1 million under this facility, after consideration of standby letters of credit of $0.2 million associated with certain insurance obligations. We also maintain certain short‑term bank lines of credit totaling $38.2 million; $36.5 million of which was unused as of July 1, 2023. 28 Table of Contents Our senior, unsecured notes and revolving credit agreement each contain cross-default provisions which permit the acceleration of our indebtedness to them if we default on other indebtedness that results in, or permits, the acceleration of such other indebtedness. The revolving credit facility requires maintenance of a financial leverage ratio, measured as of the last day of each of our fiscal quarters, of 3.50 or less. The leverage ratio is the ratio of: (a) interest-bearing debt minus unrestricted cash in excess of $50 million (but not exceeding $500 million) to (b) earnings before interest, taxes, depreciation, and amortization, adjusted for non-cash stock-based compensation and non-cash charges or gains that are non-recurring in nature, subject to certain limitations (“Adjusted EBITDA”). The leverage ratio is permitted to increase from 3.50 to 3.75 for the four consecutive fiscal quarters after certain material acquisitions. The revolving credit agreement also contains customary affirmative and negative covenants or credit facilities of this type, including, among others, limitations on us and our subsidiaries with respect to indebtedness, liens, mergers and acquisitions, investments, dispositions of assets, restricted payments, transactions with affiliates and prepayments of indebtedness. The revolving credit agreement also provides for acceleration of the obligations thereunder and exercise of other enforcement remedies upon the occurrence of customary events of default (subject to customary grace periods, as applicable). As of July 1, 2023, we were in compliance with all covenants related to these debt agreements. The calculation of Adjusted EBITDA for the last four fiscal quarters and the leverage ratio are presented in the tables below in Selected Financial Measures. Cash Uses Our principal cash requirements include working capital, capital expenditures, payments of principal and interest on our debt, payments of taxes, contributions to pension plan, and, if market conditions warrant, occasional investments in, or acquisitions of, business ventures. In addition, we regularly evaluate our ability to pay dividends or repurchase stock, all consistent with the terms of our debt agreements. Our businesses are cyclical, but we have diversity in our markets, from a product, customer, and a geographical standpoint. We have demonstrated the ability to effectively manage through business cycles and maintain liquidity. We have consistently generated operating cash flows in excess of our capital expenditures. Based on our available credit facilities, our senior unsecured notes, and our history of positive operational cash flows, we believe that we have adequate liquidity to meet our needs. We have cash balances of $166.9 million as of July 1, 2023 with approximately $139.3 million held in our non-U.S. subsidiaries. If we distributed our foreign cash balances, certain taxes would be applicable. As of July 1, 2023, we have a liability for foreign withholding taxes and U.S. state income taxes of $2.1 million and $0.9 million, respectively. Cash Flows The following table includes a summary of our cash flow information for the twenty-six weeks ended July 1, 2023 and June 25, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ Twenty-six weeks ended ​ ​ July 1, ​ June 25, Dollars in thousands 2023 2022 Net cash flows provided by operating activities ​ $ 109,546 ​ $ 68,019 Net cash flows used in investing activities ​ (34,046) ​ (87,811) Net cash flows (used in) provided by financing activities ​ (94,154) ​ 570 ​ 29 Table of Contents Operating Cash Flows and Working Capital – Cash provided by operating activities totaled $109.5 million in the first half of fiscal 2023, as compared with $68.0 million in the first half of fiscal 2022. The increase in operating cash flows in the first half of fiscal 2023, as compared with the first half of fiscal 2022, was primarily the result of the increase in operating income along with overall favorable changes in net working capital, partially offset by $12.6 million and $5.2 million increases in tax and interest payments, respectively, for the first half of fiscal 2023, as compared to the first half of fiscal 2022. Investing Cash Flows – Cash used in investing activities totaled $34.0 million in the first half of fiscal 2023, as compared to $87.8 million in the first half of fiscal 2022. Investing activities in the first half of fiscal 2023 primarily included capital spending of $45.4 million, partially offset by proceeds from a divestiture of $6.4 million and proceeds from property damage insurance claims of $4.8 million. Investing activities in the first half of fiscal 2022 primarily included capital spending of $49.7 million and the acquisition of ConcealFab for $39.3 million. We expect our capital expenditures to be in the range of $105 million to $115 million for fiscal 2023. Financing Cash Flows – Cash used in financing activities totaled $94.2 million in the first half of fiscal 2023, compared to cash provided by financing activities of $0.6 million in the first half of fiscal 2022. Our total interest-bearing debt was $955.4 million as of July 1, 2023 and $878.0 million as of December 31, 2022. The financing cash used in the first half of fiscal 2023 was primarily the result of borrowings on the revolving credit agreement and short-term notes of $179.9 million, offset by principal payments on our long-term debt and short-term borrowings of $103.7 million, dividends paid of $24.4 million, the purchase of treasury shares of $135.1 million, and $10.2 million of net activity from stock options and incentive plans, including the associated withholding tax payments. The financing cash provided in the first half of fiscal 2022 was primarily the result of borrowings on the revolving credit agreement of $201.5 million, mostly offset by principal payments on our long-term debt and short-term borrowings of $166.1 million, dividends paid of $22.3 million, the purchase of treasury shares of $9.8 million, and the purchase of a noncontrolling interest of $4.3 million. Guarantor Summarized Financial Information We are providing the following information in compliance with Rule 3-10 and Rule 13-01 of Regulation S-X with respect to our two tranches of senior unsecured notes. All of the senior notes are guaranteed, jointly, severally, fully, and unconditionally (subject to certain customary release provisions, including sale of the subsidiary guarantor, or sale of all or substantially all of its assets) by certain of the Company’s current and future direct and indirect domestic and foreign subsidiaries (collectively the “Guarantors”). The Parent is the Issuer of the notes and consolidates all Guarantors. The financial information of Issuer and Guarantors is presented on a combined basis with intercompany balances and transactions between Issuer and Guarantors eliminated. The Issuer’s or Guarantors’ amounts due from, amounts due to, and transactions with non-guarantor subsidiaries are separately disclosed. Combined financial information is as follows: Supplemental Combined Parent and Guarantors Financial Information For the thirteen and twenty-six weeks ended July 1, 2023 and June 25, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ Twenty-six weeks ended Dollars in thousands July 1, 2023 June 25, 2022 July 1, 2023 June 25, 2022 Net sales ​ $ 685,778 ​ $ 734,500 ​ $ 1,401,249 ​ $ 1,396,249 Gross profit ​ 210,310 ​ 180,909 ​ 401,805 ​ 345,268 Operating income ​ 86,175 ​ 73,044 ​ 158,007 ​ 142,137 Net earnings ​ 52,945 ​ 46,029 ​ 73,156 ​ 88,337 Net earnings attributable to Valmont Industries, Inc. ​ 52,497 ​ 46,582 ​ 72,540 ​ 90,525 ​ 30 Table of Contents Supplemental Combined Parent and Guarantors Financial Information July 1, 2023 and December 31, 2022 ​ ​ ​ ​ ​ ​ ​ Dollars in thousands July 1, 2023 December 31, 2022 Current assets ​ $ 739,152 ​ $ 769,263 Non-current assets ​ 884,346 ​ 925,088 Current liabilities ​ 359,226 ​ 459,961 Non-current liabilities ​ 1,264,797 ​ 1,189,548 Noncontrolling interest in consolidated subsidiaries ​ 2,228 ​ 1,612 ​ Included in non-current assets is a due from non-guarantor subsidiaries receivable of $157,484 and $205,424 as of July 1, 2023 and December 31, 2022, respectively. Included in non-current liabilities is a due to non-guarantor subsidiaries payable of $180,632 and $200,522 as of July 1, 2023 and December 31, 2022, respectively. Selected Financial Measures We are including the following financial measures for the Company. Adjusted EBITDA – Adjusted EBITDA is one of our key financial ratios in that it is the basis for determining our maximum borrowing capacity at any one time. Our bank credit agreements contain a financial covenant that our total interest‑bearing debt not exceed 3.50 times Adjusted EBITDA (or 3.75 times Adjusted EBITDA after certain material acquisitions), calculated on a rolling four fiscal quarter basis. The bank agreements outline adjustments for non-cash stock-based compensation and non-cash charges or gains that are non-recurring in nature, subject to certain limitations, to be included in the calculation of Adjusted EBITDA. If this financial covenant is violated, we may incur additional financing costs or be required to pay the debt before its maturity date. Adjusted EBITDA is a non-GAAP measure and, accordingly, should not be considered in isolation or as a substitute for net earnings, cash flows from operations, or other income or cash flow data prepared in accordance with GAAP or as a measure of our operating performance or liquidity. The calculation of Adjusted EBITDA for the last four fiscal quarters (June 26, 2022 to July 1, 2023) is as follows: ​ ​ ​ ​ ​ Four Fiscal ​ ​ Quarters Ended Dollars in thousands ​ July 1, 2023 Net earnings attributable to Valmont Industries, Inc. ​ $ 276,360 Interest expense ​ 52,907 Income tax expense ​ 119,757 Depreciation and amortization expense ​ 97,947 Stock based compensation ​ 42,123 Loss on divestiture of offshore wind energy structures business ​ 33,273 Adjusted EBITDA ​ $ 622,367 ​ Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. 31 Table of Contents Leverage Ratio – Leverage ratio is calculated as the sum of interest-bearing debt minus unrestricted cash in excess of $50 million (but not exceeding $500 million) divided by Adjusted EBITDA. The leverage ratio is one of the key financial ratios in the covenants under our major debt agreements and the ratio cannot exceed 3.50 (or 3.75 after certain material acquisitions), calculated on a rolling four fiscal quarter basis. If those covenants are violated, we may incur additional financing costs or be required to pay the debt before its maturity date. Leverage ratio is a non-GAAP measure and, accordingly, should not be considered in isolation or as a substitute for net earnings, cash flows from operations, or other income or cash flow data prepared in accordance with GAAP or as a measure of our operating performance or liquidity. The calculation of this ratio as of July 1, 2023, is as follows: ​ ​ ​ ​ Dollars in thousands July 1, 2023 Interest-bearing debt, excluding origination fees and discounts of $26,650 ​ $ 982,060 Less: cash and cash equivalents in excess of $50 million ​ 116,907 Net indebtedness ​ $ 865,153 Adjusted EBITDA ​ 622,367 Leverage ratio ​ 1.39 ​ Leverage ratio, as presented, may not be comparable to similarly titled measures of other companies. Financial Obligations and Financial Commitments There have been no material changes to our financial obligations and financial commitments as described on page 33 on Form 10-K for the fiscal year ended December 31, 2022. Critical Accounting Policies There were no changes in our critical accounting policies as described on pages 38 to 41 on Form 10-K for the fiscal year ended December 31, 2022 during the thirteen weeks ended July 1, 2023. Item 3. Quantitative and Qualitative Disclosures about Market Risk There were no material changes in the Company’s market risk during the thirteen weeks ended July 1, 2023. For additional information, refer to the section "Risk Management" on Form 10-K for the fiscal year ended December 31, 2022. Item 4. Controls and Procedures The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports the Company files or submits under the Securities Exchange Act of 1934 is (1) accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. No changes in the Company’s internal control over financial reporting occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ​ 32 Table of Contents PART II. OTHER INFORMATION Item 1A. Risk Factors There have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussion of the Company’s risk factors under Part I, Item 1A in each of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ as Part of ​ Value of Maximum ​ ​ Total Number ​ ​ ​ ​ Publicly ​ Number of ​ ​ of ​ ​ ​ Announced Plans ​ Shares that may yet ​ ​ Shares ​ Average Price ​ or ​ be Purchased under the Period Purchased paid per share Programs Program (1) April 2, 2023 to April 29, 2023 — ​ $ — — ​ $ 370,304,000 April 30, 2023 to June 3, 2023 66,988 ​ 283.34 66,988 ​ 351,324,000 June 4, 2023 to July 1, 2023 18,312 ​ 274.12 18,312 ​ 346,304,000 Total 85,300 ​ $ 281.36 85,300 ​ $ 346,304,000 ​ (1) On May 13, 2014, we announced a new capital allocation philosophy which covered both the quarterly dividend rate as well as a share repurchase program. The Board of Directors at that time authorized the purchase of up to $500 million of the Company’s outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately-negotiated transactions. On February 24, 2015 and again on October 31, 2018, the Board of Directors authorized an additional purchase of up to $250 million of the Company’s outstanding common stock with no stated expiration date. On February 27, 2023, the Board of Directors increased the amount remaining under the program by an additional $400 million, with no stated expiration date, bringing the total authorization to $1.4 billion. As of July 1, 2023, we have acquired 7,055,205 shares for approximately $1,053.7 million under this share repurchase program. ​ 33 Table of Contents Item 6. Exhibits (a) Exhibits Exhibit No. Description 22.1 ​ List of Issuer and Guarantor Subsidiaries. This document was filed as Exhibit 22.1 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-31429) for the quarter ended September 25, 2021 and is incorporated herein by reference. 31.1* ​ Section 302 Certificate of Chief Executive Officer 31.2* ​ Section 302 Certificate of Chief Financial Officer 32.1* ​ Section 906 Certifications of Chief Executive Officer and Chief Financial Officer 101 ​ The following financial information from Valmont’s Quarterly Report on Form 10-Q for the quarter ended July 1, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders’ Equity, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information. 104 ​ Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101) * Filed herewith ​ 34 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf and by the undersigned hereunto duly authorized. ​ VALMONT INDUSTRIES, INC. ​ (Registrant) ​ ​ ​ /s/ TIMOTHY P. FRANCIS ​ Timothy P. Francis ​ Interim Chief Financial Officer ​ ​ ​ ​ Dated the 1st day of August, 2023 ​ 35