What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-31 compared with 2024-05-08 · 88 added, 89 removed, 188 unchanged (48% of the section changed)

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Dollars in millions, except per share amounts

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Overview, Including Items Impacting Comparability

On a consolidated basis, net sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, with lower sales in both the Agriculture and Infrastructure segments.

Steel prices for both hot rolled coil and plate have remained volatile over the past two fiscal years, especially in North America.

Certain Transmission, Distribution, and Substation (“TD&S”) product line customers’ sales contracts include a contractual pricing mechanism, which adjusts to the changes in the cost of steel.

Deflation in the cost of steel and its impact on average selling prices was more than offset by a favorable product mix and an increase in volume resulting in TD&S net sales increasing 3.3% during the first quarter of fiscal 2024, as compared to the same period of fiscal 2023.

Strategic pricing initiatives across all Infrastructure segment product lines and a decrease in the average steel costs recognized in cost of goods sold resulted in the improved gross profit margin for the Infrastructure segment in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023.

On a consolidated basis, net sales were similar in the second quarter of fiscal 2024, as compared to the same period of fiscal 2023, with lower net sales in the Infrastructure segment and slightly higher net sales in the Agriculture segment.

On a consolidated basis, net sales decreased in the first half of fiscal 2024, as compared to the same period of fiscal 2023, with lower net sales in both the Infrastructure and Agriculture segments.

On a consolidated basis, gross profit and gross profit margin decreased in the second quarter of fiscal 2024, as compared to the same period of fiscal 2023, driven by a decrease in gross profit in the Agriculture segment partially offset by an increase in gross profit in the Infrastructure segment.

Gross profit decreased in the first half of fiscal 2024, as compared to the same period of fiscal 2023, while gross profit margin increased.

Favorability from steel deflation, strong commercial execution, and pricing strategies in the Infrastructure segment was more than offset by lower volumes and pricing in Brazil in the Agriculture segment.

During the third quarter of fiscal 2023, management initiated a plan to streamline segment support across the Company and reduce costs through an organizational realignment program (the “Realignment Program”).

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The Board of Directors authorized the incurrence of cash charges up to $36.0 million in connection with the Realignment Program of which $35.2 million were incurred in fiscal 2023 which included severance and other employee benefit costs totaling approximately $17.3 million within the Infrastructure segment, $9.1 million within the Agriculture segment, and $8.8 million within Corporate expense.

Consolidated selling, general, and administrative expenses (“SG&A”) decreased in the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, primarily driven by decreased compensation costs largely attributable to the Realignment Program in fiscal 2023.

In the second quarter and first half of fiscal 2023, SG&A in the Agriculture segment included amortization of identified intangible assets of $1.6 million and $3.3 million, respectively, and stock-based compensation expense of $2.3 million and $4.3 million, respectively, from the Prospera subsidiary acquired in fiscal 2021.

Prospera intangible asset amortization was $0.1 million and $0.2 million, respectively, and stock-based compensation expense was $1.3 million and $2.1 million, respectively, for the second quarter and first half of fiscal 2024.

Consolidated operating income for the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, was impacted by the lower SG&A as a result of the Realignment Program partially offset by decreased gross profit.

Acquisitions and Divestitures

In the third quarter of fiscal 2023, the Company acquired HR Products, a leading wholesale supplier of irrigation parts in Australia, included in the Agriculture segment.

In the second quarter of fiscal 2023, the Company divested Torrent Engineering and Equipment, an integrator of prepackaged pump stations in Indiana, included in the Agriculture segment.

In the first quarter of fiscal 2023, selling, general, and administrative expenses (“SG&A”) in the Agriculture segment included amortization of identified intangible assets of $1.6 million and stock-based compensation expense of $2.0 million from the Prospera subsidiary acquired in fiscal 2021.

Prospera intangible asset amortization and stock-based compensation expense was $0.1 million and $0.8 million, respectively, for the first quarter of fiscal 2024.

Macroeconomic Impacts on Financial Results and Liquidity

We continue to monitor several macroeconomic trends and geopolitical uncertainties that have impacted or may impact our business, including inflationary cost pressures, supply chain disruptions, changes in foreign currency exchange rates against the United States (“U.S.”) dollar, rising interest rates, ongoing international armed conflicts, and labor shortages.

Gross Profit, SG&A, and Operating Income

On a consolidated basis, gross profit decreased slightly in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to lower sales volumes primarily in the Agriculture segment.

Gross profit as a percentage of sales increased in the first quarter of 2024, as compared to the same period of fiscal 2023, due to more favorable input costs and higher average selling prices primarily in the Infrastructure segment attributed to a favorable project mix.

Consolidated SG&A decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily driven by decreased compensation costs largely attributable to the Realignment Program in fiscal 2023.

Consolidated operating income for the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, was impacted by the lower SG&A as a result of the Realignment Program partially offset by decreased gross profit.

Net Interest Expense

Consolidated interest expense increased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to additional borrowings on the revolving line of credit along with higher interest rates.

Other Income / Expenses (including Gain on Deferred Compensation Investments)

Amounts in “Gain on deferred compensation investments” included changes in the market value of deferred compensation assets which were offset by an equal opposite amount included in SG&A for the corresponding change in the valuation of deferred compensation liabilities.

Other items included in “Other income (expenses)” for the first quarter of fiscal 2024 were pension costs of $0.2 million compared to pension costs of $0.1 million in the same period of fiscal 2023.

Consolidated net interest expense was flat in the second quarter of fiscal 2024, as compared to the same period of fiscal 2023.

The increase in average outstanding borrowings on the revolving line of credit along with higher average interest rates resulted in higher consolidated net interest expense in the first half of fiscal 2024, as compared to the same period of fiscal 2023.

Income Tax Expense

Our effective income tax rate in the first quarter of fiscal 2024 was 25.3% as compared to 30.3% in the same period of fiscal 2023.

The change in the effective tax rate was primarily the result of changes in the geographic mix of earnings.

Loss (Earnings) Attributable to Redeemable Noncontrolling Interests

Loss (earnings) attributable to redeemable noncontrolling interests reflected the operating results of the subsidiaries the Company does not own 100%.

Our effective income tax rate in the second quarter and first half of fiscal 2024 was 23.5% and 24.4%, respectively, as compared to 26.4% and 28.2% in the same periods of fiscal 2023.

The change in the effective tax rate was primarily the result of the reduction of a valuation allowance on a tax loss carryforward in a foreign subsidiary totaling approximately $3.0 million in addition to a change in the mix of foreign earnings.

Infrastructure Segment

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Operating income

Infrastructure segment sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to decreased sales volumes in the Telecommunications, Coatings, and Lighting and Transportation product lines, partially offset by increased average selling prices across all product lines and increased sales volumes in the Transmission, Distribution, and Substation and Solar product lines.

Infrastructure segment sales decreased in North America in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, while increasing slightly in International markets.

International sales were impacted by unfavorable currency translation effects of $3.0 million for the first quarter of fiscal 2024 as compared to the same period of fiscal 2023.

Transmission, Distribution, and Substation product line sales increased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to increased average selling prices and increased sales volumes.

Lighting and Transportation sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to decreased sales volumes along with unfavorable currency translation effects totaling approximately $2.0 million.

Coatings sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to decreased volumes partially offset by slightly increased average selling prices.

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Dollars in millions

Transmission, Distribution, and Substation

Lighting and Transportation

Telecommunications

Operating income

Transmission, Distribution, and Substation sales increased in the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, due to strategic pricing initiatives and increased sales volumes .

These increases occurred amid strong utility market demand, driven by ongoing investments in the global energy transition and grid hardening.

However, a greater mix of distribution and substation structures and the unfavorable contractual pricing impact of steel index deflation limited overall sales growth.

Lighting and Transportation sales decreased in the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, due to lower sales volumes along with unfavorable currency translation effects totaling approximately $3.7 million for the first half of fiscal 2024.

Coatings sales increased slightly in the second quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to increased average selling prices more than offsetting decreased sales volumes.

Coatings sales decreased slightly in the first half of fiscal 2024, as compared to the same period of fiscal 2023, due to lower sales volumes more than offsetting increased average selling prices.

The decrease was also impacted by unfavorable currency translation effects totaling approximately $1.6 million.

Telecommunications sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to decreased sales volumes partially offset by increased average selling prices.

We expect sales for Telecommunications to remain lower until network enhancement spending of the major carriers returns to more elevated levels.

As the continued rollout and expansion of 5G wireless technology globally accelerates, sales of our products are expected to grow.

Solar sales increased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to increased sales volumes.

Infrastructure gross profit and gross profit margin increased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to a favorable product mix contributing to increased average selling prices and deliberate actions to improve overall costs of goods sold.

Telecommunications sales decreased in the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, due to much lower sales volumes as a result of a softer market environment.

Solar sales decreased in the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, due to decreased sales volumes primarily driven by project timing.

Infrastructure gross profit and gross profit margin increased in the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, due to commercial and pricing strategies contributing to increased average selling prices along with lower overall costs of goods sold from declining steel costs.

These items, partially offset by decreased sales volumes primarily in the Telecommunications product line, resulted in an overall increase in the amount of gross profit.

Infrastructure SG&A decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to decreased compensation costs primarily as a result of the Realignment Program along with decreased bad debt reserve charges that included approximately $2.7 million related to a Telecommunications customer that became insolvent in fiscal 2023.

Infrastructure operating income increased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, as decreased sales volumes were more than offset by gross profit improvements along with decreased SG&A.

Infrastructure SG&A decreased in the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, primarily due to decreased compensation costs primarily as a result of the Realignment Program.

Infrastructure operating income increased in the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, as decreased sales volumes were more than offset by gross profit improvements along with decreased SG&A.

Agriculture Segment

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Operating income

Agriculture segment sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to decreased sales volumes and slightly lower average selling prices of irrigation equipment.

In North America, the decrease in Agriculture sales for the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, was impacted by growers’ decisions to delay capital investments due to general economic uncertainty and a number of macroeconomic factors including higher interest rates and continued inflationary pressures.

The first quarter of fiscal 2023 also comparatively benefited from the ongoing delivery of elevated backlog.

International sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to decreased project sales in the Europe, Middle East, and Africa region and decreased sales in Brazil due to muted farmer sentiment attributed to lower agricultural commodity prices, partially offset by incremental sales from the HR Products acquisition totaling $10.1 million.

Sales of Technology Products and Services decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023.

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Dollars in millions

North America

International

Operating income

In North America, the increase in Agriculture sales for the second quarter of fiscal 2024, as compared to the same period of fiscal 2023, was driven by a large increase in replacement sales due to severe weather impacts in the midwestern and southern U.S., partially offset by decreased average selling prices due to targeted regional pricing actions.

Sales in the first half of fiscal 2024 were comparable to the same period of fiscal 2023.

International sales decreased in the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, due to significantly lower sales in Brazil due to normalizing backlog levels and lower grain prices impacting growers’ buying behavior, partially offset by higher project sales in the Middle East and incremental sales from the HR Products acquisition.

Sales of Technology Products and Services decreased in the first quarter and second half of fiscal 2024, as compared to the same periods of fiscal 2023.

Our Agriculture business is cyclical and is impacted by changes in net farm income, commodity prices, weather volatility, geopolitical factors, and farmer sentiment related to future economic uncertainty.

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Department of Agriculture.

In Brazil, w e also actively track changes in soybean and other crop prices and projected farm input costs to evaluate grower sentiment.

In Brazil, w e also actively track changes in grain prices and projected farm input costs to evaluate grower sentiment.

Irrigation Equipment and Parts sales in North America are expected to remain below prior-year levels for the remainder of fiscal 2024.

The previous three years benefited from record levels of disaster relief and pandemic-related stimulus for farmers in North America which contributed to higher demand.

Agriculture segment gross profit decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to decreased sales volumes.

Agriculture segment SG&A decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to decreased compensation costs, largely attributable to the Realignment Program, along with lower intangible asset amortization expense as a result of the third quarter of fiscal 2023 impairment of certain Prospera amortizing proprietary technology.

Agriculture operating income decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to decreased sales volumes partially offset by decreased SG&A.

Corporate SG&A decreased for the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to decreased compensation and incentive costs primarily as a result of the Realignment Program in fiscal 2023.

Agriculture segment gross profit decreased in the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, primarily due to decreased sales volumes in Brazil and decreased average selling prices both in North America and internationally, partially offset by increased sales volumes in North America.

Agriculture segment SG&A decreased in the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, primarily due to decreased compensation costs, largely attributable to the Realignment Program, along with lower intangible asset amortization expense as a result of the third quarter of fiscal 2023 impairment of certain Prospera amortizing proprietary technology.

Agriculture operating income decreased in the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, primarily due to decreased sales volumes and pricing in Brazil partially offset by decreased SG&A.

Corporate SG&A decreased for the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, due to decreased compensation costs primarily as a result of the Realignment Program in fiscal 2023.

Liquidity and Capital Resources

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We intend to manage our capital structure to maintain our investment-grade debt rating.

Our most recent ratings were Baa3 (stable outlook) by Moody’s Investors Service, Inc., BBB- (stable outlook) by Fitch Ratings, Inc., and BBB+ (stable outlook) by S&P Global Ratings.

Our most recent ratings were Baa3 (positive outlook) by Moody’s Investors Service, Inc., BBB- (stable outlook) by Fitch Ratings, Inc., and BBB+ (stable outlook) by S&P Global Ratings.

We expect to maintain a ratio of debt to invested capital which will support our current investment-grade debt rating.

In May 2014, the Board of Directors authorized the purchase of up to $500.0 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 $250.0 million of share purchases in February 2015 and again in October 2018, and authorized an additional $400.0 million of share repurchases in February 2023.

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We are not obligated to make any repurchases and may discontinue the program at any time.

As of March 30, 2024, we have acquired approximately 8.0 million shares for approximately $1,263.9 million under this share repurchase program.

In November 2023, we entered into an accelerated purchase agreement to repurchase $120.0 million of our outstanding common stock (“November 2023 ASR”) with CitiBank, N.A.

as counterparty.

The November 2023 ASR was entered into under our previously announced share repurchase program described above.

The Company pre-paid $120.0 million in the fourth quarter of fiscal 2023 and received an initial delivery of 438,917 shares of common stock.

The agreement was settled with the delivery of an additional 96,224 shares of common stock in the first quarter of fiscal 2024.

The total number of shares ultimately delivered under the November 2023 ASR, and therefore the average purchase price paid per share of $224.24, was determined based on the volume-weighted average market price of our common stock during the term of the agreement, less a discount.

As of June 29, 2024, we have acquired approximately 8.1 million shares for approximately $1,278.8 million under this share repurchase program.

Supplier Finance Program

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A supplier’s voluntary participation in the program does not change our payment terms, amounts paid, or payment timing, or impact our liquidity, and we have no economic interest in a supplier’s decision to participate.

As of March 30, 2024 and December 30, 2023, our accounts payable on our Condensed Consolidated Balance Sheets included $37.2 million and $41.9 million, respectively, of our payment obligations under this program.

As of June 29, 2024 and December 30, 2023, our accounts payable on our Condensed Consolidated Balance Sheets included $41.5 million and $41.9 million, respectively, of our payment obligations under this program.

Sources of Financing

Our debt financing as of March 30, 2024 consisted primarily of senior unsecured notes and borrowings on our revolving credit facility.

Our debt financing as of June 29, 2024 consisted primarily of senior unsecured notes and borrowings on our revolving credit facility.

Senior Unsecured Notes

Our senior unsecured notes as of March 30, 2024 were:

Our senior unsecured notes as of June 29, 2024 were:

● $450.0 million face value ($433.8 million carrying value) notes that bear interest at 5.00% per annum and are due in October 2044, and

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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 March 30, 2024 and December 30, 2023, we had outstanding borrowings of $377.5 million and $377.9 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 March 30, 2024, we had the ability to borrow $422.3 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 $38.9 million, $36.9 million of which were unused as of March 30, 2024.

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.

As of June 29, 2024 and December 30, 2023, we had outstanding borrowings of $287.4 million and $377.9 million, respectively, under the revolving credit facility.

The revolving credit facility contains a financial covenant that may limit our additional borrowing capability under the agreement.

As of June 29, 2024, we had the ability to borrow $512.4 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 $38.1 million, $36.2 million of which were unused as of June 29, 2024.

Our senior unsecured notes and revolving credit facility 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.

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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 the acceleration of the obligations thereunder and the exercise of other enforcement remedies upon the occurrence of customary events of default (subject to customary grace periods, as applicable).

As of March 30, 2024, we were in compliance with all covenants related to these debt agreements.

The calculations of Adjusted EBITDA and the leverage ratio are presented in the tables below in “Selected Financial Measures”.

The revolving credit agreement also provides for the acceleration of the obligations thereunder and the exercise

of other enforcement remedies upon the occurrence of customary events of default (subject to customary grace periods, as applicable).

As of June 29, 2024, we were in compliance with all covenants related to these debt agreements.

The calculations of Adjusted EBITDA and the leverage ratio are presented in “Selected Financial Measures”.

Our principal cash requirements include working capital, capital expenditures, payments of principal and interest on our debt, payments of taxes, contributions to the pension plan, and, if market conditions warrant, occasional investments in, or acquisitions of, business ventures.

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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 for fiscal 2024 and beyond.

We had cash balances of $169.2 million as of March 30, 2024 with approximately $134.8 million held in our non-U.S.

We had cash balances of $163.1 million as of June 29, 2024 with approximately $141.7 million held in our non-U.S.

subsidiaries.

If we distributed our foreign cash balances, certain taxes would be applicable.

As of March 30, 2024, we had a liability for foreign withholding taxes and U.S.

As of June 29, 2024, we had a liability for foreign withholding taxes and U.S.

state income taxes of $1.6 million and $0.7 million, respectively.

The following table includes a summary of our cash flow information for the thirteen weeks ended March 30, 2024 and April 1, 2023:

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The following table includes a summary of our cash flow information for the twenty-six weeks ended June 29, 2024 and July 1, 2023:

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Dollars in thousands

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Net cash flows from financing activities

Operating Cash Flows and Working Capital – Cash provided by operating activities totaled $23.3 million in the first quarter of fiscal 2024, as compared to $21.2 million in the same period of fiscal 2023.

The change in operating cash flows was primarily the result of the increase in net earnings, partially offset by payments of severance and other employee benefit costs related to the Realignment Program totaling $9.8 million in the first quarter of fiscal 2024.

Investing Cash Flows – Cash used in investing activities totaled $18.6 million in the first quarter of fiscal 2024, as compared to $21.8 million in the same period of fiscal 2023.

Investing activities in the first quarter of fiscal 2024 primarily included capital spending of $15.0 million.

Investing activities in the first quarter of fiscal 2023 primarily included capital spending of $22.4 million.

Operating Cash Flows and Working Capital – Cash provided by operating activities totaled $154.1 million in the first half of fiscal 2024, as compared to $109.5 million in the same period of fiscal 2023.

The change in operating cash flows was primarily the result of the increase in net earnings as well as the favorable impact of lower steel prices on our working capital.

This was partially offset by payments of severance and other employee benefit costs related to the Realignment Program totaling $10.6 million and a reduction of our sold trade accounts receivable balance totaling $40.0 million in the first half of fiscal 2024.

Investing Cash Flows – Cash used in investing activities totaled $36.5 million in the first half of fiscal 2024, as compared to $34.0 million in the same period of fiscal 2023.

Investing activities in the first half of fiscal 2024 primarily included capital spending of $33.3 million.

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.

We expect our capital expenditures to be in the range of $95.0 million to $110.0 million for fiscal 2024.

Financing Cash Flows – Cash used in financing activities totaled $34.8 million in the first quarter of fiscal 2024, as compared to $13.0 million in the same period of fiscal 2023.

Our total interest-bearing debt was $1,136.4 million as of March 30, 2024 and $1,138.1 million as of December 30, 2023.

Financing activities in the first quarter of fiscal 2024 primarily consisted of borrowings on the revolving credit agreement and short-term notes of $4.0 million offset by principal payments on our long-term debt and short-term borrowings of $5.3 million, dividends paid of $12.1 million, the purchase of redeemable noncontrolling interests of $17.7 million, and the net activity from stock option and incentive plans of $5.7 million.

Financing activities in the first quarter of fiscal 2023 primarily consisted of borrowings on the revolving credit agreement and short-term notes of $136.1 million offset by principal payments on our long-term debt and short-term borrowings of $16.6 million, dividends paid of $11.7 million, the purchase of treasury shares of $111.1 million, and the net activity from stock option and incentive plans of $9.0 million.

Financing Cash Flows – Cash used in financing activities totaled $150.9 million in the first half of fiscal 2024, as compared to $94.2 million in the same period of fiscal 2023.

Our total interest-bearing debt was $1,046.0 million as of June 29, 2024 and $1,138.1 million as of December 30, 2023.

Financing activities in the first half of fiscal 2024 primarily consisted of borrowings on the revolving credit agreement and short-term notes of $21.1 million offset by principal payments on our long-term debt and short-term borrowings of $112.7 million, dividends paid of $24.2 million, the purchase of treasury shares of $14.9 million, the purchase of redeemable noncontrolling interests of $17.7 million, and the net activity from stock option and incentive plans of $4.4 million.

Financing activities in the first half of fiscal 2023 primarily consisted 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 the net activity from stock option and incentive plans of $10.2 million.

Guarantor Summarized Financial Information

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The Issuer’s or the Guarantors’ amounts due from, amounts due to, and transactions with non-guarantor subsidiaries are separately disclosed.

Combined financial information for the thirteen weeks ended March 30, 2024 and April 1, 2023 was as follows:

Combined financial information for the thirteen and twenty-six weeks ended June 29, 2024 and July 1, 2023 was as follows:

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Net earnings attributable to Valmont Industries, Inc.

Combined financial information as of March 30, 2024 and December 30, 2023 was as follows:

Combined financial information as of June 29, 2024 and December 30, 2023 was as follows:

Dollars in thousands

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Redeemable noncontrolling interests

Included in non-current assets is a due from non-guarantor subsidiaries receivable of $110,747 and $136,904 as of March 30, 2024 and December 30, 2023, respectively.

Included in non-current liabilities is a due to non-guarantor subsidiaries payable of $221,387 and $216,633 as of March 30, 2024 and December 30, 2023, respectively.

Included in non-current assets is a due from non-guarantor subsidiaries receivable of $104,757 and $136,904 as of June 29, 2024 and December 30, 2023, respectively.

Included in non-current liabilities is a due to non-guarantor subsidiaries payable of $238,144 and $216,633 as of June 29, 2024 and December 30, 2023, respectively.

Selected Financial Measures

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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-

generally accepted accounting principles (“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 four fiscal quarters ended March 30, 2024 was as follows:

Adjusted EBITDA is a non-generally accepted accounting principles (“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 four fiscal quarters ended June 29, 2024 was as follows:

Quarters Ended

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Net cash flows provided by operating activities

Net cash flows from operating activities

Interest expense

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The 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 the leverage ratio as of March 30, 2024, was as follows:

The calculation of the leverage ratio as of June 29, 2024, was as follows:

Dollars in thousands

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Financial Obligations and Commitments

There were no material changes in the Company’s financial obligations and commitments during the thirteen weeks ended March 30, 2024.

There were no material changes in the Company’s financial obligations and commitments during the twenty-six weeks ended June 29, 2024.

For additional information on the Company’s financial obligations and commitments, refer to the “Cash Uses” section in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

Critical Accounting Estimates

There were no material changes in the Company’s critical accounting estimates during the thirteen weeks ended March 30, 2024.

There were no material changes in the Company’s critical accounting estimates during the twenty-six weeks ended June 29, 2024.

For additional information on the Company’s critical accounting policies, refer to the “Critical Accounting Policies” section in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes in the Company’s market risk during the thirteen weeks ended March 30, 2024.

There were no material changes in the Company’s market risk during the twenty-six weeks ended June 29, 2024.

For additional information on the Company’s market risk, refer to Part II, Item 7A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis