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Item 2. Management’s Discussion and Analysis

2025-04-30 compared with 2024-10-30 · 194 added, 242 removed, 89 unchanged (83% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Valmont Industries, Inc.

(the “Company”, “Valmont”, “we”, “us”, or “our”), headquartered in Omaha, Nebraska, is a global leader that provides vital infrastructure and advances agricultural productivity while driving innovation through technology.

Valmont Industries, Inc., along with its subsidiaries (collectively referred to as the “Company,” “Valmont,” “we,” “us,” or “our”), is a diversified manufacturer of products and services for infrastructure and agriculture markets.

Founded in 1946 and headquartered in Omaha, Nebraska, our purpose is to conserve resources and improve life.

Forward-Looking Statements

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, and actions and policy changes of domestic and foreign governments.

Management’s discussion and analysis contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.

These 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, anticipated future developments, and other factors deemed to be relevant.

However, these statements are not guarantees of future performance or results.

They are subject to risks, uncertainties (some beyond the Company’s control), and various assumptions.

Management believes these forward-looking statements are based on reasonable assumptions.

However, many factors could cause the actual financial results to differ materially from expectations.

These factors include, among others, risk factors described in the Company’s reports to the Securities and Exchange Commission, as well as future economic and market conditions, industry trends, Company performance and financial results, operational efficiencies, availability and pricing of raw materials, availability and market acceptance of new products, product pricing, domestic and international competition, and actions or policy changes by 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 28, 2024.

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Dollars in millions, except per-share amounts

Dollars in thousands, except per-share amounts

as a percentage of net sales

1 unchanged sentence

as a percentage of net sales

Impairment of goodwill and other intangible assets

Realignment charges

Operating income (loss)

Operating income

as a percentage of net sales

1 unchanged sentence

Effective tax rate

Net earnings (loss) attrib.

to Valmont Industries, Inc.

Diluted earnings (loss) per share

Net earnings attributable to Valmont Industries, Inc.

Diluted earnings per share

Infrastructure

as a percentage of net sales

Selling, general, and administrative expenses

Impairment of goodwill and other intangible assets

Realignment charges

as a percentage of net sales

Operating income

as a percentage of net sales

Selling, general, and administrative expenses

Impairment of goodwill and other intangible assets

Realignment charges

Operating income (loss)

as a percentage of net sales

Operating income

as a percentage of net sales

Selling, general, and administrative expenses

Realignment charges

Operating loss

NM = not meaningful

Figures above may be impacted by rounding

Overview, Including Items Impacting Comparability

On a consolidated basis, net sales decreased in the third quarter of fiscal 2024, as compared to the same period of fiscal 2023, with slightly higher net sales in the Infrastructure segment offset by lower net sales in the Agriculture segment.

On a consolidated basis, net sales decreased in the first three quarters 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 third 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 three quarters 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 were 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”).

The Realignment Program provided for a reduction in force through a voluntary early retirement program and other headcount reduction actions, which were completed by the end of fiscal 2023.

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.

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 third quarter and first three quarters 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 third quarter and first three quarters of fiscal 2023, SG&A in the Agriculture segment included amortization of identified intangible assets of $1.6 million and $4.9 million, respectively, and stock-based compensation expense of $1.5 million and $5.8 million, respectively, from the Prospera subsidiary acquired in fiscal 2021.

Prospera intangible asset amortization was $0.1 million and $0.3 million, respectively, and stock-based compensation expense was $1.3 million and $3.4 million, respectively, for the third quarter and first three quarters of fiscal 2024.

Consolidated operating income for the third quarter and first three quarters of fiscal 2024, as compared to the same periods of fiscal 2023, was impacted by the impairment of certain goodwill and other intangible assets totaling $140.8 million in fiscal 2023 and the lower SG&A as a result of the Realignment Program partially offset by decreased gross profit.

On a consolidated basis, net sales decreased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024.

Higher net sales in the Agriculture segment were more than offset by lower net sales in the Infrastructure segment.

Consolidated gross profit declined in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, primarily due to lower sales volumes in North America within the Agriculture segment, as well as decreased volumes in the Lighting and Transportation (“L&T”) and Solar product lines within the Infrastructure segment.

These declines were partially offset by higher volumes in the Telecommunications product line.

Consolidated gross profit margin also declined, largely driven by a shift in geographic sales mix, with increased international sales and reduced North American sales within the Agriculture segment.

Consolidated selling, general, and administrative expenses (“SG&A”) decreased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, primarily due to lower incentive costs, a reduced allowance for credit losses expense, and a smaller incremental expense associated with changes in the valuation of deferred compensation plan liabilities.

These declines were partially offset by higher compensation and technology-related costs.

Consolidated operating income decreased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, as the impact of lower gross profit was only partially offset by lower SG&A.

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.

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.

We continue to strategically enhance our portfolio through targeted acquisitions and divestitures, demonstrating our commitment to refining our business focus and driving value within our core segments.

In the fourth quarter of fiscal 2024, we divested George Industries, a coating and anodizing company in California previously included in the Infrastructure segment.

In the fourth quarter of fiscal 2024, we divested our extractive business, which included the manufacturing and distribution of screening products for the mining and quarrying sectors in Australia and New Zealand, previously included in the Infrastructure segment.

Macroeconomic and Geopolitical Impacts on Financial Results and Liquidity

We manufacture Utility structures in Mexico and ship them to customers in the United States (“U.S.”).

While most of the structures we sell to our U.S.

customers are manufactured domestically, we imported approximately $230.0 million worth of fabricated steel structures from Mexico into the U.S.

in fiscal 2024.

On March 4, 2025, a 25% tariff on all Mexican goods imported into the U.S.

however, as of March 7, 2025, an exemption was introduced for goods compliant with the United States-Mexico-Canada Agreement (“USMCA”).

An additional tariff took effect on March 12, 2025, when Section 232 was revised to expand the application of a 25% tariff on steel and aluminum imports into the U.S.;

however, there is an exemption from this tariff for fabricated structures produced utilizing steel that was melted and poured in the U.S.

The structures produced at our Mexico facility are USMCA-compliant and primarily utilize steel sourced from U.S.-melted and poured material.

To mitigate the financial impact of tariffs in fiscal 2025, we are implementing a comprehensive strategy.

This includes close collaboration with customers, cost optimization initiatives, operational efficiency improvements, and diversified sourcing efforts.

The ultimate impact of tariffs on our financial condition and operating results will depend on both the effectiveness of our mitigation efforts and various external factors, including the scope and duration of the tariffs, regulatory developments, and the broader trade environment.

We continue to monitor the situation closely and will adjust our strategies as needed.

We continue to monitor other macroeconomic and geopolitical uncertainties that have impacted or may impact our business, including inflationary cost pressures, supply chain disruptions, currency fluctuations against the U.S.

dollar, changing interest rates, ongoing international conflicts, and labor shortages.

These factors could impact our operational costs, revenue, and financial stability.

As conditions evolve, we are proactively adapting strategies to mitigate risks and ensure sufficient liquidity.

Net Interest Expense

Consolidated net interest expense increased in the third quarter and first three quarters of fiscal 2024, as compared to the same period of fiscal 2023, due to the increase in average outstanding borrowings on the revolving line of credit along with higher average interest rates.

Consolidated net interest expense decreased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, due to the decrease in average outstanding borrowings on the revolving line of credit.

Income Tax Expense

Our effective income tax rate in the third quarter and first three quarters of fiscal 2024 was 26.5% and 25.0%, respectively, as compared to (44.6)% and 41.4% in the same periods of fiscal 2023.

The change in the effective tax rate was primarily the result of the impairment of goodwill in the third quarter of fiscal 2023, for which there was no related tax benefit.

Our effective income tax rate in the first quarter of fiscal 2025 was 26.1%, as compared to 25.3% in the same period of fiscal 2024.

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

Infrastructure Segment

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Dollars in millions

Transmission, Distribution, and Substation

Lighting and Transportation

Telecommunications

Operating income

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Transmission, Distribution, and Substation

Dollars in thousands

Lighting and Transportation

1 unchanged sentence

Operating income

Infrastructure segment sales were similar in the third quarter and first three quarters of fiscal 2024, as compared to the same periods of fiscal 2023.

In the third quarter of fiscal 2024, a 4.8% increase in sales in North America was offset by a 13.1% decrease in sales in international markets, primarily attributed to a large international Solar utility-scale project in fiscal 2023 that did not recur in fiscal 2024.

Transmission, Distribution, and Substation sales increased in the third quarter and first three quarters of fiscal 2024, as compared to the same periods of fiscal 2023, due to a favorable project mix and higher volumes of distribution and substation products.

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

Lighting and Transportation sales decreased in the third quarter and first three quarters of fiscal 2024, as compared to the same periods of fiscal 2023, due to lower sales volumes driven by lighting market softness, the strategic exit from lower margin products, and transportation project timing.

Coatings sales decreased in the third quarter and first three quarters of fiscal 2024, as compared to the same periods of fiscal 2023, due to lower sales volumes within international markets more than offsetting increased average selling prices.

Telecommunications sales increased in the third quarter of fiscal 2024 and decreased in the first three quarters of fiscal 2024, as compared to the same periods of fiscal 2023.

The product line saw higher sales volumes in the third quarter of fiscal 2024 driven by increased carrier spending amid a stabilizing North American market environment while the first three quarters of fiscal 2024 were impacted by lower sales volumes as a result of a softer global market environment in the first half of fiscal 2024.

Solar sales decreased in the third quarter and first three quarters of fiscal 2024, as compared to the same periods of fiscal 2023, due to significantly lower sales volumes.

This was the result of the non-recurrence of a large utility-scale project that occurred in fiscal 2023 and the second quarter of fiscal 2024 strategic decision to exit certain low-margin projects.

Infrastructure gross profit and gross profit margin increased in the third quarter and first three quarters of fiscal 2024, as compared to the same periods of fiscal 2023, as a favorable mix and pricing discipline contributed to increased average selling prices that more than offset the impact of steel index deflation.

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

Infrastructure operating income increased in the third quarter and first three quarters of fiscal 2024, as compared to the same periods of fiscal 2023, primarily due to gross profit improvements along with decreased SG&A.

In addition, we incurred severance costs totaling $1.1 million within the Infrastructure segment during the third quarter of fiscal 2023 related to the Realignment Program.

Infrastructure segment sales decreased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024.

Lower sales volumes in the L&T and Solar product lines were partially offset by increased volumes in the Utility and Telecommunications product lines.

Regionally, Infrastructure segment sales increased in North America in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, but declined in international markets during the same period.

Utility product line sales increased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, driven by higher volumes and pricing actions that more than offset the impact of lower steel prices.

This growth was supported by robust utility market demand, fueled by ongoing investments in the global energy transition and grid modernization.

L&T product line sales declined in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, due to lower volumes, primarily reflecting softer demand in international markets, as well as a $2.8 million negative impact from foreign currency translation.

Coatings product line sales decreased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, driven by reduced demand in international markets and unfavorable foreign currency impacts of $1.3 million.

Telecommunications product line sales increased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, benefiting from higher volumes as a result of elevated wireless carrier spending.

Solar product line sales declined significantly in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, reflecting lower volumes, partly due to the Company’s strategic decision in the second quarter of fiscal 2024 to exit certain low-margin projects.

Foreign currency translation also had a negative impact of $1.1 million.

Infrastructure segment gross profit decreased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, due to lower volumes in L&T and Solar product lines.

The decrease was also partially attributed to additional overtime and spending at a few of our U.S.

manufacturing facilities.

Infrastructure segment SG&A decreased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, driven by lower incentive costs and lower allowance for credit losses expense.

Infrastructure segment operating income decreased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024.

This was primarily due to lower volumes in L&T and Solar product lines, partially offset by lower SG&A.

Agriculture Segment

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North America

International

Operating income (loss)

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Dollars in millions

Dollars in thousands

North America

1 unchanged sentence

Operating income

In North America, Agriculture segment sales decreased in the third quarter and first three quarters of fiscal 2024, as compared to the same periods of fiscal 2023, driven by slightly lower irrigation equipment sales volumes.

An increase in replacement sales due to severe weather events in fiscal 2024 was offset by continued market softness amid lower grain prices.

Average irrigation selling prices were similar to fiscal 2023.

In international markets, Agriculture segment sales decreased in the third quarter and first three quarters of fiscal 2024, as compared to the same periods of fiscal 2023, due to significantly lower sales in Brazil, driven by normalizing backlog levels and lower grain prices impacting growers’ buying behavior.

This decline was partially offset by sales growth in the Europe, Middle East, and Africa (“EMEA”) region along with incremental sales from the HR Products acquisition in fiscal 2023.

Sales of Technology Products and Services decreased in the third quarter and first three quarters of fiscal 2024, as compared to the same periods of fiscal 2023, due to lower hardware sales volumes.

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.

We continue to monitor the potential impacts of these factors on our financial results including estimated U.S.

net farm income, as released by the U.S.

In North America, Agriculture segment sales declined in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024.

This decline was primarily driven by lower irrigation equipment sales volumes, reflecting continued softness in the agriculture market amid lower grain prices.

Additionally, average selling prices for irrigation equipment were lower year over year, largely due to a shift in sales mix toward units with fewer spans and the impact of lower steel costs on our industrial tubing product offering.

In international markets, Agriculture segment sales increased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024.

This growth was driven by significantly higher volumes in the Europe, Middle East, and Africa (“EMEA”) region, as well as increased sales volumes in Brazil, where a stabilizing market environment supported improved performance.

However, these gains were partially offset by unfavorable foreign currency translation impacts of approximately $7.1 million.

Sales of Technology Products and Services decreased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, primarily due to lower hardware sales volumes.

Our Agriculture business remains cyclical and is influenced by a range of factors, including changes in net farm income, commodity prices, weather volatility, geopolitical events, and farmer sentiment regarding future economic conditions.

We actively monitor these variables to assess their potential impacts on financial performance, including U.S.

net farm income estimates released by the U.S.

Department of Agriculture.

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.

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

Agriculture segment SG&A decreased in the third quarter and first three quarters 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 segment operating income increased in the third quarter and first three quarters of fiscal 2024, as compared to the same periods of fiscal 2023, primarily due to the impairment of certain goodwill and other intangible assets in the third quarter of fiscal 2023 totaling approximately $137.2 million along with reduced SG&A, partially offset by the impact of lower sales volumes and a higher mix of project sales.

In addition, we incurred severance costs totaling $0.9 million within the Agriculture segment during the third quarter of fiscal 2023 related to the Realignment Program.

Corporate SG&A increased in the third quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to increased insurance costs and incremental expense from changes in the valuation of deferred compensation plan liabilities.

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.

These increases were partially offset by decreased compensation costs primarily as a result of the Realignment Program in fiscal 2023.

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

In addition, we incurred severance and other employee benefit costs totaling $2.2 million within Corporate expense in the third quarter of fiscal 2023 related to the Realignment Program.

In Brazil, w e closely track fluctuations in grain prices and projected farm input costs to gauge grower sentiment.

Irrigation Equipment and Parts sales in North America are expected to remain muted for the remainder of fiscal 2025.

Agriculture segment gross profit decreased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, primarily due to lower sales volumes and reduced average selling prices in North America.

These declines were partially offset by increased sales volumes in the EMEA region.

Agriculture segment SG&A declined in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, primarily due to lower incentive costs, along with lower allowance for credit losses expense.

Agriculture segment operating income decreased in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024, as the benefit of lower SG&A was more than offset by lower sales volumes in North America and a higher mix of international projects.

Corporate SG&A declined in the first quarter of fiscal 2025, as compared to the same period of fiscal 2024.

This decrease was primarily driven by lower incentive costs, reduced professional fees, and a smaller incremental expense associated with changes in the valuation of deferred compensation plan liabilities.

Valuation changes in deferred compensation plan liabilities are offset by corresponding changes in deferred compensation plan assets, which are included in “Other income (expenses)”.

These decreases were partially offset by higher compensation and technology-related costs.

LIQUIDITY AND CAPITAL RESOURCES

Capital Allocation Philosophy

We have historically funded our growth, capital spending, and acquisitions through 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 generally 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 (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 the next twelve months at prevailing market prices, through open market or privately negotiated transactions, including accelerated purchase agreements.

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.

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 September 28, 2024, we have acquired approximately 8.2 million shares for approximately $1,319.0 million under this share repurchase program.

Our capital allocation priorities are intended to present a balanced approach to maintaining disciplined investments in organic and inorganic growth opportunities while delivering meaningful capital returns to shareholders over the next three to five years.

These priorities are expected to be supported by our projected cash flow generation.

We plan to allocate approximately 50% of operating cash flow to high-return growth opportunities, focused on:

● capital expenditures for strategic capacity expansion, primarily in the Infrastructure segment, to maintain and increase manufacturing output and efficiency while driving innovation to better serve customers, and

● acquisitions that strategically augment our competitive position, with a focus on sustainable growth and premium returns on invested capital.

We plan to allocate the remaining approximately 50% of operating cash flow to shareholder returns through the form of share repurchases and dividends.

In February 2025, the Board of Directors increased the authorized capacity under our share repurchase program by $700.0 million, bringing the total authorization to $2,100.0 million, with no stated expiration date.

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

Any purchases will be funded through available liquidity and ongoing cash flows, and will be made subject to prevailing market and economic conditions.

As of March 29, 2025, we had approximately $766.0 million of remaining capacity under the share repurchase program.

Since the program’s inception in May 2014, we have repurchased approximately 8.2 million shares for a total of $1,334.0 million.

In the first quarter of fiscal 2025, the Company adopted a trading plan under Rule 10b5-1 to facilitate repurchases under its authorized $700.0 million stock repurchase program.

Due to the required 30-day waiting period under the trading plan, repurchases commenced in the second quarter of fiscal 2025.

Subsequent to the first quarter of fiscal 2025, as of April 25, 2025, the Company had repurchased approximately $75.6 million of its common stock under the program.

On February 18, 2025, the Board of Directors declared a quarterly cash dividend on common stock of $0.68 per share, or an annualized rate of $2.72 per share.

This represents an increase of over 13% compared to the prior quarterly dividend of $0.60 per share.

We remain committed to maintaining a capital structure that supports our investment-grade credit rating.

As of the latest assessments, our credit ratings were Baa2 (stable outlook) by Moody’s Ratings, BBB- (stable outlook) by Fitch Ratings, Inc., and BBB+ (stable outlook) by S&P Global Ratings.

To support these ratings, we aim to manage our debt-to-invested capital ratio within levels that reinforce our investment-grade status.

Supplier Finance Program

We have a supplier finance program agreement with a financial institution that 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, or payment timing, or impact our liquidity, and we have no economic interest in a supplier’s decision to participate.

As of September 28, 2024 and December 30, 2023, our accounts payable on our Condensed Consolidated Balance Sheets included $40.8 million and $41.9 million, respectively, of our payment obligations under this program.

We have established a supplier finance program with a financial institution, allowing qualifying suppliers the option to sell their receivables from us to the financial institution under independently negotiated terms.

Participation in the program is entirely voluntary for suppliers and does not affect our payment terms, amounts, timing, or liquidity.

We have no economic interest in a supplier’s decision to participate.

As of March 29, 2025 and December 28, 2024, our accounts payable in the Condensed Consolidated Balance Sheets included $41.3 million and $45.6 million, respectively, related to the obligations under this program.

Sources of Financing

Our debt financing as of September 28, 2024 consisted primarily of senior unsecured notes and borrowings on our revolving credit facility.

As of March 29, 2025, our available debt financing primarily included senior unsecured notes and a revolving credit facility.

Senior Unsecured Notes

Our senior unsecured notes as of September 28, 2024 were:

● $450.0 million face value ($433.9 million carrying value) notes that bear interest at 5.00% per annum and are due in October 2044, and

● $305.0 million face value ($295.3 million carrying value) 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.

As of March 29, 2025, our senior unsecured notes consisted of:

● $450.0 million face value ($434.2 million carrying value) notes at an interest rate of 5.00% per annum, maturing in October 2044.

● $305.0 million face value ($295.4 million carrying value) notes at an interest rate of 5.25% per annum, maturing in October 2054.

We retain the option to repurchase these notes by paying a make-whole premium.

Both tranches are guaranteed by certain subsidiaries.

Revolving Credit Facility

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 $800.0 million of committed unsecured revolving credit loans with available borrowings thereunder to $400.0 million in foreign currencies.

We may increase the credit facility by up to an additional $300.0 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.

Our revolving credit facility, managed by JPMorgan Chase Bank, N.A., as Administrative Agent, has a maturity date of October 18, 2026.

The facility provides up to $800.0 million in unsecured revolving credit, with $400.0 million available for borrowings in foreign currencies.

An additional $300.0 million may be added to the facility, subject to lender commitments.

Authorized borrowers include the Company and its 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.

Obligations under this facility are guaranteed by the Company and its wholly owned subsidiaries, Valmont Telecommunications, Inc., Valmont Coatings, Inc., Valmont Newmark, Inc., and Valmont Queensland Pty.

The interest rate on our borrowings will be, at our option, either:

(a) term Secured Overnight Financing Rate (“SOFR”) (based on a one-, three- or six-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.;

(a) term Secured Overnight Financing Rate (“SOFR”), based on a one-, three-, or six-month period, plus a 10-basis-point adjustment and a spread of 100 to 162.5 basis points, depending on our senior unsecured long-term debt credit rating by S&P Global Ratings and Moody’s Ratings;

(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.;

(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 September 28, 2024 and December 30, 2023, we had outstanding borrowings of $168.0 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 September 28, 2024, we had the ability to borrow $631.8 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 $38.6 million, $37.3 million of which were unused as of September 28, 2024.

Our senior unsecured notes and revolving credit facility each contain cross-default provisions that 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 $50.0 million (but not exceeding $500.0 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 facility 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 facility 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 September 28, 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.

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 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 for fiscal 2024 and beyond.

We had cash balances of $200.5 million as of September 28, 2024 with approximately $155.8 million held in our non-U.S.

● the overnight bank rate plus 50 basis points, or

● term SOFR (based on a one-month period) plus 100 basis points,

plus, in each case, 0 to 62.5 basis points, depending on our credit rating;

(c) daily simple SOFR plus a 10-basis-point adjustment and a spread of 100 to 162.5 basis points, depending on our credit rating.

Additionally, a commitment fee is applied to the average daily unused portion of the facility, ranging from 10 to 25 basis points, based on our credit rating.

As of March 29, 2025 and December 28, 2024, we had no outstanding borrowings under this facility.

The facility includes a financial covenant that may limit additional borrowing.

As of March 29, 2025, we could borrow $799.8 million under the facility, after accounting for $0.2 million in standby letters of credit related to certain insurance obligations.

Additionally, we maintain short‑term bank lines of credit totaling $30.1 million, with $30.0 million unused as of March 29, 2025.

Covenants and Compliance

Both our senior unsecured notes and revolving credit facility contain cross-default provisions, which allow for the acceleration of debt if we default on other indebtedness that also permits acceleration.

The revolving credit facility requires us to maintain a financial leverage ratio of 3.50 or lower, measured as of the last day of each fiscal quarter.

A temporary increase to 3.75 is permitted for the four fiscal quarters following a material acquisition.

The leverage ratio is defined as the ratio of:

(a) interest-bearing debt, minus unrestricted cash in excess of $50.0 million (but not exceeding $500.0 million), to (b) earnings before interest, taxes, depreciation, and amortization, adjusted for non-cash stock-based compensation and non-recurring non-cash charges or gains, subject to certain limitations (“Adjusted EBITDA”).

Additionally, in the event of an acquisition or divestiture, Adjusted EBITDA is calculated on a pro forma basis, reflecting the transaction as if it had occurred on the first day of the period.

Additional covenants restrict activities such as incurring indebtedness, placing liens, engaging in mergers, making investments, selling assets, paying dividends, conducting affiliate transactions, and making debt prepayments.

Customary events of default may trigger the acceleration of obligations, subject to grace periods where applicable.

As of March 29, 2025, we were in compliance with all covenants related to these debt agreements.

For detailed calculations of Adjusted EBITDA and the leverage ratio, please refer to the “Selected Financial Measures” section.

Our primary cash needs include working capital, capital expenditures, debt service, taxes, and pension contributions.

We may also pursue strategic investments, acquisitions, stock repurchases, or dividends, subject to market conditions and debt agreements restrictions.

Our business operates in cyclical markets, but our diverse portfolio—spanning various products, customers, and regions—has enabled us to navigate these cycles effectively while maintaining liquidity.

Historically, we have consistently generated operating cash flows that exceed our capital expenditures, demonstrating our ability to manage cash effectively through economic cycles.

For fiscal 2025 and beyond, we are confident in our liquidity position, supported by accessible credit facilities, capital markets, and a solid track record of positive operating cash flows.

As of March 29, 2025, we held $184.4 million in cash, including $140.9 million in non-U.S.

subsidiaries.

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

As of September 28, 2024, we had a liability for foreign withholding taxes and U.S.

state income taxes of $1.7 million and $0.6 million, respectively.

The following table includes a summary of our cash flow information for the thirty-nine weeks ended September 28, 2024 and September 30, 2023:

Thirty-nine weeks ended

September 28,

September 30,

Distributions of this foreign cash would incur tax liabilities.

As of March 29, 2025, we had liabilities of $2.1 million for foreign withholding taxes and $0.5 million for U.S.

state income taxes.

The table below summarizes our cash flow information for the thirteen weeks ended March 29, 2025 and March 30, 2024:

Thirteen weeks ended

Dollars in thousands

2 unchanged sentences

Net cash flows from financing activities

Operating Cash Flows and Working Capital – Cash provided by operating activities totaled $379.3 million in the first three quarters of fiscal 2024, as compared to $190.9 million in the same period of fiscal 2023.

The change in operating cash flows was primarily the result of favorable changes in working capital mainly driven by increased customer receipts including a $69.0 million order down payment received in the third quarter of fiscal 2024.

This was partially offset by severance payments related to the Realignment Program totaling $11.8 million in the first three quarters of fiscal 2024.

Investing Cash Flows – Cash used in investing activities totaled $55.1 million in the first three quarters of fiscal 2024, as compared to $89.3 million in the same period of fiscal 2023.

Investing activities in the first three quarters of fiscal 2024 primarily included capital spending of $53.8 million.

Investing activities in the first three quarters of fiscal 2023 primarily included capital spending of $71.2 million and the acquisition of HR Products, net of cash acquired, of $31.8 million, partially offset by proceeds from a divestiture, net of cash divested, of $6.4 million and proceeds from property

damage insurance claims of $6.8 million.

Operating Cash Flows and Working Capital – Cash provided by operating activities totaled $65.1 million in the first quarter of fiscal 2025, as compared to $23.3 million in the same period of fiscal 2024.

The increase in operating cash flows was primarily the result of a reduction in the amount of required pension contributions, a decrease in interest payments, and a lower amount of cash flows used for working capital, primarily inventory.

The first quarter of fiscal 2024 also included severance payments totaling $9.8 million related to an organizational realignment program.

Investing Cash Flows – Cash used in investing activities totaled $30.2 million in the first quarter of fiscal 2025, as compared to $18.6 million in the same period of fiscal 2024.

Investing activities in the first quarter of fiscal 2025 primarily included capital spending of $30.3 million.

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

We expect our capital expenditures to be in the range of $140.0 million to $160.0 million for fiscal 2025.

Financing Cash Flows – Cash used in financing activities totaled $325.9 million in the first three quarters of fiscal 2024, as compared to $111.5 million in the same period of fiscal 2023.

Our total interest-bearing debt was $925.8 million as of September 28, 2024 and $1,138.1 million as of December 30, 2023.

Financing activities in the first three quarters of fiscal 2024 primarily consisted of borrowings on the revolving credit facility and short-term notes of $37.4 million offset by principal payments on our long-term debt and short-term borrowings of $249.9 million, dividends paid of $36.3 million, the repurchase of common stock of $55.1 million, the purchases of redeemable noncontrolling interests of $17.7 million, and the net activity from stock option and incentive plans, including the associated withholding payments, of $3.9 million.

Financing activities in the first three quarters of fiscal 2023 primarily consisted of borrowings on the revolving credit facility and short-term notes of $239.7 million, offset by principal repayments on our long-term debt and short-term borrowings of $136.6 million, dividends paid of $37.0 million, the repurchase of common stock of $166.7 million, and the net activity from stock option and incentive plans, including the associated withholding payments, of $10.2 million.

Financing Cash Flows – Cash used in financing activities totaled $17.0 million in the first quarter of fiscal 2025, as compared to $34.8 million in the same period of fiscal 2024.

Our total interest-bearing debt was $756.1 million as of March 29, 2025 and $757.9 million as of December 28, 2024.

Financing activities in the first quarter of fiscal 2025 primarily consisted of borrowings on the revolving credit facility and short-term notes of $62.8 million offset by principal payments on our long-term debt and short-term borrowings of $64.6 million, dividends paid of $12.0 million, and the net activity from stock option and incentive plans, including the associated withholding payments, of $3.5 million.

Financing activities in the first quarter of fiscal 2024 primarily consisted of borrowings on the revolving credit facility and short-term notes of $4.0 million, offset by principal repayments 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, including the associated withholding payments, of $5.7 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 the sale of the subsidiary guarantor, or the 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 of the Guarantors.

The financial information of the Issuer and the Guarantors is presented on a combined basis with intercompany balances and transactions between the Issuer and the Guarantors eliminated.

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 and thirty-nine weeks ended September 28, 2024 and September 30, 2023 was as follows:

This information is provided in compliance with Rule 3-10 and Rule 13-01 of Regulation S-X, relating to our two tranches of senior unsecured notes.

These senior notes are jointly, severally, fully, and unconditionally guaranteed—subject to certain customary release provisions, including the sale of the subsidiary guarantor or of all or substantially all of its assets—by certain of our current and future direct and indirect domestic and foreign subsidiaries (collectively, the “Guarantors”).

The Parent serves as the Issuer of the notes and consolidates all Guarantors.

The financial information for the Issuer and Guarantors is presented on a combined basis, with intercompany balances and transactions between the Issuer and the Guarantors eliminated.

Any amounts due to or from the Issuer or Guarantors, as well as transactions with non-guarantor subsidiaries, are disclosed separately.

The combined financial information for the thirteen weeks ended March 29, 2025 and March 30, 2024 was as follows:

Thirteen weeks ended

Thirty-nine weeks ended

September 28,

September 30,

September 28,

September 30,

Dollars in thousands

1 unchanged sentence

Net earnings attributable to Valmont Industries, Inc.

Combined financial information as of September 28, 2024 and December 30, 2023 was as follows:

September 28,

The combined financial information as of March 29, 2025 and December 28, 2024 was as follows:

Dollars in thousands

3 unchanged sentences

Non-current liabilities

Redeemable noncontrolling interests

Included in non-current assets is a due from non-guarantor subsidiaries receivable of $98,314 and $136,904 as of September 28, 2024 and December 30, 2023, respectively.

Included in non-current liabilities is a due to non-guarantor subsidiaries payable of $256,781 and $216,633 as of September 28, 2024 and December 30, 2023, respectively.

As of March 29, 2025 and December 28, 2024, non-current assets included a receivable from non-guarantor subsidiaries of $67,723 and $90,938, respectively.

As of March 29, 2025 and December 28, 2024, non-current liabilities included a payable to non-guarantor subsidiaries of $255,914 and $243,465, 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 credit agreements allow us to add estimated EBITDA from acquired businesses for periods in which we did not own the acquired businesses.

The bank credit agreements also 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-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 September 28, 2024 was as follows:

Quarters Ended

September 28,

The leverage ratio is a key financial metric we use to assess our maximum borrowing capacity.

It is defined as the ratio of (a) interest-bearing debt, minus unrestricted cash in excess of $50.0 million (but not exceeding $500.0 million), to (b) Adjusted EBITDA.

In the event of an acquisition or divestiture, Adjusted EBITDA is calculated on a pro forma basis, reflecting the transaction as if it had occurred on the first day of the period.

Our revolving credit facility requires us to maintain a leverage ratio of 3.50 or lower (or 3.75 or lower following certain material acquisitions) on a rolling four-fiscal-quarter basis, measured as of the last day of each fiscal quarter.

Failure to comply with this financial covenant may result in higher financing costs or early debt repayment obligations.

The leverage ratio and Adjusted EBITDA are non-generally accepted accounting principles (“GAAP”) measures.

As presented, these measures may not be directly comparable to similarly titled measures used by other companies.

They 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.

Additionally, they should not be interpreted as indicators of operating performance or liquidity.

The calculation of Adjusted EBITDA for the four fiscal quarters ended March 29, 2025 was as follows:

Four fiscal quarters ended

Dollars in thousands

7 unchanged sentences

Changes in assets and liabilities

Realignment charges

Pro forma divestitures adjustment

Adjusted EBITDA

Quarters Ended

September 28,

Four fiscal quarters ended

Dollars in thousands

4 unchanged sentences

Stock-based compensation

Realignment charges

Pro forma divestitures adjustment

Adjusted EBITDA

Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

Leverage Ratio – The leverage ratio is calculated as the sum of interest-bearing debt minus unrestricted cash in excess of $50.0 million (but not exceeding $500.0 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.

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 September 28, 2024, was as follows:

September 28,

The calculation of the leverage ratio as of March 29, 2025 was as follows:

Dollars in thousands

4 unchanged sentences

Leverage ratio

The leverage ratio, as presented, may not be comparable to similarly titled measures of other companies.

FINANCIAL OBLIGATIONS AND COMMITMENTS

There were no material changes in the Company’s financial obligations and commitments during the thirty-nine weeks ended September 28, 2024.

There were no material changes in the Company’s financial obligations and commitments during the thirteen weeks ended March 29, 2025.

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 28, 2024.

CRITICAL ACCOUNTING ESTIMATES

The following accounting policies involve judgments and estimates used in preparation of the Condensed Consolidated Financial Statements.

A substantial amount of management judgment is used in preparing financial statements.

We must make estimates on a number of items, such as impairments of long-lived assets, income taxes, revenue recognition for the product lines recognized over time, inventory obsolescence, and pension benefits.

We base our estimates on our experience and on other assumptions that we believe are reasonable under the circumstances.

Further, we re-evaluate our estimates from time to time and as circumstances change.

Actual results may differ under different assumptions or conditions.

The selection and application of our critical accounting policies are discussed annually with our audit committee.

Other than the below, there were no changes in our critical accounting policies as described on pages 34 to 38 on Form 10-K for the fiscal year ended December 30, 2023 during the thirteen weeks ended September 28, 2024.

Impairment of Goodwill and Other Intangible Assets

We annually evaluate our reporting units for goodwill impairment during the third fiscal quarter, which usually coincides with our strategic planning process.

We estimated the value of all fourteen of the reporting units identified for the fiscal 2024 goodwill impairment analysis utilizing a discounted cash flow model.

The discounted cash flow model uses projected after-tax cash flows from operations (less capital expenditures) discounted to present value.

We perform sensitivity analyses to determine what the impact of changes in key assumptions, including discount rates and cash flow forecasts, may have on the valuation of the reporting units.

For the fiscal 2024 annual impairment test, none of our reporting units had an estimated fair value of less than its respective carrying value.

Most of our reporting units serve markets which are cyclical, and their sales and profitability may fluctuate from year to year.

For our Solar and International Irrigation reporting units, with a combined goodwill of approximately $130 million, the amount of cushion or excess fair value above their carrying value determined in our annual impairment test was less than 15%.

We believe these reporting units generate positive cash flows in excess of their current carrying value, and we will continue to monitor their prospects for growth and continuous improvement.

We continue to monitor changes in the global economy that could impact the future operating results of our reporting units.

If such adverse conditions arise, we will test impacted reporting units for impairment prior to the annual test.

In the evaluation of our reporting units, we look at the long-term prospects for the reporting unit and recognize that current performance may not be the best indicator of future prospects or value, which requires management judgment, most specifically around future cash flow projections.

Our indefinite-lived intangible assets consist of trade names.

We assess the values of these assets apart from goodwill as part of the annual impairment testing.

We use the relief-from-royalty method to evaluate our trade names, under which the value of a trade name is determined based on a royalty that could be charged to a third party for using the trade name in question.

The royalty, which is based on a reasonable rate applied against estimated future sales, is tax-effected and

discounted to present value.

Based on our fiscal 2024 annual testing, none of our trade names had an estimated fair value of less than its respective carrying value.

There were no material changes in the Company’s critical accounting estimates during the thirteen weeks ended March 29, 2025.

For additional information on the Company’s critical accounting estimates, refer to the “Critical Accounting Estimates” section in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2024.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes in the Company’s market risk during the thirty-nine weeks ended September 28, 2024.

There were no material changes in the Company’s market risk during the thirteen weeks ended March 29, 2025.

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 28, 2024.

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