VALMONT INDUSTRIES INC 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 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. Segment net sales in the following table and elsewhere are presented net of intersegment sales. See Note 7 of our Condensed Consolidated Financial Statements for additional information on segment sales and intersegment sales. 21 Table of Contents EXECUTIVE OVERVIEW Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ ​ ​ ​ March 29, March 30, ​ Percent Dollars in thousands, except per-share amounts ​ 2025 ​ 2024 ​ Change Consolidated ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 969,314 ​ $ 977,828 ​ (0.9%) Gross profit ​ ​ 291,102 ​ 306,216 ​ (4.9%) as a percentage of net sales ​ ​ 30.0% ​ 31.3% ​ Selling, general, and administrative expenses ​ ​ 162,788 ​ 174,663 ​ (6.8%) as a percentage of net sales ​ ​ 16.8% ​ 17.9% ​ Operating income ​ ​ 128,314 ​ 131,553 ​ (2.5%) as a percentage of net sales ​ ​ 13.2% ​ 13.5% ​ Net interest expense ​ ​ 6,721 ​ 14,442 ​ (53.5%) Effective tax rate ​ ​ 26.1% ​ 25.3% ​ Net earnings attributable to Valmont Industries, Inc. ​ ​ 87,261 ​ ​ 87,822 ​ (0.6%) Diluted earnings per share ​ $ 4.32 ​ $ 4.32 ​ 0.0% Infrastructure ​ ​ ​ ​ ​ ​ Net sales ​ $ 703,491 ​ $ 720,733 ​ (2.4%) Gross profit ​ 212,875 ​ ​ 217,617 ​ (2.2%) as a percentage of net sales ​ ​ 30.3% ​ ​ 30.2% ​ ​ Selling, general, and administrative expenses ​ 95,663 ​ ​ 99,753 ​ (4.1%) as a percentage of net sales ​ ​ 13.6% ​ ​ 13.8% ​ ​ Operating income ​ 117,212 ​ 117,864 ​ (0.6%) as a percentage of net sales ​ ​ 16.7% ​ ​ 16.4% ​ ​ Agriculture ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 265,823 ​ $ 257,095 ​ 3.4% Gross profit ​ 78,227 ​ ​ 88,599 ​ (11.7%) as a percentage of net sales ​ ​ 29.4% ​ ​ 34.5% ​ ​ Selling, general, and administrative expenses ​ 41,990 ​ ​ 47,626 ​ (11.8%) as a percentage of net sales ​ ​ 15.8% ​ ​ 18.5% ​ ​ Operating income ​ 36,237 ​ 40,973 ​ (11.6%) as a percentage of net sales ​ ​ 13.6% ​ ​ 15.9% ​ ​ Corporate ​ ​ ​ ​ ​ Selling, general, and administrative expenses ​ $ 25,135 ​ $ 27,284 ​ (7.9%) Operating loss ​ (25,135) ​ (27,284) ​ (7.9%) ​ ​ Overview 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. 22 Table of Contents Acquisitions and Divestitures 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. took effect; 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 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 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. 23 Table of Contents Infrastructure Segment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ ​ ​ ​ ​ ​ ​ March 29, ​ March 30, ​ Dollar ​ Percent Dollars in thousands 2025 2024 Change Change Utility ​ $ 344,265 ​ $ 336,143 $ 8,122 2.4% Lighting and Transportation ​ ​ 192,571 ​ ​ 211,209 ​ (18,638) (8.8%) Coatings ​ ​ 82,357 ​ ​ 87,090 ​ (4,733) (5.4%) Telecommunications ​ ​ 69,939 ​ ​ 53,961 ​ 15,978 29.6% Solar ​ ​ 17,089 ​ ​ 35,211 ​ (18,122) (51.5%) Total sales ​ $ 706,221 ​ $ 723,614 ​ $ (17,393) (2.4%) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ $ 117,212 ​ $ 117,864 ​ $ (652) (0.6%) 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ ​ ​ ​ ​ ​ March 29, ​ March 30, Dollar Percent Dollars in thousands 2025 2024 Change Change North America ​ $ 137,476 ​ $ 159,915 $ (22,439) (14.0%) International ​ ​ 129,795 ​ ​ 98,820 ​ 30,975 31.3% Total sales ​ $ 267,271 ​ $ 258,735 ​ $ 8,536 3.3% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ $ 36,237 ​ $ 40,973 ​ $ (4,736) (11.6%) 24 Table of Contents 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 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 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 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. 25 Table of Contents 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 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 As of March 29, 2025, our available debt financing primarily included senior unsecured notes and a revolving credit facility. Senior Unsecured Notes 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, 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. 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. Ltd. 26 Table of Contents 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 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, 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; or (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. Cash Uses 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. 27 Table of Contents As of March 29, 2025, we held $184.4 million in cash, including $140.9 million in non-U.S. subsidiaries. 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. Cash Flows The table below summarizes our cash flow information for the thirteen weeks ended March 29, 2025 and March 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ ​ March 29, ​ March 30, Dollars in thousands 2025 2024 Net cash flows from operating activities ​ $ 65,130 ​ $ 23,332 Net cash flows from investing activities ​ (30,191) ​ (18,639) Net cash flows from financing activities ​ (16,993) ​ (34,834) 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 $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 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. 28 Table of Contents The combined financial information for the thirteen weeks ended March 29, 2025 and March 30, 2024 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ ​ March 29, ​ March 30, Dollars in thousands 2025 ​ 2024 Net sales ​ $ 676,691 ​ $ 682,162 Gross profit ​ 199,145 ​ 209,640 Operating income ​ 92,995 ​ 92,578 Net earnings attributable to Valmont Industries, Inc. ​ 59,986 ​ 59,469 The combined financial information as of March 29, 2025 and December 28, 2024 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ March 29, ​ December 28, Dollars in thousands ​ 2025 2024 Current assets ​ $ 840,413 ​ $ 805,713 Non-current assets ​ 808,417 ​ 835,197 Current liabilities ​ 429,473 ​ 470,652 Non-current liabilities ​ 1,103,790 ​ 1,091,773 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 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 ​ ​ March 29, Dollars in thousands ​ 2025 Net cash flows from operating activities ​ $ 614,476 Interest expense ​ 52,616 Income tax expense ​ 118,789 Deferred income taxes ​ 24,560 Redeemable noncontrolling interests ​ (1,160) Net periodic pension cost ​ (740) Contribution to defined benefit pension plan ​ 4,377 Changes in assets and liabilities ​ (157,842) Other ​ (12,699) Pro forma divestitures adjustment ​ ​ (1,548) Adjusted EBITDA ​ $ 640,829 ​ 29 Table of Contents ​ ​ ​ ​ ​ ​ Four fiscal quarters ended ​ ​ March 29, Dollars in thousands ​ 2025 Net earnings attributable to Valmont Industries, Inc. ​ $ 347,698 Interest expense ​ 52,616 Income tax expense ​ 118,789 Depreciation and amortization ​ 93,377 Stock-based compensation ​ 29,897 Pro forma divestitures adjustment ​ ​ (1,548) Adjusted EBITDA ​ $ 640,829 The calculation of the leverage ratio as of March 29, 2025 was as follows: ​ ​ ​ ​ ​ March 29, Dollars in thousands ​ 2025 Interest-bearing debt, excluding origination fees and discounts of $25,435 ​ $ 756,138 Less: Cash and cash equivalents in excess of $50,000 ​ 134,399 Net indebtedness ​ $ 621,739 Adjusted EBITDA ​ 640,829 Leverage ratio ​ 0.97 FINANCIAL OBLIGATIONS AND COMMITMENTS 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 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. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There were no material changes in the Company’s market risk during the thirteen weeks ended 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.