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 8 of our Condensed Consolidated Financial Statements for additional information on segment sales and intersegment sales. 24 Table of Contents EXECUTIVE OVERVIEW Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ ​ ​ Twenty-six weeks ended ​ ​ ​ ​ June 28, June 29, ​ Percent ​ June 28, ​ June 29, ​ Percent Dollars in thousands, except per-share amounts ​ 2025 ​ 2024 ​ Change ​ 2025 ​ 2024 Change Consolidated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 1,050,548 ​ $ 1,039,737 ​ 1.0% ​ $ 2,019,862 ​ $ 2,017,565 ​ 0.1% Gross profit ​ ​ 321,167 ​ 320,282 ​ 0.3% ​ 612,269 ​ 626,498 ​ (2.3%) as a percentage of net sales ​ ​ 30.6% ​ 30.8% ​ ​ 30.3% ​ 31.1% ​ Selling, general, and administrative expenses ​ ​ 191,670 ​ 172,974 ​ 10.8% ​ 354,458 ​ ​ 347,637 ​ 2.0% as a percentage of net sales ​ ​ 18.2% ​ 16.6% ​ ​ 17.5% ​ 17.2% ​ Impairment of long-lived assets ​ ​ 91,337 ​ ​ — ​ NM ​ ​ 91,337 ​ ​ — ​ NM Realignment charges ​ ​ 8,884 ​ ​ — ​ NM ​ ​ 8,884 ​ ​ — ​ NM Operating income ​ ​ 29,276 ​ 147,308 ​ (80.1%) ​ 157,590 ​ 278,861 ​ (43.5%) as a percentage of net sales ​ ​ 2.8% ​ 14.2% ​ ​ 7.8% ​ 13.8% ​ Net interest expense ​ ​ 8,975 ​ 14,347 ​ (37.4%) ​ 15,696 ​ 28,789 ​ (45.5%) Effective tax rate ​ ​ 117.2% ​ 23.5% ​ ​ 38.7% ​ 24.4% ​ Net earnings (loss) attrib. to Valmont Industries, Inc. ​ ​ (4,020) ​ ​ 99,716 ​ NM ​ ​ 83,241 ​ ​ 187,538 ​ (55.6%) Diluted earnings (loss) per share ​ $ (1.53) ​ $ 4.91 ​ NM ​ $ 2.84 ​ $ 9.24 ​ (69.3%) Infrastructure ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 763,092 ​ $ 760,430 ​ 0.4% ​ $ 1,466,583 ​ $ 1,481,163 ​ (1.0%) Gross profit ​ 227,883 ​ ​ 232,403 ​ (1.9%) ​ 440,758 ​ 450,020 ​ (2.1%) as a percentage of net sales ​ ​ 29.9% ​ ​ 30.6% ​ ​ ​ ​ 30.1% ​ ​ 30.4% ​ ​ Selling, general, and administrative expenses ​ 111,187 ​ ​ 98,822 ​ 12.5% ​ 206,850 ​ 198,575 ​ 4.2% as a percentage of net sales ​ ​ 14.6% ​ ​ 13.0% ​ ​ ​ ​ 14.1% ​ ​ 13.4% ​ ​ Impairment of long-lived assets ​ ​ 89,356 ​ ​ — ​ NM ​ ​ 89,356 ​ — ​ NM Realignment charges ​ ​ 1,426 ​ ​ — ​ NM ​ ​ 1,426 ​ — ​ NM Operating income ​ 25,914 ​ 133,581 ​ (80.6%) ​ 143,126 ​ 251,445 ​ (43.1%) as a percentage of net sales ​ ​ 3.4% ​ ​ 17.6% ​ ​ ​ ​ 9.8% ​ ​ 17.0% ​ ​ Agriculture ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 287,456 ​ $ 279,307 ​ 2.9% ​ $ 553,279 ​ $ 536,402 ​ 3.1% Gross profit ​ 93,284 ​ ​ 87,879 ​ 6.2% ​ 171,511 ​ 176,478 ​ (2.8%) as a percentage of net sales ​ ​ 32.5% ​ ​ 31.5% ​ ​ ​ ​ 31.0% ​ ​ 32.9% ​ ​ Selling, general, and administrative expenses ​ 52,366 ​ ​ 47,908 ​ 9.3% ​ 94,356 ​ 95,534 ​ (1.2%) as a percentage of net sales ​ ​ 18.2% ​ ​ 17.2% ​ ​ ​ ​ 17.1% ​ ​ 17.8% ​ ​ Impairment of long-lived assets ​ ​ 1,981 ​ ​ — ​ NM ​ ​ 1,981 ​ ​ — ​ NM Realignment charges ​ ​ 2,886 ​ ​ — ​ NM ​ ​ 2,886 ​ ​ — ​ NM Operating income ​ 36,051 ​ 39,971 ​ (9.8%) ​ 72,288 ​ 80,944 ​ (10.7%) as a percentage of net sales ​ ​ 12.5% ​ ​ 14.3% ​ ​ ​ ​ 13.1% ​ ​ 15.1% ​ ​ Corporate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general, and administrative expenses ​ $ 28,117 ​ $ 26,244 ​ 7.1% ​ $ 53,252 ​ $ 53,528 ​ (0.5%) Realignment charges ​ ​ 4,572 ​ ​ — ​ NM ​ ​ 4,572 ​ ​ — ​ NM Operating loss ​ (32,689) ​ (26,244) ​ 24.6% ​ (57,824) ​ (53,528) ​ 8.0% ​ ​ NM = not meaningful Overview On a consolidated basis, net sales increased in the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024. The second quarter growth was primarily driven by higher net sales in the Agriculture segment. For the first half of fiscal 2025, net sales in the Agriculture segment also increased, though these gains were partially offset by lower net sales in the Infrastructure segment. Consolidated gross profit increased in the second quarter of fiscal 2025 but declined in the first half of fiscal 2025, as compared to the same periods of fiscal 2024. The second quarter improvement was largely due to higher international sales volumes within the Agriculture segment, which more than offset lower volumes in North America in the Agriculture segment and in international markets in the Infrastructure segment. For the first half of fiscal 2025, decreased sales in North America outweighed gains in international markets within the Agriculture segment. Consolidated gross profit margin also declined, primarily due to a shift in geographic sales mix, with an increase in international sales and a reduction in higher-margin North American sales within the Agriculture segment. 25 Table of Contents Consolidated selling, general, and administrative (“SG&A”) expenses increased in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024. This increase was driven by higher allowance for credit losses expense, an accrual of approximately $7.0 million for software licenses that are no longer expected to be used, and a $3.2 million write-off related to the Company’s exit from the agriculture solar market in Brazil. These increases were partially offset by lower incentive costs in the first half of fiscal 2025. Consolidated operating income decreased in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024. This was primarily due to the impairment of certain long-lived assets totaling $91.3 million, realignment charges of $8.9 million, and increased SG&A expenses. 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, and 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 continue to actively monitor a range of macroeconomic and geopolitical uncertainties that have affected, and may continue to affect, our business operations and financial performance. These include volatility in the global economic and trade environment, inflationary cost pressures, supply chain disruptions, foreign currency fluctuations relative to the United States (“U.S.”) dollar, changing interest rates, ongoing international conflicts, and labor shortages. These factors may influence our operational costs, revenue streams, and overall financial stability. As conditions evolve, we are proactively adjusting our business strategies to mitigate potential risks, maintain financial resilience, and ensure sufficient liquidity to support ongoing operations and strategic initiatives. Net Interest Expense Consolidated net interest expense decreased in the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024, due to a decrease in average outstanding borrowings on the revolving line of credit along with lower average interest rates. Income Tax Expense Our effective income tax rate in the second quarter and first half of fiscal 2025 was 117.2% and 38.7%, respectively, as compared to 23.5% and 24.4% in the same periods of fiscal 2024. The change in the effective tax rate was primarily the result of goodwill impairment charges for which no tax benefits were recorded. Infrastructure Segment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ ​ ​ ​ ​ ​ ​ June 28, ​ June 29, ​ Dollar ​ Percent Dollars in thousands 2025 2024 Change Change Utility ​ $ 350,416 ​ $ 332,395 $ 18,021 5.4% Lighting and Transportation ​ ​ 217,985 ​ ​ 234,254 ​ (16,269) (6.9%) Coatings ​ ​ 90,789 ​ ​ 91,574 ​ (785) (0.9%) Telecommunications ​ ​ 82,075 ​ ​ 58,400 ​ 23,675 40.5% Solar ​ ​ 24,260 ​ ​ 46,119 ​ (21,859) (47.4%) Total sales ​ $ 765,525 ​ $ 762,742 ​ $ 2,783 0.4% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ $ 25,914 ​ $ 133,581 ​ $ (107,667) (80.6%) ​ 26 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twenty-six weeks ended ​ ​ ​ ​ ​ ​ ​ June 28, ​ June 29, ​ Dollar ​ Percent Dollars in thousands 2025 2024 Change Change Utility ​ $ 694,681 ​ $ 668,538 $ 26,143 3.9% Lighting and Transportation ​ ​ 410,556 ​ ​ 445,463 ​ (34,907) (7.8%) Coatings ​ ​ 173,146 ​ ​ 178,664 ​ (5,518) (3.1%) Telecommunications ​ ​ 152,014 ​ ​ 112,361 ​ 39,653 35.3% Solar ​ ​ 41,349 ​ ​ 81,330 ​ (39,981) (49.2%) Total sales ​ $ 1,471,746 ​ $ 1,486,356 ​ $ (14,610) (1.0%) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ $ 143,126 ​ $ 251,445 ​ $ (108,319) (43.1%) Infrastructure segment sales increased in the second quarter of fiscal 2025, as compared to the same period of fiscal 2024. This growth was primarily driven by higher sales volumes in the Telecommunications and Utility product lines, which more than offset declines in the Lighting and Transportation (“L&T”) and Solar product lines. Infrastructure segment sales decreased in the first half of fiscal 2025, as compared to the same period of fiscal 2024, as lower volumes in the L&T and Solar product lines offset increased volumes in the Utility and Telecommunications product lines. Regionally, Infrastructure segment sales increased in North America in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024, but declined in international markets during the same periods. Utility product line sales increased in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024, driven by higher volumes and pricing actions that more than offset the impact of lower steel prices. This performance reflects strong demand in the utility market, supported by ongoing investments in energy transition and grid modernization. L&T product line sales declined in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024, primarily due to lower volumes, reflecting softer demand in international markets. A significant contributor was the divestiture of the extractive business in the fourth quarter of fiscal 2024, along with reduced demand in the Australian market for the Access Systems product offering. Additionally, foreign currency translation negatively impacted the first half of fiscal 2025 results by approximately $2.3 million. Coatings product line sales decreased in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024, driven by reduced demand in international markets and an unfavorable foreign currency translation impact of approximately $1.8 million in the first half of fiscal 2025. Telecommunications product line sales increased significantly in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024, supported by our strategic positioning within carrier capital expenditure spending plans. Solar product line sales declined significantly in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024. This decline was largely due to lower volumes, partially resulting from the Company’s strategic decision to exit select regional markets, including North America. Infrastructure segment gross profit decreased in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024, primarily due to lower volumes in the L&T and Solar product lines. Infrastructure segment SG&A expenses increased in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024, driven by higher allowance for credit losses expense, mostly in the Solar product line offering, along with an accrual of approximately $7.0 million for software licenses that are no longer expected to be used. Infrastructure segment operating income decreased in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024. This was primarily due to the impairment of certain long-lived assets totaling $89.4 million, realignment charges of $1.4 million, lower volumes in the L&T and Solar product lines, and increased SG&A expenses. 27 Table of Contents Agriculture Segment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ ​ ​ ​ ​ ​ June 28, ​ June 29, Dollar Percent Dollars in thousands 2025 2024 Change Change North America ​ $ 142,482 ​ $ 161,310 $ (18,828) (11.7%) International ​ ​ 146,938 ​ ​ 120,393 ​ 26,545 22.0% Total sales ​ $ 289,420 ​ $ 281,703 ​ $ 7,717 2.7% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ $ 36,051 ​ $ 39,971 ​ $ (3,920) (9.8%) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twenty-six weeks ended ​ ​ ​ ​ ​ ​ ​ June 28, ​ June 29, ​ Dollar ​ Percent Dollars in thousands 2025 2024 Change Change North America ​ $ 279,958 ​ $ 321,225 $ (41,267) (12.8%) International ​ ​ 276,733 ​ ​ 219,213 ​ 57,520 26.2% Total sales ​ $ 556,691 ​ $ 540,438 ​ $ 16,253 3.0% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ $ 72,288 ​ $ 80,944 ​ $ (8,656) (10.7%) In North America, Agriculture segment sales declined in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024. These decreases were due to a significantly lower volume in storm-related replacement sales, as the first half of 2024 benefited from elevated demand following severe weather events in the Midwestern and Southern U.S. The decline was also impacted by lower irrigation equipment sales volumes, reflecting continued softness in the agriculture market. Contributing factors included lower grain prices, uncertainty surrounding trade policy, and the timing of government funding. In addition, average selling prices for irrigation equipment declined, primarily due to a shift in product mix and increased competitive bidding activity in certain regions. In international markets, Agriculture segment sales increased significantly in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024. This growth was driven by stronger project volumes in the Europe, Middle East, and Africa (“EMEA”) region, along with higher volumes in Brazil, where a stabilizing market environment supported improved performance. These gains were partially offset by unfavorable foreign currency translation impacts of approximately $3.7 million in the second quarter of fiscal 2025 and $10.8 million in the first half of fiscal 2025. Sales of Technology Products and Services decreased in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024, primarily due to lower hardware sales volumes. Our Agriculture business remains cyclical and is influenced by a range of factors, including net farm income, commodity prices, weather volatility, geopolitical events, and farmer sentiment regarding future economic conditions. We actively monitor these variables, including U.S. net farm income estimates published by the U.S. Department of Agriculture. In Brazil, w e track fluctuations in grain prices and projected farm input costs to assess grower sentiment. Looking ahead, Irrigation Equipment and Parts sales in North America are expected to remain muted for the remainder of fiscal 2025. However, we remain focused on navigating evolving market conditions and positioning the Agriculture business for long-term growth across both domestic and international markets. Agriculture segment gross profit increased in the second quarter of fiscal 2025 but declined in the first half of fiscal 2025, as compared to the same periods of fiscal 2024. The second quarter increase was primarily attributable to higher volumes in the EMEA region, partially offset by lower volumes and average selling prices in North America. The first half decline was driven by lower average selling prices and volumes in North America, which more than offset international gains. Agriculture segment SG&A increased in the second quarter of fiscal 2025 and decreased in the first half of fiscal 2025, as compared to the same periods of fiscal 2024. The second quarter increase was primarily due to higher allowance for credit losses expense, partially offset by lower compensation costs. The first half decline was driven by lower compensation and incentive costs, partially offset by an increase in allowance for credit losses expense. Agriculture segment operating income declined in both the second quarter and first half of fiscal 2025, as compared to the same periods of fiscal 2024. The declines were primarily due to realignment charges of $2.9 million, one-time charges related to the agriculture solar business totaling $5.9 million, and lower sales volumes in North America. 28 Table of Contents In the second quarter and first half of fiscal 2025, operating income in the Agriculture segment in Brazil was negatively impacted by $1.4 million and $3.8 million, respectively, primarily due to an increase in reserves related to an unfavorable court ruling involving a former dealer. The Company has appealed the decision and intends to vigorously contest all allegations. Management cannot reasonably estimate the timing of a potential settlement, the amount of a potential settlement, or litigation costs associated with this matter. While we maintain reserves for liabilities that are reasonably estimable, these reserves may prove insufficient to cover the final judgment. As a result, this uncertainty could adversely affect SG&A expenses by up to an additional $20.0 million within the Agriculture segment. Corporate Corporate SG&A expenses increased in the second quarter of fiscal 2025, as compared to the same period of fiscal 2024, primarily due to higher incentive costs and the 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).” Corporate SG&A expenses decreased slightly in the first half of fiscal 2025, as compared to the same period of fiscal 2024. This decline was primarily driven by lower professional fees, partially offset by higher compensation, insurance, and technology-related costs. In addition, both the second quarter and first half of fiscal 2025 included realignment charges totaling $4.6 million. 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. 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 $2.1 billion, 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 June 28, 2025, we had approximately $666.0 million of remaining capacity under the share repurchase program. Since the program’s inception in May 2014, we have repurchased approximately 8.6 million shares for a total of $1.4 billion. 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 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 June 28, 2025 and December 28, 2024, our accounts payable in the Condensed Consolidated Balance Sheets included $55.1 million and $45.6 million, respectively, related to the obligations under this program. 29 Table of Contents Sources of Financing As of June 28, 2025, our available debt financing primarily included senior unsecured notes and a revolving credit facility. Senior Unsecured Notes As of June 28, 2025, our senior unsecured notes consisted of: ● $450.0 million face value ($434.3 million carrying value) notes at an interest rate of 5.00% per annum, maturing in October 2044. ● $305.0 million face value ($295.5 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 Subsequent to the second quarter of fiscal 2025, the Company renewed the revolving credit facility, extending the maturity date to July 2030. As a part of the renewal, the facility maintained $800.0 million of committed capacity and the same pricing, but the uncommitted accordion feature available under the facility increased from $300.0 million to $400.0 million; the 10-basis-point SOFR adjustment was eliminated from the interest rate calculation; and the commitment fee on the average daily unused portion was reduced and now ranges from 9 to 20 basis points, based on our credit rating. Prior to the renewal, as of June 28, 2025, our revolving credit facility, managed by JPMorgan Chase Bank, N.A., as Administrative Agent, had a maturity date of October 18, 2026. The facility provided 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 have been added to the facility, subject to lender commitments. Authorized borrowers included the Company and its wholly owned subsidiaries, Valmont Industries Holland B.V. and Valmont Group Pty. Ltd. Obligations under this facility were guaranteed by the Company and its wholly owned subsidiaries, Valmont Telecommunications, Inc., Valmont Coatings, Inc., Valmont Newmark, Inc., and Valmont Queensland Pty. Ltd. The interest rate on our borrowings was, 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 was applied to the average daily unused portion of the facility, ranging from 10 to 25 basis points, based on our credit rating. As of June 28, 2025 and December 28, 2024, we had no outstanding borrowings under this facility. The facility included a financial covenant that may limit additional borrowing. As of June 28, 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. 30 Table of Contents Additionally, we maintain short‑term bank lines of credit totaling $30.8 million, all of which were unused as of June 28, 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 June 28, 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 agreement 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 June 28, 2025, we held $208.5 million in cash, including $146.9 million in non-U.S. subsidiaries. Distributions of this foreign cash would incur tax liabilities. As of June 28, 2025, we had liabilities of $1.1 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 twenty-six weeks ended June 28, 2025 and June 29, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ Twenty-six weeks ended ​ ​ June 28, ​ June 29, Dollars in thousands 2025 2024 Net cash flows from operating activities ​ $ 232,739 ​ $ 154,143 Net cash flows from investing activities ​ (64,319) ​ (36,504) Net cash flows from financing activities ​ (131,223) ​ (150,875) Operating Cash Flows and Working Capital – Cash provided by operating activities totaled $232.7 million in the first half of fiscal 2025, as compared to $154.1 million in the same period of fiscal 2024. The increase in operating cash flows was primarily the result of favorable changes in the timing of customer receipts, a reduction in required pension contributions, and a decrease in interest payments. This was partially offset by a $14.4 million increase in tax payments for the first half of fiscal 2025 compared to the first half of fiscal 2024. Cash flows for the first half of fiscal 2025 and the first half of fiscal 2024 were also impacted by severance payments totaling $1.0 million and $10.6 million, respectively, related to organizational realignment programs. 31 Table of Contents Investing Cash Flows – Cash used in investing activities totaled $64.3 million in the first half of fiscal 2025, as compared to $36.5 million in the same period of fiscal 2024. Investing activities in the first half of fiscal 2025 primarily included capital spending of $62.3 million. Investing activities in the first half of fiscal 2024 primarily included capital spending of $33.3 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 $131.2 million in the first half of fiscal 2025, as compared to $150.9 million in the same period of fiscal 2024. Our total interest-bearing debt was $755.9 million as of June 28, 2025 and $757.9 million as of December 28, 2024. Financing activities in the first half of fiscal 2025 primarily consisted of borrowings on the revolving credit facility and short-term notes of $132.8 million offset by principal payments on our long-term debt and short-term borrowings of $134.9 million, dividends paid of $25.7 million, the purchase of treasury shares of $100.0 million, and the net activity from stock option and incentive plans, including the associated withholding payments, of $3.8 million. Financing activities in the first half of fiscal 2024 primarily consisted of borrowings on the revolving credit facility and short-term notes of $21.1 million, offset by principal repayments on our long-term debt and short-term borrowings of $112.7 million, dividends paid of $24.2 million, the purchase of treasury shares of $14.9 million, the purchase of redeemable noncontrolling interests of $17.7 million, and the net activity from stock option and incentive plans, including the associated withholding payments, of $4.4 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. The combined financial information for the thirteen and twenty-six weeks ended June 28, 2025 and June 29, 2024 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen weeks ended ​ Twenty-six weeks ended ​ ​ June 28, ​ June 29, ​ June 28, ​ June 29, Dollars in thousands 2025 ​ 2024 ​ 2025 ​ 2024 Net sales ​ $ 725,881 ​ $ 701,017 ​ $ 1,402,572 ​ $ 1,383,179 Gross profit ​ 220,733 ​ 214,564 ​ 419,878 ​ 424,204 Operating income ​ 70,364 ​ 101,506 ​ 163,359 ​ 194,084 Net earnings attributable to Valmont Industries, Inc. ​ 45,600 ​ 61,753 ​ 105,586 ​ 121,222 The combined financial information as of June 28, 2025 and December 28, 2024 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ June 28, ​ December 28, Dollars in thousands ​ 2025 2024 Current assets ​ $ 842,324 ​ $ 805,713 Non-current assets ​ 802,574 ​ 835,197 Current liabilities ​ 450,810 ​ 470,652 Non-current liabilities ​ 1,136,640 ​ 1,091,773 As of June 28, 2025 and December 28, 2024, non-current assets included a receivable from non-guarantor subsidiaries of $56,886 and $90,938, respectively. As of June 28, 2025 and December 28, 2024, non-current liabilities included a payable to non-guarantor subsidiaries of $281,343 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) 32 Table of Contents 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 June 28, 2025 was as follows: ​ ​ ​ ​ ​ Four fiscal quarters ended ​ ​ June 28, Dollars in thousands ​ 2025 Net cash flows from operating activities ​ $ 651,274 Interest expense ​ 47,313 Income tax expense ​ 110,002 Impairment of long-lived assets ​ ​ (91,337) Deferred income taxes ​ 27,661 Redeemable noncontrolling interests ​ (455) Net periodic pension cost ​ (852) Contribution to defined benefit pension plan ​ 3,082 Changes in assets and liabilities ​ (211,143) Other ​ (12,480) Impairment of long-lived assets ​ ​ 91,337 Realignment charges ​ ​ 9,794 Other non-recurring charges ​ ​ 3,918 Pro forma divestitures adjustment ​ ​ (761) Adjusted EBITDA ​ $ 627,353 ​ ​ ​ ​ ​ ​ ​ Four fiscal quarters ended ​ ​ June 28, Dollars in thousands ​ 2025 Net earnings attributable to Valmont Industries, Inc. ​ $ 243,962 Interest expense ​ 47,313 Income tax expense ​ 110,002 Depreciation and amortization ​ 92,650 Stock-based compensation ​ 29,138 Impairment of long-lived assets ​ ​ 91,337 Realignment charges ​ ​ 9,794 Other non-recurring charges ​ ​ 3,918 Pro forma divestitures adjustment ​ ​ (761) Adjusted EBITDA ​ $ 627,353 The calculation of the leverage ratio as of June 28, 2025 was as follows: ​ ​ ​ ​ ​ June 28, Dollars in thousands ​ 2025 Interest-bearing debt, excluding origination fees and discounts of $25,256 ​ $ 755,918 Less: Cash and cash equivalents in excess of $50,000 ​ 158,533 Net indebtedness ​ $ 597,385 Adjusted EBITDA ​ 627,353 Leverage ratio ​ 0.95 33 Table of Contents FINANCIAL OBLIGATIONS AND COMMITMENTS There were no material changes in the Company’s financial obligations and commitments during the twenty-six weeks ended June 28, 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 twenty-six weeks ended June 28, 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 twenty-six weeks ended June 28, 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.