VALMONT INDUSTRIES INC

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

In the first quarter of fiscal 2023, selling, general, and administrative expenses (“SG&A”) in the Agriculture segment included amortization of identified intangible assets of $1.6 million and stock-based compensation expense of $2.0 million from the Prospera subsidiary acquired in fiscal 2021. Prospera intangible asset amortization and stock-based compensation expense was $0.1 million and $0.8 million, respectively, for the first quarter of fiscal 2024.

Current wording

In the second quarter and first half of fiscal 2023, SG&A in the Agriculture segment included amortization of identified intangible assets of $1.6 million and $3.3 million, respectively, and stock-based compensation expense of $2.3 million and $4.3 million, respectively, from the Prospera subsidiary acquired in fiscal 2021. Prospera intangible asset amortization was $0.1 million and $0.2 million, respectively, and stock-based compensation expense was $1.3 million and $2.1 million, respectively, for the second quarter and first half of fiscal 2024.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Our effective income tax rate in the first quarter of fiscal 2024 was 25.3% as compared to 30.3% in the same period of fiscal 2023. The change in the effective tax rate was primarily the result of changes in the geographic mix of earnings.

Current wording

Our effective income tax rate in the second quarter and first half of fiscal 2024 was 23.5% and 24.4%, respectively, as compared to 26.4% and 28.2% in the same periods of fiscal 2023. The change in the effective tax rate was primarily the result of the reduction of a valuation allowance on a tax loss carryforward in a foreign subsidiary totaling approximately $3.0 million in addition to a change in the mix of foreign earnings.

Previous wording

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

Current wording

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

Previous wording

Coatings sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to decreased volumes partially offset by slightly increased average selling prices. The decrease was also impacted by unfavorable currency translation effects totaling approximately $1.0 million.

Current wording

Coatings sales increased slightly in the second quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to increased average selling prices more than offsetting decreased sales volumes. Coatings sales decreased slightly in the first half of fiscal 2024, as compared to the same period of fiscal 2023, due to lower sales volumes more than offsetting increased average selling prices. The decrease was also impacted by unfavorable currency translation effects totaling approximately $1.6 million.

Previous wording

Infrastructure gross profit and gross profit margin increased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to a favorable product mix contributing to increased average selling prices and deliberate actions to improve overall costs of goods sold. These items, partially offset by decreased sales volumes primarily in the Telecommunications product line, resulted in an overall increase in the amount of gross profit.

Current wording

Infrastructure gross profit and gross profit margin increased in the second quarter and first half of fiscal 2024, as compared to the same periods of fiscal 2023, due to commercial and pricing strategies contributing to increased average selling prices along with lower overall costs of goods sold from declining steel costs. These items, partially offset by decreased sales volumes primarily in the Telecommunications product line, resulted in an overall increase in the amount of gross profit.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Agriculture segment sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, primarily due to decreased sales volumes and slightly lower average selling prices of irrigation equipment. In North America, the decrease in Agriculture sales for the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, was impacted by growers’ decisions to delay capital investments due to general economic uncertainty and a number of macroeconomic factors including higher interest rates and continued inflationary pressures. The first quarter of fiscal 2023 also comparatively benefited from the ongoing delivery of elevated backlog. International sales decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023, due to decreased project sales in the Europe, Middle East, and Africa region and decreased sales in Brazil due to muted farmer sentiment attributed to lower agricultural commodity prices, partially offset by incremental sales from the HR Products acquisition totaling $10.1 million. Sales of Technology Products and Services decreased in the first quarter of fiscal 2024, as compared to the same period of fiscal 2023.

Current wording

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

Previous wording

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 annually by the U.S. Department of Agriculture. In Brazil, we also actively track changes in soybean and other crop prices and projected farm input costs to evaluate grower sentiment.

Current wording

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 annually by the U.S. Department of Agriculture. In Brazil, we 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.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

We intend to manage our capital structure to maintain our investment-grade debt rating. Our most recent ratings were Baa3 (stable outlook) by Moody’s Investors Service, Inc., BBB- (stable outlook) by Fitch Ratings, Inc., and BBB+ (stable outlook) by S&P Global Ratings. We expect to maintain a ratio of debt to invested capital which will support our current investment-grade debt rating.

Current wording

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.

Previous wording

In May 2014, the Board of Directors authorized the purchase of up to $500.0 million of the Company’s outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately negotiated transactions. The Board of Directors authorized an additional $250.0 million of share purchases in February 2015 and again in October 2018, and authorized an additional $400.0 million of share repurchases in February 2023. 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 March 30, 2024, we have acquired approximately 8.0 million shares for approximately $1,263.9 million under this share repurchase program.

Current wording

In May 2014, the Board of Directors authorized the purchase of up to $500.0 million of the Company’s outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately negotiated transactions, 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 June 29, 2024, we have acquired approximately 8.1 million shares for approximately $1,278.8 million under this share repurchase program.

Previous wording

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

Current wording

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

Previous wording

As of March 30, 2024 and December 30, 2023, we had outstanding borrowings of $377.5 million and $377.9 million, respectively, under the revolving credit facility. The revolving credit facility has a maturity date of October 18, 2026 and contains a financial covenant that may limit our additional borrowing capability under the agreement. As of March 30, 2024, we had the ability to borrow $422.3 million under this facility, after consideration of standby letters of credit of $0.2 million associated with certain insurance obligations. We also maintain certain short‑term bank lines of credit totaling $38.9 million, $36.9 million of which were unused as of March 30, 2024.

Current wording

As of June 29, 2024 and December 30, 2023, we had outstanding borrowings of $287.4 million and $377.9 million, respectively, under the revolving credit facility. The revolving credit facility contains a financial covenant that may limit our additional borrowing capability under the agreement. As of June 29, 2024, we had the ability to borrow $512.4 million under this facility, after consideration of standby letters of credit of $0.2 million associated with certain insurance obligations. We also maintain certain short‑term bank lines of credit totaling $38.1 million, $36.2 million of which were unused as of June 29, 2024.

Previous wording

Our senior unsecured notes and revolving credit agreement each contain cross-default provisions which permit the acceleration of our indebtedness to them if we default on other indebtedness that results in, or permits, the acceleration of such other indebtedness.

Current wording

Our senior unsecured notes and revolving credit facility each contain cross-default provisions which permit the acceleration of our indebtedness to them if we default on other indebtedness that results in, or permits, the acceleration of such other indebtedness.

Previous wording

The revolving credit agreement also contains customary affirmative and negative covenants or credit facilities of this type, including, among others, limitations on us and our subsidiaries with respect to indebtedness, liens, mergers and acquisitions, investments, dispositions of assets, restricted payments, transactions with affiliates, and prepayments of indebtedness. The revolving credit agreement also provides for the acceleration of the obligations thereunder and the exercise of other enforcement remedies upon the occurrence of customary events of default (subject to customary grace periods, as applicable).

Current wording

The revolving credit agreement also contains customary affirmative and negative covenants or credit facilities of this type, including, among others, limitations on us and our subsidiaries with respect to indebtedness, liens, mergers and acquisitions, investments, dispositions of assets, restricted payments, transactions with affiliates, and prepayments of indebtedness. The revolving credit agreement also provides for the acceleration of the obligations thereunder and the exercise

Previous wording

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

Current wording

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

Previous wording

We had cash balances of $169.2 million as of March 30, 2024 with approximately $134.8 million held in our non-U.S. subsidiaries. If we distributed our foreign cash balances, certain taxes would be applicable. As of March 30, 2024, we had a liability for foreign withholding taxes and U.S. state income taxes of $1.8 million and $0.8 million, respectively.

Current wording

We had cash balances of $163.1 million as of June 29, 2024 with approximately $141.7 million held in our non-U.S. subsidiaries. If we distributed our foreign cash balances, certain taxes would be applicable. As of June 29, 2024, we had a liability for foreign withholding taxes and U.S. state income taxes of $1.6 million and $0.7 million, respectively.

Previous wording

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

Current wording

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

Previous wording

Operating Cash Flows and Working Capital– Cash provided by operating activities totaled $23.3 million in the first quarter of fiscal 2024, as compared to $21.2 million in the same period of fiscal 2023. The change in operating cash flows was primarily the result of the increase in net earnings, partially offset by payments of severance and other employee benefit costs related to the Realignment Program totaling $9.8 million in the first quarter of fiscal 2024.

Current wording

Operating Cash Flows and Working Capital– Cash provided by operating activities totaled $154.1 million in the first half of fiscal 2024, as compared to $109.5 million in the same period of fiscal 2023. The change in operating cash flows was primarily the result of the increase in net earnings as well as the favorable impact of lower steel prices on our working capital. This was partially offset by payments of severance and other employee benefit costs related to the Realignment Program totaling $10.6 million and a reduction of our sold trade accounts receivable balance totaling $40.0 million in the first half of fiscal 2024.

Previous wording

Investing Cash Flows– Cash used in investing activities totaled $18.6 million in the first quarter of fiscal 2024, as compared to $21.8 million in the same period of fiscal 2023. Investing activities in the first quarter of fiscal 2024 primarily included capital spending of $15.0 million. Investing activities in the first quarter of fiscal 2023 primarily included capital spending of $22.4 million. We expect our capital expenditures to be in the range of $110.0 million to $125.0 million for fiscal 2024.

Current wording

Investing Cash Flows– Cash used in investing activities totaled $36.5 million in the first half of fiscal 2024, as compared to $34.0 million in the same period of fiscal 2023. Investing activities in the first half of fiscal 2024 primarily included capital spending of $33.3 million. Investing activities in the first half of fiscal 2023 primarily included capital spending of $45.4 million, partially offset by proceeds from a divestiture of $6.4 million and proceeds from property damage insurance claims of $4.8 million. We expect our capital expenditures to be in the range of $95.0 million to $110.0 million for fiscal 2024.

Previous wording

Financing Cash Flows– Cash used in financing activities totaled $34.8 million in the first quarter of fiscal 2024, as compared to $13.0 million in the same period of fiscal 2023. Our total interest-bearing debt was $1,136.4 million as of March 30, 2024 and $1,138.1 million as of December 30, 2023. Financing activities in the first quarter of fiscal 2024 primarily consisted of borrowings on the revolving credit agreement and short-term notes of $4.0 million offset by principal payments on our long-term debt and short-term borrowings of $5.3 million, dividends paid of $12.1 million, the purchase of redeemable noncontrolling interests of $17.7 million, and the net activity from stock option and incentive plans of $5.7 million. Financing activities in the first quarter of fiscal 2023 primarily consisted of borrowings on the revolving credit agreement and short-term notes of $136.1 million offset by principal payments on our long-term debt and short-term borrowings of $16.6 million, dividends paid of $11.7 million, the purchase of treasury shares of $111.1 million, and the net activity from stock option and incentive plans of $9.0 million.

Current wording

Financing Cash Flows– Cash used in financing activities totaled $150.9 million in the first half of fiscal 2024, as compared to $94.2 million in the same period of fiscal 2023. Our total interest-bearing debt was $1,046.0 million as of June 29, 2024 and $1,138.1 million as of December 30, 2023. Financing activities in the first half of fiscal 2024 primarily consisted of borrowings on the revolving credit agreement and short-term notes of $21.1 million offset by principal payments on our long-term debt and short-term borrowings of $112.7 million, dividends paid of $24.2 million, the purchase of treasury shares of $14.9 million, the purchase of redeemable noncontrolling interests of $17.7 million, and the net activity from stock option and incentive plans of $4.4 million. Financing activities in the first half of fiscal 2023 primarily consisted of borrowings on the revolving credit agreement and short-term notes of $179.9 million offset by principal payments on our

Previous wording

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

Current wording

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

Previous wording

Included in non-current assets is a due from non-guarantor subsidiaries receivable of $110,747 and $136,904 as of March 30, 2024 and December 30, 2023, respectively. Included in non-current liabilities is a due to non-guarantor subsidiaries payable of $221,387 and $216,633 as of March 30, 2024 and December 30, 2023, respectively.

Current wording

Included in non-current assets is a due from non-guarantor subsidiaries receivable of $104,757 and $136,904 as of June 29, 2024 and December 30, 2023, respectively. Included in non-current liabilities is a due to non-guarantor subsidiaries payable of $238,144 and $216,633 as of June 29, 2024 and December 30, 2023, respectively.

Previous wording

*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-

Current wording

*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.

Previous wording

There were no material changes in the Company’s financial obligations and commitments during the thirteen weeks ended March 30, 2024. For additional information on the Company’s financial obligations and commitments, refer to the “Cash Uses” section in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

Current wording

There were no material changes in the Company’s financial obligations and commitments during the twenty-six weeks ended June 29, 2024. For additional information on the Company’s financial obligations and commitments, refer to the “Cash Uses” section in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

Previous wording

There were no material changes in the Company’s critical accounting estimates during the thirteen weeks ended March 30, 2024. For additional information on the Company’s critical accounting policies, refer to the “Critical Accounting Policies” section in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

Current wording

There were no material changes in the Company’s critical accounting estimates during the twenty-six weeks ended June 29, 2024. For additional information on the Company’s critical accounting policies, refer to the “Critical Accounting Policies” section in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.