SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x~~QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES~~

~~EXCHANGE ACT OF 1934~~

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~

April 1, 2023

o~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES~~

~~EXCHANGE ACT OF 1934~~

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to

Commission file number 1-31429

Valmont Industries, Inc.

(Exact name of registrant as specified in its charter)

Delaware	47-0351813

~~Delaware~~ (State or Other Jurisdiction of Incorporation or Organization)	~~47-0351813~~ (I.R.S. Employer Identification No.)
~~One~~ 15000 Valmont Plaza,
Omaha,Nebraska	68154
(Address of Principal Executive Offices)	~~68154-5215~~ (Zip Code)

~~(402)~~

(402) 963-1000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

~~________________________~~

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock $1.00 par value		VMI		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No o

☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x☒ No o

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” ~~and~~ “smaller reporting ~~company”~~company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filerx	☒	Accelerated filer o	☐	Non‑accelerated filero	☐	Smaller reporting company o	☐
Emerging growth company o	~~(Do not check if a~~ ~~smaller reporting company)~~ ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x

~~22,607,680~~

☒

21,056,220

Outstanding shares of common stock asat April 20, 2023

Table of ~~October 23, 2017~~Contents

VALMONT INDUSTRIES, INC.

INDEX TO FORM 10-Q

		Page No.
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):
	Condensed Consolidated Statements of Earnings for the thirteen weeks ended April 1, 2023 and March 26, 2022	3
	Condensed Consolidated Statements of Comprehensive Income for the thirteen weeks ended April 1, 2023 and March 26, 2022	4
	Condensed Consolidated Balance Sheets as of April 1, 2023 and December 31, 2022	5
	Condensed Consolidated Statements of Cash Flows for the thirteen weeks ended April 1, 2023 and March 26, 2022	6
	Condensed Consolidated Statements of Shareholders’ Equity for the thirteen weeks ended April 1, 2023 and March 26, 2022	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36

	PART II. OTHER INFORMATION
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 5.	Other Information	38
Item 6.	Exhibits	39
Signatures		40

Page No.
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements (unaudited):

Condensed Consolidated Statements of Earnings for the thirteen and thirty-nine weeks

ended September 30, 2017 and September 24, 2016
3

Condensed Consolidated Statements of Comprehensive Income for the thirteen

and thirty-nine weeks ended September 30, 2017 and September 24, 2016
4
Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31,
2016
5
Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended
September 30, 2017 and September 24, 2016
6
Condensed Consolidated Statements of Shareholders' Equity for the thirty-nine
weeks ended September 30, 2017 and September 24, 2016
7
Notes to Condensed Consolidated Financial Statements
8
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
31
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
40
Item 4.
Controls and Procedures
40

PART II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
41
Item 6.
Exhibits
41
Signatures
42

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per share amounts)

(Unaudited)

Thirteen Weeks Ended Thirty-nine Weeks Ended
September 30,
2017 September 24,
2016 September 30,
2017 September 24,
2016
Product sales $ 602,080
$ 544,828
$ 1,807,539
$ 1,648,530
Services sales 78,699
65,419
223,450
198,571
Net sales 680,779
610,247
2,030,989
1,847,101
Product cost of sales 462,854
409,003
1,366,875
1,220,567
Services cost of sales 54,331
46,221
152,635
135,425
Total cost of sales 517,185
455,224
1,519,510
1,355,992
Gross profit 163,594

155,023

511,479

491,109
Selling, general and administrative expenses 103,671
101,783
308,764
303,698
Operating income 59,923
53,240
202,715
187,411
Other income (expenses):
Interest expense (11,190 ) (11,100 ) (33,312 ) (33,276 )
Interest income 1,311
771
3,205
2,289
Other 517
878
1,684
452
(9,362 ) (9,451 ) (28,423 ) (30,535 )
Earnings before income taxes 50,561
43,789
174,292
156,876
Income tax expense:
Current 21,163
18,017
50,264
51,276
Deferred (7,268 ) (3,749 ) 79
(1,534 )
13,895
14,268
50,343
49,742
Net earnings 36,666
29,521
123,949
107,134
Less: Earnings attributable to noncontrolling interests (1,458 ) (1,348 ) (4,098 ) (3,966 )
Net earnings attributable to Valmont Industries, Inc. $ 35,208
$ 28,173
119,851
103,168
Earnings per share:
Basic $ 1.56
$ 1.25
$ 5.33
$ 4.56
Diluted $ 1.55
$ 1.24
$ 5.28
$ 4.54
Cash dividends declared per share $ 0.375
$ 0.375
$ 1.125
$ 1.125
Weighted average number of shares of common stock outstanding - Basic (000 omitted) 22,527
22,505
22,505
22,602
Weighted average number of shares of common stock outstanding - Diluted (000 omitted) 22,751
22,659
22,717
22,741


	Thirteen weeks ended
	April 1,		March 26,
	2023		2022
Product sales	$	958,008	$	890,870
Services sales		104,473		89,950
Net sales		1,062,481		980,820
Product cost of sales		681,790		673,170
Services cost of sales		72,106		58,464
Total cost of sales		753,896		731,634
Gross profit		308,585		249,186
Selling, general, and administrative expenses		190,119		154,344
Operating income		118,466		94,842
Other income (expenses):
Interest expense		(13,105)		(11,263)
Interest income		830		227
Gain (loss) on investments - unrealized		1,194		(1,063)
Other		(2,376)		3,642
		(13,457)		(8,457)
Earnings before income taxes		105,009		86,385
Income tax expense:
Current		24,356		22,413
Deferred		7,487		708
		31,843		23,121
Earnings before equity in loss of nonconsolidated subsidiaries		73,166		63,264
Equity in loss of nonconsolidated subsidiaries		(821)		(358)
Net earnings		72,345		62,906
Less: Loss (earnings) attributable to noncontrolling interests		2,195		(595)
Net earnings attributable to Valmont Industries, Inc.	$	74,540	$	62,311
Earnings per share:
Basic	$	3.50	$	2.93
Diluted	$	3.47	$	2.90

See accompanying notes to condensed consolidated financial statements.

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

Thirteen Weeks Ended Thirty-nine Weeks Ended
September 30,
2017 September 24,
2016 September 30,
2017 September 24,
2016
Net earnings $ 36,666
$ 29,521
$ 123,949
$ 107,134
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized translation gain (loss) 19,530
770
60,471
(1,938 )
Gain/(loss) on hedging activities:
Net investment hedge (740 ) 1,972
(1,816 ) 4,897
Amortization cost included in interest expense 19
18
56
56
Other comprehensive income (loss) 18,809
2,760
58,711
3,015
Comprehensive income 55,475
32,281
182,660
110,149
Comprehensive loss (income) attributable to noncontrolling interests (2,570 ) (1,618 ) (4,552 ) (5,732 )
Comprehensive income attributable to Valmont Industries, Inc. $ 52,905
$ 30,663
$ 178,108
$ 104,417


	Thirteen weeks ended
	April 1,		March 26,
	2023		2022
Net earnings	$	72,345	$	62,906
Other comprehensive income, net of tax:
Foreign currency translation adjustments:
Unrealized translation gains		8,189		11,062
Hedging activities:
Unrealized gain (loss) on commodity hedges		(1,476)		20,560
Realized (gain) loss on commodity hedges recorded in earnings		2,872		(2,043)
Unrealized gain (loss) on cross currency swaps		(591)		1,811
Amortization cost included in interest expense		(16)		(16)
		789		20,312
Net gain on defined benefit pension plan		91		686
Other comprehensive income		9,069		32,060
Comprehensive income		81,414		94,966
Comprehensive (income) loss attributable to noncontrolling interests		1,902		(1,688)
Comprehensive income attributable to Valmont Industries, Inc.	$	83,316	$	93,278

See accompanying notes to condensed consolidated financial statements.

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

September 30,
2017 December 31,
2016
ASSETS
Current assets:
Cash and cash equivalents $ 493,490
$ 399,948
Receivables, net 492,842
439,342
Inventories 403,234
350,028
Prepaid expenses, restricted cash, and other assets 50,064
57,297
Refundable income taxes 8,493
6,601
Total current assets 1,448,123
1,253,216
Property, plant and equipment, at cost 1,169,854
1,105,736
Less accumulated depreciation and amortization 647,430
587,401
Net property, plant and equipment 522,424
518,335
Goodwill 336,754
321,110
Other intangible assets, net 142,090
144,378
Other assets 160,780
154,692
Total assets $ 2,610,171
$ 2,391,731

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt $ 949
$ 851
Notes payable to banks 197
746
Accounts payable 216,104
177,488
Accrued employee compensation and benefits 81,494
72,404
Accrued expenses 106,238
89,914
Dividends payable 8,478
8,445
Total current liabilities 413,460
349,848
Deferred income taxes 28,183
35,803
Long-term debt, excluding current installments 754,202
754,795
Defined benefit pension liability 199,562
209,470
Deferred compensation 48,612
44,319
Other noncurrent liabilities 13,557
14,910
Shareholders’ equity:
Preferred stock of $1 par value -
Authorized 500,000 shares; none issued —
—
Common stock of $1 par value -
Authorized 75,000,000 shares; 27,900,000 issued 27,900
27,900
Retained earnings 1,974,601
1,874,722
Accumulated other comprehensive loss (288,102 ) (346,359 )
Treasury stock (601,565 ) (612,781 )
Total Valmont Industries, Inc. shareholders’ equity 1,112,834
943,482
Noncontrolling interest in consolidated subsidiaries 39,761
39,104
Total shareholders’ equity 1,152,595
982,586
Total liabilities and shareholders’ equity $ 2,610,171
$ 2,391,731


	April 1,		December 31,
	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	172,948	$	185,406
Receivables, net		650,041		604,181
Inventories		725,360		728,762
Contract assets		159,785		174,539
Prepaid expenses and other assets		107,365		87,697
Total current assets		1,815,499		1,780,585
Property, plant, and equipment, at cost		1,448,466		1,433,151
Less accumulated depreciation and amortization		849,618		837,573
Net property, plant, and equipment		598,848		595,578
Goodwill		741,735		739,861
Other intangible assets, net		172,300		176,615
Defined pension benefit asset		41,744		24,216
Other assets		234,366		240,141
Total assets	$	3,604,492	$	3,556,996

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt	$	1,165	$	1,194
Notes payable to banks		11,436		5,846
Accounts payable		368,576		360,312
Accrued employee compensation and benefits		80,362		124,355
Contract liabilities		156,333		172,915
Other accrued expenses		130,750		123,965
Income taxes payable		20,093		3,664
Dividends payable		12,634		11,742
Total current liabilities		781,349		803,993
Deferred income taxes		45,422		41,091
Long-term debt, excluding current installments		985,636		870,935
Operating lease liabilities		151,219		155,469
Deferred compensation		33,885		30,316
Other noncurrent liabilities		8,581		13,480
Shareholders’ equity:
Common stock of $1 par value -
Authorized 75,000,000 shares; 27,900,000 issued		27,900		27,900
Retained earnings		2,635,628		2,593,039
Accumulated other comprehensive loss		(266,133)		(274,909)
Treasury stock		(857,296)		(765,183)
Total Valmont Industries, Inc. shareholders’ equity		1,540,099		1,580,847
Noncontrolling interest in consolidated subsidiaries		58,301		60,865
Total shareholders’ equity		1,598,400		1,641,712
Total liabilities and shareholders’ equity	$	3,604,492	$	3,556,996

See accompanying notes to condensed consolidated financial statements.

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

Thirty-nine Weeks Ended
September 30,
2017 September 24,
2016
Cash flows from operating activities:
Net earnings $ 123,949
$ 107,134
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization 63,500
61,242
Noncash loss on trading securities 395
973
Impairment of assets - restructuring activities —
618
Stock-based compensation 7,300
6,572
Change in fair value of contingent consideration —
(3,527 )
Defined benefit pension plan expense 481
1,486
Contribution to defined benefit pension plan (26,064 ) (712 )
Change in restricted cash - pension plan trust 12,568
(13,652 )
(Gain)/loss on sale of property, plant and equipment (732 ) 250
Deferred income taxes 79
(1,534 )
Changes in assets and liabilities:
Receivables (39,584 ) 16,436
Inventories (41,545 ) (34,413 )
Prepaid expenses and other assets (11,636 ) (10,624 )
Accounts payable 28,895
(11,338 )
Accrued expenses 20,157
3,272
Other noncurrent liabilities (1,627 ) 240
Income taxes refundable (1,732 ) 4,831
Net cash flows from operating activities 134,404
127,254
Cash flows from investing activities:
Purchase of property, plant and equipment (39,898 ) (42,233 )
Proceeds from sale of assets 1,575
3,938
Acquisitions, net of cash acquired (5,362 ) —
Proceeds from settlement of net investment hedge 5,123
—
Other, net (3,462 ) (2,824 )
Net cash flows from investing activities (42,024 ) (41,119 )
Cash flows from financing activities:
Net borrowings under short-term agreements (549 ) (128 )
Principal payments on long-term borrowings (658 ) (1,563 )
Dividends paid (25,386 ) (25,604 )
Dividends to noncontrolling interest (3,895 ) (2,527 )
Purchase of noncontrolling interest —
(11,009 )
Purchase of treasury shares —
(46,581 )
Proceeds from exercises under stock plans 12,446
6,509
Purchase of common treasury shares—stock plan exercises (3,929 ) (1,453 )
Net cash flows from financing activities (21,971 ) (82,356 )
Effect of exchange rate changes on cash and cash equivalents 23,133
(3,478 )
Net change in cash and cash equivalents 93,542
301
Cash and cash equivalents—beginning of year 399,948
349,074
Cash and cash equivalents—end of period $ 493,490
$ 349,375


	Thirteen weeks ended
	April 1,		March 26,
	2023		2022
Cash flows from operating activities:
Net earnings	$	72,345	$	62,906
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		24,558		23,884
Contribution to defined benefit pension plan		(15,259)		—
Stock-based compensation		8,689		9,463
Defined benefit pension plan expense (benefit)		61		(2,705)
Loss on sale of property, plant, and equipment		51		4
Equity in loss in nonconsolidated subsidiaries		821		358
Deferred income taxes		7,487		708
Changes in assets and liabilities:
Receivables		(42,175)		(36,643)
Inventories		9,052		(68,236)
Prepaid expenses and other assets (current and non-current)		(25,153)		(4,452)
Contract assets		14,695		(19,486)
Accounts payable		4,127		49,006
Accrued expenses		(36,551)		(34,186)
Contract liabilities		(22,559)		4,308
Other noncurrent liabilities		5,652		14
Income taxes payable / refundable		15,358		17,760
Net cash flows provided by operating activities		21,199		2,703
Cash flows from investing activities:
Purchase of property, plant, and equipment		(22,361)		(27,095)
Proceeds from sale of assets		1,021		2
Other, net		(449)		(2,007)
Net cash flows used in investing activities		(21,789)		(29,100)
Cash flows from financing activities:
Proceeds from short-term borrowings		11,090		—
Payments on short-term borrowings		(5,788)		(5,562)
Proceeds from long-term borrowings		125,000		97,000
Principal payments on long-term borrowings		(10,796)		(82,529)
Dividends paid		(11,742)		(10,616)
Dividends to noncontrolling interest		(654)		—
Purchase of treasury shares		(111,115)		—
Proceeds from exercises under stock plans		5,018		713
Purchase of common treasury shares—stock plan exercises		(14,022)		(2,527)
Net cash flows used in financing activities		(13,009)		(3,521)
Effect of exchange rate changes on cash and cash equivalents		1,141		2,386
Net change in cash and cash equivalents		(12,458)		(27,532)
Cash and cash equivalents—beginning of year		185,406		177,232
Cash and cash equivalents—end of period	$	172,948	$	149,700

See accompanying notes to condensed consolidated financial statements.

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Dollars in thousands)

(Unaudited)

Common
stock Additional
paid-in
capital Retained
earnings Accumulated
other
comprehensive
income (loss) Treasury
stock Noncontrolling
interest in
consolidated
subsidiaries Total
shareholders’
equity
Balance at December 26, 2015 $ 27,900
$ —
$ 1,729,679
$ (267,218 ) $ (571,920 ) $ 46,770
$ 965,211
Net earnings —
—
103,168
—
—
3,966
107,134
Other comprehensive income (loss) —
—
—
1,249
—
1,766
3,015
Cash dividends declared —
—
�� (25,482 ) —
—
—
(25,482 )
Dividends to noncontrolling interests —
—
—
—
—
(2,527 ) (2,527 )
Purchase of noncontrolling interests —
(137 ) —
—
—
(10,872 ) (11,009 )
Purchase of treasury shares; 384,622 shares acquired —
—
—
—
(46,581 ) —
(46,581 )
Stock plan exercises; 10,747 shares acquired —
—
—
—
(1,453 ) —
(1,453 )
Stock options exercised; 68,631 shares issued —
(6,435 ) 4,582
—
8,362
—
6,509
Stock option expense —
4,358
—
—
—
—
4,358
Stock awards; 6,725 shares issued —
2,214
—
—
912
—
3,126
Balance at September 24, 2016 $ 27,900
$ —
$ 1,811,947
$ (265,969 ) $ (610,680 ) $ 39,103
$ 1,002,301
Balance at December 31, 2016 $ 27,900
$ —
$ 1,874,722
$ (346,359 ) $ (612,781 ) $ 39,104
$ 982,586
Net earnings —
—
119,851
—
—
4,098
123,949
Other comprehensive income (loss) —
—
—
58,257
—
454
58,711
Cash dividends declared —
—
(25,417 ) —
—
—
(25,417 )
Dividends to noncontrolling interests —
—
—
—
—
(3,895 ) (3,895 )
Stock plan exercises; 24,672 shares acquired —
—
—
—
(3,929 ) —
(3,929 )
Stock options exercised; 106,351 shares issued —
(7,300 ) 5,445
—
14,301
—
12,446
Stock option expense —
3,868
—
—
—
—
3,868
Stock awards; 6,034 shares issued —
3,432
—
—
844
—
4,276
Balance at September 30, 2017 $ 27,900
$ —
$ 1,974,601
$ (288,102 ) $ (601,565 ) $ 39,761
$ 1,152,595


							Accumulated				Noncontrolling
			Additional				other				interest in		Total
	Common		paid-in		Retained		comprehensive		Treasury		consolidated		shareholders’
	stock		capital		earnings		income (loss)		stock		subsidiaries		equity
Balance at December 25, 2021	$	27,900	$	1,479	$	2,394,307	$	(263,127)	$	(773,712)	$	26,750	$	1,413,597
Net earnings		—		—		62,311		—		—		595		62,906
Other comprehensive income		—		—		—		30,967		—		1,093		32,060
Cash dividends declared ($0.55 per share)		—		—		(11,721)		—		—		—		(11,721)
Stock plan exercises; 11,695 shares acquired		—		—		—		—		(2,527)		—		(2,527)
Stock options exercised; 5,616 shares issued		—		(536)		—		—		1,249		—		713
Stock option expense		—		716		—		—		—		—		716
Stock awards; 37,748 shares issued		—		3,592		—		—		5,155		—		8,747
Balance at March 26, 2022	$	27,900	$	5,251	$	2,444,897	$	(232,160)	$	(769,835)	$	28,438	$	1,504,491
Balance at December 31, 2022	$	27,900	$	—	$	2,593,039	$	(274,909)	$	(765,183)	$	60,865		1,641,712
Net earnings (loss)		—		—		74,540		—		—		(2,195)		72,345
Other comprehensive income		—		—		—		8,776		—		293		9,069
Cash dividends declared ($0.60 per share)		—		—		(12,634)		—		—		—		(12,634)
Dividends to noncontrolling interests		—		—		—		—		—		(662)		(662)
Purchase of treasury shares; 356,887 shares acquired		—		—		—		—		(111,115)		—		(111,115)
Stock plan exercises; 44,908 shares acquired		—		—		—		—		(14,022)		—		(14,022)
Stock options exercised; 31,602 shares issued		—		971		(19,317)		—		23,364		—		5,018
Stock option expense		—		855		—		—		—		—		855
Stock awards; 76,731 shares issued		—		(1,826)		—		—		9,660		—		7,834
Balance at April 1, 2023	$	27,900	$	—	$	2,635,628	$	(266,133)	$	(857,296)	$	58,301	$	1,598,400

See accompanying notes to the condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)
(Unaudited)

~~(Unaudited)~~

(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Condensed Consolidated Financial Statements

The Condensed Consolidated Balance Sheet ~~as of September 30, 2017~~,at April 1, 2023, the Condensed Consolidated Statements of Earnings, ~~and~~ Comprehensive Income, ~~for the~~ ~~thirteen and thirty-nine weeks ended September 30, 2017 and September 24, 2016, and the Condensed Consolidated Statements of~~ Cash Flows, and ~~Shareholders'~~Shareholders’ Equity for the ~~thirty-nine week~~ ~~periods then~~thirteen weeks ended April 1, 2023 and March 26, 2022 have been prepared by ~~the Company,~~Valmont Industries, Inc. (the “Company”), without audit. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial statements ~~as of~~ ~~September 30, 2017~~at April 1, 2023 and for all periods presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the ~~Company's~~Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016. The accounting policies and methods of computation followed in these interim financial statements are the same as those followed in the financial statements for the year ended~~ ~~December 31, 2016~~.2022. The results of operations for the period ended ~~September 30, 2017~~April 1, 2023 are not necessarily indicative of the operating results for the full year.

Inventories

~~Approximately~~ ~~36%~~ ~~and 38% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016. All other inventory~~

Inventory is valued at the lower of cost, determined on the first-in, first-out ~~(FIFO)~~ method or ~~market.~~net realizable value. Finished goods and manufactured goods inventories include the costs of acquired raw materials and related factory labor and overhead charges required to convert raw materials to manufactured and finished goods. ~~The excess of replacement cost of inventories over the LIFO value is approximately $40,886 and $38,047 at September 30, 2017 and~~ ~~December 31, 2016, respectively.~~

Inventories consisted of the following:


	April 1,		December 31,
	2023		2022
Raw materials and purchased parts	$	258,300	$	258,814
Work-in-process		46,250		44,453
Finished goods and manufactured goods		420,810		425,495
	$	725,360	$	728,762

Income Taxes

Earnings before income taxes and equity in loss of nonconsolidated subsidiaries for the thirteen weeks ended April 1, 2023 and March 26, 2022 were as follows:


	Thirteen weeks ended
	2023		2022
United States	$	31,858	$	60,816
Foreign		73,151		25,569
	$	105,009	$	86,385

September 30,
2017 December 31,
2016
Raw materials and purchased parts $ 175,222
$ 143,659
Work-in-process 35,126
27,291
Finished goods and manufactured goods 233,772
217,125
Subtotal 444,120
388,075
Less: LIFO reserve 40,886
38,047
$ 403,234
$ 350,028

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)
(Unaudited)

~~(Unaudited)~~

(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ~~(Continued)~~

~~Income Taxes~~

~~Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries for the~~ ~~thirteen and thirty-nine weeks ended September 30, 2017 and September 24, 2016, were as follows:~~

Thirteen Weeks Ended Thirty-nine Weeks Ended
2017 2016 2017 2016
United States $ 28,886
$ 21,550
$ 115,082
$ 105,390
Foreign 21,675
22,239
59,210
51,486
$ 50,561
$ 43,789
$ 174,292
$ 156,876

– CONTINUED

Pension Benefits

The Company incurs expenses in connection with the Delta Pension Plan ~~("DPP"~~(“DPP”). The DPP was acquired as part of the Delta ~~plc~~PLC acquisition in fiscal 2010 and has no members that are active employees. In order to measure expense and the related benefit obligation, various assumptions are made including discount rates used to value the obligation, expected return on plan assets used to fund these expenses, and estimated future inflation rates. These assumptions are based on historical experience as well as current facts and circumstances. An actuarial analysis is used to measure the expense and liability associated with pension benefits.

The components of the net periodic pension (benefit) expense for the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017~~April 1, 2023 and ~~September 24, 2016~~March 26, 2022 were as follows:

Thirteen Weeks Ended Thirty-nine Weeks Ended
Net periodic (benefit) expense: 2017 2016 2017 2016
Interest cost $ 4,676
$ 6,092
$ 13,475
$ 19,134
Expected return on plan assets (5,277 ) (5,565 ) (15,208 ) (17,648 )
Amortization of actuarial loss 768
—
2,214
—
Net periodic expense $ 167
$ 527
$ 481
$ 1,486


	Thirteen weeks ended
	2023		2022
Interest cost	$	5,256	$	3,365
Expected return on plan assets		(5,317)		(6,202)
Amortization of prior service cost		122		132
Net periodic (benefit) expense	$	61	$	(2,705)

Stock Plans

The Company maintains ~~stock‑based~~stock-based compensation plans approved by the shareholders, which provide that the Human Resource Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, ~~non-vested~~restricted stock awards, restricted stock units, and bonuses of common stock. At ~~September 30, 2017, 704,818~~April 1, 2023, 1,647,157 shares of common stock remained available for issuance under the plans. ~~Shares and options issued and available are subject to changes in capitalization.~~

Under the plans, the exercise price of each option equals the closing market price at the date of the grant. Options vest beginning on the first anniversary of the grant date in equal amounts over three ~~to six~~ years or on the grant’s fifth anniversary ~~of the grant.~~

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

date. Expiration of grants is ~~from~~ seven years to ten years from the date of grant. Restricted stock units and awards generally vest in equal installments over three or four years beginning on the first anniversary of the grant.

The ~~Company's~~Company’s compensation expense (included in selling, general, and administrative expenses) and associated income tax benefits related to stock options and restricted stock for the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017~~April 1, 2023 and ~~September 24, 2016~~,March 26, 2022, respectively, were as follows:

Thirteen Weeks Ended Thirty-nine Weeks Ended
2017 2016 2017 2016
Compensation expense $ 1,290
$ 1,399
$ 3,868
$ 4,358
Income tax benefits 496
539
1,489
1,678


	Thirteen weeks ended
	2023		2022
Compensation expense	$	8,689	$	9,463
Income tax benefits		2,172		2,366

Fair Value

The Company applies the provisions of Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820 apply to other accounting pronouncements that require or permit fair value measurements. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

ASC 820 establishes a ~~three‑level~~three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

●

Level 1: Quoted market prices in active markets for identical assets or liabilities.

●

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

●

Level 3: Unobservable inputs that are not corroborated by market data.

~~Level 1: Quoted market prices in active markets for identical assets or liabilities.~~

~~Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.~~

~~Level 3: Unobservable inputs that are not corroborated by market data.~~

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.

Trading Securities: The ~~assets and liabilities recorded for~~majority of the Company’s trading securities represent the investments held in the Valmont Deferred Compensation Plan (the “DCP”). The assets of ~~$39,283~~the DCP at April 1, 2023 of $28,452 ($~~35,784~~25,008 at December 31, ~~2016)~~2022) represent mutual funds, invested in debt and equity securities, classified as trading securities in accordance with Accounting Standards Codification 320, Accounting for Certain Investments in Debt and Equity Securities (“ASC 320”), considering the ~~employee's~~employee’s ability to change investment allocation of their deferred compensation at any time.

Derivative Financial Instruments: The fair value of foreign currency and commodity forward contracts and cross currency contracts is based on a valuation model that discounts cash flows resulting from the differential between the contract price and the market-based forward rate.

Mutual Funds: The Company has short-term investments in various mutual funds.

Marketable Securities: The Company's marketable securities consist of short-term investments in certificates of deposit.


			Fair Value Measurement Using:
			Quoted Prices in		Significant Other		Significant
			Active Markets		Observable		Unobservable
	Carrying Value		for Identical		Inputs		Inputs
	April 1, 2023		Assets (Level 1)		(Level 2)		(Level 3)
Assets:
Trading securities	$	28,452	$	28,452	$	—	$	—
Derivative financial instruments, net		2,793		—		2,793		—
Cash and cash equivalents - mutual funds		1,534		1,534		—		—
Cash and cash equivalents - marketable securities		142		—		142		—

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)
(Unaudited)

~~(Unaudited)~~

(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ~~(Continued)~~

– CONTINUED


			Fair Value Measurement Using:
			Quoted Prices in		Significant Other		Significant
	Carrying Value		Active Markets		Observable		Unobservable
	December 31,		for Identical		Inputs		Inputs
	2022		Assets (Level 1)		(Level 2)		(Level 3)
Assets:
Trading securities	$	25,008	$	25,008	$	—	$	—
Derivative financial instruments, net		1,404		—		1,404		—
Cash and cash equivalents - mutual funds		7,205		7,205		—		—
Cash and cash equivalents - marketable securities		136		—		136		—

Long-Lived Assets

The ~~Company's ownership of shares in Delta EMD Pty. Ltd. (JSE:DTA) is also~~Company’s other non-financial assets include goodwill and other intangible assets, which are classified as ~~trading securities.~~ Level 3 items. These assets are measured at fair value on a non-recurring basis as part of annual impairment testing.

Leases

The ~~shares~~Company’s operating leases right-of-use assets and corresponding lease obligations are ~~valued at $1,779~~included in “Other assets” and ~~$2,016 as of September 30, 2017 and December 31, 2016,~~“Operating lease liabilities”, respectively, ~~which is~~in the ~~estimated fair value. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.~~

Fair Value Measurement Using:
Carrying Value
September 30, 2017 Quoted Prices in
Active Markets
for Identical
Assets (Level 1) Significant Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3)
Assets:
Trading Securities $ 41,062
$ 41,062
$ —
$ —

Fair Value Measurement Using:
Carrying Value
December 31,
2016 Quoted Prices in
Active Markets
for Identical
Assets (Level 1) Significant Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3)
Assets:
Trading Securities $ 37,800
$ 37,800
$ —
$ —

Condensed Consolidated Balance Sheets.

Comprehensive Income

Comprehensive income includes net earnings, currency translation adjustments, certain derivative-related activity, and changes in prior service cost and net actuarial ~~gains/losses~~gains (losses) from a pension plan. Results of operations for foreign subsidiaries are translated using the average exchange rates during the period. Assets and liabilities are translated at the exchange rates in effect on the balance sheet dates. Accumulated other comprehensive income (loss) consisted of the following at ~~September 30, 2017~~April 1, 2023 and December 31, ~~2016:~~2022:


	Foreign						Accumulated
	Currency				Defined		Other
	Translation		Hedging		Benefit		Comprehensive
	Adjustments		Activities		Pension Plan		Income (Loss)
Balance at December 31, 2022	$	(260,799)	$	20,099	$	(34,209)	$	(274,909)
Current period comprehensive income		7,896		789		91		8,776
Balance at April 1, 2023	$	(252,903)	$	20,888	$	(34,118)	$	(266,133)

Revenue Recognition

The Company determines the appropriate revenue recognition model for our contracts by analyzing the type, terms, and conditions of each contract or arrangement with a customer. Contracts with customers for all businesses are fixed-price with sales tax excluded from revenue and do not include variable consideration. Discounts included in contracts with customers, typically early pay discounts, are recorded as a reduction of net sales in the period in which the sale is recognized. Contract revenues are classified as product sales when the performance obligation is related to the manufacturing and sale of goods. Contract revenues are classified as service sales when the performance obligation is the performance of a service. Service revenue is primarily related to the coatings and technology products and services product lines.

Foreign Currency Translation Adjustments Gain/(Loss) on Hedging Activities Defined Benefit Pension Plan Accumulated Other Comprehensive Loss
Balance at December 31, 2016 $ (251,228 ) $ 7,978
$ (103,109 ) $ (346,359 )
Current-period comprehensive income (loss) 60,017
(1,760 ) —
58,257
Balance at September 30, 2017 $ (191,211 ) $ 6,218
$ (103,109 ) $ (288,102 )

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)
(Unaudited)

~~(Unaudited)~~

(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ~~(Continued)~~

~~Net Investment Hedge~~

In– CONTINUED

Customer acceptance provisions exist only in the ~~second quarter~~design stage of ~~2016,~~our products (on a limited basis, the Company ~~entered into a one-year foreign currency forward contract which qualified as a net investment hedge, in order~~may agree to ~~mitigate foreign currency risk on a portion of our investments denominated in British pounds. The forward contract had a notional amount to sell British pounds~~other acceptance terms), and ~~receive $44,000, and matured in May 2017. The realized gain of~~ ~~$5,123 ($3,150 after tax)~~ has been deferred in other comprehensive income where it will remain until the Company's net investments in its British subsidiaries are divested. No ineffectiveness resulted from the hedge prior to its maturity.

In the third quarter of 2017, the Company entered into two six-month foreign currency forward contracts which qualified as net investment hedges, in order to mitigate foreign currency risk on our grinding media business that is denominated in both Australian dollars and British pounds. The Company announced its intention to divest of this business in August 2017 and regulatory approval in Australia is currently pending. The forward contracts have a maturity date of January 2018 and a notional amount to sell Australian dollars and British pounds to receive $27,000 and $18,500, respectively. The unrealized loss recorded at September 30, 2017 is $740 and is included in Accounts Payable on the Consolidated Balance Sheets. No ineffectiveness has resulted from the hedge and the balance is recorded in the Consolidated Statement of Other Comprehensive Income within gain/(loss) on hedging activities. When the forward contract matures, the realized gain/(loss) will be deferred in Other Comprehensive Income where it will remain until the grinding media business is divested.

~~Recently Issued Accounting Pronouncements~~

~~In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-9,~~ ~~Revenue from Contracts with Customers~~ ~~(Topic 606), which supersedes the revenue recognition requirements in~~ ~~Accounting Standards Codification ("ASC") 605,~~ ~~Revenue Recognition~~. ~~The new revenue recognition standard~~ requires entities to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This standard is effective for interim and annual reporting periods beginning after December 15, 2017, and can be adopted either retrospectively or as a cumulative effect adjustment asacceptance of the ~~date of adoption. Early adoption~~design by the customer is ~~permitted for interim~~required before the project is manufactured and annual periods beginning after December 15, 2016. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its consolidated results of operations and financial position. One area under assessment is the timing of revenue recognition for the Company’s product lines that are custom engineered to a single customer’s specifications resulting in limited ability that the asset can be used for another customer. These product lines reside in the Utility and Engineered Support Structures segments. When the terms and conditions allow the Company to bill a customer for full compensation on a canceled order for the performance completed to date, revenue will be recognized over the production period and not the current practice which is upon shipment or time of deliverydelivered to the customer. The Company is not entitled to any compensation solely based on design of the product and does not recognize this service as a separate performance obligation and, therefore, no revenue is recognized with the design stage. No general rights of return exist for customers once the product has been delivered and the Company establishes provisions for estimated warranties. The Company does not sell extended warranties for any of its products.

Shipping and handling costs associated with sales are recorded as cost of goods sold. The Company elected to use the practical expedient of treating freight as a fulfillment obligation instead of a separate performance obligation and ratably recognize freight expense as the structure is being manufactured, when the revenue from the associated customer contract is being recognized over time. With the exception of the transmission, distribution, and substation structures ("TD&S") product line, the solar product line, and the telecommunication structures product line, the Company’s inventory is interchangeable for a variety of each segment’s customers. The Company has elected to not disclose the partially satisfied performance obligation at the end of the period when the contract has an original expected duration of one year or less. In addition, the Company does not adjust the amount of consideration to be received in a contract for any significant financing component if payment is expected within twelve months of transfer of control of goods or services.

The Company’s contract assets at April 1, 2023 and December 31, 2022 totaled $159,785 and $174,539, respectively.

While most of the Infrastructure segment customers are generally invoiced upon shipment or delivery of the goods to the customer’s specified location, certain customers are also ~~evaluating the necessary changes to its internal control processes to recognize revenue over time using an inputs based model after adoption. Based~~invoiced by advanced billings or progress billings. At April 1, 2023 and December 31, 2022, total contract liabilities were $156,483 and $178,531, respectively. At April 1, 2023, $156,333 was recorded as “Contract liabilities” and $150 was recorded as “Other noncurrent liabilities” on the ~~current status~~Condensed Consolidated Balance Sheets. Additional details are as follows:

●

During the thirteen weeks ended April 1, 2023, and March 26, 2022, the Company recognized $58,939 and $28,023 of revenue that was included in the total contract liability at December 31, 2022 and December 25, 2021, respectively. The revenue recognized was due to applying advance payments received for performance obligations completed during the period.

●

At April 1, 2023, the Company had $150 of remaining performance obligations on contracts with an original expected duration of one year or more and expects to complete the remaining performance obligations on these contracts within the next 12 to 24 months.

Table of the evaluation, the adoption of the standard is not expected to have a material effect on the amounts or timing of revenue recognition for the Company’s other segments. The Company expects to adopt the new standard using the modified retrospective approach effective January 1, 2018.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~, which provides revised guidance on leases requiring lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018 and is to be applied on a modified retrospective transition. ~~The Company is currently evaluating the effect of adopting this new accounting guidance but expects the adoption will result in a significant increase in total assets and liabilities.~~

Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)
(Unaudited)

~~(Unaudited)~~

(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ~~(Continued)~~

~~In August 2016,~~– CONTINUED

Segment and Product Line Revenue Recognition

Infrastructure Segment

Steel and concrete utility structures within the ~~FASB issued ASU 2016-15,~~ ~~Classification~~TD&S product line are engineered to customer specifications resulting in limited ability to sell the structure to a different customer if an order is canceled after production commences. The continuous transfer of ~~Certain Cash Receipts and Cash Payments in~~control to the ~~Statement of Cash Flows, which provides more specific guidance on cash flow presentation~~customer is evidenced either by contractual termination clauses or by rights to payment for ~~certain transactions. ASU 2016-15~~work performed to-date plus a reasonable profit as the products do not have an alternative use to the Company. Since control is effective for interim periods and fiscal years beginning after December 15, 2017, with early adoption permitted. The Company does not expect the provisions of this new standard will have a material impacttransferring over time, revenue is recognized based on the ~~consolidated financial statements~~extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment. For the TD&S and ~~plans~~telecommunication structure product lines, the Company generally recognizes revenue on an input basis, using total production hours incurred to-date for each order as a percentage of total hours estimated to ~~adopt it in~~produce the ~~first quarter~~order. The completion percentage is applied to the order’s total revenue and total estimated costs to determine reported revenue, cost of ~~2018.~~

~~In January 2017,~~goods sold, and gross profit. Production of an order, once started, is typically completed within three months. Depending on the ~~FASB issued ASU 2017-04,~~ ~~Simplifying the Test for Goodwill Impairment,~~ ~~which eliminates Step 2~~product sold, revenue from the ~~goodwill impairment test. ASU 2017-04~~solar product line is ~~effective~~recognized both upon shipment or delivery of goods to the customer depending on contract terms, or by using an inputs method, based on the ratio of costs incurred to-date to the total estimated costs at completion of the performance obligation. External sales agents are used in certain TD&S sales and the Company has chosen to expense estimated commissions owed to third parties by recognizing them proportionately as the goods are manufactured.

For the structures sold for ~~periods~~lighting and ~~fiscal years beginning after December 15, 2019. Early adoption~~transportation and for the majority of telecommunication products, revenue is ~~permitted for interim~~recognized upon shipment or ~~annual goodwill impairment tests performed~~delivery of goods to the customer depending on ~~testing dates after January 1, 2017. The Company adopted this standard in the third quarter of 2017~~contract terms, which is the same ~~period~~point in time that the customer is billed. There are also large regional customers who have unique product specifications for telecommunication structures. When the customer contract includes a cancellation clause that would require them to pay for work completed plus a reasonable margin if an order was canceled, revenue is recognized over time based on hours worked as ~~it performs~~a percent of total estimated hours to complete production.

The coatings product line revenues are derived by providing coating services to customers’ products, which include galvanizing, anodizing, and powder coating. Revenue is recognized once the ~~annual goodwill impairment testing.~~

~~In March 2017,~~coating service has been performed and the ~~FASB issued ASU 2017-07,~~ ~~Presentation~~goods are ready to be picked up or delivered to the customer, which is the same time that the customer is billed.

Agriculture Segment

Revenue recognition from the manufacture of ~~Net Periodic Benefit Cost Related to Defined Benefit Plans,~~ ~~which amends the income statement presentation requirements~~irrigation equipment and related parts and services (including tubular products for ~~the components of net periodic benefit cost for an entity's defined benefit pension and post-retirement plans. ASU 2017-07~~industrial customers) is ~~effective for periods and fiscal years beginning after December 15, 2017. Early adoption is permitted as~~generally upon shipment of the ~~beginning~~goods to the customer which is the same point in time that the customer is billed. The remote monitoring subscription services recognized as part of ~~any annual period for which an entity's financial statements have not been issued. The Company does not believe this ASU will have~~technology services product line are primarily billed annually and revenue is recognized on a ~~material impact on~~straight-line basis over the ~~consolidated financial statements and plans to adopt this ASU~~subsequent twelve months.

Disaggregation of revenue by product line is disclosed in the ~~first quarter~~“Business Segments & Related Revenue Information” footnote.

Table of ~~2018.~~

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Targeted Improvements to Accounting for Hedging Activities~~, which improves the financial reporting of hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. ASU 2017-12 is effective for periods and fiscal years beginning after December 15, 2018. Early adoption is permitted for any interim period post issuance. The Company does not believe the adoption of this ASU will have a material impact on the consolidated financial statements.

Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)
(Unaudited)

~~(Unaudited)~~

~~(2) ACQUISITIONS~~

~~On July 31, 2017,~~

(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Recently Adopted Accounting Pronouncements

In September 2022, the FASB issued Accounting Standards Update No. 2022-04, Liabilities - Supplier Finance Programs (Topic 450-50): Disclosure of Supplier Finance Program Obligations (“ASU 2022-04”), which requires all buyers that use supplier finance programs to enhance the transparency of such programs to allow financial statement users to understand the effect on working capital, liquidity, and cash flows. The new guidance requires disclosure of key terms of the program, including a description of the payment terms, payment timing, and assets pledged as security or other forms of guarantees provided to the finance provider or intermediary. Other requirements include the disclosure of the amount that remains unpaid as of the end of the reporting period, a description of where these obligations are presented in the balance sheet, and a rollforward of the obligation during the annual period. The guidance is effective in the first quarter of 2023, except for the rollforward, which is effective in 2024. The Company adopted the new standard in the first quarter of 2023, as well as early adopted the amendment on rollforward information. The new guidance had no effect on the Company’s results of operations as the changes are primarily disclosure related, as shown below.

During 2019, the Company ~~purchased Aircon Guardrails Private Limited ("Aircon")~~entered into an agreement with a third-party financial institution to facilitate a supplier finance program which allows qualifying suppliers to sell their receivables from the Company to the financial institution. These participating suppliers negotiate their outstanding receivable arrangements directly with the financial institution and the Company’s rights and obligations to suppliers are not impacted. The Company has no economic interest in a supplier’s decision to enter into these agreements. Once a qualifying supplier elects to participate in the supplier finance program and reaches an agreement with a financial institution, they elect which individual Company invoices they sell to the financial institution. The Company’s obligation is to make payment in the invoice amount negotiated with participating suppliers to the financial institution on the invoice due date, regardless of whether the individual invoice is sold by the supplier to the financial institution. The financial institution pays the supplier on the invoice due date for ~~$5,362~~any invoices that were not previously sold under the supplier finance program. The invoice amounts and scheduled payment terms are not impacted by the suppliers’ decisions to sell amounts under these arrangements. The payment of these obligations is included in cash ~~net~~provided by operating activities in the Condensed Consolidated Statements of Cash Flows. Included in Accounts Payable in the Condensed Consolidated Balance Sheets at April 1, 2023 and December 31, 2022 were $58,134 and $48,880 of outstanding payment obligations, respectively, that were sold to the financial institution under the Company’s supplier finance program.


Confirmed obligations outstanding at December 31, 2022	$	48,880
Invoices confirmed during the period		74,781
Confirmed invoices paid during the period		(65,527)
Confirmed obligations outstanding at April 1, 2023	$	58,134

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

(2) ACQUISITIONS

Acquisitions of Businesses

On June 1, 2022, the Company acquired approximately 51% of ConcealFab for $39,287 in cash (net of cash ~~acquired, plus assumed liabilities. Aircon produces highway safety systems including guardrails, structural metal products,~~acquired) and ~~solar structural products in India with annual sales~~subject to working capital adjustments. Approximately $1,850 of ~~approximately $10,000. In~~ the ~~preliminary~~ purchase price ~~allocation, goodwill~~was contingent on seller representations and warranties that will be settled within 18 months of ~~$3,327~~the acquisition date. ConcealFab is located in Colorado Springs, Colorado, and ~~$2,109 of customer relationships~~its operations are reported in the Infrastructure segment. The acquisition was made to allow the Company to incorporate innovative 5G infrastructure and ~~other intangible assets were recorded.~~passive intermodulation mitigation solutions into our advanced infrastructure portfolio. Goodwill is not deductible for tax purposes. ~~This business is included in the Engineered Support Structures segment~~The amount allocated to goodwill was primarily attributable to anticipated synergies and ~~was acquired to expand the Company's geographic presence in the Asia-Pacific region.~~other intangibles that do not qualify for separate recognition. The Company ~~expects to finalize~~finalized the purchase price allocation in the ~~fourth~~first quarter of ~~2017.~~ 2023.

The following table summarizes the fair values of the assets acquired and liabilities assumed of ConcealFab at the date of acquisition:


	As of June 1,
	2022
Current assets	$	21,133
Customer relationships		26,200
Trade name		5,000
Property, plant, and equipment		3,813
Other assets		9,108
Goodwill		42,465
Total fair value of assets acquired	$	107,719
Current liabilities		6,658
Long-term debt		2,038
Operating lease liabilities		7,812
Deferred income taxes		5,464
Other noncurrent liabilities		12
Total fair value of liabilities assumed	$	21,984
Noncontrolling interest in consolidated subsidiaries		41,693
Net assets acquired	$	44,042

Proforma disclosures were omitted for this acquisition as ~~this business~~it does not have a significant impact on the ~~Company's~~Company’s financial results.

Acquisition-related costs incurred for the above acquisition were insignificant for all years presented.

Acquisitions of Noncontrolling Interests

~~In April 2016,~~

On August 10, 2022, the Company acquired the remaining ~~30%~~9% of ~~IGC Galvanizing Industries (M) Sdn Bhd that it did not own~~Convert Italy S.p.A. for ~~$5,841. In June 2016,~~$3,046. As this transaction was for the ~~Company acquired 5.2%~~acquisition of ~~the remaining 10% of Valmont SM that it did not own for $5,168. As these transactions were for acquisitions of part or~~ all of the remaining shares of consolidated ~~subsidiaries~~subsidiary with no change in control, ~~they were~~it was recorded within ~~shareholders'~~shareholders’ equity and as a financing cash flow in the Condensed Consolidated Statements of Cash Flows.

~~3) RESTRUCTURING ACTIVITIES~~

~~In April 2015, the Company's Board of Directors authorized a broad restructuring plan (the "2015 Plan") to respond to the market environment in certain businesses. During fiscal 2016,~~

On May 10, 2022, the Company ~~incurred pre-tax restructuring charges~~acquired the remaining 20% of ~~$4,581 as it completed~~Valmont West Coast Engineering Ltd. for $4,292. As this transaction was for the ~~2015 Plan.~~

~~In 2016,~~acquisition of all of the ~~Company identified and executed further region specific restructuring activities (the "2016 Plan") and incurred $5,045~~remaining shares of pre-tax restructuring expenses in cost of sales and $2,780 of pre-tax restructuring expense in SG&A in 2016. Within the total $7,825, were pre-tax asset impairments of $1,099. The 2016 Plan was primarily completed by year-end 2016. The Energy and Mining segment incurred $1,607, the Coatings segment incurred $305, and Corporate incurred approximately $225 of restructuring expenses during the third quarter of 2016. A significantconsolidated subsidiary with no change in ~~market conditions~~control, it was recorded within shareholders’ equity and as a financing cash flow in ~~any~~the Condensed Consolidated Statements of ~~the Company's segments may affect the Company's assessment~~Cash Flows.

Table of ~~necessity for further restructuring activities.~~

~~Liabilities recorded for the restructuring plans and changes therein for the first three quarters of fiscal 2017 were as follows:~~

Balance at December 31, 2016 Recognized Restructuring Expense Costs Paid or Otherwise Settled Balance at September 30, 2017
Severance $ 1,597
$ —
$ (1,597 ) $ —
Other cash restructuring expenses 4,581
—
(3,377 ) 1,204
Total $ 6,178
$ —
$ (4,974 ) $ 1,204

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)
(Unaudited)

~~(Unaudited)~~

(3) DIVESTITURES

On November 30, 2022, the Company completed the sale of Valmont SM, the offshore wind energy structures business in Denmark, reported in the Other segment. The business was sold because it did not align with the long-term strategic plans for the Company. The offshore wind energy structures business’ historical annual sales, operating profit, and net assets are not significant for discontinued operations presentation. The offshore wind energy structures business had an operating loss of $809 for the thirteen weeks ended March 26, 2022.

At closing, in the fourth quarter of 2022, the Company received Danish Krone 90,000 (U.S. $12,570) with an additional Danish Krone 28,000 (U.S. $4,027) held in an escrow account subject to normal closing conditions before it will be released to the Company.The pre-tax loss recorded during the fourth quarter of 2022 from the divestiture was reported in “Other income (expenses)” in the Consolidated Statements of Earnings on the Form 10-K. The loss was comprised of the proceeds and an asset recognized for the escrow funds not yet released from buyer, less deal-related costs and the net assets of the business.

(4) GOODWILL AND INTANGIBLE ASSETS

Amortized Intangible Assets

The components of amortized intangible assets at ~~September 30, 2017~~April 1, 2023 and December 31, ~~2016~~2022 were as follows:

September 30, 2017
Gross
Carrying
Amount Accumulated
Amortization Weighted
Average
Life
Customer Relationships $ 200,269
$ 126,845
13 years
Proprietary Software & Database 3,687
3,111
8 years
Patents & Proprietary Technology 6,633
3,859
11 years
Other 4,807
4,032
3 years
$ 215,396
$ 137,847

December 31, 2016
Gross
Carrying
Amount Accumulated
Amortization Weighted
Average
Life
Customer Relationships $ 191,316
$ 111,342
13 years
Proprietary Software & Database 3,616
3,056
8 years
Patents & Proprietary Technology 6,434
3,420
11 years
Other 3,713
3,668
3 years
$ 205,079
$ 121,486


	April 1, 2023
	Gross				Weighted
	Carrying		Accumulated		Average
	Amount		Amortization		Life
Customer Relationships	$	223,388	$	149,136	13 years
Patents & Proprietary Technology		58,687		23,350	9 years
Trade Name		2,850		746	7 years
Other		2,647		2,289	5 years
	$	287,572	$	175,521


	December 31, 2022
	Gross				Weighted
	Carrying		Accumulated		Average
	Amount		Amortization		Life
Customer Relationships	$	222,716	$	145,502	13 years
Patents & Proprietary Technology		58,404		21,291	9 years
Trade Name		2,850		645	7 years
Other		2,462		2,164	5 years
	$	286,432	$	169,602

Amortization expense for intangible assets for the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017~~April 1, 2023 and ~~September 24, 2016~~,March 26, 2022, respectively, was as follows:

Thirteen Weeks Ended Thirty-nine Weeks Ended
2017 2016 2017 2016
4,025
3,964
11,792
12,037

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

(4) GOODWILL AND INTANGIBLE ASSETS – CONTINUED

Estimated annual amortization expense related to ~~finite‑lived~~finite-lived intangible assets is as follows:

Estimated
Amortization
Expense
2017 $ 15,823
2018 14,492
2019 13,718
2020 12,608
2021 10,474


	Estimated
	Amortization
	Expense
Remainder of 2023	$	15,804
2024		19,028
2025		17,348
2026		12,834
2027		9,653
2028		8,837

The useful lives assigned to ~~finite‑lived~~finite-lived intangible assets included consideration of factors such as the Company’s past and expected experience related to customer retention rates, the remaining legal or contractual life of the underlying arrangement that resulted in the recognition of the intangible asset, and the Company’s expected use of the intangible asset.

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~(4) GOODWILL AND INTANGIBLE ASSETS (Continued)~~

~~Non-amortized intangible assets~~

Non-Amortized Intangible Assets

Intangible assets with indefinite lives are not ~~amortized.~~amortized and consist solely of trade names. The carrying ~~values~~value of trade names at ~~September 30, 2017~~April 1, 2023 and December 31, ~~2016~~ ~~were~~2022 are as follows:

September 30,
2017 December 31,
2016 Year Acquired
Webforge $ 9,362
$ 8,624
2010
Valmont SM 9,839
8,765
2014
Newmark 11,111
11,111
2004
Ingal EPS/Ingal Civil Products 7,633
7,032
2010
Donhad 5,758
5,305
2010
Shakespeare 4,000
4,000
2014
Industrial Galvanizers 2,390
2,201
2010
Other 14,448
13,747

$ 64,541
$ 60,785


	April 1,		December 31,		Year
	2023		2022		Acquired
Newmark	$	11,111	$	11,111	2004
Convert Italia S.p.A.		8,131		8,024	2018
Webforge		7,248		7,107	2010
Ingal EPS / Ingal Civil Products		7,027		6,891	2010
ConcealFab		5,000		5,000	2022
Shakespeare		4,000		4,000	2014
Walpar		3,500		3,500	2018
Other		14,232		14,152	Various
	$	60,249	$	59,785

In its determination of these intangible assets as ~~indefinite‑lived,~~indefinite-lived, the Company considered such factors as its expected future use of the intangible asset, legal, regulatory, technological, and competitive factors that may impact the useful life or value of the intangible asset, and the expected costs to maintain the value of the intangible asset. The Company expects that these intangible assets will maintain their value indefinitely. Accordingly, these assets are not amortized.

The Company’s trade names were tested for impairment ~~in the third quarter of 2017.~~at August 27, 2022. The values of each trade name ~~was~~were determined using the relief-from-royalty method. Based on this evaluation, no trade names were determined to be impaired.

~~Goodwill~~

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

(4) GOODWILL AND INTANGIBLE ASSETS – CONTINUED

Goodwill

The carrying amount of goodwill by segment ~~as of~~ ~~September 30, 2017~~at April 1, 2023 and December 31, ~~2016~~2022 was as follows:

Engineered
Support
Structures
Segment Energy & Mining Segment Utility
Support
Structures
Segment Coatings
Segment Irrigation
Segment Total
Balance at December 31, 2016 $ 94,314
$ 72,212
$ 75,404
$ 59,569
$ 19,611
$ 321,110
Foreign currency translation 4,568
6,704
—
951
94
12,317
Acquisitions 3,327
—
—
—
—
3,327
Balance at September 30, 2017 $ 102,209
$ 78,916
$ 75,404
$ 60,520

$ 19,705
$ 336,754

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~(4) GOODWILL AND INTANGIBLE ASSETS (Continued)~~


	Infrastructure		Agriculture
	Segment		Segment		Total
Gross Balance December 31, 2022	$	473,551	$	313,777	$	787,328
Accumulated impairment losses		(47,467)		—		(47,467)
Balance at December 31, 2022		426,084		313,777		739,861
Foreign currency translation		1,704		170		1,874
Balance at April 1, 2023	$	427,788	$	313,947	$	741,735


	Infrastructure		Agriculture
	Segment		Segment		Total
Gross Balance April 1, 2023	$	475,255	$	313,947	$	789,202
Accumulated impairment losses		(47,467)		—		(47,467)
Balance at April 1, 2023	$	427,788	$	313,947	$	741,735

The Company’s annual impairment test of goodwill was performed ~~during the third quarter of 2017,~~at August 27, 2022, using primarily the discounted cash flow method. ~~As a result~~The estimated fair value of ~~that testing, the Company determined that its goodwill was not impaired, as the valuation of the~~all our reporting units exceeded their respective carrying ~~values. The Company's offshore and other complex steel structures reporting unit with $14,645 of~~value, so no goodwill is the reporting unit with the smallest cushion between its estimated fair value and its carrying value. Sales and profitability amounts for the first nine months of 2017 approximated the amounts in the 2016 annual impairment model. The 2017 model assumes continued expansion into other highly engineered steel product offerings, such as utility support structures, where the reporting unit completed profitable projects in the past. The Company will continue to monitor the outlook for wind energy in Europe and oil and natural gas prices, which will affect the sales demand assumptions in the five year model for this reporting unit. If demand for off and onshore structures for wind energy changes significantly, the Company will perform an interim impairment test for goodwill. The Company also tracks changes in the global economy that could impact future operating results of any of its reporting units.

impairments were recorded. During fiscal 2023, no goodwill impairments have been recorded.

(5) CASH FLOW SUPPLEMENTARY INFORMATION

The Company considers all highly liquid temporary cash investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the ~~thirty-nine~~thirteen weeks ended ~~September 30, 2017~~April 1, 2023 and ~~September 24, 2016~~March 26, 2022 were as follows:


	Thirteen weeks ended
	2023		2022
Interest	$	3,331	$	1,613
Income taxes		7,838		6,699

2017 2016
Interest $ 22,732
$ 24,036
Income taxes 52,823
47,954

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)
(Unaudited)

~~(Unaudited)~~

(6) EARNINGS PER SHARE

The following table provides a reconciliation between ~~Basic~~basic and ~~Diluted~~diluted earnings per share ~~(EPS)~~(“EPS”):

Basic EPS Dilutive
Effect of
Stock
Options Diluted EPS
Thirteen weeks ended September 30, 2017:
Net earnings attributable to Valmont Industries, Inc. $ 35,208
$ —
$ 35,208
Shares outstanding (000 omitted) 22,527
224
22,751
Per share amount $ 1.56
$ (0.01 ) $ 1.55
Thirteen weeks ended September 24, 2016:
Net earnings attributable to Valmont Industries, Inc. $ 28,173
$ —
$ 28,173
Shares outstanding (000 omitted) 22,505
154
22,659
Per share amount $ 1.25
$ (0.01 ) $ 1.24
Thirty-nine weeks ended September 30, 2017:
Net earnings attributable to Valmont Industries, Inc. $ 119,851
$ —
$ 119,851
Shares outstanding (000 omitted) 22,505
212
22,717
Per share amount $ 5.33
$ (0.05 ) $ 5.28
Thirty-nine weeks ended September 24, 2016:
Net earnings attributable to Valmont Industries, Inc. $ 103,168
$ —
$ 103,168
Shares outstanding (000 omitted) 22,602
139
22,741
Per share amount $ 4.56
$ (0.02 ) $ 4.54


			Dilutive
			Effect of
			Various Stock		Diluted
	Basic EPS		Awards		EPS
Thirteen weeks ended April 1, 2023:
Net earnings attributable to Valmont Industries, Inc.	$	74,540	$	—	$	74,540
Weighted average shares outstanding (000’s)		21,269		243		21,512
Per share amount	$	3.50	$	(0.03)	$	3.47
Thirteen weeks ended March 26, 2022:
Net earnings attributable to Valmont Industries, Inc.	$	62,311	$	—	$	62,311
Weighted average shares outstanding (000’s)		21,279		213		21,492
Per share amount	$	2.93	$	(0.03)	$	2.90

At ~~September 24, 2016,~~April 1, 2023 and March 26, 2022, there were ~~378,566~~40,564 and 47,223 outstanding stock options with exercise prices exceeding the market price of common stock that were excluded from the computation of diluted earnings per ~~share.~~

share, respectively.

(7) DERIVATIVE FINANCIAL INSTRUMENTS

The Company manages interest rate risk, commodity price risk, and foreign currency risk related to foreign currency denominated transactions and investments in foreign subsidiaries. Depending on the circumstances, the Company may manage these risks by utilizing derivative financial instruments. Some derivative financial instruments are marked to market and recorded in the Company’s Condensed Consolidated Statements of Earnings, while others may be accounted for as fair value, cash flow, or net investment hedges. Derivative financial instruments have credit and market risk. The Company manages these risks of derivative instruments by monitoring limits as to the types and degree of risk that can be taken and by entering into transactions with counterparties who are recognized, stable multinational banks. Any gains or losses from net investment hedge activities remain in accumulated other comprehensive income (“AOCI”) until either the sale or substantially complete liquidation of the related subsidiaries.

Fair value of derivative instruments at April 1, 2023 and December 31, 2022 are as follows:


		April 1,		December 31,
Derivatives designated as hedging instruments:	Balance sheet location	2023		2022
Commodity forward contracts	Other accrued expenses	$	(1,971)	$	(3,854)
Foreign currency forward contracts	Prepaid expenses and other assets		142		83
Cross currency swap contracts	Prepaid expenses and other assets		4,747		5,385
Cross currency swap contracts	Other accrued expenses		(125)		(210)
		$	2,793	$	1,404

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)
(Unaudited)

~~(Unaudited)~~

(7) ~~BUSINESS SEGMENTS~~

~~The accounting principles used~~DERIVATIVE FINANCIAL INSTRUMENTS – CONTINUED

Gains (losses) on derivatives recognized in the ~~preparation~~Condensed Consolidated Statements of Earnings for the thirteen weeks ended April 1, 2023 and March 26, 2022 are as follows:


		Thirteen weeks ended
		April 1,		March 26,
Derivatives designated as hedging instruments:	Statement of earnings location	2023		2022
Commodity forward contracts	Product cost of sales	$	(3,985)	$	2,043
Foreign currency forward contracts	Other income		97		151
Interest rate hedge amortization	Interest expense		(16)		(16)
Cross currency swap contracts	Interest expense		446		774
		$	(3,458)	$	2,952

Cash Flow Hedges

The Company enters into steel hot rolled coil (“HRC”) commodity forward contracts that qualify as a cash flow hedge of the ~~segment information are the same as those used for the consolidated financial statements as disclosed~~variability in Note 1, except that the segment assets and income reflect the FIFO basis of accounting for inventory. Certain inventories are accounted for using the LIFO basis in the consolidated financial statements. Incash flows attributable to future steel purchases. During the first quarter of ~~2017,~~2023, the Company ~~changed~~entered into additional steel HRC forward contracts that qualify as a cash flow hedge of the variability in cash flows attributable to future steel purchases. The forward contracts had a notional amount of $15,760 for the total purchase of 18,500 short tons. At April 1, 2023, the forward contracts had a notional amount of $15,760 for the total purchase of 18,500 short tons from September 2023 to March 2024. The gain (loss) realized upon settlement will be recorded in “Product cost of sales” in the Condensed Consolidated Statements of Earnings over average inventory turns.

The Company enters into natural gas commodity forward contracts that qualify as a cash flow hedge of the variability in cash flows attributable to future natural gas purchases. During the first quarter of 2023, the Company entered into additional natural gas commodity forward contracts that also qualify as a cash flow hedge. The forward contracts had a notional amount of $1,206 for the total purchase of 299,000 mmBtu from July 2023 to March 2025. At April 1, 2023, the forward contracts had a notional amount of $5,772 for the total purchase of 1,179,000 mmBtu from April 2023 to March 2025. The gain (loss) realized upon settlement will be recorded in “Product cost of sales” in the Condensed Consolidated Statements of Earnings in the period consumed.

During the first quarter of 2023, the Company entered into diesel fuel commodity forward contracts that qualify as a cash flow hedge of the variability in cash flows attributable to future diesel fuel purchases. The forward contracts had a notional amount of $755 for the total purchase of 1,890,000 gallons from July 2023 to March 2024. The gain (loss) realized upon settlement will be recorded in “Product cost of sales” in the Condensed Consolidated Statements of Earnings in the period consumed.

During the first quarter of 2023, a subsidiary with a Euro functional currency entered into a foreign currency forward contract to mitigate foreign currency risk related to a large customer order denominated in U.S. dollars. The forward contract, which qualifies as a fair value hedge, matures in April 2023 and has a notional amount to sell $1,800 in exchange for a stated amount of Euros.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

(7) DERIVATIVE FINANCIAL INSTRUMENTS – CONTINUED

Net Investment Hedges

In 2019, the Company entered into two fixed-for-fixed cross currency swaps (“CCS”), swapping U.S. dollar principal and interest payments on a portion of its 5.00% senior unsecured notes due in 2044 for Danish krone (“DKK”) and Euro denominated payments. The CCS were entered into in order to mitigate foreign currency risk on the Company’s Euro and DKK investments and to reduce interest expense. Interest is exchanged twice per year on April 1 and October 1.

The Company designated the initial full notional amount of the two CCS ($130,000) as a hedge of the net investment in certain Danish and European subsidiaries under the spot method, with all changes in the fair value of the CCS that are included in the assessment of effectiveness (changes due to spot foreign exchange rates) recorded as cumulative foreign currency translation within AOCI. Net interest receipts will be recorded as a reduction of interest expense over the life of the CCS.

During the second half of 2022, the Company settled the DKK CCS and received proceeds of $3,532. Due to the sale of the offshore wind energy structures business in the fourth quarter of 2022, the Company reclassified the cumulative net investment hedge gain of $4,827 ($3,620 after tax) from OCI to “Loss from divestiture of offshore wind energy structures business” in the Consolidated Statements of Earnings at December 31, 2022 in the Form 10-K.

Key terms of the Euro CCS are as follows:


	Notional			Swapped	Set Settlement
Currency	Amount		Termination Date	Interest Rate	Amount
Euro	$	80,000	April 1, 2024	2.825%	€	71,550

(8) BUSINESS SEGMENTS & RELATED REVENUE INFORMATION

The Company has two reportable segments based on its management structure. Each segment ~~operating income~~is global in nature with a manager responsible for segment operational performance and the allocation of capital within the segment. Net corporate expense is net of certain service-related expenses that are allocated to ~~separate out~~business units generally on the ~~LIFO expense (benefit). Prior year financial information has been updated to reflect this change.~~

basis of employee headcounts and sales dollars.

Reportable segments are as follows:

~~ENGINEERED SUPPORT STRUCTURES:~~

INFRASTRUCTURE: This segment consists of the manufacture and distribution of products and solutions to serve the infrastructure markets of utility, solar, lighting and transportation, and telecommunications, and coatings services to preserve metal products.

AGRICULTURE: This segment consists of the manufacture of ~~engineered metal~~

~~structures~~center pivot components and ~~components for the global lighting and traffic, wireless communication, and roadway safety~~

~~industries;~~

~~ENERGY AND MINING:~~ ~~This segment, all outside of the United States, consists of the manufacture of~~

~~access systems applications, forged steel grinding media, on and offshore oil, gas, and wind energy structures;~~

~~UTILITY SUPPORT STRUCTURES:~~ ~~This segment consists of the manufacture of engineered steel and~~

~~concrete structures for the global utility industry;~~

~~COATINGS:~~ ~~This segment consists of galvanizing, anodizing and powder coating services on a global~~

~~basis; and~~

~~IRRIGATION:~~ ~~This segment consists of the manufacture of agricultural~~linear irrigation equipment ~~and related~~

~~parts and services~~ for ~~the global~~ agricultural ~~industry~~markets, including parts and tubular products, and advanced technology solutions for ~~industrial customers.~~

precision agriculture.

In addition to these two reportable segments, the Company had a business and related activities in 2022 that are not more than 10% of consolidated sales, operating income, or assets. This comprised the offshore wind energy structures business and was reported in the Other segment until its divestiture in fourth quarter 2022.

The Company evaluates the performance of its ~~business~~reportable segments based upon operating income and return on invested capital. The ~~Company does not allocate LIFO expense,~~Company’s operating income for segment purposes excludes unallocated corporate general and administrative expenses, interest expense, non-operating income and deductions, or income ~~taxes to its business segments.~~taxes.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)
(Unaudited)

~~(Unaudited)~~

~~(7)~~

(8) BUSINESS SEGMENTS ~~(Continued)~~

& RELATED REVENUE INFORMATION

Summary by Business


	Thirteen weeks ended
	April 1,		March 26,
	2023		2022
SALES:
Infrastructure	$	736,106	$	662,072
Agriculture		332,163		306,580
Other		—		18,654
Total		1,068,269		987,306
INTERSEGMENT SALES:
Infrastructure		(3,966)		(3,101)
Agriculture		(1,822)		(3,385)
Total		(5,788)		(6,486)
NET SALES:
Infrastructure		732,140		658,971
Agriculture		330,341		303,195
Other		—		18,654
Total	$	1,062,481	$	980,820

OPERATING INCOME (LOSS):
Infrastructure	$	94,352	$	78,316
Agriculture		53,323		37,475
Other		—		(809)
Corporate		(29,209)		(20,140)
Total	$	118,466	$	94,842

Thirteen Weeks Ended Thirty-nine Weeks Ended
September 30,
2017 September 24,
2016 September 30,
2017 September 24,
2016
SALES:
Engineered Support Structures segment:
Lighting, Traffic, and Roadway Products $ 175,184
$ 159,089
$ 498,034
$ 468,582
Communication Products 46,324
44,095
121,613
115,489
Engineered Support Structures segment 221,508
203,184
619,647
584,071
Energy and Mining segment:
Offshore and Other Complex Steel Structures 25,046
27,330
75,372
76,207
Grinding Media 19,800
20,681
60,466
61,189
Access Systems 34,909
33,541
99,096
97,297
Energy and Mining segment 79,755
81,552
234,934
234,693
Utility Support Structures segment:
Steel 160,948
131,085
471,072
379,157
Concrete 18,811
19,582
67,921
67,275
Utility Support Structures segment 179,759
150,667
538,993
446,432
Coatings segment 82,593
70,082
235,842
213,961
Irrigation segment 147,428
127,809
502,939
438,575
Total 711,043
633,294
2,132,355
1,917,732
INTERSEGMENT SALES:
Engineered Support Structures segment 11,736
10,076
48,399
29,202
Energy & Mining segment 6
319
6
3,386
Utility Support Structures segment 1,231
276
2,448
538
Coatings segment 14,913
10,079
44,230
31,778
Irrigation segment 2,378
2,297
6,283
5,727
Total 30,264
23,047
101,366
70,631
NET SALES:
Engineered Support Structures segment 209,772
193,108
571,248
554,869
Energy & Mining segment 79,749
81,233
234,928
231,307
Utility Support Structures segment 178,528
150,391
536,545
445,894
Coatings segment 67,680
60,003
191,612
182,183
Irrigation segment 145,050
125,512
496,656
432,848
Total $ 680,779
$ 610,247
$ 2,030,989
$ 1,847,101

OPERATING INCOME:
Engineered Support Structures segment $ 16,226
$ 20,323
$ 45,683
$ 53,615
Energy & Mining segment 1,417
3,941
9,195
9,184
Utility Support Structures segment 22,108
16,195
65,005
48,201
Coatings segment 14,577
11,696
36,091
37,132
Irrigation segment 18,235
15,308
83,196
75,216
Adjustment to LIFO inventory valuation method (1,626 ) (2,066 ) (2,839 ) (3,192 )
Corporate (11,014 ) (12,157 ) (33,616 ) (32,745 )
Total $ 59,923
$ 53,240
$ 202,715
$ 187,411

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)
(Unaudited)

~~(Unaudited)~~

(8) BUSINESS SEGMENTS & RELATED REVENUE INFORMATION – CONTINUED


	Thirteen weeks ended April 1, 2023
	Infrastructure		Agriculture		Other		Intersegment Sales		Consolidated
Geographical market:
North America	$	584,083	$	182,869	$	—	$	(5,374)	$	761,578
International		152,023		149,294		—		(414)		300,903
Total	$	736,106	$	332,163	$	—	$	(5,788)	$	1,062,481

Product line:
Transmission, Distribution, and Substation	$	314,820	$	—	$	—	$	—	$	314,820
Lighting and Transportation		229,136		—		—		—		229,136
Coatings		90,114		—		—		(3,552)		86,562
Telecommunications		68,137		—		—		—		68,137
Solar		33,899		—		—		(414)		33,485
Irrigation Equipment and Parts, excluding Technology		—		299,181		—		(1,822)		297,359
Technology Products and Services		—		32,982		—		—		32,982
Total	$	736,106	$	332,163	$	—	$	(5,788)	$	1,062,481


	Thirteen weeks ended March 26, 2022
	Infrastructure		Agriculture		Other		Intersegment Sales		Consolidated
Geographical market:
North America	$	505,980	$	182,255	$	—	$	(6,486)	$	681,749
International		156,092		124,325		18,654		—		299,071
Total	$	662,072	$	306,580	$	18,654	$	(6,486)	$	980,820

Product line:
Transmission, Distribution, and Substation	$	281,600	$	—	$	—	$	—	$	281,600
Lighting and Transportation		212,767		—		—		—		212,767
Coatings		81,976		—		—		(3,101)		78,875
Telecommunications		61,396		—		—		—		61,396
Solar		24,333		—		18,654		—		42,987
Irrigation Equipment and Parts, excluding Technology		—		278,034		—		(3,385)		274,649
Technology Products and Services		—		28,546		—		—		28,546
Total	$	662,072	$	306,580	$	18,654	$	(6,486)	$	980,820

~~(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION~~

The Company has three tranches of senior unsecured notes. All of the senior notes are guaranteed, jointly, severally, fully and unconditionally (subject to certain customary release provisions, including sale of the subsidiary guarantor, or sale of all or substantially all of its assets) by certain of the Company’s current and future direct and indirect domestic and foreign subsidiaries (collectively the “Guarantors”), excluding its other current domestic and foreign subsidiaries which do not guarantee the debt (collectively referred to as the “Non-Guarantors”). All Guarantors are 100% owned by the parent company.

~~Consolidated financial information for the Company ("Parent"), the Guarantor subsidiaries and the Non-Guarantor subsidiaries is as follows:~~

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)
(Unaudited)

~~(Unaudited)~~

(8) ~~GUARANTOR/NON-GUARANTOR FINANCIAL~~BUSINESS SEGMENTS & RELATED REVENUE INFORMATION ~~(Continued)~~

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)~~

Parent Guarantors Non-
Guarantors Eliminations Total
Net sales $ 261,928
$ 89,305
$ 300,648
$ (41,634 ) $ 610,247
Cost of sales 199,957
66,401
230,561
(41,695 ) 455,224
Gross profit 61,971
22,904
70,087
61
155,023
Selling, general and administrative expenses 46,183
11,073
44,527
—
101,783
Operating income 15,788
11,831
25,560
61
53,240
Other income (expense):
Interest expense (10,920 ) (6 ) (174 ) —
(11,100 )
Interest income 68
12
691
—
771
Other 1,370
12
(504 ) —
878
(9,482 ) 18
13
—
(9,451 )
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries 6,306
11,849
25,573
61
43,789
Income tax expense (benefit):
Current 6,112
5,095
6,762
48
18,017
Deferred (5,321 ) —
1,572
—
(3,749 )
791
5,095
8,334
48
14,268
Earnings before equity in earnings of nonconsolidated subsidiaries 5,515
6,754
17,239
13
29,521
Equity in earnings of nonconsolidated subsidiaries 22,658
—
—
(22,658 ) —
Net earnings 28,173
6,754
17,239
(22,645 ) 29,521
Less: Earnings attributable to noncontrolling interests —
—
(1,348 ) —
(1,348 )
Net earnings attributable to Valmont Industries, Inc $ 28,173
$ 6,754
$ 15,891
$ (22,645 ) $ 28,173

Table of Contents

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)~~

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)~~

~~For the~~ ~~Thirteen weeks ended September 30, 2017~~

~~For the Thirty-nine Weeks Ended September 30, 2017~~

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)~~

~~For the~~ ~~Thirteen weeks ended September 24, 2016~~

~~For the Thirty-nine Weeks Ended September 24, 2016~~

Net Investment Hedge

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)~~

~~September 30, 2017~~

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)~~

~~December 31, 2016~~

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)~~

~~For the~~ ~~Thirty-nine Weeks Ended September 30, 2017~~

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)~~

Item 2. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis contains ~~forward‑looking~~forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These ~~forward‑looking~~forward-looking statements are based on assumptions that management has made in light of experience in the industries in which the Company operates, as well as management’s perceptions of historical trends, current conditions, expected future developments, and other factors believed to be appropriate under the circumstances. These statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company’s control), and assumptions. Management believes that these ~~forward‑looking~~forward-looking statements are based on reasonable assumptions. Many factors could affect the Company’s actual financial results and cause them to differ materially from those anticipated in the ~~forward‑looking~~forward-looking statements. These factors include, among other things, risk factors described from time to time in the Company’s reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, geopolitical risks, and actions and policy changes of domestic and foreign governments.

This discussion should be read in conjunction with the financial statements and notes thereto, and the ~~management's~~management’s discussion and analysis included in the ~~Company's~~Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~.2022. Segment net sales in the table below 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.

Table of Contents

Results of Operations

(Dollars in millions, except per share amounts)

Thirteen Weeks Ended Thirty-nine Weeks Ended
September 30, 2017 September 24, 2016 % Incr. (Decr.) September 30, 2017 September 24, 2016 % Incr. (Decr.)
Consolidated
Net sales $ 680.8
$ 610.2
11.6 % $ 2,031.0
$ 1,847.1
10.0 %
Gross profit 163.6
155.0
5.5 % 511.5
491.1
4.2 %
as a percent of sales
24.0 % 25.4 % 25.2 % 26.6 %
SG&A expense 103.7
101.8
1.9 % 308.8
303.7
1.7 %
as a percent of sales
15.2 % 16.7 % 15.2 % 16.4 %
Operating income 59.9
53.2
12.6 % 202.7
187.4
8.2 %
as a percent of sales
8.8 % 8.7 % 10.0 % 10.1 %
Net interest expense 9.9
10.3
(3.9 )% 30.1
31.0
(2.9 )%
Effective tax rate 27.5 % 32.6 % 28.9 % 31.7 %
Net earnings $ 35.2
$ 28.2
24.8 % $ 119.9
$ 103.2
16.2 %
Diluted earnings per share $ 1.55
$ 1.24
25.0 % $ 5.28
$ 4.54
16.3 %
Engineered Support Structures (ESS)
Net sales $ 209.8
$ 193.1
8.6 % $ 571.3
$ 554.9
3.0 %
Gross profit 50.9
54.3
(6.3 )% 145.2
156.9
(7.5 )%
SG&A expense 34.6
34.0
1.8 % 99.5
103.3
(3.7 )%
Operating income 16.3
20.3
(19.7 )% 45.7
53.6
(14.7 )%
Energy and Mining (E&M)
Net sales $ 79.7
$ 81.2
(1.8 )% $ 234.9
$ 231.3
1.6 %
Gross profit 12.5
14.8
(15.5 )% 41.6
41.6
— %
SG&A expense 11.1
10.9
1.8 % 32.4
32.5
(0.3 )%
Operating income 1.4
3.9
(64.1 )% 9.2
9.1
1.1 %
Utility Support Structures (Utility)
Net sales $ 178.5
$ 150.4
18.7 % $ 536.5
$ 445.9
20.3 %
Gross profit 39.4
31.8
23.9 % 115.4
94.2
22.5 %
SG&A expense 17.3
15.6
10.9 % 50.4
46.0
9.6 %
Operating income 22.1
16.2
36.4 % 65.0
48.2
34.9 %
Coatings
Net sales $ 67.7
$ 60.0
12.8 % $ 191.6
$ 182.2
5.2 %
Gross profit 20.3
17.9
13.4 % 58.5
59.1
(1.0 )%
SG&A expense 5.8
6.2
(6.5 )% 22.5
22.0
2.3 %
Operating income 14.5
11.7
23.9 % 36.0
37.1
(3.0 )%
Irrigation
Net sales $ 145.1
$ 125.5
15.6 % $ 496.7
$ 432.8
14.8 %
Gross profit 42.1
38.1
10.5 % 153.6
141.4
8.6 %
SG&A expense 23.9
22.7
5.3 % 70.4
66.1
6.5 %
Operating income 18.2
15.4
18.2 % 83.2
75.3
10.5 %
Adjustment to LIFO inventory valuation method
Gross profit $ (1.6 ) $ (2.1 ) NM $ (2.8 ) $ (3.2 ) NM
Operating income (1.6 ) (2.1 ) NM (2.8 ) (3.2 ) NM
Net corporate expense
Gross profit $ —
$ 0.3
NM $ —
$ 1.1
NM
SG&A expense 11.0
12.4
(11.3 )% 33.6
33.8
(0.6 )%
Operating loss (11.0 ) (12.1 ) 9.1 % (33.6 ) (32.7 ) (2.8 )%

~~NM=Not meaningful~~


	Thirteen weeks ended
	April 1, 2023			March 26, 2022			% Incr. (Decr.)
Consolidated
Net sales	$	1,062.5		$	980.8		8.3	%
Gross profit		308.6			249.1		23.8	%
as a percent of sales		29.0	%		25.4	%
SG&A expense		190.1			154.3		23.2	%
as a percent of sales		17.9	%		15.7	%
Operating income		118.5			94.8		24.9	%
as a percent of sales		11.1	%		9.7	%
Net interest expense		12.3			11.0		11.2	%
Effective tax rate		30.3	%		26.8	%
Net earnings		74.5			62.3		19.6	%
Diluted earnings per share	$	3.47		$	2.90		19.7	%
Infrastructure
Net sales	$	732.2		$	658.9		11.1	%
Gross profit		200.5			166.0		20.8	%
SG&A expense		106.1			87.7		21.0	%
Operating income		94.4			78.3		20.5	%
Agriculture
Net sales	$	330.3		$	303.2		9.0	%
Gross profit		108.1			82.3		31.3	%
SG&A expense		54.8			44.9		22.0	%
Operating income		53.3			37.4		42.3	%
Other
Net sales	$	—		$	18.7		NM
Gross profit		—			0.8		NM
SG&A expense		—			1.6		NM
Operating loss		—			(0.8)		NM
Corporate
SG&A expense	$	29.2		$	20.1		45.3	%
Operating loss		(29.2)			(20.1)		45.0	%

Table of Contents

Overview, Including Items Impacting Comparability

On a consolidated basis, ~~the increase in~~ net sales were higher in the ~~third~~first quarter of ~~fiscal 2017,~~2023, as compared ~~with~~to the ~~third~~first quarter of ~~fiscal 2016, reflected~~2022, with higher sales in ~~all reportable segments except for the Energy & Mining segment. On a year-to-date basis, higher consolidated sales in 2017, as compared to 2016, reflected increases across all reportable~~both reporting segments. ~~The changes in net sales in the third quarter and first three quarters of fiscal 2017, as compared with fiscal 2016, were as follows:~~

Third quarter
Total ESS E&M Utility Coatings Irrigation
Sales - 2016 $ 610.2
$ 193.1
$ 81.2
$ 150.4
$ 60.0
$ 125.5
Volume 29.7
15.9
(6.9 ) 1.6
1.5
17.6
Pricing/mix 31.7
(3.5 ) 2.0
26.5
5.6
1.1
Acquisitions 1.6
1.6
—
—
—
—
Currency translation 7.6
2.7
3.4
—
0.6
0.9
Sales - 2017 $ 680.8
$ 209.8
$ 79.7
$ 178.5
$ 67.7
$ 145.1

Year-to-date
Total ESS E&M Utility Coatings Irrigation
Sales - 2016 $ 1,847.1
$ 554.9
$ 231.3
$ 445.9
$ 182.2
$ 432.8
Volume 110.4
20.4
(4.9 ) 48.2
(5.6 ) 52.3
Pricing/mix 63.1
(2.2 ) 5.1
42.4
14.5
3.3
Acquisitions 1.6
1.6
—
—
—
—
Currency translation 8.8
(3.4 ) 3.4
—
0.5
8.3
Sales - 2017 $ 2,031.0
$ 571.3
$ 234.9
$ 536.5
$ 191.6
$ 496.7

Volume effects are estimated based on a physical production or sales measure. Since products we sell are not uniform in nature, pricing and mix relate to a combination of changes in sales prices and the attributes of the product sold. Accordingly, pricing and mix changes do not necessarily directly result in operating income changes.

~~Average steel index~~

Steel prices for both hot rolled coil and plate were ~~higher~~volatile over the past two years, especially in North ~~America and China~~America. An increase in the ~~third~~average cost of consumed steel drove higher consolidated net sales and cost of sales in the first quarter ~~and first three quarters~~ of ~~2017,~~2023, as compared to the ~~same periods~~first quarter of 2022. Gross profit margin improved in ~~2016, resulting in higher average~~the first quarter of 2023, as compared to the first quarter of 2022, as customer pricing mechanisms and product selling price practices allowed for the recovery of cost of ~~material. We expect that average selling prices will increase over time to offset~~material inflation for both the ~~decrease in gross profit realized from the higher cost of steel for the Company.~~

~~In the third quarter of 2017, the two hurricanes in the continental United States negatively impacted 10 of our facilities by interrupting production~~Infrastructure and ~~delivery schedules. This impacted certain locations in the ESS, Coatings, and Utility~~Agriculture reportable segments.

The Company acquired ~~a highway business in India ("Aircon")~~ConcealFab in the ~~third~~second quarter of ~~2017~~2022, a telecommunications technology company that offers 5G infrastructure and passive intermodulation mitigation solutions, which is included in the Infrastructure segment.

The Company divested of its offshore wind energy structures business in the fourth quarter of 2022, which resulted in a pre-tax loss of approximately $33.3 million. The offshore wind energy structures business is included in the Other segment until its divestiture in 2022 and the loss was recorded in “Other income (expenses)” in the Consolidated Statements of Earnings at December 31, 2022.

Non-cash items of note impacting the comparability of results from net earnings for the first quarter of 2023 included amortization of identified intangible assets of $1.6 million ($1.3 million after-tax) and stock-based compensation expense of $2.0 million ($1.8 million after-tax) for the employees from the Prospera subsidiary acquired in the second quarter of 2021 (recognized within SG&A for the Agriculture segment).

Non-cash items of note impacting the comparability of results from net earnings for the first quarter of 2022 included amortization of identified intangible assets of $1.6 million ($1.2 million after-tax) and stock-based compensation expense of $2.5 million ($2.3 million after-tax) for the employees from the Prospera subsidiary acquired in the second quarter of 2021 (recognized within SG&A for the Agriculture segment).

Macroeconomic Impacts on Financial Results and Liquidity

We continue to monitor several macroeconomic and geopolitical trends that impacted our ~~ESS segment.~~

~~Restructuring Plan~~

business, including inflationary cost pressures, supply chain disruptions, changes in foreign currency exchange rates against the U.S. dollar, rising interest rates, the ongoing Russia-Ukraine conflict, changing conditions from the COVID-19 pandemic, and labor shortages.

Reportable Segments

In ~~July 2016,~~addition to the two reportable segments, the Company ~~identified~~had a ~~restructuring plan~~business and related activities in ~~Australia/New Zealand (the "2016 Plan") focused primarily on closing~~2022 that are not more than 10% of consolidated sales, operating income, or assets. This comprised the offshore wind energy structures business and ~~consolidating locations within the Energy and Mining and Coatings segments. The Company incurred pre-tax expenses from the 2016 Plan of $2.1 million~~was reported in the ~~third~~Other segment until its divestiture in fourth quarter 2022. All prior period information has been recast to reflect this change in reportable segments. See Note 8 to our Condensed Consolidated Financial Statements for additional information.

Backlog

The consolidated backlog of unshipped orders at April 1, 2023 was approximately $1.6 billion compared with approximately $1.7 billion at December 31, 2022.

Currency Translation

In the first quarter of 2016. The Energy and Mining segment incurred approximately $1.6 million, the Coatings segment incurred approximately $0.3 million, and Corporate incurred approximately $0.2 million of restructuring expenses during the third quarter of 2016.

~~Currency Translation~~

~~In the third quarter and first three quarters of fiscal 2017,~~2023, we realized an increase in operating ~~profit,~~income, as compared with ~~fiscal 2016, due to~~2022, despite negative currency translation effects. ~~The U.S. dollar primarily weakened against the Brazilian real and South African rand, resulting in more operating profit in U.S. dollar terms.~~ The breakdown of this effect by segment was as

follows:


	Total		Infrastructure		Agriculture		Corporate
First quarter	$	(0.7)	$	(0.5)	$	(0.3)	$	0.1

Total ESS E&M Utility Coatings Irrigation Corporate
Third quarter $ 0.4
$ 0.2
$ 0.1
$ —
$ 0.1
$ —
$ —

Year-to-date $ 1.3
$ 0.1
$ 0.1
$ —
$ (0.1 ) $ 1.2
$ —

Table of Contents

Gross Profit, SG&A, and Operating Income

At a consolidated level, ~~the reduction in~~ gross ~~margin (gross~~ profit as a percent of ~~sales)~~sales was higher in the ~~third~~first quarter ~~and first three quarters~~ of ~~2017,~~2023, as compared with the ~~same periods in 2016, was primarily~~first quarter of 2022, and the amount of gross profit increased due to the higher ~~raw material~~average selling prices across ~~most~~all product lines more than offsetting higher costs of ~~our businesses. Gross~~goods sold across the Company. Amounts of gross profit increased for both reportable segments.

The increase in SG&A expense in the ~~third~~first quarter ~~and first three quarters~~ of ~~2017,~~2023, as compared to the ~~same periods in 2016,~~first quarter of 2022, was due to ~~increased sales volumes in most operating segments. The Irrigation and Utility segments realized~~the incremental SG&A of $3.2 million from the June 2022 acquisition of ConcealFab, as well as higher salaries as a result of merit increases, in the third quarter and first three quarters of 2017, while ESS and Energy & Mining realized a decrease in gross profit primarily due to sales pricing that did not fully recover higher raw material costs and an unfavorable sales mix. The Coatings segment realized higher gross profit in the third quarter, but lower gross profit in the first three quarters of 2017 as compared to the same periods in fiscal 2016.

~~The Company saw an increase in SG&A in the third quarter and first three quarters of fiscal 2017, as compared to the same periods in 2016, due to higher incentive expenses related~~incentives attributed to improved ~~business operations.~~financial results, and higher travel costs. In addition, the Company incurred ~~higher deferred compensation expenses in the first three quarters~~a bad debt reserve charge of ~~2017 of $1.7~~approximately $2.7 million ~~which was offset by the same amount of other income.~~

~~In the third quarter of 2017, as compared~~related to ~~2016, operating income for all operating segments were higher except for the ESS and Energy & Mining segments. On~~ a ~~year-to-date basis, operating income was higher in 2017 for the Utility and Irrigation segments and lower for the ESS and Coatings segments.~~ telecommunications customer that became insolvent.

The increase in consolidated operating income in the ~~third~~first quarter ~~and first three quarters~~ of ~~2017,~~2023, as compared to the ~~same periods~~first quarter of 2022, was primarily due to the increase in ~~2016, is primarily attributable~~average selling prices more than offsetting higher costs of goods sold. This was partially offset by the increase in SG&A period over period.

Net Interest Expense

Interest expense increased in the first quarter of 2023, as compared to the first quarter of 2022, due to increased ~~sales volumes in~~borrowing on the ~~Utility and Irrigation segments.~~

~~Net Interest Expense and Debt~~

~~Net interest expense in the third quarter and first three quarters~~revolving line of ~~2017, as compared with the same periods in 2016, was consistent due to minimal changes in short and long-term borrowings. Interest income increased due to more cash~~credit.

Other Income / Expenses (including Gain (loss) on ~~hand to invest.~~

~~Other Income/Expense~~

Investments - Unrealized)

The change in other income/~~expense~~expenses in the ~~third~~first quarter ~~and first three quarters~~ of ~~2017,~~2023, as compared ~~with~~to the first quarter of 2022, was primarily due to a pension expense of $0.1 million in the first quarter of 2023, as opposed to a pension benefit of $2.7 million in the first quarter of 2022. These changes were partially offset by the change in the valuation of deferred compensation assets, shown as "Gain (loss) on investments - unrealized" on the Condensed Consolidated Statements of Earnings, which resulted in higher other income of $2.3 million. The change related to deferred compensation assets is offset by an expense of the same ~~periods~~amount in ~~2016,~~SG&A expense.

Income Tax Expense

Our effective income tax rate in the first quarter of 2023 was 30.3% compared to 26.8% in the first quarter of 2022. The increase in the effective tax rate was primarily due to a change in valuation of deferred compensation assets. This change resulted in lower other income in the third quarter of $0.4 million but increased other income for the first three quarters of $1.7 million. This amount is offset by the same amount in SG&A expense. The change in the market value of the Company's shares held of Delta EMD was a $0.6 million smaller loss on a year-to-date basis when comparing 2017geographical earnings.

Loss (Earnings) Attributable to ~~2016. The remaining change was due to foreign currency transaction gains or losses.~~

~~Income Tax Expense~~

Our effective income tax rate in the third quarter and first three quarters of 2017 was 27.5% and 28.9%, respectively, compared to 32.6% and 31.7% in the third quarter and first three quarters of 2016, respectively. A $1.9 million reversal of a valuation allowance against certain foreign net operating loss carryforwards in third quarter of 2017 contributed to the lower

~~tax rate. In addition, the Company recorded $1.8 million of deferred income tax expense related to decreased future corporate tax rates in the United Kingdom in the third quarter of 2016.~~

~~Earnings~~Noncontrolling Interests

Loss (earnings) attributable to noncontrolling interests ~~was consistent~~were lower in the ~~third~~first quarter ~~and first three quarters~~ of ~~2017,~~2023, as compared to the ~~same periods in 2016.~~

first quarter of 2022, due to lower net earnings of the subsidiaries the Company does not own 100%.

Cash Flows from Operations

Our cash flows provided by operations ~~was $134.4~~were $21.2 million in the first ~~three quarters~~quarter of ~~fiscal 2017,~~2023, as compared with ~~$127.3~~$2.7 million provided by operations in the first ~~three quarters~~quarter of ~~2016.~~2022. The increase ~~in operating cash flow in the first three quarters of fiscal 2017, as compared with 2016,~~ was primarily the result of ~~improved~~the increase in net earnings ~~mostly~~and continued focus on overall working capital levels, partially offset by ~~higher net working capital tied~~a significant increase in the contribution to ~~increased sales volumes.~~the defined benefit pension plan of approximately $15 million.

~~Engineered Support Structures (ESS) segment~~

~~The increase in~~

Table of Contents

Infrastructure Segment


	Thirteen weeks ended
					Dollar
Infrastructure	Q1 2023		Q1 2022		Change		% Change
Sales, gross of intercompany eliminations:
Transmission, Distribution, and Substation	$	314.9	$	281.6	$	33.3	11.8	%
Lighting & Transportation		229.1		212.8		16.3	7.7	%
Coatings		90.1		82.0		8.1	9.9	%
Telecommunications		68.1		61.4		6.7	11.0	%
Solar		33.9		24.3		9.6	39.3	%
Total	$	736.1	$	662.1	$	74.0	11.2	%

Operating Income	$	94.4	$	78.3	$	16.1	20.5	%

Net sales in the ~~third~~first quarter ~~and first three quarters~~ of ~~fiscal 2017,~~2023, as ~~compared with the same periods of 2016, was due to improved roadway product sales volumes and higher communication product line sales volumes.~~

~~Global lighting and traffic, and roadway product sales in the third quarter and first three quarters of 2017 were higher~~ compared to the ~~same periods in fiscal 2016,~~first quarter of 2022, increased across all of the product lines, primarily due to increased sales volumes in roadway product sales, which is a product line outside of North America. In the third quarter and first three quarters of 2017, as compared to 2016, sales volumes in the U.S. were lower across commercial and transportation markets. The 2015 long-term U.S. highway bill has not yet provided a meaningful uplift for our North America structures business. Sales in Europe were higher in the third quarter but lower in the first three quarters of 2017 compared to the same periods in fiscal 2016. The domestic markets in general remain subdued in Europe. The increase in sales volume wasaverage selling prices, partially offset by ~~unfavorable currency translation effects on a year-to-date basis.~~

~~Communication product line sales were higher in the third quarter and first three quarters~~$10.8 million of fiscal 2017, as compared with the same periods in fiscal 2016. In both North America and Asia-Pacific, communication structure and component sales increased due to higher demand from the continued network expansion by providers.

Gross profit, as a percentage of sales, and operating income for the segment were lower in the third quarter and first three quarters of 2017, as compared with the same periods in 2016, due to margin contraction from higher raw material costs that the business was not able to fully recover through higher sales pricing. SG&A spending was higher in the third quarter of 2017, as compared to 2016, due tounfavorable foreign currency translation effects. ~~SG&A~~From a geography perspective, the increase in sales within North America was much higher than within international markets. We expect continued increases in sales in North America in line with the expansion of infrastructure spending ~~was lower~~as the rollout of the Infrastructure Investment and Jobs Act and the Inflation Reduction Act of 2022 continue.

Transmission, distribution, and substation sales increased in the first three quarters of 2017, as compared to 2016, due primarily to lower commissions owed on communication product line sales, reduced incentives due to decreased operating performance, and currency translation effects.

~~Energy & Mining (E&M) segment~~

~~The decrease in net sales in the third~~ quarter of 2017, as compared to 2016, was due primarily to lower sales volumes that were partially offset by higher sales pricing and favorable currency translation effects. The increase in net sales in the first three quarters of 2017, as compared to 2016, was due to higher sales pricing and favorable currency translation effects.

Access systems product line net sales in the third quarter and first three quarters of 2017 were higher than the same periods in 2016 due to higher sales pricing and favorable currency translation effects. The increase was partially offset by lower external sales volumes in Asia.

~~Offshore and other complex structures sales decreased in the third quarter of 2017,~~2023, as compared to the ~~same period in 2016, due to lower volumes that were partially offset by favorable currency translation effects. Sales decreased in the~~ first ~~three quarters of 2017, as compared to 2016, due to lower sales pricing that was partially offset by volume improvements primarily in the wind tower product line.~~

Grinding media sales were down slightly in the third quarter and first three quarters of 2017, as compared to the same periods in 2016. A decrease in sales volumes was offset by higher sales pricing and favorable currency translation effects.

~~Operating income for the segment in the third~~ quarter of ~~2017, as compared to 2016, was lower~~2022, primarily due to meaningfully higher average selling prices and slightly higher sales ~~pricing that did not fully recover higher material costs~~volumes. This increase in ~~the grinding media business. Operating income was comparable in the first three quarters of 2017 as compared to 2016,~~average selling prices is due to benefits realized in Access Systems from the 2016 restructuring activities offsetting the lower gross profit realized from higher material costs. SG&A expense was flat in the third quarter and first three quarters of 2017, as compared to the same periods in 2016. Restructuring costs incurred in the third quarter of 2016 and lower compensation costs were offset by currency translation effects in 2017.

~~Utility Support Structures (Utility) segment~~

~~In the Utility segment, sales increased in the third quarter of 2017, as compared with 2016, due to the higher costs of steel and~~ a ~~favorable sales mix. A~~ number of our sales contracts ~~contain provisions~~in North America containing price escalation clauses that tie the sales price to published steel index pricing at the time our ~~customer issues~~customers issue their purchase order. ~~For~~

Lighting and transportation sales increased during the first ~~three quarters~~quarter of ~~2017,~~2023, as compared to ~~2016, improved~~the first quarter of 2022, due to an increase in sales ~~demand~~volume, primarily in North America. Higher average selling prices also drove higher sales in the first quarter of 2023.

Telecommunication sales increased in the first quarter of 2023, as compared with first quarter of 2022, due primarily to approximately $8 million of sales from the second quarter 2022 acquisition of ConcealFab. Sales volumes were slightly lower in North America ~~resulted~~and average selling prices were generally consistent in the first quarter 2023, as compared to the first quarter 2022.

Coatings sales increased in the first quarter of 2023, as compared with the first quarter of 2022, due to higher average selling prices.

Solar sales increased in the first quarter of 2023, as compared with the first quarter of 2022, due to increased sales ~~volumes~~volumes.

Gross profit and gross profit margin were higher in ~~tons~~the first quarter of 2023, as compared to the first quarter of 2022. The customer contractual pricing mechanisms and selling price management initiatives led to an increase in average selling prices above the rate of inflation. SG&A was higher in the first quarter of 2023, as compared to the first quarter of 2022, primarily due to higher employment costs mostly attributed to inflationary wage increases, incremental SG&A of $3.2 million from the June 2022 acquisition of ConcealFab, and a bad debt reserve charge of approximately $2.7 million related to a telecommunications customer that became insolvent. The increase in operating income for ~~steel utility structures~~the first quarter of 2023, as compared with the first quarter of 2022, is also ~~contributed~~due to the increase in ~~sales. Sales volumes~~average selling prices and profits from the increase in ~~tons for concrete utility structures were also higher~~sales volumes. The operating income margin increased to 12.9% in the ~~third~~first quarter of 2023, from 11.9% in the first quarter of 2022, due to better leverage of fixed costs, including SG&A, in the first quarter of 2023.

Table of Contents

Agriculture Segment


	Thirteen weeks ended
					Dollar
Agriculture	Q1 2023		Q1 2022		Change		% Change
Sales, gross of intercompany eliminations:
North America	$	182.9	$	182.3	$	0.6	0.3	%
International		149.3		124.3		25.0	20.1	%
Total	$	332.2	$	306.6	$	25.6	8.3	%

Operating Income	$	53.3	$	37.5	$	15.8	42.3	%

The increase in Agriculture segment net sales in the first quarter of 2023, as compared to first quarter of 2022, was primarily due to much higher average selling prices of irrigation equipment globally. In North America, lower sales volumes for irrigation systems and parts in the first ~~three quarters~~quarter of ~~2017,~~2023, as compared to the ~~same periods in 2016. International utility structures sales decreased in 2017~~first quarter of 2022, were driven by general economic uncertainty due to ~~lower volumes.~~

~~Gross profit as~~ a ~~percentage~~number of macroeconomic factors including higher interest rates, continued inflationary pressures, and recessionary fears. International sales volumes increased in the ~~third~~first quarter of 2023, as compared to first quarter of 2022, due primarily to improved sales volumes in Brazil. The strength of our international irrigation businesses more than offset lower volumes experienced in North America. Sales of technology-related products and services continue to increase, as growers continued their adoption of technology to reduce costs and enhance profitability.

The increase in gross profit in the first ~~three quarters~~quarter of ~~2017,~~2023, as compared to the ~~same periods~~first quarter of 2022, was primarily attributed to the meaningfully higher average selling prices which more than offset the amount of inflation within cost of goods sold. SG&A was higher in ~~2016,~~the first quarter of 2023, as compared to the first quarter of 2022, primarily due to ~~improved pricing and sales mix.~~higher employment costs, mostly attributed to inflationary wage increases. Operating income for the segment was higher in the first quarter of 2023, as compared to the first quarter of 2022, due primarily to the 5.6% increase in gross profit margin mostly attributed to higher average selling prices.

Other

In November 2022, the Company completed the sale of Valmont SM, an offshore wind energy structures business with operations in Denmark.

Corporate

Corporate SG&A expense was higher in the ~~third~~first quarter ~~and first three quarters~~ of 2017, as compared with the same periods in 2016, due to higher incentive expense and commission expense attributed to the increased sales volumes. Operating income increased in the third quarter and first three quarters of 2017, as compared with 2016, due to the increased sales volumes and improved sales pricing.

~~Coatings segment~~

~~Coatings segment sales increased in the third quarter and first three quarters of 2017,~~2023, as compared to the same periods in 2016, due primarily to increased sales prices to recover higher zinc costs globally. External sales volumes in North America increased in the third quarter but were lower year-to-date, while intercompany volumes increased in the third quarter and first ~~three quarters. In the Asia-Pacific region, improved demand/volume provided an increase in net sales.~~

~~SG&A expense was lower in the third~~ quarter of 2017, as compared to 2016, due to restructuring actions undertaken in 2016 to reduce the cost structure in Australia. SG&A expense was comparable in the first three quarters of 2017, as compared to 2016. Operating income was higher in the third quarter of 2017 compared to 2016, due to improved sales pricing and restructuring actions undertaken in 2016. Operating income was lower in the first three quarters of 2017, as compared with 2016, due to costs incurred to start up our facility in Texas.

~~Irrigation segment~~

2022. The increase ~~in Irrigation segment net sales in the third quarter of 2017, as compared to 2016, was~~is primarily due to ~~sales volume increases for international irrigation. On a year-to-date basis in 2017 as compared~~$2.3 million of incremental expense from the valuation of the deferred compensation plan assets, higher incentive accruals attributed to ~~2016, the sales increase is driven by~~ improved ~~volumes for both the domestic~~business performance, and ~~international irrigation businesses. In North America, when comparing 2017 to the same periods of 2016, sales volumes were comparable in the third quarter but~~ increased year-to-date primarily driven by markets outside the traditional corn-belt. In addition, higher equipment running times due to weather conditions resulted in higher service parts sales on a year-to-date basis. International sales increased in the third quarter and first three quarters of 2017, as compared to the same periods in 2016, due to volume increases across most regions and favorable foreign currency translation effects for Brazil and South Africa.

~~SG&A was higher in the third quarter and first three quarters of fiscal 2017, as compared with the same periods in 2016. The increase can primarily be~~expense from our trade accounts receivable sale program attributed to higher ~~incentive costs due to improved business results and currency translation effects~~interest rates. The change related to the international irrigation business. Operating income for the segment increased in the third quarter and first three quarters of fiscal 2017 over the same periods in 2016, primarily due to North America and international irrigation sales volume increases, productivity improvements, and favorable foreign currency translation effects.

~~Net corporate expense~~

~~Corporate SG&A expense was lower in the third quarter of 2017, as compared to the same period in 2016, due to $0.4 million lower pension expense for the Delta Pension Plan and $0.4 million of lower~~ deferred compensation ~~expenses that is offset by the same amount in other expense. Net corporate expense slightly increased in the first three quarters of 2017 as~~

~~compared to 2016, due to $1.7 million of higher deferred compensation expenses that is~~assets are offset by a ~~reduction~~change of the same amount in ~~other expense. This increase was partially offset by $1.0 million of lower pension expenses for the Delta Pension Plan.~~

Other income.

Liquidity and Capital Resources

~~Cash Flows~~

~~Working~~

Capital Allocation Philosophy

We have historically funded our growth, capital spending, and ~~Operating Cash Flows-Net working capital was~~ ~~$1,034.7 million~~ at ~~September 30, 2017, as compared to~~ ~~$903.4 million~~ at ~~December 31, 2016~~. The increase in net working capital in 2017 mainly resulted from increased receivables, cash on hand, and inventory, partially offset by higher accrued expenses and accounts payable. Cash flow provided by operations was $134.4 million in the first three quartersacquisitions through a combination of ~~2017, as compared with $127.3 million in first three quarters of 2016. The increase in~~ operating cash ~~flow in~~flows and debt financing. The following are the ~~first three quarters~~capital allocation / priorities for cash generated:

●

working capital and capital expenditure investments necessary for future sales growth;

●

dividends on common stock in the range of 20% of the prior year’s fully diluted net earnings;

●

acquisitions; and

●

return of capital to shareholders through share repurchases.

Table of ~~2017, as compared~~Contents

We intend to ~~2016, was primarily the result of higher net earnings tied~~manage our capital structure to ~~increased sales volumes~~maintain our investment grade debt rating. Our most recent ratings were Baa3 by Moody’s Investors Services, Inc., BBB- by Fitch Ratings, and ~~pricing that was mostly offset~~BBB+ by Standard and Poor’s Rating Services. We would be willing to allow our debt rating to fall to BBB- to finance a ~~corresponding increase in working capital.~~

~~Investing Cash Flows-Capital spending in the first three quarters of fiscal 2017 was $39.9 million, as compared to $42.2 million for the same period in~~ ~~2016. Capital spending projects in 2017 and 2016 related to investments in machinery and equipment across all businesses.~~special acquisition or other opportunity. We expect to maintain a ratio of debt to invested capital which will support our ~~capital spending for the 2017 fiscal year to be approximately $60 million.~~

~~Financing Cash Flows-Our total interest‑bearing~~current investment grade debt ~~decreased slightly to~~ ~~$755.3 million~~ at ~~September 30, 2017~~ ~~from~~ ~~$756.4 million~~ at ~~December 31, 2016. Financing cash flows changed from a use~~rating.

The Board of ~~approximately $82.4 million~~Directors in the first three quarters of fiscal 2016 to a use of $22.0 million in the first three quarters of fiscal 2017. The reduction of financing cash outflows in the first three quarters of 2017, as compared to 2016, was due to the Company purchasing $46.6 million of treasury shares under our share repurchase program andMay 2014 authorized the purchase of ~~certain noncontrolling interests totaling $11.0~~up to $500 million ~~in 2016.~~

~~Financing and Capital~~

~~We have~~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 ~~open~~additional $250 million of share purchases in February 2015 and again in October 2018, and authorized an additional $400 million of share ~~purchase program without an~~repurchases in February 2023. These authorizations have no expiration date. The ~~share~~ 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 ~~share~~ repurchases ~~under the share repurchase program~~ and we may discontinue the ~~share repurchase~~ program at any time. ~~No shares were repurchased during the first three quarters of 2017. As of September 30, 2017,~~At April 1, 2023, we have acquired approximately ~~$132.2~~7.0 million ~~open~~shares for approximately $1,029.7 million under this ~~authorization~~share repurchase program.

On February 28, 2023, the Company announced that the Board of Directors approved an increase to ~~repurchase shares~~the quarterly cash dividend on the common stock to $0.60 per share, or a rate of $2.40 per share on an annualized basis, an increase of 9% from the prior quarterly cash dividend of $0.55 per share.

Supplier Finance Program

We have a supplier finance program agreement with a financial institution which 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 ~~future.~~

~~Our capital allocation philosophy announcement~~program does not change our payment terms, amounts paid, payment timing, or impact our liquidity, and we have no economic interest in a supplier’s decision to participate. At April 1, 2023 and December 31, 2022, our accounts payable on our balance sheet included $58.1 million and $48.9 million, respectively, of our intention to manage our capital structure to maintain our investment grade debt rating. Our most recent rating were Baa3 by Moody's Investors Services, Inc. and BBB+ rating by Standard and Poor's Rating Services. We expect to maintain a leverage ratio which will support our current investment grade debt rating.

payment obligations under this program.

Sources of Financing

Our debt financing at ~~September 30, 2017 is~~April 1, 2023 consisted primarily ~~long-term~~of long‑term debt ~~consisting~~and borrowings on our revolving credit facility. Our long‑term debt at April 1, 2023, principally consisted of:

●

$450 million face value ($433.2 million carrying value) of senior unsecured notes that bear interest at 5.00% per annum and are due in October 2044.

●

$305 million face value ($295.0 million carrying value) of senior unsecured notes that bear interest at 5.25% per annum and are due in October 2054.

~~$250.2 million face value ($253.0 million carrying value) of senior unsecured notes that bear interest at 6.625% per annum and are due in April 2020.~~

~~$250 million face value ($248.9 million carrying value) of senior unsecured notes that bear interest at 5.00% per annum and are due in October 2044.~~

~~$250 million face value ($246.8 million carrying value) of unsecured notes that bear interest at 5.25% per annum and are due in October 2054.~~

We are allowed to repurchase the notes ~~at specified prepayment premiums. All three~~subject to the payment of a make-whole premium. Both tranches of these notes are guaranteed by certain of our subsidiaries.

~~On October 18, 2017, we amended and restated our~~

Our revolving credit facility with JP Morgan Chase Bank, N.A., as Administrative Agent, and the other lenders party ~~thereto.~~ thereto, has a maturity date of October 18, 2026.

The revolving credit facility provides for ~~$600~~$800 million of committed unsecured revolving credit ~~loans.~~loans with available borrowings thereunder to $400 million in foreign currencies. We may increase the credit facility by up to an additional ~~$200~~$300 million at any time, subject to lenders increasing the amount of their commitments. ~~Our~~The Company and our wholly-owned subsidiaries, Valmont Industries Holland B.V. and Valmont Group Pty. Ltd., ~~along with the Company,~~ are authorized borrowers under the credit facility. The obligations arising under the revolving credit facility are guaranteed by the Company and its wholly-owned subsidiaries ~~PiRod,~~Valmont Telecommunications, Inc., Valmont Coatings, Inc., Valmont Newmark, Inc., and Valmont Queensland Pty. Ltd.

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

(a)

term SOFR (based on a 1-, 3- or 6-month interest period, as selected by the Company) plus a 10 basis point adjustment plus a spread of 100 to 162.5 basis points, depending on the credit rating of the Company’s senior, unsecured, long-term debt published by Standard & Poor’s Rating Services and Moody’s Investors Service, Inc.;

~~The amendments~~

Table of Contents

(b)

the higher of

●

the prime lending rate,

●

the overnight bank rate plus 50 basis points, and

●

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

plus, in each case, 0 to 62.5 basis points, depending on the credit rating of our senior, unsecured, long-term debt published by Standard & Poor’s Rating Services and Moody’s Investors Service, Inc.; or

(c)

daily simple SOFR plus a 10 basis point adjustment plus a spread of 100 to 162.5 basis points, depending on the credit rating of the Company’s senior, unsecured, long-term debt published by Standard & Poor’s Rating Services and Mood’s Investors Service, Inc.

A commitment fee is also required under the revolving credit facility which ~~are adopted in the amended and restated credit agreement, include:~~

~~an extension of the maturity date of the credit facility from October 17, 2019 to October 18, 2022;~~

~~an increase in the available borrowings in foreign currencies from $200 million to $400 million;~~

~~a decrease in the range of commitment fees payable from 10 to 27.5 basis points to~~accrues at 10 to 25 basis points, ~~(the specific commitment fees payable~~depending on the credit rating of our senior, unsecured long-term debt published by Standard and Poor’s Rating Services and Moody’s Investor Services, Inc., on the average daily unused portion of the commitments under the revolving credit ~~facility depend on the credit rating of the Company's senior, unsecured, long-term debt);~~

~~a modification of the definition of "EBITDA" to add-back non-recurring cash and non-cash restructuring costs in an amount that does not exceed $75 million in any trailing twelve month period;~~

~~a modification of the leverage ratio permitting it to increase from 3.5X to 3.75X for the four consecutive fiscal quarters after certain material acquisitions;~~

~~implementing beneficial changes to certain of the baskets and exceptions in the negative covenants of the credit facility; and~~

~~updating the credit facility with certain market provisions.~~

agreement.

At ~~September 30, 2017~~April 1, 2023 and December 31, ~~2016,~~2022, we had no outstanding borrowings of $255.7 million and $140.5 million, respectively, under ~~our~~the revolving credit ~~agreement.~~facility. The revolving credit ~~agreement~~facility has a maturity date of October 18, 2026 and contains ~~certain~~a financial ~~covenants~~covenant that may limit our additional borrowing capability under the agreement. At ~~September 30, 2017,~~April 1, 2023, we had the ability to borrow ~~$585.2~~$544.1 million under this facility, after consideration of standby letters of credit of ~~$14.8~~$0.2 million associated with certain insurance ~~obligations and international sales commitments.~~obligations. We also maintain certain ~~short-term~~short‑term bank lines of credit totaling ~~$113.0 million, $112.8~~$38.2 million; $26.7 million of which was unused at ~~September 30, 2017.~~

April 1, 2023.

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.

The revolving credit facility requires maintenance of a financial leverage ratio, measured as of the last day of each of our fiscal quarters, of 3.50:1 or less. The leverage ratio is the ratio of: (a) interest-bearing debt minus unrestricted cash in excess of $50 million (but not exceeding $500 million); to (b) adjusted EBITDA. The debt agreements ~~contain covenants that require us~~provide a modification of the definition of “EBITDA” to ~~maintain certain coverage ratios~~add-back any non-cash stock-based compensation in any trailing twelve month period and ~~may limit us with respect to certain business activities, including capital expenditures. The debt agreements~~ allow ~~us to add estimated EBITDA from acquired businesses for periods we did not own the acquired business. The debt agreements also provide~~ for an adjustment to EBITDA, subject to certain limitations, for non-cash charges or gains that are non-recurring in nature. ~~For 2017,~~The leverage ratio is permitted to increase from 3.50:1 to 3:75:1 for the four consecutive fiscal quarters after certain material acquisitions.

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 ~~covenant calculations do not include any estimated EBITDA from acquired businesses.~~

~~Our key debt covenants are as follows:~~

~~Interest-bearing debt is not~~subsidiaries with respect to ~~exceed 3.5X Adjusted EBITDA~~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 acceleration of the ~~prior four quarters;~~obligations thereunder and

~~Adjusted EBITDA over~~ exercise of other enforcement remedies upon the ~~prior four quarters must be at least 2.5X our interest expense over the same period.~~

occurrence of customary events of default (subject to customary grace periods, as applicable).

At ~~September 30, 2017,~~April 1, 2023, we were in compliance with all covenants related to ~~the~~these debt agreements. ~~The key covenant calculations at September 30, 2017 were as follows:~~

Interest-bearing debt $ 755,348
Adjusted EBITDA-last four quarters 345,590
Leverage ratio 2.19

Adjusted EBITDA-last four quarters $ 345,590
Interest expense-last four quarters 44,445
Interest earned ratio 7.78

The calculation of Adjusted ~~EBITDA-last~~EBITDA for the last four quarters ~~(September 25, 2016 through September 30, 2017) is as follows:~~

Net cash flows from operations $ 226,318
Interest expense 44,445
Income tax expense 42,666
Impairment of property, plant and equipment (481 )
Loss on investment (8 )
Change in fair value of contingent consideration (285 )
Deferred income tax benefit 22,072
Noncontrolling interest (5,292 )
Stock-based compensation (10,659 )
Increase in restricted cash - pension plan trust (12,568 )
Pension plan expense (865 )
Contribution to pension plan 26,840
Changes in assets and liabilities 29,167
Other 350
EBITDA 361,700
Reversal of contingent liability (16,591 )
Impairment of property, plant and equipment 481
Adjusted EBITDA $ 345,590

Net earnings attributable to Valmont Industries, Inc. $ 189,915
Interest expense 44,445
Income tax expense 42,666
Depreciation and amortization expense 84,674
EBITDA 361,700
Reversal of contingent liability (16,591 )
Impairment of property, plant, and equipment 481
Adjusted EBITDA $ 345,590

and the leverage ratio are presented in the tables below in Selected Financial Measures.

Cash Uses

Our principal cash requirements include working capital, capital expenditures, payments of principal and interest on our debt, payments of taxes, contributions to pension plan, and, if market conditions warrant, occasional investments in, or acquisitions of, business ventures. In addition, we regularly evaluate our ability to pay dividends or repurchase stock, all consistent with the terms of our debt agreements.

Our businesses are cyclical, but we have diversity in our markets, from a product, customer, and a geographical standpoint. We have demonstrated the ability to effectively manage through business cycles and maintain liquidity. We have

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consistently generated operating cash flows in excess of our capital expenditures. Based on our available credit facilities, recent issuance of senior unsecured notes, and our history of positive operational cash flows, we believe that we have adequate liquidity to meet our needs.

We have not made any provision for U.S. income taxes in our financial statements on approximately $437.8 million of undistributed earnings of our foreign subsidiaries, as we intend to reinvest those earnings. Of our cash balances of ~~$493.5~~$172.9 million at ~~September 30, 2017,~~April 1, 2023 and approximately ~~$370.5~~$132.8 million is held in ~~entities outside the United States.~~our non-U.S. subsidiaries. If we ~~need to repatriate~~distributed our foreign cash balances, ~~to the United States to meet our cash needs, income~~certain taxes would be ~~paid to the extent that those cash repatriations were undistributed earnings of our~~applicable. At April 1, 2023, we have a liability for foreign ~~subsidiaries. The determination of the additional~~withholding taxes and U.S. ~~federal and~~ state income taxes of $2.2 million and $0.9 million, respectively.

Cash Flows

The following table includes a summary of our cash flow information for the thirteen weeks ended April 1, 2023 and March 26, 2022:


	Thirteen weeks ended
Dollars in thousands	2023		2022
Cash flow data:
Net cash flows provided by operating activities	$	21,199	$	2,703
Net cash flows used in investing activities		(21,789)		(29,100)
Net cash flows used in financing activities		(13,009)		(3,521)

Operating Cash Flows and Working Capital – Cash provided by operating activities totaled $21.2 million in the first quarter of 2023, as compared with $2.7 million in the first quarter of 2022. The increase in operating cash flows in the first quarter of 2023, as compared with the first quarter of 2022, was primarily the result of the increase in net earnings partially offset by a significant increase in the contribution to the defined benefit pension plan. Net working capital was $1,034.2 million at April 1, 2023, as compared to $976.6 million at December 31, 2022. The increase in net working capital in the first quarter of 2023, is attributed to an increase in accounts receivables and prepaid expenses and other assets, partially offset by an increase in accounts payable and other accrued expenses.

Investing Cash Flows – Cash used in investing activities totaled $21.8 million in the first quarter of 2023, as compared to $29.1 million in the first quarter of 2022. Investing activities in the first quarter of 2023 primarily included capital spending of $22.4 million. For the first quarter of 2022, investing activities primarily included capital spending of $27.1 million. We expect our capital expenditures to be in the range of $105 million to $125 million for fiscal 2023.

Financing Cash Flows – Cash used in financing activities totaled $13.1 million in the first quarter of 2023, compared to $3.5 million in the first quarter of 2022. Our total interest-bearing debt was $998.2 million at April 1, 2023 and $878.0 million at December 31, 2022. The financing cash used in the first quarter of 2023 was primarily the result 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 resulting from shares purchased for award exercises related to our stock plan of $9.0 million. The financing cash used in the first quarter of 2022 was primarily the result of borrowings on the revolving credit agreement of $97.0 million, principal payments on our long-term debt and short-term borrowings of $88.1 million, and dividends paid of $10.6 million.

Guarantor Summarized Financial Information

We are providing the following information in compliance with Rule 3-10 and Rule 13-01 of Regulation S-X with respect to our two tranches of senior unsecured notes. All of the senior notes are guaranteed, jointly, severally, fully, and unconditionally (subject to certain customary release provisions, including sale of the subsidiary guarantor, or sale of all or substantially all of its assets) by certain of the Company’s current and future direct and indirect domestic and foreign ~~withholding taxes have~~subsidiaries (collectively the “Guarantors”). The Parent is the Issuer of the notes and consolidates all Guarantors.

The financial information of Issuer and Guarantors is presented on a combined basis with intercompany balances and transactions between Issuer and Guarantors eliminated. The Issuer’s or Guarantors’ amounts due from, amounts due to, and transactions with non-guarantor subsidiaries are separately disclosed.

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Combined financial information is as follows:

Supplemental Combined Parent and Guarantors Financial Information

For the thirteen weeks ended April 1, 2023 and March 26, 2022


	Thirteen weeks ended
Dollars in thousands	April 1, 2023		March 26, 2022
Net sales	$	715,471	$	661,749
Gross profit		191,495		164,359
Operating income		71,832		69,093
Net earnings		20,211		41,808
Net earnings attributable to Valmont Industries, Inc.		20,043		41,816

Supplemental Combined Parent and Guarantors Financial Information

April 1, 2023 and December 31, 2022


Dollars in thousands	April 1, 2023		December 31, 2022
Current assets	$	772,693	$	769,263
Noncurrent assets		899,133		925,088
Current liabilities		406,542		459,961
Noncurrent liabilities		1,294,484		1,189,548
Noncontrolling interest in consolidated subsidiaries		1,780		1,612

Included in noncurrent assets is a due from non-guarantor subsidiaries receivable of $180,604 and $205,424 at April 1, 2023 and December 31, 2022. Included in noncurrent liabilities is a due to non-guarantor subsidiaries payable of $177,268 and $200,522 at April 1, 2023 and December 31, 2022.

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Selected Financial Measures

We are including the following financial measures for the Company.

Adjusted EBITDA – Earnings before Interest, Taxes, Depreciation, and Amortization (“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 ~~been provided,~~exceed 3.50x Adjusted EBITDA (or 3.75x Adjusted EBITDA after certain material acquisitions) for the most recent four quarters. These bank credit agreements allow us to add estimated EBITDA from acquired businesses for periods we did not own the acquired businesses. The bank credit agreements also provide for an adjustment to EBITDA, subject to certain specified limitations, for non-cash charges or gains that are non-recurring in nature. 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-GAAP measure and, accordingly, should not be considered in isolation or as a substitute for net earnings, cash flows from operations or other income or cash flow data prepared in accordance with GAAP or as a measure of our operating performance or liquidity. The calculation of Adjusted EBITDA for the last four quarters (March 27, 2022 to April 1, 2023) is as follows:


	Last Four Quarters
Dollars in thousands	Q1 2023
Net cash flows from operations	$	344,761
Interest expense		49,376
Income tax expense		117,409
Loss on divestiture of offshore wind energy structures business		(33,273)
Deferred income tax (expense) benefit		(5,554)
Noncontrolling interest		(598)
Pension plan expense		7,321
Contribution to pension plan		32,414
Changes in assets and liabilities, net of acquisitions		58,634
Other		(1,696)
EBITDA	$	568,794
Loss on divestiture of offshore wind energy structures business		33,273
Adjusted EBITDA	$	602,067


	Last Four Quarters
	Q1 2023
Net earnings attributable to Valmont Industries, Inc.	$	263,092
Interest expense		49,376
Income tax expense		117,409
Stock based compensation		41,076
Depreciation and amortization expense		97,841
EBITDA	$	568,794
Loss on divestiture of offshore wind energy structures business		33,273
Adjusted EBITDA	$	602,067

EBITDA and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. In October 2021, our revolving credit facility was amended to allow the Company to add-back any non-cash stock-based compensation in any trailing twelve month period and allow for an adjustment to EBITDA, subject to certain limitations, for non-cash charges or gains that are non-recurring in nature.

Leverage Ratio – Leverage ratio is calculated as the ~~determination~~sum of interest-bearing debt minus unrestricted cash in excess of $50 million (but not exceeding $500 million) divided by Adjusted EBITDA. The leverage ratio is one of the key financial ratios in the covenants under our major debt agreements and the ratio cannot exceed 3.5 (or 3.75x after certain material acquisitions) for any reporting period (four quarters). If those covenants are violated, we may incur additional financing costs or be required to pay the debt before its maturity date. Leverage ratio is a non-GAAP measure and, accordingly, should not ~~practicable.~~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.

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The calculation of this ratio at April 1, 2023 is as follows:


Dollars in thousands	2023
Interest-bearing debt, excluding origination fees and discounts of $26,818	$	1,025,055
Less: Cash and cash equivalents in excess of $50 million		122,948
Net indebtedness	$	902,107
Adjusted EBITDA		602,067
Leverage Ratio		1.50

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

Financial Obligations and Financial Commitments

There have been no material changes to our financial obligations and financial commitments as described on page 3633 in our Form 10-K for the fiscal year ended December 31, ~~2016.~~

~~Off Balance Sheet Arrangements~~

2022.

Critical Accounting Policies

There ~~have been~~were no changes in our ~~off balance sheet arrangements~~critical accounting policies as described on ~~page 37~~pages 38 to 41 in our Form 10-K for the fiscal year ended December 31, ~~2016.~~

~~Critical Accounting Policies~~

~~There have been no changes in our critical accounting policies as described on pages 38-42 in our Form 10-K for the fiscal year ended December 31, 2016~~2022 during the ~~quarter~~thirteen weeks ended ~~September 30, 2017.~~

April 1, 2023.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes in the ~~company's~~Company’s market risk during the quarter ended ~~September 30, 2017~~.April 1, 2023. For additional information, refer to the section "Risk Management" in our Form 10-K for the fiscal year ended December 31, ~~2016~~.

2022.

Item 4. Controls and Procedures

The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports the Company files or submits under the Securities Exchange Act of 1934 is (1) accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.

No changes in the ~~Company's~~Company’s internal control over financial reporting occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the ~~Company's~~Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussion of the Company’s risk factors under Part I, Item 1A in each of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities


				Total Number of
				Shares Purchased	Approximate Dollar
				as Part of	Value of Maximum
	Total Number			Publicly	Number of
	of			Announced Plans	Shares that may yet
	Shares	Average Price		or	be Purchased under the
Period	Purchased	paid per share		Programs	Program ⁽¹⁾
January 1, 2023 to January 28, 2023	—	$	—	—	$	481,419,000
January 29, 2023 to March 4, 2023	157,878		318.49	157,878		431,137,000
March 5, 2023 to April 1, 2023	199,009		305.68	199,009		370,304,000
Total	356,887	$	311.35	356,887	$	370,304,000

(1)

On May 13, 2014, we announced a new capital allocation philosophy which covered both the quarterly dividend rate as well as a share repurchase program. The Board of Directors at that time authorized the purchase of up to $500 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. On February 24, 2015 and again on October 31, 2018, the Board of Directors authorized an additional purchase of up to $250 million of the Company’s outstanding common stock with no stated expiration date. On February 27, 2023, the Board of Directors increased the amount remaining under the program by an additional $400 million, with no stated expiration date, bringing total authorization to $1.4 billion. At April 1, 2023, we have acquired 6,969,905 shares for approximately $1,029.7 million under this share repurchase program.

Period Total Number of
Shares Purchased Average Price
paid per share Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs Approximate Dollar Value of Maximum Number of Shares that may yet be Purchased under the Program (1)
July 2, 2017 to July 29, 2017 —
$ —
—
$ 132,172,000
July 30, 2017 to September 2, 2017 —
—
—
132,172,000
September 3, 2017 to September 30, 2017 —
—
—
132,172,000
Total —
$ —
—
$ 132,172,000

~~(1) On May 13, 2014, we announced~~

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Item 5. Other Information

Submission of Matters to a ~~new capital allocation philosophy~~Vote of Security Holders

Valmont’s annual meeting of stockholders was held on April 24, 2023. The stockholders elected three directors to serve three-terms, approved, on an advisory basis, a resolution approving Valmont’s named executive officer compensation, voted, on an advisory basis, on the frequency of future advisory votes on executive compensation, and ratified the appointment of Deloitte & Touche LLP as independent auditors for fiscal 2023. For the annual meeting there were 21,350,819 shares outstanding and eligible to vote of which ~~included a share repurchase program. Specifically~~, 19,753,749 were present at the meeting in person or by proxy. The tabulation for each matter voted upon at the meeting was as follows:

Election of Directors:


	For	Withheld	Broker Non-Votes
Mogens C. Bay	17,151,468	1,375,171	1,227,110
Ritu Favre	17,745,563	781,076	1,227,110
Richard A. Lanoha	16,900,239	1,626,400	1,227,110

Advisory vote on executive compensation:

Advisory vote on frequency of future advisory votes on executive compensation:

The Board of Directors ~~authorized~~has determined that Valmont will hold advisory votes on executive compensation on a one-year basis.

Proposal to ratify the ~~purchase~~appointment of ~~up to $500 million~~Deloitte & Touche LLP as independent auditors for fiscal 2023:

Table 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. On February 24, 2015, the Board of Directors authorized an additional purchase of up to $250 million of the Company's outstanding common stock with no stated expiration date. As of September 30, 2017, we have acquired 4,588,131 shares for approximately $617.8 million under this share repurchase program.

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Item 6. Exhibits


(a)	Exhibits

Exhibit No.		Description
22.1		List of Issuer and Guarantor Subsidiaries. This document was filed as Exhibit 22.1 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-31429) for the quarter ended September 25, 2021 and is incorporated herein by reference.
~~Exhibit No.~~ 31.1*		~~Description~~
~~31.1~~		Section 302 Certificate of Chief Executive Officer
~~31.2~~ 31.2*		Section 302 Certificate of Chief Financial Officer
~~32.1~~ 32.1*		Section 906 Certifications of Chief Executive Officer and Chief Financial Officer
101		The following financial information from ~~Valmont's~~Valmont’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2017,~~April 1, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of ~~Shareholders'~~Shareholders’ Equity, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information.
104		Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101)

*	Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf and by the undersigned hereunto duly authorized.



	VALMONT INDUSTRIES, INC. ~~(Registrant)~~
	~~/s/ MARK C. JAKSICH~~ (Registrant)
	~~Mark C. Jaksich~~
	/s/ AVNER M. APPLBAUM
	Avner M. Applbaum
	Executive Vice President and Chief Financial Officer

Dated ~~this~~ ~~1st~~the 26th day of ~~November, 2017~~.

~~Index of Exhibits~~April, 2023



~~Exhibit No.~~		~~Description~~
~~31.1~~		~~Section 302 Certificate of Chief Executive Officer~~
~~31.2~~		~~Section 302 Certificate of Chief Financial Officer~~
~~32.1~~		~~Section 906 Certifications of Chief Executive Officer and Chief Financial Officer~~
~~101~~		The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders' Equity, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information.



		Page No.
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):
	Condensed Consolidated Statements of Earnings for the thirteen and thirty-nine weeks
	ended September 30, 2017 and September 24, 2016	3
	Condensed Consolidated Statements of Comprehensive Income for the thirteen
	and thirty-nine weeks ended September 30, 2017 and September 24, 2016	4
	Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31,
	2016	5
	Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended
	September 30, 2017 and September 24, 2016	6
	Condensed Consolidated Statements of Shareholders' Equity for the thirty-nine
	weeks ended September 30, 2017 and September 24, 2016	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40

	PART II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 6.	Exhibits	41
Signatures		42



	Thirteen Weeks Ended						Thirty-nine Weeks Ended
	September 30, 2017			September 24, 2016			September 30, 2017			September 24, 2016
Product sales	$	602,080		$	544,828		$	1,807,539		$	1,648,530
Services sales	78,699			65,419			223,450			198,571
Net sales	680,779			610,247			2,030,989			1,847,101
Product cost of sales	462,854			409,003			1,366,875			1,220,567
Services cost of sales	54,331			46,221			152,635			135,425
Total cost of sales	517,185			455,224			1,519,510			1,355,992
Gross profit	163,594			155,023			511,479			491,109
Selling, general and administrative expenses	103,671			101,783			308,764			303,698
Operating income	59,923			53,240			202,715			187,411
Other income (expenses):
Interest expense	(11,190		)	(11,100		)	(33,312		)	(33,276		)
Interest income	1,311			771			3,205			2,289
Other	517			878			1,684			452
	(9,362		)	(9,451		)	(28,423		)	(30,535		)
Earnings before income taxes	50,561			43,789			174,292			156,876
Income tax expense:
Current	21,163			18,017			50,264			51,276
Deferred	(7,268		)	(3,749		)	79			(1,534		)
	13,895			14,268			50,343			49,742
Net earnings	36,666			29,521			123,949			107,134
Less: Earnings attributable to noncontrolling interests	(1,458		)	(1,348		)	(4,098		)	(3,966		)
Net earnings attributable to Valmont Industries, Inc.	$	35,208		$	28,173		119,851			103,168
Earnings per share:
Basic	$	1.56		$	1.25		$	5.33		$	4.56
Diluted	$	1.55		$	1.24		$	5.28		$	4.54
Cash dividends declared per share	$	0.375		$	0.375		$	1.125		$	1.125
Weighted average number of shares of common stock outstanding - Basic (000 omitted)	22,527			22,505			22,505			22,602
Weighted average number of shares of common stock outstanding - Diluted (000 omitted)	22,751			22,659			22,717			22,741



	September 30, 2017			December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	493,490		$	399,948
Receivables, net	492,842			439,342
Inventories	403,234			350,028
Prepaid expenses, restricted cash, and other assets	50,064			57,297
Refundable income taxes	8,493			6,601
Total current assets	1,448,123			1,253,216
Property, plant and equipment, at cost	1,169,854			1,105,736
Less accumulated depreciation and amortization	647,430			587,401
Net property, plant and equipment	522,424			518,335
Goodwill	336,754			321,110
Other intangible assets, net	142,090			144,378
Other assets	160,780			154,692
Total assets	$	2,610,171		$	2,391,731

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt	$	949		$	851
Notes payable to banks	197			746
Accounts payable	216,104			177,488
Accrued employee compensation and benefits	81,494			72,404
Accrued expenses	106,238			89,914
Dividends payable	8,478			8,445
Total current liabilities	413,460			349,848
Deferred income taxes	28,183			35,803
Long-term debt, excluding current installments	754,202			754,795
Defined benefit pension liability	199,562			209,470
Deferred compensation	48,612			44,319
Other noncurrent liabilities	13,557			14,910
Shareholders’ equity:
Preferred stock of $1 par value -
Authorized 500,000 shares; none issued	—			—
Common stock of $1 par value -
Authorized 75,000,000 shares; 27,900,000 issued	27,900			27,900
Retained earnings	1,974,601			1,874,722
Accumulated other comprehensive loss	(288,102		)	(346,359		)
Treasury stock	(601,565		)	(612,781		)
Total Valmont Industries, Inc. shareholders’ equity	1,112,834			943,482
Noncontrolling interest in consolidated subsidiaries	39,761			39,104
Total shareholders’ equity	1,152,595			982,586
Total liabilities and shareholders’ equity	$	2,610,171		$	2,391,731



	Common stock		Additional paid-in capital				Retained earnings			Accumulated other comprehensive income (loss)			Treasury stock			Noncontrolling interest in consolidated subsidiaries			Total shareholders’ equity
Balance at December 26, 2015	$	27,900	$	—			$	1,729,679		$	(267,218	)	$	(571,920	)	$	46,770		$	965,211
Net earnings	—		—				103,168			—			—			3,966			107,134
Other comprehensive income (loss)	—		—				—			1,249			—			1,766			3,015
Cash dividends declared	—		—			��	(25,482		)	—			—			—			(25,482		)
Dividends to noncontrolling interests	—		—				—			—			—			(2,527		)	(2,527		)
Purchase of noncontrolling interests	—		(137		)		—			—			—			(10,872		)	(11,009		)
Purchase of treasury shares; 384,622 shares acquired	—		—				—			—			(46,581		)	—			(46,581		)
Stock plan exercises; 10,747 shares acquired	—		—				—			—			(1,453		)	—			(1,453		)
Stock options exercised; 68,631 shares issued	—		(6,435		)		4,582			—			8,362			—			6,509
Stock option expense	—		4,358				—			—			—			—			4,358
Stock awards; 6,725 shares issued	—		2,214				—			—			912			—			3,126
Balance at September 24, 2016	$	27,900	$	—			$	1,811,947		$	(265,969	)	$	(610,680	)	$	39,103		$	1,002,301
Balance at December 31, 2016	$	27,900	$	—			$	1,874,722		$	(346,359	)	$	(612,781	)	$	39,104		$	982,586
Net earnings	—		—				119,851			—			—			4,098			123,949
Other comprehensive income (loss)	—		—				—			58,257			—			454			58,711
Cash dividends declared	—		—				(25,417		)	—			—			—			(25,417		)
Dividends to noncontrolling interests	—		—				—			—			—			(3,895		)	(3,895		)
Stock plan exercises; 24,672 shares acquired	—		—				—			—			(3,929		)	—			(3,929		)
Stock options exercised; 106,351 shares issued	—		(7,300		)		5,445			—			14,301			—			12,446
Stock option expense	—		3,868				—			—			—			—			3,868
Stock awards; 6,034 shares issued	—		3,432				—			—			844			—			4,276
Balance at September 30, 2017	$	27,900	$	—			$	1,974,601		$	(288,102	)	$	(601,565	)	$	39,761		$	1,152,595



	Thirteen Weeks Ended				Thirty-nine Weeks Ended
	2017		2016		2017		2016
United States	$	28,886	$	21,550	$	115,082	$	105,390
Foreign	21,675		22,239		59,210		51,486
	$	50,561	$	43,789	$	174,292	$	156,876



	Thirteen Weeks Ended						Thirty-nine Weeks Ended
Net periodic (benefit) expense:	2017			2016			2017			2016
Interest cost	$	4,676		$	6,092		$	13,475		$	19,134
Expected return on plan assets	(5,277		)	(5,565		)	(15,208		)	(17,648		)
Amortization of actuarial loss	768			—			2,214			—
Net periodic expense	$	167		$	527		$	481		$	1,486



			Fair Value Measurement Using:
	Carrying Value September 30, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading Securities	$	41,062	$	41,062	$	—	$	—



			Fair Value Measurement Using:
	Carrying Value December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading Securities	$	37,800	$	37,800	$	—	$	—



	Foreign Currency Translation Adjustments			Gain/(Loss) on Hedging Activities			Defined Benefit Pension Plan			Accumulated Other Comprehensive Loss
Balance at December 31, 2016	$	(251,228	)	$	7,978		$	(103,109	)	$	(346,359	)
Current-period comprehensive income (loss)	60,017			(1,760		)	—			58,257
Balance at September 30, 2017	$	(191,211	)	$	6,218		$	(103,109	)	$	(288,102	)



	Balance at December 31, 2016		Recognized Restructuring Expense		Costs Paid or Otherwise Settled			Balance at September 30, 2017
Severance	$	1,597	$	—	$	(1,597	)	$	—
Other cash restructuring expenses	4,581		—		(3,377		)	1,204
Total	$	6,178	$	—	$	(4,974	)	$	1,204



	September 30, 2017
	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	200,269	$	126,845	13 years
Proprietary Software & Database	3,687		3,111		8 years
Patents & Proprietary Technology	6,633		3,859		11 years
Other	4,807		4,032		3 years
	$	215,396	$	137,847



	December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	191,316	$	111,342	13 years
Proprietary Software & Database	3,616		3,056		8 years
Patents & Proprietary Technology	6,434		3,420		11 years
Other	3,713		3,668		3 years
	$	205,079	$	121,486



	Estimated Amortization Expense
2017	$	15,823
2018	14,492
2019	13,718
2020	12,608
2021	10,474



	September 30, 2017		December 31, 2016		Year Acquired
Webforge	$	9,362	$	8,624	2010
Valmont SM	9,839		8,765		2014
Newmark	11,111		11,111		2004
Ingal EPS/Ingal Civil Products	7,633		7,032		2010
Donhad	5,758		5,305		2010
Shakespeare	4,000		4,000		2014
Industrial Galvanizers	2,390		2,201		2010
Other	14,448		13,747
	$	64,541	$	60,785



	Engineered Support Structures Segment		Energy & Mining Segment		Utility Support Structures Segment		Coatings Segment		Irrigation Segment		Total
Balance at December 31, 2016	$	94,314	$	72,212	$	75,404	$	59,569	$	19,611	$	321,110
Foreign currency translation	4,568		6,704		—		951		94		12,317
Acquisitions	3,327		—		—		—		—		3,327
Balance at September 30, 2017	$	102,209	$	78,916	$	75,404	$	60,520	$	19,705	$	336,754



	Basic EPS		Dilutive Effect of Stock Options			Diluted EPS
Thirteen weeks ended September 30, 2017:
Net earnings attributable to Valmont Industries, Inc.	$	35,208	$	—		$	35,208
Shares outstanding (000 omitted)	22,527		224			22,751
Per share amount	$	1.56	$	(0.01	)	$	1.55
Thirteen weeks ended September 24, 2016:
Net earnings attributable to Valmont Industries, Inc.	$	28,173	$	—		$	28,173
Shares outstanding (000 omitted)	22,505		154			22,659
Per share amount	$	1.25	$	(0.01	)	$	1.24
Thirty-nine weeks ended September 30, 2017:
Net earnings attributable to Valmont Industries, Inc.	$	119,851	$	—		$	119,851
Shares outstanding (000 omitted)	22,505		212			22,717
Per share amount	$	5.33	$	(0.05	)	$	5.28
Thirty-nine weeks ended September 24, 2016:
Net earnings attributable to Valmont Industries, Inc.	$	103,168	$	—		$	103,168
Shares outstanding (000 omitted)	22,602		139			22,741
Per share amount	$	4.56	$	(0.02	)	$	4.54



	Parent			Guarantors			Non- Guarantors			Eliminations			Total
Net sales	$	284,538		$	113,243		$	343,818		$	(60,820	)	$	680,779
Cost of sales	216,039			88,757			272,959			(60,570		)	517,185
Gross profit	68,499			24,486			70,859			(250		)	163,594
Selling, general and administrative expenses	46,451			12,046			45,174			—			103,671
Operating income	22,048			12,440			25,685			(250		)	59,923
Other income (expense):
Interest expense	(10,884		)	(3,989		)	(306		)	3,989			(11,190		)
Interest income	268			9			5,023			(3,989		)	1,311
Other	1,379			11			(873		)	—			517
	(9,237		)	(3,969		)	3,844			—			(9,362		)
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries	12,811			8,471			29,529			(250		)	50,561
Income tax expense (benefit):
Current	9,030			3,082			9,059			(8		)	21,163
Deferred	(3,474		)	—			(3,794		)	—			(7,268		)
	5,556			3,082			5,265			(8		)	13,895
Earnings before equity in earnings of nonconsolidated subsidiaries	7,255			5,389			24,264			(242		)	36,666
Equity in earnings of nonconsolidated subsidiaries	27,953			9,965			—			(37,918		)	—
Net earnings	35,208			15,354			24,264			(38,160		)	36,666
Less: Earnings attributable to noncontrolling interests	—			—			(1,458		)	—			(1,458		)
Net earnings attributable to Valmont Industries, Inc	$	35,208		$	15,354		$	22,806		$	(38,160	)	$	35,208


	Point in Time		Over Time		Total
	Thirteen		Thirteen		Thirteen
	weeks ended		weeks ended		weeks ended
	April 1, 2023		April 1, 2023		April 1, 2023
Infrastructure	$	411,217	$	320,923	$	732,140
Agriculture		324,206		6,135		330,341
Total	$	735,423	$	327,058	$	1,062,481



	Third quarter
	Total		ESS			E&M			Utility		Coatings		Irrigation
Sales - 2016	$	610.2	$	193.1		$	81.2		$	150.4	$	60.0	$	125.5
Volume	29.7		15.9			(6.9		)	1.6		1.5		17.6
Pricing/mix	31.7		(3.5		)	2.0			26.5		5.6		1.1
Acquisitions	1.6		1.6			—			—		—		—
Currency translation	7.6		2.7			3.4			—		0.6		0.9
Sales - 2017	$	680.8	$	209.8		$	79.7		$	178.5	$	67.7	$	145.1



	Year-to-date
	Total		ESS			E&M			Utility		Coatings			Irrigation
Sales - 2016	$	1,847.1	$	554.9		$	231.3		$	445.9	$	182.2		$	432.8
Volume	110.4		20.4			(4.9		)	48.2		(5.6		)	52.3
Pricing/mix	63.1		(2.2		)	5.1			42.4		14.5			3.3
Acquisitions	1.6		1.6			—			—		—			—
Currency translation	8.8		(3.4		)	3.4			—		0.5			8.3
Sales - 2017	$	2,031.0	$	571.3		$	234.9		$	536.5	$	191.6		$	496.7



Interest-bearing debt	$	755,348
Adjusted EBITDA-last four quarters	345,590
Leverage ratio	2.19

Adjusted EBITDA-last four quarters	$	345,590
Interest expense-last four quarters	44,445
Interest earned ratio	7.78



Net cash flows from operations	$	226,318
Interest expense	44,445
Income tax expense	42,666
Impairment of property, plant and equipment	(481		)
Loss on investment	(8		)
Change in fair value of contingent consideration	(285		)
Deferred income tax benefit	22,072
Noncontrolling interest	(5,292		)
Stock-based compensation	(10,659		)
Increase in restricted cash - pension plan trust	(12,568		)
Pension plan expense	(865		)
Contribution to pension plan	26,840
Changes in assets and liabilities	29,167
Other	350
EBITDA	361,700
Reversal of contingent liability	(16,591		)
Impairment of property, plant and equipment	481
Adjusted EBITDA	$	345,590



Net earnings attributable to Valmont Industries, Inc.	$	189,915
Interest expense	44,445
Income tax expense	42,666
Depreciation and amortization expense	84,674
EBITDA	361,700
Reversal of contingent liability	(16,591		)
Impairment of property, plant, and equipment	481
Adjusted EBITDA	$	345,590



Period	Total Number of Shares Purchased	Average Price paid per share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Maximum Number of Shares that may yet be Purchased under the Program (1)
July 2, 2017 to July 29, 2017	—	$	—	—	$	132,172,000
July 30, 2017 to September 2, 2017	—	—		—	132,172,000
September 3, 2017 to September 30, 2017	—	—		—	132,172,000
Total	—	$	—	—	$	132,172,000

Thirteen weeks ended

Amortization expense