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VMI Valmont Industries

Participants
Renee Campbell VP, IR and Corporate Communications
Steve Kaniewski President and CEO
Mark Jaksich EVP and CFO
Nathan Jones Stifel
Chris Moore CJS Securities
Brian Drab William Blair
Ryan Connors Boenning and Scattergood
Zane Karimi D.A. Davidson
Call transcript
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Operator

Greetings, and welcome to the Valmont Industries, Second Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Renee Campbell, Vice President of Investor Relations and Corporate Communications. you. Thank

begin. may You

Renee Campbell

Vice Good Controller. earnings welcome are call. Chief Vice Jaksich, President Jesse. and Financial second Francis, Tim Steve Valmont quarter and Senior Executive Mark Officer; XXXX With and Executive and morning, you, Chief to Officer; Corporate and President Industries Kaniewski, President Thank me today

link A and provide additional a details This morning, summary access a discussion will provide to will of our today’s financial valmont.com. is Mark the performance. slide document Steve will second presentation accompany quarter our located results page home the on website and on at of

in Please will press also is follow on be download along release, days, our to the located replay website. for included A seven next call. accessing the the available for deck and which with slide instructions today's are it

Please conference note and at on this to forward-looking today's our be call. which subject the read disclosure is discussion applies in full to of will that statements, call end this

now would Chief call like our Kaniewski. to I Officer, the Steve Executive President and to turn over

Steve Kaniewski

Thank everyone, you us. joining and you, morning, for thank Good Renee.

like Net would million of start I X.X% a three were year. than sales higher last $XXX.X second our with recap of and to quarter. slide

Support from four revenue segment currency all impacts Engineered grinding growth sales media and business, have across year's Excluding and continued discipline segments. grown led robust Structure last demand transportation the communication in divested by would pricing was This X.X%. and wireless

with Starting highlights. segment Support segment. to Engineered Moving Structure the

First X.X% last quarter over year. of sales increased $XXX.X million

has lead the higher improved strong particularly This and order communication in in flow, North continued backlog, demand transportation We wireless extended industry. benefit times from American market. pricing and across very to resulted

in the Midwest closure March and quarter. the the in our to segment Nebraska impact flooding late Valley, second in that occurred severe continued facility, one-week from this of Effects resulted

the By expected continued adding inefficiencies our in shipment buildup customers our for I to shipments. have to to speak process implementing changes and causing of that to resources shipping shipments, remarks. with Mark factory teams flow area, situation. schedules, flood regular production very a all worked recovery order constraints delayed will in detail strong our resolved this are the quarter. the of return thank on While and hard and during worked created want remedy be more third us their during and to in time understanding his all of these

and cell wireless invest continued particularly Globally, structures demand, Carriers buildout and over structures grew year, America. and in sales driving communication components in advance XX% to last supported of also in small by momentum North for growth. net expansions XG XG of first robust sales is

addressable Florida-based Sales During and year acquisition due of of to the growth Wireless, expansion a is business, quarter, components. strategic advancing addition were X currency below of completed our the unfavorable This geographic to site access systems our distributor Connect-It acquisition Pro Site translation. we wireless strategy. slightly the market last

by Structures Utility the In markets. sales driven pricing Support improved bid $XXX.X in million from X.X%, sales acquisition increased of and segment,

lead our stronger weeks. surprised initiatives, approximately caused industry significantly from We across to than have XX increase grid expected to from which and to times pleasantly hardening by demand has XX to weeks others XX been the XX

are steps facilities existing taken term America result, immediate additional have developing meet North to capacity requirements. a capacity to As add we and plans in longer

was market. our that the later launch officially benefited week, we share excited again North once quarter this this from access solar tracker to completed I’m last growth that year. American the solution Sales tracker acquisition single into will

in to optimistic those we happy will see with growth are this and benefits we XXXX. continue we expected, year, very supply the chain synergies sales as to on begin While work are

in said, the and high prior revenues revenue teens, be each stabilize higher market remain were aligned in can and business the difficult quarter. project-based expected we expect presence in As offshore other sales levels Revenues to our expand in calls, markets. forecast with we wind business this time we anticipate and largely over we That said to as this in XXXX. in is CAGRs

Coatings to the Turning segment.

X.X%, of sales pricing regions. and by sales quarter favorable $XX.X led Second million from acquisitions grew all recent across

Excluding X.X%. sales would currency have impact, increased

experience. serve. have maintain strength experiencing zinc we are value costs geographies, As signaling across that improve stabilized, discipline and utilizing the currently in add end to and markets technology growth continue are pricing all to we we customer the Further,

weigh sales Further, In very to low volumes Turning America, X.X% of Global prices were a in market last below wet sustained discipline. farmer conditions lower. to selling lower sales Macro North $XXX.X the million flooding, $XXX.X and levels North spring sentiment. on Despite income historical farm kept were across were X.X% many U.S. the average to Irrigation year. on of continued segment. net pricing due sidelines. higher parts all America, million of growers the

bringing last overall this done of strategy and growth part Pasco, On owned costs. note, market. dealership Also devices market our total and easy-to-use value recognizing a dealerships connected sales our adopting May, yield support achieved that irrigation are month belief the in and Growers strengthen XX,XXX. to presence solutions a third of our positive advanced, technology divested Company-owned input located as we we quarter, reduce in approximately technology growth independently in the improve of our our to highest was Washington. the This

International versus million irrigation $XX.X year. X.X% last increased of revenues

Excluding currency XX.X%. sales impact, grew

improving, country. As farm this of our the at expected, annual Agrishow, team a largest number orders the the Brazilian in year's market record show booked and is

We and leadership severe and first markets sales in offset parts growth uncertainties Asia in drought demand also recently lower Sales this in and Europe and in aftermarket Australia in distribution in policy this quarter center parts market. Pacific critical of Paulo helped customers Zealand impacted Middle our markets this region. the state support our Sao have East position New year. A efficiently those to quickly opened strengthen more

very and enhancements, advanced Minister, of in Omarov returned recently the on agricultural is productivity Prime on there Kazakhstan very opportunities future to Republic market of partner very our Market strategy to similar I a ag geographic Agriculture the President, region. in our Mamin; visit in Minister from We're with early technology met and Brazil. strategy. discuss I expansion region, actually building Tokayev; important community Kazakhstan the to excited where this investments, to with development

call Mark turn like I financial for to would over review. the the to now

Mark Jaksich

Thank you, Steve, and good morning, everyone.

My comments at to the the XXXX are based press as XXXX end results, release. regarding the second outlined quarter of on of adjusted comparisons the

Turning to slide four.

last $XX.X or comparison operating income year, of year of of in nonrecurring the a Coatings income by Structures operating Irrigation million quarter lower in and Engineered due occurred Utility approximately segments. portion were offset in segment Otherwise, segments, this sales largely improvements profitability LIFO Utility $X Support and XX% the the to was Second the below the expenses international and million and X.X% segment. Coatings favorable of that

refinancing I’d due that over note debt to down like the the was of $X expense completed also third interest compared net to to year quarter XXXX. million last in second the of we quarter

Second quarter diluted to share, of quarter a earnings decreased per X.X%. nonrecurring the the EPS in EPS for compared increased $X.XX expenses Without share XXXX. would impact X% adjusted $X.XX of have of of $X.XX per

are we to half claim recognize the interruption and the Valley, Nebraska. the the somewhat of this continued in flooding from be to insurance during by expect losses efficiency Efforts recovery second settle to those ongoing, second event year. quarter and benefits Operational hampered property March business in

capacity operating increased with from in along five. over improvement Asia-Pacific The market the segment cost slide operating savings Engineered reductions income The lighting took in Structures income disciplined to with Support results XX% now year. associated conditions in XXXX. pricing strong and America last telecom Turning and the markets in segment resulted North region we

as the In than from actions offset were income profitability XXXX. factory solar lower Support our of by six. slide as well Utility offshore tracker from the improved in North performance international segment, operating second approximately pricing $X more decreased in mainly developing wind. in XX% to Turning operations, Profitability Structures of America improvements million and solutions

solar market offshore be project the is much profits were Profitability the resulting smaller for QX activity sales competitors the business months. been lower market oriented has than from In weak and in last conditions while in that over wind market challenge the five business to nature continues us, of strong, challenging the QX. a existing with XX trackers, the

market operating million originated that expense improvements income in set included $X -- of a pricing matter demand increasing Segment customer improved the a result XXXX. to in expect also in profitability completion for settlement accommodation to a XXXX. and We of

Excluding this of expense, or X.X% million profit was operating $XX sales.

Segment Houston, and technology from arising income legal recent benefits In CSP United Coatings well as operating continued of in benefited to matter one-time $XX.X that the despite Coatings a elected of million expense operating segment income was on pricing as XXXX, sales offerings, seven, we slide and Texas. year. the to in New $X Zealand, related from this acquisitions resolve million to comparable Galvanizing a our

the Excluding XX.X% best business was the and pleased perform $XX.X segment in with settlement continues we cost, Coatings well million sales, The segment results. performance income quarter segment are the or legal to operating operating its since XXXX. of

to XX.X% maintaining segment due solutions to in critical pricing operating to of volumes. and despite Turing and technology lower year-to-date, profitability America. role and in margins control income XX% XX.X% our sales sales cost decreased North year. primarily driven Operating and a in volumes of by respectively, eight. benefits from QX segment the in both lower slide was last Irrigation compared Lower Value-based the in part lean played management

slide balance nine. and on Turning to cash sheet highlights

so strong far the we year, expected, operating As flows this including second million $XXX of quarter. in $XXX recognized million cash

half for ongoing XX. throughout cash capital material the be A focus capital second And to Our has deployment raw environment. been on our driven stable a efforts by assuming is price of strong further of we a management our capital summary on the team flow improve and the XXXX, working to year. slide working performance optimization expect in priority

market Year-to-date mentioned construction capital and all in in opportunities. expansions the plant previously the $XX driven Western million, support facility was growth galvanizing by of of spending Pennsylvania, the

to year $XX million full $XXX the expect We and capital million. be spending between

ending shareholders related $XX.X deployed of share -- $XX repurchases and million with $XXX to to we of quarter, quarter cash. the through dividends, to returned shareholders capital million and acquisitions million the During

with was Our the tax rate for adjusted quarter our in XX.X%, line expectations.

our slide an on update to turn now me Let for outlook. XXXX XX

ESS raw pricing environment from our from to Utility growth We backlogs continue and segments, In to margins stable improvements profitability sales expect segments improve the continued are both and marketplace. and the in and in we segment, more ESS the benefiting price of material in robust a for year. balance expect

Utility we the segment, drive backlogs our in of expect Support sequential operating year. sales income business better utility In performance growth, balance to international modestly and are North the strong expected Structures for American the and

market While commodity remain sentiment. prices irrigation and current to stabilization signs to of somewhat tailwind expect of provide challenged, seeing markets farmer a some improvements we’re in

general continues the Coatings across growth driven in Our regions. by economic industrial and business is demand to perform well all

are second quarter expenses be recovered. not nonrecurring to The expected

diluted earnings a range to share from full-year $X.XX. our As $X.XX adjusted result, per guidance a and $X.XX we have between $X.XX to

We to foreign revenue are to sales to of XX XX expansion updating points projections to currency from X% our basis international to and lower margin points on X% previously growth range previously, XX basis XX operating from to X% effects. based X% irrigation a and

strengthen currency year, earlier continues expected from to $X.XX. share unfavorable of per in is effects about dollar to million negative of effect the to sales the associated now by on translation about outlook XXXX X.X% As with compared the earnings foreign our $XX or be

people before effect noticed from organization. over of to to of with privilege stakeholders. It back my our when Valmont. that I determined, the smooth forward you successor career help ensure be my Valmont retire of will to and all continues a to transition of going Finally, turn to Valmont outstanding most call announcement help for may been to successful the benefit the I across the has is spend diligently and Steve, plans to work that a our my have

With that, the I to will over call back now turn Steve.

Steve Kaniewski

your On work of hard I Mark. want dedication. and Valmont for thank years you and of you, all Thank myself, to of behalf

During you leaving core class. our Thank legacy and epitomized professionalism you have strong tenure, your a values, again. of

milestone Anomaly Last autonomous as XX. path slide Prospera on management. introduced we to first the of launch the critical to Detection quarter, crop the and Turning Valley Insights

initial the an in even acres about goal limited goal, I’m part say a that monitor proving customers by that already exceeded X this of million excited we excited to that have to launch, set technology. As release, are we XXXX. clearly

to In we field in could. was to roadmap updating our momentum dealer This to our issues days market up has a continue technology NDVI and XX elevated fact, in you future how the and space, on Valley calls. presence detected demonstrate able one his before Insights XX grower on will

of demand slide in currency driven to quarter nonrecurring of summarize Turning the expenses balance project and revisions To financial the the international XX. to markets, the recognized year, impact foreign lower irrigation outlook by our impact. are this

provided segment, of the season. small meaningful a tailwind improvements are in have in become Irrigation this turnaround clear yet While although a seeing the should we demand, not with growing outcome prices recent in the commodity

technology We to higher expect costs solutions continued better with sales the for growth as returns offerings, of these our will labor especially grower. lead

infrastructure ESS, operations In improvement raw in businesses the the drive more second a markets, XXXX America in demand, transformation North strong of We particularly expect in stable and our margins. material higher our will margin XXXX. of cost half benefits environment plus

backlog Record business, supporting demand incremental Utility in improved from across there. efforts are hardening segment and our performance grid U.S.

always to capital serve. discipline we will our goals And we generating the markets pricing within to and stated allocation I’ve we cash all committed said, segments, against remain As while performance flows. continue strong leadership in

to call back the turn will I over now Renee.

Renee Campbell

open up call for At Steve. may the this you, you questions. time, Jesse, Thank

Operator

question instructions] your line question. you. Our first from Please Jones of proceed Thank with Nathan the Stifel. comes [Operator with

Nathan Jones

Congratulation mean, had level of and cut charges want to start nonrecurring high the here. guys a you $X.XX. here you just I at to Mark. guidance $X.XX by I

are project end some of we Should improved impact. of demand, are spot in about outside the be then guidance you over thinking other that expenses? pricing talked in talking lower negative trending the Are $X.XX have irrigation the USS. of international two of that quarter offset ESS offsetting I of impact, You there last or kind towards the FX those the nonrecurring things in tailwinds negatives that we've stable? FX lower and know, also that about market,

Mark Jaksich

the yet we was lot trended still expectations the but piece, is that the bottom those has called are that you to assumption from international guidance. kind our do look the of range irrigation year, and out have it beginning it’s way potential end of But, from the quarter said kind a first would of the We of moving develop. the stable probably before towards still upside baked position that into that our than a say in be. at irrigation Nathan, of that more to safe to if

Nathan Jones

And you the about range? would get end guidance of and then, the top end talk or takes bottom so maybe could towards puts towards the that that you

Steve Kaniewski

a of America, have times Yes. if segment, if that North America and There some our at projects That there. international some for to additional come China, would guidance our in be frankly get there gain abate, the -- to the to the way front, that Utility capacity, And probably number do fully this both into can particularly the in is ability here in through. in on still continues are jobs help was also a we baked North steel with that’s to would which out, irrigation us point. lead be not -- pushed

where been. on kind of based going just we're steel So, has

And some part so, the we’ve there are potential tailwinds, are early much as faced in some as of year there here. headwinds the that

Nathan Jones

Okay. ESS. And one on maybe just then,

Campus a there? it's does the I you back impact impact that of Can quarter. at little disruption guys we have there. you the the pushed or range digit the targeting be ESS. quarter? being that any supposed during the you about out still the the half to know, sorted that been on think, results off that something in to in third had expect get -- this Nebraska second the year, Should do said flooding double that's Is margins talked You to for in from kind of I bit? quantify

Mark Jaksich

of system to $XX quarter. really get probably the of for through is revenue unable were There million we just the that about kind second

definitely of quarter. within really both on seeing, And terms the move we're the for range, yes, would price. the cost what in that and based segment, third in kind double-digit controls into of over backlog, it’s So,

Operator

you. Thank

is question your next Our Moore from Please Securities. proceed with question. Chris with CJS

Chris Moore

improve of maybe on XXXX? bit just can kind weakness Maybe going the further operating a it’s you you into second the and utility why to margin international little half believe talk year side, and of this just on

Mark Jaksich

of The over a as The And weaker we ESS has on developing The from kind of expected. of chain, kind the had Sure, really played we to part business the wind side and as go tracker out as forward. really place orders welcome. Utility. we our did previously to international this have part, Convert have business we the have of was is quarter-over-quarter newer anticipated the year we what orders business, wind solar Chris, We of be a there, coated would came moved optimize the year-over-year. chance to Italia, that and over. taken like the piece some acquisition, that supply didn’t really

we why anticipated drawback that was some So there.

couple had the supply of longer some our anticipated, and having in synergies that liked. also to were costs generally than have South a We taking little America line. would a of we bit projects chain project-related It’s get

at improve, the in So, Europe, And competitors North that look a of of anticipated that see is taken an one, place environment as and there. will believe XXXX. business, if pricing the demand we in bankruptcies you to the of result XXXX in have wind the the increase part wind, plus particularly

production In And we like more own within come Convert, get control. into solar source we have we and North as facilities really can the business, of and things supply orders more much America, geographies, the our to better ability in chain we and week, this our steel later it optimization. then and gain irrigation do as do

year over see more feel be thus XXXX half to some around that far improvement in than half those are turn start too. an So, we this first should but will the second of the us factors we

Operator

you. Thank

question. Our Brian is from Blair. proceed next your Please William with question with Drab

Brian Drab

reconcile is Utility for because on that comments the the it’s about in start just year. the lead quarter saw Utility. And, extending and revenue level quarter times what first in as help to up, the your are we below was demand a wanted been just I with you can

build demand And So, of half that? Thanks. the kind can quarter? and is backlog you the that -- does that second help reconcile of in just

Steve Kaniewski

Some Brian, was pools some we in through this least we some talked North slight. very booked expectation, quarters distribution of There last had came as the that, structures. was initially that be thought and opposed transmission down of heavy two was substation and about at an year, mix will previously; also, America and larger to

kind now, So, some had we also of up. down. our And pulled back to capacity we to, that pull adjusted having that we're had of

little North America market-related little it’s little a QX. capacity-related why is bit softer as So, bit and to a a bit in

seeing the ramping we're why simply What is efforts to and grid demand, we're now meet in this from new facilities in southeast. coming again the hours the west and production existing hardening primarily in market

So, pleasantly areas. we’ve I been been been, money said, how actually to it’s in like spent of as that’s some robust those the surprised and

business as replacement in So, into to for drivers again the look of XXXX, lines well we substation part that should grid terms we as as continue. and the that the of expect continue, normal hardening, of business

So, to answer the international of about then that’s my and how side. America Chris kind obviously we North feel on

Brian Drab

Right.

just yourself it those? we're or year grade you on thank of you grade on give bit little a an expected us maybe you about how update now. Derit, about you wondering grade comments you And can of just Convert if Convert, each of and little Walpar, first around give how maybe accretion more these like talked acquisitions, on -- doing? just would I’m Italia. give acquisitions you But, Okay, into us some you us detail the And a Larson. each these year, in you. then, are think Walpar, $X.XX Can and a could you

Steve Kaniewski

and meeting to knew into the really for it in having threats, in is market ability America synergy take expected. despite a product, growth, us year. come and just invited Italia the our of technology being of seeing Convert there, build, North to expectations Sure, definitely would as terms the We

quarter So, synergies. building behind to those in maybe really and of kind we're a half a some quarter of a

coming acquisition acquisition. with acquisition And well. to We're case camouflage. customers, The of the kind is seeing behind where we actually existing has very very it’s strong going into people with primarily and Walpar from telecom during that’s stronger backlog, and been spend acquisition. Larson because our very, in the southeast The want XXXX. we was look already that But, DoT as bit be, XXXX that abated would a it see have thought we little good

a just little would bit a So, we in. thought probably in where of delay come it

side Coatings on a And both was acquisitions, and We very the we’ve United we’d coatings to [ph] then, taking we longer very to customer and slightly. the well us or India a was get our direct it side been -- like. and well utility done East very, and expectations both said customers. frankly than talked to acquisition. and of has are of domestic about kind CSP acquisition to is little the utility the able But, bit doing The the coatings approvals some India which the exceeding Derit, Middle in capacity

the so, trackers, tracking. And that’s forward. will become a that move And for us with frankly facility solar we as very critical

of the acquisitions. So, that’s different the runaround kind

Operator

your Thank Scattergood. proceed question. you. with with The Boenning Please is Connors next question Ryan from and

Ryan Connors

Great, legal on about on combination recent terms you just thanks. detail? give congratulations both this mean, morning. customer there. to are cryptic these million Renee, nonrecurring in cost. also bit want us -- talk matter the description, in the two congratulations, promotion in little and a of your I little to I more Can Good And USS. also retirement; these your $X Mark, you,

So, background those what can more a you exactly kind of us on cases? give of each little just in happened

Steve Kaniewski

The gone agreement. settle that that. them some multiyear it with would and of to in think the go back to where you complete an inspection And Ryan. if order speed work we up a time, things And we I’ll into large accommodation, customer number we to customer have it, we, one, was where I time at touch called it a -- We’ve through gone on XXXX, had had We Yes. regime. the program related $XX to to that in out million ahead extremely through next recall regime. inspection into decided decided year.

side, probably that litigation. have a wouldn't quarter that to around sometime, was some certainty maybe we very that get opportunity but place. Coatings be second next had Australia until been frankly can a settled in was matter fickle Australia year, there the an litigation On that

so, next And risking us than year. potentially proposition further ability settle that better now, decided a going to it we the gave financial into

Ryan Connors

other That’s was strategic kind Okay. nature. my the picture to And bigger helpful of in question very get background there.

You talked and capacity, Company -- why about and off the adding walk my why is, by the been I kind not past. slots? auction sort guess production I in you of on capacity just industry add The process decision late has some question capacity of bitten the mean, here. through us I guess cycle expansion the had

So, just add than this interested, given uncertainty there, why some at stage price macro of out rather the just it? like capacity

Steve Kaniewski

was Ryan. capacity question, It’s bringing down doing on the we're perspective. of capacity from our existing the this. part to great facilities’ is really What last a related time at And looking I a

based it’s So, capacity out, it market not would kind be on pull of a to intensive the conditions. difficult add, nor very capital capacity

there. more build and Irrigation or like looking looking down that our has for of market, with really, can we’re capacity so, flex go that And up capacity, more segment kind the

at it's So, Monterey, any have we're that we do bricks existing we is. and mortar, and and facilities it Columbus have we as more have Valley just Tulsa, Jasper, within those not adding really we looking can if

automation. this And really long-term simply of an forward. also front anyway, for sense automation that’s just pulling element of makes is the just it us There kind

quick. capacity pretty the long-term fickle we’re change and can definitely the at be market market the very and planning, of how we aware As look

for long-term to just because with of perspective our we're cautious this we as approach kind very this that to now, from important the going is builds. Right we capacity us very of -- market alliances it's have a customers. any So, meet

come regard. to through So, we in customers our have that for

Operator

you. Thank

comes question question. with Karimi next proceed your Davidson. Please from with Our Zane D.A.

Zane Karimi

guys. morning, Good

near First it we the question and about kind should how in of growth driven by highlighted acquisitions on much was term? the that organic communication, there think of XX% growth how in

Mark Jaksich

engine and in growth be came is was Good components America. to The The of of impact. fairly lion's in really both Pacific, and Wireless fairly the that it morning. that North much share Connect-It The out continues is a didn’t of and This that Asia real North small side mostly it is have international But, business, structures. Mark. acquisition so. been has muted of and there America,

Zane Karimi

switching be so. Okay, how in thinking great. more When orders the about lift that then, we materialize Irrigation, and Irrigation sales to well? Brazil begin should little for in And as bit into should to big

Mark Jaksich

that most say -- likely would are the again, all dependent place next Mark in that this few of lot take on is financing I Yes. place. getting will throughout A these quarters. the

so, moves far institutions and And through usually how you’re on within -- financial two three the the bit quarters some to a typically. getting probably it’s little those dependent quickly cycle government as degree, approvals as the done. But to

the some expect balance we certainly this and So, that through year year see of to maybe into next as well.

Operator

proceed from with [Operator instructions] the Jones your Nathan Stifel. Please follow-up question. We of with question have a do line

Nathan Jones

demand with demand. or for want talking Your out; the to that cover more Can adding pricing use a about dynamics guys? the in than lead raw that's out, concept market just material talk make deflating share questions your some those bit ESS, price little or not, inflation, creating you time stretching in about gain very willingness levels, the to robust that here, to those dynamics? pricing on time color as to ability hold just here. mean, I pricing there your onto a still you stretching dynamics up to capacity are follow couple lead in you demand robust USS, on I guys very to ability

Steve Kaniewski

on between touch ESS. little a differently it Utility I’ll and

in And of market, benefit those the from time customers, locked On Utility big are alliance a they periods from in having therefore, our these prospective. our pricing us part earlier kinds volume. arrangements, are they capacity of with

taking in of really is we bid adding basis we’ve bid to capacity been, to in customers we types help capacity of bid the extremely constrained. and market. out up pricing we’ve have fill meaningful it or orders to as up question, there I from that and a still satisfying And way, a needs. The push our we're of there and to points this say, their earlier selective the I’d that able However, ultra that perspective, market mentioned and been in becomes up XXX as continue alliance alleviate, is pushing XXX really more push

In demand. really but of terms a prices overall declining develop in ESS, we're environment steel robust seeing nice

are pricing, hold pushing the we’re line So, not up only able to on pricing. we still

ESS So, still on to nothing do increases of we will price the which And Right? inflation And where the second with to at we're four which is supply-demand. do last or are segment, with feel tailwind based XXXX that areas that along into the to as the based year, be be perform. constraints, we price, we’ve it’s market ability And half just deflation. the can looking good year that over two we on conditions, in the well. so, simply the capacity done should material going of able that additional a pass in we backlog have confident why last

zinc to well And In again, on even and the our increase has in Irrigation, to able to in get then maintained Coatings, first Coatings extremely in small segment. and have market. debated, we’ve the maintain we discipline the been price really thought been early pricing able quarter volumes, price the even across a discipline did hold rest pricing of a that stick we've there, based

So, pricing us we group. is a management a regularly about big talk here for something thing as and very

did also factory. just to has and Taking a fill we're by try and capacity. really the allowed the encouraged environment that ESS capacity overall the out to not the in So, pricing have we us

Nathan Jones

that a front. Maybe more -- maybe bit Mark one on for

that little to the raising You Mark, half through what you half, talked the half? and and steel going in bit P&L, how flows to see about prices are costs and relative versus lower out of the prices. flowing levels, Maybe, talk the kind first inventory you zinc a can pricing second half declining back about also first

Mark Jaksich

Right.

more quarter. Let side the -- of We’ve stated, me have Raw address seen been second the prices you that as the equation material of cost first. during decrease moderating. have

three P&Ls, a FIFO in the the there well. of to then, it about in on to terms or then and quarter. as lag, four-month the basis, expect you time quarter think fourth you so, If the in in general that self depends about manifest even somewhat start just always so more turns would starting the in And terms. pricing third on inventory is backlogs And

the because longer so forth. other quickly hand back same longer months with few little I So, well see don’t and logs a be typically. large pretty in Irrigation ESS backlogs usually, a deal up business, it's on more would period, as particularly P&L actions are I about pricing in because you time it’d bit utility the show the just think and the you short-cycle with will say

Steve Kaniewski

LIFO as go accelerate our and fourth quarter -- probably third will on as the we Also into LIFO well.

Nathan Jones

input the in think of lower of coming are line bottom and is majority better the businesses to I here of out So, half across the the year? business pricing that costs second majority the inventory guys the expecting you have across the through

Steve Kaniewski

true That’s statement.

Operator

session. Thank you. we of and question-and-answer gentleman, Ladies reached our have the end

So, comments. I'd back the pass additional over concluding for like to Campbell floor to Ms. any

Renee Campbell

today. joining for us Thanks, thanks to Jesse, and everyone

for available for by playback be you, quarter. As the look call next again, to speaking mentioned, days. phone on seven will our website today's forward with next We or

Operator

industries within forward-looking Reform are of that has the developments Litigation expected other experience made as in historical the Securities These management's Private meaning appropriate current operates based which believed statements be of as light to trends, discussion circumstances. of perceptions this in in the forward-looking are under the well in management Act Valmont and future of assumptions on conditions, statements Included XXXX. factors

performance risks, and They these assumptions. As which understand consider are of uncertainties, and control these comments, of Valmont's statements or beyond you guarantees involve you that listen should not to results. are some

that the foreign are risk you financial conditions, to statements. results of and and believes to future actions factors as include, price any changes that in from undertake differ cause statements. materially cautions and in These and Company as raw and of management product company these availability based is acceptance domestic domestic of things, among of described to efficiencies, actual could financial forward-looking the reasonable economic factors and policy Securities be and update and governments. aware assumptions, affect the material, those that well on anticipated this pricing, forward-looking does them market discussion the forward-looking The time this products, of date market should Commission many as to performance Valmont's circumstances, Company not other environments Valmont's any included statement new Although factors and forward-looking and discussion availability from made and international Exchange competitive operating results, time reports industry statements in

concludes This today's teleconference.

You may disconnect you your your Thank lines at for this time. participation.