UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q
(Mark One)
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
For the quarterly period ended September 25, 2021March 26, 2022
or
    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)
Delaware47-0351813
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
15000 Valmont Plaza,
Omaha,Nebraska 68154
 (Address of Principal Executive Offices) (Zip Code)

(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock $1.00 par valueVMINew 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 every Interactive Data File required to be submitted 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 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, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon‑accelerated filerSmaller reporting company
Emerging growth 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
No x
21,224,18521,311,439
Outstanding shares of common stock as of OctoberApril 21, 20212022

1


VALMONT INDUSTRIES, INC

INDEX TO FORM 10-Q
Page No.
PART I. FINANCIAL INFORMATION
Item 1.
weeks ended September 25,March 26, 2022 and March 27, 2021 and September 26, 2020
and thirty-nine weeks ended September 25,March 26, 2022 and March 27, 2021 and September 26, 2020
Condensed Consolidated Balance Sheets as of September 25, 2021March 26, 2022 and
December 26, 202025, 2021
Condensed Consolidated Statements of Cash Flows for the thirty-ninethirteen weeks
ended September 25,March 26, 2022 and March 27, 2021 and September 26, 2020
Condensed Consolidated Statements of Shareholders' Equity for the thirteen andweeks
thirty-nine weeks ended September 25,March 26, 2022 and March 27, 2021 and September 26, 2020
Notes to Condensed Consolidated Financial Statements
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 5.Other Information
Item 6.Exhibits
Signatures
2




VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share amounts)
(Unaudited)
Thirteen weeks endedThirty-nine weeks ended
September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
Product sales$782,694 $657,703 $2,283,460 $1,874,199 
Services sales86,088 76,267 254,837 222,779 
Net sales868,782 733,970 2,538,297 2,096,978 
Product cost of sales585,986 494,812 1,712,721 1,392,595 
Services cost of sales55,392 48,411 163,971 143,450 
Total cost of sales641,378 543,223 1,876,692 1,536,045 
Gross profit227,404 190,747 661,605 560,933 
Selling, general and administrative expenses151,209 129,268 425,574 372,481 
 Impairment of goodwill and trade names— — — 16,638 
Operating income76,195 61,479 236,031 171,814 
Other income (expenses):
Interest expense(11,031)(10,454)(31,466)(30,566)
Interest income397 430 894 1,931 
Gain on investments (unrealized)488 900 1,556 1,102 
Other2,644 233 10,297 1,349 
(7,502)(8,891)(18,719)(26,184)
Earnings before income taxes68,693 52,588 217,312 145,630 
Income tax expense:
Current21,109 14,968 55,069 42,922 
Deferred(5,029)(2,884)(8,747)(3,750)
16,080 12,084 46,322 39,172 
Earnings before equity in earnings of nonconsolidated subsidiaries52,613 40,504 170,990 106,458 
Equity in loss of nonconsolidated subsidiaries(360)(276)(1,079)(755)
Net earnings52,253 40,228 169,911 105,703 
Less: Earnings attributable to noncontrolling interests(603)(886)(1,137)(825)
Net earnings attributable to Valmont Industries, Inc.$51,650 $39,342 $168,774 $104,878 
Earnings per share:
Basic$2.44 $1.85 $7.97 $4.91 
Diluted$2.40 $1.84 $7.86 $4.89 
Thirteen weeks ended
March 26,
2022
March 27,
2021
Product sales$890,870 $694,965 
Services sales89,950 79,921 
Net sales980,820 774,886 
Product cost of sales673,170 518,634 
Services cost of sales58,464 51,698 
Total cost of sales731,634 570,332 
Gross profit249,186 204,554 
Selling, general and administrative expenses154,344 127,343 
Operating income94,842 77,211 
Other income (expenses):
Interest expense(11,263)(9,999)
Interest income227 311 
Loss on investments (unrealized)(1,063)(109)
Other3,642 3,449 
(8,457)(6,348)
Earnings before income taxes86,385 70,863 
Income tax expense:
Current22,413 8,547 
Deferred708 6,955 
23,121 15,502 
Earnings before equity in earnings of nonconsolidated subsidiaries63,264 55,361 
Equity in loss of nonconsolidated subsidiaries(358)(360)
Net earnings62,906 55,001 
Less: (earnings)/loss attributable to noncontrolling interests(595)13 
Net earnings attributable to Valmont Industries, Inc.$62,311 $55,014 
Earnings per share:
Basic$2.93 $2.60 
Diluted$2.90 $2.57 

See accompanying notes to condensed consolidated financial statements.
3


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
Thirteen Weeks EndedThirty-nine weeks endedThirteen Weeks Ended
September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
March 26,
2022
March 27,
2021
Net earningsNet earnings$52,253 $40,228 $169,911 $105,703 Net earnings$62,906 $55,001 
Other comprehensive income (loss), net of tax:Other comprehensive income (loss), net of tax:Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:Foreign currency translation adjustments:Foreign currency translation adjustments:
Unrealized translation gain (loss) Unrealized translation gain (loss)(15,018)14,391 (16,961)(16,102) Unrealized translation gain (loss)11,062 (12,633)
Gain (loss) on hedging activities: Gain (loss) on hedging activities: Gain (loss) on hedging activities:
Net investment hedges— — — 7,284 
Cash flow hedges Cash flow hedges307 (26)16 344  Cash flow hedges— 22 
Amortization cost included in interest expenseAmortization cost included in interest expense(16)(16)(48)(48)Amortization cost included in interest expense(16)(16)
Commodity hedges Commodity hedges(5,754)— 20,500 —  Commodity hedges20,560 9,946 
Realized gain on commodity hedges recorded in earnings Realized gain on commodity hedges recorded in earnings(9,870)— (10,140)—  Realized gain on commodity hedges recorded in earnings(2,043)— 
Cross currency swaps Cross currency swaps2,530 (3,725)4,041 570  Cross currency swaps1,811 3,606 
Defined Benefit Pension Plan:
20,312 13,558 
Actuarial loss163 — 1,838 — 
Other comprehensive income (loss)(27,658)10,624 (754)(7,952)
Actuarial gain on defined benefit pension planActuarial gain on defined benefit pension plan686 832 
Other comprehensive incomeOther comprehensive income32,060 1,757 
Comprehensive incomeComprehensive income24,595 50,852 169,157 97,751 Comprehensive income94,966 56,758 
Comprehensive (income) loss attributable to noncontrolling interestsComprehensive (income) loss attributable to noncontrolling interests268 (1,358)(819)(1,785)Comprehensive (income) loss attributable to noncontrolling interests(1,688)486 
Comprehensive income attributable to Valmont Industries, Inc.Comprehensive income attributable to Valmont Industries, Inc.$24,863 $49,494 $168,338 $95,966 Comprehensive income attributable to Valmont Industries, Inc.$93,278 $57,244 












See accompanying notes to condensed consolidated financial statements.
4


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
September 25,
2021
December 26,
2020
March 26,
2022
December 25,
2021
ASSETSASSETSASSETS
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$169,795 $400,726 Cash and cash equivalents$149,700 $177,232 
Receivables, net Receivables, net537,693 511,714  Receivables, net616,538 571,593 
InventoriesInventories655,903 448,941 Inventories807,471 728,834 
Contract assets Contract assets155,417 123,495  Contract assets161,633 142,643 
Prepaid expenses and other assetsPrepaid expenses and other assets95,965 59,804 Prepaid expenses and other assets105,233 83,646 
Refundable income taxes Refundable income taxes— 9,945  Refundable income taxes— 8,815 
Total current assets Total current assets1,614,773 1,554,625  Total current assets1,840,575 1,712,763 
Property, plant and equipment, at costProperty, plant and equipment, at cost1,383,892 1,341,380 Property, plant and equipment, at cost1,451,044 1,422,101 
Less accumulated depreciation and amortizationLess accumulated depreciation and amortization766,579 743,653 Less accumulated depreciation and amortization840,826 823,496 
Net property, plant and equipmentNet property, plant and equipment617,313 597,727 Net property, plant and equipment610,218 598,605 
GoodwillGoodwill709,462 430,322 Goodwill707,692 708,566 
Other intangible assets, netOther intangible assets, net193,449 167,193 Other intangible assets, net169,424 175,364 
Other assetsOther assets276,267 203,293 Other assets253,574 251,951 
Total assetsTotal assets$3,411,264 $2,953,160 Total assets$3,581,483 $3,447,249 
LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:Current liabilities:Current liabilities:
Current installments of long-term debtCurrent installments of long-term debt$4,803 $2,748 Current installments of long-term debt$4,226 $4,884 
Notes payable to banksNotes payable to banks13,765 35,147 Notes payable to banks8,380 13,439 
Accounts payableAccounts payable338,723 268,099 Accounts payable404,410 347,841 
Accrued employee compensation and benefitsAccrued employee compensation and benefits124,212 137,939 Accrued employee compensation and benefits96,547 144,559 
Contract liabilities Contract liabilities138,286 130,018  Contract liabilities168,794 135,746 
Other accrued expensesOther accrued expenses116,846 89,796 Other accrued expenses118,535 108,771 
Income taxes payableIncome taxes payable3,734 — Income taxes payable6,074 — 
Dividends payable Dividends payable10,610 9,556  Dividends payable11,721 10,616 
Total current liabilitiesTotal current liabilities750,979 673,303 Total current liabilities818,687 765,856 
Deferred income taxesDeferred income taxes45,863 41,689 Deferred income taxes50,604 47,849 
Long-term debt, excluding current installmentsLong-term debt, excluding current installments897,488 728,431 Long-term debt, excluding current installments963,065 947,072 
Defined benefit pension liabilityDefined benefit pension liability105,175 118,523 Defined benefit pension liability— 536 
Operating lease liabilitiesOperating lease liabilities148,031 80,202 Operating lease liabilities146,493 147,759 
Deferred compensationDeferred compensation34,723 44,519 Deferred compensation36,469 35,373 
Other noncurrent liabilitiesOther noncurrent liabilities84,273 58,657 Other noncurrent liabilities61,674 89,207 
Shareholders’ equity:Shareholders’ equity:Shareholders’ equity:
Common stock of $1 par value -Common stock of $1 par value -Common stock of $1 par value -
Authorized 75,000,000 shares; 27,900,000 issuedAuthorized 75,000,000 shares; 27,900,000 issued27,900 27,900 Authorized 75,000,000 shares; 27,900,000 issued27,900 27,900 
Additional paid in capitalAdditional paid in capital6,668 335 Additional paid in capital5,251 1,479 
Retained earningsRetained earnings2,378,075 2,245,035 Retained earnings2,444,897 2,394,307 
Accumulated other comprehensive lossAccumulated other comprehensive loss(310,222)(309,786)Accumulated other comprehensive loss(232,160)(263,127)
Treasury stockTreasury stock(784,282)(781,422)Treasury stock(769,835)(773,712)
Total Valmont Industries, Inc. shareholders’ equity Total Valmont Industries, Inc. shareholders’ equity1,318,139 1,182,062  Total Valmont Industries, Inc. shareholders’ equity1,476,053 1,386,847 
Noncontrolling interest in consolidated subsidiariesNoncontrolling interest in consolidated subsidiaries26,593 25,774 Noncontrolling interest in consolidated subsidiaries28,438 26,750 
Total shareholders’ equityTotal shareholders’ equity1,344,732 1,207,836 Total shareholders’ equity1,504,491 1,413,597 
Total liabilities and shareholders’ equityTotal liabilities and shareholders’ equity$3,411,264 $2,953,160 Total liabilities and shareholders’ equity$3,581,483 $3,447,249 
See accompanying notes to condensed consolidated financial statements.
5


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Thirty-nine weeks endedThirteen weeks ended
September 25,
2021
September 26,
2020
March 26,
2022
March 27,
2021
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net earningsNet earnings$169,911 $105,703 Net earnings$62,906 $55,001 
Adjustments to reconcile net earnings to net cash flows from operations:Adjustments to reconcile net earnings to net cash flows from operations:Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortizationDepreciation and amortization67,764 61,523 Depreciation and amortization23,884 21,031 
Noncash loss on trading securities— 39 
Impairment of property, plant and equipment— 2,811 
Impairment of goodwill & intangible assets— 16,638 
Stock-based compensationStock-based compensation17,895 8,736 Stock-based compensation9,463 4,671 
Defined benefit pension plan benefitDefined benefit pension plan benefit(11,051)(5,401)Defined benefit pension plan benefit(2,705)(3,676)
Contribution to defined benefit pension planContribution to defined benefit pension plan(970)(17,398)Contribution to defined benefit pension plan— (964)
Gain on sale of property, plant and equipment Gain on sale of property, plant and equipment(1,250)(60) Gain on sale of property, plant and equipment60 
Equity in loss in nonconsolidated subsidiariesEquity in loss in nonconsolidated subsidiaries1,079 755 Equity in loss in nonconsolidated subsidiaries358 360 
Deferred income taxesDeferred income taxes(8,747)(3,750)Deferred income taxes708 6,955 
Changes in assets and liabilities:Changes in assets and liabilities:Changes in assets and liabilities:
ReceivablesReceivables(30,709)(26,298)Receivables(36,643)16,044 
InventoriesInventories(211,273)(32,992)Inventories(68,236)(67,386)
Prepaid expenses and other assets (current and non-current) Prepaid expenses and other assets (current and non-current)(21,589)(19,157) Prepaid expenses and other assets (current and non-current)(4,452)(22,514)
Contract assets Contract assets(33,199)28,597  Contract assets(19,486)5,118 
Accounts payableAccounts payable76,916 63,627 Accounts payable49,006 24,605 
Accrued expensesAccrued expenses15,523 61,122 Accrued expenses(34,186)(35,559)
Contract liabilities Contract liabilities6,768 (1,475) Contract liabilities4,308 20,051 
Other noncurrent liabilitiesOther noncurrent liabilities10,228 20,982 Other noncurrent liabilities14 4,215 
Income taxes payable/refundable Income taxes payable/refundable14,533 9,044  Income taxes payable/refundable17,760 5,141 
Net cash flows from operating activitiesNet cash flows from operating activities61,829 273,046 Net cash flows from operating activities2,703 33,153 
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Purchase of property, plant and equipmentPurchase of property, plant and equipment(80,509)(70,960)Purchase of property, plant and equipment(27,095)(27,565)
Proceeds from sale of assetsProceeds from sale of assets1,655 911 Proceeds from sale of assets204 
Acquisitions, net of cash acquired(312,500)(15,862)
Settlement of net investment hedges— 11,983 
Other, netOther, net1,891 2,543 Other, net(2,007)(1,947)
Net cash flows from investing activitiesNet cash flows from investing activities(389,463)(71,385)Net cash flows from investing activities(29,100)(29,308)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Proceeds from short-term borrowingsProceeds from short-term borrowings3,191 4,251 Proceeds from short-term borrowings— 14,734 
Payments on short-term borrowingsPayments on short-term borrowings(23,654)(10,713)Payments on short-term borrowings(5,562)(10,759)
Proceeds from long-term borrowingsProceeds from long-term borrowings236,710 88,872 Proceeds from long-term borrowings97,000 4,181 
Principal payments on long-term borrowingsPrincipal payments on long-term borrowings(66,128)(76,417)Principal payments on long-term borrowings(82,529)(712)
Dividends paidDividends paid(30,794)(27,316)Dividends paid(10,616)(9,556)
Dividends to noncontrolling interest— (5,642)
Purchase of noncontrolling interest— (55,916)
Purchase of treasury sharesPurchase of treasury shares(24,101)(28,006)Purchase of treasury shares— (11,131)
Proceeds from exercises under stock plansProceeds from exercises under stock plans22,747 980 Proceeds from exercises under stock plans713 19,318 
Purchase of common treasury shares—stock plan exercisesPurchase of common treasury shares—stock plan exercises(16,955)(77)Purchase of common treasury shares—stock plan exercises(2,527)(16,725)
Net cash flows from financing activitiesNet cash flows from financing activities101,016 (109,984)Net cash flows from financing activities(3,521)(10,650)
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents(4,313)(2,164)Effect of exchange rate changes on cash and cash equivalents2,386 (2,463)
Net change in cash and cash equivalentsNet change in cash and cash equivalents(230,931)89,513 Net change in cash and cash equivalents(27,532)(9,268)
Cash and cash equivalents—beginning of yearCash and cash equivalents—beginning of year400,726 353,542 Cash and cash equivalents—beginning of year177,232 400,726 
Cash and cash equivalents—end of periodCash and cash equivalents—end of period$169,795 $443,055 Cash and cash equivalents—end of period$149,700 $391,458 
See accompanying notes to condensed consolidated financial statements
6


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 June 27, 2020$27,900 $— $2,194,916 $(332,486)$(763,495)$25,867 $1,152,702 
Net earnings— — 39,342 — — 886 40,228 
Other comprehensive income (loss)— — — 10,152 — 472 10,624 
Cash dividends declared ($0.45 per share)— — (9,614)— — — (9,614)
Purchase of treasury shares; 60,645 shares acquired— — — — (7,525)— (7,525)
Stock plan exercises; 580 shares acquired— — — — (72)— (72)
Stock options exercised; 2,616 shares issued— 5,461 (5,462)— 257 — 256 
Stock option expense— 686 — — — — 686 
Stock awards; 253 shares issued— 2,346 — — 33 — 2,379 
Balance at September 26, 2020$27,900 $8,493 $2,219,182 $(322,334)$(770,802)$27,225 $1,189,664 
Balance at June 26, 2021$27,900 $— $2,337,015 $(283,435)$(786,857)$26,861 1,321,484 
Net earnings— — 51,650 — — 603 52,253 
Other comprehensive income— — — (26,787)— (871)(27,658)
Cash dividends declared ($0.50 per share)— — (10,617)— — — (10,617)
Purchase of treasury shares; 10,759 shares acquired— — — — (2,500)— (2,500)
Stock plan exercises; 144 shares acquired— — — — (33)— (33)
Stock options exercised; 20,749 shares issued— (2,194)27 — 5,023 — 2,856 
Stock option expense— 618 — — — — 618 
Stock awards; 494 shares issued— 8,244 — — 85 — 8,329 
Balance at September 25, 2021$27,900 $6,668 $2,378,075 $(310,222)$(784,282)$26,593 $1,344,732 












See accompanying notes to the condensed consolidated financial statements.






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 28, 2019$27,900 $— $2,173,802 $(313,422)$(743,942)$45,407 $1,189,745 
Net earnings— — 104,878 — — 825 105,703 
Other comprehensive income (loss)— — — (8,912)— 960 (7,952)
Cash dividends declared ($1.35 per share)— — (28,837)— — — (28,837)
Dividends to noncontrolling interests— — — — — (5,642)(5,642)
Purchase of noncontrolling interest— — (30,661)— — (19,450)(50,111)
Addition of noncontrolling interest— — — — — 5,125 5,125 
Purchase of treasury shares; 251,136 shares acquired— — — — (28,006)— (28,006)
Stock plan exercises; 617 shares acquired— — — — (77)— (77)
Stock options exercised; 4,100 shares issued— 244 — — 736 — 980 
Stock option expense— 1,909 — — — — 1,909 
Stock awards; 8,957 shares issued— 6,340 — — 487 — 6,827 
Balance at September 26, 2020$27,900 $8,493 $2,219,182 $(322,334)$(770,802)$27,225 $1,189,664 
Balance at December 26, 2020$27,900 $335 $2,245,035 $(309,786)$(781,422)$25,774 $1,207,836 
Net earnings— — 168,774 — — 1,137 169,911 
Other comprehensive income— — — (436)— (318)(754)
Cash dividends declared ($1.50 per share)— — (31,848)— — — (31,848)
Purchase of treasury shares; 103,056 shares acquired— — — — (24,100)— (24,100)
Stock plan exercises; 71,412 shares acquired— — — — (16,955)— (16,955)
Stock options exercised; 164,872 shares issued— (10,294)(3,886)— 36,927 — 22,747 
Stock option expense— 1,885 — — — — 1,885 
Stock awards; 9,554 shares issued— 14,742 — — 1,268 — 16,010 
Balance at September 25, 2021$27,900 $6,668 $2,378,075 $(310,222)$(784,282)$26,593 $1,344,732 




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, 2020$27,900 $335 $2,245,035 $(309,786)$(781,422)$25,774 $1,207,836 
Net earnings— — 55,014 — — (13)55,001 
Other comprehensive income (loss)— — — 2,230 — (473)1,757 
Cash dividends declared ($0.50 per share)— — (10,625)— — — (10,625)
Purchase of treasury shares; 50,147 shares acquired— — — — (11,131)— (11,131)
Stock plan exercises; 70,485 shares acquired— — — — (16,725)— (16,725)
Stock options exercised; 142,878 shares issued— (4,600)(7,069)— 30,987 — 19,318 
Stock option expense— 648 — — — — 648 
Stock awards; 2,709 shares issued— 3,617 — — 406 — 4,023 
Balance at March 27, 2021$27,900 $— $2,282,355 $(307,556)$(777,885)$25,288 $1,250,102 
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 








See accompanying notes to the condensed consolidated financial statements.
7


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
Condensed Consolidated Financial Statements
The Condensed Consolidated Balance Sheet as of September 25, 2021,March 26, 2022, the Condensed Consolidated Statements of Earnings, Comprehensive Income, Cash Flows, and Shareholders' Equity for the thirteen and thirty-nine weeks ended September 25,March 26, 2022 and March 27, 2021, and September 26, 2020, and the Condensed Consolidated Statement of Cash Flows for the thirty-nine weeks then ended have been prepared by 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 25, 2021March 26, 2022 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 Annual Report on Form 10-K for the fiscal year ended December 26, 2020.25, 2021. The results of operations for the period ended September 25, 2021March 26, 2022 are not necessarily indicative of the operating results for the full year.
Change in Reportable Segments    
During the first quarter of 2022, the Company's Chief Executive Officer, as the chief operating decision maker ("CODM"), made changes to the Company’s management structure and began to manage the business, allocate resources, and evaluate performance under the new structure. As a result, the Company has realigned its reportable segment structure. All prior period segment information has been recast to reflect this change in reportable segments. Refer to Note 7 for additional information.

Inventories
Inventory is valued at the lower of cost, determined on the first-in, first-out (FIFO) method or market. 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.
Inventories consisted of the following:
September 25,
2021
December 26,
2020
Raw materials and purchased parts$209,090 $155,512 
Work-in-process45,213 33,632 
Finished goods and manufactured goods401,600 259,797 
Total Inventory$655,903 $448,941 

March 26,
2022
December 25,
2021
Raw materials and purchased parts$297,570 $278,107 
Work-in-process78,591 63,628 
Finished goods and manufactured goods431,310 387,099 
Total Inventory$807,471 $728,834 
Income Taxes
Earnings before income taxes for the thirteen and thirty-nine weeks ended September 25,March 26, 2022 and March 27, 2021, and September 26, 2020, were as follows:    
Thirteen weeks endedThirty-nine weeks ended
2021202020212020
United States$47,784 $33,610 $156,028 $141,347 
Foreign20,909 18,978 61,284 4,283 
$68,693 $52,588 $217,312 $145,630 

Thirteen weeks ended
20222021
United States$60,816 $51,155 
Foreign25,569 19,708 
$86,385 $70,863 
Pension Benefits
The Company incurs expenses in connection with the Delta Pension Plan ("DPP"). The DPP was acquired as part of the Delta plc acquisition in fiscal 2010 and has no members that are active employees. In order to measure expense and the
8


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

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.
8


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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


The components of the net periodic pension (benefit) expense for the thirteen and thirty-nine weeks ended September 25,March 26, 2022 and March 27, 2021 and September 26, 2020 were as follows:
Thirteen weeks endedThirty-nine weeks ended
Net periodic (benefit) expense:2021202020212020
Interest cost$2,479 $3,285 $7,508 $9,569 
Expected return on plan assets(6,957)(5,887)(21,061)(17,149)
Amortization of actuarial loss827 748 2,502 2,179 
Net periodic (benefit) expense$(3,651)$(1,854)$(11,051)$(5,401)
Thirteen weeks ended
Net periodic (benefit) expense:20222021
Interest cost$3,365 $2,497 
Expected return on plan assets(6,202)(7,005)
Amortization of actuarial loss132 832 
Net periodic (benefit) expense$(2,705)$(3,676)

    Stock Plans
The Company maintains 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, restricted stock awards, restricted stock units, and bonuses of common stock. At September 25, 2021,March 26, 2022, 453,718175,917 shares of common stock remained available for issuance under the plans. On April 26, 2022, Company shareholders approved the Valmont 2022 Stock Plan, in which the maximum number of shares of common stock that may be issued under the stock plan is 2,000,000 and no additional award grants may be made under any prior Company stock plan.
    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 in equal amounts over three years or on the grant's fifth anniversary. Expiration of grants is 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 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 25,March 26, 2022 and March 27, 2021, and September 26, 2020, respectively, were as follows:
Thirteen weeks endedThirty-nine weeks ended
2021202020212020
Compensation expense$8,947 $3,065 $17,895 $8,736 
Income tax benefits2,237 766 4,474 2,184 
During the third quarter of 2021, the Company granted approximately 143,859 restricted shares, worth approximately $38,000, to certain employees of Prospera Technologies, Ltd. ("Prospera"). These restricted shares vest in equal installments over four years, and require the employees to continue employment over those four years. As such, the related compensation expense will be incurred over the vesting period.
Thirteen weeks ended
20222021
Compensation expense$9,463 $4,671 
Income tax benefits2,366 1,168 
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.
9


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

ASC 820 establishes a 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.
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 the investments held in the Valmont Deferred Compensation Plan at September 25, 2021March 26, 2022 of $29,481$30,650 ($35,12529,982 at December 26, 2020)25, 2021) represent mutual funds, invested in debt and equity securities, classified as trading securities in accordance with Accounting Standards Codification ("ASC") 320, Accounting for Certain Investments in Debt and Equity Securities, considering the employee's ability to change investment allocation of their deferred compensation at any time. The Company's ownership of shares in Delta EMD Pty. Ltd. (JSE:DTA) is also classified as trading securities. The shares are valued at $99$101 and $202$94 as of SeptemberMarch 26, 2022 and December 25, 2021, and December 26, 2020, respectively, which is the estimated fair value. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.
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.
Fair Value Measurement Using:Fair Value Measurement Using:
Carrying Value September 25, 2021Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Carrying Value March 26, 2022Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets:Assets:Assets:
Trading SecuritiesTrading Securities$29,580 $29,580 $— $— Trading Securities$30,751 $30,751 $— $— 
Derivative financial instruments, netDerivative financial instruments, net7,001 — 7,001 — Derivative financial instruments, net17,633 — 17,633 — 
Fair Value Measurement Using:Fair Value Measurement Using:
Carrying Value December 26, 2020Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Carrying Value December 25, 2021Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets:
Assets (Liabilities):Assets (Liabilities):
Trading SecuritiesTrading Securities$35,327 $35,327 $— $— Trading Securities$30,076 $30,076 $— $— 
Liabilities:
Derivative financial instruments, netDerivative financial instruments, net(5,911)— (5,911)— Derivative financial instruments, net(4,007)— (4,007)— 

10


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

Long-Lived Assets
    The Company's other non-financial assets include goodwill and other intangible assets, which are classified as Level 3 items. These assets are measured at fair value on a non-recurring basis as part of annual impairment testing. Note 43 to these condensed consolidated financial statements contain additional information related to goodwill andthe intangible asset impairments recognized in fiscal 2020.

The Company is monitoring the outlook for wind energy in Northern Europe which would affect the net sales and gross profit assumptions in the cash flow projections for the Company’s offshore and other complex steel structures reporting unit. This reporting unit has net property, plant, and equipment of $38,694, the Valmont SM trade name of $8,386, and a customer relationship, net of accumulated amortization, of $4,927. If the market outlook declines further, the Company will have to analyze the recoverability of the long-lived assets which may result in the recognition of an impairment.2021.

Leases

    The Company's operating leases are included in other assets and operating lease liabilities. During the second quarter of 2021, the Company commenced on a new corporate headquarters operating lease with straight-line annual expense of approximately $5,100, a 2% annual increase in lease payment, and a 25 year term. In recognition of this lease, an operating lease asset of $71,853 and an operating lease long-term liability of $71,196 was incurred. These amounts are included within other assets and operating lease liabilities, respectively, in the Condensed Consolidated Balance Sheets as of September 25, 2021.

Comprehensive Income (Loss)
Comprehensive income (loss) includes net earnings, currency translation adjustments, certain derivative-related activity and changes in net actuarial 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 25, 2021March 26, 2022 and December 26, 2020:25, 2021:
Foreign Currency Translation AdjustmentsGain on Hedging ActivitiesDefined Benefit Pension PlanAccumulated Other Comprehensive Loss
Balance at December 26, 2020$(213,064)$15,550 $(112,272)$(309,786)
   Current-period comprehensive income (loss)(16,643)14,369 1,838 (436)
Balance at September 25, 2021$(229,707)$29,919 $(110,434)$(310,222)
Foreign Currency Translation AdjustmentsGain on Hedging ActivitiesDefined Benefit Pension PlanAccumulated Other Comprehensive Loss
Balance at December 25, 2021$(243,350)$15,777 $(35,554)$(263,127)
   Current-period comprehensive income (loss)9,969 20,312 686 30,967 
Balance at March 26, 2022$(233,381)$36,089 $(34,868)$(232,160)
    Revenue Recognition
    The Company determines the appropriate revenue recognition 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 when the performance obligation is related to the manufacturing of goods. Contract revenues are classified as service when the performance obligation is the performance of a service. Service revenue is primarily related to the Coatings segment.and Technology Products and Services product lines.
    Customer acceptance provisions exist only in the design stage of our products and acceptance of the design by the customer is required before the project is manufactured and delivered to the customer. The Company is not entitled to any compensation solely based on design of the product and does not recognize revenue associated with the design stage. There is one performance obligation for revenue recognition. 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.
11


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

    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 Utility segmenttransmission, distribution, and substation structures ("TD&S") product line, the renewable energy product lines, and the wireless communicationtelecommunication structures product line, the Company’s inventory is interchangeable for a variety of each segment’s customers. The Company has elected the practical expedient 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 elected the practical expedient todoes 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.
11


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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



The Company's contract asset as of March 26, 2022 and December 25, 2021 was $161,633 and $142,643, 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 invoiced by advanced billings or progress billings.
At March 26, 2022 and December 25, 2021, total contract liabilities were $221,348 and $213,203, respectively. At March 26, 2022, $168,794 was recorded as contract liabilities and $52,554 was recorded as other noncurrent liabilities on the condensed consolidated balance sheets. Additional details are as follows:
During the thirteen weeks ended March 26, 2022, the Company recognized $28,023 of revenue that was included in the total contract liability as of December 25, 2021;
In the thirteen weeks ended March 27, 2021, the Company recognized $38,102 of revenue that was included in the liability as of December 26, 2020. The revenue recognized was due to applying advance payments received for performance obligations completed during the period; and
At March 26, 2022, the Company had $105,013 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.

Segment and Product Line Revenue Recognition
    The Utility segment revenues are derived from manufactured steel and concrete structures for the North America utility industry and offshore and other complex structures used in energy generation and distribution outside of the United States. Infrastructure Segment
Steel and concrete utility structures within the 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 control to the customer is evidenced either by contractual termination clauses or by our rights to payment for work performed to-date plus a reasonable profit as the products do not have an alternative use to the Company. Since control is transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment. For our steelTD&S and concrete utility and wireless communicationtelecommunication structure product lines, we generally recognize revenue on an inputs basis, using total production hours incurred to-date for each order as a percentage of total hours estimated to produce the order. The completion percentage is applied to the order’s total revenue and total estimated costs to determine reported revenue, cost of goods sold and gross profit. Production of an order, once started, is typically completed within three months. RevenueDepending on the product sold, revenue from renewable energy is recognized both upon shipment or delivery of goods to the offshore and other complex structures business is also recognizedcustomer 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 of steel and concrete structures; the Company has chosen to use the practical expedient to expense estimated commissions owed to third parties by recognizing them proportionately as the goods are manufactured.
    The ESS segment revenues are derived fromFor the manufacture and distribution of poles, towers, and componentsstructures sold for lighting and transportation and highway safety, engineered access systems, and wireless communication markets. Forfor the lighting, transportation, and highway safety product lines,majority of telecommunication products, revenue is recognized upon shipment or delivery of goods to the customer depending on contract terms, which is the same point in time that the customer is billed. For Access Systems, revenue is generally recognized upon delivery of goods to the customer which is the same point in time that the customer is billed. The wireless communication product line hasThere are also large regional customers who have unique product specifications for communicationtelecommunication 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 a percent of total estimated hours to complete production. For the remaining wireless communication product line customers which do not provide a contractual right to bill for work completed on a canceled order, revenue is recognized upon shipment or delivery of the goods to the customer which is the same point in time that the customer is billed.
    The Coatings segmentcoatings product line revenues are derived by providing coating services to customers’ products, which include galvanizing, anodizing, and powder coating. Revenue is recognized once the coating service has been performed and the goods are ready to be picked up or delivered to the customer which is the same time that the customer is billed.
    The Irrigation segment revenues are derivedAgriculture Segment
Revenue recognition from the manufacture of agricultural irrigation equipment and related parts and services for the agricultural industry and(including tubular products for industrial customers. Revenue recognition for the irrigation segmentcustomers) is generally upon shipment of the goods to the customer which is the same point in time that the customer is billed. The remote monitoring subscription services are primarily billed annually and revenue is recognized on a straight-line basis over the subsequent twelve months.
    Disaggregation of revenue by product line is disclosed in the Segment footnote. A breakdown by segment of revenue recognized over time and at a point in time for the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020 is as follows:
12


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

Point in TimeOver TimePoint in TimeOver Time
Thirteen weeks ended September 25, 2021Thirteen weeks ended September 25, 2021Thirty-nine weeks ended September 25, 2021Thirty-nine weeks ended September 25, 2021
Utility Support Structures$12,834 $263,668 $28,255 $768,808 
Engineered Support Structures271,277 9,772 745,125 27,420 
Coatings74,906 — 224,102 — 
Irrigation230,273 6,052 729,813 14,774 
  Total$589,290 $279,492 $1,727,295 $811,002 
that the customer is billed. The remote monitoring subscription services recognized as part of technology services product line are primarily billed annually and revenue is recognized on a straight-line basis over the subsequent twelve months.
Point in TimeOver TimePoint in TimeOver Time
Thirteen weeks ended September 26, 2020Thirteen weeks ended September 26, 2020Thirty-nine weeks ended September 26, 2020Thirty-nine weeks ended September 26, 2020
Utility Support Structures$43,287 $229,192 $56,830 $667,070 
Engineered Support Structures244,785 10,160 697,491 33,693 
Coatings68,698 — 199,955 — 
Irrigation133,999 3,849 430,729 11,210 
  Total$490,769 $243,201 $1,385,005 $711,973 
The Company's contract asset as of September 25, 2021 and December 26, 2020 was $155,417 and $123,495,
respectively. Both steel and concrete utility customers are generally invoiced upon shipment or delivery of the goods to the customer's specified location with few customers that make up-front or progress payments. The offshore and complex steel structures business invoices customers a number of ways including advanced billings, progress billings, and billings upon shipment.

    At September 25, 2021 and December 26, 2020, total contract liabilities were $203,198 and $170,919, respectively. At September 25, 2021, $138,286 is recorded as contract liabilities and $64,912 is recorded as other noncurrent liabilities on the condensed consolidated balance sheets. During the thirteen and thirty-nine weeks ended September 25, 2021, the Company recognized $18,981 and $88,350    Disaggregation of revenue that was includedby product line is disclosed in the liability as of December 26, 2020. In the thirteenBusiness Segments and thirty-nine weeks ended September 26, 2020, the Company recognized $16,333 and $55,610 of revenue that was included in the liability as of December 28, 2019. The revenue recognized was due to applying advance payments received for performance obligations completed during the period. At September 25, 2021, the Company had $124,767 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.

Recently Adopted Accounting Pronouncements

    In December 2019, the FASB issued Accounting Standards Update No. 2018-14 (ASU 2019-12), Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting and disclosure requirements for income taxes by clarifying existing guidance to improve consistency in application of Accounting Standards Codification (ASC) 740. The Company adopted this standard on the first day of fiscal 2021 and it did not have a material impact on the Company's condensed consolidated financial statements.

Related Revenue Information footnote (see note 7).
Recently Issued Accounting Pronouncements (not yet adopted)

13


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

In March 2020, the FASB issued Accounting Standards Update No. 2020-04 (ASU 2020-04), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP principles to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued due to reference rate reform. . In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, which clarified that certain optional expedients and exceptions in Topic 848 apply to derivative instruments that are affected by the discounting transition due to reference rate reform. The Company has not used any of the accommodations to date, but may use them up until December 31, 2022.

(2) ACQUISITIONS
On May 12, 2021, the Company acquired the outstanding shares of Prospera, an artificial intelligence company focused on machine learning and computer vision in agriculture, for $300,000 in cash (net of cash acquired). The acquisition of Prospera, located in Tel Aviv, Israel, allowswas made to allow the Company to accelerate innovation with machine learning for agronomy and will beis reported in the IrrigationAgriculture segment. The preliminary fair values assigned were $269,859 forIn the purchase price allocation, goodwill $37,300 forof $273,453, developed technology of $32,900, trade name of $2,900,$2,850, property, plant, and equipment of $1,063, and a deferred tax liability of $9,246, and$8,223 were recorded with the remainder to net working capital. Goodwill is not deductible for tax purposes, the trade name will be amortized over 7 years, and the developed technology asset will be amortized over 5 years. The amount allocated to goodwill was primarily attributable to anticipated synergies and other intangibles that do not qualify for separate recognition. The Company expects to finalizefinalized the purchase price allocation in the fourth quarter of 2021.
On April 20, 2021 the Company acquired the assets of PivoTrac for $12,500 in cash. The agreed upon purchase price was $14,000, with $1,500 being held back for seller representations and warranties that will be settled within 12 months of the acquisition date. The acquisition of PivoTrac, located in Texas, allowswas made to allow the Company to advance its technology strategy and increase its number of connected agricultural devices and will be reported in the IrrigationAgriculture segment. The preliminary fair values assigned were $10,800 for goodwill, $2,627 for customer relationships, and the remainder is net working capital. Goodwill is not deductible for tax purposes and the customer relationship will be amortized over 108 years. The Company expects the purchase price allocation to be finalized in the second quarter of 2022.

OnMay 29, 2020, the Company acquired 55% of Energia Solar do Brasil ("Solbras") for $4,308. Approximately $646 of the purchase price was contingent on seller representations and warranties was settled for the full amount in the second quarter of 2021. Solbras is a leading provider of solar energy solutions for agriculture. In the purchase price allocation, goodwill of $3,341 and customer relationships of $3,718 were recorded and the remainder is net working capital. Goodwill is not deductible for tax purposes and the customer relationship will be amortized over 8 years. The acquisition of Solbras, located in Brazil, allows the Company to expand its product offerings in the Irrigation segment to include not only pivots, but also a sustainable and low-cost energy source to provide electricity to the units. The Company finalized the purchase price allocation in the fourth quarter of 2020.
On March 6, 2020, the Company acquired 75% of KC Utility Packaging, LLC for $4,200. Approximately $400 of the purchase price was contingent on seller representations and warranties and was settled for the full amount in the first quarter of 2021. The Company name was subsequently changed to Valmont Substations LLC. The acquisition was made to expand the Company's utility substation product offering. In the purchase price allocation, goodwill of $1,100, customer relationships of $4,000, and other intangibles of $500 were recorded. The Company finalized the purchase price allocation in the fourth quarter of 2020.
Proforma disclosures were omitted for these acquisitions as the they do not have a significant impact on the Company's financial results.
Acquisitions of Noncontrolling Interests
    In February 2020, the Company acquired the remaining 49% of AgSense that it did not own for $43,983, which includes a holdback payment of $2,200 that was made in the second quarter of 2020. The Company finalized the accounting for owning 100% of AgSense in the second quarter of 2020 which resulted in the recognition of a deferred tax asset of
1413


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

approximately $7,700. In the first quarter of 2020, the Company acquired 16% of the remaining 25% that it did not own of Convert Italia for a cash payment of $11,750. The purchase agreement also settled the escrow funds which the Company had paid at date of acquisition.

As these transactions were for the acquisition of all or part of the remaining shares of a consolidated subsidiary with no change in control, they were recorded within shareholders' equity and as a financing activity in the Condensed Consolidated Statements of Cash Flows.


(3) RESTRUCTURING ACTIVITIES
    In 2020, the Company executed certain regional restructuring activities (the "2020 Plan") primarily in the ESS and Utility segments and a U.S. specific early retirement program covering all segments. The 2020 Plan included the closure of 1 U.S. Coatings facility and restructuring activities were completed by the end of 2020. For the third quarter and first three quarters of 2020, the Company recorded restructuring expenses in cost of sales and selling, general, and administrative expenses of $2,910 and $8,489, respectively.
Changes in liabilities recorded for the restructuring plans were as follows:
Balance at December 26, 2020Costs Paid or Otherwise SettledBalance at September 25, 2021
Severance$12,660 $(12,660)$— 

(4) GOODWILL AND INTANGIBLE ASSETS
Amortized Intangible Assets
The components of amortized intangible assets at SeptemberMarch 26, 2022 and December 25, 2021 and December 26, 2020 were as follows:
September 25, 2021March 26, 2022
Gross
Carrying
Amount
Accumulated
Amortization
Weighted
Average
Life
Gross
Carrying
Amount
Accumulated
Amortization
Weighted
Average
Life
Customer RelationshipsCustomer Relationships$239,493 $166,857 13 yearsCustomer Relationships$225,201 $164,130 13 years
Patents & Proprietary TechnologyPatents & Proprietary Technology63,109 12,318 8 yearsPatents & Proprietary Technology58,657 15,978 9 years
Trade NameTrade Name2,850 339 6 years
OtherOther7,469 6,828 4 yearsOther4,511 4,087 6 years
$310,071 $186,003 $291,219 $184,534 
December 26, 2020December 25, 2021
Gross
Carrying
Amount
Accumulated
Amortization
Weighted
Average
Life
Gross
Carrying
Amount
Accumulated
Amortization
Weighted
Average
Life
Customer RelationshipsCustomer Relationships$237,232 $155,760 13 yearsCustomer Relationships$224,597 $160,626 13 years
Patents & Proprietary TechnologyPatents & Proprietary Technology26,208 8,301 14 yearsPatents & Proprietary Technology58,699 13,955 9 years
Trade NameTrade Name2,850 183 7 years
OtherOther7,602 6,786 4 yearsOther4,534 3,959 6 years
$271,042 $170,847 $290,680 $178,723 
Amortization expense for intangible assets for the thirteen and thirty-nine weeks ended September 25,March 26, 2022 and March 27, 2021, and September 26, 2020, respectively was as follows:
15


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

Thirteen weeks endedThirty-nine weeks ended
2021202020212020
$6,137 $4,518 $15,551 $13,621 
Thirteen weeks ended
20222021
Amortization expense$5,849 $4,232 
Estimated annual amortization expense related to finite-lived intangible assets is as follows:
Estimated
Amortization
Expense
Estimated
Amortization
Expense
2021$21,392 
2022202221,062 2022$20,044 
2023202319,261 202317,783 
2024202417,324 202415,869 
2025202515,868 202514,435 
2026202614,012 
The useful lives assigned to 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.
14


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

Non-amortized intangible assets
Intangible assets with indefinite lives are not amortized and consist solely of trade names. The carrying value of trade names at SeptemberMarch 26, 2022 and December 25, 2021 and December 26, 2020 are as follows:
September 25,
2021
December 26,
2020
Year AcquiredMarch 26,
2022
December 25,
2021
Year Acquired
NewmarkNewmark$11,111 $11,111 2004Newmark$11,111 $11,111 2004
Convert Italia S.p.AConvert Italia S.p.A8,238 8,479 2018
WebforgeWebforge8,035 7,972 2010Webforge7,747 7,877 2010
Convert Italia S.p.A8,790 9,137 2018
Ingal EPS/Ingal Civil ProductsIngal EPS/Ingal Civil Products7,511 7,637 2010
Valmont SMValmont SM8,386 8,720 2014Valmont SM5,904 6,082 2014
Ingal EPS/Ingal Civil Products7,790 7,730 2010
ShakespeareShakespeare4,000 4,000 2014
WalparWalpar3,500 3,500 2018Walpar3,500 3,500 2018
Shakespeare4,000 4,000 2014
OtherOther17,769 14,828 VariousOther14,729 14,721 Various
$69,381 $66,998 $62,740 $63,407 
In its determination of these intangible assets as 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 as of August 28, 2021. The values of each trade name were determined using the relief-from-royalty method. Based on this evaluation, no trade names were determined to be impaired. In conjunction with an interim second quarter 2020
Goodwill
The carrying amount of goodwill impairment test, impairment indicators were noted for the Webforgeby segment as of March 26, 2022 and Locker trade names requiring an interim impairment test. As a result, an impairment charge of approximately $3,900December 25, 2021 was recognized against these 2 trade names in fiscal 2020.as follows:
Infrastructure SegmentAgriculture
Segment
Total
Gross Balance December 25, 2021$456,876 $313,512 $770,388 
   Accumulated impairment losses(61,822)— (61,822)
Balance at December 25, 2021395,054 313,512 708,566 
Foreign currency translation(1,584)710 (874)
Balance at March 26, 2022$393,470 $314,222 $707,692 

Infrastructure SegmentAgriculture SegmentTotal
Gross Balance March 26, 2022$455,292 $314,222 $769,514 
Accumulated impairment losses(61,822)— (61,822)
Balance at March 26, 2022$393,470 $314,222 $707,692 

The Company’s annual impairment test of goodwill was performed as of August 28, 2021, using primarily the discounted cash flow method. During fiscal 2022, no goodwill impairment has been recorded.
16
15


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

Goodwill
The carrying amount of goodwill by segment as of September 25, 2021 and December 26, 2020 was as follows:
Engineered
Support
Structures
Segment
Utility
Support
Structures
Segment
Coatings
Segment
Irrigation
Segment
Total
Gross Balance December 26, 2020$232,323 $135,335 $94,309 $30,177 $492,144 
   Accumulated impairment losses(31,245)(14,355)(16,222)— (61,822)
Balance at December 26, 2020201,078 120,980 78,087 30,177 430,322 
   Acquisitions— — — 280,659 280,659 
Foreign currency translation170 (1,731)129 (87)(1,519)
Balance at September 25, 2021$201,248 $119,249 $78,216 $310,749 $709,462 

The Company’s annual impairment test of goodwill was performed as of August 28, 2021, using primarily the discounted cash flow method. During fiscal 2021, no goodwill impairment has been recorded.

An interim impairment test was required in the second quarter of 2020 and that test showed that the Access Systems reporting unit's carrying value was higher than its estimated fair value. Accordingly, the Company recorded a $12,575 impairment of Access System's goodwill in fiscal 2020.
(5)(4) 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-ninethirteen weeks ended September 25,March 26, 2022 and March 27, 2021 and September 26, 2020 were as follows:
2021202020222021
InterestInterest$20,716 $20,298 Interest$1,613 $111 
Income taxesIncome taxes40,113 35,803 Income taxes6,699 3,347 
(5) EARNINGS PER SHARE
The following table provides a reconciliation between Basic and Diluted earnings per share (EPS):
Basic EPSDilutive
Effect of
Stock
Options
Diluted EPS
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 
Thirteen weeks ended March 27, 2021:
Net earnings attributable to Valmont Industries, Inc.$55,014 $— $55,014 
Weighted average shares outstanding (000's)21,179 250 21,429 
Per share amount$2.60 $(0.03)$2.57 
At March 26, 2022 and March 27, 2021, there were 47,223 and 0 outstanding stock options with exercise prices exceeding the market price of common stock that were excluded from the computation of diluted earnings per share, respectively.

17
16


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

(6) EARNINGS PER SHARE
The following table provides a reconciliation between Basic and Diluted earnings per share (EPS):
Basic EPSDilutive
Effect of
Stock
Options
Diluted EPS
Thirteen weeks ended September 25, 2021:
Net earnings attributable to Valmont Industries, Inc.$51,650 $— $51,650 
Weighted average shares outstanding (000's)21,175 377 21,552 
Per share amount$2.44 $(0.04)$2.40 
Thirteen weeks ended September 26, 2020:
Net earnings attributable to Valmont Industries, Inc.$39,342 $— $39,342 
Weighted average shares outstanding (000's)21,309 107 21,416 
Per share amount$1.85 $(0.01)$1.84 
Thirty-nine weeks ended September 25, 2021
Net earnings attributable to Valmont Industries, Inc.$168,774 $— $168,774 
Weighted average shares outstanding (000's)21,182 301 21,483 
Per share amount$7.97 $(0.11)$7.86 
Thirty-nine weeks ended September 26, 2020:
Net earnings attributable to Valmont Industries, Inc.$104,878 $— $104,878 
Weighted average shares outstanding (000's)21,358 95 21,453 
Per share amount$4.91 $(0.02)$4.89 
    At September 25, 2021 and September 26, 2020, there were 0 and 296,966 outstanding stock options with exercise prices exceeding the market price of common stock that were excluded from the computation of diluted earnings per share, respectively.

18


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

(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 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 OCI until either the sale or substantially complete liquidation of the related subsidiaries.
    Fair value of derivative instruments at SeptemberMarch 26, 2022 and December 25, 2021 and December 26, 2020 are as follows:
Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:Balance sheet locationSeptember 25, 2021December 26, 2020Derivatives designated as hedging instruments:Balance sheet locationMarch 26, 2022December 25, 2021
Commodity forward contractsCommodity forward contractsPrepaid expenses and other assets$7,623 $— Commodity forward contractsAccrued expenses$(52)$(5,802)
Foreign currency forward contractsForeign currency forward contractsPrepaid expenses and other assets— 724 Foreign currency forward contractsPrepaid expenses and other assets236 149 
Foreign currency forward contractsForeign currency forward contractsAccrued expenses(84)— Foreign currency forward contractsAccrued expenses— (118)
Cross currency swap contractsCross currency swap contractsPrepaid expenses and other assets1,309 600 Cross currency swap contractsPrepaid expenses and other assets17,449 1,764 
Cross currency swap contractsAccrued expenses(1,847)(7,235)
$7,001 $(5,911)$17,633 $(4,007)
    Gains (losses) on derivatives recognized in the condensed consolidated statements of earnings for the thirteen and thirty-nine weeks ended September 25,March 26, 2022 and March 27, 2021 and September 26, 2020 are as follows:
Thirteen weeks endedThirty-nine weeks ended
Statements of earnings locationSeptember 25, 2021September 26, 2020September 25, 2021September 26, 2020
Commodity forward contractsProduct cost of sales$9,870 $— $10,140 $— 
Foreign currency forward contracts  Other income187 116 123 146 
Foreign currency forward contractsProduct sales— 1,017 — 1,169 
Interest rate hedge amortizationInterest expense(16)(16)(48)(48)
Cross currency swap contractsInterest expense691 649 2,060 2,111 
$10,732 $1,766 $12,275 $3,378 
Thirteen weeks ended
Statements of earnings locationMarch 26, 2022March 27, 2021
Commodity forward contractsProduct cost of sales$2,043 $— 
Foreign currency forward contracts  Other income151 (218)
Foreign currency forward contractsProduct sales— — 
Interest rate hedge amortizationInterest expense(16)(16)
Cross currency swap contractsInterest expense774 711 
$2,952 $477 
    Cash Flow Hedges
    During the first three quarters of 2021, the Company entered into steel hot rolled coil (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 $39,731$93,498 for the total purchase of 41,00086,100 short tons (30,500 short tons from May 2021 thru December 2021 and 55,600 short tons from January 2022 thru December 2022). As of March 26, 2022, the forward contracts had a notional amount of $51,331 for the total purchase of 43,600 short tons from April 2022 to JuneDecember 2022. 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.
During the first halfquarter of 2021, a Brazilian subsidiary with a Real functional currency entered into foreign currency forward contracts to mitigate foreign currency risk related to a customer order with components purchased in Euros. The forward contracts, which qualify as a cash flow hedge, matured in July and September 2021 and had notional amounts to buy 3,800 euros in exchange for a stated amount of Brazilian Real. During the first half of 2021,2022, 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 December 2021August 2022 and has a notional amount to sell $2,000$1,800 in exchange for a stated amount of Euros.
1917


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

    
Net Investment Hedges
    In the second quarter of 2020, the Company early settled their Australian dollar denominated forward currency contracts and received proceeds of $11,983. The proceeds/gain from these settlements (net of tax) will remain in Other Comprehensive Income (OCI) until either the sale or substantially complete liquidation of the related subsidiaries.
    In 2019, the Company entered into 2 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 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.
Key terms of the two CCS are as follows:
CurrencyNotional AmountTermination DateSwapped Interest RateSet Settlement Amount
Danish Krone (DKK)$50,000 April 1, 20242.68%DKK 333,625
Euro$80,000 April 1, 20242.825%€71,550
    The Company designated the full notional amount of the 2 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) are recorded as cumulative foreign currency translation within OCI. Net interest receipts will be recorded as a reduction of interest expense over the life of the CCS.
20


(7) BUSINESS SEGMENTS & RELATED REVENUE INFORMATION
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES    During the first quarter of 2022, the Company's CODM changed the Company's management structure and began to manage the business, allocate resources and evaluate performance based on the new structure. As a result, the Company has realigned to a 2 reportable segment structure organized by market dynamics (Infrastructure and Agriculture). Three operating segments resulted from the new management structure and two are aggregated into the Agriculture reportable segment. The Company considers gross profit margins, nature of products sold, nature of the production processes, type and class of customer, and methods used to distribute products when assessing aggregation of operating segments. The Infrastructure segment includes the previous reportable segments of Utility Structures, Engineered Support Structures, and Coatings. All prior period segment information has been recast to reflect this change in reportable segments.

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

(8) BUSINESS SEGMENTS
    The Company has 4Both reportable segments based on its management structure. Each segment isare 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 business units generally on the basis of employee headcounts.

Reportable segments are as follows:

    UTILITY SUPPORT STRUCTURES: This segment consists of the manufacture of engineered steel, concrete and composite structures for the utility markets, including transmission, distribution, substations, and renewable energy generation equipment and drone inspection services;
    ENGINEERED SUPPORT STRUCTURES:INFRASTRUCTURE: This segment consists of the manufacture and distribution of engineered poles, towers,products and components forsolutions to serve the infrastructure markets of utility, renewable energy, lighting, traffic,transportation, and wireless communication markets, engineered access systems, integrated structure solutions for smart cities,telecommunications, and highway safety products;

    COATINGS: This segment consists of galvanizing, painting, and anodizingcoatings services to preserve and protect metal products; andproducts.
    IRRIGATION:AGRICULTURE: This segment consists of the manufacture of center pivot and linear irrigation equipment for agricultural markets, including parts services and tubular products, and advanced technology solutions for water management and precision agriculture.
    The Company evaluates the performance of its businessreportable segments based upon operating income and invested capital. The Company does not allocate interest expense, non-operating income and deductions,(expense), or income taxes to its businessreportable segments.




21
18


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

Summary by Business
Thirteen weeks endedThirty-nine weeks ended
September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
SALES:
Utility Support Structures segment:
Steel$199,946 $156,082 $545,417 $482,430 
Concrete39,656 39,215 123,477 120,653 
Engineered Solar Tracker Solutions13,224 43,287 28,690 56,830 
Offshore and Other Complex Steel Structures23,676 35,809 99,914 71,265 
Utility Support Structures segment$276,502 $274,393 $797,498 $731,178 
Engineered Support Structures segment:
Lighting, Traffic, and Highway Safety Products$188,589 $181,571 $529,432 $534,585 
    Communication Products63,424 50,677 164,055 139,759 
Access Systems29,084 23,408 79,326 65,439 
Engineered Support Structures segment281,097 255,656 772,813 739,783 
Coatings segment96,685 87,886 288,131 255,976 
Irrigation segment:
    North America116,308 75,803 395,096 281,397 
    International124,023 63,406 356,864 165,171 
        Irrigation segment240,331 139,209 751,960 446,568 
Total894,615 757,144 2,610,402 2,173,505 
INTERSEGMENT SALES:
Utility Support Structures segment— 1,914 435 7,278 
Engineered Support Structures segment48 711 268 8,599 
Coatings segment21,779 19,188 64,029 56,021 
Irrigation segment4,006 1,361 7,373 4,629 
Total25,833 23,174 72,105 76,527 
NET SALES:
Utility Support Structures segment276,502 272,479 797,063 723,900 
Engineered Support Structures segment281,049 254,945 772,545 731,184 
Coatings segment74,906 68,698 224,102 199,955 
Irrigation segment236,325 137,848 744,587 441,939 
Total$868,782 $733,970 $2,538,297 $2,096,978 
OPERATING INCOME:
Utility Support Structures segment$24,561 $25,881 $61,168 $75,255 
Engineered Support Structures segment34,383 25,434 86,235 46,183 
Coatings segment12,478 12,416 40,018 33,618 
Irrigation segment27,735 14,687 108,467 60,701 
Corporate(22,962)(16,939)(59,857)(43,943)
Total$76,195 $61,479 $236,031 $171,814 
Thirteen weeks ended
March 26,
2022
March 27,
2021
SALES:
Infrastructure$680,726 $549,646 
Agriculture306,580 229,664 
Total987,306 779,310 
INTERSEGMENT SALES:
Infrastructure(3,101)(3,201)
Agriculture(3,385)(1,223)
Total(6,486)(4,424)
NET SALES:
Infrastructure677,625 546,445 
Agriculture303,195 228,441 
Total$980,820 $774,886 
OPERATING INCOME:
Infrastructure$77,507 $54,449 
Agriculture37,475 38,748 
Corporate(20,140)(15,986)
Total$94,842 $77,211 
Thirteen weeks ended March 26, 2022
InfrastructureAgricultureIntersegment SalesConsolidated
Geographical market:
North America$505,980 $182,255 $(6,486)$681,749 
International174,746 124,325 — 299,071 
Total$680,726 $306,580 $(6,486)$980,820 
Product line:
Transmission, Distribution and Substation$281,600 $— $— $281,600 
Lighting and Transportation212,767 — — 212,767 
Coatings81,976 — (3,101)78,875 
Telecommunications61,396 — — 61,396 
Renewable Energy42,987 — — 42,987 
Irrigation Equipment and Parts, excluding Technology— 278,034 (3,385)274,649 
Technology Products and Services— 28,546 — 28,546 
Total$680,726 $306,580 $(6,486)$980,820 

2219


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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

Thirteen weeks ended March 27, 2021
InfrastructureAgricultureIntersegment SalesConsolidated
Geographical market:
North America$385,734 $122,751 $(4,424)$504,061 
International163,912 106,913 — 270,825 
Total$549,646 $229,664 $(4,424)$774,886 
Product line:
Transmission, Distribution and Substation$208,444 $— $— $208,444 
Lighting and Transportation176,516 — — 176,516 
Coatings74,793 — (3,201)71,592 
Telecommunications45,640 — — 45,640 
Renewable Energy44,253 — — 44,253 
Irrigation Equipment and Parts, excluding Technology— 207,258 (1,223)206,035 
Technology Products and Services— 22,406 — 22,406 
Total$549,646 $229,664 $(4,424)$774,886 

A breakdown by segment of revenue recognized over time and at a point in time for the thirteen weeks ended March 26, 2022 and March 27, 2021 is as follows:
Point in TimeOver TimeTotal
Thirteen weeks ended March 26, 2022Thirteen weeks ended March 26, 2022Thirteen weeks ended March 26, 2022
Infrastructure$369,190 $308,435 $677,625 
Agriculture297,606 5,589 303,195 
  Total$666,796 $314,024 $980,820 
Point in TimeOver TimeTotal
Thirteen weeks ended March 27, 2021Thirteen weeks ended March 27, 2021Thirteen weeks ended March 27, 2021
Infrastructure$291,731 $254,714 $546,445 
Agriculture224,637 3,804 228,441 
  Total$516,368 $258,518 $774,886 
20


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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







(9)(8) SUBSEQUENT EVENT

Acquisition
On October 18, 2021, subsequentApril 27, 2022, the Company signed an agreement to acquire the endmajority ownership interest in ConcealFab, for approximately $41 million, net of our thirdcash acquired. ConcealFab is an industry leader in 5G infrastructure and passive intermodulation mitigation solutions. The acquisition will be reported in the Infrastructure segment results from the closing date. The transaction is expected to close in the second quarter of 2021, the Company2022 and its wholly-owned subsidiaries Valmont Industries Holland B.V. and Valmont Group Pty. Ltd., as Borrowers, entered into a Second Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, and the other lenders party thereto (the “Restated Credit Agreement”). The Restated Credit Agreement amends and restates the First Amended and Restated Credit Agreement dated as of October 18, 2017 among the Borrowers, the Administrative Agent and the other lenders party thereto (as amended, the “Original Credit Agreement”) The changesis subject to the Restated Credit Agreement are as follows:
a.an increase in the commitments under the credit facility from $600 million to $800 million;
b.an increase in the accordion under the credit facility from $200 million to $300 million;

c.an extension of the maturity date of the credit facility from October 18, 2022 to October 18, 2026;

d.replacement of LIBOR as the benchmark interest rate with SOFR;

e.removal of the interest coverage ratio (adjusted EBITDA / interest expense) as a covenant;

f.a modification of the leverage ratio (interest-bearing debt / adjusted EBITDA) to deduct unrestricted cash in excess of $50 million (but not exceeding $500 million) from interest-bearing debt.customary closing conditions.
2321


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

Management’s discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These 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 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 statements. These factors include, among other things, the continuing and developing effects of COVID-19 including the effects of the outbreak on the general economy and the specific effects on the Company's business and that of its customers and suppliers, 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 discussion and analysis included in the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 2020.25, 2021. Segment net sales in the table below and elsewhere are presented net of intersegment sales. See Note 87 of our condensed consolidated financial statements for additional information on segment realignment, segment sales, and intersegment sales.
2422


Results of Operations (Dollars in millions, except per share amounts)    
Thirteen weeks endedThirty-nine weeks endedThirteen weeks ended
September 25, 2021September 26, 2020% Incr. (Decr.)September 25, 2021September 26, 2020% Incr. (Decr.)March 26, 2022March 27, 2021% Incr. (Decr.)
ConsolidatedConsolidatedConsolidated
Net salesNet sales$868.8 $734.0 18.4 %$2,538.3 $2,097.0 21.0 %Net sales$980.8 $774.9 26.6 %
Gross profitGross profit227.4 190.7 19.2 %661.6 560.9 18.0 %Gross profit249.2 204.6 21.8 %
as a percent of sales
as a percent of sales
26.2 %26.0 %26.1 %26.7 %
as a percent of sales
25.4 %26.4 %
SG&A expenseSG&A expense151.2 129.3 16.9 %425.6 $389.1 9.4 %SG&A expense154.3 127.3 21.2 %
as a percent of sales
as a percent of sales
17.4 %17.6 %16.8 %18.6 %
as a percent of sales
15.7 %16.4 %
Operating incomeOperating income76.2 61.5 23.9 %236.0 171.8 37.4 %Operating income94.8 77.2 22.8 %
as a percent of sales
as a percent of sales
8.8 %8.4 %9.3 %8.2 %
as a percent of sales
9.7 %10.0 %
Net interest expenseNet interest expense10.6 10.0 6.0 %30.6 28.6 7.0 %Net interest expense11.0 9.7 13.4 %
Effective tax rateEffective tax rate23.4 %23.0 %21.3 %26.9 %Effective tax rate23.4 %23.0 %
Net earningsNet earnings$51.7 $39.3 31.6 %$168.8 $104.9 60.9 %Net earnings$62.3 $55.0 13.3 %
Diluted earnings per shareDiluted earnings per share$2.40 $1.84 30.4 %$7.86 $4.89 60.7 %Diluted earnings per share$2.90 $2.57 12.8 %
Utility Support Structures (Utility)
InfrastructureInfrastructure
Net salesNet sales$276.5 $272.5 1.5 %$797.1 $723.9 10.1 %Net sales$677.6 $546.4 24.0 %
Gross profitGross profit53.5 54.7 (2.2)%149.3 156.1 (4.4)%Gross profit166.8 135.6 23.0 %
SG&A expenseSG&A expense28.9 28.8 0.3 %88.1 80.8 9.0 %SG&A expense89.3 81.2 10.0 %
Operating incomeOperating income24.6 25.9 (5.0)%61.2 75.3 (18.7)%Operating income77.5 54.4 42.5 %
Engineered Support Structures (ESS)
Net sales$281.0 $255.0 10.2 %$772.5 $731.2 5.6 %
Gross profit79.9 71.3 12.1 %219.6 201.4 9.0 %
SG&A expense45.6 45.8 (0.4)%133.4 155.2 (14.0)%
Operating income34.3 25.5 34.5 %86.2 46.2 86.6 %
Coatings
Net sales$74.9 $68.7 9.0 %$224.1 $200.0 12.1 %
Gross profit22.9 22.6 1.3 %71.1 64.2 10.7 %
SG&A expense10.4 10.2 2.0 %31.1 30.6 1.6 %
Operating income12.5 12.4 0.8 %40.0 33.6 19.0 %
Irrigation
AgricultureAgriculture
Net salesNet sales$236.4 $137.8 71.6 %$744.6 $441.9 68.5 %Net sales$303.2 $228.4 32.7 %
Gross profitGross profit70.7 42.2 67.5 %220.9 139.2 58.7 %Gross profit82.3 68.9 19.4 %
SG&A expenseSG&A expense42.9 27.5 56.0 %112.4 78.5 43.2 %SG&A expense44.9 30.2 48.7 %
Operating incomeOperating income27.8 14.7 89.1 %108.5 60.7 78.7 %Operating income37.5 38.7 (3.1)%
Net corporate expenseNet corporate expenseNet corporate expense
Gross profitGross profit$0.3 — NM$0.6 $— NMGross profit$— — NM
SG&ASG&A$23.3 $17.0 37.1 %$60.5 $44.0 37.5 %SG&A20.1 16.0 25.6 %
Operating lossOperating loss(23.0)(17.0)(35.3)%(59.9)(44.0)(36.1)%Operating loss(20.1)(16.0)(25.6)%

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Overview, Including Items Impacting Comparability
On a consolidated basis, net sales were higher in the thirdfirst quarter and first three quarters of 2021,2022, as compared to the same periodsperiod of 2020,2021, with higher sales in allboth reporting segments. The change in net sales in the third quarter and first three quarters of fiscal 2021, as compared with the same period in 2020, is as follows:
Third quarter
TotalUtilityESSCoatingsIrrigation
Sales - 2020$734.0 $272.5 $255.0 $68.7 $137.8 
Volume32.6 (22.3)(1.3)0.5 55.7 
Pricing/mix91.1 25.6 21.6 4.6 39.3 
Acquisition/(divestiture)1.2 — — — 1.2 
Currency translation9.9 0.7 5.8 1.1 2.3 
Sales - 2021$868.8 $276.5 $281.1 $74.9 $236.3 
Year-to-Date
TotalUtilityESSCoatingsIrrigation
Sales - 2020$2,097.0 $723.9 $731.2 $200.0 $441.9 
Volume222.5 37.9 (22.9)3.2 204.3 
Pricing/mix173.0 28.4 38.4 12.8 93.4 
Acquisition/(divestiture)9.2 2.2 — — 7.0 
Currency translation36.6 4.7 25.9 8.1 (2.1)
Sales - 2021$2,538.3 $797.1 $772.6 $224.1 $744.5 
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 result in operating income changes.
Average steel prices for both hot rolled coil and plate were higher, especially in North America, in the thirdfirst quarter and first three quarters of 2021,2022, as compared to 2020, contributing to2021, resulting in higher cost of sales and lower gross profit marginnet sales as customer pricing mechanisms and product selling price practices allowed for the Utility segment and the overall Company as raw material cost inflation was not fully recovered through selling pricing mechanisms.
recovery of that inflation.
    The Company acquired the following businesses:

PivoTrac in the second quarter of 2021, an agricultural technology company that offers solutions focused on remote monitoring of center pivot irrigation machines (Irrigation)(Agriculture).
Prospera in the second quarter of 2021, a privately-held Israeli-based artificial intelligence company, focused on machine learning and computer vision in agriculture (Irrigation)(Agriculture).

KC Utility Packaging ("Valmont Substation") in
Items of note impacting the comparability of results from net earnings for the first quarter of 2020, a provider2022 included amortization of engineering, design,identified intangible assets of $1.6 million ($1.2 million after-tax) and packaging services instock-based compensation expense of $2.5 million ($2.3 million after-tax) for the substation market (Utility).
Energia Solar Do Brasil ("Solbras")employees from the Prospera subsidiary acquired in the second quarter of 2020, a leading provider of solar energy solutions2021 (recognized within SG&A for agriculture (Irrigation)the Agriculture segment).

COVID-19 Impact on Financial Results and Liquidity

The effects of COVID and the related actions of governments and other authorities to contain COVID affected and continue to affect the company’s operations, results, and cash flows. We are considered an essential business because of the products and services that serve critical infrastructure sectors as defined by many governments around the world. Our significant manufacturing facilities arewere open and fully operational as of September 25, 2021. Certain foreign manufacturing facilities were temporarily closed for part of the first half of 2020 due to government mandates.March 26, 2022. We continue to monitor incidence of COVID-19 on a continuous basis, particularly in areas reporting recent increases in infection. To protect the safety, health and well-being of employees, customers, suppliers and communities, CDC and WHO guidelines are being followed in all facilities.
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We generated $61.8 million of cash flows from operating activities during the first three quarters of 2021. Our main focus is to maintain liquidity to support the working capital needs of our operations and maintain our investment grade credit rating.

The ultimate magnitude of COVID-19, including the extent of its impact on the Company’s financial and operational results, cash balances and available borrowings on our line of credit, will be determined by the length of time the pandemic continues, its effect on the demand for the Company’s products and services and supply chain, as well as the effect of governmental regulations imposed in response to the pandemic.

Change in Reportable Segments

On December 26, 2021, the Company's CODM began to manage the business, allocate resources and evaluate performance based on changes made to the Company's management structure. As a result, the Company has realigned its reportable segment structure. The Company reorganized from a four segment structure previously organized by product category (Utility Structures, Engineered Support Structures, Coatings, and Irrigation) to a two segment reporting structure organized by market dynamics (Infrastructure and Agriculture). All prior period information has been recast to reflect this change in reportable segments. See Note 7 to our Condensed Consolidated Financial Statements for additional information.

Backlog

The backlog of unshipped orders at September 25, 2021March 26, 2022 was approximately $1.5$1.8 billion compared with approximately $1.1$1.6 billion at December 26, 2020.25, 2021. The increase is primarily attributed to the receipt of three additionala large purchase orders during the first three quartersorder of 2021 totaling approximately $267$135 million for a large Utility project in North America.within our transmission, distribution, and substation product line within the Infrastructure reporting segment. We expect approximately $1.6 billion of the backlog to be fulfilled within the subsequent 12 months with the exception of $175 million primarily related to these three new Utility orders.months.

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Currency Translation

    In the thirdfirst quarter and first three quarters of 2021,2022, we realized an increase in operating income, as compared with 2020,2021, due in part to currency translation effects. The breakdown of this effect by segment was as follows:
    
TotalUtilityESSCoatingsIrrigationCorporate
Third quarter$1.5 $— $0.9 $0.2 $0.4 $— 
 
Year-to-date$0.3 $(0.8)$1.0 $1.3 $(0.3)$(0.9)
TotalInfrastructureAgricultureCorporate
First quarter$0.3 $(0.4)$0.7 $— 

Gross Profit, SG&A, and Operating Income

    At a consolidated level, gross profit as a percent of sales was relatively flat in the third quarter and lowerdecreased slightly in the first three quartersquarter of 2021,2022, as compared with the same periodsperiod in 2020,2021, but the amount of gross profit increased due to the higher raw materialaverage selling prices across all product lines more than offsetting higher costs of goods sold across the Company, somewhat offset by improved selling prices and sales mix. In the third quarter and first three quartersCompany. Amounts of 2021 as compared to 2020, gross profit was higherincreased for all operating segments except the Utility segment.both reportable segments.
    SG&A expenses increased in the third quarter and first three quarters of 2021 as compared to the same periods in 2020.    The increase in the thirdfirst quarter and first three quarters of 20212022 SG&A expense over the same period of 20202021 was due to the SG&A contribution from the recent acquisition of Prospera (including intangible asset amortization, stock-based compensation, and research and development costs), higher incentives due to improved operations, and salary merit increases, foreign currency translation effects, and SG&A contributed from the recent acquisition of Prospera and PivoTrac, and intangible asset amortization from such acquisitions. The increase for the first three quarters of 2021 versus 2020 were somewhat offset by a reduction in certain restructuring expenses, and a partial impairment of goodwill and tradename for the Access Systems business that did not recur in 2021.increases.

    In the third quarter and first three quarters of 2021, as compared to the same periods of 2020, operating income was higher in the Irrigation, ESS, and Coatings segments and lower in the Utility segment. The increase in consolidated operating income in the third quarter is primarily attributed to higher irrigation sales volume and pricing actions in both Irrigation and ESS, somewhat offset by the decrease in gross profit in Utility with higher average selling prices more than offset by the impact of the cost of steel and lower offshore product sales, as well as increases in SG&A expenses.    The increase in consolidated operating income in the first three quartersquarter of 2022, as compared to the same period of 2021, is primarily attributeddue to the increase in average selling prices more than offsetting higher irrigation sales volumes, pricing actions in both Irrigation and ESS, the partial goodwill and tradename impairment recognized in 2020 that did not recur in 2021; somewhatcosts of goods sold. This was partially offset by the decrease in gross profit in Utility due to the same factors mentioned above for the third quarter and increasesincrease in SG&A expenses.year over year.

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Net Interest Expense and Debt
    
    Interest expense increased in the thirdfirst quarter and first three quarters of 2021 approximated the amount recognized in 2020. Interest income was lower in the third quarter and first three quarters of 2021,2022, as compared to 2020,the same period in 2021, due to lower interest ratesborrowing on cash equivalents and lower overall related balancesthe revolving line of cash equivalents throughout 2021.credit.

Other Income/Expenses (including Loss on Investments - Unrealized)

    The change in other income/expenses inincludes the third quarterunrealized loss of 2021, as compared to 2020, was primarily due to a higher pension benefit of $1.8$1.1 million and the change in valuation of deferred compensation assets, which resulted in lower other income of $0.4 million. The change in other income/expenses in the first three quarters of 2021, as compared to 2020, was primarily due to a higher pension benefit of $5.6 million and the change in valuation of deferred compensation assets which resulted in higher other income of $0.5 million. The change in valuation of deferred compensation is shown as "Gain"Loss on investments (unrealized)" on the condensed consolidated statements of earnings. The change related to deferred compensation assets are offset by an opposite change of the same amount in SG&A expense. The remaining change was primarily due to fluctuations in foreign currency transaction gains/losses that was more favorable in 2021.

Income Tax Expense
    
    Our effective income tax rate in the thirdfirst quarter and first three quarters of 20212022 was 23.4% and 21.3%26.8%, compared to 23.0% and 26.9%21.9% in the thirdfirst quarter and first three quarters of 2020. On a year-to-date basis, the decrease2021. The increase in the effective tax rate iswas primarily due to a change in geographical earnings, the resultfinalization of a U.S. tax benefitregulations related to foreign taxes paidtax credits, and an incremental tax benefit in 2021 driven by employee stock option exercises which did not occurrecur in 2020 in addition to the 2020 partial impairment of goodwill and tradename for the Access Systems business that was not fully tax deductible.2022.

Earnings Attributable to Noncontrolling Interests

    Earnings attributable to noncontrolling interests and equity in loss of nonconsolidated subsidiaries were consistentwas higher in the thirdfirst quarter and first three quarters of 20212022 as compared to 2020.2021 due to higher net earnings of the subsidiaries Valmont does not own 100%.

Cash Flows from Operations
    Our cash flows provided by operations was $61.8$2.7 million in the first three quartersquarter of fiscal 2021,2022, as compared with $273.0$33.2 million provided by operations in the first three quartersquarter of 2020.2021. The decrease in operating cash flow in the first three quartersquarter of 2021,2022, as compared with 2020,2021, was primarily due to an increase in inventory,receivables attributed to the increase in net sales and an increase in contract assets, partially offset by an increase in advance payments received for performance obligations.accounts payable.

Utility
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Infrastructure segment

InfrastructureQ1 2022Q1 2021Dollar Change% Change
Sales, gross of intercompany eliminations:
Transmission, Distribution and Substation281.6208.473.2 35.1 %
Lighting & Transportation212.8176.536.3 20.6 %
Coatings82.0 74.8 7.2 9.6 %
Telecommunications61.4 45.6 15.8 34.6 %
Renewable Energy43.0 44.3 (1.3)(2.9)%
Total$680.8 $549.6 $131.2 23.9 %
Operating Income$77.5 $54.4 $23.1 42.5 %

    In the Utility segment,Net sales increased in the thirdfirst quarter and first three quarters of 20212022, as compared with 2020,to 2021, increased for this segment across almost all of the product lines primarily due to higher average selling prices partially offset by $7.5 million of unfavorable foreign currency translation effects. From a geography perspective, the increase in sales within North America was much higher than within international markets.
Transmission, distribution, and substation sales increased in the steel product line. Afirst quarter of 2022 as compared with 2021, primarily due to substantially higher average selling prices. This increase in average selling prices is due to a number of our sales contracts in North America containcontaining mechanisms that tie the sales price to published steel index pricing at the time our customer issues their purchase order. This resulted in increases to the average selling prices for our steel utility structures product line for the third quarter
    Lighting and first three quarters of 2021, as compared with 2020. For the third quarter and first three quarters of 2021,transportation sales of concrete structures approximated the amount recognized in fiscal 2020, as slightly lower volumes were offset by increases in average selling prices and improved product mix.
    Offshore sales decreased in the third quarter and increased induring the first three quarters of 2021, as compared to 2020, due to a large decrease in sales volume in the third quarter that was more than offset by higher volumes in the first half of 2021. Solar tracker solution sales decreased in the third quarter and first three quarters of 2021, as compared to 2020, due to lower volumes.
    Gross profit decreased in the third quarter and first three quarters of 2021, as compared to 2020, due to the rapid steel cost inflation that could not be fully recovered through pricing mechanisms for the steel structures product line, as well as the decreased volumes in the solar tracker solutions product line. SG&A expense was relatively flat in the third quarter, as compared with 2020. SG&A expense was higher in the first three quarters, as compared with 2020, due primarily to a $5.5 million write-off of a receivable following arbitration within the offshore and other complex structures product line. The decrease in operating income for the third quarter of 2021, as compared with 2020, is primarily due to higher average selling prices more than offset by the impact of the cost of steel and lower offshore product sales. The decrease in operating income
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for the first three quarters of 2021, as compared with 2020, is primarily due to the increase in the cost of steel that could not be fully recovered through higher average selling prices and the $5.5 million receivable write-off recognized in 2021.
ESS segment
    Net sales in the third quarter of 2021, as compared to 2020, increased across the three product lines from pricing actions and due to favorable currency translation effect of $5.8 million. Net sales increased in the first three quarters of 2021 as compared to 2020, driven by $25.9 million of favorable foreign currency translation, higher average selling prices across the three product lines, partially offset by lower sales volumes of lighting, traffic and highway safety products.
     Global lighting, traffic, and highway safety product sales in the third quarter of 2021 increased by $7.0 million,2022, as compared to the same period in fiscal 2020, primarily attributed2021, due to meaningfully higher average selling price partially offset by lower sales volumes across most regions. Sales volumes decreasedprices, primarily in North America, from the continuation of realized pricing actions. A small decrease in global sales volume partially offset the third quarter and first three quarters of 2021, attributed to a slowdownincrease in order volumes in the latter half of 2020 due to delays in approving the FAST Act extension. Europe sales of lighting and traffic products were similar in the third quarter of 2021 versus 2020 and higher for the first three quarters of 2021 versus 2020, due to COVID mandated plant closures in 2020 that did not recur in 2021. Lighting, traffic, and highway safety product sales in the Asia-Pacific region increased in the third quarter and first three quarters of 2021, as compared to 2020, due to improved volumes of highway safety products and favorable currency translation.average selling prices.
Communication product lineTelecommunication sales were higher by $12.7 and $24.2 million in the thirdfirst quarter and first three quarters of 2021,2022, as compared with the same periods in 2020. In North America, communication product selling prices increased in the third quarter and first three quarters of 2021, as well as increases in sales volumes in the third quarter and first three quarters of 2021, due to higher demand for communication structures and components. Communication product sales also improved dueprimarily to an increase in global sales volumes in the U.K. and Asia-Pacific.volume. 5G deployments continue to increase market opportunities across all regions. Average selling prices were modestly higher in in 2022, as compared to 2021.
Access Systems product line netCoatings sales increased in the thirdfirst quarter of 2021, as compared to 2020, by $5.7 million due to favorable currency translation effects and higher sales volumes. The sales improvement on a year-to-date basis can be attributed to the favorable currency translation effects and the higher second and third quarter sales volumes.
Gross profit was higher in the third quarter and first three quarters of 2021, as compared to 2020, primarily due to selling price management that expanded margins in a rising commodity cost environment and improved performance by the access systems product line. SG&A spending was lower for the first three quarters of 2021 versus 2020 due primarily to the $16.6 million partial impairment of goodwill and tradenames within the access systems product line recognized in 2020 which did not recur in 2021. Operating income increased in the third quarter and first three quarters of 2021 due to improved average selling prices and the $16.6 million impairment recognized in 2020 which did not recur in 2021.
Coatings segment
    Coatings segment sales increased in the third quarter and first three quarters of 2021,2022, as compared to the same periods in 2020,2021, due to higher average selling pricesprices. Renewable energy sales were similar in the first quarter of 2022, as compared to 2021.
     Gross profit was higher in the first quarter of 2022, as compared to 2021. The customer contractual pricing mechanisms and favorable foreign currency translation. In North America,selling price management led to a modest improvement in sales volume combined with thelarge increase in average selling prices to counteract the higher cost of zinc resultedwhile maintaining gross profit margins in ana highly inflationary environment. The increase in net salesoperating income for the first quarter of 2022, as compared with 2021, is due to a 23% increase in gross profit versus the 10% increase in SG&A. The operating income margin increased to 11.4% in the thirdfirst quarter andof 2022, from 9.9% in first three quartersquarter of 2021. In Asia-Pacific region, sales improved in all regions in 2021, due to sales price increases, higher volumes, and favorable foreign currency translation.
    The gross profit margin decreased in the third quarterbetter leverage of 2021, as compared to 2020, as inflation infixed costs, (zinc and labor) were not fully offset by the increase in average selling prices.including SG&A, expense was similar in the third quarter and first three quarters of 2021, as compared to 2020. Operating income was higher in the first three quarters of 2021, compared to the same period in 2020, due to improved sales pricing, volume increases, and favorable foreign currency translation, partially offset by startup costs related to the new Pittsburgh facility.2022.
    IrrigationAgriculture segment
AgricultureQ1 2022Q1 2021Dollar Change% Change
Sales, gross of intercompany eliminations:
North America182.3122.859.548.5 %
International124.3106.917.416.3 %
Total$306.6 $229.7 $76.9 33.5 %
Operating Income$37.5 $38.7 $(1.2)(3.1)%
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    The increase in IrrigationAgriculture segment net sales in the thirdfirst quarter and first three quarters of 2021,2022, as compared to 2020,2021, is primarily due to strong sales volume improvements in almost all markets, as well asmuch higher average selling prices. The sales volume improvements for internationalprices of irrigation was primarily due to deliveries on the multi-year Egypt project and higher sales in Brazil.equipment globally. In North America, higher sales volumes for irrigation systems and parts in 2022, as compared to 2021, were driven by improved agricultural commodity prices. International sales volumes decreased in 2022 due to less project work when compared to 2021. Sales of technology-related products and services continue to increase, as growers continued adoption of technology to reduce costs and enhance profitability.
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    The increase in gross profit in 20212022, as compared to 20202021, is primarily attributed to the sales volume growth and partially attributed to the significant increase inmeaningfully higher average selling prices forwhich more than offset the industrial tubing product line.amount of inflation within cost of goods sold. SG&A was higher in the thirdfirst quarter and first three quarters of 2021,2022, as compared to 2020,2021, due to approximately $8.5 million ofthe SG&A from the recentlyProspera subsidiary acquired Prosperain the second quarter of 2022, including the amortization of identified intangible assets and PivoTrac, and higher incentive expense due to improved operating results.stock-based compensation expense. Operating income for the segment increasedwas slightly lower in 2022, versus 2021, due to improved global sales volumesa lower gross profit margin and pricing.the higher SG&A.
    Net corporate expense
Corporate SG&A expense was higher in the thirdfirst quarter and first three quarters of 2021,2022, as compared to 2020.2021. The increase in the thirdfirst quarter is primarily due to higher incentive accruals related to business performance. The increase in the first three quarters of 2021,as compared to 2020, is due to higher incentive accruals,performance, an increase in stockrent expense, and higher compensation expense and an increase in acquisition diligence expense.due to salary merit increases.

Liquidity and Capital Resources
Capital Allocation Philosophy
We have historically funded our growth, capital spending and acquisitions through a combination of operating cash flows and debt financing. The following are the 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.
We also announced our intention to manage our capital structure to maintain our investment grade debt rating. Our most recent ratings were Baa3 by Moody's Investors Services, Inc., BBB- by Fitch Ratings, and BBB+ by Standard and Poor's Rating Services. We would be willing to allow our debt rating to fall to BBB- to finance a special acquisition or other opportunity. We expect to maintain a ratio of debt to invested capital which will support our current investment grade debt rating.
The Board of Directors in May 2014 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. The Board of Directors authorized an additional $250 million of share purchases, without an expiration date in both February 2015 and again in October 2018. The purchases will be funded from available working capital and short-term borrowings and will be made subject to market and economic conditions. We are not obligated to make any repurchases and may discontinue the program at any time. As of March 26, 2022, we have acquired approximately 6.5 million shares for approximately $878.0 million under this share repurchase program.
On February 22, 2022, the Company announced that the Board of Directors approved an increase to the quarterly cash dividend on the common stock to $0.55 per share, or a rate of $2.20 per share on an annualized basis, an increase of 10% from the prior quarterly cash dividend of $0.50 per share.
Sources of Financing
Our debt financing at March 26, 2022 consisted primarily of long‑term debt and borrowings on our revolving credit facility. Our long‑term debt as of March 26, 2022, principally consisted of:
27


$450 million face value ($437.0 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 ($297.7 million carrying value) of senior unsecured notes that bear interest at 5.25% per annum and are due in October 2054.
    We are allowed to repurchase the notes subject to the payment of a make-whole premium. Both tranches of these notes are guaranteed by certain of our subsidiaries.
    Our revolving credit facility with JP Morgan Chase Bank, N.A., as Administrative Agent, and the other lenders party thereto, has a maturity date of October 18, 2026. 
The revolving credit facility provides for $800 million of committed unsecured revolving credit loans with available borrowings thereunder to $400 million in foreign currencies.  We may increase the credit facility by up to an additional $300 million at any time, subject to lenders increasing the amount of their commitments. The Company and our wholly-owned subsidiaries Valmont Industries Holland B.V. and Valmont Group Pty. Ltd., 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 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.;
(b)    the higher of
the prime lending rate,
 the overnight bank rate plus 50 basis points, and
term SOFR (based on a 1 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 accrues at 10 to 25 basis points, 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 agreement.
At March 26, 2022 and December 25, 2021, we had outstanding borrowings of $234.6 million and $218.9 million, respectively, under the revolving credit facility. The revolving credit facility has a maturity date of October 18, 2026 and contains a financial covenant that may limit our additional borrowing capability under the agreement. At March 26, 2022, we had the ability to borrow $565.2 million under this facility, after consideration of standby letters of credit of $0.2 million associated with certain insurance obligations. We also maintain certain short‑term bank lines of credit totaling $138.2 million; $129.8 million of which was unused at March 26, 2022.
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.
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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 provide a modification of the definition of “EBITDA” 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. 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 amended and restated revolving credit agreement also contains customary affirmative and negative covenants or credit facilities of this type, including, among others, limitations on us and our subsidiaries with respect to indebtedness, liens, mergers and acquisitions, investments, dispositions of assets, restricted payments, transactions with affiliates and prepayments of indebtedness. The amended and restated revolving credit agreement also provides for acceleration of the obligations thereunder and exercise of other enforcement remedies upon the occurrence of customary events of default (subject to customary grace periods, as applicable).
    At March 26, 2022, we were in compliance with all covenants related to these debt agreements.
The calculation of Adjusted EBITDA-last four quarters 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 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 cash balances of $149.7 million at March 26, 2022, approximately $134.1 million is held in our non-U.S. subsidiaries. If we distributed our foreign cash balances certain taxes would be applicable. At March 26, 2022, we have a liability for foreign withholding taxes and U.S. state income taxes of $3.2 million and $0.7 million, respectively.
Cash Flows
The following table includes a summary of our cash flow information for the thirteen weeks ended March 26, 2022 and March 27, 2021:
Dollars in thousands20222021
Cash flow data:
Net cash flows from operating activities$2,703 $33,153 
Net cash flows from investing activities(29,100)(29,308)
Net cash flows from financing activities(3,521)(10,650)
Working Capital and Operating Cash Flows-Net working capital was $863.8$1,021.9 million at September 25, 2021,March 26, 2022, as compared to $881.3$946.9 million at December 26, 2020.25, 2021. The decreaseincrease in net working capital in 20212022 is attributed to a decreasean increase in cash and cash equivalentsinventory due to the recent business acquisitionsrising commodity prices and an increase in accounts payable,receivables, partially offset by an increase in inventory and receivable balances.accounts payable. Cash flow provided by operations was $61.8$2.7 million in the first three quartersquarter of 2021,2022, as compared with $273.0$33.2 million in the first three quartersquarter of 2020.2021. The decrease in operating cash flows in 2021,2022, as compared to 2020,2021, was primarily the result of an increased inventory balance that wasincrease in receivables attributed to the increase in net sales and an increase in contract assets, partially offset by an increase in customer advances payments (contract liabilities) and lower pension plan contributions. The required 2021 pension contribution was made in the fourth quarter of 2020.accounts payable.
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Investing Cash Flows- The increaseCash used in investing cash outflowsactivities totaled $29.1 million in the first three quarters of 2021, as2022, compared to 2020, can be attributed to $312.5$29.3 million paid for acquisitions occurring during 2021 as compared to $15.9 million paid in 2020.2021. Capital spending in the first three quartersquarter of fiscal 20212022 was $80.5$27.1 million, as compared to $71.0$27.6 million for the same period in 2020.2021. We expect our capital expenditures to be in the range of $110 million to $120 million for fiscal 2021.2022.
Financing Cash Flows-Our- Our total interest-bearing debt was $916.1$975.7 million at September 25, 2021March 26, 2022 and $766.3$965.4 million at December 26, 2020. Financing cash flows changed from an outflow of $110.025, 2021. Cash used in financing activities totaled $3.5 million in the first three quarters of 20202022, compared to an inflow of $101.0$10.7 million in the first three quarters of 2021. The financing cash inflowoutflow in the first three quartersquarter of 20212022 was primarily the result of our borrowingborrowings on the revolving credit agreement to partially fund the Prospera acquisition, slightly offset byof $97.0 million, principal payments on our long-term debt and short-term borrowings of $88.1 million, and dividends paid and the purchase of treasury shares.$10.6 million. The financing cash outflow for the first three quartersquarter of 20202021 was due primarily to the purchase of noncontrolling interests, principal payments on our long-term debt and short-term borrowings of $11.5 million, dividends paid of $9.6 million, and the purchase of treasury shares;shares of $11.1 million; somewhat offset by our debt borrowings.borrowings of $18.9 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 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 and thirty-nine weeks ended September 25,March 26, 2022 and March 27, 2021 and September 26, 2020
Thirteen weeks endedThirty-nine weeks ended
Dollars in thousandsSeptember 25, 2021September 26, 2020September 25, 2021September 26, 2020
Net sales$520,188 $438,947 $1,551,701 $1,377,294 
Gross Profit143,724115,116426,167385,314
Operating income49,16635,261159,994149,866
Net earnings26,12513,76092,20087,235
Net earnings attributable to Valmont Industries, Inc.26,09813,75992,09087,249

Thirteen weeks ended
Dollars in thousandsMarch 26, 2022March 27, 2021
Net sales$661,749 $482,722 
Gross Profit164,359135,521
Operating income69,09352,966
Net earnings41,80831,028
Net earnings attributable to Valmont Industries, Inc.41,81631,022
Supplemental Combined Parent and Guarantors Financial Information
SeptemberMarch 26, 2022 and December 25, 2021 and December 26, 2020
Dollars in thousandsDollars in thousandsSeptember 25, 2021December 26, 2020Dollars in thousandsMarch 26, 2022December 25, 2021
Current assetsCurrent assets$729,047 $738,437 Current assets$873,174 $801,797 
Noncurrent assetsNoncurrent assets813,116 701,571 Noncurrent assets850,780 807,294 
Current liabilitiesCurrent liabilities371,801 321,979 Current liabilities387,967 383,394 
Noncurrent liabilitiesNoncurrent liabilities1,287,332 1,100,657 Noncurrent liabilities200,925 1,305,756 
Noncontrolling interest in consolidated subsidiariesNoncontrolling interest in consolidated subsidiaries1,757 1,738 Noncontrolling interest in consolidated subsidiaries1,835 1,844 
Included in noncurrent assets is a due from non-guarantor subsidiaries receivable of $99,251$117,723 and $88,309$93,613 at September 25, 2021March 26, 2022 and December 26, 2020.25, 2021. Included in noncurrent liabilities is a due to non-guarantor subsidiaries payable of $279,108$200,925 and $262,935$236,577 at September 25, 2021March 26, 2022 and December 26, 2020.
Financing and Capital
The Board of Directors authorized the purchase of $250 million of the Company's shares without an expiration date in October 2018. 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. Share repurchases were temporarily suspended at the end of the first quarter of 2020 until September 2020 as a precaution to preserve liquidity. We acquired 103,056 treasury shares for approximately $24.1 million under our share repurchase program during the first three quarters of25, 2021. As of September 25, 2021, we have approximately $123.9 million open under this authorization to repurchase shares in the future.

    Our capital allocation philosophy announcement included our intention to manage our capital structure to maintain our investment grade debt rating. Our most recent ratings were Baa3 by Moody's Investors Services, Inc., BBB- rating by Fitch Rating Services, 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.

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Our debt financing at September 25, 2021 is primarily long-term debt consisting of:
$450 million face value ($436.5 million carrying value) of senior unsecured notes that bear interest at 5.00% per annum and are due in October 2044.Selected Financial Measures
$305 million face value ($297.6 million carrying value) of unsecured notes that bear interest at 5.25% per annum and are due in October 2054.
We are allowed to repurchaseincluding the notes at specified prepayment premiums. Both tranches of these notes are guaranteed by certainfollowing financial measures for the company.
Adjusted EBITDA. Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) is one of our subsidiaries.

    At September 25, 2021key financial ratios in that it is the basis for determining our maximum borrowing capacity at any one time. Our bank credit agreements contain a financial covenant that our total interest‑bearing debt not exceed 3.50x 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 non-GAAP measure and, December 26, 2020, we had $168.1 million and no outstanding borrowings under our revolving credit agreement, respectively. The revolving credit agreement contains certain financial covenants that may limit our additional borrowing capability under the agreement. At September 25, 2021, we had the ability to borrow $415.6 million under this facility, after consideration of standby letters of credit of $16.3 million associatedaccordingly, 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 certain insurance obligations and international sales commitments. We also maintain certain short-term bank lines of credit totaling $139.7 million, $126.6 million of which was unused at September 25, 2021.

Our senior unsecured notes and revolving credit agreement each contain cross-default provisions which permit the accelerationGAAP or as a measure of our indebtednessoperating performance or liquidity. The calculation of Adjusted EBITDA-last four quarters (March 28, 2021 to them if we defaultMarch 26, 2022) is as follows:
Dollars in thousands2022
Net cash flows from operations$35,488 
Interest expense43,875 
Income tax expense69,034 
Loss on investment(4)
Impairment of long-lived assets(27,911)
Impairment of goodwill and intangible assets— 
Impairment of property, plant and equipment— 
Deferred income tax (expense) benefit6,176 
Noncontrolling interest(2,704)
Pension plan expense13,596 
Contribution to pension plan960 
Changes in assets and liabilities, net of acquisitions306,202 
Other65 
EBITDA$444,777 
Impairment of long-lived assets27,911 
Adjusted EBITDA$472,688 
2022
Net earnings attributable to Valmont Industries, Inc.$202,926 
Interest expense43,875 
Income tax expense69,034 
Stock based compensation33,512 
Depreciation and amortization expense95,430 
EBITDA$444,777 
Impairment of long-lived assets27,911 
Adjusted EBITDA$472,688 
EBITDA and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other indebtedness that results in, or permits, the acceleration of such other indebtedness.
Oncompanies. In October 18, 2021, we along with our wholly-owned subsidiaries Valmont Industries Holland B.V. and Valmont Group Pty. Ltd., as borrowers, entered into an amendment and restatement of our revolving credit agreement with our lenders. The maturity date of the revolving credit facility was extendedamended to October 18, 2026.
Borrowings underallow the amended and restated revolving credit agreement will bear interest, payable quarterly, monthly or at the end of any interest period (depending on the type of borrowing), at our option, at either:
•    term SOFR (based on one, three, or six month interest periods, as selected by us) plus a ten basis point adjustment plus a spread of 100 to 162.5 basis points, depending on the credit rating of our senior, unsecured, long-term debt;
•    the higher of (i) the prime lending rate, (ii) an overnight bank rate plus 50 basis points and (ii) term SOFR (based on a 1 month interest period) plus a 110 basis point adjustment plus, in each case, a spread of 0 to 62.5 basis points, depending on the credit rating of the Company’s senior, unsecured, long-term debt; or
•    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 our senior, unsecured, long-term debt.

A commitment fee, payable quarterly, is also required under the amended and restated revolving credit agreement which accrues at 10 to 25 basis points, depending on the credit rating of our senior, unsecured, long-term debt, on the average daily unused portion of the commitments under the amended and restated revolving credit agreement.
The amended and restated revolving credit agreement requires maintenance of a 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 provide a modification of the definition of “EBITDA”Company to add-back any non-cash stock basedstock-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 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 permitted to increase from 3.50:1 to 3:75:1 for the four consecutive fiscal quarters after certain material acquisitions.
The amended and restated revolving credit agreement also contains customary affirmative and negative covenants for credit facilities of this type, including, among others, limitations on us and our subsidiaries with respect to indebtedness, liens, mergers and acquisitions, investments, dispositions of assets, restricted payments, transactions with affiliates and prepayments of indebtedness. The amended and restated revolving credit agreement also provides for accelerationone of the obligations thereunder and exercise of other enforcement remedies upon the occurrence of customary events of default (subject to customary grace periods, as applicable).


key financial
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    At September 25, 2021,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 were in compliance with all covenants relatedmay incur additional financing costs or be required to pay the debt agreements. before its maturity date. Leverage ratio 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 key covenant calculation of this ratio at September 25, 2021 wasMarch 26, 2022 is as follows (in 000's):follows:
Dollars in thousands2022
Interest-bearing debt$916,056975,671 
Less: Cash and cash equivalents in excess of $50 million119,79599,700 
Net indebtedness$796,261875,971 
Adjusted EBITDA-last four quarters429,775 
Leverage ratio1.85 
The calculation of Adjusted EBITDA-last four quarters (September 26, 2020 through September 25, 2021) is as follows. The last four quarters information ended September 25, 2021 is calculated by taking the full fiscal year ended December 26, 2020, subtracting the first three quarters ended September 26, 2020, and adding the first three quarters ended September 25, 2021.
Net cash flows from operations$105,077 
Interest expense41,976 
Income tax expense56,765 
Impairment of property, plant and equipment(940)
Deferred income tax benefit6,394 
Noncontrolling interest(1,767)
Pension plan expense12,961 
Contribution to pension plan18,971 
Changes in assets and liabilities177,260 
Other(199)
EBITDA416,498 
Cash restructuring expenses13,277 
Adjusted EBITDA$472,688 429,775 
Net earnings attributable to Valmont Industries, Inc.Leverage Ratio$204,5901.85 
Interest expense41,976 
Income tax expense56,765 
Stock-based compensation24,034 
Depreciation and amortization expense89,133 
EBITDA416,498 
Cash restructuring expenses13,277 
Adjusted EBITDA$429,775 
Our businesses are cyclical, but we have diversity in our markets from a product, customer and a geographical standpoint. We have demonstrated the abilityLeverage ratio, as presented, may not be comparable to effectively manage through business cycles and maintain liquidity. We have consistently generated operating cash flows in excesssimilarly titled measures 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 cash balances of $169.8 million at September 25, 2021, approximately $145.0 million is held in our non-U.S. subsidiaries. If we distributed our foreign cash balances certain taxes would be applicable. At September 25, 2021, we have a liability for foreign withholding taxes and U.S. state income taxes of $3.4 million and $0.7 million, respectively.

other companies.
Financial Obligations and Financial Commitments
    There have been no material changes to our financial obligations and financial commitments as described on page 34-3529 in our Form 10-K for the fiscal year ended December 26, 2020 with the exception of the following:
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During the second quarter of 2021 the Company, the Company commenced on a new corporate headquarters operating lease with straight-line annual expense of approximately $5,100, a 2% annual increase in lease payment, and a 25 year term. In recognition of this lease, an operating lease asset of $71,853 and an operating lease long-term liability of $71,196 was incurred. These amounts are included within other assets and operating lease liabilities, respectively, in the Condensed Consolidated Balance Sheets as of September 25, 2021.
Off Balance Sheet Arrangements
There have been no material changes in our off balance sheet arrangements as described on page 38 in our Form 10-K for the fiscal year ended December 26, 2020.
Critical Accounting Policies
There were no changes in our critical accounting policies as described on pages 39-4234-37 in our Form 10-K for the fiscal year ended December 26, 202025, 2021 during the three months ended September 25, 2021.March 26, 2022.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
    There were no material changes in the company's market risk during the quarter ended September 25, 2021.March 26, 2022. For additional information, refer to the section "Risk Management" in our Form 10-K for the fiscal year ended December 26, 2020.25, 2021.


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 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 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 26, 2020.25, 2021.
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PART II. OTHER INFORMATION

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

Issuer Purchases of Equity Securities
PeriodTotal 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)
June 27, 2021 to July 24, 2021— $— — $126,356,000 
July 25, 2021 to August 28, 202110,759 232.37 10,759 123,856,000 
August 29, 2021 to September 25, 2021— — — 123,856,000 
Total10,759 $232.37 10,759 $123,856,000 
PeriodTotal 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)
December 26, 2021 to January 22, 2022— $— — $121,862,000 
January 23, 2022 to February 26, 2022— — — 121,862,000 
February 27, 2022 to March 26, 2022— — — 121,862,000 
Total— $— — $121,862,000 
(1) On May 13, 2014, we announced a new capital allocation philosophy which included a share repurchase program. Specifically, the Board of Directors 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 bringing total authorization to $1.0 billion. As of September 25, 2021,March 26, 2022, we have acquired 6,466,6296,475,406 shares for approximately $876.1$878.0 million under this share repurchase program.

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Item 5. Other Information
Submission of Matters to a Vote of Security Holders
    Valmont's annual meeting of stockholders was held on April 26, 2022. The stockholders elected four directors to serve three-year terms, approved, on an advisory basis, a resolution approving Valmont's named executive officer compensation, and ratified the appointment of Deloitte & Touche LLP as independent auditors for fiscal 2022. For the annual meeting there were 21,305,027 shares outstanding and eligible to vote of which 19,822,859 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:
ForWithheldBroker Non-Votes
Kaj den Daas17,487,3511,343,066992,442
James B. Milliken16,994,2811,836,136992,442
Catherine James Paglia18,084,128746,289992,442
Ritu Favre18,095,109735,308992,442

Approve Valmont 2022 Stock Plan:
For17,658,437
Against1,031,748
Abstain140,232
Broker non-votes992,442

Advisory vote on executive compensation:
For18,090,339
Against594,734
Abstain145,344
Broker non-votes992,442

Proposal to ratify the appointment of Deloitte & Touche LLP as independent auditors for fiscal 2022:
For18,833,293
Against965,315
Abstain24,251

Compensatory Arrangements

At Valmont’s annual shareholders meeting on April 26, 2022, the shareholders of Valmont approved the Valmont 2022 Stock Plan. The stock plan authorizes the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, deferred stock units and other forms of stock-based compensation to officers and other employees of Valmont and its subsidiaries. The maximum number of shares of Valmont's common stock that may be issued under the stock plan is 2,000,000. Following approval of the stock plan by shareholders, no additional award grants may be made under any prior Valmont stock plan. The principal features of the plan are summarized on pages 38 to 43 of Valmont’s proxy statement for the annual meeting of shareholders held on April 26, 2022. The forgoing description and the proxy statement summary are qualified in their entirety by reference to the Valmont 2022 Stock Plan, filed as an Exhibit 10.1 to this report.


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Item 6. Exhibits
(a)    Exhibits
Exhibit No.Description
Second Amended and Restated Credit Agreement, dated as of October 18, 2021, among the Company, Valmont Industries Holland B.V. and Valmont Group Pty. Ltd., as Borrowers, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other lenders party thereto.This2022 Stock Plan. This document was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated October 18, 2021March 14, 2022 (Commission file number 001-31429)001-1429) and herein incorporated by reference.
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.
Section 302 Certificate of Chief Executive Officer
Section 302 Certificate of Chief Financial Officer
Section 906 Certifications of Chief Executive Officer and Chief Financial Officer
101The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended September 25, 2021,March 26, 2022, 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' Equity, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information.
104Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101)


*    Filed herewith

37
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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/ AVNER M. APPLBAUM
Avner M. Applbaum
Executive Vice President and Chief Financial Officer
Dated the 28th27th day of October, 2021.April, 2022.









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