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, 2021~~March 26, 2022

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

EXCHANGE ACT OF 1934

For the transition period from ____________ to

Commission file number 1-31429

Valmont Industries, Inc.

(Exact name of registrant as specified in its charter)


Delaware		47-0351813
(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 class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock $1.00 par value

VMI

New York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically 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 filer

☒

Accelerated filer

☐

Non‑accelerated filer

☐

Smaller 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

~~21,224,185~~21,311,439

Outstanding shares of common stock as of ~~October~~April 21, ~~2021~~2022

VALMONT INDUSTRIES, INC

INDEX TO FORM 10-Q


		Page No.
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):
	Condensed Consolidated Statements of Earnings for the thirteen ~~and thirty-nine~~weeks ended
	~~weeks ended September 25,~~March 26, 2022 and March 27, 2021 ~~and September 26, 2020~~	3
	Condensed Consolidated Statements of Comprehensive Income for the thirteen
	~~and thirty-nine~~ weeks ended ~~September 25,~~March 26, 2022 and March 27, 2021 ~~and September 26, 2020~~	4
	Condensed Consolidated Balance Sheets as of ~~September 25, 2021~~March 26, 2022 and
	December ~~26, 2020~~25, 2021	5
	Condensed Consolidated Statements of Cash Flows for the ~~thirty-nine~~thirteen weeks
	ended ~~September 25,~~March 26, 2022 and March 27, 2021 ~~and September 26, 2020~~	6
	Condensed Consolidated Statements of Shareholders' Equity for the thirteen ~~and~~weeks
	~~thirty-nine weeks~~ ended ~~September 25,~~March 26, 2022 and March 27, 2021 ~~and September 26, 2020~~	7
	Notes to Condensed Consolidated Financial Statements	98
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2522
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3532
Item 4.	Controls and Procedures	3532

	PART II. OTHER INFORMATION
Item 1A.	Risk Factors	3633
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3734
Item 5.	Other Information	35
Item 6.	Exhibits	3836
Signatures		3937

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per share amounts)

(Unaudited)
Thirteen weeks ended Thirty-nine weeks ended
September 25,
2021 September 26,
2020 September 25,
2021 September 26,
2020
Product sales $ 782,694 $ 657,703 $ 2,283,460 $ 1,874,199
Services sales 86,088 76,267 254,837 222,779
Net sales 868,782 733,970 2,538,297 2,096,978
Product cost of sales 585,986 494,812 1,712,721 1,392,595
Services cost of sales 55,392 48,411 163,971 143,450
Total cost of sales 641,378 543,223 1,876,692 1,536,045
Gross profit 227,404 190,747 661,605 560,933
Selling, general and administrative expenses 151,209 129,268 425,574 372,481
Impairment of goodwill and trade names — — — 16,638
Operating income 76,195 61,479 236,031 171,814
Other income (expenses):
Interest expense (11,031) (10,454) (31,466) (30,566)
Interest income 397 430 894 1,931
Gain on investments (unrealized) 488 900 1,556 1,102
Other 2,644 233 10,297 1,349
(7,502) (8,891) (18,719) (26,184)
Earnings before income taxes 68,693 52,588 217,312 145,630
Income tax expense:
Current 21,109 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 subsidiaries 52,613 40,504 170,990 106,458
Equity in loss of nonconsolidated subsidiaries (360) (276) (1,079) (755)
Net earnings 52,253 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 sales	89,950		79,921
Net sales	980,820		774,886
Product cost of sales	673,170		518,634
Services cost of sales	58,464		51,698
Total cost of sales	731,634		570,332
Gross profit	249,186		204,554
Selling, general and administrative expenses	154,344		127,343

Operating income	94,842		77,211
Other income (expenses):
Interest expense	(11,263)		(9,999)
Interest income	227		311
Loss on investments (unrealized)	(1,063)		(109)


Other	3,642		3,449
	(8,457)		(6,348)
Earnings before income taxes	86,385		70,863
Income tax expense:
Current	22,413		8,547
Deferred	708		6,955
	23,121		15,502
Earnings before equity in earnings of nonconsolidated subsidiaries	63,264		55,361
Equity in loss of nonconsolidated subsidiaries	(358)		(360)
Net earnings	62,906		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.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)


		Thirteen Weeks Ended				Thirty-nine weeks ended					Thirteen Weeks Ended
		September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020			March 26, 2022		March 27, 2021
Net earnings	Net 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 hedges	307		(26)		16		344		Cash flow hedges	—		22

Amortization cost included in interest expense	Amortization 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 hedges	20,560		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 swaps	2,530		(3,725)		4,041		570		Cross currency swaps	1,811		3,606
Defined Benefit Pension Plan:
											20,312		13,558
Actuarial loss		163		—		1,838		—
Other comprehensive income (loss)		(27,658)		10,624		(754)		(7,952)

Actuarial gain on defined benefit pension plan										Actuarial gain on defined benefit pension plan	686		832
Other comprehensive income										Other comprehensive income	32,060		1,757
Comprehensive income	Comprehensive income	24,595		50,852		169,157		97,751		Comprehensive income	94,966		56,758
Comprehensive (income) loss attributable to noncontrolling interests	Comprehensive (income) loss attributable to noncontrolling interests	268		(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.

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
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	169,795	$	400,726	Cash and cash equivalents	$	149,700	$	177,232
Receivables, net	Receivables, net	537,693		511,714		Receivables, net	616,538		571,593
Inventories	Inventories	655,903		448,941		Inventories	807,471		728,834
Contract assets	Contract assets	155,417		123,495		Contract assets	161,633		142,643
Prepaid expenses and other assets	Prepaid expenses and other assets	95,965		59,804		Prepaid expenses and other assets	105,233		83,646
Refundable income taxes	Refundable income taxes	—		9,945		Refundable income taxes	—		8,815
Total current assets	Total current assets	1,614,773		1,554,625		Total current assets	1,840,575		1,712,763
Property, plant and equipment, at cost	Property, plant and equipment, at cost	1,383,892		1,341,380		Property, plant and equipment, at cost	1,451,044		1,422,101
Less accumulated depreciation and amortization	Less accumulated depreciation and amortization	766,579		743,653		Less accumulated depreciation and amortization	840,826		823,496
Net property, plant and equipment	Net property, plant and equipment	617,313		597,727		Net property, plant and equipment	610,218		598,605

Goodwill	Goodwill	709,462		430,322		Goodwill	707,692		708,566
Other intangible assets, net	Other intangible assets, net	193,449		167,193		Other intangible assets, net	169,424		175,364
Other assets	Other assets	276,267		203,293		Other assets	253,574		251,951
Total assets	Total assets	$	3,411,264	$	2,953,160	Total assets	$	3,581,483	$	3,447,249

LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Current installments of long-term debt	Current installments of long-term debt	$	4,803	$	2,748	Current installments of long-term debt	$	4,226	$	4,884
Notes payable to banks	Notes payable to banks	13,765		35,147		Notes payable to banks	8,380		13,439
Accounts payable	Accounts payable	338,723		268,099		Accounts payable	404,410		347,841
Accrued employee compensation and benefits	Accrued employee compensation and benefits	124,212		137,939		Accrued employee compensation and benefits	96,547		144,559
Contract liabilities	Contract liabilities	138,286		130,018		Contract liabilities	168,794		135,746
Other accrued expenses	Other accrued expenses	116,846		89,796		Other accrued expenses	118,535		108,771
Income taxes payable	Income taxes payable	3,734		—		Income taxes payable	6,074		—

Dividends payable	Dividends payable	10,610		9,556		Dividends payable	11,721		10,616
Total current liabilities	Total current liabilities	750,979		673,303		Total current liabilities	818,687		765,856
Deferred income taxes	Deferred income taxes	45,863		41,689		Deferred income taxes	50,604		47,849
Long-term debt, excluding current installments	Long-term debt, excluding current installments	897,488		728,431		Long-term debt, excluding current installments	963,065		947,072
Defined benefit pension liability	Defined benefit pension liability	105,175		118,523		Defined benefit pension liability	—		536
Operating lease liabilities	Operating lease liabilities	148,031		80,202		Operating lease liabilities	146,493		147,759
Deferred compensation	Deferred compensation	34,723		44,519		Deferred compensation	36,469		35,373
Other noncurrent liabilities	Other noncurrent liabilities	84,273		58,657		Other noncurrent liabilities	61,674		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 issued	Authorized 75,000,000 shares; 27,900,000 issued	27,900		27,900		Authorized 75,000,000 shares; 27,900,000 issued	27,900		27,900
Additional paid in capital	Additional paid in capital	6,668		335		Additional paid in capital	5,251		1,479
Retained earnings	Retained earnings	2,378,075		2,245,035		Retained earnings	2,444,897		2,394,307
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(310,222)		(309,786)		Accumulated other comprehensive loss	(232,160)		(263,127)
Treasury stock	Treasury stock	(784,282)		(781,422)		Treasury stock	(769,835)		(773,712)
Total Valmont Industries, Inc. shareholders’ equity	Total Valmont Industries, Inc. shareholders’ equity	1,318,139		1,182,062		Total Valmont Industries, Inc. shareholders’ equity	1,476,053		1,386,847
Noncontrolling interest in consolidated subsidiaries	Noncontrolling interest in consolidated subsidiaries	26,593		25,774		Noncontrolling interest in consolidated subsidiaries	28,438		26,750
Total shareholders’ equity	Total shareholders’ equity	1,344,732		1,207,836		Total shareholders’ equity	1,504,491		1,413,597
Total liabilities and shareholders’ equity	Total 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.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


		Thirty-nine weeks ended				Thirteen 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 earnings	Net 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 amortization	Depreciation and amortization	67,764		61,523			Depreciation and amortization	23,884		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 compensation	Stock-based compensation	17,895		8,736			Stock-based compensation	9,463		4,671

Defined benefit pension plan benefit	Defined benefit pension plan benefit	(11,051)		(5,401)			Defined benefit pension plan benefit	(2,705)		(3,676)
Contribution to defined benefit pension plan	Contribution 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 equipment	4		60
Equity in loss in nonconsolidated subsidiaries	Equity in loss in nonconsolidated subsidiaries	1,079		755			Equity in loss in nonconsolidated subsidiaries	358		360
Deferred income taxes	Deferred income taxes	(8,747)		(3,750)			Deferred income taxes	708		6,955
Changes in assets and liabilities:	Changes in assets and liabilities:						Changes in assets and liabilities:
Receivables	Receivables	(30,709)		(26,298)			Receivables	(36,643)		16,044
Inventories	Inventories	(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 payable	Accounts payable	76,916		63,627			Accounts payable	49,006		24,605
Accrued expenses	Accrued expenses	15,523		61,122			Accrued expenses	(34,186)		(35,559)
Contract liabilities	Contract liabilities	6,768		(1,475)			Contract liabilities	4,308		20,051
Other noncurrent liabilities	Other noncurrent liabilities	10,228		20,982			Other noncurrent liabilities	14		4,215
Income taxes payable/refundable	Income taxes payable/refundable	14,533		9,044			Income taxes payable/refundable	17,760		5,141
Net cash flows from operating activities	Net cash flows from operating activities	61,829		273,046			Net cash flows from operating activities	2,703		33,153
Cash flows from investing activities:	Cash flows from investing activities:						Cash flows from investing activities:
Purchase of property, plant and equipment	Purchase of property, plant and equipment	(80,509)		(70,960)			Purchase of property, plant and equipment	(27,095)		(27,565)
Proceeds from sale of assets	Proceeds from sale of assets	1,655		911			Proceeds from sale of assets	2		204
Acquisitions, net of cash acquired		(312,500)		(15,862)

Settlement of net investment hedges		—		11,983

Other, net	Other, net	1,891		2,543			Other, net	(2,007)		(1,947)
Net cash flows from investing activities	Net 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 borrowings	Proceeds from short-term borrowings	3,191		4,251			Proceeds from short-term borrowings	—		14,734
Payments on short-term borrowings	Payments on short-term borrowings	(23,654)		(10,713)			Payments on short-term borrowings	(5,562)		(10,759)
Proceeds from long-term borrowings	Proceeds from long-term borrowings	236,710		88,872			Proceeds from long-term borrowings	97,000		4,181
Principal payments on long-term borrowings	Principal payments on long-term borrowings	(66,128)		(76,417)			Principal payments on long-term borrowings	(82,529)		(712)

Dividends paid	Dividends 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 shares	Purchase of treasury shares	(24,101)		(28,006)			Purchase of treasury shares	—		(11,131)
Proceeds from exercises under stock plans	Proceeds from exercises under stock plans	22,747		980			Proceeds from exercises under stock plans	713		19,318
Purchase of common treasury shares—stock plan exercises	Purchase 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 activities	Net cash flows from financing activities	101,016		(109,984)			Net cash flows from financing activities	(3,521)		(10,650)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(4,313)		(2,164)			Effect of exchange rate changes on cash and cash equivalents	2,386		(2,463)
Net change in cash and cash equivalents	Net 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 year	Cash and cash equivalents—beginning of year	400,726		353,542			Cash and cash equivalents—beginning of year	177,232		400,726
Cash and cash equivalents—end of period	Cash 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

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.

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, 2021~~March 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, 2021~~March 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-process 45,213 33,632
Finished goods and manufactured goods 401,600 259,797
Total Inventory $ 655,903 $ 448,941


	March 26, 2022		December 25, 2021
Raw materials and purchased parts	$	297,570	$	278,107
Work-in-process	78,591		63,628
Finished goods and manufactured goods	431,310		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 ended Thirty-nine weeks ended
2021 2020 2021 2020
United States $ 47,784 $ 33,610 $ 156,028 $ 141,347
Foreign 20,909 18,978 61,284 4,283
$ 68,693 $ 52,588 $ 217,312 $ 145,630


	Thirteen weeks ended
	2022		2021
United States	$	60,816	$	51,155
Foreign	25,569		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

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.

~~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 ended Thirty-nine weeks ended
Net periodic (benefit) expense: 2021 2020 2021 2020
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 loss 827 748 2,502 2,179
Net periodic (benefit) expense $ (3,651) $ (1,854) $ (11,051) $ (5,401)


	Thirteen weeks ended
Net periodic (benefit) expense:	2022		2021
Interest cost	$	3,365	$	2,497
Expected return on plan assets	(6,202)		(7,005)
Amortization of actuarial loss	132		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, ~~453,718~~175,917 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 ended Thirty-nine weeks ended
2021 2020 2021 2020
Compensation expense $ 8,947 $ 3,065 $ 17,895 $ 8,736
Income tax benefits 2,237 766 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
	2022		2021
Compensation expense	$	9,463	$	4,671
Income tax benefits	2,366		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.

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, 2021~~March 26, 2022 of ~~$29,481~~$30,650 ($~~35,125~~29,982 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 ~~September~~March 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, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Carrying Value March 26, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:	Assets:									Assets:
Trading Securities	Trading Securities	$	29,580	$	29,580	$	—	$	—	Trading Securities	$	30,751	$	30,751	$	—	$	—
Derivative financial instruments, net	Derivative financial instruments, net	7,001		—		7,001		—		Derivative financial instruments, net	17,633		—		17,633		—


				Fair Value Measurement Using:									Fair Value Measurement Using:
		Carrying Value December 26, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Carrying Value December 25, 2021		Quoted 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 Securities	Trading Securities	$	35,327	$	35,327	$	—	$	—	Trading Securities	$	30,076	$	30,076	$	—	$	—
Liabilities:

Derivative financial instruments, net	Derivative financial instruments, net	(5,911)		—		(5,911)		—		Derivative financial instruments, net	(4,007)		—		(4,007)		—

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 and~~the 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, 2021~~March 26, 2022 and December ~~26, 2020:~~25, 2021:
Foreign Currency Translation Adjustments Gain on Hedging Activities Defined Benefit Pension Plan Accumulated 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 Adjustments		Gain on Hedging Activities		Defined Benefit Pension Plan		Accumulated 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.

~~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 segment~~transmission, distribution, and substation structures ("TD&S") product line, the renewable energy product lines, and the ~~wireless communication~~telecommunication 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 to~~does not adjust the amount of consideration to be received in a contract for any significant financing component if payment is expected within twelve months of transfer of control of goods or services.

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 ~~steel~~TD&S and ~~concrete utility and wireless communication~~telecommunication 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. ~~Revenue~~Depending 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 recognized~~customer depending on contract terms, or by using an inputs method, based on the ratio of costs incurred to-date to the total estimated costs at completion of the performance obligation. External sales agents are used in certain TD&S sales ~~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 from~~For the ~~manufacture and distribution of poles, towers, and components~~structures sold for lighting and transportation and ~~highway safety, engineered access systems, and wireless communication markets. For~~for 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 has~~There are also large regional customers who have unique product specifications for ~~communication~~telecommunication structures. When the customer contract includes a cancellation clause that would require them to pay for work completed plus a reasonable margin if an order was canceled, revenue is recognized over time based on hours worked as 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 segment~~coatings product line revenues are derived by providing coating services to customers’ products, which include galvanizing, anodizing, and powder coating. Revenue is recognized once the 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 derived~~Agriculture 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 segment~~customers) 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:

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

Point in Time Over Time Point in Time Over Time
Thirteen weeks ended September 25, 2021 Thirteen weeks ended September 25, 2021 Thirty-nine weeks ended September 25, 2021 Thirty-nine weeks ended September 25, 2021
Utility Support Structures $ 12,834 $ 263,668 $ 28,255 $ 768,808
Engineered Support Structures 271,277 9,772 745,125 27,420
Coatings 74,906 — 224,102 —
Irrigation 230,273 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 Time Over Time Point in Time Over Time
Thirteen weeks ended September 26, 2020 Thirteen weeks ended September 26, 2020 Thirty-nine weeks ended September 26, 2020 Thirty-nine weeks ended September 26, 2020
Utility Support Structures $ 43,287 $ 229,192 $ 56,830 $ 667,070
Engineered Support Structures 244,785 10,160 697,491 33,693
Coatings 68,698 — 199,955 —
Irrigation 133,999 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 included~~by product line is disclosed in the ~~liability as of December 26, 2020. In the thirteen~~Business 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)

~~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, ~~allows~~was made to allow the Company to accelerate innovation with machine learning for agronomy and ~~will be~~is reported in the ~~Irrigation~~Agriculture segment. ~~The preliminary fair values assigned were $269,859 for~~In the purchase price allocation, goodwill ~~$37,300 for~~of $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 finalize~~finalized 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, ~~allows~~was made to allow the Company to advance its technology strategy and increase its number of connected agricultural devices and will be reported in the ~~Irrigation~~Agriculture 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, 2020 Costs Paid or Otherwise Settled Balance at September 25, 2021
Severance $ 12,660 $ (12,660) $ —

~~(4)~~ GOODWILL AND INTANGIBLE ASSETS

Amortized Intangible Assets

The components of amortized intangible assets at ~~September~~March 26, 2022 and December 25, 2021 ~~and December 26, 2020~~ were as follows:


		September 25, 2021						March 26, 2022
		Gross Carrying Amount		Accumulated Amortization		Weighted Average Life		Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	Customer Relationships	$	239,493	$	166,857	13 years	Customer Relationships	$	225,201	$	164,130	13 years

Patents & Proprietary Technology	Patents & Proprietary Technology	63,109		12,318		8 years	Patents & Proprietary Technology	58,657		15,978		9 years
Trade Name							Trade Name	2,850		339		6 years
Other	Other	7,469		6,828		4 years	Other	4,511		4,087		6 years
		$	310,071	$	186,003			$	291,219	$	184,534


		December 26, 2020						December 25, 2021
		Gross Carrying Amount		Accumulated Amortization		Weighted Average Life		Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	Customer Relationships	$	237,232	$	155,760	13 years	Customer Relationships	$	224,597	$	160,626	13 years

Patents & Proprietary Technology	Patents & Proprietary Technology	26,208		8,301		14 years	Patents & Proprietary Technology	58,699		13,955		9 years
Trade Name							Trade Name	2,850		183		7 years
Other	Other	7,602		6,786		4 years	Other	4,534		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:

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(Unaudited)~~

Thirteen weeks ended Thirty-nine weeks ended
2021 2020 2021 2020
$ 6,137 $ 4,518 $ 15,551 $ 13,621


	Thirteen weeks ended
	2022		2021
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
2022	2022	21,062		2022	$	20,044
2023	2023	19,261		2023	17,783
2024	2024	17,324		2024	15,869
2025	2025	15,868		2025	14,435
2026				2026	14,012

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.

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 ~~September~~March 26, 2022 and December 25, 2021 ~~and December 26, 2020~~ are as follows:


		September 25, 2021		December 26, 2020		Year Acquired		March 26, 2022		December 25, 2021		Year Acquired
Newmark	Newmark	$	11,111	$	11,111	2004	Newmark	$	11,111	$	11,111	2004
Convert Italia S.p.A							Convert Italia S.p.A	8,238		8,479		2018
Webforge	Webforge	8,035		7,972		2010	Webforge	7,747		7,877		2010
Convert Italia S.p.A		8,790		9,137		2018
Ingal EPS/Ingal Civil Products							Ingal EPS/Ingal Civil Products	7,511		7,637		2010
Valmont SM	Valmont SM	8,386		8,720		2014	Valmont SM	5,904		6,082		2014
Ingal EPS/Ingal Civil Products		7,790		7,730		2010
Shakespeare							Shakespeare	4,000		4,000		2014
Walpar	Walpar	3,500		3,500		2018	Walpar	3,500		3,500		2018
Shakespeare		4,000		4,000		2014
Other	Other	17,769		14,828		Various	Other	14,729		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 Webforge~~by segment as of March 26, 2022 and ~~Locker trade names requiring an interim impairment test. As a result, an impairment charge of approximately $3,900~~December 25, 2021 was ~~recognized against these 2 trade names in fiscal 2020.~~as follows:


	Infrastructure Segment		Agriculture Segment		Total
Gross Balance December 25, 2021	$	456,876	$	313,512	$	770,388
Accumulated impairment losses	(61,822)		—		(61,822)
Balance at December 25, 2021	395,054		313,512		708,566



Foreign currency translation	(1,584)		710		(874)
Balance at March 26, 2022	$	393,470	$	314,222	$	707,692


	Infrastructure Segment		Agriculture Segment		Total
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.

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, 2020 201,078 120,980 78,087 30,177 430,322
Acquisitions — — — 280,659 280,659
Foreign currency translation 170 (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-nine~~thirteen weeks ended ~~September 25,~~March 26, 2022 and March 27, 2021 ~~and September 26, 2020~~ were as follows:


		2021		2020			2022		2021
Interest	Interest	$	20,716	$	20,298	Interest	$	1,613	$	111
Income taxes	Income taxes	40,113		35,803		Income taxes	6,699		3,347

(5) EARNINGS PER SHARE

The following table provides a reconciliation between Basic and Diluted earnings per share (EPS):


	Basic EPS		Dilutive 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.

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 EPS Dilutive
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.

~~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 ~~September~~March 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 location	September 25, 2021		December 26, 2020		Derivatives designated as hedging instruments:	Balance sheet location	March 26, 2022		December 25, 2021

Commodity forward contracts	Commodity forward contracts	Prepaid expenses and other assets	$	7,623	$	—	Commodity forward contracts	Accrued expenses	$	(52)	$	(5,802)
Foreign currency forward contracts	Foreign currency forward contracts	Prepaid expenses and other assets	—		724		Foreign currency forward contracts	Prepaid expenses and other assets	236		149
Foreign currency forward contracts	Foreign currency forward contracts	Accrued expenses	(84)		—		Foreign currency forward contracts	Accrued expenses	—		(118)
Cross currency swap contracts	Cross currency swap contracts	Prepaid expenses and other assets	1,309		600		Cross currency swap contracts	Prepaid expenses and other assets	17,449		1,764
Cross currency swap contracts		Accrued 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 ended Thirty-nine weeks ended
Statements of earnings location September 25, 2021 September 26, 2020 September 25, 2021 September 26, 2020
Commodity forward contracts Product cost of sales $ 9,870 $ — $ 10,140 $ —
Foreign currency forward contracts Other income 187 116 123 146
Foreign currency forward contracts Product sales — 1,017 — 1,169
Interest rate hedge amortization Interest expense (16) (16) (48) (48)
Cross currency swap contracts Interest expense 691 649 2,060 2,111
$ 10,732 $ 1,766 $ 12,275 $ 3,378


		Thirteen weeks ended
	Statements of earnings location	March 26, 2022		March 27, 2021
Commodity forward contracts	Product cost of sales	$	2,043	$	—
Foreign currency forward contracts	Other income	151		(218)
Foreign currency forward contracts	Product sales	—		—
Interest rate hedge amortization	Interest expense	(16)		(16)
Cross currency swap contracts	Interest expense	774		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 ~~41,000~~86,100 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 ~~June~~December 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 ~~half~~quarter 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 2021~~August 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:


Currency	Notional Amount		Termination Date	Swapped Interest Rate	Set Settlement Amount
Danish Krone (DKK)	$	50,000	April 1, 2024	2.68%	DKK 333,625
Euro	$	80,000	April 1, 2024	2.825%	€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.

(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 4~~Both reportable segments ~~based on its management structure. Each segment is~~are 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 for~~solutions 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 anodizing~~coatings services to preserve and protect metal ~~products; and~~products.

~~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 ~~business~~reportable 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 ~~business~~reportable segments.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

Summary by Business
Thirteen weeks ended Thirty-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
Concrete 39,656 39,215 123,477 120,653
Engineered Solar Tracker Solutions 13,224 43,287 28,690 56,830
Offshore and Other Complex Steel Structures 23,676 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 Products 63,424 50,677 164,055 139,759
Access Systems 29,084 23,408 79,326 65,439
Engineered Support Structures segment 281,097 255,656 772,813 739,783
Coatings segment 96,685 87,886 288,131 255,976
Irrigation segment:
    North America 116,308 75,803 395,096 281,397
    International 124,023 63,406 356,864 165,171
        Irrigation segment 240,331 139,209 751,960 446,568
Total 894,615 757,144 2,610,402 2,173,505
INTERSEGMENT SALES:
Utility Support Structures segment — 1,914 435 7,278
Engineered Support Structures segment 48 711 268 8,599
Coatings segment 21,779 19,188 64,029 56,021
Irrigation segment 4,006 1,361 7,373 4,629
Total 25,833 23,174 72,105 76,527
NET SALES:
Utility Support Structures segment 276,502 272,479 797,063 723,900
Engineered Support Structures segment 281,049 254,945 772,545 731,184
Coatings segment 74,906 68,698 224,102 199,955
Irrigation segment 236,325 137,848 744,587 441,939
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 segment 34,383 25,434 86,235 46,183
Coatings segment 12,478 12,416 40,018 33,618
Irrigation segment 27,735 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
Agriculture	306,580		229,664

Total	987,306		779,310
INTERSEGMENT SALES:
Infrastructure	(3,101)		(3,201)
Agriculture	(3,385)		(1,223)

Total	(6,486)		(4,424)
NET SALES:
Infrastructure	677,625		546,445
Agriculture	303,195		228,441

Total	$	980,820	$	774,886

OPERATING INCOME:
Infrastructure	$	77,507	$	54,449
Agriculture	37,475		38,748
Corporate	(20,140)		(15,986)

Total	$	94,842	$	77,211


	Thirteen weeks ended March 26, 2022
	Infrastructure		Agriculture		Intersegment Sales		Consolidated
Geographical market:
North America	$	505,980	$	182,255	$	(6,486)	$	681,749
International	174,746		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 Transportation	212,767		—		—		212,767
Coatings	81,976		—		(3,101)		78,875
Telecommunications	61,396		—		—		61,396
Renewable Energy	42,987		—		—		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
	Infrastructure		Agriculture		Intersegment Sales		Consolidated
Geographical market:
North America	$	385,734	$	122,751	$	(4,424)	$	504,061
International	163,912		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 Transportation	176,516		—		—		176,516
Coatings	74,793		—		(3,201)		71,592
Telecommunications	45,640		—		—		45,640
Renewable Energy	44,253		—		—		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 Time		Over Time		Total
	Thirteen weeks ended March 26, 2022		Thirteen weeks ended March 26, 2022		Thirteen weeks ended March 26, 2022
Infrastructure	$	369,190	$	308,435	$	677,625
Agriculture	297,606		5,589		303,195
Total	$	666,796	$	314,024	$	980,820


	Point in Time		Over Time		Total
	Thirteen weeks ended March 27, 2021		Thirteen weeks ended March 27, 2021		Thirteen weeks ended March 27, 2021
Infrastructure	$	291,731	$	254,714	$	546,445
Agriculture	224,637		3,804		228,441
Total	$	516,368	$	258,518	$	774,886

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, subsequent~~April 27, 2022, the Company signed an agreement to acquire the ~~end~~majority ownership interest in ConcealFab, for approximately $41 million, net of ~~our third~~cash 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 Company~~2022 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 ended								Thirty-nine weeks ended									Thirteen weeks ended
		September 25, 2021			September 26, 2020			% Incr. (Decr.)		September 25, 2021			September 26, 2020			% Incr. (Decr.)			March 26, 2022			March 27, 2021			% Incr. (Decr.)
Consolidated	Consolidated																	Consolidated
Net sales	Net sales	$	868.8		$	734.0		18.4	%	$	2,538.3		$	2,097.0		21.0	%	Net sales	$	980.8		$	774.9		26.6	%
Gross profit	Gross profit	227.4			190.7			19.2	%	661.6			560.9			18.0	%	Gross profit	249.2			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 expense	SG&A expense	151.2			129.3			16.9	%	425.6			$	389.1		9.4	%	SG&A expense	154.3			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 income	Operating income	76.2			61.5			23.9	%	236.0			171.8			37.4	%	Operating income	94.8			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 expense	Net interest expense	10.6			10.0			6.0	%	30.6			28.6			7.0	%	Net interest expense	11.0			9.7			13.4	%

Effective tax rate	Effective tax rate	23.4		%	23.0		%			21.3		%	26.9		%			Effective tax rate	23.4		%	23.0		%
Net earnings	Net earnings	$	51.7		$	39.3		31.6	%	$	168.8		$	104.9		60.9	%	Net earnings	$	62.3		$	55.0		13.3	%
Diluted earnings per share	Diluted 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)
Infrastructure																		Infrastructure
Net sales	Net sales	$	276.5		$	272.5		1.5	%	$	797.1		$	723.9		10.1	%	Net sales	$	677.6		$	546.4		24.0	%
Gross profit	Gross profit	53.5			54.7			(2.2)	%	149.3			156.1			(4.4)	%	Gross profit	166.8			135.6			23.0	%
SG&A expense	SG&A expense	28.9			28.8			0.3	%	88.1			80.8			9.0	%	SG&A expense	89.3			81.2			10.0	%
Operating income	Operating income	24.6			25.9			(5.0)	%	61.2			75.3			(18.7)	%	Operating income	77.5			54.4			42.5	%
Engineered Support Structures (ESS)
Net sales		$	281.0		$	255.0		10.2	%	$	772.5		$	731.2		5.6	%
Gross profit		79.9			71.3			12.1	%	219.6			201.4			9.0	%
SG&A expense		45.6			45.8			(0.4)	%	133.4			155.2			(14.0)	%
Operating income		34.3			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 profit		22.9			22.6			1.3	%	71.1			64.2			10.7	%
SG&A expense		10.4			10.2			2.0	%	31.1			30.6			1.6	%
Operating income		12.5			12.4			0.8	%	40.0			33.6			19.0	%
Irrigation
Agriculture																		Agriculture
Net sales	Net sales	$	236.4		$	137.8		71.6	%	$	744.6		$	441.9		68.5	%	Net sales	$	303.2		$	228.4		32.7	%
Gross profit	Gross profit	70.7			42.2			67.5	%	220.9			139.2			58.7	%	Gross profit	82.3			68.9			19.4	%
SG&A expense	SG&A expense	42.9			27.5			56.0	%	112.4			78.5			43.2	%	SG&A expense	44.9			30.2			48.7	%
Operating income	Operating income	27.8			14.7			89.1	%	108.5			60.7			78.7	%	Operating income	37.5			38.7			(3.1)	%
Net corporate expense	Net corporate expense																	Net corporate expense
Gross profit	Gross profit	$	0.3		—			NM		$	0.6		$	—		NM		Gross profit	$	—		—			NM
SG&A	SG&A	$	23.3		$	17.0		37.1	%	$	60.5		$	44.0		37.5	%	SG&A	20.1			16.0			25.6	%
Operating loss	Operating loss	(23.0)			(17.0)			(35.3)	%	(59.9)			(44.0)			(36.1)	%	Operating loss	(20.1)			(16.0)			(25.6)	%

2523

Overview, Including Items Impacting Comparability

On a consolidated basis, net sales were higher in the ~~third~~first quarter ~~and first three quarters~~ of ~~2021,~~2022, as compared to the same ~~periods~~period of ~~2020,~~2021, with higher sales in ~~all~~both 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
Total Utility ESS Coatings Irrigation
Sales - 2020 $ 734.0 $ 272.5 $ 255.0 $ 68.7 $ 137.8
Volume 32.6 (22.3) (1.3) 0.5 55.7
Pricing/mix 91.1 25.6 21.6 4.6 39.3
Acquisition/(divestiture) 1.2 — — — 1.2
Currency translation 9.9 0.7 5.8 1.1 2.3
Sales - 2021 $ 868.8 $ 276.5 $ 281.1 $ 74.9 $ 236.3

Year-to-Date
Total Utility ESS Coatings Irrigation
Sales - 2020 $ 2,097.0 $ 723.9 $ 731.2 $ 200.0 $ 441.9
Volume 222.5 37.9 (22.9) 3.2 204.3
Pricing/mix 173.0 28.4 38.4 12.8 93.4
Acquisition/(divestiture) 9.2 2.2 — — 7.0
Currency translation 36.6 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 ~~third~~first quarter ~~and first three quarters~~ of ~~2021,~~2022, as compared to ~~2020, contributing to~~2021, resulting in higher cost of sales and ~~lower gross profit margin~~net 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 provider~~2022 included amortization of ~~engineering, design,~~identified intangible assets of $1.6 million ($1.2 million after-tax) and ~~packaging services in~~stock-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 solutions~~2021 (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 ~~are~~were 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.

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, 2021~~March 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 additional~~a large purchase ~~orders during the first three quarters~~order 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.

Currency Translation

In the ~~third~~first 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:

Total Utility ESS Coatings Irrigation Corporate
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)



	Total		Infrastructure		Agriculture		Corporate
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 lower~~decreased slightly in the first ~~three quarters~~quarter of ~~2021,~~2022, as compared with the same ~~periods~~period in ~~2020,~~2021, but the amount of gross profit increased due to the higher ~~raw material~~average 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 quarters~~Company. Amounts of ~~2021 as compared to 2020,~~ gross profit ~~was higher~~increased 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 ~~third~~first quarter ~~and first three quarters~~ of ~~2021~~2022 SG&A expense over the same period of ~~2020~~2021 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 quarters~~quarter of 2022, as compared to the same period of 2021, is primarily ~~attributed~~due 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; somewhat~~costs 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 increases~~increase in SG&A ~~expenses.~~year over year.

Net Interest Expense ~~and Debt~~

Interest expense increased in the ~~third~~first 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 rates~~borrowing on ~~cash equivalents and lower overall related balances~~the revolving line of ~~cash equivalents throughout 2021.~~credit.

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

The change ~~in other income/expenses in~~includes the ~~third quarter~~unrealized 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 ~~third~~first quarter ~~and first three quarters of 2021~~2022 was ~~23.4% and 21.3%~~26.8%, compared to ~~23.0% and 26.9%~~21.9% in the ~~third~~first quarter ~~and first three quarters~~ of ~~2020. On a year-to-date basis, the decrease~~2021. The increase in the effective tax rate iswas primarily due to a change in geographical earnings, the ~~result~~finalization of a U.S. tax ~~benefit~~regulations related to foreign ~~taxes paid~~tax credits, and an incremental tax benefit in 2021 driven by employee stock option exercises which did not ~~occur~~recur 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 consistent~~was higher in the ~~third~~first quarter ~~and first three quarters~~ of ~~2021~~2022 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 quarters~~quarter of fiscal ~~2021,~~2022, as compared with ~~$273.0~~$33.2 million provided by operations in the first ~~three quarters~~quarter of ~~2020.~~2021. The decrease in operating cash flow in the first ~~three quarters~~quarter 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~~

Infrastructure segment


Infrastructure	Q1 2022		Q1 2021		Dollar Change		% Change
Sales, gross of intercompany eliminations:
Transmission, Distribution and Substation	281.6		208.4		73.2		35.1	%
Lighting & Transportation	212.8		176.5		36.3		20.6	%
Coatings	82.0		74.8		7.2		9.6	%
Telecommunications	61.4		45.6		15.8		34.6	%
Renewable Energy	43.0		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 ~~third~~first quarter ~~and first three quarters~~ of ~~2021~~2022, 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. A~~first 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 ~~contain~~containing 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~~

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 attributed~~2021, due to meaningfully higher average selling ~~price partially offset by lower sales volumes across most regions. Sales volumes decreased~~prices, 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 slowdown~~increase 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 line~~Telecommunication sales were higher ~~by $12.7 and $24.2 million~~ in the ~~third~~first 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 due~~primarily 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 net~~Coatings sales increased in the ~~third~~first 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 ~~prices~~prices. 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 the~~large increase in average selling prices ~~to counteract the higher cost of zinc resulted~~while maintaining gross profit margins in ana highly inflationary environment. The increase in ~~net sales~~operating 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 ~~third~~first quarter ~~and~~of 2022, from 9.9% in first ~~three quarters~~quarter 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 quarter~~better leverage of ~~2021, as compared to 2020, as inflation in~~fixed 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.

~~Irrigation~~Agriculture segment


Agriculture	Q1 2022		Q1 2021		Dollar Change		% Change
Sales, gross of intercompany eliminations:
North America	182.3		122.8		59.5		48.5	%
International	124.3		106.9		17.4		16.3	%
Total	$	306.6	$	229.7	$	76.9	33.5	%

Operating Income	$	37.5	$	38.7	$	(1.2)	(3.1)	%

The increase in ~~Irrigation~~Agriculture segment net sales in the ~~third~~first 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 as~~much higher average selling ~~prices. The sales volume improvements for international~~prices 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.

The increase in gross profit in ~~2021~~2022, as compared to ~~2020~~2021, is primarily attributed to the ~~sales volume growth and partially attributed to the significant increase in~~meaningfully higher average selling prices ~~for~~which more than offset the ~~industrial tubing product line.~~amount of inflation within cost of goods sold. SG&A was higher in the ~~third~~first quarter ~~and first three quarters~~ of ~~2021,~~2022, as compared to ~~2020,~~2021, due to ~~approximately $8.5 million of~~the SG&A from the ~~recently~~Prospera subsidiary acquired ~~Prospera~~in 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 ~~increased~~was slightly lower in 2022, versus 2021, due to ~~improved global sales volumes~~a lower gross profit margin and ~~pricing.~~the higher SG&A.

Net corporate expense

Corporate SG&A expense was higher in the ~~third~~first quarter ~~and first three quarters~~ of ~~2021,~~2022, as compared to ~~2020.~~2021. The increase in the ~~third~~first 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 ~~stock~~rent 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:

•$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.

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 thousands	2022		2021
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 ~~decrease~~increase in net working capital in ~~2021~~2022 is attributed to ~~a decrease~~an increase in ~~cash and cash equivalents~~inventory due to the ~~recent business acquisitions~~rising 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 quarters~~quarter of ~~2021,~~2022, as compared with ~~$273.0~~$33.2 million in the first ~~three quarters~~quarter 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 was~~increase 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.

Investing Cash Flows- ~~The increase~~Cash used in investing ~~cash outflows~~activities totaled $29.1 million in ~~the first three quarters of 2021, as~~2022, 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 quarters~~quarter of fiscal ~~2021~~2022 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, 2021~~March 26, 2022 and ~~$766.3~~$965.4 million at December ~~26, 2020. Financing cash flows changed from an outflow of $110.0~~25, 2021. Cash used in financing activities totaled $3.5 million in ~~the first three quarters of 2020~~2022, compared to ~~an inflow of $101.0~~$10.7 million in ~~the first three quarters of~~ 2021. The financing cash ~~inflow~~outflow in the first ~~three quarters~~quarter of ~~2021~~2022 was primarily the result of ~~our borrowing~~borrowings on the revolving credit agreement ~~to partially fund the Prospera acquisition, slightly offset by~~of $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 quarters~~quarter of ~~2020~~2021 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.

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 ended Thirty-nine weeks ended
Dollars in thousands September 25, 2021 September 26, 2020 September 25, 2021 September 26, 2020
Net sales $ 520,188 $ 438,947 $ 1,551,701 $ 1,377,294
Gross Profit 143,724 115,116 426,167 385,314
Operating income 49,166 35,261 159,994 149,866
Net earnings 26,125 13,760 92,200 87,235
Net earnings attributable to Valmont Industries, Inc. 26,098 13,759 92,090 87,249


	Thirteen weeks ended
Dollars in thousands	March 26, 2022		March 27, 2021
Net sales	$	661,749	$	482,722
Gross Profit	164,359		135,521
Operating income	69,093		52,966
Net earnings	41,808		31,028
Net earnings attributable to Valmont Industries, Inc.	41,816		31,022

Supplemental Combined Parent and Guarantors Financial Information

~~September~~March 26, 2022 and December 25, 2021 ~~and December 26, 2020~~


Dollars in thousands	Dollars in thousands	September 25, 2021		December 26, 2020		Dollars in thousands	March 26, 2022		December 25, 2021
Current assets	Current assets	$	729,047	$	738,437	Current assets	$	873,174	$	801,797
Noncurrent assets	Noncurrent assets	813,116		701,571		Noncurrent assets	850,780		807,294
Current liabilities	Current liabilities	371,801		321,979		Current liabilities	387,967		383,394
Noncurrent liabilities	Noncurrent liabilities	1,287,332		1,100,657		Noncurrent liabilities	200,925		1,305,756
Noncontrolling interest in consolidated subsidiaries	Noncontrolling interest in consolidated subsidiaries	1,757		1,738		Noncontrolling interest in consolidated subsidiaries	1,835		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, 2021~~March 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, 2021~~March 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.

3130

~~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 repurchase~~including the ~~notes at specified prepayment premiums. Both tranches of these notes are guaranteed by certain~~following financial measures for the company.

Adjusted EBITDA. Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) is one of our ~~subsidiaries.~~

~~At September 25, 2021~~key financial ratios in that it is the basis for determining our maximum borrowing capacity at any one time. Our bank credit agreements contain a financial covenant that our total interest‑bearing debt not exceed 3.50x 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 acceleration~~GAAP or as a measure of our ~~indebtedness~~operating performance or liquidity. The calculation of Adjusted EBITDA-last four quarters (March 28, 2021 to ~~them if we default~~March 26, 2022) is as follows:


Dollars in thousands	2022
Net cash flows from operations	$	35,488
Interest expense	43,875
Income tax expense	69,034
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) benefit	6,176
Noncontrolling interest	(2,704)
Pension plan expense	13,596
Contribution to pension plan	960
Changes in assets and liabilities, net of acquisitions	306,202
Other	65
EBITDA	$	444,777
Impairment of long-lived assets	27,911




Adjusted EBITDA	$	472,688


	2022
Net earnings attributable to Valmont Industries, Inc.	$	202,926
Interest expense	43,875
Income tax expense	69,034
Stock based compensation	33,512
Depreciation and amortization expense	95,430
EBITDA	$	444,777
Impairment of long-lived assets	27,911




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 ~~extended~~amended to ~~October 18, 2026.~~

~~Borrowings under~~allow 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 based~~stock-based compensation in any trailing twelve month period and allow for an adjustment to EBITDA, subject to certain limitations, for non-cash charges or gains that are non-recurring in nature.

Leverage ratio. Leverage ratio is calculated as the 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

3231

~~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 related~~may 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 was~~March 26, 2022 is as ~~follows (in 000's):~~follows:


Dollars in thousands	2022
Interest-bearing debt	$	~~916,056~~975,671

Less: Cash and cash equivalents in excess of $50 million	~~119,795~~99,700
Net indebtedness	$	~~796,261~~875,971
~~Adjusted EBITDA-last four quarters~~	~~429,775~~
~~Leverage ratio~~	~~1.85~~

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 expense~~	~~41,976~~
~~Income tax expense~~	~~56,765~~
~~Impairment of property, plant and equipment~~	~~(940)~~


~~Deferred income tax benefit~~	~~6,394~~
~~Noncontrolling interest~~	~~(1,767)~~
~~Pension plan expense~~	~~12,961~~
~~Contribution to pension plan~~	~~18,971~~
~~Changes in assets and liabilities~~	~~177,260~~
~~Other~~	~~(199)~~
~~EBITDA~~	~~416,498~~
~~Cash restructuring expenses~~	~~13,277~~




Adjusted EBITDA	$472,688		~~429,775~~


~~Net earnings attributable to Valmont Industries, Inc.~~Leverage Ratio	$		~~204,590~~1.85
~~Interest expense~~	~~41,976~~
~~Income tax expense~~	~~56,765~~
~~Stock-based compensation~~	~~24,034~~
~~Depreciation and amortization expense~~	~~89,133~~
~~EBITDA~~	~~416,498~~
~~Cash restructuring expenses~~	~~13,277~~



~~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 ability~~Leverage ratio, as presented, may not be comparable to ~~effectively manage through business cycles and maintain liquidity. We have consistently generated operating cash flows in excess~~similarly 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 ~~34-35~~29 in our Form 10-K for the fiscal year ended December ~~26, 2020 with the exception of the following:~~

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 ~~39-42~~34-37 in our Form 10-K for the fiscal year ended December ~~26, 2020~~25, 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.

3432

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.

3533

PART II. OTHER INFORMATION

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

Issuer Purchases of Equity Securities
Period Total Number of
Shares Purchased Average Price
paid per share Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs Approximate Dollar Value of Maximum Number of Shares that may yet be Purchased under the Program (1)
June 27, 2021 to July 24, 2021 — $ — — $ 126,356,000
July 25, 2021 to August 28, 2021 10,759 232.37 10,759 123,856,000
August 29, 2021 to September 25, 2021 — — — 123,856,000
Total 10,759 $ 232.37 10,759 $ 123,856,000


Period	Total Number of Shares Purchased	Average Price paid per share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Maximum Number of Shares that may yet be Purchased under the Program (1)
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 ~~6,466,629~~6,475,406 shares for approximately ~~$876.1~~$878.0 million under this share repurchase program.

3634

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:


	For	Withheld	Broker Non-Votes
Kaj den Daas	17,487,351	1,343,066	992,442
James B. Milliken	16,994,281	1,836,136	992,442
Catherine James Paglia	18,084,128	746,289	992,442
Ritu Favre	18,095,109	735,308	992,442

Approve Valmont 2022 Stock Plan:


For			17,658,437
Against			1,031,748
Abstain			140,232
Broker non-votes			992,442

Advisory vote on executive compensation:


For			18,090,339
Against			594,734
Abstain			145,344
Broker non-votes			992,442

Proposal to ratify the appointment of Deloitte & Touche LLP as independent auditors for fiscal 2022:


For			18,833,293
Against			965,315
Abstain			24,251

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.

Item 6. Exhibits

(a) Exhibits


Exhibit No.						Description
~~10.1~~10 .1						~~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.This~~2022 Stock Plan. This document was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated ~~October 18, 2021~~March 14, 2022 (Commission file number ~~001-31429)~~001-1429) and herein incorporated by reference.
22.1*						List of Issuer and Guarantor Subsidiaries. This document was filed as Exhibit 22.1 to the Company's Quarterly Report on Form 10-Q (Commission file number 001-31429) for the quarter ended September 25, 2021 and is incorporated herein by reference.
31.1*						Section 302 Certificate of Chief Executive Officer
31.2*						Section 302 Certificate of Chief Financial Officer
32.1*						Section 906 Certifications of Chief Executive Officer and Chief Financial Officer
101						The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended ~~September 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.
104						Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith

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 ~~28th~~27th day of ~~October, 2021.~~April, 2022.

3837


	Balance at December 26, 2020		Costs Paid or Otherwise Settled		Balance at September 25, 2021
Severance	$	12,660	$	(12,660)	$	—


	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, 2020	201,078		120,980		78,087		30,177		430,322
Acquisitions	—		—		—		280,659		280,659


Foreign currency translation	170		(1,731)		129		(87)		(1,519)
Balance at September 25, 2021	$	201,248	$	119,249	$	78,216	$	310,749	$	709,462


	Third quarter
	Total		Utility		ESS		Coatings		Irrigation
Sales - 2020	$	734.0	$	272.5	$	255.0	$	68.7	$	137.8
Volume	32.6		(22.3)		(1.3)		0.5		55.7
Pricing/mix	91.1		25.6		21.6		4.6		39.3
Acquisition/(divestiture)	1.2		—		—		—		1.2
Currency translation	9.9		0.7		5.8		1.1		2.3
Sales - 2021	$	868.8	$	276.5	$	281.1	$	74.9	$	236.3


	Year-to-Date
	Total		Utility		ESS		Coatings		Irrigation
Sales - 2020	$	2,097.0	$	723.9	$	731.2	$	200.0	$	441.9
Volume	222.5		37.9		(22.9)		3.2		204.3
Pricing/mix	173.0		28.4		38.4		12.8		93.4
Acquisition/(divestiture)	9.2		2.2		—		—		7.0
Currency translation	36.6		4.7		25.9		8.1		(2.1)
Sales - 2021	$	2,538.3	$	797.1	$	772.6	$	224.1	$	744.5