Valmont Industries (VMI) Stifel 2024 Cross Sector Insight Conference summary

Agriculture market outlook

• Agriculture markets remain cyclical, with 2024 expected to be down from 2023, but long-term drivers like food security and technology adoption support future growth.

• Net farm income in the U.S. is projected to decline 24% in 2024, yet investments in irrigation technology remain compelling for growers.

• International markets, especially in the Middle East and Brazil, offer growth opportunities, with recent $50 million project wins and strong long-term fundamentals.

• Strategic focus on large growers and technology investments helps mitigate cyclicality and maintain healthy margins.

• Order rates in North America have improved, leading to a revised ag business outlook of down 10%-15% versus 2023, better than initially projected.

Pricing and competitive dynamics

• Maintains price leadership and does not anticipate broad price reductions, though targeted rebates or discounts may occur in competitive situations.

• Strong demand in infrastructure, especially TD&S, supports stable pricing and healthy backlogs of about six months.

• Competitor pricing in irrigation remains mostly rational, with a focus on value, technology, and dealer network differentiation.

• Strategic pricing actions and cost controls have improved margins compared to prior down cycles.

Capital allocation and acquisitions

• Capital allocation prioritizes investing in core businesses, with acquisitions expected to exceed internal cost of capital within three years.

• Recent acquisitions, such as ConcealFab, have expanded offerings in telecom and substation markets.

• The Prospera ag tech acquisition, though largely written off, brought valuable AI and machine learning talent, now redirected to core precision irrigation.

• Future acquisitions will focus on core adjacencies and customer-driven needs, avoiding transformational deals.