Valmont Industries (VMI) 21 Apr 232023 Q1 Earnings call transcript

Greetings and welcome to the Valmont Industries' First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Renee Campbell, Senior Vice President, Investor Relations and Treasurer. Ms. begin. may you Campbell,

President good Officer. call. to Steve With Executive President Executive and and Gene Officer; quarter Senior Padgett, Kaniewski, Industries' XXXX Chief Vice Vice Applbaum, Avner earnings me Chief Officer; Chief morning. you Financial Valmont and Accounting Welcome and first President and Thank today are

current Avner results, our market our and This morning, brief and a and on provide outlook our summary of performance business by XXXX commenting remarks strategy. will for Steve will our review financial first will with quarter Steve. from indications long-term Q&A. be provide closing followed This

will of A available later website morning. webcast webcast is on on available accompany download this the live replay today's or call at and be presentation will site the our the from investors for A valmont.com.

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

Finally, when and Valmont through to investors up sign site. publishes be e-mail our for notified if information, please releases other news like you would alerts

We also company brand follow listed our the interested encourage others our channels and on and social media website. in on our Valmont to investors

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

be of Good you, quarter an us. results great joining continues challenging. another Renee. morning delivered despite to Thank environment everyone and for thank We you economic that

effective increase the our reflects our to profitability. performance Our actions strategies execution of growth and deliberate

we to great are achieve positioned another We of have results. a team year and great

you share highlights few we today. slide to to Turning a are there with four, want

operating quarter per share. and the First, year we've to earnings tremendous had with income, record first a sales, start

our $X.XX. margin better and per in that to share to X.X% to with efficiencies led grew ability from improved pricing, manage factory increased strategic Adjusted operating earnings performance. sales growth both and costs, operational XX.X%, reflecting benefits improved to Net Infrastructure solid Agriculture. Adjusted

moments, for less accomplishments. few and are with independent I and proud general but robust, entire these we remains in sectors results and products provide the will a to of tend Demand our pleased our am economy the macroeconomic markets that of for correlated cycles. Avner be to details more in and extremely team Valmont

in not the of a by is these participation Our markets but investment result strategy. chance, deliberate

targeted have the flexible can markets leadership, our value global product technology niche We footprint, to innovative and expanding customers' where solve add we recognized help greatest challenges. through

strategic inflationary margins. we in In both to value we costs. recent pressures segments, in offset while steel chain, approach capturing customers, that notably are This are to helps still that expanding increases the pricing our the ensure disciplined supply present deliver helps our our

minutes, necessary vigilant few responding on achieve. our the and latest hard have and In value creation in strategy part actions cost maintain to a our take speak the framework we'll update to our we increases will to shareholder We initiatives. capital deployment is important monitoring enhances an actions of to value. and This remain to worked when and margins Avner drive you

benefiting are to slide generation innings early to evolving in starting transition. drivers utilities the energy initiatives with is long-term portfolio. including Turning increasing the and required five support investment their are global update grid an its markets infrastructure our several from market and on to a secular and hardening spending transition Infrastructure, growth The support

to show and to is initiatives utilities expected is of over to expected next continued last concerns. three Recent XX% spending economic cost inflation reports growing. Overall, higher from spending resilience total year increase capital general the indicate to over utility XXXX environment, a CapEx continue spending years and

leading rates times renewable is been to higher one ago. the from solar global increasing, transition record Our year three than backlog order energy have a business is and benefiting that

on clarity US from come receives will more of the critical be how implemented. We expect to Reduction demand further once elements markets Act Inflation industry the

solid the and During quoting we flow transportation markets to and related activity from Investment additional see Jobs Infrastructure order Act. the continued to quarter,

appropriations As XX a reminder, funding to completed. our lighting and transportation are typically purchased products after are months nine

expect demand XXXX. incremental beginning to in benefit from we So, this

markets, XG deployment underlying remains for telecom demand strong. In multiyear

carriers' We year are levels. have seen to within previous some patterns industry pullback CapEx we've normalized typical spending seen with in These this more the rollouts. as generation

densification demand. capacity their We carriers well-positioned Infrastructure achieve and investments meet in make technology help segment, multiyear we the remain solutions to strategic and XG goals. to continue to Across strong

fundamentals International elsewhere. Turning markets to remain market stability robust demand overall project and to remain a ag positive, providing strong, by Brazil Agriculture. Underlying trends. very pipeline global led

to continued agricultural has EU of the for recently the expected market in most and the yields years, expanded Brazil approximately the as lower have to exports value strengthen Ukraine. The XX XX% annually support

Brazil Irrigated this years. a in record is acres the increased XX% three over land expected just past year, annually have year over output there. consecutive corn second And of

the come meet we to year, market year, enhancing the fully online service additional to levels. Last while began us capacity investing we allowing in customer expect factory country, demand, increased this which within

providing our opportunities robust benefit we is in well-positioned these pipeline Additionally, project to and are multiyear XXXX and sight, line of from a beyond.

Turning to North America.

late first recognized abnormal as conditions. typical order season to quarter changes we growers progressed, took decisions due to general a to uncertainty and approach patterns economic As some amid planting buying weather a wait-and-see the

XXXX a when an exceptionally elevated we recognized to backlog. comparison quarter also delivered difficult We first against

more have second income remain farm to order the averages. a the are levels return and normalized XXXX to resilient to year remained half net above historical expect commodity expected We as projected flow of prices

AgTech, myself; event. We of Daniel to from customer that our return Jim of technology chat XXXX event tremendous well and on as leaders to we celebrate of to excited Nebraska fireside dealer at networking Prospera Moving a Governor, honored a staff; solutions. at Koppel, and with roundtable The included our community event experienced have six. Media President a our as speak headquarters a commencement were panelists have half-day and to were for Pillen month, the this global Tour. Day and expert Valley media, slide host investment AgTech Earlier the our

team our plant of months, next country, the of insights our health crop control to our six will monitor offerings, release travel technology remote suite including featured showcasing diagnostics, health. the solutions, machine Over and

With to how across solutions maximize data stops technology learn provide to productivity. our open XX farm are states, and more can insights than invited have land agronomy growers plant unparalleled discussions XX to

Adoption our our through AgTech and cycles. have for rates technology in in success have solutions business of been market, us increasing setting positioned up the uniquely our while investments the agriculture

seven. slide to Turning

Next week, we XXXX sustainability will report. our publish

embedded in we For Valmont, do. is sustainability everything

Life, less. to to do work help tagline, a do customers Resources, Our Conserving Improving with the is testament more we our

an of and our ESG a examples advantage. a ESG part strategy, is will our that In see progress competitive and multiple you operations, the update on report, and demonstrating commitment

slide, XX This the team the in we green from Acacia selected philosophy. more to On our than Ridge, highlight award annual ESG Australia. recognize was for towards work teams our global the they our done Green Champion have team

be I everything this to every acknowledge achievements the demonstrate and was of our global able to our commitment does team proud team to sustainability. appreciate day to

to time published. when the you it report the encourage read is to I take

We a respond the also this host report ESG the year elements questions. to your on plan dedicated and to key conference to later expand of call

updated now for outlook. our With turn Avner the and quarter to over review financial first that, call will I

Thank you, morning, Steve, and good everyone.

the my as focus adjusted presentation to the Reg first disclosure comments results, quarter on slide appendix. the the results in Turning G and outlined and press will nine in in release

being separately focus the reportable other. Infrastructure today comments quarter, is primarily last mentioned divested Agriculture. offshore wind on business reported in segments; My now and our As will two

First in quarter total net both by X.X%, sales billion volume and driven segments. grew growth of $X.X sustainable pricing

XX.X% grew Excluding the year-over-year. segment, sales Other

reflecting $XXX.X to XX.X% leverage. grew XX% pricing and margins to million, long-term strategy, income Operating our XX.X%, disciplined increasing with and higher fixed of volumes, execution our approaching goal improved of operating cost

by tax the partially due mix year. a expense share per operating XX.X% higher change geographic earnings to grew higher earnings a $X.XX, of Diluted to attributable in to compared to last income, offset

year-over-year net Turning renewable million of lines, product sales across a to sales double-digit renamed solar, TDNS product the in for all XX.X% which quarter line. and XX, is including slide energy record growth with $XXX.X Infrastructure growth grew

underlying was and sales by higher led pricing demand. Segment growth strong market

responded this benefits capacity through We volume to realize product the our and optimization and strategic demand new innovation have drive increases across to continue the segment. footprint to expansion of

sustained XX.X% driven $XX.X to million by growth. volume increased and income Operating or pricing of sales,

XX. In pricing, volume X.X% and of led growth higher technology sustained sales grew $XXX.X million by sales solutions. slide year-over-year, net to Moving of Agriculture,

grew in international growth Strong XX% year-over-year than America quarter volumes as higher benefited in nearly including year-end and offset middle backlog. markets, e-sales more where first XXXX Brazil, of from another in record record sales North the delivery quarter volumes lower

expense sales. $XX were to XX.X% offset increased higher incremental average income million by including investment. of volume prices for higher leverage and benefits The technology additional selling or SG&A, Operating partially R&D of

slide Turning to cash on XX. flow

price working cost million $XX was operating and quarter First flow a stable driven capital diligent management cash more by of environment.

move to continue equal working on look capital free effective flow as earnings. will net to greater we or than We cash management focus to

of was and growth. further capital to share with quarter Turning to support deployment. we quarterly an in as demonstrated a sales slide summary XX first continued commitment to CapEx to increase shareholders $XX our to return We continue capacity invest cash to our million dividend for repurchases.

reflective increase million capacity our announced is repurchase $XXX of February strong authorization our in additional cash shares, growth generation. and additional while dividend flow repurchase confidence earnings The in sustained to the in us gives

dividends quarter, approximately Through In our repurchases, share and as cash. $XXX with to framework, value ending returned quarter continues. in on shareholders the business shareholder strength million are focused enhancing $XXX through deployment we our balanced capital first of the the we million

approach, capital year. remainder of continue we a our balanced forward, expect allocation we the repurchases Going of although will for the pace slower

within range a of Total debt remains a times. Moving slide two XX. adjusted to desired to EBITDA X.X one our half of times and to and half

available execute sheet credit our to balance allocation us provides capital liquidity strategy. with balance, cash Our flexible ample and

reaffirmed Moody's credit our During rating. the stable quarter, BAAX

I would on shown XX. now as like XXXX our slide outlook to review

approximately remain and mid We price and wind currency no X%, foreign divestiture at offshore volume to material impact. structure accounts the the expect high single-digit business growth growth of to sales to for X% growth, which X% assumes

continuous We given strong and expect this demand, initiatives. operating strategy margin pricing ongoing improvement our market expansion year

demand, continued assumed more a steady investments. stabilized environment R&D also We labor in market and growth

healthy across year visibility. our as We providing infrastructure expect continued strength is this good backlog global markets

year. Steve Agriculture, a this in strong, the earlier, project robust underlying remain half by ag In positive. sales as Brazil the International expected where growth globally fundamentals mentioned backlog driven second our is into market, be of extends to market visibility very year

in Agrishow, region, begin full show the will year weeks, of confirmation farm us in giving couple of further largest our expectations. a the

the due unusually volumes North quarter backlog. quarter expect We of as delivered second in the agriculture similar second XXXX to we the be to quarter in first to comparison volumes difficult to America an elevated high

approximately We the expect quarter. first to the quarter compared XX% to up sales second in be international

Finally, is rest year. quarter compared to a sales typically reminder a lower that quarter the the the third of

or to three higher two to led per However, produce per expect for sales, likely seasonality are We mitigate share by year growth sales, strong they international to range and $XX. of crops impacts. of earnings in $XX.XX Brazil growth where a XX% diluted our can now XX% adjusted project

While assume material our more previous outlook inflation steel. seeing to we environment, recent are costs, increases notably in raw stabilized a

expect projections price remainder these current for year. to align the with the We costs of

of strength multiple across the the Our solid remains $X.X record total at the billion awards. to margin end levels portfolio and and quarter projects of market at levels new attributable backlog near continued

an core a is a products growing of steady projects backlog with We our experiences strength the is few of and for and our reminder, the and indicator believe As solutions. committed backlog typically demand firm our markets cancellations.

demonstrates portfolio, strong it To outlook that our end and are of in trends believe strength the position in summarize, we marketplace. the confident favorable competitive our market and

global to financial long-term value. our enabling scale and us improve growth support cash strong sustainable drive and generation, strategy our margins leveraging shareholder targets our are driving achieve We to

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

Thank you, Avner.

fundamental Turning remain of Avner XX summary, markets resilient. expanding on to slide and our the long-term drivers

a markets growth. Our of tailwinds, multiyear that some for us long up cases, in end and, true multi-decade set runway have

investment resource Agriculture Infrastructure is transportation needs critical land energy supporting driving infrastructure the to the productivity business network transition, markets, upgrades. globally. are global conservation In and and mobile support market, Our the of combination

to value-added and innovation customer are Additionally, integrating will segments points continue solving experiencing deepen technological that our are pain competitive advantage. transition both we by

XX, of proud strategic extremely challenging deliver In am ability and market through I team's slide execution dynamics. to sustained on outperformance summary, our

our leadership market and Our continue our organization build develop to on the of momentum. across to we excellence capabilities growing sales demonstrate will and strong backlog centers and

growth investing our in and that beyond innovation, are We rates. accelerate market technology, will digitization

and strategic deliver remains focus control the positions and a the This on controlling framework is enabled targets achieve we for can things to Valmont that value. success Our financial now our future. by shareholder in

in-depth May including on capital Investor Finally, financial month growth priorities, objectives. a meeting I review you business we look segments, more forward provide Day to of the next XXrd and and at allocation strategies, with as our company

turn now the over to Renee. I call back will

will the At call the you, for open operator time, this Steve. Thank questions. up

Thank you.

conducting question-and-answer [Operator will We a be session. Instructions]

the with Our Moore of proceed first Chris question. Please line comes your from question CJS with Securities.

a guys. about election-related are can good very for morning about the lot hearing maybe things I've like a of we Obviously, couple Thanks Hey, of Yes, that. strength talked Brazil. taking just your messages Kind you risks, bullish. questions. demand, mixed -- remarks things like of -- been

maybe strong you or of a Can further Are the there? just seeing of talk what Valmont to really of just model within advantage be kind you little kind taking is to business it you're bit to doing Brazil? growth anything

local throughout the more the not deliberate a capacity proof-of-concept. our past that Good some lot of with even morning effort years subject we're has of strategy, increase to leading network our to so Brazil been there create over real the issues add dealer we're to country five technology Chris. There testing of as inventory. technology import parts To as a down aftermarket a

that I our So, when efforts at in you think totality, for are off its paying us. look

thing big you West. you that is let's opening up compared America two get to the other say, the three grow the or in to, as fact And really think Europe North seasons. just corn have I

as aquifer feed to And the corn, used have corn, byproducts a they ethanol from business helping West, replenishing drive cattle can so the production some now of because really it the well. on that's in of they're to a be cattle, robust industry, because

we in FINAMI been obviously, has land the away. in right on very that is supportive someone participating pivot puts to all a it they're time, of why in put market, growers which XX% right see then if And production, the going

And world, than parts the including that market. see the is significantly other North higher America of you in

in market not the really distant of and so our the North is surpass market Brazil future future. So, will the American

is That agriculture. on just Maybe incredibly bigger picture more one helpful. on a

you is look next North moving the by than I XX is geography? you do potential challenges, there ended XX more less months, or have how at Over difference guess, in strong just America so. any And to when obviously, by you forward? the Brazil confidence saying mean -- international there I was

Brazil mean, last of over three has us each years. I last Yes, those for the years, three doubled obviously,

think, -- GDP brings ag Even change the So, despite some we the have other XX% in a government of confidence down of lot and Brazil. of of things, government there. in, I

significant a So, piece not it they're to mess with. going that is

us Middle and Zealand growth. The the security is East, was Eastern remain for events. affected that and about. food we've New Europe Australia severe some been of last will talked market both pure by years weather population also strong a pretty regions and just for so couple has

$X, when you $X fundamentals, or ag overall, well of the above most corn have at above soy time. But $XX.XX north,

you you've reinvest. as and psychology, to after best just take you think of ever a look net I of off have is, you had, come in before the human farmers earnings start farm to want income, settled what kind a record stop it

lock world, as think can forward soy biggest. I favorable contracting their now emergence, get Brazil being the some markets The in obviously, people one of rates. And very of at of the they

of to With go cost low. I I get because tax into productivity the prices, keep old, these my kinds need we'll soy I game of back land and the my very don't think like quickly

three a of issues really kind past it market. seasons was traditional hyperinflation the and But more of indicative there. are of then chain a fundamentals ag It we was what COVID, supply metals would normalized the in kind call So, were market. not ag

Steve. perfect. Thanks That’s there. it I'll leave

you. Thank

with Nathan Stifel. question proceed Please next question. comes the from with your of Jones Our line

everyone. morning Good

Nathan. morning Good

market. I'll go the ag on domestic

in points the you the a revenue I'd to assume said last was pricing quarter year. few there. guys of similar have You

Or know probably So farmer volume pulled down that volume a the is there? decline? last points. the just in season I was there in the about a talk of year. was difference the for there account few Can forward all demand sentiment you earlier in seasonality? Does

to shifting the quarter demand quarter year year? maybe you you second go do we one than that last from as we expect better the how other? normalize to expect through had And Should a

some some we came it's forward there and -- sentiment year. was farmer negative Nathan, definitely pull the as into

that I Mississippi fields, the abnormal weather we conditions of normalized. was plus of to will much of let's out the year the really people fact say, the that the the, get think late really West expect more that and half second to be

the week-by-week. farmer on And of order -- still still it to it now that fact literally that from rates, is sentiment a particularly quarter, have in talk timeframe, and growers. second -- to We our dealers some just in pressures an we're pickup increase we'll starting April see can the

And to confidence so build. is the just starting

why it to to kind that's of being of kind talked is. add way way we're about it? Avner, we've the thinking so And want the quarter about you in do the

Yes.

So, when thank we you, kind -- of look at Steve.

actual So, the of sequential QX year-over-year. looking to by see when we're then of kind looking QX do pretty of kind volumes QX, of really sequentially the flat quarters, and impact pricing the at being similar -- And XX% kind North the you much look of markets up, the being at international well. America sequentially comps driven we of kind as kind

prices to I continuing to you've very Midwest, by impact a their to more irrigation any drought kind still color can impact out that across need Is spending? moving up for to around having those you talked rapidly you go on -- give and costs. the Just that how that. has about outlook increases? irrigation? cover farmers of having obviously, steel There's any us talked does cost those guys Okay. increased needing be again gone Are know bear and about to have able raise farmers

smallest about that of the we've we're to really last say, over with of and this -- just Nathan, the other inflation and price our take gone is of years. things some It talking that. it freight probably price some is the increase the probably to some out increase the like as off now Yes, I'd is oil other edge labor steel, pertains and of couple some

of that back in it's price market is put continued supporting. to it normal would So, just representative and to the really kind technology I increase investment our of say what we're a

water ensure of mentioned still we've the the as farms, almost as there, are put particularly and mentioned, to in they they're has out crop get large-scale some to and incredible data to to really the before, that conditions if you off And pivot a an The conserve going payback. the the need that rights, a pivot there's field, immediately. have

we we're think is And even any that or a believe don't price of back we push where So, would going say, this indicative to just ourselves have been in, let's the back ratio kind is to really that getting of problem. we elasticity market XXXX. to cost XXXX

Thanks my Great. taking much for very questions.

you. Thank

of proceed Brian comes Blair. next Our with William with question Drab your line the question. from Please

prices I we just up last roller by just it's summer XX% on been steel ask I are from year-to-date. until Good down on has then gone mean, ride. morning. Maybe where coaster it just could question last today, and more building that mean a And start and broadly. around it's steel dramatically I like

time if now, of like look summer to we? over your dip latest seeing change what from last So, you different price of you where in are big that in are in this the terms at period, price steel kind segments

-- thought some -- And that did like been maybe maybe swing see you know if is for might paused and how affected comment be also, I real? that a dynamic the is don't big was that? customers swing decrease somewhat. on that some -- irrigation? then have that that There that recent waiting market price And businesses

Yes. Thanks Brian.

and a as said, been has steel, in irrigation as of of is percentage use and we volatile more the coil, of sold not significant would That business. goods of price steel the it angle. uses as the utility it plate like cost than the be Our and more other bar forms which which

more your period. to time a And impact sold can get quicker have a dramatic so cost it in to

we've as We've as some management done well customers ourselves protecting in physical place. inventory hedging good programs, a kicked and some through our job hedging of that programs through

was steel out for price/cost kind tough And while a so figure the of really it to was from perspective. where

movements to capturing nominal And that's why up, we what this and sure need stability where with speak, we so just to a enough the pricing even it are. I can tweak, think the that we've to down we're be seen make

business, Recall have that particular we our in utility pass-throughs.

but the second down, of that the of back the know we because in pricing. form that through the steel some of not go half so and our we margin, will And utility revenue year, give revenue the

year and resilient strong. has a terms that with infrastructure, will mechanisms. uptick And of highway of business, some then infrastructure. our this, like up through own been bridges XX-week utility in won't goes that into steel because until show lead-time through a of has in remained revenue the next all pretty increases whether Now, it's Plate come pretty or lot plate that's

the coil we've that of the as of not was something not so during but a to for there, it dichotomy a as peak, albeit And ton time. is significant difference normalized long $XXX seen plate is still kind

demand. answer, I customers being a and movement, well and not steel say long-winded recent think to to done I but you really of accounted that dampened and we've we've ourselves So, protect the has and the both job able good for would

aluminum always are zinc that's metals points inflation some environment, inflationary that really expecting sidelines on or of But one there wait the today's or it. price no anytime people got Yes, think decrease with happens. that involved steel a there's should that or or be in other anything I soon

dynamic? And can any comment Great. just that That's be just still there, really the as pipeline Thanks. that out as big then might Yes. strong it's projects international on Is helpful. been? Steve, you,

Can the you're in opportunity Egypt, just million I Africa. some $XX pipeline? you past, that like some know the maybe on potential that add-on seeing you there. in announced mentioned you comment projects for In even in

awarded a through we've years they're that per $XX million the we're that received say, that are, that below say and of good regions, whether number Africa, is I'd the year that it's over Central significant couple order projects there and like Yes, been Europe, or one that last announce, award don't very coming million those of we pipeline Eastern and East, has the being Middle from are but Asia. $XX there's

And very so good. still is the pipeline

food long-term production, will all security, on Africa. The with the that is foremost pipeline. definitely around have stability that They area government's food interruption to pipeline political and Again, development and food into will the market for Russia placed minds. Ukraine, that fundamentals pure just still the money flow need is favorably

Got it. much. you Thank very

Thank you.

question Coast from the with Our next Research. comes line of Please Ryan Connors question. North proceed with your

Thanks question. Good my taking morning. for

So, come angle, from America. and North revenue outlook, to ag talked bit the Steve, a a demand the lot a wanted I outlook topline, of at international the versus different side you about

margin of to, like But the it at in seems the international and it's under in the we that the as outlook, story the go irrigation? that more in the and mix short How if probably. the does terms quarter, margin driver. run, of least of of mix the the and assumption, growth going is in the tone balance margin the That year, impact case story the terms be was

and is that would talked looked of underlying gotten helpful. those less color what bidding there is And has it you add on more can you competitive, about, then big like be stable? Any -- environment some projects obviously, competitive, the

been consistently a margin off strong with start I the improving businesses. us, profile. specifically ag in morning. can as has with the our mix, very international actually, international margin we Brazil -- has at businesses look Good the for

margin to to Brazil are earlier, three and mentioned The growing we two profits good has so seasons. some good farmer profile. make really there has a As ability there

And more the that get margins the you you then we technology business. as solutions aftermarket our increases when internationally, into look if into embed

to continue have margins grow going margins the that improve, America forward. So, versus that that impact to will the North business prominent grows our on fact less continues as and a

quite America of in profile. change significant not overall, have a some yet the to just will expect we lower margins. margin level, North projects projects those It's But the magnitude these some shouldn't at of

And strong year. at our a to quarter, of the continue throughout we're levels first our of those our of higher our improve which margins very margin kind in seen we've proud XX.X%, expect way we stay to XX%. and had to really on and As we

question point. relative our be award, there's brings million an that your And from Arabia, to very to US it's not players going competitive. obviously, It award Europe, competitor that's an about $XX base just in from bidding, Saudi like at when

have the team. global still chain where in to the ability the at can it built thankfully, a bring and company things the And point. very we've they that that world location supply a make is "utilizing" together supply global we to favorable and money So, source project strong throughout

you're range, say a going in be But nearly not more any see as But are time it's to project, projects the type large the that going million to that projects competitive. very competitive. $XX midsized I'll

time, have And pumping land to package, you went to was these the done together bring to to that of you do of if things. there's I want solution favorable margins be the Usually, a be some use able lot able type maybe that specification, more cultivation that company. ahead on with entire the need work think to deal, projects

group. up the over off is together solutions, development scale or scale the bring use. pumping land our deliberately, of We've to they're engineering help money worked We and good a we customers set we've projects, all money. on why And that can years, make whether large pull and small

it. Got

the was on then side. other transmission one just And my Okay.

better. supply holding any particularly? point, started of in get what you a XX I update constraint you that on know lead-time you lead-times have to weeks, there? We're at mentioned. one you'd chain I lead-times around indicated transmission, Speaking the is Any mentioned, have think, been Steve, update there

budgets And maybe up CapEx kind now. still But is moment. be than we as the were weeks is competitors There's that this being a few and on holding market XX-week may more XX with, still a originally as to the bit more We're mentioned that weeks anticipated. XX below thinking an construction around We of XX% same earlier, around little the industry, at depending X%, lead-time. that's we X%, that. slightly like

pretty strong some time And to obviously we start favorably at ours. able hours, by be looking so to team areas from been can of create viewed our for of And on the customer. able those we'll that the if that operations be our in complete should we've know level, which pull but down, keep growth we to ship lead-times

for your Got it. time. Thanks

you. Thank

next with of question. Please D.A. line Brent Our the proceed your comes question Thielman with from Davidson.

morning. what that seen first thanks. look, again, or I Avner, investor you've Steve mean, margin quarter costs quarter? the degree with seen to so reflected in were in those run-up in guess Hey, impressive Good steel far I has the my prices, years. really year, questions, this this

And that and can given material on confused in your margins just you then, sustain have natural because think levels face it I I'm XQ shouldn't more like these I that. impact the of guess, at higher lag a mean, have the where been margin in pricing? sounds XQ

one. thanks. that Good morning. Yes, I'll take

overall, and QX, So, in expect those throughout margins as we mentioned, you we margins had year. do to the strong continue

the the although of fluctuations between increases we you'll inventory lagging net, how year. is is kind some impact steel and there our our does there impacts see pricing, buy they Now, throughout that eventually, P&L as

lag in P&L. yet So, costs, definitely we're We're steel the on yet for higher that's quarters. it not it back or not several going our to our seeing seeing

on on those pricing. there is see a as physical based hedges, Steve might we really managing quarter do -- But deal. throughout hedges, the might some lumpiness very a through see good increases some we certain you increased overall, financial So, mentioned, job we

overall, kind profile. quarters, impact not We closely, it a our but just concern within nothing movements should it some and create can and that margin it's overall performance So, manage of us. for

about concern to of across just farmers? on sort ought How the of thoughts evolving to I Thanks lending capital, for access being curious the country, the I'd the this sort that lenders do credit be Okay. Avner. Is context a follow-up or here? how segment. we liquidity think as for business? your agreement we the guess be that think that tightening would high-level about of in Agriculture

asset one out seen quite pay of bit. Brent, that's because a have a good up the best an there back it's We've have the question. loan. it they to base back there abilities Farmers

or discounted relates down as machinery bought out a programs there's it there think So, of to points I have and equipment. that lot

farm times, the years typical we've second the is four payback the that And many tractor. talked a As to to on best three payback. compared is about pivot

financially, rates, even same elevated last the year, with increases still elevated the works probably basis the XXX, of given that XXX prices. particularly in time So, crop the from some point

being going $XX.XX, $XX that type at anytime and I stabilized. think come soy are look Yes, out But their to you're down further unbelievable they have as close those inputs Soy is inputs up. an price.

a rate maybe So, this locked year. last they year at high

their kind -- That's quarter that of the environment of has a to down out. uncertain. figure needed -- and new of sit first really a them, went as what for it's the just all account kind And through been because farmer we little with the this kind they it's

hunting not small as more They're progress. land on a they're things but not actually land. the this getting side side. big for at heavily, think I point certain grower seen And lot grower affect we've it out the more too

a it's put if a earlier, mentioned in to I as pivot anyway. and they're perspective, buying equipment going machinery typically large-scale farm, the cash they're on And

So, I then it kind digest will overall and it this the the is, is if make their environment, where grower of decisions. think

are different. the it's there. the track much not pivot still investments grower. for are good And a answers land, still very still It's It's all the

the I even remain So, they think that's fairly should -- positive despite rates.

for Thanks that Okay. Steve. Appreciate it.

you. Thank

line question. proceed Please Capital. of with comes John your from Kansas the question City with next Braatz Our

everyone. Morning

Morning Jon.

us And of Steve, you're what in the you is idea things tell maybe the the little your a spending area. increased I'm forward? that what could about bit how in are? if of opportunities trend give wondering us your maybe an on R&D commentary, talked And the going some working the agricultural much spending you like and

to that spend $X Insights That's Prospera something been utilizing that portion R&D one and let's seeing have of, product adoption it. increasing tune big is per real it. growers to we're strong being the the a paybacks AgTech, to of for -- that kind the say, And of million rates, $X million that we very are of has good gone to Yes, year year-over-year.

We've years, is you about machine. over also the pure But a our been we're if drive, continuous on working not just AgTech. think investing drive X-Tec

it in doesn't only we there's hydraulically, do one can marketplace electrically. app other the that So,

with product. that. around field two we to the so some in do can that significant took investment And hours That get

to to years. on number panels icon our for put was now wanting a that We've of machines, linear do we've been something that

upgrading newer and also the the and the So, these that it's combination electronics a pivot of pivot the pivot of we've of services the both and around functionality agronomy type out done there.

jump And I'll in. just

the research R&D. $XX dollars we that development, Specifically and to million approaching specifically that's and of year, spent overall kind we're last

on such, more course, But $XX point, a and last year. reference innovation million it we to we was continue and just spend Of as increase.

you thing, Okay. guide last Control Steve, Thank this partnership on technology last reading and with week, Module what's that and happening you, area. in some the Avner. And announced

you more very this but the needle work? for understand you us with road? of sounded a technology small that bit tell but what Control and it interesting, and Now, maybe see how And kind might can is move opportunity Module your market the down about partnership at that it's point, I little

our we and the that we're series us Yes, an in element a get I that think have when are you we And acquisition of that process try that that, wouldn't bring that to look at of gives company the and data there technologies that looking otherwise. at way forth. and data,

big R&D a and that look versus ecosystem too we that partner company want to the of of said own to already there. get always a into technology and start done has decide the want invest us we We've to where where for and probably to kind significant head at with

going technology way partnerships. So, our grow of a will of to kinds we're ecosystem it's -- these be done of the lot through

It Day. May which that line, to a them. our at is excited technology, something Investor down about infrastructure lot XXrd so we're talk And the our more we're about going

give in lot So, with more as you able how some we'll revenue. to be that of good fits into transformation to recurring ultimately strategy of color business our the and a growth the

right. All you Thank Steve. Okay.

you. Thank

MKM. question. Brian Our ROTH from Wright final line with comes of the your question Please proceed with

morning. Good Thanks.

that have the Bill or can that things they Just there going are impact its part any of on for an Farm the process, business? through the hearing was ag wondering with we about should that be you're watching

maturations kinds any -- state The typically the environmental the changes considerations kind we're very ag go and of There that watching. Usually, into some and sometimes blend and expect those things always is that of based. now We stamp is to some degree, political of Brian. significant it don't goes morning bipartisan. that. to bleeding so more that are with food wrangling. lot of in Bill through is very a can but Good issue The a it's from Farm

more meet kind needs. to provided of are a technology where to data If business good because there be regulated of growers our our ESG their solutions for is today actually is that it's the helping

So, I but think significant. that's we're we watching, anything overly don't expect something

program, $XXX it, just expired. re-upped note had but it to equip of The And make actually for was a million.

our think, quarter, a And it's the bit about mid-XXXXs. of so And little They the had program growers forced first and since, go restart growers -- forced didn't I the back been to that and our a of a into the process. queue is this lot any that's applications. around

interruption. major a was that So,

little our that's the what approve of we So, if as than things, they through business more the changes Farm some actual Bill. don't impacting at look

the for so you Great. much answer. Thank

Thank you.

session. reached Campbell I'll have the comments. over question-and-answer Renee our the closing back of turn any to call now for end We

you today. joining for us Thank

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

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teleconference. today's concludes This

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