VALMONT INDUSTRIES INC (VMI)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Valmont Industries, Inc., along with its subsidiaries (collectively referred to as the “Company,” “Valmont,” “we,” “us,” or “our”), is a diversified manufacturer of products and services for infrastructure and agriculture markets. Founded in 1946 and headquartered in Omaha, Nebraska, our purpose is to conserve resources and improve life.

Forward-Looking Statements

Management’s discussion and analysis contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These 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, anticipated future developments, and other factors deemed to be relevant. However, these statements are not guarantees of future performance or results. They are subject to risks, uncertainties (some beyond the Company’s control), and various assumptions.

Management believes these forward-looking statements are based on reasonable assumptions. However, many factors could cause the actual financial results to differ materially from expectations. These factors include, among others, risk factors described in the Company’s reports to the Securities and Exchange Commission, as well as future economic and market conditions, industry trends, Company performance and financial results, operational efficiencies, availability and pricing of raw materials, availability and market acceptance of new products, product pricing, domestic and international competition, and actions or policy changes by 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 27, 2025.

Segment net sales in the following table and elsewhere are presented net of intersegment sales. See Note 15 of our Condensed Consolidated Financial Statements for additional information on segment sales and intersegment sales.

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EXECUTIVE OVERVIEW

Results of Operations

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Overview

Consolidated net sales increased $68.1 million or 6.5% in the second quarter of fiscal 2026 and increased $128.0 million or 6.3% in the first half of fiscal 2026, as compared to the same periods of fiscal 2025. The increases were primarily driven by higher net sales in the Infrastructure segment, particularly within the North America Utility product line, partially offset by lower net sales in the Agriculture segment, primarily from international markets.

Consolidated gross profit increased $19.7 million or 6.1% in the second quarter of fiscal 2026 and increased $45.4 million or 7.4% in the first half of fiscal 2026, as compared to the same periods of fiscal 2025. The increases were primarily attributable to favorable pricing and higher sales volumes in the Infrastructure segment, particularly within the North America Utility product line. These improvements were partially offset by lower sales volumes in the Agriculture segment, primarily in the Middle East.

Consolidated selling, general, and administrative (“SG&A”) expenses decreased $17.0 million or 8.9% in the second quarter of fiscal 2026 and decreased $18.5 million or 5.2% in the first half of fiscal 2026, as compared to the same periods of

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fiscal 2025. In the second quarter of fiscal 2025, the Company recognized $7.0 million of expenses associated with software licenses that were no longer expected to be used, in addition to a $3.2 million write-off related to the Company’s exit from the agriculture solar market in Brazil. The remaining decreases were primarily driven by lower expected credit losses, in part due to certain recoveries within our Agriculture segment operations in Brazil.

Consolidated operating income increased $136.8 million or 467.4% in the second quarter of fiscal 2026 and increased $164.1 million or 104.2% in the first half of fiscal 2026, as compared to the same periods of fiscal 2025. The increases were primarily attributable to the impairment charges on certain long-lived assets of $91.3 million and realignment charges of $8.9 million recognized in the second quarter of fiscal 2025, as well as lower SG&A expenses in fiscal 2026.

Income Tax Expense

Our effective income tax rate in the second quarter and first half of fiscal 2026 was 25.8%, and 25.7%, respectively, as compared to 117.2% and 38.7% in the same periods of fiscal 2025. The decreases in the effective tax rate were primarily attributable to goodwill impairment charges recognized during the second quarter of fiscal 2025 for which no tax benefit was recorded.

Infrastructure Segment

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward‑Looking Statements

Management’s discussion and analysis, along with other sections of this annual report, contain forward‑looking statements as defined by the Private Securities Litigation Reform Act of 1995. These 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, anticipated future developments, and other factors deemed to be relevant. However, these statements are not guarantees of future performance or results. They are subject to risks, uncertainties (some beyond the Company’s control), and various assumptions.

Management believes these forward‑looking statements are based on reasonable assumptions. However, many factors could cause actual financial results to differ materially from expectations. These factors include, among others, risk factors described in the Company’s reports to the SEC, as well as future economic and market conditions, industry trends, Company performance and financial results, operational efficiencies, availability and pricing of raw materials, availability and market acceptance of new products, product pricing, domestic and international competition, and actions or policy changes by domestic and foreign governments.

The following discussion and analysis provide information that management considers relevant for assessing and understanding the Company’s consolidated results of operations and financial position. This discussion should be read in conjunction with the Consolidated Financial Statements and related notes.

This section primarily discusses fiscal 2025 and fiscal 2024, including year-over-year comparisons. Discussions regarding fiscal 2023 and associated comparisons, which are not included on Form 10-K, can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2024.

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FISCAL 2025 COMPARED WITH FISCAL 2024

Results of Operations

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Overview, Including Items Impacting Comparability

On a consolidated basis, net sales increased by 0.7% in fiscal 2025, as compared to fiscal 2024, primarily driven by higher net sales in the Infrastructure segment, partially offset by lower net sales in the Agriculture segment. Growth in the Infrastructure segment was mainly attributable to improved pricing and mix, particularly within the Utility product line. This increase was partially offset by reduced net sales resulting from the divestitures of George Industries in the Coatings product line ($5.5 million) and our extractive business in the Lighting and Transportation (“L&T”) product line ($7.4 million). The decline in the Agriculture segment was driven by lower sales volumes in North America.

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Consolidated gross profit decreased by 0.1% in fiscal 2025, as compared to fiscal 2024. The decline was primarily attributable to lower sales volumes in North America within the Agriculture segment and reduced sales volumes in the L&T and Solar product lines within the Infrastructure segment. These impacts were partially offset by higher sales volumes and improved pricing in the Utility and Telecommunications products lines within the Infrastructure segment.

Consolidated selling, general, and administrative (“SG&A”) expenses increased by 0.1% in fiscal 2025, as compared to fiscal 2024, primarily due to $24.2 million of legal contingency reserves and $23.8 million of expected credit losses in Brazil. These increases were partially offset by lower compensation and incentive costs, driven in part by our strategic realignment, as well as reduced research and development costs primarily as a result from the exit of our Prospera business.

Consolidated operating income decreased by 20.8% in fiscal 2025, as compared to fiscal 2024, primarily due to the impairment of certain long-lived assets totaling $91.3 million, realignment charges of $15.4 million, and slightly higher SG&A expenses.

Net Interest Expense

Consolidated net interest expense decreased by 37.2% in fiscal 2025, as compared to fiscal 2024, due to a decrease in average outstanding borrowings on the revolving line of credit along with lower average interest rates.

Other Income / Expenses

Amounts in “Gain on deferred compensation investments” on the Consolidated Statements of Earnings reflected changes in the market value of deferred compensation investments, which were fully offset by corresponding changes in the valuation of deferred compensation liabilities recorded in SG&A. Other components of “Other income (expenses)” included pension expense of $1.1 million and $0.6 million in fiscal 2025 and 2024, respectively, and foreign currency revaluation losses of approximately $8.4 million resulting from depreciation of the Argentine peso against the U.S. dollar in fiscal 2025.

Income Tax Expense

Our effective income tax rate in fiscal 2025 and fiscal 2024 was 6.3% and 25.2%, respectively. In fiscal 2025, the reduction in the effective tax rate was the result of a tax benefit recognized for a worthless securities deduction of $73.8 million, the release of previously recorded valuation allowances on certain foreign tax credits of $13.4 million, and changes in the geographical mix of earnings. The worthless securities deduction was the result of the exit of our Prospera business.

Infrastructure Segment

Infrastructure segment sales increased by 3.0% in fiscal 2025, as compared to fiscal 2024, driven primarily by higher sales volumes in the Utility and Telecommunications product lines, which more than offset declines in L&T and Solar product lines.

Regionally, Infrastructure segment sales grew in North America in fiscal 2025, as compared to fiscal 2024, while sales declined in inter

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