Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 21, 2026 · Beat 5 of last 7 quarters
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Valmont's strong utility and coatings results underscore the accelerating AI-driven grid buildout, with management citing data center demand as a key driver. The company's capacity constraints and multiyear customer investment cycle signal sustained demand for transmission, distribution, and substation infrastructure, which is critical to powering AI data centers. Coatings growth from data center construction further highlights the broad infrastructure impact.
Valmont delivered a strong Q2 with net sales up 6.5% to $1.12B and adjusted EPS up 25.8% to $6.14, beating consensus. Infrastructure sales grew 14.8% to $879M, led by North America Utility (+33.9%) and Coatings (+16.6%), while Telecom declined 26.1% and Lighting & Transportation fell 2.4%. Agriculture sales declined 15.8% to $244M, with North America down 2.3% and international down 28.9% due to Middle East project delays, but operating margin improved to 16.5%. Operating cash flow was $148M, with $36M in capex, $60M in debt repayment, and $75M returned to shareholders.
Management raised full-year 2026 sales guidance to $4.3B–$4.45B (midpoint ~6.7% growth) and EPS guidance to $22.25–$23.50 (midpoint ~20% growth). The increase is driven by continued strength in North America Utility and Coatings, with pricing expected to remain favorable but moderate as prior contractual pricing actions annualize. Infrastructure operating margins are expected to remain consistent with the first half, despite elevated raw material and freight costs (steel up 27–30% YTD, diesel up 45% YTD). Agriculture margins are expected to moderate in the second half due to normal seasonality, with the market environment expected to remain challenged through the balance of the year. Management reiterated confidence in long-term targets of 7% annual sales growth, 17% operating margins, double-digit EPS growth, and 21% ROIC by 2029.
“Our conversations with customers reinforce that this is the early stages of a multi year investment cycle.”
on Utility demand outlook
“We are seeing material cost inflation really accelerate, and we are seeing that impact us in the short term here in Q2, and we expect that in Q3 as well.”
on Cost inflation impact
“It is right now, it is capacity constrained, and it is a system capacity anywhere from you know, engineering to manufacturing, and that is going to really determine the level of growth.”
on Utility capacity constraints
Could you see that Q2 would be soft as of January? And can you talk about what is happening in the Middle East?
Avner noted telecom is a low-visibility, quick-turn business without typical backlog. Carrier spending shifted due to leadership changes and disciplined capital allocation. He did not foresee the softness. On Middle East, he clarified the Dubai facility manufactures, but activity is minimal due to conflict-driven project delays. Long-term food security demand remains compelling, but expectations for the year are minimal projects.
Are you seeing any green shoots in the ag market? And what is a sustainable margin level at current volumes and incremental margins on recovery?
Avner said they are seeing stabilization, not green shoots, with international ex-Middle East roughly flat. John noted Q2 ag margins of 16.5% are sustainable for a Q2, with back-half margins expected in the low teens due to seasonality. On recovery, they maintain the Investor Day view of ~3 points of margin expansion.
Can you discuss the sequential jump in infrastructure revenue and the split between price and volume, and why incremental margins were lower?
John said sequential growth was driven mostly by price with a volume component. The sequential margin compression reflects accelerated material cost inflation (steel up 27-30% YTD, diesel up 45% YTD). Year-over-year incrementals remain strong. Avner added that inflation is manageable and timing-related, not impacting demand or competitive position.