Valmont Industries (VMI) Q3 2026 earnings review
Valmont's orders rise 20%, but its cash from operations falls
Valmont's customers placed far more orders than it shipped, but higher steel costs reduced what it earns on each sale. The backlog rose 20% in one quarter, led by power-line structures for utilities, and irrigation orders doubled. Chief executive Avner Applbaum raised the full-year profit outlook again, while profit per share grew faster than sales on lower bad-debt costs and fewer shares.
| Revenue | $1.10B +5.5% from a year ago |
|---|---|
| Profit per share | $6.24 +25% from a year ago |
| Order backlog | $2.01B +20% from June |
| Full-year profit-per-share outlook | Raised $0.38 middle of the range: $23.25 |
⚖️ Verdict: 🟢 Bullish
The story got better because the order book is building again after a year of trailing shipments. Agriculture turned as well: its margin is the highest in the two years of figures we have, and its backlog doubled. The bad news: steel and zinc costs arrived as feared, cash from operations fell, and Telecom lost a third of its sales.
The question now is whether the orders mark a new leg of utility spending or a one-time catch-up. If utilities keep ordering, the backlog stays near $2 billion at year end; if not, it drains back toward $1.7 billion as the fourth quarter ships. The year-end backlog will tell.
🐂 Bull Case
Orders Rebuilt the Backlog in One Quarter
Valmont reports its backlog, the value of customer orders it has not yet shipped, at the end of each quarter, and the figure had barely moved in the first half of the year. This quarter it rose $333 million to $2.01 billion, the largest build in the two years of figures we have.
Chief executive Avner Applbaum said higher sales in Utility and Coatings "reinforce our confidence in the strength and durability of the infrastructure market". The order book now covers more of coming sales than it did in June, after a year in which it covered less and less.
- Infrastructure backlog: $1.81 billion, up $225 million from June
- Agriculture backlog: $200 million, more than double the June figure
- Total backlog from a year ago: up 16%, against sales up 6%
This matters because orders had been arriving more slowly than shipments, so each quarter started with less work lined up. One quarter reverses that drift, but the company does not split the Infrastructure backlog by product line, so nobody outside can see which customers placed the orders.
What to watch: the Infrastructure backlog at year end, after fourth-quarter shipments have come out of it. A figure above $1.7 billion would mean customers are ordering ahead of the new capacity rather than filling a one-off gap.
Utility and Coatings Keep Growing Through Harder Comparisons
North America Utility makes the steel poles and towers that carry power lines; it is now Valmont's largest product line at 43% of sales. A year ago the line was already growing fast, so this quarter's comparison was much harder than in the first half.
Utility sales still rose 23%, "driven by higher pricing and volumes, supported by strong market demand", Valmont said. Coatings, which coats steel to protect it from corrosion, grew 14%. Applbaum said the group is "focused on increasing capacity and improving throughput", and the release names "costs associated with ramping Utility capacity" as a drag on segment profit.
The slowdown from 34% growth last quarter comes from the base: the year-ago figure was $40 million higher than the quarter before it. The backlog shows demand did not weaken. But one line now carries nearly all of the growth, so a pause in utility spending would hit the whole company at once.
What to watch: fourth-quarter Utility sales against the roughly $425 million the old reporting basis showed a year ago. Growth near 20% on that base would mean volume from the new capacity is arriving as planned.
Agriculture Earns More on Lower Sales
Valmont's Agriculture segment sells center pivot irrigation machines and parts to farmers, and it has shrunk for over a year amid what Applbaum calls "broader market softness". Sales fell 6% again, because of "lower volumes in the Middle East and Brazil", yet the segment earned $40 million, up from $23 million.
- Operating margin: 17.9% of sales, against 9.7% a year ago
- Overhead (SG&A): 16.0% of sales, down 7.2 points, as last year's $11 million of Brazil credit losses dropped out
- North America sales: up 16%, helped by "storm replacement activity and favorable pricing"
- International sales: down 25%
By our math the margin a year ago was about 14% without the credit losses, so the like-for-like gain is nearer 4 points. That is still real progress, because the segment lost money in the fourth quarter of last year, and the doubled backlog gives it firm orders going into the winter.
What to watch: Agriculture sales in the fourth quarter, where the plan implies a return to growth by our math. A reading above the $222 million of a year ago would mean the Middle East and Brazil have stopped falling.
🐻 Bear Case
Steel and Zinc Costs Are Cutting the Gross Margin
Valmont makes most of its products from steel and coats them with zinc, so both metals set its cost of goods. The release headlines operating margin rising 2.2 points, but the gain came from lower overhead, not from cheaper production. Gross margin, which is sales minus the cost of making the products, fell 0.4 points.
- Cost of sales: 70.0% of revenue, up 0.4 points
- Overhead (SG&A): 14.4% of revenue, down 2.5 points, mostly because Agriculture no longer carries last year's Brazil credit losses
- Infrastructure gross margin: 29.0%, down 0.7 points; its operating margin 17.6%, against 17.8%
"The pace of margin expansion depends in part on how quickly input costs stabilize," Applbaum said. The numbers back him: Infrastructure grew sales 9% and still earned a lower margin than a year ago. "Higher material costs, primarily steel and zinc", plus the cost of ramping new Utility capacity, offset the price increases, Valmont said. It is now "taking pricing actions and applying contractual pass-throughs to recover higher steel and zinc costs".
What to watch: the fourth-quarter gross margin against the 29.8% of a year ago. A reading below 30% would mean pass-through pricing still trails the cost of metal, and the margin goal set at Investor Day moves further away.
Telecom Sales Fell by a Third
North America Telecommunications sells poles and site equipment to mobile phone carriers. A year ago it was Valmont's fastest-growing line. This quarter sales fell 34% to $55 million, and the company blames "lower carrier spend as customers shifted capital allocation priorities".
- First quarter: down 4% from a year ago
- Second quarter: down 26%
- Third quarter: down 34%
- Year to date: $173 million, down 23%
This matters because Telecom work ships quickly and rarely sits in the backlog, so a further cut in carrier budgets would arrive with no warning. It also means the Infrastructure segment's 9% growth leans even harder on Utility, because Telecom took $28 million off the top.
What to watch: fourth-quarter Telecom sales against roughly $74 million a year ago on the old reporting basis. Another fall of a third would leave the line under $50 million a quarter and would mean carriers have not resumed spending.
Profit Rose, but Cash From Operations Fell
Valmont earned $121 million in the quarter, but it collected less cash from its operations than a year ago. Operating cash flow dropped 11% while capital spending went up, so free cash flow fell by about a fifth, by our math.
- Receivables: $652 million, up 6% from a year ago
- Inventories: $645 million, up 9%
- Contract assets, work done but not yet billed: $304 million, up 33%
- Working capital absorbed so far this year: $127 million, against $19 million last year
The money went into stock and unbilled work as Utility volumes grew, so some of it should return as projects bill. But the company spent $82 million on buybacks in the same quarter and borrowed a net $25 million, by our math, to help fund them.
What to watch: full-year operating cash flow against last year's $456 million. A lower figure would mean Utility growth is consuming cash faster than it produces it, and the buyback would then depend on borrowing.
Risks this quarter didn't answer
Five standing concerns got no new numbers in the release, which is the only document Valmont has published for the quarter so far. Each one has a place where the next reading will appear.
- Steel tariffs: the outlook "assumes no material change to the current trade or tariff environment"; nothing on the customs inquiries into its Mexican imports. The quarterly filing's legal section will show whether anything changed.
- Lighting and Transportation: sales down 2%, continuing two years of declines, with no cause given this time.
- Utility price versus volume: the release says "higher pricing and volumes" without splitting them; the call commentary will.
- New Utility capacity: ramp costs are named, but no plant or date for capacity coming into service; the fourth-quarter report is due to confirm it.
- International Infrastructure: sales up 5%, on pricing and currency; no measure yet of the strengthening programme that management points to 2027 for.
👓 Other Themes
The Outlook Assumes Steel Prices and Tariffs Hold
Valmont set its plan on steel prices and foreign exchange rates as of October 16, and it "assumes no material change to the current trade or tariff environment". Steel and zinc are its main inputs, so a further rise in either would reach the fourth-quarter gross margin before pass-through pricing catches up.
💲 Other KPIs
Down 2.4% from a year ago, the fifth straight quarter of a shrinking count. Valmont bought back $82 million of stock in the quarter, taking the year's total to $200 million. That is well ahead of last year's pace, and each percent off the count adds about one percent to earnings per share.
Up $42 million from June, because the company borrowed while buying back stock and building inventory. Net debt is interest-bearing debt minus cash above $50 million; at 0.94 times yearly operating profit before depreciation it stays far below the 3.5 times the bank covenants allow. Cash on hand fell to $122 million.
🔮 Guidance
Unchanged. The plan still calls for about 7% growth this year. By our math, that leaves about $1.12 billion for the fourth quarter at the middle of the range. That is 8% growth, above this quarter's pace, and the fastest in two years. The range is wide: the bottom needs 1% growth and the top needs 15%. Valmont raised this outlook once, in July.
Unchanged. By our math the plan leaves about $890 million for the fourth quarter at the middle, matching this quarter's 9% growth. Utility and Coatings delivered the first three quarters, so the segment needs no acceleration to land inside the range, only the same volumes through year end. The outlook was raised twice earlier this year, in April and July.
Unchanged. The plan still has the segment shrinking roughly 6% to 11% this year. By our math it leaves about $233 million for the fourth quarter at the middle of the range, which would be 5% growth after more than a year of declines. The doubled Agriculture backlog makes that reachable, but the bottom of the range still allows a 6% fall.
Raised. The middle of the range now sits at $23.25, about 22% above last year. That is the fourth move up in four quarters: +$0.50, +$0.38, +$0.38. By our math the fourth quarter needs about $5.37 at the middle, or 9% growth. This quarter delivered 25%, so the plan assumes a marked slowdown in profit growth even as it raises the total. The range stays wide because steel, tariffs and Agriculture volumes remain open.
Unchanged. Valmont has spent $116 million so far this year. By our math the fourth quarter needs $54 to $84 million to land in the range, above this quarter's $46 million. The spending goes mainly into Utility capacity, and the ramp costs of that capacity already sit in this quarter's segment margin.
Unchanged. The rate this quarter was 25.6%, and 25.7% for the year so far, both just under the plan. A higher rate than last year's 23% is one reason profit per share grew more slowly than pre-tax profit this quarter.
❓ Key Questions
How much of Utility's 23% growth was volume?
The release says higher pricing and volumes without splitting them. Price tied to steel reverses when steel falls; volume from new capacity does not. The split decides how much of the growth survives a drop in input costs.
Which product line placed the $333 million of new orders?
Valmont reports one Infrastructure backlog. If Utility placed most of it, the order book confirms the capacity plan; if quick-turn lines did, the backlog will drain faster than the headline suggests.
Where do the customs inquiries on Mexican steel imports stand?
The outlook assumes no change in tariffs, but the last filing described differing customs rulings on particular entries. A broad ruling at the higher rate would hit the Utility cost base directly.
When does the new Utility capacity start shipping?
Ramp costs already weigh on the segment margin, and the plan for next year depends on that capacity landing. A named plant and a date would let readers test the 2029 targets.
Will Valmont split Agriculture's aftermarket and technology sales again?
Those lines are the stated reason the segment holds its margin in a downturn, but since the January reporting change nobody outside can see them. One figure a quarter would settle whether the margin gain is durable.