VMI Q3 Deep Dive: Infrastructure Strength Offsets Agriculture Weakness, Margin Expansion Continues

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Infrastructure and agriculture equipment manufacturer Valmont Industries $(VMI)$ reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 2.5% year on year to $1.05 billion. ...

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The company expects the full year’s revenue to be around $4.1 billion, close to analysts’ estimates. Its non-GAAP profit of $4.98 per share was 7.8% above analysts’ consensus estimates. Is now the time to buy VMI? Find out in our full research report (it’s free for active Edge members). Valmont (VMI) Q3 CY2025 Highlights:Revenue: $1.05 billion vs analyst estimates of $1.03 billion (2.5% year-on-year growth, 1.5% beat)Adjusted EPS: $4.98 vs analyst estimates of $4.62 (7.8% beat)Adjusted EBITDA: $163.1 million vs analyst estimates of $161.2 million (15.6% margin, 1.2% beat)The company reconfirmed its revenue guidance for the full year of $4.1 billion at the midpointManagement raised its full-year Adjusted EPS guidance to $19.10 at the midpoint, a 6.1% increaseOperating Margin: 13.5%, up from 12.3% in the same quarter last yearBacklog: $1.73 billion at quarter endOrganic Revenue rose 2.5% year on year vs analyst estimates of 2.1% growth (39.8 basis point beat)Market Capitalization: $8.18 billionStockStory’s TakeValmont’s third quarter results reflected steady execution in its infrastructure businesses, offsetting lingering headwinds in agriculture. Management attributed the 2.5% year-over-year sales growth to double-digit gains in Utility and Telecommunications, with CEO Avner Applbaum highlighting recent large project wins and operational improvements as key contributors. Meanwhile, the company faced continued pressure in agriculture, particularly from weaker North American grower sentiment and challenging credit conditions in Brazil. Applbaum noted, “We delivered net sales growth...with double-digit growth in Utility and Telecom,” crediting the company’s diversified portfolio and disciplined execution for the quarter’s stability.Looking ahead, management’s updated guidance is anchored by robust utility market demand, ongoing investments in capacity, and a focus on high-margin product lines. The company expects the infrastructure segment to benefit from data center expansion, grid modernization, and electrification trends. CFO Tom Liguori emphasized, “We are making progress toward our path to deliver $500 million to $700 million in revenue growth and $25 to $30 in EPS over the next three to four years,” pointing to continued investments in automation, brownfield expansions, and recurring revenue technology in agriculture as drivers supporting the improved outlook.Key Insights from Management’s RemarksManagement indicated that broad-based strength in infrastructure, supported by capacity investments, and focused cost control were primary drivers of margin expansion, while agriculture continued to face cyclical and regional pressures.\n\nUtility and telecom momentum: Strong demand from grid modernization and electrification, including data center projects, drove double-digit growth in Utility and Telecommunications. Management credited brownfield expansions and new technologies for increasing throughput and efficiency in these segments.\n\n\nAgriculture headwinds: The agriculture segment saw reduced equipment sales due to lower North American farmer sentiment and challenging credit conditions in Brazil. Management addressed a significant $11 million bad debt expense in Brazil, noting ongoing efforts to resolve outstanding receivables and stating that core margins, excluding one-time charges, remain healthy.\n\n\nAftermarket and tech growth: Aftermarket parts sales in agriculture grew 15% year over year, driven by the adoption of a new e-commerce ordering system. The company also highlighted increased revenue from technology offerings, such as the Accent 365 control panel, which expands recurring revenue opportunities by enabling connectivity across various irrigation brands.\n\n\nOperational efficiency progress: Cost discipline and resource allocation initiatives led to a 6.4% reduction in corporate expense, supporting margin improvement. Management pointed to ongoing efforts to streamline the legal entity structure and reduce reliance on outside service providers as contributors to long-term internal efficiency gains.\n\n\nProduct mix and pricing: The infrastructure segment’s margin gains were attributed to a favorable shift toward higher-margin offerings, as well as successful pricing actions taken earlier in the year to offset input costs, including those related to tariffs. Management expects these benefits to persist as new capacity comes online.\n\nDrivers of Future PerformanceValmont’s outlook is rooted in sustained infrastructure demand, execution of capacity investments, and a shift toward higher-margin, recurring revenue products, though agriculture faces ongoing volatility.\n\nInfrastructure growth drivers: Management believes persistent utility grid investment, driven by electrification, data center proliferation, and manufacturing onshoring, will continue to support order momentum. Brownfield expansions and automation are expected to boost capacity without significant fixed cost increases, supporting future operating margin stability.\n\n\nAgriculture recovery potential: While the agriculture segment faces near-term pressure from soft crop prices and credit constraints in Brazil, the company points to long-term opportunities in international markets and technology adoption. Management expects the e-commerce platform and recurring-revenue tech products to drive margin improvement once regional headwinds abate.\n\n\nMargin sustainability and risk: The company is focused on maintaining operating margins through disciplined cost control and strategic resource allocation. However, management cautions that further agriculture bad debt or unexpected operational disruptions could present risks to achieving projected profitability levels.\n\nCatalysts in Upcoming QuartersLooking ahead, the StockStory team will be monitoring (1) the pace at which new utility and telecom capacity is absorbed, (2) signs of stabilization or improvement in agriculture margins and bad debt management, and (3) continued progress on operational efficiency and cost discipline. We will also watch for the success of aftermarket and technology offerings in driving recurring revenue growth, particularly as international agriculture markets evolve.Valmont currently trades at $415, up from $408.58 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members). High Quality Stocks for All Market ConditionsDonald Trump’s April 2025 \"Liberation Day\" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities. The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today. StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI?  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