Valmont Industries, Inc. Q4 2025 Earnings Call Transcript

Valmont Industries, Inc. (NYSE: VMI) Q4 2025 Earnings Call dated Feb. 17, 2026

Presentation

Operator

Greetings and welcome to the Belmont Industries Incorporated fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. We ask that you please limit yourself to one question and one brief follow up question and return to the queue. If anyone should require operator assistance during the conference, please press Star0 on your telephone keypad. Please note this conference is being recorded.

I will now turn the conference over to your host, Renee Campbell, Senior Vice President, Capital markets and risk. Ms. Campbell, you may begin.

Renee L. Campbell — Vice President of Investor Relations and Corporate Communications

Good morning everyone and thank you for joining us. With me today are Abner Applebaum, President and Chief Executive Officer Tom Liguori, Executive Vice President and Chief Financial Officer and Eric Johnson, Chief Accounting Officer. Earlier this morning we issued a press Release announcing our fourth quarter and full year 2025 results. Both the release and the presentation for today’s webcast are available on the Investors page of our website@valmont.com A replay of the webcast will be available later this morning to stay updated with Valmont’s latest news releases and information. Please sign up for email alerts on our investor site.

We’ll begin today’s call with prepared remarks and then open it up for questions. Please note that this call is subject to our disclosure on Forward looking statements which is outlined on slide 2 of the presentation and will be read in full after Q and A. With that, I’d now like to turn the call over to Abner.

Avner Applbaum — Executive Vice President and Chief Financial Officer

Thank you Renee Good morning everyone and thank you for joining us. I’d like to start with the full year highlights and key messages summarized on slide 4. 2025 was a solid year for Valmont. Our team delivered strong performance as they continue to navigate a mixed demand environment, delivering unique value added solutions for our customers. We strengthen our core to support future value creation. Our track record of success is grounded in a clear understanding of our customers need and our core strength in serving them. They’re managing multiple demand drivers including load growth, aging infrastructure and increasing complexity.

In this environment, reliability, quality and on time delivery are critical to their financial and operational performance. Delivering consistently at scale requires disciplined execution and that discipline guided our actions throughout the year. We simplified the business, sharpened our priorities and aligned capital and resources where execution drives the greatest positive impact. As a result, Valmont is more resilient, more aligned and better positioned to support our customers. I want to thank our nearly 11,000 employees around the world for their dedication and efforts throughout the year. Their work has strengthened the foundation of the business and positioned velmont well for what we expect to be strong growth in 2026 and beyond.

Turning to Slide 5, I want to highlight how our actions in 2025 are providing us with momentum as we move into 2026. In utility, customer demand for large scale projects to support grid expansion rising electricity loads remains strong. This past year we increased capacity to serve that demand through targeted investments in equipment layout optimization and workflow redesign. We also began deploying AI enabled scheduling and planning tools to improve throughput. Together, these actions position us to support continued growth in 2026 and beyond. In agriculture, we made progress this year on structural programs that improve profitability in a challenging market.

Our customers are looking to their partners to help them do more with fewer resources. We’ll continue to drive value through disciplined cost management and improving the customer experience with better parts availability and easier e commerce ordering. We’ll also advance integrated tech and innovation that improves efficiency for growers. Altogether, these efforts are positioning the business to emerge stronger when markets recover across the company. Disciplined resource allocation, an unwavering commitment to safety and continuous improvement remain foundational to our performance. Now turning to Slide 6 for an infrastructure market update. Starting with utility, utilities are planning multi year increases in capital spending to support load growth, grid expansion and resiliency.

Data centers and AI related infrastructure are contributing to that demand. Customers trust Valmont for complex transmission, distribution and substation projects where execution and reliability are critical. We entered 2026 with $1.5 billion in backlog, up 22% from a year ago, largely driven by utility. As our incremental capacity comes online, we expect to convert that demand and support continued profitable growth. We remain a trusted partner of choice across the full project lifecycle due to our market expertise, engineering capabilities and scale manufacturing. Our lighting and transportation business enters 2026 with a positive and improving outlook. Transportation markets are supported by ongoing DOT programs and infrastructure funding.

In North America, lighting demand is stabilizing. International markets are also contributing to growth. Our focus remains on disciplined execution. We are enhancing service level and operating performance as demand strengthens. Coatings is also positioned for growth in 2026. Demand is supported by infrastructure investment and expanding data center activity. This business remains a critical part of our value proposition. It protects steel structures, extends asset life and supports reliable long term infrastructure performance. In telecommunications, carrier capital spending has normalized our components. Business continues to benefit from alignment with carrier programs and a high service operating model. During the fourth quarter, we acquired the remaining 40% of Conceal Fab.

Full ownership of conceal fabric adds control of differentiated technology and an innovative product pipeline to our portfolio. It strengthens our ability to support customers investing in 5G broadband expansion and next generation wireless deployment. Overall, infrastructure enters 2026 from a position of strength. Demand trends are durable. Capacity investments are translating into better execution and improved throughput. Our focus on the right growth areas support continued Momentum turning to Slide 7 Looking at the demand outlook for agriculture in 2026, we see North America is stable. International is likely to be down compared to the first half of 2025, but broadly in line with the second half.

USDA forecasts suggest a cautious grower environment. Thus, we are not assuming a near term recovery in North American equipment demand and our outlook reflects a disciplined view of market fundamentals. At the same time, profitability is supported by pricing and cost discipline. Targeted investments in technology and our aftermarket platform are helping mitigate the impact of of lower equipment volumes even in a softer market. In Brazil, tight credit availability and delays in government backed financing continue to weigh on near term demand. Over the longer term, Brazil remains an attractive growth market. Strong economic conditions, multiple crop cycles and a compelling ROI for irrigation equipment support future investment in the Middle east and Africa.

Project activity is driven by food security priorities. Government led investment continue to support large scale irrigation projects. We continue to advance our strategic priorities in technology, aftermarket and international markets. These actions position agriculture to emerge stronger through the cycle. In January 2026 we acquired the remaining 80% of RationalMinds, a Canada based engineering firm with expertise in advanced irrigation controls, communication and connectivity. This acquisition strengthens the engineering capabilities of our Valley irrigation platform and advances our technology roadmap, enhancing our digital capabilities that support our products, systems and our global dealer network. Turning to slide 8 as we look to 2026, Belmont is positioned for a strong year of growth with the capabilities and scale to execute and create long term value.

This year we will celebrate our 80th anniversary. While the company has evolved significantly since its founding in 1946, the core values established at the beginning passion, integrity, continuous improvement and delivering results remain central to who we are. Guided by those values, we continue to invest in our people, capabilities and products to deliver more for our customers. Finally, I’m pleased to announce that we plan to host an Investor day on Tuesday, June 16th in New York City. We look forward to sharing a deeper view of our strategy and long term financial targets. More details will follow and we hope you’ll join us.

I’ll now turn the call over to Tom to review our financial results and 2026 outlook.

Thomas Liguori — Executive Vice President and Chief Financial Officer

Thank you Abner Good morning everyone and thank you for joining us today. Turning to Slide 10, our fourth quarter results include a few unusual items, so I’ll start with a summary of our top level results and explain the impact of these items on our earnings per share. GAAP EPS of $9.05 includes a tax benefit of 78.5 million or $3.98 per share, primarily due to a US tax deduction associated with the loss on our Prospera investment as we wound down business operations in 2025. The 78.5 million is excluded from adjusted EPS. It is also a cash flow benefit, approximately half of which is reflected in 2025 results and the remainder is expected to benefit first half 2026 cash flows.

Adjusted diluted earnings per share was $4.92 up 28.1% year over year. Adjusted EPS includes a 16.5 million legal reserve for our Brazil agriculture business related to cases involving various disputes dating as far back as 2019. In the fourth quarter we had an adverse court ruling on one of these cases and for the others entered into settlement discussions with parties involved, both of which led to the reserves. Adjusted eps also includes 11 million of credit losses in Brazil. As we explained last quarter, Brazil is operating in a tight credit environment which unfortunately is causing financial distress for farmers.

For total year Brazil agriculture expenses include $24 million of legal reserves and $26 million of credit losses for a total of $50 million. We believe we have fully accrued and covered our financial exposures in Brazil and do not expect additional unusual expenses in the future. Combined these expenses reduced adjusted EPS by $0.92 in the fourth quarter and $1.70 for the total year. The remainder of my comments will focus on the adjusted results as outlined in the press release and in the Reg G disclosure in the presentation appendix. Moving to our Segment results on Slide 11 Infrastructure sales of 819 million grew 7.2% compared to last year.

Utility sales grew 21% driven by strong market conditions, favorable pricing and higher volumes as a result of the capacity increases we have deployed. Congratulations to the utility team on their strong performance. Sales in lighting and transportation declined 5.3% due to continued weakness in the Asia Pacific market and North America production challenges that temporarily reduced output. In the fourth quarter. North America LT orders were stable as we enter 2026. Order rates are trending up and we anticipate having the production challenges resolved in the first half of the year. Coating sales increased 6.3% supported by healthy internal and external infrastructure demand.

Telecommunications sales were similar to prior year. Solar sales declined due to our decision to exit certain markets. Operating income was 1:49.6 million or 18.3% of net sales, an increase of 230 basis points as a result of our pricing actions. Volume growth and high value offerings and lower SG&A turning to slide 12. Fourth quarter agriculture sales decreased 19.9% year over year to 222.7 million. North America markets remained challenged. International sales declined due to the weakened economic environment in Brazil and lower project sales in the Middle East. Our agriculture segment had an operating loss of 3.3 million in the fourth quarter.

The loss includes the $27.5 million of legal reserves and credit losses mentioned earlier. Excluding these expenses, operating income was $24.1 million or 10.9% of sales. We expect our agriculture segment to have double digit operating margins in the first quarter of 2026 and remain there for the full year. Turning to Slide 13 in our full year income statement, net sales of $4.1 billion increased slightly year over year. Sales growth in infrastructure, particularly utility, was offset by lower agriculture sales. Operating income increased to $538 million or 13.1% of revenue. Operating income includes the $50 million of expenses, but the two significant items discussed earlier in our Brazil agriculture business.

Excluding these expenses, operating income would have been $588 million or 14.3% of revenue below the line interest expense decreased due to lower debt. Our adjusted tax rate declined to 23.2% due to the geographic mix of earnings and adjusted diluted earnings per share was $19.09, an increase of 11.1% over 2024. Moving to Slide 14 for cash liquidity and capital allocation. Fourth quarter operating cash flows were $111 million, bringing our full year total to $457 million. We ended the year with approximately $187 million of cash and net debt leverage of approximately one times. We invested $145 million in CapEx primarily for utility capacity expansion.

Free cash flow totaled $311 million, representing approximately 90% of net earnings. We deployed $102 million to acquire the minority shares from some of our joint venture partners. The majority of this was related to conceal fab, though we also acquired the minority share of agriculture businesses in Brazil and Argentina. Buying at the minority partners provides us with greater control flexibility to run these businesses. We returned $250 million to shareholders, including $52 million through dividends and $198 million through share repurchases at an average price of $327.65, moving to slide 15, we remain sharply focused on executing our key value drivers to catch the infrastructure wave.

We continue to invest in high return capacity expansion to drive revenue growth. During 2025, we deployed approximately $107 million of CapEx in our North America infrastructure business which contributed to the $143 million of utility revenue growth. In agriculture, we continue to invest in our aftermarket and technology businesses. Both of these initiatives are contributing tangible productivity benefits to our agriculture customers as well as dealers. A Milestone in the fourth quarter was that we started shipping our Icon plus control panels, which brings the Axentz 365 functionality to any Pivot brand, allowing growers to easily connect older or competitive machines.

Lastly, our disciplined resource allocation initiatives are progressing. Corporate expense for the full year declined $13 million to $97.8 million or 2.4% of revenues. I want to congratulate the corporate team for their work to streamline the organization and manage cost. In the fourth quarter, corporate expense declined to 1.9% of revenues compared to 2.9% last year. On the capital allocation front, we executed on our board authorized 700 million share repurchase program with approximately 200 million repurchase in 2025. We also acquired the minority shares of our joint ventures in telecom and agriculture for 102 million. Bringing it all together, we are making progress toward our Path to deliver 500 to 700 million in revenue growth and 25 to $30 in EPS over the next three to four years.

Turning to our 2026 outlook on Slide 16, net sales are projected to be between 4.2 to 4.4 billion. Diluted earnings per share are projected to be in the range of $20.50 to $23.50. At the midpoint, our guidance represents year over year revenue growth of 4.8% and EPS growth of 15.2%. Factors that would contribute to performance being at the top end of the range include additional utility revenue that could result from our initiative to enhance factory scheduling or bring on capacity faster than expected and or an improved market environment in agriculture during 2026. Factors that will contribute to being at the low end of these ranges include unanticipated delays in our capacity expansion plans such as equipment or construction delays or changes to tariff regulations that continue to evolve.

When tariffs change, we alter our supply chains and adjust pricing, though both require time to take hold and mitigate any increase in tariffs. Turning to Slide 17, these graphs illustrate the major drivers of our 2026 guidance at midpoint, starting with net sales, we expect growth in infrastructure, both price and volume, primarily in utility in agriculture, growth in aftermarket and technology, though a decrease in volume for eps. The drivers are earnings growth in infrastructure, primarily utility Improved earnings in Brazil as we covered our legal and credit exposures last year in 2025 improved earnings from our decision last year to exit certain solar markets Increased profits from the businesses we now wholly own such as conceal fab a benefit from lower share count due to our share repurchase program Reduced earnings from AG due to lower volumes.

We expect our tax rate to return to a more normal 26% and we have also adjusted for potential risk, which could include changes in global tariffs, commodity and steel cost, or other unforeseen events. All in all, we are confident in our ability to achieve the midpoint of guidance for the first quarter of 2026. We expect year over year growth in revenue and earnings per share. Before we close, we want to thank the entire Valmont team for their focus on moving our value drivers forward. With that, I will now turn the call over to Renee.

Renee L. Campbell — Vice President of Investor Relations and Corporate Communications

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

Question & Answers

Operator

Thank you. At this time we will be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys to allow for as many questions as possible.

Please limit yourself to one question and one follow up. One moment please while we poll for questions. And our first question will come from Tomo Sano with JP Morgan.

Tomohiko Sano

Good morning everyone. Thank you for taking my questions. On the utility sides, could you talk us through your confidence in the continued strong demand for this segment and have you seen any changes in customer investment appetite or competitive landscape? Please.

Avner Applbaum — Executive Vice President and Chief Financial Officer

Well, thank you for your question. We feel very confident with the strength in the utility market that has several strong drivers such as we’re seeing electrification, we’re seeing the AI and data centers, industrial onshoring, aging infrastructure replacement. So there are many drivers that support our outlook. On top of that we have daily conversations with our customers and we’re tied in to their multi year plan to make sure we’re strongly aligned overall with their growth investments. And you know it’s evident by when you look at our backlog, roughly $1.5 billion. It gives a pretty strong support for 2026 outlook.

We’re booking into 2027 and the utility customers are looking out the plans going through 2030 and beyond. So overall, to sum it up, we are very bullish about the utility market over the near and midterm future.

Tomohiko Sano

Thank you. Abner, follow up on ag. Could you talk about excluding one time items? What specific actions are you being taken to restore agriculture margins and when do you expect to see a meaningful recovery? Thank you.

Thomas Liguori — Executive Vice President and Chief Financial Officer

Thanks, Tomo. Well, we expect to see a meaningful recovery in this current quarter Q1 of 2026. And you know, we did take some charges in the fourth quarter. The goal was to get these problems behind us. Let me add some color on this. I think it’ll be helpful. You know, we spent a lot of time with the Brazil team and did a deep dive of their balance sheet, their receivables, customer by customer, inventory.

And Avner and I went down to Sao Paulo. We met with our outside legal counsel to go through these cases. So we feel like we understand these exposures and we feel like we have them covered now. That said, you know, the Brazil economy still has high interest rate, crop prices are low. So we’re not saying there will be none, but we feel we have covered it in our guidance going forward. We’ve taken a number of steps in Brazil to strengthen the foundation. You know, Tomo, in the end Brazil is an excellent market for us which we believe is going to grow for years to come.

You know, they have multiple crop cycles. So the things we have taken, we did hire a new outside legal counsel, we added a lawyer, we replaced our finance, finance leader there. So I think we’ve taken the appropriate steps there. So given that those are, are behind us, you know, in the fourth quarter we were at a 10% excluding those we, you know, North America is doing quite well. I do want to bring out that the North America came in ag. They’ve been at a double digit operating margin throughout 2025. So we think that’s going to continue in the Middle East.

We expect to get more project wins as we get into the middle year that will help our margins. And we think, you know, Brazil, you know, we’re not expecting a lot from Brazil in our, in our, in our guidance for 2026. But you know, we have a great team there and things going forward. So we think, we believe, and we’re confident you will see a substantial uptick in our margins in agriculture in our first quarter.

Tomohiko Sano

Thank you, Tom. You bet.

Operator

And our next question comes from Nathan Jones with Stifel.

Nathan Jones

Good morning everyone. I guess I’ll start with Trying to put a finer point on the AG margins, double digits, a pretty big range there. Tom, is there any kind of finer point you can put on where you expect them to be in the first quarter and where you expect them to be for the full year? We think we’ll be in the low teens in the first quarter, maybe approaching the mid teens by the end of the year. That’s helpful I guess. The second question I’m interested in is the increasing capital spending in 2026 over 2025, which is probably a good thing, right? I assume that’s going to utility capacity expansions.

So can you talk about kind of what you’re doing there? I think you guys had talked about 100 million capex in that business to add 100 million capacity per year for the next few years. Is that now not enough to keep up with the demand? We need to ramp that up a little bit. And are you expecting to stay above that 100 million for the next few years? Thanks.

Avner Applbaum — Executive Vice President and Chief Financial Officer

Thank you. Nayatim. Let me start off with what’s behind the step up in capital. And in our guidance we said we’re going to spend 170 to 200 million doll in 2026 primarily directed towards utility. We can continue to see by durable multi year demand, as I mentioned earlier, by load growth, grid expansion and resiliency. The approach we took, right, we’re doing brownfields, we’re adding equipment, we’re modernizing our lines, we’re improving our flow, increasing automation using AI and all that is in our existing footprint which will increase our throughput. And it is all supported by, you know, the industry, our customer commitments, our customers view and that’s the disciplined approach we’re taking.

You know, we’re going to see TDNs, we’re going to see the utility business grow high single digits, low, low double digits over the foreseeable future, probably to the end of this decade. And when we take those investments, they’re adding incremental capacity, right? We’re getting in excess of 20% on each one of those investments. And as we continue to optimize, we’re even going to see more than that. So they’re overall, they’re very high return projects. We believe that’s the number one area for us. It supports our OIC, it supports our path to 30. Now specifically about your questions about 100 million, driving 100 million, we’re actually very pleased with the output we’re getting from their capital.

And I can say that we’re doing considerably better than $1 of investment for $1 in sale, and it’s multiple projects or a little differently, but we’re getting very strong ROI from our investment. So just to sum it up right, it’s disciplined scaling. We’re adding the capacity where the demand is visible, and it has very strong returns.

Nathan Jones

Great. Thanks for taking my questions.

Operator

Moving next to Chris Moore with CJS Securities.

Christopher Moore

Hey, good morning, guys. Maybe just talk a little bit about balance sheet. Are there certain areas, you know, perhaps product lines where Valmont is using could be using its balance sheet to trade better price for less prepayments?

Avner Applbaum — Executive Vice President and Chief Financial Officer

Well, we’re a leader in the markets. We’re differentiated. We get good pricing, so we’re not really looking at doing that. What we do see is we see opportunities to use our balance sheet. Number one, we have low leverage, gives us the cash to to really explore all different types of opportunities. And Chris, actually we see an opportunity in things like our working capital to continue to make improvements.

You know, I want to say I think our team has done an excellent job on the inventory and receivables and bringing those down. You know, we have some elevated, what we call on the balance sheet contract assets, which is basically the work in process for our utility customers. You know, that’s been kind of elevated because of the volume going through. And you know, we have some growing pains there, but we see an opportunity to bring down our working capital long term. It should be 90, 95 days. So I wouldn’t say we’re going to trade our balance sheet for price.

I would say we’re going to use our balance sheet for growth.

Christopher Moore

Got it. Makes sense. And maybe just on the ag side in terms of obviously still, you know, a soft market, but what types of things can you do perhaps to get a higher share of. On the aftermarkets part side of a soft ag market, you guys are, you know, the replacement process is, I guess, one of your strengths, making things very easy for the farmers and dealers. Maybe. Could you just talk in terms of kind of the aftermarket side of things and, you know, kind of momentum that you might have there?

Thomas Liguori — Executive Vice President and Chief Financial Officer

Yeah, you know, we’ve put a lot of lot of resources into this. And I got to say, the acting did an excellent job with the E commerce system. The farmer can be in the field, they can figure out what part they need, they can place an order with the dealer and hopefully get it in the next day or so. That’s just job well done. What we’re working on is making sure we have the proper inventory positioned through the field. And I think the latest one Is we want to take this and do more of it on our international regions. So more to come and there’s more upside in that.

Christopher Moore

Sounds good. I will leave it there. Appreciate it, guys. Thanks, Chris.

Operator

Again, that is Star One. If you would like to ask a question. And we’ll go next to Brent Thielman with DA Davidson.

Brent Thielman

Hey, thanks. Good morning. Yeah, I want to follow up on utility. Appreciate the outlook bridge as well and the deck. But the 150 million in growth assumed for the utility piece, 26 versus 25, I guess if we assume sort of a stable fuel price environment. Is there, is there still sort of a higher potential ceiling for that business this year or does that sort of limit out just based on the capacity you’ll have in place this year?

Thomas Liguori — Executive Vice President and Chief Financial Officer

You know, I gotta say the operations team is doing a great job of getting the, the capacity in place.

And I think you’re asking is there some upside in the utility and definitely we think there’s some, some upside there.

Brent Thielman

Okay. Okay. And then on the, on the AG side, Tom, I think I heard you mention, you know, looking towards some, maybe some potential wins on the project side, maybe more mid year. Does the outlook for that business sort of assume kind of pressure through first half, then a stronger second half contingent on winning these projects? Maybe if you could just clarify that.

Thomas Liguori — Executive Vice President and Chief Financial Officer

Yeah, I think we’ll have a slower first quarter, probably a slower first half and as these come in, that’ll improve. But.

Avner Applbaum — Executive Vice President and Chief Financial Officer

Yeah, let me just add a little bit. The underlying demand drivers for that region are intact. Right. Food security, domestic production. But we take a very disciplined and selective approach to the projects. It’s important that we meet our financial thresholds. There are several opportunities. They didn’t reach the finish line yet. We’re pretty confident in the pipeline, our ability to convert them in line with our financial criteria. So we’re going to make sure when we win these projects we’re happy with the returns overall. As you know, it’s, it’s a lumpy business, but the long term drivers are solid.

Brent Thielman

Okay. Hey, great. Thank you.

Operator

Moving next to Brian Drab with William Blair.

Brian Drab

Hi, thank you. I just wanted to. Hi, thank you. I just wanted to follow up on that utility growth. This bridge is really helpful. And of course I think 150 million incremental in utility indicates about 10% growth in the outlook for utility for 2026. I’m just wondering, is that how to think about it and then how do you expect price and volume to contribute to that 10% growth proportionally?

Thomas Liguori — Executive Vice President and Chief Financial Officer

Yeah. So you’re Correct in your assumptions. And you know, most. In 25, I would say there was more price than volume. In 26 there’s more volume than price.

And as Abner said, we’re starting to see drop through from these capacity expansions in the mid to upper 20%, even approaching 30%. So we feel really good about where the utility business.

Avner Applbaum — Executive Vice President and Chief Financial Officer

Yeah. And I’ll just add. Right. When you think about the volume and price. Right. It really represents a strength in the market. But you think of price. We have a very strong value proposition for our customers in a constrained environment. It is mission critical parts with high level of complexity. It needs to deliver on time with the highest quality to make sure we could support their operational needs. And it’s significant value to our customers and that is the price that we command in the market.

Brian Drab

Got it, thank you. And then on the non utility infrastructure piece, it looks like that’ll be up about 3%. You know, I’m just wondering, is it fair to assume that you know, you get some more growth maybe in telecom, but lighting and transportation and coatings is roughly flat or do you see any growth in those other pieces?

Thomas Liguori — Executive Vice President and Chief Financial Officer

We still have growth in all three, meaning coatings as well. So coatings, telecom, L and T. Yeah.

Avner Applbaum — Executive Vice President and Chief Financial Officer

And you know, at the highest level. Right. Telecom, we see our carriers continue to invest in, you know, they are in the execution phase. They’re investing in wireless and ran. So we kind of see that growing in the low to mid single digits. Coatings has a very strong driver around data centers and AI and on the lighting and transportation. We’re seeing good progress about the initiatives that we took in 2025 around enhancing our leadership, investing in the operations, deselecting of non core products and overall seeing growth driven by dot spend and stabilization in the international market.

So at the high level we should see growth across the infrastructure segment.

Brian Drab

Okay, thanks Avner, for coatings. Obviously tailwind within your own, you know, the intersegment work that you do for your utility business and data center AI. What other tailwinds does that business see from data center and AI? Yeah.

Avner Applbaum — Executive Vice President and Chief Financial Officer

So structurally the coatings business supports our internal business which is a strong value proposition for our customers. But we have a strong third party business within the coatings with the highest net promoter score in the industry. And it’s broad based. But we are taking a strategic approach to support the states, the regions, the industry where we’re seeing growth. You look at the Midwest or Southwest where you’re seeing a lot of good investments around infrastructure growth and data centers and AI. So we’re aligned well and we should see that business contribute to our growth in 2026.

Brian Drab

Can I just sneak in one more to Tom? You know, Tom, I think on the last call it was you mentioned that the incremental margins, operating margins on the additional capacity and utility were coming in. I think you’re phrasing with something like well above 20%. How is that incremental margin on that additional capacity looking? Lately?

Thomas Liguori — Executive Vice President and Chief Financial Officer

It’s mid to upper 20% range. And you know, actually we think through 2026 is approaching 30%. So it’s looking very positive. And you know, why is that? That’s because when we’re adding this capacity, you know, the whole approach is add incremental capital, get more throughput through that journey, improve the flow.

So we’re getting a lower unit cost as well. So, you know, applause to the OPS team for the work they’re doing.

Brian Drab

Perfect. Thanks very much.

Thomas Liguori — Executive Vice President and Chief Financial Officer

Thank you, Brian.

Operator

And we have reached the end of the question and answer session. I will now turn the call over to Renee Campbell for closing remarks.

Renee L. Campbell — Vice President of Investor Relations and Corporate Communications

Thank you for joining us today. A replay of this call will be available for playback on our website and by phone for the next seven days. We look forward to speaking with you again next quarter. These slides and the accompanying oral discussion contain forward looking statements within the meaning of the Private Securities Litigation Reform act of 1995. These statements are based on assumptions made by management considering its experience in the industries where Valmont operates, perceptions of historical trends, current conditions, expected future developments and other relevant factors.

It is important to note that these statements are not guarantees of future performance or results. They involve risks, uncertainties, some of which are beyond Valmont’s control and assumptions. While management believes these forward looking statements are based on reasonable assumptions, numerous factors could cause actual results to differ materially from those anticipated. These factors include, among other things, risks described in Valmont’s reports to the securities and Exchange Commission, the Company’s actual cash flows and net income, future economic and market circumstances, industry conditions, company performance and financial results, operational efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, geopolitical risks and actions and policy changes by domestic and foreign governments, including tariffs.

The Company cautions that any forward looking statements in this release are made as of its publication date and does not undertake to update these statements except as required by law. The Company’s guidance includes certain non GAAP financial measures, adjusted diluted earnings per share and adjusted effective tax rate presented on a forward. These measures are typically calculated by excluding the impact of items such as foreign exchange, acquisitions, divestitures, realignment or restructuring expenses, goodwill or intangible asset impairment, changes in tax laws or rates, change in redemption, value of redeemable non controlling interests and other non recurring items.

Reconciliations to the most directly comparable GAAP financial measures are not provided, as the Company cannot do so without unreasonable effort due to the inherent uncertainty and difficult difficulty in predicting the timing and financial impact of such items. For the same reasons, the Company cannot assess the likely significance of unavailable information which could be material to future results.

Operator

Ladies and Gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines and have a wonderful day. Sa.