Participants

Renee Campbell; Senior Vice President - Investor Relations, Treasurer; Valmont Industries Inc

Avner Applbaum; President, Chief Executive Officer; Valmont Industries Inc

Thomas Liguor; Chief Financial Officer; Valmont Industries Inc

Presentation

Operator

welcome to the Valmont Industries, Inc. third quarter 2024 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 and we follow up and return to the queue. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Renee Campbell, Senior Vice President, Investor Relations and Treasurer. Thank you. You may begin.

Renee Campbell

Thank you and good morning, and welcome to Valmont Industries' Third Quarter 2020 Earnings Call. With me today are Avner Applebaum, President and Chief Executive Officer, Tom Liguori, Executive Vice President and Chief Financial Officer, and Tim Francis, Chief Accounting Officer. This morning, Evan will provide a summary of our third quarter results, current market dynamics and strategic priority. Tom will review our third quarter financial performance and provide our outlook for the year. This will be followed by Q&A. A live webcast of the presentation will accompany today's call and is available for download from the webcast or on the investor site at Valmont.com. A replay will be available on our website later this morning. Please note that this call is subject to our disclosure on forward-looking statements, which applies to today's discussion is outlined on slide 3 of the presentation, and we'll be we'll be read in full at the end of today's call. Finally, to stay updated with Valmont's latest news releases and inflammation, please sign up for e-mail alerts on our investor site. We also invite you to follow Valmont in our brands on the social media channels linked on our website. With that, I would now like to turn the call over to Avner.

Avner Applbaum

Thank you, Renee, and good morning, everyone, and thank you for joining us. I'd like to begin by extending our thoughts to everyone impacted by Hurricanes Harvey and I notice top priority during events like this is always the safety and health of our employees are relieved. All our employees are safe, and I'm incredibly proud of our local leaders for providing resources and assistance where possible. Although a few of our facilities and child or brief interruption, we do not expect any disruption to our overall operations from the fourth quarter for us recover from the hurricanes. Our infrastructure teams are working to help restore damaged structures and assess future needs in our ag teams are assisting Valley dealers to repair and replace damaged irrigation equipment from proud of our teams with and compassionate responds to local news during this difficult time. Now turning to key messages on Slide 5. We delivered another quarter of solid performance, growing operating profit and expanding operating margins year over year despite lower sales. Our results were driven by effective commercial and operational execution, pricing discipline and have fundamentally improved cost structure. Sure. This reflects our focus on key areas to enhance profitability and return on invested capital. We also generated strong operating cash flows of 225 million, further strengthening our balance sheet, I wanted to extend my thanks to our global team of more than 11,000 employees for their dedication and hard work in driving these accomplishments. Their collective effort has been instrumental in not only delivering a successful quarter, but also laying the foundation for our future success. Building on that, I'm excited about the long-term outlook for our business to drive growth. We've intentionally aligned with customers' end markets. Positions have benefited from multiyear secular megatrends was strong competitive advantages and a focus on customer driven innovation. Our core businesses are well positioned to outpace market growth. As these trends continue this quarter was filled key roles on our executive leadership team through strategic hires and an internal promotion. This includes Tom. We joined us on today's call, and I will share more detail shortly. We're making solid progress on our strategic priorities. We've streamlined the productive while also structurally reducing our costs. We focus our go-to market strategy on high return opportunities, and we're effectively managing working capital to maximize cash flow to support our capital allocation framework. This continuous improvement mindset is creating a high-performance culture, driving results and increasing ROIC. While I'm encouraged by the progress we've made on our strategy, there's still work to be done. I'm energized by the strength of our leadership team and confidence in their ability to further advance its execution. Turning to Slide 6 for current market dynamics and long-term megatrends for infrastructure business. Starting with utility, we were very pleased with the strong growth this quarter on a prior year and sequential basis, utility CapEx spending has increased to meet both growth expectation and is expected to remain elevated for many years. Key factors like electrification, industrial development and the rapid expansion of data centers are driving the need to upgrade existing systems and invest in new capacity . At the same time, utilities are investing and resiliency to combat aging infrastructure and be better prepared for extreme weather. Some of our customers better withstood the challenges posed by the recent hurricanes, highlighting the continued importance of proactive grid investments. Turning to our lighting transportation business. Sales were lower this quarter. While some of the decline was due to market factors and timing of projects, we also see clear opportunities to improve execution moving forward. On a positive note, order rates for our US transportation business are trending higher year over year, driven by DOT infrastructure investments. We expect this favorable trend to continue Monday . Turning to lighting, our business historically lags single-family housing starts by about 12 months. So all these markets remained soft. In the near term, we expect our business to recover with the housing market rebound and continued suburban sprawl. Turning to telecommunications, we were pleased to see sales growth this quarter. Wireless carriers have returned to more normalized spending levels, which are expected to remain above previous cycles. This signals steady demand as we look ahead to next year. Over the long term, the adoption of advanced technologies such as 5G and more connected devices will require a more robust network. We're well positioned for growth both in the US and key markets abroad. In solar cells and lower partially due to this as deselect to have certain low margin projects, which we announced last quarter. So also seeing some near term lumpiness as we adapt our strategy to market changes. Looking ahead, we're focused on selling our solar tracker solution. We were confident in our competitive advantages for distributed generation and select utility scale applications . Finally, our coatings business generally aligns with GDP. trend of the regions we serve while supporting our internal production. Turning to Slide 7 for current market dynamics and long term mark mega trends for the ag business, North America sales were slightly lower last month. The USDA released an updated estimate for 2024 net farm income, which continues to show a decline from 22 three. They also have a forecast that current average crop prices will be lower than last year. Notably, corn prices have declined 37% over the past three years, and soybeans are down 24%, which continues to weigh on grower sentiment. Turning to international market share due to lower soybean prices, but we're encouraged by an improvement in order entry compared to last year. Brazil remains a key component of our long-term growth strategy. Currently only 10% of Brazil's agricultural land is irrigated with the potential to expand nearly sixfold, unlocking significant opportunities for growth in the irrigation industry. Center pivot offers a compelling return on investment, increasing profitability for growers and creating growth opportunities for us. Our international projects are progressing well, especially in Egypt and the Middle East with a robust pipeline ahead. Growing population and geopolitical tensions have elevated concerns about food security driving increased demand for these projects. Turning to slide 8, I'm excited to announce the key additions to our executive leadership team. Starting with Tom Liguori was joined us as CFO. Tom brings over 30 years of finance experience, including previous CFO roles at Avnet and Advanced Energy, where he successfully led global finance strategies that have drove growth, increased profitability and improved working capital. I'm excited to partner with time as we work together to execute our strategy. Okay. Sales of that want to take a moment to thank Tim Francis for stepping in as Interim CFO. Tim will continue to play a crucial role within our finance organization as Chief Accounting Officer. I'm also pleased to announce that there Will Matthews has been appointing appointed Group President of agriculture there as well regarded ag industry thought leader with expertise in global markets and dealer channel management . His leadership at Trimble, where he played a key will be in value. We will as we execute our strategy for industry-leading mechanized irrigation solutions. In addition, I'm excited to share the promotion of Jennifer Paisley, Senior Vice President of Human Resources was over 20 years of age. Our experience, including seven years at Velma . Jan has considered certainly demonstrated strong leadership and deep alignment to our core values, making her the ideal choice to lead our HR function. With these appointments and the strength of our existing executive, we have the team in place, certainly Velma forward. Each decision has been intentional insurance. We have the right talent in place to align with our strategic goals and uphold our culture. To summarize, our long-term growth outlook for both infrastructure and agriculture remains strong. We are well positioned in enduring markets with sustained multiyear demand drivers. With a search with a sharpened strategic focus, we're ready to capitalize on growing infrastructure demand, which will enable us to further expand margins. In addition, we remain optimistic about our growth potential in our ag business as the market recovers to capture future opportunities and continue delivering value to our shareholders. Now I'll turn it over to Tom for our third quarter financial review and an updated 2024 outlook.

Thomas Liguor

Thank you, Avner and thank you for having me as part of your team. Good morning, everyone. Overall, we are pleased with the financial results this quarter. Revenues were in line with expectations. Operating margins once again increased year over year as we were disciplined in pricing, exiting lower margin businesses and controlled our costs. Cash flow was a very healthy $225 million in. I want to congratulate the team and their hard work in this area. We know there is more we can and will do and revenue growth and operating margin expansion. We believe our financial results show that we are on the right path. Turning to slide 10, my comments will focus on our actual third quarter results compared to last year's, which are in an adjusted basis. Excluding nonrecurring items, net sales of 1 billion, delayer by region sales increased in our North American markets by 2.9%, largely due to growth in our utility and telecom businesses. International sales declined primarily in agriculture due to lower sales in Brazil in ultimately nurse Infrastructure segment, mostly due to lower solar sales. Our international businesses are very imperfect to buy online . And when I think our international team for controlling costs and managing cash flow during this period, operating income increased 4.9 million to $125.7 million in the quarter. Operating margin improved a healthy 80 basis points to 12.3% of net sales, while our gross margin slightly declined due to lower margin international AG projects to define was more than offset by lower SG&A costs for team's efforts to control expenses and streamline the cost structure for having a favorable impact on profitability. Earnings per share of $4.11 for similar to last year. The benefit of improved operating income and a 4.2% lower share count from share repurchases was offset by foreign currency losses in a more normalized tax rate as one-time tax benefits recognized in 2023. Turning to the segments to Slide 11. Infrastructure sales of 758,600,000.0, increased slightly year over year, and operating income grew 14.5% to $123.7 million in telecom was largely offset by lower sales in LNT. and sellers. Our utility business grew nearly 15% year over year to $342.4 million in new contributes a third of our revenues. Product mix continued to trend towards distribution substation, a smaller transmission structures. Consistent with recent quarters. Average selling prices for utility products were higher year over year and contributed to higher operating margins from overall, we are extremely pleased with performance of this team. Lighting and transportation revenues of $229.2 million declined 9.3% year over year. Revenues were impacted by market softness in lighting for strategic exit of some lower margin products and transportation project timing. As Andrew mentioned, we're encouraged by higher order rates in our transportation business and expect our lighting business to recover has a housing market rebounds. Coating revenues were relatively flat year over year. Both in North America was offset by lower sales in international markets. For telecommunications business grew close to 8% year over year, while in carrier spending in North America rose modestly. Our initiatives to ensure we have the right inventory at the right place for quick turnaround of customer orders are paying off. Solar revenues declined 21.3 million or 38.1% year over year due to large international utility-scale projects in 2023. It did not repeat this year, and our decision to exit lower margin contracts or Solar team is nearing completion of a product redesign for our go-forward business. Please say solar revenues to remain at current levels through the first half of 2025 show growth in the second half. Across the segment, pricing and mix were favorable. Infrastructure and operating income increased 16.3% of net sales grew 200 basis point improvement. This was driven by the growth in utility and telecom, improved pricing in most markets, lower SG&A expenses and lower steel costs. Moving to Slide 12. Ag sales of 265.3 million decreased 11.1% year over year. In operating income decreased 25% to $28.9 million. In North America. Irrigation equipment volumes were slightly lower, has continued soft demand in ag markets was partially offset by the increase in replacement sales as a result of the Midwest storm events during the second quarter. Here again, selling prices for similar to last year. International sales decreased primarily driven by lower sales in Brazil has lower grain prices are impacting grows buying decisions. This was partially offset by growth in the EMEA region and the contribution from the Air Products acquisition that was completed in Q3 2023. Agriculture operating income decreased to $28.9 million or 11% at the net sales, a 200 basis point decline. The benefit of reduced SG&A expenses was offset by the impact of lower volumes and a higher mix of project sales. Turning to cash flows and liquidity on Slide 13. Q1. Operating cash flows were strong $225 million, bringing the year-to-date total to $379 million. We ended the quarter with approximately $200 million in cash. We expect cash flow. Some moderate in the fourth quarter has our buying and we were incurring additional CapEx as part of our capacity expansion program. During the quarter, we reduced borrowings on our revolving line of credit by $120 million during the totally year to date and reduction to $210 million. Net debt to adjusted EBITDA is now 1.2 times. Our cash balances available credit concessional balance sheet provides us ample liquidity to execute our capital allocation strategy. Turning to slide 14 for a summary of capital deployment. Year-to-date capital spending was approximately 54 million. Our infrastructure operations team is making progress on capital projects to expand our production capacity. Our acquisition strategy is focused on opportunities that fit within our strategic priorities, expand our market and product reach to contribute to earnings growth. We will be very selective in the M&A process to ensure a healthy ROIC. and accretive earnings. Returning cash to shareholders is a core foundation of our capital allocation. So far this year, we returned $91 million of capital to shareholders through dividends and share repurchases. Over the past 12 months that tone reaches $283 million. Additionally, $81 million remains available under our Board-approved repurchase program. Turning to slide 15, our 2020 for our outlook remains unchanged. Full-year net sales are expected to decrease between 1.5% and 3.5% compared to last year. Turning to infrastructure, full year net sales are expected to be between flat to up 1.5% compared to prior year. As mentioned last quarter, infrastructure for gross margins in the second half of this year, we expect it to be lower than the first half. Steel costs become more aligned with contractual steel index. Pricing to our customers for net sales are expected to be down between 10% and 15% compared to prior year. As mentioned last quarter to a higher mix of international projects, which have lower margins for reduced fourth quarter segment operating margins. Diluted earnings per share are expected to be in the range of $16.50 to $17.30. In summary, our third quarter revenues were in line with expectations. Operating margins increased year over year due to our pricing discipline, exiting lower margin businesses and controlling our costs. Cash flow is a very healthy $225 million. Our outlook for full year 2020 for revenues and EPS are unchanged. We're pleased with our performance and are excited about our markets and opportunities in the years ahead. Lastly, I wanted to take a moment to say I am honored to be Chief Financial Officer, Valmont. That mine has a rich history of being market leaders, strong financial performance, our businesses held trade vital infrastructure and increased agricultural productivity to feed the world. I can honestly say that I am excited about the secular growth trends in our industry and our opportunity to significantly grow our business over the next several years. I look forward to supporting Avner and working with the entire team to drive revenue growth and expand operating margins. Our focus will be and earning a healthy ROIC and providing our shareholders with reliable and predictable returns on their investment in our company. On a personal note, my wife, Christie and I have already relocated to Omaha and we are thoroughly enjoying the community and look forward to meeting many of you over the coming months and sharing our vision for the future of our company. I will now turn the call back over to Rene for doing Q&A.

Question and Answer Session

Operator

Thank Tom. At this time, the operator will open up the call for questions. Thinking at this time we'll be conducting 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'd like to remove your question from Nick in 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 thinking. Our first question comes from the line of Chris Moore with CJS Securities. Please proceed with your question.

Hey, good morning, guys. Thanks for taking a couple of questions. Maybe we'll start with operating margins. So the goal is to approach mid-teen operating margin over longer-term margins were quite strong at 24 despite the soft revenue, it looks like steel pricing and lower cost structure were two. Is the big drivers. Just if you assume no benefit from steel in 2025, are you going to need meaningful improvement in agriculture to maintain the same level of operating margins there close to 30%

Avner Applbaum

Thank you. This is Anver. I'll take the question of silver. We're very pleased with our performance in 2020 for expanding operating margins are getting closer to our overall goal of achieving close to mid to mid 10s operating margin. So very pleased with the performance we've done by in many areas around our pricing leadership, our continuous improvement on driving the value to our customers by overall great performance. Yes, we did have some one-time cost tailwinds this year. Some of them are more one-time in nature. We did take some strategic actions around our pricing power purchasing scale. I mean, some of it was just the benefit of the of the steel deflation. So we do have some one-time benefits and in which will not occur in 2025. So to answer your point plays, we're pleased with what we've done on. And Tom, maybe just one add a little bit earlier.

Thomas Liguor

Yes. Well, first of all, Chris, I think we feel good about the operating margins going forward. And we're going to have revenue growth, very good, good markets. We've controlled our SG&A costs and we fully expect to have our SG&A cost increases be less than our revenue growth. So that will help our operating margins were expanding capacity in our plants. So it was more throughput will have better efficiencies in our factories. And I think we're really pleased and proud of the team with their disciplined in pricing that they have as well. As you know, exiting lower margin businesses has been has been maybe a painful process, but that that's going to help our operating margins going forward. So I think we feel we feel good going forward. And, you know, near term, yes, we do have the headwinds from our steel deflation, and we do feel that this quarter maybe we're at a more normalized rate like we have a better matching of where our contract pricing is in steel costs. And this quarter, we have a higher mix of agriculture opinion national projects, which are which are at lower gross margins. But listen for I don't understand, is they have very healthy return on invested capital because we get advance payment, there's less capital tied up. So. So overall positive sentiment on offer operating margins going forward.

Very helpful. Appreciate that. Maybe just my last one in knows my benefited from replacement sales driven by the severe weather events. Just trying to get a sense as to how much longer that benefit will carry over into Q4 and into 25 where you still going to see some positive impact from that?

Avner Applbaum

Yes, I'll take that bet as well. So overall, we did have strong storm season in the in the US Midwest initially in the here and now in the south east from an overall, we're very pleased with our ability to perform and respond very quickly to the growers and dealers, making sure they have they can get their farms up up and running as soon as possible. So overall, we had we had some positive benefits from we haven't seen all the benefits yet from the storms on the southeast. So I'm expecting to get some benefit from that from you. And as we go into next year, we're going to expect to have more of a normalized year as it relates to storms. Got it. I appreciate it, guys. I will leave it there.

Renee Campbell

Thank you. Our next question comes from the line of Nathan Jones with Stifel. Please proceed with your question.

Good morning, everyone. I wanted to start off on the the TDS. business up 15% . And specifically, I wanted to ask about a comment you made during your prepared remarks that average selling prices in utility were higher year over year, which I found pleasantly surprising, given that steel prices deflated, I would have expected to have negative pricing in that number. Can you talk about where the positive growth is coming from? I assume that that part of the transmission business that is covered by master service agreements would have had to see negative proxy this quarter. So just anymore color you can give us on the impact of pricing where it was positive, where it was negative and what the overall volume growth was?

Avner Applbaum

Thank you, Nathan, and I'll take I'll take that one. So overall, very pleased with our TDS. performance in the quarter being up 15%. So very strong performance in that aspect. As it relates specifically to pricing. And that's been a very strong demand environment for us. And we've been taking deliberate actions to make sure we price for the value that we provide to our customers. And as our customers some come to us and need us to help them provide solutions, we will make sure we price appropriately. Specifically in this quarter. What we've seen actually, we had a large transmission project that ended in 2023. It was it was a project that we have for several years. And as that while down in 2023, we've seen more distribution substation going through our through our shops. And as we're pricing those, we're pricing them at a higher level. And that's where we've seen a lot of the benefit of in our in our results overall life of a price to be up products at a higher level going into next year, we'll probably see more of a normal mix of our products going through more transmission, well, more of oil products, but we'll see more transmission becoming a larger percentage of overall. So yes, this steel deflation will have an impact on top line, not necessarily on our profitability, but that will impact us as we go into next year. And Tom, maybe I just had a little bit of color on that aspect.

Thomas Liguor

Yes, he has Avner said pricing pricing was strong and that really happy with the performance there. That said, I'd like to still deflation. It does lower like our our revenue growth percentage. And the way to think of it is the steel deflation impact infrastructure revenues right now about 1.5% of revenue. So think of like 1.5% of total inflow structure, 3 billion, roughly 45 million. And that's how to have to think about pricing is up. But the seal deflation impact the growth rate, the other impact to the steel deflation is that in the near term, it does affect our gross margin as we get steel pricing and fuel costs in line. And the effect of that is approximately 100 basis points in gross margin. When you compare the first half half to the second half. So going forward, because we think things are more online in, I think, is reasonable through, but he takes that infrastructure gross margins will be more at the second half of rates going into 2025. I guess in the last thing we would at Deno feedback from our sales team is the bid market remains strong to that's a that's a positive for us.

Do you typically see whilst dailies deflating that I made to go into the top line tailwind to margins, net of label net contracts catch on?
Yes, long-term is not an impact on income in the near term. Because of the decline is an impact on gross margin
Yes, just a last one on TD. and. in the on the capacity expansion, can you talk about the way you always capacity in, I guess, especially distribution and substation and when that capacity supposed to be online?

Avner Applbaum

Yes. Overall, that's been one of our major focuses on adding flexibility to our plants. So we can do both transmission poles, distribution substations, making sure we have our concrete or steel. So we're at that is that as a big focus of what we've been doing it, it's an ongoing process. We've already made significant improvements in some of our facilities down in Mexico. We've had a focused on increasing our utility production. But if you look at our printing facility, that is more on the lighting and transportation, we took actions both in Tulsa and in Mexico actually to increase our substation. I know if I could just give you one other specific example. If you look at our Fort Meade need concrete facility out in fire, we actually doubled our capacity there over the last several years. So we continue to invest in our in our facilities, some of the capital payout, just your typical productivity and lean and will continue to increase capacity. So we could support the strong demand that we're seeing in our infrastructure markets with a very, very good spot for us to be in place, strong mega trends, driving demand and were increased our capacity and flexibility to make sure we can address that.

Thanks very much for taking my questions. Thinking.

Renee Campbell

Our next question comes from the line of Brent Thielman with D.A. Davidson. Please proceed with your question.

Your comment in the presentation that the order rates in Brazil are improving over last year despite a pretty significant revenue headwind on this quarter and ag it maybe how does that inform your view of that market over the short term or even into 2025? In GB either not read too much into that should be still be cautious here. Just curious your thoughts around that recent trend.

Avner Applbaum

Good morning. I'll take that question overall situation in Brazil, I mean the farmers are being pressured, right? If you look at if you look at the price of soybean, today's it's it's below 10. So their profitability is being impacted from the sentiment is low. Others still profitable. But on it, we should expect that to bed condition to remain tough in the near future and going into 2025 on we're positive on the increased order rates. But I would say your point you mentioned cautious here, we should be cautious about how we think about the outlook. We're very pleased to see our Palm order intake improving. We have the were the leader in that space in Brazil. The pivot provides a very strong value proposition to the growers on renewables secure that they can get 32 crops are not counting on rain with a pivot believing that the third one. So overall, our A. will help them drive profitability in a long term. So we're very bullish about the outlook for Brazil, but I would take a cautionary view on 2025. We'll have more of these details as we see how this quarter progress, but we're happy to see the order and pick up improving in that market.

Okay. Thanks, Anver here. And then just on Ellen Chae, the revenue headwinds sort of accelerated this quarter. Maybe if you could just refresh the comparison from exiting lower margin products in what was reflective of true demand versus some of these kind of product exit headwinds? Are you experiencing this year?

Avner Applbaum

Yes. So I look at IDLNG., I mean we had a tough quarter and I would really pinpoint, but three areas that impacted our performance and LNT., it was the weakness in the residential lighting. It was timing of DOT projects, and it was of flexibility in our plants to produce what we what we were hoping to produce to support our customers. So we have three one offs don't expect that to repeat it at that magnitude. And when you think of those drivers, DOT, our order rate is continues to be strong and that continues to be positive. That will be positive into 2025. You add the IGA. So that should continue to pretty solid there. Residential lighting, as you look at the single-family housing starts, and we typically have strong correlation is a 12 month lag for us. And if you look at the single-family housing starts in 2021, 2020 to three, we've seen a decline. It impacted our business, very encouraged by what we're seeing this year in 2024 as we're seeing that, increased saving. And with our 12 month lag, we will see our residential lighting improving into 2024. And the points I made before around our flexibility, we're making good progress. So overall, the outlook for that business and LNT. is positive for us going into next year.

Thank you very much.

Renee Campbell

Our next question comes from the line of Brian Drab with William Blair. Please proceed with your question.

Hi, morning. Thanks for taking my questions on. I guess I was wondering if you could give a more specific update on what's happening in EMEA and specifically in Egypt, percentage-wise through the project, the second phase 85 million project there and how that whole macro environment or even though the economic environment in Egypt is affecting the timing, if at all.

Avner Applbaum

I guess so overall, we're very pleased with what we're thinking. And Middle East Africa. We talk about kind of the whole irrigation and we talk about how it's our. It's tough in some of these region in North America and in Brazil. It is very strong in Middle East, Africa, different drivers for us for that area around food security, population growth and so on. So overall, the pipeline is very strong, and we are executing well on these projects. And right now, the situation in the Middle East has not had not impacting our business. We continued to perform well, well, continue to ship around these projects that we just as a reminder, there's always timing with these projects based on logistics, timing of how the project is progressing right now. We are it's doing well going with a strong pipeline into 2025 and a very I'm pleased with our execution in that part of the world.

Okay. Thanks, Avner. And then my and my other question for now is you're forecasting the infrastructure business to be flat to up 1.5% for the year. What is the updated thought on volume growth or decline that you know what, what is the with the forecast for volume for 2024 at this point for infrastructure?

Avner Applbaum

Thanks. And so maybe I'll let Tom get into those details for you. Maybe just to kind of look at how we're how we're looking at, though at those businesses, as we're kind of looking into specific into 2024 or state,
we're seeing very positive demand drivers around our infrastructure businesses in all, if you look at those mega trends are out of Bob per dollar for electrification, data consumption, grid resiliency, the need for critical infrastructure. They are all having a very strong are creating a very strong demand drivers for for our businesses. And when you look at utility, the demand continues to be very strong. It has been strong in 2024 point as we go into 2025. That should continue. I just talked about the LMT. business, lighting and transportation. We should see positive momentum in that area. five telecom seen signs of recovery in that area of specifically in North America vessel positive fine on that as well. So overall, the demand drivers for us are looking very, very positive for us.
And Tom, maybe just add a few specifics of kind of

Thomas Liguor

what you're saying now as things have there yet. TD. and S. utility volumes are clearly up, say the one area where volumes are down as solar. And at this, you know, exiting the lower margin businesses, anything else is relatively relatively flattish.

Okay. Thank you.

Renee Campbell

Both thinking. Our next question comes from the line of John France with Oppenheimer & Co., please proceed with your question.

Good morning, everyone. No AmREIT. It's very, very dry eye off the Midwest. And I know the farmers are Herm finishing up their harvest and I'm going to work on their finances for by year end. But given the given the drought that we're in, are you hearing anything or do you think the absolute if it continues in this continues this way that there are some incremental upside to the northern half of next year if it continues to be dry? And secondly, are you hearing anything yet from your dealers, Tom, about the about the drought and some are and how their customers are thinking about their capital spending for next year.

Avner Applbaum

Thanks for the question. Yes, I agree. It's definitely very dry in that in the Midwest. We definitely see that on UniFi. If I kind of look at that the farmer right now and you look at corn little bit over $4, you look at the net farm income, the USDA projections since around that. And just the sentiment just look at the produce sentiment surveys for lowest, it's been over the last eight years. So the farmer sentiment is low. The farmer profitability is impacted. We do have some farmers are profitable and some are not based on grow their faith beliefs they own and some other factor. There's and so I want to be too bullish right now about the farmers and the North America market here are usually at the end of the year. Yes, we do see it. They tried to manage their financial will go ahead and though they'll buy some equipment, we're watching it. Right. I don't I don't want to be too optimistic about that just because they all had a hard a difficult year, Tom, and thanks for kind of see how it plays out. Also when you look at the stocks-to-use ratio is still pretty high. So there's a there's there's a lot of supply there and the yield so far, the initial indications are that they're strong. So um, drought, ultimately, what could could have an impact. But right now, I wouldn't be too bullish about the environment here in the US. And Tom, would you like to add a point there?

Thomas Liguor

Sure. And I mean, just to build on that in a few looking at this year versus 25 this year, we have strong storm sales. And the team is telling me the storm sales 2024 rigs. So you take out of news comments with sentiment maybe being down in North America, strong sales, difficult to predict, but we had a lot of 2020 for North America. Ag may be down in 2025, but we are seeing growth in the international, and you'll see that offsets are posted to the positive territory.

Okay. All right. Thank you very much, guys.

Renee Campbell

Thinking. As a reminder, if you'd like to join the question queue, please press star one on your telephone keypad. Our next question comes from the line of Tom Hayes with CL King & Associates. Please proceed with your question.

Good morning, everyone, and thanks for taking my question. Some covenant. I think you touched on a little bit about the uterus is if you provide a little bit more color on really what you're seeing in the telecommunications area. And we've come you're talking to some other people to market sooner given kind of mixed results. But certainly you have a nice quarter. Just wondering what you're seeing in the market is hers project activity and certainly that?

Avner Applbaum

thanks for the question. We're very pleased to see our telecom business grow 8% after after a decline. And when you kind of fallen in North America, the carrier spend there, the more to back to business as usual. And ultimately, we're very bullish about that market in the long term. We still know that they need to build out these 5G connection. And a lot of estimates have by the end of this decade, we'll have 85% of the population on 5G. So there's there's though, we believe will continue the momentum. I think we pretty much hit the floor there, and we're expecting to grow. And as the carriers keep on focusing on don't building out the net wherever increasing coverage there, optimization, we're well positioned to support them anyway from our macro towers to our small cells that are the backbone of the of the 5G system all the way through our with wide broad offer rating there that supports the carry years as they continue to build up the network. So feel pretty good about where the where the or the telecom business is heading. I will point out that on the international side that there are a little bit behind the US that's more fragmented. So there's opportunity for us in selected markets there. That might take just a bit more time.

I appreciate the call. I'll go back into queue.

Operator

Thinking we have reached the end of the question and answer session. Will now turn the floor back over to Renee Campbell for closing comments.

Renee Campbell

Thank you for joining us today. As mentioned, today's call will be available for playback on our website or by phone for the next seven days. We look forward to speaking with you again next quarter. These slides contain any company in our discussion will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 . Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from results expressed or implied such statements, including general economic and business conditions, conditions affecting the industry served by the company and its subsidiaries, the overall market acceptance of such products and services, the integration of acquisitions and other factors disclosed in the Company's periodic reports filed with the Securities and Exchange Commission as well as future economic anymore, market circumstances, industry conditions, company performance and financial results, operating 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 of domestic and foreign governments concept. Currently, such forward-looking statements should be regarded as the Company's current plans, estimates and believe the Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date, such statement or unanticipated events. This concludes today's teleconference. Thank you for your participation, and you may disconnect your lines at this time.