Valmont Industries
Annual Report 2007

Plain-text annual report

Annual Report 2007 Annual Report 2007 Global leveraGe A t w o r k Financial H i gHl i gHt s D o l l a r s i n m i l l i o n s , e x c e p t p e r sHa r e a m o u n t s Operating Results Net sales Operating income Net earnings Diluted earnings per share Dividends per share Financial Position 2007 2006 2005 $ $ $ 1,499.8 155.6 94.7 3.63 0.410 1,281.3 110.1 61.5 2.38 0.370 1,108.1 82.9 39.1 1.54 0.335 Shareholders’ equity Long-term debt as a % of invested capital1 $ 510.6 27.3% $ 401.3 $ 31.3% 328.7 36.2% Operating Profits Gross profit as a % of net sales Operating income as a % of net sales Net earnings as a % of net sales Return on beginning equity Return on invested capital1 26.7% 10.4% 6.3% 23.6% 14.0% 25.5% 8.6% 4.8% 18.7% 11.1% 25.1% 7.5% 3.5% 13.3% 7.7% Year-End Data Shares outstanding (000) Approximate number of shareholders Number of employees 25,945 5,800 6,029 25,634 5,600 5,684 24,765 5,700 5,336 1 See footnote (a) on page 36 of this document and item 6 on pages 23 through 25 of the Company’s Form 10-K 07 06 05 04 03 07 06 05 04 03 07 06 05 04 03 1,281 1,108 1,031 155.6 838 110.1 2.38 3.63 1,500 net Sales Operating income Diluted Earnings Per Share 82.9 70.1 70.3 1.54 1.10 1.05 1 V A l m o n t I n d u s t r I e s A n n u a l R e p o r t 2 0 0 7 2 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V 1 4 8 10 14 18 22 24 28 30 31 32 33 Financial Highlights Message To Fellow Shareholders Valmont At A Glance Engineered Support Structures Division Utility Support Structures Division Irrigation Division Coatings Division International Perspective Global Dedication Board Of Directors Corporate and Business Unit Officers Corporate and Stock Information Financial Summary  O u r s t r o n g m a r k e t p o s i t i o n s i n o u r c o r e b u s i n e s s e s p e r s i s t . O u r b u s i n e s s d r i v e r s a r e g l o b a l, c o m p e l l i n g a n d e n d u r i n g. O u r k n o w l e d g e i s a p l a t f o r m f r o m w h i c h w e b u i l d o u r b u s i n e s s e s. 3 V A l m o n t I n d u s t r I e s A n n u a l R e p o r t 2 0 0 7 In this annual report, we are featuring our Presidents from each Valmont divi- sion. I feel it is important that you have an opportunity to become acquainted with our business leaders. They are the ones who manage our businesses every day, and who – along with fellow Valmont team members – create value for our shareholders. I’m proud of my colleagues for all they have accom- plished, and for their vision and astute leadership on behalf of Valmont and its shareholders. I invite you to meet these dedicated individuals and learn more about their divisions through the pages of this report. We are sharpening our efforts in this regard. In previous annual letters to you, I have mentioned three initia- tives at Valmont: pricing discipline; lean manufacturing; and employee engagement. We are combining all three initiatives into one overarching program that should propel Valmont along a global journey to become a true lean enterprise. We call this The Valmont Way. We will refine a set of operating principles, which will help us to become continuously more efficient in how we deliver value to our customers. This is a major under- taking involving extensive training throughout our global enterprise – and it will take time. Our goal is for The Valmont Way to become a sustainable competitive advantage. This is my 15th annual letter to my fellow shareholders. In my very first letter to you, I discussed global leadership positions for Valmont in engineered support structures (poles) and water management for agriculture (irrigation), and I spoke of leveraging those positions for growth. Fifteen years later, our focus has not changed. We have seen tremendous growth, and we are more excited than ever about the opportunities ahead of us. The year 2007 was another record one for Valmont. Net earnings grew 54 percent on a 17 percent increase in revenue. Over the last few years, we have had a keen focus on improving the quality of our earnings. Operating income as a percentage of sales increased nearly two full percentage points, to 10.4 percent, and our return on invested capital reached 14 percent. While we are pleased with our performance in 2007, we are still not satisfied. We are confident that we can continue to improve the quality of our earnings over time, but we also know that incremental improvements will become more difficult to attain. MESSagE to f e l l o w sHa r eHo lDe r s mo g e n s c. B a y | c Ha i r m a n a nD c Hi e f ex e c u t i v e of f i c e r 4 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V MESSagE 5 V A l m o n t I n d u s t r I e s A n n u a l R e p o r t 2 0 0 7 6 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V v a l m o n t’ s ViSiOn Valmont is recognized throughout the world as an industry leader in engineered support structures and services for infrastructure, and water management for agriculture. We grow our businesses by leveraging our existing products, markets and processes. We recognize that our growth will only create shareholder value if, at the same time, we exceed our cost of capital. Essential to our success is a company-wide commitment to customer service and innovation, and the ability to be the best cost producer for all products and services we provide. Recognizing that our employees are the cornerstone of our accomplishments, we pride ourselves on being people of passion and integrity who excel and deliver results. I continue to spend time visiting our facilities in the U.S. and around the world. I appreciate the chance to meet and thank each employee whose daily efforts continue to make Valmont a strong and successful global company. As I have said many times before, capital is allocated by Valmont’s corporate office; our returns, on the other hand, are generated by great people whose work ethic and team- work extend seamlessly across plants, borders and oceans. Through their efforts, Valmont succeeds at helping to feed, light and connect the world. Looking forward, we will continue to leverage our leadership positions in our core markets around the world. We will also pursue our lean trans- formation to grow and improve our businesses. We are off to a good start in 2008 and expect to deliver another record year. As always, thank you for your support. I look forward to reporting to you throughout 2008. Sincerely, Mogens c. Bay Chairman and Chief Executive Officer In last year’s letter to you, I mentioned that the drivers of our businesses are global, compelling and enduring. We’re confident this will continue to be the case as the world’s needs for infrastructure and agricultural water management will continue to drive demand for Valmont’s products. At the present time, we do not see compet- ing products or technologies being a major threat in our markets. Local priorities and economic conditions may influence the short-term size of our markets, but in general, we are currently operating in a fairly robust environment worldwide. Our irrigation business had a very strong year in 2007 with significant increases in both revenue and earnings. Demand was strong in the U.S. as well as in most international markets. The global macroeconomic environment for agriculture is the strongest we have seen in many years. In recent years, the world has con- sumed more agricultural commodities than it has produced. This shortfall is not due to production problems in certain areas – as was often the case in the past – but rather is a result of ever-increasing demand. Today, this demand is not only for agricultural commodities to feed the world, it is also for biofuels to help fuel the world’s economic growth. We see no reason in the near term why this situation should change. In the U.S., the utility structures business delivered very solid financial results in 2007 as we continue to respond to growing demand from utilities expanding or upgrading their transmission and distribution infrastructure. We are confident that activity levels in this market will continue to be strong in 2008. Internationally, we also see good prospects for our utility structures, particularly with China investing heavily in electricity generation to support their fast-growing economy. Our lighting and traffic structures sales increased on a worldwide basis, helped by strong performance outside the U.S., especially in Europe. In the U.S., we are experiencing good activity levels in these markets, which are dependent on federal and local public funding. We expect further growth in this business in 2008, both in our important North American market and in Europe and Asia. Our specialty structures business, which provides structures for the wireless communication markets and the traffic sign structures markets, saw improve- ment as a result of very strong activity in the wireless communication market in China. In the U.S., where we have not executed well in our sign struc- tures operations in recent years, we consolidated two facilities into one to gain manufacturing efficiencies. Our lower cost structure now should help return this business to profitability. Valmont’s Coatings Segment also had a very good year. Higher industrial demand coupled with strong internal demand resulted in solid sales and profitability gains. During 2007, Charles Peebler, Jr., retired from Valmont’s Board of Directors for health reasons. Chuck served on our board for eight years and can take great pride in his many contributions to the success of our company. His wise counsel will be missed, and we thank him and wish him well as he continues to inspire us with his determined battle against progressive supranuclear palsy (PSP). At Valmont – as always – employee safety remains closely tied to our corporate values. While I am pleased to report that Valmont’s safety perfor- mance reached a new record in 2007, there are always improvements to be pursued. Nothing is more important than the safety of our workforce, and we will continue to work hard on improving safety processes and performance throughout the company. 7 V A l m o n t I n d u s t r I e s A n n u a l R e p o r t 2 0 0 7 8 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V EnginEERED SuPPORt StRuctuRES infrastructure Area lighting poles for parking lots and public areas » Sports lighting structures for arenas and stadiums » Decorative lighting poles » Traffic and sign structures » Street and high-mast lighting poles » Monopoles, towers and structures for cellular, PCS, broadcast, microwave and two-way communications » Wireless communication components » Minimum visual impact structures » Overhead sign structures cOatingS Galvanizing, anodizing, powder coatings and integrated graphics Utility transmission and distribution poles » Utility substation structures utilitY SuPPORt StRuctuRES va l m o n t at a glancE Wherever you live, whatever you do, chances are Valmont is part of your life. Engineered structures for infrastructure and water management for agriculture. agriculture iRRigatiOn Mechanized irrigation systems 9 V A l m o n t I n d u s t r I e s A n n u a l R e p o r t 2 0 0 7 “i’M cOnFiDEnt that we are well positioned to meet increasing demands for our products.” gr o u p pr e s iDen t en g i n e e r eD s u p p o r t s t r u c t u r e s a nD c o a t i n g s Di v i s i o n s e n g i n e e r e D s u p p o r t s t r u c t u r e s e n g i neereD support S tRu c t uR E S E n g i nE E R E D SuP P O Rt S tRu c t uR E S E n g i n E E R E D s e r u t c u r t s t r o p p u s D e r e e n i g n e s e r u t c u r t s t r o p p u s D e r e e n i g n e As Group President of Valmont’s North American Structures and Coatings Division, Tom Spears takes pride in Valmont’s leadership role in engineered support structures. “We leverage a network of manufacturing facilities, engineering expertise and resources,” says Spears, “and that allows us to provide customers around the world with products of superior quality and value.” Valmont manufactures structures for area and decorative lighting, overhead signs and traffic applications, mass transit, intelligent traffic systems, and wireless communication towers and components. Market leader In describing Valmont’s structures for lighting and traffic, Spears points out that Valmont is the market leader in supplying poles for the North American commercial lighting and roadway markets. “Our leadership position allows us to have economies of scale,” says Spears. “It allows us to have a critical mass of engineering resources that can offer custom design work, answer critical questions and provide optimal solutions to our customers. “We have highly efficient operations, which helps make for a profitable business,” says Spears. “We have duplicated critical processes at various locations, so if we have a disruption at one facility, we have the ability to back that up with another plant. It’s one way we leverage our gROwing DEManD en g i n e e r eD s u p p o r t s t r u c t u r e s Di v i s i o n “conservative design principles, excellent engineering and analysis capabilities, leveraging resources, and long-standing relationships . . . these, i’m proud to say, are some of valmont’s greatest strengths.” 12 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V 13 V A l m o n t I n d u s t r I e s A n n u a l R e p o r t 2 0 0 7 resources,” says Spears, “and it’s an advantage in the marketplace. It allows us to be more reliable and provide added value to our customers.” Valmont has also carved out a substantial niche for itself in the specialty structures business. “When it comes to roadway and traffic sign structures, Valmont has an outstanding reputation in being able to design and fabricate huge bent tube structures, as well as truss pipe structures,” says Spears. “Also, we have good geographic dispersion across the United States in specialty structures, so we are reaching a great number of different states with our products.” Valmont also manufactures structures and components for the wireless communications market. Says Spears, “Valmont is one of the leading wireless communication structures providers in North America. We also supply a broad range of components used in wireless communications structures, including ladders and platforms and products to mount antennas and cables.” Opportunities to grow While Valmont is the leader in engi- neered support structures today, Spears definitely sees opportunities for growth in the company’s markets in the future. “We’re always looking for opportunities to expand,” says Spears. “We have opportunities to grow by broadening our product offering. In fact, in the past couple of years, we made significant headway into the mass transit market. And, we’ve expanded our footprint in the decorative light pole market, making Valmont a player in that niche.” A significant driver of Valmont’s growth lies in the demand for new and replacement infrastructure in North America. New road construc- tion, the replacement needs of aging infrastructure, and the increased usage by wireless telephone and data system subscribers is driving demand, opening new markets, and expanding existing markets for Valmont’s steel, aluminum and fiberglass poles, sign structures and wireless communica- tion poles and towers. “The long-term trend for Valmont’s engineered support structures should produce solid growth,” says Spears, and “I’m confident that we are well positioned to meet increasing demands for our products.” “cOntinuOuS iMPROVEMEnt is part of valmont’s culture. it’s the valmont way of doing business.” t t R O P P t R O P P u S S l R Y O P P u u S t i l Y i t t i u ut i l i t y s u p p o r t s t r u c t u r e s Di v i s i o n pr e s iDen t ut i l i tY SuP P O Rt StRu c t uR E S Y t i l i t u ut i l i tY SuP P O Rt StRu c t uR E S Y t i l i t u S E R u t c u R t S t R O P P u S Y t i l i t u ut i l i tY SuP P O Rt StRu c t uR E S Y t i l i t u u t ilit Y S u P P O ut i l i tY SuP P O Rt StRu c t uR E S Y t i l i t u Rt StRuctuRES utili t Y S u P P O R t S t R u c t u R Y t i l i t u S E utilitY SuPPORt StRuctuR E S u t i l i t Y S u P P O R t S S E R u t c R t u i t u ut i l i tY SuP P O Rt StRu c t uR E S ut i l i tY SuP P O Rt StRu c t uR E S Y t i l i t u u t i l i t Y S u P P O R t S t R u c t u R E S u tilitY S S E R u t c u R t S Y t i l i t u utilitY SuPPORt S t R u c t u R E S u t i l i t Y S u P S E R u t c u R t S t P O R u PPO R t S t R u c t u R E S u t t R O P P u S P P O S u t R i l i t Y Y t i l i t u S E R u t c u R t S t R O P P u S Y t i l i t u 16 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V MaRkEt POwER ut i l i t y s u p p o r t s t r u c t u r e s Di v i s i o n “Because of the issues facing utilities today, our utility customers absolutely need partners who can deliver on durability, value, aesthetics, and responsiveness. they utilize a wide array of products and operate on aggressive deadlines. at valmont, we have the capacity to address the large project needs of the utility industry.” “Valmont has always played a vital role in meeting the rigorous needs of the utility industry with its structures for transmission, distribution, and substations. However, that role is becoming more important as greater demands are placed on utilities to meet the growing energy needs of customers,” says Earl Foust, President of Valmont’s North American Utility Support Structures Division. Optimized Solutions for utilities “One of our greatest strengths at Valmont is our ability to leverage our resources to provide a diverse product portfolio to our utility customers,” says Foust. “Utilities serve their customers in a variety of environments, and because of our ability to leverage our engineering and manufacturing capabilities, we can meet those needs with the right products.” Foust is referring to Valmont’s unique ability to provide tubular steel poles, spun concrete structures and hybrid steel/concrete poles. “In North America, we have six concrete pole operations and seven steel pole facilities,” says Foust. “We are geo- graphically dispersed and located near all of our key customers.” Overall, the demand for reliable power is ever increasing. “No one wants their power to go off,” says Foust. “Everything is so computer- ized and needs power for support. Everyone demands 100 percent reli- ability, and that’s created an increase in generation and distribution liability. Utilities can rely on Valmont to do our part, providing the structural integrity customers demand.” Valmont engineers work together, applying their expertise to provide the right solutions for every utility project. “When we work with our utility customers,” says Foust, “we provide optimized solutions. We perform a value analysis for each application to determine the most economical transmission line, whether it includes steel, concrete or hybrid poles, or a combination of these.” Because of the company’s success in meeting the demands of the utility industry, Valmont has developed a series of long-term customer relation- ships and strategic alliances. “Our customers know they can count on us because we can leverage our engineering and production capacities to respond to their short and long- term needs.” continuous improvement “Continuous improvement is part of Valmont’s culture,” says Foust. “It’s the Valmont way of doing business. We also focus on developing new products for our customers.” In fact, most of Valmont’s new product developments were born out of working partnerships with utility customers in an effort to provide solutions for specific transmis- sion projects. looking ahead The increased need for electricity is leading to the development of major transmission corridors. “We have our interstate highway system,” says Foust, “but we haven’t had the same build-out for the transmission grid. The new transmission corridors will be established to carry power east to west, and north to south.” In addition, the focus on wind energy presents opportunities for Valmont. “We’re seeing a number of wind farms being developed,” says Foust, “and that creates opportunities for Valmont in terms of building transmission lines to connect wind farms to the grid.” 17 V A l m o n t I n d u s t r I e s A n n u a l R e p o r t 2 0 0 7 “OuR VallEY BRanD center pivot and linear irrigation equipment conserves water and eases the burden on the world’s fresh water supply.”  gr o u p pr e s iDen t no r tH a m e r i c a n ir r i g a t i o n a nD t uBi n g Di v i s i o n s i r r i g a t i o n D i v i s i o n R I G N I R A T I O I R R I G N I I O T A R I G N I R T I O A R I G N I R T I O A A TIO N IR RIG A TI O RIG IR I O N I G A T R R I O N I T A G I R R N I R A T I O N I R R I G I R R I G A T I O N N I R T I O A R I G TIO A RIG N IR IO T A IG R R N I O I T A G I R R I R R ATION IRRIGATION I I G A T I O N I R R I G A T I O N I R R I G A TIO N RIG R I ATIO N I R RIG IR I G A T I O N R I R R I G A T I O N I R R IG A TION IRRIG A T IO N N O I T A G I R R I N O I T A G I R R I I R R I I R R I G A T I O N T I O N A R I G ATIO N RIG N IR N O I T A G I R R I I R I R R I G A T I O N R I A IR RIG IRRIGATION IRRIGATION IRRIGATION IRRIGATION IRRIG N IR TIO RI T G A I T A O N G I O N I R R I G I R R I G A T I O N ATIO N IR RIG A TIO N IR RIG A TIO A T I O N I R R I G A T I O N I R R I G A T I O N I R R I G A T I O N I R R I G A T I O N I R R I G A T I O N I R R I G A T I O N T I O A R I G IR T A R I G I O N I R R I G A T I O N ATIO N I R N I R R I G A T I O N I R R I G ATION N I R R I G A T I O N I R R I G A T I O N IR RIG ATIO N IRRIGATIO N IR RIG A T ION RIG R I N O I T A G I R R I I R R I G A T I O N I R R I G A T I O N I R R I G A T I O N IR RIG ATIO N IRRIGATION IRRIGATION G A T I O N I R R I G A T I O N IRRIGATION Len Adams is Group President of Valmont’s North American Irrigation Division, the world’s largest manufac- turer and distributor of mechanized irrigation equipment. “At Valmont,” says Adams, “our dealer network is one of our biggest strengths. We have over 200 Valley® Brand dealers who serve farmers in North America. Additionally, we’ve built a worldwide dealer organization that serves producers around the world.” components of Success “We’ve leveraged our dealer network for a number of years,” says Adams, “and it really is critical to our success.” But, as Adams is quick to point out, there are other significant factors contributing to Valmont’s strong per- formance in the irrigation business, including the strategic alignment between its worldwide facilities. “We operate as one global irrigation business,” says Adams. “We make use of our plant capacities everywhere.” The plant in McCook, Nebraska, pri- marily supplies North America, while the original facility in Valley, Nebraska, manufactures and ships irrigation equipment to international customers. “Most of our facilities are set up to make certain components rather than a complete machine,” said Adams. “So, many of the essential parts are manufactured and shipped out of our Valley plant to our other locations around the world. This way – by sharing engineering capabilities, manufacturing resources and EFFiciEnt FlOw ir r i g a t i o n Di v i s i o n “we have an outstanding dealer network, and it’s something we’ve developed for many years. our dealer network is a key component to our success.” 20 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V 21 V A l m o n t I n d u s t r I e s A n n u a l R e p o r t 2 0 0 7 Yet, Adams says a significant amount of land around the world is still being irrigated with flood irrigation and gated pipe, presenting Valmont with opportunities to convert these areas to Valley Brand mechanized irrigation equipment. “The potential size of the conversion market in North America is close to the size of our current mechanized irrigation market,” said Adams. “These two market drivers – replacements and conversions – will provide Valmont with significant opportunities for growth, now and well into the future.” distribution channels – we can meet the demands of the global irrigation market while maximizing operating efficiencies.” in-line Efficiency Adams says Valmont’s operation and manufacturing efficiencies are, in great part, a function of thoughtful plant design at Valmont. A prime example is the plant in McCook, Nebraska. “We built the McCook plant with material flow in mind. In Valmont’s McCook manufac- turing process, the tubing mill is right in line, as is galvanizing. Everything is batched, and the entire operation flows smoothly and efficiently,” said Adams. Room to grow When it comes to growing Valmont’s mechanized irrigation business, Adams says the replacement market presents long-term opportunities. “There are approximately 250,000 machines that have been installed by the irrigation industry in North America alone,” said Adams. “Many of these machines are 30 years old and will need to be replaced in the near future.” Another long-term driver for Valmont’s mechanized irrigation equipment is the world’s growing population and the resulting stress on the world’s fresh water supply. “Center pivot irrigation is much more efficient than flood irrigation,” says Adams. “Our Valley Brand center pivot and linear irrigation equipment conserves water and eases the burden on the world’s fresh water supply.” 22 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V nEtwORk StREngth co a t i n g s Di v i s i o n “this is a service business, and the measure of success is how fast you can provide the service at the quality level the customer expects. through consistent, quality performance, valmont has proven itself to have a well managed network of capacity in north america.” Tom Spears, Group President of Valmont’s North American Structures and Coatings Division, speaks with confidence about Valmont’s coatings business. Valmont is a full-service coatings company, providing quality surface finishes that improve the looks and extend the service life of steel and aluminum products throughout the country. Strong Performance “At Valmont, we have the capability to consistently process material that comes in from our customers in a timely manner, while delivering an excellent level of quality,” said Spears. Valmont’s strong performance in the coatings industry is the result of the company’s overarching commitment to leveraging resources. “We have 10 galvanizing kettles in North America that we operate together as a network,” says Spears. “This network provides us with the capability to serve our customers at a high level. Our network includes some state-of-the-art gal- vanizing facilities, which allows us to meet the specific needs of our clients in a timely manner.” Protecting the Future With corrosion costing industry and government agencies around $276 billion1 annually in the United States alone, Valmont’s opportunities will increase along with the need for improved corrosion management in the 21st century. commitment to innovation Valmont has earned the reputation for being the market and technical leader in hot-dip galvanizing. Through the years, Valmont has introduced a number of process innovations across the company’s galvanizing facilities. “Going forward, we see ample opportunities for Valmont’s growth in the galvanizing industry, particularly through geographic expansion,” says Spears. “We continuously evaluate opportunities to grow and expand our geographical footprint.” “We are a source for technical expertise in galvanizing in the United States, and focus on innovation leadership from a process standpoint,” said Spears. 1. NACE International. (2002). Corrosion Costs and Preventive Strategies in the United States. Retrieved February 8, 2007, from http://www. nace.org/nace/content/publicaffairs/cost_ corr_pres/cost_corrosion_files/frame.htm. 23 V A l m o n t I n d u s t r I e s A n n u a l R e p o r t 2 0 0 7 “OuR intERnatiOnal facilities and our plants in north america provide support to each other.” gr o u p pr e s iDen t in t e r n a t i o n a l Di v i s i o n Victor Grizzle, Group President of Valmont International, is enthusiastic about Valmont’s presence in interna- tional markets and the opportunities to come as a result of continued economic growth and improved standards of living. markets – lighting, communications and utility. In particular, we saw strength in China’s communication structures market as the country continues to build out its wireless infrastructure to support the dramatic increase in the number of mobile phones. Structures “Overall, we’ve benefited from broad-based opportunities in our international markets,” said Grizzle. “We had a strong year in structures. In China, we experienced solid growth across all infrastructure “Over the past year, we also expe- rienced growth in Europe. The economies in Europe were strong,” said Grizzle, “and that stimulated investment in infrastructure, particu- larly in the lighting markets in France, Holland, Poland, and Eastern Europe.” Contributing to Valmont’s international success in 2007 was the addition of Tehomet to the Valmont family. Tehomet is Scandinavia’s largest manufacturer of decorative street lighting poles. “Tehomet’s innova- tive market designs combined with Valmont’s global reach allows us to better serve our European customers,” says Grizzle. Another area of opportunity for Valmont’s structures business, according to Grizzle, was North Africa. “Our facility in Morocco experienced a double-digit increase in sales,” he said. glOBal FOOtPRint in t e r n a t i o n a l Di v i s i o n “we are pleased with the international opportunities and our team’s efforts to meet customer needs in both existing markets and new markets around the world.” 26 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V 27 V A l m o n t I n d u s t r I e s A n n u a l R e p o r t 2 0 0 7 In 2007, China was – and continues to be – a substantial area of focus for Valmont’s International Division. “In China, there is a tremendous amount of investment in energy generation,” said Grizzle, “and there is a need for transmission and distribution struc- tures to deliver that energy to homes and businesses. “In Eastern Europe,” Grizzle says, “Poland, the Ukraine and Russia are also upgrading their transmission grid systems. Demand in Eastern Europe has created opportunities for us. We experienced growth in that region during 2007. While it’s a small base, the growth we’ve experienced in Eastern Europe is an indication of continuing opportunities for Valmont.” To meet these growing international demands, says Grizzle, Valmont leverages its engineering, manufactur- ing and distribution resources across borders and continents. “Our interna- tional facilities and our plants in North America provide support to each other,” he said. “This allows us to be responsive to the unique needs of our clients, anywhere in the world.” irrigation “In our international irrigation markets,” said Grizzle, “higher commodity prices and overall improving farm incomes drove strong demand for our mechanized irrigation products. We experienced strong demand in the Middle Eastern markets, in Asia, as well as in our core markets of South America and South Africa.” Valmont continues to leverage its agricultural experience of over 50 years and its global footprint to bring a unique value to customers well beyond the irrigation equipment the company provides. “Partnering with our customers to bring this value is clearly being recognized by custom- ers in emerging market regions,” says Grizzle. “And, we will be working hard to continue to meet these needs of our international customers.” Higher energy prices and increasing standards of living are allowing many emerging economies to diversify and strengthen their agricultural sectors. Valmont’s irrigation technology aids these efforts through modernization of the application and efficient use of scarce water resources. “Now, together with the emergence of bio- fuels, additional land with available water resources will need to come into production, creating additional opportunities for our mechanized irrigation products,” says Grizzle. looking Forward While Valmont has experienced growth in international markets, Grizzle believes ample opportunities will continue in both developed and emerging markets around the world. “I think that we have a very strong lighting business in Europe, and I see us getting stronger in the utility and telecommunication structures markets,” said Grizzle. “Our international utilities group sees new market opportunities moving into Eastern Europe. We also envision con- tinuing opportunities in Asia, as well as the Middle East, where countries are investing in infrastructure. “As successful as Valmont has been in the past internationally,” continues Grizzle, “I’m particularly optimistic about the future. Increasing popula- tions, rapid urbanization in developing countries and improved standards of living will continue to drive Valmont’s growth. I believe we have our best opportunities ahead of us.” 28 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V Delta, BC, Canada Steel Poles Winnipeg, MB, Canada Steel Poles Barrie, ON, Canada Steel Poles St. Julie, QC, Canada Steel and Aluminum Poles Monterrey, Mexico Steel Poles Uberaba, Brazil Irrigation Equipment Bay Minette, Alabama, USA Concrete Poles Tuscaloosa, Alabama, USA Concrete Poles Barstow, California, USA Concrete and Steel Poles Long Beach, California, USA Galvanizing Los Angeles, California, USA Anodizing and Powder Coating Aurora, Colorado, USA Composite Poles Bartow, Florida, USA Concrete Poles Claxton, Georgia, USA Concrete Poles Elkhart, Indiana, USA Steel and Aluminum Poles Plymouth, Indiana, USA Wireless Communication Structures, Components and Specialty Structures Chicago, Illinois, USA Galvanizing Sioux City, Iowa, USA Galvanizing El Dorado, Kansas, USA Steel Poles Salina, Kansas, USA Galvanizing Farmington, Minnesota, USA Aluminum Poles Minneapolis, Minnesota, USA Powder Coating and E-Coating McCook, Nebraska, USA Irrigation Equipment Omaha, Nebraska, USA Corporate Headquarters Valley, Nebraska, USA Irrigation Equipment, Steel Poles, Tubing and Galvanizing West Point, Nebraska, USA Galvanizing Tulsa, Oklahoma, USA Steel Poles and Galvanizing Tualatin, Oregon, USA Galvanizing Salem, Oregon, USA Wireless Communication Structures, Components and Specialty Structures Hazleton, Pennsylvania, USA Steel Poles Jasper, Tennessee, USA Steel Poles Bellville, Texas, USA Concrete Poles Brenham, Texas, USA Steel Poles Mansfield, Texas, USA Steel Poles Lindon, Utah, USA Galvanizing and Powder Coating Ferndale, Washington, USA Steel Poles glOBal D eDi c a t i o n Throughout the world, our dedicated employees strive to make a difference. A difference at work, at home and in their communities. Guangzhou, China Steel Poles Shanghai, China Steel Poles Kiiu, Estonia Steel Poles Kangasniemi, Finland Steel and Wood Poles Charmeil, France Steel Poles Rive-de-Gier, France Aluminum Poles Gelsenkirchen, Germany Steel Poles Siedlce, Poland Steel Poles Madrid, Spain Irrigation Equipment Steel Poles Jebel Ali, U.A.E. Irrigation Equipment Maarheeze, The Netherlands Berrechid, Morocco Steel Poles Johannesburg, South Africa Irrigation Equipment Delta, BC, Canada Steel Poles Winnipeg, MB, Canada Steel Poles Barrie, ON, Canada Steel Poles St. Julie, QC, Canada Steel and Aluminum Poles Monterrey, Mexico Steel Poles Uberaba, Brazil Irrigation Equipment Bay Minette, Alabama, USA Concrete Poles Tuscaloosa, Alabama, USA Concrete Poles Barstow, California, USA Concrete and Steel Poles Long Beach, California, USA Galvanizing Los Angeles, California, USA Anodizing and Powder Coating Aurora, Colorado, USA Composite Poles Bartow, Florida, USA Concrete Poles Claxton, Georgia, USA Concrete Poles Elkhart, Indiana, USA Steel and Aluminum Poles Plymouth, Indiana, USA Wireless Communication Structures, Components and Specialty Structures Chicago, Illinois, USA Galvanizing Sioux City, Iowa, USA Galvanizing El Dorado, Kansas, USA Steel Poles Valley, Nebraska, USA Irrigation Equipment, Steel Poles, Tubing and Galvanizing West Point, Nebraska, USA Galvanizing Tulsa, Oklahoma, USA Steel Poles and Galvanizing Tualatin, Oregon, USA Galvanizing Salem, Oregon, USA Wireless Communication Structures, Components and Specialty Structures Hazleton, Pennsylvania, USA Salina, Kansas, USA Steel Poles Jasper, Tennessee, USA Galvanizing Aluminum Poles Farmington, Minnesota, USA Steel Poles Minneapolis, Minnesota, USA Concrete Poles Powder Coating and E-Coating Brenham, Texas, USA McCook, Nebraska, USA Steel Poles Bellville, Texas, USA Irrigation Equipment Omaha, Nebraska, USA Corporate Headquarters Mansfield, Texas, USA Steel Poles Lindon, Utah, USA Galvanizing and Powder Coating Ferndale, Washington, USA Steel Poles glOBal D eDi c a t i o n Guangzhou, China Steel Poles Shanghai, China Steel Poles Kiiu, Estonia Steel Poles Kangasniemi, Finland Steel and Wood Poles Charmeil, France Steel Poles Rive-de-Gier, France Aluminum Poles Gelsenkirchen, Germany Steel Poles Siedlce, Poland Steel Poles Madrid, Spain Irrigation Equipment Maarheeze, The Netherlands Steel Poles Jebel Ali, U.A.E. Irrigation Equipment Berrechid, Morocco Steel Poles Johannesburg, South Africa Irrigation Equipment 29 V A l m o n t I n d u s t r I e s A n n u a l R e p o r t 2 0 0 7 30 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V BOaRD o f D i r e c t o r s mogens c. Bay Chairman and Chief Executive Officer Valmont Industries, Inc. Director Since 1993 thomas f. madison Lead Director President MLM Partners Director Since 1987 glen a. Barton Retired Chairman and Chief Executive Officer Caterpillar, Inc. Director Since 2004 Kaj den Daas Executive Vice President Philips Lighting, B.V. and Chairman of its North American Lighting Operations Director Since 2004 John e. Jones Retired Chairman, President and Chief Executive Officer CBI Industries, Inc. Director Since 1993 Dr. stephen r. lewis, Jr. President Emeritus and Professor of Economics Carleton College Director Since 2002 Daniel p. neary Chairman and Chief Executive Officer Mutual of Omaha Director Since 2005 walter scott, Jr. Chairman Level 3 Communications, Inc. Director Since 1981 Kenneth e. stinson Chairman Peter Kiewit Sons’, Inc. Director Since 1996 audit committee Walter Scott, Jr., Chairman John E. Jones Daniel P. Neary compensation committee Thomas F. Madison, Chairman Glen A. Barton Dr. Stephen R. Lewis, Jr. Kenneth E. Stinson governance and nominating committee Thomas F. Madison, Chairman Kaj den Daas Dr. Stephen R. Lewis, Jr. Top row, from left to right: Mogens C. Bay, Thomas F. Madison, Glen A. Barton and Kaj den Daas. Second row, from left to right: John E. Jones, Dr. Stephen R. Lewis, Jr. and Daniel P. Neary. Bottom row, from left to right: Walter Scott, Jr. and Kenneth E. Stinson, Jr. OFFicERS co r p o r a t e a nD Bu s i n e s s u n i t s corporate Officers mogens c. Bay Chairman and Chief Executive Officer terry J. mcclain Senior Vice President and Chief Financial Officer e. robert meaney Senior Vice President and Corporate Secretary steven g. Branscombe Vice President Information Technology mark c. Jaksich Vice President Corporate Controller walter p. pasko Vice President Procurement John g. graboski Vice President Human Resources infrastructure thomas D. spears Group President North American Structures and Coatings mark e. treinen Group Vice President Business Development richard s. cornish Vice President and General Manager Galvanizing Services Joseph a. Kerner Vice President and General Manager Specialty Structures thomas f. sanderson Vice President Sales and Marketing North American Structures thomas J. sutko Vice President Operations North American Structures utility Support Structures Division earl foust President steven a. schmid Vice President Operations James p. ruddy Vice President Steel Business Units Douglas c. sherman Vice President Market Development irrigation and tubing leonard m. adams Group President North American Irrigation and Tubing James l. Brown Vice President North American Sales Irrigation stephen B. legrand Vice President Operations Irrigation craig malsam Vice President Engineering Irrigation international victor D. grizzle Group President Valmont International michael Banat Vice President International Structure Sales and Marketing Klavs guldager Vice President Operations Bernhard l. Kiep Vice President and General Manager International Irrigation stéphane Devulder General Manager Southern Europe Huang xiao yong General Manager China 31 V A l m o n t I n d u s t r I e s A n n u a l R e p o r t 2 0 0 7 32 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V cORPORatE a n D s t o c K i n f o r m a t i o n annual Meeting The annual meeting of Valmont’s shareholders will be held at 2:00 p.m. on Monday, April 28, 2008, at the Joslyn Art Museum in Omaha, Nebraska USA. corporate headquarters Valmont Industries, Inc. One Valmont Plaza Omaha, Nebraska 68154-5215 USA Tel Fax Online valmont.com 1-402-963-1000 1-402-963-1198 independent Public accountants Deloitte & Touche LLP Omaha, Nebraska USA legal counsel McGrath North Mullin & Kratz, PC LLO Omaha, Nebraska USA Stock transfer agent and Registrar address Shareholder inquiries to: BNY Mellon Shareowner Services 480 Washington Boulevard New Jersey, NJ 07310-1900 USA 1-866-886-9962 Send certificates for transfer and address changes to: BNY Mellon Shareowner Services 480 Washington Boulevard New Jersey, NJ 07310-1900 USA Shareholder and investor Relations Valmont’s common stock trades on the New York Stock Exchange (NYSE) under the symbol VMI. We make available, free of charge through our Internet Web site at www.valmont.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. Valmont has filed the Chief Executive Officer and Chief Financial Officer certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 as exhibits with the company’s annual report or Form 10-K for the fiscal year ended December 29, 2007. We have also posted on our Web site our (1) Corporate Governance Principles, (2) Charters for the Audit Committee, Compensation Committee, and Governance and Nominating Committee of the Board, (3) Code of Business Conduct, and (4) Code of Ethics for Senior Officers applicable to the Chief Executive Officer, Chief Financial Officer and Controller. Valmont shareholders may also obtain copies of these items at no charge by writing to: Jeffrey s. laudin Investor Relations Department Valmont Industries, Inc. One Valmont Plaza Omaha, NE 68154 USA 1-402-963-1000 Tel 1-402-963-1198 Fax Financial S u m m a r y SElEctED 5-YEar F i n a n c i a l Su m m a r y D o l l a rS i n T h o uSa nD S, e x c e pT p e r Sh a r e a m o u nT S 2007 2006 2005 2004 2003 Operating Data Net sales Operating income Cumulative effect of accounting change Net earnings Depreciation and amortization Capital expenditures Per Share Data Earnings: Basic Diluted Cash dividends Financial Position Working capital Property, plant and equipment, net Total assets Long-term debt, including current installments Shareholders’ equity cash Flow Data $ $ $ 1,499,834 155,626 – 94,713 35,176 56,610 3.71 3.63 0.410 350,561 232,684 1,052,613 223,248 510,613 $ $ $ $ $ $ 1,281,281 110,085 – 61,544 36,541 27,898 2.44 2.38 0.370 277,736 200,610 892,310 221,137 401,281 1,108,100 82,863 – 39,079 39,392 35,119 1.61 1.54 0.335 229,161 194,676 802,042 232,340 328,675 Net cash flows from operations Net cash flows from investing activities Net cash flows from financing activities $ 110,249 (71,040) (210) $ $ 59,130 (36,735) (6,946) 133,777 (30,354) (93,829) $ $ $ $ $ $ 1,031,475 70,112 – 26,881 38,460 17,182 1.13 1.10 0.320 277,444 205,655 843,351 322,775 294,655 $ $ $ 837,625 54,623 (366) 25,487 34,597 17,679 1.07 1.05 0.315 169,568 190,103 613,022 149,662 265,494 $ 5,165 (150,673) 139,741 52,928 (21,116) (26,442) 697,691 7.6% 97,541 $ $ 483,764 7.4% 86,515 Financial Measures Invested capital(a) Return on invested capital(a) EBITDA(b) Return on beginning shareholders’ equity(c) Long-term debt as a percent of invested capital(d) Year End Data $ $ 819,092 14.0% 191,635 $ $ 706,855 $ 641,392 11.1% 7.7% 146,029 $ 122,317 23.6% 18.7% 13.3% 10.1% 10.5% 27.3% 31.3% 36.2% 46.3% 30.9% Shares outstanding (000) Approximate number of shareholders Number of employees 25,945 5,800 6,029 25,634 5,600 5,684 24,765 5,700 5,336 24,162 5,600 5,542 23,825 5,400 5,074 See footnotes on page 36. 34 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V SEgMEnt Su m m a r y D o l l a rS i n mi l l i o nS, e x c e pT p e r Sh a r e a m o u nT S consolidated Net sales Gross profit as a percent of sales SG&A expense as a percent of sales Operating income as a percent of sales Net interest expense Effective tax rate Net earnings Diluted earnings per share Engineered Support Structures Segment Net sales Gross profit SG&A expense Operating income Utility Support Structures Segment Net sales Gross profit SG&A expense Operating income coatings Segment Net sales Gross profit SG&A expense Operating income irrigation Segment Net sales Gross profit SG&A expense Operating income Other Net sales Gross profit SG&A expense Operating income net corporate expense Gross profit SG&A expense Operating loss NM = Not meaningful 2007 2006 Change 2007-2006 2005 Change 2006-2005 $ 1,499.8 399.8 $ 1,281.3 326.7 17.1 % $ 22.4 % 1,108.1 278.3 26.7 % 244.2 16.3 % 155.6 10.4 % 14.9 31.4 % 94.7 3.63 $ $ 25.5 % 216.6 16.9 % 110.1 8.6 % 15.1 32.0 % 61.5 2.38 $ $ $ $ $ 581.5 154.1 98.6 55.5 327.3 82.4 38.0 44.4 106.5 33.9 10.9 23.0 388.9 98.5 46.8 51.7 95.6 30.7 11.8 18.9 509.3 136.0 89.8 46.2 280.8 62.9 31.9 31.0 90.4 29.5 10.7 18.8 312.8 73.9 40.9 33.0 87.9 25.1 12.5 12.5 12.7 % 41.3 % (1.5) % 53.9 % $ 52.3 % $ 14.2 % $ 13.3 % 9.8 % 20.1 % 16.5 % $ 31.0 % 19.2 % 43.1 % 17.7 % $ 15.0 % 1.7 % 22.6 % 24.3 % $ 33.3 % 14.4 % 56.7 % 8.7 % $ 22.3 % (5.6) % 51.2 % 25.1 % 195.4 17.6 % 82.9 7.5 % 17.7 37.8 % 39.1 1.54 470.7 127.2 82.6 44.6 218.9 48.6 27.9 20.7 72.1 17.6 9.2 8.4 260.4 61.0 36.2 24.8 86.0 24.9 14.4 10.5 $ 0.2 38.1 (37.9) (0.7) 30.6 (31.4) $ NM 24.3 % (20.7) % (1.0) 25.1 (26.1) $ $ $ $ $ $ $ $ 15.6 % 17.4 % 10.8 % 32.8 % (14.7) % 57.3 % 54.5 % 8.2 % 6.9 % 8.7 % 3.6 % 28.3 % 29.4 % 14.3 % 49.8 % 25.4 % 67.6 % 16.3 % 123.8 % 20.1 % 21.1 % 13.0 % 33.1 % 2.2 % 0.8 % (13.2) % 19.0 % 30.0 % 21.9 % (20.3) % 35 V A l m o n t I n d u s t r I e s A n n u a l R e p o r t 2 0 0 7 36 7 0 0 2 t r o p e R l a u n n A s e I r t s u d n I t n o m l A V Footnotes (a) Return on Invested Capital is calculated as Operating Income (after-tax) divided by the average of beginning and ending Invested Capital. Invested Capital represents Total Assets minus Accounts Payable, Accrued Expenses and Dividends Payable. Return on Invested Capital is one of our key operating ratios, as it allows investors to analyze our operating performance in light of the amount of investment required to generate our operating profit. Return on Invested Capital is also a measurement used to determine management incentives. Return on Invested Capital is not a measure of financial performance or liquidity under generally accepted accounting principles (GAAP). Accordingly, Return on Invested Capital should not be considered in isolation or as a substitute for net earnings, cash flows from operations or other income or cash flow data prepared in accordance with GAAP or as a measure of our operating performance or liquidity. Return on Invested Capital, as presented, may not be comparable to similarly titled measures of other companies. (b) Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) is one of our key financial ratios in that it is the basis for determining our maximum borrowing capacity at any one time. Our bank credit agreements contain a financial covenant that our total interest-bearing debt not exceed 3.75x EBITDA for the most recent twelve month period. If this covenant is violated, we may incur additional financing costs or be required to pay the debt before its maturity date. EBITDA is not a measure of financial performance or liquidity under GAAP and, accordingly, should not be considered in isolation or as a substitute for net earnings, cash flows from operations or other income or cash flow data prepared in accordance with GAAP or as a measure of our operating performance or liquidity. (c) Return on beginning shareholders' equity is calculated by dividing Net earnings by the prior year's ending Shareholders equity. (d) Long-term debt as a percent of invested capital is calculated as the sum of Current portion of long-term debt and Long-term debt divided by Total Invested Capital. This is one of our key financial ratios in that it measures the amount of financial leverage on our balance sheet at any point in time. We also have covenants under our major debt agreements that relate to the amount of debt we carry. If those covenants are violated, we may incur additional financing costs or be required to pay the debt before its maturity date. We have an internal target to maintain this ratio at or below 40%. This ratio may exceed 40% from time to time to take advantage of opportunities to grow and improve our businesses. Long-term debt as a percent of invested capital is not a measure of financial performance or liquidity under GAAP and, accordingly, should not be considered in isolation or as a substitute for net earnings, cash flows from operations or other income or cash flow data prepared in accordance with GAAP or as a measure of our operating performance or liquidity. (e) See pages 23-25 of our attached Form 10-K for tables that show how the financial measurement described in the above footnotes are calculated from our financial statements. Photo information Cover: “Earth Flight,” steel sculpture outside Valmont’s corporate headquarters created by artist Milton B. Heinrich of Blair, NE. Page 10: Thomas D. Spears, Group President, Engineered Support Structures Division. Page 12: Valmont provides an array of roadway and traffic structures. Page 13: Valmont lighting pole designs range from classic, to historic, to contemporary. Page 14: Earl Foust, President, Utility Support Structures Division. Page 16: Transmission poles like these Valmont structures support power networks around the world. Page 17: Valmont’s substation structure, transmission structure and distribution poles deliver power to end consumers. Page 18: Leonard M. Adams, Group President, Irrigation Division. Page 20-21: Valmont’s center pivot irrigation equipment improves crop yields and conserves water. Page 22-23: From large steel poles to small component parts, Valmont’s hot dip galvanizing services protect metal products from corrosion. Page 24: Victor D. Grizzle, Group President, International Division. Page 26: Valmont's center pivot irrigation equipment in the Middle East. Page 27: Road lighting in Helsinki designed and manufac- tured by Tehomet, a Valmont company. Forward-looking Statements This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which the Company operates, as well as management’s perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances. These statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company’s control) and assumptions. Management believes that these forward-looking statements are based on reasonable assumptions. Many factors could affect the Company’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include, among other things, risk factors described from time to time in the Company’s reports to the Securities and Exchange Commission, as well as future economic and 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, and actions and policy changes of domestic and foreign governments. The Company cautions that any forward-looking statements included in this report are made as of the date of this report. Valmont IndustrIes, Inc. one Valmont Plaza omaha, nebrask a 68154-5215 usa 402 .963 .1000 Valmont.com 

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