Lindsay Corporation Reports Fiscal 2024 First Quarter Results

Rhea-AI Summary

Lindsay Corporation (LNN) announced results for its first quarter, reporting North America irrigation revenue growth, improved demand for irrigation equipment, and stable irrigation equipment pricing. However, total revenues decreased by 8% to $161.4 million, with net earnings down by 18% to $15.0 million. International irrigation sales were lower, impacting operating income and margin. Infrastructure segment revenues decreased by 12% to $21.2 million, with a backlog of unfilled orders at $86.8 million.

Positive

• North America irrigation revenue growth driven by improved demand for irrigation equipment
• Stable irrigation equipment pricing supporting gross margin improvement
• Improved infrastructure operating performance driven by growth in Road Zipper SystemTM leasing
• Active quoting activity in international irrigation markets

Negative

• Total revenues decreased by 8% to $161.4 million
• Net earnings down by 18% to $15.0 million
• International irrigation revenues decreased by 25%

Insights

Market Research Analyst

Lindsay Corporation's recent financial results indicate a mixed performance with a notable decrease in total revenue and net earnings, contrasted by growth in North American irrigation revenue. The 8% decrease in total revenue is a critical metric for investors, as it signifies a potential shift in the company's market dynamics, particularly in international markets. A 25% drop in international irrigation revenues, largely due to decreased sales in Brazil and Argentina, could suggest regional challenges or competitive pressures. However, the company's ability to maintain stable pricing and gross margin despite these headwinds is a positive sign of pricing power and operational efficiency.

From a market strategy perspective, the increase in North American irrigation revenue by 7% and the improved infrastructure operating performance, driven by growth in Road Zipper System leasing, demonstrate resilience and diversification in Lindsay's business model. The shift towards a greater proportion of leasing revenue in the infrastructure segment, which is accretive to overall margins, is a strategic move that could provide more stable, recurring income and improve profitability over the long term.

Investors may also consider the company's outlook, which appears cautiously optimistic. The anticipation of stable demand for irrigation equipment in North America, due to favorable farm income projections and moderating inflation, could support a recovery in sales volumes. Furthermore, the potential for increased U.S. infrastructure spending could bolster the infrastructure segment, particularly in leasing and road safety product sales. However, the 32% decrease in the backlog of unfilled orders may raise concerns about future revenue streams.

Financial Analyst

Analyzing the financial health of Lindsay Corporation, the 18% decline in net earnings and a corresponding decrease in earnings per share from $1.65 to $1.36 are significant indicators of profitability pressures. The company's operating margin contraction from 14.0% to 13.1% further underscores the impact of lower revenues on operational efficiency. While gross margins have remained stable, the company's ability to manage fixed operating expenses against fluctuating sales will be an important factor for future profitability.

Investors should note the higher effective income tax rate impacting net earnings, which is an external variable that could fluctuate in future quarters. The mention of higher interest income partially offsetting lower operating income suggests a savvy management of cash reserves or investments, mitigating some of the negative impacts on net earnings.

The reported financials also reflect the impact of foreign currency translation, which provided a $1.8 million benefit. This indicates that currency exchange rates can have a material effect on reported international sales and thus, investors should consider currency risk as part of their evaluation of the company's financial performance.

Agricultural Economist

From an agricultural economics standpoint, Lindsay Corporation's performance is closely tied to the agricultural sector's health. The increase in North American irrigation revenue post-harvest suggests that grower profitability is a significant driver of equipment demand. The company's projection of stable demand for irrigation equipment, against the backdrop of current farm income projections and the macroeconomic environment, is pivotal for future performance. Flat to lower interest rates could support capital investments in irrigation technology, potentially benefiting Lindsay's North American market segment.

However, the volatility in international markets, particularly in South America, highlights the susceptibility of Lindsay's international segment to regional economic conditions and government financing programs. The reliance on developing markets, with their focus on food security and grain supplies, suggests potential for growth but also exposes the company to geopolitical and economic instability risks.

It is also worth noting the role of U.S. infrastructure spending in driving demand for the company's Road Zipper System. The infrastructure bill and related expenditures could provide a tailwind for Lindsay's infrastructure segment, particularly if the company can capitalize on opportunities for leasing and road safety products.

OMAHA, Neb.--(BUSINESS WIRE)-- Lindsay Corporation (NYSE: LNN), a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, today announced results for its first quarter which ended on November 30, 2023.

Key Highlights

• North America irrigation revenue growth driven by improved demand for irrigation equipment
• Irrigation equipment pricing remains stable, supporting gross margin improvement
• Improved infrastructure operating performance driven by growth in Road Zipper System^TM leasing

“Demand for irrigation equipment in North America improved in the quarter, reflecting increased order activity as grower profitability became more certain post-harvest compared to the delayed investment decisions we had experienced in last year's spring selling season,” said Randy Wood, President and Chief Executive Officer. "Quoting activity in international irrigation markets remains active and growing, however revenues for the quarter were lower in South America following the record revenues captured in Brazil in the prior year. Across our infrastructure business, growth in our Road Zipper System leasing revenues and sales of our road safety products largely offset muted Road Zipper System project activity in the quarter. Importantly, our leasing business continues to represent a greater proportion of our infrastructure segment revenues with this sales mix accretive to Lindsay's overall margin profile."

First Quarter Summary

Consolidated Financial Summary		First Quarter
(dollars in millions, except per share amounts)		FY2024		FY2023		$ Change		% Change
Total revenues		$161.4		$176.2		($14.8)		(8%)
Operating income		$21.1		$24.6		($3.5)		(14%)
Operating margin		13.1%		14.0%
Net earnings		$15.0		$18.2		($3.2)		(18%)
Earnings per share		$1.36		$1.65		($0.29)		(18%)

Revenues for the quarter were $161.4 million, a decrease of $14.8 million, or 8 percent, compared to revenues of $176.2 million in the prior year first quarter. The decrease resulted primarily from lower international irrigation sales compared to prior year first quarter.

Operating income for the quarter was $21.1 million, a decrease of $3.5 million, or 14 percent, compared to operating income of $24.6 million in the prior year first quarter. Operating margin was 13.1 percent of sales compared to 14.0 percent of sales in the prior year first quarter. The decrease in operating income and margin resulted primarily from lower revenues as gross margin improved compared to prior year first quarter.

Net earnings for the quarter were $15.0 million, or $1.36 per diluted share, compared with net earnings of $18.2 million, or $1.65 per diluted share, in the prior year first quarter. Lower net earnings resulted largely from lower operating income that was partially offset by higher interest income. In addition, net earnings in the quarter were impacted by a higher effective income tax rate compared to the prior year first quarter.

First Quarter Segment Results

Irrigation Segment		First Quarter
(dollars in millions)		FY2024		FY2023		$ Change		% Change
Revenues:
North America		$89.4		$83.9		$5.4		7%
International		$50.8		$68.1		($17.3)		(25%)
Total revenues		$140.2		$152.1		($11.9)		(8%)
Operating income		$25.3		$28.6		($3.3)		(12%)
Operating margin		18.1%		18.8%

Irrigation segment revenues for the quarter were $140.2 million, a decrease of $11.9 million, or 8 percent, compared to $152.1 million in the prior year first quarter. North America irrigation revenues of $89.4 million increased $5.4 million, or 7 percent, compared to the prior year first quarter. The increase in North America irrigation revenues resulted primarily from higher unit sales volume that was partially offset by the impact of a less favorable mix of shorter machines compared to the prior year first quarter. Average selling prices remained stable and were comparable to the prior year first quarter.

International irrigation revenues of $50.8 million decreased $17.3 million, or 25 percent. The decrease resulted primarily from lower sales in Brazil and Argentina compared to record sales in those markets in the prior year first quarter. Changes in the timing of funding under the financing program in Brazil contributed to lower sales in the quarter relative to the prior year first quarter. Revenue in the current year also benefited from the favorable effects of foreign currency translation of approximately $1.8 million compared to the prior year first quarter.

Irrigation segment operating income for the quarter was $25.3 million, a decrease of $3.3 million, or 12 percent, compared to the prior year first quarter. Operating margin was 18.1 percent of sales, compared to 18.8 percent of sales in the prior year first quarter. Lower operating income and operating margin resulted primarily from lower international irrigation revenues and the resulting impact from deleverage of fixed operating expenses. Gross margin remained consistent with the prior year first quarter.

Infrastructure Segment		First Quarter
(dollars in millions)		FY2024		FY2023		$ Change		% Change
Total revenues		$21.2		$24.1		($2.9)		(12%)
Operating income		$3.6		$3.4		$0.2		7%
Operating margin		17.1%		14.0%

Infrastructure segment revenues for the quarter were $21.2 million, a decrease of $2.9 million, or 12 percent, compared to $24.1 million in the prior year first quarter. The decrease resulted from lower Road Zipper System sales, which were largely offset by higher Road Zipper System lease revenue and higher sales of road safety products.

Infrastructure segment operating income for the quarter was $3.6 million, an increase of $0.2 million or 7 percent compared to the prior year first quarter. Operating margin was 17.1 percent of sales, compared to 14.0 percent of sales in the prior year first quarter. Increased operating income and operating margin resulted primarily from a more favorable margin mix of revenue with higher lease revenue compared to the prior year first quarter.

The backlog of unfilled orders at November 30, 2023 was $86.8 million compared with $129.6 million at November 30, 2022. The irrigation backlog was lower compared to the prior year while the infrastructure backlog was comparable to the prior year.

Outlook

Mr. Wood concluded, “While customers will invest cautiously, current farm income projections, moderating inflation and an anticipation of flat to lower interest rates provide a stable backdrop for irrigation equipment demand in North America. We expect sales volume levels in developed international markets, particularly Brazil, to improve over the balance of the year, and we continue to see project opportunities in developing markets supported by continuing global concerns over food security and global grain supplies.”

“In our infrastructure business, we are beginning to see the positive impact of increased U.S. infrastructure spending, particularly in Road Zipper System leasing and sales of road safety products. We also continue to actively manage projects through our Road Zipper System project sales funnel, however the timing of project implementation remains challenging to predict.”

First Quarter Conference Call

Lindsay’s fiscal 2024 first quarter investor conference call is scheduled for 11:00 a.m. Eastern Time today. Interested investors may participate in the call by dialing (833) 535-2202 in the U.S., or (412) 902-6745 internationally, and requesting the Lindsay Corporation call. Additionally, the conference call will be simulcast live on the Internet and can be accessed via the investor relations section of the Company's Web site, www.lindsay.com. Replays of the conference call will remain on our Web site through the next quarterly earnings release. The Company will have a slide presentation available to augment management's formal presentation, which will also be accessible via the Company's Web site.

About the Company

Lindsay Corporation (NYSE: LNN) is a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology. Established in 1955, the company has been at the forefront of research and development of innovative solutions to meet the food, fuel, fiber and transportation needs of the world’s rapidly growing population. The Lindsay family of irrigation brands includes Zimmatic^® center pivot and lateral move agricultural irrigation systems, FieldNET^® and FieldWise^® remote irrigation management technology, FieldNET Advisor™ irrigation scheduling technology, and industrial IoT solutions. Also a global leader in the transportation industry, Lindsay Transportation Solutions manufactures equipment to improve road safety and keep traffic moving on the world’s roads, bridges and tunnels, through the Barrier Systems^®, Road Zipper^® and Snoline™ brands. For more information about Lindsay Corporation, visit www.lindsay.com.

Concerning Forward-looking Statements

This release contains forward-looking statements that are subject to risks and uncertainties and which reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results. You can find a discussion of many of these risks and uncertainties in the annual, quarterly and current reports that the Company files with the Securities and Exchange Commission. Forward-looking statements include information concerning possible or assumed future results of operations and planned financing of the Company and those statements preceded by, followed by or including the words “anticipate,” “estimate,” “believe,” “intend,” "expect," "outlook," "could," "may," "should," “will,” or similar expressions. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking information contained in this press release.

LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
		Three months ended
(in thousands, except per share amounts)			November 30, 2023					November 30, 2022
Operating revenues		$		161,358			$		176,159
Cost of operating revenues				111,453					123,139
Gross profit				49,905					53,020
Operating expenses:
Selling expense				9,817					9,677
General and administrative expense				14,662					14,437
Engineering and research expense				4,352					4,308
Total operating expenses				28,831					28,422
Operating income				21,074					24,598
Other income (expense):
Interest expense				(877	)				(909	)
Interest income				1,068					373
Other income (expense), net				(270	)				(57	)
Total other income (expense)				(79	)				(593	)
Earnings before income taxes				20,995					24,005
Income tax expense				5,976					5,788
Net earnings		$		15,019			$		18,217
Earnings per share:
Basic		$		1.36			$		1.66
Diluted		$		1.36			$		1.65
Shares used in computing earnings per share:
Basic				11,017					10,989
Diluted				11,059					11,073
Cash dividends declared per share		$		0.35			$		0.34

LINDSAY CORPORATION AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Unaudited)
		Three months ended
(in thousands)			November 30, 2023					November 30, 2022
Operating revenues:
Irrigation:
North America		$		89,377			$		83,934
International				50,791					68,149
Irrigation segment				140,168					152,083
Infrastructure segment				21,190					24,076
Total operating revenues		$		161,358			$		176,159
Operating income:
Irrigation segment		$		25,307			$		28,641
Infrastructure segment				3,619					3,372
Corporate				(7,852	)				(7,415	)
Total operating income		$		21,074			$		24,598

The Company manages its business activities in two reportable segments as follows:

Irrigation - This reporting segment includes the manufacture and marketing of center pivot, lateral move, and hose reel irrigation systems, as well as various innovative technology solutions such as GPS positioning and guidance, variable rate irrigation, remote irrigation management and scheduling technology, irrigation consulting and design and industrial IoT solutions.

Infrastructure – This reporting segment includes the manufacture and marketing of moveable barriers, specialty barriers, crash cushions and end terminals, and road marking and road safety equipment.

LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)		November 30, 2023					November 30, 2022					August 31, 2023
ASSETS
Current assets:
Cash and cash equivalents		$		159,381			$		99,168			$		160,755
Marketable securities				16,278					11,424					5,556
Receivables, net				143,049					157,116					144,774
Inventories, net				164,144					188,404					155,932
Other current assets, net				18,450					25,295					20,467
Total current assets				501,302					481,407					487,484
Property, plant, and equipment, net				103,818					93,518					99,681
Intangibles, net				27,005					17,760					27,719
Goodwill				84,029					67,295					83,121
Operating lease right-of-use assets				17,544					18,477					17,036
Deferred income tax assets				12,712					8,117					10,885
Other noncurrent assets, net				17,508					21,722					19,734
Total assets		$		763,918			$		708,296			$		745,660
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$		52,242			$		58,535			$		44,278
Current portion of long-term debt				227					223					226
Other current liabilities				89,502					89,827					91,604
Total current liabilities				141,971					148,585					136,108
Pension benefits liabilities				4,308					4,812					4,382
Long-term debt				115,120					115,297					115,164
Operating lease liabilities				17,746					19,161					17,689
Deferred income tax liabilities				695					693					689
Other noncurrent liabilities				17,218					14,960					15,977
Total liabilities				297,058					303,508					290,009
Shareholders' equity:
Preferred stock				—					—					—
Common stock				19,115					19,090					19,094
Capital in excess of stated value				98,628					93,079					98,508
Retained earnings				647,455					593,475					636,297
Less treasury stock - at cost				(277,238	)				(277,238	)				(277,238	)
Accumulated other comprehensive loss, net				(21,100	)				(23,618	)				(21,010	)
Total shareholders' equity				466,860					404,788					455,651
Total liabilities and shareholders' equity		$		763,918			$		708,296			$		745,660

LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Three months ended
(in thousands)		November 30, 2023					November 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$		15,019			$		18,217
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			5,307					4,871
Provision for uncollectible accounts receivable			71					704
Deferred income taxes			(1,666	)				1,129
Share-based compensation expense			1,603					1,473
Unrealized foreign currency transaction loss (gain)			79					(83	)
Other, net			73					289
Changes in assets and liabilities:
Receivables			1,689					(19,828	)
Inventories			(7,970	)				4,803
Other current assets			2,762					3,526
Accounts payable			7,087					123
Other current liabilities			(4,263	)				(11,898	)
Other noncurrent assets and liabilities			2,081					1,356
Net cash provided by operating activities			21,872					4,682
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment			(6,941	)				(3,798	)
Purchases of marketable securities			(12,992	)				—
Proceeds from maturities of marketable securities			2,325					—
Other investing activities, net			(593	)				(384	)
Net cash used in investing activities			(18,201	)				(4,182	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid			(3,861	)				(3,742	)
Common stock withheld for payroll tax obligations			(1,575	)				(2,471	)
Other financing activities, net			56					43
Net cash used in financing activities			(5,380	)				(6,170	)
Effect of exchange rate changes on cash and cash equivalents			335					(210	)
Net change in cash and cash equivalents			(1,374	)				(5,880	)
Cash and cash equivalents, beginning of period			160,755					105,048
Cash and cash equivalents, end of period	$		159,381			$		99,168

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240104210742/en/

For further information, contact:



LINDSAY CORPORATION:

Alicia Pfeifer

Senior Director, Investor Relations & Treasury

402-933-6429

Alicia.Pfeifer@lindsay.com



Alpha IR:

Joe Caminiti or Stephen Poe

312-445-2870

LNN@alpha-ir.com

Source: Lindsay Corporation

FAQ

What is the ticker symbol for Lindsay Corporation?

The ticker symbol for Lindsay Corporation is LNN.

What were the first quarter total revenues for Lindsay Corporation?

The first quarter total revenues for Lindsay Corporation were $161.4 million, a decrease of 8% compared to the prior year.

What was the net earnings for Lindsay Corporation in the first quarter?

The net earnings for Lindsay Corporation in the first quarter were $15.0 million, down by 18% compared to the prior year.

How did the North America irrigation revenues perform in the first quarter?

The North America irrigation revenues increased by 7% in the first quarter, driven by improved demand for irrigation equipment.

What was the change in international irrigation revenues for Lindsay Corporation in the first quarter?

The international irrigation revenues for Lindsay Corporation decreased by 25% in the first quarter, primarily due to lower sales in Brazil and Argentina compared to record sales in those markets in the prior year first quarter.