Lindsay Corporation Reports Third Quarter Fiscal 2024 Results

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Insights

The third quarter fiscal results for Lindsay Corporation present a mixed picture for investors. The company reported diluted earnings per share of $1.85, a notable increase from $1.53 in the same period last year. This includes a $4.8 million income tax credit in Brazil, which significantly boosted net earnings. Without this credit, the earnings might not look as positive.

Total revenues declined from $164.6 million last year to $139.2 million this quarter, a drop of 15. The drop in revenue is mainly due to softness in the global irrigation segment, with North American irrigation revenues down 9 and international irrigation revenues falling 31. Despite this, the infrastructure segment showed strength, with revenues increasing by 11 and operating income rising by 76 due to higher Road Zipper System sales and higher lease revenues.

A key takeaway for investors is the large multi-year irrigation supply agreement valued at over $100 million. This project in the MENA region is expected to bolster revenues starting in the fourth quarter of fiscal 2024 and continuing through the first quarter of fiscal 2026. Furthermore, the company completed $17.9 million in share repurchases during the quarter, aligning with its capital allocation priorities to enhance shareholder value. However, the decrease in the irrigation segment's performance due to factors like high precipitation in North America and economic constraints in Brazil might concern some investors.

Overall, while the infrastructure segment's robust performance and the new large-scale project are positive, the significant downturn in the irrigation segment and dependency on future project commencements bring an element of risk. Investors should weigh these factors when considering Lindsay Corporation's future performance.

From a market perspective, Lindsay Corporation's performance in the third quarter reflects sector-specific challenges and opportunities. The irrigation segment faced headwinds due to weather conditions in North America and economic issues in Brazil, leading to a 19 decline in revenues. Lower commodity prices and tight credit availability in Brazil have impacted growers' ability to invest in irrigation equipment, which directly affects Lindsay's sales.

Conversely, the infrastructure segment's performance is encouraging, with a 25.8 operating margin driven by higher sales and lease revenues of the Road Zipper System. This indicates a strong demand for infrastructure products, likely supported by increased U.S. infrastructure spending.

The company's backlog of unfilled orders has increased significantly to $246.9 million from $94.5 million in the same period last year. This includes the substantial MENA project, which underscores Lindsay's potential to secure and execute large-scale projects. However, the timing of revenue recognition from these projects remains uncertain, which could affect short-term financial performance.

For retail investors, it's important to consider the varying performance across segments. The infrastructure segment shows promising growth, while the irrigation segment's issues may persist in the near term. The strategic move towards international projects and ongoing share repurchases reflect confidence in long-term growth, yet short-term volatility remains a possibility.

06/27/2024 - 06:45 AM

Infrastructure results support consolidated margin performance, partially offsetting global irrigation market softness

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 third quarter ended on May 31, 2024.

Key Highlights

Diluted earnings per share of $1.85 compared to $1.53 in the prior year quarter
Recognition of an income tax credit in Brazil adds $4.8 million to net earnings
Secured large multi-year international irrigation supply agreement valued at more than $100 million
Completed $17.9 million in share repurchases during the quarter

“Market conditions in our irrigation segment continue to weigh on farmer sentiment, resulting in demand softness. In North America, high precipitation levels and wet field conditions across the Midwest contributed to lower sales of irrigation equipment and replacement parts during our third quarter," said Randy Wood, President and Chief Executive Officer. "In Brazil, the market continues to be tempered by lower commodity prices and tight credit availability. We remain encouraged by the growing strength and momentum in our infrastructure business, supported by new project sales and momentum in leasing revenues of our Road Zipper System™. The growth and margin expansion we achieved in our infrastructure business for the quarter helped to offset some of the softness in the irrigation business."

"Earlier this month we announced that we had entered into a multi-year supply agreement to provide Zimmatic™ irrigation systems and FieldNET™ remote management and scheduling technology to a significant customer in the Middle East and North Africa (MENA) region. The project, valued at more than $100 million, is the largest in Lindsay's history and further demonstrates our ability to execute large-scale and complex projects that address the critical needs of our customers. The execution of this project will help to enhance the customer's ability to increase food production, conserve scarce water resources and improve quality of life. Notably, the attributes of this key project are reflective of the growth opportunities presented in international markets, where secular global trends align with Lindsay's ability to help customers optimize resources while creating sustained value through our leading combination of irrigation hardware and precision technology platforms."

"During the third quarter we also completed share repurchases totaling $17.9 million, which aligns with our capital allocation priorities to utilize our strong balance sheet to enhance shareholder value. Additionally, this further demonstrates our ability to both invest in value creation opportunities, including the $50 million investment in Lindsay, Nebraska announced earlier this year, while also returning cash to shareholders at opportune times."

Third Quarter Summary

Consolidated Financial Summary	Third Quarter
(dollars in millions, except per share amounts)	FY2024	FY2023	$ Change	% Change

Total revenues	$139.2	$164.6	($25.4)	(15%)
Operating income	$19.9	$27.0	($7.0)	(26%)
Operating margin	14.3%	16.4%
Net earnings	$20.4	$16.9	$3.5	21%
Diluted earnings per share	$1.85	$1.53	$0.32	21%

Revenues for the quarter were $139.2 million, a decrease of $25.4 million, or 15 percent, compared to revenues of $164.6 million in the prior year third quarter. An increase in infrastructure segment revenues was more than offset by lower irrigation segment revenues compared to the prior year third quarter.

Operating income for the quarter was $19.9 million, a decrease of $7.0 million, or 26 percent, compared to operating income of $27.0 million in the prior year third quarter. Operating margin was 14.3 percent of sales, compared to 16.4 percent of sales in the prior year quarter. The decrease in operating income and margin resulted mainly from lower irrigation segment revenues and the impact from deleverage of fixed operating expenses. This decrease was partially offset by improved operating income and operating margin in the infrastructure segment.

Net earnings for the quarter were $20.4 million, or $1.85 per diluted share, compared with net earnings of $16.9 million, or $1.53 per diluted share, for the prior year third quarter. The impact of lower operating income was favorably offset by higher other income, driven by increased interest income and favorable foreign currency translation results compared to the prior year third quarter, along with the recognition of an income tax credit in Brazil of $4.8 million, or $0.44 per diluted share.

Third Quarter Segment Results

Irrigation Segment	Third Quarter
(dollars in millions)	FY2024	FY2023	$ Change	% Change
Revenues:
North America	$68.2	$75.0	($6.8)	(9%)
International	$46.6	$67.5	($20.9)	(31%)
Total revenues	$114.8	$142.6	($27.7)	(19%)
Operating income	$19.5	$30.7	($11.2)	(36%)
Operating margin	17.0%	21.6%

Irrigation segment revenues for the quarter were $114.8 million, a decrease of $27.7 million, or 19 percent, compared to $142.6 million in the prior year third quarter. North America irrigation revenues of $68.2 million decreased $6.8 million, or 9 percent, compared to the prior year third quarter. The decrease resulted from a combination of lower unit sales volume of irrigation equipment, lower sales of replacement parts and slightly lower average selling prices compared to the prior year third quarter.

International irrigation revenues of $46.6 million decreased $20.9 million, or 31 percent, compared to the prior year third quarter. The decrease resulted primarily from lower sales volumes in Brazil and other Latin America markets compared to the prior year third quarter while demand in other markets remained stable. In Brazil, order activity remains constrained due to the impact lower commodity prices have on grower profitability and available liquidity, which is reducing growers' ability to invest in irrigation equipment in the near term. The decrease in revenues was partially offset by the favorable effects of foreign currency translation of approximately $0.7 million compared to the prior year third quarter.

Irrigation segment operating income for the quarter was $19.5 million, a decrease of $11.2 million, or 36 percent, compared to the prior year third quarter. Operating margin was 17.0 percent of sales, compared to 21.6 percent of sales in the prior year third quarter. Lower operating income and margin resulted mainly from lower revenues and the impact from deleverage of fixed operating expenses.

Infrastructure Segment	Third Quarter
(dollars in millions)	FY2024	FY2023	$ Change	% Change

Total revenues	$24.4	$22.0	$2.4	11%
Operating income	$6.3	$3.6	$2.7	76%
Operating margin	25.8%	16.2%

Infrastructure segment revenues for the quarter were $24.4 million, an increase of $2.4 million, or 11 percent, compared to $22.0 million in the prior year third quarter. The increase resulted from higher Road Zipper System sales and higher lease revenues compared to the prior year third quarter. The impact of higher sales of road safety products in the U.S. was offset by lower sales in international markets compared to the prior year third quarter.

Infrastructure segment operating income for the quarter was $6.3 million, an increase of $2.7 million, or 76 percent, compared to the prior year third quarter. Operating margin was 25.8 percent of sales, compared to 16.2 percent of sales in the prior year third quarter. Increased operating income and operating margin resulted from higher revenues and a more favorable margin mix of revenues with higher Road Zipper System sales and lease revenues compared to the prior year third quarter.

The backlog of unfilled orders as of May 31, 2024, was $246.9 million compared with $94.5 million as of May 31, 2023. Included in these backlogs are amounts of $62.0 million and $5.2 million, respectively, for orders that are not expected to be fulfilled within the subsequent twelve months. The backlog in both segments was higher compared to the prior year, with the increase in irrigation backlog resulting from the addition of the large project in the MENA region. Revenues for this project are expected to be recognized beginning in the fourth quarter of fiscal 2024 and continuing through the first quarter of fiscal 2026.

Outlook

Mr. Wood concluded, “We are now in the growing season in North America, when weather conditions will influence crop yields, production estimates and ultimately the direction of crop prices and net farm income for the year. We expect demand in North America to remain tempered until the outlook for net farm income improves. Similarly, we expect current market conditions in Brazil to temper demand for irrigation equipment in the near term, while we remain confident in the longer-term growth opportunity in that market. We expect continued growth in developing international markets driven by the ever-present need to address food security, as evidenced by the large project we secured in the MENA region."

“Supported by increased U.S. infrastructure spending, we expect continued growth in Road Zipper System lease revenues and sales of road safety products. We also remain optimistic regarding our Road Zipper System project sales pipeline; however the timing of individual project recognition remains challenging to predict.”

Third Quarter Conference Call

Lindsay’s fiscal 2024 third 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 website, www.lindsay.com. Replays of the conference call will remain on our website 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 website.

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, 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								Nine months ended
(in thousands, except per share amounts)		May 31, 2024				May 31, 2023				May 31, 2024				May 31, 2023

Operating revenues	$		139,199		$		164,553		$		452,076		$		506,953
Cost of operating revenues			92,702				111,332				306,720				346,454
Gross profit			46,497				53,221				145,356				160,499

Operating expenses:
Selling expense			9,579				8,681				28,894				27,092
General and administrative expense			12,695				13,061				40,823				41,237
Engineering and research expense			4,287				4,522				12,531				13,350
Total operating expenses			26,561				26,264				82,248				81,679

Operating income			19,936				26,957				63,108				78,820

Other income (expense):
Interest expense			(767	)			(948	)			(2,474	)			(2,895	)
Interest income			961				680				3,324				1,545
Other income (expense), net			43				(957	)			(93	)			(2,000	)
Total other income (expense)			237				(1,225	)			757				(3,350	)

Earnings before income taxes			20,173				25,732				63,865				75,470

Income tax (benefit) expense			(206	)			8,851				10,344				22,320

Net earnings	$		20,379		$		16,881		$		53,521		$		53,150

Earnings per share:
Basic	$		1.85		$		1.53		$		4.86		$		4.83
Diluted	$		1.85		$		1.53		$		4.84		$		4.80

Shares used in computing earnings per share:
Basic			10,996				11,008				11,016				11,001
Diluted			11,030				11,052				11,055				11,063

Cash dividends declared per share	$		0.35		$		0.34		$		1.05		$		1.02

LINDSAY CORPORATION AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Unaudited)

	Three months ended									Nine months ended
(in thousands)		May 31, 2024				May 31, 2023				May 31, 2024				May 31, 2023
Operating revenues:
Irrigation:
North America	$		68,235		$		75,027		$		240,457		$		249,315
International			46,605				67,544				147,569				193,115
Irrigation segment			114,840				142,571				388,026				442,430
Infrastructure segment			24,359				21,982				64,050				64,523
Total operating revenues	$		139,199		$		164,553		$		452,076		$		506,953

Operating income:
Irrigation segment	$		19,524		$		30,727		$		70,480		$		92,188
Infrastructure segment			6,276				3,556				13,401				8,947
Corporate			(5,864	)			(7,326	)			(20,773	)			(22,315	)
Total operating income	$		19,936		$		26,957		$		63,108		$		78,820

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 and large diameter steel tubing, 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 movable 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)	May 31, 2024			May 31, 2023			August 31, 2023

ASSETS
Current assets:
Cash and cash equivalents	$	140,221		$	131,577		$	160,755
Marketable securities		12,497			12,806			5,556
Receivables, net		134,461			154,167			144,774
Inventories, net		171,522			166,759			155,932
Other current assets		30,017			25,943			20,467
Total current assets		488,718			491,252			487,484

Property, plant, and equipment, net		111,629			96,992			99,681
Intangibles, net		25,644			16,860			27,719
Goodwill		84,102			67,441			83,121
Operating lease right-of-use assets		16,308			17,378			17,036
Deferred income tax assets		13,367			11,518			10,885
Other noncurrent assets		18,333			22,177			19,734
Total assets	$	758,101		$	723,618		$	745,660

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	35,062		$	42,207		$	44,278
Current portion of long-term debt		229			225			226
Other current liabilities		88,446			90,616			91,604
Total current liabilities		123,737			133,048			136,108

Pension benefits liabilities		4,159			4,653			4,382
Long-term debt		115,029			115,209			115,164
Operating lease liabilities		16,134			18,119			17,689
Deferred income tax liabilities		682			689			689
Other noncurrent liabilities		18,364			15,104			15,977
Total liabilities		278,105			286,822			290,009

Shareholders' equity:
Preferred stock		—			—			—
Common stock		19,123			19,092			19,094
Capital in excess of stated value		102,752			96,627			98,508
Retained earnings		678,261			620,922			636,297
Less treasury stock - at cost		(295,138	)		(277,238	)		(277,238	)
Accumulated other comprehensive loss, net		(25,002	)		(22,607	)		(21,010	)
Total shareholders' equity		479,996			436,796			455,651
Total liabilities and shareholders' equity	$	758,101		$	723,618		$	745,660

LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Nine months ended
(in thousands)		May 31, 2024				May 31, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$		53,521		$		53,150
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			15,847				14,466
Provision for uncollectible accounts receivable			321				985
Deferred income taxes			(2,504	)			(1,548	)
Share-based compensation expense			4,887				4,775
Unrealized foreign currency transaction loss			58				2,045
Other, net			237				574
Changes in assets and liabilities:
Receivables			8,107				(15,842	)
Inventories			(17,118	)			25,289
Other current assets			(9,768	)			4,401
Accounts payable			(8,592	)			(17,953	)
Other current liabilities			(5,539	)			(11,865	)
Other noncurrent assets and liabilities			3,193				691
Net cash provided by operating activities			42,650				59,168

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment			(23,527	)			(13,283	)
Purchases of marketable securities			(15,042	)			(4,932	)
Proceeds from maturities of marketable securities			8,320				3,675
Other investing activities, net			(2,140	)			(4,399	)
Net cash used in investing activities			(32,389	)			(18,939	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock			(17,900	)			—
Dividends paid			(11,557	)			(11,228	)
Common stock withheld for payroll tax obligations			(1,575	)			(2,471	)
Proceeds from exercise of stock options			479				—
Other financing activities, net			313				180
Net cash used in financing activities			(30,240	)			(13,519	)

Effect of exchange rate changes on cash and cash equivalents			(555	)			(181	)
Net change in cash and cash equivalents			(20,534	)			26,529
Cash and cash equivalents, beginning of period			160,755				105,048
Cash and cash equivalents, end of period	$		140,221		$		131,577

View source version on businesswire.com: https://www.businesswire.com/news/home/20240627357040/en/

LINDSAY CORPORATION:

Alicia Pfeifer

Vice President, 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 were Lindsay 's Q3 2024 earnings per share?

Lindsay reported diluted earnings per share of $1.85 for Q3 2024.

How much did Lindsay 's revenues change in Q3 2024?

Lindsay 's revenues decreased by 15% to $139.2 million in Q3 2024.

What is the value of Lindsay 's new international irrigation supply agreement?

Lindsay secured a new international irrigation supply agreement valued at over $100 million.

How much did Lindsay spend on share repurchases in Q3 2024?

Lindsay completed $17.9 million in share repurchases during Q3 2024.

What was the revenue change in Lindsay 's irrigation segment in Q3 2024?

Lindsay 's irrigation segment revenues decreased by 19% to $114.8 million in Q3 2024.

What was the revenue growth in Lindsay 's infrastructure segment in Q3 2024?

Lindsay 's infrastructure segment revenue increased by 11% to $24.4 million in Q3 2024.

How did Lindsay 's operating income change in Q3 2024?

Lindsay 's operating income declined by 26% to $19.9 million in Q3 2024.

What was the backlog of unfilled orders for Lindsay as of May 31, 2024?

The backlog of unfilled orders for Lindsay as of May 31, 2024, was $246.9 million.

Lindsay Corporation Reports Third Quarter Fiscal 2024 Results

Insights

FAQ

What were Lindsay 's Q3 2024 earnings per share?

How much did Lindsay 's revenues change in Q3 2024?

What is the value of Lindsay 's new international irrigation supply agreement?

How much did Lindsay spend on share repurchases in Q3 2024?

What was the revenue change in Lindsay 's irrigation segment in Q3 2024?

What was the revenue growth in Lindsay 's infrastructure segment in Q3 2024?

How did Lindsay 's operating income change in Q3 2024?

What was the backlog of unfilled orders for Lindsay as of May 31, 2024?

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Lindsay Corporation Reports Third Quarter Fiscal 2024 Results

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Financial Analyst positive

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FAQ

What were Lindsay 's Q3 2024 earnings per share?

How much did Lindsay 's revenues change in Q3 2024?

What is the value of Lindsay 's new international irrigation supply agreement?

How much did Lindsay spend on share repurchases in Q3 2024?

What was the revenue change in Lindsay 's irrigation segment in Q3 2024?

What was the revenue growth in Lindsay 's infrastructure segment in Q3 2024?

How did Lindsay 's operating income change in Q3 2024?

What was the backlog of unfilled orders for Lindsay as of May 31, 2024?

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