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Lindsay Corporation Reports Second Quarter Fiscal 2023 Results

Quarterly net earnings growth of 24 percent year-over-year, driven by marked expansion in operating income

Lindsay Corporation (NYSE: LNN), a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, today announced results for its second quarter ended on February 28, 2023.

Key Highlights

  • Second quarter net earnings increased 24 percent to $18.1 million and EPS improved to $1.63
  • Irrigation operating income increased 33 percent despite lower revenues
  • Infrastructure operating income improves on increased Road Zipper System® lease revenue

“We are pleased with the significant earnings improvement we achieved in the second quarter, as we were able to deliver expanded profitability despite a decline in our top line compared to last year,” said Randy Wood, President and Chief Executive Officer. "Lower revenues in our irrigation business were due to international project business in the prior year that did not repeat as well as seasonal volume shifts in North America and Brazil. However, improved price realization as a result of commercial pricing actions and reduced inflationary headwinds compared to the prior year contributed to operating income growth and margin expansion in both of our business segments."

"Our teams around the world continue to adapt to dynamic market conditions and remain focused on serving our customers, improving the quality of our business and driving innovation and value creation though our advanced technologies."

Second Quarter Summary

Consolidated Financial Summary

 

Second Quarter

(dollars in millions, except per share amounts)

 

FY2023

 

FY2022

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

 

Total revenues

 

$166.2

 

$200.1

 

($33.9)

 

(17%)

Operating income

 

$27.3

 

$18.3

 

$9.0

 

49%

Operating margin

 

16.4%

 

9.2%

 

 

 

 

Net earnings

 

$18.1

 

$14.6

 

$3.5

 

24%

Earnings per share

 

$1.63

 

$1.32

 

$0.31

 

23%

Revenues for the second quarter of fiscal 2023 were $166.2 million, a decrease of $33.9 million, or 17 percent, compared to revenues of $200.1 million in the prior year second quarter. Almost all of the decrease came from the irrigation segment as infrastructure revenues were down slightly.

Operating income for the quarter was $27.3 million, an increase of $9.0 million, or 49 percent, compared to operating income of $18.3 million in the prior year second quarter. Operating margin was 16.4 percent of sales, expanding 720 basis points compared to 9.2 percent of sales in the prior year quarter. The operating margin expansion was driven by strong gross margin improvement in both of our business segments. The increase was partially offset by higher operating expenses compared to the prior year second quarter, including higher employee compensation costs and increased investments in new product development.

Net earnings for the quarter were $18.1 million, or $1.63 per diluted share, compared with net earnings of $14.6 million, or $1.32 per diluted share, for the prior year second quarter. The improved net earnings performance was largely driven by increased operating income and was partially offset by foreign currency transaction losses in the current year compared to gains in the prior year and from higher income tax expense.

Second Quarter Segment Results

Irrigation Segment

 

Second Quarter

(dollars in millions)

 

FY 2023

 

FY 2022

 

$ Change

 

% Change

Revenues:

 

 

 

 

 

 

 

 

North America

 

$90.4

 

$100.7

 

($10.3)

 

(10%)

International

 

$57.4

 

$80.0

 

($22.6)

 

(28%)

Total revenues

 

$147.8

 

$180.7

 

($32.9)

 

(18%)

Operating income

 

$32.8

 

$24.7

 

$8.1

 

33%

Operating margin

 

22.2%

 

13.7%

 

 

 

 

Irrigation segment revenues for the second quarter of fiscal 2023 were $147.8 million, a decrease of $32.9 million, or 18 percent, compared to $180.7 million in the prior year second quarter. North America irrigation revenues of $90.4 million decreased $10.3 million, or 10 percent, compared to the prior year second quarter. The top-line decrease resulted from lower unit sales volumes as the prior year quarter experienced a pull forward of orders in advance of announced selling price increases, while the second quarter of 2023 reflected a return to a more traditional seasonal demand cadence. The impact of lower unit sales volumes compared to the prior year was partially offset by the positive impact of higher average selling prices.

International irrigation revenues of $57.4 million decreased $22.6 million, or 28 percent, compared to the prior year second quarter. The decrease resulted primarily from the completion of a large project in the prior year that did not repeat and lower sales volumes in Brazil, Ukraine and Russia compared to the prior year second quarter. Sales and order activity in Brazil were temporarily reduced as a result of the federal government transition following the October 2022 presidential election.

Irrigation segment operating income for the second quarter of fiscal 2023 was $32.8 million, an increase of $8.1 million, or 33 percent, compared to the prior year second quarter. Operating margin was 22.2 percent of sales, compared to 13.7 percent of sales in the prior year second quarter. Increased operating income and the 850 basis points of operating margin expansion was driven primarily by improved price realization, lower inflationary impact on input costs and a more favorable sales mix of international irrigation revenues compared to the prior year second quarter.

Infrastructure Segment

 

Second Quarter

(dollars in millions)

 

FY 2023

 

FY 2022

 

$ Change

 

% Change

Total revenues

 

$18.5

 

$19.4

 

($0.9)

 

(5%)

Operating income

 

$2.0

 

$0.3

 

$1.7

 

523%

Operating margin

 

10.9%

 

1.7%

 

 

 

 

Infrastructure segment revenues for the second quarter of fiscal 2023 were $18.5 million, a decrease of $0.9 million, or 5 percent, compared to $19.4 million in the prior year second quarter. An increase in Road Zipper System lease revenue was more than offset by lower sales of road safety products compared to the prior year second quarter. Road Zipper project sales were similar to the prior year second quarter.

Infrastructure segment operating income for the second quarter of fiscal 2023 was $2.0 million, an increase of $1.7 million or 523 percent compared to the prior year second quarter. Operating margin was 10.9 percent of sales, expanding meaningfully compared to 1.7 percent of sales in the prior year second quarter. Increased operating profit and operating margin resulted from a more favorable margin mix of revenue, improved price realization and lower inflationary impact on input costs compared to the prior year second quarter.

The backlog of unfilled orders as of February 28, 2023, was $95.2 million compared with $111.0 million on February 28, 2022. The irrigation backlog is lower while the infrastructure backlog is higher compared to the prior year.

Outlook

Mr. Wood concluded, “We are encouraged by the earnings and operating income results captured through the first half of our fiscal year, and we continue to see strength in U.S. net farm income. While domestic net farm income is projected to decline in 2023 from record levels in 2022, overall income remains at a historically high level and we believe it is supportive of continued investment in irrigation equipment. Demand strength across our international markets continues to be supported by expanded production driven by positive agricultural market fundamentals and continuing global concerns over food security and global grain supplies. Looking ahead to the balance of the year, we expect some impact from the market delays in Brazil to continue into our third quarter, however our full year outlook remains unchanged."

“We remain encouraged with the outlook for our infrastructure business due to anticipated increases in U.S. infrastructure spending and the strength of our sales funnel. While the timing of project execution can be difficult to predict, we will continue to actively manage the projects in our sales funnel and believe we are positioned to support continued growth in the infrastructure segment.”

Second Quarter Conference Call

Lindsay’s fiscal 2023 second 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® remote irrigation management and 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

 

Six months ended

 

(in thousands, except per share amounts)

 

February 28,

2023

 

 

February 28,

2022

 

 

February 28,

2023

 

 

February 28,

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

$

166,241

 

$

200,137

 

$

342,400

 

$

366,288

 

Cost of operating revenues

 

111,983

 

 

157,193

 

 

235,122

 

 

285,907

 

Gross profit

 

54,258

 

 

42,944

 

 

107,278

 

 

80,381

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling expense

 

8,733

 

 

7,932

 

 

18,410

 

 

15,922

 

General and administrative expense

 

13,739

 

 

13,022

 

 

28,176

 

 

25,901

 

Engineering and research expense

 

4,521

 

 

3,652

 

 

8,829

 

 

6,859

 

Total operating expenses

 

26,993

 

 

24,606

 

 

55,415

 

 

48,682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

27,265

 

 

18,338

 

 

51,863

 

 

31,699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(1,038

)

 

(1,176

)

 

(1,947

)

 

(2,339

)

Interest income

 

490

 

 

160

 

 

865

 

 

338

 

Other income (expense), net

 

(984

)

 

1,882

 

 

(1,043

)

 

(1,018

)

Total other income (expense)

 

(1,532

)

 

866

 

 

(2,125

)

 

(3,019

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

25,733

 

 

19,204

 

 

49,738

 

 

28,680

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

7,681

 

 

4,638

 

 

13,469

 

 

6,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

$

18,052

 

$

14,566

 

$

36,269

 

$

22,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.64

 

$

1.33

 

$

3.30

 

$

2.05

 

Diluted

$

1.63

 

$

1.32

 

$

3.28

 

$

2.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

11,007

 

 

10,974

 

 

10,998

 

 

10,950

 

Diluted

 

11,063

 

 

11,014

 

 

11,068

 

 

11,020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

$

0.34

 

$

0.33

 

$

0.68

 

$

0.66

 

LINDSAY CORPORATION AND SUBSIDIARIES

 

SUMMARY OPERATING RESULTS

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

Six months ended

 

(in thousands)

 

 

February 28,

2023

 

 

 

February 28,

2022

 

 

 

February 28,

2023

 

 

 

February 28,

2022

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Irrigation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

 

90,354

 

 

$

 

100,730

 

 

$

 

174,288

 

 

$

 

179,705

 

International

 

 

 

57,422

 

 

 

 

80,029

 

 

 

 

125,571

 

 

 

 

146,962

 

Irrigation segment

 

 

 

147,776

 

 

 

 

180,759

 

 

 

 

299,859

 

 

 

 

326,667

 

Infrastructure segment

 

 

 

18,465

 

 

 

 

19,378

 

 

 

 

42,541

 

 

 

 

39,621

 

Total operating revenues

 

$

 

166,241

 

 

$

 

200,137

 

 

$

 

342,400

 

 

$

 

366,288

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Irrigation segment

 

$

 

32,820

 

 

$

 

24,734

 

 

$

 

61,461

 

 

$

 

41,946

 

Infrastructure segment

 

 

 

2,019

 

 

 

 

324

 

 

 

 

5,391

 

 

 

 

3,090

 

Corporate

 

 

 

(7,574

)

 

 

 

(6,720

)

 

 

 

(14,989

)

 

 

 

(13,337

)

Total operating income

 

$

 

27,265

 

 

$

 

18,338

 

 

$

 

51,863

 

 

$

 

31,699

 

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 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)

 

February 28,

2023

 

 

February 28,

2022

 

 

August 31,

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

97,675

 

 

$

 

68,951

 

 

$

 

105,048

 

Marketable securities

 

 

 

8,763

 

 

 

 

24,934

 

 

 

 

11,460

 

Receivables, net

 

 

 

167,007

 

 

 

 

134,694

 

 

 

 

138,200

 

Inventories, net

 

 

 

178,703

 

 

 

 

187,328

 

 

 

 

193,776

 

Other current assets, net

 

 

 

27,973

 

 

 

 

34,350

 

 

 

 

28,617

 

Total current assets

 

 

 

480,121

 

 

 

 

450,257

 

 

 

 

477,101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant, and equipment, net

 

 

 

93,838

 

 

 

 

92,291

 

 

 

 

94,472

 

Intangibles, net

 

 

 

17,329

 

 

 

 

19,311

 

 

 

 

18,208

 

Goodwill

 

 

 

67,409

 

 

 

 

67,679

 

 

 

 

67,130

 

Operating lease right-of-use assets

 

 

 

17,984

 

 

 

 

16,724

 

 

 

 

19,181

 

Deferred income tax assets

 

 

 

9,518

 

 

 

 

5,352

 

 

 

 

9,313

 

Other noncurrent assets, net

 

 

 

22,881

 

 

 

 

24,970

 

 

 

 

25,248

 

Total assets

 

$

 

709,080

 

 

$

 

676,584

 

 

$

 

710,653

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

 

52,998

 

 

$

 

74,345

 

 

$

 

60,036

 

Current portion of long-term debt

 

 

 

224

 

 

 

 

220

 

 

 

 

222

 

Other current liabilities

 

 

 

79,566

 

 

 

 

86,837

 

 

 

 

100,684

 

Total current liabilities

 

 

 

132,788

 

 

 

 

161,402

 

 

 

 

160,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension benefits liabilities

 

 

 

4,733

 

 

 

 

5,567

 

 

 

 

4,892

 

Long-term debt

 

 

 

115,253

 

 

 

 

115,428

 

 

 

 

115,341

 

Operating lease liabilities

 

 

 

18,659

 

 

 

 

17,170

 

 

 

 

19,810

 

Deferred income tax liabilities

 

 

 

702

 

 

 

 

783

 

 

 

 

1,054

 

Other noncurrent liabilities

 

 

 

14,673

 

 

 

 

19,696

 

 

 

 

15,256

 

Total liabilities

 

 

 

286,808

 

 

 

 

320,046

 

 

 

 

317,295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

 

19,091

 

 

 

 

19,061

 

 

 

 

19,063

 

Capital in excess of stated value

 

 

 

94,834

 

 

 

 

90,711

 

 

 

 

94,006

 

Retained earnings

 

 

 

607,784

 

 

 

 

543,355

 

 

 

 

579,000

 

Less treasury stock - at cost

 

 

 

(277,238

)

 

 

 

(277,238

)

 

 

 

(277,238

)

Accumulated other comprehensive loss, net

 

 

 

(22,199

)

 

 

 

(19,351

)

 

 

 

(21,473

)

Total shareholders' equity

 

 

 

422,272

 

 

 

 

356,538

 

 

 

 

393,358

 

Total liabilities and shareholders' equity

 

$

 

709,080

 

 

$

 

676,584

 

 

$

 

710,653

 

LINDSAY CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

 

(in thousands)

 

 

February 28,

2023

 

 

 

February 28,

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net earnings

 

$

 

36,269

 

 

$

 

22,467

 

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

9,695

 

 

 

 

9,912

 

Provision for uncollectible accounts receivable

 

 

 

834

 

 

 

 

322

 

Deferred income taxes

 

 

 

(185

)

 

 

 

3,052

 

Share-based compensation expense

 

 

 

3,089

 

 

 

 

2,411

 

Unrealized foreign currency transaction loss (gain)

 

 

 

878

 

 

 

 

(111

)

Other, net

 

 

 

354

 

 

 

 

627

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Receivables

 

 

 

(28,707

)

 

 

 

(41,286

)

Inventories

 

 

 

14,014

 

 

 

 

(42,412

)

Other current assets

 

 

 

1,635

 

 

 

 

(2,541

)

Accounts payable

 

 

 

(6,178

)

 

 

 

28,757

 

Other current liabilities

 

 

 

(25,553

)

 

 

 

(8,317

)

Other noncurrent assets and liabilities

 

 

 

1,742

 

 

 

 

(8,732

)

Net cash provided by (used in) operating activities

 

 

 

7,887

 

 

 

 

(35,851

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property, plant, and equipment

 

 

 

(7,222

)

 

 

 

(6,926

)

Purchases of marketable securities

 

 

 

 

 

 

 

(18,468

)

Proceeds from maturities of marketable securities

 

 

 

2,725

 

 

 

 

12,752

 

Other investing activities, net

 

 

 

(1,214

)

 

 

 

(2,974

)

Net cash used in investing activities

 

 

 

(5,711

)

 

 

 

(15,616

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

 

 

 

 

 

2,821

 

Common stock withheld for payroll tax obligations

 

 

 

(2,471

)

 

 

 

(1,181

)

Proceeds from employee stock purchase plan

 

 

 

238

 

 

 

 

235

 

Principal payments on long-term debt

 

 

 

(110

)

 

 

 

(108

)

Dividends paid

 

 

 

(7,485

)

 

 

 

(7,242

)

Net cash used in financing activities

 

 

 

(9,828

)

 

 

 

(5,475

)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

 

279

 

 

 

 

(1,214

)

Net change in cash and cash equivalents

 

 

 

(7,373

)

 

 

 

(58,156

)

Cash and cash equivalents, beginning of period

 

 

 

105,048

 

 

 

 

127,107

 

Cash and cash equivalents, end of period

 

$

 

97,675

 

 

$

 

68,951

 

 

Contacts

For further information

LINDSAY CORPORATION:

Alicia Pfeifer

Senior Director, Investor Relations & Treasury

402-933-6429

Alicia.Pfeifer@lindsay.com

Alpha IR:

Joe Caminiti or Alec Buchmelter

312-445-2870

LNN@alpha-ir.com

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