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Lindsay Corporation Reports Third Quarter Fiscal 2023 Results

Operational execution and diligent price management help drive strong operating margin performance amid softer aggregate demand

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, 2023.

Key Highlights

  • Near record operating margin performance in irrigation as market fundamentals remain generally positive
  • Revenue decline reflects investment delays for irrigation equipment and projects
  • Infrastructure results supported by increased Road Zipper System® leasing

“While agricultural market fundamentals remain positive with U.S. net farm income projected to be above historical levels, general economic uncertainty has negatively impacted farmer sentiment, tempering order activity and driving some customers to delay capital investment decisions,” said Randy Wood, President and Chief Executive Officer. "A projected year-over-year decline in U.S. net farm income, combined with high input costs and increasing interest rates, negatively impacted unit sales volume in our irrigation business. However, our operational execution and disciplined price management have helped partially offset top-line weakness and the loss of fixed cost leverage to drive strong margin capture, as evidenced by our operating margin performance. We believe current market dynamics are likely to lead to increased demand for irrigation equipment later in the calendar year as customers become better-positioned to determine their level of profitability for the current crop year. In our infrastructure business, the anticipated increase in road construction and project activity supported by higher U.S. infrastructure spending has been slower to develop due to delays in project startups, caused in part by slower-than-expected releases of public funding."

Wood continued, "I am pleased with how our teams have responded to manage costs despite softer than expected demand. Our commercial teams have demonstrated the ability to maintain pricing discipline in order to preserve strong operating margin performance, ultimately providing resilience to our operating income results. As we look ahead to the remainder of the year and fiscal 2024, we will also remain committed to continuing our growth investments in innovation and long-term shareholder value creation opportunities across both our leading irrigation and infrastructure businesses."

Third Quarter Summary

Consolidated Financial Summary

 

Third Quarter

(dollars in millions, except per share amounts)

 

FY2023

 

FY2022

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

 

Total revenues

 

$164.6

 

$214.3

 

($49.7)

 

(23%)

Operating income

 

$27.0

 

$35.2

 

($8.2)

 

(23%)

Operating margin

 

16.4%

 

16.4%

 

 

 

 

Net earnings

 

$16.9

 

$25.1

 

($8.2)

 

(33%)

Earnings per share

 

$1.53

 

$2.28

 

($0.75)

 

(33%)

Revenues for the third quarter of fiscal 2023 were $164.6 million, a decrease of $49.7 million, or 23 percent, compared to revenues of $214.3 million in the prior year third quarter. The majority of the decrease came from the irrigation segment as infrastructure revenues were down slightly.

Operating income for the quarter was $27.0 million, a decrease of $8.2 million, or 23 percent, compared to operating income of $35.2 million in the prior year third quarter. Operating margin was 16.4 percent of sales, consistent with the prior year quarter. Operating margin performance was supported by gross margin improvement in both business segments while operating expenses were comparable to the prior year third quarter.

Net earnings for the quarter were $16.9 million, or $1.53 per diluted share, compared with net earnings of $25.1 million, or $2.28 per diluted share, for the prior year third quarter. Lower net earnings resulted largely from lower operating income and was also impacted by foreign currency transaction losses in the current year compared to gains in the prior year and from a higher effective income tax rate compared to the prior year.

Third Quarter Segment Results

Irrigation Segment

 

Third Quarter

(dollars in millions)

 

FY 2023

 

FY 2022

 

$ Change

 

% Change

Revenues:

 

 

 

 

 

 

 

 

North America

 

$75.0

 

$96.2

 

($21.2)

 

(22%)

International

 

$67.5

 

$92.5

 

($25.0)

 

(27%)

Total revenues

 

$142.6

 

$188.7

 

($46.1)

 

(24%)

Operating income

 

$30.7

 

$39.6

 

($8.9)

 

(22%)

Operating margin

 

21.6%

 

21.0%

 

 

 

 

Irrigation segment revenues for the third quarter of fiscal 2023 were $142.6 million, a decrease of $46.1 million, or 24 percent, compared to $188.7 million in the prior year third quarter. North America irrigation revenues of $75.0 million decreased $21.2 million, or 22 percent, compared to the prior year third quarter. The decrease resulted primarily from lower unit sales volumes while average selling prices were comparable with the prior year. Lower unit sales volumes resulted primarily from farmers delaying capital investment decisions.

International irrigation revenues of $67.5 million decreased $25.0 million, or 27 percent, compared to the prior year third quarter. The decrease resulted primarily from lower sales volumes in Brazil, Australia, Ukraine and Russia compared to the prior year third quarter. In Brazil, the delayed order activity experienced in the second quarter connected with the government transition continued in the current quarter. The current year was also impacted by the unfavorable effects of foreign currency translation of approximately $2.5 million compared to the prior year third quarter.

Irrigation segment operating income for the third quarter of fiscal 2023 was $30.7 million, a decrease of $8.9 million, or 22 percent, compared to the prior year third quarter. Operating margin was 21.6 percent of sales, compared to 21.0 percent of sales in the prior year third quarter. In spite of lower revenues, the increase in operating margin resulted from gross margin expansion driven by improved price realization and operating performance compared to the prior year third quarter.

Infrastructure Segment

 

Third Quarter

(dollars in millions)

 

FY 2023

 

FY 2022

 

$ Change

 

% Change

Total revenues

 

$22.0

 

$25.6

 

($3.6)

 

(14%)

Operating income

 

$3.6

 

$3.8

 

($0.2)

 

(6%)

Operating margin

 

16.2%

 

14.8%

 

 

 

 

Infrastructure segment revenues for the third quarter of fiscal 2023 were $22.0 million, a decrease of $3.6 million, or 14 percent, compared to $25.6 million in the prior year third quarter. An increase in Road Zipper System lease revenue was more than offset by lower Road Zipper System sales and lower sales of road safety products compared to the prior year third quarter.

Infrastructure segment operating income for the third quarter of fiscal 2023 was $3.6 million, a decrease of $0.2 million, or 6 percent, compared to the prior year third quarter. Operating margin was 16.2 percent of sales, compared to 14.8 percent of sales in the prior year third quarter. Increased operating margin resulted from a more favorable margin mix of revenue and improved price realization compared to the prior year third quarter.

The backlog of unfilled orders as of May 31, 2023, was $94.5 million compared with $98.3 million on May 31, 2022. The irrigation backlog is lower while the infrastructure backlog is higher compared to the prior year.

Outlook

Mr. Wood concluded, “As we are now in the growing season in North America, demand in our fourth quarter is expected to be driven primarily by summer crop harvest and storm damage replacement, which we are expecting to be lower than the exceptional demand we experienced in last year's strong fourth quarter. The potential impact from continuing drought conditions could provide additional demand support. We expect sales volume in Brazil to increase in the fourth quarter, supported by the new government financing program that was recently announced. Demand across other international markets continues to be supported by positive agricultural market fundamentals and continuing global concerns over food security and global grain supplies."

“The impact of increased U.S. infrastructure spending and the strength of our project sales funnel support the long-term growth outlook for our infrastructure business. The timing of project execution at the state level can be difficult to predict and, because of delayed startups we have experienced to date, we expect a limited positive impact on our fiscal 2023 results and a more meaningful positive impact in fiscal 2024 and beyond.”

Third Quarter Conference Call

Lindsay’s fiscal 2023 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 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

 

 

Nine months ended

 

(in thousands, except per share amounts)

 

 

May 31,

2023

 

 

 

May 31,

2022

 

 

 

May 31,

2023

 

 

 

May 31,

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

 

164,553

 

 

$

 

214,259

 

 

$

 

506,953

 

 

$

 

580,547

 

Cost of operating revenues

 

 

 

111,332

 

 

 

 

152,579

 

 

 

 

346,454

 

 

 

 

438,486

 

Gross profit

 

 

 

53,221

 

 

 

 

61,680

 

 

 

 

160,499

 

 

 

 

142,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expense

 

 

 

8,681

 

 

 

 

8,148

 

 

 

 

27,092

 

 

 

 

24,070

 

General and administrative expense

 

 

 

13,061

 

 

 

 

14,647

 

 

 

 

41,237

 

 

 

 

40,548

 

Engineering and research expense

 

 

 

4,522

 

 

 

 

3,723

 

 

 

 

13,350

 

 

 

 

10,582

 

Total operating expenses

 

 

 

26,264

 

 

 

 

26,518

 

 

 

 

81,679

 

 

 

 

75,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

 

26,957

 

 

 

 

35,162

 

 

 

 

78,820

 

 

 

 

66,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

(948

)

 

 

 

(1,006

)

 

 

 

(2,895

)

 

 

 

(3,345

)

Interest income

 

 

 

680

 

 

 

 

118

 

 

 

 

1,545

 

 

 

 

456

 

Other income (expense), net

 

 

 

(957

)

 

 

 

1,282

 

 

 

 

(2,000

)

 

 

 

264

 

Total other income (expense)

 

 

 

(1,225

)

 

 

 

394

 

 

 

 

(3,350

)

 

 

 

(2,625

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

 

 

25,732

 

 

 

 

35,556

 

 

 

 

75,470

 

 

 

 

64,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

 

8,851

 

 

 

 

10,483

 

 

 

 

22,320

 

 

 

 

16,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

 

16,881

 

 

$

 

25,073

 

 

$

 

53,150

 

 

$

 

47,540

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 

1.53

 

 

$

 

2.28

 

 

$

 

4.83

 

 

$

 

4.34

 

Diluted

 

$

 

1.53

 

 

$

 

2.28

 

 

$

 

4.80

 

 

$

 

4.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

11,008

 

 

 

 

10,978

 

 

 

 

11,001

 

 

 

 

10,960

 

Diluted

 

 

 

11,052

 

 

 

 

11,021

 

 

 

 

11,063

 

 

 

 

11,020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

$

 

0.34

 

 

$

 

0.33

 

 

$

 

1.02

 

 

$

 

0.99

 

 
 

LINDSAY CORPORATION AND SUBSIDIARIES

 

SUMMARY OPERATING RESULTS

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

Nine months ended

 

(in thousands)

 

 

May 31,

2023

 

 

 

May 31,

2022

 

 

 

May 31,

2023

 

 

 

May 31,

2022

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Irrigation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

 

75,027

 

 

$

 

96,153

 

 

$

 

249,315

 

 

$

 

275,601

 

International

 

 

 

67,544

 

 

 

 

92,540

 

 

 

 

193,115

 

 

 

 

239,759

 

Irrigation segment

 

 

 

142,571

 

 

 

 

188,693

 

 

 

 

442,430

 

 

 

 

515,360

 

Infrastructure segment

 

 

 

21,982

 

 

 

 

25,566

 

 

 

 

64,523

 

 

 

 

65,187

 

Total operating revenues

 

$

 

164,553

 

 

$

 

214,259

 

 

$

 

506,953

 

 

$

 

580,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Irrigation segment

 

$

 

30,727

 

 

$

 

39,567

 

 

$

 

92,188

 

 

$

 

81,513

 

Infrastructure segment

 

 

 

3,556

 

 

 

 

3,779

 

 

 

 

8,947

 

 

 

 

6,869

 

Corporate

 

 

 

(7,326

)

 

 

 

(8,184

)

 

 

 

(22,315

)

 

 

 

(21,521

)

Total operating income

 

$

 

26,957

 

 

$

 

35,162

 

 

$

 

78,820

 

 

$

 

66,861

 

 

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)

 

May 31,

2023

 

 

May 31,

2022

 

 

August 31,

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

131,577

 

 

$

 

81,757

 

 

$

 

105,048

 

Marketable securities

 

 

 

12,806

 

 

 

 

13,930

 

 

 

 

11,460

 

Receivables, net

 

 

 

154,167

 

 

 

 

155,518

 

 

 

 

138,200

 

Inventories, net

 

 

 

166,759

 

 

 

 

195,566

 

 

 

 

193,776

 

Other current assets, net

 

 

 

25,943

 

 

 

 

28,663

 

 

 

 

28,617

 

Total current assets

 

 

 

491,252

 

 

 

 

475,434

 

 

 

 

477,101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant, and equipment, net

 

 

 

96,992

 

 

 

 

94,441

 

 

 

 

94,472

 

Intangibles, net

 

 

 

16,860

 

 

 

 

18,769

 

 

 

 

18,208

 

Goodwill

 

 

 

67,441

 

 

 

 

67,476

 

 

 

 

67,130

 

Operating lease right-of-use assets

 

 

 

17,378

 

 

 

 

20,263

 

 

 

 

19,181

 

Deferred income tax assets

 

 

 

11,518

 

 

 

 

7,857

 

 

 

 

9,313

 

Other noncurrent assets, net

 

 

 

22,177

 

 

 

 

27,676

 

 

 

 

25,248

 

Total assets

 

$

 

723,618

 

 

$

 

711,916

 

 

$

 

710,653

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

 

42,207

 

 

$

 

72,350

 

 

$

 

60,036

 

Current portion of long-term debt

 

 

 

225

 

 

 

 

221

 

 

 

 

222

 

Other current liabilities

 

 

 

90,616

 

 

 

 

101,243

 

 

 

 

100,684

 

Total current liabilities

 

 

 

133,048

 

 

 

 

173,814

 

 

 

 

160,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension benefits liabilities

 

 

 

4,653

 

 

 

 

5,474

 

 

 

 

4,892

 

Long-term debt

 

 

 

115,209

 

 

 

 

115,384

 

 

 

 

115,341

 

Operating lease liabilities

 

 

 

18,119

 

 

 

 

20,688

 

 

 

 

19,810

 

Deferred income tax liabilities

 

 

 

689

 

 

 

 

730

 

 

 

 

1,054

 

Other noncurrent liabilities

 

 

 

15,104

 

 

 

 

15,056

 

 

 

 

15,256

 

Total liabilities

 

 

 

286,822

 

 

 

 

331,146

 

 

 

 

317,295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

 

19,092

 

 

 

 

19,063

 

 

 

 

19,063

 

Capital in excess of stated value

 

 

 

96,627

 

 

 

 

92,516

 

 

 

 

94,006

 

Retained earnings

 

 

 

620,922

 

 

 

 

564,805

 

 

 

 

579,000

 

Less treasury stock - at cost

 

 

 

(277,238

)

 

 

 

(277,238

)

 

 

 

(277,238

)

Accumulated other comprehensive loss, net

 

 

 

(22,607

)

 

 

 

(18,376

)

 

 

 

(21,473

)

Total shareholders' equity

 

 

 

436,796

 

 

 

 

380,770

 

 

 

 

393,358

 

Total liabilities and shareholders' equity

 

$

 

723,618

 

 

$

 

711,916

 

 

$

 

710,653

 

 
 

LINDSAY CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

 

(in thousands)

 

 

May 31, 2023

 

 

 

May 31, 2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net earnings

 

$

 

53,150

 

 

$

 

47,540

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

14,466

 

 

 

 

14,930

 

Provision for uncollectible accounts receivable

 

 

 

985

 

 

 

 

734

 

Deferred income taxes

 

 

 

(1,548

)

 

 

 

514

 

Share-based compensation expense

 

 

 

4,775

 

 

 

 

4,061

 

Unrealized foreign currency transaction loss (gain)

 

 

 

2,045

 

 

 

 

(754

)

Other, net

 

 

 

574

 

 

 

 

645

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Receivables

 

 

 

(15,842

)

 

 

 

(63,365

)

Inventories

 

 

 

25,289

 

 

 

 

(49,209

)

Other current assets

 

 

 

4,401

 

 

 

 

1,669

 

Accounts payable

 

 

 

(17,953

)

 

 

 

26,319

 

Other current liabilities

 

 

 

(11,865

)

 

 

 

822

 

Other noncurrent assets and liabilities

 

 

 

691

 

 

 

 

(8,840

)

Net cash provided by (used in) operating activities

 

 

 

59,168

 

 

 

 

(24,934

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property, plant, and equipment

 

 

 

(13,283

)

 

 

 

(12,222

)

Purchases of marketable securities

 

 

 

(4,932

)

 

 

 

(18,468

)

Proceeds from maturities of marketable securities

 

 

 

3,675

 

 

 

 

23,592

 

Other investing activities, net

 

 

 

(4,399

)

 

 

 

(2,952

)

Net cash used in investing activities

 

 

 

(18,939

)

 

 

 

(10,050

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

 

 

 

 

 

2,894

 

Common stock withheld for payroll tax obligations

 

 

 

(2,471

)

 

 

 

(1,181

)

Proceeds from employee stock purchase plan

 

 

 

346

 

 

 

 

319

 

Principal payments on long-term debt

 

 

 

(166

)

 

 

 

(163

)

Dividends paid

 

 

 

(11,228

)

 

 

 

(10,865

)

Net cash used in financing activities

 

 

 

(13,519

)

 

 

 

(8,996

)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

 

(181

)

 

 

 

(1,370

)

Net change in cash and cash equivalents

 

 

 

26,529

 

 

 

 

(45,350

)

Cash and cash equivalents, beginning of period

 

 

 

105,048

 

 

 

 

127,107

 

Cash and cash equivalents, end of period

 

$

 

131,577

 

 

$

 

81,757

 

 

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