Lindsay Corporation Reports Fiscal 2021 First Quarter Results
Lindsay Corporation (NYSE: LNN), a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, today announced results for its first quarter of fiscal 2021, which ended on November 30, 2020.
First Quarter Summary
Revenues for the first quarter of fiscal 2021 were $108.5 million, a decrease of $0.9 million, or 1 percent, compared to revenues of $109.4 million in the prior year first quarter. Net earnings for the quarter were $7.1 million, or $0.65 per diluted share, compared with net earnings of $8.3 million, or $0.77 per diluted share, for the prior year first quarter. Net earnings for the quarter include an income tax benefit of approximately $1.7 million, or $0.16 per diluted share, related to the release of a valuation allowance in a foreign jurisdiction.
“Irrigation market conditions improved during the quarter with rising agricultural commodity prices and higher projected net farm income. This resulted in stronger than expected order flow for irrigation equipment, particularly in the latter part of the quarter.” said Randy Wood, President and Chief Executive Officer. “Our infrastructure business performed well, although results were lower than a very strong first quarter in the prior year.”
First Quarter Segment Results
Irrigation segment revenues for the first quarter of fiscal 2021 increased $4.1 million, or 5 percent to $87.4 million, compared to $83.3 million in the prior year first quarter. North America irrigation revenues of $52.8 million decreased $0.8 million, or 2 percent, compared to the prior year first quarter. The decrease resulted primarily from lower engineering services revenue related to a project in the prior year that did not repeat that was partially offset by higher irrigation equipment unit volume. International irrigation revenues of $34.6 million increased $4.8 million, or 16 percent, compared to the prior year first quarter. The increase resulted from higher unit sales volumes in several regions which were partially offset by the unfavorable effects of foreign currency translation of approximately $2.4 million compared to the prior year first quarter.
Irrigation segment operating margin was 12.2 percent of sales, compared to 11.7 percent of sales in the prior year first quarter. The increase resulted primarily from the impact of higher irrigation system unit volume and was partially offset by the impact of higher raw material and freight costs.
Infrastructure segment revenues for the first quarter of fiscal 2021 were $21.1 million, a decrease of $5.0 million, or 19 percent, compared to $26.1 million in the prior year first quarter. The decrease resulted primarily from a large order delivered in the prior year that did not repeat and from lower road construction activity in the current year.
Infrastructure segment operating margin was 20.1 percent of sales, compared to 33.5 percent of sales in the prior year first quarter. The decrease resulted primarily from lower revenue in higher margin product lines and an increase in raw material and other costs compared to the prior year.
The backlog of unfilled orders at November 30, 2020 was $89.2 million compared with $69.2 million at November 30, 2019. Included in these backlogs are amounts of $5.4 million and $5.2 million, respectively, that are not expected to be fulfilled within the subsequent twelve months. The increase in backlog is primarily attributable to higher order activity in North America irrigation.
Outlook
“Our backlog of irrigation equipment orders in North America supports solid revenue growth for our second quarter. We also expect improved activity levels to continue in international irrigation markets. At the same time, we are seeing rapid and significant increases in steel and freight costs that will pressure margins in the short term until pricing actions are fully implemented.” said Mr. Wood. “In our infrastructure business, we continue to be encouraged by the quality of our Road Zipper® sales funnel. However, the timing of those projects can be difficult to predict, particularly in the current environment with coronavirus-related effects on road construction activity.
“Our financial position remains strong, providing support for our innovation growth strategy across our businesses that address global megatrends and provide solutions that conserve natural resources.”
First Quarter Conference Call
Lindsay’s fiscal 2021 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 and FieldNET® remote irrigation management and scheduling technology, as well as irrigation consulting and design 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,
2020
November 30,
2019
Operating revenues
$
108,485
$
109,393
Cost of operating revenues
77,077
75,319
Gross profit
31,408
34,074
Operating expenses:
Selling expense
7,331
6,492
General and administrative expense
13,452
11,804
Engineering and research expense
3,090
3,502
Total operating expenses
23,873
21,798
Operating income
7,535
12,276
Other (expense) income:
Interest expense
(1,201
)
(1,186
)
Interest income
303
615
Other income (expense), net
246
(450
)
Total other (expense) income
(652
)
(1,021
)
Earnings before income taxes
6,883
11,255
Income tax (benefit) expense
(212
)
2,910
Net earnings
$
7,095
$
8,345
Earnings per share:
Basic
$
0.65
$
0.77
Diluted
$
0.65
$
0.77
Shares used in computing earnings per share:
Basic
10,845
10,795
Diluted
10,888
10,828
Cash dividends declared per share
$
0.32
$
0.31
LINDSAY CORPORATION AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Unaudited)
Three months ended
(in thousands)
November 30,
2020
November 30,
2019
Operating revenues:
Irrigation:
North America
$
52,790
$
53,588
International
34,566
29,739
Irrigation segment
87,356
83,327
Infrastructure segment
21,129
26,066
Total operating revenues
$
108,485
$
109,393
Operating income (loss):
Irrigation segment
$
10,633
$
9,784
Infrastructure segment
4,256
8,741
Corporate
(7,354
)
(6,249
)
Total operating income
$
7,535
$
12,276
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 moveable barriers, specialty barriers, crash cushions and end terminals, and road marking and road safety equipment.
Certain immaterial reclassifications have been made to the prior year operating results to conform with current year presentation, as revenues and operating income from certain product lines previously included within the Infrastructure reporting segment are now included within the Irrigation reporting segment.
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
November 30,
2020
November 30,
2019
August 31,
2020
ASSETS
Current assets:
Cash and cash equivalents
$
126,802
$
120,910
$
121,403
Marketable securities
19,624
—
19,511
Receivables, net
74,909
79,317
84,604
Inventories, net
114,278
97,284
104,792
Assets held-for-sale
—
2,744
—
Other current assets, net
20,837
16,376
17,625
Total current assets
356,450
316,631
347,935
Property, plant, and equipment, net
81,295
70,305
79,581
Intangibles, net
22,817
23,739
23,477
Goodwill
68,027
64,358
68,004
Operating lease right-of-use assets
26,008
25,764
27,457
Deferred income tax assets
9,924
9,902
9,935
Other noncurrent assets, net
10,681
16,112
14,137
Total assets
$
575,202
$
526,811
$
570,526
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
36,263
$
30,097
$
29,554
Current portion of long-term debt
214
210
195
Other current liabilities
65,910
54,494
72,646
Total current liabilities
102,387
84,801
102,395
Pension benefits liabilities
6,293
5,948
6,374
Long-term debt
115,641
115,805
115,682
Operating lease liabilities
24,863
25,323
25,862
Deferred income tax liabilities
902
845
889
Other noncurrent liabilities
21,215
21,089
20,806
Total liabilities
271,301
253,811
272,008
Shareholders' equity:
Preferred stock
—
—
—
Common stock
18,948
18,897
18,918
Capital in excess of stated value
78,026
71,706
77,686
Retained earnings
503,342
479,732
499,724
Less treasury stock - at cost
(277,238
)
(277,238
)
(277,238
)
Accumulated other comprehensive loss, net
(19,177
)
(20,097
)
(20,572
)
Total shareholders' equity
303,901
273,000
298,518
Total liabilities and shareholders' equity
$
575,202
$
526,811
$
570,526
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
(in thousands)
November 30,
2020
November 30,
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings
$
7,095
$
8,345
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
5,140
4,748
Provision for uncollectible accounts receivable
158
248
Deferred income taxes
140
1,987
Share-based compensation expense
1,583
1,160
Foreign currency transaction (gain) loss
(203
)
668
Other, net
36
(294
)
Changes in assets and liabilities:
Receivables
8,896
(4,122
)
Inventories
(8,294
)
(4,931
)
Other current assets
(3,068
)
(2,466
)
Accounts payable
7,286
725
Other current liabilities
(7,146
)
(1,901
)
Other noncurrent assets and liabilities
3,750
(2,626
)
Net cash provided by operating activities
15,373
1,541
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment
(5,614
)
(4,322
)
Purchases of marketable securities available-for-sale
(3,844
)
—
Proceeds from maturities of marketable securities available-for-sale
3,616
—
Proceeds from settlement of net investment hedges
—
1,092
Other investing activities, net
—
24
Net cash used in investing activities
(5,842
)
(3,206
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options
56
—
Common stock withheld for payroll tax obligations
(1,269
)
(1,111
)
Principal payments on long-term debt
(35
)
(52
)
Dividends paid
(3,477
)
(3,353
)
Net cash used in financing activities
(4,725
)
(4,516
)
Effect of exchange rate changes on cash and cash equivalents
593
(113
)
Net change in cash and cash equivalents
5,399
(6,294
)
Cash and cash equivalents, beginning of period
121,403
127,204
Cash and cash equivalents, end of period
$
126,802
$
120,910
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