Lindsay Corporation : Reports Fiscal 2021 Third Quarter Results

Third quarter consolidated revenues increase 32 percent to $161.9 million with EPS of $1.61 Higher agriculture commodity prices drive improved demand for irrigation equipment across all geographies Irrigation revenues increase 39 percent in North America and 62 percent in international markets Infrastructure revenues decrease 21 percent due to coronavirus-related project delays

Lindsay Corporation (NYSE: LNN), a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, today announced results for its third quarter of fiscal 2021, which ended on May 31, 2021.

Third Quarter Summary

Revenues for the third quarter of fiscal 2021 were $161.9 million, an increase of $38.8 million, or 32 percent, compared to revenues of $123.1 million in the prior year third quarter. Net earnings for the quarter were $17.8 million, or $1.61 per diluted share, compared with net earnings of $10.1 million, or $0.93 per diluted share, for the prior year third quarter.

“Healthy agricultural market fundamentals and positive grower sentiment continue to drive increased global demand for irrigation equipment,” said Randy Wood, President and Chief Executive Officer. “At the same time, raw material inflation and other supply chain issues continue to create challenges and margin headwinds. Our teams have responded well and effectively managed through these dynamic market conditions in order to support our customers.”

Third Quarter Segment Results

Irrigation segment revenues for the third quarter of fiscal 2021 increased $44.7 million, or 47 percent, to $140.2 million, compared to $95.5 million in the prior year third quarter. North America irrigation revenues increased $24.5 million, or 39 percent, to $87.4 million compared to the prior year third quarter. The increase resulted from a combination of higher irrigation equipment unit sales volume and higher average selling prices. The increase was partially offset by lower engineering services revenue. International irrigation revenues of $52.8 million increased $20.2 million, or 62 percent, compared to the prior year third quarter. The increase resulted from higher unit sales volumes in most international markets, higher prices, and favorable foreign currency translation impact of $2.3 million.

Irrigation segment operating income was $23.9 million, an increase of $8.5 million, or 55 percent, compared to the prior year third quarter. Operating margin was 17.1 percent of sales, compared to 16.1 percent of sales in the prior year third 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 other costs.

Infrastructure segment revenues for the third quarter of fiscal 2021 decreased $5.8 million, or 21 percent, to $21.8 million, compared to $27.6 million in the prior year third quarter. The decrease resulted from lower Road Zipper System^® sales, which were partially offset by higher Road Zipper System lease revenue and increased sales of road safety products. Road construction activity and the timing of certain projects continues to be impacted by coronavirus-related delays.

Infrastructure segment operating income was $3.8 million, a decrease of $4.4 million, or 54 percent, compared to the prior year third quarter. Operating margin was 17.3 percent of sales, compared to 29.5 percent of sales in the prior year third quarter. Current year results reflect lower revenues and a less favorable margin mix of revenues compared to the prior year.

The backlog of unfilled orders at May 31, 2021 was $120.8 million compared with $78.6 million at May 31, 2020. The irrigation backlog is higher compared to the prior year while the infrastructure backlog is lower due to two large orders in the prior year that did not repeat.

Outlook

“Market conditions support continued robust demand for irrigation equipment, and we also expect raw material inflation and supply chain challenges to persist through the balance of our fiscal year,” said Mr. Wood. “We remain optimistic about the outlook for our infrastructure business, particularly as coronavirus restrictions are lifted and road construction activity returns to more normal levels.”

Mr. Wood continued, “Our financial position remains strong, providing support for our innovation growth strategy across our businesses that address global megatrends and provide solutions that improve customer profitability and assist in their sustainability efforts.”

Third Quarter Conference Call

Lindsay’s fiscal 2021 third quarter investor conference call is scheduled for 11:00 a.m. Eastern Time today. Interested investors may participate in the call by dialing [phone] in the U.S., or [phone] 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										Nine months ended
(in thousands, except per share amounts)			May 31, 2021					May 31, 2020					May 31, 2021					May 31, 2020
Operating revenues		$		161,936			$		123,106			$		413,998			$		346,287
Cost of operating revenues				117,880					83,410					297,360					239,111
Gross profit				44,056					39,696					116,638					107,176
Operating expenses:
Selling expense				7,570					7,417					22,680					22,101
General and administrative expense				12,043					13,055					39,770					38,026
Engineering and research expense				3,102					3,396					9,504					10,303
Total operating expenses				22,715					23,868					71,954					70,430
Operating income				21,341					15,828					44,684					36,746
Other (expense) income:
Interest expense				(1,178	)				(1,197	)				(3,584	)				(3,574	)
Interest income				227					408					798					1,412
Other expense, net				764					(2,774	)				699					(4,197	)
Total other (expense) income				(187	)				(3,563	)				(2,087	)				(6,359	)
Earnings before income taxes				21,154					12,265					42,597					30,387
Income tax expense				3,357					2,171					5,829					6,432
Net earnings		$		17,797			$		10,094			$		36,768			$		23,955
Earnings per share:
Basic		$		1.63			$		0.93			$		3.38			$		2.21
Diluted		$		1.61			$		0.93			$		3.35			$		2.21
Shares used in computing earnings per share:
Basic				10,907					10,835					10,879					10,818
Diluted				11,033					10,877					10,967					10,854
Cash dividends declared per share		$		0.33			$		0.32			$		0.97			$		0.94

LINDSAY CORPORATION AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Unaudited)
		Three months ended											Nine months ended
(in thousands)			May 31, 2021					May 31, 2020					May 31, 2021					May 31, 2020
Operating revenues:
Irrigation:
North America		$		87,364			$		62,895					220,332			$		183,570
International				52,812					32,606					125,772					88,751
Irrigation segment				140,176					95,501			$		346,104			$		272,321
Infrastructure segment				21,760					27,605					67,894					73,966
Total operating revenues		$		161,936			$		123,106			$		413,998			$		346,287
Operating income (loss):
Irrigation segment		$		23,925			$		15,417			$		52,603			$		35,282
Infrastructure segment				3,767					8,157					14,364					22,788
Corporate				(6,351	)				(7,746	)				(22,283	)				(21,324	)
Total operating income		$		21,341			$		15,828			$		44,684			$		36,746

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)		May 31, 2021					May 31, 2020					August 31, 2020
ASSETS
Current assets:
Cash and cash equivalents		$		120,801			$		102,474			$		121,403
Marketable securities				19,663					19,012					19,511
Receivables, net				107,713					84,931					84,604
Inventories, net				136,601					113,301					104,792
Other current assets, net				32,947					19,469					17,625
Total current assets				417,725					339,187					347,935
Property, plant, and equipment, net				92,517					72,827					79,581
Intangibles, net				21,893					24,053					23,477
Goodwill				68,134					67,635					68,004
Operating lease right-of-use assets				19,360					27,663					27,457
Deferred income tax assets				10,247					11,118					9,935
Other noncurrent assets, net				12,341					15,003					14,137
Total assets		$		642,217			$		557,486			$		570,526
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$		49,351			$		35,310			$		29,554
Current portion of long-term debt				216					195					195
Other current liabilities				94,589					71,712					72,646
Total current liabilities				144,156					107,217					102,395
Pension benefits liabilities				6,086					5,787					6,374
Long-term debt				115,557					115,723					115,682
Operating lease liabilities				19,369					26,333					25,862
Deferred income tax liabilities				881					835					889
Other noncurrent liabilities				19,995					18,633					20,806
Total liabilities				306,044					274,528					272,008
Shareholders' equity:
Preferred stock				—					—					—
Common stock				18,991					18,918					18,918
Capital in excess of stated value				85,257					76,188					77,686
Retained earnings				525,926					488,518					499,724
Less treasury stock - at cost				(277,238	)				(277,238	)				(277,238	)
Accumulated other comprehensive loss, net				(16,763	)				(23,428	)				(20,572	)
Total shareholders' equity				336,173					282,958					298,518
Total liabilities and shareholders' equity		$		642,217			$		557,486			$		570,526

LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		Nine months ended
(in thousands)			May 31, 2021					May 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings		$		36,768			$		23,955
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization				14,688					14,146
Gain on sale of assets held-for-sale				—					(1,191	)
Provision for uncollectible accounts receivable				304					466
Deferred income taxes				205					27
Share-based compensation expense				5,021					4,118
Unrealized foreign currency transaction (gain) loss				(1,934	)				3,632
Other, net				(2,123	)				1,575
Changes in assets and liabilities:
Receivables				(22,934	)				(11,379	)
Inventories				(28,612	)				(23,765	)
Other current assets				(14,025	)				(6,681	)
Accounts payable				20,828					5,385
Other current liabilities				20,149					14,485
Other noncurrent assets and liabilities				2,325					(8,810	)
Net cash provided by operating activities				30,660					15,963
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment				(22,532	)				(12,268	)
Proceeds from sale of property and equipment held-for-sale				—					3,955
Purchases of marketable securities available-for-sale				(13,067	)				(23,389	)
Proceeds from maturities of marketable securities available-for-sale				12,592					4,320
Acquisition of business, net of cash acquired				—					(3,034	)
Other investing activities, net				(1,960	)				1,503
Net cash used in investing activities				(24,967	)				(28,913	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options				3,892					1,545
Common stock withheld for payroll tax obligations				(1,269	)				(1,111	)
Principal payments on long-term debt				(141	)				(174	)
Dividends paid				(10,566	)				(10,177	)
Net cash used in financing activities				(8,084	)				(9,917	)
Effect of exchange rate changes on cash and cash equivalents				1,789					(1,863	)
Net change in cash and cash equivalents				(602	)				(24,730	)
Cash and cash equivalents, beginning of period				121,403					127,204
Cash and cash equivalents, end of period		$		120,801			$		102,474

 

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