Lindsay's 2Q Earnings Top Estimates
Lindsay Corporation’s (LNN) earnings per share increased 50% to $1.50 in the second quarter of fiscal 2013 from $1.00 a share in the year-ago quarter. Reported results were well ahead of the Zacks Consensus Estimate of $1.29 per share.
Operational Update
Total revenue improved 33% year over year to $175 million, beating the Zacks Consensus Estimate of $163 million. The year-over-year increase in revenues stemmed from a 39% improvement in total irrigation equipment revenues.
Domestic irrigation revenues rose 41% and international irrigation revenues increased 34% on increased demand resulting from higher commodity prices and farm incomes along with drought conditions in the United States. On the other hand, infrastructure revenues fell 15% during the quarter.
Cost of operating revenues increased 31% to $125 million. Gross profit improved 38% to $50.4 million with gross margin expanding 110 basis points to 28.7%. Irrigation margin improved 1%, helped by strong pricing environment combined with increased productivity and cost leverage.
Operating expenses improved 19% to $20.9 million in the quarter. Operating income in the quarter increased 55% to $29.4 million. Operating margin in the quarter was 17% compared with 14% in the prior-year quarter.
Lindsay’s backlog at the end of second quarter 2013 was $159.3 million compared with $85.1 million at the end of first quarter 2013 and $87.3 million at the end of second quarter 2012.
Financial Position
Cash and cash equivalents were $159.6 million as of Feb 28, 2013 compared with $104.9 million as of Feb 29, 2012. The company generated $26.2 million in net cash from operating activity in the first half of fiscal 2013 compared with $4.9 million in the prior-year comparable period.
Total debt was $3.7 million as of Feb 28, 2013, compared to $6.4 million as of Feb 29, 2012. Debt-to-capitalization ratio improved to 1.1% as of Feb 28, 2013, from 2.2% as Feb 29, 2012.
Outlook
Lindsay expects positive farmer sentiment, high farm incomes and commodity prices to boost irrigation sales. However, expectations of record crop planting and improved yields are leading to projections of lower commodity prices, which could lead to reduced demand in 2013 and 2014. Lindsay expects long-term demand to remain high, driven by increased food production and efficient water use.
Lindsay Corporation is a leading designer and manufacturer of self-propelled center pivot and lateral move irrigation systems, which are used principally for agriculture to increase or stabilize crop production while conserving water, energy, and labor. Lindsay retains a Zacks Rank #3 (Hold). Other stocks in the same industry with favorable Zacks ranks are Alamo Group, Inc. (ALG), Deere & Company (DE) and CNH Global NV (CNH), which carry a Zacks Rank #2 (Buy).
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