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Lindsay Corporation Reports Fiscal 2020 Second Quarter Results

·9 mins read
  • Consolidated revenues of $113.8 million and EPS of $0.51

  • Revenue growth and margin improvements lead to improved North America irrigation performance

  • Solid Infrastructure performance driven by strong revenue growth and favorable margin mix

Lindsay Corporation (NYSE: LNN), a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, today announced results for its second quarter of fiscal 2020, which ended on February 29, 2020.

Second Quarter Summary

Revenues for the second quarter of fiscal 2020 were $113.8 million, an increase of $4.6 million, or 4 percent, compared to revenues of $109.2 million in the prior year second quarter. Net earnings for the quarter were $5.5 million, or $0.51 per diluted share, compared with a net loss of $3.4 million, or $0.32 per diluted share, for the prior year second quarter. Net earnings for the prior year second quarter adjusted to eliminate costs associated with the Foundation for Growth initiative were $0.2 million, or $0.02 per diluted share. 1

"We were pleased to see improved performance in our irrigation business while market conditions remain challenged," said Tim Hassinger, President and Chief Executive Officer. "Solid performance in our infrastructure business was driven by revenue growth and a favorable mix of higher margin revenue. In addition, our Foundation for Growth initiative continues to contribute to improved performance and margin expansion in both businesses."

Second Quarter Segment Results

Irrigation segment revenues for the second quarter of fiscal 2020 were $92.1 million, a decrease of $3.7 million, or 4 percent, compared to $95.8 million in the prior year. North America irrigation revenues of $65.7 million increased $8.0 million, or 14 percent, compared to the prior year. The increase resulted primarily from higher sales of replacement parts, increased irrigation equipment unit volume and higher revenue from engineering project services. International irrigation revenues of $26.4 million decreased $11.7 million, or 31 percent, due primarily to a large project sale in a developing market in the prior year that did not repeat.

Irrigation segment operating margin was 10.4 percent of sales in the second quarter, compared to 7.9 percent of sales in the prior year. Operating margin improvement resulted from an increase in North America sales and from improved cost and pricing performance compared to the prior year.

Infrastructure segment revenues for the second quarter of fiscal 2020 were $21.7 million, an increase of $8.3 million, or 62 percent, compared to $13.4 million in the prior year. The increase resulted from higher Road Zipper System ® sales and lease revenues and an increase in sales of road safety products compared to the prior year.

Infrastructure segment operating margin was 29.3 percent of sales in the second quarter, compared to an operating loss of $0.4 million in the prior year. Operating margin improvement resulted primarily from increased sales in higher margin product lines and from improved cost and pricing performance.

The backlog of unfilled orders at February 29, 2020 was $104.4 million compared with $45.6 million at February 28, 2019. Included in these backlogs are amounts of $5.5 million and $1.1 million, respectively, that are not expected to be fulfilled within the subsequent twelve months.

Outlook

"The recent award of a large Road Zipper System project with Highways England as well as continued growth with a key customer in Japan are great proof points that our infrastructure growth strategy continues to gain traction," said Mr. Hassinger. "For our irrigation business, the potential impact of the U.S.-China Phase 1 trade agreement remains uncertain at this point and commodity prices reflect this uncertainty."

Mr. Hassinger added, "The business impact of the COVID-19 coronavirus pandemic remains uncertain at this time and depends on numerous evolving factors that are difficult to predict. Our first priority is the health and safety of our employees, customers, partners and global community. We have conducted scenario planning and developed contingency plans that continue to be refined on a regular basis to help mitigate potential risk to the business. Overall, we are well positioned with a strong balance sheet and sufficient liquidity as we navigate the current COVID-19 environment."

Second Quarter Conference Call

Lindsays fiscal 2020 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 worlds 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 worlds 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 managements 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.

1 Please see Reg G reconciliation of GAAP operating income, net earnings and diluted earnings per share to adjusted figures at end of document.

LINDSAY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Six months ended

(in thousands, except per share amounts)

 

 

February 29,

2020

 

 

 

February 28,

2019

 

 

 

February 29,

2020

 

 

 

February 28,

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

 

 

113,788

 

 

$

 

 

109,182

 

 

$

 

 

223,181

 

 

$

 

 

221,133

 

Cost of operating revenues

 

 

 

80,382

 

 

 

 

84,708

 

 

 

 

155,701

 

 

 

 

168,011

 

Gross profit

 

 

 

33,406

 

 

 

 

24,474

 

 

 

 

67,480

 

 

 

 

53,122

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expense

 

 

 

8,192

 

 

 

 

8,437

 

 

 

 

14,684

 

 

 

 

16,419

 

General and administrative expense

 

 

 

13,167

 

 

 

 

16,832

 

 

 

 

24,971

 

 

 

 

31,890

 

Engineering and research expense

 

 

 

3,405

 

 

 

 

3,665

 

 

 

 

6,907

 

 

 

 

7,233

 

Total operating expenses

 

 

 

24,764

 

 

 

 

28,934

 

 

 

 

46,562

 

 

 

 

55,542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

8,642

 

 

 

 

(4,460

)

 

 

 

20,918

 

 

 

 

(2,420

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

(1,191

)

 

 

 

(1,178

)

 

 

 

(2,377

)

 

 

 

(2,383

)

Interest income

 

 

 

389

 

 

 

 

751

 

 

 

 

1,004

 

 

 

 

1,405

 

Other income (expense), net

 

 

 

(973

)

 

 

 

(181

)

 

 

 

(1,423

)

 

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) before income taxes

 

 

 

6,867

 

 

 

 

(5,068

)

 

 

 

18,122

 

 

 

 

(3,387

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

 

1,351

 

 

 

 

(1,628

)

 

 

 

4,261

 

 

 

 

(1,159

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss)

 

$

 

 

5,516

 

 

$

 

 

(3,440

)

 

$

 

 

13,861

 

 

$

 

 

(2,228

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 

 

0.51

 

 

$

 

 

(0.32

)

 

$

 

 

1.28

 

 

$

 

 

(0.21

)

Diluted

 

$

 

 

0.51

 

 

$

 

 

(0.32

)

 

$

 

 

1.28

 

 

$

 

 

(0.21

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

10,825

 

 

 

 

10,786

 

 

 

 

10,810

 

 

 

 

10,776

 

Diluted

 

 

 

10,857

 

 

 

 

10,786

 

 

 

 

10,843

 

 

 

 

10,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

$

 

 

0.31

 

 

$

 

 

0.31

 

 

$

 

 

0.62

 

 

$

 

 

0.62

 

LINDSAY CORPORATION AND SUBSIDIARIES

 

SUMMARY OPERATING RESULTS

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

Six months ended

 

(in thousands)

 

 

February 29,

2020

 

 

 

February 28,

2019

 

 

 

February 29,

2020

 

 

 

February 28,

2019

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Irrigation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

 

65,667

 

 

$

 

57,681

 

 

 

 

118,280

 

 

$

 

114,145

 

International

 

 

 

26,406

 

 

 

 

38,085

 

 

 

 

56,145

 

 

 

 

69,231

 

Irrigation segment

 

 

 

92,073

 

 

 

 

95,766

 

 

$

 

174,425

 

 

$

 

183,376

 

Infrastructure segment

 

 

 

21,715

 

 

 

 

13,416

 

 

 

 

48,756

 

 

 

 

37,757

 

Total operating revenues

 

$

 

113,788

 

 

$

 

109,182

 

 

$

 

223,181

 

 

$

 

221,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Irrigation segment

 

$

 

9,614

 

 

$

 

7,521

 

 

$

 

19,371

 

 

$

 

15,304

 

Infrastructure segment

 

 

 

6,358

 

 

 

 

(446

)

 

 

 

15,126

 

 

 

 

3,722

 

Corporate

 

 

 

(7,330

)

 

 

 

(11,535

)

 

 

 

(13,579

)

 

 

 

(21,446

)

Total operating income

 

$

 

8,642

 

 

$

 

(4,460

)

 

$

 

20,918

 

 

$

 

(2,420

)

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 moveable 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 29,

2020

 

 

February 28,

2019

 

 

August 31,

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

101,272

 

 

$

 

102,778

 

 

$

 

127,204

 

Marketable securities

 

 

 

18,740

 

 

 

 

 

 

 

 

 

Receivables, net

 

 

 

80,468

 

 

 

 

88,576

 

 

 

 

75,551

 

Inventories, net

 

 

 

105,454

 

 

 

 

99,984

 

 

 

 

92,287

 

Assets held-for-sale

 

 

 

 

 

 

 

2,744

 

 

 

 

2,744

 

Other current assets, net

 

 

 

19,083

 

 

 

 

23,144

 

 

 

 

15,704

 

Total current assets

 

 

 

325,017

 

 

 

 

317,226

 

 

 

 

313,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant, and equipment, net

 

 

 

68,762

 

 

 

 

65,306

 

 

 

 

68,968

 

Intangibles, net

 

 

 

23,162

 

 

 

 

25,853

 

 

 

 

24,382

 

Goodwill

 

 

 

64,338

 

 

 

 

64,591

 

 

 

 

64,387

 

Operating lease right-of-use assets

 

 

 

27,257

 

 

 

 

 

 

 

 

 

Deferred income tax assets

 

 

 

10,162

 

 

 

 

6,484

 

 

 

 

11,758

 

Other noncurrent assets, net

 

 

 

15,632

 

 

 

 

20,213

 

 

 

 

17,329

 

Total assets

 

$

 

534,330

 

 

$

 

499,673

 

 

$

 

500,314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

...

Current liabilities:

Accounts payable

$

33,307

$

37,419

$

29,434

Current portion of long-term debt

211

207

209

Other current liabilities

54,303

44,825

52,488

Total current liabilities

87,821

82,451

82,131

Pension benefits liabilities

5,868

5,732

6,029

Long-term debt

115,765

116,034

115,846

Operating lease liabilities

25,919

Deferred income tax liabilities

839

991

872

Other noncurrent liabilities

20,791

22,622

27,227

Total liabilities

257,003

227,830

232,105

Shareholders' equity:

Preferred stock

Common stock

18,918

18,870

18,870

Capital in excess of stated value

74,645

69,772

71,684

Retained earnings

481,890

477,027

474,740

Less treasury stock - at cost

(277,238

)

(277,238

)

(277,238

)

Accumulated other comprehensive loss, net

(20,888

)

(16,588

)

(19,847

)

Total shareholders' equity

277,327

271,843

268,209

Total liabilities and shareholders' equity

$

534,330

$

499,673

$

500,314

LINDSAY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six months ended

(in thousands)

February 29,

2020

February 28,

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings (loss)

$

13,861

$

(2,228

)

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

Depreciation and amortization

9,418

6,889

Gain on sale of assets held-for-sale

(1,191

)

Loss on sale of business

67

Provision for uncollectible accounts receivable

213

(315

)

Deferred income taxes

1,806

(105

)

Share-based compensation expense

2,575

2,403

Other, net

(638

)

(1,093

)

Changes in assets and liabilities:

Receivables

(5,716

)

(18,157

)

Inventories

(14,153

)

(22,246

)

Other current assets

(4,539

)

(5,111

)

Accounts payable

3,540

8,402

Other current liabilities

(2,183

)

(9,792

)

Other noncurrent assets and liabilities

(5,178

)

1,439

Net cash used in operating activities

(2,185

)

(39,847

)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant, and equipment

(5,335

)

(11,701

)

Proceeds from sale of assets held-for-sale

3,955

Purchases of marketable securities available-for-sale

(19,978

)

Proceeds from maturities of marketable securities available-for-sale

1,250

Proceeds from settlement of net investment hedges

1,092

1,462

Payments for settlement of net investment hedges

(245

)

Other investing activities, net

38

Net cash used in investing activities

(19,016

)

(10,446

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of stock options

1,545

177

Common stock withheld for payroll tax obligations

(1,111

)

(1,124

)

Principal payments on long-term debt

(104

)

(102

)

Dividends paid

(6,711

)

(6,688

)

Net cash used in financing activities

(6,381

)

(7,737

)

Effect of exchange rate changes on cash and cash equivalents

1,650

21

Net change in cash and cash equivalents

(25,932

)

(58,009

)

Cash and cash equivalents, beginning of period

127,204

160,787

Cash and cash equivalents, end of period

$

101,272

$

102,778

LINDSAY CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)

The non-GAAP tables below disclose (a) the impact on diluted earnings per share of consulting fees, severance costs and loss from business divestitures, associated with the Company's Foundation for Growth Initiative ("FFG costs"), (b) the impact on operating income of FFG costs, and (c) the impact on segment operating income of FFG costs. Management believes adjusted net earnings, adjusted diluted earnings per share and adjusted operating income are important indicators of the Company’s business performance because they exclude items that may not be indicative of, or may be unrelated to, the Company’s underlying operating results, and provide a useful baseline for analyzing trends in the business. Non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. These adjusted financial measures should not be considered in isolation or as a substitute for reported net earnings, diluted earnings per share and operating income. These non-GAAP financial measures reflect an additional way of viewing the Company’s operations that, when viewed with the GAAP results and the following reconciliations to the corresponding GAAP financial measures, management believes provides a more complete understanding of the Company’s business.

Three months ended

Six months ended

(in thousands, except per share amounts)

February 28, 2019

Diluted earnings per share

February 28, 2019

Diluted earnings per share

Net loss - reported GAAP measure

$

(3,440

)

$

(0.32

)

$

(2,228

)

$

(0.21

)

FFG costs - before tax

5,281

$

0.49

9,276

$

0.86

Tax effect - FFG costs

(1,610

)

$

(0.15

)

(2,689

)

$

(0.25

)

Net earnings - adjusted

$

231

$

0.02

$

4,359

$

0.40

Average shares outstanding - diluted

10,786

10,776

For the three months ended February 28, 2019

Operating income reconciliation

Consolidated

Irrigation

Infrastructure

Corporate

Operating income (loss) - reported GAAP measure

(4,460

)

$

7,521

$

(446

)

$

(11,535

)

FFG costs - before tax

5,281

20

5,261

Adjusted operating income

$

821

$

7,521

$

(426

)

$

(6,274

)

Operating revenues

109,182

$

95,766

$

13,416

$

Operating income as a percent of operating revenues

-4.1

%

7.9

%

-3.3

%

N/A

Adjusted operating income as a percent of operating revenues

0.8

%

7.9

%

-3.2

%

N/A

For the six months ended February 28, 2019

Operating income reconciliation

Consolidated

Irrigation

Infrastructure

Corporate

Operating income (loss) - reported GAAP measure

(2,420

)

$

15,304

$

3,722

$

(21,446

)

FFG costs - before tax

9,276

126

132

9,018

Adjusted operating income

$

6,856

$

15,430

$

3,854

$

(12,428

)

Operating revenues

221,133

$

183,376

$

37,757

$

Operating income as a percent of operating revenues

-1.1

%

8.3

%

9.9

%

N/A

Adjusted operating income as a percent of operating revenues

3.1

%

8.4

%

10.2

%

N/A

View source version on businesswire.com: https://www.businesswire.com/news/home/20200407005305/en/

Contacts

LINDSAY CORPORATION:
Brian Ketcham
Senior Vice President & Chief Financial Officer
402-827-6579

HALLIBURTON INVESTOR RELATIONS:
Hala Elsherbini
972-458-8000