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
Lindsay’s 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 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.
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.
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| February 28, 2019 |
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| February 28, 2019 |
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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 |
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Operating income reconciliation | Consolidated |
| Irrigation |
| Infrastructure |
| Corporate |
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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 |
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Operating income reconciliation | Consolidated |
| Irrigation |
| Infrastructure |
| Corporate |
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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:
Brian Ketcham
Senior Vice President & Chief Financial Officer
402-827-6579
