Lindsay Corporation Reports Fiscal 2017 Second Quarter Results

  • Revenue and earnings increase over prior year’s second quarter
  • Irrigation segment revenue increases on solid growth from international markets
  • Infrastructure segment revenue increases with improved gross margin

OMAHA, Neb.--()--Lindsay Corporation (NYSE: LNN), a leading provider of irrigation systems and infrastructure products, today announced results for its second quarter ended February 28, 2017.

Second Quarter Results

Second quarter fiscal 2017 revenues were $124.1 million compared to revenues of $120.6 million in the prior year’s second quarter. Net earnings for the quarter were $5.0 million or $0.47 per diluted share compared with a net loss of $4.1 million or $0.37 per diluted share in the second quarter of the prior year. The prior year period included $13.0 million of environmental remediation expenses which, on an after-tax basis, reduced net earnings by $8.5 million, or $0.78 per diluted share.

Irrigation segment revenues for the second quarter increased three percent to $106.2 million from $103.1 million in the prior year’s second quarter. U.S. irrigation revenues of $61.5 million declined 15 percent, as harsh winter weather conditions in the Northwest resulted in lower irrigation equipment unit volume and lower revenue from other irrigation businesses. International irrigation revenues were $44.7 million, an increase of 46 percent compared to the second quarter of the prior year, driven primarily by improved demand and project activity in South America, Africa and the Commonwealth of Independent States region. Infrastructure segment revenues for the second quarter increased two percent to $17.9 million, as increased demand for road safety products and higher Road Zipper® system sales and lease revenue was offset in part by a decline in sales volume for rail products.

Gross margin for the second quarter of fiscal 2017 was 26.5 percent of sales compared to 26.9 percent of sales in the prior year’s second quarter. Improved margin in the infrastructure segment was more than offset by lower margin in the irrigation segment, as improved U.S. irrigation margin was offset by a higher mix of international revenue at comparatively lower margins. Improved infrastructure margin resulted from increased cost absorption in Road Zipper® system production and volume leverage from road safety product sales.

Operating expenses for the second quarter of fiscal 2017 were $24.4 million, a decrease of $12.7 million compared to the second quarter in the prior year. Excluding the impact of the environmental remediation expenses in the prior year’s second quarter, operating expenses were slightly higher in the current year primarily due to increased new product development and testing costs. Operating expenses were 19.7 percent of sales in the second quarter of fiscal 2017 compared with 30.8 percent of sales in the second quarter of the prior year. Operating margins were 6.9 percent in the second quarter of fiscal 2017, unchanged compared to the second quarter of the prior year after excluding the environmental expenses.

Cash and cash equivalents at the end of the second quarter were $102.8 million compared to $101.2 million at the end of the prior fiscal year and $89.5 million at the end of the prior year’s second quarter. There were no share repurchases made during the second quarter of fiscal 2017. A total of $63.7 million remains available under the Company’s share repurchase program as of February 28, 2017.

The backlog of unshipped orders at February 28, 2017 was $62.3 million compared with $52.6 million at February 29, 2016. Order backlogs were improved in both the irrigation and infrastructure in comparison to the prior year.

Six Month Results

Total revenues for the six months ended February 28, 2017 were $234.5 million, a decrease of three percent compared to $242.2 million in the same prior year period. Net earnings were $5.9 million or $0.55 per diluted share compared with $2.8 million or $0.25 per diluted share in the prior year.

Irrigation segment revenues decreased four percent to $196.1 million for the six months ended February 28, 2017 from $204.4 million in the same prior year period, as U.S. irrigation revenues of $111.8 million decreased 15 percent and international irrigation revenues of $84.3 million increased 16 percent. Infrastructure segment revenues increased two percent to $38.4 million for the six months ended February 28, 2017, as increased demand for road safety products was offset in part by a decline in sales volume for rail products.

Outlook

Rick Parod, President and Chief Executive Officer, commented, “In the irrigation segment, orders and project levels improved in the second quarter after experiencing a slow start to the year in the first quarter. Strong sales growth in international irrigation reflects improving demand and increased project activity. I am pleased with the U.S. irrigation gross margin improvement achieved, especially in view of raw material inflation experienced in the quarter. In the infrastructure segment, second quarter revenues were modestly improved over the prior year in a seasonally lower period, and we continue to see improved operating performance in the segment.”

Parod continued, “We are currently in the midst of the primary selling season for irrigation equipment in North America where overall market conditions, affected by lower commodity prices and reduced farm incomes, are resulting in seasonal demand similar to the prior year. I am encouraged by the improving activity levels we are seeing in the international irrigation and infrastructure markets. The longer-term drivers for our markets of population growth, expanded food production and efficient water use, and infrastructure upgrades and expansion support our expectations for growth.”

Second-Quarter Conference Call

Lindsay’s fiscal 2017 second quarter investor conference call is scheduled for 11:00 a.m. Eastern Time today. Interested investors may participate in the call by dialing (888) 321-8161 in the U.S., or (706) 758-0065 internationally, and referring to conference ID # 90564253. 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 manufactures and markets irrigation equipment primarily used in agricultural markets which increase or stabilize crop production while conserving water, energy, and labor. The Company also manufactures and markets infrastructure and road safety products under the Lindsay Transportation Solutions trade name. At February 28, 2017, Lindsay had approximately 10.7 million shares outstanding, which are traded on the New York Stock Exchange under the symbol LNN.

For more information regarding Lindsay Corporation, see the Company’s Web site at 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 OPERATIONS

(unaudited)
 
Three months ended Six months ended
(in thousands, except per share amounts)

February 28,
2017

February 29,
2016

February 28,
2017

February 29,
2016

 
Operating revenues $ 124,125 $ 120,573 $ 234,515 $ 242,195
Cost of operating revenues   91,184     88,128     173,200     175,336  
Gross profit   32,941     32,445     61,315     66,859  
 
Operating expenses:
Selling expense 10,132 10,363 20,114 20,355
General and administrative expense 10,230 23,028 21,585 32,043
Engineering and research expense   4,057     3,748     8,359     7,407  
Total operating expenses   24,419     37,139     50,058     59,805  
 
Operating income (loss) 8,522 (4,694 ) 11,257 7,054
 
Interest expense (1,201 ) (1,201 ) (2,410 ) (2,397 )
Interest income 171 229 336 393

Other income (expense), net

  144     (527 )   (212 )   (847 )
 
Earnings (loss) before income taxes 7,636 (6,193 ) 8,971 4,203
 
Income tax expense (benefit)   2,624     (2,064 )   3,086     1,388  
 
Net earnings (loss) $ 5,012   $ (4,129 ) $ 5,885   $ 2,815  
 
Earnings (loss) per share:
Basic $ 0.47 $ (0.37 ) $ 0.55 $ 0.25
Diluted $ 0.47 $ (0.37 ) $ 0.55 $ 0.25
 
Shares used in computing earnings (loss) per share:
Basic 10,657 11,024 10,647 11,142
Diluted 10,674 11,024 10,670 11,163
 
Cash dividends declared per share $

0.29

$

0.28

$

0.58

$

0.56

           
 
Lindsay Corporation and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
February 28, February 29, August 31,
(in thousands) 2017 2016 2016
 
ASSETS
Current assets:
Cash and cash equivalents $ 102,825 $ 89,522 $ 101,246
Restricted cash - 2,028 2,030
Receivables, net 78,828 79,225 80,610
Inventories, net 82,847 82,078 74,750
Prepaid expenses 5,208 4,418 3,671
Other current assets   15,968     12,802     14,468  
Total current assets   285,676     270,073     276,775  
 
Property, plant and equipment, net 75,632 78,916 77,627
Intangibles, net 44,890 49,475 47,200
Goodwill 76,577 76,628 76,803
Deferred income tax assets 3,094 3,108 4,225
Other noncurrent assets, net   4,747     5,070     4,885  
Total assets $ 490,616   $ 483,270   $ 487,515  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 44,254 $ 36,371 $ 32,268
Current portion of long-term debt 199 195 197
Other current liabilities   46,350     47,971     55,395  
Total current liabilities   90,803     84,537     87,860  
 
Pension benefits liabilities 6,708 6,431 6,869
Long-term debt 116,876 117,075 116,976
Deferred income tax liabilities 1,678 1,020 1,223
Other noncurrent liabilities   20,995     22,588     23,020  
Total liabilities   237,060     231,651     235,948  
 
Shareholders' equity:
Preferred stock - - -
Common stock 18,746 18,713 18,713
Capital in excess of stated value 59,002 55,908 57,338
Retained earnings 466,630 455,535 466,926
Less treasury stock - at cost (277,238 ) (261,118 ) (277,238 )
Accumulated other comprehensive loss, net   (13,584 )   (17,419 )   (14,172 )
Total shareholders' equity   253,556     251,619     251,567  
Total liabilities and shareholders' equity $ 490,616   $ 483,270   $ 487,515  
       
 
Lindsay Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)
 
(in thousands) Six months ended

February 28,
2017

February 29,
2016

CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 5,885 $ 2,815

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization 8,120 8,536
Provision for uncollectible accounts receivable (609 ) (1,103 )
Deferred income taxes 1,707 (4,163 )
Share-based compensation expense 1,815 1,534
Other, net (594 ) 1,828
Changes in assets and liabilities:
Receivables 2,710 (5,220 )
Inventories (7,368 ) (8,094 )
Other current assets 3,375 (1,779 )
Accounts payable 11,926 (2,247 )
Other current liabilities (8,135 ) (5,273 )
Current taxes payable (5,987 ) (3,641 )
Other noncurrent assets and liabilities   (2,123 )   11,833  
Net cash provided by (used in) operating activities   10,722     (4,974 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (4,194 ) (7,392 )
Proceeds from settlement of net investment hedges 2,054 2,317
Payments for settlement of net investment hedges (482 ) (512 )
Other investing activities, net   136     1,073  
Net cash used in investing activities   (2,486 )   (4,514 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 647 113
Common stock withheld for payroll tax withholdings (635 ) (712 )
Principal payments on long-term debt (98 ) (96 )
Repurchase of common shares - (32,215 )
Dividends paid   (6,181 )   (6,183 )
Net cash used in financing activities   (6,267 )   (39,093 )
 
Effect of exchange rate changes on cash and cash equivalents   (390 )   (990 )
Net change in cash and cash equivalents 1,579 (49,571 )
Cash and cash equivalents, beginning of period   101,246     139,093  
Cash and cash equivalents, end of period $ 102,825   $ 89,522  

Contacts

Lindsay Corporation
Brian Ketcham, 402-827-6579
Vice President & Chief Financial Officer
or
Halliburton Investor Relations
Hala Elsherbini or Geralyn DeBusk, 972-458-8000

Contacts

Lindsay Corporation
Brian Ketcham, 402-827-6579
Vice President & Chief Financial Officer
or
Halliburton Investor Relations
Hala Elsherbini or Geralyn DeBusk, 972-458-8000