UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☒

~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the quarterly period ended ~~May 31,~~November 30, 2021

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐

~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

Commission File Number 1-13419

Lindsay Corporation

(Exact name of registrant as specified in its charter)


Delaware		47-0554096
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

18135 Burke Street, Suite 100, Omaha, Nebraska		68022
(Address of principal executive offices)		(Zip Code)

~~402‑~~402‑829-6800

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	LNN	New York Stock Exchange, Inc.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☒	☒	~~Accelerated filer~~	Accelerated filer	☐
Non‑accelerated filer	☐	☐		Smaller reporting company	☐
Emerging growth company	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~June 28, 2021, 10,907,229~~January 4, 2022, 10,972,392 shares of the registrant’s common stock were outstanding.

Table of Contents

Lindsay Corporation

INDEX FORM 10-Q


		Page

Part I – FINANCIAL INFORMATION		3

	ITEM 1 – Financial Statements	3

	Condensed Consolidated Statements of Earnings for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and ~~May 31,~~November 30, 2020	3

	Condensed Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and ~~May 31,~~November 30, 2020	4

	Condensed Consolidated Balance Sheets as of ~~May 31,~~November 30, 2021, ~~May 31,~~November 30, 2020, and August 31, ~~2020~~2021	5

	Condensed Consolidated Statements of Shareholders’ Equity for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and ~~May 31,~~November 30, 2020	6

	Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~May 31,~~November 30, 2021 and ~~May 31,~~November 30, 2020	87

	Notes to the Condensed Consolidated Financial Statements	98

	ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

	ITEM 3 – Quantitative and Qualitative Disclosures about Market Risk	2523

	ITEM 4 – Controls and Procedures	2524

Part II – OTHER INFORMATION		2625

	ITEM 1 – Legal Proceedings	2625

	ITEM 1A – Risk Factors	2625

	ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds	2625

	ITEM 3 – Defaults Upon Senior Securities	2625

	ITEM 4 – Mine Safety Disclosures	2625

	ITEM 5 – Other Information	2625

	ITEM 6 – Exhibits	2726

SIGNATURES		2827

- 2 -

Table of Contents

Part I – FINANCIAL INFORMATION

ITEM 1 - Financial Statements

LINDSAY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


	Three months ended						Nine months ended						Three months ended
($ and shares in thousands, except per share amounts)	May 31, 2021			May 31, 2020			May 31, 2021			May 31, 2020			November 30, 2021			November 30, 2020
Operating revenues	$	161,936		$	123,106		$	413,998		$	346,287		$	166,152		$	108,485
Cost of operating revenues		117,880			83,410			297,360			239,111			128,714			77,077
Gross profit		44,056			39,696			116,638			107,176			37,438			31,408

Operating expenses:
Selling expense		7,570			7,417			22,680			22,101			7,990			7,331
General and administrative expense		12,043			13,055			39,770			38,026			12,880			13,452
Engineering and research expense		3,102			3,396			9,504			10,303			3,207			3,090
Total operating expenses		22,715			23,868			71,954			70,430			24,077			23,873

Operating income		21,341			15,828			44,684			36,746			13,361			7,535

Other (expense) income:
Interest expense		(1,178	)		(1,197	)		(3,584	)		(3,574	)		(1,163	)		(1,201	)
Interest income		227			408			798			1,412			177			303
Other expense, net		764			(2,774	)		699			(4,197	)		(2,900	)		246
Total other (expense) income		(187	)		(3,563	)		(2,087	)		(6,359	)		(3,886	)		(652	)

Earnings before income taxes		21,154			12,265			42,597			30,387			9,475			6,883

Income tax expense		3,357			2,171			5,829			6,432
Income tax expense (benefit)														1,574			(212	)

Net earnings	$	17,797		$	10,094		$	36,768		$	23,955		$	7,901		$	7,095

Earnings per share:
Basic	$	1.63		$	0.93		$	3.38		$	2.21		$	0.72		$	0.65
Diluted	$	1.61		$	0.93		$	3.35		$	2.21		$	0.72		$	0.65

Shares used in computing earnings per share:
Basic		10,907			10,835			10,879			10,818			10,927			10,845
Diluted		11,033			10,877			10,967			10,854			11,026			10,888

Cash dividends declared per share	$	0.33		$	0.32		$	0.97		$	0.94		$	0.33		$	0.32

See accompanying notes to condensed consolidated financial statements.

- 3 -

Table of Contents

LINDSAY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three months ended						Nine months ended						Three months ended
($ in thousands)	May 31, 2021			May 31, 2020			May 31, 2021			May 31, 2020			November 30, 2021			November 30, 2020
Net earnings	$	17,797		$	10,094		$	36,768		$	23,955		$	7,901		$	7,095
Other comprehensive income (loss):
Other comprehensive (loss) income:
Defined benefit pension plan adjustment, net of tax		51			43			153			129			49			43
Foreign currency translation adjustment, net of hedging activities and tax		1,858			(2,642	)		3,722			(3,831	)		(3,350	)		1,384
Unrealized (loss) gain on marketable securities, net of tax		(10	)		59			(66	)		121
Total other comprehensive income (loss), net of tax expense of $127, $297, $115, and $670, respectively		1,899			(2,540	)		3,809			(3,581	)
Unrealized loss on marketable securities, net of tax														(57	)		(32	)
Total other comprehensive (loss) income, net of tax expense of $2 and $32, respectively														(3,358	)		1,395
Total comprehensive income	$	19,696		$	7,554		$	40,577		$	20,374		$	4,543		$	8,490

See accompanying notes to condensed consolidated financial statements.

- 4 -

Table of Contents

LINDSAY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


($ and shares in thousands, except par values)	May 31, 2021			May 31, 2020			August 31, 2020			November 30, 2021			November 30, 2020			August 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	120,801		$	102,474		$	121,403		$	84,719		$	126,802		$	127,107
Marketable securities		19,663			19,012			19,511			30,195			19,624			19,604
Receivables, net of allowance of $3,145, $2,607, and $2,780, respectively		107,713			84,931			84,604
Receivables, net of allowance of $3,398, $2,960, and $3,422, respectively											111,959			74,909			93,609
Inventories, net		136,601			113,301			104,792			173,115			114,278			145,244
Other current assets, net		32,947			19,469			17,625			26,345			20,837			30,539
Total current assets		417,725			339,187			347,935			426,333			356,450			416,103

Property, plant, and equipment:
Cost		230,205			198,180			208,107			230,268			212,725			229,000
Less accumulated depreciation		(137,688	)		(125,353	)		(128,526	)		(138,629	)		(131,430	)		(137,003	)
Property, plant, and equipment, net		92,517			72,827			79,581			91,639			81,295			91,997

Intangibles, net		21,893			24,053			23,477			19,827			22,817			20,367
Goodwill		68,134			67,635			68,004			67,735			68,027			67,968
Operating lease right-of-use assets		19,360			27,663			27,457			17,584			26,008			18,281
Deferred income tax assets		10,247			11,118			9,935			6,157			9,924			8,113
Other noncurrent assets		12,341			15,003			14,137			20,170			10,681			14,356
Total assets	$	642,217		$	557,486		$	570,526		$	649,445		$	575,202		$	637,185

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	49,351		$	35,310		$	29,554		$	58,908		$	36,263		$	45,209
Current portion of long-term debt		216			195			195			219			214			217
Other current liabilities		94,589			71,712			72,646			88,655			65,910			92,814
Total current liabilities		144,156			107,217			102,395			147,782			102,387			138,240

Pension benefits liabilities		6,086			5,787			6,374			5,660			6,293			5,754
Long-term debt		115,557			115,723			115,682			115,471			115,641			115,514
Operating lease liabilities		19,369			26,333			25,862			17,679			24,863			18,301
Deferred income tax liabilities		881			835			889			798			902			832
Other noncurrent liabilities		19,995			18,633			20,806			20,112			21,215			20,099
Total liabilities		306,044			274,528			272,008			307,502			271,301			298,740

Shareholders' equity:

Preferred stock of $1 par value - authorized 2,000 shares; 0 shares issued and outstanding		0			0			0
Common stock of $1 par value - authorized 25,000 shares; 18,991, 18,918, and 18,918 shares issued, respectively		18,991			18,918			18,918
Preferred stock of $1 par value - authorized 2,000 shares; 0 shares issued and outstanding											0			0			0
Common stock of $1 par value - authorized 25,000 shares; 19,056, 18,948, and 18,991 shares issued, respectively											19,056			18,948			18,991
Capital in excess of stated value		85,257			76,188			77,686			89,006			78,026			86,495
Retained earnings		525,926			488,518			499,724			532,410			503,342			528,130
Less treasury stock - at cost, 8,083 shares		(277,238	)		(277,238	)		(277,238	)		(277,238	)		(277,238	)		(277,238	)
Accumulated other comprehensive loss, net		(16,763	)		(23,428	)		(20,572	)		(21,291	)		(19,177	)		(17,933	)
Total shareholders' equity		336,173			282,958			298,518			341,943			303,901			338,445
Total liabilities and shareholders' equity	$	642,217		$	557,486		$	570,526		$	649,445		$	575,202		$	637,185

See accompanying notes to condensed consolidated financial statements.

- 5 -

Table of Contents


Lindsay Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
($ and shares in thousands, except per share amounts)
(Unaudited)
	Shares of common stock		Shares of treasury stock		Common stock		Capital in excess of stated value			Retained earnings			Treasury stock			Accumulated other comprehensive loss, net			Total shareholders’ equity
Balance at August 31, 2020		18,918		8,083	$	18,918	$	77,686		$	499,724		$	(277,238	)	$	(20,572	)	$	298,518
Comprehensive income:
Net earnings		0		0		0		0			7,095			0			0			7,095
Other comprehensive income		0		0		0		0			0			0			1,395			1,395
Total comprehensive income		0		0		0		0			0			0			0			8,490
Cash dividends ($.32) per share		0		0		0		0			(3,477	)		0			0			(3,477	)
Issuance of common shares under share compensation plans, net		30		0		30		(1,243	)		0			0			0			(1,213	)
Share-based compensation expense		0		0		0		1,583			0			0			0			1,583
Balance at November 30, 2020		18,948		8,083	$	18,948	$	78,026		$	503,342		$	(277,238	)	$	(19,177	)	$	303,901


Balance at August 31, 2021		18,991		8,083	$	18,991	$	86,495		$	528,130		$	(277,238	)	$	(17,933	)	$	338,445
Comprehensive income:
Net earnings		0		0		0		0			7,901			0			0			7,901
Other comprehensive loss		0		0		0		0			0			0			(3,358	)		(3,358	)
Total comprehensive income		0		0		0		0			0			0			0			4,543
Cash dividends ($.33) per share		0		0		0		0			(3,621	)		0			0			(3,621	)
Issuance of common shares under share compensation plans, net		65		0		65		1,289			0			0			0			1,354
Share-based compensation expense		0		0		0		1,222			0			0			0			1,222
Balance at November 30, 2021		19,056		8,083	$	19,056	$	89,006		$	532,410		$	(277,238	)	$	(21,291	)	$	341,943

See accompanying notes to condensed consolidated financial statements.

Lindsay Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

($ and shares in thousands, except per share amounts)

(Unaudited)

Shares of
common
stock

Shares of
treasury
stock

Common
stock

Capital in
excess of
stated
value

Retained
earnings

Treasury
stock

Accumulated
other
comprehensive
loss,
net

Total
shareholders’
equity

Balance at August 31, 2019

18,870

8,083

$
18,870

$
71,684

$
474,740

$
(277,238
)

$
(19,847
)

$
268,209

Comprehensive income:

     Net earnings

0

0

0

0

23,955

0

0

23,955

     Other comprehensive loss

0

0

0

0

0

0

(3,581
)

(3,581
)
Total comprehensive income

0

0

0

0

0

0

0

20,374

Cash dividends ($.94) per share

0

0

0

0

(10,177
)

0

0

(10,177
)
Issuance of common shares under share compensation plans, net

48

0

48

386

0

0

0

434

Share-based compensation expense

0

0

0

4,118

0

0

0

4,118

Balance at May 31, 2020

18,918

8,083

$
18,918

$
76,188

$
488,518

$
(277,238
)

$
(23,428
)

$
282,958

Balance at August 31, 2020

18,918

8,083

$
18,918

$
77,686

$
499,724

$
(277,238
)

$
(20,572
)

$
298,518

Comprehensive income:

��

     Net earnings

0

0

0

0

36,768

0

0

36,768

     Other comprehensive income

0

0

0

0

0

0

3,809

3,809

Total comprehensive income

0

0

0

0

0

0

0

40,577

Cash dividends ($.97) per share

0

0

0

0

(10,566
)

0

0

(10,566
)
Issuance of common shares under share compensation plans, net

73

0

73

2,550

0

0

0

2,623

Share-based compensation expense

0

0

0

5,021

0

0

0

5,021

Balance at May 31, 2021

18,991

8,083

$
18,991

$
85,257

$
525,926

$
(277,238
)

$
(16,763
)

$
336,173

See accompanying notes to condensed consolidated financial statements.

- 6 -

Table of Contents

Lindsay Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

($ and shares in thousands, except per share amounts)

(Unaudited)

Shares of
common
stock

Shares of
treasury
stock

Common
stock

Capital in
excess of
stated
value

Retained
earnings

Treasury
stock

Accumulated
other
comprehensive
loss,
net

Total
shareholders’
equity

Balance at February 29, 2020

18,918

8,083

$
18,918

$
74,645

$
481,890

$
(277,238
)

$
(20,888
)

$
277,327

Comprehensive income:

     Net earnings

0

0

0

0

10,094

0

0

10,094

     Other comprehensive income

0

0

0

0

0

0

(2,540
)

(2,540
)
Total comprehensive income

0

0

0

0

0

0

0

7,554

Cash dividends ($0.32) per share

0

0

0

0

(3,466
)

0

0

(3,466
)
Issuance of common shares under share compensation plans, net

0

0

0

0

0

0

0

0

Share-based compensation expense

0

0

0

1,543

0

0

0

1,543

Balance at May 31, 2020

18,918

8,083

$
18,918

$
76,188

$
488,518

$
(277,238
)

$
(23,428
)

$
282,958

Balance at February 28, 2021

18,990

8,083

$
18,990

$
84,206

$
511,728

$
(277,238
)

$
(18,662
)

$
319,024

Comprehensive income:

     Net earnings

0

0

0

0

17,797

0

0

17,797

     Other comprehensive income

0

0

0

0

0

0

1,899

1,899

Total comprehensive income

0

0

0

0

0

0

0

19,696

Cash dividends ($0.33) per share

0

0

0

(3,599
)

0

0

(3,599
)
Issuance of common shares under share compensation plans, net

1

0

1

77

0

0

0

78

Share-based compensation expense

0

0

0

974

0

0

0

974

Balance at May 31, 2021

18,991

8,083

$
18,991

$
85,257

$
525,926

$
(277,238
)

$
(16,763
)

$
336,173

See accompanying notes to condensed consolidated financial statements.

~~- 7 -~~

~~Table of Contents~~

LINDSAY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine months ended						Three months ended
($ in thousands)	May 31, 2021			May 31, 2020			November 30, 2021			November 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	36,768		$	23,955		$	7,901		$	7,095
Adjustments to reconcile net earnings to net cash provided by operating activities:
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation and amortization		14,688			14,146			4,896			5,140
Gain on sale of assets held-for-sale		0			(1,191	)
Provision for uncollectible accounts receivable		304			466			91			158
Deferred income taxes		205			27			1,841			140
Share-based compensation expense		5,021			4,118			1,222			1,583
Unrealized foreign currency transaction (gain) loss		(1,934	)		3,632
Unrealized foreign currency transaction loss (gain)								2,193			(203	)
Other, net		(2,123	)		1,575			292			36
Changes in assets and liabilities:
Receivables		(22,934	)		(11,379	)		(17,816	)		8,896
Inventories		(28,612	)		(23,765	)		(31,674	)		(8,294	)
Other current assets		(14,025	)		(6,681	)		5,965			(3,068	)
Accounts payable		20,828			5,385			12,462			7,286
Other current liabilities		20,149			14,485			(3,632	)		(7,146	)
Other noncurrent assets and liabilities		2,325			(8,810	)		(7,920	)		3,750
Net cash provided by operating activities		30,660			15,963
Net cash (used in) provided by operating activities								(24,179	)		15,373

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment		(22,532	)		(12,268	)		(3,061	)		(5,614	)
Proceeds from sale of property and equipment held-for-sale		0			3,955
Purchases of marketable securities available-for-sale		(13,067	)		(23,389	)		(14,354	)		(3,844	)
Proceeds from maturities of marketable securities available-for-sale		12,592			4,320			3,599			3,616
Acquisition of business, net of cash acquired		0			(3,034	)
Other investing activities, net		(1,960	)		1,503			(342	)		0
Net cash used in investing activities		(24,967	)		(28,913	)		(14,158	)		(5,842	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		3,892			1,545			2,442			56
Common stock withheld for payroll tax obligations		(1,269	)		(1,111	)		(1,181	)		(1,269	)
Proceeds from employee stock purchase plan								93			0
Principal payments on long-term debt		(141	)		(174	)		(54	)		(35	)
Dividends paid		(10,566	)		(10,177	)		(3,621	)		(3,477	)
Net cash used in financing activities		(8,084	)		(9,917	)		(2,321	)		(4,725	)

Effect of exchange rate changes on cash and cash equivalents		1,789			(1,863	)		(1,730	)		593
Net change in cash and cash equivalents		(602	)		(24,730	)		(42,388	)		5,399
Cash and cash equivalents, beginning of period		121,403			127,204			127,107			121,403
Cash and cash equivalents, end of period	$	120,801		$	102,474		$	84,719		$	126,802

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net of refunds	$	2,929		$	2,910		$	341		$	418
Interest paid	$	2,402		$	2,409		$	51		$	77

NONCASH INVESTING ACTIVITIES:
Earn-out liability related to business acquisition	$	0		$	1,195
Holdback related to business acquisition	$	0		$	300

See accompanying notes to condensed consolidated financial statements.

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LINDSAY CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Basis of Presentation

The condensed consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and do not include all of the disclosures normally required by U.S. generally accepted accounting principles (“U.S. GAAP”) as contained in Lindsay Corporation’s (the “Company”) Annual Report on Form 10-K. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended August 31, ~~2020.~~2021.

In the opinion of management, the condensed consolidated financial statements of the Company reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and the results of operations and cash flows for the periods presented. The results for interim periods are not necessarily indicative of trends or results expected by the Company for a full year. The condensed consolidated financial statements were prepared using U.S. GAAP. These principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from these estimates.

Recent Accounting Guidance Adopted

In ~~June 2016,~~December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting and related disclosure requirements for income taxes. The Company adopted this standard in the first quarter of its fiscal 2022. The adoption of this ASU did not have a material impact on its condensed consolidated financial statements.

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables. This update is intended to provide financial statement users with more decision-useful information about the expected credit losses. The Company adopted this in the first quarter of the Company’s fiscal 2021. The adoption of this ASU did not have a material impact on its condensed consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill; rather, an entity will measure its goodwill impairment by the amount the carrying value exceeds the fair value of a reporting unit. The Company adopted this in the first quarter of the Company’s fiscal 2021. The adoption of this ASU did not have a material impact on its condensed consolidated financial statements and related disclosures.

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Note 2 – Revenue Recognition

Disaggregation of Revenue

A breakout by segment of revenue recognized over time versus at a point in time for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and ~~May 31,~~November 30, 2020 is as follows:


	Three months ended						Three months ended						Three months ended
	May 31, 2021						May 31, 2020						November 30, 2021
($ in thousands)	Irrigation		Infrastructure		Total		Irrigation		Infrastructure		Total		Irrigation		Infrastructure		Total
Point in time	$	131,032	$	16,790	$	147,822	$	84,356	$	23,271	$	107,627	$	139,400	$	14,712	$	154,112
Over time		9,143		1,383		10,526		11,145		1,871		13,016		6,509		742		7,251
Revenue from the contracts with customers		140,175		18,173		158,348		95,501		25,142		120,643		145,909		15,454		161,363

Lease revenue		0		3,588		3,588		0		2,463		2,463		0		4,789		4,789
Total operating revenues	$	140,175	$	21,761	$	161,936	$	95,501	$	27,605	$	123,106	$	145,909	$	20,243	$	166,152


	Nine months ended						Nine months ended						Three months ended
	May 31, 2021						May 31, 2020						November 30, 2020
($ in thousands)	Irrigation		Infrastructure		Total		Irrigation		Infrastructure		Total		Irrigation		Infrastructure		Total
Point in time	$	321,960	$	53,060	$	375,020	$	232,017	$	61,769	$	293,786	$	80,060	$	15,452	$	95,512
Over time		24,144		4,557		28,701		40,304		5,421		45,725		7,296		1,639		8,935
Revenue from the contracts with customers		346,104		57,617		403,721		272,321		67,190		339,511		87,356		17,091		104,447

Lease revenue		0		10,277		10,277		0		6,776		6,776		0		4,038		4,038
Total operating revenues	$	346,104	$	67,894	$	413,998	$	272,321	$	73,966	$	346,287	$	87,356	$	21,129	$	108,485

Further disaggregation of revenue is disclosed in the Note 13 – Industry Segment Information.

For contracts with an initial length longer than twelve months, the unsatisfied performance obligations were ~~$6.8~~$7.3 million at ~~May 31,~~November 30, 2021.

Contract Balances

Contract assets arise when recorded revenue for a contract exceeds the amounts billed under the terms of such contract. Contract liabilities arise when billed amounts exceed revenue recorded. Amounts are billable to customers upon various measures of performance, including achievement of certain milestones and completion of specified units of completion of the contract. At ~~May 31,~~November 30, 2021, ~~and~~November 30, 2020, and August 31, ~~2020,~~2021, contract assets amounted to ~~$1.5~~$1.2 million, ~~$0.8~~$1.2 million, and ~~$0.9~~$1.3 million, respectively. These amounts are included within other current assets on the condensed consolidated balance sheet.

Contract liabilities include advance payments from customers and billings in excess of delivery of performance obligations. At ~~May 31,~~November 30, 2021, ~~May 31,~~November 30, 2020, and August 31, ~~2020,~~2021, contract liabilities amounted to ~~$35.5~~$41.1 million, ~~$16.9~~$21.3 million, and ~~$19.6~~$37.4 million, respectively. Contract liabilities are included within other current liabilities on the condensed consolidated balance sheets. During the Company’s ~~nine~~three months ended ~~May 31,~~November 30, 2021 and ~~May 31,~~November 30, 2020, the Company recognized ~~$16.7~~$12.7 million and ~~$13.5~~$6.5 million of revenue that were included in the liabilities as of August 31, ~~2020~~2021 and ~~2019,~~2020, respectively. The revenue recognized was due to applying advance payments received for the performance obligations completed during the quarter.

Note 3 – Net Earnings per Share

Basic earnings per share is calculated on the basis of weighted average outstanding common shares. Diluted earnings per share is calculated on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, restricted stock unit awards and other dilutive securities.

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The following table shows the computation of basic and diluted net earnings per share for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and 2020:


	Three months ended				Nine months ended				Three months ended
($ and shares in thousands, except per share amounts)	May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020		November 30, 2021		November 30, 2020
Numerator:
Net earnings	$	17,797	$	10,094	$	36,768	$	23,955	$	7,901	$	7,095

Denominator:
Weighted average shares outstanding		10,907		10,835		10,879		10,818		10,927		10,845
Diluted effect of stock awards		126		42		88		36		99		43
Weighted average shares outstanding assuming dilution		11,033		10,877		10,967		10,854		11,026		10,888

Basic net earnings per share	$	1.63	$	0.93	$	3.38	$	2.21	$	0.72	$	0.65
Diluted net earnings per share	$	1.61	$	0.93	$	3.35	$	2.21	$	0.72	$	0.65

Certain stock options and restricted stock units were excluded from the computation of diluted net earnings per share because their effect would have been anti-dilutive. Performance stock units are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied. The following table shows the securities excluded from the computation of earnings per share because their effect would have been anti-dilutive:

Three months ended

Nine months ended

(Units and options in thousands)

May 31,
2021

May 31,
2020

May 31,
2021

May 31,
2020

Restricted stock units

0

3

0

9

Stock options

0

115

28

42

Performance stock units

0

0

4

7


	Three months ended
(Units and options in thousands)	November 30, 2021		November 30, 2020
Stock options		10		79
Performance stock units		2		10

Note 4 – Income Taxes

The Company recorded income tax expense of ~~$3.4~~$1.6 million and ~~$2.2~~an income tax benefit of $0.2 million for the three months ended ~~May 31,~~November 30, 2021 and 2020, ~~respectively, and recorded income tax expense of $5.8 million and $6.4 million for the nine months ended May 31, 2021 and 2020,~~ respectively.

It is the Company’s policy to report income tax expense for interim periods using an estimated annual effective income tax rate. The estimated annual effective income tax rate was ~~21.4~~24.2 percent and ~~23.6~~23.8 percent for the ~~nine~~three months ended ~~May 31,~~November 30, 2021 and 2020, respectively.

The tax effects of significant or unusual items are not considered in the estimated annual effective income tax rate. The tax effects of such discrete events are recognized in the interim period in which the events occur. The Company recorded discrete items resulting in an income tax benefit of ~~$3.3~~$0.7 million and ~~$0.3~~$1.8 million for the ~~nine~~three months ended ~~May 31,~~November 30, 2021 and 2020, ~~respectively,~~respectively. The discrete items recorded in the ~~nine~~three months ended ~~May 31,~~November 30, 2021 ~~includes~~include a benefit of ~~$1.7~~$0.7 million related to the vesting of share-based compensation awards, and the discrete items recorded in the three months ended November 30, 2020 include a benefit of $1.7 million related to the release of a valuation allowance related to net operating loss carryforwards in a foreign ~~jurisdiction that are now expected to be realizable.~~jurisdiction.

Note 5 – Inventories

Inventories consisted of the following as of ~~May 31,~~November 30, 2021, ~~May 31,~~November 30, 2020, and August 31, ~~2020:~~2021:


($ in thousands)	May 31, 2021			May 31, 2020			August 31, 2020			November 30, 2021	November 30, 2020	August 31, 2021
Raw materials and supplies	$	64,087		$	50,820		$	51,205		$78,102	$52,374	$69,962
Work in process		9,440			7,819			6,464		12,227	8,041	8,301
Finished goods and purchased parts, net		71,414			59,496			51,684		90,676	58,284	75,053
Total inventory value before LIFO adjustment		144,941			118,135			109,353		181,005	118,699	153,316
Less adjustment to LIFO value		(8,340	)		(4,834	)		(4,561	)	(7,890)	(4,421)	(8,072)
Inventories, net	$	136,601		$	113,301		$	104,792		$173,115	$114,278	$145,244

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Note 6 – Long-Term Debt

The following table sets forth the outstanding principal balances of the Company’s long-term debt as of the dates shown:


($ in thousands)	November 30, 2021	November 30, 2020	August 31, 2021
Series A Senior Notes	$115,000	$115,000	$115,000
Elecsys Series 2006A Bonds	1,096	1,309	1,148
Total debt	116,096	116,309	116,148
Less current portion	(219)	(214)	(217)
Less unamortized debt issuance costs	(406)	(454)	(417)
Total long-term debt	$115,471	$115,641	$115,514

($ in thousands)

May 31,
2021

May 31,
2020

August 31,
2020

Series A Senior Notes

$
115,000

$
115,000

$
115,000

Revolving Credit Facility

0

0

0

Elecsys Series 2006A Bonds

1,203

1,397

1,344

Total debt

116,203

116,397

116,344

Less current portion

(216
)

(195
)

(195
)
Less unamortized debt issuance costs

(430
)

(479
)

(467
)
Total long-term debt

$
115,557

$
115,723

$
115,682

Principal payments on the debt are due as follows:


Due within	$ in thousands
1 year	$	219
2 years		222
3 years		227
4 years		231
5 years		197
Thereafter		115,000
	$	116,096

Due within

$ in thousands

1 year

$
216

2 years

220

3 years

225

4 years

229

5 years

234

Thereafter

115,079

$
116,203

Note 7 – Fair Value Measurements

The following table presents the Company’s financial assets and liabilities measured at fair value, based upon the level within the fair value hierarchy in which the fair value measurements fall, as of ~~May 31,~~November 30, 2021, ~~May 31,~~November 30, 2020, and August 31, ~~2020.~~2021. There were no transfers between any levels for the periods presented.


												November 30, 2021
($ in thousands)												Level 1		Level 2		Level 3			Total
Cash and cash equivalents												$	84,719	$	0	$	0		$	84,719
Marketable securities:
Corporate bonds													0		26,503		0			26,503
U.S. treasury securities													0		3,692		0			3,692

	May 31, 2021											November 30, 2020
($ in thousands)	Level 1		Level 2			Level 3			Total			Level 1		Level 2		Level 3			Total
Cash and cash equivalents	$	120,801	$	0		$	0		$	120,801		$	126,802	$	0	$	0		$	126,802
Marketable securities:
Corporate bonds		0		15,114			0			15,114			0		14,564		0			14,564
U.S. treasury securities		0		4,549			0			4,549			0		5,060		0			5,060
Earn-out liability		0		0			(1,098	)		(1,098	)		0		0		(1,112	)		(1,112	)

	May 31, 2020											August 31, 2021
($ in thousands)	Level 1		Level 2			Level 3			Total			Level 1		Level 2		Level 3			Total
Cash and cash equivalents	$	102,474	$	0		$	0		$	102,474		$	127,107	$	0	$	0		$	127,107
Marketable securities:
Corporate bonds		0		14,554			0			14,554			0		15,484		0			15,484
U.S. treasury securities		0		4,458			0			4,458			0		4,120		0			4,120
Derivative assets		0		909			0			909
Derivative liabilities		0		(528	)		0			(528	)
Earn-out liability		0		0			(1,195	)		(1,195	)		0		0		(250	)		(250	)

	August 31, 2020
($ in thousands)	Level 1		Level 2			Level 3			Total
Cash and cash equivalents	$	121,403	$	0		$	0		$	121,403
Marketable securities:
Corporate bonds		0		14,426			0			14,426
U.S. treasury securities		0		5,085			0			5,085
Derivative assets		0		21			0			21
Earn-out liability		0		0			(1,112	)		(1,112	)

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The Company’s investment in marketable securities consists of United States treasury bonds and investment grade corporate bonds. The marketable securities are classified as available-for-sale and are carried at fair value with the change in unrealized gains and losses reported as a separate component on the condensed consolidated statements of comprehensive income ~~(loss)~~ until realized. The Company determines fair value using data points that are observable, such as quoted prices and interest rates. The amortized cost of the investments approximates fair value. Investment income is recorded within other (expense) income on the condensed consolidated statements of earnings. As of ~~May 31,~~November 30, 2021, approximately ~~69%~~65% of the Company’s marketable securities investments mature within one year and ~~31%~~35% mature within one to ~~three~~five years.

The Company’s earn-out liability relates to its acquisition of Net Irrigate, LLC during the third quarter of fiscal 2020 and ~~has a maximum potential payout~~was settled in full during the first quarter of ~~$1.5 million.~~fiscal 2022.

There were 0 required fair value adjustments for assets and liabilities measured at fair value on a non-recurring basis for the ~~nine~~three months ended ~~May 31, 2021.~~November 30, 2021 or 2020.

Note 8 – Commitments and Contingencies

In the ordinary course of its business operations, the Company enters into arrangements that obligate it to make future payments under contracts such as lease agreements. Additionally, the Company is involved, from time to time, in commercial litigation, employment disputes, administrative proceedings, business disputes and other legal proceedings. The Company has established accruals for certain proceedings based on an assessment of probability of loss. The Company believes that any such currently-pending proceedings are either covered by insurance or would not have a material effect on the business or its consolidated financial statements if decided in a manner that is unfavorable to the Company. Such proceedings are exclusive of environmental remediation matters which are discussed separately below.

Infrastructure Products

The Company is currently defending a number of product liability lawsuits arising out of vehicle collisions with highway barriers incorporating the Company’s X-Lite® end terminal. Despite the September 2018 reversal of a sizable judgment against a competitor, the Company expects that the significant attention brought to the infrastructure products industry by the original judgment may lead to additional lawsuits being filed against the Company and others in the industry.

The Company, certain of its subsidiaries, and certain third parties which originally designed the X-Lite end terminal have also been named in a lawsuit filed on June 9, 2020 in the Circuit Court of Cole County, Missouri by Missouri Highways and Transportation Commission (“MHTC”). MHTC alleges, among other things, that the X-Lite end terminal was defectively designed and failed to perform as designed, intended, and advertised, leading to MHTC’s removal and replacement of X-Lite end terminals from Missouri’s roadways. MHTC alleges strict liability (defective design and failure to warn), negligence, breach of express warranties, breach of implied warranties (merchantability and fitness for a particular purpose), fraud, and public nuisance. MHTC seeks compensatory damages, interest, attorneys’ fees, and punitive damages.

The Company believes it has meritorious factual and legal defenses to each of the lawsuits discussed above and is prepared to vigorously defend its interests. Based on the information currently available to the Company, the Company does not believe that a loss is probable in any of these lawsuits; therefore, no accrual has been included in the Company’s consolidated financial statements. While it is possible that a loss may be incurred, the Company is unable to estimate a range of potential loss due to the complexity and current status of these lawsuits. However, the Company maintains insurance coverage to mitigate the impact of adverse exposures in these lawsuits and does not expect that these lawsuits will have a material adverse effect on its business or its consolidated financial statements.

In June 2019, the Company was informed by letter that the Department of Justice, Civil Division and U.S. Attorney’s Office for the Northern District of New York, with the assistance of the Department of Transportation, Office of Inspector General, are conducting an investigation of the Company relating to the Company’s X-Lite end terminal and potential violations of the federal civil False Claims Act. Depending on the outcome of this matter, there could be a material adverse effect on the Company’s business or its consolidated financial statements. Given the current posture of the matter, the Company is unable to estimate a range of potential loss, if any, or to express an opinion regarding the ultimate outcome.

Environmental Remediation

In previous years, the Company committed to a plan to remediate environmental contamination of the groundwater at and adjacent to its Lindsay, Nebraska facility (the “site”). The current estimated aggregate accrued cost of ~~$16.1~~$16.1 million is based on consideration of remediation options which the Company believes could be successful in meeting the long-term regulatory requirements of the site. The Company submitted a revised remedial alternatives evaluation report to the U.S. Environmental Protection Agency (“EPA”) and the Nebraska Department of Environment and Energy (the “NDEE”) in August 2020 to

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~~August 2020 to~~ review remediation alternatives and proposed plans for the site. The proposed remediation plan is preliminary and has not been approved by the EPA or the NDEE. Based on guidance from third-party environmental experts and the preliminary discussions with the regulatory agencies, the Company anticipates that a definitive plan will not be agreed upon until the ~~latter~~first half of calendar ~~2021~~2022 or later. ~~An increase to the liability of $1.0 million was recorded within general and administrative expense on the condensed consolidated statement of earnings in the fourth quarter of fiscal 2020.~~ Of the total liability ~~$11.0~~as of both August 31, 2021 and 2020, $11.0 million was calculated on a discounted basis using a discount rate of ~~1.2%~~1.2%, which represents a risk-free rate. This discounted portion of the liability amounts to ~~$12.4~~$12.4 million on an undiscounted basis.

The Company accrues the anticipated cost of investigation and remediation when the obligation is probable and can be reasonably estimated. While the plan has not been formally ~~been~~ approved by the EPA, the Company believes the current accrual is a good faith estimate of the long-term cost of remediation at this site; however, the estimate of costs and their timing could change as a result of a number of factors, including but not limited to (1) EPA input on the proposed remediation plan and any changes which itthe EPA may subsequently require, (2) refinement of cost estimates and length of time required to complete remediation and post-remediation operations and maintenance, (3) effectiveness of the technology chosen in remediation of the site as well as changes in technology that may be available in the future, and (4) unforeseen circumstances existing at the site. As a result of these factors, the actual amount of costs incurred by the Company in connection with the remediation of contamination of its Lindsay, Nebraska site could exceed the amounts accrued for this expense at this time. While any revisions could be material to the operating results of any fiscal quarter or fiscal year, the Company does not expect such additional expenses would have a material adverse effect on its liquidity or financial condition.

The following table summarizes the undiscounted environmental remediation liability classifications included in the condensed consolidated balance sheets as of ~~May 31,~~November 30, 2021, ~~May 31,~~November 30, 2020, and August 31, ~~2020:~~2021:


($ in thousands)	November 30, 2021		November 30, 2020		August 31, 2021
Other current liabilities	$	828	$	1,105	$	965
Other noncurrent liabilities		15,181		15,021		15,128
Total environmental remediation liabilities	$	16,009	$	16,126	$	16,093

($ in thousands)

May 31,
2021

May 31,
2020

August 31,
2020

Other current liabilities

$
971

$
1,182

$
1,115

Other noncurrent liabilities

15,155

14,257

15,030

Total environmental remediation liabilities

$
16,126

$
15,439

$
16,145

Note 9 – Warranties

The following table provides the changes in the Company’s product warranties:


	Three months ended
($ in thousands)	November 30, 2021			November 30, 2020
Product warranty accrual balance, beginning of period	$	12,736		$	10,765
Liabilities accrued for warranties during the period		2,394			1,734
Warranty claims paid during the period		(2,751	)		(1,641	)
Product warranty accrual balance, end of period	$	12,379		$	10,858

Three months ended

Nine months ended

($ in thousands)

May 31,
2021

May 31,
2020

May 31,
2021

May 31,
2020

Product warranty accrual balance, beginning of period

$
11,786

$
8,990

$
10,765

$
8,960

Liabilities accrued for warranties during the period

2,883

2,744

6,864

6,360

Warranty claims paid during the period

(1,062
)

(2,031
)

(4,081
)

(5,617
)
Changes in estimates

0

110

59

110

Product warranty accrual balance, end of period

$
13,607

$
9,813

$
13,607

$
9,813

Note 10 – Share-Based Compensation

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The Company’s current share-based compensation plans, approved by the stockholders of the Company, provides for awards of stock options, restricted shares, restricted stock units (“RSUs”), stock appreciation rights, performance shares, and performance stock units (“PSUs”) to employees and non-employee directors of the Company. The Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. Share-based compensation expense was ~~$1.0~~$1.3 million and ~~$1.5~~$1.7 million for the three months ended ~~May 31,~~November 30, 2021 and 2020, ~~respectively,~~respectively.

The following table illustrates the type and fair value of share-based compensation awards granted during the three months ended November 30, 2021 and 2020, respectively:

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	Three months ended
	November 30, 2021				November 30, 2020
	Number of units granted		Weighted average grant-date fair value per award		Number of units granted		Weighted average grant-date fair value per award
Stock options		21,137	$	41.80		35,168	$	30.68
RSUs		20,099	$	141.99		26,314	$	106.72
PSUs		12,122	$	147.74		19,533	$	125.23

The RSUs granted during the three months ended November 30, 2021 and 2020 included 2,248 and ~~$5.3~~ 2,162 awards, respectively, that will be settled in cash. The weighted average stock price on the date of grant was $145.93and $110.21 per award for the three months ended November 30, 2021 and 2020, respectively. Share issuances are presented net of share repurchases to cover payroll taxes of $~~4.1~~1.2 million and $1.3 million for the ~~nine~~three months ended ~~May 31,~~November 30, 2021 and 2020, respectively.

The following table provides the assumptions used in determining the fair value of the stock options awarded during the three months ended November 30, 2021 and 2020, respectively:


	Three months ended November 30,
	2021			2020
Weighted-average dividend yield		0.9	%		1.2	%
Weighted-average volatility		33.8	%		32.8	%
Risk-free interest rate		1.2	%		0.5	%
Weighted-average expected life (years)		5			6

The PSUs granted during fiscal 2022 include performance goals based on a return on invested capital ("ROIC") and total shareholder return ("TSR") relative to the Company's peers during the performance period. The awards actually earned will range from 0 to 200 percent of the targeted number of PSUs and will be paid in shares of common stock. Shares earned will be distributed upon vesting on the first day of November following the end of the three-year performance period. For the ROIC portion of the award, the Company is accruing compensation expense based on the estimated number of shares expected to be issued utilizing the most current information available to the Company at the date of the consolidated financial statements. For the TSR portion of the award, compensation expense is recorded ratably over the three-year term of the award based on the estimated grant date fair value.

The fair value of the TSR portion of the awards granted during the three months ended November 30, 2021 and 2020 was estimated at the grant date using a Monte Carlo simulation model which included the following assumptions:


	Three months ended November 30,
	2021			2020
Expected term (years)		3			3
Risk-free interest rate		0.7	%		0.2	%
Volatility		39.1	%		38.6	%
Dividend yield		0.9	%		1.2	%

- 14 -

Table of Contents

Note 11 – Other Current Liabilities

($ in thousands)

May 31,
2021

May 31,
2020

August 31,
2020

Other current liabilities:

Contract liabilities

$
34,072

$
16,029

$
17,296

Compensation and benefits

19,558

17,072

20,945

Warranties

13,607

9,813

10,765

Deferred revenue - lease

4,206

3,526

1,822

Operating lease liabilities

3,955

5,046

5,123

Dealer related liabilities

3,902

3,505

3,664

Tax related liabilities

3,547

6,733

3,726

Accrued insurance

1,068

1,462

1,348

Accrued environmental liabilities

971

1,182

1,115

Other

9,703

7,344

6,842

Total other current liabilities

$
94,589

$
71,712

$
72,646


($ in thousands)	November 30, 2021		November 30, 2020		August 31, 2021
Other current liabilities:
Contract liabilities	$	39,747	$	18,497	$	36,060
Compensation and benefits		13,460		13,759		21,623
Warranties		12,379		10,858		12,736
Dealer related liabilities		4,180		3,696		3,971
Operating lease liabilities		3,787		5,004		3,991
Tax related liabilities		1,639		443		1,072
Deferred revenue - lease		1,201		3,165		3,456
Accrued insurance		893		1,253		1,123
Accrued environmental liabilities		828		1,105		965
Other		10,541		8,130		7,817
Total other current liabilities	$	88,655	$	65,910	$	92,814

Note 12 – Share Repurchases

There were 0 shares repurchased during the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and 2020 under the Company’s share repurchase program. The remaining amount available under the repurchase program was ~~$63.7~~$63.7 million as of ~~May 31,~~November 30, 2021.

Note 13 – Industry Segment Information

The Company manages its business activities in 2 reportable segments: irrigation and infrastructure. The Company evaluates the performance of its reportable segments based on segment revenues, gross profit and operating income, with operating income for segment purposes excluding unallocated corporate general and administrative expenses, interest income, interest expense, other income and expenses and income taxes. Operating income for segment purposes includes general and administrative expenses, selling expenses, engineering and research expenses and other overhead charges directly attributable to the segment. There are no inter-segment sales included in the amounts disclosed. The Company had 0 single customer who represented 10 percent or more of its total revenues during the three ~~or nine~~ months ended ~~May 31,~~November 30, 2021 or 2020.

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 internet of things, or “IIoT”, solutions. The irrigation reporting segment consists of 1 operating segment.

- 15 -

Table of Contents

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. The infrastructure reporting segment consists of 1 operating segment.


	Three months ended
($ in thousands)	November 30, 2021			November 30, 2020
Operating revenues:
Irrigation:
North America	$	78,976		$	52,790
International		66,933			34,566
Irrigation total		145,909			87,356
Infrastructure		20,243			21,129
Total operating revenues	$	166,152		$	108,485

Operating income:
Irrigation	$	17,212		$	10,633
Infrastructure		2,766			4,256
Corporate		(6,617	)		(7,354	)
Total operating income		13,361			7,535

Interest and other expense, net		(3,886	)		(652	)
Earnings before income taxes	$	9,475		$	6,883

Certain immaterial reclassifications have been made to the prior year’s operating results to conform with the current year’s 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.

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

52,811

32,606

125,772

88,751

Irrigation total

140,175

95,501

346,104

272,321

Infrastructure

21,761

27,605

67,894

73,966

Total operating revenues

$
161,936

$
123,106

$
413,998

$
346,287

Operating income:

Irrigation

$
23,925

$
15,417

$
52,603

$
35,282

Infrastructure

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

Interest and other expense, net

(187
)

(3,563
)

(2,087
)

(6,359
)
Earnings before income taxes

$
21,154

$
12,265

$
42,597

$
30,387

($ in thousands)

May 31,
2021

May 31,
2020

August 31,
2020

Total assets:

Irrigation

$
402,304

$
313,216

$
307,537

Infrastructure

92,436

105,832

113,111

Corporate

147,477

138,438

149,878

$
642,217

$
557,486

$
570,526

- 16 -

Table of Contents

ITEM 2 ‑ Management's Discussion and Analysis of Financial Condition and Results of Operations

Concerning Forward‑Looking Statements

This Quarterly Report on Form 10-Q contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical are forward-looking and reflect information concerning possible or assumed future results of operations and planned financing of the Company. In addition, forward-looking statements may be made orally or in press releases, conferences, reports, on the Company's web site, or otherwise, in the future by or on behalf of the Company. When used by or on behalf of the Company, the words “expect,” “anticipate,” “estimate,” “believe,” “intend,” “will,” “plan,” “predict,” “project,” “outlook,” “could,” “may,” “should” or similar expressions generally identify forward-looking statements. The entire section entitled “Executive Overview and Outlook” should be considered forward-looking statements. 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.

Forward-looking statements involve a number of risks and uncertainties, including but not limited to those discussed in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2020. Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results or conditions, which may not occur as anticipated. Actual results or conditions could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described herein and in the Company’s other public filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, ~~2020,~~2021, as well as other risks and uncertainties not now anticipated. The risks and uncertainties described herein and in the Company’s other public filings are not exclusive and further information concerning the Company and its businesses, including factors that potentially could materially affect the Company's financial results, may emerge from time to time. Except as required by law, the Company assumes no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

COVID-19 Impact

In March 2020, the World Health Organization declared the 2019 coronavirus disease (COVID-19) a global pandemic. This outbreak has adversely affected workforces, customers, economies, and financial markets globally, leading to economic uncertainty. Shelter-in-place or stay-at-home orders have been implemented from time to time in many of the jurisdictions in which the Company operates. However, because the Company supports critical industries, the Company’s facilities worldwide have generally been considered “business essential” and have remained open throughout the outbreak with limited exceptions. Accordingly, COVID-19 has had a limited impact on the Company’s manufacturing operations to date. While the Company has implemented new procedures to protect the health and well-being of employees and customers, costs associated with these procedures have not been material. The pandemic has not had a material adverse effect on demand for the Company’s irrigation or infrastructure products; however, the pandemic has resulted in a slowdown of road construction activity and delays in certain project implementations. As pandemic conditions improve and economic activity increases, the Company has experienced a number of supply chain challenges including increased lead times and limited availability of certain components, raw material inflation, and labor and logistics constraints.

The ultimate impact of COVID-19 on the Company’s business, results of operations, or cash flows remains uncertain and depends on numerous evolving factors that the Company may not be able to accurately predict or effectively respond to, including, without limitation: the duration and scope of the outbreak; mutations of COVID-19; actions taken by governments, businesses, and individuals in response to the outbreak; the effect on economic activity and actions taken in response; the effect on customers and their demand for the Company’s products and services; and the Company’s ability to manufacture, sell, distribute and service its products, including without limitation as a result of supply chain challenges, facility closures, social distancing, restrictions on travel, fear or anxiety by the populace, and shelter-in-place orders. As such, the full financial impact of COVID-19 on the Company’s business is difficult to estimate.

Accounting Policies

In preparing the Company’s condensed consolidated financial statements in conformity with U.S. GAAP, management must make a variety of decisions which impact the reported amounts and the related disclosures. These decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In making these decisions, management applies its judgment based on its understanding and analysis of the relevant circumstances and the Company’s historical experience.

- 17 -

Table of Contents

The Company’s accounting policies that are most important to the presentation of its results of operations and financial condition, and which require the greatest use of judgments and estimates by management, are designated as its critical

~~- 17 -~~

~~Table of Contents~~

accounting policies. See discussion of the Company’s critical accounting policies under Item 7 in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, ~~2020.~~2021. Management periodically re-evaluates and adjusts its critical accounting policies as circumstances change. There were no significant changes in the Company’s critical accounting policies during the ~~nine~~three months ended ~~May 31,~~November 30, 2021.

Recent Accounting Guidance

See Note 1 – Basis of Presentation and the disclosure therein of recently adopted accounting guidance to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Executive Overview and Outlook

Operating revenues for the three months ended ~~May 31,~~November 30, 2021 were ~~$161.9~~$166.2 million, an increase of 3253 percent compared to ~~$123.1~~$108.5 million for the three months ended ~~May 31,~~November 30, 2020. Irrigation segment revenues increased 4767 percent to ~~$140.2~~$145.9 million and infrastructure segment revenues decreased 214 percent to ~~$21.8~~$20.2 million. Net earnings for the three months ended ~~May 31,~~November 30, 2021 were ~~$17.8~~$7.9 million, or ~~$1.61~~$0.72 per diluted share, compared to net earnings of ~~$10.1~~$7.1 million, or ~~$0.93~~$0.65 per diluted share, for the three months ended ~~May 31,~~November 30, 2020.

The global drivers for the Company’s irrigation ~~revenues~~segment are ~~highly dependent upon~~population growth and the attendant need for expanded food production and efficient water use. The need for irrigated agricultural crop production, which ~~in turn,~~ depends upon many factors, ~~including~~include the following primary drivers:



Agricultural commodity prices – As of November 2021, U.S. corn prices have increased approximately 40 percent and U.S. soybean prices have increased approximately six percent from November 2020. The increases are due to lower production levels in the U.S. coupled with higher demand coming primarily from an increase in corn and soybean exports to China.



Net farm income – As of December 2021, the U.S. Department of Agriculture (the “USDA”) estimated U.S. 2021 net farm income to be $116.8 billion, an increase of 23 percent from the USDA’s estimated U.S. 2020 net farm income of $94.8 billion. The increase is primarily related to an increase in cash receipts from crops and livestock that is offsetting a portion of the decrease in government support payments. If estimates hold, U.S. net farm income in 2021 will be the highest level since 2013.



Weather conditions – Demand for irrigation equipment is often positively affected by storm damage and prolonged periods of drought conditions as producers look for ways to reduce the risk of low crop production and crop failures. Conversely, demand for irrigation equipment can be negatively affected during periods of more predictable or excessive natural precipitation.



Governmental policies – A number of governmental laws and regulations can affect the Company’s business, including:



The Agriculture Improvement Act of 2018 (the “Farm Bill”) was signed into law in December 2018. The Farm Bill continues many of the programs that were in the Agricultural Act of 2014, which expired in September 2018. Such programs are designed to provide a degree of certainty to growers, including funding for the Environmental Quality Incentives Program, which provides financial assistance to farmers to implement conservation practices, and is frequently used to assist in the purchase of center pivot irrigation systems.



Changes to U.S. income tax laws enacted in December 2017 increased the benefit of certain tax incentives, such as the Section 179 income tax deduction and Section 168 bonus depreciation, which are intended to encourage equipment purchases by allowing the entire cost of equipment to be treated as an expense in the year of purchase rather than amortized over its useful life.

•

~~Agricultural commodity prices~~ ~~– As of May 2021, U.S. corn prices have increased approximately 106 percent and U.S. soybean prices have increased approximately 80 percent from May 2020~~. The increase in these commodity prices resulted from lower production levels caused by unfavorable weather conditions coupled with higher demand coming primarily from an increase in corn and soybean exports to China.

•

~~Net farm income~~ – As of February 2021, the U.S. Department of Agriculture (the “USDA”) estimated U.S. 2021 net farm income to be $111.4 billion, a decrease of eight percent from the USDA’s estimated U.S. 2020 net farm income of $121.1 billion. The decrease is primarily related to a reduction in 2021 in Federal government direct farm program payments from the Coronavirus Food Assistance Program (“CFAP”) that increased government support in 2020. Federal government direct farm program payments are estimated to return to more historical levels during 2021. A projected increase in cash receipts from crops and livestock is expected to offset a portion of the decrease in government support payments. Agricultural commodity prices have improved substantially since the February USDA estimate, supporting an improved outlook for 2021 farm income.

•

~~Weather conditions –~~ Demand for irrigation equipment is often positively affected by storm damage and prolonged periods of drought conditions as producers look for ways to reduce the risk of low crop production and crop failures. Conversely, demand for irrigation equipment can be negatively affected during periods of more predictable or excessive natural precipitation.

•

~~Governmental policies~~ ~~– A number of governmental laws and regulations can affect the Company’s business, including:~~

•

The U.S. Tax Cuts and Jobs Act (“U.S. Tax Reform”) enacted in December 2017 increased the benefit of certain tax incentives, such as the Section 179 income tax deduction and Section 168 bonus depreciation, which are intended to encourage equipment purchases by allowing the entire cost of equipment to be treated as an expense in the year of purchase rather than amortized over its useful life.

•

Biofuel production continues to be a major demand driver for irrigated corn, sugar cane and soybeans as these crops are used in high volumes to produce ethanol and biodiesel. In May, 2021 the U.S. Environmental Protection Agency (“EPA”) announced that Renewable Fuels Standard (RFS) volume requirements for 2021 and 2022 are likely to be in line with those of 2020, as the EPA accounts for weaker fuel demand since the onset of the coronavirus pandemic.

- 18 -

Table of Contents



Biofuel production continues to be a major demand driver for irrigated corn, sugar cane and soybeans as these crops are used in high volumes to produce ethanol and biodiesel. In December 2021, the U.S. Environmental Protection Agency (“EPA”) proposed the Renewable Fuels Standard (RFS) volume requirements for 2022, 2021, and 2020. The proposed volumes for 2022 are over 3.5 billion gallons higher than the volume of renewable fuel used in 2020. The EPA is proposing 2021 volumes at the level it predicts the market will use by the end of the year, while proposing revisions to the 2020 standards to account for market challenges, including the COVID-19 pandemic.



Many international markets are affected by government policies such as subsidies and other agriculturally related incentives. While these policies can have a significant effect on individual markets, they typically do not have a material effect on the consolidated results of the Company.



Currency – The value of the U.S. dollar fluctuates in relation to the value of currencies in a number of countries to which the Company exports products and in which the Company maintains local operations. The strengthening of the dollar increases the cost in the local currency of the products exported from the U.S. into these countries and, therefore, could negatively affect the Company’s international sales and margins. In addition, the U.S. dollar value of sales made in any affected foreign currencies will decline as the value of the dollar rises in relation to these other currencies.

•

~~Currency~~ – The value of the U.S. dollar fluctuates in relation to the value of currencies in a number of countries to which the Company exports products and in which the Company maintains local operations. The strengthening of the dollar increases the cost in the local currency of the products exported from the U.S. into these countries and, therefore, could negatively affect the Company’s international sales and margins. In addition, the U.S. dollar value of sales made in any affected foreign currencies will decline as the value of the dollar rises in relation to these other currencies.

International irrigation markets remain active with opportunities for further development and expansion, however regional political and economic factors, currency conditions and other factors can create a challenging environment. Additionally, international results are heavily dependent upon project sales which tend to fluctuate and can be difficult to forecast accurately.

The infrastructure business continues to be driven by the Company's transportation safety products which is dependent to ~~some~~a significant extent on government spending for road ~~construction. In December 2015, the U.S. government enacted a five-year, $305 billion highway-funding bill (the “FAST Act”) to fund highway~~construction and ~~bridge projects.~~improvements. The FAST Act was scheduled to expire in September 2020, however Congress reauthorized a one year extension. This extension includes an additional $13.6 billion added to the Highway Trust Fund, which finances most government spending for highways and mass transit. A Federal COVID-19 relief bill signed December 27, 2020 includes $10 billion of emergency aid for state departments of transportation to help fund eligible projects. Despite government spending uncertainty, opportunities exist for market expansion in eachenactment of the Infrastructure Investment and Jobs Act in November 2021 marked the largest infusion of federal investment into infrastructure ~~product lines. Demand~~projects in more than a decade. This legislation introduced $110 billion in incremental federal funding, planned for roads, bridges, and other transformational projects, which the ~~Company’s~~Company anticipates will translate into higher demand for its transportation safety ~~products continues to be driven by population growth and the need for improved road safety.~~products.

~~During the first nine months of fiscal 2021, demand~~Demand for irrigation equipment in the U.S. has ~~increased significantly~~remained robust over the same prior year period due to ~~improved~~positive farmer sentiment resulting from ~~significant increases in~~strong agricultural commodity prices and ~~an improved~~a favorable outlook for net farm income. ~~Also, during~~During this period ~~there has been a significant increase in~~supply chain constraints such as steel and other raw material costs as well as freight and logistics ~~costs. This has created short-term pressure on~~costs have continued to persist. These circumstances have continued to temper operating margins and are expected to continue to do so until these increased costs can be fully covered by increases in selling prices. In addition, supply chain constraints impacting availability of raw materials and trucking resources have contributed to cost increases and have resulted in extended lead times for deliveries.

The backlog of unshipped orders at ~~May 31,~~November 30, 2021 was ~~$120.8~~$154.8 million compared with ~~$78.6~~$89.2 million at ~~May 31,~~November 30, 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.~~ lower. The Company’s backlog can fluctuate from period to period due to the seasonality, cyclicality, timing and execution of contracts. Backlog typically represents long-term projects as well as short lead-time orders, and therefore is generally not a good indication of the next fiscal quarter’s revenues.

The global drivers for the Company’s markets of population growth, expanded food production, efficient water use and infrastructure expansion support the Company’s long-term growth goals. The most significant opportunities for growth over the next several years are in international markets, where irrigation use is less developed and demand is driven primarily by food security, water scarcity and population growth.

- 19 -

Table of Contents

Results of Operations

For the Three Months ended ~~May 31,~~November 30, 2021 compared to the Three Months ended ~~May 31,~~November 30, 2020

The following section presents an analysis of the Company’s operating results displayed in the condensed consolidated statements of earnings for the three months ended ~~May 31,~~November 30, 2021 and 2020. It should be read together with the industry segment information in Note 13 to the condensed consolidated financial statements:


	Three months ended						Percent
($ in thousands)	November 30, 2021			November 30, 2020			Increase (Decrease)
Consolidated
Operating revenues	$	166,152		$	108,485		53%
Gross profit	$	37,438		$	31,408		19%
Gross margin		22.5	%		29.0	%

Operating expenses (1)	$	24,077		$	23,873		1%
Operating income	$	13,361		$	7,535		77%
Operating margin		8.0	%		6.9	%

Other expense, net	$	(3,886	)	$	(652	)	496%
Income tax expense	$	1,574		$	(212	)	-842%
Overall income tax rate		16.6	%		-3.1	%
Net earnings	$	7,901		$	7,095		11%

Irrigation Segment
Segment operating revenues	$	145,909		$	87,356		67%
Segment operating income	$	17,212		$	10,633		62%
Segment operating margin		11.8	%		12.2	%

Infrastructure Segment
Segment operating revenues	$	20,243		$	21,129		-4%
Segment operating income	$	2,766		$	4,256		-35%
Segment operating margin		13.7	%		20.1	%

Three months ended

Percent

($ in thousands)

May 31,
2021

May 31,
2020

Increase
(Decrease)

Consolidated

Operating revenues

$
161,936

$
123,106

32%

Gross profit

$
44,056

$
39,696

11%

Gross margin

27.2
%

32.2
%

Operating expenses⁽¹⁾

$
22,715

$
23,868

-5%

Operating income

$
21,341

$
15,828

35%

Operating margin

13.2
%

12.9
%

Other expense, net

$
(187
)

$
(3,563
)

-95%

Income tax expense

$
3,357

$
2,171

55%

Overall income tax rate

15.9
%

17.7
%

Net earnings

$
17,797

$
10,094

76%

Irrigation Segment

Segment operating revenues

$
140,176

$
95,501

47%

Segment operating income

$
23,925

$
15,417

55%

Segment operating margin

17.1
%

16.1
%

Infrastructure Segment

Segment operating revenues

$
21,760

$
27,605

-21%

Segment operating income

$
3,767

$
8,157

-54%

Segment operating margin

17.3
%

29.5
%

(1)

Includes $6.6 million and $7.4 million of corporate operating expenses for the three months ended November 30, 2021 and 2020, respectively.

Revenues

⁽¹⁾

~~Includes $6.4 million and $7.7 million of corporate operating expenses for the three months ended May 31, 2021 and 2020, respectively.~~

~~Revenues~~

Operating revenues for the three months ended ~~May 31,~~November 30, 2021 increased 3253 percent to ~~$161.9~~$166.2 million from ~~$123.1~~$108.5 million for the three months ended ~~May 31,~~November 30, 2020, as irrigation revenues increased ~~$44.7~~$58.6 million and infrastructure revenues decreased ~~$5.8~~$0.9 million. The irrigation segment provided 8788 percent of the Company’s revenue during the three months ended ~~May 31,~~November 30, 2021 as compared to 7881 percent for the three months ended ~~May 31,~~November 30, 2020.

North America irrigation revenues for the three months ended ~~May 31,~~November 30, 2021 of ~~$87.4~~$79.0 million increased ~~$24.5~~$26.2 million, or 3950 percent, from ~~$62.9~~$52.8 million for the three months ended ~~May 31,~~November 30, 2020. The increase resulted from a combination ofhigher irrigation equipment unit sales volume and higher average selling prices. ~~The increase was partially offset~~Increased demand for irrigation equipment is supported by ~~revenue~~higher agricultural commodity prices and farm income, while higher average selling prices result from ~~engineering project services in~~ the ~~prior year that did not repeat.~~pass through of higher raw materials costs to customers.

International irrigation revenues for the three months ended ~~May 31,~~November 30, 2021 of ~~$52.8~~$66.9 million increased ~~$20.2~~$32.4 million, or 6294 percent, from ~~$32.6~~$34.6 million for the three months ended ~~May 31,~~November 30, 2020. The increase resulted from a combination of higher average selling prices and ~~from~~ higher unit sales volumes in ~~several~~most international markets, ~~as well as~~namely Brazil, Middle East and Europe. These increases are the result of positive market fundamentals and from the pass through of higher raw material costs. Also contributing were favorable effects of foreign currency translation of approximately ~~$2.3~~$1.1 million compared to the same prior year ~~third quarter.~~period.

Infrastructure segment revenues for the three months ended ~~May 31,~~November 30, 2021 of ~~$21.8~~$20.2 million decreased ~~$5.8~~$0.9 million, or 214 percent, from ~~$27.6~~$21.1 million for the three months ended ~~May 31,~~November 30, 2020. 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.

- 20 -

Table of Contents

Gross Profit

Gross profit for the three months ended ~~May 31,~~November 30, 2021 of ~~$44.1~~$37.4 million increased 1119 percent from ~~$39.7~~$31.4 million for the three months ended ~~May 31,~~November 30, 2020. The increase in gross profit resulted ~~primarily~~ from higher irrigation ~~equipment~~segment revenues that were partially offset by ~~higher raw material and freight costs and~~ lower infrastructure segment revenues. In addition, gross profit was reduced by the impact of higher costs of raw materials and other inputs, as well as approximately $6.0 million resulting from the impact of the last-in, first-out ("LIFO") method of accounting for inventory, of which $5.0 million impacted the irrigation segment and $1.0 million impacted the infrastructure segment. Under LIFO, higher raw material costs are recognized in cost of goods sold rather than in ending inventory values. Gross margin was ~~27.2~~22.5 percent of sales for the three months ended ~~May 31,~~November 30, 2021 compared with ~~32.2~~29.0 percent of sales for the three months ended ~~May 31,~~November 30, 2020. Lower gross margin in the current year period resulted ~~primarily~~in part from a higher proportion of irrigation revenues, ~~coming from irrigation,~~ which have a lower gross margin than infrastructure revenues, as compared to the same prior ~~year.~~year period. Higher costs of raw materials and other inputs also contributed to lower gross margin in the current period compared to the same prior year period.

Operating Expenses

Operating expenses of ~~$22.7~~$24.1 million for the three months ended ~~May 31,~~November 30, 2021 ~~decreased $1.2~~increased $0.2 million, or 51 percent, compared with $23.9 million for the three months ended ~~May 31,~~November 30, 2020. The ~~decrease~~increase resulted primarily from ~~lower incentive compensation expense~~higher selling expenses and engineering expenses, which were partially offset by reductions in other categories of operating expenses compared to the same prior ~~year. Other categories of operating expense did not differ materially from the prior year.~~ year period.

Other Expense, net

Other expense for the three months ended ~~May 31,~~November 30, 2021 ~~decreased $3.3~~increased $3.1 million compared to the three months ended ~~May 31,~~November 30, 2020. The change resulted primarily from ~~lower~~higher foreign currency transaction ~~losses.~~losses compared to the same prior year period.

Income Taxes

The Company recorded income tax expense of ~~$3.4~~$1.6 million and ~~2.2~~an income tax benefit of $0.2 million for the three months ended ~~May 31,~~November 30, 2021 and 2020, respectively. The effective income tax rate was ~~15.9~~16.6 percent and ~~17.7~~(3.1) percent for the three months ended ~~May 31, 2021 and 2020, respectively.~~

~~- 21 -~~

~~Table of Contents~~

~~For the Nine Months ended May 31, 2021 compared to the Nine Months ended May 31, 2020~~

~~The following section presents an analysis of the Company’s operating results displayed in the condensed consolidated statements of earnings for the nine months ended May 31, 2021 and 2020.It should be read together with the industry segment information in Note 13 to the condensed consolidated financial statements:~~

Nine months ended

Percent

($ in thousands)

May 31,
2021

May 31,
2020

Increase
(Decrease)

Consolidated

Operating revenues

$
413,998

$
346,287

20%

Gross profit

$
116,638

$
107,176

9%

Gross margin

28.2
%

31.0
%

Operating expenses⁽¹⁾

$
71,954

$
70,430

2%

Operating income

$
44,684

$
36,746

22%

Operating margin

10.8
%

10.6
%

Other expense, net

$
(2,087
)

$
(6,359
)

-67%

Income tax expense

$
5,829

$
6,432

-9%

Overall income tax rate

13.7
%

21.2
%

Net earnings

$
36,768

$
23,955

53%

Irrigation Segment

Segment operating revenues

$
346,104

$
272,321

27%

Segment operating income

$
52,603

$
35,282

49%

Segment operating margin

15.2
%

13.0
%

Infrastructure Segment

Segment operating revenues

$
67,894

$
73,966

-8%

Segment operating income

$
14,364

$
22,788

-37%

Segment operating margin

21.2
%

30.8
%

⁽¹⁾	~~Includes $22.3 million and $21.3 million of corporate operating expenses for the nine months ended May 31, 2021 and 2020, respectively.~~

~~Revenues~~

Operating revenues for the nine months ended May 31, 2021 increased 20 percent to $414.0 million from $346.3 million for the nine months ended May 31, 2020, as irrigation revenues increased $73.8 million and infrastructure revenues decreased $6.1 million. The irrigation segment provided 84 percent of the Company’s revenue during the nine months ended May 31, 2021 as compared to 79 percent for the nine months ended May 31, 2020.

North America irrigation revenues for the nine months ended May 31, 2021 of $220.3 million increased $36.8 million, or 20 percent, from $183.5 million for the nine months ended May 31, 2020. The increase resulted from a combination of higher ~~irrigation equipment unit sales volume and higher average selling prices. The increase was partially offset by revenue from engineering project services in the prior year that did not repeat.~~

International irrigation revenues for the nine months ended May 31, 2021 of $125.8 million increased $37.0 million, or 42 percent, from $88.8 million for the nine months ended May 31, 2020. The increase resulted from higher prices and higher unit sales volumes in most international markets which were partially offset by the unfavorable effects of foreign currency translation of approximately $2.3 million compared to the nine months ended May 31, 2021.

Infrastructure segment revenues for the nine months ended May 31, 2021 of $67.9 million decreased $6.1 million or 8 percent from $74.0 million. The decrease resulted primarily lower Road Zipper System sales, partially offset by higher Road Zipper System lease revenue and increased sales of road safety products.

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~~Gross Profit~~

Gross profit for the nine months ended May 31, 2021 of $116.6 million increased 9 percent from $107.2 million for the nine months ended May 31, 2020. The increase in gross profit resulted primarily from higher irrigation equipment revenues that were partially offset by higher raw material and freight costs and lower infrastructure segment revenues. In addition, gross profit for the nine months ended May 31, 2021 included a gain recorded in the infrastructure segment of $1.2 million on the sale of a building that had been held for sale. Gross margin was 28.2 percent of sales for the nine months ended May 31, 2021 compared with 31.0 percent of sales for the nine months ended May 31, 2020. Lower gross margin in the current year resulted primarily from a higher proportion of irrigation revenues, which has lower gross margin than infrastructure revenues as compared to the prior year. In addition, the prior year gross margin benefited from the building sale gain.

~~Operating Expenses~~

Operating expenses of $72.0 million for the nine months ended May 31, 2021 increased $1.5 million, or 2 percent, compared with $70.4 million for the nine months ended May 31, 2020. The increase resulted primarily from increased incentive compensation expense and a one-time expense of $1.5 million in equity awards related to the retirement of the Company’s chief executive officer. These increases were partially offset by decreases in other areas such as travel. Other categories of operating expense did not differ materially from the prior year.

~~Other Expense, net~~

Other expense for the nine months ended May 31, 2021 decreased $4.3 million compared to the nine months ended May 31, 2020. The change resulted primarily from lower foreign currency transaction losses.

~~Income Taxes~~

~~The Company recorded income tax expense of $5.8 million and $6.4 million for the nine months ended May 31,~~November 30, 2021 and 2020, respectively. The ~~effective income tax rate was 13.7 percent and 21.2 percent for~~current year period includes a benefit of $0.7 million related to the ~~nine months ended May 31, 2021 and 2020, respectively. The nine months ended May 31, 2021 include~~vesting of share-based compensation awards while the same prior year period includes a benefit of $1.7 million related to the release of a valuation allowance related to net operating loss carryforwards in a foreign ~~jurisdiction that are now expected to be realizable.~~jurisdiction.

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Liquidity and Capital Resources

The Company's cash, cash equivalents, and marketable securities totaled ~~$140.5~~$114.9 million at ~~May 31,~~November 30, 2021 compared with ~~$121.5~~$146.4 million at ~~May 31,~~November 30, 2020 and ~~$140.9~~$146.7 million at August 31, ~~2020.~~2021. The Company requires cash for financing its receivables and inventories, paying operating expenses and capital expenditures, and for dividends and share repurchases. The Company meets its liquidity needs and finances its capital expenditures from its available cash and funds provided by operations along with borrowings under its credit arrangements described below. The Company’s investments in marketable securities are primarily comprised of United States government securities and investment grade corporate ~~bonds.~~securities. The Company believes its current cash resources, investments in marketable securities, projected operating cash flow, and remaining capacity under its continuing bank lines of credit are sufficient to cover all its expected working capital needs, planned capital expenditures and dividends. The Company may require additional borrowings to fund potential acquisitions in the future.

The Company’s total cash and cash equivalents held by foreign subsidiaries were approximately ~~$43.1~~$35.5 million, ~~$35.4~~$41.3 million, and ~~$37.2~~$38.4 million as of ~~May 31,~~November 30, 2021, ~~May 31,~~November 30, 2020, and August 31, ~~2020,~~2021, respectively. The Company considers earnings in foreign subsidiaries to be indefinitely reinvested and would need to accrue and pay incremental state, local, and foreign taxes if such earnings were repatriated to the United States. The Company does not intend to repatriate the funds and does not expect these funds to have a significant impact on the Company’s overall liquidity.

Net working capital was ~~$273.6~~$278.6 million at ~~May 31,~~November 30, 2021, as compared with ~~$232.0~~$254.1 million at ~~May 31,~~November 30, 2020 and ~~$245.5~~$277.9 million at August 31, ~~2020.~~2021. Cash ~~provided by~~used in operating activities totaled ~~$30.7~~$24.2 million during the ~~nine~~three months ended ~~May 31,~~November 30, 2021, compared to cash provided by operating activities of ~~$16.0~~$15.4 million during the ~~nine~~three months ended ~~May 31,~~November 30, 2020. This change was primarily due to ~~higher net earnings~~increases in receivables and ~~more cash generated from~~inventories that were partially offset by changes in other categories of working capital, ~~primarily accounts payable and other noncurrent assets and liabilities,~~ compared to the same prior year period.

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~~Table of Contents~~

Cash flows used in investing activities totaled ~~$25.0~~$14.2 million during the ~~nine~~three months ended ~~May 31,~~November 30, 2021 compared to ~~$28.9~~$5.8 million during the ~~nine~~three months ended ~~May 31,~~November 30, 2020. ~~The current~~Purchases of marketable securities increased $10.5 million compared to the same prior year ~~period includes $22.5 million in purchases~~period. Purchases of property, plant, and equipment were $3.1 million, compared to ~~$12.3~~$5.6 million in the same prior year period. The increase includes $8.5 million to exercise a purchase option for the land and buildings related to the Company’s manufacturing operation in Turkey. The prior year included cash outflows of $20.0 million related to the Company’s initial purchase of marketable securities.

Cash flows used in financing activities totaled ~~$8.1~~$2.3 million during the ~~nine~~three months ended ~~May 31,~~November 30, 2021 compared to cash flows used in financing activities of ~~$9.9~~$4.7 million during the ~~nine~~three months ended ~~May 31,~~November 30, 2020. The decrease was primarily the result of higher proceeds from the exercise of stock options compared to the same prior year period.

Capital Allocation Plan

The Company’s capital allocation plan is to continue investing in revenue and earnings growth, combined with a defined process for enhancing returns to stockholders. Under the Company’s capital allocation plan, the priorities for uses of cash include:



Investment in organic growth including capital expenditures and expansion of international markets,



Dividends to stockholders, along with expectations to increase dividends over time,



Synergistic acquisitions that provide attractive returns to stockholders, and



Opportunistic share repurchases taking into account cyclical and seasonal fluctuations.

•

~~Investment in organic growth including capital expenditures and expansion of international markets,~~

•

~~Dividends to stockholders, along with expectations to increase dividends over time,~~

•

~~Synergistic acquisitions that provide attractive returns to stockholders, and~~

•

~~Opportunistic share repurchases taking into account cyclical and seasonal fluctuations.~~

Capital Expenditures

Capital expenditures for fiscal ~~2021~~2022 are expected to be between ~~$25.0~~$20.0 million and ~~$27.0~~$25.0 million, including equipment replacement, productivity improvements and new product development. The Company’s management does maintain flexibility to modify the amount and timing of some of the planned expenditures in response to economic conditions.

Dividends

In the ~~third~~first quarter of fiscal ~~2021,~~2022, the Company paid a quarterly cash dividend to stockholders of $0.33 per common share, or $3.6 million, compared to a quarterly cash dividend of $0.32 per common share, or $3.5 million, in the ~~third~~first quarter of fiscal ~~2020.~~2021.

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Share Repurchases

The Company’s Board of Directors authorized a share repurchase program of up to $250.0 million of common stock with no expiration date. Under the program, shares may be repurchased in privately negotiated and/or open market transactions as well as under formalized trading plans in accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. There were no shares repurchased during the ~~nine~~three months ended ~~May 31,~~November 30, 2021 or 2020. The remaining amount available under the repurchase program was $63.7 million as of ~~May 31,~~November 30, 2021.

Long-Term Borrowing Facilities

Senior Notes. The Company has outstanding $115.0 million in aggregate principal amount of Senior Notes, Series A (the “Senior Notes”). The entire principal of the Senior Notes is due and payable on February 19, 2030. Interest on the Senior Notes is payable semi-annually at a fixed annual rate of 3.82 percent. Borrowings under the Senior Notes are unsecured. The Company used the proceeds of the sale of the Senior Notes for general corporate purposes, including acquisitions and dividends.

Revolving Credit Facility. The Company has outstanding a $50.0 million unsecured Amended and Restated Revolving Credit Facility (the “Revolving Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”) expiring ~~May 31, 2022.~~August 26, 2026. The Company intends to use borrowings under the Revolving Credit Facility for working capital purposes and to fund acquisitions. At ~~May 31,~~November 30, 2021 and 2020, the Company had no outstanding borrowings under the Revolving Credit Facility. The amount of borrowings available at any time under the Revolving Credit Facility is reduced by the amount of standby letters of credit issued by Wells Fargo then outstanding. At ~~May 31,~~November 30, 2021, the Company had the ability to borrow up to $50.0 million under the Revolving Credit Facility. The Revolving Credit Facility may be increased by up to an additional $50.0 million at any time, subject to additional commitment approval. The Revolving Credit Facility was amended to transition the benchmark rate from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”). Borrowings under the Revolving Credit Facility bear interest at a variable rate equal to ~~LIBOR~~the SOFR plus 90a margin of between 100 and 210 basis points ~~(1.03~~depending on the Company’s leverage ratio then in effect (which resulted in a variable rate of 1.40 percent at ~~May 31,~~November 30, 2021), subject to adjustment as set forth in the loan documents for the Revolving Credit Facility. Interest is paid on a monthly to quarterly basis depending on loan type. The Company currently pays an annual commitment fee ~~of 0.15 percent~~ on the unused portion of the Revolving Credit Facility. The fee is between 0.125 percent and 0.2 percent (0.125 percent at November 30, 2021) on the unused balance depending on the Company’s leverage ratio then in effect.

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~~Table of Contents~~

Borrowings under the Revolving Credit Facility have equal priority with borrowings under the Company’s Senior Notes. Each of the credit arrangements described above include certain covenants relating primarily to the Company’s financial condition. These financial covenants include a funded debt to EBITDA leverage ratio and an interest coverage ratio. In the event that the loan documents for the Revolving Credit Facility were to require the Company to comply with any financial covenant that is not already included or is more restrictive than what is already included in the arrangement governing the Senior Notes, then such covenant shall be deemed incorporated by reference for the benefit of holders of the Senior Notes. Upon the occurrence of any event of default of these covenants, including a change in control of the Company, all amounts outstanding thereunder may be declared to be immediately due and payable. At ~~May 31,~~November 30, 2021 and 2020, the Company was in compliance with all financial loan covenants contained in its credit arrangements in place as of each of those dates.

Series 2006A Bonds. Elecsys International LLC, a wholly owned subsidiary of the Company, has outstanding ~~$1.6~~$1.1 million in principal amount of industrial revenue bonds that were issued in 2006 (the “Series 2006A Bonds”). Principal and interest on the Series 2006A Bonds are payable monthly through maturity on September 1, 2026. The interest rate is adjustable every five years based on the yield of the 5-~~year~~5-year United States Treasury Notes, plus 0.45 percent ~~(0.81~~(1.72 percent as of ~~May 31,~~November 30, 2021). This rate was adjusted on September 1, ~~2016~~2021 in accordance with the terms of the bonds, and the adjusted rate will be in force ~~until September 1, 2021.~~through maturity. The obligations under the Series 2006A Bonds are secured by a first priority security interest in certain real estate.

Contractual Obligations and Commercial Commitments

There have been no material changes in the Company’s contractual obligations and commercial commitments as described in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, ~~2020.~~2021.

ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the Company’s quantitative and qualitative disclosures about market risk previously disclosed in the Company’s most recent Annual Report on Form 10-K. See discussion of the Company’s quantitative and qualitative disclosures about market risk under Part II, Item 7A in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, ~~2020.~~2021.

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ITEM 4 – Controls and Procedures

Disclosure Controls and Procedures

The Company carried out an evaluation under the supervision and the participation of the Company’s management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of ~~May 31,~~November 30, 2021.

Changes in Internal Control over Financial Reporting

The CEO and CFO determined that there has not been any significant change to the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II – OTHER INFORMATION

ITEM 1 – Legal Proceedings

See the disclosure in Note 8 – Commitments and Contingencies to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is hereby incorporated herein by reference.

ITEM 1A – Risk Factors

There have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussions of the Company’s risk factors under Part I, Item 1A in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, ~~2020.~~2021.

ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3 – Defaults Upon Senior Securities

None.

ITEM 4 – Mine Safety Disclosures

Not applicable.

ITEM 5 – Other Information

None.

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ITEM 6 – Exhibits


Exhibit
No.		Description

3.1		Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on December 14, 2006.
3.2		Amended and Restated By‑Laws of the Company, effective October 17, 2018, incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on October 19, 2018.
4.1		Specimen Form of Common Stock Certificate, incorporated by reference to Exhibit 4(a) of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2006.
10.1*		31.1Lindsay Corporation Management Incentive Plan (MIP) 2022 Plan Year. † *
10.2*		Lindsay Corporation Policy on Payment of Director Fees and Expenses.
31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 18 U.S.C. Section 1350.
31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 18 U.S.C. Section 1350.
32.1*		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 18 U.S.C. Section 1350.
101*		Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language ("Inline XBRL").
104*		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

† Management contract or compensatory plan or arrangement required to be filed as an exhibit hereto pursuant to Item 6 of Part II of Form 10-Q.

* Filed herein.

** Certain confidential portions of this exhibit were omitted by means of marking such portions with brackets and asterisks because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this ~~1st~~6th day of ~~July 2021.~~January 2022.


			LINDSAY CORPORATION

	By:		/s/ BRIAN L. KETCHAM
	Name:		Brian L. Ketcham
	Title:		Senior Vice President and Chief Financial Officer
			(on behalf of the registrant and as principal financial officer)

- 2827 -