LNN - Earnings call transcript Q3 2018

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Operator

Good morning. My name is Anita, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lindsay Corporation Third Quarter 2018 Earnings Call. [Operator Instructions] Please note, this event is being recorded.

During this call, management may make forward-looking statements that are subject to risks and uncertainties, which reflect management's current beliefs, estimates of future economic circumstances, industry conditions, company performances and financial results.

words; information the or preceded company by including the of future by, include may, or of could, operations and the statements concerning similar assumed possible results followed should Forward-looking or outlook, expressions. expectation, those statements

we I statements, of protection Executive to over the would statements now the for Litigation Reform to the Private conference Hassinger, Chief in like Officer. the claim please Securities Harbor President Mr. Act forward-looking go these For Safe contained Hassinger, of and Tim XXXX. Mr. turn ahead.

Tim Hassinger

for and thank Financial our morning our on Good me Lori today's and is you Chief Chief joining Ketcham, call. Officer. Brian With Accounting Zarkowski, call Officer;

As of discuss call you quarter to the is this objective three know, our results.

manufacturing make past of are, launched result In the We that activities. business cost our for that, focus introductory being Overall, dealership the specialist, mind, Before to with to four, areas. for This we channel company the focused planning this a initiative plants for year. Pacific divest jump few plan identifying In simplify clear. in quarter's four an in I foundation overview call, to to call, following into efficiencies our to these the the I the growth. provided processes. sourcing. irrigation Watertronics foundation associated conduct on this want calendar goal in all With very that we optimize divest move office to primary to we growth one, We're improve assets, centralized a build LAKOS. we Three, actions our towards and for said buying desired we achieve the our work we are will including Northwest. activities. gaining comments. management goal Also, The We to actions. our way aligned productivity want earlier Two, G&A. from that back is Those were earnings commercial. a our in business projects I we primary and structure. implementing footprint our is that and optimize our our intend approach the to areas is stream focused take and manufacturing overview, owned to And

turnkey action we away some addition, close In Lindsay Crown simplify to of to our Point This represents plant later we keeps dedicated same Nebraska year. specialist from the Irrigation announced Point the the a plant and two largest Omaha the this that and is Crown same that a to businesses. the because in meet to and businesses. will infrastructure complexity irrigation work Lindsay drive Lindsay Lindsay, existed the our be only will aligned this a commercial plant. manufacturing these margin And what serving meeting plant strategy initiated. our will place align manufacturing divestments hour words, businesses. agreement when transfer core world. best this owner direction a This makes will business are business creates change, is of and kept evaluation the area our our that These the simplify and in expectations and to other is our business criteria, buyer of evaluation have these LAKOS Watertronics to What it if have footprint. our a if the discipline allow and/or business very its internal important access further aligned the does process at is to not leverage providing our time, to to to this process, eliminate evaluation leverage across is our moves dealership we determining Through with of operations is at that irrigation intention simplification still our operations these customers owning running strategic these In in for in divestment a is time.

is When We effort we create the support to change in the foundation I our is Lindsay have like important taking required the long-term provide growth have direction started, growth business. service the It's look concluded we're view I will to our to that at the also self-help the making space. important best the for in customers this not and It is owner innovation initiative highlight that this us. market. progress that this of

continued our agreement in of Last have each this on XX quarter, broaden put the our To global advisor you perspective, XX this FieldNET agreement heard fact FieldNET we just beta countries was in marketplace, reach add differentiated Also in XX% offered with Deere only progress operating year launching irrigation have by are and these it crops. talk to strategy and the in fiscal FieldNET This XXXX. in a me different to margin towards the to capabilities As highly is and/or advisor expand with test we that excellent advisor. about one XX% to country are last we in comments on our goal in offering capability doing tell Farmers our announced John Hopefully, that year, you to can two we collaboration making crops. we of achieving Edge space. a is with and the recently scheduling announced a our area.

over to that continue several quarters. you projects will on on focused will we the status of update the key be next We the

I'll move let's Brian. that, So QX turn for call our results the to over and to now,

Brian Ketcham

reported deferred in an his improvement initiative, pre-tax the $X.X held you, foundation Thank and cover Tim businesses $X million I less cost the adjustment its selling everyone. referred of price amount price for was recognized, selling costs this as growth to would estimated million estimated completed. The planned price, good to tax where related To of value the the until adjustment than gain to are begin, of not not quarter performance Tim of that is adjustment, is sell, our In represents selling the our value on is compared in reduce deductible the carrying benefit carrying a exceeded impact Therefore, to carrying held the morning, divestitures for results. sale this was significant was this which value to sale comments. businesses carrying purposes. determining carrying where each sale, expense the the value related estimated incurred third recognized. the of had was and a the to tax for like value less for

the professional revenues quarter last refer related which to million, America driven year, Additional detailed Net year. sales compared activity quarter revenues irrigation omit have comments irrigation Adjusted market same the last the things selling are an for along of third to my revenues third results segment same results, higher the with of initiative XXXX quarter growth market, last The North project offset fees. Brazil. level earnings million, Total lower were $X.X compared increase for higher foundation earnings third quarter costs In by G were revenues the press growth costs slowdown Brazil. average of third the few Disclosure $XXX.X slightly adjusted system year. same a release. an third of fiscal In higher international prices. share for experienced foundation contributed impact will over markets in quarter for of the $XXX.X Irrigation developing markets, year. A quarter. the million, $X.XX for XX% slowdown an were last at quarter the Regulation year's the was quarter per volumes increase to A were over are million of end the in the severance the of XX% the the we were for last XX% and year. of over consulting irrigation remainder Diluted increase X% the the in of to $X.XX quarter of in increased last comprised to by initiative. $XX.X regarding in over

the our ten days a trucker work quarter. resulted over in wide third a First, last strike of stoppage country

costs to handlers resulted strike, Although by government have halting from put temporary order local grain soybeans in purchases corn were place measures in the rising in and end freight farmers. the of

compared ability increase and accounts the significant same Cash us quarter, of of share total expenditures of $XX.X end higher available equipment payments. fund remains of government our the million, operating in well Road year. support in was result however, compared a at quarter turn mix sales as initiatives, year, in purchase third prior I'd was higher last the to margin strength The the to third of challenges, XX.X% X% short authorization. the margin quarter mix operator from our quarter quarter international of In margin the to effects remain and a $XXX.X by to cash capital compared and at Japan third to the an and of margin These orders. irrigation XX% year. increased position Zipper growth million the growth in income potential the organic a create over growth the revenue to increased of sales situations believe offset of At during Infrastructure the about of sheet decisions pursue year. sales anticipation capital prior quarter. the XX.X% of as initiatives deliver leverage. the to XX% Bridge proportion XX.X% to Zipper in improved driven were from increase repurchases recovery the Infrastructure term in the US the balance the sales over previously reduction prior million by for growth and utilized $XX.X to call and of lower in revenues improved we $XXX.X and Fraser in time, the for repurchase operating equivalents a the X under have rates. was acquisitions America portion compared your during Alex shareholders. XX% cost of to this prior for $X.X optimistic segment operating increases segment July were costs through as quarter orders some and compared addition, for Road the Irrigation interest the our sales quarter No of operating to million The to future quarter Infrastructure income for in returns effects both irrigation a year. receivable for however, quarter drive operating of in a end prior fiscal an was the were were Total working freight we questions. subsidized take coming of our improved been The Cash year. delayed the North continues other million reserved Brazil. to project dividend sales like made share of

Operator

from comes with Shlisky today question Mike [Operator Seaport first Instructions] The Global.

Mike Shlisky

to wanted first infrastructure about I So the segment. start off

some you to do tell three guess months Sounds deliveries quarter. guess deliveries obviously, to the for get I year really trying two there do year about us projects. to feel a like great make ago? Or you your the timing were far progress all out, the – big compared how thought in sure I today maybe I just the expectations? initial And as within I figure could full you as it those business than better is want

Brian Ketcham

Yeah.

Mike, So Brian. is this

was the revenue to full that that fourth a I full in the remains majority third these the that's the barrier these which be outlook began we the think of said deliver to the some projects we able barrier and machines, quarter, on Rafael were quarter same. both San -- of year year, during earlier in of separate the I out may still expected quarter. majority if quarter, we saw on the we both or third What we of quarter, shipped fourth is versus XXXX you of the projects, first on in the that had project. expected quarter would third the of Bridge. our That the say, but a we production the Also, come majority recognition

Mike Shlisky

end it away, you you to wanted And upcoming the and also that are reducing the like, shift? infrastructure -- of exiting capacity, Also amount you same other of a the for for this facility next to very of And might get can not margin facility? long in it’s less also us what this sounds closure mean year, sense a in Would facility can the footage? of make of drive have year. out square kind the be that that are segment your products any Okay. to of you you turn you in product assuming this give if by able

Tim Hassinger

offering portfolio There result reduction this of in So Mike, will this be is as no Tim. change. a

an is this comments, opening opportunity. my in overlap mentioned I As

We are plant. going to and it Lindsay down Nebraska taking then into and this plant be shutting our capabilities those moving

change no in So portfolio. again,

In foundation captured our for to broader financial growth into terms related impact, goal initiative. is of that the

but projects splitting and the would that overall we're the So this that we one out goal not contributing of set. is that, had be communicating specifics to of the

Mike Shlisky

So same over? line, is after this the sales it’s product same potential

Tim Hassinger

let no me be And will impact say Correct. way. to customers. it our this There

to opportunity has from product, same Lindsay smaller, the opportunity the gotten an footprint et a because So buy only manufacturing service, our differences same we cetera, perspective, to consolidate. see

Mike Shlisky

it. Got

Okay. And rate then the even are which July with next shift too the you the days a comments, bit or on your lower the on that. okay you couple next lower. lower Brazil, quarter. clearly, here issues plan, harvest But of hear an And the they that those impact X. sense rates farmers rates starts of were did I for Brian, touching in totally hoping over get some do did the

Brian Ketcham

was basis it It was rate was -- the points. Yeah. well, about, reduction XX

think been financing. but I basis may it's it had be that they XXX long optimistic on these, the tenor points, on term still

think I it's a it's positive overall, still move. So

I change be the July would announced think -- back. X they place while had in a the it's just put

we new I activity, some think purchasing in go place. just the until in And delayed saw so waiting rates

Mike Shlisky

it Brazil the the to see good summer, good the to here still US, crop soybean plan trends we we year this term is of out of do follow-up just have prices that wants increased acres see support adoption, get a belt to irrigation there, in do irrigated? or strong need yields quickly through that. corn a you government and if very more in things If awfully down in the long pricing high part look large come more very a the And on

Tim Hassinger

that's We being one on. that Mike, trade going would could it. with strong see describe in a for and unknown the still very this that potential retaliation is upside discussions be fundamentals I the Brazil Tim. Brazil are

we exists Brazil. still take move. just projects as given lag and time do positive, are financing, it to To the the move change although, Brian's time optimistic through in So of see that for some will it that though, point we we this for system, think type

Operator

The next comes Nathan Stifel. from question with Jones

Nathan Jones

said for about But in quarter? costs for around feel in comments any be future. the So Do steel margins better the AR And on of other start mix can passing were international. versus press on you with like a you around a we I you little steel had -- during about and still the potential for guess poorer you us the in to you comment dollar some income you any release through. pricing commentary that higher down of of pass out I'll operating more the mix quarter, If year-over-year a those take dollar probably the international business. just domestic in had from the reversal maybe give revenue, the should have covered bit it'll challenging color projects then you

Tim Hassinger

Yeah.

to going this this with so here talked Tim the this is goal continues cost address being call. -- The the our on press to results increases it's the say, strategy. to industry our this in continue though and reflect this of unknown need the that they be to earnings that in the in to reality escalation. strategy to successful we’re the surcharges of pass forward. intention our far, release we about some and implementation the would comments year led and reflect with is We address the We our marketplace in Nathan, view cost the steel last had So

been to give laid we want successful out. area. is that there We've but the we're with as going did a with much caution direction to to that we least going some date to unknown be direction, to that at we So successful in have continue can continue in how that forward that

Nathan Jones

to positive came release. your maybe posture in that on press So bit more little there the commentary sounds ability price and steel a across just it

problems being but through, any you it way you you're to think point, passing this through be don't at price. to successful, have to you're you're are framing saying that any you’re it. the with just being want but that there's not really Obviously, problems always So reason you're cautious steel not, you successful, passing seeing continue

Tim Hassinger

North this quarter you it in our and that describe in to Nathan, way, results successful. America our would saw reflect we've been view,

Nathan Jones

those LAKOS remember path Okay. Then open that little that the was into strategic divestitures. future. are the a of I to I’d I that go prior that that on, strategic industrial company you know your water particularly was the for some a go the of bought bit leadership, ask off reason to up Does the to the where can divestiture in a strategic the around more question company part table? kind take the about thinking businesses get of business applications. more outlook when of path done for how

Tim Hassinger

The see as divestitures way side that. We've would bought with it strategy. on the We evolution. developed those these is, describe We I success Nathan irrigation a turnkey companies. had I

Now, we've with with come point agreements we the want where turnkey forward the simplify stated organization. be the those will continue us agreement to that involved have keep we the a as agreement with in that we're to moving commercial other publicly strategy turnkey and in allow to the we’ll strategy irrigation commercial many organization companies, then markets. to with simplify and have not These

our initiative. the were the wanted around focus, key simplifying theme achieve it's we to which that business, foundation growth with of real So tenants the for

Nathan Jones

Okay.

been that. about I pretty clear think you've

it not that you're be to the not think that about divestitures no say, the be table of think something don't don't When would I surprised I I that these to off Is you? water company is deployment for take should capital, looking should quite anybody path does industrial done these maybe longer and comes So surprised yet. when anybody at?

Tim Hassinger

are core point focus at this would been define where in infrastructure the we've key businesses, terms That's and is as irrigation business. businesses. our Our what we core clear, our of

Operator

Drab The comes next from question Blair. with William Brian

Brian Drab

margins. about I recovery, you and that operating XX.X% wanted talk in was third first operating really receivable in So over margin little decade. more segment, the you irrigation to the lowest in reported In the the adjusted if bit margin was just accounts the that one, in – irrigation a a that exclude quarter the

are more fiscal talk I into going that do steel. could you it driving lot in and expect obviously to if wondering XXXX? with quarter just what should about and has fourth the dynamics So we assume that a

You talked better about relatively we or margin? forward are low about this Brazil, but as get operating that level does really of you go concerned

Brian Ketcham

Brian. This Yeah. is

slowdown say, I that the then our Brazil, one I operating being in we project first US that And with, in think, reacting I that delayed bit the increases the impact. couple had, think the key in impacted in say little second being would largest in second to quarter. the there's a area, that low I project in our with third international you particular irrigation three things margin freight the one margins, probably thing the that. would were in fairly

those international opportunities become a still I the But of think see costs freight there. in markets all have in So very price expect project addressed, lot I competitive. would of -- cases, we've we

Brazil the more situation is, think short feel, as I of well. a we situation it's term

Brian Drab

sense for terms growth was And of what in give price versus for can revenue irrigation? us any you volume Okay.

Brian Ketcham

played there the pulled growth higher going on part would third quarter, that the versus sales in volume too just growth that And because it. the little -- may quantified, bit a volume. the little than environment. don't have a would price to of in part been say I quarter what say a little clarity I into quarter, of volume expected increasing I slightly a Yeah. forward more We a have is the we quarter the played in in price may just third other but in think the have third had

Brian Drab

domestic consolidated? only apply the split for and is Does or business Okay. the to that international that

Brian Ketcham

only was domestic, America. That No. Yeah. North for for

Brian Drab

Okay.

role. Just more price okay, domestic, of a little for a bit so – played

Brian Ketcham

slightly say would higher. I Yes.

Brian Drab

potentially? growth helped volume volume by and forward In was some than pull

Brian Ketcham

Yeah.

Brian Drab

Okay. it. on missed impact? revenue but FX quarter? And us just I you give I Brian, Got the know if can FX impact that, growth don't in

Brian Ketcham

overall It’s fairly insignificant. Yeah.

that that the had versus You had had some currency Brazilian strengthened currencies weakened.

it overall, negligible. So was

Brian Drab

just in Okay. versus the quickly, And more do less revenue the third expect QMB or fourth you then quarter quarter.

Brian Ketcham

since or projects in two expect third would significant quarter. the lower. the of those we a it we'd majority Quarter-over-quarter, to definitely, expect less shipped Quarter-over-quarter, be portion

Operator

next comes with The from Mondillo question Joe Sidoti Company. &

Joe Mondillo

to want about dig infrastructure more bit and in So to I little segment a last of sort the question. just relative

million guys project were have about think and the XX. was divulged Alex I about Fraser that total Japan $XX follow-ons you

hit So year-over-year quarter, majority that brings third and your up you the million. a it to revenue was about in about million $XX XX infrastructure said by

QMB, XX to leaves of So most you're this Fraser but that more related I saying leave than Japan million would XX assume that larger QX XX to dollars related was out million, million in which QX. be of Alex follow-ons, will

bringing projects, So over that you not $XX two is something. those of third missing for in analysis million quarter I'm me million have obviously, $XX my but sort and left

you just large by actually than core of on going what's those was the expected really actually projects? segment part a could the two much So was driven and if down business I more clarify

Tim Hassinger

is Tim. This Joe. Hey,

then can specific to your Brian take the from more QMB and Let's a question. color of give direction first all

First, going business on move the to continuing actions do a backlog calls, is to contract sales an include we signed, we it’s important Zipper in not to on in more we're lumpiness to a highlight, help are lumpiness. to as any address global demand and and and prior but the before interest this leasing, reduces basis increased we've seeing these said we've increase Road until is two and said this this the and focus of

making key the help what we of asking That’s But, a part opportunities. of leasing creating in more of terms to in let of here address our strategy. progress specifics feel new you're quarter. Brian versus going So good we're I’m quarter

Brian Ketcham

the but Fraser, indicated will On the a we third quarter will there portion still through and there's that of projects third. than I'd quarter, directionally, those Japan definitely of quarters. it well, Yeah. projects of first Alex But lower was fourth for go be portion clearly, is both had On fourth both those of that there, XXXX. both a say in

Joe Mondillo

Okay.

could Fraser follow-ons million. here much Alex So I'm what million Of guess $XX was the and in you I is quarter? getting how third $XX -- Japan that at backlog,

Brian Ketcham

specifics to going in out break not what the for two the on those I'm projects hit quarter. third

Joe Mondillo

I projects, it need you the QMB, wondering to total I'm backlog how don't two of hit in of break need, out much those don’t projects, between of just the the third.

Brian Ketcham

I would say roughly two-thirds.

Joe Mondillo

Okay. with I what year-over-year. least, the year-over-year had on were different business. also international sort inventory to ask into was was see inventory infrastructure down was now in did about aside going sort actually backlog that the quarter, wanted we're sequential to being third we a down know backlog of up subject, I last but quarters, year-over-year uptick international just projects down up in driven over and from of relative international, we and talking of the and was at year-over-year, seeing some still but by it of down you a that year-over-year, -- couple

Brazil, of is international and you you if want the about watermark XQ like the what high I look does of but areas know other touched year talk for sort outlook So for sort can international? of the overall, to. you on

Tim Hassinger

is earlier but timing expectations always had year-to-date on reasons to and targeted a place, total year we of flavor of pipeline a versus these, our is depend this this year. on our versus in the you X% will recently in These beginning for mentioned at key well points below on how do and Tim. Brazil is decrease the predict for slowdown this in a closing less international the of fiscal volume decreased revenue projects questions. results I’ll that the several year Year-to-date, Brian one has year have The Joe, feel pipeline. quarter of this more sale do prior good are in and projects his that large addressing the in business. the give we year. are difficult projects We the a prior

Joe Mondillo

Okay.

was irrigation you so And last the of think I Obviously, anticipate in do think being I year-over-year XQ I quarter, international asked year. back the year-over-year. up the question, down

So point growth XQ, or it -- the or any be us watermark year-over-year a just as is sort to related could is could you sort a high do this or possibility quarter, the still more sort thought. of XQ give you as of you of strong still that Is at XQ color big initially still see that? not

Tim Hassinger

Yeah.

think a outlook I full of things couple for the have impacted year. the

timing some think being there. something when then slowdown And is these thing that seen the last in talked this on I other the There number projects we've the just of we been get radar Brazil out quarter. at hadn't a the of of projects. pushed is, for

getting the a think next I delayed think year. fourth I depend versus So quarter two Tim as will mentioned, quarter on project or getting into the into

Operator

more Hassinger, call to you no time, the I’ll there to for closing Mr. this turn be back questions. appears remarks. At over

Tim Hassinger

participation quarter four in updating for looking to October. held thanks you your today's on forward in be and interest concludes quarter progress Well, our call This to earnings call. third in I'm continued Great. call. our our

Operator

you Thank now attending today's This for has presentation. concluded. conference

may disconnect. now You

Lindsay (LNN) 28 Jun 182018 Q3 Earnings call transcript