LNN - Earnings call transcript Q1 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Matt and I will be your conference operator today. At this time, I'd like to welcome everybody to the Lindsay Corporation First Quarter Fiscal Year 2021 Earnings Call. All participants today will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. this being note, Please Instructions] event recorded. is [Operator

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

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

protection I'd of Wood, in call the Safe to these Harbor Litigation contained claim For Mr. President statements, the statements the the Officer. Executive Reform forward-looking we Randy turn Chief to over Act like Securities and Private of XXXX. now

Randy Wood

call is Ketcham, Financial and Chief good Brian everyone. Officer. you joining morning today's us. you our Thank on Appreciate With me

details the President but he CEO transformation as I continue and Tim this pleasure gets announced and comments. opening it's of first our share I morning this quarter organization Jim path want during lead transition for join the plan key pleased great We and my that Lindsay want the his company. now and am and our full Corporation. Brian to truly played only not do in pleasure and is a acknowledge and into you Hassinger in role our to results, to support to I I Before have November fully some of completed transition the It our thank CEO of transition honor to the confirm forward.

plan. part safety facilities of response protocols pandemic to at CDC all as We continue our follow our our of

us for We're and safe. we'll work home continue remotely. employees make from maintaining nine that are is be expectation classified businesses decisions to as Our can that our all for our essential nonnegotiable and a also roles keep Safety performed and plans operational are running. business option

government the and exports due strengthened aid live quarter. during net in stock Turning irrigation the American Phase aid to including the in and supply XXXX customer President $XX large on impact a virus to market basis. in leading to linked to to positive rapidly in December, that from prices in pack Record been of conditions year-over-year billion income we half environment, increase grower flow supplemental and show business both Corona support the order expect the Commodity at improved In stronger soybean provide an and profitability. support in X fundamentals market and direct a expected factor the significantly grew sales to X second X.X% farm projections the late in the deal. the has and allocated the positive for dairy virus and These the to quarter in North than improvements support the now of backlog improvement the increase offset quarter. drove trade equipment end the sentiment the demand in of a of year America the drivers North higher China corn sectors. trade Corona USGA help disputes a an ongoing

and soybean passed to Reserve International margins. technology of in increased imagery were market and private to resolution identities, subsidized pressures announce expansion our economic export to and well. for In results year in across unit we're seeing coupled and through continues with Microsoft leader and options as an innovation, showed support input subside growth exports [ph], during pleased a strong partnership see farm Trends perform yield, basis favorable progresses. a to orders some integrated with combination and we short further high saw on large resulted regions. of irrigation on platform industry and which monitoring continues the the and volume finance most us economics a margin income, allow due within in our market well health to market to currency deploy cost expect we also as increases strengthens escalation innovation steel transportation government growth solid will Price machine learning record banking year-over-year an in machine [ph] have as create a have disruptions We will the quarter rapid artificial be with to that higher the pressure the the leader first advanced mechanized of term put influx and primarily irrigation. intelligence and position smart cost been

continues fully relief expect do for response. our We file focus projects. Both President Biden spring resuming The be to while did news executing Zipper Zipper shift-left expect provide the is also have our this road managing funnel we business strategy, now safety and later sales environment. applications. supported has improve will deployed bell Zipper delayed infrastructure increase that challenging similar see see project become operating Road shortly Moving for great projects Zipper after year. basis. recent Road penetration growing in Road office, to further on COVID so well the Zipper additional goal to with the an exiting The Road supports the construction the state beneficial to quarter to package The study and funding lease case of Highways term their our support expressed in did Zipper pandemic and timing we and in but should in England and an desire we potential the a of revenue we a increasing by governments penetration this our infrastructure, road faced continue projects headwinds business. lease remains projects as year-over-year short particularly predict to current pandemic the Road and Road

the I'll call quarter first turn review our Now Brian to over results. to financial

Brian Ketcham

partially $X.X XX.X% quarter and compared irrigation $X.X improved year translation for year increased foreign Total or sales million share good in Randy rapidly million which last per to commercial first Net or million $XX.X evaluation $XX.X diluted during of fiscal an earnings steel the availability steel quarter the totaled the year. reduced markets, to Increase the the from for engineering same prices freight or in of by higher quarter over million compared release all you, prior end foreign $XX.X equipment million quarter a same diluted earnings also $X.X prior compared revenue to of from of were the were this quarter volume; trucking same that in the international and project for share from same per tempered resulted prices year. net decrease the to related included September quarter, last resulted quarter unit million, that Irrigation X% not was compared currency supported million the several segment $XX.X $X.X last revenues Improved partially were to volume. first by the lower material higher of higher quarter $X.X were of did approximately million irrigation the of volumes prior for compared but amounts jurisdiction. irrigation million quarter in sales of offset of $XXX.X costs compared regions, the primarily impact or related unit types in the year. The operating to year. in the million that quarter sales from Thank the somewhat cost of irrigation the were revenues approximately to was of million and the this benefit XX% $XX.X in the same American services income the improvement in $X.XX or to income higher earnings of share resources. rates increased margin last revenues to sales $XX.X for tax $X.XX began in everyone. from of equipment prior XXXX revenues coil XX.X% differences year. $X.X irrigation tax to first compared however operating in Total repeat to offset December. rise effects morning, resulted In increase and $XXX.X in increasing was an $X.XX for to margins diluted compared last year raw X% quarter Market million $XX.X year. unfavorable the million of segment million $X.X Net the per XX% to million products million. by North by higher

of While number orders we these actions a have pricing received implemented to prior increases, irrigation actions to large equipment through these pass impact. cost were taken

the last lower activity income not quarter resulted same The compared Road last quarter operating sales the for Infrastructure in segment in received are We repeat first construction $X.X the and compared of expect in to was quarter and of the headwinds large to see million by the year. the $XX.X system the for from price an shipped. prior margin for delivered backlog cost in segment current to also Zipper sales XX.X% first a increases in other in is revenues the the lines and This year. the our to prior-year. from primarily compared road was Infrastructure same material due decrease prior-year quarter quarter product second in some $XX.X Infrastructure of did that prior order decrease and year. was million lower higher-margin to quarter million XX.X% impacted primarily increase million revenue as raw to to $X.X operating year. orders margin were compared

of flow liquidity; $XX quarter we and representing almost of Turning earnings. a to during balance net million performance free cash sheet XXX% generated the

revolving Our with marketable under $XX of our in total the was first available credit million cash $XXX.X quarter $XXX.X million securities liquidity facility. and million end the and available at

end total quarter almost was first the all XXXX. at which $XXX.X in Our of of debt the million matures

within over of at of of the covenant the questions. facilities compared to debt At quarter, covenants EBITDA including this X.X. I to Additionally take borrowing operator time, would end to to were leverage funded your a limit well of a like ratio turn call the financial we to our the X.X the

Operator

Brian question comes Please William ahead. [Operator instructions] Our Drab Blair. go with from first

Brian Drab

Road the on just Zipper is question First pipeline.

am in give projects us your you latest the totaled year and last project So $XX this as latest large if the look next to the fiscal potential revenue year, for revenue estimate. year in I wondering out million over fiscal what's the you update can large

Randy Wood

Thanks for projects. the classify Brian. mid visibility Yeah I clear several would expect large what this as to year question. We've to

that Road and $XX being of know with were last year million over $XX a mentioned England you or million Highways So project. projects we slightly Zipper you

right cover current project visibility our visibility think have. would Highways that now we probably indicates that that of would about I half England with we

Brian Drab

it you Okay. that overall that is could for project projects range? large any going to in below revenue you think $XX or for be total year Do have million tad that or it $XX the be plus available million

Randy Wood

timing depending the I that it right would million. on think be works, now would above what it booked $XX

Brian Drab

project large from do solid you positive Great and margin business thanks as fiscal relatively account then positive for good then good and pretty the Overall the year? than take year in there be think the but gross direction on on but margin leverage irrigation and side goes next somewhat what in into revenue down that you in business. Okay. that will type high last a here outlook

Randy Wood

I outlook think Obviously after was record two things over on what that infrastructure improved a is much year and irrigation year it in point. last the replicate.

margin irrigation but businesses increase well side. the So operating you the pretty obviously on know, as the volume lower of in side, mix levers irrigation on

the little I where they at margin a margin, bit can percentage we from a if profitability I year. commission last but today remain could be profitability this total So year above on at standpoint, or lower operating think conditions could last be based replicate think total or are

Brian Drab

could consolidated little be you're bit operating was than be could saying fiscal a in margin margin operating it total 'XX. So lower

Randy Wood

the in of mix. because change just Yeah

Brian Drab

it Just correctly. understand, heard I make want Right sure to I

very much. thanks Okay

Operator

come Nathan Our will Jones from Stifel. next ahead. go question Please with

Nathan Jones

Brian's last follow than said be a bit but be year. could clarification, the down last up could Just operating margin down question you Brian and income percentage a operating higher

Brian Ketcham

can having Yes Nathan remain that solid no won't, point. at Ag we we're to this if that with have seeing which conditions through get definitely year predicated a point today irrigation reason year, that we they the I think

Nathan Jones

run its and four little or really I ago, prices spike recall about prizes your how anyway. up which talk five it it takes saw a to you to start long correctly inventory to through raw on margins, months wanted if impact I you bit material steel

terms price quarter And go material recognizing of all then increases have enough put raw plays Have running have the guys through quarter materials to fiscal back really in of increase you forward So or about the price the in have pricing first of that the I you price the we increase talk to how with certainly bit cover that how Can as more we that with you've wouldn't of P&L. thought been you that the recognized, pricing be any two. one you price off steel also go in that do out would would here I already in getting the raw thought worse should next a need little increases over that to increases? or put? plays market increased

Brian Ketcham

our Yeah this in September really order started We availability an picking then on When industry Brian. the steel the so and increases that October. automobile to picking starting steel and flow you of Nathan, is beginning off the taking in last the up saw compare the supply we side. started saw, up I half in think cost really order issue October becoming with in flow that

in steel increase really that So rapid to led cost. the

our increases effect through that program and steel order November. have X the price October end taking of started We went

So just say seen. cost where increase several kind range at the are would implemented today, increases I'd of cover we where that we've double-digit which to price steel we've

Nathan Jones

pass Thanks, I'll on. Okay. it

Operator

Our Ryan from question and next Connors Please comes go ahead. Scattergood. Benning with

Ryan Connors

Couple picture of questions. bigger

ag agricultural Randy be the less share some in First where you you if wondered that that of you could and heard think something more the real give whether comment good market. which they've environmental is funding even Biden but low-cost may other a and the so details be and going you that priority forth, money program to another irrigation on prominently the tilts Have infrastructure irrigation issues. that whether is wallet the to I balance mentioned they towards and administration spend any on equip sort that's of mentioned

Randy Wood

means Yeah The a thanks program think to going the are proven for have customers to your efficient you're to a market administration improve be do significant it on the question to capital Ryan and and to I getting the right. efficiency. environment, very is obviously focus has use sustainability going of where equip the

changes last was investment big the technology of that we've to the the one seen in fund advisor. fuel think I ability farm bill like

support well which also forward with and So to it technology that in will financial Equip will also will going think means I we but save time, irrigation, investments efficient of strong growers technologies more to will we're pivots conversions that excited energy. as include see should aid that buy in into program water allow

forward. Equip a good see as tailwind we So going

Ryan Connors

cost necessitating technology or material increases. these farmers, segue to their sort whether can get in fix price pivot it field. much increases impact to then decision How price of you actually does And talk just that, have Okay. to from equipment base that on of to a most augment what of customer's about whether a big and to put out to metal raw piece sort that of new the top augment and up product and the that of more they new on older technology put in place try

Randy Wood

on impact or technology the increase at in purchases if ad-ons with but quarter yields driving significant pretty of upgrades we versus don't see over as seeing what at in look short pricing a prices look impact decisions you of farm just term, the a machine purchase towards acquisition the even and We that the profitability, elasticity total lot income. commodity maybe add the on new double-digit cost, particularly then and ons of net strength the upgrades technology and we're

having see don't a pricing we through the So passing significant the increases cost as on increases equipment impact.

that's Our more to to that and investments machines their continue include perspective bottom technology they'll ad is on. impact make line, going

Ryan Connors

immediately it's people sort hour, has guess the I big Zipper gears in last infrastructure had part transportation case but from going mind the person a my brought as comment thought Road one lane of home really at time in infrastructure be down least during was if which pretty person been from always the the interesting prominent you to with because am impact country made planning rush a saw spending, quote Okay. Texas to about a question, add every who positive I an basically I picture lane. working And of highway I a talked to and added switching to a that the then a of it

your that get infrastructure know interested angle lower business density spending heard I we to if maybe So does on that of how comment some get don’t for impact you take Zipper but not that potential on roads the Road that or but case? sort the

Randy Wood

continuation see a always all of you I to to are questions work more traffic think life environment and normal maybe whether returns as post-pandemic shopping traffic I at there's are I is a coast to we're going we think we're were what and roadways what pre-COVID there's all stressed the on we trends people back infrastructure our way hybrid about that and starts to get the don't environment going see driving highway, goods and nation's a and again there. and the we see spending. that see in pick be to of the on the traffic to that coast going pent-up some if of moving be to a economy is behind demand to know lot home, new it back look that that up nation's that a be little mix we about commercial environment, of trucks people volume think but is we to There on and going

ability wouldn't business. that that growing growing significant as road Zipper I Road continue Ryan and view a to having on our So impact the

Ryan Connors

and to in. on Got the role it. Very helpful. Thank new you. Year Happy congrats New everybody

Operator

Our Braatz go Please comes Kansas Capital. next with ahead. from City Jon question

Jon Braatz

the of corn of and up and half in have picked improved quarter are You end mentioned orders soybeans grain prices the second further, about November, guys that irrigation the versus half order December even up the or of seen of pace you rates? improvement the see in in XX%. the quarter or or accelerate change have you month of the activity Did an since second

Randy Wood

slow has positive been December, improvement steady of at you certainly end the customer of market indicators John improvement of other if in conditions the led in and last there announcement have continuous it's on to commodity right really each pile prices, lot a sentiment. continued a Coronavirus relief been track that that package top

see we in October, from we our September, did when December. November exhilaration same irrigation, intake look So at order that through

through right that those sentiment conditions, customer we've market So positive the continue seen December.

Jon Braatz

at the quarter? you Would backlog versus disclose Okay. your end at of you the of end were where December

Randy Wood

We end increase December more obviously color end we'll seeing it's over equipment it's of backlog around At and within what some is a obviously picked year-over-year. the just lot was a no. compared XX% of up say it to increase the but year-over-year where we're last year quarter a well but large irrigation

Jon Braatz

in And the the for. quarter, higher costs cost. SG&A in retirement Tim's expense ratio was their was low any on the there Anything ratio color expense then looking any anything than recorded I were transition SG&A secondly, unusual, with

Randy Wood

of there. in of first how last booked cost, we did year. that but role which that we all think Yes for really didn’t was have that transition wasn’t quarter accrual but have our a I the this forward going was We versus year terms COO significant before biggest and significantly incentive thing nothing timing the

we that we was as went then First the pretty low quarter last as grew. year increased the infrastructure business through and year,

we that directed increased related I but first product the the introduced, higher other launches nothing. year-over-year selling expenses of thing in in lot was think we A towards the quarter. irrigation marketing driving that had new

Jon Braatz

Brian was the quarter. in the sort for incentive how of the accrual much delta

Brian Ketcham

would on large irrigation That was a one little up was corporate look Also bit about the majority you that. which of million, at the side. be that when

than half total more of increase. in the So

Operator

Moness, Crespi. Our Chris go Please concerning next ahead. question with Shaw

Chris Shaw

market sort the And market a probably you -- How that up think assume that case different of maybe is as of international or don't the are of I still Brazilian got is I strongly US strong I institutional International more delays excited markets. that is lot irrigation and there's driven. know as is government driven there? are or it I in though? other seasonal the going market would assume Is COVID with was through. because on, markets the

Randy Wood

Yeah.

propped at into it does North I as markets, look think, the America with when and break supply define some you and Zealand, international global fundamentals and And they're they of and And fundamentals we income operate up farm commodity like prices. demand same markets in Chris, what some Europe. like New we markets. more up mature by certainly being Brazil, the Australia, Western portions like fundamentals, of supported then

a saw mature lot emerging business. So, of almost more markets, ones mix have markets. of In we across the project-oriented improvement the those in those a board

Some we've more where price income be supported of that's and shutdown will risk some the of by the and got they've commodity interest more comfortable identified we've be for driven crisis and farm about area than some that projects this investments. net that And seen in will of borders they're an really government countries, before COVDI with. talked

discussion more where internationally, in good projects mix of the sub-Saharan we growth that we was strong unrest that South political seeing Africa fundamentals internationally well. incredibly of and are when more inquiries weak. those we growth in where But The headwind quarter-over-quarter we we see on overlays in as business We're and But the in world. capital world. there area got So the areas. where we look have pretty you markets seeing would only fundamentals. really market -- we've in see saw investment But some limiting parts part not are most really African specifically some

there, but benefit year. from they Brazil. on crops seasonality multiple question have some We having second per do Your

into So they'll then they'll planting, jump have a back planting. growing, cycle harvesting, that's right

So than in we it some we rolling quicker maybe seasonality, there up just growing little season. the northern comes have see the where there is one markets hemisphere in a

Chris Shaw

in international similarly is costs that in the negotiation fuel markets that the rising or with different the of is sort there? NASDAQ handle you Do customer

Randy Wood

process. very similar It's a

Chris Shaw

maybe cost a any supplies, you is else. local some with it water be a to that -- there more state-based whether understood sense decision theoretical, of aquifer of or the -- water something sort in terms any or chance I do more of there of federal restrictions, do the there's greater not on you but I I But Okay. always foresight that? something. in talk is a irrigation be -- have terms larger or that cost about is and there's a off water on maybe And US, know -- economic maybe in could have economic the then, something putting But -- or there effort to and put or for again, any, it supplies guess, Biden administration, don't farmers into insight on,

Randy Wood

Yeah. I would say, Chris, we don't have any insight knowledge, no official perspectives.

an seen. I of in to the lot that area really administration use you answer your recognize a give good nothing that read point that could to think we economic it's to you true remains wanting is question. at but fact-based be about business And water seen a we've water to indicated where when that this the consumed, cost there's models

Chris Shaw

Got it. Thank you.

Operator

Our follow-up is instructions] from question with [Operator a next Nathan Stifel. go ahead. Jones Please

Nathan Jones

XX%. period It I slow you for backlog increase, to the bit pretty a guys. a want is little just on seasonally follow-up guys. Hey,

move where aware maybe a timing anything at terms probably backlog starts. impacting Were by end numbers around. November it on of when harvest are that or the It that of the season noting any buying huge should in of? So, from ended the worth does the be there like backlog take impacted the and to that timing be those we other factors harvest that impact the could

Brian Ketcham

Nathan, is this Brian.

really trying say quantify some know that. shelter farm tax And as the that increase, of there's you to prices the price orders to be, that sure, steel forward. could I One to beat increases. we then, think, pull I of some I'm some I think the buying I came can couple year-end orders, in starting of income, a don't maybe things would think if potentially

Nathan Jones

enough. Fair

Brian Ketcham

I maybe out. seeing year year the a as I Quite starting quarter the lead really think with mean, this more have into to been hard shift second But say. it's think quarter. see times we would are in last plays At the... extend I point, we'll clearly, our out, third little that clearly, bit to a of

Nathan Jones

Okay. Then...

Brian Ketcham

underlying the backlog. driver the order Randy clearly mentioned, it's ...but fundamentals that really behind and primary flow the

Nathan Jones

about Got it. robust mean, better. going in growth double-digit some you big And having about think how talked trying can we the then, demand swings purchases, have through or to technology increases, in about pretty of idea get revenue increases just unit sizing you talked we're forward should as some Are in How price I'm forward we and here go into put better I long some revenue the things double-digit here growth it bleed as expectation? talking actually try of kind before as mid-teens or forward? be of we some price Just an about kind idea give going through growth revenue increases what of business us does take P&L? going this expecting the should

Randy Wood

I be quarter second is Well, Yeah. year-over-year. think, going to definitely stronger

expect price the -- to would the of end to at our full the quarter increases. mid-teens If to I on headwinds project a I subside, year would when received to basis, have backlog orders out estimate close reasonable you the been would were I this to say, XX% is a expectation. of would prior start regards In

second behind the So, that headwind have by the we'd would through time quarter, we say, us. get I

Nathan Jones

very much. Excellent. Thanks

Operator

with Baldwin Securities. Anthony ahead. comes go Baldwin Our Bill next from Please question

Bill Baldwin

Thank taking for Thank my you you. question.

housekeeping 'XX couple fiscal at have questions. time a this Do a of tax rate you Just for rate? projected range or a for attracting tax

Brian Ketcham

the Yeah, little for XX% be, year a the the year. Bill. full bit What puts expect over XX.X%, we which would would balance for of us around

Bill Baldwin

ongoing Okay. projects the for do there? you current or have expenditure any And last capitals what full year are year projections particular to similar your

Brian Ketcham

the $XX million be for year. Expectations to close probably would

Bill Baldwin

road pretty a internationally. color wondering business, products, -- it cushions, and/or how your can currently that offer on, got business plans many looks then, in are what operating safety you've that your some like in what your for what lastly, what's area. road guardrail, your Okay. line zipper just your And And you good domestically and going product infrastructure on you're your end non doing states I'm are you up with

Randy Wood

replacement The business to over activity road a Yeah. both last really crash couple of around got as just business you a new in Bill. product refresh went But well. mentioned, Yeah, Road standard. Safety we MASH tape Europe, years update business, full through construction is or to driven temporary products the the cushions there we've as the

as to we seen, in bit that we This So, little have that is that received of started think that good activity and most safety tied in most product quarter, some to of marketplace. some which And made pretty process, see products. the products I safety very said slowdown that's we enhancements think part a we've construction COVID-related. road been down in we've were recent really the the road growth well

Bill Baldwin

of or in operate you have in or lower XX should, the the to currently domestically? to expansion do states most market addressable want I room here for operate that the in, say you You states

Randy Wood

the don't it's states states. other room There's the get, certainly I be always operate the It's states isn't in. is you some that not, going Yeah, on. to exact certain number into focus there in that just we It's key off the know but business incremental states. that want to to hand, much as we expand

Bill Baldwin

from of infrastructure business if type non-Road And the products, what comes Right. this, percent, road Zipper roughly products? your disclose safety you

Brian Ketcham

year. Zipper. broken Last the it than has XX% of the non-Road in business strong past year out more was very been but Road Zipper haven't We it's been

Bill Baldwin

Right. good. Right. Very Very good.

your much very you time. for Thank Okay.

Brian Ketcham

Yeah. questions. Thanks for the

Operator

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

Randy Wood

continued first of second you call. to forward interest progress quarter you quarter. much Thank the our look does and participation on for your following earnings conclude 'XX our We This today. very fiscal updating our close

Operator

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

may disconnect. now You

Lindsay (LNN) 7 Jan 212021 Q1 Earnings call transcript