LNN - Earnings call transcript Q3 2021

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Operator

Good morning. My name is Betsy and I will be your conference operator today. At this time, I would like to welcome everyone to the Lindsay Corporation’s Third Quarter Fiscal Year 2021 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. circumstances, call, risks make management’s and estimates future this are statements current During performance of to Company subject uncertainties, economic Instructions] management results. forward-looking may that beliefs, and [Operator financial conditions, industry which reflect

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

for protection XXXX. the For contained would forward-looking event these Harbor claim Wood, the Litigation statements of to the call the Act of is Mr. Randy statements, Please President Securities Private turn I to now like in Safe Chief we and Officer. over this being Reform recorded. note Executive

Randy Wood

good earnings outlook everyone. quarter it our third share Brian third morning, that channel of Brian today running partners is some our to key to call. our particularly market teams results. world review before on our our our on our me initiatives employees keeping users and support Chief the continued Officer. acknowledge quarter Ketcham, Welcome and opening turning Thank Financial I’ll to With you, over and to those for our their every and the I’d day. global around end manufacturing through pandemic, thank factories are customers and like comments

can roles have performed remotely. be We for our that work-from-home maintained option

extraordinary We productivity be under our circumstances. to continue pleased the with employees of

collaboration, return-to-work the committee the our plans for recognizing employee-led productivity, help employees, an Future of in-person will office more structure flexible potential of created have safety forward. culture, and importance environment. a our the We to define work ensure going while

manufacturing. to Moving

increases safety, capacity. in constraints strategic operations our make impact function the Material to to productivity, improve supply global to continued continue chain business. investments and and We

our in in historically a the driven leverage unemployment particular, and Labor some rates wage production take maintain and market increased able offering talent Nebraska competition strong low in USA advantage We have and labor. of inflation global and to to demand. sourcing been availability have for

cost the a increases monitoring make feedback pass-through RoadConnect seeing software hardware This to create the network a many for We launch in assets positive and infrastructure continue area commitments pricing from safety and of environment pilot the our of rational space, is deployed in more the the In segment. on In our have our see of social from to environmental, improve ESG for and industry-leading Department U.S. than FieldNET good XX% leverage platform of innovation, roadway customer we’re market. in progress Transformation serviceability, and governance, that of across or continue initiatives. to or the the we districts currently platform,

and organization reach and the underrepresented significant equity of in Over strategy’s inside most great largest on recruiting our created diverse and of XX% of group and to all and This diverse. our groups organization. expanding individuals talent than class more involvement a across has into effort increase training development, XXXX community inclusion genders our program. is This females purpose and management, our diversity, focused global ethnically we proof XX% our and energy summer, Our are and representation the welcomed point businesses. internship

talent future quality the able industries the of Company we’ve and with our about attract. optimistic very our of to We’re been

Commodity uncertainty, created And some across drought supply has strong temporary across recent activity remained Strom the active. and been [ph] Correll conditions provided of to light market country this some remains year. Western American high, the have Midwest although rains have portions relief. spring prices projections through net the the irrigation remains and Turning market income environment. the season. farm key and North selling very

continue now. In to market in extreme see current Our drought mentioned markets, projected thoughts footprint we and very difficult Plains, demand. And we’re mature markets. in our conditions international and are growers investments as making West dealing strategic who’re strength with earlier, and the in sustained global with both, right the supports the irrigation that to Northern capacity developing and the increase

in strong will into market, growth. for specifically U.S. than escalation the support Brazil, opportunities we quarter with a here very the versus in shipments to continues year in the we’ve a QX. backlog some be our This Turkey and where investments Additional rapid market, the been has competitive cost doubled that China of see active seen and more going prior very same Brazil

to to business equality. continue region. and Middle Transitioning Africa the manage We support actions East, capacity to pricing Europe,

with in that awarded million been June, have to XXXX. fiscal Egypt a conclude second quarter in began expected of shipping We deliveries project $XX the in

are our and win our this customer. competitive global We growth We are compete in expectations and positioned meet geographically of in to the and this long-term timing strong strategically business. the market for volume leveraging well see and region footprint potential to project

Moving to infrastructure.

slowdown temporary government Following activity, coronavirus efforts. last record as the a to business priorities shift in has infrastructure year entities experienced response project a year,

are fiscal those in levels. see enter delays. returning expect we’ve As continued Road to strengthening million due see in we as move XXXX. are approximately the year construction to Zipper out had to previously and the communicated, safety business, season projects We XXXX, more still projects pre-COVID close These COVID-related fiscal active, very U.S. in of $XX anticipated projects road regions and demand we

in roadways baseline The $X.X There markets and pedestrians. week, policy and at includes Last cyclists on many projects progress announced had an in mitigation, the change, dedicated construction limit investment $XXX the major The investment climate since roads, bridges, for safety. interstate safety highway federal bipartisan resilience, been system. the framework to above several agreement bipartisan of single bridge reached vaccination than that in and users, continued been all represents equity billion focus potential slower framework have the infrastructure And including it was trillion. will funding largest it growth potential valued package for more and the plans. Although, over on of developments a parts international infrastructure world.

now we to will positive for our package call work products. turn our the infrastructure to Zipper, still third tailwind review a Brian road results. create this including and new there’s the financial over I’ll safety, business, quarter expect Road to technology While do,

Brian Ketcham

Thank increased the North supported million quarter higher the same from equipment and year. The sales you, third XX.X% $XX.X morning, irrigation There $X.X to to of did by in share for same margins equipment of segment sales or million, irrigation months that implemented as not for million operating in of of prior volume of or $XX.X year. other million the segment primarily XXXX sales international $XX.X irrigation were quarter America $XXX.X was compared to the offset multiple $XXX.X combination third from to volumes Total increased $XX.X the the the fiscal currency million in year. year. year. per last last margin the This the $XX.X most $XX.X America, third of resulted $XX.X irrigation The quarter And markets, higher volume for by same operating year. price $X.XX and XX% diluted a million sales in compared of repeat. $XXX.X Irrigation increases being the costs. million were of Improved the markets. or improved Total quarter million increased of or quarter over the million XX% realized. XX% irrigation compared revenues resulted quarter are the good for XX% past the or continuing last to year. million or compared prior international higher to compared higher to million, compared was headwinds compared $XX.X North or year are equipment diluted quarter revenues margin share Net and partially XX% related by increase Randy, In impact revenues quarter XX.X% same million higher increased revenues sales increase also $X.XX several quarter $XX.X was compared impact average of the to an partially selling a income earnings material to $X.X per to offset lower raw engineering prior earnings services favorable prior a of million increase $X.X million everyone. million was irrigation prices. translation of in approximately foreign project revenue increase diminishing and In of last same year. net last the

also large we mentioned, have have in Randy continue Brazil significant orders. will work do experienced cost that through compressed as as so to However, backlog of increases margins and we a

margin XXXX year. quarter through to first quarter or million and $X.X project the the $XX.X this to of quarter realized. operating the Japan $X.X fiscal XX% decrease same segment higher while quarter prior price this fully take the last lower lease XX.X% by lower to margin were to million order. safety Road $X.X the quarter a revenues Systems quarter and in to operating was did and any Current road for time, to to related the Road highways for which We The call Road Infrastructure in products. the increases margin reflect year, XX.X% million mix significant the million the included the decreased Zipper favorable segment Infrastructure sales year. The England of with prior offset for compared sales of your questions. coupled was increased third million not are until to like from quarter revenue At sales to Zipper the partially income same third less continue last year. compared sales, current in $X expect compared over have results of pressure of over compared turn revenue resulted sales year operator year revenues prior the I’d Zipper

Operator

momentarily time, now We roster. At Instructions] question-and-answer the our to session. will will assemble we [Operator pause this begin

Our Connors go with & Please first Scattergood. Ryan Boenning question from ahead. comes

Ryan Connors

kind if talked that’s of little remarks on wage prepared touched your the you that pressures sort expand and issue little seeing labor-related could and good more issues. so a on I an about detail you know of lot little attention of nationally, you that issue I on front? wondered people bit bit an give the you in and a received time actually just that’s a forth. what sector Can a a manufacturing keeping having you’re on just hard expand

Brian Ketcham

is Yes. Ryan, Brian. this

with outside I the the help with also as we’ve adapted last overtime think demand rate -- bringing the mentioned, early on, area we’re fall, we more picked up as wage from think increased demand. I recently, in And what increases. to workers of and

wage effort retain in And an to our have be to our Lindsay also would increase part like able of reduce this rate and We plant. is to recruit but both implemented a overtime levels. people,

say is been lot other of challenge would has ongoing I a an So, as for it clearly labor companies.

Ryan Connors

obviously, the -- to other the from has with, on with it next, I growth we think, And I are just the question. to dynamics just commodities. secular week there’s do like but ag cyclical Okay. mean, obvious varying my question got seems And then the the opinions are important. in drivers, you’ve commodities where and always one

just I I’m dynamic would be what commodities power deep enough a of the even cycle your downturn? pent-up you and off kind keep coming going, so, Just opinion curious it bit? down And such staying on kind little of your relates things helpful. protracted mean, to settle think has, of to especially is as cyclical of demand view a if there of that

Randy Wood

this significant be ethanol in now. And on we don’t demand fuel may drivers, renewable significant. standard of But got Ryan. those going that and good question maybe farm demand, This really us. or morning, try investors simplify ask I of is lot not shifts we’ve assessment. any we some drivers project a and and I stability down movement really on And supply were side. limit, soybeans stable simplify lot, supply. a limit that that’s acreage and right really to some ask what surprises USDA’s near Good of the demand it bet. really in There there a support took lot demand The net what’s only from a the to This obviously right is see yesterday. income. is is to ourselves corn and yourselves upper now we report then, try yesterday You question Randy. price And

disruption shorter expectations. if as fall. than see higher sustain going short-term crop So, harvest is, crop be into through it season we supply to get prices to we the this in the only potential is the that’s And new going

to fall today, the what So, And does of to and look year’s I turn and the spring to back that’s fall crop going crop our the think, in into then, going confidence ground and sight line intentions season. we’re next build next planting selling the supply situation like. is right

market lot So, in I what the can confidence telling we the us. in term, have short indicators think a are of

tough be those indicators know watching to both and if to assessment. supply multiyear make to to it’s have that, or not. a this run that demand Beyond going will continue be We’ll

Ryan Connors

regionally, then, U.S. last one, one just And Okay. the in

you on of well, or in think as it where some just U.S. kind did us briefly kind uniform there? is just this I give a board real of regionally the can you’re touch seeing but on you granularity the strength any more color across the or

Randy Wood

There aren’t We’ve strength would lot the and are of right Ryan. got patterns data now. say domestically a now the all, right almost internationally at we that board in interesting across

it’s a nothing be unique we position that can in. interesting So, fortunate, data share. very there’s in feel to the We but

Operator

comes question Blair. William next from Brian with Please The ahead. Drab go

Brian Drab

the obviously customer lot you on say of the who a security seems Egypt pandemic. food following Egypt? Can So first, in on like Egypt. is focus there’s It in

Randy Wood

in being from and see do We Brian. the driver customer’s right. you’re the region perspective, market certainly a confidentiality positive some Yes, that

that wasn’t the into say private But, We So name we specific can’t yes, sector. it share can’t client. can with the we you.

Brian Drab

the And it’s say is or whether that or any can the customer customer you that serving there? not same it’s same comment Valmont

Randy Wood

cannot, I unfortunately.

Brian Drab

-- is a this could -- whether completely say you competitor from business Did that project a you you... you or won new Okay.

Randy Wood

we market can that the in this a that was tender published tender was say victorious We a on. market that were

Brian Drab

the consider then, obviously And irrigation, a just comment to year-over-year, in little I is about increase guess, and to to other the this or lower related sequentially, it’s love I one, know In XX% just that a fuel to there? any but huge think it. hear incremental on historical. was factors answer prices margin than operating XX% I’d I

Brian Ketcham

side. Yes, Brian. expect in the would during we I quarter, America, would say, what margin close the to North we got incremental on

seeing really dilution -- side, we’re of right Brazil. think more and particularly is the in mentioned, international I we what as on now where the

bit in a XX% XX%, on think on it to range at that quarterly actually little look above basis, you were look XX%. QX or incremental a I If QX margins a

progress a price capturing the So, we’re making realization. in the U.S.,

Brian Drab

Brazil, you steel said, it all wages -- sorry, primarily or or In is is of if above? the it it but is

Brian Ketcham

that process from It’s all that’s about quote unique subsidized financing. into quote take thing can the government we the lead from And delivery the is different is that six can a that quote go it’s the when that anticipate obviously the of order of to than We to are approved and be similar in the of than delivered. with gets until project the months just backlog first the quarters it above. steel America. Brazil that’s thing. in doesn’t we margin U.S. big at -- it again, costs where Brazil, financing. time when And whole the other just saw causing We Obviously, as large to what rapid to -- because try couple the what North seen, volume going compression we’re in costs it’s experiencing delivery time. in But we’ve increase

Brian Drab

the XX% price comment of associated were can to with contributed growth And price? growth How much many points Okay. in you how then, on irrigation?

Brian Ketcham

XX% Yes, year-over-year. roughly around

Brian Drab

just last, then me replacement And quarter? figures conversion do mind you dry the Brian, Okay. the land in giving

Brian Ketcham

Yes.

increase about XXX For to was land year. replacement the was last quarter, XX%, dry is over up XX% a which and Conversion XX%. basis-point

Operator

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

Jon Braatz

Brazil On the the business, was international of obviously side strong.

this sustain see to other you ability international see into next we’ve about the non-Brazil Brazil? order itself growth bit funding gains extend the beyond? remaining of But, You of markets the the year do in that place the maybe Do relative and can strength in And the financing to markets? those seen sort year you nice got from a talk of sort of a little Egypt. and versus you

Randy Wood

all And one, the in significant that take mentioned lot markets. the Jon. the and it often I’ll we show there our this there really we that trend of and world. population that The Europe. comments, other. reasons. impacted New mature We’ve around driving differences markets different are prices a Australia, in when growth seen, riding look we’re some unique those in trends, drivers those mature the it’s mature the security project-oriented than and for longer in business food commodity strong certainly is growth more of between aren’t and a the markets; markets international position Brazil impacting like we term one issues, Again, Zealand, are developing look and growth trends at aren’t those are our And Yes. data developing at where or Western

reasons, are those And differences sustain now. or again, continue different seeing We So, sustains are don’t that a and going see markets. itself in good of we’re drivers in growth those market for to increase? long growth to those. right lot see all we How rates of long-term it interesting

So, predicting slope long-term to internationally. do and right or in increase/decrease the difficult we rate and the the is both, the growth of potential mature whether will believe but in maybe markets the now, line do the developing

Jon Braatz

backlog Brian, the up is rather significantly.

issues so Is the of did some mentioned or and issues much significant? You on. those an number? influence much it how supply backlog impact How chain

Brian Ketcham

backlog regions. backlog is But backlog but in or like obviously domestic the ago. was say to delivery wouldn’t end related it’s at the spring In a at what up the the Egypt increase both backlogs are the year is is have more the I up Brazil, that when than because season, anything international Jon. Lead but But -- is up. we international Obviously, it North all still of up $XX look constraints selling of the double project. times America, extended, and that, million biggest year-over-year. of

Jon Braatz

maybe are year now times versus lead Okay. the ago? How extended a

Brian Ketcham

in getting are time shorter, frame three But think I think five U.S., longer traditional, some seasonal again, lead drops the of so. -- kind volume lead the as obviously, you the or could go In times volume mentioned, six say, four-week there, as more Brazil, of let’s times or the that I to I off, months.

of it different world. the from varies So, parts

Operator

The go Stifel. next Nathan question ahead. with is Jones from Please

Adam Farley

on Nathan. project, shipping evenly is help I us with in it ramp morning. wondering should cadence of it the be up Farley to going Good for split? June Adam starts was is Egypt This the it more you could if once or

Brian Ketcham

the Brian. heavily quarter, of would quarters, spread the probably really $XX going fourth is million This project about this three think XXXX with the over more first remainder second quarter. quarter weighted it to Yes. I way, to next

Adam Farley

the to when maybe provide project And to infrastructure Thanks. you Road then, to on additional color any funnel begin you the just convert? some business, could update Zipper are over think shifting on and an projects going

Randy Wood

You bet.

We’re Left still very projects pleased Road in we’ve into strategy the that Shift put deployed and the with we funnel. continue Zipper, to

through growth funnel. manage We tricky funnel. And overall. as the a is slight total of in part the projects of we’ve stability terms continue And exiting and we see to dollars, commented in lot we our that couple do of opening, we’ll we year in had have exit move fiscal to projected fiscal we specific have confirmed very ‘XX ‘XX. year would ones a that now The

So, ‘XX an expect then, ‘XX to have any that being with deliver new coming deferrals we view in project out, and generating there and important as well. those business been we year as

So, XXXX us. year will the be for key

Operator

[Operator Instructions] from Crespi. Monness with Shaw Next Chris question comes

Chris Shaw

getting all. of still Road and just to the because sort slower on know it’s -- COVID just about construction projects Follow-up of been other the back piece was infrastructure, ask Zipper, infrastructure, I but it’s back after getting that highlighting of going I the

is until still doesn’t curious But or expect guess, and funding on safety would is when matter projects was you’d actually a products I sort get spending take to next there are while or to spending of everyone selling much? in well these or or and to we just decision it’s law going is any bills and I infrastructure the So, wait dynamic on -- and bill that gets this as that around XXXX. piece decision a passed you the be see, going projects infrastructure to for backseat that year, that -- grow or available, that

Randy Wood

coming the getting season, our that And tenders is off defer, people But conditions sometime enough along notion terms money there’s returning combination program both. demand of now, on until in Yes. being to of future, right there. work. money there’s And and delay funnel, normal Chris, money let from talked freezing. natural view getting some There’s in market is of know -- that the a work you states and money construction hold back about might done, the here the previously to you we’ve if the projects in some

makes there that funding be the to could that be money happening market through of approval and is in now. right freeze because but fund view plan as process, and system an So, its enough being to there the element as made impactful upgrades way significantly don’t infrastructure need other we the investments the that

significant a So, assume. not might you some market market. freeze be as in There’ll activity the

Chris Shaw

sides anticipate would Zipper safety of of next year? and the both infrastructure you products business, growing Road So, sort both

Randy Wood

complex speed those drivers more and projects. pedestrians more increasing footprint, not terrific still obviously, cyclists, and going and There’s for a to implementation. that capacity there’s And view focus When infrastructure are And we’ve positive they safety to do got are application turn solution and carbon projects got for up product safety Zipper, market reducing that. it’s the on to of road Zipper see the they When those. is longer safety for We for going an both. Road and going that. term, we’ve money. quicker. Those for fit Road on little business be focus a our a

increases infrastructure spending Safety different So, Road zipper view time and and as the on we Road good think any infrastructure a potentially obviously in a tailwind we but business it’s reasons do lines, for whole. different from impacting do for both,

Operator

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

Randy Wood

your to the expect business, projections to security sustain prices strong remain a population will business. irrigation and We international our income growth today. and food participation Well, mature, farm the growth in optimistic and continue tailwind for the we about will in continue again be and commodity concerns markets, potential thank project you interest global established

a that technology with and We’re footprint to and markets sustainably, efficiently access uniquely growing more that platform operate a allows provides strategic and global innovation manufacturing to all growers commercial and broad positioned profitably.

in we segment, to see a American recovery regions expected international in to infrastructure other North Our market the safety road show normal XXXX. with return

project solution transportation Zipper have headwind differentiated and due to While traffic improves short-term very lowering delays, quality. a that still emissions faced highly and air we’re safety projects positioned with mitigates Road well congestion, specific improving

the technology for penetration and our New infrastructure opportunities infrastructure package additional supporting look fourth fiscal progress, business. call. XXXX updating our Thank investment This create third We continued you earnings following forward to the of the pending quarter concludes quarter. tailwinds joining you on our us. close

Operator

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

You now may disconnect.

Lindsay (LNN) 1 Jul 212021 Q3 Earnings call transcript