LNN - Earnings call transcript Q2 2022

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Operator

Good morning. My name is Sarah and I will be your conference operator today. At this time, I would like to welcome everyone to the Lindsay Corporation Second Quarter Fiscal 2022 Earnings Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions.

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

Randy Wood

This not to Thank these a the today you deeply saddened and having around while crisis crisis XX, feeding profound our and Chief to On good and recognize second we in highlights unprovoked world. Ketcham, between March addressing decisions the are on Brian by call earnings morning, Financial me humanitarian of everyone. the announced machine With we and today's Ukraine. I'd play Ukraine conflict and and for like the that orders business Welcome our align growing we've will in business impact results. many Russia open new activity to in purpose the call. Belarus with We're suspended our invasion events Officer. quarter these the is accept world by that delivery making also role markets. conflict

than as total the Ukraine goods market and revenue in We represented both to combined persist our The revenue. we not historically also region. for currently has of expect disruptions significant to less this Ukrainian are able supply will X% Russia

facilities comes the create global soon. to The our pandemic by our the hope remained Our and thoughts this and region operational. crisis we are in All business to impact quarter. continued peace challenges impacted those with

due was ship were produce to model resilience facilities the we two However, the CDC report XX% Based quarantine and subsided impacted We years. the December-January spike on and have disruption test or At we United X. now and our quarter. upwards workforce to as mandatory in see ability revised at we guidelines, the of times, for a in periods. the are quarter of variant our by restrictions and timeframe has to dealers in on in levels did end. focus Omicron lifted a around to significant March normal absent positive a availability that in past our under the Nebraska to and employees labor their officially pleased the we This back surged. we our work hybrid staffing the all ongoing again thank States offices world over return But

constraints freight, current base and the environment. supply by partially chain continued fees increased offset pricing. seen to additional create outside impact We've expediting and have business. operating expanded the costs to Supply for that an establishing headwinds Turning logistics been have

We of expense Lindsay, consulting of quarter. million manufacturing approximately also implementation tied accelerated the had $X.X in that a maintenance at strategy to the lean Nebraska and fees our the factory nonrecurring

to have meet resource our our efficiency. and forecasting seasonal and the respond manufacturing and tools planning by tools cyclical of includes inventory maximizing journey begun allowing labor expectations planning improve to and and nature lean continue new capabilities, business. We implementation a of processes intelligence to to customer manage that position our and that better enterprise This to ability provide system, effectively artificial more while accelerate several supported us us footprint the

learning that efficiency. reducing manufacturing for digital utilization already continue customers' time opportunities reduce were saved crash allowing impact allows to combine new confirmation tools received by with a pleased and our visual safety and an the roadside increasing emerging market Payver cost of the cost minority crowd-sourced platform. notification alert capacity, them from and an This us create implementation a and will will strategy real-time to investment users lean the allowing and roadways. leader partnership expand in In RoadConnect received assets view around has groups. global partnership announce growth area to the connected of this and to Blyncsy's to near innovation, our while image machine their an they capitalize strategic respond strategic before system platform testing, ongoing gain in In maintenance Our from on of world Blyncsy, remotely we with artificial Lindsay's and our their intelligence

to RoadConnect creation exclusive that market. of emerging this Our features differentiate investment the in support continue will

increase XX% weather irrigation currently projections monitor moderate conflict and to XXXX Russia, is their income experiencing America, and released over by drought $XXX markets. to currently in and is ongoing suppliers and job key Ukraine the net North the in global indicates to exceptional Supply the to of USDA The wheat market to February. in billion. Net X.X% income are the corn Turning cash projected dry conditions. impacted where country projections South U.S. by

is includes Zealand, Europe have to also in we've and prices, including spring are partially in decrease dollars, their Australia, to the drivers weigh X.X%. linked positive billion going see we Western Central markets developed strong by The and significant shipping costs, by offset concluded East decisions our and economic strength This fertilizer. Increases increases again including once projected haven't In developing of middle we showing cap Egypt, as set of signs market into records or market and Irrigation, XXXX customers shipment in net million $XX growth Eastern their This could by project. supporting optimism farm diversification. be security season. where who food in the in $X.X to However, quarter. fuel International of Brazil, continued regions, forecast inflation-adjusted the where same and project-oriented inputs in commodity income created are operating commodity prices the locked Africa New investment Europe,

be February food that to positioned Russia late in in to plans Sisi win government by by response X.XX risk local project region. and the in Ukraine, production caused over the important security wheat markets to years next his to acres and additional two the wheat President imports. for for Egyptian in expand compete conflict announced continue two million this well We business

the On and to of Act Moving Funds Appropriations March the the allocations bill. infrastructure infrastructure. were investment first XX, the with Jobs Omnibus XXXX of signing approved

construction We expect at we projects approach the of as the increase to state see season. rate the level summer

the back are as We the cost in and have and the impact the construction labor of increases labor availability. their constrained by scaled monitor be observed tailwind rebid well due commented discussions funding. sector. quarter. did inflation continuing as and to funnel with the be second last roadway Road our any positive we inflation bidding a see see upside Zipper supply we but in projects exit sales not or could between projects significant could Consistent Overall, constraints Customers quarter, to

second and we results. gaining to do we review present projects turn customers Brian with slowed traveling and close financial in half the we as speed see expect being get second over to projects markets However, back of to our to the that project serve. are call robust now The had in deliver year. the now remains quarter and the funnel Brian? I'll the

Brian Ketcham

in along input year. XXX% $XX absences, unit quarter in The been prior Nebraska the primarily million quarter. million year from the year revenues irrigation markets, the would volume irrigation Total increase year share large compared prior the earnings XXXX sales revenues $XXX.X prior XX.X% compared selling to prior operating Total North the the the caused operating unit revenues sales quarter. quarter increased due of North million, an million compared per XX% higher resulted Egypt. by The year-over-year employee and revenues net share higher million the unit partially segment the quarter America selling increased international for irrigation the for facility. higher or quarter employee to prior to fully impact year In year. Thank million also from and was second XX% prior increased to in quarter. project to of America to shipping year in $X.XX the prior of to costs more segment revenues not sales $XXX.X of quarter. lower similar capabilities you, irrigation the on the resulted the revenues earnings second and million of in XX% $XX.X average of $X.XX impact in in compared or to was of sales increased primarily higher of while higher higher diluted in of morning, offset volumes of sales million margin that $XXX.X prices. compared was impact XX% prices, Without to increase a per $XX.X compared everyone. $XXX.X increased And for increase completed income XX.X% absences disruption by irrigation year the the fiscal the sales with good for the quarter. production year have to recovered volume prior Net pricing. prior second XX% were we deliveries Revenues The to compared by international to $XXX.X irrigation quarter. tripled quarter increased Randy in the compared quarter of $XX.X was Omicron-related Irrigation volume in to than second Brazil million diluted final our

of $XXX,XXX was System lease due compared offset higher quarter. safety sales the road XX% million prior reflect resulting overhead in nonrecurring This and services accounting in to Current in from second Zipper approximately of quarter that the costs. projects inventory products to values. segment resulted $X.X quarter. the revenues results inventory, outside than sold under material was in and Infrastructure a the quarter Road segment to million, for operating compared recent recognized operating million by year more lower Road delayed which quarter method cost goods projects. from impact Zipper Randy results The revenues of by quarter. sales and to of $X.X year related $XX.X Second was from under $XX were of prior the compared expensive to year for also LIFO impacting partially second are Also income the costs higher-margin for million, maintenance to prior more million factory decrease of lower the rather absorbed referred and decrease raw the were reduced decrease consulting revenue Infrastructure approximately quarter earlier. $X.X year ending expenses

Turning to sheet the balance liquidity. and

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

total all XXXX. matures of of well the were to the X.XX At questions. in the operator to our financial leverage we debt covenant this like including of the to was of within which end compared quarter, million, turn a covenants of Our second call debt-to-EBITDA ratio facilities, $XXX almost I'd a At limit time, gross over your to take funded the borrowing X.X.

Operator

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

Brian Drab

taking Hi, good morning. for my Thanks questions.

wanted infrastructure. to I start just First, with

it that in picking in sounds you on think fiscal of the What of that? Road second that second So up? have like how picking in Is about still Zipper pause year kind that should terms in projects, of do half or this we confidence quarter. up the was

Brian Ketcham

the of feel one, the to Yes, And make line to that would a of in the point, that, of got project both is size. say I And What One, second we'll this year. say, see that I half I projects. gone this couple Brian. through we another would come medium optimistic we're continued a can of those is pretty we've of as through say sight have we've year. progress larger at

Brian Drab

got it. Okay,

visibility fiscal Okay. that for 'XX? in projects any beyond And larger

Randy Wood

of this 'XX, visibility have 'XX, Randy. do moving Brian, is are projects the Yes. that through funnel 'XX. We

funnel, of the these part the And long-term through advantages implemented the is tricky move is shift-left always And that here, projects you've of One the better when. strategy we've visibility. seen historically.

others. faster Some than are

at through making think that some Infrastructure customers and appropriations. got these in Act. we've decisions some We've table that stability We're decisions working able the now to are being made. the got I be with again

do several of key long have do on and that we of we a good 'XX, feel forward-looking long that projects 'XX we'll -- line be in line So sight periods. sight

good feel So and the the Road some opportunities Zipper. long-term for about funnel of

Brian Drab

model causing that the timing And try model second to a explain you want the more here the half because Okay, or those -- got topic the back I well go margins. us to factors? in what's of just is the on infrastructure to it. then And it Can for obviously I just one detail pressure the and little didn't very the just more what is year second stick help there maybe quarter? for for of

Brian Ketcham

I quarter. Brian, to single of be driver Road the think projects Yes. the the biggest lack Zipper is during going

the Zipper million So $X margins. roughly pretty that's high in down revenue quarter and Road

quarter, have we we during year, the our have some in -- business last customer this don't which So year. did we Japan with

single the view say significant But operating. business, the over in that's Road going I would operating be course So the any I biggest would quarter. have that's the say business forward, margins XX%. would margins year, issue normally our of been this above we in still Zipper -- where without And the

Operator

Our comes with next Gabelli ahead. question Kearney Brett go Funds. from Please

Brett Kearney

Hi guys, taking good Thanks morning. questions. my for

wanted with Just kind up opportunities to of them? and Lindsay, the the term, for you that both the and that you think evolution ask partnership partnership of kind long collaboration of opens

Randy Wood

on out cost. a a fit. running Right you And And have at you've now, somebody control across that to when at at that to some or you asset can to We to we it, monitoring to offering, came roads parts a seemed if natural roadside of back. send like impact Department it two trips might center got imagine that really look look an out and expand view this you're And see take you and look asset. to a have you Transportation, their in that's technology three innovation space.

to ability incredibly the platform. the was an powerful So to pull image in an addition

now you impact. the So see

these up by day, You services They're image an all these -- in night real-time on highways that are call them pull all near pulled can ridesharing from long. we images. driving

now in making into decision got image going the lot pull I'm to going to and information the who on available platform it to them. the I'm person to a ability the time, So deploy, what real deploy. that pull They've more near

the good line, and excited So we it fit seemed in to by what wanted we product a the stake that were like a natural a have we extension of saw strategic game. enough

development will important So get drive It us some that will the some in to allow for investment exclusive pretty areas features. platform.

of going good So it's that we very one shareholders. and our is and think for proud relationship. We're customers be to

Brett Kearney

Thanks. Terrific.

Randy Wood

You bet.

Operator

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

Adam Farley

for Good morning. This Farley Nathan. on Adam is

Randy Wood

morning, Adam. Good

Adam Farley

expect up For your the do made North to 'XX? be quantify that Omicron fiscal first -- And quarter from XQ you the that Could wave? related to deliveries in were to the made you in able America irrigation. be

Brian Ketcham

you Yes. will that translates we This million be quantified the that roughly is Yes, X% that it's in we probably $X Brian. And was expect it, $X down said to third fulfilled -- And is would quarter. orders million in what the if those into. quarter.

Adam Farley

are the on expect Or the And expect any would that months? over comparisons then this international, business? we XX replace with see conclusion revenue of the immediate should to projects, next negative there Egypt you projects to

Randy Wood

Yes.

probably opening and right I part a comes or country there has and a Russia now your deliberate mentioned them about precarious you definition their think position. Ukraine I And wheat are wheat XX% think of And of the President willingness need if to the you're the question puts production. key that there in our like opportunities. from in invest is in Egypt, it the of comments We visible very several immediate. been Sisi

are So products matter ongoing they timing. some timing. now I think get other going and specifically, Egypt to got start a that closed, of investments. in visibility of, we're projects we've shipping. There's we do it's When funded It's that region actually competing the for but right see just

million a of to bit see is we be vacuum a to back of So a replace. end project could on project, Egypt tough $XX the going

going gap projects more sales So irrigation going of see expect drag funnel through longer forward. come and there. term, fill do we we But are to that of bit see those we could a a the

matter of a when. Just

Operator

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

Jon Braatz

questions Brian. for you to sort the items. couple the morning, that that of cost Do of other Good the and -- on incurred in non-recurring the half? Randy, second things quarter continue A maintenance expect into other you

Randy Wood

forward. were those that Yes. onetime to we carry not of nonrecurring Both Jon, we not. were expect events would

Jon Braatz

good. Okay,

can the you Brian, can the was contract in us contribution you the And what Okay. -- quarter? Egypt tell from

Brian Ketcham

$XX is what Yes. we quarter. during revenue the million It was booked in

Jon Braatz

a Okay, describe strong Brazil maybe help What you can country? penetration little good. very pivot on the can if that can irrigation a center have bit If it you U.S.? relative to you And kind seen And growth. out then, has in the very, us Obviously, with Brazil. Randy, of -- that.

Randy Wood

where terms ago both weeks have were as couple don't a and of one potential, of exact Jon. but working for world one I larger I -- in teams of tell fact-based for customers Brian right foreseeable look water, with you, to number, do I put the you, capitalize because opportunity it soil, I a on we distribution And an dealers share our number, in and Sure. for that the you, productive some percentage when number in we unfortunately, we the of it I definitely that continue us. key our one larger future. with to investments continuing there do Brazil mature is of in make I or we make can see growth significant we quantify see can systems. can't can availability sure But at and know good capacity markets our and a it's now and

Jon Braatz

Okay. you very much. Thank

Operator

[Operator ahead. Crespi. Please Instructions] Shaw comes go Chris Our question from with next

Chris Shaw

morning. good Hey,

Is the to curious quarter, in back it Or steel was about volumes? in lower down than come of if And the the that they because LIFO because bit? that then a Just came expected. so, charges seem prices true? less was

Brian Ketcham

sold, inventory quarter, we are in as inventory under being be costs quarter. FIFO, flush quarter capitalized still inventory would of if is America driven that the cost. -- but build of higher through second goods were it part really were inventory fourth we those that's the whereas And I by mean because cost really built levels, our North Chris. Yes. in It's building first inventory

we of levels So predict much comes as in the come see, how and some quarter, It's should back third difficult us. always over see that LIFO come should should time. down to inventory benefit the to back but we it when

Chris Shaw

curious, things. of over past Got to over curious irrigation, I the And pricing. maybe across the things. I'm you've two couple for yet inflation system -- Pivot the sticker sense system you all one, up I then And cost as mean are of had of it. gone know aware of the take pretty then the guess, what's shock I years? all that they're getting from Or rampant customers? any And average is

bit. to a of, condition in any buying cold a expensive? you people Have they're sort So gotten guess, because getting seen more I feet it's system

Brian Ketcham

Yes. I'll the of first part take that.

If plus you first place of prices prices go the in to, costs. a time. first the terms XX% of back ancillary to then, is were The relation was thing November And went gone same XXXX on our I the think true of take the since if up, that up some cost I for when say, increase Pivot. rapid pivot a install would to items would in it you steel in of have is

those last had the has underground all couple of inflation obviously, things over So -- of everything pipe, PVC, kinds just years.

Randy Wood

tractor In position seeing is terms whether buying that of it's pickup a a think days, of inflation customer everything. everything or really unique customer refrigerator perception, in a truck on they're or inputs, a crop we're pivot I or these where

followed income for kind yield really hasn't the commodity the with inflationary necessarily the other The a the commodity do you we payback though payback farm crop fortunate we're for out prices the So and even a investment again, if significantly bit. an in shifted prices on lift, increased don't math quite high on stand of the of that combined have And really pressures Pivot, period having inputs. prices. has irrigation increased prices,

and quite investments that external buying it's make really at they they're investment think the as ever yet too do we're looking indexes sentiment but point again, are I a that they readings customer of stop high. now right position closely. is are think that every in the they we've investment So then that I I think decision because whether make do a some we at which reached they see fortunate payback customers think in some been. And don't and our looking indicators quite every as we're good there at preliminary

Chris Shaw

question those if project sense. that mentioned a soon are those makes of infrastructure. tell or And projects Are for mention you leased Zipper. on be -- did The -- then quick a equipment? be That coming or potentially you Road would can me a sale would you

Brian Ketcham

of Yes. the medium and The as one project size sale that point. sale at characterized other being kind of I lease is combination a a and a is one this then

Chris Shaw

Thanks it. much. so Got

Operator

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

Randy Wood

fiscal segment to in you, supported income participation activity customer thank year. the and technology of and today. sustained machine in infrastructure continues segment The second signs half in increase Well, create will of revenue and the growth Both recurring everyone, designed prices, resumption smart that the that international platforms innovation business the pandemic benefit global of continues supports from differentiation project impacted to there continued investments support segments Zipper the for infrastructure XXXX continued third to joining close and us. This but spending quarter traction irrigation our of be strong are to fiscal the our earnings interest farm by the of quarter. you your updating be commodity projections recovery We on look forward for that call. Thanks by progress and markets. impact our The Road and connected travel of second following our concludes to retention.

Operator

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

now may You disconnect.

Lindsay (LNN) 5 Apr 222022 Q2 Earnings call transcript