LNN - Earnings call transcript Q3 2022

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Operator

Good morning. My name is Joe, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Lindsay Corporation Third Quarter Fiscal Year 2022 Earnings Call. [Operator Instructions] Do please note that 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 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 I statements, of protection Executive to over the would statements now the for Litigation Reform to the Private call Wood, Chief in like Officer. the claim Securities harbor President Mr. Act forward-looking these For safe contained of and Randy XXXX. turn

Randy Wood

Thank Ketcham, you, Welcome our Financial and good morning, to me third everyone. With call. today quarter Officer. our earnings is Brian Chief

third the the world Our dealers ongoing around our support our customers and employees dynamic reflect results to very in commitment quarter a of environment.

through inflationary managed constraints results. is challenges, Lindsey manage Our quality. evident supply preserve chain pressures, one our our effectively have entire teamwork, and organization pricing teams to This approach in commercial business logistics to and while continues focus effectively

to XX our highest was in international this across with XXXX. have We Our third released the strong to in business, the cycle quarter teams innovation, continues of that's before second sites devices the ever fiscal ag We're showcase our the quarter industry getting continues the U.S. the deployed new peak for infrastructure partnerships. To market possible be revenue several to new seeing our Smart and innovation experience date, year. RoadConnect company the for with power later fall. the Road end the area deploy ready reviews contribute will from company. customer income great FieldNET relationship to with we program states our platform that of in of user In of during success and Blyncsy our all thank customers acceptance also Pivot telemetry and progress the strong rivaling highest history, the in forward, world the we're around operating our of to doing they're and our our

see a irrigation Global Turning to is market customer impacting factors commodity conditions. and positive. growth. high, of sentiment combination remain which prices continues to market The business

a However, year-over-year flat year's input be most which This net costs, crop by a positive increase one and relatively orders through an center have on farm market in the storms We Midwest. beginning large U.S. pivot year. expensive the somewhat is to income the support see Order was revenue demand stability. benefit basis. of ever this will with consistent in with will in customers due attained tampered yield our should quarter planted in so prior irrigation increased the did keep mid-May

is the this was a combination commodity also was amongst this This of in highlighting markets, prior region. expanding irrigation focus was drivers. the than and Government this of on investment BRLX.XX is irrigation demand by this XXXX-XXXX the prior secular for plan billion, increase did released markets, into In regions. be XX% the The some a doubled and plan. continues the versus volume the investments Irrigation, In to we year. the most increase more the by or crop programs, prices. efficient carried the week. supported at where fourth Brazil quarter in realization a incentives mature financing resources see largest the over in And business price set all continued Some quarter. across spot, strength more ship over high bright project-oriented International supported developing in

to in May. and tightened were site of the conflict across of Africa attend el-Sisi for project inquiries Ukraine. global future inauguration between by ongoing supplies wheat pleased continued as X,XXX market. includes storage, Egypt that towards project a We from grain support security and this funding will Middle localized which and This will World that will pivots business see Russia also $XXX of receive strong earlier Egypt go Bank the over more food and We grain been the a this thematic concerns year. million East food Europe, security farm was production the with have news the There the week this boost fiscal President to shipped and also portion irrigation

to Moving infrastructure.

labor near regarding our increasing has reduction. for project I'll and now activity. commercial Road at results. seeing been infrastructure been to impacted will have based but anticipating two Our headwinds funnel funding the by and remain commercial signs and each design ago in business, on this Zipper has been see the half turn sales third projects the diligence support in our of in The we our provided positive, quarter second stimulate months restart financial provide of cost sales in that teams state perseverance in availability. has his Brian this schedules, bids funnel. business able movement Brian? submitted the growth paid Brian delays of to over forward. bill review number return are off pre-pandemic In the and moving details to helped have caused A project the optimistic Their by project have inflation we update. scope we or and increases the travel to this Road additional and processes level. segment a DOT being by procurement are call financial regarding do Safety some Overall, the opportunities also year to quality of now resulted we're and normalized

Brian Ketcham

North quarter. to increased XX% $X.XX per XXXX third quarter in you, for America morning, segment The was quarter. diluted increased in to North lower fiscal million for year-over-year. the increased increase irrigation prior quarter. the or prior third and compared year the of higher quarter increased $XX.X net share compared revenues or good revenues quarter million resulted Thank sales selling the Net $X.XX average share compared quarter. to the America $XX.X $XXX.X to to Randy, to prices, revenues while compared of everyone. the year Irrigation earnings in in year $XX.X million million volume Total XX% million prior million year diluted revenues prior per irrigation earnings XX% unit from $XXX.X to for $XXX.X million the of XX% $XXX.X

third were As during order last similar to indicated, rates quarter the year. Randy

we pulled entered last price year's larger However, significant frequent third a forward. of orders quarter as time with at and the backlog increases orders

partially in XX% impact with this volume revenue which increase quarter. million System of orders of leverage, XX% segment increased were $X.X damage and of was the combination of quarter. a of of and irrigation international our the While net and foreign in income to In quarter. the to the Infrastructure year an products year operating the from a to projects. prior million, completion third Road $XX.X prior quarter, approximately currency project an selling resulted storm system Improved some replacement projects of Zipper of fourth replacement in quarter offset improved sales, in higher realized resulted with the compared year higher was from most cost of late to more XX% in damage prices segment the Also new prior This resulted revenue most sales for average the sales resulted this the the unit increase significant from third from in volume margin lease the increased quarter of revenues Brazil. operating Zipper quarter additional to million, most in an lease increase sales which lower the offset gain lease along Lower increase was than Road compared prior of storm increase quarter the effect increase compared volume certain The additional be prior $XX.X the safety inflationary to international of revenue. for compared translation sales year. markets, start-up million provided will margin contributing price were increases. year operating volumes year's quarter. delays XX% the lease $XX.X and road markets, for increase of by higher XX.X% realization from third irrigation revenues favorable beginning compared Total

segment value year of first representing the absorbed with During $X this well in optimistic costs. the a delivery we The reflect year project project our was is in Current value of Road favorable barriers as approximately to began the this overhead sale the to of less half is million, quarter. which under in compared total of Australia. quarter, about million, the of Zipper project margin and expect the for market. a comparable to and fixed potential income mix of This prior the delivered in machines We two half year period. lease as prior a third barrier operating lease of the the Australia, fourth the half quarter. revenues about the was XX-month remainder certain quarter over in third $X.X deliver the representing are of our other Infrastructure the future we and project quarter about results barrier

Another second we the project awarded expected barrier is Massachusetts. in This expecting been year the of approved one in has projects to have project replacement half that in and been of is to quarter. million, a of quarter being the fiscal and our our be our now fourth remainder quarter approximately the in first is two-thirds able of value portion delivering this anticipate of XXXX. deliver The fourth project in project we this the $XX of and about

and Turning to liquidity. the sheet balance

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

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

Operator

first from Jones We go come the Please Instructions] ahead. question will question-and-answer now Our Stifel. will with [Operator begin session. Nathan

Nathan Jones

can stimulus? you some have kind looks of on that we little been for the those these two half Maybe the business, spot Maybe talk guidance 'XX the in going I bill can starting back should couple barrier projects, like expecting of Good impact morning, a outlook and -- conversion guys been on going two there. pipeline and us of you about in of of what be these for on talking there. project growth environment year infrastructure with that last about the quarters bit the any Just you give the of projects 'XX confidence the of mean, in and everyone. have

Brian Ketcham

in Brian. we the Yes. that. environment funnel. couple saying confidence with all is we have COVID that Nathan, earlier, projects that projects of moving pretty the good some sales in these this coming travel now. But our year we We've the last this would that year, we restrictions through and late Yes, along, had two line already challenge of we're of like felt in and funnel funnel. last has been talked And had sight that, we've seeing the about the been these be years realize things through really

things And and XX-month deliver what is prove construction-related Looking mentioned side as as programs business, result engage we've can And we to number -- business do, part forward, states. are some I with the add-on to able Road construction kind I a once I as these interest one being overall seeing anticipate mentioned and with through Zipper of leasing started the some customers to of demonstrated I continuing lease a funnel. of we in see return Road actually the we say, including the the a of Zipper we're a of projects good there. of think that that to the would of we move also program Australia would in on normal, that. in

we So the where business. we're remain again, that pretty potential -- optimistic and at on of growth

Nathan Jones

what you a on we from thoughts just going get or that can you say I'm deflation, Thanks. on to inflation/potential that. on question can to get ask of kind

us were would it from give where you margins, clearly We've over earnings probably how couple earnings. seen maintain prices pricing? had obviously has rolled to a have big could you come they years revert to U.S. done guys positive from revenue last in hot back math You've the been you of some but guess, tailwinds for going the down coil as where for negative inflation, inflation. back on here to and figure can here any reversal get focused Do might steel that what I ago, you we you clearly years the just potential of with Fed any Just the is think your the impact like happen out, lose was? you that focused are to much few investors Fed continuing If that thoughts on have could saw The business? I'd bit. a how on pricing policy? quite prices to thoughts which

Brian Ketcham

is Brian. Yes. Again, this

Just cost hot It's increasing. input That we see I the more recently other so sold, perspective, of see percent softening. to XX-or-so do of slightly. cost actually or coil some logistics see put mean our sold. roughly is but goods which structural prices steel, things in zinc, rolled to we still increase another continues of our We of goods XX% costs,

inflationary still there. would So moderated, what year the say is overall environment, I it say, ago. had from say, it's let's obviously, been, I'd a

happens, lag some that respond of the way to up. protecting as our going price, So we kind recession sacrifice In it movements the to as much again, on and continue to maintain that to off, on were steel competitive come would depending we to to obviously, up, as always, to And case, we'd a can forward, begin if margins. we soften. we our demand does would way prices to But at there's objective on tend margins. what be we retain the in as we're on if down, have that would just value falls focused point, expect but

Nathan Jones

for the pass I'll commentary. Thanks it on. Okay.

Operator

with will next Our William Please question Brian come Drab ahead. go from Blair.

Brian Drab

Hi, wanted either drought asking conditions by the abroad? I the demand for morning. to in U.S. just Thanks the moment and start about and questions. that's positively impacting how negatively or at good taking

Randy Wood

some monitor particularly market. We Brian, the irrigation and pivot significant Texas some in getting you Western cover that now good one. We've drought West. of is the Yes, seen drought, closer and I'll watch see morning, creep into and lot this Panhandle, Randy. the that Texas core obviously to a

where of was in not commodities will a some a more to of to center are, really is that potential significant really opposite if couple something finish water support may something market. regions. markets, be core a year But water have to now, regions of for and going somebody's a more and And impact could there's irrigation finish if it a those It very again, the saw So that's yield but might now certain about right It But switching water stretch and several impact look Australia crop. feels of there price for not that center to which some be difficult a impact they But application are a pivot, for the those be efficient there's some probably option point you of pivot a they the a be it you market, regions that point don't crop be to provide too irrigating certainly use reaching not the an in to getting their there's depends know them. than pivot situation a customers. in does market things. you also that's where don't a want some us. get going and they enough time diminished I promote if be where enough out weather And differently. areas could water in would unfortunately, efficient to drought this water the globally, much I

So it whether prices, sentiment. in have customer have doesn't drought think impact does an or particular rains and gets worse, improves it on commodity the I

wouldn't down on significant I say right but watch, impact we something is demand our up it or So there's a now.

Brian Drab

my going in significant Road roughly company general then fourth margin should in question. to from revenue that given Okay. think in recognize just Thank we for barrier gross quarter? directionally How gross the the you. projects overall, barrier Zipper about you're revenue just impacts maybe the And even the margin is next

Brian Ketcham

we've machines. on Yes. higher spoken before, Brian, as barriers versus margins

Massachusetts tend And barriers, would this the a to so case, project higher-than-average be in in is all so that margin.

two a going to So what of larger similar example Japan the I had on good being say year we've it's past there. of some realized a or would we barrier be the sales to when projects. ago in

Brian Drab

what revenue in -- say, said third revenue for have total the but the should it, Zipper may was just barrier quarter? You I Road

Brian Ketcham

this Zipper Australia the not just revenue and is project. Road the -- leasing, was sale, have necessarily Our the really been would total

that but million for out, So lease. roughly sale Road broken the have relatively Zipper. and number third $X.X light of quarter I in don't

Brian Drab

Okay. Got it.

a contributor sequentially -- that Zipper saw you general? so that to increase And in significant that margin, major then wasn't the Road infrastructure in the gross or

Brian Ketcham

even I lease revenue, barrier negative No, it is -- would because than of just generally margin say the higher side, infrastructure sales. a machine the was actually and gross the which

Zipper So Road operating not were lease by in we income products, having increase revenue, an a Road the flat in and reduction sales Safety in year-over-year. offset

Brian Drab

the main in in increase point gross quarter third margin then And the Okay. basis XXX the what? of driver sequentially was

Brian Ketcham

going be both It's to it's international. and America and to going irrigation, be North

Brian Drab

and -- leverage Volume

Brian Ketcham

factor seeing is the volume. Yes, impacts that. realization price price the probably international I that the say and both wear single it's would biggest in we're then And to and volume in

I we being overall North in quarter what operating that America. have margin to the saw think about similar lower is America. talked What in to North become compared historically, we've international third we it's

that a well. positive for was us real So as

Brian Drab

Okay. Thanks there. pass very much. I'll it

Operator

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

Brett Kearney

Curious shape? on side Thanks investments what either or Hi projects my guys, capacity Anything of and internal up, sheet and uses morning. you've kind with internal any other lined you've productivity good balance up the investments CapEx of lined potentially in thoughts great kind taking for question. of capital?

Brian Ketcham

Brett, I we terms international add would areas in currently of be and looking And we're where to an business more would Brazil capacity. Turkey. in at two phase I need think our say, evaluation Yes. and

our area infrastructure serviced out to We've increase primarily a then with CapEx would another As Brazil would spending other With where fleet of but the a to lot say money that of we've good to the this delays point, from without But lease we we on adding CapEx that market. increase, standpoint. see forward, that additional of an the from the project lot side. capacity done projects, returns the we of source be would would as of up a the market associated be I things kind that whole delayed we've that seen area Turkey growth going in some that lease see consider the is some is some of which well. and in CapEx. CapEx

Brett Kearney

Okay. Terrific. Thanks so much.

Operator

will come Please next Instructions] with question [Operator Jon ahead. Our from go KCCA. Braatz

Jon Braatz

first some significant Brian Are quarters, in And charges. those the Good results? in "recovering". we that about LIFO the you morning had quarter Randy, talked two recovering Brian. charges, actually you've third seeing

Brian Ketcham

No, John. a We the in $X say million. maybe impact negative slight really haven't. there quarter. say LIFO even -- I I'd would was impact around

I think to is were you they end quarter the our of the were of where big the the is where second the thing at look at if quarter. similar there inventory levels at end

in LIFO And quarter. really benefit from so the no

is realization I see price think where take impact really starting we hold. just the the to benefit of the

of So we, again, expect down. as come inventory we levels to see LIFO that benefit see some

Jon Braatz

lira your Does on does Okay. the very, margins and of that -- been have Turkish has in role weak. kind Brian, that also facility? your Turkish what very your profitability

Brian Ketcham

expenses we've an where some the much our our Turkey in impact lot We've those is to that of there. costs local But dollars the we've exporting of dollar profitability a on say, and based of area the impact our there. lot input Yes. really well. U.S. overall, because significant had impact overall to U.S. inflation one of some the seen a would obviously not devaluation the John, adjust compensation markets. And the our functional on the are a compensation is of and currency seen not employee employees. say as business -- I'd I the of for it's of

Jon Braatz

then capital there's year. sizable Good. lastly, And a been build Okay. working obviously, this

strong see the you down? entering you're the quarters? coming but capital disinvestment in southern that how hemisphere, few working see we now course, maybe period the Brazil that next Of in seasonally investment Should do in

Brian Ketcham

the would reduction particularly I in in a those receivables as expect fourth America, I North in get collected would some say, quarter. of

of in activity the Turkey, the On so going inventory that than about quickly. seeing talk is we what them. just on. we're We've We're we're have in more South we respond. And sight can expect think Brazil, when delivery line happen, then Africa, I would a These normally active where to carrying we project while. for also they pretty international we projects, actually they growth side, got them quite supporting

to X little be bit So that's I maintaining say business. the uncertainty international respond of to We're area the is. that's project business would that the inventory an a in able to

Jon Braatz

thank much.' Brian, Okay. very you

Operator

no conference further for at time. There session. turn now to to would any Mr. remarks. Randy This Wood back conclude over I like are will this our the questions question-and-answer closing

Randy Wood

your for you Thank today. interest participation and

us. costs in that market. net to allow our costs technology in the capabilities continues a availability. to farm sales. quarter. and investment segment We to close look our funnel incremental commodity the updating Road and irrigation The that traditional high labor infrastructure tempered drivers project business Infrastructure by the project demand, you the from positive is caused following slightly support call. and by irrigated Investments our and This improve strong supported quarter of delays benefit on input Act inflation rising to concludes ROI affect progress continues return customers third the and operate impact segments Thanks continue by by and ongoing connected more by profitably. investments This rising to Our funding for continued Zipper prices innovation be We of earnings provided XXXX slightly potential and Jobs by Both do managements and an offset joining project travel sustainably forward our to see a will to provided fourth stable international believe agriculture of our more segment income. more that fiscal

Operator

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

now your lines. may You disconnect

Lindsay (LNN) 30 Jun 222022 Q3 Earnings call transcript