Earnings call transcript Q1 2023

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Operator

Good morning. My name is Joe, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lindsay Corporation Fiscal Year 2023 First Quarter Earnings Call. All participants will be in a listen-only mode today. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Instructions] [Operator

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

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

statements contained the do For forward-looking these event safe the Reform Litigation of we note recorded. the Please the statements, harbor in Act claim protection today is XXXX. Securities being Private for of that

now would like Randy Mr. the Chief President and Executive I call over to Officer. to turn Wood,

Randy Wood

With good you, Ketcham, morning, first Officer. were that Chief quarter. revenue Brian everyone. We to and Financial earnings doubled our earnings and year’s XXXX delivering to more year Thank strong, call. than fiscal today compared start me growth our pleased our is to fiscal Welcome first quarter last

mission to and like our business their our positive of and execution thank the focus and continues customers around I’d to The the dealers potential I relentless results contributions. resources, generate doing. strategies world improving on natural our supports world’s for appreciative life. very of continue job quality our expanding of proud be employees, are they for shareholders and to and our the conserving of suppliers

of certain macro the business. areas impacting at environment, Looking our constraints see we to chain continue supply

Our see these improvement as continuous job progresses. the situation teams challenges and the done have in a expect to great we mitigating of the impact year

and remain passing the increases in moderated. competitive costs we our approach Price materials to raw on even Overall disciplined inflationary pressure input other through market have realization a strong in market. to cost remains and

sources of Smart recently them our make strategic and anticipate for FieldNET strategic customers additional our announce the In flexibility we choices and of choice with help crops. pleased Allowing analytics This Imaging. customer to and and imagery imagery in partnerships innovation, their future. partnership expands part of platform decisions our addition we best to and Pivot resolution our agronomic Ceres strategy technology to fundamental were high the area the a in provides additional is

conditions, American market in including prices strong leading high irrigation see record market farm XXXX. to fundamentals continue the we income to market, Turning to net cash North in commodity

Nebraska in conditions the we far of the but the seeing have This importance highlights a of should in are market. supportive agricultural year-over-year somewhat irrigated including eased conditions be and west, Drought core strong Midwest worsen Kansas. markets, and

concerns upside, significant a expect due cautious Customer this stage we XXXX This may time. headwind about rates. sentiment this at is to but the temper mainly crop this to at don’t market rising future profitability and of interest create

results. global income don’t connected year same Brazil. presidential regions, In our quarter to the the fundamentals to having market developed that we transition international impact prices has positive full deliveries, strong expect Brazil and farm delay second latency in particularly may some in in The resulted it market in the but a we impact see commodity markets

strong, our visibility these what our Asia win the in see execution Middle to compete we the projects. we and be Central and across but of to continues with footprint and activity pleased to Project predict, and ability market are difficult for to leverage timing East is global

are Act local positive and we and state Road of by impact is impact construction business. somewhat of a payment this being and year an up November increase The Moving Infrastructure offset the compared inflation the to in activity contract in to awards our ago, infrastructure, the fiscal in Jobs year. supporting the construction second costs. of increase in XX% half full Safety expect projects Investment for to see government highway year-to-date

shipment completed We project our first continue to large and quarter. of sales funnel in actively manage the in Road the Massachusetts Zipper

global Our to congestion and applications mitigate in Zipper temporary identify and permanent traffic installations Road to applications lease construction. the during help roadway both for provide teams continue positive protection

to to turn review first our now call Brian Brian? quarter will I results. financial the over

Brian Ketcham

and the $X.XX in first everyone. for quarter morning, $XX.X year. of the quarter to $X.X increased in Total $X.XX for net $XXX.X share, same earnings last compared or the XXXX Thank diluted compared million prior you, to of earnings per million million, Randy, Net diluted share quarter revenues year. million good X% fiscal to were $XXX.X or the per

of higher X% quarter. year. The average revenues revenues revenues resulted segment compared $XXX.X for as last from to comparable selling North increase first to America primarily year. million was quarter the million, unit million sales increased volume North to quarter increased in to America prices compared Irrigation the same X% last $XXX.X $XX.X irrigation the first in prior year’s irrigation

Higher of that international not the X% offset including as approximately million project translation impact sales quarter, and Brazil first year’s sales of revenues markets lower the unfavorable currency more In did to Egypt last irrigation of million. $X year other the Russia, prior of Ukraine as differences of in and $XX.X than markets, million repeat. in increased well compared sales foreign $X.X effects in

while price minimal. a international first $X improved quarter. margin less included current irrigation impact year impact and year to Total segment input from operating prior operating margin year was prior income prior year sales more of sales, XX% The first increase of first compared the was realization, quarter operating mix expense year to of quarter costs was irrigation $XX.X primarily resulted XX.X% of compared in quarter. for of an the income million, quarter favorable XX.X% million, and inflationary first the the LIFO The the compared and first increase in to revenues prior operating LIFO margin on

sales first higher year. to The sales, lower and increased the were lower in quarter which and Road Zipper lease by partially to for last to revenues segment prior Safety project of the compared resulted million, Zipper products Infrastructure million $XX.X compared year. same System the from Road Road increase revenue offset quarter XX% $XX.X

remaining the barrier project of we last Massachusetts our quarter, replacement million fiscal $XX million began quarter year. the in fourth that $X in delivered During the

to increased $X.X operating in million, quarter compared of for for the prior XX% XX% in sales, sales Infrastructure year. first to margin Infrastructure segment to was same $X.X operating income of XX.X% the year. last quarter the quarter compared the million

results was year from lease prior lower first resulted and a because favorable of impact Road current higher year revenues to mix compared Improved quarter, compared offset primarily margin costs quarter. prior the less year revenues of revenue. increase inflationary less by the to This Zipper input on first partially

Turning to the liquidity. sheet balance and

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

we that improve for expect shareholders. fiscal our ongoing focus free create growth XXXX generation further our our enhance in in an capital flow on cash value Through invest management, opportunities position and to working to

would I take call At over turn Operator the this time, to to to like the your questions.

Operator

will Please Hutin ahead. [Operator William our go come Blair. from Tyler first Instructions] And here with question

Tyler Hutin

Hey. taking my Good Thanks morning. question. for

Randy Wood

Tyler. Hi,

Tyler Hutin

projects I just then any one you have with was in larger if follow-up. wondering more I could internationally off updates and irrigation start on

Randy Wood

of Tyler. script, the execution And I cover the as timing of to in said predict. timing the confirmation, is Sure. that always difficult we will one,

linked that of and growth. see on to the and security, there we a population robust now right we food is opportunities number really focus it’s So funnel

in parts security The times. the improving on around a really pandemic accelerated for different a the talked of governments have lot to of We lot and world world. different of discussions countries food

are when strong. is So we again funnel but funnel, we going pleased start to confirmed the and is see it what are to difficult delivering, we with predict those in see the but

Tyler Hutin

you one of Massachusetts And up you. fiscal large XXXX, Right. project in fiscal for small- for mid-sized XXXX? then in Thank that Thank confirming how infrastructure, with projects the that. to against for that stack would number

Brian Ketcham

Yeah. in projects the leasing is increase is say, and the Brian. we projects we some what the probably the our of underway said business. season medium-sized of then half Tyler, on I this year side Road gets part as second construction smaller the see business before, as of an the and Zipper in would

of expect growth, we year-over-year, total, project Safety in to from Massachusetts we some so that other so expect some offset with the growth be to And Road able products, areas.

Tyler Hutin

for That’s had color that. you Thanks. Okay. I on for Thank the all today.

Operator

from And Northcoast Ryan ahead. Connors will come with Research. our Please go question next

Ryan Connors

on congrats Good there super and on results everyone team. the to morning

well looks it like saw some of So, very inflation what as we the moderate. pricing up really here holding is,

kind of and call as So sustainability anything that you like be moderates I forward, negative at price about and are up margin a question any we this jump should to cost how of kind -- price. guess think is a my we in gross how should we going the telegraphing inflation level? thinking on this never be But want that margin, obviously, about

Brian Ketcham

Yeah.

that good we last quarter, first the look finished we increase, attributed Where LIFO Brian. think, a negative year-over-year, this is had -- and this of I much to at impact LIFO you Ryan, think, year. as the not I obviously, big year chunk

But improvement. been margin year gotten think since that there’s project still last dilutive And some factor have we I some that full we strong the incremental the still realization year of you we have saying quarter price you the Egypt the last nature of expected, had factor still out, as in very what have and noise third inflation. we

gotten we a have say through this as both have inflationary strong demand environment. would margin I we looking as some at in Brazil, result North through seen and America expansion But -- impact, in the a come

So productivity we margins. to we with have progress other been margins grow improvement pretty are to-date. able made have continue through pleased and to continue at expand we we to to opportunities look But the

Ryan Connors

there’s issue pretty to wonder can damage to -- demand. carriers issue some pivots, full and us Okay. that replacement do as that insurance claim driver for impact able extent with rather, of what impact has and we in been of was a dropping the of the with there ahead storm of you fiscal And look coverage And storm year of, XXXX, XXXX? to in that my also, talking terms in least a because be talk about had this to damage. might you all then carriers, quantify you both way insurance one if part kind obviously, other I frequency then XXXX, at some that nice any frame of year

any buying customer could going impact have thoughts you that if how curious on decisions So forward?

Randy Wood

tackle can both Ryan. We of Yeah. those,

when that let fiscal comp difficult certainly quarter. in quantify -- last fourth I Looking maybe we volume see -- am fourth year, will at I that quarter will it’s impact our but through, Brian our storm

in and You but fourth always your damage particularly in supply really was some storm labor planning, extraordinary but forecasting quarter the chain and an for year volume us. plan for last

will that. I Brian So quantify let

a and with a flow contact disasters here, the insurance, in the in in just in the been and industry. insurance types the there’s see have reinsurers when there’s certain Relative personally same same the residential to think, lot parts of we chatter you across I discussions seen an we of country. of market like have And and ebb insurers, homes

always there’s to to willing coverage necessary. is a now where going be always view Our market. to going be provide There’s it’s somebody

And of as to a even look total still irrigated of -- of the incremental be quantification the And a a sentiment we any significant headwind. be if economics of driving but part in on premiums, storm? going country see going irrigation as production, benefits to to we when lot the compared insurance some maybe lot we agriculture the right at now. don’t and is insurance of slightly you parts hesitation, might a costs on still negative changed it Brian, that see It’s don’t cost ownership view of requirement

Brian Ketcham

last kind Yeah. expect and the we revenue neighborhood of of so incremental quarter, I storm year have Yeah. the who in are exceptional the of year, million our around would we more looking things kind this damage been what storm kind -- back into had $XX in of of think, changes to that that but today. kind that’s we seeing, in fall we fourth knows Ryan, at weather quantified traditional season. how But we

Ryan Connors

Understood. Very helpful. Thanks time today. for your

Randy Wood

Ryan. Thanks,

Operator

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

Brett Kearney

Hi, for taking guys. Thanks question. Good my morning.

Randy Wood

Brett. Hi,

Brett Kearney

the about offer to North With America the Imaging, least option assume within of able the relative Western there and I initially? internationally, irrigation they do Ceres that solution the opportunity market, is to longer do how demand Brazil, curious opportunity developed I much go new to think customers, guess, what, of North be you that American some for the other have well, to capabilities term at that? will And the primarily Europe like kind a to markets -- how into you partnership with are

Randy Wood

for you on say and in when it’s irrigated at look be in acreage would certainly North we opportunities Brett, that Yeah. penetration technology going America. adoption initial the telemetry are the general are largely to North America focused higher rates coverage,

being a do see we short-term opportunity. that So

scalable think like our the good base to this current it some on us ability and incredibly is installed is opportunities. leverage for our The create news significant technology channel, leverage I does

innings And of North a the American in really you the if in there others. are even some are at in imagery is our and country strengths look early lot just parts that regional market view, to some companies the relative of stronger

and that’s North our part key strong our for start to view, we do excited really of growth a see strategy do we choice customers with about going America. we But some for offer what very here and is So are in our customers Ceres our in opportunities. base to will a

Brett Kearney

Thanks Sure. much, Thanks. Randy. so

Randy Wood

bet, Brett. You

Operator

go Capital. Roth Our come next ahead. question will with Wright Brian from Please

Brian Wright

the could segments. was of provide and magnitude little impacted America the a just way more there just changes? Is and Good the Yeah. on it, you a North about America was said you backlog morning. and hoping it color kind both segments to then think Thanks. versus comparing backlog of just I South kind

Brian Ketcham

say, increases, driven by backlog. forward both Yeah. at price and you the comparison, Brian, having pulls when some in were year’s in last the primarily volume America still North Brazil pretty backlog, I into year-over-year would look which generally significant

at more in the backlog. with more to its and selling and I are of inflation of season traditional reverted would kind where and timing year this our the say the we stability prices,

there. thing America international year-over-year, So North that’s and is biggest backlog both affecting the which

infrastructure season as we construction the our think, side, end the really we into winding I winter, is are quarter, on the down. first And

pretty backlog of that is November. end typically So low the at

result, what going couple like. results, So are the quarters our which always future backlog look nothing next and said view of have the significant indicator that from for what necessarily the we isn’t means to of strongest

Brian Wright

much so for that you you. Thank Thank Great. clarification.

Operator

go here Shaw next come Our Monness from and Please Instructions] ahead. question will Crespi Chris [Operator with Hardt.

Chris Shaw

quarter? you might a everyone. bit, you pricing morning, the could and Good irrigation, growth -- In the the Hey. what was the have during given volume growth

Brian Ketcham

Yeah.

comparable much said So the pretty we to volume was year, last flat. so

down there’s that think that in the probably range X% the and I pricing overall to that other brought X% some changes to is X%. then

Chris Shaw

bigger, the are going infrastructure, the two in I the Gemini this -- there new and I it. or one little difference, Got leasing Titan. Zipper into or a you that introduced for machine Road one couldn’t what I buying. forgot like didn’t if I the looking you at but And was now -- and the I Zipper didn’t understand customers then name I available, just -- really the that I understand the the maybe applications Road week. was that just smaller, Could more? machines go guess, guess, or one the bit was have news tell was are you to really

Randy Wood

to Zipper lease is depending part the it’s, going be Yeah. and all construction like Again let’s things the it’s that options quite we permanent say, that, have. which models few when application and installation would a so have a of have always Road a different doesn’t little, project, on a situation, had a the of

a -- have had really So out the have and we the come Zipper But we redesign as standpoint, with of through from two types. always the have brands we machine. Road have multiple refurbishment went branding

-- it lanes. was the Japan for Hawaii specifically have barrier that move classification produced. where another could One, we two

thing of some was additional of that just new. machine. that the are now it’s So the really of options The the and part nothing part big redesign

Chris Shaw

have customer like one? The of anything just market, It machine that’s It expand base. like sort of you not the new was the that. doesn’t a old iteration like, don’t newer it wasn’t

Randy Wood

I mean, some might a something perspective I would say, drive from interest, I it’s think, think marketing we that game I changing, nothing additional but don’t Yeah. primarily. think.

Chris Shaw

Great. Thanks a lot.

Operator

would And we the closing no will I Randy for to over conference further our Instructions] with questions, to conclude [Operator session. remarks. turn Mr. question-and-answer like back Wood any

Randy Wood

Thank participation you today. and interest for all your

look the and to XXXX. momentum quarter infrastructure by incremental first our Act. continues Jobs and with pleased Infrastructure by very are Investments funding be segment supported to We carrying that results The forward through provided

due strong an food The elevated ROI farm population fundamentals see secular investment connected and segment and income longer positive to growth. near-term term by to irrigation continues security drivers The to provided will profitability continue from segments ongoing improve conserving investments benefit around resources and agriculture in that world. to strong irrigated Both safer. while innovative technologies in support markets roadways our the customer making

joining This call. fiscal our concludes We our second updating earnings following for close the quarter. continued quarter our look Thanks to progress of first forward you on us. XXXX

Operator

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

You your disconnect now may lines.

Lindsay (LNN) 5 Jan 232023 Q1 Earnings call transcript