Earnings call transcript Q3 2023

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Operator

Good day, and welcome to the Lindsay Corporation Third Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask question. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to Randy Wood, President and Chief Executive Officer. ahead. go Please

Randy Wood

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

start seeing two playing in to I'd market another. themes looking where really irrigation off conditions like we're North by American one at

past Firstly, level represent it's quality years. income above still due XX projected market historical And over the decline also to averages recently the farm remain net strong. will third concerns drought. well income highest versus the fundamentals and have support prices although is last by Commodity caused year, seen crop to

While some month of below the across precipitation, tailwind spread the economic needed currently parts Midwest sentiment was U.S. customer driving interest has corn by that by This much XX% impacted and drought. crop uncertainty been to commodity of year's this country rates, received the partially offset have by tepid earlier has drought still have been we last inflation, seen USDA general highs. the driven that market announce prices

short-term view, patterns. uncertainties influenced and caused customer the an seasonal unexpected our In order behavior shift in have

with feedback more for was volume quotation market generally prior term. taken remained near volume the While our year, cautious order impacted consistent who've indicated customers approach by the a wait-and-see

fall into us, this For means some volume we installation season. the of will shift spring anticipated the

expand us lighter the pricing focus, margins of volumes. to allow operational discipline maintain Our operating did business in and efficiencies by in quarter and spending driven deleveraging spite quality the

International Moving irrigation. on to

and shifting Middle Africa climate projects several XXX there recently project in demand Middle are designed large connected also We quoted. region actively global project the East continue security the confirmed to strong We being are and Europe, to and and food that East patterns. additional units in see

our to differentiated competitive footprint, strong be and projects. and to ability win identify global confident us experience technology project position in these Our

funding the at customer further by that is large we supported market, region. recent selling were an a pleased for these the the this financing to approximately available which interest show be season. week irrigation rate interest irrigators. be and billion government strong XX%, a Total options will continues investments was increased The in program over Agrishow, aggressive Brazil with makes which market making for released maintained was at BRLX.X This to on for continued was attractive loans them support XX.X%, investment. upcoming program

with were of over also of growing month. Mato We development. add to headquarters a irrigation market. production, Irrigation to the three value in creates opportunity acres is last which Grosso confident important investment. honored accelerates crops our in our irrigated, growers projects XX.X payback less this ability the This to we're our million but than also and grow from significant potential has win representing competitive strategic the And the of Brazil mentioned, in year, a global as host land in per X.X% delegation for State region growth that

platform, pleased innovation providing with in including growers monitoring quarter. crop water Pessl with insights field and will announce the conjunction partnership to real-time We FieldNET into needs. Instruments be probes, Pessl technology. moisture access In were our stations and Turning soil to now able to weather our systems,

to will the by utilize enhance monitoring provided FieldNET growers Additionally, platform. utilizing adviser able the to analytics be predictive Pessl's systems field

Infrastructure. to Moving

companies to many provided will market the infrastructure, fundamentals, funding This we're Infrastructure driven We and but and funding Jobs continue aging the that space, in is to incremental investments this see positive other by funding by seeing quickly Investment mid- getting like infrastructure in market. and delays in long-term support roadway Act. how

the to and the leading and sales with signs construction XXXX. Even spring delays, and continues have into significant increased with IIJA impact for have will steady XXXX growth encouragingly more transportation the a in activity as leading prior the funding serves show year. This XXXX construction this strengthening. through indicator of overall season believe contract over awards We

large The be will portfolio a in in year Road not Zipper we delivered see to This fourth into our due should going new sales funnel quarter, growth do remains projects any currently although incremental we steady. backlog project states. in our 'XX. And do lease stronger additional drive expect fiscal

discuss over I'd to turn now Brian? to third quarter like the our call Brian results. financial to

Brian Ketcham

and Thank everyone. morning, you, good Randy,

$XXX.X same for the decline quarter last the compared down of to year. prior were quarter million Most Irrigation consolidated million $XXX.X segment third to XXXX as in revenues year. the Total fiscal revenues revenues were Infrastructure from slightly the the compared of in came

year. Operating income business for margin was quarter $XX.X the XX.X% the last with the solid for the same supported operating quarter. consistent performance to prior the sales was margin in both segments, million quarter quarter year Operating to was $XX margin in of comparable million gross prior were operating This improvement compared expenses exhibited by year. while

diluted for the or a in Lower earnings higher by in compared transaction currency compared losses year to earnings in a per tax impacted primarily of Brazil, prior effective the or This jurisdictions, greater operating largely foreign share compared the year. the earnings to current million diluted resulted prior reflected rate increase proportion were year lower rate earnings higher share from Earnings from foreign $XX.X to per rate income. $XX.X effective year. also gains to the income in million prior was the $X.XX quarter $X.XX prior and compared in Net year. tax of net the net performance

were compared last quarter Moving segment for million same third $XXX.X million revenues on the segment in Irrigation Irrigation year. the to the performance to quarter quarter. the for $XXX.X

the of crop $XX.X to becomes year selling from irrigation year. farmers North decisions unit earlier. current decline deferring capital The lower in calendar more last $XX revenues will Lower primarily primarily in the resulted average the prior to to farmers for sales from were Randy apparent. revenues later the cited profitability year. this in million volumes, unit We million compared same resulted investment sales in year while were comparable reasons volumes America the quarter delaying believe when result purchases the prices

the million This lower third $XX.X decrease compared and volumes irrigation quarter. to Ukraine same Russia year In markets, to sales from in year. Australia, million compared $XX.X were prior the in primarily resulted Brazil, last the revenues quarter International

to sales program increase the volumes new mentioned. in supported expect financing We quarter, Randy fourth Brazil that government in by the subsidized

by Irrigation for margin in last resulted increase the marking compared of Total the quarter third $XX.X in performance XX.X% from compared from was operating quarter the an segment driven XX.X% price represented realization and margin gross same $XX.X of million to operating sales, This operating Operating income in margin year. the increase to year. sales year. prior improved prior million expansion,

Infrastructure same $XX sales Moving to increase the segment. last $XX.X the sales to lower Zipper in Zipper products for lower the of third to Infrastructure Road in Road compared quarter the lease compared An by was project year. road million quarter safety revenue more and segment offset were revenues year. than million prior

segment quarter to third resulted from compared prior revenue improved in in Operating operating to million of sales last year. Infrastructure more a $X.X $X.X the compared the increased quarter of year. XX.X% quarter the mix This was for and income expansion year. price margin of realization sales, attributed prior operating margin margin same from margin performance to gross was improved the which million favorable from XX.X% for the

the Turning and sheet liquidity. balance to

and end solid, on the million and at cash, very remains sheet million, was of with our quarter with facility. of cash marketable capacity total in additional revolving $XX $XXX credit balance available our equivalents million securities, the liquidity $XXX Our an undrawn

of to in management, for by we growth capital working effective cash will and ability enhance creating to performance meaningful XXXX. further strategically shareholders. fiscal generation as opportunistically flow flow cash expect be opportunities, the operating balance solid investing for will our Through beneficial improved stronger free act value our This our it continue

take At this to like I'd the questions. to operator call the to over your time, turn

Operator

Please question first comes ahead. [Operator you. Thank go Stifel. Instructions] Nathan with Jones from The

Nathan Jones

morning, everyone. Good

Randy Wood

Nathan. morning, Good

Brian Ketcham

Hi, Nathan.

Nathan Jones

would off fall. selling shifting season normally the to on I the from farmer what's a demand that into made commentary spring you uncertainty like about start

the fall talk the top you're first people grow shifting I've there, an I where think the Can you seeing supplier thought it typically that fall? that shifted into think more around is that's into would you maybe that aren't irrigation demand on shift crop equipment installing next some us ever on into spring. that the crop. if why have dynamics have probably was it time about it give generally the just of that? I heard And demand would out detail and shifting,

Randy Wood

seen can Nathan. take I historically in comes to it one, of the you behavior. business. we've seasonality what of understand terms And really Yes, our down And that

ag the installations firmly really into use we We then season. and in summer, installation have through a selling we fall of harvest then believe season still fall fundamentals going the and of And have and spring market.

we're customers that pull our this look you be our XX income, confirmed net weren't specific again just and be our over segment. with of ready going as is in profits farm years. to in a to trigger, said time in last to market. they they over machines, farm the if quoting, the where fields, looking spring, cash the the were highest in the third lot net specific at And going time There's income we've we And active in at the and in -- comments,

going up that they their funnel, as of will, So finalize you invest business of and to willing be more they're to be our in. to And there's type that tax go. a lot are view going is machines if of December the to in fall wrap that situation, there's ready customers to harvest XX

again, the an historically, irrigation and one in profitable, ROI investments to and me, when make system that fall. will of business is to investment going shift belief this make proven can they've they is best to the our So investments segment they're is

Nathan Jones

Okay.

is saying or saying after shifts it into kind not shifts quarter So you're first to your fall harvest, fiscal what it second season, late fiscal the so quarter? of you're late in growing the your that early during

Randy Wood

that be probably for be first quarter Exactly. It will post-harvest fiscal That year in installations. us. would

You got it.

Nathan Jones

margin? Obviously, might over here drop you on that just that. around pretty sustainable? commentary give the gross 'XX pause They've last a started couple Does changes Got area. it. in any more low steel. Is Or XX%s That you sense. of the the that kind bit any more demand you pricing they've pressure into years, on And volatile gross that was gross makes my settle then here in can an been followed in price margins concern for area margins. on follow-up us we've give down to where of think the question put are more

Brian Ketcham

full go can is seasonality and think this also of down business it quarter-to-quarter first due vary the depending the say, and margin, Nathan, environment on all, can gotten quarters Yes, we've our just margin, as the gross price Brian. project of over Yes, enhancement few on up the last realization. gross the to I the activity. stabilized, I would as seen inflationary But has we've

margins I across business think would range if recent XX% more to you in to bit it of later in realization look most activity America. reflected was we International this North seen be price what expected. of quarter on as I the the some in level at or quarter little But project that curve than had XX% that year, our one depending another. actually think in improvement course a gross Again, of

somewhat If large the obviously, project might Infrastructure drive be Irrigation A project on you dilutive. had a the higher would on that side, side margins.

Nathan Jones

Ye, makes my thanks pass for it right, I'll very on. taking much a difference. All questions.

Operator

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

Brian Drab

XX%, Nathan's above idea gross margin, I comment margin, to fiscal Hi, into I the been? like on gross fiscal -- to going The like XX% taking think is on 'XX? just clear. follow 'XX, this that it there made and just said where you questions. thanks sustainable range you for Is year. a which on question the expectation something Street my forward just that Can be is just over Is has

Brian Ketcham

we would maintain Yes, be that. be, to Brian, our able expectation would

we've demand and think as we environment, come and internationally, up, seen margin this particularly operating I levels margins have improve, margins. we've gross with picking through inflationary -- the

would it next into year. our that carry is So expectation forward

Brian Drab

just Okay. on And still. then margins

of in into the maybe your shifting capacity early fourth Irrigation 'XX? that of your potentially a You help as year fiscal part demand period up absorption could margin segment. the some And where of normal that early quarter mentioned or that fall could in a that supported does relative to result fiscal be this in end

Brian Ketcham

support if our Yes. in think There be somewhat higher with September, the and pre-harvest second standpoint, first again, a margin would quarter. quarter, some are I likely into would yet. starting definitely from volumes more

Brian Drab

more Okay. -- than that here, XX% the last And then down mean, the guess, just on question, quarter. in I headline I which Irrigation just your is really

go But really me, of challenges? could to thinking weather order rank clear, rank back like that to understand, What's be maybe back just just factor you getting what in factors the them kind -- you've go biggest dynamics here. Just you it the of talked farmers I important do steel, is could just list the and some of about I'm just some so think you uncertainty, And conditions? is about the macro the late like field, down order? the most for

Randy Wood

my take about lot and think more how I'm is, you going of And fall I'm them customer not and headline what, profitable know I I going the until And season. get can see And to year. this lock of really yields I to closer a I Brian, what one. more that profit harvest of in I I'm sure do. think I a Yes. spent The sentiment sure profitable. won't the with be are time know growing lot and pretty to crop. sentiment is customers, this I certainty.

market that's into and Corn This price. Illinois, price. rains, it or pricing. it the little gets dry a moving again, If of Eastern the gain to lose has you responds, you're bit rains Belt If drought Iowa, for a now, of bit of short-term provided strong kind some going support that right

pieces So your how now grower, is you're figuring ultimate be. to many what out market moving sell right and there's your to going crop so a profitability and if

are think drivers. those in big environment, I that the

a don't general contributes the noise fall it's I'll And when directly And seeing. I more I position even about the know make when really economic I've think that's think other in to I there's I've maybe of got we're my we is what wait that know completed taxes and but my rates, grain market some sold, profitability. that decision, until I I room financial uncertainty, interest the know believe to going my investments, got be, to lot

Brian Drab

Okay. much. Thanks very

Randy Wood

You bet.

Operator

next Partners. go Please Research comes Our with question Northcoast from Ryan ahead. Connors

Ryan Connors

maintaining for Thanks more understand to issue can volume? relative taking think just your maintain to But on do to -- question Good to pricing was the extent a us you I price to discipline. gets you of morning. the that. volume the In another? Or they're contributes function -- curious the desire words, one the price other issue of My maybe uncertain as take frame pressure? for want on some And call. environment of your what

Brian Ketcham

Yes, that price point we're would not say environment of price discussion. has Brian. become today, market this in I is not in the has -- main been the

As isn't uncertainty Randy mentioned, now. of just the lowering buy to a lot convince in the to environment, going farmer right the price a

been we've on so, that. disciplined And

purchases what that of that. they highly the are situation. financing When program to was government know lot because that price not there tied it's this a going you the waiting the look delay on to until Again, with announced. the -- in that be transition, financing is to and drive Brazil volume They're new seen program all we've lot about to wait of a for going at is dependent lowering

this environment, that's a environment going not drive in additional it's volume. price So to been

disciplined So been prices. maintaining we've on our

the thing really will I as on steel view capacity. contribute could think soften, but the their mills just another costs steel maybe wait-and-see approach fall the and prices -- either be that if that's is seen we've not today, disciplined our to

in forward drop precipitous we're not either. any steel And expecting so costs going

Ryan Connors

it. Got

that's -- terms words, you're that approach that. then And market's taken that, to strategy, I [indiscernible] assume an discipline maintain pricing. Okay. I not going been on that's if of in same any from that be other take not Brian, In the the of have others to aware effective not

Brian Ketcham

regional the our we're price. dealers not obviously that based or orders on Yes, been respond that's if sales people getting but to not any have losing ability were case, from we're case. We feedback that the the

Ryan Connors

Got it.

Road now? customers? a forward? with of that traction just one flow that other that be one sort outpacing more and that Is a leasing actual the seems a my revenue Or Is product model then more future on And is leasing a just that again Infrastructure. is sales. for ebb going will Okay. was of gaining -- quick to the Zipper really just something Especially

Randy Wood

Randy. is flow, one. focused and lease there because some when in leasing a is every is I'll this take there, be and projects connected be period effort can permanent like work but in more start example, large pretty an those bridge long Ryan, there's on That's that of for ebb predictable And on as markets a to we've really going Gate to terms sales Hey, installation to come a had going lease revenue And stream. leasing where those develop little on the really to construction summer programs. we season. gestation can a we Golden

think period-to-period, in funnel. of could that the do for way or lease of again, smoothing time. mix, a I what's very leasing and exiting area So more make it growth see expect specific any funnel opportunities depending little mix more revenue we predictable. the going to make focus on But of one terms been in quarter-to-quarter, a at But certainly continue It's in out see other a we more growing. we're that little and to given strategic more that should us,

Ryan Connors

Got it. your for time. Thanks

Randy Wood

Ryan. Thanks,

Operator

Brian Please Our go MKM. with Wright comes next ahead. question ROTH from

Brian Wright

in the stages there? current I at we're Thanks closer of in wanted opportunity more maybe as and Or mentioned creating of to that out still the landscape sellers question. to far you of for kind position. what's is kind as opportunity the pricing the earlier And looking again of just of environment, know, the the buyers about capital getting investment given levels? kind just

Brian Ketcham

necessarily pricing. couple of of valuations opportunities of environment, having it's think we see an don't this or I coming strong that. in indicated before, take lot a I'll just off We've impact Brian. a is This where market the focused on penetration our is the to we're our continue of area technology. with on technology and increase our and ag in we technology and of build market areas that years on in can capabilities

increased focus what we'll area. full-time that the a role put I level from of that into area, standpoint think in that's some Brian in with on creates move having So we've see activity our that Magnusson it this optimism

Brian Wright

much. Great. so you Thank

Operator

Brett question Please Fund. Kearney [Operator next from Instructions] Gabelli comes go Our with ahead.

Brett Kearney

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

Randy Wood

Brett. morning, Good

Brett Kearney

and America the scale in opportunity to that on -- guys customers already, but just Lindsay drought curious, conditions severe You going guess, of opportunities, kind on impacting of too touched a thinking on North potentially an getting how where expectations update this I the it's going bit latest particularly versus forward for your the level forward? incremental

Randy Wood

Sure, Brett. I'll Randy. take one. that is This

Eastern large into you see are Belt. It's just a in And some irrigation market at traditionally Illinois, with don't now look the drought we you pockets that precipitation. Eastern timely that that have up lit mandated, corn and We drought. Corn base a Iowa There's have there. see really heading Nebraska, we seed If maps, Kansas, growers heavy in extreme Indiana. installed do gets

So see got you've you're you if we'll we able on supply impact an And commodity yield irrigator, when the disruption. then supply good likely needed support. you've when to been And see water is price you bigger it. disruption, know because

got Now good price support. you've

be business in it's going in of be what drought So seeing because our of the we're in supportive to price. general, is, to terms now going supportive for view,

for period 'XX the is We to to going world. Corn short some that of it going up Belt drive that I'm did it's market of that feel we enough income, that strong prices, and that it that I up would back severe during very the to 'XX, don't going drought predict are heats for sure see in historic that my That in business us. Eastern in commodity know I term, yields. results prop combination business. back in not part have get could to correlate strong farm will be I the supportive view but that irrigators

Brett Kearney

infrastructure just additional in Excellent. side. I could on if And the maybe one one sneak

few of had heard have interact transportation other kind projects forward. at departments, on states levels folks with transportation. of of have guys a I number know constraints a moving the from definitely various kind you You that

road the labor -- kind whether feedback, on construction materials it's bottlenecks of data crews, some you're points just product So curious major hearing and side. the kind the or safety of of what or the

Randy Wood

Yes.

and early labor, get and road. this really costs into the get to moved heard ones the concerns. both inflationary and due just and approval you've of quoted think the those flow And money flow we've were access heard I they can this spent. to and requoted bank projects mentioned, to about impacted it's think really be more paper we've to had Access had so I then the on, under to the get things, flow ability account, inflation about rebid kind of to the some equipment, project administration recently, most money to it because

a you, working combination phenomenon. of factors. we're organizations. those Manufacturers, stories consistent some This Association of in with, companies it's the hearing does industry space, we're So of an of the and a Equipment the public following Brett, AED, appear like But to be lot listening to

here. we'll talk have any okay And -- and news benefit But for and good potential markets. as and out strong XXXX, longer-term again, some is, as long-term funding see, we far some additional supportive where we're is patient, do stability a we'll lot think we're we going the being about,

Brett Kearney

helpful. Thanks Very Randy. so Excellent. much,

Randy Wood

you, Brett. right. Thank All

Operator

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

Bill Baldwin

can, questions. 'XX? was of Yes. what's the in to going taking see thinking area? and that here Initially, my that of capital Good the now kind And of on for level being if you're about the morning, you I nature in are what thanks projects expenditure focused

Brian Ketcham

Yes, Bill, it's Brian.

in $XX we're to million that end up XXXX, For million $XX to probably range. going

investments. I think to we've looking our can where footprint add been we across at look productivity-type manufacturing

million we improve in we CapEx to our this could range. year, continue ways to and as XXXX, like we but I look into million end need could level But as to of up capacity should expansion. where be at $XX there additional in go efficiency. market say overall Turkey, that -- $XX a for pick a up at Brazil And our look facility the You would

Bill Baldwin

Okay. you. Thank

it's you bit Are get On side, us exactly on design been give but this know on you've a specifics primarily systems infrastructure you project a previously, gone primary I programs? into were or of any commentary Road to on buying where overview Zippers fit usage going of Can Infrastructure continuous the since Road kind of while into is permanent the it. Zippers? where the those a into the Or the what nature transportation basis? used of -- early they into the little be the on

Brian Ketcham

No, a be about be great being Yes. up, programs leasing can question, during of program. a that because ways. facilitated, that's talked the a safety going variety the it's provides Road Zipper the and project. worker in way generally different used construction can be used We to during It's construction

we're of the through too indicator see an that. money early as of seeing uptick you'll some that's IIJA funding that And So of kind road coming first is construction in an with starts. the

and an Road use installation city. we'll it And bridge existing substantial opportunities flexible provide the the permanent solving a you been in more get a going best planned different one we and to also you've into then, a that of traffic, example city see in as expanding think other And congestion a that's issues. a is roadways, going has to could lanes. of got on where the flow permanent installation, Zipper option. When things couple That's projects a especially with comes out

solution. a see global continue is to in and opportunities. had those the success and various So this examples, around countries world We've few are a

Bill Baldwin

nature? the projects, in on you early Road of get we're able these to design to the get yourselves the finding into was permanent here on talking to your you design focus early is these where projects I about more itself. Are know Zipper have a that that get stage one design project try of permanent

Brian Ketcham

was Zipper at ago Road applications. that is that a a part can be so of shift implemented variety or could different in of three we table the that really really we used Yes, strategy explain so seat getting left years how

Bill Baldwin

working you? that that for Is working Is well?

Brian Ketcham

traction some definitely seeing we're that. Yes, from

Bill Baldwin

Super.

Russia kind areas? as Can out of And revenue insight year-over-year good. just delta here. decline question came a far any into lastly, revenue much How provide two on as Ukraine those on Okay. Very numbers decline? of the the you of and

Brian Ketcham

it three couple orders a completed in And quarters, million. last $XX we first about last talked a of it's basis probably that in backlog we We've third had. the through it on the approaching on quarters. look year, at if the of -- year-to-date quarter And you the just

Bill Baldwin

Okay. very much. you Thank

Brian Ketcham

All right. Thanks, Bill.

Operator

no Showing like to for closing Wood would remarks. over conference turn Instructions] questions, [Operator I the further Randy any back to

Randy Wood

and your interest and you thank Great, today's conference in call. for participation

we're projected, business did not mentioned, operating by although with And margins our season the materialize spring of As the underlying to during Irrigation fundamentals our segment. the strong as our pleased resiliency continues demonstrate as shown quarter.

various actively remains high, several in the project of around International interest opportunities these quoting and regions we're world.

flow through see create the collaboration partnership Pessl joint customers. to to continue We to value excited our of the value with our with technology strategy. And very we're

the also is supported available segment by IIJA. fundamentals through incremental market Infrastructure The the strong and funding

funding positioned that market released growth. believe is well As we market, to capitalize we're on to the

you our us. on We for quarter end of the This call. at earnings year. joining our updating concludes look continued third progress our Thanks fiscal forward to

Operator

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

You now disconnect. may

Lindsay (LNN) 29 Jun 232023 Q3 Earnings call transcript