LNN - Earnings call transcript Q2 2024

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Operator

Hello, and welcome to the Lindsay Corporation Fiscal Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the call to Randy Wood, President and CEO. Please go ahead.

Randy Wood

Thank you, and good morning, everyone. XXXX earnings fiscal our to second call. quarter Welcome Ketcham, Financial Officer. me today Chief Brian is With our I'm the fiscal through the pleased our first of with half consolidated performance of this year. resilience and business

America grower While market agriculture the sentiment. by continues of performance steady temporarily business activity North irrigation be across industry, American have our to conditions the impacted demand South in supported amid tempered

expansion. Overall, business, for is to our organization infrastructure strategically the encouraged margin our delivering actions the Road in shift and leasing well taken continued as ability Additionally, towards drive our goods market to supported system leading quarter North Zipper meaningful some second solid our operationally the was to I'm by mix as demand of year. we've conditions profitability execute across last order In from year, whole carryover in the regions. farm and versus in expectations navigate profits line with last which the Irrigation suboptimal of America, impact largely by comparable business saw in

While of income in we below back XXXX released farm year-to-date initial the our were are which and tempered approaching markets revenue half end stable its has initial North year The USDA market results, with net expectations. recently demand significantly forecasts expectations. projections, the supported American

While deployment still it's very farmer impact of the equipment this the the has season. near term, early potential sentiment investment new and to negatively the in dollars for in

investment access a to and of experienced financing the continue Moving In irrigation, grower market see softening reduced to we to capacity. limited where international constrained has Brazilian demand. profitability, particular,

these the increased state-level year, do Sul and crops will and with up for support low continue to opportunities Parana ] this grow. Grosso [ we're still Sao in Brazil in operating market. support to mid- term, Ongoing a Mato per levels [ very to markets near to facing droughts the we're While external penetration ], the environment challenging confident X in ability in irrigation long-term and Paulo, in have

Moving to infrastructure.

As Road the continues opening our our touch later. revenue year move encouraging remarks, margin comparable prior profitability I my system Despite Brian the to overall benefit business, Zipper we to an will we that meaningful mentioned improvement of on captured forward. as was that from growth leasing in strong period, indicator

our expect in lease continued the this overall We strong growth heart of the move Zipper rope back pipeline as sales half with backlog construction into coupled revenue in business. we season Road of the year and the a infrastructure for

part we trajectory and begun out, in that we our as Jobs time infrastructure the Infrastructure we're in a of business over We've expect multiyear calls, growth Investments Act. innings only as the that we mentioned for believe dynamic Additionally, of spending prior recently and early play to infrastructure domestically. benefit see to

innovation and to technology. Turning

further interest an a to control, the around the disease [ pestal supporting including with agricultural solutions The company instruments to yesterday, XX.X% globe. We water decision-making, world-class management believe in of infield ] Pestal As acquire acquire a agreed markets. is option we developer solutions for of announced monitoring and company the future. leading ] distributor in remainder we've [ the weather crop and and pest management this stations environmental to irrigation and commitment deploys including highlights to sensors, software hardware, growers and IoT our agricultural providing relationship management.

service customers conditions Our further capabilities. operations while irrigation allow to allowing our platforms analytics digital a reach on of management portfolio, This enhancing and will globally. based combined set and integrated adjust predictive and us monitor broader to strengthens overall users providers technologies water also hemispheric key

million operations. our I'd over more technology implement address January, years Lastly, global state-of-the-art benefit that announcement than expand X In to recent manufacturing next announced greatly invest will commitment $XX our to and the our to like our facilities. modernize to we

implementation technologies, and of robotics. the Our strategic data intelligence the facilities of analytics, artificial connectivity, plans for Industry the and automation our X.X include modernization addition of

Our renovated equipment process for a the and and will manufacturing core in mechanized products. galvanizing, advancements latest road also new safety house facility irrigation systems

and into financial facility we the increased metal XX,XXX forming. feet Lindsay, company's manufacturing you updating results. discuss as by over to like square to capabilities Brian? look Brian Additionally, is to in second call to excellence allow we in history forward for innovation. I'd and we'll be capacity quarter This to largest and our the further expanding Nebraska invest our operational turn investment our

Brian Ketcham

by an results prior foreign quarter expense effective increase year income decrease Consolidated Irrigation Thank The lower year reduced quarter the in a the XXXX $XXX.X a for Brazil. the the revenues compared prior revenues were second million the the Other infrastructure compared share quarter income by of onetime from was was interest $XXX.X quarter. earnings tax other And prior income were per or benefited year. of you, in everyone. the the favorable translation of compared as for of Randy, realization benefit revenues operating The currency and million $X.XX million, second to lower segment revenues or diluted tax for to $X.X increased net in impact to earnings in good tax offset of from diluted second second of and comparable a per decrease resulted morning, $XX.X million prior income year. Net and to fiscal share lower compared to prior quarter. $XX.X favorably year and quarter. $X.XX lower X% the rate were income

of Sales RTU irrigation prior of year. the the $XX.X this average our to did second parts $XX.X resulted upgrades decrease prior with decrease Turning segment Most a quarter. North sales compared million for XX% machines quarter. were year replacement impact substantial year $XXX.X of X% selling second lower year. compared lower revenues not the a million to to of $XXX number sunsetting of from and coverage repeat modem results. the in segment mix the XG the of prior replacement along million to the the shorter revenues connected that to slightly compared prices of a less year of parts, million, decreased favorable in America Irrigation and quarter in included prior of

road XX.X% lease operating were million of operating While primarily in lower available for the second compared from was operating and second equipment year revenues decreases margin the the prior markets The in in current system liquidity yield also increase of with more XX.X% quarter also year increase the segment and Latin income other System prior margin quarter. In to sales to second sales a overall stable is that irrigation February, see in at in offset sales Zipper cash impact year these impacting mainly million of partially the and the resulting regions higher the comparable relatively to one price The selling was we revenues to compared operating in situation a primarily million of revenues as resulting from their selective prior products was Lower XX% overall was grower profitability revenues from of income another. In expectations were prior decrease to income by margin lower quarter operating Infrastructure project safety responded and the margin impact higher from other the in for compared XX% some expenses. resulted operating compared growers markets, second crops Zipper decrease Infrastructure a XX% mix American the revenues lower $X This term. Irrigation $XX.X the prices to quarter. impact the an are unit markets year of prior in increases during indicating And coupled to unwillingness operating Brazil, soybean the segment was the the international by income prices year, deleverage system December while of more revenue year. lease competitive quarter compared credit Road to An levels. year. the prior and XX% Road prior in prior revenues North outlook is sales decreases to environment, lower did year. is operating offset $XX.X Road to negatively an year. and the moderately in prior which to. quarter, favorable was constrained volume $X.X quarter near of decreased for drop margin of revenues of to to quarter. offset a revenues the resulted America Brazil XX% fixed increase we million discounting of and the compared compared and compared sell irrigation XX.X% of investment for prior The operating Zipper for Infrastructure in in remained million, of year. in from compared sales in quarter. million, resulted $XX.X limiting sales lower $XX.X with sales

to balance and sheet the Turning liquidity.

million, available increased million total from revolving end $XXX.X compared available year. liquidity the Our and activities our equivalents credit cash which was the at includes has to the quarter operating cash prior $XXX.X million facility. in generated marketable of $XX securities and under cash, Year-to-date second

cash flow operation. our impacted investments Lindsay, being in being by However, spending Nebraska made increase capital in is our free relating the the to

to access and Our the I'll with my our to operator capital This positioned allocation at time, concludes well take and sustained questions. strong be to for this resources, create liquid execute ample the value remains continue to call enhanced to to balance strategy capital our over turn sheet your shareholders. we remarks. And

Operator

Today's first Instructions] with from North Connors Coast question [Operator Research. comes Ryan

Ryan Connors

a few. got I

in some you and that's and some us elaborate here? kind on can Randy, we all, how And is quantification additional that expect can terms on regarding that any as that? where of into The third color how of move you quarter made or magnitude you at of either first you -- pricing the there. trended comments is And softness give

Brian Ketcham

Yes, Brian that Ketcham. one. is take Ryan, I'll this

seen. quarter reduced share, when in overall what But discounting I match as-need selective basis. regional share it's our As say is protect on my and market some I we've affects we an I during protecting that we've market we'll I'd said that our our overall, say, we've the mentioned remarks, it And seen that prices. would more before think haven't

in competitive prices say, they probably just revenue. in the would look impact the Brazil would when that been -- have that general I been overall say North U.S., minimal -- you the more have softness steady, there in the well, the say looking I'd at a I Our But seen the I the U.S. pressures pricing America on we've market. than with say margins, significant in U.S. outside remain we've would and seen what

Ryan Connors

it. Got

I that, there. the pretty gross on And Brian. well held P&L one here. up margin The appreciate then another Okay. really

I declines side, up pretty know of held you've we despite done some have the gross manufacturing normal? sort double-digit years a stacking Is level there? in happens I margins forth. of now. think, at in well. kind that new negative irregardless we're It Are revenue what X a like top What's the of we're seems forward? things the new revenue this on be sort and efficiencies line the situation of going of to so view going

Brian Ketcham

benefit you some year on though or America at Yes. even margins, from infrastructure there's slightly at I in the say, gross that would obviously, would when second we Irrigation got quarter. last were look North say overall, side. -- I the above

I the with we've as I of pressures just having some with internationally. -- a particularly price the we've years of some both there. that's gross operational over the impact done we've international think U.S. where that that we're well decline volume, standpoint last seeing management that But from in the efficiencies of a in deleverage seen the think Brazil, and in in couple as gained margin things

going months, the you're forward. got Obviously, raw last holding that more bit, we we've your like to impact anything, forward And material feel pricing just gross point, view a of I I going leverage think if environment materials stable margin and a to stabilized present deleverage. of think at softened steel the has have have sustainable. I is think to but stable we be time, costs up do couple going volume raw

I margin that think from we're where supports level. a at So

Ryan Connors

first if one, see to declined surprised a on I time but and a it. bit in A little be we area I the what smaller million why $X And just item I focused efficiencies a below was side. Got while. by some that's almost could. last X technology decline the then P&L, for that? are know we XX% year-over-year there? field that seeing into been Because synergies from read wise? some an And like you've precision the Is a on Or would to that R&D

Randy Wood

shifts. this Ryan, isn't take that And is I'll one. there any Randy. substantial

particular. the in innovation I spending with of in think, obviously, technology and cautious we're areas being

invest. to continue We

you what not is or a just drop there see big So spending. strategic really shift in timing picture and

of that infrastructure those lot in expenses a business testing tests. when hit the conduct have we We

timing. really, it's again, So just

Operator

Brian question next The Drab is with Blair. from William

Tyler Hutin

for your This is $XX million what within be those on to was Hutin backlog the are wondering of about fulfilled It orders to. months. not Tyler XX are mentioned next worth that Brian. expected I'm orders in mostly related just

Brian Ketcham

the a Road of say increase category is multiyear on lease signed that in Zipper million, side, a lease and we've related to the primarily roughly I'd multiyear Texas had in Yes, the $XX that a renewal is year-over-year that we've reason. is that

Tyler Hutin

products driving the in what's And markets? safety the Okay. international salable lower road

Brian Ketcham

road did and in construction. again, like things the again, that. being really, Europe, in by federal the of an weather the months, supported additional That's timing U.S. impact funding U.S. We winner can and see increase

in But that, would in quarter, and the weather say, less see it U.S. was to or products related. I We safety expected more more grow timing in Europe the road

Tyler Hutin

Got do have Road more. how pipeline details I it. on of evolving. Zipper just understand is that timing you couple just the a And any [indiscernible]

Brian Ketcham

Yes. we'll have I of QX that we improved that projects do funnel, feel in some moved in most line forward point. see think, we recognized the into to moving fiscal as XXXX, and fiscal projects in sight do year we've do this at likely now,

our will years gets as much versus spills XXXX feel [indiscernible] for that the in sales the comments, on think dictate this into based about growth fiscal also I much good next few prospects our project how into of But Randy but his XXXX. in year mentioned we timing how

Tyler Hutin

And just of kind then the questions. following lastly, of one on previous to

margin had in above you operating quarter. XX% So the

and that aggregation? of As to say safe domestic you international despite the probably XX% above pretty [indiscernible] year headwinds some near-term and

Brian Ketcham

caught I'm not question completely, Tyler. the I sure

Tyler Hutin

Yes, with in you'll line for margin the XX% in I'm just fiscal target. you average wondering, likely X-year year think [indiscernible] operating finish your on

Brian Ketcham

definitely fourth Yes. lowest being I quarter the I mean there's quarter-to-quarter, think our in U.S. seasonality, there's

we're So margin a from I at think we feel good about standpoint. where

impact the ability And will to point. our done think of the volume I mean, decreases us. objective we've to on have for think some good But margins. is we protect job a operating this we've on I seen feel our the like an up impact that pretty I of based our to

Operator

The next is Jon Kansas from question with City Capital. Braatz

Jon Braatz

years over years incrementally, what $XX on $XX ahead? your good million in margins past you couple that in manufacturing Randy, making improving get obviously, investment a the facility, and that job million you're you've the margins. of done in will

Randy Wood

up some connected I and some we a interesting automation, And think us capacity areas there's react improving we and going that think and talked increasing in is maybe efficiently market this to we've we're galvanizing. few about. whether Obviously, have to the more detailed than past investments, really flow. the to modernize new in making to end, demand, down. faster position We're that's or material facilities capabilities, big robotics, really we

taking that leveraging inside our technologies X.X we're and and industry for think really net customers, types the of the net those tools developed to field new the like our the it, of I about monitor field way we've we're adviser similar that of technologies equipment. factories. production Some And and

maintenance, machine So ahead course, And we'll we're stay any of for employees. always opportunity performance, of have very to those mindful improve of types better the safety of monitoring of things.

it, investments wonderful the think pretty about you, capabilities weekend people excited I they're the modernization, groundbreaking energized data new had production the leveraging both excited we and flexibility and about inside equipment, we're So last tell some too. the can in that and and automation, in facility, a I ceremony

Jon Braatz

think you you say, over what in improve cycle? do this could million facility the let's $XX do how that cycle, can much margin your you think with margin you -- over that investment, So the x, Randy, is

Brian Ketcham

jump is one. Brian. this John, that on I'll in

is up add I that flex lot it to a and down and think of remove does near without flex labor. what term gives us ability having to or really

a it. And of part so that's big

obviously, significantly margins. demand you're savings ago. I let's that think an a as it think the the I offset that depreciation say, in have years I view did in some increases like mean, of would stabilizing term couple for more you being But have. more I we of as it going increase productivity to near

we Our the reliance as to labor, less difficult up Nebraska in find flex of some know, to out which, be because low up, unemployment on and should with able the pick having to ability just is you go rate. margin

Jon Braatz

Okay.

that seen is that Okay. ago, Brian, in about with investment. you What less in X have than years, years X seen a [ that Am you have What guys relationship past pastal encouraged you a taking you? ]. established pronouncing Okay. you correctly? resulted I these XX.X%

Randy Wood

relationship is John. actually last Yes. the been I'll that that This within Randy. And one, year. take formalized

So you company. synergies a at those look but hardware being We're their able kind when a global they're we a global services relatively and areas. software don't through But of still early. channel, of move in of it's company, the our to overlap lot

devices help we So management that the models the opportunities tools we field input the data adviser the they've got can and guidance, recurring immediate And XX,XXX exciting for net around the about better from field data provide annual companies. acquisition, really world installed we do FieldNET platform. broader think I is opportunities and some see over tremendous opportunities the and creates can water part expand like creates the that investment using digital sensors, analytics, integration revenue with have revenue some and we that the improve and to both and to the

really running. great feel founder and the going ownership, So ground we're great company, we've and we got hit a to

Jon Braatz

accounted I as to equity be going it's assume an Okay. investment. Brian, for

Brian Ketcham

that's . correct. Yes,

Operator

comes Partners. next American Kearney Brett question with from Opportunity The Rebirth

Brett Kearney

a ] the patsal instruments partnership agreement. way [ a I follow-up seems the Congratulations. like deepen there. just to had great on It

based, installed an it's existing penetrated you those is able have they they're well geographically, have, say customers relationships, maybe Europe, into given strong America, Obviously, in as your the Brazil globally, opportunity. some geared you're you're XX,XXX bring towards they region? more devices but more curious, Lindsay where the to them European would Just and North not

Randy Wood

Yes.

is think in they're things. fruits the map, types in when everywhere. Europe. footprint, vineyards, at of I would I a specialty their nuts, those and orchards, they're But weighted more you the crops, look say, involved And little

other think So but Brad. Advisor us, with different current than of in digital ability in them the areas world our platforms, everywhere to FieldNET, we then maybe we footprint, technology, see with FieldNET integrate North take their or the equipment America the them we can and

Operator

next comes with Nathan question The Instructions] Jones [Operator from Stifel.

Adam Farley

Farley This I on Brazil is want start Brazilian worse? the your the near market Brazil. Adam on Nathan. over for to incrementally maybe to for expectation What we term? Should get is expect

Randy Wood

Adam, south his our being In view short really notes, weather very was headwinds in of we is in what of the too view, it all lot were the term some you Brian as short-term too that year of was that a Brazil those on in this mentioned the the tricky factors and again, we north market. see, short whether wet, depending tricky term. or was dry. in But is

look state market, X we than that the over And that long-term We've have, the amount it's We've going states just penetrated weeks. see these view, to world. of a still, months. the met ability are to you crops. with of X% for land irrigation. large our past And in growth most less X%, than next outlook here at when ag significant the several to got of they visits with generate other in when planned over of in the less couple So of Omaha production mid- officials lot one markets their be

state-level there. certainly So government support to we and interest from do have federal governments continue from more see

are bullish term, investments So right in do And long strongest our we've team now. some Brazil of navigating have Brazil a we members there. kind are made just short-term in the -- the of of in we headwinds lot

Adam Farley

America on maybe All Brazil markets looking for project demand of international and the update outside you funnel. the right. could Brazil, us also outside Maybe and give an of South fundamentals

Randy Wood

our around at they ups other not Sure. And America because The purchasers, Europe, talk which now there's when a kind when is of project on of puts and when pieces world, Northern markets project talking we the view, very movers we offset are And international and specific look that, we're about you obviously Eastern the about go but revenues. and the needle of really specific And then the near strong, on. Middle rest the in of big downs. very specific is lot talk sub-Saharan both are being of land, activity, we still on you minor Brazil long lot movers the about And Africa. strong, when worked and East a designs South demand and that the comment project now and takes big depending term. significantly

we're are competitors, Some the in several quoting along of we world. on those actively with depending where

of letters to the activity. Some really like financing arranging tough on details. same we're predict, those. credits as those confirmed and always project and see project is disclaimer long-term funnel of do delivery and what The working we both through timing short- and in but we

Operator

would like call remarks. question-and-answer This Wood our closing I for session. over back Randy to to turn concludes the

Randy Wood

Well, We your joining continued progress look international today. of of quarter. a very appreciate to tempered forward and with for thank our global outlook following for updating all you markets, about of and optimistic fiscal XXXX their team our prospects. irrigation long-term We're third few near-term the in Despite us. the we for in joining Lindsay interest on company's our Thanks our all close remain you a accomplishments. pleased efforts us

Operator

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

may You lines. now your disconnect

Lindsay (LNN) 4 Apr 242024 Q2 Earnings call transcript