LNN
$80.61
Lindsay
$2.37
3.03%
Earnings Details
2nd Quarter February 2019
Tuesday, April 9, 2019 6:45:00 AM
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Summary

Lindsay Misses

Lindsay (LNN) reported 2nd Quarter February 2019 earnings of $0.02 per share on revenue of $109.2 million. The consensus earnings estimate was $0.62 per share on revenue of $114.5 million. The Earnings Whisper number was $0.65 per share. Revenue fell 16.2% compared to the same quarter a year ago.

Lindsay Corp designs, manufactures, and sells irrigation systems used in the agricultural industry to increase or stabilize crop production while conserving water, energy, and labor. It also manufactures infrastructure products and services.

Results
Reported Earnings
$0.02
Earnings Whisper
$0.65
Consensus Estimate
$0.62
Reported Revenue
$109.2 Mil
Revenue Estimate
$114.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Lindsay Corporation Reports Fiscal 2019 Second Quarter Results

  • International irrigation revenues increased 15 percent led by project sales in developing markets
  • North America irrigation market conditions worsen as trade concerns weigh on farmer sentiment
  • Infrastructure revenues decreased 27 percent on lower Road Zipper System® sales

OMAHA, Neb.--(BUSINESS WIRE)-- Lindsay Corporation (NYSE: LNN), a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, today announced results for its second quarter ended February 28, 2019.

Second Quarter Summary

Revenues for the second quarter of fiscal 2019 were $109.2 million, a decrease of $21.2 million, or 16 percent, compared to revenues of $130.3 million in the prior year’s second quarter. Approximately $19.6 million of the total decrease in revenues was attributable to previously announced business divestitures in the irrigation segment as part of the Company’s Foundation for Growth initiative.

The Company incurred a net loss for the quarter of $3.4 million, or $0.32 per diluted share, compared with net earnings of $1.7 million, or $0.16 per diluted share, for the same period in the prior year. In addition to the impact of lower revenues, net earnings for the quarter were reduced by after-tax costs of $3.7 million, or $0.34 per diluted share, related to the Company’s Foundation for Growth initiative. Excluding these additional costs, net earnings for the second quarter would have been $0.2 million, or $0.02 per diluted share.1 Net earnings for the same period in the prior year adjusted for these costs, plus the tax expense attributable to enactment of the U.S. Tax Cuts and Jobs Act, were $6.0 million, or $0.56 per diluted share.1

“North America irrigation sales volumes were significantly lower than anticipated as the unresolved US-China trade dispute contributed to a further decline in farmer sentiment,” said Tim Hassinger, President and Chief Executive Officer. “Along with that, lower Road Zipper System® sales contributed to a disappointing quarter. We were however pleased to see an increase in our international irrigation sales compared to the prior year.”

Segment Results

Irrigation segment revenues for the second quarter of fiscal 2019 were $95.8 million, a decrease of $16.1 million, or 14 percent, compared to $111.9 million in the prior year’s second quarter. Excluding the impact of the divestitures, North America irrigation revenues of $57.7 million decreased $1.6 million, or 3 percent, compared to the prior year. Lower irrigation equipment sales volume was partially offset by higher average selling prices and higher revenue from engineering project services. International irrigation revenues of $38.1 million increased $5.1 million, or 15 percent, compared to the prior year. Excluding the negative impact of differences in foreign currency translation compared to the prior year, international irrigation revenues increased $7.4 million, or 22 percent, led by higher project sales in developing markets.

Irrigation segment operating margin was 7.9 percent of sales in the second quarter, compared to 10.7 percent of sales (11.2 percent adjusted)1 in the prior year. Irrigation segment operating margin was negatively impacted in the quarter by negative margin mix from lower equipment sales volumes in North America, higher warranty costs and operational inefficiencies.

Infrastructure segment revenues for the second quarter of fiscal 2019 were $13.4 million, a decrease of $5.1 million, or 27 percent, compared to $18.5 million in the prior year’s second quarter. The decrease resulted primarily from lower Road Zipper System® sales compared to the prior year along with slightly lower sales of road safety products.

The infrastructure segment incurred an operating loss of $0.4 million in the second quarter, compared to operating income of $2.5 million in the second quarter of the prior year. The decrease resulted primarily from lower Road Zipper System® sales compared to the prior year.

The backlog of unshipped orders at February 28, 2019 was $44.4 million, compared with $90.2 million at February 28, 2018. Approximately $14.8 million of the backlog reduction resulted from the business divestitures and $28.5 million of the reduction is from a lower backlog of Road Zipper System orders compared to the prior year.

Foundation for Growth Initiative

In fiscal 2018, the Company announced a defined performance improvement initiative, referred to as Foundation for Growth, with the objectives of simplifying the business and achieving operating margin performance of 11 percent to 12 percent in fiscal 2020, assuming no improvement in market conditions from fiscal 2017.

Outlook

“Impacts of the recent widespread flooding in the Midwest are unknown at this time, and we don’t expect to see meaningful improvement in farmer sentiment while the U.S-China trade uncertainty persists,” said Mr. Hassinger. “We expect market conditions in Brazil to continue improving and international project markets to remain active.”

Mr. Hassinger added, “I’m encouraged by the early signs of success we are seeing in our Road Zipper System strategy to be more involved in the planning stage of major highway construction projects, and we expect to see additional sales and leasing opportunities as a result.”

Second Quarter Conference Call

Lindsay’s fiscal 2019 second quarter investor conference call is scheduled for 11:00 a.m. Eastern Time today. Interested investors may participate in the call by dialing (833) 535-2202 in the U.S., or (412) 902-6745 internationally, and requesting the Lindsay Corporation call. Additionally, the conference call will be simulcast live on the Internet and can be accessed via the investor relations section of the Company's Web site, www.lindsay.com. Replays of the conference call will remain on our Web site through the next quarterly earnings release. The Company will have a slide presentation available to augment management's formal presentation, which will also be accessible via the Company's Web site.

About the Company

Lindsay Corporation is a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology. The Lindsay family of irrigation brands includes Zimmatic® and FieldNET® as well as irrigation consulting, design, advanced machine-to-machine communication, remote control, monitoring and scheduling technology, and wireless networking solutions. Also a global leader in the transportation industry, Lindsay Transportation Solutions manufactures equipment to improve road safety and keep traffic moving on the world’s roads, bridges and tunnels, through the Barrier Systems®, Road Zipper® and Snoline™ brands. For more information about Lindsay Corporation, visit www.lindsay.com.

1 Please see Reg G reconciliation of GAAP operating income, net earnings and earnings per share to adjusted figures at end of document.

Concerning Forward-looking Statements

This release contains forward-looking statements that are subject to risks and uncertainties and which reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results. You can find a discussion of many of these risks and uncertainties in the annual, quarterly and current reports that the Company files with the Securities and Exchange Commission. Forward-looking statements include information concerning possible or assumed future results of operations and planned financing of the Company and those statements preceded by, followed by or including the words “anticipate,” “estimate,” “believe,” “intend,” "expect," "outlook," "could," "may," "should," “will,” or similar expressions. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking information contained in this press release.

 
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
           
Three months ended Six months ended
(in thousands, except per share amounts) February 28,

2019

  February 28,

2018

February 28,

2019

February 28,

2018

 
Operating revenues $ 109,182 $ 130,339 $ 221,133 $ 254,865
Cost of operating revenues   84,708     95,023     168,011     187,152  
Gross profit   24,474     35,316     53,122     67,713  
 
Operating expenses:
Selling expense 8,437 10,020 16,419 20,245
General and administrative expense 16,832 14,086 31,890 26,004
Engineering and research expense   3,665     3,919     7,233     7,972  
Total operating expenses   28,934     28,025     55,542     54,221  
 
Operating income (loss) (4,460 ) 7,291 (2,420 ) 13,492
 
Interest expense (1,178 ) (1,095 ) (2,383 ) (2,331 )
Interest income 751 311 1,405 686
Other income (expense), net   (181 )   (831 )   11     (1,379 )
 
Earnings (loss) before income taxes (5,068 ) 5,676 (3,387 ) 10,468
 
Income tax expense (benefit)   (1,628 )   3,941     (1,159 )   5,548  
 
Net earnings (loss) $ (3,440 ) $ 1,735   $ (2,228 ) $ 4,920  
 
Earnings (loss) per share:
Basic $ (0.32 ) $ 0.16 $ (0.21 ) $ 0.46
Diluted $ (0.32 ) $ 0.16 $ (0.21 ) $ 0.46
 
Shares used in computing earnings (loss) per share:
Basic 10,786 10,743 10,776 10,724
Diluted 10,786 10,765 10,776 10,752
 
Cash dividends declared per share $ 0.31 $ 0.30 $ 0.62 $ 0.60
 
 
LINDSAY CORPORATION AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Unaudited)
               
Three months ended Six months ended
(in thousands) February 28,

2019

February 28,

2018

February 28,

2019

February 28,

2018

Operating revenues:
Irrigation segment $ 95,766 $ 111,865 $ 183,376 $ 215,218
Infrastructure segment   13,416     18,474     37,757     39,647  
Total operating revenues $ 109,182   $ 130,339   $ 221,133   $ 254,865  
 
Operating income:
Irrigation segment $ 7,521 $ 11,933 $ 15,304 $ 19,784
Infrastructure segment (446 ) 2,519 3,722 5,810
Corporate   (11,535 )   (7,161 )   (21,446 )   (12,102 )
Total operating income $ (4,460 ) $ 7,291   $ (2,420 ) $ 13,492  
 

The Company manages its business activities in two reportable segments as follows:

Irrigation - This reporting segment includes the manufacture and marketing of center pivot, lateral move, and hose reel irrigation systems, as well as irrigation consulting and design, remote control and monitoring, irrigation scheduling, and machine-to-machine technology.

Infrastructure – This reporting segment includes the manufacture and marketing of moveable barriers, specialty barriers, crash cushions and end terminals, and road marking and road safety equipment.

 
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
             
 
(in thousands) February 28,

2019

February 28,

2018

August 31,

2018

 
ASSETS
Current assets:
Cash and cash equivalents $ 102,778 $ 102,211 $ 160,787
Receivables, net 88,576 96,738 69,107
Inventories, net 99,984 102,975 79,233
Prepaid expenses 4,948 5,339 3,883
Assets held-for-sale 2,744 - 10,837
Other current assets   18,196     6,092     7,204  
Total current assets   317,226     313,355     331,051  
 
Property, plant, and equipment, net 65,306 72,678 57,248
Intangibles, net 25,853 40,677 27,376
Goodwill 64,591 77,296 64,671
Deferred income tax assets 6,484 5,773 6,645
Other noncurrent assets, net   20,645     12,575     13,265  
Total assets $ 500,105   $ 522,354   $ 500,256  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 37,419 $ 46,599 $ 30,530
Current portion of long-term debt 207 203 205
Liabilities held-for-sale - - 2,424
Other current liabilities   44,825     57,720     46,935  
Total current liabilities   82,451     104,522     80,094  
 
Pension benefits liabilities 5,732 6,152 5,874
Long-term debt 116,466 116,673 116,570
Deferred income tax liabilities 991 1,179 1,083
Other noncurrent liabilities   22,622     20,768     19,769  
Total liabilities   228,262     249,294     223,390  
 
Shareholders' equity:
Preferred stock
Common stock 18,870 18,841 18,841
Capital in excess of stated value 69,772 66,625 68,465
Retained earnings 477,027 476,091 484,886
Less treasury stock - at cost (277,238 ) (277,238 ) (277,238 )
Accumulated other comprehensive loss, net   (16,588 )   (11,259 )   (18,088 )
Total shareholders' equity   271,843     273,060     276,866  
Total liabilities and shareholders' equity $ 500,105   $ 522,354   $ 500,256  
 
 
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
         
Six months ended
(in thousands) February 28,

2019

February 28,

2018

CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (2,228 ) $ 4,920

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

Depreciation and amortization 6,889 8,599
Loss on sale of business 67
Provision for uncollectible accounts receivable (315 ) 228
Deferred income taxes (105 ) (931 )
Share-based compensation expense 2,403 1,887
Other, net (1,093 ) 45
Changes in assets and liabilities:
Receivables (18,157 ) (23,084 )
Inventories (22,246 ) (15,239 )
Prepaid expenses and other current assets (5,111 ) (1,731 )
Accounts payable 8,402 9,728
Other current liabilities (9,792 ) 5,313
Other noncurrent assets and liabilities   1,439     1,368  
Net cash used in operating activities   (39,847 )   (8,897 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (11,701 ) (4,715 )
Proceeds from settlement of net investment hedges 1,462 101
Payments for settlement of net investment hedges (245 ) (1,967 )
Other investing activities, net   38     137  
Net cash used in investing activities   (10,446 )   (6,444 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 177 2,788
Common stock withheld for payroll tax obligations (1,124 ) (833 )
Principal payments on long-term debt (102 ) (100 )
Dividends paid   (6,688 )   (6,444 )
Net cash used in financing activities   (7,737 )   (4,589 )
 
Effect of exchange rate changes on cash and cash equivalents   21     521  
Net change in cash and cash equivalents (58,009 ) (19,409 )
Cash and cash equivalents, beginning of period   160,787     121,620  
Cash and cash equivalents, end of period $ 102,778   $ 102,211  
 
 

LINDSAY CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Unaudited)

The non-GAAP tables below disclose (a) the impact on diluted earnings per share of consulting fees, severance costs and loss from business divestitures, associated with the Company's Foundation for Growth Initiative ("FFG costs"), (b) the impact on operating income of FFG costs, and (c) the impact on segment operating income of FFG costs. Management believes adjusted net earnings, adjusted diluted earnings per share and adjusted operating income are important indicators of the Company’s business performance because they exclude items that may not be indicative of, or may be unrelated to, the Company’s underlying operating results, and provide a useful baseline for analyzing trends in the business. Non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. These adjusted financial measures should not be considered in isolation or as a substitute for reported net earnings, diluted earnings per share and operating income. These non-GAAP financial measures reflect an additional way of viewing the Company’s operations that, when viewed with the GAAP results and the following reconciliations to the corresponding GAAP financial measures, management believes provides a more complete understanding of the Company’s business.

         
Three months ended Six months ended
(in thousands, except per share amounts) February 28,

2019

 

Diluted earnings
per share

February 28,

2019

 

Diluted earnings
per share

 
Net earnings - as reported $ (3,440 ) $ (0.32 ) $ (2,228 ) $ (0.21 )
 
FFG costs - after tax   3,671     0.34     6,587     0.61  
 
Net earnings - adjusted $ 231   $ 0.02   $ 4,359   $ 0.40  
Average shares outstanding - diluted 10,786 10,776
 
 
For the three months ended February 28, 2019

Operating income reconciliation

Consolidated Irrigation Infrastructure Corporate
 
Operating income - as reported $ (4,460 ) $ 7,521 $ (446 ) $ (11,535 )
 
FFG costs - pre-tax   5,281         20     5,261  
 
Adjusted operating income $ 821   $ 7,521   $ (426 ) $ (6,274 )
 
Operating revenues $ 109,182 $ 95,766 $ 13,416 $
 
Operating income as a percent of operating revenues -4.1 % 7.9 % -3.3 % N/A
 
Adjusted operating income as a percent of operating revenues   0.8 %   7.9 %   -3.2 %   N/A  
 
 
For the six months ended February 28, 2019

Operating income reconciliation

Consolidated Irrigation Infrastructure Corporate
 
Operating income - as reported $ (2,420 ) $ 15,304 $ 3,722 $ (21,446 )
 
FFG costs - pre-tax   9,276     126     132     9,018  
 
Adjusted operating income $ 6,856   $ 15,430   $ 3,854   $ (12,428 )
 
Operating revenues $ 221,133 $ 183,376 $ 37,757 $
 
Operating income as a percent of operating revenues -1.1 % 8.3 % 9.9 % N/A
 
Adjusted operating income as a percent of operating revenues   3.1 %   8.4 %   10.2 %   N/A  
 
 

LINDSAY CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Unaudited)

The non-GAAP tables below disclose (a) the impact on diluted earnings per share of (1) tax expense attributed to enactment of the U.S. Tax Cuts and Jobs Act ("U.S. Tax Reform"), and (2) severance costs and professional consulting fees associated with the Company's Foundation for Growth initiative ("FFG costs"), (b) the impact on operating income of FFG costs, and (c) the impact on segment operating income of FFG costs. Management believes adjusted net earnings, adjusted diluted earnings per share and adjusted operating income are important indicators of the Company’s business performance because they exclude items that may not be indicative of, or may be unrelated to, the Company’s underlying operating results, and provide a useful baseline for analyzing trends in the business. Non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. These adjusted financial measures should not be considered in isolation or as a substitute for reported net earnings, diluted earnings per share and operating income. These non-GAAP financial measures reflect an additional way of viewing the Company’s operations that, when viewed with the GAAP results and the following reconciliations to the corresponding GAAP financial measures, management believes provides a more complete understanding of the Company’s business.

         
Three months ended Six months ended
(in thousands, except per share amounts)

February 28,
2018

 

Diluted earnings
per share

February 28,
2018

 

Diluted earnings
per share

 
Net earnings - as reported $ 1,735 $ 0.16 $ 4,920 $ 0.46
 
Impact of U.S. Tax Reform 2,578 0.24 2,578 0.24
 
FFG costs - after tax   1,668     0.15     1,668     0.16  
 
Net earnings - adjusted $ 5,981   $ 0.56   $ 9,166   $ 0.85  
Average shares outstanding - diluted 10,765 10,752
 
 
For the three months ended February 28, 2018

Operating income reconciliation

Consolidated Irrigation Infrastructure Corporate
 
Operating income - as reported $ 7,291 $ 11,933 $ 2,519 $ (7,161 )
 
FFG costs - pre-tax   2,331     573         1,758  
 
Adjusted operating income $ 9,622   $ 12,506   $ 2,519   $ (5,403 )
 
Operating revenues $ 130,339 $ 111,865 $ 18,474 $
 
Operating income as a percent of operating revenues 5.6 % 10.7 % 13.6 % N/A
 
Adjusted operating income as a percent of operating revenues   7.4 %   11.2 %   13.6 %   N/A  
 
 
For the six months ended February 28, 2018

Operating income reconciliation

Consolidated Irrigation Infrastructure Corporate
 
Operating income - as reported $ 13,492 $ 19,784 $ 5,810 $ (12,102 )
 
FFG costs - pre-tax   2,331     573         1,758  
 
Adjusted operating income $ 15,823   $ 20,357   $ 5,810   $ (10,344 )
 
Operating revenues $ 254,865 $ 215,218 $ 39,647 $
 
Operating income as a percent of operating revenues 5.3 % 9.2 % 14.7 % N/A
 
Adjusted operating income as a percent of operating revenues   6.2 %   9.5 %   14.7 %   N/A  
 

LINDSAY CORPORATION:
Brian Ketcham
Senior Vice President & Chief Financial Officer
402-827-6579

HALLIBURTON INVESTOR RELATIONS:
Hala Elsherbini or Geralyn DeBusk
972-458-8000

Source: Lindsay Corporation