Lindsay Corporation Reports Fiscal 2020 Fourth Quarter and Full Year Results

·10-min read
  • Irrigation and Infrastructure segments deliver fourth quarter revenue growth

  • Fourth quarter revenues grow to $128.4 million and EPS improves to $1.35

  • Margin improvement objective achieved with full year operating margin of 11.4 percent

Lindsay Corporation (NYSE: LNN), a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, today announced results for its fourth quarter and fiscal year, which ended on August 31, 2020.

Fourth Quarter and Full Year Summary

Revenues for the fourth quarter of fiscal 2020 were $128.4 million, an increase of $26.5 million, or 26 percent, compared to revenues of $101.9 million in the prior year fourth quarter. Net earnings for the quarter were $14.7 million, or $1.35 per diluted share, compared with net earnings of $1.5 million, or $0.14 per diluted share, for the prior year fourth quarter. Net earnings for the prior year fourth quarter adjusted to eliminate costs associated with the Foundation for Growth initiative and a valuation adjustment for indirect tax credits were $5.8 million, or $0.54 per diluted share.1

Revenues for the year ended August 31, 2020, were $474.7 million, an increase of $30.6 million, or 7 percent, compared to revenues of $444.1 million in the prior year. Net earnings for the year were $38.6 million, or $3.56 per diluted share, compared with net earnings of $2.2 million, or $0.20 per diluted share, in the prior year. Net earnings for the prior year adjusted to eliminate costs associated with the Foundation for Growth initiative and a valuation adjustment for indirect tax credits were $15.6 million, or $1.45 per diluted share.1

"We were pleased to see fourth quarter revenue growth in both our Irrigation and Infrastructure segments, highlighted by the successful execution of our large Road Zipper® project with Highways England in the U.K.," said Tim Hassinger, President and Chief Executive Officer. "I am proud of the Lindsay team for achieving our 2020 operating margin goal, especially given the additional market challenges presented by the coronavirus pandemic. We achieved another key objective related to culture, measured through an organizational health assessment conducted by a major consulting firm."

Fourth Quarter Segment Results

Irrigation segment revenues for the fourth quarter of fiscal 2020 were $75.6 million, an increase of $6.1 million, or 9 percent, compared to $69.5 million in the prior year fourth quarter. North America irrigation revenues of $39.8 million decreased $1.8 million, or 4 percent, compared to the prior year. The decrease resulted primarily from lower engineering services revenue related to a project in the prior year that did not repeat. An increase in irrigation equipment unit volume and higher sales of replacement parts was offset by the impact of lower average selling prices. International irrigation revenues of $35.8 million increased $7.8 million, or 28 percent. The increase resulted primarily from higher sales volumes in Brazil, Australia and the Middle East which were partially offset by the unfavorable effects of foreign currency translation of approximately $3.4 million compared to the prior year.

Irrigation segment operating margin was 7.7 percent of sales in the fourth quarter, compared to 5.0 percent of sales (9.0 percent adjusted)1 in the prior year fourth quarter. Operating margin in the current year fourth quarter was negatively impacted by expense of approximately $1.6 million, related to an increase in the environmental remediation liability and severance costs.

Infrastructure segment revenues for the fourth quarter of fiscal 2020 were $52.8 million, an increase of $20.4 million, or 63 percent, compared to $32.4 million in the prior year. The increase resulted from higher Road Zipper System® sales compared to the prior year, including the large project with Highways England in the U.K.

Infrastructure segment operating margin was 38.0 percent of sales in the fourth quarter, compared to 28.8 percent of sales in the prior year fourth quarter. Operating margin improvement resulted primarily from increased sales in higher margin product lines and from improved cost and pricing performance.

The backlog of unfilled orders at August 31, 2020 was $58.7 million compared with $55.4 million at August 31, 2019. Included in these backlogs are amounts of $6.3 million and $10.0 million, respectively, that are not expected to be fulfilled within the subsequent twelve months.

Outlook

"The recent increase in agricultural commodity prices along with additional government support payments to farmers under the expanded Coronavirus Food Assistance Program have raised estimates for U.S. farm income," said Mr. Hassinger. "This supports an improved outlook for North America irrigation equipment demand for the fall selling season. We expect growth in international irrigation led by continued momentum in Brazil and other markets as well as new agricultural development being driven by heightened food security concerns as a result of the global coronavirus pandemic."

Mr. Hassinger added, "Our infrastructure business achieved a record year in fiscal 2020, in large part due to our success in implementing the "shift left" strategy to expand our addressable market for Road Zipper® systems. We continue to be encouraged by the execution of this strategy, which has resulted in a higher quality sales funnel."

Fourth Quarter Conference Call

Lindsay’s fiscal 2020 fourth 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.

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

About the Company

Lindsay Corporation (NYSE: LNN) is a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology. Established in 1955, the company has been at the forefront of research and development of innovative solutions to meet the food, fuel, fiber and transportation needs of the world’s rapidly growing population. The Lindsay family of irrigation brands includes Zimmatic® center pivot and lateral move agricultural irrigation systems and FieldNET® remote irrigation management and scheduling technology, as well as irrigation consulting and design and industrial IoT 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.

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 August 31,

Years Ended August 31,

(in thousands, except per share amounts)

2020

2019

2020

2019

Operating revenues

$

128,405

$

101,885

$

474,692

$

444,072

Cost of operating revenues

83,038

70,398

322,149

329,464

Gross profit

45,367

31,487

152,543

114,608

Operating expenses:

Selling expense

9,343

6,886

31,444

30,820

General and administrative expense

14,921

17,152

52,947

63,737

Engineering and research expense

3,647

3,389

13,950

13,936

Total operating expenses

27,911

27,427

98,341

108,493

Operating income

17,456

4,060

54,202

6,115

Other income (expense):

Interest expense

(1,185

)

(1,215

)

(4,759

)

(4,767

)

Interest income

544

472

1,956

2,402

Other income (expense), net

1,641

(1,052

)

(2,556

)

(1,643

)

Total other income (expense)

1,000

(1,795

)

(5,359

)

(4,008

)

Earnings before income taxes

18,456

2,265

48,843

2,107

Income tax expense (benefit)

3,782

762

10,214

(65

)

Net earnings

$

14,674

$

1,503

$

38,629

$

2,172

Earnings per share:

Basic

$

1.35

$

0.14

$

3.57

$

0.20

Diluted

$

1.35

$

0.14

$

3.56

$

0.20

Shares used in computing earnings per share:

Basic

10,835

10,786

10,823

10,781

Diluted

10,880

10,817

10,861

10,810

Cash dividends declared per share

$

0.32

$

0.31

$

1.26

$

1.24

LINDSAY CORPORATION AND SUBSIDIARIES

SUMMARY OPERATING RESULTS

(Unaudited)

Three months ended

Twelve months ended

(in thousands)

August 31,

2020

August 31,

2019

August 31,

2020

August 31,

2019

Operating revenues:

Irrigation:

North America

$

39,757

$

41,509

$

218,954

$

218,627

International

35,824

27,995

124,575

132,871

Irrigation total

75,581

69,504

343,529

351,498

Infrastructure

52,824

32,381

131,163

92,574

Total operating revenues

$

128,405

$

101,885

$

474,692

$

444,072

Operating income:

Irrigation

$

5,829

$

3,463

$

40,214

$

29,804

Infrastructure

20,085

9,340

43,771

16,599

Corporate

(8,458

)

(8,743

)

(29,783

)

(40,288

)

Total operating income

$

17,456

$

4,060

$

54,202

$

6,115

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 various innovative technology solutions such as GPS positioning and guidance, variable rate irrigation, remote irrigation management and scheduling technology, irrigation consulting and design and industrial IoT solutions.

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)

August 31,

2020

August 31,

2019

ASSETS

Current assets:

Cash and cash equivalents

$

121,403

$

127,204

Marketable securities

19,511

Receivables, net of allowance of $2,780 and $2,635, respectively

84,604

75,551

Inventories, net

104,792

92,287

Assets held-for-sale

2,744

Other current assets

17,625

15,704

Total current assets

347,935

313,490

Property, plant, and equipment, net

79,581

68,968

Intangible assets, net

23,477

24,382

Goodwill

68,004

64,387

Operating lease right-of-use assets

27,457

Deferred income tax assets

9,935

11,758

Other noncurrent assets

14,137

17,329

Total assets

$

570,526

$

500,314

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

29,554

...

$

29,434

Current portion of long-term debt

195

209

Other current liabilities

72,646

52,488

Total current liabilities

102,395

82,131

Pension benefits liabilities

6,374

6,029

Long-term debt

115,682

115,846

Operating lease liabilities

25,862

Deferred income tax liabilities

889

872

Other noncurrent liabilities

20,806

27,227

Total liabilities

272,008

232,105

Shareholders' equity:

Preferred stock

Common stock

18,918

18,870

Capital in excess of stated value

77,686

71,684

Retained earnings

499,724

474,740

Less treasury stock - at cost

(277,238

)

(277,238

)

Accumulated other comprehensive loss, net

(20,572

)

(19,847

)

Total shareholders' equity

298,518

268,209

Total liabilities and shareholders' equity

$

570,526

$

500,314

LINDSAY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Years Ended August 31,

(in thousands)

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings

$

38,629

$

2,172

Adjustments to reconcile net earnings to net cash provided

by operating activities:

Depreciation and amortization

19,396

14,018

Gain on sale of property and equipment

(1,158

)

26

Loss on sale of businesses

301

Provision (benefit) for uncollectible accounts receivable

589

(496

)

Deferred income taxes

1,384

(5,686

)

Share-based compensation expense

5,616

4,195

Valuation adjustment for indirect tax credits

2,795

Foreign currency transaction loss

1,102

709

Other, net

1,446

246

Changes in assets and liabilities:

Receivables

(9,523

)

(7,969

)

Inventories

(14,039

)

(16,187

)

Other current assets

(6,612

)

173

Accounts payable

(691

)

2,119

Other current liabilities

16,673

2,629

Other noncurrent assets and liabilities

(6,778

)

4,752

Net cash provided by operating activities

46,034

3,797

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment

(21,445

)

(23,211

)

Proceeds from sale of assets held-for-sale

3,955

Purchases of marketable securities available-for-sale

(28,041

)

Proceeds from maturities of marketable securities available-for-sale

8,548

Proceeds from settlement of net investment hedges

1,503

2,262

Payments for settlement of net investment hedges

(327

)

Acquisition of business, net of cash acquired

(3,034

)

Other investing activities, net

57

Net cash used in investing activities

(38,514

)

(21,219

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of stock options

1,545

177

Common stock withheld for payroll tax obligations

(1,111

)

(1,124

)

Principal payments on long-term debt

(227

)

(205

)

Payment of debt issuance costs

(115

)

Dividends paid

(13,645

)

(13,375

)

Cash and cash equivalents, end of period

(13,438

)

(14,642

)

Effect of exchange rate changes on cash and cash equivalents

117

(1,519

)

Net change in cash and cash equivalents

(5,801

)

(33,583

)

Cash and cash equivalents, beginning of period

127,204

160,787

Cash and cash equivalents, end of period

$

121,403

$

127,204

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) consulting fees, severance costs and loss from business divestitures, associated with the Company's Foundation for Growth Initiative ("FFG costs"), and (2) a valuation adjustment for indirect tax credits in a foreign jurisdiction ("valuation adjustment"), (b) the impact on operating income of FFG costs and the valuation adjustment, and (c) the impact on segment operating income of FFG costs and the valuation adjustment. 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

Twelve months ended

(in thousands, except per share amounts)

August 31,
2019

Diluted earnings per
share

August 31,
2019

Diluted earnings per
share

Net earnings - reported GAAP measure

$

1,503

$

0.14

$

2,172

$

0.20

FFG costs - pre-tax

1,947

0.18

15,113

1.40

Valuation adjustment - pre-tax

2,795

0.26

2,795

0.26

Total adjustments

4,742

0.44

17,908

1.66

Tax effect of adjustments*

(428

)

(0.04

)

(4,454

)

(0.41

)

Net earnings - adjusted

$

5,817

$

0.54

$

15,626

$

1.45

Average shares outstanding - diluted

10,816

10,810

* The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.

Three months ended August 31, 2019

Operating income reconciliation

Consolidated

Irrigation

Infrastructure

Corporate

Operating income - reported GAAP measure

$

4,060

$

3,463

$

9,340

$

(8,743

)

FFG costs

1,947

1,947

Valuation adjustment

2,795

2,795

Adjusted operating income

$

8,802

$

6,258

$

9,340

$

(6,796

)

Operating revenues

$

101,885

$

69,504

$

32,381

$

Operating income as a percent of operating revenues

4.0

%

5.0

%

28.8

%

N/A

Adjusted operating income as a percent of operating revenues

8.6

%

9.0

%

28.8

%

N/A

Twelve months ended August 31, 2019

Operating income reconciliation

Consolidated

Irrigation

Infrastructure

Corporate

Operating income - reported GAAP measure

$

6,115

$

29,804

$

16,599

$

(40,288

)

FFG costs

15,113

676

188

14,249

Valuation adjustment

2,795

2,795

Adjusted operating income

$

24,023

$

33,275

$

16,787

$

(26,039

)

Operating revenues

$

444,072

$

351,498

$

92,574

$

Operating income as a percent of operating revenues

1.4

%

8.5

%

17.9

%

N/A

Adjusted operating income as a percent of operating revenues

5.4

%

9.5

%

18.1

%

N/A

View source version on businesswire.com: https://www.businesswire.com/news/home/20201022005211/en/

Contacts

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

THREE PART ADVISORS:
Hala Elsherbini
972-458-8000