Lindsay Corporation Reports Fiscal 2014 Second Quarter Results

March 26, 2014

OMAHA, Neb., March 26, 2014—Lindsay Corporation (NYSE: LNN), a leading provider of irrigation systems and infrastructure products, today announced results for its second quarter ended February 28, 2014.

Second Quarter Results

Second quarter fiscal 2014 revenues were $152.8 million, versus $175.5 million of revenues in the same prior year period. Net earnings were $13.5 million or $1.04 per diluted share compared with $19.4 million or $1.50 per diluted share in the prior year.

Total irrigation equipment revenues decreased 16 percent to $135.9 million from $162.7 million in the prior fiscal year’s second quarter primarily due to lower crop prices. U.S. irrigation revenues of $92.8 million declined 21 percent while international irrigation revenues of $43.1 million decreased five percent. Infrastructure revenues increased 32 percent to $16.9 million with increases in all of its product lines.

Gross margin was 27.9 percent of sales compared to 28.7 percent of sales in the prior year’s second quarter. Gross margins in irrigation declined by approximately one percentage point due to fixed cost deleverage on lower sales and a higher mix of international sales. Infrastructure gross margins improved by approximately seven percentage points due to sales mix and leverage on higher sales.

Operating expenses were $21.8 million compared to $20.9 million in the same prior year period. The increase includes $2.2 million associated with the Lakos acquisition, offset by reductions in incentive compensation and advertising expenses. Operating expenses including Lakos were 14.2 percent of sales in the second quarter of fiscal 2014 compared with 11.9 percent of sales in the prior year period. Operating margins were 13.7 percent in the second quarter, versus 16.8 percent in the prior year period.

Cash and cash equivalents of $165.5 million were $5.9 million higher compared to the end of the second quarter in the prior fiscal year, while debt decreased $2.1 million. During the quarter the Company repurchased 78,520 shares for $6.6 million.

Backlog of unshipped orders at February 28, 2014 was $89.3 million compared with $159.3 million at February 28, 2013 and $86.6 million at November 30, 2013. Backlog declined in the U.S. and international irrigation markets, and infrastructure segment backlog increased over the same time last year. The current year infrastructure backlog includes a $12.8 million Road Zipper System order for the Golden Gate Bridge which will be recognized in revenue in fiscal 2015. The prior year irrigation backlog included a $39.1 million equipment and installation contract in Iraq, of which $3.0 million remained in backlog at the end of the second quarter of fiscal 2014. 

Six Month Results

Total revenues for the six months ended February 28, 2014 were $300.5 million, a seven percent decrease from $322.9 million of revenues in the same prior year period. Net earnings were $23.7 million or $1.83 per diluted share compared with $34.1 million or $2.65 per diluted share in the prior year.

Total irrigation equipment revenues decreased 11 percent to $265.1 million from $296.9 million during the first six months of the prior fiscal year. U.S. irrigation revenues of $172.6 million declined 19 percent while international irrigation revenues of $92.4 million increased 11 percent on sales increases in South America and Australia. Infrastructure revenues increased 36 percent to $35.4 million.

Outlook Rick Parod, president and chief executive officer, commented, “Irrigation sales declined in the second quarter driven by the lessening of drought conditions and the significant decline in agricultural commodity prices as compared to the same time last year. Lower grain prices and the political environment regarding Russia and Ukraine are likely to pressure irrigation demand in the second half of the year. Our focus for the balance of the year is on managing margins given the deleveraging impact, and maintaining momentum in the irrigation market.”

Parod added, “I’m pleased with the continued progress toward sustainable, profitable performance in our infrastructure segment, including more aggressive selling processes in the markets we serve. While we anticipate a decline from peak irrigation revenues for the near-term, drivers for the Company’s markets of population growth, expanded food production and efficient water use, support our expectation for long-term growth. In addition, we are committed to expanding shareholder returns through the continued execution of our capital allocation plan, as outlined in January 2014.”

Second-Quarter Conference Call

Lindsay’s fiscal 2014 second quarter investor conference call is scheduled for 11:00 a.m. Eastern Time today. Interested investors may participate in the call by dialing (888) 321-8161 in the U.S., or (706) 758-0065 internationally, and referring to conference ID # 9646534. 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 manufactures and markets irrigation equipment primarily used in agricultural markets which increase or stabilize crop production while conserving water, energy, and labor. The Company also manufactures and markets infrastructure and road safety products under the Lindsay Transportation Solutions trade name. At February 28, 2014 Lindsay had approximately 12.9 million shares outstanding, which are traded on the New York Stock Exchange under the symbol LNN.

For more information regarding Lindsay Corporation, see the Company’s Web site at www.lindsay.com.

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