Lindsay Corporation Reports Fiscal 2015 Second Quarter Results
Lindsay Corporation (NYSE: LNN), a leading provider of irrigation systems and infrastructure products, today announced results for its second quarter ended February 28, 2015.
Second Quarter Results
Second quarter fiscal 2015 revenues were $141.1 million versus $152.8 million of revenues in the same prior year period. Net earnings were $9.0 million or $0.75 per diluted share compared with $13.5 million or $1.04 per diluted share in the prior year.
Total irrigation equipment revenues decreased 20 percent to $108.3 million from $135.9 million in the prior fiscal year’s second quarter. U.S. irrigation revenues of $68.0 million, which includes $3.5 million of revenues from the newly acquired Elecsys Corporation, decreased 27 percent primarily due to a decline in the number of irrigation systems sold as a result of the reduction in commodity prices. International irrigation revenues of $40.3 million decreased 6 percent most notably in the Middle East and Europe. Excluding the effect of currency translation, international irrigation sales were approximately equal to the same period in the prior year. Infrastructure revenues increased 94 percent to $32.8 million with the completion of the Golden Gate Bridge Road Zipper project and increases in road safety product sales.
Gross margin was 28.0 percent of sales compared to 27.9 percent of sales in the prior year’s second quarter. Gross margin in irrigation decreased by approximately 3 percentage points and infrastructure gross margin increased by approximately 14 percentage points. The decrease in irrigation gross margins is primarily a result of pricing pressure and cost deleverage from lower sales. The increase in infrastructure gross margin was primarily due to sales mix from increases in Road Zipper and road safety product sales.
Operating expenses increased $3.3 million to $25.0 million compared to the second quarter of the prior fiscal year. The increase includes $1.0 million of Elecsys Corporation operating expenses, $1.0 million of acquisition and integration expenses, $0.7 million in incremental health benefit expenses and $0.3 million of commissions related to increased infrastructure project sales. Operating expenses were 17.7 percent of sales in the second quarter of fiscal 2015 compared with 14.2 percent of sales in the prior year period. Operating margins were 10.3 percent in the second quarter, versus 13.7 percent in the prior year period.
Cash and cash equivalents of $167.2 million were $1.7 million higher compared to the prior year second quarter. During the quarter the Company completed a $115.0 million private placement of long term debt, expanded its revolving credit agreement with Wells Fargo Bank from $30.0 million to $50.0 million, and completed the acquisition of Elecsys Corporation for $67.2 million, net of cash acquired. The long term debt is due for payment in February 2030 and bears interest at 3.82 percent. The Company also repurchased 224,307 shares for $19.4 million during the second quarter and a total of 605,926 shares for $49.4 million during the first six months of fiscal 2015. Since the initiation of the share repurchase plan, the Company has purchased a total of 1.1 million shares for $90.4 million, with $59.6 million remaining authorized as of February 28, 2015 for additional repurchases.
Backlog of unshipped orders at February 28, 2015 was $74.3 million compared with $89.3 million at February 28, 2014 and $68.3 million at November 30, 2014. The backlog at February 28, 2014 and November 30, 2014 included $12.7 million for the Golden Gate Bridge project, now completed. The current period includes $7.9 million of backlog from Elecsys Corporation.
Six Month Results
Total revenues for the six months ended February 28, 2015 were $275.9 million versus $300.5 million in the same prior year period. Foreign currency translation as compared to the prior year reduced year to date revenues by $5.6 million. Net earnings were $16.6 million or $1.36 per diluted share compared with $23.7 million or $1.83 per diluted share in the prior year. The current year includes $1.5 million of estimated environmental expenses and $1.5 million of acquisition and integration expenses. These expenses reduced earnings by $0.16 per diluted share on an after tax basis.
Total irrigation equipment revenues decreased 16 percent to $223.0 million from $265.1 million during the first six months of the prior fiscal year. U.S. irrigation revenues of $129.1 million decreased 25 percent, while international irrigation revenues of $93.9 million increased 2 percent. Infrastructure revenues increased 49 percent to $52.9 million.
Rick Parod, president and chief executive officer, commented, “While the longer term drivers to our markets remain positive, the cyclical contraction for irrigation equipment has continued. The U.S. irrigation market has been impacted by lower commodity prices and lower farm incomes, while international irrigation markets have remained more stable, although competitive pressure is increasing. The infrastructure segment made a significant contribution to the quarter with the installation of a Road Zipper System on the Golden Gate Bridge, and we remain optimistic about additional growth opportunities.”
Parod continued, “In January we completed the acquisition of Elecsys Corporation and have begun the integration with our irrigation business. In addition, in February we completed a $115 million private placement of debt to improve our capital structure and position us for additional growth through acquisitions and other initiatives in driving improved returns for shareholders.”
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, 2015 Lindsay had approximately 11.9 million shares outstanding, which are traded on the New York Stock Exchange under the symbol LNN.
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 Jim Raabe, 402-827-6579
Vice President & Chief Financial Officer
Halliburton Investor Relations Hala Elsherbini or Geralyn DeBusk, 972-458-8000> Download PDF