Lindsay Corporation Reports Fiscal 2017 Third Quarter Results
Jun 29, 2017
Lindsay Corporation (NYSE: LNN), a leading provider of irrigation systems and infrastructure products, today announced results for its third quarter ended May 31, 2017.
Third Quarter Results
Third quarter fiscal 2017 revenues were $151.5 million compared to revenues of $141.3 million in the prior year's third quarter. Net earnings for the quarter were $11.0 million or $1.02 per diluted share compared with net earnings of $9.6 million or $0.90 per diluted share in the third quarter of the prior year.
Irrigation segment revenues for the third quarter were $120.0 million, an increase of two percent compared to $117.3 million in the prior year's third quarter. U.S. irrigation revenues were $75.2 million, increasing two percent over the third quarter of the prior year, as the impact of higher average selling prices and improved irrigation equipment unit volume was partially offset by lower revenue from other irrigation components. International irrigation revenues were $44.8 million, an increase of two percent compared to the third quarter of the prior year, driven by the continuation of a notable recovery in Brazil, increased project activity in developing markets, and a slightly favorable currency translation impact. Lower revenues in other international markets partially offset those increases. Infrastructure segment revenues for the third quarter increased 31 percent over the prior year's third quarter to $31.5 million, driven by higher Road Zipper® system sales and lease revenue and increased sales of road safety products in international markets.
Gross margin for the third quarter of fiscal 2017 was 30.3 percent of sales compared to 29.6 percent of sales in the prior year's third quarter. Improved margin in the infrastructure segment was partially offset by slightly lower gross margin in the irrigation segment. Improved infrastructure margin resulted from higher Road Zipper system sales and lease revenue and volume leverage from higher road safety product sales. International irrigation margin was lower due to a less-favorable regional sales mix compared to the prior year. U.S. irrigation margin increased compared to the prior year due to higher margin from technology products, partially offset by the impact of higher material costs.
Operating expenses for the third quarter of fiscal 2017 were $28.5 million, an increase of $2.0 million compared to the third quarter in the prior year. The increase resulted primarily from higher product development costs and professional fees. Operating expenses were 18.8 percent of sales in the third quarter of fiscal 2017 compared with 18.7 percent of sales in the third quarter of the prior year. Operating margins were 11.5 percent in the third quarter of fiscal 2017 compared to 10.8 percent in the prior year's third quarter.
Cash and cash equivalents at the end of the third quarter were $113.2 million compared to $101.2 million at the end of the prior fiscal year and $91.5 million at the end of the prior year's third quarter. There were no share repurchases made during the third quarter of fiscal 2017. A total of $63.7 million remains available under the Company's share repurchase program as of May 31, 2017.
The backlog of unshipped orders at May 31, 2017 was $70.1 million compared with $61.2 million at May 31, 2016. Higher order backlog in the irrigation segment was partially offset by slightly lower order backlog in the infrastructure segment compared to the prior year.
Nine Month Results
Total revenues for the nine months ended May 31, 2017 were $386.0 million, an increase of one percent compared to $383.5 million in the same prior year period. Net earnings were $16.8 million or $1.58 per diluted share compared with $12.5 million or $1.13 per diluted share in the same prior year period.
Irrigation segment revenues of $316.1 million for the nine months ended May 31, 2017 declined two percent from $321.7 million in the same prior year period. Compared to the prior year period, U.S. irrigation revenues of $187.0 million declined nine percent and international irrigation revenues of $129.1 million increased 11 percent. Infrastructure segment revenues increased 13 percent to $69.9 million for the nine months ended May 31, 2017 compared to the same prior year period, due to higher Road Zipper system sales and lease revenue and increased demand for road safety products.
Rick Parod, President and Chief Executive Officer, commented, "Irrigation segment results for the third quarter reflect a level of stabilization in the U.S. irrigation equipment market, a continued recovery in Brazil, and increased project activity in developing international markets. Irrigation operating margin performance in the U.S. continues to benefit from the strength and growth of our technology products. Stronger infrastructure segment results for the quarter reflect continued growth and performance of our global Road Zipper business, as well as international market growth for our road safety products."
Parod continued, "Grower sentiment in the U.S. is showing signs of improvement. However, overall market conditions and demand for capital investment continue to be constrained by lower commodity prices and farm income. Absent a sustainable upturn in commodity prices, we expect irrigation growth opportunities to come primarily from international markets in the near term. The longer-term drivers for our markets of population growth, expanded food production and efficient water use, and infrastructure upgrades and expansion support our expectations for growth."
Third-Quarter Conference Call
Lindsay's fiscal 2017 third quarter investor conference call is scheduled for 11:00 a.m. Eastern Time today. Interested investors may participate in the call by dialing (877) 317-6789 in the U.S., or (412) 317-6789 internationally, and request 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 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 May 31, 2017, Lindsay had approximately 10.7 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.
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.