Lindsay Corporation Reports Fourth Quarter and Fiscal Year 2023 Results

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, 2023.

Key Highlights

Fourth Quarter:

• Revenue of $167.1 million and EPS of $1.74 led by strong irrigation results
• Strong growth in international irrigation revenues and record revenues in Brazil
• Record operating income and operating margin in irrigation segment

Full-Year:

• Record net earnings of $72.4 million and record EPS of $6.54
• Record revenue and operating income in Brazil
• Free cash flow generation reaches 139 percent of net earnings

“We are pleased to report strong performance in our fiscal fourth quarter and solid momentum as we head into fiscal 2024, driven by our irrigation business. Our strong quarterly performance reflected growth in international irrigation markets led by South America, and Brazil in particular where we achieved record fourth quarter revenue. Demand for irrigation equipment in North America remained steady in the fourth quarter, in line with our expectations. Record fourth quarter operating income and operating margin in irrigation is a testament to effective price management and operating performance, while also reflecting the impact of increasing geographic diversification through strategic growth in international markets,” said Randy Wood, President and Chief Executive Officer. "Infrastructure results for the fourth quarter reflected the impact of Road Zipper System™ projects in the prior year that did not repeat, while Road Zipper System leasing revenue continued to show solid growth and partially offset the overall decrease in revenue."

Wood continued, "For the full year, I am pleased with our ability to deliver new records in net earnings and earnings per share, as our performance overcame softer revenues compared to last year's record levels. This record earnings and income performance was led by record full year operating income and operating margin in irrigation with gross margin expansion across the business. This improved operating performance, along with effective working capital management, resulted in free cash flow generation that exceeded our objective for the year. This performance demonstrated our ability to continue funding growth investments in innovation and other long-term shareholder value creation opportunities."

Fourth Quarter Summary

Revenues for the fourth quarter of fiscal 2023 were $167.1 million, a decrease of $23.1 million, or 12 percent, compared to revenues of $190.2 million in the prior year fourth quarter. Most of the decrease came from the infrastructure segment due to Road Zipper System projects in the prior year fourth quarter that did not repeat.

Operating income for the fourth quarter was $23.4 million, a decrease of $4.4 million, or 16 percent, compared to operating income of $27.8 million in the prior year fourth quarter. Operating margin was 14.0 percent of sales, compared to operating margin of 14.6 percent of sales in the prior year fourth quarter. The impact of the decline in higher margin infrastructure revenue was substantially offset by improved gross profit and gross margin in irrigation. Operating expenses were comparable to the prior year fourth quarter.

Net earnings for the fourth quarter were $19.2 million, or $1.74 per diluted share, compared with net earnings of $17.9 million, or $1.62 per diluted share, for the prior year fourth quarter. Net earnings improvement was supported by higher interest income and more favorable foreign currency transaction changes compared to the prior year fourth quarter.

Fourth Quarter Segment Results

Irrigation segment revenues for the fourth quarter of fiscal 2023 were $143.6 million, a decrease of $6.9 million, or 5 percent, compared to $150.5 million in the prior year fourth quarter. North America irrigation revenues of $60.2 million decreased $19.9 million, or 25 percent, compared to the prior year fourth quarter. The decrease in revenues resulted primarily from lower unit sales volumes while average selling prices were comparable with the prior year fourth quarter. Unit sales volumes in the prior year fourth quarter reflected an exceptional level of storm damage replacement demand while unit sales volumes in the current year reflected more normal seasonal demand.

International irrigation revenues of $83.4 million increased $13.0 million, or 18 percent, compared to the prior year fourth quarter. The increase resulted primarily from increased sales volumes in Brazil, Argentina and the Middle East compared to the prior year fourth quarter. The current year fourth quarter also benefited from the favorable effects of foreign currency translation of approximately $1.3 million compared to the prior year fourth quarter.

Irrigation segment operating income for the fourth quarter of fiscal 2023 was $29.8 million, an increase of $5.5 million, or 23 percent, compared to the prior year fourth quarter. Operating margin was 20.7 percent of sales, compared to 16.1 percent of sales in the prior year fourth quarter. The increase in operating margin resulted from gross margin expansion driven by improved price realization and operating performance compared to the prior year fourth quarter.

Infrastructure segment revenues for the fourth quarter of fiscal 2023 were $23.5 million, a decrease of $16.2 million, or 41 percent, compared to $39.7 million in the prior year fourth quarter. The decrease in revenues resulted primarily from lower Road Zipper System sales compared to the prior year fourth quarter. Notably, the prior year fourth quarter included a number of project sales that did not repeat in the current year fourth quarter. The impact of lower project sales was partially offset by growth in Road Zipper System lease revenue and higher sales of road safety products compared to the prior year fourth quarter.

Infrastructure segment operating income for the fourth quarter of fiscal 2023 was $3.1 million, a decrease of $8.3 million, or 73 percent, compared to the prior year fourth quarter. Operating margin was 13.3 percent of sales, compared to 28.8 percent of sales in the prior year fourth quarter. The decrease in operating income and margin resulted from lower revenues compared to the prior year fourth quarter and the resulting loss in fixed cost leverage.

Full Year Summary

Revenues for fiscal 2023 were $674.1 million, a decrease of $96.7 million, or 13 percent, compared to revenues of $770.7 million in the prior year. Irrigation revenues decreased $79.8 million due to farmers in North America deferring investment decisions, a higher level of storm damage replacement demand in the prior year and prior year sales in Egypt, Ukraine and Russia that did not repeat. Infrastructure revenues decreased $16.9 million, primarily due to lower Road Zipper System project sales compared to the prior year.

Operating income for fiscal 2023 was $102.2 million, an increase of $7.5 million, or 8 percent, compared to operating income of $94.6 million in the prior year. Operating margin was 15.2 percent of sales, compared to 12.3 percent of sales in the prior year. Operating margin improvement resulted primarily from gross margin expansion in irrigation, while gross margin in infrastructure was comparable to the prior year.

Net earnings for fiscal 2023 were $72.4 million, or $6.54 per diluted share, compared with net earnings of $65.5 million, or $5.94 per diluted share, for the prior year. Net earnings improvement resulted largely from increased operating income and also benefited from higher interest income and more favorable foreign currency transaction changes compared to the prior year.

The backlog of unfilled orders as of August 31, 2023, was $78.7 million compared with $96.8 million on August 31, 2022. The irrigation and infrastructure backlogs are both lower compared to the prior year.

Outlook

Mr. Wood concluded, “Current commodity prices and U.S. net farm income projections, although lower compared to the marked strength seen a year ago, continue to support demand for irrigation equipment in North America. So far in our first quarter of fiscal 2024, we are seeing order levels running ahead of the prior year. We expect sales volume levels in developed international markets to remain robust, led by strong demand in Brazil, and we continue to see project opportunities in developing markets supported by continuing global concerns over food security and global grain supplies."

“We expect to see a more meaningful positive impact of increased U.S. infrastructure spending on our infrastructure business in fiscal 2024, particularly in Road Zipper System leasing and sales of road safety projects. We also continue to actively manage projects in our Road Zipper System sales funnel, however the timing of when these projects will be executed is difficult to predict.”

Fourth Quarter Conference Call

Lindsay’s fiscal 2023 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.

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, FieldNET^® and FieldWise^® remote irrigation management technology, FieldNET Advisor™ irrigation scheduling technology, 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.