Release Date: April 03, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lindsay Corp (LNN, Financial) reported record quarterly net earnings, supported by a 23% increase in consolidated revenues.
- The international irrigation market showed significant growth, with revenues increasing by 42% year-over-year, driven by large projects in the MENA region.
- The Infrastructure segment saw a substantial increase in revenues, more than doubling compared to the prior year, primarily due to the completion of a large Road Zipper project.
- The company received FHWA approval for the new TAU-XR express repair crash cushion, enhancing safety and maintenance efficiency.
- Lindsay Corp (LNN) has a strong balance sheet with $236.7 million in available liquidity, providing strategic flexibility for capital allocation and growth initiatives.
Negative Points
- North America irrigation revenues decreased by 7% due to lower unit sales volume and slightly lower average selling prices.
- The timing of large infrastructure projects remains challenging to predict, which could impact future revenue streams.
- Rising interest rates and a challenging credit environment in Brazil pose potential headwinds for demand in the region.
- The company anticipates a marginal increase in cost of goods due to proposed tariffs, which may lead to increased pricing.
- Uncertainty surrounding potential retaliatory tariffs could impact the agricultural economy and customer sentiment in the U.S.
Q & A Highlights
Q: Can you provide more details on the international revenue performance and expectations for the coming quarters?
A: Brian Ketcham, CFO, explained that they shipped slightly more of the large project than anticipated, exceeding the $20 million per quarter expectation. However, this does not change their projections for the third and fourth quarters. They also saw growth in non-project revenue in the MENA region and stable unit volumes in Brazil, despite currency impacts.
Q: How are tariffs impacting your business, and what measures are you taking to mitigate these effects?
A: Brian Ketcham noted that the biggest impact is on the Irrigation business, with tariffs affecting products sourced from Taiwan and Korea. They have implemented supplier negotiations and strategic inventory placements to manage costs, estimating a mid-single-digit increase in cost of goods. They plan to pass these costs onto consumers.
Q: How did the Irrigation segment manage to maintain margins despite international project contributions?
A: Brian Ketcham stated that North American margins remained comparable to last year, with stable pricing and some cost softness in steel. Internationally, Brazil's market stabilized, and volume leverage from large projects helped offset gross margin dilution.
Q: What is the potential impact of tariffs on the agricultural economy and demand for irrigation equipment?
A: Randy Wood, CEO, expressed concerns about potential disruptions in U.S. agricultural exports affecting demand and pricing. However, he noted historical government support for farmers during trade disruptions and emphasized the company's readiness to adapt to changing market conditions.
Q: Could retaliatory tariffs lead to increased investment in Brazil if production shifts there?
A: Randy Wood indicated that global grain demand is stable, and any shifts in production could benefit Brazil. Lindsay Corp is well-positioned to respond quickly to increased demand in Brazil due to their existing capacity and global footprint.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
