MRO Magazine

Lindsay Corporation Reports Fiscal 2015 Second Quarter Results


March 25, 2015
By Business Wire News

OMAHA, Neb.

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.

Outlook

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.”

Second-Quarter Conference Call

Lindsay’s fiscal 2015 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 # 8407317. 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, 2015 Lindsay had approximately 11.9 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.

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 and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
     
Three months endedSix months ended
($ and shares in thousands,

except per share amounts)

February 28,February 28,February 28,February 28,
2015201420152014
 
Operating revenues $ 141,089 $ 152,804 $ 275,934 $ 300,475
Cost of operating revenues   101,533     110,132     199,464     217,652  
Gross profit   39,556     42,672     76,470     82,823  
 
Operating expenses:
Selling expense 10,231 9,534 19,648 19,290
General and administrative expense 11,680 9,354 24,551 21,097
Engineering and research expense   3,109     2,871     5,833     5,531  
Total operating expenses   25,020     21,759     50,032     45,918  
 
Operating income 14,536 20,913 26,438 36,905
 
Other income (expense):
Interest expense (209 ) (56 ) (280 ) (95 )
Interest income 162 157 334 292
Other expense, net   (351 )   (225 )   (693 )   (496 )
 
Earnings before income taxes 14,138 20,789 25,799 36,606
 
Income tax expense   5,143     7,339     9,236     12,922  
 
Net earnings $ 8,995   $ 13,450   $ 16,563   $ 23,684  
 
Earnings per share:
Basic $ 0.75 $ 1.04 $ 1.37 $ 1.84
Diluted $ 0.75 $ 1.04 $ 1.36 $ 1.83
 
Shares used in computing earnings per share:
Basic 11,982 12,910 12,103 12,899
Diluted 12,008 12,942 12,141 12,947
 
Cash dividends declared per share $ 0.270 $ 0.260 $ 0.540 $ 0.390
 
 

Lindsay Corporation and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
       
February 28,February 28,August 31,
($ and shares in thousands, except par values)201520142014
 
ASSETS
Current Assets:
Cash and cash equivalents $ 167,165 $ 165,509 $ 171,842
Receivables, net 93,293 111,211 94,135
Inventories, net 82,263 80,994 71,696
Deferred income taxes 16,224 13,916 17,714
Other current assets   21,936     18,216     18,671  
Total current assets   380,881     389,846     374,058  
 
Property, plant and equipment, net 75,663 65,446 72,457
Intangibles, net 53,900 34,084 31,980
Goodwill 74,808 37,282 37,021
Other noncurrent assets, net   13,528     3,961     11,035  
Total assets $ 598,780   $ 530,619   $ 526,551  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable $ 50,293 $ 53,954 $ 42,424
Other current liabilities   59,030     54,204     73,943  
Total current liabilities   109,323     108,158     116,367  
 
Pension benefits liabilities 6,460 6,202 6,600
Long-term debt 117,270
Deferred income taxes 20,940 13,975 12,992
Other noncurrent liabilities   8,846     7,590     7,945  
Total liabilities   262,839     135,925     143,904  
 
Shareholders’ Equity:
Preferred stock
Common stock 18,675 18,633 18,636
Capital in excess of stated value 53,618 50,794 52,866
Retained earnings 455,439 424,241 445,366
Less treasury stock (181,383 ) (97,566 ) (132,020 )
Accumulated other comprehensive loss, net   (10,408 )   (1,408 )   (2,201 )
Total shareholders’ equity   335,941     394,694     382,647  
Total liabilities and shareholders’ equity $ 598,780   $ 530,619   $ 526,551  
 
 
Lindsay Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
   Six months ended
February 28,February 28,
($ in thousands)20152014
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 16,563 $ 23,684
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 8,017 7,384
Asset impairment 270
Provision for uncollectible accounts receivable 418 618
Deferred income taxes 28 (2,696 )
Share-based compensation expense 2,051 2,191
Other, net 3,381 250
Changes in assets and liabilities:
Receivables (4,439 ) 9,010
Inventories (3,583 ) (12,192 )
Other current assets (2,647 ) (2,400 )
Accounts payable 9,778 11,422
Other current liabilities (8,744 ) (5,410 )
Current income taxes payable (6,987 ) (168 )
Other noncurrent assets and liabilities   1,478     754  
Net cash provided by operating activities   15,584     32,447  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (6,576 ) (5,353 )
Acquisition of business, net of cash acquired (67,176 )
Proceeds from settlement of net investment hedges 3,310 280
Payments for settlement of net investment hedges (329 ) (1,846 )
Other investing activities   (2,554 )   35  
Net cash used in investing activities   (73,325 )   (6,884 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 66 371
Common stock withheld for payroll tax withholdings (1,703 ) (2,027 )
Proceeds from issuance of long-term debt 115,000
Principal payments on long-term debt (16 )
Issuance costs related to debt (679 )
Excess tax benefits from share-based compensation 510 695
Repurchase of common shares (49,363 ) (6,605 )
Dividends paid   (6,490 )   (5,023 )
Net cash provided by (used in) financing activities   57,325     (12,589 )
 
Effect of exchange rate changes on cash and cash equivalents   (4,261 )   608  
Net change in cash and cash equivalents (4,677 ) 13,582
Cash and cash equivalents, beginning of period   171,842     151,927  
Cash and cash equivalents, end of period $ 167,165   $ 165,509  

Lindsay Corporation
Jim Raabe, 402-827-6579
Vice President & Chief Financial Officer
or
Halliburton Investor Relations
Hala Elsherbini or Geralyn DeBusk, 972-458-8000