Lindsay Corporation sees growth opportunities in Latin America, particularly Brazil, despite challenges like high interest rates and limited credit access for growers. Infrastructure segment shows potential for system sales and road safety products. Fiscal Q1 revenues at $155.8 million, down 6% from last year. Operating income at $19.6 million, a 6% decrease.
Irrigation segment revenue drops 9% to $133.4 million, with North America revenue at $74.3 million (down 4%) and international revenue at $59.1 million. Operating income at $23 million, down $1.8 million from last year. Infrastructure segment revenue rises 17% to $22.4 million. Operating income at $4.5 million, up 9% from last year.
Total available liquidity at the end of Q1 is $249.6 million, including $199.6 million in cash and $50 million from a revolving credit facility. Free cash flow impacted by increased working capital and capital expenditure levels. $30.3 million deployed for share repurchases in Q1, new $150 million share repurchase program authorized. The company has authorized the return of capital to shareholders due to a strong financial position and balance sheet. Questions from investors focused on the North American irrigation market hitting a bottom, potential international projects, and elevated CapEx investments in Lindsay, Nebraska for improved efficiency and profitability.
The company acknowledges a slow market in North American irrigation but sees potential for stability. International projects offer opportunities with repeat and new clients in the MENA region. Elevated CapEx investments in Lindsay, Nebraska aim to improve safety, efficiency, and productivity with world-class tube mill and galvanizing facility upgrades.
Investors inquire about the impact of ongoing CapEx investments on margins, with improvements not yet reflected in first-quarter results. The company expects positive changes in production processes and efficiency from the investments in Lindsay, Nebraska, with potential benefits to profitability in the future. Investments in a new $80 million MENA project are expected to boost margins once demand picks up. The project, with a repeat customer in the same region, will improve operational efficiencies and absorption through the facility. Project margins are anticipated to be slightly below segment average but contribute to overall business growth.
North America’s irrigation sector saw a 4% decline in the first fiscal quarter, reflecting a flat to down trend for the year. Pricing in North America has increased, contributing to solid margins despite current market conditions. Cost management and productivity gains are key factors in maintaining margin profiles.
Interest income saw a positive contribution in Q1 due to regional funds and interest rates. While specific details are not disclosed, interest income is influenced by regional mix and rates. The company is cautious about speculating on future interest rate environments but remains optimistic about continued improvement.
The Road Zipper infrastructure business experienced a lull, which is common due to the nature of the industry. The company remains focused on managing costs, maintaining solid margins, and adapting to market conditions. The Q&A session highlighted the company’s strategic approach to addressing challenges and seizing opportunities in various sectors. Randy Wood discusses the Road Zipper business, highlighting its project-oriented nature and the engagement with customers to solve specific problems in the market. He emphasizes the business’s lumpy project nature but sees long-term growth opportunities for Road Zipper.
Wood addresses the historical lumpiness of big projects and the challenges it presents in forecasting future performance. He stresses transparency in sharing market insights and expects more Road Zipper projects in fiscal ’27 and ’28. The business model focuses on shifting left for better short and long-term visibility.
Brett Kearney asks about international adoption of FieldNET capabilities in irrigation projects. Wood explains the significant investments in agricultural operations in regions like the Middle East, where customers seek technological advantages for efficiency. He notes a shift in technology adoption, with customers eager for every advantage available.
Wood expresses gratitude for the support and looks forward to updating on second-quarter earnings. The conference concludes, with participants encouraged to disconnect. The article then transitions to a promotional section about “Double Down” stock recommendations by The Motley Fool for potentially high-growth companies like Nvidia, Apple, and Netflix. 1. The FDA approved a new drug for Alzheimer’s disease, Aduhelm, developed by Biogen. This is the first new treatment for Alzheimer’s in nearly two decades, sparking hope for patients and their families. However, some experts question the drug’s efficacy and potential side effects.
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