On June 27, 2024, Lindsay Corp (LNN, Financial) released its 8-K filing reporting its third-quarter fiscal 2024 results. Lindsay Corp, a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, operates primarily through its Irrigation and Infrastructure segments. The company generates maximum revenue from the Irrigation segment, which includes manufacturing and marketing center pivot, lateral move, and hose reel irrigation systems, as well as various technology solutions such as GPS positioning and guidance, variable rate irrigation, wireless irrigation management, M2M communication technology, and smartphone applications. Geographically, it derives a majority of its revenue from the United States.
Performance Overview
For the third quarter ended May 31, 2024, Lindsay Corp reported diluted earnings per share (EPS) of $1.85, surpassing the analyst estimate of $1.17. This represents a 21% increase from the prior year's EPS of $1.53. However, total revenues for the quarter were $139.2 million, a 15% decline from $164.6 million in the same period last year, falling short of the estimated $144.36 million.
Key Financial Achievements
Despite the revenue decline, Lindsay Corp achieved several notable financial milestones:
- Recognition of an income tax credit in Brazil added $4.8 million to net earnings.
- Secured a large multi-year international irrigation supply agreement valued at over $100 million.
- Completed $17.9 million in share repurchases during the quarter.
"Market conditions in our irrigation segment continue to weigh on farmer sentiment, resulting in demand softness. In North America, high precipitation levels and wet field conditions across the Midwest contributed to lower sales of irrigation equipment and replacement parts during our third quarter," said Randy Wood, President and Chief Executive Officer.
Segment Performance
Irrigation Segment: Revenues for the Irrigation segment were $114.8 million, a 19% decrease from $142.6 million in the prior year quarter. North America irrigation revenues fell by 9% to $68.2 million, while international irrigation revenues dropped by 31% to $46.6 million. The decline was primarily due to lower sales volumes in Brazil and other Latin American markets.
Infrastructure Segment: The Infrastructure segment, however, showed robust growth with revenues increasing by 11% to $24.4 million from $22.0 million in the prior year quarter. This growth was driven by higher Road Zipper System sales and lease revenues. Operating income for the segment surged by 76% to $6.3 million, with an operating margin of 25.8%, up from 16.2% in the previous year.
Financial Metrics
| Metric | Q3 FY2024 | Q3 FY2023 | Change | % Change |
|---|---|---|---|---|
| Total Revenues | $139.2 million | $164.6 million | ($25.4 million) | (15%) |
| Operating Income | $19.9 million | $27.0 million | ($7.0 million) | (26%) |
| Net Earnings | $20.4 million | $16.9 million | $3.5 million | 21% |
| Diluted EPS | $1.85 | $1.53 | $0.32 | 21% |
Analysis
The decline in revenues and operating income was primarily due to the softness in the global irrigation market, exacerbated by high precipitation levels in North America and lower commodity prices in Brazil. However, the company's strong performance in the Infrastructure segment, driven by increased Road Zipper System sales and lease revenues, helped offset some of the challenges faced in the Irrigation segment.
Looking ahead, Lindsay Corp's backlog of unfilled orders as of May 31, 2024, was $246.9 million, significantly higher than $94.5 million as of May 31, 2023. This includes a substantial project in the MENA region, expected to contribute to revenues starting in the fourth quarter of fiscal 2024.
For more detailed insights and the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Lindsay Corp for further details.
