Lindsay Corporation (NYSE: LNN), a leading provider of irrigation systems and infrastructure products, today announced results for its second quarter ended February 28, 2014.

Second Quarter Results

Second quarter fiscal 2014 revenues were $152.8 million, versus $175.5 million of revenues in the same prior year period. Net earnings were $13.5 million or $1.04 per diluted share compared with $19.4 million or $1.50 per diluted share in the prior year.

Total irrigation equipment revenues decreased 16 percent to $135.9 million from $162.7 million in the prior fiscal year’s second quarter primarily due to lower crop prices. U.S. irrigation revenues of $92.8 million declined 21 percent while international irrigation revenues of $43.1 million decreased five percent. Infrastructure revenues increased 32 percent to $16.9 million with increases in all of its product lines.

Gross margin was 27.9 percent of sales compared to 28.7 percent of sales in the prior year’s second quarter. Gross margins in irrigation declined by approximately one percentage point due to fixed cost deleverage on lower sales and a higher mix of international sales. Infrastructure gross margins improved by approximately seven percentage points due to sales mix and leverage on higher sales.

Operating expenses were $21.8 million compared to $20.9 million in the same prior year period. The increase includes $2.2 million associated with the Lakos acquisition, offset by reductions in incentive compensation and advertising expenses. Operating expenses including Lakos were 14.2 percent of sales in the second quarter of fiscal 2014 compared with 11.9 percent of sales in the prior year period. Operating margins were 13.7 percent in the second quarter, versus 16.8 percent in the prior year period.

Cash and cash equivalents of $165.5 million were $5.9 million higher compared to the end of the second quarter in the prior fiscal year, while debt decreased $2.1 million. During the quarter the Company repurchased 78,520 shares for $6.6 million.

Backlog of unshipped orders at February 28, 2014 was $89.3 million compared with $159.3 million at February 28, 2013 and $86.6 million at November 30, 2013. Backlog declined in the U.S. and international irrigation markets, and infrastructure segment backlog increased over the same time last year. The current year infrastructure backlog includes a $12.8 million Road Zipper System order for the Golden Gate Bridge which will be recognized in revenue in fiscal 2015. The prior year irrigation backlog included a $39.1 million equipment and installation contract in Iraq, of which $3.0 million remained in backlog at the end of the second quarter of fiscal 2014.

Six Month Results

Total revenues for the six months ended February 28, 2014 were $300.5 million, a seven percent decrease from $322.9 million of revenues in the same prior year period. Net earnings were $23.7 million or $1.83 per diluted share compared with $34.1 million or $2.65 per diluted share in the prior year.

Total irrigation equipment revenues decreased 11 percent to $265.1 million from $296.9 million during the first six months of the prior fiscal year. U.S. irrigation revenues of $172.6 million declined 19 percent while international irrigation revenues of $92.4 million increased 11 percent on sales increases in South America and Australia. Infrastructure revenues increased 36 percent to $35.4 million.

Outlook

Rick Parod, president and chief executive officer, commented, “Irrigation sales declined in the second quarter driven by the lessening of drought conditions and the significant decline in agricultural commodity prices as compared to the same time last year. Lower grain prices and the political environment regarding Russia and Ukraine are likely to pressure irrigation demand in the second half of the year. Our focus for the balance of the year is on managing margins given the deleveraging impact, and maintaining momentum in the irrigation market.”

Parod added, “I’m pleased with the continued progress toward sustainable, profitable performance in our infrastructure segment, including more aggressive selling processes in the markets we serve. While we anticipate a decline from peak irrigation revenues for the near-term, drivers for the Company’s markets of population growth, expanded food production and efficient water use, support our expectation for long-term growth. In addition, we are committed to expanding shareholder returns through the continued execution of our capital allocation plan, as outlined in January 2014.”

Second-Quarter Conference Call

Lindsay’s fiscal 2014 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 # 9646534. 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, 2014 Lindsay had approximately 12.9 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 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 ended Six months ended
February 28, February 28, February 28, February 28,
($ and shares in thousands, except per share amounts) 2014 2013 2014 2013
 
Operating revenues $ 152,804 $ 175,539 $ 300,475 $ 322,909
Cost of operating revenues   110,132     125,175     217,652     229,688  
Gross profit   42,672     50,364     82,823     93,221  
 
Operating expenses:
Selling expense 9,534 8,000 19,290 15,321
General and administrative expense 9,354 10,155 21,097 20,273
Engineering and research expense   2,871     2,763     5,531     5,917  
Total operating expenses   21,759     20,918     45,918     41,511  
 
Operating income 20,913 29,446 36,905 51,710
 
Other income (expense):
Interest expense (56 ) (83 ) (95 ) (226 )
Interest income 157 129 292 267
Other income (expense), net   (225 )   (4 )   (496 )   120  
 
Earnings before income taxes 20,789 29,488 36,606 51,871
 
Income tax expense   7,339     10,137     12,922     17,792  
 
Net earnings $ 13,450   $ 19,351   $ 23,684   $ 34,079  
 
Earnings per share:
Basic $ 1.04 $ 1.51 $ 1.84 $ 2.66
Diluted $ 1.04 $ 1.50 $ 1.83 $ 2.65
 
Shares used in computing earnings per share:
Basic 12,910 12,842 12,899 12,799
Diluted 12,942 12,882 12,947 12,867
 
Cash dividends declared per share $ 0.260 $ 0.115 $ 0.390 $ 0.230
 
 

Lindsay Corporation and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
       
February 28, February 28, August 31,
($ and shares in thousands, except par values) 2014 2013 2013
 
ASSETS
Current Assets:
Cash and cash equivalents $ 165,509 $ 159,583 $ 151,927
Receivables, net of allowance of $3,520, $1,915 and $2,853 111,211 105,399 120,291
Inventories, net 80,994 78,071 68,607
Deferred income taxes 13,916 9,110 12,705
Other current assets   18,216     15,020     15,261  
Total current assets   389,846     367,183     368,791  
 
Property, Plant and Equipment:
Cost 158,948 141,973 153,422
Less accumulated depreciation   (93,502 )   (85,104 )   (88,358 )
Property, plant and equipment, net   65,446     56,869     65,064  
 
Intangibles, net 34,084 23,729 36,007
Goodwill 37,282 30,211 37,414
Other noncurrent assets   3,961     4,490     5,020  
Total assets $ 530,619   $ 482,482   $ 512,296  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 53,954 $ 63,651 $ 42,276
Current portion of long-term debt - 2,143 -
Other current liabilities   54,204     45,724     59,816  
Total current liabilities   108,158     111,518     102,092  
 
Pension benefits liabilities 6,202 6,676 6,324
Deferred income taxes 13,975 9,716 15,415
Other noncurrent liabilities   7,590     7,415     7,827  
Total liabilities   135,925     135,325     131,658  
 
Shareholders' Equity:
Preferred stock of $1 par value-
Authorized 2,000 shares; none issued - - -
Common stock of $1 par value-
Authorized 25,000 shares; 18,633 issued 18,633 18,553 18,571
Capital in excess of stated value 50,794 47,036 49,764
Retained earnings 424,241 372,242 405,580
Less treasury stock (at cost, 5,777 shares) (97,566 ) (90,961 ) (90,961 )
Accumulated other comprehensive loss, net   (1,408 )   287     (2,316 )
Total shareholders' equity   394,694     347,157     380,638  
Total liabilities and shareholders' equity $ 530,619   $ 482,482   $ 512,296  
     
 
 
 
Lindsay Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six months ended
February 28, February 28,
($ in thousands) 2014 2013
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 23,684 $ 34,079
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 7,384 6,240
Provision for uncollectible accounts receivable 618 530
Deferred income taxes (2,696 ) (2,104 )
Share-based compensation expense 2,191 2,351
Other, net 250 144
Changes in assets and liabilities:
Receivables 9,010 (22,880 )
Inventories (12,192 ) (24,827 )
Other current assets (2,400 ) (4,222 )
Accounts payable 11,422 32,066
Other current liabilities (5,410 ) 5,331
Current income taxes payable (168 ) (789 )
Other noncurrent assets and liabilities   754     273  
Net cash provided by operating activities   32,447     26,192  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (5,353 ) (5,342 )
Proceeds from sale of property, plant and equipment 35 14
Proceeds from settlement of net investment hedges 280 -
Payments for settlement of net investment hedges   (1,846 )   (1,919 )
Net cash used in investing activities   (6,884 )   (7,247 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 371 1,619
Common stock withheld for payroll tax withholdings (2,027 ) (2,441 )
Principal payments on long-term debt - (2,142 )
Excess tax benefits from share-based compensation 695 2,629
Repurchase of common shares (6,605 ) -
Dividends paid   (5,023 )   (2,952 )
Net cash used in financing activities   (12,589 )   (3,287 )
 
Effect of exchange rate changes on cash and cash equivalents   608     481  
Net change in cash and cash equivalents 13,582 16,139
Cash and cash equivalents, beginning of period   151,927     143,444  
Cash and cash equivalents, end of period $ 165,509   $ 159,583