8-K
Lindsay Corp (LNN)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 2, 2020
LINDSAY CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 1-13419 | 47-0554096 |
|---|---|---|
| (State of<br> <br>Incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification Number) |
| 18135 Burke Street, Suite 100<br> <br>Omaha, Nebraska | 68022 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
(402) 829-6800
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common Stock, $1.00 par value | LNN | New York Stock Exchange, Inc. |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On July 2, 2020, Lindsay Corporation (the “Company”) issued a press release announcing the Company’s results of operations for its third quarter ended May 31, 2020. A copy of the press release is furnished herewith as Exhibit 99.1.
In addition, a copy of the slide presentation to be used during the Company’s fiscal 2020 third quarter investor conference call at 11:00 a.m. Eastern Time on July 2, 2020 is furnished herewith as Exhibit 99.2.
| Item 9.01. | Financial Statements and Exhibits. |
|---|---|
| 99.1 | Press Release, dated July 2, 2020, issued by the Company. |
| --- | --- |
| 99.2 | Slide Presentation for Fiscal 2020 Third Quarter Investor Conference Call on July 2, 2020. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
In accordance with General Instruction B.2 of Form 8-K, the information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 relating to Item 2.02 and attached hereto, is being “furnished” and, as such, shall not be deemed to be “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: July 2, 2020 | LINDSAY CORPORATION | |
|---|---|---|
| By: | /s/ Brian L. Ketcham | |
| Brian L. Ketcham, Senior Vice President and<br> <br>Chief Financial Officer |
EX-99.1
Exhibit 99.1
| 18135 BURKE ST. OMAHA, NE 68022 TEL: 402-829-6800 FAX:<br>402-829-6836 |
|---|
For further information, contact:
| LINDSAY CORPORATION: | THREE PART ADVISORS: |
|---|---|
| Brian Ketcham | Hala Elsherbini |
| Senior Vice President & Chief Financial Officer | 972-458-8000 |
| 402-827-6579 |
Lindsay Corporation Reports Fiscal 2020 Third Quarter Results
| • | Consolidated revenues grow to $123.1 million and EPS improves to $0.93 |
|---|---|
| • | Shipment and project delays related to COVID-19 impact revenues by<br>approximately $14.0 million |
| --- | --- |
| • | Company continues successful execution of its strategic priorities of margin improvement, irrigation technology<br>expansion and infrastructure growth |
| --- | --- |
OMAHA, Neb., July 2, 2020—Lindsay Corporation (NYSE: LNN), a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, today announced results for its third quarter of fiscal 2020, which ended on May 31, 2020.
Third Quarter Summary
Revenues for the third quarter of fiscal 2020 were $123.1 million, an increase of $2.1 million, or 2 percent, compared to revenues of $121.1 million in the prior year third quarter. Net earnings for the quarter were $10.1 million, or $0.93 per diluted share, compared with net earnings of $2.9 million, or $0.27 per diluted share, for the prior year third quarter. Net earnings for the prior year third quarter adjusted to eliminate costs associated with the Foundation for Growthinitiative were $5.5 million, or $0.50 per diluted share.^1^
“As we navigate the coronavirus pandemic, our priority continues to be the health and safety of our employees around the world while continuing to operate our facilities and serve our customers,” said Tim Hassinger, President and Chief Executive Officer. “I am pleased with the success we have had in these areas as a result of the proactive measures we have put in place. In spite of this challenging environment, our businesses continue to perform well. During the quarter we also completed the acquisition of Net Irrigate, LLC, an agriculture IoT technology company that provides remote monitoring solutions for irrigation customers. This acquisition expands the number of irrigated acres managed under our FieldNET^®^ platform.”
Third Quarter Segment Results
Irrigation segment revenues for the third quarter of fiscal 2020 were $93.5 million, a decrease of $5.1 million, or 5 percent, compared to $98.6 million in the prior year. North America irrigation revenues of $60.9 million decreased $2.1 million, or 3 percent, compared to the prior year. The decrease resulted primarily from lower irrigation equipment unit volume which was partially offset by the impact of higher average selling prices. International irrigation revenues of $32.6 million decreased $3.0 million, or 9 percent. Higher sales volumes in certain regions were more than offset by unfavorable effects of foreign currency translation of approximately $3.5 million compared to the prior year and COVID-19 related shipment delays of approximately $2.0 million.
Irrigation segment operating margin was 16.1 percent of sales in the third quarter, compared to 11.2 percent of sales (11.7% percent adjusted)^1^ in the prior year. Operating margin expansion resulted from improved cost and pricing performance attributed to the Foundation for Growth initiative as well as from increased margin contribution from technology products and services.
Infrastructure segment revenues for the third quarter of fiscal 2020 were $29.6 million, an increase of $7.1 million, or 32 percent, compared to $22.4 million in the prior year. The increase resulted from higher Road Zipper System^®^ sales and lease revenues which were partially offset by lower sales of road safety products compared to the prior year. In addition, revenues of approximately $12.0 million were impacted by COVID-19 related project delays.
| 1 | Please see Reg G reconciliation of GAAP operating income, net earnings and diluted earnings per share to<br>adjusted figures at end of document. |
|---|
Infrastructure segment operating margin was 28.9 percent of sales in the third quarter, compared to 15.8 percent of sales (16.0 percent adjusted)^1^ in the prior year. Operating margin improvement resulted primarily from increased sales in higher margin product lines and from improved cost and pricing performance.
The backlog of unfilled orders at May 31, 2020 was $78.6 million compared with $52.5 million at May 31, 2019. Included in these backlogs are amounts of $4.5 million and $10.0 million, respectively, that are not expected to be fulfilled within the subsequent twelve months.
Outlook
“In North America, fourth quarter irrigation equipment demand is driven largely by storm damage replacement. The uncertainty of this demand combined with low commodity prices makes it challenging to project how the market will develop,” said Mr. Hassinger. “The demand outlook for our fiscal 2021 is dependent on a number of factors that could impact commodity prices and farm income, including current year crop results, export demand related to the U.S.-China Phase 1 trade agreement, and the level of government support payments to assist farmers. We expect continued growth in technology products and services due to the solid returns these investments provide to farmers. In international markets, we see the potential for additional demand being driven by heightened concerns regarding food security as a result of the global pandemic; however, the timing remains uncertain.”
Mr. Hassinger added, “In our infrastructure business, we expect strong fourth quarter results, driven by the Highways England project and the fulfillment of a large order in Japan. We continue to be excited about the growth opportunities we see for our Road Zipper Systems. Lastly, I would like to express my appreciation to the Lindsay employees, dealers and suppliers around the world who have gone to great lengths to promote a safe environment while continuing to serve our customers during this challenging time.”
Third Quarter Conference Call
Lindsay’s fiscal 2020 third quarter investor conference call is scheduled for 11:00 a.m. Eastern Time today. Interested investors may participate in the call by dialing (833) 535-2202 in the U.S., or (412) 902-6745 internationally, and requesting the Lindsay Corporation call. 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 Corporation (NYSE: LNN) is a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology. Established in 1955, the company has been at the forefront of research and development of innovative solutions to meet the food, fuel, fiber and transportation needs of the world’s rapidly growing population. The Lindsay family of irrigation brands includes Zimmatic^®^ center pivot and lateral move agricultural irrigation systems and FieldNET^®^ remote irrigation management and scheduling technology, as well as irrigation consulting and design and industrial IoT solutions. Also a global leader in the transportation industry, Lindsay Transportation Solutions manufactures equipment to improve road safety and keep traffic moving on the world’s roads, bridges and tunnels, through the Barrier Systems^®^, Road Zipper^®^ and Snoline^™^ brands. For more information about Lindsay Corporation, visit 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 currentbeliefs 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 Companyfiles 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 orincluding the words “anticipate,” “estimate,” “believe,” “intend,” “expect,” “outlook,” “could,” “may,” “should,” “will,” or similar expressions. Forthese 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 informationcontained in this press release.
2
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
| Three months ended | Nine months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands, except per share amounts) | May 31,<br>2020 | May 31,<br>2019 | May 31,<br>2020 | May 31,<br>2019 | ||||||||
| Operating revenues | $ | 123,106 | $ | 121,054 | $ | 346,287 | $ | 342,187 | ||||
| Cost of operating revenues | 83,410 | 91,055 | 239,111 | 259,066 | ||||||||
| Gross profit | 39,696 | 29,999 | 107,176 | 83,121 | ||||||||
| Operating expenses: | ||||||||||||
| Selling expense | 7,417 | 7,515 | 22,101 | 23,934 | ||||||||
| General and administrative expense | 13,055 | 14,695 | 38,026 | 46,585 | ||||||||
| Engineering and research expense | 3,396 | 3,314 | 10,303 | 10,547 | ||||||||
| Total operating expenses | 23,868 | 25,524 | 70,430 | 81,066 | ||||||||
| Operating income | 15,828 | 4,475 | 36,746 | 2,055 | ||||||||
| Interest expense | (1,197 | ) | (1,169 | ) | (3,574 | ) | (3,552 | ) | ||||
| Interest income | 408 | 525 | 1,412 | 1,930 | ||||||||
| Other income (expense), net | (2,774 | ) | (602 | ) | (4,197 | ) | (591 | ) | ||||
| Earnings (loss) before income taxes | 12,265 | 3,229 | 30,387 | (158 | ) | |||||||
| Income tax expense (benefit) | 2,171 | 332 | 6,432 | (827 | ) | |||||||
| Net earnings | $ | 10,094 | $ | 2,897 | $ | 23,955 | $ | 669 | ||||
| Earnings per share: | ||||||||||||
| Basic | $ | 0.93 | $ | 0.27 | $ | 2.21 | $ | 0.06 | ||||
| Diluted | $ | 0.93 | $ | 0.27 | $ | 2.21 | $ | 0.06 | ||||
| Shares used in computing earnings per share: | ||||||||||||
| Basic | 10,835 | 10,786 | 10,818 | 10,779 | ||||||||
| Diluted | 10,877 | 10,814 | 10,854 | 10,807 | ||||||||
| Cash dividends declared per share | $ | 0.32 | $ | 0.31 | $ | 0.94 | $ | 0.93 |
3
LINDSAY CORPORATION AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Unaudited)
| Three months ended | Nine months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | May 31,<br>2020 | May 31,<br>2019 | May 31,<br>2020 | May 31,<br>2019 | ||||||||
| Operating revenues: | ||||||||||||
| Irrigation: | ||||||||||||
| North America | $ | 60,917 | $ | 62,974 | 179,197 | $ | 177,118 | |||||
| International | 32,606 | 35,644 | 88,751 | 104,876 | ||||||||
| Irrigation segment | 93,523 | 98,618 | $ | 267,948 | $ | 281,994 | ||||||
| Infrastructure segment | 29,583 | 22,436 | 78,339 | 60,193 | ||||||||
| Total operating revenues | $ | 123,106 | $ | 121,054 | $ | 346,287 | $ | 342,187 | ||||
| Operating income: | ||||||||||||
| Irrigation segment | $ | 15,014 | $ | 11,037 | $ | 34,385 | $ | 26,341 | ||||
| Infrastructure segment | 8,560 | 3,537 | 23,686 | 7,259 | ||||||||
| Corporate | (7,746 | ) | (10,099 | ) | (21,325 | ) | (31,545 | ) | ||||
| Total operating income | $ | 15,828 | $ | 4,475 | $ | 36,746 | $ | 2,055 |
The Company manages its business activities in two reportable segments as follows:
Irrigation - This reporting segment includes the manufacture and marketing of center pivot, lateral move, and hose reel irrigation systems, as well as various innovative technology solutions such as GPS positioning and guidance, variable rate irrigation, remote irrigation management and scheduling technology, irrigation consulting and design and industrial IoT solutions.
Infrastructure – This reporting segment includes the manufacture and marketing of moveable barriers, specialty barriers, crash cushions and end terminals, and road marking and road safety equipment.
4
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (in thousands) | May 31,<br>2020 | May 31,<br>2019 | August 31,<br>2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 102,474 | $ | 110,839 | $ | 127,204 | |||
| Marketable securities | 19,012 | — | — | ||||||
| Receivables, net | 84,931 | 94,584 | 75,551 | ||||||
| Inventories, net | 113,301 | 91,091 | 92,287 | ||||||
| Assets<br>held-for-sale | — | 2,744 | 2,744 | ||||||
| Other current assets, net | 19,469 | 17,903 | 15,704 | ||||||
| Total current assets | 339,187 | 317,161 | 313,490 | ||||||
| Property, plant, and equipment, net | 72,827 | 70,367 | 68,968 | ||||||
| Intangibles, net | 24,053 | 25,103 | 24,382 | ||||||
| Goodwill | 67,635 | 64,454 | 64,387 | ||||||
| Operating lease<br>right-of-use assets | 27,663 | — | — | ||||||
| Deferred income tax assets | 11,118 | 8,783 | 11,758 | ||||||
| Other noncurrent assets, net | 15,003 | 20,054 | 17,329 | ||||||
| Total assets | $ | 557,486 | $ | 505,922 | $ | 500,314 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 35,310 | $ | 37,509 | $ | 29,434 | |||
| Current portion of long-term debt | 195 | 208 | 209 | ||||||
| Other current liabilities | 71,712 | 49,102 | 52,488 | ||||||
| Total current liabilities | 107,217 | 86,819 | 82,131 | ||||||
| Pension benefits liabilities | 5,787 | 5,661 | 6,029 | ||||||
| Long-term debt | 115,723 | 115,885 | 115,846 | ||||||
| Operating lease liabilities | 26,333 | — | — | ||||||
| Deferred income tax liabilities | 835 | 918 | 872 | ||||||
| Other noncurrent liabilities | 18,633 | 26,245 | 27,227 | ||||||
| Total liabilities | 274,528 | 235,528 | 232,105 | ||||||
| Shareholders’ equity: | |||||||||
| Preferred stock | — | — | — | ||||||
| Common stock | 18,918 | 18,870 | 18,870 | ||||||
| Capital in excess of stated value | 76,188 | 70,566 | 71,684 | ||||||
| Retained earnings | 488,518 | 476,580 | 474,740 | ||||||
| Less treasury stock - at cost | (277,238 | ) | (277,238 | ) | (277,238 | ) | |||
| Accumulated other comprehensive loss, net | (23,428 | ) | (18,384 | ) | (19,847 | ) | |||
| Total shareholders’ equity | 282,958 | 270,394 | 268,209 | ||||||
| Total liabilities and shareholders’ equity | $ | 557,486 | $ | 505,922 | $ | 500,314 |
5
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine months ended | ||||||
|---|---|---|---|---|---|---|
| (in thousands) | May 31,2020 | May 31,2019 | ||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net earnings | $ | 23,955 | $ | 669 | ||
| Adjustments to reconcile net earnings to net cash provided by (used in) operating<br>activities: | ||||||
| Depreciation and amortization | 14,146 | 10,452 | ||||
| Gain on sale of assets<br>held-for-sale | (1,191 | ) | — | |||
| Loss on sale of business | — | 301 | ||||
| Provision for uncollectible accounts receivable | 466 | (726 | ) | |||
| Deferred income taxes | 27 | (2,556 | ) | |||
| Share-based compensation expense | 4,118 | 3,226 | ||||
| Foreign currency transaction loss | 3,632 | 99 | ||||
| Other, net | 1,575 | (113 | ) | |||
| Changes in assets and liabilities: | ||||||
| Receivables | (11,379 | ) | (26,371 | ) | ||
| Inventories | (23,765 | ) | (14,467 | ) | ||
| Other current assets | (6,681 | ) | 546 | |||
| Accounts payable | 5,385 | 9,072 | ||||
| Other current liabilities | 14,485 | (4,078 | ) | |||
| Other noncurrent assets and liabilities | (8,810 | ) | 4,318 | |||
| Net cash provided by (used in) operating activities | 15,963 | (19,628 | ) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchases of property, plant, and equipment | (12,268 | ) | (20,210 | ) | ||
| Proceeds from sale of assets<br>held-for-sale | 3,955 | — | ||||
| Purchases of marketable securities<br>available-for-sale | (23,389 | ) | — | |||
| Proceeds from maturities of marketable securities available-for-sale | 4,320 | — | ||||
| Proceeds from settlement of net investment hedges | 1,503 | 2,262 | ||||
| Payments for settlement of net investment hedges | — | (327 | ) | |||
| Acquisition of business, net of cash acquired | (3,034 | ) | — | |||
| Other investing activities, net | — | 60 | ||||
| Net cash used in investing activities | (28,913 | ) | (18,215 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Proceeds from exercise of stock options | 1,545 | 177 | ||||
| Common stock withheld for payroll tax obligations | (1,111 | ) | (1,124 | ) | ||
| Principal payments on long-term debt | (174 | ) | (153 | ) | ||
| Payment of debt issuance costs | — | (115 | ) | |||
| Dividends paid | (10,177 | ) | (10,032 | ) | ||
| Net cash used in financing activities | (9,917 | ) | (11,247 | ) | ||
| Effect of exchange rate changes on cash and cash equivalents | (1,863 | ) | (858 | ) | ||
| Net change in cash and cash equivalents | (24,730 | ) | (49,948 | ) | ||
| Cash and cash equivalents, beginning of period | 127,204 | 160,787 | ||||
| Cash and cash equivalents, end of period | $ | 102,474 | $ | 110,839 |
6
LINDSAY CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
The non-GAAP tables below disclose (a) the impact on diluted earnings per share of consulting fees, severance costs and loss from business divestitures, associated with the Company’s Foundation for Growth Initiative (“FFG costs”), (b) the impact on operating income of FFG costs, and (c) the impact on segment operating income of FFG costs. Management believes adjusted net earnings, adjusted diluted earnings per share and adjusted operating income are important indicators of the Company’s business performance because they exclude items that may not be indicative of, or may be unrelated to, the Company’s underlying operating results, and provide a useful baseline for analyzing trends in the business. Non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. These adjusted financial measures should not be considered in isolation or as a substitute for reported net earnings, diluted earnings per share and operating income. These non-GAAP financial measures reflect an additional way of viewing the Company’s operations that, when viewed with the GAAP results and the following reconciliations to the corresponding GAAP financial measures, management believes provides a more complete understanding of the Company’s business.
| Three months ended | Nine months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands, except per share amounts) | May 31, 2019 | Diluted<br>earnings pershare | May 31, 2019 | Diluted<br>earnings pershare | ||||||||
| Net earnings - reported GAAP measure | $ | 2,897 | $ | 0.27 | $ | 669 | $ | 0.06 | ||||
| FFG costs - before tax | 3,890 | $ | 0.36 | 13,166 | $ | 1.22 | ||||||
| Tax effect - FFG costs | (1,336 | ) | $ | (0.12 | ) | (4,025 | ) | $ | (0.37 | ) | ||
| Net earnings - adjusted | $ | 5,450 | $ | 0.50 | $ | 9,809 | $ | 0.91 | ||||
| Average shares outstanding - diluted | 10,814 | 10,807 | ||||||||||
| For the three months ended May 31, 2019 | ||||||||||||
| Operating income reconciliation | Consolidated | Irrigation | Infrastructure | Corporate | ||||||||
| Operating income - reported GAAP measure | 4,475 | $ | 11,037 | $ | 3,537 | $ | (10,099 | ) | ||||
| FFG costs - before tax | 3,890 | 550 | 56 | 3,284 | ||||||||
| Adjusted operating income | $ | 8,365 | $ | 11,587 | $ | 3,593 | $ | (6,815 | ) | |||
| Operating revenues | 121,054 | $ | 98,618 | $ | 22,436 | $ | — | |||||
| Operating income as a percent of operating revenues | 3.7 | % | 11.2 | % | 15.8 | % | N/A | |||||
| Adjusted operating income as a percent of operating revenues | 6.9 | % | 11.7 | % | 16.0 | % | N/A | |||||
| For the nine months ended May 31, 2019 | ||||||||||||
| Operating income reconciliation | Consolidated | Irrigation | Infrastructure | Corporate | ||||||||
| Operating income - reported GAAP measure | 2,055 | $ | 26,341 | $ | 7,259 | $ | (31,545 | ) | ||||
| FFG costs - before tax | 13,166 | 676 | 188 | 12,302 | ||||||||
| Adjusted operating income | $ | 15,221 | $ | 27,017 | $ | 7,447 | $ | (19,243 | ) | |||
| Operating revenues | 342,187 | $ | 281,994 | $ | 60,193 | $ | — | |||||
| Operating income as a percent of operating revenues | 0.6 | % | 9.3 | % | 12.1 | % | N/A | |||||
| Adjusted operating income as a percent of operating revenues | 4.4 | % | 9.6 | % | 12.4 | % | N/A |
7
EX-99.2
3rd Quarter Fiscal 2020 Earnings Slide Deck Exhibit 99.2
Safe-Harbor Statement This presentation 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, financial results and planned financing. 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. Investors should understand that a number of factors could cause future economic and industry conditions, and the Company’s actual financial condition and results of operations, to differ materially from management’s beliefs expressed in the forward-looking statements contained in this presentation. These factors include but are not limited to those outlined in the “Risk Factors” sections of the Company’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission and the Company’s quarterly report on Form 10-Q for the fiscal quarter ended February 29, 2020, and investors are urged to review these factors when considering the forward-looking statements contained in this presentation. 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. For full financial statement information, please see the Company’s earnings release dated July 2, 2020.
Third Quarter Summary *Please see Reg G reconciliation of GAAP operating income, net earnings and diluted earnings per share to adjusted figures at end of presentation. Revenue Operating Income Diluted EPS Revenues increased $2.1 million compared to prior year Irrigation decreased $5.1 million Infrastructure increased $7.1 million Shipment and project delays related to COVID-19 impact revenue by approximately $14.0 million Operating income increased $7.5 million compared to adjusted prior year results* Irrigation increased $3.4 million Infrastructure increased $5.0 million Corporate expense increased $0.9 million due mainly to incremental incentive expense GAAP Adjusted* GAAP Adjusted* Amounts in millions, except per share amounts FY19 FY20 FY19 FY20
Third Quarter and YTD Financial Summary *Please see Reg G reconciliation of GAAP operating income, net earnings and diluted earnings per share to adjusted figures at end of presentation.
Current Market Factors Effect of global COVID-19 pandemic has led to significant decreases in commodity prices. 2020 Net Farm Income is projected by the USDA to be $96.7 billion, an increase of 3.3% from 2019. Increases in cash receipts for crops and livestock are partially offset by a decrease in gov’t support payments. Impacts from COVID-19 have not yet been factored into the USDA projections. Under the U.S.-China Phase 1 trade deal, China pledged to increase purchases of U.S. agricultural products by $32 billion over two years. This would be more than a 60% increase over the 2017 baseline cited in the deal, however it is uncertain that China will actually increase purchases to this level. Drop in ethanol demand puts additional downward pressure on corn prices. Food security an increased concern in certain international markets. Irrigation Infrastructure Our “shift left” strategy is gaining traction and contributing to an increase in Road Zipper System® lease revenue. Road Zipper System® gaining interest globally as a solution to traffic congestion and air quality. The five-year $305 billion U.S. highway bill enacted in December 2015 (the “FAST Act”) is scheduled to expire in September 2020 unless it is reauthorized by Congress. Congress and the Administration have put forth several infrastructure packages, but none have moved beyond their introduction. States continue the transition to new federal MASH testing standards for road safety products. Almost all of our road safety product offerings in the U.S. have now received MASH eligibility.
Irrigation Segment North America revenue decreased $2.1 million Lower irrigation equipment unit volume Higher average selling prices International revenue decreased $3.0 million Unfavorable currency impact of $3.5 million Shipment delays of approximately $2.0 million related to the impact of COVID-19 Operating income increased $3.4 million compared to adjusted prior year results* Improved cost and pricing performance Increased margin contribution from technology products and services Operating margin improved 440 bps vs. adjusted prior year results* Net Irrigate, LLC acquired on April 8, 2020 Agriculture IoT technology company that provides remote monitoring solutions for center pivot irrigation Expands the number of irrigated acres managed under Lindsay’s FieldNET ® brand of remote monitoring and control solutions Revenue Operating Income GAAP Adjusted* North America International FY19 FY20 FY19 FY20 *Please see Reg G reconciliation of GAAP operating income, net earnings and diluted earnings per share to adjusted figures at end of presentation. Amounts in millions
Infrastructure Segment Total revenue increased $7.1 million Increase in Road Zipper System® sales Highways England project Japan barrier order Increase in Road Zipper System lease revenue Sales of road safety products in Europe were lower than prior year Project delays in the U.S. of approximately $12.0 million related to the impact of COVID-19 Operating income of $8.6 million and operating margin of 28.9% Positive mix impact from higher-margin Road Zipper System sales and lease revenue Improved cost and pricing performance Revenue Operating Income GAAP Adjusted* FY19 FY20 FY19 FY20 *Please see Reg G reconciliation of GAAP operating income, net earnings and diluted earnings per share to adjusted figures at end of presentation. Amounts in millions
Update on the COVID-19 Situation Innovative Market Leader – Sustainable Solutions Lindsay’s products and technologies support the following critical infrastructure sectors as defined by the Department of Homeland Security (CISA.gov) and other global government agencies: Food and Agriculture – our irrigation business supports the production of food and the conservation of water and energy Transportation Systems – our infrastructure business supports the movement of people and goods efficiently, safely and securely Lindsay’s production facilities are considered “business essential” and will remain operational as long as we 1) have demand for our products, 2) are allowed to remain open by local governments, and 3) can provide for the safety of our employees. At the present time, all of our facilities are operational. Other potential business impacts associated with COVID-19 include but are not limited to: additional facility closures and the duration of such closures, supply chain disruption and additional costs, logistics delays, border closures, workforce disruption, reduced demand for our products and services, delay in the implementation of projects and other effects that may result from a general economic downturn. Lindsay is well positioned with a strong balance sheet and sufficient liquidity as we face the uncertainty and challenges presented by the COVID-19 pandemic. As of May 31, 2020 we have: Available liquidity of $171.5 million, with $121.5 million in cash, cash equivalents and marketable securities and $50.0 million available under revolving credit facility Total debt of $116.4 million, of which $115.0 million matures in 2030 A funded debt to EBITDA leverage ratio (as defined in our credit agreements) of 1.8 compared to a covenant limit of 3.5
COVID-19 Protocols in Place Innovative Market Leader – Sustainable Solutions Protecting the health and well-being of our employees is a top priority, as is maintaining frequent communication and providing important updates. Beginning in early March, we have: Created a global task force and communication strategy Implemented social distancing protocols Initiated remote work strategy for employees not essential to factory operations Restricted domestic and international travel for business-essential purposes Completed an electrostatic spray deep clean at our global headquarters Limited visitors to all of our facilities to essential personnel only Conducted screening questionnaires for all facility visitors Increased frequency and intensity of disinfecting all high-touch areas Implemented twice daily disinfecting procedures for production equipment Implemented staggered breaks in our factory operations Created a COVID-19 Manager at each facility to ensure rigid discipline of protocols Established protocols in the event of a confirmed COVID-19 diagnosis Published weekly updates by location specific to CDC and WHO updates and guidelines Implemented virtual or phone meeting protocols
Executing Long-Term Value Creation Innovative Market Leader – Sustainable Solutions Deepening customer relationships through technology differentiation Solutions and growth aligned to market megatrends…. designed to sustain and protect our evolving world Foundation for Growth initiative driving margin expansion Empowered global culture through Vision, Values and Behaviors Framework Innovative Market Leader – Sustainable Solutions ONE LINDSAY
Foundation for Growth Initiative Margin improvement Cost Strategy and Culture Objectives Raise operating margin floor Innovation leader in core markets Renewed culture and identity 1 2 3 4 5 6 Commercial Excellence Global Sourcing Manufacturing Optimization Lower G&A Expenses Cultural Changes Strategic Choices
Foundation for Growth Execution Execution remains on track Accomplishments through Q3 Fiscal 2020 Divested four non-core businesses, acquired Net Irrigate, LLC ü Established a centralized shared services organization ü Closed and sold an infrastructure facility; consolidated activity into an existing irrigation facility ü Made tangible progress in culture change and aligning behaviors to strategy ü Projects in each of the four margin-improvement workstreams have moved to implementation and realization stage ü
Summary Balance Sheet
Summary of Cash Flow
Capital Allocation – A Balanced Approach Allocation History (1) Other includes debt repayments, net cash sources/uses from note receivables, net investment hedges, stock compensation and related tax benefits. Targeted cash balance of $60-75 million, including international accounts To support cyclical and seasonal fluctuations in working capital and projected capital expenditures $115 million in Senior Notes maturing on 2/19/30 at annual interest rate of 3.82% The Company’s prioritization for cash use: Organic growth initiatives Capital expenditures - expected to be $15-20 million in fiscal 2020 Dividend payments Synergistic acquisitions that leverage core capabilities Excess cash invested in opportunistic share repurchases Allocation Plan
Attractive Long-Term Megatrends Water Conservation Alternative Fuels Increase Yields Improve Road Safety Population Growth Advancing Technology
Regulation G Reconciliation of GAAP to Non-GAAP Financial Measures LINDSAY CORPORATION AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited) The non-GAAP tables below disclose (a) the impact on diluted earnings per share of consulting fees, severance costs and loss from business divestitures, associated with the Company's Foundation for Growth Initiative ("FFG costs"), (b) the impact on operating income of FFG costs, and (c) the impact on segment operating income of FFG costs. Management believes adjusted net earnings, adjusted diluted earnings per share and adjusted operating income are important indicators of the Company’s business performance because they exclude items that may not be indicative of, or may be unrelated to, the Company’s underlying operating results, and provide a useful baseline for analyzing trends in the business. Non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. These adjusted financial measures should not be considered in isolation or as a substitute for reported net earnings, diluted earnings per share and operating income. These non-GAAP financial measures reflect an additional way of viewing the Company’s operations that, when viewed with the GAAP results and the following reconciliations to the corresponding GAAP financial measures, management believes provides a more complete understanding of the Company’s business.
Regulation G Reconciliation of GAAP to Non-GAAP Financial Measures LINDSAY CORPORATION AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited) (Continued)