Lindsay Corp 10-Q for FY2025 Q2
Lindsay Corp (LNN)
About this 10-Q
Lindsay Corp filed this 10-Q on April 3, 2025, covering the quarter ended February 28, 2025 (FY2025 Q2).
Headline figures
Quarter ended February 28, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $187.06M
- up 23.5% from $151.52M a year earlier
- Net income
- $26.58M
- up 46.6% from net income of $18.12M a year earlier
- Diluted EPS
- $2.44
- up 48.8% from $1.64 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
For the quarterly period ended
OR
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
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Accelerated filer |
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Non‑accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of April 1, 2025,
Lindsay Corporation
INDEX FORM 10-Q
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ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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ITEM 3 – Quantitative and Qualitative Disclosures about Market Risk |
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28 |
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28 |
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ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds |
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28 |
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28 |
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- 2 -
Part I – FINANCIAL INFORMATION
ITEM 1 - Financial Statements
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
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Three months ended |
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Six months ended |
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($ and shares in thousands, except per share amounts) |
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February 28, |
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February 29, |
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February 28, |
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February 29, |
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Operating revenues |
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$ |
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$ |
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$ |
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$ |
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Cost of operating revenues |
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Gross profit |
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Operating expenses: |
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Selling expense |
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General and administrative expense |
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Engineering and research expense |
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Total operating expenses |
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Operating income |
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Other income (expense): |
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Interest expense |
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Interest income |
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Other income (expense), net |
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Total other income (expense) |
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Earnings before income taxes |
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Income tax expense |
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Net earnings |
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$ |
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$ |
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$ |
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$ |
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Earnings per share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Shares used in computing earnings per share: |
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Basic |
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Diluted |
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Cash dividends declared per share |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
- 3 -
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
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Three months ended |
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Six months ended |
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($ in thousands) |
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February 28, |
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February 29, |
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February 28, |
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February 29, |
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Net earnings |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss): |
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Defined benefit pension plan adjustment, net of tax |
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Foreign currency translation adjustment, net of hedging activities and tax |
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Unrealized gain on marketable securities, net of tax |
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Total other comprehensive income (loss), net of tax expense of $ |
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Total comprehensive income |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
- 4 -
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
($ and shares in thousands, except par values) |
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February 28, |
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February 29, |
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August 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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$ |
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Marketable securities |
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Receivables, net of allowance of $ |
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Inventories, net |
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Other current assets |
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Total current assets |
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Property, plant, and equipment: |
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Cost |
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Less accumulated depreciation |
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Property, plant, and equipment, net |
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Intangibles, net |
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Goodwill |
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Operating lease right-of-use assets |
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Deferred income tax assets |
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Equity method investment |
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Other noncurrent assets |
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Total assets |
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$ |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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$ |
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Current portion of long-term debt |
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Other current liabilities |
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Total current liabilities |
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Pension benefits liabilities |
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Long-term debt |
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Operating lease liabilities |
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Deferred income tax liabilities |
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Other noncurrent liabilities |
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Total liabilities |
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Shareholders' equity: |
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Preferred stock of $ |
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Common stock of $ |
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Capital in excess of stated value |
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Retained earnings |
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Less treasury stock - at cost, |
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( |
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( |
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( |
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Accumulated other comprehensive loss, net |
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( |
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( |
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( |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
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$ |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
- 5 -
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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY |
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($ and shares in thousands, except per share amounts) |
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(Unaudited) |
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Shares of |
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Shares of |
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Common |
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Capital in |
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Retained |
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Treasury |
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Accumulated |
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Total |
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Balance at August 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Comprehensive income: |
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Net earnings |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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( |
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Total comprehensive income |
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— |
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— |
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Cash dividends ($ |
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— |
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— |
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( |
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( |
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Repurchase of common stock |
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— |
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— |
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Issuance of common shares under share compensation plans, net |
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( |
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Share-based compensation expense |
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— |
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— |
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Balance at February 29, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Balance at August 31, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Comprehensive income: |
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Net earnings |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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( |
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( |
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Total comprehensive income |
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— |
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— |
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Cash dividends ($ |
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— |
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— |
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( |
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Repurchase of common stock |
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( |
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Issuance of common shares under share compensation plans, net |
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( |
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( |
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Share-based compensation expense |
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— |
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— |
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Balance at February 28, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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See accompanying notes to condensed consolidated financial statements. |
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||||||||||||||||||||||
- 6 -
Lindsay Corporation and Subsidiaries |
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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY |
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($ and shares in thousands, except per share amounts) |
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(Unaudited) |
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Shares of |
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Shares of |
|
Common |
|
Capital in |
|
Retained |
|
Treasury |
|
Accumulated |
|
Total |
Balance at November 30, 2023 |
|
|
|
$ |
|
$ |
|
$ |
|
$( |
|
$( |
|
$ |
||
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
— |
|
— |
|
|
|
|
|
|
||||||
Other comprehensive loss |
|
— |
|
— |
|
|
|
|
|
( |
|
( |
||||
Total comprehensive income |
|
— |
|
— |
|
|
|
|
|
|
||||||
Cash dividends ($) per share |
|
|
|
— |
|
|
|
( |
|
|
|
( |
||||
Repurchase of common stock |
|
|
|
|
|
|
|
|
||||||||
Issuance of common shares under share compensation plans, net |
|
|
|
|
|
|
|
|
||||||||
Share-based compensation expense |
|
— |
|
— |
|
|
|
|
|
|
||||||
Balance at February 29, 2024 |
|
|
|
$ |
|
$ |
|
$ |
|
$( |
|
$( |
|
$ |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at November 30, 2024 |
|
|
|
$ |
|
$ |
|
$ |
|
$( |
|
$( |
|
$ |
||
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
— |
|
— |
|
|
|
|
|
|
||||||
Other comprehensive income |
|
— |
|
— |
|
|
|
|
|
|
||||||
Total comprehensive income |
|
— |
|
— |
|
|
|
|
|
|
|
|||||
Cash dividends ($ |
|
— |
|
— |
|
|
|
( |
|
|
|
( |
||||
Repurchase of common stock |
|
|
|
|
|
|
( |
|
|
( |
||||||
Issuance of common shares under share compensation plans, net |
|
|
|
|
|
|
|
|
||||||||
Share-based compensation expense |
|
— |
|
— |
|
|
|
|
|
|
||||||
Balance at February 28, 2025 |
|
|
|
$ |
|
$ |
|
$ |
|
$( |
|
$( |
|
$ |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial statements. |
|
|
|
|
|
|
||||||||||
- 7 -
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Six months ended |
|
|||||
($ in thousands) |
|
February 28, 2025 |
|
|
February 29, 2024 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
Net earnings |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Provision for uncollectible accounts receivable |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Share-based compensation expense |
|
|
|
|
|
|
||
Unrealized foreign currency transaction (gain) |
|
|
( |
) |
|
|
( |
) |
Other, net |
|
|
( |
) |
|
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
||
Receivables |
|
|
( |
) |
|
|
( |
) |
Inventories |
|
|
( |
) |
|
|
( |
) |
Other current assets |
|
|
|
|
|
( |
) |
|
Accounts payable |
|
|
|
|
|
|
||
Other current liabilities |
|
|
( |
) |
|
|
( |
) |
Other noncurrent assets and liabilities |
|
|
( |
) |
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
Purchases of property, plant, and equipment |
|
|
( |
) |
|
|
( |
) |
Purchases of marketable securities |
|
|
( |
) |
|
|
( |
) |
Proceeds from maturities of marketable securities |
|
|
|
|
|
|
||
Purchase of equity method investment |
|
|
( |
) |
|
|
|
|
Proceeds from settlement of net investment hedge |
|
|
|
|
|
|
||
Payments for settlement of net investment hedge |
|
|
( |
) |
|
|
|
|
Other investing activities, net |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Dividends paid |
|
|
( |
) |
|
|
( |
) |
Common stock withheld for payroll tax obligations |
|
|
( |
) |
|
|
( |
) |
Repurchase of common shares |
|
|
( |
) |
|
|
|
|
Proceeds from exercise of stock options |
|
|
|
|
|
|
||
Other financing activities, net |
|
|
|
|
|
|
||
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
Net change in cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
Cash and cash equivalents, beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents, end of period |
|
$ |
|
|
$ |
|
||
See accompanying notes to condensed consolidated financial statements.
- 8 -
LINDSAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Basis of Presentation
The condensed consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and do not include all of the disclosures normally required by U.S. generally accepted accounting principles (“U.S. GAAP”) as contained in Lindsay Corporation’s (the “Company”) Annual Report on Form 10-K. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended August 31, 2024.
In the opinion of management, the condensed consolidated financial statements of the Company reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and the results of operations and cash flows for the periods presented. The results for interim periods are not necessarily indicative of trends or results expected by the Company for a full year. The condensed consolidated financial statements were prepared using U.S. GAAP. These principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from these estimates.
Recent Accounting Guidance Adopted
In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2022-04, Liabilities - Supplier Finance Programs, which requires annual and interim disclosures for entities that finance its purchases with supplier finance programs. The Company adopted these amendments in its fiscal 2024, except for the amendment on rollforward information, which is effective for the Company beginning in its fiscal 2025. The adoption of this ASU is not expected to have a material impact on its condensed consolidated financial statements.
Recent Accounting Guidance Not Yet Adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures which requires, among other updates, enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker, or CODM, as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This ASU is effective for fiscal years beginning after December 15, 2023. The Company plans to adopt this ASU in its fiscal 2025.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires entities to disclose more detailed information in their reconciliation of their statutory tax rate to their effective tax rate. The Company plans to adopt this ASU in its fiscal 2026.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (DISE), which requires additional disclosure of the nature of expenses included in the income statement in response to longstanding requests from investors for more information about an entity’s expenses. The guidance will be effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company plans to adopt this ASU in it its fiscal 2028.
- 9 -
Note 2 – Revenue Recognition
Disaggregation of Revenue
A breakout by segment of revenue recognized over time versus at a point in time for the three and six months ended February 28, 2025 and February 29, 2024 is as follows:
|
|
Three months ended |
|
Three months ended |
||||||||||||||
|
|
February 28, 2025 |
|
February 29, 2024 |
||||||||||||||
($ in thousands) |
|
Irrigation |
|
Infrastructure |
|
Total |
|
Irrigation |
|
Infrastructure |
|
Total |
||||||
Point in time |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Over time |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenue from the contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lease revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total operating revenues |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
Six months ended |
||||||||||||
|
|
|
February 28, 2025 |
|
|
February 29, 2024 |
||||||||||||
($ in thousands) |
|
Irrigation |
|
Infrastructure |
|
Total |
|
Irrigation |
|
Infrastructure |
|
Total |
||||||
Point in time |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Over time |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenue from the contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lease revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total operating revenues |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Further disaggregation of revenue is disclosed in Note 14 – Business Segments.
For contracts with an initial length longer than 12 months, the unsatisfied performance obligations were $
Contract Balances
Contract assets arise when recorded revenue for a contract exceeds the amounts billed under the terms of such contract. Contract liabilities arise when billed amounts exceed revenue recorded. Amounts are billable to customers upon various measures of performance, including achievement of certain milestones and completion of specified units of completion of the contract. At February 28, 2025, February 29, 2024, and August 31, 2024, contract assets amounted to $
Contract liabilities include advance payments from customers and billings in excess of delivery of performance obligations. At February 28, 2025, February 29, 2024, and August 31, 2024, contract liabilities amounted to $2
Note 3 – Net Earnings per Share
Basic earnings per share is calculated on the basis of weighted average outstanding common shares. Diluted earnings per share is calculated on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, restricted stock unit awards and other dilutive securities.
- 10 -
The following table shows the computation of basic and diluted net earnings per share for the three and six months ended February 28, 2025 and February 29, 2024:
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
($ and shares in thousands, except per share amounts) |
|
February 28, |
|
|
February 29, |
|
|
February 28, |
|
|
February 29, |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted effect of stock awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding assuming |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net earnings per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted net earnings per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Certain stock options and restricted stock units were excluded from the computation of diluted net earnings per share because their effect would have been anti-dilutive. Performance stock units are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied. The number of securities excluded from the computation of earnings per share because their effect would have been anti-dilutive was not significant for the three and six months ended February 28, 2025 and February 29, 2024.
Note 4 – Equity Method Investment
On December 19, 2024, the Company completed its acquisition of a
The Company's investment in Pessl is accounted for pursuant to the equity method due to the Company’s ability to exert significant influence over decisions relating to Pessl's operating and financial affairs. Revenue and expenses of this investment are not consolidated into the Company’s financial statements; rather, the proportionate share of the earnings/losses is recorded within other income (expense), net on the condensed consolidated statements of earnings.
The Company determined that on the date of the minority interest acquisition of Pessl, there were differences between the Company's investment in Pessl and its proportional interest in the equity of Pessl, which represented basis differences between the Company's purchase price and its share of Pessl's net assets as well as residual equity method goodwill that is not amortized. Amortizable basis differences, which are not financially significant, are being amortized over a 5-year period and are also recorded within other income (expense), net on the condensed consolidated statements of earnings.
Note 5 – Income Taxes
The Company recorded income tax expense of $
It is the Company’s policy to report income tax expense for interim periods using an estimated annual effective income tax rate. The estimated annual effective income tax rate was
The tax effects of significant or unusual items are not considered in the estimated annual effective income tax rate. The tax effects of such discrete events are recognized in the interim period in which the events occur. The impact of discrete items was not significant for the six months ended February 28, 2025 and amounted to an income tax benefit of $
- 11 -
Note 6 – Inventories
Inventories consisted of the following as of February 28, 2025, February 29, 2024, and August 31, 2024:
($ in thousands) |
|
February 28, |
|
|
February 29, |
|
|
August 31, |
|
|||
Raw materials and supplies |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Work in process |
|
|
|
|
|
|
|
|
|
|||
Finished goods and purchased parts, net |
|
|
|
|
|
|
|
|
|
|||
Total inventory value before LIFO adjustment |
|
|
|
|
|
|
|
|
|
|||
Less adjustment to LIFO value |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Inventories, net |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Of the $
Note 7 – Long-Term Debt
The following table sets forth the outstanding principal balances of the Company’s long-term debt as of the dates shown:
($ in thousands) |
|
February 28, |
|
|
February 29, |
|
|
August 31, |
|
|||
Series A Senior Notes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Elecsys Series 2006A Bonds |
|
|
|
|
|
|
|
|
|
|||
Total debt |
|
|
|
|
|
|
|
|
|
|||
Less current portion |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Less unamortized debt issuance costs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total long-term debt |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Principal payments on the debt are due as follows:
Due within |
|
$ in thousands |
|
|
1 year |
|
$ |
|
|
2 years |
|
|
|
|
Thereafter |
|
|
|
|
|
|
$ |
|
|
Note 8 – Fair Value Measurements
The following table presents the Company’s financial assets and liabilities measured at fair value, based upon the level within the fair value hierarchy in which the fair value measurements fall, as of February 28, 2025, February 29, 2024, and August 31, 2024. There were no transfers between any levels for the periods presented.
- 12 -
|
|
February 28, 2025 |
|
|||||||||||||
($ in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Derivative assets |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
February 29, 2024 |
|
|||||||||||||
($ in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liabilities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
August 31, 2024 |
|
|||||||||||||
($ in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Derivative assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liabilities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
The Company’s investments in marketable securities consist of investment grade corporate bonds and commercial paper. The marketable securities are classified as available-for-sale and are carried at fair value with the change in unrealized gains and losses reported as a separate component on the condensed consolidated statements of comprehensive income until realized. The Company determines fair value using data points that are observable, such as quoted prices and interest rates. The amortized cost of the investments approximates fair value. Investment income is recorded within other income (expense), net on the condensed consolidated statements of earnings. As of February 28, 2025, all of the Company’s marketable securities investments mature within
The Company enters into derivative instrument agreements to manage risk in connection with changes in foreign currency. The Company only enters into derivative instrument agreements with counterparties who have highly rated credit and does not enter into derivative instrument agreements for trading or speculative purposes. The fair values are based on inputs other than quoted prices that are observable for the asset or liability and are determined by standard calculations and models that use readily observable market parameters. These inputs include foreign currency exchange rates and interest rates. Industry standard data providers are the primary source for forward and spot rate information for both interest rates and foreign currency exchange rates.
The Company has entered into various cross currency swaps that mature between the first quarter of fiscal 2027 and the first quarter of fiscal 2028 with a total notional amount of $
At February 28, 2025, the Company had an outstanding foreign currency forward contract to sell a notional amount of
There were
- 13 -
Note 9 – Commitments and Contingencies
In the ordinary course of its business operations, the Company enters into arrangements that obligate it to make future payments under contracts such as lease agreements. Additionally, the Company is involved, from time to time, in commercial litigation, employment disputes, administrative proceedings, business disputes and other legal proceedings. The Company has established accruals for certain proceedings based on an assessment of probability of loss. The Company believes that any such currently-pending proceedings are either covered by insurance or would not have a material effect on the business or its consolidated financial statements if decided in a manner that is unfavorable to the Company. Such proceedings are exclusive of environmental remediation matters which are discussed separately below.
Infrastructure Products
The Company is currently defending a number of product liability lawsuits arising out of vehicle collisions with highway barriers incorporating the Company’s X-Lite® end terminal. Despite the September 2018 reversal of a sizable judgment against a competitor and the October 2023 dismissal of the FCA Lawsuit (as defined below), the Company expects that the significant attention brought to the infrastructure products industry by the original judgment may lead to additional lawsuits being filed against the Company and others in the industry.
Following the March 2019 filing of a qui tam lawsuit (as amended, the “FCA Lawsuit”) by an individual relator (the “Relator”) on behalf of the United States and 12 individual states, in the United States District Court for the Northern District of New York (the “U.S. District Court”), the Department of Justice, Civil Division and the U.S. Attorney's Office for the Northern District of New York (the “U.S. Attorney’s Office”) proceeded to initiate an investigation into the Relator’s allegations relating to the Company's X-Lite end terminal and potential violations of the False Claims Act. On September 28, 2023, the U.S. Attorney’s Office submitted a letter motion (the “Letter Motion”) informing the U.S. District Court that the United States had investigated the Relator’s allegations and now sought to move to dismiss the FCA Lawsuit as it had “determined that dismissal is commensurate with the public interest because the claims lack merit and the matter does not warrant the continued expenditure of resources to pursue or monitor the action.” The U.S. Attorney’s Office also noted that it had “been advised by counsel for the 12 states that the states [had] no objection to the U.S. District Court declining to exercise supplemental jurisdiction over the remaining state claims and to dismissing those claims without prejudice to the states.” On October 2, 2023, the U.S. District Court granted the Letter Motion and indicated that a motion to dismiss could be filed without further order or pre-motion conference. On October 12, 2023, after the Relator proceeded to file his own notice of voluntary dismissal, the U.S. Attorney’s Office filed its notice of consent to the Relator’s voluntary dismissal. On October 26, 2023, the U.S. District Court ordered the dismissal of the FCA Lawsuit without prejudice as to the Relator, the United States, and each of the 12 state plaintiffs.
On November 27, 2023, following the dismissal of the Relator’s FCA Lawsuit, the Relator filed under seal a subsequent qui tam lawsuit on behalf of the State of Tennessee against the Company, certain of its subsidiaries, and certain third parties which originally designed the X-Lite end terminal (the “Tennessee FATA Lawsuit”) in the Circuit Court of Davidson County, Nashville, Tennessee (the “Tennessee Circuit Court”) making substantially similar allegations relating to the Company’s X-Lite end terminal and potential violations of the Tennessee Fraud Against Taxpayers Act. On March 26, 2024, the State of Tennessee, which had previously consented to the dismissal of the FCA Lawsuit without prejudice, filed under seal a notice of its election to decline to intervene in the Tennessee FATA Lawsuit. On May 17, 2024, the Tennessee Circuit Court filed an order to unseal the case documents, and the Company and its named subsidiaries were subsequently notified of the Tennessee FATA Lawsuit and served in June 2024.
The Company, certain of its subsidiaries, and certain third parties which originally designed the X-Lite end terminal have also been named in a lawsuit filed on June 9, 2020 in the Circuit Court of Cole County, Missouri by Missouri Highways and Transportation Commission (“MHTC”). MHTC alleges, among other things, that the X-Lite end terminal was defectively designed and failed to perform as designed, intended, and advertised, leading to MHTC’s removal and replacement of X-Lite end terminals from Missouri’s roadways. MHTC alleges strict liability (defective design and failure to warn), negligence, breach of express warranties, breach of implied warranties (merchantability and fitness for a particular purpose), fraud, and public nuisance. MHTC seeks compensatory damages, interest, attorneys’ fees, and punitive damages.
The Company believes it has meritorious factual and legal defenses to each of the lawsuits discussed above and is prepared to vigorously defend its interests. Based on the information currently available to the Company, the Company does not believe that a loss is probable in any of these lawsuits; therefore, no accrual has been included in the Company’s consolidated financial statements. While it is reasonably possible that a loss may be incurred, the Company is unable to estimate a range of potential loss due to the complexity and current status of these lawsuits. However, the Company maintains insurance coverage to mitigate the impact of adverse exposures in these lawsuits and does not expect that these lawsuits will have a material adverse effect on its business or its consolidated financial statements.
- 14 -
Environmental Remediation
In previous years, the Company committed to a plan to remediate environmental contamination of the groundwater at and adjacent to its Lindsay, Nebraska facility (the “site”). The current estimated aggregate accrued cost of $
The Company accrues the anticipated cost of investigation and remediation when the obligation is probable and can be reasonably estimated. While the plan has not been formally approved by the EPA, the Company believes the current accrual is a good faith estimate of the long-term cost of remediation at this site; however, the estimate of costs and their timing could change as a result of a number of factors, including but not limited to (1) EPA input on the proposed remediation plan and any changes which the EPA may subsequently require, (2) refinement of cost estimates and length of time required to complete remediation and post-remediation operations and maintenance, (3) effectiveness of the technology chosen in remediation of the site as well as changes in technology that may be available in the future, and (4) unforeseen circumstances existing at the site. As a result of these factors, the actual amount of costs incurred by the Company in connection with the remediation of contamination of its Lindsay, Nebraska site could exceed the amounts accrued for this expense at this time. While any revisions could be material to the operating results of any fiscal quarter or fiscal year, the Company does not expect such additional expenses would have a material adverse effect on its liquidity or financial condition.
The following table summarizes the environmental remediation liability classifications included in the condensed consolidated balance sheets as of February 28, 2025, February 29, 2024, and August 31, 2024:
($ in thousands) |
|
February 28, |
|
|
February 29, |
|
|
August 31, |
|
|||
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
||||
Total environmental remediation liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Note 10 – Warranties
The following table provides the changes in the Company’s product warranties:
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
($ in thousands) |
|
February 28, |
|
|
February 29, |
|
|
February 28, |
|
|
February 29, |
|
||||
Product warranty accrual balance, beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities accrued for warranties during the period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warranty claims paid during the period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Product warranty accrual balance, end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Note 11 – Share-Based Compensation
The Company’s current share-based compensation plans, approved by the stockholders of the Company, provides for awards of stock options, restricted shares, restricted stock units (“RSUs”), stock appreciation rights, performance shares, and performance stock units (“PSUs”) to employees and non-employee directors of the Company. The Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. Share-based compensation expense was $
- 15 -
Note 12 – Other Current Liabilities
($ in thousands) |
|
February 28, |
|
|
February 29, |
|
|
August 31, |
|
|||
Other current liabilities: |
|
|
|
|
|
|
|
|
|
|||
Contract liabilities |
|
|
|
|
$ |
|
|
|
|
|||
Compensation and benefits |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Warranties |
|
|
|
|
|
|
|
|
|
|||
Tax related liabilities |
|
|
|
|
|
|
|
|
|
|||
Dealer related liabilities |
|
|
|
|
|
|
|
|
|
|||
Operating lease liabilities |
|
|
|
|
|
|
|
|
|
|||
Accrued insurance |
|
|
|
|
|
|
|
|
|
|||
Deferred revenue - lease |
|
|
|
|
|
|
|
|
|
|||
Accrued environmental liabilities |
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
|
|
|
|
|||
Total other current liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Note 13 – Share Repurchases
The Company’s Board of Directors authorized a share repurchase program of up to $
During the three and six months ended February 28, 2025, the Company repurchased approximately
Note 14 – Business Segments
The Company manages its business activities in
Irrigation – This reporting segment includes the manufacture and marketing of center pivot, lateral move and hose reel irrigation systems and large diameter steel tubing 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 internet of things, or “IIoT”, solutions. The irrigation reporting segment consists of
- 16 -
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. The infrastructure reporting segment consists of
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
($ in thousands) |
|
February 28, |
|
|
February 29, |
|
|
February 28, |
|
|
February 29, |
|
||||
Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Irrigation: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
North America |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Irrigation total |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Infrastructure |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Irrigation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Infrastructure |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total operating income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
- 17 -
ITEM 2 ‑ Management's Discussion and Analysis of Financial Condition and Results of Operations
Concerning Forward‑Looking Statements
This Quarterly Report on Form 10-Q contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical are forward-looking and reflect information concerning possible or assumed future results of operations and planned financing of the Company. In addition, forward-looking statements may be made orally or in press releases, conferences, reports, on the Company's web site, or otherwise, in the future by or on behalf of the Company. When used by or on behalf of the Company, the words “expect,” “anticipate,” “estimate,” “believe,” “intend,” “will,” “plan,” “predict,” “project,” “outlook,” “could,” “may,” “should” or similar expressions generally identify forward-looking statements. The entire section entitled “Executive Overview and Outlook” should be considered forward-looking statements. 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.
Forward-looking statements involve a number of risks and uncertainties, including but not limited to those discussed in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2024. Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results or conditions, which may not occur as anticipated. Actual results or conditions could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described herein and in the Company’s other public filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2024, as well as other risks and uncertainties not now anticipated. The risks and uncertainties described herein and in the Company’s other public filings are not exclusive and further information concerning the Company and its businesses, including factors that potentially could materially affect the Company's financial results, may emerge from time to time. Except as required by law, the Company assumes no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.
Accounting Policies
In preparing the Company’s condensed consolidated financial statements in conformity with U.S. GAAP, management must make a variety of decisions which impact the reported amounts and the related disclosures. These decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In making these decisions, management applies its judgment based on its understanding and analysis of the relevant circumstances and the Company’s historical experience.
The Company’s accounting policies that are most important to the presentation of its results of operations and financial condition, and which require the greatest use of judgments and estimates by management, are designated as its critical accounting policies. See discussion of the Company’s critical accounting policies under Item 7 in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2024. Management periodically re-evaluates and adjusts its critical accounting policies as circumstances change. There were no significant changes in the Company’s critical accounting policies during the six months ended February 28, 2025.
Recent Accounting Guidance
See Note 1 – Basis of Presentation and the disclosure therein of recently adopted accounting guidance to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Executive Overview and Outlook
Operating revenues for the three months ended February 28, 2025 were $187.1 million, an increase of 23 percent compared to $151.5 million for the three months ended February 29, 2024. Irrigation segment revenues for the three months ended February 28, 2025 increased 11 percent to $148.1 million from the same prior year period, while infrastructure segment revenues increased 110 percent to $38.9 million. Net earnings for the three months ended February 28, 2025 were $26.6 million, or $2.44 per diluted share, compared to net earnings of $18.1 million, or $1.64 per diluted share, for the three months ended February 29, 2024. The increase in net earnings and earnings per share was driven primarily by higher operating income, as other income and the effective tax rate were comparable to the same prior year period.
The primary drivers for the Company’s irrigation segment are the need for irrigated agricultural crop production, which is tied to population growth and the attendant need for expanded food production, and the need to use water resources efficiently. These drivers are affected by a number of factors, including the following:
- 18 -
- 19 -
The forecasted increase in estimated 2025 net farm income is not expected to have a meaningful positive impact on demand for irrigation equipment as the increase results primarily from government support payments while crop receipts are expected to be slightly lower compared to the prior year.
The most significant opportunities for growth in irrigation sales over the next several years continue to be in international markets where irrigation use is less developed and demand is driven not only by commodity prices and net farm income, but also by food security, water scarcity and population growth. While international irrigation markets remain active with opportunities for further development and expansion, regional political and economic factors, including armed conflict, currency conditions and other factors can create a challenging environment. Additionally, international results are influenced by large project sales which tend to fluctuate and can be difficult to forecast accurately. In the fourth quarter of fiscal 2024, the Company began shipment under a multi-year supply agreement to provide irrigation systems and remote management and scheduling technology for a large project in the Middle East and North Africa (MENA) region. The project is valued at over $100 million in revenue, with equipment deliveries expected to continue throughout fiscal 2025.
The infrastructure business continues to be driven by the Company's transportation safety products, the demand for which largely depends on government spending for road construction and improvements. The enactment of the Infrastructure Investment and Jobs Act ("IIJA") in November 2021 introduced $110 billion in incremental federal funding for roads, bridges, and other transportation projects, which the Company anticipates may support higher demand for its transportation safety products as states utilize these funds in construction projects. The federal programs under IIJA run through September 2026 with funding anticipated to extend up to two years beyond that date.
The backlog of unshipped orders at February 28, 2025 was $127.0 million compared with $94.2 million at February 29, 2024. Included in these backlogs are amounts of $11.9 million and $20.3 million, respectively, for orders that are not expected to be fulfilled within the subsequent 12 months. The increase in backlog is primarily attributed to the large irrigation project in the MENA region. The Company’s backlog can fluctuate from period to period due to the seasonality, cyclicality, timing and execution of contracts. Backlog typically represents long-term projects as well as short lead-time orders, and therefore is generally not a good indication of the next fiscal quarter’s revenues.
- 20 -
Results of Operations
For the Three Months ended February 28, 2025 compared to the Three Months ended February 29, 2024
The following section presents an analysis of the Company’s operating results displayed in the condensed consolidated statements of earnings for the three months ended February 28, 2025 and February 29, 2024. It should be read together with the business segments information in Note 14 to the condensed consolidated financial statements:
|
|
Three months ended |
|
|
|
|||||
($ in thousands) |
|
February 28, |
|
|
February 29, |
|
|
Percent |
||
Consolidated |
|
|
|
|
|
|
|
|
||
Operating revenues |
|
$ |
187,064 |
|
|
$ |
151,519 |
|
|
23% |
Gross profit |
|
$ |
62,488 |
|
|
$ |
48,954 |
|
|
28% |
Gross margin |
|
|
33.4 |
% |
|
|
32.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
||
Operating expenses (1) |
|
$ |
30,364 |
|
|
$ |
26,856 |
|
|
13% |
Operating income |
|
$ |
32,124 |
|
|
$ |
22,098 |
|
|
45% |
Operating margin |
|
|
17.2 |
% |
|
|
14.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
||
Other income (expense), net |
|
$ |
1,090 |
|
|
$ |
599 |
|
|
82% |
Income tax expense |
|
$ |
6,638 |
|
|
$ |
4,574 |
|
|
45% |
Overall income tax rate |
|
|
20.0 |
% |
|
|
20.2 |
% |
|
|
Net earnings |
|
$ |
26,576 |
|
|
$ |
18,123 |
|
|
47% |
|
|
|
|
|
|
|
|
|
||
Irrigation Segment |
|
|
|
|
|
|
|
|
||
Segment operating revenues |
|
$ |
148,139 |
|
|
$ |
133,018 |
|
|
11% |
Segment operating income |
|
$ |
27,377 |
|
|
$ |
25,649 |
|
|
7% |
Segment operating margin |
|
|
18.5 |
% |
|
|
19.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
||
Infrastructure Segment |
|
|
|
|
|
|
|
|
||
Segment operating revenues |
|
$ |
38,925 |
|
|
$ |
18,501 |
|
|
110% |
Segment operating income |
|
$ |
13,257 |
|
|
$ |
3,506 |
|
|
278% |
Segment operating margin |
|
|
34.1 |
% |
|
|
19.0 |
% |
|
|
Revenues
Operating revenues for the three months ended February 28, 2025 increased 23 percent to $187.1 million from $151.5 million for the three months ended February 29, 2024, as irrigation revenues increased $15.1 million and infrastructure revenues increased $20.4 million compared to the prior year period. The irrigation segment provided 79 percent of the Company’s revenue during the three months ended February 28, 2025 as compared to 88 percent for the three months ended February 29, 2024.
North America irrigation revenues for the three months ended February 28, 2025 of $77.1 million decreased $5.7 million, or 7 percent, from $82.8 million for the three months ended February 29, 2024. The decrease resulted primarily from lower unit sales volume of irrigation equipment, along with slightly lower average selling prices and lower sales of replacement parts compared to the prior year period. Lower net farm income for calendar 2024 has tempered demand for irrigation equipment.
International irrigation revenues for the three months ended February 28, 2025 of $71.0 million increased $20.8 million, or 42 percent, from $50.2 million for the three months ended February 29, 2024. The increase resulted primarily from revenues related to the large project in the MENA region as well as higher sales in other parts of this region. This increase was partially offset by lower sales in other international markets and the unfavorable impact of foreign currency translation of approximately $4.7 million compared to the prior year period. Unit sales volume in Brazil for the quarter was comparable to the prior year period.
- 21 -
Infrastructure segment revenues for the three months ended February 28, 2025 of $38.9 million increased $20.4 million, or 110 percent, from $18.5 million for the three months ended February 29, 2024. The increase was primarily driven by a large Road Zipper System project, valued at over $20 million, that was delivered in the current year period while leasing revenue and sales of road safety products were slightly lower compared to the prior year period.
Gross Profit
Gross profit for the three months ended February 28, 2025 of $62.5 million increased 28 percent from $49.0 million for the three months ended February 29, 2024. The increase in gross profit resulted primarily from higher revenues in irrigation and infrastructure. Gross margin was 33.4 percent of sales for the three months ended February 28, 2025 compared with 32.3 percent of sales for the three months ended February 29, 2024. Increased gross margin in infrastructure resulted primarily from a more favorable margin mix of revenues with higher Road Zipper System sales. This favorable impact was partially offset by lower irrigation gross margin resulting from a higher percentage of international project revenue in the current year period that was dilutive to gross margin.
Operating Expenses
Operating expenses of $30.4 million for the three months ended February 28, 2025 increased $3.5 million, or 13 percent, compared with $26.9 million for the three months ended February 29, 2024. The increase was primarily driven by higher incentive compensation expense, partially offset by lower salary and wage expense.
Other Income (Expense), net
The Company recorded other income of $1.1 million and $0.6 million for the three months ended February 28, 2025 and February 29, 2024, respectively. The change resulted primarily from favorable changes in interest income and expense.
Income Taxes
The Company recorded income tax expense of $6.6 million and $4.6 million for the three months ended February 28, 2025 and February 29, 2024, respectively. The effective income tax rate was 20.0 percent and 20.2 percent for the three months ended February 28, 2025 and February 29, 2024, respectively. The current year period effective tax rate reflects a higher proportion of earnings in lower tax rate jurisdictions, while the prior year period effective rate includes a discrete benefit of $1.1 million that did not repeat in the current year period.
- 22 -
For the Six Months ended February 28, 2025 compared to the Six Months ended February 29, 2024
The following section presents an analysis of the Company’s operating results displayed in the condensed consolidated statements of earnings for the six months ended February 28, 2025 and February 29, 2024. It should be read together with the business segments information in Note 14 to the condensed consolidated financial statements:
|
|
Six months ended |
|
|
|
|||||
($ in thousands) |
|
February 28, |
|
|
February 29, |
|
|
Percent |
||
Consolidated |
|
|
|
|
|
|
|
|
||
Operating revenues |
|
$ |
353,345 |
|
|
$ |
312,877 |
|
|
13% |
Gross profit |
|
$ |
112,454 |
|
|
$ |
98,859 |
|
|
14% |
Gross margin |
|
|
31.8 |
% |
|
|
31.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
||
Operating expenses (1) |
|
$ |
59,448 |
|
|
$ |
55,687 |
|
|
7% |
Operating income |
|
$ |
53,006 |
|
|
$ |
43,172 |
|
|
23% |
Operating margin |
|
|
15.0 |
% |
|
|
13.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
||
Other income (expense), net |
|
$ |
2,241 |
|
|
$ |
520 |
|
|
331% |
Income tax expense |
|
$ |
11,508 |
|
|
$ |
10,550 |
|
|
9% |
Overall income tax rate |
|
|
20.8 |
% |
|
|
24.1 |
% |
|
|
Net earnings |
|
$ |
43,739 |
|
|
$ |
33,142 |
|
|
32% |
|
|
|
|
|
|
|
|
|
||
Irrigation Segment |
|
|
|
|
|
|
|
|
||
Segment operating revenues |
|
$ |
295,226 |
|
|
$ |
273,186 |
|
|
8% |
Segment operating income |
|
$ |
52,111 |
|
|
$ |
50,956 |
|
|
2% |
Segment operating margin |
|
|
17.7 |
% |
|
|
18.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
||
Infrastructure Segment |
|
|
|
|
|
|
|
|
||
Segment operating revenues |
|
$ |
58,119 |
|
|
$ |
39,691 |
|
|
46% |
Segment operating income |
|
$ |
17,381 |
|
|
$ |
7,125 |
|
|
144% |
Segment operating margin |
|
|
29.9 |
% |
|
|
18.0 |
% |
|
|
Revenues
Operating revenues for the six months ended February 28, 2025 increased 13 percent to $353.3 million from $312.9 million for the six months ended February 29, 2024, as irrigation revenues increased $22.0 million and infrastructure revenues increased $18.4 million. The irrigation segment provided 84 percent of the Company’s revenue during the six months ended February 28, 2025 as compared to 87 percent for the six months ended February 29, 2024.
North America irrigation revenues for the six months ended February 28, 2025 of $154.9 million decreased $17.3 million, or 10 percent, from $172.3 million for the six months ended February 29, 2024. The decrease resulted primarily from lower unit sales volume, as well as a less favorable mix of shorter machines, and slightly lower average selling prices compared to the prior year period.
International irrigation revenues for the six months ended February 28, 2025 of $140.3 million increased $39.4 million, or 39 percent, from $101.0 million for the six months ended February 29, 2024. The increase resulted primarily from revenues related to shipments for a large project in the MENA region and was partially offset by lower sales volumes in Brazil. In Brazil, market demand has declined due to a significant drop in local commodity prices that has had a negative impact on farmer profitability and liquidity. The current year period was also impacted by the unfavorable effects of foreign currency translation of approximately $6.9 million compared to the prior year period.
Infrastructure segment revenues for the six months ended February 28, 2025 of $58.1 million increased $18.4 million, or 46 percent, from $39.7 million for the six months ended February 29, 2024. The increase was primarily driven by a large Road Zipper System project, valued at over $20 million, that was delivered in the current year period while leasing revenue and sales of road safety products were slightly lower compared to the prior year period.
- 23 -
Gross Profit
Gross profit for the six months ended February 28, 2025 of $112.5 million increased 14 percent from $98.9 million for the six months ended February 29, 2024. The increase in gross profit resulted from higher revenues in irrigation and infrastructure. Gross margin was 31.8 percent of sales for the six months ended February 28, 2025 compared with 31.6 percent of sales for the six months ended February 29, 2024. Increased gross margin in infrastructure resulted primarily from a more favorable margin mix of revenues with higher Road Zipper System sales. This favorable impact was partially offset by lower irrigation gross margin resulting from a higher percentage of international project revenue in the current year that was dilutive to gross margin.
Operating Expenses
Operating expenses of $59.4 million for the six months ended February 28, 2025 increased $3.8 million compared with $55.7 million for the six months ended February 29, 2024. The increase was driven by higher incentive compensation expense, partially offset by lower salary and wage expense.
Other Income (Expense), net
The Company recorded other income for the six months ended February 28, 2025 of $2.2 million compared to other income of $0.5 million for the six months ended February 29, 2024. The increase in the current year period was driven by favorable changes related to interest income and interest expense. The current year period also includes $0.3 million of foreign currency gains while the same prior year period includes $0.2 million of foreign currency losses.
Income Taxes
The Company recorded income tax expense of $11.5 million and $10.6 million for the six months ended February 28, 2025 and February 29, 2024, respectively. The effective income tax rate was 20.8 percent and 24.1 percent for the six months ended February 28, 2025 and February 29, 2024, respectively. The lower current year period effective tax rate reflects a higher proportion of earnings in low tax jurisdictions, while the prior year period effective rate includes a discrete benefit of $1.1 million that did not repeat in the current year period.
- 24 -
Liquidity and Capital Resources
The Company's cash, cash equivalents, and marketable securities totaled $186.7 million at February 28, 2025 compared with $150.6 million at February 29, 2024 and $190.9 million at August 31, 2024. The Company requires cash for financing its receivables and inventories, paying operating expenses and capital expenditures, and for dividends and share repurchases. The Company meets its liquidity needs and finances its capital expenditures from its available cash and funds provided by operations along with borrowings under its credit arrangements described below. The Company’s investments in marketable securities consist of investment grade corporate bonds and commercial paper. In the normal course of business, the Company enters into contracts and commitments which obligate the Company to make future payments. The Company does not have any additional off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. The Company believes its current cash resources, investments in marketable securities, projected operating cash flow, and remaining capacity under its continuing bank lines of credit are sufficient to cover all its expected working capital needs, planned capital expenditures and dividends. The Company may require additional borrowings to fund potential acquisitions in the future.
The Company’s total cash and cash equivalents held by foreign subsidiaries were approximately $93.8 million, $57.3 million, and $84.3 million as of February 28, 2025, February 29, 2024, and August 31, 2024, respectively. The Company considers earnings in foreign subsidiaries to be indefinitely reinvested and would need to accrue and pay incremental state, local, and foreign taxes if such earnings were repatriated to the United States. The Company does not intend to repatriate the funds and does not expect these funds to have a significant impact on the Company’s overall liquidity.
Net working capital was $381.8 million at February 28, 2025, as compared with $371.4 million at February 29, 2024 and $367.4 million at August 31, 2024. Cash provided by operating activities totaled $33.9 million during the six months ended February 28, 2025, compared to cash provided by operating activities of $12.1 million during the six months ended February 29, 2024. The current year period included higher net earnings and a more favorable impact of changes in working capital compared to the prior year period.
Cash flows used in investing activities totaled $39.2 million during the six months ended February 28, 2025 compared to $30.8 million during the six months ended February 29, 2024. The current year includes the purchase of a minority interest in Pessl Instruments for $5.8 million. Purchases of property, plant, and equipment were $18.9 million, compared to $18.8 million in the same prior year period.
Cash flows used in financing activities totaled $9.8 million during the six months ended February 28, 2025 compared to cash flows used in financing activities of $8.6 million during the six months ended February 29, 2024. During the current year, the Company repurchased $1.4 million of common stock.
Capital Allocation Plan
The Company’s capital allocation plan is to continue investing in revenue and earnings growth, combined with a defined process for enhancing returns to stockholders. Under the Company’s capital allocation plan, the priorities for uses of cash include:
Capital Expenditures
Capital expenditures for fiscal 2025 are expected to be between $35.0 million and $40.0 million, including equipment replacement, productivity improvements, new product development and commercial growth investments. The increase over recent levels of capital expenditures is primarily related to modernization and productivity improvements planned at certain manufacturing facilities. The Company’s management does maintain flexibility to modify the amount and timing of some of the planned expenditures in response to economic conditions.
- 25 -
Dividends
In the second quarter of fiscal 2025, the Company paid a quarterly cash dividend to stockholders of $0.36 per common share, or $3.9 million, compared to a quarterly cash dividend of $0.35 per common share, or $3.9 million, in the second quarter of fiscal 2024.
Share Repurchases
The Company’s Board of Directors authorized a share repurchase program of up to $250.0 million of common stock with no expiration date. Under the program, shares may be repurchased in privately negotiated and/or open market transactions as well as under formalized trading plans in accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.
During the three and six months ended February 28, 2025, the Company repurchased approximately 12,000 shares of its common stock under the program in open market transactions for $1.4 million, inclusive of excise taxes. There were no shares repurchased during the three or six months ended February 29, 2024. As of February 28, 2025, the repurchased shares were held as treasury stock and $40.0 million of the authorization remained available for future share repurchases.
Long-Term Borrowing Facilities
Senior Notes. The Company has outstanding $115.0 million in aggregate principal amount of Senior Notes, Series A (the “Senior Notes”). The entire principal of the Senior Notes is due and payable on February 19, 2030. Interest on the Senior Notes is payable semi-annually at a fixed annual rate of 3.82 percent. Borrowings under the Senior Notes are unsecured. The Company used the proceeds of the sale of the Senior Notes for general corporate purposes, including acquisitions and dividends.
Revolving Credit Facility. The Company has outstanding a $50.0 million unsecured Amended and Restated Revolving Credit Facility (the “Revolving Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”) expiring August 26, 2026. The Company intends to use borrowings under the Revolving Credit Facility for working capital purposes and to fund acquisitions. At February 28, 2025 and February 29, 2024, the Company had no outstanding borrowings under the Revolving Credit Facility. The amount of borrowings available at any time under the Revolving Credit Facility is reduced by the amount of standby letters of credit issued by Wells Fargo then outstanding. At February 28, 2025, the Company had the ability to borrow up to $50.0 million under the Revolving Credit Facility. The Revolving Credit Facility may be increased by up to an additional $50.0 million at any time, subject to additional commitment approval. Borrowings under the Revolving Credit Facility bear interest at a variable rate equal to the Secured Overnight Financing Rate ("SOFR") plus a margin of between 100 and 210 basis points depending on the Company’s leverage ratio then in effect (which resulted in a variable rate of 5.74 percent at February 28, 2025), subject to adjustment as set forth in the loan documents for the Revolving Credit Facility. Interest is paid on a monthly to quarterly basis depending on loan type. The Company currently pays an annual commitment fee on the unused portion of the Revolving Credit Facility. The fee is between 0.125 percent and 0.2 percent on the unused balance depending on the Company’s leverage ratio then in effect (which resulted in a fee of 0.125 percent at February 28, 2025).
Borrowings under the Revolving Credit Facility have equal priority with borrowings under the Company’s Senior Notes. Each of the credit arrangements described above include certain covenants relating primarily to the Company’s financial condition. These financial covenants include a funded debt to EBITDA leverage ratio and an interest coverage ratio. In the event that the loan documents for the Revolving Credit Facility were to require the Company to comply with any financial covenant that is not already included or is more restrictive than what is already included in the arrangement governing the Senior Notes, then such covenant shall be deemed incorporated by reference for the benefit of holders of the Senior Notes. Upon the occurrence of any event of default of these covenants, including a change in control of the Company, all amounts outstanding thereunder may be declared to be immediately due and payable. At February 28, 2025 and February 29, 2024, the Company was in compliance with all financial loan covenants contained in its credit arrangements in place as of each of those dates.
Contractual Obligations and Commercial Commitments
There have been no material changes in the Company’s contractual obligations and commercial commitments as described in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2024.
ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes from the Company’s quantitative and qualitative disclosures about market risk previously disclosed in the Company’s most recent Annual Report on Form 10-K. See discussion of the Company’s quantitative and qualitative disclosures about market risk under Part II, Item 7A in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2024.
- 26 -
ITEM 4 – Controls and Procedures
Disclosure Controls and Procedures
The Company carried out an evaluation under the supervision and the participation of the Company’s management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of February 28, 2025.
Changes in Internal Control over Financial Reporting
The CEO and CFO determined that there has not been any significant change to the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
- 27 -
Part II – OTHER INFORMATION
ITEM 1 – Legal Proceedings
See the disclosure in Note 9 – Commitments and Contingencies to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is hereby incorporated herein by reference.
ITEM 1A – Risk Factors
There have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussions of the Company’s risk factors under Part I, Item 1A in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2024.
ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds
The table below sets forth information with respect to purchases of the Company’s common stock made by or on behalf of the Company during the three months ended February 28, 2025:
ISSUER PURCHASES OF EQUITY SECURITIES |
|
|||||||||||||||||
Period |
|
Total Number of Shares Purchased |
|
|
|
Average Price Paid Per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) |
|
||||
December 1, 2024 to December 31, 2024 |
|
|
— |
|
|
$ |
|
— |
|
|
|
— |
|
|
$ |
|
41,419 |
|
January 1, 2025 to January 31, 2025 |
|
|
11,930 |
|
|
$ |
|
117.45 |
|
|
|
11,930 |
|
|
$ |
|
40,018 |
|
February 1, 2025 to February 28, 2025 |
|
|
— |
|
|
$ |
|
— |
|
|
|
— |
|
|
$ |
|
40,018 |
|
Total |
|
|
11,930 |
|
|
$ |
|
117.45 |
|
|
|
11,930 |
|
|
$ |
|
40,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(1) On January 3, 2014, the Company announced that its Board of Directors authorized the Company to repurchase up to $150.0 million of common stock through January 2, 2016. On July 22, 2015, the Company announced that its Board of Directors increased its outstanding share repurchase authorization by $100.0 million with no expiration. Under the program, shares may be repurchased in privately negotiated and/or open market transactions as well as under formalized trading plans in accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. |
|
|||||||||||||||||
ITEM 3 – Defaults Upon Senior Securities
None.
ITEM 4 – Mine Safety Disclosures
Not applicable.
ITEM 5 – Other Information
- 28 -
ITEM 6 – Exhibits
Exhibit |
|
|
No. |
|
Description |
|
|
|
3.1 |
|
|
3.2 |
|
|
4.1 |
|
|
10.1 |
|
|
31.1* |
|
|
31.2* |
|
|
32.1* |
|
|
99* |
|
Lindsay Corporation Policy for the Recovery of Erroneously Awarded Compensation. |
101* |
|
Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language ("Inline XBRL"). |
104* |
|
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). |
|
|
|
* Filed herein.
† Management contract or compensatory plan or arrangement required to be filed as an exhibit hereto pursuant to Item 6 of Part II of Form 10-Q.ai
- 29 -
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, thereunto duly authorized on this 3rd day of April 2025.
|
|
|
LINDSAY CORPORATION |
|
|
|
|
|
By: |
|
/s/ BRIAN L. KETCHAM |
|
Name: |
|
Brian L. Ketcham |
|
Title: |
|
Senior Vice President and Chief Financial Officer |
|
|
|
(on behalf of the registrant and as principal financial officer) |
|
|
|
|
- 30 -
EXHIBIT 31.1
CERTIFICATION
I, Randy A. Wood, certify that:
|
|
|
/s/ RANDY A. WOOD |
|
President and Chief Executive Officer |
Randy A. Wood |
|
April 3, 2025 |
EXHIBIT 31.2
CERTIFICATION
I, Brian L. Ketcham, certify that:
|
|
|
/s/ BRIAN L. KETCHAM |
|
Senior Vice President and Chief Financial Officer |
Brian L. Ketcham |
|
April 3, 2025 |
EXHIBIT 32.1
CERTIFICATION
In connection with the accompanying Quarterly Report on Form 10-Q (the “Report”) of Lindsay Corporation (the “Company”) for the quarter ended February 28, 2025, I, Randy A. Wood, Chief Executive Officer of the Company and I, Brian L. Ketcham, Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:
|
|
|
|
/s/ RANDY A. WOOD |
|
|
Randy A. Wood |
|
|
President and Chief Executive Officer |
|
|
|
|
|
/s/ BRIAN L. KETCHAM |
|
|
Brian L. Ketcham |
|
|
Senior Vice President and Chief Financial Officer |
|
|
|
|
|
April 3, 2025 |
|
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 99
LINDSAY CORPORATION
POLICY FOR THE
RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION
1
2
3
* * *
4
Exhibit A
LINDSAY CORPORATION
POLICY FOR THE
RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION
ACKNOWLEDGEMENT FORM
By signing below, the undersigned acknowledges and confirms that the undersigned has received and reviewed a copy of the Lindsay Corporation Policy for the Recovery of Erroneously Awarded Compensation (the “Policy”). Capitalized terms used but not otherwise defined in this Acknowledgement Form (this “Acknowledgement Form”) shall have the meanings ascribed to such terms in the Policy.
By signing this Acknowledgement Form, the undersigned acknowledges and agrees that the undersigned is and will continue to be subject to the Policy and that the Policy will apply both during and after the undersigned’s employment with the Company Group. Further, by signing below, the undersigned agrees to abide by the terms of the Policy, including, without limitation, by returning any Erroneously Awarded Compensation (as defined in the Policy) to the Company Group to the extent required by, and in a manner permitted by, the Policy.
Signature
Print Name
Date