Lindsay Corporation Reports Fiscal 2018 Fourth Quarter and Full Year Results

Lindsay Corporation (NYSE: LNN), a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, today announced results for its fourth quarter and fiscal year ended August 31, 2018.

Fourth Quarter and Full Year Summary

Revenues for the fourth quarter of fiscal 2018 were $123.3 million, a decrease of 7 percent compared to revenues of $131.9 million in the prior year’s fourth quarter. Net earnings for the quarter were $5.0 million and diluted earnings per share were $0.46, compared with net earnings of $6.3 million and diluted earnings per share of $0.59 for the same period in the prior year. Adjusted net earnings for the fourth quarter were $4.5 million, or $0.42 per diluted share.¹

Total revenues for the year ended August 31, 2018 were $547.7 million, an increase of 6 percent compared to revenues of $518.0 million in the prior year. Net earnings for the year were $20.3 million and diluted earnings per share were $1.88, compared with net earnings of $23.2 million and diluted earnings per share of $2.17 in the prior year. Net earnings for the year were reduced by tax expense of $2.5 million due to the enactment of the U.S. Tax Reform and by after-tax costs of $8.8 million related to the Company’s Foundation for Growth initiative. Adjusted net earnings for fiscal 2018 were $31.6 million, or $2.94 per diluted share.¹

"Despite challenging market conditions resulting from tariffs and falling grain prices, our fourth quarter North America irrigation equipment sales were improved over the prior year,” said Tim Hassinger, President and Chief Executive Officer. "Our full year revenue growth of 6 percent was led by 16 percent growth in North America irrigation and 8 percent growth in our infrastructure segment. We also continue to make good progress on our Foundation for Growth objectives that we introduced earlier in the year.”

Fourth Quarter Segment Results

Irrigation segment revenues decreased 6 percent to $96.2 million, compared to $101.9 million in the prior year’s fourth quarter. North America irrigation revenues increased 3 percent to $60.6 million, reflecting an increase in irrigation system unit volume. International irrigation revenues decreased 18 percent to $35.6 million due to the market disruption in Brazil that continued during the quarter and lower project activity in developing markets compared to the prior year.

Irrigation segment operating margin was 10.8 percent of sales in the fourth quarter (8.8 percent adjusted)¹, compared to 9.6 percent of sales in the prior year. A net gain of $2.0 million from business divestitures was partially offset by a $1.6 million incremental LIFO inventory valuation expense resulting from raw material inflation.

Infrastructure segment revenues decreased 10 percent in the fourth quarter to $27.1 million, compared to $30.0 million in the prior year’s fourth quarter. The decrease resulted primarily from lower Road Zipper System^® lease revenue and lower road safety product sales, while Road Zipper System^® sales were comparable to the prior year.

Infrastructure segment operating margin was 14.0 percent of sales in the fourth quarter (16.6 percent adjusted)¹, compared to 25.1 percent of sales in the fourth quarter of the prior year. Operating margin declined primarily due to less favorable revenue mix, resulting from lower revenue from leasing, compared to the prior year.

The backlog of unshipped orders at August 31, 2018 was $50.0 million, compared with $51.8 million at August 31, 2017.

Foundation for Growth Initiative

Earlier in the fiscal year, the Company announced a defined performance improvement initiative, referred to as Foundation for Growth, with the objectives of simplifying the business and achieving operating margin performance of 11 percent to 12 percent in fiscal 2020, exclusive of market changes.

During the fourth quarter, the Company completed divestitures of its pump and filtration businesses and a water resource consulting firm, resulting in a net gain of $2.0 million reported in the irrigation segment. In addition, the Company completed the closure of an infrastructure manufacturing facility and the consolidation of its activities with an existing irrigation operation. Severance and other costs of $0.7 million were incurred in connection with the facility closure. Additional operating expenses of $1.1 million, representing severance costs and professional consulting fees, were incurred during the quarter.

Results for the fiscal year include pre-tax costs of $9.7 million in connection with the Foundation for Growth initiative, including a net loss from business divestitures of $4.1 million.

Outlook

"Market headwinds in North America are expected to continue into our fiscal 2019 due to uncertainty regarding the outcome of global trade negotiations and pressure on grain prices,” said Mr. Hassinger. "We expect improvement in international irrigation as Brazil returns to a level of normalcy and developing markets continue to grow.”

Mr. Hassinger added, "Following record infrastructure results in fiscal 2018, we continue to focus on converting the pipeline of Road Zipper projects into orders.”

Fourth Quarter Conference Call

Lindsay’s fiscal 2018 fourth quarter investor conference call is scheduled for 11:00 a.m. Eastern Time today. Interested investors may participate in the call by dialing (877) 317-6789 in the U.S., or (412) 317-6789 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 is a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology. The Lindsay family of irrigation brands includes Zimmatic^® and FieldNET^® as well as irrigation consulting, design, advanced machine-to-machine communication, remote control, monitoring and scheduling technology, and wireless networking 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 current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results. You can find a discussion of many of these risks and uncertainties in the annual, quarterly and current reports that the Company files with the Securities and Exchange Commission. Forward-looking statements include information concerning possible or assumed future results of operations and planned financing of the Company and those statements preceded by, followed by or including the words "anticipate,” "estimate,” "believe,” "intend,” "expect," "outlook," "could," "may," "should," "will,” or similar expressions. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking information contained in this press release.

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 irrigation consulting and design, remote control and monitoring, irrigation scheduling, and machine-to-machine technology.

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 non-GAAP tables below disclose (a) the impact on diluted earnings per share of (1) income tax expense attributed to enactment of U.S. Tax Reform, and (2) gains and losses from businesses divested and held-for-sale, severance costs and consulting fees 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.

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