Lindsay Corporation Reports Fiscal 2019 First Quarter Results

Lindsay Corporation (NYSE: LNN), a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, today announced results for its first quarter ended November 30, 2018.

First Quarter Summary

Revenues for the first quarter of fiscal 2019 were $112.0 million, a decrease of $12.5 million, or 10 percent, compared to revenues of $124.5 million in the prior year’s first quarter. Revenues decreased $14.0 million as a result of the completion of previously announced business divestitures.

Net earnings for the quarter were $1.2 million and diluted earnings per share were $0.11, compared with net earnings of $3.2 million and diluted earnings per share of $0.30 for the same period in the prior year. Net earnings for the quarter were reduced by after-tax costs of $2.9 million, or $0.27 per diluted share, related to the Company’s Foundation for Growth initiative. Adjusted net earnings for the first quarter were $4.1 million, or $0.38 per diluted share.¹

"As expected, market headwinds in North America constrained demand for irrigation equipment in our first quarter; however disciplined price management in response to higher input costs led to revenue growth for the quarter,” said Tim Hassinger, President and Chief Executive Officer. "We continue to make progress on our Foundation for Growth initiative, and during the quarter we completed the last of our previously announced divestitures.”

Segment Results

Irrigation segment revenues for the first quarter of fiscal 2019 were $87.6 million, a decrease of $15.8 million, or 15 percent, compared to $103.4 million in the prior year’s first quarter. Excluding the impact of the divestitures, North America irrigation revenues of $56.5 million increased $2.7 million, or 5 percent, compared to the prior year. International irrigation revenues of $31.1 million decreased $4.5 million, or 13 percent, compared to the prior year. Differences in foreign currency exchange rates accounted for $2.4 million of the decline.

Irrigation segment operating margin was 8.9 percent of sales in the first quarter (9.0 percent adjusted)¹, compared to 7.6 percent of sales in the prior year. Improved operating margin resulted from improvement in North America, supported by the impact of the divestitures as well as price realization and a more favorable product mix.

Infrastructure segment revenues for the first quarter of fiscal 2019 were $24.3 million, an increase of $3.1 million, or 15 percent, compared to $21.2 million in the prior year’s first quarter. The increase resulted from higher Road Zipper System^® sales which were partially offset by lower sales of road safety products.

Infrastructure segment operating margin was 17.1 percent of sales in the first quarter (17.6 percent adjusted)¹, compared to 15.5 percent of sales in the first quarter of the prior year. Improved operating margin resulted from a more favorable product mix and lower operating costs compared to the prior year.

The backlog of unshipped orders at November 30, 2018 was $48.9 million, compared with $80.3 million at November 30, 2017 reflecting a decrease in both the Irrigation and Infrastructure backlogs. Approximately $13.0 million of the backlog reduction resulted from the business divestitures and $14.0 million is from a large infrastructure project completed in the prior fiscal year.

Foundation for Growth Initiative

In fiscal 2018, 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.

First quarter fiscal 2019 operating expenses include pre-tax costs of $4.0 million in connection with the Foundation for Growth initiative, of which $3.8 million represents professional consulting fees with the remainder representing severance costs and a loss on sale of a business. These costs, and additional future costs anticipated in connection with this initiative, are expected to be recovered through improved operating income in fiscal 2020.

Outlook

"Passage of the 2018 farm bill provides a source of modest optimism that North America irrigation market conditions will see improvement,” said Mr. Hassinger. "In the international markets, we are seeing signs of improved conditions in Brazil as well as increased interest in developing markets.”

Mr. Hassinger added, "We continue to build a solid pipeline of Road Zipper System projects to support growth in the infrastructure business; however, the long lead times required to complete these projects can impact the timing of when we will realize the value from the increased focus on this business.”

First Quarter Conference Call

Lindsay’s fiscal 2019 first quarter investor conference call is scheduled for 11:00 a.m. Eastern Time today. Interested investors may participate in the call by dialing (833) 535-2202 in the U.S., or (412) 902-6745 internationally, and requesting the Lindsay Corporation call. Additionally, the conference call will be simulcast live on the Internet and can be accessed via the investor relations section of the Company's Web site, www.lindsay.com. Replays of the conference call will remain on our Web site through the next quarterly earnings release. The Company will have a slide presentation available to augment management's formal presentation, which will also be accessible via the Company's Web site.

About the Company

Lindsay Corporation 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.

LINDSAY CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)

The non-GAAP tables below disclose (a) the impact on diluted earnings per share of consulting fees, severance costs and loss from business divestitures, associated with the Company's Foundation for Growth Initiative ("FFG costs"), (b) the impact on operating income of FFG costs, and (c) the impact on segment operating income of FFG costs. Management believes adjusted net earnings, adjusted diluted earnings per share and adjusted operating income are important indicators of the Company’s business performance because they exclude items that may not be indicative of, or may be unrelated to, the Company’s underlying operating results, and provide a useful baseline for analyzing trends in the business. Non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. These adjusted financial measures should not be considered in isolation or as a substitute for reported net earnings, diluted earnings per share and operating income. These non-GAAP financial measures reflect an additional way of viewing the Company’s operations that, when viewed with the GAAP results and the following reconciliations to the corresponding GAAP financial measures, management believes provides a more complete understanding of the Company’s business.

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