OMAHA, Neb.–(BUSINESS WIRE)–Jan 8, 2019–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.”
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 GrowthInitiative
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.
“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.”