OMAHA, Neb.–(BUSINESS WIRE)–Lindsay Corporation (NYSE: LNN), a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, today announced results for its second quarter ended February 28, 2019.
Second Quarter Summary
Revenues for the second quarter of fiscal 2019 were $109.2 million, a decrease of $21.2 million, or 16 percent, compared to revenues of $130.3 million in the prior year’s second quarter. Approximately $19.6 million of the total decrease in revenues was attributable to previously announced business divestitures in the irrigation segment as part of the Company’s Foundation for Growth initiative.
The Company incurred a net loss for the quarter of $3.4 million, or $0.32 per diluted share, compared with net earnings of $1.7 million, or $0.16 per diluted share, for the same period in the prior year. In addition to the impact of lower revenues, net earnings for the quarter were reduced by after-tax costs of $3.7 million, or $0.34 per diluted share, related to the Company’s Foundation for Growth initiative. Excluding these additional costs, net earnings for the second quarter would have been $0.2 million, or $0.02 per diluted share. 1 Net earnings for the same period in the prior year adjusted for these costs, plus the tax expense attributable to enactment of the U.S. Tax Cuts and Jobs Act, were $6.0 million, or $0.56 per diluted share. 1
“North America irrigation sales volumes were significantly lower than anticipated as the unresolved US-China trade dispute contributed to a further decline in farmer sentiment,” said Tim Hassinger, President and Chief Executive Officer. “Along with that, lower Road Zipper System ® sales contributed to a disappointing quarter. We were however pleased to see an increase in our international irrigation sales compared to the prior year.”
Irrigation segment revenues for the second quarter of fiscal 2019 were $95.8 million, a decrease of $16.1 million, or 14 percent, compared to $111.9 million in the prior year’s second quarter. Excluding the impact of the divestitures, North America irrigation revenues of $57.7 million decreased $1.6 million, or 3 percent, compared to the prior year. Lower irrigation equipment sales volume was partially offset by higher average selling prices and higher revenue from engineering project services. International irrigation revenues of $38.1 million increased $5.1 million, or 15 percent, compared to the prior year. Excluding the negative impact of differences in foreign currency translation compared to the prior year, international irrigation revenues increased $7.4 million, or 22 percent, led by higher project sales in developing markets.
Irrigation segment operating margin was 7.9 percent of sales in the second quarter, compared to 10.7 percent of sales (11.2 percent adjusted) 1 in the prior year. Irrigation segment operating margin was negatively impacted in the quarter by negative margin mix from lower equipment sales volumes in North America, higher warranty costs and operational inefficiencies.
Infrastructure segment revenues for the second quarter of fiscal 2019 were $13.4 million, a decrease of $5.1 million, or 27 percent, compared to $18.5 million in the prior year’s second quarter. The decrease resulted primarily from lower Road Zipper System ® sales compared to the prior year along with slightly lower sales of road safety products.
The infrastructure segment incurred an operating loss of $0.4 million in the second quarter, compared to operating income of $2.5 million in the second quarter of the prior year. The decrease resulted primarily from lower Road Zipper System ® sales compared to the prior year.
The backlog of unshipped orders at February 28, 2019 was $44.4 million, compared with $90.2 million at February 28, 2018. Approximately $14.8 million of the backlog reduction resulted from the business divestitures and $28.5 million of the reduction is from a lower backlog of Road Zipper System orders compared to the prior 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, assuming no improvement in market conditions from fiscal 2017.
“Impacts of the recent widespread flooding in the Midwest are unknown at this time, and we don’t expect to see meaningful improvement in farmer sentiment while the U.S-China trade uncertainty persists,” said Mr. Hassinger. “We expect market conditions in Brazil to continue improving and international project markets to remain active.”
Mr. Hassinger added, “I’m encouraged by the early signs of success we are seeing in our Road Zipper System strategy to be more involved in the planning stage of major highway construction projects, and we expect to see additional sales and leasing opportunities as a result.”