Lindsay Corporation (NYSE:LNN) Q1 2021 Earnings Conference Call January 7, 2021 11:00 AM ET Company Participants Randy Wood - President and CEO Brian Ketcham - SVP and CFO Conference Call Participants Brian Drab - William Blair Nathan Jones - Stifel Ryan Connors - Benning and Scattergood Jon Braatz - Kansas City Capital Chris Shaw - Moness, Crespi & Hardt Bill Baldwin - Baldwin Anthony Securities Operator Good morning. My name is Matt and I will be your conference operator today. At this time, I'd like to w ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-13419 Lindsay Corporation (Exact name of registrant as specified in its charter) Delaware 47-0554096 (State or other jurisdiction of incorporat ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) Lindsay Corporation operates in water management and road infrastructure, with key segments: Irrigation and Infrastructure - The company operates through two primary reporting segments: Irrigation and Infrastructure[8](index=8&type=chunk) - The Irrigation segment manufactures and markets center pivot, lateral move, and hose reel irrigation systems under brands including Zimmatic®, Perrot™, and Greenfield®, enhanced with technologies like GPS guidance and FieldNET® remote management[9](index=9&type=chunk)[11](index=11&type=chunk)[17](index=17&type=chunk) - The Infrastructure segment focuses on manufacturing and marketing products like the Quickchange® Moveable Barrier™ (Road Zipper System®), crash cushions, and other road safety equipment[10](index=10&type=chunk)[28](index=28&type=chunk)[32](index=32&type=chunk) International Irrigation Sales Contribution | Fiscal Year | Percentage of Total Irrigation Segment Revenues | | :--- | :--- | | 2020 | ~36% | | 2019 | ~38% | Order Backlog (as of August 31) | Year | Total Backlog ($ in millions) | Amount Not Expected to be Fulfilled in Next Fiscal Year ($ in millions) | | :--- | :--- | :--- | | 2020 | $58.7 | $6.3 | | 2019 | $55.4 | $10.0 | Capital Expenditures | Fiscal Year | Amount ($ in millions) | | :--- | :--- | | 2020 | $21.4 | | 2019 | $23.2 | | 2018 | $11.1 | | 2021 (Est.) | $15.0 - $20.0 | [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) Agricultural industry, international operations, government funding, and product liability litigation present key risks to the company - Irrigation revenues are highly cyclical and dependent on factors like agricultural commodity prices, farm income, and weather conditions[70](index=70&type=chunk)[71](index=71&type=chunk) - International sales are subject to risks from foreign market conditions, trade barriers (such as U.S.-China tariffs), and currency exchange rate fluctuations[74](index=74&type=chunk)[75](index=75&type=chunk)[78](index=78&type=chunk) - The COVID-19 pandemic presents risks related to workforce, customer demand, supply chain disruptions, and potential economic downturns[78](index=78&type=chunk) - Infrastructure revenues depend heavily on government spending for transportation projects, which can be subject to reduction or delay[80](index=80&type=chunk) - The company is defending product liability lawsuits and a Department of Justice investigation related to its X-Lite® end terminal product, which could result in significant damages and reputational harm[88](index=88&type=chunk)[89](index=89&type=chunk) [Properties](index=15&type=section&id=Item%202.%20Properties) Corporate headquarters are leased in Omaha, with owned and leased manufacturing facilities located across the U.S. and internationally Significant Company Properties | Segment | Location | Ownership | Size (sq. ft.) | Description | | :--- | :--- | :--- | :--- | :--- | | Corporate | Omaha, NE | Lease | 55,000 | Corporate headquarters | | Irrigation | Lindsay, NE | Own | 300,000 | Principal U.S. manufacturing plant | | Irrigation | Corlu, Turkey | Lease | 283,000 | Manufacturing plant | | Irrigation | Tianjin, China | Lease | 163,000 | Manufacturing plant | | Infrastructure | Milan, Italy | Own | 45,000 | Manufacturing plant | | Infrastructure | Rio Vista, CA | Own | 30,000 | Manufacturing plant | [Legal Proceedings](index=16&type=section&id=Item%203.%20Legal%20Proceedings) Routine legal proceedings are ongoing, with specific disclosures for environmental remediation and infrastructure products litigation - The company is involved in routine commercial, product liability, and other legal proceedings, which are not expected to have a material effect on the business[100](index=100&type=chunk) - Specific disclosures regarding significant legal matters, including infrastructure products litigation and environmental remediation, are provided in Note 16 to the consolidated financial statements[100](index=100&type=chunk)[101](index=101&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=17&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Common stock trades on NYSE (LNN); a share repurchase program is active, and dividends were paid during the fiscal year - The company's common stock trades on the New York Stock Exchange (NYSE) under the ticker symbol LNN[105](index=105&type=chunk) - As of August 31, 2020, **$63.7 million** remained available under the company's share repurchase program, with no shares repurchased during fiscal years 2020, 2019, or 2018[106](index=106&type=chunk) Dividends Paid | Fiscal Year | Total Dividends Paid ($ in millions) | | :--- | :--- | | 2020 | $13.6 | | 2019 | $13.4 | [Selected Financial Data](index=19&type=section&id=Item%206.%20Selected%20Financial%20Data) A five-year summary of key financial and operational data highlights fiscal 2020's significant increase in profitability Selected Financial Data (Years ended August 31) | ($ in millions, except per share data) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Operating revenues | $474.7 | $444.1 | $547.7 | | Gross profit | $152.5 | $114.6 | $151.5 | | Operating income | $54.2 | $6.1 | $39.0 | | Net earnings | $38.6 | $2.2 | $20.3 | | Diluted net earnings per share | $3.56 | $0.20 | $1.88 | | Cash dividends per share | $1.26 | $1.24 | $1.21 | | Total assets | $570.5 | $500.3 | $499.8 | | Long-term debt | $115.9 | $116.1 | $116.3 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2020 revenues grew 7% to $474.7 million, driven by a 42% Infrastructure segment surge, resulting in dramatically improved net earnings Fiscal 2020 vs. 2019 Performance Highlights | Metric | Fiscal 2020 | Fiscal 2019 | % Change | | :--- | :--- | :--- | :--- | | Operating Revenues | $474.7M | $444.1M | +7% | | - Irrigation Revenues | $343.5M | $351.5M | -2% | | - Infrastructure Revenues | $131.2M | $92.6M | +42% | | Gross Margin | 32.1% | 25.8% | +6.3pp | | Operating Income | $54.2M | $6.1M | +786% | | Net Earnings | $38.6M | $2.2M | +1678% | | Diluted EPS | $3.56 | $0.20 | +1680% | - The increase in infrastructure revenue was primarily driven by higher Road Zipper System® sales, including approximately **$27.0 million** from a single project in the United Kingdom[144](index=144&type=chunk) - Fiscal 2019 results were negatively impacted by **$15.1 million** in pre-tax costs related to the 'Foundation for Growth' initiative, which did not repeat in fiscal 2020[130](index=130&type=chunk)[131](index=131&type=chunk)[146](index=146&type=chunk) - The company's cash, cash equivalents, and marketable securities increased to **$140.9 million** at year-end, with net cash from operations totaling **$46.0 million** for fiscal 2020[149](index=149&type=chunk)[151](index=151&type=chunk) - The company has **$115.0 million** in Senior Notes due 2030 and an undrawn **$50.0 million** revolving credit facility[157](index=157&type=chunk)[158](index=158&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=27&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Foreign currency exchange rate volatility is the primary market risk, mitigated by derivative instruments used for hedging - The company's main market risk is foreign currency exchange rate volatility; a hypothetical **10% adverse change** in exchange rates is estimated to decrease operating income by approximately **$0.6 million**[168](index=168&type=chunk) - The company uses derivative financial instruments, such as forward exchange contracts, to hedge exposures in the ordinary course of business and does not engage in speculative trading[166](index=166&type=chunk)[169](index=169&type=chunk) [Financial Statements and Supplementary Data](index=28&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited consolidated financial statements for fiscal year 2020, along with the independent auditor's report, are presented here [Consolidated Statements of Earnings](index=31&type=section&id=Consolidated%20Statements%20of%20Earnings) This section presents the company's consolidated statements of earnings for the fiscal years ended August 31, 2020, 2019, and 2018 Consolidated Earnings (Years ended August 31) | ($ in thousands) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Operating revenues | 474,692 | 444,072 | 547,705 | | Gross profit | 152,543 | 114,608 | 151,462 | | Operating income | 54,202 | 6,115 | 39,012 | | Net earnings | 38,629 | 2,172 | 20,277 | [Consolidated Balance Sheets](index=33&type=section&id=Consolidated%20Balance%20Sheets) This section provides the company's consolidated balance sheets as of August 31, 2020 and 2019, detailing assets, liabilities, and equity Consolidated Balance Sheet Highlights (as of August 31) | ($ in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 121,403 | 127,204 | | Inventories, net | 104,792 | 92,287 | | Total current assets | 347,935 | 313,490 | | Total assets | 570,526 | 500,314 | | **Liabilities & Equity** | | | | Total current liabilities | 102,395 | 82,131 | | Long-term debt | 115,682 | 115,846 | | Total liabilities | 272,008 | 232,105 | | Total shareholders' equity | 298,518 | 268,209 | [Consolidated Statements of Cash Flows](index=35&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's consolidated statements of cash flows for the fiscal years ended August 31, 2020, 2019, and 2018 Consolidated Cash Flows (Years ended August 31) | ($ in thousands) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 46,034 | 3,797 | 33,934 | | Net cash (used in) provided by investing activities | (38,514) | (21,219) | 18,105 | | Net cash used in financing activities | (13,438) | (14,642) | (11,252) | [Notes to Consolidated Financial Statements](index=36&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, new standards, legal contingencies, and segment performance, including X-Lite® litigation and environmental liabilities - The company adopted ASC 842 (Leases) in fiscal 2020, recording a right-of-use asset of **$26.2 million** and a lease liability of **$29.5 million** upon adoption[233](index=233&type=chunk) - The company is defending multiple product liability lawsuits and a Department of Justice investigation related to its X-Lite® end terminal; no loss has been deemed probable, so no accrual has been made[295](index=295&type=chunk)[297](index=297&type=chunk)[298](index=298&type=chunk) - An environmental remediation liability of **$16.1 million** is accrued for the cleanup of the Lindsay, Nebraska facility site[299](index=299&type=chunk)[302](index=302&type=chunk) Segment Operating Income (Fiscal Year 2020) | ($ in thousands) | Operating Revenues | Operating Income | | :--- | :--- | :--- | | Irrigation | 343,529 | 40,214 | | Infrastructure | 131,163 | 43,771 | | Corporate | N/A | (29,783) | | **Total** | **474,692** | **54,202** | [Controls and Procedures](index=62&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls were effective as of August 31, 2020, and a prior material weakness was successfully remediated - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of August 31, 2020[335](index=335&type=chunk) - A material weakness related to indirect tax credits in a foreign jurisdiction, identified in fiscal 2019, was remediated as of August 31, 2020[336](index=336&type=chunk)[337](index=337&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of August 31, 2020, and received an unqualified opinion from its independent auditor, KPMG LLP[339](index=339&type=chunk)[340](index=340&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, and Related Matters](index=66&type=section&id=Items%2010-14) Information on directors, executive compensation, and corporate governance is incorporated by reference from the 2020 Proxy Statement - Information required for Items 10 through 14 is incorporated by reference from the company's definitive Proxy Statement to be filed for its 2020 Annual Meeting of Stockholders[354](index=354&type=chunk)[357](index=357&type=chunk)[358](index=358&type=chunk) - The company has adopted a Code of Ethical Conduct applicable to its principal executive officer and senior financial officers, which is available on its website[356](index=356&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=68&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) Financial statements, schedules, and exhibits, including consolidated statements and an Exhibit Index, are listed as part of the Form 10-K - This section contains the list of financial statements and schedules included in the report, such as the Consolidated Statements of Earnings and the Valuation and Qualifying Accounts schedule[364](index=364&type=chunk)[365](index=365&type=chunk)[367](index=367&type=chunk) - An Exhibit Index is provided, listing all documents filed with the Form 10-K, including corporate governance documents, material contracts, and certifications[373](index=373&type=chunk)

Lindsay Corporation (NYSE:LNN) Q4 2020 Earnings Conference Call October 22, 2020 11:00 AM ET Company Participants Tim Hassinger - President and CEO Brian Ketcham - SVP and CFO Randy Wood - COO Conference Call Participants Nathan Jones - Stifel Brian Drab - William Blair Jon Braatz - Kansas City Capital Operator Good morning. My name is Gareth, and I will be your conference operator today. At this time, I would like to welcome everybody to the Lindsay Corporation Fourth Quarter Fiscal Year 2020 Earnings Call ...

4th Quarter Fiscal 2020 Earnings Slide Deck ZLINDSAY Safe-Harbor Statement This presentation 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, financial results and planned financing. 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 Ex ...

Part I – FINANCIAL INFORMATION [ITEM 1 – Financial Statements](index=3&type=section&id=ITEM%201%20%E2%80%93%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements, including operations, balance sheets, cash flows, and detailed notes on accounting policies and other financial items [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations | Metric | Three months ended May 31, 2020 ($ in millions) | Three months ended May 31, 2019 ($ in millions) | Nine months ended May 31, 2020 ($ in millions) | Nine months ended May 31, 2019 ($ in millions) | | :--------------------------------- | :------------------------------------------------ | :------------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Operating revenues | 123.1 | 121.1 | 346.3 | 342.2 | | Gross profit | 39.7 | 30.0 | 107.2 | 83.1 | | Operating income | 15.8 | 4.5 | 36.7 | 2.1 | | Net earnings | 10.1 | 2.9 | 24.0 | 0.7 | | Basic EPS | 0.93 | 0.27 | 2.21 | 0.06 | | Diluted EPS | 0.93 | 0.27 | 2.21 | 0.06 | | Cash dividends declared per share | 0.32 | 0.31 | 0.94 | 0.93 | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Condensed Consolidated Statements of Comprehensive Income | Metric | Three months ended May 31, 2020 ($ in millions) | Three months ended May 31, 2019 ($ in millions) | Nine months ended May 31, 2020 ($ in millions) | Nine months ended May 31, 2019 ($ in millions) | | :------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Net earnings | 10.1 | 2.9 | 24.0 | 0.7 | | Foreign currency translation adjustment, net | (2.6) | (1.8) | (3.8) | 0.1 | | Total comprehensive income | 7.6 | 1.1 | 20.4 | 0.9 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets | Metric | May 31, 2020 ($ in millions) | May 31, 2019 ($ in millions) | August 31, 2019 ($ in millions) | | :-------------------------------- | :---------------------------- | :---------------------------- | :------------------------------- | | Total assets | 557.5 | 505.9 | 500.3 | | Total liabilities | 274.5 | 235.5 | 232.1 | | Total shareholders' equity | 283.0 | 270.4 | 268.2 | | Cash and cash equivalents | 102.5 | 110.8 | 127.2 | | Inventories, net | 113.3 | 91.1 | 92.3 | | Operating lease right-of-use assets | 27.7 | — | — | [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Condensed Consolidated Statements of Shareholders' Equity | Metric | May 31, 2020 ($ in millions) | May 31, 2019 ($ in millions) | August 31, 2019 ($ in millions) | | :-------------------------------- | :---------------------------- | :---------------------------- | :------------------------------- | | Total shareholders' equity | 283.0 | 270.4 | 268.2 | | Net earnings (9 months) | 24.0 | 0.7 | N/A | | Cash dividends (9 months) | (10.2) | (10.0) | N/A | | Share-based compensation expense (9 months) | 4.1 | 3.1 | N/A | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows | Metric | Nine months ended May 31, 2020 ($ in millions) | Nine months ended May 31, 2019 ($ in millions) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Net cash provided by (used in) operating activities | 16.0 | (19.6) | | Net cash used in investing activities | (28.9) | (18.2) | | Net cash used in financing activities | (9.9) | (11.2) | | Cash and cash equivalents, end of period | 102.5 | 110.8 | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [Note 1 – Basis of Presentation](index=9&type=section&id=Note%201%20%E2%80%93%20Basis%20of%20Presentation) - The Company adopted ASU 2016-02 (Leases) in Q1 fiscal 2020, recognizing a right-of-use asset of **$26.2 million** and a lease liability of **$29.5 million**[25](index=25&type=chunk) - ASU No. 2016-13 (Credit Losses) will be effective in Q1 fiscal 2021 but is not expected to have a material impact[24](index=24&type=chunk) [Note 2 – Revenue Recognition](index=10&type=section&id=Note%202%20%E2%80%93%20Revenue%20Recognition) Total Operating Revenues by Segment | Segment | Three months ended May 31, 2020 ($ in millions) | Three months ended May 31, 2019 ($ in millions) | Nine months ended May 31, 2020 ($ in millions) | Nine months ended May 31, 2019 ($ in millions) | | :---------- | :----------------------------------------------- | :----------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Irrigation | 93.5 | 98.6 | 267.9 | 282.0 | | Infrastructure | 29.6 | 22.4 | 78.3 | 60.2 | | **Total** | **123.1** | **121.1** | **346.3** | **342.2** | - Contract liabilities increased to **$16.9 million** at May 31, 2020, from **$13.1 million** at May 31, 2019[31](index=31&type=chunk) - The Company recognized **$13.5 million** of revenue from advance payments for the nine months ended May 31, 2020, significantly up from **$0.8 million** in the prior year[31](index=31&type=chunk) [Note 3 – Acquisitions and Divestitures](index=10&type=section&id=Note%203%20%E2%80%93%20Acquisitions%20and%20Divestitures) - Acquired Net Irrigate, LLC on April 8, 2020, for **$4.5 million**, consisting of cash and an earn-out payment[32](index=32&type=chunk) - Sold an infrastructure manufacturing facility building in Q2 fiscal 2020 for **$3.9 million**, resulting in a **$1.2 million** gain[35](index=35&type=chunk) [Note 4 – Net Earnings per Share](index=11&type=section&id=Note%204%20%E2%80%93%20Net%20Earnings%20per%20Share) Net Earnings per Share | Metric | Three months ended May 31, 2020 | Three months ended May 31, 2019 | Nine months ended May 31, 2020 | Nine months ended May 31, 2019 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Basic net earnings per share | $0.93 | $0.27 | $2.21 | $0.06 | | Diluted net earnings per share | $0.93 | $0.27 | $2.21 | $0.06 | - Certain stock options and restricted stock units were excluded from diluted EPS calculation due to their anti-dilutive effect (e.g., **115k stock options** for 3 months ended May 31, 2020)[37](index=37&type=chunk) [Note 5 – Income Taxes](index=12&type=section&id=Note%205%20%E2%80%93%20Income%20Taxes) Income Tax Expense (Benefit) | Period | Income Tax Expense (Benefit) ($ in millions) | | :-------------------------- | :------------------------------------------ | | Three months ended May 31, 2020 | 2.2 | | Three months ended May 31, 2019 | 0.3 | | Nine months ended May 31, 2020 | 6.4 | | Nine months ended May 31, 2019 | (0.8) | - The estimated annual effective income tax rate decreased to **23.6%** for the nine months ended May 31, 2020, from **42.6%** in 2019, primarily due to a change in earnings mix between U.S. and foreign operations[39](index=39&type=chunk) [Note 6 – Inventories](index=12&type=section&id=Note%206%20%E2%80%93%20Inventories) Inventories, Net | Category | May 31, 2020 ($ in millions) | May 31, 2019 ($ in millions) | August 31, 2019 ($ in millions) | | :-------------------------- | :---------------------------- | :---------------------------- | :------------------------------- | | Raw materials and supplies | 50.8 | 44.7 | 49.0 | | Work in process | 7.8 | 6.9 | 4.5 | | Finished goods and purchased parts, net | 59.5 | 47.7 | 46.8 | | Total inventory value before LIFO adjustment | 118.1 | 99.3 | 100.4 | | Less adjustment to LIFO value | (4.8) | (8.2) | (8.1) | | **Inventories, net** | **113.3** | **91.1** | **92.3** | [Note 7 – Long-Term Debt](index=12&type=section&id=Note%207%20%E2%80%93%20Long-Term%20Debt) Outstanding Principal Balances of Long-Term Debt | Debt Type | May 31, 2020 ($ in millions) | May 31, 2019 ($ in millions) | August 31, 2019 ($ in millions) | | :-------------------------- | :---------------------------- | :---------------------------- | :------------------------------- | | Series A Senior Notes | 115.0 | 115.0 | 115.0 | | Elecsys Series 2006A Bonds | 1.4 | 1.6 | 1.6 | | **Total debt** | **116.4** | **116.6** | **116.6** | | Less current portion | (0.2) | (0.2) | (0.2) | | Less unamortized debt issuance costs | (0.5) | (0.5) | (0.5) | | **Total long-term debt** | **115.7** | **115.9** | **115.8** | - Principal payments on debt due within 1 year are **$0.2 million**[42](index=42&type=chunk) [Note 8 – Financial Derivatives](index=13&type=section&id=Note%208%20%E2%80%93%20Financial%20Derivatives) Fair Values of Derivative Instruments | Derivative Type | Balance sheet location | May 31, 2020 ($ in millions) | May 31, 2019 ($ in millions) | August 31, 2019 ($ in millions) | | :-------------------------------- | :----------------------- | :---------------------------- | :---------------------------- | :------------------------------- | | Foreign currency forward contracts (hedging) | Other current assets | — | 0.5 | 1.1 | | Foreign currency option contracts (non-hedging) | Other current assets | 0.9 | 0.0 | 0.0 | | Foreign currency forward contracts (non-hedging) | Other current liabilities | (0.5) | (0.0) | — | - For the nine months ended May 31, 2020, settled foreign currency forward contracts (net investment hedges) resulted in an after-tax net gain of **$1.1 million**[44](index=44&type=chunk) - At May 31, 2020, the Company had no foreign currency forward contracts qualifying as a hedge of a net investment in foreign operations[45](index=45&type=chunk) [Note 9 – Leases](index=14&type=section&id=Note%209%20%E2%80%93%20Leases) Operating Lease Costs and Information | Metric | Three months ended May 31, 2020 ($ in millions) | Nine months ended May 31, 2020 ($ in millions) | | :-------------------------------- | :----------------------------------------------- | :---------------------------------------------- | | Operating lease cost | 1.5 | 4.4 | | Variable lease cost | 0.1 | 0.3 | | **Total lease cost** | **1.6** | **4.7** | | Operating cash outflows from operating leases | 1.2 | 4.0 | | Weighted average lease term | 9.2 years | 9.2 years | | Weighted average discount rate | 3.2% | 3.2% | Operating Lease Balance Sheet Information (May 31, 2020) | Classification | Amount ($ in millions) | | :-------------------------- | :---------------------- | | Operating lease ROU assets | 27.7 | | Operating lease short-term liabilities | 5.0 | | Operating lease long-term liabilities | 26.3 | | **Total lease liabilities** | **31.4** | [Note 10 – Fair Value Measurements](index=15&type=section&id=Note%2010%20%E2%80%93%20Fair%20Value%20Measurements) Financial Assets and Liabilities Measured at Fair Value (May 31, 2020) | Category | Level 1 ($ in millions) | Level 2 ($ in millions) | Level 3 ($ in millions) | Total ($ in millions) | | :-------------------------- | :----------------------- | :----------------------- | :----------------------- | :--------------------- | | Cash and cash equivalents | 102.5 | — | — | 102.5 | | Marketable securities: Corporate bonds | — | 14.6 | — | 14.6 | | Marketable securities: U.S. treasury securities | — | 4.5 | — | 4.5 | | Derivative assets | — | 0.9 | — | 0.9 | | Derivative liabilities | — | (0.5) | — | (0.5) | | Earn-out liability | — | — | 1.2 | 1.2 | - Approximately **67%** of the Company's marketable securities investments mature within one year, and **33%** mature within one to three years[58](index=58&type=chunk) [Note 11 – Commitments and Contingencies](index=16&type=section&id=Note%2011%20%E2%80%93%20Commitments%20and%20Contingencies) - The Company is defending multiple product liability lawsuits related to its X-Lite® end terminal, including a lawsuit filed by the Missouri Highways and Transportation Commission (MHTC) on June 9, 2020, alleging defective design and failure to warn[61](index=61&type=chunk)[62](index=62&type=chunk) - The Department of Justice is investigating the Company regarding the X-Lite® end terminal and potential violations of the federal civil False Claims Act, which could have a material adverse effect[65](index=65&type=chunk) Environmental Remediation Liabilities | Category | May 31, 2020 ($ in millions) | May 31, 2019 ($ in millions) | August 31, 2019 ($ in millions) | | :-------------------------- | :---------------------------- | :---------------------------- | :------------------------------- | | Other current liabilities | 1.2 | 1.2 | 1.2 | | Other noncurrent liabilities | 14.3 | 14.9 | 14.7 | | **Total environmental remediation liabilities** | **15.4** | **16.1** | **15.9** | [Note 12 – Warranties](index=17&type=section&id=Note%2012%20%E2%80%93%20Warranties) Product Warranty Accrual Balance | Metric | Three months ended May 31, 2020 ($ in millions) | Three months ended May 31, 2019 ($ in millions) | Nine months ended May 31, 2020 ($ in millions) | Nine months ended May 31, 2019 ($ in millions) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Product warranty accrual balance, beginning of period | 9.0 | 8.0 | 9.0 | 7.1 | | Liabilities accrued for warranties during the period | 2.7 | 2.6 | 6.4 | 5.5 | | Warranty claims paid during the period | (2.0) | (2.0) | (5.6) | (4.3) | | Changes in estimates | 0.1 | 0.0 | 0.1 | 0.4 | | **Product warranty accrual balance, end of period** | **9.8** | **8.7** | **9.8** | **8.7** | [Note 13 – Share-Based Compensation](index=17&type=section&id=Note%2013%20%E2%80%93%20Share-Based%20Compensation) Share-Based Compensation Expense | Period | Share-Based Compensation Expense ($ in millions) | | :-------------------------- | :---------------------------------------------- | | Three months ended May 31, 2020 | 1.5 | | Three months ended May 31, 2019 | 0.8 | | Nine months ended May 31, 2020 | 4.1 | | Nine months ended May 31, 2019 | 3.2 | [Note 14 – Other Current Liabilities](index=18&type=section&id=Note%2014%20%E2%80%93%20Other%20Current%20Liabilities) Other Current Liabilities | Category | May 31, 2020 ($ in millions) | May 31, 2019 ($ in millions) | August 31, 2019 ($ in millions) | | :-------------------------- | :---------------------------- | :---------------------------- | :------------------------------- | | Compensation and benefits | 17.1 | 13.5 | 14.0 | | Contract liabilities | 16.0 | 11.7 | 14.8 | | Warranties | 9.8 | 8.7 | 9.0 | | Tax related liabilities | 6.7 | 2.1 | 1.5 | | Operating lease liabilities | 5.0 | — | — | | Deferred revenue - lease | 3.5 | 0.2 | 3.0 | | Dealer related liabilities | 3.5 | 3.7 | 3.2 | | Accrued insurance | 1.5 | 1.6 | 1.5 | | Accrued environmental liabilities | 1.2 | 1.2 | 1.2 | | Other | 7.3 | 6.4 | 4.4 | | **Total other current liabilities** | **71.7** | **49.1** | **52.5** | [Note 15 – Share Repurchases](index=18&type=section&id=Note%2015%20%E2%80%93%20Share%20Repurchases) - No shares were repurchased during the three and nine months ended May 31, 2020 and 2019[72](index=72&type=chunk) - The remaining amount available under the share repurchase program was **$63.7 million** as of May 31, 2020[72](index=72&type=chunk) [Note 16 – Industry Segment Information](index=18&type=section&id=Note%2016%20%E2%80%93%20Industry%20Segment%20Information) - The Company operates in two reportable segments: Irrigation (manufacturing and marketing of irrigation systems and technology solutions) and Infrastructure (manufacturing and marketing of road safety equipment, steel tubing, and railroad structures)[74](index=74&type=chunk)[76](index=76&type=chunk) Segment Operating Revenues and Income | Segment | Three months ended May 31, 2020 ($ in millions) | Three months ended May 31, 2019 ($ in millions) | Nine months ended May 31, 2020 ($ in millions) | Nine months ended May 31, 2019 ($ in millions) | | :-------------------------- | :----------------------------------------------- | :----------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | **Operating Revenues:** | | | | | | Irrigation | 93.5 | 98.6 | 267.9 | 282.0 | | Infrastructure | 29.6 | 22.4 | 78.3 | 60.2 | | **Total Operating Revenues** | **123.1** | **121.1** | **346.3** | **342.2** | | **Operating Income:** | | | | | | Irrigation | 15.0 | 11.0 | 34.4 | 26.3 | | Infrastructure | 8.6 | 3.5 | 23.7 | 7.3 | | Corporate | (7.7) | (10.1) | (21.3) | (31.5) | | **Total Operating Income** | **15.8** | **4.5** | **36.7** | **2.1** | Total Assets by Segment (May 31, 2020) | Segment | Total Assets ($ in millions) | | :---------- | :---------------------------- | | Irrigation | 313.2 | | Infrastructure | 105.8 | | Corporate | 138.4 | | **Total** | **557.5** | [ITEM 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=ITEM%202%20%E2%80%93%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, condition, and outlook, including COVID-19 impact, operating results, liquidity, and capital resources [Concerning Forward-Looking Statements](index=20&type=section&id=Concerning%20Forward-Looking%20Statements) - The report contains forward-looking statements, for which the Company claims protection under the Private Securities Litigation Reform Act of 1995[78](index=78&type=chunk) - Readers are advised not to place undue reliance on forward-looking statements, as actual results may differ materially due to various risks and uncertainties detailed in the Company's 10-K and 10-Q filings[78](index=78&type=chunk) [COVID-19 Impact](index=20&type=section&id=COVID-19%20Impact) - The Company's facilities have generally remained open as 'business essential' during the COVID-19 pandemic, resulting in limited impact on manufacturing operations to date[79](index=79&type=chunk) - For the three months ended May 31, 2020, COVID-19 caused approximately **$14.0 million** in shipment and project delays, but associated costs were not material[79](index=79&type=chunk) - The ultimate financial impact of COVID-19 remains uncertain and depends on evolving factors such as the outbreak's duration, government actions, and changes in customer demand[80](index=80&type=chunk) [Accounting Policies](index=20&type=section&id=Accounting%20Policies) - There were no changes in the Company's critical accounting policies during the nine months ended May 31, 2020[83](index=83&type=chunk) [Recent Accounting Guidance](index=21&type=section&id=Recent%20Accounting%20Guidance) - Refer to Note 1 – Basis of Presentation for details on recent accounting guidance adopted and not yet adopted[84](index=84&type=chunk) [Executive Overview and Outlook](index=21&type=section&id=Executive%20Overview%20and%20Outlook) Q3 Fiscal 2020 Key Financial Highlights | Metric | Three months ended May 31, 2020 | Change YoY | | :-------------------------- | :------------------------------ | :--------- | | Operating revenues | $123.1 million | +2% | | Net earnings | $10.1 million | +248% | | Diluted EPS | $0.93 | +244% | - Net earnings for the three months ended May 31, 2019, were reduced by **$2.6 million** (**$0.23 diluted EPS**) due to non-recurring 'Foundation for Growth' initiative costs[86](index=86&type=chunk) - The backlog of unshipped orders increased to **$78.6 million** at May 31, 2020, from **$52.5 million** at May 31, 2019[91](index=91&type=chunk) - Long-term growth is supported by global drivers such as population growth, expanded food production, efficient water use, and infrastructure expansion, with significant opportunities in international markets[92](index=92&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) [For the Three Months ended May 31, 2020 compared to the Three Months ended May 31, 2019](index=23&type=section&id=For%20the%20Three%20Months%20ended%20May%2031,%202020%20compared%20to%20the%20Three%20Months%20ended%20May%2031,%202019) Consolidated Financial Performance (Three Months) | Metric | May 31, 2020 ($ in millions) | May 31, 2019 ($ in millions) | % Change | | :-------------------------- | :---------------------------- | :---------------------------- | :------- | | Operating revenues | 123.1 | 121.1 | 2% | | Gross profit | 39.7 | 30.0 | 32% | | Gross margin | 32.2% | 24.8% | +7.4 pp | | Operating expenses | 23.9 | 25.5 | -6% | | Operating income | 15.8 | 4.5 | 254% | | Operating margin | 12.9% | 3.7% | +9.2 pp | - Irrigation segment revenues decreased **5%** to **$93.5 million**, primarily due to lower North America unit volume and unfavorable foreign currency translation (**$3.5 million**) and COVID-19 related shipment delays (**$2.0 million**) internationally[95](index=95&type=chunk)[96](index=96&type=chunk) - Infrastructure segment revenues increased **32%** to **$29.6 million**, driven by higher Road Zipper System® sales and lease revenues, despite **$12.0 million** in COVID-19 related project delays[97](index=97&type=chunk) - Operating expenses decreased by **$1.7 million**, or **6%**, primarily due to the non-recurrence of **$3.9 million** in 'Foundation for Growth' initiative costs from the prior year[99](index=99&type=chunk) [For the Nine Months ended May 31, 2020 compared to the Nine Months ended May 31, 2019](index=25&type=section&id=For%20the%20Nine%20Months%20ended%20May%2031,%202020%20compared%20to%20the%20Nine%20Months%20ended%20May%2031,%202019) Consolidated Financial Performance (Nine Months) | Metric | May 31, 2020 ($ in millions) | May 31, 2019 ($ in millions) | % Change | | :-------------------------- | :---------------------------- | :---------------------------- | :------- | | Operating revenues | 346.3 | 342.2 | 1% | | Gross profit | 107.2 | 83.1 | 29% | | Gross margin | 31.0% | 24.3% | +6.7 pp | | Operating expenses | 70.4 | 81.1 | -13% | | Operating income | 36.7 | 2.1 | 1688% | | Operating margin | 10.6% | 0.6% | +10.0 pp | | Net earnings | 24.0 | 0.7 | 3481% | - Irrigation segment revenues decreased **5%** to **$267.9 million**, primarily due to lower international project activity and **$5.6 million** unfavorable foreign currency translation[106](index=106&type=chunk) - Infrastructure segment revenues increased **30%** to **$78.3 million**, driven by higher Road Zipper System® sales and lease revenues and increased road safety product sales[107](index=107&type=chunk) - Gross profit for the nine months ended May 31, 2020, included a **$1.2 million** gain on the sale of a building held for sale[108](index=108&type=chunk) - Operating expenses decreased by **$10.6 million**, or **13%**, mainly due to the non-recurrence of **$13.2 million** in 'Foundation for Growth' initiative costs from the prior year[109](index=109&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash, cash equivalents, and marketable securities totaled **$121.5 million** at May 31, 2020[112](index=112&type=chunk) - Net cash provided by operating activities was **$16.0 million** for the nine months ended May 31, 2020, a significant improvement from cash used of **$19.6 million** in the prior year[114](index=114&type=chunk) - Cash used in investing activities increased to **$28.9 million** for the nine months ended May 31, 2020, primarily due to purchases of marketable securities, partially offset by proceeds from asset sales and decreased capital expenditures[116](index=116&type=chunk) [Capital Allocation Plan](index=27&type=section&id=Capital%20Allocation%20Plan) - Capital expenditures for fiscal 2020 are expected to be between **$15.0 million** and **$20.0 million**[118](index=118&type=chunk) - The Company paid a quarterly cash dividend of **$0.32 per common share** in Q3 fiscal 2020, up from **$0.31** in Q3 fiscal 2019[119](index=119&type=chunk) - No shares were repurchased during the nine months ended May 31, 2020 or 2019, with **$63.7 million** remaining available under the repurchase program[120](index=120&type=chunk) [Long-Term Borrowing Facilities](index=27&type=section&id=Long-Term%20Borrowing%20Facilities) - The Company has **$115.0 million** in Series A Senior Notes outstanding, due February 19, 2030, with a fixed annual interest rate of **3.82%**[121](index=121&type=chunk) - A **$50.0 million** unsecured Revolving Credit Facility with Wells Fargo expires May 31, 2022, with no outstanding borrowings at May 31, 2020[122](index=122&type=chunk) - The Company was in compliance with all financial loan covenants under its credit arrangements as of May 31, 2020[124](index=124&type=chunk) [Contractual Obligations and Commercial Commitments](index=28&type=section&id=Contractual%20Obligations%20and%20Commercial%20Commitments) - There have been no material changes in the Company's contractual obligations and commercial commitments since the Annual Report on Form 10-K for the fiscal year ended August 31, 2019[126](index=126&type=chunk) [ITEM 3 – Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=ITEM%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section refers to previous filings for disclosures on market risk, indicating no material changes in the current period - There have been no material changes from the Company's quantitative and qualitative disclosures about market risk previously disclosed in its most recent Annual Report on Form 10-K[127](index=127&type=chunk) [ITEM 4 – Controls and Procedures](index=28&type=section&id=ITEM%204%20%E2%80%93%20Controls%20and%20Procedures) This section addresses the effectiveness of the company's disclosure controls and procedures, noting a material weakness and ongoing remediation efforts - The Company's disclosure controls and procedures were deemed ineffective as of May 31, 2020, due to a material weakness related to ineffective internal control over indirect tax credits in a foreign jurisdiction[128](index=128&type=chunk)[129](index=129&type=chunk) - Remediation efforts, including the implementation of new controls for tax credit valuation, are ongoing and expected to be completed during fiscal 2020[130](index=130&type=chunk) - There have been no significant changes to the Company's internal control over financial reporting during the last fiscal quarter[131](index=131&type=chunk) Part II – OTHER INFORMATION [ITEM 1 – Legal Proceedings](index=29&type=section&id=ITEM%201%20%E2%80%93%20Legal%20Proceedings) This section refers to Note 11 for detailed information on legal proceedings, including product liability lawsuits and an environmental remediation investigation - Refer to Note 11 – Commitments and Contingencies for disclosure on legal proceedings[132](index=132&type=chunk) [ITEM 1A – Risk Factors](index=29&type=section&id=ITEM%201A%20%E2%80%93%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K and prior Quarterly Report on Form 10-Q - No material changes from risk factors previously disclosed in the Company's most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the fiscal quarter ended February 29, 2020[133](index=133&type=chunk) [ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=ITEM%202%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms that there were no unregistered sales of equity securities or use of proceeds during the reporting period - None[134](index=134&type=chunk) [ITEM 3 – Defaults Upon Senior Securities](index=29&type=section&id=ITEM%203%20%E2%80%93%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - None[135](index=135&type=chunk) [ITEM 4 – Mine Safety Disclosures](index=29&type=section&id=ITEM%204%20%E2%80%93%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the Company - Not applicable[136](index=136&type=chunk) [ITEM 5 – Other Information](index=29&type=section&id=ITEM%205%20%E2%80%93%20Other%20Information) This section states that there is no other information to report - None[137](index=137&type=chunk) [ITEM 6 – Exhibits](index=30&type=section&id=ITEM%206%20%E2%80%93%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate documents, certifications, and interactive data files - Exhibits include certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[139](index=139&type=chunk) - Interactive Data Files are provided in Inline Extensible Business Reporting Language (Inline XBRL)[139](index=139&type=chunk) [SIGNATURES](index=31&type=section&id=SIGNATURES) This section contains the official signatures for the Form 10-Q filing - The report was signed on July 2, 2020, by Brian L. Ketcham, Senior Vice President and Chief Financial Officer[143](index=143&type=chunk)

Lindsay Corporation (NYSE:LNN) Q3 2020 Earnings Conference Call July 2, 2020 11:00 AM ET Company Participants Tim Hassinger - President and CEO Brian Ketcham - SVP and CFO Conference Call Participants Nathan Jones - Stifel Nicolaus Joseph Mondillo - Sidoti & Co. Brian Drab - William Blair Chris Shaw - Monness Crespi Jon Braatz - KCCA Operator Good morning. My name is Eric, and I will be your conference operator for today. At this time, I'd like to welcome everybody to Lindsay Corporation Third Quarter Fisca ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10‑Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 29, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-13419 Lindsay Corporation (Exact name of registrant as specified in its charter) Delaware 47-0554096 (State or other jurisdiction of incorporat ...

[Part I – FINANCIAL INFORMATION](index=3&type=section&id=Part%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for the period [ITEM 1 – Financial Statements](index=3&type=section&id=ITEM%201%20%E2%80%93%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including statements of earnings, comprehensive income, balance sheets, shareholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, revenue recognition, and other financial details for the three months ended November 30, 2019 and 2018 [Condensed Consolidated Statements of Earnings](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) This statement details the company's revenues, expenses, and net earnings for the three months ended November 30 Condensed Consolidated Statements of Earnings (Three months ended November 30) | ($ and shares in thousands, except per share amounts) | 2019 | 2018 | | :-------------------------------------------------- | :----- | :----- | | Operating revenues | $109,393 | $111,951 | | Cost of operating revenues | 75,319 | 83,303 | | Gross profit | 34,074 | 28,648 | | Operating expenses: | | | | Selling expense | 6,492 | 7,982 | | General and administrative expense | 11,804 | 15,058 | | Engineering and research expense | 3,502 | 3,568 | | Total operating expenses | 21,798 | 26,608 | | Operating income | 12,276 | 2,040 | | Other income (expense): | | | | Interest expense | (1,186) | (1,205) | | Interest income | 615 | 654 | | Other (expense) income, net | (450) | 192 | | Earnings before income taxes | 11,255 | 1,681 | | Income tax expense | 2,910 | 469 | | Net earnings | $8,345 | $1,212 | | Earnings per share: | | | | Basic | $0.77 | $0.11 | | Diluted | $0.77 | $0.11 | | Shares used in computing earnings per share: | | | | Basic | 10,795 | 10,766 | | Diluted | 10,828 | 10,806 | | Cash dividends declared per share | $0.31 | $0.31 | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net earnings and other comprehensive income components for the three months ended November 30 Condensed Consolidated Statements of Comprehensive Income (Three months ended November 30) | ($ in thousands) | 2019 | 2018 | | :------------------------------------------------------- | :----- | :----- | | Net earnings | $8,345 | $1,212 | | Other comprehensive (loss) income: | | | | Defined benefit pension plan adjustment, net of tax | 43 | 29 | | Foreign currency translation adjustment, net of hedging activities and tax | (293) | 1,106 | | Total other comprehensive (loss) income, net of tax expense | (250) | 1,135 | | Total comprehensive income | $8,095 | $2,347 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and shareholders' equity as of November 30 Condensed Consolidated Balance Sheets (As of November 30, 2019, November 30, 2018, and August 31, 2019) | ($ and shares in thousands, except par values) | Nov 30, 2019 | Nov 30, 2018 | Aug 31, 2019 | | :------------------------------------------- | :----------- | :----------- | :----------- | | **ASSETS** | | | | | Current assets: | | | | | Cash and cash equivalents | $120,910 | $137,217 | $127,204 | | Receivables, net | 79,317 | 84,864 | 75,551 | | Inventories, net | 97,284 | 88,912 | 92,287 | | Assets held-for-sale | 2,744 | 2,744 | 2,744 | | Other current assets, net | 16,376 | 11,585 | 15,704 | | Total current assets | 316,631 | 325,322 | 313,490 | | Property, plant, and equipment, net | 70,305 | 60,482 | 68,968 | | Intangibles, net | 23,739 | 26,576 | 24,382 | | Goodwill | 64,358 | 64,557 | 64,387 | | Operating lease right-of-use assets | 25,764 | — | — | | Deferred income tax assets | 9,902 | 5,639 | 11,758 | | Other noncurrent assets | 16,112 | 19,511 | 17,329 | | **Total assets** | **$526,811** | **$502,087** | **$500,314** | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | | Current liabilities: | | | | | Accounts payable | $30,097 | $41,338 | $29,434 | | Current portion of long-term debt | 210 | 206 | 209 | | Other current liabilities | 54,494 | 41,480 | 52,488 | | Total current liabilities | 84,801 | 83,024 | 82,131 | | Pension benefits liabilities | 5,948 | 5,803 | 6,029 | | Long-term debt | 115,805 | 116,086 | 115,846 | | Operating lease liabilities | 25,323 | — | — | | Deferred income tax liabilities | 845 | 1,048 | 872 | | Other noncurrent liabilities | 21,089 | 19,451 | 27,227 | | **Total liabilities** | **253,811** | **225,412** | **232,105** | | Shareholders' equity: | | | | | Common stock | 18,897 | 18,870 | 18,870 | | Capital in excess of stated value | 71,706 | 68,710 | 71,684 | | Retained earnings | 479,732 | 483,811 | 474,740 | | Less treasury stock | (277,238) | (277,238) | (277,238) | | Accumulated other comprehensive loss, net | (20,097) | (17,478) | (19,847) | | **Total shareholders' equity** | **273,000** | **276,675** | **268,209** | | **Total liabilities and shareholders' equity** | **$526,811** | **$502,087** | **$500,314** | [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) This statement details changes in shareholders' equity, including net earnings, dividends, and share-based compensation Condensed Consolidated Statements of Shareholders' Equity (Three months ended November 30, 2019 and 2018) | ($ and shares in thousands, except per share amounts) | Common stock | Capital in excess of stated value | Retained earnings | Treasury stock | Accumulated other comprehensive (loss) income, net | Total shareholders' equity | | :-------------------------------------------------- | :----------- | :-------------------------------- | :---------------- | :------------- | :----------------------------------------------- | :------------------------- | | **Balance at August 31, 2018** | **$18,841** | **$68,465** | **$484,886** | **$(277,238)** | **$(18,088)** | **$276,866** | | Net earnings | — | — | 1,212 | — | — | 1,212 | | Other comprehensive income | — | — | — | — | 1,135 | 1,135 | | Cash dividends ($0.31) per share | — | — | (3,344) | — | — | (3,344) | | Issuance of common shares under share compensation plans, net | 29 | (972) | — | — | — | (943) | | Share-based compensation expense | — | 1,217 | — | — | — | 1,217 | | Cumulative impact of ASC 606 adoption | — | — | 532 | — | — | 532 | | Cumulative impact of ASU 2018-02 adoption | — | — | 525 | — | (525) | — | | **Balance at November 30, 2018** | **$18,870** | **$68,710** | **$483,811** | **$(277,238)** | **$(17,478)** | **$276,675** | | **Balance at August 31, 2019** | **$18,870** | **$71,684** | **$474,740** | **$(277,238)** | **$(19,847)** | **$268,209** | | Net earnings | — | — | 8,345 | — | — | 8,345 | | Other comprehensive loss | — | — | — | — | (250) | (250) | | Cash dividends ($0.31) per share | — | — | (3,353) | — | — | (3,353) | | Issuance of common shares under share compensation plans, net | 27 | (1,138) | — | — | — | (1,111) | | Share-based compensation expense | — | 1,160 | — | — | — | 1,160 | | **Balance at November 30, 2019** | **$18,897** | **$71,706** | **$479,732** | **$(277,238)** | **$(20,097)** | **$273,000** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement outlines cash flows from operating, investing, and financing activities for the three months ended November 30 Condensed Consolidated Statements of Cash Flows (Three months ended November 30) | ($ in thousands) | 2019 | 2018 | | :---------------------------------------------------------------- | :----- | :----- | | **CASH FLOWS FROM OPERATING ACTIVITIES:** | | | | Net earnings | $8,345 | $1,212 | | Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | | | | Depreciation and amortization | 4,748 | 3,424 | | Loss on sale of business | — | 67 | | Provision for uncollectible accounts receivable | 248 | (159) | | Deferred income taxes | 1,987 | 742 | | Share-based compensation expense | 1,160 | 1,303 | | Other, net | 374 | (1,053) | | Changes in assets and liabilities: | | | | Receivables | (4,122) | (14,782) | | Inventories | (4,931) | (11,387) | | Other current assets | (2,466) | 298 | | Accounts payable | 725 | 13,917 | | Other current liabilities | (1,901) | (7,106) | | Other noncurrent assets and liabilities | (2,626) | (792) | | **Net cash provided by (used in) operating activities** | **1,541** | **(14,316)** | | **CASH FLOWS FROM INVESTING ACTIVITIES:** | | | | Purchases of property, plant, and equipment | (4,322) | (5,701) | | Proceeds from settlement of net investment hedges | 1,092 | 962 | | Other investing activities, net | 24 | 8 | | **Net cash used in investing activities** | **(3,206)** | **(4,731)** | | **CASH FLOWS FROM FINANCING ACTIVITIES:** | | | | Proceeds from exercise of stock options | — | 177 | | Common stock withheld for payroll tax obligations | (1,111) | (1,120) | | Principal payments on long-term debt | (52) | (51) | | Dividends paid | (3,352) | (3,344) | | **Net cash used in financing activities** | **(4,515)** | **(4,338)** | | Effect of exchange rate changes on cash and cash equivalents | (114) | (185) | | **Net change in cash and cash equivalents** | **(6,294)** | **(23,570)** | | Cash and cash equivalents, beginning of period | 127,204 | 160,787 | | **Cash and cash equivalents, end of period** | **$120,910** | **$137,217** | [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1 – Basis of Presentation](index=8&type=section&id=Note%201%20%E2%80%93%20Basis%20of%20Presentation) The financial statements are unaudited and prepared in accordance with SEC rules and U.S. GAAP, reflecting management's estimates. The company adopted ASU 2016-02 (Leases) in Q1 FY2020, recognizing right-of-use assets and lease liabilities, and ASU 2017-12 (Hedging Activities) with no material impact. ASU 2016-13 (Credit Losses) is pending adoption in FY2021 - The Company adopted ASU 2016-02, Leases, in the first quarter of fiscal 2020, recognizing a right-of-use asset of **$26.2 million** and a lease liability of **$29.5 million**[21](index=21&type=chunk) - ASU No 2016-13, Financial Instruments - Credit Losses, will be effective in the first quarter of the Company's fiscal 2021, and the Company is currently evaluating its impact[20](index=20&type=chunk) - ASU No 2017-12, Targeted Improvements to Accounting for Hedging Activities, was adopted in Q1 FY2020 and did not have a material impact on the consolidated financial statements[22](index=22&type=chunk) [Note 2 – Revenue Recognition](index=8&type=section&id=Note%202%20%E2%80%93%20Revenue%20Recognition) Revenue is disaggregated by segment (Irrigation and Infrastructure) and recognition method (point in time vs. over time). Total operating revenues decreased by 2.3% YoY. Contract assets and liabilities are detailed, with $6.4 million of revenue recognized from prior period liabilities in Q1 FY2020 Operating Revenues by Segment and Recognition Method (Three months ended November 30) | Category | 2019 ($ in thousands) | 2018 ($ in thousands) | YoY Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :------------- | | **Irrigation** | | | | | Point in time | 73,375 | 81,086 | -9.5% | | Over time | 8,977 | 6,524 | 37.6% | | *Subtotal Irrigation* | *82,352* | *87,610* | *-6.0%* | | **Infrastructure** | | | | | Point in time | 21,605 | 21,247 | 1.7% | | Over time | 2,657 | 1,490 | 78.3% | | *Subtotal Infrastructure* | *24,262* | *22,737* | *6.7%* | | Lease revenue (Infrastructure) | 2,779 | 1,604 | 73.3% | | **Total Operating Revenues** | **109,393** | **111,951** | **-2.3%** | - Contract assets amounted to **$1.2 million** at November 30, 2019, down from **$1.3 million** at August 31, 2019[25](index=25&type=chunk) - Contract liabilities amounted to **$14.7 million** at November 30, 2019, down from **$18.4 million** at August 31, 2019. The Company recognized **$6.4 million** of revenue from prior period liabilities in Q1 FY2020[26](index=26&type=chunk) [Note 3 – Divestitures and Held-For-Sale](index=9&type=section&id=Note%203%20%E2%80%93%20Divestitures%20and%20Held-For-Sale) The Company completed the divestiture of an irrigation dealership in Q1 FY2019, resulting in a $0.1 million loss and a $5.8 million note receivable. An infrastructure manufacturing facility closed in FY2018, with the related building listed as held-for-sale at $2.7 million - Divestiture of Company-owned irrigation dealership in Q1 FY2019 resulted in a **$0.1 million loss** and a **$5.8 million note receivable**[27](index=27&type=chunk) - A building related to an infrastructure manufacturing facility closure in FY2018 is listed for sale at **$2.7 million**[28](index=28&type=chunk) [Note 4 – Net Earnings per Share](index=9&type=section&id=Note%204%20%E2%80%93%20Net%20Earnings%20per%20Share) Basic and diluted net earnings per share significantly increased to $0.77 for Q1 FY2020 from $0.11 in Q1 FY2019, driven by higher net earnings. Certain stock options and restricted stock units were excluded from diluted EPS calculation due to their anti-dilutive effect Net Earnings Per Share (Three months ended November 30) | Metric | 2019 | 2018 | YoY Change | | :------------------------------------ | :----- | :----- | :--------- | | Net earnings ($ in thousands) | 8,345 | 1,212 | 588.5% | | Basic net earnings per share | $0.77 | $0.11 | 600.0% | | Diluted net earnings per share | $0.77 | $0.11 | 600.0% | | Weighted average shares outstanding (Basic) | 10,795 | 10,766 | 0.3% | | Weighted average shares outstanding (Diluted) | 10,828 | 10,806 | 0.2% | Anti-dilutive Securities Excluded from EPS Calculation (Three months ended November 30) | Security Type | 2019 (thousands) | 2018 (thousands) | | :---------------------- | :--------------- | :--------------- | | Restricted stock units | 19 | 26 | | Stock options | — | 35 | | Performance stock units | 20 | — | [Note 5 – Income Taxes](index=10&type=section&id=Note%205%20%E2%80%93%20Income%20Taxes) Income tax expense increased significantly to $2.9 million in Q1 FY2020 from $0.5 million in Q1 FY2019, reflecting higher earnings. The effective income tax rate decreased to 25.8% from 27.9% primarily due to changes in earnings mix among foreign operations. The company accounts for GILTI as a period cost Income Tax Expense and Rate (Three months ended November 30) | Metric | 2019 | 2018 | YoY Change | | :-------------------- | :----- | :----- | :--------- | | Income tax expense ($ in thousands) | 2,910 | 469 | 520.5% | | Estimated annual effective income tax rate | 25.8% | 27.9% | -2.1 pp | - The decrease in the effective income tax rate is primarily due to the change in earnings mix among foreign operations[33](index=33&type=chunk) - The Company has elected to account for Global Intangible Low-Taxed Income (GILTI) as a period cost[34](index=34&type=chunk) [Note 6 – Inventories](index=10&type=section&id=Note%206%20%E2%80%93%20Inventories) Net inventories increased to $97.3 million at November 30, 2019, from $88.9 million at November 30, 2018, primarily driven by an increase in raw materials and supplies Inventories, Net ($ in thousands) | Category | Nov 30, 2019 | Nov 30, 2018 | Aug 31, 2019 | | :------------------------------ | :----------- | :----------- | :----------- | | Raw materials and supplies | 47,266 | 40,781 | 49,047 | | Work in process | 6,235 | 9,601 | 4,514 | | Finished goods and purchased parts, net | 51,908 | 46,925 | 46,812 | | Total inventory value before LIFO adjustment | 105,409 | 97,307 | 100,373 | | Less adjustment to LIFO value | (8,125) | (8,395) | (8,086) | | **Inventories, net** | **97,284** | **88,912** | **92,287** | [Note 7 – Long-Term Debt](index=11&type=section&id=Note%207%20%E2%80%93%20Long-Term%20Debt) Total long-term debt remained stable at $115.8 million at November 30, 2019. The majority consists of $115.0 million in Series A Senior Notes due in 2030. Principal payments are minimal in the short term, with the bulk due after 5 years Outstanding Principal Balances of Long-Term Debt ($ in thousands) | Debt Type | Nov 30, 2019 | Nov 30, 2018 | Aug 31, 2019 | | :------------------------ | :----------- | :----------- | :----------- | | Series A Senior Notes | 115,000 | 115,000 | 115,000 | | Revolving Credit Facility | — | — | — | | Elecsys Series 2006A Bonds | 1,519 | 1,724 | 1,571 | | **Total debt** | **116,519** | **116,724** | **116,571** | | Less current portion | (210) | (206) | (209) | | Less unamortized debt issuance costs | (504) | (432) | (516) | | **Total long-term debt** | **115,805** | **116,086** | **115,846** | Principal Payments on Debt Schedule ($ in thousands) | Due within | Amount | | :--------- | :----- | | 1 year | $210 | | 2 years | 214 | | 3 years | 218 | | 4 years | 222 | | 5 years | 227 | | Thereafter | 115,428 | | **Total** | **$116,519** | [Note 8 – Financial Derivatives](index=11&type=section&id=Note%208%20%E2%80%93%20Financial%20Derivatives) The Company uses foreign currency forward contracts to hedge foreign exchange rate volatility, both designated and not designated as hedging instruments. Total derivatives designated as hedging instruments showed a net liability of $115 thousand at Nov 30, 2019, down from a net asset of $625 thousand at Nov 30, 2018 Fair Values of Derivative Instruments ($ in thousands) | Category | Nov 30, 2019 | Nov 30, 2018 | Aug 31, 2019 | | :------------------------------------------ | :----------- | :----------- | :----------- | | Derivatives designated as hedging instruments | (115) | 625 | 1,073 | | Derivatives not designated as hedging instruments | 13 | 6 | 39 | - For net investment hedging relationships, a net loss of **$76 thousand** (after-tax) was recognized in other comprehensive income for the three months ended November 30, 2019, compared to a gain of **$651 thousand** in the prior year[38](index=38&type=chunk) - At November 30, 2019, the Company had outstanding foreign currency forward contracts to sell a notional amount of **32.7 million Euro**[39](index=39&type=chunk) [Note 9 – Leases](index=12&type=section&id=Note%209%20%E2%80%93%20Leases) Following the adoption of ASC 842 in Q1 FY2020, the Company recognized operating lease ROU assets of $25.8 million and total lease liabilities of $29.5 million. Total lease cost for the quarter was $1.5 million, with a weighted average lease term of 10.0 years Operating Lease Cost and Other Information (Three months ended November 30, 2019) | Metric | Value ($ in thousands) | | :------------------------------------ | :--------------------- | | Operating lease cost | 1,418 | | Variable lease cost | 100 | | Total lease cost | 1,518 | | Operating cash outflows from operating leases | 1,086 | | Weighted average lease term - operating leases | 10.0 years | | Weighted average discount rate - operating leases | 3.3% | Supplemental Balance Sheet Information Related to Operating Leases (As of November 30, 2019) | Item | Value ($ in thousands) | | :---------------------------- | :--------------------- | | Operating lease ROU assets | 25,764 | | Operating lease short-term liabilities | 4,200 | | Operating lease long-term liabilities | 25,323 | | **Total lease liabilities** | **29,523** | [Note 10 – Fair Value Measurements](index=13&type=section&id=Note%2010%20%E2%80%93%20Fair%20Value%20Measurements) The Company's financial assets and liabilities measured at fair value primarily consist of cash and cash equivalents (Level 1) and derivative instruments (Level 2). There were no transfers between fair value hierarchy levels during the periods presented Fair Value Measurements ($ in thousands, November 30, 2019) | Item | Level 1 | Level 2 | Level 3 | Total | | :-------------------- | :------ | :------ | :------ | :------ | | Cash and cash equivalents | 120,910 | — | — | 120,910 | | Derivative assets | — | 13 | — | 13 | | Derivative liabilities | — | (115) | — | (115) | [Note 11 – Commitments and Contingencies](index=14&type=section&id=Note%2011%20%E2%80%93%20Commitments%20and%20Contingencies) The Company is involved in various legal proceedings, including product liability lawsuits related to its X-Lite® end terminal and a federal civil False Claims Act investigation. Environmental remediation for groundwater contamination at its Lindsay, Nebraska facility is estimated at $15.8 million, with a definitive plan pending EPA/NDEQ approval - The Company is defending product liability lawsuits related to its X-Lite® end terminal and is under investigation by the Department of Justice for potential federal civil False Claims Act violations[50](index=50&type=chunk)[51](index=51&type=chunk) - The estimated aggregate accrued cost for environmental remediation at the Lindsay, Nebraska facility is **$15.8 million**, with a definitive plan expected in the second half of fiscal 2020 or later[52](index=52&type=chunk)[53](index=53&type=chunk) Environmental Remediation Liabilities ($ in thousands, as of November 30) | Category | 2019 | 2018 | Aug 31, 2019 | | :------------------------------------ | :----- | :----- | :----------- | | Other current liabilities | 1,243 | 1,243 | 1,243 | | Other noncurrent liabilities | 14,548 | 15,142 | 14,674 | | **Total environmental remediation liabilities** | **15,791** | **16,385** | **15,917** | [Note 12 – Warranties](index=15&type=section&id=Note%2012%20%E2%80%93%20Warranties) The product warranty accrual balance decreased slightly to $8.8 million at November 30, 2019, from $9.0 million at the beginning of the period, as claims paid ($1.7 million) exceeded new accruals ($1.5 million) Product Warranty Accrual Changes ($ in thousands, Three months ended November 30) | Metric | 2019 | 2018 | | :------------------------------------ | :----- | :----- | | Product warranty accrual balance, beginning of period | 8,960 | 7,109 | | Liabilities accrued for warranties during the period | 1,480 | 1,178 | | Warranty claims paid during the period | (1,652) | (1,047) | | **Product warranty accrual balance, end of period** | **8,788** | **7,240** | [Note 13 – Share-Based Compensation](index=15&type=section&id=Note%2013%20%E2%80%93%20Share-Based%20Compensation) Share-based compensation expense was $1.2 million in Q1 FY2020, slightly down from $1.3 million in Q1 FY2019. Awards granted include stock options, RSUs, and PSUs, with fair values determined using specific assumptions like dividend yield, volatility, and risk-free interest rates - Share-based compensation expense was **$1.2 million** for the three months ended November 30, 2019, compared to **$1.3 million** for the same period in 2018[55](index=55&type=chunk) Share-Based Compensation Awards Granted (Three months ended November 30) | Award Type | 2019 Units Granted | 2019 Avg Grant-Date Fair Value | 2018 Units Granted | 2018 Avg Grant-Date Fair Value | | :----------------- | :----------------- | :----------------------------- | :----------------- | :----------------------------- | | Stock options | 44,347 | $24.18 | 38,337 | $24.71 | | RSUs | 30,235 | $90.73 | 29,013 | $88.27 | | PSUs | 22,715 | $102.28 | 20,631 | $107.80 | Assumptions for Stock Options (Grant Year) | Assumption | 2019 | 2018 | | :-------------------------- | :----- | :----- | | Weighted-average dividend yield | 1.3% | 1.4% | | Weighted-average volatility | 28.4% | 26.3% | | Risk-free interest rate | 1.6% | 3.1% | | Weighted-average expected life | 6 years | 6 years | [Note 14 – Other Current Liabilities](index=16&type=section&id=Note%2014%20%E2%80%93%20Other%20Current%20Liabilities) Total other current liabilities increased to $54.5 million at November 30, 2019, from $41.5 million at November 30, 2018, primarily due to increases in contract liabilities and operating lease liabilities Other Current Liabilities ($ in thousands) | Category | Nov 30, 2019 | Nov 30, 2018 | Aug 31, 2019 | | :-------------------------- | :----------- | :----------- | :----------- | | Compensation and benefits | 11,400 | 12,034 | 13,960 | | Contract liabilities | 13,280 | 7,022 | 14,763 | | Warranties | 8,788 | 7,240 | 8,960 | | Operating lease liabilities | 4,200 | — | — | | Dealer related liabilities | 3,536 | 2,849 | 3,246 | | Deferred revenue - lease | 2,431 | 657 | 2,985 | | Tax related liabilities | 2,400 | 1,400 | 1,469 | | Accrued insurance | 1,555 | 2,139 | 1,482 | | Accrued environmental liabilities | 1,243 | 1,243 | 1,243 | | Other | 5,661 | 6,896 | 4,380 | | **Total other current liabilities** | **54,494** | **41,480** | **52,488** | [Note 15 – Share Repurchases](index=16&type=section&id=Note%2015%20%E2%80%93%20Share%20Repurchases) No shares were repurchased during Q1 FY2020 or Q1 FY2019. The Company has $63.7 million remaining under its authorized share repurchase program - No shares were repurchased during the three months ended November 30, 2019 and 2018[60](index=60&type=chunk) - The remaining amount available under the share repurchase program was **$63.7 million** as of November 30, 2019[60](index=60&type=chunk) [Note 16 – Industry Segment Information](index=16&type=section&id=Note%2016%20%E2%80%93%20Industry%20Segment%20Information) The Company manages its business activities in two reportable segments: Irrigation and Infrastructure. While total operating revenues decreased slightly, Infrastructure segment revenues and operating income saw significant growth, offsetting a decline in Irrigation revenues. Corporate operating expenses decreased substantially Segment Operating Revenues ($ in thousands, Three months ended November 30) | Segment | 2019 | 2018 | YoY Change (%) | | :---------- | :----- | :----- | :------------- | | Irrigation | 82,352 | 87,610 | -6.0% | | Infrastructure | 27,041 | 24,341 | 11.1% | | **Total** | **109,393** | **111,951** | **-2.3%** | Segment Operating Income ($ in thousands, Three months ended November 30) | Segment | 2019 | 2018 | YoY Change (%) | | :---------- | :----- | :----- | :------------- | | Irrigation | 9,757 | 7,783 | 25.4% | | Infrastructure | 8,768 | 4,168 | 110.4% | | Corporate | (6,249) | (9,911) | -37.0% | | **Total** | **12,276** | **2,040** | **501.8%** | Segment Total Assets ($ in thousands, as of November 30) | Segment | 2019 | 2018 | Aug 31, 2019 | | :---------- | :----- | :----- | :----------- | | Irrigation | 305,928 | 289,773 | 292,202 | | Infrastructure | 84,813 | 74,671 | 85,848 | | Corporate | 136,070 | 137,643 | 122,264 | | **Total** | **526,811** | **502,087** | **500,314** | Key Consolidated Financial Highlights (Three months ended November 30) | Metric | 2019 ($ in thousands) | 2018 ($ in thousands) | YoY Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :------------- | | Operating revenues | 109,393 | 111,951 | -2.3% | | Gross profit | 34,074 | 28,648 | 19.0% | | Operating income | 12,276 | 2,040 | 501.8% | | Net earnings | 8,345 | 1,212 | 588.5% | | Basic EPS | $0.77 | $0.11 | 600.0% | | Diluted EPS | $0.77 | $0.11 | 600.0% | Key Consolidated Financial Position (As of November 30) | Metric | 2019 ($ in thousands) | 2018 ($ in thousands) | Aug 31, 2019 ($ in thousands) | | :-------------------------- | :-------------------- | :-------------------- | :---------------------------- | | Total assets | 526,811 | 502,087 | 500,314 | | Total liabilities | 253,811 | 225,412 | 232,105 | | Total shareholders' equity | 273,000 | 276,675 | 268,209 | [ITEM 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=ITEM%202%20%E2%80%93%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of the Company's financial performance, including a 2% decrease in operating revenues but a significant increase in net earnings due to higher gross margins and reduced operating expenses. It also discusses key drivers for the Irrigation and Infrastructure segments, the capital allocation plan, and liquidity - Operating revenues for Q1 FY2020 decreased **2%** to **$109.4 million**, while net earnings significantly increased to **$8.3 million** (**$0.77 per diluted share**) from **$1.2 million** (**$0.11 per diluted share**) in Q1 FY2019[71](index=71&type=chunk) - Q1 FY2019 net earnings were reduced by **$2.9 million** (**$0.27 per diluted share**) due to 'Foundation for Growth' initiative costs, which were not incurred in Q1 FY2020[72](index=72&type=chunk) - Key drivers for the Irrigation segment include agricultural commodity prices, net farm income, weather conditions, governmental policies (Farm Bill, U.S. Tax Reform, Biofuel production), international market factors, and currency fluctuations[73](index=73&type=chunk)[75](index=75&type=chunk)[77](index=77&type=chunk) - Key drivers for the Infrastructure segment include government spending on road construction (FAST Act), highway safety product certification requirements, population growth, and the need for improved road safety[76](index=76&type=chunk) Consolidated Financial Performance Summary (Three months ended November 30) | Metric | 2019 ($ in thousands) | 2018 ($ in thousands) | Change (%) | | :-------------------- | :-------------------- | :-------------------- | :--------- | | Operating revenues | 109,393 | 111,951 | -2% | | Gross profit | 34,074 | 28,648 | 19% | | Gross margin | 31.1% | 25.6% | 5.5 pp | | Operating expenses | 21,798 | 26,608 | -18% | | Operating income | 12,276 | 2,040 | 502% | | Operating margin | 11.2% | 1.8% | 9.4 pp | | Net earnings | 8,345 | 1,212 | 589% | - The backlog of unshipped orders at November 30, 2019, was **$69.2 million**, up from **$49.2 million** at November 30, 2018[77](index=77&type=chunk) - Cash and cash equivalents totaled **$120.9 million** at November 30, 2019. Net cash provided by operating activities was **$1.5 million** in Q1 FY2020, a significant improvement from cash used of **$14.3 million** in Q1 FY2019[88](index=88&type=chunk)[90](index=90&type=chunk) - The Company's capital allocation plan prioritizes investment in organic growth, dividends, synergistic acquisitions, and opportunistic share repurchases. Capital expenditures for fiscal 2020 are projected to be **$15.0 million to $20.0 million**[93](index=93&type=chunk)[98](index=98&type=chunk) [ITEM 3 – Quantitative and Qualitative Disclosures about Market Risk](index=23&type=section&id=ITEM%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) There have been no material changes to the Company's quantitative and qualitative disclosures about market risk from those previously reported in its most recent Annual Report on Form 10-K - No material changes from previously disclosed quantitative and qualitative disclosures about market risk in the Company's most recent Annual Report on Form 10-K[102](index=102&type=chunk) [ITEM 4 – Controls and Procedures](index=23&type=section&id=ITEM%204%20%E2%80%93%20Controls%20and%20Procedures) The CEO and CFO concluded that the Company's disclosure controls and procedures were ineffective as of November 30, 2019, due to a previously disclosed material weakness related to ineffective internal control over indirect tax credits in a foreign jurisdiction. Remediation efforts are underway and expected to be completed in fiscal 2020 - The Company's disclosure controls and procedures were **ineffective** as of November 30, 2019[103](index=103&type=chunk) - A material weakness was identified related to ineffective internal control over indirect tax credits in a foreign jurisdiction, specifically concerning the valuation of tax credits[104](index=104&type=chunk) - Remediation efforts, including implementing new controls for tax credit valuation, began in Q1 FY2020 and are expected to be completed during fiscal 2020[105](index=105&type=chunk) - Other than remediation efforts and the implementation of ASC 842 (Leases), there were no significant changes to internal control over financial reporting during the last fiscal quarter[106](index=106&type=chunk)[107](index=107&type=chunk) [Part II – OTHER INFORMATION](index=24&type=section&id=Part%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [ITEM 1 – Legal Proceedings](index=24&type=section&id=ITEM%201%20%E2%80%93%20Legal%20Proceedings) This section refers to the disclosures in Note 11 – Commitments and Contingencies, which detail ongoing product liability lawsuits and a federal investigation related to the X-Lite® end terminal, as well as environmental remediation efforts - Legal proceedings disclosures are incorporated by reference from Note 11 – Commitments and Contingencies[108](index=108&type=chunk) [ITEM 1A – Risk Factors](index=24&type=section&id=ITEM%201A%20%E2%80%93%20Risk%20Factors) There have been no material changes to the Company's risk factors from those previously disclosed in its most recent Annual Report on Form 10-K - No material changes from risk factors previously disclosed in the Company's most recent Annual Report on Form 10-K[109](index=109&type=chunk) [ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=ITEM%202%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company reported no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities and no use of proceeds reported[110](index=110&type=chunk) [ITEM 3 – Defaults Upon Senior Securities](index=24&type=section&id=ITEM%203%20%E2%80%93%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - No defaults upon senior securities reported[111](index=111&type=chunk) [ITEM 4 – Mine Safety Disclosures](index=24&type=section&id=ITEM%204%20%E2%80%93%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[111](index=111&type=chunk) [ITEM 5 – Other Information](index=24&type=section&id=ITEM%205%20%E2%80%93%20Other%20Information) The Company reported no other information for this period - No other information reported[112](index=112&type=chunk) [ITEM 6 – Exhibits](index=25&type=section&id=ITEM%206%20%E2%80%93%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Company's Restated Certificate of Incorporation, Amended and Restated By-Laws, specimen common stock certificate, Management Incentive Plan, and certifications from the CEO and CFO - Key exhibits filed include the Restated Certificate of Incorporation, Amended and Restated By-Laws, Specimen Form of Common Stock Certificate, Lindsay Corporation Management Incentive Plan (MIP) 2020 Plan Year, and Certifications of the Chief Executive Officer and Chief Financial Officer[114](index=114&type=chunk) [SIGNATURES](index=26&type=section&id=SIGNATURES) This section contains the official signatures certifying the accuracy and completeness of the report - The report was signed on January 9, 2020, by Brian L Ketcham, Senior Vice President and Chief Financial Officer of Lindsay Corporation[118](index=118&type=chunk)[119](index=119&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION (MARK ONE) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-13419 Lindsay Corporation (Exact name of registrant as specified in its charter) Washington, D.C. 20549 FORM 10‑K (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identifica ...