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Lindsay(LNN) - 2022 Q1 - Quarterly Report

Part I – FINANCIAL INFORMATION Financial Statements This section presents Lindsay Corporation's unaudited condensed consolidated financial statements for the three months ended November 30, 2021, including earnings, balance sheets, and cash flows Condensed Consolidated Statements of Earnings Operating revenues for the three months ended November 30, 2021, increased to $166.2 million, with net earnings rising to $7.9 million Condensed Consolidated Statements of Earnings (Q1 FY2022 vs Q1 FY2021) | Metric | Three months ended Nov 30, 2021 | Three months ended Nov 30, 2020 | | :--- | :--- | :--- | | Operating revenues | $166,152 thousand | $108,485 thousand | | Gross profit | $37,438 thousand | $31,408 thousand | | Operating income | $13,361 thousand | $7,535 thousand | | Net earnings | $7,901 thousand | $7,095 thousand | | Diluted EPS | $0.72 | $0.65 | Condensed Consolidated Balance Sheets Total assets increased to $649.4 million as of November 30, 2021, driven by higher inventories and receivables, with shareholders' equity growing to $341.9 million Key Balance Sheet Items | Metric | Nov 30, 2021 | Nov 30, 2020 | Aug 31, 2021 | | :--- | :--- | :--- | :--- | | Total current assets | $426,333 thousand | $356,450 thousand | $416,103 thousand | | Inventories, net | $173,115 thousand | $114,278 thousand | $145,244 thousand | | Total assets | $649,445 thousand | $575,202 thousand | $637,185 thousand | | Total current liabilities | $147,782 thousand | $102,387 thousand | $138,240 thousand | | Long-term debt | $115,471 thousand | $115,641 thousand | $115,514 thousand | | Total liabilities | $307,502 thousand | $271,301 thousand | $298,740 thousand | | Total shareholders' equity | $341,943 thousand | $303,901 thousand | $338,445 thousand | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $24.2 million for Q1 FY2022, primarily due to increased receivables and inventories, with cash ending at $84.7 million Cash Flow Summary (Q1 FY2022 vs Q1 FY2021) | Metric | Three months ended Nov 30, 2021 | Three months ended Nov 30, 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($24,179) thousand | $15,373 thousand | | Net cash used in investing activities | ($14,158) thousand | ($5,842) thousand | | Net cash used in financing activities | ($2,321) thousand | ($4,725) thousand | | Net change in cash and cash equivalents | ($42,388) thousand | $5,399 thousand | | Cash and cash equivalents, end of period | $84,719 thousand | $126,802 thousand | Notes to the Condensed Consolidated Financial Statements This section details accounting policies and financial statement items, including revenue recognition, income taxes, debt, and segment information - The company adopted ASU No. 2019-12, Simplifying the Accounting for Income Taxes, in Q1 FY2022, with no material impact21 - The company is defending product liability lawsuits related to its X-Lite® end terminal and is under DOJ investigation, but no loss accrual is deemed probable414344 - An accrued environmental remediation liability of $16.0 million exists for the Lindsay, Nebraska facility4548 Segment Operating Revenues (Q1 FY2022 vs Q1 FY2021) | Segment | Three months ended Nov 30, 2021 | Three months ended Nov 30, 2020 | | :--- | :--- | :--- | | Irrigation | $145,909 thousand | $87,356 thousand | | North America | $78,976 thousand | $52,790 thousand | | International | $66,933 thousand | $34,566 thousand | | Infrastructure | $20,243 thousand | $21,129 thousand | | Total operating revenues | $166,152 thousand | $108,485 thousand | Segment Operating Income (Q1 FY2022 vs Q1 FY2021) | Segment | Three months ended Nov 30, 2021 | Three months ended Nov 30, 2020 | | :--- | :--- | :--- | | Irrigation | $17,212 thousand | $10,633 thousand | | Infrastructure | $2,766 thousand | $4,256 thousand | | Corporate | ($6,617) thousand | ($7,354) thousand | | Total operating income | $13,361 thousand | $7,535 thousand | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 FY2022 financial results, highlighting a 53% revenue increase driven by irrigation, alongside challenges from inflation and supply chain constraints Executive Overview and Outlook Q1 FY2022 operating revenues rose 53% to $166.2 million, driven by irrigation, with backlog increasing to $154.8 million despite cost and supply challenges - Operating revenues for Q1 FY2022 were $166.2 million, a 53% increase YoY, with irrigation revenues up 67% and infrastructure revenues down 4%69 - Primary drivers for irrigation demand include a 40% increase in U.S. corn prices and a 23% increase in estimated U.S. net farm income for 202170 - The backlog of unshipped orders at November 30, 2021, was $154.8 million, a substantial increase from $89.2 million in the prior year, primarily due to higher irrigation backlog75 Results of Operations Consolidated revenues increased 53% to $166.2 million in Q1 FY2022, driven by irrigation growth, though gross margin compressed to 22.5% due to higher costs and sales mix Consolidated Results of Operations (Q1 FY2022 vs Q1 FY2021) | Metric | Q1 FY2022 | Q1 FY2021 | % Change | | :--- | :--- | :--- | :--- | | Operating revenues | $166,152 thousand | $108,485 thousand | 53% | | Gross profit | $37,438 thousand | $31,408 thousand | 19% | | Gross margin | 22.5% | 29.0% | -6.5 p.p. | | Operating income | $13,361 thousand | $7,535 thousand | 77% | | Operating margin | 8.0% | 6.9% | +1.1 p.p. | | Net earnings | $7,901 thousand | $7,095 thousand | 11% | - North America irrigation revenues increased 50% to $79.0 million, driven by higher unit sales and prices amid strong commodity markets79 - International irrigation revenues grew 94% to $66.9 million, with strong performance in Brazil, the Middle East, and Europe80 - Gross margin decreased to 22.5% from 29.0% due to higher raw material costs, a $6.0 million LIFO impact, and a sales mix shift to lower-margin irrigation products83 Liquidity and Capital Resources Cash and equivalents decreased to $114.9 million due to $24.2 million cash used in operations, with fiscal 2022 capital expenditures projected at $20.0-$25.0 million - Cash, cash equivalents, and marketable securities decreased to $114.9 million at Nov 30, 2021, from $146.7 million at Aug 31, 202188 - Cash used in operating activities was $24.2 million, a reversal from $15.4 million provided in the prior year, mainly due to increases in receivables and inventories90 - The capital allocation plan prioritizes organic growth, dividends, acquisitions, and share repurchases, with fiscal 2022 capital expenditures projected at $20.0 million to $25.0 million9394 - The company has a $50.0 million revolving credit facility with no outstanding borrowings as of November 30, 202197 Quantitative and Qualitative Disclosures about Market Risk No material changes have occurred in the company's quantitative and qualitative disclosures about market risk since the last Annual Report on Form 10-K - There have been no material changes from the Company's quantitative and qualitative disclosures about market risk as previously disclosed in the Annual Report on Form 10-K for the fiscal year ended August 31, 2021101 Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of November 30, 2021, with no significant changes to internal control over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of November 30, 2021102 - No significant changes were made to the Company's internal control over financial reporting during the quarter103 Part II – OTHER INFORMATION Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 8 – Commitments and Contingencies in the financial statements - Information regarding legal proceedings is incorporated by reference from Note 8 – Commitments and Contingencies in Part I, Item 1 of this report104 Risk Factors No material changes have occurred in the risk factors previously disclosed in the company's most recent Annual Report on Form 10-K - There have been no material changes from risk factors previously disclosed in the Company's most recent Annual Report on Form 10-K105 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None106 Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and interactive data files - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, and Interactive Data Files (Inline XBRL)110