Lindsay(LNN) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated revenues for Q2 FY2025 increased by 23% to $187.1 million compared to$ 151.5 million in the prior year [14] - Net earnings for the quarter increased by 47% to $26.6 million or$ 2.44 per diluted share, compared to $18.1 million or$ 1.64 per diluted share in the prior year, marking the highest quarterly net earnings in the company's history [15] Business Segment Data and Key Metrics Changes - Irrigation segment revenues increased by 11% to $148.1 million compared to$ 133 million in the prior year, with North America Irrigation revenues decreasing by 7% to $77.1 million [16] - International Irrigation revenues increased by 42% to$ 71 million, driven by large projects in the MENA region [17] - Infrastructure segment revenues more than doubled to $38.9 million from$ 18.5 million in the prior year, primarily due to the completion of a large Road Zipper project valued at over $20 million [19] Market Data and Key Metrics Changes - In North America, no meaningful improvement in market conditions is expected in the near term, with USDA forecasting a 29% increase in net farm income primarily due to higher government support payments [9] - Internationally, particularly in developing regions, continued growth is expected driven by project activity focused on food security and water resource conservation [10] Company Strategy and Development Direction - The company is focused on growing its Road Zipper system leasing business for a higher and more stable margin profile [7] - A comprehensive action plan has been implemented to address potential cost impacts from tariffs, including supplier negotiation and strategic inventory placement [12] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the Road Zipper project sales pipeline despite challenges in predicting the timing of large projects [6] - The company anticipates stable demand for irrigation equipment in the second half of FY2025, pending significant storm damage activity [9] Other Important Information - Total available liquidity at the end of Q2 was$ 236.7 million, including $186.7 million in cash and equivalents [20] - The company is evaluating the potential impact of additional or retaliatory tariffs and has a structure in place to react quickly [12] Q&A Session Summary Question: Insights on international revenue recognition timing - The company shipped more of the large project than originally anticipated, but this does not affect expectations for future quarters [26] Question: Details on tariff exposure and actions - The biggest impact is expected on the Irrigation business, with a marginal increase in cost of goods projected [30][32] Question: Margin performance in the Irrigation segment - Margins in North America remained comparable to last year, with volume leverage from international projects helping to offset gross margin dilution [38][40] Question: Impact of tariffs on agricultural economy - Potential disruptions in US agricultural exports could impact pricing and customer sentiment, but government support is expected if needed [45][46] Question: Pricing expectations in the domestic irrigation market - The company has already taken pricing actions based on increased steel costs and believes it can pass these costs along to customers [53][54] Question: Potential benefits of retaliatory tariffs for investment in Brazil - The company is positioned to react quickly to any increase in demand in Brazil, leveraging its global footprint [56][57]