Lindsay Corporation

Good morning. My name is Grant, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lindsay Corporation fourth quarter fiscal year 2020 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchstone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. During this call, management may make forward-looking statements that are subject to risks and uncertainties, which reflect management's current beliefs, estimates of future economic circumstances, industry conditions, company performance, and financial results. Forward-looking statements include the information concerning possible or assumed future results of operations, of the company and those statements preceded by, followed by, or including the words, expectations, outlook, could, may, should, or similar expressions. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. I'd now like to turn the call over to Mr. Tim Hessinger, President and Chief Executive Officer.

Good morning, and thank you for joining our call. With me on today's call is Brian Ketchum, our Chief Financial Officer, and Randy Wood, our Chief Operating Officer. I'd like to take this opportunity to introduce Randy, whom some of you may not know. Randy was promoted to Chief Operating Officer in August of this year. He has been with Lindsay for 12 years, and most recently was the president of our irrigation business. He brings a wealth of experience to this role, and with him focused on running the business, this change provides me the opportunity to focus more on growth and M&A activities. After I make some opening comments, Randy will provide a business update and Brian will update us on the quarter's financial results. I will start with addressing the impact of COVID-19 on our employees and business. Our highest priority continues to be our employee health and safety. we continue to proactively implement safety measures according to health organization recommendations and local government regulations. At our sites, key actions that continue are ensuring employees are practicing social distancing, use of face coverings, enhanced cleaning and sanitation efforts, and staggered work schedules. We continue to offer work from home for roles that can be done outside of a Lindsay site. Our businesses are all classified as business essential. And I'm pleased to say that all nine manufacturing plants are operational and running according to the local demand level. In terms of business impact related to COVID-19 in the fourth quarter, The primary impact continues to be some project delays, but not cancellations. The rapid response team structure across the company that was put in place to address COVID-19 related issues and mitigate potential risk to the business continues to operate. I'd now like to share with you a few highlights from fiscal year 20. The first dates go back to a commitment. that was made in early 2018. At that time, we announced that through the efforts of the Foundation for Growth Initiative, we would achieve 11 to 12 percent operating margin in fiscal year 20. Our caveat to that commitment was that we would achieve this goal in a market environment similar to fiscal year 2017. When we set that commitment, we did not foresee an ag market that would become more challenging and a global pandemic all occurring at the same time. I'm very proud of the Lindsay team to say that we achieved our fiscal year 20 goal, reaching 11.4% operating margin, especially given the challenging environment in which we were operating in. In addition to the operating margin goal, we also focused on culture in our Foundation for Growth initiative. We established a baseline back in February 2018 through the support of a major consultant's employee survey to help us understand where we had opportunities to improve our organizational health and align our culture with our strategy. Our goal was to achieve first quartile status in the comparison against approximately 2,000 companies that are used in their benchmarking exercise. We have conducted an annual employee survey every year since fiscal year 2018, and I'm very pleased to say that we have achieved first quartile status in this year's survey that was conducted in the July timeframe. This survey focuses on organizational health, and this result gives me the confidence to say our culture has now transformed into a strength for the company. These two achievements are significant for our company, and I want to thank the Lindsay employees for their dedication and commitment to meeting these goals. Meeting our operating margin goal was not the only key financial achievement this fiscal year. In looking as far back as when Lindsay became a publicly traded company, this is the highest gross margin percent result for the company. In addition, The infrastructure business in fiscal year 20 achieved the highest revenue, operating income, and operating margin since Lindsay acquired this business in 2006. And Brazil achieved its highest revenue in local currency in fiscal year 20 since this business was established in 2002. One last achievement I want to mention In fiscal year 20, our South Africa plant ran almost exclusively on rainwater, furthering our global focus on sustainable practices in water conservation. Regarding our Foundation for Growth initiative, we continue to see that the margin improvement projects we implemented are delivering as expected. To go even beyond that statement, The approach taken in this initiative is rapidly becoming part of the company's culture. Focus on continuous improvement has become established throughout the company. Now, I will turn the call over to Randy to provide a business update.

Thank you, Tim, and good morning, everyone. The fourth quarter is generally a seasonal low period in the North American irrigation business. Storm damage becomes more of a market driver during the summer months. This year's storm volume was down slightly from prior year, but more than 10% below the five-year average for the quarter. Supply and demand fundamentals saw lots of movement in the quarter. Most of this volatility was bullish for commodity prices and farm income. So our customers were pessimistic due to low commodity prices early in the quarter. We did see a steady improvement of customer sentiment as we approached the end of the fiscal year. Government support in the U.S. was visible for the 2019 harvested crop with the $16 billion coronavirus food assistance program, or CFAP, announced earlier this year. But through most of the quarter, growers dealt with uncertainty regarding additional support for the 2020 harvest. That was addressed with the announcement of the second round of CFAP payments in mid-September when a further $14 billion in government aid was announced. We continue to see strong growth in technology penetration. New subscription volume for the 2020 season, inclusive of the net irrigate acquisition, was up 174% versus prior year. We've also seen renewal rates approaching 97%, so we're successfully retaining customers in addition to attracting new ones. In international irrigation, we continue to see strong results in most mature markets, including Brazil, where, as Tim mentioned, we had a record year for revenue in local currency. Market conditions in Australia have also continued to improve with recent rains, and our new expanded regional distribution center is performing very well there. International project activity remains robust. Several projects and tenders are currently visible across multiple regions, although timing is uncertain. Many of these are across the Mideast and Africa, where we continue to see irrigation projects supporting food security investments. We continued shipment of our large Mideast project in Q4 and had our largest shipping quarter ever from our Turkey facility. In the infrastructure business, we saw generally flat results globally in road safety products for the quarter. We continue to see adoption of the MASH compliant product line where sales were up more than 120% versus prior year. The Absorb-M in particular is doing very well due to its rapid deployment capabilities which increase worker safety and efficiency. We are also pleased to see that the President signed the Continuing Appropriations Act, which extended the FAST Act by one year. In addition to the extension, the Highway Trust Fund was infused with $13.6 billion to continue funding for important road infrastructure projects. Road zipper project sales were a significant contributor to the quarter on a year-over-year basis. We completed delivery of the Large Highways England project in the UK. We were able to support our client's aggressive timeline and leveraged our global manufacturing footprint to fulfill the project on time, while also pulling ahead barrier shipments to Japan to meet customer requests. These accelerated shipments allowed us to offset the impact of COVID-related project deferrals in the quarter. Our road zipper project funnel remains robust due to the successful implementation of our shift left strategy that provides earlier visibility of project demand. While timing of project deliveries is always difficult to predict, we have seen some planned projects get pushed out of Q1 due to uncertainty regarding the pandemic. We are also seeing construction delays continue into the first quarter as regional and local governments manage their COVID response plans. In some cases, deliveries will be moved, and in others, orders could be cancelled. As previously communicated, we are working to reduce the lumpiness of our road zipper business by maintaining and growing increasing the lease portion of this business, and we are pleased with progress in both areas. Now I'll turn it over to Brian to discuss our financial results.