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spk07: Good morning. My name is Tom, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lindsay Corporation Second Quarter Fiscal Year 2021 Earnings Call. 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 expectation, 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. Please note, this event is being recorded. I would now like to turn the call over to Mr. Randy Wood, President and Chief Executive Officer. Please go ahead.
spk05: Thank you, and good morning, everyone. Welcome to our second quarter earnings call. With me today is Brian Ketchum, our Chief Financial Officer. And before Brian gets into the details of our second quarter results, I'd like to share some opening comments. In the area of innovation, we continue executing key elements of our SmartPivot platform with our strategic partners, Microsoft and Taranis. We're leveraging new technologies, including edge computing, to improve the speed and accuracy of image recognition used for agronomic analysis and machine health diagnostics. This will give customers the peace of mind and security they need and continue the move towards autonomous management of both the crop and the machine in the field. We've also announced the release of our new Road Connect platform in the infrastructure segment. This allows us to leverage many of the same hardware elements from our field net and remote monitoring product lines to improve speed to market and reliability. This platform will provide states, municipalities, and other stakeholders with the ability to remotely monitor a broad range of assets on our roads and roadways to improve safety and service. In the environmental, social, and governance, or ESG, space, We continue to make great progress on many of our initiatives. Back in March 2018, we hosted our Water Matters event where we set a goal of helping our customers around the world save over 700 billion gallons of water and conserve over 1.2 billion kilowatt hours of energy through efficient irrigation tools like FieldNet Advisor. We're pleased to confirm that we're on track to meet our water savings goal and will exceed our energy savings goal by over 80% allowing us to remove more than 3.5 billion pounds or 1.6 million metric tons of carbon from the atmosphere. That's equivalent to the annual emissions from over 330,000 passenger vehicles. We've also launched our internal ESG council focused on addressing both the sustainability of our internal operations and the operations of our customers engaged in transportation safety, traffic management, and agricultural production. We'll release our next sustainability report later this spring, and we'll have more to share on our strategy and specific goals as they're finalized. We continue to follow safety protocols at all of our facilities as part of our pandemic response plan. Currently, all nine factories are operational and running, and we are maintaining our work from home option for roles that can be performed remotely. As we've stated in the past, safety is a non-negotiable for us, so we'll continue to make decisions that keep our employees safe. I would like to take a moment and acknowledge and recognize our team for their continued focus and execution through the global pandemic. The business essential nature of our work in transportation safety and sustainable agriculture production means our customers are counting on us to deliver and our teams have continued to do that well. We appreciate your dedication and support of each other and our business. Turning to the market environment. Conditions in North American irrigation remain strong in the corridor. Commodity prices were high and net farm income reached near record levels as growers benefited from strong supply and demand fundamentals, including growth and export to China and government support tied to the COVID relief programs. This drove positive customer sentiment and a willingness to increase capital expenditures. These positive market drivers drove strong order flow in North America, leading to higher equipment sales and a large order backlog that will carry into our third quarter. The recently released planting intentions report for the 2021 growing season indicate we could see a continuation of supply constraints that will support strong commodity prices and net farm income. Increased income from crop receipts is projected to be partially offset by a reduction in government subsidies that would lead to slightly lower net farm income for this marketing year when compared to 2020. We continue to see rapid escalation of input costs, primarily steel, during the quarter. Transportation and other import costs also increased due to the nationwide trucking shortage and high component demand across the industry. We've seen expedite fees and delivery delays on some inbound components in the quarter. These are actively managed daily to minimize disruptions to our dealers and customers, but we do expect tight material supplies will continue into the third quarter. Multiple price increases have been implemented this fiscal year. We continue to trail costs slightly due to the volume of incoming orders and the pace of cost increases. This will continue to put short-term margin pressure into Q3. International irrigation again had a strong quarter in both the mature and developing market segments. We are seeing signs of strong market recovery across the Asia-Pacific region with growth in both the domestic China and Australian New Zealand markets. Brazil continues to be a very competitive market, but a bright spot in terms of both volume and revenue growth due to strong farm income, favorable currency for exports, and record soybean yield. The second corn crop, or safrina planting, was delayed this year due to the late soybean harvest. This could have some impact on the market, but we still see continued strength into their fall and winter seasons. Moving to infrastructure, where we saw another strong quarter. In road safety, we are seeing some improvement in the volume of project tenders, but we remain below pre-pandemic levels. Construction awards are down throughout the country, primarily due to states focusing resources on their pandemic response. We're also seeing delays in road zipper project confirmations as states defer projects while managing their COVID response plans. We don't view these as lost sales, but it does lengthen the revenue recognition cycle. and we've had anticipated projects valued at close to $11 million now move out of fiscal year 2021. We're actively managing the sales funnel to close this gap. We did see an increase in lease revenue in the quarter, and our municipal sales funnel continues to improve on a year-over-year basis. However, the timing of project shipments remains challenging to predict in this environment. On March 31st, President Biden revealed the American Jobs Plan, valued at an estimated $2 trillion, This is an eight-year stimulus package containing $115 billion to modernize roads and bridges, $25 billion for large, complex infrastructure projects of regional significance, and $20 billion to improve road safety. This includes a Safe Streets for All program to fund state and local improvements that reduce crashes and fatalities, especially for cyclists and pedestrians. We believe the increased emphasis from the Biden administration on reducing carbon emissions, addressing traffic congestion and gridlock, and upgrading our aging road networks will provide some longer-term funding stability that could have a positive impact on our infrastructure segment. Of course, there's a long road ahead in terms of approvals and funding, so the timing of that benefit is uncertain. There's also potential that in some situations, pending legislation could temporarily freeze the market while local governments wait to see the magnitude and timing of program funding. Now I'll turn the call over to Brian to review our second quarter financial results.
spk02: Thank you, Randy, and good morning, everyone. Total revenues for the second quarter of fiscal 2021 of $143.6 million increased $29.8 million, or 26%, compared to $113.8 million in the same quarter last year. Net earnings for the quarter were $11.9 million, or $1.08 per diluted share compared to net earnings of $5.5 million or $0.51 per diluted share in the prior year. Irrigation segment revenues for the second quarter of $118.6 million increased $25.1 million or 27% compared to the same quarter last year. North America irrigation revenues of $80.2 million increased $13.1 million or 19% compared to last year. The increase resulted primarily from higher irrigation equipment sales volume and higher average selling prices. This increase was partially offset by lower engineering services revenue of approximately $10.5 million related to a project in the prior year that did not repeat. In the international irrigation markets, Revenues of $38.4 million increased $12 million, or 45%, compared to the same quarter last year. The increase resulted from higher irrigation equipment sales volumes in several international markets. The overall impact of foreign currency translation differences was insignificant for the quarter. Total irrigation segment operating income for the second quarter was $18 million, an increase of $7.9 million or 79% compared to the same quarter last year. And operating margin improved to 15.2% of sales compared to 10.8% of sales in the prior year. Improved margins were supported by higher irrigation equipment sales volume. However, this improvement was tempered somewhat by the impact of higher raw material and freight costs. As Randy mentioned in his comments, we have implemented multiple price increases to pass along the escalating costs. However, we have experienced margin compression as we work through the backlog of orders received prior to the effective dates of our pricing actions. We expect this margin pressure to continue into the third quarter until increased cost pass-throughs are fully realized. Feedback received from our dealers indicates that Lindsay has consistently led the industry in proactively implementing price increases, and other than timing differences, the pricing environment has remained rational. Infrastructure segment revenues for the second quarter of $25 million increased $4.7 million, or 23%, compared to the same quarter last year. The increase resulted primarily from higher road zipper system sales and lease revenue, while global sales of road safety products were relatively flat compared to the prior year. Infrastructure segment operating income for the second quarter was $6.3 million, an increase of $400,000 or 8% compared to the same quarter last year. Infrastructure operating margin for the quarter was 25.4% of sales, compared to 29% of sales in the prior year. Positive margin mix from higher road zipper sales and lease revenue was partially offset by the negative impact of higher raw material and other costs. In addition, the prior year included a gain of $1.2 million on the sale of a building that had been held for sale. Turning to the balance sheet performance and liquidity. During the quarter, We had capital expenditures of $11 million, which included $8.5 million to exercise a purchase option for the land and buildings related to our manufacturing operation in Turkey. This facility is well positioned strategically and geographically, and the purchase provides us greater flexibility to take advantage of future growth opportunities in the EMEA region. Our total available liquidity at the end of the second quarter was $180.3 million, with $130.3 million in cash and marketable securities, and $50 million available under our revolving credit facility. Our total debt was $116.3 million at the end of the second quarter, almost all of which matures in 2030. Additionally, at the end of the quarter, we were well within the financial covenants of our borrowing facilities. including a gross debt to EBITDA leverage ratio of 1.4 compared to a covenant limit of 3.0. At this time, I would like to turn the call over to the operator to take your questions.
spk07: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. And the first question comes from Nathan Jones with Stiefel. Please go ahead. Good morning, everyone.
spk05: Good morning, Evan and Nathan.
spk08: Just starting in irrigation, obviously really strong growth there.
spk02: 27 percent growth year over year can you talk about what the contribution from price was to the top line growth yeah this is brian i would i would say it was in the uh mid mid single digits range as you recall at the uh end of the first quarter we had a large backlog that uh the orders came in prior to the first price increase that we put in place. So in the quarter, and I would say incrementally year over year, as well as quarter to quarter, about mid-single digits impact on price for the quarter.
spk08: And you would probably expect that now that you've probably shipped all of that backlog to be more like double digits contribution from price in the fiscal third quarter?
spk02: Yeah, it will continue to increase. As we both mentioned, we have implemented multiple price increases. And, you know, it's in total, you know, where we're at is in that 20% range. But that's feathered in as, you know, on a month-by-month basis is how we've been approaching price increases.
spk08: Okay, and then I want to talk about margins because, I mean, you put up a 32% incremental margin in irrigation, which given the level of inflation, I think is really, really good. Can you talk about some of the dynamics there? I know you said you had lower engineering revenues than last year. If I recall, that was some relatively low margin. And you've got, you know, some of this revenue that doesn't have price increases. Some of it does. Is that kind of low 30s? incremental margin in an area that you can maintain as we go forward as we're dealing with these price increases and, you know, the shipping costs and things like that? Or is there a reason why they would get better or worse in the short term?
spk02: Yeah, I think as we've said in the past, incremental margins in irrigation generally in that 30% plus range You know, I would say in this particular quarter, you know, we did have the margin headwind primarily on the U.S. side. What really helped incremental margins this year is some pretty significant improvement year over year on the international business. Some of that may have been a, you know, a favorable comp compared to last year, but I would say going forward, the expectation would be, you know, in that 30 plus range, but again, you know, continue to have some headwind with the cost increases that we're seeing.
spk08: Do you think we'll find a quarter here eventually when, you know, steel stops going straight up, that you would have a quarter or two where you'll hit, you know, a better incremental margin as you're catching up on that pricing?
spk02: Yeah, when that point in time comes, which I'm not sure if anybody knows that at this point, we would expect to... you know, catch up and hopefully gain some incremental margin as steel costs stabilize. Great. That's helpful. I'll pass it along. Thank you.
spk07: Our next question comes from Brian Drab with William Blair. Please go ahead.
spk06: Hi. Thanks for taking my questions. I know you're not giving formal guidance for the year, but I'm wondering, can you give us Any sense, just roughly, where you see irrigation revenue going this year? These are big numbers now, so it gets harder to model when you're getting 20% plus growth and pricing's moving around so much. Any help you can give us in modeling that?
spk02: Yeah, Brian, I would say that the growth we saw in the second quarter on a percentage basis, we would expect that to continue into the third. And then as you get into our fourth quarter, that's kind of post-planting season, and that's generally driven by storm replacement demand. So with the backlog that we've got today, again, subject to some of the supply chain constraints we're seeing. That would be kind of our expectation for the third quarter.
spk06: For the third quarter. But for the fourth quarter, given that that's driven by a lot of replacement, the growth year over year might come down a little. Is that what you're saying?
spk02: Yeah. There's still some positive impact from the ag fundamentals in commodity prices in a lot of different commodities, but I think the demand level falls off into the fourth quarter. So again, it's going to be primarily dependent on what happens with storms and replacement activity.
spk06: Okay, thanks. And your mention of replacement reminds me of the question that I always like to ask, Brian, that breakdown of irrigation revenue.
spk02: Yeah, as as we would expect the dry land or irrigation for the first time increased during the quarter. It was at 34% for the quarter conversion was at 27% and replacement at 39.
spk06: OK, thanks and then maybe just want one more for now. The large. Road zipper projects and the pipeline is is very healthy. Is it a pipeline that you think will start? Maybe we'll see the next big projects coming in the fiscal 22? Or can you comment any more specifically on when some things in that pipeline might hit?
spk02: Yeah, this is Brian again. As we began the year, what we had said is we had line of sight to projects in the pipeline that would um cover about half of the gap of the uk project that we had last year and as randy mentioned in his comments we've we've had projects of around 11 million that have now shifted into fiscal 2022 so that um you know let's say that gap recreated by the uk project last year is is uh probably going to remain with us for the balance of the year. But as we look at our pipeline, you know, we're very encouraged by, you know, what we see for fiscal 22. It's just the, you know, the delays that we've experienced in 21, primarily being, you know, COVID related in certain states and municipalities in the U.S. that is delaying some of those projects. But the overall sales funnel continues to improve.
spk06: Okay. Can I just make sure I understand that and maybe frame it slightly differently? I'm looking at my notes and I had, you know, in our one conversation we had, I got the impression that large project road zipper revenue could be in the 25 to 30 million range in fiscal 21. Is the idea that, you know, maybe I think you said 11 million gets pushed to the next year and there's more like 15 to 20 this year? Is that the...
spk02: Yeah, I would say it's at the lower end of that range, so 20 plus.
spk06: Got it.
spk02: Okay.
spk06: That's very helpful. Thank you.
spk07: The next question comes from Ryan Connors with Benning and Scattergood. Please go ahead.
spk00: Hey, great. A couple bigger picture questions. First on irrigation, I wonder if you can give us any perspective you have, Randy, on where irrigation fits in into the budget this time around versus other priorities, tractors combined, etc. Anything unique or different about this cycle, this period versus past cycles that would make irrigation more or less of a priority? I mean, I know we had the drought last time, but then again, you know, interest rates are so low now and irrigated land values are up, which is a positive. So Just trying to get a feel for where you think irrigation fits into the puzzle this time around.
spk05: Yeah, I don't see it being unique in this upcycle versus prior upcycles. Ryan, if you see the releases from the public companies in the equipment space, they're seeing some increases on their sales as well. The only caveat might be availability. And I know that in irrigation, we've got to run up until spring planting season to And then through Q2, we were hitting up against our capacity at the factory in Lindsay, Nebraska. And we're going to run at that rate through Q3 as well. And we're leveraging, you know, the global factories and our global footprint to manage demand in other parts of the world. But if we start to see, you know, deliveries of machines getting past spring, then you might see some of that capital transition into a comment purchase. But that assumes they can get a tractor or a planter or a baler or a combine pre-delivery. I think the one driver here on where they take their money might be what can they take delivery of in this tax year.
spk00: Got it. Okay. Interesting. That's helpful. And then a quick other one on the irrigation side. What percentage – I know in the past there's been a metric that about a third of purchases are financed versus cash purchases. So the question is, is that the case right now? Is that holding about that level – And what about the interest rates? And is that actually any kind of a tail end or customers moving more to cash purchases anyway because they're doing so well?
spk05: Yeah, what we see is roughly a third of the purchases are financed where we see the UCC1 filings on those purchases. And that changes a few percentage points up or down quarter by quarter. But it doesn't shift significantly. And we're in that same band right now. And talking to growers and talking to dealers, I think there's a lot of customers really looking at their liquidity and their ability to borrow on an operating line versus the low interest rates. And I think over time we could see more customers transition to financing outside and not using their operating line. But we haven't seen a significant shift in that direction, Ryan. But it does make sense that they could.
spk00: Got it. Okay. And then I had one over on the infrastructure side as well. Again, big picture. I just want to get your take on it. as we've heard a few times. So, you know, road zipper deployed on a lot of, you know, toll bridges and other toll roads. Yet there's been some talk of toll roads sort of going out of favor under this more federally financed vision of infrastructure. You know, the idea, I guess, being that toll roads are somewhat a regressive way to finance infrastructure. You know, it does seem like road zipper is a real good toll road solution. You put up a cash flowing asset and you want to maximize throughput on that. Is that – I mean, how would you read that? If the world goes away from toll roads, is that a headwind for Road Zipper, or do you find ways to be involved anyway?
spk05: I think we would definitely find ways to be involved. And I don't think it matters if it's a toll road or a state or federal government-funded road if there are congestion issues. The individuals driving on that road are – going to demand that somebody puts a solution in place. So I think we play a role. We make a fix to the traffic congestion gridlock issues no matter who owns that road. So I do see that being no upside or downside for us.
spk00: Got it. Okay. That's all I had. Thanks for your time. All right.
spk07: Thank you. The next question comes from John Bratz with Kansas City Capital. Please go ahead.
spk01: Morning, Randy. Brian. Morning, John. Brian, I was wondering what you might be hearing from your steel providers and the outlook for continued steel cost increases that might delay your ability to recover those costs. What's the outlook that you're seeing?
spk02: Well, there's a number of different, you know, there's a lot of noise out there, I should say. You know, I think if you just look at the steel futures, you know, it looks like it maybe peaks in May and then stabilizes. But, you know, we've seen that, you know, all the way back to the November-December timeframe when those projections indicated that. But I know there's a number of mills that are taking capacity out in the May-June timeframe. So I think that That supports, you know, keeping prices up. And then I think the other unknown is, you know, infrastructure. If, you know, if that drives a lot of steel demand, then, you know, you could see steel even go up further from where, you know, it's projected to be. So we don't see any real relief in steel in the near term based on all of those factors.
spk01: Okay. Okay. And, Brian, when you mentioned the margin of pressure will continue into the third quarter, Is that, you know, versus what you saw in the second quarter, or are you talking year over year?
spk02: It's really looking at recouping our, you know, the cost increases that we've got, John. Okay. And, you know, we intend to protect our margins generally and And so, you know, as we've said, we've been playing catch up a little bit on passing along those cost increases. So, you know, in our second quarter, I would guess that, you know, there's two to two and a half million of actual margin dollar headwinds that we had. And, you know, we would expect generally that to continue into the third quarter because we, you know, every quarter, We continue to push through the increases, but that drives a backlog of orders that continues to delay the recovery.
spk01: Okay, good. Your corporate costs, if you're non-allocated expenses, I think they were up about $1.3 million. Was there anything unusual in there? Is that more reflective of maybe incentive compensation accruals?
spk02: Yeah, John, that was a one-time expense of $1.5 million in the quarter, and that was related to Tim's retirement and some of his equity comp that continues to fast through this calendar year. They had to be remeasured at the beginning of the year, and so that drove the incremental one-time expense of $1.5 million.
spk01: Okay, so what will we see maybe going forward?
spk02: I think if you took that $1.5 million out of the second quarter number, that would probably be more representative of the run rate.
spk01: Okay. So Tim, no additional expenses related to Tim?
spk02: No.
spk01: Okay.
spk02: All behind the stuff.
spk01: Okay. And then the tax rate a little bit lower than I suppose most of us were looking for? Yeah.
spk02: Yeah, a couple of things there. I think one was more of a shift in earnings in our Turkey facility, which is in a tax-free zone. That brought the rate down. And then as we completed our tax return, there are some additional kind of one-time items. We had higher R&D credit than what we had estimated and some other discrete items that affected the quarter, but I would say third and fourth quarters, probably around that 23% would be what we'd say.
spk01: Okay, sounds great. Brian, thank you very much.
spk07: The next question comes from Chris Shaw with Monash Crespi. Please go ahead.
spk04: Good morning, everyone. How are you doing? Good morning, Chris. I'd like to ask about internationally, you know, it was up 45% for the quarter. And you mentioned the different geographies and all that was doing well. And it seemed fairly across the board, mature, developing, but I guess a couple of things there. I mean, it was that there's some lumpiness there were some big projects that came through. Should we expect growth like that for the remainder of the year? And I know you said something about the comp last year. I was, you know, it was down a lot. I remember last year and then the second quarter, can you remind me what, what the reasoning was last year for the, with a weak result in international?
spk02: Yeah, Chris, I don't think there was anything in particular last year. I think it was just the overall market still being challenged, but as Randy mentioned and I mentioned in my comments, we've seen improvement in pretty much all of our international regions this quarter, and it's in both the what we call the mature markets and project markets. Nothing in particular in this quarter in terms of a large project, but I think it's the overall, you know, increase in commodity prices that are supporting the market in most of the regions. We've seen a nice rebound in Australia and New Zealand. China has been an improving market over the last couple of quarters, and I would say Europe, Brazil, both very strong markets.
spk04: And then more broadly across all the business, I guess, look at the third quarter and the conference last year. You also remind me, last year, was there any sort of COVID impact you called out in the third quarter that sort of disrupted your business, just so I can maybe understand the year-over-year impact?
spk02: Yeah, we had – I mean, there was, because of border closings, a delivery issue that was delayed. I think it was in that – Something like $3 to $5 million range, if I recall right. But I think that just got shifted from third to fourth.
spk04: Right.
spk07: That's all I needed. Thanks. The next question comes from William Baldwin with Baldwin Anthony Securities. Please go ahead.
spk03: Yes. Thank you very much. Excuse me. I was just going to ask if you can give some color as you expand your field net capabilities. Looking out over the next several years, can you provide any color as to how important that can be to your overall irrigation revenues and earnings?
spk05: Yeah, William, this is Randy. I'll take a stab at that. Anytime you have a recurring revenue stream like a subscription service, over time as your installed base grows, as you retain your stickiness through renewals, it does become more and more significant to earnings. And our future look at FieldNet and the types of innovative technology products that we can add there, we think does create a very natural growth path. And we view it as it's almost the technology ladder. And if you start with a subscription that allows you to monitor and control your pivot in the field, then you buy up to the capability with FieldNet Advisor to plan and manage your irrigation scheduling as we roll out the SmartPivot platform with both machine health monitoring, agronomic imagery analysis, really that artificial intelligence engine, that's going to create another tier of subscription that we feel our customer base will buy up to. So we do see this, as many companies in technology innovation space, this industrial Internet of Things creates and grows that recurring revenue stream, and we do see that as being key to our strategy and our growth going forward.
spk03: It looks like it offers a tremendous amount of opportunity there. Randy, have you all disclosed at this time, based on your install base of center pivot systems, what percent of those growers are using some aspect of field net at this time?
spk05: We see the market itself being in that 40% penetration range and climbing. Is that pretty similar domestically and internationally, or is there a difference between the two? The number I've given you is a domestic number here in North America. The international numbers are slightly lower. Some of that is due to connectivity issues. Some of it is due to more readily available low-cost labor and less improvement in cost and efficiency because they've got access to low-cost labor. But we do see those international regions growing over time just at a slightly lower rate than what we see here domestically.
spk09: Great.
spk05: Thank you very much. You bet. Thank you, William.
spk07: As a reminder, if you have a question, please press star then one to be joined into the queue. The next question is again from Nathan Jones with Stiefel. Please go ahead.
spk08: Hey, guys. I wanted to just ask a couple questions on cash flow. Obviously, you've got pretty good demand growth here in the irrigation business, plus you've got a lot of inflation to deal with as well. So just wondering how you're thinking about cash conversion this year? Obviously, I expect it to be, you know, lower than average. Just any help you could give us on how you're thinking about cash generation this year?
spk02: Yeah, Nathan, this is Brian. I think, you know, on a seasonal basis, you know, we've seen the increase in working capital here in the second quarter, which will continue into the third. But as we complete the fiscal year, you know, we would be expecting cash flow to approximate net earnings for the full year.
spk08: Okay, that would be a very good result, I think. And then just maybe on the progression of the infrastructure business, it can tend to be a bit lumpy, but I would normally expect things to step up from 2Q to 3Q just seasonally as we come into the summer months. Is there anything unusual going on that we changed that, or is it a reasonable expectation that we should see revenues from 2Q to 3Q step up as we get into the summer months?
spk05: I think the uncertainty this year, Nathan, is really around the large stimulus package announced by the Biden administration. And whether or not that begins to freeze the market, we don't have a lot of strong leading indicators in terms of tenders being let. We're still lower than what we had seen pre-COVID. So there's just a lot of uncertainty in states, municipalities, managing COVID response. It's taking a lot of thought. and time and attention away from some of the other infrastructure-related investments and projects that might be typically taking precedence this time of year. So there are just a lot of uncertainties, I think, in that area that makes it a little difficult to predict where Q3 could go. But I think it is, to me, more headwind than we traditionally see this time of year, and most of that's related to COVID and whether or not some of these purchasing entities are going to wait to see what the stimulus package does in terms of magnitude and timing.
spk08: That does make sense. I mean, I remember back to the Obama stimulus, and you did see quite a number of investments deferred waiting for, you know, quote-unquote free money from the government. Can you talk about how that impacted your business maybe back then, if you guys remember that at this point, given how long ago it was? Just to give us any idea of how that might create some short-term drag on, you know, projects getting let out here.
spk05: I don't think Brian or I would have a very good opinion there for you, Nathan, not being engaged in it at the time. But if you look at what has been published in terms of the American Jobs Plan, and some of the statistics in the document are really quite alarming. And in the documentation, it says one of every five miles of highways or major roads are in poor condition. That's 173,000 miles of infrastructure that is described as poor condition. Delays due to traffic congestion cost over $160 billion per year. Each motorist pays roughly $1,000 in wasted time and fuel. So when you look at those problems and the money that's been allocated to modernize roads and bridges, $115 billion, $20 billion to improve road safety, $25 billion for large complex projects, these are problems that have a road zipper solution or other Lindsay infrastructure solution attached to it. So I do think we see this long-term stability in terms of revenue that could take out some of that unpredictability. So it's not a matter of if, it's just a matter of when. But to predict exactly how that will transpire, how that funding will be approved and released, and when it'll get spent and let in projects, it's probably too early to speculate. And we'd be guessing if we did.
spk08: Fair enough. Thanks for taking the questions.
spk05: All right. Thank you, Nathan.
spk07: At this time, there appear to be no more questions. Mr. Wood, I'll turn the call back over to you for some closing remarks.
spk05: Well, thank you for your interest and participation today, everybody. This will conclude our second quarter earnings call. We look forward to updating you on our continued progress following the close of our fiscal 2021 third quarter. Thank you.
spk07: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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