Lindsay Corporation

to the Lindsay Corporation Fiscal Fourth Quarter 2024 Earnings Conference Call. All participants will be in 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 telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Randy Wood, President and CEO. Please go ahead.

Thank you and good morning, everyone. Welcome to our fourth quarter and full year 2024 earnings call. With me today is Brian Ketchum, our Chief Financial Officer. We are pleased with our fourth quarter and full year performance as our teams executed extremely well during the fiscal year. This allowed us to deliver profitable operating performance amidst challenging market fundamentals, particularly in our irrigation business. In North American irrigation, we were pleased to see volume up slightly in the quarter versus last year, driven by carryover storm damage that shipped early in the quarter. In international irrigation, market softness in Brazil due to lower grower profitability and poor customer sentiment continues to persist. This headwind has been partially offset by the large project in the MENA region that started shipping in the fourth quarter. Turning to our irrigation market outlook. While net farm income projections in North America have improved slightly versus earlier forecasts, much of that good news impacted the livestock sector, and we still see major headwinds for the cropping segment more closely associated with our irrigation solutions. And recent customer sentiment surveys indicate some of the lowest ratings ever recorded. While we have tougher year-over-year comparisons in the first half of the year, we would expect to see a slightly down market overall, Unless there's a significant improvement in net farm income in 2025, these projections won't be visible until we get into the next growing season. We are seeing some storm damage replacement demand in the southeast connected to the tragic hurricane activity, but it's too early to quantify that volume, and most growers have a window between now and next spring to make those decisions. We are working closely with our dealers to ensure that we support recovery in the regions. We expect temper demand to continue in Brazil and Latin America until farm profitability and credit availability improve. Historic droughts in parts of the country may support stronger grain prices, but it's also delayed soybean planting, which could carry forward to delays in the safrinha or second crop corn planting. We will continue shipping the large MENA project through fiscal year 2025. The project funnel remains active, and we continue to advance other projects forward that support food security and other developing international irrigation markets, We look forward to sharing more on these projects in the future. Moving to infrastructure. In June, we installed our first TOWXR Express Repair Cushion in Nevada. This new innovative crash cushion is differentiated by its ability to provide robust protection, yet can be installed and repaired when impacted in under 30 minutes. We've seen a positive response in the market and have received state approvals in some of our key markets as we await Federal Highway Administration approval. We do anticipate an increase in U.S. infrastructure spending in fiscal 2025 and continue to see positive near-term market opportunities driven by the increased federal funding provided by the Infrastructure Investments and Jobs Act. We maintain the expectation that demand for our road-zippered lease and project sales will grow in turn, positively impacting revenues and margins. We continue to actively manage projects in our sales funnel and have line of sight to additional projects moving through the funnel in fiscal 2025. In the area of technology and innovation, we are extremely encouraged to see continued growth in both the field net and field-wise irrigation management platforms in addition to realizing the first commercial sale of our Impact Alert product in the infrastructure segment. We now have more than 140,000 connected devices and we achieved a 28% growth rate in annual recurring revenue from device subscriptions in fiscal 2024. Growth in this recurring revenue stream is supportive of our overall margin profile and we expect to drive continued momentum in this area while supporting investments that allow us to differentiate and extend our leadership position in technology. Moving to our operational footprints, we've continued to progress on the $50 million investment at our Lindsay, Nebraska facility, which will allow us to better manage our variable costs as the cycle fluctuates. These long-term investments will support the business as the cycle returns to growth, providing for increased responsiveness to demand fluctuations, improved efficiencies, and margin stability. Now I'll turn the call over to Brian to discuss our financial results. Brian. Thank you, Randy. And good morning, everyone.

Total revenues for the fourth quarter of fiscal 2024 were $155 million, a decrease of 7% compared to the fourth quarter last year. Net earnings for the quarter were $12.7 million, or $1.17 per diluted share. compared to net earnings of $19.2 million or $1.74 per diluted share in the fourth quarter last year. Total revenues for the full year of $607.1 million decreased 10% compared to the prior fiscal year. And net earnings for fiscal 2024 were $66.3 million or $6.01 per diluted share, a decrease of 8% compared to record net earnings of $72.4 million and $6.54 per diluted share in the prior year. Turning to our segment results, irrigation segment revenues for the fourth quarter were $125.9 million, a decrease of 12% compared to the prior year. North America irrigation revenues of $61.7 million increased 2% compared to the prior year. The increase in revenues resulted primarily from higher unit sales volumes while average selling prices were comparable with the prior year. Increased irrigation equipment sales were driven by a higher level of storm damage replacement demand compared to the prior year. The impact of higher equipment sales was partially offset by lower sales of replacement parts due to wet field conditions in certain parts of the country that limited equipment run times. In international irrigation markets, revenues of $64.2 million decreased 23% compared to last year. The decrease resulted primarily from lower revenues in Brazil compared to record revenues in the prior year fourth quarter. Revenues were also lower in other parts of Latin America, while demand in other developed markets remained relatively stable. These decreases were partially offset by higher project sales in developing markets. As Randy mentioned in his remarks, we began delivery on the previously announced project in the MENA region during the quarter. Revenues in the current year quarter were also impacted by the unfavorable effects of foreign currency translation of approximately $3.1 million compared to the prior year quarter. Total irrigation segment operating income for the fourth quarter was $17.1 million, a decrease of 43% compared to last year. And operating margin was 13.6% of sales compared to 20.7% of sales last year. Lower operating income and operating margin resulted primarily from lower international irrigation revenues and the impact from the deleveraging of fixed operating expenses compared to the prior year. For the full fiscal year, total irrigation segment revenues of $513.9 million decreased 12% compared to the prior year. North America irrigation revenues of $302.1 million decreased 2% as higher unit sales volumes were more than offset by lower sales of replacement parts and slightly lower average selling prices compared to the prior year. International irrigation revenues of $211.7 million decreased 23% compared to prior year, primarily the result of lower revenues in Brazil and other Latin America markets. This decrease was partially offset by higher revenues from project sales in developing markets compared to the prior year. Operating income in the irrigation segment for the full fiscal year of $87.6 million was a decrease of 28% compared to the prior year. And operating margin was 17% of sales compared to 20.8% of sales in the prior year. Lower operating income and operating margin resulted primarily from lower international irrigation revenues and from the impact of deleveraging of fixed operating expenses. Infrastructure segment revenues for the fourth quarter of $29.1 million increased 24% compared to the prior year. The increase in revenues resulted from higher road zipper system sales and lease revenues compared to the prior year fourth quarter, while the impact of higher sales of road safety products in the U.S. was offset by lower sales in international markets compared to the prior year. Infrastructure segment operating income for the fourth quarter of $5.6 million increased 79% compared to the prior year. And infrastructure operating margin for the quarter was 19.2% of sales compared to 13.3% of sales in the fourth quarter last year. Increased operating income and operating margin resulted from higher revenues and from a more favorable margin mix of revenues. with higher road zipper system sales and lease revenues compared to the prior year. For the full fiscal year, infrastructure segment revenues of $93.2 million increased 6% compared to the prior year. The increase was primarily attributable to higher road zipper system lease revenues, which were partially offset by lower road zipper sales and lower sales of road safety products compared to the prior year. Infrastructure operating income for the full fiscal year was $19 million and increased 57% compared to the prior year. Operating margin for the year was 20.4% of sales compared to 13.7% of sales in the prior year. Turning to the balance sheet and liquidity, our total available liquidity at the end of the fourth quarter was $240.9 million. which includes $190.9 million in cash and cash equivalents and $50 million available under our revolving credit facility. Our operating performance for the year, along with diligent working capital management, resulted in free cash flow of $66.8 million, or 101% of net earnings. Our demonstrated cash flow generation further strengthens our balance sheet and positions us well to continue executing on our capital allocation priorities, balancing organic and inorganic investments, along with returning capital to our shareholders. During the quarter, we completed additional share repurchases of $4.6 million, bringing the total share repurchases to $22.5 million for the year. This concludes my remarks, and at this time, I'll turn the call over to the operator to take your questions.