Lindsay Corporation

Good day and welcome to the Lindsay Corporation's fiscal third quarter 2025 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 fiscal 2025 third quarter earnings call. With me today is Brian Ketchum, our Chief Financial Officer. I'm extremely proud of our team and their execution, delivering our third consecutive quarter of year-over-year growth in both revenue and operating income. Our employees are diligently focused on supporting our customers and each other. These results reflect the strength of our global business and our team's commitment to execution excellence. Our irrigation business delivered year-over-year revenue growth, led by strength in our international markets including Latin America and the Mideast and North Africa region, while the domestic irrigation volume was comparable to the prior year. We continue to deliver our large project in the Middle East and are pleased to announce we have secured a new project in the Territory valued at over $20 million. This project will begin shipping in our fiscal fourth quarter and will continue into our first quarter of fiscal year 2026. Turning to our infrastructure segment. Our team delivered another solid quarter, primarily driven by road safety products as we enter the road construction season here in North America. Our focus remains on growing both our road safety products and road zipper system businesses, particularly leasing, as this supports a more stable revenue profile for the segment and our overall results. Shifting gears to market outlook. In North American irrigation, we're now in the primary growing season, where weather conditions influence crop yields, prices, and net farm income for the year. These factors play a large role in determining future demand for irrigation equipment. While the USDA is projecting an increase in net farm income for this year, most of that growth is related to direct government payments for disaster relief and commodity price support. Crop revenue is projected to decline, And at this point of the storm season, we have seen softer demand relative to the prior year. This tempers demand expectations for North American irrigation heading into our fourth quarter. In our international irrigation markets, particularly Brazil, we're encouraged by continued signs of improving market conditions. I traveled across Mato Grosso and Goiás states earlier this month and can confirm that customers in this region are ready to expand irrigated acres as the availability of affordable credit expands and the country's energy infrastructure grows. The federal government raised the benchmark interest rate by 25 basis points earlier this month, and it now sits at 15%, which is the highest rate since July of 2006. We do expect next year's crop plan to be released in July, and the market outlook will be impacted by the rate and amount of funds made available through the program. We continue to see a strong project funnel in the Mideast and North Africa, and as I mentioned earlier, we did secure another project in this region and expect to see continued growth as countries across the territory prioritize food security and water resource conservation. In infrastructure, we continue to see opportunities develop across road zipper system sales, leasing, and road safety products. Infrastructure funding in the U.S. remains steady, and while project timing can shift quarter to quarter, our funnel of project opportunities remains robust. While additional project sales are on the horizon, the timing of these more complex sales remains uncertain. Our global operations and supply chain team continue to navigate an evolving tariff environment while leveraging our global footprint to mitigate the impact on our business. Actions including supplier collaboration, strategic inventory placement, resourcing and pricing have allowed us to manage through this period well. In the area of technology, Our collaboration with Pestle Instruments continues to create customer value. By combining FieldNet Advisor with Pestle's infield environmental centers, we're providing more precise and real-time agronomic insights that allow for more accurate irrigation scheduling decisions. This integrated approach has driven notable growth in cross-selling opportunities. The partnership is deepening our expertise in agronomic decision support, strengthening our data-driven product suite, and advancing our position as a leader in precision irrigation. I'd like to now turn the call over to Brian to discuss our third quarter financial results. Brian.

Thank you, Randy, and good morning, everyone. Consolidated revenues for the third quarter of fiscal 2025 increased 22% to $169.5 million. compared to $139.2 million in the prior year. Revenues grew in both the irrigation and infrastructure segments compared to the prior year. Net earnings for the quarter were $19.5 million or $1.78 per diluted share compared to net earnings of $20.4 million or $1.85 per diluted share in the prior year. This year-over-year decrease in net earnings resulted primarily from the recognition of a one-time income tax credit in the prior year of $4.8 million, or 44 cents per diluted share. Excluding the impact of the tax credit on prior year results, current year earnings per share represents an increase of 26% over the prior year. Turning to our segment results, irrigation segment revenues for the quarter increased 25% to $143.7 million compared to $114.8 million in the prior year. North America irrigation revenues of $69.1 million increased 1% compared to $68.2 million in the prior year. Unit sales volume of irrigation equipment was comparable to the prior year, while average selling prices were up slightly. This increase was partially offset by the mixed impact of slightly shorter machines on average compared to the prior year. Increased demand for irrigation equipment in specialty crop markets in the Pacific Northwest offset softer demand in corn and soybean markets and a lower level of storm damage replacement activity compared to the prior year. In international irrigation markets, revenues increased 60% to $74.7 million compared to $46.6 million in the prior year. The majority of the increase resulted from revenues related to our large project in the MENA region, along with higher sales volumes in Brazil and other parts of South America. These increases were partially offset by unfavorable effects of foreign currency translation of approximately $2.5 million compared to the prior year. Irrigation segment operating income for the quarter of $27.2 million increased 39% compared to the prior year, and operating margin was 18.9% of sales compared to 17% of sales in the prior year. Operating income increased due to higher revenues and favorable leverage of fixed operating expenses, while being partially offset by a higher amount of international project revenues which resulted in some dilution to operating margin compared to the prior year. Infrastructure segment revenues for the quarter of $25.7 million increased 6% compared to $24.4 million in the prior year. The increase resulted primarily from higher sales of road safety products, while road zipper project sales and lease revenues in total were comparable to the prior year. Infrastructure segment operating income for the quarter was $5.4 million compared to $6.3 million in the prior year. And infrastructure operating margin for the quarter was 21.1% of sales compared to 25.8% of sales in the prior year. Lower operating income and operating margin resulted primarily from a less favorable margin mix within road zipper system revenues compared to the prior year. Turning to the balance sheet and liquidity, our total available liquidity at the end of the third quarter was $261 million, which includes $211 million in cash, cash equivalents, and marketable securities, and $50 million available under our revolving credit facility. The strength of our balance sheet and ample access to liquid capital resources continue to serve as a strategic asset for Lindsay as we execute our capital allocation strategy to create enhanced and sustained value for our shareholders. This concludes my remarks and at this time I'll turn the call over to the operator to take your questions.