Lindsay Corporation

Good day and welcome to the Lindsay Corporation Fiscal First Quarter 2026 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 a touch-tone phone. 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 2026 first quarter earnings call. With me today is Sam Henriksen, our Chief Financial Officer. Once again, I'm very proud of our team's execution in the quarter, despite external headwinds impacting our business. While ongoing trade uncertainty, low commodity prices and high input costs have negatively impacted customer profitability and sentiment, our team's focus on price and cost management and operational efficiencies gained through our diversified global footprint helped us deliver solid profitability and maintain earnings quality in the quarter. In our domestic U.S. irrigation business, customers continue to delay large capital purchases due to high input costs and low profitability. In our international business, We're encouraged by the strength and opportunities in the project market, including the Middle East and North Africa. Our ability to help growers globally improve productivity and optimize resources remains a key differentiator for Lindsay and has supported performance amid a challenging macroeconomic environment. Subsequent to the end of our fiscal first quarter, we announced a supply agreement to provide ZMATIC irrigation systems and field net remote management and scheduling technology in the MENA region. This project is valued at approximately $80 million in total revenue, with approximately $70 million of revenue realization this fiscal year. This announcement reflects our ability to compete and win large-scale projects globally, but also demonstrates Lindsay's role as a trusted partner in advancing sustainable agriculture while supporting localized production and enhancing food security. We're very proud of our team's commitment to delivering transformative projects in our international markets and look forward to executing this important project in the region. Our infrastructure segment delivered solid performance in the first quarter, with total revenues up 17% year-over-year. Increased road construction activity supported segment performance in the quarter, and we continue to see solid interest in our Road Zipper Solutions product. Moving forward, we expect further momentum as infrastructure funding and road project activity advance. Turning to our market outlook, as we mentioned last quarter, in North America, we expect softer market conditions to persist in the near term. Market indicators suggest the current profit environment will persist until there's greater clarity around international trade impacts and an improvement in customer profitability. The U.S. administration has announced a $12 billion Farmer Bridge Assistance Package designed to offset trade-related pressures on U.S. farmers. Their program includes one-time payments of approximately $44 per acre for corn and $31 per acre for soybeans. While this support will be appreciated by growers, we don't expect it to drive significant incremental demand in the short term. Within our international markets, we remain encouraged by the overall outlook for future growth and market fundamentals in Latin America, including Brazil. Elevated interest rates and ongoing constraints on credit access for growers continue to weigh on near-term equipment investment in the region tempering what otherwise remains an attractive long-term growth opportunity. Within our infrastructure segment, we continue to see opportunities develop across systems, sales, leasing, and road safety products, and our sales funnel remains strong. As previously communicated, we do not see a large road zipper project exiting the funnel in fiscal year 26. This creates a difficult comparison, particularly in Q2, where we shipped a large $20 million project last year. We do have incremental opportunities for smaller projects and other segment growth to offset half of that total, with the majority coming in the second half of the fiscal year. Road safety funding in the United States remains steady, and we remain very excited by the long-term potential of our road zipper leasing model, which continues to gain traction and supports a more stable and balanced margin profile over time. With that, I'd like to now turn the call over to Sam to discuss our fiscal first quarter financial results. Sam.

Thank you, Randy, and good morning, everyone. It is a privilege to join you today for my first earnings call as Chief Financial Officer at Lindsay Corporation. I'm excited to continue partnering with this talented team as we drive our strategy forward, deliver on key initiatives, and create meaningful long-term value for our shareholders. I look forward to building on the strong foundation already in place. Now, let me walk you through our financial results for the quarter. Total revenues for the first quarter of fiscal 2026 were $155.8 million, a decrease of 6% compared to revenues of $166.3 million in the same quarter last year. The decline in revenue was driven by lower volumes in our irrigation segment as continued uncertainty around trade, lower commodity prices, and higher input cost continued to weigh on farmer sentiment. Lower volume in irrigation was partially offset by year-over-year growth in our infrastructure segment. Operating income for the quarter was $19.6 million, a decrease of 6% compared to $20.9 million in the prior year period. Operating margin for the quarter was 12.6%, consistent with the prior year. Despite a lower revenue base, our solid operating margin performance for the quarter reflects continued execution of our operational strategy coupled with effective cost and pricing management. While near-term irrigation market conditions in North America are expected to remain soft, we anticipate that our business will continue to show resilience. Net earnings results for the quarter were $16.5 million, or $1.54 of net earnings per diluted share, marking a slight decline compared to net earnings of $17.2 million, or $1.57 per alluded share in the first quarter of last year. The difference in net earnings when compared to the prior year period was largely attributable to lower operating income and a slightly higher effective tax rate. These were partially offset by an increase in other income. Turning to our segment results, irrigation segment revenue for the first quarter were $133.4 million, a decrease of 9% compared to segment revenues of $147.1 million in the prior year. North America irrigation revenues of $74.3 million decreased by 4% compared to $77.7 million in the prior year. Within our North American markets, the impact of lower overall unit sales volume was partially offset by higher average selling prices compared to prior year. In international irrigation markets, we delivered revenues of $59.1 million compared to $69.4 million in the first quarter last year. The decrease was primarily attributable to two factors. First, the timing of project revenues in the MENA region is difficult to predict. First quarter results were impacted by the timing gap between last year's project and the recently awarded new project in the region. Secondly, sales volumes in Brazil were lower than anticipated as this key market continues to be constrained by elevated interest rates and an unfavorable credit environment, which is weighing on investor activity for growers in the region. These declines were partially offset by approximately $1.5 million of favorable effects of foreign currency translation compared to the prior year. Total irrigation segment operating income for the first quarter was $23 million, a decrease of $1.8 million compared to $24.7 million in the first quarter last year. Segment operating margins of 17.2% of sales grew compared to 16.8% of sales in the first quarter of last year. Despite lower segment revenues, our irrigation margin profile continues to reflect resilience in a down cycle market. In our infrastructure segment, revenues for the first quarter increased 17% to $22.4 million compared to $19.2 million in the prior year. The increase was driven by higher sales of road safety products, while road zipper system revenues were similar compared to the prior year. Infrastructure segment operating income for the first quarter increased 9% to $4.5 million compared to $4.1 million in the prior year. Infrastructure segment operating margin for the quarter was 20.1% of sales compared to 21.5% of sales last year, as revenue growth was offset by higher operating expenses. Turning to the balance sheet and liquidity, our total available liquidity at the end of the first quarter was $249.6 million, which includes $199.6 million in cash and cash equivalents and $50 million available at our revolving credit facility. Free cash flow for the quarter was impacted by an increase in working capital to support business growth and elevated capital expenditure levels. We also utilized our strong free cash flow conversion to opportunistically buy back shares in the open market. In the first quarter, we deployed $30.3 million into share repurchases, exhausting our original authorization. During the quarter, we were pleased to announce the authorization of a new share repurchase program of up to $150 million. Our team has strategically maintained a very robust balance sheet, and this authorization provides us with the ongoing flexibility to continue returning capital to our shareholders. We are pleased with our strong financial position and balance sheet, which enable us to deliver shareholder returns while continuing to invest in future growth opportunities and innovations. This concludes my remarks, and at this time, I will turn the call over to the operator to take your questions.