Lindsay Corporation

Good day and welcome to the Lindsay Corporation Fiscal Second Quarter 2026 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists 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 touchtone phone. And 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 Mr. Randy Wood, President and CEO. Please go ahead, sir.

Thank you and good morning, everyone. Welcome to our fiscal 2026 second quarter earnings call. With me today is Sam Henrichsen, our Chief Financial Officer. Before commenting on our quarterly results, I'd like to address recent developments related to the conflict in the Middle East. We are closely monitoring the situation with our top priority remaining the safety of our employees and partners in the region. The MENA market has been a strong source of growth for our international irrigation business and deliveries tied to our most recent project are meaningful to our revenue. The project remains on schedule and our supply chains are currently operating without disruption. Any future risk will depend on the duration of the conflict and the potential for broader geographic impact. At this time, we remain well positioned to continue supporting our customers and dealers across the region. Turning to our second quarter results. I'm very proud of our team's execution. Despite continued external headwinds in the agriculture industry, including trade uncertainty, higher input costs, and weakening sentiment, our team demonstrated strong operational discipline. We remain focused on the levers within our control, particularly pricing, cost management, and operational efficiency, while continuing to invest strategically to position the business for long-term growth. In North America, our irrigation business customers continued to delay large capital purchases given current farm economics, which, as expected, resulted in lower unit sales volumes in the quarter. Demand remained soft, consistent with what we outlined last quarter. In our international business, revenues were flat to slightly down year over year, driven by lower sales volumes in Brazil and the timing of project revenue in the MENA regions. In Brazil, high interest rates and limited access to credit continue to constrain growers' ability to finance capital equipment purchases. Additionally, local market feedback suggests the 2026 crop plan expected to be released in July will include lower financing rates than the prior year. As a result, many customers are taking a wait-and-see approach. Our infrastructure segment performance reflects the expected impact of a difficult comparison to the prior year, which included the delivery of a $20 million road zipper project, which we did not expect to repeat. Excluding the road zipper project, our infrastructure business grew 6%, led by higher sales in road safety products. Turning to market outlook. As we mentioned last quarter, we expect softer market conditions to persist in the near term in North America. While customer quotations are down slightly versus prior year, we are not seeing the traditional pickup in spring order volume. Current market indicators, including input costs and overall farm profitability, suggest the current trough environment will continue until there's greater clarity around trade impacts, profitability, and resolution in the Middle East. In our international markets, we remain encouraged by the overall outlook for future growth, particularly in regions focused on improving food security and water resource management. Near-term recovery in Brazil will depend on grower response to the new crop plan and the availability of attractive financing. While we will closely monitor customer sentiment at the AgriShow later this month, we do not expect any meaningful market recovery until the new crop plan is released in July. We remain optimistic in Brazil and continue to see a compelling long-term secular growth opportunity in that market. Within our infrastructure segment, we continue to see opportunities develop across the portfolio and the road zipper sales funnel remain strong. We do see opportunities for continued growth in road safety products, which has provided solid support to our results this year. During the quarter, we introduced two new products at the American Traffic Safety Services Association Trade Show. The AlphaGuard channeling device delivers speed, strength, and flexibility, allowing it to be used in both emergency applications as well as everyday use. The RoadRunner is a breakthrough truck-mounted attenuator that prioritizes speed of deployment and unmatched durability. The introduction of these new road safety solutions highlights our investment in innovation and the growing demand for efficient and safe roadway solutions. I'd like to now turn the call over to Sam to discuss our fiscal second quarter financial results. Sam. Thank you, Randy, and good morning, everyone.

Total revenues for the second quarter of fiscal 2026 were $157.7 million, a decrease of 16% compared to $187.1 million in the prior year. Decline in our consolidated top line was driven by lower revenues in both of our segments. The year-over-year decrease in the infrastructure business reflects the absence of the $20 million road zipper project that was delivered in the prior year, which, as Randy mentioned, we did not expect to repeat. Operating income for the second quarter was $13 million compared to $32.1 million in the prior year. And operating margin was 8.3% of sales compared to 17.2% of sales last year. Decrease in operating income was driven by lower revenues, with the most significant driver being the previously mentioned lower roles of our project revenues. Net earnings for the quarter were $12.0 million, or $1.15 per diluted share, compared to $26.6 million, or $2.44 per diluted share in the prior year. The year-over-year decrease in net earnings reflected the impact of lower operating income and a higher effective tax rate. Turning to operating segment results, irrigation segment revenues for the second quarter were $141.2 million, a decrease of 5% compared to the $148.1 million in the prior year. The results were largely in line with our expectations against the backdrop of a continued challenging agricultural environment. North America irrigation revenues were at $71 million, down 8% from the previous year, as lower unit sales volume was partially offset by higher average selling prices. Demand in North America continued to be impacted by low commodity prices and overall tempered farmer sentiment. International irrigation revenues were at $70.2 million compared to $71 million in the prior year. The marginal decrease was driven by lower sales volume in Brazil and meaner project timing which was partially offset by growth in other international markets. Irrigation segment operating income for the quarter was $19.5 million compared to $27.4 million in the prior year, and operating margin represented 13.8% of sales compared to 18.5% of sales last year. The compression in operating income was mainly a result of lower sales volume in North America, unfavorable regional mix, and the impact of fixed cost deleverage. In our infrastructure segment, revenues for the second quarter were $16.5 million, compared to $38.9 million in the prior year. As expected, the year-over-year decrease was attributable to the absence of the $20 million road zipper project that was delivered in the prior year period. Excluding the road zipper project, revenues were up 6%, driven by continued growth in road safety products. Infrastructure operating income for the quarter was $1.2 million, down compared to $13.3 million in the prior year and operating margin was 7.1% of sales compared to 34.1% of sales in the prior year. Decrease in operating income and margin was mainly driven by lower road zipper project revenues which resulted in less favorable mix. Going to the balance sheet and liquidity. At the end of the second quarter, our total available liquidity was $236.1 million, which includes $186.1 million in cash and cash equivalents and $50 million available under our current revolving credit facility. During the quarter, we continued to execute against our capital allocation priorities. We turned cash to shareholders by completing $25 million of share repurchases and progress on key strategic investments. We remain confident in the strength of our balance sheet and our ability to continue investing in the business to support future growth and drive productivity while returning capital to shareholders. This concludes my remarks, and at this time I will turn the call over to the operator to take your questions.