Lindsay (LNN) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues declined 15% year-over-year to $139.2 million, driven by softening agricultural markets and lower irrigation demand in North America and Brazil, but infrastructure growth and a record $100M+ MENA irrigation project partially offset declines.

• Net earnings rose 21% to $20.4 million ($1.85/share), aided by a $4.8 million Brazilian tax credit.

• Road Zipper System sales and leasing drove infrastructure segment momentum, benefiting from U.S. infrastructure spending.

• Completed $17.9 million in share repurchases during the quarter.

• Continued investment in technology and operational excellence, including FieldNET enhancements and a $50M facility modernization.

Financial highlights

• Q3 consolidated revenues were $139.2M, down 15% year-over-year; net earnings rose to $20.4M ($1.85/share) from $16.9M ($1.53/share); operating income decreased 26% to $19.9M; operating margin fell to 14.3%.

• Irrigation segment revenues fell 19% to $114.8M; North America down 9%, international down 31%; operating income dropped 36% to $19.5M; margin 17%.

• Infrastructure segment revenues increased 11% to $24.4M; operating income up 76% to $6.3M; margin 25.8%.

• Q3 gross profit was $46.5M, down 13% year-over-year; gross margin improved to 33.4% from 32.3%.

• Recognized a one-time $4.8M income tax credit in Brazil, lowering the effective tax rate to -1.0%.

Outlook and guidance

• North American irrigation demand expected to remain soft due to farmer sentiment, weather, and low commodity prices; international growth driven by large projects and underpenetrated markets.

• Infrastructure segment positioned for multi-year growth as U.S. and global infrastructure spending increases.

• Backlog surged 161% to $246.9M, driven by the MENA irrigation project, with revenue recognition through fiscal 2026.

• Fiscal 2024 capital expenditures projected at $30M, focused on modernization and productivity improvements.

• Five-year goals: >7% organic revenue growth, >14% operating margin, >12% ROIC, >10% EPS growth.