FULL YEAR: LINDSAY'S SALES UP 1%, EARNINGS UP 14%
Oct. 12, 2017
Source: Lindsey Corp. news release
*Irrigation segment revenue and operating income improve over the prior year fourth quarter
*Infrastructure segment delivers solid performance for the fourth quarter and full year
Lindsay Corporation (NYSE: LNN), a leading provider of irrigation systems and infrastructure products, today announced results for its fourth quarter and fiscal year ended August 31, 2017.
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Fourth Quarter Results
Fourth quarter fiscal 2017 revenues were $131.9 million compared to revenues of $132.9 million in the prior year's fourth quarter. Net earnings for the quarter were $6.3 million or $0.59 per diluted share compared with net earnings of $7.8 million or $0.73 per diluted share in the fourth quarter of the prior year. A higher effective income tax rate for the quarter decreased net earnings $1.1 million, or $0.10 per diluted share, compared to the same prior year period.
Irrigation segment revenues for the fourth quarter were $101.9 million, an increase of two percent compared to $99.9 million in the prior year's fourth quarter. U.S. irrigation revenues were $55.6 million, a three percent decrease from the fourth quarter of the prior year, driven primarily by lower filtration and pump system revenues. Mechanized irrigation equipment revenues increased in the quarter on higher average selling prices and higher unit sales volume. International irrigation revenues were $46.3 million, an increase of nine percent compared to the fourth quarter of the prior year, driven by the continued market recovery in Brazil, increased project activity in developing markets, and a slightly favorable currency translation impact. Infrastructure segment revenues for the fourth quarter were $30.0 million, a decrease of nine percent over the prior year's fourth quarter. Higher Road ZipperŪ system lease revenue and higher sales of road safety products in international markets were more than offset by lower Road ZipperŪ system project sales and lower sales of U.S. road safety products.
Gross margin for the fourth quarter of fiscal 2017 was 28.6 percent of sales compared to 30.1 percent of sales in the prior year's fourth quarter. Margins were slightly lower in both the irrigation and infrastructure segments. Irrigation margins were impacted by a higher mix of revenue from international markets, where gross margins are typically lower. Infrastructure margins were lower in comparison to a strong fourth quarter in the prior year.
Operating expenses for the fourth quarter of fiscal 2017 were $26.3 million, a decrease of $1.7 million compared to the fourth quarter in the prior year. The decrease resulted from lower selling and administrative expenses while engineering and development costs remained stable, although at elevated levels due to ongoing testing required to qualify road safety products under new U.S. government testing standards. Operating expenses were 19.9 percent of sales in the fourth quarter of fiscal 2017 compared with 21.0 percent of sales in the fourth quarter of the prior year.
Operating income for the fourth quarter of 2017 was $11.5 million, a decrease of four percent compared to $12.0 million in the fourth quarter of the prior year. Irrigation segment operating income increased on higher revenue and lower operating expenses while infrastructure segment operating income decreased on lower revenue and lower gross margin. Operating margin was 8.7 percent in the fourth quarter of 2017 compared to 9.0 percent in the prior year fourth quarter.
Cash and cash equivalents at the end of the fourth quarter were $121.6 million compared to $101.2 million at the end of the prior fiscal year. There were no share repurchases made during the fourth quarter of fiscal 2017. A total of $63.7 million remains available under the Company's share repurchase program as of August 31, 2017.
The backlog of unshipped orders at August 31, 2017 was $51.8 million compared with $50.7 million at August 31, 2016. Higher order backlog in the irrigation segment was partially offset by lower order backlog in the infrastructure segment compared to the end of the prior fiscal year.
Full Year Results
Total revenues for the year ended August 31, 2017 were $518.0 million, a slight increase compared to $516.4 million in the same prior year period. Net earnings were $23.2 million or $2.17 per diluted share compared with $20.3 million or $1.85 per diluted share in the same prior year period. A higher effective income tax rate in fiscal 2017 decreased net earnings $1.5 million, or $0.14 per diluted share, compared to the same prior year period.
Irrigation segment revenues of $418.0 million for the year ended August 31, 2017 decreased one percent from $421.6 million in the same prior year period. U.S. irrigation revenues of $242.6 million decreased seven percent while international irrigation revenues of $175.4 million increased 10 percent. Infrastructure segment revenues increased five percent to $99.9 million for the year ended August 31, 2017 compared to the same prior year period.
Rick Parod, President and Chief Executive Officer, commented, "U.S. irrigation equipment revenues were improved for a second consecutive quarter, a further indication that we may have reached a level of stabilization in the domestic market. The market recovery in Brazil and increased project activity in developing markets continue to drive growth in international irrigation."
Parod continued, "Commodity prices have stabilized, but are expected to remain under pressure as generally favorable weather conditions during the 2017 growing season are expected to result in above average crop production levels and ending stocks. The latest USDA estimate of net farm income for 2017 is projected to be 3% higher than last year, following three years of significant decline. Grower sentiment in the U.S. is showing signs of improvement and we expect modest growth in our U.S. irrigation business in the upcoming year. We also expect continued growth in international irrigation markets. In our infrastructure business, we expect continued global growth in Road Zipper system sales and leasing as well as our road safety products. The longer-term drivers for our markets of population growth, expanded food production and efficient water use, and infrastructure upgrades and expansion support our expectations for growth."