Lindsay Corporation Q3 FY2025 earnings call

• Irrigation business had year-over-year revenue growth, led by international markets like Latin America and MENA; secured a new $20M project in MENA. - Infrastructure segment strong due to road safety products; focus on growing road safety and Road Zipper leasing. - Market outlook: North America irrigation demand tempered by softer demand vs prior year; Brazil irrigation market improving with affordable credit and energy infrastructure growth; MENA region project funnel strong. - Technology partnership with Pessil Instruments drives cross-selling and precision irrigation expertise. - Financial results: Consolidated revenues up 22% to $169.5M; net earnings $19.5M vs $20.4M prior year, excluding prior year tax credit, EPS up 26%.

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 were $69.1 million, a 1% increase, with unit sales volume comparable to prior year but average selling prices slightly up. International irrigation revenues were $74.7 million, a 60% increase, driven by a large project in the MENA region and higher sales in Brazil, partially offset by foreign currency translation. Irrigation segment operating income was $27.2 million, a 39% increase, with an operating margin of 18.9%. Infrastructure Segment: Revenues were $25.7 million, a 6% increase, primarily from road safety products. Operating income was $5.4 million, up from $300,000 prior year, but operating margin was 21.1% compared to 25.8% prior year due to margin mix issues.

• No significant short-term disruption expected from Middle East situation on MENA projects; long-term food security drivers intact. - Brazil irrigation adoption projected to grow, with mid-single-digit adoption rate; credit conditions and energy infrastructure key for growth. - Infrastructure opportunities robust with Road Zipper sales, leasing, and road safety products; timing of complex sales uncertain. - Global operations and supply chain managing tariff environment through strategies like supplier collaboration and inventory placement.

• Potential short-term impact from Middle East flare-up on large project activity, but long-term fundamentals remain. - Tariff environment poses challenges to supply chain and costs, though actions taken to mitigate. - Competitive landscape in Brazil could impact irrigation acreage expansion.

Q: Impact of Middle East flare-up on large project activity and long-term growth in Brazil?

A: Randy Wood states short-term no significant impact; long-term MENA food security drivers intact. Brazil has significant long-term growth opportunity with mid-single-digit irrigation adoption, improving with credit and energy infrastructure.

Q: Tax credits and bonus depreciation impact on demand outlook?

A: Brian Ketcham says tax credits and bonus depreciation more impactful on irrigation business, could shift demand timing but support equipment investment.

Q: Pricing in Ag business and shorter machines impact?

A: Brian Ketcham says slight pricing impact in US due to tariff actions; shorter machines in Pacific Northwest due to regional demand for large farms adding land with shorter machines.

Q: $20M MENA project margins and trend of smaller projects?

A: Randy Wood says $20M project margins comparable to larger ones; smaller projects part of project funnel, not a trend of mega projects breaking down, but different customers and regions.

Q: North America pivot sales vs big equipment manufacturers?

A: Randy Wood says different go-to-market models; Lindsay ships factory to field, unlike OEMs with destocking through channels, leading to different volume trends.

Q: Impact of steel/aluminum tariffs and Lindsay, Nebraska facility modernization?

A: Brian Ketcham says limited impact from steel tariffs so far; Randy Wood reports Nebraska facility modernization on track, with operational efficiencies contributing to margin expansion including volume leverage and recurring revenue from subscriptions.