LINDSAY CORP Q2 FY2026 earnings call

• Randy addressed recent MENA conflict, emphasizing monitoring and team execution despite agriculture headwinds, focusing on pricing, cost management, and operational efficiency. - Noted North America irrigation customers delayed large capital purchases, international business revenues flat to slightly down, and infrastructure segment impact of difficult comparison. - Market outlook: Softer conditions to persist in North America near term; encouraged by international growth outlook, with Brazil recovery dependent on crop plan and financing. - Introduced new infrastructure products at trade show

Irrigation segment: Revenues were $141.2 million, down 5% year over year. North America irrigation revenues were $71 million, down 8% from the previous year, with lower unit sales volume partially offset by higher average selling prices. International irrigation revenues were $70.2 million compared to $71 million in the prior year, with the marginal decrease driven by lower sales volume in Brazil and project timing in the MENA regions. Irrigation segment operating income was $19.5 million compared to $27.4 million in the prior year, and operating margin was 13.8% of sales compared to 18.5% of sales last year. Infrastructure segment: Revenues for the second quarter were $16.5 million, compared to $38.9 million in the prior year. The year-over-year decrease was attributable to the absence of the $20 million road zipper project. 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

• Expect softer market conditions to persist in North America near term until clarity on trade, profitability, and Middle East. - Encouraged by international growth outlook, particularly in food security and water resource management regions. - Plan to continue large main project in third and fourth quarters and advance investments in Nebraska facility, including new galvanizing operation in early 2027

• MENA conflict duration and potential broader geographic impact on business operations. - In Brazil, high interest rates and limited credit access constraining growers' equipment purchase financing. - Competitive pricing environment in soft markets impacting margins. - Input price inflation globally affecting margins. - Prolonged MENA conflict disrupting supply chains and business operations

Q: Discussed irrigation margins, input factors and competitive environment.

A: Fixed cost deleverage, regional mix, competitive environment, and input price inflation are key factors impacting margins.

Q: Competitive pricing, its persistence and impact of Iran war.

A: Soft markets have increased competitiveness, MENA project is on track if conflict isn't prolonged.

Q: Pricing, walkaway point, cost vs pricing.

A: Have a walkaway point, pricing was favorable but costs exceeded pricing opportunities.

Q: Acreage shift in North America and its impact on irrigation.

A: Largely indifferent to direct machine sales from acreage shift, but will watch macro impact on commodities.

Q: Infrastructure margin deleveraging and its drag in the quarter.

A: The road zipper project's magnitude is the main driver of margin compression, with road safety growth partially offsetting but not fully.

Q: Nebraska capital investments and margin impact.

A: Tube mill is operational, galvanizing facility on track, initial efficiency gains are offset by depreciation, needing market recovery for returns.

Q: Middle East North Africa project and potential additional food security projects.

A: Iran isn't a big grain producer, near-term impact of conflict depends on duration, but long-term interest in food security remains.

Q: Brazil outlook, crop plan, and interest rates.

A: Long-term bullish on Brazil, near-term credit issues, crop plan not guaranteed, interest rates moving down, AgriShow to gauge customer sentiment.

Q: Gross margin and MENA project margin.

A: Fixed cost leverage is a key gross margin driver, and MENA project margins are comparable to previous year.

Q: Capital investments return and timing.

A: Need market recovery for volume leverage on tube mill investment, galvanizing facility in 2027, with near-term savings diluted by depreciation