Lindsay Corp., a provider of irrigation systems and infrastructure products, today announced results for its third quarter ended May 31, 2016.
Third Quarter Results
Third quarter fiscal 2016 revenues were $141.3 million compared to revenues of $160.7 million in the prior year’s third quarter. Net earnings for the quarter were $9.6 million or $0.90 per diluted share compared with $12.9 million or $1.10 per diluted share in the prior year.
Irrigation segment revenues for the quarter were $117.3 million, an 11 percent decrease from $131.3 million in the prior year’s third quarter. U.S. irrigation revenues of $73.4 million decreased 18 percent, reflecting the combined effect of lower unit volume and reduced market pricing, passing through lower material costs. International irrigation revenues for the third quarter were $43.9 million, up 4 percent over the same quarter last year, including a negative currency translation impact of 4 percent. Sales were improved in several markets while Brazil and certain export markets experienced declines. Infrastructure segment revenues decreased 18 percent to $24.0 million for the quarter as relatively flat sales in road safety products were offset by lower Road Zipper System project sales compared to the prior year.
Gross margin was 29.6 percent of sales compared to 28.9 percent of sales in the prior year’s third quarter, increasing approximately 1 percentage point in both the irrigation and infrastructure segments. Irrigation margins improved primarily due to the benefit of lower material costs. Improved infrastructure margins were the result of revenue growth and cost leverage in Europe while U.S. margins remained relatively flat overall with improved cost leverage in road safety products offset by the impact of lower Road Zipper System revenue.
Operating expenses increased $1.6 million to $26.5 million compared to the third quarter of the prior fiscal year. The increase resulted primarily from an increase in outside professional services and new product development costs. Operating expenses were 18.7 percent of sales in the third quarter of fiscal 2016 compared with 15.5 percent of sales in the prior year period. Operating margins were 10.8 percent in the third quarter compared to 13.4 percent in the prior year period.
Cash and cash equivalents of $91.5 million at the end of the quarter were $47.6 million lower than at our fiscal year end August 31, 2015. The company repurchased 219,578 shares for $16.1 million during the third quarter and a total of 688,790 shares for $48.3 million during the first nine months of fiscal 2016. There is $63.7 million that remains available under the company’s share repurchase program.
The backlog of unshipped orders at May 31, 2016 was $61.2 million compared with $53.2 million at May 31, 2015 and $52.6 million at February 29, 2016. The increase in order backlog is primarily coming from the infrastructure segment, with higher backlogs in both Road Zipper and road safety product lines.
Nine Month Results
Total revenues for the nine months ended May 31, 2016 were $383.5 million, a decrease of 12 percent compared to $436.6 million in the same prior year period. Foreign currency translation as compared to the prior year reduced year to date 2 revenues by 3 percent. Net earnings for the nine month period were $12.5 million or $1.13 per diluted share compared with $29.5 million or $2.46 per diluted share in the prior year. The current year includes $13.0 million of environmental expenses which, on an after tax basis, reduced net earnings by $8.5 million, or $0.77 per diluted share.
Total irrigation equipment revenues decreased 9 percent to $321.7 million from $354.3 million during the first nine months of the prior fiscal year. U.S. irrigation revenues of $204.9 million decreased 7 percent, while international irrigation revenues of $116.8 million decreased 13 percent, of which 8 percent was due to the effect of currency translation. Infrastructure revenues decreased 25 percent to $61.8 million, primarily due to the completion of a few larger Road Zipper Systems projects in the prior year, including the Golden Gate Bridge project.
Rick Parod, president and chief executive officer, commented, “Irrigation results reflect continued headwinds from low commodity prices and farm income. We are also managing through the challenge of recent increases in raw material costs by passing along the cost of those increases in the market. Activity in the infrastructure market is beginning to show improvement, and we continue to be encouraged by the improved performance of our infrastructure business.”
Parod continued, “We are at the early stages of the growing season in the U.S., and while commodity prices have increased during the quarter, yields from the current growing season and where commodity prices settle in the fall will be more important in terms of grower sentiment and incentive for capital investment. Although the current environment continues to be constrained, the longer term drivers for our markets of population growth, expanded food production, efficient water use and infrastructure upgrades and expansion remain positive.”