Lindsay Corporation Q4 2024 Earnings Report

In the fiscal fourth quarter of 2024, Lindsay Corporation (NYSE:LNN), a global leader in irrigation and infrastructure, faced a mix of challenges and growth opportunities during their earnings call. President and CEO Randy Wood recognized the tough market conditions, particularly in the irrigation sector, while highlighting the company's solid operational performance and strategic investments aimed at long-term growth.

Despite a slight increase in North American irrigation volumes due to storm-related early shipments, international markets, especially Brazil, experienced ongoing difficulties. The company reported total revenues for fiscal year 2024 at $607.1 million, representing a 10% decrease year-over-year, with net earnings also declining.

Key Takeaways

• Total FY 2024 revenues were $607.1 million, a decrease of 10% from the previous year.
• Net earnings were $66.3 million, or $6.01 per diluted share, down 8%.
• Revenues in the irrigation segment dropped by 12%, while the infrastructure segment grew by 6%.
• A $50 million investment is underway at the Nebraska facility to improve cost management and efficiency.
• Annual recurring revenue from device subscriptions increased by 28%.
• An anticipated $80 million project in the MENA region is expected to contribute to 2025 revenues, with $14 million shipped in Q4 2024.
• Brazil's market is weak, with low double-digit declines expected in early 2025.
• Gross margins remained near 30%, but SG&A expenses rose significantly.
• The tax rate for fiscal 2025 is projected to stabilize around 25%.

Company Outlook

• Continued demand for international projects is expected, particularly from the MENA region.
• Total available liquidity at the end of Q4 was $240.9 million.
• A slightly declining market for irrigation is anticipated unless net farm income improves significantly in 2025.

Bearish Highlights

• Brazil's market is forecasted to remain weak, impacting margins and causing significant deleverage.
• A low double-digit decline in Brazil is expected for the year 2025.

Bullish Highlights

• The infrastructure segment, especially the Road Zipper business, is gaining momentum, aided by federal funding and growth anticipated primarily in the U.S.
• Focus on technology investments and collaborations for weather and environmental monitoring.
• Increased interest in irrigation investments in the EMEA region due to population growth and food security concerns.

Misses

• The irrigation sector witnessed a 12% decrease in revenues year-over-year.
• Market conditions proved challenging, particularly in international sectors like Brazil.

Q&A Highlights

• There’s no immediate urgency for storm-damaged machine replacements in the Southeast as harvest season concludes.
• The replacement cycle may shift to purchasing structural parts instead of new machines due to insurance cost gaps.
• Updates for stakeholders are expected by the end of fiscal Q1 2025.

Lindsay Corporation's call conveyed a challenging yet opportunistic landscape. While headwinds persist in the irrigation market, especially in Brazil, growth areas were identified in MENA region projects and the infrastructure segment. The company's strategy revolves around technology investments and operational efficiency.

InvestingPro Insights

Lindsay Corporation navigates challenging market conditions while focusing on long-term growth. With a market capitalization of $1.24 billion and a P/E ratio of 18.73, the company is seen as trading at a high P/E ratio relative to near-term earnings growth.

Despite a revenue decline of -11.18% over the last twelve months, Lindsay maintains a strong financial position with cash exceeding debt. Additionally, the company's commitment to shareholder returns is evident as it has raised its dividend for 21 consecutive years, boasting a current yield of 1.16%.

For deeper insights, InvestingPro provides 10 additional tips regarding Lindsay Corporation's financial health and market position.

Full Transcript – Lindsay Corporation (LNN) Q4 2024

• Operator: Good day, and welcome to the Lindsay Corporation Fiscal Fourth Quarter 2024 Earnings Conference Call.
• Randy Wood: Thank you, and good morning, everyone. Welcome to our fourth quarter and full year 2024 earnings call. We are pleased with our fourth quarter performance amidst challenging market fundamentals, particularly in irrigation.
• Brian Ketcham: Total revenues for Q4 were $155 million, a decrease of 7% compared to last year.

… [Omitted content for brevity] …

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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