Lindsay (LNN) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues declined 15% year-over-year to $139.2 million, driven by soft irrigation demand in North America and Brazil, but infrastructure growth and a record $100M+ MENA irrigation contract partially offset declines.

• Net earnings rose 21% to $20.4 million ($1.85 per diluted share), aided by a $4.8 million one-time Brazil tax credit, higher interest income, and favorable FX.

• Infrastructure segment benefited from increased Road Zipper System sales and leasing, supported by U.S. infrastructure funding and global opportunities.

• Technology enhancements included FieldNET upgrades and participation in a generative AI pilot with Bayer, supporting digital integration and sustainable farming.

• Completed $17.9 million in share repurchases during the quarter.

Financial highlights

• Q3 consolidated revenues were $139.2 million (down 15%); infrastructure revenues rose 11% to $24.4 million, while irrigation revenues fell 19% to $114.8 million.

• Net earnings increased 21% to $20.4 million; diluted EPS was $1.85, including a $0.44 per share tax benefit.

• Operating income for Q3 was $19.9 million (down 26%); operating margin was 14.3%.

• Gross profit for Q3 was $46.5 million, with gross margin improving to 33.4%.

• Backlog surged 161% to $246.9 million, driven by the MENA irrigation project.

Outlook and guidance

• Irrigation demand is expected to remain subdued until net farm income outlook improves, but international growth opportunities persist, especially in less developed markets.

• Infrastructure segment is positioned for multi-year growth as U.S. and global infrastructure spending increases.

• Fiscal 2024 capital expenditures are projected at $30 million, focused on modernization and productivity improvements.

• Brazil irrigation demand is expected to stabilize, with future activity dependent on government crop plan funding.

• Large international irrigation projects may be margin-dilutive due to competitive pricing, but overall international growth should not significantly dilute margins.