) adjusted EPS of 60 cents per share for the fiscal first quarter
2012 outperformed the Zacks Consensus Estimate of 46 cents. Results
improved 58% from the prior-year quarter's earnings of 38 cents per
Including 37 cents per share of accrued expense related to an
estimated increase in the company's liability for environmental
remediation at its Lindsay, Nebraska facility, EPS in the quarter
was 23 cents. Including a similar expense in the prior-year
quarter, EPS stood at 34 cents.
Total revenue in the quarter increased 34% year over year to
$119 million, beating the Zacks Consensus Estimate of $102 million.
The improvement stemmed from a 68% rise in total irrigation
equipment revenues, in turn driven by a 66% increase in domestic
irrigation revenues and a 71% increase in international irrigation
However, a 37% year-over-year decline in infrastructure revenues
due to lower sales of Quick-Change Moveable Barrier (QMB) product
was a drag. Excluding QMB system sales, infrastructure revenues
Cost of goods sold in the quarter increased 37% to $88.9
million. Gross profit rose 25% to $30.2 million whereas gross
margin contracted 180 basis points year over year to 25.4% largely
attributable to lower revenues from the higher-margin QMB
Operating expenses increased to $25.2 million in the quarter
from $17.6 million in the year-earlier quarter. Adjusted
operating income in the quarter amounted to $17.9 million, up 6.2%
year over year. Operating margin was 10.3%, up 210 basis points
year over year.
Lindsay's backlog at quarter end was $52.8 million compared with
$59.7 million at the end of the year-ago quarter and $46.0 million
at fiscal 2011 end.
Lindsay ended the first quarter of fiscal 2012 with cash and
cash equivalent of $108.7 million, up from $107.2 million at fiscal
2011 end. Long-term debt declined to $3.2 million from $4.3 million
as of fiscal 2011 end. The company generated $6.2 million of net
cash from operating activity in the quarter, up from $2.2 million
in the year-ago quarter.
Lindsay is optimistic about positive farmer sentiment. Moreover,
the company's long-term drivers including expanded food production,
water use efficiency and transportation safety products, and
population growth are expected to hold course. The company
nonetheless cautioned that, in fiscal 2012, the business will be
subject to the volatility recently witnessed in agriculture
commodity prices, besides government spending decisions in
According to the United States Department of Agriculture,
record-high prices for crops and livestock will lift U.S. farm
income by 19% in 2011, which for the first time will top $100
billion. Another buoyant year is also in sight in 2012 for an
agricultural boom that started in 2006 is coming to fruition.
Lindsay's irrigation segment will thus benefit from rising farm
income. The irrigation segment also stands to benefit from a
continuing shift from flood irrigation to more efficient systems
and exposure to fast-growing international irrigation markets.
Lindsay's Infrastructure revenues depend on government funding
of transportation projects. The segment has been experiencing
pressure from budget cutbacks. Thus, the outlook for the
infrastructure segment remains unclear due to government budget
constraints and a delay in the congressional passage of a new
federal highway bill.
We retain our Neutral long-term recommendation on Lindsay. The
quantitative Zacks #3 Rank (short-term Hold rating) for
the company indicates no clear directional pressure on the shares
over the near term.
Omaha, Nebraska-based Lindsay Corporation is a leading designer
and manufacturer of self-propelled center pivot and lateral move
irrigation systems, which are used principally in agriculture to
increase or stabilize crop production while conserving water,
energy and labor. The company also manufactures and markets road
safety products. The company competes with
Valmont Industries Inc.
LINDSAY CORP (
): Free Stock Analysis Report
VALMONT INDS (
): Free Stock Analysis Report
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