Lindsay Corporation
(
LNN
) reported fourth-quarter fiscal 2012 earnings of 68 cents per
share compared to the year-ago quarter's earnings of 46 cents.
Results missed the Zacks Consensus Estimate of 76 cents per
share.
Operational Update
Total revenue improved 10% year over year to $127.8 million,
missing the Zacks Consensus Estimate of $129 million. The
year-over-year increase in revenues stemmed from an 18%
improvement in total irrigation equipment revenues, driven by an
18% rise in domestic irrigation revenues as well as a 19%
improvement in international irrigation revenues. On the other
hand, infrastructure revenues fell 20% during the quarter.
Cost of goods sold increased 10% to $95.1 million. Gross profit
improved 9% to $32.7 million. However, gross margin dropped 30
basis points year over year to 25.6%. Irrigation margins improved
1% due to fixed cost leverage and year-over-year efficiency
gains.
Operating expenses declined 1.1% to $20.1 million in the quarter.
Operating income in the quarter soared 29.9% to $12.7 million.
Operating margin expanded 150 bps to 9.9%.
Lindsay's backlog at the end of fourth-quarter fiscal 2012 was
$57.1 million compared with $46 million at the end of
fourth-quarter fiscal 2011 and $44.5 million at the end of
third-quarter fiscal 2012.
Financial Position
Lindsay ended the fourth-quarter fiscal 2012 with cash and cash
equivalents of $143.4 million from $108.2 million at the end of
fourth-quarter fiscal 2011. Total debt was $4.3 million as of
August 31, 2012, compared to $8.6 million as of August 31, 2011.
The company generated $52.4 million of net cash from operating
activity in the quarter compared with $43.1 million in the
year-ago quarter.
Fiscal 2012 Performance
For fiscal 2012, Lindsay reported earnings of $3.38 per share,
missing the Zacks consensus Estimate of $3.77. Total revenue rose
15% year over year to $551.3 million, missing the Zacks Consensus
Estimate of $552 million.
Outlook
Lindsay expects that positive farmer sentiment, farm incomes and
commodity prices affected by dry weather prevailing in the U.S.
will positively impact the company in the first few months of
fiscal 2013. Moreover, the new highway bill and the cost
reduction initiatives in the infrastructure business will boost
revenues in fiscal 2013. Lindsay expects long-term demand to
remain high, driven by increased food production and efficient
water use.
Our View
Demand for Lindsay's products will increase, driven by soaring
demand for food production due to worldwide population growth,
efficient water use, mounting need for biofuel and improving
transportation infrastructure. Moreover, the new highway bill
will increase government spending on infrastructure favoring
Lindsay in the space.
Lindsay's debt was reduced by $4.3 million in the reported
quarter, improving the debt-to-capitalization ratio to 1.4% as of
August 31, 2012, from 3% as of August 31, 2011, and 1.7% as of
May 31, 2012.
Lindsay retains a short-term Zacks #1 Rank (Strong Buy). We have
a long-term Neutral recommendation on the stock.
LINDSAY CORP (LNN): Free Stock Analysis
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