Markets
LNN

Lindsay's (LNN) Q2 Earnings in Line, Revenues Miss Estimates

Lindsay CorporationLNN reported second-quarter fiscal 2018 (ended Feb 28, 2018) adjusted earnings of 56 cents per share, which surged 19% from 47 cents per share recorded in the prior-year quarter. Earnings came in line with the Zacks Consensus Estimate.

The irrigation equipment manufacturer reported revenues of $130 million, up 5% year over year. However, revenues missed the Zacks Consensus Estimate of $132 million.

Irrigation segment revenues climbed 5% year over year to $112 million. Domestic irrigation revenues recorded growth of 23% from the year-ago quarter, driven by an increase in irrigation system sales volume. However, international irrigation revenues dipped 22% due to lower project sales and stable demand in core markets.

Lindsay Corporation Price, Consensus and EPS Surprise

Lindsay Corporation Price, Consensus and EPS Surprise | Lindsay Corporation Quote

Infrastructure segment revenues were up 3% year over year to $18.5 million led by elevated Road Zipper System revenues, partly offset by lower revenues in the North American road safety products.

Operational Update

Cost of operating revenues went up 4% year over year to $95 million. Gross profit improved 7% to $35.3 million from $33 million reported in the year-earlier quarter. Gross margin also expanded 60 basis points (bps) to 27%.

Operating expenses flared up 15.7% year over year to $28.3 million in the reported quarter. The company posted an operating profit of $7.1 million, down from $8.5 million recorded in the comparable period last year. Operating margin shrunk 150 bps to 5.4% in the fiscal second quarter compared to the prior-year quarter.

Financial Position

Lindsay had cash and cash equivalents of $102.2 million at the end of the fiscal second quarter compared with $102.8 million recorded at the end of the comparable quarter last fiscal. The company recorded cash usage of $9 million from operating activities for the six-month period ended Feb 28, 2018, compared with positive cash flow of $10.7 million recorded in the comparable prior-year period. Lindsay had long-term debt of $116.7 million at the end of the reported quarter compared with $116.9 million recorded at the end of the prior year quarter.

Lindsay's backlog as of Feb 28, 2018, was $90.2 million compared with $62.3 million as of Feb 28, 2017.

Growth Initiatives

Lindsay's growth objectives include setting strategic direction, defining priorities and improving overall operating performance. A key financial objective is to achieve operating margin performance between 11% and 12% in fiscal 2020. The company expects to incur additional costs regarding this initiative over each of the next several quarters. These additional costs are anticipated to be recovered through improved operating income in fiscal 2020.

Outlook

Lindsay's Infrastructure business is poised to gain from a growing backlog of Road Zipper projects. The company noted that it will remain focused on providing innovative technology solutions and improving operating performance. However, the North American agricultural market conditions are expected to remain challenged due to lower commodity prices and farm income. Further, the recently-announced tariffs on steel and aluminum product imports are a concern due to the potential impact on raw-material cost and possible trade retaliation that might affect U.S. agricultural products.

Share Price Performance

In the last year, Lindsay has outperformed the industry it belongs to. The company's shares have gained around 27% compared with 17% growth recorded by the industry.

Zacks Rank & Other Stocks to Consider

Lindsay currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the same sector are H&E Equipment Services, Inc. HEES , Komatsu Ltd. KMTUY and Deere & Company DE . While H&E Equipment Services sports a Zacks Rank #1 (Strong Buy), Komatsu and Deere carry a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

H&E Equipment Services has an expected long-term earnings growth rate of 14.4%. The company's shares have surged 60.5% in the past year.

Komatsu has a long-term earnings growth rate of 31.7%. The company's shares have rallied 28% over a year.

Deere has an expected long-term earnings growth rate of 5.7%. The stock has gained 42.7% in a year's time.

Can Hackers Put Money INTO Your Portfolio?

Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.

Zacks has just released Cybersecurity! An Investor's Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.

Download the new report now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Komatsu Ltd. (KMTUY): Free Stock Analysis Report

H&E Equipment Services, Inc. (HEES): Free Stock Analysis Report

Deere & Company (DE): Free Stock Analysis Report

Lindsay Corporation (LNN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

LNN DE KMTUY HEES

Other Topics

Earnings Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More