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Lindsay's CEO Discusses Q1 2012 Results - Earnings Call Transcript

The accrual is based on preliminary findings and plans which have not yet been finalized, nor have the specifics of the action plan been agreed to by the EPA or Lindsay. So this estimate is subject to change. I'm confident that the expenses required to address this environmental obligation will not materially impact the company's liquidity or financial resources or long-term trajectory for our growth, nor will this expense impact the extent to which we invest in growth for the advancement of our competitive position.

Now I'd like to move on to discuss the underlying performance of our business in the quarter as noted, exclusive of the $7.2 million in environmental expense. Global irrigation sales grew 68% to $101 million in the quarter with segment operating margins exclusive the environmental remediation expenses of 15.6%. U.S. irrigation revenues totaled $60.7 million for the first quarter, increasing 66% over the same period last year.

Commodity prices remained relatively high through most of the quarter and continue to support positive farmer sentiment. Projections of record U.S. farm income throughout 2011 along with Section 179 accelerated depreciation and write-off of equipment purchases continue to support positive economic conditions for U.S. farmers.

In the international irrigation market, revenues increased 71% to $40.1 million, a record for the first quarter. We have seen solid revenue increases in nearly all international markets with the most significant year-over-year gains in the Middle East, South America and China. Long-term market drivers of improving diets and growing worldwide population, combined with water use efficiencies available for mechanized irrigation systems, continue to be positive drivers for global irrigation equipment demand.

Infrastructure segment revenues were $18.4 million, decreasing 37% from the first quarter of last year due to lower QMB system sales. Importantly, we have made significant progress in our other infrastructure product lines, as our non-QMB infrastructure sales grew by 7% over the year-ago quarter despite a difficult environment for funding, highway and other infrastructure projects. Yet we are confident in the opportunity to drive significant profitability with QMB system sales over the long term as a superior solution to worldwide traffic congestion and improvement in driver and highway worker safety. QMB sales are likely to continue at some level of volatility due to the project nature of this business and the current funding environment.

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