Lindsay Corporation CEO Discusses F4Q10 (Qtr End 9/30/10) Earnings Call Transcript

Lindsay Corporation CEO Discusses F4Q10 (Qtr End 9/30/10) Earnings Call Transcript
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Lindsay Corporation (

LNN

)

F4Q10 (Qtr End 8/31/10) Earnings Call

October 20, 2010 11:00 a.m. ET

Executives

Rick Parod – President and CEO

Dave Downing – CFO, President – International Operations and IR Officer

Analysts

Brian Drab – William Blair

Ned Borland – Hudson Securities

Ryan Connors – Janney Montgomery

Paul Mammola – Sidoti & Company

David Rhodes – Red Bush Securities

Davis Paddock - Investco

Presentation

Operator

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Good morning. My name is Tina, and I will be your conference operator today. At this time I would like to welcome everyone to the Lindsay Corporation Fourth Quarter 2010 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks there will be a question-and-answer session. (Operator Instructions)

During this call management may make forward-looking statements that are subject to risk and uncertainties, and which reflect management current belief and estimates of future economic circumstances, industry conditions, company’s performance and financial results.

Forward-looking statements include the information concerning possible or assumed future results of operations of the company and those statement that are proceeded by, followed by, or including the words expectations, outlook, good, may, should, or other similar expressions. For these statements we claim the protection of the Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

I would now like to turn the call over to Mr. Rick Parod, President and Chief Executive Officer.

Rick Parod

Good morning, and thank you for joining us today.

Our revenues for the fourth quarter of Fiscal 2010 were 87.2 million, increasing 19% over the same quarter of last year. Net earnings were 6 million or $0.48 per diluted share compared with 2.1 million or $0.17 per diluted share in the prior year’s fourth quarter. Total revenues for Fiscal 2010 were 358.4 million, up 7% from Fiscal 2009. Net earnings for the fiscal year were 24.9 million or $1.98 per diluted share compared to 13.8 million or $1.11 per diluted share Fiscal 2009.

Fiscal 2010 was Lindsay Corporation’s second highest earnings year, exceeded only by 2008.

In the U.S. Irrigation Market, revenues were 33.9 million for the fourth quarter, increasing 16 percent over the same quarter of last year.

Since early June, commodity prices rose significantly with corn up 70%, soybeans up 26% and wheat increasing over 60%. The most recent USDA projections for 2010 net farm income show a 24% increase over 2009 and projected to be the fourth highest on recorded, creating generally positive economic conditions for U.S. farmers.

For the full year Fiscal 2010, U.S. Irrigation revenues were 152.8 million, down 2% from Fiscal 2009, which benefited from a record backlog at the start of that year carried over from Fiscal 2008.

International Irrigation revenues were 23.3 million for the fourth quarter, declining 9% from the same period last year due to lower exports in some regions.

For the Fiscal 2010 year, International Irrigation revenues were 105.8 million, up 6% from Fiscal 2009.

Our International Irrigation Business Units in South American, South Africa and Europe, as well as exports to Mexico all received solid growth in Fiscal 2010.

Long-term market drivers are improving diets in the worldwide population, combined with the water use efficiencies available for mechanized irrigation systems, continue to be positive drivers for our global irrigation equipment demand.

Infrastructure Segment revenues were 30 million, up 61% from the fourth quarter of last year, driven my increased sales of quick-change movable barrier systems, rail structures, and lights and commercial tubing.

During the quarter, we booked and completed a barrier project from the East Coast of the U.S. worth a little more than 9 million. Later in the quarter we also received an order for just under 15 million of Movable Barriers Products for another East Coast project.

We continue to see strong interest in our Moveable Barrier Products, which provide a very cost effective way to add wing capacity.

For Fiscal 2010, infrastructure revenues were 99.8 million, increasing 24% from the same time last year, driven by higher product sales.

Gross profit was 25.7 million for the fourth quarter versus 17.6 million in the same quarter of last year. Gross margins increased to 29 ½% compared to 24% for the fourth quarter last year.

Infrastructure margins increased primarily due to higher revenues of Moveable Barrier Products while irrigation margins increased from improved factory efficiencies at our Nebraska facility.

For the full year Fiscal 2010, gross profit was 98.9 million reflecting a 23% increase over 2009. Gross margins grew to 27.6 percent in Fiscal 2010 compared to 24% in 2009 driven by the higher barrier sales, favorable regional mix and improved factory efficiencies.

Operating expenses for the fourth quarter were 16 million versus 14.1 in the same quarter last year, reflecting higher research and development expenses, commissions and incentive compensation costs.

Total operating expenses for Fiscal 2010 increased 2.8 million; however, dropped to 17% of sales for the year. The full-year increase of operating expenses was due primarily to increased investments in product development and to higher incentive compensations resulting in improved financial performance.

Our order backlog was 38.4 million on August 31, 2010 compared to 43.6 million on August 31, 2009 and 33.9 million on May 31

st

, 2010.

Last year’s backlog at this time included 20 million for the next Mexico City Barrier Project, which was completed in the first half of Fiscal 2010. The Fiscal 2010 year-end backlog includes there recently-formed East Coast Project worth slightly under 15 million. That project is expected to be completed during the first half of Fiscal 2011.

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