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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
For the quarterly period ended
OR
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
|
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|
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
|
|
☒ |
|
Accelerated filer |
☐ |
|
Non‑accelerated filer |
☐ |
|
Smaller reporting company |
|
|
Emerging growth company |
|
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|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of June 25, 2024
,
Lindsay Corporation
INDEX FO RM 10-Q
- 2 -
Part I – FINANC IAL INFORMATION
ITEM 1 - Financi al Statements
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
|
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
($ and shares in thousands, except per share amounts) |
|
May 31,
|
|
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May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
||||
|
Operating revenues |
|
$ |
|
|
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$ |
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$ |
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$ |
|
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Cost of operating revenues |
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Gross profit |
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||||
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Operating expenses: |
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||||
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Selling expense |
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General and administrative expense |
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Engineering and research expense |
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Total operating expenses |
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||||
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Operating income |
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||||
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Other income (expense): |
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||||
|
Interest expense |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Interest income |
|
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Other income (expense), net |
|
|
|
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|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Total other income (expense) |
|
|
|
|
|
|
(
|
) |
|
|
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|
|
(
|
) |
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||||
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Earnings before income taxes |
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||||
|
Income tax (benefit) expense |
|
|
(
|
) |
|
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||||
|
Net earnings |
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$ |
|
|
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$ |
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|
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$ |
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|
$ |
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|
||||
|
Earnings per share: |
|
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|
|
|
|
|
||||
|
Basic |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Diluted |
|
$ |
|
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|
$ |
|
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$ |
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$ |
|
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|
||||
|
Shares used in computing earnings per share: |
|
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|
||||
|
Basic |
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Diluted |
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||||
|
Cash dividends declared per share |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
See accompanying notes to condensed consolidated financial statements.
- 3 -
LINDSAY CORPORA TION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
($ in thousands) |
|
May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
||||
|
Net earnings |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Other comprehensive loss: |
|
|
|
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|
|
|
|
|
|
|
|
||||
|
Defined benefit pension plan adjustment, net of tax |
|
|
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|
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|
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|
|
|
|
|
|
Foreign currency translation adjustment, net of hedging activities and tax |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Unrealized gain on marketable securities, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive loss, net of tax benefit of $
|
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Total comprehensive income |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
See accompanying notes to condensed consolidated financial statements.
- 4 -
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
($ and shares in thousands, except par values) |
|
May 31,
|
|
|
May 31,
|
|
|
August 31,
|
|
|||
|
ASSETS |
|
|
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|
|
|
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|
|||
|
Current assets: |
|
|
|
|
|
|
|
|
|
|||
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Marketable securities |
|
|
|
|
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|
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|
|
|
|
|
|
Receivables, net of allowance of $
|
|
|
|
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|
|
|
|
|
Inventories, net |
|
|
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|
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|
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|
|
|
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|
|
Other current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Property, plant, and equipment: |
|
|
|
|
|
|
|
|
|
|||
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less accumulated depreciation |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Property, plant, and equipment, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Intangibles, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease right-of-use assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other noncurrent assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|||
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|||
|
Accounts payable |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Current portion of long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Pension benefits liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other noncurrent liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Shareholders' equity: |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Preferred stock of $
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock of $
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital in excess of stated value |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less treasury stock - at cost,
|
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Accumulated other comprehensive loss, net |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Total shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
See accompanying notes to condensed consolidated financial statements .
- 5 -
|
|
||||||||||||||||||||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY |
|
|||||||||||||||||||||||||||||||
|
($ and shares in thousands, except per share amounts) |
|
|||||||||||||||||||||||||||||||
|
(Unaudited) |
|
|||||||||||||||||||||||||||||||
|
|
|
Shares of
|
|
|
Shares of
|
|
|
Common
|
|
|
Capital in
|
|
|
Retained
|
|
|
Treasury
|
|
|
Accumulated
|
|
|
Total
|
|
||||||||
|
Balance at August 31, 2022 |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net earnings |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Total comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends ($
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
Repurchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares under share compensation plans, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at May 31, 2023 |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Balance at August 31, 2023 |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net earnings |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Total comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends ($
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
Repurchase of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
(
|
) |
|
Issuance of common shares under share compensation plans, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at May 31, 2024 |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
See accompanying notes to condensed consolidated financial statements. |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
- 6 -
|
Lindsay Corporation and Subsidiaries |
|
|||||||||||||||||||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY |
|
|||||||||||||||||||||||||||||||
|
($ and shares in thousands, except per share amounts) |
|
|||||||||||||||||||||||||||||||
|
(Unaudited) |
|
|||||||||||||||||||||||||||||||
|
|
|
Shares of
|
|
|
Shares of
|
|
|
Common
|
|
|
Capital in
|
|
|
Retained
|
|
|
Treasury
|
|
|
Accumulated
|
|
|
Total
|
|
||||||||
|
Balance at February 28, 2023 |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net earnings |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Total comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends ($
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
Repurchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares under share compensation plans, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at May 31, 2023 |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Balance at February 29, 2024 |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net earnings |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Total comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends ($ ) per share |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
Repurchase of common stock |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(
|
) |
|
|
— |
|
|
|
(
|
) |
|
Issuance of common shares under share compensation plans, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at May 31, 2024 |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
See accompanying notes to condensed consolidated financial statements. |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
- 7 -
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED S TATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Nine months ended |
|
|||||
|
($ in thousands) |
|
May 31, 2024 |
|
|
May 31, 2023 |
|
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
|
Net earnings |
|
$ |
|
|
|
$ |
|
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
||
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
Provision for uncollectible accounts receivable |
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
(
|
) |
|
|
(
|
) |
|
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
Unrealized foreign currency transaction loss |
|
|
|
|
|
|
|
|
|
Other, net |
|
|
|
|
|
|
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
||
|
Receivables |
|
|
|
|
|
|
(
|
) |
|
Inventories |
|
|
(
|
) |
|
|
|
|
|
Other current assets |
|
|
(
|
) |
|
|
|
|
|
Accounts payable |
|
|
(
|
) |
|
|
(
|
) |
|
Other current liabilities |
|
|
(
|
) |
|
|
(
|
) |
|
Other noncurrent assets and liabilities |
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
|
Purchases of property, plant, and equipment |
|
|
(
|
) |
|
|
(
|
) |
|
Purchases of marketable securities |
|
|
(
|
) |
|
|
(
|
) |
|
Proceeds from maturities of marketable securities |
|
|
|
|
|
|
|
|
|
Other investing activities, net |
|
|
(
|
) |
|
|
(
|
) |
|
Net cash used in investing activities |
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
||
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
|
Repurchase of common stock |
|
|
(
|
) |
|
|
|
|
|
Dividends paid |
|
|
(
|
) |
|
|
(
|
) |
|
Common stock withheld for payroll tax obligations |
|
|
(
|
) |
|
|
(
|
) |
|
Proceeds from exercise of stock options |
|
|
|
|
|
|
|
|
|
Other financing activities, net |
|
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
||
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(
|
) |
|
|
(
|
) |
|
Net change in cash and cash equivalents |
|
|
(
|
) |
|
|
|
|
|
Cash and cash equivalents, beginning of period |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
|
|
|
$ |
|
|
See accompanying notes to condensed consolidated financial statements.
- 8 -
LINDSAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSO LIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Basis of Presentation
The condensed consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and do not include all of the disclosures normally required by U.S. generally accepted accounting principles (“U.S. GAAP”) as contained in Lindsay Corporation’s (the “Company”) Annual Report on Form 10-K. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended August 31, 2023.
In the opinion of management, the condensed consolidated financial statements of the Company reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and the results of operations and cash flows for the periods presented. The results for interim periods are not necessarily indicative of trends or results expected by the Company for a full year. The condensed consolidated financial statements were prepared using U.S. GAAP. These principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from these estimates.
Recent Accounting Guidance Adopted
In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2022-04, Liabilities - Supplier Finance Programs, which requires annual and interim disclosures for entities that finance its purchases with supplier finance programs. The Company adopted these amendments in its fiscal 2024, except for the amendment on rollforward information, which is effective for the Company beginning in its fiscal 2025. The adoption of this ASU is not expected to have a material impact on its condensed consolidated financial statements.
Recent Accounting Guidance Not Yet Adopted
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires entities to disclose more detailed information in their reconciliation of their statutory tax rate to their effective tax rate. The Company plans to adopt this ASU in its fiscal 2026.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures which requires, among other updates, enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker, or CODM, as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This ASU is effective for fiscal years beginning after December 15, 2023. The Company plans to adopt this ASU in its fiscal 2025.
- 9 -
Note 2 – Revenue Recognition
Disaggregation of Revenue
A breakout by segment of revenue recognized over time versus at a point in time for the three and nine months ended May 31, 2024 and 2023 is as follows:
|
|
|
Three months ended |
|
|
Three months ended |
|
||||||||||||||||||
|
|
|
May 31, 2024 |
|
|
May 31, 2023 |
|
||||||||||||||||||
|
($ in thousands) |
|
Irrigation |
|
|
Infrastructure |
|
|
Total |
|
|
Irrigation |
|
|
Infrastructure |
|
|
Total |
|
||||||
|
Point in time |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Over time |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from the contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Lease revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
Nine months ended |
|
|
Nine months ended |
|
||||||||||||||||||
|
|
|
May 31, 2024 |
|
|
May 31, 2023 |
|
||||||||||||||||||
|
($ in thousands) |
|
Irrigation |
|
|
Infrastructure |
|
|
Total |
|
|
Irrigation |
|
|
Infrastructure |
|
|
Total |
|
||||||
|
Point in time |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Over time |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from the contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Lease revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Further disaggregation of revenue is disclosed in the Note 14 – Industry Segment Information.
For contracts with an initial length longer than twelve months, the unsatisfied performance obligations were $
Contract Balances
Contract assets arise when recorded revenue for a contract exceeds the amounts billed under the terms of such contract. Contract liabilities arise when billed amounts exceed revenue recorded. Amounts are billable to customers upon various measures of performance, including achievement of certain milestones and completion of specified units of completion of the contract. At May 31, 2024, May 31, 2023, and August 31, 2023
, contract assets amounted to $
Contract liabilities include advance payments from customers and billings in excess of delivery of performance obligations. At May 31, 2024, May 31, 2023, and August 31, 2023
, contract liabilities amounted to $
Note 3 – Net Earnings per Share
Basic earnings per share is calculated on the basis of weighted average outstanding common shares. Diluted earnings per share is calculated on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, restricted stock unit awards and other dilutive securities.
- 10 -
The following table shows the computation of basic and diluted net earnings per share for the three and nine months ended May 31, 2024 and 2023:
|
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
($ and shares in thousands, except per share amounts) |
|
May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
||||
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net earnings |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted effect of stock awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding assuming
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic net earnings per share |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Diluted net earnings per share |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Certain stock options and restricted stock units were excluded from the computation of diluted net earnings per share because their effect would have been anti-dilutive. Performance stock units are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied. The number of securities excluded from the computation of earnings per share because their effect would have been anti-dilutive was not significant for the three and nine months ended May 31, 2024 and 2023 .
Note 4 – Acquisitions
Pessl Instruments GmbH
On
FieldWise, LLC
On
The following table summarizes the final purchase price allocation for the acquisition of FieldWise.
|
($ in thousands) |
|
Total |
|
|
|
Cash and cash equivalents |
|
$ |
|
|
|
Accounts receivable |
|
|
|
|
|
Inventories |
|
|
|
|
|
Property and equipment |
|
|
|
|
|
Deferred tax asset |
|
|
|
|
|
Intangible assets |
|
|
|
|
|
Goodwill |
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
(
|
) |
|
Deferred revenues |
|
|
(
|
) |
|
Non-current deferred revenues |
|
|
(
|
) |
|
Total purchase price |
|
$ |
|
|
During the post-acquisition period, the Company recorded measurement period adjustments to the preliminary recorded values assigned to certain Company assets acquired as of the acquisition date. These adjustments were the product of final working capital adjustments with the seller and are incorporated within the values noted in the table above. These adjustments did not have a material impact on the Company's condensed consolidated financial statements.
- 11 -
The acquired intangible assets inclu
de amortizable intangible assets of $
|
($ in thousands) |
|
Weighted average useful life in years |
|
|
Fair value of identifiable asset |
|
||
|
Intangible assets: |
|
|
|
|
|
|
||
|
Customer relationships |
|
|
|
|
|
$ |
|
|
|
Developed technology |
|
|
|
|
|
|
|
|
|
Tradenames |
|
N/A |
|
|
|
|
|
|
|
Total intangible assets |
|
|
|
|
|
$ |
|
|
Goodwill related to the acquisition of FieldWise primarily relates to intangible assets that do not qualify for separate recognition, including the experience and knowledge of FieldWise management, its assembled workforce, and its intellectual capital and specialization with monitoring technology solutions, data acquisition and management systems. This goodwill is included in the irrigation reporting segment and is deductible for income tax purposes. Pro forma information related to this acquisition was not included because the impact on the Company’s consolidated financial statements was not considered to be material.
Note 5 – Income Taxes
The Company recorded an income tax benefit of $
It is the Company’s policy to report income tax expense for interim periods using an estimated annual effective income tax rate. The estimated annual effective income tax rate was
During the three months ended May 31, 2024, the Company recorded a discrete tax benefit of $
Note 6 – Inventories
Inventories consisted of the following as of May 31, 2024, May 31, 2023, and August 31, 2023:
|
($ in thousands) |
|
May 31,
|
|
|
May 31,
|
|
|
August 31,
|
|
|||
|
Raw materials and supplies |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Work in process |
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished goods and purchased parts, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total inventory value before LIFO adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less adjustment to LIFO value |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Inventories, net |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Of the $
- 12 -
Note 7 – Long-Term Debt
The following table sets forth the outstanding principal balances of the Company’s long-term debt as of the dates shown:
|
($ in thousands) |
|
May 31,
|
|
|
May 31,
|
|
|
August 31,
|
|
|||
|
Series A Senior Notes |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Elecsys Series 2006A Bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less current portion |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Less unamortized debt issuance costs |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Total long-term debt |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Principal payments on the debt are due as follows:
|
Due within |
|
$ in thousands |
|
|
|
1 year |
|
$ |
|
|
|
2 years |
|
|
|
|
|
3 years |
|
|
|
|
|
Thereafter |
|
|
|
|
|
|
|
$ |
|
|
The following table presents the Company’s financial assets and liabilities measured at fair value, based upon the level within the fair value hierarchy in which the fair value measurements fall, as of May 31, 2024, May 31, 2023, and August 31, 2023. There were no transfers between any levels for the periods presented.
|
|
|
May 31, 2024 |
|
|||||||||||||
|
($ in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Corporate bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
May 31, 2023 |
|
|||||||||||||
|
($ in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Corporate bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
August 31, 2023 |
|
|||||||||||||
|
($ in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Corporate bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
(
|
) |
- 13 -
The Company’s investment in marketable securities consists of corporate bonds and United States treasury bonds. The marketable securities are classified as available-for-sale and are carried at fair value with the change in unrealized gains and losses reported as a separate component on the condensed consolidated statements of comprehensive income until realized. The Company determines fair value using data points that are observable, such as quoted prices and interest rates. The amortized cost of the investments approximates fair value. Investment income is recorded within other income (expense) on the condensed consolidated statements of earnings. As of May 31, 2024, all of the Company’s marketable securities investments mature within one year.
The Company enters into derivative instrument agreements to manage risk in connection with changes in foreign currency. The Company only enters into derivative instrument agreements with counterparties who have highly rated credit and does not enter into derivative instrument agreements for trading or speculative purposes. The fair values are based on inputs other than quoted prices that are observable for the asset or liability and are determined by standard calculations and models that use readily observable market parameters. These inputs include foreign currency exchange rates and interest rates. Industry standard data providers are the primary source for forward and spot rate information for both interest rates and foreign currency exchange rates.
The Company has entered into various cross currency swaps that mature between the second quarter of fiscal 2026 and the third quarter of fiscal 2027 with a total notional amount of $
At May 31, 2024 the Company had an outstanding foreign currency forward contract to sell a notional amount of
There were
Note 9 – Commitments and Contingencies
In the ordinary course of its business operations, the Company enters into arrangements that obligate it to make future payments under contracts such as lease agreements. Additionally, the Company is involved, from time to time, in commercial litigation, employment disputes, administrative proceedings, business disputes and other legal proceedings. The Company has established accruals for certain proceedings based on an assessment of probability of loss. The Company believes that any such currently-pending proceedings are either covered by insurance or would not have a material effect on the business or its consolidated financial statements if decided in a manner that is unfavorable to the Company. Such proceedings are exclusive of environmental remediation matters which are discussed separately below.
Infrastructure Products
The Company is currently defending a number of product liability lawsuits arising out of vehicle collisions with highway barriers incorporating the Company’s X-Lite ® end terminal. Despite the September 2018 reversal of a sizable judgment against a competitor and the October 2023 dismissal of the FCA Lawsuit (as defined below), the Company expects that the significant attention brought to the infrastructure products industry by the original judgment may lead to additional lawsuits being filed against the Company and others in the industry.
Following the March 2019 filing of a qui tam lawsuit (as amended, the “FCA Lawsuit”) by an individual relator (the “Relator”) on behalf of the United States and twelve individual states, in the United States District Court for the Northern District of New York (the “U.S. District Court”), the Department of Justice, Civil Division and the U.S. Attorney's Office for the Northern District of New York (the “U.S. Attorney’s Office”) proceeded to initiate an investigation into the Relator’s allegations relating to the Company's X-Lite end terminal and potential violations of the False Claims Act. On September 28, 2023, the U.S. Attorney’s Office submitted a letter motion (the “Letter Motion”) informing the U.S. District Court that the United States had investigated the Relator’s allegations and now sought to move to dismiss the FCA Lawsuit as it had “determined that dismissal is commensurate with the public interest because the claims lack merit and the matter does not warrant the continued expenditure of resources to pursue or monitor the action.” The U.S. Attorney’s Office also noted that it had “been advised by counsel for the twelve states that the states [had] no objection to the U.S. District Court declining to
- 14 -
exercise supplemental jurisdiction over the remaining state claims and to dismissing those claims without prejudice to the states.” On October 2, 2023, the U.S. District Court granted the Letter Motion and indicated that a motion to dismiss could be filed without further order or pre-motion conference. On October 12, 2023, after the Relator proceeded to file his own notice of voluntary dismissal, the U.S. Attorney’s Office filed its notice of consent to the Relator’s voluntary dismissal. On October 26, 2023, the U.S. District Court ordered the dismissal of the FCA Lawsuit without prejudice as to the Relator, the United States, and each of the twelve state plaintiffs.
On November 27, 2023, following the dismissal of the Relator’s FCA Lawsuit, the Relator filed under seal a subsequent qui tam lawsuit on behalf of the State of Tennessee against the Company, certain of its subsidiaries, and certain third parties which originally designed the X-Lite end terminal (the “Tennessee FATA Lawsuit”) in the Circuit Court of Davidson County, Nashville, Tennessee (the “Tennessee Circuit Court”) making substantially similar allegations relating to the Company’s X-Lite end terminal and potential violations of the Tennessee Fraud Against Taxpayers Act. On March 26, 2024, the State of Tennessee, which had previously consented to the dismissal of the FCA Lawsuit without prejudice, filed under seal a notice of its election to decline to intervene in the Tennessee FATA Lawsuit. On May 17, 2024, the Tennessee Circuit Court filed an order to unseal the case documents, and the Company and its named subsidiaries were subsequently notified of the Tennessee FATA Lawsuit and served in June 2024.
The Company, certain of its subsidiaries, and certain third parties which originally designed the X-Lite end terminal have also been named in a lawsuit filed on June 9, 2020 in the Circuit Court of Cole County, Missouri by Missouri Highways and Transportation Commission (“MHTC”). MHTC alleges, among other things, that the X-Lite end terminal was defectively designed and failed to perform as designed, intended, and advertised, leading to MHTC’s removal and replacement of X-Lite end terminals from Missouri’s roadways. MHTC alleges strict liability (defective design and failure to warn), negligence, breach of express warranties, breach of implied warranties (merchantability and fitness for a particular purpose), fraud, and public nuisance. MHTC seeks compensatory damages, interest, attorneys’ fees, and punitive damages.
The Company believes it has meritorious factual and legal defenses to each of the lawsuits discussed above and is prepared to vigorously defend its interests. Based on the information currently available to the Company, the Company does not believe that a loss is probable in any of these lawsuits; therefore, no accrual has been included in the Company’s consolidated financial statements. While it is reasonably possible that a loss may be incurred, the Company is unable to estimate a range of potential loss due to the complexity and current status of these lawsuits. However, the Company maintains insurance coverage to mitigate the impact of adverse exposures in these lawsuits and does not expect that these lawsuits will have a material adverse effect on its business or its consolidated financial statements.
Environmental Remediation
In previous years, the Company committed to a plan to remediate environmental contamination of the groundwater at and adjacent to its Lindsay, Nebraska facility (the “site”). The current estimated aggregate accrued cost of $
The Company accrues the anticipated cost of investigation and remediation when the obligation is probable and can be reasonably estimated. While the plan has not been formally approved by the EPA, the Company believes the current accrual is a good faith estimate of the long-term cost of remediation at this site; however, the estimate of costs and their timing could change as a result of a number of factors, including but not limited to (1) EPA input on the proposed remediation plan and any changes which the EPA may subsequently require, (2) refinement of cost estimates and length of time required to complete remediation and post-remediation operations and maintenance, (3) effectiveness of the technology chosen in remediation of the site as well as changes in technology that may be available in the future, and (4) unforeseen circumstances existing at the site. As a result of these factors, the actual amount of costs incurred by the Company in connection with the remediation of contamination of its Lindsay, Nebraska site could exceed the amounts accrued for this expense at this time. While any revisions could be material to the operating results of any fiscal quarter or fiscal year, the Company does not expect such additional expenses would have a material adverse effect on its liquidity or financial condition.
- 15 -
The following table summarizes the environmental remediation liability classifications included in the condensed consolidated balance sheets as of May 31, 2024, May 31, 2023, and August 31, 2023:
|
($ in thousands) |
|
May 31,
|
|
|
May 31,
|
|
|
August 31,
|
|
|||
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total environmental remediation liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Note 10 – Warranties
The following table provides the changes in the Company’s product warranties:
|
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
($ in thousands) |
|
May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
||||
|
Product warranty accrual balance, beginning of period |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Liabilities accrued for warranties during the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warranty claims paid during the period |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Product warranty accrual balance, end of period |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Note 11 – Share-Based Compensation
The Company’s current share-based compensation plans, approved by the stockholders of the Company, provides for awards of stock options, restricted shares, restricted stock units (“RSUs”), stock appreciation rights, performance shares, and performance stock units (“PSUs”) to employees and non-employee directors of the Company. The Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. Share-based compensation expense was $
Note 12 – Other Current Liabilities
|
($ in thousands) |
|
May 31,
|
|
|
May 31,
|
|
|
August 31,
|
|
|||
|
Other current liabilities: |
|
|
|
|
|
|
|
|
|
|||
|
Contract liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Compensation and benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
Warranties |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dealer related liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax related liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue - lease |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued environmental liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other current liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Note 13 – Share Repurchases
The Company’s Board of Directors authorized a share repurchase program of up to $
During the three and nine months ended May 31, 2024
, the Company repurchased
- 16 -
shares
repurchased during the three or nine months ended May 31, 2023. As of May 31, 2024, the repurchased shares were held as treasury stock and $
Note 14 – Industry Segment Information
The Company manages its business activities in
Irrigation
–
This reporting segment includes the manufacture and marketing of center pivot, lateral move and hose reel irrigation systems and large diameter steel tubing as well as various innovative technology solutions such as GPS positioning and guidance, variable rate irrigation, remote irrigation management and scheduling technology, irrigation consulting and design and industrial internet of things, or “IIoT”, solutions.
The irrigation reporting segment consists of
Infrastructure
– This reporting segment includes the manufacture and marketing of moveable barriers, specialty barriers, crash cushions and end terminals, and road marking and road safety equipment. The infrastructure reporting segment consists of
|
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
($ in thousands) |
|
May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
||||
|
Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Irrigation: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
North America |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
International |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Irrigation total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infrastructure |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Irrigation |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Infrastructure |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Total operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest and other expense, net |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
(
|
) |
|
Earnings before income taxes |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
- 17 -
ITEM 2 ‑ Management's Discussion and Analysis o f Financial Condition and Results of Operations
Concerning Forward‑Looking Statements
This Quarterly Report on Form 10-Q contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical are forward-looking and reflect information concerning possible or assumed future results of operations and planned financing of the Company. In addition, forward-looking statements may be made orally or in press releases, conferences, reports, on the Company's web site, or otherwise, in the future by or on behalf of the Company. When used by or on behalf of the Company, the words “expect,” “anticipate,” “estimate,” “believe,” “intend,” “will,” “plan,” “predict,” “project,” “outlook,” “could,” “may,” “should” or similar expressions generally identify forward-looking statements. The entire section entitled “Executive Overview and Outlook” should be considered forward-looking statements. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve a number of risks and uncertainties, including but not limited to those discussed in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2023. Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results or conditions, which may not occur as anticipated. Actual results or conditions could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described herein and in the Company’s other public filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2023, as well as other risks and uncertainties not now anticipated. The risks and uncertainties described herein and in the Company’s other public filings are not exclusive and further information concerning the Company and its businesses, including factors that potentially could materially affect the Company's financial results, may emerge from time to time. Except as required by law, the Company assumes no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.
Accounting Policies
In preparing the Company’s condensed consolidated financial statements in conformity with U.S. GAAP, management must make a variety of decisions which impact the reported amounts and the related disclosures. These decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In making these decisions, management applies its judgment based on its understanding and analysis of the relevant circumstances and the Company’s historical experience.
The Company’s accounting policies that are most important to the presentation of its results of operations and financial condition, and which require the greatest use of judgments and estimates by management, are designated as its critical accounting policies. See discussion of the Company’s critical accounting policies under Item 7 in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2023. Management periodically re-evaluates and adjusts its critical accounting policies as circumstances change. There were no significant changes in the Company’s critical accounting policies during the nine months ended May 31, 2024.
Recent Accounting Guidance
See Note 1 – Basis of Presentation and the disclosure therein of recently adopted accounting guidance to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Executive Overview and Outlook
Operating revenues for the three months ended May 31, 2024 were $139.2 million, a decrease of 15 percent compared to $164.6 million for the three months ended May 31, 2023. Irrigation segment revenues for the three months ended May 31, 2024 decreased 19 percent to $114.8 million from the same prior year period, while infrastructure segment revenues increased 11 percent to $24.4 million. Net earnings for the three months ended May 31, 2024 were $20.4 million, or $1.85 per diluted share, compared to net earnings of $16.9 million, or $1.53 per diluted share, for the three months ended May 31, 2023.
The primary drivers for the Company’s irrigation segment are the need for irrigated agricultural crop production, which is tied to population growth and the attendant need for expanded food production, and the need to use water resources efficiently. These drivers are affected by a number of factors, including the following:
- 18 -
- 19 -
U.S. net farm income levels in calendar 2023, although lower than historically high 2022 levels, supported farmer profitability and demand for investment in the first half of fiscal 2024. However, the forecasted decline in estimated 2024 net farm income has led to tempered demand for irrigation equipment during the third quarter of fiscal 2024, which is expected to continue until the outlook for net farm income improves. The Company has been able to maintain its pricing for irrigation equipment while inflationary pressure on steel and other raw material costs, as well as freight and logistics costs, have moderated compared to the same prior year period.
The most significant opportunities for growth in irrigation sales over the next several years continue to be in international markets where irrigation use is less developed and demand is driven not only by commodity prices and net farm income, but also by food security, water scarcity and population growth. While international irrigation markets remain active with opportunities for further development and expansion, regional political and economic factors, including armed conflict, currency conditions and other factors can create a challenging environment. The Company continues to monitor the Ukraine and Russia conflict for both short and long-term implications and has suspended new business activity in Russia and Belarus since February 2022. Sales with Russian, Ukrainian and Belarusian customers historically have represented less than 5 percent of consolidated revenues. Additionally, international results are heavily dependent upon project sales which tend to fluctuate and can be difficult to forecast accurately. In May 2024, the Company announced a multi-year supply agreement to provide irrigation systems and remote management and scheduling technology for a large project in the Middle East and North Africa (MENA) region. The project is valued at more than $100 million in revenue, and is expected to be recognized over the period beginning in the fourth quarter of fiscal 2024 and continuing through the first quarter of fiscal 2026.
The infrastructure business continues to be driven by the Company's transportation safety products, the demand for which largely depends on government spending for road construction and improvements. The enactment of the Infrastructure Investment and Jobs Act in November 2021 marked the largest infusion of federal investment into infrastructure projects in more than a decade. This legislation introduced $110 billion in incremental federal funding, planned for roads, bridges, and other transportation projects. The Company expects this additional funding to support higher demand in the U.S. for its transportation safety products.
The backlog of unshipped orders at May 31, 2024 was $246.9 million compared with $94.5 million at May 31, 2023. Included in these backlogs are amounts of $62.0 million and $5.2 million, respectively, for orders that are not expected to be fulfilled within the subsequent twelve months. The backlog in both segments was higher compared to the prior year, with the increase in irrigation backlog resulting from the addition of the large project in the MENA region. The Company’s backlog can fluctuate from period to period due to the seasonality, cyclicality, timing and execution of contracts. Backlog typically represents long-term projects as well as short lead-time orders, and therefore is generally not a good indication of the next fiscal quarter’s revenues.
- 20 -
Results of Operations
For the Three Months ended May 31, 2024 compared to the Three Months ended May 31, 2023
The following section presents an analysis of the Company’s operating results displayed in the condensed consolidated statements of earnings for the three months ended May 31, 2024 and 2023. It should be read together with the industry segment information in Note 14 to the condensed consolidated financial statements:
|
|
|
Three months ended |
|
|
|
|||||
|
($ in thousands) |
|
May 31,
|
|
|
May 31,
|
|
|
Percent
|
||
|
Consolidated |
|
|
|
|
|
|
|
|
||
|
Operating revenues |
|
$ |
139,199 |
|
|
$ |
164,553 |
|
|
(15%) |
|
Gross profit |
|
$ |
46,497 |
|
|
$ |
53,221 |
|
|
(13%) |
|
Gross margin |
|
|
33.4 |
% |
|
|
32.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Operating expenses (1) |
|
$ |
26,561 |
|
|
$ |
26,264 |
|
|
1% |
|
Operating income |
|
$ |
19,936 |
|
|
$ |
26,957 |
|
|
(26%) |
|
Operating margin |
|
|
14.3 |
% |
|
|
16.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Other income (expense), net |
|
$ |
237 |
|
|
$ |
(1,225 |
) |
|
(119%) |
|
Income tax expense |
|
$ |
(206 |
) |
|
$ |
8,851 |
|
|
(102%) |
|
Overall income tax rate |
|
|
-1.0 |
% |
|
|
34.4 |
% |
|
|
|
Net earnings |
|
$ |
20,379 |
|
|
$ |
16,881 |
|
|
21% |
|
|
|
|
|
|
|
|
|
|
||
|
Irrigation Segment |
|
|
|
|
|
|
|
|
||
|
Segment operating revenues |
|
$ |
114,840 |
|
|
$ |
142,571 |
|
|
(19%) |
|
Segment operating income |
|
$ |
19,524 |
|
|
$ |
30,727 |
|
|
(36%) |
|
Segment operating margin |
|
|
17.0 |
% |
|
|
21.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Infrastructure Segment |
|
|
|
|
|
|
|
|
||
|
Segment operating revenues |
|
$ |
24,359 |
|
|
$ |
21,982 |
|
|
11% |
|
Segment operating income |
|
$ |
6,276 |
|
|
$ |
3,556 |
|
|
76% |
|
Segment operating margin |
|
|
25.8 |
% |
|
|
16.2 |
% |
|
|
Revenues
Operating revenues for the three months ended May 31, 2024 decreased 15 percent to $139.2 million from $164.6 million for the three months ended May 31, 2023, as irrigation revenues decreased $27.7 million and infrastructure revenues increased $2.4 million compared to the prior year period. The irrigation segment provided 83 percent of the Company’s revenue during the three months ended May 31, 2024 as compared to 87 percent for the three months ended May 31, 2023.
North America irrigation revenues for the three months ended May 31, 2024 of $68.2 million decreased $6.8 million, or 9 percent, from $75.0 million for the three months ended May 31, 2023. Lower commodity prices, a projected decline in U.S. net farm income, and wet field conditions in the midwest that delayed deliveries and irrigation start up all contributed to lower unit sales volume for irrigation equipment and sales of replacement parts for the current year period. Revenues were also impacted by slightly lower average selling prices compared to the same prior year period.
International irrigation revenues for the three months ended May 31, 2024 of $46.6 million decreased $20.9 million, or 31 percent, from $67.5 million for the three months ended May 31, 2023. The decrease resulted primarily from lower sales volumes in Brazil and other Latin America markets compared to the same prior year period. In Brazil, order activity remains constrained due to the impact lower commodity prices have on grower profitability and available liquidity, which is reducing growers' ability to invest in irrigation equipment in the near term. The decrease in revenues was partially offset by the favorable effects of foreign currency translation of approximately $0.7 million compared to the same prior year period.
Infrastructure segment revenues were $24.4 million for the three months ended May 31, 2024 compared to $22.0 million for the three months ended May 31, 2023. The increase resulted primarily from an increase in both Road Zipper System sales and lease revenue as compared to the same prior year period. The impact of higher sales of road safety products in the U.S. was offset by lower sales in international markets.
- 21 -
Gross Profit
Gross profit for the three months ended May 31, 2024 of $46.5 million decreased 13 percent from $53.2 million for the three months ended May 31, 2023. The decrease in gross profit resulted primarily from lower irrigation revenues. Gross margin was 33.4 percent of sales for the three months ended May 31, 2024 compared with 32.3 percent of sales for the three months ended May 31, 2023. Increased gross margin in infrastructure resulted primarily from a more favorable margin mix of revenues with higher Road Zipper System sales and lease revenues. This favorable impact was partially offset by lower irrigation gross margin resulting from a decrease in revenues without a corresponding reduction in fixed costs.
Operating Expenses
Operating expenses of $26.6 million for the three months ended May 31, 2024 increased $0.3 million, or 1 percent, compared with $26.3 million for the three months ended May 31, 2023. Increased selling expense was partially offset by cost reductions in other areas.
Other Income (Expense), net
The Company recorded other income of $0.2 million for the three months ended May 31, 2024 compared to other expense of $1.2 million for the three months ended May 31, 2023. The change resulted primarily from foreign currency transaction losses of $0.1 million in the current year compared to foreign currency transaction losses of $0.9 million in the same prior year period, along with a $0.3 million increase in interest income.
Income Taxes
The Company recorded an income tax benefit of $0.2 million and income tax expense of $8.9 million for the three months ended May 31, 2024 and 2023, respectively. The effective income tax rate was -1.0 percent and 34.4 percent for the three months ended May 31, 2024 and 2023, respectively. The lower effective tax rate in the current year period resulted from a discrete tax benefit of $4.8 million related to the recognition of an income tax credit in Brazil. This discrete benefit is not expected to repeat in future periods. The impact of discrete items in the same prior year period was not significant.
- 22 -
For the Nine Months ended May 31, 2024 compared to the Nine Months ended May 31, 2023
The following section presents an analysis of the Company’s operating results displayed in the condensed consolidated statements of earnings for the nine months ended May 31, 2024 and 2023. It should be read together with the industry segment information in Note 14 to the condensed consolidated financial statements:
|
|
|
Nine months ended |
|
|
|
|||||
|
($ in thousands) |
|
May 31,
|
|
|
May 31,
|
|
|
Percent
|
||
|
Consolidated |
|
|
|
|
|
|
|
|
||
|
Operating revenues |
|
$ |
452,076 |
|
|
$ |
506,953 |
|
|
(11%) |
|
Gross profit |
|
$ |
145,356 |
|
|
$ |
160,499 |
|
|
(9%) |
|
Gross margin |
|
|
32.2 |
% |
|
|
31.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Operating expenses (1) |
|
$ |
82,248 |
|
|
$ |
81,679 |
|
|
1% |
|
Operating income |
|
$ |
63,108 |
|
|
$ |
78,820 |
|
|
(20%) |
|
Operating margin |
|
|
14.0 |
% |
|
|
15.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Other income (expense), net |
|
$ |
757 |
|
|
$ |
(3,350 |
) |
|
(123%) |
|
Income tax expense |
|
$ |
10,344 |
|
|
$ |
22,320 |
|
|
(54%) |
|
Overall income tax rate |
|
|
16.2 |
% |
|
|
29.6 |
% |
|
|
|
Net earnings |
|
$ |
53,521 |
|
|
$ |
53,150 |
|
|
1% |
|
|
|
|
|
|
|
|
|
|
||
|
Irrigation Segment |
|
|
|
|
|
|
|
|
||
|
Segment operating revenues |
|
$ |
388,026 |
|
|
$ |
442,430 |
|
|
(12%) |
|
Segment operating income |
|
$ |
70,480 |
|
|
$ |
92,188 |
|
|
(24%) |
|
Segment operating margin |
|
|
18.2 |
% |
|
|
20.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Infrastructure Segment |
|
|
|
|
|
|
|
|
||
|
Segment operating revenues |
|
$ |
64,050 |
|
|
$ |
64,523 |
|
|
(1%) |
|
Segment operating income |
|
$ |
13,401 |
|
|
$ |
8,947 |
|
|
50% |
|
Segment operating margin |
|
|
20.9 |
% |
|
|
13.9 |
% |
|
|
Revenues
Operating revenues for the nine months ended May 31, 2024 decreased 11 percent to $452.1 million from $507.0 million for the nine months ended May 31, 2023, as irrigation revenues decreased $54.4 million and infrastructure revenues decreased $0.5 million. The irrigation segment provided 86 percent of the Company’s revenue during the nine months ended May 31, 2024 as compared to 87 percent for the nine months ended May 31, 2023.
North America irrigation revenues for the nine months ended May 31, 2024 of $240.4 million decreased $8.9 million, or 4 percent, from $249.3 million for the nine months ended May 31, 2023. Slightly higher unit sales volume in the current year period was more than offset by lower sales of replacement parts, the impact of a less favorable mix of shorter machines, and slightly lower average selling prices compared to the same prior year period.
International irrigation revenues for the nine months ended May 31, 2024 of $147.6 million decreased $45.6 million, or 24 percent, from $193.1 million for the nine months ended May 31, 2023. The decrease resulted primarily from lower sales volumes in Brazil and other Latin America markets compared to the same prior year period. In Brazil, market demand has declined due to a significant drop in local commodity prices that has had a negative impact on farmer profitability and liquidity. This decrease was partially offset by the favorable effects of foreign currency translation of approximately $3.9 million compared to the same prior year period.
Infrastructure segment revenues for the nine months ended May 31, 2024 of $64.1 million decreased $0.5 million, or 1 percent, from $64.6 million for the nine months ended May 31, 2023. The decrease resulted from lower sales of road safety products compared to the same prior year period. In addition, the decrease was partially attributable to lower Road Zipper System which more than offset higher lease revenue compared to the same prior year period. The prior year included a project that did not repeat in the current year.
- 23 -
Gross Profit
Gross profit for the nine months ended May 31, 2024 of $145.4 million decreased 9 percent from $160.5 million for the nine months ended May 31, 2023. The decrease in gross profit resulted primarily from lower revenues in irrigation. Gross margin was 32.2 percent of sales for the nine months ended May 31, 2024 compared with 31.7 percent of sales for the nine months ended May 31, 2023. Increased gross margin in infrastructure resulted primarily from a more favorable margin mix of revenues with higher Road Zipper System lease revenues. This favorable impact was offset by lower irrigation gross margin resulting from a decrease in revenues without a corresponding reduction in fixed costs.
Operating Expenses
Operating expenses of $82.2 million for the nine months ended May 31, 2024 increased $0.6 million compared with $81.7 million for the nine months ended May 31, 2023. Increased selling expense was partially offset by cost reductions in other areas.
Other Income (Expense), net
The Company recorded other income for the nine months ended May 31, 2024 of $0.8 million compared to other expense of $3.4 million for the nine months ended May 31, 2023. The current year period includes $0.3 million of foreign currency transaction losses compared to losses of $2.0 million in the same prior year period and $3.3 million of interest income compared to $1.6 million in the same prior year period.
Income Taxes
The Company recorded income tax expense of $10.3 million and $22.3 million for the nine months ended May 31, 2024 and 2023, respectively. The effective income tax rate was 16.2 percent and 29.6 percent for the nine months ended May 31, 2024 and May 31, 2023, respectively. The lower effective tax rate in the current year period reflects a decreased proportion of earnings in higher rate foreign jurisdictions, along with the impact of discrete benefits totaling $6.1 million compared to discrete benefits totaling $0.8 million in the same prior year period.
- 24 -
Liquidity and Capital Resources
The Company's cash, cash equivalents, and marketable securities totaled $152.7 million at May 31, 2024 compared with $144.4 million at May 31, 2023 and $166.3 million at August 31, 2023. The Company requires cash for financing its receivables and inventories, paying operating expenses and capital expenditures, and for dividends and share repurchases. The Company meets its liquidity needs and finances its capital expenditures from its available cash and funds provided by operations along with borrowings under its credit arrangements described below. The Company’s investments in marketable securities are primarily comprised of United States government securities and investment grade corporate securities. The Company believes its current cash resources, investments in marketable securities, projected operating cash flow, and remaining capacity under its continuing bank lines of credit are sufficient to cover all its expected working capital needs, planned capital expenditures and dividends. The Company may require additional borrowings to fund potential acquisitions in the future.
The Company’s total cash and cash equivalents held by foreign subsidiaries were approximately $62.9 million, $54.6 million, and $64.6 million as of May 31, 2024, May 31, 2023, and August 31, 2023, respectively. The Company considers earnings in foreign subsidiaries to be indefinitely reinvested and would need to accrue and pay incremental state, local, and foreign taxes if such earnings were repatriated to the United States. The Company does not intend to repatriate the funds and does not expect these funds to have a significant impact on the Company’s overall liquidity.
Net working capital was $365.0 million at May 31, 2024, as compared with $358.3 million at May 31, 2023 and $351.4 million at August 31, 2023. Cash provided by operating activities totaled $42.7 million during the nine months ended May 31, 2024, compared to cash provided by operating activities of $59.2 million during the nine months ended May 31, 2023. The decrease resulted primarily from an increase in inventories that was partially offset by a decrease in receivables compared to the same prior year period.
Cash flows used in investing activities totaled $32.4 million during the nine months ended May 31, 2024 compared to $18.9 million during the nine months ended May 31, 2023. Purchases of marketable securities amounted to $15.0 million in the current year compared to $4.9 million in the same prior year period. Purchases of property, plant, and equipment were $23.5 million, compared to $13.3 million in the same prior year period.
Cash flows used in financing activities totaled $30.2 million during the nine months ended May 31, 2024 compared to cash flows used in financing activities of $13.5 million during the nine months ended May 31, 2023. During the current year period, the Company repurchased $17.9 million of common stock.
Capital Allocation Plan
The Company’s capital allocation plan is to continue investing in revenue and earnings growth, combined with a defined process for enhancing returns to stockholders. Under the Company’s capital allocation plan, the priorities for uses of cash include:
Capital Expenditures
Capital expenditures for fiscal 2024 are expected to be approximately $30.0 million, including equipment replacement, productivity improvements, new product development and commercial growth investments. The increase over recent levels of capital expenditures is primarily related to modernization and productivity improvements planned at certain manufacturing facilities. The Company’s management does maintain flexibility to modify the amount and timing of some of the planned expenditures in response to economic conditions.
Dividends
In the third quarter of fiscal 2024, the Company paid a quarterly cash dividend to stockholders of $0.35 per common share, or $3.8 million, compared to a quarterly cash dividend of $0.34 per common share, or $3.7 million, in the third quarter of fiscal 2023.
- 25 -
Share Repurchases
The Company’s Board of Directors authorized a share repurchase program of up to $250.0 million of common stock with no expiration date. Under the program, shares may be repurchased in privately negotiated and/or open market transactions as well as under formalized trading plans in accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.
During the three and nine months ended May 31, 2024, the Company repurchased 154 thousand shares of its common stock under the program in open market transactions for $17.9 million, including excise taxes of $0.2 million. There were no shares repurchased during the three or nine months ended May 31, 2023. As of May 31, 2024, the repurchased shares were held as treasury stock and $46.0 million of the authorization remained available for future share repurchases.
Long-Term Borrowing Facilities
Senior Notes . The Company has outstanding $115.0 million in aggregate principal amount of Senior Notes, Series A (the “Senior Notes”). The entire principal of the Senior Notes is due and payable on February 19, 2030. Interest on the Senior Notes is payable semi-annually at a fixed annual rate of 3.82 percent. Borrowings under the Senior Notes are unsecured. The Company used the proceeds of the sale of the Senior Notes for general corporate purposes, including acquisitions and dividends.
Revolving Credit Facility . The Company has outstanding a $50.0 million unsecured Amended and Restated Revolving Credit Facility (the “Revolving Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”) expiring August 26, 2026. The Company intends to use borrowings under the Revolving Credit Facility for working capital purposes and to fund acquisitions. At May 31, 2024 and 2023, the Company had no outstanding borrowings under the Revolving Credit Facility. The amount of borrowings available at any time under the Revolving Credit Facility is reduced by the amount of standby letters of credit issued by Wells Fargo then outstanding. At May 31, 2024, the Company had the ability to borrow up to $50.0 million under the Revolving Credit Facility. The Revolving Credit Facility may be increased by up to an additional $50.0 million at any time, subject to additional commitment approval. Borrowings under the Revolving Credit Facility bear interest at a variable rate equal to the Secured Overnight Financing Rate ("SOFR") plus a margin of between 100 and 210 basis points depending on the Company’s leverage ratio then in effect (which resulted in a variable rate of 6.69 percent at May 31, 2024), subject to adjustment as set forth in the loan documents for the Revolving Credit Facility. Interest is paid on a monthly to quarterly basis depending on loan type. The Company currently pays an annual commitment fee on the unused portion of the Revolving Credit Facility. The fee is between 0.125 percent and 0.2 percent on the unused balance depending on the Company’s leverage ratio then in effect (which resulted in a fee of 0.125 percent at May 31, 2024).
Borrowings under the Revolving Credit Facility have equal priority with borrowings under the Company’s Senior Notes. Each of the credit arrangements described above include certain covenants relating primarily to the Company’s financial condition. These financial covenants include a funded debt to EBITDA leverage ratio and an interest coverage ratio. In the event that the loan documents for the Revolving Credit Facility were to require the Company to comply with any financial covenant that is not already included or is more restrictive than what is already included in the arrangement governing the Senior Notes, then such covenant shall be deemed incorporated by reference for the benefit of holders of the Senior Notes. Upon the occurrence of any event of default of these covenants, including a change in control of the Company, all amounts outstanding thereunder may be declared to be immediately due and payable. At May 31, 2024 and 2023, the Company was in compliance with all financial loan covenants contained in its credit arrangements in place as of each of those dates.
Contractual Obligations and Commercial Commitments
There have been no material changes in the Company’s contractual obligations and commercial commitments as described in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2023.
ITE M 3 – Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes from the Company’s quantitative and qualitative disclosures about market risk previously disclosed in the Company’s most recent Annual Report on Form 10-K. See discussion of the Company’s quantitative and qualitative disclosures about market risk under Part II, Item 7A in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2023.
ITEM 4 – Controls and Procedures
- 26 -
Disclosure Controls and Procedures
The Company carried out an evaluation under the supervision and the participation of the Company’s management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of May 31, 2024.
Changes in Internal Control over Financial Reporting
The CEO and CFO determined that there has not been any significant change to the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
- 27 -
Part II – OTHE R INFORMATION
ITEM 1 – Legal Proceedings
See the disclosure in Note 9 – Commitments and Contingencies to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is hereby incorporated herein by reference.
ITEM 1A – R isk Factors
There have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussions of the Company’s risk factors under Part I, Item 1A in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2023.
ITEM 2 – Unregistered Sales of Equ ity Securities and Use of Proceeds
The table below sets forth information with respect to purchases of the Company’s common stock made by or on behalf of the Company during the three months ended May 31, 2024:
|
ISSUER PURCHASES OF EQUITY SECURITIES |
|
|||||||||||||||||
|
Period |
|
Total Number of Shares Purchased |
|
|
|
Average Price Paid Per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
(1)
|
|
||||
|
March 1, 2024 to March 31, 2024 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
$ |
|
63,700 |
|
|
April 1, 2024 to April 30, 2024 |
|
|
73,355 |
|
|
$ |
|
115.72 |
|
|
|
73,355 |
|
|
$ |
|
55,211 |
|
|
May 1, 2024 to May 31, 2024 |
|
|
80,276 |
|
|
$ |
|
115.03 |
|
|
|
80,276 |
|
|
$ |
|
45,977 |
|
|
Total |
|
|
153,631 |
|
|
$ |
|
115.36 |
|
|
|
153,631 |
|
|
$ |
|
45,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
(1) On January 3, 2014, the Company announced that its Board of Directors authorized the Company to repurchase up to $150.0 million of common stock through January 2, 2016. On July 22, 2015, the Company announced that its Board of Directors increased its outstanding share repurchase authorization by $100.0 million with no expiration. Under the program, shares may be repurchased in privately negotiated and/or open market transactions as well as under formalized trading plans in accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. |
|
|||||||||||||||||
ITEM 3 – Defaults Upo n Senior Securities
None.
ITEM 4 – Mine Sa fety Disclosures
Not applicable.
ITEM 5 – Othe r Information
None.
- 28 -
ITEM 6 – Exhibits
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Exhibit |
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No. |
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Description |
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3.1 |
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3.2 |
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4.1 |
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31.1* |
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31.2* |
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32.1* |
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101* |
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Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language ("Inline XBRL"). |
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104* |
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Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). |
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* Filed herein.
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SIGNA TURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 27th day of June 2024.
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LINDSAY CORPORATION |
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By: |
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/s/ BRIAN L. KETCHAM |
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Name: |
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Brian L. Ketcham |
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Title: |
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Senior Vice President and Chief Financial Officer |
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(on behalf of the registrant and as principal financial officer) |
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