LINDSAY CORP

Previous wording

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 three months ended November 30, 2023.

Current wording

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 six months ended February 29, 2024.

Previous wording

Operating revenues for the three months ended November 30, 2023 were $161.4 million, a decrease of 8 percent compared to $176.2 million for the three months ended November 30, 2022. Irrigation segment revenues decreased 8 percent to $140.2 million and infrastructure segment revenues decreased 12 percent to $21.2 million. Net earnings for the three months ended November 30, 2023 were $15.0 million, or $1.36 per diluted share, compared to net earnings of $18.2 million, or $1.65 per diluted share, for the three months ended November 30, 2022.

Current wording

Operating revenues for the three months ended February 29, 2024 were $151.5 million, a decrease of 9 percent compared to $166.2 million for the three months ended February 28, 2023. Irrigation segment revenues for the three months ended February 29, 2024 decreased 10 percent to $133.0 million from the same prior year period, while infrastructure segment revenues of $18.5 million were equivalent during both periods. Net earnings for the three months ended February 29, 2024 were $18.1 million, or $1.64 per diluted share, compared to net earnings of $18.1 million, or $1.63 per diluted share, for the three months ended February 28, 2023.

Previous wording

Agricultural commodity prices – As of November 2023, U.S. corn prices have decreased approximately 32 percent and U.S. soybean prices have decreased approximately 8 percent from November 2022. Agriculture commodity prices continue to fluctuate based on supply factors, such as global production and inventory levels and the ongoing conflict between Ukraine and Russia, and demand factors such as food and feed consumption, biofuel production and the level of China's demand for agricultural imports.

Current wording

Agricultural commodity prices – As of February 2024, U.S. corn prices have decreased approximately 35 percent and U.S. soybean prices have decreased approximately 25 percent from price levels prevailing in February 2023. The reduction in commodity prices is due primarily to higher production levels in calendar 2023 that resulted in increased supply and higher inventory levels at the end of the year. Agriculture commodity prices fluctuate based on supply factors, such as global production and inventory levels and the ongoing conflict between Ukraine and Russia, and demand factors such as food and feed consumption, biofuel production and the level of China's demand for agricultural imports.

Previous wording

Net farm income –As of December 2023, the U.S. Department of Agriculture (the “USDA”) estimated 2023 U.S. net farm income to be $151.1 billion, a decrease of 17 percent from 2022 U.S. net farm income of $182.8 billion, which was an all-time record level. The majority of this projected decrease is expected to come from a reduction in government support payments while cash receipts for crops is projected to decrease by 4 percent and cash expenses are projected to increase by 4 percent.

Current wording

Net farm income –As of February 2024, the U.S. Department of Agriculture (the “USDA”) estimated 2024 U.S. net farm income to be $116.1 billion, a decrease of 26 percent from forecasted 2023 U.S. net farm income of $155.9 billion. The majority of this projected decrease is expected to come from a reduction in government support payments while cash receipts for crops is projected to decrease by 6 percent and cash expenses are projected to increase by 4 percent.

Previous wording

Demand for irrigation equipment in the U.S. has increased over the same prior year period as 2023 net farm income levels, although lower than historically high 2022 levels, still support farmer profitability and demand for investment. The Company has been able to maintain its pricing while supply chain constraints, such as steel and other raw material costs as well as freight and logistics costs, have eased somewhat compared to the same prior year period.

Current wording

Demand for irrigation equipment in the U.S. has remained stable during the first half of fiscal 2024 compared to the same prior year period. Net farm income levels in calendar 2023, although lower than historically high 2022 levels, supported farmer profitability and demand for investment so far in our fiscal 2024. However, the forecasted decline in estimated 2024 net farm income, if realized, could negatively affect demand for irrigation equipment during the remainder of our fiscal 2024. 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.

Previous wording

-20 - 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.

Current wording

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 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.

Previous wording

The backlog of unshipped orders at November 30, 2023 was $86.8 million compared with $129.6 million at November 30, 2022. The irrigation backlog was lower compared to the prior year while the infrastructure backlog was comparable to the prior year. 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.

Current wording

The backlog of unshipped orders at February 29, 2024 was $94.2 million compared with $95.2 million at February 28, 2023. Included in these backlogs are amounts of $20.3 million and $5.4 million, respectively, for orders that are not expected to be fulfilled within the subsequent twelve months. The irrigation backlog was lower and the infrastructure backlog was higher compared to the prior year. 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.

Previous wording

Includes $7.9 million and $7.4 million of corporate operating expenses for the three months ended November 30, 2023 and 2022, respectively.

Current wording

Includes $7.1 million and $7.6 million of corporate operating expenses for the three months ended February 29, 2024 and February 28, 2023, respectively.

Previous wording

North America irrigation revenues for the three months ended November 30, 2023 of $89.4 million increased $5.4 million, or 7 percent, from $83.9 million for the three months ended November 30, 2022. The increase resulted primarily from the impact of higher unit sales volume that was partially offset by the impact of a less favorable mix of shorter machines compared to the prior year first quarter. Average selling prices remained stable and were comparable to the same prior year period.

Current wording

North America irrigation revenues for the three months ended February 29, 2024 of $82.8 million decreased $7.6 million, or 8 percent, from $90.4 million for the three months ended February 28, 2023. The decrease resulted from 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. This decrease was partially offset by the impact of slightly higher unit sales volume compared to the same prior year period.

Previous wording

Gross profit for the three months ended November 30, 2023 of $49.9 million decreased 6 percent from $53.0 million for the three months ended November 30, 2022. The decrease in gross profit resulted primarily from lower revenues in both segments, the impact of which was partially offset by improved gross margin. Gross margin was 30.9 percent of sales for the three months ended November 30, 2023 compared with 30.1 percent of sales for the three months ended November 30, 2022. Increased gross margin in infrastructure resulted primarily from a more favorable margin mix of revenues with higher Road Zipper System lease revenues while irrigation gross margins were similar to the same prior year period.

Current wording

Gross profit for the three months ended February 29, 2024 of $49.0 million decreased 10 percent from $54.3 million for the three months ended February 28, 2023. The decrease in gross profit resulted primarily from lower irrigation revenues. Gross margin was 32.3 percent of sales for the three months ended February 29, 2024 compared with 32.6 percent of sales for the three months ended February 28, 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.

Previous wording

Operating expenses of $28.8 million for the three months ended November 30, 2023 increased $0.4 million, or 1 percent, compared with $28.4 million for the three months ended November 30, 2022.

Current wording

Operating expenses of $26.9 million for the three months ended February 29, 2024 decreased $0.1 million, or 1 percent, compared with $27.0 million for the three months ended February 28, 2023. Increased selling expense was offset by lower engineering and research expense and cost reductions in other areas.

Previous wording

The Company recorded other expense of $0.1 million for the three months ended November 30, 2023 compared to $0.6 million for the three months ended November 30, 2022. The change resulted primarily from higher interest income compared to the same prior year period.

Current wording

The Company recorded other income of $0.6 million for the three months ended February 29, 2024 compared to other expense of $1.5 million for the three months ended February 28, 2023. The change resulted primarily from foreign currency transaction gains of $0.1 million in the current year compared to foreign currency transaction losses of $1.1 million in the same prior year period and a $0.8 million increase in interest income.

Previous wording

The Company recorded income tax expense of $6.0 million and $5.8 million for the three months ended November 30, 2023 and 2022, respectively. The effective income tax rate was 28.5 percent and 24.1 percent for the three months ended November 30, 2023 and 2022, respectively. The higher effective tax rate reflects an increased proportion of earnings in higher rate foreign jurisdictions in the current year period. In addition, the same prior year period benefited from the impact of larger discrete items.

Current wording

The Company recorded income tax expense of $4.6 million and $7.7 million for the three months ended February 29, 2024 and February 28, 2023, respectively. The effective income tax rate was 20.2 percent and 29.8 percent for the three months ended February 29, 2024 and February 28, 2023, respectively. The lower effective tax rate in the current year period reflects a decreased proportion of earnings in higher rate foreign jurisdictions as well as a discrete income tax benefit of approximately $1.1 million realized in Brazil.

Previous wording

Operating revenues for the three months ended November 30, 2023 decreased 8 percent to $161.4 million from $176.2 million for the three months ended November 30, 2022, as irrigation revenues decreased $11.9 million and infrastructure revenues decreased $2.9 million. The irrigation segment provided 87 percent of the Company’s revenue during the three months ended November 30, 2023 as compared to 86 percent for the three months ended November 30, 2022.

Current wording

Operating revenues for the six months ended February 29, 2024 decreased 9 percent to $312.9 million from $342.4 million for the six months ended February 28, 2023, as irrigation revenues decreased $26.7 million and infrastructure revenues decreased $2.8 million. The irrigation segment provided 87 percent of the Company’s revenue during the six months ended February 29, 2024 as compared to 88 percent for the six months ended February 28, 2023.

Previous wording

Infrastructure segment revenues for the three months ended November 30, 2023 of $21.2 million decreased $2.9 million, or 12 percent, from $24.1 million for the three months ended November 30, 2022. The decrease resulted from lower Road Zipper System sales compared to the same prior year period due to a project in the same prior year period that did not repeat. This decrease was largely offset by higher Road Zipper System lease revenue and higher sales of road safety products.

Current wording

Infrastructure segment revenues for the six months ended February 29, 2024 of $39.7 million decreased $2.8 million, or 7 percent, from $42.5 million for the six months ended February 28, 2023. The decrease resulted from lower Road Zipper System sales compared to the same prior year period due to a project in the same prior year period that did not repeat. This decrease was largely offset by higher Road Zipper System lease revenue during the six months ended February 29, 2024 compared to the prior year period.

Previous wording

The Company's cash, cash equivalents, and marketable securities totaled $175.7 million at November 30, 2023 compared with $110.6 million at November 30, 2022 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.

Current wording

The Company's cash, cash equivalents, and marketable securities totaled $150.6 million at February 29, 2024 compared with $106.4 million at February 28, 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.

Previous wording

The Company’s total cash and cash equivalents held by foreign subsidiaries were approximately $70.8 million, $51.3 million, and $64.6 million as of November 30, 2023, November 30, 2022, 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.

Current wording

The Company’s total cash and cash equivalents held by foreign subsidiaries were approximately $57.3 million, $51.2 million, and $64.6 million as of February 29, 2024, February 28, 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.

Previous wording

Net working capital was $359.3 million at November 30, 2023, as compared with $332.8 million at November 30, 2022 and $351.4 million at August 31, 2023. Cash provided by operating activities totaled $21.9 million during the three months ended November 30, 2023, compared to cash provided by operating activities of $4.7 million during the three months ended November 30, 2022. This change was primarily due to a reduction in receivables in the current year as compared to the same prior year period.

Current wording

Net working capital was $371.4 million at February 29, 2024, as compared with $347.3 million at February 28, 2023 and $351.4 million at August 31, 2023. Cash provided by operating activities totaled $12.1 million during the six months ended February 29, 2024, compared to cash provided by operating activities of $7.9 million during the six months ended February 28, 2023. The increase was primarily driven by favorable improvements in working capital, mainly receivables and other current liabilities, partially offset by an increase in inventory during the current year period.

Previous wording

Cash flows used in investing activities totaled $18.2 million during the three months ended November 30, 2023 compared to $4.2 million during the three months ended November 30, 2022. The increase resulted primarily from purchases of marketable securities. Purchases of property, plant, and equipment were $6.9 million, compared to $3.8 million in the same prior year period.

Current wording

Cash flows used in investing activities totaled $30.8 million during the six months ended February 29, 2024 compared to $5.7 million during the six months ended February 28, 2023. Cash proceeds from the maturities of marketable securities amounted to $15.0 million in the current year compared to zero in the same prior year period. Purchases of property, plant, and equipment were $18.8 million, compared to $7.2 million in the same prior year period.

Previous wording

Cash flows used in financing activities totaled $5.4 million during the three months ended November 30, 2023 compared to cash flows used in financing activities of $6.2 million during the three months ended November 30, 2022. The value of

Current wording

Cash flows used in financing activities totaled $8.6 million during the six months ended February 29, 2024 compared to cash flows used in financing activities of $9.8 million during the six months ended February 28, 2023. The change was primarily the result of lower common stock withheld for payroll tax obligations compared to the same prior year period.

Previous wording

In the first quarter of fiscal 2024, the Company paid a quarterly cash dividend to stockholders of $0.35 per common share, or $3.9 million, compared to a quarterly cash dividend of $0.34 per common share, or $3.7 million, in the first quarter of fiscal 2024.

Current wording

In the second quarter of fiscal 2024, the Company paid a quarterly cash dividend to stockholders of $0.35 per common share, or $3.9 million, compared to a quarterly cash dividend of $0.34 per common share, or $3.7 million, in the second quarter of fiscal 2023.

Previous wording

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. There were no shares repurchased during the three months ended November 30, 2023 or 2022. The remaining amount available under the repurchase program was $63.7 million as of November 30, 2023.

Current wording

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. There were no shares repurchased during the six months ended February 29, 2024 or 2023. The remaining amount available under the repurchase program was $63.7 million as of February 29, 2024.

Previous wording

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 November 30, 2023 and 2022, 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 November 30, 2023, 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 6.68 percent at November 30, 2023), 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 November 30, 2023).

Current wording

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 February 29, 2024 and February 28, 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 February 29, 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 6.67 percent at February 29, 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 February 29, 2024).