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

By Zacks Investment ResearchStock MarketsApr 01, 2018 09:53PM ET
www.investing.com/analysis/lindsays-lnn-q2-earnings-in-line-revenues-miss-estimates-200302439
Lindsay's (LNN) Q2 Earnings In Line, Revenues Miss Estimates
By Zacks Investment Research   |  Apr 01, 2018 09:53PM ET
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Lindsay Corporation (NYSE:LNN) reported second-quarter fiscal 2018 (ended Feb 28, 2018) adjusted earnings of 56 cents per share, which surged 19% from 47 cents per share recorded in the prior-year quarter. Earnings came in line with the Zacks Consensus Estimate.

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

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

Lindsay Corporation Price, Consensus and EPS Surprise

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

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

Operational Update

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

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

Financial Position

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

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

Growth Initiatives

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

Outlook

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

Share Price Performance

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

Zacks Rank & Other Stocks to Consider

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

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

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

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

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

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Komatsu Ltd. (KMTUY): Free Stock Analysis Report

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Lindsay Corporation (LNN): Free Stock Analysis Report

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Zacks Investment Research
Lindsay's (LNN) Q2 Earnings In Line, Revenues Miss Estimates
 

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

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