Lindsay Corporation (LNN - Free Report) reported first-quarter fiscal 2017 (ended Nov 30, 2016) adjusted earnings of 8 cents per share, plunging 87% from 62 cents per share in the prior-year quarter. Further, earnings fell short of the Zacks Consensus Estimate of 63 cents, a negative earnings surprise of 87%.
First-quarter performance in the irrigation segment was negatively impacted by low volume and resulting cost deleverage in the company’s operations while the infrastructure segment continues to maintain solid performance as market activity reflects improving demand.
The irrigation equipment manufacturer reported revenues of $110 million, missing the Zacks Consensus Estimate of $121 million. Revenues decreased around 9% from the year-ago quarter.
U.S. irrigation revenues went down 11% year over year to $89.9 million owing to a 15% drop in U.S irrigation revenues and a 6% drop in international irrigation revenues. Domestic irrigation revenues declined mainly due to a reduction in irrigation equipment unit volume as falling commodity prices and reduced farm income negatively impacted irrigation equipment demand. International irrigation revenues declined as higher sales in Brazil, Africa and the Middle East were negated by weakness in other markets. Infrastructure segment revenues edged up 1% to $20.5 million as increased sales volume in road safety products were offset by lower Road Zipper system sales and leasing.
Operational Update
Cost of operating revenues decreased 6% year over year to $82 million. Gross profit dipped 18% to $28.4 million from $34.4 million in the year-ago quarter. Gross margin was down 25.7%, 260 basis points (bps) from the prior-year quarter. Higher margins in the infrastructure segment were more than offset by lower margin in the irrigation segment due to reduced factory overhead absorption and increased product warranty costs owing to a specific component field-fix as well as changes in the international regional mix of sales. Increased cost absorption in Road Zipper system production and volume leverage from road safety product sales led to improvement in infrastructure margins.
Operating expenses went up 13% year over year to $25.6 million in the quarter primarily due to higher new product development and testing costs along with some specific project-related legal and outside consulting service fees. The company posted an operating profit of $2.7 million, a 77% drop from $11.7 million in the year-ago quarter. Operating margin came in at 2.5%, a 720 bps contraction from 9.7% in the prior-year quarter. Lindsay’s backlog as of Nov 30, 2016, was $55.9 million compared with $61.9 million as of Nov 30, 2015.
Financial Position
Lindsay had cash and cash equivalents of $103 million as of Nov 30, 2016, compared with $101.2 million as of Nov 30, 2015. The company reported cash flow of $8.1 million in first-quarter fiscal 2017, compared with $8.5 million in prior-year quarter. Lindsay had long-term debt of $117 million at the end of first-quarter fiscal 2017, flat year over year.
During fiscal 2016, the company had repurchased a total of 688,790 shares for $48.3 million while no repurchases were made in first-quarter fiscal 2017. As of Nov 30, 2016, shares worth around $63.7 million remained under the company’s buyback program.
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Lindsay Corporation (LNN - Free Report) reported first-quarter fiscal 2017 (ended Nov 30, 2016) adjusted earnings of 8 cents per share, plunging 87% from 62 cents per share in the prior-year quarter. Further, earnings fell short of the Zacks Consensus Estimate of 63 cents, a negative earnings surprise of 87%.
First-quarter performance in the irrigation segment was negatively impacted by low volume and resulting cost deleverage in the company’s operations while the infrastructure segment continues to maintain solid performance as market activity reflects improving demand.
The irrigation equipment manufacturer reported revenues of $110 million, missing the Zacks Consensus Estimate of $121 million. Revenues decreased around 9% from the year-ago quarter.
U.S. irrigation revenues went down 11% year over year to $89.9 million owing to a 15% drop in U.S irrigation revenues and a 6% drop in international irrigation revenues. Domestic irrigation revenues declined mainly due to a reduction in irrigation equipment unit volume as falling commodity prices and reduced farm income negatively impacted irrigation equipment demand. International irrigation revenues declined as higher sales in Brazil, Africa and the Middle East were negated by weakness in other markets. Infrastructure segment revenues edged up 1% to $20.5 million as increased sales volume in road safety products were offset by lower Road Zipper system sales and leasing.
Operational Update
Cost of operating revenues decreased 6% year over year to $82 million. Gross profit dipped 18% to $28.4 million from $34.4 million in the year-ago quarter. Gross margin was down 25.7%, 260 basis points (bps) from the prior-year quarter. Higher margins in the infrastructure segment were more than offset by lower margin in the irrigation segment due to reduced factory overhead absorption and increased product warranty costs owing to a specific component field-fix as well as changes in the international regional mix of sales. Increased cost absorption in Road Zipper system production and volume leverage from road safety product sales led to improvement in infrastructure margins.
Operating expenses went up 13% year over year to $25.6 million in the quarter primarily due to higher new product development and testing costs along with some specific project-related legal and outside consulting service fees. The company posted an operating profit of $2.7 million, a 77% drop from $11.7 million in the year-ago quarter. Operating margin came in at 2.5%, a 720 bps contraction from 9.7% in the prior-year quarter. Lindsay’s backlog as of Nov 30, 2016, was $55.9 million compared with $61.9 million as of Nov 30, 2015.
Financial Position
Lindsay had cash and cash equivalents of $103 million as of Nov 30, 2016, compared with $101.2 million as of Nov 30, 2015. The company reported cash flow of $8.1 million in first-quarter fiscal 2017, compared with $8.5 million in prior-year quarter. Lindsay had long-term debt of $117 million at the end of first-quarter fiscal 2017, flat year over year.
During fiscal 2016, the company had repurchased a total of 688,790 shares for $48.3 million while no repurchases were made in first-quarter fiscal 2017. As of Nov 30, 2016, shares worth around $63.7 million remained under the company’s buyback program.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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