Lindsay Corp Earnings Call Balances Caution and Confidence

Lindsay Corp. ((LNN)) has held its Q1 earnings call. Read on for the main highlights of the call.

Lindsay Corp. Strikes Cautious but Confident Tone Amid Revenue Pressure

Lindsay Corp.’s latest earnings call painted a picture of cautious resilience. Despite a drop in revenue, the company preserved healthy margins, secured a sizable new project in the Middle East and North Africa (MENA), and returned significant cash to shareholders. Management acknowledged persistent macroeconomic pressures and lumpy project timing but expressed guarded optimism about stabilizing demand in North America and solid growth opportunities internationally, underpinned by a strong balance sheet and strategic investments.

Revenue and Profitability: Margins Hold as Sales Slip

Lindsay reported total revenue of $155.8 million, down 6% from $166.3 million a year earlier, reflecting weaker irrigation demand and tough year-over-year comparisons. Operating income also fell 6% to $19.6 million from $20.9 million. However, the company maintained its operating margin at 12.6%, signaling that pricing discipline and cost control are helping protect earnings quality even in a lower-revenue environment. Net earnings dipped slightly to $16.5 million, or $1.54 per diluted share, versus $17.2 million, or $1.57, in the prior-year quarter.

Irrigation Segment: Margin Strength Despite Lower Sales

The irrigation segment, Lindsay’s core business, saw a 9% revenue decline to $133.4 million, pressured by softer demand and international weakness. Yet operating income in irrigation reached $23.0 million, and the segment’s operating margin improved to 17.2% of sales, up from 16.8% a year ago. Management credited pricing actions, cost management, and productivity gains for offsetting volume and mix headwinds, demonstrating that the business can defend profitability even as top-line conditions remain challenging.

Infrastructure: Revenue Growth but Margin Compression

Infrastructure provided a bright spot on growth but showed some profitability pressure. Segment revenue climbed 17% to $22.4 million from $19.2 million, driven mainly by higher sales of road safety products. Operating income rose 9% to $4.5 million from $4.1 million. Still, the infrastructure operating margin slipped to 20.1% from 21.5% as higher operating expenses weighed on results. Management also emphasized that the Road Zipper business will be lumpy, with no large project expected to exit the funnel in fiscal 2026, creating tougher comparisons versus last year’s sizeable shipment.

MENA Project Win Underscores Global Competitiveness

A major highlight of the quarter was Lindsay’s announcement of a roughly $80 million supply agreement for Zimmatic irrigation systems and FieldNET technology in the MENA region, with about $70 million expected to be recognized as revenue this fiscal year. This contract underscores the company’s ability to compete for and secure large-scale global projects in a highly competitive market. While margins on the project are expected to be slightly below segment averages, the win provides meaningful volume and reinforces Lindsay’s position as a technology-enabled irrigation provider on the world stage.

Balance Sheet Strength and Aggressive Share Repurchases

Lindsay emphasized its strong financial position, with total available liquidity of $249.6 million, including $199.6 million in cash and a $50 million undrawn revolver. The company used this balance sheet strength to enhance shareholder returns, repurchasing $30.3 million of stock in the quarter. It also authorized a new share repurchase program of up to $150 million, signaling confidence in the long-term value of the business and offering potential support to earnings per share over time despite modest near-term profit pressure.

Strategic Capital Investments: Building for Future Efficiency

Management highlighted ongoing strategic capital projects aimed at boosting productivity and competitiveness. The company has activated a new large tube mill in Lindsay, Nebraska, which is now near full production, and is progressing on a reengineering of its galvanizing facility. These investments are expected to deliver productivity, safety, and efficiency gains over time. However, incremental depreciation from these projects will likely offset much of the near-term financial benefit until demand strengthens, making these initiatives more of a medium- to long-term margin lever.

EPS Stability Supported by Other Income

Earnings per share slipped only slightly, to $1.54 from $1.57, despite lower operating income and a somewhat higher effective tax rate. Management noted that increased other income, including higher interest income, helped cushion the impact of operating pressure. While not a primary earnings driver, this non-operating support contributed to keeping net income relatively stable in a challenging quarter.

Revenue Declines Led by Irrigation and International Weakness

The overall 6% revenue decline was driven mainly by the irrigation business, where sales fell 9%. International irrigation revenue was particularly weak, dropping about 14.9% from $69.4 million to $59.1 million. North America irrigation fared somewhat better but still declined 4% to $74.3 million. The disparity underscores the sensitivity of Lindsay’s international operations to project timing and macro conditions, while North America appears to be stabilizing at a softer level.

International Markets: Project Timing and Brazil Drag

Management pointed to specific international challenges behind the irrigation downturn. The timing of MENA project revenue recognition led to softer reported results this quarter, even as the underlying project funnel remains robust. In Brazil, elevated interest rates and tight credit are restricting growers’ ability to finance large equipment purchases, leading to deferred investments and weaker demand. The result is more volatility from quarter to quarter and added uncertainty around near-term international performance.

Infrastructure Outlook: Lumpy Road Zipper Activity Weighs on Margins

While infrastructure revenue grew strongly, the segment faces a more complicated outlook. Higher operating expenses compressed margins, and the absence of a large Road Zipper project in fiscal 2026 — compared to a $20 million shipment in the prior-year quarter — sets up difficult comparisons. Current opportunities may offset only about half of this shortfall, with most of the benefit expected in the second half. Investors should expect continued lumpiness in results as project timing plays an outsized role in quarterly performance.

Free Cash Flow and CapEx: Near-Term Pressure, Long-Term Upside

Free cash flow came under pressure as Lindsay increased working capital to support growth and ramped up capital expenditures for its tube mill and galvanizing upgrades. Management acknowledged that elevated capex and higher depreciation will likely offset some of the near-term productivity gains. The company is effectively trading short-term free cash flow for longer-term efficiency and capacity, positioning itself to benefit more fully when end-market demand eventually improves.

Macro Headwinds and Slight Earnings Pressure

The call underscored ongoing macro headwinds: trade uncertainty, low commodity prices, high input costs, and constrained grower credit — particularly in Brazil — are all dampening farmer profitability and delaying major capital spending on irrigation equipment. These pressures contributed to lower operating income and a slightly higher effective tax rate, which together nudged net earnings down year over year despite help from higher other income. Management characterized the environment as challenging but manageable, with structural demand drivers intact over the longer term.

Forward-Looking Guidance: Soft Near Term, Select Growth Drivers

Looking ahead, Lindsay’s guidance remained cautious. The company expects North America irrigation demand to stay “soft,” and is planning for a flat-to-down full-year run rate relative to current levels, after a 4% year-over-year decline in Q1. Overall irrigation revenue fell 9% in the quarter, and management does not anticipate a quick turnaround given persistent macro and credit pressures, notably in Brazil. That said, the roughly $80 million MENA irrigation project — with about $70 million to be recognized this fiscal year — and a healthy pipeline of international projects should provide a meaningful revenue tailwind, even if margins on the project are modestly below segment averages. Infrastructure is expected to grow but face a drag from the absence of a large Road Zipper project in fiscal 2026, with new opportunities likely offsetting only part of last year’s $20 million comparable shipment. Management reiterated that liquidity remains strong at $249.6 million, share repurchases will continue to be an important capital allocation tool, and margin improvements from recent capex are more likely to materialize after demand recovers, given higher near-term depreciation.

In summary, Lindsay’s earnings call reflected a company navigating a tough demand backdrop while preserving profitability, investing for the future, and rewarding shareholders. Revenue and earnings are under modest pressure, especially in international irrigation, but strong margins, a major MENA win, robust liquidity, and disciplined capital deployment provide a solid foundation. For investors, the story is one of short-term caution balanced by long-term opportunity, with the timing of a demand recovery likely to be the key driver of future upside.