Lindsay Corp. Earnings Call: Margins Steady, Demand Soft

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

Lindsay Corp. Balances Resilient Margins With Soft Demand in Mixed Quarter

Lindsay Corp.’s latest earnings call painted a picture of cautious stability: profitability and margins held firm despite declining revenues, aided by strong cost control, a major new project win in the Middle East and North Africa (MENA), and a sizable new share repurchase authorization. At the same time, management underscored persistent macro headwinds, particularly in global irrigation markets, and warned that near-term demand and free cash flow will remain pressured by weak farm economics, lumpy project timing, and elevated capital spending.

Stable Margins Despite Lower Total Revenue

Lindsay reported total revenue of $155.8 million, down 6% from $166.3 million a year earlier, but managed to keep operating income essentially in line at $19.6 million versus $20.9 million. The operating margin held steady at 12.6%, signaling that the company protected earnings quality through disciplined pricing and cost control even as top-line momentum softened. This resilience in profitability is a key theme for investors weighing revenue pressure against operational execution.

Irrigation Margins Improve as Segment Revenue Falls

In the core irrigation segment, sales declined 9% to $133.4 million, pressured by weaker international demand and softer conditions in North America. Yet operating income reached $23.0 million and the segment’s operating margin improved to 17.2% of sales, up from 16.8% in the prior year. Management attributed this margin strength to pricing discipline, productivity gains and cost management initiatives, underscoring that the business can generate solid profitability even in a downturn, which may support earnings once volumes stabilize or recover.

Infrastructure Delivers Solid Growth but Tighter Margins

Infrastructure was a bright spot on the top line, with revenue climbing 17% year over year to $22.4 million from $19.2 million, driven by higher sales of road safety products. Operating income in the segment increased 9% to $4.5 million, though the operating margin slipped to 20.1% from 21.5%. The margin compression reflects higher operating expenses and highlights the trade-off between growth and profitability in this smaller but increasingly important part of Lindsay’s portfolio.

Major MENA Project Underscores International Scale

Lindsay announced a significant international win: a supply agreement for Zimmatic systems and FieldNET technology in the MENA region valued at approximately $80 million. Roughly $70 million of that is expected to be realized in the current fiscal year, demonstrating the company’s ability to compete for and secure large-scale global irrigation projects. While management noted that margins on this project will run slightly below segment averages, the win validates Lindsay’s technology and project capabilities and supports the order book in a challenging demand environment.

Strong Liquidity and Step-Up in Shareholder Returns

The balance sheet remains a key support for the equity story. Lindsay ended the quarter with total available liquidity of $249.6 million, including $199.6 million in cash and a $50 million undrawn revolver. The company returned capital aggressively, deploying $30.3 million on share repurchases during the quarter and authorizing a new buyback program of up to $150 million. This reinforces management’s confidence in the long-term outlook and offers a meaningful offset to near-term earnings volatility for shareholders.

Strategic Capital Investments Aim at Productivity Gains

Lindsay is pressing ahead with strategic capital projects designed to enhance efficiency and long-term competitiveness. A new large tube mill in Lindsay, Nebraska, is now online and operating near full production, while the company is progressing a reengineering of its galvanizing facility. These projects are expected to drive productivity, safety, and efficiency improvements over time. However, management cautioned that incremental depreciation from these investments will likely offset much of the near-term benefit until demand recovers, making the payoff more back-end loaded.

EPS Holds Up With Help From Other Income

Net earnings dipped only slightly to $16.5 million from $17.2 million, with diluted EPS of $1.54 versus $1.57 in the prior-year quarter. The modest decline reflects both lower operating income and a slightly higher effective tax rate. Increased other (interest) income provided an important buffer, helping to offset operating pressures and highlighting the benefit of a strong balance sheet in a higher-rate environment.

Revenue Pressure Concentrated in Irrigation, Especially International

The headline revenue decline of 6% was driven mainly by weakness in irrigation, which fell 9% to $133.4 million. International irrigation was hit hardest, dropping about 14.9% from $69.4 million to $59.1 million, while North America irrigation was down a more modest 4% to $74.3 million. The international shortfall reflects both timing effects from the MENA project and macroeconomic constraints in key markets, underscoring the cyclical and geographically sensitive nature of Lindsay’s irrigation business.

International Volatility and Brazil Weakness Weigh on Demand

Management stressed that international irrigation results were shaped by timing and macro factors rather than structural issues. The MENA project, although large, contributes revenue unevenly over time, creating quarter-to-quarter volatility. In Brazil, elevated interest rates and tight credit have significantly constrained growers’ ability to finance equipment purchases, delaying investments in new irrigation systems. These dynamics are likely to keep international results choppy in the near term, even as the project pipeline remains attractive.

Infrastructure Exposed to Lumpy Road Zipper Timing

Within Infrastructure, the company flagged margin pressure and project lumpiness, particularly in its Road Zipper business. While the segment grew revenue 17%, operating margin declined as higher operating expenses offset some of the top-line gains. Importantly for comparability, management does not expect a large Road Zipper project to exit the funnel in fiscal 2026 similar to the $20 million shipment recorded in the prior-year quarter. This absence creates tough comparisons for upcoming periods, and current identified opportunities may only offset roughly half of that gap, mainly in the second half of the year.

Free Cash Flow Hit by Working Capital and CapEx

Free cash flow came under pressure as Lindsay increased working capital to support growth and continued to fund elevated capital expenditures tied to its tube mill and galvanizing projects. While these investments are aimed at boosting long-term productivity and competitiveness, they weigh on near-term cash generation. Management also noted that higher depreciation will initially mask some of the efficiency benefits until volumes improve, suggesting a period of muted free cash flow despite solid liquidity.

Macro Headwinds Continue to Suppress Farmer Demand

The company emphasized persistent macro headwinds that are curbing irrigation demand. Trade uncertainty, low commodity prices, elevated input costs and constrained farmer credit—particularly acute in Brazil—are collectively pressuring grower profitability. In this environment, farmers are delaying large capital expenditures such as new irrigation systems. Lindsay’s results and commentary indicate that while the long-term need for efficient irrigation remains intact, the near-term investment cycle is clearly under strain.

Slight Earnings Drag from Taxes and Softer Operating Income

The modest year-over-year decline in net earnings was driven primarily by lower operating income and a slightly higher effective tax rate. These factors were only partly offset by higher other income. While the overall earnings impact is limited, it highlights how even small shifts in tax and operating performance can affect bottom-line results in a period of flat margins and lower revenue.

Guidance: Cautious Near Term, Supported by Projects and Liquidity

Looking ahead, Lindsay’s guidance signals caution rather than optimism for the immediate future. Management expects North America irrigation to remain soft and is planning for a flat-to-down full-year run rate after a 4% decline in the first quarter. Overall irrigation revenue fell 9% in Q1, and the company is not assuming a rapid rebound. The $80 million MENA project, with roughly $70 million in revenue slated for this fiscal year and margins slightly below segment averages, provides important support, as does a robust pipeline of international projects, though Brazil is expected to remain under pressure from high rates and tight credit. In Infrastructure, management highlighted the lack of a large Road Zipper project in fiscal 2026, with current opportunities expected to offset only about half of last year’s $20 million shipment, mainly in the second half. Strong liquidity of $249.6 million and the new $150 million share repurchase authorization give Lindsay flexibility to navigate this period, but near-term margin and free cash flow improvement from recent capital investments is expected only once demand improves, as incremental depreciation will initially offset productivity gains.

Lindsay’s earnings call ultimately presented a company executing well operationally in the face of cyclical and macroeconomic challenges. Investors heard a story of stable margins, disciplined capital allocation, and strategic investment, counterbalanced by declining revenues, soft irrigation demand and lumpy infrastructure projects. With a strong balance sheet and a major international contract in hand, Lindsay appears well positioned for a potential upturn, but management’s cautious tone suggests that patience will be required before the full benefits of its investments and project wins flow through to earnings and cash flow.