Lindsay (LNN) Q3 2025 Earnings Call Transcript

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ETCALL PARTICIPANTSPresident & Chief Executive Officer — Randy WoodSenior Vice President & Chief Financial Officer — Brian KetchamNeed a quote from one of our analysts. [ tected]RISKSManagement stated, "We have seen softer demand relative to the prior year" in North American irrigation for Q3 FY2025, tempering demand expectations for the upcoming quarter

The benchmark interest rate in Brazil was elevated to 15% as of June 2025, described by management as "the highest rate since February," which has mpted a "wait and see" apach among customers, possibly restricting short-term market activity until crop funding plans are clarified

Infrastructure segment operating margin declined to 21. 1% in Q3 FY2025 from 25. 8% in the prior year due to "less favorable margin mix within Road Zipper System revenues compared to the prior year. "TAKEAWAYSConsolidated Revenues: $169. 5 million in Q3 FY2025, up 22% year over year, with contributions from both the Irrigation and Infrastructure segments

Normalized EPS Growth: Excluding the prior year's tax credit, management reported a 26% increase in earnings per

S, and the increasing impact of growth in subscription-based recurring revenues

Pricing Action and Cost Impact: Management stated U

Irrigation pricing actions are "slight" and steel tariffs had not duced material cost pressure

Nology Partnerships: Strategic partnership with Pessl Instruments, integrating FieldNET Advisor and infield sensors, is resulting in increased cross-selling and enhanced agronomic decision support

SUMMARYLindsay (LNN 0. 80%) reported accelerated top-line growth in Q3 FY2025, supported by robust international irrigation demand, major ject execution in the Middle East and North Africa, and steady performance in road safety ducts

Management specifically highlighted the successful advancement and earlier-than-expected shipping of its flagship MENA ject, as well as new ject wins expected to support future revenue

Stable liquidity and continued capital discipline were emphasized as strategic advantages

President Randy Wood characterized current U

Irrigation demand as "softer," with limited storm-driven replacement activity, and noted the mature domestic market's inventory channel structure as a differentiator from large agricultural equipment peers

In Brazil, management indicated that short-term demand may be constrained by a "wait and see" sentiment until government crop funding parameters are clarified, expected in July 2025

Management indicated the global ject pipeline remains active, with the mix shifting to a greater number of mid-sized jects, though the number and timing of very large jects ("mega jects") remain uncertain

Manufacturing modernization in Lindsay, Nebraska, is on schedule, with efficiency gains evident, but margin growth in Q3 was driven primarily by international leverage and operational imvements across multiple factories

The partnership with Pessl Instruments is driving increased value for customers through deeper integration of real-time agronomic insights and is contributing to margin expansion from higher subscription revenue

INDUSTRY GLOSSARYRoad Zipper System: A moveable barrier system used in highway construction and maintenance to facilitate traffic flow and work zone safety

FieldNET Advisor: Lindsay's precision irrigation management platform that uses real-time data and modeling for scheduling and decision support

MENA: An acronym for Middle East and North Africa, referencing a key region for Lindsay's irrigation jects

Full Conference Call TranscriptRandy Wood: Thank you, and good morning, everyone

With me today is Brian Ketcham, our Chief Financial Officer

I am extremely ud of our team and their execution, dering our third consecutive quarter of year-over-year growth in both revenue and operating income

Our employees are diligently focused on supporting our customers and each other

These results reflect the strength of our global and our team's commitment to execution excellence

Our Irrigation dered year-over-year revenue growth led by strength in our international, including Latin America and the Middle East and North Africa region, while the domestic irrigation volume was comparable to the prior year

Turning to our Infrastructure segment, our team dered another solid quarter, primarily driven by road safety ducts as we enter the road construction season here in North America

Our focus remains on growing both our road safety ducts and Road Zipper system, particularly leasing, as this supports a more stable revenue file for the segment and our overall results

Shifting gears to market outlook, in North America irrigation, we are now in the primary growing season where weather conditions influence crop yields, prices, and net farm income for the year

These factors play a large role in determining future demand for irrigation equipment

While the USDA is jecting an increase in net farm income for this year, most of that growth is related to direct government payments for disaster relief and commodity price support

Crop revenue is jected to decline at this point of the storm season, we have seen softer demand relative to the prior year

This tempers demand expectations for North American irrigation heading into our fourth quarter

In our international irrigation, particularly Brazil, we are encouraged by continued signs of imving market conditions

I traveled across Mato Grosso and Goias states earlier this month and can confirm that customers in this region are ready to expand irrigated acres as the availability of affordable credit expands and the country's energy infrastructure grows

We do expect next year's crop plan to be released in July

The market outlook will be impacted by the rate and amount of funds made available through the gram

We continue to see a strong ject funnel in the Middle East and North Africa, and as I mentioned earlier, we did secure another ject in this region and expect to see continued growth as countries across the territory prioritize food security and water resource conservation

In infrastructure, we continue to see opportunities develop across Road Zipper systems sales, leasing, and road safety ducts

Infrastructure funding in the U

Remains steady, and while ject timing can shift quarter to quarter, our funnel of ject opportunities remains robust

While additional ject sales are on the horizon, the timing of these more complex sales remains uncertain

Our global operations and supply chain team continue to navigate an evolving tariff environment while leveraging our global foot to mitigate the impact on our

Actions, including supplier collaboration, strategic inventory placement, resourcing, and pricing, have allowed us to manage through this period well

In the area of nology, our collaboration with Pessil Instruments continues to create customer value

By combining FieldNET Advisor with Pessl's infield environmental centers, we are viding more precise and real-time agronomic insights that allow for more accurate irrigation scheduling decisions

This integrated apach has driven notable growth in cross-selling opportunities

The partnership is deepening our expertise in agronomic decision support, strengthening our data-driven duct suite, and advancing our position as a leader in precision irrigation

I would to now turn the call over to Brian to discuss our third quarter financial results

Brian Ketcham: Thank you, Randy, and good morning, everyone

Revenues grew in both the Irrigation and Infrastructure segments compared to the prior year

Unit sales volume of irrigation equipment was comparable to the prior year, while average selling prices were up slightly

This increase was partially offset by the mix impact of slightly shorter machines on average compared to the prior year

Increased demand for irrigation equipment and specialty crop in the Pacific Northwest offset softer demand in corn and soybean and a lower level of storm damage replacement activity compared to the prior year

The majority of the increase resulted from revenues related to our large ject in the MENA region along with higher sales volumes in Brazil and other parts of South America

Operating income increased due to higher revenues and favorable leverage of fixed operating expenses, while being partially offset by a higher amount of international ject revenues, which resulted in some dilution to operating margin compared to the prior year

The increase resulted primarily from higher sales of road safety ducts, while Road Zipper ject sales and lease revenues in total were comparable to the prior year

Lower operating income and operating margin resulted primarily from a less favorable margin mix within Road Zipper System revenues compared to the prior year

The strength of our balance sheet and ample access to liquid capital resources continue to serve as a strategic asset for Lindsay Corporation as we execute our capital allocation strategy to create enhanced and sustained value for our holders

This concludes my remarks

And at this time, I will turn the call over to the operator to take your questions

We will now begin the question-and-answer session

And your first question comes from Kristen Owen with Oppenheimer

Mason Banwar: Good morning

This is Mason Banwar on for Kristen

We wanted to ask your international

Over the short term, can you help understand what, if any, impact the recent flare-up in the Middle East could have on your large ject activity

Then, on the longer term, I am wondering if you can help us understand what you are thinking the long-term growth opportunity in Brazil

We are hearing a lot of optimism around the rebound and sentiment in the region, but also acreage and expansion from a competitive standpoint

I will go ahead and take that one

And I guess I will start by stating, obviously everyone else, we are hoping for a peaceful resolution on the complex in the Middle East, and transitioning to the impact on large ject activity, we do not see a lot of direct impact in the short term

And certainly, the long-term fundamental drivers there related to food security remain intact

So we do not expect at this point any significant disruption in our ability to der existing jects or continue working the funnel to exit new jects in the region

And relative to Brazil, you broke up a little bit there in the middle, but I will cover what I think I had he.