Lindsay Corp. Reports Operating Results (10-Q)
Lindsay Corp has a market cap of $1.03 billion; its shares were traded at around $86.84 with a P/E ratio of 20.2 and P/S ratio of 1.8. The dividend yield of Lindsay Corp stocks is 0.6%. Lindsay Corp had an annual average earning growth of 19.8% over the past 10 years. GuruFocus rated Lindsay Corp the business predictability rank of 4-star.
Highlight of Business Operations:Operating revenues for the three months ended November 30, 2012 increased by 24 percent to $147.4 million compared with $119.2 million for the three months ended November 30, 2011. The increase is primarily attributable to an increase in domestic irrigation revenues. The trend for the first quarter of fiscal 2013 included higher demand for domestic irrigation systems stimulated by positive fundamental drivers in the agricultural economy offset by lower infrastructure products demand impacted by government funding issues and project delays. As drought conditions across the U.S. pushed commodity prices higher through the summer months and fall months, the realization of the importance of efficient, mechanical irrigation rose, creating robust market conditions for irrigation equipment sales during the first quarter. Gross margins improved to 29.1 percent compared to 25.4 percent in the comparable prior year period as higher gross margin in the irrigation segment more than offset lower gross margins in the infrastructure segment. Net earnings were $14.7 million or $1.15 per diluted share for the three months ended November 30, 2012 compared with $2.9 million or $0.23 per diluted share for the same prior year period. The operating expenses for the three months ended November 30, 2011 included $7.2 million, or $0.37 per diluted share on an after tax basis, of accrued expenses relating to an estimated increase in the Companys liability for environmental remediation at its Lindsay, Nebraska facility.
Operating revenues for the three months ended November 30, 2012 increased by 24 percent to $147.4 million compared with $119.2 million for the three months ended November 30, 2011. The increase is attributable to a $33.4 million increase in irrigation revenues offset in part by a $5.3 million decrease in infrastructure revenues. The irrigation segment provided 91 percent of Company revenue for the three months ended November 30, 2012 as compared to 85 percent of the prior year, due to exceptional growth in irrigation equipment revenues and the decline in infrastructure revenues.
Gross profit for the three months ended November 30, 2012 of $42.9 million increased 42 percent compared to $30.2 million for three months ended November 30, 2011. The increase in gross profit was primarily attributable to a $7.2 million gross profit increase on higher sales volume and a $5.5 million gross profit increase from improvement in gross margin. Gross margin was 29.1 percent for the three months ended November 30, 2012 compared to 25.4 percent for the three months ended November 30, 2011. Irrigation segment gross margins increased by approximately 4 percentage points primarily due to cost improvement, as input costs were down slightly from prior year, fixed cost leverage from higher sales, and improved sales pricing. Infrastructure segment gross margins decreased by approximately 4 percentage points due to unfavorable product mix from lower Road Zipper system lease volume and deleverage of fixed costs from lower sales.
Net working capital was $234.2 million at November 30, 2012, as compared with $181.5 million at November 30, 2011. The increase in net working capital mainly resulted from increased cash from earnings over the past year, increased inventory to support the increases in sales, especially in the irrigation segment, and increased receivables due to higher sales offset by increased payables related to increases in inventory. Cash flows provided by operations totaled $13.5 million during the three months ended November 30, 2012 compared to $6.2 million provided by operations during the same prior year period. Cash provided by operations increased by $7.3 million compared to the prior year period primarily as a result of increased earnings ($11.8 million) and positive cash flow changes in payables ($10.4 million) and other current liabilities ($2.0 million) offset in part by decreases due to negative cash flow changes in receivables ($6.6 million), other noncurrent assets and liabilities ($5.4 million) and inventories ($4.8 million).
As of November 30, 2012, the Company has an order backlog of $85.1 million compared with $52.8 million at November 30, 2011 and $57.1 million at August 31, 2012. The Company believes the quarter end backlog represents pulling forward some volume, at least in part, from the second half of fiscal 2013. The Companys backlog can fluctuate from period to period due to the seasonality, cyclicality, timing and execution of contracts. Typically, the Companys backlog at any point in time represents only a portion of the revenue it expects to realize during the following three month period. However, the timing related to certain project oriented contracts may extend longer than three months.
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