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LC

LINDSAY CORP (LNN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $155.0M and diluted EPS was $1.17; operating margin compressed to 8.7% as international irrigation (Brazil) weakened, partially offset by North America irrigation volume and stronger infrastructure demand .
  • Year-over-year comparisons were soft: revenue (-7%), operating income (-42%), EPS (-33%), driven by deleveraging from lower Brazil volumes; effective tax rate benefited results at 16.1% vs 22.8% last year .
  • Sequentially, revenue rose versus Q3 2024 ($139.2M) but EPS fell (Q3: $1.85) as Q3 benefited from a Brazil tax credit; infrastructure momentum and initial MENA project shipments ($14M in Q4, ~$80M expected in FY25) support forward mix but dilute irrigation margins by ~100 bps for FY25 .
  • Management expects continued infrastructure growth supported by U.S. IIJA funding, while Brazil remains a headwind (down low double-digit for FY25), and FY25 tax rate ~25%; these are the key near-term stock narrative drivers .

What Went Well and What Went Wrong

What Went Well

  • Infrastructure segment delivered strong growth: Q4 revenues +24% to $29.1M; operating income +79% to $5.6M; operating margin improved to 19.2%, driven by Road Zipper sales and leases .
  • North America irrigation held up: revenues +2% to $61.7M on higher unit volumes, supported by above-average storm damage replacement demand; pricing comparable YoY .
  • Technology/ARR momentum: >140,000 connected devices and 28% ARR growth from subscriptions in FY2024, supportive of margin profile; first commercial sale of Impact Alert in infrastructure .
  • CEO quote: “Fourth quarter and full year growth in our Road Zipper System lease revenues drove margin expansion and improved infrastructure results.” .

What Went Wrong

  • International irrigation (Brazil) weakened materially: Q4 revenue down 23% to $64.2M; deleveraging of fixed costs and pricing pressure drove irrigation margin compression (13.6% vs 20.7% last year) .
  • Consolidated decremental margins elevated due to Brazil mix; management highlighted deleverage tied to last year’s record Brazil volumes vs. current year softness, and project mix dilution .
  • SG&A creep: selling +21% and G&A +9% YoY for Q4 (commissions, R&D/tech investment, MENA resources), offset by cost actions that should be more visible in FY25 .

Financial Results

Sequential trend (last three quarters)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$151.5 $139.2 $155.0
Operating Income ($USD Millions)$22.1 $19.9 $13.5
Operating Margin (%)14.6% 14.3% 8.7%
Net Earnings ($USD Millions)$18.1 $20.4 $12.7
Diluted EPS ($USD)$1.64 $1.85 $1.17

Year-over-year comparison (Q4)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$167.1 $155.0
Operating Income ($USD Millions)$23.4 $13.5
Operating Margin (%)14.0% 8.7%
Net Earnings ($USD Millions)$19.2 $12.7
Diluted EPS ($USD)$1.74 $1.17

Segment breakdown (oldest → newest)

Segment MetricQ4 2023Q3 2024Q4 2024
Irrigation NA Revenue ($M)$60.2 $68.2 $61.7
Irrigation Intl Revenue ($M)$83.4 $46.6 $64.2
Irrigation Total Revenue ($M)$143.6 $114.8 $125.9
Irrigation Operating Income ($M)$29.8 $19.5 $17.1
Irrigation Operating Margin (%)20.7% 17.0% 13.6%
Infrastructure Revenue ($M)$23.5 $24.4 $29.1
Infrastructure Operating Income ($M)$3.1 $6.3 $5.6
Infrastructure Operating Margin (%)13.3% 25.8% 19.2%

KPIs

KPIValue
Backlog (Aug 31, 2024) ($M)$180.9
Liquidity ($M)$240.9 (Cash $190.9; RCF $50)
Free Cash Flow (FY2024) ($M)$66.8 (101% of net earnings)
Connected Devices>140,000
Subscription ARR Growth (FY2024)28%
Share Repurchases (Q4; FY2024) ($M)$4.6; $22.5
Q4 Effective Tax Rate16.1%
MENA Project Shipments (Q4; FY2025 expected)~$14M; ~$80M FY25

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Effective Tax RateFY2025N/A~25%Updated
International Irrigation – MENA Project ShipmentsFY2025N/A~$80M spread across 4 quartersNew
Brazil Market OutlookFY2025N/ADown low double-digit for FY25; worse in H1, flattish H2Cautioned Lower
Infrastructure DemandFY2025Positive outlookContinued growth supported by IIJA fundingMaintained/Raised Confidence
Dividend per ShareQ4 2024$0.35 (Q2)$0.36 declared in Q4Raised
Road Zipper Project PipelineFY2025ActiveLine-of-sight to additional U.S. projectsMaintained Positive

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Brazil softness & marginsQ2: commodity price drop/tight credit; infra lease mix accretive Intl irrigation -23%; deleverage and pricing pressure; FY25 down low double-digit Persistent headwind; moderating late FY25
MENA irrigation projectQ3: >$100M agreement; revenue recognition to begin Q4–FQ1’26 $14M shipped in Q4; ~$80M expected FY25; ~100 bps irrigation margin dilution FY25 Ramping shipments; margin dilution manageable
Infrastructure Road ZipperQ2: lease revenue mix boosted margins ; Q3: +11% revenue, margin to 25.8% Q4: +24% revenue; margin 19.2%; FY25 U.S.-led growth (IIJA) Accelerating with U.S. funding tailwind
Technology/ARR & IoTQ2: FieldNET next-gen launch; Pessl minority stake >140k devices; 28% ARR growth; supports margin Strengthening recurring revenue
Tax & one-timesQ3: Brazil tax credit $4.8M; tax benefit Q4 tax rate 16.1%; FY25 guide ~25% Normalizing up
Storm damage demand—Above-average storm replacement; supports NA volumes; replacement parts may outpace new machines Near-term support in NA
Macro/IIJAQ2: IIJA supportive Continued IIJA support for infra in FY25 Ongoing tailwind

Management Commentary

  • CEO: “While agricultural markets globally remain challenged… I am pleased with the demonstrated resilience and performance of our North America irrigation business… During the fourth quarter we began delivery on the previously announced irrigation project in the MENA region… Fourth quarter and full year growth in our Road Zipper System™ lease revenues drove margin expansion and improved infrastructure results.” .
  • CFO: “Our total available liquidity at the end of the fourth quarter was $240.9 million… free cash flow of $66.8 million or 101% of net earnings… completed additional share repurchases of $4.6 million, bringing the total to $22.5 million for the year.” .
  • CEO: “We expect to see continued growth in our infrastructure business in fiscal 2025 supported by the additional U.S. federal infrastructure funds… line of sight to additional projects potentially moving through the funnel in fiscal 2025.” .

Q&A Highlights

  • Decremental margins: Entirely related to international irrigation; North America margins maintained/slightly improved; last year’s record Brazil volumes created tough comps; project mix is slightly dilutive .
  • MENA project cadence and margin impact: ~$14M shipped in Q4; ~$80M expected in FY25 across quarters; ~100 bps irrigation operating margin dilution for FY25 due to lower project margins, though SG&A leverage offsets partly .
  • Brazil FY25 trajectory: Down in H1 with potential flattish performance in H2; full-year down low double-digit .
  • FY25 tax rate: Expected ~25%, absent one-time items, reflecting earnings mix shift (e.g., Turkey tax-free zone project shipments) vs. earlier Brazil credits .
  • Infrastructure funnel: Primarily U.S. near-term growth, with global opportunities; IIJA funds supportive; Road Zipper project sales accretive to margins .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was not available due to data access limits, so a beat/miss vs. estimates cannot be assessed from SPGI in this session [GetEstimates error].
  • Based on management’s commentary, forward estimate adjustments may reflect: persistent Brazil headwinds in H1 FY25, irrigation margin dilution from MENA project mix (~100 bps), and infrastructure upside supported by IIJA—suggesting potential mix-driven EPS volatility despite revenue support .

Key Takeaways for Investors

  • Mix shift matters: Infrastructure strength and project shipments support revenue, but irrigation margins dilute with MENA project mix; watch operating margin trajectory and SG&A leverage in FY25 .
  • Brazil remains the swing factor: Expect low double-digit decline in FY25 with worst pressure in H1; monitor commodity prices, credit conditions, and planting timelines for signs of stabilization .
  • Recurring revenue is building: >140k devices and 28% ARR growth underpin margin resilience through cycles; continued investment in FieldNET/IoT platforms is strategically accretive .
  • Cash generation and balance sheet: FY2024 free cash flow exceeded net earnings; liquidity of $240.9M positions LNN to fund initiatives and opportunistic repurchases/dividends .
  • FY25 tax normalization: Guide to ~25% tax rate implies less EPS uplift from one-time items vs FY2024; incorporate into models .
  • Infrastructure catalysts: IIJA funding and a robust U.S. Road Zipper pipeline support segment growth and margin strength; timing of large projects remains a key variable .
  • Near-term trading: Expect sensitivity to Brazil headlines and project cadence; sequential revenue support likely from MENA shipments, with EPS swing influenced by mix and tax-normalization .