Q1 2024 Lindsay Corporation Earnings Call
Hello and welcome to the Lindsay Corporation fiscal first quarter 2024 earnings conference call. All participants will be in listen only mode. Should you need assistance please signal a conference specialist by pressing the star key followed by zero. After today's presentation there will be an opportunity to ask questions. To ask a question you may press star then one on your telephone keypad. To withdraw from the question queue please press star then two.
Hello, and welcome to the Lindsay Corporation fiscal first quarter 'twenty 'twenty four earnings conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw from the question queue. Please press Star then two.
I would now like to hand the call to Randy Wood, President and CEO , please go ahead.
I would now like to hand, the call to Randy Wood, President and CEO. Please go ahead.
Randy Wood: Thank you, and good morning, everyone. Welcome to our fiscal 2024 first corner earnings call. With me today is Brian Ketchum, our chief financial officer.
Thank you and good morning, everyone welcome to our fiscal 2024 first quarter earnings call with me today is Brian Ketcham, our Chief Financial Officer.
Brian: I'd like to start by once again recognizing our dealers, partners, and employees around the world for their contributions. Their focus on our customers and execution of our business strategies continues to generate positive results for our shareholders while supporting our purpose of conserving natural resources, expanding the world's potential, and improving quality of life. I continue to be very appreciative of the job they're doing.
I'd like to start by once again, recognizing our dealers partners and employees around the world for their contributions they will focus on our customers and execution of our business strategies continues to generate positive results for our shareholders, while supporting our purpose of conserving natural resources, expanding the world's potential and improving quality of life I continue to be very appreciative.
The job they're doing.
Brian: Our fiscal first quarter was highlighted by growth in our North American irrigation markets and improved operating income and margin capture and infrastructure segment driven primarily by growth in road zippers system leasing.
Our fiscal first quarter was highlighted by growth in our North American irrigation markets and improved operating income and margin capture our infrastructure segment, driven primarily by growth in road zipper system leasing.
Brian: In North America, demand for irrigation equipment was improved over the prior year first quarter, as commodity prices and U.S. net farm income have continued to support stable demand in our North American end mark.
In North America demand for irrigation equipment was improved over the prior year first quarter as commodity prices in U S. Net farm income have continued to support stable demand in our North American end markets.
Brian: We experienced increased order activity as grow profitability became more transparent following harvest season. This was expected and is consistent with the wait and see approach we discussed coming out of last year's spring selling season. Moving to
We experienced increased order activity is grow our profitability became more transparent following harvest season. This was expected and is consistent with the wait and see approach we discussed coming out of last year's spring selling season.
Moving to international irrigation.
Brian: Our key end markets remain healthy, although revenues for the quarter were lower in South America, particularly Brazil. Despite being down year over year, our results remain quite solid, particularly when compared to the record-setting international revenues captured last year.
Our key end markets remain healthy although revenues for the quarter were lower in South America, particularly Brazil.
Despite being down year over year, our results remained quite solid, particularly when compared to the record setting international revenues captured last year.
Brian: Specific to Brazil, the Phenomy Financing Program offered by BNDES was modified this year to distribute funding in quarterly increments. Ultimately, this caused some short-term disruption to our order confirmations in the period, and while this impacted our quarterly results, we do not believe this will have significant impact to our pro-year results in the region.
Specific to Brazil, the Phenom refinancing program offered by <unk> was modified this year to distribute finding in quarterly increments. Ultimately this caused some short term disruption to our order confirmations in the period and while this impacted our quarterly results. We do not believe this will have significant impact to our full year results in the region.
Moving to infrastructure.
Brian: While we are still very much in the early stages of deployment, we are beginning to see the positive impact of IIJA-driven U.S. infrastructure spending. We continue to see solid growth in road zipper system leasing and sales of our road safety products in the quarter, which largely offset the softer road zipper system sales and project activity in the period. As a reminder, last year's fiscal first quarter carried the tail end of revenues from the large project in Massachusetts.
While we are still very much in the early stages of deployment. We are beginning to see the positive impact of I R. J, a driven U S infrastructure spending we continue to see solid growth in road zipper system leasing and sales of our road safety products in the quarter, which largely offset the softer road zipper system sales and project activity in the peer.
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As a reminder, last year's fiscal first quarter carried the tail end of revenues from the large project in Massachusetts.
Brian: Road zipper lease revenue continues to represent a greater proportion of our consolidated infrastructure segment revenues. This sales mix remains accretive to Lindsay's overall margin profile.
Road Zipper lease revenue continues to represent a greater proportion of our consolidated infrastructure segment revenues. This sales mix remains accretive to Lindsay as overall margin profile.
Brian: We also continue to actively manage projects through our Road Zipper Sales Project Funnel. However, timing and project implementation remains challenging to fork.
We also continue to actively manage projects through our road zipper sales project funnel, however, timing and project implementation remains challenging to forecast.
Brian: In the area of technology and innovation, I like to highlight a few key items this quarter.
In the area of technology and innovation I'd like to highlight a few key items this quarter the.
Brian: The integration of the field-wise acquisition is going very well and we're pleased that we've continued to add dealers to our distribution channel. This is a key element of our technology growth strategy and it expands our access to the install base of competitive brands. We're also pleased to record our first commercial sale of our new Road Connect platform in the quarter. This roadside asset and monitoring technology has been well received by the market and we expect to see growth in both the advice and subscription revenue going forward.
The integration of the field wise acquisition is going very well and we're pleased that we've continued to add dealers to our distribution channel. This is a key element of our technology growth strategy and it expands our access to the installed base of competitive brands. We're also pleased to record our first commercial sale of our new road connect platform in the quarter. This roadside asset.
Monitoring technology has been well received by the market and we expect to see growth in both device and subscription revenue going forward.
Brian: I'd now like to turn the call over to Brian to discuss our first quarter financial results. Brian . Thank you, Randy.
Now I'd like to turn the call over to Brian to discuss our first quarter financial results Brian.
Thank you Randy and good morning, everyone.
Brian: Consolidated revenues for the first quarter of fiscal 2024 were $161.4 million, a decrease of 8%, compared to $176.2 million in the first quarter last year.
Consolidated revenues for the first quarter of fiscal 2024 were $161 4 million, a decrease of 8% compared to $176 $2 million in the first quarter last year.
Brian: Net earnings for the quarter were $15 million or $1.36 per deluded share compared to net earnings of $18.2 million or $1.65 per deluded share in the first quarter last year.
Net earnings for the quarter were $15 million or $1 36 per diluted share compared to net earnings of $18 $2 million or $1 65 per diluted share in the first quarter last year.
Brian: Turning to our segment results, irrigation segment revenues for the quarter were $140.2 million, a decrease of 8%, compared to $152.1 million in the first quarter last year.
Turning to our segment results irrigation segment revenues for the quarter were $142 million, a decrease of 8% compared to $152 $1 million in the first quarter last year.
Brian: North America irrigation revenues increased 7 percent to $89.4 million compared to $83.9 million in the first quarter last year.
North America irrigation revenues increased 7% to $89 $4 million compared to $83 $9 million in the first quarter last year.
Brian: The increase in North America irrigation revenues resulted primarily from higher unit sales volume that was partially offset by the impact of a less favorable mix of shorter machines compared to the prior year first quarter.
The increase in North America irrigation revenues resulted primarily from higher unit sales volume that was partially offset by the impact of a less favorable.
Mix of shorter machines compared to the prior year first quarter average.
Brian: average selling prices remain stable and we're comparable with the first quarter last year.
Average selling prices remained stable and were comparable with the first quarter last year.
Brian: In international irrigation markets, revenues of $50.8 million decreased 25% compared to record revenues of $68.1 million in the first quarter last year. The decrease resulted primarily from lower sales in Brazil and Argentina compared to record sales in those markets in the first quarter last year.
In the international irrigation markets revenues of $50 $8 million decreased 25% compared to record record revenues of $68 $1 million in the first quarter last year.
The decrease resulted primarily from lower sales in Brazil, and Argentina compared to record sales in those markets in the first quarter last year <unk>.
Brian: changes in the timing of funding under the financing program in Brazil that Randy mentioned and the government transition in Argentina following the recent presidential election both contributed to lower sales in the quarter.
Changes in the timing of funding under the financing program in Brazil that Randy mentioned and the government transition in Argentina. Following the recent presidential election, both contributed to lower sales in the quarter.
Brian: Total irrigation segment operating income for the quarter was $25.3 million, a decrease of 12% compared to the first quarter last year. And operating margin was 18.1% of sales compared to 18.8% of sales in the first quarter last year.
Total irrigation segment operating income for the quarter was $25 $3 million, a decrease of 12% compared to the first quarter last year and operating margin was 18, 1% of sales compared to 18, 8% of sales in the first quarter last year.
Brian: Lower operating income and operating margin resulted primarily from lower international irrigation revenues and the resulting impact from the leverage of fixed operating expenses.
Lower operating income and operating margin resulted primarily from lower international irrigation revenues and the resulting impact from deleverage of fixed operating expenses gross margin remained consistent with the first quarter last year.
Brian: gross margin remain consistent with the first quarter last year.
Infrastructure segment revenues for the quarter were $21 2 million, a decrease of 12% compared to $24 1 million in the first quarter last year.
Brian: Infrastructure segment revenues for the quarter were $21.2 million, a decrease of 12% compared to $24.1 million in the first quarter last year.
Brian: The decrease resulted from lower road zipper system sales with the prior year first quarter, including $8 million of project sales that did not repeat.
The decrease resulted from lower road zipper system sales with the prior year first quarter, including $8 million of project sales that did not repeat.
Brian: The impact of lower road zipper sales was largely offset by growth in road zipper lease revenue and higher sales of road safety products compared to the first quarter last year.
The impact of lower road Zipper sales was largely offset by growth in road zipper lease revenue and higher sales of road safety products compared to the first quarter last year.
Brian: Infrastructure segment operating income for the quarter was $3.6 million an increase of 7% compared to $3.4 million in the first quarter last year.
Infrastructure segment operating income for the quarter was $3 $6 million, an increase of 7% compared to $3 $4 million in the first quarter last year and.
Brian: and infrastructure operating margin for the quarter was 17.1% of sales compared to 14% of sales in the first quarter last year.
In infrastructure operating margin for the quarter was 17, 1% of sales compared to 14% of sales in the first quarter last year.
Brian: the increase in operating income and margin resulted primarily from a more favorable margin mix of revenue with higher lease revenue compared to the first quarter last year.
The increase in operating income and margin resulted primarily from a more favorable margin mix of revenue with higher lease revenue compared to the first quarter last year.
Turning to the balance sheet and liquidity, our total available liquidity at the end of the first quarter was $225 $7 million, which includes $175 $7 million in cash cash equivalents in marketable securities and $50 million available under our revolving credit facility.
Brian: Turning to the balance sheet and liquidity, our total available liquidity at the end of the first quarter was $225.7 million, which includes $175.7 million in cash, cash equivalents and marketable securities, and $50 million available under our revolving credit facilities.
Brian: Our strong balance sheet and our ample access to liquid capital resources will continue to serve as a strategic advantage for
Our strong balance sheet and our ample access to liquid capital resources, we will continue to serve as a strategic advantage for Lindsay as we continue to execute our capital allocation strategy to create enhanced and sustained value for our shareholders.
Brian: as we continue to execute our capital allocation strategy to create enhanced and sustained value for our shareholder.
Speaker Change: That concludes my remarks and at this time I'd like to turn the call over to the operator to take your question.
That concludes my remarks, and at this time I'd like to turn the call over to the operator to take your questions.
Speaker Change: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the key.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Speaker Change: Today's first question comes from Brian Drab with William Blair. Please go ahead.
Today's first question comes from Brian Drab with William Blair. Please go ahead.
Speaker Change: Hey, good morning. This is Tyler Hootin' on for a brown job. Thank you for taking my questions.
Hey, Good morning. This is Tyler on for Brian job. Thank you for taking my questions. Good morning, Good morning Tyler.
Yes, I just wanted to start I appreciate the color on the South America and our irrigation situation has there been any other impact on.
Tyer Houtton: Yeah, I just want to start, I appreciate the color on the South America irrigation situation. Has there been any other impact on international irrigation shipments, you know, due to geopolitical tensions or other factors?
International irrigation shipments due to geopolitical tensions or other factors.
If we look at our year over year basis, Tyler I wouldn't say, there's anything that's moved the needle significantly one way or the other if we focus on the quarter that the big shift was really in South America for the reasons that we've cited.
Speaker Change: If we look at a year-over-year basis, Tyler, I wouldn't say there's anything that's moved the needle significantly one way or the other if we focus on the corridor that the big shift was really in South America for the reasons that we've cited.
Speaker Change: Got it. And then on the previous call, you mentioned that, you know, some irrigation projects could be dilutive, dilutive and infrastructure projects could be accretive. Can you just give some details on how those scenarios typically could play out in the future?
Got it and then on the previous call you mentioned that you know some irrigation projects could be dilutive dilutive and infrastructure projects could be accretive can you just give us some details on how those scenarios typically it could play out in the future.
Yeah I think.
Speaker Change: On the infrastructure side, I'll start there. You know, the road zipper project side, which we've...
On the infrastructure side I'll start there the road Zipper project side, which we've.
Hum.
Speaker Change: We haven't had any significant projects since we had the first quarter last year, but those are typically going to be higher margin kinds of projects.
We haven't had any significant project since we had the first quarter last year, but those are typically.
Going to be higher margin kinds of projects and I would say.
Speaker Change: You know, we've what we've commented on before there is.
No.
What we've commented on before there is is post pandemic once we've been able to reengage with some of the municipalities government entities that are in charge of these projects.
Speaker Change: is, you know, post pandemic once we've been able to re-engage with.
Speaker Change: some of the municipalities, government entities that are in charge of these projects.
Speaker Change: You know, it's taken some time to get reengaged with them. And, you know, I'd say our commercial team over the last few quarters has made some really good progress. And we've got line of sight, you know, to moving some of these projects.
It's taken some time to get re engaged with with them and you know I'd say our commercial team over the last few quarters has made some really good progress and we've got line of sight.
Moving some of these projects forward.
Speaker Change: Um, you know, on the international irrigation side, uh, again, line of sight to a lot of projects has been an active market, a lot of quoting activity. The challenge there is.
On the international irrigation side again line of sight to a lot of projects has been an active market a lot of quoting activity. The challenge there is.
Speaker Change: Part of it is access to capital, access to U.S. dollars in some of the markets, but we still remain confident that we'll see project activity coming out of both irrigation and infrastructure.
Part of it is access to capital access to U S dollars and some of the markets, but we still remain confident that we will see project activity coming out of both irrigation and infrastructure.
Speaker Change: Yeah, thank you for the color on that. And just a final question, just when it comes to data analytics in the field, I saw some articles about farmers maybe having like too much data or information overload. Just how do you and the dealers approach farmers like that and convince them that these solutions are optimal for their operations? And that's all I have today. Thank you. Sure. And I'll take that one, Tyler. I would agree that there's a lot of data available to our customers and being able to convert that data into an insight.
Yes. Thank you for the color on that and just a final question just when it comes with data analytics in the field I saw some articles about farmers, maybe having like too much data or information overload, just how do you and the dealers approach farmers like that and convince them that these solutions are optimal for the opera.
<unk> and that's all I have today. Thank you.
Sure and I'll take that one Tyler I would agree that there is a lot of data are available to our customers and being able to convert that data and insights that they can use to manage our operation is is really important and we really focus on our core and our quarters irrigation and water management. So our tools are very deliberate very folk.
Speaker Change: they can use to manage their operation is really important. And we really focus on our core. And our core is irrigation and water management. So our tools are very deliberate, very focused, and purpose-built to help them manage water and energy to deliver water in the most efficient means possible.
<unk> and purpose built to help them manage water and energy to deliver water and the most efficient means possible. So we're not going outside.
Speaker Change: So we're not going outside of our core to try and bring more to our customers. We're really focusing on that irrigation and water management core. And the feedback we're getting from customers is that's exactly what they need. When we look at the retention of our digital tools at north of 97%, I've had customers say once they start with our platform, they couldn't farm, they couldn't irrigate without it. So I think the direction that our teams are heading are the right direction. And I think that's confirmed with customer feedback and growth we continue to see.
Outside of our core to try and bring more to our customers, we're really focusing on that irrigation and water management core and the feedback we're getting from customers is that's exactly what they need when we look at the retention of our digital tools that north of 97%.
Other customers say once they start with our platform. They couldnt farm that couldnt irrigate without it. So I think the direction that our teams are heading the right direction and I think that's confirmed with customer feedback and in growth. We continue to see in those technology platforms.
Speaker Change: Sounds good. Thank you and I'll pass it along.
Sounds good thank you and I'll pass it along.
Speaker Change: Thank you. The next question is from Nathan Jones with Stiefel. Please go ahead.
Thank you. The next question is from Nathan Jones with Stifel. Please go ahead.
Good morning, everyone.
The next morning.
Nathan Jones: and happy new year. I want to go to Brazil, Argentina.
And happy new year.
I want to hit Brazil, Argentina.
Nathan Jones: You've had some challenges in, I mean, particularly Brazil.
You've had some challenges in particularly Brazil.
Nathan Jones: a government changeover, there was phenomena financing that wasn't available for a while, now they're shifting around the way that's happened.
Government change out.
There was a phenomenal financing wasn't available for awhile now they're shifting around the way that has happened.
Nathan Jones: It seems like Brazil's been down pretty significantly, at least three of the last four quarters. So you should have some pretty easy cops coming up.
It seems like Brazil is being down.
Pretty significant lately three of the last four quarters.
So you should have some pretty easy comps coming up.
Nathan Jones: Does that lead to the expectation that we should see pretty significant year-over-year growth for the next few quarters, out of Brazil especially? Or is there enough uncertainty in the way the Finami financing is going to come out for you to not be confident enough to say that?
Does that lead to the expectation that we should see pretty significant year over year growth for the next few quarters.
Out of Brazil, especially.
Or is that.
Enough uncertainty in the way that phenomena financing is going to come out for you too could not be confident enough to say that.
Speaker Change: Yeah, I think, obviously, the last, you said three out of four quarters, we did have a strong fourth quarter in Brazil, once that Finami financing became available for the first quarter. But, you know, financing continues to kind of keep a lid on the demand there, in some respects. There's a lot of dependence on that government program because of the difference in
Yes, I think.
Obviously, the last you said three out of four quarters, we did have a strong fourth quarter in Brazil, once that phenomena financing became available for the first quarter, but.
Financing continues to kind of keep a lid on the demand there to in some respects.
There's a lot of dependence on that government program because of the difference in the.
Speaker Change: rates uh... compared to the commercial rates but having said that what we've seen uh... the last four or five months is the uh... central bank rates in brazil have come down about two hundred basis points are expected to come down another fifty basis points in January so
Rates compared to the commercial rates, but having said that what we've seen.
The last four or five months is the central bank rates in Brazil have come down about 200 basis points are expected to come down another 50 basis points in January so.
Speaker Change: You know, we're seeing more availability of.
We're seeing more.
Availability of.
Speaker Change: commercial financing through, you know, commercial banks outside of the economy, which I think is another positive. But, you know, the demand environment in Brazil is still strong. I would say it's just, you know, the financing plays a key in some of the timing and, you know, we're seeing that.
Commercial financing through commercial banks outside of me, which I think is another positive but the.
The demand environment in Brazil is still strong I would say, it's just the financing plays a key in some of the timing and.
Is that in the first quarter this year.
Speaker Change: Obviously some issues in Argentina. What's the relative size for you guys between Brazil and Argentina? Is Brazil significantly bigger?
Obviously, some issues in Argentina, what's the relative size.
You guys between Brazil, and Argentina, and Brazil significantly bigger.
Speaker Change: We haven't broken that out specifically, Nathan, but your instinct is correct. Brazil would be significantly more impactful to us than Argentina in terms of market size.
We haven't broken that out specifically Nathan but your instinct is correct, Brazil would be significantly more impactful to us than then Argentina in terms of market size.
Nathan Jones: Got it. And then I just wanted to go back to the domestic business. I thought that growth year over year in the first quarter was pretty encouraging.
Got it.
And then I just wanted to get back to the domestic business I thought that growth year over year in the first quarter was weak.
We've pretty encouraging.
Nathan Jones: Crop prices have been on the decline through 2023 which you know all else equal would suggest that farm income will be lower in 2024 than it was in 2023. There's obviously the MOF test with that with crop input and financing costs and all those kinds of things. Is it reasonable to think that you know farm income is down in 2024 and that should probably lead to domestic irrigation down in 2024 or is that not the way you're thinking about it at this point?
Yes.
Prices have been on the decline through 2023, which all else equal would suggest that farm income will be lower than 24 than it was in 'twenty three.
Theres, obviously I'm off test it with that wheat crop input and financing costs in our lifetimes.
Is it reasonable to think that finding comes down in 'twenty, four and that should probably late two domestic irrigation dam in 2024 or is that the way you are thinking about it at this point.
Speaker Change: I think at a macro level, obviously, I think your logic walks based on history, Nathan. I think the anomaly this coming year in 2024, if you think back to where we were Q2, Q3 of last year, we talked a lot about customers taking that wait and see approach, that they were waiting for interest rates to come down, waiting for inflation to stabilize, waiting for paper prices to come down. Right now, we see a lot more stability.
I think at a macro level, obviously I think your logic walks based on history, Nathan I think the dynamically this coming year in 2024, if you think back to where we were Q2 Q3 of last year, we talked a lot about customers, taking a wait and see approach that they were waiting for interest rates to come down waiting for inflation to stabilize.
Waiting for paper prices to come down.
Right now we see a lot more stability. So just the fact that we think we will we won't see that those delayed purchase decisions just a more normalized seasonal order pattern next year will offset some of that market softness and maybe some of those end of year machines and first quarter machines that we saw this year, we're going to see that more naturally in the second and third quarter net.
Speaker Change: Just the fact that we think we won't see those delayed purchase decisions, just a more normalized seasonal order pattern next year will offset some of that market softness and maybe some of those end-of-year machines.
Speaker Change: and first quarter machines that we saw this year, we're gonna see that more naturally in the second and third quarter next year. But I think it would be difficult to predict.
Last year, but I think it will be difficult to predict some significant upside in the market just because those those fundamentals related to farm income and crop prices and their impact on customer sentiment. It would be tough to see a line of sight to a significant growth, but I think again with the comps that we have particularly.
Speaker Change: some significant upside in the market just because those fundamentals related to farm income and crop prices and their impact on customer sentiment. It'd be tough to see a line of sight to significant growth, but I think again with the comps that we have particularly
Speaker Change: for Q2 and Q3, we don't see the market falling apart either.
Year over year for Q2, and Q3, we don't see the market falling apart either.
And farmers are profitable.
Invest.
Yes, Thanks I'll pass it on.
Thank you. The next question comes from Brian Wright with Ross and Cam.
Speaker Change: Thank you. The next question comes from Brian Wright with Roth MKM. Please go ahead.
Please go ahead.
brianwright: Thanks. Good morning, and thanks for the question. Just one more on the Brazil situation. You know, given the dryness in Mato Grosso and hearing that it could be still a game-time decision come February and March for the saffronia season as far as planting a vectors, is that a
Thanks, Good morning, and thanks for the question just wanted to.
One more on <unk>.
The Brazil situation, given the Detroit nest in Mato Grasso and hearing it.
It could be still a game time decision.
February and March for the suffering that she can as far as planning.
Is that up.
brianwright: Like, should we be thinking about that as a positive backdrop as far as potential and why your commentary on the strong kind of quoting levels that you're seeing?
Like should we be thinking about that as a positive backdrop.
For us to control and why.
Your commentary on the strong kind of quoting.
Quoting levels that Youre seeing.
brianwright: I think the weather there and that's going to be obviously the biggest market for that safrinha second season crop.
I think the weather there and that's going to be obviously the biggest market for that is a free in our second season crop and if there is some risk to Germany or crop maturing our crop irrigation, obviously is going to offset some of that risk. So we would view that as a potential tailwind to the continued market opportunity in Brazil, but as Brian mentioned.
brianwright: And if there is some risk to germinating a crop, maturing a crop, irrigation obviously is going to offset some of that risk. So we would view that as a potential tailwind to the continued market opportunity in Brazil. But as Brian mentioned earlier, it's going to be about access to capital. And have they sold the first crop and then the cash flow they need to go into the second and potentially the third crops in some parts of the country?
Earlier, it's going to be about access to capital and do they have they sold the first crop and then the cash flow they need to go into the second and potentially the third crops in some parts of the country. So there is certainly some some good macro tailwind there, but they still have to get access to funding and again the phenomenon program is going to be supportive.
brianwright: So there's certainly some good macro tailwind there, but they still have to get access to funding. And again, the FNAMI program is gonna be supportive. We're seeing the central bank rate continue to drop and that's gonna be supportive of financing. So we do see that as some potential upside.
We're seeing the central bank rate continue to drop in and that's going to be supportive of our financing. So we do see that has some potential upside.
Speaker Change: Okay, thank you. And then I guess, you know, a follow-up. There has been talk in Brazil about putting together an incentive program for the conversion of pasture land to crop land. Just is there kind of any headwind or headway that's been made on a regulatory or legislative front on that, you know, in the past?
Okay. Thank you.
And I guess.
A follow up there has been talking in Brazil about.
Putting together an incentive program to for the conversion of pasture land to cropland just theory.
Is there kind of any <unk>.
Headwind or headway there.
And made on.
Regulatory or legislative front on that.
In the past.
Speaker Change: In our view, not a lot that would be actionable in the near term.
And in our view.
Not a lot that would be actionable in the near term.
Speaker Change: Okay, great. And then just a real quick balance sheet question. Marketable securities were up pretty nicely sequentially up to over $10 million in the quarter. What kind of securities are you buying there?
Okay, Okay, Great and then just real quick.
Our balance sheet question marketable securities were up pretty nicely sequentially October 10 million in the quarter just you know.
What kind of securities are you buying there.
Speaker Change: These would be high-grade commercial paper and other things where, and generally it's gonna be, you know, it'll be beyond 90 days, but you know, six-month maturities or so, but an opportunity to get some additional rate, you know, interest income. So it's just a little bit of an.
These would be.
High grade commercial paper and other things were and generally it's going to be it'll be beyond 90 days, but six.
Six month maturities or so, but an opportunity to get some additional rate.
Interest income so just a little bit of an allocation of cash from.
Compared to where we were at the end of the calendar year.
Speaker Change: Okay, great. I guess one last one, if I could. Inventory picked up a bit sequentially in the quarter. Just thoughts on that.
Okay, Great and then I guess, one last one if I could inventory picked up a bit sequentially in the quarter just.
What's on on that.
I would say, it's mostly going to be a seasonal kind of a thing as we get into the main selling season in North America.
Speaker Change: I would say it's mostly going to be a seasonal kind of a thing as we get into the main selling season in North America. That's probably the biggest driver of the increase and if you go back to 2023, over the course of the year we've reduced overall inventories about $40 million, so a slight uptick in the first quarter is really more of the seasonal nature of the business.
That's probably the biggest driver of the increase and if you go back to 2023, we over the course of the year, we have reduced overall inventories about $40 million. So a slight uptick in the first quarter is really more of the seasonal nature of the business.
Speaker Change: Okay, great. That goes well for North America and next quarter. So that's great. That's all I've got. Thank you so much for the questions.
Okay great.
That bodes well for North America in next quarter. So that's great. That's all I've got it. Thank you so much for the questions.
Thanks, Brian.
Speaker Change: Thank you. As a reminder, to ask a question, you may press star then 1.
Thank you.
As a reminder to ask a question you May Press Star then one.
Speaker Change: The next question comes from John Brotz with Kansas City Capital. Please go ahead. Good morning, Randy. Brian . Good morning, John . Good morning, John . On the domestic irrigation front, how does the demand profile vary per region, Midwest versus maybe Southeast, Northwest? Are you seeing any significant difference in sort of the demand picture by geography?
The next question comes from Jon Braatz, with Kansas City Capital. Please go ahead good.
Good morning, Randy Bryan.
Okay.
On the domestic international front domestic irrigation front.
What does the demand profile vary per region.
Midwest versus maybe southeast North West are you seeing any.
Any significant difference in.
Sort of the demand picture by geography.
Randy: Yeah, John , this Brian , you know, what we saw in our first quarter was really demand increase in almost all of our regions. You know, we're seeing in the southeast and mid kind of that Great Lakes region, which.
Yes, John this is Bryan.
What we saw in our first quarter was really a demand increase in almost all of our regions.
We are seeing in the southeast and mid.
Kind of that Great Lakes region, which.
Randy: Great Lakes region typically has been more of a supplemental irrigation market.
Great Lakes region, typically it's been more of a supplemental irrigation market.
Randy: We've seen nice growth there, we've seen it in the Corn Belt, you know, in the Midwest. So I'd say the first quarter...
Seen nice growth there we've seen it in the corn belt in the Midwest, So I'd say the first quarter.
Randy: It's really been pretty broad across all the regions. Is there something specific in the Great Lakes area that may be driving a different profile there from the past?
It's really been pretty broad across all the regions is there something specific.
The great Lakes area.
It may be driving.
A different profile there.
From the past.
Speaker Change: There's probably a couple of things, John . It's a pretty big seed corn area and we see seed corn acres growing there and it's mandatory to irrigate that crop and really just shifting climate patterns. We've talked a lot here about what customers have to invest in a crop to put it in the ground. That's really sunk cost if they don't get water, so I think just the risk management and the yield enhancement benefit of irrigation is driving a lot of investment in that part of the world. Okay. Thanks. Thanks, John . That's fine.
There's probably a couple of things Jon it's a pretty big seed corn area, and we see corn acres growing there and it's mandatory to irrigate that crop and really just a.
Shifting climate patterns, and we've talked a lot here about what customers have to invest in a crop to put it in the ground and that's really sunk cost if they don't get water. So I think just the risk management and the yield enhancement benefit of irrigation. It is driving a lot of investment in that part of the world. Okay. Thanks.
Brian.
It looks like maybe you are.
Speaker Change: selling prices are sort of flattish year-over-year, and I suspect it might continue to be that way. But we're all seeing higher costs, maybe not as significant as we've seen in the past couple of years. But when you look at the cost pressures on your business,
Selling prices are sort of flattish year over year and I suspect it might continue to be that way, but we're all we're all seeing higher costs.
Maybe not as.
As significant as we've seen in most in the past couple of years, but when you look at the cost pressures on your business.
Speaker Change: uh... how how how that uh... do you think you'll be able to offset offset those cost pressures with productivity or is is there going to be a little bit in a little bit impact on on your margins because of uh... uh... some rising costs
How is that do you think you'll be able to offset offset those cost pressures with productivity or is there going to be a little bit a little bit of impact on your margins because of the.
Some rising cost.
Speaker Change: Yeah, I think, you know, we have seen steel from November to December , the the CRU for hot rolled coil has gone up 25%. I mean, it had softened a fair amount, you know, going back into 2023. So, you know, structural steel continues to maintain at a higher level. But, you know, I'd say where we're positioned now, I mean, I think steel is kind of the biggest variable, a lot of the other inflation is kind of abated a bit, but we expect
Yes, I think.
We have seen steel from November to December the C argue for hot rolled coil has gone up 25% I mean, it has softened a fair amount going back into 2023, so structure.
Structural steel continues to.
We maintain at a higher level, but.
I'd say, where we're positioned now I mean, I think steel kind of the biggest variable a lot of the other inflation has kind of abated a bit but we expect.
Speaker Change: You know, I think if you go back to probably last quarter, I mean, maybe the...
I think if you go back to probably last quarter I mean, maybe the.
The.
Speaker Change: view was, you know, we would have to give price back if raw material softened, but, you know, we're not seeing that situation today, I think, where raw materials appear to be headed as, you know, would be supportive of maintaining price.
View was we would.
Have to give price back if raw materials softened, but we're not seeing that situation today, I think where raw materials appear to be headed as you know it would be supportive of maintaining price.
Okay, Alright, thank you very much.
Speaker Change: Thank you. This concludes our question and answer session. I would now like to turn the call back to Randy Wood for closing remarks.
Thank you. This concludes our question and answer session I would now like to turn the call back to Randy Wood for closing remarks.
Randy Wood: Thank you all for joining us on today's call. While current commodity prices and U.S. net farm income are down from recent highs, growers remain profitable. And while they're investing cautiously, we feel this will continue to support stable demand for irrigation equipment in North America.
Well. Thank you all for joining us on today's call, while current commodity prices and U S. Net farm income are down from recent highs growers remain profitable and while they are investing cautiously. We feel this will continue to support stable demand for irrigation equipment in North America.
Randy Wood: The International Project Pipeline for Irrigation Investments remains robust and supportive to our long-term growth trajectory. These projects are driven by food security and stabilizing global grain supplies, and we're uniquely positioned to identify and win these project opportunities as we execute our strategy. We expect to continue the strong momentum we've seen from road zipper leasing, as well as solid growth from our road safety products, the combination of which will continue to drive a revenue mix which is supportive to our consolidated margin capture in the segment and our consolidated return.
The International project pipeline for irrigation investments remains robust and supportive to our long term growth trajectory. These projects are driven by food security and stabilizing global grain supplies and we're uniquely positioned to identify and win these project opportunities as we execute our strategy.
We expect to continue the strong momentum we've seen from road zipper leasing as well as solid growth from our road safety products. The combination of which will continue to drive our revenue mix, which is supportive to our consolidated margin capture in the segment and our consolidated returns. This concludes our first quarter earnings call. We appreciate your interest and Lindsay and look forward to updating you on our continued progress following the close of our <unk>.
Randy Wood: This concludes our first quarter earnings call. We appreciate your interest in Lindsay and look forward to updating you on our continued progress following the close of our fiscal 2024 second quarter. Thanks for joining us.
Fiscal 2024 second quarter, thanks for joining us.
Yeah.
Randy Wood: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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