Q2 2025 Lindsay Corp Earnings Call

Operator: Good day, and welcome to the Lindsay Corporation Fiscal Second Quarter 2025 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.

Good day and welcome to the Lindsay Corporation fiscal second quarter 2025 earnings Conference call.

All participants will be in listen only mode.

You need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded.

Randy Wood: I would now like to turn the conference over to Randy Wood, President and CEO. Please go ahead. Thank you and good morning everyone.

Randy: I would now like to turn the conference over to Randy <unk>, President and CEO. Please go ahead.

Randy: Thank you and good morning, everyone welcome to our fiscal 2025 second quarter earnings call with me today is Brian Ketcham, our Chief Financial Officer.

Randy Wood: Welcome to our fiscal 2025 second quarter earnings call.

Randy Wood: With me today is Brian Ketcham, our Chief Financial Officer. I'm extremely proud of our team and their execution during the second quarter as our results reflect record quarterly net earnings supported by revenue growth in both business segments. These results demonstrate our commitment to deliver on our long-term goals despite market headwinds in our key irrigation markets. Our irrigation business delivered year-over-year revenue growth led by strength in our international markets while the domestic irrigation market has continued to perform in line with our expectations. We continue to deliver the large project in the MENA region and also saw growth in other non-project business in this part of the world.

Randy: I'm extremely proud of our team and their execution during the second quarter as our results reflect record quarterly net earnings supported by revenue growth in both business segments. These results demonstrate our commitment to deliver on our long term goals despite market headwinds in our key irrigation markets.

Randy: Our irrigation business delivered year over year revenue growth led by strength in our international markets. While the domestic irrigation market has continued to perform in line with our expectations. We continue to deliver the large project in the Mena region and also saw growth in other non project business in this part of the World. We're encouraged by the recent improvement in market conditions.

Randy Wood: We're encouraged by the recent improvement in market conditions in Brazil with unit sales volumes returning to levels comparable to prior years.

Randy: In Brazil with unit sales volumes returning to levels comparable to prior year.

Randy Wood: turning to our infrastructure segment. Our team delivered very strong results this quarter as they completed the Road Zipper Project in the Northeast valued at over $20 million that we mentioned during our first quarter call. We remain optimistic in our Road Zipper project sales pipeline. However, the timing on large projects, such as this one, remain challenging to predict. Our leasing revenues and unit sales of road safety products were slightly lower compared to prior year. However, as we've mentioned on prior calls, we remain focused on growing our Road Zipper system leasing business over the long term as this supports a higher and more stable margin profile for the segment and our overall results.

Randy: Turning to our infrastructure segment.

Randy: Our team delivered very strong results this quarter as they completed the road zipper project in the northeast.

Randy: You did over $20 million that we mentioned during our first quarter call.

Randy: We remain optimistic in our road Zipper project sales pipeline. However, the timing on large projects such as this one remained challenging to predict.

Randy: Our leasing revenues and unit sales of road safety products were slightly lower compared to prior year. However, as we've mentioned on prior calls we remain focused on growing our road zipper system leasing business over the long term as this supports a higher and more stable margin profile for the segment and our overall results.

Randy Wood: We were also pleased to receive FHWA approval on our new TOW XR Express Repair Crash Cushion in the corridor. This product is designed for high-frequency impact locations, improving safety for motorists and ease of maintenance for work crews. This product ships fully assembled and can be repaired in less than 30 minutes after a head-on or side impact.

Randy: We were also pleased to receive F. H W. A approval on our new tower XR expressed repair crash cushion in the quarter. This product is designed for high frequency impact locations, improving safety for motorists and ease of maintenance for work crews. This product ships fully assembled and it can be repaired in less than 30 minutes. After a head on our side impact.

Randy Wood: Shifting gears to our market outlook. In North America, we don't expect meaningful improvement in market conditions in the near-term. While the USDA is forecasting a 29% increase in net farm income for 2025, this increase is primarily due to higher government support payments, while crop receipts are projected to be slightly lower compared to last year. We anticipate demand for irrigation equipment in the second half of our fiscal 2025 will be stable relative to prior year, pending any significant storm damage activity. In our international irrigation markets, particularly the developing regions, we expect to see continued growth driven by project activity as these countries continue to prioritize food security and water resource conservation.

Randy: Shifting gears to our market outlook.

Randy: In North America, we don't expect meaningful improvement in market conditions in the near term while the USDA is forecasting a 29% increase in net farm income for 2025. This increase is primarily due to higher government support payments, while crop receipts are projected to be slightly lower compared to last year, we anticipate demand for irrigation equipment in the <unk>.

Randy: Half of our fiscal 2025 will be stable relative to prior year pending any significant storm damage activity.

Randy: In our international irrigation markets, particularly the developing regions. We expect to see continued growth driven by project activity. As these countries continue to prioritize food security and water resource conservation and.

Randy Wood: In Brazil, we are encouraged to see some improvement in commodity prices supporting increased customer sentiment. However, rising interest rates and a more challenging credit environment does provide a headwind that can temper demand. Regarding infrastructure, our strong year-to-date performance sets us up for full year growth in fiscal 2025. Our road zipper sales funnel continues to be strong, and while additional project sales are on the horizon, the timing of these more complex sales remains uncertain. For the second half of the year, we expect overall activity to be comparable with last year.

Randy: In Brazil, we are encouraged to see some improvement in commodity prices supporting increased customer sentiment, however, rising interest rates and a more challenging credit environment does provide a headwind that can tempered demand.

Randy: Regarding infrastructure, our strong year to date performance sets us up for full year growth in fiscal 2025, our road zipper sales funnel continues to be strong and while additional project sales are on the horizon. The timing of these more complex sales remains uncertain for the second half of the year, we expect overall activity to be comparable with last year.

Randy Wood: Before I turn the call over to Brian, I would like to outline our approach to addressing the tariff plan released by the White House yesterday. We've already implemented a comprehensive action plan that includes supplier negotiation, strategic inventory placement, and other supply chain initiatives to manage potential cost impacts to our business. We anticipate the impact of the proposed tariffs to result in marginal increase to our cost of goods, which we will pass through and increase pricing. We are also evaluating the potential impact of additional or retaliatory tariffs. While the situation remains fluid, we have the structure in place to react quickly and plan to utilize our global footprint and supply chain to minimize the potential impact of these actions on our business and our customers.

Speaker Change: Before I turn the call over to Brian I would like to outline our approach to addressing the tariff plan released by the White House yesterday.

Speaker Change: We've already implemented a comprehensive action plan that includes supplier negotiation strategic inventory placement and other supply chain initiatives to manage potential cost impacts to our business. We anticipate the impact of the proposed tariffs to result in marginal increase to our cost of goods, which we will pass through in increased pricing. We are also evaluating the potential <unk>.

Speaker Change: <unk> of additional ore retaliatory tariffs, while the situation remains fluid we have the structure in place to react quickly and plan to utilize our global footprint and supply chain to minimize the potential impact of these actions on our business and our customers.

Brian Ketcham: I'd now like to turn the call over to Brian to discuss our second quarter financial results. Thank you, Randy, and good morning, everyone. Consolidated revenues for the second quarter of fiscal 2025 increased 23% to $187.1 million, compared to $151.5 million in the prior year. Revenue growth in international irrigation and infrastructure was partially offset by lower North America irrigation revenues compared to the prior year. Net earnings for the quarter increased 47% to $26.6 million or $2.44 per diluted share compared to net earnings of $18.1 million or $1.64 per diluted share in the prior year. As Randy mentioned, these results represent the highest quarterly net earnings and earnings per share in the company's history.

Speaker Change: I would now like to turn the call over to Brian to discuss our second quarter financial results Brian.

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

Brian Ketcham: Consolidated revenues for the second quarter of fiscal 2025 increased 23% to $187 1 million compared to $151 $5 million in the prior year.

Brian Ketcham: Revenue growth in international irrigation and infrastructure was partially offset by lower North America irrigation revenues compared to the prior year.

Brian Ketcham: Net earnings for the quarter increased 47% to $26 6 million or $2 44 per diluted share compared to net earnings of $18 1 million or $1 64 per diluted share in the prior year.

Brian Ketcham: As Randy mentioned these results represent the highest quarterly net earnings and earnings per share in the company's history.

Brian Ketcham: Turning to our segment results. Irrigation segment revenues for the quarter increased 11% to $148.1 million compared to $133 million in the prior year. North America irrigation revenues of $77.1 million decreased 7% compared to the prior year. The decrease resulted primarily from lower sales volume, unit sales volume of irrigation equipment, slightly lower average selling prices, and lower sales of replacement parts compared to the prior year. This decline in unit sales volume was slightly less than expected as we did see year-over-year growth in certain regions of the U.S. In international irrigation markets, revenues of $71 million increased 42% compared to the prior year.

Brian Ketcham: Turning to our segment results irrigation segment revenues for the quarter increased 11% to $148 1 million.

Brian Ketcham: Compared to $133 million in the prior year.

Brian Ketcham: North America irrigation revenues of $77 $1 million decreased 7% compared to the prior year.

Brian Ketcham: The decrease resulted primarily from lower sales volume unit sales volume of irrigation equipment slightly lower average selling prices and lower sales of replacement parts compared to the prior year.

Brian Ketcham: This decline in unit sales volume was slightly less than expected as we did see year over year growth in certain regions of the U S.

Brian Ketcham: In international irrigation markets revenues of $71 million increased 42% compared to the prior year.

Brian Ketcham: The increase resulted from revenues related to our large project in the MENA region, along with higher sales in other parts of this region compared to the prior year. This increase was partially offset by lower revenue in other international markets and by the unfavorable effects of foreign currency translation of approximately $4.7 million compared to the prior year. As Randy mentioned, the Brazil market showed signs of improvement during the quarter, with unit sales volume being comparable to the prior year. Irrigation segment operating income for the quarter of $27.4 million increased 7% compared to the prior year, while operating margin was 18.5% of sales compared to 19.3% of sales in the prior year.

Brian Ketcham: The increase resulted from revenues related to our large project in the Mena region, along with higher sales in other parts of this region compared to the prior year.

Brian Ketcham: This increase was partially offset by lower revenue in other international markets and by the unfavorable effects of foreign currency translation of approximately $4 7 million compared to the prior year.

Brian Ketcham: As Randy mentioned, the Brazil market showed signs of improvement during the quarter with unit sales volume being comparable to the prior year.

Brian Ketcham: Irrigation segment operating income for the quarter of $27 $4 million increased 7% compared to the prior year, while operating margin was 18, 5% of sales compared to 19, 3% of sales in the prior year.

Brian Ketcham: Operating income increased due to higher revenues, while a larger percentage of project revenues resulted in some dilution to operating margin compared to the prior year.

Brian Ketcham: Operating income increased due to higher revenues, while a larger percentage of project revenues resulted in some dilution to operating margin compared to the prior year.

Brian Ketcham: Infrastructure segment revenues for the quarter of $38.9 million, more than doubled compared to revenues of $18.5 million in the prior year. The increase resulted primarily from the completion of a large road zipper system project valued at over $20 million that was delivered during the quarter, while road zipper lease revenue and sales of road safety products were slightly lower compared to the prior year. Infrastructure segment operating income for the quarter of $13.3 million, more than tripled compared to $3.5 million in the prior year. Infrastructure operating margin for the quarter was 34.1% of sales compared to 19% of sales in the prior year.

Brian Ketcham: Infrastructure segment revenues for the quarter of $38 9 million.

Brian Ketcham: More than doubled compared to revenues of $18 $5 million in the prior year. The increase resulted primarily from the completion of a large road zipper system project valued at over $20 million that was delivered during the quarter, While road zipper lease revenue and sales of road safety products were slightly lower compared to the prior.

Brian Ketcham: Per year.

Brian Ketcham: Infrastructure segment operating income for the quarter of $13 $3 million more than tripled compared to $3 $5 million in the prior year.

Brian Ketcham: Infrastructure operating margin for the quarter was 34, 1% of sales compared to 19% of sales in the prior year.

Brian Ketcham: The increase in operating income and operating margin resulted primarily from higher revenues and a more favorable mix. margin mix of revenues as road zipper system sales represented a higher percentage of revenues compared to the prior year.

Brian Ketcham: The increase in operating income and operating margin resulted primarily from higher revenues and a more favorable mix margin mix of revenues as road zipper system sales represented a higher percentage of revenues compared to the prior year.

Brian Ketcham: Turning to the balance sheet and liquidity, our total available liquidity at the end of the second quarter was $236.7 million, which includes $186.7 million in cash, cash equivalents and marketable securities, and $50 million available under our revolving credit fund. The strength of our balance sheet and ample access to liquid capital resources continue to serve as a strategic asset for Lindsay as we execute our capital allocation strategy to create enhanced and sustained value for our shareholders.

Turning to the balance sheet and liquidity, our total available liquidity at the end of the second quarter was $236 $7 million, which includes $186 $7 million in cash cash equivalents in marketable securities and $50 million available under our revolving credit.

Brian Ketcham: Facility.

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

Brian Ketcham: This concludes my remarks, and at this time, I'll turn the call over to the operator to take your questions. Thank you.

Brian Ketcham: This concludes my remarks and at this time I will turn the call over to the operator to take your questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.

Brian Ketcham: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speaker phone. Please pick up your handset before pressing the keys.

Brian Ketcham: If at any time. Your question has been addressed and we would like to withdraw your question. Please press Star then two at.

Operator: At this time, we will pause momentarily to assemble our roster.

At this time, we will pause momentarily to assemble our roster.

Ryan Connors: And our first question will come from Brian Drabb with William Blair. Please go ahead. Hi, good morning. Thanks for taking my questions. Morning.

Brian Ketcham: And our first question will come from Brian Drab with William Blair. Please go ahead.

Hi, good morning, Thanks for taking my questions.

Brian Ketcham: The first one that we wanted to ask was on the international side, you're ahead of our expectation by quite a bit for the quarter in terms of revenue, and I'm just wondering if you could dig in a little deeper on the timing of, you know, how that revenue is being recognized. Was any of it maybe pulled forward or maybe a little heavier? Thank you. Yeah, sure, Brian.

Brian Ketcham: Morning.

Brian Ketcham: The first one that we wanted to ask was on the international side.

Brian Ketcham: Ahead of our expectation by quite a bit for the quarter in terms of revenue and I'm. Just wondering if you could dig in a little deeper on the timing of how that revenue is being recognized it was any it was any of it maybe pulled forward or maybe a little heavier.

Brian Ketcham: Than expected in the second quarter and what should we expect some from the from that region over the next few quarters.

Brian Ketcham: Yeah sure Brian This is Brian Ketcham.

Brian Ketcham: This is Brian Ketcham. I will say in the quarter, we did ship a little bit more of the large project than what we, you know, had originally anticipated. I think we had indicated roughly $20 million a quarter. We were a little bit above that during the second quarter, but I don't think that affects, you know, our expectations for third and fourth. We'd still be kind of back to that cadence that we originally planned on. As mentioned in our comments too, we did see revenue growth in other parts of the MENA region as well that were non-project related, you know, compared to the prior year.

Brian Ketcham: I will say in the quarter, we did ship a little bit more of the large project and what we had originally anticipated I think we had indicated roughly $20 million a quarter, we were a little bit above that during the second quarter, but I don't think that affects our expectations for third and fourth will still be.

Brian Ketcham: Kind of back to that cadence that we had originally planned on.

Brian Ketcham: As mentioned in our comments to we did see.

Brian Ketcham: Revenue growth in other parts of the Mena region as well that were non project related.

Brian Ketcham: Compared to the prior year.

Brian Ketcham: Brazil, you know, we had mentioned unit volume was flat. You know, the currency impact that we talked about was primarily related to Brazil. You know, the difference in the real and then other parts of the market, not not huge differences, but Western Europe and Australia both being down slightly compared to last year. Okay. All right. Thanks.

Brian Ketcham: Brazil.

Brian Ketcham: Had mentioned unit volume was flat the currency impact that we talked about.

Brian Ketcham: Was primarily related to Brazil and.

Brian Ketcham: The difference in the real and then other parts of the market not not huge differences, but western Europe, and Australia, both being down slightly compared to last year.

Brian Ketcham: Okay, Alright, Thanks, and then.

Ryan Connors: And then, you know, someone's going to ask you to dig into the tariff situation more on the levers you can pull. So, I'll just be the one to do that. But can you just elaborate on, you know, where your most significant exposures are and really, you know, what other actions are you going to have to take besides just, you know, I guess, passing on, you said, you know, price to the consumers and really, I guess, the main focus here is on the irrigation side. But, you know, I think that on the infrastructure side, the whole highway spending situation has been under pressure in part because prices are higher and, you know, the projects are more expensive.

Brian Ketcham: Someone someone's going to ask you to dig into the tariffs situation where on the levers you can pull so I'll just be the one to do that but can you just elaborate on.

Brian Ketcham: Are your.

Brian Ketcham: Most significant exposures are and really what you know what what.

Brian Ketcham: What other actions are you going to have to take besides just passing.

Brian Ketcham: Passing on you said.

Brian Ketcham: Price to the to the consumers and really I guess the main focus here is on the irrigation side, but.

Brian Ketcham: You know I think that.

Brian Ketcham: On the infrastructure side, the whole the whole highway spending.

Brian Ketcham: Spending situation has been under pressure in part because prices are higher in.

Brian Ketcham: The projects are more expensive and can.

Brian Ketcham: And can you just talk about how it affects both businesses a little bit more and what you can do to offset that? Yeah, yeah, no, you're right. The biggest impact is going to be on our irrigation business. And, you know, we've been anticipating, you know, the, at least the China, Mexico, Canada tariffs for some, some time now, but, you know, yesterday with the additional tariffs, I think, you know, pull in from our standpoint, you know, Taiwan and Korea, where we do source some. products but you know I think that on the cost side the other thing you know we source our steel all domestically but we have seen you know steel prices going up steel coil prices going up a lot of that's been driven by I think companies building inventories to in anticipation of tariff impact we don't necessarily consider that to be a you know long-term increase but we you I think to your question you know in terms of what we've been doing some of it has been you know some inventory build we've had shifted some suppliers around a little bit already.

Brian Ketcham: Can you just talk about how it how it affects both businesses a little bit more than what you can do to offset that.

Brian Ketcham: Yes, yes, no you are right the biggest impact is going to be on our irrigation business and we.

Brian Ketcham: We've been anticipating.

Brian Ketcham: At least the China.

Brian Ketcham: Mexico, Canada tariffs for some time now, but yesterday with the additional tariffs I think.

Speaker Change: Paul and from our standpoint, Taiwan, and Korea, where we do source some.

Brian Ketcham: [noise] products, but.

Brian Ketcham: I think the.

Brian Ketcham: On the cost side, the other thing we source our steel domestically, but we have seen.

Brian Ketcham: Steel prices going up steel coil prices going up a lot of that's been driven by I think companies building inventories in anticipation of tariffs impact, we don't necessarily consider that to be.

Brian Ketcham: Long term increase but.

Brian Ketcham: I think to your question in terms of what we've been doing some of it has been.

Brian Ketcham: Some inventory build we've had shifted some suppliers around.

Brian Ketcham: Around a little bit already.

Brian Ketcham: But I would say, when you look at it in total, Randy mentioned a marginal increase in our cost of goods. It's something, if we were to quantify it today, ballpark it would probably be like mid-single digit kind of an impact on our cost of goods. Okay.

Brian Ketcham: But I.

Brian Ketcham: I would say.

Brian Ketcham: They look at it in total Randy mentioned, a marginal increase in our cost of goods.

Brian Ketcham: Yeah.

Brian Ketcham: It's something if we were to quantify it today ballpark it would probably be like mid single digit kind of an impact on our cost of goods.

Okay, and then just one more quick follow up.

Brian Ketcham: And then just one more quick follow-up. When you talk about, you know, moving around some of the suppliers, what are we talking about there, like circuit boards, controls, or something? Like what kind of imports? do you have the most exposure to? If you could just remind me. Yeah, I think electrical components would be one and, you know, some of this had already been addressed as we, you know, considering potential China-Taiwan conflict, things like that. We do have an operation in China, and a fair amount of our internal components come from China. Some of the supply chain stuff has been in the works for a while.

Brian Ketcham: Can you talk about.

Brian Ketcham: Moving around some of the suppliers.

Speaker Change: What are you what are we talking about there like circuit boards controls or something like that.

Brian Ketcham: What kind of imports.

Brian Ketcham: Have the most exposure to so you could just remind me.

Brian Ketcham: Yes, I think electrical components would be one and some of this had already been addressed as we.

Brian Ketcham: Yeah.

Brian Ketcham: Considering potential China, Taiwan conflict things like that.

Brian Ketcham: Have an operation in China, and a fair amount of our.

Brian Ketcham: Internal components come from China, but so some of the supply chain.

Brian Ketcham: Stuff has been in the works for a while.

Brian Ketcham: Yeah, understood. Okay, thank you very much.

Brian Ketcham: Yeah understood. Okay. Thank you very much.

Brian Ketcham: Sure.

Ryan Connors: Our next question will come from Ryan Connors with North Coast Research Partners. Please go ahead. Morning, thanks for taking my questions.

Ryan Connors: Our next question will come from Ryan Connors with Northcoast Research partners. Please go ahead.

Ryan Connors: Good morning, Thanks for taking my questions.

Brian Ketcham: Okay.

Ryan Connors: First on the irrigation, I wanted to come at that from the angle of margin. It seems like the margins seem to hold up there better than we had expected with the big jump in international project. So, you know, a little bit of a decline year over year, but seemed like a pretty solid. margin there given the contribution from international which you know typically you've said in the past has been lower uh carries a lower margin so any anything you can drill down on us there how the margin net managed to hold up so well with north america down like it was and and that big order contributing like that.

Brian Ketcham: First on irrigation wanted to come at that from the angle of margin it seems like the.

Brian Ketcham: Margins seem to hold up there better than we had expected with the big jump in International project.

Brian Ketcham: So a little bit of a decline year over year, but seemed like a pretty solid.

Brian Ketcham: Margin there given the contribution from international which typically you've said in the past has been lower.

Speaker Change: Carries a lower margin so any any thing you can drill down on us there how the margin managed to hold up so well with North America down like it was and.

Brian Ketcham: And that big order contributing like that.

Brian Ketcham: Yeah, I think starting with North America, I would say, you know, margins comparable to last year. So we've, you know, from a pricing standpoint, we've maintained our pricing, you know, we've seen some cost, a little bit of cost softness on steel earlier in the quarter. But I think on the international side, you know, we've had pressure in Brazil over the last few quarters, just with the demand coming down there. So there's been some margin pressure in Brazil. We saw that stabilize in the second quarter. And then, you know, I think the volume leverage that we're getting from that project on the international side is, is definitely definitely helping to offset, you know, the gross margin dilution on that on the large project.

Brian Ketcham: Yeah, I think starting with North America, I would say margins comparable to last year. So.

Brian Ketcham: From a pricing standpoint, we've maintained our pricing we've seen some cost a little bit of cost softness on steel earlier in the quarter, but.

Brian Ketcham: I think on the international side.

Brian Ketcham: We've had pressure in Brazil over the last few quarters, just with the demand coming down there. So theres been some margin pressure in Brazil, we saw that stabilize in the second quarter and then I think the volume leverage that we're getting from that project on the international side is is definitely definitely helping too.

Brian Ketcham: Offset the gross margin dilution on that on the large project.

Ryan Connors: got it, very helpful.

Speaker Change: Got it very helpful.

Ryan Connors: And then the other one was just on the tariff side. Very much appreciate your comments about what you're doing and what you can control within the business. But I think what the other concern is, what the tariffs will mean for the agricultural given the different tariffs on different exports from the US Corn Belt and things like that. Obviously you don't have a crystal ball, but any thoughts on that issue? Like how this could impact the demand and potential recovery from the tougher market we've been in in the US?

Brian Ketcham: And then the other one was just on the tariff side.

Speaker Change: Very much appreciate your comments about what Youre doing and what you can control within the business, but I think what the other concern is what the tariffs will mean for the agricultural.

Brian Ketcham: The economy.

Brian Ketcham: Given given the different.

Brian Ketcham: Tariffs on different exports from the U S corn belt and things like that.

Speaker Change: Obviously, you don't have a crystal ball, but any thoughts.

Speaker Change: On that issue like like how how this could impact the demand and potential recovery from from the tougher market we've been in in the U S.

Randy Wood: Yeah, good morning, Ryan.

Speaker Change: Yes. Good morning, Ryan This is Randy I'll take that one I think obviously when you look at $27 billion worth of U S AG exports going out into the world if any of that is in jeopardy.

Randy Wood: This is Randy. I'll take that one. I think obviously when you look at $27 billion worth of U.S. ag exports going out into the world, if any of that is in jeopardy, then you have a disruption on the demand side of the equation that I think is going to have to have and will have some impact on the pricing side of the equation. I know that the government's working aggressively to develop new markets in parts of the world where maybe we haven't exported grain. If you look at the WASDE forecast, it's roughly 16% of the corn this year demand is export demand.

Speaker Change: You have a disruption on the demand side of the equation, but I think theres going to have to have a friend will have some impact on the pricing side of the equation I know that the government is working aggressively to develop new markets.

Speaker Change: And parts of the World, where maybe we havent exported grain.

Speaker Change: If you look at the wise the forecasted it's roughly 16% of the corn. This year demand is export demand and if that goes away I think there is going to have some some impact.

Randy Wood: And if that goes away, I think there is going to have some impact. I would say if we look at a historical perspective, when we've had issues like this in the past, whether it's trade, we've seen the government step up to support the American farmers. And we've just had roughly $30 billion in aid rolled out here in the past several months. And again, when we've had historic trade disruptions like this potential that we see today, the government has stepped in. So I'm not sure there's going to be a natural market demand driver that's going to open up a lot of new markets to offset what we might lose.

Speaker Change: I would say if we look at our historical perspective, when we've had issues like this in the past whether it's trade them.

Speaker Change: We've seen the government step up to support the American farmers and we've just had roughly 30 billion in aid rolled out here in the past several months and then again when we've had historic trade disruption like this.

Speaker Change: Tension that we see today that the government has stepped in and so I'm not sure there's going to be a natural market demand driver that's going to open up a lot of new markets to offset what we might lose and again. This is we might lose we don't know with certainty what the retaliatory tariffs are going to look like I think we've got some measure of confidence that we're going to see some additional additional support.

Randy Wood: And again, this is we might lose. We don't know with certainty what the retaliatory tariffs are going to look like. I think we've got some measure of confidence that we're going to see some additional support if and when the American farmers need it. But certainly the element of uncertainty, I don't think is going to help customer sentiment and it's not going to make customers more eager to go out and get loans or take on additional capital investments. So something we're watching closely and you're right to highlight that this is really twofold for us, what it does on the cog side and what it might do for the end markets as well.

Speaker Change: If and when the American farmer's need it but certainly the element of uncertainty I don't think there is going to help customer sentiment and its not going to make our customers more year to go out and get loans or take on additional capital investments. So something we're watching closely and youre right to highlight that this is really twofold for us what it does on the Cogs side and what it might do for the end markets.

Speaker Change: Well.

Ryan Connors: Got it.

Speaker Change: Got it thanks for your time this morning.

Operator: Thanks for your time this morning. Again, if you have a question, please press star, then 1.

Speaker Change: Thanks.

Speaker Change: Again, if you have a question. Please press Star then one our next question will come from Nathan Jones with Stifel. Please go ahead.

Nathan Jones: Our next question will come from Nathan Jones with Stiefel. Please go ahead. Yeah, good morning.

Speaker Change: Yes. Good morning, this is Adam Farley on for Nathan.

Adam Farley: This is Adam Farley on for Nathan. I wanted to follow up on that last question. What is your expectation on pricing to the domestic irrigation market? Do you think? Farmers could bear another round of price increases in response to tariffs.

Speaker Change: Wanted to follow up on that last question.

Speaker Change: So what is what is your expectation on pricing to the domestic irrigation market do you think.

Speaker Change: Farmers could bear another round of price increases in response to tariffs.

Brian Ketcham: Yeah, Adam, this is Brian. We have already taken some pricing actions based on, you know, the increase in steel costs that we have have seen in the market. And, you know, as we demonstrated a couple years ago when steel was going up, you know, pretty dramatically. I mean, we were able to pass that along. I mean, I think, you know, as I mentioned to right now we're looking at, you know, the cost impact being, you know, mid single digit kind of increase. So, you know, we feel, you know, this is we're not in any different situation than our competitors.

Brian Ketcham: Yeah, Adam this is Brian.

Brian Ketcham: We've already taken some pricing actions based on the increase in steel costs that we have had seen in the market.

Brian Ketcham: And as we demonstrated a couple of years ago, when steel is going up.

Brian Ketcham: Pretty dramatically.

Brian Ketcham: We're able to pass that along I mean, I think as I mentioned two right now we're looking at that.

Brian Ketcham: Cost impact being mid single digit kind of.

Brian Ketcham: Increase so we feel.

Brian Ketcham: And this is we're not in any different situation than our competitors. So we feel like we would have that ability to to pass that along I think the other thing to mentioned the timing of all of this we're coming to the end of our spring selling season here. So the demand is going to drop off seasonally also.

Brian Ketcham: So we feel like we would have that ability to to pass that along. I think the other thing to mention, you know, the timing of all of this, you know, we're coming to the end of our spring selling season here. So the demand is going to, you know, drop off seasonally also.

Adam Farley: But, but no, I think that's, you know, we've already taken some action and depending on where all of this settles off or settles out will depend on, depend on, you know, what other actions that we need Okay, thanks for that. And then... This is a hypothetical, but if the trade war continues to ramp up, and if the U.S. is hit with retaliatory tariffs, Did that potentially be a benefit for investment in Brazil? If some of the production shifts around? We've certainly seen that in the past, Adam, and I don't know that the global demand for grain is going to change at all, just because we have these trade wars, so I think that demand is going to shift around, and the supply side then goes into different countries, whether it's Brazil or Argentina or other parts of the world.

Brian Ketcham: But no I think thats, we've already taken some action and depending on where all of this settles off.

Brian Ketcham: Settles out will depend.

Brian Ketcham: Depend on what other actions that we need to take.

Speaker Change: Okay. Thanks for that.

Brian Ketcham: And then.

Brian Ketcham: This is a hypothetical but.

Brian Ketcham: If the trade war continues to ramp up.

Brian Ketcham: And if the U S is hit with retaliatory tariffs.

Brian Ketcham: Does that potentially be a benefit for investment in Brazil.

Brian Ketcham: If some of the production shifts around.

Brian Ketcham: We've certainly seen that in the past, Adam and I don't know that the global demand for grain is going to change at all just because we have these trade war. So I think that demand is going to shift around and the supply side, then goes into different countries, whether it's Brazil, or Argentina or other parts of the world.

Randy Wood: Demand is going to be pretty stable, and demand is going to continue to grow. So with a global company like ours, we're able to react quickly in Brazil. We've got the capacity there. If we start to see an expansion of that market, we're going to be able to react to that very, very quickly. So again, when we look globally, I think we're positioned very well and uniquely to take advantage of any incremental increase in demand on the grain side in any of our facilities around the world.

Speaker Change: Demand is going to be pretty stable and demand is going to continue to grow so with a global company like ours, where.

Speaker Change: We're able to react quickly in Brazil, we've got the capacity there if we start to see an expansion of that market, we're going to be able to react to that very very quickly. So again, when we look globally I think we're positioned very well.

Speaker Change: And equally to take advantage of any incremental increase in demand on the green side in any of our facilities around the world.

Ryan Connors: Thank you for taking my questions. You bet.

Speaker Change: Okay. Thank you for taking my questions.

Speaker Change: You bet.

Randy Wood: This concludes our question and answer session.

Randy: This concludes our question and answer session I would like to turn the conference back over to Randy would for any closing remarks.

Randy Wood: I would like to turn the conference back over to Randy Wood for any closing remarks. Thank you all for joining us today. We're very pleased with our year-to-date results and our record second quarter performance. Our teams continue to execute well and we're positioned to manage through the market headwinds in our North American irrigation market while leveraging opportunities in the expanding international irrigation regions. Our road zipper funnel will continue to drive long-term growth and our global footprint and supply chain will allow us to effectively manage through tariff uncertainty.

Thank you all for joining US today, we're very pleased with our year to date results and our record second quarter performance. Our teams continue to execute well and we're positioned to manage through the market headwinds in our north American irrigation market, while leveraging opportunities in the expanding international irrigation regions. Our road zipper funnel will continue to drive long term growth and our global footprint and supply chain.

Randy: It will allow us to effectively manage through tariff uncertainty. This concludes our second quarter earnings call. We look forward to updating you on our continued progress following the close of our fiscal 2025 third quarter. Thanks for joining us.

Randy Wood: This concludes our second quarter earnings call.

Randy Wood: We look forward to updating you on our continued progress following the close of our fiscal 2025 third quarter. Thanks for joining.

Operator: The conference is now concluded. Thank you for attending today's presentation.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: You may now disconnect. © BF-WATCH TV 2021

Randy: Okay.

Randy: Okay.

Randy: Yes.

Randy: Yeah.

Randy: Yeah.

Randy: Yeah.

Randy: Yeah.

Randy: Yeah.

Randy: [music].