Q3 2025 Lindsay Corp Earnings Call

Operator: Good day, and welcome to the Lindsay Corporation's Fiscal Third 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 a zero.

Good day and welcome to the Lindsay Corporation's fiscal third 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. After today's presentation, there will be an opportunity to ask.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note, this event is being recorded.

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To ask a question you May press Star then one on your telephone keypad to withdraw your question. Please press Star then two please.

Speaker Change: Please note. This event is being recorded I would now like to turn the conference over to Randy Wood, President and CEO. Please go ahead.

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.

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

Randy Wood: Welcome to our fiscal 2025 third quarter earnings call. With me today is Brian Ketcham, our Chief Financial Officer. I'm extremely proud of our team and their execution, delivering our third consecutive quarter of year-over-year growth in both revenue and operating income. Our employees are diligently focused on supporting our customers and each other. These results reflect the strength of our global business and our team's commitment to execution excellence. Our irrigation business delivered year-over-year revenue growth, led by strength in our international markets including Latin America and the Mideast North Africa region, while the domestic irrigation volume was comparable to the prior year.

I'm extremely proud of our team and their execution delivering our third consecutive quarter of year over year growth in both revenue and operating income.

Our employees are diligently focused on supporting our customers and each other these results reflect the strength of our global business and our team's commitment to execution excellence.

Speaker Change: Our irrigation business delivered year over year revenue growth led by strength in our international markets, including Latin America, and the mid East and North Africa region, while the domestic irrigation volume was comparable to the prior year.

Randy Wood: We continue to deliver our large project in the Middle East and are pleased to announce we have secured a new project in the territory valued at over $20 million. This project will begin shipping in our fiscal fourth quarter and will continue into our first quarter of fiscal year 2026.

We continue to deliver our large project in the middle East and are pleased to announce we have secured a new project in the territory valued at over $20 million. This project will begin shipping in our fiscal fourth quarter and will continue into our first quarter of fiscal year 2026.

Randy Wood: turning to our infrastructure segment. Our team delivered another solid quarter, primarily driven by road safety products as we enter the road construction season here in North America. Our focus remains on growing both our road safety products and road zipper system businesses, particularly leasing, as this supports a more stable revenue profile for the segment and our overall results.

Speaker Change: Turning to our infrastructure segment.

Our team delivered another solid quarter, primarily driven by road safety products as we enter the road construction season here in North America, our focus remains on growing both our road safety products and road zipper system businesses, particularly leasing as this supports a more stable revenue profile for this segment and our overall results.

Randy Wood: Shifting gears to Market Outlook. In North America, irrigation, we're now in the primary growing season, where weather conditions influence crop yields, prices, and net farm income for the year. These factors play a large role in determining future demand for irrigation equipment. While USDA is projecting an increase in net farm income for this year, most of that growth is related to direct government payments for disaster relief and commodity price support. Crop revenue is projected to decline, and at this point of the storm season, we have seen softer demand relative to the prior year. This tempers demand expectations for North American irrigation heading into our fourth quarter.

Shifting gears to market outlook.

In North America irrigation, we're now in the primary growing season, where weather conditions influenced crop yields prices and net farm income for the year. These factors play a large role in determining future demand for irrigation equipment.

While the USDA is projecting an increase in net farm income for this year most of that growth is related to direct government payments for disaster relief and commodity price support prep revenue is projected to decline and at this point of the storm season, we have seen softer demand relative to the prior year. This temporary demand expectations for north American irrigation heading into.

Our fourth quarter.

Randy Wood: In our international irrigation markets, particularly Brazil, we're encouraged by continued signs of improving market conditions. I traveled across Mato Grosso and Goia states earlier this month and can confirm that customers in this region are ready to expand irrigated acres as the availability of affordable credit expands and the country's energy infrastructure grows. The federal government raised the benchmark interest rate by 25 basis points earlier this month and it now sits at 15%, which is the highest rate since July of 2006. We do expect next year's crop plan to be released in July, and the market outlook will be impacted by the rate and amount of funds made available through the program.

And our international irrigation markets, particularly Brazil, we are encouraged by continued signs of improving market conditions.

Well, the cross Mato Grosso and gory ice states earlier this month and can confirm that customers. In this region are ready to expand irrigated acres is the availability of affordable credit expands and the country's energy infrastructure grows.

The federal government raised the benchmark interest rate by 25 basis points earlier this month and it now sits at 15%, which is the highest rate since July of 2006.

Speaker Change: We do expect next year's crop plan to be released in July and the market outlook will be impacted by the rate and amount of funds made available through the program.

Randy Wood: We continue to see a strong project funnel in the Mid-East and North Africa, and as I mentioned earlier, we did secure another project in this region and expect to see continued growth as countries across the territory prioritize food security and water resource conservation. In infrastructure, we continue to see opportunities develop across road zipper system sales, leasing, and road safety products. Infrastructure funding in the U.S. remains steady, and while project timing can shift quarter to quarter, our funnel of project opportunities remains robust. While additional project sales are on the horizon, the timing of these more complex sales remains uncertain.

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

In infrastructure, we continue to see opportunities develop a cross road zipper system sales leasing and road safety products.

Restructure funding in the U S remains steady and project timing can shift quarter to quarter, our funnel of project opportunities remains robust while additional project sales are on the horizon. The timing of these more complex sales remains uncertain.

Randy Wood: Our global operations and supply chain team continue to navigate an evolving tariff environment while leveraging our global footprint to mitigate the impact on our business. Actions including supplier collaboration, strategic inventory placement, resourcing, and pricing have allowed us to manage through this period well.

Speaker Change: Our global operations and supply chain team continues to navigate an evolving tariff environment, while leveraging our global footprint to mitigate the impact on our business actions.

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

Randy Wood: In the area of technology, our collaboration with Pestle Instruments continues to create customer value. By combining FieldNet Advisor with Pestle's in-field environmental sensors, we are providing more precise and real-time agronomic insights that allow for more accurate irrigation scheduling decisions. This integrated approach has driven notable growth in cross-selling opportunities. The partnership is deepening our expertise in agronomic decision support, strengthening our data-driven product suite, and advancing our position as a leader in precision irrigation.

In the area of technology, our collaboration with personal instruments continues to great customer value by combining fumet advisor with pestles infield environmental sensors, we're providing more precise and real time agronomic insights that allow for more accurate irrigation scheduling decisions.

This integrated approach has driven notable growth.

Cross selling opportunities the partnership is deepening our expertise and agronomic decision support strengthening our data different data driven product suite and advancing our position as a leader in precision irrigation.

Brian Ketcham: I'd like to now turn the call over to Brian to discuss our third quarter financial results. Thank you, Randy, and good morning, everyone. Consolidated revenues for the third quarter of fiscal 2025 increased 22% to $169.5 million compared to $139.2 million in the prior year. Revenues grew in both the irrigation and infrastructure segments compared to the prior year. Net earnings for the quarter were $19.5 million or $1.78 per diluted share, compared to net earnings of $20.4 million or $1.85 per diluted share in the prior year. This year-over-year decrease in net earnings resulted primarily from the recognition of a one-time income tax credit in the prior year of $4.8 million, or 44 cents per diluted share.

I'd like to now turn the call over to Brian to discuss our third quarter financial results Brian.

Brian: You Randy and good morning, everyone.

Brian: <unk> revenues for the third quarter of fiscal 2025 increased 22% to $169 5 million compared to $139 $2 million in the prior year revenues grew in both the irrigation and infrastructure segments compared to the prior year.

Brian: Net earnings for the quarter were $19 5 million or $1 78 per diluted share compared to net earnings of $24 million or $1 85.

Brian: Per diluted share in the prior year.

This year over year decrease in net earnings resulted primarily from the recognition of a onetime income tax credit in the prior year of $4 8 million or <unk> 44 per diluted share.

Brian Ketcham: excluding the impact of the tax credit on prior year results, current year earnings per share represents an increase of 26% over the prior year. Turning to our segment results, irrigation segment revenues for the quarter increased 25% to $143.7 million compared to $114.8 million in the prior year. North America irrigation revenues of $69.1 million increased 1% compared to $68.2 million in the prior year. Unit sales volume of irrigation equipment was comparable to the prior year, while average selling prices were up slightly. This increase was partially offset by the mixed impact of slightly shorter machines on average compared to the prior year.

Brian: Excluding the impact of the tax credit on prior year results current year earnings per share represents an increase of 26% over the prior year.

Turning to our segment results irrigation segment revenues for the quarter increased 25% to $143 7 million compared to $114 $8 million in the prior year.

North America irrigation revenues of $69 $1 million increased 1% compared to $68 2 million in the prior year.

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

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

Brian Ketcham: Increased demand for irrigation equipment in specialty crop markets in the Pacific Northwest, offset softer demand in corn and soybean markets, and a lower level of storm damage replacement activity compared to the prior year. In international irrigation markets, revenues increased 60% to $74.7 million compared to $46.6 million in the prior year. The majority of the increase resulted from revenues related to our large project in the MENA region, along with higher sales volumes in Brazil and other parts of South America. These increases were partially offset by unfavorable effects of foreign currency translation of approximately $2.5 million compared to the prior year.

Brian: Increased demand for irrigation equipment and specialty crop markets in the Pacific northwest offset softer demand in corn, and soybean markets and a lower level of storm damage replacement activity compared to the prior year.

Brian: In international irrigation markets revenues increased 60% to $74 7 million compared to $46 $6 million in the prior year.

Brian: The majority of the increase resulted from revenues related to our large project in the Mena region.

Brian: Along with higher sales volumes in Brazil, and other parts of South America. These.

Brian: These increases were partially offset by unfavorable effects of foreign currency translation of approximately $2 5 million compared to the prior year.

Brian Ketcham: Irrigation segment operating income for the quarter of $27.2 million increased 39% compared to the prior year. And operating margin was 18.9% of sales compared to 17% of sales in the prior year. Operating income increased due to higher revenues and favorable leverage of fixed operating expenses while being partially offset by a higher amount of international project revenues which resulted in some dilution to operating margin compared to the prior year. Infrastructure segment revenues for the quarter of $25.7 million increased 6% compared to $24.4 million in the prior year. The increase resulted primarily from higher sales of road safety products, while road zipper project sales and lease revenues in total were comparable to the prior year.

Brian: Irrigation segment operating income for the quarter of $27 $2 million increased 39% compared to the prior year and operating margin was 18, 9% of sales compared to 17% of sales in the prior year.

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

Brian: Infrastructure segment revenues for the quarter of $25 $7 million increased 6% compared to $24 4 million in the prior year the.

Brian: The increase resulted primarily from higher sales of road safety products, While road Zipper project sales and lease revenues in total were comparable to the prior year.

Brian Ketcham: Infrastructure segment operating income for the quarter was $5.4 million compared to $6.3 million in the prior year. And infrastructure operating margin for the quarter was 21.1% of sales compared to 25.8% of sales in the prior year. Lower operating income and operating margin resulted primarily from a less favorable margin mix within road zipper system revenues compared to the prior year.

Brian: Infrastructure segment operating income for the quarter was $5 4 million compared to $6 $3 million in the prior year.

Brian: And infrastructure operating margin for the quarter was 21, 1% of sales compared to 25, 8% of sales in the prior year.

Brian: Lower operating income and operating margin resulted primarily from a less favorable margin mix within road zipper system revenues compared to the prior year.

Brian Ketcham: Turning to the balance sheet and liquidity. Our total available liquidity at the end of the third quarter was $261 million, which includes $211 million in cash, cash equivalents, and marketable securities, and $50 million available under our revolving credit facility. 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: Turning to the balance sheet and liquidity.

Brian: Our total available liquidity at the end of the third quarter was $261 million, which includes $211 million in cash cash equivalents in marketable securities and $50 million available under our revolving credit facility.

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

Brian: Thank you.

Operator: 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 speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two.

Brian: 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 if at anytime. Your question has been addressed and you would like to withdraw. Your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.

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

Kristen Owen: And your first question comes from Kristen Owen with Oppenheimer. Please go ahead. Yeah, good morning, Mason. This is Randy. I'll go ahead and take that one.

Speaker Change: And your first question comes from Christian Ellen with Oppenheimer. Please go ahead.

Speaker Change: Good morning. This is mason on for Kristen, we wanted to ask about your international business over the short term can you help us understand what if any impact the recent flare up in the middle East could have on your large project activity and then on the longer term I'm wondering if you can help us understand what you're thinking about a long term growth opportunity in Brazil, we're hearing a lot of off.

Speaker Change: And as I round out of the rebound in sentiment in the region, but also acreage expansion.

Speaker Change: From a competitive standpoint.

Speaker Change: Yes. Good morning, Nathan This is Randy I'll I'll go ahead, and take that one and I guess I'll start by stating, obviously like everyone else, where we're hoping for a peaceful resolution on the complex in the middle East and transitioning to the impact on large project activity, we don't see a lot of direct impact in the short.

Randy Wood: And I guess I'll start by stating, obviously, like everyone else, we're hoping for peaceful resolution on the conflicts in the Middle East and transitioning to the impact on large project activity. We don't see a lot of direct impact in the short term. And certainly the long-term fundamental drivers there related to food security remain intact. So we don't expect at this point any significant disruption in our ability to deliver existing projects or continue working the funnel to exit new projects in the region.

Speaker Change: <unk> and.

Speaker Change: And certainly the long term fundamental drivers there related to food security.

Speaker Change: And tax so we don't expect at this point any significant disruption in our ability to deliver existing projects or a continue work in the final two to exit new projects in the region and relative to to Brazil, you broke up a little bit there in the middle but I'll I'll cover what I, what I think I had heard that the long term growth opportunity in Brazil.

Randy Wood: And relative to Brazil, you broke up a little bit there in the middle, but I'll cover what I think I heard. The long-term growth opportunity in Brazil from our perspective is significant, and we've made that comment before. We still have that view. I was fortunate to travel in the region earlier this month, and it really does confirm what we hear, what we read, what we see from our dealers and our sales teams in the region. And right now, we would put Brazil kind of mid-single digits in terms of irrigation adoption. So we're not only projecting growth on new ground coming into production, but certainly improving the yield and productivity of ground that's already under production.

Speaker Change: From our perspective is significant and we've made that comment before we still have that view I was fortunate to travel in the region earlier this month and it really does confirm what we hear what we read what we see from from our dealers and our sales teams in the region and right now we would put Brazil kind of mid single digits in terms of irrigation.

Speaker Change: Adoption, so we're not only projecting growth on new ground coming into production, but certainly improving the yield and productivity of ground. That's already under production and we've often said you know as credit conditions become more attractive, but we'll certainly see continued investment in growth, where we're hearing a lot of territory now where energy.

Randy Wood: And we've often said, as credit conditions become more attractive, we'll certainly see continued investment and growth. We're hearing a lot of territory now where energy has to catch up so that they've got the ability to power pumps and pivots in the region.

Speaker Change: As to catch up so that they've got the ability to power pumps and pivots in the region, but if we had to rank where we see the strong sustainable consistent growth opportunities in the world, Brazil is certainly going to be near the top of that list.

Randy Wood: But if we had to rank where we see the strong, sustainable, consistent growth opportunities in the world, Brazil is certainly going to be near the top of that list. Thank you for that.

Tim: Thank you Tim.

Mason: A quick follow up. One of the things we're watching across both ag and infrastructure markets is the extension of the Trump tax credits and in particular the reinstatement of bonus depreciation. Can you provide your thoughts on how it might impact your demand outlook in both irrigation and road zipper business?

Tim: A quick follow up one of the things we're watching across both AG and infrastructure markets is the extension of the Trump tax credits and in particular, the reinstatement of bonus depreciation can you provide your thoughts on how that might impact your demand outlook in both irrigation and road zipper business.

Brian Ketcham: Yeah, Mason, this is Brian. You know, I think The tax credits and the accelerated depreciation, bonus depreciation, it's going to be more impactful for the irrigation business, probably not as much on the road zipper side of the business. And really it's all about, you know, farmer income and the ability to shelter that from taxes.

Tim: Yes, Nathan this is Brian.

Tim: I think the.

Tim: <unk>.

Tim: The tax credits and the accelerated depreciation bonus depreciation is going to be more impactful for the irrigation business, probably not as much on the road zipper side of the business and really it's all about.

Tim: Farmer income and the ability.

Tim: To shelter that from taxes, and I think from our standpoint, maybe not at an overall.

Brian Ketcham: And I think from our standpoint, you know, maybe not an overall increase in demand, but I think the timing of that demand, you know, so you could, if the bill gets passed, you know, this year, you could see some demand later in the calendar year this year that might've, you know, been projected to be in the spring of next year. So I think it can shift the timing around, but overall it's still definitely supportive of investment in our equipment.

Tim: The increase in demand, but I think the timing of that demand.

Tim: As you see it could if the bill gets passed this year.

Tim: You could see some demand later in the calendar year this year that might have.

Tim: <unk> been projected to be in the spring of next year. So I think it can shift the timing around but overall, it's still definitely supportive of investment in our equipment.

Mason: Thank you for taking my call.

Tim: Thank you for taking my questions.

Ryan Connors: And your next question comes from Ryan Connors with North Coast Research. Please go ahead. Good morning. Thanks for taking my questions. Morning, Ryan. So I wanted to stick on the ag business for a few. And first off, just on the pricing front, you talked about price being a slight tailwind. That seems like a bit more constructive than we've had the last few quarters. So any color there? Was that regional in nature? You mentioned the Northwest was strong. Just any additional color on the pricing would be helpful. Yeah, Ryan, I would say, you know, we've stated before, you know, when the tariff information, you know, came out and then, you know, some, we saw some of this deal.

Ryan Connors: And your next question comes from Ryan Connors with Northcoast Research. Please go ahead.

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

Speaker Change: Good morning, Ryan So what wanted to stick on the AG business for a few and first off just on the pricing front and you talked about price.

Tim: Slight tailwind.

Tim: That seems like a bit more constructive than we've had the last few quarters. So any any color. There was that regional in nature. You mentioned that now with northwest was strong just any any additional color on the pricing would be helpful.

Tim: Yeah, Brian.

Tim: I would say.

Tim: We've stated before the tariffs information came out and then some we saw some of this deal.

Randy Wood: market in the U.S. go up, you know, we've been proactive at addressing price and taking pricing actions. So I think at this point, you know, I would say it's A slight impact on revenues, but I think we're kind of getting ahead a little bit of the cost impact there, so certainly some support on the margin side there, but that's been really in the U.S. is where we've seen the pricing. Understood. Okay.

Tim: Market in the U S go up.

Tim: Been proactive at <unk>.

Tim: Addressing price and taking pricing actions. So I think at this point.

Tim: I would say it's.

Tim: A slight impact on revenues and.

Tim: But I think.

Tim: We're kind of getting ahead, a little bit of the cost impact there. So.

Tim:

Tim: Certainly some support on the margin side, there, but thats been really in the in the U S is where we've seen the pricing actions.

Tim: Understood. Okay, and then you mentioned in the press release, and you mentioned it as well Brian. This is this notion of shorter machines.

Randy Wood: And then, you know, you mentioned in the press release, and you mentioned it as well, Brian, this notion of shorter machines as, I guess, a tailwind to, or excuse me, a headwind, rather. So anything that's driving that, anything to note in the mix that's structural that's changing there, or is that just sort of happenstance at the moment, or that's the way it's going? Or is there anything we read into that? Because I noticed you mentioned it a couple times. Yeah. And it's really a regional thing primarily, and mentioned, you know, pretty strong demand in the Pacific Northwest in our third quarter.

Tim: As I guess a tailwind too.

Tim: Our Assam excuse me a headwind rather so anything thats driving that anything to note in the mix.

Tim: That's structural that's changing there or is that just sort of happened stance at the moment and that's the way it's going if anything we read into that because I know that you mentioned it a couple of times and it's really a regional thing primarily in mentioned pretty strong demand in the Pacific northwest in our third quarter end and Thats, where were seeing some of the shorter machines.

Randy Wood: And that's where we're seeing some of the shorter machines, which influences the overall average. And there you've got large farms that have had pivots in, and as they add land, and maybe they cover the corners, you know, with shorter machines, you know, that's kind of what's really driving it. You don't see that as much, you know, across the broad Corn Belt, but in the Pacific Northwest region, and some in the Southeast as well, you got some shorter machines. Got it. Okay.

Tim: Which influences the overall average in there you've got.

Tim: Large farms that have had pivots in and as they add land and maybe they cover the corners with shorter machines, that's kind of what's what's really driving it you don't you don't see that as much across the broad corn belt, but in the Pacific Northwest region and some in the southeast as well you guys some shorter machines.

Speaker Change: Got it Okay, and then kind of a bigger picture question, Randy you alluded to the fact that.

Randy Wood: And then kind of a bigger picture question, you know, Randy, you alluded to the fact that, you know, net farm income is going to be up this year, but a lot of that is government supports. And that, you know, the adage is that growers aren't going to spend that money the same as they will spend crop receipts. But in a drought scenario, like we have going on in parts of the Midwest, especially a pivot heavy region like Nebraska, could we actually end up seeing a lot coming in from the government? And you sort of need, it is certainly a priority at the moment, I would think, for some of these growers to make sure they can get a crop up.

Tim: Net farm income is going to be up this year, but a lot of that is government support.

Tim: Ports and the <unk>.

Tim: Outages that growers are going to spend that money. The same as they will then crop receipts, but in a drought scenario like we have going on in parts of the Midwest, especially a pivot heavy region like Nebraska could we actually end up seeing a lot of that money flow into irrigation I mean, if the money is coming in from the government and you sort of need.

Tim: It is certainly a priority at the moment I would think for some of these growers to make sure. They can get a get a crop up.

Randy Wood: Yeah, Ryan, I wouldn't say in our view that the drought is going to drive a lot of new machine purposes. We're a pretty mature market here in the Midwest, so I know we had some machines start up maybe a little earlier to germinate a crop when we didn't have those early spring rains. So we might see more hours this year. That could lead to more parts business, certainly some service business for our dealers. But I wouldn't correlate that to a significant or noticeable increase in machine demand. I can say in the eastern part of the state, at least, we've had a significant amount of rain here over the last seven to ten days.

Tim: Yes, Ryan I wouldn't say in our view that the drought is going to drive a lot of new machine purposes, where we're a pretty mature market here in the Midwest. So we I know we had some machine start up maybe a little earlier to germinate a crop when we didn't have those early spring rains. So we might see more hours. This year that could lead to more parts business certainly some service business.

Tim: For our dealers.

Tim: But I wouldn't correlate that to a you know a significant or a noticeable increase in machine demand and I can say in the eastern part of the state at least we've had a significant amount of rain here over the last seven to 10 days. So I think a longer term threat of drought could be could be abating slightly as well.

Randy Wood: So I think the longer term threat of drought could be abating slightly as well. Sure.

Ryan Connors: And then just one last one, if I could sneak it in.

Tim: Sure and then just one last one if I could sneak it in on the new $20 million mean a project.

Ryan Connors: On the new $20 million MENA project, should we assume the margins on that are roughly equivalent to the margins on the other big MENA project you've been shipping? Yeah, I think that's a fair assumption. I mean, it's a smaller project. But I would say, given the fact that we're going to start delivering that at the same time we still have the larger project, I think we'll see comparable margins. Yep. Okay. Great.

Speaker Change: Should we assume the margins on that are roughly equivalent to the margins on the.

Tim: The other big mean, a project you've been shipping.

Tim: Yes, I think Thats, a fair assumption I mean, it's a smaller project.

Tim: But I would say given the fact that we're going to start delivering that at the same time, we still have the larger project I think we will see comparable margins.

Tim: Yeah, Okay, great. Thanks for your time.

Ryan Connors: Thanks for your time.

Ryan Connors: Thank you.

Tim: Thank you.

Brian Drab: And your next question comes from Brian Drab with William Blair, please go ahead. Good morning, thanks for taking my questions. And I just wanted to start with, you know, following up to that last question that the $20 million project is a little bit smaller than, as you pointed out, and some of the other ones that you've been doing in that region is, is that is there is at the beginning of a trend possibly? Why? Why is it coming in? These are the smaller pieces in this case. Do you, you know, in winning that project, were there discussions of other pieces to maybe a larger project, and do you have visibility to, you know, the next phases?

Speaker Change: And your next question comes from Brian Drab with William Blair. Please go ahead.

Brian Drab: Hey, good morning, Thanks for taking my questions and I just wanted to start with.

Tim: Following up to that last question the $20 million project is a little bit smaller than as you pointed out in some of the other ones that you've been doing.

Tim: In that region is that.

Tim: Is there just at the beginning of a trend, possibly why why is it coming in maybe smaller smaller pieces in this case and.

Tim: Do you.

Tim: In winning that project, where there are discussions of other pieces to maybe a larger project and do you have visibility to.

Tim: The next phases.

Randy Wood: Good morning, Brian. This is Randy. Thanks for the question. I'd probably answer the question this way. We talk a lot about the funnel, and I think others that are active in the region have as well. When you look at the Pareto on everything that's in there, there's going to be more of these $20, $30, $40 million projects than there are the $100, $150 plus million dollar projects. Those megaprojects are going to be certainly a smaller number. If you look at a trend, I wouldn't say it's a trend where the megaprojects are getting broken down into smaller projects.

Tim: Yes. Good morning, Brian. This is Randy Thanks for the question that I would probably answer the question. This way and we talk a lot about the funnel and I think others that are active in the region have as well and when you look at the kind of the parade on everything Thats in there theres going to be more of these 2030 $40 million projects. Then there are the.

Tim: 100, 150 plus million dollar projects those mega projects are going to be certainly a smaller number. So if you look at a trend I wouldnt say its a trend where the mega projects are getting broken down into smaller projects. These are different customers different parts of the region with may be different.

Brian Drab: These are different customers, different parts of the region with maybe different availability of landmass to them. Not a trend where we'd say everything is going to shift to these small ones. We still see some of those megaprojects working their way through the funnel. From a quantity perspective, I think we are going to see more of these smaller projects over time. It's not big customers getting small. It's different customers, different parts of the region. Okay, thanks very much.

Tim: Availability of landmass to them, so not not a trend where we'd say everything is going to shift to the small ones. We still see some of those mega projects working their way through the funnel from a quantity perspective, I think we are going to see more of these smaller projects over time, but it's not big customers getting small it's different customers different parts of the region.

Tim: Okay. Thanks, very much and then.

Brian Drab: And then on Brazil, your comments today, you know, in the you know, what we're seeing in Brazil kind of has me slightly feeling slightly more cautious about the near term outlook in Brazil. I'm wondering if that if that's what you're I mean, you talked about the rate being the highest it's been since 2006, 15%. I guess the question is just, are you incrementally more cautious on Brazil here for the second half of calendar 25? I think as we see in a lot of markets, there's a combination of tailwinds and headwinds that are kind of battling it out.

Tim: On Brazil.

Tim: Comments today.

Tim: And what we're seeing in Brazil.

Tim: It has.

Tim: Slightly feeling slightly more cautious about the near term outlook in Brazil, I'm wondering if that if that's what you're.

Tim: Fences as well I mean, you talked about the rate being at the highest it's been since 2615%.

Tim: I guess the question is just are you incrementally more cautious on Brazil here for for the second half of calendar 'twenty five.

Tim: I think as we've seen a lot of markets. There is a combination of tailwind and headwinds that are kind of battling it out and I think in Brazil, we still see the.

Randy Wood: And I think in Brazil, we still see, you know, the fundamental market there when you can grow three crops when you irrigate and two when you don't. Soy prices remain strong and that access to affordable capital, that's the one thing, you know, right now that's maybe keeping a lid on that market.

Tim: Fundamental market there when you can grow three crops. When you were great and then two when when you don't soy prices remains strong and that access to affordable capital Thats. The one thing right now that's maybe keeping a lid on that market. So in the near term.

Randy Wood: So in the near term, near term being today, maybe slightly more cautious, but we also commented that next year's crop plan should be released in the first part of July. That's going to be a major source of affordable funding for our customers. So depending on where that rate is and the amount of total funding that's available, I think that that short-term cautious optimism could transition quite quickly. And we know that that market from a long-term perspective is going to continue to see growth and ongoing investment. So I don't think it's tempered demand to the point that we're even remotely concerned, Brian, but until we see what next year's crop plan looks like, I think it's for the most part, a lot of customers are kind of in a wait-and-see approach now, but that wait-and-see is, you know, 10 to 14 days.

Tim: Near term being today, maybe slightly more cautious, but we also commented that next year's crop plan should be released in the first part of July that's going to be a major source of affordable funding for our customers. So depending on where that rate is in the amount of total funding. That's available I think that short term cautious optimism could <unk>.

Tim: Transition quite quickly and we know that that market from a long term perspective is going to continue to see growth and ongoing investments. So I don't think it's tempered demand to the point they were even remotely concerned Bryan but until we see what next year's crop land looks like I think it's.

Randy Wood: For the most part a lot of customers are kind of in a wait and see approach now, but that wait and see as you know tend to 10 to 14 days.

Brian Drab: Okay, thanks. Appreciate it very much.

Tim: Okay. Thanks, I appreciate it very much.

Tim: You bet.

John Braatz: And your next question comes from John Braatz with Kansas City Capital. Please go ahead. Morning Randy, Brian. Morning John. Brian can you tell us a little bit about, I mean tell us about...

Speaker Change: And your next question comes from Jon Braatz, with Kansas City Capital. Please go ahead.

Randy Bryan: Randy Bryan.

Speaker Change: Good morning, guys, Brian can you tell us a little bit about I mean in Tulsa.

Brian Ketcham: how much was delivered on the large project this quarter and what remains, and then From a bigger picture standpoint, is there enough opportunities out there for you to offset the completion of the large project as we look into next year? Sure. Yeah, first of all, we were able to deliver a little bit ahead of schedule in the third quarter. So I think we've been talking about $20 million a quarter. We did about $24 million in the third quarter. So that potentially, you know, pulls forward what we were expecting to do in the fourth quarter. So maybe there's $16 million in the fourth quarter and then the remainder, you know, which could be another 15, 16 million that rolls into the first quarter of next year.

Speaker Change: How much was delivered on the on the large project this quarter and what remains and then.

Randy Bryan: From a bigger picture standpoint is there enough.

Randy Bryan: Opportunities out there for you to offset.

Randy Bryan: Sort of the completion of a large project as we look into <unk>.

Randy Bryan: Next year.

Randy Bryan: Sure.

Randy Bryan: First of all we were able to deliver a little bit ahead of schedule in the third quarter. So I think we've been talking about $20 million a quarter.

Randy Bryan: We did about $24 million in the third quarter, so that potentially pull.

Randy Bryan: Pulls forward, what we were expecting to do in the fourth quarter. So maybe there are 16 in the fourth quarter and then the remainder.

Randy Bryan: Which could be another.

Tim: $15 million to $16 million that rolls into the first quarter of next year. So that's been really delivering as expected like I said, we were able to get a little bit more of that out in the third quarter, but the second part of your question I mean, I think as Randy talked about.

Brian Ketcham: So that's been really delivering as expected. Like I said, we were able to get a little bit more of that out in the third quarter.

Brian Ketcham: But the second part of your question, I mean, I think as Randy talked about, you know, the project pipeline and. both a combination of large and small. I mean, small. I kind of have to laugh when we talk about a $20 million project being small. I mean, in the past, a $20 million project would be a pretty good-sized project. But there's enough projects in the funnel to fill the gap from the large project that we have this year. I think the big question, as we always talk about, is the timing and the unpredictability there. And a lot of factors go into when a project can get started, whether it's infrastructure or whether it's getting the funding in place and things like that.

Tim: The project pipeline and.

Tim: Both the combination of large and small I mean I.

Tim: I have to laugh when we talk about a $20 million project being small I mean in the.

Tim: In the past at $20 million project would be a pretty good sized project, but.

Tim: But there's enough projects in the funnel too.

Tim: Fill the gap from the large project that we've had we have this year I think the big question is as we always talk about is the timing.

Tim: Unpredictability, there and a lot of a lot of factors go into wind.

Tim: Our project can can get started whether it's infrastructure or whether it's getting that.

Tim: The funding in place and things like that but there is ample opportunity there to certainly fill that gap and continue to have a.

Brian Ketcham: But there's ample opportunity there to certainly fill that gap and continue to have a project business in that part of the world. Okay.

Tim: Project business in that part of the World.

John Braatz: The second question is, how in the past... We're speaking of North America. North American pivot sales seem to have been somewhat correlated with what we're seeing in terms of at John Deere and the big equipment manufacturers. And this year, there certainly hasn't been a disconnect. Your volumes have been flattish and their volumes have been off considerably. You know, what might be driving that? And I know you talked a little bit about the Pacific Northwest. Is it sort of more irrigation, more pivot sales in regional markets and outside of the big row crop? Yeah, I'll take that one, John.

Tim: Hey.

Tim: Second question is.

Tim: So in the past.

Tim: Oh, we're speaking in North America, North American vet sales seem to have been somewhat correlated with what we what we're seeing in terms of.

Tim: Uh huh.

Tim: Volumes at John Deere, and the big equipment manufacturers and this year and it certainly hasn't been.

Tim: Disconnect.

Tim: Your volumes have been flattish in.

Tim: Their volumes have been off considerably.

Speaker Change: You know what might be driving that and I know you talked a little bit about the Pacific northwest is it is it sort of a.

Tim: More irrigation more pivot sales in regional markets and outside of the big row crops.

Speaker Change: Yes, I'll take that one John I think there's a couple of things the mix that youre talking about regionally I think certainly plays into it one of the other factors is that just fundamentally we've got different go to market models and when you talked about John Deere and their calls they'll talk about destocking. The channels. So their revenue is recognized when it shifts to a dealer the dealer is going to hold inventory.

Randy Wood: I think there's a couple things. The mix that you're talking about regionally, I think certainly plays into it. One of the other factors is that just fundamentally, we've got different go-to-market models. And when you talk about John Deere, they'll talk about de-stocking the channel. So their revenue is recognized when it ships to a dealer. The dealer is going to hold inventory and sell that at retail. And for us, we basically ship from the factory to the field. So we don't have that de-stocking mechanism through our I think a lot of those equipment OEMs have to deal with when we start to see the market downturn.

Speaker Change: Tori and sell that at retail and for US we basically shipped from the factory to the field. So we don't have that destocking mechanism through our channel that I think a lot of those equipment Oems have to have to deal with when we start to see the market downturn, okay. Okay alright.

John Braatz: Okay, all right.

Operator: That's it. Thank you very much. Thank you, John. Again, if you have a question, please press star, then 1.

Speaker Change: That's it thank you very much.

Speaker Change: Thank you John it's John.

Speaker Change: Again, if you have a question. Please press Star then one.

Nathan Jones: And your next question comes from Nathan Jones with Stiefel, please go ahead. Good morning, this is Adam Farley on for. Hey Adam. I wanted to follow up on the price cost discussion. Are you seeing any impact from the increase in the steel and aluminum tariff? And then, do you have any expectation for near-term steel costs? And, you know, as it relates to the other tariffs, I think it's still in that, you know, where we talked about before in that mid-single-digit kind of impact, and as we mentioned earlier, we have taken some pricing actions in anticipation of that cost.

Nathan Jones: And your next question comes from Nathan Jones with Stifel. Please go ahead.

Adam Farley: Hey, Good morning, this is Adam Farley on for Nathan.

Speaker Change: And I wanted to follow up on.

Speaker Change: Morning, guys I wanted to follow up on the price cost discussion.

Speaker Change: Are you seeing any impact from the increase in the steel and aluminum tariffs and.

Speaker Change: And then do you have any expectation for near term steel costs.

Speaker Change: Yeah. Adam This is Brian I would say at this point, we've had little to no impact from the steel cost I mean, we had seen initially when the tariffs were announced.

Speaker Change: Domestic steel suppliers increase.

Speaker Change: Increasing price some of that with some artificial demand created with with companies stocking up on inventory and things like that but this most recent announcement of the 50% tariffs.

Speaker Change: We just haven't seen any price increases sticking at this point in time.

Speaker Change: The demand is there to support.

Speaker Change: The domestic steel increases so I would say from a cost standpoint as it relates to steel.

Speaker Change: At this point limited limited impact and.

Speaker Change:

Speaker Change: And as it relates to the other other tariffs I think it's still in that.

Speaker Change: We've talked about before in that mid single digit kind of impact in.

Speaker Change: As we mentioned earlier, we have taken some pricing actions in anticipation of that cost impact.

Brian Ketcham: Thanks, Brian. That's helpful.

Brian Ketcham: Thanks, Brian Thats helpful.

Randy Wood: And then I wanted to follow up on the progress. around the modernization of your Lindsay, Nebraska manufacturing facility. I'm asking the question because margins have been pretty robust this year, and I'm wondering if you're seeing realized savings from that. monetization.

Speaker Change: And then I wanted to follow up on the <unk>.

Speaker Change: Yes.

Speaker Change: Deep honored monetization Wednesday, Nebraska manufacturing facility.

Speaker Change: My question, because margins have been pretty robust and Sharon I wonder.

Speaker Change: If youre seeing realized savings from that from that.

Speaker Change: Monetization.

Randy Wood: Y'all maybe start, Adam, and kind of give you an update on the progress, and Brian can maybe go a little deeper on some of the numbers. We had the opportunity to take our board there earlier this week and kind of do a tour on the investment progress, and things are going extremely well. We've been blessed with good weather, we've been blessed with a great team, supplier support working on execution, and I can say that everything is on track on the timelines that we expected, and I think the quality of the equipment of the facilities, the worker environment, the improvements in safety, the improvements of efficiency, everything looks like it's going to deliver quite well versus our expectations, and maybe turn it over to Brian to be a little more specific.

Speaker Change: Yeah, I'll, maybe start Adam and kind of give you an update on the progress and Brian can maybe go a little deeper on some of the numbers and we had the opportunity to take our board. There earlier this week and kind of do a tour on the investment progress and things are going extremely well we've been blessed with good weather, we've been blessed with that with a great team.

Speaker Change: Supplier support working on execution and I can say that everything is on track on the timelines that we expected and I think the quality of the equipment or the facilities the worker environment and improvements in safety the improvements of efficiency everything looks like it's going to deliver deliver quite well versus our expectations and maybe turn it over to Brian to be a little more more specific.

Brian Ketcham: Yeah, Adam, in terms of the margin improvement that we're seeing, and specifically to the third quarter here, if I were to characterize it in order of magnitude, I would say, first of all, the volume leverage that we have in the international business, and the leverage in our Turkey facilities, probably the largest single driver, but operational efficiencies, I would say, would be the next contributor to the margin expansion, and you're seeing that in our main factories in Brazil, Turkey, and in the U.S., we're seeing some operational efficiencies. And then a third thing that's contributing to margin expansion that we've talked about at some point, you know, is being supportive.

Brian Ketcham: Adam in terms of the margin improvement that we're seeing in specifically to the third quarter here.

Brian Ketcham: If I were to characterize it in order of magnitude I would say first of all the volume leverage that we have in the international business and the leverage in our Turkey facility is probably the largest single driver, but operational efficiencies I would say would be the next.

Brian Ketcham: Contributor to the margin expansion in that you are seeing that.

Brian Ketcham: And our main factories in Brazil, Turkey and in the U S. We're seeing some operational efficiencies and then a third thing.

Speaker Change: That's that's contributing to margin expansion that we've talked about at some point as being supportive I think our growth in subscriptions in the recurring revenue there we are seeing.

Brian Ketcham: I think our growth in subscriptions and the recurring revenue there, we are seeing, you know, that start to impact and help from a margin standpoint.

Speaker Change: That start to impact and help from a margin standpoint.

Operator: Okay, thank you for taking my questions. Thank you. Seeing no additional questions, this concludes our question and answer session.

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

Speaker Change: Thank you.

Speaker Change: Seeing no additional questions. 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 Thank you all for joining us today. We are very pleased with our year-to-date results and our third quarter performance. Our teams continue to execute well, and we are positioned to manage through the market headwinds in our domestic U.S. 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.

Speaker Change: Thank you all for joining US today, we are very pleased with our year to date results and our third quarter performance. Our teams continue to execute well and we are positioned to manage through the market headwinds in our domestic U S 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.

Speaker Change: Apply chain will allow us to effectively manage through tariff uncertainty. This conclude concludes our third quarter earnings call. We look forward to updating you on our continued progress following the close of our fiscal 2025 year. Thanks for joining us.

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

Operator: The conference has 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.

Speaker Change: [music].

Speaker Change: Yes.