Q4 2025 Lindsay Corp Earnings Call
Speaker #3: Good day and welcome to the LINDSAY CORP fiscal fourth Quarter 2020 Earnings Conference Call . All participants will be in listen only mode .
Operator: Good day and welcome to the Lindsay Corporation Fiscal Fourth 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 * key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press * then 1 on a touch-tone phone. To withdraw your question, please press * then 2. 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.
Speaker #3: Should you need assistance , please signal a conference specialist by pressing the star key , followed by zero . After today's presentation , there will be an opportunity to ask questions .
Speaker #3: To ask a question , you may press star , then one on a touchtone phone . To withdraw your question , please press star .
Speaker #3: Then two . Please note this event is being recorded . I would now like to turn the conference over to Randy Wood president and CEO .
Speaker #3: Please go ahead .
Speaker #4: Thank you and good morning , everyone . Welcome to our fourth quarter and full year 2025 earnings call . With me today is Brian Ketchum , our chief financial officer .
Randy Wood: Thank you and good morning, everyone. Welcome to our fourth quarter and full-year 2025 earnings call. With me today is Brian Ketcham, our Chief Financial Officer. I'm extremely pleased with our fiscal year 2025 results and proud of our team for demonstrating resilience in the face of challenging market fundamentals and a volatile macroeconomic environment. Double-digit revenue and operating income growth in both our businesses, combined with execution of our key strategic initiatives, enabled us to achieve record earnings and earnings per share for the year. Our fourth quarter performance was marked by revenue growth in our irrigation segment, driven by double-digit increases in our international irrigation business, as South America, the Middle East, North Africa, and Australia all delivered strong results. In North America, low commodity prices and weak crop receipts continued to negatively impact demand.
Speaker #4: I'm extremely pleased with our fiscal year 2025 results and proud of our team for demonstrating resilience in the face of challenging market fundamentals and a volatile macroeconomic environment .
Speaker #4: Double digit revenue and operating income growth in both our businesses , combined with execution of our key strategic initiatives , enabled us to achieve record earnings and earnings per share for the year .
Speaker #4: Our fourth quarter performance was marked by revenue growth in our irrigation segment , driven by double digit increases in our international irrigation business .
Speaker #4: As South America , the Middle East and North Africa and Australia all delivered strong results . In North America , low commodity prices and weak crop receipts continued to negatively impact demand .
Speaker #4: We also saw a large reduction in storm damage volume versus the prior year, impacting whole goods orders and aftermarket revenues in the quarter.
Randy Wood: We also saw a large reduction in storm damage volume versus prior year, impacting whole goods orders and aftermarket revenues in the quarter. We also dealt with a wet summer that impacted our runtime hours. Pivot analytics data indicates irrigated hours across the core Midwest markets of Nebraska, Oklahoma, and Texas were down over 20% versus prior year. Our global road safety products business delivered strong results, underscoring the resilience and demand in this segment. However, this performance was offset by lower sales and a decline in global leases within our Road Zipper system business. Turning to our outlook, we expect North American irrigation headwinds to persist. Near-record yields will be offset by low commodity prices and weak crop returns, and the effect of trade disruptions will continue to weigh on customer sentiment.
Speaker #4: We also dealt with a wet summer that impacted our runtime hours . Pivot analytics data indicates irrigated hours across the core Midwest markets of Nebraska , Oklahoma , and Texas were down over 20% versus prior year .
Speaker #4: Our global road safety products business delivered strong results , underscoring the resilience and demand in this segment . However , this performance was offset by lower sales and a decline in global leases within our road zipper business .
Speaker #4: Turning to our outlook , we expect North American irrigation headwinds to persist near record yields will be offset by low commodity prices and weak crop returns , and the effect of trade disruptions will continue to weigh on customer sentiment .
Speaker #4: Increased government support may create a safety net , but we don't expect this to drive significant market activity . We anticipate demand for irrigation equipment in North America to remain suppressed until the outlook for commodity prices and overall net farm income meaningfully improves .
Randy Wood: Increased government support may create a safety net, but we don't expect this to drive significant market activity. We anticipate demand for irrigation equipment in North America to remain suppressed until the outlook for commodity prices and overall net farm income meaningfully improves. Internationally, we're encouraged by the early signs of recovery we're seeing across several key growth markets, particularly Brazil, where demand for irrigation equipment remains stable. However, high interest rates and ongoing credit constraints will continue to present market headwinds in the near term. We continued to execute international irrigation projects during the quarter, including the $100 million project in the Middle East and North Africa region that we expect to complete in our first quarter of our 2026 fiscal year.
Speaker #4: Internationally , we're encouraged by the early signs of recovery we're seeing across several key growth markets , particularly Brazil , where demand for irrigation equipment remains stable .
Speaker #4: However , high interest rates and ongoing credit constraints will continue to present market headwinds in the near term . We continued to execute international irrigation projects during the quarter , including the $100 million project in the Mid East , North Africa region that we expect to complete in our first quarter of our 2026 fiscal year .
Speaker #4: During the fourth quarter, we also began delivery of an additional $20 million project in the region, which we expect to complete in the first quarter of fiscal 2026.
Randy Wood: During the fourth quarter, we also began delivery of an additional $20 million project in the region, which we also expect to complete in the first quarter of fiscal 2026. Looking ahead, we continue to see other compelling opportunities within our project pipeline, particularly in the MENA and other developing regions. These project opportunities remain a long-term growth opportunity for our business as the region continues to adopt mechanized irrigation to address food security and GDP diversification. We are pleased at the momentum we have been able to generate and expect to realize additional project volume during fiscal 2026. In our infrastructure business, we expect to see growth in Road Zipper system leasing and road safety product sales this fiscal year due to ongoing implementation of the IIJA and the introduction of new products.
Speaker #4: Looking ahead , we continue to see other compelling opportunities within our project pipeline , particularly in the Mena and other developing regions . These project opportunities remain a long term growth opportunity for our business as the region continues to adopt mechanized irrigation to address food security and GDP diversification .
Speaker #4: We are pleased at the momentum we have been able to generate and expect to realize additional project volume during fiscal 2026 . In our infrastructure business .
Speaker #4: We expect to see growth in road zipper system leasing and road safety product sales this fiscal year due to ongoing implementation of the Iija in the introduction of new products .
Speaker #4: The road zipper System project sales funnel remains active , but we do not anticipate a large project will exit the funnel in 2026 to offset the $20 million project delivered in fiscal 2025 .
Randy Wood: The Road Zipper system project sales funnel remains active, but we do not anticipate a large project will exit the funnel in 2026 to offset the $20 million project delivered in fiscal 2025. We do see the potential for several smaller projects to fill a portion of this gap. The large capital project at our Lindsay, Nebraska facility is going well, and we've activated our new state-of-the-art automated tool mill, providing increased safety, efficiency, and throughput. We recently began construction of our next-generation galvanizing facility, which will provide us with industry-leading capabilities and increased capacity. Our initial plans anticipated completion of this contract by the end of the calendar year. However, with the expanded galvanizing scope, we anticipate this work will be completed by the end of calendar year 2026. Innovation leadership continues to be a strategic priority and a core piece of our growth strategy.
Speaker #4: We do see the potential for several smaller projects to fill a portion of this gap . The large capital project at our Lindsay , Nebraska facility is going well , and we've activated our new state of the art automated tube mill providing increased safety , efficiency and throughput .
Speaker #4: We recently began construction of our next generation galvanizing facility , which will provide us with industry leading capabilities and increased capacity . Our initial plans anticipated completion of this contract by the end of the calendar year .
Speaker #4: However, with the expanded galvanizing scope, we anticipate this work will be completed by the end of calendar year 2026. Innovation leadership continues to be a strategic priority and a core piece of our growth strategy.
Speaker #4: During the quarter , we advanced our position as a leader in precision irrigation with the introduction of Tower Watch . This is the first new product introduction on our Smart Pivot platform that allows customers to diagnose machine faults at individual towers .
Randy Wood: During the quarter, we advanced our position as a leader in precision irrigation with the introduction of TowerWatch. This is the first new product introduction on our SmartPivot platform that allows customers to diagnose machine faults at individual towers. In testing, this reduced troubleshooting time by up to 75%, enabling growers to save time and maximize yields and profitability. This solution is a direct response to voice-to-the-customer feedback we've received and helps our growers make faster decisions, strengthening their FieldNET user experience. We continue to leverage capabilities like the new TowerWatch to differentiate and increase penetration of our technology portfolio. This has allowed us to surpass 150,000 total connected devices while delivering 20% year-over-year growth in annual recurring revenue. Entering fiscal 2026, we remain dedicated to investing in opportunities and technology advancements that will continue to drive growth and extend our leadership position.
Speaker #4: In testing , this reduced troubleshooting time by up to 75% , enabling growers to save time and maximize yields and profitability . This solution is a direct response to voice of the customer feedback we received , and helps our growers make faster decisions , strengthening their field .
Speaker #4: Net user experience . We continue to leverage capabilities like the new Tower watch to differentiate and increase penetration of our technology portfolio . This has allowed us to surpass 150,000 total connected devices while delivering 20% year over year growth in annual recurring revenue .
Speaker #4: Entering fiscal 2026 . We remain dedicated to investing in opportunities and technology advancements that will continue to drive growth and extend our leadership position .
Speaker #4: Before I turn the call over to Brian , I'd like to take a moment and acknowledge his upcoming retirement . Since joining Lindsay in 2016 , Brian has played a pivotal role in strengthening our financial foundation , promoting transparency and shaping an organization that's become recognized for excellence .
Randy Wood: Before I turn the call over to Brian, I'd like to take a moment and acknowledge his upcoming retirement. Since joining Lindsay Corporation in 2016, Brian has played a pivotal role in strengthening our financial foundation, promoting transparency, and shaping an organization that's become recognized for excellence. Under his leadership, we've achieved record earnings performance, maintained a consistently strong balance sheet, and laid the groundwork for continued growth across our businesses. While his retirement marks a significant transition, we're pleased that he'll continue to serve as a consultant through 2026, helping ensure a smooth transition. On a more personal note, I'm deeply grateful for Brian's partnership and friendship. On behalf of all of us at Lindsay, thank you, Brian. We wish you the very best in your well-earned retirement.
Speaker #4: Under his leadership , we've achieved record earnings performance , maintain a consistently strong balance sheet , and laid the groundwork for continued growth across our businesses .
Speaker #4: While his retirement marks a significant transition , we're pleased that he'll continue to serve as a consultant through 2026 , helping ensure a smooth transition .
Speaker #4: On a more personal note , I'm deeply grateful for Brian's partnership and friendship . On behalf of all of us at Lindsay . Thank you Brian .
Speaker #4: We wish you the very best in your well-earned retirement . I'm also pleased to formally welcome Sam Henrickson , who will join us in November and transition to the CFO role with Brian's departure in January .
Randy Wood: I'm also pleased to formally welcome Sam Henrichson, who will join us in November and transition to the CFO role with Brian's departure in January. Sam brings strong financial leadership experience, investor engagement, and will be instrumental in continuing our focus on disciplined execution and creating value for our shareholders. Now I'll turn the call over to Brian for a review of our financial results. Brian.
Speaker #4: Sam brings strong financial leadership experience . Investor engagement and will be instrumental in continuing our focus on disciplined execution and creating value for our shareholders .
Speaker #4: Now, I'll turn the call over to Brian for a review of our financial results. Brian.
Speaker #5: Thank you . Randy , and good morning , everyone . Total revenues for the fourth quarter of fiscal 2025 were $153.6 million , a decrease of 1% compared to the fourth quarter last year .
Brian Ketcham: Thank you, Randy, and good morning, everyone. Total revenues for the fourth quarter of fiscal 2025 were $153.6 million, a decrease of 1% compared to the fourth quarter last year. Net earnings for the quarter were $10.8 million or $0.99 per diluted share, compared to net earnings of $12.7 million or $1.17 per diluted share in the fourth quarter last year. Total revenues for the full year increased 11% to $676.4 million, and net earnings increased 12% to $74.1 million, and earnings per share increased 13% to $6.78. These record results were driven by double-digit revenue growth and operating income growth in both irrigation and infrastructure for the year. Turning to our segment results, irrigation segment revenues for the fourth quarter increased 3% to $129 million compared to the prior year. North America irrigation revenues for the fourth quarter decreased 19% to $50 million.
Speaker #5: Net earnings for the quarter were $10.8 million , or $0.99 per diluted share , compared to net earnings of $12.7 million , or $1.17 per diluted share , in the fourth quarter last year .
Speaker #5: Total revenues for the full year increased 11% to $676.4 million , and net earnings increased 12% to $74.1 million , and earnings per share increased 13% to $6.78 .
Speaker #5: These record results were driven by double digit revenue growth and operating income growth in both irrigation and infrastructure . For the year . Turning to our segment results .
Speaker #5: Irrigation segment revenues for the fourth quarter increased 3% to $129 million compared to the prior year . North America Irrigation revenues for the fourth quarter decreased 19% to $50 million .
Speaker #5: The decrease in revenues resulted primarily from lower unit sales volume , while average selling prices were up slightly compared to the prior year .
Brian Ketcham: The decrease in revenues resulted primarily from lower unit sales volume, while average selling prices were up slightly compared to the prior year. Lower unit sales volume was due primarily to less storm damage replacement demand compared to the prior year, along with soft market conditions. Higher selling prices reflected the pass-through of tariff-related raw material cost increases. In international irrigation markets, revenues for the fourth quarter increased 23% to $79 million. The increase resulted primarily from higher sales volume in South America, increased project sales in the MENA region, and higher sales volume in Australia. Markets in South America are benefiting from increased exports of agricultural products to China. In the MENA region, as Randy mentioned, we continued delivery of a $100 million project and began delivering a separate $20 million project during the quarter.
Speaker #5: Lower unit sales volume was due primarily primarily to less storm damage . Replacement demand compared to the prior year , along with soft market conditions , higher selling prices reflected the pass through of tariff related raw material cost increases in international irrigation markets .
Speaker #5: Revenues for the fourth quarter increased 23% to $79 million . The increase resulted primarily from higher sales volume in South America , increased project sales in the Mena region , and higher sales volume in Australia .
Speaker #5: Markets in South America are benefiting from increased exports of agricultural products to China . In the Mena region , as Randy mentioned , we continued delivery of $100 million project and began delivering a separate $20 million project during the quarter .
Speaker #5: Total irrigation segment operating income for the fourth quarter was $17.7 million, an increase of 4% compared to last year. Operating margin was 13.7% of sales, compared to 13.6% of sales last year.
Brian Ketcham: Total irrigation segment operating income for the fourth quarter was $17.7 million, an increase of 4% compared to last year, and operating margin was 13.7% of sales compared to 13.6% of sales last year. For the full fiscal year, total irrigation segment revenues increased 11% to $568 million. North America irrigation revenues of $273.8 million decreased 9%, primarily due to lower unit sales volume compared to the prior year. International irrigation revenues of $294.2 million increased 39%, primarily due to project sales in the MENA region and supported by higher sales volume in Brazil and other parts of South America. The unfavorable impact of foreign currency translation was approximately $9.5 million compared to the prior year. This marks the first time in company history that international irrigation revenues were greater than North America revenues in a fiscal year, highlighting the value of our geographical diversification.
Speaker #5: For the full fiscal year , total irrigation segment revenues increased 11% to $568 million . North America irrigation revenues of $273.8 million decreased 9% , primarily due to lower unit sales volume compared to the prior year .
Speaker #5: International irrigation revenues of $294.2 million increased 39% , primarily due to project sales in the Mena region and supported by higher sales volume in Brazil and other parts of South America .
Speaker #5: The unfavorable impact of foreign currency translation was approximately $9.5 million , compared to the prior year . This marks the first time in company history that International irrigation revenues were greater than North America .
Speaker #5: Revenues . In a fiscal year , highlighting the value of our geographical diversification . Operating income for the irrigation segment for the full fiscal year was $97 million , an increase of 11% compared to the prior year .
Brian Ketcham: Operating income for the irrigation segment for the full fiscal year was $97 million, an increase of 11% compared to the prior year, and operating margin of 17.1% of sales was similar to the prior year. Infrastructure segment revenues for the fourth quarter decreased 16% to $24.5 million. The decrease in revenues resulted primarily from lower Road Zipper system project sales and lease revenues, while sales of road safety products were slightly higher compared to the prior year. The prior year fourth quarter included Road Zipper project sales that did not repeat in the current year. Infrastructure segment operating income for the fourth quarter decreased 37% to $3.5 million, and infrastructure operating margin for the quarter was 14.4% of sales compared to 19.2% of sales in the fourth quarter last year.
Speaker #5: And operating margin of 17.1% of sales was similar to the prior year . Infrastructure segment revenues for the fourth quarter decreased 16% to $24.5 million .
Speaker #5: The decrease in revenues resulted primarily from lower road zipper system project sales and lease revenues , while sales of road safety products were slightly higher compared to the prior year .
Speaker #5: The prior year , fourth quarter included road zipper project sales that did not repeat in the current year . Infrastructure segment . Operating income for the fourth quarter decreased 37% to $3.5 million , and infrastructure operating margin for the quarter was 14.4% of sales , compared to 19.2% of sales in the fourth quarter last year .
Speaker #5: Lower operating income and operating margin resulted from lower revenues and a less favorable margin mix of revenues compared to the prior year . For the full fiscal year , infrastructure segment revenues increased 16% to $108.4 million .
Brian Ketcham: Lower operating income and operating margin resulted from lower revenues and a less favorable margin mix of revenues compared to the prior year. For the full fiscal year, infrastructure segment revenues increased 16% to $108.4 million. The increase was primarily due to higher Road Zipper system project sales and higher sales of road safety products, while Road Zipper lease revenues were slightly lower compared to the prior year. Infrastructure operating income for the full fiscal year increased 39% to $26.3 million. Operating margin for the year was 24.3% of sales compared to 20.4% of sales in the prior year. Increased operating income and operating margin resulted from higher revenues and a more favorable margin mix of revenues compared to the prior year.
Speaker #5: The increase was primarily due to higher road zipper system project sales and higher sales of road safety products , while road zipper lease revenues were slightly lower compared to the prior year , infrastructure operating income for the full fiscal year increased 39% to $26.3 million , operating margin for the year was 24.3% of sales , compared to 20.4% of sales in the prior year .
Speaker #5: Increased operating income and operating margin resulted from higher revenues and a more favorable margin mix of revenues compared to the prior year . Turning to the balance sheet and liquidity , our total available liquidity at the end of the fourth quarter was just over $300 million , which included $250 million in cash and cash equivalents and $50 million available under our revolving credit facility .
Brian Ketcham: Turning to the balance sheet and liquidity, our total available liquidity at the end of the fourth quarter was just over $300 million, which included $250 million in cash and cash equivalents and $50 million available under our revolving credit facility. Our record earnings performance for the year, along with active working capital management, resulted in free cash flow of 122% of net earnings and included capital expenditures of $42.5 million. Our demonstrated cash flow generation further strengthens our balance sheet and positions us well to continue executing on our capital allocation priorities of investing in the business, balancing organic and inorganic investments, and returning capital to our shareholders. During the quarter, we completed share repurchases of $8.8 million, bringing the total share repurchases to $11.5 million for the year.
Speaker #5: Our record earnings performance for the year , along with active working capital management , resulted in free cash flow of 122% of net earnings and included capital expenditures of $42.5 million .
Speaker #5: Our demonstrated cash flow generation further strengthens our balance sheet and positions us well to continue executing on our capital allocation priorities of investing in the business , balancing organic and inorganic investments , and returning capital to our shareholders .
Speaker #5: During the quarter , we completed share repurchases of $8.8 million , bringing the total share repurchases to $11.5 million for the year . As I conclude my remarks , I would like to say that it has been a tremendous experience to serve as CFO of Lindsay .
Brian Ketcham: As I conclude my remarks, I would like to say that it has been a tremendous experience to serve as CFO of Lindsay. I'm deeply grateful for the talented colleagues I've had the honor of working alongside and proud of all that we've accomplished together. I'm confident in Lindsay's continued success and in the team that we have built, and I look forward to working with Sam Henrichson on the CFO transition over the next couple of months. With that, I will turn the call over to the operator to take your questions.
Speaker #5: I'm deeply, deeply grateful for the talented colleagues I've had the honor of working alongside, and proud of all that we've accomplished together.
Speaker #5: I'm confident in Lindsay's continued success and in the team that we have built , and I look forward to working with Sam Henrickson on the CFO transition over the next couple of months .
Speaker #5: And now, with that, I will turn the call over to the operator to take your questions.
Speaker #3: We will now begin the question and answer session . To ask a question , you may press star , then one on your touchtone phone .
Operator: We will now begin the question and answer session. To ask a question, you may press * then 1 on your touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw the question, please press * then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Kristen Owen with Oppenheimer. Please go ahead.
Speaker #3: 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 the question , please press star then two .
Speaker #3: At this time we will pause momentarily to assemble our roster . Our first question comes from Kristen Owen with Oppenheimer . Please go ahead .
Speaker #6: Good morning , and thank you for taking the question . So just understanding that there's a lot of uncertainty in your ag markets right now .
[Analyst]: Good morning, and thank you for taking the question. Understanding that there's a lot of uncertainty in your ag markets right now, I'm hoping you can outline just some of the catalysts that you're watching that are shaping your outlook for fiscal 2026. My follow-up question is related. Assuming that we are in this more cautious ag investment backdrop, what are the margin levers that you have at your disposal that you're thinking about for next year? Thank you.
Speaker #6: I'm hoping you can outline just some of the catalysts that you're watching that are shaping your outlook for fiscal 26 . And then my follow up question is related .
Speaker #6: So just assuming that we are in this more cautious ag investment backdrop , what are the margin levers that you have at your disposal that you're thinking about for next year ?
Speaker #6: Thank you .
Speaker #4: Yeah . Good morning Kristen , this is Randy . I'll take the first part and then have Brian cover the the cost levers that we're we're actively managing .
Randy Wood: Yeah, good morning, Kristen. This is Randy. I'll take the first part and then have Brian cover the cost levers that we're actively managing. From a market perspective, it really depends where you are. In Brian's comments, he talked about the geographic diversity of our business. When you look at North America, obviously, anybody providing a narrative or commentary on North American marketing conditions, there's not a lot of tailwinds there right now. We've been here before. We know how to manage through these cycles. Brian will comment on some of that. I think we're blessed right now to be a global company, and we're going to see more than half of our revenues come from outside of the U.S. this year. I think we battened on the hatches.
Speaker #4: And from a market perspective , it really depends where you are . And Brian's comments , he talked about the geographic diversity of our business .
Speaker #4: And when you look at North America obviously anybody providing a narrative or commentary on North American market conditions , there's not a lot of , you tailwinds there right now .
Speaker #4: And we've been here before . We know how to manage through these cycles . And again , Brian will comment on some of that .
Speaker #4: But I think the we're blessed right now to be a global company , and we're going to see half more than half of our revenues come from outside of the US this year .
Speaker #4: So I think we batten down the hatches , we manage responsibly in North America . And the catalysts that we look for , you know , some of those customer sentiment indicators right now are , you know , approaching lows that we haven't seen since the pandemic .
Randy Wood: We manage responsibly in North America, and the catalysts that we look for, some of those customer sentiment indicators right now are approaching lows that we haven't seen since the pandemic. Farm income, there's not a lot of positive upside in trade or demand side of the equation to drive pricing. We do see some potential government support, which to me, as I've said, is a bit of a safety net that bridges guys to next year, but they're not going to invest that money like they would crop receipts and profits that they get from growing, marketing, and selling a crop. In 2026, North American expectations are not for significant growth. We will probably bounce along the bottom of the trough. We know how to do that. Internationally, Brazil is stable and maybe not at all-time highs, but still a very strong business for us.
Speaker #4: Farm income . There's not a lot of positive upside in trade or demand side of the equation to drive pricing . We do see some potential government support , which to me , as I've said , is a bit of a safety net that bridges guys to next year .
Speaker #4: But they're not going to invest that that money like they would , you know , crop receipts and profits that they get from growing marketing and selling a crop .
Speaker #4: So in 2026 , North American expectations are not for significant growth . We will probably bounce along the bottom of the trough . And again , we know how to do that internationally .
Speaker #4: You know , Brazil is is stable and maybe not at all time highs , but still a very strong business for for us , the project business continues to deliver .
Randy Wood: The project business continues to deliver. As we've stated, 2026 should see us realize more project opportunity. Australia, New Zealand, the Asia-Pacific region, we see some signs of a strong recovery there. I think when you separate the mature versus the project business, we see two different narratives, Kristen. Right now, I think we're well positioned to manage through the trough conditions here and capitalize on the growth opportunities in those international markets. Again, ask Brian to comment on some of those cost levers.
Speaker #4: And as we've stated , 2026 should see us realize more project opportunity Australia , New Zealand , the Asia region . We see some some signs of strong recovery there .
Speaker #4: So I think when you you separate the the mature versus the project business , we see two different narratives . Kristen . And right now I think we're well positioned to manage through the trough conditions here .
Speaker #4: And capitalize on the growth opportunities in those international markets . And again , as Brian , to comment on some of those cost levers .
Speaker #5: Yeah . Kristen , on the margin side , obviously , you if North America is softer , that's going to pressure margins just like it did in the fourth quarter .
Brian Ketcham: Yeah, Kristen, on the margin side, obviously, if North America is softer, that's going to pressure margins just like it did in the fourth quarter. I think that the things that we have that we can manage, starting with price, and we've increased price with some of the raw material cost increases that we've seen. We always try to get out ahead of that when it comes to price. Maintaining pricing discipline going forward is going to be key to maintaining margins, managing the costs, as Randy has said. The other thing that is supportive of margins, we saw that in the last couple of quarters, and we expect to see that continue into 2026, is just the growth in our recurring subscription revenue. That's high margin revenue, and it's really cycle-proof. Farmers aren't going to decide not to invest when the market is down.
Speaker #5: But I think the things that we have that we can manage , starting with price and you know , we we've increased price with some of the raw material cost increases that we've seen .
Speaker #5: We always try to get out ahead of of that when it comes to price . But , you know , maintaining pricing discipline going forward is going to be key to maintaining margins , managing the costs .
Speaker #5: As Randy has said , and then the other thing that is supportive of margins , we saw that in the in the last couple of quarters , and we expect to see that continue into 2026 is just the growth in our recurring subscription revenue , and that's high margin revenue .
Speaker #5: And it's it's really cycle proof . It's not , you know , farmers aren't going to decide not to invest when the market is down .
Speaker #5: It's something that is going to continue to grow . So those are a couple of things . You know , related to North America primarily .
Brian Ketcham: It's something that is going to continue to grow. Those are a couple of things related to North America primarily. In Brazil, we've seen as that volume is picking up, we've seen some margin improvement happening in that market.
Speaker #5: And then , you know , in Brazil , we've seen as that volume is picking up , you know , we've seen some margin improvement happening in in that market .
Speaker #6: Thank you for the time .
[Analyst]: Thank you for the time.
Speaker #3: Our next question comes from Nathan Jones with Stifel . Please go ahead .
Operator: Our next question comes from Nathan Jones with Stifel. Please go ahead.
Speaker #7: Good morning everyone . Congratulations , Brian . And thanks for all the help over the years . Yeah I guess maybe just trying to set some expectations here for 2026 is obviously , you know , some demand headwinds and some discrete comparison headwinds that you're going to have heading into 2026 .
[Analyst]: Good morning, everyone. Congratulations, Brian. Thank you for all the help over the years. I guess maybe just trying to set some expectations here for 2026 is obviously some demand headwinds and some discrete comparison headwinds that you're going to have heading into 2026. We're clearly bumping along the bottom in North America. Is it your expectation for North America irrigation that will be somewhere close to flat in 2026, or should we expect to see that market be down overall given the lack of real catalysts there? I guess I'll start with that one, then I'll go to international.
Speaker #7: We're clearly bumping along the bottom in North America . Is it your expectation for North America irrigation that will be somewhere close to flat in 26 ?
Speaker #7: Or should we expect to see that market be down overall , given the lack of real catalysts there ? I guess I'll start with that one , and then I'll go to international .
Speaker #5: Yeah . Nathan on the North America side , I our expectation is volume will be down . You know , maybe low to mid single digits in 2026 .
Brian Ketcham: Yeah, Nathan, on the North America side, our expectation is volume will be down, maybe low to mid-single digits in 2026. Partially offsetting that is price. We do expect that the price increases that we put in place will carry over into the first two or three quarters next year. I think the other thing that I just mentioned is subscription revenue being up. When you balance lower volume, higher price, higher subscription revenue, I think from a revenue standpoint, we're expecting to be more flattish for 2026 overall compared to 2025.
Speaker #5: But offsetting that partially offsetting that is price . We do expect that the price increases that we've put in place will will carry over into , you know , the first 2 or 3 quarters next year .
Speaker #5: I think the other thing that I just mentioned is , is subscription revenue being up . So when you balance lower volume , higher price , higher subscription revenue , I think from a revenue standpoint , we're expecting to be more flattish for 26 overall compared to 2025 .
Speaker #7: And then you probably actually with that , have some some tailwinds on the margin side . Just in the North America business , particularly prices , obviously drops through it 100% kind of margin carrying over from this year .
[Analyst]: You probably actually, with that, have some tailwinds on the margin side, just in the North America business particularly. Prices obviously dropped through at 100% kind of margin carrying over from this year, and subscription revenue is going to be higher margin. You're going to have some benefits, I imagine, from all of the upgrades that you've been doing within the manufacturing footprint. Could we expect that on a flat revenue number in North America irrigation, your profit would be higher?
Speaker #7: And subscription revenue is going to be higher margin . And you're going to have some benefits . I imagine , from all of the upgrades that you've been doing within the manufacturing footprint .
Speaker #7: So could we expect that on on a flat revenue number in North America , irrigation , your profit would be higher ?
Speaker #5: I would say our expectations would , you know , remaining having the operating margin be relatively similar to last year . We do have some additional depreciation coming on board in the Lindsay factory that in the short term , you know , we'll put some pressure on margins .
Brian Ketcham: I would say our expectations would be having the operating margin be relatively similar to last year. We do have some additional depreciation coming on board in the Lindsay factory that in the short term will put some pressure on margins. As volume picks up in the future, that's where we'll see the benefit of those investments in our ability to respond quickly to market demand without adding a lot of costs. In the short term, a little bit of a headwind on margins just because of the additional depreciation.
Speaker #5: But you know as that as volume picks up in the future that's where we'll see the benefit of those investments and our ability to respond quickly to market demand without adding a lot of cost .
Speaker #5: So in the short term , a little bit of a headwind on margins , just because of the additional depreciation .
Speaker #7: Fair enough . I guess I'll just slide one in on international revenue . You obviously had a large project and a smaller , large project to deliver in fiscal 2025 .
[Analyst]: Fair enough. I guess I'll just slide one in on international revenue. You obviously had a large project and a smaller large project to deliver in fiscal 2025. I think that the outlook for the project business is pretty solid, but there's always timing dependency on that. I mean, is it possible that you could overcome the headwind from the lack of the Middle East project in 2026, or is the starting point assumption for that in 2026 should be that revenue will be down in international?
Speaker #7: You know , I think the outlook for the project business is pretty solid . But there's always timing dependency on that . I mean , is it is it possible that you could overcome the headwind from the lack of the Middle East project in 2026 , or is the starting point assumption for that in 2026 should be that revenue will be down in international ?
Speaker #4: Yeah . Good morning Nathan , this is Randy . I'll take that one . And and I think you used a key word there .
Randy Wood: Yeah, good morning, Nathan. This is Randy. I'll take that one. I think you used a key word there. The potential is there to kind of lock that project and backfill with additional project volume that could be close to that revenue. You're absolutely right, the timing is unknown. The project funnel for us, there's lots of moving pieces in many different parts of the world. When one pops through, we'll be very clear in how we communicate when it's going to start, when it's going to stop, the magnitude of the project. We do expect to have more news on that as we go into fiscal year 2026 and continue through the year. That potential does exist.
Speaker #4: The potential is there to to kind of lap that project . And backfill with with additional project volume that that could be close to that revenue .
Speaker #4: But you're you're absolutely right . The timing is , is unknown . And the project funnel for us , there's lots of moving pieces in many different parts of the world .
Speaker #4: And when one pops through , we'll be very clear . And in how we communicate , when it's going to start , when it's going to stop , the magnitude of the project .
Speaker #4: And we do expect to have more news on that as we go into fiscal year 26 and continue through the year . But that potential does does exist .
Speaker #7: All right . Thank you very much for taking my questions .
[Analyst]: All right. Thank you very much for taking my questions.
Speaker #4: Thanks , Nathan .
Randy Wood: Thanks, Nathan.
Speaker #3: Our next question comes from Brian Drab with William Blair . Please go ahead .
Operator: Our next question comes from Brian Paul Drab with William Blair & Company LLC. Please go ahead.
Speaker #8: Hi . Good morning . Thanks for taking the questions . And congratulations , Brian . And we'll talk more later when we're not on a public call .
Brian Ketcham: Good morning. Thanks for taking the questions. Congratulations, Brian. We'll talk more later when we're not on a public call, but congrats.
Speaker #8: But congrats .
Speaker #5: Thank you .
Randy Wood: Thank you.
Speaker #8: You know , I just want to follow up on on Nathan's questions there on just the outlook for for AG . First and make sure I understood this .
[Analyst]: I just want to follow up on Nathan's questions there on just the outlook for ag first and make sure I understood this. Your comments around volume being down low single digit to mid-single digit, that was a North America specific comment?
Speaker #8: Your comments around volume being down low single digit to mid-single digit was that was a North America specific comment .
Speaker #5: Yeah , that's right .
Randy Wood: Yeah, that's right.
Speaker #8: For fiscal 26 .
[Analyst]: For fiscal 2026?
Speaker #5: For North America . Correct ?
Randy Wood: For North America, correct.
Speaker #8: Yeah . Okay . Got it . And and then I think that also I think Randy made the comment that you expect probably more revenue to come from the international business in , in irrigation in 26 relative to domestic .
[Analyst]: Okay. Got it. I think Randy made the comment that you expect probably more revenue to come from the international business in irrigation in 2026 relative to domestic. Did I hear that correctly?
Speaker #8: Is that could I hear that correctly .
Speaker #5: Yeah that that's our expectation today . We do see continuing continuing improvement in the South America markets next year . We've seen some recovery continuing in Australia .
Brian Ketcham: Yeah, that's our expectation today. We do see continuing improvement in the South America markets next year. We've seen some recovery continuing in Australia. As Randy referred to the project side of the business, we feel pretty confident that there's the opportunity to replace the projects that we've had in 2025. Our view right now is international revenues overall could be up slightly in 2026. We're not expecting to take a big step backwards.
Speaker #5: But then as Randy referred to the project side of the business , you know , we we feel pretty confident that there's the opportunity to replace , you know , the projects that we've had in 2025 .
Speaker #5: So our view right now is , is international revenues overall could be up slightly in 2026 . We're not expecting to take a big step backwards .
Speaker #8: Okay . Do you do you have to have an additional project hit in the EMEA region in addition to the 20 million that you that you announced for ?
[Analyst]: Okay. Do you have to have an additional project hit in the MENA region in addition to the $20 million that you announced for that to happen?
Speaker #8: For that to happen ?
Speaker #4: I think , Brian , we would we would require and it doesn't have to be the in the region or the Mena region .
Randy Wood: I think, Brian, we would require, and it doesn't have to be in the EMEA region or the MENA region, we would require some project volume coming through the funnel and starting to deliver in the year for that to be true.
Speaker #4: We would require some project volume coming through the funnel and starting to deliver in the year . For that to be true .
Speaker #8: Okay . And then can you put any , any more of a fine point on the , on the revenue that you had from the , from the 100 million project and , and , you know , in the quarter and then how much of that carries over into 26 and , and then and then do you ship the whole 20 million on the additional project in the first quarter ?
[Analyst]: Okay. Can you put any more of a fine point on the revenue that you had from the $100 million project in the quarter, and how much of that carries over into 2026? Do you ship the whole $20 million on the additional project in the first quarter?
Speaker #5: Yeah . So on the $100 million project , we had had been able to pull forward some of that into the second and third quarters this past year .
Brian Ketcham: On the $100 million project, we had been able to pull forward some of that into the second and third quarters this past year. In the fourth quarter, we delivered, let's say in round numbers, roughly $10 million of that, another $10 million remaining for the first quarter. Of that $20 million project, we delivered about half of that in the fourth quarter. The remainder will be in the first quarter. First quarter comparisons on the project side year over year should be fairly similar with the two remaining projects.
Speaker #5: In the fourth quarter , we delivered , let's say , around numbers , roughly $10 million of that . I another 10 million remaining for the first quarter .
Speaker #5: And then of that $20 million project , we delivered about half of that in the fourth quarter . So the remainder will be in the first quarter .
Speaker #5: So first quarter , you know , comparisons on the project side , year over year should be fairly similar with the the two remaining projects .
Speaker #8: Okay . Got it . So so in total 10 million from each of those in the first quarter is a good estimate .
[Analyst]: Okay. Got it. In total, $10 million from each of those in the first quarter is a good estimate.
Speaker #5: Yeah , I'd say round number .
Brian Ketcham: I'd say in round numbers.
Speaker #8: Yeah . Okay . Got it . And then obviously one more . If that's all right . And on the infrastructure side you said that the mix was weighing on margins in the near term .
[Analyst]: Okay. Got it. I'll just ask one more if that's all right. On the infrastructure side, you said that the mix was weighing on margins in the near term. I'm just wondering, how do you see that mix playing out going forward in the margin dynamics related to that?
Speaker #8: And I'm just wondering how do you see that mix playing out going forward in the margin dynamics related to that ?
Speaker #5: Yeah , with the , you know , large project that we had in the second quarter this year , obviously high margins drove the overall margins for the year above 2,024% .
Brian Ketcham: Yeah, with a large project that we had in the second quarter this year, obviously, high margins drove the overall margins for the year above 24%. As Randy mentioned, we don't anticipate another $20 million project coming in 2026, but between some smaller ones and increase in leasing, we expect without the large projects, this business runs right around that 20% operating margin level. A little bit of a step back just with, you know, when you have a $20 million project that doesn't be or doesn't get replaced. Still, very solid operating margin performance is what our expectation is.
Speaker #5: As Randy mentioned , we don't anticipate another $20 million project coming in 2026 . But between some smaller ones and increase in leasing , you know , we expect without the large projects , this business runs right around that 20% operating margin level .
Speaker #5: So a little bit of a step back just with , you know , when you have a $20 million project that doesn't or doesn't get replaced .
Speaker #5: So but still very solid operating margin performance is what our expectation is .
Speaker #8: Got it . All right . Thanks very much .
[Analyst]: Got it. All right. Thanks very much.
Speaker #3: Our next question comes from Ryan Connors with Northcoast Research . Please go ahead .
Operator: Our next question comes from Ryan Michael Connors with Northcoast Research Partners LLC. Please go ahead.
Speaker #9: Good morning . Thanks for your time and congratulations , Brian .
[Analyst]: Good morning. Thanks for your time and congratulations, Brian.
Speaker #5: Thanks , Ryan .
Randy Wood: Thanks, Ryan.
Speaker #9: I wanted to start on international side specific to Brazil . Randy , you mentioned , you know , credit constraints there and you know that something I wonder if you can expand on because there was you had a peer company actually come out and talk about some bad debt and raising bad debt reserve in Brazil specifically for that .
[Analyst]: I want to start on the international side, specific to Brazil. Randy, you mentioned credit constraints there. That's something that I wonder if you can expand on because you had a peer company actually come out and talk about some bad debt and raising bad debt reserve in Brazil specifically for that. Can you just expand on that comment you made among credit constraints? Is that just on the impact on actual sales, or are you seeing any of that actual credit loss issue as well?
Speaker #9: So can you just expand on that comment you made on credit constraints ? Is that just on the impact on actual sales , or is there actually are you seeing any of that actual , you know , credit loss issue as well ?
Speaker #4: Yeah , I think our commentary wasn't connected to credit loss at all . I think we run a pretty tight ship when it comes to credit risk in Brazil .
Randy Wood: Yeah, I think our commentary wasn't connected to credit loss at all. I think we run a pretty tight ship when it comes to credit risk in Brazil. Nothing newsworthy from our perspective there. I think the comments really relate to our customer's ability to access low finance rates to support irrigation and investments. We do have the FENAMI program. What we're seeing right now is total government funding for that program was up year over year, and that was launched in July. At this point, we're really seeing like mid-single digit utilization. That money isn't getting through the system and into the hands of the growers. If you look at the, and that program rate is about 12.5%. If you look at just the record, you go to the bank to get a loan for ag equipment, that rate is in that 20% range.
Speaker #4: So yeah , nothing , nothing newsworthy from from our perspective there . I think the comments really relate to our customers ability to access low finance rates to support irrigation and and we do have the phenomenon program .
Speaker #4: And what we're seeing right now is total government funding for that program was up year over year . And that was launched in July .
Speaker #4: But at this point , we're really seeing like mid-single digit utilization so that that money isn't getting through the system and into the hands of of the growers .
Speaker #4: If you look at the and that that program rate is about 12.5% , if you look at just the regular , you go to the bank to get a loan for , for ag equipment , that rate is , you know , in that 20% ish range .
Speaker #4: So I think that that has some , some customers kind of , you know , taking that wait and see approach . There's an election next year .
Randy Wood: I think that has some customers kind of taking that wait and see approach. There's an election next year. If they're anticipating additional support or funding, some customers might wait for that. We also offset that with three crops a year and what we know we can generate in incremental yield and returns for irrigation. It creates a bit of a short-term headwind in the market, but there's still a lot of strong fundamentals for investment in irrigation. We'd still describe the market as stable, but we're not going to see some of the pop that you may expect because of the trade disruption, some of that Chinese demand maybe shifting to Latin America. Credit is, I would say, right now, probably the lead reason for that.
Speaker #4: If they're anticipating additional support or funding , some customers might wait for that . But we also offset that with , three crops a year .
Speaker #4: And what we know we can generate an incremental yield in returns for for irrigation . So it creates a bit of a short term headwind in the market .
Speaker #4: But there's still a lot of strong fundamentals for investment in irrigation . So we we'd still describe the market as stable . But we're not going to see , you know , some of the pop that you may expect because of the trade disruption .
Speaker #4: Some of that Chinese demand may be shifting to to Latin America . And credit is I would say right now probably the lead reason for that .
Speaker #9: Got it . Very helpful . Thank you . And then one housekeeping for you , Brian , before I have a big picture question , but just you mentioned the capital project in Lindsay extending out now towards the end of calendar 26 .
[Analyst]: Got it. Very helpful. Thank you. One housekeeping for you, Brian, before I have a big picture question. You mentioned the capital project in Lindsay extending out now towards the end of calendar 2026. Can you give any update on the corresponding impact on the capital investment in dollar terms there associated with that? Is that just the same dollars, or are we adding dollars?
Speaker #9: Can you give any update on the corresponding impact on the capital investment in dollar terms ? Their associated with that ? Or is that is that just the same dollars or are we adding dollars ?
Speaker #5: No , we'll be adding dollars . Ryan and our expectation for 2026 is CapEx of around 50 million . So the scope of the project did expand .
Brian Ketcham: No, we'll be adding dollars, Ryan. Our expectation for 2026 is a CapEx of around $50 million. The scope of the project did expand, mainly due to the galvanizing investment where we've decided to increase the scope of that. We will have elevated CapEx again next year, a little bit higher than what we had in 2025 or 2026.
Speaker #5: And you know , mainly due to the galvanizing investment where we've decided to increase the scope of that . So we will have elevated CapEx again next year , a little bit higher than what we had in 26 or 2025 .
Speaker #9: Got it . Okay . And then lastly , just so Randy , you mentioned a few times , you know , this idea that the grower does not spend the government support money the same way as , as profits .
[Analyst]: Got it. Okay. Lastly, Randy, you mentioned a few times this idea that the grower does not spend the government support money the same way as profits. I know there's a lot of lobbying going on right now for additional federal support. Is there any way that could be structured that would be more beneficial to manufacturers like Lindsay? Anything the industry is working to include in that that would be more beneficial, or should we just think of any kind of federal benefits we see just don't really accrue to the company?
Speaker #9: But I know there's a lot of lobbying going on right now for additional federal support . Is there any way that that could be structured that would be more beneficial to manufacturers like Lindsay ?
Speaker #9: You know , any anything the industry is , you working to to include in that that would be more beneficial . Or should we just think of , you know , any kind of federal benefits we see just just don't really accrue to the company ?
Speaker #4: Yeah , I think it's insightful question . And my view would be and this is an opinion that it really doesn't matter how those funds are structured , I don't think it's in how they're worded or how they're administered or how you apply for them .
Randy Wood: Yeah, I think it's an insightful question. My view would be, and this is an opinion, that it really doesn't matter how those funds are structured. I don't think it's in how they're worded or how they're administered or how you apply for them. That's not what drives the customer view on how that money is used. It's always been, from my perspective, kind of rainy day funds. That's money that we're not going to get next year. It's not part of money I earned growing, marketing, and selling and shipping my grain. It's always going to have that perception that this is the rainy day fund money. I don't see any administrative change in the programs that would change that customer perception. The number that we're seeing now is an incremental $10 billion.
Speaker #4: That's not what drives , you know , the customer view on how that money is used . It's always been , from my perspective , kind of , you know , rainy day funds that that's money that , you know , we're not going to get next year .
Speaker #4: It's not part of money . I earned growing marketing . And selling and shipping my grain . It's always going to have that perception that this is , you know , the rainy day fund money .
Speaker #4: So I don't see any administrative change in the programs that would change that customer perception . And I mean , the number that we're seeing now is , you know , an incremental 10 billion .
Speaker #4: I know there's been a lot of talk about American and Argentinian beef this week in particular, creating a bit of a stir.
Randy Wood: I know there's been a lot of talk about American and Argentinian beef this week in particular, creating a bit of a stir. I'm confident that there will be some support for the farmers if they need it as a result of some of the trade disputes. It's just a matter of when and then how they invest it. Again, our assumption isn't that that's going to be a windfall and that we'd see a significant change in market demand. Farm income this year, if you look at the number, in around $180 billion for both net cash farm income and net farm income, $35 billion of that is what we'd call ad hoc government support from some of the payments and the weather-related issues last year. Farm income being up this year, you'd expect should be supportive of the market from a fundamental perspective. It's just not the case.
Speaker #4: And I'm confident that that there will be some support for the farmers if they need it as a result of some of the trade disputes .
Speaker #4: It's just a matter of when and then how they how they invest it . But but again , our assumption isn't that that's going to be a windfall and that we'd , you know , see a significant change in market demand and , and farm income this year .
Speaker #4: If you look at the number in around 180 billion for both net cash farm income and net farm income , 35 billion of that is what we'd call ad hoc government support from some of the payments and the weather related issues .
Speaker #4: Last year . So farm income being up this year , you'd expect , you know , should be supportive of the market from a fundamental perspective .
Speaker #4: And it's just not the case . And that again , goes back to our view that that customers aren't going to invest those government payments the same way that they'd invest crop receipts .
Randy Wood: That, again, goes back to our view that the customers aren't going to invest those government payments the same way that they'd invest crop receipts. We continue to see that.
Speaker #4: We continue to see that .
Speaker #9: I appreciate the perspective. Thanks again for your time.
[Analyst]: I appreciate the perspective. Thanks again for your time.
Speaker #5: Thanks, Ryan. Ryan,
Randy Wood: Thanks, Ryan.
Speaker #3: Again , if you have a question , please press star . Then one . Our next question comes from John Bratz with Kansas City Capital .
Operator: Again, if you have a question, please press star, then one. Our next question comes from Jonathan Paul Braatz with Kansas City Capital Associates. Please go ahead.
Speaker #3: Please go ahead .
Speaker #10: Good morning everyone . And and Brian I congratulations on your retirement . Wish you nothing but the best and enjoy the Lake of the Ozarks .
[Analyst]: Morning, everyone. Brian, congratulations on your retirement. I wish you nothing but the best and enjoy the Lake of the Ozarks.
Speaker #5: Thanks , John . You got you got my number .
Randy Wood: Thanks, John. You got my number.
Speaker #10: Yeah , yeah , I do . Randy , I just want to go back to Brazil a little bit , and and maybe your view on your commentary .
[Analyst]: Yeah, I do. Randy, I just want to go back to Brazil a little bit and maybe your view, your commentary is it's stable, obviously facing some headwinds. Yesterday I read where Banco Brazil in the second quarter saw an increase in rural loan defaults and so on. How would you view Brazil at this time, sort of the downside risk in Brazil versus maybe a stable environment?
Speaker #10: Is it's stable . Obviously facing some headwinds . You know , yesterday I read where Banco Brazil in the second quarter took some , saw an increase in rural loan defaults and so on .
Speaker #10: How would you view Brazil at this time? Sort of the downside risk in Brazil versus maybe a stable environment.
Speaker #4: I wouldn't view the downside risk as significant . And again , I think you you kind of combined the headwinds and tailwinds and certainly there's more demand going there from China in particular .
Randy Wood: I wouldn't view the downside risk as significant. I think you kind of combined the headwinds and the tailwinds, and certainly there's more demand going there from China in particular. That bodes well. There's a currency overlay that's a little complex. The credit thing, obviously, we've talked a lot about, creates a bit of a headwind. Stable is the best word, I think, that describes where the market is. I don't think we're going to see that huge upside from the increases in demand. I also don't think that market continues to decline in any significant way. We'll watch for signs. That's a market that's a year-round market, not as seasonal as what we see in the Northern Hemisphere. We'll know pretty quickly if things do start to turn, and we'll react to that. Right now, I don't project or foresee any significant downturn issues with the Brazil market.
Speaker #4: So that bodes well . There's a currency overlay that's that's a little complex . And the credit thing obviously we've talked a lot about creates a bit of a headwind .
Speaker #4: So stable is the best word . I think that describes where the market is I , I don't think we're going to see that huge upside from from the increases in demand .
Speaker #4: But I also don't think that market , you know , continues to to decline in any significant way . So we'll watch for signs , you know , that's that's a market that's a year round market not as seasonal as what we see in the northern hemisphere .
Speaker #4: So we'll know pretty quickly if if things do start to turn and we'll react to that . But right now I don't project or foresee any significant downturn issues with with the Brazil market .
Speaker #4: There's too much good news there . And again , the investments in irrigation , we know are going to support and prop up a customer's bottom line and allow them to grow more .
Randy Wood: There's too much good news there. The investments in irrigation we know are going to support and prop up a customer's bottom line and allow them to grow more three crops a year. Those fundamental market conditions for us really give us a bit of a parachute there.
Speaker #4: Three crops a year . Those fundamental market , you know , conditions for us really gives us a bit of a bit of a parachute there .
Speaker #10: Okay . Thank you . And Brian , obviously free cash flow was very strong this year . Working capital very good . How would you view that in 2026 .
[Analyst]: Okay. Thank you. Brian, obviously, free cash flow was very strong this year. Working capital, very good. How would you view that in 2026? Do you see that similar type of potential, or are we going to see a little bit less in terms of free cash flow?
Speaker #10: Do you see that that similar type of potential or we're going to see a little bit less in terms of free cash flow ?
Speaker #5: Yeah , I think the the potential is maybe a little bit less next year . I think we've we've done a great job , particularly in inventories , inventory management .
Brian Ketcham: Yeah, I think the potential is maybe a little bit less next year. I think we've done a great job, particularly in inventory management this last year and maybe not the same kind of potential there. As I mentioned, our CapEx is going to be up close to $10 million compared to what it was this year. Probably not the, you know, if you look historically, we've always been around that 100% free cash flow, but you know, the CapEx obviously makes a difference.
Speaker #5: This last year and maybe not the same kind of potential there . And then as I mentioned , our CapEx is going to be up close to $10 million compared to what it was this year .
Speaker #5: So probably not the , you know , if you look , historically , we've always been around that 100% free cash flow . But , you know , the CapEx obviously makes a difference .
Speaker #10: But okay . All right . Thank you .
[Analyst]: Okay. All right. Thank you.
Speaker #5: Thanks , John .
Brian Ketcham: Thanks, John.
Speaker #3: This concludes our question and answer session . I would like to turn the conference back over to Randy wood for any closing remarks .
Operator: This concludes our question and answer session. I would like to turn the conference back over to Randy Wood for any closing remarks.
Speaker #4: Thank you again for joining us today . We appreciate your interest and believe fiscal 2026 will be another strong year for Lindsay , and we look forward to updating everyone at our first quarter earnings call .
Randy Wood: Thank you again for joining us today. We appreciate your interest and believe fiscal 2026 will be another strong year for Lindsay, and we look forward to updating everyone at our first quarter earnings call. Thanks for joining us.
Speaker #4: Thanks for joining us .
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.