UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-13419
Lindsay Corporation
(Exact name of registrant as specified in its charter)
|
Delaware |
|
47-0554096 |
|
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
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18135 Burke Street, Suite 100, Omaha, Nebraska |
|
68022 |
|
(Address of principal executive offices) |
|
(Zip Code) |
402‑829-6800
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
|
Common Stock, $1.00 par value |
LNN |
New York Stock Exchange, Inc. |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
|
Large accelerated filer |
☒ |
|
Accelerated filer |
☐ |
|
Non‑accelerated filer |
☐ |
|
Smaller reporting company |
☐ |
|
Emerging growth company |
☐ |
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of January 4, 2022, 10,972,392 shares of the registrant’s common stock were outstanding.
Lindsay Corporation
INDEX FORM 10-Q
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3 |
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3 |
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4 |
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5 |
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6 |
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7 |
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8 |
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ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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17 |
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ITEM 3 – Quantitative and Qualitative Disclosures about Market Risk |
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23 |
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24 |
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25 |
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25 |
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25 |
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ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds |
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25 |
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25 |
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25 |
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25 |
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26 |
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27 |
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- 2 -
Part I – FINANCIAL INFORMATION
ITEM 1 - Financial Statements
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
|
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Three months ended |
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($ and shares in thousands, except per share amounts) |
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November 30,
|
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November 30,
|
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Operating revenues |
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$ |
166,152 |
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$ |
108,485 |
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Cost of operating revenues |
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128,714 |
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77,077 |
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Gross profit |
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37,438 |
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31,408 |
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Operating expenses: |
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Selling expense |
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7,990 |
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7,331 |
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General and administrative expense |
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12,880 |
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13,452 |
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Engineering and research expense |
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3,207 |
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3,090 |
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Total operating expenses |
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24,077 |
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23,873 |
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Operating income |
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13,361 |
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7,535 |
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Other (expense) income: |
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Interest expense |
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(1,163 |
) |
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(1,201 |
) |
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Interest income |
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177 |
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|
303 |
|
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Other expense, net |
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(2,900 |
) |
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246 |
|
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Total other (expense) income |
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(3,886 |
) |
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(652 |
) |
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Earnings before income taxes |
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9,475 |
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6,883 |
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Income tax expense (benefit) |
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1,574 |
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(212 |
) |
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Net earnings |
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$ |
7,901 |
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$ |
7,095 |
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Earnings per share: |
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Basic |
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$ |
0.72 |
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$ |
0.65 |
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Diluted |
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$ |
0.72 |
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$ |
0.65 |
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Shares used in computing earnings per share: |
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Basic |
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10,927 |
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10,845 |
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Diluted |
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11,026 |
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10,888 |
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Cash dividends declared per share |
|
$ |
0.33 |
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$ |
0.32 |
|
See accompanying notes to condensed consolidated financial statements.
- 3 -
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
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Three months ended |
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($ in thousands) |
|
November 30,
|
|
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November 30,
|
|
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Net earnings |
|
$ |
7,901 |
|
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$ |
7,095 |
|
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Other comprehensive (loss) income: |
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Defined benefit pension plan adjustment, net of tax |
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49 |
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43 |
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Foreign currency translation adjustment, net of hedging activities and tax |
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(3,350 |
) |
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1,384 |
|
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Unrealized loss on marketable securities, net of tax |
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(57 |
) |
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(32 |
) |
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Total other comprehensive (loss) income, net of tax expense of $2 and $32, respectively |
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(3,358 |
) |
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1,395 |
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Total comprehensive income |
|
$ |
4,543 |
|
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$ |
8,490 |
|
See accompanying notes to condensed consolidated financial statements.
- 4 -
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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($ and shares in thousands, except par values) |
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November 30,
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November 30,
|
|
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August 31,
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
84,719 |
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$ |
126,802 |
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$ |
127,107 |
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Marketable securities |
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30,195 |
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19,624 |
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19,604 |
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Receivables, net of allowance of $3,398, $2,960, and $3,422,
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111,959 |
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74,909 |
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93,609 |
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Inventories, net |
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173,115 |
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114,278 |
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145,244 |
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Other current assets, net |
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26,345 |
|
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20,837 |
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30,539 |
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Total current assets |
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426,333 |
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356,450 |
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416,103 |
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Property, plant, and equipment: |
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Cost |
|
|
230,268 |
|
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|
212,725 |
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229,000 |
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Less accumulated depreciation |
|
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(138,629 |
) |
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(131,430 |
) |
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(137,003 |
) |
|
Property, plant, and equipment, net |
|
|
91,639 |
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81,295 |
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91,997 |
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Intangibles, net |
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|
19,827 |
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|
22,817 |
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|
20,367 |
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Goodwill |
|
|
67,735 |
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68,027 |
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67,968 |
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Operating lease right-of-use assets |
|
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17,584 |
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26,008 |
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|
18,281 |
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Deferred income tax assets |
|
|
6,157 |
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|
9,924 |
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8,113 |
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Other noncurrent assets |
|
|
20,170 |
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|
10,681 |
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|
14,356 |
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Total assets |
|
$ |
649,445 |
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$ |
575,202 |
|
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$ |
637,185 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
58,908 |
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$ |
36,263 |
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$ |
45,209 |
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Current portion of long-term debt |
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|
219 |
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214 |
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|
217 |
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Other current liabilities |
|
|
88,655 |
|
|
|
65,910 |
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|
92,814 |
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Total current liabilities |
|
|
147,782 |
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|
102,387 |
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138,240 |
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Pension benefits liabilities |
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5,660 |
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6,293 |
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5,754 |
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Long-term debt |
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115,471 |
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115,641 |
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115,514 |
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Operating lease liabilities |
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|
17,679 |
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|
24,863 |
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|
|
18,301 |
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Deferred income tax liabilities |
|
|
798 |
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|
|
902 |
|
|
|
832 |
|
|
Other noncurrent liabilities |
|
|
20,112 |
|
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|
21,215 |
|
|
|
20,099 |
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Total liabilities |
|
|
307,502 |
|
|
|
271,301 |
|
|
|
298,740 |
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|||
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Shareholders' equity: |
|
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|||
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Preferred stock of $1 par value - authorized 2,000 shares; no shares issued and outstanding |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Common stock of $1 par value - authorized 25,000 shares;
|
|
|
19,056 |
|
|
|
18,948 |
|
|
|
18,991 |
|
|
Capital in excess of stated value |
|
|
89,006 |
|
|
|
78,026 |
|
|
|
86,495 |
|
|
Retained earnings |
|
|
532,410 |
|
|
|
503,342 |
|
|
|
528,130 |
|
|
Less treasury stock - at cost, 8,083 shares |
|
|
(277,238 |
) |
|
|
(277,238 |
) |
|
|
(277,238 |
) |
|
Accumulated other comprehensive loss, net |
|
|
(21,291 |
) |
|
|
(19,177 |
) |
|
|
(17,933 |
) |
|
Total shareholders' equity |
|
|
341,943 |
|
|
|
303,901 |
|
|
|
338,445 |
|
|
Total liabilities and shareholders' equity |
|
$ |
649,445 |
|
|
$ |
575,202 |
|
|
$ |
637,185 |
|
See accompanying notes to condensed consolidated financial statements.
- 5 -
- 6 -
LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Three months ended |
|
|||||
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($ in thousands) |
|
November 30, 2021 |
|
|
November 30, 2020 |
|
||
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CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
|
Net earnings |
|
$ |
7,901 |
|
|
$ |
7,095 |
|
|
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: |
|
|
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|
|
|
||
|
Depreciation and amortization |
|
|
4,896 |
|
|
|
5,140 |
|
|
Provision for uncollectible accounts receivable |
|
|
91 |
|
|
|
158 |
|
|
Deferred income taxes |
|
|
1,841 |
|
|
|
140 |
|
|
Share-based compensation expense |
|
|
1,222 |
|
|
|
1,583 |
|
|
Unrealized foreign currency transaction loss (gain) |
|
|
2,193 |
|
|
|
(203 |
) |
|
Other, net |
|
|
292 |
|
|
|
36 |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
||
|
Receivables |
|
|
(17,816 |
) |
|
|
8,896 |
|
|
Inventories |
|
|
(31,674 |
) |
|
|
(8,294 |
) |
|
Other current assets |
|
|
5,965 |
|
|
|
(3,068 |
) |
|
Accounts payable |
|
|
12,462 |
|
|
|
7,286 |
|
|
Other current liabilities |
|
|
(3,632 |
) |
|
|
(7,146 |
) |
|
Other noncurrent assets and liabilities |
|
|
(7,920 |
) |
|
|
3,750 |
|
|
Net cash (used in) provided by operating activities |
|
|
(24,179 |
) |
|
|
15,373 |
|
|
|
|
|
|
|
|
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
|
Purchases of property, plant, and equipment |
|
|
(3,061 |
) |
|
|
(5,614 |
) |
|
Purchases of marketable securities available-for-sale |
|
|
(14,354 |
) |
|
|
(3,844 |
) |
|
Proceeds from maturities of marketable securities available-for-sale |
|
|
3,599 |
|
|
|
3,616 |
|
|
Other investing activities, net |
|
|
(342 |
) |
|
|
— |
|
|
Net cash used in investing activities |
|
|
(14,158 |
) |
|
|
(5,842 |
) |
|
|
|
|
|
|
|
|
||
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
|
Proceeds from exercise of stock options |
|
|
2,442 |
|
|
|
56 |
|
|
Common stock withheld for payroll tax obligations |
|
|
(1,181 |
) |
|
|
(1,269 |
) |
|
Proceeds from employee stock purchase plan |
|
|
93 |
|
|
|
— |
|
|
Principal payments on long-term debt |
|
|
(54 |
) |
|
|
(35 |
) |
|
Dividends paid |
|
|
(3,621 |
) |
|
|
(3,477 |
) |
|
Net cash used in financing activities |
|
|
(2,321 |
) |
|
|
(4,725 |
) |
|
|
|
|
|
|
|
|
||
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(1,730 |
) |
|
|
593 |
|
|
Net change in cash and cash equivalents |
|
|
(42,388 |
) |
|
|
5,399 |
|
|
Cash and cash equivalents, beginning of period |
|
|
127,107 |
|
|
|
121,403 |
|
|
Cash and cash equivalents, end of period |
|
$ |
84,719 |
|
|
$ |
126,802 |
|
|
|
|
|
|
|
|
|
||
|
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
|
||
|
Income taxes paid, net of refunds |
|
$ |
341 |
|
|
$ |
418 |
|
|
Interest paid |
|
$ |
51 |
|
|
$ |
77 |
|
See accompanying notes to condensed consolidated financial statements.
- 7 -
LINDSAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Basis of Presentation
The condensed consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and do not include all of the disclosures normally required by U.S. generally accepted accounting principles (“U.S. GAAP”) as contained in Lindsay Corporation’s (the “Company”) Annual Report on Form 10-K. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended August 31, 2021.
In the opinion of management, the condensed consolidated financial statements of the Company reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and the results of operations and cash flows for the periods presented. The results for interim periods are not necessarily indicative of trends or results expected by the Company for a full year. The condensed consolidated financial statements were prepared using U.S. GAAP. These principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from these estimates.
Recent Accounting Guidance Adopted
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting and related disclosure requirements for income taxes. The Company adopted this standard in the first quarter of its fiscal 2022. The adoption of this ASU did not have a material impact on its condensed consolidated financial statements.
In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables. This update is intended to provide financial statement users with more decision-useful information about the expected credit losses. The Company adopted this in the first quarter of the Company’s fiscal 2021. The adoption of this ASU did not have a material impact on its condensed consolidated financial statements and related disclosures.
In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill; rather, an entity will measure its goodwill impairment by the amount the carrying value exceeds the fair value of a reporting unit. The Company adopted this in the first quarter of the Company’s fiscal 2021. The adoption of this ASU did not have a material impact on its condensed consolidated financial statements and related disclosures.
- 8 -
Note 2 – Revenue Recognition
Disaggregation of Revenue
A breakout by segment of revenue recognized over time versus at a point in time for the three months ended November 30, 2021 and November 30, 2020 is as follows:
|
|
|
Three months ended |
|
|||||||||
|
|
|
November 30, 2021 |
|
|||||||||
|
($ in thousands) |
|
Irrigation |
|
|
Infrastructure |
|
|
Total |
|
|||
|
Point in time |
|
$ |
139,400 |
|
|
$ |
14,712 |
|
|
$ |
154,112 |
|
|
Over time |
|
|
6,509 |
|
|
|
742 |
|
|
|
7,251 |
|
|
Revenue from the contracts with customers |
|
|
145,909 |
|
|
|
15,454 |
|
|
|
161,363 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Lease revenue |
|
|
— |
|
|
|
4,789 |
|
|
|
4,789 |
|
|
Total operating revenues |
|
$ |
145,909 |
|
|
$ |
20,243 |
|
|
$ |
166,152 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
Three months ended |
|
|||||||||
|
|
|
November 30, 2020 |
|
|||||||||
|
($ in thousands) |
|
Irrigation |
|
|
Infrastructure |
|
|
Total |
|
|||
|
Point in time |
|
$ |
80,060 |
|
|
$ |
15,452 |
|
|
$ |
95,512 |
|
|
Over time |
|
|
7,296 |
|
|
|
1,639 |
|
|
|
8,935 |
|
|
Revenue from the contracts with customers |
|
|
87,356 |
|
|
|
17,091 |
|
|
|
104,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Lease revenue |
|
|
— |
|
|
|
4,038 |
|
|
|
4,038 |
|
|
Total operating revenues |
|
$ |
87,356 |
|
|
$ |
21,129 |
|
|
$ |
108,485 |
|
Further disaggregation of revenue is disclosed in the Note 13 – Industry Segment Information.
For contracts with an initial length longer than twelve months, the unsatisfied performance obligations were $7.3 million at November 30, 2021.
Contract Balances
Contract assets arise when recorded revenue for a contract exceeds the amounts billed under the terms of such contract. Contract liabilities arise when billed amounts exceed revenue recorded. Amounts are billable to customers upon various measures of performance, including achievement of certain milestones and completion of specified units of completion of the contract. At November 30, 2021, November 30, 2020, and August 31, 2021, contract assets amounted to $1.2 million, $1.2 million, and $1.3 million, respectively. These amounts are included within other current assets on the condensed consolidated balance sheet.
Contract liabilities include advance payments from customers and billings in excess of delivery of performance obligations. At November 30, 2021, November 30, 2020, and August 31, 2021, contract liabilities amounted to $41.1 million, $21.3 million, and $37.4 million, respectively. Contract liabilities are included within other current liabilities on the condensed consolidated balance sheets. During the Company’s three months ended November 30, 2021 and November 30, 2020, the Company recognized $12.7 million and $6.5 million of revenue that were included in the liabilities as of August 31, 2021 and 2020, respectively. The revenue recognized was due to applying advance payments received for the performance obligations completed during the quarter.
Note 3 – Net Earnings per Share
Basic earnings per share is calculated on the basis of weighted average outstanding common shares. Diluted earnings per share is calculated on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, restricted stock unit awards and other dilutive securities.
- 9 -
The following table shows the computation of basic and diluted net earnings per share for the three months ended November 30, 2021 and 2020:
|
|
|
Three months ended |
|
|||||
|
($ and shares in thousands, except per share amounts) |
|
November 30,
|
|
|
November 30,
|
|
||
|
Numerator: |
|
|
|
|
|
|
||
|
Net earnings |
|
$ |
7,901 |
|
|
$ |
7,095 |
|
|
|
|
|
|
|
|
|
||
|
Denominator: |
|
|
|
|
|
|
||
|
Weighted average shares outstanding |
|
|
10,927 |
|
|
|
10,845 |
|
|
Diluted effect of stock awards |
|
|
99 |
|
|
|
43 |
|
|
Weighted average shares outstanding assuming
|
|
|
11,026 |
|
|
|
10,888 |
|
|
|
|
|
|
|
|
|
||
|
Basic net earnings per share |
|
$ |
0.72 |
|
|
$ |
0.65 |
|
|
Diluted net earnings per share |
|
$ |
0.72 |
|
|
$ |
0.65 |
|
Certain stock options and restricted stock units were excluded from the computation of diluted net earnings per share because their effect would have been anti-dilutive. Performance stock units are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied. The following table shows the securities excluded from the computation of earnings per share because their effect would have been anti-dilutive:
|
|
|
Three months ended |
|
|||||
|
(Units and options in thousands) |
|
November 30,
|
|
|
November 30,
|
|
||
|
Stock options |
|
|
10 |
|
|
|
79 |
|
|
Performance stock units |
|
|
2 |
|
|
|
10 |
|
Note 4 – Income Taxes
The Company recorded income tax expense of $1.6 million and an income tax benefit of $0.2 million for the three months ended November 30, 2021 and 2020, respectively.
It is the Company’s policy to report income tax expense for interim periods using an estimated annual effective income tax rate. The estimated annual effective income tax rate was 24.2 percent and 23.8 percent for the three months ended November 30, 2021 and 2020, respectively.
The tax effects of significant or unusual items are not considered in the estimated annual effective income tax rate. The tax effects of such discrete events are recognized in the interim period in which the events occur. The Company recorded discrete items resulting in an income tax benefit of $0.7 million and $1.8 million for the three months ended November 30, 2021 and 2020, respectively. The discrete items recorded in the three months ended November 30, 2021 include a benefit of $0.7 million related to the vesting of share-based compensation awards, and the discrete items recorded in the three months ended November 30, 2020 include a benefit of $1.7 million related to the release of a valuation allowance related to net operating loss carryforwards in a foreign jurisdiction.
Note 5 – Inventories
Inventories consisted of the following as of November 30, 2021, November 30, 2020, and August 31, 2021:
|
($ in thousands) |
|
November 30,
|
|
November 30,
|
|
August 31,
|
|
Raw materials and supplies |
|
$78,102 |
|
$52,374 |
|
$69,962 |
|
Work in process |
|
12,227 |
|
8,041 |
|
8,301 |
|
Finished goods and purchased parts, net |
|
90,676 |
|
58,284 |
|
75,053 |
|
Total inventory value before LIFO adjustment |
|
181,005 |
|
118,699 |
|
153,316 |
|
Less adjustment to LIFO value |
|
(7,890) |
|
(4,421) |
|
(8,072) |
|
Inventories, net |
|
$173,115 |
|
$114,278 |
|
$145,244 |
- 10 -
Note 6 – Long-Term Debt
The following table sets forth the outstanding principal balances of the Company’s long-term debt as of the dates shown:
|
($ in thousands) |
|
November 30,
|
|
November 30,
|
|
August 31,
|
|
Series A Senior Notes |
|
$115,000 |
|
$115,000 |
|
$115,000 |
|
Elecsys Series 2006A Bonds |
|
1,096 |
|
1,309 |
|
1,148 |
|
Total debt |
|
116,096 |
|
116,309 |
|
116,148 |
|
Less current portion |
|
(219) |
|
(214) |
|
(217) |
|
Less unamortized debt issuance costs |
|
(406) |
|
(454) |
|
(417) |
|
Total long-term debt |
|
$115,471 |
|
$115,641 |
|
$115,514 |
Note 7 – Fair Value Measurements
The following table presents the Company’s financial assets and liabilities measured at fair value, based upon the level within the fair value hierarchy in which the fair value measurements fall, as of November 30, 2021, November 30, 2020, and August 31, 2021. There were no transfers between any levels for the periods presented.
|
|
|
November 30, 2021 |
|
|||||||||||||
|
($ in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
Cash and cash equivalents |
|
$ |
84,719 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
84,719 |
|
|
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Corporate bonds |
|
|
— |
|
|
|
26,503 |
|
|
|
— |
|
|
|
26,503 |
|
|
U.S. treasury securities |
|
|
— |
|
|
|
3,692 |
|
|
|
— |
|
|
|
3,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
November 30, 2020 |
|
|||||||||||||
|
($ in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
Cash and cash equivalents |
|
$ |
126,802 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
126,802 |
|
|
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Corporate bonds |
|
|
— |
|
|
|
14,564 |
|
|
|
— |
|
|
|
14,564 |
|
|
U.S. treasury securities |
|
|
— |
|
|
|
5,060 |
|
|
|
— |
|
|
|
5,060 |
|
|
Earn-out liability |
|
|
— |
|
|
|
— |
|
|
|
(1,112 |
) |
|
|
(1,112 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
August 31, 2021 |
|
|||||||||||||
|
($ in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
Cash and cash equivalents |
|
$ |
127,107 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
127,107 |
|
|
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Corporate bonds |
|
|
— |
|
|
|
15,484 |
|
|
|
— |
|
|
|
15,484 |
|
|
U.S. treasury securities |
|
|
— |
|
|
|
4,120 |
|
|
|
— |
|
|
|
4,120 |
|
|
Earn-out liability |
|
|
— |
|
|
|
— |
|
|
|
(250 |
) |
|
|
(250 |
) |
- 11 -
The Company’s investment in marketable securities consists of United States treasury bonds and investment grade corporate bonds. The marketable securities are classified as available-for-sale and are carried at fair value with the change in unrealized gains and losses reported as a separate component on the condensed consolidated statements of comprehensive income until realized. The Company determines fair value using data points that are observable, such as quoted prices and interest rates. The amortized cost of the investments approximates fair value. Investment income is recorded within other (expense) income on the condensed consolidated statements of earnings. As of November 30, 2021, approximately 65% of the Company’s marketable securities investments mature within one year and 35% mature within one to five years.
The Company’s earn-out liability relates to its acquisition of Net Irrigate, LLC during the third quarter of fiscal 2020 and was settled in full during the first quarter of fiscal 2022.
There were no required fair value adjustments for assets and liabilities measured at fair value on a non-recurring basis for the three months ended November 30, 2021 or 2020.
Note 8 – Commitments and Contingencies
In the ordinary course of its business operations, the Company enters into arrangements that obligate it to make future payments under contracts such as lease agreements. Additionally, the Company is involved, from time to time, in commercial litigation, employment disputes, administrative proceedings, business disputes and other legal proceedings. The Company has established accruals for certain proceedings based on an assessment of probability of loss. The Company believes that any such currently-pending proceedings are either covered by insurance or would not have a material effect on the business or its consolidated financial statements if decided in a manner that is unfavorable to the Company. Such proceedings are exclusive of environmental remediation matters which are discussed separately below.
Infrastructure Products
The Company is currently defending a number of product liability lawsuits arising out of vehicle collisions with highway barriers incorporating the Company’s X-Lite® end terminal. Despite the September 2018 reversal of a sizable judgment against a competitor, the Company expects that the significant attention brought to the infrastructure products industry by the original judgment may lead to additional lawsuits being filed against the Company and others in the industry.
The Company, certain of its subsidiaries, and certain third parties which originally designed the X-Lite end terminal have also been named in a lawsuit filed on June 9, 2020 in the Circuit Court of Cole County, Missouri by Missouri Highways and Transportation Commission (“MHTC”). MHTC alleges, among other things, that the X-Lite end terminal was defectively designed and failed to perform as designed, intended, and advertised, leading to MHTC’s removal and replacement of X-Lite end terminals from Missouri’s roadways. MHTC alleges strict liability (defective design and failure to warn), negligence, breach of express warranties, breach of implied warranties (merchantability and fitness for a particular purpose), fraud, and public nuisance. MHTC seeks compensatory damages, interest, attorneys’ fees, and punitive damages.
The Company believes it has meritorious factual and legal defenses to each of the lawsuits discussed above and is prepared to vigorously defend its interests. Based on the information currently available to the Company, the Company does not believe that a loss is probable in any of these lawsuits; therefore, no accrual has been included in the Company’s consolidated financial statements. While it is possible that a loss may be incurred, the Company is unable to estimate a range of potential loss due to the complexity and current status of these lawsuits. However, the Company maintains insurance coverage to mitigate the impact of adverse exposures in these lawsuits and does not expect that these lawsuits will have a material adverse effect on its business or its consolidated financial statements.
In June 2019, the Company was informed by letter that the Department of Justice, Civil Division and U.S. Attorney’s Office for the Northern District of New York, with the assistance of the Department of Transportation, Office of Inspector General, are conducting an investigation of the Company relating to the Company’s X-Lite end terminal and potential violations of the federal civil False Claims Act. Depending on the outcome of this matter, there could be a material adverse effect on the Company’s business or its consolidated financial statements. Given the current posture of the matter, the Company is unable to estimate a range of potential loss, if any, or to express an opinion regarding the ultimate outcome.
Environmental Remediation
In previous years, the Company committed to a plan to remediate environmental contamination of the groundwater at and adjacent to its Lindsay, Nebraska facility (the “site”). The current estimated aggregate accrued cost of $16.1 million is based on consideration of remediation options which the Company believes could be successful in meeting the long-term regulatory requirements of the site. The Company submitted a revised remedial alternatives evaluation report to the U.S. Environmental Protection Agency (“EPA”) and the Nebraska Department of Environment and Energy (the “NDEE”) in August 2020 to
- 12 -
review remediation alternatives and proposed plans for the site. The proposed remediation plan is preliminary and has not been approved by the EPA or the NDEE. Based on guidance from third-party environmental experts and the preliminary discussions with the regulatory agencies, the Company anticipates that a definitive plan will not be agreed upon until the first half of calendar 2022 or later. Of the total liability as of both August 31, 2021 and 2020, $11.0 million was calculated on a discounted basis using a discount rate of 1.2%, which represents a risk-free rate. This discounted portion of the liability amounts to $12.4 million on an undiscounted basis.
The Company accrues the anticipated cost of investigation and remediation when the obligation is probable and can be reasonably estimated. While the plan has not been formally approved by the EPA, the Company believes the current accrual is a good faith estimate of the long-term cost of remediation at this site; however, the estimate of costs and their timing could change as a result of a number of factors, including but not limited to (1) EPA input on the proposed remediation plan and any changes which the EPA may subsequently require, (2) refinement of cost estimates and length of time required to complete remediation and post-remediation operations and maintenance, (3) effectiveness of the technology chosen in remediation of the site as well as changes in technology that may be available in the future, and (4) unforeseen circumstances existing at the site. As a result of these factors, the actual amount of costs incurred by the Company in connection with the remediation of contamination of its Lindsay, Nebraska site could exceed the amounts accrued for this expense at this time. While any revisions could be material to the operating results of any fiscal quarter or fiscal year, the Company does not expect such additional expenses would have a material adverse effect on its liquidity or financial condition.
The following table summarizes the undiscounted environmental remediation liability classifications included in the condensed consolidated balance sheets as of November 30, 2021, November 30, 2020, and August 31, 2021:
|
($ in thousands) |
|
November 30,
|
|
|
November 30,
|
|
|
August 31,
|
|
|||
|
Other current liabilities |
|
$ |
828 |
|
|
$ |
1,105 |
|
|
$ |
965 |
|
|
Other noncurrent liabilities |
|
|
15,181 |
|
|
|
15,021 |
|
|
|
15,128 |
|
|
Total environmental remediation liabilities |
|
$ |
16,009 |
|
|
$ |
16,126 |
|
|
$ |
16,093 |
|
Note 9 – Warranties
The following table provides the changes in the Company’s product warranties:
|
|
|
Three months ended |
|
|||||
|
($ in thousands) |
|
November 30,
|
|
|
November 30,
|
|
||
|
Product warranty accrual balance, beginning of period |
|
$ |
12,736 |
|
|
$ |
10,765 |
|
|
Liabilities accrued for warranties during the period |
|
|
2,394 |
|
|
|
1,734 |
|
|
Warranty claims paid during the period |
|
|
(2,751 |
) |
|
|
(1,641 |
) |
|
Product warranty accrual balance, end of period |
|
$ |
12,379 |
|
|
$ |
10,858 |
|
Note 10 – Share-Based Compensation
The Company’s current share-based compensation plans, approved by the stockholders of the Company, provides for awards of stock options, restricted shares, restricted stock units (“RSUs”), stock appreciation rights, performance shares, and performance stock units (“PSUs”) to employees and non-employee directors of the Company. The Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. Share-based compensation expense was $1.3 million and $1.7 million for the three months ended November 30, 2021 and 2020, respectively.
The following table illustrates the type and fair value of share-based compensation awards granted during the three months ended November 30, 2021 and 2020, respectively:
- 13 -
|
|
|
Three months ended |
|
|||||||||||||
|
|
|
November 30, 2021 |
|
|
November 30, 2020 |
|
||||||||||
|
|
|
Number of
|
|
|
Weighted average
|
|
|
Number of
|
|
|
Weighted average
|
|
||||
|
Stock options |
|
|
21,137 |
|
|
$ |
41.80 |
|
|
|
35,168 |
|
|
$ |
30.68 |
|
|
RSUs |
|
|
20,099 |
|
|
$ |
141.99 |
|
|
|
26,314 |
|
|
$ |
106.72 |
|
|
PSUs |
|
|
12,122 |
|
|
$ |
147.74 |
|
|
|
19,533 |
|
|
$ |
125.23 |
|
The RSUs granted during the three months ended November 30, 2021 and 2020 included 2,248 and 2,162 awards, respectively, that will be settled in cash. The weighted average stock price on the date of grant was $145.93 and $110.21 per award for the three months ended November 30, 2021 and 2020, respectively. Share issuances are presented net of share repurchases to cover payroll taxes of $1.2 million and $1.3 million for the three months ended November 30, 2021 and 2020, respectively.
The following table provides the assumptions used in determining the fair value of the stock options awarded during the three months ended November 30, 2021 and 2020, respectively:
|
|
|
Three months ended November 30, |
|
|||||
|
|
|
2021 |
|
|
2020 |
|
||
|
Weighted-average dividend yield |
|
|
0.9 |
% |
|
|
1.2 |
% |
|
Weighted-average volatility |
|
|
33.8 |
% |
|
|
32.8 |
% |
|
Risk-free interest rate |
|
|
1.2 |
% |
|
|
0.5 |
% |
|
Weighted-average expected life (years) |
|
|
5 |
|
|
|
6 |
|
The PSUs granted during fiscal 2022 include performance goals based on a return on invested capital ("ROIC") and total shareholder return ("TSR") relative to the Company's peers during the performance period. The awards actually earned will range from zero to two hundred percent of the targeted number of PSUs and will be paid in shares of common stock. Shares earned will be distributed upon vesting on the first day of November following the end of the three-year performance period. For the ROIC portion of the award, the Company is accruing compensation expense based on the estimated number of shares expected to be issued utilizing the most current information available to the Company at the date of the consolidated financial statements. For the TSR portion of the award, compensation expense is recorded ratably over the three-year term of the award based on the estimated grant date fair value.
The fair value of the TSR portion of the awards granted during the three months ended November 30, 2021 and 2020 was estimated at the grant date using a Monte Carlo simulation model which included the following assumptions:
|
|
|
Three months ended November 30, |
|
|||||
|
|
|
2021 |
|
|
2020 |
|
||
|
Expected term (years) |
|
|
3 |
|
|
|
3 |
|
|
Risk-free interest rate |
|
|
0.7 |
% |
|
|
0.2 |
% |
|
Volatility |
|
|
39.1 |
% |
|
|
38.6 |
% |
|
Dividend yield |
|
|
0.9 |
% |
|
|
1.2 |
% |
- 14 -
Note 11 – Other Current Liabilities
|
($ in thousands) |
|
November 30,
|
|
|
November 30,
|
|
|
August 31,
|
|
|||
|
Other current liabilities: |
|
|
|
|
|
|
|
|
|
|||
|
Contract liabilities |
|
$ |
39,747 |
|
|
$ |
18,497 |
|
|
$ |
36,060 |
|
|
Compensation and benefits |
|
|
13,460 |
|
|
|
13,759 |
|
|
|
21,623 |
|
|
Warranties |
|
|
12,379 |
|
|
|
10,858 |
|
|
|
12,736 |
|
|
Dealer related liabilities |
|
|
4,180 |
|
|
|
3,696 |
|
|
|
3,971 |
|
|
Operating lease liabilities |
|
|
3,787 |
|
|
|
5,004 |
|
|
|
3,991 |
|
|
Tax related liabilities |
|
|
1,639 |
|
|
|
443 |
|
|
|
1,072 |
|
|
Deferred revenue - lease |
|
|
1,201 |
|
|
|
3,165 |
|
|
|
3,456 |
|
|
Accrued insurance |
|
|
893 |
|
|
|
1,253 |
|
|
|
1,123 |
|
|
Accrued environmental liabilities |
|
|
828 |
|
|
|
1,105 |
|
|
|
965 |
|
|
Other |
|
|
10,541 |
|
|
|
8,130 |
|
|
|
7,817 |
|
|
Total other current liabilities |
|
$ |
88,655 |
|
|
$ |
65,910 |
|
|
$ |
92,814 |
|
Note 12 – Share Repurchases
There were no shares repurchased during the three months ended November 30, 2021 and 2020 under the Company’s share repurchase program. The remaining amount available under the repurchase program was $63.7 million as of November 30, 2021.
Note 13 – Industry Segment Information
The Company manages its business activities in two reportable segments: irrigation and infrastructure. The Company evaluates the performance of its reportable segments based on segment revenues, gross profit and operating income, with operating income for segment purposes excluding unallocated corporate general and administrative expenses, interest income, interest expense, other income and expenses and income taxes. Operating income for segment purposes includes general and administrative expenses, selling expenses, engineering and research expenses and other overhead charges directly attributable to the segment. There are no inter-segment sales included in the amounts disclosed. The Company had no single customer who represented 10 percent or more of its total revenues during the three months ended November 30, 2021 or 2020.
Irrigation - This reporting segment includes the manufacture and marketing of center pivot, lateral move and hose reel irrigation systems and large diameter steel tubing as well as various innovative technology solutions such as GPS positioning and guidance, variable rate irrigation, remote irrigation management and scheduling technology, irrigation consulting and design and industrial internet of things, or “IIoT”, solutions. The irrigation reporting segment consists of one operating segment.
- 15 -
Infrastructure – This reporting segment includes the manufacture and marketing of moveable barriers, specialty barriers, crash cushions and end terminals, and road marking and road safety equipment. The infrastructure reporting segment consists of one operating segment.
|
|
|
Three months ended |
|
|||||
|
($ in thousands) |
|
November 30,
|
|
|
November 30,
|
|
||
|
Operating revenues: |
|
|
|
|
|
|
||
|
Irrigation: |
|
|
|
|
|
|
||
|
North America |
|
$ |
78,976 |
|
|
$ |
52,790 |
|
|
International |
|
|
66,933 |
|
|
|
34,566 |
|
|
Irrigation total |
|
|
145,909 |
|
|
|
87,356 |
|
|
Infrastructure |
|
|
20,243 |
|
|
|
21,129 |
|
|
Total operating revenues |
|
$ |
166,152 |
|
|
$ |
108,485 |
|
|
|
|
|
|
|
|
|
||
|
Operating income: |
|
|
|
|
|
|
||
|
Irrigation |
|
$ |
17,212 |
|
|
$ |
10,633 |
|
|
Infrastructure |
|
|
2,766 |
|
|
|
4,256 |
|
|
Corporate |
|
|
(6,617 |
) |
|
|
(7,354 |
) |
|
Total operating income |
|
|
13,361 |
|
|
|
7,535 |
|
|
|
|
|
|
|
|
|
||
|
Interest and other expense, net |
|
|
(3,886 |
) |
|
|
(652 |
) |
|
Earnings before income taxes |
|
$ |
9,475 |
|
|
$ |
6,883 |
|
- 16 -
ITEM 2 ‑ Management's Discussion and Analysis of Financial Condition and Results of Operations
Concerning Forward‑Looking Statements
This Quarterly Report on Form 10-Q contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical are forward-looking and reflect information concerning possible or assumed future results of operations and planned financing of the Company. In addition, forward-looking statements may be made orally or in press releases, conferences, reports, on the Company's web site, or otherwise, in the future by or on behalf of the Company. When used by or on behalf of the Company, the words “expect,” “anticipate,” “estimate,” “believe,” “intend,” “will,” “plan,” “predict,” “project,” “outlook,” “could,” “may,” “should” or similar expressions generally identify forward-looking statements. The entire section entitled “Executive Overview and Outlook” should be considered forward-looking statements. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve a number of risks and uncertainties, including but not limited to those discussed in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2020. Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results or conditions, which may not occur as anticipated. Actual results or conditions could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described herein and in the Company’s other public filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2021, as well as other risks and uncertainties not now anticipated. The risks and uncertainties described herein and in the Company’s other public filings are not exclusive and further information concerning the Company and its businesses, including factors that potentially could materially affect the Company's financial results, may emerge from time to time. Except as required by law, the Company assumes no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.
COVID-19 Impact
In March 2020, the World Health Organization declared the 2019 coronavirus disease (COVID-19) a global pandemic. This outbreak has adversely affected workforces, customers, economies, and financial markets globally, leading to economic uncertainty. Shelter-in-place or stay-at-home orders have been implemented from time to time in many of the jurisdictions in which the Company operates. However, because the Company supports critical industries, the Company’s facilities worldwide have generally been considered “business essential” and have remained open throughout the outbreak with limited exceptions. Accordingly, COVID-19 has had a limited impact on the Company’s manufacturing operations to date. While the Company has implemented new procedures to protect the health and well-being of employees and customers, costs associated with these procedures have not been material. The pandemic has not had a material adverse effect on demand for the Company’s irrigation or infrastructure products; however, the pandemic has resulted in a slowdown of road construction activity and delays in certain project implementations. As pandemic conditions improve and economic activity increases, the Company has experienced a number of supply chain challenges including increased lead times and limited availability of certain components, raw material inflation, and labor and logistics constraints.
The ultimate impact of COVID-19 on the Company’s business, results of operations, or cash flows remains uncertain and depends on numerous evolving factors that the Company may not be able to accurately predict or effectively respond to, including, without limitation: the duration and scope of the outbreak; mutations of COVID-19; actions taken by governments, businesses, and individuals in response to the outbreak; the effect on economic activity and actions taken in response; the effect on customers and their demand for the Company’s products and services; and the Company’s ability to manufacture, sell, distribute and service its products, including without limitation as a result of supply chain challenges, facility closures, social distancing, restrictions on travel, fear or anxiety by the populace, and shelter-in-place orders. As such, the full financial impact of COVID-19 on the Company’s business is difficult to estimate.
Accounting Policies
In preparing the Company’s condensed consolidated financial statements in conformity with U.S. GAAP, management must make a variety of decisions which impact the reported amounts and the related disclosures. These decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In making these decisions, management applies its judgment based on its understanding and analysis of the relevant circumstances and the Company’s historical experience.
- 17 -
The Company’s accounting policies that are most important to the presentation of its results of operations and financial condition, and which require the greatest use of judgments and estimates by management, are designated as its critical accounting policies. See discussion of the Company’s critical accounting policies under Item 7 in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2021. Management periodically re-evaluates and adjusts its critical accounting policies as circumstances change. There were no significant changes in the Company’s critical accounting policies during the three months ended November 30, 2021.
Recent Accounting Guidance
See Note 1 – Basis of Presentation and the disclosure therein of recently adopted accounting guidance to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Executive Overview and Outlook
Operating revenues for the three months ended November 30, 2021 were $166.2 million, an increase of 53 percent compared to $108.5 million for the three months ended November 30, 2020. Irrigation segment revenues increased 67 percent to $145.9 million and infrastructure segment revenues decreased 4 percent to $20.2 million. Net earnings for the three months ended November 30, 2021 were $7.9 million, or $0.72 per diluted share, compared to net earnings of $7.1 million, or $0.65 per diluted share, for the three months ended November 30, 2020.
The global drivers for the Company’s irrigation segment are population growth and the attendant need for expanded food production and efficient water use. The need for irrigated agricultural crop production, which depends upon many factors, include the following primary drivers:
- 18 -
International irrigation markets remain active with opportunities for further development and expansion, however regional political and economic factors, currency conditions and other factors can create a challenging environment. Additionally, international results are heavily dependent upon project sales which tend to fluctuate and can be difficult to forecast accurately.
The infrastructure business continues to be driven by the Company's transportation safety products which is dependent to a significant extent on government spending for road construction and improvements. The enactment of the Infrastructure Investment and Jobs Act in November 2021 marked the largest infusion of federal investment into infrastructure projects in more than a decade. This legislation introduced $110 billion in incremental federal funding, planned for roads, bridges, and other transformational projects, which the Company anticipates will translate into higher demand for its transportation safety products.
Demand for irrigation equipment in the U.S. has remained robust over the same prior year period due to positive farmer sentiment resulting from strong agricultural commodity prices and a favorable outlook for net farm income. During this period supply chain constraints such as steel and other raw material costs as well as freight and logistics costs have continued to persist. These circumstances have continued to temper operating margins and are expected to continue to do so until these increased costs can be fully covered by increases in selling prices. In addition, supply chain constraints impacting availability of raw materials and trucking resources have contributed to cost increases and have resulted in extended lead times for deliveries.
The backlog of unshipped orders at November 30, 2021 was $154.8 million compared with $89.2 million at November 30, 2020. The irrigation backlog is higher compared to the prior year while the infrastructure backlog is lower. The Company’s backlog can fluctuate from period to period due to the seasonality, cyclicality, timing and execution of contracts. Backlog typically represents long-term projects as well as short lead-time orders, and therefore is generally not a good indication of the next fiscal quarter’s revenues.
The global drivers for the Company’s markets of population growth, expanded food production, efficient water use and infrastructure expansion support the Company’s long-term growth goals. The most significant opportunities for growth over the next several years are in international markets, where irrigation use is less developed and demand is driven primarily by food security, water scarcity and population growth.
- 19 -
Results of Operations
For the Three Months ended November 30, 2021 compared to the Three Months ended November 30, 2020
The following section presents an analysis of the Company’s operating results displayed in the condensed consolidated statements of earnings for the three months ended November 30, 2021 and 2020. It should be read together with the industry segment information in Note 13 to the condensed consolidated financial statements:
|
|
|
Three months ended |
|
|
Percent |
|||||
|
($ in thousands) |
|
November 30,
|
|
|
November 30,
|
|
|
Increase
|
||
|
Consolidated |
|
|
|
|
|
|
|
|
||
|
Operating revenues |
|
$ |
166,152 |
|
|
$ |
108,485 |
|
|
53% |
|
Gross profit |
|
$ |
37,438 |
|
|
$ |
31,408 |
|
|
19% |
|
Gross margin |
|
|
22.5 |
% |
|
|
29.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Operating expenses (1) |
|
$ |
24,077 |
|
|
$ |
23,873 |
|
|
1% |
|
Operating income |
|
$ |
13,361 |
|
|
$ |
7,535 |
|
|
77% |
|
Operating margin |
|
|
8.0 |
% |
|
|
6.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Other expense, net |
|
$ |
(3,886 |
) |
|
$ |
(652 |
) |
|
496% |
|
Income tax expense |
|
$ |
1,574 |
|
|
$ |
(212 |
) |
|
-842% |
|
Overall income tax rate |
|
|
16.6 |
% |
|
|
-3.1 |
% |
|
|
|
Net earnings |
|
$ |
7,901 |
|
|
$ |
7,095 |
|
|
11% |
|
|
|
|
|
|
|
|
|
|
||
|
Irrigation Segment |
|
|
|
|
|
|
|
|
||
|
Segment operating revenues |
|
$ |
145,909 |
|
|
$ |
87,356 |
|
|
67% |
|
Segment operating income |
|
$ |
17,212 |
|
|
$ |
10,633 |
|
|
62% |
|
Segment operating margin |
|
|
11.8 |
% |
|
|
12.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Infrastructure Segment |
|
|
|
|
|
|
|
|
||
|
Segment operating revenues |
|
$ |
20,243 |
|
|
$ |
21,129 |
|
|
-4% |
|
Segment operating income |
|
$ |
2,766 |
|
|
$ |
4,256 |
|
|
-35% |
|
Segment operating margin |
|
|
13.7 |
% |
|
|
20.1 |
% |
|
|
Revenues
Operating revenues for the three months ended November 30, 2021 increased 53 percent to $166.2 million from $108.5 million for the three months ended November 30, 2020, as irrigation revenues increased $58.6 million and infrastructure revenues decreased $0.9 million. The irrigation segment provided 88 percent of the Company’s revenue during the three months ended November 30, 2021 as compared to 81 percent for the three months ended November 30, 2020.
North America irrigation revenues for the three months ended November 30, 2021 of $79.0 million increased $26.2 million, or 50 percent, from $52.8 million for the three months ended November 30, 2020. The increase resulted from a combination of higher irrigation equipment unit sales volume and higher average selling prices. Increased demand for irrigation equipment is supported by higher agricultural commodity prices and farm income, while higher average selling prices result from the pass through of higher raw materials costs to customers.
International irrigation revenues for the three months ended November 30, 2021 of $66.9 million increased $32.4 million, or 94 percent, from $34.6 million for the three months ended November 30, 2020. The increase resulted from a combination of higher average selling prices and higher unit sales volumes in most international markets, namely Brazil, Middle East and Europe. These increases are the result of positive market fundamentals and from the pass through of higher raw material costs. Also contributing were favorable effects of foreign currency translation of approximately $1.1 million compared to the same prior year period.
Infrastructure segment revenues for the three months ended November 30, 2021 of $20.2 million decreased $0.9 million, or 4 percent, from $21.1 million for the three months ended November 30, 2020. The decrease resulted from lower Road Zipper System sales, which were partially offset by higher Road Zipper System lease revenue and increased sales of road safety products.
- 20 -
Gross Profit
Gross profit for the three months ended November 30, 2021 of $37.4 million increased 19 percent from $31.4 million for the three months ended November 30, 2020. The increase in gross profit resulted from higher irrigation segment revenues that were partially offset by lower infrastructure segment revenues. In addition, gross profit was reduced by the impact of higher costs of raw materials and other inputs, as well as approximately $6.0 million resulting from the impact of the last-in, first-out ("LIFO") method of accounting for inventory, of which $5.0 million impacted the irrigation segment and $1.0 million impacted the infrastructure segment. Under LIFO, higher raw material costs are recognized in cost of goods sold rather than in ending inventory values. Gross margin was 22.5 percent of sales for the three months ended November 30, 2021 compared with 29.0 percent of sales for the three months ended November 30, 2020. Lower gross margin in the current year period resulted in part from a higher proportion of irrigation revenues, which have a lower gross margin than infrastructure revenues, as compared to the same prior year period. Higher costs of raw materials and other inputs also contributed to lower gross margin in the current period compared to the same prior year period.
Operating Expenses
Operating expenses of $24.1 million for the three months ended November 30, 2021 increased $0.2 million, or 1 percent, compared with $23.9 million for the three months ended November 30, 2020. The increase resulted primarily from higher selling expenses and engineering expenses, which were partially offset by reductions in other categories of operating expenses compared to the same prior year period.
Other Expense, net
Other expense for the three months ended November 30, 2021 increased $3.1 million compared to the three months ended November 30, 2020. The change resulted primarily from higher foreign currency transaction losses compared to the same prior year period.
Income Taxes
The Company recorded income tax expense of $1.6 million and an income tax benefit of $0.2 million for the three months ended November 30, 2021 and 2020, respectively. The effective income tax rate was 16.6 percent and (3.1) percent for the three months ended November 30, 2021 and 2020, respectively. The current year period includes a benefit of $0.7 million related to the vesting of share-based compensation awards while the same prior year period includes a benefit of $1.7 million related to the release of a valuation allowance related to net operating loss carryforwards in a foreign jurisdiction.
- 21 -
Liquidity and Capital Resources
The Company's cash, cash equivalents, and marketable securities totaled $114.9 million at November 30, 2021 compared with $146.4 million at November 30, 2020 and $146.7 million at August 31, 2021. The Company requires cash for financing its receivables and inventories, paying operating expenses and capital expenditures, and for dividends and share repurchases. The Company meets its liquidity needs and finances its capital expenditures from its available cash and funds provided by operations along with borrowings under its credit arrangements described below. The Company’s investments in marketable securities are primarily comprised of United States government securities and investment grade corporate securities. The Company believes its current cash resources, investments in marketable securities, projected operating cash flow, and remaining capacity under its continuing bank lines of credit are sufficient to cover all its expected working capital needs, planned capital expenditures and dividends. The Company may require additional borrowings to fund potential acquisitions in the future.
The Company’s total cash and cash equivalents held by foreign subsidiaries were approximately $35.5 million, $41.3 million, and $38.4 million as of November 30, 2021, November 30, 2020, and August 31, 2021, respectively. The Company considers earnings in foreign subsidiaries to be indefinitely reinvested and would need to accrue and pay incremental state, local, and foreign taxes if such earnings were repatriated to the United States. The Company does not intend to repatriate the funds and does not expect these funds to have a significant impact on the Company’s overall liquidity.
Net working capital was $278.6 million at November 30, 2021, as compared with $254.1 million at November 30, 2020 and $277.9 million at August 31, 2021. Cash used in operating activities totaled $24.2 million during the three months ended November 30, 2021, compared to cash provided by operating activities of $15.4 million during the three months ended November 30, 2020. This change was primarily due to increases in receivables and inventories that were partially offset by changes in other categories of working capital, compared to the same prior year period.
Cash flows used in investing activities totaled $14.2 million during the three months ended November 30, 2021 compared to $5.8 million during the three months ended November 30, 2020. Purchases of marketable securities increased $10.5 million compared to the same prior year period. Purchases of property, plant, and equipment were $3.1 million, compared to $5.6 million in the same prior year period.
Cash flows used in financing activities totaled $2.3 million during the three months ended November 30, 2021 compared to cash flows used in financing activities of $4.7 million during the three months ended November 30, 2020. The decrease was primarily the result of higher proceeds from the exercise of stock options compared to the same prior year period.
Capital Allocation Plan
The Company’s capital allocation plan is to continue investing in revenue and earnings growth, combined with a defined process for enhancing returns to stockholders. Under the Company’s capital allocation plan, the priorities for uses of cash include:
Capital Expenditures
Capital expenditures for fiscal 2022 are expected to be between $20.0 million and $25.0 million, including equipment replacement, productivity improvements and new product development. The Company’s management does maintain flexibility to modify the amount and timing of some of the planned expenditures in response to economic conditions.
Dividends
In the first quarter of fiscal 2022, the Company paid a quarterly cash dividend to stockholders of $0.33 per common share, or $3.6 million, compared to a quarterly cash dividend of $0.32 per common share, or $3.5 million, in the first quarter of fiscal 2021.
- 22 -
Share Repurchases
The Company’s Board of Directors authorized a share repurchase program of up to $250.0 million of common stock with no expiration date. Under the program, shares may be repurchased in privately negotiated and/or open market transactions as well as under formalized trading plans in accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. There were no shares repurchased during the three months ended November 30, 2021 or 2020. The remaining amount available under the repurchase program was $63.7 million as of November 30, 2021.
Long-Term Borrowing Facilities
Senior Notes. The Company has outstanding $115.0 million in aggregate principal amount of Senior Notes, Series A (the “Senior Notes”). The entire principal of the Senior Notes is due and payable on February 19, 2030. Interest on the Senior Notes is payable semi-annually at a fixed annual rate of 3.82 percent. Borrowings under the Senior Notes are unsecured. The Company used the proceeds of the sale of the Senior Notes for general corporate purposes, including acquisitions and dividends.
Revolving Credit Facility. The Company has outstanding a $50.0 million unsecured Amended and Restated Revolving Credit Facility (the “Revolving Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”) expiring August 26, 2026. The Company intends to use borrowings under the Revolving Credit Facility for working capital purposes and to fund acquisitions. At November 30, 2021 and 2020, the Company had no outstanding borrowings under the Revolving Credit Facility. The amount of borrowings available at any time under the Revolving Credit Facility is reduced by the amount of standby letters of credit issued by Wells Fargo then outstanding. At November 30, 2021, the Company had the ability to borrow up to $50.0 million under the Revolving Credit Facility. The Revolving Credit Facility may be increased by up to an additional $50.0 million at any time, subject to additional commitment approval. The Revolving Credit Facility was amended to transition the benchmark rate from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”). Borrowings under the Revolving Credit Facility bear interest at a variable rate equal to the SOFR plus a margin of between 100 and 210 basis points depending on the Company’s leverage ratio then in effect (which resulted in a variable rate of 1.40 percent at November 30, 2021), subject to adjustment as set forth in the loan documents for the Revolving Credit Facility. Interest is paid on a monthly to quarterly basis depending on loan type. The Company currently pays an annual commitment fee on the unused portion of the Revolving Credit Facility. The fee is between 0.125 percent and 0.2 percent (0.125 percent at November 30, 2021) on the unused balance depending on the Company’s leverage ratio then in effect.
Borrowings under the Revolving Credit Facility have equal priority with borrowings under the Company’s Senior Notes. Each of the credit arrangements described above include certain covenants relating primarily to the Company’s financial condition. These financial covenants include a funded debt to EBITDA leverage ratio and an interest coverage ratio. In the event that the loan documents for the Revolving Credit Facility were to require the Company to comply with any financial covenant that is not already included or is more restrictive than what is already included in the arrangement governing the Senior Notes, then such covenant shall be deemed incorporated by reference for the benefit of holders of the Senior Notes. Upon the occurrence of any event of default of these covenants, including a change in control of the Company, all amounts outstanding thereunder may be declared to be immediately due and payable. At November 30, 2021 and 2020, the Company was in compliance with all financial loan covenants contained in its credit arrangements in place as of each of those dates.
Series 2006A Bonds. Elecsys International LLC, a wholly owned subsidiary of the Company, has outstanding $1.1 million in principal amount of industrial revenue bonds that were issued in 2006 (the “Series 2006A Bonds”). Principal and interest on the Series 2006A Bonds are payable monthly through maturity on September 1, 2026. The interest rate is adjustable every five years based on the yield of the 5-year United States Treasury Notes, plus 0.45 percent (1.72 percent as of November 30, 2021). This rate was adjusted on September 1, 2021 in accordance with the terms of the bonds, and the adjusted rate will be in force through maturity. The obligations under the Series 2006A Bonds are secured by a first priority security interest in certain real estate.
Contractual Obligations and Commercial Commitments
There have been no material changes in the Company’s contractual obligations and commercial commitments as described in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2021.
ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes from the Company’s quantitative and qualitative disclosures about market risk previously disclosed in the Company’s most recent Annual Report on Form 10-K. See discussion of the Company’s quantitative and qualitative disclosures about market risk under Part II, Item 7A in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2021.
- 23 -
ITEM 4 – Controls and Procedures
Disclosure Controls and Procedures
The Company carried out an evaluation under the supervision and the participation of the Company’s management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of November 30, 2021.
Changes in Internal Control over Financial Reporting
The CEO and CFO determined that there has not been any significant change to the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
- 24 -
Part II – OTHER INFORMATION
ITEM 1 – Legal Proceedings
See the disclosure in Note 8 – Commitments and Contingencies to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is hereby incorporated herein by reference.
ITEM 1A – Risk Factors
There have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussions of the Company’s risk factors under Part I, Item 1A in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2021.
ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds
None.
ITEM 3 – Defaults Upon Senior Securities
None.
ITEM 4 – Mine Safety Disclosures
Not applicable.
ITEM 5 – Other Information
None.
- 25 -
ITEM 6 – Exhibits
|
Exhibit |
|
|
|
No. |
|
Description |
|
|
|
|
|
3.1 |
|
|
|
3.2 |
|
|
|
4.1 |
|
|
|
10.1* |
|
Lindsay Corporation Management Incentive Plan (MIP) 2022 Plan Year. † ** |
|
10.2* |
|
Lindsay Corporation Policy on Payment of Director Fees and Expenses. |
|
31.1* |
|
|
|
31.2* |
|
|
|
32.1* |
|
|
|
101* |
|
Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language ("Inline XBRL"). |
|
104* |
|
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). |
|
|
|
|
† Management contract or compensatory plan or arrangement required to be filed as an exhibit hereto pursuant to Item 6 of Part II of Form 10-Q.
* Filed herein.
** Certain confidential portions of this exhibit were omitted by means of marking such portions with brackets and asterisks because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 6th day of January 2022.
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LINDSAY CORPORATION |
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By: |
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/s/ BRIAN L. KETCHAM |
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Name: |
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Brian L. Ketcham |
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Title: |
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Senior Vice President and Chief Financial Officer |
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(on behalf of the registrant and as principal financial officer) |
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Exhibit 10.1
Certain identified information has been excluded from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
LINDSAY CORPORATION
MANAGEMENT INCENTIVE PLAN (MIP)
2022
Plan Year
____________________________
Senior Vice President - HR/Date
________________________
Chief Financial Officer/Date
________________________
Chief Executive Officer/Date
Table of Contents
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1. Purpose |
1 |
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2. Definitions |
1 |
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3. Effective Date |
2 |
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4. Eligibility for Participation |
2 |
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5. Enrollment in the Plan |
2&3 |
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6. Determination of Target Payout Levels |
3&4 |
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7. Basis of Awards |
4&5 |
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8. Changes in Employment Status |
6 |
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9. Administration |
6 |
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10. Attachments .…….7 |
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1. Purpose
The purpose of the Management Incentive Plan (the “Plan”) is to:
Encourage performance consistent with the Company’s business strategy.
Focus on near-term performance results as well as progress toward the achievement of long-term objectives.
Strengthen the link between performance and pay by delivering awards based on measurable corporate and individual goals.
2. Definitions
The terms used in this Plan have the meanings set forth below.
A. “Company” shall mean Lindsay Corporation.
B. “Committee” shall mean the Human Resources and Compensation Committee of the Company’s Board of Directors.
C. “Financial Performance Component” shall mean the portion of a Participant’s Plan award that is based on the Company’s and specific Market financial performance as defined in Section 7B.
D. "Named Executive Officers" shall mean the executives of the Company listed in the Executive Compensation section of the Company’s Proxy Statement, other executive officers of the Company for SEC reporting purposes and any other elected officers.
E. “Participant” shall mean a key employee eligible for awards under the terms outlined in Section 4 of this Plan.
F. “Plan” shall mean Lindsay Corporation Management Incentive Plan.
G. “Strategic Goal Performance Component” shall mean the portion of a Participant’s Plan award that is based on a Participant’s or the Company’s performance relative to certain individual objectives or strategic goals established in accordance with Section 7C.
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3. Effective Date
The Plan shall be effective as of September 1, 2021 and will be in effect for the 2022 bonus year. The 2022 bonus year is defined as September 1, 2021 through August 31, 2022.
4. Eligibility for Participation
A. Participation in the Plan is limited to individuals in positions which have significant responsibility for and impact on the Company’s corporate performance.
B. Only the Named Executive Officers are eligible to be considered for participation in the Plan.
C. Participation in the Plan does not guarantee or entitle any employee to participate in any bonus plan enacted in the future. Participation in the Plan at any target bonus level does not guarantee or entitle any employee to be eligible to participate at any similar target bonus level in any bonus plan which may be enacted in the future.
5. Enrollment in the Plan
A. Initial Enrollment
At the beginning of the Plan year, each Participant must be enrolled in the Plan subject to the approvals and eligibility criteria set forth in Sections 4 and 6. The enrollment process is as follows:
i. Plan Participants will participate in the Plan at the target percentage set forth opposite his or her name on Exhibit A.
ii. The Company’s Chief Executive Officer will review the participant list and projected bonus costs of enrolled employees with the Committee. The Committee provides final approval on the aggregate potential cost of the Plan.
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B.
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Mid-year Enrollment
When hiring or promoting employees during the Plan year who may be eligible for participation in the Plan, the following procedures must be followed:
i. Prior to the commencement of the recruiting or promotion process, the hiring manager consults with Human Resources to determine the position’s eligibility for participation in the Plan and the recommended target bonus amount.
ii. Offer letters indicating bonus Plan participation and target bonus award opportunities to new hires and/or promoted employees must be reviewed by the CEO or, in the case of a Named Executive Officer, by the Committee. Target bonus recommendations must be approved before communication to a prospective Participant. Generally, employees hired or promoted during the fourth quarter of fiscal 2022 are not eligible to participate in the 2022 Plan.
6. Determination of Target Payout Levels
A. Incentive awards will be calculated as a percentage of the Participant’s annual base salary received during the Plan year, provided that annual base salary increases which are made during the first quarter of the Plan year will be treated for purposes of calculating a Participant’s bonus as if they had been made at the beginning of the Plan year. The impact of promotions or other adjustments to base pay made after the annual pay adjustment noted above will be prorated for the time in effect. While award amounts will vary based on the range of award opportunity and an assessment of individual performance results, the target award opportunities for each Participant are set forth opposite his or her name on Exhibit A. Actual participation is subject to approval by the CEO and by the Committee. Actual participation is based on an assessment of the individual's position impact on the organization.
B. If a Participant’s Plan target award opportunity (Target % of Salary as set forth above) changes due to promotion into a grade level with a higher target bonus, the Participant’s bonus will be calculated based on his or her annual salary during the Plan year and a pro-rated bonus award. The pro-rated bonus award will reflect the portion of the Plan year spent in each grade level (e.g., 26 weeks at 40% and 26 weeks at 50%). In evaluating the performance of Participants who change positions during the Plan year, consideration will be given to the length of time and results in each position. Actual award decisions will be made by the CEO or, in the case of a Named Executive Officer, by the Committee. Generally, fourth quarter promotions will not result in an increase in a Participant’s target award opportunity.
C. Examples of various award calculations are included with this Plan document as Attachment
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A.
D. The Committee will determine the award payments to the Named Executive Officers.
E. Award payments will be calculated on an annual basis and paid in accordance with the Company’s normal payroll cycle. Payments will be made within 75 days following the Plan year. The payment date may be changed at any time and for any reason at the discretion of the CEO, or in the case of a Named Executive Officer, with approval of the Committee, but may not be later than March 15 following the end of the Plan year for which the award is paid.
7. Basis of Awards
A. Measurable performance objectives for each Plan Participant will be established at the beginning of the Plan year (or at mid-year for mid-year hires or newly eligible employees). For the 2022 bonus year, consideration will be given to:
i. Financial Performance Component: Company and Market financial performance vs. Plan performance objectives in accordance with Section 7B.
ii. Strategic Goal Performance Component: Participant’s or Company’s performance relative to individual objectives or strategic goals established in accordance with Section 7C.
iii. Financial and Strategic Goal Performance Components will be added to reach a Participant’s total bonus. The relative weighting between these Components for each Participant is set forth opposite his or her name on Exhibit A.
B. At the beginning of the Plan year, the objectives for the Financial Performance Component are identified and approved by the Committee and are set forth on Exhibit B.
i. Recommended award amounts may range from 0 - 200% of the Financial Performance Component of the Participant’s target award, based on performance.
ii. Percentages between the threshold, intermediate, target, and maximum award will be interpolated.
iii. In the event of an acquisition, actual results for the selected financial performance metrics (e.g., revenue, operating margin) will be adjusted by subtracting the Board-approved business case for each acquisition for purposes of award payout calculations, unless the Committee approves a modification to
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include any such items. Any transaction costs associated with any acquisition considered, pursued or closed shall be added back to profitability.
iv. In the event of a divestiture, actual results for the selected financial performance metrics will be adjusted by including the Board-approved budget (and removing actual performance results) for each divestiture for purposes of award payout calculations, unless the Committee approves a modification to any such items. If a planned divestiture is not included in the budget, its financial performance metrics will not be included in the calculation of the Financial Performance Component if the divestiture is not complete by the end of the fiscal year. Any transaction costs associated with any divestiture considered, pursued or closed shall be added back to profitability.
v. Award payout calculations shall exclude the positive or negative impact of any adjustments to the accrual for environmental remediation liability or unbudgeted expenses related to the existing contamination at the Lindsay facility as disclosed in the Company’s SEC filings.
vi. Award payout calculations shall be adjusted to remove Project Foundation consulting fees, if any, from the resulting operating margin calculation which were not included in the annual budget.
vii. Award payout calculations may be adjusted for any items of gain, loss or expense (i) from non-cash impairments; (ii) related to loss contingencies identified in the Company’s 10-K; (iii) that are unusual in nature or infrequent in occurrence; (iv) related to the disposal of a segment of a business; or (v) related to a change in accounting principle. The Plan also permits adjustments to remove the effects of changes in the tax law.
C. At the beginning of the Plan year, the objectives for the Strategic Goal Performance Component are identified and approved by the Committee and are set forth on Exhibit B.
i. Objectives under the Strategic Goal Performance Component may be linked to individual objectives or team-based goals, as appropriate.
ii. Recommended award amounts may range from 0% - 200% of the target amount under the Strategic Goal Performance Component. Recommended award amounts will be based on an assessment of the Participant or Company’s performance, as applicable, relative to objectives established under the Strategic Goal Performance Component as set forth on Exhibit B.
iii. The “Payout (as % of Target Individual Performance Component)” represents the payout relative to target award for the Strategic Goal Performance Component of the Plan.
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8. Changes in Employment Status
A. Participants who cease to be employees of the Company during the Plan year will not be eligible to receive an award. Only active employees on the date that the bonus is paid will be eligible to receive an award. Any exceptions will require the approval of the CEO, or in the case of a Named Executive Officer, the Committee.
B. In the event that a Participant transfers out of an eligible position into an ineligible position within the Company, the employee may be eligible for a prorated bonus award based upon the approval of the CEO, or in the case of a Named Executive Officer, the Committee.
C. In all cases awards will be calculated and paid according to the provisions in Sections 6 and 7 of this Plan document.
9. Administration
A. General authority for Plan administration and responsibility for ongoing Plan administration will rest with the Committee of the Company’s Board of Directors. The Committee has sole authority for decisions regarding interpretation of the terms of this Plan.
B. The Company reserves the right to amend or change the Plan in whole or in part at any time during the Plan year. Amendments to the Plan require the approval of the Committee.
C. Participation in the Plan does not constitute a contract of employment nor a contractual agreement of payment. It shall not affect the right of the Company to discharge, transfer, or change the position of a Participant. The Plan shall not be construed to limit or prevent the Company from adopting or changing, from time to time, any rules, standards or procedures affecting the Participant’s employment with the Company or any Company affiliate, including those which affect bonus payouts.
D. If any provision of this Plan is found to be illegal, invalid or unenforceable under present or future laws, that provision shall be severed from the Plan. If such a provision is severed, this Plan shall be construed and enforced as if the severed provision had never been part of it and the remaining provisions of this Plan shall remain in full force and effect and shall not be affected by the severed provisions or by its severance from this Plan. In place of any severed provision there shall be added automatically as part of this Plan a provision as similar in terms to the severed provision as may be possible and be legal, valid and enforceable.
E. This is not an ERISA plan. This is a bonus program.
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ATTACHMENT A
Award Calculation Guidelines
The following examples are to be used as guidelines in calculating bonus awards at the end of the 2022 Plan year. Managers should use their discretion in calculating actual bonus awards and may consider exceptions to the calculations below when necessary. Any such exceptions must be fully documented and are subject to review and approval by the Chief Executive Officer, or in the case of a Named Executive Officer, the Committee.
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Full Year Participation |
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Mid-Year Promotion |
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Strategic Goal Performance Score: |
100 |
Strategic Goal Performance Score: |
100 |
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Financial Performance Score: |
100.00% |
Financial Performance Score: |
100.00% |
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Pre-Promotion Calculation |
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Strategic Goal Score |
100 |
Strategic Goal Score |
100 |
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Total Incentive Plan % |
40% |
Total Incentive Plan % |
40% |
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% Strategic to Total Incentive Plan Participation |
20% |
% Strategic to Total Incentive Plan Participation |
20% |
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Base Salary |
$150,000 |
Base Salary |
$150,000 |
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Strategic Goal Performance Payout |
$12,000 |
Strategic Goal Performance Payout |
$12,000 |
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Financial Score |
100% |
Financial Score |
100% |
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Total Incentive Plan % |
40% |
Total Incentive Plan % |
40% |
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% Financial to Total Incentive Plan Participation |
80% |
% Financial to Total Incentive Plan Participation |
80% |
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Base Salary |
$150,000 |
Base Salary |
$150,000 |
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Financial Performance Payout |
$48,000 |
Financial Performance Payout |
$48,000 |
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Incentive Amount |
$60,000 |
Incentive Amount |
$60,000 |
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Time Period (weeks) |
52 |
Time Period (weeks) |
26 |
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Proration Factor |
1 |
Proration Factor |
0.5 |
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Prorated Payout for Time Period |
$60,000 |
Prorated Payout for Time Period |
$30,000 |
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Partial Year Participation |
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Strategic Goal Performance Score: |
100 |
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Financial Performance Score: |
100.00% |
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Post Promotion Calculation |
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Strategic Goal Score |
100 |
Strategic Goal Score |
100 |
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Total Incentive Plan % |
40% |
Total Incentive Plan % |
50% |
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% Strategic to Total Incentive Plan Participation |
20% |
% Strategic to Total Incentive Plan Participation |
20% |
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Base Salary |
$150,000 |
Base Salary |
$200,000 |
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Strategic Goal Performance Payout |
$12,000 |
Strategic Goal Performance Payout |
$20,000 |
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Financial Score |
100% |
Financial Score |
100% |
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Total Incentive Plan % |
40% |
Total Incentive Plan % |
50% |
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% Financial to Total Incentive Plan Participation |
80% |
% Financial to Total Incentive Plan Participation |
80% |
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Base Salary |
$150,000 |
Base Salary |
$200,000 |
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Financial Performance Payout |
$48,000 |
Financial Performance Payout |
$80,000 |
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Incentive Amount |
$60,000 |
Incentive Amount |
$100,000 |
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Time Period (weeks) |
30 |
Time Period (weeks) |
26 |
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Proration Factor |
0.57692 |
Proration Factor |
0.5 |
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Prorated Payout for Time Period |
$34,615 |
Prorated Payout for Time Period |
$50,000 |
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Total Prorated Incentive Amount |
$80,000 |
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[**The appendix that includes Financial Performance and Strategic Goal Component Elements and Weighting for Fiscal Year 2022 constitutes confidential information and has been omitted from this filing because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.**]
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Exhibit 10.2
LINDSAY CORPORATION
POLICY ON PAYMENT OF DIRECTOR FEES AND EXPENSES
(Adopted at Board of Directors Meeting on January 25, 2000, as amended at Board of Directors Meetings
on December 5, 2003, July 13, 2004, January 29, 2007, May 4, 2007, July 2, 2008, December 1, 2011,
November 29, 2012, September 26, 2013, September 20, 2016, October 17, 2018 and October 18, 2021)
Outside Directors who are not employees of the Company are compensated or have expenses reimbursed as follows, effective September 1, 2021:
- $75,000 Annual Fee as Director: Payment of $18,750 is made by check or electronic payment in December, March, June and September ($75,000 total).
- $70,000 Annual Fee as Chairman of Board of Directors: Payment of $17,500 is made by check or electronic payment in December, March, June and September ($70,000 total) in addition to the annual fee as a Director, if the Chairman of the Board is an outside Director; provided that the Chairman of the Board may not also receive an additional fee for serving as Chairman of any standing or special committee.
- $20,000 Annual Fee as Chairman of the Audit Committee, $15,000 Annual Fee as Chairman of the Compensation Committee and $15,000 Annual Fee as Chairman of the Corporate Governance and Nominating Committee: Payment of one-quarter of the fee is made by check or electronic payment in December, March, June and September in addition to the annual fee as a Director; provided that the annual fee to serve as the Chairman of any Committee shall not be payable if the Chairman of such Committee is also serving as Chairman of the Board of Directors.
- Lindsay will reimburse outside Directors for actual and reasonable expenses they incur associated with travel for Lindsay meetings or other Lindsay business, including first class commercial airfare (or travel by private plane for distances of less than 1,000 miles if commercial air travel is difficult or inconvenient or more than 1,000 miles if authorized or approved by the Chairman of the Board of Directors or the Chairman of the Audit Committee), car rental, taxi, parking, meals, tips and hotel expenses. Reimbursement for other expenses may be authorized or approved by the Chairman of the Board of Directors or the Chairman of the Audit Committee.
- Directors who are not employees of the Company receive annual grants of restricted stock units with an award value of $100,000 with the grant being made on the date of the annual meeting of stockholders. The number of units awarded will equal $100,000 divided by the closing stock price on the date of grant. These restricted stock units vest on November 1 following the date of grant.
- New directors who are not employees of the Company that join the Board of Directors at a time other than the annual meeting of stockholders receive a one-time grant of restricted stock units with an award value equal to the prorated amount of the last annual grant of restricted stock units based on the amount of time the new director will serve on the Board of Directors until the next annual meeting of stockholders, with the grant being made on the date of their first regular Board meeting as a director. The number of units awarded will equal the prorated amount divided by the closing stock price on the date of grant. These restricted stock units vest on the earlier of November 1 following the date of grant or the date of the next annual meeting of stockholders. For the sake of clarity, this prorated grant of restricted stock units will not apply to a new director who joins the Board of Directors at an annual meeting of the stockholders.
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603644.4 6/25/04 |
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EXHIBIT 31.1
CERTIFICATION
I, Randy A. Wood, certify that:
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/s/ RANDY A. WOOD |
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President and Chief Executive Officer |
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Randy A. Wood |
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January 6, 2022 |
EXHIBIT 31.2
CERTIFICATION
I, Brian L. Ketcham, certify that:
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/s/ BRIAN L. KETCHAM |
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Senior Vice President and Chief Financial Officer |
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Brian L. Ketcham |
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January 6, 2022 |
EXHIBIT 32.1
CERTIFICATION
In connection with the accompanying Quarterly Report on Form 10-Q (the “Report”) of Lindsay Corporation (the “Company”) for the quarter ended November 30, 2021, I, Randy A. Wood, Chief Executive Officer of the Company and I, Brian L. Ketcham, Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:
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/s/ RANDY A. WOOD |
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Randy A. Wood |
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President and Chief Executive Officer |
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/s/ BRIAN L. KETCHAM |
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Brian L. Ketcham |
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Senior Vice President and Chief Financial Officer |
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January 6, 2022 |
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A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.