Lindsay Corporation (NYSE:LNN) Q3 2018 Earnings Conference Call - Final Transcript

Jun 28, 2018 • 11:00 am ET


Lindsay Corporation (NYSE:LNN) Q3 2018 Earnings Conference Call - Final Transcript


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Tim Hassinger

meet these criteria, a best owner evaluation is initiated.

What makes the Watertronics and LAKOS divestment align to our simplification direction and still be aligned to our turnkey irrigation strategy is our intention to have a commercial agreement in place with the buyer of these businesses. And at the same time, these divestments will allow Lindsay to eliminate complexity that existed in owning and running these businesses. In other words, Lindsay keeps access to what is strategic to the irrigation business and will simplify its operations at the same time.

Irrigation specialist represents a very important dealership for Lindsay, serving some of our largest customers in the world. We have concluded that Lindsay is not the best long-term owner of this business. It's our view that this change will provide the required service and support to our customers to create growth in this important market. When I look at the self-help effort that we have started, I like the direction the foundation for growth initiative is taking us.

It is also important to highlight the progress we're making in the innovation space. As each of you have heard me talk about FieldNET advisor and the fact that it is a highly differentiated offering in the marketplace, we have continued to add to our capabilities in this area. Last quarter, we announced the agreement with John Deere and we just recently announced a collaboration agreement with Farmers Edge to broaden our capability in the irrigation scheduling space.

Also our strategy is to expand our global reach with FieldNET advisor. This year, we are launching and/or doing a beta test in 17 countries on 21 different crops. To put this in perspective, last year FieldNET advisor was offered in only one country and on two crops. Hopefully, you can tell by these comments that we are making excellent progress towards our goal of achieving 11% to 12% operating margin in fiscal 2020. We will continue to update you on the status of the key projects that we will be focused on over the next several quarters.

So now, let's move to our Q3 results and for that, I'll turn the call over to Brian.

Brian Ketcham

Thank you, Tim and good morning, everyone. To begin, I would like to cover the $7.6 million of pre-tax costs incurred in the third quarter related to our foundation for growth performance improvement initiative, as this had a significant impact on our reported results. $6 million of this amount represents an adjustment to reduce the carrying value of the businesses held for sale, which are the planned divestitures that Tim referred to in his comments.

In determining this adjustment, the carrying value of each of the businesses held for sale was compared to its estimated selling price less cost to sell, where the carrying value exceeded estimated selling price and expense was recognized, where the carrying value was less than estimated selling price, the related gain is deferred until the sale is completed. The carrying value adjustment is