Lindsay Corporation (NYSE:LNN) Q2 2019 Earnings Conference Call Transcript

Apr 09, 2019 • 11:00 am ET

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Lindsay Corporation (NYSE:LNN) Q2 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) The first question will come today from Nathan Jones with Stifel. Please go ahead.

Analyst
Adam Farley

Yeah, hi. Good morning. This is Adam Farley on for Nathan.

Executive
Timothy L. Hassinger

Good morning, Adam.

Executive
Brian L. Ketcham

Hi, Adam.

Analyst
Adam Farley

My first question is on irrigation margins. There's a bunch of moving pieces, sales mix, lower volumes in North America, warranty costs. I was wondering if you could maybe bucket or kind of highlight what's most important as we think about for the rest of the year. I know you said average selling prices also came down for steel prices. So, maybe just some color on that would be very helpful?

Executive
Brian L. Ketcham

Yes. This is Brian. Just to address the average selling prices. Average selling prices for the quarter, year-over-year, were up probably mid-single digits compared to last quarter when we, at our call, we spoke of being up about mid teens. So, gives you a sense of how steel prices have come down and how we've passed that along in our average selling prices. The volume in North America was down about, I would say, upper teens compared to last year. Obviously, we spoke to the market conditions being part of that.

Also last year, we had a very strong second quarter, highest second quarter in the last three or four years. So, there's a little bit of a comparison year-over-year in the volume aspect of it. Getting to margins, I would say, the overall selling margins remained fairly stable. Although pricing has gotten more competitive.

But I think the mix with the drop in North America equipment volume being replaced with incrementally lower margins from the international sales as well as the engineering sales had a big part of the drop as well as the higher warranty costs and some of the operating inefficiencies that we experienced as we planned for a stronger quarter operationally, and this will not able to reduce the cost quick enough to adapt to that environment.

Analyst
Adam Farley

Okay. That's helpful. And then just turning to the Road Zipper systems quickly. Was there any movement to the right maybe related to the San-Rafael object? Was there any weather in there that maybe affected that?

Executive
Brian L. Ketcham

So, this is Brain again. San-Rafael, we recorded majority of that in the first quarter. We still have some left to record is now in our fourth quarter and that's really driven more towards the customer readiness to deploy the Road Zipper on the bridge.

Analyst
Adam Farley

All right. That's great. Thank you, guys.

Executive
Brian L. Ketcham

Thanks, Adam.

Operator
Operator

The next question will come from Brian Drab with William Blair. Please go ahead.

Analyst
Joe Aiken

Good morning. This is actually Joe Aiken on for Brian Drab today. I was wondering, if you could just touch on the international irrigation segment. What areas are showing strength there? I know you've talked about Brazil in the past. Maybe if you could expand a little on the environment and like there. And you also mentioned on the last call project in the