This morning, Lindsay Corp reported fiscal fourth quarter earnings of $0.42 per share, excluding non-recurring items, which easily fell short of expectations.
On the top line, sales came in at $123.3 mln, falling 6.5% year/year, also short of expectations.
However, interestingly enough, despite challenging market conditions resulting from tariffs and falling grain prices, the company's fourth quarter North America irrigation equipment sales actually rose versus the prior year's quarter. More specifically, North America irrigation revenues increased 3% to $60.6 mln, reflecting an increase in irrigation system unit volume. But overall, irrigation segment revenues decreased 6% to $96.2 mln, compared to $101.9 mln in the prior year's fourth quarter.
Infrastructure segment revenues fell 10% in the quarter to $27.1 mln, compared to $30.0 mln in the fourth quarter of the prior year.
The decrease resulted primarily from lower Road Zipper System lease revenue and lower road safety product sales, while Road Zipper System sales were comparable to the prior year.
Looking ahead, the company said, "Market headwinds in North America are expected to continue into our fiscal 2019 due to uncertainty regarding the outcome of global trade negotiations and pressure on grain prices. We expect improvement in international irrigation as Brazil returns to a level of normalcy and developing markets continue to grow."
Grain prices and soybean prices have been declining in recent years, which can weigh on farmer income and which ultimately weighs on agriculture equipment plays such as Lindsay. On top of that, the uncertainty of global trade negotiations adds to the stress of the pricing situation. However, at the same time, keep in mind that these two key catalysts driving agriculture oriented stocks are ones that can change rather quickly.