Historically high farm incomes and commodity prices helped to propel second-quarter earnings for irrigation systems manufacturer Lindsay.
Net income for the Omaha-based company was $19.4 million, or $1.50 per diluted share, compared with $12.8 million, or $1 per diluted share, this time last year. Revenues were a record $175.5 million, up 33 percent from $132.1 million last year.
President and CEO Rick Parod said the earnings were driven by positive farmer sentiment, plus strong domestic and international orders. Domestic irrigation revenues were $117.1 million, up 41 percent, and international irrigation revenues were $45.5 million, up 34 percent.
Strong irrigation order volumes have created a record $159.3 million backlog of unshipped orders, including those for a $39.1 million irrigation project in the Middle East. The contract is for irrigation machines and support equipment that will be delivered this fiscal year.
“While contracts of this type generally generate below-average gross margins,” he said, “the (contract) award demonstrates the success that we are having in developing Lindsay Corporation’s position around the world.”
A weaker spot in the company’s earnings, infrastructure revenues, generated $12.9 million, a 15 percent decline. To improve that segment, Parod said, the company is focusing on operating efficiencies and expense controls. He also cautioned that demand for Lindsay’s products could decline as farming conditions improve.
“Expectations of record crop planting and improved yields are leading to projections of lower commodity prices, which could lead to reduced demand over the balance of 2013 and into 2014,” he said.
But overall, Parod said, he was pleased with the company’s results and prospects.
“The long-term drivers for the company of population growth, expanded food production, efficient water use and improved transportation infrastructure remain positive,” he said.