Lindsay Corporation’s MENA Project Margins and Nebraska Facility Timelines Clash in Earnings Calls

Date of Call: Apr 2, 2026

Financials Results

• Revenue: $157.7 million, a decrease of 16% compared to $187.1 million in the prior year
• EPS: $1.16 per diluted share, compared to $2.44 per diluted share in the prior year
• Gross Margin: Not explicitly provided in transcript
• Operating Margin: 8.3% of sales, compared to 17.2% of sales last year

Guidance:

• Softer market conditions expected to persist in North America near term; no traditional spring order volume pickup.
• Current trough environment will continue until greater clarity on trade impacts, profitability, and Middle East resolution.
• International growth outlook remains encouraging, especially in regions focused on food security and water management.
• Near-term Brazil recovery depends on grower response to July crop plan and financing availability; no meaningful recovery expected before then.
• Road Zipper sales funnel remains strong; opportunities for continued growth in road safety products.
• Large MENA project to continue through Q3 and Q4; new galvanizing facility in Nebraska expected online early 2027.

Business Commentary:

Challenging Agricultural Environment:

• Lindsay Corporation reported total revenues for Q2 fiscal 2026 at $157.7 million, a decrease of 16% compared to $187.1 million in the prior year.
• The decline was driven by continued external headwinds in the agriculture industry, including trade uncertainty, higher input costs, and weakening sentiment.

North America Irrigation Performance:

• North America irrigation revenues were $71 million, down 8% from the previous year.
• The decrease was due to lower unit sales volumes, influenced by low commodity prices and tempered farmer sentiment.

International Irrigation and MENA Project:

• International irrigation revenues were $70.2 million, slightly down from $71 million in the prior year.
• The decrease was attributed to lower sales volumes in Brazil and timing of project revenue in the MENA region, although the MENA project remains on schedule.

Infrastructure Segment and Road Zipper Project:

• Infrastructure segment revenues were $16.5 million, compared to $38.9 million in the prior year.
• The year-over-year decrease was primarily due to the absence of a $20 million Road Zipper project delivered in the prior year, with growth in road safety products partially offsetting the decline.

Brazil Market Outlook:

• Lindsay Corporation's international business faced challenges in Brazil due to high interest rates and limited access to credit, constraining growers' ability to finance equipment purchases.
• The company anticipates a potential market recovery post-July release of the new crop plan, expecting lower financing rates.

Sentiment Analysis:

Overall Tone: Neutral

• Management acknowledges 'continued external headwinds' and 'challenging agricultural environment' with 'lower unit sales volumes' and 'margin compression.' However, they express confidence in execution, strategic investments, and long-term growth, noting 'strong operational discipline' and optimism in markets like Brazil and road safety.

Q&A:

• Question from Nathan Jones (Stifel): Can you provide more color on the soft margin in irrigation, including any increased pricing pressure from competitors?
  Response: Margin compression driven by fixed cost deleverage from lower North America volume, unfavorable regional mix, and competitive pricing pressure, especially from smaller family businesses in soft markets. Company maintains a strategic, rational pricing approach focused on quality over market share.

• Question from Nathan Jones (Stifel): Could the war in Iran delay the MENA project or contract awards?
  Response: Potential short-term delays possible if conflict prolongs; current project is on schedule and supply chain is secure, assuming conflict resolves within weeks, not months or quarters.

• Question from Ryan Connors (Northcoast Research): Should pricing comments be interpreted as holding firm and walking away from some business?
  Response: Yes, company has a walkaway point; while year-over-year pricing was favorable, cost increases exceeded pricing opportunities, contributing to margin compression.

• Question from Ryan Connors (Northcoast Research): Does the shift of acreage from corn to soybeans impact Lindsay?
  Response: Lindsay is largely indifferent as both crops require similar irrigation; the bigger impact is potential macro market shifts in commodity prices and farmer profitability, which could affect demand later.

• Question from Ryan Connors (Northcoast Research): What drove the Infrastructure margin deleverage, and is that the new run rate?
  Response: Main driver was absence of the $20M Road Zipper project causing cost absorption deleverage; road safety products growth is a partial offset. Margin profile without large projects will be closer to current levels.

• Question from Ryan Connors (Northcoast Research): Any update on Nebraska capital investments and margin impact?
  Response: Tube mill is operational; new galvanizing facility on track for late 2026/early 2027. Initial efficiency gains will be offset by depreciation; realizing full returns requires market recovery.

• Question from Brett Kearney (American Rebirth Opportunity): How might future food security projects in Africa/Asia arise from the current geopolitical situation, and can Lindsay capture them?
  Response: Iran's non-grain-producer status may change dynamics, but long-term food security investments in regions like Africa could still materialize. Near-term focus is on conflict resolution; Lindsay remains active and competitive in the region.

• Question from Trevor Romeo (William Blair): What is the outlook for Brazil in H2, given expected lower interest rates in the July crop plan?
  Response: Long-term Brazil remains attractive, but near-term uncertainty persists as customers await crop plan and financing rates. Customer sentiment may improve post-Agrishow, but significant recovery likely depends on July plan release.

• Question from Trevor Romeo (William Blair): Any additional factors impacting gross margin beyond top-line weakness, and MENA project margin outlook?
  Response: Fixed cost deleverage and input price risks are key margin drivers; international mix expected stable. MENA project margins comparable to prior year, with timing differences as ramp-up continues.

• Question from Jonathan Braatz (Kansas City Capital): How far along are you in accruing returns on the Nebraska capital investments?
  Response: Tube mill now operational to improve efficiency and reduce labor reliance. Full returns require market recovery to offset depreciation; new galvanizing facility will come online in early 2027.

Contradiction Point 1

Outlook on North America Irrigation Market

Contradiction in describing the market's near-term trajectory.

Nathan Jones (Stifel) - Nathan Jones (Stifel)

2026Q2: The market is bouncing along the trough. Near-term conditions are not expected to improve significantly... The market is not expected to get progressively worse, just flat to down near-term. - Randy Wood(CEO)

What factors are contributing to the soft margin in irrigation, including any pricing pressures from competitors? - Nathan Jones (Stifel)

20260108-2026 Q1: North America is expected to be flat to down for the full year. - Randy Wood(CEO)

Contradiction Point 2

Margin Expectations for the MENA Project

Contradiction on whether project margins are dilutive or expected to be as good as prior projects.

Trevor Romeo (William Blair) - Trevor Romeo (William Blair)

2026Q2: Project margins are typically dilutive to the overall business but are expected to be as good as or better than the prior project, which was slightly below the segment average irrigation margin. - Randy Wood(CEO)

What factors beyond weak top-line performance affected gross margins, and could you clarify the MENA project's margin impact? - Brian Drab (William Blair)

20260108-2026 Q1: For the MENA project, margins are comparable to the prior-year project, with no significant changes from previous expectations. - Randy Wood(CEO) and Sam Henrichson(CFO)

Contradiction Point 3

Operational Status and Impact of Nebraska Facility Investments

Contradiction on the operational status and the timeline for realizing benefits from the new tube mill.

Ryan Connors (Northcoast Research) - Ryan Connors (Northcoast Research)

2026Q2: The first tranche (tube mill) is operational and improved safety/efficiency... The new galvanizing facility is on track to come online in late 2026/early 2027. - Randy Wood(CEO)

What is the current status of Nebraska capital investments and their impact on margins? - Nathan Jones (Stifel)

20260108-2026 Q1: The new 2-mill in Lindsay, Nebraska, has completed testing and will be fully operational within 30 days. - Randy Wood(CEO)

Contradiction Point 4

Brazil Credit Environment and Market Timing

Contradiction on credit constraints severity and customer readiness to re-enter the market.

Trevor Romeo (William Blair) - Trevor Romeo (William Blair)

2026Q2: Growers are waiting for the July crop plan to be released before re-entering the market. - Randy Wood(CEO)

What is the outlook for Brazil's second-half performance considering the expected lower interest rate in the new crop plan, and is that rate a guarantee? - Ryan Connors (Northcoast Research Partners, LLC)

2025Q4: Utilization is only mid-single digits, and some customers may wait for potential post-election support. - Randy Wood(CEO)

Contradiction Point 5

Impact of Middle East Conflict on Project Activity

Contradiction on whether conflict impacts short-term project delivery and outlook.

Nathan Jones (Stifel) - Nathan Jones (Stifel)

2026Q2: Short-term delays are possible for other business in the region... A prolonged conflict... could change the outlook. - Randy Wood(CEO)

Will the conflict in Iran delay the MENA project or future contracts? - Kristen Owen (Oppenheimer) – Question (posed by Mason Manner)

2025Q3: There is no significant short-term impact on existing project delivery or the funnel for new projects. - Randy Wood(CEO)