10-K: Lindsay Corp. Reports Strong FY25 Growth, Boosted by International Irrigation

Lindsay Corporation reported an 11% increase in fiscal year 2025 operating revenues to $676.4 million, driven by international irrigation and infrastructure segment growth, leading to a 12% rise in net earnings.

Summary

• Operating revenues for fiscal 2025 increased 11% to $676.4 million from $607.1 million in fiscal 2024.
• Net earnings rose 12% to $74.1 million ($6.78 per diluted share) in fiscal 2025, up from $66.3 million ($6.01 per diluted share) in fiscal 2024.
• Irrigation segment revenues increased 11% to $568.0 million, primarily due to a large international project in the MENA region and higher sales volume in Brazil and other parts of South America, partially offset by a 9% decrease in North America irrigation revenues.
• Infrastructure segment revenues grew 16% to $108.4 million, driven by higher Road Zipper System project sales and road safety products, despite lower Road Zipper System leasing revenue.
• Gross profit increased 10% to $210.8 million, with gross margin at 31.2% (down from 31.5% in FY24), impacted by a higher percentage of lower-margin international project revenue in the irrigation segment.
• Operating income increased 15% to $88.1 million, with operating margin at 13.0% (up from 12.6% in FY24).
• Cash and cash equivalents increased to $250.6 million at August 31, 2025, from $190.9 million at August 31, 2024.
• Order backlog decreased to $110.7 million at August 31, 2025, from $180.9 million at August 31, 2024, primarily due to deliveries for the large MENA irrigation project.
• Capital expenditures for fiscal 2025 were $42.5 million, up from $29.0 million in fiscal 2024.

Sentiment

Score: 7

Explanation: The company demonstrated strong financial performance with increased revenues and net earnings, driven by international growth and strategic acquisitions. However, a significant decrease in backlog, declining North American irrigation sales, and ongoing legal and environmental risks temper the overall positive outlook. The retirement of the CFO also introduces a minor element of uncertainty.

Positives

• Operating revenues increased 11% to $676.4 million in fiscal 2025.
• Net earnings increased 12% to $74.1 million, with diluted EPS rising to $6.78.
• International irrigation revenues grew significantly by 39%, driven by a large project in the MENA region.
• Infrastructure segment revenues increased by 16%, primarily from Road Zipper System project sales.
• Operating income increased 15% to $88.1 million, and operating margin improved to 13.0%.
• Cash and cash equivalents increased by $59.7 million to $250.6 million, indicating strong liquidity.
• The USDA forecasts U.S. 2025 net farm income to increase 41% to $179.8 billion, primarily due to government support payments.
• The One Big Beautiful Bill Act (OBBBA) permanently extended Section 168 bonus depreciation, encouraging equipment purchases.
• The Infrastructure Investment and Jobs Act (IIJA) provides $110 billion in incremental federal funding for transportation projects through September 2026, supporting demand for infrastructure products.
• The EPA proposed increases of approximately 8% and 10% in biofuel volume requirements for 2026 and 2027, respectively, which supports demand for irrigated crops.
• The company completed the acquisition of a 49.9% non-controlling interest in Pessl Instruments GmbH, enhancing its agricultural technology solutions.
• The company was in compliance with all financial loan covenants at August 31, 2025 and 2024.

Negatives

• North America irrigation revenues decreased 9% due to lower unit sales volume, a less favorable product mix, and slightly lower average selling prices.
• Lower unit sales volume in North America was attributed to softer market conditions and reduced storm damage replacement demand.
• Overall gross margin slightly decreased to 31.2% from 31.5%, primarily due to a higher percentage of lower-margin international project revenue in the irrigation segment.
• Order backlog decreased significantly from $180.9 million at August 31, 2024, to $110.7 million at August 31, 2025, mainly due to deliveries for the large MENA irrigation project.
• Favorable weather conditions in key U.S. markets are expected to result in higher crop production in 2025 and increased downward pressure on commodity prices in the near term.
• The Agriculture Improvement Act of 2018 (Farm Bill) expired on September 30, 2025, creating uncertainty and pausing certain programs.
• Foreign currency translation had a negative impact of approximately $9.5 million on international irrigation revenues.
• The effective income tax rate increased to 21.7% in fiscal 2025 from 16.2% in fiscal 2024.
• Brian L. Ketcham, Senior Vice President and Chief Financial Officer, notified the Board of his intent to retire effective December 31, 2025.

Risks

• Changing worldwide demand for food and biofuels could affect agricultural commodity prices and consequently the demand for irrigation equipment.
• A decline in oil prices or overall demand for motor fuels, or changes in government policies regarding biofuels, could negatively affect the biofuels market and reduce government revenues of oil-producing countries that purchase or subsidize irrigation equipment.
• Changing short-term weather conditions or more prolonged climate change could adversely impact the company's business and operations, particularly irrigation revenues, through drought conditions or water restriction policies.
• The company's irrigation revenues are cyclical and highly dependent on factors such as total worldwide crop production, agricultural commodity prices, net farm income, and governmental policies.
• Infrastructure revenues are highly dependent on government funding of transportation projects and subject to compliance with government regulations, with potential reductions or delays in funding impacting demand.
• Reevaluation of infrastructure products' compliance with applicable standards, implementation of new standards (e.g., MASH), or delays in developing compliant products could adversely affect competitive position and sales.
• Compliance with environmental and health and safety regulations may require additional capital and operational expenditures, potentially exceeding current accruals for remediation activities at the Lindsay, Nebraska site.
• Revenues can be highly dependent on a limited number of key customers and projects, leading to concentration risk if orders are reduced, delayed, or canceled, or if socioeconomic conditions disrupt operations in certain geographies (e.g., MENA region).
• International sales efforts and profit margins are affected by international trade barriers, including tariffs, taxes, import/export licensing requirements, and trade sanctions, and require compliance with anti-corruption laws like the U.S. Foreign Corrupt Practices Act.
• The company is exposed to risks from legal proceedings, including product liability lawsuits (e.g., X-Lite end terminal), which could result in substantial costs, reputational harm, and diversion of management attention.
• The frequency and magnitude of liability claims and related expenses could lower profitability and increase business risk, potentially exceeding available insurance coverage.
• Profitability may be negatively affected by changes in the availability and price of certain parts, components, and raw materials (e.g., steel and zinc).
• International sales are highly dependent on foreign market conditions and susceptible to disruption from changing socioeconomic conditions, terrorism, sanctions, war, and outbreaks (e.g., sales to Russia and Belarus paused indefinitely).
• International sales and profit margins are subject to currency exchange risk, where a strengthening U.S. dollar can increase the cost of products in foreign markets.
• Changes in interest rates could reduce demand for the company's products by making equipment purchases more difficult for customers to fund.
• Security breaches and other disruptions to the company's information technology infrastructure could interfere with operations, compromise information, and expose the company to liability and reputational damage.

Future Outlook

Capital expenditures for fiscal 2026 are projected to be between $50 million and $55 million, focusing on equipment replacement, productivity improvements, new product development, and commercial growth. Management retains flexibility to adjust these expenditures based on economic conditions. The company expects to continue paying cash dividends comparable to historical levels, with an anticipation of increasing them over time, and will pursue opportunistic share repurchases. While the USDA forecasts a significant increase in U.S. net farm income for 2025, this is primarily due to government support, and favorable weather conditions are expected to lead to higher crop production and downward pressure on commodity prices in the near term, which may not meaningfully boost irrigation demand. International markets are seen as key growth opportunities for irrigation sales due to less developed irrigation use, food security, water scarcity, and population growth, though regional political and economic factors pose challenges. The infrastructure business anticipates continued demand for transportation safety products, supported by federal funding from the IIJA through September 2026. The company plans to generate additional growth through an ongoing, structured acquisition process and is committed to achieving earnings growth via global market expansion, margin improvements, and strategic acquisitions.

Management Comments

• The company continues to strengthen irrigation product offerings through innovative technology such as Global Positioning System (GPS) positioning and guidance, variable rate irrigation, wireless irrigation management, Industrial Internet of Things (IIOT) technology solutions and mobile device applications.
• The company expects demand for center pivots and lateral move systems to continue to increase relative to other irrigation methods because these systems are preferred where soil is sandy, terrain is not flat, land area to be irrigated is sizeable, reliable labor is short, water supply is restricted, and/or fertigation or chemigation will be utilized.
• The company expects to continue expanding in international markets as populations grow and markets become more established.
• Management maintains flexibility to modify the amount and timing of some of the planned capital expenditures in response to economic conditions.
• The company believes its commitment to empowering and developing its human capital resources is essential to becoming the innovation and market leader in its core businesses.
• The company believes its current cash resources, projected operating cash flow, and remaining capacity under its continuing bank lines of credit are sufficient to cover all of its expected working capital needs, planned capital expenditures and dividends.

Industry Context

The company operates in two primary segments: Irrigation and Infrastructure. The irrigation segment is driven by global long-term trends such as population growth, water conservation, and the need for increased food production. Demand is influenced by agricultural commodity prices, farm income, weather conditions, and government policies like the Farm Bill and biofuel mandates. The infrastructure segment is primarily driven by government spending on road construction and improvements, with significant support from programs like the U.S. Federal Highway Trust Fund and the Infrastructure Investment and Jobs Act (IIJA). The company faces competition in both segments, with a strong position in center pivot irrigation and limited competition in its moveable barrier systems, though it competes with traditional safety barriers. International markets present both significant growth opportunities and challenges due to political and economic instability and currency fluctuations.

Comparison to Industry Standards

• The company's infrastructure products are designed to meet industry standards such as the Manual for Assessing Safety Hardware (MASH) and National Cooperative Highway Research Program (NCHRP) Report 350 in the U.S., and the European Norms (EN1317 Norms) for European markets.
• The company operates an ISO 17025 certified testing laboratory for full-scale impact testing of highway safety products, demonstrating adherence to rigorous industry benchmarks.
• The company's center pivot, lateral move, and hose reel irrigation systems compete with traditional flood irrigation, drip irrigation, and other mechanical devices, offering advantages in labor, water, and energy conservation, and suitability for diverse terrains.
• The infrastructure products industry has seen increased scrutiny and litigation, highlighted by a 'sizable False Claims Act judgment against a competitor (which was reversed on appeal),' indicating a challenging legal landscape that the company navigates by ensuring product compliance and maintaining insurance.

Management Changes

Corporate Governance

Legal Proceedings

• The company is currently defending multiple product liability lawsuits arising from vehicle collisions with highway barriers incorporating its X-Lite end terminal.
• A federal civil False Claims Act (FCA) lawsuit against the company, related to the X-Lite end terminal, was dismissed by the U.S. District Court in October 2023, after the United States determined the allegations lacked merit.
• Following the dismissal of the federal FCA lawsuit, the same individual relator filed state-level qui tam lawsuits in Tennessee (Tennessee FATA Lawsuit) and California (California FATA Lawsuit) making substantially similar allegations under state false claims or fraud laws.
• The State of Tennessee declined to intervene in the Tennessee FATA Lawsuit (March 2024), and the company was served in June 2024.
• The State of California declined to intervene in the California FATA Lawsuit (September 2024), and the company was served in June 2025.
• Missouri Highways and Transportation Commission (MHTC) filed a lawsuit alleging the X-Lite end terminal was defectively designed and failed to perform, seeking compensatory, interest, attorneys' fees, and punitive damages.
• The company believes it has meritorious factual and legal defenses to these lawsuits and does not believe a loss is probable, maintaining insurance coverage to mitigate potential impacts.
• The company is engaged in ongoing environmental remediation activities at its Lindsay, Nebraska facility for groundwater contamination, with an estimated accrued cost of $10.6 million as of August 31, 2025. A proposed remediation plan is preliminary and awaiting approval from the EPA and NDEE.

Stakeholder Impact

• Shareholders: Positive impact from increased net earnings and diluted EPS, continued dividends, and potential for future dividend increases and share repurchases. Risks include ongoing legal proceedings, market fluctuations, and potential for lower commodity prices impacting future performance.
• Employees: Benefit from competitive wages, benefits, and training/development programs. Share-based compensation plans incentivize long-term contributions and retention. The company prioritizes employee health and safety.
• Customers (Farmers): Benefit from innovative irrigation technology for increased crop production and resource conservation. Demand is influenced by agricultural commodity prices, farm income, weather, and government policies.
• Customers (Transportation Agencies/Contractors): Benefit from road safety products for increased capacity, reduced congestion, and improved safety. Demand is driven by government spending on infrastructure projects.
• Suppliers: The company relies on a limited number of suppliers for certain raw materials and components, exposing them to potential disruptions or price increases.
• Regulatory Authorities: The company is subject to numerous environmental, occupational health and safety laws, and securities regulations. Compliance with MASH standards for infrastructure products is critical, and environmental remediation efforts are under regulatory oversight.

Next Steps

• Congress is working to pass a new, comprehensive Farm Bill to provide longer-term certainty for farmers.
• Capital expenditures for fiscal 2026 are expected to range from approximately $50 million to $55 million, including equipment replacement, productivity improvements, new product development, and commercial growth investments.
• The company expects to continue expanding in international markets.
• The company continues to work with the EPA and NDEE on finalizing proposed environmental remediation plans for the Lindsay, Nebraska site.
• The company may require additional borrowings to fund potential acquisitions in the future.
• The company expects to increase dividends over time.
• The company will continue opportunistic share repurchases.
• The call option to acquire the remainder of Pessl's outstanding shares can be exercised starting October 2027.

Key Dates

Recommendation

Lindsay Corporation delivered solid financial results in fiscal 2025 with increased revenues and net earnings, driven by strong international irrigation sales and infrastructure growth. The company's strategic investments in technology and acquisitions, coupled with favorable long-term industry drivers like population growth and water conservation, provide a positive foundation. However, the significant decline in order backlog, a decrease in North American irrigation revenues, and the ongoing product liability lawsuits introduce elements of uncertainty and risk. The CFO's upcoming retirement also warrants attention. While the company is fundamentally sound, these factors suggest a 'hold' position until there is clearer visibility on sustained North American market recovery, resolution of legal matters, and the impact of the reduced backlog on future revenue.

Keywords

Irrigation, Infrastructure, Agriculture, Water Management, Road Safety, Center Pivot, Lateral Move, Road Zipper System, Crash Cushions, SEC Filing, 10-K, Financial Report, LNN, Farm Equipment, Construction Machinery, Transportation Safety, Smart Agriculture, IIOT, Global Operations, Capital Expenditures, Share Repurchase, Dividends