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Lindsay Corporation (NYSE:LNN)

Q2 2010 Earnings Call

March 31, 2010 11:00 am ET

Executives

Richard Parod – President, Chief Executive Officer

David Downing – Chief Financial Officer

Analysts

Alex Potter – Piper Jaffray

Brian Drab – William Blair

Paul Mammola – Sidoti & Company

Jason Kraft – Cato Partners

Michael Coleman – Sterne, Agee & Leach

[Peter Ryder – Global Investor Capital]

Jason Kraft – Cato Partners

Operator

I would like to welcome everyone to the Lindsay Corporation’s 2010 second quarter conference call. (Operator Instructions)

During this call, management may make forward-looking statements that are subject to risks and uncertainties and which reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, company performance and financial results. Forward-looking statements include the information concerning possible or assumed future results of operations of the company and their statements preceded by, followed by or including the words expectations, outlook, could, may, should or similar expressions.

For these statements, we claim the protection of the Safe Harbor forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

I would now like to turn the call over to Rick Parod, President and Chief Executive Officer.

Rick Parod

Good morning and thank you for joining us today. Revenues for the second quarter of fiscal 2010 were $85.2 million, a 31% increase over the same prior year quarter. Net earnings were $6 million or $0.48 per diluted share compared with $200,000 or $0.01 per diluted share in the prior year second quarter.

Nebraska investment credits earned contributed approximately $0.16 per diluted share to the earnings in the second quarter of fiscal 2010.

Total revenues for the first six months of 2010 were $171.2 million, down 4% from the first half of fiscal 2009 as the first quarter of 2009 reflected strong revenues from the 2008 ending backlog. Net earnings for the first six months were $12.7 million or $1.01 per diluted share compared to $6.5 million or $0.52 per diluted share for the first six months of 2009.

In U.S. Irrigation market, revenues were $38.8 million for the second quarter, increasing 16% over the same quarter last year. Agricultural commodity prices for corn, soy beans and wheat are relatively similar to prices at the same time last year; however, there is a sense that farmer’s sentiments are moving beyond the shock effect of the economic recession experienced last year.

USDA projections for 2010 net farm income forecasts a 12% increase when compared to 2009 estimates and the estimate is near the ten year average. U.S. Irrigation demands for the full fiscal 2010 year remains unclear as we’re still only half way through the peak selling period, but we have experienced improved demand in most regions of the country in overall irrigation demand is expected to be slightly better than fiscal l2009.

For the first six months of fiscal 2010, domestic irrigation revenues were $71.6 million, down 18% from the same time last year. The comparable six month period of fiscal 2009 reflected a record first quarter irrigation revenue, working off a record backlog from the end of fiscal 2008.

International irrigation revenues were $29.1 million for the second quarter, 93% higher than the same period last year. Significant increases in exports to Mexico, Central America and Australia along with strong revenues from our South American irrigation business drove the second quarter revenue increase.

During the quarter, exports to Mexico increased significantly, as farmers raced to receive equipment driven by the logistics of the government subsidy that required installation of the equipment by March 16.

For the first six months of fiscal 2010, international irrigation revenues were $49.6 million, up 5% from the same time last year.

The long term market drivers of improving diets in the growing worldwide population combined with the water use efficiencies available for mechanized irrigation systems continue to be positive.

Infrastructure revenues increased 4% from the second quarter of last year driven by completion of the Mexico City road project. This was partially offset by decreased revenue in contract manufacturing and commercial tubing compared to the prior year second quarter.

Contract manufacturing, which was less than 2% of total revenue in the quarter, decreased approximately 55% from the same time last year. This decrease reflects the recession impact on our customers as well as companies pulling in work from contract manufacturers.

Barrier systems revenues were up 29% for the quarter, with most of the increase due to completion of the Mexico City movable barrier project. Interest in the movable barrier product line for traffic mitigation remains very strong throughout the world.

While the $20 million Mexico City project was the largest single project for the product line to date, our list of potential projects continues to include projects of similar size as well as many smaller projects.

Many of our other highway safety products; primarily our line of crash cushions, are more directly impacted by Federal Highway Bill spending which appears to have stabilized for the near term, yet remains uncertain beyond 2010 pending the passage of a new long term Highway bill.

The second fiscal quarter is generally an off-season quarter for these products while traditionally picking up in the spring as more intensive roadwork begins.

Year to date, at the end of the second quarter, infrastructure revenues were $50 million, an increase of 14% from the same time last year. Barrier systems revenues increased over 70% while diversified manufacturing revenues decreased approximately 40% compared with the same period last year.

Overall, gross profit was $22.1 million for the second quarter versus $13.3 million in the same quarter last year. Gross margins increased to 26% compared to 20.4% for the second quarter last year, reflecting higher infrastructure and irrigation margins. Infrastructure margins increased primarily from the increased revenues of the movable barrier product. In irrigation, gross margin increases are attributable to improved factory efficiencies and favorable regional sales mix.

While irrigation margins increased in the quarter, the average irrigation price per unit was down approximately 5% from the same time last year, reflecting competitive actions that pass through lower steel costs. Towards the end of the second quarter, steel prices moved somewhat higher and we anticipate effectively passing through those increases as we have in the past. However, we have seen a recent increase in competitive pricing pressure in the U.S. market that could impact our ability to pass through those increases.

Total operating expenses for the quarter were $15.2 million versus $13.7 million in the same quarter last year. The increase in operating expenses was due in large part to the inclusion of $700,000 of incremental expense for additional environmental monitoring or remediation as part of our EPA work plan at the Lindsay, Nebraska facility. In addition, employee medical expenses and incentive compensation contributed to the increase.

For the quarter, operating expenses were 17.9% of sales compared to 21.1% in the prior year second quarter.

Nebraska’s State Economic Development incentive wage and investment credit significantly contributed to earnings during the quarter. In addition to contributing toward operating income, cumulative investment credits reduced income tax expense by a net of $1.1 million, resulting in a total after tax benefit of $2 million.

Our order backlog was $33.6 million on February 28, 2010 as compared to $36.1 million at the end of the first quarter of fiscal 2010 and $45.5 million on February 28, 2009. The February 2009 backlog included $19.6 million for the Mexico City road project, which was completed in the first half of fiscal 2010.

Our balance sheet has strengthened over the prior year. Cash and cash equivalents were $15.5 million higher. Our long term debt has been reduced by $6.2 million, improving our net cash position by 456.7 million.

Accounts receivable decreased $5.4 million from the same time last year, even with the higher sales. Favorable terms of sales for customers in both irrigation and infrastructure resulted in a much improved DSO versus the prior year.

Inventory decreased $19.5 million over the same time last year. Balance sheet initiatives remain focused on working capital reductions and overall cash management.

In summary, completion of the Mexico City road project complemented stronger irrigation revenues and margins. Higher U.S. irrigation revenues reflected an improvement in farmer sentiment over the same time last year.

International irrigation revenues increased significantly in the quarter, partially fueled by the subsidy requirements in Mexico, and there are indications of improved selling conditions for irrigations globally.

We are seeing some benefit from the Federal stimulus spending in demand for our road safety products and believe that the project funding conditions have improved including more funding certainty through 2010.

In addition, while still a small component of our revenue, we continue to experience good growth in our rain water harvesting and railroad structures product lines. Our actions to enhance cash flow through the reduction of working capital have resulted in a stronger balance sheet with further improved net cash position.

We have increased our emphasis on finding accretive acquisitions and expand our product lines within our existing business segments, and add new businesses synergistic to our core. I’m optimistic that this process will yield additional growth opportunities.

We are confident that increasing agricultural yield to boost food supply and improving water use efficiencies, expanding bio fuel production and improving our transportation infrastructure will remain global priorities, will be strong drivers for our market long-term.

Our balance sheet has positioned Lindsay well to capitalize on growth opportunities organically and through acquisition.

I’d now like to open it up for your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Alex Potter – Piper Jaffray.

Alex Potter – Piper Jaffray

I was wondering if you could give a little bit more color here on international markets and if you could compare and contrast those through the domestic irrigation market. Clearly they’re a big driver of results here in the quarter and it sounds like to a certain extent, some of that was one time in nature because of Mexico subsidy issue, but if you could just elaborate on that. What are your growth expectations internationally versus domestically and what are some of the regions that you see outperforming?

Richard Parod

We’ve commented in the past that we have projected that the U.S. market year over year probably has, we would expect to see something like a 4% to 7% annual growth rate, and obviously some years will be much better and some less.

In the international market however, we believe that the growth rate tends to be double digit in general because we see some very specific markets with larger growth rates. For example, China is a hot market that’s been growing over the last few years.

We see growth in Brazil is really picking up again. Eastern Europe, which is so lagging, but a good growth opportunity and right now I think they’re more affected by the availability of funding than anything else, and Central America, which also appears to be a good growth opportunity.

So I think in general, we would view that the international markets have some very good growth opportunities and we’ve seen double digit to 20% plus type growth in those markets in the past.

Alex Potter – Piper Jaffray

In the near term over the next several quarters as you look out, you noted that irrigation demand globally seems to be better. Would you say it’s fair to say it’s substantially better globally than it is in the domestic market?

Richard Parod

I wouldn’t go that far. I’d say that we’re seeing good growth in a few of the international markets. They’re going to be a little more spotty or lumpy than possibly the U.S. market would be. For example, this past quarter we obviously had some additional sales in Mexico. We’re going to see China’s season kind of turn on and I expect China would be good.

Eastern Europe will come back but probably not maybe within the next quarter or two. So I think it will tend to be a little lumpier and we’ll see probably a more erratic growth rate in those markets than we will the U.S.

Alex Potter – Piper Jaffray

I was wondering also if you could comment on gross margin stability. I know that you mentioned some of the pricing pressure you’re seeing in domestic market. You also mentioned that there were some margin benefits that you get from having favorable regional sales mix. I guess the implication there is that you get higher margins in some of those international markets. I was just wondering if you could comment both on the stability of gross margins domestically given the price competition and the increasing fuel costs and then some additional calls there on what the regional variation is.

Richard Parod

In terms of gross margin stability, I’d say that if you look over the last number of quarters, we’ve been very effective in being able to pass through steel increases as they’ve come through and I would say that also as an industry segment and company, have been pretty effective in not having to give back all of the steel cost decrease, which I think made a lot of sense because steel has been volatile, and while it has tended to go up and down. Since we’ve had the increases, it’s been pretty effective in passing those through.

I did also make the comment however, that what we’ve seen recently, and I’d say recently meaning the last 35 to 45 days, probably more increased competition in terms, or more signs let’s say in terms of pricing which could make it more challenging to pass through steel increases in the future as needed, but I don’t know that yet.

I’d say that we’ve seen good discipline in the market in total, but it is just a concern of something that we’re certainly going to watch and try to manage as best we can as we go forward.

I’ll also comment that in terms of steel, we typically buy forward or cover our steel requirements particularly in times where we see steel increasing, we will cover our steel requirements for usually about 75% of a quarter’s needs. I would say that we’re in a similar position for this next quarter, where we’re pretty comfortable with having our steel requirements covered at a price that we basically paid last time into our pricing. So there isn’t any action necessarily required.

Again, the caution would be whatever competition does in terms of pricing because we will obviously do what we have to to hold onto share.

In terms of the regional mix question, that was really a reference to, as I said we had larger sales in Mexico in the quarter and in that particular block of sales, the margins were good. In some other international markets, margins may be a little less, a little more competitive. But that happened to be a block that was pretty good and certainly beneficial in many respects to the quarter.

Alex Potter – Piper Jaffray

On M&A, you mentioned that you’re still actively looking. If it’s possible, what sort of areas are you looking mostly at? Would you look at expanding your irrigation presence internationally? How do you prioritize what the domestic versus international and then thematically irrigation versus infrastructure versus something entirely new?

Richard Parod

We’ve tended to really prioritize on the acquisitions from the perspective of those that are tied into the water industry as being the highest priority and that would be certainly could be irrigation companies on an international basis, or it could be other types of things. For example, we’re now in the rainwater harvesting equipment through our Water Connect acquisition, and it could be pump type systems. It could be rainwater harvesting or storm water management or a number of different areas that we look at.

We are primarily oriented into that water conservation, water management part of it, not necessarily, what I would consider to be water infrastructure. At the same time, we’re also looking at product additions in the infrastructure segment of our business and other businesses that could make a third core to build off of, but primarily, we’re focused in the water area.

Operator

You're next question comes from Brian Drab – William Blair.

Brian Drab – William Blair

I wanted to see if I could get a little more clarity around the onetime expenses in the quarter. I think you did a good job in the press release of calling this all out, but $2 million was the total after tax net benefit from the State investment credits, but I don’t exactly understand the breakdown. It looks to me like you have $1.1 million that was just on the income tax line as a tax credit, and then could you give some more detail as to the pre tax and after tax amounts for the balance of those credits and where they fell in terms of SG&A or COGS.

Richard Parod

The other pieces were $600,000 in COGS on a pretax basis, $300,000 in SG&A on a pretax basis, and then those are tax affected, and that net affect in the tax line is the $1.1 million.

Brian Drab – William Blair

$300 K in SG&A on a pretax basis. And the net effect of that was $1.1 million. Can you connect that for me for the total of $2 million?

Richard Parod

The $600 K in COGS, the $300 K in SG&A, a pre tax $1.4, tax affected by $300,000 for the above the line items for a net of $1.1 million. So it’s $900,000 above and net $1.1 million on the tax line for a total of $2 million.

Brian Drab – William Blair

Then the total of $2 million is after tax.

Richard Parod

Correct.

Brian Drab – William Blair

One more question just on the international irrigation market, which I understand has a benefit from the Mexico demand in the quarter. As we look to the third quarter, which is typically the season strongest for irrigation of course, can you give us any directional guidance on domestic and international sales within irrigation? I would suspect you’re only expecting improvement sequentially in domestic markets, but could you say the same for international?

David Downing

It will depend a little bit on funding availability in some markets. The southern markets will be a little quieter sequentially but the northern hemisphere markets will turn on. So as Rick commented, China will turn on. Northern Europe will turn on in the third quarter.

Brian Drab – William Blair

So domestically, are you expecting the third quarter as usual to be the seasonally strongest for the year?

David Downing

Yes.

Operator

You're next question comes from Paul Mammola – Sidoti & Company.

Paul Mammola – Sidoti & Company

On international, if we could stay there, could you elaborate a bit on where credit is tight and what that does for sales in certain regions during the quarter?

Richard Parod

As I mentioned, one of the areas that we have seen credit tight is certainly in Eastern Europe in general, but also more specifically in Russia and Ukraine. Those have been disappointing in the sense that we really were starting to see those pick up in 2007 and 2008 and pull back in 2009 due to funding availability.

I would describe it today as still a tremendous amount of interest; however, funding is restrictive in terms of being able to move forward on those projects, farmers being able to get funding. I’m very optimistic about those markets for the longer term because I think the interest has certainly been developed and they’re ready to go, but funding will be a key.

In terms of others, I would say that most other markets, I think Brazil is solid. I don’t really see funding issues there. China seems to be solid at this point. I think we will have the government subsidy which assists, but funding hasn’t really been a problem.

Central America has been pretty solid as well. But I would say that funding in some of those markets does restrict demand somewhat. But the primary areas that I would be concerned about from a funding standpoint today would be probably Eastern Europe and maybe northern Africa.

Paul Mammola – Sidoti & Company

On the North America side, would you say that the season will be driven by purely placement or do you think that new acres planted could start to drive at least some demand?

Richard Parod

I would expect that what we would see this year would be a fairly traditional split in terms of the application of our equipment, therefore demand, meaning in the past, we’ve seen that a normal split is probably about a third of the machines going into replacement, a third into conversion from flood or other methods and a third into dry lands putting irrigation on for the first time.

What we saw in 2008 was the dry land percentage move up to about 40% in that year for us, and I would expect that we would see a fairly traditional third/third/third split this year. Indications are from looking at the past quarter that that’s kind of the trend right now.

Paul Mammola – Sidoti & Company

On the EPA remediation charge, does that stay at $700,000 a quarter going forward?

Richard Parod

No. That charge is specifically for some work done. What this refers back to is an issue with our Lindsay Nebraska manufacturing site which was put on the super fund site back in 1989 due to some discovered environmental contamination ground water in 1980. We’ve been working with the EPA in terms of work plans to primarily in drilling wells into the aquifer and pumping that water out and in testing.

Every five years we have a new work plan. We just submitted awhile back a new work plan with the EPA and we are working through that work plan with them. So at this point, the way I would describe it is, we have accrued and really reflected any of the expenses that we think are reasonably estimatable at this point and there may be from time to time some other things that will come up based on that work plan or other requirements from the EPA that are unknown at this time that could also be required to be accrued or expenses in some quarter.

Paul Mammola – Sidoti & Company

On infrastructure, with that last 28% of the Mexico City project falling into the quarter, I guess I would have expected a little higher margin, so we should think that maybe the contract is actually going to fall off is really a bigger piece in terms of profitability fall off, and is it your expectation that the season coming back would sort of make up shortfall from the Mexico City project at this point on a run rate basis going forward.

Richard Parod

I think the simple answer is yes. It’s a little more complex in that there are a couple of things that happen. Both the contract manufacturing which is probably our least profitable piece of business in infrastructure did fall off very significantly and of course, it did take some profit with them and certainly factory absorption.

The other piece of business that fell off is the tubing business which is a pretty high margin or attractive margin piece of business for us, and that has pulled back also, primarily due to just recession effect. So that had an impact in the quarter.

And there’s a mix change that’s taking place and we trying to have take place within our infrastructure segment to move more towards more proprietary pipe products. So for example, we added the rail structure product line through a small acquisition back at the end of ’09, and we will hopefully expect to be growing that, and that will improve margins as well.

So I think as we see some of the safety products which we’re, those safety products outside of the quick move barrier product line, we expect to cost reduce those products. We expect to change the mix of that product line infrastructure to include more proprietary product. Those will all be beneficial to margins for that segment.

Operator

You're next question comes from Jason Kraft – Cato Partners.

Jason Kraft – Cato Partners

On the price pressure, at least as long as we’ve been following you, haven’t really heard you talk about competitive price pressure and I just wanted to see if you could point to a time in the past where price pressure was prevalent and there was aggressive discounting amongst the competitors.

Richard Parod

We’d probably go back to about the 2007 time period we saw price pressure, probably about the 2004/2005 time period as well. But it’s been a while, and I don’t want to overly stress this, or create over concern on this. I think it’s something that we see in the market and I’ve heard from dealers recently.

So there are two factors from the pricing side. One is obviously steel going up and our ability to pass through increases, but I’m not concerned about it. We’ve typically been very effective at being able to do that.

But the other side of that is what happens with competition and we’ve seen competition give back some of the price decrease in steel a couple quarters ago, and I would just be a little concerned about the price pressure restricting ability to pass through increases in future period or just becoming a little more tougher than it has been in the past.

But I don’t want to create over concern on that. We really haven’t seen that as a significant issue for a long time.

Jason Kraft – Cato Partners

What is your sense that is leading to for price pressure, or at least the early signs? Is it the dealer inventory or what would motivate other competitors to get aggressive on price?

Richard Parod

Dealers really do not have much inventory on hand. That’s not really a factor. I think it comes down to if a specific competitor decides to, there’s an opportunity to take market share through price, then we can see that from time to time, that competitive intensity increase for a period of time.

But it really is not very effective and it doesn’t last when that does happen. That’s generally what I would attribute it to, is usually some competitors’ attempt to take market share.

Jason Kraft – Cato Partners

On your slide deck, on the web site, I know you covered a little bit on a mix shift that’s happening in the infrastructure segment, but I’m trying to reconcile. You posted a negative 6.7% margin on infrastructure even with the $4 million or so of the high margin Mexico City project. So what happened in the quarter? I know last quarter you had nice operating margins because of a lot of Mexico City, but what happened there in terms of the mix that you posted the negative Op margin?

Richard Parod

The other factor that enters into this is the seasonality of the road safety products. The quick move barrier projects are not as seasonal. It would be more project oriented and could happen any time, any part of the world during the year.

The other road safety products, the crash cushions, the absorb crash type product, some of the other products, barrier systems, our snow line, will be more seasonal in the sense that they’re really going to be sold and used through the peak road construction, road work period which really starts in the spring. So there is that seasonal impact in addition to the changing that product mix affect that I talked about a little while ago.

Operator

You're next question comes from Michael Coleman – Sterne, Agee & Leach.

Michael Coleman – Sterne, Agee & Leach

Your margin on the irrigation showed pretty strong performance and you talk about strength in Mexico. As the international shifts back to, the assumption here is that you serviced Mexico out of North America manufacturing for it to have a higher margin, but as the international shifts back to markets that aren’t necessarily served out of North America, would it be some volatility or would you see that 17.5% operating margin on irrigation sustainable in near term?

Richard Parod

I think I understand your question and it really comes back to discussions we’ve had in the past about the overall cost structure of Lindsay and our international business units where for the Lindsay, Nebraska facility we have clearly very highly integrated factory of fuel coil, and making tubing and galvanizing and everything on site, where the international manufacturing facilities are less integrated, moving tubing outside and galvanizing outside.

So as we have larger sales in those international factories, or those regions with international factories, the margins tend to be a little bit lower because of that product mix, and I think that’s what you’re referring to. I’d say, yes you could have that impact, but I wouldn’t necessarily model that in from the standpoint of exports growth and the international business pieces grow. All of that is part of the international segment of our business. So I’m not sure that mix will significantly change.

Michael Coleman – Sterne, Agee & Leach

How do you view going forward your cash flow and free cash flow relative to your net income and relationship there? There’s been a fair amount of volatility over the last year. It seems to have kind of come in line in most recent quarter, but should you be generating cash flow from operations that are significantly in excess of net income or how should that relationship work?

Richard Parod

Free cash flow should generally be in line with operating income. It can change. As you know, last year we had high inventories going into the year that we carried, but generally speaking, should be relatively in line with operating income.

Michael Coleman – Sterne, Agee & Leach

On a pretax basis?

Richard Parod

Yes.

Michael Coleman – Sterne, Agee & Leach

You mentioned acquisitions that you’ve got an increased emphasis with respect to acquisitions in water and some optimism, and you mentioned the international irrigation companies. I’m just curious what kind of level, what kind of multiples international irrigation companies’ trend and not necessarily from a multiple perspective but does this increase the hurdle in terms of your ability to create value in acquiring international irrigation companies. And the second piece of this, obviously you’ve got a fair amount of cash, but how would you think about funding a sizeable acquisition?

Richard Parod

I’d say that I don’t really see looking at the international irrigation companies; I don’t see that as increasing the hurdle in any way. I think if you were looking at the kinds of multiples that we’re going to pay, it will really vary. Most of those will be looked at on the international irrigation side, have been ones that would either bring us a specific regional strength or bring us additional product that we were going to add to the line.

I think from that standpoint, you’re not really going to have cannibalization or rationalization of product that would make that hurdle difficult, so I’m pretty comfortable with that on the irrigation side.

In terms of the funding of acquisitions as you said, we certainly have a big cash balance to work with. We are also willing to take on some additional debt. We also have situations where ones that we’ve talked with are interested in taking stock, so we would consider that as an option as well.

Operator

You're next question comes from [Peter Ryder – Global Investor Capital]

[Peter Ryder – Global Investor Capital]

In cost of goods sold, steel normally represents, I mean irrigation side.

Richard Parod

I’m sorry; I missed the first part of your question.

[Peter Ryder – Global Investor Capital]

The 1% of sales, what percent of cost does steel represent on the irrigation side.

Richard Parod

About a third of cost of goods sold.

[Peter Ryder – Global Investor Capital]

You made reference to competition. I think in prior conversations with other corporate officers, I understand Valmont, the cross town rival is the main competition, so when you refer to the competition, is it mainly Valmont or are there other competitors coming in?

Richard Parod

There’s primarily two competitors in the U.S. market. It’s Valmont and Ranke and those are the two competitors we run into generally. Those are the two I’m referring to.

[Peter Ryder – Global Investor Capital]

The third part of the question you may not want to answer, but I’m looking at the Thomson Estimates sheet and they had a consensus estimate for 2010 above 53, next year about 55 plus 7.8% for the surprising comes to 2.25% in fiscal year 2012 which is up 36.4% over ’11. Any comments on that? I’m curious if you can. You may not be able to, but I’m curious to understand why the street thinks that 2012 is going to be significantly better than 2011.

Richard Parod

That is one I really cannot comment on.

Operator

You're next question comes from Jason Kraft – Cato Partners.

Jason Kraft – Cato Partners

I can try to normalize out the seasonality on the international irrigation for my model; can you attribute how much of the Mexico irrigation this quarter was a onetime nature due to that government subsidy?

Richard Parod

We really can’t split out, would rather not split out the Mexico piece of it specifically for competitive purposes. I really don’t want to get that specific, but I would tell you the way I would look at seasonality for irrigation in total, is that, and these are kind of rough estimates, the first quarter is going to be around 20% of revenues, the second quarter around 23%, so you get about 43% in the first half of the year, and the remainder in the second half.

It’s usually the third quarter is the strongest at about a third of our year. It will vary in the international markets, but it also varies very significantly by which market those sales come from, so it’s difficult to characterize international with any specific seasonal split because it does change quite bit from year to year depending on which markets are strong.

But I would look at irrigation in total. And that’s kind of the typical split that we’ve seen.

Operator

I will not turn it back over to Mr. Parod for closing comments.

Richard Parod

For our business overall, the global long term drivers of water conservation, population growth, increasing importance of bio fuels and improvements in infrastructure remain very positive. In addition to the overall business enhancements that have taken place, we continue to have an ongoing structured acquisition process that will generate additional growth opportunities throughout the world in water and infrastructure.

Lindsay is committed to achieving earnings growth through global market expansion, improvements in margins and strategic acquisitions.

I’d like to thank you for your questions and participation in this call.

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