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Author: TMFGebinr Big gold star, 5000 posts Old School Fool Supernova Phoenix 1
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Subject: LNN - Q1 2014 - my thoughts Date: 1/30/2014 11:36 AM
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Hi everyone,

Release: http://www.lindsayir.com/profiles/investor/ResLibraryView.as...
Transcript: http://seekingalpha.com/article/1927701-lindsay-management-d...

This is a fairly quick pass through catching up on an earlier than expected (for me) release of earnings (back at the beginning of the month). Between earnings season for Stock Advisor and the Supernova reopen, time is tight. Now that it's in my queue, though, I should be able to track this better and really get a feel for how the company operates quarter to quarter.

As expected, domestic irrigation sales slowed way down YoY as the drought-driven sales of Q1 FY2013 (end of 2012) didn't repeat. However, given the drought that's intenisfying out in CAlifornia, there might be some recovery in domestic sales. International irrigation sales were up strongly, something over 30% YoY.

That bodes well for the company's international expansion, a pillar of my investing thesis.

Here in the U.S., sales are also driven by crop prices and how cash rich farmers are. Higher prices mean more cash means more sales. Grain prices are expected to be lower this year, which also puts some downward pressure on sales, but this, too, was known going in. Given the demand for grain as world population continues to grow, this is a short-term issue ocmpared to a long-term trend.

Some of the comments in the call were about lowering costs. Always a goal for just about every company, so it's not surprising to hear management say this, but management expects to be successful, raising operating margin back up to the historical 15% level for the full fiscal year off of the disappointing 12% level or so of Q1.

The dividend hike was very nice (doubled from $0.52 to $1.04 yearly) and management said they're committed to increasing it annually. Not a big part of my thesis, but a nice bonus. It also will tend to make management more responsible in capital allocation and that would boost company performance and the share price (at least according to research by Arnott and Asness, which I think I've referenced before).

First quarterly report with this company. We'll see how it goes going forward.

Cheers,
Jim
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