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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-13419

Lindsay Corporation

(Exact name of registrant as specified in its charter)

Delaware |  | 47-0554096
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
18135 Burke Street, Suite 100, Omaha, Nebraska |  | 68022
(Address of principal executive offices) |  | (Zip Code)

402‑829-6800

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, $1.00 par value | LNN | New York Stock Exchange, Inc.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer | ☒ |  | Accelerated filer | ☐
Non‑accelerated filer | ☐ |  | Smaller reporting company | ☐
Emerging growth company | ☐ |  |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of January 2, 2023, 11,006,852 shares of the registrant’s common stock were outstanding.

Table of Contents

Lindsay Corporation

INDEX FO RM 10-Q

|  |  |  | Page
Part I – FINANCIAL INFORMATION |  | 3
|  | ITEM 1 – Financial Statements |  | 3
|  | Condensed Consolidated Statements of Earnings for the three months ended November 30, 2022 and November 30, 2021 |  | 3
|  | Condensed Consolidated Statements of Comprehensive Income for the three months ended November 30, 2022 and November 30, 2021 |  | 4
|  | Condensed Consolidated Balance Sheets as of November 30, 2022, November 30, 2021, and August 31, 2022 |  | 5
|  | Condensed Consolidated Statements of Shareholders’ Equity for the three months ended November 30, 2022 and November 30, 2021 |  | 6
|  | Condensed Consolidated Statements of Cash Flows for the three months ended November 30, 2022 and November 30, 2021 |  | 7
|  | Notes to the Condensed Consolidated Financial Statements |  | 8
|  | ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 17
|  | ITEM 3 – Quantitative and Qualitative Disclosures about Market Risk |  | 23
|  | ITEM 4 – Controls and Procedures |  | 23
Part II – OTHER INFORMATION |  | 24
|  | ITEM 1 – Legal Proceedings |  | 24
|  | ITEM 1A – Risk Factors |  | 24
|  | ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds |  | 24
|  | ITEM 3 – Defaults Upon Senior Securities |  | 24
|  | ITEM 4 – Mine Safety Disclosures |  | 24
|  | ITEM 5 – Other Information |  | 24
|  | ITEM 6 – Exhibits |  | 25
SIGNATURES |  | 26

- 2 -

Table of Contents

Part I – FINANC IAL INFORMATION

ITEM 1 - Financi al Statements

LINDSAY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

|  | Three months ended |
($ and shares in thousands, except per share amounts) |  | November 30, 2022 |  |  | November 30, 2021 |
Operating revenues |  | $ | 176,159 |  |  | $ | 166,152 |
Cost of operating revenues |  |  | 123,139 |  |  |  | 128,714 |
Gross profit |  |  | 53,020 |  |  |  | 37,438 |
Operating expenses: |  |  |  |  |  |
Selling expense |  |  | 9,677 |  |  |  | 7,990 |
General and administrative expense |  |  | 14,437 |  |  |  | 12,880 |
Engineering and research expense |  |  | 4,308 |  |  |  | 3,207 |
Total operating expenses |  |  | 28,422 |  |  |  | 24,077 |
Operating income |  |  | 24,598 |  |  |  | 13,361 |
Other income (expense): |  |  |  |  |  |
Interest expense |  |  | (909 | ) |  |  | (1,163 | )
Interest income |  |  | 373 |  |  |  | 177 |
Other expense, net |  |  | (57 | ) |  |  | (2,900 | )
Total other income (expense) |  |  | (593 | ) |  |  | (3,886 | )
Earnings before income taxes |  |  | 24,005 |  |  |  | 9,475 |
Income tax expense |  |  | 5,788 |  |  |  | 1,574 |
Net earnings |  | $ | 18,217 |  |  | $ | 7,901 |
Earnings per share: |  |  |  |  |  |
Basic |  | $ | 1.66 |  |  | $ | 0.72 |
Diluted |  | $ | 1.65 |  |  | $ | 0.72 |
Shares used in computing earnings per share: |  |  |  |  |  |
Basic |  |  | 10,989 |  |  |  | 10,927 |
Diluted |  |  | 11,073 |  |  |  | 11,026 |
Cash dividends declared per share |  | $ | 0.34 |  |  | $ | 0.33 |

See accompanying notes to condensed consolidated financial statements.

- 3 -

Table of Contents

LINDSAY CORPORA TION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

|  | Three months ended |
($ in thousands) |  | November 30, 2022 |  |  | November 30, 2021 |
Net earnings |  | $ | 18,217 |  |  | $ | 7,901 |
Other comprehensive loss: |  |  |  |  |  |
Defined benefit pension plan adjustment, net of tax |  |  | 40 |  |  |  | 49 |
Foreign currency translation adjustment, net of hedging activities and tax |  |  | (2,186 | ) |  |  | (3,350 | )
Unrealized gain (loss) on marketable securities, net of tax |  |  | 1 |  |  |  | (57 | )
Total other comprehensive loss, net of tax (benefit) expense of $(469), and $2 respectively |  |  | (2,145 | ) |  |  | (3,358 | )
Total comprehensive income |  | $ | 16,072 |  |  | $ | 4,543 |

See accompanying notes to condensed consolidated financial statements.

- 4 -

Table of Contents

LINDSAY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

($ and shares in thousands, except par values) |  | November 30, 2022 |  |  | November 30, 2021 |  |  | August 31, 2022 |
ASSETS |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 99,168 |  |  | $ | 84,719 |  |  | $ | 105,048 |
Marketable securities |  |  | 11,424 |  |  |  | 30,195 |  |  |  | 11,460 |
Receivables, net of allowance of $4,774, $3,398, and $4,118, respectively |  |  | 157,116 |  |  |  | 111,959 |  |  |  | 138,200 |
Inventories, net |  |  | 188,404 |  |  |  | 173,115 |  |  |  | 193,776 |
Other current assets, net |  |  | 25,295 |  |  |  | 26,345 |  |  |  | 28,617 |
Total current assets |  |  | 481,407 |  |  |  | 426,333 |  |  |  | 477,101 |
Property, plant, and equipment: |  |  |  |  |  |  |  |  |
Cost |  |  | 243,006 |  |  |  | 230,268 |  |  |  | 240,981 |
Less accumulated depreciation |  |  | (149,488 | ) |  |  | (138,629 | ) |  |  | (146,509 | )
Property, plant, and equipment, net |  |  | 93,518 |  |  |  | 91,639 |  |  |  | 94,472 |
Intangibles, net |  |  | 17,760 |  |  |  | 19,827 |  |  |  | 18,208 |
Goodwill |  |  | 67,295 |  |  |  | 67,735 |  |  |  | 67,130 |
Operating lease right-of-use assets |  |  | 18,477 |  |  |  | 17,584 |  |  |  | 19,181 |
Deferred income tax assets |  |  | 8,117 |  |  |  | 6,157 |  |  |  | 9,313 |
Other noncurrent assets |  |  | 21,722 |  |  |  | 20,170 |  |  |  | 25,248 |
Total assets |  | $ | 708,296 |  |  | $ | 649,445 |  |  | $ | 710,653 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |
Accounts payable |  | $ | 58,535 |  |  | $ | 58,908 |  |  | $ | 60,036 |
Current portion of long-term debt |  |  | 223 |  |  |  | 219 |  |  |  | 222 |
Other current liabilities |  |  | 89,827 |  |  |  | 88,655 |  |  |  | 100,684 |
Total current liabilities |  |  | 148,585 |  |  |  | 147,782 |  |  |  | 160,942 |
Pension benefits liabilities |  |  | 4,812 |  |  |  | 5,660 |  |  |  | 4,892 |
Long-term debt |  |  | 115,297 |  |  |  | 115,471 |  |  |  | 115,341 |
Operating lease liabilities |  |  | 19,161 |  |  |  | 17,679 |  |  |  | 19,810 |
Deferred income tax liabilities |  |  | 693 |  |  |  | 798 |  |  |  | 1,054 |
Other noncurrent liabilities |  |  | 14,960 |  |  |  | 20,112 |  |  |  | 15,256 |
Total liabilities |  |  | 303,508 |  |  |  | 307,502 |  |  |  | 317,295 |
Shareholders' equity: |  |  |  |  |  |  |  |  |
Preferred stock of $1 par value - authorized 2,000 shares; no shares issued and outstanding |  |  | — |  |  |  | — |  |  |  | — |
Common stock of $1 par value - authorized 25,000 shares; 19,090, 19,056, and 19,063 shares issued, respectively |  |  | 19,090 |  |  |  | 19,056 |  |  |  | 19,063 |
Capital in excess of stated value |  |  | 93,079 |  |  |  | 89,006 |  |  |  | 94,006 |
Retained earnings |  |  | 593,475 |  |  |  | 532,410 |  |  |  | 579,000 |
Less treasury stock - at cost, 8,083 shares |  |  | (277,238 | ) |  |  | (277,238 | ) |  |  | (277,238 | )
Accumulated other comprehensive loss, net |  |  | (23,618 | ) |  |  | (21,291 | ) |  |  | (21,473 | )
Total shareholders' equity |  |  | 404,788 |  |  |  | 341,943 |  |  |  | 393,358 |
Total liabilities and shareholders' equity |  | $ | 708,296 |  |  | $ | 649,445 |  |  | $ | 710,653 |

See accompanying notes to condensed consolidated financial statements.

- 5 -

Table of Contents

Lindsay Corporation and Subsidiaries |
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY |
($ and shares in thousands, except per share amounts) |
(Unaudited) |
|  | Shares of common stock |  |  | Shares of treasury stock |  |  | Common stock |  |  | Capital in excess of stated value |  |  | Retained earnings |  |  | Treasury stock |  |  | Accumulated other comprehensive loss, net |  |  | Total shareholders’ equity |
Balance at August 31, 2021 |  |  | 18,991 |  |  |  | 8,083 |  |  | $ | 18,991 |  |  | $ | 86,495 |  |  | $ | 528,130 |  |  | $ | (277,238 | ) |  | $ | (17,933 | ) |  | $ | 338,445 |
Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net earnings |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,901 |  |  |  | — |  |  |  | — |  |  |  | 7,901 |
Other comprehensive loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3,358 | ) |  |  | (3,358 | )
Total comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,543 |
Cash dividends ($.33) per share |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3,621 | ) |  |  | — |  |  |  | — |  |  |  | (3,621 | )
Issuance of common shares under share compensation plans, net |  |  | 65 |  |  |  | — |  |  |  | 65 |  |  |  | 1,289 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,354 |
Share-based compensation expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,222 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,222 |
Balance at November 30, 2021 |  |  | 19,056 |  |  |  | 8,083 |  |  | $ | 19,056 |  |  | $ | 89,006 |  |  | $ | 532,410 |  |  | $ | (277,238 | ) |  | $ | (21,291 | ) |  | $ | 341,943 |
Balance at August 31, 2022 |  |  | 19,063 |  |  |  | 8,083 |  |  | $ | 19,063 |  |  | $ | 94,006 |  |  | $ | 579,000 |  |  | $ | (277,238 | ) |  | $ | (21,473 | ) |  | $ | 393,358 |
Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net earnings |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 18,217 |  |  |  | — |  |  |  | — |  |  |  | 18,217 |
Other comprehensive loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,145 | ) |  |  | (2,145 | )
Total comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 16,072 |
Cash dividends ($.34) per share |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3,742 | ) |  |  | — |  |  |  | — |  |  |  | (3,742 | )
Issuance of common shares under share compensation plans, net |  |  | 27 |  |  |  | — |  |  |  | 27 |  |  |  | (2,400 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,373 | )
Share-based compensation expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,473 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,473 |
Balance at November 30, 2022 |  |  | 19,090 |  |  |  | 8,083 |  |  | $ | 19,090 |  |  | $ | 93,079 |  |  | $ | 593,475 |  |  | $ | (277,238 | ) |  | $ | (23,618 | ) |  | $ | 404,788 |
See accompanying notes to condensed consolidated financial statements. |  |  |  |  |  |  |  |  |  |

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LINDSAY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED S TATEMENTS OF CASH FLOWS

(Unaudited)

|  | Three months ended |
($ in thousands) |  | November 30, 2022 |  |  | November 30, 2021 |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |
Net earnings |  | $ | 18,217 |  |  | $ | 7,901 |
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |  |  |  |  |  |
Depreciation and amortization |  |  | 4,871 |  |  |  | 4,896 |
Provision for uncollectible accounts receivable |  |  | 704 |  |  |  | 91 |
Deferred income taxes |  |  | 1,129 |  |  |  | 1,841 |
Share-based compensation expense |  |  | 1,473 |  |  |  | 1,222 |
Unrealized foreign currency transaction (gain) loss |  |  | (83 | ) |  |  | 2,193 |
Other, net |  |  | 289 |  |  |  | 292 |
Changes in assets and liabilities: |  |  |  |  |  |
Receivables |  |  | (19,828 | ) |  |  | (17,816 | )
Inventories |  |  | 4,803 |  |  |  | (31,674 | )
Other current assets |  |  | 3,526 |  |  |  | 5,965 |
Accounts payable |  |  | 123 |  |  |  | 12,462 |
Other current liabilities |  |  | (11,898 | ) |  |  | (3,632 | )
Other noncurrent assets and liabilities |  |  | 1,356 |  |  |  | (7,920 | )
Net cash provided by (used in) operating activities |  |  | 4,682 |  |  |  | (24,179 | )
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |  |  |
Purchases of property, plant, and equipment |  |  | (3,798 | ) |  |  | (3,061 | )
Purchases of marketable securities |  |  | — |  |  |  | (14,354 | )
Proceeds from maturities of marketable securities |  |  | — |  |  |  | 3,599 |
Other investing activities, net |  |  | (384 | ) |  |  | (342 | )
Net cash used in investing activities |  |  | (4,182 | ) |  |  | (14,158 | )
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |
Proceeds from exercise of stock options |  |  | — |  |  |  | 2,442 |
Common stock withheld for payroll tax obligations |  |  | (2,471 | ) |  |  | (1,181 | )
Proceeds from employee stock purchase plan |  |  | 98 |  |  |  | 93 |
Principal payments on long-term debt |  |  | (55 | ) |  |  | (54 | )
Dividends paid |  |  | (3,742 | ) |  |  | (3,621 | )
Net cash used in financing activities |  |  | (6,170 | ) |  |  | (2,321 | )
Effect of exchange rate changes on cash and cash equivalents |  |  | (210 | ) |  |  | (1,730 | )
Net change in cash and cash equivalents |  |  | (5,880 | ) |  |  | (42,388 | )
Cash and cash equivalents, beginning of period |  |  | 105,048 |  |  |  | 127,107 |
Cash and cash equivalents, end of period |  | $ | 99,168 |  |  | $ | 84,719 |
SUPPLEMENTAL CASH FLOW INFORMATION: |  |  |  |  |  |
Income taxes paid, net of refunds |  | $ | 3,935 |  |  | $ | 341 |
Interest paid |  | $ | 47 |  |  | $ | 51 |

See accompanying notes to condensed consolidated financial statements.

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LINDSAY CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSO LIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Basis of Presentation

The condensed consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and do not include all of the disclosures normally required by U.S. generally accepted accounting principles (“U.S. GAAP”) as contained in Lindsay Corporation’s (the “Company”) Annual Report on Form 10-K. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended August 31, 2022.

In the opinion of management, the condensed consolidated financial statements of the Company reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and the results of operations and cash flows for the periods presented. The results for interim periods are not necessarily indicative of trends or results expected by the Company for a full year. The condensed consolidated financial statements were prepared using U.S. GAAP. These principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from these estimates.

Recent Accounting Guidance Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting and related disclosure requirements for income taxes. The Company adopted this standard in the first quarter of its fiscal 2022. The adoption of this ASU did not have a material impact on its condensed consolidated financial statements.

Recent Accounting Guidance Not Yet Adopted

In September 2022, the FASB issued ASU No. 2022-04, Liabilities - Supplier Finance Programs, which requires annual and interim disclosures for entities that finance its purchases with supplier finance programs. These amendments are effective for the Company beginning in its fiscal 2024, except for the amendment on rollforward information, which is effective for the Company beginning in its fiscal 2025. The adoption of this ASU is not expected to have a material impact on its condensed consolidated financial statements.

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Note 2 – Revenue Recognition

Disaggregation of Revenue

A breakout by segment of revenue recognized over time versus at a point in time for the three months ended November 30, 2022 and 2021 is as follows:

|  | Three months ended |
|  | November 30, 2022 |
($ in thousands) |  | Irrigation |  |  | Infrastructure |  |  | Total |
Point in time |  | $ | 145,716 |  |  | $ | 20,230 |  |  | $ | 165,946 |
Over time |  |  | 6,367 |  |  |  | 1,454 |  |  |  | 7,821 |
Revenue from the contracts with customers |  |  | 152,083 |  |  |  | 21,684 |  |  |  | 173,767 |
Lease revenue |  |  | — |  |  |  | 2,392 |  |  |  | 2,392 |
Total operating revenues |  | $ | 152,083 |  |  | $ | 24,076 |  |  | $ | 176,159 |
|  | Three months ended |
|  | November 30, 2021 |
($ in thousands) |  | Irrigation |  |  | Infrastructure |  |  | Total |
Point in time |  | $ | 139,400 |  |  | $ | 14,712 |  |  | $ | 154,112 |
Over time |  |  | 6,509 |  |  |  | 742 |  |  |  | 7,251 |
Revenue from the contracts with customers |  |  | 145,909 |  |  |  | 15,454 |  |  |  | 161,363 |
Lease revenue |  |  | — |  |  |  | 4,789 |  |  |  | 4,789 |
Total operating revenues |  | $ | 145,909 |  |  | $ | 20,243 |  |  | $ | 166,152 |

Further disaggregation of revenue is disclosed in the Note 13 – Industry Segment Information.

For contracts with an initial length longer than twelve months, the unsatisfied performance obligations were $1.8 million at November 30, 2022.

Contract Balances

Contract assets arise when recorded revenue for a contract exceeds the amounts billed under the terms of such contract. Contract liabilities arise when billed amounts exceed revenue recorded. Amounts are billable to customers upon various measures of performance, including achievement of certain milestones and completion of specified units of completion of the contract. At November 30, 2022, November 30, 2021, and August 31, 2022, contract assets amounted to $1.1 million, $1.2 million, and $0.9 million, respectively. These amounts are included within other current assets on the condensed consolidated balance sheets.

Contract liabilities include advance payments from customers and billings in excess of delivery of performance obligations. At November 30, 2022, November 30, 2021, and August 31, 2022, contract liabilities amounted to $27.5 million, $41.1 million, and $30.6 million, respectively. Contract liabilities are included within other current liabilities on the condensed consolidated balance sheets. During the Company’s three months ended November 30, 2022 and 2021, the Company recognized $17.9 million and $12.7 million of revenue that were included in the liabilities as of August 31, 2022 and 2021, respectively. The revenue recognized was due to applying advance payments received for the performance obligations completed during the quarter.

Note 3 – Net Earnings per Share

Basic earnings per share is calculated on the basis of weighted average outstanding common shares. Diluted earnings per share is calculated on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, restricted stock unit awards and other dilutive securities.

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The following table shows the computation of basic and diluted net earnings per share for the three months ended November 30, 2022 and 2021:

|  | Three months ended |
($ and shares in thousands, except per share amounts) |  | November 30, 2022 |  |  | November 30, 2021 |
Numerator: |  |  |  |  |  |
Net earnings |  | $ | 18,217 |  |  | $ | 7,901 |
Denominator: |  |  |  |  |  |
Weighted average shares outstanding |  |  | 10,989 |  |  |  | 10,927 |
Diluted effect of stock awards |  |  | 84 |  |  |  | 99 |
Weighted average shares outstanding assuming dilution |  |  | 11,073 |  |  |  | 11,026 |
Basic net earnings per share |  | $ | 1.66 |  |  | $ | 0.72 |
Diluted net earnings per share |  | $ | 1.65 |  |  | $ | 0.72 |

Certain stock options and restricted stock units were excluded from the computation of diluted net earnings per share because their effect would have been anti-dilutive. Performance stock units are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied. The number of securities excluded from the computation of earnings per share because their effect would have been anti-dilutive was not significant for the three months ended November 30, 2022 and 2021.

Note 4 – Income Taxes

The Company recorded income tax expense of $5.8 million and $1.6 million for the three months ended November 30, 2022 and 2021, respectively.

It is the Company’s policy to report income tax expense for interim periods using an estimated annual effective income tax rate. The estimated annual effective income tax rate was 27.3 percent and 24.2 percent for the three months ended November 30, 2022 and 2021, respectively. The increase in the estimated annual effective income tax rate relates primarily to the change in earnings mix among foreign operations and the finalization of U.S. tax regulations related to foreign tax credits during 2022.

The tax effects of significant or unusual items are not considered in the estimated annual effective income tax rate. The tax effects of such discrete events are recognized in the interim period in which the events occur. The Company recorded discrete items resulting in an income tax benefit of $0.8 million and $0.7 million for the three months ended November 30, 2022 and 2021, respectively, which relate to the vesting of share-based compensation awards.

Note 5 – Inventories

Inventories consisted of the following as of November 30, 2022, November 30, 2021, and August 31, 2022:

($ in thousands) |  | November 30, 2022 |  |  | November 30, 2021 |  |  | August 31, 2022 |
Raw materials and supplies |  | $ | 96,811 |  |  | $ | 78,102 |  |  | $ | 93,469 |
Work in process |  |  | 12,326 |  |  |  | 12,227 |  |  |  | 12,603 |
Finished goods and purchased parts, net |  |  | 103,400 |  |  |  | 90,676 |  |  |  | 110,022 |
Total inventory value before LIFO adjustment |  |  | 212,537 |  |  |  | 181,005 |  |  |  | 216,094 |
Less adjustment to LIFO value |  |  | (24,133 | ) |  |  | (7,890 | ) |  |  | (22,318 | )
Inventories, net |  | $ | 188,404 |  |  | $ | 173,115 |  |  | $ | 193,776 |

Of the $188.4 million, $173.1 million, and $193.8 million of net inventories at November 30, 2022, November 30, 2021, and August 31, 2022, $52.9 million, $50.5 million, and $55.5 million, respectively, was valued on the last-in, first-out ("LIFO")

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basis, and $135.5 million, $122.7 million, and $138.3 million, respectively, was valued on the first-in, first-out ("FIFO") or average cost methods.

Note 6 – Long-Term Debt

The following table sets forth the outstanding principal balances of the Company’s long-term debt as of the dates shown:

($ in thousands) |  | November 30, 2022 |  |  | November 30, 2021 |  |  | August 31, 2022 |
Series A Senior Notes |  | $ | 115,000 |  |  | $ | 115,000 |  |  | $ | 115,000 |
Elecsys Series 2006A Bonds |  |  | 876 |  |  |  | 1,096 |  |  |  | 931 |
Total debt |  |  | 115,876 |  |  |  | 116,096 |  |  |  | 115,931 |
Less current portion |  |  | (223 | ) |  |  | (219 | ) |  |  | (222 | )
Less unamortized debt issuance costs |  |  | (356 | ) |  |  | (406 | ) |  |  | (368 | )
Total long-term debt |  | $ | 115,297 |  |  | $ | 115,471 |  |  | $ | 115,341 |

Principal payments on the debt are due as follows:

Due within |  | $ in thousands |
1 year |  | $ | 223 |
2 years |  |  | 227 |
3 years |  |  | 232 |
4 years |  |  | 194 |
5 years |  |  | — |
Thereafter |  |  | 115,000 |
|  | $ | 115,876 |

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Note 7 – Fair Value Measurements

The following table presents the Company’s financial assets and liabilities measured at fair value, based upon the level within the fair value hierarchy in which the fair value measurements fall, as of November 30, 2022, November 30, 2021, and August 31, 2022. There were no transfers between any levels for the periods presented.

|  | November 30, 2022 |
($ in thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Cash and cash equivalents |  | $ | 99,168 |  |  | $ | — |  |  | $ | — |  |  | $ | 99,168 |
Marketable securities: |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  |  | — |  |  |  | 9,646 |  |  |  | — |  |  |  | 9,646 |
U.S. treasury securities |  |  | — |  |  |  | 1,778 |  |  |  | — |  |  |  | 1,778 |
Derivative asset |  |  | — |  |  |  | 3,455 |  |  |  | — |  |  |  | 3,455 |
|  | November 30, 2021 |
($ in thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Cash and cash equivalents |  | $ | 84,719 |  |  | $ | — |  |  | $ | — |  |  | $ | 84,719 |
Marketable securities: |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  |  | — |  |  |  | 26,503 |  |  |  | — |  |  |  | 26,503 |
U.S. treasury securities |  |  | — |  |  |  | 3,692 |  |  |  | — |  |  |  | 3,692 |
|  | August 31, 2022 |
($ in thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Cash and cash equivalents |  | $ | 105,048 |  |  | $ | — |  |  | $ | — |  |  | $ | 105,048 |
Marketable securities: |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  |  | — |  |  |  | 9,668 |  |  |  | — |  |  |  | 9,668 |
U.S. treasury securities |  |  | — |  |  |  | 1,792 |  |  |  | — |  |  |  | 1,792 |
Derivative Asset |  |  | — |  |  |  | 5,505 |  |  |  | — |  |  |  | 5,505 |

The Company’s investment in marketable securities consists of United States treasury bonds and investment grade corporate bonds. The marketable securities are classified as available-for-sale and are carried at fair value with the change in unrealized gains and losses reported as a separate component on the condensed consolidated statements of comprehensive income until realized. The Company determines fair value using data points that are observable, such as quoted prices and interest rates. The amortized cost of the investments approximates fair value. Investment income is recorded within other (expense) income on the condensed consolidated statements of earnings. As of November 30, 2022, approximately 67% of the Company’s marketable securities investments mature within one year and 33% mature within one to three years.

The Company enters into derivative instrument agreements to manage risk in connection with changes in foreign currency. The Company only enters into derivative instrument agreements with counterparties who have highly rated credit and does not enter into derivative instrument agreements for trading or speculative purposes. The fair values are based on inputs other than quoted prices that are observable for the asset or liability and are determined by standard calculations and models that use readily observable market parameters. These inputs include foreign currency exchange rates and interest rates. Industry standard data providers are the primary source for forward and spot rate information for both interest rates and foreign currency exchange rates.

On March 28, 2022, the Company entered into a fixed-to-fixed cross currency swap with a notional amount of $50.0 million, or €45.6 million, that is set to mature on March 30, 2027. The Company elected the spot method for designating this contract as a net investment hedge. Changes in the fair value of this contract are reported in accumulated other comprehensive loss on the condensed consolidated balance sheets. The fair value of this contract as of November 30, 2022 is disclosed in the table above and is recorded within other noncurrent assets on the condensed consolidated balance sheets.

There were no required fair value adjustments for assets and liabilities measured at fair value on a non-recurring basis for the three months ended November 30, 2022 or 2021.

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Note 8 – Commitments and Contingencies

In the ordinary course of its business operations, the Company enters into arrangements that obligate it to make future payments under contracts such as lease agreements. Additionally, the Company is involved, from time to time, in commercial litigation, employment disputes, administrative proceedings, business disputes and other legal proceedings. The Company has established accruals for certain proceedings based on an assessment of probability of loss. The Company believes that any such currently-pending proceedings are either covered by insurance or would not have a material effect on the business or its consolidated financial statements if decided in a manner that is unfavorable to the Company. Such proceedings are exclusive of environmental remediation matters which are discussed separately below.

Infrastructure Products

The Company is currently defending a number of product liability lawsuits arising out of vehicle collisions with highway barriers incorporating the Company’s X-Lite® end terminal. Despite the September 2018 reversal of a sizable judgment against a competitor, the Company expects that the significant attention brought to the infrastructure products industry by the original judgment may lead to additional lawsuits being filed against the Company and others in the industry.

The Company, certain of its subsidiaries, and certain third parties which originally designed the X-Lite end terminal have also been named in a lawsuit filed on June 9, 2020 in the Circuit Court of Cole County, Missouri by Missouri Highways and Transportation Commission (“MHTC”). MHTC alleges, among other things, that the X-Lite end terminal was defectively designed and failed to perform as designed, intended, and advertised, leading to MHTC’s removal and replacement of X-Lite end terminals from Missouri’s roadways. MHTC alleges strict liability (defective design and failure to warn), negligence, breach of express warranties, breach of implied warranties (merchantability and fitness for a particular purpose), fraud, and public nuisance. MHTC seeks compensatory damages, interest, attorneys’ fees, and punitive damages.

The Company believes it has meritorious factual and legal defenses to each of the lawsuits discussed above and is prepared to vigorously defend its interests. Based on the information currently available to the Company, the Company does not believe that a loss is probable in any of these lawsuits; therefore, no accrual has been included in the Company’s consolidated financial statements. While it is possible that a loss may be incurred, the Company is unable to estimate a range of potential loss due to the complexity and current status of these lawsuits. However, the Company maintains insurance coverage to mitigate the impact of adverse exposures in these lawsuits and does not expect that these lawsuits will have a material adverse effect on its business or its consolidated financial statements.

In June 2019, the Company was informed by letter that the Department of Justice, Civil Division and U.S. Attorney’s Office for the Northern District of New York, with the assistance of the Department of Transportation, Office of Inspector General, are conducting an investigation of the Company relating to the Company’s X-Lite end terminal and potential violations of the federal civil False Claims Act. Depending on the outcome of this matter, there could be a material adverse effect on the Company’s business or its consolidated financial statements. Given the current posture of the matter, the Company is unable to estimate a range of potential loss, if any, or to express an opinion regarding the ultimate outcome.

Environmental Remediation

In previous years, the Company committed to a plan to remediate environmental contamination of the groundwater at and adjacent to its Lindsay, Nebraska facility (the “site”). The current estimated aggregate accrued cost of $13.6 million is based on consideration of remediation options which the Company believes could be successful in meeting the long-term regulatory requirements of the site. The Company submitted a revised remedial alternatives evaluation report to the U.S. Environmental Protection Agency (“EPA”) and the Nebraska Department of Environment and Energy (the “NDEE”) in August 2020 to review remediation alternatives and proposed plans for the site. While the proposed remediation plan is preliminary and has not been approved by the EPA or the NDEE, they have recently approved an in situ thermal remediation pilot study to be conducted by the Company at a specific location on the site. The Company commenced implementation of the pilot program in the second half of calendar 2022 and expects to complete the pilot program in calendar 2023. Of the total liability as of November 30, 2022, $11.0 million was calculated on a discounted basis using a discount rate of 1.2%, which represents a risk-free rate. This discounted portion of the liability amounts to $12.4 million on an undiscounted basis.

The Company accrues the anticipated cost of investigation and remediation when the obligation is probable and can be reasonably estimated. While a definitive plan has not been formally approved by the EPA, the Company believes the current accrual is a good faith estimate of the long-term cost of remediation at this site; however, the estimate of costs and their timing could change as a result of a number of factors, including but not limited to (1) EPA input on the proposed remediation plan and any changes which the EPA may subsequently require, (2) effectiveness of the in situ thermal pilot remediation pilot study, (3) refinement of cost estimates and length of time required to complete remediation and post-remediation operations and maintenance, (4) effectiveness of the technology chosen in remediation of the site as well as changes in technology that may be available in the future, and (5) unforeseen circumstances existing at the site. As a result of these factors, the actual amount of costs incurred by the Company in connection with the remediation of contamination of its Lindsay, Nebraska site

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could exceed the amounts accrued for this expense at this time. While any revisions could be material to the operating results of any fiscal quarter or fiscal year, the Company does not expect such additional expenses would have a material adverse effect on its liquidity or financial condition.

The following table summarizes the environmental remediation liability classifications included in the condensed consolidated balance sheets as of November 30, 2022, November 30, 2021, and August 31, 2022:

($ in thousands) |  | November 30, 2022 |  |  | November 30, 2021 |  |  | August 31, 2022 |
Other current liabilities |  | $ | 3,319 |  |  | $ | 828 |  |  | $ | 4,179 |
Other noncurrent liabilities |  |  | 10,255 |  |  |  | 15,181 |  |  |  | 10,967 |
Total environmental remediation liabilities |  | $ | 13,574 |  |  | $ | 16,009 |  |  | $ | 15,146 |

Note 9 – Warranties

The following table provides the changes in the Company’s product warranties:

|  | Three months ended |
($ in thousands) |  | November 30, 2022 |  |  | November 30, 2021 |
Product warranty accrual balance, beginning of period |  | $ | 14,080 |  |  | $ | 12,736 |
Liabilities accrued for warranties during the period |  |  | 1,240 |  |  |  | 2,394 |
Warranty claims paid during the period |  |  | (1,718 | ) |  |  | (2,751 | )
Product warranty accrual balance, end of period |  | $ | 13,602 |  |  | $ | 12,379 |

Note 10 – Share-Based Compensation

The Company’s current share-based compensation plans, approved by the stockholders of the Company, provides for awards of stock options, restricted shares, restricted stock units (“RSUs”), stock appreciation rights, performance shares, and performance stock units (“PSUs”) to employees and non-employee directors of the Company. The Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. Share-based compensation expense was $1.6 million and $1.3 million for the three months ended November 30, 2022 and 2021, respectively.

The following table illustrates the type and fair value of share-based compensation awards granted during the three months ended November 30, 2022 and 2021:

|  | Three months ended |
|  | November 30, 2022 |  |  | November 30, 2021 |
|  | Number of units granted |  |  | Weighted average grant-date fair value per award |  |  | Number of units granted |  |  | Weighted average grant-date fair value per award |
Stock options |  |  | 21,743 |  |  | $ | 55.53 |  |  |  | 21,137 |  |  | $ | 41.80 |
RSUs |  |  | 18,502 |  |  | $ | 152.36 |  |  |  | 20,099 |  |  | $ | 141.99 |
PSUs |  |  | 14,496 |  |  | $ | 173.17 |  |  |  | 12,122 |  |  | $ | 147.74 |

The RSUs granted during the three months ended November 30, 2022 and 2021 included 2,112 and 2,248, respectively, that will be settled in cash. The weighted average stock price on the date of grant was $156.16 and $145.93 per award for the three months ended November 30, 2022 and 2021, respectively. Share issuances are presented net of share repurchases

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to cover payroll taxes of $2.5 million and $1.2 million for the three months ended November 30, 2022 and 2021, respectively.

The following table provides the assumptions used in determining the fair value of the stock options awarded during the three months ended November 30, 2022 and 2021, respectively:

|  | Three months ended November 30, |
|  | 2022 |  |  | 2021 |
Weighted-average dividend yield |  |  | 0.9 | % |  |  | 0.9 | %
Weighted-average volatility |  |  | 35.7 | % |  |  | 33.8 | %
Risk-free interest rate |  |  | 4.4 | % |  |  | 1.2 | %
Weighted-average expected life (years) |  |  | 5 |  |  |  | 5 |

The PSUs granted during fiscal 2023 include performance goals based on a return on invested capital ("ROIC") and total shareholder return ("TSR") relative to the Company's peers during the performance period. The awards actually earned will range from zero to two hundred percent of the targeted number of PSUs and will be paid in shares of common stock. Shares earned will be distributed upon vesting on the first day of November following the end of the three-year performance period. For the ROIC portion of the award, the Company is accruing compensation expense based on the estimated number of shares expected to be issued utilizing the most current information available to the Company at the date of the consolidated financial statements. For the TSR portion of the award, compensation expense is recorded ratably over the three-year term of the award based on the estimated grant date fair value.

The fair value of the TSR portion of the awards granted during the three months ended November 30, 2022 and 2021 was estimated at the grant date using a Monte Carlo simulation model which included the following assumptions:

|  | Three months ended November 30, |
|  | 2022 |  |  | 2021 |
Expected term (years) |  |  | 3 |  |  |  | 3 |
Risk-free interest rate |  |  | 4.5 | % |  |  | 0.7 | %
Volatility |  |  | 38.6 | % |  |  | 39.1 | %
Dividend yield |  |  | 0.9 | % |  |  | 0.9 | %

Note 11 – Other Current Liabilities

($ in thousands) |  | November 30, 2022 |  |  | November 30, 2021 |  |  | August 31, 2022 |
Other current liabilities: |  |  |  |  |  |  |  |  |
Contract liabilities |  | $ | 26,487 |  |  | $ | 39,747 |  |  | $ | 29,494 |
Compensation and benefits |  |  | 14,958 |  |  |  | 13,460 |  |  |  | 23,148 |
Warranties |  |  | 13,602 |  |  |  | 12,379 |  |  |  | 14,080 |
Dealer related liabilities |  |  | 9,730 |  |  |  | 4,180 |  |  |  | 8,396 |
Tax related liabilities |  |  | 8,360 |  |  |  | 1,639 |  |  |  | 7,820 |
Accrued environmental liabilities |  |  | 3,319 |  |  |  | 828 |  |  |  | 4,179 |
Operating lease liabilities |  |  | 3,079 |  |  |  | 3,787 |  |  |  | 3,159 |
Deferred revenue - lease |  |  | 1,629 |  |  |  | 1,201 |  |  |  | 1,064 |
Accrued insurance |  |  | 1,165 |  |  |  | 893 |  |  |  | 1,193 |
Other |  |  | 7,498 |  |  |  | 10,541 |  |  |  | 8,151 |
Total other current liabilities |  | $ | 89,827 |  |  | $ | 88,655 |  |  | $ | 100,684 |

Note 12 – Share Repurchases

There were no shares repurchased during the three months ended November 30, 2022 and 2021 under the Company’s share repurchase program. The remaining amount available under the repurchase program was $63.7 million as of November 30, 2022.

Note 13 – Industry Segment Information

The Company manages its business activities in two reportable segments: irrigation and infrastructure. The Company evaluates the performance of its reportable segments based on segment revenues, gross profit and operating income, with operating income for segment purposes excluding unallocated corporate general and administrative expenses, interest income,

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interest expense, other income and expenses, and income taxes. Operating income for segment purposes includes general and administrative expenses, selling expenses, engineering and research expenses and other overhead charges directly attributable to the segment. There are no inter-segment sales included in the amounts disclosed. The Company had no single customer who represented 10 percent or more of its total revenues during the three months ended November 30, 2022 or 2021.

Irrigation – This reporting segment includes the manufacture and marketing of center pivot, lateral move and hose reel irrigation systems and large diameter steel tubing as well as various innovative technology solutions such as GPS positioning and guidance, variable rate irrigation, remote irrigation management and scheduling technology, irrigation consulting and design and industrial internet of things, or “IIoT”, solutions. The irrigation reporting segment consists of one operating segment.

Infrastructure – This reporting segment includes the manufacture and marketing of moveable barriers, specialty barriers, crash cushions and end terminals, and road marking and road safety equipment. The infrastructure reporting segment consists of one operating segment.

|  | Three months ended |
($ in thousands) |  | November 30, 2022 |  |  | November 30, 2021 |
Operating revenues: |  |  |  |  |  |
Irrigation: |  |  |  |  |  |
North America |  | $ | 83,934 |  |  | $ | 78,976 |
International |  |  | 68,149 |  |  |  | 66,933 |
Irrigation total |  |  | 152,083 |  |  |  | 145,909 |
Infrastructure |  |  | 24,076 |  |  |  | 20,243 |
Total operating revenues |  | $ | 176,159 |  |  | $ | 166,152 |
Operating income: |  |  |  |  |  |
Irrigation |  | $ | 28,641 |  |  | $ | 17,212 |
Infrastructure |  |  | 3,372 |  |  |  | 2,766 |
Corporate |  |  | (7,415 | ) |  |  | (6,617 | )
Total operating income |  |  | 24,598 |  |  |  | 13,361 |
Interest and other expense, net |  |  | (593 | ) |  |  | (3,886 | )
Earnings before income taxes |  | $ | 24,005 |  |  | $ | 9,475 |

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ITEM 2 ‑ Management's Discussion and Analysis o f Financial Condition and Results of Operations

Concerning Forward‑Looking Statements

This Quarterly Report on Form 10-Q contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical are forward-looking and reflect information concerning possible or assumed future results of operations and planned financing of the Company. In addition, forward-looking statements may be made orally or in press releases, conferences, reports, on the Company's web site, or otherwise, in the future by or on behalf of the Company. When used by or on behalf of the Company, the words “expect,” “anticipate,” “estimate,” “believe,” “intend,” “will,” “plan,” “predict,” “project,” “outlook,” “could,” “may,” “should” or similar expressions generally identify forward-looking statements. The entire section entitled “Executive Overview and Outlook” should be considered forward-looking statements. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve a number of risks and uncertainties, including but not limited to those discussed in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2022. Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results or conditions, which may not occur as anticipated. Actual results or conditions could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described herein and in the Company’s other public filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2022, as well as other risks and uncertainties not now anticipated. The risks and uncertainties described herein and in the Company’s other public filings are not exclusive and further information concerning the Company and its businesses, including factors that potentially could materially affect the Company's financial results, may emerge from time to time. Except as required by law, the Company assumes no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

COVID-19 Impact

In March 2020, the World Health Organization declared coronavirus (COVID-19) a global pandemic. COVID-19 has had a limited impact on the Company’s manufacturing operations to date. While the Company implemented new procedures to protect the health and well-being of employees and customers, costs associated with these procedures have not been material. In addition, the pandemic has not had a material adverse effect on demand for the Company’s irrigation or infrastructure products; however, the COVID-19 pandemic did result in a slowdown of road construction activity and delays in certain project implementations. As pandemic conditions improved and economic activity increased, the Company experienced a number of supply chain challenges including increased lead times and limited availability of certain components, significant raw material inflation, and labor and logistics constraints.

The ongoing effects of the COVID-19 pandemic on the Company’s business, results of operations, or cash flows in future periods remain uncertain and will depend on numerous evolving factors that the Company may not be able to accurately predict or effectively respond to, including, without limitation: the duration and scope of any outbreak; the transmissibility and severity of new variants of COVID-19; actions taken by governments, businesses, and individuals in response to any outbreak; the effect on economic activity and actions taken in response; the effect on customers and their demand for the Company’s products and services; and the Company’s ability to manufacture, sell, and service its products, including without limitation as a result of supply chain challenges, facility closures, social distancing, restrictions on travel, fear or anxiety by the populace, and shelter-in-place orders.

Accounting Policies

In preparing the Company’s condensed consolidated financial statements in conformity with U.S. GAAP, management must make a variety of decisions which impact the reported amounts and the related disclosures. These decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In making these decisions, management applies its judgment based on its understanding and analysis of the relevant circumstances and the Company’s historical experience.

The Company’s accounting policies that are most important to the presentation of its results of operations and financial condition, and which require the greatest use of judgments and estimates by management, are designated as its critical accounting policies. See discussion of the Company’s critical accounting policies under Item 7 in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2022. Management periodically re-evaluates and

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adjusts its critical accounting policies as circumstances change. There were no significant changes in the Company’s critical accounting policies during the three months ended November 30, 2022.

Recent Accounting Guidance

See Note 1 – Basis of Presentation and the disclosure therein of recently adopted accounting guidance to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Executive Overview and Outlook

Operating revenues for the three months ended November 30, 2022 were $176.2 million, an increase of 6 percent compared to $166.2 million for the three months ended November 30, 2021. Irrigation segment revenues increased 4 percent to $152.1 million and infrastructure segment revenues increased 19 percent to $24.1 million. Net earnings for the three months ended November 30, 2022 were $18.2 million, or $1.65 per diluted share, compared to net earnings of $7.9 million, or $0.72 per diluted share, for the three months ended November 30, 2021.

The primary drivers for the Company’s irrigation segment are the need for irrigated agricultural crop production, which is tied to population growth and the attendant need for expanded food production, and the need to use water resources efficiently. These drivers are affected by a number of factors, including the following:

•
Agricultural commodity prices – As of November 2022, U.S. corn prices have increased approximately 15 percent and U.S. soybean prices have increased approximately 18 percent from November 2021. Higher commodity prices are being sustained by constrained supply levels globally coupled with higher demand. The continued conflict between Ukraine and Russia has put additional pressure on the availability of agricultural commodities, further increasing corn, wheat, and soybean prices.
•
Net farm income – As of December 2022, the U.S. Department of Agriculture (the “USDA”) estimated U.S. 2022 net farm income to be $160.5 billion, an increase of 14 percent from the USDA’s estimated U.S. 2021 net farm income of $141.0 billion. A projected increase in cash receipts and other cash farm-related income has more than offset a decrease in government support payments and higher cash expenses. If the estimated 2022 net farm income is realized, such income would be at its highest level since 1973.
•
Weather conditions – Demand for irrigation equipment is often positively affected by storm damage and prolonged periods of drought conditions as producers look for ways to reduce the risk of low crop production and crop failures. Conversely, demand for irrigation equipment can be negatively affected during periods of more predictable or excessive natural precipitation.
•
Governmental policies – A number of governmental laws and regulations can affect the Company’s business, including:
•
The Agriculture Improvement Act of 2018 (the “Farm Bill”) was signed into law in December 2018. The Farm Bill provides a degree of certainty to growers, including funding for the Environmental Quality Incentives Program, which provides financial assistance to farmers to implement conservation practices, and is frequently used to assist in the purchase of center pivot irrigation systems. The current Farm Bill will expire at the end of September 2023.
•
Changes to U.S. income tax laws enacted in December 2017 increased the benefit of certain tax incentives, such as the Section 179 income tax deduction and Section 168 bonus depreciation, which are intended to encourage equipment purchases by allowing 100 percent of the cost of equipment to be treated as an expense in the year of purchase rather than amortized over its useful life. This benefit is scheduled to be phased out over a five-year period, beginning in 2023 when the allowable deduction drops to 80 percent of the cost of equipment.
•
Biofuel production continues to be a major demand driver for irrigated corn, sugar cane and soybeans as these crops are used in high volumes to produce ethanol and biodiesel. In December 2022, the U.S. Environmental Protection Agency (“EPA”) proposed the Renewable Fuels Standard (RFS) volume requirements for 2023, 2024, and 2025. The proposed volumes for 2023 are comparable to the volume of renewable fuel estimated to be used in 2022, with years 2024 and 2025 increasing 5 percent and 4 percent, respectively.

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•
Many international markets are affected by government policies such as subsidies and other agriculturally related incentives. While these policies can have a significant effect on individual markets, they typically do not have a material effect on the consolidated results of the Company.
•
Currency – The value of the U.S. dollar fluctuates in relation to the value of currencies in a number of countries to which the Company exports products and in which the Company maintains local operations. The strengthening of the dollar increases the cost in the local currency of the products exported from the U.S. into these countries and, therefore, could negatively affect the Company’s international sales and margins. In addition, the U.S. dollar value of sales made in any affected foreign currencies will decline as the value of the dollar rises in relation to these other currencies.

Demand for irrigation equipment in the U.S. has remained robust over the same prior year period due to positive farmer sentiment resulting from strong agricultural commodity prices and a favorable outlook for net farm income. During this period the Company has been able to maintain its pricing while supply chain constraints, such as steel and other raw material costs as well as freight and logistics costs, eased. The Company expects to continue to actively track these circumstances and will monitor its prices as increased costs that are passed through become fully realized.

The most significant opportunities for growth in irrigation sales over the next several years continue to be in international markets where irrigation use is less developed and demand is driven primarily by food security, water scarcity and population growth. While international irrigation markets remain active with opportunities for further development and expansion, regional political and economic factors, including armed conflict, currency conditions and other factors can create a challenging environment. The Company continues to monitor the Ukraine and Russia conflict for both short and long-term implications and has suspended new business activity in Russia and Belarus since February 2022. Sales with Russian and Ukrainian customers historically have represented less than 5% of consolidated revenues. Additionally, international results are heavily dependent upon project sales which tend to fluctuate and can be difficult to forecast accurately.

The infrastructure business continues to be driven by the Company's transportation safety products, the demand for which largely depends on government spending for road construction and improvements. The enactment of the Infrastructure Investment and Jobs Act in November 2021 marked the largest infusion of federal investment into infrastructure projects in more than a decade. This legislation introduced $110 billion in incremental federal funding, planned for roads, bridges, and other transportation projects, which the Company anticipates will translate into higher demand for its transportation safety products.

The backlog of unshipped orders at November 30, 2022 was $129.6 million compared with $154.8 million at November 30, 2021. The Company’s backlog can fluctuate from period to period due to the seasonality, cyclicality, timing and execution of contracts. Backlog typically represents long-term projects as well as short lead-time orders, and therefore is generally not a good indication of the next fiscal quarter’s revenues.

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Results of Operations

For the Three Months ended November 30, 2022 compared to the Three Months ended November 30, 2021

The following section presents an analysis of the Company’s operating results displayed in the condensed consolidated statements of earnings for the three months ended November 30, 2022 and 2021. It should be read together with the industry segment information in Note 13 to the condensed consolidated financial statements:

|  | Three months ended |  |  |
($ in thousands) |  | November 30, 2022 |  |  | November 30, 2021 |  |  | Percent Change
Consolidated |  |  |  |  |  |  |  |
Operating revenues |  | $ | 176,159 |  |  | $ | 166,152 |  |  | 6%
Gross profit |  | $ | 53,020 |  |  | $ | 37,438 |  |  | 42%
Gross margin |  |  | 30.1 | % |  |  | 22.5 | % |  |
Operating expenses (1) |  | $ | 28,422 |  |  | $ | 24,077 |  |  | 18%
Operating income |  | $ | 24,598 |  |  | $ | 13,361 |  |  | 84%
Operating margin |  |  | 14.0 | % |  |  | 8.0 | % |  |
Other income (expense), net |  | $ | (593 | ) |  | $ | (3,886 | ) |  | -85%
Income tax expense |  | $ | 5,788 |  |  | $ | 1,574 |  |  | 268%
Overall income tax rate |  |  | 24.1 | % |  |  | 16.6 | % |  |
Net earnings |  | $ | 18,217 |  |  | $ | 7,901 |  |  | 131%
Irrigation Segment |  |  |  |  |  |  |  |
Segment operating revenues |  | $ | 152,083 |  |  | $ | 145,909 |  |  | 4%
Segment operating income |  | $ | 28,641 |  |  | $ | 17,212 |  |  | 66%
Segment operating margin |  |  | 18.8 | % |  |  | 11.8 | % |  |
Infrastructure Segment |  |  |  |  |  |  |  |
Segment operating revenues |  | $ | 24,076 |  |  | $ | 20,243 |  |  | 19%
Segment operating income |  | $ | 3,372 |  |  | $ | 2,766 |  |  | 22%
Segment operating margin |  |  | 14.0 | % |  |  | 13.7 | % |  |

(1)
Includes $7.4 million and $6.6 million of corporate operating expenses for the three months ended November 30, 2022 and 2021, respectively.

Revenues

Operating revenues for the three months ended November 30, 2022 increased 6 percent to $176.2 million from $166.2 million for the three months ended November 30, 2021, as irrigation revenues increased $6.2 million and infrastructure revenues increased $3.8 million. The irrigation segment provided 86 percent of the Company’s revenue during the three months ended November 30, 2022 as compared to 88 percent for the three months ended November 30, 2021.

North America irrigation revenues for the three months ended November 30, 2022 of $83.9 million increased $5.0 million, or 6 percent, from $79.0 million for the three months ended November 30, 2021. The increase resulted primarily from the impact of higher average selling prices as unit sales volume was comparable to the same prior year period. Demand for irrigation equipment is supported by favorable agricultural commodity prices and farm income, while higher average selling prices result from the pass through of higher raw material costs to customers.

International irrigation revenues for the three months ended November 30, 2022 of $68.1 million increased $1.2 million, or 2 percent, from $66.9 million for the three months ended November 30, 2021. Higher sales in Brazil and other markets more than offset the impact of lower sales in Ukraine and Russia and a large Egypt project in the same prior year period that did not repeat. The current year was also impacted by the unfavorable effects of foreign currency translation of approximately $1.6 million compared to the same prior year period.

Infrastructure segment revenues for the three months ended November 30, 2022 of $24.1 million increased $3.8 million, or 19 percent, from $20.2 million for the three months ended November 30, 2021. The increase resulted from increased sales of Road Zipper Systems, which were partially offset by lower Road Zipper System lease revenue and lower sales of road safety products.

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Gross Profit

Gross profit for the three months ended November 30, 2022 of $53.0 million increased 42 percent from $37.4 million for the three months ended November 30, 2021. The increase in gross profit resulted primarily from higher revenues in both segments along with improved gross margin. Gross margin was 30.1 percent of sales for the three months ended November 30, 2022 compared with 22.5 percent of sales for the three months ended November 30, 2021. Increased gross profit and gross margin in Irrigation resulted primarily from improved price realization, lower inflationary impact on input costs and a more favorable margin mix of international revenues compared to the same prior year period. Increased gross profit and gross margin in Infrastructure resulted primarily from higher revenues and lower inflationary impact on input costs compared to the same prior year period. This increase was partially offset by a less favorable margin mix of revenues compared to the same prior year period. Gross profit for Irrigation and Infrastructure in the prior year included additional expense of $5.0 million and $1.0 million, respectively, resulting from the impact of the LIFO method of accounting for inventory while the impact on each segment in the current year was minimal.

Operating Expenses

Operating expenses of $28.4 million for the three months ended November 30, 2022 increased $4.3 million, or 18 percent, compared with $24.1 million for the three months ended November 30, 2021. The increase resulted primarily from higher incentive expense attributable to improved business results, and higher sales commissions and increased spending on new product development compared to the same prior year period.

Other Expense, net

The Company recorded other expense of $0.6 million for the three months ended November 30, 2022 compared to $3.9 million for the three months ended November 30, 2021. The change resulted primarily from lower foreign currency transaction losses compared to the same prior year period.

Income Taxes

The Company recorded income tax expense of $5.8 million and $1.6 million for the three months ended November 30, 2022 and 2021, respectively. The effective income tax rate was 24.1 percent and 16.6 percent for the three months ended November 30, 2022 and 2021, respectively. The higher effective tax rate reflects an increased proportion of earnings in higher rate foreign jurisdictions in the current year period. In addition, the same prior year period benefited from the impact of larger discrete items.

Liquidity and Capital Resources

The Company's cash, cash equivalents, and marketable securities totaled $110.6 million at November 30, 2022 compared with $114.9 million at November 30, 2021 and $116.5 million at August 31, 2022. The Company requires cash for financing its receivables and inventories, paying operating expenses and capital expenditures, and for dividends and share repurchases. The Company meets its liquidity needs and finances its capital expenditures from its available cash and funds provided by operations along with borrowings under its credit arrangements described below. The Company’s investments in marketable securities are primarily comprised of United States government securities and investment grade corporate securities. The Company believes its current cash resources, investments in marketable securities, projected operating cash flow, and remaining capacity under its continuing bank lines of credit are sufficient to cover all its expected working capital needs, planned capital expenditures and dividends. The Company may require additional borrowings to fund potential acquisitions in the future.

The Company’s total cash and cash equivalents held by foreign subsidiaries were approximately $51.3 million, $35.5 million, and $49.0 million as of November 30, 2022, November 30, 2021, and August 31, 2022, respectively. The Company considers earnings in foreign subsidiaries to be indefinitely reinvested and would need to accrue and pay incremental state, local, and foreign taxes if such earnings were repatriated to the United States. The Company does not intend to repatriate the funds and does not expect these funds to have a significant impact on the Company’s overall liquidity.

Net working capital was $332.8 million at November 30, 2022, as compared with $278.5 million at November 30, 2021 and $316.2 million at August 31, 2022. Cash provided by operating activities totaled $4.7 million during the three months ended November 30, 2022, compared to cash used in operating activities of $24.2 million during the three months ended November 30, 2021. This change was primarily due to higher net earnings and a reduction in inventories compared to the same prior year period that reflected an increase in inventories.

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Cash flows used in investing activities totaled $4.2 million during the three months ended November 30, 2022 compared to $14.2 million during the three months ended November 30, 2021. The current year does not include any activity related to marketable securities compared to net purchases of $10.8 million in the same prior year period. Purchases of property, plant, and equipment were $3.8 million, compared to $3.1 million in the same prior year period.

Cash flows used in financing activities totaled $6.2 million during the three months ended November 30, 2022 compared to cash flows used in financing activities of $2.3 million during the three months ended November 30, 2021. The Company did not have any proceeds from the exercise of stock options in the current year period compared to $2.4 million in the same prior year period.

Capital Allocation Plan

The Company’s capital allocation plan is to continue investing in revenue and earnings growth, combined with a defined process for enhancing returns to stockholders. Under the Company’s capital allocation plan, the priorities for uses of cash include:

•
Investment in organic growth including capital expenditures and expansion of international markets,
•
Dividends to stockholders, along with expectations to increase dividends over time,
•
Synergistic acquisitions that provide attractive returns to stockholders, and
•
Opportunistic share repurchases taking into account cyclical and seasonal fluctuations.

Capital Expenditures

Capital expenditures for fiscal 2023 are expected to be between $20.0 million and $25.0 million, including equipment replacement, productivity improvements and new product development. The Company’s management does maintain flexibility to modify the amount and timing of some of the planned expenditures in response to economic conditions.

Dividends

In the first quarter of fiscal 2023, the Company paid a quarterly cash dividend to stockholders of $0.34 per common share, or $3.7 million, compared to a quarterly cash dividend of $0.33 per common share, or $3.6 million, in the first quarter of fiscal 2022.

Share Repurchases

The Company’s Board of Directors authorized a share repurchase program of up to $250.0 million of common stock with no expiration date. Under the program, shares may be repurchased in privately negotiated and/or open market transactions as well as under formalized trading plans in accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. There were no shares repurchased during the three months ended November 30, 2022 or 2021. The remaining amount available under the repurchase program was $63.7 million as of November 30, 2022.

Long-Term Borrowing Facilities

Senior Notes. The Company has outstanding $115.0 million in aggregate principal amount of Senior Notes, Series A (the “Senior Notes”). The entire principal of the Senior Notes is due and payable on February 19, 2030. Interest on the Senior Notes is payable semi-annually at a fixed annual rate of 3.82 percent. Borrowings under the Senior Notes are unsecured. The Company used the proceeds of the sale of the Senior Notes for general corporate purposes, including acquisitions and dividends.

Revolving Credit Facility. The Company has outstanding a $50.0 million unsecured Amended and Restated Revolving Credit Facility (the “Revolving Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”) expiring August 26, 2026. The Company intends to use borrowings under the Revolving Credit Facility for working capital purposes and to fund acquisitions. At November 30, 2022 and 2021, the Company had no outstanding borrowings under the Revolving Credit Facility. The amount of borrowings available at any time under the Revolving Credit Facility is reduced by the amount of standby letters of credit issued by Wells Fargo then outstanding. At November 30, 2022, the Company had the ability to borrow up to $50.0 million under the Revolving Credit Facility. The Revolving Credit Facility may be increased by up to an additional $50.0 million at any time, subject to additional commitment approval. Borrowings under the Revolving Credit Facility bear interest at a variable rate equal to the Secured Overnight Financing Rate (“SOFR”) plus a margin of between 100 and 210 basis points depending on the Company’s leverage ratio then in effect (which resulted in a variable rate of 5.17 percent at November 30, 2022), subject to adjustment as set forth in the loan documents for the Revolving Credit Facility.

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Interest is paid on a monthly to quarterly basis depending on loan type. The Company currently pays an annual commitment fee on the unused portion of the Revolving Credit Facility. The fee is between 0.125 percent and 0.2 percent on the unused balance depending on the Company’s leverage ratio then in effect (which resulted in a fee of 0.125 percent at November 30, 2022).

Borrowings under the Revolving Credit Facility have equal priority with borrowings under the Company’s Senior Notes. Each of the credit arrangements described above include certain covenants relating primarily to the Company’s financial condition. These financial covenants include a funded debt to EBITDA leverage ratio and an interest coverage ratio. In the event that the loan documents for the Revolving Credit Facility were to require the Company to comply with any financial covenant that is not already included or is more restrictive than what is already included in the arrangement governing the Senior Notes, then such covenant shall be deemed incorporated by reference for the benefit of holders of the Senior Notes. Upon the occurrence of any event of default of these covenants, including a change in control of the Company, all amounts outstanding thereunder may be declared to be immediately due and payable. At November 30, 2022 and 2021, the Company was in compliance with all financial loan covenants contained in its credit arrangements in place as of each of those dates.

Series 2006A Bonds. Elecsys International LLC, a wholly owned subsidiary of the Company, has outstanding $0.9 million in principal amount of industrial revenue bonds that were issued in 2006 (the “Series 2006A Bonds”). Principal and interest on the Series 2006A Bonds are payable monthly through maturity on September 1, 2026. The interest rate is adjustable every five years based on the yield of the 5-year United States Treasury Notes, plus 0.45 percent (1.72 percent as of November 30, 2022). This rate was adjusted on September 1, 2021 in accordance with the terms of the bonds, and the adjusted rate will be in force through maturity. The obligations under the Series 2006A Bonds are secured by a first priority security interest in certain real estate.

Contractual Obligations and Commercial Commitments

There have been no material changes in the Company’s contractual obligations and commercial commitments as described in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2022.

ITE M 3 – Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the Company’s quantitative and qualitative disclosures about market risk previously disclosed in the Company’s most recent Annual Report on Form 10-K. See discussion of the Company’s quantitative and qualitative disclosures about market risk under Part II, Item 7A in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2022.

ITEM 4 – Controls and Procedures

Disclosure Controls and Procedures

The Company carried out an evaluation under the supervision and the participation of the Company’s management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of November 30, 2022.

Changes in Internal Control over Financial Reporting

The CEO and CFO determined that there has not been any significant change to the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II – OTHE R INFORMATION

ITEM 1 – Legal Proceedings

See the disclosure in Note 8 – Commitments and Contingencies to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is hereby incorporated herein by reference.

ITEM 1A – R isk Factors

There have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussions of the Company’s risk factors under Part I, Item 1A in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2022.

ITEM 2 – Unregistered Sales of Equ ity Securities and Use of Proceeds

None.

ITEM 3 – Defaults Upo n Senior Securities

None.

ITEM 4 – Mine Sa fety Disclosures

Not applicable.

ITEM 5 – Othe r Information

None.

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ITEM 6 – Exhibits

Exhibit |  |
No. |  | Description
3.1 |  | Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on December 14, 2006.
3.2 |  | Amended and Restated By‑Laws of the Company, effective October 17, 2018, incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on October 19, 2018.
4.1 |  | Specimen Form of Common Stock Certificate, incorporated by reference to Exhibit 4(a) of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2006.
10.1* |  | Lindsay Corporation Management Incentive Plan (MIP) 2023 Plan Year. † **
10.2* |  | Lindsay Corporation Policy on Payment of Director Fees and Expenses.
10.3* |  | First Amendment to Lindsay Corporation 2015 Long-Term Incentive Plan. †
10.4* |  | Lindsay Corporation Directors Nonqualified Deferred Compensation Plan.
31.1* |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 18 U.S.C. Section 1350.
31.2* |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 18 U.S.C. Section 1350.
32.1* |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 18 U.S.C. Section 1350.
101* |  | Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language ("Inline XBRL").
104* |  | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

† Management contract or compensatory plan or arrangement required to be filed as an exhibit hereto pursuant to Item 6 of Part II of Form 10-Q.

* Filed herein.

** Certain confidential portions of this Exhibit were omitted by means of redacting a portion of the text. This Exhibit has been filed separately with the Secretary of the Commission with the redacted text pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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Table of Contents

SIGNA TURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 5th day of January 2023.

|  |  | LINDSAY CORPORATION
| By: |  | /s/ BRIAN L. KETCHAM
| Name: |  | Brian L. Ketcham
| Title: |  | Senior Vice President and Chief Financial Officer
|  |  | (on behalf of the registrant and as principal financial officer)

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