Lindsay Corp (LNN) 2010 Q2 法說會逐字稿

Good morning, my name is Rachel and I will your conference operator today.

At this time I would like to welcome everyone to the Lindsay Corporation 2010 second-quarter conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks there will be a question-and-answer session.

(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 in those 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.

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's 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 fiscal 2010 were $171.2 million, down 4% from the first half of fiscal 2009 as the first quarter of fiscal 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 fiscal 2009.

In the US irrigation market revenues were $38.8 million for the second quarter, increasing 16% over the same quarter last year.

Agricultural commodity prices for corn, soybeans and wheat are relatively similar to prices at the same time last year; however, there is a sense that farmer sentiments are moving beyond the shock effect of the economic recession experienced last year.

USDA projections for 2010 net farm income forecast a 12% increase when compared to 2009 estimates and the estimate is near the 10-year average.

US irrigation demand for the full fiscal 2010 year remains unclear as we're still only halfway through the peak selling period.

But we have experienced improved demand in most all regions of the country and overall irrigation demand is expected to be slightly better than fiscal 2009.

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 rose significantly as farmers raced to receive equipment driven by the logistics of a government subsidy that required installation of equipment by March 15.

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 and a 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 and contract manufacturing and commercial tubing compared to the prior year's 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 road work 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% site for the second quarter last year reflecting higher infrastructure and irrigation margin.

Infrastructure margins increased primarily from the increased revenues of 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 action to 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 US 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 inclusion of $700,000 of incremental expense for additional environmental monitoring and 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's 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, the 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 and equivalents were $50.5 million higher while long-term debt has been reduced by $6.2 million improving our net cash position by $56.7 million.

Accounts receivable decreased $5.4 million from the same time last year even with the higher sales.

Favorable terms of sales to customers in both irrigation and infrastructure resulted in a much improved DSO versus the prior year.

Inventories 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 US irrigation revenues reflected an improvement in farmer sentiment over the same time last year.

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

We are seeing some benefit of 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 rainwater harvesting and railroad structures product lines.

Our actions to enhance cash flow through the reduction in working capital have resulted in a stronger balance sheet with further improved net cash position.

We have increased our emphasis on finding accretive acquisitions that expand our product lines within our existing business segments and that add new businesses synergistic to our core.

I'm optimistic that this process will yield additional growth opportunities.

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

Our strong 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.

(Operator Instructions).

Alex Potter, Piper Jaffray.

I was just wondering if you could give a little bit more color here on international markets and if you could compare and contrast those to the domestic irrigation market?

Clearly they were 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 the Mexico subsidy issue.

But if you could just elaborate on that -- what are kind of your growth expectations internationally versus domestically?

And what are some of the regions that you see out performing?

Yes, well, we've commented in the past that we've projected that the US 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 markets, 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 that is really picking up again; Eastern Europe, which is still 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 percent type growth in those markets in the past.

And in the near term here over the next say several quarters as you look out you noted that I guess irrigation demand globally seems to be better.

Would you say it's fair to say that it's substantially better globally than it is in the domestic market?

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 US 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 will be good.

I think 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 more -- I shouldn't say up and down -- but probably a more erratic growth rate in those markets then we will in the US.

Okay, fair enough.

I was just wondering also if you could comment here on gross margin stability.

I know that you mentioned some of the pricing pressure you're seeing in domestic markets.

You also mentioned that there were I guess 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 steel -- increasing steel costs and then some additional color there I guess on what the regional variation is?

Yes.

Well, 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 we've also, as an industry segment and company, 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.

But as 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 in the last probably 35 to 45 days, probably more increased competition in terms of -- or more signs of let's say some competition on 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 certainly are going to watch and try to manage the best we can as we go forward.

I'd 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 need.

And 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 have priced in at this time into our pricing.

So there isn't any action necessarily required.

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

In terms of the regional mix question, that was really a reference to the -- as I said, we had a larger sale 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.

Okay.

Fair enough.

And then I guess just my last question here on M&A.

You mentioned that you're still actively looking.

I guess if it's possible, what areas are you looking mostly at?

Would you look at expanding say your irrigation presence internationally?

How do you prioritize what the -- domestic versus international and then I guess schematically irrigation versus infrastructure versus something entirely new?

Yes, we've tended to really prioritize 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 rain water harvesting equipment through our Watertronics acquisition.

And it could be pump type systems; it could be rain water harvesting or storm water management or a number of different areas that we look at.

But primarily oriented into that water conservation, water management part of it, not necessarily what I would consider to be water infrastructure.

But 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 -- say a third core to build off of.

But primarily we're focused in the water area.

Okay.

Very good, thanks a lot for taking the questions.

Thank you.

Brian Drab, William Blair.

Good morning.

I just wanted to start by getting a little more clarity around the one-time expenses in the quarter.

I think you did a good job in the press release of calling this all out.

So $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 after-tax -- you know, the pretax and after-tax amounts for the balance of those credits and where they fell in terms of SG&A or COGS?

Brian, 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 effect in the tax line is the $1.1 million.

Okay.

$300,000 in SG&A on a pretax basis?

Correct.

Okay.

And the net effect of that was $1.1 million.

And then can you connect that for me to the total of $2 million?

Sure.

The $600,000 in COGS, $300,000 in SG&A, a pretax $1.4 million, tax affected by $300,000 for the above the line items, for a net of $1.1 million.

So it is $900,000 above and net $1.1 million on the tax line for a total of $2 million.

Okay.

I think that is clear.

And the total of $2 million is after-tax?

Correct.

Okay.

And the $900,000 above and the $1.4 million.

All right, I think that is clear.

And then one more question just on the international irrigation market, which I understand had the benefit from the Mexico demand in the quarter.

As we look to the third quarter, which is typically the seasonally 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?

It will depend, Brian, a little bit on funding availability in some markets.

The Southern markets will be a little more -- will be 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.

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

Yes, yes.

Okay, I'll get back in line.

Thanks.

Thank you.

Paul Mammola, Sidoti & Company.

Good morning, everyone.

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

Yes.

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.

And those have been disappointing in the sense that we really were starting to see those pick up in 2007 and 2008, pull back in 2009 due to funding availability.

And I would describe it today as still a tremendous amount of interest.

However, funding is a bit restrictive in terms of being able to move forward on those projects, farmers being able to get funding.

So 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 -- we've got the government subsidy which assists.

But funding hasn't really specifically been a problem and 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.

Okay.

Understood there.

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

No, 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 one-third of the machines going into replacement, one-third into conversion from flood or other methods, and one-third into dry land putting irrigation on for the first time.

What we saw in 2008 was the dry land percentage moved up to about 40% in that year for us.

And I would expect that we would see a fairly traditional one-third, one-third, one-third split this year.

And indications are from looking at the past quarter that that's kind of the trend right now.

Okay.

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

No, that charge is specifically for some work done.

And what this refers back to is an issue with our Lindsay, Nebraska Manufacturing site, which was put on the Superfund site back in 1989 due to some discovered environmental contamination in groundwater in 1980s.

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.

And every five years we have a new work plan.

We just submitted a while 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 estimable at this point and there may be from time to time 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 expensed in some quarter.

Okay.

And then finally on infrastructure.

I guess with that last 20% of the Mexico City Project falling into the quarter, I guess I would have expected a little higher margin.

So should we think that maybe the contract manufacturing falloff is really a bigger piece in terms of profitability or the profitability falloff?

And if your expectation that the season coming back would sort of make up the shortfall from the Mexico City Project at this point -- on a run rate basis going forward?

I think the simple answer is, yes.

It's a little more complex in that there are a couple of things that happened; 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 felt off is the tubing business which is a pretty high-margin or attractive margin piece of business for us.

And that one has pulled back also partly -- I'd say primarily due to just general recession of fact.

So that had an impact in the quarter.

And there's a mixed change that's taking place, or we're trying to have take place within our infrastructure segment to move more towards more proprietary type products.

So, for example, we added the rail structure product line through a small acquisition back at the end of 2008 -- 2009 rather.

And we will hopefully be -- 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 -- the road safety products outside of the quick move barrier product line grow, we expect to cost reduce those products, we expect to change the mix of that product line and infrastructure to include more proprietary product.

Those will all be beneficial to margins for that segment.

Okay.

Thanks for your time, Rick.

Thank you.

(Operator Instructions).

Jason Kraft, Cato Partners.

Hey, guys, nice showing on the international front.

Two questions.

First on the price pressure.

At least as long as we've been following you guys, haven't really heard you guys 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?

Yes, I'd probably go back to about the 2007 time period; we saw price pressure probably in about the 2004 and 2005 period also.

But it's been a while.

And I'm not -- 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 is steel going up and our ability to pass through increases, which I'm not concerned about.

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 periods or just becoming a little more -- 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.

What is your sense that is leading to the price pressure or at least the early signs?

Is it dealer inventory or what would motivate other competitors to get aggressive on price?

No, 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.

It is usually some competitor's attempt to try and take market share.

Okay.

And on your slide deck on the website, 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 guys posted a negative 6.7% op margin on infrastructure even with the $4 million or so, the high-margin Mexico City Project.

So what happened in the quarter -- I know last quarter you guys had nice operating margins because there was a lot of Mexico City.

But what happened there in terms of the mix?

So do you guys posted the negative op margin?

I think the other factor that enters into this is the seasonality of the road safety products.

The quick move barrier projects are not as seasonal and will be more project oriented and could happen any time any part of the world in any part of the world during the year.

But the other road safety products, the crash cushions, the absorbed crash type product, some of the other products sold through Barrier Systems or Snoline will be more seasonal in the sense that they're really going to be sold and used through the peak road construction roadwork period, which really starts in the spring.

So there is that seasonal impact in addition to the -- let's say changing that product mix effect that I talked about a little while ago.

Got it.

Okay, helpful.

Thanks.

Michael Coleman, Sterne Agee.

Good morning.

Your margin on the irrigation showed pretty strong performance and you talked about strength in Mexico.

I guess my question is, as the international shifts back to -- the assumption here is that you service Mexico out of North America manufacturing for -- have a higher margin.

But as the international shifts back to markets that aren't necessarily served out of North America will there be some volatility or would you see that 17.5% operating margin on irrigation is sustainable in the near term?

I think I understand your question.

And I think 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 -- it's a fairly, very highly integrated factory of steel coil and making tubing and galvanizing and everything on site, where the international manufacturing facilities are less integrated where we'll buy tubing outside and do 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.

And I'd say, yes, you could have that impact.

But I don't necessarily think that I would -- I wouldn't necessarily model that in from the standpoint of exports grow and the international business pieces grow.

All of that is part of the international segment of our business.

So I'm not sure that that mix will significantly change.

Okay.

How do you view, kind of going forward, your cash flow and free cash relative to your net income and the relationship there?

There's been a fair amount of volatility over the last year, it seems to have kind of come in line in the most recent quarter.

But should you be generating cash flow from operations that are significantly in excess of net income or how does that -- should that relationship work?

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.

On a pretax basis?

Yes.

Okay.

And you mentioned acquisitions -- that you've got an increased emphasis with respect to acquisitions in water and some optimism (technical difficulty).

And you mentioned the international irrigation companies.

I'm just curious kind of what level of -- what kind of multiples international irrigation companies trade at.

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 then the second piece of this, obviously you've got a fair amount of cash, but how do you think about funding a sizable acquisition?

Well, I'd say that I really don't see that, looking at the international irrigation companies I don't see that as increasing the hurdle in any way.

I think if you're looking at the kinds of multiples that we're going to pay, it will really vary.

Most of those that we've 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 would want to add to the line.

So I think from that standpoint you're not really going to have cannibalization or any 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 significant 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 stocks, we would consider that as an option as well.

Okay, thank you.

Thank you.

[John Best], 4Point.

They already answered my question.

Cheers.

[Peter Brider], [Global Investor Capital].

(technical difficulty) of goods sold steel normally represent on the irrigation side?

I'm sorry, I missed the first part of your question.

It was muffled.

The 1% of the sales, what percent of comps does steel represent on the irrigation side?

It's about one-third of cost of goods sold.

Okay.

Now you made reference to competition.

I think in prior conversations with other corporate offices, I understand Valmont, a 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?

There are primarily two competitors in the US market, it's Valmont and Reinke.

And those are the two competitors we run into generally.

And those are the two I'm referring to.

Okay.

The third question you may not want to answer, but I'm looking at the Thomson estimate tear sheet and they have a consensus estimate for 2010 of $1.53, next year $1.55 plus 7.8%, but a surprising jump to $2.25 in fiscal year 2012 which is up 36.4% over 2011.

Any comments on that or (multiple speakers)?

You're right (multiple speakers).

(multiple speakers) I'm curious to find, just if you can, you may not be able to, but I'm curious just to understand why the Street thinks that 2012 is going to be significantly better than 2011?

That is one I really cannot comment on.

Okay.

I thank you.

Thank you.

Jason Kraft, Cato Partners.

Hey, guys, a quick full follow-up.

So I can try and normalize out the seasonality on international irrigation for my model, can you guys maybe attribute how much of the Mexico irrigation rev this quarter was of one-time nature due to that government subsidy?

Well, we really can't split out the -- I would rather not split out the Mexico piece of it specifically for competitive purposes.

I don't really 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 somewhere 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.

And it's usually the third quarter is the strongest at about one-third of our year.

And it will vary by -- in the international market, 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 a 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.

Okay, thanks.

Thanks.

Thank you.

I will now turn it back over to Rick Parod for closing comments.

For our business overall the global long-term drivers of water conversation, population growth, increasing importance of biofuels 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 share -- market expansion, improvements in margins, and strategic acquisitions.

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

Thank you, ladies and gentlemen.

You may now disconnect.