Lindsay Corp (LNN) 2014 Q4 法說會逐字稿

Good morning. My name is Vanessa and I will be your conference operator today. At this time, I would like the to welcome everyone to the Lindsay Corporation fourth-quarter 2014 earnings call.

(Operator Instructions)

During this call, Management may make forward-looking statements that are subject to risk and uncertainties 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 at the Company and those statements preceded by, followed by, or including the words expectation, outlook, could, may, should, or similar expressions. For these statements, we claim the protection of the Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

I would now like to turn the call over to Mr. Rick Parod, President and Chief Executive Officer. Please go ahead, sir.

Good morning and thank you for joining us today. With me on today's call is Jim Raabe, Lindsay Corporation's Chief Financial Officer and Lori Zarkowski, our Chief Accounting Officer.

Total revenues for the fourth quarter of FY14 were $147.5 million, slightly less than the record $148.4 million in revenue in the same quarter last year. Both irrigation and infrastructure revenues were in line with the same quarter of last year.

Operating margins increased to 11% in the quarter, compared to 10.6% in the same quarter of last year, primarily due to an improvement in gross margins related to sales mix. Net earnings were $11.3 million, or $0.89 per diluted share, compared with $10.4 million, or $0.81 per diluted share, in the prior-year quarter.

Total revenues for FY14 were $617.9 million, decreasing 11% from the same period last year. Net earnings were $51.5 million, or $4 per diluted share, as compared to $70.6 million, or $5.47 per diluted share, in the prior year.

For the irrigation segment in total, sales were $125.8 million in the quarter, 2% lower than the same quarter of last year. Irrigation operating margins increased to 14.9% of sales from 14.5% of sales last year due to a higher mix of US sales.

In the US irrigation market, revenues were $70.7 million for the fourth quarter, increasing 31% over the same period last year, primarily due to replacement machine revenue driven by spring and summer storms. The severe storms across the Midwest resulted in incremental revenue approximately $15 million to $20 million higher in the quarter than normal.

The higher revenue in the quarter also included Lakos filtration products, the business acquired late last year. Excluding the storm damage revenue and Lakos, US irrigation sales declined in the fourth quarter by approximately 14%.

Corn prices continued to decline during the quarter on indication of strong yields in the current growing season and a significant increase in ending stocks of corn. The lower agricultural commodity prices continued the downward pressure on irrigation equipment demand in the US.

In addition, in August the USDA forecasted 2014 net farm income to be 16% below 2013, which was still above the 10 year average. At this point, US irrigation revenue for FY15 remains very difficult to predict, although the significant increase projected in the stocks-to-use ratios for corn, the recent decrease in crop prices and abnormal storm damage revenue in FY14 have created challenging comparatives conditions for FY15 in the US market.

In the international irrigation markets, revenues for the fourth quarter were $55.1 million, decreasing 26% over the same quarter of last year. Comparatively, revenues decreased $17.4 million from the Iraq contract revenues included in the fourth quarter of FY13. This accounted for more than 90% of the decrease in the quarter from the same time last year.

Decreases in other regions were offset by the inclusion of international revenue from Lakos. For the full year of FY14, total irrigation segment revenues decreased 14% to $539.9 million.

US irrigation market revenues also declined by 14% from the previous year, driven by declining crop prices and the lessening of drought conditions in the corn belt. Excluding Lakos and incremental irrigation sales associated with the abnormal storm damage in the Midwest, US irrigation sales declined by approximately 26%. Sales in the international irrigation markets decreased 13% from the previous year, primarily due to the Iraq contract revenues included in FY13.

Operating margins for the irrigation segment were 17% in 2014, compared to 20% last year, primarily due to cost deleverage on lower sales. Infrastructure segment revenues were $21.7 million in the quarter, increasing 7% from the same quarter of last year. The infrastructure segment generated operating income of $2.1 million in the quarter, compared to $2.4 million in the fourth quarter of last year, due to lower sales of Road Zipper Systems.

For the full year of FY14, infrastructure revenues increased 20% to $78 million, with significant increases of road safety products and rail products. For the year, operating income was $3.5 million, compared to $800,000 loss last year, driven by the higher volume.

We've made significant progress in infrastructure profitability in 2014 through revenue increases and managing expenses. We expect to see further improvement in profitability in 2015, which will include revenue from the Golden Gate Bridge project currently scheduled for the second fiscal quarter of 2015.

US highway bill signed in August only provides funding for 10 months, creating future funding uncertainty for road safety product revenues. In spite of government spending uncertainty, we believe we can continue to capitalize on the progress we made in 2014 in the infrastructure segment, including market share increases in key product categories, margin improvements through manufacturing efficiencies, and expense management.

Gross profit in the fourth quarter was $39.9 million, or 27.1% of sales, versus $38.6 million, or 26% of sales, in the same quarter of last year. Gross margins in irrigation increased by nearly 2 percentage points, primarily due to a change in sales mix. Infrastructure gross margins declined by approximately 3 percentage points, primarily due to lower Road Zipper Systems sales.

Operating expenses in the fourth quarter increased to $23.7 million from $22.8 million in the prior-year period. Excluding the acquired Lakos filtration business, operating expenses decreased by $1.1 million in the quarter. Operating expenses with Lakos increased to 16.1% of sales for the quarter compared to 15.3% of sales in the same period last year.

The order backlog on August 31, 2014 was $79.6 million, compared to $66.5 million August 31, 2013. Backlog at the end of FY14 includes $12.7 million order for the Road Zipper System project on the Golden Gate Bridge, which we expect to recognize in revenue in FY15. In addition, backlog includes $2.6 million remaining from the Iraq contract, which is currently on hold as a result of security concerns in the region.

Year over year, US and international irrigation backlogs have decreased, reflecting the change of agricultural market conditions while infrastructure backlog has increased. Our backlog typically represents some long-term irrigation and infrastructure projects, as well as short lead time orders and, therefore, as I've indicated in past quarters, backlog is generally not a good indication of future quarters' revenues.

Cash and cash equivalents were $172 million at the end of the fiscal quarter -- fiscal year, and were $20 million higher than the same time last year. Accounts receivable were $26 million lower year over year, due primarily to collections on the Iraq contract.

During FY14, we began executing against our capital allocation plan announced in January, including a doubling of the dividend at that time. In FY14, we paid out $11.7 million of dividends and had capital expenditures increase to $17.7 million. We repurchased 498,000 shares for $41 million during the fiscal year, including $23.3 million in repurchases in the fourth quarter.

In summary, FY14 reflected a transition from the bullish agricultural irrigation market conditions we experienced in the past few years, through contracting market due to improved crop production conditions in the US. While the market contracted, fueled by declining corn prices, the abnormally high equipment sales resulting from storms in the Midwest softened the negative impact in the past two quarters. Due to the superb responsiveness of our Nebraska factory and entire irrigation team, we were able to quickly respond to the urgent needs of our customers and dealers and provide the equipment needed in the peak of the growing season.

Looking forward, we expect that irrigation sales will be affected again in 2015 by the lower crop prices, the projected reductions in farm income, as well as political instability in various regions of the world. However, the extent and the duration of the current cyclical downturn is very difficult to predict. Our team is confident that our investment to competitively advantaged products and services will continue to position us well now and as agricultural market conditions improve.

Today we have a leadership position with our irrigation management platform, FieldNET, which we intend to defend and expand. We offer the most comprehensive package of high-quality irrigation solutions for growers in the industry, which we will continue to build and leverage.

For the infrastructure business, we made significant progress this year in returning to profitability with sales growth and margin improvement. We believe we can continue this progress in 2015 with further growth and margin gains, despite the lack of long-term US highway funding clarity. Finally, the strength of our balance sheet will allow us to continue to invest in creating incremental returns for shareholders through investments in growth opportunities, both or organic and through acquisitions, increasing dividends and share repurchases.

I would now like to open it up for your questions.

We will now begin the question-and-answer session.

(Operator Instructions)

Your first question comes from the line of Brett Wong from Piper Jaffray. One moment, please, for your first question.

Hello.

Yes, good morning.

Hey, guys. Hi, good morning.

Hi.

How are you? Thanks for taking my questions. Just first wanted to dig into the backlog. I was wondering, the decline in the irrigation backlog, are you seeing a more pronounced decline in either domestic or irrigation -- or international orders?

No. The decline in the backlog is pretty similar in both of those regions.

Okay. And then just kind of going along with international irrigation, do you have any improved visibility into projects there? I know there's been some softness, just given the lower grain price backdrop. Just wondering if you're seeing anything incrementally better there?

Was that regarding the international markets?

Yes, yes, just seeing if any visibility has improved.

We're not seeing much more improved visibility. I would describe it more as, we continue to see a lot of activity. There's a lot of requests for information quotes.

We're seeing continued agricultural investment with some of the larger investors in the international markets. We've seen a little bit of slowing in, certainly, in Russia and Ukraine. That's definitely been a little more troubling in the past number of months, probably past four months, but right now we've seen -- I'd say the markets have been fairly stable in terms of the kind of activity that we've seen.

And I would caution on the backlog in terms of -- usually looking at our backlog at any period of time isn't that reflective, but certainly at the end of the fourth quarter we usually don't have much of a backlog and seeing a little bit of a change in either domestic or international doesn't really concern me much at this point, because it really isn't you much of an indication. This isn't the season typically when people are buying.

Right. Okay. That makes sense. And within the backlog, are there any other storm replacement units in there? Should we expect any impact in the first quarter?

No, basically those are out. Not aware of anything in storm related. I think those were all cleared through in the fourth quarter.

Okay. And then one last one from me. You provided some commentary around expectations for continued growth for the infrastructure segment. Just wondering if you can talk to a little bit more on why you have that confidence, given the uncertainty around the highway bill.

I think the primary reason for the confidence there is I've seen changes in terms of our approach from a selling standpoint. I would say that our team is aggressive out in the market.

We're developing some new products. We're developing more contacts. We're getting our road safety products qualified or certified in more of the states than we've had in the past.

I'd say it's a very aggressive approach to getting good coverage in the market for, particularly, road safety products, but I would say really all of the infrastructure products in total. We've seen some good progress there. We have some large market share opportunities over time, meaning we have still relatively small share in some of the product categories where that presents a good opportunity for us.

Okay. And then, sorry, just one last one, just around the infrastructure. Have you seen any softness here recently at all? Or everything's kind of been going as you've seen through the whole year?

It's been pretty status quo. I would say that we will start to see a little more softness now because we're getting to the end of the season for some of the infrastructure products to be installed, particularly in the roadwork stuff. But generally, it's been pretty solid.

I think we've also seen increase in the interest in some of our products, for example our end terminals, due to problems that other competitors have had in various ways. So we see some opportunities and we think there are definitely opportunities to grow.

Excellent. Thanks a lot. Appreciate it.

Thank you.

Your next question comes from the line of Schon Williams from BB&T Capital Markets.

Hi, good morning.

Good morning.

Good morning.

Just briefly on the storm-related projects, the $15 million to $20 million, is that what you were expecting coming out of last quarter or was there -- you certainly mentioned it on the call, but I wasn't expecting something to this extent. I'm just wondering, did that continue through the summer or was this kind of what you were expecting coming out of the last quarter?

It was in process at the time last quarter, where we saw the orders coming in but not to the level that it ended up at. So I think it's a fair statement to say that it was not -- it was more than what we expected.

And what could we -- I guess what would one expect around the margins around those projects? I would assume that it's more kind of like an emergency order, where you've got to get it through the system as quick as possible. Do you tend to get a little bit better pricing on a system like that versus a traditional system?

There's really very little pricing difference between what was supplied in, say, the storm-damage systems versus other replacements or other systems that we sell. I think one area where we do see a little bit of a difference in terms of the mix in the quarter would be where we typically would have in any quarter a mix of one-off type machines, a machine sold to a grower or 2 machines sold to a local grower and a mix of some larger projects that could be more competitive bid, could be 5 machines or 20 machines, we probably had a larger composition of the one-off type sales to those growers, which were really replacement machines. I wouldn't say they were at higher price points necessarily than other machines. It was more a factor of the mix, because it was so much higher than typical in that quarter.

That's helpful. And then just turning to the international side, wonder if you could give us an update on where the Turkey plant is right now. I notice that the CapEx actually came in a bit more than where you guided. I was wondering if that may be related to Turkey.

And then if you could, kind of just keeping with the international focus, if you could kind of comment on what you're seeing out of South Africa. I'm sorry, South America. I'll get pack back in the queue after that. Thanks.

First let me comment on the Turkey facility. The CapEx was primarily not related to the Turkey facility at this time. It was related to some other things which Jim can talk about in a second.

But as far as the Turkey facility itself, it's progressing on track and I commented last quarter that I would expect that it would be operational around the first of the year, calendar year, and that is still the plan. So that's still progressing well.

As far as the other international markets, I would say that what we saw in the quarter was nothing really surprising or significant differences in any of them, including South America. I think there's some changes that we would expect once the elections are resolved and we see more free-up of funding, particularly [fenami] in the region.

But in general I would say that there is no major changes in any of the regions. The only one that surprised me a little is we've continued to see inquiries and work on projects to some extent in Russia and I think that it remains to be seen what happens there, but definitely we've seen a little more concern over funding availability in Russia for projects. That's kind of the general overview from the international synopsis.

Jim, if you want to talk about the CapEx in the last quarter?

Sure. On the CapEx for the quarter, as we mentioned last quarter, we lowered our kind of estimate because we had seen some delays in projects and we were able to complete the acquisition of our Brazil facility in the quarter. We thought it might slip into the first quarter, but basically that -- it's the acquisition of the facility that we had been leasing. We acquired it basically to kind of improve our flexibility around adding kind of capacity, productivity and vertical integration in that facility as well. So we did end up with a little bit more than what we had originally expected.

Thanks, guys.

Thank you.

Your next question comes from the line of Nathan Jones from Stifel.

Jim and Lori, this is actually Jesse [Meterman] calling on behalf of Nathan today.

Good morning.

Good morning. So our checks indicate that neither you nor your competitors have been cutting price in the market. Can you talk about the dynamics in the industry that allows such rational behavior in this pretty acute downturn and whether you expect your competitors to remain rational?

I'd say that the competitive intensity really didn't change much from the third to the fourth quarter. However, at the end of the quarter we were hearing some from our dealers that intensity was increasing a bit and that one of the competitors was discussing some pricing changes.

In past cycles we've typically seen selling margins decrease from peak to trough levels and it could be anywhere from 3 to 5 percentage points. So it wouldn't surprise us if competitive intensity increases and it does affect margins at some point in the process.

However, our adoption of lean in the Nebraska irrigation facility is very strong. We've demonstrated ability to ramp up and down with volume levels.

It does become challenging as volume decreases, but we've been able to minimize the deleverage effect on those when that does happen. I would say I think we're in a very good competitive position if that were to take place and we were to see some selling price reductions, but we really haven't seen much in terms of that kind of intensity to date.

Got you. Good. One more question for you guys. You talked about earlier how you committed the $100 million to $150 million to share repurchase and executed on $41.1 million in 2014. How do you view accelerating or increasing that given current market conditions, negative sentiment on ag in general, and how do you approach the decision between M&A and share repurchase going forward?

This is Jim. I think the kind of the share repurchase program, and as we've executed, I think is indicative of how we think about it. We have said that we were committed to it and that we were going to be in the market regularly and that we were also going to be opportunistic in how we approached it and as the prices have declined, as you can see, we've been a little bit more active.

We did put a 10B51 program into place before the end of the quarter. That allows us to continue purchasing but also allows for an increase or decrease in purchases depending on what happens to the price. So we absolutely are committed to continuing to execute against that in a way that we think will provide a good return to shareholders overall.

I think in terms of the second half of that, of how we look at it versus acquisitions, I'd say that, one, we've defined what we're going to do from a share repurchase standpoint. We definitely look at return on investment, say from acquisitions and share repurchase together to look at one versus the other.

But at the same time, we have looked at the share repurchases, let's say as a primary use of the excess cash at this point, and we would consider debt, for example, for acquisitions as needed. So we're still aggressive in terms of looking for acquisitions but we don't believe that we are restricted in any way on that by what we're doing from a share repurchase standpoint.

Got you. All right. Well, thank you so much for your time today.

Thank you.

Your next question comes from the line of Brian Drab from William Blair.

Hi, Rick. Hi, Jim.

Good morning.

Good morning.

Good morning. I don't know if you said already, but can you tell us how much Lakos contributed in the fourth quarter?

Yes. Lakos for the year was roughly $27 million, $28 million in revenue, and the amount in the quarter was roughly about $8 million. It's a little less seasonal than the rest of our business, although it does have some seasonality within each one of its businesses. It's pretty consistent with kind of what we expected when we acquired it.

Great. Okay. And then have you said yet what the expectation is for CapEx for the next fiscal year?

Yes. This is Jim again. Our expectation is that in $20 million to $25 million range. We continue to work towards the capacity and other investments from that standpoint.

Okay. Thanks. And then with the Golden Gate Bridge project, well first of all, you said second quarter 2015, so that's your fiscal second quarter 2015, right? And can you talk about what that means in terms of when revenue will be recognized? It likely won't all be in the second quarter, right?

It would likely all be in the second quarter. It will be a fairly concentrated time frame for when that is recognized.

Okay. And that's still the --

In caution, we would add to that is that we're not in control of the project entirely. Obviously, the Golden Gate Bridge authority and others are. That's our timing.

Right now that project is on schedule. So that's how we would expect it to occur. But it could be delayed. We haven't had any indication of that, but that is always a possibility.

And would you expect the gross margin on that project to be comparable to other larger QMB projects that you've completed in the past?

Well, I think the nature of that product line and those projects are that they are higher, they are certainly higher margins than what we have in the rest of our business. We don't comment on the specific margin rate but it is higher than the rest of our business.

Sure, but how about relative to other large, like the Mexico City project, other QMB projects, would this be comparable to other QMB projects?

It would be comparable to the range that we see. There is a range that we see within the QMB projects, so it's in that range. But I wouldn't compare it to any particular project.

Okay. And given we didn't have any large QMB projects in FY14, and we're going to have one in 2015, do you think that despite maybe some pressure on irrigation that gross margin on a consolidated basis could actually be up in FY15 or any comment on that?

Well, certainly the QMB activity and what we've seen on the infrastructure business will help it. It's a little bit difficult to predict on the gross margin as a whole, because it will depend a lot on the mix of the business and what happens in the US markets because we do have higher margins there. So it's hard to predict exactly how that will all flush out from a mix standpoint.

And then I think the other piece is, as Rick alluded to, we haven't seen significant pricing pressure to date but that will also -- we tend to see that more in the selling season, if we were to see it. So it's a little bit hard to predict exactly how.

I think I'd say that to -- this is Rick again. I think to answer that in an affirmative way would take a lot more visibility on what the next season looks like from an irrigation standpoint and we're really just not there at this point.

Okay. And Jim, I think you just mentioned, make sure I'm clear, that one of the pressures on margin next year could be -- if domestic irrigation is down, your domestic business still carries higher margins than the international? That is correct. The domestic business does carry higher margins. The mix of the business between US and international does affect the gross margin.

Okay. All right. That's all I have for now. Thanks a lot.

Thank you.

Your next question comes from the line of David Rose from Wedbush Securities.

Good morning, gentlemen. Thank you for taking my call.

Good morning.

Maybe I can follow up on Brian's question. If we think about next year, I think most assume, given the backdrop, that it would be very difficult, and I think you've mentioned challenging, for domestic irrigation sales to be up. I think even globally. Assuming, then, international doesn't have the same pressure because it's project related, doesn't it imply that it's more likely that margins would be down than up?

Well, it certainly depends on mix. Some of the international projects can have a very good margin rate versus some of the, let's say, sales that would be through typical dealer channel and some of the international markets where we don't have as much vertical integration.

There's a number of factors that come into play. I would say that I really couldn't comment on what that would look like going forward for the next year, because it's comprised of a number of factors.

I'm still very comfortable with what it looks like for the international markets. I think there's a bit of uncertainty in how the ag commodity prices will play out in affecting those markets to date, but right now the indications are still very strong in terms of the types of demand that we see in those markets. But in terms of going beyond that to give any kind of guidance on what the margins would -- what would happen with the margins or that mix at this point, we really couldn't do that.

Okay. And maybe going back to Brazil, the expansion that you highlighted, capacity expansion for international, that's largely Brazil and Turkey. Are you consolidating the two locations in Brazil in Sao Paulo?

We only have one location in Brazil.

The two buildings. Are you doing anything there?

Well, we have a couple buildings on the same piece of property. We're not really consolidating those. The primary reason for the acquisition was to be able to do some things in terms of vertical integration and adding more manufacturing functions and capacity and processes in our facility.

As we've talked about in the past, our international plants are generally not very vertically integrated, so we have a number of processes that are done outside, by outside suppliers. There's a few we're looking at bringing inside that would reduce the cost the product and probably get margins closer to the kinds of ranges we see in the US. Not quite there yet, but this is the next step in our expansion of capacity, plus cost reduction process in the international markets.

Okay. That's helpful. And then just two quick ones. Used market, I think a lot of people have been concerned about the impact from the used market of irrigation, or set up to the equipment. Have you seen any impact on your business in any particular locations at all?

Nothing knowing --

Or regions.

Nothing that's really visible from an impact standpoint. We have anecdotally heard comments about some used machines.

I've heard comments that some of the storm damaged machines were recovered and potentially rebuilt with some components to put onto the market. We haven't seen any real evidence of that. I'm sure that there is a bit of a market for used machines at all times, but we really haven't seen that have any impact on our business at this point.

Okay. And then lastly, FieldNET. Can you provide some color in terms of percentage of mix that's incorporating FieldNET or higher-level technology, smart technology?

I really can't do that for competitive purposes. I would say that we've seen significant increase in FieldNET market penetration in the past year. We would expect to see more.

We are investing in expanding that market penetration. We believe it's a great opportunity, but also customers who use FieldNET become very dedicated, loyal customers who really don't want to give it up. It's a great tool for saving labor, saving water and for managing their system in general.

So what we've found is that the more that we can get market penetration, the more customers we can get on FieldNET, regardless of what pivot brand they use, the better that is for us and the more that they love it. So we're going to continue to expand the product line and the capabilities of the product and we will continue to expand our market penetration.

Okay. Great. Thank you. I'll get back in the queue.

Your next question comes from the line of Kevin Bennett from Sterne Agee.

Hey, guys, good morning.

Good morning.

Good morning.

First, you guys talked about a 3% to 5%, I guess, margin decline for peak to trough that you usually see. Was that just from price, when pricing gets competitive, or was that -- what was that in context?

It would be a combination, typically, of price but also to some extent deleveraging, which could affect cost of goods sold. Usually what we --

That's total margin?

That would be a total gross margin change that we've seen from peak to trough is in that 3% to 5% range, typically.

Got you. That's really helpful. Thank you. And then, you guys usually give the breakdown in terms of repair, replace versus dry land versus conversion. Can you give us those numbers for the fourth quarter?

Yes. That was an interesting quarter because of the storm damage machines, so keep in mind that those had an impact. They would be categorized certainly as replacement. What we saw in the quarter were the replacement machines were 60% of the total.

Machines going into dry land were 17% and machines for conversion of gravity were 23%. In a typical year we've described in the past roughly about a third split in all three of those categories and it obviously varies where high commodity prices we'd see much larger percentage in dry land. It was a pretty high replacement quarter, primarily driven by the storm damaged machines.

Got you. That makes a lot of sense. On those machines, are you seeing like-for-like replacement or do you think you've had -- you may have taken a little bit of share there?

Well, what we hear is that we've picked up some share, but I can't say with fact. This is only information from our people is they believe that we picked up some share. Our dealers believe that we picked up a little share.

Got you. Good to hear. And then just a couple more quick ones. First, on the international market, it looks -- if you back out Iraq from last year, total revenue was down about 3% on a year-over-year basis. Was that kind of broad based across geographies or was there one that had more of an impact than others?

I think one of the primary areas outside of the Middle East, because of the Iraq project, would have been Russia.

Okay.

A decline in Russia and I think it's understandable in two fronts. One is the situation that's occurring there today but the other is, it tends to be project based, so it would be driven by a large project or two that could take place in the region and that's primarily the other market where there was a difference.

Got you. Okay. Cool.

And then Jim, on the CapEx, you mentioned, I guess, some projects -- in the slide deck, some projects got delayed. Can you elaborate on that?

And then maybe also elaborate on kind of what's in store for 2015? Can you call out some of the projects that you're looking at?

Sure. Well, what I was alluding to was in the third quarter we've lowered our estimate for CapEx for the year because we had, had some projects delayed and that we were anticipating some delays. The Brazil facility acquisition was one of those projects that we thought was going to slide into FY15, but it did in fact get completed in 2014.

I think we also alluded to the fact that the Turkey, the plant in Turkey, has also slid a little bit or at least we said that last quarter. It's still on track now for basically around the end of the year.

But with regard to next year, we continue to work on productivity enhancements in our plant. We will certainly build out and complete the facility in Turkey. We always have some projects around productivity in our US facility as well.

Most of what we are doing, as we've said, is capacity and productivity, both in the US, but more significantly in the international markets. And then we do have some CapEx in the infrastructure business with some of the progress that we've made there. We also expect to have some CapEx there. But most of it is around productivity and capacity.

Got you. So no plans to build a new facility in any other country right now?

No.

Cool. Okay. Thanks. Last one from me. On M&A, was just curious if your pipeline has changed much in recent months or if some things have progressed? Just an update on that.

I commented last quarter that our pipeline has been very strong recently and we've been very active in M&A work and that still is the case. We're active on a number of projects. We're constantly in contact with a number and I would say it's a very aggressive approach at this point.

Okay, great. Thank you guys so much.

Thank you.

(Operator Instructions).

Your next question comes from the line of Richard Hayden from [Tiff Gill] Capital.

This is kind of a subjective question, but what level do you think grain prices would have to reach in order to encourage farmers to buy irrigation systems?

That is a very difficult question to answer. I would say that it really varies depending on the crop that they're growing, the part of the country that they're in, and where grain prices have been.

Certainly if we're just talking about corn, we'll see farmers buying irrigation equipment at the current corn prices without a doubt. As we've seen in the past, as corn prices increase, we see that expand. I can't say it's a linear equation or process, but we do see a continual expansion of higher prices.

I can't really tell you what that trigger point is. I do know that as we go out and talk to larger commercial growers or the larger operations, they would consider irrigation at almost any commodity price, because it's the best method in terms of expanding their yield and boosting production. They look at it as almost a necessity in many cases.

So it really does vary by the crop that's being grown, the region of the world that you're growing in and specifics in terms of either the farmer type or their experience in terms of what commodity prices have been. I know that's not a very clear answer but that's how I would describe it today.

Thank you very much.

Thank you.

(Operator Instructions)

At this time, there appears to be no more questions. Mr. Parod, I'll turn the call back to you for closing remarks.

Thank you. While we're in the midst of a cyclical downturn for the irrigation segment, the global long-term drivers, water conservation, population growth, importance of biofuel, the need for safer, more efficient transportation solutions remain very positive. Lindsay is committed to creating value for shareholders through organic growth, dividends, strategic acquisitions, and share repurchases. Thank you for your questions and participation in this call.

This does conclude today's conference call. You may now disconnect.