Tim Hassinger - President and Chief Executive Officer Brian Ketcham - Chief Financial Officer.

Brian Drab - William Blair Joseph Mondillo - Sidoti & Company Nathan Jones - Stifel Jon Braatz - Kansas City Capital Chris Shaw - Monness Crespi.

Good morning. My name is Chad, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lindsay Corporation Fourth Quarter and Fiscal Year 2018 Earnings Call. [Operator Instructions] Please note, this event is being recorded.

During this call, management may make forward-looking statements that are subject to risks and uncertainties, which reflect management's current beliefs, estimates of future economic circumstances, industry conditions, company performance and financial results.

Forward-looking statements include the information concerning possible or assumed future results of operations of the company and 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 conference over to Mr. Tim Hassinger, President and Chief Executive Officer. Please go-ahead sir..

Good morning and thank you for joining our call. With me on today's call is Brian Ketcham, Chief Financial Officer; and Lori Zarkowski, our Chief Accounting Officer. The objective of this call is to discuss our quarter four results. But before we go to that overview, I’ll make a few introductory comments.

Our foundation for growth initiative we launched earlier this calendar year continues to progress and is bringing positive change to Lindsay. This initiative is focused on margin expansion in four primary areas. Those areas are; one, manufacturing footprint; two, G&A, the back-office activities; three, sourcing; and four, commercial.

We have also focused on culture and this effort has been cascaded to the entire organization. A new vision, values, and desired behaviors have been launched across the organization and to date positive results in our culture are already evident. Overall, the goal that we want to achieve from our focus in these areas is very clear.

We want to simplify the way we conduct our business and align to that, improve our productivity to build a foundation for growth. With that goal in mind, I will highlight these recent outcomes. We completed the previously announced divestiture plans for LAKOS and Watertronics.

Our planned divestiture of Irrigation Specialist is still on track for closing before the end of the calendar year, and we successfully closed the dedicated infrastructure manufacturing plant in Nebraska and these products are now being made at our Lindsay Nebraska facility.

In addition to these actions, we also completed the divestiture of SPF, a water resource consulting firm, located in Idaho, whose primary customer base was not aligned to the mechanized irrigation market.

Just to reinforce the importance, we are putting on the need to connect to our core businesses IRZ, our water resource and irrigation engineering company located in Oregon is directly connected to the irrigation business.

And since their capabilities are aligned to our turnkey irrigation solution strategy, we have increased our investment in that business by adding additional engineers to the staff. Lastly, we have continued to consolidate back office functional work that has been conducted in many different locations.

This action is aligned with our desire to find more back office efficiencies that I mentioned earlier. For example, we were running back office activities from four different locations in Nebraska. So, in January, we will be moving to a new corporate office location in Omaha that will facilitate the consolidation of this work into one office.

Our goal is to realize a meaningful productivity improvement in all the areas that we have targeted with these moves to our new Omaha office. Overall, the Foundation for Growth Initiative we launched just 10 months ago is rapidly changing our company. It is also important to highlight the progress we are making in the innovation space.

As each of you have heard me talked about FieldNET advisor and the fact that it is a highly differentiated offering in the marketplace, we have continued to add to our capabilities in this area. Earlier this year, we announced the agreement with John Deere and Farmers Edge to broaden our capability in the irrigation scheduling space.

We just announced an agreement between Lindsay and DTN that will provide the opportunity for growers to further localize their field specific weather data using the FieldNET advisor irrigation management system. Also, our strategy to expand our global reach with FieldNET advisor is fully underway.

This calendar year, we will have FieldNET advisor active in 17 countries on 21 different crops, compared to last year when it was initially offered in one country on two crops. As recognition of this technology's potential impact, FieldNET was highlighted in a case study at the recent Microsoft Ignite Conference.

This is Microsoft's largest conference for IT professionals and technology enthusiast, and Microsoft describes it as the world's largest conference on the planet focused exclusively on IT. This is more validation of the impact this technology is having in the irrigation marketplace.

Also, Road Zipper, a highly differentiated product that positively addresses key infrastructure needs such as reducing congestion, lowering carbon emissions, and increasing driver's safety was showcased at the recent Midwest U.S.–Japan Association meeting in Omaha.

This meeting included a broad range of government officials, including several governors from the states in the association. This outing was an excellent example of how we are shifting our demand creation efforts to a boarder stakeholder base to address these important infrastructure needs.

We are addressing the unmet needs before they occur instead of only being viewed as a solution to existing problems. These actions are proof points of the progress we’re making on our foundation for growth initiative.

This organization is focused and committed to the goals we announced earlier this year and the necessary steps are being taken to achieve the 11% to 12% operating margin goal for fiscal year 2020. So, now, let’s move to our Q4 results, and for that I’ll turn the call over to Brian..

Thank you, Tim, and good morning everyone. To begin, I would like to cover the actions taken in the fourth quarter related to our foundation for growth initiative and their impact on our reported results.

During the fourth quarter, we completed the divestitures of our pump and filtration businesses and a water resource consulting firm, resulting in a net gain of $2 million reported in the irrigation segment.

In addition, we completed the closure of an infrastructure manufacturing facility and the consolidation of its activities with an existing irrigation facility. Severance and other costs of $700,000 were incurred in connection with the facility closure and are reported in the infrastructure segment.

Additional operating expenses of $1.1 million, comprised of other severance costs and professional consulting fees, were incurred during the quarter and reported in corporate expense.

The remainder of my comments regarding the fourth quarter and full-year will refer to adjusted results, which omit the impacts of the foundation for growth initiative, as well as the impacts of U.S. tax reforms. Adjusted results are detailed in a Regulation G Disclosure at the end of the press release.

Total revenues for the fourth quarter of fiscal 2018 were $123.3 million, a decrease of 7% over the same quarter last year. Net earnings for the quarter were $4.5 million or $0.42 per diluted share, compared to net earnings of $6.3 million or $0.59 per diluted share in the same quarter last year.

Lower revenues in both segments, as well as incremental LIFO inventory valuation expense of $1.6 million and less favorable revenue mix in the infrastructure segment contributed to the lower results. Total revenues for the full-year of fiscal 2018 were $547.7 million, an increase of 6% over the prior year.

Net earnings for fiscal 2018 were $31.6 million, an increase of 36% over the prior fiscal year. Diluted earnings per share for fiscal 2018 were $2.94, compared to $2.17 in the prior fiscal year. Revenue growth in both the irrigation and infrastructure segments improved gross margin in the infrastructure segment and a lower U.S.

income tax rate contributed to improved full-year results. Irrigation segment revenues for the fourth quarter were $96.2 million, a decrease of 6% over the same quarter last year. In the North America irrigation market, revenues increased 3%, reflecting an increase in irrigation system sales volume.

The impact of higher average selling prices was offset by a change in sales mix. In the fourth quarter this year, irrigation system size was slightly shorted than the average size sold last year. Average system size can vary depending on field sizes and regions of the country.

In the international irrigation markets, revenues decreased 18%, compared to last year’s fourth quarter. The market disruption in Brazil that impacted our third quarter continued into the fourth quarter and project activity in developing markets was lower, compared to the prior year.

Total irrigation segment operating income for the fourth quarter decreased $1.3 million or 14%, compared to the prior year. Improved gross margin from higher North America revenues was offset by the impact of $1.6 million in incremental LIFO inventory expense resulting from raw material inflation.

Irrigation operating margin for the quarter was 8.8% of sales, compared to 9.6% of sales in the prior year. For the full fiscal year, total irrigation segment revenues of $439.9 million were 5% higher than the prior year.

North America irrigation revenues of $294.6 million were 16% higher than last year, and international irrigation revenues of $145.2 million were 11% lower than last year.

Irrigation segment operating income for the full fiscal year was $46.9 million, an increase of 10%, compared to the prior year, and operating margin was 10.7%, compared to 10.2% in the prior year. Infrastructure segment revenues for the fourth quarter were $27.1 million, a decrease of 10% over the same quarter last year.

Most of the decrease resulted from lower Road Zipper System lease revenue, as well as lower sales of road safety products compared to the prior year. Infrastructure segment operating income for the fourth quarter decreased 3 million or 40%, compared to the prior year.

This decrease resulted from lower revenue, as well as a less favorable mix of revenue, compared to the prior year, due to lower leasing revenue. Infrastructure operating margin for the quarter was 16.6% of sales, compared to 25.1% of sales in the prior year.

For the full-year, infrastructure segment revenues were $107.8 million, an increase of 8%, compared to the prior year. Infrastructure segment operating income for fiscal 2018 was $24.7 million, an increase of 23%, compared to the prior year, and operating margin was 22.9%, compared to 20.1% in the prior year.

Record results in fiscal 2018 were driven by increased Road Zipper System sales at strong gross margins. Cash and cash equivalents were $160.8 million at the end of the quarter, compared to $121.6 million at the end of the prior fiscal year. Proceeds from the business divestitures of approximately $30 million contributed to the increase in cash.

No share repurchases were made during the quarter. However, a total of $63.7 million remains available under our share repurchase authorization. At this time, I would like to turn the call over to the operator to take your questions..

Thank you. [Operator Instructions] The first question today will come from Brian Drab with William Blair. Please go ahead..

Good morning. Thanks for taking my questions..

Good morning, Brian..

Just first on the infrastructure side, based on the comments that you made on the third quarter call, I was left with the impression that maybe there is about $8 million in revenue to be recognized yet on the Japan and Fraser Bridge projects going into this quarter, can you talk about, even roughly how much of that you did recognize in the fourth quarter?.

Yes, Brian. The Japan project was completed during the fourth quarter. The Alex Fraser Bridge, we had two machines, one of those machines was delivered in the fourth quarter and the second machine is going to be delayed until the fiscal 2019..

Okay. And I’m trying to understand what happened or what – the decline was driven by in the non-QMB project business in the quarter.

You had total revenue of $27 million in the infrastructure segment, you had some QMB business relative to fourth quarter 2017, I don’t think, and correct me if I’m wrong, but I don’t think there was QMB projects business in that quarter, it seemed like a significant decline really in the non-QMB project business and I was wondering if you could add a little more color to that?.

Yes. First of all, most of the decline in the fourth quarter year-over-year was related to QMB. It was on the leasing side of QMB. So, from a project sales perspective it was about flat year-over-year.

We did have some project revenue in the fourth quarter last year, but we had a couple of leases during our fourth quarter last year that did not repeat and so that was the main part of the reduction in sales and leasing is at higher margin levels, so that’s what drove the deleverage on the margin side.

There were some – road safety product sales were lower than last year and most of that was attributed to the states moving to the new MASH standards for some of the products and as we’ve indicated in the past, as that happens there can be some delays in ordering the new MASH compliant products. That was the secondary portion of the decline.

When we look at that, we were, you look at the second half of the year, we had pulled a lot of volume into the third quarter on the QMB side, we were up 31% for the third quarter. Look at second half, in total, we were up 11%. So, still, record year for the full-year.

I think the fourth quarter gets into a little bit of timing on some of the project recognition, but still for the full-year a very solid year on infrastructure..

Okay. That makes sense. And just to make sure that I’ve got it. In the fourth quarter 2017, although there weren’t any big projects like the Fraser or the Japan project San Rafael, if there was a lot of leasing business and that’s what we’re saying with the tough comp with respect to QMB..

Yeah, that’s the main change. We did have, I would say a couple of smaller projects on the sales side, so the Road Zipper sales were comparable year-over-year, it was the leasing side that caused the decline..

Got it. Okay. And those projects you were referring to, I don't know that – it’s just my memory or we didn't really call any specific projects out in the quarter though.

Is that correct?.

Yes, I would say those are kind of the normal $2 million to $3 million type projects that we would have, nothing as significant as the three that we have called out this year..

Okay. Thanks for all the clarity there. I will ask one more and then get out of the way.

The corporate expense, you know, it’s crept up actually slightly over the last three quarters, I would have expected it maybe to decline, given the cost cutting program, I guess may be on a GAAP basis there is some onetime charges in there, but the bottom line is, my question is, what should we expect corporate expense to be on a quarterly basis as we head in the fiscal 2019..

Yes. I would say the increase that we’ve seen over the last couple of quarters is going to be primarily driven by professional fees related to audit. Some of its timing, but then we’ve had the revenue recognition project in the implementation of that this year, plus tax reforms, so that’s driven professional fees up.

If you look at where we ended the year this year, I would look at next year to be flattish to slightly down on corporate expense..

Okay.

So, where should be see the Foundation for Growth impact in terms of cost? Is that - we will see it more within the segments then?.

Well, the costs have, you know as it relates to let's say a divestiture or a facility closing would be within the segments as it relates – there’s been severance cost and consulting fees at a corporate level that have been in the corporate expense, but those get field out in the regulation G reconciliation.

So, you can see where we would be at on a run rate basis based on that reconciliation..

Okay.

With 7.5 million for corporate expense roughly ballpark is kind of what to model for fiscal 2019 per quarter?.

No, I think it would be lower than that. I think on an adjusted basis, our corporate expense for the year was closer to 22 million, 23 million for the full-year..

Okay. So, think about it on an annual basis and think about it at that level. Okay. Got it..

Yes..

Thank you..

The next question will be from Joseph Mondillo with Sidoti & Company. Please go ahead..

Hi. Good morning guys..

Hi, Joe..

Just to follow-up on the infrastructure there.

I’m just wondering, last time we talked on the last conference call, did you have visibility into the fact that you were anticipating lease revenue on the Zipper potentially could be down significant enough or is it something that just comes week-to-week and you just weren’t too sure, I’m just wondering what kind of visibility you have into this business?.

Yes. So, Joe, this is Tim. I appreciate the question. Let’s take your question and broaden out, because obviously that’s created some interest on where we are at. We did see a line of sight, we had line of sight on that. Obviously, from an overall standpoint, we had the third quarter.

We called that out in the third quarter that positive side, our plant ran faster than we anticipated and we got an order out, good size that we originally had thought would come in this quarter, but we captured those sales in the prior quarter.

If we elevate here and look at the QMB and just what do we see going forward? We are seeing an increased interest in Road Zipper on a global basis, and I can say that involves projects and leasing opportunities. We’re finding opportunities before the need exist.

It links to what I said in my introduction and a good example of that is, when you can identify road construction opportunities for the upcoming summer and having those discussions now before the problem even exist. This is an area where we’re putting a lot of effort in.

So, you’ve heard me say this before, we’re focused on really two key areas to help address the lumpiness, which is increase the overall demand and then the second is move more of our business to leasing.

We’re still focused on those two areas and I can say, we are sitting here today feel very good that we’re making progress in both of those two key areas..

Alright.

And just a follow-up, I understand that you have called out some of these bigger projects and I sort of get an idea of where those tend to fall and potentially in the back half of fiscal 2019 you have a tough comp, but in terms of the leasing revenue, are there any, obviously I guess in the fourth quarter fiscal 2019 may be that’s a normal quarter in terms of a comp, but what about the third quarter in the first half of the year, in terms of comps.

Just on this leasing revenue that can cause some volatility.

I’m just wondering if we should anticipate any other sort of tough quarter comps relative to this leasing revenue that we really can't see and anticipate?.

Yeah. Joe, this is Brian. The leasing revenue, there is two types of lease. One is going to be more of a short-term during a construction project, and then there is others that are longer term, rather than buying the system, they’ll choose to lease it.

As Tim mentioned, we’re trying to increase both, which hopefully will take some of the lumpiness out, but as far as projecting on a quarter-by-quarter basis in the comps, I mean, it is just because of the project nature of it, it’s hard to predict the quarter-by-quarter.

I would say, overall, we expect that our infrastructure revenue will continue to grow and then particularly at the Road Zipper area where we’re putting more focus, but it’s really hard to get into comps on a quarter-to-quarter basis..

Okay. And then I wanted to ask the foundation for growth, sort of the progress there, you know what kind of inning are we in, in terms of seeing the quarterly cost savings, I’m just trying to get an idea of how we can sort of expect to see that ramp up, may be throughout fiscal 2019 and into fiscal 2020..

So, Joe, this is Tim. We’ve got everything scoped. The plans are in place. We're in full execution mode. We’ve got some things concluded as you’ve heard us announce, but we’re right in the middle of the game here in terms of the execution side.

So, what we’re going to continue to do over the next - through the quarters of fiscal year 2019 is bring these proof points to you and hopefully what you’re taking away from today is, we’re already well into execution with the divestments and now the back-office action, and the plant closing on the infrastructure plan. We’re taking that deal.

Those were key milestones and key deliveries on the execution side. That’s where we’re at..

So, when you look at the adjusted profit numbers, have we begun to see any, you know much of anything related to the cost savings yet?.

I would say, I mean, through fiscal 2018, I think the divestitures and the plant closing occurred pretty close to the end of the fiscal year, so on those items, we’ll start to see some benefit as we start the year.

As we get into some of the other Workstreams such as sourcing and commercial, as Tim mentioned, we are in the implementation stage now, so I would say those, the impacts of some of those, including the back-office would be more second-half -type impact for fiscal 2019..

Alright great. And then I just want to ask one last question.

In terms of the international project revenue, I understand it sounds like you’re still sort of dealing with the issues with Brazil, is that largely behind this at this point? And just given, what you see in the backlog, it sounded like fourth quarter was potentially going to be a good quarter, potentially up year-over-year and it didn’t fall out like that.

So, I'm just wondering sort of what things pushed out at all into fiscal 2019 and sort of what’s your anticipation on growth at the international irrigation side of the business?.

So, Joe year-to-date through the year our international revenues decreased 11% as what we put in our materials. To be upfront, these results were below our expectations we had at the beginning of the year. The key drivers for the decrease was what you mentioned. One, the overall market in Brazil was not as robust as we had expected.

But we also had a decrease from the prior year in volume in several large projects. What I can say is, we feel really good about the pipeline of projects we have in place. The opportunities are identified. In each one of these cases, Lindsay leadership has met with the key decision makers for these projects.

So, in summary, the needed efforts to get these deals done are well underway and we’re going to continue to update you on progress. As you know, these projects can – multiple steps related to them.

But when we look at what challenges we had in the international market, it’s Brazil and it’s the larger projects dealing with that and we’re bullish on Brazil, and happy to go into more detail on that on why we feel good about it, and on the projects we feel we’ve got good line of sight on those and we got the right efforts in place to try to capture that business..

Okay. Thanks a lot. Appreciate it guys..

You bet. Thanks..

The next question will be from Nathan Jones with Stifel. Please go ahead..

Good morning, everyone..

Hi, Nathan..

Good morning, Nathan..

On domestic irrigation, I think one thing is pretty clear to me here and that’s that Lindsay is significantly outperforming the underlying market on domestic irrigation, not just this most recent quarter, but pretty much throughout your entire fiscal 2018, I wonder if you guys could talk a little bit about where it is you think you’re winning, why it is you think you’re winning and how sustainable that outperformance is in your opinion?.

Yes. So, Nathan this is Tim and let’s do talk about the domestic market because obviously it is a large part of our business. First of all, to come right out at you. Sure, it's a challenging marketplace.

I got to tell you, just read a survey coming from Purdue it had gone to 400 US producers really getting at farmers sentiment, and it reflected that we’re at the lowest level since October 2016, and in this survey, it said 54% of the producers were expecting their financial condition to be worse this year, compared to last year.

Obviously, on a positive side the recent trade deal with Canada and Mexico and the E15 announcements, I would describe it as has brought some fresh air, but it’s a challenging environment. Having said that, our North America revenue increased 16% year-over-year. And I’d even add this to say to add to how strong a result that was.

This came even on top of the increased cost from tariffs. We had a wetter summer in most parts of the Midwest and when that happens you typically have lower part sales because machines don't run as much, and there was a lower storm demand in Q4 versus the prior year.

So, I can see say with confidence that the whole fiscal year 2018 in domestic business for us, exceeded our expectations. I share your view that Lindsay has increased market share in this region. I’d mentioned before, and we still think these are the two key drivers, the market has increased in the areas where Lindsay has a higher share of market.

And the second factor is, we strongly believe we’ve got a technology leadership position based on the feedback we get in the marketplaces in the areas of remote monitoring and irrigation scheduling and Nathan, you know how strong we feel about that and we’re continuing to push that, and have every expectation to continue doing that in this fiscal year..

I wonder if we could talk a little bit more about FieldNET Advisor. I know you guys are committed to that. It’s certainly, a technology that looks very attractive to farmers.

Are we at a point yet where you can talk about the level of revenue that's being generated out of that product, what the growth rates are like? Any more kind of detail that you can give us into how that business is growing?.

Nathan, do you want me to talk for a while and say nothing or you want me to just say, no?.

Just say, no..

Okay, no. We're not going to give a lot of color on how the exacts on that, and obviously, you understand why that we’re not wanting to do that. What we can say is, we're growing, we feel good about not only the rate of growth, but I can tell you as I said in my opening statement, what I’m most excited about is, we're getting a global footprint.

17 countries, 21 crops comparing that to where we were the prior year with one country and two crops, to me that’s a key proof point of the expansion that we’ve got going. So, it’s helping us drive market share. We’ve been doing what we would call fall dealer meetings. I have been interfaced with probably about 150 dealers in the last three weeks.

Been one a week. I can tell you there is a step change in their sentiment about the Lindsay technology and what that can do for their business this year, compared to what discussions I had one year ago, which was literally the first few weeks I had started in the company. I can see it, and that’s encouraging. So that’s why we feel the path we’re on.

We’re going to continue and if anything, only try to strengthen that position..

Then, a couple of questions on the Foundation for Growth initiatives.

Are you guys prepared to quantify the savings in dollar terms that will be generated from those initiatives in 2019?.

Yes. Right now, we’re staying with our overall commitment of the 11% to 12% operating income. As I had mentioned earlier, I believe it was Joe who asked a question on this. We’re in complete execution mode. And obviously everybody is doing a back calculation as to what that amount is.

Nathan, we realized, as we go forward we’re going to need to get more color and context to what that is, but right now we’re – our commitment is the 11 to 12. We took a step change in fiscal year 2018 versus 2017 on the adjusted OI percent. We need to deliver that again in 2019 to continue to show us a proof point.

What we’re wanting to come out of today's call is just really giving you the proof points that we’re progressing in the right direction..

Then just one more on that. You guys, I think, have said previously that some of the divestitures were planned in that 11% to 12% margin target. I would have as a guess that the irrigation business is probably trending towards a lower revenue number than you guys have maybe planned out to 2020.

Should we assume that, that trends you to maybe the bottom half of that margin range versus the top half of that margin range or do you still think the top half is attainable?.

Yes, Nathan, this is Bryan. You know, the target that was set for 2020 was based on working off of our 2017 base. And so, I think we would, and again, it was based on the assumption that we’re not going to get any help from the market.

So, I would say, we would still maintain that target regardless of the challenges that we may have next year in the irrigation market..

Okay. Thanks very much for your time. I’ll get back in the queue..

Great. Thanks Nathan..

The next question will be from Jon Braatz with Kansas City Capital. Please go ahead..

Good morning them. Please go ahead..

Hi, Jon..

Hi, Jon..

Returning to Brazil, later this month Brazil is going to have an election, and it looks like Bolsonaro is going to win.

I guess my question is, your context on there, do they or has Bolsonaro said anything about the agricultural industry or what you might want to do? And do your people think that if he is elected will there be an additional level of uncertainty or some level of stability returning to the market place?.

Yes, Jon this is Tim. I would describe the election process, and just the fact that that’s going on is bringing some apprehension in the marketplace, but the lead candidate as you mentioned is considered strongly as pro-ag.

And so, we see from a, purely from our business standpoint that being positive, but you know, I mentioned earlier, we’re still bullish on Brazil. The reason and rational behind that is, as we had called out in the last quarter we were dealing like everyone with the trucker strike and that definitely carried over. We’re through that now.

Although there are some higher logistics costs there. The challenges we were facing in the last quarter earnings call time frame is really past us. We also at that time had mentioned that we hadn’t gotten as far along on confirming the new interest rate, that’s done.

That’s helping stimulate some demand that is now currently at 7% or it was 7.5% in the previous crop plan. And obviously the one that jumps out is the global trade dispute and specifically the US China has been a significant market driver for this region. I’ll give you a perspective on this.

What I am seeing is that Brazil's soy exports have – the China jumped 22% in value, between January and September. So, we’re expecting to see the soya bean area planted in that country in Brazil to expand to about 36 million hectors this season.

So, when you add all of that up and with the potential pro-ag candidate leading the polls, it leaves us to believe that this is still a bullish opportunity for us and we’ve got a manufacturing plant there. So, we’ve got the footprint in place to capture if the market does expand..

Okay.

I don't know, but the mechanics and logistics down there, but if should he win the election and I guess it’s October 28, when does he actually take office and can start his – implementing his plans?.

Jon, I don't have – the I don't know the answer to that one. We don't follow up. I don't know the [indiscernible] the election he would take power so to speak, I don't know..

Okay.

Brian, a question on the adjusted operating margin, 8.8% I think for the full-year, I think that was it, if we take out the divestitures, and I think it is about 70 million in revenues, a little bit of operating margin, operating profit in those, would it be fair to say that your adjusted operating margin exclusive of the divestitures is sort of in the 9.5%, 10% area, if we ex-out the divestitures?.

Yes, I think it probably would be closer in the 9.5 – between 9.5 and 10..

Okay.

So, that’s sort of the starting base that we’re looking at as we head into 2019?.

I think that’s fair..

Okay.

And then lastly, obviously, with the divestitures $160 million in cash, any thoughts on what you want to do with that cash?.

Yes, Jon, this is Tim, and we’ve said this before, and we're still pretty passionate on this. We know what we want and I can tell you we’re actively looking in those spaces. Looking from an acquisition standpoint, we’ve been very clear that we want to expand our innovation on our innovation strategy and/or find bolt-on cost synergy opportunities.

But what I want to elevate here is, in order, what we’ve talked about is, we want to continue to deploy that cash first in, where we see organic growth opportunities and then again if we’ve got strategic and accretive acquisitions that are aligned to what I just said, that would be our next choice.

And then followed with dividend and repurchase stock.

So, the good news is, we’ve got some options in front of us?.

Okay. Alright. Thanks Tim..

You bet. Thanks..

The next question comes from Chris Shaw with Monness Crespi. Please go ahead..

Hi, good morning everyone.

How are you doing?.

Good morning, Chris..

Good morning, Chris..

I want to sort of, I guess follow-up on with, I guess Nathan was getting at about the strength on the sort of North American irrigation, if you maybe breakout, I think in the release you talked about higher volumes, but in the last quarter you said, the biggest growth came from pricing, so is there a way to break out between pricing and volume this quarter, if not quantitatively qualitatively?.

Yes, Chris, this is Brian.

The increase that we had in the quarter, this quarter was primarily all volume and we didn’t obviously had price increases, but I would say that was offset by the mix and by that I mean, we track the average size of the system sold and depending on the size of the field, and that region of the country they were slightly low, smaller machines on average this year than last.

So, that kind of – the mix cancelled out the price, but if you look at, let’s say for the full-year, our price increases are approaching 10% overall, or a little bit less than that, you know when you look at what steel costs primarily have done and that’s recapturing that and protecting our margins on that side.

So, hopefully year-over-year that’s kind of where we’re at from a pricing standpoint..

I know freight, I think, has been up a bunch for you as well, is that captured in pricing or is that captured in some other, I don’t know SG&A or some of selling, is it, are you making up to that in pricing basically?.

Yes, it’s typically, it’s more or less a passthrough cost, and we did get a little bit behind in third quarter on the rapid increase in freight cost, but we have now recaptured that and that’s not having an impact at this point, but it’s treated more like a passthrough and not necessarily a price when we measure price..

Okay.

And then, I wonder, do you still break out, sort of a split between and dry land conversion parts then replacement?.

Yes, we do. We track that each quarter. Yes, this quarter replacement was much higher than what we’ve seen. This quarter replacement was 65% of the sales, dry land was 16%, and conversion was 18%..

Is there anything to be taken away from the higher replacement, is there any sort of trend, I don't remember if this business you know had a boom, I forget it, top of my head how long these figures with the last, what 15, 20 years or something and are we getting a big replacement cycle now?.

Well typically the fourth quarter would be a little bit higher percentage just because of the storm damage, but to put it in perspective last year in the fourth quarter, replacement was 42%. So, it’s definitely higher. I would say, the way I would characterize it is it really is a more of a regional thing from time-to-time.

Generally, in a lower commodity price environment you’ll see replacement ticking up.

I wouldn't read too much into the fact that this was an exceptionally high quarter at this point, but we’ll see what the upcoming quarters look like, but I mean over time replacement should increase as a percentage, but this was pretty significant change year-over-year for replacement..

And then just finally, I know I think you’ve given this before or just quantitatively.

You sort of split between the major crops something like corn and soy beans and what sort of percent of your demand versus nuts, fruits and other kind of thing like that?.

I don't know that we have a specific percentage breakdown. Obviously, corn is going to be the big driver, corn and soy beans, but we have in the Pacific Northwest as an example and in other parts of say, Wisconsin, there is a lot of potato growers. Potatoes are big driver for our equipment as well and alfalfa, there is a number of different crops.

So, we're not totally dependent on the grain crops like corn and soybeans..

Generally, corn and soybeans are still say over 50% of the business?.

I would describe them, Chris if we can leave it at this as they are – that would be the leading crop, you know the classic corn soya bean rotation acre is the biggest, but as Brian said, it is in a case where it is the dominant share because there is many other crops that help diversified that mix..

Got it. Thanks a lot..

You bet. Thanks..

The next question is a follow-up from Brian Drab with William Blair..

Thank you.

Forgive me for being so short-term focused here, but just trying to build the model and back on the QMB there is a lot of revenue I think it is coming in the near-term in QMB projects, particularly from the San Rafael Bridge, and I was wondering should we expect, I guess just directionally a pretty good step-up from the fourth quarter to the first quarter in terms of QMB project revenue?.

Brian, I think one thing we did call out in the slide deck is, the San Rafael Bridge is now, had gotten pushed back into our second quarter, which was driven by when the customer is going to deploy it.

Each contract is a little bit different in terms of revenue recognition and in this case, it’s based on when the customer deploys it and when we commission it and all of that. And now, the plan is our second quarter.

So, that’s been shifted and I guess that probably answers your question around first quarter?.

Yes, I think so.

I would at least, here is how I have it in my mind now and maybe if you can correct me with, the Fraser Bridge has a little bit trailing into the first quarter, maybe a couple of million and then the San Rafael is about $9 million project and that should primarily be delivered in the second quarter with maybe some into the third quarter?.

Yes. Now, that’s right..

Okay. Thanks a lot..

[Operator Instructions] The next question is a follow-up from Nathan Jones with Stifel..

Hi guys. Just another question on the price increases. I think Brian, there you said that pricing in irrigation is up about 10% for full-year 2019. You've got declining farm income projections. You've got probably nervous farmers around the trade issues and things like that, price increases on the equipment.

Can you maybe talk about what you think the impact of price increases having on the demand level within the market?.

Nathan this is Tim and I will go back to some of our prior quarters when the steel prices were coming up, and I tried to go back to almost exactly what I said at that point as our goal is to continue to pass on our cost increases to the marketplace to address the cost escalation and I can say, confidently, that we’ve led to the industry this past year and the implementation of passing on these charges, the steel surcharges is a good example of that.

And at the same time, I can say, and I look at our North America results, the sales growth that we had with being up 16% year-over-year. So, to me we were successful at the strategy, our intention is to continue at this strategy.

Now, having said that, you have to be competitive, but I can tell you, my bigger concern right now continues to be just literally the lower commodity prices and just farmer sentiment-related to trade deals.

So, we're going to stay with the strategy that we communicated earlier and given the fact it’s been successful and we’ve been able to grow and pass on these cost increases that gives us the confidence to continue in that direction..

I'm just going to ask you a broad question about domestic irrigation for 2019 and what your expectations are there. It sounds like from your comments that you are expecting domestic irrigation in 2019 to be below 2018.

Is that correct? And is there any color you can give us on what your expectations, at least directionally, off of that business?.

No, what I'm saying Nathan is it is a challenging environment. We got to get that out on the table. There’s nobody that’s in the ag market with commodity prices where they are would say any different. What I'm saying in addition to that, we outperformed the market, and we think we can do that again. That’s the message I’m delivering.

So, tough market, we performed well, got a lot of momentum coming into this year, we believe we can continue with that momentum in this fiscal year. Really not saying anything more than that..

Fair enough. Thanks very much..

Okay. Thanks Nathan..

[Operator Instructions] At this time, there appear to be no further questions. Mr. Hassinger I’ll turn the call back to you for closing remarks..

Well let me say thanks for your interest in participation in today's call. This will conclude our fourth quarter earnings call. I'm looking forward to updating you on our continued progress in our quarter one fiscal 2019 call to be held in January. Again, thanks for joining..

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect..