Thank you, and good morning, everyone. Welcome to our fiscal 2026 second quarter earnings call.

With me today is Sam Hinrichsen, our Chief Financial Officer. Before commenting on our quarterly results, I'd like to address recent developments related to the conflict in the Middle East.

We are closely monitoring the situation, with our top priority remaining the safety of our employees and partners in the region. The MENA market has been a strong source of growth for our international irrigation business, and deliveries tied to our most recent project are meaningful to our revenue.

The project remains on schedule, and our supply chains are currently operating without disruption. Any future risk will depend on the duration of the conflict and the potential for broader geographic impact.

At this time, we remain well-positioned to continue supporting our customers and dealers across the region. Turning to our second quarter results.

I'm very proud of our team's execution. Despite continued external headwinds in the agriculture industry, including trade uncertainty, higher input costs, and weakening sentiment, our team demonstrated strong operational discipline.

We remain focused on the levers within our control, particularly pricing, cost management, and operational efficiency, while continuing to invest strategically to position the business for long-term growth. In North America, our irrigation business customers continued to delay large capital purchases given current farm economics, which, as expected, resulted in lower unit sales volumes in the quarter.

Demand remains soft, consistent with what we outlined last quarter. In our international business, revenues were flat to slightly down year-over-year, driven by lower sales volumes in Brazil and the timing of project revenue in the MENA region.

In Brazil, high interest rates and limited access to credit continue to constrain growers' ability to finance capital equipment purchases. Additionally, local market feedback suggests the 2026 crop plan, expected to be released in July, will include lower financing rates than the prior year.

As a result, many customers are taking a wait-and-see approach. Our infrastructure segment performance reflects the expected impact of a difficult comparison to the prior year, which included the delivery of a $20 million Road Zipper project, which we did not expect to repeat.

Excluding the Road Zipper project, our infrastructure business grew 6%, led by higher sales in road safety products. Turning to market outlook.

As we mentioned last quarter, we expect softer market conditions to persist in the near term in North America. While customer quotations are down slightly versus prior year, we are not seeing the traditional pick-up in spring order volume.

Current market indicators, including input costs and overall farm profitability, suggest the current trough environment will continue until there's greater clarity around trade impacts, profitability, and resolution in the Middle East. In our international markets, we remain encouraged by the overall outlook for future growth, particularly in regions focused on improving food security and water resource management.

Near-term recovery in Brazil will depend on grower response to the new crop plan and the availability of attractive financing. While we will closely monitor customer sentiment at the Agrishow later this month, we do not expect any meaningful market recovery until the new crop plan is released in July.

We remain optimistic in Brazil and continue to see a compelling long-term secular growth opportunity in that market. Within our infrastructure segment, we continue to see opportunities develop across the portfolio, and the Road Zipper sales funnel remains strong.

We do see opportunities for continued growth in road safety products, which has provided solid support to our results this year. During the quarter, we introduced two new products at the American Traffic Safety Services Association trade show.

The Alpha-Guard channelizing device delivers speed, strength, and flexibility, allowing it to be used in both emergency applications as well as everyday use. The RoadRunner is a breakthrough truck-mounted attenuator that prioritizes speed of deployment and unmatched durability.

The introduction of these new road safety solutions highlights our investment in innovation and the growing demand for efficient and safe roadway solutions. I'd like to now turn the call over to Sam to discuss our fiscal second quarter financial results.

Sam?

Thank you, Randy, and good morning, everyone. Total revenues for the second quarter of fiscal 2026 were $157.7 million, a decrease of 16% compared to $187.1 million in the prior year.

The decline in our consolidated top line was driven by lower revenues in both of our segments. The year-over-year decrease in the infrastructure business reflects the absence of the $20 million Road Zipper project that was delivered in the prior year, which, as Randy mentioned, we did not expect to repeat.

Operating income for the second quarter was $13.0 million compared to $32.1 million in the prior year, and operating margin was 8.3% of sales compared to 17.2% of sales last year. The decrease in operating income was driven by lower revenues, with the most significant driver being the previously mentioned lower Road Zipper project revenues.

Net earnings for the quarter were $12.0 million, or $1.15 per diluted share, compared to $26.6 million, or $2.44 per diluted share, in the prior year. The year-over-year decrease in net earnings reflected the impact of lower operating income and a higher effective tax rate.

Turning to operating segment results. Irrigation segment revenues for the second quarter were $141.2 million, a decrease of 5% compared to the $148.1 million in the prior year.

Results were largely in line with our expectations against the backdrop of a continued challenging agricultural environment. North America irrigation revenues were $71.0 million, down 8% from the previous year, as lower unit sales volume was partially offset by higher average selling prices.

Demand in North America continued to be impacted by low commodity prices and overall tempered farmer sentiment. International irrigation revenues were $70.2 million compared to $71.0 million in the prior year.

The marginal decrease was driven by lower sales volume in Brazil and MENA project timing, which was partially offset by growth in other international markets. Irrigation segment operating income for the quarter was $19.5 million compared to $27.4 million in the prior year, and operating margin represented 13.8% of sales compared to 18.5% of sales last year.

The compression in operating income was mainly a result of lower sales volume in North America, unfavorable regional mix, and the impact of fixed cost deleverage. In our infrastructure segment, revenues for the second quarter were $16.5 million compared to $38.9 million in the prior year.

As expected, the year-over-year decrease was attributable to the absence of the $20 million Road Zipper project that was delivered in the prior year period. Excluding the Road Zipper project, revenues were up 6%, driven by continued growth in road safety products.

Infrastructure operating income for the quarter was $1.2 million, down compared to $13.3 million in the prior year, and operating margin was 7.1% of sales compared to 34.1% of sales in the prior year. The decrease in operating income and margin was mainly driven by lower Road Zipper project revenues, which resulted in less favorable mix.

Turning to the balance sheet and liquidity. At the end of the second quarter, our total available liquidity was $236.1 million, which includes $186.1 million in cash and cash equivalents and $50 million available under our current revolving credit facility.

During the quarter, we continued to execute against our capital allocation priorities. We returned cash to shareholders by completing $25 million of share repurchases and made progress on key strategic investments.

We remain confident in the strength of our balance sheet and our ability to continue investing in the business to support future growth and drive productivity while returning capital to shareholders. This concludes my remarks, and at this time, I will turn the call over to the operator to take your questions.

Good morning, everyone.

Good morning, Nathan.

I guess I'll just start with margins. The irrigation margins were a bit low, even on the volume that we had there, I think.

The incrementals were over 100%, not a big number on the revenue change. Could you just talk about maybe some more color on the soft margin in irrigation, if you're seeing any increased pricing pressure from competitors or just what's going on there, please?

Sure, Nathan. If you think about the volume drop, particularly North America year-over-year, coming from an even lower base from last year, that will continue to drive fixed cost deleverage.

That's a main driver of that margin compression. Regional mix was slightly unfavorable due to the fact that we shipped more internationally.

I would also just say the margin pressure from the overall competitive environment from input price inflation, really globally, has impacted margins. It's really a combination of those factors.

You mentioned the competitive environment there. Are you seeing more intense price competition from competitors as the volume is fairly low here?

Hey Nathan, this is Randy. I'll take that one.

I think what you generally see in these soft markets, there's more propensity, maybe from the smaller, privately held, family businesses, whether it's in North America, Western Europe, you certainly see a more competitive environment kind of ratchets up the pricing intensity. We would still say a rational pricing environment in general, and our approach is very strategic.

We might want to identify specific customer relationships that we know we have to protect. We're not going to use pricing as a method to drive market share increases.

We certainly want to preserve the quality of the business. For us, it's a strategic approach, but certainly when volumes are tight, you do see that competitiveness ratchet up.

Thanks for that. Just one on the MENA project, I think you manufacture that in Turkey, and you've said that it's on schedule at the moment.

Do you expect it to stay that way, or does it stretch out? Does the war in Iran kind of delay any potential contract awards in that area as people wait and see how things are going to play out there?

Just any comments you can give us on that.

You have hit on a couple of things, and we would say certainly there could be short-term delays in some of the other business in the region, whether it's project business or just regular retail business. I think everybody in the region's kind of on the edge of their seats waiting to see what happened.

Specific to the MENA project we're delivering now, a lot depends on the length of the conflict. If this is another 3 to 4 weeks, 5 to 6 weeks, in our view would be everything looks to be on track.

We've confirmed with our logistics providers. We've confirmed with our supply chain on the inbound side.

For us, it looks safe and as predicted and as projected, provided this is not a prolonged conflict. If this goes months or several quarters, then we may have a different answer for you, but right now, based on what we see and the communication we've had with all of our suppliers, things look to be on track and proceeding as planned.

Fair enough. Thanks very much for taking the questions.

Thank you, Nathan

Good morning. I wanted to actually go back and revisit the topic on pricing, because if I'm reading in the press release, you actually mentioned higher average selling prices as a offsetting tailwind to some of the headwinds in irrigation.

I'm reading that pricing was actually positive. Just wanted to kind of see, should I interpret then the comments a minute ago to say that you're holding up on your price and maybe walking away from some business where you feel it's not business you feel is priced appropriately?

I would say yes, we certainly have a walk-away point on anything, Ryan, whether it's a project sale or just a retail sale. I think there's always two parts to the equation.

I think pricing year-over-year was favorable, but you have to factor cost into it as well. Cost, in our view, exceeded the pricing opportunities we're able to get in the market, and that's resulting in the margin compression that you're seeing.

A portion of it.

Got it. Okay.

Got it. Then one more on irrigation, then a quick one on infrastructure.

Been a lot of talk about significant shifting of acreage from corn to soybeans in North America given the economics. Does that impact you at all, or are you sort of indifferent between those two?

I think we're largely indifferent in terms of what it means for direct machine sales, whether a customer grows one or the other. In our regions, there's a need for irrigation and it really doesn't matter.

We'll apply both in the same way. The bigger macro market impact could start to shift acres, could start to impact price, could start to impact farmer profitability.

I think right now, you see small decrease in corn, a slight increase in soybeans. If you look historically, the June report's going to give us better data.

Generally, we see corn acres increase between now and June, and soybean acres decrease. I think a lot of the customers that we've talked to are kind of locked in on their inputs and their planting intentions.

I don't know that there'll be a lot of significant shifts between now and when they get into the fields. Either way, from a direct sales perspective, no impact.

We will watch how it impacts the macro and the pricing on those commodities, because that could start to move the needle one way or the other.

Got it. Very helpful.

Then lastly, on infrastructure, it did seem that to us the deleveraging on the margins did kind of catch us by surprise in infrastructure. Is there anything special that's dragging that down in the quarter, or is this sort of the margin run rate that we should think about when we don't have a Road Zipper project of scale flowing through?

If you think about the Road Zipper, that, of course, just the sheer magnitude is the biggest single driver for the margin compression. Frankly, cost absorption deleverage is a big chunk of this.

You're taking that significant product out of the results compared to last year. If you think about the road safety products business that's doing really well, that business is the smaller piece, of course, of our overall infrastructure business.

Even that growth is a partial offset, but it can't offset the full impact from the Road Zipper project. If you think about the other components in infrastructure, there are what I would call non-Road Zipper project components, they will continue to impact results.

They're more components than just road safety products and Road Zipper. As you think about margin profile, of course, in the absence of a big project, it's going to be closer to what we've seen right now.

Got it. Okay.

Can I sneak one more in? Any update quickly on the Nebraska capital investments, where we're at there and what the kind of margin impacts for not only '26, but as we move to FY '27?

I can say from a timeline perspective, the weather was very cooperative and supportive this winter, our tube mill is up and running and turned over to full production. Construction of the new galvanizing facility is on track, on plan, and we would expect that to come online near the end of the calendar year, sometime in the first portion of our fiscal 2027 year.

In terms of the depreciation impact, the efficiency gains, I think we've been pretty consistent that initially it does appear that a lot of those efficiency gains we're going to have are going to be eaten up by the incremental depreciation that we're going to see on that investment. Really, for us to get the leverage and growth and profitability out of investment, we are going to have to see some market recovery to support that.

To me, the similar answers we provided over previous quarters and no significant shifts in project timing.

Got it. Thanks for your time.

Thanks, Ryan.

Hi, guys. Good morning.

Thanks for taking my question.

Morning, Brett.

I think you've done a good job discussing status of your Middle East, North Africa project in the context of the current environment. Obviously, you guys are on top of risks that could materialize there, but wanted to talk about potentially on the opportunity side.

About 4 years ago today when we saw the Russia-Ukraine conflict materialize, subsequent to that was when you guys ultimately were able to experience a number of these international food security projects. Now, this one has a different texture.

It's not in a global grain production region, primarily centered on fertilizers. As you look 12, 24 months from now, how are you seeing potential additional waves of food security projects in, call it, Africa, Central, South, and Southeast Asia and your ability to potentially capture opportunities that might arise there?

I think it's an interesting observation, Brett, and you're right. If you go back to 2022, when the Russia-Ukraine conflict hit, we did see a surge in energy prices, we saw corresponding surge in commodity prices.

I think you hit on one big difference this time around is that Iran is not a big grain producer. They're not a big exporter of grains, and I think that's one thing that probably changes the model going forward just a little bit.

Certainly, the fuel cost, the fertilizer cost going through the Strait of Hormuz, that certainly has some short-term impact. Long term, it really depends how long this thing goes, and if we're still talking about it and we're still dealing with the conflict 12 to 24 months from now, I think a lot of things can change.

In the near term, I don't know that this changes our long-term view of this market. We are still going to see some of the same countries interested in investing in food security, investing in GDP diversification for the local economies.

Again, it comes back to duration, and right now, our plan would be faster resolution over the next several weeks, not something that's going to last several quarters for us. We're still active in the region, still able to run the facility, keep our people safe, and I guess that bodes well for us competitively in the region as well.

That's very helpful. Thanks so much, Randy.

Thank you, Brett.

Hey, can you guys hear me?

We got you.

Thank you. Sorry about that.

Just wanted to ask quickly on Brazil, maybe just some more thoughts there, how the outlook might have changed throughout the quarter. Randy, you mentioned that the upcoming crop plan in July, I believe you said it is expected to have lower interest rates for ag equipment.

Is that something that's just expected, or is that a hard kind of guarantee? How can we think about Brazil in the second half of your fiscal year here?

Sure. I'll maybe start by saying, long term, Brazil still a very attractive market, low penetration in terms of irrigation, three crops a year really accelerates the payback.

We're still very, very bullish on Brazil. What we're dealing with in the near term is credit, and that's been the narrative for the past several quarters.

The feedback that we've got locally, I would say, in Brazil, nothing's guaranteed. This is an election year, which can sometimes change and shift timing on some of the things that are shared verbally in the markets.

That crop plan last year was about 12.5%, and this year the projections are it's going to be well under that. How far under that, no guarantees until the plan is released.

We are seeing some market movement in interest rates there. I think that the Selic rate nationally was just lowered by a quarter point just within the last couple of weeks.

There is indications locally that financing rates are going to come down. When customers see that, they kind of wait.

Customers might think, I could use a pivot today, but you know what, I can put a pivot on my next crop if I can get a better interest rate, my payback is going to be much better. The environment we're in, there's no certainty, but the prevailing attitude locally is rates are going to get better, and that's got customers kind of sitting on the sidelines.

We did mention in our prepared comments the Agrishow is the end of this month, and that generally is the largest show. It's a selling show where dealers and customers are working on designs, putting quotations together.

We're very anxious to see what customer sentiment is like at that show. I suspect we could come out of that with some very good feedback on customers ready to re-enter the market.

Until that crop plan is released and that money and funding is available in July, we could be in the same position through our third quarter that we've been in in our second quarter.

That's great, very helpful there. Finally, I just wanted to ask quickly on gross margin, wanted to see if there was anything you wanted to call out besides weaker top-line performance that resulted in the margin hit this quarter.

Then additionally, any more clarity you can provide on margin for the latest international irrigation project would be helpful as well.

As far as overall gross margins are concerned, again, the fixed cost deleverage at these current demand levels, that is a key driver. You think about the international mix, we don't expect that mix to fundamentally change in the second half compared to where we were in Q2.

Of course, there's risk from an input price perspective and timing of pricing actions. You think about the Iran situation, that is a fluid situation.

If it drags on, if it has continued impact from an input price perspective, there could be challenges there. I think those are the key drivers there.

Sorry, what was your second question? The outlook for the second half?

Any comment on the second half, and then maybe if there's any update or more clarity on the margin of the MENA international project?

Again, for the second half, based on what Randy discussed, the overall outlook for specifically North America and Brazil is not a big change versus Q2, we would expect especially the cost deleverage to continue. From a MENA project perspective, again, we're executing the project according to plan.

Those margins are comparable to the previous year project. Of course, there are timing differences as we ramp up the project.

There's really no change there compared to what we had discussed before.

Thank you.

Morning, everyone. Randy, just want to return to the capital investments you've been making, back in 2024 initiated Project Fortify spending $50 million, I guess, in the Nebraska facility.

I guess I would have maybe expected a little bit of better margins in this downturn. I guess my question is how far along are you in beginning to accrue a return on that investment?

Are we going to begin to see that return on that investment shortly?

I think as I said earlier, John, we have now turned over the tube mill specifically, and that was the first tranche of the big investments. It was designed to improve safety for our operators, improve efficiency and throughput, but also to reduce our reliance on labor.

As in Lindsay, Nebraska, if we had to bring in another 100 laborers to respond to some upswing in demand, that would be tough, that would be a stretch. Our plan was automate the equipment so that when we do have to respond to an upswing in the market or downswing in the market, we're not taking our labor head count up and down as we maybe have in previous history when we had more labor-intensive labor practices.

Right now, I think I said earlier in the call, we do need to see some market recovery to get the volume leverage on that investment. That will sustain itself as we launch the new galvanizing facility in early 2027.

At current volumes, it's going to be tough to generate and see those incremental margins and those returns, just because of the deleverage on a big investment and the depreciation that we'll see now. When we get into the next upcycle, as we grow and reach the peak of the market, I think that's when we're really going to be able to capitalize on it and identify it.

In the near term here, I think most of those savings are going to get diluted by the incremental impact of the depreciation.

Okay. Basically what remains is the galvanizing facility for 2027?

You got it. Yeah.

That one won't be turned over in this fiscal year, we won't see that incremental depreciation until we get into Q1 of '27.

Okay. Thank you, Randy.

You bet.

Thank you. Overall, near-term market conditions remain challenging, but we are confident in our ability to execute and position the business for long-term growth.

We will continue delivering the large MENA project throughout the third and fourth quarters while advancing planned investments in our Lindsay, Nebraska facility, including the new galvanizing operation expected to come online in early 2027. Our leadership teams remain disciplined and experienced in managing through the cycles, and we will continue to closely manage spending while aligning investments with our strategic growth priorities.

In addition, we see continued opportunity in our road safety business and remain focused on introducing new products into attractive end markets. We remain committed to creating long-term value for shareholders and look forward to updating you on our third quarter earnings call.

Thanks for joining us.