Lindsay Corporation, known for its irrigation systems and infrastructure solutions, recently released its Q2 2024 earnings transcript. While analysts dissect Brazil's impact and ponder domestic irrigation, a quiet detail hints at a potential gold mine: a burgeoning lease portfolio in the Infrastructure segment.

Buried within the transcript is the revelation that Lindsay holds a staggering $20 million in backlogged orders not expected to be fulfilled within the next year. This backlog, we learn, is largely attributed to multi-year lease agreements, specifically a renewal in Texas and a new agreement for the 'roads of Versailles.'

This detail, easily overlooked, could signal a strategic shift for Lindsay, one with potentially explosive implications for its bottom line. While project-based sales offer lucrative bursts of revenue, they are inherently unpredictable and subject to delays. Leasing, on the other hand, provides a steady, predictable stream of income – music to the ears of investors seeking stability and growth.

Furthermore, Lindsay's infrastructure segment, though smaller than its irrigation counterpart, boasts significantly higher margins. The transcript reveals a 19% operating margin for infrastructure in Q2, a stark contrast to the 19.3% margin seen in irrigation. This disparity underscores the profitability potential of Lindsay's leasing strategy.

Consider this: if just half of the $20 million backlog translates to annual recurring lease revenue at a 19% margin, Lindsay could be looking at an additional $1.9 million in annual operating income. Now, project that growth over a 5-year span, and the numbers become even more compelling.

This potential revenue stream, coupled with the anticipated growth in US infrastructure spending thanks to the Infrastructure Investments and Jobs Act, paints a very optimistic picture for Lindsay's future.

However, questions remain. What is the average lease duration? Are there penalties for early termination? How scalable is Lindsay's leasing model? Answering these questions will be crucial in assessing the true long-term impact of this strategic shift.

One thing is clear: Lindsay's $15 million whisper deserves a closer look. What seems like an insignificant detail might just be the roadmap to unlocking a new era of profitability for the company.

Financial Performance: A Glimpse into the Numbers

Revenue Breakdown: Irrigation vs. Infrastructure

"Fun Fact: Lindsay Corporation, headquartered in Omaha, Nebraska, was founded in 1949. Initially focused on designing and manufacturing irrigation equipment, the company's innovative spirit led them to develop the world's first center pivot irrigation system in 1960, revolutionizing the agricultural landscape."