LNN
#There are some new standards that are going into effect, referred to as mash standard, that will require some of the road safety products to meet a different standard level.
I won't call it better; I would just say different.
That will require, in many cases, for our products to at least be retested to see if they meet those mash standards.
In some cases, it may require some product redesign or modifications.
That's the process that will be taking place.
And as what we're finding is some of the states will implement those standards faster than is required, but they are selecting to potentially implement those standards.
It may show up as we proceed with this, but I think it's something we can talk about in future quarters as we get into really understanding what testing needs to be required and what, if any, product modifications need to take place.
There isn't much I could tell you about that estimated cost at this point until we get further along in the process.
Yes, I can.
I can say that the replacement piece of business was the largest in terms of our whole goods shipped out the door; 47% would have gone through replacement, 25% into dry land applications, and 27% in conversion from flood or gravity.
And this is for the domestic US market that we're talking about.
I can also summarize this for you a bit and say that for the total year, 39% of the machines were replacement, 31% dry land and 29% conversion.
So it's much closer to that one-third in each category than what we saw during the drought period, but that's roughly the numbers.
Yes, it's a great little engineering company up in Boise that has specialized in water engineering, as the name implies.
And that includes everything from water rights to design of irrigation systems to the waste water-type systems and many different types of applications.
But they've expanded our capability from an engineering standpoint in terms of large projects, but also with much bigger, larger strength in water in general.
So we see them as a great addition to our engineering resource team that can be beneficial in many of the large projects that we work.
Thank you.
I think that's definitely a perspective on the story.
I think the other part of it is the things that we're doing to expand our business and increase share in many different ways, including our project revenue that we're working on with a key projects team that is going after large projects.
We have new product development taking place in each of our business units with new products planned for additional growth.
We've got market share gaining activities in each of our business and strategies that are being implemented.
So there's many other factors to this, other than just the marketing itself, as you've described it.
And I suppose if we just rode the market in that sense, that could be an outcome.
But that is not an outcome I would predict.
I'm not going to provide a specific kind of number, but I think that certainly the 18% was a very, very good year in the infrastructure business.
And as you mentioned, we potentially have some incremental investments on the product development side.
And absent a ---+ or I should say the QMB Road Zipper projects are certainly a key contributor to the margin in that business.
But we are continuing to work to look for projects, and we are continuing to work on other areas of the business to kind of make up that margin.
But I think it's certainly fair to say that 18% was a very favorable year, and so there could be some pullback in the margin this year if we don't get another QMB project.
This is <UNK>.
One other point that I would add to that is that prior to this year, where we were running with the infrastructure business, which consists of a number of pieces including the road safety products and rail and all the others.
But generally, most of the pieces were running in a 10% operating margin or better level.
The Road Zipper piece of it was the more volatile part because we were carrying expenses that were not offset, of course, if you didn't have the projects.
We've reduced the breakeven level for the Road Zipper piece of business.
We've built up more in terms of lease revenue with the Road Zipper piece of it.
And at the same time, on the road safety products business, the margins have improved through expansion of the business through additional revenue, but also through process improvements that have taken place in our production processes, and generally, just efficiencies in our factory.
So I think there's a number of enhancements that have taken place to both of those.
And again, it is going to be a little volatile based on what happens with the Road Zipper projects potentially, but the rest of the businesses have all improved.
I'll let <UNK> give you some of the more specifics, but I'd say anecdotally that acquisition has ---+ is performing as expected, if not better.
We have now integrated in our Digitec Electronics operation into Elecsys, and they did a superb job of taking care of customers and getting that done efficiently.
That team is a great team down there that has very good growth potential in terms of their business.
I'll let <UNK> talk about some of the more specifics on Elecsys, but I'd say that it has met our expectations.
I think I'll start out by saying this is probably the last quarter I'll talk about specifics on Elecsys, because we're now getting into it being part of the core business.
But in the prior quarters, I talked about it basically being a breakeven business with the purchase accounting but some of the purchase accounting amortization items are winding off.
But as <UNK> said, from an operating standpoint with excluding those purchase adjustments, the operating margins have been very good.
Just with regard to the fourth quarter, the operating margins, even with purchase accounting adjustments, are now approaching the 10%, as some of those purchase accounting amortization items wind off and the operating margins before purchase adjustments have been very strong.
So we've continued to see it progress as we expected, and as some of those short-term amortization items wind off it's definitely starting to contribute positively to the GAAP earnings as well.
Sales year ---+ I don't recall exactly where they were in the quarter, but it was a very good sales quarter for them.
I missed part of your comment, but I think the answer to your question is the players have not changed.
It's basically the same players.
Prior periods in trough situations, I would say that players were not quite as rational as what we've seen this time.
So it's definitely been more rational in terms of overall pricing than what we'd seen in previous trough conditions.
But the players are the same.
I don't think that's a factor in this.
I think it's more management.
Sometimes it becomes very difficult in a condition like this when the dealers are certainly trying to find any bit of revenue that they can in their regions, and they're pushing to the manufacturers like us to make concessions and do things to try and generate revenue.
However, there's not really a major share shift that's taken place and stayed shifted based on price.
It really is through differ differentiation that that share shift really is sustainable when it does take place.
I think that what we've seen over time is the pressure could take place from dealers to do something, and there had been some reactions.
And we're seeing less of that now and probably more of a realization of those are just short-term initiatives.
There's really not a used market for the systems.
There are some cases where if they're coming off of an application, which is really very, very rare, in fact, I honestly can't think of one.
I know of one or two that have been talked about at times in terms of taking it off.
There have been cases where we have bought back a machine that's been out in a number of years and sold it into another application or leased it into another application, if, in fact somebody wasn't going to use it.
That's a very rare situation.
But there's really not a used market for the machines or the barrier, that I'm aware of.
Well, the global long-term drivers of water conservation, population growth, importance of biofuels and the need for safer, more efficient transportation solutions remain very positive.
We're uniquely positioned for developing and delivering turnkey solutions.
Our offerings include a broad line of market-leading irrigation solutions for agriculture; providing the best irrigation management and control technology; engineered, integrated pumping and filtration solutions; as well as providing energy absorbing road safety solutions and solutions for expanding the capacity of existing roads and bridges.
We're committed to creating shareholder value through investments in organic growth, dividend increases, strategic water-related acquisitions and share repurchases, congruent with our capital allocation plan.
I'd like to thank all of you for your questions and participation in this call.
