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Lindsay Corp (LNN) Q1 2021 Earnings Call Transcript

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Lindsay Corp (NYSE: LNN)
Q1 2021 Earnings Call
Jan 7, 2021, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. My name is Matt, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lindsay Corporation First Quarter Fiscal Year 2021 Earnings Call. [Operator Instructions] Please note this event is being recorded.

During this call, management may make forward-looking statements that are subject to the 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’d now like to turn the call over to Mr. Randy Wood, President and Chief Executive Officer.

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Randy A. WoodPresident and Chief Executive Officer

Thank you and good morning, everyone. Appreciate you joining us. With me on today’s call is Brian Ketcham, our Chief Financial Officer.

Before Brian gets into the details of our first quarter results, I do want to share some opening comments. We announced our CEO transition plan in November. And I’m pleased to confirm that Tim Hassinger and I have now fully completed the transition. And it’s my pleasure to join you this morning as President and CEO of Lindsay Corporation. I want to acknowledge and thank Tim for his full support not only during the transition, but the key role he played in the transformation of our company. It truly is a pleasure and an honor to lead this great organization and continue our path forward.

We continue to follow CDC’s safety protocols at all of our facilities as part of our Pandemic Response Plan. Our businesses are classified as business essential and all nine plants are operational and running. We’re also maintaining our work-from-home option for roles that can be performed remotely. Safety is a non-negotiable expectation for us, so we’ll continue to make decisions that keep our employees safe.

Turning to the business environment. Conditions in North American irrigation market improved rapidly during the quarter. Commodity prices strengthened significantly due to an improvement both in supply and demand fundamentals, including an increase in exports linked to the Phase 1 China trade deal. Record government support to help offset the ongoing impact of the coronavirus and trade disputes early in the year for the support of positive customer sentiment and improvements in grower profitability. USDA projections now show a 43% increase in 2020 net farm income on a year-over-year basis.

In late December, the President signed the coronavirus direct aid package that allocated an additional $13 billion to the ag sector and we expect that aid to provide supplemental support for the corn, soybean, livestock and dairy sectors. These positive market drivers drove stronger than expected order flow in the second half of the quarter in North America, leading to higher equipment sales and a large order backlog at the end of the quarter.

We also saw rapid escalation of input costs, primarily steel, during the quarter and some transportation disruptions that resulted in higher expediting fees. The large influx of orders, coupled with increased costs, have put short-term pressure on margins. Price increases have been passed through to the market and we expect to see margin pressure subside as the year progresses.

International irrigation showed solid results on a year-over-year basis with unit volume growth across most regions. Brazil continues to perform well due to strong farm income, favorable currency for exports and a record soybean yield. Government subsidized financing continues to support market growth and we’re seeing expansion in private banking options as well.

In technology and innovation, we were pleased to announce our partnership with Trends [Phonetic], the market leader in high-resolution agronomic imagery, and Microsoft, which will allow us to deploy machine learning and artificial intelligence to create the smart pivot. The combination of advanced agronomics and machine health monitoring within the integrated FieldNET platform will be an industry first and further strengthens our position as the innovation leader in mechanized irrigation.

Moving to Infrastructure. We continue to focus on growing the Road Zipper business by executing our shift-left strategy, increasing our goal penetration and growing the lease business. We did see an increase in Road Zipper lease revenue in the quarter and our Road Zipper sales funnel continues to improve on a year-over-year basis. The timing of projects exiting the funnel remains challenging to predict, particularly in this current pandemic environment.

Both road safety and Road Zipper projects faced short-term headwinds as governments have delayed road construction projects while managing their pandemic response. The recent COVID relief package did provide additional funding to the states, which we expect will be beneficial for spring projects. President-elect Biden has also expressed the desire to support an infrastructure bill shortly after assuming office, so we do see the potential for supportive news later in the year.

The Road Zipper project with Highways England is now fully deployed and operating well and we expect this should become a great case study that supports further penetration of Road Zipper in similar applications.

Now I’ll turn the call over to Brian to review our first quarter financial results.

Brian L. KetchamSenior Vice President and Chief Financial Officer

Thank you, Randy, and good morning, everyone.

Total revenues for the first quarter of fiscal 2021 were $108.5 million compared to $109.4 million in the same quarter last year. Net earnings for the quarter were $7.1 million or $0.65 per diluted share compared to net earnings of $8.3 million or $0.77 per diluted share in the prior year. Net earnings for the quarter included an income tax benefit of approximately $1.7 million or $0.16 per diluted share related to the release of a valuation allowance in a foreign tax jurisdiction.

Irrigation segment revenues of $87.4 million for the first quarter increased $4.1 million or 5% compared to $83.3 million in the same quarter last year. North American irrigation revenues were $52.8 million compared to $53.6 million in the same quarter last year. The decrease resulted primarily from lower engineering services revenue related to a project in the prior year that did not repeat and this was partially offset by higher irrigation equipment unit volume.

In the international irrigation markets, revenues of $34.6 million increased $4.8 million or 16% compared to $29.7 million in the same quarter last year. Increase resulted from higher unit sales volumes in several regions, which were partially offset by the unfavorable effects of differences in foreign currency translation rates compared to the prior year that totaled approximately $2.4 million.

Total irrigation segment operating income for the first quarter was $10.6 million, an increase of 9% compared to $9.8 million in the same quarter last year. And operating margin improved to 12.2% of sales compared to 11.7% of sales in the prior year.

Improved [Phonetic] margins were supported by higher irrigation equipment sales volume. However, this improvement was tempered somewhat by the impact of higher raw material costs and also from higher freight costs that resulted from reduced availability of commercial trucking resources.

Market prices for all types of steel products began to rise rapidly during the quarter with steel coil prices increasing over 70% from September to the end of December. While we have implemented pricing actions to pass-through these cost increases, a large number of irrigation equipment orders were received prior to these actions taking effect. We expect to see some margin headwinds in our second quarter as the backlog of orders received prior to the price increases are shipped.

Infrastructure segment revenues for the first quarter were $21.1 million compared to $26.1 million in the same quarter last year. The decrease resulted primarily from a large Road Zipper System order delivered in the prior year that did not repeat and from lower road construction activity in the current year.

Infrastructure segment operating income for the first quarter was $4.3 million compared to $8.7 million in the same quarter last year. Infrastructure operating margin for the quarter was 20.1% of sales compared to 33.5% of sales in the prior year. This decrease is primarily due to lower revenue and higher margin product lines and was also impacted by an increase in raw material and other costs compared to the prior year.

Turning to balance sheet performance and liquidity. During the quarter, we generated free cash flow of almost $10 million, representing 138% of net earnings. Our total available liquidity at the end of the first quarter was $196.4 million with $146.4 million in cash and marketable securities and $50 million available under our revolving credit facility.

Our total debt was $115.9 million at the end of the first quarter, almost all of which matures in 2030. Additionally, at the end of the quarter, we were well within the financial covenants of our borrowing facilities, including a funded debt to EBITDA leverage ratio of 1.5 compared to a covenant limit of 3.0.

At this time, I would like to turn the call over to the operator to take your questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Brian Drab with William Blair. Please go ahead.

Brian DrabWilliam Blair — Analyst

Hi. Good morning. Thanks for taking my questions. First question is just on the Road Zipper pipeline. So, in the last fiscal year, large projects totaled over $50 million in revenue. And I’m wondering if you can give us your latest update for — as you look out to the next fiscal year, the potential for large project revenue this year, what’s the latest estimate?

Randy A. WoodPresident and Chief Executive Officer

Hey, Brian. Thanks for the question. Yeah. In — we’ve got, I would say, pretty good visibility this year to several — what I would classify as mid to large projects. So, as you mentioned last year, we were $50 million or slightly over in Road Zipper projects with $27 million of that being the Highways England project. I think our visibility right now would indicate that we would cover probably about half of that Highways England project with the current visibility that we have.

Brian DrabWilliam Blair — Analyst

Okay. Do you think overall for the year that it could be like a $25 million plus or $30 million plus large project revenue for — in total for any projects that you have or is it going to be kind of below that range?

Randy A. WoodPresident and Chief Executive Officer

I think, right now, it would look that depending on what — how the timing works that it would be above the $30 million.

Brian DrabWilliam Blair — Analyst

Okay. Great. Thanks. And as you take that into account that there will be solid large project revenue but somewhat down from last year, and then on the positive — and the type relatively high margin business but then on the positive side you have a pretty good outlook here for the irrigation and good leverage in that business. So, overall, what direction do you think gross margin goes in the next fiscal year?

Brian L. KetchamSenior Vice President and Chief Financial Officer

Well, I think two things on that point. Obviously, yeah, the irrigation outlook is much improved over what it was last year. And after a record year in infrastructure [Indecipherable] replicate, so the mix of business is lower operating margin on the infrastructure — or I mean, on the irrigation side. But obviously as you know, increase in volume levers pretty well on the irrigation side. So, I think, based on this commission — or if conditions remain where they’re at today, from a total profitability standpoint, I think we can replicate last year margin — operating margin percentage could be a little bit lower but total profitability could be at or above last year.

Brian DrabWilliam Blair — Analyst

So it — sorry — operating margin could be — consolidated operating margin, you’re saying, could be a little bit lower than it was in fiscal ’20?

Brian L. KetchamSenior Vice President and Chief Financial Officer

Yeah. Just because of the change in mix.

Brian DrabWilliam Blair — Analyst

Right. I understand. Just want to make sure I heard it correctly. Okay. Thanks very much.

Operator

Our next question will come from Nathan Jones with Stifel. Please go ahead.

Nathan JonesStifel — Analyst

Good morning, everyone.

Randy A. WoodPresident and Chief Executive Officer

Good morning, Nathan.

Brian L. KetchamSenior Vice President and Chief Financial Officer

Good morning, Nathan.

Nathan JonesStifel — Analyst

Just a follow-up there on Brian’s last question and a clarification. Brian, you said operating margin percentage could be down a bit, but the operating income could be higher than last year?

Brian L. KetchamSenior Vice President and Chief Financial Officer

Yeah, Nathan. I predicated that on — if the ag conditions that we’re seeing today remain through the year, which we have no reason at this point to think they won’t, with irrigation having a solid year, we could definitely get to that point.

Nathan JonesStifel — Analyst

Okay. Thanks for that. I want to talk a little bit about raw material prices and its impact on margins. You really only saw steel prices start to spike up four or five months ago, which, if I recall correctly, is about how long it takes you to run it through your inventory anyway. So, I wouldn’t have felt you guys certainly in the fiscal first quarter should really have been recognizing any of that increased steel pricing running through the P&L. Can you talk about how that plays out in terms of what if the increased raw material prices you’ve already recognized, I would have thought that that pricing would be getting a little bit worse as we go forward here over the next quarter or two? And then also how that plays off with the price increases that you’ve put in? Have you put in enough price increases to cover all of the increase in raw materials or do we need to go back to the market with more price increases?

Brian L. KetchamSenior Vice President and Chief Financial Officer

Yeah. Nathan, this is Brian. We really saw the steel cost increases beginning in September and then really taking off starting in October. When you compare that to the order flow that we saw, our order flow started picking up in the last — I’d say, the last half of October. And so, with — I think the automobile industry picking up, availability started becoming an issue in supply on the steel side. So that really led to the rapid increase in steel costs. We had a fall order program that went through the end of October and our steel price increases started taking effect first in November. So, where we’re at today, we’ve implemented several price increases to where it’s, I’d just say, double-digit kind of range which would cover the steel cost increase that we’ve seen.

Nathan JonesStifel — Analyst

Okay. Thanks. I’ll pass it on.

Operator

Our next question comes from Ryan Connors with Boenning & Scattergood. Please go ahead.

Ryan ConnorsBoenning & Scattergood — Analyst

Great. Thanks for taking my questions. Couple of bigger picture questions. First, you mentioned, Randy, the Biden administration and the infrastructure spend and so forth. But I wondered if you could comment on another priority that they’ve mentioned may be less prominently, which is the EQIP funding, the sort of environmental program where they give some low cost moneys for irrigation and other agricultural issues. Have you heard any more details on that whether that’s something that you think is going to be real and whether that tilts the balance of wallet share toward irrigation even in a good ag market?

Randy A. WoodPresident and Chief Executive Officer

Yeah. Thanks for your question, Ryan. And I do think you’re right. The administration obviously is going to have a significant focus on the environment, ESG, sustainability and the EQIP program has proven to be a very efficient means of getting capital to the market where customers are going to use it to improve efficiency. I think one of the big changes that we’ve seen in the last farm bill was the ability to fund technology investments like FieldNET Advisor. So, I think going forward we should see strong financial support in the EQIP program, which will aid in farm machine conversions to more efficient means of irrigation. But we’re also excited that they’ll include technology investments as well that will allow growers with pivots to buy into technologies that will also save time, water and energy. So we see EQIP as a good tailwind going forward.

Ryan ConnorsBoenning & Scattergood — Analyst

Okay, OK. And then, sort of a segue from that. You talk about these big raw material price increases and that necessitating product price increases. How does that impact a farmer’s — customers’ decision on whether to put a new pivot in place or whether to try to augment technology and sort of fix up their older base equipment and sort of augment technology on top of it to just sort of get the most out of what they have if it’s going to cost that much more to actually put a new piece of metal in the field.

Randy A. WoodPresident and Chief Executive Officer

Yeah. When we look at the impact on pricing and maybe elasticity of new machine purchases versus upgrades technology add-ons, even a double-digit increase in the quarter is pretty significant over the short-term. But if you look at the total acquisition cost, the impact on yield and profitability, we don’t see that driving a lot of purchase decisions toward upgrades or just technology add-ons, particularly with what we’re seeing in commodity prices and the strength of net farm income. So, we don’t see the cost increases passing through as pricing increases on the equipment having a significant impact. Our perspective is, they’re going to continue to make investments that impact their bottom line and that’s going to include farm machines and technology add-ons.

Ryan ConnorsBoenning & Scattergood — Analyst

Got it. Okay. And then, my last one was kind of switching gears to infrastructure. Really a big picture question, you talked about the positive impact of infrastructure spending. But I saw an interesting quote from, I guess, a transportation planning person down at Texas A&M, pretty prominent person, who made a comment that basically with people working from home, at least part of the time, it’s going to be as if every highway in the country had a lane added to it during rush hour, which I thought immediately brought to mind sort of the Road Zipper because the case has always been to just kind of add a lane. So, I don’t if you heard that comment or not, but interesting to get your take on that angle that maybe we get some infrastructure spending but how does that sort of potential for lower density on the roads impact the Road Zipper business case?

Randy A. WoodPresident and Chief Executive Officer

I think there is going to be a lot of questions about what the post-pandemic environment is all about and whether we see a continuation of work-from-home, is it a hybrid environments? And if you look at the volume of traffic that we see on the nation’s highways, there’s always going to be a mix of commercial traffic and trucks moving goods coast to coast and then people that are driving to and from work, people that are shopping. And I think as the economy starts to pick back up again and then life returns to new normal that we’re going to see traffic trends that maybe don’t get all the way back to what we’ve seen in a pre-COVID environment. But I think we were stressed on our nation’s roadways and we know that we’re a little behind on infrastructure spending. There’s going to be some pent-up demand there. So, I wouldn’t view that, Ryan, as having a significant impact on our ability to continue growing that Road Zipper funnel and growing our Road Zipper business.

Ryan ConnorsBoenning & Scattergood — Analyst

Got it. Very helpful. Thank you. Happy New Year to everybody and congrats on the new role, Randy.

Randy A. WoodPresident and Chief Executive Officer

I appreciate it, Ryan. Thank you.

Operator

Our next question comes from John Bratzs with Kansas City Capital. Please go ahead.

John BratzKansas City Capital — Analyst

Morning, Randy and Brian.

Randy A. WoodPresident and Chief Executive Officer

Good morning, John.

John BratzKansas City Capital — Analyst

You guys mentioned that irrigation orders picked up in the second half of the quarter. And since the end of November, grain prices have improved even further. Corn and soybeans are up about 16%. Did you see the pace of activity change or accelerate in the month of December versus sort of the second half of the quarter? Have you seen an improvement in order rates?

Randy A. WoodPresident and Chief Executive Officer

Yeah, John. It’s been a slow steady continuous improvement in market conditions. And if you track commodity prices, certainly the last coronavirus relief package announcement right at the end of December, there has been a lot of positive indicators that pile on top of each other that have really led to continued improvement in customer sentiment. So, when we look at our order intake rate in irrigation, we did see that same acceleration from September, October, November through December. So, those market conditions, the positive customer sentiment, we’ve seen that continue right through December.

John BratzKansas City Capital — Analyst

Okay. Would you disclose your backlog at the end of December versus where you were at the end of quarter?

Randy A. WoodPresident and Chief Executive Officer

At the end of December? No. We obviously picked up some of the…

John BratzKansas City Capital — Analyst

Yeah.

Randy A. WoodPresident and Chief Executive Officer

…quarter and back. But what I will say, I mean, year-over-year obviously is a large increase.

John BratzKansas City Capital — Analyst

Right.

Randy A. WoodPresident and Chief Executive Officer

And compared to where it was last year, but we’re seeing just — put a little more color around the backlog. I mean, it’s — within irrigation equipment, it’s well over a 50% increase over year-over-year.

John BratzKansas City Capital — Analyst

Okay. Okay, thanks. And then, secondly, the expense ratio — SG&A expense ratio was higher than I was looking for anything in there unusual. Were there any transition costs with Tim’s retirement recorded in the quarter? Anything any color on the level of SG&A costs?

Randy A. WoodPresident and Chief Executive Officer

Yeah. Now, just first of all in terms of transition costs nothing significantly there, we did have the COO role for a quarter, which we didn’t have before. We’ll have going forward. But you know that wasn’t that significant. But you know I think the biggest thing was really timing and how we kind of booked our incentive accrual this year versus last year first quarter last year was pretty low. And then, as we went through the year, we increased that as the infrastructure business grew. You know I think the other thing driving you know we had higher selling expenses in irrigation in the first quarter. A lot of that was marketing related directed toward the new product launches that we’ve introduced. So, how much year-over-year increase, but nothing structurally.

John BratzKansas City Capital — Analyst

Brian, how much was sort of the delta in the incentive accrual for the quarter?

Randy A. WoodPresident and Chief Executive Officer

That was when you look at corporate which was up about $1.1 million.

John BratzKansas City Capital — Analyst

Yeah.

Randy A. WoodPresident and Chief Executive Officer

That would be the large majority of that.

John BratzKansas City Capital — Analyst

Okay.

Randy A. WoodPresident and Chief Executive Officer

Also a little bit on the irrigation side. So, in total, that implied more than half of the increase.

John BratzKansas City Capital — Analyst

Okay. Thank you.

Operator

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

Chris ShawMonness Crespi — Analyst

Yeah. Good morning, everyone. How are you doing?

Randy A. WoodPresident and Chief Executive Officer

Good morning, Chris.

Brian L. KetchamSenior Vice President and Chief Financial Officer

Good morning, Chris.

Chris ShawMonness Crespi — Analyst

International irrigation was up strongly and you think you guys cited Brazil as a strong market. So, how are the other international markets? I would assume still with COVID going on that there is a lot of delays in markets that are sort of maybe more government driven or I don’t know institutional driven. Is that the case though? And I assume the Brazilian market is probably — is it as seasonal as the US market is or is that different there?

Randy A. WoodPresident and Chief Executive Officer

Yeah. I think, when we look at the international markets, Chris, and you break it up into what we define as more mature markets. And they operate like North America does with some supply and demand fundamentals, farm income fundamentals and markets like Brazil, like Australia, New Zealand, certainly portions of Western Europe. And they’re being supported and then propped up by some of the same fundamentals in global commodity prices. So, we saw almost across the board improvement in a lot of those more mature markets.

In the emerging project-oriented markets, those ones have a mix of business. Some of that will be commodity price net farm income driven and some of that will be supported by government investments. And that’s an area where we’ve seen more interest in projects and we’ve talked about this before the COVDI crisis and the shutdown of borders really identified for some countries, they’ve got more risk than they’re comfortable with. So we are seeing more discussion inquiries on projects in those areas. But in markets where we — would you have that mix and we see some strong fundamentals. We’re seeing business growth there as well. The only area internationally where we saw more headwind was really in sub-Saharan African and South Africa specifically where the market fundamentals are not incredibly weak. But we’ve got some political unrest overlays really limiting capital investment in that part of the world. But when we look internationally, we see pretty good growth quarter-over-quarter in most parts of the world.

Your second question on Brazil. We do have some seasonality there, but they benefit from having multiple crops per year. So they’ll have a cycle that’s planting, growing, harvesting, then they’ll jump right back into planting. So there is some seasonality, it just comes up a little quicker there than maybe we see in the markets in the northern hemisphere rolling where we have one growing season.

Chris ShawMonness Crespi — Analyst

Do you handle rising fuel costs similarly in the international markets that is in the NASDAQ or is that sort of different negotiation with the customer there?

Randy A. WoodPresident and Chief Executive Officer

It’s a very similar process.

Chris ShawMonness Crespi — Analyst

Okay. And then, something more — not theoretical, but in terms of the irrigation in the US, in terms of — there’s off and on, there’s talk about water restrictions, maybe putting a greater economic cost on water supplies, whether it aquifer or something else. But do you have any sense — I always understood that to be more of maybe a local decision or is it maybe [Phonetic] state-based or something. But with the Biden administration, is there a chance that there could be a larger federal effort to — I don’t know — again, put some sort of economic cost on water supplies for farmers or is there any and do you have any, I guess, insight or foresight into that?

Randy A. WoodPresident and Chief Executive Officer

Yeah. I would say, Chris, we don’t have any insight knowledge, no official perspectives. I think it’s an area that remains to be seen. And when you read a lot about wanting to recognize the true economic cost of water in business models where water is consumed, but there’s nothing that we’ve seen indicated that the administration at this point that we could use to really give you a good fact-based answer to your question.

Chris ShawMonness Crespi — Analyst

Got it. Thank you.

Operator

[Operator Instructions] Our next question is a follow-up from Nathan Jones with Stifel. Please go ahead.

Nathan JonesStifel — Analyst

Hey, guys. I just want to follow-up a little bit on the backlog increase, 50%. It is a pretty slow period seasonally for you guys. So, it does take huge numbers probably to move that backlog around. It could be impacted by the timing on the harvest and when the buying season starts. Were there any other factors impacting where the backlog ended at the end of November that are worth noting in terms of those maybe a timing impact from the harvest or anything like that that we should be aware of?

Brian L. KetchamSenior Vice President and Chief Financial Officer

Nathan, this is Brian. I think potentially a couple of things that you could say maybe pull some orders forward. One would be, if there’s year-end tax buying to shelter some of the farm income, I don’t know that we can really quantify that. And then, I think, as steel prices starting to increase, I think some of the orders, I’m sure, came in trying to beat the price increases.

Nathan JonesStifel — Analyst

Fair enough.

Brian L. KetchamSenior Vice President and Chief Financial Officer

Quite clearly, I think with lead times starting to extend out, I think we are seeing a little bit more of a shift into our second quarter that maybe last year would have been in the third quarter. At this point, it’s really hard to say. I mean, we’ll see as the year plays out. But clearly, the…

Nathan JonesStifel — Analyst

Okay. Then…

Brian L. KetchamSenior Vice President and Chief Financial Officer

…but clearly the underlying fundamentals that Randy mentioned, it’s really the primary driver behind the order flow and backlog.

Nathan JonesStifel — Analyst

Got it. And then, you talked about having put through double-digit price increases, talked about robust unit demand increases in technology purchases, I’m just trying to get some idea or some sizing of how we should think about the revenue growth as we’re going forward here I mean, you can have some pretty big swings in revenue in this business as things go better. Are we talking about mid-teens or better going forward kind of revenue growth as an expectation? How long does it take before the double-digit price increases actually bleed through into the P&L? Just try and give us some idea of what kind of growth we should be expecting here going forward?

Randy A. WoodPresident and Chief Executive Officer

Yeah. Well, I think, second quarter is definitely going to be stronger year-over-year. If you were to project this out on a full year basis, I would say, mid-teens is a reasonable expectation. In regards to when the headwinds start to subside, I would expect — I would estimate close to 40% of our backlog at the end of the quarter would have been orders received prior to the price increases. So, by the time we get through the second quarter, I would say, we’d have that headwind behind us.

Nathan JonesStifel — Analyst

Excellent. Thanks very much.

Operator

Our next question comes from Bill Baldwin with Baldwin Anthony Securities. Please go ahead.

Bill BaldwinBaldwin Anthony Securities — Analyst

Thank you. Thank you for taking my question. Just a couple of housekeeping questions. Do you have a projected tax rate for fiscal ’21 at this time or attracting a range for tax rate?

Brian L. KetchamSenior Vice President and Chief Financial Officer

Yeah, Bill. What we would expect for the balance of the year would be, around 23.5%, which puts us a little bit over 20% for the full year.

Bill BaldwinBaldwin Anthony Securities — Analyst

Okay. And what are your current capitals expenditure projections for the full year similar to last year or do you have any particular projects ongoing there?

Brian L. KetchamSenior Vice President and Chief Financial Officer

Expectations would be probably close to $20 million for the year.

Bill BaldwinBaldwin Anthony Securities — Analyst

Okay. And then, lastly, can you offer some color on what your — what’s going on, what you’re doing with your non road zipper infrastructure business, your road safety products, your guardrail, your end cushions [Phonetic], it looks like you’ve got a pretty good product line up in that area. And I’m just wondering how many states are you currently operating in and what are your plans for that business domestically and/or internationally.

Randy A. WoodPresident and Chief Executive Officer

Yeah, Bill. Yeah. The Road Safety products business, as you mentioned, crash cushions in Europe, we’ve got a temporary tape business really both driven around the road construction activity or there is replacement business as well. But we just went through a full product refresh over the last couple of years to update to the new MASH standard. So, as part of that process, we’ve made some product enhancements that I think have been received very well in the marketplace. And we started to see some pretty good growth in the road safety products. This most recent quarter, we said that road safety products were down a little bit and that’s really tied to the slowdown in construction activity that we’ve seen, most of which we think is COVID-related.

Bill BaldwinBaldwin Anthony Securities — Analyst

You currently operate in most of the lower 48 states or in the states that you want to operate in, I should, say or do you have room for expansion to the addressable market here domestically?

Randy A. WoodPresident and Chief Executive Officer

Yeah, it’s the states that we want to operate in. It’s not, I don’t know the exact number off hand, but there is certainly some key states that we focus on. There’s always room to expand into the other states. It’s just the incremental business that you get, isn’t going to be as much in certain states.

Bill BaldwinBaldwin Anthony Securities — Analyst

Right. And roughly what percent, if you disclose this, of your infrastructure business comes from non-Road Zipper type products, the road safety products?

Brian L. KetchamSenior Vice President and Chief Financial Officer

We haven’t broken it out in the past but it’s been more than 50% of the business has been non-Road Zipper. Last year…

Bill BaldwinBaldwin Anthony Securities — Analyst

Okay.

Brian L. KetchamSenior Vice President and Chief Financial Officer

…was very strong Road Zipper year.

Bill BaldwinBaldwin Anthony Securities — Analyst

Right. Right. Very good. Very good. Okay. Thank you very much for your time.

Brian L. KetchamSenior Vice President and Chief Financial Officer

Yeah. Thanks for the questions.

Operator

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

Randy A. WoodPresident and Chief Executive Officer

Thank you very much for your interest and participation today. This does conclude our first quarter earnings call. We look forward to updating you on our continued progress following the close of our fiscal ’21 second quarter.

Operator

[Operator Closing Remarks]

Duration: 37 minutes

Call participants:

Randy A. WoodPresident and Chief Executive Officer

Brian L. KetchamSenior Vice President and Chief Financial Officer

Brian DrabWilliam Blair — Analyst

Nathan JonesStifel — Analyst

Ryan ConnorsBoenning & Scattergood — Analyst

John BratzKansas City Capital — Analyst

Chris ShawMonness Crespi — Analyst

Bill BaldwinBaldwin Anthony Securities — Analyst

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