Tyler Hutin: Thank you. And then, lastly, just in the tough environment, kind of following on one of the previous questions, so you have operating margin above 14% in the quarter. Is it probably pretty safe to say that you’ll finish the fiscal year above 14% despite some of the near-term headwinds in domestic and international irrigation? Thank you.
Brian Ketcham: I’m not sure I caught the question completely, Tyler.
Tyler Hutin: I’m just wondering, do you think you’ll likely finish above 14% for operating margin in the fiscal year? Kind of in line with your five-year average target?
Brian Ketcham: Yes, I mean, I think there’s quarter-to-quarter there’s definitely seasonality fourth quarter being our lowest in the U.S. So, I think we feel good about where we’re at from a margin standpoint. I think that the impact of some of the volume decreases that we’ve seen particularly in Brazil will have an impact on us and based on our ability to react to that from a spending standpoint, I mean, our objective is to protect our operating margins. But I think we feel like we’ve done a pretty good job up to this point.
Brian Ketcham: Okay. Thank you. I’ll pass it along.
Operator: Thank you very much. The next question is from Jon Braatz with Kansas City Capital. Please go ahead.
Jon Braatz: Good morning, Randy. Good morning, Brian.
Randy Wood: Hi, Jon.
Brian Ketcham: Hi, Jon.
Jon Braatz: Randy, on the $50 million investment that you’re making in your facility, obviously you’ve done a good job over the past couple of years in improving margins and manufacturing margins. Incrementally, what will that $50 million get you in the years ahead?
Randy Wood: I think there’s a few interesting areas that we’ve talked about. Obviously, we detailed some new facilities, really connected the capacity and capabilities. We’re making some big investments, modernizing, galvanizing. We’re increasing automation, robotics, improving material flow. In the end, we think this is really going to position us to react faster and maybe more efficiently than we have in the past to market demand, whether that’s up or down. Some of the new industry 4.0 technologies that monitor the production equipment, and the way I like to think about it, we’re really taking FieldNET and FieldNET Advisor and the tools that we’ve developed for our customers, and we’re leveraging those similar types of technologies inside of our factory.
So, we’ll have better monitoring of machine performance, stay ahead of maintenance, those types of things. And of course, we’re always very mindful of any opportunity to improve safety for the employees. So, I think that flexibility in automation, the modernization, leveraging some new capabilities in both data and production equipment, we’re excited about the investments. And I can tell you, we had a wonderful groundbreaking ceremony last week, and the people inside the facility, they’re pretty energized and excited about it too.
Jon Braatz: So, Randy, let’s say over the cycle your margin in that facility is X. With this $50 million investment, what do you think you can — how much do you think you can improve that margin over the cycle?
Brian Ketcham: Hey, Jon, this is Brian. I’ll jump in on that one. It does, and near-term gives us that ability to flex up and flex down without really having to add or remove a lot of labor. And so, that’s a big part of it. I think I would view it as more, in the near-term, being more stabilizing for margins. I mean, obviously, you’re going to have an increase in depreciation that offsets some of the productivity savings that we have. But I think as you, let’s say demand increases significantly like it did a couple of years ago, our ability to flex up we should be able to pick up some margin just because of the less reliance on having to go out and find labor, which in Nebraska is difficult with the low unemployment rate.
Jon Braatz: Okay. Brian, about less than two years ago, you established a relationship with Pessl. Am I pronouncing that correctly?
Brian Ketcham: Pessl, yes.
Jon Braatz: Okay. What have you seen in these past two years that resulted in you guys taking a 49.9% investment? What have you seen that has encouraged you?
Randy Wood: Yes, I’ll take that one, Jon. This is Randy. And that relationship actually has been formalized within the last year, so it’s still relatively early. But when you look at kind of the synergies of being able to move their hardware and software services through our channel, they’re a global company, we’re a global company, but we don’t overlap in a lot of those areas. So, we do see some immediate opportunities to help both companies. And I think the exciting part is really about the data and the digital opportunities that the acquisition, the investment creates. And we can improve tools like FieldNet Advisor, using input from field sensors. We can expand data analytics and the models that we have to provide better water management and guidance.
And they’ve got over 80,000 installed devices around the world. And that creates some tremendous revenue opportunities for annual recurring revenue and the broader integration with the FieldNET platform. So, we feel we’ve got a great company, great founder, and ownership, and we’re really going to hit the ground running.
Jon Braatz: Okay. Brian, I assume it’s going to be accounted for as an equity investment?
Brian Ketcham: Yes, that’s correct.
Jon Braatz: Okay. All right. Thank you.
Operator: Thank you. The next question comes from Brett Kearney with American Rebirth Opportunity Partners. Please go ahead.
Brett Kearney: Hi, Randy, Brian, Alicia. Good morning. Thank you for taking my question.
Randy Wood: Hi, Brett.
Brian Ketcham: Hi, Brett.
Brett Kearney: I just had a follow-up on the Pessl instruments agreement. Congratulations. It seems like a great way to deepen the partnership there. Just curious geographically those 80,000 installed devices they have, would you say given where they’re based, it’s more geared towards Europe and opportunity, obviously, Lindsay is strong globally, but more you’re able to bring them into your existing relationships North America, Brazil and they have some customers maybe you’re not as well penetrated in the European region?
