Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Michael Cox - Piper Jaffray.
Michael Cox - Piper Jaffray
My first question is on the timing from a seasonal perspective. On a normalized year, when do you expect farmers to sort of revisit a capital decision?
Rick Parod
Mike we expect to generally see demand start to pick up and orders start to pick up in the January time period; usually its January, February time period, depending on what else is happening in the market.
Just to explain our typical revenue split for irrigation, this is from a more historical perspective, typically we would see a revenues split for the irrigation business of about 20% of revenues in the first quarter, 25% in the second, 35% in the third and 20% in the fourth quarter and that’s kind of a traditional split.
Now, we do however see many times when that will change due to things like whatever is happening in the economic environment that may affect farmers, commodity pricing for example or a drought impact in terms of timing, so there’s a number of things that can impact that flow, but that’s the typical timing of our revenue recognition in irrigation.
Michael Cox - Piper Jaffray
Can you comment on the pricing dynamic in the irrigation segment now that steel prices have fallen significantly?
Rick Parod
Yes. During the first quarter and through all of last year, we saw pretty good pricing discipline in the sense that as steel prices were rising, we were generally or often leading in terms of passing through price increases and saw competition following a good pricing discipline in terms of maintaining pricing in the market and we saw most of that through this first quarter.
However, since then we have seen some movement down by one of our major competitors; not a huge amount, but probably in the range of about 3% and what I’ve said to our dealers and would say is that we will be competitive in this business in irrigation and we will do what’s necessary to remain competitive in it, but we will not lead with pricing reductions.
Michael Cox - Piper Jaffray
Okay that’s very helpful and then just one last. Again a big picture questions in revolving credit conditions; there’s been a lot of discussion around this. I’m hoping you could maybe address this, both on a domestic as well as in your key international markets?
- To read the full transcript on Seeking Alpha, click here »
