The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from GlobeNewswire (a Nasdaq OMX company)

Raven Industries Reports Record Fiscal 2013 First-Quarter Results

Friday, May 18, 2012

Raven Industries Reports Record Fiscal 2013 First-Quarter Results06:10 EDT Friday, May 18, 2012SIOUX FALLS, S.D., May 18, 2012 (GLOBE NEWSWIRE) -- Raven Industries, Inc. (Nasdaq:RAVN) today reported record sales and earnings for its fiscal 2013 first quarter ended April 30, 2012. The sales and earnings trends Raven experienced in the 2012 fiscal year continued in the 2013 fiscal first quarter, with sales up 16 percent to $117.9 million, from $101.5 million in the prior-year period. First-quarter net income rose 21 percent to $19.0 million, or $1.04 per diluted share, versus fiscal 2012 first-quarter net income of $15.7 million, or $0.86 per diluted share. Growth was driven by the Engineered Films and Applied Technology Divisions, where double-digit sales gains were accompanied by even stronger increases in operating income. "We are capitalizing on favorable market dynamics in agriculture and energy," said Daniel A. Rykhus, president and chief executive officer. "This produced a strong start to the year with excellent top- and bottom-line performances in our Engineered Films and Applied Technology Divisions. A difficult federal spending environment affected Aerostar. However, the company as a whole posted impressive results, demonstrating the benefits of our diversification strategy. "In each of our chosen markets, we're committed to helping our customers solve great challenges—hunger, safety, environmental protection and energy independence. Our ability to meet these challenges and aggressively expand and pursue new opportunities in our growth markets requires important capital investments. Despite significant investment spending in the first quarter, Raven still reported record performance."Engineered Films Builds Sales and MarginsRaven's Engineered Films Division posted first-quarter sales of $41.1 million, which was up 37 percent from $30.1 million in the fiscal 2012 first quarter. Operating income more than doubled to $9.2 million, from $4.1 million in the prior-year period. Both sales and earnings figures were at record levels. Noted Rykhus, "Continued strength in the energy and agricultural markets, and deliveries of geomembrane films for environmental protection, fueled increased demand in the first quarter. Moreover, we further enhanced margins through a combination of several factors. We continued to sustain an attractive cost/price spread for raw materials. We also improved operating efficiencies and plant utilization, and reduced scrap. Finally, margins benefited from a more favorable product mix. "New products continue to support our growth and we're actively investing in R&D to build a pipeline of growth opportunities. We are tracking at our expected pace for utilizing the extrusion capacity brought on-line in the fourth quarter last year."Ag Market Growth and Strong Execution Drive Applied Technology ResultsFor the first quarter, sales in the Applied Technology Division grew 29 percent to $50.5 million versus $39.1 million last year. Operating income increased 39 percent, to $20.9 million from $15.1 million. As in Engineered Films, both sales and earnings set records. Said Rykhus, "We are in the midst of a strong domestic agricultural market, and our record performance and continued growth reflect that. Our expanded offerings in field computers, application controls, information management and, in particular, guided steering systems that enhance farm yields and reduce operating costs, helped generate increased sales. We're committed to further product development in fiscal 2013. "International sales also continued to grow at a strong pace, delivering 27 percent of division revenues. Underlying our success outside of North America is the rapid adoption of guidance and steering systems. On the OEM front, we continue to make progress with our key partners, cultivating and deepening our existing relationships and developing new ones. We're starting to realize benefits, and as a result, our market position is improving."Order Timing, Volatility Impact Aerostar GrowthAerostar's sales in the first quarter were down 29 percent to $10.8 million from $15.1 million in the previous year's first quarter. The company reported an operating loss of $1.2 million, versus income of $4.1 million a year earlier. "The quarter-to-quarter variability for aerostat orders can lead to significant fluctuations in our Aerostar Division," said Rykhus. "That, combined with a difficult spending environment at the federal level, drove the anticipated first-quarter decrease in sales and operating income. To manage the short-term responsibly, we're carefully monitoring discretionary spending, staffing levels and R&D. While the quarterly variability in aerostat orders can be expected going forward, our focus at Aerostar is to continue to strengthen the business foundation for the long term to accommodate our future growth plans. "To that end we continued to make progress integrating Vista with Raven. We also began new pursuits with Vista that broaden our customer base to include more programs and government agencies. As we continue to collaborate, bringing the great talent of both organizations together, we believe the potential to sell into new markets, including those overseas, will be enhanced."Electronic Systems Realigned to Maximize Long-Term GrowthElectronic Systems' sales in the first quarter were $19.1 million, down slightly from $19.5 million in the year-ago first quarter. Operating income was $3.7 million, up 8 percent from the prior-year period. As previously disclosed, Raven is realigning the assets and team members of its Electronic Systems Division, redeploying them into the company's Aerostar and Applied Technology Divisions. Aerostar will add contract electronics manufacturing services to its capabilities, and Applied Technology will continue initiatives related to proprietary product lines. The repositioning is expected to be completed in the company's second fiscal quarter. Rykhus noted, "Electronic Systems has historically held a complementary position at Raven. The transition will better align our corporate structure with our mission and long-term growth strategies, and enhance our capacity to serve the needs of Electronic Systems Division's customers moving forward." Approximately 75 percent of Electronic Systems sales will go to Aerostar and the balance to Applied Technology. After the realignment, Raven Industries will continue with its core growth divisions: Applied Technology, Engineered Films and Aerostar.Strong Cash Position Despite Increased InvestmentsAt April 30, 2012, cash and investment balances were $43.5 million, up from $42.6 million a year ago. Increases in capital expenditures and the $12 million payment to acquire Vista Research, Inc., in the fourth quarter last year were offset by cash flows from operations. Accounts receivable increased to $58.6 million compared with $50.5 million at April 30, 2011. Inventories were $54.7 million, up from $45.5 million one year earlier. Average accounts receivable days outstanding remained consistent year-over-year while inventory turns declined slightly. First-quarter operating cash flows increased to $28.2 million from $11.0 million in the prior year.Responsibly Managing the Short Term, Focused on Longer-term OpportunitiesConcluded Rykhus, "We anticipate continued positive trends in Engineered Films and Applied Technology. Order variability will likely persist in Aerostar going forward—and we'll manage that responsibly. For the company overall, we believe that we can meet our long-term target of 10-15 percent earnings growth. "With favorable market dynamics anticipated in agriculture and other key market segments, we are focused on leveraging our market position, technology and differentiated products to build sales and income. Moreover, we're continuing to invest for the long term, expanding both our base of fixed assets and portfolio of product lines. "The drive to solve great challenges guides our vision today. Customer needs are always evolving and Raven has the willingness to embrace change, flexibility to shift our operational focus and innovative drive to meet market demand."Conference Call InformationRaven will host a conference call today, Friday, May 18, 2012, at 9:00 a.m. Central Time to discuss first-quarter performance. Analysts and investors are invited to join the conference call by dialing: 1-866-393-0676. Alternatively, the live call can be accessed through the Investor Relations section of the company's website at http://investors.ravenind.com/. Please log on to the website at least 15 minutes early to register on the Events & Presentations page, and download and install any necessary audio software. A replay of the conference call will be available two hours after the call ends through 11:59 p.m. CT on Friday, May 25, 2012. To access the replay, dial 1-855-859-2056 and enter conference ID: 78751693. A replay also will remain available on the company's website for 90 days following the call.About Raven Industries, Inc. Since 1956, Raven Industries has designed and manufactured high-quality, high-value technical products. Raven is publicly traded on NASDAQ (RAVN) and has earned an international reputation for innovation, product quality, high performance and unmatched service. With strengths in engineering, manufacturing, and technological innovation, Raven serves the precision agriculture, high performance specialty films, aerospace, and electronic manufacturing services markets. Visit www.RavenInd.com for more information.Forward-Looking Statements This news release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the expectations, beliefs, intentions or strategies regarding the future. Without limiting the foregoing, the words "anticipates," "believes," "expects," "intends," "may," "plans," and similar expressions are intended to identify forward-looking statements. The company intends that all forward-looking statements be subject to the safe harbor provisions of the Private Securities Litigation Reform Act. Although management believes that the expectations reflected in forward-looking statements are based on reasonable assumptions, there is no assurance these assumptions are correct or that these expectations will be achieved. Assumptions involve important risks and uncertainties that could significantly affect results in the future. These risks and uncertainties include, but are not limited to, those relating to weather conditions and commodity prices, which could affect sales and profitability in some of the company's primary markets, such as agriculture, construction and oil and gas drilling; or changes in competition, raw material availability, technology or relationships with the company's largest customers—any of which could adversely affect any of the company's product lines—as well as other risks described in the company's 10-K under Item 1A. This list is not exhaustive, and the company does not have an obligation to revise any forward-looking statements to reflect events or circumstances after the date these statements are made.        RAVEN INDUSTRIES, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(Dollars in thousands, except earnings per share) (Unaudited)          Three Months Ended April 30,       Fav (Unfav)  2012 2011 Change Net sales $ 117,915  $101,541 16 % Cost of sales 76,780  68,605   Gross profit 41,135  32,936 25 %         Research and development expenses 3,400  2,243   Selling, general and administrative expenses 9,303  7,160   Operating income 28,432  23,533 21 %         Other income (expense), net (52)  (13)   Income before income taxes 28,380  23,520 21 %         Income taxes 9,357  7,804   Net income 19,023  15,716 21 %         Net (loss) attributable to noncontrolling interest (20)  --           Net income attributable to Raven Industries, Inc. $ 19,043  $ 15,716 21 %         Net income per common share:        -basic $ 1.05  $ 0.87 21 %  -diluted $ 1.04  $ 0.86 21 %         Weighted average common shares outstanding:        -basic18,147 18,102    -diluted18,261 18,212                  RAVEN INDUSTRIES, INC.SALES AND OPERATING INCOME BY SEGMENT(Dollars In thousands) (Unaudited)          Three Months Ended April 30,       Fav (Unfav)  2012 2011 Change Net sales:       Applied Technology $ 50,480  $ 39,125 29 % Engineered Films 41,094  30,091 37 % Aerostar10,801  15,139 (29)% Electronic Systems 19,120 19,477 (2)% Intersegment eliminations(3,580) (2,291)   Total company $ 117,915  $101,541 16 %       Operating income (loss):       Applied Technology $ 20,910  $ 15,074 39 % Engineered Films 9,179  4,129 122 % Aerostar (1,161)  4,062 (129)% Electronic Systems 3,695  3,412 8 % Intersegment eliminations (31) 12   Total segment income 32,592  $ 26,689   Corporate expenses(4,160) (3,156) (32)% Total company $ 28,432  $ 23,533 21 %                RAVEN INDUSTRIES, INC.  CONDENSED CONSOLIDATED BALANCE SHEETS  (Dollars in thousands) (Unaudited)            April 30 January 31 April 30  2012 2012 2011ASSETS       Cash, cash equivalents and short-term investments $ 43,536  $ 25,842  $ 42,625 Accounts receivable, net 58,641  60,759  50,542 Inventories 54,664  54,756  45,538 Other current assets 8,068  6,202  5,991 Total current assets 164,909  147,559  144,696         Property, plant and equipment, net 64,888  61,894  42,409 Other assets, net 35,928  36,250  17,130   $ 265,725  $ 245,703  $204,235        LIABILITIES AND SHAREHOLDERS' EQUITY       Accounts payable $ 17,134  $ 16,162  $ 17,447 Accrued and other liabilities 33,165  24,484  19,815 Total current liabilities 50,299  40,646  37,262         Other liabilities 18,931  24,467  12,637 Shareholders' equity 196,495  180,590  154,336   $ 265,725  $ 245,703  $204,235              RAVEN INDUSTRIES, INC.CONDENSED CONSOLIDATED CASH FLOWS(Dollars in thousands) (Unaudited)        Three Months Ended April 30,  2012 2011 Cash flows from operating activities:     Net income $ 19,043  $ 15,716 Adjustments to reconcile net income to net cash provided by operating activities:     Depreciation and amortization 2,892  1,985 Other operating activities, net 6,277  (6,693) Net cash provided by operating activities 28,212  11,008       Cash flows from investing activities:     Capital expenditures (4,900)  (3,585) Payments related to business acquisitions (1,867)  --  Other investing activities, net (58)  228 Net cash used in investing activities (6,825)  (3,357)       Cash flows from financing activities:     Dividends paid (3,806)  (3,254) Other financing activities, net 103  100 Net cash used in financing activities (3,703)  (3,154)       Effect of exchange rate changes on cash 10  65       Net increase (decrease) in cash and cash equivalents 17,694  4,562 Cash and cash equivalents at beginning of period 25,842  37,563 Cash and cash equivalents at end of period 43,536  42,125 Short-term investments --   500 Cash, cash equivalents and short-term investments $ 43,536  $ 42,625      CONTACT: At the Company: Tom Iacarella, Vice President and CFO 605-336-2750 Thomas.Iacarella@ravenind.com At Padilla Speer Beardsley: Matt Sulllivan 612-455-1700 msullivan@padillaspeer.com