Strong Performance by Flow Controls Division Increases Net Income 14
Percent
SIOUX FALLS, S.D., May 17 /PRNewswire-FirstCall/ -- Raven Industries,
Inc. (Nasdaq: RAVN) today reported higher earnings on relatively flat sales
for the quarter ended April 30, 2007.
The strong performance of Raven's Flow Controls Division led to record
net income of $8.5 million, or $0.47 per share, up 14 percent from $7.5
million, or $0.41 per share in the first quarter last year. Sales were
$58.1 million, almost level with last year's first quarter of $58.5
million. While the Flow Controls Division saw a significant increase in
revenues, this was not enough to fully offset lower sales in the Engineered
Films Division compared with a year ago, when that business had significant
disaster film shipments.
"The Flow Controls Division exceeded our expectations during the
quarter, leveraging an improving agricultural market," said Ronald M.
Moquist, chief executive officer. "While we saw lower sales at our
Engineered Films Division -- because last year's quarter included $4
million in disaster film shipments in total we reported stronger operating
income. We believe that the major investments we have made during the past
two years will support our revenue growth objectives."
Segment Performance
Engineered Films Division (EFD) first quarter sales were $19.7 million,
down 13 percent, or $2.9 million, from $22.6 million at this time last
year. Increased sales of pit liners to the oil and gas markets could not
offset $4.0 million in sales of disaster films that did not reoccur this
year. Operating income was affected by the lower sales level, decreasing 15
percent to $5.0 million for the latest quarter versus $5.9 million a year
ago.
"The level of disaster film revenues should not significantly affect
comparisons in our second quarter," Moquist explained. "Of the $9.9 million
in disaster films shipped last year, we recorded less than $400,000 in
sales of those products in the second quarter. Our focus on creating
long-term growth involves increasing the utilization of our new plastic
extrusion equipment, so we can offer more multi-layer film products to our
customers. One new extruder came online in the fourth quarter of last year,
one in the first quarter of this year, and the last will follow in the
second quarter. It normally takes two to three years to fully utilize new
extrusion capacity. We are actively pursuing additional markets and
developing new products, such as geomembranes, oxygen barriers and a new
house wrap that we'll begin marketing this quarter. These investments and
the increased depreciation associated with them -- plus our current
projection that we will not receive any disaster film orders this year --
mean lower operating income for this division in fiscal 2008."
Flow Controls Division (FCD) quarterly revenues increased 21 percent to
$19.8 million compared with $16.3 million a year ago. The marginal impact
of higher sales on the division's fixed cost base generated a 38 percent
growth in operating income -- $7.1 million versus $5.1 million at this time
last year.
"Demand for precision agriculture products benefited from strong
commodity prices during this quarter and expectations for improved farm
income," said Moquist. "We leveraged the situation by capitalizing on
investments made last year to improve our market position and product
offerings. During the quarter, several new products were well received,
such as our Envizio Plus(TM) GPS-based guidance and control system. We look
for a strong year from this division, based on current ag demand and the
level of orders for marine navigation systems."
Electronic Systems Division (ESD) sales for the latest quarter were
$14.4 million versus $15.1 million. Operating income, however, increased 19
percent to $2.4 million from $2.0 million at this time last year. An
unfavorable product mix negatively affected gross profit rates in last
year's first quarter. The latest quarter reflected a very favorable product
mix, including a closeout order placed by a former customer.
"We saw a short-term dip in sales as our customers curtailed shipment
releases," Moquist stated. "Because our business model requires a high
degree of responsiveness to customer needs, this can happen from time to
time. Demand to date in the second quarter is improving, and we believe
deliveries to our customers will grow as the year progresses. This division
will continue to generate solid cash returns on investment."
Aerostar sales were $4.2 million during the first quarter, versus $4.4
million in the first quarter last year. Operating income was $214,000
compared with $228,000 for last year's three months.
"We continued to ship government-procured protective wear under
existing contracts during the quarter, and shipments of research balloons
increased," said Moquist. "Aerostar recently received an add-on to the MC-6
Army parachute contract for another $7.3 million, bringing our total
parachute backlog to more than $14 million and creating a revenue stream
well into fiscal 2009. However, we have been informed that issues with the
parachute's design -- totally unrelated to our manufacturing process -- may
delay shipments on this project. As planned, we began production in the
first quarter, and expect to be paid for the work as we complete it.
Because production of most of the components is continuing, we should
benefit from additional absorption of manufacturing and related overhead
costs. But we might not ship any parachutes during the second quarter. Once
the issues have been resolved, shipments will accelerate rapidly, and
Aerostar should make a stronger contribution to earnings."
Strong Balance Sheet and Cash Flows
Cash and investment balances were $15.7 million at April 30, 2007,
versus $8.0 million one year earlier. The higher balances were generated by
strong operating cash flows from earnings and working capital utilization,
and lower capital expenditures. Operating cash flows for the three-month
period totaled $9.7 million compared with $4.6 million last year. Cash used
for capital expenditures declined to $2.4 million versus $6.3 million in
the prior year, because significant investments in additional extrusion
capacity for the Engineered Films Division were made in the prior fiscal
year. Capital spending for the full year is expected to range between $6
million and $7 million, down from $16.5 million in fiscal 2007.
Raven continued its commitment to returning cash to shareholders.
During the quarter, its board of directors approved a 22.2 percent increase
to the quarterly dividend, which now stands at $0.11 per share.
Outlook for Another Record Year
"We expect the strong performance from our Flow Controls Division will
continue during the year. This should be supported by accelerating progress
in the Engineered Films Division, as its new capabilities come on line and
new products gain acceptance. The Electronic Systems Division should
continue to make a solid contribution to revenues, income and cash flow.
While there are some near-term uncertainties about when parachute contracts
will turn into revenue at Aerostar, we remain confident that this will
materialize. As a result, we believe Raven will have another record year in
fiscal 2008, and double-digit increases in sales and profits are
achievable," Moquist concluded.
About Raven Industries, Inc.
Raven is an industrial manufacturer that provides electronic precision-
agriculture products, reinforced plastic sheeting, electronics
manufacturing services and specialty aeronautics and sewn products to niche
markets.
Conference Call Information
Raven has scheduled a conference call today at 3:00 p.m. Eastern
Daylight Time to discuss its first quarter performance and related trends
in its business. The call will be accessible by telephone and through the
Internet. Interested investors are invited to listen to the call by dialing
800-936-9754. To hear a webcast, log on to the company's Web site at
http://www.ravenind.com or http://www.vcall.com 15 minutes before the call
to download the necessary software.
In addition, a taped rebroadcast will be available beginning one hour
following the completion of the call, and will continue through May 24,
2007. To access the rebroadcast, dial 877-519-4471 and request reservation
number 8717935. A replay of the call will also be available on the Internet
at http://www.ravenind.com for 90 days.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this report are "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 the company believes that the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, there is no assurance that such assumptions are
correct or that these expectations will be achieved. Such 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, which could affect
certain of the company's primary markets, such as agriculture and
construction, or changes in competition, raw material availability,
technology or relationships with the company's largest customers, any of
which could adversely impact any of the company's product lines, as well as
other risks described in the Company's 10-K under Item 1A. The foregoing
list is not exhaustive and the company disclaims any obligation to
subsequently revise any forward-looking statements to reflect events or
circumstances after the date of such statements.
For more information on Raven Industries, please visit
http://www.ravenind.com.
FINANCIAL TABLES FOLLOW ...
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except earnings per share) (Unaudited)
Three Months Ended April 30
Fav(Unfav)
2007 2006 Change
Net sales $58,103 $58,465 (1)%
Cost of goods sold 40,729 42,574
Gross profit 17,374 15,891 9 %
Selling, general and administrative
expenses 4,536 4,414
Operating income 12,838 11,477 12 %
Other income, net (187) (138)
Income before income taxes 13,025 11,615 12 %
Income taxes 4,485 4,113
Net income $8,540 $7,502 14 %
Net income per common share:
-basic $0.47 $0.41 15 %
-diluted $0.47 $0.41 15 %
Weighted average common
shares outstanding:
-basic 18,077 18,114
-diluted 18,180 18,350
RAVEN INDUSTRIES, INC.
SALES AND OPERATING INCOME BY SEGMENT
(In thousands) (Unaudited)
Three Months Ended April 30
Fav(Unfav)
2007 2006 Change
Net Sales:
Engineered Films $19,654 $22,579 (13)%
Flow Controls 19,835 16,345 21 %
Electronic Systems 14,434 15,116 (5)%
Aerostar 4,180 4,425 (6)%
Total Company $58,103 $58,465 (1)%
Operating Income:
Engineered Films $5,018 $5,901 (15)%
Flow Controls 7,115 5,146 38 %
Electronic Systems 2,373 1,996 19 %
Aerostar 214 228 (6)%
Total Segment Income 14,720 13,271
Corporate Expenses (1,882) (1,794) (5)%
Total Company $12,838 $11,477 12 %
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
April 30 January 31 April 30
2007 2007 2006
ASSETS
Cash, cash equivalents and short-term
investments $15,660 $10,783 $7,964
Accounts receivable, net 34,841 31,336 33,441
Inventories 28,612 28,071 29,598
Prepaid expenses and other current
assets 4,076 3,029 3,768
Total current assets 83,189 73,219 74,771
Property, plant and equipment, net 37,171 36,264 30,303
Other assets, net 10,963 10,281 9,270
$131,323 $119,764 $114,344
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $7,706 $6,093 $8,669
Accrued and other liabilities 12,579 10,371 13,214
Total current liabilities 20,285 16,464 21,883
Other liabilities 6,806 5,032 1,816
Shareholders' equity 104,232 98,268 90,645
$131,323 $119,764 $114,344
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(In thousands) (Unaudited)
Three Months Ended April 30
2007 2006
Cash flows from operating activities
Net income $8,540 $7,502
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,492 1,289
Deferred income taxes (117) (127)
Other operating activities, net (177) (4,075)
Net cash provided by operating activities 9,738 4,589
Cash flows from investing activities
Capital expenditures (2,382) (6,325)
Other investing activities, net (50) (63)
Net cash used in investing activities (2,432) (6,388)
Cash flows from financing activities
Dividends paid (1,990) (1,630)
Purchase of treasury stock (282) -
Other financing activities, net (159) (14)
Net cash used in financing activities (2,431) (1,644)
Effect of exchange rate changes on cash 2 (2)
Net increase (decrease) in cash and
cash equivalents 4,877 (3,445)
Cash and cash equivalents at beginning
of period 6,783 9,409
Cash and cash equivalents at end of period 11,660 5,964
Short-term investments 4,000 2,000
Cash, cash equivalents and short-term
investments $15,660 $7,964
SOURCE Raven Industries, Inc.
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Related links:
http://www.ravenind.com
CONTACT:
Company, Tom Iacarella, Vice President & CFO
of Raven Industries, Inc., +1-605-336-2750; or Analyst Inquiries,
Leslie Loyet, +1-312-640-6672, or Media Inquiries, Tim Grace,
+1-312-640-6667, both of Financial Relations Board, for Raven
Industries, Inc.
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