- Engineered Films Division increased sales by 40%, operating income by 43%
- Company anticipates another record year with double-digit earnings growth
SIOUX FALLS, S.D., May 18 /PRNewswire-FirstCall/ -- Raven Industries,
Inc. (Nasdaq: RAVN) today reported record sales and earnings for its first
quarter ended April 30, 2006. Net sales rose 15 percent to $58.5 million
while net income for the quarter increased five percent to $7.5 million, or
$0.41 per share, from $7.2 million, or $0.39 per share in the prior year
period. Results were driven by continued strength in the company's
Engineered Films Division.
"We had a solid performance in the quarter highlighted by growth in
revenues, earnings and cash flow, despite no military parachute
deliveries," said Chief Executive Officer Ronald Moquist. "Having made
significant investments in expanding both our plastic film capacity and
product capabilities, we are currently benefiting from strong demand
related to oilfield activity, construction and disaster-related films."
Segment Performance
Engineered Films Division (EFD) posted a 40 percent increase in sales
to $22.6 million, for the first quarter compared with $16.1 million in the
same quarter a year ago. Operating income rose 43 percent to $5.9 million
over the prior year period. Despite volatile raw material costs,
particularly polyethylene resins, operating margins improved over fourth
quarter levels. Moquist added, "Since most of our film orders are
short-term in nature, raw material price swings are generally passed
through, although with a lag on some occasions. We remain optimistic about
our growth prospects in films." Recent capital investments will enable
production of specialty films with up to seven layers, offering enhanced
strength and barrier protection not previously available.
Flow Controls Division (FCD) continued to feel the effects of a weaker
agricultural sector. Sales for the first quarter rose two percent to $16.3
million over the prior year period. Operating income declined 12 percent
from year-ago levels to $5.1 million, reflecting increased investments in
product development and sales and marketing. Moquist noted, "There's no
doubt that this agricultural market presents a challenge. In this
environment we expect profit growth will be minimal, but we intend to
continue to make the critical long-term strategic investments required for
long-term growth. We are making good progress in building out our precision
agriculture marketing channels in Europe and South America and with key
U.S. original equipment manufacturers."
Electronic Systems Division (ESD) sales for the first quarter increased
13 percent to $15.1 million while operating income fell by four percent
from the prior-year period to $2.0 million. "This business benefits from a
diverse group of customers who depend on us for high-mix, low-volume types
of projects, and while this quarter we shipped some relatively lower margin
products, indications from our customers are that demand remains strong.
ESD expects to show profit growth in the second half of the year," added
Moquist. "Our circuit board assemblies and related services span a number
of industries, including communication, environmental controls, and
aviation components."
Aerostar sales for the first quarter declined 15 percent to $4.4
million from the same period a year ago, while operating income was
$228,000 compared to $937,000 one year earlier. In the year-ago period, the
company was still shipping cargo parachutes under a large military
contract, which was completed in October 2005. During the first quarter
this year, Aerostar received a new $6 million parachute order. The order
calls for most product to be delivered in the company's next fiscal year
and it is expected to be completed by December 2007. Development efforts
are focused on high-altitude aerostats, targeting applications for
long-distance communications, data relay and reconnaissance.
Balance Sheet
The company's cash and investment balances were $8.0 million at April
30, 2006, versus $4.1 million one year earlier. Operating cash flows for
the first quarter totaled $4.6 million compared with $1.3 million for the
prior year period. The improvement in first-quarter cash flows from
operating activities was due to higher earnings and reduced working capital
requirements. Cash used for capital expenditures increased by $3.9 million
over the prior year quarter primarily due to capacity expansion in
Engineered Films. Also, during the first quarter, the Board of Directors
approved a 29 percent dividend increase.
Outlook
Commenting on the company's prospects, Moquist said, "With four
operating segments in different sectors of the economy, we are used to the
push and pull that occurs in any given quarter. Our goal is to keep growing
the top line while generating strong profit margins and cash flows. Along
with increasing the dividend, we continue to reinvest in market expansion
and new products. We anticipate that our growth this year will continue to
be led by Engineered Films. Flow Controls and Electronic Systems also have
the potential to exceed last year's record performances, but at reduced
growth levels. Based on the relative strength of each segment, we remain
confident in our ability to produce another record year of results and
double-digit earnings growth."
About Raven Industries, Inc.
Celebrating its 50th anniversary, Raven is an industrial manufacturer
that provides electronics manufacturing services, reinforced plastic
sheeting and flow control devices to various markets.
Conference Call Information
Raven has scheduled a conference call today at 3:00 p.m. Eastern Time
to discuss its first quarter fiscal 2007 performance and related trends in
its business. To access this call, log on to http://www.ravenind.com or
http://www.vcall.com 15 minutes before the call to download the necessary
software. A replay will be available through this website 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 the company's
website at 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)
2006 2005 Change
Net sales $58,465 $50,704 15 %
Cost of goods sold 42,574 35,543
Gross profit 15,891 15,161 5 %
Selling, general and
administrative expenses 4,414 4,025
Operating income 11,477 11,136 3 %
Other (income) expense, net (138) 38
Income before income taxes 11,615 11,098 5 %
Income taxes 4,113 3,941
Net income $7,502 $7,157 5 %
Net income per common share:
-basic $0.41 $0.40 2 %
-diluted $0.41 $0.39 5 %
Weighted average common
shares outstanding:
-basic 18,114 18,033
-diluted 18,350 18,292
RAVEN INDUSTRIES, INC.
SALES AND OPERATING INCOME BY SEGMENT
(In thousands) (Unaudited)
Three Months Ended April 30
Fav (Unfav)
2006 2005 Change
Net Sales:
Engineered Films $22,579 $16,092 40 %
Flow Controls 16,345 16,089 2 %
Electronic Systems 15,116 13,321 13 %
Aerostar 4,425 5,202 (15)%
Total Company $58,465 $50,704 15 %
Operating Income:
Engineered Films $5,901 $4,119 43 %
Flow Controls 5,146 5,869 (12)%
Electronic Systems 1,996 2,090 (4)%
Aerostar 228 937 (76)%
Total Segment Income 13,271 13,015
Corporate Expenses (1,794) (1,879) 5 %
Total Company $11,477 $11,136 3 %
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
April 30 January 31 April 30
2006 2006 2005
ASSETS
Cash, cash equivalents and short-term
investments $7,964 $11,409 $4,148
Accounts receivable, net 33,441 29,290 29,206
Inventories 29,598 27,819 23,209
Prepaid expenses and other current
assets 3,768 2,827 4,003
Total current assets 74,771 71,345 60,566
Property, plant and equipment, net 30,303 25,602 21,442
Other assets, net 9,270 9,210 9,749
$114,344 $106,157 $91,757
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $8,669 $8,179 $6,252
Accrued and other liabilities 13,214 11,871 12,282
Total current liabilities 21,883 20,050 18,534
Other liabilities 1,816 1,718 1,435
Shareholders' equity 90,645 84,389 71,788
$114,344 $106,157 $91,757
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(In thousands) (Unaudited)
Three Months Ended April 30
2006 2005
Cash flows from operating activities
Net income $7,502 $7,157
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,289 1,139
Deferred income taxes (127) (111)
Other operating activities, net (4,075) (6,923)
Net cash provided by operating
activities 4,589 1,262
Cash flows from investing activities
Capital expenditures (6,325) (2,409)
Acquisition of businesses - (2,685)
Other investing activities, net (63) 497
Net cash used in investing activities (6,388) (4,597)
Cash flows from financing activities
Dividends paid (1,630) (1,262)
Purchase of treasury stock - (360)
Other financing activities, net (14) (28)
Net cash used in financing activities (1,644) (1,650)
Effect of exchange rate changes on
cash (2) 14
Net decrease in cash and cash
equivalents (3,445) (4,971)
Cash and cash equivalents at
beginning of period 9,409 6,619
Cash and cash equivalents at end of
period 5,964 1,648
Short-term investments 2,000 2,500
Cash, cash equivalents and short-term
investments $7,964 $4,148
SOURCE Raven Industries, Inc.
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Related links:
http://www.ravenind.com
CONTACT:
Tom Iacarella, Vice President & CFO of Raven
Industries, Inc., +1-605-336-2750; or Leslie Loyet, Analyst
Inquiries, +1-312-640-6672, or Tim Grace, Media Inquiries,
+1-312-640-6667, both of Financial Relations Board
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