SIOUX FALLS, S.D., May 19 /PRNewswire-FirstCall/ -- Raven Industries,
Inc. (Nasdaq: RAVN) today announced that continued strong demand for Flow
Controls Division products led to new highs in revenues and earnings for
the three months ended April 30, 2008.
Strong Start to Fiscal 2009
Sales for the first quarter rose 29 percent to $75.2 million from $58.1
million at this time last year. Most of the increase was due to strong
sales from new and existing products at Flow Controls, supported by revenue
growth from Engineered Films and Aerostar. Net income for the latest three
months expanded 27 percent to $10.9 million, or 60 cents per diluted share,
compared with $8.5 million, or 47 cents per diluted share, for last year's
three months.
"Record prices for crops such as corn and wheat, and higher input costs
for fuel and fertilizer, create demand for precision agriculture products
to help growers cost-effectively plant and manage their acreage," said
Ronald M. Moquist, chief executive officer. "That is driving demand for the
entire line of products offered by our Flow Controls Division. This
stronger than expected performance, combined with significant operating
income increases at our smaller Aerostar segment, more than offset the
lower profitability we are experiencing in Engineered Films and Electronic
Systems, which are being affected by weak construction and home-improvement
markets."
Engineered Films Begins to Stabilize
Engineered Films Division sales for the first quarter increased 12
percent to $22.0 million versus $19.7 million at this time last year.
Operating income was $3.9 million, down 23 percent from $5.0 million for
last year's three months, reflecting lower gross margins. The weaker
construction market began to affect the division in the second half of the
previous fiscal year. The resulting competitive pricing pressure, combined
with higher costs for plastic resin used to create films, reduced operating
margins. However, first quarter operating margins appear to have stabilized
from their fourth quarter levels, reaching 17.6 percent versus 17.1 percent
in the three months that immediately preceded it.
"Revenues rose as we saw continued strength in the oil and gas
industry, creating particular demand for our pond liners used in
exploration drilling," Moquist explained. "We also increased our sales to
the construction market and began to ship our new radon barrier product,
VaporBlock Plus(TM), which has been well received. We believe one benefit
of the slower construction market is that builders are looking for ways to
differentiate their products. So having homes that reduce the flow of radon
gas -- or using our new FortressPro(TM) house wrap to provide better air
and water protection than the market leaders' offerings -- are seen as
giving builders an edge. These are two examples of value-added products
that will lead this division to improved performance -- and that we would
not have been able to offer without expanding our manufacturing capability
and capacity over the last two years."
Flow Controls Sets New Records
Flow Controls Division sales reached $34.8 million, up 76 percent from
$19.8 million for last year's first quarter. International sales more than
doubled and accounted for 19 percent of the division's revenues. Operating
income for the three months improved 90 percent to $13.5 million from last
year's $7.1 million.
"While a rising tide floats all boats, what differentiates Flow
Controls is that it offers the products the market truly values," Moquist
commented. "One example is our Cruizer(TM), a low-cost GPS guidance system
for farmers just starting to adopt a precision approach to agriculture. We
introduced this product last fall. Usually it takes one to two years for a
new product to hit its stride. Cruizer has done more than allow us to
greatly exceed our sales forecast. It is helping us successfully expand
beyond our traditional niche of sprayer-related products and into serving a
much broader grower market. As a result of the demand for this and other
Flow Controls products, we added a second production shift to meet current
demand, and expanded our engineering and sales staff as we prepare for
future growth."
Electronic Systems Faces Difficult Comparisons
Electronic Systems Division sales were $13.3 million for the quarter,
down 8 percent from $14.5 million at this time last year. Operating income
for the latest three months decreased 73 percent to $640,000 from $2.4
million.
"We continued to face the twin issues of losing a significant account
through acquisition, and having the downturn in new home construction and
home improvements negatively affect our customers in furniture and bed
controls," Moquist stated. "We were able to replace some of the sales with
a strong increase in products for the avionics market. These programs have
lower margins than the products they are replacing, which is giving us an
unfavorable mix. Until we can build up our volume of business, we have to
lower our costs. To that end, we reduced the size of our manufacturing
staff and will be reassigning some of our Sioux Falls manufacturing space
to the expanding Flow Controls Division. Electronic Systems also is
beginning to produce circuit boards for Flow Controls, helping that
division keep up with demand."
Aerostar Posts Strong Results
Aerostar's $6.0 million in sales rose 44 percent from $4.2 million for
the first three months a year ago. Operating income reached $806,000, a
dramatic improvement over $214,000 in last year's first quarter.
"Most of the increase in sales came as we began the second quarter of
shipping under the two-year Army MC-6 parachute contract, which was
recently expanded to $18 million," Moquist said. "We saw margins improve as
parachute production increased. In addition, the quarter reflected
shipments of fuel-handler coveralls under a one-year $6 million contract
with the Army, and increased sales of high-altitude research balloons.
While Aerostar is our smallest business, its profitability is clearly
accelerating."
Solid Balance Sheet, Cash Flows
At April 30, 2008, cash and investment balances were $21.6 million, up
from $15.7 million on the same date last year, reflecting solid cash flows
from operations and modest capital investment levels. Higher sales and
demand for Flow Controls products led to a 44 percent rise in accounts
receivable to $50.0 million from last year's $34.8 million. Flow Controls
uses extended collection terms to sell its agricultural products and manage
capacity constraints. The 30 percent rise in inventory to $37.2 million
from a year ago reflected Flow Controls' growth and increases at Engineered
Films, which had relatively low inventory levels in last year's first
quarter.
As a result of the higher accounts receivable, operating cash flows for
the quarter were $5.1 million versus prior year's $9.7 million. Cash used
for capital expenditures in the latest period was $1.0 million compared
with $2.4 million. Capital expenditures for the entire year are still
expected to be in the $8 million range. During the quarter, the company
spent $3.0 million to repurchase 99,100 shares and raised its per-share
quarterly dividend by 18 percent, to 13 cents -- the 22nd consecutive year
with a dividend increase.
Another Record Year Expected
"We are seeing the advantages of Raven's business model: strong
performance in one area can offset temporary setbacks in others," Moquist
said. "We believe this approach will lead to another record year in sales,
earnings and operating cash flows while we continue to invest in our
future.
"The sales momentum at Flow Controls should continue this year," he
added. "The reasons behind this include our growing market penetration in
North America along with our expanding international presence in areas such
as Eastern and Western Europe and South America. There is seasonality in
the ag business, so while we expect to see double-digit increases in Flow
Controls' quarterly sales and operating income compared with the prior
year, these are not expected to have the same impact on total company
results as in the first quarter. This means second quarter consolidated
sales and earnings are not expected to show the same level of growth as in
the first quarter. We expect Engineered Films will be able to report sales
increases despite softness in some of the markets it serves. This should
result from a good level of demand from the energy market, plus innovative
new products. Operating income will remain a challenge, due to higher resin
costs. As construction markets improve, production volumes should rise,
which in turn would allow us to realize the long-term earnings potential
from this segment.
"While the Electronic Systems Division is working hard to replace the
$7 million in annual revenue from the customer that was lost, this will
take some time to accomplish," Moquist explained. "And the situation is
exacerbated by the slowdown in bed control sales. As a result, we expect to
see significantly lower operating income comparisons from this business for
the balance of the year. We believe Aerostar is on track to more than
double its operating income for the year. Most of Aerostar's annual
revenues are already in place, as it produces and delivers on contracts for
parachutes and protective wear. There is also upside potential from the
interest we are seeing in high-altitude research balloons and tethered
aerostats.
"Our commitment to providing value to shareholders remains strong. We
are reviewing opportunities to reinvest in our growing operations,
including making acquisitions. Our strong cash flows and balance sheet give
us great flexibility here. If we do not find a way to invest to accelerate
our growth, then we will consider returning excess cash to shareholders in
the form of a special dividend or increased share repurchases later this
year," 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 aerostats and sewn products to niche
markets.
Conference Call Information
Raven has scheduled a conference call today at 3:00 p.m. Eastern Time
to discuss its first quarter performance and related trends in its
business. Interested investors are invited to listen to the call by
visiting 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
after the call ends, and will continue through May 26, 2008. To access the
rebroadcast, dial 888-203-1112, and enter this passcode: 8648565. A replay
of the call will also be available at http://www.ravenind.com for 90 days.
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,
which could affect some 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 affect any of the company's
product lines, as well as other risks described in Raven'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.
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)
2008 2007 Change
Net sales $75,166 $58,103 29 %
Cost of goods sold 53,151 40,729
Gross profit 22,015 17,374 27 %
Selling, general and
administrative expenses 5,374 4,536
Operating income 16,641 12,838 30 %
Other income, net (118) (187)
Income before income taxes 16,759 13,025 29 %
Income taxes 5,877 4,485
Net income $10,882 $8,540 27 %
Net income per common share:
-basic $0.60 $0.47 28 %
-diluted $0.60 $0.47 28 %
Weighted average common
shares outstanding:
-basic 18,103 18,077
-diluted 18,154 18,180
RAVEN INDUSTRIES, INC.
SALES AND OPERATING INCOME BY SEGMENT
(In thousands) (Unaudited)
Three Months Ended April 30
Fav (Unfav)
2008 2007 Change
Net Sales:
Engineered Films $22,005 $19,654 12 %
Flow Controls 34,846 19,835 76 %
Electronic Systems 13,279 14,472 (8)%
Aerostar 6,019 4,180 44 %
Intersegment Eliminations (983) (38)
Total Company $75,166 $58,103 29 %
Operating Income:
Engineered Films $3,864 $5,018 (23)%
Flow Controls 13,546 7,115 90 %
Electronic Systems 640 2,373 (73)%
Aerostar 806 214 277 %
Intersegment Eliminations (29) -
Total Segment Income $18,827 $14,720
Corporate Expenses (2,186) (1,882) (16)%
Total Company $16,641 $12,838 30 %
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
April 30 January 31 April 30
2008 2008 2007
ASSETS
Cash, cash equivalents and short-term
investments $21,632 $22,772 $15,660
Accounts receivable, net 50,015 36,538 34,841
Inventories 37,226 36,529 28,612
Other current assets 5,890 5,030 4,076
Total current assets 114,763 100,869 83,189
Property, plant and equipment, net 34,613 35,743 37,171
Other assets, net 11,149 11,249 10,963
$160,525 $147,861 $131,323
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $11,691 $8,374 $7,706
Accrued and other liabilities 17,034 13,734 12,579
Total current liabilities 28,725 22,108 20,285
Other liabilities 7,734 7,478 6,806
Shareholders' equity 124,066 118,275 104,232
$160,525 $147,861 $131,323
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(In thousands) (Unaudited)
Three Months Ended April 30
2008 2007
Cash flows from operating activities
Net income $10,882 $8,540
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,820 1,492
Deferred income taxes (63) (117)
Other operating activities, net (7,516) (177)
Net cash provided by operating activities 5,123 9,738
Cash flows from investing activities
Capital expenditures (974) (2,382)
Other investing activities, net (1,755) (50)
Net cash used in investing activities (2,729) (2,432)
Cash flows from financing activities
Dividends paid (2,353) (1,990)
Purchase of treasury stock (2,966) (282)
Other financing activities, net (13) (159)
Net cash used in financing activities (5,332) (2,431)
Effect of exchange rate changes on cash (2) 2
Net (decrease) increase in cash and
cash equivalents (2,940) 4,877
Cash and cash equivalents at
beginning of period 21,272 6,783
Cash and cash equivalents at end of period 18,332 11,660
Short-term investments 3,300 4,000
Cash, cash equivalents and short-term
investments $21,632 $15,660
SOURCE Raven Industries, Inc.
 back to top
Related links:
http://www.ravenind.com
CONTACT:
Tom Iacarella, Vice President & CFO of Raven
Industries, Inc., +1-605-336-2750; or Analysts, Leslie Loyet,
+1-312-640-6672, or Media, Tim Grace, +1-312-640-6667, both of
Financial Relations Board, for Raven Industries, Inc.
|
