SIOUX FALLS, S.D., Aug. 17 /PRNewswire-FirstCall/ -- Raven Industries,
Inc. (Nasdaq: RAVN) today reported record sales and earnings for its second
quarter ended July 31, 2006. Net sales rose 11 percent to $50.4 million
from $45.3 million in the second quarter 2005. Net income for the quarter
increased seven percent to $5.1 million, or $0.28 per share, from $4.8
million, or $0.26 per share in the prior year period. The Engineered Films
Division continued to produce strong growth and led the company's progress
during the quarter. Raven continues to invest in growth opportunities in
its Flow Controls Division despite the continued weak agricultural market.
For the first six months of the fiscal year, Raven reported total sales
of $108.8 million, an increase of 13 percent from the $96.0 million a year
earlier. Net income for this period rose six percent to $12.6 million, or
$0.69 cents per share, from $11.9 million, or $0.65 cents per share.
Ronald Moquist, chief executive officer, noted, "Our second-quarter
profit growth rate improved modestly over first quarter levels, led by
continued strength in our Engineered Films Division. Despite our increased
spending on new products and international expansion, as well as the
ongoing adverse agricultural market, we continue to generate solid cash
flows from operations and are confident that Raven will see accelerated
earnings growth in the second half of the year."
Segment Performance
Engineered Films Division (EFD) deliveries increased 29 percent to
$22.5 million for the second quarter, compared with $17.4 million in the
same quarter a year ago. Operating income rose 52 percent to $6.4 million
over the prior year period. For the six months, sales were $45.1 million,
up 35 percent over last year, and operating income increased 48 percent,
reaching $12.3 million. The sales increase was driven by strong oil field
and construction demand. Although disaster film shipments were
insignificant in the quarter, the company recently received an order in
excess of $5 million for third-quarter delivery.
Moquist noted, "We were able to pass along higher material costs
compared with a year ago. Strong capacity utilization and use of lower-cost
resin inventory in a volatile pricing environment also contributed to solid
gross profit margins. We continue to invest capital into this division and
expect to start providing additional extrusion capacity in the first
quarter of the next fiscal year."
Flow Controls Division (FCD) sales for its seasonally-low second
quarter fell two percent, from $8.6 million in the prior year period, to
$8.4 million. The North American agricultural market continues to be weak
and FCD is countering this by building its distribution and marketing
network internationally and developing a pipeline of new products.
Operating income declined 45 percent to $790,000 from year-ago levels.
Six-month sales of $24.8 million were relatively flat compared to the
year-earlier period and operating income of $5.9 million was off 19 percent
from the first six months of the prior year. Operating results were
impacted by expenses incurred to upgrade products in the field and the
company's level of investment in product development, sales and marketing.
Moquist added, "The market landscape is difficult, but commodity prices
are strengthening, and the agricultural market could rebound in the second
half of the year. An improving market coupled with the new products we plan
to introduce over the course of the next year will help to drive continued
future growth in this division."
Electronic Systems Division (ESD) sales for the second quarter
increased eight percent to $16.5 million while operating income was
essentially unchanged from the prior-year period at $2.9 million. For the
six months, sales of $31.6 million were up 11 percent and operating income
of $4.9 million was down two percent from one year earlier. This division
continues to leverage improved production efficiencies and show quality
profit margins.
"Last year's second quarter business benefited from a favorable product
mix, which produced an above-average margin for the quarter. Our focus on
high-mix, low-volume types of projects continued to deliver some of the
strongest margins in our industry," Moquist reported. "We are still
expecting an up-tick in sales and thus profit for the second half of the
year, which will be driven by an increase in demand in certain sectors we
serve," he added.
Aerostar sales for the second quarter declined 26 percent to $2.9
million from the same period a year ago, and generated an operating loss of
$306,000 compared to a $420,000 operating profit one year earlier. For the
six months, sales of $7.3 million were down 20 percent and this division
reported an operating loss of $78,000 compared to an operating profit of
$1.4 million in the six months ended July 2005. 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 personnel
parachute order, which with add-ons now totals $6.6 million. Shipments
under the contract are expected to begin in the fourth quarter and most of
the product under these initial orders is to be delivered over the
following twelve months.
"We are committed to Aerostar's future profitability. As a result, we
have decided to exit the hot air balloon market, which had a negative
affect on earnings. We will continue to offer our higher-margin
inflatables, such as those produced for high-altitude aerostats, targeting
applications for long- distance communications, data relay and
reconnaissance," Moquist emphasized.
Balance Sheet and Cash Flows
The company's cash and investment balances were $11.3 million at July
31, 2006, versus $9.7 million one year earlier. Operating cash flows for
the first half totaled $14.7 million compared with $10.5 million for the
prior year period. Favorable working capital utilization accounted for most
of the improvement. Cash used for capital expenditures increased by $5.3
million over the prior year due primarily to capacity expansion in
Engineered Films. Cash returned to shareholders increased by 56 percent,
from $3.2 million to $5.0 million, as a result of higher dividends and
share repurchases.
Outlook
Moquist summarized, "An outstanding first-half performance from our
Engineered Films Division has been substantially offset by a lack of orders
in both Flow Controls and Aerostar. We expect lower growth rates in our
film business in the second half of the year will be countered by higher
shipment levels from our other operations. As Aerostar ramps up deliveries
on its parachute and other contracts, it should add to profit for the rest
of the year. We believe that Flow Controls sales will begin to rebound and
that Electronic Systems has the capacity to maintain stronger delivery
levels with solid margins. We expect to generate double digit profit growth
for the current fiscal year and believe our investments in Engineered Films
and Flow Controls will drive incremental future 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 second 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 provides a "safe harbor" for forward-looking statements. Certain
information included in this presentation and other materials filed or to
be filed by the company with the Securities and Exchange Commission (as
well as information included in statements made or to be made by the
company) contains statements that are forward-looking. 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 Six Months Ended
July 31 July 31
Fav Fav
(Unfav) (Unfav)
2006 2005 Change 2006 2005 Change
Net sales $50,381 $45,304 11 % $108,846 $96,008 13 %
Cost of goods sold 38,198 34,422 80,772 69,965
Gross profit 12,183 10,882 12 % 28,074 26,043 8 %
Selling, general and
administrative expenses 4,311 3,583 8,725 7,608
Operating income 7,872 7,299 8 % 19,349 18,435 5 %
Other income, net (65) (92) (203) (54)
Income before income taxes 7,937 7,391 7 % 19,552 18,489 6 %
Income taxes 2,810 2,617 6,923 6,558
Net income $5,127 $4,774 7 % $12,629 $11,931 6 %
Net income per common
share:
-basic $0.28 $0.26 8 % $0.70 $0.66 6 %
-diluted $0.28 $0.26 8 % $0.69 $0.65 6 %
Weighted average common
shares outstanding:
-basic 18,089 18,059 18,107 18,046
-diluted 18,285 18,315 18,324 18,306
RAVEN INDUSTRIES, INC.
SALES AND OPERATING INCOME BY SEGMENT
(In thousands) (Unaudited)
Three Months Ended Six Months Ended
July 31 July 31
Fav Fav
(Unfav) (Unfav)
2006 2005 Change 2006 2005 Change
Net Sales:
Engineered Films $22,530 $17,445 29 % $45,109 $33,537 35 %
Flow Controls 8,419 8,626 (2)% 24,764 24,715 0 %
Electronic Systems 16,519 15,300 8 % 31,635 28,621 11 %
Aerostar 2,913 3,933 (26)% 7,338 9,135 (20)%
Total Company $50,381 $45,304 11 % $108,846 $96,008 13 %
Operating Income
(Loss):
Engineered Films $6,376 $4,184 52 % $12,277 $8,303 48 %
Flow Controls 790 1,434 (45)% 5,936 7,303 (19)%
Electronic Systems 2,912 2,903 0 % 4,908 4,993 (2)%
Aerostar (306) 420 (78) 1,357
Total Segment Income 9,772 8,941 23,043 21,956
Corporate Expenses (1,900) (1,642) (16)% (3,694) (3,521) (5)%
Total Company $7,872 $7,299 8 % $19,349 $18,435 5 %
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
July 31 January 31 July 31
2006 2006 2005
ASSETS
Cash, cash equivalents and short-term
investments $11,330 $11,409 $9,678
Accounts receivable, net 24,390 29,290 22,152
Inventories 29,915 27,819 25,073
Prepaid expenses and other current
assets 3,386 2,827 3,533
Total current assets 69,021 71,345 60,436
Property, plant and equipment, net 32,936 25,602 22,444
Other assets, net 9,324 9,210 9,695
$111,281 $106,157 $92,575
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $7,435 8,179 $6,265
Accrued and other liabilities 9,255 11,871 9,845
Total current liabilities 16,690 20,050 16,110
Other liabilities 1,934 1,718 1,402
Shareholders' equity 92,657 84,389 75,063
$111,281 $106,157 $92,575
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(In thousands) (Unaudited)
Six Months Ended July 31
2006 2005
Cash flows from operating activities
Net income $12,629 $11,931
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 2,709 2,412
Deferred income taxes (166) (264)
Other operating activities, net (467) (3,611)
Net cash provided by operating activities 14,705 10,468
Cash flows from investing activities
Capital expenditures (9,888) (4,548)
Acquisition of businesses - (2,748)
Other investing activities, net (196) 504
Net cash used in investing activities (10,084) (6,792)
Cash flows from financing activities
Dividends paid (3,258) (2,527)
Purchase of treasury stock (1,746) (689)
Long-term debt principal payments (4) (40)
Other financing activities, net 306 157
Net cash used in financing activities (4,702) (3,099)
Effect of exchange rate changes on cash 2 (18)
Net increase (decrease) in cash and cash
equivalents (79) 559
Cash and cash equivalents at beginning of period 9,409 6,619
Cash and cash equivalents at end of period 9,330 7,178
Short-term investments 2,000 2,500
Cash, cash equivalents and short-term
investments $11,330 $9,678
SOURCE Raven Industries, Inc.
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Related links:
http://www.ravenind.com
CONTACT:
Tom Iacarella, Vice President & CFO, 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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