EPS 40 Cents Vs. 34 Cents
SIOUX FALLS, S.D., Aug. 19 /PRNewswire-FirstCall/ -- Bolstered by strong
results in three of its four operating units, Raven Industries, Inc.
(Nasdaq: RAVN) today announced results for its second quarter and first half
ended July 31, 2004. Net income for the second quarter climbed 15 percent to
a record $3.6 million from $3.2 million, or 40 cents per share, vs. the
year-earlier's 34 cents. Total sales for the industrial manufacturer's second
quarter rose three percent to $37.1 million.
For the first half of its fiscal year, Raven reported that net earnings
increased 23 percent to $9.1 million from $7.3 million, or a record 98 cents
per share vs. 79 cents per share in the first six months of the previous
fiscal year. Total sales for the first half were up three percent to
$75.5 million.
"Our second quarter was budgeted to be our toughest, with earnings
projected to be flat or slightly down," Raven President and CEO Ronald M.
Moquist said. "But we were able to do much better than that, as three of our
four operations performed beautifully. We could have done even better except
for the weak performance of our Electronic Systems Division (ESD). I'm
disappointed with the slippage in ESD, but it demonstrates Raven's strength,
in that we had good results in a tough quarter even with one of our operations
substantially down."
Segment Performance
Raven's Engineered Films Division (EFD) turned in a "strong performance"
for the second quarter, CEO Moquist said. Sales rose 19 percent from a year
ago to $12.0 million while operating income jumped 23 percent to $3.2 million
from $2.6 million. Sales to the manufacturing housing sector were up after a
depressed level during the past four years, Moquist noted, and the company
also experienced higher sales in pit liners for the oil-drilling industry.
For the first six months of the fiscal year, sales were up 12 percent to
$22.4 million while operating income increased 17 percent to $6.2 million.
"We were able to maintain profit margins in spite of rising raw material
costs," Moquist noted.
Flow Controls Division (FCD) typically reaches its seasonal low point in
the second quarter. Sales fell to an expected level of $7.2 million from
$9.0 million. Operating income, however, climbed 39 percent to $1.8 million
buoyed mainly by higher overall margins. Sales and margin comparisons were
significantly affected by the loss of $3.9 million of shipments, from a
special order of lower-margin chemical-injection systems, which were part of
last year's second quarter. For the first half, sales totaled $20.4 million,
down $375,000 from the first six months of the previous year. Shipments under
the special order for chemical-injection systems totaled $6.0 million in the
first six months of last year. Operating income rose 41 percent to
$6.9 million for the first half. The division's new products continued to be
well accepted in the market.
Electronics Systems Division (ESD) experienced what Moquist labeled "a
disappointing quarter" with sales up less than one percent to $11.7 million
while operating profit was down 52 percent to $773,000. The division
struggled with start-up problems with a new customer and continuing material
supplier issues. As a result, shipments were delayed and inventory levels
increased substantially, management noted. For the first half, sales of
$20.8 million were down four percent and operating income of $1.5 million was
46 percent lower than one year earlier. "These issues have negatively
impacted production efficiencies," Moquist added. "The biggest challenge
facing any electronics manufacturing services provider is to execute a
disciplined and efficient strategy. Both division and corporate management
are focused on regaining profit margins and momentum in the third quarter."
Aerostar sales in the second quarter climbed 15 percent to $6.1 million
while operating income jumped 30 percent to $1.3 million from $1.0 million a
year earlier. For the first six months of the year, sales rose 13 percent to
$11.8 million and operating income increased 56 percent to $2.6 million.
Improved efficiencies in military cargo parachute production contributed to
the margin improvement. Aerostar also delivered on some additional smaller
contracts for parachute retrofits for military personnel during the quarter.
"We continue to look for new orders in the coming fiscal year to support this
recently revitalized operation," Moquist commented.
Cash Flow and Balance Sheet
Cash and short-term investments reached $11.3 million at July 31, 2004,
despite a payout of $11.3 million in a special cash dividend on May 20, 2004.
Compared to July 31, 2003, inventory levels were up $5.3 million due primarily
to higher levels in ESD. Accounts receivable levels, impacted by the timing
of sales during the quarter, were up $3.1 million. Six-month cash flows from
operating activities of $9.0 million were down from the $14.7 million for the
first six months of the prior year as a result of these higher working capital
requirements.
Expectations for the Second Half and Year
CEO Moquist said that despite the current problems in the company's
Electronic Systems Division, the full-year outlook continued to appear strong
and that production problems will be ironed out in the third quarter. "We
believe the positive trends set in the first half will continue to help drive
sales and earnings growth through the second half of this year."
Forward-Looking Statement
The Private Securities Litigation Reform Act provides a "safe harbor" for
forward-looking statements. Certain information included in this Press
Release 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 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, material availability, technology or
relationships with the company's largest customers, any of which could
adversely impact any of the company's product lines. 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.
On the Internet, information is available at http://www.ravenind.com , the
company's website.
RAVEN INDUSTRIES, INC.
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)
2004 2003 Change 2004 2003 Change
Net sales $37,077 $36,110 3% $75,485 $73,052 3%
Cost of goods sold 28,318 28,299 55,048 55,804
Gross profit 8,759 7,811 12% 20,437 17,248 18%
Selling, general, and
administrative expenses 3,108 2,766 6,335 5,668
Loss on sale of businesses
and assets - 108 - 99
Operating income 5,651 4,937 14% 14,102 11,481 23%
Other income (26) (39) (50) (51)
Income before income
taxes 5,677 4,976 14% 14,152 11,532 23%
Income taxes 2,035 1,813 5,095 4,186
Net income $3,642 $3,163 15% $9,057 $7,346 23%
Net income per common
share:
-basic $0.40 $0.35 14% $1.00 $0.81 23%
-diluted $0.40 $0.34 18% $0.98 $0.79 24%
Weighted average common
shares outstanding:
-basic 9,048 9,037 0% 9,043 9,055 0%
-diluted 9,212 9,233 0% 9,213 9,246 0%
RAVEN INDUSTRIES, INC.
SALES AND OPERATING INCOME BY SEGMENT (a)
(In thousands) (Unaudited)
Three Months Ended Six Months Ended
July 31 July 31
Fav Fav
(Unfav) (Unfav)
2004 2003 Change 2004 2003 Change
Net Sales:
Flow Controls $7,233 $9,044 (20)% $20,430 $20,805 (2)%
Engineered Films 11,995 10,067 19 % 22,408 20,068 12 %
Electronic Systems 11,743 11,676 1 % 20,825 21,729 (4)%
Aerostar 6,106 5,323 15 % 11,822 10,450 13 %
Total Company $37,077 $36,110 3 % $75,485 $73,052 3 %
Operating Income (Loss):
Flow Controls $1,784 $1,286 39 % $6,895 $4,905 41 %
Engineered Films 3,190 2,595 23 % 6,176 5,287 17 %
Electronic Systems 773 1,625 (52)% 1,475 2,722 (46)%
Aerostar 1,326 1,020 30 % 2,554 1,639 56 %
Sold Businesses - (260) - (280)
Total Segment Income 7,073 6,266 17,100 14,273
Corporate Expenses (1,422) (1,329) (7)% (2,998) (2,792) (7)%
Total Company $5,651 $4,937 14 % $14,102 $11,481 23 %
(a) The company's high-altitude research balloon operation, formerly in
the Engineered Films segment, is included with Aerostar results as a
result of a change in the company's organizational structure. Prior
year results have been reclassified to reflect this change.
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
July 31, January 31, July 31,
2004 2004 2003
ASSETS
Cash, cash equivalents and short-term
investments $11,327 $18,442 $19,902
Accounts receivable, net 16,821 18,454 13,752
Inventories 21,008 16,763 15,734
Prepaid expenses and other current
assets 1,888 2,051 2,289
Total current assets 51,044 55,710 51,677
Property, plant and equipment, net 16,031 15,950 15,405
Other assets, net 7,608 7,848 6,955
$74,683 $79,508 $74,037
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $73 $72 $112
Accounts payable 4,762 3,666 2,420
Accrued and other liabilities 7,091 8,157 7,398
Total current liabilities 11,926 11,895 9,930
Long-term debt, less current portion 20 57 98
Other liabilities 1,344 1,085 1,440
Stockholders' equity 61,393 66,471 62,569
$74,683 $79,508 $74,037
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED CASH FLOW
STATEMENTS
(In thousands) (Unaudited)
Six Months Ended July 31
2004 2003
Cash flows from operating activities
Net income $9,057 $7,346
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,975 2,167
Deferred income taxes 60 117
Other operating activities, net (2,084) 5,090
Net cash provided by operating activities 9,008 14,720
Cash flows from investing activities
Capital expenditures (1,805) (908)
Other investing activities, net (20) 17
Net cash used in investing activities (1,825) (891)
Cash flows from financing activities
Dividends paid (13,314) (1,450)
Purchase of treasury stock (1,059) (1,693)
Long-term debt principal payments (36) (60)
Other financing activities, net 111 59
Net cash used in financing activities (14,298) (3,144)
Net increase in cash and cash equivalents (7,115) 10,685
Cash and cash equivalents at beginning of period 14,442 5,217
Cash and cash equivalents at end of period 7,327 15,902
Short-term investments 4,000 4,000
Cash, cash equivalents and short-term investments $11,327 $19,902
SOURCE Raven Industries, Inc.
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CONTACT:
Tom Iacarella, VP & CFO, of Raven Industries,
+1-605-336-2750; or General Inquiries, Dennis Waite,
+1-708-246-6265, Analyst Inquiries, Leslie Loyet,
+1-312-640-6672, or Media Inquiries, Cindy Martin,
+1-312-640-6741, all of Financial Relations Board
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