Published:
Raven Industries Reports Record Fiscal 2008 Results
SIOUX FALLS, S.D., March 12 /PRNewswire-FirstCall/ -- Raven Industries,
Inc. (Nasdaq: RAVN) today reported that a strong performance from its Flow
Controls Division led to its fifth-consecutive annual record for revenues and
earnings for the year ended January 31, 2008. Fourth quarter sales and
earnings also increased.
Gains for Year, Fourth Quarter
Sales for the most recent 12 months reached $234.0 million, up 8 percent
from $217.5 million a year ago. This was largely due to the continued growth
momentum of its ag-based Flow Controls Division, and assisted by sales
increases at Aerostar. These results were partially offset by the weakening
construction and home-improvement markets that led to lower operating results
in the Engineered Films and Electronic Systems divisions. Net income for the
latest 12 months grew 9 percent to $27.8 million, or $1.53 per diluted share,
from $25.4 million, or $1.39 per diluted share.
Fourth quarter sales rose 14 percent to $58.4 million from $51.2 million
in the same period last year. Net income was $6.0 million, or 33 cents per
diluted share, 3 percent higher than the $5.8 million, or 32 cents per share,
earned in the prior year's three months.
"Our Flow Controls Division is leveraging a very strong agricultural
market by introducing a record number of products while experiencing solid
demand for its entire line," said Ronald M. Moquist, chief executive officer.
"While Aerostar is a much smaller operation, it showed significant improvement
as it began production and shipping on key military contracts for parachutes
and protective wear, and increased its deliveries of high-altitude research
balloons."
Engineered Films Faces Challenges
Engineered Films Division sales for the latest year were $84.8 million,
down 7 percent from $91.1 million, which included $9.9 million of disaster
film revenues that were not repeated this year. Annual operating income was
$17.7 million compared with $23.4 million. The 25 percent decrease resulted
from a lower margin product mix, and competitive pricing that prevented the
division from recovering the increased costs of plastic resin used to create
films.
For the fourth quarter, sales were up 1 percent to $20.0 million in
contrast to $19.7 million. Operating income decreased 21 percent to $3.4
million versus $4.3 million in last year's fourth quarter.
"With the lack of disaster film revenues, we knew sales would be lower
than in the previous year," said Moquist. "Two other factors made matters
worse this past year: rising material costs and competitive pricing pressure
in the construction market.
"While we cannot predict when the construction market will improve, I am
more confident than ever that the manufacturing capacity and capability we
added over the past 18 months will be the driver for profitable future
growth," he added. "We are using our new extrusion lines to create higher
value-added and more complex films with higher margins. One example is our
new radon gas barrier for residential construction, which in tests
successfully reduced the flow of this gas by a statistically significant
amount. Our new geomembrane products also serve a growing market for
high-performance barrier films in landfills and water storage."
Flow Controls Sets Records
Flow Controls Division sales for the year expanded 41 percent to $64.3
million from $45.5 million. This included a 42 percent increase in
international sales, which represent 16 percent of the division's revenues.
Operating income of $19.1 million was 89 percent higher than the $10.1 million
seen a year ago.
In the fourth quarter, sales rose 59 percent to $16.6 million from $10.4
million. This caused operating income to more than double the $2.1 million
for last year's three months, reaching $4.5 million.
"The emphasis on renewable fuels is helping to drive strong crop prices in
North America," Moquist explained. "This situation, combined with higher
input costs for growers, is driving demand for greater farm productivity,
which is the sweet spot for our Flow Control products. Among the new products
we introduced last year was the Cruizer(TM). This low-cost GPS (global
positioning system) guidance system is designed for farmers who are just
starting to adopt precision agriculture practices, and sells for about half
the price of competing products. Reaction from the market has been very
positive, and we began shipping our first units in the fourth quarter."
Electronic Systems Posts Mixed Results
Electronic Systems Division sales were $67.6 million, up 2 percent from
$66.3 million for the prior year. Operating income for the latest year was
$10.3 million, off 5 percent from $10.9 million.
Sales in the latest fourth quarter were $16.2 million, down 4 percent from
$17.0 million. Operating income decreased 34 percent to $1.9 million from
$2.9 million for last year's fourth quarter.
"The downturn in new home construction and home improvements is negatively
affecting associated markets such as furniture and bed sales," Moquist stated.
"As a result, our electronic bed control sales were down 20 percent for the
year. For the first nine months, the impact of this situation was offset by a
very favorable product mix."
Aerostar Posts Significant Increases in Sales, Operating Income
Aerostar's sales grew 18 percent to $17.3 million for the year, compared
with $14.7 million a year ago. Operating income for the most recent year more
than doubled, reaching $1.5 million versus $707,000.
In the fourth quarter, sales of $5.6 million compared with $4.1 million, a
36 percent rise. Start-up costs on new contracts held operating income growth
to 8 percent, reaching $689,000 as compared with $638,000 for the year-ago
three months. This represented the sixth-consecutive profitable quarter for
Aerostar.
"The long delay on the MC-6 Army parachutes came to an end, and these
began shipping in the fourth quarter," Moquist said. "We expect to see
margins improve on this order beginning in the first quarter, as production
ramps up on this two-year, $14 million contract. We received a $6.1 million
one-year Army contract for fuel handler coveralls that also began to ship in
the fourth quarter. In addition, we experienced great interest in our
research balloons. In January 2008, three Aerostar stratospheric balloons
helped NASA set a record: flying 13,000 pounds of scientific equipment over
Antarctica for more than 1,700 hours."
Strong Balance Sheet and Cash Flows
Cash and investment balances were $22.8 million at January 31, 2008, more
than double the $10.8 million a year ago, primarily due to strong operating
cash flows and modest capital investment levels. Higher Flow Controls sales
were the primary reason that accounts receivable rose 17 percent to $36.5
million from last year's $31.3 million, and inventory increased 30 percent to
$36.5 million during the latest year.
Operating cash flows for the year were $27.2 million in contrast to the
prior year's $26.3 million. Cash used for capital expenditures in the latest
period declined to $6.6 million from $16.5 million, which reflected the prior
year's significant investments in Engineered Films extrusion capacity. This
also placed capital expenditures below depreciation and amortization for the
year, which was $7.3 million. Cash dividends grew by 22 percent from a year
ago, to $8.0 million, or 44 cents per share.
Solid Business Model Should Lead to Another Record Year
"A year ago, we were talking about an expected turnaround in the ag market
that we could use as a springboard to another year of record performance at
Raven," Moquist commented. "This materialized and was the main reason behind
our improved results for the year. It also demonstrates the benefits of our
business model: that advances in one area can offset temporary setbacks in
others. The net result is growth in earnings, cash flows, and shareholders'
equity along with continuous investment in our future.
"We believe the Flow Controls Division will see strong results in the
current year," he continued. "This operation is well positioned to meet the
growing demand for precision agricultural products inNorth America and
abroad. On the other hand, we expect another challenging year for Engineered
Films. Pricing pressure and volatile resin prices are expected to continue
impacting margins at least through the first half. However, we expect to
generate revenue growth this year both from innovative new products and
serving markets that remain strong, such as energy -- where our pond liners
and pit liners enjoy steady demand by oilfield services companies.
"The Electronic Systems Division is expected to see continuing reductions
in operating income in the coming year. The division faces near-term
challenges in replacing the $7 million in revenue from a customer that is
moving its manufacturing elsewhere after being acquired. The slowdown in bed
control sales will be another negative offset," Moquist added. "However, we
believe our low volume/high mix manufacturing services offer great value in
the market, based on new opportunities we are presently pursuing. Until we
can rebuild the lost sales volume, we will see higher fixed costs as a
percentage of revenues as we maintain the critical skills and relationships
that are the core of this business. That will make their first quarter
comparison particularly difficult this year. Aerostar should see more than a
redoubling of its operating income. This division already has contracts in
place for its planned sales of parachutes and protective wear. Interest in
high-altitude research balloons and our new tethered aerostats is very strong.
"Our first quarter performance should reflect the strength and seasonality
of Flow Controls and solid improvements from Aerostar. This should more than
offset expected weakness in Engineered Films and Electronic Systems. Growth
prospects for the remainder of the year will depend more heavily on the
ability of Engineered Films to gain traction with new products and new
customers and Electronic Systems to win new projects. Our opportunities in
the strong ag market and the continuing recovery of Aerostar fuel our
expectations for another record 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 year-end performance and outlook for the coming year. 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
following the completion of the call, and will continue through March 19,
2008. To access the rebroadcast, dial 888-203-1112, and enter this passcode:
4354285. A replay of the call will also be available on the Internet 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)
Three Months Ended Twelve Months Ended
January 31 January 31
Fav Fav
(Unfav) (Unfav)
2008 2007 Change 2008 2007 Change
Net sales $58,359 $51,248 14 % $233,957 $217,529 8 %
Cost of goods sold 45,291 38,920 174,809 162,647
Gross profit 13,068 12,328 6 % 59,148 54,882 8 %
Selling, general and
administrative expenses 4,244 3,915 18,003 16,580
Operating income 8,824 8,413 5 % 41,145 38,302 7 %
Other income, net (264) (157) (1,079) (533)
Income before income
taxes 9,088 8,570 6 % 42,224 38,835 9 %
Income taxes 3,067 2,726 14,422 13,394
Net income $6,021 $5,844 3 % $27,802 $25,441 9 %
Net income per common
share:
-basic $0.33 $0.32 3 % $1.54 $1.41 9 %
-diluted $0.33 $0.32 3 % $1.53 $1.39 10 %
Weighted average common
shares outstanding:
-basic 18,135 18,057 18,108 18,086
-diluted 18,208 18,197 18,204 18,273
RAVEN INDUSTRIES, INC.
SALES AND OPERATING INCOME BY SEGMENT
(In thousands)
Three Months Ended Twelve Months Ended
January 31 January 31
Fav Fav
(Unfav) (Unfav)
2008 2007 Change 2008 2007 Change
Net Sales:
Engineered Films $19,959 $19,743 1 % $84,783 $91,082 (7)%
Flow Controls 16,595 10,416 59 % 64,291 45,515 41 %
Electronic Systems 16,246 17,002 (4)% 67,609 66,278 2 %
Aerostar 5,559 4,087 36 % 17,274 14,654 18 %
Total Company $58,359 $51,248 14 % $233,957 $217,529 8 %
Operating Income:
Engineered Films $3,398 $4,312 (21)% $17,655 $23,440 (25)%
Flow Controls 4,504 2,058 119 % 19,102 10,111 89 %
Electronic Systems 1,928 2,930 (34)% 10,349 10,850 (5)%
Aerostar 689 638 8 % 1,506 707 113 %
Total Segment
Income 10,519 9,938 48,612 45,108
Corporate Expenses (1,695) (1,525) (11)% (7,467) (6,806) (10)%
Total Company $8,824 $8,413 5 % $41,145 $38,302 7 %
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
January 31 January 31
2008 2007
ASSETS
Cash, cash equivalents and short-term
investments $22,772 $10,783
Accounts receivable, net 36,538 31,336
Inventories 36,529 28,071
Other current assets 5,030 3,029
Total current assets 100,869 73,219
Property, plant and equipment, net 35,743 36,264
Other assets, net 11,249 10,281
$147,861 $119,764
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $8,374 $6,093
Accrued and other liabilities 13,734 10,371
Total current liabilities 22,108 16,464
Other liabilities 7,478 5,032
Shareholders' equity 118,275 98,268
$147,861 $119,764
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(In thousands)
Twelve Months Ended January 31
2008 2007
Cash flows from operating activities
Net income $27,802 $25,441
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 7,344 5,885
Deferred income taxes (779) (293)
Other operating activities, net (7,216) (4,720)
Net cash provided by operating
activities 27,151 26,313
Cash flows from investing activities
Capital expenditures (6,635) (16,522)
Other investing activities, net 2,202 (2,142)
Net cash used in investing activities (4,433) (18,664)
Cash flows from financing activities
Dividends paid (7,966) (6,507)
Purchase of treasury stock (592) (4,201)
Other financing activities, net 288 431
Net cash used in financing activities (8,270) (10,277)
Effect of exchange rate changes on cash 41 2
Net increase (decrease) in cash and
cash equivalents 14,489 (2,626)
Cash and cash equivalents at beginning of
period 6,783 9,409
Cash and cash equivalents at end of period 21,272 6,783
Short-term investments 1,500 4,000
Cash, cash equivalents and short-term
investments $22,772 $10,783
SOURCE Raven Industries, Inc.
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