Published:
Raven Industries Announces Higher Sales and Earnings for Third Quarter
SIOUX FALLS, S.D., Nov. 19 /PRNewswire-FirstCall/ -- Raven Industries,
Inc. (Nasdaq: RAVN) today reported strong demand for Flow Controls Division
products lifted revenues and earnings to new highs for the third quarter and
year-to-date ended October 31, 2008.
Flow Controls Leads Improved Results for Three and Nine Months
Sales for the third quarter grew 22 percent to $75.5 million compared with
$61.8 million at this time last year. While Flow Controls continued to be the
largest contributor to growth, Engineered Films and Aerostar also experienced
double-digit percentage increases in revenues. Net income for the latest
three months, at $8.4 million, or 46 cents per diluted share, rose 13 percent
from $7.4 million, or 41 cents per diluted share, for the third quarter one
year earlier.
For the nine months, sales of $220.0 million represented a 25 percent
improvement from last year's $175.6 million. Net income for the year-to-date
expanded 20 percent to $26.1 million, or $1.44 per diluted share, versus $21.8
million, or $1.20 per diluted share.
"The third quarter represented a continuation of the trends we saw in our
first and second quarters," said Ronald M. Moquist, chief executive officer.
"Flow Controls resellers and customers remained optimistic through the third
quarter as demand for our products continued to be driven by the need to
enhance grower efficiency in the face of lower crop prices. Operating margin
growth at Aerostar came as this business continued to execute on contracts for
protective wear. The combination of stronger earnings at these two operations
once again more than made up for lower operating profit at Engineered Films
and Electronic Systems, which still face soft and highly competitive
construction and home-improvement markets."
Higher Revenues, Lower Profits at Engineered Films
Engineered Films Division saw 23 percent growth in third quarter sales, to
$26.8 million from $21.8 million at this time last year. This primarily
reflected an increase in volume rather than higher selling prices. Operating
income, at $3.7 million, was down 7 percent compared with $4.0 million for
last year's three months.
Revenues for the year-to-date were $75.3 million, a 16 percent improvement
over $65.1 million at this time last year. Operating earnings of $11.1
million were off 22 percent from the $14.3 million seen in last year's nine
months as increased raw material costs outstripped the division's ability to
raise prices.
"Engineered Films' quarterly revenues again reflected high levels of
demand from the oil and gas industry, particularly for pit and pond liners,
and geomembranes," Moquist stated. "We also have had good success with our
new FeedFresh(TM) silage cover, with its unique oxygen barrier that prevents
spoilage. Our long-term direction for this operation is to invest in new
products made possible by the capacity expansion we completed last year, to
keep tight control of costs and capital expenditures, and to manage raw
material inventories in a volatile resin market."
U.S. and International Growth at Flow Controls
For the quarter, sales at the Flow Controls Division expanded 61 percent
from a year ago, to $25.9 million versus $16.1 million. This resulted from
strong shipments to international markets as well as in the U.S. A 64 percent
increase occurred in operating income, to $8.0 million from last year's $4.9
million.
Year-to-date revenues were up 75 percent, reaching $83.5 million from
$47.7 million. International sales accounted for 18 percent of revenues during
this period, and increased by 91 percent versus last year's nine months.
Operating income nearly doubled, to $28.6 million compared with $14.6 million
at this time last year.
"Third quarter revenues remained strong," said Moquist. "While all our
products performed well during the quarter, our field computers showed the
highest growth in demand based on their ability to lower input costs by
improving accuracy and control in virtually every production area. This
quarter, we introduced the Switch Pro(TM) control console, which provides
product control and boom section control to customers that want to upgrade
from their existing SCS spray consoles to our field computers more easily. We
strive to lead the market with new advances in precision ag technology."
Lower Results at Electronic Systems
Electronic Systems Division sales for the third quarter were $17.9 million
compared with $20.3 million, off 12 percent. Operating income, at $1.8
million, decreased 49 percent from $3.5 million for last year's three months.
Sales for the nine months were down 11 percent, to $45.9 million versus
$51.5 million a year ago. Operating income was $3.7 million versus $8.4
million for last year's nine months, a 56 percent reduction.
"The trends that have been leading to lower earnings in this business all
year are still present," said Moquist. "These include lower levels of new
home construction and home improvements negatively affecting our bed-control
deliveries, and the loss of a significant account through an acquisition. In
addition, in the third quarter we faced a tough comparison with a particularly
strong period a year ago. But we are making progress here. We consolidated
two manufacturing facilities and continued to provide circuit board assemblies
to ease capacity constraints at Flow Controls. As a result, we are beginning
to see some sequential improvement in operating margins: to 10.0 percent for
the third quarter, from 8.4 percent in the second, and 4.8 percent in the
first."
Continued Improvement at Aerostar
Aerostar's revenues reached $5.4 million in the latest three months versus
$3.8 million at this time last year, a 42 percent improvement. Operating
income tripled, reaching $912,000 compared to $299,000 for the year-ago
quarter.
For the year-to-date, sales rose to $17.0 million from last year's $11.7
million, a 45 percent increase. Operating income of $2.4 million was up
nearly three times from $817,000 for the nine months a year ago.
"Most of the third-quarter increase came from sales of protective wear,"
Moquist explained. "This more than offset a delay in shipments of MC-6
parachutes to the Army, which resumed in November."
Balance Sheet, Cash Flows, Remain Strong
On October 31, 2008, cash and investment balances were $31.2 million, up
from $23.3 million on that date a year ago. The $7.9 million increase
reflected continued solid cash flows from operations and modest capital
spending.
"We are committed to returning excess cash flow to shareholders through
share repurchases or a special dividend," said Moquist. "As a result, we paid
a special dividend of $22.5 million, or $1.25 per share, after the close of
our third quarter on November 14-in addition to our regular third quarter
dividend of 13 cents per share. After both activities, we still had healthy
cash and investment balances of more than $8 million."
Accounts receivable, at $44.3 million, were 26 percent higher than $35.1
million a year ago, due to stronger sales levels. Inventory was $40.5 million
versus $32.3 million at the end of last year's third quarter. The 25 percent
increase resulted from growth at Flow Controls, higher plastic resin prices
for Engineered Films, and the delayed Aerostar parachute shipments.
Operating cash flows for the year-to-date reached $26.6 million, an 11
percent improvement over $23.9 million a year ago. Capital expenditures were
a $5.6 million use of cash versus $5.1 million one year earlier. For the
entire fiscal year, capital expenditures are expected to be in the $8-9
million range.
The company suspended its share repurchase program during the quarter, in
favor of the special dividend. As a result, share repurchases to date this
year totaled 161,000 for $5.2 million. Regular quarterly dividends of $7.0
million through the nine months represented an 18 percent increase over the
same period in 2007.
Record Year Expected
"The demand for Flow Controls' products in the fourth quarter remains
strong, but we expect this division's sales growth rate will come down from
the unsustainable level seen in the third quarter," Moquist commented. "While
crop prices have moderated from their earlier highs this year, growers in the
U.S.,Canada,South America,Europe andAustralia are still interested in
reaping the benefits of the precision approach to agriculture that we offer.
The environment is uncertain for Engineered Films. Over 40 percent of our
third quarter sales came from the oil and gas industry. With softening oil
prices, we have seen orders slow down in the fourth quarter. We have reduced
staffing levels in this division by 42 employees due to the drop in demand.
However, lower selling prices in a competitive marketplace could offset our
operational efficiency and expense control efforts.
"We have lowered the cost base at Electronic Systems," Moquist continued.
"The loss of a key account will continue to affect results through the fourth
quarter, so comparisons are not expected to look better for Electronic Systems
until next year. Aerostar should have an excellent fourth quarter, as the
parachute orders delayed in the third quarter will ship in the current one.
We also look forward to additional sales of tethered aerostats in the coming
quarters.
"All of these factors should combine to give us relatively flat sales and
net income for the fourth quarter, leading us to another record year. Our
plans for the new fiscal year recognize that it will be a difficult period,
and that we are not immune to an economic recession. For that reason, we
continue to focus on cost, quality and new products to drive results. In
addition, our strong operating discipline and balance sheet put us in a better
position than most companies to succeed in tough times," 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 Thursday, November 20 at 3:00 p.m.
Eastern Time to discuss its third 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, a few 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 November 27, 2008. To access
the rebroadcast, dial 888-203-1112 and enter this passcode: 5285245. 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 and commodity prices, which could affect sales and
profitability in some of the company's primary markets, such as agriculture,
construction and oil and gas well drilling; 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 Nine Months Ended
October 31 October 31
Fav Fav
(Unfav) (Unfav)
2008 2007 Change 2008 2007 Change
Net sales $75,538 $61,842 22% $219,982 $175,598 25%
Cost of goods sold 57,537 46,543 164,180 129,518
Gross profit 18,001 15,299 18% 55,802 46,080 21%
Selling, general and
administrative expenses 5,630 4,359 16,478 13,759
Operating income 12,371 10,940 13% 39,324 32,321 22%
Interest income and
other, net (177) (314) (471) (815)
Income before income
taxes 12,548 11,254 11% 39,795 33,136 20%
Income taxes 4,163 3,856 13,713 11,355
Net income $8,385 $7,398 13% $26,082 $21,781 20%
Net income per common
share:
-basic $0.47 $0.41 15% $1.44 $1.20 20%
-diluted $0.46 $0.41 12% $1.44 $1.20 20%
Weighted average common
shares outstanding:
-basic 18,018 18,118 18,051 18,099
-diluted 18,073 18,241 18,105 18,203
RAVEN INDUSTRIES, INC.
SALES AND OPERATING INCOME BY SEGMENT
(In thousands) (Unaudited)
Three Months Ended Nine Months Ended
October 31 October 31
Fav Fav
(Unfav) (Unfav)
2008 2007 Change 2008 2007 Change
Net Sales:
Engineered Films $26,829 $21,803 23% $75,338 $65,127 16%
Flow Controls 25,892 16,081 61% 83,454 47,696 75%
Electronic Systems 17,915 20,308 (12)% 45,933 51,487 (11)%
Aerostar 5,444 3,827 42% 17,010 11,726 45%
Intersegment
Eliminations (542) (177) (1,753) (438)
Total Company $75,538 $61,842 22% $219,982 $175,598 25%
Operating Income
(Loss):
Engineered Films $3,718 $3,992 (7)% $11,097 $14,293 (22)%
Flow Controls 8,022 4,889 64% 28,628 14,598 96%
Electronic Systems 1,804 3,528 (49)% 3,683 8,421 (56)%
Aerostar 912 299 205% 2,436 817 198%
Intersegment
Eliminations (8) 17 (11) (36)
Total Segment Income 14,448 12,725 45,833 38,093
Corporate Expenses (2,077) (1,785) (16)% (6,509) (5,772)(13)%
Total Company $12,371 $10,940 13% $39,324 $32,321 22%
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
October 31 January 31 October 31
2008 2008 2007
ASSETS
Cash, cash equivalents and short-term
investments $31,194 $22,772 $23,274
Accounts receivable, net 44,307 36,538 35,119
Inventories 40,493 36,529 32,296
Other current assets 5,477 5,030 3,984
Total current assets 121,471 100,869 94,673
Property, plant and equipment, net 35,539 35,743 36,220
Other assets, net 10,905 11,249 11,310
$167,915 $147,861 $142,203
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $11,365 $8,374 $8,174
Dividend payable 22,510 - -
Accrued and other liabilities 15,551 13,734 12,588
Total current liabilities 49,426 22,108 20,762
Other liabilities 8,142 7,478 7,143
Shareholders' equity 110,347 118,275 114,298
$167,915 $147,861 $142,203
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(In thousands) (Unaudited)
Nine Months Ended October 31
2008 2007
Cash flows from operating activities
Net income $26,082 $21,781
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 5,705 5,265
Deferred income taxes 21 (703)
Other operating activities, net (5,239) (2,413)
Net cash provided by operating
activities 26,569 23,930
Cash flows from investing activities
Capital expenditures (5,639) (5,139)
Other investing activities, net 1,177 (315)
Net cash used in investing activities (4,462) (5,454)
Cash flows from financing activities
Dividends paid (7,032) (5,972)
Purchase of treasury stock (5,180) (282)
Other financing activities, net 93 242
Net cash used in financing activities (12,119) (6,012)
Effect of exchange rate changes on cash (66) 27
Net increase in cash and cash
equivalents 9,922 12,491
Cash and cash equivalents at
beginning of period 21,272 6,783
Cash and cash equivalents at end of
period 31,194 19,274
Short-term investments - 4,000
Cash, cash equivalents and short-term
investments $31,194 $23,274
SOURCE Raven Industries, Inc.
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Copyright © 2009, NewsBlaze,
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