RAVN
$31.10
Raven Industries
$.25
.81%
Earnings Details
2nd Quarter July 2017
Wednesday, August 23, 2017 4:35:14 PM
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Summary

Raven Industries (RAVN) Recent Earnings

Raven Industries (RAVN) reported 2nd Quarter July 2017 earnings of $0.23 per share on revenue of $86.6 million. The consensus earnings estimate was $0.22 per share. Revenue grew 27.3% on a year-over-year basis.

Raven Industries Inc is a technology company providing products to customers within the industrial, agricultural, energy, construction & military markets. Its operating segment includes: Applied Technology, Engineered Films & Aerostar Division.

Results
Reported Earnings
$0.23
Earnings Whisper
-
Consensus Estimate
$0.22
Reported Revenue
$86.6 Mil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Raven Industries Reports Second Quarter Fiscal 2018 Results

Raven Industries, Inc. (RAVN) today reported financial results for the second quarter that ended July 31, 2017.

Noteworthy Items:

Consolidated net sales and operating income increased approximately 28 percent and 75 percent year-over-year, respectively, with all divisions achieving strong results;

Engineered Films sales increased 33.8% and division operating income increased 43.4%, driven by strong growth in the Geomembrane and Industrial markets;

Recently announced acquisition of Colorado Lining International, Inc. (CLI) positions Engineered Films for expanded vertical integration within the Geomembrane market;

During the second quarter, Aerostar was awarded a stratospheric balloon contract with a new customer, further broadening the customer base and continuing to build the momentum of the division’s stratospheric balloon platform;

Applied Technology continued to invest aggressively in research and development and channel development for long-term growth.

Second Quarter Results:

Net sales for the second quarter of fiscal 2018 were $86.6 million, up 28.1 percent versus the second quarter of fiscal 2017. All three divisions drove significant growth year-over-year in the second quarter.

Operating income for the second quarter of fiscal 2018 was $11.7 million versus operating income of $6.7 million in the second quarter of fiscal 2017, increasing 74.7 percent year-over-year. Operating margin increased 360 basis points year-over-year, from 9.9 percent of net sales to 13.5 percent of net sales. The significant improvement in profitability was principally driven by strong operating leverage on higher sales volume.

Net income for the second quarter of fiscal 2018 was $8.2 million, or $0.23 per diluted share, versus net income of $4.5 million, or $0.12 per diluted share, in last year’s second quarter. All three divisions made significant contributions to the substantial growth in diluted earnings per share.

Balance Sheet and Cash Flow:

At the end of the second quarter of fiscal 2018, cash and cash equivalents totaled $55.2 million, up $4.7 million versus the prior quarter.

Net working capital as a percentage of annualized net sales improved 300 basis points year-over-year, from 27.4 percent in the second quarter of last year to 24.4 percent in this year’s second quarter. The decrease in net working capital percentage was the result of higher payables, as well as managing inventory and receivables efficiently with the substantial increase in sales versus the prior year.

Applied Technology Division:

Net sales for Applied Technology in the second quarter of fiscal 2018 were $28.4 million, up 25.4 percent versus the second quarter of fiscal 2017. New product sales, expanded OEM relationships, and higher sales of direct injection systems continued to drive growth year-over-year.

Division operating income was $6.6 million, up 28.3 percent versus the second quarter of fiscal 2017, driven primarily by higher sales volume and improved operating leverage. The division continues to see strong incremental margins on improved sales volume, as operating margin increased from 22.8 percent in the second quarter of last year to 23.3 percent in this year’s second quarter.

Engineered Films Division:

Net sales for Engineered Films were $49.0 million, up 33.8 percent year-over-year. Volume, measured in pounds sold, increased 35.0 percent versus the prior year. Consistent with the past three quarters, the increase in sales was driven by markedly higher sales into the Geomembrane market, with the Industrial and Agriculture markets also significantly contributing to division growth versus the prior year.

Operating income in the second quarter of fiscal 2018 was $9.6 million, up $2.9 million or 43.4 percent versus the second quarter of fiscal 2017. The year-over-year increase in operating income was principally driven by strong operating leverage and higher sales volume. Division operating margin increased 130 basis points year-over-year, from 18.2 percent to 19.5 percent, driven by improved capacity utilization and continued spending discipline.

Aerostar Division:

Net sales for Aerostar during the second quarter of fiscal 2018 were $9.4 million, up $1.0 million or 11.3 percent versus the second quarter of fiscal 2017. The year-over-year increase in sales was primarily driven by growth in the stratospheric balloon platform.

Operating income in the second quarter of fiscal 2018 was $1.4 million, versus an operating loss of $0.3 million in the previous year’s second quarter. Adjustments in operating expenses while focusing on strategic research and development spending contributed to the improved financial performance.

Fiscal 2018 Outlook:

"We are very pleased with the progress made and performance achieved by all three divisions throughout the first half of the year," said Dan Rykhus, President and CEO. "The Company delivered strong growth in sales and operating income. Year-over-year comparisons are getting progressively more challenging and will continue to do so through the remainder the year. However, we believe we are on track to deliver meaningful growth in revenues and operating income in fiscal year 2018. We remain focused on innovation in our core products and outstanding service to our end-markets, while also making strategic acquisitions, such as CLI, to supplement our organic growth strategy."

Regulation G:

The information presented in this earnings release regarding earnings before interest, taxes, depreciation, and amortization (EBITDA) do not conform to generally accepted accounting principles (GAAP) and should not be construed as an alternative to the reported results determined in accordance with GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the Company and its operating segments as well as the comparability of results. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results in the tables below.

Conference Call Information:

The Company will host an investor conference call to discuss second quarter fiscal 2018 results tomorrow, Thursday, August 24, 2017, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). The conference call audio will be available to all interested parties via a simultaneous webcast that can be accessed through the Investor Relations section of the Company’s website at http://investors.ravenind.com. Analysts and investors are invited to join the conference call by dialing: +1 (866) 393-0676. The event is scheduled to last one hour. For those unable to listen live, an audio replay of the event will be archived on the Company’s website.

About Raven Industries, Inc.:

Raven Industries (RAVN) is dedicated to providing innovative, high-value products and solutions that solve great challenges throughout the world. Raven is a leader in precision agriculture, high-performance specialty films, and lighter-than-air technologies. Since 1956, Raven has designed, produced, and delivered exceptional solutions, earning the company a reputation for innovation, product quality, high performance, and unmatched service. For more information, visit http://ravenind.com.

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. The Company intends that all forward-looking statements be subject to the safe harbor provisions of the Private Securities Litigation Reform Act.

Generally, forward-looking statements can be identified by words such as "may," "will," "plan," "believe," "expect," "intend," "anticipate," "potential," "should," "estimate," "predict," "project," "would," and similar expressions, which are generally not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future -- including statements relating to our future operating or financial performance or events, our strategy, goals, plans and projections regarding our financial position, our liquidity and capital resources, and our product development -- are forward-looking statements.

Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements, because such statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain known risks, as described in the Company’s 10K under Item 1A, and unknown risks and uncertainties that may cause actual results to differ materially from our Company’s historical experience and our present expectations or projections.

RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands, except earnings per share) (Unaudited)
Three Months Ended July 31,
Six Months Ended July 31,
2017
2016
Fav (Un)
2017
2016
Fav (Un)
Change
Change
Net sales
$
86,610
$
67,598
28.1 %
$
180,145
$
135,958
32.5
%
Cost of goods sold
60,097
48,683
121,676
96,926
Gross profit
26,513
18,915
40.2 %
58,469
39,032
49.8
%
Gross profit percentage
30.6
%
28.0
%
32.5
%
28.7
%
Research and development expenses
4,256
3,915
8,236
8,324
Selling, general and administrative expenses
10,557
8,304
20,055
15,962
Long-lived asset impairment loss
--
--
259
--
Operating income
11,700
6,696
74.7 %
29,919
14,746
102.9 %
Operating income percentage
13.5
%
9.9
%
16.6
%
10.8
%
Other income (expense), net
(63
)
(209
)
$
(293
)
$
(306
)
Income before income taxes
11,637
6,487
79.4 %
29,626
14,440
105.2 %
Income tax expense
3,403
1,993
9,044
4,427
Net income
8,234
4,494
83.2 %
20,582
10,013
105.6 %
Net income attributable to noncontrolling interest
(1
)
(1
)
(1
)
1
Net income attributable to Raven Industries
$
8,235
$
4,495
83.2 %
$
20,583
$
10,012
105.6 %
Net income per common share:
- basic
$
0.23
$
0.12
91.7 %
$
0.57
$
0.28
103.6 %
- diluted
$
0.23
$
0.12
91.7 %
$
0.56
$
0.28
100.0 %
Weighted average common shares:
- basic
36,205
36,207
36,192
36,311
- diluted
36,554
36,250
36,515
36,362
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) (Unaudited)
July 31
January 31
July 31
2017
2017
2016
ASSETS
Cash, and cash equivalents
$
55,197
$
50,648
$
40,123
Accounts receivable, net
46,398
43,143
38,645
Inventories
50,844
42,336
45,502
Other current assets
3,670
2,689
4,958
Total current assets
156,109
138,816
129,228
Property, plant and equipment, net
105,723
106,324
110,706
Goodwill and amortizable intangibles, net 52,069
52,697
53,640
Other assets, net
3,295
3,672
3,783
Total Assets
$
317,196
$
301,509
$
297,357
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable
$
12,597
$
8,467
$
10,076
Accrued and other liabilities
19,180
19,915
14,998
Total current liabilities
31,777
28,382
25,074
Other liabilities
12,348
13,696
13,827
Shareholders’ equity
273,071
259,431
258,456
Total Liabilities and Shareholders’ Equity$
317,196
$
301,509
$
297,357
Net Working Capital and Net Working Capital Percentage
Accounts receivable, net
$
46,398
$
43,143
$
38,645
Plus:
Inventories
50,844
42,336
45,502
Less: Accounts payable
12,597
8,467
10,076
Net working capital
$
84,645
$
77,012
$
74,071
Net working capital percentage
24.4
%
27.9
%
27.4
%
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands) (Unaudited)
Six Months Ended July 31,
2017
2016
Cash flows from operating activities:
Net income
$
20,582
$
10,013
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
7,184
7,633
Long-lived asset impairment loss
259
--
Other operating activities, net
(8,164
)
7,912
Net cash provided by operating activities
19,861
25,558
Cash flows from investing activities:
Capital expenditures
(5,223
)
(2,168
)
Proceeds from sale or maturity of investments
250
250
Purchases of investments
(255
)
(500
)
(Disbursements) proceeds from settlement of liabilities, sale of assets
(344
)
1,117
Other investing activities, net
(17
)
(339
)
Net cash used in investing activities
(5,589
)
(1,640
)
Cash flows from financing activities:
Dividends paid
(9,384
)
(9,428
)
Payments for common shares repurchased
--
(7,702
)
Payment of acquisition-related contingent liabilities
(320
)
(282
)
Other financing activities, net
(299
)
(256
)
Net cash used in financing activities
(10,003
)
(17,668
)
Effect of exchange rate changes on cash
280
91
Net increase (decrease) in cash and cash equivalents
4,549
6,341
Cash and cash equivalents at beginning of period
50,648
33,782
Cash and cash equivalents at end of period
$
55,197
$
40,123
RAVEN INDUSTRIES, INC.
SALES AND OPERATING INCOME BY SEGMENT
(Dollars in thousands) (Unaudited)
Three Months Ended July 31,
Six Months Ended July 31,
2017
2016
Fav (Un)
2017
2016
Fav (Un)
Change
Change
Net sales
Applied Technology
$
28,424
$
22,668
25.4
%
$
68,914
$
54,124
27.3
%
Engineered Films
49,028
36,656
33.8
%
92,583
65,756
40.8
%
Aerostar
9,369
8,415
11.3
%
18,975
16,310
16.3
%
Intersegment eliminations
(211
)
(141
)
(327
)
(232
)
Total Company
$
86,610
$
67,598
28.1
%
$
180,145
$
135,958
32.5
%
Operating income (loss)
Applied Technology
$
6,637
$
5,172
28.3
%
$
20,090
$
13,865
44.9
%
Engineered Films
9,551
6,659
43.4
%
18,271
10,537
73.4
%
Aerostar
1,388
(251
)
653.0 %
2,806
(429
)
754.1 %
Intersegment eliminations
11
--
9
(5
)
Total segment income
$
17,587
$
11,580
51.9
%
$
41,176
$
23,968
71.8
%
Corporate expenses
(5,887
)
(4,884
)
(20.5 )%
(11,257
)
(9,222
)
(22.1 )%
Total Company
$
11,700
$
6,696
74.7
%
$
29,919
$
14,746
102.9 %
Operating income (loss) percentages
Applied Technology
23.3
%
22.8
%
50bps
29.2
%
25.6
%
360bps
Engineered Films
19.5
%
18.2
%
130bps
19.7
%
16.0
%
370bps
Aerostar
14.8
%
(3.0
)%
1780bps
14.8
%
(2.6
)%
1740bps
Total Company
13.5
%
9.9
%
360bps
16.6
%
10.8
%
580bps
RAVEN INDUSTRIES, INC.
EBITDA REGULATION G RECONCILIATION
(Dollars in thousands) (Unaudited)
Three Months Ended July 31,
Six Months Ended July 31,
Fav (Un)
Fav (Un)
Segments
2017
2016
Change
2017
2016
Change
Applied Technology
Reported operating income
$
6,637
$
5,172
28.3
%
$
20,090
$
13,865
44.9
%
Plus: Depreciation and amortization
822
956
(14.0 )%
1,652
1,908
(13.4 )%
ATD EBITDA
$
7,459
$
6,128
21.7
%
$
21,742
$
15,773
37.8
%
ATD EBITDA % of Net Sales
26.2
%
27.0
%
31.5
%
29.1
%
Engineered Films
Reported operating income
$
9,551
$
6,659
43.4
%
$
18,271
$
10,537
73.4
%
Plus: Depreciation and amortization
2,099
2,173
(3.4
)%
4,165
4,230
(1.5
)%
EFD EBITDA
$
11,650
$
8,832
31.9
%
$
22,436
$
14,767
51.9
%
EFD EBITDA % of Net Sales
23.8
%
24.1
%
24.2
%
22.5
%
Aerostar
Reported operating income (loss)
$
1,388
$
(251
)
653.0 %
$
2,806
$
(429
)
754.1 %
Plus: Depreciation and amortization
344
418
(17.7 )%
761
837
(9.1
)%
Aerostar EBITDA
$
1,732
$
167
937.1 %
$
3,567
$
408
774.3 %
Aerostar EBITDA % of Net Sales
18.5
%
2.0
%
18.8
%
2.5
%
Consolidated Raven
Net Income
$
8,235
$
4,495
83.2
%
$
20,583
$
10,012
105.6 %
Interest expense (income), net
47
76
115
148
Income tax expense
3,403
1,993
9,044
4,427
Depreciation and amortization
3,570
3,871
7,184
7,633
EBITDA
$
15,255
$
10,435
46.2
%
$
36,926
$
22,220
66.2
%
EBITDA % of Net Sales
17.6
%
15.4
%
20.5
%
16.3
%

____________________________

Net working capital is a defined as accounts receivable (net) plus inventories less accounts payable. Net working capital percentage is defined as net working capital divided by four times quarterly sales.

EBITDA is a non-GAAP financial measure defined on a consolidated basis as net income/(loss) attributable to Raven Industries, Inc., plus income taxes, plus depreciation and amortization expense, plus interest expense (net). On a segment basis, it is defined as operating income plus depreciation expense and amortization expense. EBITDA margin is defined as EBITDA divided by net sales.

Contact Information:
Bo Larsen
Investor Relations Director
Raven Industries, Inc.
+1 (605) 336-2750

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