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8-K - FORM 8-K - RAVEN INDUSTRIES INC | c64788e8vk.htm |
Exhibit 99
news |
AT THE COMPANY:
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AT FINANCIAL RELATIONS BOARD: | |
Tom Iacarella
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Leslie Loyet | |
Vice President & CFO
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Analyst/Media Inquiries | |
(605) 336-2750
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(312) 640-6672 |
FOR IMMEDIATE RELEASE
THURSDAY, MAY 19, 2011
THURSDAY, MAY 19, 2011
RAVEN INDUSTRIES REPORTS RECORD
FIRST QUARTER FISCAL 2012 RESULTS
FIRST QUARTER FISCAL 2012 RESULTS
SIOUX FALLS, SDMay 19, 2011Raven Industries, Inc. (RAVN: Nasdaq) today announced record
sales and earnings for the first quarter ended April 30, 2011. All divisions posted strong
increases in sales, driven by demand for the companys precision agriculture and engineered film
products, as well as military parachutes.
For the first quarter, sales increased 19 percent to $101.5 million, from $85.0 million in the same
period a year ago. First quarter net income increased 21 percent to $15.7 million, or $0.86 per
diluted share, compared with $12.9 million, or $0.72 per diluted share during the same period a
year ago. The Applied Technology and Aerostar divisions led this growth, where double-digit sales
gains were accompanied by even higher increases in operating income.
Our strong start was in line with our expectations, said Daniel A. Rykhus, president and chief
executive officer. We saw broad demand across the sectors of the U.S. economy that we serve. At
the same time, our international sales were very encouraging. With such a solid start, we are on
track to produce another record year. Our record performance in the first quarter included
spending necessary to support our growth strategy. Raven has committed to higher levels of capital
investment in support of future growth. Despite this, we continued to increase cash.
Ag Market Strength Drives Applied Technology
For the first quarter, sales in the Applied Technology Division increased 19 percent to $39.1
million versus $32.9 million last year. Operating income increased 22 percent, to $15.1 million
from $12.4 million. Both the sales and earnings figures were records.
Demand remains strong for our core products, Rykhus said. The strength of the U.S. ag economy
has translated into solid demand across our line of field computers, guided steering and
application controls. During the first quarter we also saw international sales up sharply in South
America and the former Soviet Republics. The first quarter one year ago included new sales from
the introduction of our SlingshotTM information management platform. As this new
information management tool continues to roll out, we are finding that it has enhanced Ravens
reputation in the precision ag marketplace. We believe that it further expands the opportunity for
our products to increase farm productivity and lower costs.
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Record Quarterly Sales in Engineered Films
The Engineered Films Division posted record first quarter sales of $30.1 million, which was up 17
percent from $25.6 million in the first quarter of the prior year. Operating income was relatively
flat at $4.1 million.
Rykhus stated, Energy market sales continue to lead this division, and we experienced growth in
all of our markets in the first quarter, including construction, industrial packaging and
agricultural films. However, higher overhead spending and material costs are impacting our gross
margins. While margins improved sequentially over the fourth quarter contraction, we saw a lag in
price increase acceptance that continued to negatively impact margins. We adjusted our pricing
strategy during the quarter to mitigate this lag going forward. We are encouraged by broad-based
demand for our products and are making a concerted effort to increase capacity for this division in
the coming year. For example, we recently upgraded our cast extruder line to produce texturized
films for geomembrane applications. In addition, we have significant new capacity coming on stream
in the second half of this fiscal year to expand our specialty film capabilities.
Strong Growth and Record Profits at Aerostar
Aerostars sales in the first quarter were up 29 percent to $15.1 million from $11.7 million in the
previous years first quarter. Operating income reached a quarterly record of $4.1 million, up 88
percent from $2.2 million a year earlier.
Parachutes and protective wear led the top-line growth this past quarter, noted Rykhus. These
are both core product lines with good visibility going forward. A year ago we were in the midst of
ramping up production of our T-11 parachutes and tethered aerostats. Today we see the result of
efficiencies in the form of higher profits. We expect our aerostat business to remain strong as we
work through existing contracts through the first half of the fiscal year. We are in pursuit of
significant follow-on orders, as well as new relationships around the globe. While we are facing a
challenging military procurement process, we are confident that our solutions offer cost-effective
protection for our armed forces on the ground.
Electronic Systems Continuing to Deliver Profits
Electronic Systems sales in the first quarter were $19.5 million versus $16.3 million a year ago,
up 20 percent. Operating income was $3.4 million this past quarter, up 9 percent from $3.1 million
in the previous years quarter. First quarter profit margins a year ago benefited from a more
favorable product mix.
Rykhus noted, The first quarter growth was paced by sales of bed controls and avionics. We are
still projecting that the remainder of the year will be relatively flat for this division as we
complete certain avionics programs in the second half of the fiscal year. However, this unit
continues to generate strong cash flow while at the same time provides us with the ability to
in-source key manufacturing services for our Applied Technology Division. We are well-positioned
as an electronics manufacturing services provider, but we also seek to generate proprietary product
sales.
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Cash Builds on a Debt-Free Balance Sheet
At April 30, 2011, cash and investment balances were $42.6 million, down from $49.5 million a year
ago, but up from $38.6 million at the end of last years fourth quarter. Raven paid a $22.5
million special cash dividend in September 2010. First quarter operating cash flows remained
strong, at $11.0 million versus $10.3 million last year. Working capital levels reflected a higher
level of sales activity. Accounts receivable increased to $50.5 million compared with $43.9 million
at April 30, 2010. Accounts receivable collections averaged 49 days, consistent with a year
earlier. Inventories were $45.5 million, up $8.0 million from the same quarter in the prior year.
During the first quarter, Ravens directors approved a 12.5 percent increase in the companys
regular quarterly cash dividend to 18 cents per share. This marks the companys 25th consecutive
annual cash dividend increase. The company has paid a cash dividend for 39 consecutive years.
Raven Gearing Up for Long-Term Growth
Rykhus concluded, Continued careful and strategic investment is key to sustaining growth at Raven.
We are pursuing growth markets precision agriculture, engineered films and situational
surveillance where we have the opportunity to gain share with new products and higher production
capacity. We expect challenges in the form of market and price volatility will continue.
Increased investment spending for research, capacity and capabilities will tend to temper the
bottom line this year relative to top-line growth, but we believe we can achieve our long-term
objectives of 12 to 15 percent net income improvement. At the same time, we plan to double our
investment in plant and equipment, reaching the $30 million range. Were investing today to
generate future growth in sales, earnings and cash flow.
About Raven Industries, Inc.
Since 1956, Raven Industries has designed and manufactured high-quality, high-value technical
products. Raven is publicly traded on NASDAQ (RAVN) and has earned an international reputation for
innovation, product quality, high performance and unmatched service. With strengths in
engineering, manufacturing, and technological innovation, Raven serves the precision agriculture,
high performance specialty films, aerospace, and electronic manufacturing services markets.
Conference Call Information
Raven has scheduled a conference call today at 3:00 p.m. Eastern Time to discuss its first quarter
performance, and provide an outlook for the current year. Interested investors are invited to
listen to the call by visiting the Investor Relations section of the companys Web site at
www.ravenind.com several minutes before the call to register on the Events and Presentations page.
In addition, a taped rebroadcast will be available beginning one hour after the call ends, and will
continue through May 26, 2011. To access the rebroadcast, dial 877-870-5176 and enter this
passcode: 7288019. A replay of the call will also be available at 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
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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 companys primary markets, such as agriculture, construction and
oil and gas drilling; or changes in competition, raw material availability, technology or
relationships with the companys largest customersany of which could adversely affect any of the
companys product linesas well as other risks described in the companys 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.
FINANCIAL TABLES FOLLOW...
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RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except earnings per share) (Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except earnings per share) (Unaudited)
Three Months Ended April 30 | ||||||||||||
Fav (Unfav) | ||||||||||||
2011 | 2010 | Change | ||||||||||
Net sales |
$ | 101,541 | $ | 85,030 | 19 | % | ||||||
Cost of sales |
68,605 | 57,859 | ||||||||||
Gross profit |
32,936 | 27,171 | 21 | % | ||||||||
Research and development expenses |
2,243 | 2,126 | ||||||||||
Selling, general and administrative expenses |
7,160 | 5,540 | ||||||||||
Operating income |
23,533 | 19,505 | 21 | % | ||||||||
Other income (expense), net |
(13 | ) | 52 | |||||||||
Income before income taxes |
23,520 | 19,557 | 20 | % | ||||||||
Income taxes |
7,804 | 6,612 | ||||||||||
Net income |
$ | 15,716 | $ | 12,945 | 21 | % | ||||||
Net income per common share: |
||||||||||||
-basic |
$ | 0.87 | $ | 0.72 | 21 | % | ||||||
-diluted |
$ | 0.86 | $ | 0.72 | 19 | % | ||||||
Weighted average common shares outstanding: |
||||||||||||
-basic |
18,102 | 18,051 | ||||||||||
-diluted |
18,212 | 18,058 |
RAVEN INDUSTRIES, INC.
SALES AND OPERATING INCOME BY SEGMENT
(In thousands) (Unaudited)
SALES AND OPERATING INCOME BY SEGMENT
(In thousands) (Unaudited)
Three Months Ended April 30 | ||||||||||||
Fav (Unfav) | ||||||||||||
2011 | 2010 | Change | ||||||||||
Net sales: |
||||||||||||
Applied Technology |
$ | 39,125 | $ | 32,925 | 19 | % | ||||||
Engineered Films |
30,091 | 25,633 | 17 | % | ||||||||
Aerostar |
15,139 | 11,693 | 29 | % | ||||||||
Electronic Systems |
19,477 | 16,288 | 20 | % | ||||||||
Intersegment eliminations |
(2,291 | ) | (1,509 | ) | ||||||||
Total company |
$ | 101,541 | $ | 85,030 | 19 | % | ||||||
Operating income: |
||||||||||||
Applied Technology |
$ | 15,074 | $ | 12,403 | 22 | % | ||||||
Engineered Films |
4,129 | 4,127 | 0 | % | ||||||||
Aerostar |
4,062 | 2,164 | 88 | % | ||||||||
Electronic Systems |
3,412 | 3,124 | 9 | % | ||||||||
Intersegment eliminations |
12 | (49 | ) | |||||||||
Total segment income |
$ | 26,689 | $ | 21,769 | ||||||||
Corporate expenses |
(3,156 | ) | (2,264 | ) | (39 | )% | ||||||
Total company |
$ | 23,533 | $ | 19,505 | 21 | % | ||||||
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RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
April 30 | January 31 | April 30 | ||||||||||
2011 | 2011 | 2010 | ||||||||||
ASSETS |
||||||||||||
Cash, cash equivalents and short-term investments |
$ | 42,625 | $ | 38,563 | $ | 49,472 | ||||||
Accounts receivable, net |
50,542 | 39,967 | 43,946 | |||||||||
Inventories |
45,538 | 43,679 | 37,546 | |||||||||
Other current assets |
5,991 | 5,972 | 6,305 | |||||||||
Total current assets |
144,696 | 128,181 | 137,269 | |||||||||
Property, plant and equipment, net |
42,409 | 41,522 | 33,047 | |||||||||
Other assets, net |
17,130 | 18,057 | 19,805 | |||||||||
$ | 204,235 | $ | 187,760 | $ | 190,121 | |||||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||||||
Accounts payable |
$ | 17,447 | $ | 16,715 | $ | 14,450 | ||||||
Accrued and other liabilities |
19,815 | 17,620 | 20,657 | |||||||||
Total current liabilities |
37,262 | 34,335 | 35,107 | |||||||||
Other liabilities |
12,637 | 12,211 | 11,378 | |||||||||
Shareholders equity |
154,336 | 141,214 | 143,636 | |||||||||
$ | 204,235 | $ | 187,760 | $ | 190,121 | |||||||
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(In thousands) (Unaudited)
CONDENSED CONSOLIDATED CASH FLOWS
(In thousands) (Unaudited)
Three Months Ended April 30 | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 15,716 | $ | 12,945 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
1,985 | 1,738 | ||||||
Other operating activities, net |
(6,693 | ) | (4,347 | ) | ||||
Net cash provided by operating activities |
11,008 | 10,336 | ||||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(3,585 | ) | (1,585 | ) | ||||
Other investing activities, net |
228 | 406 | ||||||
Net cash used in investing activities |
(3,357 | ) | (1,179 | ) | ||||
Cash flows from financing activities: |
||||||||
Dividends paid |
(3,254 | ) | (2,885 | ) | ||||
Other financing activities, net |
100 | | ||||||
Net cash used in financing activities |
(3,154 | ) | (2,885 | ) | ||||
Effect of exchange rate changes on cash |
65 | 16 | ||||||
Net increase in cash and cash equivalents |
4,562 | 6,288 | ||||||
Cash and cash equivalents at beginning of period |
37,563 | 40,684 | ||||||
Cash and cash equivalents at end of period |
42,125 | 46,972 | ||||||
Short-term investments |
500 | 2,500 | ||||||
Cash, cash equivalents and short-term investments |
$ | 42,625 | $ | 49,472 | ||||
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