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| RAVEN INDUSTRIES, INC. | NASDAQ: RAVN | SIOUX FALLS, SD | RAVENIND.COM |
Raven Industries Reports Fiscal 2013 Third-Quarter Results
Applied Technology and Aerostar Drive 4 Percent Year-Over-Year Sales Gain
Sioux Falls, SD-Nov. 20, 2012-Raven Industries, Inc. (NASDAQ: RAVN) today reported sales and earnings for its fiscal 2013 third quarter ended October 31, 2012.
For the third quarter, sales increased 4 percent to $97.0 million, from $93.3 million in the prior-year third quarter. Revenue growth resulted from strength in the Applied Technology Division along with the addition of Vista Research revenues in the Aerostar Division. Engineered Films sales declined slightly from record levels in the year-ago third quarter.
Raven's third-quarter net income was $10.9 million, or $0.30 per diluted share, down 5 percent from year-earlier net income of $11.4 million, or $0.31 per diluted share. All earnings-per-share amounts have been adjusted to reflect a two-for-one stock split effective July 25, 2012.
For the nine months, sales reached $316.6 million, an 11-percent increase from last year's $285.2 million. Net income grew 5 percent to $41.5 million, or $1.13 per diluted share, from $39.6 million, or $1.09 per diluted share, in fiscal 2012.
“There were encouraging developments within all of our divisions during the third quarter,” said Daniel A. Rykhus, president and chief executive officer. “Applied Technology sales benefited from our consistent investment in new products and international expansion. Within Aerostar, Vista Research revenues helped to moderate aerostat volatility. Engineered Films saw improved demand for construction films-and that helped offset a decline in energy sales. Our performance company-wide led to a 4 percent top-line gain.”
Guidance Products Drive Applied Technology to Record Levels
Sales in Applied Technology grew 12 percent to $39.5 million, versus $35.3 million last year. Operating income rose 6 percent, to $12.3 million, from $11.5 million. The bottom-line gain stemmed from relatively higher sales and was achieved despite ongoing investment in research, marketing and product development. Both the sales and operating income results were third-quarter records.
Said Rykhus, “We continue to see rising demand for our precision agricultural solutions-particularly Raven's advanced guided steering systems that enhance farm yields and reduce operating costs. Emerging and established markets benefit from the precision and resulting cost savings we bring via technology, as well as the ability to maximize yields, which is significant in challenging conditions, including drought.
Raven Industries Fiscal 2013 Third-Quarter Results
November 20, 2012
Page 2
“International sales remained strong in the third fiscal quarter, particularly in Brazil, Canada and South Africa. Domestically, we saw strong OEM demand as we enhance our product capabilities. The drought in the US has created some uncertainty in the marketplace, but overall, any sluggishness has been substantially offset by higher commodity prices and strong farm income.”
During the third quarter, Raven introduced its Envizio Pro XL™ field computer. Based on the company's popular Envizio Pro and Envizio Pro II field computers, the new device features a 10.4" color touchscreen display. The Envizio Pro XL utilizes the same operating system as its predecessors, but the larger touchscreen enhances the user experience with products like Raven's OmniRow advanced planter control system, or OmniSeed advanced air-seeder control system.
Noted Rykhus, “The Envizio Pro XL is just one example of our commitment to product development. Our new product initiatives are done in concert with our OEM and aftermarket channel partners-and this is part of what drives continued success in Applied Technology.”
Vista Research Fuels Aerostar Gains
Aerostar's sales in the third quarter were $26.4 million versus $24.2 million in the previous year's third quarter, a 9 percent gain. As previously disclosed, Raven realigned its Electronic Systems Division in the second quarter. Approximately 75 percent of Electronic Systems' sales went to Aerostar in the fiscal third quarter and the balance to Applied Technology. All sales and operating income amounts reflect the realignment.
Most of Aerostar's gain came from the addition of revenues from Vista Research, which was acquired in January 2012. Sales of high-altitude research balloons also increased. Aerostat sales of $1.4 million declined $700,000; electronics manufacturing services revenues were also lower. However, operating income rose 20 percent to $3.8 million from $3.2 million a year earlier.
Said Rykhus, “Despite a lack of aerostat sales in the third quarter, we were able to deliver year-over-year growth. This affirms our strategy of acquiring highly engineered products and businesses that occupy a unique market position-and Vista Research does just that. A leading provider of surveillance systems that enhance the effectiveness of radars using sophisticated signal processing algorithms, Vista's smart sensing radar systems, or SSRS, are employed in a host of advanced detection and tracking applications, including wide-area surveillance for border patrol and the military.”
Commented Rykhus, “We continue to develop opportunities to add stability and mitigate volatility in our Aerostar business, and ultimately drive longer-term growth with breakout potential. That said, we continue to manage the business responsibly, carefully controlling discretionary spending, staffing levels and R&D.”
Recently, the company confirmed that the high-altitude research balloons used by Austrian Felix Baumgartner in his record-setting Red Bull Stratos mission, were manufactured by Raven's Aerostar Division.
Engineered Films Keeps Gross Profit Percentage Despite Lower Demand
For the third quarter, Engineered Films posted sales of $33.3 million, compared to $34.9 million in the fiscal 2012 third quarter, a 5 percent reduction from last year's record level. Operating income declined 15 percent to $4.7 million, from $5.6 million in the prior-year period.
Raven Industries Fiscal 2013 Third-Quarter Results
November 20, 2012
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Said Rykhus, “We continue to see solid performance from Engineered Films. While energy and agricultural sales declined during the quarter, deliveries of construction films were higher. Moreover, we continue to believe that geomembrane films will be a rising part of our market mix for this division, due to the critical need to protect water and other environmental resources.
“Within Engineered Films we maintained our gross profit percentage-even with lower sales-through improved operating efficiencies. While the pounds of film sold is up about 10 percent for the nine months, we do have extrusion capacity to further grow this business-which we intend to do through R&D investments in new growth opportunities as well as enhancements to our existing product line,” Rykhus noted.
Attractive Cash Position Despite Increased Investments
At October 31, 2012, cash and investment balances were $48.1 million, up from $44.2 million a year ago. Increases in capital expenditures and the $12 million payment to acquire Vista Research, Inc., in the fourth quarter last year were offset by cash flows from operations. The company paid $3.8 million in dividends to shareholders ($0.105 per share) during the quarter. Accounts receivable increased to $55.5 million compared with $50.7 million at October 31, 2011. Inventories were $50.0 million, up from $49.9 million one year earlier. Average accounts receivable days outstanding increased year-over-year while inventory turns declined slightly. Nine-month operating cash flows increased to $58.0 million from $37.7 million in the prior year.
Building for the Future
Said Rykhus, “For the fourth quarter, we continue to see positive trends in Applied Technology. For the near-term, Aerostar continues to be impacted by a lack of aerostat orders. Within Engineered Films, we anticipate a challenging environment and tough year-over-year comparison. Given the company's year-to-date performance and a difficult fourth-quarter outlook, reaching our long-term earnings growth target of 10-15 percent is unlikely in the current year. However, we are pleased that we continue to expect a record year for sales and earnings, while managing the business to achieve our target longer term.”
Concluded Rykhus, “Helping customers solve great challenges-hunger, safety, environmental protection and energy independence-remains the driving force behind everything that we do. We're continuing to invest in the company, expanding both our base of fixed assets and portfolio of product lines. Raven's diversified business model enables us to weather near-term challenges, while continuing to grow and build for the future.”
Conference Call Information
Raven will host a conference call today, Tuesday, November 20, 2012, at 9:00 a.m. Central Time to discuss third-quarter performance. Analysts and investors are invited to join the conference call by dialing: 1-866-393-0676. Alternatively, the live call can be accessed through the Investor Relations section of the company's website at http://investors.ravenind.com/. Please log on to the website at least 15 minutes early to register on the Events & Presentations page, and download and install any necessary audio software.
A replay of the conference call will be available two hours after the call ends through 11:59 p.m. CT on Friday, November 30, 2012. To access the replay, dial 1-855-859-2056 and enter conference ID: 60394664. A replay also will remain available on the company's website for 90 days following the call.
Raven Industries Fiscal 2013 Third-Quarter Results
November 20, 2012
Page 4
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. Visit www.RavenInd.com for more information.
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 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 the company'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.
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| Contact Information | |
At the Company: | At Padilla Speer Beardsley: |
Tom Iacarella, Vice President and CFO | Matt Sullivan |
| 605-336-2750 | 612-455-1700 |
Thomas.Iacarella@ravenind.com | msullivan@padillaspeer.com |
Raven Industries Fiscal 2013 Third-Quarter Results
November 20, 2012
Page 5
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands, except earnings per share) (Unaudited)
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| | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended October 31, | | Nine Months Ended October 31, | |
| | 2012 | | 2011 | | Fav (Unfav)Change | | 2012 | | 2011 | | Fav (Unfav)Change | |
| Net sales | $ | 97,011 |
| | $ | 93,300 |
| | 4 | % | | $ | 316,600 |
| | $ | 285,185 |
| | 11 | % | |
| Costs of goods sold | 67,436 |
| | 66,046 |
| | | | 215,826 |
| | 196,865 |
| | | |
| Gross profit | 29,575 |
| | 27,254 |
| | 9 | % | | 100,774 |
| | 88,320 |
| | 14 | % | |
| | | | | | | | | | | | | |
| Research and development expenses | 3,498 |
| | 2,499 |
| | | | 10,462 |
| | 7,116 |
| | | |
| Selling, general and administrative expenses | 9,705 |
| | 7,880 |
| | | | 28,101 |
| | 22,122 |
| | | |
| Operating income | 16,372 |
| | 16,875 |
| | (3 | )% | | 62,211 |
| | 59,082 |
| | 5 | % | |
| | | | | | | | | | | | | |
| Other (expense), net | (56 | ) | | (4 | ) | | | | (204 | ) | | (93 | ) | | | |
| Income before income taxes | 16,316 |
| | 16,871 |
| | (3 | )% | | 62,007 |
| | 58,989 |
| | 5 | % | |
| | | | | | | | | | | | | |
| Income taxes | 5,454 |
| | 5,473 |
| | | | 20,554 |
| | 19,414 |
| | | |
| Net income | 10,862 |
| | 11,398 |
| | (5 | )% | | 41,453 |
| | 39,575 |
| | 5 | % | |
| | | | | | | | | | | | | |
| Net income attributable to the noncontrolling interest | 3 |
| | 8 |
| | | | 5 |
| | 8 |
| | | |
| | | | | | | | | | | | | |
| Net income attributable to Raven Industries, Inc. | $ | 10,859 |
| | $ | 11,390 |
| | (5 | )% | | $ | 41,448 |
| | $ | 39,567 |
| | 5 | % | |
| | | | | | | | | | | | | |
Net income per common share: (a) | | | | | | | | | | | | |
| basic | $ | 0.30 |
| | $ | 0.31 |
| | (3 | )% | | $ | 1.14 |
| | $ | 1.09 |
| | 5 | % | |
| diluted | $ | 0.30 |
| | $ | 0.31 |
| | (3 | )% | | $ | 1.13 |
| | $ | 1.09 |
| | 4 | % | |
| | | | | | | | | | | | | |
Weighted average common shares: (a) | | | | | | | | | | | | |
| basic | 36,363 |
| | 36,242 |
| | | | 36,333 |
| | 36,224 |
| | | |
| diluted | 36,530 |
| | 36,438 |
| | | | 36,540 |
| | 36,430 |
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| (a) All weighted average shares and earnings per share amounts have been adjusted to reflect the two-for-one stock split effective July 25, 2012. | |
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Raven Industries Fiscal 2013 Third-Quarter Results
November 20, 2012
Page 6
RAVEN INDUSTRIES, INC.
SALES AND OPERATING INCOME BY SEGMENT
(Dollars in thousands) (Unaudited)
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| | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended October 31, | | Nine Months Ended October 31 | |
| | | 2012 | | 2011 | | Fav (Unfav)Change | | 2012 | | 2011 | | Fav (Unfav)Change | |
Net sales (a) | | | | | | | | | | | | | |
| Applied Technology | | $ | 39,534 |
| | $ | 35,263 |
| | 12 | % | | $ | 133,346 |
| | $ | 112,716 |
| | 18 | % | |
| Engineered Films | | 33,316 |
| | 34,947 |
| | (5 | )% | | 111,195 |
| | 97,497 |
| | 14 | % | |
| Aerostar | | 26,385 |
| | 24,173 |
| | 9 | % | | 78,865 |
| | 78,126 |
| | 1 | % | |
| Intersegment eliminations | | (2,224 | ) | | (1,083 | ) | | | | (6,806 | ) | | (3,154 | ) | | | |
| Total Company | | $ | 97,011 |
| | $ | 93,300 |
| | 4 | % | | $ | 316,600 |
| | $ | 285,185 |
| | 11 | % | |
| | | | | | | | | | | | | | |
Operating income (a) | | | | | | | | | | | | | |
| Applied Technology | | $ | 12,289 |
| | $ | 11,547 |
| | 6 | % | | $ | 47,248 |
| | $ | 40,950 |
| | 15 | % | |
| Engineered Films | | 4,729 |
| | 5,574 |
| | (15 | )% | | 20,727 |
| | 14,987 |
| | 38 | % | |
| Aerostar | | 3,830 |
| | 3,198 |
| | 20 | % | | 7,581 |
| | 12,972 |
| | (42 | )% | |
| Intersegment eliminations | | (25 | ) | | 6 |
| | | | (87 | ) | | 6 |
| | | |
| Total segment income | | 20,823 |
| | 20,325 |
| | | | 75,469 |
| | 68,915 |
| | | |
| Corporate expenses | | (4,451 | ) | | (3,450 | ) | | (29 | )% | | (13,258 | ) | | (9,833 | ) | | (35 | )% | |
| Total Company | | $ | 16,372 |
| | $ | 16,875 |
| | (3 | )% | | $ | 62,211 |
| | $ | 59,082 |
| | 5 | % | |
| | | | | | | | | | | | | | |
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(a) Effective June 1, 2012 the Company realigned the assets and team members of its Electronic Systems Division and deployed them into the Company's Aerostar and Applied Technology Divisions. The segment information presented for the three months and nine months ended October 31, 2012 and 2011 reflect this realignment.
Raven Industries Fiscal 2013 Third-Quarter Results
November 20, 2012
Page 7
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) (Unaudited)
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| | | | | | | | | | | |
| | October 31 | | January 31 | | October 31 |
| | 2012 | | 2012 | | 2011 |
| ASSETS | | | | | |
| Cash and cash equivalents | $ | 48,087 |
| | $ | 25,842 |
| | $ | 44,223 |
|
| Accounts receivable, net | 55,462 |
| | 60,759 |
| | 50,661 |
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| Inventories | 50,024 |
| | 54,756 |
| | 49,856 |
|
| Other current assets | 6,054 |
| | 6,202 |
| | 4,581 |
|
| Total current assets | 159,627 |
| | 147,559 |
| | 149,321 |
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| | | | | | |
| Property, plant and equipment, net | 77,392 |
| | 61,894 |
| | 56,906 |
|
| Other assets, net | 35,156 |
| | 36,250 |
| | 16,910 |
|
| | $ | 272,175 |
| | $ | 245,703 |
| | $ | 223,137 |
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| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | |
| Accounts payable | $ | 13,262 |
| | $ | 16,162 |
| | $ | 17,568 |
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| Accrued and other liabilities | 26,154 |
| | 24,484 |
| | 19,130 |
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| Total current liabilities | 39,416 |
| | 40,646 |
| | 36,698 |
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| | | | | | |
| Other liabilities | 19,178 |
| | 24,467 |
| | 13,582 |
|
| Shareholders' equity | 213,581 |
| | 180,590 |
| | 172,857 |
|
| | $ | 272,175 |
| | $ | 245,703 |
| | $ | 223,137 |
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Raven Industries Fiscal 2013 Third-Quarter Results
November 20, 2012
Page 8
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(Dollars in thousands) (Unaudited)
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| | | | | | | |
| | Nine Months Ended October 31, |
| | 2012 | | 2011 |
| Cash flows from operating activities: | | | |
| Net income | $ | 41,453 |
| | $ | 39,575 |
|
| Adjustments to reconcile net income to cash provided by operating activities: | | | |
| Depreciation and amortization | 9,595 |
| | 6,481 |
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| Other operating activities, net | 6,998 |
| | (8,327 | ) |
| Net cash provided by operating activities | 58,046 |
| | 37,729 |
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| | | | |
| Cash flows from investing activities: | | | |
| Capital expenditures | (22,840 | ) | | (22,070 | ) |
| Other investing activities, net | (125 | ) | | 405 |
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| Net cash used in investing activities | (22,965 | ) | | (21,665 | ) |
| | | | |
| Cash flows from financing activities: | | | |
| Dividends paid | (11,430 | ) | | (9,766 | ) |
| Other financing activities, net | (1,396 | ) | | 356 |
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| Net cash used in financing activities | (12,826 | ) | | (9,410 | ) |
| | | | |
| Effect of exchange rate changes on cash | (10 | ) | | 6 |
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| | | | |
| Net increase in cash and cash equivalents | 22,245 |
| | 6,660 |
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| Cash and cash equivalents at beginning of period | 25,842 |
| | 37,563 |
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| Cash and cash equivalents at end of period | $ | 48,087 |
| | $ | 44,223 |
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