Raven Industries (RAVN) 8-K Raven Industries Announces First Quarter Results

Exhibit 99

RE:	Raven Industries, Inc.
	P.O. Box 5107
	Sioux Falls, SD 57117-5107

FOR FURTHER INFORMATION:

AT THE COMPANY:	AT FINANCIAL RELATIONS BOARD:
Tom Iacarella	Leslie Loyet	Tim Grace
Vice President & CFO	Analyst Inquiries	Media Inquiries
(605) 336-2750	(312) 640-6672	(312) 640-6667

FOR IMMEDIATE RELEASE
THURSDAY, MAY 18, 2006

RAVEN INDUSTRIES ANNOUNCES FIRST QUARTER RESULTS

• Engineered Films Division increased sales by 40%, operating income by 43%

• Company anticipates another record year with double-digit earnings growth

SIOUX FALLS, SD—May 18, 2006—Raven Industries, Inc. (RAVN: NasdaqNM)today reported record sales and earnings for its first quarter ended April 30, 2006. Net sales rose 15 percent to $58.5 million while net income for the quarter increased five percent to $7.5 million, or $0.41 per share, from $7.2 million, or $0.39 per share in the prior year period. Results were driven by continued strength in the company’s Engineered Films Division.

“We had a solid performance in the quarter highlighted by growth in revenues, earnings and cash flow, despite no military parachute deliveries,” said Chief Executive Officer Ronald Moquist. “Having made significant investments in expanding both our plastic film capacity and product capabilities, we are currently benefiting from strong demand related to oilfield activity, construction and disaster-related films.”

Segment Performance

Engineered Films Division (EFD)posted a 40 percent increase in sales to $22.6 million, for the first quarter compared with $16.1 million in the same quarter a year ago. Operating income rose 43 percent to $5.9 million over the prior year period. Despite volatile raw material costs, particularly polyethylene resins, operating margins improved over fourth quarter levels. Moquist added, “Since most of our film orders are short-term in nature, raw material price swings are generally passed through, although with a lag on some occasions. We remain optimistic about our growth prospects in films.” Recent capital investments will enable production of specialty films with up to seven layers, offering enhanced strength and barrier protection not previously available.

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Financial Relations Board serves as financial relations counsel to this company, is acting on the company’s behalf in issuing this bulletin and receiving compensation therefore. The information contained herein is furnished for information purposes only and is not to be construed as an offer to buy or sell securities.

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Flow Controls Division (FCD)continued to feel the effects of a weaker agricultural sector. Sales for the first quarter rose two percent to $16.3 million over the prior year period. Operating income declined 12 percent from year-ago levels to $5.1 million, reflecting increased investments in product development and sales and marketing. Moquist noted, “There’s no doubt that this agricultural market presents a challenge. In this environment we expect profit growth will be minimal, but we intend to continue to make the critical long-term strategic investments required for long-term growth. We are making good progress in building out our precision agriculture marketing channels in Europe and South America and with key U.S. original equipment manufacturers.”

Electronic Systems Division (ESD)sales for the first quarter increased 13 percent to $15.1 million while operating income fell by four percent from the prior-year period to $2.0 million. “This business benefits from a diverse group of customers who depend on us for high-mix, low-volume types of projects, and while this quarter we shipped some relatively lower margin products, indications from our customers are that demand remains strong. ESD expects to show profit growth in the second half of the year,” added Moquist. “Our circuit board assemblies and related services span a number of industries, including communication, environmental controls, and aviation components.”

Aerostarsales for the first quarter declined 15 percent to $4.4 million from the same period a year ago, while operating income was $228,000 compared to $937,000 one year earlier. In the year-ago period, the company was still shipping cargo parachutes under a large military contract, which was completed in October 2005. During the first quarter this year, Aerostar received a new $6 million parachute order. The order calls for most product to be delivered in the company’s next fiscal year and it is expected to be completed by December 2007. Development efforts are focused on high-altitude aerostats, targeting applications for long-distance communications, data relay and reconnaissance.

Balance Sheet

The company’s cash and investment balances were $8.0 million at April 30, 2006, versus $4.1 million one year earlier. Operating cash flows for the first quarter totaled $4.6 million compared with $1.3 million for the prior year period. The improvement in first-quarter cash flows from operating activities was due to higher earnings and reduced working capital requirements. Cash used for capital expenditures increased by $3.9 million over the prior year quarter primarily due to capacity expansion in Engineered Films. Also, during the first quarter, the Board of Directors approved a 29 percent dividend increase.

Outlook

Commenting on the company’s prospects, Moquist said, “With four operating segments in different sectors of the economy, we are used to the push and pull that occurs in any given quarter. Our goal is to keep growing the top line while generating strong profit margins and cash flows. Along with increasing the dividend, we continue to reinvest in market expansion and new products. We anticipate that our growth this year will continue to be led by Engineered Films. Flow Controls and Electronic Systems also have the potential to exceed last year’s record performances, but at reduced growth levels. Based on the relative strength of each segment, we remain confident in our ability to produce another record year of results and double-digit earnings growth.”

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About Raven Industries, Inc.

Celebrating its 50^th anniversary, Raven is an industrial manufacturer that provides electronics manufacturing services, reinforced plastic sheeting and flow control devices to various markets.

Conference Call Information

Raven has scheduled a conference call today at 3:00 p.m. Eastern Time to discuss its first quarter fiscal 2007 performance and related trends in its business. To access this call, log on to www.ravenind.com or www.vcall.com 15 minutes before the call to download the necessary software. A replay will be available through this website for 90 days.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this report are “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 the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, there is no assurance that such assumptions are correct or that these expectations will be achieved. Such 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 certain 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 impact any of the Company’s product lines, as well as other risks described in the Company’s 10-K under Item 1A. The foregoing list is not exhaustive and the Company disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements.

For more information on Raven Industries, please visit the company’s website at
www.ravenind.com.

FINANCIAL TABLES FOLLOW...

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RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except earnings per share) (Unaudited)

	Three Months Ended April 30
						Fav (Unfav)
	2006			2005		Change
Net sales	$	58,465		$	50,704		15	%
Cost of goods sold		42,574			35,543
Gross profit		15,891			15,161		5	%
Selling, general and administrative expenses		4,414			4,025
Operating income		11,477			11,136		3	%
Other (income) expense, net		(138	)		38
Income before income taxes		11,615			11,098		5	%
Income taxes		4,113			3,941
Net income	$	7,502		$	7,157		5	%
Net income per common share:
-basic	$	0.41		$	0.40		2	%
-diluted	$	0.41		$	0.39		5	%
Weighted average common shares outstanding:
-basic		18,114			18,033
-diluted		18,350			18,292

RAVEN INDUSTRIES, INC.
SALES AND OPERATING INCOME BY SEGMENT
(In thousands) (Unaudited)

	Three Months Ended April 30
							Fav (Unfav)
	2006			2005			Change
Net Sales:
Engineered Films	$	22,579		$	16,092			40	%
Flow Controls		16,345			16,089			2	%
Electronic Systems		15,116			13,321			13	%
Aerostar		4,425			5,202			(15	)%
Total Company	$	58,465		$	50,704			15	%
Operating Income:
Engineered Films	$	5,901		$	4,119			43	%
Flow Controls		5,146			5,869			(12	)%
Electronic Systems		1,996			2,090			(4	)%
Aerostar		228			937			(76	)%
Total Segment Income		13,271			13,015
Corporate Expenses		(1,794	)		(1,879	)		5	%
Total Company	$	11,477		$	11,136			3	%

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RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)

	April 30		January 31		April 30
	2006		2006		2005
ASSETS
Cash, cash equivalents and short-term investments	$	7,964	$	11,409	$	4,148
Accounts receivable, net		33,441		29,290		29,206
Inventories		29,598		27,819		23,209
Prepaid expenses and other current assets		3,768		2,827		4,003
Total current assets		74,771		71,345		60,566
Property, plant and equipment, net		30,303		25,602		21,442
Other assets, net		9,270		9,210		9,749
	$	114,344	$	106,157	$	91,757
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	8,669	$	8,179	$	6,252
Accrued and other liabilities		13,214		11,871		12,282
Total current liabilities		21,883		20,050		18,534
Other liabilities		1,816		1,718		1,435
Shareholders’ equity		90,645		84,389		71,788
	$	114,344	$	106,157	$	91,757

RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(In thousands) (Unaudited)

	Three Months Ended April 30
	2006			2005
Cash flows from operating activities
Net income	$	7,502		$	7,157
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,289			1,139
Deferred income taxes		(127	)		(111	)
Other operating activities, net		(4,075	)		(6,923	)
Net cash provided by operating activities		4,589			1,262
Cash flows from investing activities
Capital expenditures		(6,325	)		(2,409	)
Acquisition of businesses		—			(2,685	)
Other investing activities, net		(63	)		497
Net cash used in investing activities		(6,388	)		(4,597	)
Cash flows from financing activities
Dividends paid		(1,630	)		(1,262	)
Purchase of treasury stock		—			(360	)
Other financing activities, net		(14	)		(28	)
Net cash used in financing activities		(1,644	)		(1,650	)
Effect of exchange rate changes on cash		(2	)		14
Net decrease in cash and cash equivalents		(3,445	)		(4,971	)
Cash and cash equivalents at beginning of period		9,409			6,619
Cash and cash equivalents at end of period		5,964			1,648
Short-term investments		2,000			2,500
Cash, cash equivalents and short-term investments	$	7,964		$	4,148