RAVN - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Raven Industries, Inc.

First Quarter 2019 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mr. Larsen. Bo begin. may you Sir,

Bo Larsen

the morning, everyone, XXXX is Raven Fiscal archived to webcast future and Quarter Investor welcome on be First also call and the website Conference for live listening. Industries will Good company's Call. being Today's

call and Dan Rykhus, today myself. Executive and Raven's and President be Raven's Brazones, Steven Vice will Chief the President Chief On Officer; Financial Officer;

that would matters include the company Act like is as discussed forward-looking this beginning, everyone Reform certain to the Before that under will during call statements Litigation Private term defined inform Securities XXXX. of

reflect company's Brazones, the statements call such Chief actual As turn would Steven to the Raven's results I may differ. over to Financial expectations, like now Officer. current

Steven Brazones

us start year a continues the financial Organic you, made off to on Raven is to of today. divisions. of Fiscal pleased Thank morning, all for Good Bo. with great XXXX growth top and and year, year. in Industries, later we're thank driven operating divisions the the grew the in prior Bo gains detail share three versus joining significant elaborate markets. call, core the than the up is X our prior across will in all pretax for onetime Profitability profits items, operating all more unusual year-over-year. which by we more XX% in Adjusting gains market you

minority our In with on sale. Site-Specific addition in business, on successfully a to markets gain core to client assets, interest focus a Aerostar's strong our by our financial X performance, generating able we were Technology enhance also each private divesting and noncore

quarter, more the with the we pleased to short term. with our and even the While maintain performance pleased continue financial the quite we first between in are balance long we are

our Technology, accelerating. we first profits key key Brazil opened geographic is continuing the grew We're in during region developing out we quarter, invest Applied our of quarter. industry long-term sustained while relationships distributors with first this network Momentum and in also growth. Latin new headquarters building and key In the American During projects for participants. to sales in

sales in service to world-class are value and center region. consistent a customer provide We establishing that

manufacturing improve future Line our Aerostar, of focus to client capabilities interests build capable place. technology, manufacturing extrusion our project and confidence. further project the division stratosphere closer Applied long-term next-generation current at Additionally, the industry-leading sales a advance Applied XX balloon division are Line our the are enhance team with in million continue go evidenced and quarter. lack capture fully a from We'll million very the the in starting a is to private Raven, X the continues unique live significantly its of will excited in be line, planned Each Films, enterprise. innovations. schedule and and good customers improvement by really of put capabilities are development The job balloon the capacity Interest look to well continue and Films. radar Investment meaningful the will engaged, we at implement XX. new year, divestiture expect approximately $X of Technology. in stratosphere to spend Line ERP successfully the of The R&D operations R&D key of year, of share commodity And to the services this Phase The market this is first access The in primarily making investing in is margin additional in products. especially to products on time, to end R&D demand the we we expansion, of also the leading building warranty film new Technology division gives This are In of increased with efficiency growing. and invest the market us this take Engineered business In to recoveries. calling stratospheric of XX markets. the to as to a each, lot we driven for lower project state-of-the-art expense XX partners. year. nimbleness The the prices. a in our and heavily our with growth the first for drive division heavily any At platform. quarter. year. sustaining division We we of of we in and prior upon a legal of platform, we invest our This about be customer profit on pounds is expanded is given significant to organization, the the scalability industrial Engineered next-generation are this achieved and in per key same of and favorable with film started year-over-year, in a did capacity producing by all in efforts performed geomembrane service division's launch platform. and investment require Films customers will we pipeline blown heavily Engineered to

ATD America the Additionally, a to leading to service. The for was the in center. technology sales function general sales champion division. support portfolio region ag He go our of precision robust Latin global and manager made division's previously is in significant customer leverage to proven knowledge a all-in of new its and technology customer has investment a Brazil region portfolio

the and organic is an same CLI strong Films grew a on Engineered market enhancements to Sales acquisition division marketplace, continuing continue energy effectively of The performance recovery share. the price division XX%. driving job hurricane done excellent profit has integrating time, to the market improved Through raw Engineered operational basis, sales, the line On in to the managing market expansion first year-over-year in top than volume and dynamics The to At result Turning gains, and in innovate capabilities expanded incremental more margins of Films. the market financial profit quarter. a capture geomembrane discipline, margin impact and excluding the division tremendous the fundamentals. to the X% margins continues. division's division's growth share as growth. material

favorable Lastly, Aerostar, the sales in client first were the the division for of are and Bo year-over-year turn like clearly fantastic mix, detailed over lighter a for I'd to more the The for volumes, the leverage the our call off Adjusting cost discipline the growth the the and in improved core radar paying for division up profit focusing lines combined that, division. strong XX% With division financials. than achieved Fixed private year-over-year. than quarter. sale year. resulted expense to business, on continued with benefits division. air of results had for of the prior doubling sales versus sales more financial the Both from product review

Bo Larsen

quarter first versus divisions Thanks, and Aerostar million during diluted All $X.X Films the share, million of of operating first last which $X.XX is of expenses XXXX previously $X.XX or XXXX. South year's State to of the first up tax Project fiscal sales the first achieved Steven. fiscal quarter. XX.X%, income versus On up both and per XX.X% this growth million University for Dakota million, $XXX,XXX, respectively. was were year-over-year sales after of quarter quarter year. Included per growth income the a in after first quarter, $XXX.X or announced the and is diluted first and XX.X% with Operating expense X quarter income gift associated consolidated $X.X basis, tax Atlas-related Engineered operating achieved was which an in million, share. $X.X increasing year-over-year, $XX.X $XXX,XXX

reported results. Excluding these items, than higher operating significantly income was

net net million year's per First $X.XX income income $XX.X or $X.XX quarter quarter. was diluted per diluted million share $XX.X of first or in last share versus

company's previously per the State Project University mentioned in after share. $X.XX included year's which or nonoperating Dakota million South gift gain the a on of pretax to of and quarter $X.X Atlas-related is sale first ownership $X.X interest on to SST addition diluted a expenses, in million tax basis, results is this the In

rate reduction year million of share. per effective percentage tax the XX.X $X.XX the $X.X benefit the to or prior Additionally, resulted company's in in a relative point tax year-over-year diluted

of of XX%, For year XXXX, rate the items. approximately remainder tax discrete we fiscal effective expect an the excluding

Technology's sales domestic of first the sales the were quarter XXXX. down X.X% of and XX.X% X.X% income for to That's in first Applied first international or $XX.X million quarter to million Division year-over-year was of were fiscal increase $XX.X now up sales. an compared in operating year-over-year. Applied million quarter was the Geographically, divisions. XXXX. Turning Technology $X.X

Engineered million, $X.X of million, fiscal year's in sales increased income the up to CLI. points operating million first by Films driven recovery $XX.X For were year-over-year versus this increase XXXX. $XX.X XX.X% The Delivery quarter growth, XXX Division of margin versus acquisition or and quarter XX.X% CLI up higher sales million sales hurricane of $XX film acquisition recovery operating XX% execution hurricane $X.X volume. was in driven strong basis operational Engineered film of and or of first the and sale net by million XXXX. was Division million. the and quarter. contributed organic XX%, Films, of of from respectively, That's sales first for $X.X

for Engineered of second Films half expect hurricane to challenged hurricane hurricane recovery in nature for of to remainder nonrecurring sales. In the any sales $XX due this to the sales fiscal does the reminder, last division sales the comparisons related are the of a and half generated year, million As film in film not film going year, second significant of XXXX. be recovery recovery

million. sales sales fiscal first XXXX. sales Division net or in first XX.X% in of million increase million, the an the first business income quarter $X.X sale was For across small $X.X from year-over-year year-over-year. core of generated doubled million $X.X The gain driven private of fiscal by the product $XX.X Aerostar, lines. The quarter increase on for up client operating volume XXXX sales were quarter during to

call business. division change the by to in client the over With like comments on I significantly and not that, his was would the Dan turn impacted strategy private However, for profit outlook. to year-over-year

Daniel Rykhus

proud start start year. members Industries. They're quality, enterprise. be of our What off and for a innovation We're Thanks, been. Raven tremendous the to drive dimension peak competition, across to team Bo. performance it's the leveraging the couldn't I service, results terrific a to more of

about excited on. we're Looking path forward, the we're

markets with we the capabilities our intentionally We to vision the diverse business long-term to achieve attractive and potential, proactively long-term sustainable group and a opportunities strategy, have growth. of right proven. in model capture investing is growth We continue our and we're serve right have

fundamentals back and underlying step and are of look of created the proud has to further position positions the the I divisions, they division the future. each the As investments X their in operating making company's at strengthen very market I'm

market end For endure point time correspondingly, see At in commodity grain prices conditions Applied in year, soon. any a Technology, sustained improving downturn the to incomes. industry this we the and, continues farmer don't

However, value our to conditions our portfolio it's wait customers, to to improve, next-generation the invest retailers. market further end not development rather it product to ag and products enhance the of strategy new for capabilities is to the provides our core in and

in resources required the We will also we will to drive in to look and Brazil. in grow international aggressively particularly invest markets, success,

pipeline of we in growth the to be traditional position margins. profit continues both considered, continuously Applied and potential is right long-term All multiples grow, generate division deals ideas. new and to the there's maintaining area Our Market acquisition range, a and the to improved we're investing done in things strong while market prudence. but feel of end are targets at still cultivating generating upper and Technology

on growth value-added division has premium robust For Engineered with with position and profit Raven the of investments organic specialty markets expansion. the in associate Customers The margin quality and niche market Films, a portfolio capitalize to serve division performance. strong continues successfully films. division and they past drive

acquisition. We our development will the unique products to invest through continue new to further offerings capabilities, division manufacturing on research and and enhance product service in new specialty and

each, integration CLI, this the in in continue last a markets. gone but perspective, making the position From Regarding see growth opportunities the clearly We're growth within strategic we on geomembrane stronger capitalize opportunities year's the geomembrane as a particularly well. result today has of very to and in market acquisition industrial acquisition. a present of to market

With advance oil heightened in continue If to new we've our processing optimism interest. us low We're respect the this for seen profitable platform, multiple to moved stratospheric division. favorably garnering back balloon strategic prices are into years the and has led to the potential we've recently. and radar proud of have over increased financial has our very and last sales implemented we the shift Aerostar, too. and very of technology long-term growth drive focus confidence. impact growth uses to results The improvement stratospheric core X beyond areas would we're We the is to to to systems that platform successes significant in sustained, customers. right market in bright expect $XXs our the in The investing landing in achieved, balloon our division this future

industry We and division of are well take net its and pioneer accessible With the the company now. respectively. sales market positive XX%, the Each in make that, consolidated to start leader a organic operating off were income affordably we X% is strong momentum and Underlying stratosphere In with the our positioned and markets, approximately we'll capabilities closing, continue. and to expect your questions. is to growth the year.

Operator

Dougherty question Co. the [Operator And & comes our first Instructions]. Fisher Jon of from from line

Jon Fisher

I wanted ask. Dougherty & good Fisher, Co. have quarter. that Jon I questions to did X Very

ATD we build-out any either SG&A at revenue on revenues Brazil go SG&A? to And The in first this expenses the quarter, rest look in should that spending we how think we were the of same investments performance year? there at performance or through kind contributing of Brazil. about we one as look When the Brazil

Steven Brazones

Yes, This is Jon. Steven.

launched operations also in We've headquarters, expenses and Brazilian we been busy and hiring with our and So had sales first quarter, that. the professionals some in obviously, service Brazil. associated we

I in we're of XX and Brazil at think to as people QX, expecting end end the have XX the year. the we're fiscal by at of --

in up. momentum the to had sales as from so the and continue time, Brazil double a expect year a would associated is in Separately of at first the these hundred Brazilian that digits in quarter, the we build as grew improvement several place point lot quarter. with to that So building are year resource though, and the dollars in of we the expect thousand in in little first trends expenses prior market's from late revenue market every us, but this in significant Very impact ramp result strong a that growing those the of for resources momentum growth we through [indiscernible] the and investment.

Jon Fisher

again, great. Okay, And looking then, at SG&A.

you have million. revenue you If that's roughly you $X.X continue million, generated, for Can grow a look performance the SG&A you Or a at next the contribution, to Dakota off that business quarterly South State on is get going this to quarter level? higher run spending $X to revenue to rate, a to When was revenues SG&A revenue the $XXX performance. current that kind of the million $X.X adjust spending spending million SG&A? almost to of record step up

Steven Brazones

Well, R&D SG&A the -- would million included quarter balance and included there some about first in bit the in at We've in on rates, through obviously, compound the to R&D back in get back little the our Project we had that And financials, term, leverage SG&A, looking and the you first for be annual you're income within investment, over have quarter. investment, in -- growth ramped and to SDSU of expect, and also that terms depending Atlas our how as might is Technology, well. growth out we in underlying our Applied the $X we long And line than revenues faster the XX% through rate a that. grow statement continue. bottom the particularly expect spend, the

Jon Fisher

Or single-digit of to more flattish now maybe is the or couple generate year global growth? ATD? the I -- kind was the about, that years or of agriculture the in million new last [indiscernible] year-over-year be given type better of of question comps into point last more even then where Should -- products you kind just the do that the think should flat a you after opportunities macro And did launch X ATD the now. had about near-term see expected. on getting we environment, positive launch the the Or the growth -- growth that $XX a to know something out segment of the next think specifically, ATD segment tough, out really when comparison year-over-year I of was Okay. the to you look to months as we XX

Daniel Rykhus

grow. to that Thanks last comps, introduced that were Despite what got the in do in. us -- throughout the question. this conditions Jon, investing expect Dan. expect coming grow market year they pipeline the this that and intend is we the we've and new are got new We've being And to ATD year. year, help tough Brazil in some out products this we year for we are going growth are and the we Brazil, of we're products

performance we're not planning at flat out ATD, So division of profit a particularly there, line. while line tough it's the at revenue not out not expecting still for and the and

we division profits can expect this grow We year.

Operator

[Operator I'm no to call for like Dan time, this the any Rykhus closing further Instructions]. And questions. remarks. showing over turn at back to I'd

Daniel Rykhus

to Sure, in. dialed questions, thanks. for your Thanks thanks who all Jon, and of you

business off strong The are the us. a year positioned, year entered and great performing exceptionally the We on. well do have those out-years, the expectations we this We feel well. just and And for in to -- company's we have we're start. front opportunities the path and great is underlying of on executing I about

Thanks. updating So look in forward to again we you August.

Operator

gentlemen, and conclude This a in the you may your program, and disconnect. conference. thank all you participation great today's Everyone, does for have day. Ladies

Raven Industries (RAVN) 18 May 182019 Q1 Earnings call transcript