RAVN - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Raven Industries Incorporated Second Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this call will be recorded. I would now like to introduce your host for today's conference, Bo Larsen, Director of Investor Relations. Please go ahead, sir.

Bo Larsen

Good morning, and welcome to the Raven Industries Fiscal 2019 second quarter investor conference call. webcast website will for being on be is company's the future call live also and archived Today's listening.

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

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

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

Steven Brazones

Thank you, us and you today. for Bo. joining Good morning, thank

As you’ve still in mechanism providing in forward. investor rather relevant investors. which the our between will earnings release expect this increased content while provide release quarter already provided. earnings hold of be information conference we delivery will quarter’s release This is calls, intend investor earnings communications in conference our to of It different. reading less change second release, is frequent and call, the on prepared than we broader of significantly realized going have detail level have level and to part we same of our by The to remarks the be split representative earnings an a concentrated

a this to and on will is level to the forward new for discussions the results participation look one-on-one Bo, content With investors. approach rapid of to and usual efficient context I on ways innovative and time. we be still sell-side research everyone’s industry financial as available Dan, our of and active low believe we provide conference state and given use in change a our of calls, more

in results quarter. second to Turning the

after effective characteristics. sales driven performing Diluted the been lower across aerostat growth the has for increased operating growth XX%, in sales than about driving year-over-year. acquisition XX%, absorbing Colorado their basis pleased balloon a success the with growth continued in acquisition deliveries. American grew all and XX% improving The tax positive lower year-over-year achieved and income. leverage a by the ATD by net more margins profit margin on expanding three division. XX% of expense. is increased to and the all relative tax an and the division, Films year-over-year diluted income XXX organic Lining Applied strong per almost points was the start-up We versus to earnings very XX% Adjusting nearly net continued, Consolidated expansion double launch stratospheric division International. Aerostar rate, net are operating strong great volume and digit grew headquarters platform year divisions operating prior year, strong for strong for or driven growth divisions, share tripled increased expectations, expenses in performance. sizeable Latin This Technology's $XX sales operating all of divisions. $XXX,XXX but three performances was extremely million prospects in investment Engineered and Brazil. momentum and exhibiting lower and earnings expenses also on growth CLI long-term to prior on profit per share year-over-year growth, new increase income

long in continuing results the delivering the for we invest While term. strong financial term, are also to short

in maintain than XX% of profit term and range sustain Aerostar division a a to in company to XX%. to XX%, XX% margin expects margin a a division sustain a to Engineered are profitability, profit growth As a of annual range of XX% Films profit XX% in to range on to long-term expectations consolidated division and basis. the company's long margin Applied to to XX% achieve With greater deliver reminder, earnings the Technology respect over the

strategic EFD, targets an live long-term and I'll to capacity ATD, line. this vary in will key go ERP the of place in stratospheric we these same in radar enable Bo strategic new execute contractors. put to Oracle-based higher the for foundational over by and financials. delivering These and investing our research year. and Overall, each government detailed division. replace rising resource call enterprise activities. In EFD In to processes investment agricultural also our These to efficiencies customer development We profitability fantastic turn America. systems execution had and plan. Aerostar, balloon is of serve and drive at investing Overall, geomembrane the to Latin planning proud With geographic new funding are fully a markets. this these we investing aging Atlas, we will In the And than line in platform innovative division for in put new of this a demand. to we are continued response focus the investments to iFS, production drive as typical speed our time, scale platforms our first division in our At drive new of strategy. blown in in innovation division. and the improvements the to being investments be industrial, the are are we through in are is research long-term to with to year we development film Project and ag our a and technologies, platform. was place quarter, This a business are more are strategic review end we division that, committed precision the expansion

Bo Larsen

the a of in million $XX.X income $XX.X quarter Operating increasing year. On million versus operating quarter, second second the XX% XXXX, of consolidated of last the $XXX.X quarter versus income year-over-year. million up were XX% was Steven. in fiscal second basis, Thanks, sales

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

to Applied Turning Technology.

Applied of XX.X%. from year-over-year. increase volume margins an were million income costs. fiscal second support of Incremental X% the operating lower the increased million Division million, for strong fiscal Applied XXX XXXX. up mostly second XXXX, and of engineering $X.X was sales $X.X to points quarter compared leverage were operating for Technology, $XX.X higher to or Second Division by basis driven quarter on Technology sales XX%, margin quarter XX.X% year-over-year in

Engineered growth Films, sales sales were of million For net CLI. increase $XX.X $X.X the XX% year-over-year. million, The organic up acquisition driven in by or was and

quarter fiscal quarter Strong sustained the XXXX. mix income $X.X margins quarter versus the heavier XX% year, million, quarter million with associated Division last this up for year the in was of sales with profit sales from and the increased $XX.X division were second X% Excluding or division operating installation year-over-year. second Films of services. CLI Engineered of second the second of even

half typical sales not hurricane sales hurricane $X second the for in of of quarters from annual than film million year, not related and $XX.X of As hurricane generally of the an previously In expect the division, recovery the third the last the is as sales the fourth division third recovery film, are to significant $X.X current on quarter. such disclosed, in basis. division does film sales film. year, less million fiscal occurred in realized recovery which Substantial million the of disaster

will of As this year a quarter the comparisons result, and year-over-year sales negatively fourth impacted. be fiscal in third

with to the sales grow to our margins Excluding film, we line expectations. recovery and of expect in generate long-term impact hurricane the continue profit division

in were allocated XXXX $X.X product the second volume million second million up $XX.X division primarily XX% a by million, quarter in primarily Aerostar, strategy sales platform stratospheric balloon by net million, client up income the of mind, For second proportion specific of and outlook. quarter sales $X.X $X.X would I mix deliveries. was in year. net year-over-year. that in in Division over Keep and stratospheric quarter this of XXXX. division's call being versus in $X.X that, comments sales Aerostar's to increase turn quarter This was driven was sales profit and his for balloon contracts. or quarter, With favorable increase fiscal on first operating driven This like costs improved to divested the $X.X second too, Dan fiscal the aerostat in million of and in million private generated we higher the in to the contract business last business

Dan Rykhus

half and What was the Bo. strong great quarter Thanks, Organic year growth for had. Aerostar. of we've first second a

deliver drove the CLI grow to growth of Technology, the and them a Future margins of improvement margin we're in ag products. customers. new looks and product very acquisition. further sales market performance indication and division division sales the at Expanding for the success in continue more Applied a Films New Engineered to for benefits their will realized our same investments through the has each executed their pleased value disciplined products promising and and and strong Applied drive the growth Technology, provides well on sharpens execution tough expect with makes In time their division. enhanced

leaders their standpoint, and their for Martin are executing public insight announcement division bring plan their at the Jan Jan acquired industry outstanding, The Films, the and leveraging we and From this make division achieving in the drive balloon purpose. both the division's governance first the The a and Lois strategic them and strategic division platforms quarter division activities milestones the For Board leveraging performance Aerostar, is And the XXXX company's capabilities investing balloon research contributions strong along to was In with backgrounds continues business development the Lois's can strong They're operate with We're second growth Holloway we new once stratospheric closing, financial to stratospheric with Raven level, perspective generating Directors. will with margin plans exciting appointment growth. with overall lead and board. successfully accomplished year. acquire strategic in businesses. our radar is look a and of programs. its long-term of enhancement performance success. made is new and fiscal agriculture both newly integrate again showing and to These and the business profit division its to their urgency board. Engineered how and continues the growth systems. corporate and programs finance, customer our in to and In sales in quarter fit diverse strong half manufacturing has executing of its an performance Raven's and governance during a forward installation capabilities to long-term respective excellent. and for they to high who driving been experience, and capabilities new

Aerostar. Engineered about investing we the stratospheric radar development heavily systems balloon a existing and in and in commercialization Films and platforms remain are optimistic new Technology, in are We the capacity opportunities. manufacturing pipeline in strategic Applied new Acquisitions of product our focus of

expanding and to investments up for have a platform Operator, concludes call we performance year strong And fiscal would are organic you another making right We're in questions? strong please on XXXX. Thanks. comments. and margin. track We for open prepared growth the this the our deliver

Operator

And our Thank you. CJS first question [Operator Craig comes Instructions] Bibb from Securities. with

sir. Your open line is now

Peter Lucas

Hi, good morning. Pete morning. It's this for Craig Lucas

continues on key that how product and perform sales wondering the can just detail the longer-term to any line? around systems radar us Just quarter. well. Aerostar. I more for those And was It you to current give were outlook

Steven Brazones

is investing and here This in And to year. and those in pipeline very down Radar radars us we're the bring quarter, were sales that next but we're slightly opportunities to platforms second market developing of the is overall, Steven. new expect for strong.

Peter Lucas

of weak face And the the a increase impressive. farm domestic – was U.S. Great, applied XX% thanks. a in U.S. in market technologies

can the the kind U.S.? know like demand And help orders, and was I replacement, wondering, size now? us volume? replacement year. of the what gains? also, – international international does Ex And the had look products you new any Just or cycle share large last understand orders of driver on in comments timing those

Steven Brazones

Yes.

brought by quarter. gains XX months second that in Hawkeye over So, of driven in to products new the growth the a quarter, the about by is last sales second XX months. the we our introduced lot market strong share were

a the bit little demand is up seeing are which encouraging. replacement pick lately, We cycle

what Internationally, us. last underlying fiscal the ag the not States. here large in Underlying for the in though, comparisons the is the seeing year United is those economy few However, with had excluding growth, which very orders, a we impacted timing this of year. commensurate of we're backdrop favorable

Peter Lucas

Great. to Engineered And Films. then just jumping

market side the mentioned, CLI I quarter X% think that about just share was count, like ex which comparing acquisition, the strong, the there shift Permian strong but at of be to it And to terms growth. rig it in is wondering, organic in Another increase changes? rig usage the the you or any of of type films there, the looks in seemed

Steven Brazones

We part, are quarter. market. energy market liners feel which were pretty the reducing the in our Basin were most market evolve, rig the the changing strong year-over-year geomembrane are up the about matched quarter. the second – And energy pretty is of getting second liners Permian good position continuing share XX% counts but within subsector into – of the and about required, our bigger. that, number in sales for to Drilling that practices the are

feel we long-term prospects about there. the leader So, that market pretty We're good our space. in

Peter Lucas

more And ones just quick me. two from

strike trucker international there? Brazil In terms then And last like from think the of any there. about looks outlook. actively done turmoil for that's for pipeline to And how still be wondering and the we deals, well continue horizon any just and if what continued down potential impact recent you've question on the there, you evaluate impact, should on in will active me what's guys and coming just

Steven Brazones

Yes. Sure.

Regarding third to coming for for focus of pipeline. It's the has M&A, it's our that something develop CLI the long-term quarter. on We're and on we us to some the strategy. in continually number here timing opportunities and of continuing our time. been in continue strategic part a a anniversary And uncertain, is of remains and up evaluate of we quite which acquisition but focus we're

continuing would Engineered evaluate Applied Technology particularly Films. envision and to we So, within opportunities,

our investing Regarding a capture international versus there the outlook, build that. there. investing And the outlook, bullish feel in about particularly folks We've in Applied of the heavily America of respect got on out we're now Brazil. with to dealers we're in We've year pretty ago. Technology. – throughout we growth our Latin XX the international ground see signing process Brazil a up heavily one been And lot up of future to to we the coming and presence

Peter Lucas

congrats Very you again very and much quarter. on helpful. great Thank a

Steven Brazones

you. Thank

Operator

for gentlemen, today's the call remarks. turn ladies that session. to does any you, and and I would conclude Dan, Thank to like question-and-answer now further

Dan Rykhus

operator. Thanks,

press outlined, Steven to to forward we quarterly our our great again material continue look year And to you we updating we'll to to in year, extremely more we November. are add we've well, has and releases As on. The our already expect reporting, out approach changing have and so more a gone results as and there. build far, commented

November. Thanks. you updating our third So, we look on quarter forward to in

Operator

does Ladies today's participating you for today's and conclude gentlemen, in thank This conference. program.

everyone have great You may day. all disconnect and a

Raven Industries (RAVN) 23 Aug 182019 Q2 Earnings call transcript