May 17, 2018 18:00 ET | Source: Raven Industries, Inc.
SIOUX FALLS, S.D., May 17, 2018 (GLOBE NEWSWIRE) -- Raven Industries, Inc. (NASDAQ:RAVN) today reported financial results for the first quarter that ended April 30, 2018.
Noteworthy Items:
First Quarter Results: Net sales for the first quarter of fiscal 2019 were $111.1 million, up 18.8 percent versus the first quarter of fiscal 2018. Engineered Films and Aerostar achieved double-digit growth in sales year-over-year during the first quarter, and Applied Technology sustained the strong growth achieved in the prior year. Delivery of hurricane recovery film contributed sales of $8.9 million during this year's first quarter.
Operating income for the first quarter of fiscal 2019 was $21.5 million versus operating income of $18.2 million in the first quarter of fiscal 2018, increasing 18.2 percent year-over-year on a reported basis. All three divisions achieved growth year-over-year in operating income during the first quarter. Included in this year's first quarter operating income was an expense of $4.5 million related to the previously announced gift to South Dakota State University and $900 thousand of expenses related to Project Atlas. Excluding these items, operating income increased significantly more than reported results year-over-year.
Net income for the first quarter of fiscal 2019 was $22.1 million, or $0.61 per diluted share, versus net income of $12.3 million, or $0.34 per diluted share, in last year's first quarter. Included in this year's first quarter results on a pre-tax basis were: a non-operating gain on the sale of the Company's ownership interest in SST of $5.8 million ($4.7 million after-tax, or $0.13 per diluted share); an expense associated with the previously announced gift to South Dakota State University of $4.5 million ($3.7 million after-tax, or $0.10 per diluted share); and Project Atlas related expenses of $0.9 million ($0.7 million after-tax, or $0.02 per diluted share). Additionally, the 12.8 percentage point reduction in the Company's effective tax rate year-over-year resulted in a tax benefit relative to the prior year of $3.5 million, or $0.10 per diluted share.
Balance Sheet and Cash Flow: At the end of the first quarter of fiscal 2019, cash and cash equivalents totaled $51.3 million, up $10.8 million versus the prior year-end. Cash proceeds from the sale of SST and continued strength in operating cash flows principally drove the increase in cash versus the prior quarter.
Net working capital1 as a percentage of annualized net sales increased slightly year-over-year, from 23.4 percent in the first quarter of last year to 24.1 percent in this year’s first quarter. The increase was primarily driven by an increase in receivables within Engineered Films as a result of the acquisition of Colorado Lining International, Inc. (CLI).
We expect cash outflows for capital expenditures to be approximately $22 million in fiscal 2019. The increase over fiscal 2018 will primarily be driven by the installation of a new extrusion line for Engineered Films (Line 15).
Applied Technology Division: Net sales for Applied Technology in the first quarter of fiscal 2019 were $40.4 million, essentially flat versus the first quarter of fiscal 2018. The division sustained the strong growth achieved in the prior year despite persistently low commodity prices. Geographically, domestic sales were down 2.4 percent year-over-year, while international sales were up 6.6 percent year-over-year.
Division operating income in the first quarter of fiscal 2019 was $15.9 million, up $2.5 million or 18.5 percent versus the first quarter of fiscal 2018. Division operating margin increased 620 basis points year-over-year, driven mostly by lower warranty expense and favorable legal recoveries.
Engineered Films Division: Net sales for Engineered Films were $60.0 million, up 37.7 percent year-over-year. The increase in net sales was driven by organic growth, the sale of hurricane recovery film and the acquisition of CLI. The delivery of Hurricane recovery film and the acquisition of CLI contributed sales in this year's first quarter of $8.9 million and $7.7 million, respectively. In the first quarter of fiscal 2018 the division generated $2.3 million in sales to CLI.
Operating income in the first quarter of fiscal 2019 was $13.2 million, up $4.5 million or 51.3 percent versus the first quarter of fiscal 2018. Division operating margin increased 200 basis points year-over-year, from 20.0 percent to 22.0 percent, driven by strong operational execution and higher sales volume.
Aerostar Division: Net sales for Aerostar during the first quarter of fiscal 2019 were $10.9 million, up $1.3 million or 13.5 percent versus the first quarter of fiscal 2018. This increase in net sales was driven by improved sales volume across core product lines. During the first quarter of fiscal 2019, the division sold its client private business in alignment with its strategy to focus on its core business. Aerostar's client private business generated sales of $0.3 million and $1.6 million in the first quarter of fiscal 2019 and 2018, respectively.
Division operating income in the first quarter of fiscal 2019 was $2.8 million, up $1.4 million versus the first quarter of fiscal 2018. This increase was primarily driven by increased sales volume and favorable sales mix. The sale of the client private business generated a small gain on sale during the first quarter of fiscal 2019; however, the change in division profit year-over-year was not significantly impacted by the client private business.
Fiscal 2019 Outlook: “All three divisions continued to achieve strong operating results during the first quarter of fiscal 2019,” said Dan Rykhus, President and CEO. “Investments in growth are leading to increased demand, and operational execution is resulting in higher sales volume and improved financial performance.
“Applied Technology continues to drive results through innovation and investments to grow internationally. During the quarter, the division established its new Latin American headquarters in Brazil to drive sales in this key geographic market.
“Engineered Films continued to achieve expected sales growth and profitability. The division is leveraging past investments to capitalize on strategic opportunities and is investing in additional capabilities to capture increased demand from existing customers. The underlying fundamentals remain strong and the division's operational execution is delivering impressive financial results.
“Aerostar's financial performance progressed in the first quarter of fiscal 2019. Confidence is strong within the division and Aerostar further sharpened its focus as evidenced by the divestiture of its client private business during the quarter. Stratospheric balloon systems continue to build positive momentum and achieve key milestones.
“The Company is off to a strong start to the year. Underlying organic growth in consolidated net sales and operating income were approximately 5 percent and 20 percent, respectively, when excluding unusual items. Each of the divisions is well positioned in its markets and we expect our positive momentum to continue," concluded Rykhus.
Regulation G: The information presented in this earnings release regarding earnings before interest, taxes, depreciation, and amortization (EBITDA) do not conform to generally accepted accounting principles (GAAP) and should not be construed as an alternative to the reported results determined in accordance with GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the Company and its operating segments as well as the comparability of results. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results in the tables below.
Conference Call Information: The Company will host an investor conference call to discuss first quarter fiscal 2019 results tomorrow, Friday, May 18, 2018, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). The conference call audio will be available to all interested parties via a simultaneous webcast that can be accessed through the Investor Relations section of the Company’s website at http://investors.ravenind.com. Analysts and investors are invited to join the conference call by dialing: +1 (866) 393-0676. The event is scheduled to last one hour. For those unable to listen live, an audio replay of the event will be archived on the Company's website.
About Raven Industries, Inc.: Raven Industries (NASDAQ:RAVN) is dedicated to providing innovative, high-value products and solutions that solve great challenges throughout the world. Raven is a leader in precision agriculture, high-performance specialty films, and lighter-than-air technologies. Since 1956, Raven has designed, produced, and delivered exceptional solutions, earning the company a reputation for innovation, product quality, high performance, and unmatched service. For more information, visit http://ravenind.com.
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. The Company intends that all forward-looking statements be subject to the safe harbor provisions of the Private Securities Litigation Reform Act.
Generally, forward-looking statements can be identified by words such as "may," "will," "plan," "believe," "expect," "intend," "anticipate," "potential," “should,” “estimate,” “predict,” “project,” “would,” and similar expressions, which are generally not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future - including statements relating to our future operating or financial performance or events, our strategy, goals, plans and projections regarding our financial position, our liquidity and capital resources, and our product development - are forward-looking statements.
Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements, because such statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain known risks, as described in the Company’s 10K under Item 1A, and unknown risks and uncertainties that may cause actual results to differ materially from our Company’s historical experience and our present expectations or projections.
Contact Information: Bo Larsen Investor Relations Director Raven Industries, Inc. +1 (605) 336-2750
Source: Raven Industries, Inc.
RAVEN INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars and shares in thousands, except earnings per share) (Unaudited)
Three Months Ended April 30,
2018
2017
Fav (Un) Change
Net sales
$
111,129
93,535
18.8
%
Cost of sales
71,131
61,579
Gross profit
39,998
31,956
25.2
Gross profit percentage
36.0
34.2
Research and development expenses
5,285
3,980
Selling, general, and administrative expenses
13,182
9,498
Long-lived asset impairment loss
—
259
Operating income
21,531
18,219
18.2
Operating income percentage
19.4
19.5
Other income (expense), net
5,679
(230
)
Income before income taxes
27,210
17,989
51.3
Income tax expense
5,063
5,641
Net income
22,147
12,348
79.4
Net income attributable to noncontrolling interest
12
Net income attributable to Raven Industries, Inc.
22,135
79.3
Net income per common share:
- Basic
0.62
0.34
82.4
- Diluted
0.61
Weighted average common shares:
35,914
36,179
36,381
36,539
RAVEN INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited)
April 30
January 31
ASSETS
Cash and cash equivalents
51,317
40,535
50,477
Accounts receivable, net
66,812
58,532
51,617
Inventories
55,162
55,351
49,867
Other current assets
4,483
5,861
3,256
Total current assets
177,774
160,279
155,217
Property, plant and equipment, net
107,037
106,280
106,194
Goodwill and amortizable intangibles, net
56,344
57,294
52,141
Other assets
3,947
2,950
3,442
TOTAL ASSETS
345,102
326,803
316,994
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable
14,714
13,106
13,909
Accrued and other liabilities
21,249
23,836
22,615
Total current liabilities
35,963
36,942
36,524
Other liabilities
16,053
13,795
12,726
Shareholders' equity
293,086
276,066
267,744
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
Net Working Capital and Net Working Capital Percentage1
Plus: Inventories
Less: Accounts payable
Net working capital1
107,260
100,777
87,575
Annualized net sales
444,516
383,292
374,140
Net working capital percentage1
24.1
26.3
23.4
RAVEN INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
3,683
3,614
Other operating activities, net
(12,227
(8,519
Net cash provided by operating activities
13,603
7,702
Cash flows from investing activities:
Capital expenditures
(4,164
(2,790
Proceeds from sale or maturity of investments
6,556
Purchases of investments
(79
Proceeds from sale of assets
832
14
Other investing activities, net
40
(60
Net cash provided by (used in) investing activities
3,185
(2,836
Cash flows from financing activities:
Dividends paid
(4,658
(4,691
Payment of acquisition-related contingent liabilities
(295
(161
Other financing activities, net
(822
(141
Net cash used in financing activities
(5,775
(4,993
Effect of exchange rate changes on cash
(231
(44
Net increase (decrease) in cash and cash equivalents
10,782
(171
Cash and cash equivalents at beginning of period
50,648
Cash and cash equivalents at end of period
RAVEN INDUSTRIES, INC. SALES AND OPERATING INCOME BY SEGMENT (Dollars in thousands) (Unaudited)
Applied Technology
40,430
40,490
(0.1
)%
Engineered Films
59,992
43,555
37.7
Aerostar
10,901
9,606
13.5
Intersegment eliminations
(194
(116
Consolidated net sales
Operating income (loss)
15,948
13,453
18.5
13,196
8,720
2,805
1,418
97.8
(15
(2
Total segment income
31,934
23,589
35.4
Corporate expenses
(10,403
(5,370
(93.7
Consolidated operating income
Operating income percentages
39.4
33.2
620bps
22.0
20.0
200bps
25.7
14.8
1,090bps
(10)bps
RAVEN INDUSTRIES, INC. EBITDA REGULATION G RECONCILIATION2 (Dollars in thousands) (Unaudited)
Fav (Un)
Segments
Change
Reported operating income
Plus: Depreciation and amortization
750
830
(9.6
ATD EBITDA
16,698
14,283
16.9
ATD EBITDA % of Net Sales
41.3
35.3
2,321
2,066
12.3
EFD EBITDA
15,517
10,786
43.9
EFD EBITDA % of Net Sales
25.9
24.8
219
417
(47.5
Aerostar EBITDA
3,024
1,835
64.8
Aerostar EBITDA % of Net Sales
27.7
19.1
Consolidated Raven
Net Income attributable to Raven Industries
Interest expense (income), net
(37
68
EBITDA
30,844
21,671
42.3
EBITDA % of Net Sales
27.8
23.2
____________________________
1 Net working capital is a defined as accounts receivable (net) plus inventories less accounts payable. Net working capital percentage is defined as net working capital divided by four times quarterly sales for each respective period. 2 EBITDA is a non-GAAP financial measure defined on a consolidated basis as net income attributable to Raven Industries, Inc., plus income taxes, plus depreciation and amortization expense, plus interest expense (net). On a segment basis, it is defined as operating income plus depreciation expense and amortization expense. EBITDA margin is defined as EBITDA divided by net sales.