EPS of 33 Cents Declined 31% from 48 Cents Year Ago; Management Sees Likely Improvement in Plastics Segment in Fourth Quarter, But Expects Company-Wide FY 1998 Operating Profit to Fall Short of Record-High $12 Million Last Year
SIOUX FALLS, S.D., Nov. 18 /PRNewswire/ -- As announced in mid-October, the third fiscal quarter for Raven Industries, Inc. (Nasdaq: RAVN) was a disappointing one despite higher sales. Management expects to see "some continuing if less softness in demand in the tank and truck topper lines" in the fourth quarter, which ends January 31, 1998.
Official numbers for the third quarter and nine months were reported today. For the third quarter ended October 31, 1997, sales of $41.3 million were up 6 percent over the year-earlier's $38.9 million. Net income, however, which was expected to decline as much as 30 percent due to weak sales and operating losses experienced in both the company's industrial tank business and its truck topper line, actually totaled $1.64 million, off 29 percent from the year-earlier's $2.30 million. Earnings per share of 33 cents declined 31 percent from the 48 cents earned in the year-ago period.
Nine-Month Results Nine-months sales of $111.1 million rose 10 percent over last year's $101.1 million while net income dropped slightly below last year's total of $5.52 million to $5.38 million. Year-to-date earnings per share of $1.10 trail last year's total of $1.16.
Looking Forward David A. Christensen, president and chief executive officer, said that "in looking to our fourth quarter and next year, we expect continuing sales growth and profit improvement in our electronics product lines." Christensen noted that the company's plastic tank business serves industrial markets as well as the agricultural market. "While important segments of the industrial market remain weak, agricultural sales become a more significant factor in the fourth quarter as shipments begin for the next season. This will help our plastic tank business.
"For the full year," Christensen added, "we cannot yet estimate results because of the sharp slowdown in our Plastics segment, but we do not see as good a year in terms of continuing operations as the all-time record year of fiscal 1997 in which operating profits totaled $12.0 million, up from $9.6 million the year previous."
Electronics Segment Segment sales of $11.5 million improved 8 percent over last year's third- quarter total of $10.7 million, while operating income of $1.43 million rose 30 percent over last year's $1.10 million. Increased sales came primarily from the company's contract manufacturing business, while margins improved in all three product lines including contract manufacturing, flow controls, and process controls. On a year-to-date basis, sales of $32.7 million are up 3 percent over last year's $31.8 million and operating income of $3.9 million has improved 18 percent over last year's $3.3 million.
Plastics Segment Although sales of $17.1 million for the quarter were up 13 percent over last year's total of $15.2 million, operating income fell 92 percent from $925,000 in last year's third quarter to $70,000 in the current period. A strong performance in the company's plastic films business which had a sales increase of 19 percent to $8.1 million for the quarter with a greater improvement in profitability was offset by losses sustained in the industrial storage tank business and to a lesser extent by the poor performance of the company's truck topper business.
Year-to-date sales for the segment total $51.7 million, up 19 percent over last year's $43.3 million, while operating income of $2.05 million is down 31 percent from the $2.98 million earned in the same period last year.
Sewn Products Segment Sales of $12.7 million were 3 percent short of last year's third quarter total of $13.1 million while sales for the nine months of $26.7 million remain 3 percent ahead of last year's $25.9 million. Operating income for the quarter of $1.0 million fell 36 percent below last year's third quarter total of $1.58 million mainly due to first- and second-quarter deliveries of higher margin products with a higher percentage of low margin products delivered in the current quarter. Year-to-date operating income of $2.24 million trails last year's total of $2.36 million by 5 percent.
Raven Industries is a diversified manufacturer that supplies plastics, electronics and special-apparel products to various markets.