Raven Industries Reports Second Quarter Fiscal 2018 Results
Noteworthy Items:
- Consolidated net sales and operating income increased approximately 28 percent and 75 percent year-over-year, respectively, with all divisions achieving strong results;
Engineered Films sales increased 33.8% and division operating income increased 43.4%, driven by strong growth in theGeomembrane and Industrial markets;- Recently announced acquisition of
Colorado Lining International, Inc. (CLI) positionsEngineered Films for expanded vertical integration within theGeomembrane market; - During the second quarter, Aerostar was awarded a stratospheric balloon contract with a new customer, further broadening the customer base and continuing to build the momentum of the division's stratospheric balloon platform;
- Applied Technology continued to invest aggressively in research and development and channel development for long-term growth.
Second Quarter Results:
Net sales for the second quarter of fiscal 2018 were
Operating income for the second quarter of fiscal 2018 was
Net income for the second quarter of fiscal 2018 was
Balance Sheet and Cash Flow:
At the end of the second quarter of fiscal 2018, cash and cash equivalents totaled
Net working capital as a percentage of annualized net sales1 improved 300 basis points year-over-year, from 27.4 percent in the second quarter of last year to 24.4 percent in this year's second quarter. The decrease in net working capital percentage1 was the result of higher payables, as well as managing inventory and receivables efficiently with the substantial increase in sales versus the prior year.
Applied Technology Division:
Net sales for Applied Technology in the second quarter of fiscal 2018 were
Division operating income was
Net sales for
Operating income in the second quarter of fiscal 2018 was
Aerostar Division:
Net sales for Aerostar during the second quarter of fiscal 2018 were
Operating income in the second quarter of fiscal 2018 was
Fiscal 2018 Outlook:
"We are very pleased with the progress made and performance achieved by all three divisions throughout the first half of the year," said
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 second quarter fiscal 2018 results tomorrow,
About
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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||||
(Dollars and shares in thousands, except earnings per share) (Unaudited) | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
2017 | 2016 | Fav (Un) Change | 2017 | 2016 | Fav (Un) Change | |||||||||||||||||
Net sales | $ | 86,610 | $ | 67,598 | 28.1 | % | $ | 180,145 | $ | 135,958 | 32.5 | % | ||||||||||
Cost of goods sold | 60,097 | 48,683 | 121,676 | 96,926 | ||||||||||||||||||
Gross profit | 26,513 | 18,915 | 40.2 | % | 58,469 | 39,032 | 49.8 | % | ||||||||||||||
Gross profit percentage | 30.6 | % | 28.0 | % | 32.5 | % | 28.7 | % | ||||||||||||||
Research and development expenses | 4,256 | 3,915 | 8,236 | 8,324 | ||||||||||||||||||
Selling, general and administrative expenses | 10,557 | 8,304 | 20,055 | 15,962 | ||||||||||||||||||
Long-lived asset impairment loss | — | — | 259 | — | ||||||||||||||||||
Operating income | 11,700 | 6,696 | 74.7 | % | 29,919 | 14,746 | 102.9 | % | ||||||||||||||
Operating income percentage | 13.5 | % | 9.9 | % | 16.6 | % | 10.8 | % | ||||||||||||||
Other income (expense), net | (63 | ) | (209 | ) | $ | (293 | ) | $ | (306 | ) | ||||||||||||
Income before income taxes | 11,637 | 6,487 | 79.4 | % | 29,626 | 14,440 | 105.2 | % | ||||||||||||||
Income tax expense | 3,403 | 1,993 | 9,044 | 4,427 | ||||||||||||||||||
Net income | 8,234 | 4,494 | 83.2 | % | 20,582 | 10,013 | 105.6 | % | ||||||||||||||
Net income attributable to noncontrolling interest | (1 | ) | (1 | ) | (1 | ) | 1 | |||||||||||||||
Net income attributable to | $ | 8,235 | $ | 4,495 | 83.2 | % | $ | 20,583 | $ | 10,012 | 105.6 | % | ||||||||||
Net income per common share: | ||||||||||||||||||||||
- basic | $ | 0.23 | $ | 0.12 | 91.7 | % | $ | 0.57 | $ | 0.28 | 103.6 | % | ||||||||||
- diluted | $ | 0.23 | $ | 0.12 | 91.7 | % | $ | 0.56 | $ | 0.28 | 100.0 | % | ||||||||||
Weighted average common shares: | ||||||||||||||||||||||
- basic | 36,205 | 36,207 | 36,192 | 36,311 | ||||||||||||||||||
- diluted | 36,554 | 36,250 | 36,515 | 36,362 | ||||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||
(Dollars in thousands) (Unaudited) | |||||||||||||||||||
2017 | 2017 | 2016 | |||||||||||||||||
ASSETS | |||||||||||||||||||
Cash, and cash equivalents | $ | 55,197 | $ | 50,648 | $ | 40,123 | |||||||||||||
Accounts receivable, net | 46,398 | 43,143 | 38,645 | ||||||||||||||||
Inventories | 50,844 | 42,336 | 45,502 | ||||||||||||||||
Other current assets | 3,670 | 2,689 | 4,958 | ||||||||||||||||
Total current assets | 156,109 | 138,816 | 129,228 | ||||||||||||||||
Property, plant and equipment, net | 105,723 | 106,324 | 110,706 | ||||||||||||||||
52,069 | 52,697 | 53,640 | |||||||||||||||||
Other assets, net | 3,295 | 3,672 | 3,783 | ||||||||||||||||
Total Assets | $ | 317,196 | $ | 301,509 | $ | 297,357 | |||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||
Accounts payable | $ | 12,597 | $ | 8,467 | $ | 10,076 | |||||||||||||
Accrued and other liabilities | 19,180 | 19,915 | 14,998 | ||||||||||||||||
Total current liabilities | 31,777 | 28,382 | 25,074 | ||||||||||||||||
Other liabilities | 12,348 | 13,696 | 13,827 | ||||||||||||||||
Shareholders' equity | 273,071 | 259,431 | 258,456 | ||||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 317,196 | $ | 301,509 | $ | 297,357 | |||||||||||||
Accounts receivable, net | $ | 46,398 | $ | 43,143 | $ | 38,645 | |||||||||||||
Plus: Inventories | 50,844 | 42,336 | 45,502 | ||||||||||||||||
Less: Accounts payable | 12,597 | 8,467 | 10,076 | ||||||||||||||||
Net working capital1 | $ | 84,645 | $ | 77,012 | $ | 74,071 | |||||||||||||
Net working capital percentage1 | 24.4 | % | 27.9 | % | 27.4 | % |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Dollars in thousands) (Unaudited) | |||||||
Six Months Ended | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 20,582 | $ | 10,013 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 7,184 | 7,633 | |||||
Long-lived asset impairment loss | 259 | — | |||||
Other operating activities, net | (8,164 | ) | 7,912 | ||||
Net cash provided by operating activities | 19,861 | 25,558 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (5,223 | ) | (2,168 | ) | |||
Proceeds from sale or maturity of investments | 250 | 250 | |||||
Purchases of investments | (255 | ) | (500 | ) | |||
(Disbursements) proceeds from settlement of liabilities, sale of assets | (344 | ) | 1,117 | ||||
Other investing activities, net | (17 | ) | (339 | ) | |||
Net cash used in investing activities | (5,589 | ) | (1,640 | ) | |||
Cash flows from financing activities: | |||||||
Dividends paid | (9,384 | ) | (9,428 | ) | |||
Payments for common shares repurchased | — | (7,702 | ) | ||||
Payment of acquisition-related contingent liabilities | (320 | ) | (282 | ) | |||
Other financing activities, net | (299 | ) | (256 | ) | |||
Net cash used in financing activities | (10,003 | ) | (17,668 | ) | |||
Effect of exchange rate changes on cash | 280 | 91 | |||||
Net increase (decrease) in cash and cash equivalents | 4,549 | 6,341 | |||||
Cash and cash equivalents at beginning of period | 50,648 | 33,782 | |||||
Cash and cash equivalents at end of period | $ | 55,197 | $ | 40,123 | |||
SALES AND OPERATING INCOME BY SEGMENT | ||||||||||||||||||||||
(Dollars in thousands) (Unaudited) | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
2017 | 2016 | Fav (Un) Change | 2017 | 2016 | Fav (Un) Change | |||||||||||||||||
Net sales | ||||||||||||||||||||||
Applied Technology | $ | 28,424 | $ | 22,668 | 25.4 | % | $ | 68,914 | $ | 54,124 | 27.3 | % | ||||||||||
49,028 | 36,656 | 33.8 | % | 92,583 | 65,756 | 40.8 | % | |||||||||||||||
Aerostar | 9,369 | 8,415 | 11.3 | % | 18,975 | 16,310 | 16.3 | % | ||||||||||||||
Intersegment eliminations | (211 | ) | (141 | ) | (327 | ) | (232 | ) | ||||||||||||||
$ | 86,610 | $ | 67,598 | 28.1 | % | $ | 180,145 | $ | 135,958 | 32.5 | % | |||||||||||
Operating income (loss) | ||||||||||||||||||||||
Applied Technology | $ | 6,637 | $ | 5,172 | 28.3 | % | $ | 20,090 | $ | 13,865 | 44.9 | % | ||||||||||
9,551 | 6,659 | 43.4 | % | 18,271 | 10,537 | 73.4 | % | |||||||||||||||
Aerostar | 1,388 | (251 | ) | 653.0 | % | 2,806 | (429 | ) | 754.1 | % | ||||||||||||
Intersegment eliminations | 11 | — | 9 | (5 | ) | |||||||||||||||||
Total segment income | $ | 17,587 | $ | 11,580 | 51.9 | % | $ | 41,176 | $ | 23,968 | 71.8 | % | ||||||||||
Corporate expenses | (5,887 | ) | (4,884 | ) | (20.5 | )% | (11,257 | ) | (9,222 | ) | (22.1 | )% | ||||||||||
$ | 11,700 | $ | 6,696 | 74.7 | % | $ | 29,919 | $ | 14,746 | 102.9 | % | |||||||||||
Operating income (loss) percentages | ||||||||||||||||||||||
Applied Technology | 23.3 | % | 22.8 | % | 50bps | 29.2 | % | 25.6 | % | 360bps | ||||||||||||
19.5 | % | 18.2 | % | 130bps | 19.7 | % | 16.0 | % | 370bps | |||||||||||||
Aerostar | 14.8 | % | (3.0 | )% | 1780bps | 14.8 | % | (2.6 | )% | 1740bps | ||||||||||||
13.5 | % | 9.9 | % | 360bps | 16.6 | % | 10.8 | % | 580bps | |||||||||||||
EBITDA REGULATION G RECONCILIATION2 | ||||||||||||||||||||||
(Dollars in thousands) (Unaudited) | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
Fav (Un) | Fav (Un) | |||||||||||||||||||||
Segments | 2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||
Applied Technology | ||||||||||||||||||||||
Reported operating income | $ | 6,637 | $ | 5,172 | 28.3 | % | $ | 20,090 | $ | 13,865 | 44.9 | % | ||||||||||
Plus: Depreciation and amortization | 822 | 956 | (14.0 | )% | 1,652 | 1,908 | (13.4 | )% | ||||||||||||||
ATD EBITDA | $ | 7,459 | $ | 6,128 | 21.7 | % | $ | 21,742 | $ | 15,773 | 37.8 | % | ||||||||||
ATD EBITDA % of | 26.2 | % | 27.0 | % | 31.5 | % | 29.1 | % | ||||||||||||||
Reported operating income | $ | 9,551 | $ | 6,659 | 43.4 | % | $ | 18,271 | $ | 10,537 | 73.4 | % | ||||||||||
Plus: Depreciation and amortization | 2,099 | 2,173 | (3.4 | )% | 4,165 | 4,230 | (1.5 | )% | ||||||||||||||
EFD EBITDA | $ | 11,650 | $ | 8,832 | 31.9 | % | $ | 22,436 | $ | 14,767 | 51.9 | % | ||||||||||
EFD EBITDA % of | 23.8 | % | 24.1 | % | 24.2 | % | 22.5 | % | ||||||||||||||
Aerostar | ||||||||||||||||||||||
Reported operating income (loss) | $ | 1,388 | $ | (251 | ) | 653.0 | % | $ | 2,806 | $ | (429 | ) | 754.1 | % | ||||||||
Plus: Depreciation and amortization | 344 | 418 | (17.7 | )% | 761 | 837 | (9.1 | )% | ||||||||||||||
Aerostar EBITDA | $ | 1,732 | $ | 167 | 937.1 | % | $ | 3,567 | $ | 408 | 774.3 | % | ||||||||||
Aerostar EBITDA % of | 18.5 | % | 2.0 | % | 18.8 | % | 2.5 | % | ||||||||||||||
Consolidated Raven | ||||||||||||||||||||||
Net Income | $ | 8,235 | $ | 4,495 | 83.2 | % | $ | 20,583 | $ | 10,012 | 105.6 | % | ||||||||||
Interest expense (income), net | 47 | 76 | 115 | 148 | ||||||||||||||||||
Income tax expense | 3,403 | 1,993 | 9,044 | 4,427 | ||||||||||||||||||
Depreciation and amortization | 3,570 | 3,871 | 7,184 | 7,633 | ||||||||||||||||||
EBITDA | $ | 15,255 | $ | 10,435 | 46.2 | % | $ | 36,926 | $ | 22,220 | 66.2 | % | ||||||||||
EBITDA % of | 17.6 | % | 15.4 | % | 20.5 | % | 16.3 | % |
____________________________
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.
2 EBITDA is a non-GAAP financial measure defined on a consolidated basis as net income/(loss) attributable to
Contact Information:Source:Bo Larsen Investor Relations DirectorRaven Industries, Inc. +1 (605) 336-2750
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