Applied Technology Division Sets Record
Quarterly Revenue
Raven Industries, Inc. (the Company; NASDAQ:RAVN) today
reported financial results for the first quarter that ended April
30, 2021.
First Quarter Fiscal 2022 Noteworthy Items:
- Consolidated net sales were $112.5 million, an increase of 30.0
percent versus the prior year;
- Company reported diluted earnings per share of $0.26, an
increase of $0.15 or 136 percent versus the prior year;
- Applied Technology generated record quarterly revenue of $54.9
million, an increase of 30.6 percent versus the prior year, driven
by significant growth in both the OEM and aftermarket
channels;
- Applied Technology secured orders for 36 OMNiDRIVE™ systems
(formerly known as AutoCart®), its first commercially-available
Driverless Ag Technology, representing approximately half of its
available volume for the current year's limited release;
- Company invested $4.6 million, or $0.10 per diluted share,
primarily in research and development activities, to advance Raven
Autonomy™;
- Engineered Films' net sales increased 46.0 percent versus the
prior year as the division's end-markets continued their recovery
from the global pandemic, leading to year-over-year growth across
all end-markets;
- Backlog and order activity in both Applied Technology and
Engineered Films continued to strengthen, providing even greater
confidence for substantial growth in fiscal 2022;
- Price increases were implemented across all divisions as the
Company navigates through supply chain constraints and rising input
costs;
- Company acquired the intellectual property and patents of
Jaybridge Robotics, advancing its growth strategy in autonomous
agriculture.
First Quarter Results:
Consolidated net sales for the first quarter of fiscal 2022 were
$112.5 million, up 30.0 percent versus the first quarter of fiscal
2021. The year-over-year growth was driven by increased sales in
Applied Technology and Engineered Films. In Applied Technology, the
division reported record quarterly revenue, while overcoming supply
chain constraints, as the demand for its industry-leading ag
technology solutions was amplified by improved market conditions.
In Engineered Films, the division’s end-markets continued to
recover from the adverse impacts of the global pandemic, leading to
year-over-year volume and revenue growth across all end-markets,
led by construction and agriculture. Aerostar was impacted by the
conclusion of Loon activity and a decrease in aerostat sales due to
timing of contracts, leading to a year-over-year decline in
revenue.
Consolidated operating income for the first quarter of fiscal
2022 was $11.6 million, versus operating income of $3.9 million in
the first quarter of fiscal 2021. Included in the results for the
first quarter of fiscal 2022 was $4.6 million of investment in
research and development and selling expenses to advance Raven
Autonomy™, compared to $3.8 million in the prior year. The strong
profitability performance in this year's first quarter was driven
by increased sales volume and corresponding positive operating
leverage.
Net income for the first quarter of fiscal 2022 was $9.6
million, or $0.26 per diluted share, compared to $4.0 million, or
$0.11 per diluted share, in last year's first quarter. The
Company's strategic investment in Raven Autonomy™ reduced net
income attributable to Raven by $3.6 million, or $0.10 per diluted
share, in the first quarter of fiscal 2022 compared to $2.9
million, or $0.08 per diluted share, in the prior year.
Balance Sheet and Cash Flow:
At the end of the first quarter of fiscal 2022, cash and cash
equivalents totaled $17.8 million, decreasing $15 million versus
the previous quarter. The sequential decrease in cash was driven by
an increase in working capital needs as the Company fulfills
substantial demand in Applied Technology and Engineered Films while
navigating lengthening lead times in the global supply chain and
rising input costs. Total liquidity3 at the end of the first
quarter totaled $117.8 million.
Applied Technology Division:
Net sales for Applied Technology in the first quarter of fiscal
2022 were $54.9 million, increasing $12.9 million or 30.6 percent
versus the first quarter of the prior year. The division's
performance was the highest quarterly revenue ever. The
year-over-year sales growth was driven by increased sales in the
OEM and aftermarket channels, both domestically and
internationally, with substantial growth in Europe. Demand and
order activity for the division's ag technology products continues
to accelerate as Applied Technology is capitalizing on the first
robust ag market in several years. The division also finished the
first quarter with a record backlog as it positions itself for
strong revenue growth.
Division operating income in the first quarter of fiscal 2022
was $13.2 million, up $4.2 million or 47.5 percent versus the first
quarter of fiscal 2021. Included in the results was investment in
research and development and selling expenses to advance Raven
Autonomy™ of $4.6 million on a pre-tax basis, an increase of $0.8
million versus the prior year. The underlying profitability of
Applied Technology was very strong with year-over-year growth in
operating income that was driven by increased sales volumes and
associated operating leverage, partially offset by an increase in
research and development and rising input costs related to global
supply chain dynamics.
Engineered Films Division:
Net sales for Engineered Films in the first quarter of fiscal
2022 were $48.8 million, up $15.4 million or 46.0 percent
year-over-year. The division generated year-over-year sales growth
across all end-markets, with agriculture and construction serving
as the largest drivers, as the recovery from the adverse effects of
the global pandemic continued to strengthen. Due to volatility in
the resin market, the division has taken intentional actions to
adjust pricing commensurate with the changes in the market input
costs. Demand for the Company's highly engineered, high-value
products improved sequentially as order activity gained momentum in
the quarter.
Division operating income in the first quarter of fiscal 2022
was $6.8 million, up $5.2 million or 321.1 percent versus the first
quarter of fiscal 2021. The year-over-year increase was driven by
higher sales volume and corresponding positive operating leverage,
partially offset by rising material input costs. Operating margin
for Engineered Films at 13.9 percent improved year-over-year toward
pre-pandemic levels of 18 to 22 percent.
Aerostar Division:
Net sales for Aerostar in the first quarter of fiscal 2022 were
$8.9 million, down $2.3 million or 20.3 percent versus the first
quarter of fiscal 2021. Year-over-year revenue growth for defense
related stratospheric balloon systems was offset by the conclusion
of Loon activity announced in the fourth quarter of fiscal 2021 and
a decrease in aerostat revenue. Aerostar's financial performance is
driven by the timing of government contracts, which can fluctuate
on a quarterly basis. As such, it is beneficial to analyze the
division over a longer period of time.
Division operating income was $0.6 million in the first quarter
of fiscal 2022, up $0.3 million versus the first quarter of fiscal
2021. The year-over-year improvement in operating income was driven
by product mix and effective cost control measures.
Update on Strategic Platforms for Growth:
In Raven Autonomy™, the Company made significant progress on
executing on its strategy in the first quarter of the year. Since
launching pre-orders for OMNiDRIVE™ (formerly known as AutoCart®),
Applied Technology has secured 36 orders of the advanced Driverless
Ag Technology solution and is on track to achieve its limited
release goal of 75 units in fiscal 2022. In addition, the Company
expects to release an OMNiDRIVE™ system compatible with Case IH
Magnum and New Holland tractors this fall, ahead of the targeted
date. For OMNiPOWER™ (formerly known as Dot®), the Company
currently expects to sell out its current manufacturing capacity in
the fiscal year. To meet future demand, Applied Technology is
planning with a strategic partner to significantly expand
production capacity for OMNiPOWER™. The Company also purchased the
intellectual property (IP) and patent portfolio of Jaybridge
Robotics, an early mover in the development of autonomous ag
technology. The Company's ownership of this IP, related to
path-planning, obstacle detection and multi-machine control
systems, accelerates the development of Raven's Driverless Ag
Technology.
The momentum around Raven Autonomy™ continues to expand as the
division hits key milestones and showcases the capabilities of its
industry leading technology. Demand for autonomous ag solutions is
strong and growing. The limited commercial releases of OMNiDRIVE™
and OMNiPOWER™ in fiscal 2022 will provide valuable customer
engagement and insight as the Company executes on its strategy of
advancing technology that improves agriculture practices
globally.
In Raven Composites™, Engineered Films continued to build out
its composites production operations in the first quarter. The
Company began installation of its composites equipment and expects
to have operations running by the end of the second quarter. In
addition, the division continues to build relationships with
strategic customers as it executes on its strategy of supplying
thinner, lighter and stronger materials through combining
high-value films with rigid composites that provide superior value
across multiple end-markets.
Fiscal 2022 Outlook:
"We are off to a tremendous start in fiscal 2022, breaking our
previous quarterly record for revenue in Applied Technology, while
also making significant progress on our strategic platforms for
growth," said Dan Rykhus, President and CEO. "The strong demand we
continue to see in our businesses, particularly in Applied
Technology and Engineered Films, provides us even greater
confidence in our ability to exceed our previous annual revenue
record in the current year.
"I am very proud of our team in Applied Technology as we
overcame substantial supply chain constraints experienced across
the world to generate record revenue for the quarter. The momentum
and demand in the market continues to grow for our ag technology
solutions. Order activity remained very strong in the first quarter
and backlog is at an all-time high. In Raven Autonomy™, we are
right on track with our commercialization goals in the current year
as we continue to set the foundation for a step-change in long-term
growth for the division. The solutions we are developing are
significant advancements in ag technology that will help solve
labor shortages, provide greater efficiencies and enhance
sustainability in agriculture across the world.
"In Engineered Films, we generated substantial year-over-year
growth as our end-markets continued their recovery from the global
pandemic in the first quarter of the year. Rising prices and
volatility in the resin market presented challenges. However, our
offering of highly engineered, high-value films provides
flexibility to be able to mitigate rising input costs and maintain
our strong profitability within the division. For the full year in
fiscal 2022, we expect to drive significant volume and revenue
growth over fiscal 2021 and also exceed pre-pandemic sales levels
achieved in fiscal 2020. These expectations for the current year
are in line with plans developed two years ago as we return to
normalized conditions while executing on our strategy of delivering
thinner, lighter and stronger materials.
"In Aerostar, we continued to advance the technology for our
stratospheric and radar solutions in the first quarter, while
improving profitability year-over-year and sequentially. The
momentum around utilizing our technology in defense applications
continues to grow, and our team is working to advance our solution
down the pathway of becoming a program of record. Over the
remainder of the year, we have a significant number of flight
campaigns scheduled with multiple Department of Defense agencies as
we continue to showcase the industry-leading capabilities for our
stratospheric balloon systems.
"Fiscal 2022 will be an exceptional year for our Company. We are
experiencing high commodity prices in agriculture and a broad
economic recovery in construction, industrial, energy and the other
end-markets we serve. Our Company is well-positioned to drive
record revenue and substantial earnings growth. While we expect
global supply chain constraints to persist throughout the year, I
am confident in our team's ability to continue to manage these
challenges. While executing on the near-term opportunities, we will
continue to invest in our strategic platforms that will drive
substantial growth for our Company in the coming years," concluded
Rykhus.
Regulation G:
The information presented in this earnings release regarding
consolidated and segment 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. Additionally, 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.
About Raven Industries, Inc.:
Raven Industries (NASDAQ: RAVN) provides innovative, high-value
products and systems that solve great challenges throughout the
world. Raven is a leader in precision agriculture, high-performance
specialty films, and aerospace and defense solutions, and the
Company's groundbreaking work in autonomous systems is unlocking
new possibilities in areas like farming, national defense, and
scientific research. 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.
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Dollars and shares in
thousands, except earnings per share) (Unaudited)
Three Months Ended April
30,
2021
2020
Fav (Un) Change
Net sales
$
112,486
$
86,496
30.0
%
Cost of sales
72,500
58,029
Gross profit
39,986
28,467
40.5
%
Gross profit percentage
35.5
%
32.9
%
Research and development expenses
11,462
10,505
Selling, general, and administrative
expenses
16,951
14,023
Operating income
11,573
3,939
193.8
%
Operating income percentage
10.3
%
4.6
%
Other income (expense), net
30
(468
)
Income before income taxes
11,603
3,471
234.3
%
Income tax expense (benefit)
1,983
(478
)
Net income
9,620
3,949
143.6
%
Net loss attributable to the
noncontrolling interest
—
(98
)
Net income attributable to Raven
Industries, Inc.
$
9,620
$
4,047
137.7
%
Net income per common share:
- Basic
$
0.27
$
0.11
145.5
%
- Diluted
$
0.26
$
0.11
136.4
%
Weighted average common shares:
- Basic
36,037
35,928
- Diluted
36,450
36,066
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Dollars in thousands)
(Unaudited)
April 30
January 31
April 30
2021
2021
2020
ASSETS
Cash and cash equivalents
$
17,764
$
32,938
$
72,581
Accounts receivable, net
68,064
48,669
60,336
Inventories, net
63,407
52,703
57,101
Other current assets
7,904
5,776
6,268
Total current assets
157,139
140,086
196,286
Property, plant and equipment, net
107,905
106,007
102,061
Goodwill
109,284
107,677
104,608
Intangible assets, net
46,074
44,585
43,826
Other assets
10,437
11,016
11,552
TOTAL ASSETS
$
430,839
$
409,371
$
458,333
LIABILITIES AND SHAREHOLDERS'
EQUITY
Accounts payable
$
22,535
$
18,639
$
20,392
Accrued and other liabilities
32,149
28,066
24,042
Redeemable noncontrolling interest
payable
5,438
5,333
17,172
Total current liabilities
60,122
52,038
61,606
Long-term debt
2,895
1,981
50,364
Other liabilities
23,837
23,997
33,939
Total liabilities
86,854
78,016
145,909
Shareholders' equity
343,985
331,355
312,424
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
430,839
$
409,371
$
458,333
Net Working Capital and Net
Working Capital Percentage1
Accounts receivable, net
$
68,064
$
48,669
$
60,336
Plus: Inventories, net
63,407
52,703
57,101
Less: Accounts payable
22,535
18,639
20,392
Net working capital1
$
108,936
$
82,733
$
97,045
Annualized net sales
$
449,944
$
320,308
$
345,984
Net working capital percentage1
24.2
%
25.8
%
28.0
%
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Ended April
30,
2021
2020
Cash flows from operating activities:
Net income
$
9,620
$
3,949
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
4,511
4,176
Other operating activities, net
(21,910
)
3,726
Net cash provided by (used in) operating
activities
(7,779
)
11,851
Cash flows from investing activities:
Capital expenditures
(5,605
)
(4,434
)
Purchases of investments
(587
)
(98
)
Proceeds from sale of assets
263
251
Other investing activities, net
(1,112
)
(9
)
Net cash used in investing activities
(7,041
)
(4,290
)
Cash flows from financing activities:
Dividends paid
—
(4,658
)
Proceeds from debt
815
50,150
Other financing activities, net
(1,204
)
(844
)
Net cash provided by (used in) financing
activities
(389
)
44,648
Effect of exchange rate changes on
cash
35
(335
)
Net increase (decrease) in cash and cash
equivalents
(15,174
)
51,874
Cash and cash equivalents at beginning of
period
32,938
20,707
Cash and cash equivalents at end of
period
$
17,764
$
72,581
RAVEN INDUSTRIES, INC.
SALES AND OPERATING INCOME BY
SEGMENT
(Dollars in thousands)
(Unaudited)
Three Months Ended April
30,
2021
2020
Fav (Un) Change
Net sales
Applied Technology
$
54,868
$
42,007
30.6
%
Engineered Films
48,765
33,398
46.0
%
Aerostar
8,887
11,151
(20.3
)%
Intersegment eliminations
(34
)
(60
)
Consolidated net sales
$
112,486
$
86,496
30.0
%
Operating income (loss)
Applied Technology
$
13,187
$
8,939
47.5
%
Engineered Films
6,767
1,607
321.1
%
Aerostar
589
293
101.0
%
Intersegment eliminations
(7
)
40
Total segment income
$
20,536
$
10,879
88.8
%
Corporate expenses
(8,963
)
(6,940
)
(29.1
)%
Consolidated operating income
$
11,573
$
3,939
193.8
%
Operating income percentages
Applied Technology
24.0
%
21.3
%
270bps
Engineered Films
13.9
%
4.8
%
910bps
Aerostar
6.6
%
2.6
%
400bps
Consolidated operating income
10.3
%
4.6
%
570bps
RAVEN INDUSTRIES, INC.
EBITDA REGULATION G
RECONCILIATION2
(Dollars in thousands)
(Unaudited)
Three Months Ended April
30,
Fav (Un)
2021
2020
Change
Applied Technology
Reported Operating income
$
13,187
$
8,939
47.5
%
Plus: Depreciation and amortization
1,466
1,100
33.3
%
ATD EBITDA
$
14,653
$
10,039
46.0
%
ATD EBITDA % of Net Sales
26.7
%
23.9
%
Engineered Films
Reported Operating income
$
6,767
$
1,607
321.1
%
Plus: Depreciation and amortization
2,459
2,412
1.9
%
EFD EBITDA
$
9,226
$
4,019
129.6
%
EFD EBITDA % of Net Sales
18.9
%
12.0
%
Aerostar
Reported Operating income
$
589
$
293
101.0
%
Plus: Depreciation and amortization
227
239
(5.0
)
%
Aerostar EBITDA
$
816
$
532
53.4
%
Aerostar EBITDA % of Net Sales
9.2
%
4.8
%
Consolidated
Net income attributable to Raven
Industries Inc.
$
9,620
$
4,047
137.7
%
Interest expense, net
94
144
Income tax expense (benefit)
1,983
(478
)
Plus: Depreciation and amortization
4,511
4,176
Consolidated EBITDA
$
16,208
$
7,889
105.5
%
Consolidated EBITDA % of Net Sales
14.4
%
9.1
%
1
Net working capital is defined as accounts
receivable, (net) plus inventories, (net) 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.
3
Total liquidity is defined as Cash and
cash equivalents plus the available balance on the Company's
revolving credit facility.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210517005698/en/
Jared Stearns Investor Relations Manager Raven Industries, Inc.
+1 (605) 336-2750
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