Raven Industries Inc.
) reported third-quarter fiscal 2014 (ended Oct 31, 2013)
earnings of 34 cents per share, up 13% year over year. The
earnings surpassed the Zacks Consensus Estimate of 30 cents.
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Sales increased 8% year over year to $105 million, beating the
Zacks Consensus Estimate of $101 million. The growth was driven
by improved revenues in the Engineered Films and Applied
Technology segment, partly offset by decreased revenues in the
Aerostar segment due to U.S. government disruptions.
Cost of sales rose 8% year over year to $73 million. Gross profit
increased 8% to $31.9 million from $29.5 million in the year-ago
quarter. However, gross margin remained flat at 30.4% from the
Selling, general and administrative expenses edged up 1.5% year
over year to $9.85 million. Operating income grew 10.7% year over
year to $18 million with operating margin expanding 50 basis
points (bps) to 17.3%.
Sales for the segment went up 11% year over year to $43.8 million
led by rise in after-market demand for precision agriculture
products. Operating income also rose 23% to $15 million from $12
million in the prior-year quarter.
The segment reported sales of $40 million, improving 21% year
over year. Barrier films for agriculture led the strong growth,
specifically sales of fumigation and silage films. Besides, the
addition of new extrusion capacity earlier in the year was a key
factor to meet demand for high-tech films. Operating income hiked
11% year over year to $5.2 million.
Sales declined 8% year over year to $24 million due to reduced
contract manufacturing demand, partially offset by strong sales
in Vista Research and lighter-than-air products. Segment
operating income fell 29% year over year to $2.7 million.
Raven Industries ended the quarter with cash and cash equivalents
of $48.6 million compared with $48 million at the end of the
year-ago comparable period. Cash flow from operating activities
for the nine-month period ended Oct 31, 2013 was $37 million
against $58 million in the prior-year comparable period.
Raven will benefit from investments in technology, capacity and
market expansions. Raven's commitment to innovation, service and
quality will drive growth. In addition, its acquisition of Vista
Research will aid sales of the Aerostar segment, primarily driven
by deliveries under existing contracts for Vista's Smart Sensing
Raven's Applied Technology division will grow with robust
original equipment manufacturer demand, new product launches and
international expansion. In the past four months, the segment
introduced Viper 4, SmarTrax MD and Multi-Hybrid OmniRow.
Going forward, Raven will benefit from Google's new project for
balloon-powered Internet access, Project Loon. The project will
use Raven's Aerostar-designed and developed high-tech balloons.
While the program is still in its early stages, a successful
trial took place in June involving 30 balloons providing Internet
connectivity to an area covering nearly 10,000 square kilometers.
Raven anticipates modest revenues from the project in the
remainder of fiscal 2014, with further expectations of
significant revenue growth in the first half of fiscal 2015.
The Aerostar segment will continue to face risks from government
and sluggish demand. Raven is working to compensate government
uncertainty by expanding proprietary technology revenues
including advanced radar systems, high-altitude research balloons
and aerostats to international markets.
South Dakota-based Raven, is an industrial manufacturer offering
a variety of products for the agricultural, industrial,
construction and aerospace markets. Raven operates through four
business segments, namely Engineered Films, Electronic Systems,
Applied Technology and Aerostar.
Raven currently carries a Zacks Rank #3 (Hold). Among other
stocks in the same industry,
Hutchison Whampoa Limited
) are favorably placed with a Zacks Rank #2 (Buy).
Another one of Raven's peers-
) - reported third-quarter 2013 net income of $1,230 million or
$1.78 per share compared with $1,161 million or $1.65 a share in
the year-earlier quarter, driven by higher sales across its
businesses. The reported earnings beat the Zacks Consensus
Estimate of $1.76.