Raven Industries Inc.
) reported third quarter 2013 earnings of 30 cents per share,
down 3% from 31 cents in the year-ago quarter and missed the
Zacks Consensus Estimate of 34 cents per share.
Sales increased 4% year over year to $97 million, falling
short of the Zacks Consensus Estimate of $102 million. The
year-over-year increase in sales was attributable to growth in
the Applied Technology Division and contribution from Vista
Research in the Aerostar Division.
Cost of sales increased 2% year over year to $67 million.
Selling, general and administrative expenses increased 23% year
over year to $9.7 million. Operating income decreased 3% year
over year to $16.4 million in the quarter.
Sales for the segment increased 11% year over year to $39
million. The segment benefited from the company's continued
investment in new products as well as international expansion.
Operating income increased 6% to $12.3 million from $11.5
Engineered Films: The segment reported sales of $33.3 million,
down 5% year over year. Operating income declined 15% to $4.7
million. A decline in energy and agricultural sales offset
improved demand for construction films.
Aerostar: Sales increased 9% year over year to $26 million,
primarily driven by the addition of Vista Research revenues
(acquired in January 2012). The segment reported an operating
profit of $3.8 million, up 20% from the prior-year quarter.
Raven Industries ended the quarter with cash and cash
equivalents, including short-term investments, of $48 million
compared with $44.1 million as of the second quarter. Cash flow
from operating activities during the first nine months of fiscal
2013 improved to $58 million from $37.7 million in the prior year
Raven's Engineered Films segment continues to benefit from
strong demand for geo membrane films. Demand for geo membrane
films, meant for environmental protection, is on the rise as
customers are keen on protecting water and other environmental
resources for a sustainable future. This will provide a boost to
Raven Industries' revenues moving ahead.
Vista Research, which Raven acquired in January 2012, has high
growth potential and continues to boost revenues of the Aerostar
segment. Vista Research has recently signed a new $6 million
contract with the U.S. government to support and further explore
the applications of its radar technology. Moreover, the company
is also focusing on increasing the customer base of Vista both in
the domestic and international markets.
Raven will benefit from the current strength in the
agriculture market. The company continues with its strategy of
investing significantly in research and development, thereby,
helping it to maintain strong financial results. In addition,
Raven has ample scope to fund future growth and increase
dividends with the support of debt-free balance sheet and solid
cash flow. However, the near-term results of the Aerostar segment
will be affected by the lack of aerostat orders.
South Dakota-based Raven Industries Inc. is an industrial
manufacturer providing a variety of products for the
agricultural, industrial, construction and military/aerospace
markets. The company operates through four business segments:
Engineered Films, Electronic Systems, Applied Technology and
) are peers of Raven. The company currently retains a Zacks #4
Rank (short-term Sell rating).
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