Raven Industries Inc.
) reported second quarter 2012 earnings of 32 cents per share, down
3% from 34 cents in the year-ago quarter. Results were affected by
continued volatility in the Aerostar segment. Earnings per share
also fell short of the Zacks Consensus Estimate of 38 cents per
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Sales increased 13% year over year to $101.7 million, but
marginally missed the Zacks Consensus Estimate of $102 million. The
year-over-year growth in sales was attributable to the double-digit
growth across all segments.
Cost of sales increased 15% year over year to $71.6 million.
Selling, general and administrative expenses increased 28% year
over year to $9.1 million. Operating income decreased 7% year over
year to $17.4 million in the quarter.
Applied Technology: Sales for the segment surged 13% year over year
to $40 million, due to the strength in international sales,
particularly in Brazil and Canada. Domestic sales also remained
strong but were somewhat mitigated by drought conditions. Operating
income, however, declined 2% to $12.9 million from $13.2 million
due to higher sales of lower-margin products and higher investment
in research, marketing and product development.
Engineered Films : The segment reported sales of $36.8 million, up
13% year over year. Operating income saw a 29% increase on a
year-over-year basis to a record $6.8 million. The solid
performance was driven by strength in the energy and agricultural
markets, and deliveries of geomembrane films for environmental
protection. Margins benefited from improved operating efficiencies
and a more aggressive pricing strategy.
Aerostar : Sales increased 15% year over year to $26.8 million,
primarily driven by the addition of Vista Research revenues (which
was acquired in January 2012) and higher Electronic Systems' sales.
Raven realigned its Electronic Systems Division in the quarter.
Approximately 75% of Electronic Systems' sales have been recorded
in the Aerostar segment and the balance to Applied Technology.
The segment reported an operating profit of $2.3 million, down 32%
from $3.4 million in the prior-year quarter due to decline in
Aerostat sales. A difficult federal spending environment led to
continued volatility in the segment, as lack of aerostat orders are
taking a toll on potential top-line gains.
Raven Industries ended the quarter with cash and cash equivalents,
including short-term investments, of $44.1 million, up from the
$43.5 million as of April 31, 2012. Cash flow from operating
activities during the first half of fiscal 2012 improved to $44.4
million from $26.2 million in the prior year comparable period.
Raven will benefit from the current strength in the agriculture
market. However, variability for aerostat orders will remain,
leading to significant fluctuations in the Aerostar Division. The
company continues with its strategy of investing significantly in
research and development, thereby, helping to maintain strong
financial results. In addition, Raven has ample scope to fund
future growth and increase dividends with the support from
debt-free balance sheet and solid cash flow. The company currently
retains a Zacks #2 Rank (short-term Buy recommendation).
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 Aerostar.
) are peers of Raven.