Raven Industries Inc
) reported first quarter 2014 earnings of 38 cents per share, a
27% drop year over year, which fell short of the Zacks Consensus
Estimate of 44 cents per share. Sales declined across the board
reflecting the current sluggish growth environment and tough
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Sales decreased 12% year over year to $103.7 million, falling
short of the Zacks Consensus Estimate of $113 million. Weakness
in the Applied Technology Division, declining demand from U.S.
agency customers in Aerostar and a moderated energy market in
Engineered Films led to the overall decline.
Cost of sales decreased 10% year over year to $68.8 million.
Selling, general and administrative expenses increased 5% year
over year to $9.7 million. Operating income decreased 26% year
over year to $20.9 million in the quarter.
Applied Technology: Sales for the segment dipped 5% year over
year to $51.2 million reflecting lower demand in the U.S.
aftermarkets. Operating income decreased 13% to $19 million from
$22 million in the prior-year quarter, driven by lower sales but
impacted by expenses for continued investments in research,
marketing and product development to drive future growth.
Engineered Films: The segment reported sales of $34.5 million,
down 16% year over year. Operating income plunged 48% to $4.7
million due to weak energy markets and tough year-over-year
Aerostar: Sales declined 15% year over year to $21.7 million due
to reduced demand from U.S. agency customers and planned declines
with avionics customers. However, Aerostar was the lone segment
which reported a rise in operating profit to $1.8 million, up 25%
from the prior-year quarter helped by gross margin improvements
and the integration of Vista Research. .
Raven Industries ended the first quarter of fiscal 2014 with cash
and cash equivalents of $51.1 million compared with $49.3 million
as of the end of fiscal 2013. Cash flow from operating activities
during the reported quarter was $14.9 million compared with $28.2
million in the prior year quarter.
Going forward, Raven will benefit from its acquisition of Vista
Research. Raven expects to return to historic earnings growth
levels in fiscal 2014 driven by benefits from investments made
over the last few years, new product developments and
expansion. Raven has several new precision agricultural
products that will be launched in the second half of fiscal 2014
and are expected to help drive growth in Applied Technology.
The Aerostar segment will continue to face continued government
uncertainty and sluggish demand. Raven is working to offset
government uncertainty by expanding proprietary technology
revenues including advanced radar systems, high-altitude research
balloons and aerostats to international markets. However, margins
will also be under pressure due to Raven's stepped up investments
in new initiatives and product development.
South Dakota-based Raven Industries Inc. is an industrial
manufacturer providing a variety of products for the
agricultural, industrial, construction and military/aerospace
markets. Raven operates through four business segments:
Engineered Films, Electronic Systems, Applied Technology and
Raven currently holds a short-term Zacks Rank #3 (Hold). Among
the other stocks in the same industry,
Compass Diversified Holdings
Honeywell International Inc.
) hold a Zacks Rank #2 (Buy) and are favorable options for