Raven Industries (RAVN) Beats on Q3 Earnings, Stock Up

Shares of Raven Industries Inc.RAVN jumped around 8.6% to close at $27.25 yesterday, after it reported third-quarter fiscal 2017 (ended Dec 31, 2016) results. Adjusted earnings increased around 40.4% to $5,741 million or 16 cents per share from $4,089 million or 11 cents earned in the year-ago quarter. The increase in bottom-line was attributed to the rise in revenues during the quarter. Adjusted earnings comfortably beat the Zacks Consensus Estimate of 6 cents.

Raven Industries, Inc. Price, Consensus and EPS Surprise

Raven Industries, Inc. Price, Consensus and EPS Surprise | Raven Industries, Inc. Quote

Operational Update

Sales increased around 7.3% year over year to $72.5 million in the quarter. Sales growth in Applied Technology and of Engineered Films segments were offset by declining sales in the Aerostar segment.

Gross profit increased 16.9% to $19.8 million from $17 million in the year-ago quarter. Gross margin expanded 230 basis points (bps) year over year to 27.4%.

In the quarter, selling, general and administrative expenses went up to $8.2 million from $7.5 million in the year-ago quarter. Operating income significantly increased 175.2% to $7.4 million.

S egmental Performance

Applied Technology: Sales grew 18.1% year over year to $25.2 million. Domestic sales were up 14.3% while international sales were up 33% from the prior-year period. Sales growth was driven largely by strength in new product sales and in particular the division's new Hawkeye Nozzle Control System.

Operating income was $6.4 million, up 94.5% from the prior-year quarter. The increase was driven primarily by rise in operating leverage due to higher sales volume. Operating margin increased 1,000 bps from 15.5% to 25.5%. The jump was driven by fixed manufacturing cost leverage and operating expense discipline which resulted in lower operating expenses as a percentage of sales.

Engineered Films: The segment reported sales of $38.6 million, up 4.4% year over year. The increase was driven mainly by higher sales in the Geomembrane (which includes Energy) and Industrial markets, partly offset by volume declines in the Agricultural market.

Operating income rose 16% to $7.1 million due to higher sales volumes and lower operating expenses. Segment operating margin expanded 190 bps to 18.5% driven by raw material efficiencies and improved capacity utilization.

Aerostar: Sales in the segment were $9 million, reflecting a 4.8% decline from the prior-year quarter, impacted by lower Aerostat sales due to the timing of contract deliveries.

The segment reported an operating loss of $1.4 million compared with an operating loss of $15.5 million in the year-ago quarter. This loss was driven primarily by an inventory write-down of $2.3 million for certain Aerostar radar systems.

Financial Update

Raven ended the quarter with cash and cash equivalents of $46.3 million, up $6.2 million from the prior quarter. The company generated cash flow from operations of $13.1 million in the third quarter of the fiscal year compared with $11.5 million in the year-ago quarter.


Raven expects to exceed prior-year sales and adjusted operating income in fiscal 2017. The company expects sales to be approximately $277 million with Applied Technology, Engineered Films and Aerostar sales of approximately $105 million, $138 million and $34 million respectively.

Stocks Worth a Glance

3M Company MMM reported relatively healthy fourth-quarter 2016 results on Jan 24, 2017. The reported earnings exceeded the Zacks Consensus Estimate by a penny, while revenues missed the Zacks Consensus Estimate.

Crane Co. CR reported better-than-expected results for fourth-quarter 2016 on Jan 31, 2017. The company's earnings, before special items, came in at $1.02 per share, above the Zacks Consensus Estimate of 98 cents. In the fourth quarter, Crane's net sales totaled $681.4 million, surpassing the Zacks Consensus Estimate of $659.7 million and increasing 0.1% year over year.

ITT Inc. ITT posted fourth-quarter results on Feb 13, 2017. The company comfortably beat estimates during the quarter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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