Raven Reports Strong Quarter - Analyst Blog
March 15 2012 - 5:49AM
Zacks
Raven Industries Inc. (RAVN) reported
fourth quarter results ended January 21, 2012, delivering earnings
of 60 cents per share, increasing 46% from the 41 cents earned in
the year-ago quarter. Earnings per share comfortably surpassed the
Zacks Consensus Estimate of 48 cents per share.
Operational Update
Sales increased 36% year over year to $96.3 million, beating the
Zacks Consensus Estimate of $78 million. The outperformance was
attributable to the double-digit sales across all the segments.
Cost of sales increased 32% year over year to $68 million in the
reported quarter. Selling, general and administrative expenses
increased 27% year over year to $8.7 million. Operating income
soared 62% year over year to $16.6 million in the quarter.
Fiscal 2012 Performance
In fiscal 2012, the company reported earnings of $2.77 per
share, which increased 24% from the prior year earnings of $2.24
per share. Sales in the full year 2012, saw a rise of 21% to $381.5
million from the year ago quarter of $314.7 million.
Segmental Performance
Applied Technology: Sales surged 29% year over
year to a record $28.8 million in the reported quarter in this
segment. Operating income also soared 28% to $7.5 million from $5.9
million. The performance was attributable to the continued demand
for the company's precision in agriculture solutions. International
sales also saw a strong growth during the quarter.
Engineered Films: The segment also saw record
sales of $36.0 million, increasing 48% year over year from $24.3
million. Consequently, operating income also saw a whopping 114%
increase year-over-year to $6.5 million. The solid performance was
supported by demand growth, strong energy market and introduction
of new products.
Aerostar: Sales increased 32% year over year to
$15.8 million in the quarter. Operating income of the segment
surged 49% over the prior year period to $3.4 million. During
the quarter, consistent sales of parachutes and shipment of
aerostat systems led the improvement of this segment. Increased
parachute production capacity also added to the contribution.
Electronic Systems: Sales jumped 34% year over
year to $18.4 million in the quarter. Operating income nearly
doubled year over year to $3.3 million. Sales of secure
communication products and industrial controls contributed to the
growth in sales of this segment.
Financial Position
Raven Industries ended the year with cash and cash equivalents,
including short-term investments of $25.8 million, lower than $39
million at the end of January 31, 2011. Cash provided by operating
activities during twelve months of 2012 improved to $43.8 million
from $42.1 million in the year ago period.
Our Take
All the four segments of Raven Industries experienced strong
sales in the quarter. Strong demand across all the segments as well
as introduction of new products in the line of Engineered Films
added to the momentum. The company continues with its strategy of
investing significantly in the research and development, thereby,
helping to maintain the 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. Thus, we have a Zacks #2 Rank, implying a
short-term “Buy” recommendation for the stock.
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. Graco Inc. (GGG)
and Spartech Corp. (SEH) are the peers
of Raven.
GRACO INC (GGG): Free Stock Analysis Report
RAVEN INDS INC (RAVN): Free Stock Analysis Report
SPARTECH CORP (SEH): Free Stock Analysis Report
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