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Raven Industries Inc. reported modest fourth-quarter fiscal 2017 results. Adjusted earnings were significantly up to $4.4 million or 12 cents per share from $1.9 million or 5 cents per share in the year-ago quarter. The increase in bottom-line was attributed to the rise in revenues during the quarter. Adjusted earnings were in line with the Zacks Consensus Estimate.
For full-year fiscal 2017, the company reported adjusted earnings of $20.2 million or 56 cents per share compared with $15.1 million 40 cents per share in fiscal 2016.
Raven Industries, Inc. Price, Consensus and EPS Surprise
Sales increased around 30.5% year over year to $68.9 million in the quarter. Sales growth in Applied Technology and Engineered Films segments were offset by declining sales in the Aerostar segment.
Gross profit increased 63.9% to $19.3 million from $11.8 million in the year-ago quarter. Gross margin expanded 570 basis points (bps) year over year to 28%.
In the quarter, selling, general and administrative expenses went up to $9.2 million from $7.3 million in the year-ago quarter. Operating income increased a whopping 999.5% to $6.2 million.
Segmental Performance
Applied Technology: Sales grew 40.4% year over year to $25.9 million. Domestic sales were up 44% while international sales were up 29.8% from the prior-year period. Sales growth for the division was driven by new product sales, expanded OEM relationships and higher sales of direct injection systems.
Operating income was $6.4 million, up 94.5% from the prior-year quarter, primarily driven by a 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 $34.5 million, up 35.8% year over year. The increase was driven by higher sales in the Geomembrane, Industrial, and Construction markets, partially offset by a decline in the Agriculture market.
Operating income in the fiscal fourth quarter was $5.3 million, up $3.4 million or 177.3% from the prior-year period. The year-over-year increase in operating income was driven by strong operating leverage as sales volumes increased significantly. Division operating margin increased 780 bps year over year from 7.5% to 15.3%, driven by improved capacity utilization and spending discipline.
Aerostar: Sales in the segment were $8.8 million, down $0.2 million or 2.5% from the year-ago quarter. The decline was driven primarily by lower Aerostat sales due to the timing of deliveries. Sales of stratospheric balloons to Google for Project Loon were up significantly year over year while sales of research balloons were down due to the timing of deliveries.
Operating income in the fiscal fourth quarter was $0.2 million, flat with the fourth quarter of last year.
Financial Update
Raven ended the year with cash and cash equivalents of $50.6 million, up $16.9 million from the prior year. The company generated cash flow from operations of $48.6 million at the end of fiscal 2017 compared with $44 million a year ago.
Outlook
Going into fiscal 2018, Raven remains optimistic about the future and expects to continue making progress in its long-term goal to generate 10% annualized earnings growth and strong relative returns on equity and assets.
Hitachi has a long-term earnings growth expectation of 13% and is currently trading at a forward P/E of 13.4x.
LSB Industries has a long-term earnings growth expectation of 12%.
Bunzl has a long-term earnings growth expectation of 7.5% and is currently trading at a forward P/E of 20.3x.
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Raven (RAVN) Posts In-Line Earnings, Revenues Increase Y/Y
Raven Industries Inc. reported modest fourth-quarter fiscal 2017 results. Adjusted earnings were significantly up to $4.4 million or 12 cents per share from $1.9 million or 5 cents per share in the year-ago quarter. The increase in bottom-line was attributed to the rise in revenues during the quarter. Adjusted earnings were in line with the Zacks Consensus Estimate.
For full-year fiscal 2017, the company reported adjusted earnings of $20.2 million or 56 cents per share compared with $15.1 million 40 cents per share in fiscal 2016.
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 30.5% year over year to $68.9 million in the quarter. Sales growth in Applied Technology and Engineered Films segments were offset by declining sales in the Aerostar segment.
Gross profit increased 63.9% to $19.3 million from $11.8 million in the year-ago quarter. Gross margin expanded 570 basis points (bps) year over year to 28%.
In the quarter, selling, general and administrative expenses went up to $9.2 million from $7.3 million in the year-ago quarter. Operating income increased a whopping 999.5% to $6.2 million.
Segmental Performance
Applied Technology: Sales grew 40.4% year over year to $25.9 million. Domestic sales were up 44% while international sales were up 29.8% from the prior-year period. Sales growth for the division was driven by new product sales, expanded OEM relationships and higher sales of direct injection systems.
Operating income was $6.4 million, up 94.5% from the prior-year quarter, primarily driven by a 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 $34.5 million, up 35.8% year over year. The increase was driven by higher sales in the Geomembrane, Industrial, and Construction markets, partially offset by a decline in the Agriculture market.
Operating income in the fiscal fourth quarter was $5.3 million, up $3.4 million or 177.3% from the prior-year period. The year-over-year increase in operating income was driven by strong operating leverage as sales volumes increased significantly. Division operating margin increased 780 bps year over year from 7.5% to 15.3%, driven by improved capacity utilization and spending discipline.
Aerostar: Sales in the segment were $8.8 million, down $0.2 million or 2.5% from the year-ago quarter. The decline was driven primarily by lower Aerostat sales due to the timing of deliveries. Sales of stratospheric balloons to Google for Project Loon were up significantly year over year while sales of research balloons were down due to the timing of deliveries.
Operating income in the fiscal fourth quarter was $0.2 million, flat with the fourth quarter of last year.
Financial Update
Raven ended the year with cash and cash equivalents of $50.6 million, up $16.9 million from the prior year. The company generated cash flow from operations of $48.6 million at the end of fiscal 2017 compared with $44 million a year ago.
Outlook
Going into fiscal 2018, Raven remains optimistic about the future and expects to continue making progress in its long-term goal to generate 10% annualized earnings growth and strong relative returns on equity and assets.
Stocks Worth a Glance
Top ranked stocks in the industry include Hitachi, Ltd. (HTHIY - Free Report) , LSB Industries, Inc. (LXU - Free Report) and Bunzl plc (BZLFY - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hitachi has a long-term earnings growth expectation of 13% and is currently trading at a forward P/E of 13.4x.
LSB Industries has a long-term earnings growth expectation of 12%.
Bunzl has a long-term earnings growth expectation of 7.5% and is currently trading at a forward P/E of 20.3x.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere
1 billion iPhones in 10 years but a new breakthrough is expected to generate more
than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging
phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may
kick yourself in 2020. Click here for the 6 trades >>