Raven (RAVN) Reports Strong Q1, Beats Earnings Estimates

Raven Industries, Inc. (NASDAQ:RAVN) reported first-quarter fiscal 2018 results with income of $12.34 million or 34 cents per share compared with $5.5 million or 15 cents in the year-ago quarter. The increase in bottom-line was driven primarily by improved operating performance in Applied Technology and Engineered Films, and higher profitability in Aerostar. Earnings comfortably beat the Zacks Consensus Estimate of 24 cents.

Operational Update

Sales increased around 36.7% year over year to $93.5 million in the quarter. Sales in all three divisions witnessed significant growth year over year in the first quarter. Gross profit increased 34.2% to $31.9 million from $20.1 million in the year-ago quarter. Gross margin expanded 480 basis points (bps) year over year.

In the quarter, selling, general and administrative expenses went up to $9.5 million from $7.7 million in the year-ago quarter. Operating income significantly increased 126.3% to $18.2 million.

Segmental Performance

Applied Technology: Sales grew 28.7% year over year to $40.5 million. Sales growth for the division was driven by new product sales, expanded OEM relationships and higher sales of direct injection systems.

Operating income was $13.5 million, up 54.8% from the prior-year quarter. The increase was driven primarily by rise in operating leverage due to higher sales volume. Operating margin increased 560 bps from 27.6% to 33.2%. 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 $43.6 million, up 49.7% year over year. The increase in sales was driven by markedly higher sales into the Geomembrane market, with the Industrial and Construction markets also significantly contributing to growth.

Operating income rose to $8.7 million or 125% due to higher sales volumes and lower operating expenses. Segment operating margin expanded 670 bps to 20% driven by improved capacity utilization and continued spending discipline.

Aerostar: Sales in the segment were $9.6 million, reflecting a 21.7% increase from the prior-year quarter. The rise was driven by the starting of a newly-awarded stratospheric balloon contract, rise in sales to Google (NASDAQ:GOOGL) for Project Loon, and the timing of research balloon deliveries.

The segment reported an operating income of $1.4 million against an operating loss of $0.2 million in the year-ago quarter. The increase was driven by cost reductions implemented over the prior year as well as higher sales to stratospheric balloon programs.

Financial Update

Raven ended the quarter with cash and cash equivalents of $50.5 million, up $17.6 million from the prior quarter. The company generated cash flow from operations of $7.7 million in the first quarter of the fiscal year compared with $11.1 million in the year-ago quarter.

Outlook

Raven expects to exceed prior-year sales and adjusted operating income in fiscal 2017. The company continues to invest for the intermediate and long term. The company is increasing its investment in research and development activities to continue its new product momentum, and continues to look for additional strategic acquisitions.

Stocks Worth a Glance

3M Company (NYSE:MMM) reported relatively healthy first-quarter 2017 results on May 24, 2017. The reported earnings exceeded the Zacks Consensus Estimate by 9 cents, while revenues also exceeded the Zacks Consensus Estimate of $7,515 million.

Crane Co. (NYSE:CR) kept its earnings streak alive, reporting better-than-expected results for first-quarter 2017. The company's earnings of $1.05 per share, surpassed the Zacks Consensus Estimate of $1.00 by 5%. Also, the bottom line increased roughly 13% over the year-ago tally of 93 cents. The company's revenues totaled $673.4 million, 3.2% higher than the Zacks Consensus Estimate of $652.5 million and up 2% year over year.

United Technologies Corporation (NYSE:UTX) reported first-quarter 2017 adjusted earnings (from continuing operations) of $1.48 per share, which beat the Zacks Consensus Estimate of $1.39. Revenues beat the Zacks Consensus Estimate of $13,316 million.

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