Raven Industries Inc. (RAVN) delivered earnings per share (EPS) of 46 cents in its second quarter ended July 31, 2010, surpassing the Zacks Consensus Estimate of 39 cents and 34 cents in the year-ago period. Higher revenues due to a surge in demand in several of its end-markets, including energy, precision agriculture, and military surveillance, led to the outperformance.
Revenues increased 29% to $73 million, surpassing the Zacks Consensus of $65 million. All the segments posted year-over-year sales growth led by Engineered Films growing 74%, followed by the Aerostar segment at 58%.
Cost and Margin Performance
Expenses increased year – over - year, with cost of goods sold up 27% and selling, general and administrative expenses increasing 31%. However, based on revenues, cost of goods sold improved 120 basis points and selling, general and administrative expenses increased 10 basis points in the reported quarter.
Gross profit upped 35% to $20.4 million with gross margin expanding 120 basis points to 27.9%. Operating income climbed 36% to $12.6 million with operating margin expanding 80 basis points to 17.2%.
Segment Performance
Revenues increased 29% to $73 million, surpassing the Zacks Consensus of $65 million. All the segments posted year-over-year sales growth led by Engineered Films growing 74%, followed by the Aerostar segment at 58%.
Cost and Margin Performance
Expenses increased year – over - year, with cost of goods sold up 27% and selling, general and administrative expenses increasing 31%. However, based on revenues, cost of goods sold improved 120 basis points and selling, general and administrative expenses increased 10 basis points in the reported quarter.
Gross profit upped 35% to $20.4 million with gross margin expanding 120 basis points to 27.9%. Operating income climbed 36% to $12.6 million with operating margin expanding 80 basis points to 17.2%.
Segment Performance
The Engineered Films segment was the star performer with revenues surging 74% to reach $26.1 million in the quarter, driven by strength in energy, agriculture and industrial markets. Operating income shot up an impressive 166% to $5.5 million and operating margin hiked 730 basis points to 21.2%.
The Aerostar segment posted a revenue increase of 58% to $9.2 million boosted by aerostats sales. The segment’s operating income went up 18% to $1.3 million. However, the segment’s operating margin contracted 490 basis points to 14.6%.
Applied Technology revenues increased by 13% to $21 million driven by strong revenue growth in its core steering product lines. Operating income at the segment was $5.5 million, up 8% from the year-ago level. Operating margin, however, plunged 130 basis points to 26.3% in the quarter.
The Electronic Systems segment revenues edged up 1% to $18.1 million in the quarter. Despite delivering positive results, performance at this segment paled in comparison with the other segments. The segment’s operating income dipped 5% to $2.8 million with operating margin contracting 90 basis points to 15.6% affected by a less favorable product mix.
Financial Position
As of July 31, 2010, Raven had cash, cash equivalents and short-term investments of $53.6 million compared with $49.5 million as of April 30, 2010. The company generated cash of $9.4 million from operating activities in the second quarter of fiscal 2011 compared with $14.6 million in the year-ago period.
Raven possesses a debt-free balance sheet. Raven’s current ratio was 4.35 as of July 31, 2010, compared with 3.91 as of April 30, 2010.
Earlier this week, Raven announced a special dividend of $1.25 per share. The combination of the special dividend and regular quarterly dividend in fiscal 2011 will amount in a total payout of approximately $34 million. Raven increased its regular quarterly dividend from 14 cents to 16 cents per share in the first quarter of this fiscal year.
Outlook
Strong current orders at Engineered Films bode well for the future performance of the segment. The company has however cautioned that the high percentage gains witnessed in the first half will moderate in the latter half of fiscal 2011.
For the Aerostar segment, the company expects shipments to be strong in the third quarter and expects additional orders in the fourth quarter. The company expects the momentum to spill over into the next fiscal year with some leeway for quarter-to-quarter volatility, as the company takes advantage of tethered aerostat development and deployment opportunities. Ramping up of the T-11 Army Airborne parachute contract to its targeted delivery levels will affect near-term profitability.
Total capital expenditure is projected in a range of $12 million to $15 million for fiscal 2011. The company plans to allocate resources for growth opportunities in precision agriculture, persistent surveillance and barrier films. The company further plans to build out the business platform in key areas of research and development and business development.
South Dakota-based Raven Industries Inc. is an industrial manufacturer providing a variety of products for the industrial, construction and military/aerospace markets. The company operates through four business segments: Engineered Films, Electronic Systems, Applied Technology and Aerostar.
RAVEN INDS INC (RAVN): Free Stock Analysis Report
Zacks Investment Research
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Loading...
Posted In: Industrial ConglomeratesIndustrials
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in
