Raven Industries Profit Surges

May 29, 2012

• Sales up 16%
• Earnings increase 21%
• Beats consensus estimates by 16.9%
• Fourth year of double digit growth

Raven Industries, Inc. recently reported record sales and earnings for its first quarter ended April 30, 2012 with net income increasing 21 percent and sales up 16 percent.
The release follows several years of growth that has seen sales increase from $238mm in 2010 to $382mm in 2012 and net income increase from $29mm to $51mm.
The positive growth in sales and earnings trends Raven experienced have continued in the 2013 fiscal first quarter, with sales up to $117.9 million, from $101.5 million in the prior-year period. First-quarter net income rose to $19.0 million, or $1.04 per diluted share, versus fiscal 2012 first-quarter net income of $15.7 million, or $0.86 per diluted share. Growth was driven by the Engineered Films and Applied Technology Divisions, where double-digit sales gains were accompanied by even stronger increases in operating income.


"We are capitalizing on favorable market dynamics in agriculture and energy," said Daniel A. Rykhus, president and chief executive officer. "This produced a strong start to the year with excellent top- and bottom-line performances in our Engineered Films and Applied Technology Divisions."

Raven's Engineered Films Division posted first-quarter sales of $41.1 million, which was up 37 percent from $30.1 million in the fiscal 2012 first quarter. Operating income more than doubled to $9.2 million, from $4.1 million in the prior-year period. Both sales and earnings figures were at record levels as the company continued to benefit from the strength in the energy and agricultural markets while operating efficiencies and a more favorable product mix boosted margins.
For the first quarter, sales in the Applied Technology Division grew 29 percent to $50.5 million versus $39.1 million last year. Operating income increased 39 percent, to $20.9 million from $15.1 million. As in Engineered Films, both sales and earnings set records. The main driver was again the strong domestic agricultural market with the divisons results boosted by its expanded offerings in field computers and application controls that enhance farm yields and reduce operating costs. 

The overall result of EPS of $1.04 significantly exceeded consensus estimates of $0.89 and forecast earnings for the full year have increased to $3.02 from $2.93 three months ago.  Priced at over twenty times consensus forward earnings Raven is not cheap but given average EPS growth of 13.35% and similar forward forecasts the premium appears reasonable.

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