Raven Industries (RAVN) released fiscal second-quarter 2018 results on Aug. 23 after the market closed, highlighting continued broad-based growth, a recent acquisition, and welcome diversification for the mini-industrial conglomerate's Aerostar segment.
Let's dig deeper to see what Raven Industries accomplished over the past few months, as well as what investors can expect from the company.
Aerostar won a new stratospheric balloon contract this quarter. Image source: Raven Industries.
Raven Industries results: The raw numbers
| Metric |
Fiscal Q2 2018* |
Fiscal Q2 2017 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$86.6 million |
$67.6 million |
28.1% |
|
Net income |
$8.2 million |
$4.5 million |
82.2% |
|
Earnings per diluted share |
$0.23 |
$0.12 |
91.7% |
Data source: Raven Industries. *For the quarter ended July 31, 2017.
What happened this quarter?
- Engineered-films revenue climbed 33.8% year over year to $49 million, helped by a 35% increase in volume (measured in pounds sold). Volume growth was driven by higher geomembrane market sales. Engineered-films operating income climbed 43.4% to $9.6 million.
- Applied-technology revenue climbed 25.4% year over year to $28.4 million, driven by new product sales, expanded relationships with original equipment manufacturers, and growth in sales of direct injection systems. Applied-technology operating income increased 28.3% to $6.6 million.
- Aerostar division revenue rose 11.3% to $9.4 million on growth in the stratospheric-balloon platform. Aerostar operating income swung to $1.4 million from a $0.3 million operating loss in the same year-ago period.
- On Aug. 22, Raven announced that it will acquire Colorado Lining International (CLI) for $14 million in cash, plus up to $2 million in potential earn-out payments over the next three years. The move adds new design-build and installation service components to Raven's geomembrane offering and transforms the engineered-films business into a vertically integrated solutions provider.
- Aerostar was awarded a stratospheric-balloon contract with an unnamed new customer during the quarter, helping to diversify its base from Google's Project Loon.
What management had to say
"We are very pleased with the progress made and performance achieved by all three divisions throughout the first half of the year," added Raven Industries CEO Dan Rykhus. "The company delivered strong growth in sales and operating income."
But Rykhus also repeated his warning that year-over-year comparisons will be more difficult in the second half of 2017.
Looking forward
"However," he added, "we believe we are on track to deliver meaningful growth in revenues and operating income in fiscal year 2018. We remain focused on innovation in our core products and outstanding service to our end-markets, while also making strategic acquisitions, such as CLI, to supplement our organic growth strategy."
Raven doesn't usually provide specific financial revenue or earnings guidance. So with the caveat that we don't usually pay close attention to Wall Street's demands, note that consensus estimates predicted Raven would deliver roughly the same earnings this quarter on lower sales of $82 million.
In all, this was a solid performance from all three of Raven Industries' divisions, punctuated by the continued implementation of its long-term strategy for delivering both organic and acquisitive growth.
