Raven Industries (RAVN +0.00%) announced strong fiscal second-quarter 2019 results Wednesday after the market closed, including continued broad-based top- and bottom-line growth from each of its core business segments.
With shares of the mini-industrial conglomerate up 13.8% Thursday as of this writing, let's take a closer look at what drove Raven industries this quarter, as well as what investors can expect.
Image source: Raven Industries.
Raven Industries results: The raw numbers
| Metric |
Fiscal Q2 2019* |
Fiscal Q2 2018 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$102.7 million |
$86.6 million |
18.6% |
|
Net income |
$13.7 million |
$8.2 million |
66.1% |
|
Earnings per diluted share |
$0.38 |
$0.23 |
65.2% |
Data source: Raven Industries. *For the quarter ended July 31, 2018.
What happened with Raven Industries this quarter?
- Excluding sales associated with Colorado Linings International (CLI), which Raven acquired last year, as well as from Aerostar's client private business, which the company divested last quarter, revenue climbed 10.1% year over year.
- This quarter also included $0.02 per share in expenses related to the company's Project Atlas initiative to replace its existing enterprise resource planning platform, as well as a $0.05-per-share favorable impact from lower tax expenses.
- Even adjusted for one-time items, Raven's results still handily outpaced consensus estimates for earnings of $0.30 per share.
- Applied Technology segment revenue grew 6.8% year over year to $30.4 million, driven by strength in new product sales to the domestic market. International sales declined primarily due to order timing. Segment operating income grew 32.4% to $8.8 million, driven by operating leverage and reduced engineering support costs.
- Engineered Films segment revenue climbed 20.1% to $58.9 million, driven by both 1.8% organic growth and a $9 million net increase in sales from the CLI acquisition. Segment operating income increased 13.1% to $10.8 million.
- Aerostar revenue grew 44.3% to $13.5 million, thanks to higher stratospheric balloon platform sales and contract deliveries. Note the recently divested client private business within this segment generated no sales this quarter, compared to $1.4 million in the same year-ago period. Segment operating income nearly tripled to $3.8 million, driven by favorable product mix and higher costs allocated to specific balloon contracts.
What management had to say
Raven Industries CEO Dan Rykhus said:
We are very pleased with the strong second quarter performances of all three operating divisions. Organic growth was strong for Aerostar, new product success drove growth for Applied Technology, and Engineered Films executed well and has realized the benefits of the CLI acquisition. We expect the underlying strength of our business to continue in the second half of the year, and we are on track to deliver another strong year of growth and improved profitability.
Looking forward
Raven Industries doesn't provide specific forward financial guidance. But Rykhus did add that the company expects its "underlying strength" to continue into the second half.
"We have a strong platform for organic growth and we are making the right investments and expanding margins," Rykhus said. "We believe we are on track to deliver another strong performance in fiscal year 2019."
All told, there's no denying this was an excellent quarter that should leave investors excited for what's to come. With shares largely trading flat over the past few months despite Raven Industries' equally impressive first-quarter performance in May, I think the market was right to bid the stock up to a fresh all-time high today.
