So far as I can tell, after 15 years in business, we here at the Fool have yet to write a single column on Raven Industries (NASDAQ:RAVN). Meanwhile, the stock has nearly quadrupled in value over the last five years alone. Seems high time we gave this Raven some virtual ink, don't you think?

And there's no better time to start than the outset of a new fiscal year. Raven reported its fiscal Q1 2009 earnings on Monday, and the stock has already risen 13% in response. Before examining what led to the rise, let's begin with a brief introduction to the company. Raven's business can be broken down into four main segments:

  • Engineered Films manufactures rugged reinforced plastic sheeting used in construction, industry, and agriculture.
  • Flow Controls' electronic speed and GPS-based systems have both agricultural and marine applications.
  • Electronic Systems makes avionics and communications systems, as well as circuit boards used in "bed controls."
  • Aerostar manufactures high-altitude aerostats (read: "balloons") used in commercial research, as well as parachutes and specialty outerwear for the military.

Writing on the defense industry as I do, Raven's Aerostar segment interests me most. But on Monday, Flow Controls dominated the headlines. Overall company performance was superb -- sales up 29%, profits per diluted share up 28% -- and Flow Controls led the way.

Historically Raven's third-largest division, Flow Controls' revenue soared 76% in Q1. CEO Ronald Moquist explained: "Record prices for crops ... and higher input costs for fuel and fertilizer, create demand for precision agriculture products to help growers cost-effectively plant and manage their acreage." In other words, the more money farmers have to pay seed sellers like Monsanto (NYSE:MON) and Syngenta (NYSE:SYT), and fertilizer producers like Potash (NYSE:POT) and Mosaic (NYSE:MOS), the more incentive farmers have to ensure the seeds and fertilizer are used efficiently -- and Raven can help out with that.

Flow Controls' performance offset weak results in Engineered Films and Electronics Systems, both of which were hurt by the housing downturn. Meanwhile, the division that interests me most -- Aerostar -- turned in the second-best results. Sales there soared 44% on the back of parachute and apparel sales to the military, helping profits nearly quadruple.

Caveat emptor
Aside from the weakness in Films and Electronics, I think investors should watch free cash flow going forward. It dropped precipitously to $4.1 million in Q1, as accounts receivable and inventories both ballooned. Management attributes both phenomena to supporting the dramatic rise in the Flow Controls business, which sounds plausible -- but we'll still want to keep an eye on this trend.