Raven Industries Delivers as Promised, Invests in Its Future
Raven Industries (NASDAQ: RAVN) announced fiscal fourth-quarter 2018 results on Tuesday after the market closed, highlighting double-digit growth in each of its three operating segments led by the hurricane-related strength of its engineered films division.
With shares of the mini-industrial conglomerate down modestly on Wednesday in response, let's take a closer look at how Raven capped the year, as well as what investors should expect from the company going forward.
IMAGE SOURCE: RAVEN INDUSTRIES.
Raven Industries results: The raw numbers
| Metric | Fiscal Q4 2018* | Fiscal Q4 2017 | Year-Over-Year Growth |
|---|---|---|---|
| Revenue | $95.8 million | $68.9 million | 39% |
| Net income | $8.4 million | $4.4 million | 90.2% |
| Earnings per diluted share | $0.23 | $0.12 | 91.7% |
DATA SOURCE: RAVEN INDUSTRIES. *FOR THE QUARTER ENDED JAN. 31, 2018
What happened with Raven Industries this quarter?
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Raven doesn't provide specific financial guidance. So, for perspective -- though we don't normally pay close attention to Wall Street's demands -- consensus estimates predicted slightly higher earnings of $0.27 per share on roughly the same revenue.
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Applied technology segment revenue climbed 17.8% to $30.5 million, despite "lackluster" agriculture market conditions, driven by new product introductions and the continued development of key OEM relationships. Applied Technology Operating income declined 8.7% to $5.8 million, driven by continued research and development investments aimed at driving long-term growth and taking market share.
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Subsequent to the end of the quarter, Raven launched a strategic initiative to grow its local presence in Brazil/Latin America and capitalize on one of the world's largest agriculture markets.
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Engineered films revenue climbed 61% to $55.6 million, driven by a combination of organic growth in the geomembrane and industrial markets, $15.8 million related to the delivery of recovery film in support of hurricane relief efforts (above expectations for $8 million to $9 million), and $7.9 million in sales from last quarter's acquisition of Colorado Linings International. Engineered films operating income grew 125.2% to $11.9 million.
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Aerostar sales increased 11.8% to $9.8 million, driven by stratospheric balloon platform growth. Aerostar incurred a small operating loss during the quarter -- something the company insists is not consistent with its long-term expectations for the segment -- due to a combination of unfavorable product mix and contract timing.
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Net income included a $0.4 million (or $0.01 per share) impact related to costs for "Project Atlas," the company's strategic initiative announced last quarter to replace its existing enterprise resource planning platform.