Raven Industries (NASDAQ: RAVN) announced fiscal third-quarter 2019 results on Wednesday after the market closed, marking its second-straight quarterly beat with modest top-line growth despite an unusually tough comparable performance for the company's engineered films segment.
Let's dig deeper to see exactly what drove the mini-industrial conglomerate as it started the second half and what investors should be watching in the coming quarters.
IMAGE SOURCE: RAVEN INDUSTRIES.
Raven Industries results: The raw numbers
| Metric | Fiscal Q3 2019* | Fiscal Q3 2018 | Year-Over-Year Growth |
|---|---|---|---|
| Revenue | $104.83 million | $101.35 million | 3.4% |
| Net income | $13.06 million | $12 million | 8.8% |
| Earnings per diluted share | $0.36 | $0.33 | 9.1% |
DATA SOURCE: RAVEN INDUSTRIES. *FOR THE QUARTER ENDED 31, 2018.
What happened with Raven Industries this quarter?
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Consolidated revenue would have increased 11% had it not been for the impact of abnormally high sales of hurricane recovery film in the same year-ago period.
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Even then -- keeping in mind that Raven doesn't provide specific quarterly guidance -- these results compare favorably to consensus estimates, which predicted earnings of $0.33 per share on revenue of $104.6 million.
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Applied technology segment sales climbed 17.5% year over year, driven by both market-share gains from core product platforms and sales of new products, including the innovative RS1 steering platform. Segment operating income grew more than 44%, to $7.7 million, thanks largely to higher sales and resulting operating leverage.
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Engineered films segment revenue declined 10.6%, to $58.2 million, due to an expected decline in hurricane recovery film sales -- to $1.5 million from $8.4 million in the same year-ago period. Segment operating income declined 46%, to $9.2 million.
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Aerostar segment revenue climbed 53.4%, to $17 million, driven by higher stratospheric balloon sales from several completed flight campaigns and deliverables to new U.S. government customers, as well as fulfilling its aerostat contract with the U.S. Department of Defense. Segment operating income nearly tripled, to $3.8 million.
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Aerostar also was awarded a new five-year, $36 million radar-systems contract this quarter, "positioning this strategic product line for strong future growth."
What management had to say
Raven Industries CEO Dan Rykhus called it a "strong" quarterly performance, crediting applied technology and Aerostar for their relative strength and offsetting a "temporary step back in performance for Engineered Films."