Raven Industries (RAVN) Tops Q4 EPS by 4c, Revenues Miss

Raven Industries (NASDAQ: RAVN) reported Q4 EPS of $0.09, $0.04 better than the analyst estimate of $0.05. Revenue for the quarter came in at $85.8 million versus the consensus estimate of $89.55 million.

Fourth Quarter Results:

Consolidated net sales for the fourth quarter of fiscal 2020 were $85.8 million, down 2.6 percent versus the fourth quarter of fiscal 2019. The year-over-year decline was driven by Engineered Films. The division experienced lower sales demand in the geomembrane market (specifically in the energy sub-market) in addition to a $4.0 million decrease in hurricane recovery film sales. The decline in Engineered Films was mostly offset by growth in Applied Technology and Aerostar. Net sales for those two divisions grew 12.5 percent and 42.3 percent, respectively, versus the fourth quarter of fiscal 2019.

Consolidated operating income for the fourth quarter of fiscal 2020 was $2.9 million versus operating income of $3.4 million in the fourth quarter of fiscal 2019, decreasing 13.2 percent year-over-year. Included in the results for the fourth quarter of fiscal 2020 was $3.2 million of Raven Autonomy™ related expenses. The change in consolidated operating income was driven by lower sales and corresponding negative operating leverage in Engineered Films as well as Raven Autonomy™ related expenses. These impacts were partially offset by increased sales volume and improved profitability within Aerostar and Applied Technology's underlying businesses.

Net income attributable to Raven for the fourth quarter of fiscal 2020 was $3.3 million, or $0.09 per diluted share, versus $3.0 million, or $0.08 per diluted share, in last year\'s fourth quarter. Raven Autonomy™ decreased net income attributable to Raven by $2.3 million, or $0.06 per diluted share, in the fourth quarter of fiscal 2020. Tax expense in the fourth quarter decreased primarily due to higher research and development tax credits, lower pre-tax income, and timing of discrete tax items.

Fiscal 2021 Outlook:

"While we are extremely excited about our long-term future, we cannot ignore the global economic uncertainties brought about by recent world events," said Dan Rykhus, President and CEO. "This is generating concerns from many market participants, and the likelihood of a global economic slowdown for the next several months is high. How extensive and how long this will persist are indeterminable, but I am very confident in our ability to respond to the challenges this is creating. We are in a very strong relative position. We serve diverse end-markets, we have strong competitive positions, we generate robust operating margins, and we have a solid balance sheet and cash flow profile. We will effectively manage the short-term uncertainties and financial performance, while continuing to fund our strategic platforms for growth, although not nearly as aggressively as we planned prior to the recent events.

"With respect to fiscal 2020, we are pleased with the results achieved given the unique market challenges that presented themselves. Market introduction of autonomous agricultural solutions in Raven Autonomy™, greenfield investments in Raven Composites™, and continued success in Aerostar are focused targets for fiscal 2021.

“Building on the acquisition of Smart Ag and a majority ownership in DOT, Applied Technology is moving towards becoming a market leader in autonomous agricultural solutions in fiscal 2021. We are making significant investments to commercialize autonomous agricultural solutions, while also continuing to release innovative precision ag products that solve challenges for our ag retailer and OEM partners. Investments in Raven Autonomy™ will negatively impact profits and margins in fiscal 2021; however, our underlying historical business in Applied Technology is strong. While the global economic environment will impact the ag market, the underlying historical business has a very strong product offering, which generates compelling returns for its end customers.

"In Engineered Films, we are focused on maximizing the returns on past investments given weaker anticipated end-market demand. We expect to see continued challenges in our geomembrane market (specifically in the energy sub-market), as recent global economic developments have significantly impacted oil prices and will drive reductions in domestic drilling activities. We believe the division's diverse market exposure will help insulate it from certain market dynamics, and the division is prepared for challenging end-market conditions. During fiscal 2021, we plan to make progress on the execution of our Raven Composites™ strategy through greenfield operations as we leverage our reinforced materials expertise to deliver thinner, lighter, and stronger composites to our customers. By developing Raven Composites™ and realizing opportunities in the industrial market, Engineered Films is expecting to set the foundation for stronger growth over the long-term.

"I am very pleased with Aerostar's financial performance and execution on its core stratospheric platforms and radar systems. The division will be executing on its noteworthy government contract wins while further advancing its technical services and integrated hardware and software solutions. The division expects to build on this year's strong performance in fiscal year 2021.

"This will be a very interesting and challenging year for Raven. While we are in such a unique position to capitalize on significant opportunities in the marketplace by advancing Raven Autonomy™ and Raven Composites™, we are not going to be as bold as we would prefer in fiscal 2021. We face great uncertainty and we must be prudent. We will be emphasizing the following four strategic priorities: upholding the Raven Way in all the decisions we make, emphasizing cash flow and liquidity from a position of strength, protecting the core business and our strong market positions, and continuing to invest in Raven Autonomy™, a strategic platform with tremendous long-term growth potential. We are a strong Company with a bright future, and we will prudently monitor and respond to whatever short-to-intermediate term economic conditions we face to ensure continued long-term success," concluded Rykhus.

For earnings history and earnings-related data on Raven Industries (RAVN) click here.

You May Also Be Interested In

• Z Squared outlines AI power strategy and Paradox Data acquisition
• Boost Run, Inc. (BRUN) Reports Q2 Revenue of $31.1M
• Cable One names Heather McCallion as chief operating officer