Raven Industries Reports Fiscal 2013 Third-Quarter Results

Raven Industries Reports Fiscal 2013 Third-Quarter Results

Applied Technology and Aerostar Drive 4 Percent Year-Over-Year Sales Gain

SIOUX FALLS, S.D., Nov. 20, 2012 (GLOBE NEWSWIRE) -- Raven Industries, Inc.
(Nasdaq:RAVN) today reported sales and earnings for its fiscal 2013 third
quarter ended October 31, 2012.

For the third quarter, sales increased 4 percent to $97.0 million, from $93.3
million in the prior-year third quarter. Revenue growth resulted from strength
in the Applied Technology Division along with the addition of Vista Research
revenues in the Aerostar Division. Engineered Films sales declined slightly
from record levels in the year-ago third quarter.

Raven's third-quarter net income was $10.9 million, or $0.30 per diluted
share, down 5 percent from year-earlier net income of $11.4 million, or $0.31
per diluted share. All earnings-per-share amounts have been adjusted to
reflect a two-for-one stock split effective July 25, 2012.

For the nine months, sales reached $316.6 million, an 11-percent increase from
last year's $285.2 million. Net income grew 5 percent to $41.5 million, or
$1.13 per diluted share, from $39.6 million, or $1.09 per diluted share, in
fiscal 2012.

"There were encouraging developments within all of our divisions during the
third quarter," said Daniel A. Rykhus, president and chief executive officer.
"Applied Technology sales benefited from our consistent investment in new
products and international expansion. Within Aerostar, Vista Research revenues
helped to moderate aerostat volatility. Engineered Films saw improved demand
for construction films—and that helped offset a decline in energy sales. Our
performance company-wide led to a 4 percent top-line gain."

Guidance Products Drive Applied Technology to Record Levels

Sales in Applied Technology grew 12 percent to $39.5 million, versus $35.3
million last year. Operating income rose 6 percent, to $12.3 million, from
$11.5 million. The bottom-line gain stemmed from relatively higher sales and
was achieved despite ongoing investment in research, marketing and product
development. Both the sales and operating income results were third-quarter
records.

Said Rykhus, "We continue to see rising demand for our precision agricultural
solutions—particularly Raven's advanced guided steering systems that enhance
farm yields and reduce operating costs. Emerging and established markets
benefit from the precision and resulting cost savings we bring via technology,
as well as the ability to maximize yields, which is significant in challenging
conditions, including drought.

"International sales remained strong in the third fiscal quarter, particularly
in Brazil, Canada and South Africa. Domestically, we saw strong OEM demand as
we enhance our product capabilities. The drought in the US has created some
uncertainty in the marketplace, but overall, any sluggishness has been
substantially offset by higher commodity prices and strong farm income."

During the third quarter, Raven introduced its Envizio Pro XL™ field computer.
Based on the company's popular Envizio Pro and Envizio Pro II field computers,
the new device features a 10.4" color touchscreen display. The Envizio Pro XL
utilizes the same operating system as its predecessors, but the larger
touchscreen enhances the user experience with products like Raven's OmniRow
advanced planter control system, or OmniSeed advanced air-seeder control
system.

Noted Rykhus, "The Envizio Pro XL is just one example of our commitment to
product development. Our new product initiatives are done in concert with our
OEM and aftermarket channel partners—and this is part of what drives continued
success in Applied Technology."

Vista Research Fuels Aerostar Gains

Aerostar's sales in the third quarter were $26.4 million versus $24.2 million
in the previous year's third quarter, a 9 percent gain. As previously
disclosed, Raven realigned its Electronic Systems Division in the second
quarter. Approximately 75 percent of Electronic Systems' sales went to
Aerostar in the fiscal third quarter and the balance to Applied Technology.
All sales and operating income amounts reflect the realignment.

Most of Aerostar's gain came from the addition of revenues from Vista
Research, which was acquired in January 2012. Sales of high-altitude research
balloons also increased. Aerostat sales of $1.4 million declined $700,000;
electronics manufacturing services revenues were also lower. However,
operating income rose 20 percent to $3.8 million from $3.2 million a year
earlier.

Said Rykhus, "Despite a lack of aerostat sales in the third quarter, we were
able to deliver year-over-year growth. This affirms our strategy of acquiring
highly engineered products and businesses that occupy a unique market
position—and Vista Research does just that. A leading provider of surveillance
systems that enhance the effectiveness of radars using sophisticated signal
processing algorithms, Vista's smart sensing radar systems, or SSRS, are
employed in a host of advanced detection and tracking applications, including
wide-area surveillance for border patrol and the military."

Commented Rykhus, "We continue to develop opportunities to add stability and
mitigate volatility in our Aerostar business, and ultimately drive longer-term
growth with breakout potential. That said, we continue to manage the business
responsibly, carefully controlling discretionary spending, staffing levels and
R&D."

Recently, the company confirmed that the high-altitude research balloons used
by Austrian Felix Baumgartner in his record-setting Red Bull Stratos mission,
were manufactured by Raven's Aerostar Division.

Engineered Films Keeps Gross Profit Percentage Despite Lower Demand

For the third quarter, Engineered Films posted sales of $33.3 million,
compared to $34.9 million in the fiscal 2012 third quarter, a 5 percent
reduction from last year's record level. Operating income declined 15 percent
to $4.7 million, from $5.6 million in the prior-year period.

Said Rykhus, "We continue to see solid performance from Engineered Films.
While energy and agricultural sales declined during the quarter, deliveries of
construction films were higher. Moreover, we continue to believe that
geomembrane films will be a rising part of our market mix for this division,
due to the critical need to protect water and other environmental resources.

"Within Engineered Films we maintained our gross profit percentage—even with
lower sales—through improved operating efficiencies. While the pounds of film
sold is up about 10 percent for the nine months, we do have extrusion capacity
to further grow this business—which we intend to do through R&D investments in
new growth opportunities as well as enhancements to our existing product
line," Rykhus noted.

Attractive Cash Position Despite Increased Investments

At October 31, 2012, cash and investment balances were $48.1 million, up from
$44.2 million a year ago. Increases in capital expenditures and the $12
million payment to acquire Vista Research, Inc., in the fourth quarter last
year were offset by cash flows from operations. The company paid $3.8 million
in dividends to shareholders ($0.105 per share) during the quarter. Accounts
receivable increased to $55.5 million compared with $50.7 million at October
31, 2011. Inventories were $50.0 million, up from $49.9 million one year
earlier. Average accounts receivable days outstanding increased year-over-year
while inventory turns declined slightly. Nine-month operating cash flows
increased to $58.0 million from $37.7 million in the prior year.

Building for the Future

Said Rykhus, "For the fourth quarter, we continue to see positive trends in
Applied Technology. For the near-term, Aerostar continues to be impacted by a
lack of aerostat orders. Within Engineered Films, we anticipate a challenging
environment and tough year-over-year comparison. Given the company's
year-to-date performance and a difficult fourth-quarter outlook, reaching our
long-term earnings growth target of 10-15 percent is unlikely in the current
year. However, we are pleased that we continue to expect a record year for
sales and earnings, while managing the business to achieve our target longer
term."

Concluded Rykhus, "Helping customers solve great challenges—hunger, safety,
environmental protection and energy independence—remains the driving force
behind everything that we do. We're continuing to invest in the company,
expanding both our base of fixed assets and portfolio of product lines.
Raven's diversified business model enables us to weather near-term challenges,
while continuing to grow and build for the future."

Conference Call Information

Raven will host a conference call today, Tuesday, November 20, 2012, at 9:00
a.m. Central Time to discuss third-quarter performance. Analysts and investors
are invited to join the conference call by dialing: 1-866-393-0676.
Alternatively, the live call can be accessed through the Investor Relations
section of the company's website at http://investors.ravenind.com/. Please log
on to the website at least 15 minutes early to register on the Events &
Presentations page, and download and install any necessary audio software.

A replay of the conference call will be available two hours after the call
ends through 11:59 p.m. CT on Friday, November 30, 2012. To access the replay,
dial 1-855-859-2056 and enter conference ID: 60394664. A replay also will
remain available on the company's website for 90 days following the call.

About Raven Industries, Inc.

Since 1956, Raven Industries has designed and manufactured high-quality,
high-value technical products.Raven is publicly traded on NASDAQ (RAVN) and
has earned an international reputation for innovation, product quality, high
performance and unmatched service.With strengths in engineering,
manufacturing, and technological innovation, Raven serves theprecision
agriculture, high performance specialty films, aerospace, and electronic
manufacturing services markets.Visit www.RavenInd.com for more information.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements regarding
the expectations, beliefs, intentions or strategies regarding the future.
Without limiting the foregoing, the words "anticipates," "believes,"
"expects," "intends," "may," "plans," and similar expressions are intended to
identify forward-looking statements. The company intends that all
forward-looking statements be subject to the safe harbor provisions of the
Private Securities Litigation Reform Act. Although management believes that
the expectations reflected in forward-looking statements are based on
reasonable assumptions, there is no assurance these assumptions are correct or
that these expectations will be achieved. Assumptions involve important risks
and uncertainties that could significantly affect results in the future. These
risks and uncertainties include, but are not limited to, those relating to
weather conditions and commodity prices, which could affect sales and
profitability in some of the company's primary markets, such as agriculture,
construction and oil and gas drilling; or changes in competition, raw material
availability, technology or relationships with the company's largest
customers—any of which could adversely affect any of the company's product
lines—as well as other risks described in the company's 10-K under Item 1A.
This list is not exhaustive, and the company does not have an obligation to
revise any forward-looking statements to reflect events or circumstances after
the date these statements are made.

RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands, except earnings per share) (Unaudited)
                                                                 
                                                                 
                 Three Months Ended October 31, Nine Months Ended October 31,
                                     Fav                          Fav
                                        (Unfav)                        (Unfav)
                 2012       2011       Change   2012       2011       Change
Net sales         $97,011  $93,300  4 %      $316,600 $285,185 11 %
Cost of goods     67,436    66,046            215,826   196,865   
sold
Gross profit      29,575    27,254    9 %      100,774   88,320    14 %
                                                                 
Research and
development       3,498     2,499             10,462    7,116     
expenses
Selling, general
and               9,705     7,880             28,101    22,122    
administrative
expenses
Operating income  16,372    16,875    (3)%     62,211    59,082    5 %
                                                                 
Other (expense),  (56)      (4)               (204)     (93)      
net
Income before     16,316    16,871    (3)%     62,007    58,989    5 %
income taxes
                                                                 
Income taxes      5,454     5,473             20,554    19,414    
Net income        10,862    11,398    (5)%     41,453    39,575    5 %
                                                                 
Net income
attributable to   3         8                 5         8         
noncontrolling
interest
                                                                 
Net income
attributable to   $10,859  $11,390  (5)%     $41,448  $39,567  5 %
Raven Industries,
Inc.
                                                                 
Net income per                                                    
common share: (a)
-basic            $0.30      $0.31      (3)%     $1.14      $1.09      5 %
-diluted          $0.30      $0.31      (3)%     $1.13      $1.09      4 %
                                                                 
Weighted average
common shares:                                                    
(a)
-basic            36,363     36,242             36,333     36,224     
-diluted          36,530     36,438             36,540     36,430     
                                                                 
                                                                 
(a) All weighted average shares and earnings per share amounts have been
adjusted to reflect the two-for-one stock split effective July 25, 2012.
                                                                 
                                                                 
                                                                 
                                                                 
                                                                 
RAVEN INDUSTRIES, INC.
SALES AND OPERATING INCOME BY SEGMENT
(Dollars in thousands) (Unaudited)
                                                                 
                                                                 
                 Three Months Ended October 31, Nine Months Ended October 31,
                                     Fav                          Fav
                                        (Unfav)                        (Unfav)
                 2012       2011       Change   2012       2011       Change
Net sales (a)                                                     
Applied           $39,534  $35,263  12 %     $133,346 $112,716 18 %
Technology
Engineered Films  33,316    34,947    (5)%     111,195   97,497    14 %
Aerostar          26,385    24,173    9 %      78,865    78,126    1 %
Intersegment      (2,224)    (1,083)            (6,806)    (3,154)    
eliminations
Total Company     $97,011  $93,300  4 %      $316,600 $285,185 11 %
                                                                 
Operating income                                                  
(a)
Applied           $12,289  $11,547  6 %      $47,248  $40,950  15 %
Technology
Engineered Films  4,729     5,574     (15)%    20,727    14,987    38 %
Aerostar          3,830     3,198     20 %     7,581     12,972    (42)%
Intersegment      (25)       6                 (87)       6         
eliminations
Total segment     $20,823  $20,325          $75,469  $68,915  
income
Corporate         (4,451)    (3,450)    (29)%    (13,258)   (9,833)    (35)%
expenses
Total Company     $16,372  $16,875  (3)%     $62,211  $59,082  5 %
                                                                 
                                                                 
(a) Effective June 1, 2012 the Company realigned the assets and team members
of its Electronic Systems Division and deployed them into the Company's
Aerostar and Applied Technology Divisions.The segment information presented
for the three months and nine months ended October 31, 2012 and 2011 reflect
this realignment.


RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars In thousands) (Unaudited)
                                                        
                                                        
                                    October 31 January 31 October 31
                                    2012       2012       2011
ASSETS                                                   
Cash and cash equivalents            $48,087  $25,842  $44,223
Accounts receivable, net             55,462    60,759    50,661
Inventories                          50,024    54,756    49,856
Other current assets                 6,054     6,202     4,581
Total current assets                 159,627   147,559   149,321
                                                        
Property, plant and equipment, net   77,392    61,894    56,906
Other assets, net                    35,156    36,250    16,910
                                    $272,175 $245,703 $223,137
                                                        
LIABILITIES AND SHAREHOLDERS' EQUITY                     
Accounts payable                     $13,262  $16,162  $17,568
Accrued and other liabilities        26,154    24,484    19,130
Total current liabilities            39,416    40,646    36,698
                                                        
Other liabilities                    19,178    24,467    13,582
Shareholders' equity                 213,581   180,590   172,857
                                    $272,175 $245,703 $223,137

                                                              
RAVEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(Dollars in thousands) (Unaudited)
                                                              
                                                              
                                                Nine Months Ended October 31,
                                                2012           2011
Cash flows from operating activities:                          
Net income                                       $41,453      $39,575
Adjustments to reconcile net income to net cash                
provided by operating activities:
Depreciation and amortization                    9,595         6,481
Other operating activities, net                  6,998         (8,327)
Net cash provided by operating activities        58,046        37,729
                                                              
Cash flows from investing activities:                          
Capital expenditures                             (22,840)      (22,070)
Other investing activities, net                  (125)         405
Net cash used in investing activities            (22,965)      (21,665)
                                                              
Cash flows from financing activities:                          
Dividends paid                                   (11,430)      (9,766)
Other financing activities, net                  (1,396)       356
Net cash used in financing activities            (12,826)      (9,410)
                                                              
Effect of exchange rate changes on cash          (10)          6
                                                              
Net increase in cash and cash equivalents        22,245        6,660
Cash and cash equivalents at beginning of period 25,842        37,563
Cash and cash equivalents at end of period       $48,087      $44,223

CONTACT: Contact Information
         At the Company:
         Tom Iacarella, Vice President and CFO
         605-336-2750
         Thomas.Iacarella@ravenind.com

         At Padilla Speer Beardsley:
         Matt Sullivan
         612-455-1700
         msullivan@padillaspeer.com
 
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