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Edited Transcript of RAVN earnings conference call or presentation 24-Mar-20 2:00pm GMT

·27 mins read

Q4 2020 Raven Industries Inc Earnings Call SIOUX FALLS Jun 2, 2020 (Thomson StreetEvents) -- Edited Transcript of Raven Industries Inc earnings conference call or presentation Tuesday, March 24, 2020 at 2:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Bo Larsen Raven Industries, Inc. - Assistant Controller & IR Director * Daniel A. Rykhus Raven Industries, Inc. - President, CEO & Director * Steven E. Brazones Raven Industries, Inc. - VP, CFO & Treasurer ================================================================================ Conference Call Participants ================================================================================ * Benjamin David Klieve National Securities Corporation, Research Division - Analyst * Christopher Paul Moore CJS Securities, Inc. - Senior Research Analyst * Joseph Logan Mondillo Sidoti & Company, LLC - Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by and welcome to the Raven Industries Fiscal 2020 Year-End Investor Conference Call. (Operator Instructions) And I would now like to hand the conference over to your speaker today, Bo Larsen, Director of Finance. Thank you, and please go ahead, sir. -------------------------------------------------------------------------------- Bo Larsen, Raven Industries, Inc. - Assistant Controller & IR Director [2] -------------------------------------------------------------------------------- Good morning, and welcome to the Raven Industries Fiscal 2020 Year-End Investor Conference Call. Today's call is being webcast live and will also be archived on the company's website for future listening. On the call today will be Dan Rykhus, Raven's President and Chief Executive Officer; and Steven Brazones, Raven's Vice President and Chief Financial Officer. Before beginning, the company would like to inform everyone that certain matters discussed during this call will include forward-looking statements as that term is defined under the Private Securities Litigation Reform Act of 1995. As such statements reflect the company's current expectations, actual results may differ. I would now like to turn the call over to Dan Rykhus, Raven's Chief Executive Officer. -------------------------------------------------------------------------------- Daniel A. Rykhus, Raven Industries, Inc. - President, CEO & Director [3] -------------------------------------------------------------------------------- Thanks, Bo. Good morning, everyone, and thanks for joining us. Our comments today to start the call will be focused primarily on the year ahead, rather than the quarter and the year closed. We believe last year was a very important year for the company as we completed numerous initiatives to prepare the company for growth and launched 2 exciting strategic growth platforms. Despite the impact of the current pandemic, Raven Autonomy and Raven Composites, along with the numerous growth investments made over the last 2 years in each division, will prove to be critical to our long-term growth and performance. Over the past month, much has changed outside our business that has impacted Raven. A global pandemic has certain cities, states and countries literally locked down, and uncertainty has become the central theme that we are all living with. Because of the pandemic and uncertainty, our outlook for the business performance is changing day by day, with the outlook for some segments improving and some declining. My view today is that economic activity for the next 2 quarters will be greatly suppressed due to the pandemic, and that we are hopeful for a fourth quarter recovery. No one knows for sure what to expect, but we must form our best opinions and run the company guided by our values, our belief in our long-term strategy, and our current view of the health of our markets over the next several quarters. With those guiding principles in place, we have formed the following strategic priorities for the remainder of fiscal year '21, our current year: first, we will uphold and preserve the Raven way in all that we do. Our values, dimensions of competition and our business model are the firm ground on which we stand that guides our decision-making. Second, we will actively preserve cash, the lifeblood of any company. Third, we will preserve the core in each of our 3 divisions, which means our highly talented teams, our core product lines and services and our customer relationships. And our fourth and final strategic priority for the current year is to continue investing aggressively in Raven Autonomy as a long-term growth driver for the company. These 4 strategic priorities are guiding the many decisions we are making to be prudent and disciplined in our investing and expense controls, while ensuring the preservation of our business for the short and long term. Steven will talk a little more about our specific measures related to cash, liquidity and balance sheet in a few minutes. As we think about the unique position Raven holds during these challenging times, there's reason for hope in other areas of greater concern. We believe the diversification of markets served by the company is generally positive, and while growing our international business is a priority, the dominance of our revenue being based in the U.S. is a current positive. The ag markets we serve have potential to show greater resilience in other industrial markets, and we hold strong positions in our ag markets served by ATD and EFD. New orders for this fiscal year-to-date in our ATD ag business are up 25% over the same period last year. While this is not likely to hold up, it shows an indication of the strength of our starting position for the year in ATD. Much of our U.S. government-related work in Aerostar, which is around 80% of the current revenue for that division, should hold up better than the general economy in our opinion. The Raven customers who likely stand to take the hardest hit in the next couple of quarters are those serving the energy market. This business last year was around $38 million in total revenue or around 10% of the full company revenue. While this business has also held up well for us so far this year, as leases and projects are completed over the next couple of months, this business will slow. Revenue from these customers could be half of last year's revenue, which would be around a $20 million decline in revenue, or 5% of the full company revenue. As we manage the company for the current year, we are significantly and responsibly reducing new growth initiative spending in fiscal year '21, other than Raven Autonomy. We stand confident in the numerous growth investments we've made over the last 2 years, and we'll be keenly focused on optimizing returns from those investments. Let me remind you of a few of those investments right now. During the past 2 years, we completed 3 important acquisitions in ATD. We opened our Latin American operations and expanded our Raven Europe operations. We've introduced RS1 steering, XRT boom controls and our new vision steering. We're winning the connectivity market in ag with our Slingshot and ag sync solutions. All these past growth initiatives remain areas of focus for us in fiscal '21 and provide excellent growth prospects for ATD. In addition, and of the highest importance, we are firmly committed to widening the gap we already enjoy in the growing autonomous ag equipment market. In Aerostar, we've greatly expanded our R&D investments in stratospheric platforms and radar signal processing, and have won numerous contracts based on the innovations delivered through those R&D investments. Our capabilities to deliver technical services to our U.S. government customers greatly increased in fiscal year '20, and we see that continuing as a strong growth area for Aerostar, given our exceptional capabilities in the delivery of technical services. Leveraging these, prior and ongoing investments are priorities in our core Aerostar business. Over the past 2 years, we have expanded our capacity and capabilities throughout our Engineered Films division. New extrusion lines, fabrication facilities and R&D staff expansion are resulting in new business opportunities in our existing markets, which we will continue to cultivate through fiscal year '21. We launched our long-term composite strategy late last year, and are committed to that growth strategy for the long term, but will slow the pace of implementation in the current fiscal year. With that overview of our priorities for the year, I will pass the call to Steven to share some thoughts on the balance sheet. -------------------------------------------------------------------------------- Steven E. Brazones, Raven Industries, Inc. - VP, CFO & Treasurer [4] -------------------------------------------------------------------------------- Thank you, Dan. First of all, I want to emphasize that Raven has a very strong balance sheet position and cash flow profile. This not only enable -- enables us to fund certain growth initiatives, but it also provides a level of security when global economic challenges arise. It is for this reason that we're able to preserve continued investment into Raven autonomy, a key strategic platform with tremendous long-term growth potential. Our balance sheet strength is a clear competitive advantage during this unprecedented time. With that being said, we are being prudently proactive to ensure this strong liquidity position does not deteriorate. Actions are already underway to reduce inventory levels, manage receivables and optimize payments to vendors. We are targeting approximately $20 million in improved cash flow from the actions being taken to reduce net working capital. Most planned capital expenditures are being delayed or canceled, and expense reduction measures across the company are being developed and evaluated, all with the goal of maximizing our preparedness and maintaining flexibility. We are also hitting pause on acquisition activity, although we are not completely ruling these out later in the year. The actions we are taking now to emphasize cash flow will continue to keep ratings secure and also afford us the flexibility to continue to fund Raven Autonomy, and perhaps even pursue acquisitions again later in the year. At the end of the fourth quarter, we had approximately $120 million in available liquidity, and that continues to be the case today. We are in a very strong balance sheet position. The actions we're taking, the contingency plans that we are developing will emphasize cash flow and ensure we remain in a strong liquidity position. With that, I'll turn the call back to Dan for a few closing comments. -------------------------------------------------------------------------------- Daniel A. Rykhus, Raven Industries, Inc. - President, CEO & Director [5] -------------------------------------------------------------------------------- Thanks, Steven. I remain very confident in the long-term prospects for Raven. We are acting quickly to refine our strategic priorities and ensure the preservation of our Raven way, of our cash and liquidity and the preservation of our cores in each business during this unfortunate pandemic-driven economic slowdown. We are taking aggressive actions to reduce discretionary spending, reduce CapEx, improve net working capital and to refine our investing priorities, all with the intent to preserve that which is most important in the immediate term. However, I'm also completely committed to preserving the long-term strategy of the company. Other companies may take more aggressive actions over the next couple of quarters than Raven. We have certainly done that in the past when specific market conditions turned down, and we believe those challenging conditions would persist. I believe our future growth beyond this near-term challenge is just too important and promising to react in that way. Over the past couple of years, we have taken bold actions in each of our businesses that expand their total addressable markets by billions of dollars annually, and have prepared each business to execute on those new opportunities. We are now positioned with the expectation that through the addition of Raven Autonomy, Raven Composites and our technology and services strategy in Aerostar, each division can grow to $1 billion in annual revenue over the next 7 to 10 years. We remain keenly focused on these growth drivers and the success of each of them, with reasonable expectations for substantial growth given our market positions, the growth potential in our chosen markets and our plans and readiness to execute those plans over the next several years. We will make the most of the current year, given our new reality, while upholding the priorities we just discussed with you. And with that, we would turn this call back to the operator and open it up for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And our first question comes from the line of Chris Moore with CJS Securities. -------------------------------------------------------------------------------- Christopher Paul Moore, CJS Securities, Inc. - Senior Research Analyst [2] -------------------------------------------------------------------------------- Yes, maybe we could start with the Engineered Films. So you're talking about slowing the pace of implementation there, likely no acquisitions this fiscal year. Can you maybe get a little bit more specific in terms of, beyond the no acquisitions, where the -- you kind of -- where you'll slow down a little bit? -------------------------------------------------------------------------------- Daniel A. Rykhus, Raven Industries, Inc. - President, CEO & Director [3] -------------------------------------------------------------------------------- Sure. I'll take that, and you can build on it, Steven, if you like. This is Dan. We -- what we said is we're going to pause in acquisitions, and we're going to look at them a lot more carefully in terms of their value, given the current environment. And -- so that's going to slow down. But if there is a value opportunity out there, the work we've done to prepare our company from a balance sheet standpoint leaves us in a great position to be able to take advantage of that. So that's a little more clarity on where we stand there. We have a lot of different initiatives throughout our Engineered Films division that have been implemented over the last 2 years. We've expanded our fabrication footprint. We've expanded our extrusion capabilities. We've expanded our value-added capabilities to the extruded film that we have. And we've built out plans to begin greenfielding in our composites strategy. So we're going to evaluate that throughout the year. We have the opportunity to push that back a few months right now. And as this whole market condition starts to become more clear for us, we're ready to reengage in that. -------------------------------------------------------------------------------- Christopher Paul Moore, CJS Securities, Inc. - Senior Research Analyst [4] -------------------------------------------------------------------------------- Got it. Maybe just some specifics. It sounds like you'll still be investing in AT and, to an extent, to Aerostar. R&D was in the $31 million range, something like that, for the fiscal year just ended. Can you give a sense in terms of expectations for R&D for this year? -------------------------------------------------------------------------------- Steven E. Brazones, Raven Industries, Inc. - VP, CFO & Treasurer [5] -------------------------------------------------------------------------------- We're still working through our various scenario plans right now. I think one thing I can tell you is that our investment in Raven Autonomy is going to continue to be very robust, although we've reduced the amount of going into R&D and selling next year from roughly $20 million to $15 million, order of magnitude wise, we're still going to be seeing an increase in our R&D expenses next year. -------------------------------------------------------------------------------- Christopher Paul Moore, CJS Securities, Inc. - Senior Research Analyst [6] -------------------------------------------------------------------------------- Got it. And maybe... -------------------------------------------------------------------------------- Daniel A. Rykhus, Raven Industries, Inc. - President, CEO & Director [7] -------------------------------------------------------------------------------- I guess, I would just -- I would also want to clarify for you and for anybody else out there. As I said in my comments, that we think the next couple of quarters are going to be challenging for just about every business out there, including Raven. But we're running the business with the expectation that we're going to come through this and we're going to continue to execute our strategy, and that the fourth quarter is going to start to create -- we're going to have some opportunities by then. So I don't want to pair this company back so severely for a couple of quarters when our outlook is so unbelievably bright beyond that. And that's what's really driving the way we're making decisions for the company right now. -------------------------------------------------------------------------------- Christopher Paul Moore, CJS Securities, Inc. - Senior Research Analyst [8] -------------------------------------------------------------------------------- Got it. Last one, just similar question on the CapEx side. You're still looking to be meaningfully above where you were in fiscal '20, but obviously, keeping in mind what's going on in the first half of the year. -------------------------------------------------------------------------------- Steven E. Brazones, Raven Industries, Inc. - VP, CFO & Treasurer [9] -------------------------------------------------------------------------------- Yes, I would expect our capital expenditures to be -- to increase in fiscal year '21. However, given the plans that we had leading into the year, we've curtailed them quite a bit. I think our plan was heading into the year about $50 million in capital expenditures, and we'll probably be in the $20 million, $25 million range this year. -------------------------------------------------------------------------------- Operator [10] -------------------------------------------------------------------------------- And our next question comes from the line of Joe Mondillo with Sidoti & Company. -------------------------------------------------------------------------------- Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [11] -------------------------------------------------------------------------------- So the -- excluding the hurricane-related sales, your EFD sales were down about 12%. Just could you -- I'm just wondering what your thoughts are on such a big decline? I wasn't anticipating that at -- through the January quarter, at least. And do you think this is channel destocking, or more end user demand through at least January? And then, I guess, to tie on to that, I assume you're thinking that declines will accelerate, just given oil prices and just the overall economy and such. Could you just address those things? -------------------------------------------------------------------------------- Steven E. Brazones, Raven Industries, Inc. - VP, CFO & Treasurer [12] -------------------------------------------------------------------------------- Yes, there's 2 things in there, Joe, in the fourth quarter. One, we saw some weak demand from our customers in the industrial market, in the Flexitank market. That demand is actually coming back right now, but definitely impacted the fourth quarter results for Engineered Films. In addition, energy market in the Permian Basin deteriorated and went down. Rig counts were down 25% to 30% in the fourth quarter, and that definitely had an impact as well for us in the energy market. And looking forward, obviously, as Dan mentioned in his prepared comments, the outlook for the energy market is very weak, given where energy prices are today. And it's not inconceivable for us to see our energy-based revenues in films be cut in half. Now as we look forward to the current year, we do have a diversified portfolio within Engineered Films. And so energy market is likely to be under a lot of pressure, but we've got good balance, and we see some positive signs on the agricultural side of things and in the industrial side as well. So a little bit more balanced for fiscal '21, but we're going to be under pressure in the energy market, for sure. -------------------------------------------------------------------------------- Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [13] -------------------------------------------------------------------------------- All right. And then could you just expand on the industrial side of -- your comments on the industrial end markets there? Because just given what's transpired in the last 6 weeks or so, there's seemingly a pretty good chance that anything cyclical, including sort of industrial or construction, potentially could be seeing a pretty good downturn. You haven't seen that yet, I guess. Could you just expand on what you're talking about on the industrial markets? -------------------------------------------------------------------------------- Steven E. Brazones, Raven Industries, Inc. - VP, CFO & Treasurer [14] -------------------------------------------------------------------------------- Most of the weakness we saw in the fourth quarter in the industrial market was due to lost market share in the Flexitank market and for various reasons. And -- but our product performs at a very, very high level, and I think what we're seeing now is a return of our customers to us as a supplier because of the quality of our product. So we're not really looking at the underlying industrial market per se, but more on the transportation market, with the Flexitank is the key driver for our industrial business today. -------------------------------------------------------------------------------- Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [15] -------------------------------------------------------------------------------- Okay. And Flexitank is what kind of application? Is that the bladder? -------------------------------------------------------------------------------- Steven E. Brazones, Raven Industries, Inc. - VP, CFO & Treasurer [16] -------------------------------------------------------------------------------- Correct. Yes, for converting a dry goods container into a liquid container for shipping purposes of liquid product. -------------------------------------------------------------------------------- Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [17] -------------------------------------------------------------------------------- Okay. And just last question, I'm sorry to sort of harp on this, but the market share losses, I assume there was -- the factors there were something temporary because it sounds like you're a lot more positive going forward. -------------------------------------------------------------------------------- Steven E. Brazones, Raven Industries, Inc. - VP, CFO & Treasurer [18] -------------------------------------------------------------------------------- Well, I think from our perspective, there was some price competition, but also that price was at a lower quality, and the quality was leading to challenges for those who are shipping -- usually those in the shipping containers. And when you have a leak, it's a catastrophic event. And so our product doesn't leak. And I think our customers are realizing that and coming back to us. -------------------------------------------------------------------------------- Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [19] -------------------------------------------------------------------------------- Okay. And then just -- I had a question on ATD, I'll hop back in the queue after this. But the revenues being up 12%. Could you talk about -- was that a surprise to you? Could you talk about the markets and what you're seeing there? What do you think -- it sounds like you're thinking that things will slow with just the overall market, but I know it's sort of isolated a little bit with the ag markets and such. Could you just talk about what you're seeing in market trends and competitive dynamics and how you think about that 12% that you saw in the quarter and sustainability wise? -------------------------------------------------------------------------------- Daniel A. Rykhus, Raven Industries, Inc. - President, CEO & Director [20] -------------------------------------------------------------------------------- Sure. This is Dan. We introduced some really exciting new products at the end of last year. And our vision steering system got off to an excellent start. We've been working on our -- enhancing and really deepening our OEM relationships, and the work that we've done over the last year in that area is producing some good returns. So we're continuing to be pleased with the overall direction of our Applied Technology division, and we started to see a little bit of the return on that in the fourth quarter. As I said, our year-to-date orders for 1.5 months -- a little more than 1.5 months are up 25% compared to the same period last year. That isn't going to continue. There's going to be some -- everybody is going to be down, it seems like no matter what industry you're in. But that gives you a sense of the health of the underlying business pre-pandemic. So we continue to be optimistic about our Applied Technology division. -------------------------------------------------------------------------------- Operator [21] -------------------------------------------------------------------------------- (Operator Instructions) Our next question comes from the line of Ben Klieve with National Securities. -------------------------------------------------------------------------------- Benjamin David Klieve, National Securities Corporation, Research Division - Analyst [22] -------------------------------------------------------------------------------- First, just a quick follow-up on your comments that you were just making on year-to-date bookings in ATD. The drivers of that, is that primarily being driven by OEMs or by aftermarket? And then was there any kind of like large onetime order that really skewed that? Or was that a -- or was it a pretty kind of widespread improvement? -------------------------------------------------------------------------------- Daniel A. Rykhus, Raven Industries, Inc. - President, CEO & Director [23] -------------------------------------------------------------------------------- So we almost never talk about our current quarter, but I felt like this was important to people to understand the underlying momentum. The only answer I'll give is that it was not skewed by a single order and that we have good, strong, broad underlying demand pre-pandemic. And that's really all we're going to tell you about the new order book. -------------------------------------------------------------------------------- Benjamin David Klieve, National Securities Corporation, Research Division - Analyst [24] -------------------------------------------------------------------------------- Okay. That's helpful, though. Turning over to the M&A strategy in composites. Can you -- I certainly understand that the -- in the context of the current environment, kind of pushing that off to the right. But can you talk a bit about how that decision was made, and if it was purely just a function of having a bias towards conservatism? Or were the candidates that you were looking at kind of uniquely exposed to the issues of the day, and as such, maybe they just simply aren't attractive candidates at this point? -------------------------------------------------------------------------------- Daniel A. Rykhus, Raven Industries, Inc. - President, CEO & Director [25] -------------------------------------------------------------------------------- No, it's not that. It's really -- we have a great funnel of candidates, and we think that those candidates are going to continue to be opportunities for us. Really, it's a matter of, for the weeks, the days, the months ahead, just taking a hard look at cash. Every company has to do this right now. We're in a great cash position, like Steven outlined. But even companies who are in a great cash position need to think hard about cash right now. And probably not for years, but for the next weeks and months, we're just looking at all uses of cash and applying a little more conservative view on that. And we'll come out of that. That'll will change. But the long-term strategy hasn't changed. The implementation of it has changed slightly over the next couple of months -- or quarters. -------------------------------------------------------------------------------- Benjamin David Klieve, National Securities Corporation, Research Division - Analyst [26] -------------------------------------------------------------------------------- Got it, okay. Okay. On -- yes, that obviously makes sense, and I think that does it for me for questions. But best of luck kind of navigating the challenge that everybody is facing right now, it's a tough time for everybody. So best of luck. -------------------------------------------------------------------------------- Operator [27] -------------------------------------------------------------------------------- And we do have a follow-up with -- from the line of Joe Mondillo with the Sidoti & Company. -------------------------------------------------------------------------------- Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [28] -------------------------------------------------------------------------------- Just a few follow-up questions. Regarding one of the -- just one of the recent questions there, mainly related to OEM production, related to the ATD segment. A lot of the OEMs have been -- including many of your customers, have been ramping down production, but I know you don't sell into a large percentage of their tractors and combines. You're more into the sprinklers and other smaller-type equipment. Could you just give us an idea of how OEM production has been into the units that you're selling into? -------------------------------------------------------------------------------- Steven E. Brazones, Raven Industries, Inc. - VP, CFO & Treasurer [29] -------------------------------------------------------------------------------- Well, we're seeing some of our OEM strategic partners shutting down some of their plants temporarily, seeing some supply issues with components. But just to remind everybody, we've got a pretty balanced portfolio and a lot of -- about half of our market is sold into the aftermarket. And we're seeing strength, as Dan mentioned throughout at the beginning of this year. -------------------------------------------------------------------------------- Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [30] -------------------------------------------------------------------------------- Okay. Okay. And then I wanted to ask about the 2 recent acquisitions that you acquired. Just regarding the progression of those businesses and really sort of the commercialization. And what you're -- primarily, what -- when you're anticipating these businesses will get off in terms of generating revenue and how that growth trajectory looks? Just, I guess, the timing of when you start seeing the commercialization. -------------------------------------------------------------------------------- Steven E. Brazones, Raven Industries, Inc. - VP, CFO & Treasurer [31] -------------------------------------------------------------------------------- Yes, so we're investing $15 million in R&D and selling this year, and developing and integrating the technologies that we acquired Smart Ag's perception technology onto the DOT platform. Our expectation is that, that will be commercialized towards the end of this year, so we will start seeing revenues at the end of this year. They'll be very modest, but the technology that we're integrating and the platform that we're creating in Gen 1 is going to be a substantial game changer in the ag market, and we expect, as we said at the Investor Day event, revenues to ramp from there and see a substantial increase in revenues by year 3. -------------------------------------------------------------------------------- Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [32] -------------------------------------------------------------------------------- Okay. And then just going back to the overall segment. Would you characterize this year -- so last year was sort of a soft year. I know you don't give guidance, but do you think you'll see growth this year at ATD? -------------------------------------------------------------------------------- Daniel A. Rykhus, Raven Industries, Inc. - President, CEO & Director [33] -------------------------------------------------------------------------------- So yes, right now, anybody answering that question would be answering it without a firm understanding of what they're saying. These markets are unpredictable right now. What we can tell you is the underlying health of ATD is exceptional, and that continues. But how long factories will be open, what the buying sentiment will be, that's unpredictable right now. How quickly it'll respond, what I do know is that farmers across the world, they're going to put seed in the ground in their spring time, and they're going to fertilize it, and they're going to control weeds, and they're going to attempt to grow a crop because that's what they do. And that fundamental underlying demand will be there. So we feel better about our ag business than other areas. But I can't tell you with certainty that it's going to be up or down. We're monitoring it week by week. Not all the factories are shutting down. We have -- this supply chain for agriculture and many others is doing everything they can to stay open to satisfy the demand that's there. And I believe that's going to persist. And we're ready to satisfy that demand from our OEM customers and our aftermarket customers. And we're -- overall, we're very optimistic about our Applied Technology division. I think the fact that we were able to generate growth last year in the market conditions that we saw last year with the flooding across the U.S. and the ongoing commodity price declines shows you the strength and the resiliency of that business. -------------------------------------------------------------------------------- Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [34] -------------------------------------------------------------------------------- Okay, yes. Definitely a challenging time. I -- just one way to ask it, I guess, maybe, if there wasn't a risk of plant closures within your supply chain and your customers, do you think just given the isolation of the ag markets that you'd be maybe more positive, especially given what we saw last year regarding the flooding and the other challenges that the ag market saw? -------------------------------------------------------------------------------- Daniel A. Rykhus, Raven Industries, Inc. - President, CEO & Director [35] -------------------------------------------------------------------------------- I didn't... -------------------------------------------------------------------------------- Bo Larsen, Raven Industries, Inc. - Assistant Controller & IR Director [36] -------------------------------------------------------------------------------- What's the question? -------------------------------------------------------------------------------- Daniel A. Rykhus, Raven Industries, Inc. - President, CEO & Director [37] -------------------------------------------------------------------------------- Yes, it seems like you're making more statements than questions. Can you just shorten up your question and make it crisp? -------------------------------------------------------------------------------- Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [38] -------------------------------------------------------------------------------- Yes. I mean, I'm essentially just saying if you don't see plant closures due to shutdowns related to the global pandemic, so plants continue to operate. I'm just wondering, would your outlook be a lot more optimistic, given the isolation within the ag markets? -------------------------------------------------------------------------------- Daniel A. Rykhus, Raven Industries, Inc. - President, CEO & Director [39] -------------------------------------------------------------------------------- Yes. We're not interested in stacking hypotheticals on hypotheticals. So we're not going to provide an answer to that. I've given you enough guidance on how we see the ag market. -------------------------------------------------------------------------------- Operator [40] -------------------------------------------------------------------------------- Thank you. And this concludes today's question-and-answer session. I would now like to turn the call back to Director of Finance, Bo Larsen for closing remarks. -------------------------------------------------------------------------------- Bo Larsen, Raven Industries, Inc. - Assistant Controller & IR Director [41] -------------------------------------------------------------------------------- Thanks for joining us today. We appreciate you listening in and your interest in Raven industries. Have a good day, and we look forward to providing the next update in May. -------------------------------------------------------------------------------- Operator [42] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.