Raven Industries, Inc. RAVN reported disappointing results for the fourth quarter of fiscal 2019 (ended Jan 31, 2019), with earnings missing the Zacks Consensus Estimate.
The company’s earnings per share in the quarter under review were 11 cents, down 54.1% year over year. The downside was primarily caused by lower hurricane recovery film sales, reduced profit in the Aerostar segment and expenses related to the Project Atlas.
Inside the Headlines
Net sales in the quarter declined 8.1% year over year to $88 million. Excluding $4.1 million sales from hurricane recovery films, the company’s revenues in the quarter amounted to $83.9 million, up 5% on a year-over-year basis.
Raven Industries, Inc. Price, Consensus and EPS Surprise
Raven Industries, Inc. Price, Consensus and EPS Surprise | Raven Industries, Inc. Quote
The company reports net sales under three segments — Applied Technology, Engineered Films and Aerostar. The segmental information is briefly discussed below.
Revenues in the Applied Technology segment were $29.2 million, down 4.1% year over year. The decline led by lower domestic and international sales.
Notably, the segment’s sales fell 4% year over year for domestic and international operations.
Revenues in the Engineered Films segment totaled $49.5 million, down 11% from the year-ago quarter’s tally. Excluding sales worth $4.1 million from the hurricane recovery film, revenues in the quarter were $45.4 million. The year-over-year decline was caused by volumes due to lower hurricane recovery film sales.
Revenues in the Aerostar segment fell 4.3% year over year to $9.4 million on due to decline in sales stemming from the divestment of client private business.
Margins, Costs & Expenses
In the reported quarter, Raven’s cost of sales fell 5.1% year over year to $62.7 million. The figure contributed 71.3% of sales compared with 69% in the year-ago quarter. Gross margin declined 240 basis points (bps) year over year to 28.7%.
Research and development expenses in the quarter grew 78.9% year over year to $8.3 million. It contributed 9.4% to the quarter’s net sales versus 4.8% in the year-ago quarter. Selling, general and administrative expenses slipped 0.4% year over year to $13.7 million. As a percentage of sales, it represented 15.5% versus 14.3% in the year-ago quarter.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $7.3 million, down 52.5% year over year. EBITDA margin in the reported quarter was 8.2% versus 16.1% in the year-ago quarter.
Operating income in the quarter plunged 70.6% year over year to $3.4 million primarily due to fall in hurricane recovery film sales. Operating margin was 3.9%.
Balance Sheet and Cash Flow
Raven exited the quarter with cash and cash equivalents of $65.8 million, down 4.6% from $62.9 million at the end of the last reported quarter (ended Oct 31, 2018).
In fiscal 2019, the company generated net cash of about $66 million from operating activities, up 46.7% year over year. Capital expenditure amounted to $14.1 million, up 17.5% from the year-ago quarter’s tally. During the period, the company paid dividends worth $18.8 million and refrained from repurchasing shares.
The company’s Applied Technology segment is actively working in establishing strong foothold in the Latin American region. In addition, the Engineered Films segment is likely to gain from growth investments and healthy demand in markets served.
Some better-ranked stocks in the same space are Carlisle Companies Incorporated CSL, Federal Signal Corporation FSS and Macquarie Infrastructure Company MIC. While Carlisle sports a Zacks Rank #1 (Strong Buy), Federal Signal and Macquarie carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carlisle surpassed estimates thrice in the trailing four quarters, the average being 15.00%.
Federal Signal exceeded estimates in the trailing four quarters, the average being 21.65%.
Macquarie surpassed estimates twice in the trailing four quarters, the average being 0.51%.
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