SIOUX FALLS, S.D. — Raven Industries Inc. (the Company; NASDAQ:RAVN) reported financial results for the second quarter that ended July 31, 2021.

Second Quarter Fiscal 2022 Noteworthy Items

  • Company entered into an agreement to be acquired by CNH Industrial N.V. in an all-cash transaction that values the Company at approximately $2.1 billion, or $58.00 per share;
  • Consolidated net sales were $114.4 million, an increase of 34.3% vs. the prior year;
  • Company reported diluted earnings per share of $0.19, an increase of 18.8% vs. the prior year;
  • Second quarter results included $4.9 million pre-tax and $3.8 million after-tax of acquisition related expenses, or $0.10 per diluted share;
  • Company invested $5.2 million pre-tax and $4.1 million after-tax to advance Raven Autonomy, or $0.11 per diluted share;
  • Net sales in Applied Technology increased 25.6% vs. the prior year, driven by growth in both the OEM and aftermarket channels;

Second Quarter Results

Consolidated net sales for the second quarter of fiscal 2022 were $114.4 million, up 34.3% vs. the second quarter of fiscal 2021. The year-over-year growth was driven by increased sales in both Applied Technology and Engineered Films. In Applied Technology, demand for its precision ag technology remained robust, leading to strong year-over-year growth despite global supply chain constraints. In Engineered Films, the division experienced growth across all end-markets, led by construction, agriculture and geomembrane (including the energy sub-market), as market conditions continued to improve throughout the quarter. Aerostar's growth in core stratospheric and radar platforms was offset by the conclusion of Loon activity and a decrease in aerostat sales due to timing of contracts.

Consolidated operating income for the second quarter of fiscal 2022 was $8.3 million, vs. operating income of $6.1 million in the second quarter of fiscal 2021. Included in the results for the second quarter of fiscal 2022 was $5.2 million of investment in research and development and selling expenses to advance Raven Autonomy, compared to $4.0 million in the prior year. The second quarter of fiscal 2022 results also included $4.9 million of expenses associated with the proposed acquisition by CNH Industrial N.V. The Company generated significant year-over-year operating income growth within its core businesses driven by increased sales volume and corresponding operating leverage.

Net income for the second quarter of fiscal 2022 was $6.9 million, or $0.19 per diluted share, compared to $5.8 million, or $0.16 per diluted share, in last year's second quarter. The Company's strategic investment in Raven Autonomy reduced net income attributable to Raven by $4.1 million, or $0.11 per diluted share, in the second quarter of fiscal 2022 compared to $3.1 million, or $0.09 per diluted share, in the prior year. Expenses related to the proposed acquisition by CNH Industrial reduced net income attributable to Raven by $3.8 million, or $0.10 per diluted share in the current year's second quarter.

Balance Sheet and Cashflow

At the end of the second quarter of fiscal 2022, cash and cash equivalents totaled $13.1 million, decreasing $4.7 million vs. the previous quarter. The sequential decrease in cash was driven by an increase in working capital needs as the Company fulfills substantial demand in Applied Technology and Engineered Films. Total liquidity at the end of the second quarter totaled $113.1 million.

Applied Technology Division

Net sales for Applied Technology in the second quarter of fiscal 2022 were $44.6 million, increasing $9.1 million or 25.6% vs. the second quarter of the prior year. Demand across the division's product portfolio remained very strong in the second quarter as favorable ag market conditions continued. These market conditions, combined with the division's industry-leading technology portfolio, led to year-over-year revenue growth in both the OEM and aftermarket channels.

Division operating income in the second quarter of fiscal 2022 was $8.5 million, up $2.0 million or 30.6% vs. the second quarter of fiscal 2021. Included in the results was investment in research and development and selling expenses to advance Raven Autonomy of $5.2 million on a pre-tax basis, an increase of $1.2 million vs. the prior year. Division operating income in the second quarter was adversely impacted by increased input costs associated with challenging supply chain conditions and material shortages.

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