Raven Industries, Inc. (the Company; NASDAQ: RAVN)
announced today details of its strategic plan, which include a
significantly increased level of investment in targeted areas in
order to drive greater earnings growth and long-term value. Over
the next several years, the Company will advance two strategic
platforms for growth: Raven Autonomy™ and Raven Composites™.
“The strength of our market positions and technology offerings
has never been greater than it is today,” said Dan Rykhus, Chief
Executive Officer and President of Raven Industries. “Now is the
time to leverage our positions in these expanding markets in order
to drive significant growth in company performance over the
long-term — and we couldn’t be more excited for the opportunities
in front of us.”
These two strategic growth platforms are a result of the
development and growth in these key markets and directly align with
the Company’s business model, which is to serve market segments
with strong growth prospects. Autonomous agriculture technology is
expected to develop rapidly over the next five years. Additionally,
the composites market is expected to expand significantly as the
need for these materials increases across several applications.
Raven Autonomy™ is a strategic
growth platform which will propel its Applied Technology Division
to become the industry leader in autonomous agricultural solutions.
This strategic growth platform builds upon our existing machine
control technology, while also innovating smart machine
platforms/implements to achieve fully autonomous solutions across
the farming enterprise.
Raven Composites™ is a
strategic growth platform which will expand its Engineered Films
Division to become an industry leader in the reinforced composites
market. By leveraging our reinforced materials expertise,
Engineered Films will innovate solutions that deliver thinner,
lighter and stronger composites within the transportation,
construction, automotive and packaging markets. These composites
will be attractive alternatives to existing materials such as wood,
metal and thicker plastics, as they will significantly reduce
weight while improving appearance, strength, durability and
lifecycle.
“To fully realize our growth potential, increased investment is
needed across these areas, and we are in a great position to
capitalize on these market opportunities,” added Rykhus. “We
have been investing in R&D, production capabilities, strategic
acquisitions, leadership development and a new enterprise resource
planning software for quite some time — and now we are going to
invest further. Together, these provide a solid foundation for
executing this bolder strategy.”
Rykhus went on to say, “These strategic growth platforms are
additive to our existing business model and enhance our core
strengths — which include a proven history of innovating technology
in precision agriculture and specialty sheeting.”
Raven Autonomy™Raven has been
committed to maximizing operational efficiencies through its core
offering of application and machine control platforms. Raven’s
evolution of autonomous solutions is an extension of that core. As
availability of skilled labor decreases and compliance requirements
get more complex, the need for more efficient utilization of
resources is critical. Raven is best positioned to solve this great
challenge.
Raven has market-leading guidance and steering technology. VSN™,
the Company’s best-in-class visual guidance technology, and RS1™,
its machine guidance and steering platform, are currently used
around the world. However, autonomy in agriculture is not only
about driving, it is about operating. Autonomy in agriculture is an
extension of Raven’s Slingshot® communication and servicing
platform, which has been used by ag retailers for more than a
decade. Autonomy in agriculture also requires trusted implement
performance and application control, like Raven’s Rate Control
Module (RCM) and Hawkeye® Nozzle Control System, and boom control
technology platforms, like AutoBoom® XRT and AccuBoom™, each of
which lead the industry in operational performance. All of these
elements are equally important components of a successful autonomy
strategy, and Raven has been innovating these technologies for
years.
The Company’s plan to invest in Raven Autonomy™ includes
increasing the research and development (R&D) investment in the
automation of its existing product portfolio and building out the
additional necessary technology through a combination of internal
development, acquisitions and partnerships. Throughout all of this,
the Company will focus on perception, path planning and machine
controls for autonomous agriculture solutions.
“Raven has been investing in the necessary enabling components
for autonomy in agriculture for 20 years,” continued Rykhus. “Along
the way, others have had unsuccessful attempts at initiating
autonomy in agriculture; however, neither the technology nor the
market were ready. The necessary technology to enable autonomy in
agriculture is ready, and the inflection point is here. We want to
lead in the next revolution of production agriculture, and our
legacy platforms, new technologies and strategic partnerships
provide distinct advantages over the competition. Now we need to
aggressively invest to bring our solutions to market — and to
capture this tremendous opportunity. We believe we are in the lead
position on the path to fully autonomous solutions for agriculture.
Now more than ever, our strategic OEM partners need to deliver
premier precision agriculture solutions in order to compete and win
market share. Investing to expand our advantage is essential to
remaining the trusted innovator in precision agriculture.”
Raven
Composites™For
decades, Raven has innovated, produced and sold multi-layer
reinforced laminated materials that displace heavier and thicker
materials. The Company has been, and remains, committed to
delivering thinner, lighter and stronger solutions that use less
material, are easier to use and provide enhanced value to its
customers. The Company is in a strong position to leverage its
wide-width product expertise, high-quality lamination capabilities
and reinforcement technology to solve these challenges.
Raven has the most unique film lines in North America and is
capable of manufacturing very complex and specialized films,
specifically for the composites market. This is a natural adjacency
for the Company and helps maximize capacity utilization.
Significantly increasing the Company’s composites portfolio will
greatly expand its total addressable market of high-value product
offerings, which will result in greater revenue growth with a
strong margin profile.
For the past several years, Raven has strategically invested in
high value, multi-layer films and reinforced flexible composites. A
move to rigid composites, combined with the Company’s existing
expertise and film materials, is a logical strategic adjacency for
Engineered Films. The market demand exists, and the size of the
opportunity is significant. This provides great opportunity to
invest aggressively to capture a significant position in this
expanding market and drive a step change in materials
performance.
The Company’s plan to invest in Raven Composites™ includes
increasing the investment in R&D and business development
related to the rigid composites market and developing new
technologies and capabilities through internal R&D,
acquisitions and partnerships. To support Raven Composites™, the
Company plans to establish a cadence of strategic investments of
size every 12 months.
“Our track record of product performance and quality,
exceptional service, unique combination of capabilities, vertical
integration and ability to remain agile are unmatched,” stated
Rykhus. “We have a core competency in running efficient
manufacturing operations. We have a strong balance sheet and
borrowing capacity. We have a history of successfully integrating
strategic acquisitions, delivering innovative products and solving
customer challenges through strong R&D. This combination has
provided distinct advantages and puts us in a unique position to
capitalize on the vast opportunity in this expanding adjacent
market. We have a good opportunity to find acquisitions and grow
quickly and significantly.”
Raven Business Model “Our core
business across each of our three divisions remains strong,” said
Rykhus. “These strategic platforms fit within our business model
and existing divisions. We are committed to serving a set of
diversified markets, which includes our Aerostar division. Two
years ago, we brought focus and strong investments to Aerostar’s
stratospheric balloon and radar platforms. Today, we believe
Aerostar is reaping solid returns from those investments by
delivering strong financial results with significant opportunities
for growth. We couldn’t be more pleased with how well the Division
is positioned within today’s aerospace and defense market.
“We have a high return on invested capital, and the investments
in Raven Autonomy™ and Raven Composites™ are incremental to our
existing portfolio needs and will accelerate growth and drive
higher value creation. We are excited because of our unique
position to win in each of these markets.
“We are committed to this plan. Current end market conditions
are more challenging than anticipated, but we believe in these
investments and the strength of our core businesses. We remain
steadfast in our decision regardless of what the short term looks
like. We have confidence in our ability to execute and drive strong
long-term results.”
Financial Expectations “Raven
is in the top decile of our peer group for margins and returns, but
our growth rates have not met our long-term objective,” said Steven
Brazones, Vice President and Chief Financial Officer. “Our primary
financial goal is to generate annual earnings growth of 10%, over
the long term. We believe this plan will get us there.
“In order to meet that objective, we believe we can
significantly augment growth, with modest reductions in margins and
return ratios, through this bolder investment strategy and drive
higher value creation over the long-term.
“This strategy also provides balance. Executing on near-term
opportunities for Raven Composites™ will help offset the investment
being made for Raven Autonomy™ as it ramps over the next few
years.
“Raven Industries’ financial performance has been very strong
despite persistent end-market demand challenges. As we look to
pursue a bolder growth strategy, we expect to make significant
strategic investments in R&D, CAPEX, and M&A to build upon
our core to drive faster growth in sales, operating profit and EPS
over the next five years. Total investment over the next five years
is expected to be a threefold increase over the previous five
years, a clear step change to drive stronger growth. For the
long-term, our financial objectives include 30-32% operating
margins for Applied Technology and 18-20% operating margins for
Engineered Films.
“This strategy enables us to carry out our purpose — to solve
great challenges — on a larger scale. We have the utmost confidence
in our people, purpose, vision, values, business model and
strategic plan. We know we can execute on our strategy and in doing
so will achieve greater value creation,” concluded Brazones.
Investor DayRaven is hosting
an Investor Day on Tuesday, November 5, 2019 in New
York City. The event will feature presentations and a Q&A
session with Dan Rykhus, President and Chief Executive
Officer, and Steven Brazones, Vice President and Chief
Financial Officer. The event will provide an overview of the
Company’s strategic plan and more detail on Raven Autonomy™ and
Raven Composites™.
The event will begin at 10:30 a.m. ET and conclude
by 1:00 p.m. ET. The event is open to all institutional
investors, but advanced registration is required to attend, as
space is limited. Interested attendees should email
irevent@ravenind.com with the individual’s name, location and
affiliated institution. A live audio webcast and presentation
materials will be available through the Investor Relations section
of the Company’s website at http://investors.ravenind.com.
About Raven Industries, Inc.
Raven Industries (NASDAQ: RAVN) is dedicated to providing
innovative, high-value products and solutions that solve great
challenges throughout the world. Raven is a leader in precision
agriculture, high-performance specialty films, and lighter-than-air
technologies. Since 1956, Raven has designed, produced, and
delivered exceptional solutions, earning the company a reputation
for innovation, product quality, high performance, and unmatched
service. For more information, visit http://ravenind.com.
Forward-Looking StatementsThis
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. The Company intends
that all forward-looking statements be subject to the safe harbor
provisions of the Private Securities Litigation Reform Act.
Generally, forward-looking statements can be identified by words
such as “may,” “will,” “plan,” “believe,” “expect,” “intend,”
“anticipate,” “potential,” “should,” “estimate,” “predict,”
“project,” “would,” and similar expressions, which are generally
not historical in nature. However, the absence of these words or
similar expressions does not mean that a statement is not
forward-looking. All statements that address operating performance,
events or developments that we expect or anticipate will occur in
the future – including statements relating to our future operating
or financial performance or events, our strategy, goals, plans and
projections regarding our financial position, our liquidity and
capital resources, and our product development – are
forward-looking statements.
Management believes that these forward-looking statements are
reasonable as and when made. However, caution should be taken not
to place undue reliance on any such forward-looking statements
because such statements speak only as of the date when made. Our
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law. In addition,
forward-looking statements are subject to certain known risks, as
described in the Company’s 10-K/A under Item 1A, and unknown risks
and uncertainties that may cause actual results to differ
materially from our Company’s historical experience and our present
expectations or projections.
Contact InformationBo Larsen,
Director of Investor Relations Margaret Carmody, Director of
Corporate CommunicationsRaven Industries+1 (605) 336-2750
Source: Raven Industries
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