“Our results were buoyed by phenomenal demand from the agricultural market during the year,” Moquist explained. “We have said all along that this kind of growth was unsustainable, and that it will be hard to beat that performance in our current year. However, Applied Technology should benefit from several factors. While commodity prices are down from prior records, they remain at strong levels. And growers still are seeing increases in input costs, creating demand for our precision application products. We plan to strengthen the distribution of our products domestically and internationally. We also expect to add to our complete suite of products that make farming more productive – by introducing complementary services such as helping growers build databases to better manage field information.”
“We believe ours is the most financially sound company in the fragmented industrial films marketplace,” Moquist said. “Our plan to ride out the current difficult market has three elements. First, we will emphasize product differentiation: creating high quality films at prices that are comparable with competitors’ lower performing commodity films – offering customers a better value for the same price. Second, we are negotiating better prices and terms on raw materials, which can account for up to 70 percent of our films’ price, so have a significant impact on margins. Third, we will improve operating efficiencies. This includes benefiting from the efficient extrusion equipment put in place in recent years, and sizing the business to reflect its current opportunities.”
“Each quarter of this past year was affected by the downturn in new home construction and home improvements, and the loss of a customer through acquisition,” commented Moquist. “We shifted our focus to other markets we already serve that hold more promise. These include avionics and secure communications. Electronic Systems also is working to improve operational efficiencies. This is helping reduce total delivered cost–an important advantage as quality and supply chain disruptions associated with overseas competitors become more acute.”
“This business is in a strong position to weather the recession,” Moquist said. “Aerostar has contracts for parachutes and specialty protective outerwear for the military. Its aerostats are in demand by NASA, the military and scientific customers. We plan to grow by developing and promoting tethered aerostats, which have wide-ranging applications for communications, surveillance and intelligence work.”
“This will be the most challenging year in our history,” Moquist said. “Our outlook includes a continued downturn for the economy this year, and it factors in a long and slow recovery. Under these difficult conditions, we don’t expect to post another earnings record. What we can do, and have always done, is to optimize performance regardless of what happens in our markets, and be ready to take advantage of opportunities.
“Raven has the resources to come out of this recession a strong survivor, but this requires us to implement a new strategy,” Moquist continued. “For the near term, growing the business at previous target rates is no longer a priority. Our new strategy has three parts. First, we will protect the core. This means getting rid of everything that is non-core (from assets to product lines), defending our core assets (such as businesses that have performed well in the past but will struggle in a recession), and protecting our core values and beliefs. Second, we will generate and preserve cash. This includes defending the balance sheet and improving working capital turnover through tactics such as increasing inventory turns and cutting expenses to the bone – but continuing to pay the dividend. Third, we will continue to invest in quality when it comes to customers, suppliers, products and R&D.”
Raven is an industrial manufacturer that provides electronic precision-agriculture products, reinforced plastic sheeting, electronics manufacturing services, and specialty aerostats and sewn products to niche markets.
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, which could affect some of the company’s primary markets, such as agriculture and construction; 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 Raven’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.
SOURCE Raven Industries, Inc.