RAVEN INDUSTRIES SOLVING GREAT CHALLENGES

Transcription

1 RAVEN INDUSTRIES SOLVING GREAT CHALLENGES As of October 31,

2 SAFE HARBOR & REGULATION G Safe Harbor Statement Certain matters discussed today may include 'forward looking statements' as that term is defined under the Private Securities Litigation Reform Act of Since such statements reflect our current expectations, actual results may differ as they are subject to the kinds of risks that are enumerated in the Company s Securities and Exchange Commission (SEC) filings. The Company disclaims any obligation to subsequently revise any forward-looking statements to reflect actual events or circumstances after the date of such statements. Regulation G During today s meeting we will be discussing certain non-gaap financial measures, specifically operating income, and earnings before interest expense, taxes, depreciation expense, and amortization expense, or EBITDA. Operating income is defined as gross profit less R&D expense less SG&A expense. EBITDA is defined as gross profit less R&D expense less SG&A expense, plus depreciation and amortization expense. All of the non-gaap measures discussed today should not be construed as an alternative to the reported results determined in accordance with GAAP. Management believes that a discussion of these measures is useful to investors because it assists in understanding the operating performance of the Company and its operating segments as well as the comparability of results, and it provides insight into the ability of the Company to fund such things as debt reduction, acquisitions, and share repurchase programs. The non-gaap information discussed today may not be consistent with the methodologies used by other companies. All non-gaap information is reconciled with reported GAAP results on the following pages of this presentation. Additional Information For more information, please refer to our recent press release, quarterly reports on form 10Q, and annual report on form 10K filed with the Securities and Exchange Commission; all of which are available on our website at under the Investors section. 2

3 COMPANY OVERVIEW A leading technology company with strengths in engineering and innovation whose purpose is to Solve Great Challenges. Raven designs and manufactures precision agriculture applications, high-performance specialty films, and aerospace and situational awareness systems. 3

4 RAVEN AT A GLANCE Sales: $414.4M EBITDA: $84.3M EBITDA Margin: 20.4% APPLIED TECHNOLOGY Sales: $131.0M ENGINEERED FILMS Sales: $232.7M AEROSTAR Sales: $51.3M CORPORATE/ ELIMINATION EBITDA: $41.5M EBITDA: $54.4M EBITDA: $11.4M Sales: ($0.6M) EBITDA Margin: 31.7% EBITDA Margin: 23.4% EBITDA Margin: 22.2% EBITDA: ($23.0M) SALES EBITDA 12% 10% 32% 39% 56% 51% ATD EFD AERO ATD EFD AERO *All data is for the trailing-twelve-months ended October 31, 2018 *As corporate/elimination sales and EBITDA figures are negative, they have been excluded from the pie charts above. 4

5 We Solve Great Challenges. APPLIED TECHNOLOGY ENGINEERED FILMS AEROSTAR DIVERSIFIED BUSINESS MODEL UNITED BY A COMMON PURPOSE & VISION Intentionally serve diverse market segments with strong short and long-term growth prospects Diversified portfolio of businesses provide balance, opportunity, and risk mitigation Compete on quality, service, innovation and peak performance Balance sheet strength and stability enables strategic investments and acquisitions to enhance shareholder returns Corporate responsibility is a top priority, it attracts great team members, customers and opportunities Continuous process improvements and value engineering 5

6 ORGANIC VALUE DRIVERS FOR SHAREHOLDERS RAVEN APPLIED TECHNOLOGY New product introductions through increased research and development investment International expansion and growth, with particular emphasis in Brazil Enhanced OEM partnerships Eventual rebound in the Precision Agriculture market driven by higher commodity prices Increased complexity and regulation of Agriculture chemical applications Volume leverage to drive operating margin expansion RAVEN ENGINEERED FILMS Growth in the Industrial market driven by new production capabilities Mix shift to higher value applications in the Ag market and value added conversion capabilities Continued rebound in the Energy market driven by oil prices and active land-based rig counts Water scarcity and increased environmental regulations Volume leverage to drive operating margin expansion RAVEN AEROSTAR Project Loon (Google) full scale commercialization Leverage of stratospheric capabilities into new applications Radar platform development 6

7 ACHIEVING OUR STRATEGIC PLAN OUR GOALS 10% annual earnings growth over the long-term Expansion into new, but closely adjacent market opportunities Serve our purpose to Solve Great Challenges through applied innovation HOW WE WILL GET THERE Execute on existing opportunities Maintain and build operational excellence Create new opportunities through innovation Successfully complete acquisition opportunities in ATD and EFD Execute our proven business model Invest in, and build, a high performing sales organization 7

8 CAPITAL ALLOCATION STRATEGY LONG-TERM FOCUS The Company s business model generates strong cash flows and is capable of funding all organic growth initiatives and dividend commitment The Company is continually evaluating strategic acquisitions to strengthen its core business Balance sheet capacity will be utilized as required to execute larger acquisitions The Company will use its dividend policy and share repurchase authority to return capital to shareholders, while preserving its ability to acquire The Company expects its acquisition strategy will lead to multiple successful transactions over the short-to-intermediate term 8

9 CAPITAL ALLOCATION PRIORITIES MULTI-FACETED AND BALANCED APPROACH TO ALLOCATING CAPITAL Fund Organic Growth Initiatives Research and development of new products Capital expenditures for capacity expansion International expansion Market Expansion Growth Capital Expenditures Research & Development Strategic Mergers & Acquisitions Focus on Applied Technology and Engineered Films Utilize leverage, maintain investment grade credit quality metrics Return to Shareholders Long-term dividend payout ratio target of 30 40% of prior year earnings Opportunistic use of share buy-back authorization (currently > $25M) 9

10 RAVEN APPLIED TECHNOLOGY Feeding a Growing Population By Improving Agricultural Efficiency Around the World 10

11 We Solve Great Challenges. RAVEN APPLIED TECHNOLOGY DEDICATED TO FEEDING THE WORLD Precision Agriculture since 1978 Feeding the world by enabling farmers to: Reduce operating costs Control inputs Improve yields Robust product development pipeline Strong OEM, Dealer, and Ag Retailer relationships International presence, 20% of sales outside the U.S. 11

12 END MARKETS AND PRODUCTS RAVEN APPLIED TECHNOLOGY Revenue Domestic: 77% International: 23% * All data is for the trailing-twelve-months ended October 31, Financial information is represented in millions. 12

13 RAVEN ENGINEERED FILMS Dedicated to Innovative Films for the Critical Protection of Our Earth s Natural Resources, and Providing Unique, Multilayer Films Solutions for the Markets We Serve 13

14 RAVEN ENGINEERED FILMS DEDICATED TO PROVIDING SOLUTIONS THAT PROTECT EARTH S RESOURCES & PRESERVE ASSET VALUE Value-added and in-demand solutions for an array of end markets Largest specialized manufacturing lines in the industry 0.5 mil to 80 mil range of products Multi-layer specialty films to niche markets Unique and robust conversion and fabrication capabilities 14

15 END MARKETS AND PRODUCTS RAVEN ENGINEERED FILMS Revenue GEOMEMBRANE AGRICULTURE Domestic: 93% International: 7% CONSTRUCTION INDUSTRIAL * All data is for the trailing-twelve-months ended October 31, Financial information is represented in millions. 15

16 RAVEN AEROSTAR Shapes the Stratospheric Platform Market With the World s Most Advanced and Reliable Lighter-Than-Air Technologies 16

17 RAVEN AEROSTAR DEDICATED TO PROTECTING & CONNECTING THE WORLD Origin of the Company Aerospace and Defense Markets Core product focused on Stratospheric Balloon Technology - industry leader Strategic partner of Google on Project Loon to bring internet connection to underserved areas of the world Providing turnkey stratospheric systems to include balloons, hardware, software, and electronics Vertically integrated to include the design, manufacturing, integration, and operation of stratospheric balloon systems 17

18 END MARKETS AND PRODUCTS RAVEN AEROSTAR Revenue LIGHTER-THAN-AIR OTHER Domestic: 98% International: 2% * All data is for the trailing-twelve-months ended October 31, Financial information is represented in millions. 18

19 INVESTMENT SUMMARY Diversified technology company Solid balance sheet position and strong cash flow profile Very attractive long-term macro trends Balanced approach to returning capital to shareholders Focused on both organic growth and growth through acquisition 19

20 APPENDIX 20

21 REGULATION G RECONCILIATIONS - CONSOLIDATED (IN MILLIONS) Q4'18 Q1'19 Q2'19 Q3'19 TTM Sales Less: Cost of Goods Sold Gross Profit Less: R&D Expense Less: SG&A Expense Operating Income Other Income (Expense), net (0.1) Income Before Taxes Depreciation Amortization EBITDA EBITDA / Sales 16.1% 27.8% 19.6% 17.2% 20.4% 21