Delivering on its commitment to enhance shareholder return, Raven Industries Inc. (RAVN) announced that its board has approved an 8% increase in its regular quarterly dividend to 13 cents per share from the prior dividend of 12 cents. Shares of Raven however dipped 0.26% as the company revealed that it will continue to face certain marketplace challenges over the next several quarters.
This represents the 28th consecutive hike in Raven’s dividend. The increased dividend will be paid on Oct 24, 2014, to shareholders of record as of Oct 10, 2014.
Raven had declared a 14% increase to the current payout of 12 cents per share in March last year. The latest move will take the dividend yield to 1.93% from the current 1.78%. Raven has outscored its peers Federal Signal Corp. (FSS), ITT Corporation (ITT) and Carlisle Companies Incorporated (CSL) which have respective dividend yields of 0.80%, 0.90% and 1.10%. The quarterly dividend payout will cost the company approximately $19 million, around $1.5 million higher than the previous payout.
Raven recently reported second-quarter fiscal 2015 (ended Jul 31, 2014) results, wherein earnings of 21 cents per share declined 8.7% year over year due to persistent weakness in the agriculture equipment market. Sales increased 1% year over year to $94.5 million. However, revenues missed the Zacks Consensus Estimate of $99 million. Improved revenues in the Engineered Films segment were offset by a decline in revenues in the Applied Technology and Aerostar segments
Raven remains optimistic about its long-term growth based on growing global population and stronger demand for food. For third-quarter fiscal 2015, Raven expects solid growth in Engineered Films revenues from multiple end markets. However, the company expects double-digit declines in third-quarter net income. Difficult market conditions in Applied Technology, transitional impact of higher-scale production of Project Loon balloons and planned runoff in contract manufacturing will make third-quarter revenue growth challenging.
Raven anticipates that profit growth will resume in the fourth quarter of fiscal 2015, but not at a rate sufficient to produce higher earnings for the full fiscal year. As per the company, Engineered Films will continue to witness solid growth in revenues in the second half of fiscal 2015 derived from high-value agriculture and operating income gains.
For the second half of fiscal 2015, Raven remains positive about the Aerostar segment owing to the expansion of proprietary technology opportunities in international markets, including advanced radar systems, high-altitude balloons and aerostats. However, uncertainties remain regarding additional aerostat contracts in the second half. Additionally, a transition to higher levels of balloon production in the third quarter may result in certain disruptions that can temporarily temper the growth rate.
Moreover, continued focus in research and development, implementation of cost control measures, international market expansion and new product innovations will drive growth for Raven.
South Dakota-based Raven is an industrial manufacturer offering a variety of products for agricultural, industrial, construction and aerospace markets. The company operates through three business segments, namely, Engineered Films, Applied Technology and Aerostar.
Raven currently carries a Zacks Rank #5 (Strong Sell).
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