SIOUX FALLS, S.D. — Raven Industries Inc. reported financial results for the first quarter that ended April 30, 2017.

Operating income for the first quarter of fiscal 2018 was $18.2 million vs. operating income of $8.1 million in the first quarter of fiscal 2017, increasing more than $10 million year-over-year. Operating margin increased 770 basis points year-over-year, from 11.8% of net sales to 19.5% of net sales. The significant improvement in profitability continues to be driven by strong operating leverage on higher sales volume.

Net income for the first quarter of fiscal 2018 was $12.3 million, or $0.34 per diluted share, vs. net income of $5.5 million, or $0.15 per diluted share, in last year’s first quarter. The substantial growth in diluted earnings per share was driven primarily by the improved operating performance in both Applied Technology and Engineered Films, but also benefited from improved profitability in Aerostar.

Balance Sheet and Cash Flow:
At the end of the first quarter of fiscal 2018, cash and cash equivalents totaled $50.5 million, essentially flat vs. the prior quarter.

Net working capital as a percentage of annualized net sales1 improved 530 basis points year-over-year, from 28.7% in the first quarter of last year to 23.4% in this year’s first quarter. The decrease in net working capital percentage was the result of higher payables, as well as managing inventory and receivables efficiently with the substantial increase in sales versus the prior year.

Cash flow from operations was $7.7 million in the first quarter of fiscal year 2018 vs. $11.1 million in the previous year’s first quarter. The decrease in cash flow was primarily due to net working capital requirements to support the substantial increase in sales.

Capital expenditures were $2.8 million in this year’s first quarter, up $2.0 million vs. $0.8 million in the first quarter of fiscal 2017. For fiscal year 2018, the Company expects total capital expenditures to be approximately $10 to $12 million.

Applied Technology Division:
Net sales for Applied Technology in the first quarter of fiscal 2018 were $40.5 million, up 28.7% vs. the first quarter of fiscal 2017. Consistent with the second half of fiscal 2017, sales growth for the division was driven by new product sales, expanded OEM relationships and higher sales of direct injection systems.

Division operating income was $13.5 million, up 54.8% vs. the first quarter of fiscal 2017, driven primarily by higher sales volume and improved operating leverage. The division continues to see strong incremental margins on improved sales volume as operating margin increased from 27.6 percent in the first quarter of last year to 33.2 percent in this year’s first quarter.

Fiscal 2018 Outlook:
“We are very pleased with our overall performance in the first quarter,” said Dan Rykhus, President and CEO. “Both Applied Technology and Engineered Films drove significantly higher sales volume, resulting in operating leverage which led to strong incremental margins. Aerostar also achieved an improved financial performance.

“For Applied Technology, end-market conditions remain subdued, but stable, vs. the prior year, but our continued focus on new products and expanding OEM relationships is successfully driving additional market share gains and enabling the division to outperform the market.