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Raven Industries Reports Record Sales and Earnings in First Quarter
8:10 AM ET May 19, 2005

Raven Industries, Inc. (Nasdaq: RAVN) reported today that net income for its fiscal first quarter ended April 30, 2005, climbed 32 percent to a record $7.2 million, or 39 cents per share, from the year-ago's 29 cents, making it the best quarter in the 49- year history of Raven.

"Except in our Aerostar segment, where we anticipated some decline, both the topline and operating income of our other three core businesses were very strong in this first quarter," noted Raven President and CEO Ronald M. Moquist. "Our first quarter was particularly bolstered by our Engineered Films Division." This segment generated an increase of 55 percent in sales and 38 percent in operating income by focusing on selling out productive capacity. "Our Autoboom product line, acquired in February from Montgomery Industries, is performing well, benefiting our Flow Controls Division, and we are seeing a nice turnaround in Electronic Systems." Overall, sales for the first quarter climbed 32 percent to $50.7 million.

Segment Performance

Engineered Films Division (EFD) operating income climbed 38 percent to $4.1 million from $3.0 million a year ago. This division increased sales 55 percent to $16.1 million from $10.4 million in the year-earlier period. Shipments included residual demand for disaster film, while the division also saw significant growth in demand for pit liners for oil exploration. Higher product pricing offset some of the increases in raw material costs, but gross margins still declined from 33.7 percent to 30.2 percent of sales.

Raven's Flow Controls Division (FCD) "is off to a good start for the year," Moquist said, with first-quarter sales increasing 22 percent to $16.1 million from $13.2 million. Operating income was up 15 percent to $5.9 million from $5.1 million last year. Sales of the division's newly acquired automatic boom height control system, called Autoboom, were strong, reaching more than $1 million. The executive noted, however, that the first quarter is the seasonal peak for the year for Flow Controls and that the acquisition may make that seasonality more pronounced. FCD saw steady ongoing demand for its ag products, including SmarTrax, its GPS-based automatic steering system. Operating profit margins reflect higher spending for the division's continuing investment in its research, product development and Precision Agriculture marketing initiatives.

The Electronic Systems Division (ESD) enjoyed a "nice recovery" in sales, which were up 47 percent to $13.3 million from a depressed $9.1 million a year earlier. Operating profits climbed to $2.1 million from $702,000 in the year- ago period. CEO Moquist said that Raven delivered a lower percentage of startup products and had improved operating efficiencies and throughput in the latest quarter.

Aerostar "was in line with expectations," with sales declining nine percent to $5.2 million from $5.7 million while operating income fell to $937,000 vs. the $1.2 million reported a year earlier. A much lower level of shipments of cargo parachutes was primarily the cause of lower revenues. There was, however, an increase in shipments of high-altitude research balloons during the first quarter. At this point, Aerostar no longer expects to receive follow-on parachute orders from the US Army for delivery in the current fiscal year. "The Army is not moving forward as quickly as we originally expected," Moquist explained, "but we believe our bids will be competitive and orders under long-term contracts will be issued for fiscal 2007 delivery."

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