þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended October 31, 2017 | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to | ||
South Dakota (State or other jurisdiction of incorporation or organization) | 46-0246171 (I.R.S. Employer Identification No.) | |
Large accelerated filer þ | Accelerated filer o | |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o | |
Emerging growth company o | ||
PAGE | |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 4. Mine Safety Disclosures | |
(dollars and shares in thousands, except per-share data) | October 31, 2017 | January 31, 2017 | October 31, 2016 | ||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||
Accounts receivable, net | |||||||||||
Inventories | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Goodwill | |||||||||||
Amortizable intangible assets, net | |||||||||||
Other assets | |||||||||||
TOTAL ASSETS | $ | $ | $ | ||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | $ | $ | ||||||||
Accrued liabilities | |||||||||||
Customer advances | |||||||||||
Total current liabilities | |||||||||||
Other liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Shareholders' equity | |||||||||||
Common stock, $1 par value, authorized shares 100,000; issued 67,088; 67,060; and 67,060, respectively | |||||||||||
Paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | |||||
Treasury stock at cost, 31,332; 30,984; and 30,984 shares, respectively | ( | ) | ( | ) | ( | ) | |||||
Total Raven Industries, Inc. shareholders' equity | |||||||||||
Noncontrolling interest | |||||||||||
Total equity | |||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | $ | $ | ||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(dollars in thousands, except per-share data) | October 31, 2017 | October 31, 2016 | October 31, 2017 | October 31, 2016 | |||||||||||
Net sales | $ | $ | $ | $ | |||||||||||
Cost of sales | |||||||||||||||
Gross profit | |||||||||||||||
Research and development expenses | |||||||||||||||
Selling, general, and administrative expenses | |||||||||||||||
Long-lived asset impairment loss | |||||||||||||||
Operating income | |||||||||||||||
Other income (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income before income taxes | |||||||||||||||
Income tax expense | |||||||||||||||
Net income | |||||||||||||||
Net income (loss) attributable to the noncontrolling interest | ( | ) | ( | ) | |||||||||||
Net income attributable to Raven Industries, Inc. | $ | $ | $ | $ | |||||||||||
Net income per common share: | |||||||||||||||
─ Basic | $ | $ | $ | $ | |||||||||||
─ Diluted | $ | $ | $ | $ | |||||||||||
Cash dividends paid per common share | $ | $ | $ | $ | |||||||||||
Comprehensive income (loss): | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation | ( | ) | ( | ) | |||||||||||
Postretirement benefits, net of income tax benefit (expense) of $4, $2, $11 and $4, respectively | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other comprehensive income (loss), net of tax | ( | ) | ( | ) | |||||||||||
Comprehensive income | |||||||||||||||
Comprehensive income (loss) attributable to noncontrolling interest | ( | ) | ( | ) | |||||||||||
Comprehensive income attributable to Raven Industries, Inc. | $ | $ | $ | $ | |||||||||||
$1 Par Common Stock | Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Raven Industries, Inc. Equity | Non- controlling Interest | Total Equity | |||||||||||||||||||
(dollars in thousands, except per-share amounts) | Shares | Cost | ||||||||||||||||||||||||
Balance January 31, 2016 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||
Cumulative foreign currency translation adjustment | — | — | — | — | — | — | ||||||||||||||||||||
Postretirement benefits reclassified from accumulated other comprehensive income (loss) after tax benefit of $4 | — | — | — | — | — | ( | ) | ( | ) | — | ( | ) | ||||||||||||||
Cash dividends ($0.39 per share) | — | — | — | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||
Dividends of less than wholly-owned subsidiary attributable to non-controlling interest | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
Shares issued on vesting of stock units, net of shares withheld for employee taxes | ( | ) | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Director shares issued | ( | ) | — | — | — | — | — | |||||||||||||||||||
Shares repurchased | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||
Share-based compensation | — | — | — | — | — | |||||||||||||||||||||
Income tax impact related to share-based compensation | — | ( | ) | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||
Balance October 31, 2016 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||
Balance January 31, 2017 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||
Net income | — | — | — | — | — | ( | ) | |||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||
Cumulative foreign currency translation adjustment | — | — | — | — | — | — | ||||||||||||||||||||
Postretirement benefits reclassified from accumulated other comprehensive income (loss) after tax benefit of $11 | — | — | — | — | — | ( | ) | ( | ) | — | ( | ) | ||||||||||||||
Cash dividends ($0.39 per share) | — | — | — | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||
Shares issued on stock options exercised, net of shares withheld for employee taxes | ( | ) | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Shares issued on vesting of stock units, net of shares withheld for employee taxes | ( | ) | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Director shares issued | ( | ) | — | — | — | — | — | |||||||||||||||||||
Shares repurchased | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||
Share-based compensation | — | — | — | — | — | |||||||||||||||||||||
Balance October 31, 2017 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||
Nine Months Ended | |||||||
(dollars in thousands) | October 31, 2017 | October 31, 2016 | |||||
OPERATING ACTIVITIES: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Change in fair value of acquisition-related contingent consideration | ( | ) | |||||
Long-lived asset impairment loss | |||||||
Loss from equity investment | |||||||
Deferred income taxes | ( | ) | ( | ) | |||
Share-based compensation expense | |||||||
Other operating activities, net | |||||||
Change in operating assets and liabilities: | |||||||
Accounts receivable | ( | ) | ( | ) | |||
Inventories | ( | ) | |||||
Other assets | ( | ) | ( | ) | |||
Operating liabilities | |||||||
Net cash provided by operating activities | |||||||
INVESTING ACTIVITIES: | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Payments related to business acquisitions | ( | ) | |||||
Proceeds from sale or maturity of investments | |||||||
Purchases of investments | ( | ) | ( | ) | |||
(Disbursements) proceeds from settlement of liabilities, sale of assets | ( | ) | |||||
Other investing activities | ( | ) | ( | ) | |||
Net cash used in investing activities | ( | ) | ( | ) | |||
FINANCING ACTIVITIES: | |||||||
Dividends paid | ( | ) | ( | ) | |||
Payments for common shares repurchased | ( | ) | ( | ) | |||
Payments of acquisition-related contingent liability | ( | ) | ( | ) | |||
Restricted stock units vested and issued | ( | ) | ( | ) | |||
Employee stock option exercises | ( | ) | |||||
Net cash used in financing activities | ( | ) | ( | ) | |||
Effect of exchange rate changes on cash | |||||||
Net increase (decrease) in cash and cash equivalents | ( | ) | |||||
Cash and cash equivalents at beginning of year | |||||||
Cash and cash equivalents at end of period | $ | $ | |||||
Three Months Ended | Nine Months Ended | ||||||
October 31, 2017 | October 31, 2016 | October 31, 2017 | October 31, 2016 | ||||
Anti-dilutive options and restricted stock units | |||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
October 31, 2017 | October 31, 2016 | October 31, 2017 | October 31, 2016 | ||||||||||||
Numerator: | |||||||||||||||
Net income attributable to Raven Industries, Inc. | $ | $ | $ | $ | |||||||||||
Denominator: | |||||||||||||||
Weighted average common shares outstanding | |||||||||||||||
Weighted average fully vested stock units outstanding | |||||||||||||||
Denominator for basic calculation | |||||||||||||||
Weighted average common shares outstanding | |||||||||||||||
Weighted average fully vested stock units outstanding | |||||||||||||||
Dilutive impact of stock options and restricted stock units | |||||||||||||||
Denominator for diluted calculation | |||||||||||||||
Net income per share ─ basic | $ | $ | $ | $ | |||||||||||
Net income per share ─ diluted | $ | $ | $ | $ | |||||||||||
October 31, 2017 | January 31, 2017 | October 31, 2016 | ||||||||||
Accounts receivable, net: | ||||||||||||
Trade accounts | $ | $ | $ | |||||||||
Allowance for doubtful accounts | ( | ) | ( | ) | ( | ) | ||||||
$ | $ | $ | ||||||||||
Inventories: | ||||||||||||
Finished goods | $ | $ | $ | |||||||||
In process | ||||||||||||
Materials | ||||||||||||
$ | $ | $ | ||||||||||
Other current assets: | ||||||||||||
Insurance policy benefit | $ | $ | $ | |||||||||
Income tax receivable | ||||||||||||
Receivable from sale of business | ||||||||||||
Prepaid expenses and other | ||||||||||||
$ | $ | $ | ||||||||||
Property, plant and equipment, net: | ||||||||||||
Land | $ | $ | $ | |||||||||
Buildings and improvements | ||||||||||||
Machinery and equipment | ||||||||||||
Accumulated depreciation | ( | ) | ( | ) | ( | ) | ||||||
$ | $ | $ | ||||||||||
Other assets: | ||||||||||||
Equity method investments | $ | $ | $ | |||||||||
Deferred income taxes | ||||||||||||
Other | ||||||||||||
$ | $ | $ | ||||||||||
Accrued liabilities: | ||||||||||||
Salaries and related | $ | $ | $ | |||||||||
Benefits | ||||||||||||
Insurance obligations | ||||||||||||
Warranties | ||||||||||||
Income taxes | ||||||||||||
Other taxes | ||||||||||||
Acquisition-related contingent consideration | ||||||||||||
Other | ||||||||||||
$ | $ | $ | ||||||||||
Other liabilities: | ||||||||||||
Postretirement benefits | $ | $ | $ | |||||||||
Acquisition-related contingent consideration | ||||||||||||
Deferred income taxes | ||||||||||||
Uncertain tax positions | ||||||||||||
Other | ||||||||||||
$ | $ | $ | ||||||||||
October 31, 2017 | |||
Assets held for sale | |||
Inventories | $ | ||
Other current assets | |||
Total current assets held for sale | |||
Property, plant and equipment, net | |||
Goodwill | |||
Amortizable intangible assets, net | |||
Other assets | |||
Total assets held for sale | $ | ||
Liabilities held for sale | |||
Current liabilities | $ | ||
Other long-term liabilities | |||
Total liabilities held for sale | $ | ||
Three Months Ended | Nine Months Ended | ||||||||||||||
October 31, 2017 | October 31, 2016 | October 31, 2017 | October 31, 2016 | ||||||||||||
Beginning balance | $ | $ | $ | $ | |||||||||||
Fair value of contingent consideration acquired | |||||||||||||||
Change in fair value of the liability | ( | ) | ( | ) | |||||||||||
Contingent consideration earn-out paid | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Ending balance | $ | $ | $ | $ | |||||||||||
Classification of liability in the Consolidated balance sheet | |||||||||||||||
Accrued Liabilities | $ | $ | |||||||||||||
Other Liabilities, long-term | |||||||||||||||
Balance at October 31, 2017 | $ | $ | |||||||||||||
Applied Technology | Engineered Films | Aerostar | Total | |||||||||||||
Balance at January 31, 2017 | $ | $ | $ | $ | ||||||||||||
Additions due to business combinations | ||||||||||||||||
Divestiture of business | ( | ) | ( | ) | ||||||||||||
Foreign currency translation adjustment | ||||||||||||||||
Balance at October 31, 2017 | $ | $ | $ | $ | ||||||||||||
Balance at January 31, 2016 | $ | $ | $ | $ | ||||||||||||
Foreign currency translation adjustment | ||||||||||||||||
Balance at October 31, 2016 | $ | $ | $ | $ | ||||||||||||
October 31, 2017 | January 31, 2017 | October 31, 2016 | |||||||||||||||||||||||||||
Accumulated | Accumulated | Accumulated | |||||||||||||||||||||||||||
Amount | amortization | Net | Amount | amortization | Net | Amount | amortization | Net | |||||||||||||||||||||
Existing technology | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
Customer relationships | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
Patents and other intangibles | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
October 31, 2017 | October 31, 2016 | October 31, 2017 | October 31, 2016 | ||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||
Interest cost | |||||||||||||||
Amortization of actuarial losses | |||||||||||||||
Amortization of unrecognized gains in prior service cost | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net periodic benefit cost | $ | $ | $ | $ | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
October 31, 2017 | October 31, 2016 | October 31, 2017 | October 31, 2016 | ||||||||||||
Beginning balance | $ | $ | $ | $ | |||||||||||
Change in provision | ( | ) | |||||||||||||
Settlements made | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Ending balance | $ | $ | $ | $ | |||||||||||
Nine Months Ended | |||||
October 31, 2017 | October 31, 2016 | ||||
Risk-free interest rate | % | % | |||
Expected dividend yield | % | % | |||
Expected volatility factor | % | % | |||
Expected option term (in years) | |||||
Weighted average grant date fair value | $ | $ | |||
Three Months Ended | Nine Months Ended | ||||||||||||||
October 31, 2017 | October 31, 2016 | October 31, 2017 | October 31, 2016 | ||||||||||||
Net sales | |||||||||||||||
Applied Technology | $ | $ | $ | $ | |||||||||||
Engineered Films | |||||||||||||||
Aerostar | |||||||||||||||
Intersegment eliminations (a) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Consolidated net sales | $ | $ | $ | $ | |||||||||||
Operating income (loss)(b) | |||||||||||||||
Applied Technology | $ | $ | $ | $ | |||||||||||
Engineered Films | |||||||||||||||
Aerostar(c) | ( | ) | ( | ) | |||||||||||
Intersegment eliminations | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total reportable segment income | |||||||||||||||
General and administrative expenses(d) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Consolidated operating income | $ | $ | $ | $ | |||||||||||
• | Executive Summary |
• | Results of Operations - Segment Analysis |
• | Outlook |
• | Liquidity and Capital Resources |
• | Off-Balance Sheet Arrangements and Contractual Obligations |
• | Critical Accounting Policies and Estimates |
• | Accounting Pronouncements |
• | Consolidated net sales, gross margin, operating income, operating margin, net income, and diluted earnings per share |
• | Cash flow from operations and shareholder returns |
• | Segment net sales, gross profit, gross margin, operating income, and operating margin. At the segment level, operating income does not include an allocation of general and administrative expenses. |
• | Intentionally serve a set of diversified market segments with attractive near- and long-term growth prospects; |
• | Consistently manage a pipeline of growth initiatives within our market segments; |
• | Aggressively compete on quality, service, innovation, and peak performance; |
• | Hold ourselves accountable for continuous improvement; |
• | Value our balance sheet as a source of strength and stability with which to pursue strategic acquisitions; and |
• | Make corporate responsibility a top priority. |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
(dollars in thousands, except per-share data) | October 31, 2017 | October 31, 2016 | % Change | October 31, 2017 | October 31, 2016 | % Change | ||||||||||||||||
Net sales | $ | 101,349 | $ | 72,522 | 39.7 | % | $ | 281,494 | $ | 208,480 | 35.0 | % | ||||||||||
Gross profit | 33,333 | 19,839 | 68.0 | % | 91,802 | 58,871 | 55.9 | % | ||||||||||||||
Gross margin (a) | 32.9 | % | 27.4 | % | 32.6 | % | 28.2 | % | ||||||||||||||
Operating income | $ | 17,829 | $ | 7,389 | 141.3 | % | $ | 47,748 | $ | 22,135 | 115.7 | % | ||||||||||
Operating margin (a) | 17.6 | % | 10.2 | % | 17.0 | % | 10.6 | % | ||||||||||||||
Net income attributable to Raven Industries, Inc. | $ | 11,998 | $ | 5,741 | 109.0 | % | $ | 32,581 | $ | 15,753 | 106.8 | % | ||||||||||
Diluted earnings per share | $ | 0.33 | $ | 0.16 | $ | 0.89 | $ | 0.43 | ||||||||||||||
Cash flow from operating activities | $ | 10,973 | $ | 13,127 | (16.4 | )% | $ | 30,834 | $ | 38,685 | (20.3 | )% | ||||||||||
Cash outflow for capital expenditures | $ | 1,780 | $ | 1,733 | 2.7 | % | $ | 7,003 | $ | 3,901 | 79.5 | % | ||||||||||
Cash dividends | $ | 4,648 | $ | 4,720 | (1.5 | )% | $ | 14,032 | $ | 14,148 | (0.8 | )% | ||||||||||
Common share repurchases | $ | 10,000 | $ | — | $ | 10,000 | $ | 7,702 | 29.8 | % | ||||||||||||
(a) The Company's gross and operating margins may not be comparable to industry peers due to the diversity of its operations and variability in the classification of expenses across industries in which the Company operates. | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
(dollars in thousands) | October 31, 2017 | October 31, 2016 | $ Change | % Change | October 31, 2017 | October 31, 2016 | $ Change | % Change | ||||||||||||||||||||||
Net sales | $ | 25,319 | $ | 25,203 | $ | 116 | 0.5 | % | $ | 94,233 | $ | 79,327 | $ | 14,906 | 18.8 | % | ||||||||||||||
Gross profit | 10,790 | 10,636 | 154 | 1.4 | % | 41,554 | 32,911 | 8,643 | 26.3 | % | ||||||||||||||||||||
Gross margin | 42.6 | % | 42.2 | % | 44.1 | % | 41.5 | % | ||||||||||||||||||||||
Operating expenses | $ | 5,433 | $ | 4,221 | $ | 1,212 | 28.7 | % | $ | 15,848 | $ | 12,631 | $ | 3,217 | 25.5 | % | ||||||||||||||
Operating expenses as % of sales | 21.5 | % | 16.7 | % | 16.8 | % | 15.9 | % | ||||||||||||||||||||||
Long-lived asset impairment loss | $ | — | $ | — | $ | 259 | $ | — | ||||||||||||||||||||||
Operating income (loss)(1) | $ | 5,357 | $ | 6,415 | $ | (1,058 | ) | (16.5 | )% | $ | 25,447 | $ | 20,280 | $ | 5,167 | 25.5 | % | |||||||||||||
Operating margin | 21.2 | % | 25.5 | % | 27.0 | % | 25.6 | % | ||||||||||||||||||||||
(1) At the segment level, operating income does not include an allocation of general and administrative expenses. | ||||||||||||||||||||||||||||||
• | Market conditions. Aftermarket sales channel demand remains subdued, and growth in the OEM sales channel has become more challenging in the third quarter of fiscal 2018. Although agriculture end market conditions deteriorated in the third quarter of fiscal 2018, the Company believes that overall the division is holding market share across product lines. Despite these challenging conditions, Applied Technology's marketplace strategy has capitalized on new product introductions through the first nine months of fiscal 2018. Successful new product introductions and expanded relationships with OEM partners are driving improved sales and market share gains versus the prior year. |
• | Sales volume. Third quarter fiscal 2018 net sales were up slightly compared to $25.2 million in the third quarter of the prior year. Sales in the original equipment manufacturer (OEM) channel were up 10.3% while sales in the aftermarket channel were down 10.1% for the fiscal 2018 third quarter. Year-to-date sales increased 18.8% to $94.2 million compared to $79.3 million in the prior year. For the nine months ended October 31, 2017, sales in the OEM channel were up 39.2% while sales in the aftermarket channel were up 3.1% versus the prior year comparative period. The increases in net sales in the three- and nine-month periods were primarily driven by volume as pricing had minimal impact. |
• | International sales. For the three-month period, international sales totaled $5.2 million, down 8.8% from $5.7 million in the prior year comparative period. Lower sales volume in Canada, and Europe were the primary drivers of this decrease. International sales represented 20.7% of segment revenue compared to 22.8% of segment revenue in the prior year comparative period. Year-to-date, international sales totaled $23.2 million, an increase of $0.1 million from a year ago. Year-to-date international sales represented 24.6% of segment sales compared to 29.1% in the prior year comparative period. Higher sales in Latin America, Europe, and Australia were mostly offset by a decrease in Canada. The sales increases in Europe reflect commercial synergies realized by the acquisition of SBG in fiscal 2015 as Applied Technology products are increasingly sold into this market. |
• | Gross margin. Gross margin increased to 42.6% for the three months ended October 31, 2017 from 42.2% in the prior year comparative period. For the nine-month period ended October 31, 2017 gross margin increased to 44.1% from 41.5% in the fiscal 2017 comparative period. The nine-month period benefited more from higher sales volume and improved operating leverage. |
• | Operating expenses. Fiscal 2018 third quarter operating expense as a percentage of net sales was 21.5%, up from 16.7% in the prior year third quarter. This increase is primarily driven by higher investment in the sales function and research and development activities, and higher legal expenses. These strategic investments will support the Company's long-term growth through new product introductions and an enhanced sales function. Year-to-date operating expense as a percentage of net sales was 16.8%, up from 15.9% in the prior year comparative period. The increase in the nine-month period is driven by investment in research and development and selling and marketing expenses related to new product introductions and to enhance our customer experience. |
• | Long-lived asset impairment loss. As described in Note 7 Goodwill, Long-lived Assets, and Other Intangibles of the Notes to the Consolidated Financial Statements included in Item 1 of this Form 10-Q, during the first quarter of fiscal 2018 the Company determined that the intangible asset related to the investment in AgEagle was fully impaired due to the decrease in expected future cash flows. No impairments were recognized in the three-month period ended October 31, 2017 or the three- or nine-month periods ended October 31, 2016. |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
(dollars in thousands) | October 31, 2017 | October 31, 2016 | $ Change | % Change | October 31, 2017 | October 31, 2016 | $ Change | % Change | ||||||||||||||||||||||
Net sales | $ | 65,108 | $ | 38,551 | $ | 26,557 | 68.9 | % | $ | 157,691 | $ | 104,307 | $ | 53,384 | 51.2 | % | ||||||||||||||
Gross profit | 19,358 | 8,711 | 10,647 | 122.2 | % | 41,631 | 22,334 | 19,297 | 86.4 | % | ||||||||||||||||||||
Gross margin | 29.7 | % | 22.6 | % | 26.4 | % | 21.4 | % | ||||||||||||||||||||||
Operating expenses | $ | 2,243 | $ | 1,582 | $ | 661 | 41.8 | % | $ | 6,245 | $ | 4,668 | $ | 1,577 | 33.8 | % | ||||||||||||||
Operating expenses as % of sales | 3.4 | % | 4.1 | % | 4.0 | % | 4.5 | % | ||||||||||||||||||||||
Operating income (loss)(1) | $ | 17,115 | $ | 7,129 | $ | 9,986 | 140.1 | % | $ | 35,386 | $ | 17,666 | $ | 17,720 | 100.3 | % | ||||||||||||||
Operating margin | 26.3 | % | 18.5 | % | 22.4 | % | 16.9 | % | ||||||||||||||||||||||
(1) At the segment level, operating income does not include an allocation of general and administrative expenses. | ||||||||||||||||||||||||||||||
• | Market conditions. End-market conditions in the geomembrane market, which constituted approximately 29 percent of the division's sales in the third quarter of fiscal 2018, have continued to improve from the market-bottom conditions reached last year. At the end of the third quarter of fiscal 2018, U.S. land-based rig counts have increased approximately 66% versus the third quarter of fiscal 2017. For the three- and nine-month periods ended October 31, 2017, sales into the geomembrane market were up approximately 125% and 135% year-over-year, respectively. As described in Note 6 Acquisitions of and Investments in Businesses and Technologies of the Notes to the Consolidated Financial Statements included in Item 1 of this Form 10-Q, during the third quarter of fiscal 2018 the Company closed on the acquisition of Colorado Lining International Inc. (CLI), further strengthening Engineered Films' presence in the geomembrane market. CLI contributed $5.2 million in sales during the three- and nine-month periods ended October 31, 2017 which was split between the geomembrane market and installation sales. For the three- and nine-month periods ended October 31, 2017, sales into the construction market were up approximately 61.8% and 27.5% year-over-year, respectively, which included $8.4 million in sales of hurricane recovery film. It has been several years since the Company last received a substantial increase in demand for hurricane recovery film. Sales of such film are generally less than $2.0 million on an annual basis. In April 2017, Engineered Films expanded its fabrication capabilities of geomembrane liner materials in south Texas by purchasing a new facility in Pleasanton, Texas and increased fabrication at the Company's location in Midland, Texas by adding production team members to service the increased demand in the geomembrane market. The Company does not model comparative market share position for its divisions, but based on the growth in the first nine months of fiscal 2018, the Company believes Engineered Films achieved sales growth due to improved end-market demand conditions and increased market share. |
• | Sales volume and selling prices. Third quarter net sales were $65.1 million, an increase of $26.5 million, or 68.9%, compared to fiscal 2017 third quarter net sales of $38.6 million. Volume, measured in pounds sold, increased 52.6% and average selling price increased 4.5%. For the nine-month period ended October 31, 2017, Engineered Films' net sales were $157.7 million, an increase of $53.4 million, or 51.2%, compared to the nine-month period ended October 31, 2016. Volume, measured in pounds sold, increased 44.5% and average selling price increased 2.2%. All markets contributed to the higher sales in the three- and nine-month periods ended October 31, 2017. |
• | Gross margin. For the three- and nine-month periods ended October 31, 2017, gross margin was 29.7% and 26.4%, respectively. The gross margin for the three- and nine-month periods ended October 31, 2016 was 22.6% and 21.4%, respectively. The improvement in gross margin was primarily due to higher sales volume and the resulting improvement in capacity utilization, but also benefited from continued spending discipline. |
• | Operating expenses. Third quarter operating expenses were up $0.6 million or 41.8% compared to the prior year third quarter. As a percentage of net sales, operating expense was 3.4% in the current year three-month period as compared to 4.1% in the prior year comparative period. Year-to-date operating expenses were 4.0% as a percentage of net sales as compared to 4.5% in the prior year comparative period. The increase in sales volume in the three- and nine-month periods more than offset the additional costs to support sales growth and drove operating expenses as percentage of sales down 0.7 and 0.5 percentage points year-over-year, respectively. |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
(dollars in thousands) | October 31, 2017 | October 31, 2016 | $ Change | % Change | October 31, 2017 | October 31, 2016 | $ Change | % Change | ||||||||||||||||||||||
Net sales | $ | 11,103 | $ | 9,003 | $ | 2,100 | 23.3 | % | $ | 30,078 | $ | 25,313 | $ | 4,765 | 18.8 | % | ||||||||||||||
Gross profit | 3,197 | 508 | 2,689 | 529.3 | % | 8,620 | 3,647 | 4,973 | 136.4 | % | ||||||||||||||||||||
Gross margin | 28.8 | % | 5.6 | % | 28.7 | % | 14.4 | % | ||||||||||||||||||||||
Operating expenses | $ | 1,838 | $ | 1,796 | $ | 42 | 2.3 | % | $ | 4,455 | $ | 5,364 | $ | (909 | ) | (16.9 | )% | |||||||||||||
Operating expenses as % of sales | 16.6 | % | 19.9 | % | 14.8 | % | 21.2 | % | ||||||||||||||||||||||
Long-lived asset impairment loss | — | 87 | (87 | ) | — | 87 | $ | (87 | ) | |||||||||||||||||||||
Operating income (loss)(1) | $ | 1,359 | $ | (1,375 | ) | $ | 2,734 | (198.8 | )% | $ | 4,165 | $ | (1,804 | ) | $ | 5,969 | (330.9 | )% | ||||||||||||
Operating margin | 12.2 | % | (15.3 | )% | 13.8 | % | (7.1 | )% | ||||||||||||||||||||||
(1) At the segment level, operating income does not include an allocation of general and administrative expenses. | ||||||||||||||||||||||||||||||
• | Market conditions. Some of Aerostar's markets are subject to significant variability due to government spending and the timing of awards. Such conditions result in delays and uncertainties in certain opportunities important to the division's growth strategy. Despite these uncertainties, Aerostar is pioneering new markets with leading-edge applications of its stratospheric balloon platform. While it is particularly challenging to measure market share information for the Aerostar division and the Company does not model comparative market share position for any of its divisions, the Company believes that Aerostar's sales growth in the three- and nine-month periods was primarily the result of market share gains rather than overall growth of the market. |
• | Sales volume. Net sales increased 23.3% from $9.0 million for the three-month period ended October 31, 2016 to $11.1 million for the three-month period ended October 31, 2017. Year-to-date sales were $30.1 million, up $4.8 million year-over-year, or 18.8%. The increase in both periods was driven principally by growth in the stratospheric balloon platform. |
• | Gross margin. For the three-month period, gross margin increased from 5.6% to 28.8%. Gross margin increased from 14.4% to 28.7% in the nine-month period. The three- and nine-month periods ended October 31, 2017 include an inventory write-down adjustment of $0.4 million related to certain aerostat inventory. The three- and nine-month periods ended October 31, 2016 include an inventory write-down adjustment of $2.3 million related to certain radar inventory. The inventory write downs in the current and prior year were driven by strategic decisions to narrow certain offerings and thereby further enhance Aerostar’s focus on its stratospheric balloon platform. The remaining increase in gross margin for both periods was primarily driven by higher sales volume and the implementation of cost reductions as compared to the previous year. |
• | Operating expenses. Third quarter fiscal 2018 operating expense was $1.8 million, or 16.6% of net sales, a decrease from 19.9% of net sales in the third quarter of fiscal 2017. Year-to-date operating expense as a percentage of net sales was 14.8%, down from 21.2% in the prior year. The three- and nine-month periods ended October 31, 2017 include a $0.5 million loss on the disposal of certain demonstration related equipment driven by strategic decisions to narrow certain offerings and thereby further enhance Aerostar’s focus on its stratospheric balloon platform. The decrease as a percentage of sales in both periods is primarily driven by higher sales and adjustments in operating expenses while focusing on strategic research and development spending. |
Three Months Ended | Nine Months Ended | |||||||||||||||
(dollars in thousands) | October 31, 2017 | October 31, 2016 | October 31, 2017 | October 31, 2016 | ||||||||||||
Administrative expenses | $ | 5,990 | $ | 4,764 | $ | 17,247 | $ | 13,986 | ||||||||
Administrative expenses as a % of sales | 5.9 | % | 6.6 | % | 6.1 | % | 6.7 | % | ||||||||
Other income (expense), net | $ | (34 | ) | $ | (273 | ) | $ | (327 | ) | $ | (579 | ) | ||||
Effective tax rate | 32.6 | % | 19.3 | % | 31.3 | % | 26.9 | % | ||||||||
(dollars in thousands) | October 31, 2017 | January 31, 2017 | October 31, 2016 | |||||||||
Cash and cash equivalents | $ | 36,873 | $ | 50,648 | $ | 46,313 | ||||||
Nine Months Ended | ||||||||
(dollars in thousands) | October 31, 2017 | October 31, 2016 | ||||||
Cash provided by operating activities | $ | 30,834 | $ | 38,685 | ||||
Cash used in investing activities | (20,077 | ) | (3,754 | ) | ||||
Cash used in financing activities | (24,704 | ) | (22,424 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 172 | 24 | ||||||
Net increase in cash and cash equivalents | $ | (13,775 | ) | $ | 12,531 | |||
(dollars in thousands) | October 31, 2017 | October 31, 2016 | ||||||
Accounts receivable, net | $ | 59,573 | $ | 39,554 | ||||
Plus: Inventories | 53,481 | 42,813 | ||||||
Less: Accounts payable | 13,383 | 9,377 | ||||||
Net working capital(a) | $ | 99,671 | $ | 72,990 | ||||
Annualized net sales(b) | $ | 405,396 | $ | 290,088 | ||||
Net working capital percentage(c) | 24.6 | % | 25.2 | % | ||||
(a) Net working capital is defined as accounts receivable (net) plus inventories less accounts payable. | ||||||||
(b) Annualized net sales is defined as the most recent quarter net sales times four for each of the fiscal periods, respectively. | ||||||||
(c) Net working capital percentage is defined as Net working capital divided by Annualized net sales for each of the fiscal periods, respectively. | ||||||||
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
• | The Company’s controls relating to the response to the risks of material misstatement were not effectively designed. |
◦ | During the second quarter of fiscal 2018, we have redesigned and enhanced our controls and procedures around timely and appropriate identification, assessment, and response to risks of material misstatement. This included formalizing and redefining the risk categorization and risk rating methodology to appropriately assess and monitor identified risks on a quarterly basis. |
• | The Company’s controls over the accounting for goodwill and long-lived assets, including finite-lived intangible assets, were not effectively designed and maintained, specifically, the controls related to the identification of the proper unit of account as well as the development and review of assumptions used in interim and annual impairment tests. This control deficiency resulted in the restatement of the Company’s financial statements for the three- and nine-month periods ended October 31, 2015, the fiscal year ended January 31, 2016, and the three-month period ended April 30, 2016. |
◦ | During the first quarter of fiscal 2018, management completed the following remediation efforts around the design deficiency: |
▪ | We have redesigned our specific procedures and controls associated with the identification of the proper unit of account. |
▪ | We have developed an enhanced risk assessment evaluation for the reporting unit for which a goodwill impairment analysis is being conducted. |
▪ | We have redesigned our controls associated with the development of a more precise revenue forecast for use in interim and annual impairment tests. For Aerostar, this specifically includes more precise contract-based revenue assumptions. |
▪ | We have redesigned our controls associated with all significant assumptions, model and data used in management's estimates relevant to assessing the valuation of goodwill and long-lived assets, including finite-lived intangible assets. |
▪ | Internal Audit has completed a design walkthrough of redesigned controls. |
• | The Company’s controls over the completeness and accuracy of spreadsheets and system-generated reports used in internal control over financial reporting were not effectively designed and maintained |
◦ | During the second quarter of fiscal 2018, we have redesigned our controls for the identification and assessment of the completeness and accuracy of spreadsheets and system-generated reports used in internal control over financial reporting. |
◦ | During the second quarter of fiscal 2018, we have developed governance policy and procedures that will be used consistently by the organization to appropriately identify, assess, and manage risks related to the data integrity of spreadsheets and system-generated reports in internal control over financial reporting. |
◦ | During the third quarter of fiscal 2018, we have completed the baseline testing for those system-generated reports utilized in internal control over financial reporting that are subject to change management. |
◦ | During the third quarter of fiscal 2018, we have redesigned our controls to perform an analysis to identify changes made to system-generated reports utilized in the internal controls. |
• | The Company’s controls related to the accounting for income taxes were not effectively designed and maintained, specifically the controls to assess that the income tax provision and related tax assets and liabilities are complete and accurate. This control deficiency resulted in adjustments to the income tax provision and related tax asset and liability |
◦ | Management completed the following remediation efforts around the deficiency: |
• | We have redesigned specific processes and controls to augment the review of significant or unusual transactions performed by finance leadership to ensure that the relevant tax accounting implications are identified and considered. |
• | Our Director of Taxation has improved our tax models and implemented multiple reconciliations to ensure the Company’s tax provision is properly reconciled and rolled-forward. |
• | The Company’s controls over the existence of inventories were not effectively designed and maintained. Specifically, the controls to monitor that inventory subject to the cycle count program was counted at the frequency levels and accuracy rates required under the Company’s policy, and the controls to verify the existence of inventory held at third-party locations were not effectively designed and maintained. |
◦ | Management completed the following remediation efforts around the deficiency: |
• | We have completed the transfer of the vast majority of inventory held at third-party locations to Company-owned facilities. |
• | We have redesigned our controls over the completeness and accuracy of underlying information to monitor count dates for each item by location. |
• | We have redesigned our controls over the completeness and accuracy of underlying information to calculate and monitor the historical cycle count accuracy results. We have also formalized procedures to establish specific accountability for investigation and analysis of identified variances. |
• | We have redesigned our controls over baseline testing for all system-generated reports utilized in the internal controls over existence of inventories subject to the cycle count program. |
• | We have completed an analysis to validate that inventory subject to the cycle count program is being counted at the frequency levels and accuracy rates required under the Company’s policy. |
Period | Total number of shares purchased under the plan | Weighted average price paid per share (or unit) | Total amount purchased including commissions | Dollar value of shares (or units) that may be purchased under the plan | |||||||||||
August 1 to August 31, 2017 | 124,700 | $ | 27.66 | $ | 3,448,795 | ||||||||||
September 1 to September 30, 2017 | 223,586 | 29.30 | 6,551,197 | ||||||||||||
October 1 to October 31, 2017 | — | — | |||||||||||||
Total as of and for the fiscal quarter ended October 31, 2017 | 348,286 | $ | 28.71 | $ | 9,999,992 | $ | 2,959,349 | ||||||||
Exhibit Number | Description | |
Asset Purchase Agreement by and among Colorado Lining International, Inc., John B. Heap, Patrick Elliott, and Raven Industries, Inc. dated August 22, 2017. | ||
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101.INS | Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | |
RAVEN INDUSTRIES, INC. | ||||
/s/ Steven E. Brazones | ||||
Steven E. Brazones | ||||
Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | ||||
CONFIDENTIAL TREATMENT REQUESTED | Exhibit 2.1 | |
[*] Indicates confidential portions omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. | ||
Page | |
ARTICLE I. DEFINITIONS | 1 |
1.1 Certain Definitions | 1 |
1.2 Interpretation | 12 |
ARTICLE II. PURCHASE AND SALE OF THE ACQUIRED ASSETS | 12 |
2.1 Purchase and Sale of the Acquired Assets | 12 |
2.2 Excluded Assets | 13 |
2.3 Assumption of Certain Liabilities | 14 |
2.4 Retained Liabilities | 14 |
2.5 Nontransferable Assets | 14 |
2.6 Inventory Count | 15 |
2.7 Estimated Closing Purchase Price | 15 |
2.8 Payment of Estimated Closing Purchase Price | 15 |
2.9 Determination of the Final Closing Purchase Price | 16 |
2.10 Closing | 17 |
2.11 Closing Deliveries | 17 |
2.12 Earnout Payments | 19 |
2.13 Withholding | 21 |
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER STOCKHOLDERS | 21 |
3.1 Organization | 21 |
3.2 Equity Ownership | 22 |
3.3 Authority, Validity and Enforceability | 22 |
3.4 No Subsidiaries | 22 |
3.5 No Conflict | 22 |
3.6 Consents | 22 |
3.7 Financial Statements; Undisclosed Liabilities | 22 |
3.8 Inventory | 23 |
3.9 Accounts Receivable | 23 |
3.10 Absence of Certain Developments | 23 |
3.11 Compliance with Laws; Governmental Authorizations; Licenses | 23 |
3.12 Litigation | 24 |
3.13 Real Property | 24 |
3.14 Taxes | 25 |
3.15 Environmental Matters | 26 |
3.16 Employee Matters | 27 |
3.17 Employee Benefit Plans | 28 |
3.18 Intellectual Property Rights | 29 |
3.19 Material Contracts | 31 |
3.20 Insurance | 33 |
3.21 Title to Assets | 33 |
3.22 Affiliate Transactions | 33 |
3.23 Brokers | 33 |
3.24 Customers and Suppliers | 33 |
3.25 Product Liability Claims | 34 |
3.26 Warranties | 34 |
3.27 Disclosure | 34 |
Page | |
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER | 34 |
4.1 Organization | 34 |
4.2 Authority, Validity and Enforceability | 34 |
4.3 No Conflicts | 35 |
4.4 Consents | 35 |
4.5 Brokers | 35 |
ARTICLE V. COVENANTS AND AGREEMENTS | 35 |
5.1 Access and Information | 35 |
5.2 Conduct of Business Prior to Closing | 36 |
5.3 Commercially Reasonable Efforts; Notification of Certain Events | 37 |
5.4 Public Announcements | 37 |
5.5 Employee Matters | 37 |
5.6 Exclusivity | 38 |
5.7 Tax Matters | 39 |
5.8 Transfer of Certain Funds Received Post-Closing | 40 |
5.9 Further Assurances | 40 |
5.10 Insurance | 41 |
5.11 Access to Records Post-Closing | 41 |
5.12 Warranty Claims | 42 |
ARTICLE VI. CONDITIONS TO CLOSING | 42 |
6.1 Mutual Conditions | 42 |
6.2 Conditions to the Obligations of Buyer | 42 |
6.3 Conditions to the Obligations of Seller and Seller Stockholders | 43 |
ARTICLE VII. TERMINATION | 43 |
7.1 Termination | 43 |
7.2 Effect of Termination | 44 |
ARTICLE VIII. SURVIVAL; INDEMNIFICATION | |
8.1 Survival of Representations, Warranties and Covenants | 44 |
8.2 Indemnification | 45 |
8.3 Limitations on Liability; Calculation of Losses | 46 |
8.4 Claims Procedures | 46 |
8.5 Payment of Claim | 47 |
8.6 Exclusive Remedy | 48 |
8.7 Investigation | 48 |
8.8 Treatment of Indemnity Payments | 48 |
ARTICLE IX. MISCELLANEOUS | 48 |
9.1 Notices | 48 |
9.2 Exhibits and Schedules | 49 |
9.3 Computation of Time | 50 |
9.4 Expenses 50 | 50 |
9.5 Governing Law; Jurisdiction | 50 |
9.6 Assignment; Successors and Assigns; No Third Party Rights | 50 |
9.7 Counterparts | 50 |
9.8 Titles and Headings | 50 |
9.9 Entire Agreement | 50 |
9.10 Severability | 51 |
9.11 No Strict Construction | 51 |
9.12 Specific Performance | 51 |
9.13 Waiver of Jury Trial | 51 |
9.14 Failure or Indulgence not Waiver | 51 |
9.15 Amendments 51 | 51 |
Exhibits | |
Exhibit A | Form of Assignment and Assumption Agreement |
Exhibit B | Form of Bill of Sale |
Exhibit C | Form of Escrow Agreement |
Exhibit D-1 | Form of Patent Assignment |
Exhibit D-2 | Form of Trademark Assignment |
Exhibit D-3 | Form of Domain Name Assignment |
Exhibit E-1 | Form of Lease Agreement (Colorado Facility) |
Exhibit E-2 | Form of Lease Agreement (Texas Facility) |
Exhibit F-1 | Form of Noncompetition Agreement (Seller) |
Exhibit F-2 | Form of Noncompetition Agreement (Elliott) |
Exhibit F-3 | Form of Noncompetition Agreement (Heap) |
Disclosure Schedules | |
Schedule 2.1(b) | Equipment |
Schedule 2.1(e) | Assumed Contracts |
Schedule 2.1(f) | Business Intellectual Property Rights |
Schedule 2.1(h) | Prepaid Items, Backlogs, Advances, Deposits |
Schedule 2.1(l) | Leased Real Property |
Schedule 2.1(m) | Other Assets |
Schedule 2.2(f) | Excluded Assets |
Schedule 2.11(a)(iii) | Consents, Waivers and Approvals |
Schedule 2.12(a)(ii) | Buyer Products |
Schedule 3.2 | Equity Ownership |
Schedule 3.4 | Subsidiaries |
Schedule 3.6 | Consents |
Schedule 3.7 | Financial Statements; Undisclosed Liabilities |
Schedule 3.10 | Absence of Certain Developments |
Schedule 3.11(a) | Compliance with Laws; Governmental Authorizations; Licenses |
Schedule 3.12 | Litigation |
Schedule 3.14 (a) | Tax Returns |
Schedule 3.14 (e) | Tax Filings |
Schedule 3.14 (f) | Tax Legal Requirements |
Schedule 3.14 (i) | S-Corporation Filings |
Schedule 3.16 (a) | Employee Matters |
Schedule 3.16 (c) | Employees |
Schedule 3.16 (d) | Former Employees |
Schedule 3.17 (b) | Employee Benefit Plans |
Schedule 3.18(a) | Owned Intellectual Property |
Schedule 3.18(d) | Infringement |
Schedule 3.19 | Material Contracts |
Schedule 3.20 | Insurance |
Schedule 3.22 | Affiliate Transactions |
Schedule 3.24(a) | Suppliers |
Schedule 3.24(b) | Customers |
Schedule 3.25 | Product Liability Claims |
Schedule 3.26 | Warranties |
Schedule 5.2 | Conduct of Business Prior to Closing |
Schedule 5.5(f) | M&A Qualified Beneficiaries |
Schedule 5.10(a) | Discontinued Products Policy |
Schedule 8.2(a)(iv) | Specific Indemnities |
(c) | all accounts receivable of Seller (the “Accounts Receivable”); |
(d) | all supplier and customer lists and pricing information relating to the Business; |
(g) | all Permits related to the Business; |
(m) | all assets listed on Schedule 2.1(m); and |
(n) | all goodwill associated with the Business and the Acquired Assets. |
(d) | all rights of Seller under the Transaction Documents; |
(f) | those assets set forth on Schedule 2.2(f). |
(b) | all Seller Expenses; |
(d) | all Liabilities arising in connection with, or relating to, Excluded Taxes; |
(g) | all Liabilities arising in connection with, or relating to, the Excluded Assets. |
2.8 | Payment of Estimated Closing Purchase Price. At the Closing, Buyer will pay in cash: |
2.9 | Determination of the Final Closing Purchase Price. |
2.11 | Closing Deliveries. |
(ii) | the Assignment and Assumption Agreement, duly executed by Seller; |
(viii) | the IP Assignment and Assumption Agreement, duly executed by Seller; |
(ix) | the Escrow Agreement, duly executed by Seller; |
(x) | the Leases, duly executed by the landlords party thereto; |
(b) | At the Closing, Buyer will deliver or cause to be delivered the following: |
(ii) | the Assignment and Assumption Agreement, duly executed by Buyer; |
(iii) | the Leases, duly executed by Buyer; |
(iv) | the Escrow Agreement, duly executed by Buyer; |
(v) | the Noncompetition Agreements, duly executed by Buyer; |
2.12 | Earnout Payments. |
(iii) | For each such Earnout Period, an additional amount (not to exceed |
Earnout Period | Minimum Amount |
Year One Earnout Period | $[*] |
Year Two Earnout Period | $[*] |
Year Three Earnout Period | $[*] |
Earnout Period | Minimum Installation Services Revenue | Maximum Installation Services Revenue |
Year One Earnout Period | $[*] | $[*] |
Year Two Earnout Period | $[*] | $[*] |
Year Three Earnout Period | $[*] | $[*] |
3.4 | No Subsidiaries. Seller has no Subsidiaries other than those set forth on Schedule 3.4. |
3.7 | Financial Statements; Undisclosed Liabilities. |
3.11 | Compliance with Laws; Governmental Authorizations; Licenses. |
3.13 | Real Property. |
(b) | Leased Real Property. |
3.14 | Taxes. |
3.15 | Environmental Matters. |
3.16 | Employee Matters. |
3.17 | Employee Benefit Plans. |
(iii) | “cafeteria plan” (“125 Plan”) governed by Code Section 125; or |
3.18 | Intellectual Property Rights. |
3.19 | Material Contracts. |
(xiii) | any commitment to do any of the foregoing described in clauses |
3.21 | Title to Assets. |
3.24 | Customers and Suppliers. |
5.3 | Commercially Reasonable Efforts; Notification of Certain Events. |
5.5 | Employee Matters. |
5.7 | Tax Matters. |
5.9 | Further Assurances. |
5.10 | Insurance. |
7.2 | Effect of Termination. If this Agreement is terminated pursuant to Section 7.1 hereof, |
8.2 | Indemnification. |
(iii) | any Excluded Asset or Retained Liability; |
(iv) | any items set forth on Schedule 8.2(a)(iv); and |
8.3 | Limitations on Liability; Calculation of Losses. |
8.4 | Claims Procedures. |
(c) | Third Party Claims. |
9.6 | Assignment; Successors and Assigns; No Third Party Rights. |
SELLER: | |||
COLORADO LINING INTERNATIONAL, INC. | |||
By: | /s/ John B. Heap | ||
Name: John B. Heap | |||
Title: President | |||
By: | /s/ Patrick Elliot | ||
Name: Patrick Elliot, Individually | |||
By: | /s/ John B. Heap | ||
Name: John B. Heap, Individually | |||
BUYER: | |||
RAVEN INDUSTRIES, INC. | |||
By: | /s/ Steven E. Brazones | ||
Name: Steven E. Brazones | |||
Title: Chief Financial Officer | |||
1. | I have reviewed this quarterly report on Form 10-Q of Raven Industries, Inc. (the Registrant); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
5. | The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or others performing the equivalent function): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal controls over financial reporting. |
Dated: November 21, 2017 | /s/ Daniel A. Rykhus |
Daniel A. Rykhus | |
President and Chief Executive Officer | |
1. | I have reviewed this quarterly report on Form 10-Q of Raven Industries, Inc. (the Registrant); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
5. | The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or others performing the equivalent function): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal controls over financial reporting. |
Dated: November 21, 2017 | /s/ Steven E. Brazones |
Steven E. Brazones | |
Vice President and Chief Financial Officer | |
• | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Raven Industries, Inc. |
Dated: November 21, 2017 | /s/ Daniel A. Rykhus |
Daniel A. Rykhus | |
President and Chief Executive Officer | |
• | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Raven Industries, Inc. |
Dated: November 21, 2017 | /s/ Steven E. Brazones |
Steven E. Brazones | |
Vice President and Chief Financial Officer | |
Document and Entity Information - shares |
9 Months Ended | |
|---|---|---|
Oct. 31, 2017 |
Nov. 17, 2017 |
|
| Document Information [Line Items] | ||
| Entity Registrant Name | RAVEN INDUSTRIES INC | |
| Entity Central Index Key | 0000082166 | |
| Current Fiscal Year End Date | --01-31 | |
| Entity Filer Category | Large Accelerated Filer | |
| Document Type | 10-Q | |
| Document Period End Date | Oct. 31, 2017 | |
| Document Fiscal Year Focus | 2018 | |
| Document Fiscal Period Focus | Q3 | |
| Amendment Flag | false | |
| Entity Common Stock, Shares Outstanding | 35,755,646 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) (Unaudited) - $ / shares |
Oct. 31, 2017 |
Jan. 31, 2017 |
Oct. 31, 2016 |
|---|---|---|---|
| Statement of Financial Position [Abstract] | |||
| Common stock, par value (in dollars per share) | $ 1.000 | $ 1.000 | $ 1.000 |
| Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | 100,000,000 |
| Common stock, shares issued (in shares) | 67,088,000 | 67,060,000 | 67,060,000 |
| Treasury stock, at cost (in shares) | 31,332,000 | 30,984,000 | 30,984,000 |
Consolidated Statements of Income and Comprehensive Income (Unaudited) (Parenthetical) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 31, 2017 |
Oct. 31, 2016 |
Oct. 31, 2017 |
Oct. 31, 2016 |
|
| Income Statement [Abstract] | ||||
| Other comprehensive income, postretirement benefits, income tax (expense) benefit | $ 4 | $ 2 | $ 11 | $ 4 |
Consolidated Statements of Shareholders' Equity (Unaudited) (Parenthetical) (Unaudited) - USD ($) $ in Thousands |
9 Months Ended | |
|---|---|---|
Oct. 31, 2017 |
Oct. 31, 2016 |
|
| Statement of Stockholders' Equity [Abstract] | ||
| Common Stock, Dividends, Per Share, Declared | $ 0.390 | $ 0.390 |
| Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, Tax | $ 11 | $ 4 |
Basis of Presentation and Principles of Consolidation |
9 Months Ended |
|---|---|
Oct. 31, 2017 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Basis of Presentation and Principles of Consolidation | BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION Raven Industries, Inc. (the Company or Raven) is a diversified technology company providing a variety of products to customers within the industrial, agricultural, geomembrane, construction, and aerospace/defense markets. The Company is comprised of three unique operating units, or divisions, classified into reportable segments: Applied Technology, Engineered Films, and Aerostar. The accompanying interim unaudited consolidated financial statements, which includes the accounts of Raven and its wholly-owned or controlled subsidiaries, net of intercompany balances and transactions, has been prepared by the Company in accordance with generally accepted accounting principles in the United States (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, these financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present this financial information have been included. These financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2017. Financial results for the interim three- and nine-month periods ended October 31, 2017 are not necessarily indicative of the results that may be expected for the year ending January 31, 2018. The January 31, 2017 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required in an annual report on Form 10-K. Preparing financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Noncontrolling interests represent capital contributions, income and loss attributable to the owners of less than wholly-owned consolidated entities. The Company owns a 75% interest in an entity consolidated under the Aerostar business segment. Given the Company's majority ownership interest, the accounts of the business venture have been consolidated with the accounts of the Company, and a noncontrolling interest has been recorded for the noncontrolling investor interest in the net assets and operations of the business venture.
|
Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Notes) |
9 Months Ended |
|---|---|
Oct. 31, 2017 | |
| Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES There have been no material changes to the Company's significant accounting policies as described in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2017 other than described below in the Accounting Standards Adopted section. Accounting Pronouncements Accounting Standards Adopted In the fiscal 2018 first quarter, the Company early adopted Accounting Standards Update (ASU) No. 2017-04 (issued by the Financial Accounting Standards Board (FASB) in January 2017), "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" (ASU 2017-04) on a prospective basis . This ASU removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the new guidance, a goodwill impairment will be measured as the amount by which a reporting unit’s carrying value exceeds its fair value. The amount of any impairment may not exceed the carrying amount of goodwill. The amendments should be applied on a prospective basis. As discussed in Note 7 Goodwill, Long-lived Assets, and Other Intangibles, management performed an assessment in the fiscal 2018 first, second and third quarters and determined no triggering events had occurred for any of its three reporting units; therefore, the early adoption of this guidance did not have any impact on the consolidated financial statements or the results of operations as of and for the three- or nine-month periods ended October 31, 2017. In the fiscal 2018 first quarter when it became effective, the Company adopted FASB ASU 2016-09 (issued in March 2016), "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" (ASU 2016-09). ASU 2016-09 amends the accounting for employee share-based payment transactions to require recognition of the tax effects resulting from the settlement of stock-based awards as discrete income tax expense or benefit in the income statement in the reporting period in which they occur. This guidance also requires that all tax-related cash flows resulting from share-based awards be disclosed as operating cash flows in the statement of cash flows and that cash paid to taxing authorities on the behalf of employees for withheld shares be classified as a financing activity in the statement of cash flows. Finally, this ASU allows companies to make an accounting policy election to either estimate the number of awards that are expected to vest, consistent with current GAAP, or account for forfeitures when they occur. The Company accounts for forfeitures as they occur. The Company is prospectively recognizing excess tax benefits or deficits on vesting or settlement of awards, when they occur, as a discrete income tax benefit or expense instead of as additional paid-in capital as required under previous guidance. This change to the Company's accounting policies resulted in recognition of income tax expense of $2 and $571 for the three- and nine-month periods ended October 31, 2017. These tax-related cash flows are now classified within operating activities. The Company classifies tax payments made to taxing authorities on the employee's behalf for withheld shares as a financing activity on the statement of cash flows, as such the adoption of this guidance had no impact. Under the new guidance, excess tax benefits are no longer included in assumed proceeds under the treasury stock method of calculating earnings per share. The increase in incremental shares used in the weighted average diluted shares calculation was not material to the Company's diluted earnings per share calculation. In the fiscal 2018 first quarter when it became effective, the Company adopted the FASB ASU No. 2015-11 (issued in July 2015), "Inventory (Topic 330) Simplifying the Measurement of Inventory" (ASU 2015-11) on a prospective basis. The amendments in ASU 2015-11 clarify that an entity should measure inventory within the scope of this update at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Substantial and unusual losses that result from subsequent measurement of inventory should be disclosed in the financial statements. Previously the Company reported its inventory at the lower of cost or market. Market was defined as replacement cost with a ceiling of net realizable value and a floor of net realizable value less a normal profit margin. The Company evaluates its inventory in all three reporting segments quarterly to determine if cost exceeds net realizable value and records a write-down, if necessary. The adoption of this guidance did not have any impact on the consolidated financial statements or the results of operations as of and for the three- and nine-month periods ended October 31, 2017. New Accounting Standards Not Yet Adopted In May 2017, the FASB issued ASU No. 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting" (ASU 2017-09). The guidance amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under Topic 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards as equity instruments or a liability instruments are the same immediately before and after the modification to the award. The guidance is effective for annual periods, including interim periods, in fiscal years beginning after December 15, 2017. Early adoption is permitted and the amendments should be applied prospectively to an award modified on or after the adoption date. The Company currently has no plans to modify any of its outstanding awards. The Company will consider early adopting this guidance if modifications to its share-based compensation arrangements are likely to occur. The Company does not expect the adoption of this guidance will have a significant impact on its consolidated financial statements, results of operations, and disclosures. In March 2017, the FASB issued ASU No. 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Postretirement Benefit Cost" (ASU 2017-07). The guidance clarifies where the cost components of the net benefit cost should be reported in the income statement and it allows only the service cost to be capitalized. Currently the Company reports all of the components of the net benefit cost in "Operating income" in the Consolidated Statement of Income and Comprehensive Income. The net benefit cost for participants that are active employees is reported in the same manner as each participant's compensation cost is classified in the Consolidated Statement of Income and Comprehensive Income. The net benefit cost attributable to retired (inactive) participants is reported in "Selling, general, and administrative expenses" in the Consolidated Statement of Income and Comprehensive Income. Under the new guidance only the service cost component of the net benefit cost will be classified the same as the participant's compensation cost. The other components of the net benefit cost are required to be reported separately as a non-operating income (expense). The guidance is effective for annual periods, including interim periods, in fiscal years beginning after December 15, 2017. Early adoption is permitted and the amendments should be applied retrospectively. The Company does not expect this guidance will have a significant impact on its consolidated financial statements, results of operations and disclosures since it primarily will only change how the net benefit cost is classified in the Company's Consolidated Statements of Income and Comprehensive Income. In February 2016 the FASB issued ASU No. 2016-02, "Leases (Topic 842)" (ASU 2016-02). The primary difference between previous GAAP and ASU 2016-02 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The guidance requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. The Company is evaluating the impact the adoption of this guidance will have on its consolidated financial statements, results of operations, and disclosures. |
Net Income per Share |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income per Share | NET INCOME PER SHARE Basic net income per share is computed by dividing net income by the weighted average common shares and fully vested stock units outstanding. Diluted net income per share is computed by dividing net income by the weighted average common and common equivalent shares outstanding which includes the shares issuable upon exercise of employee stock options (net of shares assumed purchased with the option proceeds), stock units, and restricted stock units outstanding. Performance share awards are included in the diluted calculation based upon what would be issued if the end of the most recent reporting period was the end of the term of the award. Weighted average common and common equivalent shares outstanding are excluded from the diluted loss per share calculation if their inclusion would have an antidilutive effect. Certain outstanding options and restricted stock units were excluded from the diluted net income per-share calculations because their effect would have been anti-dilutive under the treasury stock method. The options and restricted stock units excluded from the diluted net income per-share share calculation were as follows:
The computation of earnings per share is presented below:
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Selected Balance Sheet Information |
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| Selected Balance Sheet Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selected Balance Sheet Information | SELECTED BALANCE SHEET INFORMATION Following are the components of selected items from the Consolidated Balance Sheets:
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Assets Held for Sale (Notes) |
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| Assets Held for Sale Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment Disclosure [Text Block] | ASSETS HELD FOR SALE The Company continually analyzes its product and service offerings to ensure we serve market segments with attractive near- and long-term growth prospects that are consistent with our core capabilities. Through this continued evaluation the Company's Aerostar segment finalized a plan ("the Plan") to actively market the sale of its client private and radar product lines, which it has determined constitutes a business. During the second quarter of fiscal 2018 the Company determined that it was probable that these product lines would be sold within one year. The Company has identified specific assets and liabilities likely to be sold, including an allocation of goodwill based on the relative fair value of the business to be sold. Currently, the Company estimates the fair value of the net assets held for sale is in excess of their net book value. As such there is no impact to the Consolidated Statement of Income for the three- or nine-month periods ended October 31, 2017. Under the Plan, Aerostar will remain focused on serving the aerospace/defense market with its stratospheric balloon product and service offerings. Amounts classified as held for sale are as follows:
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Acquisitions of and Investments in Businesses and Technologies |
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| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisitions of and Investments in Businesses and Technologies | ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES AND TECHNOLOGIES Colorado Lining International, Inc. On September 1, 2017, the Company completed the acquisition of substantially all of the assets ("the acquisition") of Colorado Lining International, Inc., a Colorado corporation, headquartered in Parker, CO (“CLI”). The acquisition will immediately align under the Company’s Engineered Films Division. The acquisition enhances the Company’s geomembrane market position through extended service and product offerings with the addition of new design-build and installation service components, and will advance Engineered Films’ business model into a vertically-integrated, full-service solutions provider for the geomembrane market. The acquisition constitutes a business and as such was accounted for as a business combination. The purchase price was approximately $15,088. This includes potential earn-out payments with an estimated fair value of $1,256 which are contingent upon achieving certain revenues and operational synergies. The acquisition includes a working capital adjustment to be settled within ninety days after acquisition. In the initial acquisition accounting, the fair value of the business acquired was allocated to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over the fair value of the identifiable assets acquired and liabilities assumed is reflected as goodwill. Goodwill recorded as part of the purchase price allocation was $5,941, all of which is tax deductible. Identifiable intangible assets acquired as part of the acquisition were $610, including definite-lived intangibles, such as customer relationships and order backlog. The estimated fair value of the assets acquired and liabilities assumed are preliminary and may be adjusted as the Company obtains additional information, primarily related to adjustments for the true up of acquired net working capital in accordance with the asset purchase agreement. If there are adjustments made for these items, the fair value of intangible assets and goodwill could be impacted. Thus, the provisional measurements of fair value are subject to change. Ag-Eagle Aerial Systems, Inc. In February 2016, the Applied Technology Division acquired an interest of approximately 5% in AgEagle Aerial Systems, Inc. (AgEagle). AgEagle is a privately held company that is a provider of unmanned aerial systems (UAS) used for agricultural applications. Contemporaneously with the execution of this agreement, AgEagle and the Company entered into a distribution agreement whereby the Company was appointed as the exclusive distributor of the existing AgEagle system as it pertains to the agriculture market. The Company’s equity ownership interest is considered a variable interest and it accounts for this investment under the equity method of accounting. The Company is not the primary beneficiary as the Company does not have the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the entity. The purchase price was allocated between the equity ownership interest and an intangible asset for the exclusive distribution agreement. In April 2017, the Company determined that the investment in AgEagle, was fully impaired, further described in Note 7 Goodwill, Long-lived Assets and Other Intangibles, due to lower than expected cash flows. The Company has no commitments or guarantees related to this equity method investment. Acquisition-related Contingent Consideration The Company has contingent liabilities related to the recent acquisition of CLI, as well as the prior acquisitions of SBG Innovatie BV and its affiliate, Navtronics BVBA (collectively, SBG) in May 2014 and Vista Research, Inc. (Vista) in January 2012. The fair value of such contingent consideration is estimated as of the acquisition date, and subsequently at the end of each reporting period, using forecasted cash flows. Projecting future cash flows requires the Company to make significant estimates and assumptions regarding future events, conditions, or revenues being achieved under the subject contingent agreement as well as the appropriate discount rate. Such valuation techniques include one or more significant inputs that are not observable (Level 3 fair value measures). Changes in the fair value of the liability for acquisition-related contingent consideration are as follows:
In the recent CLI acquisition, the Company entered into a contingent earn-out agreement, not to exceed $2,000. The earn-out is paid annually for three years after the purchase date, contingent upon achieving certain revenues and operational synergies. To date, the Company has made no payments on this potential earn-out liability. In connection with the acquisition of SBG, Raven is committed to making additional earn-out payments, not to exceed $2,500 calculated and paid quarterly for ten years after the purchase date contingent upon achieving certain revenues. To date, the Company has paid a total of $847 of this potential earn-out liability. |
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| Schedule of Business Acquisitions by Acquisition, Contingent Consideration [Table Text Block] | Changes in the fair value of the liability for acquisition-related contingent consideration are as follows:
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Goodwill, Long-lived Assets and Other Intangibles Goodwill, Long-lived Assets and Other Intangibles (Notes) |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill Impairment Loss and Other Charges | GOODWILL, LONG-LIVED ASSETS, AND OTHER CHARGES Goodwill Fiscal 2018 Management assesses goodwill for impairment annually during the fourth quarter and between annual tests whenever a triggering event indicates there may be an impairment. Impairment tests of goodwill are done at the reporting unit level. Management performed an assessment in the fiscal 2018 third quarter and determined that no triggering events had occurred for any of the Company's reporting units. There were no goodwill impairment losses reported in the three- and nine-month periods ended October 31, 2017. Fiscal 2017 In the fiscal 2017 third quarter the Company determined that a triggering event occurred for its Aerostar reporting unit, which had $789 of goodwill as of October 31, 2016. The triggering event was caused by lowering the financial expectations for net sales and operating income of the reporting unit and certain asset groups due to delays and uncertainties regarding the reporting unit’s pursuit of certain opportunities, including aerostat orders, certain classified stratospheric balloon pursuits, and radar pursuits. Aerostar was still actively pursuing these opportunities and some were in active negotiations, but the timing of certain aerostat and classified stratospheric balloon opportunities are being delayed more than previously expected and the likelihood of radar sales is lower due to the Company's decision to no longer actively pursue certain radar product opportunities. A Step 1 impairment analysis was completed using fair value techniques as of October 31, 2016. In determining the estimated fair value of the Aerostar reporting unit, the Company was required to estimate a number of factors, including projected revenue growth rates, projected operating results, terminal growth rates, economic conditions, anticipated future cash flows, and the discount rate. On the basis of these estimates, the October 31, 2016 analysis indicated that the estimated fair value of the Aerostar reporting unit exceeded the reporting unit carrying value by approximately $9,000, or approximately 30.0%. There were no goodwill impairment losses reported in the three- and nine-month periods ended October 31, 2016. The changes in the carrying amount of goodwill by reporting unit were as follows:
Long-lived Assets and Other Intangibles Fiscal 2018 The Company assesses the recoverability of long-lived assets, including definite-lived intangibles, equity method investments, and property plant and equipment if events or changes in circumstances indicate that an asset might be impaired. For long-lived and intangible assets, the Company performs impairment reviews by asset groups. When performing long-lived asset testing, the fair values of assets are determined based on valuation techniques using the best available information. Such valuations are derived from valuation techniques in which one or more significant inputs are not observable (Level 3 fair value measures). An impairment loss is recognized when the carrying amount of an asset is above the estimated undiscounted cash flows used in determining the fair value of the asset. During first quarter of fiscal 2018, the Company determined that the investment in AgEagle, further described in Note 6 Acquisitions of and Investments in Businesses and Technologies, was impaired due to lower than expected cash flows. This impairment was determined to be other-than-temporary and an accelerated equity method investment loss of $72 was reported in "Other (expense), net" in the Consolidated Statements of Income and Comprehensive Income for the nine-month period ended October 31, 2017. The Company also determined the customer relationship intangible asset related to the Ag Eagle exclusive distribution agreement was fully impaired. The total impairment loss reported related to this intangible asset was $259 and was reported in "Long-lived asset impairment loss" in the Consolidated Statements of Income and Comprehensive Income for the nine-month period ended October 31, 2017. There were no long-lived asset impairments or accelerated equity method investment losses reported in the three-month period ended October 31, 2017. Fiscal 2017 The Company evaluated the triggering events described in the goodwill impairment analysis and determined there were also triggering events with respect to the assets associated with the aerostat and stratospheric programs (Lighter than Air) and Radar asset groups in the Aerostar reporting unit in the third quarter, which resulted in an asset impairment test. Using the sum of the undiscounted cash flows associated with each of the two asset groups, a Step 1 test was performed for each asset group. The undiscounted cash flows for the Lighter than Air asset group exceeded the carrying value of the long-lived assets by approximately $110,000, or 800%, and no Step 2 test was deemed to be necessary based on the recoverability of the long-lived assets. For the Radar asset group, however, the undiscounted cash flows did not exceed the carrying value of the long-lived assets and the Company performed a Step 2 impairment analysis for the long-lived assets. In the Step 2 impairment analysis, the fair value determined was allocated to the assets and liabilities of the Radar asset group. The resulting estimated fair value of the Radar asset group long-lived assets was $175 compared to the carrying value of $262 for the asset group. The shortfall of $87 was recorded in the fiscal 2017 third quarter as an impairment charge to operating income reported as "Long-lived asset impairment loss" in the Consolidated Statements of Income and Comprehensive Income. The total impairment loss related to property, plant, and equipment and patents was $62 and $25, respectively. The following table provides the gross carrying amount and related accumulated amortization of definite-lived intangible assets:
Inventory write-downs During the fiscal 2017 third quarter, the Company wrote-down radar inventory, purchased primarily during fiscal 2016, due to the Company's decision in the fiscal 2017 third quarter to no longer actively pursue certain radar opportunities. The decision to write-down this inventory is consistent with the triggering event identified during the fiscal 2017 third quarter relating to the Aerostar reporting unit and the radar product and radar services (Radar) asset group. This radar specific inventory write-down increased "Cost of sales" by $2,278 for the three- and nine-month periods ended October 31, 2016. There were no material inventory write-downs in the three- and nine-month periods ended October 31, 2017.
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Employee Postretirement Benefits |
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| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee Postretirement Benefits | EMPLOYEE POSTRETIREMENT BENEFITS The Company provides postretirement medical and other benefits to certain current and past senior executive officers and senior managers. These plan obligations are unfunded. The components of the net periodic benefit cost for postretirement benefits are as follows:
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Warranties |
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| Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warranties | WARRANTIES Accruals necessary for product warranties are estimated based on historical warranty costs and average time elapsed between purchases and returns for each division. Additional accruals are made for any significant, discrete warranty issues. Changes in the warranty accrual were as follows:
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Financing Arrangements Financing Arrangements |
9 Months Ended |
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Oct. 31, 2017 | |
| Debt Disclosure [Abstract] | |
| Financing Arrangements | FINANCING ARRANGEMENTS The Company entered into a credit facility on April 15, 2015 with JPMorgan Chase Bank, N.A., Toronto Branch as Canadian Administrative Agent, JPMorgan Chase Bank, National Association, as administrative agent, and each lender from time to time party thereto (the Credit Agreement). The Credit Agreement provides for a syndicated senior revolving credit facility up to $125,000 with a maturity date of April 15, 2020. Simultaneous with execution of the Credit Agreement, Raven, and its subsidiaries entered into a guaranty agreement in favor of JPMorgan Chase Bank National Association in its capacity as administrator under the Credit Agreement for the benefit of JPMorgan Chase Bank N.A., Toronto Branch and the lenders and their affiliates under the Credit Agreement. Unamortized debt issuance costs associated with this Credit Agreement were $270, $352 and $379 at October 31, 2017, January 31, 2017, and October 31, 2016, respectively and are included in "Other assets" in the Consolidated Balance Sheets. Loans or borrowings defined under the Credit Agreement bear interest and fees at varying rates and terms defined in the Credit Agreement based on the type of borrowing as defined. The Credit Agreement includes annual administrative and unborrowed capacity fees. The Credit Agreement also contains customary affirmative and negative covenants, including those relating to financial reporting and notification, limits on levels of indebtedness and liens, investments, mergers and acquisitions, affiliate transactions, sales of assets, restrictive agreements, and change in control as defined in the Credit Agreement. The Company requested and received the necessary covenant waivers relating to its late filing of financial information in fiscal 2017. Financial covenants include an interest coverage ratio and funded indebtedness to earnings before interest, taxes, depreciation, and amortization as defined in the Credit Agreement. The loan proceeds may be utilized by Raven for strategic business purposes and for working capital needs. Letters of credit (LOCs) totaling $1,103 were outstanding at October 31, 2017. Letters of Credit totaling $514 were outstanding at January 31, 2017, and October 31, 2016. Any draws required under the LOCs would be settled with available cash or borrowings under the Credit Agreement. |
Commitments and Contingencies Commitments and Contingencies Disclosure |
9 Months Ended |
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Oct. 31, 2017 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies Disclosure [Text Block] | COMMITMENTS AND CONTINGENCIES The Company is involved as a party in lawsuits, claims, regulatory inquiries, or disputes arising in the normal course of its business, the potential costs and liability of which cannot be determined at this time. Among these matters is a patent infringement lawsuit filed in federal district court in Kansas, in which Capstan Ag Systems, Inc. has made certain infringement claims against the Company and one of its customers, CNH Industrial America LLC, related to the Applied Technology Division’s Hawkeye® Nozzle Control System. Management does not believe the ultimate outcomes of its legal proceedings are likely to be significant to its results of operations, financial position, or cash flows. Additionally, because of the present status of the lawsuit, management cannot determine the potential impact, if any, of the patent infringement lawsuit described above. The Company has insurance policies that provide coverage to various degrees for potential liabilities arising from legal proceedings. |
Income Tax Income Tax Disclosure |
9 Months Ended |
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Oct. 31, 2017 | |
| Income Tax Disclosure [Abstract] | |
| Income Tax Disclosure | INCOME TAXES |
Dividends and Treasury Stock |
9 Months Ended |
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Oct. 31, 2017 | |
| Stockholders' Equity Note [Abstract] | |
| Dividends and Treasury Stock | DIVIDENDS AND TREASURY STOCK Dividends paid to Raven shareholders for the three- and nine-month periods ended October 31, 2017 were $4,648 and $14,032, or 13.0 cents and 39.0 cents per share, respectively. Dividends paid to Raven shareholders for the three- and nine-month periods ended October 31, 2016 were $4,690 and $14,078, or 13.0 cents and 39.0 cents per share, respectively. There were no declared and unpaid shareholder dividends at October 31, 2017 or 2016. Effective March 21, 2016 the Board of Directors (Board) authorized an extension and increase of the authorized $40,000 stock buyback program in place at that time. An additional $10,000 was authorized for share repurchases once the $40,000 authorization limit is reached. |
Share Based Compensation |
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| Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share Based Compensation | SHARE-BASED COMPENSATION The Company reserves shares for issuance pursuant to the Amended and Restated 2010 Stock Incentive Plan effective March 23, 2012, administered by the Personnel and Compensation Committee of the Board of Directors. Two types of awards, stock options and restricted stock units, were granted during the nine months ended October 31, 2017 and October 31, 2016. Stock Option Awards The Company granted 85,800 non-qualified stock options during the nine-month period ended October 31, 2017. The Company granted 274,200 non-qualified stock options during the nine-month period ended October 31, 2016. None of these options were granted in the three-month periods ended October 31, 2017 and October 31, 2016, respectively. Options are granted with exercise prices based upon the closing market price of the Company's common stock on the day prior to the date of grant. The stock options vest over a four-year period and expire after five years. Options contain retirement and change-in-control provisions, as well as termination without cause provisions for certain executive officers, which may accelerate the vesting period. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The Company uses historical data to estimate option exercises and employee terminations within this valuation model. The weighted average assumptions used for the Black-Scholes option pricing model by grant year are as follows:
Restricted Stock Unit Awards (RSUs) The Company granted 4,593 and 60,413 time-vested RSUs to employees in the three- and nine-month periods ended October 31, 2017, respectively. The Company granted 4,577 and 70,947 time-vested RSUs to employees in the three- and nine-month periods ended October 31, 2016, respectively. The grant date fair value of a time-vested RSU is measured based upon the closing market price of the Company's common stock on the day prior to the date of grant. The weighted average grant date fair value per share of the time-vested RSUs granted in the periods ended October 31, 2017 and 2016, respectively, was $29.25 and $15.94. Time-vested RSUs will vest if, at the end of the three-year period, the employee remains employed by the Company. RSUs contain retirement and change-in-control provisions, as well as termination without cause provisions for certain executive officers, which may accelerate the vesting period. Dividends are cumulatively earned on the time-vested RSUs over the vesting period. The Company also granted performance-based RSUs in the nine-month periods ended October 31, 2017 and 2016, respectively. The exact number of performance shares to be issued will vary from 0% to 150% of the target award, depending on the Company's actual performance over the three-year period in comparison to the target award. The target award for the fiscal 2017 and 2016 grants are based on return on equity (ROE), which is defined as net income divided by the average of beginning and ending shareholders' equity. The performance-based RSUs will vest if, at the end of the three-year performance period, the Company has achieved certain performance goals and the employee remains employed by the Company. RSUs contain retirement and change-in-control provisions, as well as termination without cause provisions for certain executive officers, which may accelerate the vesting period. Dividends are cumulatively earned on performance-based RSUs over the vesting period. The number of RSUs that will vest is determined by an estimated ROE target over the three-year performance period. The estimated ROE performance factors used to estimate the number of restricted stock units expected to vest are evaluated at least quarterly. The number of restricted stock units issued at the vesting date will be based on actual results. |
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Segment Reporting |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting | SEGMENT REPORTING The Company's reportable segments are defined by their product lines which have been grouped in these segments based on technology, manufacturing processes, and end-use application. Raven's reportable segments are Applied Technology, Engineered Films, and Aerostar. The Company measures the performance of its segments based on their operating income excluding general and administrative expenses. Other expense and income taxes are not allocated to individual operating segments, and assets not identifiable to an individual segment are included as corporate assets. Separate financial information is available and regularly evaluated by the Company's chief operating decision-maker (CODM), the President and Chief Executive Officer, in making resource allocation decisions for the Company's reportable segments. Segment information is reported consistent with the Company's management reporting structure. Business segment net sales and operating income results are as follows:
(a) Intersegment sales for both fiscal 2018 and 2017 were primarily sales from Engineered Films to Aerostar. (b) At the segment level, operating income (loss) does not include an allocation of general and administrative expenses. (c) The three- and nine-month periods ended October 31, 2016 include inventory write-downs of $2,278 as a result of a strategic decision to narrow certain radar product offerings. (d) At the segment level, operating income (loss) does not include an allocation of general and administrative expenses and, as a result, "General and administrative expenses" are reported as a deduction from "Total reportable segment income" to reconcile to "Operating income" reported in the Consolidated Statements of Income and Comprehensive Income.
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Subsequent Events (Notes) |
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| Subsequent Event [Line Items] | |
| Subsequent Events [Text Block] | SUBSEQUENT EVENTS |
Summary of Significant Accounting Policies New Accounting Standards (Policies) - USD ($) $ in Thousands |
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| New Accounting Standards [Abstract] | ||||
| New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | Accounting Standards Adopted In the fiscal 2018 first quarter, the Company early adopted Accounting Standards Update (ASU) No. 2017-04 (issued by the Financial Accounting Standards Board (FASB) in January 2017), "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" (ASU 2017-04) on a prospective basis . This ASU removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the new guidance, a goodwill impairment will be measured as the amount by which a reporting unit’s carrying value exceeds its fair value. The amount of any impairment may not exceed the carrying amount of goodwill. The amendments should be applied on a prospective basis. As discussed in Note 7 Goodwill, Long-lived Assets, and Other Intangibles, management performed an assessment in the fiscal 2018 first, second and third quarters and determined no triggering events had occurred for any of its three reporting units; therefore, the early adoption of this guidance did not have any impact on the consolidated financial statements or the results of operations as of and for the three- or nine-month periods ended October 31, 2017. In the fiscal 2018 first quarter when it became effective, the Company adopted FASB ASU 2016-09 (issued in March 2016), "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" (ASU 2016-09). ASU 2016-09 amends the accounting for employee share-based payment transactions to require recognition of the tax effects resulting from the settlement of stock-based awards as discrete income tax expense or benefit in the income statement in the reporting period in which they occur. This guidance also requires that all tax-related cash flows resulting from share-based awards be disclosed as operating cash flows in the statement of cash flows and that cash paid to taxing authorities on the behalf of employees for withheld shares be classified as a financing activity in the statement of cash flows. Finally, this ASU allows companies to make an accounting policy election to either estimate the number of awards that are expected to vest, consistent with current GAAP, or account for forfeitures when they occur. The Company accounts for forfeitures as they occur. The Company is prospectively recognizing excess tax benefits or deficits on vesting or settlement of awards, when they occur, as a discrete income tax benefit or expense instead of as additional paid-in capital as required under previous guidance. This change to the Company's accounting policies resulted in recognition of income tax expense of $2 and $571 for the three- and nine-month periods ended October 31, 2017. These tax-related cash flows are now classified within operating activities. The Company classifies tax payments made to taxing authorities on the employee's behalf for withheld shares as a financing activity on the statement of cash flows, as such the adoption of this guidance had no impact. Under the new guidance, excess tax benefits are no longer included in assumed proceeds under the treasury stock method of calculating earnings per share. The increase in incremental shares used in the weighted average diluted shares calculation was not material to the Company's diluted earnings per share calculation. In the fiscal 2018 first quarter when it became effective, the Company adopted the FASB ASU No. 2015-11 (issued in July 2015), "Inventory (Topic 330) Simplifying the Measurement of Inventory" (ASU 2015-11) on a prospective basis. The amendments in ASU 2015-11 clarify that an entity should measure inventory within the scope of this update at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Substantial and unusual losses that result from subsequent measurement of inventory should be disclosed in the financial statements. Previously the Company reported its inventory at the lower of cost or market. Market was defined as replacement cost with a ceiling of net realizable value and a floor of net realizable value less a normal profit margin. The Company evaluates its inventory in all three reporting segments quarterly to determine if cost exceeds net realizable value and records a write-down, if necessary. The adoption of this guidance did not have any impact on the consolidated financial statements or the results of operations as of and for the three- and nine-month periods ended October 31, 2017. |
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| Description of New Accounting Pronouncements Not yet Adopted [Text Block] | New Accounting Standards Not Yet Adopted In May 2017, the FASB issued ASU No. 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting" (ASU 2017-09). The guidance amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under Topic 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards as equity instruments or a liability instruments are the same immediately before and after the modification to the award. The guidance is effective for annual periods, including interim periods, in fiscal years beginning after December 15, 2017. Early adoption is permitted and the amendments should be applied prospectively to an award modified on or after the adoption date. The Company currently has no plans to modify any of its outstanding awards. The Company will consider early adopting this guidance if modifications to its share-based compensation arrangements are likely to occur. The Company does not expect the adoption of this guidance will have a significant impact on its consolidated financial statements, results of operations, and disclosures. In March 2017, the FASB issued ASU No. 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Postretirement Benefit Cost" (ASU 2017-07). The guidance clarifies where the cost components of the net benefit cost should be reported in the income statement and it allows only the service cost to be capitalized. Currently the Company reports all of the components of the net benefit cost in "Operating income" in the Consolidated Statement of Income and Comprehensive Income. The net benefit cost for participants that are active employees is reported in the same manner as each participant's compensation cost is classified in the Consolidated Statement of Income and Comprehensive Income. The net benefit cost attributable to retired (inactive) participants is reported in "Selling, general, and administrative expenses" in the Consolidated Statement of Income and Comprehensive Income. Under the new guidance only the service cost component of the net benefit cost will be classified the same as the participant's compensation cost. The other components of the net benefit cost are required to be reported separately as a non-operating income (expense). The guidance is effective for annual periods, including interim periods, in fiscal years beginning after December 15, 2017. Early adoption is permitted and the amendments should be applied retrospectively. The Company does not expect this guidance will have a significant impact on its consolidated financial statements, results of operations and disclosures since it primarily will only change how the net benefit cost is classified in the Company's Consolidated Statements of Income and Comprehensive Income. In February 2016 the FASB issued ASU No. 2016-02, "Leases (Topic 842)" (ASU 2016-02). The primary difference between previous GAAP and ASU 2016-02 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The guidance requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. The Company is evaluating the impact the adoption of this guidance will have on its consolidated financial statements, results of operations, and disclosures. |
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| New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Net Income | $ 2 | $ 0 | $ 571 | $ 0 |
Net Income per Share (Tables) |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of antidilutive securities excluded from computation of earnings per share | The options and restricted stock units excluded from the diluted net income per-share share calculation were as follows:
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| Schedule of calculation of numerator and denominator in earnings per share | The computation of earnings per share is presented below:
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Selected Balance Sheet Information (Tables) |
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| Selected Balance Sheet Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of selected balance sheet items | Following are the components of selected items from the Consolidated Balance Sheets:
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Assets Held for Sale Assets Held for Sale (Tables) |
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| Disclosure of Long Lived Assets Held-for-sale [Table Text Block] | Amounts classified as held for sale are as follows:
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Oct. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Goodwill [Table Text Block] | The changes in the carrying amount of goodwill by reporting unit were as follows:
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| Schedule of Finite-Lived Intangible Assets [Table Text Block] | The following table provides the gross carrying amount and related accumulated amortization of definite-lived intangible assets:
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Employee Postretirement Benefits Employee Postretirement Benefits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of net periodic benefit cost for postretirement plan | The components of the net periodic benefit cost for postretirement benefits are as follows:
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Warranties (Tables) |
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Oct. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warranties | Changes in the warranty accrual were as follows:
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Share Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Weighted average assumptions by grant year | The weighted average assumptions used for the Black-Scholes option pricing model by grant year are as follows:
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Segment Reporting (Tables) |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business segment net sales and operating income results | Business segment net sales and operating income results are as follows:
(a) Intersegment sales for both fiscal 2018 and 2017 were primarily sales from Engineered Films to Aerostar. (b) At the segment level, operating income (loss) does not include an allocation of general and administrative expenses. (c) The three- and nine-month periods ended October 31, 2016 include inventory write-downs of $2,278 as a result of a strategic decision to narrow certain radar product offerings. (d) At the segment level, operating income (loss) does not include an allocation of general and administrative expenses and, as a result, "General and administrative expenses" are reported as a deduction from "Total reportable segment income" to reconcile to "Operating income" reported in the Consolidated Statements of Income and Comprehensive Income.
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Basis of Presentation and Principles of Consolidation (Details) |
9 Months Ended |
|---|---|
|
Oct. 31, 2017
segment
| |
| Organization, Consolidation and Presentation of Financial Statements Line Items [Line Items] | |
| Number of operating units | 3 |
| Aerostar Integrated Systems [Member] | |
| Organization, Consolidation and Presentation of Financial Statements Line Items [Line Items] | |
| Joint venture, ownership percentage | 75.00% |
Net Income per Share (Antidiluted Securities Excluded from Computation) (Details) - shares |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 31, 2017 |
Oct. 31, 2016 |
Oct. 31, 2017 |
Oct. 31, 2016 |
|
| Earnings Per Share [Abstract] | ||||
| Antidilutive securities excluded from computation of earnings per share, amount (in options and restricted units) | 338,244 | 653,513 | 385,157 | 922,041 |
Net Income per Share (Schedule of Calculation of Numerator and Denominator in Earnings per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 31, 2017 |
Oct. 31, 2016 |
Oct. 31, 2017 |
Oct. 31, 2016 |
|
| Numerator: | ||||
| Net income attributable to Raven Industries, Inc. | $ 11,998 | $ 5,741 | $ 32,581 | $ 15,753 |
| Denominator: | ||||
| Weighted average common shares outstanding (in shares) | 35,829,880 | 36,076,259 | 36,002,024 | 36,164,468 |
| Weighted average fully vested stock units outstanding (in shares) | 109,558 | 97,716 | 105,830 | 100,595 |
| Denominator for basic calculation (in shares) | 35,939,438 | 36,173,975 | 36,107,854 | 36,265,063 |
| Weighted average common shares outstanding (in shares) | 35,829,880 | 36,076,259 | 36,002,024 | 36,164,468 |
| Weighted average fully vested stock units outstanding (in shares) | 109,558 | 97,716 | 105,830 | 100,595 |
| Dilutive impact of stock options and restricted units (in shares) | 380,997 | 122,270 | 369,339 | 70,102 |
| Denominator for diluted calculation (in shares) | 36,320,435 | 36,296,245 | 36,477,193 | 36,335,165 |
| Net income per share - basic (in dollars per share) | $ 0.33 | $ 0.16 | $ 0.90 | $ 0.43 |
| Net income per share - diluted (in dollars per share) | $ 0.33 | $ 0.16 | $ 0.89 | $ 0.43 |
Employee Postretirement Benefits Employee Postretirement Benefits (Details) - Other Postretirement Benefit Plans, Defined Benefit [Member] - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 31, 2017 |
Oct. 31, 2016 |
Oct. 31, 2017 |
Oct. 31, 2016 |
|
| Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
| Service cost | $ 21 | $ 20 | $ 64 | $ 60 |
| Interest cost | 83 | 83 | 247 | 249 |
| Amortization of actuarial losses | 30 | 36 | 90 | 110 |
| Amortization of unrecognized prior service cost (Credit) | (40) | (40) | (120) | (120) |
| Defined Benefit Plan, Net Periodic Benefit Cost (Credit) | $ 94 | $ 99 | $ 281 | $ 299 |
Warranties (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 31, 2017 |
Oct. 31, 2016 |
Oct. 31, 2017 |
Oct. 31, 2016 |
|
| Product Warranty Accrual [Roll Forward] | ||||
| Beginning balance | $ 2,265 | $ 2,076 | $ 1,547 | $ 1,835 |
| Change in warranty provision | (274) | 202 | 1,504 | 1,288 |
| Settlements made | (774) | (426) | (1,834) | (1,271) |
| Ending balance | $ 1,217 | $ 1,852 | $ 1,217 | $ 1,852 |
Financing Arrangements (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Oct. 31, 2017 |
Jan. 31, 2017 |
Oct. 31, 2016 |
Apr. 15, 2015 |
|
| Line of Credit Facility [Line Items] | ||||
| Letters of credit outstanding, amount | $ 1,103 | $ 514 | $ 514 | |
| Debt Instrument, Covenant Compliance | The Company requested and received the necessary covenant waivers relating to its late filing of financial information in fiscal 2017. | |||
| JPMorgan Chase Bank [Member] | ||||
| Line of Credit Facility [Line Items] | ||||
| Line of Credit Facility, Initiation Date | Apr. 15, 2015 | |||
| Borrowing capacity under line of credit | $ 125,000 | |||
| Maturity date of the line of credit | Apr. 15, 2020 | |||
| Unamortized Debt Issuance Expense | $ 270 | $ 352 | 379 | |
| Borrowing outstanding under line of credit | 0 | $ 0 | $ 0 | |
| Remaining borrowing capacity under the line of credit | $ 123,947 |
Income Tax (Details) |
9 Months Ended | |
|---|---|---|
Oct. 31, 2017 |
Oct. 31, 2016 |
|
| Income Tax Contingency [Line Items] | ||
| Effective Income Tax Rate Reconciliation, Percent | 31.30% | 26.90% |
Dividends and Treasury Stock (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Oct. 31, 2017 |
Oct. 31, 2016 |
Oct. 31, 2017 |
Oct. 31, 2016 |
Mar. 21, 2016 |
Jan. 31, 2016 |
|
| Stockholders' Equity Note [Abstract] | ||||||
| Dividends paid | $ 4,648 | $ 4,690 | $ 14,032 | $ 14,078 | ||
| Cash dividends paid per common share (in dollars per share) | $ 0.13 | $ 0.13 | $ 0.39 | $ 0.39 | ||
| Dividends Payable | $ 0 | $ 0 | $ 0 | $ 0 | ||
| Stock Repurchase Program, Authorized Amount | $ 50,000 | $ 50,000 | $ 50,000 | $ 50,000 | $ 40,000 | |
| Stock repurchase program, additional amount authorized | $ 10,000 | |||||
| Shares repurchased, Treasury Stock | 348,286 | 0 | 348,286 | 484,252 | ||
| Payments for Repurchase of Common Stock | $ 10,000 | $ 0 | $ 10,000 | $ 7,702 | ||
| Unpaid repurchases of common stock | $ 0 | $ 0 | ||||
| Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 2,959 | $ 2,959 | ||||
Share Based Compensation (Weighted average assumptions by grant year) (Details) - $ / shares |
9 Months Ended | |
|---|---|---|
Oct. 31, 2017 |
Oct. 31, 2016 |
|
| Share-based Compensation [Abstract] | ||
| Risk-free interest rate | 1.68% | 1.05% |
| Expected dividend yield | 1.78% | 3.33% |
| Expected volatility factor | 33.87% | 32.61% |
| Expected option term (in years) | 4 years 3 months | 4 years |
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 7.35 | $ 3.05 |
Segment Reporting (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2017 |
Oct. 31, 2016 |
Oct. 31, 2017 |
Oct. 31, 2016 |
||||||||||||
| Segment Reporting Information [Line Items] | |||||||||||||||
| Net sales | $ 101,349 | $ 72,522 | $ 281,494 | $ 208,480 | |||||||||||
| Operating income | 17,829 | 7,389 | 47,748 | 22,135 | |||||||||||
| Administrative and general expenses | [1] | (5,990) | (4,764) | (17,247) | (13,986) | ||||||||||
| Applied Technology [Member] | |||||||||||||||
| Segment Reporting Information [Line Items] | |||||||||||||||
| Net sales | 25,319 | 25,203 | 94,233 | 79,327 | |||||||||||
| Operating income | [2] | 5,357 | 6,415 | 25,447 | 20,280 | ||||||||||
| Engineered Films [Member] | |||||||||||||||
| Segment Reporting Information [Line Items] | |||||||||||||||
| Net sales | 65,108 | 38,551 | 157,691 | 104,307 | |||||||||||
| Operating income | [2] | 17,115 | 7,129 | 35,386 | 17,666 | ||||||||||
| Aerostar [Member] | |||||||||||||||
| Segment Reporting Information [Line Items] | |||||||||||||||
| Inventory Write-down | 2,278 | 2,278 | |||||||||||||
| Net sales | 11,103 | 9,003 | 30,078 | 25,313 | |||||||||||
| Operating income | [2] | 1,359 | (1,375) | [3] | 4,165 | (1,804) | [3] | ||||||||
| Intersegment Eliminations [Member] | |||||||||||||||
| Segment Reporting Information [Line Items] | |||||||||||||||
| Net sales | [4] | (181) | (235) | (508) | (467) | ||||||||||
| Operating income | [4] | (12) | (16) | (3) | (21) | ||||||||||
| Corporate Segment [Member] | |||||||||||||||
| Segment Reporting Information [Line Items] | |||||||||||||||
| Operating income | $ 23,819 | $ 12,153 | $ 64,995 | $ 36,121 | |||||||||||
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