Document

Consolidated net sales for the third quarter of fiscal 2021 were $96.6 million, down 3.9 percent versus the third quarter of fiscal 2020. Applied Technology and Aerostar achieved significant year-over-year growth, but this was offset by a decline in Engineered Films. Strong growth in OEM sales drove the increase in Applied Technology. Aerostar achieved year-over-year growth by executing on a record number of successful stratospheric balloon flight campaigns and completing the delivery of aerostats on its current contract. The global pandemic continued to present challenges for Engineered Films' end-markets, leading to the year-over-year decline in revenue.

Consolidated operating income for the third quarter of fiscal 2021 was $9.3 million, versus operating income of $11.3 million in the third quarter of fiscal 2020. Included in the results for the third quarter of fiscal 2021 were $4.6 million of incremental research and development and selling expenses to advance Raven Autonomy™. The strong profitability performance in this year's third quarter was driven by improved gross profit margin, which increased from 30.1 percent to 35.7 percent year-over-year. Applied Technology and Engineered Films improved gross profit margins materially versus the prior year, on improved volume and overhead reduction measures, respectively. Prudent cost containment actions, outside of committed investments in platforms for growth, also contributed to the strong profit performance in this year's third quarter. Prior year third quarter operating income included a pre-tax gain of $1.9 million on the sale of an Applied Technology facility in Austin, Texas.

Net income for the third quarter of fiscal 2021 was $8.7 million, or $0.24 per diluted share, compared to $9.9 million, or $0.28 per diluted share, in last year's third quarter. The Company's investment in Raven Autonomy™ reduced net income attributable to Raven by $3.6 million, or $0.10 per diluted share, in the third quarter of fiscal 2021. Prior year net income included a $1.5 million, or $0.04 per diluted share, gain on sale of a facility in Austin, Texas.

At the end of the third quarter of fiscal 2021, cash and cash equivalents totaled $38.2 million, increasing $22.4 million versus the previous quarter. The sequential increase in cash was led by improved profitability and a reduction in net working capital requirements. Total liquidity4 at the end of the third quarter totaled $138.2 million.

Net sales for Applied Technology in the third quarter of fiscal 2021 were $34.8 million, increasing $6.3 million or 22.2 percent versus the third quarter of the prior year. The year-over-year sales growth was primarily driven by higher volumes to OEMs, both domestically and internationally. This growth included last-time buy activity associated with the division's strategic decision to exit a commercial relationship. Excluding the benefit of the last-time buy activity, the division achieved growth over the prior year while overcoming certain production inefficiencies caused by process changes in response to the pandemic.

Division operating income in the third quarter of fiscal 2021 was $5.8 million, down $1.2 million or 17.6 percent versus the third quarter of fiscal 2020. The profitability of the division was very strong and included an incremental investment of $4.5 million year-over-year into Raven Autonomy™. The prior year results included a pre-tax gain of $1.9 million on the sale of the division's facility in Austin, Texas.

Net sales for Engineered Films in the third quarter of fiscal 2021 were $43.8 million, down $12.6 million or 22.4 percent year-over-year. Increased demand and a recapture of market share in the industrial market led to year-over-year growth within this market. However, Engineered Films continued to face weak demand across a majority of its end-markets, resulting in the year-over-year decline in revenue. Engineered Films serves the following markets: geomembrane (including the energy sub-market), agriculture, construction and industrial. Geomembrane (including the energy sub-market) experienced the largest decline, as rig counts in the Permian Basin were down approximately 70 percent year-over-year. The construction market also experienced reduced demand as non-residential construction starts decreased significantly versus the prior year. Partially offsetting these declines was the delivery of the remaining $2.4 million of film-based medical supplies associated with a FEMA contract to aid in the pandemic response.

from 15.0 percent to 16.7 percent, driven by operational efficiency improvements and expense reductions, as the division mitigated the impact of negative operating leverage on division profit margin and continued to invest in Raven Composites™. Additionally, the division generated strong cash flows as it continues to effectively manage working capital levels.

Net sales for Aerostar in the third quarter of fiscal 2021 were $18.0 million, up $2.3 million or 15.0 percent versus the third quarter of fiscal 2020. The year-over-year growth in net sales was driven by the delivery of aerostat systems and the completion of a record number of successful stratospheric flight campaigns for the Department of Defense throughout the quarter. Momentum continues to build for the division's Thunderhead Balloon Systems as it further develops and demonstrates the capabilities and technology offering.

In the third quarter, the Company continued to aggressively and strategically invest in Raven Autonomy™, the Company's strategic platform for growth within the Applied Technology Division. Field testing continues to progress, preparing for initial product launches for both the Raven Dot® Power Platform and tractor autonomous power units (APUs) next year. Raven is commercializing its first available solutions in driverless ag technology, allowing ag professionals to be safer, more efficient and run their operations with less reliance on human variability. The Company plans to introduce additional smart implements leveraging these APUs as it continues to advance agriculture solutions.

In Raven Composites™, the Company invested in research and development equipment to support new product development efforts. This specialty equipment was installed and became operational subsequent to the end of the third quarter. Additionally, the Company continues to develop new products and strengthen strategic relationships in targeted markets while building out greenfield operations. Larger scale manufacturing equipment to advance Raven Composites™ is on order and expected to be operational during the first quarter of fiscal 2022.

For Raven Thunderhead, Aerostar continues to develop and demonstrate the functionalities of the technology. The Company achieved milestones throughout the quarter on flight durations, mission functionalities and successful flight campaigns. The stratosphere is the next frontier, and Aerostar is at the forefront of capitalizing on the significant opportunity.


Third Quarter Fiscal 2021 Financial Impact of Raven Autonomy™
	Increase (Decrease)
(dollars in millions, except per share amounts)	Three Months Ended October 31, 2020		Nine Months Ended October 31, 2020
Net sales	$	—	$	0.9
Gross profit	—		(0.2)
Applied Technology Operating income	(4.5)		(12.3)
Consolidated Operating income	(4.6)		(12.4)
Consolidated EBITDA3	(4.2)		(11.7)
Net income attributable to Raven Industries, Inc.	(3.6)		(9.6)

Net income per common share - Diluted	$	(0.10)	$	(0.26)

"The third quarter of fiscal 2021 was strong, from both a financial performance perspective and taking into account the key steps we took to advance our strategic platforms for growth," said Dan Rykhus, President and CEO. "We achieved strong profitability and cash flows while investing aggressively in Raven Autonomy™, advancing our greenfield operations in Raven Composites™ and executing on contracts for Thunderhead Balloon Systems.

"Applied Technology generated significant profitability while aggressively investing in Raven Autonomy™ during the third quarter. We continue to advance our core technology, as evidenced by enhancements and new product releases - including Hawkeye® 2 and VSN® full canopy guidance - that solve problems for our customers and generate strong returns for end users. In Raven Autonomy™, our team continues to perform field validation trials with farmers while development proceeds with our Raven Autonomy™ platform framework to enhance customer value with autonomous applications. The momentum and our position in the market continues to improve, and the outlook for this initiative is revolutionary for the Company.

"In Engineered Films, our end markets continued to be suppressed by adverse economic challenges related to the pandemic. We expect these conditions to persist throughout the remainder of the current fiscal year and into the next fiscal year, especially in the geomembrane market due to low oil prices. However, I am confident in our ability to effectively manage through these challenges. The health and long-term prospects of Engineered Films' core business and our Raven Composites™ platform is very strong.

"Aerostar achieved mission success on a record number of flight campaigns, leading to strong financial performance in the quarter. We continue to see growing momentum surrounding our Thunderhead Balloon Systems, and we believe this market will grow substantially over the coming years. We are the clear leader in this space, and our team continues to enhance the capabilities of our technology.

"We are well-positioned for substantial long-term growth across all three of our operating divisions. This confidence stems from the opportunities in front of us combined with our performance throughout the first three quarters of fiscal 2021. In Applied Technology, we generated strong margins in our underlying business, and economic conditions in the ag market appear to be improving for the first time in several years. In Engineered Films, our operational discipline and ability to generate significant cash flows in the midst of this pandemic is evidence of our strong business model. Additionally, Aerostar continues to prove the value of Thunderhead, creating momentum for strong growth in both the short-term and the long-term," concluded Rykhus.

The information presented in this earnings release regarding consolidated and segment earnings before interest, taxes, depreciation, and amortization (EBITDA), do not conform to generally accepted accounting principles (GAAP) and should not be construed as an alternative to the reported results determined in accordance with GAAP. Additionally, management has included this non-GAAP information to assist in understanding the operating performance of the Company and its operating segments as well as the comparability of results. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results in the tables below.

Raven Industries (NASDAQ: RAVN) provides innovative, high-value products and systems that solve great challenges throughout the world. Raven is a leader in precision agriculture, high-performance specialty films, and aerospace and defense solutions, and the company's groundbreaking work in autonomous systems is unlocking new possibilities in areas like farming, national defense, and scientific research. Since 1956, Raven has designed, produced, and delivered exceptional solutions, earning the company a reputation for innovation, product quality, high performance, and unmatched service. For more information, visit http://ravenind.com.

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the expectations, beliefs, intentions or strategies regarding the future. The Company intends that all forward-looking statements be subject to the safe harbor provisions of the Private Securities Litigation Reform Act.

Generally, forward-looking statements can be identified by words such as "may," "will," "plan," "believe," "expect," "intend," "anticipate," "potential," "should," "estimate," "predict," "project," "would," and similar expressions, which are generally not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future - including statements relating to our future operating or financial performance or events, our strategy, goals, plans, and projections regarding our financial position, our liquidity and capital resources, and our product development - are forward-looking statements.

Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements, because such statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain known risks, as described in the Company’s 10K under Item 1A, and unknown risks and uncertainties that may cause actual results to differ materially from


	Three Months Ended October 31,								Nine Months Ended October 31,
	2020			2019			Fav (Un) Change			2020			2019			Fav (Un) Change
Net sales	$	96,607		$	100,533		(3.9)	%		$	268,282		$	296,769		(9.6)	%
Cost of sales	62,083			70,229						175,159			200,061
Gross profit	34,524			30,304			13.9	%		93,123			96,708			(3.7)	%
Gross profit percentage	35.7		%	30.1		%				34.7		%	32.6		%

Research and development expenses	10,949			7,662						32,262			22,000
Selling, general, and administrative expenses	14,284			11,310						41,488			37,685


Operating income	9,291			11,332			(18.0)	%		19,373			37,023			(47.7)	%
Operating income percentage	9.6		%	11.3		%				7.2		%	12.5		%

Other income (expense), net	(423)			84						(514)			398
Income before income taxes	8,868			11,416			(22.3)	%		18,859			37,421			(49.6)	%

Income tax expense	140			1,483						363			5,512
Net income	8,728			9,933			(12.1)	%		18,496			31,909			(42.0)	%

Net loss attributable to the noncontrolling interest	—			(1)						(98)			(1)

Net income attributable to Raven Industries, Inc.	$	8,728		$	9,934		(12.1)	%		$	18,594		$	31,910		(41.7)	%

Net income per common share:
- Basic	$	0.24		$	0.28		(14.3)	%		$	0.52		$	0.89		(41.6)	%
- Diluted	$	0.24		$	0.28		(14.3)	%		$	0.51		$	0.88		(42.0)	%

Weighted average common shares:
- Basic	36,001			35,914						35,975			36,014
- Diluted	36,151			36,091						36,118			36,251


	October 31		January 31		October 31
	2020		2020		2019
ASSETS
Cash and cash equivalents	$	38,217	$	20,707	$	77,094
Accounts receivable, net	54,224		62,552		62,057
Inventories, net	44,674		53,899		51,981
Other current assets	4,938		5,436		5,095
Total current assets	142,053		142,594		196,227

Property, plant and equipment, net	104,596		100,850		101,487
Goodwill	105,925		106,509		50,834
Intangible assets, net	44,083		46,217		14,933
Other assets	11,123		7,087		8,795
TOTAL ASSETS	$	407,780	$	403,257	$	372,276

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	$	19,314	$	14,893	$	11,045
Accrued and other liabilities	25,927		23,030		23,083

Total current liabilities	45,241		37,923		34,128

Long-term debt	1,900		225		—
Other liabilities	32,944		29,161		21,969
Total liabilities	80,085		67,309		56,097

Redeemable noncontrolling interest	—		21,302		—

Shareholders' equity	327,695		314,646		316,179
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	407,780	$	403,257	$	372,276


Net Working Capital and Net Working Capital Percentage2
Accounts receivable, net	$	54,224		$	62,552		$	62,057
Plus: Inventories, net	44,674			53,899			51,981
Less: Accounts payable	19,314			14,893			11,045
Net working capital2	$	79,584		$	101,558		$	102,993

Annualized net sales	$	386,428		$	343,044		$	402,132
Net working capital percentage2	20.6		%	29.6		%	25.6		%


	Nine Months Ended October 31,
	2020		2019
Cash flows from operating activities:
Net income	$	18,496	$	31,909
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	12,829		12,124


Other operating activities, net	23,775		3,045
Net cash provided by operating activities	55,100		47,078

Cash flows from investing activities:
Capital expenditures	(10,931)		(6,143)

Proceeds from sale or maturities of investments	586		993
Purchases of investments	(227)		(934)
Proceeds from sale of assets	251		3,459
Other investing activities, net	(272)		(3,208)
Net cash used in investing activities	(10,593)		(5,833)

Cash flows from financing activities:
Dividends paid	(9,318)		(14,001)
Payments for common shares repurchased	—		(10,781)
Proceeds from debt	51,685		—
Repayments of debt	(50,000)		—
Payments for redeemable noncontrolling interest	(17,853)		—
Payment of acquisition-related contingent liabilities	—		(1,308)
Other financing activities, net	(1,169)		(3,780)
Net cash used in financing activities	(26,655)		(29,870)

Effect of exchange rate changes on cash	(342)		(68)

Net increase in cash and cash equivalents	17,510		11,307
Cash and cash equivalents at beginning of period	20,707		65,787
Cash and cash equivalents at end of period	$	38,217	$	77,094


	Three Months Ended October 31,								Nine Months Ended October 31,
	2020			2019			Fav (Un) Change			2020			2019			Fav (Un) Change
Net sales
Applied Technology	$	34,838		$	28,500		22.2	%		$	112,347		$	97,596		15.1	%
Engineered Films	43,765			56,406			(22.4)	%		113,415			158,214			(28.3)	%
Aerostar	18,010			15,661			15.0	%		42,626			41,040			3.9	%
Intersegment eliminations	(6)			(34)						(106)			(81)
Consolidated net sales	$	96,607		$	100,533		(3.9)	%		$	268,282		$	296,769		(9.6)	%

Operating income
Applied Technology	$	5,797		$	7,035		(17.6)	%		$	21,247		$	25,120		(15.4)	%
Engineered Films	7,321			8,474			(13.6)	%		13,393			24,987			(46.4)	%
Aerostar	2,777			2,488			11.6	%		4,821			7,427			(35.1)	%
Intersegment eliminations	9			(12)						60			(10)
Total segment income	$	15,904		$	17,985		(11.6)	%		$	39,521		$	57,524		(31.3)	%
Corporate expenses	(6,613)			(6,653)			0.6	%		(20,148)			(20,501)			1.7	%
Consolidated operating income	$	9,291		$	11,332		(18.0)	%		$	19,373		$	37,023		(47.7)	%

Operating income percentages
Applied Technology	16.6		%	24.7		%	(810)bps			18.9		%	25.7		%	(680)bps
Engineered Films	16.7		%	15.0		%	170bps			11.8		%	15.8		%	(400)bps
Aerostar	15.4		%	15.9		%	(50)bps			11.3		%	18.1		%	(680)bps
Consolidated operating income	9.6		%	11.3		%	(170)bps			7.2		%	12.5		%	(530)bps


	Three Months Ended October 31,								Nine Months Ended October 31,
							Fav (Un)								Fav (Un)
	2020			2019			Change		2020			2019			Change
Applied Technology
Reported Operating income	$	5,797		$	7,035		(17.6)	%	$	21,247		$	25,120		(15.4)	%
Plus: Depreciation and amortization	1,335			957			39.5	%	3,656			2,956			23.7	%
ATD EBITDA	$	7,132		$	7,992		(10.8)	%	$	24,903		$	28,076		(11.3)	%



ATD EBITDA % of Net Sales	20.5		%	28.0		%			22.2		%	28.8		%


Engineered Films
Reported Operating income	$	7,321		$	8,474		(13.6)	%	$	13,393		$	24,987		(46.4)	%
Plus: Depreciation and amortization	2,384			2,397			(0.5)	%	7,220			7,121			1.4	%
EFD EBITDA	$	9,705		$	10,871		(10.7)	%	$	20,613		$	32,108		(35.8)	%



EFD EBITDA % of Net Sales	22.2		%	19.3		%			18.2		%	20.3		%


Aerostar
Reported Operating income	$	2,777		$	2,488		11.6	%	$	4,821		$	7,427		(35.1)	%
Plus: Depreciation and amortization	278			240			15.8	%	765			680			12.5	%
Aerostar EBITDA	$	3,055		$	2,728		12.0	%	$	5,586		$	8,107		(31.1)	%
Aerostar EBITDA % of Net Sales	17.0		%	17.4		%			13.1		%	19.8		%

Consolidated
Net income attributable to Raven Industries Inc.	$	8,728		$	9,934		(12.1)	%	$	18,594		$	31,910		(41.7)	%
Interest (income) expense, net	103			(210)					383			(644)
Income tax expense	140			1,483					363			5,512
Plus: Depreciation and amortization	4,351			4,002					12,829			12,124
Consolidated EBITDA	$	13,322		$	15,209		(12.4)	%	$	32,169		$	48,902		(34.2)	%




Consolidated EBITDA % of Net Sales	13.8		%	15.1		%			12.0		%	16.5		%

3 EBITDA is a non-GAAP financial measure defined on a consolidated basis as net income attributable to Raven Industries, Inc., plus income taxes, plus depreciation and amortization expense, plus interest (income) expense, (net). On a segment basis, it is defined as operating income plus depreciation expense and amortization expense. EBITDA margin is defined as EBITDA divided by net sales.


Contact Information:
Jared Stearns
Investor Relations Manager
Raven Industries, Inc.
+1(605) 336-2750


Exhibit 99.1