SIOUX FALLS, S.D. — Raven Industries Inc. (NASDAQ:RAVN) has reported financial results for the third quarter ended Oct. 31, 2017.

Net sales for the third quarter of fiscal 2018 were $101.3 million, up 39.7% vs. the third quarter of fiscal 2017. Engineered Films and Aerostar both achieved significant growth year-over-year in the third quarter, increasing sales 68.9% and 23.3%, respectively. Applied Technology, which includes agriculture, sales were up slightly vs. the prior year.

Operating income for the third quarter of fiscal 2018 was $17.8 million vs. operating income of $7.4 million in the third quarter of fiscal 2017, increasing 141.3% year-over-year. Operating margin increased 740 basis points year-over-year, from 10.2% of net sales to 17.6% of net sales. The significant improvement in profitability was principally driven by strong operating leverage on higher sales volume within Engineered Films and improved financial performance of Aerostar.

Net income for the third quarter of fiscal 2018 was $12 million vs. net income of $5.7 million, in last year's third quarter. The increase in earnings per share was driven primarily by the improved operating performance in both Engineered Films and Aerostar.

Applied Technology Division

Net sales for Applied Technology in the third quarter of fiscal 2018 were $25.3 million, up slightly vs. the third quarter of fiscal 2017. Weaker end market conditions, coupled with challenging year-over-year comparisons for new products, led to the expected slowdown in growth for the division during the third quarter.

Although agriculture market conditions deteriorated in the third quarter of this year for Applied Technology, the company believes that overall the division is holding market share across product lines.

Division operating income was $5.4 million, down 16.5% vs. the third quarter of fiscal 2017. The decline in profitability was driven primarily by additional investments to enhance our customer experience as well as higher legal expenses. Combined, these items reduced division operating income by approximately

$1 million during the third quarter of this year. The incremental investments, concentrated in research and development and selling and marketing, are strategic investments that are expected to generate new sales and market share gains in future quarters.

Fiscal 2018 Outlook

“We are very pleased with the performance achieved by all three operating divisions throughout the first nine months of the year,” said Dan Rykhus, President and CEO. “Each division has worked to optimize performance given their specific end market conditions and each has achieved success.

“Applied Technology has faced a more challenging agriculture market than we expected at the beginning of the year, and we don't foresee anything changing in the next 12 months to improve market conditions. At the same time, we have made the strategic decision to fund several long-term investments for growth, knowing this dampens short term profits. We believe strongly in the long term margin potential for ATD and we expect improved margins over time with these investments, even if end-market conditions remain challenging.