Raven Industries has reported net sales for the fourth quarter of fiscal 2019 were $88 million, down 8.1% vs. the fourth quarter of fiscal 2018. Operating income for the fourth quarter of fiscal 2019 was $3.4 million vs. operating income of $11.4 million in the fourth quarter of fiscal 2018, declining 70.6% year-over-year. A reduction in operating leverage as a result of the significant decline in hurricane recovery film sales, lower Aerostar profitability due to timing of contracts, and higher spending on Project Atlas primarily drove the year-over-year decrease in consolidated operating income.

Fiscal Year 2019

Net sales for fiscal 2019 were $406.7 million, up 7.8% vs. fiscal 2018. This is a new record sales year for the Company, surpassing the previous record from fiscal 2013. The current mix of sales vs. fiscal 2013 is more strategic as evidenced by contract manufacturing sales consisting of less than 2% of total sales in fiscal 2019, down from 16% in fiscal 2013.

All divisions achieved year-over-year growth during the fiscal year, led by a 27.4% increase in Aerostar. Operating income for fiscal 2019 was $55.1 million, down 6.8%, vs. $59.2 million in fiscal 2018. The current year operating income was reduced by an expense of $4.5 million related to a gift to South Dakota State University and an increase in Project Atlas related expenses of $3.1 million. Excluding these items, operating income increased significantly more than reported results year-over-year. Additionally, investment in research and development activities within Applied Technology and Aerostar increased, and operating leverage within Engineered Films decreased due to significantly lower hurricane recovery film sales, both of which contributed to the year-over-year decline.

Raven Industries FY19

Applied Technology Division

Net sales for Applied Technology in the fourth quarter of fiscal 2019 were $29.2 million, down 4.1% year-over-year. Geographically, domestic and international sales were each down approximately 4% year-over-year. These decreases were primarily driven by a slower spraying season for ag retailers, which reduced demand.

The AgSync acquisition was completed on Jan. 1, 2019. Applied Technology expects to leverage this acquisition to enhance its Slingshot® platform by delivering a more seamless logistics solution for ag retailers, custom applicators and enterprise farms. This strategic expansion of the Slingshot® platform is an effort to provide further value to the end customer and grow the division's subscription-based service model.

Division operating income in the fourth quarter of fiscal 2019 was $6.6 million, up $0.8 million or 13.1% vs. the fourth quarter of fiscal 2018. Division operating margin increased 340 basis points year-over-year, from 19.1% to 22.5%. The division continues to achieve strong profitability while continuing to invest in research and development activities to drive new product innovation. Division operating income in the fourth quarter of fiscal 2018 included expenses related to the resolution of two legal matters.