Raven Industries Inc., which makes reinforced plastic sheeting and products for precision farming and navigation, on Thursday reported a 13 percent drop in third-quarter profit but said higher operating margins helped offset lower sales.
The diversified manufacturer, based in Sioux Falls, S.D., reported a profit of $7.3 million, or 40 cents per share, in the three months ended Oct. 31 compared to $8.4 million, or 46 cents per share, in the third quarter of 2008.
Revenue fell 20.3 percent to $60.1 million from $75.5 million in the year-ago period.
Analysts polled by Thomson Reuters were looking for a profit of 38 cents per share on $62.9 million in revenue.
"While sales comparisons to a year ago remain negative, we have been able to offset some of the top-line weakness with better operating margins," Ronald M. Moquist, Raven's chief executive, said in a statement.
Sales in the company's engineered films division fell 30 percent, reflecting soft conditions in the oil and gas exploration and construction markets.
The company's applied technology revenue dropped 19 percent, but Moquist said the company took a major step to push the efficiency of its precision agriculture technology with its purchase of Ranchview Inc., a privately held Canadian startup.
Ranchview develops products that use cellular networks instead of the traditional radio systems that are typically used to deliver corrections to GPS enabled equipment, and the network can also be used to provide high speed Internet access. A purchase price for the deal, which was announced earlier this month, was not disclosed.
Sales in Raven's Aerostar subsidiary increased 9 percent on higher sales of U.S. Army parachutes.
Moquist said Raven has no debt and strong cash flows, which will allow it to push forward on new product offerings, expanded distribution agreements and technology investment.
Raven shares fell 76 cents, or 2.8 percent, to $26.38 in morning trading.