SIOUX FALLS, S.D., Oct. 28, 2019 (GLOBE NEWSWIRE) — Raven Industries Inc. has announced details of its strategic plan, which include a significantly increased level of investment in targeted areas in order to drive greater earnings growth and long term value. Over the next several years, the company will advance two strategic platforms for growth: Raven Autonomy and Raven Composites.
“The strength of our market positions and technology offerings has never been greater than it is today,” said Dan Rykhus, chief executive officer and president of Raven Industries. “Now is the time to leverage our positions in these expanding markets in order to drive significant growth in company performance over the long term — and we couldn’t be more excited for the opportunities in front of us.”
These two strategic growth platforms are a result of the development and growth in these key markets and directly align with the company’s business model, which is to serve market segments with strong growth prospects. Autonomous agriculture technology is expected to develop rapidly over the next 5 years.
Raven Autonomy is a strategic growth platform which will propel its Applied Technology Division to become the industry leader in autonomous agricultural solutions. This strategic growth platform builds upon our existing machine control technology, while also innovating smart machine platforms/implements to achieve fully autonomous solutions across the farming enterprise.
“To fully realize our growth potential, increased investment is needed across these areas, and we are in a great position to capitalize on these market opportunities,” added Rykhus. “We have been investing in R&D, production capabilities, strategic acquisitions, leadership development and a new enterprise resource planning software for quite some time — and now we are going to invest further. Together, these provide a solid foundation for executing this bolder strategy.”
Rykhus went on to say, “These strategic growth platforms are additive to our existing business model and enhance our core strengths — which include a proven history of innovating technology in precision agriculture.”
Raven has been committed to maximizing operational efficiencies through its core offering of application and machine control platforms. Raven’s evolution of autonomous solutions is an extension of that core. As availability of skilled labor decreases and compliance requirements get more complex, the need for more efficient utilization of resources is critical. Raven is best positioned to solve this challenge.
Raven has guidance and steering technology. VSN, the company’s best-in-class visual guidance technology, and RS1, its machine guidance and steering platform, are currently used around the world. However, autonomy in agriculture is not only about driving, it is about operating. Autonomy in agriculture is an extension of Raven’s Slingshot communication and servicing platform, which has been used by ag retailers for more than a decade. Autonomy in agriculture also requires trusted implement performance and application control, like Raven’s Rate Control Module (RCM) and Hawkeye Nozzle Control System, and boom control technology platforms, like AutoBoom XRT and AccuBoom, each of which lead the industry in operational performance. All of these elements are equally important components of a successful autonomy strategy, and Raven has been innovating these technologies for years.
The Company’s plan to invest in Raven Autonomy includes increasing the research and development (R&D) investment in the automation of its existing product portfolio and building out the additional necessary technology through a combination of internal development, acquisitions and partnerships. Throughout all of this, the company will focus on perception, path planning and machine controls for autonomous agriculture solutions.
“Raven has been investing in the necessary enabling components for autonomy in agriculture for 20 years,” continued Rykhus. “Along the way, others have had unsuccessful attempts at initiating autonomy in agriculture; however, neither the technology nor the market were ready. The necessary technology to enable autonomy in agriculture is ready and the inflection point is here. We want to lead in the next revolution of production agriculture, and our legacy platforms, new technologies and strategic partnerships provide distinct advantages over the competition. Now we need to aggressively invest to bring our solutions to market — and to capture this tremendous opportunity. We believe we are in the lead position on the path to fully autonomous solutions for agriculture. Now more than ever, our strategic OEM partners need to deliver premier precision agriculture solutions in order to compete and win market share. Investing to expand our advantage is essential to remaining the trusted innovator in precision agriculture.”
Raven Business Model
“Our core business across each of our three divisions remains strong,” said Rykhus. “These strategic platforms fit within our business model and existing divisions. We are committed to serving a set of diversified markets.
“We have a high return on invested capital, and the investments in Raven Autonomy are incremental to our existing portfolio needs and will accelerate growth and drive higher value creation. We are excited because of our unique position to win in each of these markets.
“We are committed to this plan. Current end market conditions are more challenging than anticipated, but we believe in these investments and the strength of our core businesses. We remain steadfast in our decision regardless of what the short term looks like. We have confidence in our ability to execute and drive strong long-term results.”
“Raven is in the top decile of our peer group for margins and returns, but our growth rates have not met our long term objective,” said Steven
Brazones, vice president and chief financial officer. “Our primary financial goal is to generate annual earnings growth of 10%, over the long term. We believe this plan will get us there.
“In order to meet that objective, we believe we can significantly augment growth, with modest reductions in margins and return ratios, through this bolder investment strategy and drive higher value creation over the long-term.
“This strategy also provides balance. Executing on near-term opportunities for Raven Composites will help offset the investment being made for Raven Autonomy as it ramps over the next few years.
“Raven Industries’ financial performance has been very strong despite persistent end-market demand challenges. As we look to pursue a bolder growth strategy, we expect to make significant strategic investments in R&D, CAPEX, and M&A to build upon our core to drive faster growth in sales, operating profit and EPS over the next 5 years. Total investment over the next 5 years is expected to be a threefold increase over the previous 5 years, a clear step change to drive stronger growth. For the long-term, our financial objectives include 30-32% operating margins for Applied Technology.
“This strategy enables us to carry out our purpose — to solve great challenges — on a larger scale. We have the utmost confidence in our people, purpose, vision, values, business model and strategic plan. We know we can execute on our strategy and in doing so will achieve greater value creation,” concluded Brazones.