Nov 21, 2017
Executives
Bo Larsen – Investor Relations Director Dan Rykhus – President and Chief Executive Officer Steven Brazones – Vice President and Chief Financial Officer
Analysts
Brett Wong – Piper Jaffray Jason Freuchtel – SunTrust Craig Bibb – CJS Securities
Operator
Good day, ladies and gentlemen, and welcome to the Raven Industries Third Quarter 2018 Earnings Conference Call. At this time all participants are in a listen-only mode.
Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded.
I would now like to introduce your host for today’s conference Mr. Bo Larsen, Investor Relations Director.
Please go ahead sir.
Bo Larsen
Good morning, and welcome to the Raven Industries Fiscal 2018 third quarter investor conference call. Today’s call is being webcast live and will also be archived on the company’s website for future listening.
On the call today will be Dan Rykhus, Raven’s President and Chief Executive Officer; and Steven Brazones, Raven’s Vice President and Chief Financial Officer. Before beginning, the company would like to inform everyone that certain matters discussed during this call will include forward-looking statements as that term is defined under the Private Securities Litigation Reform Act of 1995.
Since such statements reflect the company’s current expectations, actual results may differ. I would now like to turn the call over to Dan Rykhus, Raven’s President and Chief Executive Officer.
Dan Rykhus
Thanks, Bo, and good morning and welcome. Thanks for joining us on the call today.
Our emphasis on these calls is intended to be longer term updating you on the strategic process made in each division and touching on the financial performance of the company. Our third quarter earnings per share of $0.33 was nearly a record for the company.
In FY 2014, we made a record $0.34 EPS and since then have intentionally exited over $70 million in annual revenues for contract manufacturing. And we’ve been replacing that business in our core divisions, which brings us to our strong performance in third quarter.
We’re pleased with the overall progress we’ve made in the performance of the business since our last call. We’ve delivered strong returns from focus on our core business in each division and from key strategic investments made over the past several years.
The energy market has definitely improved this year and we’ve optimized that opportunity. Ag markets continue to be soft, but new products from our R&D investments are generating growth.
Our ability to grow as we have throughout this year with a mix of market conditions demonstrates the strength of our explicit strategy to maintain strong core positions in a diverse set of markets. During this call, I’ll touch on a few points to provide more color on the strategic progress made during the quarter and provide comments on our outlook.
Steven will provide more insight on the financial performance of the company and following our comments we’ll open up the call for your questions. Starting with ATD, I’m pleased with our progress and results through Q3.
We sustained our commitment to fund exciting R&D projects and selling initiatives to drive future growth. We also experienced unusually high legal expenses in ATD and these factors adversely impacted the short-term profitability of the division, but nothing has fundamentally changed within the division, but markets remained soft.
We believe our market shares remain consistent and excitement for our new products is at a high level. The precision ag market and our position in it offer tremendous opportunities for growth with strong margins over the long-term.
While our ongoing internal investments have increased our short-term profitability, these investments are the right course of action to take for the long-term. We’re investing in our precision ag specialist and system engineering teams to provide deeper connection to our OEM customers and aftermarkets.
We’re investing in global market strategies and key regions including Latin America and Europe. And we continue to invest in R&D to enhance our boom leveling and application control systems to provide new automated steering systems and field computers to expand our Slingshot logistics system and to develop other new products that you’ll learn more about over the next couple of years.
To comment specifically on our ATD margins, my view of our long-term margin potential for ATD is unchanged, still in the low to mid 30%. And for the full year, we will make good progress on that.
Current market conditions make high growth difficult and we will continue to manage ATD for mid cycle conditions knowing that we will still make good returns during this slow period of the market cycle and realize increasingly higher margins with volume improvements from our growth strategies and market recovery. Moving to longer-term growth for ATD, we’re making good progress on our three long-term growth drivers in ATD, which are new product development, global expansion and M&A activities.
As we have reported and discussed in the past, we’re in active pursuit of acquisition opportunities to support our precision ag strategy. The primary segments of interest for our M&A activity, our key technology that support our product strategy in precision ag, geographic reach to key global markets and adjacent technology for ag.
We’re committed to finding deals that offer solid returns and fit well within our Raven culture and strategy. Our expectation is to greatly improve our cadence of meaningful transactions in ATD in support of our growth plans and opportunities in this market.
Our primary driver for long-term growth has always been new product development investments. And as I mentioned earlier, we’re working hard on this.
Those efforts will be critical to enabling growth in the current market and in our future. And finally key international markets for ag continue to provide strong growth opportunities in the long-term for Applied Technology division.
We’re planning and executing new regional growth strategies in Europe, Latin America and Australia and I’m confident they will lead to improved performance in those regions over the next several years. Moving to Engineered Films Division, I can’t tell you how excited and pleased I am with the progress that EFD has made and Steven is going to go into the details further when he gets the chance, but the underlying Engineered Films Division continues to perform exceptionally well throughout the year.
And in the third quarter, of course, we have the benefit of recovery – hurricane recovery film and the strong start that CLI posted. Speaking of CLI, the acquisition we made, further leverages EFD’s strengths in the geomembrane market and brings additional fabrication capacity and new design build capabilities to this geomembrane market.
We announced this deal in early September and we expect that the current year performance for CLI that part of EFD to be slightly accretive to earnings for this year and contribute around $0.05 per share in FY 2019. The acquired business is however being fully integrated into EFD and we do not intend to measure the business as a standalone entity.
We found CLI to be a great cultural fit and the integration could now be going more smoothly. Synergy potential is strong and we’re identifying additional synergy opportunities now that we’ve combined CLI with our Engineered Films Division.
I want to remind you also of the Integra strategic acquisition we made back in November of 2014 and the reason is to continue to point out the strategic investments we’ve made in our recent past and the progress and the returns that they’re generating today. This acquisition enabled EFD to retool our distribution model to serve the energy market and this has gone very well as this market slowly recovers.
The Integra acquisition also provides the primary footprint for our fabrication business. And during this fiscal year, we acquired another key Texas location in Pleasanton, Texas to add to that fabrication capacity network.
And finally touching on other important investments we’ve made in EFD. Over the past four, five years, we’ve invested in four unique high output production lines.
These production lines have enabled industrial market revenue expansion and growth realized this year and they provide unique capabilities and necessary capacity. These lines have enabled our ag market growth to serve the specialty crop market.
And they provide necessary capacity to grow and support our strategy to reduce our concentration in the energy market by growing our other three key markets. As we plan for future growth in EFD, additional extrusion capacity is necessary and in process to support our longer range growth plans.
During calendar year 2018, we will bring additional extrusion capacity online to support our ongoing growth in the markets we currently serve. Moving to Aerostar, again we’re making good progress in Aerostar.
Aerostar is having a strong year financially and has benefited from our focus on the stratospheric balloon market opportunities. We continue to make good progress on our work with Google on Project Loon and we’ve added other U.S.
government customers to our core balloon technology. I want to touch on something we call Project Atlas.
During the third quarter, the company launched an internal project called Project Atlas. This is a strategic long-term investment to replace the company’s existing enterprise resource planning platform.
Project Atlas is expected to take approximately three years to complete and cost between $8 million to $10 million. This investment will drive efficiencies across the enterprise, enable faster integration of future acquisitions, automate a significant portion of our internal controls and enhance the enterprise’s execution of our long-term growth strategy.
I hope this long-term investment lasts as long as the current system that we’re replacing. My first job at Raven when I started here 25, 27 years ago as an intern was to work with the implementation team on the release of our current system, which is to say its definitely time for an enterprise-wide upgrade.
And with that that, I’ll turn the call over to Steven to give you some more details on our financial performance.
Steven Brazones
Thanks, Dan. We are very pleased with our strong third quarter financial results.
All three divisions had strong performances this year in the third quarter. Let’s take a deeper look at each.
In Applied Technology, the division’s performance was quite strong, especially given the weak end market conditions the division continues to face and has faced for several years. As we expected, growth of recent new product introductions like Hawkeye and the next-generation rate control modules slowed somewhat, as we anniversaried the large ramps in sales of these products during the third quarter.
At the same time, we made the strategic decision to fund new initiatives in sales and R&D, as Dan mentioned in his comments. These are key investments that we believe will result in improved sales developments next year.
In the short term, however, these investments along with higher legal expenses during the quarter, are reducing division profits. All in, we had approximately $1 million of costs that were incremental to the prior year.
For Engineered Films, Q3 is seasonally our strongest quarter, and this quarter was particularly strong for the third quarter and near-record for Engineered Films. On a reported basis, sales were up nearly 70% year-over-year.
After adjusting for CLI and hurricane recovery film sales, the division still grew nearly 35% with all markets growing versus the third quarter of last year. During the quarter, we closed on the acquisition of CLI International.
Included in this year’s third quarter results were sales of approximately $5 million from CLI. CLI integration is going very smooth, and although it’s relatively early, the financial performance of the transaction is exceeding our expectations.
During the third quarter, EFD benefited by approximately $8 million in hurricane recovery film sales. These sales were unanticipated.
The usually – the unusually active hurricane seasons drove the need for recovery film, and EFD was nimble and able to modify its production schedules to aid in the recovery process. Sales of hurricane film are continuing into the fourth quarter of fiscal year 2018, and we expect another $8 million to $9 million of sales from these films in the fourth quarter.
Strong sales and a smooth integration of CLI has significantly increased the capacity utilization for the division. As a result, incremental margins for EFD were particularly strong in the third quarter.
For Aerostar, the turnaround in financial performance continued and the division has achieved consistency and profitability this year as well as progress towards its long-term goal of 15% to 20% division profit margins. Aerostar sales growth was driven by strength in both its stratospheric balloon platform as well as higher radar sales year-over-year.
Aero continues to push the frontier of what is possible with stratospheric balloon technology and is achieving new milestones. During the quarter, the division broke its previous duration record by 5 days and reached nearly 200 days aloft.
We could not be more pleased with the results of the division has achieved so far this year. With respect to the division’s new aerostat contract win, we expect most of the sales associated with this contract to fall into fiscal 2019.
The company-wide initiative to replace our ERP platform, Project Atlas, kicked off in the third quarter. We are excited about this project and its anticipated strategic benefit to the enterprise.
For the next three years, we will be reporting higher corporate expenses as a result of the implementation cost associated with this project. During the third quarter of this year, Project Atlas expenses were approximately $300,000.
We expect the cost for this project to ramp through the end of this year and average approximately $1 million per quarter in fiscal 2019. Overall, we expect the project to cost between $8 million to $10 million, as Dan mentioned, with $6 million to $8 million likely to be expensed and approximately $2 million to be capitalized.
Turning to the balance sheet and cash flow. The story remains consistent from the previous quarters of this year.
Net working capital progress continues. We saw further declines in our net working capital requirements, down 60 basis points year-over-year in the third quarter and down even more than that, adjusting for the CLI acquisition.
While we are entering the later stages of driving net working capital improvement, we will continue to pursue incremental reductions as we move forward. During the third quarter of fiscal 2018, we completed the repurchase of approximately 350,000 shares at an average price of $28.71 for a total of $10 million.
As we’ve commented in the past and we will continue to be opportunistic and maintain a balanced approach to returning capital to shareholders in the future. Overall, the returns of each of our divisions are improving significantly.
As a result, our return on equity has increased significantly, reaching nearly 14% on a trailing 12-month basis. The improved volume, improved profitability, improved growth and investments we’ve made are generating strong returns.
With that, I’d like to turn the call back to Dan for a preview of our outlook going forward.
Dan Rykhus
Thanks, Steven. The U.S.
ag market is a little weaker than we expected at the beginning of the year, and we still don’t see a recovery in the next 12 months. However, organic growth for ATD is expected over the next several quarters based on meaningful new product introductions and improved performance in certain global markets.
Acquisitions have the potential to improve on the organic growth achieved. EFD, with the addition of CLI and not factoring in hurricane relief film, is expected to continue to generate growth for the next several quarters.
Through our continued efforts to narrow the focus in Aerostar and excel at what we do best, we have reestablished the division as a consistently profitable business, and we expect this to continue through next year. We will finish the full year with tremendous year-over-year growth in sales, operating income and earnings per share.
We believe this momentum for the company will carry into next year as well. We are diligently reinvesting in each of our businesses to enable further growth.
And I believe the underlying businesses are very well positioned in our core markets served. While any one quarter will include unique circumstances, I believe the three divisions and the overall business should perform well over the next several quarters and over the long term.
And with that I will turn the call back to our operator for questions.
Operator
Thank you. [Operator Instructions] Our first question is from Brett Wong of Piper Jaffray.
Your line is open.
Brett Wong
Hey, thanks guys. Thanks for taking my questions and congrats on the nice quarter.
I wanted to dig into ATD a little bit. First, just looking forward, can you kind of speak to the competitive landscape for ATD, especially now given some of your competitors are more active in variable rate control and just how you see that potentially impacting growth in the out years.
Dan Rykhus
Thanks, Brett. This is Dan.
So I’ve been in that – associated with ATD and flow controls for the last over 20 years, and we’ve always had strong competition in that division and we’ve been able to differentiate ourselves based on our innovation, the quality of our products and our service, and we’re going to continue to differentiate ourselves in that way. There will be acquisitions, like we’ve seen recently and combinations.
And as I mentioned, we intend to also be active in M&A. And I feel good about our ongoing competitiveness based on the conversations I have with our OEM customers and my understanding of our position in the aftermarket.
Brett Wong
Thanks, I will hop back in.
Operator
Thank you. Our next question is from Jason Freuchtel of SunTrust.
Your line is open.
Jason Freuchtel
Hi, good morning.
Dan Rykhus
Good morning.
Jason Freuchtel
Since the hurricane recovery films business likely experienced the surge in demand in fiscal 3Q 2018, should we view the product as experiencing very inelastic demand during the quarter and, therefore, potentially higher incremental margins than the rest of the segments? And could the incremental margins for that product, I guess, potentially decline this – in fiscal 4Q 2018 as demand starts to wane?
Dan Rykhus
Yeah, I would say EFD has been running at a fairly high capacity utilization, given the underlying strength of that business across all end markets, and the demand for hurricane recovery film in the third quarter was unexpected. We don’t comment on the overall profitability of individual SKUs, but if you look at the average gross margin for the division of approximately 29%, 30%, that would give you a good proxy, get you close to how we view the incremental profitability on that sale.
Jason Freuchtel
Okay, thanks. And I guess from a historical perspective same periods – where I guess with this severe hurricane damage, how long is the demand for the hurricane recovery films typically lasted?
Could it last beyond six months? Just trying to get a better understanding of the life cycle of the product and potential demand trends.
Dan Rykhus
Yes, I’ll comment on that. It’s very, very unpredictable.
And we don’t have – we have some ancient history in serving this marketplace, but it’s very unpredictable. It’s hard to tell how our government is going to fund and act on these needs and how much they’ll warehouse.
So very hard to tell. We stand nimble and ready to serve whatever opportunity we can to participate in this recovery effort.
We’re proud of our ability to have met the demand that was placed on us so far without impacting or sacrificing any of our other customers in our other market places. And we’ll stand ready going forward.
And if that opportunity presents itself, then we will be there.
Jason Freuchtel
Okay, then lastly, how would you characterize the current activity level for defense contracts in the Aerostar segments? Can you characterize that you’re experiencing greater RFPs than what you saw last year and what you saw last quarter?
Dan Rykhus
Yeah, I would say the level activity on the stratospheric side has picked up over the last 12 months. There’s a lot of interest in the stratosphere right now from the government and various agencies of the federal government.
And we’ve been expanding our customer base with the government over the last 18 months, and so we’re quite happy with the progress we’re making there and the opportunities we see in progress.
Jason Freuchtel
Okay, thank you.
Dan Rykhus
You’re welcome.
Operator
Thank you. Our next question is from Craig Bibb of CJS Securities.
Your line is open.
Craig Bibb
Hi. Maybe if we could talk about Colorado Lining a little bit, since it’s the first quarter you guys have owned it.
The seasonality is similar to Engineered Films, I’m assuming. And maybe just broad strokes on margins, so we can understand how it impacts profitability.
Dan Rykhus
Yeah, I would say our base business in EFD’s seasonal high quarter is Q3. I think, for CLI, historically, their strongest has been Q2, followed by Q3.
So I wouldn’t expect there to be a significant change in our overall seasonality of the Engineered Films division as a result of the acquisition. What was your second part, Craig?
Craig Bibb
It was actually that. So what were the – are the margins comparable?
But this is more of a installation business, it’s not really an incremental margin story from extra pounds?
Dan Rykhus
That’s correct. You’re viewing that correctly.
However, we aren’t looking for strong synergies from this transaction. We’re already seeing additional synergy potential now that we’re combined and operating as one.
And our goal is to continue to enhance our margins and enhance CLI’s margins going forward.
Craig Bibb
So what are the synergies?
Dan Rykhus
Well, there is internalization of production. There is certain demand from CLI that Engineered Films has satisfied in the past, but there’s more of their demand that we can produce internally.
We’ve also been able to leverage the Pleasanton facility in Texas and migrate the operations from CLI’s Houston facility into Pleasanton to a benefit for us there as well.
Craig Bibb
Okay. And then, you have some capital spending coming up for Engineered Films.
Kind of what – where’s capacity utilization running right now, and maybe you could talk about it in terms of pounds. And then how much pound capacity are you planning to add, and will there be additional additions in FY 2019?
Steven Brazones
Yeah, we’re probably running depending on how you define it, we’re probably running around 80% to 85% capacity utilization right now. Now, there is some variation around that.
Certain lines are at higher rates and some are at lower. But we are going to be adding capital expenditures next year.
We’ve improved the Line 15 for EFD recently. That’s about a $13.5 million line, and that will add 20 million pounds of capacity and be very strategic for us.
Craig Bibb
Okay. So – and then, did you mention that there was a project for this year also, or the projects are all next year?
Steven Brazones
Well, the major capital expenditures for new lines is going to occur next year. We’ve had some capacity expansion opportunities this year, but they’ve been – they haven’t been new lines.
And then, the additions to the lines that we’ve already had improved their capacity.
Craig Bibb
And finally, I just wanted to congratulate you on your awesome timing on your buyback. You’ve got exceptional price for $10 million.
Steven Brazones
Thank you.
Craig Bibb
Thank you.
Operator
Thank you. Our next question is from Brett Wong of Piper Jaffray.
Your line is open.
Brett Wong
Hey, thanks. I wanted to follow up on ATD.
I know it’s still a tough environment, as you’ve mentioned, but just wondering how some of the low reception has been for the new products that you recently released?
Dan Rykhus
Sure, thanks, Brett. It’s been good.
We have two new products, in particular, what we call the RS1 and CR7 that were introduced to the marketplace this fall – or summer. And one is a steering product and one is a field computer.
And the reception among OEMs, in particular, on the RS1 has been very strong. And we expect over the long term to make good progress with that product line to improve our shares in our – in the very large steering market, of which we have a pretty low market share.
With the CR7, it’s a continuous upgrade to our field computer offering that brings together some very strong guidance and steering technology with our VRA capabilities, and we’ve had good reception on that. These products, at least for Raven in precision ag, these products usually take a little while to get traction to move toward meaningful revenue.
And the reason for that is we’ll get some aftermarket take and sales, but it takes a while to work with system engineers at the OEMs to integrate these solutions and replace existing solutions that they have there now.
Brett Wong
Great, thanks.
Operator
Thank you…
Dan Rykhus
I would say – I’d just say one more thing on that, operator. With our new product line, I feel very good about Hawkeye, still, and again, that – we’re entering our third year with Hawkeye.
We continue to grow those sales and bring incremental sales, and we’re expecting another strong year of growth from Hawkeye next year. And you’ll layer in RS1 and CR7, as I just described, that will be in their second year next year, which is usually a good year for us of new products.
And then we’ll layer on the new products that we’ll introduce during next year. And I’m not going to tell you the details on those, but that mix of new product pipeline gives me a lot of confidence in our ability to grow that part of the business against a really tough marketplace still.
Operator
Thank you. Next is Jason Freuchtel of SunTrust.
Your line is open.
Jason Freuchtel
Hi, thanks for taking my follow up. In terms of Project Atlas, and I think it’s certainly understandable that you may need to reinvest in an ERP system that’s approximately 25 years old.
However, has the current ERP system been a hindrance for completing transactions? And how has the current ERP system factored into your decision to bid for an acquisition and may process?
Steven Brazones
Yeah, I would say it’s increased our complexity. And so there are diminishing marginal returns of continuing to layer in additional acquisitions on disparate systems.
And so we really view consolidating under one platform as the best recipe for long-term success and speed of integration for acquisitions.
Jason Freuchtel
Okay, thank you. And given the strong operating leverage you have in your business, do you think it’s necessary to keep your leverage profile pretty low in order to reduce volatility in the future earnings performance?
And I understand that you’re looking at other deals, but you know from a historical perspective, your leverage has been pretty low. I am just trying to get a better sense of where that could move to in the future.
Thanks and good luck in the quarter.
Steven Brazones
Thanks. So as we have said in the past, and our view hasn’t changed, we do have quite a bit of flexibility on our balance sheet to fund our acquisition strategy.
And our first focus for utilization of that balance sheet is on M&A. And as Dan mentioned in his comments, we’re pursuing a number of targets within the precision ag space.
And our view would be, long term, we would have some leverage on the balance sheet. For the right transaction, we would lever up.
However, we will maintain investment-grade credit quality metrics and – but there would be some benefit from that.
Dan Rykhus
Yeah, I would just reinforce what Steven said that we’re not running the business intentionally to carry no long-term debt that just happens to be that we haven’t found the right acquisition to take on a large amount of debt. But we’re actively in the marketplace.
And if the right deal presents itself, and we find that and we can execute a disciplined strategy to acquire it, then we’d be happy to put our balance sheet to work.
Operator
Thank you. Our next question is from Craig Bibb of CJS Securities.
Your line is open.
Craig Bibb
This one – there is going to be a healthy debate about dicamba in the U.S. ag community, about – and how it’s applied and formulated.
How is that likely to impact you? Or maybe just talk about your outlook there.
Dan Rykhus
Sure, thanks. So dicamba, for those that maybe don’t know what we’re talking about, is an herbicide.
It’s been introduced over the last several years, and it’s an herbicide that provides general broadleaf control. And our products are really geared to accommodate and help with sprayer efficiency and chemical efficacy.
And what I mean by that is we have injection – chemical injection systems. We have variable rate application systems.
We have a Hawkeye Nozzle Control that controls drift and helps apply the exact amount of chemical that you’re desiring to put down. And we have field computers that provide best-in-class record keeping.
So while the dicamba situation is causing a lot of stir in the marketplace, we have a set of products that continue to provide value to those that want to use that chemical. And I’m not going to comment on state-by-state where we think this is going to go, and we didn’t necessarily design these products with dicamba in mind.
But we find ourselves in a place where we can provide value and assistance for those that want to continue to use those chemicals.
Craig Bibb
Okay. In international, you’ve been making investment overseas, it sounds like you have some opportunities there.
Could you just give us some broad strokes on what you need to – you feel like you’d like to get done overseas in terms of building the organization, et cetera, or acquisition?
Dan Rykhus
Sure, rather than just executing a global growth strategy in ATD, we’re executing specific regional growth strategies. So we’ve done that in Canada, and you’ve probably seen that, where we’ve made some acquisitions over the years.
We’ve got an in-country presence there with the proper staffing levels and the ability to reach those customers. Each of the different regional markets that we go to, though, have a different set of requirements that we found, over the years, necessary to be effective.
So in Latin America, we’ve hired staff down there. We’re going to continue to expand on that.
Of course, we’re looking for potential investments that we can make in that part of the world that would give us a stronger presence there and a nucleus of people that understand the business processes and the requirements for products in those region. And in Europe, we have a presence there by virtue of our SBG acquisition and the build-out of staffing across Eastern Europe and Russia, Ukraine as well as Western Europe.
So we’ll continue to build out on those strategies, and those markets that I outlined are probably the most important markets for us.
Craig Bibb
Okay. And the last one, you noted that government demand for stratospheric balloons is peaking up.
Why is that?
Dan Rykhus
Go ahead.
Steven Brazones
Well, there’s a lot of interesting capabilities that we’ve been able to build and demonstrate, leveraging a lot of the work that we’ve done with Google. We’ve been be able to do things with balloons that weren’t thought possible five years ago.
And as we mentioned in our release, we’re near the 200 days of duration. And when we first started, we were at one to two days.
So the overall value of the system is extremely cost beneficial to the government, it’s a very inexpensive way to get things to the stratosphere. And so we’ll just continue to develop those capabilities, and there’s a lot of interest in those.
Craig Bibb
Okay, great. Thanks.
Dan Rykhus
You’re welcome.
Operator
Thank you. And that does conclude our Q&A session for today.
I would like to turn the call back over to Mr. Dan Rykhus for any further remarks.
Dan Rykhus
Thank you. We’re remaining disciplined in running the business for mid-cycle conditions.
As we’ve said repeatedly, we are very pleased with the performance of each of the division so far this year, and we feel like they’re well positioned to carry us into next year. And I’m very proud of the team members across Raven Industries.
We’ve put a lot of work into getting the businesses in that position they are today in each division and I want to thank our team members for those efforts, and that’s the only reason that we are where we are today. And I will close off my comments there and look forward to updating you again in March.
Thanks.
Operator
Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program, and you may all disconnect.
Everyone, have a great day.