RAVEN INDUSTRIES: MANAGEMENT REPORT AND ANALYSIS OF THE FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

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The following commentary on the operating results, liquidity, capital resources,
and financial condition of Raven Industries, Inc. (the Company or Raven) should
be read in conjunction with the unaudited Consolidated Financial Statements in
Item 1 of Part 1 of this Quarterly Report on Form 10-Q (Form 10-Q) and the
Company's Annual Report on Form 10-K for the year ended January 31, 2021.

The Management's Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) is organized as follows:
•Executive Summary
•Results of Operations - Segment Analysis
•Market Conditions and Outlook
•Liquidity and Capital Resources
•Off-Balance Sheet Arrangements and Contractual Obligations
•Critical Accounting Policies and Estimates
•Accounting Pronouncements

ABSTRACT

Raven is a diversified technology company providing a variety of products to
customers within the industrial, agricultural, geomembrane, construction,
commercial lighter-than-air, and aerospace and defense markets. The Company is
comprised of three unique operating units, classified into reportable segments:
Applied Technology, Engineered Films, and Aerostar. Segment information is
reported consistent with the Company's management reporting structure.

Management uses a number of metrics to assess company performance:

•Consolidated net sales, gross margin, operating income, operating margin, net
income, and diluted earnings per share.
•Cash flow from operations and shareholder returns.
•Return on sales, average assets, and average equity.
•Segment net sales, gross profit, gross margin, operating income, and operating
margin. At the segment level, operating income and margin does not include an
allocation of general and administrative expenses.

Vision and Strategy
Raven's purpose is to solve great challenges. Great challenges require great
solutions. Raven's three unique divisions share resources, ideas, and a passion
to create technology that helps the world grow more food, produce more energy,
protect the environment, and live safely.

The Raven business model is our platform for success. Raven's business model is
defensible, sustainable, and gives us a consistent approach in the pursuit of
quality financial results. This overall approach to creating value, which is
employed across the three business segments, is summarized as follows:

•Intentionally serve market segments with strong growth prospects in both the
near and long term.
•Consistently manage a pipeline of growth initiatives within our market
segments.
•Aggressively compete on quality, service, innovation, and peak performance.
•Attract and develop exceptional leaders who understand business deeply and can
thrive in the Raven Way.
•On a path of continuous improvement, integrate sustainability with our
operations by consistently taking actions to streamline processes, improve
efficiencies, and increase value delivered to our customers.
•Value our balance sheet as a source of strength and stability.
•Corporate responsibility is a top priority.

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The following discussion highlights the consolidated operating results for the
three-month periods ended April 30, 2021 and 2020. Segment operating results are
more fully explained in the Results of Operations - Segment Analysis section.
                                                                            Three Months Ended
                                                                                                         April 30,          April 30,
(dollars in thousands, except per-share data)                                                               2021              2020              % Change
Net sales                                                                                               $ 112,486          $ 86,496                  30.0  %
Gross profit                                                                                            $  39,986          $ 28,467                  40.5  %
Gross margin (a)                                                                                             35.5  %           32.9  %
Operating income                                                                                        $  11,573          $  3,939                 193.8  %
Operating margin (a)                                                                                         10.3  %            4.6  %
Other income (expense), net                                                                             $      30          $   (468)
Net income attributable to Raven Industries, Inc.                                                       $   9,620          $  4,047                 137.7  %
Diluted earnings per share                                                                              $    0.26          $   0.11

Cash flow from (used in) operating activities                                                           $  (7,779)         $ 11,851                (165.6) %
Cash outflow for capital expenditures                                                                   $  (5,605)         $ (4,434)                 

26.4%

(a) The Company’s gross and operating margins may not be comparable to its industry peers due to the variability in expense classification between the industries in which the Company operates.



Consolidated Results
For the fiscal 2022 first quarter, net sales were $112.5 million, an increase of
$26.0 million, or 30.0%, from $86.5 million in last year's first quarter. The
year-over-year growth was driven by increased sales in Applied Technology and
Engineered Films. Applied Technology reported record quarterly revenue while
overcoming supply chain constraints, as the demand for its industry-leading ag
technology solutions was amplified by improved market conditions. In Engineered
Films, the division's end-markets continue to recover from the adverse impacts
of the global pandemic, leading to an increase in year-over-year volume and
revenue across all end-markets, led by construction and agriculture. Aerostar
was impacted by the conclusion of Loon activity and a decrease in aerostat
sales, leading to a year-over-year decline in revenue.

The Company's operating income for the first quarter of fiscal 2022 was $11.6
million, up 193.8% from $3.9 million in the first quarter of fiscal 2021. The
strong profitability performance in this year's first quarter was driven by
increased sales volume and corresponding positive operating leverage. Included
in the results for the first quarter of fiscal 2022 were $4.6 million of
research and development and selling expenses to advance Raven Autonomy™,
compared to $3.8 million in the prior year.

Net income for the first quarter of fiscal 2022 was $9.6 million, or $0.26 per
diluted share, compared to net income of $4.0 million, or $0.11 per diluted
share, in last year's first quarter. The Company's strategic investment in Raven
Autonomy™ reduced net income attributable to Raven by $3.6 million, or $0.10 per
diluted share, in the first quarter of fiscal 2022 compared to $2.9 million, or
$0.08 per diluted share, in the prior year.

Applied Technology Division Results
Applied Technology's net sales in the first quarter of fiscal 2022 were $54.9
million, up $12.9 million, or 30.6%, compared to fiscal 2021 first quarter net
sales of $42.0 million. The year-over-year sales growth was driven by increased
sales in the OEM and aftermarket channels, both domestically and
internationally, with substantial growth in Europe.

Division operating income in the first quarter of fiscal 2022 was $13.2 million,
up $4.2 million, or 47.5% versus the first quarter of fiscal 2021. The
year-over-year growth in operating income was driven by increased sales volumes
and associated operating leverage, partially offset by rising input costs
related to global supply chain dynamics. Included in the results was an
incremental investment in research and development and selling expenses in Raven
Autonomy™ of $4.6 million on a pre-tax basis, an increase of $0.8 million
year-over-year.

Engineered Films Division Results
Engineered Films' net sales in the first quarter of fiscal 2022 were $48.8
million, an increase of $15.4 million, or 46.0%, compared to fiscal 2021 first
quarter net sales of $33.4 million. The division generated year-over-year sales
growth across all end-markets, with agriculture and construction serving as the
largest drivers, as the recovery from the adverse effects of the global pandemic
continued to strengthen. Due to volatility in the resin market, the division has
adjusted pricing commensurate with the changes in the market input costs.
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Division operating income in the first quarter of fiscal 2022 was $6.8 million,
up $5.2 million, or 321.1% versus the first quarter of fiscal 2021. The
year-over-year increase was driven mainly by higher sales volume, resulting in
positive operating leverage, and partially offset by rising input costs.

Aerostar Division Results
Aerostar's net sales in the first quarter of fiscal 2022 were $8.9 million, a
decrease of $2.3 million, or 20.3%, compared to fiscal 2021 first quarter net
sales of $11.2 million. Year-over-year revenue growth for defense related
stratospheric balloon systems was offset by the conclusion of Loon activity,
announced in the fourth quarter of fiscal 2021, and a decrease in aerostat
revenue. Aerostar's financial performance is driven by the timing of government
contracts, which can fluctuate on a quarterly basis. As such, it is beneficial
to analyze the division over a longer period of time.

Division operating income in the first quarter of fiscal 2022 was $0.6 million,
up $0.3 million, or 101.0%, versus the first quarter of fiscal 2021. The
year-over-year improvement was driven by product mix and effective cost control
measures.

OPERATING RESULTS – SECTOR ANALYSIS

Applied Technology
Applied Technology designs, manufactures, sells, and services innovative
precision agriculture products, autonomous solutions, and information management
tools, which are collectively referred to as precision agriculture equipment,
that help farmers reduce costs, more precisely control inputs, and improve
yields for the global agriculture market.
                                                                         Three Months Ended
                                                                                                         April 30,         April 30,
(dollars in thousands)                                                                                     2021              2020               $ Change            % Change
Net sales                                                                                               $ 54,868          $ 42,007             $ 12,861                 30.6  %
Gross profit                                                                                              26,227            20,330                5,897                 29.0  %
Gross margin                                                                                                47.8  %           48.4  %
Operating expenses                                                                                      $ 13,040          $ 11,391             $  1,649                 14.5  %
Operating expenses as % of sales                                                                            23.8  %           27.1  %

Operating income(a)                                                                                     $ 13,187          $  8,939             $  4,248                 47.5  %
Operating margin                                                                                            24.0  %           21.3  %

(a) At the sector level, the operating result does not include an allocation of general and administrative expenses.

The following factors were the main drivers of the year-over-year three-month changes:

•Market conditions. Grain commodity prices reached levels not seen since 2014
during the first quarter of fiscal 2022 and the prior year fourth quarter,
providing optimism within the ag market. These improved conditions, along with
more normalized economic activity, has improved both domestic and international
ag markets, leading to an increase in demand from both OEMs and aftermarket
retailers. The Company does not model comparative market share position for its
divisions, but the Company believes Applied Technology maintained or increased
its market share in the first three months of fiscal 2022.
•Sales volume and selling prices. First quarter fiscal 2022 net sales increased
$12.9 million or 30.6%, to $54.9 million compared to $42.0 million in the prior
year. Higher sales volume, rather than a change in selling price, was the
primary driver of this increase. Aftermarket and OEM sales were up 43.8% and
16.6% year-over-year, respectively. For the three-month period, domestic sales
were up $4.8 million year-over-year and international sales were up $8.1 million
year-over-year. Domestic OEM net sales in the first quarter of fiscal 2022
included a decrease in last time buy activity to a non-strategic OEM customer of
$2.5 million year-over-year.
•International sales. For the first quarter of fiscal 2022, international sales
totaled $19.2 million, up 72.4% from $11.1 million in the prior year comparative
period. International sales represented 35.0% of segment revenue compared to
26.5% of segment revenue in the prior year comparative period. Increased demand
in Europe and Australia drove an increase in international sales during the
first quarter.
•Gross margin. Gross margin decreased from 48.4% in the prior year first quarter
of fiscal 2021 to 47.8% in the first quarter of fiscal 2022. The year-over-year
decrease in profitability was driven by higher material costs and production
inefficiencies caused by supply chain constraints.
•Operating expenses. Fiscal 2022 first quarter operating expenses as a
percentage of net sales were 23.8%, down from 27.1% in the prior year
comparative period. The decrease was primarily driven by the increase in sales
compared to the prior year.
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Engineered Films
Engineered Films produces high-performance plastic films and sheeting for
geomembrane, agricultural, construction, and industrial applications and also
offers design-build and installation services of these plastic films and
sheeting. Plastic film and sheeting can be purchased separately or together with
installation services.
                                                                           Three Months Ended
                                                                                          April 30,         April 30,
(dollars in thousands)                                                                      2021              2020            $ Change            % Change
Net sales                                                                                $ 48,765          $ 33,398          $ 15,367                 46.0  %
Gross profit                                                                               10,036             4,263             5,773                135.4  %
Gross margin                                                                                 20.6  %           12.8  %
Operating expenses                                                                       $  3,269          $  2,656          $    613                 23.1  %
Operating expenses as % of sales                                                              6.7  %            8.0  %
Operating income(a)                                                                      $  6,767          $  1,607          $  5,160                321.1  %
Operating margin                                                                             13.9  %            4.8  %

(a) At the sector level, the operating result does not include an allocation of general and administrative expenses.

The following factors were the main drivers of the year-over-year three-month changes:

•Market conditions. In the first quarter, Engineered films continued to see
improved demand that started in the fourth quarter of the prior year. Demand was
up across all markets, led by the agricultural and construction markets. In
addition, the geomembrane market (including the energy sub-market) is showing
signs of improvement, with oil prices having rebounded from lows experienced in
the prior year and rig counts within the Permian Basin continuing to increase.
The Company does not model comparative market share position for its divisions,
but the Company believes Engineered Films maintained or increased its market
share in most of its end markets in the first three months of fiscal 2022.
•Sales volume and selling prices. First quarter net sales were $48.8 million, an
increase of $15.4 million, or 46.0%, compared to net sales of $33.4 million in
the first quarter fiscal 2021. The division saw an increase in demand across all
markets, as uncertainty caused by the global pandemic continues to fall, leading
to improved market conditions. While the division adjusted selling prices to
recover increasing input costs caused by volatility in the resin market, the
primary driver of the increase in sales was an increase in sales volume. Sales
volume, measured in pounds sold, increased approximately 45.7% compared to the
prior year comparative period.
•Gross margin. For the three-month period, gross margin was 20.6%, increasing
from 12.8% in the prior year comparative period. Higher sales volumes and
operational efficiency gains from improved capacity utilization drove the
significant increase in gross margin compared to the prior year first quarter.
•Operating expenses. As a percentage of net sales, operating expenses were 6.7%
in the current year three-month period as compared to 8.0% in the prior year
comparative period. The decrease was primarily driven by the increase in sales
compared to the prior year.

Aerostar

Aerostar serves the lighter-than-air commercial and aerospace and defense markets. Aerostar’s main products include high altitude stratospheric balloon systems and radar systems. These products can be integrated with additional third-party sensors to provide research, communication and situational awareness capabilities to government and commercial customers.

                                                                           Three Months Ended
                                                                                          April 30,         April 30,
(dollars in thousands)                                                                      2021              2020            $ Change            % Change
Net sales                                                                                $  8,887          $ 11,151          $ (2,264)               (20.3) %
Gross profit                                                                                3,730             3,834              (104)                (2.7) %
Gross margin                                                                                 42.0  %           34.4  %
Operating expenses                                                                       $  3,141          $  3,541          $   (400)               (11.3) %
Operating expenses as % of sales                                                             35.3  %           31.8  %
Operating income(a)                                                                      $    589          $    293          $    296                101.0  %
Operating margin                                                                              6.6  %            2.6  %

(a) At the sector level, the operating result does not include an allocation of general and administrative expenses.

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The following factors were the main drivers of the year-over-year three-month changes:

•Market conditions. Aerostar's markets are subject to significant variability in
demand due to government spending uncertainties and the timing of contract
awards. The Company does not model comparative market share position for its
divisions, but the Company believes Aerostar has maintained its market share in
the first three months of fiscal 2022.
•Sales volume. Net sales decreased 20.3% from $11.2 million for the three-month
period ended April 30, 2020, to $8.9 million for the three-month period ended
April 30, 2021. The division saw year-over-year growth for defense related
stratospheric balloon systems, however, this was offset by the conclusion of
Loon activity and a decrease in aerostat revenue. There was no aerostat revenue
in the first quarter of the current year compared to $0.9 million in the first
quarter of the prior year.
•Gross margin. For the three-month period, gross margin increased from 34.4% to
42.0%. Sales mix and cost control measures implemented during the quarter to
reduce overhead expenses drove the improvement in gross margin.
•Operating expenses. First quarter fiscal 2022 operating expense was $3.1
million, or 35.3% of net sales, an increase from 31.8% of net sales in the first
quarter of fiscal 2021. Despite the $0.4 million decrease in operating expenses,
the significant decrease in revenues drove operating expenses as a percentage to
sales higher. The division continues to make focused investments in research and
development and selling activities to drive growth and secure contract awards.

Corporate Expenses (administrative expenses; other income (expense), net; and
effective tax rate)
                                                          Three Months Ended
                                                                       April 30,      April 30,
(dollars in thousands)                                                   2021           2020
Administrative expenses                                               $  8,963       $  6,940
Administrative expenses as a % of sales                                    8.0  %         8.0  %
Other income (expense), net                                           $     30       $   (468)
Effective tax rate                                                        17.1  %       (13.8) %



Administrative spending for the three-month period of fiscal 2022 was up 29.1%
compared to fiscal 2021. Improved profitability during the quarter drove higher
incentives, along with continued spending for Project Atlas, an ongoing project
to the replace the Company's ERP system.

Other income (expense), net consists primarily of activity related to the
Company's equity investments, interest income and expense, and foreign currency
transaction gains or losses. There were no significant items in other income
(expense), net for the three-month period in fiscal 2022 and 2021.

The company’s effective tax rates for the three-month periods ended April 30, 2021 and 2020, were 17.1% and (13.8)% respectively. The year-over-year volatility of the effective tax rate for the three-month period is mainly due to an increase in profitability in the current year.

MARKET CONDITIONS AND PROSPECTS

The Company is off to a good start in fiscal 2022, with Applied Technology
breaking its previous quarterly record for revenue, while also making
significant progress on the strategic platforms for growth. The Company saw
improving demand during the first quarter within Applied Technology and
Engineered Films and is well-positioned to drive revenue and earnings growth for
the Company. The Company expects global supply chain constraints to persist
throughout the year, but remain confident in the management team's ability to
continue to manage these challenges.

Applied Technology was able to overcome supply chain constraints experienced
across the world to generate record revenue for the first quarter. The momentum
and demand in the market continues to grow for the Company's ag technology
solutions. Order activity remained strong in the first quarter of fiscal 2022.
In Raven Autonomy, the Company is on track for commercialization goals in the
current year. The division has secured 36 orders for OMNiDRIVE™ (formerly known
as AutoCart®), the Company's advanced Driverless Ag Technology solution. In
addition, the division expects to release OMNiDRIVE™ system compatible with Case
IH Magnum and New Holland tractors this fall, ahead of the targeted date. For
OMNiPOWER™ (formerly known as Dot®), the Company expects to sell out its current
manufacturing capacity in the fiscal year. To meet future demand, Applied
Technology is planning with a strategic partner to significantly expand
production capacity for
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OMNiPOWER™. Demand for autonomous ag solutions is strong, and the limited
commercial releases of OMNiDRIVE™ and OMNiPOWER™ in fiscal 2022 will provide
valuable customer engagement and insight as the Company executes on its strategy
of advancing technology that improves agriculture practices globally. The
solutions being developed are significant advancements in ag technology that
will help solve labor shortages, provide greater efficiencies and enhance
sustainability in agriculture across the world.

Engineered Films generated substantial year-over-year growth as their
end-markets continued their recovery from the global pandemic. Rising prices and
volatility in the resin market presented challenges in the first quarter of the
year. However, the division's offering of highly engineered, high-value films
provides flexibility to be able to mitigate rising input costs and maintain
strong profitability within the division. In Raven Composites™, the division
continued to build out its composites production operations in the first
quarter. The Company began installation of its composites equipment and expects
to have operations running by the end of the second quarter. In addition, the
division continues to build relationships with strategic customers as it
executes on its strategy of supplying thinner, lighter and stronger materials
that combine high-value films with rigid composites that provide superior value
across multiple end-markets.

Aerostar continued to advance the technology for the division's stratospheric
and radar solutions in the first quarter, while improving profitability
year-over-year and sequentially. The momentum around utilizing the division's
technology in defense applications continues to grow, and the management team is
working to advance solutions down the pathway of becoming a program of record.
Over the remainder of the year, the division has a significant number of flight
campaigns scheduled with multiple Department of Defense agencies as the division
continues to showcase the industry-leading capability for stratospheric balloon
systems.

LIQUIDITY AND CAPITAL RESOURCES

The Company's balance sheet continues to reflect significant liquidity.
Management focuses on the current cash balance and operating cash flows in
considering liquidity, as operating cash flows have historically been the
Company's primary source of liquidity. Management expects that current cash,
combined with the generation of positive operating cash flows, will be
sufficient to fund the Company's normal operating, investing, and financing
activities beyond the next twelve months. In addition, the Company has a
three-year, $100 million senior revolving credit facility which includes a $100
million borrowing availability expansion feature. If executed, this allows the
Company's total borrowing capacity to reach $200 million. This credit facility
has a maturity date of September 20, 2022.

The company’s cash balances and cash flows were as follows:

                                April 30,      January 31,          April 30,
(dollars in thousands)            2021             2021               2020
Cash and cash equivalents      $  17,764      $     32,938         $  72,581


                                                                                Three Months Ended
                                                                                                               April 30,
(dollars in thousands)                                                                 April 30, 2021             2020
Cash provided by (used in) operating activities                                      $        (7,779)         $  11,851
Cash used in investing activities                                                             (7,041)            (4,290)
Cash provided by (used in) financing activities                                                 (389)            44,648
Effect of exchange rate changes on cash and cash equivalents                                      35               (335)
Net change in cash and cash equivalents                                     

(15,174) $ $ 51,874



Cash and cash equivalents totaled $17.8 million at April 30, 2021, a sequential
decrease of $15.2 million from January 31, 2021. The decrease in cash was driven
by an increase in net working capital needs due to the significant increase in
revenue in Applied Technology and Engineered Films operating segments as well as
investments to advance Raven Autonomy™ and Raven Composites™. Cash and cash
equivalents as of April 30, 2020 was $72.6 million. In the first quarter of the
prior year, during the early stages of the pandemic, the Company made a $50.0
million draw on its credit facility. No draws were made on the credit facility
in the first quarter of fiscal 2022.

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Operating Activities
Cash provided by operating activities was primarily derived from cash received
from customers, offset by cash payments for inventories, services, and employee
compensation. Cash used in operating activities was $7.8 million for the first
three months of fiscal 2022 compared with cash provided by operating activities
of $11.9 million in the first three months of fiscal 2021. The decrease in
operating cash flows year-over-year was driven by the increase in net working
capital in the current year to support the significant increase in sales orders
in Applied Technology and Engineered Films. In the prior year first quarter, the
Company took significant steps to reduce working capital due to the economic
downturn caused by pandemic. There was a sequential increase in net working
capital of $26.2 million in the three months ended April 30, 2021, but as a
percentage of sales, net working capital declined. Net working capital for the
three months ended April 30, 2020 decreased $4.5 million.

The company’s net working capital for the comparative periods was as follows: (dollars in thousands)

                                                     April 30, 2021          April 30, 2020
Accounts receivable, net                                                  $       68,064          $      60,336
Plus: Inventories, net                                                            63,407                 57,101
Less: Accounts payable                                                            22,535                 20,392
Net working capital(a)                                                    $      108,936          $      97,045

Annualized net sales(b)                                                          449,944                345,984
Net working capital percentage(c)                                                   24.2  %                28.0  %
(a) Net working capital is defined as accounts receivable, (net) plus inventories, (net) less accounts payable.
(b) Annualized net sales is defined as the most recent quarter net sales times four for each of the fiscal
periods, respectively.
(c) Net working capital percentage is defined as net working capital divided by annualized net sales.



Year-over-year, net working capital increased $11.9 million, to $108.9 million
at April 30, 2021. The Company increased inventory in Applied Technology and
Engineered Films to meet increased demand in fiscal 2022 and accounts receivable
increased as sales were up significantly year-over-year. Although net working
capital increased, net working capital percentage was down year-over-year in the
first quarter of fiscal 2022. The decline in net working capital percentage was
due to a significant increase in sales, indicating working capital is within the
appropriate range for normalized operations.

Inventory levels increased $6.3 million, or 11.0%, year-over-year from $57.1
million at April 30, 2020, to $63.4 million at April 30, 2021. In comparison,
consolidated net sales increased $26.0 million, or 30.0%, year-over-year in the
first quarter. The increase in inventory was primarily driven by strategic
actions within Applied Technology and Engineered Films divisions to fulfill the
increase in sales order backlog.

Accounts receivable increased $7.8 million or 12.8%, year-over-year to $68.1
million at April 30, 2021, from $60.3 million at April 30, 2020. In comparison,
consolidated net sales increased $26.0 million, or 30.0%, year-over-year in the
first quarter. Higher sales volume was the primary driver of the year-over-year
increase in accounts receivable.

Accounts payable increased $2.1 million, or 10.5%, year-over-year from $20.4
million at April 30, 2020, to $22.5 million at April 30, 2021. The increase in
accounts payable year-over-year was primarily due to timing of purchases and
increase in raw materials inventory to support increased demand.
Investing Activities
Cash used by investing activities was $7.0 million for the first three months of
fiscal 2022 compared with cash used of $4.3 million in the first three months of
fiscal 2021. Capital expenditure spending increased $1.2 million compared to the
prior year three-month period primarily due to investments in equipment for
Engineered Films to support Raven Composites™. In the first quarter of fiscal
2022, capitalized spending for intangibles included approximately $0.8 million
for capitalized software development costs in Applied Technology, compared to
none in the prior year.

Financing Activities
Cash provided by financing activities for the first three months of fiscal 2022
decreased $45.0 million compared to the first three months of fiscal 2021. In
the first quarter of the current year, the Company made no draws on its credit
facility, compared to the $50.0 million draw made on its credit facility during
the early stages of the pandemic in the prior year. Offsetting this decrease was
$4.7 million cash outflows for dividends in first three months of the prior year
compared to no dividend payments in the current year. On August 26, 2020, the
Company announced that the board of directors indefinitely suspended the
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Company's regular quarterly cash dividend on its common stock. The Company has
reallocated this capital to supplement and accelerate investments in the
Company's Strategic Platforms for Growth; Raven Autonomy™, Raven Composites™,
and Raven Thunderhead Balloon Systems.

Other Liquidity and Capital Resources
The Company entered into a $100 million credit agreement on September 20, 2019,
with a maturity date of September 20, 2022. Availability under the Credit
Agreement for borrowings as of April 30, 2021, was $100.0 million. This
agreement (Credit Agreement) is more fully described in Note 10 Debt of the
Notes to the Consolidated Financial Statements included in Item 1 of this
Form 10-Q.

Debt under the Credit Agreement is subject to customary affirmative and negative
covenants, including financial covenants. These financial covenants include a
consolidated interest coverage ratio and consolidated leverage ratio, both of
which are defined in the Credit Agreement. Non-financial covenants, include
those relating to financial reporting and notification, limits on levels of
indebtedness and liens, investments, mergers and acquisitions, affiliate
transactions, sales of assets, restrictive agreements, and change in control as
defined in the Credit Agreement. The Company is in compliance with all financial
covenants set forth in the Credit Agreement.

Total Letters of Credit (LOC) $ 0.1 million were both exceptional
April 30, 2021 and April 30, 2020. Any drawdown required under the LOC would be settled with available cash or borrowings under the Credit Agreement.

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

There have been no material changes in the Company's known off-balance sheet
debt and other unrecorded obligations since the fiscal year ended January 31,
2021.

CRITICAL ACCOUNTING ESTIMATES

Critical accounting estimates are those that require the application of judgment
when valuing assets and liabilities on the Company's balance sheet. For a
description of our critical accounting policies and estimates, see Critical
Accounting Policies and Estimates in Item 7 of our Annual Report on Form 10-K
for the year ended January 31, 2021, filed with the SEC. There have been no
material changes to our critical accounting policies and estimates during the
three-month period ended April 30, 2021.

ACCOUNTING PRONUNCTIONS

See note 2 Summary of significant accounting policies in the notes to the consolidated financial statements included in item 1 of this Form 10-Q for a summary of recent accounting pronouncements.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this report are "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, including
statements regarding the expectations, beliefs, intentions or strategies
regarding the future, not past or historical events. Without limiting the
foregoing, the words "anticipates," "believes," "expects," "intends," "may,"
"plans," "should," "estimate," "predict," "project," "would," "will,"
"potential," and similar expressions are intended to identify forward-looking
statements. However, the absence of these words or similar expressions does not
mean that a statement is not forward-looking. The Company intends that all
forward-looking statements be subject to the safe harbor provisions of the
Private Securities Litigation Reform Act.

Although the Company believes that the expectations reflected in such
forward-looking statements are based on reasonable assumptions when made, there
is no assurance that such assumptions are correct or that these expectations
will be achieved. Assumptions involve important risks and uncertainties that
could significantly affect results in the future. These risks and uncertainties
include, but are not limited to, those relating to weather conditions, which
could affect sales and profitability in some of the Company's primary markets,
such as agriculture and construction and oil and gas drilling; or changes in raw
material availability, commodity prices, competition, technology or
relationships with the Company's largest customers, risks and uncertainties
relating to the impacts of the COVID-19 pandemic, development of new
technologies to satisfy customer requirements, possible development of
competitive technologies, ability to scale production of new products without
negatively impacting quality and cost, risks of operating in foreign markets,
risks relating to acquisitions, including risks of integration or unanticipated
liabilities or contingencies, and ability to finance investment and net working
capital needs for new development projects, any of which could adversely impact
any of the Company's product lines, risks of litigation, as well as other risks
                                       24

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described in Item 1A., Risk Factors, of the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 2021. The foregoing list is not exhaustive
and the Company disclaims any obligation to subsequently revise any
forward-looking statements to reflect events or circumstances after the date of
such statements. Past financial performance may not be a reliable indicator of
future performance and historical trends should not be used to anticipate
results or trends in future periods.

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