Entertainment Gaming Asia (EGT) swung to a net loss for the quarter ended Sep. 30, 2016. The company has made a net loss of $0.74 million, or $ 0.05 a share in the quarter, against a net profit of $1.45 million, or $0.10 a share in the last year period.
Revenue during the quarter plunged 84.61 percent to $0.69 million from $4.48 million in the previous year period. Gross margin for the quarter expanded 611 basis points over the previous year period to 75.80 percent. Total expenses were 99.28 percent of quarterly revenues, up from 77.27 percent for the same period last year. That has resulted in a contraction of 2201 basis points in operating margin to 0.72 percent.
However, the adjusted EBITDA for the quarter stood at negative $1.35 million compared with $2.40 million in the prior year period.
Clarence Chung, chairman and chief executive officer of Entertainment Gaming Asia, commented, "We continue our efforts to refine our business operations and position ourselves for new opportunities. Following the disposition of our gaming products assets in May 2016 for cash proceeds of $5.9 million and our EGMs in NagaWorld and Leisure World in July 2016 for cash proceeds of $3.3 million, we sold all 71 EGMs seats in Thansur Bokor in October 2016 for cash proceeds of $250,000. While our reduced base of operations will have a negative impact on our near-term earnings, these transactions provide us a total of approximately $9.4 million in cash proceeds, excluding $765,000 in expense reimbursements for severance costs and factory lease payments and the potential for earn outs on certain gaming chip and plaque sales related to the now discontinued gaming products business. To date, we have received $7.3 million of the sale proceeds and have cash resources of approximately $35 million which, we believe, enhances our ability to pursue and execute on new projects."
Working capital increases
Entertainment Gaming Asia has recorded an increase in the working capital over the last year. It stood at $34.14 million as at Sep. 30, 2016, up 15.56 percent or $4.60 million from $29.54 million on Sep. 30, 2015. Current ratio was at 12.99 as on Sep. 30, 2016, down from 13.16 on Sep. 30, 2015.
Cash conversion cycle (CCC) has increased to 243 days for the quarter from 227 days for the last year period. Days sales outstanding went up to 248 days for the quarter compared with 57 days for the same period last year.
Days inventory outstanding has decreased to 16 days for the quarter compared with 228 days for the previous year period. At the same time, days payable outstanding went up to 507 days for the quarter from 58 for the same period last year.
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