KMG Chemicals, Inc. (KMG) has reported a 25.07 percent rise in profit for the quarter ended Oct. 31, 2016. The company has earned $5.74 million, or $0.47 a share in the quarter, compared with $4.59 million, or $0.39 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $5.83 million, or $0.48 a share compared with $4.98 million or $0.42 a share, a year ago.
Revenue during the quarter went down marginally by 0.20 percent to $76.50 million from $76.65 million in the previous year period. Gross margin for the quarter expanded 63 basis points over the previous year period to 38.81 percent. Total expenses were 88.65 percent of quarterly revenues, down from 90.45 percent for the same period last year. This has led to an improvement of 180 basis points in operating margin to 11.35 percent.
Operating income for the quarter was $8.68 million, compared with $7.32 million in the previous year period.
However, the adjusted operating income for the quarter stood at $8.81 million compared to $7.92 million in the prior year period. At the same time, adjusted operating margin improved 119 basis points in the quarter to 11.52 percent from 10.33 percent in the last year period.
Chris Fraser, KMG chairman and chief executive officer, said, "Our fiscal 2017 year is off to a strong start, as KMG achieved 24% year-over-year growth in first quarter net income to $5.7 million. In addition, first quarter adjusted EBITDA reached a record quarterly level of $12.6 million, while operating cash flow of $10.9 million represented a 36% increase from the prior year's first quarter. We also further strengthened our balance sheet by reducing long-term debt."
Operating cash flow improves significantly
KMG Chemicals, Inc. has generated cash of $10.91 million from operating activities during the quarter, up 36.92 percent or $2.94 million, when compared with the last year period.
The company has spent $2.38 million cash to meet investing activities during the quarter as against cash outgo of $3.62 million in the last year period.
The company has spent $2.91 million cash to carry out financing activities during the quarter as against cash outgo of $1.84 million in the last year period.
Cash and cash equivalents stood at $17.61 million as on Oct. 31, 2016, up 69.32 percent or $7.21 million from $10.40 million on Oct. 31, 2015.
Working capital increases
KMG Chemicals, Inc. has recorded an increase in the working capital over the last year. It stood at $56.79 million as at Oct. 31, 2016, up 12.25 percent or $6.20 million from $50.59 million on Oct. 31, 2015. Current ratio was at 2.36 as on Oct. 31, 2016, up from 2.15 on Oct. 31, 2015.
Cash conversion cycle (CCC) has decreased to 20 days for the quarter from 66 days for the last year period. Days sales outstanding were almost stable at 48 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 34 days for the quarter compared with 79 days for the previous year period. At the same time, days payable outstanding went up to 62 days for the quarter from 61 for the same period last year.
Debt comes down significantly
KMG Chemicals, Inc. has recorded a decline in total debt over the last one year. It stood at $33.30 million as on Oct. 31, 2016, down 35.34 percent or $18.20 million from $51.50 million on Oct. 31, 2015. KMG Chemicals, Inc. has recorded a decline in long-term debt over the last one year. It stood at $33.30 million as on Oct. 31, 2016, down 35.34 percent or $18.20 million from $51.50 million on Oct. 31, 2015. Total debt was 14.05 percent of total assets as on Oct. 31, 2016, compared with 21.51 percent on Oct. 31, 2015. Debt to equity ratio was at 0.23 as on Oct. 31, 2016, down from 0.40 as on Oct. 31, 2015.
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