NN, Inc. (NNBR) has reported a 10.43 percent fall in profit for the quarter ended Sep. 30, 2016. The company has earned $4.15 million, or $0.15 a share in the quarter, compared with $4.63 million, or $0.17 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $10.30 million, or $0.38 a share compared with $9.50 million or $0.35 a share, a year ago.
Revenue during the quarter surged 32.38 percent to $204.96 million from $154.82 million in the previous year period. Gross margin for the quarter expanded 321 basis points over the previous year period to 25.58 percent. Total expenses were 90.86 percent of quarterly revenues, down from 93.46 percent for the same period last year. This has led to an improvement of 260 basis points in operating margin to 9.14 percent.
Operating income for the quarter was $18.73 million, compared with $10.12 million in the previous year period.
However, the adjusted operating income for the quarter stood at $25.74 million compared to $16.26 million in the prior year period. At the same time, adjusted operating margin improved 206 basis points in the quarter to 12.56 percent from 10.50 percent in the last year period.
Richard Holder, president and chief executive officer, commented, "We continue to drive solid operating performance and margin expansion aided by the NN Operating System despite ongoing weakness in the industrial market. Our focus throughout 2016 has been to optimize our business operations to lay a solid foundation for future long term growth, and our continuing margin improvement is evidence of the power of our diversified portfolio and the benefits derived from strong operating discipline."
Working capital increases
NN, Inc. has recorded an increase in the working capital over the last year. It stood at $157.79 million as at Sep. 30, 2016, up 14.95 percent or $20.52 million from $137.26 million on Sep. 30, 2015. Current ratio was at 2.15 as on Sep. 30, 2016, up from 2.13 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 55 days for the quarter from 88 days for the last year period. Days sales outstanding went down to 59 days for the quarter compared with 66 days for the same period last year.
Days inventory outstanding has decreased to 36 days for the quarter compared with 69 days for the previous year period. At the same time, days payable outstanding went down to 40 days for the quarter from 47 for the same period last year.
Debt increases substantially
NN, Inc. has witnessed an increase in total debt over the last one year. It stood at $815.04 million as on Sep. 30, 2016, up 267.37 percent or $593.18 million from $221.86 million on Sep. 30, 2015. Total debt was 58.96 percent of total assets as on Sep. 30, 2016, compared with 30.84 percent on Sep. 30, 2015. Debt to equity ratio was at 2.50 as on Sep. 30, 2016, up from 0.65 as on Sep. 30, 2015. Interest coverage ratio deteriorated to 1.15 for the quarter from 2.21 for the same period last year.
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