Novanta Inc. (NOVT) has reported a 13.73 percent rise in profit for the quarter ended Sep. 30, 2016. The company has earned $7.47 million, or $0.21 a share in the quarter, compared with $6.57 million, or $0.19 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $10.09 million, or $0.29 a share compared with $8.52 million or $0.24 a share, a year ago.
Revenue during the quarter grew 6.02 percent to $97.83 million from $92.27 million in the previous year period. Gross margin for the quarter contracted 113 basis points over the previous year period to 42.13 percent. Total expenses were 88.71 percent of quarterly revenues, down from 90.24 percent for the same period last year. This has led to an improvement of 153 basis points in operating margin to 11.29 percent.
Operating income for the quarter was $11.05 million, compared with $9.01 million in the previous year period.
However, the adjusted operating income for the quarter stood at $14.68 million compared to $13.45 million in the prior year period. At the same time, adjusted operating margin improved 44 basis points in the quarter to 15.01 percent from 14.57 percent in the last year period.
“We delivered strong operating results in the third quarter. Our business delivered 6% reported revenue growth and more than 4% organic revenue growth in the quarter. Our new brand and focus around mission critical enabling solutions to Original Equipment Manufacturers in medical and advanced industrial markets continues to resonate with our customers and employees, driving sustained progress on customer design win activities. In addition, we delivered strong Adjusted EBITDA, up 11% versus the third quarter of last year,” said Matthijs Glastra, chief executive officer.
For financial year 2016, Novanta Inc. projects revenue to be in the range of $384 million to $386 million. The company forecasts diluted earnings per share to be in the range of $1 to $1.03 on adjusted basis.
Working capital declines
Novanta Inc. has witnessed a decline in the working capital over the last year. It stood at $129.37 million as at Sep. 30, 2016, down 15.03 percent or $22.89 million from $152.26 million on Oct. 02, 2015. Current ratio was at 2.93 as on Sep. 30, 2016, down from 3.54 on Oct. 02, 2015.
Cash conversion cycle (CCC) has decreased to 60 days for the quarter from 118 days for the last year period. Days sales outstanding went down to 56 days for the quarter compared with 60 days for the same period last year.
Days inventory outstanding has decreased to 48 days for the quarter compared with 106 days for the previous year period. At the same time, days payable outstanding went down to 44 days for the quarter from 47 for the same period last year.
Debt comes down significantly
Novanta Inc. has recorded a decline in total debt over the last one year. It stood at $79.63 million as on Sep. 30, 2016, down 25.89 percent or $27.83 million from $107.46 million on Oct. 02, 2015. Total debt was 19.11 percent of total assets as on Sep. 30, 2016, compared with 25.23 percent on Oct. 02, 2015. Debt to equity ratio was at 0.31 as on Sep. 30, 2016, down from 0.45 as on Oct. 02, 2015.
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