Orthofix International N.V. (OFIX) swung to a net profit for the quarter ended Sep. 30, 2016. The company has made a net profit of $9.90 million, or $ 0.54 a share in the quarter, against a net loss of $1.37 million, or $0.07 a share in the last year period. On the other hand, adjusted net income from continuing operations for the quarter stood at $6.61 million, or $0.36 a share compared with $5.34 million or $0.28 a share, a year ago. Revenue during the quarter went down marginally by 2.62 percent to $98.50 million from $101.15 million in the previous year period. Gross margin for the quarter expanded 341 basis points over the previous year period to 79.82 percent. Total expenses were 90.59 percent of quarterly revenues, down from 95.91 percent for the same period last year. This has led to an improvement of 532 basis points in operating margin to 9.41 percent.
Operating income for the quarter was $9.27 million, compared with $4.14 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $23.53 million compared with $15.86 million in the prior year period. At the same time, adjusted EBITDA margin improved 821 basis points in the quarter to 23.88 percent from 15.68 percent in the last year period.
"While we underperformed on the top-line during the quarter, primarily in our Spine Fixation business, I am very happy about where the company is today. We now have a solid infrastructure in place, a dominant position in the bone growth stimulation market, a strong balance sheet, improving free cash flow, and double-digit ROIC," said president and chief executive officer Brad Mason. "Although highly competitive, our markets remain very healthy, and we have plans in place to reinvigorate our top-line growth going forward."
For financial year 2016, Orthofix International N.V. forecasts revenue to be in the range of $404 million to $408 million. The company projects net income to be in the range of $12.20 million to $15.70 million. It company expects diluted earnings per share from continuing operations to be in the range of $0.65 to $0.85 and diluted earnings per share to be in the range of $1.35 to $1.45 on adjusted basis.
Working capital drops significantly
Orthofix International N.V. has witnessed a decline in the working capital over the last year. It stood at $101.97 million as at Sep. 30, 2016, down 38.91 percent or $64.94 million from $166.91 million on Sep. 30, 2015. Current ratio was at 2.22 as on Sep. 30, 2016, down from 3.12 on Sep. 30, 2015. Cash conversion cycle (CCC) has decreased to 129 days for the quarter from 212 days for the last year period. Days sales outstanding were almost stable at 52 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 150 days for the quarter compared with 225 days for the previous year period. At the same time, days payable outstanding went up to 73 days for the quarter from 66 for the same period last year.
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