Otter Tail Corporation (OTTR) has reported a 34.88 percent jump in profit for the quarter ended Mar. 31, 2017. The company has earned $19.58 million, or $0.49 a share in the quarter, compared with $14.52 million, or $0.38 a share for the same period last year. Revenue during the quarter grew 3.82 percent to $214.12 million from $206.24 million in the previous year period. Gross margin for the quarter expanded 6 basis points over the previous year period to 64.84 percent. Total expenses were 84.68 percent of quarterly revenues, down from 86.63 percent for the same period last year. This has led to an improvement of 195 basis points in operating margin to 15.32 percent.
Operating income for the quarter was $32.80 million, compared with $27.58 million in the previous year period.
“Our team delivered a solid first quarter with earnings per share $0.11 better than first quarter last year,” said Otter Tail Corporation president and chief executive officer Chuck MacFarlane. “All operating segments improved net income quarter over quarter. The overall improvement was largely driven by Minnesota interim rate revenues that Otter Tail Power Company began collecting in mid-April 2016. Weather was also slightly more favorable for the utility in the first quarter of 2017 compared with the first quarter of 2016, and interest costs were lower for our manufacturing companies due to refinancing long-term debt at a lower rate in December 2016. Our engaged employees enhanced these outcomes with their dedication to cost management and operational excellence.
For financial year 2017, the company forecasts diluted earnings per share to be in the range of $1.60 to $1.75.
Operating cash flow declines
Otter Tail Corporation has generated cash of $21.20 million from operating activities during the quarter, down 6.34 percent or $ 1.44 million, when compared with the last year period. The company has spent $30.01 million cash to meet investing activities during the quarter as against cash outgo of $25.60 million in the last year period. It has incurred capital expenditure of $29.50 million on net basis during the quarter, up 22.04 percent or $5.33 million from year ago period.
Cash flow from financing activities was $8.81 million for the quarter, up 197.47 percent or $5.85 million, when compared with the last year period.
Working capital remains negative
Working capital of Otter Tail Corporation was negative $17.06 million on Mar. 31, 2017 compared with negative $23 million on Mar. 31, 2016. Current ratio was at 0.93 as on Mar. 31, 2017, up from 0.90 on Mar. 31, 2016.
Cash conversion cycle (CCC) has decreased to 12 days for the quarter from 37 days for the last year period. Days sales outstanding were almost stable at 42 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 49 days for the quarter compared with 107 days for the previous year period. At the same time, days payable outstanding went down to 103 days for the quarter from 112 for the same period last year.
Debt remains almost stable
Otter Tail Corporation has witnessed an increase in total debt over the last one year. It stood at $594.74 million as on Mar. 31, 2017, up 0.94 percent or $5.55 million from $589.19 million on Mar. 31, 2016. Total debt was 30.80 percent of total assets as on Mar. 31, 2017, compared with 32.14 percent on Mar. 31, 2016. Debt to equity ratio was at 0.88 as on Mar. 31, 2017, down from 0.96 as on Mar. 31, 2016.
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