Real Industry, Inc. (RELY) swung to a net loss for the quarter ended Sep. 30, 2016. The company has made a net loss of $10.90 million, or $ 0.40 a share in the quarter, against a net profit of $1.20 million, or $0.02 a share in the last year period.
Revenue during the quarter dropped 7 percent to $314.90 million from $338.60 million in the previous year period. Gross margin for the quarter contracted 223 basis points over the previous year period to 5.27 percent. Operating margin for the quarter stood at negative 1.11 percent as compared to a positive 2.19 percent for the previous year period.
Operating loss for the quarter was $3.50 million, compared with an operating income of $7.40 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $16.90 million compared with $22.80 million in the prior year period. At the same time, adjusted EBITDA margin contracted 137 basis points in the quarter to 5.37 percent from 6.73 percent in the last year period.
Mr. Kyle Ross, president, interim chief executive officer and chief investment officer of Real Industry, stated, "Over the past few months, Real Industry has refocused its efforts on improving the value of its primary operating business and allocating capital based on a critical evaluation of risk-based returns. As Real Alloy operates through a challenging scrap spread environment, we are witnessing the value of our scale and diversified business model with strong results from our base tolling operations in North America and strong performance in Europe. In addition, the continued efforts of lean operating practices throughout all of our facilities have allowed the Company to offset some of the margin pressure in our buy/sell business and lower tolling volumes."
Working capital declines
Real Industry, Inc. has witnessed a decline in the working capital over the last year. It stood at $141.80 million as at Sep. 30, 2016, down 13.75 percent or $22.60 million from $164.40 million on Sep. 30, 2015. Current ratio was at 1.91 as on Sep. 30, 2016, down from 2.01 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 22 days for the quarter from 41 days for the last year period. Days sales outstanding went up to 44 days for the quarter compared with 42 days for the same period last year.
Days inventory outstanding has decreased to 15 days for the quarter compared with 35 days for the previous year period. At the same time, days payable outstanding was almost stable at 37 days for the quarter, when compared with the previous year period.
Debt comes down marginally
Real Industry, Inc. has recorded a decline in total debt over the last one year. It stood at $342.20 million as on Sep. 30, 2016, down 2.14 percent or $7.50 million from $349.70 million on Sep. 30, 2015. Total debt was 48.04 percent of total assets as on Sep. 30, 2016, compared with 45.82 percent on Sep. 30, 2015. Debt to equity ratio was at 2.78 as on Sep. 30, 2016, up from 2.42 as on Sep. 30, 2015.
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