Sparton Corporation (SPA) has reported a 95.49 percent plunge in profit for the quarter ended Oct. 02, 2016. The company has earned $0.11 million, or $0.01 a share in the quarter, compared with $2.39 million, or $0.24 a share for the same period last year. On an adjusted basis, earnings per share were at $0.20 for the quarter compared with $0.41 in the same period last year.

Revenue during the quarter dropped 5.93 percent to $100.37 million from $106.69 million in the previous year period. Gross margin for the quarter contracted 259 basis points over the previous year period to 17.22 percent. Total expenses were 98.67 percent of quarterly revenues, up from 95.78 percent for the same period last year. That has resulted in a contraction of 289 basis points in operating margin to 1.33 percent.

Operating income for the quarter was $1.33 million, compared with $4.50 million in the previous year period.

However, the adjusted operating income for the quarter stood at $2.10 million compared to $4.50 million in the prior year period. At the same time, adjusted operating margin contracted 213 basis points in the quarter to 2.09 percent from 4.22 percent in the last year period.

Joseph J. Hartnett, Interim president and chief executive officer, commented, "First quarter revenues came in just above the midpoint of our guidance range. However, during the quarter we remained engaged in activities related to the exploration of a possible sale of the Company and we have not yet achieved the desired level of success in addressing operating performance issues, implementing cost saving initiatives or carrying out new business development activities. We anticipate that progress in these areas will accelerate upon the completion of the current sale process, whether from an agreement for a sale of the Company or from a determination that no such sale will occur."

For the second-quarter 2016, Sparton Corporation projects revenue to be in the range of $97 million to $101 million.

The company has spent $1.12 million cash to meet investing activities during the quarter as against cash outgo of $1.48 million in the last year period.

The company has spent $1.51 million cash to carry out financing activities during the quarter as against cash outgo of $15.68 million in the last year period.

Cash and cash equivalents stood at $0.72 million as on Oct. 02, 2016, down 67.17 percent or $1.47 million from $2.19 million on Sep. 27, 2015.

Working capital drops significantly

Sparton Corporation has witnessed a decline in the working capital over the last year. It stood at $70.14 million as at Oct. 02, 2016, down 34.38 percent or $36.74 million from $106.88 million on Sep. 27, 2015. Current ratio was at 2.34 as on Oct. 02, 2016, down from 2.98 on Sep. 27, 2015.

Cash conversion cycle (CCC) has decreased to 56 days for the quarter from 112 days for the last year period. Days sales outstanding were almost stable at 54 days for the quarter, when compared with the last year period.

Days inventory outstanding has decreased to 37 days for the quarter compared with 86 days for the previous year period. At the same time, days payable outstanding went up to 35 days for the quarter from 29 for the same period last year.