Sparton Corp (SPA) swung to a net loss for the quarter ended Jan. 01, 2017. The company has made a net loss of $0.91 million, or $ 0.09 a share in the quarter, against a net profit of $0.27 million, or $0.03 a share in the last year period. On an adjusted basis, earnings per share were at $0.10 for the quarter compared with $0.25 in the same period last year.
Revenue during the quarter dropped 5.92 percent to $97.40 million from $103.53 million in the previous year period. Gross margin for the quarter contracted 157 basis points over the previous year period to 16.32 percent. Total expenses were 99.77 percent of quarterly revenues, up from 99.56 percent for the same period last year. That has resulted in a contraction of 21 basis points in operating margin to 0.23 percent.
Operating income for the quarter was $0.22 million, compared with $0.45 million in the previous year period.
However, the adjusted operating income for the quarter stood at $3.11 million compared to $4.67 million in the prior year period. At the same time, adjusted operating margin contracted 132 basis points in the quarter to 3.19 percent from 4.51 percent in the last year period.
Joseph J. Hartnett, Interim president & chief executive officer, commented, "We are pleased to report that our Q2 performance reflects the continued improvement in revenues and profitability in our MDS segment as well as the continued strengthening of our balance sheet. The MDS segment reported net organic revenue growth along with increased new program wins and stronger margins as compared to the prior quarter and Q2 of fiscal 2016. Our ECP segment did not perform as expected due to delays in production of the Q53G sonobuoy and the need to record a loss on a contract in our rugged display platform. Both of these issues have been addressed and are not expected to have any impact on future results."
For the third-quarter, Sparton Corp projects revenue to be in the range of $97 million to $101 million.
Operating cash flow improves
Sparton Corp has generated cash of $14.67 million from operating activities during the first half, up 11.92 percent or $1.56 million, when compared with the last year period.
The company has spent $2.57 million cash to meet investing activities during the first six months as against cash outgo of $2.51 million in the last year period.
The company has spent $11.64 million cash to carry out financing activities during the first six months as against cash outgo of $20.68 million in the last year period.
Cash and cash equivalents stood at $0.59 million as on Jan. 01, 2017, down 87.81 percent or $4.24 million from $4.83 million on Dec. 27, 2015.
Debt comes down significantly
Sparton Corp has recorded a decline in total debt over the last one year. It stood at $86.01 million as on Jan. 01, 2017, down 35.72 percent or $47.79 million from $133.80 million on Dec. 27, 2015. Total debt was 38.54 percent of total assets as on Jan. 01, 2017, compared with 42.83 percent on Dec. 27, 2015. Debt to equity ratio was at 1.09 as on Jan. 01, 2017, down from 1.11 as on Dec. 27, 2015. Interest coverage ratio deteriorated to 0.21 for the quarter from 0.50 for the same period last year.
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