Vectren Corporation (VVC) has reported a 6.75 percent rise in profit for the quarter ended Dec. 31, 2016. The company has earned $69.60 million, or $0.84 a share in the quarter, compared with $65.20 million, or $0.79 a share for the same period last year.
Revenue during the quarter grew 15.73 percent to $699 million from $604 million in the previous year period. Gross margin for the quarter contracted 225 basis points over the previous year period to 64.19 percent. Total expenses were 82.73 percent of quarterly revenues, down from 82.95 percent for the same period last year. This has led to an improvement of 21 basis points in operating margin to 17.27 percent.
Operating income for the quarter was $120.70 million, compared with $103 million in the previous year period.
"Results for 2016 were very strong at $2.55 per share, reflecting another year of consistent earnings growth and, with the December dividend increase of 5 percent, 2016 marked the 57th consecutive year of increase. The utility operation performed very well in 2016, largely driven by our gas infrastructure investment programs and our focus on cost control," said Carl Chapman, Vectren's chairman, president and chief executive officer. "Our Energy Services business continues to grow nicely, as does Infrastructure Services' distribution operation as the demand for utility infrastructure replacement continues."
For fiscal year 2017, the company expects diluted earnings per share to be in the range of $2.55 to $2.65.
Operating cash flow improves marginally
Vectren Corporation has generated cash of $524.10 million from operating activities during the year, up 3.74 percent or $18.90 million, when compared with the last year.
The company has spent $509.20 million cash to meet investing activities during the year as against cash outgo of $469.60 million in the last year.
The company has spent $21 million cash to carry out financing activities during the year as against cash outgo of $47.30 million in the last year period.
Cash and cash equivalents stood at $68.60 million as on Dec. 31, 2016, down 8.17 percent or $6.10 million from $74.70 million on Dec. 31, 2015.
Working capital turns negative
Working capital of Vectren Corporation has turned negative to $149.60 million on Dec. 31, 2016 from positive $131.60 million on Dec. 31, 2015. Current ratio was at 0.82 as on Dec. 31, 2016, down from 1.25 on Dec. 31, 2015.
Cash conversion cycle (CCC) has increased to 5 days for the quarter from 2 days for the last year period. Days sales outstanding went down to 26 days for the quarter compared with 28 days for the same period last year.
Days inventory outstanding has decreased to 24 days for the quarter compared with 30 days for the previous year period. At the same time, days payable outstanding was almost stable at 56 days for the quarter, when compared with the previous year period.
Debt moves up
Vectren Corporation has witnessed an increase in total debt over the last one year. It stood at $1,908.40 million as on Dec. 31, 2016, up 6 percent or $108 million from $1,800.40 million on Dec. 31, 2015. Total debt was 32.90 percent of total assets as on Dec. 31, 2016, compared with 33.28 percent on Dec. 31, 2015. Debt to equity ratio was at 1.08 as on Dec. 31, 2016, up from 1.07 as on Dec. 31, 2015. Interest coverage ratio improved to 5.69 for the quarter from 4.81 for the same period last year.
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