Select Comfort Corporation (SCSS) swung to a net profit for the quarter ended Dec. 31, 2016. The company has made a net profit of $11.29 million, or $ 0.25 a share in the quarter, against a net loss of $21.17 million, or $0.42 a share in the last year period.
Revenue during the quarter surged 46 percent to $313.44 million from $214.68 million in the previous year period. Gross margin for the quarter expanded 676 basis points over the previous year period to 63 percent. Operating margin for the quarter period stood at positive 4.89 percent as compared to a negative 14.28 percent for the previous year period.
Operating income for the quarter was $15.31 million, compared with an operating loss of $30.66 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $32.66 million compared to negative $15.43 million in the prior year second quarter. At the same time, adjusted EBITDA margin stood at 10.42 percent for the quarter compared to negative 7.19 percent in the last year period.
"While our fourth quarter sales and earnings were below our expectations, we begin 2017 well positioned to accelerate earnings growth, cash generation and returns to shareholders. Thus far in 2017 traffic and sales are on target, which we attribute to a steadier consumer environment and improved marketing effectiveness," said Shelly Ibach, president and chief executive officer of Select Comfort.
For fiscal year 2017, the company expects diluted earnings per share to be in the range of $1.20 to $1.40.
Operating cash flow improves significantly
Select Comfort Corporation has generated cash of $151.64 million from operating activities during the year, up 40.49 percent or $43.70 million, when compared with the last year. The company has spent $42.68 million cash to meet investing activities during the year as against cash outgo of $44.28 million in the last year.
The company has spent $118.36 million cash to carry out financing activities during the year as against cash outgo of $94.67 million in the last year period.
Cash and cash equivalents stood at $11.61 million as on Dec. 31, 2016, down 44.70 percent or $9.38 million from $20.99 million on Jan. 02, 2016.
Working capital remains negative
Working capital of Select Comfort Corporation was negative $86.99 million on Dec. 31, 2016 compared with negative $27.02 million on Jan. 02, 2016. Current ratio was at 0.61 as on Dec. 31, 2016, down from 0.88 on Jan. 02, 2016.
Cash conversion cycle (CCC) has increased to 9 days for the quarter from 1 days for the last year period. Days sales outstanding went down to 3 days for the quarter compared with 9 days for the same period last year.
Days inventory outstanding has decreased to 29 days for the quarter compared with 42 days for the previous year period. At the same time, days payable outstanding went down to 41 days for the quarter from 50 for the same period last year.
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