Rite Aid Corp (RAD), the operator of a chain of retail drugstores, has recorded a 3.89 times surge in profit for the quarter ended Aug. 30, 2014. The company earned $127.85 million or $0.13 a share in the second-quarter compared with $32.83 million or $0.03 a share a year ago.
Revenue during the second-quarter grew 3.89 percent to $6522.58 million from $6278.16 million in the last year period.
Gross margin expanded by 12 basis points over the previous year period to 29.05 percent. Total expenses as a percentage of revenues decreased to 96.19 percent from 96.75 percent in the same period last year. That has resulted in improvement of 56 basis points in operating margins to 3.81 percent. Operating income stood at $248.66 million compared with $203.92 million in the last year period.
''In the second quarter, our team of dedicated Rite Aid associates worked together to execute our strategy and deliver results that reflect growth in net income and Adjusted EBITDA and significant increases in same-store sales and prescription count,'' said Rite Aid chairman and CEO John Standley. ''Heading forward, while we believe that our key initiatives will continue to drive top-line growth, we are revising our guidance based on lower than anticipated pharmacy margin in the second half of Fiscal 2015. As we navigate these headwinds, we will remain focused on growing our business, generating continued operational efficiencies and positioning our associates to deliver a consistently outstanding experience for our customers.''
The company expects fiscal 2015 adjusted EBITDA to be between $1.200 billion and $1.275 billion. Net income is expected to be between $223.0 million and $333.0 million and income per diluted share between $0.22 and $0.33, it said.
Cash Flow
Rite Aid Corp has generated cash of $362.23 million from operating activities during the first half, up 37.25 percent or $98.32 million when compared with the last year period.
The company has spent $297.35 million cash to meet investing activities during the first half, as against cash outgo of $192.81 million in the last year period. It has made net capital expenditure of $233.66 million during the first half, which was higher by 15.38 percent or $31.14 million, from a year ago.
The company's free cash flow accounted for 35.50 percent of operating cash flow for the first half, compared with 23.27 percent in the last year period.
The company has spent $25.53 million cash to meet financing activities during the first half, as against cash outgo of $56.38 million in the last year period. It has borrowed net of $2260.37 million through debt during the first half. It has raised net of $14.79 million by selling common stocks.
As on Aug. 30, 2014, the company's cash balance stood at $185.76 million, up 28.85 percent or $41.59 million from Aug. 31, 2013.
Working Capital
Rite Aid Corp has witnessed a decline in the working capital over the last one year. The company's working capital stood at $1783.05 million as at Aug. 30, 2014, down $160.58 million or 8.26 percent from $1943.63 million on Aug. 31, 2013. It registered a decrease in current ratio to 1.74 as at Aug. 30, 2014 from 1.76 on Aug. 31, 2013.
The company's cash conversion cycle (CCC) was decreased to 9 days for second quarter from 23 days for the last year period. CCC is a liquidity metric which expresses the length of time (in days) that a company uses to sell inventory, collect receivables and pay its accounts payable. Decreasing or steady CCCs are good for business.
Days' sales outstanding were almost stable at 13 days for second quarter when compared with the last year period.
The company's days' inventory outstanding decreased to 29 days for second quarter compared with 65 days for the last year period. This suggests the company took less time to convert the inventory into sales.
The company's days' payable outstanding went down to 25 days for second quarter from 28 days for the last year period. This reflects that the company has made early payment to vendors compared to prior year period.
Debt Position
Rite Aid Corp has witnessed a decline in the total debt over the last one year. As on Aug. 30, 2014, total debt stood at $5752.29 million, down 4.95 percent or $299.27 million, from Aug. 31, 2013. The company's total debt was 82.66 percent of total assets as on Aug. 30, 2014, compared with 84.41 percent on Aug. 31, 2013. Interest coverage ratio, which determines how easily a company can pay interest expenses on outstanding debt, has improved to 2.46 from 1.91 in the same period last year.
Shares of the company gained $0.23 or 3.59 percent to settle at $6.64 on Wednesday.
