Aleris Corporation (ARS) saw its loss narrow to $21.60 million in the quarter ended compared with $25.40 million, a year ago.
Revenue during the quarter dropped 10.16 percent to $683.40 million from $760.70 million in the previous year period. Gross margin for the quarter expanded 304 basis points over the previous year period to 10.65 percent. Total expenses were 98.17 percent of quarterly revenues, down from 98.76 percent for the same period last year. This has led to an improvement of 59 basis points in operating margin to 1.83 percent.
Operating income for the quarter was $12.50 million, compared with $9.40 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $53.30 million compared with $68.20 million in the prior year period. At the same time, adjusted EBITDA margin contracted 117 basis points in the quarter to 7.80 percent from 8.97 percent in the last year period.
"We continued to see strong demand in the third quarter in both the global automotive and North American building and construction industries, the benefits of which were unfortunately offset by planned and unplanned production outages largely tied to our ongoing transformation at Lewisport," Sean Stack, Aleris president and chief executive officer said. "While higher customer inventory levels led to weaker than anticipated demand in aerospace, our global aerospace volume growth remained slightly positive due to the additional sales we have been able to generate as a result of the continued ramp up of our aerospace plate mill in Zhenjiang, China."
Operating cash flow drops significantly
Aleris Corporation has generated cash of $46.60 million from operating activities during the nine month period, down 34.73 percent or $24.80 million, when compared with the last year period.
The company has spent $296.90 million cash to meet investing activities during the nine month period as against cash inflow of $412.20 million in the last year period
Cash flow from financing activities was $224.10 million for the nine month period as against cash outgo of $352 million in the last year period.
Cash and cash equivalents stood at $36.50 million as on Sep. 30, 2016, down 77.85 percent or $128.30 million from $164.80 million on Sep. 30, 2015.
Working capital drops significantly
Aleris Corporation has witnessed a decline in the working capital over the last year. It stood at $327.30 million as at Sep. 30, 2016, down 33.74 percent or $166.70 million from $494 million on Sep. 30, 2015. Current ratio was at 1.63 as on Sep. 30, 2016, down from 1.93 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 39 days for the quarter from 72 days for the last year period. Days sales outstanding went up to 42 days for the quarter compared with 39 days for the same period last year.
Days inventory outstanding has decreased to 37 days for the quarter compared with 69 days for the previous year period. At the same time, days payable outstanding went up to 41 days for the quarter from 36 for the same period last year.
Debt moves up
Aleris Corporation has witnessed an increase in total debt over the last one year. It stood at $1,355.80 million as on Sep. 30, 2016, up 20.14 percent or $227.30 million from $1,128.50 million on Sep. 30, 2015. Total debt was 56.44 percent of total assets as on Sep. 30, 2016, compared with 48.28 percent on Sep. 30, 2015. Debt to equity ratio was at 4.48 as on Sep. 30, 2016, up from 3.22 as on Sep. 30, 2015.
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