AZZ Inc. (AZZ) has reported a 22.49 percent fall in profit for the quarter ended Nov. 30, 2016. The company has earned $18.25 million, or $0.70 a share in the quarter, compared with $23.55 million, or $0.91 a share for the same period last year.
Revenue during the quarter dropped 6.18 percent to $227.46 million from $242.45 million in the previous year period. Gross margin for the quarter contracted 208 basis points over the previous year period to 23.68 percent. Total expenses were 87.35 percent of quarterly revenues, up from 84.98 percent for the same period last year. That has resulted in a contraction of 236 basis points in operating margin to 12.65 percent.
Operating income for the quarter was $28.78 million, compared with $36.41 million in the previous year period.
Tom Ferguson, president and chief executive officer of AZZ Inc., commented, "Our overall third quarter financial performance was disappointing as we continued to feel the effects of depressed markets in oil and gas, petrochemical, and solar for our Galvanizing segment, and experienced lower than expected refinery turnarounds and maintenance in our Energy segment during the quarter. Sales in both business segments were lower during the third quarter versus last year’s comparable quarter due to greater market headwinds than we anticipated as we entered the quarter."
Operating cash flow drops significantly
AZZ Inc. has generated cash of $57.28 million from operating activities during the nine month period, down 45.01 percent or $46.88 million, when compared with the last year period.
The company has spent $51.27 million cash to meet investing activities during the nine month period as against cash outgo of $80.87 million in the last year period.
The company has spent $32.35 million cash to carry out financing activities during the nine month period as against cash outgo of $27.10 million in the last year period.
Cash and cash equivalents stood at $13.48 million as on Nov. 30, 2016, down 23.41 percent or $4.12 million from $17.60 million on Nov. 30, 2015.
Working capital increases sharply
AZZ Inc. has recorded an increase in the working capital over the last year. It stood at $180.74 million as at Nov. 30, 2016, up 25.36 percent or $36.57 million from $144.18 million on Nov. 30, 2015. Current ratio was at 2.15 as on Nov. 30, 2016, up from 1.82 on Nov. 30, 2015.
Days sales outstanding went down to 27 days for the quarter compared with 50 days for the same period last year.
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