Methode Electronics, Inc. (MEI) has reported 17.45 percent rise in profit for the quarter ended Oct. 29, 2016. The company has earned $24.90 million, or $0.66 a share in the quarter, compared with $21.20 million, or $0.54 a share for the same period last year. Revenue during the quarter went up marginally by 0.43 percent to $209.30 million from $208.40 million in the previous year period. Gross margin for the quarter expanded 214 basis points over the previous year period to 26.56 percent. Total expenses were 86.10 percent of quarterly revenues, down from 87.33 percent for the same period last year. This has led to an improvement of 124 basis points in operating margin to 13.90 percent.
Operating income for the quarter was $29.10 million, compared with $26.40 million in the previous year period.
President and chief executive officer Donald W. Duda said, "Year over year, we delivered strong earnings in our second quarter and first-half despite nearly flat sales, which reflects our commitment to continuous manufacturing improvement as well as the successful investments we have made in vertical integration."
For fiscal year 2017, Methode Electronics expects revenue to be in the range of $820 million to $845 million. It expects operating income to be in the range of $102 million to $117 million. It projects diluted earnings per share to be in the range of $2.30 to $2.45 for the same period.
Operating cash flow improves significantlyMethode Electronics, Inc. has generated cash of $63.70 million from operating activities during the first half, up 29.74 percent or $14.60 million, when compared with the last year period. Cash flow from investing activities was unchanged at negative $9.50 million for the first half, when compared with the last year period.
The company has spent $23.50 million cash to carry out financing activities during the first six months as against cash outgo of $15.90 million in the last year period.
Cash and cash equivalents stood at $249.60 million as on Oct. 29, 2016, up 33.76 percent or $63 million from $186.60 million on Oct. 31, 2015.
Working capital increases
Methode Electronics, Inc. has recorded an increase in the working capital over the last year. It stood at $383.20 million as at Oct. 29, 2016, up 13.07 percent or $44.30 million from $338.90 million on Oct. 31, 2015. Current ratio was at 4.36 as on Oct. 29, 2016, up from 4.04 on Oct. 31, 2015.
Cash conversion cycle (CCC) has decreased to 47 days for the quarter from 70 days for the last year period. Days sales outstanding went up to 72 days for the quarter compared with 71 days for the same period last year.
Days inventory outstanding has decreased to 18 days for the quarter compared with 39 days for the previous year period. At the same time, days payable outstanding went up to 43 days for the quarter from 40 for the same period last year.
Debt increases substantially
Methode Electronics, Inc. has witnessed an increase in total debt over the last one year. It stood at $49 million as on Oct. 29, 2016, up 122.73 percent or $27 million from $22 million on Oct. 31, 2015. Methode Electronics has witnessed an increase in long-term debt over the last one year. Total debt was 7.35 percent of total assets as on Oct. 29, 2016, compared with 3.61 percent on Oct. 31, 2015. Debt to equity ratio was at 0.10 as on Oct. 29, 2016, up from 0.05 as on Oct. 31, 2015. Interest coverage ratio deteriorated to 291 for the quarter from 88 for the same period last year.
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