Nutri System (NTRI) has reported 8.76 percent rise in profit for the quarter ended Sep. 30, 2016. The company has earned $7.95 million, or $0.27 a share in the quarter, compared with $7.31 million, or $0.25 a share for the same period last year. Revenue during the quarter grew 18.78 percent to $124.57 million from $104.88 million in the previous year period. Gross margin for the quarter expanded 303 basis points over the previous year period to 53.69 percent. Total expenses were 90.09 percent of quarterly revenues, up from 89.48 percent for the same period last year. That has resulted in a contraction of 61 basis points in operating margin to 9.91 percent.
Operating income for the quarter was $12.34 million, compared with $11.03 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $18.14 million compared with $14.54 million in the prior year period. At the same time, adjusted EBITDA margin improved 69 basis points in the quarter to 14.56 percent from 13.87 percent in the last year period.
Dawn Zier, president and chief executive officer, stated, "Our ongoing record of success underscores the health of the business and growing demand for our expanding portfolio of products. As we gear up for 2017, were excited about our Diet Season plans for our primary brand, Nutrisystem, and remain on track for the 2017 launch of the South Beach Diet program. We’re strongly positioned to achieve further long-term growth and value creation for our shareholders."
For the fourth-quarter, Nutri System forecasts revenue to be in the range of $96.50 million to $101.50 million. Nutri System forecasts revenue to be in the range of $533 million to $538 million for fiscal year 2016. Nutri System projects net income to be in the range of $6.10 million to $7.50 million for the fourth-quarter. For financial year 2016, Nutri System projects net income to be in the range of $32.80 million to $34.10 million. For fiscal year 2016, the company expects diluted earnings per share to be in the range of $1.10 to $1.15.
Operating cash flow improves significantlyNutri System has generated cash of $55.92 million from operating activities during the nine month period, up 52.76 percent or $19.32 million, when compared with the last year period. The company has spent $20.46 million cash to meet investing activities during the nine month period as against cash outgo of $8.84 million in the last year period.
The company has spent $14.63 million cash to carry out financing activities during the nine month period as against cash outgo of $12.33 million in the last year period.
Cash and cash equivalents stood at $27.02 million as on Sep. 30, 2016, down 3.68 percent or $1.03 million from $28.05 million on Sep. 30, 2015.
Working capital declines
Nutri System has witnessed a decline in the working capital over the last year. It stood at $37.29 million as at Sep. 30, 2016, down 5.15 percent or $2.03 million from $39.31 million on Sep. 30, 2015. Current ratio was at 1.74 as on Sep. 30, 2016, down from 1.86 on Sep. 30, 2015.
Cash conversion cycle (CCC) has increased to 27 days for the quarter from 8 days for the last year period. Days sales outstanding went down to 10 days for the quarter compared with 11 days for the same period last year.
Days inventory outstanding has decreased to 15 days for the quarter compared with 35 days for the previous year period. At the same time, days payable outstanding went down to 52 days for the quarter from 54 for the same period last year.
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