Quantum Corporation (QTM) swung to a net profit for the quarter ended Dec. 31, 2016. The company has made a net profit of $5.01 million in the quarter, against a net loss of $0.82 million in the last year period. On the other hand, adjusted net income for the quarter stood at $6.58 million, or $0.02 a share compared with $4.81 million or $0.02 a share, a year ago.
Revenue during the quarter grew 4.25 percent to $133.48 million from $128.05 million in the previous year period. Gross margin for the quarter contracted 267 basis points over the previous year period to 41.20 percent. Total expenses were 94.57 percent of quarterly revenues, down from 98.88 percent for the same period last year. This has led to an improvement of 432 basis points in operating margin to 5.43 percent.
Operating income for the quarter was $7.25 million, compared with $1.43 million in the previous year period.
However, the adjusted operating income for the quarter stood at $8.78 million compared to $6.67 million in the prior year period. At the same time, adjusted operating margin improved 137 basis points in the quarter to 6.58 percent from 5.21 percent in the last year period.
"Following up on our revenue growth and improved profitability in the first half of the fiscal year, we again delivered solid results in the December quarter," said Jon Gacek, president and CEO of Quantum. “On a year-over-year basis, we generated our 22nd consecutive quarter of scale-out tiered storage revenue growth and increased total revenue, data protection sales and overall profitability for the third straight quarter. As a result of our strong execution and the leverage our financial model provides, year-to-date GAAP and non-GAAP net income also improved $29 million and $24 million, respectively, on a total revenue increase of $29 million.
For financial year 2017, Quantum Corp expects revenue to be in the range of $505 million to $510 million. The company projects diluted earnings per share to be in the range of $0.01 to $0.02. It projects diluted earnings per share to be in the range of $0.04 to $0.05 on adjusted basis.
For the fourth-quarter, Quantum Corp expects revenue to be in the range of $120 million to $125 million.
Operating cash flow turns positive
Quantum Corp has generated cash of $10.47 million from operating activities during the nine month period as against cash outgo of $15.91 million in the last year period.
The company has spent $21.73 million cash to meet investing activities during the nine month period as against cash outgo of $2.94 million in the last year period.
Cash flow from financing activities was $0.06 million for the nine month period as against cash outgo of $16.16 million in the last year period.
Cash and cash equivalents stood at $22.60 million as on Dec. 31, 2016, down 31.36 percent or $10.32 million from $32.92 million on Dec. 31, 2015.
Working capital turns negative
Working capital of Quantum Corp has turned negative to $39.24 million on Dec. 31, 2016 from positive $33.21 million on Dec. 31, 2015. Current ratio was at 0.83 as on Dec. 31, 2016, down from 1.19 on Dec. 31, 2015.
Cash conversion cycle (CCC) has decreased to 37 days for the quarter from 82 days for the last year period. Days sales outstanding were almost stable at 69 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 30 days for the quarter compared with 75 days for the previous year period. At the same time, days payable outstanding was almost stable at 62 days for the quarter, when compared with the previous year period.
Debt comes down marginally
Quantum Corp has recorded a decline in total debt over the last one year. It stood at $136.46 million as on Dec. 31, 2016, down 1.16 percent or $1.60 million from $138.06 million on Dec. 31, 2015. Short-term debt stood at $64.22 million as on Dec. 31, 2016. Total debt was 59.42 percent of total assets as on Dec. 31, 2016, compared with 49.63 percent on Dec. 31, 2015. Interest coverage ratio improved to 2.99 for the quarter from 1.02 for the same period last year.
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