VSE Corporation (VSEC) has reported an 11.31 percent rise in profit for the quarter ended Mar. 31, 2017. The company has earned $7.29 million, or $0.67 a share in the quarter, compared with $6.55 million, or $0.61 a share for the same period last year. Revenue during the quarter surged 37.36 percent to $197.29 million from $143.64 million in the previous year period. Gross margin for the quarter contracted 318 basis points over the previous year period to 9.45 percent. Total expenses were 92.80 percent of quarterly revenues, up from 91.13 percent for the same period last year. That has resulted in a contraction of 167 basis points in operating margin to 7.20 percent.
Operating income for the quarter was $14.20 million, compared with $12.74 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $20.91 million compared with $17.60 million in the prior year period. At the same time, adjusted EBITDA margin contracted 165 basis points in the quarter to 10.60 percent from 12.25 percent in the last year period.
“Our Federal Services Group drove our revenue increases this quarter as compared to the first quarter of 2016,” said Maurice “Mo” Gauthier, VSE chief executive officer. “Growth in our NAVSEA foreign military sales work centered around two recent ship transfers to Taiwan, and our equipment sustainment and logistics support for the U.S. Army were the main contributors to the first quarter revenue increase. Our funded backlog remains strong based on an excellent bookings quarter. In addition, we anticipate that the new administration’s spending priorities will continue to benefit our DoD revenues. We are also deploying more of our resources to expand the market offerings in our Supply Chain Management and Aviation groups.”
Operating cash flow drops significantly
VSE Corporation has generated cash of $0.65 million from operating activities during the quarter, down 95.77 percent or $ 14.74 million, when compared with the last year period. The company has spent $0.41 million cash to meet investing activities during the quarter as against cash outgo of $1.42 million in the last year period.
The company has spent $0.21 million cash to carry out financing activities during the quarter as against cash outgo of $14.12 million in the last year period.
Cash and cash equivalents stood at $0.46 million as on Mar. 31, 2017, down 22.15 percent or $0.13 million from $0.59 million on Mar. 31, 2016.
Working capital increases sharply
VSE Corporation has recorded an increase in the working capital over the last year. It stood at $126.62 million as at Mar. 31, 2017, up 28.08 percent or $27.76 million from $98.86 million on Mar. 31, 2016. Current ratio was at 2.04 as on Mar. 31, 2017, up from 1.94 on Mar. 31, 2016.
Cash conversion cycle (CCC) has decreased to 46 days for the quarter from 97 days for the last year period. Days sales outstanding went down to 39 days for the quarter compared with 49 days for the same period last year.
Days inventory outstanding has decreased to 36 days for the quarter compared with 81 days for the previous year period. At the same time, days payable outstanding went down to 28 days for the quarter from 33 for the same period last year.
Debt comes down marginally
VSE Corporation has recorded a decline in total debt over the last one year. It stood at $237.68 million as on Mar. 31, 2017, down 2.11 percent or $5.12 million from $242.80 million on Mar. 31, 2016. Total debt was 36.82 percent of total assets as on Mar. 31, 2017, compared with 39.10 percent on Mar. 31, 2016. Debt to equity ratio was at 0.90 as on Mar. 31, 2017, down from 1.03 as on Mar. 31, 2016. Interest coverage ratio improved to 5.83 for the quarter from 5.10 for the same period last year.
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