Watts Water Technologies, Inc. (WTS) has reported a 33.95 percent jump in profit for the quarter ended Apr. 02, 2017. The company has earned $21.70 million, or $0.63 a share in the quarter, compared with $16.20 million, or $0.47 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $22.30 million, or $0.65 a share compared with $19.60 million or $0.57 a share, a year ago. Revenue during the quarter went up marginally by 0.87 percent to $347.20 million from $344.20 million in the previous year period. Gross margin for the quarter expanded 214 basis points over the previous year period to 41.42 percent. Total expenses were 89.72 percent of quarterly revenues, down from 90.94 percent for the same period last year. This has led to an improvement of 122 basis points in operating margin to 10.28 percent.
Operating income for the quarter was $35.70 million, compared with $31.20 million in the previous year period.
However, the adjusted operating income for the quarter stood at $38.40 million compared to $37.30 million in the prior year period. At the same time, adjusted operating margin improved 22 basis points in the quarter to 11.06 percent from 10.84 percent in the last year period.
Commenting on operating results, chief executive officer Robert J. Pagano Jr., said, "Overall, the first quarter played out as we anticipated. On an adjusted basis, we delivered a record Q1 operating margin and EPS despite a nominal reduction in organic revenue. This was the sixth consecutive quarter that adjusted operating margin increased year-over-year. We continued to execute on key initiatives, including the Americas transformation and seed planting to enhance our long-term growth trajectory. The steps we've taken have us well-positioned to meet our longer-term operating and financial objectives and to create long-term shareholder value."
Operating cash flow remains negative
Watts Water Technologies, Inc. has spent $9.10 million cash to meet operating activities during the quarter as against cash outgo of $21.90 million in the last year period. The company has spent $3.80 million cash to meet investing activities during the quarter as against cash outgo of $29.40 million in the last year period.
The company has spent $42.50 million cash to carry out financing activities during the quarter as against cash inflow of $4.20 million in the last year period.
Cash and cash equivalents stood at $287 million as on Apr. 02, 2017, up 10.64 percent or $27.60 million from $259.40 million on Apr. 03, 2016.
Working capital drops significantly
Watts Water Technologies, Inc. has witnessed a decline in the working capital over the last year. It stood at $410.90 million as at Apr. 02, 2017, down 26.99 percent or $151.90 million from $562.80 million on Apr. 03, 2016. Current ratio was at 2.06 as on Apr. 02, 2017, down from 2.97 on Apr. 03, 2016.
Cash conversion cycle (CCC) has decreased to 64 days for the quarter from 122 days for the last year period. Days sales outstanding went down to 53 days for the quarter compared with 54 days for the same period last year.
Days inventory outstanding has decreased to 58 days for the quarter compared with 113 days for the previous year period. At the same time, days payable outstanding went up to 47 days for the quarter from 45 for the same period last year.
Debt moves up marginally
Watts Water Technologies, Inc. has witnessed an increase in total debt over the last one year. It stood at $623.60 million as on Apr. 02, 2017, up 4.25 percent or $25.40 million from $598.20 million on Apr. 03, 2016. Total debt was 35.79 percent of total assets as on Apr. 02, 2017, compared with 34.49 percent on Apr. 03, 2016. Debt to equity ratio was almost stable at 0.82 as on Apr. 02, 2017, when compared with the last year. Interest coverage ratio improved to 7.44 for the quarter from 4.66 for the same period last year.
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