CTI BioPharma Corp. reports financial results for the quarter ended June 30, 2017.
- Summary numbers: Revenues of USD 22.23 million, Net Earnings of USD 5.40 million.
- Gross margins widened from 96.40% to 98.80% compared to the same period last year, operating (EBITDA) margins now 33.57% from -256.17%.
- Change in operating cash flow of 102.55% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
- Earnings growth from operating margin improvements as well as one-time items.
The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:
|Relevant Numbers (Quarterly)|
|Revenue Growth (%YOY)||201.93||-97.93||-19.32||359.85||569.18|
|Earnings Growth (%YOY)||127.31||-698.67||75.15||10.46||39.36|
|Net Margin (%)||24.29||-2629.71||-69.75||-658.31||-268.52|
|Return on Equity (%)||7.34||N/A||-62.86||-118.46||-43.21|
|Return on Assets (%)||32.97||-146.19||-36.33||-134.08||-71.53|
Access our Ratings and Scores for CTI BioPharma Corp.
Market Share Versus Profits
Compared to the same period last year, CTIC-US’s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if CTIC-US’s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 2,847.61% and earnings by 127.22% compared to the previous period.
Earnings Growth Analysis
The company’s earnings growth was influenced by year-on-year improvement in gross margins from 96.40% to 98.80% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from -256.17% to 33.57% compared to the same period last year. For comparison, gross margins were 69.56% and EBITDA margins were -2,536.74% in the last reporting period.
Gross Margin Trend
Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.
CTIC-US’s improvement in gross margin has been accompanied by an improvement in its balance sheet as well. This suggests that gross margin improvements are likely from operating decisions and not accounting gimmicks. Its working capital days are now 75.33 days compared to 715.42 days for the same period last year.
Cash Versus Earnings – Sustainable Performance?
It is important to examine a companyï¿½s cash versus earnings numbers to gauge whether its performance is sustainable.
CTIC-US’s year-on-year change in operating cash flow of 102.55% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.
The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -259.03% to 32.72% and (2) one-time items. The company’s pretax margins are now 24.18% compared to -272.00% for the same period last year.
Access our Ratings and Scores for CTI BioPharma Corp.
CTI BioPharma Corp. operates as a biopharmaceutical company, which is focuses on the development, acquisition, and commercialization of novel treatments for cancer. Its products include Pixuvri, Pacritinib, Tosedostat and Opaxio. The company was founded by James A. Bianco, Jack W. Singer, and Louis A. Bianco in September 1991 and is headquartered in Seattle, WA.
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