Broadridge Financial Solutions, Inc. (BR) has reported a 25.12 percent fall in profit for the quarter ended Dec. 31, 2016. The company has earned $30.10 million, or $0.25 a share in the quarter, compared with $40.20 million, or $0.33 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $46.80 million, or $0.39 a share compared with $46.50 million or $0.38 a share, a year ago.
Revenue during the quarter surged 39.71 percent to $892.60 million from $638.90 million in the previous year period. Gross margin for the quarter contracted 659 basis points over the previous year period to 20.70 percent. Total expenses were 93.41 percent of quarterly revenues, up from 89.01 percent for the same period last year. That has resulted in a contraction of 440 basis points in operating margin to 6.59 percent.
Operating income for the quarter was $58.80 million, compared with $70.20 million in the previous year period.
However, the adjusted operating income for the quarter stood at $84.20 million compared to $79.70 million in the prior year period. At the same time, adjusted operating margin contracted 304 basis points in the quarter to 9.43 percent from 12.47 percent in the last year period.
"Broadridge delivered another solid quarter," said Rich Daly, Broadridge's president and chief executive officer. "We reported strong revenue growth, driven by the acquisition of NACC and organic growth of our recurring fee revenues. We also continued to benefit from strong momentum in Closed sales, which positions us well to sustain growth going forward. Our success reflects the breadth of our products and the depth of our relationships with industry-leading clients." "We are well on track to achieve our three year financial objectives and our fiscal 2017 key guidance metrics of recurring fee revenue growth of 29% to 31%, Adjusted EPS growth of 12% to 17%, and Closed sales in the range of $140 million to $180 million," Mr. Daly concluded.
For financial year 2017, Broadridge Financial Solutions, Inc. projects revenue to grow in the range of 40 percent to 42 percent. The company projects operating income to grow at 13 percent and projects adjusted operating income to grow at 15 percent. It forecasts diluted earnings per share to be in the range of $0.02 to $0.07 and forecasts diluted earnings per share to be in the range of $0.12 to $0.17 on adjusted basis.
Operating cash flow turns negative
Broadridge Financial Solutions, Inc. has spent $5.50 million cash to meet operating activities during the first half as against cash inflow of $42.60 million in the last year period.
The company has spent $553.40 million cash to meet investing activities during the first six months as against cash outgo of $52 million in the last year period.
Cash flow from financing activities was $70.20 million for the first six months, up 2,708 percent or $67.70 million, when compared with the last year period.
Cash and cash equivalents stood at $235.70 million as on Dec. 31, 2016, down 22.75 percent or $69.40 million from $305.10 million on Dec. 31, 2015.
Working capital drops significantly
Broadridge Financial Solutions, Inc. has witnessed a decline in the working capital over the last year. It stood at $261.20 million as at Dec. 31, 2016, down 34.67 percent or $138.60 million from $399.80 million on Dec. 31, 2015. Current ratio was at 1.41 as on Dec. 31, 2016, down from 1.93 on Dec. 31, 2015.
Days sales outstanding went down to 48 days for the quarter compared with 59 days for the same period last year.
At the same time, days payable outstanding went down to 16 days for the quarter from 22 for the same period last year.
Debt increases substantially
Broadridge Financial Solutions, Inc. has witnessed an increase in total debt over the last one year. It stood at $1,206 million as on Dec. 31, 2016, up 59.84 percent or $451.50 million from $754.50 million on Dec. 31, 2015. Short-term debt stood at $124.90 million as on Dec. 31, 2016. Total debt was 40.64 percent of total assets as on Dec. 31, 2016, compared with 32.06 percent on Dec. 31, 2015. Debt to equity ratio was at 1.22 as on Dec. 31, 2016, up from 0.80 as on Dec. 31, 2015.
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