CDK Global, Inc (CDK) has reported a 21.26 percent rise in profit for the quarter ended Dec. 31, 2016. The company has earned $82.70 million, or $0.55 a share in the quarter, compared with $68.20 million, or $0.43 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $96.10 million, or $0.64 a share compared with $70 million or $0.44 a share, a year ago.
Revenue during the quarter grew 5.33 percent to $547.80 million from $520.10 million in the previous year period. Gross margin for the quarter expanded 256 basis points over the previous year period to 44.65 percent. Total expenses were 76.01 percent of quarterly revenues, down from 78.60 percent for the same period last year. This has led to an improvement of 259 basis points in operating margin to 23.99 percent.
Operating income for the quarter was $131.40 million, compared with $111.30 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $179.70 million compared with $141.80 million in the prior year period. At the same time, adjusted EBITDA margin improved 554 basis points in the quarter to 32.80 percent from 27.26 percent in the last year period.
“Our fiscal second quarter results reflect the improvements we have made to our business and represent further progress toward our transformational goals,” said Brian MacDonald, chief executive officer. “We have continued to invest in our operations and products to improve the customer experience while increasing our adjusted EBITDA margin to 32.8%, which is a 550 bps increase over last year’s second quarter and keeps us on track to meet our target of 35% margin for fiscal 2018. In addition, we completed our $1B return of capital plan commitment in the quarter and I am pleased to announce our intention to continue to return significant capital to investors through calendar year 2019.”
CDK Global, Inc projects revenue to grow in the range of 4 percent to 5 percent for the financial year 2017. CDK Global, Inc projects adjusted revenue to grow in the range of 4 percent to 5 percent for for financial year 2017. For fiscal year 2017, CDK Global, Inc expects net income to grow in the range of $21 percent to $23 percent. For the fiscal year 2017, CDK Global, Inc forecasts adjusted net income to grow in the range of $26 percent to $29 percent. For financial year 2017, the company forecasts diluted earnings per share to be in the range of $1.93 to $1.99. For financial year 2017, the company forecasts diluted earnings per share to be in the range of $2.33 to $2.38 on adjusted basis.
Operating cash flow improves significantly
CDK Global, Inc has generated cash of $173.40 million from operating activities during the first half, up 572.09 percent or $147.60 million, when compared with the last year period.
The company has spent $35.80 million cash to meet investing activities during the first six months as against cash outgo of $19.20 million in the last year period.
The company has spent $20.70 million cash to carry out financing activities during the first six months as against cash outgo of $58.30 million in the last year period.
Cash and cash equivalents stood at $327.60 million as on Dec. 31, 2016, down 5.73 percent or $19.90 million from $347.50 million on Dec. 31, 2015.
Working capital declines
CDK Global, Inc has witnessed a decline in the working capital over the last year. It stood at $366.10 million as at Dec. 31, 2016, down 22.71 percent or $107.60 million from $473.70 million on Dec. 31, 2015. Current ratio was at 1.74 as on Dec. 31, 2016, down from 2.07 on Dec. 31, 2015.
Days sales outstanding went down to 59 days for the quarter compared with 63 days for the same period last year.
At the same time, days payable outstanding went up to 6 days for the quarter from 5 for the same period last year.
Debt increases substantially
CDK Global, Inc has witnessed an increase in total debt over the last one year. It stood at $1,602.50 million as on Dec. 31, 2016, up 30.43 percent or $373.90 million from $1,228.60 million on Dec. 31, 2015. Total debt was 65.54 percent of total assets as on Dec. 31, 2016, compared with 48.83 percent on Dec. 31, 2015. Debt to equity ratio was at 12.68 as on Dec. 31, 2016, up from 2.06 as on Dec. 31, 2015. Interest coverage ratio deteriorated to 10.68 for the quarter from 11.72 for the same period last year.
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