Convergys Corporation (CVG) has reported a 14.83 percent fall in profit for the quarter ended Mar. 31, 2017. The company has earned $37.90 million, or $0.38 a share in the quarter, compared with $44.50 million, or $0.43 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $52.10 million, or $0.52 a share compared with $51.60 million or $0.50 a share, a year ago.
Revenue during the quarter went up marginally by 0.75 percent to $727.60 million from $722.20 million in the previous year period. Gross margin for the quarter expanded 49 basis points over the previous year period to 38.13 percent. Total expenses were 93.29 percent of quarterly revenues, up from 91.64 percent for the same period last year. That has resulted in a contraction of 166 basis points in operating margin to 6.71 percent.
Operating income for the quarter was $48.80 million, compared with $60.40 million in the previous year period.
However, the adjusted operating income for the quarter stood at $71.30 million compared to $70.50 million in the prior year period. At the same time, adjusted operating margin improved 4 basis points in the quarter to 9.80 percent from 9.76 percent in the last year period.
"The business produced solid results in the first quarter," said Andrea Ayers, president and chief executive officer. "Investment in innovation, insights and operational excellence delivered via our voice and digital platforms helped drive strong new business signings across vertical markets. As anticipated, steps in the quarter to streamline operations keep us on track to achieve our revenue and profitability expectations for the year and well positioned for long-term value creation." Ayers continued, "Consistent with our commitment to disciplined capital deployment, we are pleased to raise the quarterly dividend 11 percent marking our fifth consecutive year of dividend growth."
Operating cash flow drops significantly
Convergys Corporation has generated cash of $32.90 million from operating activities during the quarter, down 57.05 percent or $ 43.70 million, when compared with the last year period.
The company has spent $8.90 million cash to meet investing activities during the quarter as against cash outgo of $11.80 million in the last year period.
Cash flow from financing activities was $14.30 million for the quarter as against cash outgo of $48 million in the last year period.
Cash and cash equivalents stood at $177.10 million as on Mar. 31, 2017, down 20.05 percent or $44.40 million from $221.50 million on Mar. 31, 2016.
Working capital decreases marginally
Convergys Corporation has witnessed a decline in the working capital over the last year. It stood at $516.90 million as at Mar. 31, 2017, down 1.67 percent or $8.80 million from $525.70 million on Mar. 31, 2016. Current ratio was at 2.68 as on Mar. 31, 2017, up from 2.61 on Mar. 31, 2016.
Days sales outstanding went down to 67 days for the quarter compared with 69 days for the same period last year.
Debt increases substantially
Convergys Corporation has witnessed an increase in total debt over the last one year. It stood at $405.50 million as on Mar. 31, 2017, up 27.16 percent or $86.60 million from $318.90 million on Mar. 31, 2016. Total debt was 16.89 percent of total assets as on Mar. 31, 2017, compared with 13.41 percent on Mar. 31, 2016. Debt to equity ratio was at 0.30 as on Mar. 31, 2017, up from 0.24 as on Mar. 31, 2016. Interest coverage ratio deteriorated to 9.21 for the quarter from 13.42 for the same period last year.
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