Post Earnings Coverage as Convergys' Adjusted EPS Grew 4%; Raised Dividend by 11%
Upcoming AWS Coverage on Deluxe Corp. Post-Earnings Results
LONDON, UK / ACCESSWIRE / May 23, 2017 / Active Wall St. announces its post-earnings coverage on Convergys Corp. (NYSE: CVG). The Company posted its first quarter fiscal 2017 financial results on May 08, 2017. The customer management Company reported better than expected revenue and earnings numbers. Register with us now for your free membership at: http://www.activewallst.com/register/.
One of Convergys' competitors within the Business Services space, Deluxe Corp. (NYSE: DLX), reported on April 27, 2017, its financial results for the first quarter ended March 31, 2017. AWS will be initiating a research report on Deluxe in the coming days.
Today, AWS is promoting its earnings coverage on CVG; touching on DLX. Get our free coverage by signing up to: http://www.activewallst.com/register/.
Earnings Reviewed
For the quarter ended March 31, 2017, Convergys' reported revenue of $728 million including $8 million adverse foreign currency impacts compared with $722 million in Q1 2016, up 1% as reported and up 2% on a constant currency basis. The reported quarter revenue includes $41 million from the buw Management Holding GmbH & Co. KG operations acquired in June 2016. The Company's revenue numbers exceeded analysts' consensus of $720.5 million.
For Q1 2017, Convergys' GAAP operating income was $49 million compared with $60 million in Q1 2016. Excluding discrete actions and acquisition-related impacts, the Company's adjusted operating income was $71 million for the reported quarter compared with $71 million in the prior year's same quarter. Convergys' GAAP operating margin was 6.7% for Q1 2017 compared with 8.4% in Q1 2016. The Company's adjusted operating margin was 9.8%, almost similar compared to the prior year's corresponding period.
During Q1 2017, Convergys' adjusted EBITDA was $99 million compared with $98 million in Q1 2016. The Company's adjusted EBITDA margin was 13.6% for the reported quarter compared with 13.5% in the same period last year.
Convergys' GAAP net income from continuing operations was $38 million, or $0.38 per diluted share, for Q1 2017 compared with net income from continuing operations of $45 million, or $0.43 per diluted share, in Q1 2016. The Company's first-quarter results include severance charges of $13 million for discrete actions to streamline the business. GAAP results also include acquisition-related impacts consisting of $7 million amortization expense for acquired intangible assets; $1 million depreciation expense related to the fair value write-up of acquired property and equipment; and $2 million integration expenses. Excluding discrete actions and acquisition-related impacts, the Company's adjusted net income from continuing operations was $52 million, or $0.52 per diluted share, compared with $52 million, or $0.50 per diluted share, in the same period last year. Convergys' earnings numbers surpassed Wall Street's expectations of $0.46 per share.
Financial Details
During Q1 2017, Convergys repurchased 0.9 million shares in the first quarter at a cost of $22 million. At March 31, 2016, the remaining authorization to purchase outstanding shares was $121 million.
Convergys' Board of Directors approved an 11% increase in the quarterly dividend to $0.10 per share. Convergys has scheduled the first dividend payment of $0.10 per share on July 07, 2017, to shareholders of record at the close of business on June 23, 2017.
During Q1 2017, Convergys' operating cash flow was $33 million compared with $77 million in Q1 2016. The Company's adjusted free cash flow for the reported quarter was $26 million compared with $67 million in the year ago same period.
As of March 31, 2017, Convergys' cash and short-term investments were $189 million; debt maturing in one year was $1 million; and long-term debt was $343 million. The Company's net debt totaled $156 million at March 31, 2017, compared with $148 million at December 31, 2016, and $86 million at the end of Q1 2016.
Business Outlook
For FY17, Convergys is forecasting for constant currency revenue growth in the range of negative 3% to positive 1%, and adjusted EBITDA margin to be approximately 12.5%. The Company is expecting adjusted EPS growth in the band of negative 3% to positive 3%.
Stock Performance
At the close of trading session on Monday, May 22, 2017, Convergys' stock price rose slightly by 0.67% to end the day at $24.16. A total volume of 634.28 thousand shares were exchanged during the session. The Company's share price has gained 9.77% in the past one month. The Company's shares are trading at a PE ratio of 19.45 and have a dividend yield of 1.66%. The stock currently has a market cap of $2.27 billion.
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