Presidio, Inc. reported consolidated earnings results for the second quarter and six months ended December 31, 2017. For the quarter, the company reported total revenue of $661.6 million against $721.8 million a year ago. Operating income was $23.3 million against $27.5 million a year ago. Income before income taxes was $10.0 million against $5.7 million a year ago. Net income was $99.2 million against $3.4 million a year ago. Earnings per diluted share were $1.03 against $0.05 a year ago. Net cash provided by operating activities was $41.0 million against $62.5 million a year ago. Purchases of property and equipment were $2.5 million against $3.4 million a year ago. Adjusted EBITDA was $49.4 million against $54.7 million a year ago. Adjusted net income was $28.3 million against $22.4 million a year ago. Pro forma adjusted net income was $30.1 million against $27.8 million a year ago. Pro forma diluted EPS was $0.31 against $0.30 a year ago. Total revenue in the period was impacted by delays in the delivery of certain solutions which resulted in a strong increase in the company's backlog orders believed to be firm as of December 31, 2017, which the company now expect to deliver in the second half of fiscal 2018. In addition, the company experienced a decline in sales to the federal government due to curtailed spending among the specific federal agencies where the company has exposure. These trends were partially offset by the continued growth of Security solutions and a higher proportion of services as part of solutions. Adjusted EBITDA decreased $5.3 million, or 9.7%, driven by a decline in revenue offset slightly by gross margin percent expansion and a reduction in selling, general and administrative expenses associated with lower incentive compensation and lower headcount in the period. The increase in net income was comprised of the following: the favorable impact of Tax Reform, and the favorable impact of lower interest expense in the three months ended December 31, 2017, attributable to the redemption and retirement of the company's senior and subordinated notes in connection with the company's March 2017 initial public offering, the impact of the January 2017 re-pricing of term loan facility, and the impact of voluntary prepayments of term loan facility during calendar 2017, and the unfavorable impact of lower revenue and gross margin in the period.

For the six months, the company reported total revenue of $1,426.6 million against $1,459.5 million a year ago. Operating income was $67.5 million against $57.8 million a year ago. Income before income taxes was $41.0 million against $15.3 million a year ago. Net income was $118.9 million against $9.0 million a year ago. Earnings per diluted share were $1.23 against $0.12 a year ago. Net cash provided by operating activities was $124.6 million against $83.3 million a year ago. Purchases of property and equipment were $7.2 million against $6.7 million a year ago. Adjusted EBITDA was $116.9 million against $112.9 million a year ago. Adjusted net income was $63.1 million against $46.9 million a year ago. Pro forma adjusted net income was $66.3 million against $57.6 million a year ago. Pro forma diluted EPS was $0.69 against $0.62 a year ago. Total revenue in the period was impacted by delays in the delivery of certain solutions which resulted in a strong increase in the company's backlog orders believed to be firm as of December 31, 2017, as well as a decline in sales to the federal government due to curtailed spending among the specific federal agencies where the company has exposure. These trends were partially offset by the continued growth of Security solutions and a higher proportion of services as part of the company's solutions. Net income benefited from the following: the impact of Tax Reform, an increase in total gross margin, as well as, improved operating efficiency in the form of lower selling, general and administrative expenses, a decline in transaction costs in the six months ended December 31, 2017, as compared to the prior year, and lower interest expense in the six months ended December 31, 2017, attributable to the redemption and retirement of senior and subordinated notes in connection with March 2017 initial public offering, the impact of the January 2017 re-pricing of the company's term loan facility, and the impact of voluntary prepayments of term loan facility. The increase pro forma adjusted net income was attributable to the impact of tax reform, lower interest expense, and higher adjusted EBITDA in the six months ended December 31, 2017. Net debt, defined as total debt reduced by cash and cash equivalents, was $680.9 million at December 31, 2017 compared to $701.6 million at September 30, 2017.

For the fiscal year 2018, the company provided that it's total revenue growth is expected to be approximately 5.5%, which is consistent with the company's previous guidance; pro forma adjusted net income is expected to be favorably impacted by tax reform and the January 2018 refinancing. The year-to-date impact of tax reform and the January 2018 refinancing has been included in pro forma results for the six months ended December 31, 2017; and pro forma diluted EPS is expected to grow in the low double-digit range, which is higher than previous guidance driven by the impact of the 2018 refinancing and tax reform. Note that while the U.S. tax reform reduced the U.S. federal corporate tax rate from 35% to 21% effective on January 1, 2018, its fiscal year began on July 1, 2017. As a result, its blended tax rate will be 28.1% for fiscal year 2018. Adjusted EBITDA margins are expected to be in the low 8% range.

The company provided tax rate guidance for the fiscal year ending June 30, 2019. The company expects that federal corporate tax rate will be reduced to 21% in its fiscal year ending June 30, 2019.