Healthcare Services Group Inc. (NASDAQ:HCSG) Q4 2016 Earnings Conference Call - Final Transcript
Feb 08, 2017 • 08:30 am ET
of political environment. That said, the change in administration may present an opportunity to refocus some of our best and brightest towards growing the company, creating opportunities for our employees and managing the business rather than navigating an increasingly complex and burdensome regulatory environment. Additionally, the administration's pro-growth agenda, specifically its stated desire for corporate tax reform, could be a boost to fully taxed US-based service companies like ourselves.
With that abbreviated overview, I'll turn the call over to Matt for a more detailed discussion on the quarter.
Thanks, Ted. Good morning, everyone. The net income for the quarter increased to $20.3 million or $0.28 per share and for the year was $77.4 million or $1.05 per share. Both net income and earnings per share for the quarter and year were company records. Direct cost of services for the quarter came in at 85.5%, which is below our target of 86%. Going forward, our goal is to continue to manage direct costs under 86% on a consistent basis and, ultimately, work our way closer to 85% direct cost of services.
SG&A was reported at 6.8% for the quarter, but after adjusting for that $400,000 change in deferred comp investment accounts, [Indecipherable] our management people, our actual SG&A was 6.7% for the quarter. We would expect our normalized SG&A to continue to be at or below 7% going forward with ongoing opportunities to garner additional modest efficiencies. Investment income for the quarter was reported at about $100,000 before adjusting for the $400,000 change in deferred comp. Our effective tax rate for the year was 36% and that's inclusive of the worker opportunity tax credit, which has been extended through 2019.
For 2017, excluding the potential for Trump tax cut that Ted alluded to in his opening remarks, we'd expect that our effective tax rate continues to be in and around the 36% range. We continue to manage the balance sheet conservatively, and at the end of the fourth quarter, had over $90 million of cash and marketable securities and a current ratio of better than four to one.
Our accounts receivable remain in good shape right around 60 days. As announced last week, the Board of Directors approved an increase in the dividend to $0.18625 per share, split adjusted, and that's payable on March 24. The earnings and cash balances for the quarter supported and with the dividend tax rate in place for the foreseeable future, the cash dividend program continues to be the most tax efficient way to get the value and free cash flow back to our shareholders. This will be the 55th consecutive cash dividend payment since the program was initiated in 2003 after the change in tax law and it's now the 54th consecutive quarter that we've increased the dividend payment over the previous quarter. That's now a 14-year period that includes four three for two stock splits.
So, with those opening remarks, we'd like to now open up the call for questions.