CSC (NYSE: CSC) today reported diluted earnings per share of $1.34 consisting of $0.93 from continuing operations and $0.41 from discontinued operations for the second quarter of fiscal 2014. In the second quarter of 2013, CSC reported $0.83 of diluted earnings per share consisting of $0.69 from continuing operations and $0.14 from discontinued operations. Total revenue was $3.19 billion, a decline of 9% in constant currency when compared to $3.53 billion from the year ago period. However, on a more comparable basis, revenue declined by 7% in constant currency.
“In our commercial business, we are seeing early signs of improvement in book-to-bill and pipeline growth as a result of our investments in salespeople, sales support and next-generation IT services offerings,” said Mike Lawrie, president and CEO. “The Federal business is delivering strong profitability and margin growth amidst uncertainty in government spending. And our cost takeout actions across the company are contributing to our earnings growth.”
- EPS from continuing operations of $0.93 for the second quarter, flat sequentially and an increase of $0.24 from the second quarter of fiscal 2013.
- Net income was $209 million for the second quarter, an increase of $50 million sequentially and $71 million from the prior year.
- Operating income was $338 million, an increase of $29 million sequentially and $76 million when compared with the prior year. Operating income margin was 10.6% for the quarter, an increase when compared with 9.5% on a sequential basis and 7.4% in the prior year.
- Earnings before interest and taxes (EBIT) was $248 million, an increase of $2 million sequentially and $45 million when compared with the second quarter of fiscal 2013. EBIT margin of 7.8% improved from 7.6% on a sequential basis and 5.8% in the prior year.
- Operating cash flow of $270 million in the quarter compares with $444 million in the prior year. Last year’s result includes a $110 million settlement payment from the UK National Health Service (NHS) and $22 million from divested businesses.
- Free cash flow of $86 million compares with $105 million in the prior period excluding the settlement payment and net contributions from divested businesses.
- Ending cash and cash equivalents were $2.1 billion as of September 27, 2013, an increase of $245 million over the prior year.
Global Business ServicesGBS offerings include consulting, industry software & solutions, business process services, and applications services. Revenue was $1.05 billion in the quarter which compares with revenue of $1.20 billion in the year ago quarter. Excluding $69 million from a divested IT staffing business in the year-ago period, GBS revenue decreased by 7% in constant currency. Operating margin excluding restructuring increased to 11.7% from 8.2% in the prior year, primarily due to the company’s cost takeout efforts. New business awards for GBS were $1.3 billion in the quarter.