CSC Delivers Revenue Growth And Sequential Commercial Margin Expansion In Second Quarter 2017

CSC (NYSE: CSC) today reported results for the second quarter of fiscal year 2017.

"In the second quarter, CSC delivered revenue growth and sequential margin improvement as we continue to execute on our transformation strategy," said Mike Lawrie, chairman, president and CEO. "We have integrated our recent acquisitions, and are growing our next generation offerings, such as Business Process Services. Recent wins such as MetLife are a strong confirmation of our leadership in the insurance market and other sectors. Today, we announced a global alliance with PwC to deliver end-to-end digital transformation solutions to our clients. Finally, we remain on track to close our proposed merger with the Enterprise Services business of Hewlett Packard Enterprise on or about April 1st."

Financial Highlights
  • Diluted earnings per share from continuing operations were $0.10 in the second quarter, compared with $0.66 in the year-ago period. Diluted earnings per share from continuing operations included $(0.13) per share of restructuring costs and $(0.38) per share of transaction and other integration-related costs.
  • Non-GAAP diluted earnings per share from continuing operations excluding these items were $0.61, compared with $0.55 in the prior period.
  • (Loss) income from continuing operations before taxes was $(1) million for the second quarter, compared with $47 million in the prior year and includes $(25) million of restructuring and $(78) million of transaction and other integration-related costs. Excluding the impact of these items, non-GAAP income from continuing operations, before taxes was $102 million compared with $95 million a year ago.
  • Consolidated segment adjusted commercial operating income, which includes GBS and GIS, excluding certain items, was $171 million compared with $173 million in the second quarter of fiscal 2016. Consolidated segment adjusted commercial operating margin on the same basis was 9.1% compared to 9.9% in the prior year.
  • Net cash provided by operating activities was $192 million in the second quarter, compared to $122 million in the prior year.
  • Adjusted free cash flow was $75 million in the second quarter, compared to $58 million in the prior year. During the second quarter of fiscal 2016, CSC's net cash provided by operating activities and adjusted free cash flow included the results of its since-divested U.S. federal IT services business, CSRA.

Global Business Services

GBS revenue of $1,035 million in the quarter compares with $891 million in the year ago quarter, an increase of 16.2%. GBS revenue increased 19.2% year-over-year in constant currency. The GBS revenue increase included the contributions of our recent acquisitions. GBS consolidated segment operating margin in the quarter, excluding the impact of certain items, was 10.1% compared to 12.3% in the prior year. New business awards for GBS were $2 billion in the second quarter.

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