Information technology services provider Computer Sciences Corp. (CSC) reported Tuesday a profit for the third quarter compared to a huge loss last year, which was weighed down by a hefty charge relating to the UK NHS contract. Stripping down the charge, adjusted earnings per share from continuing operations would have topped analysts' expectations, so did quarterly revenues. The company also raised its earnings guidance for the full-year 2013.
The company noted that it divested certain non-core businesses during the quarter, and are using the proceeds to return cash to shareholders through share buyback program and incremental contributions to pension plans.
The company agreed in early-December to sell its credit services unit to Equifax Inc. (EFX) for $1 billion in cash as part of its efforts to focus on next-generation technology solutions and services. It also divested certain businesses in Italy.
"Our cost takeout initiatives are yielding results as demonstrated by higher profit margins in all three lines of business when compared with the prior year," President and CEO Mike Lawrie said.
The Falls Church, Virginia-based company reported net income of $510 million or $3.27 per share for the third quarter, compared to a hefty net loss of $1.39 billion or $8.96 per share in the prior-year quarter.
The results for the latest quarter includes $2.50 per share of gains from discontinued operations. Income from continuing operations totaled $123 million or $0.77 per share, compared to loss of $1.42 billion or $9.15 per share in the year-ago quarter.
The results for the latest quarter also include a workforce restructuring charge of $0.13 per share, while the year-ago quarter included a $9.93 per share charge relating to the UK National Health Service (NHS) contract.
Excluding items, adjusted earnings per share would have been $0.64, compared to last year's $0.78. On average, seven analysts polled by Thomson Reuters expected earnings of $0.58 per share for the third quarter. Analysts' estimates typically exclude one-time items.
Revenues for the quarter increased 2.5 percent or 2.8 percent in constant currency, to $3.78 billion from $3.69 billion in the same quarter last year, and topped seven Wall Street analysts' consensus estimate of $3.69 billion.
Revenues declined year-over-year in North American public sector by 2.8 percent to $1.34 billion, and managed services sector revenues decreased 3 percent or 2.8 percent in constant currency to $1.62 billion, while business solutions & services revenues rose 28.7 percent or 29.4 percent in constant currency to $853 million.
Looking ahead to fiscal 2013, the company raised earnings target to a range of $2.50 to $2.70 per share from the prior forecast of $2.30 to $2.50 per share. Street is currently looking for earnings of $2.37 per share.
CSC closed Monday's regular trading session at $41.91, down $0.51 on a volume of 3.58 million shares. In the past 52-week period, the stock has been trading in a range of $22.19 to $43.00.
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