Thursday, BPO and IT services provider Affiliated Computer Services, Inc. (ACS) reported a dip in second quarter earnings as the company absorbed the costs of global production initiative. Yet, earnings topped Street estimate with revenues rising 7%, reflecting growth in commercial and government segments.
The Dallas, Texas-based ACS's second quarter net income slipped to $75.52 million or $0.77 per share from $81.6 million or $0.81 per share in the prior-year period.
Adjusted net income, for the quarter, was $83.0 million or $0.85 per share, down from $90.6 million or $0.90 per share in the comparable period last year. Eleven analysts polled by First Call/Thomson Financial expected the company to earn $0.79 per share. Analysts' estimates typically exclude special items. Adjusted net income for the recent quarter included costs of $0.11 per share related to global production initiative, while the year-ago quarter included a tax benefit of $0.04 per share.
ACS's operating income for the recent quarter were impacted by a charge of approximately $17 million from costs related to the company's global production initiative, and a benefit of approximately $13 million from costs related to the company's deferred compensation plan.
Quarterly revenues grew 7% to $1.612 billion from $1.511 billion a year ago, driven by 4% internal revenue growth. The Street anticipated revenues of $1.62 billion.
The commercial segment contributed 60% of revenues and grew 7%, with 3% internal growth, while the Government segment contributed 40% of revenues and grew 8%, excluding divestitures, with 5% internal growth.
During the quarter, new business signings totaled $202 million of annual recurring revenue with an estimated total contract value of $853 million. Trailing twelve-month new business signings were $860 million of annual recurring revenue, a 31% increase over the prior comparable period. Trailing twelve-month total contract value of new business signings was $3.4 billion, a 34% increase over the prior comparable period.
Total contract value of all signings, including new business signings, renewals and non-recurring revenue, was $2.3 billion for the recent quarter. Trailing twelve-month total contract value of all signings was $7.9 billion.
For the first half, ACS posted net income of $159.15 million or $1.62 per share, up from $147.74 million or $1.47 per share in the comparable period last year.
Adjusted net income for the first half was $170.5 million or $1.74 per share, up from $168.5 million or $1.67 per share in the same period last year.
Year-to-date, revenues advanced 7% to $3.217 billion from $3.005 billion in the prior comparable period, reflecting internal revenue growth of 4%.
"ACS has a recession resistant model that performed well again this quarter. We delivered strong performance in revenue, earnings, cash flow and bookings," said Lynn Blodgett, ACS president and chief executive officer.
"We have also undertaken several initiatives that will further increase the resiliency of our business. We are proactively managing the business to take advantage of opportunities in this market," Blodgett added.
Among other players in the filed, Computer Sciences Corp. (CSC) reported net income of $451.7 million or $2.95 per share for the second quarter, sharply higher than $75.8 million or $0.43 per share in the prior year quarter, boosted by a tax benefit. Revenues for the quarter increased 5.5% to $4.24 billion from $4.02 billion a year ago. Citing currency volatility, the company revised its outlook for the full-year 2009, while guiding fourth quarter outlook below the Street expectations.
ACS closed Thursday's trading down $0.52 or 1.15% at $44.73 on a volume of about 652 thousand shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.