FALLS CHURCH, Va., Aug 07, 2014 (BUSINESS WIRE) -- today reported results for the first quarter of fiscal year 2015.
“First quarter results were consistent with our expectations for the start to fiscal 2015,” said Mike Lawrie , president and CEO. “Our North American Public Sector (NPS) business performed well with sequential revenue improvement and a higher operating margin as we continue to position that business for the uncertain federal spending environment. In our commercial business, we continue to make investments in next generation offerings, strategic partnerships, and sales capacity as we focus on returning that business to growth. We are particularly pleased with the growth we are seeing in our cloud, cyber, and big data businesses.”
Diluted EPS from continuing operations was $1.03 for the first quarter of fiscal 2015.
Total revenue for the quarter was $3.24 billion, down 1% year-over-year as reported and down 2% year-over-year in constant currency compared with $3.25 billion in the year ago period.
Income from continuing operations of $159 million for the quarter compares with $161 million in the year-ago period.
Operating income was $304 million for the quarter, which compares with operating income of $332 million in the prior period. The company’s operating margin of 9.4 percent for the quarter compares with 10.2 percent for the first quarter of fiscal year 2014. The year-on-year change is primarily due to incremental investments in next-generation offerings, sales coverage, and strategic partnerships, as well as the restructuring of a few contracts.
Earnings before interest and taxes (EBIT) were $248 million in the quarter, compared with $269 million in the prior year. EBIT margin of 7.7 percent for the quarter compares with 8.3 percent in the prior year, reflecting the investments and restructurings discussed above.
Operating cash flow of $273 million in the quarter compares with $213 million in the prior year.
Free cash flow of $70 million for the first quarter was an improvement of $79 million when compared with an outflow of $9 million in the year-ago period, and reflects better working capital management.
Ending cash and cash equivalents were $2.4 billion, up from $1.9 billion at the end of the first quarter of fiscal 2014.
Global Business Services (GBS)
GBS revenue was $1.09 billion in the quarter, a 3 percent increase as reported and a 1 percent increase in constant currency when compared with the year ago quarter. Growth in industry software and solutions offset declines in the company’s consulting business, which is being repositioned to focus on higher-value, next-generation technology services. Applications revenue was up slightly year-on-year on a GAAP basis and down slightly year-on-year in constant currency. Operating margin of 9.9 percent compares with 10.7 percent in the year-ago period, reflecting higher investments in new offerings, sales coverage, and partnerships, as well as some higher project costs. Contract awards for GBS were $1.2 billion during the quarter.
Global Infrastructure Services (GIS)
GIS revenue was $1.13 billion in the quarter, a 1 percent decrease as reported and a 3 percent decrease in constant currency from the prior year due to price-downs, contract conclusions, and restructured contracts. An operating margin of 6.3 percent compares with 8.0 percent in the year-ago period, reflecting the impact of price-downs and restructured contracts, along with continued investments in next-generation offerings, sales coverage, and strategic partnerships. Contract awards for GIS were $1.2 billion in the quarter.
North American Public Sector (NPS)
NPS revenue was $1.02 billion in the quarter, a decline of 3 percent compared to first quarter of fiscal 2014, reflecting continued uncertainty in the budget environment at the Department of Defense and other Federal government agencies. The NPS operating margin of 14.8 percent compares with 12.1 percent in the prior year, driven by continued strong cost take-out and favorable contract performance. Contract awards for NPS were $300 million in the quarter.
Returning Cash to Shareholders
During the first quarter, CSC returned $177 million to shareholders, consisting of $29 million in common stock dividends and $148 million of share repurchases. CSC repurchased 2.4 million shares at an average price of $62.28 per share during the quarter. CSC had 145,411,589 basic shares outstanding on July 4, 2014.
Further analysis will follow in a separate posting.