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CSRA Q3 Earnings & Revenues Top Estimates, Updates '18 View
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CSRA Inc. delivered non-GAAP earnings of 56 cents per share in third-quarter fiscal 2018, surpassing the Zacks Consensus Estimate of 47 cents and improved 16.7% on a year-over-year basis.
Revenues of $1.31 billion increased 7% from the year-ago quarter and beat the Zacks Consensus Estimate of $1.26 billion. The increase marked the biggest year-over-year growth since the company was formed in 2015.
Segment-wise, Defense and Intelligence (46.2% of revenues) increased 8.8% to $605 million, primarily owing to acquisitions of NES and Praxis and contract wins. Civil (53.8% of revenues) increased 5.8% to $704 million, aided by expansion of recent program wins at several agencies.
CSRA is benefiting from its domain expertise and strong partnerships with the likes of Amazon Web Services, ServiceNow Inc. (NOW - Free Report) , Microsoft Corporation (MSFT - Free Report) and Red Hat among others.
The company’s strategic acquisitions like NES and Praxis have been a significant revenue generators.
The company stated that new business wins in the quarter amounted to about $0.5 billion or more than $1 billion including the protested wins. The key new business win during the quarter came in at $238 million of enterprise service desk for the Department of Veterans Affairs.
During the quarter, CSRA unveiled milCloud 2.0 at the AFCEA West conference in San Diego.
Shares of the company went up around 2.8%, yesterday. Notably, CSRA’s stock has gained 5.1% year to date, versus the 1.4% decline of the industry.
Program Wins Drive Bookings
Bookings totaled $1.6 billion in the reported quarter, representing a book-to-bill ratio of 1.3 times. Apart from the DoD Enterprise IT support program, the company had other noticeable wins in the quarter.
The Department of Veterans Affairs (“VA”) awarded CSRA a five-year $1238-million task order to shift 12 existing national IT service desks to an Enterprise Service Desk (“ESD”) at CSRA's Integrated Technology Center in Bossier City, LA.
CSRA also won a contract from Federal Aviation Administration (“FAA”). Per the $677 contract for a period up to 12 and a half years, the company will support the system operations, maintenance, and development of the Traffic Flow Management System (“TFMS”). CSRA will be integrating FAA’s NextGen technologies program to decrease delays and boost air safety.
CSRA also won a two-year $62-million task order to support United States Citizenship and Immigration Services (“USCIS”) Call Center. The company is providing citizenship and immigration information to customers of the USCIS Customer Engagement Center (“CEC”).
During the quarter, Environmental Protection Agency (“EPA”) awarded Scientific and Technical Support (“STS”) contract to CSRA, which holds a potential value of $24.5 million over a period of five years.
CSRA’s backlog of signed business orders was $18.2 billion, up 2.8% sequentially. Funded backlog was $2.6 billion.
EBITDA Margin Declines in Q3
Adjusted EBITDA was $201 million, up 6.9% from the year-ago quarter. EBITDA margin of 15.4% was flat from the year-ago quarter. Management noted that the EBITDA margin surpassed the company’s long-term target of 14-15%, aided by strong contract performance and stringent cost control measures.
Contract mix moved away from cost-plus contracts, aided by the NES business and the FEMA call center support contract. Management noted that 47% was on fixed price contracts, 27% on time and material contracts, and 27% on cost plus contracts.
Selling, general and administrative (SG&A) expenses, as percentage of revenues, were almost flat on a year-over-year basis to 4.3%.
Segment operating margin expanded 160 basis points (bps) on a year-over-year basis to 12.1%. Defense and Intelligence segment operating margin increased 480 bps, while Civil segment operating margin declined 120 bps in the reported quarter.
Cash, Share Buyback, Dividend
Cash & cash equivalents as of Dec 29 was $80 million, down $91 million from the previous quarter. Long-term debt came in at $2.65 billion.
During the quarter, CSRA returned $17 million to shareholders through its dividends program.
Acquisition
During the quarter, the company completed its previously announced acquisition of Praxis Engineering Technologies LLC ("Praxis") for approximately $235 million in cash.
Updates Fiscal 2018 Guidance
At the end of the quarter, the company had $12 billion in submits outstanding, including about $8 billion in new work pending decision.
For fiscal 2018, revenues are now expected in the range of $5.15-$5.2 billion (previous guidance$5-$5.2 billion). The Zacks Consensus Estimate is pegged at $5.16 billion. Adjusted EBITDA projection is now expected at the $805-$825 million band (previously $770-$800 million band).
Adjusted earnings are now estimated in the range of $2.00-2.05 per share (previously $1.88-2.00 per share). The Zacks Consensus Estimates is pegged at $1.99 per share. Free cash flow is anticipated in the range of $330-$380 million.
Long-term expected EPS growth rate of Facebook is 26.5%.
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CSRA Q3 Earnings & Revenues Top Estimates, Updates '18 View
CSRA Inc. delivered non-GAAP earnings of 56 cents per share in third-quarter fiscal 2018, surpassing the Zacks Consensus Estimate of 47 cents and improved 16.7% on a year-over-year basis.
Revenues of $1.31 billion increased 7% from the year-ago quarter and beat the Zacks Consensus Estimate of $1.26 billion. The increase marked the biggest year-over-year growth since the company was formed in 2015.
Segment-wise, Defense and Intelligence (46.2% of revenues) increased 8.8% to $605 million, primarily owing to acquisitions of NES and Praxis and contract wins. Civil (53.8% of revenues) increased 5.8% to $704 million, aided by expansion of recent program wins at several agencies.
CSRA is benefiting from its domain expertise and strong partnerships with the likes of Amazon Web Services, ServiceNow Inc. (NOW - Free Report) , Microsoft Corporation (MSFT - Free Report) and Red Hat among others.
The company’s strategic acquisitions like NES and Praxis have been a significant revenue generators.
The company stated that new business wins in the quarter amounted to about $0.5 billion or more than $1 billion including the protested wins. The key new business win during the quarter came in at $238 million of enterprise service desk for the Department of Veterans Affairs.
During the quarter, CSRA unveiled milCloud 2.0 at the AFCEA West conference in San Diego.
Shares of the company went up around 2.8%, yesterday. Notably, CSRA’s stock has gained 5.1% year to date, versus the 1.4% decline of the industry.
Program Wins Drive Bookings
Bookings totaled $1.6 billion in the reported quarter, representing a book-to-bill ratio of 1.3 times. Apart from the DoD Enterprise IT support program, the company had other noticeable wins in the quarter.
The Department of Veterans Affairs (“VA”) awarded CSRA a five-year $1238-million task order to shift 12 existing national IT service desks to an Enterprise Service Desk (“ESD”) at CSRA's Integrated Technology Center in Bossier City, LA.
CSRA also won a contract from Federal Aviation Administration (“FAA”). Per the $677 contract for a period up to 12 and a half years, the company will support the system operations, maintenance, and development of the Traffic Flow Management System (“TFMS”). CSRA will be integrating FAA’s NextGen technologies program to decrease delays and boost air safety.
CSRA also won a two-year $62-million task order to support United States Citizenship and Immigration Services (“USCIS”) Call Center. The company is providing citizenship and immigration information to customers of the USCIS Customer Engagement Center (“CEC”).
During the quarter, Environmental Protection Agency (“EPA”) awarded Scientific and Technical Support (“STS”) contract to CSRA, which holds a potential value of $24.5 million over a period of five years.
CSRA’s backlog of signed business orders was $18.2 billion, up 2.8% sequentially. Funded backlog was $2.6 billion.
EBITDA Margin Declines in Q3
Adjusted EBITDA was $201 million, up 6.9% from the year-ago quarter. EBITDA margin of 15.4% was flat from the year-ago quarter. Management noted that the EBITDA margin surpassed the company’s long-term target of 14-15%, aided by strong contract performance and stringent cost control measures.
Contract mix moved away from cost-plus contracts, aided by the NES business and the FEMA call center support contract. Management noted that 47% was on fixed price contracts, 27% on time and material contracts, and 27% on cost plus contracts.
Selling, general and administrative (SG&A) expenses, as percentage of revenues, were almost flat on a year-over-year basis to 4.3%.
Segment operating margin expanded 160 basis points (bps) on a year-over-year basis to 12.1%. Defense and Intelligence segment operating margin increased 480 bps, while Civil segment operating margin declined 120 bps in the reported quarter.
Cash, Share Buyback, Dividend
Cash & cash equivalents as of Dec 29 was $80 million, down $91 million from the previous quarter. Long-term debt came in at $2.65 billion.
During the quarter, CSRA returned $17 million to shareholders through its dividends program.
Acquisition
During the quarter, the company completed its previously announced acquisition of Praxis Engineering Technologies LLC ("Praxis") for approximately $235 million in cash.
Updates Fiscal 2018 Guidance
At the end of the quarter, the company had $12 billion in submits outstanding, including about $8 billion in new work pending decision.
For fiscal 2018, revenues are now expected in the range of $5.15-$5.2 billion (previous guidance$5-$5.2 billion). The Zacks Consensus Estimate is pegged at $5.16 billion. Adjusted EBITDA projection is now expected at the $805-$825 million band (previously $770-$800 million band).
Adjusted earnings are now estimated in the range of $2.00-2.05 per share (previously $1.88-2.00 per share). The Zacks Consensus Estimates is pegged at $1.99 per share. Free cash flow is anticipated in the range of $330-$380 million.
Zacks Rank
CSRA carries a Zacks Rank #3 (Hold).
A better-ranked stock in the technology sector worth considering is Facebook, Inc. , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term expected EPS growth rate of Facebook is 26.5%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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