CSC’s Q3 results reveal that the turnaround instigated by CSC President and CEO Mike Lawrie is, in his words, ‘tracking to plan’. Cost cutting initiatives and better contract management have helped all three lines of business improve profit margins, albeit on slightly lower revenue figures at two of them. As a result, Lawrie was confident enough to raise the target EPS from continuing operations for FY13 again to $2.50-$2.70. If you recall, it was only in November that the he raised the EPS target to $2.30-$2.50 from a consensus of $2.24 (see Signs of progress at CSC).
Total revenues in Q3 were $3.78bn, up 2.8% in constant currency from $3.69bn a year ago. Pre-tax income from continuing operations was $155m, compared to a loss the previous year resulting from the $1.5bn NHS charge. Operating margins are now 7.1%, or 7.7% excluding restructuring costs. In other words, the figures suggest that Lawrie’s plan is working (see CSC: turning around under Lawrie) and CSC is finally moving in the right direction. Shareholders will be extremely happy – CSC’s share price is currently trading nearly 11% higher at $46; that’s almost 110% higher than the 52-week low set last summer.