Computer Sciences Corporation (NYSE:CSC) Q3 2017 Earnings Conference Call - Final Transcript

Feb 02, 2017 • 05:00 pm ET

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Computer Sciences Corporation (NYSE:CSC) Q3 2017 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day and welcome to the CSC Third Quarter 2017 Earnings Conference Call.

[Operator Instructions]

At this time, I'd like to turn the conference over to Mr. Neil DeSilva. Please go ahead.

Executive
Neil DeSilva

Thanks so much. Thank you everyone, and good afternoon. I'm pleased you joined for CSC's third quarter of 2017 earnings call and webcast. Our speakers on today's call will be Mike Lawrie, our Chairman and Chief Executive Officer; and Paul Saleh, our Chief Financial Officer. As usual, the call is being webcast at csc.com/investorrelations, and we've posted some slides to our website, which will accompany our discussion today.

On the slides, on slide two, you'll see that certain comments we make on the calls will be forward looking. These statements are subject to known and unknown risks and uncertainties which could cause actual results to differ materially from those expressed on the call. A discussion of risks and uncertainties is included in our form 10-Q and other SEC filings.

Slide 3 informs our participants that CSC's presentation includes certain non-GAAP financial measures and certain further adjustments to these measures, which we believe provide useful information to our investors. In accordance with SEC rules, we provided a reconciliation of these measures to their respective and most directly comparable GAAP measures.

These reconciliations can be found in the tables included in today's earnings release, as well as in our supplemental slides. Both documents are available on the investor relations section of our website.

I would like to remind our listeners that CSC assumes no obligation to update the information presented on the call, except of course, as required by law.

And now I would like to introduce CSC's Chairman and CEO, Mike Lawrie. Mike?

Executive
J. Michael Lawrie

Okay, Neil, thank you. Welcome everyone. Thank you again for your interest in CSC. As is my usual practice, I've got five key messages here, which I'll cover in a moment. Then I'll get into a little more detail on each of those messages. And then Paul will go through in more detail and then as usual we'll open it up for Q&A.

The first key message here is our non-GAAP EPS from continuing operations in the third quarter was $0.81. Our commercial profit margin in the third quarter was up 270 basis points sequentially, and year-over-year our margin was up over 70 basis points. And this is in spite the continued investment that we are making in key growth areas, such as our next-gen BPS platform. And in the third quarter, we generated adjusted free cash flow of $299 million.

The second message is that revenue in the third quarter was up approximately 14% year-over-year constant currency, inclusive of our Xchanging and UXC acquisitions, and we achieved on the sale side a book-to-bill of 1.3 times for the quarter.

Now point three, our ongoing momentum in next-generation technologies continued in the third quarter. Our next-gen revenues were up over 60% year-over-year in constant currency, and our next-gen book-to-bill was 1.6 times.

Point four, we remain on