CSRA Announces Third Quarter Fiscal Year 2018 Financial Results
FALLS CHURCH, Va., Feb. 7, 2018 /PRNewswire/ -- CSRA Inc. (NYSE: CSRA), a leading provider of next-generation IT solutions and professional services to government organizations, today announced financial results for the third quarter of fiscal year 2018, which ended December 29, 2017.
"CSRA is the clear leader in next-generation IT delivery for the federal government, which is increasingly looking to harness the transformational potential of the cloud," said Larry Prior, CSRA president and CEO. "Our strong third quarter results demonstrate the power of that premise. We delivered robust revenue growth with important new programs and strategic acquisitions while maintaining our industry-leading margins. Our focus on innovation with leading technology partners continues to drive strong business development success, which signals that our long-term model is solid and our foundation is strong."
Summary Operating Results (Unaudited)
(Dollars in millions,
except Three Months Ended Nine Months Ended
per share data)
December 29, December 30, December 29, December 30,
2017 2016 2017 2016
---- ---- ---- ----
Revenue $1,309 $1,222 $3,810 $3,739
Operating income $128 $104 $398 $346
Net income attributable
to CSRA $188 $126 $341 $267
common stockholders
GAAP diluted EPS $1.14 $0.76 $2.07 $1.62
Non-GAAP Measures:
Adjusted EBITDA $201 $188 $604 $586
Adjusted diluted EPS $0.56 $0.44 $1.50 $1.43
Note: All figures are unaudited; refer to Reconciliation of Non-GAAP Financial Measures at
the end of this news
release for a more detailed discussion of management's use of non-GAAP measures and for
reconciliations to
GAAP financial measures.
Revenue for the third quarter of fiscal year 2018 was $1.31 billion, up 7 percent compared to the third quarter of fiscal year 2017, the largest year-over-year increase since the Company was formed in November 2015, reflecting both organic growth and contributions from recent acquisitions. Revenue for the quarter was up 3 percent compared to the second quarter of fiscal year 2018 despite higher seasonal leave-taking, which historically dampens third quarter revenue approximately 3 percentage points.
Operating income for the third quarter of fiscal year 2018 of $128 million (9.8 percent operating margin) included $59 million of non-cash depreciation and amortization expense; $4 million of cash expense for acquisition, integration, and other costs; and $8 million of non-cash loss on the sale of the Company's corporate headquarters building (net of $2 million reimbursable portion). Adjusted EBITDA, which excludes these items, was $201 million for the third quarter, up 7 percent year-over-year. The adjusted EBITDA margin of 15.4 percent was above the Company's long-term target range 14 to 15 percent as the result of strong contract performance and disciplined cost management.
Net income attributable to CSRA shareholders for the third quarter of fiscal year 2018 was $188 million, or $1.14 per share, compared to $126 million, or $0.76 per share in the third quarter of fiscal year 2017. As a result of the "Tax Cuts and Jobs Act" of 2017, the effective tax rate for the quarter was (64.1) percent, which includes a benefit of $101 million associated with the estimated net effect of the Act on CSRA's deferred tax liabilities and assets at the end of the period. Absent that adjustment, the Company's provision for current period income taxes was recognized using a prorated statutory rate, which makes the year-to-date rate excluding that benefit equal the effective rate expected for the full fiscal year of 2018.
Adjusted diluted EPS, which excludes the one-time benefit associated with the net deferred tax liabilities; the impact of pension and other post-retirement plans; costs directly associated with acquisition, separation, and merger transactions; and the amortization from acquisition-related intangible assets, was $0.56 for the quarter, up 27% compared to $0.44 in the comparable period in fiscal year 2017. Excluding all impacts of tax reform, including the deferred tax liability adjustments and the lower statutory rate, CSRA's effective tax rate in the third quarter would have been 31.5%, and adjusted diluted EPS would have been $0.49, an increase of 11 percent year-over-year.
Cash Management and Capital Deployment
For the third quarter of fiscal year 2018, operating cash flow was $157 million, and free cash flow was $133 million, or about 1.4 times adjusted net income. The strong cash generation reflected improvements in working capital compared to the first half of the year. Days Sales Outstanding (DSO) for the quarter were 59 days. The $33 million of gross cash proceeds from the sale-leaseback transaction are not included in operating or free cash flow and do not impact DSO.
During the third quarter of fiscal year 2018, the Company returned $17 million to shareholders through its regular quarterly cash dividend program. In addition, the Company completed its acquisition of Praxis Engineering Technologies LLC ("Praxis"), a leader in providing mission applications to ensure the success of Intelligence Community customers, for approximately $235 million in cash.
On December 29, 2017, the Company entered into a Third Amendment to the Credit Agreement, which increased borrowings under the Term Loan B facility by $200 million and extended the maturity dates of the Tranche A2 facility and Revolving Credit facility by one year. The additional borrowings under the Term Loan B facility were immediately applied to repay in full the aggregate principal amount of advances outstanding under the Revolving Credit facility, which had been used to fund a portion of the acquisition consideration for NES Associates, LLC and Praxis and to pay fees and expenses incurred in connection with the Third Amendment.
At quarter end, the Company had $80 million in cash and cash equivalents and $2.7 billion in debt (excluding capital lease obligations). In December 2017, the Board of Directors declared that the Company would pay a cash dividend of $0.10 per share. Payment of the dividend was made on January 25, 2018 to CSRA stockholders of record at the close of business on January 4, 2018.
Business Development
Bookings in the third quarter totaled $1.6 billion, representing a book-to-bill ratio of 1.3x, the twelfth consecutive quarter with a book-to-bill ratio of 1.0x or higher. Bookings for the trailing twelve months totaled $8.8 billion, representing a book-to-bill ratio of 1.7x.
Included in the quarterly bookings were several particularly important single-award prime contracts:
-- Department of Veterans Affairs (VA) Enterprise Service Desk (ESD). The
VA awarded CSRA a five-year, $238 million task order to transition 12
existing national IT service desks to an ESD for enterprise-class IT
services and support. This project represents the VA's first migration
of critical services to a managed service environment, which will be
operated at CSRA's Integrated Technology Center in Bossier City, La.
-- Federal Aviation Administration (FAA) Traffic Flow Management System
(TFMS). Under a $677 million contract extending up to 12 and a half
years, CSRA will support the system operations, maintenance, and
development of the TFMS, as it has done since 1981. Under the new
contract, CSRA will incorporate the FAA's NextGen future technologies
program that provides air traffic managers the most up-to-date
situational awareness to minimize delays and increase air safety.
-- United States Citizenship and Immigration Services (USCIS) Call Center.
CSRA received a two-year, $62 million task order to provide citizenship
and immigration information to customers of the USCIS Customer
Engagement Center (CEC). This award expands CSRA's work with the CEC,
and CSRA is now the sole provider of these services to the CEC. The CEC
accepts between 12 million and 14 million phone calls and web chats
annually.
The Company's backlog of signed business orders at the end of third quarter of fiscal year 2018 was $18.2 billion, of which $2.6 billion was funded.
Forward Guidance
With three quarters of reported performance, the Company is modifying its previously announced guidance ranges for revenue, adjusted EBITDA, and adjusted diluted earnings per share for fiscal year 2018 as specified in the table below. Free cash flow guidance is unchanged. The Company elects to provide ranges for certain metrics that are not prepared and presented in accordance with GAAP because it cannot make reliable estimates of key items that would be necessary to provide guidance for its GAAP operating and cash flow measures, including pension and OPEB mark-to-market adjustments and amounts associated with any changes to its receivables purchase agreement.
Metric Fiscal Year 2018
------ ----------------
Revenue (millions) $5,150 - $5,200
----------------- ---------------
Adjusted EBITDA
(millions) $805 - $825
--------------- -----------
Adjusted Diluted Earnings
per Share $2.00 - $2.05
Free Cash Flow (millions) $330 - $380
------------------------- -----------
CSRA chief financial officer Dave Keffer commented, "With strong financial performance across the board, we are able to maintain or improve our guidance ranges for all metrics. Our ranges imply strong organic growth in our fourth quarter, and tax reform is helping to drive strong earnings growth and free cash flows."
Conference Call
CSRA executive management will hold a conference call on February 7, 2018, at 5 p.m. Eastern to discuss the financial results and outlook and answer questions. Analysts and institutional investors may participate on the conference call by dialing 877-883-0383 (domestic) or 412-902-6506 (international) and entering pass code 3778101. The conference call will be webcast simultaneously to the public through a link on the Investor Relations section of the CSRA website (https://www.csra.com/investor-relations/). A replay of the conference call will be available on the CSRA website approximately two hours after the conclusion of the call.
About CSRA Inc.
CSRA (NYSE: CSRA) solves our nation's hardest mission problems as a bridge from mission and enterprise IT to Next Gen, from government to technology partners, and from agency to agency. CSRA is tomorrow's thinking, today. For our customers, our partners, and ultimately, all the people our mission touches, CSRA is realizing the promise of technology to change the world through next-generation thinking and meaningful results. CSRA is driving towards achieving sustainable, industry-leading organic growth across federal and state/local markets through customer intimacy, rapid innovation, and outcome-based experience. CSRA has over 19,000 employees and is headquartered in Falls Church, Virginia. To learn more about CSRA, visit www.csra.com. Think Next. Now.
Forward-looking Statements
All statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements represent CSRA's intentions, plans, expectations, and beliefs, including statements about earnings, revenue, cash flow, future acquisitions, dividends, debt repayment, share repurchases and other future financial business performance and strategies. Forward-looking statements are typically identified by words such as, but not limited to, "estimates," "expects," "anticipates," "intends," "believes," "plans," and similar expressions, or future or conditional verbs such as "will," "should," "would," and "could." The forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside the control of CSRA. These factors could cause actual results to differ materially from forward-looking statements. For a written description of these factors, see the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in CSRA's most recent Annual Report on Form 10-K for fiscal year 2017 and any updating information in subsequent SEC filings. CSRA disclaims any intention or obligation to update these forward-looking statements, whether as a result of subsequent event or otherwise.
CSRA INC.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Unaudited)
As of
(Dollars in millions, shares in thousands) December 29, March 31,
2017 2017
--- ---- ----
Current assets
Cash and cash equivalents $80 $126
Receivables, net of allowance for doubtful
accounts of $26 and 945 748
$24, respectively
Prepaid expenses and other current assets 119 126
--- ---
Total current assets 1,144 1,000
----- -----
Intangible and other assets
Goodwill 2,522 2,335
Customer-related and other intangible
assets, net of accumulated 854 775
amortization of $284 and $244, respectively
Software, net of accumulated amortization of
$103 and $89, 72 81
respectively
Other assets 86 87
--- ---
Total intangible and other assets 3,534 3,278
----- -----
Property and equipment, net of accumulated
depreciation of $669 622 610
and $694, respectively
Total assets $5,300 $4,888
====== ======
Current liabilities
Accounts payable $120 $187
Accrued payroll and related costs 212 181
Accrued expenses and other current
liabilities 611 487
Current capital lease liability 50 44
Current maturities of long-term debt 86 72
Dividends payable 17 21
--- ---
Total current liabilities 1,096 992
----- ---
Long-term debt, net of current maturities 2,651 2,511
Noncurrent capital lease liability 210 172
Deferred income tax liabilities 170 272
Other long-term liabilities 522 582
Equity
Stockholders' equity:
Common stock, $0.001 par value, 750,000
shares authorized, - -
164,350 and 163,570 shares issued, and 163,827 and 163,216
shares outstanding, respectively
Additional paid-in capital 141 134
Accumulated earnings 456 165
Accumulated other comprehensive income 28 31
--- ---
Total stockholders' equity 625 330
Noncontrolling interests 26 29
--- ---
Total equity 651 359
Total liabilities and equity $5,300 $4,888
====== ======
CSRA INC.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
(Dollars in millions, except per share
amounts) December 29, December 30, December 29, December 30,
2017 2016 2017 2016
--- ---- ---- ---- ----
Total revenue $1,309 $1,222 $3,810 $3,739
Cost of services 1,063 1,000 3,064 3,023
Selling, general and administrative
expenses 56 52 156 163
Acquisition, integration, and other
costs 3 5 17 18
Depreciation and amortization 59 61 175 189
--- --- --- ---
Operating expense 1,181 1,118 3,412 3,393
----- ----- ----- -----
Operating income 128 104 398 346
Net benefit of defined benefit plans 20 137 61 186
Interest expense, net (29) (36) (88) (95)
Other expense, net (2) (1) (5) (3)
--- --- --- ---
Income from continuing operations
before taxes 117 204 366 434
Income tax (benefit) expense (75) 76 16 158
--- --- --- ---
Net income 192 128 350 276
Less: noncontrolling interests 4 2 9 9
--- --- --- ---
Net income attributable to CSRA common
stockholders $188 $126 $341 $267
==== ==== ==== ====
Earnings per common share:
Basic $1.15 $0.77 $2.08 $1.63
Diluted $1.14 $0.76 $2.07 $1.62
Common share information (weighted averages, in
thousands):
Common shares outstanding - basic 163,780 163,325 163,570 163,413
Dilutive effect of stock options and
equity awards 1,364 1,563 1,490 1,388
----- ----- ----- -----
Common shares outstanding - diluted 165,144 164,888 165,060 164,801
======= ======= ======= =======
Cash dividend per common share $0.10 $0.10 $0.30 $0.30
CSRA INC.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited
(Dollars in millions) Three Months Ended Nine Months Ended
--------------------
December 29, December 30, December 29, December 30,
2017 2016 2017 2016
---- ---- ---- ----
Cash flows from operating activities:
Net income $192 $128 $350 $276
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and
amortization 59 60 175 191
Pension settlement and
actuarial gains - (114) - (114)
Stock based compensation 3 18 11 25
Excess tax benefit from
stock based compensation - (1) (2) (3)
Deferred income taxes (101) - (102) -
Net loss on dispositions
on business and assets 10 2 10 2
Other non-cash items, net 8 - 14 1
Changes in assets and liabilities, net
of acquisitions and dispositions:
(Increase) decrease in
assets (52) 82 (91) 26
Decrease in defined
benefit plan liability (19) (21) (59) (68)
Increase in other
liabilities 59 72 7 98
Other operating
activities, net (2) 1 3 4
--- --- --- ---
Cash provided by
operating activities 157 227 316 438
--- --- --- ---
Cash flows used in investing activities:
Purchases of property and
equipment (45) (30) (94) (98)
Software purchased and
developed (2) (8) (11) (16)
Payments for
acquisitions, net of
cash acquired (234) - (335) -
Proceeds from disposals
of assets 29 (1) 36 9
Other investing
activities, net 30 12 23 (13)
--- --- --- ---
Cash used in investing
activities (222) (27) (381) (118)
---- --- ---- ----
Cash flows (used in) provided by
financing activities:
Borrowings on revolving
credit facility 165 - 220 -
Repayment of revolving
credit facility (220) - (220) (50)
Borrowings of long term
debt 200 234 384 234
Payments of long-term
debt (21) (281) (233) (379)
Debt issuance cost (2) (4) (4) (4)
Proceeds from stock
options and other stock
activity, net 1 (5) 3 2
Repurchase of common
stock - (21) (16) (29)
Dividends paid (17) (17) (50) (51)
Payments on lease
liability (10) (15) (30) (32)
Payments to
noncontrolling interest (12) (4) (12) (8)
Other financing
activities (30) 7 (23) 29
--- --- --- ---
Cash (used in) provided
by financing activities 54 (106) 19 (288)
--- ---- --- ----
Net (decrease) increase
in cash and cash
equivalents (11) 94 (46) 32
Cash and cash equivalents
at beginning of period 91 68 126 130
--- --- --- ---
Cash and cash equivalents
at end of period $80 $162 $80 $162
=== ==== === ====
CSRA INC.
Supplemental Cash Flow Information
(Unaudited)
(Dollars in
millions) Three Months Ended Nine Months Ended
-----------
December 29, December 30, December 29, December 30,
2017 2016 2017 2016
---- ---- ---- ----
Supplemental cash flow
information:
Cash paid for
income taxes $32 $14 $99 $61
Cash paid for
interest 32 25 81 79
Capital
expenditures in
accounts payable
and other
liabilities 4 1 18 10
Capital
expenditures
through capital
lease obligations 24 65 79 85
Segment Operating Results (Unaudited)
CSRA delivers IT, mission, and operations-related services across the U.S. federal government through two reportable segments-Defense and Intelligence, which supports customers in the Department of Defense (DoD) and Intelligence Community, and Civil, which supports customers in homeland security, law enforcement, healthcare, and other civil agencies as well as certain state and local government agencies. The following table summarizes revenue and segment operating income by reportable segment:
Three Months Ended Nine Months Ended
(Dollars in
millions;
unaudited) December 29, December 30, December 29, December 30,
2017 2016 2017 2016
---- ---- ---- ----
Revenue
Defense and
Intelligence $605 $556 $1,687 $1,699
Civil 704 666 2,123 2,040
Segment
operating
income(a)
Defense and
Intelligence 70 37 203 149
Civil 88 91 283 270
Notes:
(a) Excludes segment operating income (loss) for the Corporate segment as well as
acquisition, integration, and other costs.
For the three months ended December 29, 2017, Defense and Intelligence segment revenues increased by $49 million, or 9 percent, compared to revenues from the same period of the prior year. The primary drivers of the increase were the acquisitions of NES and Praxis and increased work scope on a contract to provide logistics and maintenance support for Army Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) systems, partially offset by declines in the Army Logistics Modernization Program and the U.S. Strategic Command Information Technology Capabilities Contract, which were completed in the fourth quarter of fiscal year 2017. Third quarter fiscal year 2018 Civil segment revenues increased by $38 million, or 6 percent compared to revenues from the same period of the prior year, driven by the expansion of recent program wins at several agencies, including the Federal Emergency Management Agency, Office of Personnel Management, Centers for Medicare & Medicaid Services, and Environmental Protection Agency.
Defense and Intelligence segment operating margin for the quarter increased to 11.5% from 6.7% in the third quarter of fiscal year 2017, driven in part by exceptional performance on a large fixed price program. Conversely, Civil segment operating margin decreased to 12.5% from 13.7% in the third quarter of fiscal year 2017; the decrease is primarily due to higher direct costs associated with software license fees that were partially offset by lower indirect costs related to depreciation and amortization.
Reconciliation of Non-GAAP Financial Measures
The following tables illustrate the items and means to reconcile non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. CSRA management believes that adjusted diluted EPS, adjusted EBITDA and margin, and free cash flow provide useful additional information to investors regarding the Company's financial condition and results of operations, as they provide additional measures of the Company's profitability and ability to service its debt. In addition, these measures are considered important measures by financial analysts covering CSRA, and are used in determining executive compensation.
Our non-GAAP measures may be calculated differently than similarly named measures reported by other companies. In addition, using non-GAAP measures may have limited value as they exclude certain items that may have a material impact on reported financial results and cash flows. When analyzing CSRA's performance, it is important to evaluate each adjustment in our reconciliation and use adjusted measures in addition to, and not as an alternative to, GAAP measures.
The major adjustments to GAAP to derive adjusted metrics are summarized below:
-- Plan Impacts. At the time of the Spin-off on November 27, 2015, CSRA
assumed the assets and obligations of the pension and other
post-retirement plans from CSC. The recurring net non-cash benefits
associated with these plans are excluded from all quarters. The
mark-to-market effect in the third quarter of fiscal year 2017 is
excluded in the adjusted metrics; there were no other plan
remeasurements in the current or year-ago quarterly or year-to-date
periods.
-- Acquisition, Integration, and Other Costs. Costs directly associated
with acquisitions, including integration costs and costs associated with
the separation and merger transactions, are excluded from adjusted
diluted EPS, adjusted EBITDA, and free cash flow.
-- Acquisition-related Intangible Amortization. All amortization associated
with acquisition-related intangible assets is excluded from adjusted
diluted EPS.
-- Net Deferred Tax Liabilities. On December 22, 2017, the U.S. government
enacted the "Tax Cuts and Jobs Act" of 2017. The Company is required to
evaluate its deferred tax assets and liabilities as of December 29, 2017
using the new statutory rates. The benefit of approximately $101 million
associated with the revaluation of the Company's net deferred tax
liability is excluded from adjusted income tax expense, adjusted net
income, and adjusted diluted EPS.
-- Sale-Leaseback Transaction. On November 2, 2017, CSRA closed a
sale-leaseback transaction with MCPII 3170 Fairview, LLC, pursuant to
which the Company sold its corporate headquarters property in Falls
Church, Va. and simultaneously leased back a significant portion of the
building. The gross sale price was $33 million, and the Company
recognized a loss of approximately $10 million. The proceeds from the
sale are excluded from free cash flow, and the $8 million unbillable
portion of the loss is excluded from adjusted EBITDA and adjusted
diluted EPS.
Adjusted Diluted Earnings Per Share
CSRA INC.
ADJUSTED DILUTED EARNINGS PER SHARE (unaudited)
Three Months Ended Nine Months Ended
(Dollars in millions
except per share
amounts) December 29, December 30, December 29, December 30,
2017 2016 2017 2016
--- ---- ---- ---- ----
Income before income
taxes $117 $204 $366 $434
Acquisition,
integration, and
other costs 3 5 17 18
Other separation-
related items
(within SG&A and
cost of services)(a) 9 23 8 31
Actuarial and
settlement (gains)
losses of the
defined benefit
plans ("Plans") - (114) - (114)
Net benefit of
defined benefit
plans (20) (23) (61) (72)
Amortization of
backlog associated
with SRA
acquisition(b) - 11 - 43
Other acquisition &
spin-off-related
intangible
amortization(c) 15 12 45 42
--- --- --- ---
Adjusted income
before income taxes 124 118 375 382
Adjusted income tax
expense(d) 27 44 119 138
--- --- --- ---
Adjusted net income 97 74 256 244
Less: Noncontrolling
interest 4 2 9 9
--- ---
Adjusted net income
attributable to CSRA
common stockholders $93 $72 $247 $235
=== === ==== ====
Adjusted diluted
earnings per common
share $0.56 $0.44 $1.50 $1.43
Notes: Adjusted net income attributable to CSRA
common stockholders may not equal the sum of
the component figures due to rounding.
(a) The nine
months ended
December 29,
2017 includes
approximately
$2 million of
interest
expense for
the write-
off of
deferred
financing
costs related
to the
restructuring
of the
Company's
debt facility
in the first
quarter of
fiscal year
2018. The
three and
nine months
ended
December 29,
2017 includes
approximately
$8 million of
unbilled,
non-cash
loss on the
sale of the
Company's
corporate
headquarters
building.
(b) Total value of
$65 million
amortized
over the
period
November 30,
2015 to
November 30,
2016 is
included in
Income before
income taxes.
(c) The nine
months ended
December 29,
2017 includes
$4.9 million
in
accelerated
amortization
expense
related to
software
acquired in
the spin-off
of the North
American
Public Sector
business from
Computer
Sciences
Corporation,
now known as
DXC
Technology,
("Spin-off")
that was
discontinued
for further
use in the
period.
(d) For the nine
months ended
December 29,
2017, the
adjusted
income tax
expense
utilizes an
effective
rate of
31.85%, which
reflects the
projected
rate for the
fiscal year,
absent the
revaluation
of deferred
tax assets
and
liabilities
resulting
from
enactment of
the Tax Act.
For the three
and nine
months ended
December 30,
2016, the
adjusted
income tax
utilizes the
effective tax
rate for GAAP
purposes.
Adjusted EBITDA and Margin
During the nine months ended December 29, 2017, CSRA adopted Accounting Standard Update No. 2017-07--Compensation-Retirement Benefits (Topic 715), which changes the presentation of net periodic pension and postretirement costs. Previously, operating income included net periodic benefits of CSRA's defined benefit pension and postretirement plans. Under the new presentation, operating income excludes this benefit, so it is no longer deducted to compute adjusted EBITDA. The prior periods have been revised to conform with current period presentation.
CSRA INC.
ADJUSTED EBITDA (unaudited)
Three Months Ended Nine Months Ended
(Dollars in
millions) December 29, December 30, December 29, December 30,
2017 2016 2017 2016
--- ---- ----
Operating Income $128 $104 $398 $346
Less: other expense,
net (2) (1) (5) (3)
Other separation-
related items
(within SG&A and
cost of
services)(a) 9 15 7 22
Add:
Acquisition,
integration and
other costs(b) 3 5 17 18
Depreciation and
amortization 59 61 175 189
Amortization of
contract-related
intangibles - - - 3
Stock-based
compensation 4 4 11 11
Foreign currency
loss 1 - 1 -
--- --- --- ---
Adjusted EBITDA $201 $188 $604 $586
==== ==== ==== ====
Adjusted EBITDA
Margin 15.4% 15.4% 15.9% 15.7%
==== ==== ==== ====
Notes:
(a) The fiscal
year 2017
periods
include $14
million of
stock-based
compensation
that was
associated
with the SRA
merger.
(b) Consists of
costs
directly
associated
with the
Spin-off and
the merger
with SRA
International
Inc. ("SRA"),
acquisition
and one-time
integration
costs. The
nine months
ended
December 29,
2017 includes
$4.9 million
in
accelerated
amortization
expense
related to
software
acquired in
the Spin-off
that was
discontinued
for further
use in the
period. The
nine months
ended
December 30,
2016,
includes
intangibles
amortization
expense
associated
with SRA's
funded
contract
backlog.
Free Cash Flow
CSRA defines free cash flow to be equal to the sum of (1) operating cash flows, (2) investing cash flows, excluding business acquisitions, dispositions, and investments, and (3) payments on capital leases and other long-term asset financings, as further adjusted for certain other cash flow items, such as (i) non-recurring separation-related payments and (ii) the relative fiscal quarter impact of net proceeds arising from the initial sale of billed and/or unbilled receivables under the Master Accounts Receivable Purchase Agreement ("Purchase Agreement").
CSRA INC.
FREE CASH FLOW (unaudited)
Three Months Ended Nine Months Ended
(Amounts in millions) December 29, December 30, December 29, December 30,
2017 2016 2017 2016
--- ---- ---- ---- ----
Net cash provided by
operating activities $157 $227 $316 $438
Net cash used in
investing activities (222) (27) (381) (118)
Acquisitions, net of
cash acquired 234 - 335 -
Disposition of
Corporate
Headquarters(a) (31) - (31) -
Payments on capital
lease liabilities (10) (15) (30) (32)
Separation and merger-
related payments 5 6 14 24
Initial sales of
qualifying accounts
receivables(b) - - - (46)
--- --- --- ---
Free cash flow $133 $191 $223 $266
==== ==== ==== ====
Notes:
(a) The net
proceeds
from the
sale of the
corporate
headquarters
in the
quarter
ended
December 29,
2017 is
treated as a
non-
operating
asset
disposition
and excluded
from free
cash flow.
(b) Adjustments
for the
relative
impact of
the net
proceeds
arising from
the initial
sale of
billed and/
or unbilled
receivables
under the
Purchase
Agreement as
well as the
effect of
any new
types of
sales
arising from
changes in
the Purchase
Agreement.
For the nine
months ended
December 30,
2016, the
amount
relates to
SRA unbilled
receivables
under the
Purchase
Agreement to
which SRA
was added to
during the
period.
View original content with multimedia:http://www.prnewswire.com/news-releases/csra-announces-third-quarter-fiscal-year-2018-financial-results-300595276.html
SOURCE CSRA Inc.
