In the three months to December 31, 2002, the Dallas, Texas-based company increased net profit by 33% to $74m, on revenue that grew 23.8% to $929.2m. ACS improved its operating profit margin to 13.4% from 12.9% in the year-ago quarter. In the half year, ACS net profit rose 44% to $143.5m on revenue that increased 30% to $1.83bn.
ACS’s new business bookings in the second quarter represented $242m in annualized revenues, compared to $122m in the year-ago quarter. Chief executive Jeff Rich said he is confident that the economic climate will encourage more clients to outsource their IT and back-office processes, and further expand ACS’s business pipeline that already stands in excess of $1bn.
During the period, ACS was awarded its largest ever contract to date – a $600m deal to run the State of Texas’s Medicaid and health network programs for the next six years. It expects the contract to be signed before the end of March. ACS also secured new contracts with Motorola and Ingram Micro during the first half of its financial year, a period that Rich described as fantastic.
The company’s growth in new bookings came despite it pulling out of a race to win a possible $8bn mega-outsourcing deal with manufacturing giant Proctor and Gamble in September 2002. ACS said at the time that the financial, operational and cultural risks were too high.
Big outsourcing firms have come under increased scrutiny from the investment community after sector bellwether EDS Corp announced plans to improve its cash position last year to help it cover the huge cost of pitching for and taking over clients’ IT departments as part of major deals. ACS was keen to talk up its cash position this week, and said it generated approximately $147m of operating cash flow and $99m of free cash flow during the second quarter.
ACS’s growth in its latest quarter was undoubtedly helped by its recent M&A activity, which saw it acquire processing services provider AFSA Data Corp for $410m last May. ACS is not short of funds to fuel further growth. Last September, ACS secured a $875m credit facility with some of its major backers, which gave it an additional $175m facility for future expansion.
Source: Computerwire
