Larry Prior: CSRA to Watch for ‘Strategic Opportunities’ From CSC-HPE Deal, Targets $16B in FY 2017 Bids

CSRAGovernment technology services contractor CSRA (NYSE: CSRA) will observe the merger of its former parent Computer Sciences Corp. (NYSE: CSC) with Hewlett Packard Enterprise‘s (NYSE: HPE) enterprise services segment for any potential opportunities, CSRA CEO Larry Prior told investors Wednesday.

Falls Church, Virginia-based CSRA entered the market in November 2015 via the merger of the former CSC U.S. public sector business with Fairfax-based government services contractor SRA International.

CSC and HPE expect their deal to close in March 2017 and project the future combined company to generate approximately $2.86 billion in annual U.S. public sector revenue to represent 11 percent of total sales.

“As a company, we’ve got a lot of time to think about this, “ Prior said to investors in a call to discuss CSRA’s fourth quarter and fiscal year 2016 results.

“I would expect it to be business as usual for all parties, as they navigate the next nine months. I know our board is tremendously interested in it and we’ll consider it along with all of the other strategic opportunities that will avail themselves in the market over the next year.”

As covered Tuesday by GovCon Wire, a two-year non-compete agreement forbids CSC from participating in the federal government market and also has some restrictions on both CSC and CSRA regarding activity with state and local agencies.

Prior also told investors CSRA will aim to submit nearly $16 billion in new bids for its 2017 fiscal year that started April 2 compared to $10 billion as outlined in the company’s November presentation to investors in November.

Cybersecurity, cloud computing and data analytics work present potential “next-generation” information technology opportunities for CSRA as agencies increasingly seek to adopt those platforms, Prior said.

CSRA — one of 30 companies listed in Executive Mosaic’s GovCon Index — said fourth quarter earnings were 50 cents per share to exceed Wall Street forecasts by 2 cents with revenue of $1.29 billion to fall below the consensus analyst outlook of $1.31 billion.

For the full fiscal year,  earnings totaled $1.96 per share versus analyst expectations of $2.04 EPS and revenue at $5.2 billion compared to Wall Street’s outlook of $5.22 billion.

CSRA and reported financial results as pro forma to compare the prior year period as if the company existed in its current form then.

On a pro forma basis, fourth quarter revenue fell 4.41 percent as compared to the same prior year period.

As of Wednesday’s close, shares in CSRA have declined 14.53 percent since the start of the year and are down 12.76 percent since its Nov. 30, 2015 start of regular-way trading on the New York Stock Exchange at $29.39.

As of the noon report shares of CRSA have fallen to 25.26 down 1.5 per cent from the opening price.

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