Covansys posts $96.6 M Q2 revenues

By SiliconIndia   |   Friday, 25 July 2003, 07:00 Hrs
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FARMINGTON HILLS: Covansys Corporation (Nasdaq:CVNS), a provider of information technology services, reported second quarter revenue of $96.2 million up two percent compared with $94.7 million in the second quarter of 2002 and flat compared with $96.6 million in first quarter 2003.

Net income available to common shareholders was a loss of $0.02 per share in the second quarter 2003 compared with net loss to common shareholders of $0.04 per share in the first quarter of 2003 and a loss of $0.03 per share in the second quarter 2002.

Net income before the non-cash convertible redeemable preferred stock dividends in the second quarter was $510,000 versus $11,000 in the first quarter 2003 and $325,000 in second quarter 2002.

During the second quarter, Covansys announced a major organizational realignment. Martin Clague, president and chief executive officer said, "We reorganized our North American business into two segments, public sector and commercial, with commercial split into two geographic regions, East and West. We reduced the number of first and second tier executives by six; increased organizational leaders' span of control and more effectively aligned resources within the new organizational structure while further leveraging capabilities in India."

Gross profit was $23.1 million or 24.0% of revenue for the quarter ended June 30, 2003, compared with $21.7 million or 22.5% of revenue in the first quarter 2003. Despite one-time severance payments of approximately $1.0 million charged to cost of revenue and the impact of loss contracts, gross profit was up over $1.4 million as a result of cost savings realized from an increase in utilization; a higher percentage of business completed in India; and a health care related refund. Gross profit year over year was down from $25.4 million in the second quarter of 2002.

Covansys repurchased 557,200 shares of stock during the quarter, spending approximately $1.5 million in cash including the payment of commissions. The share repurchase plan authorizes future purchases of up to 2.8 million shares, the company announced.

Speaking about the outlook for the third quarter Clague said, "Although we expect continued revenue pressure, Covansys' streamlined operational structure will result in improved profitability in the second half of 2003. By focusing on our core competencies in Public Sector and Commercial, leveraging offshore delivery, and by the elimination of overlapping layers in the organizational structure, we will continue to improve profitability during the second half of 2003."

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