Outsourcing firm Affiliated Computer Services Inc., despite the loss of business from a major banking client, last week reported an 18% rise in earnings for its latest quarter.
Dallas-based Affiliated Computer said net income for its second quarter of fiscal 1996 was $5.1 million, or 37 cents per share, up from $4.3 million, or 32 cents per share, in the year-earlier period.
Wall Street analysts had expected the company to earn 36 cents per share for the quarter, according to a consensus estimate published by First Call Corp.
Revenues for the three-month period grew by 26%, to $91.4 million, from the corresponding quarter in 1994.
The healthy top- and bottom-line growth came about even though Affiliated Computer previously announced termination of an data processing contract with the Texas subsidiary of BankAmerica Corp., a client that at one time was one of the firm's biggest revenue sources.
Mark King, Affiliated Computer's chief financial officer, said in a conference call with analysts that the BankAmerica Texas contract contributed $9.3 million in revenue in the second quarter of fiscal 1995 and $4.6 million in three months ended Sept. 30, 1995.
"Excluding BankAmerica, total revenues grew by over 44%" in the latest quarter compared with the year-earlier period, he noted.
Slightly less than one-third of that revenue growth was internally generated, with the rest coming from acquisitions, Mr. King said. The company also cut costs and has expanded its revenues sources in order to maintain its double-digit earnings growth, he added.
Affiliated Computer chairman and chief executive officer Dawin Deason said he expects to maintain the company momentum into 1996, mainly through acquisitions.
"Our acquisition pipeline remains very favorable," Mr. Deason told analysts Thursday. "We strongly believe we meet our goal of 20% (revenue growth) with half or more of that growth coming from acquisitions."
In terms of internally generated sales growth, Affiliated Computer's outlook "is as good as its ever been, particularly with outsourcing opportunities," Mr. Deason said.
He added that the company's electronic funds transfer business is experiencing robust growth. Affiliated Computer now manages a network of over 4,600 automated teller machines, a 50% increase over the last six months. It is now the second-largest nonbank deployer of ATMs, behind Electronic Data Systems Corp.
Much of Affiliated Computer's ATM growth has come from its recent introduction of a low-cost cash machine that be installed in a variety of retail locations, Mr. Deason said.