Financial Performance - Revenues for the three months ended May 3, 2024, were $1,847 million, a decrease of 8.9% compared to $2,028 million for the same period in 2023[9]. - Net income for the same period was $77 million, down 21.4% from $98 million in the prior year[9]. - Basic earnings per share decreased to $1.49 from $1.80, reflecting a decline of 17.2% year-over-year[9]. - The company reported a comprehensive income of $80 million for the three months ended May 3, 2024, compared to $92 million in the prior year[11]. - Operating income for the same period decreased by $26 million (17%) to $131 million, with an operating margin of 7.1% compared to 7.7% in the prior year[118]. - EBITDA for the three months ended May 3, 2024, was $167 million, down from $194 million, with EBITDA as a percentage of revenues decreasing to 9.0% from 9.6%[134][135]. - Adjusted EBITDA also decreased to $166 million, with adjusted EBITDA as a percentage of revenues at 9.0%, down from 9.3% in the prior year[134][135]. Revenue Sources - The Department of Defense contributed $976 million to total revenues for the three months ended May 3, 2024, down from $1,071 million in the prior year[54]. - The Defense and Intelligence segment generated revenues of $1,436 million, while the Civilian segment contributed $411 million for the same period[91]. - Revenues for the three months ended May 3, 2024, decreased by $181 million (9%) to $1,847 million compared to $2,028 million in the same period last year, primarily due to the sale of the Supply Chain Business[118]. - Revenues for the three months ended May 3, 2024, decreased by $20 million to $411 million, a 5% decline compared to $431 million in the same period last year[127]. Cash Flow and Assets - Cash and cash equivalents decreased to $49 million from $94 million at the end of the previous quarter[15]. - Net cash provided by operating activities increased to $98 million from $82 million in the same period last year[21]. - Cash flows provided by operating activities increased by $16 million (20%) to $98 million, driven by higher cash from the Master Accounts Receivable Purchase Agreement[123]. - Cash used in investing activities was $7 million, a significant decrease from cash provided of $336 million in the prior year, primarily due to the sale of the Supply Chain Business[149]. - Cash used in financing activities increased to $136 million, attributed to higher principal payments and share repurchases[150]. Business Operations and Strategy - The company completed a business reorganization effective February 3, 2024, transitioning to five customer-facing business groups[24]. - The Innovation Factory supports the company’s segments by developing enterprise-class solutions, focusing on AI, application development, and cloud services[27]. - The company anticipates that spending packages related to digital modernization and climate resiliency may provide additional growth opportunities[110]. - The company executed a definitive agreement to sell its logistics and supply chain management business for $350 million, with a refundable cash deposit of $355 million received[63][65]. Shareholder Actions - The company paid cash dividends of $0.37 per share, totaling $20 million during the quarter[21]. - A quarterly dividend of $0.37 per share was declared during the three months ended May 3, 2024[49]. - The Company has repurchased approximately 20.9 million shares under its repurchase plan as of May 3, 2024[48]. - The company repurchased a total of 612,428 shares of common stock during the three months ended May 3, 2024, at an average price of $131.77 per share[161]. - The company may repurchase shares on the open market based on various factors including market conditions and internal cash generation[160]. Tax and Compliance - The company's effective income tax rate decreased to 19.0% for the three months ended May 3, 2024, from 20.0% in the same period in 2023, primarily due to higher tax benefits[73]. - The effective income tax rate for the three months ended May 3, 2024, was 19.0%, down from 20.0% in the same period last year, primarily due to higher tax benefits from foreign-derived intangible income[120]. - The Company plans to adopt new accounting standards related to income tax disclosures and segment reporting in fiscal years 2026 and 2025, respectively[43][44]. Future Outlook - As of May 3, 2024, the company had approximately $5.4 billion in remaining performance obligations, with an expectation to recognize revenue on approximately 81% over the next 12 months[60]. - The U.S. government budget for fiscal year 2025 includes a 1% growth for both defense and non-defense budgets, which may impact future revenue opportunities[108]. - The company expects to fund ongoing working capital and commitments with cash on hand and future operating cash flows, supported by a $1.0 billion Revolving Credit Facility[144]. Risk and Compliance - The company is routinely subject to investigations and reviews related to compliance with various laws and regulations, as detailed in the fiscal 2024 Annual Report[158]. - No material changes were reported in risk factors compared to the most recent Annual Report on Form 10-K[159]. - Management evaluated the effectiveness of disclosure controls and procedures, concluding they were operating effectively as of May 3, 2024[154]. - There were no changes in internal control over financial reporting that materially affected the company during the quarterly period[155].

Financial Data and Key Metrics Changes - The company reported revenue of $1.85 billion, reflecting pro-forma organic growth of approximately 40 basis points, offset by a 5% headwind from recompete losses [59][67] - Adjusted EBITDA was $166 million, resulting in an adjusted EBITDA margin of 9%, impacted by increased investments and timing of program performance milestones [60][105] - Transaction adjusted free cash flow was $21 million, ahead of plan, despite a $50 million year-over-year headwind due to the sale of the supply chain business and higher cash bonuses [81][110] Business Line Data and Key Metrics Changes - The Civilian business is expected to improve margins over the long term, with a focus on expanding presence in that market [16][66] - The Defense and Intelligence segment saw a decline in margins compared to the previous year, attributed to the timing of EACs and increased investments [15][149] - The company has a backlog of $24 billion, with a focus on delivering additional volume through large ceiling programs [25] Market Data and Key Metrics Changes - The company is seeing a normalization in government outlay trends, which has impacted revenue expectations for the second quarter [108][172] - There is an expectation for mid-single-digit revenue growth in the second half of FY '25, with stronger growth anticipated in Q4 as recompete headwinds ease [83][130] Company Strategy and Development Direction - The company is focusing on a multi-year growth strategy centered around five national imperatives and four key growth vectors, including Integrated Solutions and Civilian [74][75] - Investment will be prioritized in six portfolio differentiators, such as Secure Multi-Cloud and Operational AI, to enhance competitive positioning [75][76] - The company aims to shift its pipeline and portfolio to align with market areas that value differentiation, expecting a favorable shift in margin profiles [86] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the spending environment, signaling a potential impact on revenue profiles but not viewing it as a long-term trend [155][176] - The company is optimistic about the end-of-year spending cycle, with expectations for increased activity across various government sectors [157] - There is confidence in the strategy to strengthen competitiveness and drive consistent growth, despite near-term challenges [87][110] Other Important Information - The company repurchased $81 million of shares in the quarter, with plans to target the higher end of a $350 million to $400 million share repurchase program for the year [110] - The company is implementing an enterprise operating model to optimize program execution and enhance business development efforts [61][66] Q&A Session Summary Question: Update on Vanguard recompete and other recompete timelines - Management indicated minimal impact from Vanguard recompete this year, with expectations for timing to remain unchanged [89][90] Question: Opportunities in Europe - Management noted ongoing conversations about strategy refresh and potential opportunities in Europe, emphasizing customer-driven capabilities [98][99] Question: Expected growth dynamics in the second half - Management confirmed expectations for mid-single-digit growth in the second half, with a focus on overcoming recompete losses and driving on-contract growth [130][134] Question: Profitability profile of Defense and Intelligence segments - Management acknowledged a decline in margins for Defense and Intelligence but expects improvements in EBITDA and EBIT margins over time [149][150]

Core Viewpoint - SAIC reported quarterly earnings of $1.92 per share, slightly missing the Zacks Consensus Estimate of $1.93 per share, and down from $2.14 per share a year ago, indicating a -0.52% earnings surprise [1] Financial Performance - The company posted revenues of $1.85 billion for the quarter ended April 2024, surpassing the Zacks Consensus Estimate by 0.21%, but down from $2.03 billion year-over-year [2] - Over the last four quarters, SAIC has surpassed consensus EPS estimates two times and topped consensus revenue estimates four times [2] Stock Performance - SAIC shares have increased by approximately 8.3% since the beginning of the year, compared to the S&P 500's gain of 10.6% [3] Future Outlook - The company's earnings outlook will be crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $2 on $1.82 billion in revenues, and for the current fiscal year, it is $8.11 on $7.45 billion in revenues [7] Industry Context - The Computers - IT Services industry, to which SAIC belongs, is currently ranked in the bottom 43% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Performance - Revenues for Q1 FY2025 were $1.85 billion, a decrease of 9% compared to $2.03 billion in Q1 FY2024, primarily due to the divestiture of the Supply Chain Business[5] - Net income for the quarter was $77 million, down 21% from $98 million in the prior year[4] - Adjusted EBITDA was $166 million, representing 9.0% of revenues, a decrease from 9.3% in the same period last year[7] - Diluted earnings per share were $1.48, down 17% from $1.79 in the prior year, while adjusted diluted EPS was $1.92, down 10% from $2.14[7] - Revenues for the quarter decreased by $181 million or 8.9% year-over-year, from $2,028 million in Q1 2023 to $1,847 million in Q1 2024[31] - Operating income fell to $131 million, a decrease of $26 million or 16.6% compared to $157 million in the same quarter last year[31] - Net income for the quarter was $77 million, down from $98 million in the prior year, representing a decline of 21.4%[31] - Revenues for the three months ended May 3, 2024, were $1,847 million, a decrease of 8.9% from $2,028 million in the same period of 2023[45] - Net income for the same period was $77 million, down from $98 million, reflecting a decline of 21.4%[45] - Adjusted EBITDA was $166 million, representing 9.0% of revenues, compared to $189 million or 9.3% of revenues in the prior year[45] - Free cash flow for the three months ended May 3, 2024, was $13 million, significantly lower than $76 million in the same period of 2023[54] - Total revenue for fiscal 2024 was $7,704 million, a 3.5% increase from $7,444 million in fiscal 2023[60] - Operating income for fiscal 2024 was $741 million, up 47.9% from $501 million in fiscal 2023[60] - The total operating income margin for fiscal 2024 was 10.0%, compared to 6.5% in fiscal 2023[60] - The total non-GAAP operating income for fiscal 2024 was $634 million, with a margin of 8.5%[63] Backlog and Bookings - Net bookings for the quarter were approximately $2.6 billion, resulting in a book-to-bill ratio of 1.4[11] - The estimated backlog at the end of the quarter was approximately $23.6 billion, with $3.5 billion funded[11] - Total backlog increased to $23,564 million as of May 3, 2024, compared to $22,763 million on February 2, 2024, reflecting growth in both funded and unfunded backlog[42] - Funded backlog for Defense and Intelligence was $2,629 million, while Civilian funded backlog was $839 million, totaling $3,468 million[42] Segment Performance - The Defense and Intelligence segment reported revenues of $1,436 million, a decrease of $161 million or 10% year-over-year, while Civilian segment revenues decreased by $20 million or 5%[37][38] - The Defense and Intelligence segment generated an adjusted operating income of $107 million, while the Civilian segment contributed $34 million[48] - Defense and Intelligence segment revenue for the twelve months ended February 2, 2024, was $5,817 million, slightly down from $5,876 million in the previous year[60] - Civilian segment revenue decreased to $1,627 million in fiscal 2024 from $1,828 million in fiscal 2023, representing an 11% decline[60] Capital Management - SAIC deployed $107 million in capital during the quarter, including $81 million for share repurchases and $20 million in cash dividends[9] - Cash and cash equivalents decreased from $94 million to $49 million during the quarter[33] - Principal payments on borrowings increased significantly to $310 million from $160 million in the prior year[35] - The company provided FY25 guidance for net cash provided by operating activities between $520 million and $540 million[54] - The company expects approximately $30 million in expenditures for property, plant, and equipment in FY25[54] Strategic Initiatives - The company launched a multi-year growth strategy aimed at enhancing its portfolio and market approach[19] - Notable new contracts included a $444 million award from the U.S. Space Force for digital transformation support[12] - The company completed a business reorganization effective February 3, 2024, transitioning to five customer-facing business groups[57] - The acquisition and integration costs for the three months ended May 3, 2024, were $2 million, while restructuring and impairment costs were $2 million[48] - The company anticipates continued revenue growth in the upcoming quarters, adjusting for the impact of divestitures[38]

The market expects SAIC (SAIC) to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended April 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on June ...

Science Applications International Corporation (SAIC) has secured a contract worth $232 million from the U.S. Air Force's 774th Enterprise Sourcing Squadron. Under this contract, SAIC is set to develop signals intelligence and electronic warfare systems for the U.S. Army. This new task order for SAIC was carried out through a multiple-award contract vehicle, which is managed by the Department of Defense Information Analysis Center (DoD IAC). The DoD IAC assists the Department of Defense and federal governme ...

Smederevac Science Applications International Corporation (NASDAQ:SAIC) acquired companies with capabilities in digital transformation and artificial intelligence know-how. Also, with recent contracts in the cybersecurity market, I believe that SAIC could receive significant business growth from growing industries. Given the total backlog of approximately $22.8 billion, noted in the most recent quarter, and agreements with the United States government, SAIC will most likely deliver net sales growth. The ...

Revenue Sources - 98% of total revenues in fiscal 2024 were derived from prime contracts with the U.S. government or subcontracts related to U.S. government work[32] - The U.S. Army contributed 17% to total revenues in fiscal 2024, while the U.S. Navy and Air Force contributed 13% and 12%, respectively[33] - The company generated 98% of its revenues from contracts with the U.S. government in fiscal 2024[165] - Revenues derived from fixed-price contracts represented approximately 19% of total revenues for fiscal 2024, highlighting the company's reliance on various contract types[84] - Total revenues for fiscal 2024 were $7,444 million, compared to $7,704 million in fiscal 2023[189] Financial Performance - Operating income increased by 48% to $741 million, representing 10.0% of revenues, compared to 6.5% in fiscal 2023[180] - Net income attributable to common stockholders rose by 59% to $477 million, compared to $300 million in fiscal 2023[180] - Adjusted EBITDA as a percentage of revenues increased to 9.0% for fiscal 2024, compared to 8.8% for fiscal 2023[192] - Cash flows from operating activities decreased by 26% to $396 million, down from $532 million in fiscal 2023[180] - Cash used in financing activities rose to $725 million in fiscal 2024, reflecting higher principal payments and share repurchases[216] Employee and Diversity Metrics - The company employed approximately 24,000 individuals as of February 2, 2024, with a gender representation of 73% male and 27% female[53] - The gender pay equity ratio was approximately 99% for the compensation of women relative to men as of October 1, 2023[54] - In fiscal 2024, the company achieved a 28% representation of women in leadership roles, maintaining parity from fiscal 2023[55] - The company made progress in increasing the representation of people of color in leadership roles by 2% to 25% in fiscal 2024[55] - The annual employee culture survey showed significant improvement in sustainable engagement, with scores above national benchmarks[62] Operational Challenges and Risks - The company faces intense competition from established multinational companies and smaller specialized firms in the government services industry[45] - The U.S. government can cancel contracts at any time, but most contracts allow recovery of incurred costs and profits upon termination[35] - The company faces risks related to U.S. government budgetary changes, which could adversely affect future revenues and cash flows[78] - Increased scrutiny from government audits may restrict the company's ability to bid on new contracts and could result in significant customer refunds[90] - The company faces risks from potential government investigations that could lead to civil or criminal penalties, affecting profitability and reputation[92] Strategic Initiatives - The company completed a business reorganization effective February 3, 2024, transitioning from two operating sectors to five customer-facing business groups[164] - The company aims for a 20% reduction in Scopes 1 and 2 greenhouse gas emissions by 2030, having already achieved its previous reduction targets for 2025[72] - The company’s Innovation Factory develops enterprise-class solutions to accelerate digital transformation for customers[172] - The company may pursue strategic acquisitions, but these could involve risks that adversely affect operations and financial results[102] Community Engagement and Support - Employee volunteer hours increased by 10%, totaling over 29,000 hours contributed to community service[63] - The SAIC Foundation awarded over $58,000 in grants to support employees facing financial hardships in calendar year 2023[64] Contractual and Financial Obligations - Total contractual obligations amount to $2,928 million, with $340 million due in fiscal 2025[212] - Total long-term debt as of February 2, 2024, is $2,109 million, with $77 million due in fiscal 2025[212] - The company has estimated $251 million in gross net operating loss carryforwards and approximately $1.2 billion in tax basis for acquired amortizable goodwill and other intangible assets[95] Audit and Compliance - The company is subject to rigorous audits by the DCAA and DCMA, which could lead to adverse outcomes affecting profitability and cash flows[89] - The company has established policies and procedures to ensure compliance with complex laws and regulations affecting its business[38] - The company is subject to extensive federal and state privacy and data security laws, impacting operations involving personally identifiable information[36] Market and Economic Factors - Volatility in global capital markets could restrict the company's access to capital and increase its cost of capital[108] - Changes in U.S. tax laws, such as the requirement to amortize R&D expenditures over five years, could increase tax expenses and affect profitability[96] - Pension funding and costs are sensitive to economic assumptions, which could lead to significant fluctuations in future earnings and cash flow[120]

Science Applications International Corporation (SAIC) shares plunged 10% on Monday after the company reported lower-than-expected bottom-line results for the fourth quarter of fiscal 2024. The company reported fourth-quarter adjusted earnings of $1.43 per share, which lagged the Zacks Consensus Estimate by a penny. The figure also decreased 30% year over year due to lower revenues and higher expenses.Revenues declined 12% year over year to $1.74 billion but outpaced the consensus mark by 5.9%. The year-over ...

Science Applications International Corporation (NASDAQ:SAIC) Q4 2024 Earnings Conference Call March 18, 2024 10:00 AM ET Company Participants Joseph DeNardi - Senior Vice President, Investor Relations and Treasurer Toni Townes-Whitley - Chief Executive Officer Prabu Natarajan - Chief Financial Officer Conference Call Participants Seth Seifman - JPMorgan Jason Gursky - Citi Greg Konrad - Jefferies Bert Subin - Stifel Cai von Rumohr - TD Cowen Tobey Sommer - Truist Securities Josh Korn - Barclays Operator Hel ...