Core Insights - Science Applications International Corporation (SAIC) reported a revenue contraction of 5.6% for the third quarter ended October 31, 2025, attributed to a government shutdown and contract completions, despite strong margins from effective program execution [2][4][11]. Financial Performance - Revenues for the quarter were $1.866 billion, down 6% from $1.976 billion in the prior year [3][4]. - Operating income decreased by 20% to $128 million, with an operating margin of 6.9%, down 120 basis points from 8.1% [3][5]. - Net income fell 26% to $78 million, while diluted earnings per share decreased by 21% to $1.69 [3][7]. - Adjusted EBITDA was $185 million, representing 9.9% of revenues, a slight decrease from 10.0% in the prior year [3][6]. Cash Flow and Capital Deployment - Net cash provided by operating activities was $129 million, down 10% from $143 million in the prior year [3][8]. - Free cash flow surged to $135 million, a significant increase from $9 million in the previous year [3][6]. - The company deployed $120 million in capital, primarily for share repurchases and dividends [9]. Backlog and Contract Awards - Net bookings for the quarter were approximately $2.2 billion, with a book-to-bill ratio of 1.2, and year-to-date net bookings reached $7.2 billion [11]. - The estimated backlog at the end of the quarter was approximately $23.8 billion, with $3.8 billion funded [11][42]. - Notable contract awards included a $1.4 billion task order for the U.S. Air Force and a $413 million task order for the U.S. Army [12][13]. Acquisition Activity - SAIC acquired SilverEdge Government Solutions for a preliminary purchase price of $203 million, aimed at enhancing its mission-focused technology solutions [18]. Fiscal Year 2026 Guidance - The company raised its fiscal year 2026 guidance for revenue to $7.275 billion - $7.325 billion and adjusted EBITDA to approximately $695 million [20].

Financial Performance - Revenues for the third quarter of fiscal year 2026 were $1.87 billion, a decrease of 6% compared to $1.98 billion in the same period last year[4]. - Net income for the quarter was $78 million, down 26% from $106 million year-over-year[4]. - Adjusted EBITDA was $185 million, representing 9.9% of revenues, a slight decrease from 10.0% in the prior year[4][8]. - Revenues for the three months ended October 31, 2025, were $1,866 million, a decrease of 5.6% compared to $1,976 million for the same period in the prior year[25]. - Net income for the three months ended October 31, 2025, was $78 million, down from $106 million in the same period last year, representing a decline of 26.4%[25]. - Adjusted operating income for the Defense and Intelligence segment decreased to $118 million, down 20.3% from $148 million in the prior year[31]. - The Civilian segment's revenues decreased by 7.4% to $427 million for the three months ended October 31, 2025, compared to $461 million in the prior year[34]. - For the nine months ended October 31, 2025, revenues totaled $5,512 million, a decrease from $5,641 million in the same period of 2024[40]. - Operating income for the nine months ended October 31, 2025, was $388 million, down from $425 million in the same period of 2024[40]. Earnings Per Share - Diluted earnings per share for the quarter were $1.69, down from $2.13 in the prior year[4][8]. - The company reported a diluted earnings per share of $1.69 for the three months ended October 31, 2025, down from $2.13 in the same period last year, a decline of 20.7%[25]. - Adjusted diluted EPS for the nine months ended October 31, 2025, was $8.12, compared to $6.56 for the same period in 2024[49]. Guidance and Projections - Fiscal year 2026 revenue guidance was increased to $7.275 billion - $7.325 billion, up from the previous range of $7.250 billion - $7.325 billion[20]. - The company expects net cash provided by operating activities to exceed $585 million for FY26[52]. - Expenditures for property, plant, and equipment are projected to be approximately $35 million for FY26[52]. - The company anticipates free cash flow to exceed $550 million for FY26[52]. Cash Flow and Capital Expenditures - Cash flows from operating activities for the nine months ended October 31, 2025, totaled $351 million, compared to $379 million for the same period last year, reflecting a decrease of 7.4%[29]. - Free cash flow for the three months ended October 31, 2025, was $135 million, a significant increase from $9 million in the same period of 2024[52]. - For the nine months ended October 31, 2025, free cash flow totaled $241 million, compared to $263 million for the same period in 2024[52]. - Net cash provided by operating activities for the three months ended October 31, 2025, was $129 million, down from $143 million in the same period of 2024[52]. - Expenditures for property, plant, and equipment for the nine months ended October 31, 2025, were $24 million, compared to $21 million in the same period of 2024[52]. Acquisitions and Investments - The company deployed $120 million in capital during the quarter, including $94 million for share repurchases[10]. - SAIC acquired SilverEdge Government Solutions for a preliminary purchase price of $203 million, enhancing its mission-focused technology solutions[18]. - The company incurred $203 million in cash paid for acquisitions during the nine months ended October 31, 2025[29]. Backlog and Bookings - The company reported net bookings of $2.2 billion for the quarter, resulting in a book-to-bill ratio of 1.2[5][12]. - The estimated backlog at the end of the quarter was approximately $23.8 billion, with $3.8 billion funded[12]. - Total backlog as of October 31, 2025, was $23,788 million, an increase from $21,857 million as of January 31, 2025[37]. - Funded backlog for Defense and Intelligence contracts was $2,696 million, up from $2,599 million in January 2025, indicating a growth of 3.7%[37]. Dividends - The company declared a cash dividend of $0.37 per share, payable on January 28, 2026[11]. Other Financial Metrics - Adjusted operating income for the nine months ended October 31, 2025, was $523 million, slightly down from $529 million in the same period of 2024[40]. - Adjusted operating income for the three months ended October 31, 2025, was $183 million, representing 9.8% of revenues, compared to $195 million and 9.9% in the prior year[40]. - Adjusted EBITDA for the three months ended October 31, 2025, was $185 million, or 9.9% of revenues, compared to $197 million and 10.0% in the prior year[43]. - The company believes free cash flow is a useful measure for assessing cash flow trends and comparing with peer companies[52].

Fund Performance - The FPA Queens Road Small Cap Value Fund returned 7.46% in Q3 2025, underperforming the Russell 2000 Value Index which returned 12.60% [1] - For the first three quarters of 2025, the Fund achieved a return of 13.77%, outperforming the index's return of 9.04% [1] - The fund's strategy focuses on a diligent, disciplined, and patient approach, expecting to outperform in down markets and lag in speculative markets [1] Company Overview: Science Applications International Corporation (SAIC) - Science Applications International Corporation (SAIC) is a government contractor providing engineering and IT services, with a revenue split of approximately 50% from defense and 50% from civilian agencies [3] - As of November 21, 2025, SAIC's stock closed at $85.17 per share, with a market capitalization of $3.992 billion [2] - The stock experienced a one-month return of -8.63% and a 52-week decline of 30.31% [2] Market Context and Challenges - SAIC's stock has been negatively impacted by government spending cuts promised by the Trump administration, leading to uncertainty among investors regarding the extent of these cuts [3] - The company reported a 3% decline in revenue and reduced fiscal year estimates during its September 4th earnings release, contributing to a significant sell-off of its shares [3] - Current valuation of SAIC is approximately 10 times earnings, which may reflect an overly pessimistic outlook on potential cuts to its programs [3] Investment Sentiment - SAIC is not among the 30 most popular stocks held by hedge funds, with 33 hedge fund portfolios holding the stock at the end of Q2 2025, down from 39 in the previous quarter [4] - While SAIC is recognized for its potential, certain AI stocks are viewed as offering greater upside potential with less downside risk [4]

Core Points - Science Applications International Corp. (SAIC) has been awarded a $242 million contract by the Naval Undersea Warfare Center Division, Newport to support the Propulsion Test Facility (PTF) for the U.S. Navy [1][2] - The contract is a 5-year follow-on agreement that emphasizes the U.S. Navy's trust in SAIC's capabilities in engineering, technical, and logistics support [2][3] - The contract will enable SAIC to provide testing, engineering, and technical services for various torpedo systems and unmanned underwater vehicles, ensuring the PTF meets emerging Navy research and development needs [3] Company Overview - SAIC is a Fortune 500 mission integrator focused on technology and innovation across defense, space, civilian, and intelligence markets [4] - The company has approximately 24,000 employees and annual revenues of about $7.5 billion [5]

Core Insights - Science Applications International Corp (SAIC) was honored for its commitment to supporting American veterans and their families through a partnership with Building Homes for Heroes, which has resulted in the construction, gifting, and modification of 445 homes over 12 years [1][2]. Company Commitment - SAIC's Interim CEO, Jim Reagan, emphasized the company's deep connection to the armed forces, with over 25% of its employees being veterans, and expressed the privilege of supporting initiatives that transform veterans' lives through housing [2][3]. Partnership Impact - The partnership between SAIC and Building Homes for Heroes is highlighted as a model for how mission-driven organizations and corporations can create significant positive impacts for veterans [2]. - Building Homes for Heroes aims to deliver 50 homes in 2025 and reach its 500th home milestone by the end of 2026, with a goal of assisting over 5,000 veterans this year [2]. Organizational Achievements - Building Homes for Heroes has achieved a 96% program rating in 2024, marking the 13th consecutive year of a rating of at least 93%, and has received a perfect 4-star rating from Charity Navigator for seven years, including a 100% in transparency and accountability [4].

Core Insights - Zacks Premium provides various tools to enhance stock market investment confidence and knowledge [1] - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market [3][4] Zacks Style Scores Overview - The Zacks Style Scores rate stocks based on value, growth, and momentum characteristics, with ratings from A to F [4] - Value Score focuses on identifying undervalued stocks using financial ratios [4] - Growth Score assesses a company's financial health and future growth potential [5] - Momentum Score evaluates stocks based on price trends and earnings estimate changes [6] - VGM Score combines all three styles to identify stocks with the best overall characteristics [7] Zacks Rank and Performance - The Zacks Rank is a proprietary model that uses earnings estimate revisions to guide investment decisions [8] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +23.93% since 1988, significantly outperforming the S&P 500 [9] - Investors are encouraged to focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal returns [10] Stock Highlight: SAIC - SAIC is a leading IT and professional services provider to the U.S. government, currently rated 3 (Hold) with a VGM Score of A [12] - The company has a Growth Style Score of B, with a projected year-over-year earnings growth of 4.8% for the current fiscal year [12] - Recent upward revision of earnings estimates indicates a consensus estimate increase of $0.08 to $9.57 per share, with an average earnings surprise of +25% [13]

Core Insights - SAIC is prioritizing its first major international expansion in India, viewing it as a strategic opportunity to support the country's aviation transformation [1][7] - The company aims to leverage its capabilities to drive faster development, greater efficiency, and enhance passenger safety and experience in India [2][6] Company Overview - SAIC is a leading technology and defense partner for the US government, with one-third of its business supporting the US civilian government and being a top contractor for the US Federal Aviation Administration [2][7] - The company is recognized as the largest air traffic controller training provider globally [7] Market Opportunities - SAIC sees significant opportunities in priority markets, including the GCC, UAE, and India, particularly in the context of India's rapid growth, which includes building a new airport every fifty days [5][6] - The company is showcasing next-generation air traffic control training, advanced simulation, and modernization solutions at the Dubai Air Show, emphasizing their role in enhancing safety, capacity, and operational excellence [5][6]

Core Viewpoint - Science Applications International Corp. (SAIC) is set to release its third quarter fiscal year 2026 results on December 4, 2025, with a conference call scheduled for 10:00 a.m. Eastern time to discuss operational and financial results [1][2]. Company Overview - SAIC is a Fortune 500 mission integrator focused on technology and innovation across defense, space, civilian, and intelligence markets, offering secure high-end solutions in mission IT, enterprise IT, engineering services, and professional services [3]. - The company employs approximately 24,000 people and has annual revenues of around $7.5 billion, headquartered in Reston, Virginia [4].

Core Insights - Science Applications International Corp. (SAIC) has been awarded a $1.4 billion task order for the COBRA project to support the Department of War, focusing on multi-domain warfighting technologies [1][4] - The COBRA initiative aims to modernize existing military systems and enhance operational flexibility within the Combined Joint All-Domain Command and Control (CJADC2) ecosystem [2][3] - The project emphasizes the integration of various domains (sea, land, air, space, and cyber) to improve combat effectiveness and decision-making capabilities for military commands [3][4] Company Overview - SAIC is a leading mission integrator with a focus on technology and innovation, serving defense, space, civilian, and intelligence markets [4][5] - The company has approximately 24,000 employees and reported annual revenues of around $7.5 billion [5]

Core Insights - The collaboration between Science Applications International Corp. (SAIC) and HavocAI aims to enhance maritime domain awareness for the U.S. Navy by integrating SAIC's communication infrastructure with HavocAI's autonomous fleets [1][3][4] Group 1: Collaboration Details - The integration connects HavocAI's autonomy stack, which currently operates dozens of autonomous vessels, to SAIC's Joint Range Extension (JRE) system, enhancing command and control capabilities [2][4] - This partnership will allow for the seamless connection of diverse fleets of sensors and platforms, supporting the U.S. military's Combined Joint All Domain Command and Control (CJADC2) initiative [3][4] Group 2: Operational Impact - The integrated solution is expected to provide real-time situational awareness data to maritime operations centers, significantly improving operational capabilities for the Navy [4] - The collaboration is positioned to deliver immediate operational value and drive future maritime operations, enhancing decision-making speed and effectiveness [4] Group 3: Company Backgrounds - SAIC is a Fortune 500 mission integrator with annual revenues of approximately $7.5 billion, focusing on technology and innovation across defense, space, civilian, and intelligence markets [5][6] - HavocAI, founded in 2024, specializes in collaborative maritime autonomy and has delivered over 30 operational products to the U.S. military [7]