Financial Performance - Q4 FY25 revenues reached $1.84 billion, representing a 6% increase year-over-year, while FY25 revenues totaled $7.48 billion, showing no significant change from FY24[4] - Q4 FY25 net income was $98 million, a 151% increase compared to the prior year, with adjusted EBITDA of $177 million, or 9.6% of revenue[5] - Diluted earnings per share for Q4 FY25 were $2.00, up 170% from $0.74 in the prior year, while adjusted diluted earnings per share were $2.57, an 80% increase from $1.43[5] - Adjusted EBITDA for FY25 was $710 million, or 9.5% of revenue, reflecting a 6% increase from the previous year[5] - Revenues for the three months ended January 31, 2025, were $1,838 million, an increase of 5.8% compared to $1,737 million for the same period in 2024[26] - Net income for the three months ended January 31, 2025, was $98 million, compared to $39 million for the same period in 2024, representing a 151.3% increase[26] - The company reported a total revenue of $7,479 million for the fiscal year ended January 31, 2025, compared to $7,444 million in the previous year, reflecting a slight increase of 0.5%[26] - Revenues in the fiscal year increased by $126 million or 8% compared to the prior year, primarily due to ramp up in volume on existing and new contracts[37] Cash Flow and Operating Activities - The company generated $115 million in cash flows from operating activities in Q4 FY25, an 83% increase from the prior year, and free cash flow was $236 million, a 143% increase[5] - Cash flows from operating activities for the year ended January 31, 2025, were $494 million, compared to $396 million in the previous year, an increase of 24.7%[30] - Free cash flow for the three months ended January 31, 2025, was $236 million, up from $97 million in the same period last year[60] - The company expects net cash provided by operating activities for FY26 to be between $545 million and $565 million[60] - The company anticipates free cash flow for FY26 to be between $510 million and $530 million[60] Backlog and Bookings - Net bookings for Q4 FY25 were approximately $1.3 billion, resulting in a book-to-bill ratio of 0.7, while total net bookings for FY25 were approximately $6.6 billion, with a book-to-bill ratio of 0.9[16] - The estimated backlog at the end of FY25 was approximately $21.9 billion, with $3.4 billion funded[16] - The estimated total backlog as of February 2, 2024, was $22,763 million, with funded backlog at $3,539 million and negotiated unfunded backlog at $19,224 million[41] Segment Performance - The Defense and Intelligence segment generated revenues of $1,360 million for the three months ended January 31, 2025, compared to $1,352 million in the same period last year, a growth of 0.6%[32] - Civilian segment revenues increased to $478 million for the three months ended January 31, 2025, from $385 million in the same period last year, a growth of 24.2%[32] Guidance and Future Projections - Fiscal year 2026 guidance includes projected revenues of $7.60 billion to $7.75 billion and adjusted EBITDA of $715 million to $735 million[19] Operating Income and Margins - Operating income as a percentage of revenues for Q4 FY25 increased to 7.5%, up from 4.5% in the prior year, due to improved profitability across contracts[7] - The total operating margin for the three months ended January 31, 2025, was 7.5%, compared to 4.5% for the same period in 2024[32] - Operating income for the fiscal year ended January 31, 2025, was $563 million, down from $741 million in the prior year, a decrease of 24.1%[26] - Adjusted operating income for the fiscal year was $705 million, with a margin of 9.4%[50] Other Financial Metrics - The company’s total assets as of January 31, 2025, were $5,246 million, a decrease from $5,314 million as of February 2, 2024[28] - Total stockholders' equity decreased to $1,577 million as of January 31, 2025, from $1,785 million as of February 2, 2024, a decline of 11.7%[28] - Operating loss in the fiscal year increased by $192 million compared to the prior year, primarily due to a gain on the sale of the Supply Chain Business in the prior year[38] - Adjusted operating loss in the fiscal year decreased by $31 million compared to the prior year, mainly due to lower incentive-based compensation expenses[39] - EBITDA for the fourth quarter was $175 million, representing 9.5% of revenues, compared to $118 million or 6.8% for the same period last year[44] - The operating loss and adjusted operating loss in the fourth quarter decreased by $19 million and $12 million, respectively, compared to the same period in the prior year[38] Restructuring and Costs - The restructuring and impairment costs for the year ended January 31, 2025, were $8 million, impacting the adjusted diluted EPS[57] - The acquisition and integration costs for the year ended January 31, 2025, were $2 million, which were excluded from the adjusted results[57] Summary of Net Income - The company achieved a net income of $362 million for the year ended January 31, 2025, compared to $477 million for the year ended February 2, 2024[57]

Financial Performance - Science Applications International Corporation (SAIC) is set to release its fourth-quarter financial results on March 17, with analysts expecting earnings of $2.09 per share, an increase from $1.43 per share in the same period last year [1] - The projected quarterly revenue for SAIC is $1.81 billion, compared to $1.74 billion a year earlier [1] Dividend Information - SAIC currently offers an annual dividend yield of 1.42%, translating to a quarterly dividend of 37 cents per share, or $1.48 annually [2] - To generate $500 monthly or $6,000 annually from dividends, an investment of approximately $422,670 or around 4,054 shares is required. For a more modest income of $100 monthly or $1,200 annually, an investment of $84,555 or around 811 shares is needed [2] Dividend Yield Dynamics - The dividend yield can fluctuate based on changes in the stock price and dividend payments. It is calculated by dividing the annual dividend payment by the stock's current price [3][4] - For instance, if a stock's price increases while the dividend remains the same, the yield decreases, and vice versa [4][5] Stock Performance - Recently, shares of SAIC fell by 0.4%, closing at $104.26 [5]

Core Insights - SAIC and Defense Unicorns have formed a strategic partnership to enhance the delivery of secure and scalable software capabilities for the Department of Defense (DoD) [1][5] - The integration of Defense Unicorns' Unicorn Delivery Service (UDS) into SAIC's software delivery ecosystem aims to streamline application deployment across various environments, improving operational readiness for military personnel [1][3] Software Delivery Challenges - The DoD faces challenges with traditional software delivery methods, which often lead to fragmented and slow processes, impacting the deployment of critical capabilities [2] - There is a need for industry partners to provide solutions that address issues such as bespoke infrastructure and inconsistent security standards [2] Benefits of UDS Integration - Adopting UDS as the standard software delivery platform will allow for more efficient deployment of mission-ready applications, reducing delivery timelines from months to weeks or days [3] - UDS automates deployment, accelerates compliance, and removes integration barriers, ensuring timely delivery of software updates and new capabilities [4] Strategic Commitment - SAIC is dedicated to providing an innovative ecosystem of next-generation offerings that meet unique mission needs and accelerate outcomes for the DoD [4] - The partnership is expected to fundamentally change how the DoD fields mission-critical software, enhancing the speed and security of software delivery [5][6] Company Profiles - SAIC has over 50 years of experience in technology integration for government customers, with annual revenues of approximately $7.4 billion [8] - Defense Unicorns, founded in 2021, focuses on transforming how the DoD acquires and sustains software capabilities, trusted by critical military branches [9][10]

Group 1: Market Trends and Defense Spending - European Commission President Ursula von der Leyen announced an 800 billion euro ($841 billion) "REARM Europe" program to enhance military capabilities and support Ukraine, which may lead to increased purchases from U.S. defense contractors [3] - Citigroup suggested that recent declines in defense stock prices combined with potential European spending indicate it is time to buy defense stocks, highlighting a projected increase of $300 billion in the U.S. defense budget over the next 10 years [4] - Wells Fargo noted that defense stocks are becoming "interesting" and raised its price target on Lockheed Martin, reflecting a growing positive sentiment on Wall Street [5] Group 2: Company Valuations - Lockheed Martin's current price-to-earnings (P/E) ratio is 21.2, which is lower than the S&P 500 average of 28.8, but its price-to-sales (P/S) ratio of 1.6 and enterprise value-to-sales ratio of 1.8 indicate it is 43% more expensive than its 20-year average [7] - Science Applications International Corporation (SAIC) has a more attractive valuation with a P/E ratio of 17.9 and a P/S ratio of 0.8, along with significantly higher free cash flow compared to net income [8] - GE Aerospace's valuation is complex due to its hybrid business model, with a P/S ratio of 5.5 and a P/E ratio of nearly 32, which appear expensive given its cash flow generation [9][10]

Core Viewpoint - Science Applications International Corp. (SAIC) is set to release its fourth quarter fiscal year 2025 results on March 17, 2025, with a conference call scheduled for 10:00 a.m. Eastern time to discuss operational and financial results [1] Group 1: Company Overview - SAIC is a Fortune 500® technology integrator focused on technology and innovation to serve and protect the world [3] - The company has a diverse portfolio across defense, space, civilian, and intelligence markets, providing secure high-end solutions in mission IT, enterprise IT, engineering services, and professional services [3] - SAIC employs approximately 24,000 people and is headquartered in Reston, Virginia, with annual revenues of about $7.4 billion [4] Group 2: Conference Call Details - The conference call will be available via webcast only, with no dial-in access provided [2] - A supplemental presentation will be accessible through links on the SAIC website, and an on-demand audio replay of the webcast will be available after the call [2]

Group 1 - The U.S. Department of Defense is conducting a comprehensive review of consulting services contracts, aiming to make cuts and terminate nonessential contracts [1][4] - Companies such as Booz Allen Hamilton, Science Applications International, Leidos Holdings, and General Dynamics experienced stock declines due to investor concerns about the implications of the review [2][3] - The review results are expected to be released between March and mid-April, with the potential for significant contract terminations [4][5] Group 2 - The Department of Government Efficiency has already terminated a $1.9 billion contract with the Internal Revenue Service, indicating a trend towards cuts in consulting services [5] - There is uncertainty regarding the shift from a "cost-plus" contract model to a fixed-fee model, which could impact company margins [6] - Investment bank William Blair downgraded several companies, including Booz Allen and General Dynamics, reflecting the negative sentiment in the market [6] Group 3 - Despite the potential for cuts, there is a belief that the government may not fully revert to in-house operations for previously outsourced activities, as this would lead to significant disruptions and costs [8] - The industry had hoped that government streamlining efforts would create new opportunities, but the outlook now suggests a mix of both opportunities and cuts [7] - The current environment is expected to lead to volatility in the stocks of these government IT service providers until more clarity is achieved [8]

Summary of Key Points Core Viewpoint - Shares of Science Applications International Corporation (SAIC) have experienced a significant decline of 35%, dropping from a high of $154.10 on November 11, 2024, to $100.13 on February 18, 2025, primarily due to market sell-off pressures [1] Company Performance - The stock price of SAIC has decreased substantially over the past three months, indicating potential volatility and investor concerns [1] Investor Insights - Robert F. Abbott, an experienced investor since 1995, has been utilizing options strategies such as covered calls and collars alongside long stock positions, reflecting a cautious approach to market fluctuations [1] Market Context - The decline in SAIC's stock price may suggest broader market trends affecting technology and defense sectors, which are critical to the company's operations [1]

Core Insights - Science Applications International Corp. (SAIC) shares have declined 18% over the past three months, underperforming the Zacks Computers - IT Services industry, Zacks Computer and Technology sector, and the S&P index, which grew by 7.4%, 9.8%, and 6.6% respectively [1][2] Financial Performance - SAIC's fiscal 2025 revenue outlook is projected to be between $7.425 billion and $7.475 billion, raising investor concerns due to a slight expected decline of 0.13% year over year based on Zacks consensus estimates [2][11] - The company is currently facing revenue gaps due to contract transitions and improved bid selections [2] Recent Developments - SAIC secured a $170.9 million contract from the Texas Department of Information Resources to provide cybersecurity services, indicating a growing presence in state and local government sectors [3] - The company has been focusing on increasing its market presence in the federal government sector, with approximately 98% of its revenues coming from U.S. government contracts in recent years [6] Market Position - Major clients include various U.S. government agencies such as Homeland Security, NASA, and military branches, which helps stabilize revenue and minimize fluctuations [6][7] - The increased federal government budget is expected to accelerate contract awards, benefiting SAIC's top-line growth [7] Competitive Landscape - SAIC operates in a competitive market with players like CACI International, KBR Inc., and Leidos Holdings, which creates pricing pressure and low-margin government deals affecting profitability [8][9] - Rising component costs, labor, and logistics expenses, along with recession concerns, may lead to softened spending by government agencies, impacting near-term prospects [10]

Core Insights - Science Applications International Corp. (SAIC) has been awarded a contract valued at $170.9 million by the State of Texas' Department of Information Resources to provide cybersecurity services [1][3]. Group 1: Contract Details - The contract aims to enhance cybersecurity for state agency networks, focusing on security operations services, risk management, and compliance with regulations [3][4]. - This contract signifies an expansion of SAIC's cybersecurity efforts in Texas, building on its existing partnerships with various state and local governments [2][3]. Group 2: Company Overview - SAIC is a Fortune 500 technology integrator with a focus on defense, space, civilian, and intelligence markets, generating annual revenues of approximately $7.4 billion [5][6]. - The company employs around 24,000 individuals and emphasizes a culture of diversity, equity, and inclusion [6].

Core Viewpoint - Science Applications International Corp. (SAIC) has underperformed in the year-to-date period, with a share price decline of 7.8%, contrasting with the growth of the Zacks Computers - IT Services industry, Zacks Computer and Technology sector, and the S&P index, which grew by 16.7%, 34.2%, and 27.8% respectively [1][2]. Group 1: Performance and Challenges - The decline in SAIC's stock performance is attributed to temporary challenges related to contract transitions and improved bid selections, leading to revenue gaps [2]. - The company's cautious outlook for fiscal 2025 revenues, projected between $7.425 billion and $7.475 billion, raises concerns among investors [2]. - Despite these challenges, SAIC is recovering and securing new contracts [2]. Group 2: Recent Contracts and Government Focus - SAIC has recently secured a prime position on the $1.8 billion Personnel and Readiness Infrastructure Support Management (PRISM) contract to support the U.S. Department of Defense (DoD) [3]. - The contract involves assisting the Office of the Under Secretary of Defense for Personnel & Readiness with services such as technology integration, data analytics, and mission support [3][4]. - The focus on federal government contracts is significant, with approximately 98% of SAIC's revenues in 2021, 2022, and 2023 derived from U.S. government contracts [7]. Group 3: Market Dynamics and Competitive Landscape - The company operates in a highly competitive market for defense, space, intelligence, and mission-critical services, facing competition from firms like CACI International, KBR Inc., and Leidos Holdings [9][10]. - Pricing pressures in government contracts lead to low-margin deals, impacting SAIC's profitability [10]. - Rising component costs, labor, and logistics expenses, along with recession concerns, pose additional challenges to the company's near-term prospects [11]. Group 4: Future Outlook - The increased federal government budget is expected to accelerate contract awards, which could positively impact SAIC's top-line growth [8]. - The company is on a recovery path, obtaining multiple government contracts, suggesting a potential for improved performance moving forward [12].