Core Insights - SAIC delivered better-than-expected earnings, alleviating concerns about potential pullbacks due to government efficiency initiatives, resulting in a 13% increase in share price [1] Financial Performance - SAIC reported earnings of $2.57 per share for the fiscal fourth quarter ending January 31, with revenue of $1.83 billion, surpassing Wall Street's consensus estimates of $2.09 per share and $1.81 billion in revenue [2] - Revenue increased by 6% year-over-year, while net income surged by 151%, driven by a 250-basis point improvement in operating margin [3] - The company raised its fiscal year guidance by $0.20 per share, projecting earnings between $9.10 and $9.30 per share [3] Business Developments - Post-quarter, SAIC secured a $1.8 billion award, with CEO Toni Townes-Whitley highlighting a backlog of submitted bids valued at approximately $20 billion, indicating positive momentum [4] - Management reported only "nominal" program cancellations from the newly formed Department of Government Efficiency (DOGE), which has been a source of investor concern [4] Market Sentiment - Despite a strong quarter, there are concerns regarding SAIC's new awards and funded orders relative to sales, attributed to customer uncertainty [5] - The company demonstrated resilience in the current operating environment, suggesting it may be a viable option for long-term investors willing to navigate potential uncertainties [5]

SAIC (SAIC) came out with quarterly earnings of $2.57 per share, beating the Zacks Consensus Estimate of $2 per share. This compares to earnings of $1.43 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 28.50%. A quarter ago, it was expected that this information technology company would post earnings of $2.17 per share when it actually produced earnings of $2.61, delivering a surprise of 20.28%.Over the last four quarters, the ...

Core Insights - Science Applications International Corporation (SAIC) reported strong financial results for the fourth quarter and full fiscal year ended January 31, 2025, with revenue, adjusted EBITDA, adjusted earnings per share, and free cash flow exceeding guidance [2][3][8] - The company secured a significant $1.8 billion contract award for the System Software Lifecycle Engineering program, marking its largest recompete win in recent years, alongside a backlog of submitted bids valued at approximately $20 billion [2][3] Financial Performance - **Fourth Quarter Results**: Revenues increased by $101 million to $1.84 billion, a 6% rise compared to the prior year quarter, driven by increased volume on new and existing contracts [5][8] - **Operating Income**: Operating income rose to $138 million, a 75% increase from the previous year, with an operating margin of 7.5% [3][6] - **Net Income**: Net income for the quarter was $98 million, a 151% increase year-over-year, with diluted earnings per share at $2.00 [3][8] - **Adjusted EBITDA**: Adjusted EBITDA was $177 million, representing a 39% increase, with an adjusted EBITDA margin of 9.6% [3][7] Fiscal Year Overview - **Annual Revenue**: For the fiscal year 2025, revenues reached $7.48 billion, a slight increase of $35 million compared to the previous year, with organic growth of approximately 3.1% after adjusting for divestitures [10][8] - **Operating Income**: Operating income decreased by 24% to $563 million, primarily due to a prior year gain from the sale of the Supply Chain Business [11][12] - **Net Income**: Net income for the fiscal year was $362 million, down 24% from the previous year, with diluted earnings per share at $7.17 [3][13] Cash Flow and Capital Deployment - **Cash Flow**: Operating cash flow for the fourth quarter was $115 million, an increase of 83% year-over-year, while free cash flow was $236 million, a 143% increase [14][8] - **Capital Deployment**: In the fourth quarter, SAIC deployed $163 million in capital, including $130 million for share repurchases and $18 million in dividends [16][8] Backlog and Contract Awards - **Backlog**: As of January 31, 2025, SAIC's estimated backlog was approximately $21.9 billion, with $3.4 billion funded [18][46] - **Contract Awards**: Notable awards included a $187 million task order for the Defense Readiness Reporting System and approximately $480 million in contract awards from space and intelligence organizations [18][20] Guidance for Fiscal Year 2026 - **Revenue Guidance**: The company provided guidance for fiscal year 2026, projecting revenues between $7.60 billion and $7.75 billion, with adjusted EBITDA expected between $715 million and $735 million [21][22]

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]