SAIC(SAIC) - 2026 Q1 - Quarterly Report

Financial Performance - Revenues for the three months ended May 2, 2025, increased by $30 million to$1,877 million, a 2% rise compared to the same period in the prior year[110] - Operating income decreased by 8% to $121 million, with operating income as a percentage of revenues falling to 6.4$68 million, down 12% from $77 million in the prior year[110] - Revenues for the Defense and Intelligence segment decreased by$3 million to $1,433 million for the three months ended May 2, 2025, compared to$1,436 million in the prior year[116] - Civilian segment revenues increased by $33 million to$444 million for the three months ended May 2, 2025, compared to $411 million in the prior year, primarily due to ramp-up in volume on existing and new contracts[118] - Total revenues for the company were$1,877 million for the three months ended May 2, 2025, compared to $1,847 million in the prior year, reflecting an overall increase[126] Taxation - The effective income tax rate for the three months ended May 2, 2025, was 20.6$2.4 billion, contributing to a total backlog of $22,343 million[133] - Funded backlog as of May 2, 2025, was$3,265 million, down from $3,444 million as of January 31, 2025[133] - Total backlog included$19,078 million in negotiated unfunded backlog, up from $18,413 million[133] - The total backlog as of May 2, 2025, was$22,343 million, consisting of $3,265 million in funded backlog and$19,078 million in negotiated unfunded backlog[133] Operating Income and EBITDA - Operating income increased by 18% to $40 million, with operating income as a percentage of revenues rising to 9.0$52 million, with adjusted operating income as a percentage of revenues increasing to 11.7%[118] - EBITDA for the three months ended May 2, 2025, was $156 million, representing 8.3$157 million, accounting for 8.4% of revenues, a decrease from 9.0% in the prior year[126] - Operating loss in the corporate segment increased to $17 million, a 70$115 million, representing 8.0% of revenues, down from 8.6% in the prior year[116] - Adjusted EBITDA for the three months ended May 2, 2025, was $157 million, a decrease from$166 million in the prior year, with adjusted EBITDA as a percentage of revenues at 8.4%[126] Cash Flow and Liquidity - The company expects to fund future cash needs through cash on hand, operating cash flows, and access to a $1.0 billion Revolving Credit Facility[136] - Net cash provided by operating activities increased by$2 million to $100 million for the three months ended May 2, 2025, compared to$98 million in the prior year[139] - Cash used in investing activities increased by $8 million to$15 million, primarily due to higher contributions to investments[140] - Cash used in financing activities decreased by $42 million to$94 million, mainly due to higher proceeds from borrowings[141] - The company expects to fund ongoing working capital and discretionary investments with cash on hand and future operating cash flows, supported by a $1.0 billion Revolving Credit Facility and a$300 million MARPA Facility[136] - The total cash decrease for the three months ended May 2, 2025, was $9 million, compared to a decrease of$45 million in the prior year[139] - Future cash needs will focus on working capital, capital expenditures, and contractual commitments, with a strategy based on cash provided by operating activities and free cash flow[137] - The company believes existing cash, future operating cash flows, and access to financing will meet short-term liquidity and long-term capital needs[138] Competition and Market Position - Approximately 98% of revenues were generated from contracts with the U.S. government, highlighting the company's reliance on government spending[98] - The company is positioned to benefit from new defense and border defense spending as Congress works on a budget reconciliation package[99] - The company anticipates that spending packages like the infrastructure bill and CHIPS and Science Act may provide additional opportunities in digital modernization and climate resiliency[103] - The company faces increased competition due to the U.S. government's reliance on competitive bidding processes, which may pressure pricing[104] - The company is implementing strategic sourcing and developing repeatable offerings to maintain competitiveness in pricing and service delivery[106] - The company has approximately 1,700 active contracts and employs around 24,000 individuals, indicating a strong operational capacity[91] Cost Structure - Labor-related cost of revenues accounted for 59% in both Defense and Intelligence and Total SAIC segments for the three months ended May 2, 2025[135] - The proportion of subcontractor-related cost of revenues was 29% for the Defense and Intelligence segment for the three months ended May 2, 2025[135] Accounting Policies - There have been no changes to critical accounting policies and estimates during the three months ended May 2, 2025[142]