SAIC(US:SAIC)2025-03-17 16:16Revenue Sources - In fiscal 2025, 98% of total revenues were attributable to prime contracts with the U.S. government or subcontracts with other contractors engaged in work for the U.S. government[32]. - Approximately 52% of total revenues in fiscal 2025 were from the Department of Defense, while 46% were from Intelligence and other federal government agencies[33]. - In fiscal 2023, 49% of total revenues were from both the Department of Defense and Intelligence and other federal government agencies[34]. - The company generated 98% of total revenues from U.S. government contracts over the last three fiscal years, highlighting dependency on government spending[74]. - In fiscal 2025, revenue breakdown included approximately 16% from fixed-price contracts, 22% from time and materials contracts, and 62% from cost-reimbursable contracts[82]. - Revenues for fiscal 2025 were $7,479 million, a slight increase of $35 million from fiscal 2024, primarily due to ramp-up in volume in existing and new contracts, partially offset by the sale of the Supply Chain Business[193]. - Revenues decreased by $91 million from fiscal 2024 to fiscal 2025, primarily due to the sale of the Supply Chain Business ($188 million) and contract completions, but adjusted revenues grew by 1.7% when excluding the divestiture[207]. - The revenue mix for fiscal 2025 included 79% from cost reimbursement contracts, 10% from time and materials, and 11% from firm-fixed price contracts[233]. Employee and Talent Management - As of January 31, 2025, the company employed approximately 24,000 individuals, including over 6,000 active military or veterans[57]. - The company achieved its highest overall score in five years in the fiscal 2025 culture survey, exceeding national benchmarks by 6%[59]. - In fiscal 2025, the company invested in talent development with over 140,000 training hours completed, averaging nearly 6 hours per employee[61]. - More than 21% of approximately 5,000 new employees were hired through employee referrals, indicating strong internal talent attraction[63]. - The voluntary attrition rate was approximately 13%, demonstrating industry-leading employee retention[63]. - More than 450 employees participated in leadership development programs, totaling nearly 8,500 hours of training[62]. - The company is committed to employee well-being, offering wellness programs and an Employee Assistance Program to support mental and financial health[65]. Financial Performance - Cost of revenues for fiscal 2025 was $6,587 million, an increase of $15 million from fiscal 2024, driven by ramp-up in volume on existing and new contracts[195]. - Selling, general and administrative expenses decreased to $339 million in fiscal 2025, down $34 million from fiscal 2024, mainly due to lower incentive-based compensation[197]. - Operating income for fiscal 2025 was $563 million, a decrease of 24% compared to fiscal 2024, with operating income as a percentage of revenues at 7.5%[193]. - Net income attributable to common stockholders for fiscal 2025 was $362 million, a decrease of 24% from fiscal 2024[193]. - Adjusted EBITDA for fiscal 2025 was $710 million, with an adjusted EBITDA margin of 9.5%, an increase from 9.0% in fiscal 2024[224]. - The effective income tax rate for fiscal 2025 is lower than fiscal 2024, primarily due to the gain from the divestiture of the Supply Chain Business[202]. - Operating loss for the Corporate segment was $45 million in fiscal 2025, a significant decrease from an operating income of $147 million in fiscal 2024[216]. - The adjusted operating income for the Corporate segment improved to a loss of $20 million in fiscal 2025, compared to a loss of $51 million in fiscal 2024[214]. Risks and Challenges - The company faces risks from potential reductions in U.S. government defense spending, which could adversely affect future revenues and cash flows[75]. - The company is subject to rigorous government audits, which could lead to adjustments in contract costs and mandatory customer refunds, potentially impacting profitability and cash flows[93]. - The company may face civil or criminal penalties if investigations reveal improper activities, which could include contract terminations and reputational harm[96]. - The U.S. government has the right to terminate or modify contracts at any time, which could adversely affect revenue growth and profitability[97]. - The company faces risks related to health epidemics, which could disrupt operations and impact financial performance[110]. - The company may engage in acquisitions or divestitures that could disrupt operations and pose financial risks if not managed properly[105]. - The company faces potential liabilities and negative publicity if its detection systems fail, particularly regarding tsunami buoys deployed by the U.S. National Oceanic and Atmospheric Administration[121]. - Climate change poses risks to the company's operations, as extreme weather events could disrupt contractual obligations and affect business performance[117]. - Cybersecurity threats are a significant concern, with potential impacts on business operations and customer trust if sensitive information is compromised[132]. - The company has experienced cybersecurity incidents, but none have materially impacted operations to date; however, future incidents could harm reputation and financial performance[136]. Strategic Initiatives - The company completed a business reorganization effective February 3, 2024, transitioning from two operating sectors to five customer-facing business groups[172]. - The sale of the Supply Chain Business in May 2023 allowed the company to focus on long-term strategic growth areas[187]. - The company anticipates that spending packages related to digital modernization and climate resiliency may provide additional opportunities[183]. - The company expects continued ramp-up in volume on existing and new contracts to drive future revenue growth despite challenges from contract completions[209]. - The company is actively monitoring changes in environmental laws and implementing sustainability initiatives to mitigate risks associated with climate change[91]. Backlog and Future Outlook - As of January 31, 2025, the total backlog was estimated at $21.857 billion, a decrease from $22.763 billion on February 2, 2024[232]. - Net bookings for fiscal 2025 were approximately $6.6 billion, compared to $6.7 billion in fiscal 2024[232]. - Funded backlog for government contracts was $3.444 billion as of January 31, 2025, down from $3.539 billion in the previous year[232]. - The company anticipates that ongoing reforms in the U.S. government acquisition process could lead to delays in contract awards and increased competition[89].