SAIC(US:SAIC)2025-12-04 17:25Financial Performance - Revenues for the three months ended October 31, 2025, decreased by $110 million (6%) to $1,866 million compared to the same period in the prior year, primarily due to a ramp down in volume on existing contracts and contract completions [139]. - Operating income for the three months ended October 31, 2025, was $128 million, representing a decrease of 20% from the prior year, with operating income as a percentage of revenues falling to 6.9% [139]. - Revenues for the Defense and Intelligence segment decreased by $76 million (5%) to $1,439 million for the three months ended October 31, 2025, compared to $1,515 million in the prior year [147]. - Revenues for the Civilian segment decreased by $34 million (7%) to $427 million for the three months ended October 31, 2025, compared to $461 million in the prior year [149]. - Consolidated adjusted operating income for the three months ended October 31, 2025, was $183 million, a decrease from $195 million in the same period last year [156]. - EBITDA for the three months ended October 31, 2025, was $168 million, down from $197 million in the same period last year, representing 9.0% of revenues [158]. - Adjusted EBITDA for the three months ended October 31, 2025, was $185 million, compared to $197 million in the same period last year, representing 9.9% of revenues [158]. Government Contracts and Revenue Sources - The company generated 98% of its revenues from contracts with the U.S. government during the three and nine months ended October 31, 2025 [125]. - For the three months ended October 31, 2025, 80% of revenues in the Defense and Intelligence segment were derived from cost reimbursement contracts, while 4% came from civilian contracts [167]. - The company is positioned to benefit from increased government spending and has a strong history of serving the U.S. government, which provides a competitive advantage [134]. Acquisitions and Investments - The acquisition of SilverEdge Government Solutions was completed on October 15, 2025, for a preliminary purchase price of $203 million, aimed at enhancing mission-focused, IP-based solutions [124]. - Cash used in investing activities increased by $222 million to $237 million for the nine months ended October 31, 2025, primarily due to the acquisition of SilverEdge [173]. Tax and Regulatory Impact - The effective income tax rate for the three months ended October 31, 2025, was 16.7%, an increase from 15.6% in the same period last year, primarily due to the One Big Beautiful Bill Act [143]. - The company anticipates that the OECD's 15% global minimum tax framework will not have a significant impact on its effective tax rate or financial results [146]. Backlog and Future Revenue Potential - As of October 31, 2025, the total backlog is estimated at $23.788 billion, with a funded backlog of $3.823 billion and a negotiated unfunded backlog of $19.965 billion [165]. - Net bookings for the three months ended October 31, 2025, were approximately $2.2 billion, and for the nine months, they totaled $7.2 billion [165]. Operating Cash Flow and Liquidity - Cash provided by operating activities for the nine months ended October 31, 2025, was $351 million, a decrease of $28 million compared to the prior year [172]. - The company expects to fund ongoing working capital and commitments with cash on hand, future operating cash flows, and borrowings under its $1.0 billion Revolving Credit Facility [168]. - The company believes existing cash, future operating cash flows, and access to financing will meet short-term liquidity and long-term capital needs [170]. Cost Structure and Expenses - Selling, general and administrative expenses increased by 22% to $101 million for the three months ended October 31, 2025, compared to $83 million in the prior year [139]. - The company’s cost of revenues as a percentage of revenues was 87.8% for the three months ended October 31, 2025, compared to 88.0% in the prior year [139]. - The labor-related cost of revenues for the three months ended October 31, 2025, was 57% in the Defense and Intelligence segment, while subcontractor-related costs accounted for 28% [167]. Strategic Focus and Market Position - The company is focused on enhancing its competitive position through strategic sourcing and developing repeatable offerings sold "as a service" to improve pricing competitiveness [135]. - The company operates with approximately 1,700 active contracts and employs around 24,000 individuals [117].