SAIC(SAIC) - 2023 Q2 - Quarterly Report

Part I Financial Information Financial Statements The unaudited financial statements present the company's income, balance sheet, and cash flows for the period Condensed and Consolidated Statements of Income Quarterly revenue remained flat while net income declined, with six-month revenue growing but net income decreasing Consolidated Statements of Income (Unaudited) | Metric | Three Months Ended July 29, 2022 | Three Months Ended July 30, 2021 | Six Months Ended July 29, 2022 | Six Months Ended July 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $1,831M | $1,836M | $3,827M | $3,714M | | Operating Income | $125M | $133M | $250M | $263M | | Net Income Attributable to Common Stockholders | $73M | $82M | $146M | $163M | | Diluted EPS | $1.30 | $1.41 | $2.59 | $2.79 | Condensed and Consolidated Balance Sheets Total assets slightly decreased, with goodwill and intangible assets as key components, while equity increased Balance Sheet Highlights (Unaudited) | Metric | July 29, 2022 | January 28, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $99M | $106M | | Goodwill | $2,911M | $2,913M | | Total Assets | $5,654M | $5,746M | | Long-term debt, net of current portion | $2,462M | $2,370M | | Total Liabilities | $4,001M | $4,117M | | Total Stockholders' Equity | $1,653M | $1,629M | Condensed and Consolidated Statements of Cash Flows Operating cash flow decreased while cash used in financing increased, driven by debt and share repurchases Cash Flow Summary (Unaudited) | Cash Flow Activity | Six Months Ended July 29, 2022 | Six Months Ended July 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $259M | $281M | | Net cash used in investing activities | ($17M) | ($256M) | | Net cash used in financing activities | ($249M) | ($73M) | | Net decrease in cash | ($7M) | ($48M) | Notes to Condensed and Consolidated Financial Statements The notes detail accounting policies, revenue recognition, debt, share repurchases, and performance obligations - The company is a leading provider of technical, engineering, and enterprise IT services, primarily to the U.S. government[17] - In June 2022, the share repurchase plan was increased by 8.0 million shares, with approximately 15.9 million shares repurchased under the program as of July 29, 2022[38] - A quarterly dividend of $0.37 per share was declared and paid during the quarter[39] - As of July 29, 2022, the company had $5.0 billion of remaining performance obligations, with approximately 80% expected to be recognized as revenue over the next 12 months[47] - On June 30, 2022, the company amended its credit agreement, establishing a new $1,230 million Term Loan A Facility and increasing its Revolving Credit Facility to $1,000 million[60] Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes flat quarterly revenue, declining operating income, and a strong backlog of $24.3 billion Results of Operations Summary | Metric | Three Months Ended July 29, 2022 | % Change YoY | Six Months Ended July 29, 2022 | % Change YoY | | :--- | :--- | :--- | :--- | :--- | | Revenues | $1,831M | 0% | $3,827M | 3% | | Operating Income | $125M | (6%) | $250M | (5%) | | Net Income Attributable to Common Stockholders | $73M | (11%) | $146M | (10%) | - Quarterly revenue decrease of $5 million was primarily due to contract completions and one fewer working day, partially offset by the Halfaker acquisition (approx. $30 million) and new contract ramps[100] - Six-month revenue increase of $113 million was driven by new/existing contract ramps and the Halfaker acquisition (approx. $72 million)[101] Backlog and Bookings | Metric | Value (in billions) | | :--- | :--- | | Total Backlog (as of July 29, 2022) | $24.3 | | Net Bookings (Q2 FY23) | $2.1 | | Net Bookings (First Half FY23) | $4.1 | - The Tax Cuts and Jobs Act of 2017, which requires capitalization of R&D costs, is expected to decrease cash flows from operations in fiscal 2023 by a minimum of $90 million if not deferred or repealed by Congress[125] Quantitative and Qualitative Disclosures About Market Risk Market risk disclosures remain materially unchanged from the most recent Annual Report on Form 10-K - There have been no material changes to the company's market risks since the last Annual Report on Form 10-K[131] Controls and Procedures Disclosure controls and procedures were deemed effective with no material changes to internal controls - The company's disclosure controls and procedures were evaluated and concluded to be effective as of the end of the quarter[132] - No material changes were made to the internal control over financial reporting during the quarter[133] Part II Other Information Legal Proceedings Details regarding legal matters are cross-referenced to Note 11 of the financial statements - Information regarding legal proceedings is provided in Note 11 to the condensed and consolidated financial statements[135] Risk Factors Risk factors remain materially unchanged from those disclosed in the latest Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the most recent Form 10-K[137] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 706,379 shares and increased its share repurchase authorization by 8.0 million shares Common Stock Repurchases (Q2 FY23) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Apr 30 - Jun 3, 2022 | 358,544 | $83.26 | | Jun 4 - Jul 1, 2022 | 165,457 | $91.10 | | Jul 2 - Jul 29, 2022 | 182,378 | $93.21 | | Total | 706,379 | $87.66 | - In June 2022, the share repurchase plan was increased by 8.0 million shares, bringing the total authorized shares to be repurchased to approximately 24.4 million, with 15.9 million shares repurchased under the program as of July 29, 2022[139] Exhibits Filed exhibits include the amended credit agreement and required CEO/CFO Sarbanes-Oxley certifications - Key exhibits filed include the Fifth Amendment to the Third Amended and Restated Credit Agreement and CEO/CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906[143]