SAIC(US:SAIC)2025-12-04 16:02Financial Data and Key Metrics Changes - Third quarter revenue was $1.87 billion, a decline of 5.6% year-over-year, impacted by a government shutdown which accounted for approximately one percentage point of the decline [6][7] - Adjusted EBITDA was $185 million, resulting in a margin of 9.9%, driven by strong program execution [7][8] - Adjusted diluted EPS was $2.58, reflecting strong margin performance and a favorable tax rate [7] - Free cash flow for the third quarter was $135 million, despite being affected by the government shutdown [8][19] Business Line Data and Key Metrics Changes - Net bookings for the third quarter were $2.2 billion, resulting in a book-to-bill ratio of 1.2x [15] - The civil business segment experienced a year-over-year decline of 7%, but margins improved significantly over the first nine months of the year [32][33] Market Data and Key Metrics Changes - The government shutdown slowed proposal submissions, but normalization is expected in the near term [15][22] - The company anticipates submitting bids totaling over $30 billion in FY 2027 [15][16] Company Strategy and Development Direction - The acquisition of SilverEdge is expected to enhance the company's capabilities and contribute positively to margins and EPS [5][31] - The company is focusing on improving execution, resource allocation, and prioritizing bid quality to drive growth [9][10] - There is a commitment to reinvest over $100 million in annual spending into higher ROI areas to improve profitability [10][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to improve execution and deliver sustained profitable growth despite market uncertainties [20] - The company is prepared to adapt to changes in procurement processes within the Department of War, aiming for greater speed and efficiency [37][39] - The outlook for FY 2026 and FY 2027 includes increased revenue guidance due to the acquisition of SilverEdge and reaffirmed organic growth expectations [17][19] Other Important Information - The company plans to repurchase approximately $500 million in shares for both FY 2026 and FY 2027, totaling $1 billion, which represents about 25% of its market value [19] - Management is actively seeking a permanent CEO to lead the company forward [13] Q&A Session Summary Question: What is the current procurement environment post-shutdown? - Management noted a slowdown in submit activity and RFPs due to the shutdown, but expects normalization in Q4 [22] Question: Any residual impact from DOGE and pricing environment? - Management indicated no material changes from previous disclosures regarding DOGE, and margins remained healthy with minimal pricing pressure [24][25] Question: Opportunities and integration of SilverEdge? - Management expressed enthusiasm about SilverEdge's integration, expecting it to enhance bid differentiation and contribute positively to margins and EPS [30][31] Question: Civil growth decline and future trajectory? - Management stated that the civil business has been roughly flat over nine months, with no specific program-related drivers for the recent decline [32][33] Question: Thoughts on Department of War's reforms? - Management is ready to assist with procurement changes and is focusing on execution to align with the Department's objectives [37][39] Question: How to allocate savings from cost efficiencies? - Management indicated that a substantial portion of the $100 million savings will be reinvested into business development and proposal improvement [44][45] Question: Expectations on federal civil spending? - Management anticipates continued pressure on civilian agency budgets, but remains optimistic about their positioning within key agencies [51][52] Question: Portfolio shaping and defense budget growth? - Management is open to portfolio shaping but is currently focused on organic growth, with expectations of upward pressure on the DoD budget [62][65]