SAIC Announces Second Quarter of Fiscal Year 2025 Results
Revenues of $1.82 billion; 2% organic growth
Net income of $81 million; Adjusted EBITDA(1) of $170 million or 9.4% of revenues
Diluted earnings per share of $1.58; Adjusted diluted earnings per share(1) of $2.05
Cash flows provided by operating activities of $138 million; free cash flow(1) of $241 million
Net bookings of $1.2 billion; book-to-bill ratio of 0.6; trailing twelve months book-to-bill ratio of 1.1
Company increases Adjusted Diluted EPS(1) Fiscal Year 2025 guidance to $8.10 - $8.30 and reaffirms all other Fiscal Year 2025 financial guidance
RESTON, Va., Sept. 05, 2024 (GLOBE NEWSWIRE) -- Science Applications International Corporation (NASDAQ:SAIC), a premier Fortune 500® technology integrator driving our nation's digital transformation across the defense, space, civilian, and intelligence markets, today announced results for the second quarter ended August 2, 2024.
"Our second quarter results were solid, reflecting strong program performance and exceptional cash flow with a continued focus on returning capital to shareholders," said SAIC CEO Toni Townes-Whitley. "We are seeing encouraging trends as we execute our growth strategy. Our expanded pipeline of qualified opportunities is now converting to a higher number and quality of submissions and increasing book-to-bill, trends which are expected to accelerate and drive growth into Fiscal Year 2026. This momentum fuels the confidence we have in our ability to meet our Fiscal Year 2027 targets of 5% organic revenue growth, mid 9% adjusted EBITDA margins, and approximately $12 of free cash flow per share."
Second Quarter of Fiscal Year 2025: Summary Operating Results
Three Months Ended
August 2, 2024
Percentchange
August 4, 2023
(in millions, except per share amounts)
Revenues
$
1,818
2
%
$
1,784
Operating income
134
(63) %
362
Operating income as a percentage of revenues
7.4
%
-1,290 bps
20.3
%
Adjusted operating income(1)
164
1
%
163
Adjusted operating income as a percentage of revenues
9.0
%
-10 bps
9.1
%
Net income
81
(67) %
247
EBITDA(1)
169
(58) %
402
EBITDA as a percentage of revenues
9.3
%
-1,320 bps
22.5
%
Adjusted EBITDA(1)
170
(2) %
174
Adjusted EBITDA as a percentage of revenues
9.4
%
-40 bps
9.8
%
Diluted earnings per share
$
1.58
(65) %
$
4.56
Adjusted diluted earnings per share(1)
$
2.05
,
%
$
2.05
Net cash provided by operating activities
$
138
(8) %
$
150
Free cash flow(1)
$
241
67
%
$
144
Transaction-adjusted free cash flow(1)
$
241
69
%
$
143
(1)Non-GAAP measure, see Schedule 6 for information about this measure.
Second Quarter Summary Results
Revenues for the quarter increased $34 million or 2% compared to the same period in the prior year primarily due to ramp up in volume on existing and new contracts, partially offset by contract completions.
Operating income as a percentage of revenues decreased from the comparable prior year period primarily due to the gain on the sale of the Supply Chain Business ($234 million) in the prior year period, and contract completions, partially offset by ramp up in volume on existing and new contracts.
Adjusted EBITDA(1) as a percentage of revenues for the quarter decreased to 9.4% from 9.8% for the same period in the prior year primarily due to contract completions, partially offset by ramp up in volume on existing and new contracts.
Diluted earnings per share for the quarter was $1.58 compared to $4.56 in the prior year quarter. Adjusted diluted earnings per share(1) for the quarter was $2.05 compared to $2.05 in the prior year quarter. The weighted-average diluted shares outstanding during the quarter decreased to 51.2 million from 53.9 million during the prior year quarter.
(1)Non-GAAP measure, see Schedule 6 for information about this measure.
Cash Generation and Capital Deployment
Cash flows provided by operating activities for the second quarter decreased $12 million compared to the prior year quarter, primarily due to higher cash used from the Master Accounts Receivable Purchase Agreement ("MARPA Facility") in the current year, partially offset by timing of collections, lower tax payments in the current year, and other net favorable changes in working capital.
During the quarter, SAIC deployed $226 million of capital, consisting of $201 million of plan share repurchases, $19 million in cash dividends, and $6 million of capital expenditures.
Quarterly Dividend Declared
As previously announced, subsequent to quarter end, the Company's Board of Directors declared a cash dividend of $0.37 per share of the Company's common stock payable on October 25, 2024 to stockholders of record on October 11, 2024. SAIC intends to continue paying dividends on a quarterly basis, although the declaration of any future dividends will be determined by the Board of Directors each quarter and will depend on earnings, financial condition, capital requirements and other factors.
Backlog and Contract Awards
Net bookings for the quarter were approximately $1.2 billion, which reflects a book-to-bill ratio of 0.6 and a trailing twelve months book-to-bill ratio of 1.1. SAIC's estimated backlog at the end of the quarter was approximately $22.9 billion. Of the total backlog amount, approximately $4.2 billion was funded.
Notable New Awards:
U.S. Treasury: During the quarter, SAIC was awarded a one year, approximately $134 million task order to support the Treasury Cloud (TCloud). This effort provides enterprise-level commercial Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS) cloud products and professional services to support Treasury and Bureau business and mission operations.
Notable Recompete Awards:
Department of Veterans Affairs: During the quarter, SAIC was awarded a five-year (one year base, plus four, one-year option periods), $206 million recompete to deliver high-quality IT services that are crucial to the seamless execution of the Veterans Affairs Financial Services Center's operations. This effort will support the Financial Services Center in Austin, TX with essential services such as infrastructure and application support, cloud services, cybersecurity, data analytics, database design, and administration.
U.S. Navy: During the quarter, SAIC was awarded three contracts worth $58 million to support the Airborne Electronic Attack (AEA) Integrated Product Team (IPT) Jammer Technique Optimization (JATO) Program, the International Program, and the AEA IPT EA-18G Program. These three contracts will deliver mission-critical solutions with dedicated support to the Naval Air Warfare Center Weapons Division.
U.S. Defense and Space Portfolio: During the quarter, SAIC was awarded approximately $250 million of contract awards by defense and space organizations. These awards represent a combination of new business and recompetes.
Fiscal Year 2025 Guidance
Management is increasing Adjusted Diluted EPS(1) fiscal year 2025 guidance to $8.10 - $8.30 from $8.00 - $8.20, reaffirms all other fiscal year 2025 guidance which represents the Company's views as of September 5, 2024.
Fiscal Year
2025 Guidance
Revenue
$7.35B - $7.50B
Adjusted EBITDA(1)
$680M - $700M
Adjusted EBITDA Margin(1)
9.2% - 9.4%
Adjusted Diluted EPS(1)
$8.10 - $8.30
Free Cash Flow(1)
$490M - $510M
(1)Non-GAAP measure, see Schedule 6 for information about this measure.
Webcast Information
SAIC management will discuss operations and financial results in an earnings conference call beginning at 10:00 a.m. Eastern time on September 5, 2024. The conference call will be webcast simultaneously to the public through a link on the Investor Relations section of the SAIC website (https://investors.saic.com/). We will be providing webcast access only, "dial-in" access is no longer available. Additionally, a supplemental presentation will be available to the public through links to the Investor Relations section of the SAIC website. After the call concludes, an on-demand audio replay of the webcast can be accessed on the Investor Relations website.
About SAIC
SAIC® is a premier Fortune 500® technology integrator focused on advancing the power of technology and innovation to serve and protect our world. Our robust portfolio of offerings across the defense, space, civilian and intelligence markets includes secure high-end solutions in mission IT, enterprise IT, engineering services and professional services. We integrate emerging technology, rapidly and securely, into mission critical operations that modernize and enable critical national imperatives.
We are approximately 24,000 strong; driven by mission, united by purpose, and inspired by opportunities. SAIC is an Equal Opportunity Employer, fostering a culture of diversity, equity and inclusion, which is core to our values and important to attract and retain exceptional talent. Headquartered in Reston, Virginia, SAIC has annual revenues of approximately $7.4 billion. For more information, visit saic.com. For ongoing news, please visit our newsroom.
Contacts
Investor Relations: Joe DeNardi, +1.703.488.8528,
Media: Kara Ross,
GAAP to Non-GAAP Guidance Reconciliation
The Company does not provide a reconciliation of forward-looking adjusted diluted EPS to GAAP diluted EPS, adjusted EBITDA margin to GAAP net income or transaction-adjusted free cash flow and free cash flow to GAAP net cash flows from operating activities due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because certain deductions for non-GAAP exclusions used to calculate net income and cash flows from operating activities may vary significantly based on actual events, the Company is not able to forecast GAAP diluted EPS, GAAP net income or GAAP net cash flows from operating activities with reasonable certainty. The variability of the above charges may have an unpredictable and potentially significant impact on our future GAAP financial results.
Forward-Looking Statements
Certain statements in this release contain or are based on "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "expects," "intends," "plans," "anticipates," "believes," "estimates," "guidance," and similar words or phrases. Forward-looking statements in this release may include, among others, estimates of future revenues, operating income, earnings, earnings per share, charges, total contract value, backlog, outstanding shares and cash flows, as well as statements about future dividends, share repurchases and other capital deployment plans. Such statements are not guarantees of future performance and involve risk, uncertainties and assumptions, and actual results may differ materially from the guidance and other forward-looking statements made in this release as a result of various factors. Risks, uncertainties and assumptions that could cause or contribute to these material differences include those discussed in the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Legal Proceedings" sections of our Annual Report on Form 10-K, as updated in any subsequent Quarterly Reports on Form 10-Q and other filings with the SEC, which may be viewed or obtained through the Investor Relations section of our website at www.saic.com or on the SEC's website at www.sec.gov. Due to such risks, uncertainties and assumptions you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. SAIC expressly disclaims any duty to update any forward-looking statement provided in this release to reflect subsequent events, actual results or changes in SAIC's expectations. SAIC also disclaims any duty to comment upon or correct information that may be contained in reports published by investment analysts or others.
Schedule 1:
SCIENCE APPLICATIONS INTERNATIONAL CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME(Unaudited)
Three Months Ended
Six Months Ended
August 2,2024
August 4,2023
August 2,2024
August 4,2023
(in millions, except per share amounts)
Revenues
$
1,818
$
1,784
$
3,665
$
3,812
Cost of revenues
1,608
1,568
3,242
3,361
Selling, general and administrative expenses
77
88
162
172
(Gain) loss on divestitures, net of transaction costs
—
(234
)
—
(240
)
Other operating (income) expense
(1
)
—
(4
)
—
Operating income
134
362
265
519
Interest expense, net
31
29
65
61
Other (income) expense, net
3
(2
)
5
—
Income before income taxes
100
335
195
458
Provision for income taxes
(19
)
(88
)
(37
)
(113
)
Net income
$
81
$
247
$
158
$
345
Weighted-average number of shares outstanding:
Basic
50.9
53.5
51.3
53.9
Diluted
51.2
53.9
51.7
54.3
Earnings per share:
Basic
$
1.59
$
4.60
$
3.08
$
6.40
Diluted
$
1.58
$
4.56
$
3.06
$
6.35
Schedule 2:
SCIENCE APPLICATIONS INTERNATIONAL CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)
August 2,2024
February 2, 2024
(in millions)
ASSETS
Current assets:
Cash and cash equivalents
$
48
$
94
Receivables, net
946
914
Prepaid expenses and other current assets
109
123
Total current assets
1,103
1,131
Goodwill
2,851
2,851
Intangible assets, net
836
894
Property, plant, and equipment, net
95
91
Operating lease right of use assets
168
152
Other assets
197
195
Total assets
$
5,250
$
5,314
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
639
$
567
Accrued payroll and employee benefits
338
370
Other accrued liabilities
118
144
Debt, current portion
197
77
Total current liabilities
1,292
1,158
Debt, net of current portion
1,970
2,022
Operating lease liabilities
158
147
Deferred income taxes
19
28
Other long-term liabilities
186
174
Equity:
Total stockholders' equity
1,625
1,785
Total liabilities and stockholders' equity
$
5,250
$
5,314
Schedule 3:
SCIENCE APPLICATIONS INTERNATIONAL CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
Three Months Ended
Six Months Ended
August 2,2024
August 4,2023
August 2,2024
August 4,2023
(in millions)
Cash flows from operating activities:
Net income
$
81
$
247
$
158
$
345
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
34
36
69
72
Deferred income taxes
(8
)
(19
)
(8
)
(25
)
Stock-based compensation expense
12
15
25
27
(Gain) loss on sale of long-lived assets
—
(3
)
—
(3
)
(Gain) loss on divestitures
—
(240
)
—
(247
)
Other
(2
)
1
(3
)
—
Increase (decrease) resulting from changes in operating assets and liabilities, net of the effect of divestitures:
Receivables
(12
)
37
(32
)
(90
)
Prepaid expenses and other current assets
(1
)
4
14
8
Other assets
(1
)
(7
)
(1
)
(3
)
Accounts payable and accrued liabilities
(21
)
(54
)
41
52
Accrued payroll and employee benefits
51
52
(32
)
9
Income taxes payable
—
