- Revenues increase to $2.0 billion; 6% total revenue growth,
approximately 4% growth excluding acquired revenues
- Diluted earnings per share: $1.29; Adjusted diluted earnings
per share(1): $1.88
- Company increases revenue and adjusted diluted EPS(1)
guidance for fiscal year 2023
- Board authorizes share repurchase program up to 8.8 million
shares, representing 16% of shares outstanding
Science Applications International Corporation (NYSE: 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 first quarter
ended April 29, 2022.
“Our results over the past several quarters speak to the
progress we have made in executing our strategy to drive
profitable, sustained growth,” said SAIC CEO Nazzic Keene. “While
we face some modest top line pressure in the near-term, the
momentum we see in our business development efforts gives me
confidence in our ability to continue to profitably grow the
business. In the meantime, we will remain focused on strong
execution, disciplined capital allocation, and building upon our
strong culture.”
First Quarter of Fiscal Year 2023:
Summary Operating Results
Three Months Ended
April 29, 2022
Percent
change
April 30, 2021
(in millions, except per share
amounts)
Revenues
$
1,996
6
%
$
1,878
Operating income
125
(4
)%
130
Operating income as a percentage of
revenues
6.3
%
-60 bps
6.9
%
Adjusted operating income(1)
134
(4
)%
140
Adjusted operating income as a percentage
of revenues
6.7
%
-80 bps
7.5
%
Net income attributable to common
stockholders
73
(10
)%
81
EBITDA(1)
164
(6
)%
175
EBITDA as a percentage of revenues
8.2
%
-110 bps
9.3
%
Adjusted EBITDA(1)
173
(6
)%
184
Adjusted EBITDA as a percentage of
revenues
8.7
%
-110 bps
9.8
%
Diluted earnings per share
$
1.29
(7
)%
$
1.38
Adjusted diluted earnings per share(1)
$
1.88
(3
)%
$
1.94
Net cash provided by operating
activities
$
118
(38
)%
$
189
Free cash flow(1)
$
113
(31
)%
$
164
(1) Non-GAAP measure, see Schedule 5 for
information about this measure.
First Quarter Summary
Results
Revenues for the quarter increased $118 million compared to the
same period in the prior year primarily due to ramp up on new and
existing contracts and the acquisition of Halfaker (approximately
$42 million), partially offset by contract completions. Adjusting
for the impact of acquired revenues and divested revenues, revenues
grew 3.9% primarily due to ramp up on new and existing
contracts.
Operating income as a percentage of revenues decreased from the
comparable prior year period primarily due to higher indirect costs
in the current year period and higher benefit from net favorable
settlement of prior indirect rate years in the prior year period,
partially offset by improved profitability across our contract
portfolio.
Adjusted EBITDA(1) as a percentage of revenues for the quarter
decreased to 8.7% from 9.8% for the same period in the prior year
primarily due to higher indirect costs in the current year period
and higher benefit from net favorable settlement of prior indirect
rate years in the prior year period, partially offset by improved
profitability across our contract portfolio.
Diluted earnings per share for the quarter was $1.29 compared to
$1.38 in the prior year quarter. Adjusted diluted earnings per
share(1) for the quarter was $1.88 compared to $1.94 in the prior
year quarter. The weighted-average diluted shares outstanding
during the quarter decreased to 56.6 million from 58.7 million
during the prior year quarter.
Cash Generation and Capital
Deployment
Cash flows provided by operating activities for the first
quarter were $118 million, a decrease of $71 million compared to
the prior year quarter, primarily due to lower net earnings, cash
payments during the quarter associated with certain change in
control provisions related to the acquisition of Halfaker, and
timing of customer collections and vendor disbursements.
Free cash flow(1) for the first quarter decreased by $51 million
from the prior year quarter to $113 million, primarily due to lower
net earnings, cash payments during the quarter associated with
certain change in control provisions related to the acquisition of
Halfaker, and timing of customer collections and vendor
disbursements.
During the quarter, SAIC deployed $95 million of capital,
consisting of $68 million of plan share repurchases, $22 million in
cash dividends, and $5 million of capital expenditures. In
addition, SAIC made $59 million of mandatory debt repayment in the
first quarter.
(1) Non-GAAP measure, see Schedule 5 for
information about this measure.
Quarterly Dividend
Declared
Subsequent to the end of the quarter, the Company's Board of
Directors declared a cash dividend of $0.37 per share of the
Company's common stock payable on July 29, 2022 to stockholders of
record on July 15, 2022. 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.
Share Repurchase Authorization
Increased
SAIC today announced that its Board of Directors has authorized
an increase to its existing stock repurchase authorization of the
Company's common stock under an existing stock repurchase program.
The current authorization increases the repurchase program by 8.0
million shares in order to make available for repurchase an
aggregate of approximately 8.8 million shares.
Backlog and Contract
Awards
Net bookings for the quarter were approximately $2.0 billion,
which reflects a book-to-bill ratio of 1.0 and a trailing twelve
months book-to-bill ratio of 1.0. SAIC’s estimated backlog at the
end of the quarter was approximately $24.1 billion. Of the total
backlog amount, approximately $3.2 billion was funded.
Notable Recompete Awards:
Air Force Space and Missile Systems Center: SAIC was
awarded a $390 million task order by the General Services
Administration on behalf of the U.S. Space Force / Space Systems
Command to continue providing systems engineering and integration
services to help modernize the nation's Global Positioning System
(GPS) program.
U.S. Space and Intelligence Community: SAIC was awarded
$337 million of contract awards by space and intelligence community
organizations. Most of these contracts serve customers in the
intelligence community and classified space domain that rely on
SAIC for highly-specialized expertise in digital engineering as
well as cloud, artificial intelligence, cybersecurity, technology
integration, engineering, IT modernization and mission
operations.
Fiscal Year 2023
Guidance
The table below summarizes fiscal year 2023 guidance and
represents our views as of June 6, 2022.
Current Fiscal Year
Prior Fiscal Year
2023 Guidance
2023 Guidance
Revenue
$7.43 billion to $7.55
billion
$7.35 billion to $7.55
billion
Adjusted EBITDA Margin(1)
Approximately 8.9%
Approximately 8.9%
Adjusted Diluted EPS(1)
$6.90 to $7.20
$6.80 to $7.10
Free Cash Flow(1)
$500 million to $530 million
$500 million to $530 million
Webcast Information
SAIC management will discuss operations and financial results in
an earnings conference call beginning at 10:00 a.m. Eastern time on
June 6, 2022. The conference call will be webcast simultaneously to
the public through a link on the Investor Relations section of the
SAIC website (http://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 driving
our nation’s technology transformation. Our robust portfolio of
offerings across the defense, space, civilian and intelligence
markets includes secure high-end solutions in engineering, digital,
artificial intelligence and mission solutions. Using our expertise
and understanding of existing and emerging technologies, we
integrate the best components from our own portfolio and our
partner ecosystem to deliver innovative, effective, and efficient
solutions that are critical to achieving our customers'
missions.
We are approximately 26,000 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.
GAAP to Non-GAAP Guidance
Reconciliation
The Company does not provide a reconciliation of forward-looking
adjusted diluted EPS to GAAP diluted EPS or adjusted EBITDA margin
to GAAP net income due to the inherent difficulty in forecasting
and quantifying certain amounts that are necessary for such
reconciliation, including, but not limited to, amortization of
acquired intangible assets and acquisition, integration and
restructuring costs. As a result, the Company is not able to
forecast GAAP diluted EPS or GAAP net income with reasonable
certainty. The variability of the above charges may have an
unpredictable and potentially significant impact on our future GAAP
financial results.
(1) Non-GAAP measure, see Schedule 5 for
information about this measure.
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 CORPORATION
CONDENSED AND CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
April 29, 2022
April 30, 2021
(in millions, except per share
amounts)
Revenues
$
1,996
$
1,878
Cost of revenues
1,770
1,661
Selling, general and administrative
expenses
92
80
Acquisition and integration costs
9
10
Other operating income
—
(3
)
Operating income
125
130
Interest expense
27
27
Other (income) expense, net
3
(2
)
Income before income taxes
95
105
Provision for income taxes
(21
)
(23
)
Net income
$
74
$
82
Net income attributable to non-controlling
interest
1
1
Net income attributable to common
stockholders
$
73
$
81
Weighted-average number of shares
outstanding:
Basic
56.1
58.1
Diluted
56.6
58.7
Earnings per share:
Basic
$
1.30
$
1.39
Diluted
$
1.29
$
1.38
Schedule 2:
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
CONDENSED AND CONSOLIDATED
BALANCE SHEETS
(Unaudited)
April 29, 2022
January 28, 2022
(in millions)
ASSETS
Current assets:
Cash and cash equivalents
$
56
$
106
Receivables, net
1,104
1,015
Inventory, prepaid expenses and other
current assets
131
142
Total current assets
1,291
1,263
Goodwill
2,911
2,913
Intangible assets, net
1,101
1,132
Property, plant, and equipment, net
97
100
Operating lease right of use assets
187
209
Other assets
129
129
Total assets
$
5,716
$
5,746
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued
liabilities
$
820
$
840
Accrued payroll and employee benefits
395
364
Long-term debt, current portion
119
148
Total current liabilities
1,334
1,352
Long-term debt, net of current portion
2,342
2,370
Operating lease liabilities
175
192
Other long-term liabilities
215
203
Equity:
Total common stockholders' equity
1,640
1,619
Non-controlling interest
10
10
Total stockholders' equity
1,650
1,629
Total liabilities and stockholders'
equity
$
5,716
$
5,746
Schedule 3:
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
CONDENSED AND CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
April 29, 2022
April 30, 2021
(in millions)
Cash flows from operating activities:
Net income
$
74
$
82
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
41
42
Amortization of off-market customer
contracts
(2
)
(4
)
Amortization of debt issuance costs
2
2
Deferred income taxes
2
20
Stock-based compensation expense
11
10
Gain on divestitures
—
(3
)
Impairment of assets
—
7
Increase (decrease) resulting from changes
in operating assets and liabilities:
Receivables
(89
)
(61
)
Inventory, prepaid expenses and other
current assets
11
(5
)
Other assets
3
(4
)
Accounts payable and accrued
liabilities
39
44
Accrued payroll and employee benefits
31
57
Operating lease assets and liabilities,
net
(4
)
5
Other long-term liabilities
(1
)
(3
)
Net cash provided by operating
activities
118
189
Cash flows from investing activities:
Expenditures for property, plant, and
equipment
(5
)
(10
)
Purchases of marketable securities
(2
)
(2
)
Sales of marketable securities
1
1
Proceeds from divestitures
—
8
Other
—
(1
)
Net cash used in investing activities
(6
)
(4
)
Cash flows from financing activities:
Dividend payments to stockholders
(22
)
(22
)
Principal payments on borrowings
(59
)
(39
)
Issuances of stock
4
4
Stock repurchased and retired or withheld
for taxes on equity awards
(84
)
(53
)
Proceeds from borrowings
—
16
Distributions to non-controlling
interest
(1
)
(1
)
Net cash used in financing activities
(162
)
(95
)
Net (decrease) increase in cash, cash
equivalents and restricted cash
(50
)
90
Cash, cash equivalents and restricted cash
at beginning of period
115
190
Cash, cash equivalents and restricted cash
at end of period
$
65
$
280
Schedule 4:
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
BACKLOG
(Unaudited)
The estimated value of our total backlog
as of the dates presented was:
April 29, 2022
January 28, 2022
(in millions)
Funded backlog
$
3,218
$
3,491
Negotiated unfunded backlog
20,894
20,601
Total backlog
$
24,112
$
24,092
Backlog represents the estimated amount of future revenues to be
recognized under negotiated contracts and task orders as work is
performed and excludes contract awards which have been protested by
competitors until the protest is resolved in our favor. SAIC
segregates backlog into two categories, funded backlog and
negotiated unfunded backlog. Funded backlog for contracts with
government agencies primarily represents contracts for which
funding is appropriated less revenues previously recognized on
these contracts, and does not include the unfunded portion of
contracts where funding is incrementally appropriated or authorized
by the U.S. government and other customers even though the contract
may call for performance over a number of years. Funded backlog for
contracts with non-government agencies represents the estimated
value of contracts which may cover multiple future years under
which SAIC is obligated to perform, less revenues previously
recognized on these contracts. Negotiated unfunded backlog
represents the estimated future revenues to be earned from
negotiated contracts for which funding has not been appropriated or
authorized, and unexercised priced contract options. Negotiated
unfunded backlog does not include any estimate of future potential
task orders expected to be awarded under indefinite-delivery,
indefinite-quantity (IDIQ), U.S. General Services Administration
(GSA) schedules or other master agreement contract vehicles.
Schedule 5:
SCIENCE APPLICATIONS INTERNATIONAL
CORPORATION NON-GAAP FINANCIAL MEASURES
(Unaudited)
This schedule describes the non-GAAP financial measures included
in this earnings release. While we believe that these non-GAAP
financial measures may be useful in evaluating our financial
information, they should be considered as supplemental in nature
and not as a substitute for financial information prepared in
accordance with GAAP. Reconciliations, definitions, and how we
believe these measures are useful to management and investors are
provided below. Other companies may define similar measures
differently.
EBITDA, Adjusted EBITDA and Adjusted
Operating Income
Three Months Ended
April 29, 2022
April 30, 2021
(in millions)
Net income
$
74
$
82
Interest expense and loss on sale of
receivables
28
28
Provision for income taxes
21
23
Depreciation and amortization
41
42
EBITDA(1)
164
175
EBITDA as a percentage of revenues
8.2
%
9.3
%
Acquisition and integration costs
9
10
Depreciation included in acquisition and
integration costs
—
(1
)
Adjusted EBITDA(1)
$
173
$
184
Adjusted EBITDA as a percentage of
revenues
8.7
%
9.8
%
Operating income
$
125
$
130
Operating income as a percentage of
revenues
6.3
%
6.9
%
Acquisition and integration costs
9
10
Adjusted operating income(1)
$
134
$
140
Adjusted operating income as a percentage
of revenues
6.7
%
7.5
%
EBITDA is a performance measure that is calculated by taking net
income and excluding interest and loss on sale of receivables,
provision for income taxes, and depreciation and amortization.
Adjusted EBITDA and adjusted operating income are performance
measures that exclude acquisition and integration costs,
impairments, restructuring costs, and any other material
non-recurring costs that we do not consider to be indicative of our
ongoing operating performance. The acquisition and integration
costs relate to the Company's acquisitions of Halfaker, Koverse,
and Unisys Federal. We believe that these performance measures
provide management and investors with useful information in
assessing trends in our ongoing operating performance and may
provide greater visibility in understanding the long-term financial
performance of the Company.
(1) Non-GAAP measure, see above for
definition.
Schedule 5 (continued):
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
NON-GAAP FINANCIAL
MEASURES
(Unaudited)
Adjusted Diluted
Earnings Per Share
Three Months Ended
April 29, 2022
April 30, 2021
Diluted earnings per share
$
1.29
$
1.38
Acquisition and integration costs and
restructuring and impairment costs, divided by diluted
'weighted-average number of shares outstanding' (WASO)
0.16
0.17
Tax effect of acquisition and integration
costs and restructuring and impairment costs, divided by diluted
WASO
(0.03
)
(0.03
)
Net effect of acquisition and integration
costs and restructuring and impairment costs, divided by diluted
WASO
0.13
0.14
Amortization of intangible assets, divided
by diluted WASO
0.58
0.55
Tax effect of amortization of intangible
assets, divided by diluted WASO
(0.12
)
(0.13
)
Net effect of amortization of intangible
assets, divided by diluted WASO
0.46
0.42
Adjusted diluted earnings per
share(1)
$
1.88
$
1.94
Adjusted diluted earnings per share is a performance measure
that excludes acquisition and integration costs, impairments,
restructuring costs, and any other material non-recurring costs
that we do not consider to be indicative of our ongoing operating
performance. The acquisition and integration costs relate to the
Company's acquisitions of Halfaker, Koverse, and Unisys Federal.
Adjusted diluted earnings per share also excludes amortization of
intangible assets because we do not have a history of significant
acquisition activity, we do not acquire businesses on a predictable
cycle, and the amount of an acquisition's purchase price allocated
to intangible assets and the related amortization term are unique
to each acquisition. We believe that this performance measure
provides management and investors with useful information in
assessing trends in our ongoing operating performance and may
provide greater visibility in understanding the long-term financial
performance of the Company.
(1) Non-GAAP measure, see above for
definition.
Schedule 5 (continued):
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
NON-GAAP FINANCIAL
MEASURES
(Unaudited)
Free Cash
Flow
Three Months Ended
April 29, 2022
April 30, 2021
(in millions)
Net cash provided by operating
activities
$
118
$
189
Expenditures for property, plant, and
equipment
(5
)
(10
)
Cash used (provided) by MARPA Facility
—
(15
)
Free cash flow(1)
$
113
$
164
FY23 Guidance
(in millions)
Net cash provided by operating
activities
$535 to $565
Expenditures for property, plant, and
equipment
Approximately $35
Free cash flow(1)
$500 to $530
Free cash flow is calculated by taking cash flows provided by
operating activities less expenditures for property, plant, and
equipment and less cash flows from our Master Accounts Receivable
Purchasing Agreement (MARPA Facility) for the sale of certain
designated eligible U.S. government receivables. Under the MARPA
Facility, the Company can sell eligible receivables up to a maximum
amount of $300 million. We believe that free cash flow provides
management and investors with useful information in assessing
trends in our cash flows and in comparing them to other peer
companies, many of whom present a similar non-GAAP liquidity
measure. This measure should not be considered as a measure of
residual cash flow available for discretionary purposes.
(1) Non-GAAP measure, see above for
definition.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220606005039/en/
Investor Relations: Joe DeNardi, +1.703.488.8528
joseph.w.denardi@saic.com
Media: Thais Hanson, +1.703.676.8215
publicrelations@saic.com
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