SAIC Announces Third Quarter of Fiscal Year 2019 Results
RESTON, Va.--(BUSINESS WIRE)--Dec 6, 2018--Science Applications International Corporation (NYSE: SAIC), a leading technology integrator providing full life-cycle services and solutions in the technical, engineering, intelligence, and enterprise information technology markets, today announced results for the third quarter ended November 2, 2018.
“As we prepare for the future, we continue to focus on delivering strong performance across our contract portfolio, as evidenced by our third quarter results. Our fifth consecutive quarter of revenue growth and the highest profitability in our five year history are proof points of the disciplined execution of our strategy,” said SAIC CEO Tony Moraco. “We look forward to accelerating the execution of our long term strategy, Ingenuity 2025, with the acquisition of Engility. We will enter next year with increased customer access, more investments in competitive and differentiated solutions, along with improved cash flow to enhance opportunities for shareholder value creation.”
Third Quarter of Fiscal Year 2019: Summary Operating Results
Revenues for the quarter increased $32 million, or 2.8%, compared to the prior year quarter due to newly awarded contracts ($54 million), which includes an information technology (IT) integration contract supporting state and local customers, and increased orders in our supply chain portfolio ($24 million). These increases were partially offset by completion of contracts and other net decreases across our portfolio ($46 million).
Operating income as a percentage of revenues of 6.2%, was consistent with 6.3% for the prior year quarter.
Adjusted operating income (1) as a percentage of revenues increased to 7.4%, compared to 6.4% for the prior year quarter due to improved performance across our portfolio ($22 million), inclusive of newly awarded contracts, and higher net favorable changes in estimates related to performance obligations satisfied over time ($14 million). These improvements were partially offset by an increase in our inventory provision ($25 million).
Net income for the quarter increased $5 million as compared to the same period in the prior year due to a lower effective tax rate, partially offset by expenses associated with the debt refinancing activities in the current quarter.
Adjusted EBITDA (1) as a percentage of revenues for the quarter increased to 8.3%, compared to 7.4% for the prior year quarter, consistent with adjusted operating income (1).
Diluted earnings per share was $1.11 for the quarter and adjusted diluted earnings per share (1) was $1.35. The weighted-average diluted shares outstanding during the quarter was 43.2 million shares.
Cash Generation and Capital Deployment
Cash flows provided by operating activities for the third quarter were $86 million, compared to $80 million during the same period in the prior year. The improvement is primarily due to higher customer collections, partially offset by an increase in vendor payments and payments for acquisition and integration costs.
During the quarter SAIC deployed $13 million of capital in cash dividends. No plan share repurchases were made during the quarter pending the close of the Engility acquisition.
New Business Awards
Net bookings for the quarter were approximately $1.2 billion, which reflects a book-to-bill ratio of 1.0. SAIC’s estimated backlog of signed business orders at the end of the quarter was approximately $10.4 billion of which $2.4 billion was funded. Although not contributing to bookings for the quarter, SAIC was awarded several single-award indefinite-delivery, indefinite-quantity vehicles with $1.2 billion of ceiling value.
SAIC was awarded the following contracts during the quarter:
Notable Protect Awards (maintaining our existing contract base):
The U.S. Navy Space and Naval Warfare (SPAWAR) Systems Center Atlantic: SAIC was awarded an indefinite-delivery, indefinite-quantity contract by the Navy to continue the production and delivery of integrated Command, Control, Communications, Computers, Computers, Intelligence, Surveillance, and Reconnaissance (C5ISR) systems, networks, and support equipment in support of the Space and Naval Warfare Systems Center (SSC) Atlantic. The single-award contract has a five-year period of performance worth approximately $597 million. The contract has an additional two-year award term that, if earned, would increase its potential value to approximately $861 million.
The U.S. Army: SAIC was awarded a task order to provide aviation and unmanned system simulation technical support to the Army’s Research, Development, and Engineering Command (RDECOM) Aviation and Missile Research, Development, and Engineering Center (AMRDEC) Systems Simulation, Software and Integration Directorate (S3I). Awarded under the U.S. Army Aviation and Missile Command (AMCOM) Expedited Professional & Engineering Support Services (EXPRESS) Blanket Purchase Agreement (BPA), the task order has a three-year period of performance, is worth approximately $98 million.
U.S. Space-related Activities: SAIC was awarded a $255 million contract to provide systems engineering and technical assurance work that supports various space-related activities. As part of this contract, SAIC will use its Model Based System Engineering methodologies to develop mission-planning tools and products that help customers to save time, resources, and money. This work will be performed primarily in the continental United States.
Notable Expand Awards (selling new services & solutions to existing customers):
The U.S. Navy Office of the Chief of Naval Operations: SAIC was awarded an indefinite-delivery, indefinite-quantity contract by the Navy to provide support the deputy chief of naval operations, the Bureau of Naval Personnel, the Navy Personnel Command, the Navy Manpower Analysis Center, Commander Naval Education and Training, and the Commander Navy Recruiting Command. Services will include chief information officer, engineering, network and information technology system support; data and information management; information assurance; cybersecurity; enterprise business intelligence; enterprise business analytics; software analysis; hardware maintenance and development; and business process reengineering. The multiple-award contract has a six-year period of performance and is worth potentially more than $213 million for all awardees. SAIC is one of five awardees competing for task orders.
Orange County, California: SAIC was awarded a prime contract to provide information technology (IT) managed services and solutions to agencies and departments within Orange County, California. The firm-fixed-price contract has a three-year base period of performance valued at approximately $51 million, two one-year options, and a total contract value of approximately $77 million, if all options are exercised. Work will be primarily performed in Santa Ana, California. Under the contract, SAIC will deliver IT and technology services including converged network (WAN and LAN), voice communications, security operations center, and overall IT service management.
Notable Grow Awards (selling services & solutions to new customers):
The U.S. Department of Agriculture (USDA) and the General Services Administration (GSA): GSA awarded SAIC three GSA-led Information Technology (IT) modernization Centers of Excellence (CoE) contract awards to support the USDA. As part of GSA’s government-wide IT modernization plan, the CoEs provide agencies with consulting, acquisition, and IT engineering services to improve the way agencies design services and interact with their customers. Under the initiative, SAIC was awarded the following:Data Analytics Capacity Building: A single-award task order worth an estimated $4 million to provide program management, data science, organizational change management, and training support to more than 100,000 personnel within the USDA. SAIC will align with USDA to enhance the way the entire department works together and thinks about, manages, and leverages insights from their data. Data Visualization and Analytics: A single-award blanket purchase agreement worth an estimated $35 million with firm-fixed-price task orders to provide professional services to develop and deploy advanced analytics and data visualization capabilities within USDA’s mission areas. SAIC teams will evaluate alternatives across technologies, including blockchain, to develop and implement solutions to infuse the Voice of the Customer and enhance USDA’s mission delivery. Infrastructure Optimization Cloud Adoption: A multiple-award blanket purchase agreement worth an estimated $50 million to support DevSecOps transformation. Additionally, work includes the migration of more than 800 applications and data center consolidation.
SAIC was awarded the following notable contracts subsequent to the end of the quarter:
Notable Protect Award:
Defense Logistics Agency (DLA): SAIC was awarded a firm fixed-price requirements contract to continue to act as lead supply chain manager and integrator for a DLA tire delivery program. The contract has a five-year base period of performance worth approximately $900 million. The contract also includes two, two-year option periods, plus four two-month option periods which, if exercised, would bring the total potential contract value to $1.7 billion. As part of the tires program, SAIC has delivered more than 1.5 million tires meeting a stringent 97 percent on-time delivery rate. Customers using the Global Tire Program integrator contract are the U.S. Army, Navy, Air Force, Marine Corps, Coast Guard, and foreign military sales.
SAIC management will discuss operations and financial results in an earnings conference call beginning at 4:30 p.m. Eastern time on December 6, 2018. 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.
SAIC is a premier technology integrator providing full life cycle services and solutions in the technical, engineering, intelligence, and enterprise information technology markets. SAIC is Redefining Ingenuity through its deep customer and domain knowledge to enable the delivery of systems engineering and integration offerings for large, complex projects. SAIC’s more than 15,000 employees are driven by integrity and mission focus to serve customers in the U.S. federal government. Headquartered in Reston, Virginia, SAIC has annual revenues of approximately $4.5 billion. For more information, visit saic.com. For ongoing news, please visit our newsroom.
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 or on the SEC’s website at . 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.
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SOURCE: Science Applications International Corporation
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PUB: 12/06/2018 04:05 PM/DISC: 12/06/2018 04:05 PM