SAIC Announces Second Quarter of Fiscal Year 2019 Results
RESTON, Va.--(BUSINESS WIRE)--Sep 10, 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 second quarter ended August 3, 2018.
“With our fourth quarter of consecutive revenue growth, SAIC delivered strong second quarter results including increased profitability and contract bookings,” said SAIC CEO Tony Moraco. “Our long term strategy, Ingenuity 2025, that we began executing two years ago and in advance of an improved market environment, positions SAIC well to create value for our customers and shareholders.”
Second Quarter of Fiscal Year 2019: Summary Operating Results
Revenues for the quarter increased $37 million, or 3.4%, compared to the prior year quarter due to increased orders in our supply chain portfolio ($31 million) and revenue on new contracts primarily supporting NASA and other federal civilian agencies ($24 million). These increases were partially offset by completion of contracts and other net decreases across our portfolio ($18 million).
Operating income as a percentage of revenues increased to 6.6%, compared to 5.5% for the prior year quarter, driven by improved performance across our portfolio and the continued realization of cost efficiencies.
Net income for the quarter increased $13 million as compared to the same period in the prior year due to higher operating income.
Adjusted EBITDA (1) as a percentage of revenues for the quarter increased to 7.5%, compared to 6.7% for the prior year quarter, driven by improved performance across our portfolio and the realization of cost efficiencies resulting from our restructuring activities in fiscal 2018.
Diluted earnings per share was $1.13 for the quarter. The weighted-average diluted shares outstanding during the quarter was 43.2 million shares.
(1) Non-GAAP measure, see Schedule 5 for information about this measure.
Cash Generation and Capital Deployment
Total cash flows used in operating activities for the second quarter were $12 million, compared $35 million used in operating activities during the same period in the prior year. The improvement is primarily due to prior year delayed collections caused by a government payment system issue, partially offset by an increase in working capital investments in platform integration programs.
During the quarter SAIC deployed $22 million of capital, consisting of $13 million in cash dividends and a $9 million term loan repayment. No plan share repurchases were made during the quarter as SAIC evaluated alternative capital deployment opportunities including the pending acquisition of Engility.
New Business Awards
Net bookings for the quarter were approximately $1.5 billion, which reflects a book-to-bill ratio of 1.4. SAIC’s estimated backlog of signed business orders at the end of the quarter was approximately $10.5 billion of which $2.1 billion was funded.
SAIC was awarded the following contracts during the quarter:
Notable Protect Awards (maintaining our existing contract base):
The U.S. Army Aviation and Missile Command (AMCOM): SAIC was awarded a follow-on task order by AMCOM to continue to provide systems engineering and development, and modeling and simulation services to all branches of the Armed services, multiple program offices, and other government agencies. This single award task order has a six-year period of performance, and a total contract value of more than $718 million. The task order was awarded under the AMCOM Expedited Professional & Engineering Support Services (EXPRESS) contract vehicle that provides for systems and computer resources support.
The U.S. Army and the General Services Administration (GSA): SAIC will continue to provide the Army with support to the Maneuver Center of Excellence, Maneuver Battle Lab in Fort Benning, Georgia. The single-award task order, awarded by GSA, has a one-year base period of performance, four one-year options, and is valued at approximately $48 million.
GSA: SAIC was awarded a position on the GSA’s Alliant 2 Governmentwide Acquisition Contract (GWAC) to provide information technology support services. Alliant 2 is an unrestricted multiple-award, indefinite-delivery, indefinite-quantity contract that has a five-year base period, a five-year option, and a $50 billion ceiling value. SAIC is one of 60 awardees. Alliant 2 GWAC provides flexible access to customized IT solutions from a large, diverse pool of industry partners. Under the contract, SAIC will provide a full range of comprehensive IT services and IT services-based solutions.
The U.S. Navy Space and Naval Warfare (SPAWAR) Systems Center Pacific: SAIC was awarded a prime contract worth approximately $116 million by SPAWAR Systems Center Pacific to continue to provide engineering services to the Navy’s afloat and ashore assets. Under the contract SAIC will provide management, engineering, technical, integrated logistics support, and configuration management to the Navy’s Tactical Networks In-Service Engineering Activity (TACNET ISEA). The single award, indefinite-delivery, indefinite-quantity contract has a three-year base period of performance and a two-year option period which, if exercised, would bring the potential value of this contract to an estimated $196 million.
Notable Expand Award (selling new services & solutions to existing customers):
The Commonwealth of Virginia: SAIC was awarded a contract by the Virginia Information Technologies Agency to provide information technology (IT) infrastructure services for state agencies. SAIC will provide infrastructure services as part of a transition assistance program designed to reduce transition risk and permit stabilization of services for four months, until December 15, 2018. When VITA moves to a multisupplier service model on December 15, 2018, SAIC will serve as the multisourcing service integrator (MSI). The contract is worth approximately $70 million.
SAIC was awarded the following notable contracts subsequent to the end of the quarter:
Notable Protect Award:
The U.S. Navy: SAIC was awarded a multiple-award, indefinite delivery, indefinite quantity subcontract to support the Department of Defense Ordnance Technology Consortium (DOTC) by providing the Naval Sea Systems Command with prototype solutions to advance and transition ordnance systems, subsystems and component technologies. The contract has a 10-year base period of performance and is worth a potential $300 million.
Notable Expand Awards:
U.S. Space-related Activities: SAIC was awarded a contract in excess of $250 million 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.
The U.S. Navy: SAIC was awarded an indefinite-delivery, indefinite-quantity contract by the Navy to help procure materials and services for the development, manufacturing, and fabrication of unmanned undersea vehicles. The multiple-award contract has a five-year base period of performance, one four-year option, and is potentially worth approximately $795 million for all awardees. SAIC is one of 23 awardees.
Notable Grow Award (selling services & solutions to new customers):
The U.S. Navy: SAIC was awarded an indefinite-delivery, indefinite-quantity contract by the Navy to deliver a broad range of training system products and services to the Naval Air Warfare Center Training Systems Division. The multiple-award contract has a five-year base ordering period and three option ordering periods spanning four years. The contract is potentially worth approximately $980 million total for all awardees. SAIC is one of 22 awardees.
SAIC management will discuss operations and financial results in an earnings conference call beginning at 8 a.m. Eastern time on September 10, 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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