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Science Applications (SAIC) Plunges 10% on Q4 Earnings Miss
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Science Applications International Corporation (SAIC - Free Report) shares plunged 10% on Monday after the company reported lower-than-expected bottom-line results for the fourth quarter of fiscal 2024. The company reported fourth-quarter adjusted earnings of $1.43 per share, which lagged the Zacks Consensus Estimate by a penny. The figure also decreased 30% year over year due to lower revenues and higher expenses.
Revenues declined 12% year over year to $1.74 billion but outpaced the consensus mark by 5.9%. The year-over-year decrease was due to the sale of the logistics and supply chain management division, the Forfeiture Support Associates (“FSA”) joint venture's deconsolidation, contract completions and an additional five working days in the year-ago quarter. The downside was partially offset by a ramp-up in existing and new contracts.
Nevertheless, the top line increased by 7.7% when adjusted for the impact of the logistics and supply chain management division’s divesture, the deconsolidation of the FSA joint venture and the estimated impact of an additional five working days in the year-ago quarter.
Adjusted EBITDA was $127 million, down 26% year over year. The adjusted EBITDA margin contracted 140 basis points (bps) on a year-over-year basis to 7.3%. The year-over-year decline was due to the sale of the logistics and supply chain management division, the FSA joint venture's deconsolidation and higher incentive-based compensation expenses.
Science Applications International Corporation Price, Consensus and EPS Surprise
Net bookings for the fiscal fourth quarter were $1.4 billion, reflecting a book-to-bill ratio of 0.8. SAIC’s estimated backlog of signed business deals was $22.8 billion at the end of the fiscal fourth quarter, of which $3.5 billion was funded.
Selling, general and administrative (SG&A) expenses increased 12% to $114 million. SG&A expenses, as a percentage of revenues, rose to 6.6% from 5.8% in the year-ago quarter.
Non-GAAP operating income plunged 32% year over year to $89 million, mainly due to lower revenues and higher expenses. The non-GAAP operating margin contracted 160 bps year over year to 5.1%.
Balance Sheet & Cash Flow Details
Science Applications ended the fiscal third quarter with cash and cash equivalents of $94 million, down from the prior quarter’s $311 million.
As of Feb 2, 2024, Science Applications’ long-term debt (net of the current portion) was $2.02 billion compared with $2.2 billion as of Nov 3, 2023.
The company generated operating and free cash flows of $63 million and $97 million, respectively, in the fiscal fourth quarter. The company generated operating and free cash flows of $396 million and $414 million, respectively, in fiscal 2024.
FY25 Guidance Update
Science Applications updated its fiscal 2025 guidance. The company raised the fiscal 2025 revenue guidance range to $7.35-$7.50 billion from $7.25-$7.40 billion projected earlier. It projects adjusted EBITDA in the $680-$700 million range for the fiscal. However, SAIC revised downward the adjusted EBITDA margin to 9.2%-9.4% from 9.4%-9.6% forecasted previously.
SAIC still expects adjusted earnings in the $8-$8.20 per share range. It projects to generate free cash flow in the band of $490-$510 million, up from the earlier guidance range of $480-$500 million.
Zacks Rank & Other Stocks to Consider
Currently, Science Applications carries a Zacks Rank #2 (Buy). Shares of SAIC have increased 3.3% year to date (YTD).
The Zacks Consensus Estimate for NVIDIA’s fiscal 2025 earnings has been revised 27 cents upward to $23.49 per share in the past seven days, which suggests year-over-year growth of 81.3%. The long-term estimated earnings growth rate for the stock is 29.7%. Shares of NVDA have surged 78.7% YTD.
The consensus mark for Meta’s 2024 earnings has been revised upward by 12 cents to $19.94 per share over the past 30 days, which indicates a 34.1% increase from 2023. It has a long-term earnings growth expectation of 19.5%. META stock has jumped 40.5% YTD.
The Zacks Consensus Estimate for Amazon’s 2024 earnings has been revised upward by 5 cents to $4.08 per share in the past 30 days, which implies an increase of 40.7% on a year-over-year basis. The long-term expected earnings growth rate for the stock is 28.1%. AMZN stock has returned 14.9% YTD.
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Science Applications (SAIC) Plunges 10% on Q4 Earnings Miss
Science Applications International Corporation (SAIC - Free Report) shares plunged 10% on Monday after the company reported lower-than-expected bottom-line results for the fourth quarter of fiscal 2024. The company reported fourth-quarter adjusted earnings of $1.43 per share, which lagged the Zacks Consensus Estimate by a penny. The figure also decreased 30% year over year due to lower revenues and higher expenses.
Revenues declined 12% year over year to $1.74 billion but outpaced the consensus mark by 5.9%. The year-over-year decrease was due to the sale of the logistics and supply chain management division, the Forfeiture Support Associates (“FSA”) joint venture's deconsolidation, contract completions and an additional five working days in the year-ago quarter. The downside was partially offset by a ramp-up in existing and new contracts.
Nevertheless, the top line increased by 7.7% when adjusted for the impact of the logistics and supply chain management division’s divesture, the deconsolidation of the FSA joint venture and the estimated impact of an additional five working days in the year-ago quarter.
Adjusted EBITDA was $127 million, down 26% year over year. The adjusted EBITDA margin contracted 140 basis points (bps) on a year-over-year basis to 7.3%. The year-over-year decline was due to the sale of the logistics and supply chain management division, the FSA joint venture's deconsolidation and higher incentive-based compensation expenses.
Science Applications International Corporation Price, Consensus and EPS Surprise
Science Applications International Corporation price-consensus-eps-surprise-chart | Science Applications International Corporation Quote
Quarter in Detail
Net bookings for the fiscal fourth quarter were $1.4 billion, reflecting a book-to-bill ratio of 0.8. SAIC’s estimated backlog of signed business deals was $22.8 billion at the end of the fiscal fourth quarter, of which $3.5 billion was funded.
Selling, general and administrative (SG&A) expenses increased 12% to $114 million. SG&A expenses, as a percentage of revenues, rose to 6.6% from 5.8% in the year-ago quarter.
Non-GAAP operating income plunged 32% year over year to $89 million, mainly due to lower revenues and higher expenses. The non-GAAP operating margin contracted 160 bps year over year to 5.1%.
Balance Sheet & Cash Flow Details
Science Applications ended the fiscal third quarter with cash and cash equivalents of $94 million, down from the prior quarter’s $311 million.
As of Feb 2, 2024, Science Applications’ long-term debt (net of the current portion) was $2.02 billion compared with $2.2 billion as of Nov 3, 2023.
The company generated operating and free cash flows of $63 million and $97 million, respectively, in the fiscal fourth quarter. The company generated operating and free cash flows of $396 million and $414 million, respectively, in fiscal 2024.
FY25 Guidance Update
Science Applications updated its fiscal 2025 guidance. The company raised the fiscal 2025 revenue guidance range to $7.35-$7.50 billion from $7.25-$7.40 billion projected earlier. It projects adjusted EBITDA in the $680-$700 million range for the fiscal. However, SAIC revised downward the adjusted EBITDA margin to 9.2%-9.4% from 9.4%-9.6% forecasted previously.
SAIC still expects adjusted earnings in the $8-$8.20 per share range. It projects to generate free cash flow in the band of $490-$510 million, up from the earlier guidance range of $480-$500 million.
Zacks Rank & Other Stocks to Consider
Currently, Science Applications carries a Zacks Rank #2 (Buy). Shares of SAIC have increased 3.3% year to date (YTD).
Some other top-ranked stocks from the broader technology sector are NVIDIA Corporation (NVDA - Free Report) , Meta Platforms (META - Free Report) and Amazon.com (AMZN - Free Report) . NVIDIA and Meta each sport a Zacks Rank #1 (Strong Buy), while Amazon carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2025 earnings has been revised 27 cents upward to $23.49 per share in the past seven days, which suggests year-over-year growth of 81.3%. The long-term estimated earnings growth rate for the stock is 29.7%. Shares of NVDA have surged 78.7% YTD.
The consensus mark for Meta’s 2024 earnings has been revised upward by 12 cents to $19.94 per share over the past 30 days, which indicates a 34.1% increase from 2023. It has a long-term earnings growth expectation of 19.5%. META stock has jumped 40.5% YTD.
The Zacks Consensus Estimate for Amazon’s 2024 earnings has been revised upward by 5 cents to $4.08 per share in the past 30 days, which implies an increase of 40.7% on a year-over-year basis. The long-term expected earnings growth rate for the stock is 28.1%. AMZN stock has returned 14.9% YTD.