Science Applications International Corporation ( SAIC Quick Quote SAIC - Free Report) delivered better-than-expected third-quarter fiscal 2023 results. The company reported adjusted earnings of $1.90 per share, surpassing the Zacks Consensus Estimate of $1.74. The bottom line increased 3% from the year-ago quarter’s earnings of $1.85 per share.
Revenues inched up 1% year over year to $1.91 billion and outpaced the consensus mark of $1.86 billion. The increase was primarily due to the ramp-up of new and existing contracts, partially offset by contract completions and lower accelerated amortization on certain off-market liability contracts.
Quarter in Detail
Net bookings for the fiscal third quarter were $2 billion, reflecting a book-to-bill ratio of 1.1. SAIC’s estimated backlog of signed business deals was $24.4 billion, of which $4 billion was funded.
The non-GAAP operating income increased 8% year over year to $136 million. The non-GAAP operating margin expanded 50 basis points to 7.1%.
Adjusted EBITDA decreased to $170 million from $171 million in the year-ago quarter. The adjusted EBITDA margin decreased to 8.9% from 9% in the year-ago quarter.
Balance Sheet & Cash Flow Details
Science Applications ended the fiscal third quarter with cash and cash equivalents of $53 million, down from the prior quarter’s $99 million. As of Oct 28, 2022, its long-term debt (net of the current portion) was $2.36 billion.
The company generated operating and free cash flows of $128 million and $122 million, respectively, in the third quarter.
In the fiscal third quarter, Science Applications paid out $21 million in dividends and repurchased shares worth $60 million.
Science Applications announced that its board of directors authorized a quarterly cash dividend of 37 cents per share, payable on Jan 27, 2023, to shareholders of record as of Jan 13, 2023.
Fiscal 2023 Guidance
Buoyed by the stronger-than-expected third-quarter performance, Science Applications raised its revenue and earnings guidance range for fiscal 2023.
The company now anticipates revenues of approximately $7.60 billion in fiscal 2023, up from the previously forecast range of $7.50-$7.55 billion. The company now expects adjusted earnings in the band of $7.05-$7.20 per share instead of the earlier projection in the range of $7.00-$7.20.
Management expects to generate free cash flow between $500 million and $520 million in fiscal 2023 instead of the earlier forecast band of $500-$530 million. It still projects the adjusted EBITDA margin to be approximately 8.9% in fiscal 2023.
Zacks Rank & Stocks to Consider
Currently, Science Applications carries a Zacks Rank #3 (Hold). Shares of SAIC have increased 30.8% year to date (YTD).
Some better-ranked stocks from the broader technology sector are
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