SAIC Announces Financial Results for the Second Quarter of Fiscal Year 2016

MCLEAN, Va., Sept. 1, 2015 /PRNewswire/ -- Science Applications International Corporation (NYSE: SAIC), a leading technology integrator providing full life cycle services and solutions in the technical, engineering and enterprise information technology markets, today announced financial results for the second quarter ended July 31, 2015. As previously announced, SAIC completed its acquisition of Scitor Holdings, Inc. (Scitor) on May 4, 2015, at the beginning of the quarter, and accordingly, the results presented reflect that of the combined company since acquisition.

"The second quarter fiscal 2016 results demonstrate our commitment to continuing the execution of our market strategy and shareholder value creation proposition," said CEO Tony Moraco. "The acquisition of Scitor provides strategic market access and incremental, strong cash flow characteristics. We continue to serve our existing customers and expand market opportunities while effectively deploying capital for our shareholders."

Second Quarter: Summary Operating Results

Revenues for the second quarter were $1,089 million compared to $939 million during the prior year quarter, which equates to revenue growth of 16% and, as is shown in Schedule 5, represents internal revenue contraction of 0.5% when revenue from the prior year quarter is adjusted to include historical revenue from the Scitor acquisition. Total revenues increased due to the acquisition of Scitor which generated $147 million in revenue during the quarter.

Operating income for the quarter was $52 million, or 4.8% of revenues, down from $59 million in the prior year quarter. The decrease was primarily driven by costs associated with the acquisition and integration of Scitor ($12 million). These costs were partially offset by operating income generated by Scitor during the quarter ($3 million after $11 million of amortization of acquired intangible assets), with the remainder primarily attributable to strong performance across our contract portfolio.

The Scitor acquisition and integration costs of $12 million have been added back to current quarter operating income in the summary table for the calculation of adjusted operating income in order to aid comparison with the prior year comparable period which did not include such costs. Adjusted operating income as a percentage of revenues was 5.9% for the quarter.

Net income for the quarter was $22 million compared to $34 million in the prior year quarter. The decrease was due to lower operating income and increased interest expense of $9 million on incremental term loan borrowings related to the acquisition of Scitor.

Diluted earnings per share was $0.46 for the quarter and adjusted diluted earnings per share (which excludes the estimated after-tax effects of the $12 million of acquisition and integration costs) was $0.66. The weighted-average diluted shares outstanding during the quarter was 47.6 million shares.

Cash Generation and Capital Deployment

Cash flows provided by operating activities for the quarter were $21 million. Operating cash flows were primarily generated through operating income of $52 million, which includes the cash flow impact of acquisition and integration costs and is further reduced by payments for income taxes and an increase in days of sales outstanding as a result of administrative delays in customer collections and the timing of milestone payments.

During the quarter, SAIC deployed $15 million in cash dividends and paid $764 million, net of cash acquired, to purchase Scitor. The acquisition of Scitor and related transaction costs were funded through additional term loan borrowings of $670 million and cash on hand of $157 million.

New Business Awards

Net bookings for the quarter were approximately $1.0 billion and include Scitor contract awards since the acquisition date, which reflects a combined book-to-bill ratio of approximately 0.9.

SAIC was awarded the following notable contracts during the quarter:

U.S. Air Force – Network Centric Solutions 2 (NETCENTS2): SAIC was awarded an indefinite delivery/indefinite quantity (IDIQ) contract by the U.S. Air Force to provide a variety of services and solutions for network operations; enterprise services and infrastructure development; operations and network management; and defense. The multiple-award IDIQ contract has a three-year period of performance, four one-year options, and a total contract value of more than $7.9 billion available to all awardees. Under the contract, SAIC will compete with the other awardees to provide support to the Air Force at various locations throughout the country/world.

U.S. Army – Tank and Automotive Command (TACOM): SAIC was awarded three prime IDIQ contracts by the U.S. Army for TACOM Strategic Service Solutions. The multiple-award IDIQ contracts cover three individual service areas: a knowledge based services contract worth a total of $1.8 billion; an equipment related services contract worth a total of $1.1 billion; and a research and development services contract worth a total of $634 million. The contracts each have a five-year period of performance, and a combined total contract value of more than $3.5 billion available to all awardees. Work will be performed primarily in Michigan.

Defense Logistics Agency (DLA): SAIC was awarded a contract to provide tailored logistics support for maintenance, repair and operations (MRO) requirements at Department of Defense (DoD) and federal installations in the south central region of the U.S. The single-award, firm-fixed-price contract has a five-year period of performance and an estimated contract value of $105 million. Under the contract, SAIC will employ commercial business practices to reduce total MRO logistics cost to DLA Troop Support and its customers. SAIC will provide sourcing, procurement and delivery of MRO supplies to DoD and federal entities in the south central region of the south central region of the U.S. Work will be performed primarily in Arkansas, Colorado, Kansas, New Mexico, and Oklahoma.

U.S. Army - Aviation and Missile Research, Development, and Engineering Center (AMRDEC): SAIC was awarded the Aviation Systems and Computer Resources Support (ASCRS) task order by the U.S. Army to provide a variety of Aviation Systems Engineering and Software Development services for AMRDEC. The single-award, cost-plus-fixed-fee task order, under the GSA One Acquisition Solution for Integrated Services (OASIS) contract, has a one-year base period of performance, a one-year option, and an estimated contract value of $109 million. Under this task order, SAIC will perform lifecycle systems and software engineering support to help provide the latest technology and equipment needed for mission success. Work will be performed primarily in Alabama.

U.S. Marine Corps – Enterprise Information Technology Services (MCEITS): SAIC was awarded a prime contract by the U.S. Marine Corps to update and maintain two data centers. The MCEITS contract is a single-award, firm-fixed price, IDIQ contract that has a two-year period of performance and a contract value of more than $64 million. Under the contract, SAIC will provide open architecture and modern software-defined data centers that will allow for greater visibility of the U.S. Marine Corps data center operations and support future cloud services for Marine Corps customers. Work will be performed primarily in Missouri, North Carolina, and Virginia.

SAIC's estimated backlog of signed business orders at the end of the quarter was approximately $7.1 billion of which $1.9 billion was funded. Our total backlog at the end of the second quarter includes approximately $1 billion of backlog obtained through the acquisition of Scitor. Negotiated backlog does not include any estimate of future task orders expected to be awarded under IDIQ, U.S. General Services Administration schedules or other master agreement contract vehicles.

Special Recognition – General Services Administration (GSA) Awards SAIC and Penobscot Bay Media with Mentor-Protégé of the Year Award

The GSA awarded SAIC the Mentor-Protégé of the Year Award during the 2015 GSA Mentor Protégé Awards Ceremony held on May 13 in Washington, D.C. SAIC was recognized for the mentor support provided through its agreement with Penobscot Bay Media, a service-disabled, veteran-owned, economically-disadvantaged, woman-owned small business.

Conference Call Information

SAIC management will discuss operations and financial results in an earnings conference call beginning at 8 a.m. ET on September 1, 2015. A live audio broadcast of the conference call, along with a supplemental presentation, will be available to the public through links to the Investor Relations section of the SAIC website (http://investors.saic.com). Interested parties may listen to the conference call by dialing +1.888.297.0353 (toll-fee U.S.) or +1.719.457.1517 (International/Local) and entering passcode 5618601.

About SAIC

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, talented people, effective processes, and innovation to enable the delivery of systems engineering and integration offerings for large, complex projects. SAIC's approximately 15,000 employees are driven by integrity and mission focus to serve customers in the U.S. federal government, state/local, and global commercial markets. Headquartered in McLean, Virginia, SAIC has annual revenues of about $4.4 billion.

For more information, visit http://www.saic.com. For ongoing news, please visit our newsroom.

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. These statements reflect our belief and assumptions as to future events that may not prove to be accurate. Actual performance and results may differ materially from the guidance and other forward-looking statements made in this release depending on a variety of factors, including: developments in the U.S. government defense budget, including budget reductions, implementation of spending cuts (sequestration) or changes in budgetary priorities; delays in the U.S. government budget process or approval to raise the U.S. debt ceiling; delays in the U.S. government contract procurement process or the award of contracts; delays or loss of contracts as result of competitor protests; changes in U.S. government procurement rules, regulations and practices; our compliance with various U.S. government and other government procurement rules and regulations; governmental reviews, audits and investigations of our company; our ability to effectively compete and win contracts with the U.S. government and other customers; our ability to retain key employees and customers of recently acquired Scitor Holdings, Inc. and its subsidiaries (collectively, Scitor); our ability to successfully integrate Scitor, including implementing IT and other control systems relating to Scitor's operations; our ability to generate sufficient earnings to meet the required leverage ratio under our credit facilities, which if unsuccessful would give lenders the right to, among other things, foreclose on all of our assets; our ability to attract, train and retain skilled employees, including our management team, and to obtain security clearances for our employees; our ability to accurately estimate costs associated with our firm-fixed price and other contracts; cybersecurity, data security or other security threats, systems failures or other disruptions of our business; resolution of legal and other disputes with our customers and others or legal or regulatory compliance issues; our ability to effectively deploy capital and make investments in our business; our ability to maintain relationships with prime contractors, subcontractors and joint venture partners; our ability to manage performance and other risks related to customer contracts, including complex engineering projects; the adequacy of our insurance programs designed to protect us from significant product or other liability claims; our ability to declare future dividends based on our earnings, financial condition, capital requirements and other factors, including compliance with applicable laws and contractual agreements; risks associated with our recently completed spin-off transaction from our former parent, such as protests of awards of contracts to us that were bid before completion of the spin-off or novation of contract vehicles to us or a failure to realize the expected benefits of the spinoff; and our ability to execute our business plan and long-term management initiatives effectively and to overcome these and other known and unknown risks that we face. These are only some of the factors that may affect the forward-looking statements contained in this release. For further information concerning risks and uncertainties associated with our business, please refer to the filings we make from time to time with the U.S. Securities and Exchange Commission, including 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, which may be viewed or obtained through the Investor Relations section of our web site at www.saic.com.

All information in this release is as of September 1, 2015. 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.

 

 

 

 

 

 

 

 

 

 

 

 

Logo - http://photos.prnewswire.com/prnh/20150727/245853LOGO

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/saic-announces-financial-results-for-the-second-quarter-of-fiscal-year-2016-300135730.html

SOURCE SAIC