Science Applications International Corp (SAIC) Reports Strong Earnings Growth in Q3 FY2024
SAIC reports 10.6% organic revenue growth adjusted for divestitures.
Net income rises to $93 million with a 16% increase year-over-year.
Adjusted EBITDA margin improves by 50 basis points to 9.4%.
Company raises revenue and adjusted diluted EPS guidance for FY2024.
On December 4, 2023, Science Applications International Corp (NYSE:SAIC) released its 8-K filing, announcing its financial results for the third quarter of fiscal year 2024. The company, a leading technology integrator in the defense, space, civilian, and intelligence markets, has shown a robust performance with significant year-over-year growth in key financial metrics.
Financial Highlights and Performance
SAIC's revenues for the quarter stood at $1.90 billion, with an organic growth rate of 10.6% when adjusted for the impact of divestitures. The company's net income saw a notable increase to $93 million, up 16% from the same quarter in the previous year. Diluted earnings per share (EPS) were reported at $1.76, a 21% increase, while adjusted diluted EPS rose to $2.27, up 19% compared to the prior year's quarter.
The company's profitability also improved, with operating income growing by 8% to $143 million and operating income as a percentage of revenues increasing by 50 basis points to 7.5%. Adjusted EBITDA grew by 5% to $178 million, resulting in an adjusted EBITDA margin of 9.4%, a 50 basis points improvement from the previous year.
Cash Flow and Capital Deployment
Cash flows from operating activities were reported at $101 million, a decrease from the previous year, primarily due to the timing of payroll and tax payments. However, transaction-adjusted free cash flow showed a positive trend, increasing by 21% to $148 million, reflecting improved earnings and working capital efficiency. SAIC continued its capital deployment strategy, repurchasing $101 million in shares, paying out $19 million in dividends, and investing $4 million in capital expenditures.
Backlog and Contract Awards
SAIC's backlog of contracts remained strong at approximately $23.1 billion, with $4.0 billion funded. The company secured several notable new and recompete awards during the quarter, including a $575 million contract with the U.S. Space Force and a $375 million contract with the Naval Information Warfare Center.
Fiscal Year 2024 Guidance
SAIC has raised its revenue guidance for fiscal year 2024 to a range of $7.325 billion to $7.350 billion, up from the prior guidance of $7.20 billion to $7.25 billion. Adjusted diluted EPS guidance has also been increased to $7.70 to $7.90, from the previous range of $7.20 to $7.40. The company's transaction-adjusted free cash flow guidance remains unchanged at $460 million to $480 million.
Conclusion
SAIC's third-quarter results reflect a company that is successfully navigating its strategic business pivots, focusing on innovation, solutions, and market positioning. With increased profitability, strong cash flow generation, and a solid backlog of contracts, SAIC is well-positioned for continued growth and success in the coming quarters.
Investors and stakeholders can access the full earnings conference call and supplemental presentation through the Investor Relations section of the SAIC website, where an on-demand audio replay of the webcast will also be available.
For detailed financial tables and a reconciliation of non-GAAP financial measures, please refer to the schedules included in the 8-K filing.
Explore the complete 8-K earnings release (here) from Science Applications International Corp for further details.
This article first appeared on GuruFocus.
