Science Applications (SAIC) Q3 Earnings & Sales Beat Estimates
Science Applications International Corporation SAIC reported third-quarter fiscal 2024 adjusted earnings of $2.27 per share, surpassing the Zacks Consensus Estimate by 36.7%. The figure increased 19% year over year.
The robust year-over-year growth in the bottom line was primarily driven by strong operating performance along with the benefits of a lower tax rate and reduction in outstanding share count.
Revenues decreased 1% year over year to $1.90 billion but outpaced the consensus mark by 6.5%. The year-over-year decline was due to the sale of the logistics and supply chain management division, the Forfeiture Support Associates joint venture's deconsolidation and finishing contracts. The downside was partially offset by a ramp-up in existing and new contracts.
Nevertheless, the top line increased 10.6% when adjusted for the impact of the logistics and supply chain management division divesture and the deconsolidation of the Forfeiture Support Associates joint venture.
Adjusted EBITDA was $178 million, up 5% year over year. The adjusted EBITDA margin expanded 50 basis points (bps) on a year-over-year basis to 9.4%. The year-over-year growth was driven by improved profitability across the contract portfolio and lower indirect costs.
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 third quarter were $2.5 billion, reflecting a book-to-bill ratio of 1.3. SAIC’s estimated backlog of signed business deals was $23.1 billion at the end of the fiscal third quarter, of which $4 billion was funded.
Selling, general and administrative (SG&A) expenses remained unchanged at $87 million. SG&A expenses, as a percentage of revenues, remained almost flat at 4.6%.
Non-GAAP operating income increased 6% year over year to $144 million. The non-GAAP operating margin expanded 50 bps year over year to 7.6%.
Balance Sheet & Cash Flow Details
Science Applications ended the fiscal third quarter with cash and cash equivalents of $311 million, down from the prior quarter’s $352 million.
As of Nov 3, 2023, Science Applications’ long-term debt (net of the current portion) was $2.2 billion compared with $2.25 billion as of Aug 4, 2023.
The company generated operating and free cash flows of $101 million and $97 million, respectively, in the fiscal third quarter. The company generated operating and free cash flows of $333 million and $317 million, respectively, in the first three quarters of fiscal 2024.
Raised Fiscal 2024 Guidance
SAIC raised its guidance for the full fiscal 2024. The company now anticipates revenues in the band of $7.325-$7.350 billion in fiscal 2024 instead of the earlier projected range of $7.20-$7.25 billion.
Science Applications now expects adjusted earnings in the band of $7.70-$7.90 per share, up from the previous range of $7.20-$7.40.
SAIC still expects to generate free cash flow between $460 million and $480 million in fiscal 2024. It continues to project the adjusted EBITDA margin between 9.3% and 9.4% in fiscal 2024.
Zacks Rank & Other Stocks to Consider
Science Applications currently carries a Zacks Rank #2 (Buy). Shares of SAIC have gained 22.6% year to date.
Some other top-ranked stocks from the broader technology sector are Bel Fuse BELFB, NetEase NTES and Dropbox DBX, each flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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BELFB’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 56.92%. Shares of BELFB have surged 70.3% year to date.
The Zacks Consensus Estimate for NetEase's fourth-quarter 2023 earnings has been revised upward by 10 cents to $1.83 per share in the past 30 days. For fiscal 2023, earnings estimates have increased by 30 cents to $7.26 per share in the past 30 days.
NTES' earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing the same on one occasion, the average surprise being 16.63%. Shares of NTES have gained 43.4% year to date.
The Zacks Consensus Estimate for Dropbox's fourth-quarter 2023 earnings has remained unchanged for the past 90 days at 48 cents per share. For fiscal 2023, earnings estimates have been revised 7 cents upward to $1.96 per share in the past 30 days.
DBX’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 13.14%. Shares of DBX have climbed 26.5% year to date.
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