Loading...
01/09 22:52
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights mixed signals: a decline in revenue and lowered guidance for FY '26, but optimistic EPS and free cash flow guidance. The Q&A reveals concerns about procurement delays and budget pressures, yet also potential growth in defense and strategic areas. The share repurchase plan and SilverEdge integration are positive, but the lack of specific guidance details tempers optimism. Overall, the sentiment balances out to neutral.
Revenue $1.87 billion, declined 5.6% year-over-year. The decline included a roughly 1 point headwind related to the government shutdown. Adjusting for this impact, revenue results were modestly ahead of prior guidance due to signs of stability across the market.
Adjusted EBITDA $185 million, with a margin of 9.9%. This was driven by strong program execution. There are meaningful opportunities to further improve margins in the coming years.
Adjusted Diluted EPS $2.58, reflecting strong margin performance and a favorable tax rate in the quarter.
Free Cash Flow $135 million, strong despite being impacted by the government shutdown, which resulted in certain collections moving into the fourth fiscal quarter.
Net Bookings $2.2 billion, resulting in a book-to-bill ratio of 1.2x for the quarter and on a trailing 12-month basis.
SilverEdge Acquisition: SAIC acquired SilverEdge, a company known for its AI capabilities for the intelligence community. This acquisition is expected to enhance SAIC's portfolio and drive growth by leveraging SilverEdge's technology and commercial go-to-market approach.
Revenue Performance: Third quarter revenue was $1.87 billion, a 5.6% decline year-over-year, partly due to a government shutdown. Adjusted for this, revenue was slightly ahead of prior guidance.
Business Development: SAIC achieved net bookings of $2.2 billion in Q3, with a book-to-bill ratio of 1.2x. Key awards included a $1.4 billion Air Force recompete and a $413 million U.S. Army contract for the OSINT program.
Operational Efficiencies: SAIC identified over $100 million in annual spending to reinvest in higher ROI areas, aiming to improve margins to 10% in the near term and further in FY '27.
Cost Efficiency Measures: Efforts include organizational restructuring and redeploying savings to drive growth and profitability.
Focus on Execution: The interim CEO emphasized a shift towards near-term execution and improving business development quality to align with markets where SAIC has a strong competitive position.
Shareholder Value Creation: SAIC plans to repurchase $1 billion in shares over FY '26 and FY '27, representing 25% of its market value, supported by strong free cash flow.
Revenue Decline: Third quarter revenue of $1.87 billion declined 5.6% year-over-year, including a roughly 1 point headwind related to the government shutdown.
Government Shutdown Impact: The government shutdown caused delays in collections and slowed the pace of proposal submissions, impacting revenue and business development activities.
Business Development Challenges: SAIC has struggled with below-average business development and capture performance, which has hindered revenue and EBITDA growth.
Recompete Headwinds: SAIC faces recompete headwinds, including one of its largest programs representing over 3% of annual revenue, with uncertainty around the outcome of the recompete.
Operational Efficiency: Efforts to implement efficiencies across indirect functions and redeploy savings to higher ROI areas are ongoing, but these changes involve risks and challenges in execution.
Leadership Transition: The company is undergoing a leadership transition, including the search for a permanent CEO, which could create uncertainty and impact strategic execution.
Market Uncertainty: Uncertainty in the government contracting market, including potential future shutdowns, could impact SAIC's operations and financial performance.
Revenue Guidance FY '26 and FY '27: FY '26 total revenue guidance increased to reflect the acquisition of SilverEdge. Organic revenue growth guidance reaffirmed despite a 1-point impact from the government shutdown. FY '27 revenue guidance increased by approximately 1 point due to the SilverEdge acquisition, with organic revenue growth guidance of 0% to 3%.
Adjusted EBITDA Margin Guidance: FY '26 adjusted EBITDA margin guidance increased by 10 basis points due to strong program performance. FY '27 margin guidance increased by 20 basis points at the midpoint to a range of 9.7% to 9.9%, with potential upside beyond FY '27 due to efficiency improvements.
Adjusted EPS Guidance: FY '26 adjusted diluted EPS guidance increased by $0.40 due to increased earnings and a lower tax rate. FY '27 adjusted EPS guidance increased by $0.50, reflecting the addition of SilverEdge, increased operating margins, and a lower share count.
Free Cash Flow Guidance: FY '26 free cash flow guidance maintained at greater than $550 million. FY '27 free cash flow guidance maintained at greater than $600 million, benefiting from minimal cash taxes due to Section 174 changes.
Share Repurchase Program: SAIC plans to repurchase approximately $500 million in shares in each of FY '26 and FY '27, totaling $1 billion, representing about 25% of the company's market value.
Business Development and Market Focus: Proposal submissions targeted at over $30 billion in FY '27. Focus on improving bid quality and alignment with markets where SAIC has the strongest right to win. Incremental investments from cost efficiency efforts to strengthen solutions and bid quality.
Share Repurchase Program: SAIC plans to repurchase approximately $500 million in each of FY '26 and FY '27, totaling $1 billion. This represents approximately 25% of the company's market value. The repurchase program is supported by strong free cash flow and is seen as a compelling investment to return cash to shareholders.
The earnings call highlights mixed signals: a decline in revenue and lowered guidance for FY '26, but optimistic EPS and free cash flow guidance. The Q&A reveals concerns about procurement delays and budget pressures, yet also potential growth in defense and strategic areas. The share repurchase plan and SilverEdge integration are positive, but the lack of specific guidance details tempers optimism. Overall, the sentiment balances out to neutral.
The earnings call summary reveals mixed signals: a positive defense spending increase and new contracts, but challenges in on-contract growth and slow new business ramp-up. The Q&A highlighted cautious guidance and temporary disruptions, with management focusing on cost efficiencies. The shareholder return plan is stable, but no new partnerships or strong positive catalysts were mentioned. Therefore, the overall sentiment is neutral, reflecting balanced growth prospects and uncertainties.
The earnings call presents a mixed picture: positive elements include a strong backlog, strategic contract wins, and share repurchase plans. However, challenges such as procurement delays, negative free cash flow, and cost overruns in the space business create uncertainty. The Q&A highlights management's confidence but also reveals some evasiveness on potential risks. The financial guidance suggests modest growth, but headwinds like competitive pressures and budget constraints temper optimism. Overall, the balance of positive and negative factors suggests a neutral stock price movement in the short term.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
