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Science Applications (SAIC) Q3 Earnings & Sales Beat Estimates

Science Applications International Corporation SAIC 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.

Science Applications International Corporation Price, Consensus and EPS Surprise

Science Applications International Corporation Price, Consensus and EPS Surprise
Science Applications International Corporation Price, Consensus and EPS Surprise

Science Applications International Corporation price-consensus-eps-surprise-chart | Science Applications International Corporation Quote

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 Celestica CLS, Oracle ORCL and Blackbaud BLKB. Celestica sports a Zacks Rank #1 (Strong Buy) at present, while Oracle and Blackbaud each carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Celestica’s fourth-quarter 2022 earnings has increased by 9 cents to 53 cents per share over the past 60 days. For 2022, earnings estimates have moved up 9.4% to $1.86 per share in the past 60 days.

CLS' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 11.8%. Shares of the company have risen 0.8% YTD.

The Zacks Consensus Estimate for Oracle's third-quarter fiscal 2023 earnings has been revised a penny south to $1.24 per share over the past 60 days. For fiscal 2023, earnings estimates have moved a penny lower to $4.96 per share in the past 30 days.

ORCL’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 3.4%. Shares of the company have declined 4.4% YTD.

The Zacks Consensus Estimate for Blackbaud's fourth-quarter 2022 earnings has been revised a penny southward to 58 cents per share over the past 30 days. For 2022, earnings estimates have moved upward by a penny to $2.59 per share in the past 30 days.

Blackbaud's earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 4.9%. Shares of BLKB have slumped 23.8% YTD.

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