SAIC Raises 2024 Outlook Despite Revenue Dip: What You Need to Know?

Science Applications International Corp (NYSE: SAIC) reported a 3% revenue decline Y/Y in Q2 FY24 to $1.78 billion, beating the consensus of $1.69 billion.

The sale of the logistics and supply chain management business, the deconsolidation of the Forfeiture Support Associates J.V. (FSA), and contract completions mainly led to the decline.

Adjusting for the impact of the divestiture of the Supply Chain Business and the deconsolidation of FSA, revenues grew 8.3%.

Adjusted EPS of $2.05 beat the consensus of $1.62.

Adjusted operating margin expanded by 70 bps to 7.5% due to the gain from the sale of the Supply Chain Business and improved profitability across its contract portfolio.

Adjusted EBITDA margin improved by 70 bps to 9.8% due to improved profitability across its contract portfolio.

SAIC generated $144 million in free cash flow and held $352 million in cash and cash equivalents.

Net bookings for the quarter were $0.7 billion, reflecting a book-to-bill ratio of 0.4. The estimated backlog was around $22.5 billion at the end of the quarter. 

Dividend: The company declared a cash dividend of $0.37 per share.

FY24 Outlook: SAIC raised revenue guidance to $7.20 billion - $7.25 billion (from the prior $7.125 billion - $7.225 billion) vs. the consensus of $7.20 billion.

SAIC increased adjusted EPS guidance to $7.20-$7.40 (from $7.00-$7.20 earlier), above the consensus of $7.16.

Price Action: SAIC shares are trading lower by 1.45% at $113.85 on the last check Thursday.