Science Applications International Corp. [SAIC] on Dec. 6 after the close of the markets reported higher sales due to work for state and local governments while earnings increased due to a lower tax rate.
Net income increased 12 percent to $48 million, $1.11 earnings per share (EPS) in the company’s fiscal year 2019 third quarter from $43 million (98 cents EPS) a year ago. The results beat consensus estimates by 21 cents per share.
Acquisition and integration costs associated with SAIC’s pending acquisition of Engility [EGL] chopped $14 million from the bottom line.
Sales increased 3 percent to nearly $1.2 billion from more than $1.1 billion a year ago.
Orders in the quarter were $1.2 billion with total backlog at the end of the quarter at $10.4 billion, down from $10.5 billion in the second quarter. Funded backlog stood at $2.4 billion, nearly $200 million above the second quarter figure.
In addition to the work for state and local governments, Tony Moraco, SAIC’s CEO, said on the company’s earnings call that increased orders for supply chain support for the military helped fuel growth in the quarter.
Moraco also said that most of SAIC’s customers are spending with “confidence” given they are operating with their fiscal year 2018 budgets. The company’s customers that have been operating under a continuing resolution since Oct. 1 are spending at fiscal year 2017 levels, which are still higher than in 2016, he said.
“In this favorable market environment, I am confident that SAIC is positioned well to accelerate growth through a variety of enablers,” he said.
Free cash flow in the quarter was $80 million.
SAIC didn’t provide specific guidance for the rest of its fiscal year but said it still expects organic sales growth and about $250 million in free cash flow.