Science Applications International Corp. [SAIC] on Monday reported strong earnings in its first quarter of fiscal year 2024 driven by lower indirect, acquisition and integration costs, and a gain from the deconsolidation of a joint venture.
Net income jumped 32 percent to $98 million, $1.79 earnings per share (EPS), from $74 million ($1.29 EPS) a year ago. Excluding acquisition and integration costs, gains on divestitures, adjust earnings of $2.14 EPS topped consensus estimates by 31 cents per share.
Sales in the quarter increased 2 percent to just over $2 billion from just under $2 billion a year ago. Excluding the deconsolidation of the Forfeiture Support Associates Joint Venture, sales increased nearly 4 percent.
SAIC increased its sales and earnings guidance for the year, with sales now expected to be in a range between $7.125 billion and $7.22 billion, an increase of $50 million at the mid-point of the prior range. Adjusted earnings are expected to be between $7 and $7.20 EPS, 20 cents higher than the prior range. Free cash flow, which was $74 million in the quarter, is still forecast to be between $460 million and $480 million after adjusting for transactions.
The increase in the sales guidance is mainly due to $35 million in better-than-expected results in SAIC’s supply chain business and the rest from other improvements. The earnings outlook is benefitting from improved operating performance and expectations for lower interest rates ahead.
Orders in the quarter were solid at $2.1 billion and backlog stood at $23.8 billion, essentially unchanged from the end of FY ’23.
Nazzic Keene, SAIC’s CEO, who is retiring this fall, said on the company’s earnings call that employee hiring and retention are recent “encouraging trends” and SAIC is “tracking ahead of our plan year-to-date on new hires and headcount.”