SAIC [SAI] on Monday reported lower first quarter earnings and sales due to declines in its defense and intelligence related business, results that were in line with its expectations.
Net income tumbled 31 percent to $81 million, 23 cents earnings per share (EPS), from $117 million (35 cents EPS), shy of consensus estimates by three cents EPS.
The decline in income was mainly attributable to expenses associated with the pending split of SAIC into two separate companies. SAIC’s National Security Solutions, and Technical Services and Information Technology segments both reported double-digit declines in operating income due to lower revenues, unfavorable changes in profit expectations from certain programs, and intangible asset impairment charges.
Sales in the quarter dipped 2 percent to $2.7 billion from nearly $2.8 billion as declines in the National Security, and Technical Services and Information Technology segments more than offset an increase in the Health and Engineering segment. SAIC cited a classified intelligence program, an intelligence integration program for the Army, a ramp down in the Defense Information Systems Global Solutions Program, the drawdown of United States military forces overseas and U.S. government budget reductions for the decline.
Sales in the Health and Engineering segment rose on higher engineering business at power plant construction projects and increased unit deliveries and maintenance of cargo inspection systems used by the U.S. government and international customers.
Bookings in the quarter were weak at $1.3 billion, less than half of sales, while backlog stood at $16.5 billion, down 4 percent from a year ago.
SAIC maintained its financial outlook for FY ’14, with sales expected to be between $10 billion and $10.7 billion with EPS from continuing operations pegged at $1.16 to $1.33.