Latest news with #Townes-Whitley
Yahoo
03-06-2025
- Business
- Yahoo
SAIC Q1 Earnings Call: Revenue Miss and Margin Pressures Shape 2025 Outlook
Government IT services provider Science Applications International Corporation (NASDAQ:SAIC) missed Wall Street's revenue expectations in Q1 CY2025 as sales only rose 1.6% year on year to $1.88 billion. Its non-GAAP EPS of $1.92 per share was 9.3% below analysts' consensus estimates. Is now the time to buy SAIC? Find out in our full research report (it's free). Revenue: $1.88 billion (1.6% year-on-year growth) Adjusted EPS: $1.92 vs analyst expectations of $2.12 (9.3% miss) Adjusted Operating Income: $158 million vs analyst estimates of $138.4 million (8.4% margin, 14.2% beat) Management reiterated its full-year Adjusted EPS guidance of $9.20 at the midpoint EBITDA guidance for the full year is $725 million at the midpoint, below analyst estimates of $729.2 million Operating Margin: 6.4%, in line with the same quarter last year Backlog: $22.34 billion at quarter end Market Capitalization: $5.45 billion Science Applications International Corporation's (SAIC) first quarter performance was shaped by persistent procurement delays and customer personnel turnover, which management said contributed to the slower pace of contract awards. CEO Toni Townes-Whitley highlighted that while some areas within the Department of Defense (DoD) received more robust budget requests, significant agency staff changes have affected procurement timelines. The company's decision to move away from lower-margin programs, like CloudOne, also weighed on recent results. Townes-Whitley noted, 'We have been amping up our submissions and being very selective in terms of being on strategy with the bids that we've been making,' indicating a continued focus on higher-value, mission-critical IT and integration work. Looking forward, SAIC's guidance is anchored on ramping up new business and achieving higher on-contract growth, despite ongoing headwinds in budget negotiations and potential delays in contract awards. CFO Prabu Natarajan explained that full-year margin improvement relies on a transition from development-heavy to sustainment phases in certain fixed price programs, as well as continued discipline in cost management. Management reiterated its commitment to achieving margin targets, with Townes-Whitley stating, 'We remain focused on executing and delivering on our full year margin guidance…our flexible cost structure permits us to calibrate our spend in line with the macro environment.' However, the company acknowledged that achieving booking targets may be impacted if procurement delays persist. Management attributed the quarter's performance to slower contract awards, portfolio shifts toward higher-value IT work, and cost overruns on select programs. Several civilian agency contracts and a new space integration win provided areas of relative strength. Procurement delays impact awards: SAIC faced continued delays in federal contract awards due to customer turnover and new agency processes, particularly in acquisition functions. This led to a slower realization of new business, with management emphasizing that award timing rather than program performance drove the softness. Portfolio shift to mission IT: The company continued its pivot away from lower-margin, legacy programs—such as the CloudOne contract, which SAIC intentionally did not rebid—toward higher-margin mission and enterprise IT. This transition is designed to align with evolving government priorities and to position SAIC for more sustainable, profitable growth. Fixed price space program overruns: A unique fixed price development program in the space segment incurred higher costs during its technical development phase. Management stated that the transition into the sustainment phase and recent option period extensions should relieve some cost pressures in future quarters. Civilian business momentum: SAIC's civilian segment showed growth and margin improvement, benefiting from its focus on key agencies like the Department of Homeland Security, State, Transportation, and Treasury, where funding and IT modernization remained supportive. Bookings and backlog visibility: While net bookings and backlog remained solid, management cautioned that achieving their targeted book-to-bill ratio may be delayed by up to two quarters if procurement headwinds persist. Recent post-quarter wins, including a major State Department extension and Air Force contract, bolstered confidence in near-term visibility. Management expects future performance to rest on the pace of new business ramp-up, margin recovery in challenged programs, and the company's ability to adjust to shifting federal priorities. On-contract growth and booking targets: The company is relying on continued growth within existing contracts ('on-contract growth') if new business awards are further delayed. Sustained mid-single-digit on-contract growth is seen as necessary to support its revenue guidance if external headwinds persist. Margin normalization in key programs: Margin improvement is expected as SAIC transitions fixed price programs in the space segment from development to sustainment phases, and as civilian business margins trend higher. Management pointed to enhanced cost controls and standardized delivery frameworks as tools to mitigate margin risk. Federal budget and procurement environment: The outlook depends on stable or moderately growing federal budgets, especially for defense and civilian agencies. Management acknowledged that further disruptions in government funding or policy priorities could impact the timing and mix of awarded contracts, introducing risk to the growth trajectory. In upcoming quarters, the StockStory team will watch (1) whether SAIC can accelerate new business awards and reach its targeted book-to-bill ratio, (2) the pace of margin recovery in fixed price and space programs as they enter sustainment phases, and (3) continued expansion and profitability in the civilian segment, especially as federal funding priorities evolve. Execution on disciplined contract transitions and cost control will also be closely monitored. SAIC currently trades at a forward P/E ratio of 12×. Should you double down or take your chips? Find out in our full research report (it's free). Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
Yahoo
02-06-2025
- Business
- Yahoo
Why SAIC Stock Plunged Today
SAIC missed earnings expectations despite in-line revenue. The company is fighting through DOGE-related headwinds, but is an attractive long-term option. 10 stocks we like better than Science Applications International › Government contractor Science Applications International (NASDAQ: SAIC) reported disappointing quarterly results, weighed down by the government's efficiency drive. Investors were disappointed, sending SAIC shares down 13% for the day. SAIC is one of the largest so-called "Beltway Bandits" -- defense contractors focused on providing IT and other services to military, intelligence, and civil government customers. The company earned $1.92 per share in its fiscal first quarter of 2026 on revenue of $1.88 billion, compared to analyst expectations for $2.12 per share in earnings on sales of $1.87 billion. Net income was down 12% year over year to $68 million, and SAIC's operating margin fell by 70 basis points to 6.4%. On a call with investors, CEO Toni Townes-Whitley said that the business has been caught up in the efforts of the newly formed Department of Government Efficiency (DOGE) to scrutinize spending. Townes-Whitley said: While the operating environment has stabilized in recent months and recent budget developments provide improved clarity around future spending, we continue to see higher rates of turnover among our customers, contributing to procurement delays and award timelines moving to the right. We expect conditions to remain very fluid over the next few months as budget negotiations play out and agencies continue to implement the strategic priorities of this administration. The good news is the company expects DOGE to impact full-year revenue by less than 1%. The company booked $2.4 billion in future business in the quarter, which is 1.3 times the revenue it brought in, an indication of better times ahead. And SAIC reiterated its full-year guidance, implying that the company sees opportunities to make back the profit miss in the quarters to come. The question is how soon those better times will arrive. Townes-Whitley and other executives have said the DOGE impact so far, is more to delay procurements than to tear up contracts. But with a Congressional budget battle brewing, there is unlikely to be clarity about future spending anytime soon. With Monday's fall, SAIC is trading at just 10 times future earnings. That's nearing a recent historical low. It's possible we haven't bottomed out yet, but for long-term-focused investors, SAIC has reached a level where it is worth adding to the watch list. Before you buy stock in Science Applications International, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Science Applications International wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor's total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Why SAIC Stock Plunged Today was originally published by The Motley Fool
