Business context and reporting period
SAIC’s Form 10-K covers fiscal 2024, the 52 weeks ended February 2, 2024, with comparisons to fiscal 2023, which included 53 weeks. The supplied filing text does not provide standalone fourth-quarter financial results. SAIC provides technical, engineering and enterprise IT services, primarily to the U.S. government; 98% of revenue came from U.S. government prime contracts or subcontracts.
Financial performance and position
| Metric | FY2024 | FY2023 |
|---|---|---|
| Revenue | $7.444 billion | $7.704 billion |
| Operating income / margin | $741 million / 10.0% | $501 million / 6.5% |
| Net income attributable to common stockholders | $477 million | $300 million |
| Diluted EPS | $8.88 | $5.38 |
| Operating cash flow | $396 million | $532 million |
| Adjusted EBITDA / margin | $668 million / 9.0% | $680 million / 8.8% |
Cost of revenues was $6.572 billion, or 88.3% of revenue, versus $6.816 billion, or 88.5%, in FY2023. Cash and cash equivalents were $94 million; total debt, net of issuance costs, was $2.099 billion, including $77 million current. The $1.0 billion revolving credit facility had no balance outstanding at year-end. Current assets were $1.131 billion and current liabilities $1.158 billion.
Operating cash flow fell $136 million, primarily due to lower cash contribution from the receivables-sale facility and higher tax payments. Investing activities provided $314 million, including $356 million of divestiture proceeds; financing activities used $725 million. Capital expenditures were $27 million. SAIC repurchased approximately 3.3 million shares for $357 million during FY2024 and paid $1.48 per share in dividends.
Material changes versus the prior comparable period
- Reported revenue declined 3%. Management attributed the decrease mainly to the sale of the Supply Chain Business, deconsolidation of FSA, contract completions and five fewer working days. Excluding those factors, management estimated revenue growth of approximately 7.4%.
- Operating income increased primarily because of a $240 million net gain on divestitures, improved contract profitability and lower acquisition and integration costs. The gain included $233 million from the Supply Chain Business sale and $7 million from the FSA transaction.
- Net income and EPS rose substantially, but the reported improvement includes the divestiture gains. Adjusted EBITDA declined from $680 million to $668 million, while its margin increased from 8.8% to 9.0%.
- Contract mix shifted: cost-reimbursement revenue rose to 61% of total from 56%; firm-fixed-price revenue fell to 19% from 25%, partly reflecting the divested business’s higher fixed-price mix.
- Total backlog decreased to $22.763 billion from $23.802 billion; net bookings were $6.7 billion versus $7.4 billion. Funded backlog was $3.539 billion and negotiated unfunded backlog $19.224 billion.
Outlook, commentary, risks and unusual items
The filing provides no specific fiscal 2025 revenue or earnings guidance. Management said it believes SAIC is positioned to defend and expand customer relationships, citing its scale, technical expertise, contract performance and efforts to improve cost competitiveness. Remaining performance obligations were approximately $5.5 billion; SAIC expects to recognize about 79% within 12 months and 92% within 24 months. Backlog and RPO are not equivalent to guaranteed revenue; task-order awards, funding and contract options remain subject to customer decisions.
Congress had funded non-defense agencies for government fiscal 2024, while remaining defense and other appropriations were still under consideration at the time of the filing. Management noted the possibility of further continuing resolutions, a shutdown or reduced defense spending. Key risks include high dependence on U.S. government spending, competitive bidding and pricing pressure, contract cost-estimation risk, staffing and security-clearance needs, government audit adjustments, and cybersecurity threats. The company reported that prior cybersecurity incidents had not materially affected its financial condition or results, and that it had not identified threats reasonably likely to have a material effect.
SAIC received U.S. Department of Justice Antitrust Division grand jury subpoenas in April 2022 and October 2023 and said its document production was ongoing. The company is cooperating; it stated that the potential financial impact could not be determined or reasonably estimated. DCAA indirect-cost audits remain open for certain prior years and the current year. Management said it had reserved for estimated audit-related refunds, but adverse adjustments exceeding reserves could affect results.
Other notable items: FY2024 restructuring costs were $23 million, with activities expected to conclude in FY2025. The company’s annual goodwill assessment found no impairment. On February 8, 2024, after year-end, SAIC refinanced $510 million of term loans with a new facility due February 2031. The company reorganized from two operating sectors into five customer-facing business groups effective February 3, 2024 and was assessing the impact on segment reporting.
Important facts for investors to verify
- How much of FY2024 earnings growth reflects ongoing contract performance versus the $240 million divestiture gain and other nonrecurring items.
- Whether revenue growth excluding the divestiture, FSA deconsolidation and calendar effects continues, and how the lower bookings and backlog translate into funded work.
- Cash conversion and working-capital trends, including the use and economics of the receivables-sale facility and the effect of higher tax payments.
- Debt repayment, interest costs, covenant headroom and the terms and impact of the February 2024 refinancing.
- Developments in the DOJ investigation and government contract audits, including any changes to reserves, liabilities or contract eligibility.
- Progress and costs of the business reorganization and whether the new structure changes reported segments or operating performance.