New president and CEO highlights revenue growth due to strategy of leveraging diverse portfolio and employee dedication.
Science Applications International Corp. saw its revenues for the first quarter of fiscal 2013 reach $2.8 billion, up 3 percent from the $2.7 billion recorded in the first quarter of fiscal 2012.
Internal revenue growth represented 2 percent of the consolidated revenue growth, the company reported in its quarterly earnings statement released May 31. SAIC's fiscal year ends Jan. 31.
Operating income for the quarter was $208 million (7.5 percent of revenues), down from $230 million (8.6 percent of revenues) in the first quarter of fiscal year 2012. The reduction in operating income was attributable to increased indirect spending, including bid and proposal costs; an $8 million reduction in net positive changes in contract estimates; and a $6 million gain on the sale of real estate in the prior year quarter.
Income from continuing operations for the quarter was $117 million, compared to $130 million in the first quarter of fiscal year 2012 – a decline attributable to the reduction in operating income partially offset by a lower effective tax rate.
Diluted earnings per share from continuing operations for the quarter were 35 cents, down 3 percent from 36 cents in the first quarter of fiscal year 2012.
"Our performance for the quarter reflects a combination of pressures we are seeing in the market and internal investments being made to prepare for the future," SAIC president and CEO John Jumper said in the news release.
"Despite these two factors, I am pleased we delivered positive revenue growth for the quarter, growth that can be attributed to a strategy that leverages our diverse portfolio of government and commercial offerings and the dedicated work of our employees who deliver the highest level of performance to our customers every day," Jumper said.
Segment growth for the quarter included a 3 percent revenue increase for its Defense Solutions unit, from $1.13 billion for the first quarter fiscal 2012 to $1.17 billion this year’s first quarter, all of which was internal growth.
SAIC said the growth was attributable to the continued ramp up of a program to operate and maintain the enterprise network IT infrastructure for the State Department, increased activity on systems integration and logistics programs for tactical and mine resistant ambush protected vehicles, and the ramp up of a new program with the Defense Logistics Agency to provide supply chain management of military land and aircraft tires.
However, these increases were partially offset by reduced revenue from the Army Brigade Combat Team Modernization program, which was terminated during the third quarter of fiscal year 2012, the company said.
The Health, Energy and Civil Solutions unit also saw a 3 percent increase from $657 million in first quarter 2011 to $678 million in first quarter 2012, primarily due to the August 2011 acquisition of Vitalize Consulting Solutions Inc.
Internal revenues decreased 3 percent due to declines in various U.S. federal civilian agency programs and program completions with federal health IT customers, particularly military health system customers.
These declines were partially offset by increased deliveries of non-intrusive cargo inspection systems, increased design-build volume related to geothermal and biomass power plant construction, and strong growth in commercial health technology consulting services, SAIC said.
Operating income for the quarter was 6.9 percent of revenue, down from 8.2 percent of revenue in the first quarter of fiscal year 2012. This decline was attributable to higher levels of indirect spending, an increase in amortization expense associated with a prior year acquisition, and unfavorable impacts of changes in contract estimates.
The Intelligence and Cybersecurity Solutions unit grew from $896 million a year ago to $930 million for first quarter 2013, a 4 percent increase, all of which was internal growth, due to increased activity on airborne surveillance programs and cybersecurity programs. These increases were partially offset by a decline in revenues on intelligence analysis programs, primarily due to the drawdown of overseas U.S. military forces and a contract completed in the prior year.
The unit's operating income for the quarter was 7.1 percent of revenue, down from 9.6 percent of revenue in the first quarter of fiscal 2012 due to increased indirect spending, including increased bid and proposal costs and research and development spending; a reduction in net positive changes in contract estimates; and lower sales of propriety software products that have higher relative margins.
Cash flow used by operations for the quarter was $361 million, due to the payment of the $500 million to the city of New York for settlement of the CityTime scandal last year.
Days sales outstanding were 70 days, improved from 72 days in the prior year quarter.
Net business bookings totaled $2.1 billion in the first quarter of fiscal year 2013, representing a book-to-bill ratio of 0.8.
Notable awards received during the quarter include:
- U.S. Army Aviation and Missile Command Systems and Computer Resources Support, a single award, indefinite-delivery, indefinite-quantity follow-on five-year task order with a ceiling value of $820 million to provide professional and engineering support services.
- Veterans Affairs Benefits Systems, a $37 million two-year task order from the Space and Naval Warfare Systems Center Atlantic for program management, technical, engineering, application development and operational support required to manage, enhance and develop new solution functionality for Veterans Affairs benefit systems.
- Transportation Security Administration Hazardous Materials Management and Disposal Services, a five-year TSA prime contract worth more than $46 million to provide hazardous materials management and disposal services at all TSA airport operations and facilities. The single-award contract has an overall period of performance up to five years, including options, and a contract value of if all options are exercised.
The company's backlog of signed business orders at the end of the first quarter of fiscal year 2013 was $17.4 billion, of which $5.7 billion was funded. Compared to the end of the first quarter of fiscal year 2012, total backlog decreased 4 percent while funded backlog increased 14 percent.