SAIC CEO: Industry outlook helped by regulatory cuts

Perceptions of a more business-friendly environment under the Trump administration amid rollbacks of some regulations on contractors offer a slight boost to Science Applications International Corp.’s outlooks for the company and contracting market, SAIC’s CEO told investors Thursday.

Potential changes to tax policy also factor into that outlook and SAIC has also observed a slowdown of added regulations and a pullback of some rules with respect to compliance, Tony Moraco said during SAIC’s fourth quarter earnings call with analysts.

“We’ve seen a significant uptick in supply chain compliance management that affect us as a technology integrator, a third of our portfolio moves through that procurement side of the house. That puts a cost demand on us at a modest amount but tangible dollars we could potentially invest in areas like R&D,” Moraco said.

Moraco’s comments come in the same week that President Donald Trump signed legislation to eliminate the Fair Pay and Safe Workplace rule that required contractors to disclose workplace safety violations prior to starting contract work for agencies.

“Pro-business helps us, tax will affect everyone and be net-neutral to our peers. The compliance part we’ll take advantage of if that improves,” he added.

Specifically to contracting, Moraco told analysts on the call he sees the industry trend as in the “slightly positive” direction in line with a post-sequestration environment and general business climate.

“(With) the government’s dependency on private sector technology innovation to help them run their businesses each day, gain efficiencies in their IT systems and modernize the mission systems and capabilities that they need, I think the sector is in a very strong position going forward with modest upside growth for the macroeconomics,” Moraco said.

Shares of SAIC declined almost 14 percent in early afternoon trading as investors appeared to take note of full-year revenue figures below Wall Street’s forecasts. Full-year revenue for SAIC’s most recent fiscal year ended Jan. 31 totaled $4.45 billion compared to the $4.51 billion analyst consensus.

Full-year sales climbed almost 3 percent on the acquisition of Scitor closed in the second quarter of SAIC’s last fiscal year. Internal revenue excluding Scitor’s contributions declined nearly 2 percent year-to-year.