SAIC recompete successes, new wins set its course
Amid the uncertainty of the COVID-19 pandemic, Science Applications International Corp. has won several critical recompetes as well as significant new business that essentially “derisks” the company’s current fiscal year that started around Feb. 1.
Chief Financial Officer Charles Mathis told the investor community Thursday evening that COVID had a negative impact of $33 million on revenue and $8 million to profitability during SAIC's fiscal first quarter ended May 1.
SAIC reported first quarter revenue of $1.8 billion and net income of $36 million.
Organic growth stood at 3 percent for the quarter but would have been 5 percent without the COVID-19 impact, CEO Nazzic Keene said on that call with analysts.
The company's second quarter started with securing the recompete of a five-year, $2.9 billion Army Aviation and Missile Command task order. That works brings about $300 million in annual revenue currently and has the potential to bring in another $100 million-to-$150 million in sales each year, Keene said.
“Building off the deep relationship we have with our AMCOM customer, our proposed systems engineering solution was recognized as the best opportunity for AMCOM to drive future transformation,” Keene said.
While bid by the just-acquired Unisys Federal, that acquisition netted a Air Force Weather Agency technology services contract worth $630 million.
The win is a “great early proof point of the value the Unisys Federal acquisition brings,” she said.
Other major recompetes include the Justice Department’s $1.3 billion asset forfeiture contract and a Federal Aviation Administration controller training contract valued at $653 million.
“We feel very good about going into the year retiring that risk at this stage of the year,” Keene said of the recompetes.
During its first quarter, SAIC also won $4.6 billion in single-award IDIQ contracts, the most it has ever captured, Mathis said.
Given the mix of recompetes and new wins plus more stability in the COVID-19 impact, the company reinstated its guidance for the year and projects revenue of $7.1 billion-to-$7.3 billion that includes a $150 million hit from the pandemic.
The impact of COVID-19 will actually be larger during the company’s current second quarter because SAIC was partially through its first quarter when the pandemic and the stay-at-home orders began.
Some impacts include disruptions to the supply chain business as well as cancellations of training exercises.
Unknowns moving forward include the timing of the return to secured facilities, when FAA training will resume and the operational tempo at the Defense Department.
“There is still uncertainty related to the pandemic but this is the best that we know at this time,” Mathis said. "We do see modest improvements in the second half of the year related to the COVID impact. That’s how we’re planning for this.”
Posted by Nick Wakeman on Jun 05, 2020 at 7:27 AM