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SAIC Announces Third Quarter of Fiscal Year 2022 Results

  • Revenues increase to $1.9 billion; 4.4% total revenue growth, 2.1% growth excluding acquired revenues
  • Diluted earnings per share increase to $1.22; Adjusted diluted earnings per share(1) increase to $1.85
  • Company raises revenue, adjusted EBITDA margin(1), adjusted diluted EPS(1), and free cash flow(1) guidance for fiscal year 2022

Science Applications International Corporation (NYSE: SAIC), a premier Fortune 500® technology integrator driving our nation's digital transformation across the defense, space, civilian, and intelligence markets, today announced results for the third quarter ended October 29, 2021.

“Our focus remains on positioning our portfolio and empowering our talented workforce to meet the needs of our customer, today and in the future.” said SAIC CEO Nazzic Keene. “Our strong results and sustained growth reflect the continued progress we are making in aligning SAIC with areas of increasing customer demand. We continue to see attractive opportunities to profitably grow our business.”

Third Quarter of Fiscal Year 2022: Summary Operating Results

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2021

 

Percent

change

 

October 30,

2020

 

October 29,

2021

 

Percent

change

 

October 30,

2020

 

(in millions, except per share amounts)

Revenues

$

1,898

 

 

4

%

 

$

1,818

 

 

$

5,612

 

 

5

%

 

$

5,339

 

Operating income

114

 

 

4

%

 

110

 

 

377

 

 

31

%

 

288

 

Operating income as a percentage of revenues

6.0

%

 

-10

bps

 

6.1

%

 

6.7

%

 

130

bps

 

5.4

%

Adjusted operating income(1)

126

 

 

10

%

 

115

 

 

413

 

 

23

%

 

336

 

Adjusted operating income as a percentage of revenues

6.6

%

 

30

bps

 

6.3

%

 

7.4

%

 

110

bps

 

6.3

%

Net income attributable to common stockholders

71

 

 

18

%

 

60

 

 

234

 

 

59

%

 

147

 

EBITDA(1)

159

 

 

%

 

159

 

 

505

 

 

20

%

 

420

 

EBITDA as a percentage of revenues

8.4

%

 

-30

bps

 

8.7

%

 

9.0

%

 

110

bps

 

7.9

%

Adjusted EBITDA(1)

171

 

 

4

%

 

164

 

 

540

 

 

15

%

 

468

 

Adjusted EBITDA as a percentage of revenues

9.0

%

 

bps

 

9.0

%

 

9.6

%

 

80

bps

 

8.8

%

Diluted earnings per share

$

1.22

 

 

20

%

 

$

1.02

 

 

$

4.01

 

 

60

%

 

$

2.51

 

Adjusted diluted earnings per share(1)

$

1.85

 

 

14

%

 

$

1.62

 

 

$

5.76

 

 

25

%

 

$

4.61

 

Net cash provided by operating activities

$

134

 

 

(42)

%

 

$

231

 

 

$

415

 

 

(41)

%

 

$

702

 

Free cash flow(1)

$

124

 

 

(44)

%

 

$

222

 

 

$

373

 

 

(21)

%

 

$

470

 

(1)Non-GAAP measure, see Schedule 5 for information about this measure.

Third Quarter Summary Results

Revenues for the quarter increased $80 million compared to the same period in the prior year primarily due to ramp up on new and existing contracts, the acquisition of Halfaker and the accelerated amortization on certain off-market liability contracts, partially offset by contract completions. Adjusting for the impact of acquired revenues and divested revenues, revenues grew 2.1% primarily due to net increases in program volume and new awards. We estimate the third quarter program impact from the COVID-19 pandemic to be approximately $30 million, primarily driven by reduced volume in our supply chain business.

Operating income as a percentage of revenues of 6.0%, decreased from 6.1% in the comparable prior year period primarily due to lower employee benefit costs in the prior year period and higher acquisition and integration costs in the current year period, partially offset by net favorable changes in contract estimates and the accelerated amortization on certain off-market liability contracts.

Adjusted EBITDA(1) as a percentage of revenues for the quarter of 9.0% remained consistent with the same period in the prior year. Net favorable changes in contract estimates and revenue resulting from the accelerated amortization on certain off-market liability contracts were offset by lower employee benefit costs in the prior year period. We estimate the third quarter program impact from the COVID-19 pandemic to be approximately $1 million of adjusted EBITDA(1).

Diluted earnings per share for the quarter was $1.22 compared to $1.02 in the prior year quarter. Adjusted diluted earnings per share(1) for the quarter was $1.85 compared to $1.62 in the prior year quarter. The weighted-average diluted shares outstanding during the quarter decreased to 58.0 million from 58.7 million during the prior year quarter.

Cash Generation and Capital Deployment

Cash flows provided by operating activities for the third quarter were $134 million, a decrease of $97 million compared to the prior year quarter, primarily due to working capital related to the impact of payroll tax payments associated with the CARES Act.

Free cash flow(1) for the third quarter decreased by $98 million from the prior year quarter to $124 million, primarily due to working capital related to the impact of payroll tax payments associated with the CARES Act.

During the quarter, SAIC deployed $97 million of capital, consisting of $63 million of plan share repurchases, $21 million in cash dividends, $10 million of capital expenditures and $3 million for acquisitions. In addition, SAIC made $23 million of mandatory debt repayment in the third quarter.

(1)Non-GAAP measure, see Schedule 5 for information about this measure.

Quarterly Dividend Declared

Subsequent to the end of the quarter, the Company's Board of Directors declared a cash dividend of $0.37 per share of the Company's common stock payable on January 28, 2022 to stockholders of record on January 14, 2022. SAIC intends to continue paying dividends on a quarterly basis, although the declaration of any future dividends will be determined by the Board of Directors each quarter and will depend on earnings, financial condition, capital requirements and other factors.

Backlog and Contract Awards

Net bookings for the quarter were approximately $1.4 billion, which reflects a book-to-bill ratio of 0.7 and a trailing twelve months book-to-bill ratio of 1.1. SAIC’s estimated backlog at the end of the quarter was approximately $24 billion. Of the total backlog amount, approximately $3.4 billion was funded.

Notable Recompete Awards

U.S. Department of State: SAIC was awarded a twelve month contract extension, valued at $200 million, to continue providing engineering and design services, security, and operation and maintenance services for critical IT infrastructure.

SAIC was awarded the following contracts subsequent to the end of the quarter which are not included in the current quarter net bookings and book-to-bill:

U.S. Naval Sea Systems Command (NAVSEA): SAIC was awarded a contract, valued at $1.1 billion, to produce, assemble, test and deliver the U.S. Navy's MK 48 MOD 7 torpedo afterbody tailcones (AB/TC) and MK29 Mod 0 Warshot fuel tanks. Under the contract, SAIC will provide all necessary facilities, resources and management necessary to meet the contract's production, test and delivery requirements.

Fiscal Year 2022 Guidance

As a result of the Company's year-to-date performance and future expectations, including expected impacts from the COVID-19 pandemic, the Company is updating previously provided fiscal year 2022 guidance. The guidance assumes expected negative COVID-19 impact of approximately $125 million in revenue and approximately $10 million in adjusted EBITDA. The table below summarizes fiscal year 2022 guidance and represents our views as of December 6, 2021.

 

Current Fiscal Year

Prior Fiscal Year

 

2022 Guidance

2022 Guidance

Revenue

$7.35 billion - $7.40 billion

$7.30 billion - $7.40 billion

Adjusted EBITDA Margin(1)

9.0% to 9.1%

8.9% to 9.0%

Adjusted Diluted EPS(1)

$6.75 - $6.95

$6.50 - $6.70

Free Cash Flow(1)

$450 million - $470 million

$430 million to $470 million

Webcast Information

SAIC management will discuss operations and financial results in an earnings conference call beginning at 10:00 a.m. Eastern time on December 6, 2021. The conference call will be webcast simultaneously to the public through a link on the Investor Relations section of the SAIC website (http://investors.saic.com). We will be providing webcast access only – “dial-in” access is no longer available. Additionally, a supplemental presentation will be available to the public through links to the Investor Relations section of the SAIC website. After the call concludes, an on-demand audio replay of the webcast can be accessed on the Investor Relations website.

About SAIC

SAIC® is a premier Fortune 500® technology integrator driving our nation’s technology transformation. Our robust portfolio of offerings across the defense, space, civilian, and intelligence markets includes secure high-end solutions in engineering, digital, artificial intelligence, and mission solutions. Using our expertise and understanding of existing and emerging technologies, we integrate the best components from our own portfolio and our partner ecosystem to deliver innovative, effective, and efficient solutions that are critical to achieving our customers' missions.

We are more than 26,000 strong; driven by mission, united by purpose, and inspired by opportunities. Headquartered in Reston, Virginia, SAIC has annual revenues of approximately $7.2 billion.​​​​ For more information, visit saic.com. For ongoing news, please visit our newsroom.

GAAP to Non-GAAP Guidance Reconciliation

The Company does not provide a reconciliation of forward-looking adjusted diluted EPS to GAAP diluted EPS or adjusted EBITDA margin to GAAP net income due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including, but not limited to, amortization of acquired intangible assets and acquisition, integration and restructuring costs. As a result, the Company is not able to forecast GAAP diluted EPS or GAAP net income with reasonable certainty. The variability of the above charges may have an unpredictable and potentially significant impact on our future GAAP financial results.

(1)Non-GAAP measure, see Schedule 5 for information about this measure.

Forward-Looking Statements

Certain statements in this release contain or are based on “forward-looking” information within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “guidance,” and similar words or phrases. Forward-looking statements in this release may include, among others, estimates of future revenues, operating income, earnings, earnings per share, charges, total contract value, backlog, outstanding shares and cash flows, as well as statements about future dividends, share repurchases and other capital deployment plans. Such statements are not guarantees of future performance and involve risk, uncertainties and assumptions, and actual results may differ materially from the guidance and other forward-looking statements made in this release as a result of various factors. Risks, uncertainties and assumptions that could cause or contribute to these material differences include those discussed in the “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Legal Proceedings” sections of our Annual Report on Form 10-K, as updated in any subsequent Quarterly Reports on Form 10-Q and other filings with the SEC, which may be viewed or obtained through the Investor Relations section of our website at www.saic.com or on the SEC’s website at www.sec.gov. Due to such risks, uncertainties and assumptions you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. SAIC expressly disclaims any duty to update any forward-looking statement provided in this release to reflect subsequent events, actual results or changes in SAIC’s expectations. SAIC also disclaims any duty to comment upon or correct information that may be contained in reports published by investment analysts or others.

Schedule 1:

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

CONDENSED AND CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2021

 

October 30,

2020

 

October 29,

2021

 

October 30,

2020

 

(in millions, except per share amounts)

Revenues

$

1,898

 

 

$

1,818

 

 

$

5,612

 

 

$

5,339

 

Cost of revenues

1,685

 

 

1,609

 

 

4,950

 

 

4,747

 

Selling, general and administrative expenses

87

 

 

96

 

 

252

 

 

261

 

Acquisition and integration costs

12

 

 

3

 

 

36

 

 

47

 

Other operating income

 

 

 

 

(3)

 

 

(4)

 

Operating income

114

 

 

110

 

 

377

 

 

288

 

Interest expense

26

 

 

32

 

 

79

 

 

95

 

Other (income) expense, net

 

 

 

 

(3)

 

 

 

Income before income taxes

88

 

 

78

 

 

301

 

 

193

 

Provision for income taxes

(17)

 

 

(18)

 

 

(66)

 

 

(43)

 

Net income

$

71

 

 

$

60

 

 

$

235

 

 

$

150

 

Net income attributable to non-controlling interest

 

 

 

 

1

 

 

3

 

Net income attributable to common stockholders

$

71

 

 

$

60

 

 

$

234

 

 

$

147

 

Weighted-average number of shares outstanding:

 

 

 

 

 

 

 

Basic

57.5

 

 

58.2

 

 

57.8

 

 

58.1

 

Diluted

58.0

 

 

58.7

 

 

58.4

 

 

58.6

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

1.24

 

 

$

1.03

 

 

$

4.05

 

 

$

2.53

 

Diluted

$

1.22

 

 

$

1.02

 

 

$

4.01

 

 

$

2.51

 

Schedule 2:

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

CONDENSED AND CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

October 29,

2021

 

January 29,

2021

 

(in millions)

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

148

 

 

$

171

 

Receivables, net

1,107

 

 

962

 

Inventory, prepaid expenses and other current assets

128

 

 

156

 

Total current assets

1,383

 

 

1,289

 

Goodwill

2,905

 

 

2,787

 

Intangible assets, net

1,166

 

 

1,138

 

Property, plant, and equipment, net

103

 

 

108

 

Operating lease right of use assets

223

 

 

236

 

Other assets

136

 

 

165

 

Total assets

$

5,916

 

 

$

5,723

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

877

 

 

$

861

 

Accrued payroll and employee benefits

399

 

 

346

 

Long-term debt, current portion

119

 

 

68

 

Total current liabilities

1,395

 

 

1,275

 

Long-term debt, net of current portion

2,433

 

 

2,447

 

Operating lease liabilities

202

 

 

205

 

Other long-term liabilities

241

 

 

244

 

Equity:

 

 

 

Total common stockholders' equity

1,635

 

 

1,542

 

Non-controlling interest

10

 

 

10

 

Total stockholders' equity

1,645

 

 

1,552

 

Total liabilities and stockholders' equity

$

5,916

 

 

$

5,723

 

Schedule 3:

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2021

 

October 30,

2020

 

October 29,

2021

 

October 30,

2020

 

(in millions)

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

71

 

 

$

60

 

 

$

235

 

 

$

150

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

44

 

 

48

 

 

123

 

 

131

 

Amortization of off-market customer contracts

(13)

 

 

(4)

 

 

(30)

 

 

(11)

 

Amortization of debt issuance costs

2

 

 

7

 

 

6

 

 

19

 

Deferred income taxes

10

 

 

6

 

 

41

 

 

17

 

Stock-based compensation expense

11

 

 

11

 

 

35

 

 

30

 

(Gain) loss on divestitures

 

 

 

 

(2)

 

 

10

 

Impairment of right of use assets

 

 

 

 

10

 

 

 

Increase (decrease) resulting from changes in operating assets and liabilities, net of the effect of acquisitions:

 

 

 

 

 

 

 

Receivables

(43)

 

 

(20)

 

 

(123)

 

 

131

 

Inventory, prepaid expenses and other current assets

18

 

 

24

 

 

28

 

 

9

 

Other assets

 

 

(4)

 

 

(8)

 

 

(11)

 

Accounts payable and accrued liabilities

5

 

 

13

 

 

47

 

 

9

 

Accrued payroll and employee benefits

25

 

 

61

 

 

45

 

 

141

 

Operating lease assets and liabilities, net

1

 

 

(2)

 

 

4

 

 

(7)

 

Other long-term liabilities

3

 

 

31

 

 

4

 

 

84

 

Net cash provided by operating activities

134

 

 

231

 

 

415

 

 

702

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Expenditures for property, plant, and equipment

(10)

 

 

(9)

 

 

(27)

 

 

(32)

 

Purchases of marketable securities

(2)

 

 

(1)

 

 

(5)

 

 

(5)

 

Sales of marketable securities

2

 

 

1

 

 

4

 

 

8

 

Cash paid for acquisitions, net of cash acquired

(3)

 

 

 

 

(247)

 

 

(1,202)

 

Proceeds from divestitures

 

 

3

 

 

8

 

 

4

 

Other

(3)

 

 

 

 

(5)

 

 

(2)

 

Net cash used in investing activities

(16)

 

 

(6)

 

 

(272)

 

 

(1,229)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Dividend payments to stockholders

(21)

 

 

(21)

 

 

(65)

 

 

(65)

 

Principal payments on borrowings

(23)

 

 

(218)

 

 

(84)

 

 

(376)

 

Issuances of stock

4

 

 

3

 

 

12

 

 

9

 

Stock repurchased and retired or withheld for taxes on equity awards

(63)

 

 

(1)

 

 

(154)

 

 

(13)

 

Proceeds from borrowings

 

 

 

 

116

 

 

1,000

 

Debt issuance costs

 

 

 

 

 

 

(27)

 

Distributions to non-controlling interest

 

 

(2)

 

 

(1)

 

 

(2)

 

Net cash (used in) provided by financing activities

(103)

 

 

(239)

 

 

(176)

 

 

526

 

Net increase (decrease) in cash, cash equivalents and restricted cash

15

 

 

(14)

 

 

(33)

 

 

(1)

 

Cash, cash equivalents and restricted cash at beginning of period

142

 

 

215

 

 

190

 

 

202

 

Cash, cash equivalents and restricted cash at end of period

$

157

 

 

$

201

 

 

$

157

 

 

$

201

 

Schedule 4:

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

BACKLOG

(Unaudited)

 

The estimated value of our total backlog as of the dates presented was:

 
 

 

October 29,

2021

 

July 30,

2021

 

January 29,

2021

 

(in millions)

Funded backlog

$

3,441

 

 

$

3,299

 

 

$

3,024

 

Negotiated unfunded backlog

20,213

 

 

20,938

 

 

18,524

 

Total backlog

$

23,654

 

 

$

24,237

 

 

$

21,548

 

Backlog represents the estimated amount of future revenues to be recognized under negotiated contracts and task orders as work is performed and excludes contract awards which have been protested by competitors until the protest is resolved in our favor. SAIC segregates backlog into two categories, funded backlog and negotiated unfunded backlog. Funded backlog for contracts with government agencies primarily represents contracts for which funding is appropriated less revenues previously recognized on these contracts, and does not include the unfunded portion of contracts where funding is incrementally appropriated or authorized by the U.S. government and other customers even though the contract may call for performance over a number of years. Funded backlog for contracts with non-government agencies represents the estimated value of contracts which may cover multiple future years under which SAIC is obligated to perform, less revenues previously recognized on these contracts. Negotiated unfunded backlog represents the estimated future revenues to be earned from negotiated contracts for which funding has not been appropriated or authorized, and unexercised priced contract options. Negotiated unfunded backlog does not include any estimate of future potential task orders expected to be awarded under indefinite-delivery, indefinite-quantity (IDIQ), U.S. General Services Administration (GSA) schedules or other master agreement contract vehicles.

Schedule 5:

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NON-GAAP FINANCIAL MEASURES

(Unaudited)

This schedule describes the non-GAAP financial measures included in this earnings release. While we believe that these non-GAAP financial measures may be useful in evaluating our financial information, they should be considered as supplemental in nature and not as a substitute for financial information prepared in accordance with GAAP. Reconciliations, definitions, and how we believe these measures are useful to management and investors are provided below. Other companies may define similar measures differently.

EBITDA, Adjusted EBITDA and Adjusted Operating Income

 

Three Months Ended

   

 

Nine Months Ended

 

October 29,

2021

   

 

October 30,

2020

   

 

October 29,

2021

   

 

October 30,

2020

   

 

(in millions)

               

Net income

$

71 

 

 

$

60 

 

 

$

235 

 

 

$

150 

 

Interest expense and loss on sale of receivables

27 

 

 

33 

 

 

81 

 

 

97 

 

Interest income

— 

 

 

— 

 

 

— 

 

 

(1)

 

Provision for income taxes

17 

 

 

18 

 

 

66 

 

 

43 

 

Depreciation and amortization

44 

 

 

48 

 

 

123 

 

 

131 

 

EBITDA(1)

159 

 

 

159 

 

 

505 

 

 

420 

 

EBITDA as a percentage of revenues

8.4 

%  

 

8.7 

%  

 

9.0 

%  

 

7.9 

%  

Acquisition and integration costs

12 

 

 

 

 

36 

 

 

47 

 

Restructuring and impairment costs

 

 

 

 

 

 

 

Depreciation included in acquisition and integration costs

— 

 

 

— 

 

 

(1)

 

 

— 

 

Recovery of acquisition and integration costs and restructuring and impairment costs

(1)

 

 

(2)

 

 

(1)

 

 

(3)

 

Adjusted EBITDA(1)

$

171 

 

 

$

164 

 

 

$

540 

 

 

$

468 

 

Adjusted EBITDA as a percentage of revenues

9.0 

%  

 

9.0 

%  

 

9.6 

%  

 

8.8 

%  
       

Operating income

$

114 

 

 

$

110 

 

 

$

377 

 

 

$

288 

 

 

Operating income as a percentage of revenues

6.0 

%

 

6.1 

%

 

6.7 

%

 

5.4 

%

 

Acquisition and integration costs

12 

 

 

 

 

36 

 

 

47 

 

 

Restructuring and impairment costs

 

 

 

 

 

 

 

 

Recovery of acquisition and integration costs and restructuring and impairment costs

(1)

 

 

(2)

 

 

(1)

 

 

(3)

 

 

Adjusted operating income(1)

$

126 

 

 

$

115 

 

 

$

413 

 

 

$

336 

 

 

Adjusted operating income as a percentage of revenues

6.6 

%

 

6.3 

%

 

7.4 

%

 

6.3 

%

 

EBITDA is a performance measure that is calculated by taking net income and excluding interest and loss on sale of receivables, provision for income taxes, and depreciation and amortization. Adjusted EBITDA and adjusted operating income are performance measures that exclude acquisition and integration costs, impairments, restructuring costs, and any other material non-recurring costs that we do not consider to be indicative of our ongoing operating performance. The acquisition and integration costs relate to the Company's acquisitions of Engility, Unisys Federal, Halfaker and Associates and Koverse. The recovery of acquisition and integration costs and restructuring and impairment costs relate to costs recovered through the Company's indirect rates in accordance with Cost Accounting Standards. We believe that these performance measures provide management and investors with useful information in assessing trends in our ongoing operating performance and may provide greater visibility in understanding the long-term financial performance of the Company.

(1)Non-GAAP measure, see above for definition

Schedule 5 (continued):

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NON-GAAP FINANCIAL MEASURES

(Unaudited)

Adjusted Diluted Earnings Per Share

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2021

 

October 30,

2020

 

October 29,

2021

 

October 30,

2020

Diluted earnings per share

$

1.22

 

 

$

1.02

 

 

$

4.01

 

 

$

2.51

 

 

 

 

 

 

 

 

 

Acquisition and integration costs and restructuring and impairment costs, divided by diluted 'weighted-average number of shares outstanding' (WASO)

0.21

 

 

0.09

 

 

0.62

 

 

0.82

 

Tax effect of acquisition and integration costs and restructuring and impairment costs, divided by diluted WASO

(0.04)

 

 

(0.02)

 

 

(0.12)

 

 

(0.15)

 

Net effect of acquisition and integration costs and restructuring and impairment costs, divided by diluted WASO

0.17

 

 

0.07

 

 

0.50

 

 

0.67

 

 

 

 

 

 

 

 

 

Amortization of intangible assets, divided by diluted WASO

0.57

 

 

0.68

 

 

1.61

 

 

1.84

 

Tax effect of amortization of intangible assets, divided by diluted WASO

(0.11)

 

 

(0.15)

 

 

(0.36)

 

 

(0.41)

 

Net effect of amortization of intangible assets, divided by diluted WASO

0.46

 

 

0.53

 

 

1.25

 

 

1.43

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share(1)

$

1.85

 

 

$

1.62

 

 

$

5.76

 

 

$

4.61

 

Adjusted diluted earnings per share is a performance measure that excludes acquisition and integration costs, impairments, restructuring costs, and any other material non-recurring costs that we do not consider to be indicative of our ongoing operating performance. The acquisition and integration costs relate to the Company's acquisitions of Engility, Unisys Federal, Halfaker and Associates and Koverse. The acquisition and integration costs and restructuring and impairment costs are net of the portion of costs recovered through the Company's indirect rates in accordance with Cost Accounting Standards. Adjusted diluted earnings per share also excludes amortization of intangible assets because we do not have a history of significant acquisition activity, we do not acquire businesses on a predictable cycle, and the amount of an acquisition's purchase price allocated to intangible assets and the related amortization term are unique to each acquisition. We believe that this performance measure provides management and investors with useful information in assessing trends in our ongoing operating performance and may provide greater visibility in understanding the long-term financial performance of the Company.

(1)Non-GAAP measure, see above for definition

Schedule 5 (continued):

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

Free Cash Flow

 

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2021

 

October 30,

2020

 

October 29,

2021

 

October 30,

2020

 

(in millions)

Net cash provided by operating activities

$

134

 

 

$

231

 

 

$

415

 

 

$

702

 

Expenditures for property, plant, and equipment

(10)

 

 

(9)

 

 

(27)

 

 

(32)

 

Cash used (provided) by MARPA Facility

 

 

 

 

(15)

 

 

(200)

 

Free cash flow(1)

$

124

 

 

$

222

 

 

$

373

 

 

$

470

 

 

 

FY22 Guidance

 

 

(in millions)

Net cash provided by operating activities

 

$495 to $525

Expenditures for property, plant, and equipment

 

$45 to $55

Free cash flow(1)

 

$450 to $470

Free cash flow is calculated by taking cash flows provided by operating activities less expenditures for property, plant, and equipment and less cash flows from our Master Accounts Receivable Purchasing Agreement (MARPA Facility) for the sale of certain designated eligible U.S. government receivables. Under the MARPA Facility, the Company can sell eligible receivables up to a maximum amount of $300 million. We believe that free cash flow provides management and investors with useful information in assessing trends in our cash flows and in comparing them to other peer companies, many of whom present a similar non-GAAP liquidity measure. This measure should not be considered as a measure of residual cash flow available for discretionary purposes.

(1)Non-GAAP measure, see above for definition

 

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