) second quarter fiscal 2014 net income of $42 million or 12
cents per share slumped from $108 million or 32 cents per share
reported in the year-earlier quarter. The year-over-year decline
was primarily due to reductions in operating income associated
with the corporate decision to split into two separate publicly
traded companies. The quarterly earnings also missed the Zacks
Consensus Estimate of 20 cents.
Revenues in second quarter fiscal 2014 dropped to $2.47
billion from $2.83 billion in the second quarter of fiscal 2013.
The quarterly revenues missed the Zacks Consensus Estimate of
$2.55 billion. The decrease was driven by ramp down of certain
contracts, drawdown of overseas U.S. military forces and
reduction of the U.S. Government budget, partially offset by
growth in the Health and Engineering segment.
Effective Feb 1, 2013, SAIC redefined its reportable segments as
a preparation for planned separation. Technical Services and
Information Technology segment will operate as an independent
namesake company, while the Health and Engineering and National
Security Solutions segments will operate as a separate
independent under the name Leidos Holdings, Inc.
Health and Engineering
delivered sales of approximately $451 million in the second
quarter, up 8% year over year. The year-over-year increase was
driven by the acquisition of maxIT Healthcare Holdings, Inc - a
provider of healthcare IT consulting services to commercial
National Security Solutions
revenues stood at $1,022 million in second quarter 2014, down 15%
year over year. The decrease in segment revenues was driven by
ramp down of the Joint Logistics Integration JLI program for
tactical mine resistant ambush protected vehicles and the
completion of several intelligence programs.
Technical Services and Information Technology
revenues stood at $1,009 million, down 16% year over year. The
revenue contraction was driven by the ramp down of DISN Global
Solutions DGS program with the Defense Information Systems
Agency and the completion of a network operational management
program for the U.S. Forces in Afghanistan.
Operating income for the quarter was $75 million, down from $189
million in the year-ago period. The reduction in operating income
was primarily due to separation transaction expenses, intangible
asset impairment charges, increase in the net unfavorable changes
in contract cost and contraction in revenues.
Balance Sheet, Cash Flows and Backlog
At quarter-end, cash and cash equivalents aggregated $462
million. Long-term debt stood at $1.3 billion. During the
reported quarter, the company paid a cash dividend of $1.12 per
share, which included a special cash dividend of $1.00 paid in
Cash flow provided by continuing operations for the quarter
was $217 million versus $200 million in the year-ago period.
Net business bookings stood at $1.86 billion in the reported
quarter, representing a book-to-bill ratio of 0.75.
The company's backlog of signed business orders at the end of
the second quarter fiscal 2014 was $15.88 billion, of which $4.56
billion was funded. Total order backlog decreased 4% year over
year and funded backlog decreased 17% year over year.
For fiscal 2014, management expects revenues to be in the
range of $9.7 billion to $10.2 billion. Earnings per share
from continuing operations are expected to be in the range of 95
cents to $1.03 and cash flow from continuing operations is
projected to be around $450 million.
SAIC has a large pipeline of new projects and continues to win
deals at regular intervals. The contract wins are key catalysts
that are likely to augment the company's revenues. The company is
looking forward to the planned separation to remain competitive
in the market.
SAIC currently has a Zacks Rank #2 (Buy). Other stocks that
look promising and are worth considering now include
Booz Allen Hamilton Holding Corporation
) with Zacks Rank #1 (Strong Buy), and
Providence Service Corp
ICF International Inc
), both carrying a Zacks Rank #2 (Buy).
BOOZ ALLEN HMLT (BAH): Free Stock Analysis
ICF INTL INC (ICFI): Free Stock Analysis
PROVIDENCE SVC (PRSC): Free Stock Analysis
SAIC INC (SAI): Free Stock Analysis Report
To read this article on Zacks.com click here.