SAIC Reports Strong First Quarter Fiscal Year 2027 Results, Raises Guidance
Key Points and Highlights
- Revenue Growth: SAIC reported Q1 FY2027 revenues of \$1.91 billion, a 2% increase year-over-year. Organic growth, adjusting for the SilverEdge acquisition, was 0.5%.
- Profitability: Net income surged to \$115 million (up 69% YoY), with adjusted EBITDA of \$222 million, representing 11.6% of revenues. Operating income margin jumped to 9.4% from 6.4% last year, and adjusted operating margin to 11.6% from 8.4%.
- EPS Growth: Diluted earnings per share came in at \$2.61 (up 84% YoY), and adjusted diluted EPS at \$3.23 (up 68%). The decrease in weighted-average diluted shares (44.0M vs. 47.8M last year) further boosted per-share metrics.
- Cash Flow: Operating cash flow rose to \$127 million (up 27%), while free cash flow was \$118 million, a dramatic turnaround from last year’s negative \$44 million.
- Capital Deployment: SAIC deployed \$192 million in capital, including \$175 million in share repurchases—an aggressive return to shareholders—and \$17 million in dividends.
- Backlog and New Awards: Net bookings for the quarter were \$2.1 billion, a book-to-bill ratio of 1.1. Total backlog reached \$22.9 billion, with \$3.7 billion funded. Notable contract wins include several large recompetes in the U.S. Space and Intelligence Community (\$330M, \$540M, \$100M), U.S. Department of Homeland Security (\$200M), U.S. Air Force (\$192M), U.S. Navy (\$123M), and post-quarter FAA awards totaling \$100M.
- Dividend Declaration: SAIC declared a quarterly cash dividend of \$0.37 per share, payable July 24, 2026. The company intends to continue quarterly dividends, but future payments depend on board decisions and financial conditions.
- Raised Guidance: SAIC increased guidance for FY2027 adjusted EBITDA (\$720M-\$730M, up from \$705M-\$715M), adjusted EBITDA margin (10.1%-10.3%, up from 9.9%-10.1%), and adjusted diluted EPS (\$9.90-\$10.10, up from \$9.50-\$9.70). Revenue guidance remains \$7.0B-\$7.2B, and free cash flow guidance remains >\$600M.
Detailed Financials
- Segment Results:
- Defense and Intelligence revenues grew \$33 million (2%), primarily from SilverEdge and contract ramp-ups. Adjusted operating income margin improved to 10.0% from 8.0%.
- Civilian segment revenues fell \$4 million (1%), but operating margin rose to 15.5% from 11.7%, reflecting improved profitability and contract mix.
- Corporate segment saw a swing from a \$9 million loss last year to \$7 million income, driven by a \$12 million investment sale gain and lower SG&A costs.
- Balance Sheet:
- Cash and cash equivalents stood at \$109 million (down from \$182M at year-end). Receivables increased to \$962M.
- Total assets: \$5.34 billion. Debt: \$2.49 billion (net of current portion).
- Shareholders’ equity: \$1.42 billion.
- Cash Flow Statement:
- Q1 net cash provided by operating activities: \$127M (up from \$100M).
- Free cash flow improved to \$118M from \$(44)M, reflecting stronger operations and the absence of MARPA Facility cash flows.
- Capital expenditures: \$9M. Share buybacks: \$188M. Dividend payments: \$17M.
Contract Backlog
- Total Backlog: \$22.9 billion, of which \$3.7 billion is funded. Defense and Intelligence backlog: \$18.6B; Civilian: \$4.24B.
- Backlog Definitions: Funded backlog represents contracts with appropriated funding, minus recognized revenues. Negotiated unfunded backlog includes future revenues from contracts not yet funded or authorized, plus unexercised priced options.
Non-GAAP Financial Measures and Guidance
- SAIC provides non-GAAP measures including organic growth, adjusted operating income, adjusted EBITDA, adjusted diluted EPS, and free cash flow, to better reflect ongoing operating performance and trends.
- FY2027 guidance (as of June 1, 2026):
- Revenue: \$7.0B–\$7.2B
- Organic Growth: (4%)–(2%)
- Adjusted EBITDA: \$720M–\$730M
- Adjusted EBITDA Margin: 10.1%–10.3%
- Adjusted Diluted EPS: \$9.90–\$10.10
- Free Cash Flow: >\$600M
Shareholder and Price-Sensitive Information
- Raised Guidance: The increase in adjusted EBITDA, margin, and EPS guidance reflects management’s confidence in improved profitability and execution, which is likely to be price-sensitive and positively impact the share value.
- Share Repurchases: \$175M repurchased in Q1, signaling management’s commitment to shareholder returns and potentially reducing share count, which can boost EPS.
- Dividend Continuity: SAIC’s declaration of a \$0.37 quarterly dividend with intention to continue, subject to board discretion, provides ongoing income to shareholders and signals financial strength.
- Significant Contract Wins: Major recompetes and new contracts in defense, intelligence, civilian, and federal sectors (U.S. Space/Intelligence, DHS, Air Force, Navy, FAA) add visibility to future revenues and backlog, supporting long-term growth.
- Backlog Strength: A large backlog, particularly in Defense and Intelligence, provides revenue visibility and supports the raised guidance.
- Cash Flow Recovery: Turnaround in free cash flow (from negative to positive) and strong operating cash flow are positive signals for investors, supporting both capital deployment and future dividend/share repurchase activities.
Additional Investor Information
- SAIC will host its earnings webcast at 10:00 a.m. ET on June 1, 2026, accessible via investors.saic.com.
- Headquartered in Reston, VA, SAIC employs ~23,000 people and has annual revenues of ~\$7.3B.
- For further information, visit saic.com.
Disclaimer
This article is for informational purposes only and does not constitute investment advice. The information summarized herein is based on SAIC’s publicly released earnings report. Forward-looking statements and guidance are subject to risks and uncertainties, including those identified in SAIC’s SEC filings. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions. SAIC expressly disclaims any duty to update forward-looking statements to reflect subsequent events or changes in expectations.
