SAIC Reports Q4 and Full-Year Fiscal 2026 Results: Key Highlights and Investor Insights

Summary of Results

• Q4 FY26 Revenues: \$1.75 billion (down from \$1.84 billion YoY)
• FY26 Revenues: \$7.26 billion (down from \$7.48 billion YoY)
• Q4 FY26 Net Income: \$85 million
• FY26 Net Income: \$358 million
• Q4 Adjusted EBITDA: \$181 million (10.3% of revenue)
• FY26 Adjusted EBITDA: \$708 million (9.7% of revenue)
• Q4 Diluted EPS: \$1.87; Adjusted Diluted EPS: \$2.62
• FY26 Diluted EPS: \$7.70; Adjusted Diluted EPS: \$10.75
• Q4 Free Cash Flow: \$336 million
• FY26 Free Cash Flow: \$577 million
• Q4 Net Bookings: \$0.6 billion; Book-to-Bill Ratio: 0.3
• Trailing 12-Month Book-to-Bill: 1.1
• FY27 Guidance: Adjusted diluted EPS \$9.50–\$9.70; Revenue \$7.0–\$7.2 billion; Adjusted EBITDA \$705–\$715 million; Free Cash Flow >\$600 million

Management Commentary

Jim Reagan, now permanent CEO, highlighted ongoing top-line challenges but emphasized strong operational execution. The company is focusing on controllable elements to drive consistent and reliable growth, with a renewed commitment to operational excellence and value creation.

Detailed Financial Performance

Quarterly Performance

• Q4 revenues dropped by \$88 million YoY, primarily due to contract ramp-downs and completions, and the impact of the government shutdown. This was partially offset by \$23 million in new revenue from the SilverEdge acquisition.
• Operating income as a percentage of revenue increased to 7.6% (up 10bps), mainly due to lower SG&A expenses, despite the revenue decrease.
• Adjusted EBITDA margin improved to 10.3%, up from 9.6% in the prior year quarter.
• Q4 diluted EPS fell to \$1.87 from \$2.00, but adjusted diluted EPS rose slightly to \$2.62 from \$2.57, reflecting improved underlying profitability.
• Weighted average diluted shares outstanding decreased to 45.4 million from 49.0 million, enhancing per-share results despite lower net income.

Full-Year Performance

• FY26 revenues declined by \$217 million YoY, largely due to contract completions, ramp-downs, and about \$26 million lost due to the government shutdown.
• SilverEdge contributed \$27 million to FY26 revenue; excluding this, organic revenue contracted by about 3.3%.
• Operating income margin decreased to 7.2% from 7.5%, mostly due to executive transition costs, a lack of prior year’s favorable contract terminations, and tax audit settlements, offset in part by patent settlement recoveries.
• Adjusted EBITDA margin increased to 9.7% (from 9.5%) due to one-time patent settlement recoveries and lower SG&A, but partially offset by the lack of a favorable prior-year contract termination.
• FY diluted EPS rose to \$7.70 (from \$7.17); adjusted diluted EPS was \$10.75 (up 18% YoY).
• Weighted average diluted shares outstanding for FY26 was 46.5 million, down from 50.5 million, reflecting aggressive share repurchases.

Cash Flow and Capital Deployment

• Q4 Operating Cash Flow: \$258 million (up \$143 million YoY), driven by timing of customer collections and lower taxes paid.
• FY26 Operating Cash Flow: \$609 million (up \$115 million YoY).
• Q4 Capital Deployed: \$122 million, mainly \$97 million in share repurchases and \$17 million in dividends.
• FY26 Capital Deployed: \$524 million, including \$422 million in share repurchases (~4 million shares) and \$70 million in dividends.

Dividend and Shareholder Updates

• New Quarterly Dividend: \$0.37 per share declared, payable April 24, 2026, to shareholders of record on April 10, 2026.
• SAIC intends to continue quarterly dividends, subject to Board approval and company performance.

Backlog and New Contract Awards

• Q4 Net Bookings: \$0.6 billion; Book-to-Bill: 0.3 (below 1.0, potentially a concern for future revenue growth).
• FY26 Net Bookings: \$7.8 billion; Book-to-Bill: 1.1, indicating total bookings exceeded annual revenue.
• Backlog at Year-End: \$22.6 billion (of which \$3.6 billion is funded).
• Notable Q4 Awards:
  • \$629 million from U.S. Space and Intelligence organizations (new business, modifications, recompetes).
  • \$95 million five-year IT solutions contract from the U.S. Government Accountability Office (GAO).
• Post-Q4 Awards (not in current bookings):
  • \$330 million, seven-year recompete with a Space and Intelligence Community customer.
  • \$200 million, five-year recompete for technology modernization in the Federal Civilian sector.

FY27 Guidance (As of March 16, 2026)

• Revenue: \$7.0–\$7.2 billion (expected organic contraction of ~2%)
• Adjusted EBITDA: \$705–\$715 million
• Adjusted EBITDA Margin: 9.9%–10.1%
• Adjusted Diluted EPS: \$9.50–\$9.70
• Free Cash Flow: >\$600 million

Segment Performance

Defense & Intelligence

• Q4 Revenue: \$1.34 billion (down 2% YoY)
• FY Revenue: \$5.58 billion (down 3% YoY)
• Decline mainly due to contract ramp-downs and completions, offset partially by SilverEdge acquisition and new contracts.
• Adjusted operating income margin up in Q4, but down YoY due to last year’s favorable one-off contract events.

Civilian

• Q4 Revenue: \$415 million (down 13% YoY)
• FY Revenue: \$1.68 billion (down 4% YoY)
• Decline due to contract ramp-downs and completions, partially offset by new business.
• Q4 margin down due to contract mix, but FY margin up due to improved profitability.

Balance Sheet Update

• Cash & Equivalents (Year-End): \$182 million (up from \$56 million prior year)
• Total Assets: \$5.35 billion
• Total Debt: \$2.49 billion (up from \$2.22 billion prior year)
• Total Equity: \$1.50 billion

Non-GAAP Measures

The company continues to emphasize non-GAAP results such as adjusted operating income, adjusted EBITDA, and adjusted EPS, which exclude non-recurring costs (e.g., acquisition/integration, executive transition, tax settlements).

Risks and Considerations for Investors

• Revenue declines in both core segments, though margins are improving due to cost controls and one-off recoveries.
• Low Q4 book-to-bill ratio (0.3) could signal future revenue pressure if not reversed.
• Continued aggressive share repurchases are reducing share count, supporting per-share metrics.
• Dividend commitment reaffirmed, but subject to ongoing performance and Board approval.
• Guidance suggests another year of slight organic revenue contraction but steady margins and strong cash flow.
• Large backlog (\$22.6B) provides revenue visibility, but funded portion is \$3.6B (about 16% of total).
• Potential share price impact from new contract wins, cost discipline, and shareholder returns, but headwinds from declining revenue base and low quarterly bookings should be monitored closely.

Conclusion

SAIC delivered solid margin and cash flow performance in a challenging environment, supported by cost controls, share buybacks, and selective acquisitions. However, revenue headwinds, a low Q4 book-to-bill ratio, and ongoing executive transitions are key watch points for investors. The company’s strong backlog and capital return policy remain positives, but future growth will depend on securing new contracts and reversing the revenue contraction trend.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence or consult a financial advisor before making any investment decisions. The author and publisher are not responsible for any actions taken based on this content.

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