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SAIC plans to detail organic growth and expand pipeline-Washington Technology

SAIC plans to detail organic growth and expand pipeline

Science Applications International Corp. reports organic growth for the fourth consecutive quarter.

SAIC reported revenue of $ 1.9 billion in the just-completed third quarter, compared to $ 1.8 billion in the year-ago quarter.

This is equivalent to 4% growth. Adjusted EBITDA (Interest, Taxes, Depreciation, and Pre-Amortization Revenues) increased profits by 6% year-on-year to $ 171 million.

SAIC currently expects revenue for fiscal year 2022 to range from $ 7.35 billion to $ 7.4 billion, with a lower limit raised from $ 7.3 billion. The company’s fiscal year is from February to January.

These are SAIC figures, but in many cases the value of these quarterly financial reports to the investment community is what SAIC sees for the future.

When management talked about the company’s capital allocation plans, there was no talk about acquisitions. These funds were used to buy back shares and repay debt, which is now about 3.5 times the annual EBITDA.

CEO Nazzic Keene and Chief Financial Officer Prabu Natarajan said they expect organic growth to continue beyond 2023. Their optimism is despite the ongoing pandemic-related challenges in SAIC’s supply chain business.

Prior to the COVID-19 pandemic, the supply business generated far more than $ 700 million in revenue. Today it is brought just north of $ 600 million.

“But our ability to grow a company does not depend on a complete recovery of our supply chain business,” said Natarajan.

Until growth returns to its business, SAIC focuses on improving margins through additional automation and what he calls a “differentiated bidding strategy.”

SAIC faces familiar headwinds throughout its business, including supply chain challenges and tight labor markets.

Keane explained that he is focusing on two previously announced initiatives. One is the future of work, and the other is the reorganization of internal investment efforts, including SAIC’s “Innovation Factory” team, which focuses on artificial intelligence, engineering and digital transformation.

SAIC’s top priority is to attract and retain talent. This is of interest to all competitors as well.

In September, SAIC announced future work initiatives, including new employee benefits to increase flexibility. This includes the option of a four-day working week on June 16 as paid leave, an increase in paid family leave, and the option to level medical insurance premiums for the second consecutive year.

SAIC is also reducing the footprint of its facilities and investing in what Keane calls a “new operational paradigm.”

“This has advanced our vision of promoting employee well-being, promoting economic benefits in the form of increased competitiveness and cost savings, while promoting the ability to attract diverse talent.” She said.

SAIC expects the change to save $ 25 million annually. The money will be reinvested in the workforce, Keane said.

The second labor issue that has received much attention is the impact of the mandatory COVID-19 vaccine. According to Keane, the company expects minimal negative impact.

“As of last week, 96% of our workforce is in compliance with our vaccine policy and we expect it to grow moderately in the future,” she said.

SAIC believes it can handle or relocate the majority of unvaccinated. Keane said the final net impact was not important.

The creation of the innovation factory team has already paid dividends, as evidenced by the announcement on Monday morning booked by SAIC. $ 1.1 billion Navy contract Manufacture, test and delivery of torpedoes.

She says this victory reflects SAIC’s move from working on specific program features to more enterprise solutions focused on long-term customer needs.

“This year, we made changes to our organizational structure and incentive indicators to strengthen collaboration between the Innovation Factory team and the sector’s growth priorities,” Keane said.

Under the Navy’s contract, SAIC will integrate various subsystems for the Navy’s torpedoes.

“This is a direct reflection of SAIC’s understanding of the submarine territory and its company-wide investment in digital manufacturing solutions, integrated logistics and supply chain solutions, and other digital engineering capabilities,” Keane said. I am.

The SAIC pipeline is full of similar system integration opportunities. Keane said SAIC remains cautious and works where the company knows technology, domains, legacy systems, and partners.

Areas of great ongoing opportunity for the company are IT modernization and cloud migration.

“We’re doing a fair amount of that work today, and that’s an important part of our future pipeline,” Keane said. “We are aware of it to all our customers who provide our services.”

Contributor Nick Wakeman on December 6, 2021 so 1:36 PM


https://washingtontechnology.com/blogs/editors-notebook/2021/12/saic-third-quarter.aspx SAIC plans to detail organic growth and expand pipeline-Washington Technology

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