SAIC Earnings Miss Forecast, But Revenue Beats as Company Guides Higher

SAIC SAI, the large engineering company, Monday reported earnings that missed Wall St. forecasts. However, revenue was stronger than forecast and the company guided higher than analyst forecasts for the full fiscal year 2014.

Data Breakdown

For the first quarter of fiscal year 2014, SAIC Inc. reported earnings per share of $0.23 vs. the consensus analyst estimate of $0.26. Earnings were also lower than the same period a year ago, when the company earned $0.35 per share. The worse than expected income figures are being attributed to lower than anticipated operating income due to $33 million of separation transaction expenses, as well as certain other expenses.

Despite the earnings miss, revenues were stronger than expected in the quarter. For the quarter, revenue was reported at $2.71 billion, beating analyst estimates of $2.59 billion by 4.63 percent. However, revenue was lower than the same period a year ago when the company made $2.78 billion in revenue. Revenues were impacted by the ramp down of certain contracts and the tightening of the U.S. Government budget and would have fallen further on a comparable basis to the same period a year ago if not for an additional two working days in the quarter.

Guidance

Looking forward, SAIC Inc. guided higher than the consensus estimate for the full fiscal year 2014. The company expects to earn between $1.16 and $1.33 per share this year compared to the consensus estimate of $1.17. The company also expects revenue to total between $10.0 and $10.7 billion for the year and for cash flows from operations to be at least $450 million.

Management Comments

Chairman and CEO John P. Jumper commented in the press release on the first quarter's results. "Our performance for the quarter was consistent with our expectations and reflects the difficult government market characterized by spending reductions and procurement delays associated with sequestration. We are reaffirming our guidance for the full year."

"The market conditions reinforce the importance of expanding our addressable markets through the planned separation of the Company. In addition, we continue to invest in operational improvements and to drive cost reductions necessary to position the Company for profitable growth in the future."

New Contracts

SAIC Inc. new business booking totaled $1.3 billion in the quarter. The new contracts included a $228 million contract from Sandia National Laboratories, a $74 million contract from the U.S. Navy, and a $495 million contract from the Joint Program Executive Office for Chemical and Biological Defense.

Market Reaction

SAIC's stock traded little changed in after market trading with the stock dropping a mere 0.07 percent to $14.83 per share after gaining over 2.3 percent during the day. Notably, the company's annual meeting is this Friday, June 7.