Science Applications Q1 Profit Declines, Misses View; But Revenues Beat

(RTTNews) - Information technology services provider Science Applications International Corp. (SAIC) on Tuesday reported a 3 percent decline in profit for the first quarter from last year, as higher costs and expenses more than offset an increase in revenues.

Earnings per share for the quarter missed analysts' expectations, while revenues beat their estimates. In addition, the company increased its quarterly dividend by 10.7 percent. Shares of the company are down almost 9 percent in the regular trading session.

Tony Moraco, CEO of Science Applications said, "We continue to see progress in our strategy execution with our third straight quarter of internal revenue growth. The recent Scitor acquisition further expands our market access and enhances our strong cash flow generation. The increase in our quarterly dividend demonstrates confidence in our business model and underscores our commitment to our shareholders."

McLean, Virginia-based Science Applications, which provides scientific and engineering services mainly to the U.S. defense department, commenced operations in the third quarter of fiscal 2014 after spinning off from its former parent SAIC Inc, which was renamed as Leidos Holdings Inc.

Science Applications' first-quarter net income edged down to $33 million from $34 million in the year-ago period, while earnings per share were flat with last year at $0.69.

The latest quarter's earnings per share results include the impact of acquisition and integration costs of $0.04 per share.

On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.75 per share for the quarter. Analysts' estimates typically exclude special items.

However, total revenues for the quarter increased 3 percent to $1.01 billion from $977 million in the same period last year. Analysts had a consensus revenue estimate of $982.50 million for the quarter.

Science Applications noted that total revenues for the quarter increased due to higher volume on supply chain contracts as well as increased U.S. Department of Defense or DoD material and subcontract revenues.

Operating income for the quarter declined to $57 million from $59 million in the prior-year quarter, primarily driven by costs of $3 million associated with the acquisition and integration of Scitor as well as net unfavorable changes of $2 million in estimates on contracts accounted for under the percentage-of-completion method.

Total cost of revenues for the quarter rose 3 percent from the year-ago period to $923 million.

Subsequent to the first quarter, the company's board of directors declared a regular quarterly cash dividend of $0.31 per share, payable on July 30, 2015 to stockholders of record on July 15, 2015. The dividend represents a 10.7 percent increase from the previous quarterly dividend of $0.28 per share.

SAIC is trading at $48.60, down $4.62 or 8.68 percent on a volume of 123,545 shares.