SCIENCE APPLICATIONS INTERNATIONAL CORPORATION reports 4.4% EBITDA decline in 2018 and almost no change in Revenue of 4,454
03/29/2018 • About SCIENCE APPLICATIONS INTERNATIONAL CORPORATION (
$SAIC) • By InTwits
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- SCIENCE APPLICATIONS INTERNATIONAL CORPORATION has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.4%.
- In the last 5 years the company invested considerably less than D&A: $95m vs. $195m. In FY2018 this situation was still the same: CAPEX was 22 while D&A was 46
- The company has highly profitable business model: ROIC is 18.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.9x while industry average is -0.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION's Revenue showed almost no change in FY2018. Revenue growth showed acceleration in FY18Q4 - it increased 10.2% YoY. During the last 5 years Revenue growth topped in FY2016 at 11.1% and was decelerating since that time. EBITDA Margin showed almost no change in FY2018.
Gross Margin decreased slightly on 0.66 pp from 9.9% to 9.2% in FY2018. During the last 5 years Gross Margin topped in FY2017 at 9.9%. SG&A as a % of Revenue showed almost no change in FY2018. During the last 5 years SG&A as a % of Revenue topped in FY2017 at 4.0%. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018.
Net Income margin increased slightly on 0.80 pp from 3.2% to 4.0% in FY2018. The efficient tax rate was 16.4% in FY2018 while the average for the last five years was 31.3%.
Investments (CAPEX, working capital and M&A)
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION's CAPEX/Revenue was 0.49% in FY2018. The company showed almost no change in CAPEX/Revenue from FY2015 to FY2018. Average CAPEX/Revenue for the last three years was 0.43%.
Accounts receivable as a % of Revenue increased on 3.0 pp from 12.1% to 15.1% in FY2018. Inventories as a % of Revenue showed almost no change at 1.5% in FY2018. Accounts payable as a % of Revenue increased slightly on 1.6 pp from 8.2% to 9.8% in FY2018.
Return on investment
The company operates at high and attractive ROE (53.0%) while ROIC is a bit lower (18.4%). ROIC showed almost no change in FY2018. ROE surged on 13.7 pp from 39.2% to 53.0% in FY2018.
Leverage (Debt)
Debt level is 2.9x Net Debt / EBITDA and 3.4x Debt / EBITDA. Net Debt / EBITDA jumped on 0.3x from 2.6x to 2.9x in FY2018. Debt decreased on 2.2% while cash dropped on 31.4%.
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION has good short term financial stability: Interest coverage ratio (ICR) is 5.8x. SCIENCE APPLICATIONS INTERNATIONAL CORPORATION has no short term refinancing risk: cash is higher than short term debt (351.2%).
Average interest expence charged on company's debt was 4.3% in FY2018.
Valuation and dividends
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION's trades at EV/EBITDA 14.8x and P/E 20.0x.
The company paid 30.2% of Net Income as dividends in FY2018. Dividends grew on average at -30.0% per annum in the last 5 years).
Management team
Anthony J Moraco "Tony" is a the company's CEO. Anthony J Moraco "Tony" is a founder and has spent 5 years with the company. CEO total compensation was
$6,427,791 in FY2018 which included
$1,000,000 salary. The company's CFO is Charles A Mathis. Charles A Mathis has 2 years tenure at the company.
0.65% of the company is owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 15,500 employees. The number of employees didn't change in 2018. Average revenue per employee in FY2018 was
$287,355 and it showed almost no change in 2018.
Financial and operational results
FY ended 02/02/2018
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION ($SAIC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 4,121 | 3,885 | 4,315 | 4,442 | 4,454 | 0.3% |
| Gross Profit | 333 | 335 | 411 | 439 | 411 | -6.4% |
| SG&A | 92 | 95 | 158 | 176 | 155 | -11.9% |
| EBITDA | 196 | 261 | 289 | 316 | 302 | -4.4% |
| EBIT | 183 | 240 | 227 | 263 | 256 | -2.7% |
| Interest expence | | | 44 | 52 | 44 | -15.4% |
| Tax | 63 | 82 | 66 | 69 | 35 | -49.3% |
| Net Income | 113 | 141 | 117 | 143 | 179 | 25.2% |
| Stock Based Compensation | 33 | 32 | 23 | 13 | 27 | 107.7% |
Balance Sheet
|
|---|
| Cash | 254 | 301 | 195 | 210 | 144 | -31.4% |
| Accounts Receivable | 621 | 544 | 635 | 539 | 674 | 25.0% |
| Inventory | 119 | 67 | 68 | 71 | 68 | -4.2% |
| Accounts Payable | | 315 | 351 | 329 | 397 | 20.7% |
| Short Term Debt | 13 | 32 | 57 | 25 | 41 | 64.0% |
| Long Term Debt | 489 | 457 | 1,013 | 1,022 | 983 | -3.8% |
Cash flow
|
|---|
| Capex | 16 | 22 | 20 | 15 | 22 | 46.7% |
| Dividends | 322 | 52 | 55 | 54 | 54 | 0.0% |
| Acquisitions | | | 764 | 2 | | |
Ratios
|
|---|
| Revenue growth | -13.8% | -5.7% | 11.1% | 2.9% | 0.3% | |
| EBITDA growth | -33.3% | 33.2% | 10.7% | 9.3% | -4.4% | |
|
|---|
| Gross Margin | 8.1% | 8.6% | 9.5% | 9.9% | 9.2% | -0.7% |
| EBITDA Margin | 4.8% | 6.7% | 6.7% | 7.1% | 6.8% | -0.3% |
| EBIT Margin | 4.4% | 6.2% | 5.3% | 5.9% | 5.7% | -0.2% |
| SG&A, % of revenue | 2.2% | 2.4% | 3.7% | 4.0% | 3.5% | -0.5% |
| SBC, % of revenue | 0.8% | 0.8% | 0.5% | 0.3% | 0.6% | 0.3% |
| Net Income Margin | 2.7% | 3.6% | 2.7% | 3.2% | 4.0% | 0.8% |
| CAPEX, % of revenue | 0.4% | 0.6% | 0.5% | 0.3% | 0.5% | 0.2% |
|
|---|
| ROIC | 24.4% | 27.4% | 19.6% | 18.3% | 18.4% | 0.1% |
| ROE | 23.2% | 39.1% | 32.3% | 39.2% | 53.0% | 13.7% |
| Net Debt/EBITDA | 1.3x | 0.7x | 3.0x | 2.6x | 2.9x | 0.3x |
| Interest coverage ratio (ICR) | | | 5.2x | 5.1x | 5.8x | 0.8x |
| Interest expence / Average debt | | | 5.6% | 4.9% | 4.3% | -0.6% |
People
|
|---|
| Insider ownership | 0.7% | 0.7% | 0.7% | 0.7% | 0.7% | 0.0% |
| Employees | 13,000 | 13,000 | 15,000 | 15,500 | 15,500 | 0.0% |
| Revenue/Employee, th. $ | 317 | 299 | 288 | 287 | 287 | 0.3% |
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION ($SAIC) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,103 | 1,078 | 1,145 | 1,128 | | -9.2% | -1.6% | 2.8% | 10.2% |
| EBITDA | 73 | 71 | 83 | 75 | | -11.0% | -13.4% | -4.6% | 5.6% |
| Net Income | 49 | 36 | 43 | 51 | | 48.5% | -2.7% | 2.4% | 45.7% |
Balance Sheet
|
|---|
| Cash | 207 | 140 | 125 | 144 | | 34.4% | 21.7% | -38.4% | -31.4% |
| Short Term Debt | 24 | 58 | 37 | 41 | | -57.9% | -4.9% | 362.5% | 64.0% |
| Long Term Debt | 1,014 | 1,006 | 994 | 983 | | 1.5% | 2.2% | -4.2% | -3.8% |
Ratios
|
|---|
| Gross Margin | 8.7% | 9.2% | 9.5% | 9.5% | | -0.9% | -0.8% | -0.7% | -0.8% |
| EBITDA Margin | 6.6% | 6.6% | 7.2% | 6.6% | | -0.1% | -0.9% | -0.6% | -0.3% |
| Net Income Margin | 4.4% | 3.3% | 3.8% | 4.5% | | 1.7% | -0.0% | -0.0% | 1.1% |
Peers in IT Consulting & Other Services
Below you can find SCIENCE APPLICATIONS INTERNATIONAL CORPORATION benchmarking vs. other companies in IT Consulting & Other Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Gopher Protocol Inc ($GOPH) | | -25.0% | 83.3% | 5,471.1% | 461.0% |
| CLPS Incorporation ($CLPS) | | | | 8.1% | 56.0% |
| EPAM Systems, Inc. ($EPAM) | | 25.2% | 26.9% | 25.0% | 27.1% |
| Gartner, Inc. ($IT) | | 7.0% | 13.0% | 35.5% | 20.1% |
| Computer Task Group, Incorporated ($CTG) | | -6.0% | -12.1% | -7.3% | 19.1% |
| |
|---|
| Median (35 companies) | | 3.5% | 7.7% | 4.0% | 3.9% |
|---|
| SCIENCE APPLICATIONS INTERNATIONAL CORPORATION ($SAIC) | | -5.7% | 11.1% | 2.9% | 0.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Inpixon ($INPX) | 29.8% | 28.9% | 28.1% | 68.7% | 71.4% |
| Gartner, Inc. ($IT) | 60.5% | 61.2% | 61.3% | 60.1% | 63.1% |
| InterXion Holding N.V. ($INXN) | 59.2% | 60.8% | 61.5% | 61.1% | 60.9% |
| LiveRamp Holdings, Inc. ($RAMP) | 25.1% | 38.6% | 42.5% | 45.7% | 56.2% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 50.4% | 50.8% | 52.3% | 53.6% | 53.5% |
| |
|---|
| Median (36 companies) | 27.1% | 32.4% | 29.5% | 30.0% | 30.4% |
|---|
| SCIENCE APPLICATIONS INTERNATIONAL CORPORATION ($SAIC) | 8.1% | 8.6% | 9.5% | 9.9% | 9.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 41.3% | 44.9% | 43.3% | 42.2% | 42.8% |
| Switch, Inc. ($SWCH) | | 50.7% | 37.0% | 28.5% | 39.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 20.4% | 19.9% | 19.8% | 19.7% | 20.5% |
| Taoping Inc. ($TAOP) | -54.0% | -237.5% | -117.7% | 13.2% | 18.7% |
| DXC Technology Company ($DXC) | | | | 8.0% | 16.3% |
| |
|---|
| Median (35 companies) | 5.1% | 3.3% | 6.7% | 6.3% | 7.2% |
|---|
| SCIENCE APPLICATIONS INTERNATIONAL CORPORATION ($SAIC) | 4.8% | 6.7% | 6.7% | 7.1% | 6.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 62.5% | 48.1% | 57.4% | 50.5% | 78.3% |
| Switch, Inc. ($SWCH) | | 71.5% | 90.2% | 106.4% | 67.9% |
| Taoping Inc. ($TAOP) | 1.4% | 29.2% | 34.0% | 20.8% | 8.7% |
| Teradata Corporation ($TDC) | 2.0% | 2.1% | 2.3% | 3.6% | 7.1% |
| ServiceSource International, Inc. ($SREV) | 3.4% | 4.7% | 10.4% | 7.2% | 6.5% |
| |
|---|
| Median (34 companies) | 1.0% | 0.9% | 1.2% | 1.4% | 1.5% |
|---|
| SCIENCE APPLICATIONS INTERNATIONAL CORPORATION ($SAIC) | 0.4% | 0.6% | 0.5% | 0.3% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Accenture plc ($ACN) | 80.5% | 81.0% | 81.3% | 61.7% | 66.1% |
| The Hackett Group, Inc. ($HCKT) | 11.2% | 19.5% | 31.7% | 23.8% | 24.6% |
| Cognizant Technology Solutions Corporation ($CTSH) | 24.7% | 22.0% | 21.3% | 21.9% | 23.8% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 25.3% | 26.5% | 23.1% | 22.6% | 22.5% |
| EPAM Systems, Inc. ($EPAM) | 19.7% | 18.4% | 18.2% | 18.9% | 21.2% |
| |
|---|
| Median (43 companies) | 6.2% | 4.7% | 7.3% | 4.7% | 6.9% |
|---|
| SCIENCE APPLICATIONS INTERNATIONAL CORPORATION ($SAIC) | 24.4% | 27.4% | 19.6% | 18.3% | 18.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Infinite Group Inc ($IMCI) | | | 169.6x | | 10.5x |
| InterXion Holding N.V. ($INXN) | 3.3x | 2.9x | 3.4x | 3.8x | 4.6x |
| Gartner, Inc. ($IT) | 0.1x | 1.3x | 0.6x | 11.7x | 4.1x |
| Switch, Inc. ($SWCH) | | 2.2x | 4.0x | 3.2x | 3.3x |
| Presidio, Inc. ($PSDO) | 0.0x | | 5.6x | 3.6x | 3.1x |
| |
|---|
| Median (27 companies) | -0.2x | -0.3x | 0.0x | 0.4x | 0.0x |
|---|
| SCIENCE APPLICATIONS INTERNATIONAL CORPORATION ($SAIC) | 1.3x | 0.7x | 3.0x | 2.6x | 2.9x |
