Anthony J. Moraco, CEO of SAIC (SAIC), and CFO John R. Hartley presented on Wednesday at the Cowen & Co. 35th Annual Aerospace/Defense & Transportation Conference at the InterContinental New York Barclay, New York City.
Moraco began the presentation by explaining that SAIC separated into an independent company on September 27, 2013. He said that SAIC is now one of the largest pure play technical services providers to the U.S. government and that the company currently has approximately $4 billion in annual revenue with 90% prime contracts.
Moraco said that the spinoff allows them to protect their base and expand into customers they already know but who they have under served in the past. The spinoff, according to Moraco, creates new access points unencumbered by conflict of interest.
Hartley then explained that company revenue is between $3.85 billion and $4.10 billion with diluted earnings per share of $2.13 to $2.33. Operating cash flow is equal to or greater than $125 million. As of January 31, 2014, SAIC has repurchased 362,723 shares of stock to create shareholder value.
During a question-and-answer period, Moraco said SAIC recovered relatively easily from the government shutdown late last year. SAIC sees the budget deal as essentially neutral, but positive in that it should allow awards to restart. Moraco expects some lift in calendar quarter one and two.
Moraco said he expects numbers to trend up in FY 15. He noted, however, that the first quarter of FY 15 should have a double-digit decrease. This, he said, will be the fourth consecutive quarter of negative double digit numbers. The numbers should then flatten and the company is expecting organic growth in the second half of the year.
Overall, Moraco said SAIC is very pleased with the status of the company post-spin off. The upside for FY 15 will be triggered by award activity, according to Moraco, and he believes SAIC can outperform the market as a whole. The downside would be any surprises from the spin off. However, Moraco believes the downside is offset by the upside.
To view the presentation on the company web site, click here.
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