SAIC Q2 Results Miss Estimates, Cuts FY Outlook - Update

(RTTNews) - Defense contractor SAIC, Inc. (SAI) Wednesday reported a sharp decline in second-quarter profit, reflecting mainly lower revenues, separation transaction expenses, as well as asset impairment charge. Both earnings per share and revenues missed analysts' expectations. The company also lowered its guidance for fiscal year 2014.

The company said fall in quarterly profit was mainly due to $35 million of separation transaction expenses, a non-cash $30 million intangible asset impairment charge, $29 million for the increase in net unfavorable changes in contract cost estimates and $26 million related to the contraction in revenue.

John Jumper, chairman and chief executive officer of the company stated, "Our financial results and outlook were impacted by a number of discrete items relating to the planned separation of SAIC into two companies, net charges for underperforming programs and contracts coupled with the ongoing effects of sequestration."

In the second quarter, the company's net income fell to $42 million from $108 million in the previous year.

On a per share basis, earnings were $0.12, significantly lower than $0.32 per share a year ago. Income from continuing operations for the recent quarter totaled $0.13 per share.

On average, 10 analysts polled by Thomson Reuters expected earnings per share of $0.22 for the quarter. Analysts' estimates typically exclude one-time items.

Quarterly revenues declined to $2.47 billion from $2.83 billion in the year-ago quarter. Nine analysts estimated revenues of $2.56 billion for the quarter.

The company said its revenues were impacted by ramp down of certain contracts, drawdowns of overseas U.S. military forces and reduction of the U.S. Government budget. This was partially offset by growth in Health and Engineering segment, mainly due to acquisition of maxIT Healthcare Holdings, Inc.

Health and Engineering segment revenues increased 8 percent to $451 million from $417 million a year ago.

For fiscal year 2014, the firm now sees earnings from continuing operations to be in the range of $0.95 to $1.03 per share, down from the prior outlook of $1.16 to $1.33 per share.

Revenues are now anticipated to be between $9.7 billion and $10.2 billion, lower than the earlier guidance of $10 billion and $10.7 billion. Ten analysts project earnings of $1.13 per share, on revenues of $10.36 billion for the year.

The company noted that its fiscal year guidance excludes impact of potential future acquisitions and other non-ordinary course items.

SAI closed Tuesday's regular trading at $15.15 on the NYSE. In the pre-market activity, the shares are down 4.36 percent.