8-K: SAIC Reports Q4, Full FY26 Results; CEO Confirmed

Science Applications International Corporation announced its fourth quarter and full fiscal year 2026 financial results, highlighting strong operational execution despite top-line challenges and confirming Jim Reagan as permanent CEO.

Summary

• Q4 FY26 revenues decreased 5% year-over-year to $1.75 billion, while full FY26 revenues decreased 3% to $7.26 billion.
• Q4 FY26 net income was $85 million, a 13% decrease year-over-year, and full FY26 net income was $358 million, a 1% decrease.
• Adjusted diluted earnings per share (EPS) increased 2% to $2.62 for Q4 FY26 and 18% to $10.75 for full FY26.
• Cash flows provided by operating activities significantly increased to $258 million in Q4 FY26 (up 124%) and $609 million for full FY26 (up 23%).
• Free cash flow rose 42% to $336 million in Q4 FY26 and 16% to $577 million for full FY26.
• The Q4 FY26 net bookings were $0.6 billion, resulting in a book-to-bill ratio of 0.3, while the trailing twelve months book-to-bill ratio was 1.1.
• Estimated backlog at the end of fiscal 2026 was approximately $22.6 billion, with $3.6 billion funded.
• SAIC provided FY27 guidance, projecting revenues between $7.0 billion and $7.2 billion, with an organic growth decline of (4%) to (2%), adjusted EBITDA of $705 million to $715 million, adjusted diluted EPS of $9.50 to $9.70, and free cash flow greater than $600 million.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a mixed report; while operational execution and adjusted EPS showed strength, the revenue decline and negative organic growth guidance for FY27 indicate ongoing top-line challenges.

Positives

• Strong operational execution supported the ability to raise margin expectations moving forward.
• Adjusted EBITDA as a percentage of revenues increased to 10.3% in Q4 FY26 (from 9.6% in prior year) and to 9.7% for full FY26 (from 9.5% in prior year).
• Adjusted diluted EPS increased by 2% in Q4 FY26 to $2.62 and by 18% for full FY26 to $10.75.
• Cash flows provided by operating activities increased significantly by 124% in Q4 FY26 to $258 million and by 23% for full FY26 to $609 million.
• Free cash flow increased by 42% in Q4 FY26 to $336 million and by 16% for full FY26 to $577 million.
• The trailing twelve months book-to-bill ratio of 1.1 indicates that new business awards exceeded revenues recognized over the past year.
• Total estimated backlog increased to $22.6 billion at the end of FY26 from $21.857 billion in the prior year.
• Awarded approximately $629 million in contract awards by space and intelligence organizations during the quarter.
• Secured a new $95 million, five-year contract with the U.S. Government Accountability Office (GAO) for IT solutions.
• Subsequent to quarter-end, awarded a $330 million seven-year recompete contract with a Space and Intelligence Community customer and a $200 million five-year recompete contract with a Federal Civilian agency.
• A quarterly cash dividend of $0.37 per share was declared, payable on April 24, 2026.

Negatives

• Revenues decreased by 5% in Q4 FY26 to $1.75 billion and by 3% for full FY26 to $7.26 billion, primarily due to ramp-downs in existing contracts, contract completions, and the impact of a government shutdown.
• Net income decreased by 13% in Q4 FY26 to $85 million and by 1% for full FY26 to $358 million.
• The Q4 FY26 book-to-bill ratio was 0.3, indicating that new bookings for the quarter were significantly lower than revenues.
• Operating income as a percentage of revenues for the full fiscal year decreased to 7.2% from 7.5% in the prior year, impacted by executive transition costs, prior year favorable contract termination resolution, federal tax audit settlement costs, and timing/volume mix.
• FY27 guidance projects an organic growth decline of (4%) to (2%), indicating continued top-line challenges.

Risks

• Future performance is subject to risks, uncertainties, and assumptions, and actual results may differ materially from guidance and other forward-looking statements.
• Risks and uncertainties include those discussed in the Risk Factors, Management's Discussion and Analysis of Financial Condition and Results of Operations, and Legal Proceedings sections of the Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q.

Future Outlook

For fiscal year 2027, SAIC projects revenues between $7.0 billion and $7.2 billion, with an organic growth decline of (4%) to (2%). Adjusted EBITDA is expected to be between $705 million and $715 million, with an adjusted EBITDA margin of 9.9% to 10.1%. Adjusted diluted EPS is guided to be $9.50 to $9.70, and free cash flow is anticipated to be greater than $600 million.

Management Comments

• "As previously announced on February 11, our fourth-quarter results reflected ongoing top-line challenges, balanced by strong operational execution that supports our ability to raise margin expectations moving forward." Jim Reagan, SAIC's Chief Executive Officer.
• "I am encouraged by the progress we are making and by the opportunities in front of us. Our plan is simple we will focus on elements within our control to drive more consistent and reliable growth." Jim Reagan, SAIC's Chief Executive Officer.
• "With a career dedicated to operational excellence and value creation in our industry, I am honored to continue, as permanent CEO, building on SAIC's solid foundation to deliver meaningful results to all stakeholders." Jim Reagan, SAIC's Chief Executive Officer.

Industry Context

StockSavvy.ai notes that SAIC operates in a competitive U.S. government contracting market, where revenue can be influenced by government spending cycles, contract completions, and new award timing. The focus on digital transformation across defense, space, civilian, and intelligence markets aligns with broader industry trends towards modernization and advanced technology integration. The decline in organic growth guidance for FY27 suggests ongoing pressure in securing new large-scale contracts or expanding existing ones, a common challenge for large integrators in a dynamic federal budget environment.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results for a detailed assessment against global benchmarks.

Management Changes

Corporate Governance

Legal Proceedings

• The company experienced a favorable resolution of the Assault Amphibious Vehicle ("AAV") contract termination in the prior year, which had a $13 million impact.
• Costs were recovered from the settlement of a patent infringement matter.
• Costs were incurred related to the settlement of federal tax audits for fiscal years 2016 through 2019.

Stakeholder Impact

• Shareholders: Continued quarterly dividends, significant share repurchases ($422 million for FY26), and increased adjusted EPS demonstrate a commitment to shareholder returns despite revenue challenges.
• Employees: As a large technology integrator with approximately 23,000 employees, the company's ongoing contract awards and strategic focus suggest stable employment, though contract ramp-downs could lead to shifts in resource allocation.
• Customers (U.S. Government): Ongoing significant contract awards, including in the Space and Intelligence Community and a new GAO contract, indicate continued trust and demand for SAIC's services in critical government missions.
• Creditors: Strong cash flow generation ($609 million operating cash flow, $577 million free cash flow for FY26) provides a solid foundation for debt servicing and financial stability.

Next Steps

• SAIC management will discuss operations and financial results in an earnings conference call beginning at 10:00 a.m. Eastern time on March 16, 2026.
• The Company's Board of Directors intends to continue paying dividends on a quarterly basis, with the next declared dividend payable on April 24, 2026, to stockholders of record on April 10, 2026.

Key Dates

Recommendation

While SAIC demonstrated strong operational execution, leading to improved adjusted earnings and robust cash flow, the persistent revenue decline and negative organic growth guidance for FY27 present significant top-line concerns. The mixed results suggest that the company is effectively managing costs and capital deployment, but faces headwinds in expanding its core business. A "hold" recommendation reflects the balance between strong profitability metrics and the challenges in revenue growth, advising investors to monitor the company's ability to reverse the top-line trend in future periods.

Keywords

SAIC, Science Applications International Corporation, Q4 earnings, FY26 results, financial results, government contractor, defense, space, civilian, intelligence, IT solutions, adjusted EBITDA, diluted EPS, free cash flow, backlog, book-to-bill, contract awards, Jim Reagan CEO