Science Applications International Corporation (SAIC) reported Q1 results for fiscal year 2026 that indicate a modest growth trajectory. The company generated revenue of $1.877 billion, reflecting a 2% increase from the previous year’s $1.847 billion. The growth was primarily driven by the ramp-up of existing and new contracts, although this was partially offset by transitions and completions of various contracts.

Net income for the quarter was $68 million, a decrease of 12% from $77 million a year earlier. The adjusted EBITDA was $157 million, corresponding to an adjusted EBITDA margin of 8.4%, down from 9.0% in the prior year. The decline in adjusted EBITDA margin was attributed to timing and volume mix within the contract portfolio.

SAIC’s diluted earnings per share for the quarter decreased to $1.42 from $1.48 year-over-year. However, adjusted diluted earnings per share remained flat at $1.92, as a reduction in the weighted average share count, from 52.1 million last year to 47.8 million this quarter, offset higher tax rates that impacted net income.

The company reported net bookings of $2.4 billion during the first quarter, resulting in a book-to-bill ratio of 1.3. The trailing twelve-month book-to-bill ratio stands at 0.8. Total backlog at the end of the quarter was approximately $22.3 billion, with funded backlog amounting to about $3.3 billion.

As for cash generation, SAIC reported cash flows from operating activities of $100 million, representing a slight increase from $98 million in the prior-year quarter. However, the company faced negative free cash flow of $(44) million due to the timing of receivables in two programs, which affected overall liquidity.

Management reaffirmed the fiscal year 2026 guidance, indicating anticipated revenues in the range of $7.6 billion to $7.75 billion, with adjusted EBITDA projected to be between $715 million and $735 million, reiterating an adjusted EBITDA margin of 9.4% to 9.6%. Adjusted diluted EPS is guided between $9.10 and $9.30.

In terms of capital deployment, SAIC repurchased shares worth approximately $125 million in Q1 and continues to target annual repurchases in the range of $350 million to $400 million. The company also declared a quarterly dividend of $0.37 per share, payable on July 25, 2025.

SAIC remains in a stable condition with a moderate growth outlook despite challenges, including procurement delays and fluctuations in defense budgets.