SAIC stock pitch for Spring 2016.

Defense Sector Overview

  • Consists of companies who primarily get revenue from government defense contracts
  • Sub-sector of Aerospace and Defense Industry
  • Revenue growth has declined since passage of 2011 Budget Control Act
  • Stagnating growth has also been attributed to program cancellations and contract award delays
  • Implementation of Least Technically Acceptable Price (LTAP) decreased revenues on defense contracts
  • Global tensions rising due to ISIS, Russia-Ukraine, and other factors
  • Increased military spending in Russia, China, and Middle East Countries
  • Expected to begin new growth cycle starting in 2016
  • Move away from LTAP contracts in favor of best value
  • Increasing M&A activity
  • Divestment from inefficient revenue streams

SAIC Overview

  • Provider of technology integration specializing in engineering, intelligence, and enterprise IT services to the US. government
  • Split from parent company (Now Leidos) in 2013 after 46 year history to separate defense focus from consulting
  • Completed restructuring expenses from split in 2015
  • 15,000 Employees
  • Acquired Scitor in May 2015 to gain access into intelligence industry
  • Scitor- 1,500 employees and S60oM in revenue
  • Financed $790M Scitor acquisition through $670M in loans and $12oM cash on hand
  • Expected to payoff acquisition by 2021
  • Decrease in revenue due to timing in contract awards
  • Increase in operating income clue to low restructuring expense
  • Bookings-Estimated Future Revenue from contracts gained during period
  • Backlog- Estimated Future Revenue under negotiated contracts total

Global Tension

  • Terrorist attacks and threats have increased public concern over security
  • Paris Attacks
  • San Bernardino
  • Russia and Ukraine Conflicts
  • North Korea concerns

SAIC Spring 2016 Stock Pitch

SAIC Stock Pitch

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