On this page of StockholderLetter.com we present the latest annual shareholder letter from Science Applications International Corp — ticker symbol SAIC. Reading current and past SAIC letters to shareholders can bring important insights into the investment thesis.
SAIC Shareholder/Stockholder Letter Transcript:
DEAR FELLOW SHAREHOLDERS, Fiscal year 2023 was a year of great accomplishment and significant progress for SAIC. We continued to focus on long-term value creation as the challenges associated with the COVID-19 pandemic waned. While meeting our financial goals and delivering for our shareholders, we were also able to balance investing for the future. SAIC maintains a focus on meeting the challenges of today while also shaping the future to meet the challenges of tomorrow. We challenge the norm and push boundaries by architecting solutions and a better workplace, making the world a better place today and for tomorrow. We are excited about our future and are continuously innovating to meet its challenges it s what happens when you Bring on Tomorrow. SAIC TOTAL SHAREHOLDER RETURN FOR FISCAL YEAR 2023 We recognize that the world is becoming increasingly complex and the threats our country faces are formidable. From the pandemic response to the war in Ukraine, to climate change and disagreements between nation states, when it comes to the threats facing our world, we believe that the most important lesson we can all take from such adversity is the belief in the power of everyday heroes. S&P 500 INDEX TOTAL SHAREHOLDER RETURN FOR FISCAL YEAR 2023 With unwavering focus, commitment and sense of purpose, we have seen so many among us serve humanity in ways that are inspiring. Their courage is something that all of us should have the fortitude to emulate. We should all strive to do our part. 30% 5% FY23 ANNUAL REPORT 1 R E V EN U E S $7.7B FY23 $7.4B FY22 $7.1B FY21 4% ANNUAL REVENUE GROWTH FR EE C A SH FLOW 1 FY23 $457M FY22 $467M $524M FY21 A DJ U S T ED D I L U T ED EP S 2 $7.55 FY23 $7.27 FY22 $6.27 FY21 4% INCREASE FROM PRIOR YEAR C A P I TA L D EP LOY ED $353M FY23 $333M FY22 FY21 $152M 6% INCREASE FROM PRIOR YEAR SAIC does its part by partnering with our customers in advancing the most critical missions of the U.S. government. All of our approximately 25,000 employees are everyday heroes dedicated to the service of our customers and ultimately, our nation. These are no-fail circumstances. We also serve our shareholders in the same way. In our efforts to advance our world, we strive to deliver value to you and consider that a no-fail mission as well. The trust you have placed in us is important, and because of that we work tirelessly to deliver on your expectations. We would be remiss if we didn t take this opportunity to also demonstrate how we are delivering on our commitments to our employees and the communities where they live. Through hard work and dedication, our employees strive to solve the world s most challenging problems with unmatched ethical behavior and an eye toward shaping the future through innovation. This report highlights our financial performance and progress on strategic goals, as well as how we are making a difference in the lives of all of those who depend upon us to get it right the first time, every time. We are proud to share this message with you. DELIVERING FOR OUR SHAREHOLDERS Our strategic focus continues to be on growth, profitability, cash generation and disciplined deployment of capital. By expanding the portfolio in high-growth markets through a well-defined and focused strategy, we have enhanced top-line growth, increased adjusted diluted earnings per share2 (EPS) and generated significant free cash flow1 while balancing investments for the future. Our strategy has led us to delivering two consecutive years of organic growth, increasing profitability and deploying capital for shareholder return. As a result of our strong financial management and in a fiscal year where the total shareholder return for the S&P 500 declined by 5%, SAIC delivered an increase of 30%. SAIC s business strategy puts focus on our growth and technology accelerants (GTAs) while protecting our core business. Our GTAs encompass some of the most attractive portions of our market and consist of secure and resilient cloud and applications, enterprise IT, systems integration & delivery (SID) and all-domain C5ISR and operations. We anticipate that we will continue to grow our GTAs as we evolve with the market and bring capabilities to bear that our customers will require in the future. In fiscal year 2023, we achieved revenues of $7.7B, equating to annual growth of 4%, and increased diluted EPS as compared to fiscal year 2022. Through disciplined capital deployment of $353M, we deployed $245M of share repurchases, $83M of dividends to shareholders, and $25M of capital expenditures. Most importantly, we delivered by meeting and often exceeding expectations, and we did it through the lens of long-term shareholder value creation. GROWTH AND TECHNOLOGY ACCELERANTS (GTAs) 2 1 Free cash flow is a non-GAAP financial measure and is reconciled at the end of this letter 2 Adjusted diluted earnings per share is a non-GAAP financial measure and is reconciled at the end of this letter FY23 ANNUAL REPORT SECURE AND RESILIENT CLOUD AND APPLICATIONS ENTERPRISE IT SYSTEMS INTEGRATION & DELIVERY ALL-DOMAIN C5ISR AND OPERATIONS OUR COMMITMENT TO DIVERSITY, EQUITY AND INCLUSION 28% WOMEN IN LEADERSHIP (IN FY23) 23% FORTUNE 2023 WORLD S MOST ADMIRED COMPANIES PEOPLE OF COLOR IN LEADERSHIP (IN FY23) 62% OF OUR BOARD OF DIRECTORS ARE WOMEN AND/OR PEOPLE OF COLOR (IN FY23) OUR PEOPLE: A CULTURE OF EXCELLENCE SAIC takes great pride in our role as a leader in innovation. Innovation comes in many forms; it s not just about technological advances. Our people, our most valuable asset, are fostered through a culture where they can thrive and be their best. Because when they are at their best, they are also at their best for our customers. Providing them with the tools they need to be successful, and an emphasis on their well-being, is an important element of our strategy and is embraced at every level of the organization. At SAIC, we foster an environment where diversity, equity and inclusion are welcomed because we know that diversity of thought and experience brings the best of everyone. We are committed to being a leader in corporate responsibility through actions and environmental, social and governance (ESG) disclosures. Reflecting this commitment, we established a new office of ESG Integration during fiscal year 2023. This office is responsible for setting our company s strategy on ESG, ensuring that all goals are met, and providing transparency through a wide variety of disclosures. We expect to continue setting the standard in these areas and our successes have been recognized through many accolades, including: FORTUNE 500 2022 Forbes America s Best Employers for Diversity 2023 Forbes America s Best Large Employers 2022 Forbes America s Best Employers for Veterans 2022 Human Rights Campaign Best Places to Work for LGBTQ+ Equality We continue to set targets and measure our results, ensuring accountability for progress in areas such as board and leadership diversity, because we know it starts with leadership. Today, 62% of our board of directors are women and people of color. Equally as important, our leadership team is comprised of 28% women and 23% people of color. 2022 AMERICA'S BEST EMPLOYERS FOR DIVERSITY (EVERY YEAR SINCE 2019) 2023 AMERICA'S BEST LARGE EMPLOYERS (EVERY YEAR SINCE 2019) 2022 AMERICA'S BEST EMPLOYERS FOR VETERANS (BEST IN OUR INDUSTRY, 31% OF SAIC S WORKFORCE ARE U.S. MILITARY VETERANS) BEST PLACES TO WORK FOR LGBTQ+ EQUALITY (FIVE CONSECUTIVE YEARS WITH A PERFECT SCORE) FY23 ANNUAL REPORT 34/26/2023 Letter Continued (Full PDF)