Business Wire | Dec 6, 2021 07:00AM EST

SAIC Announces Third Quarter of Fiscal Year 2022 Results

Dec. 06, 2021

RESTON, Va.--(BUSINESS WIRE)--Dec. 06, 2021--Science Applications International Corporation (NYSE: SAIC), a premier Fortune 500(r) technology integrator driving our nation's digital transformation across the defense, space, civilian, and intelligence markets, today announced results for the third quarter ended October 29, 2021.

"Our focus remains on positioning our portfolio and empowering our talented workforce to meet the needs of our customer, today and in the future." said SAIC CEO Nazzic Keene. "Our strong results and sustained growth reflect the continued progress we are making in aligning SAIC with areas of increasing customer demand. We continue to see attractive opportunities to profitably grow our business."

Third Quarter of Fiscal Year 2022: Summary Operating Results

Three Months Ended Nine Months Ended

October Percent October October Percent October 29, 30, 29, 30, 2021 change 2020 2021 change 2020

(in millions, except per share amounts)

Revenues $ 1,898 4 % $ 1,818 $ 5,612 5 % $ 5,339

Operating 114 4 % 110 377 31 % 288 income

Operatingincome as a 6.0 % -10 bps 6.1 % 6.7 % 130 bps 5.4 %percentageof revenues

Adjustedoperating 126 10 % 115 413 23 % 336 income^(1)

Adjustedoperatingincome as a 6.6 % 30 bps 6.3 % 7.4 % 110 bps 6.3 %percentageof revenues

Net incomeattributable 71 18 % 60 234 59 % 147 to commonstockholders

EBITDA^(1) 159 - % 159 505 20 % 420

EBITDA as apercentage 8.4 % -30 bps 8.7 % 9.0 % 110 bps 7.9 %of revenues

Adjusted 171 4 % 164 540 15 % 468 EBITDA^(1)

AdjustedEBITDA as a 9.0 % - bps 9.0 % 9.6 % 80 bps 8.8 %percentageof revenues

Dilutedearnings per $ 1.22 20 % $ 1.02 $ 4.01 60 % $ 2.51 share

Adjusteddiluted $ 1.85 14 % $ 1.62 $ 5.76 25 % $ 4.61 earnings pershare^(1)

Net cashprovided by $ 134 (42) % $ 231 $ 415 (41) % $ 702 operatingactivities

Free cash $ 124 (44) % $ 222 $ 373 (21) % $ 470 flow^(1)

(1)Non-GAAP measure, see Schedule 5 for information about this measure.

Third Quarter Summary Results

Revenues for the quarter increased $80 million compared to the same period in the prior year primarily due to ramp up on new and existing contracts, the acquisition of Halfaker and the accelerated amortization on certain off-market liability contracts, partially offset by contract completions. Adjusting for the impact of acquired revenues and divested revenues, revenues grew 2.1% primarily due to net increases in program volume and new awards. We estimate the third quarter program impact from the COVID-19 pandemic to be approximately $30 million, primarily driven by reduced volume in our supply chain business.

Operating income as a percentage of revenues of 6.0%, decreased from 6.1% in the comparable prior year period primarily due to lower employee benefit costs in the prior year period and higher acquisition and integration costs in the current year period, partially offset by net favorable changes in contract estimates and the accelerated amortization on certain off-market liability contracts.

Adjusted EBITDA(1) as a percentage of revenues for the quarter of 9.0% remained consistent with the same period in the prior year. Net favorable changes in contract estimates and revenue resulting from the accelerated amortization on certain off-market liability contracts were offset by lower employee benefit costs in the prior year period. We estimate the third quarter program impact from the COVID-19 pandemic to be approximately $1 million of adjusted EBITDA(1).

Diluted earnings per share for the quarter was $1.22 compared to $1.02 in the prior year quarter. Adjusted diluted earnings per share(1) for the quarter was $1.85 compared to $1.62 in the prior year quarter. The weighted-average diluted shares outstanding during the quarter decreased to 58.0 million from 58.7 million during the prior year quarter.

Cash Generation and Capital Deployment

Cash flows provided by operating activities for the third quarter were $134 million, a decrease of $97 million compared to the prior year quarter, primarily due to working capital related to the impact of payroll tax payments associated with the CARES Act.

Free cash flow(1) for the third quarter decreased by $98 million from the prior year quarter to $124 million, primarily due to working capital related to the impact of payroll tax payments associated with the CARES Act.

During the quarter, SAIC deployed $97 million of capital, consisting of $63 million of plan share repurchases, $21 million in cash dividends, $10 million of capital expenditures and $3 million for acquisitions. In addition, SAIC made $23 million of mandatory debt repayment in the third quarter.

^(1)Non-GAAP measure, see Schedule 5 for information about this measure.

Third Quarter Summary Results

Revenues for the quarter increased $80 million compared to the same period in the prior year primarily due to ramp up on new and existing contracts, the acquisition of Halfaker and the accelerated amortization on certain off-market liability contracts, partially offset by contract completions. Adjusting for the impact of acquired revenues and divested revenues, revenues grew 2.1% primarily due to net increases in program volume and new awards. We estimate the third quarter program impact from the COVID-19 pandemic to be approximately $30 million, primarily driven by reduced volume in our supply chain business.

Operating income as a percentage of revenues of 6.0%, decreased from 6.1% in the comparable prior year period primarily due to lower employee benefit costs in the prior year period and higher acquisition and integration costs in the current year period, partially offset by net favorable changes in contract estimates and the accelerated amortization on certain off-market liability contracts.

Adjusted EBITDA(1) as a percentage of revenues for the quarter of 9.0% remained consistent with the same period in the prior year. Net favorable changes in contract estimates and revenue resulting from the accelerated amortization on certain off-market liability contracts were offset by lower employee benefit costs in the prior year period. We estimate the third quarter program impact from the COVID-19 pandemic to be approximately $1 million of adjusted EBITDA(1).

Diluted earnings per share for the quarter was $1.22 compared to $1.02 in the prior year quarter. Adjusted diluted earnings per share(1) for the quarter was $1.85 compared to $1.62 in the prior year quarter. The weighted-average diluted shares outstanding during the quarter decreased to 58.0 million from 58.7 million during the prior year quarter.

Cash Generation and Capital Deployment

Cash flows provided by operating activities for the third quarter were $134 million, a decrease of $97 million compared to the prior year quarter, primarily due to working capital related to the impact of payroll tax payments associated with the CARES Act.

Free cash flow(1) for the third quarter decreased by $98 million from the prior year quarter to $124 million, primarily due to working capital related to the impact of payroll tax payments associated with the CARES Act.

During the quarter, SAIC deployed $97 million of capital, consisting of $63 million of plan share repurchases, $21 million in cash dividends, $10 million of capital expenditures and $3 million for acquisitions. In addition, SAIC made $23 million of mandatory debt repayment in the third quarter.

^(1)Non-GAAP measure, see Schedule 5 for information about this measure.

Quarterly Dividend Declared

Subsequent to the end of the quarter, the Company's Board of Directors declared a cash dividend of $0.37 per share of the Company's common stock payable on January 28, 2022 to stockholders of record on January 14, 2022. SAIC intends to continue paying dividends on a quarterly basis, although the declaration of any future dividends will be determined by the Board of Directors each quarter and will depend on earnings, financial condition, capital requirements and other factors.

Backlog and Contract Awards

Net bookings for the quarter were approximately $1.4 billion, which reflects a book-to-bill ratio of 0.7 and a trailing twelve months book-to-bill ratio of 1.1. SAIC's estimated backlog at the end of the quarter was approximately $24 billion. Of the total backlog amount, approximately $3.4 billion was funded.

Notable Recompete Awards

U.S. Department of State SAIC was awarded a twelve month contract extension, valued at $200 million, to continue providing engineering and design services, security, and operation and maintenance services for critical IT infrastructure.

SAIC was awarded the following contracts subsequent to the end of the quarter which are not included in the current quarter net bookings and book-to-bill

U.S. Naval Sea Systems Command (NAVSEA) SAIC was awarded a contract, valued at $1.1 billion, to produce, assemble, test and deliver the U.S. Navy's MK 48 MOD 7 torpedo afterbody tailcones (AB/TC) and MK29 Mod 0 Warshot fuel tanks. Under the contract, SAIC will provide all necessary facilities, resources and management necessary to meet the contract's production, test and delivery requirements.

Fiscal Year 2022 Guidance

As a result of the Company's year-to-date performance and future expectations, including expected impacts from the COVID-19 pandemic, the Company is updating previously provided fiscal year 2022 guidance. The guidance assumes expected negative COVID-19 impact of approximately $125 million in revenue and approximately $10 million in adjusted EBITDA. The table below summarizes fiscal year 2022 guidance and represents our views as of December 6, 2021.

Current Fiscal Year Prior Fiscal Year

2022 Guidance 2022 Guidance

Revenue $7.35 billion - $7.40 $7.30 billion - $7.40 billion billion

Adjusted EBITDA Margin^ 9.0% to 9.1% 8.9% to 9.0%(1)

Adjusted Diluted EPS^(1) $6.75 - $6.95 $6.50 - $6.70

Free Cash Flow^(1) $450 million - $470 million $430 million to $470 million

Webcast Information

SAIC management will discuss operations and financial results in an earnings conference call beginning at 10:00 a.m. Eastern time on December 6, 2021. The conference call will be webcast simultaneously to the public through a link on the Investor Relations section of the SAIC website ( http://investors.saic.com). We will be providing webcast access only - "dial-in" access is no longer available. Additionally, a supplemental presentation will be available to the public through links to the Investor Relations section of the SAIC website. After the call concludes, an on-demand audio replay of the webcast can be accessed on the Investor Relations website.

About SAIC

SAIC(r) is a premier Fortune 500(r) technology integrator driving our nation's technology transformation. Our robust portfolio of offerings across the defense, space, civilian, and intelligence markets includes secure high-end solutions in engineering, digital, artificial intelligence, and mission solutions. Using our expertise and understanding of existing and emerging technologies, we integrate the best components from our own portfolio and our partner ecosystem to deliver innovative, effective, and efficient solutions that are critical to achieving our customers' missions.

We are more than 26,000 strong; driven by mission, united by purpose, and inspired by opportunities. Headquartered in Reston, Virginia, SAIC has annual revenues of approximately $7.2 billion.???? For more information, visit saic.com. For ongoing news, please visit our newsroom.

GAAP to Non-GAAP Guidance Reconciliation

The Company does not provide a reconciliation of forward-looking adjusted diluted EPS to GAAP diluted EPS or adjusted EBITDA margin to GAAP net income due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including, but not limited to, amortization of acquired intangible assets and acquisition, integration and restructuring costs. As a result, the Company is not able to forecast GAAP diluted EPS or GAAP net income with reasonable certainty. The variability of the above charges may have an unpredictable and potentially significant impact on our future GAAP financial results.

^(1)Non-GAAP measure, see Schedule 5 for information about this measure.

Forward-Looking Statements

Certain statements in this release contain or are based on "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "expects," "intends," "plans," "anticipates," "believes," "estimates," "guidance," and similar words or phrases. Forward-looking statements in this release may include, among others, estimates of future revenues, operating income, earnings, earnings per share, charges, total contract value, backlog, outstanding shares and cash flows, as well as statements about future dividends, share repurchases and other capital deployment plans. Such statements are not guarantees of future performance and involve risk, uncertainties and assumptions, and actual results may differ materially from the guidance and other forward-looking statements made in this release as a result of various factors. Risks, uncertainties and assumptions that could cause or contribute to these material differences include those discussed in the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Legal Proceedings" sections of our Annual Report on Form 10-K, as updated in any subsequent Quarterly Reports on Form 10-Q and other filings with the SEC, which may be viewed or obtained through the Investor Relations section of our website at www.saic.com or on the SEC's website at www.sec.gov. Due to such risks, uncertainties and assumptions you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. SAIC expressly disclaims any duty to update any forward-looking statement provided in this release to reflect subsequent events, actual results or changes in SAIC's expectations. SAIC also disclaims any duty to comment upon or correct information that may be contained in reports published by investment analysts or others.

Schedule 1:

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

CONDENSED AND CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended Nine Months Ended

October October October October 29, 30, 29, 30, 2021 2020 2021 2020

(in millions, except per share amounts)

Revenues $ 1,898 $ 1,818 $ 5,612 $ 5,339

Cost of revenues 1,685 1,609 4,950 4,747

Selling, general and administrative 87 96 252 261 expenses

Acquisition and integration costs 12 3 36 47

Other operating income - - (3) (4)

Operating income 114 110 377 288

Interest expense 26 32 79 95

Other (income) expense, net - - (3) -

Income before income taxes 88 78 301 193

Provision for income taxes (17) (18) (66) (43)

Net income $ 71 $ 60 $ 235 $ 150

Net income attributable to - - 1 3 non-controlling interest

Net income attributable to common $ 71 $ 60 $ 234 $ 147 stockholders

Weighted-average number of shares outstanding:

Basic 57.5 58.2 57.8 58.1

Diluted 58.0 58.7 58.4 58.6

Earnings per share:

Basic $ 1.24 $ 1.03 $ 4.05 $ 2.53

Diluted $ 1.22 $ 1.02 $ 4.01 $ 2.51

Schedule 2:

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

CONDENSED AND CONSOLIDATED BALANCE SHEETS

(Unaudited)

October 29, January 29, 2021 2021

(in millions)

ASSETS

Current assets:

Cash and cash equivalents $ 148 $ 171

Receivables, net 1,107 962

Inventory, prepaid expenses and other current assets 128 156

Total current assets 1,383 1,289

Goodwill 2,905 2,787

Intangible assets, net 1,166 1,138

Property, plant, and equipment, net 103 108

Operating lease right of use assets 223 236

Other assets 136 165

Total assets $ 5,916 $ 5,723

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable and accrued liabilities $ 877 $ 861

Accrued payroll and employee benefits 399 346

Long-term debt, current portion 119 68

Total current liabilities 1,395 1,275

Long-term debt, net of current portion 2,433 2,447

Operating lease liabilities 202 205

Other long-term liabilities 241 244

Equity:

Total common stockholders' equity 1,635 1,542

Non-controlling interest 10 10

Total stockholders' equity 1,645 1,552

Total liabilities and stockholders' equity $ 5,916 $ 5,723

Schedule 3:

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Nine Months Ended Ended

October October October October 29, 30, 29, 30, 2021 2020 2021 2020

(in millions)

Cash flows from operating activities:

Net income $ 71 $ 60 $ 235 $ 150

Adjustments to reconcile net income tonet cash provided by operating activities:

Depreciation and amortization 44 48 123 131

Amortization of off-market customer (13) (4) (30) (11) contracts

Amortization of debt issuance costs 2 7 6 19

Deferred income taxes 10 6 41 17

Stock-based compensation expense 11 11 35 30

(Gain) loss on divestitures - - (2) 10

Impairment of right of use assets - - 10 -

Increase (decrease) resulting fromchanges in operating assets and liabilities, net of the effect ofacquisitions:

Receivables (43) (20) (123) 131

Inventory, prepaid expenses and other 18 24 28 9 current assets

Other assets - (4) (8) (11)

Accounts payable and accrued 5 13 47 9 liabilities

Accrued payroll and employee benefits 25 61 45 141

Operating lease assets and liabilities, 1 (2) 4 (7) net

Other long-term liabilities 3 31 4 84

Net cash provided by operating 134 231 415 702 activities

Cash flows from investing activities:

Expenditures for property, plant, and (10) (9) (27) (32) equipment

Purchases of marketable securities (2) (1) (5) (5)

Sales of marketable securities 2 1 4 8

Cash paid for acquisitions, net of cash (3) - (247) (1,202) acquired

Proceeds from divestitures - 3 8 4

Other (3) - (5) (2)

Net cash used in investing activities (16) (6) (272) (1,229)

Cash flows from financing activities:

Dividend payments to stockholders (21) (21) (65) (65)

Principal payments on borrowings (23) (218) (84) (376)

Issuances of stock 4 3 12 9

Stock repurchased and retired or (63) (1) (154) (13) withheld for taxes on equity awards

Proceeds from borrowings - - 116 1,000

Debt issuance costs - - - (27)

Distributions to non-controlling - (2) (1) (2) interest

Net cash (used in) provided by (103) (239) (176) 526 financing activities

Net increase (decrease) in cash, cash 15 (14) (33) (1) equivalents and restricted cash

Cash, cash equivalents and restricted 142 215 190 202 cash at beginning of period

Cash, cash equivalents and restricted $ 157 $ 201 $ 157 $ 201 cash at end of period

Schedule 4:

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

BACKLOG

(Unaudited)

The estimated value of our total backlog asof the dates presented was:

October July 30, January 29, 2021 29, 2021 2021

(in millions)

Funded backlog $ 3,441 $ 3,299 $ 3,024

Negotiated unfunded backlog 20,213 20,938 18,524

Total backlog $ 23,654 $ 24,237 $ 21,548

Backlog represents the estimated amount of future revenues to be recognized under negotiated contracts and task orders as work is performed and excludes contract awards which have been protested by competitors until the protest is resolved in our favor. SAIC segregates backlog into two categories, funded backlog and negotiated unfunded backlog. Funded backlog for contracts with government agencies primarily represents contracts for which funding is appropriated less revenues previously recognized on these contracts, and does not include the unfunded portion of contracts where funding is incrementally appropriated or authorized by the U.S. government and other customers even though the contract may call for performance over a number of years. Funded backlog for contracts with non-government agencies represents the estimated value of contracts which may cover multiple future years under which SAIC is obligated to perform, less revenues previously recognized on these contracts. Negotiated unfunded backlog represents the estimated future revenues to be earned from negotiated contracts for which funding has not been appropriated or authorized, and unexercised priced contract options. Negotiated unfunded backlog does not include any estimate of future potential task orders expected to be awarded under indefinite-delivery, indefinite-quantity (IDIQ), U.S. General Services Administration (GSA) schedules or other master agreement contract vehicles.

Schedule 5:

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION NON-GAAP FINANCIAL MEASURES (Unaudited)

This schedule describes the non-GAAP financial measures included in this earnings release. While we believe that these non-GAAP financial measures may be useful in evaluating our financial information, they should be considered as supplemental in nature and not as a substitute for financial information prepared in accordance with GAAP. Reconciliations, definitions, and how we believe these measures are useful to management and investors are provided below. Other companies may define similar measures differently.

EBITDA, Adjusted EBITDA and Adjusted Operating Income

Three Months Ended Nine Months Ended

October October October October 29, 30, 29, 30, 2021 2020 2021 2020

(in millions)

Net income $ 71 $ 60 $ 235 $ 150

Interest expense andloss on sale of 27 33 81 97 receivables

Interest income - - - (1)

Provision for income 17 18 66 43 taxes

Depreciation and 44 48 123 131 amortization

EBITDA^(1) 159 159 505 420

EBITDA as a percentage 8.4 8.7 9.0 7.9 of revenues % % % %

Acquisition and 12 3 36 47 integration costs

Restructuring and 1 4 1 4 impairment costs

Depreciation includedin acquisition and - - (1) - integration costs

Recovery of acquisitionand integration costs (1) (2) (1) (3)and restructuring and impairment costs

Adjusted EBITDA^(1) $ 171 $ 164 $ 540 $ 468

Adjusted EBITDA as a 9.0 9.0 9.6 8.8 percentage of revenues % % % %

Operating income $ 114 $ 110 $ 377 $ 288

Operating income as a 6.0 % 6.1 % 6.7 % 5.4 % percentage of revenues

Acquisition and 12 3 36 47 integration costs

Restructuring and 1 4 1 4 impairment costs

Recovery ofacquisition andintegration costs and (1) (2) (1) (3) restructuring andimpairment costs

Adjusted operating $ 126 $ 115 $ 413 $ 336 income^(1)

Adjusted operatingincome as a percentage 6.6 % 6.3 % 7.4 % 6.3 % of revenues

EBITDA is a performance measure that is calculated by taking net income and excluding interest and loss on sale of receivables, provision for income taxes, and depreciation and amortization. Adjusted EBITDA and adjusted operating income are performance measures that exclude acquisition and integration costs, impairments, restructuring costs, and any other material non-recurring costs that we do not consider to be indicative of our ongoing operating performance. The acquisition and integration costs relate to the Company's acquisitions of Engility, Unisys Federal, Halfaker and Associates and Koverse. The recovery of acquisition and integration costs and restructuring and impairment costs relate to costs recovered through the Company's indirect rates in accordance with Cost Accounting Standards. We believe that these performance measures provide management and investors with useful information in assessing trends in our ongoing operating performance and may provide greater visibility in understanding the long-term financial performance of the Company.

^(1)Non-GAAP measure, see above for definition

Schedule 5 (continued):

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION NON-GAAP FINANCIAL MEASURES (Unaudited)

Adjusted Diluted Earnings Per Share

Three Months Ended Nine Months Ended

October October October October 29, 30, 29, 30, 2021 2020 2021 2020

Diluted earnings per share $ 1.22 $ 1.02 $ 4.01 $ 2.51



Acquisition and integration costs andrestructuring and impairment costs, 0.21 0.09 0.62 0.82 divided by diluted 'weighted-averagenumber of shares outstanding' (WASO)

Tax effect of acquisition andintegration costs and restructuring (0.04) (0.02) (0.12) (0.15) and impairment costs, divided bydiluted WASO

Net effect of acquisition andintegration costs and restructuring 0.17 0.07 0.50 0.67 and impairment costs, divided bydiluted WASO



Amortization of intangible assets, 0.57 0.68 1.61 1.84 divided by diluted WASO

Tax effect of amortization ofintangible assets, divided by diluted (0.11) (0.15) (0.36) (0.41) WASO

Net effect of amortization ofintangible assets, divided by diluted 0.46 0.53 1.25 1.43 WASO



Adjusted diluted earnings per share^ $ 1.85 $ 1.62 $ 5.76 $ 4.61 (1)

Adjusted diluted earnings per share is a performance measure that excludes acquisition and integration costs, impairments, restructuring costs, and any other material non-recurring costs that we do not consider to be indicative of our ongoing operating performance. The acquisition and integration costs relate to the Company's acquisitions of Engility, Unisys Federal, Halfaker and Associates and Koverse. The acquisition and integration costs and restructuring and impairment costs are net of the portion of costs recovered through the Company's indirect rates in accordance with Cost Accounting Standards. Adjusted diluted earnings per share also excludes amortization of intangible assets because we do not have a history of significant acquisition activity, we do not acquire businesses on a predictable cycle, and the amount of an acquisition's purchase price allocated to intangible assets and the related amortization term are unique to each acquisition. We believe that this performance measure provides management and investors with useful information in assessing trends in our ongoing operating performance and may provide greater visibility in understanding the long-term financial performance of the Company.

^(1)Non-GAAP measure, see above for definition

Schedule 5 (continued):

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NON-GAAP FINANCIAL MEASURES

(Unaudited)

Free Cash Flow

Three Months Ended Nine Months Ended

October October October October 29, 30, 29, 30, 2021 2020 2021 2020

(in millions)

Net cash provided by operating $ 134 $ 231 $ 415 $ 702 activities

Expenditures for property, plant, and (10) (9) (27) (32) equipment

Cash used (provided) by MARPA - - (15) (200) Facility

Free cash flow^(1) $ 124 $ 222 $ 373 $ 470

FY22 Guidance

(in millions)

Net cash provided by operating activities

$495 to $525

Expenditures for property, plant, and equipment

$45 to $55

Free cash flow(1)

$450 to $470

Free cash flow is calculated by taking cash flows provided by operating activities less expenditures for property, plant, and equipment and less cash flows from our Master Accounts Receivable Purchasing Agreement (MARPA Facility) for the sale of certain designated eligible U.S. government receivables. Under the MARPA Facility, the Company can sell eligible receivables up to a maximum amount of $300 million. We believe that free cash flow provides management and investors with useful information in assessing trends in our cash flows and in comparing them to other peer companies, many of whom present a similar non-GAAP liquidity measure. This measure should not be considered as a measure of residual cash flow available for discretionary purposes.

FY22 Guidance

(in millions)

Net cash provided by operating activities $495 to $525

Expenditures for property, plant, and equipment $45 to $55

Free cash flow^(1) $450 to $470

Free cash flow is calculated by taking cash flows provided by operating activities less expenditures for property, plant, and equipment and less cash flows from our Master Accounts Receivable Purchasing Agreement (MARPA Facility) for the sale of certain designated eligible U.S. government receivables. Under the MARPA Facility, the Company can sell eligible receivables up to a maximum amount of $300 million. We believe that free cash flow provides management and investors with useful information in assessing trends in our cash flows and in comparing them to other peer companies, many of whom present a similar non-GAAP liquidity measure. This measure should not be considered as a measure of residual cash flow available for discretionary purposes.

^(1)Non-GAAP measure, see above for definition

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CONTACT: Investor Relations: Joe DeNardi, +1.703.676.2344, joseph.w.denardi@saic.com Media: Brad Bass, +1.240.418.0168, brad.h.bass@saic.com