SAIC Amends Credit Agreement, Lowers Interest Rates

Source: Investing Published 10/23/2024, 00:38

Science Applications International Corp. (NASDAQ:SAIC) has entered into a seventh amendment to its existing credit agreement, which will lower interest rates on certain loans. The company disclosed the amendment, set to take effect on October 18, 2024, in a recent Form 8-K filing with the Securities and Exchange Commission.

The Reston, Virginia-based company, which specializes in designing computer integrated systems, has revised the terms of its B3 tranche loans. Under the amendment, the margin applied to Term SOFR advances will decrease from 1.875% per annum to 1.750% per annum. As for the base rate advances, the margin will decrease from 0.875% per annum to 0.750% per annum.

These changes come as part of the seventh amendment to the third amended and restated Credit Agreement.

which was originally entered into on October 31, 2018. This agreement has been amended several times.

with the most recent amendment prior to this being the sixth amendment dated February 8, 2024.

The Credit Agreement involves multiple parties, with Citibank, N.A. acting as administrative agent and collateral agent.

and includes several other lenders. SAIC’s decision to amend the Credit Agreement and reduce interest rates may reflect its financial management strategies and current market conditions.

This financial maneuver comes at a time when companies across various sectors are reevaluating their financial structures in light of economic shifts. SAIC’s amendment to the terms of the Credit Agreement may provide financial benefits to the company, such as lower borrowing costs.

Investors and stakeholders can access the full details of the Seventh Amendment through the Supplement filed with the Securities and Exchange Commission. This information is based on the press release and Form 8-K filing filed by Science Applications International Corporation.

In other recent news, Science Applications International Corp. (SAIC) has been the subject of significant financial and strategic developments. Wells Fargo raised its price target on the company’s stock to $157, citing SAIC’s stronger-than-expected Q2 performance and an increase in share buybacks. JPMorgan Chase & Co. and Jefferies analysts also raised their price targets on SAIC to $170 and $148, respectively, with JPMorgan Chase & Co. upgrading the stock to higher weight from neutral.

These revisions come after SAIC’s successful shift toward higher-value work and an increase in bids. Additionally, SAIC was awarded a $229 million contract from the U.S. Department of Defense to enhance the IT capabilities of NORAD and USNORTHCOM. In terms of financial performance, the company’s fiscal Q2 results indicated a 2% increase in revenue and a slight 2% decrease in earnings before interest, taxes, depreciation and amortization (EBITDA).

beating expectations and prompting a revision to its fiscal 2025 outlook that forecasts 3% revenue growth and 4% EBITDA growth. These developments are part of SAIC’s strategic shift towards targeted growth areas and improved bidding processes. The company is targeting a book-to-bill ratio of 1.2x by the first half of fiscal 2026 and organic revenue growth of 5% by the end of the same fiscal year. These latest developments point to SAIC’s strategic shift towards targeted growth areas and improved bidding processes.

InvestingPro Insights

SAIC’s recent amendment to the credit agreement, which lowers interest rates on certain loans.

aligns well with the company’s financial management strategies. The move stands out due to key insights provided by InvestingPro.

According to InvestingPro data, SAIC has a market cap of $7.21 billion and has been profitable over the past 12 months with a price-to-earnings ratio of 25.98. The company’s revenue over the past 12 months was $7.297 billion.

although it saw a slight decline in revenue of 5.1% during the period.

InvestingPro’s tips highlight that SAIC’s management has been buying shares aggressively.

which, coupled with the recent credit agreement amendment, indicates a focus on improving the company’s financial structure. Additionally, SAIC has maintained its dividend payment for 12 consecutive years, indicating a commitment to shareholder returns.

The company’s stock is currently trading near its 52-week high, with a solid 20.1% return over the past three months. This positive momentum, coupled with lower borrowing costs from the amended credit agreement, is likely to enhance SAIC’s financial flexibility and profitability going forward.

For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for SAIC.

providing a deeper understanding of the company’s financial health and market position.