Sales at the new Science Applications International Corp. declined in the first quarter, but profits rose as a drop in defense business was offset by the absence of restructuring costs this year, the company reported last week.
Revenue at the McLean-based government services contractor dropped by 14 percent compared with the previous quarter, to $977 million (or $962 million excluding revenue from former parent company SAIC).
Profits were up to $34 million for the first quarter, or 71 cents a share, compared with $33 million a year ago, or 69 cents a share. The company’s operating income was also up to $59 million, compared with $52 million the previous year.
The drop in revenue resulted primarily from the loss of a 2012 contract with the Defense Information Systems Agency, called the DISN Global Solutions program, the company said. Reduction in defense business and overseas military activity also led to lower revenue, SAIC said.
SAIC is the spin-off created by the split of the original company in 2013. The parent company, renamed Leidos, recently reported lower first-quarter revenue and profits. Since the split, SAIC has surprised industry analysts by outperforming Reston-based Leidos, which walked away with the company’s more-promising business units and an established leadership team.
In a call with investors, Tony Moraco, the company’s chief executive, said the company was seeing more business from federal civilian agencies compared with the Defense Department. SAIC’s biggest civilian clients include the Department of Homeland Security and NASA, he said.
Consulting firm Deloitte has named John Powers the new head of its federal defense sector.
Powers, who worked as a managing director for the company, succeeds Charles Wald, who was recently named to the company’s board of directors. In his new role, Powers said he would focus on helping the military streamline its operations as a business organization.
As the nation’s war effort winds down, the Defense Department is looking to reposition itself, Powers said in an interview.
“They are setting up the military for a defense position rather than a wartime position, and that’s where we focus,” he said.
That shift was reflected in the fact that the department is investing more in research and development, and showing greater willingness to adopt cost-saving ideas from the commercial sector, he said.
Powers, whose background is in mergers and acquisitions, said the Defense Department’s restructuring efforts mirrored that of any large organization in the commercial sector.
“This dynamic they’re going through, a lot of large organizations have gone through,” he said. “This is a normal cycle.”
McLean-based aerospace and services contractor Exelis completed the acquisition of Celestech, a private communications service company.
The deal, whose financial terms were not disclosed, gives Exelis greater access to Celestech’s data sharing and analytics expertise, the company said. Last year, Exelis separated its government services and technology divisions. Celestech will be integrated into the company’s Electronics Systems division.