Science Applications (NASDAQ:SAIC) International Corp (NASDAQ:SAIC) has entered into a Seventh Amendment to its existing credit agreement, which will lower the interest rates for certain loans. The amendment, effective from October 18, 2024, was disclosed in a recent 8-K filing with the Securities and Exchange Commission.
The Reston, Virginia-based company, which specializes in computer integrated systems design, has revised the terms of its Tranche B3 Loans. According to the amendment, the applicable margin for Term SOFR Advances will decrease from 1.875% per annum to 1.750% per annum. For Base Rate Advances, the margin will reduce from 0.875% per annum to 0.750% per annum.
These changes are part of the Seventh Amendment to the Third Amended and Restated Credit Agreement, originally dated October 31, 2018. This agreement has been amended multiple times, with the most recent amendment before this being the Sixth Amendment, dated February 8, 2024.
The credit agreement involves several parties, with Citibank, N.A. serving as the administrative agent and collateral agent, and includes various other lenders. SAIC's decision to amend the credit agreement and reduce the interest rates could reflect its financial management strategies and the current market conditions.
This financial maneuver comes as companies across various sectors reassess their financial structures in light of economic shifts. SAIC's adjustment to its credit agreement terms may provide the company with financial benefits, such as lower borrowing costs.
Investors and stakeholders can access the complete details of the Seventh Amendment through the exhibit filed with the SEC. This information is based on the press release statement and the 8-K filing made 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 has increased the company's stock price target to $157, citing SAIC's stronger-than-anticipated second quarter performance and an increase in share repurchases. Analysts at JPMorgan and Jefferies also raised their price targets for SAIC to $170 and $148 respectively, with JPMorgan upgrading the stock from Neutral to Overweight.
The revisions follow SAIC's successful shift towards higher-value work and an increase in submitted bids. Furthermore, SAIC has secured 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 second fiscal quarter results indicated a 2% increase in revenue and a slight 2% decrease in EBITDA, surpassing expectations and leading to a revised fiscal year 2025 forecast predicting 3% revenue growth and 4% EBITDA growth.
These developments are part of SAIC's strategic transition towards targeted growth areas and improved bidding processes. The company aims to hit a book-to-bill ratio of 1.2x by the first half of fiscal year 2026 and a 5% organic revenue growth by the end of the same fiscal year. These recent developments indicate SAIC's strategic transition towards targeted growth areas and improved bidding processes.
InvestingPro Insights
SAIC's recent amendment to its credit agreement, which lowers interest rates on certain loans, aligns well with the company's financial management strategies. This move is particularly noteworthy given some key insights from InvestingPro.
According to InvestingPro data, SAIC has a market capitalization of $7.21 billion and has been profitable over the last twelve months with a P/E ratio of 25.98. The company's revenue for the last twelve months stands at $7.297 billion, although it has experienced a slight revenue decline of 5.1% during this period.
InvestingPro Tips highlight that SAIC's management has been aggressively buying back shares, which, combined with the recent credit agreement amendment, suggests a focus on optimizing the company's financial structure. Additionally, SAIC has maintained dividend payments for 12 consecutive years, indicating a commitment to shareholder returns.
The company's stock is currently trading near its 52-week high, with a strong return of 20.1% over the last three months. This positive momentum, coupled with the lower borrowing costs from the amended credit agreement, could potentially 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.
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