Companies around the world continue to deal with the financial fallout from the COVID-19 pandemic. With so much still up in the air, it is hard for businesses to know exactly how much of an impact these events will ultimately have on their bottom line.
One company—Reston, Virginia-based Science Applications International Corp. (SAIC)—has revealed exactly how much it believes the virus will cost them this fiscal year: $250 million.
Charlie Mathis, SAIC Executive Vice President and Chief Financial Officer, said on a second quarter earnings call that the impact from the pandemic is expected to affect the company through the next two quarters. The company saw $65 million in COVID-related losses in Q2, bringing the total so far for the fiscal year to $110 million. Another $140 million is now expected in the third and fourth quarters. As a result, SAIC has lowered its mid-year revenue guidance by $100 million to a range of $7.1 billion to $7.2 billion.
Mathis explained that the pandemic has impacted several areas, including labor costs in SAIC’s national security business, lower training operations business with the Federal Aviation Administration, and the company’s suppliers.
“This is an issue of duration,” he said. “We see this persisting until the end of the year. We thought there would be lessening headwinds from this dynamic going into the fall. That didn’t happen, and the majority of this is the operational tempo around the supply chain. It just hasn’t gotten back to the levels that we were expecting.”
It's not all bad news for SAIC, which has won more than $286 million in national security contracts during the second quarter of fiscal year 2021. Some of its most recent contracts include a $171.5 million contract from the U.S. Navy to continue providing a range of training solutions, a $79 million task order from the U.S. Air Force to deliver mission engineering services, and a $133 million contract from the Navy to continue providing mission engineering and integration services.
In addition, the company’s acquisition of Unisys Federal earlier this year has helped feed the company’s backlog of contracts in technology markets that are still thriving during the pandemic. With that in mind, Mathis expects SAIC to hit its pre-pandemic organic revenue growth rate projection of 3% or higher by fiscal year 2022.