Science Applications International Corporation (SAIC) Cash Flow Statement

The persistent gap between operating cash flow and net income, as seen in the 2027Q2 OCF of $146M versus net income of $102M, indicates that non-cash charges like depreciation and amortization are significant add-backs. This pattern suggests the underlying cash generation of the business is more stable than the bottom-line earnings, which are subject to contract completion estimates and intangible amortization from past acquisitions.

The FCF trajectory appears stable, not deteriorating, which is a key positive signal. The 2026Q4 FCF margin spike to 14.3% was driven by a large working capital inflow, but the normalized run-rate of 6-7% is healthy for the sector. This resilience suggests that cost controls and working capital management are effectively offsetting the top-line decline, at least for now.

The volatility in working capital, particularly the large negative swings, suggests that cash flow timing is heavily influenced by the federal payment cycle and contract milestone payments. Investors should monitor whether the recent negative working capital trends in 2027Q1 and Q2 represent a normalization or a sign of slower collections, as this directly impacts the conversion of accounting profits into spendable cash.

The scale of buybacks, particularly the $201M in 2025Q2 and $188M in 2027Q1, is significant for a company with a strained balance sheet. This aggressive return of capital suggests management's confidence in cash flow stability but also raises questions about the trade-off between deleveraging and shareholder returns, especially given the negative revenue growth trend.