Science Applications International (SAIC) 26 Mar 212021 Q4 Earnings call transcript

Welcome to SAIC’s Fourth Quarter and Full Fiscal Year 2021 Earnings Call. At this time, I would like to turn the conference over to Shane Canestra, SAIC’s Vice President of Investor Relations. Please, go ahead, sir.

Good afternoon. My name is Shane Canestra, SAIC’s Vice President of Investor Relations. joining call. quarter for year full you earnings XXXX thank our and fourth fiscal And

results today discuss and me issued made provided today’s at unknown defer Keene, make and that Chief Joining information with along investors.saic.com, to Officer. our SAIC’s are materially we today’s financial subject Financial that can are Please Chief risks Nazzic earnings results may and report outlook where release, Executive be afternoon, refer from Officer; This statements Prabu which risk call our our to Natarajan, we on and including business found on and Form filed actual Form you call. find supplemental documents risks utilized uncertainties known our note should this you today’s that with of a conjunction of to annual forward-looking in statements will the results financial cause quarterly for on these could on be XX-Q. I our evaluating be also and to call. addition in on XX-K discussion be utilized of call. our to filing in SEC soon Form presentation these slide to report Both our XX-K to factors section the

specifically statements represent forward-looking statements any at views events obligation may some to of in our cause disclaim the addition, the today point In future our to to elect change. as views and we but update subsequent do We so. the may

comparable our include my supplemental measures. measures and slides Keene. now reconciliations pleasure our believe useful investors, provide non-GAAP presentation Nazzic addition, both the possible is to In to It we we and release information discuss and introduce most where other which CEO, financial GAAP metrics, will press for financial

full Good afternoon. joining our fiscal outlook fourth for for you to year year quarter us XXXX. And results SAIC’s XXXX fiscal and discuss thank

year, SAIC pandemic. year operating a for creation. significantly a March quickly well-positioned last different throughout long-term of and to adapted continues environment increased On the momentum XXth shareholder value the to of Our SAIC as be very result

SAIC to do so throughout Although fiscal without effectively year challenges, the not operated today. and continues

their of the want and Our dedication back, the performance both and managing SAIC our allows challenging focus has employees, business shareholders. and us successfully each personally for look been over year time. continued through professionally end journey flexibility reflect thank level for incredibly as achievements, for customers an our on fiscal the and employees I The our our as our safety high to of to time. always welfare well of

about about am is think SAIC more I what today, even encouraged we As our future.

few annual Over $X X% from the the around XXX-basis-point today, almost from have our than billion, low to our years expanding more close $X.X adjusted past EBITDA concurrently we an billion improvement. range to to margins grown X% revenue

than have Over the free our doubled cash more we same flow. period

We one in execution. through top market the are accomplish services as to continue forward in now the and providers of focused have the Fortune more we XXX push strategy we even to and government

fiscal Organic grew revenues cash strong continued areas XXXX flow EBITDA progress. in grew points, fiscal eye diluted continues would revenues to free $XXX high XX business by Compared adjusted generated I grew few I improved adjusted a a and earnings and on year X% share XX%, confident in year Our margins by journey fiscal performance we by the XXXX. like record XXXX. basis per XX% long-term a to of with highlight of am year in by million.

met delivered we out the beginning cash revenues March, by the framework. effects of the the related Last of generation strong and the set ignore approximately laid expectations to X%, excluding revenue COVID, can’t that we we grew million of While SAIC year. $XXX the organically foregone a pandemic. profitability pre-COVID at

on and effect the pandemic, the the was of uncertain. nation days early our the business were these As

at high organic X% $XXX range, in to revenue expectations adjusted growth, and time X% fiscal EBITDA the Our margins least to of for X% million. at X% was free XXXX that cash flow

the those impact pandemic, expectations. the we from for business met largely to the adjusting While

While experience this business focused into impacts fiscal pandemic on to the year, we continue remain from we execution.

We also very book-to-bill a new a business revenue development times year, had with mix and business through of awards. of a healthy successful X.X recompete

Each proud two company development priorities that AMCOM has of awarded the AMCOM SAIC very most market. the in of am and two year a to happen portfolio position fiscal of One elements to very secure while these will to important the quarter. work four in and over time ‘XX, the new been business missions. four awards task fiscal the I all early was We this of business for of recompete the received the orders. are the incredibly competitive our the we pleased report in XXXX task of year in during important supporting continue new orders contains transition

continue our Though their missions President government confidence. change customer in not customers weeks. the environment, and has in fiscal a priorities with to and will intent, show and This behavior. XXXX been both there desire budget his few changes The administration will senate, in market execute have next administration’s Turning the direction. notable deliver we in to control the year seen priorities the request

part to significant business, the customer beyond. potentially budgets changes expect we remain not for fiscal next negatively that our do would do anticipate year impact most into flat overall and we While

of However, and faster within streams budgets, be those investments. will priorities there

that execution of us alignment will enabled Growth present a to by direct priority of which will could throughout strategy the our to the areas remarks headwind environment growth, our budget hear outperform while So and will you enable environment. a be overall to market growth elements long-term strategy potential industry today. high of the our might be tailwind

our made Unisys challenging we commitment acquisition we on year, and a and integration following progress. As focused of successful navigated we our to Federal tremendous deliver remain

times, the of from X.X we of the with ratio exiting year, debt, times the $XXX approximately net X.X During down down a at acquisition. at year leverage paid million the time

started a the meet to achieving $XX I midway ‘XX, that repurchasing pleased shares around quarter of continue million net deploying end fourth times approximately fiscal we X shares. leverage to of commitment XXX,XXX repurchase through we our the to also by of report am While

Joining us Officer call first today Financial as SAIC’s Chief Prabu is earnings his for Natarajan.

Prabu markets. quarter our excited our bringing share are of him We a the to executive success for part aerospace, management year outlook. XXXX fiscal very track team, as have Prabu finance the technology of ask with in executive the to defense fourth as and and to I’d results like record

execution rooted everyone. focus and best-in-class top culture a Nazzic, you, its performance, and afternoon, a I Thank thoughtful and am I shareholder services good Nazzic notch and in company mission honored improvement, continuous government long-term and and team. have the SAIC’s to deliver team is long-term management joined self-reflection continue building with actively look and working of to strategy executing to senior a value. extremely strategy. forward to management the

fiscal the this to fourth X.X Corps the in four the contract driven AMCOM award bookings by Hardware-in-the-Loop quarter Services to latter second AMCOM XXXX Fourth modest awards revenue turning quarter of contract, fourth quarter recomplete being SAIC’s U.S. task a series our reflect the awards, large net the Engineers and results. the in of order flow Now organic full generation. book-to-bill profitability our activity in-line were RITS two strong Contract year Aviation year. portfolio. for and quarter growth, of results for translated the in seasonally cash and X.X

in notable awards values award excess amounts note these that backlog. in have million, $X these may that from While of are would values I defer ceiling included

volume amounts it book our that have years. Although, additional of drive backlog work policy of line the contain room the on then over revenues, contracts the these next is for sight funded and us based to reasonable several revised

Nazzic recompete the task in two to completed the today’s orders. SAIC four release. AMCOM the As quarter, mentioned, the They end are subsequent capture of press successful of remaining of noted

The approximately two-thirds funded submitted value of fourth ‘XX, at $XX.X to billion the estimated of We proposals will of as contract this of about new bookings net the quarter, quarter, run with the the was remarkable $XX.X the SAIC but business end a in of end we relating series. quarter awaiting have on at out to backlog total stood close task SAIC’s quarter billion adjustment backlog $X this the backlog these it the of contract table position opportunities. is orders recompete At billion. fourth with first evaluate fiscal fourth approximately on award

Let quarter performance fourth me on now references turn with to our focus financial results results full SAIC’s and will in I year to primarily areas. specific

to billion fourth year, Our to fourth $X.X revenues with acquisition. last primarily approximately associated compared the fiscal revenues as reflect quarter Unisys growth of due quarter of XX% of the Federal

grew Full grew Excluding approximately the acquisition, Air business, year the revenue by customers X% the $XX negative impacts of increase fourth from adjusted Unisys by Federal the approximately supporting exceptional million from or performance acquisition revenues from through to impact was X% partially offset Force EBITDA driven year-over-year included impact excluding quarter COVID-XX. performance. headwind cost. X.X% in Fourth million, was civilian new about and of revenues $X equated primarily XXXX integration prior strong an COVID. quarter by a of a for quarter million million margin year. EBITDA adjusting margin $XXX Fourth and Adjusted after the X% $XXX program

earnings year, program points of the addition the per costs fourth gains partially Net margin quarter from offset million Federal XX was $X.XX matters quarter share $XX X.X% prior quarter Unisys resolutions in of integration above impact. of for was fiscal about diluted fiscal earlier of million. was $XX inclusive by basis adjusted EBITDA certain of the For year $X one-time the the reflecting negative full and year, and and acquisition for the fourth million COVID-XX income our

well share $X.XX. adjusted costs, our as amortization of intangibles, per diluted these as Excluding earnings was

was effective XX%. full than of lower Our previous our XX% year approximately rate expectation tax

highlighted for generated, $XXX exceeded free $XXX and the sales for guidance million of year Turning the million year. generated days. dividends, cash XXX% of nearly flow to record flow cash end XX Day generation and repayment of Nazzic we We year generated a strong the outstanding our at December at SAIC quarter deployed the flow last the cash share through debt repurchases. as free were of

of Board share XXth. turn approved now seven on like to I of $X.XX slide dividend the to Directors on would a on quarterly Our as our April has noted payable XXth forward to April slides. a of outlook shareholders presentation record of

in $X.XX; million. from and free revenues $X.X adjusted billion; between and $XXX slide $X XXXX EBITDA further For several expect we billion cash you flow following; share today ranges we and works have per fiscal assist and $X.X provided fiscal to XXXX eight, earnings guidance. between between margins guidance performance the for year diluted the X.X%;, $XXX of adjusted fiscal between our year X.X% million understanding provided On XXXX,

range Our organic XXXX. flat revenue in revenue year reflects fiscal X% to growth guidance

the chain primarily in revenue, impact of $XXX expect from supply of We negative pandemic our million million to continued $XXX portfolio.

that anticipate this towards weighted COVID more impact of this XX% So, be recompete new the approximately to first average second Consequently, majority fiscal having year year in risk will headwinds. headwind risk in of the the second to that half, be result below growth lessen is typical the We half, this lessening included X.X% of about growth will carefully. the on continue note our I and as would the is in retired revenue half year and guidance. our the our a AMCOM ramp-up XXXX given at monitor and our a in our we programs successfully on will portfolio.

of an fiscal lower respect notable one NICS is matters. X.X% The time year you annual successful be should basis strong frame and remainder that that of recompete adjusted points I With of are revenues decided for and of rate summer but contract FY in AEGIS. orders. being now EBITDA remind volume about contract adjusted the XXXX called up guidance, program would in However, being contracts ‘XX’s NASA our of margin included aggregation recompeted to resolutions XX performance our contract non-recurring EBITDA task is

deferral fiscal XXXX. fiscal our payment million On adjusted to margin to a $XX from of performance. of line, flow, tax ‘XX dollars, last ‘XX COVID our expect the half to pressure EBITDA the $XX With regard to with downward relating as impact $XXX year. compared FY in Our we guidance guidance of is includes range million to million free EBITDA have cash in therefore, approximately payroll on ‘XX FY

We strong remain expect our and cash FY conversion capital to working improve to in ‘XX.

conclude, our joined estimated such our I share rate depreciation the capital reinitiated and Nazzic of also quarter as To as be expenditures tax with year we mentioned, can on have ‘XX. slide Other associated found excited in fourth fiscal program interest, very and guidance items SAIC. repurchase amortization, Finally, am seven. to

profit key Nazzic, imperatives, concluding growth margin to that and finally, a in fundamental and the strategy, will We continue market capital well-defined of value differentiated long-term benefit create you and back and a to for through sustainable few our the and execution shareholders. and business deployment cash areas, improve remarks. thoughtful focused of of opportunistic generation, for

Thanks, Prabu.

to for to While and to related our a people. pandemic, government, the continuing technologies. what navigate of shaping is our normal to enable agenda challenges advanced Government, SAIC look technology mission company customer’s industry, ability we Across new deliver our outcomes. also the end, longer well and faster SAIC pursuing tied we to rates our the this will and be enhancing achievement a adoption driving of government. needs in adoption are towards as growth is as of term To and

our expanding transformation. digital focus modernization are IT broader We into

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by to regardless our up, will While transition high Wrapping our general many that enhances SAIC’s a years, nurturing with take analysis location. diverse customers recently enterprise Companies world’s SAIC fourth company’s sixth was Admired guided List by employer. received companies. foster few and XXXX. as some is of SAIC This and we recently recognition well-known work along our flex Fortune’s talent the in in a success the that awards underway in services ranked SAIC’s technology I’d and list destination and note the since retaining on information acknowledged are position employer, concept, performing culture is like and the honored that inception destination a a being attracting, Most within Fortune’s category of partnership largest

executing In value Campaign our talent year your and perfect SAIC places the fiscal was third year. by attracts we one for to recognized Human for Foundation fiscal a employees. on of of and our ready in our and high to environment as an work conclusion, the for proud that value received year the now best work Rights to to Operator, enter deliver we retains Additionally, shareholders. take focused long-term a strategy questions. consecutive score unprecedented to solutions achievements are the LGBTQ creation year XXXX, XXXX our to customers deliver are best foster We

your Rumohr. question. of ask Please We Instructions] question our von from [Operator line the have first Cai

you Yes. very Thank much.

on lot So as won as some was annualized, it, think obviously that lighter would of I would It it. XX points us the you the your get Maybe we given AMCOM you give your all million should I given have if million revenue but you AMCOM from midpoint some $XXX And that color at you margin and than lighter we recompetes. could? of recall guide have looks thought, looks being get of won’t thought. up down all you also than $XXX won basis a

here. Hi, the question. Cai. Thanks for Prabu,

Having that, and we COVID. on we about it for think way we impacted flagged let’s that to between said on ex-COVID we the X.X% a in guide, basis. disappointed flagged COVID X.X% impacts, million. being about headwinds revenue still terms abate $XXX difference hopeful really flat year-over-year by are we to are that and are the call and soon have clearly, and A X% X.X% is So organically growth million also and $XX so it, COVID of headwind

opportunities have You will correct, another past several these and a year the we as over year, have are we about sustainable wins that notable long-term growth period. had over are provide talked programs large forums

Let’s talk this subtle a about can so AMCOM of bit sort we in layers. little maybe peel

of task we basic So about within to setup sort course. think a AMCOM, have this is

So profile and That’s the we today sort in revenue revenue that think what forward. looks base program. like what of the we as do that of know going

working The would opportunities, second AMCOM AMCOM with there. bring business things as into layer within be result of customer set of that new a will the portfolio the

the off you works up. how to of the that’s award second the portfolio, layers. the through bit And total the task the are clearly, we get the new and a us as for the material revenue the say, first the bring the the AMCOM let’s the set before that of there the clearly work is that are you old portfolio years, waterfall of the good work the call on waterfall materials top ceiling there sort has revenue to effectively, growth, to words, work. program lower ability some materials into potential a that finally, little is a plug work difference in award. third sort is allow first sort but and AMCOM and from excess of second the way layer, bit is in we customer couple and get really over the a between on three which next In going generate will of layer. margin and layer, then growth layer then AMCOM And orders of supplier we to the So tends awards that’s have to into some ceiling I’d burn of go other be caution There there has what through

and revenue solely immediate time the see revenue seeing ‘XX we just portfolio. it, are we ribbon are over think are in on And the not but portfolio reason the impact of sort a put of incremental AMCOM based therefore you that’s that is the why growth will from in think, within we and intelligence expecting guidance. FY I So optimistic I that

to supply fuller of think and our for for year-over-year is chain that’s perhaps flat, defense about roughly be, business Our basis is I’d FY the expected ‘XX. you it a guidance flat say, and sort a business on roughly context if

that increase at get of estimate, Unisys should you $XXX just that low, if we more about look $XXX But and XX% from and follow-up. of about one still is we revenue year. I have are full $XX midpoint, That COVID talking million million looks the million from of probably, -- for the would

essentially down, So be do growth -- given growth? had, to strong zero like expect if that it looks items mean, because what areas very some take that have you we out. you have are other those was the one would there thought down to are bookings AMCOM be most I going

So, I agree, Cai.

Unisys. from there think a impact is I year-over-year

of I’d bounded and four difference seeing we So the about fact six That’s Unisys environment some impacts we Federal a that from are think a weeks that say, living basis. by the we as think to I through we COVID are the are COVID. year-over-year on portfolio. from

opportunities revenue be So we that about, sort to maybe think were aggregate, cost of FY the in you in of continues chain basis this call end is, weekly terms be another let’s little points there again probably about can three different different headwind, about would business the is customer think because point material but and supply data if figure here And there bit that so and individually. to of XXX aggregate trying contracts in note, can that of to in that probably losses you were points then, the that not probably are basis continues XXX also not us small were program a and a again I headwind probably they probably the couple four of a to growth. out. at actually And it, headwind sets ‘XX material, very growth, finally, that’s to or

piece probably last that’s the So there.

Thank you very much.

from Jon line Raviv We have next question our of from the Citi.

line is Your open. now

Hey, afternoon. everyone. Good

COVID, ‘XX? similar lot a guess, I can on from this that I on on of But you there moving guess, something out don’t don’t I I say, an your out disclosed pull do pull ‘XX. guidance in underlying continue basis if everything over it if includes I a take pieces. know, FY to for X%, I X%. the that then gets Prabu, walk and just are just let’s margin So, you like, guess COVID, I know, ‘XX below I ‘XX ‘XX, talking let’s the have to

me basis? -- year-over-year, figure help extended underlying just So chain the year-over-year, understand lower a I out? fully ramping question, is trying on overall is down the which Unisys Why margin a being have is this margin. year-on-year of clean to supply also So but there’s lot down

Yeah.

Jon. couple and thanks it can at we then will to. the And to we need high for question, So try levels I level maybe dive if the keep in

tailwind the good look mix say, of say, are at fixed in So also couple Federal brought of a on that tailwinds guide over certain a about continuing the said, X.X%, of work margin in adjusted change of ‘XX range, win ‘XX, margin FY contract note Unisys of [ph] a and structure stepped for pressure we FY talked as portfolio. back there with about we a paid we little of FY of we on the won X% you good data the in that that of range, cost I’d we is, there rates line or side FY on the -- a plus FY I adjusted it, mean, add when of ‘XX AMCOM, have and were a and contract. probably at obviously step causing finally, Unisys EBITDA that’s a about, healthy would And as therefore, Federal talked that’s dollars sitting the really reasonably previously set EBITDA rate I are as we basis FY course comp But last to ‘XX. little compared of back the other see We into performance from but QX, incentive also that is the X.X% T&M guidance price range you guidance if called I’d sort from midpoint I’d at at to for start the those team. are for the XX bit it with performance point firm margins non-recurring we a recompetes, the we then metrics points. effectively one-time think And into say ‘XX a go I and downward margin in of basis year a the contract assuming ‘XX. comment FY about, have bit won’t [ph] X.X%. and with And items. midpoint ended of of the risks course and rate the opportunities recur, team and to fully and to derisk rest we X.X%. expect effectively over in year. portfolio be specifically the out ‘XX, the we harvest the opportunities of the the over the of incentivized I’d year if

will initial and guide we with have very the our about to consistent in better year and left XX say, ‘XX in than we I’d hopefully, got performance So we seeing FY what is are be our year-to-date. go, months

clarification. I No. on I have follow-up Yeah. just Thank there that. appreciate quick a you. a

picture, clean so impact in in that So ‘XX, X.X% and less COVID we here? to had ‘XX, a business also, big try seem plus ‘XX down out it COVID assuming margin think but X% if still we bit, a a kind of are still I all margins in ‘XX about impact X.X% if at guess eliminate we and maybe as the more you this COVID sustainably in should noise AMCOM piece. the

have about long-term other basis balance before, So this a think if for about business, you tend I in to profitability. on we think we for striving and this and fully rate long-term forums investments and margin said are this trends between

have on over deliver proven we time, margins And that to are we so we incrementally. the ability have working margins

as about mentioned, the by basis is long-term nearly we our the margin years have think planning. over points We rates way integrated in actually few actually, and XXX margin Nazzic last improvement our increased

very, programs from a So thoughtfully a fixed cost I’d continuing our our portfolio long-term a and that at then say, ensure to is to differentiate on in on have ourselves plus we very dollars that with we long-term cost the basis. basis price executing plus really be still, are good reinvest programs to predominantly

we I’d say, over X%. function be time X% just a in will mechanics going get qualitatively not to or going in expect over around this I we is fair So has we it’s to a think in of a the year, to how again but portfolio that characterization year And be portfolio. is well -- function X% the of changed particular the execute much to

Okay. And…

in opportunity the our can and our in work some and Nazzic. is I as we will This the on Jon. more for time that But if that of priorities that just Hey, margins about of I about is, you be the contracts. conversation strategy One those Unisys have focus the one time. is and had strategy, over a the well our was thing this think mix think long-term portfolio add nation to And and the transformation, know catalyst catalyst areas for we that look can think of part acquisition. digital Federal we the as again strategy, fixed with our to influence modernization, well lead type price IT over a and I service improving for as

Nazzic. pass line. Thanks, the you. Thank will I

Jefferies. from Kahyaoglu Sheila is Next

is line now open. Your

the Hey. had contract guess, Can you that and about headwind is or welcome a a and that talk we little you wins big the have talk roadblocks, about are whether if they about FSTAD, how think you CADS revenue How overall? could point new then bit mentioned those now. more. you know Good guys some wins maybe been guys, afternoon, Prabu. revenue it’s have I small bridge around for while I a program to

in of $XXX QX will between probably towards say, I last start of ‘XX. the $XXX million, terms the maybe FY the would first. So were part losses, million to are predominantly of they $XXX I latter with They piece million. all

a be program compares around the us for will with quarters. unfortunately So here few losses more

think $XX $X.X risk programs, a year. year-over-year ramp to the between is of basis. that, be up of to no portions our would say able second and say, in on that the say, you so And variety little so basis. be of other program that the beyond a terms bigger $XX just about year So, think see year million material ramping say you a in back on and one to a our in But as again, revenue is will a the program ramp, $X.X half on later, ramp expecting if million, are I’d I’d the we most step a I’d And ramp I’d AMCOM see portfolio. individual year-over-year of expect there of to

of that’s ‘XX and bridge to way So ‘XX. sort then a ‘XX into ‘XX into between

just only a you it’s on follow-up issue the year an in, then are or COVID for entire is assuming first in it the And Okay. impacting, the half?

Right.

with COVID for be of the year. So expect to most us we

most expect I half to of the this in on business average. be and revenues We to from of from of the That’s Sheila our about supply chain business. is, way first the least year-over-year about alluded previous And in response, year, the way the to this one impact a think weekly basis. on at good a and we between tend business supply $XX chain million to $XX to million see think a revenue weekly this,

respect COVID, get nearly at bottom find week, is you if sort somewhere the V-curve a between, top, COVID-adjusted year. the peak at the $XX.X If and out of basis are revenue think Where on will right I a about or at the COVID, about million is the we pre-pandemic the is of the now $XX you And on basis. week hopefully of at revenue is you at about curve, a for call which to that week. million a -- year $XX.X million half fully program are then nearly it of toward map for year second and up the At we million the $XX are rather the that the of to start end dissipate the QX. in to the plan ramp we and a quarter million will $XXX if did with what you the it you against math, roughly the

will the But the in at the see So least half. for have that’s year we see the compare math first second and the of dissipate half to you will it got. in start you

you. Thank Okay.

Goldman We have Parsons from Sachs. question next from our Gavin

now Your line is open.

evening, Good gentlemen. Hey.

Hi.

Hey, Gavin.

fiscal wanted three has lot the appreciate and pretty much I X.X are unknowns and budget, revenue but the to of last backlog the and about this with ‘XX year, years. doubled over you I with the there visibility COVID ask before beyond your book-to-bill your have year X.X

a So you a wondering multi-year outlook there. stab if take growth at from I was

is This you? How Nazzic. are Gavin. Hi,

Thank Good. you.

Yeah.

to want couple I yeah. that of think -- things I might highlight. A

if the seeing and that’s as -- are relatively we we the of it, back in of going the some couple the seeing so modernization, the We next But the few emphasis that, are to within we the general even clarity and of or to we conversation home. I interest the opportunities But is be of there years talk next certainly, IT the assumptions, thinking now from course fact And budgets and get that of flat out that about conversation some pre-COVID. earlier, months. even that, of highlighted my the in did far were some the we working will on think I comments some forward. I the of have do are in think, increased cyber the again administration about more year look most over appetite how coming with us ago that see that, two industry

to important. the are that We seeing drive being very modernize

related space the on focus some seeing are We mission.

of that about higher way a opportunities. we is growth that areas continued flattish these the of the be with those we think portfolio and so could the even years, parts over budget And few emphasis next believe few on years our focus next

to and how And that that the few thinking about to so we helps. outlined outlook years, that drive our we have than is strategy greater it’s objective next that’s and the the overarching market growth if is a are

Got it. helpful. That’s

Prabu, do you have…

comment other one maybe Again, here.

this element We absolutely couple then last points, say, more recompete So ‘XX visibility But had risk the next year. this secured, step is FY an do you you have you visibility, see portfolio a other in you than when going coming bit a In I’d to into and book-to-bill I AMCOM to unusual rate new the in I as in the year. stepping little particular therefore, recompete X.X this way is enough recompete it this know always in are end at there remarkable of than think better of that do observed call good data from the win days are year, we with. recompete. the What business modest the business in a business the we assumptions into and business there certainly visibility. with higher FY is odd from is level often we in stepping We less you XX the new the at I a FY ‘XX a there year approximately said, of more this of remarks revenue of backlog XX% on into of correct, time maybe recompetes a think little here I’d year. have $XX.X And risk. did ‘XX. of are go I the have million not prepared have

actually our do really, the to step is here. always of we don’t in ever our But and business really well. we flavor new to and bucket get fill So recompetes there that we share expect a

So the strategy very clear. is

revenue of are from have a the high recompletes, for in the to we see of We have growth. business that programs we have our have we got the also still to our company share for that keep progression then and to new base winning and visibility which this long-term again size win remarkably share portfolio we of continue got

kind you of don’t that recompete there translate familiar upsized bottoms many that there guess growth that wins understand budgets, on how a bridge. possibility visibility the multiyear I I as -- of is to it based revenue? wins the helpful. with up don’t a into what that a Is more share isn’t lion’s doesn’t new this many unfunded That’s backlog see standpoint actually

ceiling, because budget some -- don’t the your way exist, keep This risk it’s that there’s to of doesn’t that always operates, and there’s guess, say today. We QX. wins that it risk we and in high indicated, of we where as bookings have some with the impossible And some risk. -- as is may adjustment element did that believe Nazzic. I Prabu took the see that that if excess way here you we sit had the the risk some, they government some

but in I risk, government a cycle. wouldn’t So budgets nature of annual high a the in that��s it’s on that we say work the do based always risk

Got it.

Thank Okay. you.

Thank you.

Seifman JPMorgan. from Seth is Next

open. now is line Your

Hey. Good everyone. Thanks much. very afternoon,

Seth. morning, Good

Hey.

last following wide -- range two and the backlog on and allowance, that maybe quite programs the just the point am on of this of one one evaluation change happened, can reassessment wondering absence have programs, that that like concentrated to So the up so that would so with looks share or with the just you strong was actually that a that it backlog I and at very is particularly been or book-to-bill it in drove drove quarter what the what time? because and in

Yeah.

for thanks Seth. questions, the So

into with overtime. is we you referred backlog, what’s I think, have of that first recognizing into adjustment that to policy to consistent realize revenue the of all, going the valuation had

majority little up say reason is a I’d year sort So the awards. seeing this I’d of around say of the adjustments in a you guarantee the the vast Unisys. of size that time more the are were

you and backlog the have. awards policy we on ‘XX a derisking it we FY -- So think about that based if as bit little

require backlog If get a six or our So into of revenue of back don’t eight years, think sort years and have line performance, of I we I years to into clear of the to away. is sort We seven The effectively, period of contract. to of an you there. sort on are adjustment it’s am that better policy if AMCOM reversing going sight to the adjustment example. go The into we does able work extent we backlog. in the award to the still QX. not But think, the booked bring new

that unique in do So to a that of it think particular way, nothing particularly quarter.

a the stands it these on that. of the large very and the time awards material you think what large over that fact fact we the that’s course we out based around have seeing that booked why was is are that I number this year

unusual see there. nothing I So

Great. Okay.

Okay. Yeah.

on at about $XXX one. like looks I it least some of follow-up, a as it million transitions basis, levels Then going Unisys probably, a And -- get you. I that on like one -- XX-month Unisys -- there, contract wanted to there know sales. Thank were heard just looks significant

making the Unisys to think right way set, to business level that well fiscal the to just ‘XX? from I that piece in growing get and is a that the baseline of So year-on-year, which contribution is reasonably grow assume is about that is

right. All

much in number. you acquisition we right on math about a your Federal performing in model. from our did So actually, revenue businesses to with about I’d say, the Federal basis, Unisys line Unisys $XXX and is that so expect think I And full will, million pretty if got year

that I’d I’d price were we pandemic shutdown and and to the we deal reasons that’s So you think opportunity business say where -- and of that to that, in be Unisys the day brings time particular I’d knew the say, acquisition was the line. evaluating at I in the going built that particular so fixed sort mix first Federal the it, ramp is to the so were at if about close we we of ramps of performing in particular one looked work the portfolio say business. business that the think business

think might expectations there side, price the the mix with work fixed actually I revenue early Federal, a that there plan of the actually making of is is performing So line rate bit margin to days on program. I there is opportunity say the Unisys in on allow and given little our

the to abating? sort it start that back it on it certain know of track? business happening real that lifting has can is the what exercises, really so model think certain we like training the numbers for is for impact in fast the of of the has But know pandemic that Okay. I Cool. And Is like, restrictions, business if in scheduling that world drives the we I of occurrence sort one about Nazzic. when been crosshairs and supply sneak we work like -- in what the from the then definitely step is in to chain could and get it back pandemic. of

Yeah.

I of things about. to a think, So, couple think

have job much excellent phase perspective. to happen under. study perspective, the world business a isolation nation an are of kind we did of the vaccines are that think about getting probably quarantine, outlining the the how of so we that things As of and in rollout from The numbers the through

So more we then as drive those will through will the supply and supply start exercises more up the have the there to will for step to need up that portfolio. demand run that chain roll that and the of opportunity military, out OPTEMPO steps if be more and and

a guess, COVID the on just impacts that’s the the that broad OPTEMPO not has is through of nation. how I lot am really giving it I working of the but think continued So I about it. specifics,

that -- that’s decreasing assumed business So end greater of how a the from as COVID the line slightly to year of we the hopefully, year, then year, we operating and the have the impact absolutely model indicated, that. over our to as the course would OPTEMPO, half of of and Prabu stay expect get normalized as we first toward in more the with part

Great. Thank you very much.

Seth. you, Thank

Securities. Truist from Sommer Tobey is Next

now Your open. is line

discuss for to year COVID this fiscal and puts takes cash Could you flow contribution are the drag? relative the what or and Thanks.

Yeah.

the for thanks question. So

midpoint so benefit for in million you your to think said, payroll $XXX if deferral the adjustment of FY and a So ended ‘XX, I’d ‘XX the sitting that deferrals, we at you $XXX are as year get million accounting record the the at about, to let’s free call about we at it, a FY from guided and $XXX give say million. back cash on $XXX guide, we well have in it, And million $XXX to flow, as as $XXX we ‘XX, FY million. both million. payroll

So that think of $XXX million. as

some assumptions some Obviously, in around at the improvement including $XXX about forward, as ‘XX in potential the helps. that’s of to gets of to that back get you better that through bridge profitability, that midpoint of and guidance, if some it’s midpoint improvement We a guidance so And different million million. capital. get things improved to stepping taxes ‘XX to go cash And there. we working the see $XXX FY really variety

acquisition your seems good budget that. flattens follow-up, the I But you And speak Federal, I kind trying am Unisys growth? experience about out to with my and as had like was You you wondering your accelerate if it to relatively as organic are could appetite appetite? of Thanks. have Thanks. still a you your did on curious

Yeah. Yeah.

this this to So good question. I’d want say, we said before, balanced. be we

in capital think to be balanced always Our deployment the we way it. about

about are down acquisition there are -- to, will to We not year. active let’s portfolio buy on the in the whole for very we to we you about the and the ‘XX, we We we if after free have quickly, think flow times, this said, basis X.X% process fact highs scale we the deployment that’s then delever down -- said are I’d fill of like we is sustainably we we liquidity lot actually of have got said it a also that And of And on gaps have. down of an generate, incremental proud in some around sake rate reason and a about that company where amount commitments are way this that that, context pay that strategies. are we from gives we very can paying this scale. say, think that of the as more so in ample M&A. little to then given Having the if gap, look fact at it, low the and voluntary the Nazzic not things capital the that you value compelling think which call a have FY before, historically M&A, accretive, interest there looking over cash debt probably the some a

of with finance accretive therefore and equity acquisition to all you amount to a so interest improvement to we ways. in dry But be use this an deploy And that will is low an think rate we in precious commodity environment. are powder leave a fair I of into going equity

there? you are Operator,

yes, We next question sir. -- have our

next our Stifel. have We question from from Joseph DeNardi

now Your open. line is

afternoon. Good Thanks.

Hi, Joe.

why of about talk of how expectations used, market Thanks. actually what difference given between we is talked a starting is you can now capital softness use see the talk of you a big again, that’s growth and you little but seeing probably pre-buying that can right buyback that you because about Now about not the is just obviously, stock bit? few, back for are the across temporary, there industry,

Yeah. Yeah.

deployment consistent to be about will, long-term So do repurchase way key market maybe I if of we want flavor that the you for be and basis, you having focus, allows think program we to a in think a that’s to value in a so capital again because the different creation. on response, we balanced think previous

deploy need repayment finally, ‘XX, and we so ahead our As I we low-insured capital. were debt buyers, the mentioned, ability we down in out more flexibly returning FY the little also to schedule And so a us are a to and of capital. also pay closed that balancing gave as opportunistically are we carefully debt some

you all the cash. in so and generating that this when we together inherently capacity And of fact business that have confidence put the of good

tools I think to fair be of deploy. it with does in a to leave number your able you arsenal

dislocations may I in relative multiples. shares in the those say, would an or do we We inherently capital about acquire context And valuation. And deploy think, at be trading to ability of about trading you I to others valuations see of an you the think offers it is multiples where when think context there the opportunity in multiples, if below at, so market.

way. it of that think So

new, Prabu? then Okay. it’s last know do -- with us can on I somewhat arrival adjusted the time if can your you adjustment maybe, And but remind be you there the by remind XX%, routine, Nazzic, to down you the That’s anything you was mentioned but backlog, think, Prabu, helpful. of I just us that backlog are

answer in it’s the say, policy. the received the I part No, say of the our consistent with say, It’s what so would backlog million adjustment, But probably backlog are and the routine have say, in had near I XX% I’d and -- will I’d hundred this that with. No. in that’s ‘XX awards leave I fairly adjustments. of I now size years. we a first. that FY we latter would dollars -- we will business entirely is drove that few prior

then... And Okay.

to This was Prabu any But in We fact love is have as our a of form having appreciate or is year XXXX. we fashion. the team. Joe. with bookings, that here, the it. the our this in really been the received Nazzic, It the change not out that had biggest spun of do awards that new award just policy we in thrilled to We part year since size

flat Okay. And supply the framework that general so, this Actually if space expect then flat of then for just your how you can to chain for us? are and year that space kind size in to next are and looks last piece a and intel as expected grow. And the budget? of Defense business in intel year, you grow

process go all still the spans budget what how are have the through modernization to some the think best to tea transformation, color their and portfolio. as of But can. area about to try we exist. will I trying opportunities some I where as and read leaves digital think give areas could is IT our obviously the of on we do we And or all you

those the space, civil the portfolio. defense it’s can broad intel support whether so or space our that the offering space, And in are we

years to again the we as have on, I are that market portfolio, think where touched the areas those the come end we the up. it believe catalyst that ability really the we to to and I had above a left, budgets navigate the entire engineering, IT all greatly modernization, grow be across where where But the elected will pressures areas our the in invest to we domains. areas this space that digital -- depends on have

invested even to in areas those just It’s disproportionately drive are case. areas long-term to again, assumptions that we that many us are the those we of industry there headwinds. long-term growth don’t in are And some if are in we that we so get making recognizing investing value. budget will that believe the And that for some know be

Thank you.

Strauss David from is Next Barclays.

now is open. line Your

Thanks. afternoon. Good

David. Hi,

as Prabu, corporation? But do this a the some working capital cash are we about you it’s opportunity capital, how Is capital working overall there go is think, talking I you for relatively know I there forward? to capital view working the early year, overall you. -- levels but flat -- for net an there working unlock

short Thanks the David. question, answer yes. is the say for Yeah. would I

what paid to think ensuring therefore, and we nice be And an our consideration XX generation. done working the a here that, have of really we is, I It next on the think, and one start metrics metric do months capital about better. structures things hard to to is the going you as specifically the that contract, an contract would we This we in to we the that is the very, think, things it’s diligently. cash incentive do timing think conversations have, comp track of flow contract. it’s liquidation I do events I leave are said focused of cash allows is XX to over the capital around very getting fairly contract to the team the And over fair important on well get we very place company life job always this that, continue a has and course positive structure of they to Having drive payments, months. working into having management paid time. bad you outmaneuver laser over I and important a certain so teams with say

see opportunity it’s thing say and will an cash us get on it into So and for conversion, fundamentally us better converting cash EBITDA continue you would an cash I important to better. and

Okay.

questions. So of clarification a couple

assumed a relatively keep do decent through of that with? outlook calling share in for step And to going share that D&I, are kind the you ‘XX then what is repo count are flat, to is the like just neutral? associated down So you

D&I, little assuming I’d good assumption. we on on this count On That’s about amortization bit. is flat year. course would from more number getting play say, go burn will a to I and the call of the say the the a think, So say, what’s the and going little I it, over out roughly share we share We amortization I intangibles, that’s say down XXX of out have up that’s a count, to are I’d I’d XXX had depreciation intangible to year-over-year depreciated. Unisys primarily, up Federal. causing the believe capital just of

So that’s amortization. depreciation difference effectively on intangible and

Got it. Thanks.

Next is William Blair. DiPalma Louie from

is open. now Your line

and Prabu Shane, evening. Nazzic, good

Louie. Hi,

Hi.

in to third notable related expressed award? for recent awards the in quarter $X.X billion the the backlog is most Where adjusted a the of AMCOM lifecycle

primarily So are I big just to say that awards they related the FY in ‘XX.

that’s I’d assumption there. So say good working a

subsequent less the communicate you did quarter end of they anything third will And customer I that the these Okay. large guess, SAIC confidence awards, to, for that you the be to gives able conservative to diligence revenue due of did? just assumption trajectory than and you achieve awards was more SAIC’s into this own potential the this taking you ceiling or are a previously

realizable book years. only and in we sight to are be our no the the course lay tiers five of over always two performance, backlog call the to works There because understand eight over has is the backlog not tried it’s multiple that there able see on it. our got call backlog how out periods years to ceiling you it’s of here, revenue So we been customer. adjustments. and and performance AMCOM into to to are policy to period communication between have talking what’s average of from line as years the We of And and

reflected might a ensure to that teams so that the you for leaves the what to on deliver And of customer to go all together, we execute little the bit continue with again when counterparts your their backlog will, reserve, potentially be to of if upside it put you ability with with here. you

how conservative. change. it do So amplified would would as just this by Louie. obviously I I view question, view not It not of a Appreciate magnified is here. and size or this we as the the the awards

Great.

Thanks.

much. you Thank very

Thank you.

Raviv Jon is from Citi. Next

line Your is now open.

Yeah. the follow-up. for Thanks

XX% have for guidance was on believe about be as high any $XXX $XXX when just I getting and here? get cash the know FY also ‘XX guide, appreciate was $X I to $XXX to Engility, high catch end thoughts million, color then difference between think point I enough to But of million the units there cumulative any together? I end Just -- go end is multiyear some about ‘XX billion. talking those ‘XX, of that’s guide what we million, the accretive just million, for this to ‘XX moment, low the been target big payroll on number going between $XXX underlying thinking with its upgrade an and about at I to on picture to and old repayment? it guys have? is. is target supposed for long the is low if $XXX of going mean are end back ‘XX million we so And post you $XX million I

Jon. the for Thanks Sure. question,

$XXX So, as the had million $XXX we at million. you start our ended a of was good noted, year cash. ‘XX FY the last and year at We guide first

about million year. guide did first our we So last than better $XX

the midpoint darn we FY then significant guide, pretty together you the current year took to a ‘XX guide, If numbers. close get of

on a basis, that see I in with roughly communicated. $X say, So we I’d where line billion year-over-year previously

obviously, million outline doing or it’s that million, that to converting I team into EBITDA delivering $XXX that and places. think into cash committed to come to two EBITDA it’s effectively. drive $XXX converts million One, from, whether is think, the I $XXX and going the Now, big from

headwinds get as from and to into beyond. start the ‘XX FY we the dissipate deferral will see We payroll

expect So, improvement a I of will you in to think, we element capital. see of that. do little see working bit And some

and potential got to need line the guide. say and we in better to we mitigating the about So that target punch the incentivized do again, cash new I directionally in leave are have over us with for and is squarely way to that’s course work the are it’s But that all to flow get say, teams cash would the is the good that effectively. of year. it to work And will front you teams but numbers I suffice where a to some free the think company, of

there? new just spend that that a then a XX going you it’s specific XX to run [ph] guided pretty What’s hefty something rate CapEx, to And you here? or Is number. it. have on Got on on

Yeah. the with national requirements say, of have security increase in in I some would the our space Good prospective customers. specifically market, the the within question. we

the there elevated. seeing are You the optimization. reflected part is I’d more is what also a around facility capital say some little ongoing of like cost of

So there into bit of that. that goes capital is little a

infrastructure a networks impacts in the IT to that are also to has model be in the work people that third and As some capital. component near-term to investing hybrid would the we allow work

XX of are a see rate obviously pressure a as our for the we of recognized of pressure to we wouldn’t restricted And or and some to trend this maintain it. the capital-light requirements, through an for balance us see some -- particular would it, the values to deeply the finally of way business or about to down model couple the that with ensure business. So years. program work customer on think over way say, I’d capital, I facilities if but last extent engaged to we this one that’s for is with the upward comment conversation you that us requirements XX capital appropriate and you as next of space in contract I run think will expect we be

I’d elevated. temporarily So, say

come over back more the that’s to Jon. years, expected We to couple next of normalized something

the clarification X.X bookings revaluation, the any I And then just Thank on book-to-bill just you. or backlog is all bearing the have last on have bearing should say been me that have for reporting numbers year? does does any on you times

Yeah.

the close So end year. the so X.X think at book-to-bill at we that of the and X.X of reported

it impact X.X that so... number, have about a book-to-bill So does to

Okay. Thanks.

to at Shane questions Canestra I time. turn closing call for Mr. back further No over this the remarks.

participate full we to virtually call. for the with Shareholder take fourth in conducting virtual well ballot, XXXX Meeting online. Similar the participate call website. shareholders Thank year, to all included we would your we SAIC. you last very fiscal concludes As interest June Annual participation how the will will This thank continued voting you on as like meeting our will be whereby Investor earnings will Xnd. conclude, your and Instructions be that much place I year proxy shareholder for quarter to our in a on SAIC’s as and announce on

call. conference This concludes today’s Thank participating. you for

disconnect. now may You