SAIC - Earnings call transcript Q2 2021 | Science Applications International Corporation

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Operator

Good afternoon, and welcome to SAIC's second quarter 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.

Shane Canestra

Good afternoon and thank you for joining SAIC's second quarter fiscal year 2021earnings call. My name is Shane Canestra, Vice President of Investor Relations. to SAIC's business Charlie Chief Chief Officer. today are financial Mathis, me Financial Keene, Nazzic Executive joining discuss and our results our And Officer; and July our the Today, results will discuss quarter we ended XX, XXXX. for afternoon, with be at can today's find financial call. investors.saic.com, release, be to also found presentation will issued slides earnings you utilized This we supplemental which our where in conjunction results to and these Both along in addition be XX-Q filed in Form utilized call. soon, documents, information of evaluating the our our outlook with today's provided be should to on on that call and note we that to Please may and made make from risks are known could forward-looking statements on to materially actual call. results differ today's subject cause uncertainties that unknown statements this to these SEC discussion XX-K section our Risk Factors and a for XX-Q. risks, Form our on the you Annual on of of filings quarterly I Report Form including refer reports

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

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

Nazzic Keene

Thank you, Shane and afternoon. good

details by provide To you continue and where is through those pandemic. and we today, in have it your each employees forward been support my macro proud and adapted performance for related ones despite you to Before assistance now you SAIC to and our indirectly this and and directly position outlook, cover challenges for family. have six or I a who employees environment. to the from we loved say to pleased managing hope I'm We've that SAIC's operating can healthy months impacted been sincere and well. operate economic COVID-XX, discussing organization have SAIC strength our of continued are a to but the that challenging continues am report and lot of a very your Charlie I of environment to

of our experienced remained pockets strong impact, customer positive demand achievements. we our While COVID-XX development evidenced by have related and isolated offerings for as business financial

the the our and proof history, exited pandemic employees, in improved history. our COVID-related strategy our expectations areas acceleration SAIC Let customers underlying to resilient bookings of demonstrate response of communicated results. with of generation our considering many and second focused highest me quarter and issues strength point SAIC Internal all by was discuss year portfolio second demonstrating the in are cash the ratio the in flow a evidenced shareholders. quarter are In continues growth I the the company June, as base, of our momentum. backlog business three navigating. seven briefly These we a for excluding revenue second inline profitability, our and stable our X%, our strong to COVID-XX with the excellent book-to-bill highest and revenue impact the achievements, business. go-to-market at quarter notable

create to the But it shareholder on relates pandemic-related our continue specifically, areas. as these we our while our meet Our commitments business the to in managing shareholders efforts key value. is navigate attention headwinds, and

grateful SAIC and substantial a the impacted development de-levering of the cash, ensure meeting our managing by market We that to to been commitment growth company. continuing and is our long-term our are has in operate profitability, focused minimally generating on success business pandemic. activities

but our health in our customer responsible and our set customers' in across broad role vital nation's security. for a play to those continue particular, We missions ensuring

maintenance the approaches, our vital expiration particularly of and continue extended, provides parts of ready to are confident us national many that support we of Act our be provision CARES the the allowing XXXX labor, will the state to As for security section hopeful that customers.

assured ability in acquisition minute SAIC take and of a voluntary key know under the start in talent will accustomed benefiting have the element to a and also talent maintained pandemic. continuing remain and which operating By Looking strategy, during XXXX potential best likely talent, a while a a to bit Government after year the retain into in turnover. to from I'd all class time place fiscal discuss is our a and environment priority until low resolution, we is to retention November to recruit future. our in CR navigate almost elections. to technical making like an how we disruptions.

over believe very we have positions a of market, opportunity XXX providing SAIC with importance. attractive available technological in and that a solutions provides direct customers We national stable career open

has our valuable on update of me to operated pandemic, similar during Speaking well second let of of entire for the SAIC. a talent, the acquisition and Unisys quick Federal provide very rest quarter Federal. the contributed Unisys

I I'm say exceeded Engility, much integration to As integration team our expectations. that mentioned integration of and proud than of before, work Unisys the had is the has complicated Federal the the less of

their are market markets, receptive and style go model with infusing in government We commercial to delivery approach and key customers.

portfolio priorities, to also strategic our areas or on focused remain non-strategic periodically deemphasize the we for we divest. While review

justice strategy of contracts quarter, a the They These to dilutive second were contracts. our or department not material and few future. were through and also strategically enforcement important obtained and department as our Engility viewed margin of to were profile law to not support our company. sold SAIC our international During state the acquisition financially

and ability year’s are sell and past capabilities strategy and our advanced acquisitions analytics, especially modernization of and notable our to the in seeing to is new app the modernization by community and in cloud relates to software our customers. capabilities, exciting existing it interest customers Most in investments and cross technology positive impact IT defense we increased migration. execution, As intelligence

growth. example also market creating opportunities stage growth of continues to realization increased that priorities, position acquisition capabilities profitable customer our guide a will and strategy and Federal of our an are digital This transformation strengthened Unisys investments SAIC and Our is by through the versus access.

to company through call a billion has Charlie, we four business His the as the am to supporting financial of acumen navigate allowing take pandemic moment extensive to transition to in I I CEO. from recently the smooth successful SAIC billion year, want over are discuss his to experience a today. over turning the in retirement. year new stay our to agreed my particular has and fiscal decided years Charlie's graciously over a $X.X challenges. until for appreciative Before leadership the very has transition continued as retire past end Charlie me CFO but grow of announced financial a a and we helped $X to

SAIC, recent commitment and this And we decision for miss I Although, retire. passion well we milestone. congratulate and ask you to to celebrating will him reaching wishing Charlie's him in his join to me

Charlie Mathis

the mission has for rewarding power kind a has Nazzic statement advance to of you, wonderful the of purpose Thank very technology. been most my career. and one This words. the SAIC times of

done of country. As marine, have a yet. of former part goal. continue But not quite I'm opportunity talented great I'm a to common been such SAIC supporting pursuing a people group And gave to proud me our

will As my year Nazzic of the time mentioned, and in the fiscal remaining will I focus at end areas. two retire

will deliver to we commitments year on have the I made. financial First, to look continue close out and another

CFO. company strength new ensure will operating all position a help a and will I the can smooth transition leadership, to The is do from success new I enable the CFO. a and Second, future of I to of

our quarter to SAIC Now and for outlook. results the a second demonstrate to moving the on in exceptional resiliency challenging market. continues

all of free awards, business metrics. cash of profitability across XXXX to our flow functions outstanding development for operations, while aspects solid year revenues, reflect continue second quarter and build and momentum SAIC’s and results business related absorbing financial headwinds. strong COVID-XX contract all We the fiscal

second contract Let bookings development me of total highest quarterly a $X.X to were of The to $X.X strong Net most was of book-to-bill translating our book-to-bill with billion, the Life with our the Development a bookings business contract contribution the Software results. Cycle quarterly value the approximately history. quarter award X.X, begin billion. significant AMCOM our in for

At proposals submitted of The Federal is our first acquisition. at approximately Sustainment for quarter, Unisys of Development billion being Agency. billion. quarter, $XX.X or value billion, of addition proposals the billion, stood contributing our continue only opportunities. Not not to and IT Air well. the as submitted end bookings, the in of contract a the provide to Application was funded TADS U.S. second which SAIC’s the of proposals awards over our $X.X quarter the end at backlog the contracts from Technology second $X This result second and contract of quarter. strong the history, be In billion the amount up end is as XX% strong highest single contract with and the awards of million includes Even the was $X contract business prior of bookings of received were backlog one total of SAIC’s value Weather from approximately of submittals contract Force new $XXX year submitted we with IDIQ to one XX% the in quarter, a up $XX.X modernization to quarter the robust award our but

results now me the financial Let to for quarter. the turn

and that quarter. growth contraction COVID-XX On the generally A of ready business portfolio. due flat national a basis, maintenance XX% tempo $X.X of operational our the million X%. reduced revenues services approximately reflect supply in with billion security resulting our affecting state to $XX organic reflect training labor the and impacted year-to-date factors revenue revenues same FAA quarter X%. of lower military forces, headwinds our chain first Negatively second were quarter second total revenues Our growth organic in from of year-over-year slowdown of of approximately

the in the by of grew to the expectations prior X% with and Excluding year-to-date, our line in organic the quarter for X% pandemic. the COVID-XX onset year headwinds, revenues

Second quarter prior period. basis, from and X.X% as up revenues. year-to-date a adjusted XX point year million month $XXX were of six adjusted percentage adjusted EBITDA margins the basis margins was EBITDA X.X%, are a On EBITDA

negatively supply adjusted basis points. profit about state in on to This or business. first ready due chain uncertain cost with our and was COVID-XX the As million community quarter, in margins business, by impacted our recovery EBITDA XX primarily reduced intelligence $X volume labor

provisions grateful ready We of Section Act the available. the from XXXX our and keeping workforce CARES and for are

quarter matters. couple items non-recurring were in negative the $XX resolution the a impact and the program of offsetting to certain of legal one-time favorable million of However, related COVID-XX contract

times, by market. operate challenging efficiently of strong continues model business profitability, services and resiliency to during our government evidenced As these reflecting both the the SAIC our both

earnings diluted Nazzic accounts in costs $X.XX. integration for the non-strategic share international quarter million obtained from second Finally, the during per for acquisition, contracts and Engility Net acquisition most quarter. mentioned, the was we the $XX and enforcement the and law as quarter, was which sold of income

profitability Excluding The the the well intangibles, million acquisition $XX as amortization share earnings adjusted million integration second and equated quarter net unfavorable per expectation rate COVID-XX our tax $X of to $X.XX about of of quarter. our continued share impact was costs, line was as to share. for $X.XX the of year to diluted per in approximately XX%, XX% for XX%. The per full with rate effective

Second quarter quarter million, was another strong flow reflecting $XX cash of free cash generation.

more cycle of delevering profile. were facility. hand contained is the the rapid excluding one quarter with generation our continues the of our first cash $XXX compared We in the finished million. second payroll consistent the The free at days, quarter, end impact The which cash to historical sale accounts to quarter reinforce with flow as receivable of on Day confidence outstanding sales years. quarter XX

deployed During and million $XX and of of mandatory quarter, second $XX million debt $XXX and the respectively. million consisting $XXX repayment voluntary capital, dividends of we in million

of release Board to October press XXth. of a in as repayment, cash a commitment. quarterly made XXth quarter, to has strength the approved share, Directors continued outlook, that voluntary due should our continuing we of to our our delevering in payable subsequent million record on I shareholders plan generation and debt dividend cash note rapid the in Additionally flow announced $X.XX $XXX today, and October our on

to turning outlook. Now forward our

for of portion our our full noted provided we're XXXX. guidance press in previously release, a fiscal As year updating

XXXX. from a guidance that at the far pandemic updated seeing are impact pace and COVID-XX now year we the continued thus through end fiscal assumes Our similar of

guidance through now persist the but fourth previous headwinds lessening a will more our COVID-XX we fiscal and of normal and in of the tempo year. end third Our to return the believe the quarter, assume impacts operational

previously newer So due duration, the is increase to not longer unidentified impacts.

fiscal X%. months and revenue revenue billion, including Unisys XXXX XX of $X.X billion For and X% are Federal, expectations our year and growth between and between implying half $X.X organic

supply Expectations revised partially related With foregone revenue impact the of the of expectation $XX pandemic of per and the from offset million $XXX $X.XX year believe assumes and $XXX our for earnings volume with COVID-XX, headwinds, reduced up from previous from full guidance in contracts, unchanged accounts portfolio. now of $XX and expectation to regards We impact between for million range profit year of primarily today. strength revenue with underlying updated estimate this organic in the the However, fiscal revenue revenue This a profitability. million up increase associated includes approximately and that diluted chain The enforcement are from share COVID-XX of associated the full to growth international fully about addresses year. adjusted $X.XX. portfolio previous approximately estimate million. improvements the portfolio. of the This law the at points it we of this negative COVID-XX, updated for to the impact X see revenue as risk our equates sale by the

However, due we the the increased to date impact profitability, year offset to estimate. expect to COVID-XX

expect flow. flow Turning billion, than to free previous cash our also We be to cash or to expectations. $XXX with equal free still consistent greater

committed acquisition. at February Unisys announcement in the delevering the to Federal we the are plan We initially communicated that rapid of

year concluding are and now back net are progress including a are ratio you end significant X.X ratio far repayment the Nazzic, we today, of debt We plan. the X.X of times point, our fiscal through of just to repayments net ahead debt leverage at by under that made remarks. for to times leverage our meeting and in target so have of confident XXXX,

Nazzic Keene

Charlie. you, Thank

relations and your accomplishments I report very social and and would a country. is to the doing Along events good many in in to profile. with and social and investor be action you an SAIC things have We like our I call social impact encourage much across a a details commitment page, proven see can to taking on The to a take to make broader have to area, and our recent found our can important this diversity. within issued social and reaffirm more moment issue, our areas. and need progress Before questions, company, environmental, urgent review these report, report been the the inclusion the SAIC’s communities meaningful and recently responsibility sustainability about and how emphasis greater have in this that to discussions inequality our SAIC more governance in report

Operator, ethnic aggressively the identity are take to questions. we build also country, to is that us our know ahead. and their challenges tapestry what opportunity personal broad the we represents gender, reminded there already build achieve an feel resolve and commitment strengthened gender about on their age, of to must this and a more. background. have employees can our that equal have more will ensure welcome but a SAIC SAIC SAIC taking are our experiences of was employees We critically to goals. we to we do on progress work and from doing opportunity is to Hearing and It workforce have important and work color, only that best all date directly ready

Operator

from [Operator Jon instructions] line first And question the your of Citi. from comes Raviv

line Your open. is

Jon Raviv

Thank you, and afternoon. good

almost next the the should feeling able number talked to dollars, above least growth the basis impacts X% this dollars To not year? growth recapture dynamic, dollar extent about. like should growth what in On we rate? I the that but feels XXX at we mentioned To it you've extent appreciating Maybe the misfit fiscal year. the full-year this always the you've -- mean, you're long-term gone all growth be what headwind -- be points year. and of that that

Charlie Mathis

that assumption in would projecting rate year I would agree be be with we growth the would X%. next we that excess estimates that and or of pre-COVID X% line our would Yes, growing with be

momentum of If you generating. business, the of business look contract book-to-bill, deal amount the submittals of backlog, is XX% momentum, there's development great the the a which at new

rate think growth to be we or have -- meet so year, this going excluding And next year the would COVID. what forward yes, exceed out would I

Jon Raviv

benefit And well one-timers in more had you room Is your accelerate year. on of I as a backlog, you're combined mean some of that this margin momentum performance mid forward X% sustainable then growth some that X basis rid year much you there to as to well? what with the dilutive I to think way businesses, on for you're the above outlined. seeing appreciating up going net that on some a date, X.X from mentioned the margin, But getting just picking

Charlie Mathis

margins. margins one that's basis quarter. So of points the comments million, the impact about favorable let normalize me the a again, just $XX for couple from the on time make XXX And

would So to translate X.X% really an the X.X%.

However, negative profit COVID impact, impact. you we you had other COVID back to the XX And improvement the $X get basis hand on the and revenue points if million add in there.

margin for the X.X%. So a normalized quarter about is

higher for the communication. half look as solutions, all the with bid slightly translating Federal second in bidding, from the move higher margins. second higher Unisys being next half fixed expect our year previous we impact continue we And more We're We priced these from our lower year margin. that into consistent would in that's contracts, we benefiting and in with to guidance and margins And of contracts higher are dynamic forward are the costs. the

into way give But that. we're or way early higher we for margins. too that the So, would suggest guidance going going to next certainly any of year any are

Operator

of Greg from next Konrad Jefferies. question Your the from comes line

line is open. Your

Greg Konrad

the won? of then on supply up FAA? types on it ramp follow new contracts you've to some delays of And of you any on is to wanted chain seeing Just mean, the some isolated that COVID. are I

Charlie Mathis

And majority back impacts year, what that's that's FAA, that security was the what around persisting of of depth. end the supply just the the we the not is the assumptions seeing would We're of It the just impacting the was going chain. of this were thought This headwinds happen. that supply levels into the this issue what and we're continuing national us. didn't is We pandemic there and this to gotten fall hasn't We from a be seeing. end the It operational an are. lessening laid year. tempo out duration the expecting dynamic to chain, to

Nazzic Keene

did Charlie capturing that are So excellent an of pockets job those impacted.

many of working, majority positive side, working remotely. employees are On vast the the our still

So concert of that continues majority models my work customers our exceptionally vast with in in work. and we've to that delivery cases, ensure for the worked well many new

And so, we've I impacted that. certainly think and are in general, although, we outlined

important And remember do before. this to to new Just delivery technologies, it company that of so. operate also continues new as that most the bringing allow in operated has us to the models

Greg Konrad

don't And kind mention proposals you're contracts I business. in terms maybe of color up you know seeing opportunity? the areas ties question. $X mentioned most any you're on. But with the are next bidding of then submitted XX% that mean, typically you sequentially new into that [billion] where I

Nazzic Keene

one we've is, and think about think sharing I focus way been it our to areas strategy. our Well,

digital see in forces. areas we in IT drive modernization, the readiness the if opportunity transformation, space that armed So growth domain, the migration, cloud

revenue the out very it's those areas. and seeing with drive to long-term we are laid strategy growth consistent opportunity So we've in that

Operator

from comes von of question the Rumohr next Cowen. Your from Cai line

Your line open. is

Cai von Rumohr

other you've big So anything about the we therefore, laid like it there? worth Is dollars than billion stuff I there award out. you it’s That particular like of citing your stuff a $XXX unidentified of an and award pretty miscellaneous got looks in the assume given TADS that's IDIQ number. million a looks from exclude sort

Charlie Mathis

$XXX the in most the I contained awards know big the than you million, were million but other out release software few there we those, in No, there. notable of And to nothing $XXX were press of that one think some lifecycle. time laid

Cai von Rumohr

you mentioned or legal you then how the contract is And quarter were Speakers] much million [Multiple expect… EACs in $XX gain. How adjustments the do

Charlie Mathis

proved contract million were related I in included to be say, was resolvements EAC but on the that certain The legal There to that quarter. EACs would settlements contract favorable. to to and significant $XX were no related not negotiating adjustments terms,

were EAC. year zero So it $X date the The wasn't to EAC quarter million. for

Cai von Rumohr

last sales chains. estimate area the it the raised my like main one, of looks COVID below is million, then exposure way the the millions And $XX Their and supply you of that average. margins $XXX by P&L are for impact

So how million? $XXX million come on its $XX

Charlie Mathis

idle So the two no for time million for been us the impact $XX relates an to quarters. that's on first fee

So of time that's thought fee year. of from We in comes but till idle no the of that on the extension national extended would the lessen that profit fall, is the security… the most end that where that's

Operator

of DeNardi from next Stifel. from line comes question Your Joseph the

line Your open. is

Joseph DeNardi

is Yes. north years. months know, to, Charlie, the growth the industry of don’t couple book-to-bill past organic very strong, correlated the Ringo across mean I that’s X% I of

kind what organic are recompete year? offset of is and a there strong should some of shouldn’t quite you And why extensions may an as of in defer So Thank anything extent from be then we standpoint that to growth years? terms consider subsequent you. to next bridges that recompete that risk into seeing all

Nazzic Keene

was things. with We most still recompete risk favor. But as of recompete the that the this our retired have remainder for the this that of small relates a the year, part to of of it about of in year. rest certainly as with things sort we are certainly There’s AMCOM most retired there. think out couple So really resolution

is we So that will go as about the drive in continue I the the we year, next the it into as solid go that we’ll think we gain backlog wins way growth year. the to would next

of dealing as seeing, and -- are it’s in In extensions We it's result procurement. course cases, hearing business. COVID. some In so with way just of some of that the extensions normal cases, recompetes a and is some normal -- a cases we're that's

saying recompete most forward rest to at if of retired. nothing been the significant of But think that, I are this has look of again, year, this juncture. the we some risk So we

Joseph DeNardi

past retention employee it you. doing few as then Federal, And to months? you’ve talk relates there, Unisys been just the Thank what over you about can

Nazzic Keene

general, go think relatively COVID. the it's industry. of in impact rest to I the of of Unisys light low rates well, our The in Federal integration the consistent -- with been continues very turnover have and relatively So, Unisys of

stability in little overall so Unisys color the see continues on I'll portfolio, go integration. So that give seeing Federal the would with very, very same rates of turnover in well. very to the portfolio, a our we're consistent we you high

we mentioned, COVID we in did I -- one -- close acquisition the day that the As and was of challenges. the COVID beginning

And so as to is complicated and we think close making successfully we've about sure It we business that the Engility that something attention we pay we portion and can. communicate entire you as integrated integration if less that of fact than is bought that was not a company. a much of the

harmonization integration. us system the well as path. steps full And next to on as well well of the benefits so And again, financial at look track, we continue as that's that's and for on

pleased that with customer the pleased the has with and gone, So integration integration very employees very solutions of and access. the the

update you just give wanted well. as so general that I to And

Operator

of comes from question line Seth from J.P. the Seifman next Your Morgan.

Your open. line is

Seth Seifman

about I COVID-XX day at I first impact, I you to everybody realized and and one time. by just ask everyone wanted a to -- else guess the that it is

at visibility And time it not at doing date of point so the activity the the continues this and of the this of terms logistics whether first case letting to depending diseases quarter that will year of pace year end virus business? is out until the Or and in is is of on it of but is necessarily on that in kind in go the persistent the next and you see of away the some possibly and end the sight? into what year

Charlie Mathis

COVID. this the the to I at around $XXX consistent further the could would opportunity and the see we we now in We're in had see at go, Year-to-date case. related risk by so we of if to faster on next year. fourth any improvements. We've right it’s the quarters. say be consistent. factored on away million The tempo looking don't have And more this. -- we we million, the Yes, the downside everything thing looking is this that could to turned to went -- revenue persist the two believe that’s we're impact end quarter But $XXX the then be there's operational

Seth Seifman

And maybe AMCOM talk you expect… about off the you recompetes to and if But AMCOM, future win award the then an obviously, opportunities then important there. the start could future when

Nazzic Keene

So the and first to we of awarded again, very were size pleased are early secure There more of scale. several are that as late one the we as believe we're misfit mid-October. to We into that these. pursuing be able September next

for into this fiscal look as next more year. come we out than year close and then one few so, And we would early possibly that fiscal

growth And so, create our again, some as secure provide well-positioned. well recompetes to but opportunity, that opportunities we current believe stream we're only an not for very It our in does and revenue portfolio.

Operator

Sachs. question Your next Goldman Parsons comes from the Gavin from line of

line is Your open.

Gavin Parsons

a Did COVID organic with X% X% you underlying the X% to total headwind. organic rate raise guidance? growth X% to Given guidance X% ex the

Charlie Mathis

No.

X% And raised We X%, rounded haven't those approximate that. to are X% numbers there. the the

end leads estimate our So strength underlying on of portfolio top I the growth. would revenue the us of that say to that the pre-COVID

pre-COVID more estimates. So than any raising I there would say, we're

Gavin Parsons

X% high to end? ex towards but the the reiterating COVID So X%

Charlie Mathis

Yes.

Gavin Parsons

X% X% that the ex in organic back something does even COVID like So of or imply rate the half growth year?

Charlie Mathis

gave. roughly were end we of a X% excluding think I we where there impact is that range X%, that's we're that COVID, X%, again thinking the higher

Gavin Parsons

where just Nazzic, Thanks. to are mean, or the what's mix repositioning those digital of the you segments given space, then, relative today? the categories those focus. intel, of I And target business transformation,

Nazzic Keene

question. make -- I sure asking the just get Are you to

overall Is that So question… as of it our category, business what relates the modernization, our digital portion portfolio, to transformation. is IT in that

Gavin Parsons

be? What to where Yes, today is exactly. aspire it versus that you

Nazzic Keene

I number. the that But $X to range. in would I billion number… have billion I exact that exact don't somewhere have it's don't say, $X.X

Gavin Parsons

Okay…

Nazzic Keene

well. portfolio our of forward today, a as portion our significant portion pipeline Significant it's of going

Gavin Parsons

$XX or the quickly, in considered expected Was margin million year? EBITDA just EBITDA. that guidance for And then the on gain

Charlie Mathis

No was that that was one-time non-recurring, the not guidance. in

that the favorable year, the half contract the negative of matters offset and program we COVID have in helps impact the legal So additional back settlements.

Gavin Parsons

full for guidance year So new please? the percentage what's

Charlie Mathis

expected we’ve EBITDA So just as much at end was I that normal ETFs quarter that cash, and And now. we think all we've margin and revenue mentioned factors slightly need also in back and higher a as leave the given pretty And second the to of I X.X% given the in calculate half. earlier that guidance that. it far you for to the be would and I

Operator

next Your Truist. line Sommer from Tobey question from comes

Your is line open.

Tobey Sommer

at how difference profile income How us more statement to -- Thanks. a currently. the pipeline and profitable give how much is profit we reporting you're the than book? look of If is pipeline compared words, there? current much your maybe other the that much In

Charlie Mathis

of looking slightly always say new work. because value we're a lot I I margins added now that screening and And looking of sure these the accretive would be. of -- our think And always are these I to that portion making but increase it what going we're number for favorable, would puts margins. the don't higher we're into accretive, that business have exact

Tobey Sommer

And looking was the Difficulty] I numbers acquisition? at that that looks well formed marketplace, like TADS U.S pipeline prior federal [Technical to about talking the for apparently that say and and assuming in -- what that the bid

Nazzic Keene

the end. So bit up little towards you broke a

not and so is it, but that So I asking and I yes. sentences. me try to address to Federal starting couple if so, think if capture get how But get know. it last pipeline is the I'll the Unisys where, absolutely let if that's I'll into But answer and the you're of address didn't what the I question, didn't the acquisition

intelligence relates I our in out, seeing IT increased in DoD as in those community as it that those we're modernization, mean but So pipeline digital the most particular cloud in to to do migration, areas in the addition our pipeline. called transformation and areas it's what rest building civilian the space. on of it activity we have significant in portfolio, opportunities And the in doesn't not

So saying development. we're of that into solution absolutely set our infusion the of pipeline

so that I benefit something? true or I believe be of that did question advantage we answer a your And Did to miss acquisition. and

Operator

comes from question from the next Akers Your Matthew Barclays. line of

open. line Your is

Matt Akers

same million. $XX profit increased COVID another gain, the think legal was year? And you little the there the nitpicky, guidance but offset by guess made I your Was On that bit is keep the the I think guidance, $XX of a this for you full sort negative million. I impact

Charlie Mathis

I revenue million wasn't strength think in favorable some again, And the can there the legal in to underlying I Like of. anything No, that said, no, strength think well. I of contract there underlying just and also the were emphasize nothing portfolio portfolio, other there. was But I there's settlements. also as side. can't $XX that there was in -- There matters than the of want

Matt Akers

one just one. guess I then And other

comment to quarter portfolio of sort plan something your said. portfolio that on now So, over into the product well in pursue of fit related along of that you guess, one vehicles, I the you future? could infantry could business squad that your in that or just business, vehicle this the competitors future sort

Nazzic Keene

the around ago particular for too to or color can that don't Nazzic, much we made two really business you probably since months pivot is tell nature is This is put XX deal. on want us I any engineering. What years the of the

as DoD. of of And a engineering absolutely go-to-market complex the strength and so continues SAIC that engineering that strategy, to is to serve be bringing digital our part

continues. aspect more particular we of say that but disappointed Obviously that were probably much want our deal. business to So don't on

Operator

Benchmark from of comes line The Company. next Your Josh Sullivan question from

Your is line open.

Josh Sullivan

longer updated think or November you theory on election game put the maybe just here? as your Investor defence outlays. I Day, term assumptions up at or thoughts, some approaches Any outlook,

Nazzic Keene

some the forward, watching. well potential budgets. immediate board. emphasize We sit to in No you DoD the attention the portfolio impact budget diversification, we're recognize we impact and industries that of nature something going that here we that no some a election, areas certainly at certainly, a also we watch and that to. that’s But elected that some with so the many as the if across from as of all see to paying we that the any that's standpoint does -- COVID work has there's We're headwind will tell we see to as create that So impacts close all our don't the on closely. all headwinds, the negative created that and today challenge. potential and give us I very we've do, navigate we the focus

mission very is that feel that And this we going again, are doing different areas space, of next the on work critical. modernization, happen. about those We the cycle. our focus the so into posture we could know with that that are we do good regardless IT work as the we do, feel And areas pressures

it. continue and to potential We that. navigate way recognize we that But we So work our there through feel about positive it. is there's that we'll --

Josh Sullivan

those, of positions mentioned. Is then maybe might are about could closed? transformation being revenue focused of in number what you're open open And what way to or the opportunity the on? being we some frame be, those digital And then positions there on just XXX what think timeline a areas those you the

Nazzic Keene

positions. expect we would you always open with XX,XXX as employees, So the have

that I recruit few been the that to technology on-board about board strength new And of talent it we've talent think of the way be is so months course leveraging these and very, good a that over very last on and new continues the to at ours.

proof proof still So a don't in hiring, we categorization is cross routinely point that still it a I but we're that front section think have me, the the needs. it's a of point have it’s company. of I

it's cross cloud a of technology, technology engineers, section workers, So engineer.

country. that so, the across the type of I'm the work do across it's of we gamut certain the for the most part and And

So we in that it think regard. about

Operator

up a And Raviv follow we from the of have Jon Citi. line question from

Your is line open.

Jon Raviv

bit more Can making? Dee if wondering a what there's for on three around comment you're a together, talk the about changes of or now of you and you’ve might was months. team you're I any those of make, kind seeing changes that frame kind maybe time Dee just of Nazzic, little if could of sort pivots kind what what you further you had

Nazzic Keene

her somebody team. So on of I us on to anytime set makes we're it's think thrilled you diverse is bring better. first a have ideas, can collectively senior She -- and background with position the a in

focus I in team. strategy investing have refinement her and we're ensure to that, of And very right our things, on the the as focusing some slight cases, a pivots deemphasize. something where exact emphasize it's are. some confirmation term, that a that good slight cases, pivots we it’s to mean really continued on the helping I might our want is many so we're we been us portfolio and to Where might she's or in little within more be right there our pleased referenced in areas In here that we're that

charge so has us. she And that for led

with we agile way. do strategy shared we've a at at you look As and dynamic before, all really very

to and that is we investments we investments And go for a also us. solution she technology key role as play then And so will as look she continuing forward.

on So kind I'd that's spending that her is really put color team. again, early around But how some pleased of she days. our where she's very

Jon Raviv

AR one year, last one reiterating the for Understand the free just then just flow cash this $XXX on Charlie excluding trajectory. million And facility.

payroll on stuff? Just downs, We have any a XXX clean again know you payroll to so that sort to we period. over tax think the of is used out ups to multiyear number I here, think still speak. the multi-year the path about thoughts the Is of and all tax centering sort if about fair

Charlie Mathis

said free cash year the reaffirming we That's exceeding dollars time, just $XXX our would reaffirming also expectation outlook billion our flow. or this only Absolutely. or what say last for flow million the not we next of the talked of but meeting $XXX I meeting that year free that's about. cash million with consistent of exceeding

if you I what next normalize a repayment had of of a $XX normalized -- flow million is with talked have payroll we year, free year cash on which we're the deferral about. we consistent think think next the Now, that and million, $XXX paying that's tax back

Operator

Truist. And question from Tobey of your next comes from Sommer line the

Your line is open.

Tobey Sommer

much? ability company's staffing ramp it wins a perspective, slowed whether contract Nazzic, that can and to to you has speak extent environment this how the to from the kind of

Nazzic Keene

to industries, remained able on talent. in hire, as slowed some as that to whatever result that actually in seeing ability our to come quite in some we're a at rebatching result no consistent to seen impacted all. cases ability This are COVID. We've challenges win, of contract staff bring the it's talent being other a environment more And not our we've is great of has talent If from actually staff. opposite, a technical

negative a of aspect And haven't more of particular issues. our so than for seen any a positive us, that been those but it's on business probably of we

Tobey Sommer

And describe federal more if awards I pace in contract fiscal done. and I'll How the could would of the one month? you final be

Nazzic Keene

to to the orals make part as But would to COVID was think, excellent how it done how guess for to has I let, we’re things surprising. real Yes, the hard happen. technologies going job long going adapting happen. were to describe not happen, predict help It's when I to in were get how this it government going were an I -- most environment, into certainly contracts

in some There's cases where normal environment. So cases do a they but something might certainly, happens gets there's some slipped. where that even bridge, a

Again, on level pocket believe but contract or I macro it. don't I've any awards. So, not there's impact there's contract been significant seen the RFPs at

Operator

this further Canestra, back no to I at remarks. final Mr. over turn there you for call Shane are And time. closing the some questions

Shane Canestra

SAIC for second quarter interest your Thank your very year SAIC. the you concludes for call in we and in much participation you thank call. continued fiscal XXXX earnings This

Operator

this for conference participating. gentlemen, you call. today's Ladies and concludes Thank

disconnect. now may You

Science Applications International (SAIC) 3 Sep 202021 Q2 Earnings call transcript