Earnings call transcript Q4 2023

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Operator

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the SAIC Fourth Quarter Fiscal Year 2023 Earnings Conference Call. [Operator Instructions] Thank you.

Joe DeNardi

Good morning and thank you for joining SAIC’s fourth quarter fiscal year 2023 earnings call. DeNardi, of Joe Strategic Relations is Ventures. name Vice Investor President and My today business Prabu discuss are joining to And me our Financial our Executive Chief Nazzic Chief and Officer; our and Natarajan, Officer. Keene, results financial we quarter fiscal fourth X, year for February of ended discuss results that Today, will XXXX. the our XXXX

and of we slides filed earnings be addition where call release, and to morning, also evaluating find copy to will with you utilized management’s provided a documents, supplemental our to in results information prepared remarks. later can conjunction These on Form be XX-K this today’s outlook, our utilized Earlier presentation be along which issued our with financial should be in investors.saic.com call. today, found at today’s in

SEC forward-looking materially risks, we could on call. filings annual Form on statements subject and that this to that are reports unknown make discussion XX-K differ known of that uncertainties and the on and note report to call from Factors including may of to results today’s our and on quarterly I section risks a for made XX-Q. actual Risk Form statements cause refer you our Please these

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

considered for to a to non-GAAP measures comparable financial financial press information addition measures. supplemental will the not and release with discuss useful our reconciliations financial for GAAP. and substitute should non-GAAP we measures GAAP slides addition, In in both provide include most presentation accordance be The metrics, and in we measures other which investors believe and

Keene. is my Nazzic our pleasure to now CEO, It introduce

Nazzic Keene

growth to and across very of fourth and we Earlier Joe joining revenue morning particularly the that XXXX. and you, results proud the the fiscal expectations quarter good the due exceeded encouraging quarter, for today, focus I intensity enterprise which reported am the see. XX% we our our strong reported to call. in year those Thank to is

done inclusive values, want to SAIC our our the quarters, have start advancement culture to colleagues I by are two in their success. for in the foundation contribution of As highlighting which to I recent

As history you from was celebrating was enterprise-wide know, led at women The by who year’s Employee tell SAIC women’s win specialist which Group, at SAIC. SAIC which this embraced month, our cybersecurity stories, March our celebrate and team month we initiatives. strategic Resource theme we through planning for Dorsey, our history through a April here women’s several Sandra Women’s at

to strong, share Resource employees their In and with partnered these, the stories SAIC their about April leadership Inc. D.C., inspire that women in Employee of a which them inspiration, book and panels SAIC smart and students Greater for Sandra bold. of and to be donation and one I want efforts drive related Group Washington, collaborative and accomplishments. Women’s thank Girls for their their personally

our on and recent Now financial review actions. a results of to portfolio

adjusting of revenues delivered overcoming reported of roughly growth $X year-over-year additional discussed organic we After in benefit billion, mentioned, while days the X As we of transitions. from X quarter, representing of working I approximately X% the XX%. contract previously points for growth of headwind

on both points which recently book-to-bill, that could of contribute recent remains ramped and both important we upon wins: two least improve our combined sustain and and confidence gives once the Combined, to to program year, can at close with year up. TCloud, growth programs business are rates. any me strategically ultimately new recompetes, ‘XX business strong results reawarded that in backlog from do fiscal DCSA, and revenue not SAIC, note these recent we two fully was It include Our protest. X development contribution new momentum, organic in is believe growth significant ultimately for which

of still not guidance look once any either post-award Given organic timing X% revenue the to to growth forma the fiscal deliver clear both forward these uncertain from pro include able of year material program contribution starts, does programs program. value to roughly process. for our We these being customers ‘XX typical

we dilutive expansion next and in were our While years, modestly the our fiscal we which few program into with to improvement. is execution ‘XX ASRC supply cash, have announced, signed in for and $XXX to Federal revenue, margin an months. I coming Contributing margins solid fourth year-over-year sell this, basis material-related to our over guidance logistics close quarter which to the million impacted pleased expect am in visibility for we points agreement reflected as our year margin and the by continued XX of business chain in

right on a have financials, areas long-term roughly where to win return contributor While represents market an and cash of which believe shareholders. prior free our The we price the the sale focus was attractive our and to the attractive to for we business flow, transaction delivers strong a for the our resources return not significant provide year shareholders. aligns dollars most strategy XX.Xx investment our with

only increasing the position next a of we decisions investment best customer the to to environment. value It bullish us very disciplined excellence quarters, our customers and and deliver that strategy able through well challenging that are our demand and face to meet we is our to shareholders. noise somewhat amidst threat Although few heightened and commitment employees period a we dedication our budgetary political are over from

in our discussion With your I over to year. the turn financial call my of past outlook will to that, usual our Prabu SAIC there cover. to discuss results a and strong improved want to for I thank to is colleagues longer than much contribution this performance bit all as

Prabu Natarajan

and Thank morning Nazzic everyone. you, good

strong to overcome growth, revenue again, and from allowed quarter We have revenue or on-contract working results execution from us for fourth continued extra billion, $X contract XX% to benefiting year-over-year adjusting focus pressure reported X% of with which X up strong transitions. fiscal a when the days, drive

than this introduced we expected, in some margin our opportunity which a materially slightly While multiyear margin margins. being see resulted modest quarter improve lower of fourth pressure, to X.X%

We of rate as reported from tax and $X.XX, of in year-over-year share repurchase X% our count result our reduction adjusted program. a share earnings continued return diluted a roughly shareholders which benefited per capital share a diluted our via lower of to

$XXX Our $XX of million million. XXX to impact by free which free $XXX offset million cash cash a flow fourth Section tax $XX flow year payments, quarter of in related approximately tax cash million, resulted roughly benefits included full partially cash related of

of year the our cash quarter free flow of not for fiscal of top in million cash XXXX. related payment free our on of million of $XX this back prior guidance we intensity tax XX% all a an end to million, additional payments of deliver focus As reminder, as year the in XXX million was flow overcome million. versus $XXX Section ahead am payments, guidance $XXX Adding achieved cash commitments. our to $X and with cash particularly delays other our flow $XXX to we cash and tax were proud included prior represents the growth I and of performance able financial

to into of provides bookings the monthly State effort. had this In January, visibility finance who we business net approximately trailing our our the FY highest our to leaders the partially want on business led contributed Treasury and thank who $X.X us Vanguard FY this contributed Department in and in extension collections which which team cash all history. and of I On of fourth the unit month of a XX-month a $XXX achieved of level development, program, Xx. to of to billion SAIC’s million quarter, book-to-bill ‘XX. in contract Included our our that through was on ‘XX we

mentioned; new headwinds we by in recent strong, fiscal returning our X.Xx prior book-to-bill loss confident our our recompete annualize year, the on the and two, to to one, two line business win in average fiscal organic trailing normalized be generally continue rates as growth is and third our two wins, quarter. rates of quarters our book-to-bill partially of highlighted the approximately in is ability to with in we ahead, stronger over for quarter fully our which our in recompete generate Nazzic second and win reasons: new rates is While X-year around quarters levels X.Xx pursuits our are over

Although ability of focus the heartened key on organization to our recompetes we beyond, we in bounce from by have are FY these back ‘XX to and setbacks. temporary

‘XX chain two supply recent the our our Importantly, impact profile portfolio the supply and Support extension logistics want the to updated the I our of risk Forfeiture to discussing of actions: guidance, venture. near-term divestiture Vanguard quickly chain the Associates certainly the and our business FY company. divestitures and from joint management improved financial the deconsolidation Prior of summarize

$XX million a adjusted to contracts, of in $XXX consists flow. million to million revenue portfolio of $XX cash of ‘XX, free business FY supply Our contributed $XX and roughly chain approximately which million of EBITDA

The approximately controls our begun the And accordingly, the by ‘XX accounting venture, second joint amended SAIC February by equity and operating $X agreement free the $X roughly $XXX an flow revenue approximately item Support part deconsolidation transaction. relates of our that XXXX, the of such no to Associates, Engility X, Forfeiture we as acquired which Effective SAIC joint longer method million, adjusted investment. we deconsolidation will The million. million our have by the EBITDA our FY reduce for arrangement cash as venture.

$XXX transactions on reduction margins. our from roughly ‘XX impact basis revenue million million will in and combined the a in XX reduction resulting to clarity, adjusted two FY For benefit $XX be point these a in EBITDA, year-over-year financials

additional our of FY an divestiture. ‘XX, we supply and For from margin XX management chain points expect basis logistics

approximately from FY quarter the one assumes ‘XX updated business contribution of year. for Our guidance financial that

on Section and provide for date on transaction. like adjusting outlook based closing just XXXX I discuss needed the updated of XXX to cash after guidance taxes. year our for now would the will items two updated if mentioned the actual impact We and fiscal of improved the

presentation from strong have additional Given our in underlying to to prior slide clarify the to SAIC. with disclosures assist detail go-forward changes compared the and number the our guidance, and performance we provided modeling of

growth revenue of at the after chain our reflects adjusting the billion a supply for and guidance for the ‘XX midpoint range roughly FY FY FSA. X% working $X.XX ‘XX, $X.XX fewer days billion Our to organic of deconsolidation in of sale

transitions and we first growth as benefit fiscal we programs annualize basis, with revenue rates ramping flat On contract in roughly our a expect and up. new XQ XQ quarter reported into from F F improving

Our days, will by from result on growth $XXX or fiscal impacted growth estimated flat strong the but basis, rates GAAP be adjusting days. modest an for million a in fewer headwind working fourth quarter will which working when

guidance estimated portfolio margin margin points benefit basis improvement our to X.X% initiatives includes and XX from ‘XX X.X% our points an X.X% FY basis Our XX compares of of FY ‘XX margin from to and actions.

a we see Nazzic As drive organic multiyear margin continue mentioned, to to opportunity improvement.

a range compares to for guidance EPS ‘XX EPS FY of $X.XX of Our $X.XX. to ‘XX FY $X our

assumption higher Slide and supply on the items, midpoint by offset XX, of the operational chain improvement, our Note reflects be associated the deploy rate of below-the-line increased illustrated and interest including business a as As proceeds time tax that of guidance chain the roughly with our our divestiture actively $X.XX divestiture dilution supply minimal is from sale. over expected we to expense. the

of tax of million guidance expected is prior $XX FY and payments flow an Our cash and chain guidance by offset $XXX our XXX our a million This free to divestiture. from benefit $XXX Section of million to supply other flow ‘XX $XXX the higher operational impact free cash net improvements. approximately includes $XXX associated cash effect with million and million compares to

updated an reflect walk chain free Slide provided supply XXX. the XX we that cash and Note, of to Section our sale effects multiyear on flow

bias see to on expected despite Based the from per our in coming flow of flow We to the higher free we shares XXX impact taxes. intention million our opportunities share repurchase strong continued to in cash and a free ‘XX towards FY to have visibility with shareholders. strong good approximately for million XXX in continue ‘XX FY to years, updated FY ‘XX, repurchases increase cash cash

next increased This sufficient capability-focused program. few with will for the years. announced M&A outlook Even $X maintain is supported by repurchases, recently billion for this repurchase we plan capacity share our over

and maturities very October there. We seeing to flow until look maturity financial multiyear with in outlook debt free to I next meaningful earnings, our to intend Tuesday forward Importantly, shape detailed revenue, at capital no you include our deployment. cash profile Investor capital and much all of structure good is provide XXXX. Day a

will I back Nazzic. to the that, With turn call

Nazzic Keene

Day Investor As April seen, mentioned you and next will our Prabu have we as hosting XX. on week be

time While the financial provide three with I to targets will we want to that you. won’t we during I our specific them, preview any accomplish quickly do are of looking things highlight

who of multiyear capabilities shareholders; commitment with to articulate to technology asset-light provide in; case third, strategy. for financial capital are, you SAIC the an investing and understanding shareholder-focused investment a targets integrator First, and and provide an we to discuss to markets our a our improved compelling second, and key being deployment leaders we’re with

are seeing about next We for excited thank you and us. all you joining advance week, very of in

now We questions. take will your

Operator

[Operator line from Instructions] the from of And your Jason first question Citi. comes Gursky

Your line is open.

Jason Gursky

good everybody. morning, Hey,

Nazzic Keene

morning. Good

Prabu Natarajan

Good morning.

Jason Gursky

just I I on CR? book-to-bill kind like the bookings to XX pro the up Nazzic, another think Prabu the of likely the some one question wondering a we Prabu, basis could for end your we’re the for you, describe just points and looks one and this you to front-end you as customer flat color Thanks And will of loaded guidance if then curious what And head in was back-end range? behavior what kind for it kind am the on of cadence you’re a whether outlook the your year of to expect the margin basis, time. for top that from of you of for get what you year? what’s allow you and into expectations maybe pipeline us is you, on forma to for the on loaded, of that around kind

Nazzic Keene

Great. Thanks, Jason.

first So in ways. couple tackle your one let me of a

than us we closely even what’s expect bit in And Washington, and be obviously, are the year could seen CR certainly, the this all budget a of happening a past. So in watching impacts. we’ve longer

very is and lot experience a we to do continue to work with CR, navigating in exactly that. have news navigate a of we history The our good closely we that. customers and So

there it great customers. on-contract component our as being strategy and last drive ensure the to CR, in even the of sales So our very elongated been It’s will with objectives closely this help as in so particular be working on-contract growth a they event see of our of success and is important to year, in year key has booking couple we can part deliver strategy customers we sales that years, more this mission their our growth able probably that continue on that on our an strategy.

normalized as that we in Prabu our arena, would to business. new to relates good in we it And rates drive and our opportunity more to give strong don’t of our that general, strong areas, arena continue remarks, business traction well in our to opportunity we As very win to business and the continue building but on pipeline focus bookings, as continue back tend of as to his bookings, we GTA continue mentioned position, there. we expect a recompete in to mix new seen as the see guidance to in that. get recompetes And prepared booking good those on have areas we see then and side,

that the comfortable So going with but growth that don’t I’m support guidance, pipeline targets will provide to into a outlined. portfolio, we’ve a year we tend the Prabu?

Prabu Natarajan

bookings was it for Maybe not margin which IT, of still TCloud, us question. One to recently days obviously protest before Thanks, the early process. reflect Jason, which question, Thanks, nor DCSA book-to-bill, include do the of kind does Nazzic. rewarded the the is

‘XX. As FY start over actually very rate averages ‘XX, business new the we and pointed to of business, has than new FY was trend course continued our the for higher trending our historical win nicely,

for that consistently pointed above guidance we’re that that’s to the X.X out, book-to-bill kind kind growing exactly but of and how Nazzic number As sort for of on comfortably, we we be trajectory of offer business. are long-term book-to-bill, don’t ensure targeting look to

I exactly on right. picture, margin big rate of you’re kind think guidance, the So

the on kind grind XX business about sort to think basis, we year-over-year. of of pro forma are points up basis a expecting truly I

are things obviously, proud other to here XX a point to couple efficiency-related what to last the very hopper continued increase kind we’ve delivered on midpoint. There improvements. things a think actions of got that of very year. at from I we focus basis rate of X And portfolio margin allow actively the looked X we’ve comfortable on the get the X that at, X plus us in

real potential that estate here out talked our as are actively facilities cycle the footprint as inside have of continue we minimally to about a used We organization. tailwind

very looking across at actively curves portfolio. labor We are

start So through that we’ve be a will things way would us margin grind question the to I’d continuing execute to run rest at year. sure a we that reality inside on the that the appropriately is got hopefully, say answering multiyear make of basis. we placed we gives margins we continue short on we few to want that of year are obviously to continue organization the side. up the comfort move as and the and And we risks through opportunity improve the the And QX,

Jason Gursky

you. Thank great. Okay,

Operator

of comes from Your question line Fargo. the Matt next from Akers Wells

line open. Your is

Matt Akers

to on question. logistics morning, that are there might kind Hey, part this the M&A the Or mix about? that there for guys. to wanted side, could of ask talked I maybe business, sort enact going I maybe the kind of guess, And other flip After you’ve the of the good guess may the on are assets forward? that fit? Thanks don’t need flow portfolio. of divestiture, be other cash pieces I be you GTA story strategy

Nazzic Keene

it’s Matt, Nazzic. Hi. Yes,

is is the So portfolio of other at no. there divestiture? from of a looking a we’re short that couple aspects things, answer The

continue We SAIC. process very and run to a agile operate of strategy inside

portfolio always up. we we bubbles our on looking current and anything at a long-term we’re today, that here basis. continue regular sit that But how do we as So objectives, our supports see to don’t

wanted to relates couple I things. to divestiture, highlight it a of that As

portfolio. it as was we’ve since with here focus very over our of strategy. that as the acquired many GTA part communicating contributed into portfolio what our we became of as been has strategy, to on proud SAIC and it sat you, not core SAIC the we long-term years But the We’re today to

know rights And so divest at to the and it team looked very, very right the proud for time, an for and the where has where all growth the against of their objective be opportunity we that part to right up great pleased very how long-term drive executed going price, with of pleased Federal, great to end I they’ll it’s and ability ASRC a strategy. and business, their with a inside drive have

here sit that into we falls anything else we as don’t So see category. that today,

acquire? at and question, deliver and on to we’ve which the longer-term positioned as been We’re flip to strategy well will some the We be On Koverse us that of opportunities execute the see week. sale could to got believe acquisition. opportunities financial do capacity communicating and very the in your side for there we the we did provide the we’ve strategy But guidance technology-based do some with SAIC. next tuck-ins

And so space at today. look we continue strategy accelerate opportunity to our GTA the to

where I is that’s particular see a that So are strategy, choosy, to and would would forward, acquisition. we opportunity our as very we did what it if hard type acquisition. look disciplined. potential I accelerates of at certainly of similar part we current Again, Koverse with the But very take very look there an where

Matt Akers

we moving And Thanks. mentioned if recompetes? guess, you that us I I extended, on just Great. remind you anything Okay. else one – Vanguard should I watch could got for could forward? if do more, know

Nazzic Keene

top our is portfolio. Well, of it’s in part of mind. everybody It’s significant the industry knows one a about that’s it, the certainly, and Vanguard

we very place. the and team’s focus Department our taking process of as is customer, to ball critical So proud on with there keeping the deliver continue the through that their eye even of State our procurement pleased to very the

about on the touch that delivering in we always over and the elements keep close the recompetes those we the much competitive years, to And couple just right So of to our critical those. forward, as of ensuring are not solutions much course that the to portfolio, focused a so we’ve – right some at look too – prefer to many But is customer of or price due become, of on more we’re a there in last we disciplined, public recompete forum. more eye we those protect talk success. but reasons,

Matt Akers

you. Yes. Understood. Thank

Nazzic Keene

Thank you.

Operator

Stifel. Your line comes of from next from the Robert question Connors

Your is open. line

Unidentified Analyst

in you hear Hey, me? Prabu Bert. is Are Nazzic, able for and to this Rob guys

Nazzic Keene

Yes. Good morning.

Prabu Natarajan

morning. Good

Unidentified Analyst

guys with a by around And Great. And into I of versus cited on-contract Okay. much was the some regards sort is get GTA of core just I growth? how versus think story wondering driven before ‘XX, just sense of the to trying margin to And GTA going versus margin metrics part core. had you expansion expansion.

Prabu Natarajan

Sure. Prabu here. Hey, I’ll that take one. Rob,

we points flagged over we’ve the business the basis the supply before be expect core chain to venture. well obviously of So the about margins. FSA divestiture that than as of quarters the That last few higher was deconsolidation XXX our as margins joint

be, about which an least margins whether inside the to pipeline is trending important pipeline differentiated after. where the want inside track see actually The of company. multiyear to are at GTA opportunity core levels and higher core margins, we’re they biased we GTA the that’s on on things in then we of see We And we are Xs margins a are going the towards X% of higher the sure we and that answer continuing the continue than towards biasing that multiyear therefore, to higher And used the is trending now is high now. basis. tend about to higher are pipeline than sitting a to right make think metric GTA. what’s that We levels to basis. And

not focused investment the to truly are the of spraying really the that across we’re we’re So ensure portfolio. quality chasing we that on dollars the things

So, pipeline, also depths we’re but after. the that things going of both of tuned into the quality the the

Hopefully, several was So by years. for expansion business of the say, as the we levels the higher I’d margin GTA responsive. encouraged see, potential that towards next we over inflect continue to

Unidentified Analyst

hires was And follow-up, Prabu. a announced and units. have Army the of that for recently, then Thanks Yes, around as sort guys that business Navy great. some you

that around were Thanks. the unit sort thinking you is the brought that, by what recent Just hires? to of table whole of guys what were business wondering capabilities some some the of

Nazzic Keene

thanks that. here. Yes, Nazzic noticing for

elements is people caliber critical the business, the and business, what our table. the in and talent of the the bring type services of to One

of cases, few years, been a our of so the And course priorities, some with aligned priorities makes priorities, for last in and things, most it to we’ve aligned importantly, growth the very our in organization the get sense, where to company. that the few new priorities. bringing rotations develop look talent additional to many proud we the to the opportunity the do across over customer margin the in talent efforts And to skills like looking have

you on exactly And those to accomplish so things as commented two portfolios, we’ve been fronts. many those able on

So had we’ve team been in and talent also better And some that we’ve also skill that make us has from outside and out the leaders the great bring our even sets able more opportunity stronger our to solutions to their become deliver talent strengthen some to some for build and SAIC. rotation got a do company and valuable customers.

talent, take leadership we to best industry. the the have ensure in best the we so that we absolute advantage can when And of opportunities those

Unidentified Analyst

for my Okay, great. Thanks taking questions.

Nazzic Keene

Sure. Thanks, Rob.

Operator

Seth line from the your JPMorgan. next from And comes question of Seifman

line Your is open.

Unidentified Analyst

Hi, good Rocco morning. for on This Seth. is

Nazzic Keene

Good morning.

Unidentified Analyst

Going the businesses? sort increased question, prior win back rate as to recompete the run well the rate on driving on of new win are changes what rate – as

Nazzic Keene

than losing. has of last more this some course team that this over motivates area There many the an shared quarters. the been probably is of So nothing we’ve the

situations So we guys better. where we Several can we them. we some advantage you ago, had of felt try saw take them, do And quarters losses. to certainly,

kind love were things I losses win. of This already a we accelerated would to couple that team win. of doing. really some that loves of a is course, that to So we’d say And

talent, customers And to our of what do well areas. talked sales laser-focused briefly, development we’ve deliver So have across board, on those on well last good our about to the my did great strengthen searching and have on-contract missions. some the didn’t been new some and corrected have we we able doing we been and and on their so topic in we growth, question, been We’ve on teams. business what bring talent helping sole

the attention must disciplined because for so there GTA are some we more will so gets those this I differentiated looking think – So also highlights, are extent is is basis, ELT but opportunity. opportunities daily focus you can on in entire those something I certainly my tell RFPs. bit what really There we mentioned the the to we we Prabu’s areas the a at many attention that areas wins is that our much And and the that company, resources of he that a win. so opportunity accounts on us is Prabu focused being There But a pursue focus to make and key on we’ve those to or pretty many to to and been of and on little those have areas is how those our the we’re what addressed attention core focus, the ensuring our areas in pipeline dedicating that last of question our as difference. inside the money.

that win to new business, well many great So we’re our done. abilities our recompete area not a that this into I going is win and certainly continue are not rates drive that. everything. would We say in as there intend It’s aspects strengthen to to going as to our success recognizing in one

that to and But going have mouth must the not to We’re us, are anything to where that talent ensure add Prabu, our win customer. we for is recompete. solution that? to where our we every wins best you is and for the we aspire mouth want put money to those our our

Prabu Natarajan

fantastic, was to Nazzic. add. That Nothing

Unidentified Analyst

last over talent the environment touching changed the is few portion, hiring how on months? Right. Then the

Nazzic Keene

there. A couple comments of

turnover So I part would of that obviously say the a is on dynamic.

We the are pre-pandemic seeing turnover return levels. to closely much aligned to more

couple it comes course what as heightened area continue a companies can over on. was want we other back to the be to to as normalized probably to pleased for focus We an very us well very, when issue so well as It is turnover years And the to environment. of see get best-in-class as more of last hiring.

normalized. side, I again, On months, few in has would last some say, areas. hiring headwinds the certainly, we the But there what more would it over – gotten, some consider I is

pockets the is business. of there so And

If you some security we’re need longer, hiring clearances to tend little in think that the new focus to the There as sense. turnover critical we And take others. as to, to hiring does general, in makes we than that’s for that tremendous us of are bit is especially the what looking mind a it industry. about mitigate pockets are teams as put, well more for But special up risk where looking us. trying everybody it that the start of as these of again, on programs business top

all is especially pleased we’re a I but very we question. services dynamic So sit with the the business, watching, It appreciate today. how

Unidentified Analyst

Thank Great. you.

Nazzic Keene

you. Thank

Operator

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

Your line open. is

Cai von Rumohr

Thank you much. very

Prabu Natarajan

Hi.

Cai von Rumohr

Hello, Nazzic. Prabu. Hello,

Nazzic Keene

Good morning.

Cai von Rumohr

been be decisions generally those understanding has we an Vanguard, extension. margin you understanding we five win could should did in above-average be split sustained you’ve only two. My on my should different And is sections, recompete? this to be But profitability it come into secondly, you where of when then was it if that for? bid gotten the the looking and that program, kind going are and was the should up

Nazzic Keene

Cai, cycle. this through going active Nazzic is very A here. Obviously, couple a its comments. it’s of procurement and

multiple big is is I obviously can broke a I I aspects but very through SAIC as believe pieces. to differentiated procurement when lot to we we than we role will that pursue happen. a solutions. and comment ago, of bring the It not exactly up is that can look pursue reasons cycle far many As play ones we on know critical different – pieces. to know a predict that probably such program well I had will going where it’s to into Obviously, – There true, going it those moving in timing, as appreciate. you going important procurement all there to which or not don’t going And years they are think with a

solutions support to can bear ourselves best look as objectives days But can again, it we early we profitability profitability, customer and not where best I do re-compete, we support bring relates and we to As apart, well. that re-competes for execution. set the that’s put It’s can our will uncommon areas to in of the to headwinds differentiate, that certainly something you it’s think when TBD. some

at all of get I appreciate that’s team going happening, sometimes delivering process it’s I kind them. to Vanguard very that’s am – of but our re-compete say with of team to mission get want this critical But the on again, because that’s all and to easy proud laser-focused reiterate point. just sidelines to very and on So, this probably the delivering is

Cai von Rumohr

last Terrific. impressive takeaway TCloud the IT. one, and One wins in And

hadn’t really other at this as bidding, in takeaway of up kind you effort takeaway outing look aggressive kind part? significant two do because the wins, of on your you So, seen are these until we we have bids what

Nazzic Keene

both that. areas really I two, to solution those that forward as GTA are with in comments. appreciate we our team And will they to brought – our post-award of focus I in provide pleased part how points our ability strategy. and that have proud I think positioned on competitive share is all our you are proof these and some I customers. optimistic and their complement and a will So, far on has part of sit believe with Prabu get very very mentioned, of we I still compelling the you both this will But to so today. that for the much process, the strategy that clear very it’s more Very appreciate of after our continues and focus, – process of but very, post-award say say to we

differentiate, to the in position of choose come. create to you see other forward in our quarters As these in in to we of wins those types market that do to areas continue sharing opportunities a we it pipeline, to and look more with relates to we things certainly the

Cai von Rumohr

Thank you.

Prabu Natarajan

that. can to I add if Cai, And

high. on got that As We that other tend a all more potential articulate to SAIC, are takeaways annual Nazzic re-compete have a pretty we customer hard the proposition every important one to are incumbent on know an we to rates because why things in focus next pipeline few can in on business the said, have takeaway The years is opportunity. X X deliver. we we years to bring for thing of the this how a basis win the that

tying basis. a we the review team investment inside repeated SAIC for on dollars are the process question of effectively questions have question the answering critical and So we sure our part why is really that the making therefore, to the the gate and compelling a

build changed what technology time, of other bidding of terms things or pipeline. want the that are Looking at, a changer at parts a that RFPs, and draft the to what’s customer, way these the last either we particular class potential of to game a for terms from be conditions, that out is the to in opportunity be

important that, and end we at the And habits solid So, to competitors, truly just just this answer are more getting the resulted that good they those get a that really is two big for as is get but old-fashioned, not differentiator. and are technologies me, the business day, teams ingredients old-fashioned the a all scored this also the To the again, things we where future. to wins few in bringing hopefully positioned in from our good of us. differentiated hygiene look development

Cai von Rumohr

you. Thank Terrific.

Operator

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

Your line is open.

Greg Konrad

morning. Good

Nazzic Keene

morning. Good

Greg Konrad

color Maybe just just or record you the out in give you some cash and you Can to around over it’s the forward? working see flow earnings that just to capital, think start, the called capital about just bridge, the January years. I next how thinking maybe contributor in opportunity metrics are collection going whether and working several mean about

Prabu Natarajan

it. me appreciate try Greg. stab a I take at the question, let and Yes. And

it, cash flow free at, chart of $X a let’s presentation a call at we leverage flow. We cash multiyear about And per a for earnings offers importantly, most around have are of I got view in FY share. that the think sitting three-turn ‘XX,

sale and Our And chain difference FSA. previous million. the about estimate the was effectively business the of is deconsolidation and supply our XXX of $XX

sort multiyear And so the view. that’s of

that there is are a believer capital strong very We potential working improvement. for

$XX had to And continue in pedal. QX. working If back look, generated, QX to the you we Section deferral When give numbers. generated a cash business QX we of looked free we add the QX, plus cash in in you XXX, reported flow $XXX million we on that That flow million payroll at just included free elements round a cash about this those free We trends numbers, take to cash as DSO. basis, not the million see that going improve we in strong foot cash multiyear are about QX. think of round capital $XXX generation flow very on so to gas opportunity off flow the two to

conditions, We DPO, opportunities and continue to improve conditions inventory supplier with see management, our customer. and our terms to terms

multiyear free those growing with Obviously, opportunities growing pressure flow improve – believe to us are continue on roughly present, I you generate basis. on here business, the that working improvement needs are when of year-over-year a a solid a cash impacts more working cash of capital business little to for to growth than All a a actually the and a of offset flat. enough hopper will allow some in are basis. in capital on business a But us there things

see So, And incentive we team. metric cash this. of to plans Nazzic operating team important you so good the and you see our this business. will importantly, deliver put therefore, ops you as element with really just will us we the in than are for finally, And committed from capital comp out continue importantly, cash will see as this kind can there, hard. most through flow make mentioned, us pretty an choices cash better most deployment also of go is to grind And we

I story So, space, we continue that believe. in to be a differentiated

Greg Konrad

you book-to-bill D.C. some that maybe with opportunities how strategy you the before? bidding near-term, helpful of strategy, And when just in you what’s way has overall of commentary some are and on just Any gave and to that pipeline given is how these a the thinking about just of given of to moved kind just quantify caveat talked volatility about follow-up, there some market and going there opportunities GTA lot the bidding then out around

Prabu Natarajan

me, question. Yes. of the the business, the want the of to growing of call I spend relevant the years from work profitably consistently make Look, X are X% our looking that’s and would now. I Nazzic of to I quality it, important that the In this time to is also the over business this to we committed are we midpoint, we the at targeting pipeline. future company pipeline, that grow a To amount we to of see consistently, diagram an what Venn appreciate but that sure quality inside inside the think and kinds depth fair draw let’s pipeline at time. that years the to X order be

about think And so to it. me, that’s the way we

thread very fixated metrics. in between that’s a rates, what governance and of X making trying cash expansion three part or do of that Board. we brings To the we are take the X the growth stock. to us, margin dashboards to on want – we important balance years’ we obviously, quality of hard that truly at. generation, improving with reality business today longer chasing be to to what share perspective is this, me, a almost and term and needle that look happy and sure is years And between that that’s those are because our are of our quality bid, this pipeline our there we we business the kind of as internal We have We those, work the

Greg Konrad

you. Thank

Operator

Securities. from question of line comes the Your Tobey from next Truist Sommer

open. Your line is

Tobey Sommer

building of some on Kind questions. Thanks. recent

year years get in the of And results? the going reflect see how produced you have on future? an outputs comp, those in those? recent beyond, back in changes so, in incentive refine If do to And the and you if opportunity forward fiscal different changes the desired new sort to

Nazzic Keene

Yes. Tobey, Nazzic here.

I answer say would So, is short the yes.

drive necessary revenue are well. cash, shareholder of value those business that to of long-term think and incentive employees, on growth, is margin to which creation, So, the And expansion we structure value comp us if have senior drive three three highlighted, our components for strategy value for and creation. achieve balance we the the shareholder the as our drive just leaders changes we we all to Prabu we believe that when about our made, obviously, really

it’s of revenue believe the expense right the don’t want the to we want we at to drive don’t drive balance. two. cash, So, other It’s We profit and at right the expense of the certainly profit and mix.

very think balanced. it’s So, I

hear the several next that, of inside from drive company. week, have in next those you drive helps it, guidance decision-making – understands and three it heard and you to I team will this improvement And as across years. year’s all also look Our we the highlight dimensions will our

we it And And shareholder so seeing of ultimately to drive all are company, right the drive what’s value. right it, that. that with am pleased about of balance, behavior, you what’s very does to – the kind just reminds important and incentives, I if but model, having backdrop it’s think us the simple going of the a

will work We week, and we are you today, seeing when you that to are share about did we in we point. the we guidance. get Prabu, it are seeing know to future lot our help next as as I a of that see results – talking us this

So, anything you want to add?

Prabu Natarajan

for Nazzic’s the would add X in we be every changes theme the the Tobey, the game over underlying I team, commentary have to their skin leadership the one thing skinning only and the would of last other more made years for team. accountability

performance. permeating continuing the and having have step the seen that’s comp you up to more team theme, the incentive to drive truly so challenge And system inside to me, and risk embrace the and better

a it to be to made characterize that’s comfortable way if it. have uncomfortable We

So, was not over years. likely that of next to couple change the think I

business that will as it us You will performance, drive owners performance little of and on and continue we you a thread have to more a view the business internally is pull of see continue the actually and takes to operate drive mindset to what that the to matters the it.

going on We animating see changes the of don’t we ahead certainly, not our theme changes you comment Board here. will upcoming. But in as to are making. specifically are that the to an that We want get are

Tobey Sommer

you as space maybe And intel seeing the opportunities, and what military are markets? rank order and discuss follow-up, you. you attractive as civil, Thank in domain, could a

Nazzic Keene

an part space our of important So, to continues be portfolio.

military – kind with think I As seeing space increased of we we unrest are in aspect the sit exists. with the that today, global certainly of here focus some

other. and So, and but the in deliver they or are at many civil the we interwoven aspect we cases, can the see opportunities intel. solutions there, continue in In learnings not really one that be of replicated to expense the

RFPs but in it where three very fortunate with to our we a of from talent, the And on leverage at we So, those stage the all to can again, to is demands a have look drive balance it. solutions closely do ecosystem going the budget the working, world position as we obviously, the and and we where customers the differentiation perspective, leverage domains. go,

Operator

Blair. And Louie from your next question William comes from of DiPalma the line

is open. line Your

Louie DiPalma

good blossom Nazzic, and Prabu cherry and area. on happy Joe morning season to the D.C.

Nazzic Keene

morning. Good

Louie DiPalma

morning. branded solutions. has multiple Good SAIC Nazzic, Hello. for And

been the that XX-gene [ph] You Solutions Have accelerant. gain the solution you and partnerships have you data the platform. and is we what like Koverse did just an mentioned Ascend Koverse in these expect has with Cloud market solutions that more traction should of XX-gene? Nazzic, part DataEQ your branded for

Nazzic Keene

Yes.

is recognized But so the very many customers, pleased for have at bids. more for the have differentiators more Louie, we the So, that in me I in little hear new answer the we those position get to we how makes being of ones, cases, we of noticed recent been very the will am with you that with thrilled that. to market. have looking in position that that. and a so able strengthen some existing a maybe have, also And little pleased and the happy. bit we are opportunity – a bring But solutions to brand, all you integrate the solutions to short us public, as been that able we you have have about They have couple yes.

GTA So, XX-gene think that’s part a management. part cloud about key is we migration, Koverse about and the that as And well. integral of cloud obviously, area of an talk of you if our strategy and

able do it is exist of domains bear, that – and to strategy, we deploy best-in-class this commercial that to And part able SAIC with most it’s partnering cases, is very being that powerful. it’s customers have we the combination – our being know. to technologies So, whether in and to bring

own but don’t can what on we of rely integration we of do, know, really here. the you and solutions, but lot we seeing our a and you we that’s As are build best-in-class technologies,

little of new that sure can thanks to bit well, the means So, recognizing. a make when going of solutions. of will these highlight is And wins work but linkage types and key we we we for some that our these

Louie DiPalma

on two as Is and with been of FENS this million former the materiality FENS SAIC from the questions And and that contract a the seems billion $XXX program IT TCloud, I the of Thanks. contracts? in One won Verizon also FAA follow-up billion same takeaways $X.X $X.X the have the have Along JPMorgan. Cai part category the to contract. team

Nazzic Keene

Yes.

part So, it’s can through great, won team FENS very, I of are the normal know very proud Verizon you to as going be And appreciate that process. the we

process. kind we say get a the am until about proud what to say I we bear. it of goes team So, will the going I not of that brought and the But through deal great it all clear are to

We we to bring differentiation But are able and sub. are some overall team. strengthen a the

prime line to the So, in we delivery but role the general, critical FAA. role, play several tends to probably less be a on integral in top will than and a role

Louie DiPalma

you everyone. Thanks Great. See week. next Thanks.

Nazzic Keene

Sure. Thanks so much.

Operator

today’s there call. for your conference concludes And questions. no further are Thank participation. This you

You disconnect. now may

Science Applications International (SAIC) 3 Apr 232023 Q4 Earnings call transcript