SAIC - Earnings call transcript Q4 2024 | Science Applications International Corporation

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Operator

Hello, and welcome to the SAIC Fiscal Year 2024 Q4 Earnings Call. [Operator Instructions] I turn the conference over to Joseph DeNardi, SAIC, Senior Vice President, Investor Relations, Treasurer. Please go ahead.

Joseph DeNardi

Good morning, and thank you for joining SAIC's Fourth Quarter Fiscal Year 2024 Earnings Call. My name is Joe DeNardi, Senior Vice President of Investor Relations and Treasurer. to our business Prabu Chief Chief Officer. today are financial Natarajan, me Financial Townes-Whitley, Toni Executive joining discuss and our results our And Officer; and of our XXXX. X, the Today, ended results will XXXX that discuss fourth we quarter fiscal year February for

call where we slides investors.saic.com, These to call. uncertainties in to with outlook, will this that XX-K. of be risks filings found made subject and be morning, report discussion call. which information and be supplemental to unknown could from evaluating differ our I be known section addition that utilized to today refer are note you today's of in remarks. our annual our provided utilized Risk documents, issued the on Earlier also may management's a today's make today's release, and Please find earnings results to Form can and XX-K at in actual you we this on Factors presentation call. our prepared statements along materially of our later including SEC that copy results financial cause conjunction with on these to risks, Form a forward-looking filed on for statements should

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

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

Toni Townes-Whitley

morning our remarks and update the Prabu will more of review detail on in everyone full your we My our and implementation focus you, take and corporate call. results questions. fourth an to this a our Joe, good and morning our quarter outlook strategy. prepared discuss of on Thank on results before then will year

the we value proud customers favorable quarter funding and as on I'm contributed strong performance in focus delivered financial our revenue the to environment of to our providing growth. a

forma the pro revenue which profitable by of this X%, the to For potential highlights year, we deliver market-level full over business of rates increased growth.

able quarter, our by per by grew impacted we this, and were over margin EBITDA flow cash margins last very incentive by basis XX excluding strong. earnings were remains share to primarily in accruals that our share higher underlying and execution rate per increase the While compensation indicating free year XX%, points

basis point Investor flow in and adjusted initiatives XX to framework the profitable to expect growth cash continue We Relative maximize flow higher fiscal we incremental year while shareholder our business the at portfolio value. manage 'XX to now year EBITDA business 'XX investment free drive market-proven fiscal year talent and accelerating to provided despite development a growth. be free cash Day, XXXX key differentiators, investments EBITDA to to we and last roughly in drive and upskilling long-term

impact investment fiscal 'XX returns and to year with year meaningful this expect generate We 'XX in more fiscal beyond. in

more drive outcomes, detail these will Importantly, shortly. to which we appropriately I incentives align in will discuss

we execution strategy update our of spoke. Now since last corporate provide I on the will an

more They imperatives. a market more will contribute portfolio, is with government to X pivots our made future the to call, in months. next-generation As citizen national each strategic systems order solutions X efficient pivots becoming in the third I our earnings on the we experience, All valuable brand. the discussed team's and all strong culture areas, X quarter on leadership in and have by to of is our differentiated, more mission integrator these success our go-to-market, and goal pivots related war dominance, focus premier create recent of space. domain The our specific X SAIC ultimate progress against on fighting are our for undersea a future, these focus and the

our multi-cloud, customers. recently the of Chief Chief known are AI, Officer. secure On a hired data across systems that brand, our our of solutions innovation completed we focus operational our markets and with secure under first Communications on With a capabilities Officer effectively SAIC's reorganization for Officer Innovation and analytics success technical deploying Marketing factory our we've are ensuring pivot, focus and integration. with On digital new in engineering, portfolio differentiators new system our scaling systematically our Chief a packaged on SAIC's and

To probability we win we've support recognized between the our correlation growth increasing in innovation innovation fiscal year because a in is that be return our accounts performance this, our to higher ensure generate implementing we and investment while metrics solutions. This factory on leverage invested 'XX capital. important will new year-over-year in factory targeted

big contract greater metrics operating adherence to and new to delivery outlines accountability Our model at rubrics group the drive performance enterprise levels account and processes, required and our business strategy.

Organizationally, pipeline our in deliver expectation organic go-to-market, growth, free years. value and the and EBITDA this that to centralized the President organizational to and flow coming focus opportunities, team. cash Vice who On directly business Senior will and into is we to been them capture resulting in has our Our a operational. customer executive increasing investment leadership point increased our programs both sustained reports development functions, this reported our and

business development be procurement ensure disproportionately identified the appropriate. the and we've that our with model the business cycle, to markets and practice, efforts where along is high-growth new we a investments and enterprise pipeline in driving to investment bid. accountability talent our expect of and implemented we Operationally, to across factory allocating leverage consistent fiscal In earlier our innovation and development pipeline development further teams more result standardize to addition, customers these 'XX life In are business year engagement delivery functions our dollars our upgrade qualified to and increasing company.

off customers several meeting our strength enterprise can culture with the profitable, across long are time is months investments we factory senior our culture, functions, making provides commitment On deliver the the employees. in around customer evident to build. the and SAIC's align with with much over a spent government and Consistent of which over will and pivot I've valuable innovation SAIC term. of we our business last to development differentiated growth The base my our positioning

to of adopting coordination of cross-functional talent and customers. We on a will best one to mindset our focus practices to the and best sharing SAIC encourage the enterprise bring

accelerate to We for taking of providing relative design, of growth, of drive more outsized Board our ownership driving outcomes, to to for growth portfolio recently profitable recommended results aspire our Relative to and we our incentive Directors vectors. will and achievement. our accountability differentiated to share towards our the increased that in compensation equity PSUs leaders senior RSUs sustainable to our we encourage rewards

the broadened a of we or additionally ensure that return shareholder to are meet group. of results use metric as exceed incenting total our performance We've peer the

As growth maximize position these is to I the organic in pivots driving with, started force future. profitable SAIC to behind the

impacting to a lower-than-targeted in our continued recompete see years have book-to-bill. recent rate We win

improve capitalizing our business While capture we've our backlog growth, of been good and with to large work. with new offset retention on able that on-contract it's continued this existing we important

bid X.X. practices business our and with best and efforts we the more current improving rate to improve on capture development business across focused yearly first, are our standardize enterprise, overall recompete increasing two retaining our over While to by drive second, improving rate; book-to-bill we'll bid outcomes: selection our functions, strategic higher our specifically win

current satisfaction innovation broader implementing of throughout more process offerings. For to gain as-a-service programs, and and delivery. progression objective new process our customer feedback we We're and rigor to in are value program our additional the scope expanding driving

remains selection Our improved and our will vectors. processes in on influence ensure growth bid our our monitor, to strategy allow and inform to enterprise portfolio us

procurement Given XX the in our over next our business cycle development business, of impact months. longer results the we XX the to to expect realize to impact full efforts inherent

pro our approximately fiscal discuss will forma Prabu X.X%. guidance expectation for is growth our revenue detail, While greater year in 'XX updated

Now a notably contemplated base a than but still it healthy higher is this previously more assumes environment. funding off of and normalized

cash EBITDA from We're enthusiasm $XX, off changes encouraged which $XXX my by to benefit any free I legislation. XXX and deliver team. strong leadership a the share Section and to across potential per to of see of excludes approximately approximately expect million I'm with We cohesion flow start, new

SAIC building momentum delivered have off the decade. financial We peak X over quarters, the best last performance results has

our many you updated strategy, our April seeing technical greater differentiators on our New including XXXX of in innovation financial I to forward provide We Day. growth York of into from detail plan targets, to Investor factory. XX showcase multiyear a look for

and results turn the discuss Prabu over improved to financial call I'll outlook. our to now

Prabu Natarajan

will you, financial Thank fiscal quarter to revenue on results billion, Revenue My everyone in an results fourth and of strong pro in growth margin X.X% on which incentive revenue funding headwinds in was by our driven EBITDA trends, compensation quarter and labor was of new performance. from programs, existing and higher transitions. Adjusted financial given strong the X% focus with the our a reported ramp-up the favorable good and nearly Toni, call. quarter impacted a timing materials the updated forma $X.XX by on program was and on certain the of expected helped quarter morning and increase accrual guidance. basis. We remarks offset

share X.X% margins $X.XX of impacted margin XX rate. performance. due lower the share incentive basis for higher diluted aforementioned adjusting line the which this, stronger with year, adjusted guidance expectations. per in when in earnings diluted with incentive the by by was Adjusted for our adjusting tax continued was performance prior EPS For earnings our Full a in and with ahead compensation points a and to guidance of quarter year fourth accruals line approximately strong program reflecting compensation per accrual, $X.XX of $X.XX reduced

as rate to our Free and and was million our maintaining chain million for year good adjusted of cash of in conversion. see quarter to the cash the business fees transaction $XXX momentum costs sale related we flow, $XXX continue industry-leading in the other supply for

were 'XX the to close several we million in with coming and we growing of focus including X.X at opportunities quality overall straight submission the least cash a new roughly volume contract double-digit in billion the strategic to pipeline quarter quarter, XX-month in pro year We cash XX% healthy 'XX resulted a forma the bookings, encouraged book-to-bill a remain in delivered including with an of and indicated, proposal of and increase basis. space on our the force. process, of Toni in third improvement. FY years trailing by by the expect our our consistent in awarded improve volume increase and of U.S. $XXX submissions. XX% the per $X.X to free flow Net share As of flow Subsequent FY X.X approximately bookings representing a

Our healthy a pipeline opportunities and in ABMS, CJADCX which such leverage will areas strategic larger needle-moving data mix pursuits solutions. as AI, has and our of analytics and operational enterprise

focus As work. differentiated of Toni value more share building capture mentioned, profitable and more greater a pipeline a long-term differentiated is our outcome-based and markets on which

I'll now discuss our XXXX and updated year for XXXX. fiscal guidance

billion 'XX more over FY of a to incorporates represents year. outlook increasing to This transitions typical our in assumes a approximately ratably contract guidance approximately the outlay year spread organic X% an expectation headwind saw range forma the of our at revenue X% fiscal for environment we of are from growth than course We the midpoint. billion pro $X.X 'XX which $X.XX X.X% to and

growth the flat first see our funding earnings in strength on business comments of second Consistent organic new half FY as in the the half our rates ramp for customers. roughly single-digit 'XX more clarity we call, of our we expect with to on higher growth and last with low wins the

our by $XXX of and expect development increased function, predominantly in million at approximately underlying as discussed. the 'XX improvement an We innovation midpoint approximately basis FY Toni revenue points factory guidance partially our EBITDA offset margin XX and adjusted are of investment business as

earnings adjusted share I from effective note program. of expected in would impacts our approximately assumes earnings share of and and 'XX benefits repurchase rate X% to FY our a tax XX% every tax that $X $X.XX. per by share per an further is rate $X.XX range approximately of

compensation. efficiency 'XX We for million FY offset free increasing looking outlays and cash by flow to incentive to $XXX related to fiscal taxes to are with year range cash 'XX capital of increased cash million, million a working higher earnings guidance $XXX $XX and

We $XX expect 'XX share $XX in cash free FY per FY in to 'XX. share approximately flow in and free flow cash approximately per deliver in

year free payments flow XXX our 'XX cash from XX%. free any that cash approximately change already should favorable for legislation. our effective 'XX be a Section $XX Section 'XX assume and change expect and 'XX FY note fiscal made is a outlook enacted, 'XX approximately this rate of tax Our does to to could Should $X flow respectively. if we improve occur, FY recovery FY $XX million, our XXX million million, than approximately not would $XXX by related and guidance higher of million Please

million fiscal count In XXXX, repurchase to million our year-over-year. over by a shares, year bit share we reducing X.X weighted deployed average X% $XXX

about shares, of shares prices the substantial approximately our Over past over repurchased outstanding debt at we've over target XX% to reaching years, representing total our $XX. ] representing this while accomplished [ our leverage EBITDA X We X discount value. intrinsic million of a net

reflected additional solid value creation. for our us As options XX, cash on Slide gives generation

remain while program and market year. approximately leverage at million XXXX year given dislocations in to fiscal For uncertain to or budgetary and roughly to allocate 'XX, to an $XXX million in total opportunistic X.Xx repurchase time, we $XXX ongoing our reducing expect this election

is on posture execution the correct road we and believe with our portfolio capability acquisitions the our market discerning M&A our largely perspective towards for towards strategic shareholders. can prioritize that long-term long-term unchanged eye differentiate of a organic as is accelerate M&A initiatives Our map. bias our focused the We

facility our noninvestment-grade improved team I our with loan their X-year years. rate strengthens The profile our the Lastly, an work us to of outstanding managing X-year provides a transaction B. which and compared in on for X tightest our thank over the Loan to prior treasury maturity loan B, represented term pricing rated extension in want Term

flexibility the FY our I'm the I near-term to of financial performance to positioned with that us over advantage future. interest can for maturities lower confident we additional it potentially to deliver 'XX, respect proud in ability debt of has value has term. generated importantly, and shareholders rates More and sustain take in we long the our delivered am

the begin call over to now Q&A. to operator I'll turn the

Operator

Instructions] the question of first Your from [Operator comes Seth Seifman line with JPMorgan.

Seth Seifman

maybe hiring we making, kind model. the you investments over I business of investments not guess ? other you how in new that or you're How lot people questions -- or on CapEx. this the it's talk talked you're being of making, that that guys I in investments developing of kind that sorry, R&D a having think about But capital-light about couple technologies? can are a have investments I know or guess time you're CapEx is this a about that making These in do different making about are? investments think as people these and you're we what

Toni Townes-Whitley

Toni. Seth, it's

start me off color. that with and add Let will some probably

three have the making of we So investment that we're in business. flavors

investments across customer factory First, making people, in environments. into our expand particularly and our those programs some are we've be engineering. our AI, deployed systematically around around The some looking that can got capabilities our secure differentiators enterprise, innovation data, that also across we mentioned ensure we're primarily but digital integrated all our we tools our are to when differentiators that to

these. to identify demos in more to the are Investor a those deployed around making Day add give differentiators on environment. going this space customer to in that able to investments We're million on been we're how we've in some So color roughly $XX actually

And to Second development. retain our capability pipeline on area volume to high-quality as in been in but focused business have as those recompete, is strategic have. we only also ability our Obviously, we our both bid we our challenges bid not our current heavily well higher that business areas. for of bidding ability the have

existing and talent way investment ensuring a our in we development, a in higher we upgrading solution call significant programs all capture certain customers can and we create key So and in is in which we're areas. business with in investing bid what areas, that value and systematic more that greater in for standardized talent are around of architecting, we making talent

our the that's third then expectation And terms to and our and customer our we're to talent in implementing. the the have that customers investment that deliver with upskilling solutions that sites is our evolve the capabilities ability at with of individuals around have

months the that the our will we're our So up rates, investments to those over making rates satisfaction. bid capability, that and XX recompete next the our investments our business, win expect XX and overall, three those are in shore fundamental we customer

add? else to anything you'd Prabu, like

Prabu Natarajan

Toni. basis Thank picture, a little zoom bit out to XX big Toni and referred Yes. the investing That's points I the $XX of going you, Seth, really that Seth, I'm about appreciate to. question. we're margin. million

to guidance mid-X first We have we which this communicating shows to X.X%, poised effectively the chart deliver the that morning. operationally, consistent $XX we're what margins we're brings is new million with that in a Toni our the down guy earnings provided package previously and to about midpoint the that of that X.X%, at

think up else capital-light this are these operating on expecting really I emphasize, we I to change something important a our model that fundamentally of you is not primarily as to picked expense think is result investments.

capital We remaining on making we're is an investment. investment just And to return to that the as the generating light. important adequate I are committed ensure think as

we delivering the are investments. laser therefore, focused ROIC on And on good

are We out, for appropriate an we we're that into investments said, XX making as we now. was responsive. we're we months Toni -- XX the but making. right delivering to Hopefully, and are return ensuring And are that dialed

Seth Seifman

Yes. about like in priority but I areas feel to bid would the on. talk increasing you what solutions I increase assume value-added things you -- little means but could maybe us that a bit, that bit on of the discriminating be if to you is if I think you and also you maybe be a absolutely. both rate, terms want tell can is you bid mean, And assume I somewhat want bid focused then why, little absolutely, yes, follow-up, you the rate I about a as could assume answer

the areas increasing of rate, also bidding in idea how and you higher-value being that square And so circle? with kind of bid discriminating the

Prabu Natarajan

Yes, that the pipeline pipeline taking areas I'll ensure think reflects Look, longer-term one the that take the I out a priority got of first, we're there. Seth. to view we've

probably observed, range, calories, we're we X% recognizing our you chasing top to but at multiyear As X% we're vitamins. guide that holding are not the line chasing

win Our from one for generating differentiate portfolio therefore, we're as business because line the part top is portfolio and is market as think the EBITDA incentive the a delivering. in it differentiated rates, a good this -- is the right of we're gladatorial improve making And having to benefits cash that on incumbency that's which comp value the that also think top out but think as must equation your I candidly, rates more for actually EBITDA we're I the will the less Toni? focused that and downstream is of trying of improving line. you business delivering of get growth I kind calibrated between that the more of delivering this think sure well of why

Toni Townes-Whitley

on No, together think some I Prabu that's spent point that vectors. acknowledging time exactly is to putting specific we and identify growth where strategy a

a about sure about, we value talked that as talk a that's work bid make we fact, let. day Prabu to about contract in that we differentiating rate, recompete with first bring has about that also bid also, the from the we correlated is time, that is first want work right win talk the when strategic because selection bidding is, ability of So to our

years. rate rate. our expense and do to bid -- -- are we bid return to not the last couple historically, win at a bid over higher We volume and quite at dropped we, frankly, that so of volume want back of looking a the has our And

XX off investments time, pay we making XX why the will at the So be we're both doing the and same months. now, over next to we're will believe that

Operator

line Citi. Your next with Gursky of Jason the comes question from

Jason Gursky

in was you've Prabu you chime as got -- wondering if I just Toni, as could and some thoughts well. if well

losses Just has a recompete to kind that those you've you postmortems theme. a done and common seen losses? driven on the what Have of

Do this what's the a from we generally understand perspective, here? have issues performance to ] just is broke speaking pricing lesson a trying issue. broad Just breast [ learned that

Toni Townes-Whitley

and the differentiated tied want are differentiate to proposals that Look, our have. that losses to have in specifically our learned and various we -- going Yes. we're that across about and submit investments, make probably offerings on solutions we it's there technical three the we our areas when sure we we

that that not so technical as our And feedback gotten times volumes, have have know we we been proposals our at evaluated positively.

got we in to but we've sure clear, that solution is presented the across area that part make bid factory. not is only our differentiation also that one so all is of our And systematically proposals well and things

into of why the and metrics processes And forward really in the frankly, the capture area the how and bid of we quite one, put looking, compromise second has sure that is no not how backward enterprise across. look means in appropriate appropriate a team, our centralized terms our and direct the is those run understand. to systematic executive under approach which to one human, only that be forward-looking with and we metrics, that with reporting performance are making level, The for health standard -- pipeline at run standardized the DNA, I at

sure is, Look, you place set piece across a that delivering recompete, expanded we've are our throughout program. generally X got a the one of listening a we've customer of program, to. last we we've in feedback to sets the not And our When multiple day heard, I of recompete you a think our deliver make customers. understanding delivering win of think mechanisms contract. we're That's as

and of we our we're that contract delivery. throughout are the in we are the add make that ground the value so And getting expanding feedback on that to aspect to teams sure training every

for the Value the that provider into we're capabilities only all you the the future the into that business. business adding as-a-service solutions, that current contract. but are value are you increasing how throughout for offerings, That you not is provider ensure integrated

placing some bets learned where there? any that's mitigations. having in other some and thoughts and we've Prabu, So areas, those we're three

Prabu Natarajan

we at our win to that that here's thing rate than expect the great, more was is new higher be differentiated thing if they and we are Toni. work. them the higher you how business animates we rates, Jason, I much bidding That would only new are are would when looked win add,

is an business organization And some natural captures. ton of excitement in around of new that with a

think it's how do replicate recompete the spectrum. I that we across -- performance the

I less opt-in best of have is to practices. culture we of where sort think around have an that

for We expectations over are while that are and result replicating of and the new in are expectations changes delivering differentiation of recognize higher will number thresholds, those things for win have. making doing the we executing front. recompete portfolio we we profit, a of things across believe good while business to all sincerely bid but rates are programs really programs on time, we some that we of It's a that question do entire

Jason Gursky

Okay. as make Great. just I a And want I this. then to follow-on, understand sure just

given on here X% focus things. more count win risk comment seems that. still you're increasing that, that but the we're X% general successful would back rate having growth over coming first comment out things. end It is and and the to get XX%, a X% can moves the at looking yet the to two on by just be pipeline maybe to that you're better time you X% me You these on, a recompetes higher of in

you're able nice people ought that fulfill that of that's to and we of this good have the indication should better I first, kind you're successful And be scale? OpEx see really you in that. ability the then you today, So around you've XX% And to maybe leverage in? or got do and will come to win being Can they your And an comes than up rates pipeline, all are as to fast? some people want it at it. that with have just if you some been secondly, actually historically, confirm underutilized grow growing with end you demand place,

kind you to So all you happens? generally, What when margins do? of win How do this, what you then on just it? of execute happens

Prabu Natarajan

first Jason. on one. Toni and the part defer I'll question, Great second take the to

as we April, noticed, Investor the I is but and to And expect returns really I that obviously pipeline years. and the provided We've guide. the a we in expectation the topic 'XX out is EBITDA that of translate FY providing probably 'XX. first to you you as referred in held opposed growth will at making obviously, an That's think it the Day improvement On we're in in investments XX% of number part, our FY from the look, growth discussion assume make are 'XX on back we think would a FY making sense the to, to than comment higher that submission that seems improvement number. there cash level currently. The investments to was better

you billion. $XX billion Our we're we here to XX% explicitly pipeline, think FY in kind circa to that of a FY of pipeline and TCV is, as in the least by about But $XXX improving about rates at 'XX. are 'XX talking relative submission

EBITDA fair and just we've long the in out I improve term. relative to to performance sure me, our to you on so expect improving, And got want clear make to think there should a cash it's comment we're what that we're exactly what Toni? but I

Toni Townes-Whitley

pipeline Jason, of prosecuting demand, the SAIC. Yes. capital for a let terms human of positive question second increased part me the in of in new of way this a demand take as the function And all that meeting supply,

responses So of there's two really, there. sort

in of is requisitions. in days to open to talent First, terms talent a the position relative leadership our acquisition, acquisition, market, fill ability SAIC on and fill

our years. fact, in QX some last over In of underpinning in market the and talent to a well ability and was quite very positive couple our execute the had frankly, acquisition of lowest average labor we've attrition was company on it the performance

sustain the to regard, top have talent, get go our and from obviously that we think, that. talent I has retain in So ability market and to been proven,

to our all in we just my acquire need. in have our talent relative conversation got we to even heard functions investment various can't to is of initiatives in that business company the Secondarily, the we upskilling And one engaging that groups upskilling. that you is ensure the of across each

We to incubate have talent. that

And are generally areas. is in upskilling differentiation portfolio. critical so areas our our we in Those where upskilling align with

are a upskilling are So significant in investing actual and upskilling and that that support your human a from AI. question enterprise we on Those the area, capital. data analytics, Hopefully, portfolio. our answers upskilling the in cloud return expect all differentiation and in

Operator

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

Greg Konrad

to in the a But last to of mentioned submitted Maybe question. at follow that XX% an just in of least fiscal you 'XX. XX-month increase up kind XX- but on also year bids cycle,

Just you forward then trending returns that going maybe what that do laid bid aperture the the out, growth execute green is with how strategy I how of And think on number of expanding that market about much the that, as you after early about on? space and mean strategy? of versus thinking you you on kind

Prabu Natarajan

I'll of Greg, first part it Yes. here. take the

terms these the just less green see as in So about aperture, development. we space of

I the the pipeline core over years. last built is think this we've to few

are place they think bid I in actually things readily solutions these right a think the a to with more the we're where I inside place of factories. to maturing

investments I more adjacencies the So new way of the of would in made less say in where the being capability are the kind core way of inside company.

Toni Townes-Whitley

And we a addressable we've able market. significant confirm already been have to

are is just sake. bid can only and, the the need to about frankly, this looking as our bidding quite But High on way sort volume to, manner. we've sort a that high Investor growth will that's for strategic the got bid. ability to of those speak bids that We're is strategy and not going not we It's adjacency, we thesis. Day are to bid, bid's of show in monitor before what's So to to additional this to bid driving processes probably out strategic vitamins drive we routine any not lay in calories. look vectors bidding

Greg Konrad

or are the has when based the When compete where most those is the vectors, much is areas And versus aligned growth? more that the may market then where things or I how think about mean, is one that. differentiators, aligned I can those you about you two just compete? quick follow-up. markets those you think think AI of appreciate this where about going you better think most? maybe you it be maybe is think about Or about you on where like Thinking how I

Toni Townes-Whitley

that how growth we vectors a to capability, phenomenal both is appreciate are how because are what strategy we may are need combination express that's where a as of are set meeting that's where and or growing. Greg, that footprint to well for the also of parts capability market identified the and question. have but it The terms me underpinning. allows contracts there and of speak solution in it that the have currently built demand we customer as I of the

so multifactor growing. The there of -- equation come it a together, the And underpinning. market are they parts is that and are

is for vectors. And so equation come to growth and a together, they it identify us multifactor

capability, we that one our a cloud when secure the the One cloud about have fact and the treasury in our you of the have of one fact and have of the is think cloud differentiators we an cloud we security Defense, and So brokerage offering and cloud, that contracts us. civilian Department that largest we're Cloud at market only the multi-cloud, area contracts of there unique in the of of key differentiation in not largest for

both government. across markets the of and defense fastest growing civilian federal in one the also It's

pretty it are of And those so growth engaged in equation is get vector. and opportunity share areas. part about And that we how excited of the why our we that's to a take identify both

Operator

Your with the Bert from Stifel. of line Subin next question comes

Bert Subin

the internal that of point of be new sort about strategy. a the on think meaningful focusing contributing multiyear revenue. from government just where process the we to If cycle initial actually it's solicitation life winning to can investment contracts, Maybe a

payback we to I as perhaps be bit accelerate think ramping growth projected positioning leverage a lower period more buyback that is investment, couple as Prabu, out. With of a assumption and be what of in to ratio, acquisitive mind, function return? of So little about SAIC some a that probably seems internal is lower contemplate a years a that internal the of to

Prabu Natarajan

just maybe moved question, view ago, Great had million over of materially. up fewer not buying I to a reflects the that years. Look, math terms And I therefore, we but that repurchases, Yes. Bert. ultimately the we're considerably. contemplated multiyear think couple we we next in than -- kind of are provided the price guiding year think shares of the relative $XXX and between $XXX stock And has share the

the share really is to strategy, a problem price and stock So change we're to means think No really the I buying -- has think shares. the but just as repurchases. big I that reacted have, to fewer it fact this has, good me, as the on but real picture that's well

below this leverage -- business just there time at the run time I said will about thought dry points signaled in where target the points terms In we've of of above this to where always it's Xx. points be we've always powder, and and think as we're what's we're at? And we just about Xx,

are there the and assuming the just improvement business, down And that generation potential And a now of that's we the think capacity for call I reflect Xs. of business, cash given right to, let's the inside mid what levers charts natural coming the in deleveraging portfolio. it, happening why the mechanism just EBITDA is is

that M&A company that use we the for there bringing simply either is appropriately are to proceeds are shares dislocations or to focus of continue if major to to Now means tech-enabled the in the in capability. we more market us extra where capacity our buy see the ensure that on differentiators valuation

create the money things a on innovation for the factory the is we're of of we investments don't we available the to to lower inside of effectively second make-buy have make a inside and if believe the One laser-focused a color innovation decision. company, at That cost that is that externally. that the different

that think staying we decisions in M&A I decide so real no the is. me, acutely on But big change can the calibrated the to ROI fundamentally, make-buy So best where Toni? strategy. focus is real

Toni Townes-Whitley

Correct. there, No, I you think Prabu. nailed it

Bert Subin

was that Yes, great.

the good you Toni, asked NCAP some on there. Just and color gave really quarter, about last contract, a follow-up

as now NCAPS I view at through we your curious, a how and think coming in in here be I'm goes win. that percentage are of your that's think weighted FY sort probability of to And just factoring about expected the you just months. guide 'XX, those finalized Vanguard?

Vanguard drive outcome you way the anticipate, you upside if is just evolve, and looking than a so to do weight turning you're better And to those NCAPS at here guide?

Prabu Natarajan

first, Yes. NCAPS, and really a picture, I'll add we're Bert, I'll take big waiting. so -- that one

disruptor this pre-award of than NCAPS, did be but some midpoint As not. folks for likely for the of a and And potential year from a know, NCAPS NCAPS significant provided at guide to calibrated guide that process. disruption not NCAP. X% a for X% the disruption. we is protest X.X% we way on FY of to our outcome candidly, Clearly, on assumes more the 'XX FY feedback on an waiting negative 'XX file right stays amount on now

ago the ramp win year into announced days that that as couple and which 'XX. last IT of over is year. we the frame we start little And began through ramp time a will that by Obviously, as the other fiscal of on year. X beginning growth this think to total will derisked we AOC One uptick in of DTAM about thing got continue the the maybe to on point, So first and head X, FY of GMS, inside this considered as X% program just very rates QX the on first course that picking we've left DCSA we T-Cloud. large, revenue of of revenue the ramp probably most certainly would year, But T-Cloud is of well to recent as of Bert, up I quarters the are ramp year, That course, some company. significant last

and we're tos So on reflects the are the headwinds outcomes might of we as potential year well reflects as here, comfortable appropriately to and X.X% add potential to to tailwinds that the me, I outcomes the negative guiding that range on X% X% and for evolve and of that this think outcomes Vanguard the I as all and fros about NCAPS.

a -- here. more color hopefully, So that that little adds

Toni Townes-Whitley

would thing that relative only and new, we is ramping on are And or that are losses. to Bert, great. acknowledging that's think to I understanding any we recompete And add as challenges I think I headwinds derisking the

implement works. But have up We in talking correct the and benefit opportunity a work, also that shore for the to are way we have existing in terms recompetes. you're start cycle the right absolutely to absolutely differentiating on growth XX-month of government we trying of bids, the -- expectation, new procurement about on the on-contract strategy our here and we for portfolio,

you it is when the so and by our recompete can win and adding rates come the what more that get value think in And existing delivery. growth our that existing we with our belief programs the back up contract can about growth for contract will upon with value creation we to implementing that recompetes, expectation, traditional customers our improve on strategy that underpins our

we turn, the absolutely business opportunity, So current have do XX-month we with have our new levers program. but

Operator

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

Cai Von Rumohr

Yes.

update give X then with to on us you the bids last quarters? some of maybe down? where environment down and sequentially are next decisions terms expect sort you of NCAP could color lastly, quarters? kind your couple awaiting are of the -- decision an sort the come gone you bookings we what see in So where of And book-to-bill And maybe they on of or because when in you Vanguard

Prabu Natarajan

sure go make a that's let back. them please multipart, certainly don't, I me and remind me a, Right. I'll get if all. And I

last will the as lower. years Toni of less is are adjudication, level And On mentioned, rates think, we higher be of higher I FY submitting reflect expectation couple the in been have that final will. over course of rates, submit you the if should think that submission and the a bids in 'XX, I waiting

So picture trend book-to-bill. we flip do expect year. to big Really that this on

is observed, that X.X aspiring range to our under X% probably in would We book-to-bill Trailing to you grow year. X% above be X.X. As was a months book-to-bill business under XX expect to X.X. for last that's

sort FY 'XX the for is of X.X of in that range. think objective versus X.X So

And we're then expectation the process 'XX. over plays for is me FY of for book-to-bill to the going this finally, next NCAPS, course that how quarters. to see on So several out the

astutely customers the here. previous the an to can revenue disruption would we incumbent think and I I to an have 'XX question, FY as as minimal guidance providing as position we're responded in in FY our on how relative procurement as But just we've revenues significant middle and cycle Vanguard calibrated our the active that expect to program it procurement complicated will we impact of is, a probably not the process given I suspect evolve 'XX and

I hopefully, X-parter. the captured So

Cai Von Rumohr

milestones? one, a it's when guess we are decision, the Vanguard? should Actually, year-end? I be question. were were And multipart what I are decisions bids missed I on should awaiting to forthcoming decision represented What milestones? but what When guess, expect there then expect, the the we the at

Prabu Natarajan

part, are on the awaiting typically individual I that mean out call Cai, And first suffice... we programs Yes. don't adjudication

Cai Von Rumohr

Just the dollar... total

Prabu Natarajan

any adjudication. that And the at pretty where the been terms that of historical healthy Cai, but we try amount awards just in in number, find waiting with pending of numbers certainly it's are adjudication right have point can we line have a and probably time, in

it. frame. some most QX, year. I on we necessary So in question, the we'll number, timing of the but depend say would to QX this biased will to is of precise Obviously, terms and would QX, of you the some expect hear more if would of I this environment, a government not we're QX frame expecting in funding get the where for say, QX QX, time on these time

Operator

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

Tobey Sommer

What's the units? financial with from important structure business the expect most you outcome new organizational more to that derive

Prabu Natarajan

chime please first part and take the then of in. let that Tobey, me Toni,

inside part what animated on simplify of the desire picture, org think layer groups. so reorg on that could to big I the perspective to eliminate Tobey, we structure the was a going really the have a of So what's business direct

the part to me, get customer, to was that probably that last of reason will. the where closer what And the to really closer that was road, reorganization in year. the if so to most reason was animating the of important announced rubber was QX And the you we hits

most single over the say, always incentive long of are metric, our what I comp metrics look, time. to we deliver of terms financial In reflecting want periods would important

flow that dollar and cash shareholder growth, EBITDA free is total return. And

business additional term, then TSR. EBITDA out are financial EBITDA think converting and but I've what I get. of cash those not important drive to long As It about of what to we're that the organic think really is single hoping me, and growth? objective a driving the I I think growth To higher metric, from really delivering is given

Toni Townes-Whitley

is This Toni.

moment. give just for me Tobey, a view just Let you -- operational an

we to be and with completely -- I'm what moves and two to outcome. that growth perspective, were that the BD and on Prabu term, the long organization. quite both ourselves by derisk on the rate. of consistent The flattening towards The organic are right there moves the our to the function addressing compound one ensuring there collective frankly, of So are those just of centralizing shared. supposed organization recompete

not is that at our spoken before. a traditional drag rate business win becomes to recompete XX% A on have we the as

recompete are responsibility. during team the to second, our in has that point way capture a to are derisk we and value the process delivery And with direct, executive have standardized function; happen to was flatter and of portfolio one so that in to me single drive address we to the one, so to of issue systematic is part the reporting with ensure this to directly reporting bright that groups those bring light organization direct accountability flatten of make and sure differentiators creation the organizational program across deployment and the that business of leaders and so to a to that two accountability to and those ways: in that were closer the BD each organization customer driving

made. are recompete delivery. The the value standardized ground changes a issue the And bid organizational the creation in I've on those and ways address two and that to two are that program capture capabilities are reflected

Tobey Sommer

a you the value margin inject lower on to see industry or drive order you As that the margin higher trying higher you're keep and same that's more average, encourage it work to bidding hire. migrate of value towards in seems into me work kind where the can to tension the if that margin to also there's margins even

the frontier Are margin to success to or we're more work or on margin trying of newer on lower and that value sort sort success having out trying to where defend drive stuff inject the value the of with higher? company distinction to work the more the less that you you're higher push or

Prabu Natarajan

run take I'll Toni. it Great and first And maybe then at question.

be the of business. recompete through margin go out new -- think of when look, luxury holding can the don't sanguine cycles. repeated have think we we And So improvement we margins I I nor focusing on just about

it's a both. of think I little bit

we've the think the that business business on the to that to front that done accretive focus of differentiators is are growth in I what is on the future of line new to part moving top forward us relevant generate keep areas the necessary allow SAIC.

So the it. way to approaching that's me, we're

a on How while a I of how we price the it. bring about think probably out program? solution right do by as do on within a deliver confines to couple ways we actively cost a now How with deliver period effectively are the work, and at a of performance we getting there I fixed me, program? costs? So we're solutions while in the plus think, program focus labor there's service is we as a going we're think do cost we innovation different of recompete replacing

other recompete identifying adding we thing are thresholds right are bid, sure our the value The is to over make we period at making course we looking performance. focused of win the absolutely on for that doing things we want of that rates. are To sure the

or higher pick solutions what operating as delivering deliver. the other. recompete, rates one of we more a actually this to But have it's focused we're to think So on in hard but margin

for doing on we I think companies both. both. And to do think but we've approach got have are I both, a different focused

Toni Townes-Whitley

to specific as that the I that ensure agree measures on increasing margin look, on Prabu -- recompete to fully business we side, And spoke is that retain. very the

making labor has reskilling will bring in then time. increased on recompete, over element an you the value that where a is to we're tie labor If for investment

win recompete of win that existing bringing contracts investments rate. new made, are would that business the side. significant a and business, that ensuring those But portfolio we're that I with win in time able being the spend why of of and going of given investments indicate on some element are Another differentiated and value industry the to rates program more business. we we've ground that side where the We're clip up that our our that amount in existing bringing to upskilling we standard you the getting our on it's into above new are, making bid the might to we of suggest

Operator

from comes Strauss your question final line And with Barclays. David the of

Joshua Korn

is David. This Korn Josh on for

So how ask you see which just wanted in I think to sort remarks, I been before, really during markets like verticals you going I forward? prepared the don't mentioned so for you border, differentiate new think has of plan those to emphasized

Toni Townes-Whitley

Yes.

Let me I imperatives. speak to them. were identified. five them national were that We there believe call

of think an You organizational them not. don't they construct, are as

our with In the our fact, what customer, they customers, our represent long-term are imperatives of engagement for are efforts country programmatic the customers working. the the that

we when in What we're bid those ensure strategy we our of do our business in in we good build terms outcomes trying are we how towards differentiation imperatives. grow want to driving to and to is that our each portfolio, selection do that across of

one the example, undersea capabilities that is fleet to in we undersea and for So our that the of speaks contracts dominance have naval U.S., space.

We are work doing space. in that

going continue We in grow forward. that differentiated. are space work to and type We differentiate want that to of

and how we position how engage and investments long-range those and mid- customers for towards driving with are we directional more those they're So that outcomes.

Operator

session thank will This joining. the conclude call. today's conference for and We you question-and-answer

You may now disconnect your lines.

Science Applications International (SAIC) 18 Mar 242024 Q4 Earnings call transcript