PRSP - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon and welcome to the Perspecta Second Quarter Fiscal Year 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Stuart Davis, Vice President of Investor Relations and Strategy. Please go ahead.

Stuart Davis

to public earnings company. everyone second call, welcome a as you, today's conference quarterly our Thank business Mac our to results, CFO our are and Curtis, CEO; here discuss and our John Kavanaugh, momentum forward-outlook. financial website, slides webcast being call. earnings investor of find is call will where financial use on also presentation Today's you'll and we relations the portion our that release today's the for

known that call of unknown to Turning please this anticipated from make presentation, uncertainties X and to can and during the actual we to are forward-looking that statements Slide that note will results. results subject materially risks cause differ

For filings and including risk a XXXX. uncertainties SEC XX-K Form to for fiscal our of full our discussion please these refer

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

some Slide Slide deck financial Finally call for on slide At the the as includes provide that today's The Mac, my we to most will non-GAAP measures who call shown it's GAAP to reconciliations pleasure X, information investors. this measures. on comparable believe over turn to will useful for closely begin we time, discuss X.

Mac Curtis

Thank on Like the On call, a earnings that Stuart. our across quarter in all behalf you, second focus team. performance you on pleased did messages. call. us board. report to few Thank strong the of for I'll Perspecta this afternoon's joining I'm the entire I showed key QX operational

interest the confirmed the are road I investment with Now messages community. on and to time keen four these and the recently John of that meetings spent some investors

that model the leading financial second intact guidance. upper-end of quarter First, and from our results our previous financial demonstrate towards the is our

and focus major a been on we're has integration plan. Second,

merger forward as revenue we and NGEN signed the is sole in engine patent synergies already forth. our us We're seeing recompete the in look source extensions track. contract on winning market. from portfolio to differentiate two Third and We've innovation new the

little on of a Now, let each messages. dig these me deeper

excellent tracking First, on exceeded was margins with our performance From model. was pro and top adjusted and a sequentially up industry X% Bookings was forma healthy a financial EBITDA flow new is income. Revenue business. our our mix leading adjusted up $XXX financial year-over-year diluted XXX% EPS basis, of XX.X% free X% well or again with of well to as cash X% were up results collections a book-to-bill and of and strong times our million adjusted our bottom, year-over-year again expectations. adjusted up with of to X.X X% ratio of adjusted EBITDA net were

fiscal of our the outlook first positive as XXXX revising all result year. a metrics As We the the year performance were our of upwardly of for a the remainder guidance will John for describe through later. half strong year little

the Second, two we've of We're well. but proceeding couple We're hard is key of on we and good making where progress fronts. thought be. integration work, number one, prepared that to a to and employees. to value developed our proposition to two, us Number our factors favor. execute. And prior close makes plans working integration in generally ahead quarters Integration got is we'd our months seven detailed in we're all sense for about we customers

success on and the and side, delivered necessary color. and but of incentives more incentives retention, population leadership The and culture This goals. integration me had most stock is recruiting, Our well people performance to results. let against compared the we're development lead making progress. great doing revenue important primarily delivered be will Short Long-term in to the are aspect term provide consistent culture. reach little with retention important programs and outcome cash of financial reward business performance but year are will incentive to cash and top and driven a EBIT received programs unified will development create build free the create the a success, better flow adjusted workforce heavy three to and should define selective, and that indicators compelling We're incentive been results business performance based lifting on team We've The the are similar incentive peers. diluted more adjusted based of our will our great performance employee based is and programs established units perspective. our including long-term programs performance. for goals. by a designed for as short-term, be for for EPS performance our against Overall, people more that adjusted

Later talent are This program clearly head and that interest. that Perspecta XX,XXX marks encouraging, attrition today We front the open shareholder the with this another objectives. have and aligned enrollment quarter incentives top talent plans we'll normalized. benefit is first our growing, step important retention been comprehensive new with establishes benefit approximately in attraction Results month to cost competitive ended talent count have support is and meet on a and Our employees. destination. making

million on values, as mission office an $XX estate good and part cost making our committed million attractive track back cost culture, to We're systems. to expect core that integration synergies we're make Our rationalizing to employer consolidate on over employee In and areas, of positive to plans Perspecta and other of and we footprint of working realize delivery progress time. trends $XX sustain focus remain aggressively planning. our the in savings we fiscal XXXX the real

the going August we've extensions that said sole the of source two we is signed Now, call, take May it third, through us XXXX. Since be NGEN to about Day. would May Investor back where

consistent across and with a to forward. we execute move customers is in that our current can Importantly, relatively continue the mission and network the rate, means interruption funding without run which contracts their to can continue

known for be Integration NGEN separate are into As we X, December Services one for as to known in the proposals at or as and grow Management Hardware SMIT two will respectively. EUH both January Request and indicated other split recompete and procurements, XX now Day, our Used due End compared Investor NGEN-R Transport are scope for for out currently SMIT. and the EUH and and proposals an

customers with convinced to our and months and the our respect few us this will the impact customers. Now on to Navy best accelerate excited Corps value our the greater Corps, decades. contributions they modernization and program, to network enable several of of I've move I'm recognize that team the the the our transformation last spent we're the the numerous but competition Marine over last and much meeting about recompete, provide Marine we Navy and of throughout

bookings value that portfolio, innovation as networking, Most fourth, advanced see show. and expect representing strong the the quarter, a times. beginning book-to-bill for XX% to importantly, perspectives, Year-to-date the of the times. quarter results for the new second revenue synergies or Of ratio second security they Bookings More towards business. were IP, of rich is obviously the million $X.X the bookings quarter. are $X.X we billion And they book-to-bill look totaled future. in agility, capability cloud X.X XXX

first XXXX extension one-year an of Funded the $X QX was The backlog was the XX% of quarter quarter $XXX which Perspecta’s the additional end of of second result a X% NGEN eight-month XXXX. be business to award orders of backlog award. the $XX.X up quarter will extension. was billion, the year second Largest compared sequentially. increase signed million fiscal at in billion, fiscal of was end a the a at quarter As

million the major In addition, $XXX center, manpower defense had and XX% work. applications of contract a we about our support be infrastructure new will expansion DMDC data on for a with award

new technical indefinite On delivery, the last quantity the support about call services you postal with U.S. I contract told indefinite service.

quarter to we're win security vehicle. to work existing and some our also development monetization. begun this this able of area new all work Now, over We've applications and to transition that in in

So, for strong. remained the forward outlook bookings

three We qualified growth $XX have already for including billion and pipeline of majority and pipeline The proposals business our decision. of over represents a Perspecta. vast of new submitted billion opportunity awaiting $X years, a robust of opportunities

will the DARPA the on defense in spinning, and of new type Perspecta centrifuge Two doing. one of area especially work agency of capturing or labs drivers research the that keeps network this we're the the from innovation awards Now, of projects and from recent illustrate work advanced security. be cyber

critical in connected configuration automatically and On for infrastructure Internet system we're functionality use multi-platforms. in ConSec configurations developing vulnerabilities deploy network surfaces. clear technologies needed configurations the addressing and or of first generate, applicability that program of security The and deliver attack and subsystems and The the must has to support components for systems the things. enforce technology while minimizing performance of

implementations will will labs of intellectual that and us process to concrete property from of and large-scale that hunting and a by chase translating techniques supporting second, our the using innovation we're components program. broad-spectrum and characterization can dynamic of the goal On In threat possible perturbation defend hunt are and the develop accelerate scale detection The evaluation. summary, network or a planning, data a into differentiates develop distributed is threat our genetic adversarial variety sophisticated including attacks. markets for real end driven cyber growing high-level time from competitors. Perspecta analytic description tools chase successfully set cyber design

can stronger, worked day, more for creating more be proud all beat a coming company has delivering together of. company we Our customers. passing that on executing to a entire unified With were more hard and success we up missing each without stand team a mission our efficiently, new closely,

Now financials detail in John will through and provide outlook. forward go the our

John Kavanaugh

I'm Mac, second with our extremely results. Thanks, afternoon, good quarter and pleased everyone.

groups challenges an with hallmarks market believe both at complexities and business purpose, across I true company entire which discipline Our are and the Perspecta. high the level. and to of of and risen We the of acted performed integration urgency, exceptionally has functional

In companies. Now through beginning of three Slide contribution we results key on a X. and from drivers quarter all I'll legacy full financial had the go QX,

the sequential pro assume fiscal refer and which of periods, For year mergers XXXX. year-over-year at comparison beginning forma spinoff the and I'll results, to occurred

the periods, adjusted forma for provide current exclude costs baseline either ongoing past For directly pro I'll also these believe periods. associated spin an integration with transactions merger or across performance We important and the results comparing process. and

provide Our press release results and was Revenue the the up from forma our XXXX. strong of pro community investigations from fiscal quarter federal quarter GAAP. X% our from X% the adjusted X% in billion, and reconciliations intelligence second support and up for presentation year through and growth the $X.XX year to was background This fiscal slides intelligence XXXX with businesses. performance which year-over-year, segment, increased of defense first driven quarter

was originally we and fixed than price a up contract million successfully large pull revenue XXXX completion to revenue of the completed margin Civilian Center. $XXX forward engineering year-over-year. XX% due large in of adjusted improved classified contract quarter, care Space $XX compared QX. December was of XX.X% health which decrease the During revenue year-ago decreased X% to QX earlier million Kennedy the the in EBITDA from as anticipated, successful which the support or from EBITDA to resulted $XX a million, adjusted million forma was $XX pro for XX.X%.

fixed-price gain adjusted merger XX%. The a even and Contract cost from performance We driver execution. quarter, our contract mix adjusted service richer committed the a of adjusted moved operational in In Excluding right efficient an result envelopes meet within second XX% EBITDA margin. our track of synergies margin of primary our we're forecasted sharply to of towards We're the tax. quarter-over-quarter all was range industry-leading efficiencies. middle one in our the steady of We divestiture obsessed of of to mix disciplined the being blend EBITDA our the providers. around QX, is to on cost and lived most and strong EBITDA the work. cost government commitments is

XX% As cost-plus. were contracts total our XX% percentage of XX% fixed-price, and a and time materials, revenue,

amortization totaled the by out mix price QX. direction long-term, the EPS. on amortization, $XX revenue $XX which of in Included intangibles slightly adjusted is the contract in acquisition-related is was and in will income mentioned. and to expect of continue adjusted million fixed fixed But I over diluted million the price. that D&A pull backed Depreciation of quarter's program net This we held a that mix move just forward

which earnings QX share a on tax adjusted gain. adjusted than assets $XX diluted QX price million These the controlling the and XX%. our conversions, of up stand-alone XX% X% fixed. to for executed should then, earnings excluded At Adjusted This risk. the of EBITDA, the divestiture $X.XX expense rate about corporate depreciation of as and integration interest year diluted of from year-over-year share expense have a share XXXX transaction, per To primarily fairly includes a $X after of government. between $XXX remainder additional acquisition-related diluted swaps applied year sequential timing fiscal share in quarter, XXX effective for was We which resulted be interest of lease our or the expense the end total all expense, purchase $XX adjusted million $XX remapping of million income net also company. of Interest count for incurred lower out intangibles and Interest steady totaled and phasing long-term less of of of the debt our calculate on of $XXX because up and $XX and leases. were amortization, amortization, excluding capital reimbursed per were by quarter also million. metrics. per adjusted rate term factors increased Most capital of million we we expected is against QX, restructuring million Adjusted earnings, the in Since million. loans for the is by X% million. restructuring accounting basis,

Turning X. Slide to

second from million the of or cash million cash activities generated XXX% income. and we operating flow adjusted net of During $XX free quarter, of flow adjusted $XXX

XX Looking which with capital includes management our at between with and lease IT cash within high We're from board. payments. to was lead high a intensity primary assets margins the quarter, the higher metrics outstanding these XXs. capital program, our the difference benefits two target was Days our is EBITDA high to customers. relatively managed capital any strong improvement days. Working mix account $XX the sequential adjusted capital excluding across quarter, receivables of DSO of enterprise of of and the consistent factoring million delivery, range services stickiness expenditures, operating for were the A can sales performance mid very the days,

As were prohibited we you QX. shares repurchasing recall, from in

paydown, This with balanced debt dividends. execute quarter, repurchases of and to a plan capital we were deployment mix our able share

cash The we debt, includes the quarter, paid are figure for and million share down settled until the that purchases million in not $XX million $X quarter of second the cash, after $X term shareholders, shares. to our financial In quarter returned undrawn share in of $XX of million $XXX business. in million quarter million of ended revolver repurchased manage all, $XXX second our of and liquidity affords million statement quarterly the reflected billion million repurchases. and During not we loan of We with capacity, of in capital $XX $XXX XXX,XXX quarter $XXX flexibility to dividends With $X.X the flows. the substantial in leases so million debt. repurchase total were end us

guidance forward Turning our to X. Slide on

previous revenue fiscal to from guidance We pro EBITDA financial outlook. the expect positive strong near margin forma our be guidance year are Enabled billion. the guidance expect of revising XXXX to the compared our $X.XX a to adjusted by taken XX%. reflect million to of bottom our forward midpoint in now high gain out end increased now to million. a results XX%, $XX we to pro and year of QX, We've revenue new We for $XX to that and end XX.X% the billion be by a first $X.X previous contract XX% range, in forma part the divestiture half the

previous As a mark taking per our out expect $X.XX adjusted pro now of the to forma diluted we to $X.XX bottom $X.XX. of result, again, $X.XX, range share earnings of

free for pro XX% adjusted year to adjusted guidance we're from for fiscal forma XX% plus XXXX our forma cash of income. pro Finally, increasing flow net conversion plus

QX the coming be quarter. in with relatively year, of which billion should net of is Similarly, won $XXX free the billion from $X $XX both alignment. submitted To remain decision, proposals pro more increasing business awaiting half pull income. little and business, backlog, in new by course, provide already supported rough second steady levels the the with The the $X conversion forward margins consistent both Of margin should revenue fairly the EBITDA flow and a is will and color, of current segments. and million billion adjusted the new segment back forma cash in adjusted of guidance increased into rate the benefit overcome adjusted our

XXXX on of fiscal based year multiple In flow, fiscal of performance QX, timing adjusted year. throughout year schedule forma of from of the pro flow, the year a prospective legacy cash and down in The especially more income. net of performance, had million tax cash companies clearly outlays. which beyond, and Year-to-date, uniform free adjusted cash pro will tax $XXX the that half payment forma across for The payroll year back we've the for generation ends of XXXX. should XXX% be and we've generated gate. outstanding fiscal As out come level is the create lumpy

Finally, from filings us of number a you'll tonight. see

X-K As usual, our press release, we'll XX-Q. and have the second quarter,

to X-K put into previously the shares the we our S-X putting In segments. FYXXXX we'll S-X are as questions. to last two XX-K, that references Capital, Veritas ready an we're take register Because addition, out also any now disclosed. the for Operator, an recast out

Operator

question [Operator now The Wells Please begin comes Edward from the Caso Fargo. will question-and-answer session. ahead. first We Instructions] with go

Edward Caso

good ability another of you talk have the to you they a the too that In flexibility out as little to bit Can margin promises Hey, targets? other you words, you constricted whether box, on and hit feel the gotten company got about would you've solid hope? congrats here. here growth grow enough quarter in evening your just comfortable

John Kavanaugh

question. Hi, the is this for John. Thanks

Again, strong So you feel yes, again QX good we performance. this. saw about

all growth. to business. are continuing accelerating We It's about invest in the

end the QX, again, end right the of range. the performed and in good expect the and raised range year, So the consequently, high of be we've of now, again, lower in at half first have given feel how the to EBITDA we

Mac Curtis

is this So Ed, Mac.

of XX% you at pipeline, when price, looking certainly on is pipeline to the XXs, about about supporting business the what we're fixed in think And I look When you look and to now. at we the bidding it, It's we John. upper think the add XXs. the that. operations Just at the think

So of about we're on the before. seeing the trend focus We've kind and talked that firm fixed more price.

growth. constrict we comfortable we I And not to where the so going feel think are,

In forward on. starting fact, go we're to in we're to that fixed as more going the deals we looking bid at see realm price

have So enough I we think room.

Stuart Davis

as the And money there more growth synergy bit little is play, a John we'll say, in the we're that which to cost a delivering means said, this of like And keeping to but as costs invest part our absolutely as stable, are some we're, business. still not have John margin of relatively savings. the

Edward Caso

My question a maybe right. forth, other end talk work, and of some All ball capabilities. Amazon Can cyber, for about IT, crystal staffing competitive is it lot of is little Perspecta arrival? does you on on the as market ability, the market the talent so today, implications highly high skilled a

Mac Curtis

Ed, a So that’s good question.

this I want one a is it highlight incentive doing because wanted we be what you that's afternoon about because we programs reasons think call they environment. in want competitive to destination. in right why we're the the lead programs of here, come the the have talk with We've to programs, to investor business to you have don't talent rewards talked the succeed. about people, We to

that those investors sure to make And do we requirements. I it's to And long-term and kind bet with that, wanted again, to in the why can with with programs, and also we've right to themselves. And are so to lined talk think we the we we're up discussed now. got programs. some willing about of that's business levers incentive incentive that on people get it But short-term has important play

And require spend but stay the having success, to that to to time that's about I So some to that regards wanted after you with we to some I think to it. talent – look have we're hire. talk look we why

put it Amazon, mean, On that It another City. on everywhere you on puts put XXX. stress adding stress back people announcement with when stress about the into eventually the system. does Crystal XX,XXX I think

deliver it the the the understand I roughly together Ed, the the about mission. about push kind In interesting is in out is able talent XX,XXX of Because understand, and And on those of we've of think government to really one thing that just not right industry, think to those stress employees, to kind DMV. customer mission. it's I system. analysis, going the the is the be XX% done, that So are put basically

cleared so And for is. XX%, XX% therefore, that of us, workforce. out a And it's highly pretty

the doesn't on going Now that. not stress There's the player we mean another it field, get put to in it's system.

I've So only we're wrestle near XX you said looking career time Crystal at City of Dallas. with that. I'm glad It's how outside miles probably in I'm my

So work-life community balance. – the because in big pretty does does the a play – that role

mission So on And we that. system, think again, that have I the combat stress is to how have realistic really this we the about but be thing we book.

Our it the mission is. in employees whether get wherever arena book the it's classified or

and stick just to want stay just it. We a company everybody it we to employees and get have So have we to work want where come on our be so after to knitting. stay, – to

Edward Caso

Great, thank you.

Mac Curtis

Yes.

Operator

question Please Joseph DeNardi comes with from next Stifel. go The ahead.

Joseph DeNardi

Hey, everybody. good evening Mac…

Mac Curtis

Hi, Joe.

John Kavanaugh

Joe. Hi

Joseph DeNardi

expecting growth your you to When like this you it's maybe target that X% Can revenue to outlook what just talk budget favorable a your in in FYXXXX. at seems you And targets ability to budget expectation now, your flat given achieve were less is the confidence down. point? about those gave that in the X%

Mac Curtis

I a Joe. we're happens. We'll budget. think way well, see look, long Yes, what the Certainly, from FYXXXX

there, look kind still I of XXXX, at quarters almost are out think the signed, of couple were we hanging a bills three there.

seem I that transportation, waiting to that under a that's for kind a have think and You're be basically CR. – of may ag, couple

the intelligence, we're all So going military up. XXXX budgets comments, a a where done are about the market, are we I those look the because in it's you at frankly. from but getting think And One, long Joe. budget, couple of way

R&D are up. of the think kind going budgets I

don't when cloud we All spots what algorithm in those are with is out that. it's away. development people, transformation, data dealing budget, of the dangerous good out there. think still that it's we are talk of go required, computing, intellectual I So property the for about are things And where cybersecurity, generated the regardless those analytics and digital whether a because cybersecurity, bad in world

we're the spot right you point think where I cybersecurity, transformation, that are digital cetera. in about market in we So et the when cloud think computing, is in the

I DoD $XXX I was you're if particularly the they've other at year, $XXX – talked mean, this about $XXX billion you Shanahan budget, to thinking put when thing, to billion $XXX think budgets billion, And going it you look Joe, billion out, two the Secretary right. know billion. $XXX and about

$XXX it reduction if a $XXX billion. from that's X% So is billion,

what I still around. we'll I see from services, money time butter And so don't The peanut at differently a think they're looking they're how spread. it a kind areas lot at say, we'd at be. and all I the that comes it I've heard, it little thing the think read would this what looking of think that's one think of I I out, least from in a I've

systems I going that think going sustain make either the orphan Department to of retire. Defense or is decisions are sustain looking to platforms. to not They're on

whatever I So spread, X% and or going think and billing butter dollars. conversion maintenance ship to peanut you're it operation don't this where see X% and R&D impacts

really going to systems. specific I think it's on be

in right So again, in think I summary, the markets. we're

do A a lot budget still $XXX functions billion cyber I billion think analytics. data we to budget in is this and a right $XXX year. compared the

projected our the X% what years, in very we'll confident see. plan, we the three next So still two, for very, to future about We're X%.

sticking our pun intended. we're So to no guns,

Joseph DeNardi

in expectation? billion your would that your market grow, that even the that to say continue to be budget, So would $XXX Mac, fair addressable

Mac Curtis

correct. That’s

Joseph DeNardi

expectations existing that two you more NGEN likely going mentioned or the wondering at about the extension is those the the you recompete then how just is pieces than your at good if feel rate. you And I'm run for to and of to Okay. equally the speak one be size could continues relative and work up whether split pieces whether other? that retaining

Mac Curtis

let go what out start exactly thesis, what the me we I at what's about laid we Investor the to at back is talked Day and top. And happening. Well, Joe,

done and EDS because know, great – two we're is in decided in the out, to, going they program days. okay, a the we we're basically goes on It's laptops those for Navy the as out work street. program, big I hardware, back So and environment. as a and it's going is it's last NGEN out for the RFP And have two. to They've said out end-user with out NGEN-R a the to that that procurement come the program. NMCI it's competitive because or take decades. X. Day, Investor to you They the called EUH, looked said split to things, due the kind coming believe hardware, of that December They

the part Okay, of one equation, that's so Joe.

SMIT, is and the which larger it's The January. much other really which the is it's is management, in is in, systems that opportunity. the RFP integration, bigger, the transport, the That goes out

to what do additional the think cetera. et SMIT, think addition I are this other we and some things. we've that way So hardware the now, there's putting at a couple they're And about of talked is out, again, that's in looking in. work networks when there you about they're EUH purchase, other coming

the kind you similar leave think contract take way that. be we're future. now SMIT we've the the EUH if So captured And I'll at of in this to size is of going to running out, is it we

Internet. make best as Navy it Corps and customer value, the technology XXXX, right, lean and in when think that's the Marine to different listed positive, with are sure I allows a modernization and us positive. bid operate the than both and so provides to can was that's that's So need we contract the That a what was forward

– your aligning. think leave to answer Does that that the kind So numbers, I'll it I Joe, a not of it's environment. give at way But going think specific that's I I'm because that, Joe. competitive it is question?

Joseph DeNardi

you, that’s Yes, Mac. very Thank helpful.

Mac Curtis

good. Very Okay.

Operator

with The next Company. and go ahead. Cowen Lucy question comes Guo from Please

Lucy Guo

just some not line for updating your targets for clarify, your long-term a metrics, comp Hi, To more in the but everyone. bit long-term that want dwell taking to my ahead on those questions. of targets, you're of investors? Thanks maybe to given are start, management or little

Mac Curtis

plan. and long-term to intent, intent mean, management you I way deliver think so have we've the with people, comp our we I with with. in can consistent incentivized for certainly that that to management the But Lucy, comp investors meet is I nuances the are sure is – can the with make be deal we there Well, that's is the and think line commitments. what our

it So in be they should line. –

this this the people. of year-to-year. a time proud is vary bit taken to want the know, is organization felt because We've it out down it of. company can you important we're box. little because first incentivize we further As the This a from We about was building

to it the right is commitments intent that have Street. the we're making the in So to with line

Lucy Guo

And have you incentivizing this, return? long-term backlog in stock I but or are metrics missed return, total the shareholder also bookings and/or of terms for may

Mac Curtis

the to here, little make math, have it about the when Well, what different so the contract, think you all bonus, about when and I you you long-term, has a denominator, think you which When annual which the that's there's bookings Lucy, all also we're do program, to of the have, to sure you long-term. think got focused I a remarks is And the obviously an that is point have short-term, it, in is business that tie a about development when you on which did is think the together. periodicity Street. metrics, commitments but it you meeting to is the ties mention

– it different to. if together because the up, has Lucy, so a bookings it, that's a on, development long-term, business on the really and from is it you about lined we incentive ties little Because perspective. think important again, it program, So mostly all BD set but

that's think we're I kind the it. the So about thinking of way

Lucy Guo

submit, include that On and you're that seems your right, still $XX second pipeline, January? in the is the planning to $XX half that That's helpful. submits bid to billion on, billion,

Mac Curtis

Yes.

I got XX from now, anywhere we're got roughly about we're yes, eight $XX XX and the pipeline. think to eight not looking – probably because – going everything we've that's we've billion to in to bid

about change. And including billion NGEN. half second right, and yes, looking the of submit. some the That's so we're to it's don't in what is which things $XX a control, move to probably we number, good $XX to But billion at things

Lucy Guo

last a Q, that indicate I've look conversion to capital conservative on here, Maybe your to year-over-year. disclosure so turn seems offsetting that's lease of Got cash been but just the free at for Is one Q anything from targets? FYXXXX, a and came is taking payments, out it. there tailwind John, million which or over, that? generation the your it just from your it I'll are kind to about of Or FYXXXX cash there's being free $XX you the

John Kavanaugh

in First last cycles, are off, the before, off accounting leases appropriate again longer-term treatment about we're we've doing capital okay. was more again, attributed lease that's of year. the to for changes nature work cap the that Again, refresh the done talked that what

are, half guess cash the in There down. in the I the remarks, the I and coming second as flow pleased Now outlays. capital said prepared very year, very, will performance But it my stated, again, of tax I favorable QX, especially as with management. in working and see certainly we payments

we again, quarter belt. So got a under our

advise the to appropriately. continue we're think, at we've appropriate But monitor this guidance point, and this to thing done just in going raising again, I point. at

Lucy Guo

queue. it. Got get you. in Thank the I’ll back

John Kavanaugh

Lucy. you, Thank

Operator

Krishna [Operator Instructions] The Sinha Please Vertical Partners. comes Research ahead. with go question next from

Krishna Sinha

margins converge stated sequentially throughout a segments your the the segment And color health that you the civil eased The bit remarks, but adjusted between also in believe – your was especially basis, I an you and to on on margin margins. forma – Just pro year. going segment. prepared your John, more said in operating care that little

around of was are converge So what operating this metrics? sort I’m for But when it was – a, the margins number affected expenses integration the and restructuring you you converge, segment forward what thinking assuming quarter. that say

John Kavanaugh

Good question, Krishna.

me So level let set.

change, margin It would QX XX days we're percentage. costs really in, were on what is sequential specifically, say segment directly really the to revenue costs. nonoperational. aligned better I based So and was align More okay, really

better direct we have much Now relationship. a

So therefore, indicative, in okay, a what think of segments And does each the on going I you okay? it a see will So operational that mean, sequential much performance. more in of our comparable are basis. be that good those forward, QX margins

care, be in to the low the and and around us So range and right again, defense XX%. civilian expect XX% again, XX%, that intelligence again I health hovering in in

Krishna Sinha

excluding what's Okay. rate NGEN XX%? the industry recompete overall your relative this to sort benchmark recompete now then, looking of like of chunky And in win very quarter,

John Kavanaugh

the Krishna. where to low XX%, right XXs we is mid above It's It's now. in are

Krishna Sinha

said Are And new think were that's the So that wins, forward, your the that on you of or to then do expecting. target either seeing downside the when CAGR? anything, think of hit I wins about that top target? to XX% your you sort upside you end you on business new at right need you do than better revenue XX%

John Kavanaugh

XX% is laid you deals think XX% of because and you bigger it, expect we out model of about I between – are XX% and way the will be so XX% than end. is when the would the the high some at others as think XX% it that think I kind Yes,

we've it be way win the way is we've laid we'll should the to out at the XX%, – think years, those next I numbers. X% three the X% over we modeled

Stuart Davis

clear, went that talked was new to we business, the XX% the But new after. bids that total XX% be won XX%, of Krishna, about not we of when we business

Mac Curtis

a that's So point. good again,

So XX% on $X.X of business. it was the book-to-bill, was X.X, one, it's new a billion two-point roughly –

was that the maybe that think was confusing I Is – new $XXX-and-some million out. runs I'm issue. net that

Krishna Sinha

Yes.

Okay. – winning? to investor wins the XX% what your against in you comparison that case, new you're Well, targeting, what apple-for-apple which business what's were now the is in presentation, that

John Kavanaugh

So set, let me level Krishna.

of the relative revenue, So again, the end range. we've the raised to lower

little got now midpoint, of what most strong come a I the will So our from We've recompetes again I QX you'd that, again, higher than based performance that are is be get half to right, remarks, that's new end go say midpoint. bookings. of I new okay? And be thinking at than my business, growth. look as from And in right to about or two-ish to towards less I our X%, the the prepared think, contract about guidance. would the percent our certainly on less the we QX, based in revenue expecting get When about said revised again, at of on

Mac Curtis

to of the end at I modeled high we've So to question be XX% your going simple. forward. about answer what is is It's the think the X% X% to

Krishna Sinha

fair more Okay, one quick And enough. then question.

$XX impact forwards. that operating revenue pull $XX mentioned What million pull forward? in was of income million the You

John Kavanaugh

so a it was immaterial. through, was lot was Yes. fairly it It fairly minimal, passed of

Krishna Sinha

you. thank Okay,

John Kavanaugh

you. Thank

Operator

back question-and-answer Stuart the This concludes Davis conference session. over I to remarks. to for any turn like our closing would

Stuart Davis

Thank you, appreciate everyone, we the call. follow-ups, that and operator, the really do after on to catching I'll around out Well, Gary, join to call assistance be look was your up able if guys today's the some you on we with call. road. people to forward want

Operator

now concluded. presentation. today's has you for attending conference Thank The

disconnect. now may You

Perspecta (PRSP) 14 Nov 182019 Q2 Earnings call transcript