PRSP - Earnings call transcript Q2 2020

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Operator

Good day, and welcome to the Perspecta Incorporated Second Quarter Fiscal Year 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [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. ahead. go Please

Stuart Davis

Investor everyone financial today Welcome Kavanaugh, quarterly conference use the call. on earnings CFO. where today's our Thank also for slides you'll Mac to that Curtis, Presenting find the webcast being are call release John portion our call. of This website and you. earnings is today's Relations presentation CEO; our will and we

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

For a our refer including latest please full Form XX-K. uncertainties, discussion these and our filings risks to SEC of

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

will information measures. Slide Finally, The reconciliations financial useful provide call GAAP most today's we as to measures on believe includes the discuss closely shown for deck some for comparable we non-GAAP X, slide investors. that

At will this X. on my time, the begin Slide to Mac, to call turn over it's who pleasure

Mac Curtis

very for in am and you, you Thank as company. I Perspecta's making the a progress us of the proud with all thank afternoon. this am second Stuart, quarter I pleased performance joining and we are

five that messages. through communicate key Now I'll

strong earnings excellent had we've and operations another with First, growth, outstanding growth, quarter cash organic flow. robust free of

Second, we've had strong quarter. another business development

And first-year on be things put to proud healthy all Fourth, the a business Knight us integration focus big portfolio that can of well. our right to is the building quite focus NGEN. extends beyond in we Point keep and a our the details of. has position Systems company proceeding is on getting well Third, fifth,

and are up was Quarter-after-quarter, earnings, First, we sequentially financial our fastest our growth up commitments. and XX% cash Revenue estimates our we exceeded on consensus margin, of on X% core delivering yet. metrics. all key again year-over-year, growth,

XX%. by Free target adjusted flow we the EBITDA and Adjusted and execution up EPS, cash was our conversion XX% net revenue, was generation XXX% this guidance. cash EPS was our income. strong free With entire team, again up raising are above adjusted diluted at

bookings with a quarter the a of $X.X strong were Second, ratio positive seasonally in representing This for book-to-bill billion, Xx. us. second streak continues

months book-to-bill XX is X.Xx. Our for the ratio trailing

Now, area our quarter a booking Intelligence strength in Community of clear the was business.

integration five NGEN Intelligence We the of to contract from the perform won or sailing work. $XXX and With million of over REIT and scope. Geospatial maximum Agency our largest compete full value NGA significantly outside National a systems ceiling expands engineering the this lifecycle years,

a thrilled We in to support forward maximum contract. Agency’s position awarded Defense a billion. value continue and needs. period to $XX ID/IQ Intelligence are We performance the commission prime critical were look national This also expanding a Analysis security multiple of customers’ a XX-year on total for potential of Solutions meeting X Intelligence work SIA contract of has this and or award

of Defense Department task Intelligence for will be work multiple and all will new deliver analytic orders for customers, support We Agency compete to to which Perspecta.

a We work. received also million our extension on $XXX NGEN

hardware made end-user to Recompete. More on award portion of the for EUH NGEN an importantly, HPI Navy

an smooth portion the EUH we Navy Marine and to this with of of successful to and with teaming are working the the forward HPI on We program. HPI bid Corps and transition look ensure

HPI Award and transition potential of with the the on timing, buying some in the drawdown on of see Based EUH. QX hardware SMIT the we in revenue advance do

for is of a on We or XXXX track still NGEN-R program, calendar also announcement the quarter the Transport await Integration names Management first regarding award. portion and which Service SMIT

beat faster can only confident and operating on modernization, network. there Corps the Marine missing getting Navy a and Perspecta IT without the accelerate remain more We efficiently

We received growth U.S. with million Federal business to won and We six-year This new wins a IT marked $XXX server ability Senate that demonstration provide to large contract the into customer software Perspecta's civilian agencies workstation ahead. new enter a a the of support point in the for brand application of hardware, win pyramid. to and clear system by operating power software. services system leveraging the

Agreement In CIO new on as slot Services also two three We COMET Modernization BPA. GSA weeks Blanket quarter, we more and General contracts. a the first Enterprise of new Administration, prime won third the the Transformation defensive won Purchase known

and also security won to specialized enhance HS' against threats. $XXX services contract We cyber attacks million the posture network DHS security

for transform their contract a Department Urban we experience. the of from new Housing Finally, and awarded end-user about $XXX million to were Development

has this been protested. contract Now since

$XX Looking robust and including billion remains submitted weighted of which towards is business. at ahead, awaiting pipeline our proposals already three-year decision, new billion, $XX heavily qualified

a a delivery rich and IP, Knight Third, integration is services legacy programs. patented Point Knight is be innovation, successful very deep the and acquisition. DHS customer of of up and Point firstly first complete. intimacy shaping at DISA bring managed to They

are successfully pursuits. bidding transformation, new We ours integrating in the them on IT and their cloud, already digital with enterprise cyber, offerings and

perspective. is who day aligned employees Point organizations Perspecta into are are integrated perspective Knight to fully one. business functional groups on There from an operations and XXX-plus

legacy Knight employees. acquisition and perspective the has very received Now, Point been and well a from customers

business in are experiencing We the aggressively below and attrition. average hiring

is greater impacting pipeline Fourth at business very than strengths billion. assessment their closing Point synergies more envisioned to revenue told, critical Agile Knight Rich, valued are All services COMET the Point DHSS GSA cyber The a opportunities secure managed portfolio help healthy. NGEN, DevOps is much is the of our Knight expertise were BPA we than the $XX [ph]. from just it importantly, real. Most and

to major through and success. business our me run highlight just our lines Let keys

a built into we our broader around well as integration. billion positioned quarter, have and to the position analytics we the community about in areas franchise expand intelligence model-based engineering set. awards in in systems and we Now new $X With capability are leverage

business is defense Our thriving.

These of their DoD. through new ARCYBER their way integration transformative cyber spate on including and Award wins, the and programs the recent Enterprise are Force Air of are building out well milestones solutions the We are driving for two still and to Logging. SuperNet

business point, But this has suggests sequentially Civilian Health recent a underinvestment will QX. as result of and to legacy that beginning primarily pipeline in the qualified our we Up strong wins grow companies. and by underperformed,

scheduled and XX,XXX XXX,XXX trusted investigations our decision workforce expected. steady progressing week. the for inventory new and the Finally, and investigations to group background of be market will about in demand risk as ongoing we at XX,XXX investigation per The ongoing

Agency DCSA revenue unevenness go-forward allocation on discussions QX. ownership cause case contracts and this in Defense we which DSA may in and some Counterintelligence and Security in with a of or took are function October methodology,

moving chain supply we industrial and facility is DCSA out on the ahead, are and in threat insider Looking investing business. security and security

a ago year So we've basically having today. from robust pipeline pipeline dollar no multi-billion gone a to

is it's a customers' we not real lab attribute to It's Perspecta that mission emerging invent solutions our just I Labs Labs. and our missions. that Perspecta research makes for and technologies transformation mean innovation strategic key the fact success, us. that an we our emphasis focus, on our solve digital leveraging I NGEN and difference. differentiator had areas growth cyber a our advance like problems applied real

against underdevelopment Labs the XXXX recognizing adversaries. for Just attacks grid received Industry the from solutions last power Perspecta DARPA its nation-state Award, to defend week, Innovator

as of which a Solution infrastructure our was solution this efforts, select part Catalyst our SecureSmart of technology by Cyber line, transition part we offering just designating are innovations As critical program Marsh. developed on

its you Labs the role give only services in idea, in cybersecurity leadership is that. an received very XXX demonstrating ways. To more and and were this year. also XX products Perspecta We're than submitted innovative solutions solutions of developing cybersecurity designation proud other

milestone and carry Mil-Standard-XXXX contracts technology. out solution attempts DoD detects and Defender we adversary further via to Defender additional operation. bus, B, blocks successfully cyberattacks and Bus a novel missions Solution to reached The mature transmission proper Bus signed and while this maintaining and ensuring the data Our is that

platforms of This given Navy, architecture. applies to Force, of wide Air Army the the and a operated Mil-Standard-XXXX by large the use number

are. not more we second we Now effectively. company, operating and monetize are this portfolio. and example about Since where we our can very patent We're but now product feel we're and broadly hints we in good year a how

For the it call can words pro to saying forma. make first a the time, we without

which integrate business. for on it's speak mandate was Year engineers one-year Our fast. modulate we and details the focus to tune and can two, now integrate is

to enrollment the and cost. management. use selling and employee milestone we've second benefits benefits for and talent the business grow we on monetize workday, huge just balance facility. example, to start to million kicked the We and improve unified platform integration off open drive been value. We've that the real-time by enhance Herndon can We'll the shareholder use able sheet analytics For source to retention and to in proceeds the which another in major HR the are our is we rain now just $XX

doing Now to building focus very community our the what we're we internally John same do. people going say that investment with been by I and we're on We've and have focused what hone to be all had trying better of. but build as not culture do here. perfect, we it's we our can It's day company getting a proud every that see and credibility

see come together and You social pride around that can how responsibility. we

We participate in two every fall. major community initiatives

top than the which raised first employees with in earlier and Heart $XXX,XXX fundraising this it National Mall our the culminate Hartwall. the Employees around The joined month. again on participated we a country and walks, Hundreds year. the Association is company more of in American was this walk were fundraising

Home the employees Brave of the warriors than items of much our celebration volunteered and Campaign. is More needed and of events, The for Day. donated second wounded visiting XXX Veterans

great military, commitment to mission. helping veterans is while staying in Our we members life, how work them Perspecta to in evident a also in involved transitioning such with a move the make survey to place

on aired Makeover: month. earlier In which fact, were this Career, Military featured TV's, Operation lifetimes we

the turn And call let with John. to that, over me

John Kavanaugh

Thanks, metrics, full-year Mac, performance it our The with quarters or execution. quarter and upwardly our key making six ahead a pleased row good for our with we guidance. am again I second are results of extremely on plan revising financial solid afternoon in everyone.

the Turning year to XXXX and of up very X. Revenue XX% the Knight quarter was which from well. of quarter fiscal first year of Slide XXXX. two Point, is months up Revenue was from second quarter billion, $X.XX which performing includes the X% fiscal for

$XX In transition NASA booked about Desktop addition, contract. million as we IT we assets our ended sale of revenue from and services in support the

customer any and set outcome to didn't our for the that The essentially no were expectations write-downs. year. ensure with we a revenue entirely guidance was have consistent came margin, positive This as program but at the outcome able for we we deliver

year-over-year. Excluding one-time X% up revenue benefit, this was

NGEN. The business revenue momentum have was Defense Background the and begun flat volumes though on Intelligence and wins our we Investigations segment on even as continued increased for year-over-year. demand and year-over-year, Revenues increased moderate recent XX% met segment its to ramped up

mix was Care terms result Civilian little of segment and quarter. one-time Health the heavier transition year-over-year Contract in a in X% a price as revenue revenue. fixed the NASA of increased

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

QX XX% XX.X% adjusted from increased EBITDA XX.X%. margin up year-over-year, was which $XXX million, to as was

revenue Excluding target at achieved run full the program the essentially synergies no last rate execution one-time range fixed efficiencies from cost EBITDA margin, our the NASA strong driven and by benefit of merger operational was adjusted and price middle year. near

Depreciation returned income run net adjusted diluted million. rate amortization $XX is Acquisition-related was $XX to which at intangibles EPS of and normal adjusted million. out backed

of up QX $XX share EPS adjusted share resulting against was per diluted count of million. diluted income adjusted Adjusted year-over-year. $XXX.X a net in was earnings million, diluted XX% $X.XX

to X. Turning Slide

cash integration XX adjusted activities payments second sales flow cash the lease million finance of and expenditures, outstanding is in days capital the was strong of flow free from generated income. separation, million of cash low payments. days, restructuring of $XX range of the operating and of quarter we quarter, $XX our between mid-to-high the reflected $XXX which adjusted DSO XXX% target of or of and The million at is capital difference includes in which XXs. metric the our metrics The net $XXX million During end

$XX million During the repurchases. and second of million in $XX in quarter, quarterly shareholders. million and $XX we to million down debt paid share dividends returned $XX

and the quarter Point Knight million $XXX debt about the customary facility. on with purchase price million discussed $XXX the of out on million call. revolving for credit of finished $XXX paid total cash, obligations We including million ended last $X.X $XXX also million We adjustments as of for billion lease $XXX plus of a

proceeds diluted quarter. last and the EPS to full-year. adjusted gain and In exclude million $XX buildings a drypowder growth Herndon recognize cash from adjusted of sale assets sheet value of we'll adjusted the $XX leaseback which net in We'll land headquarters us for October, quarter carrying million, of in but in the more we’ll gain EDS our initiatives. exclude approximately we from and completed former our gives on our QX, flow The included for EBITDA balance our held-for-sale third pursue a and was the free the

business Based our X. guidance to fiscal on we now raising million for previous and shown $X.X to in $XX year on billion, increase the financial quarter, performance our are an $X.XXX lower guidance. Slide is the billion expect be which XXXX second the development We of revenue year end as of to

We XX% which is share to to the $X.XX $X.XX, margin, an no end to There is expect of adjusted diluted which of per prior to earnings adjusted $X.XX guidance. stays XX%. at increase lower change EBITDA

fewer NASA of In effective $XX considering headwind, million Knight months about face QX, by plus December sale two working partially the another revenue Point, normal we'll and with asset quarter month of sequential NASA days. seasonality execution, offset

conversion adjusted additional EPS this to to guidance income. equates maintain maniacal flow cash XX%-plus value. free aggressively manage drive the adjusted focus At we million shareholder flow deploy are from that we $XX capital. net midpoint free increasing working and on of cash of We of about cash to Finally, can XXX%-plus adjusted guidance, a

we're Operator, take any questions. to ready now

Operator

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

Edward Caso

Great. you. Thank

ball Just December resolution to your a at looking bit, to get XX. like crystal out we're here, the extending Mac it continuing looks of little

Thanks. Some on end your that how your might revenue up CR, change year might a with full impact of And if thoughts we your guidance? how view, that outlook?

Mac Curtis

resolution. continuing you back continuing resolution. when go going Yes. history, years like XX at XX Ed, I last we're a the does look with have in and mean, look out And thanks. started the of to Yes, it DoD the

great floor year. to extending to But is of March, hearing about they're maybe up. house not the going We budget And a is February-March. [indiscernible] vote are also a put a we're what deal extend little the is lining it it and talking the disappointed, it had because surprising. we to We're it's in end on probably

impact really And looked gone do and see fact then mission-focused, a of a through our And much that it we don't specific to business. is to what that mission-driven. of mission-important, is of the lot we've so we and at I think lot whole and

our on don't go we see lot as we on based resolution. but So, forward, continuing impact really a being of analysis, this

Edward Caso

foolish shutdown, from XX-day quarter? like sharper there like the we actually point, be if fall will a do Maybe just something it within impact if the a that, one, any

Mac Curtis

that and And Yes. on we shutdown had the Well, can XX,XXX-plus about the look about and were the we contract we it XX impacted where history based talked XX% think what in government. employees, happened that at ended. the of last on NASA that had. calls, out that was I I of we that just mean, previous was

XX, government, news the at the seen best right impact crystal that's to but at kind the of of, of hard in the more I mean, much can look of is government, we which it's it So, haven't of but project part now. shutdowns. whole last ball how lot of couple a what

Edward Caso

big we How was of contribution, can the up question. with Thanks. kind organic Point growth some so Last come rate? Knight

John Kavanaugh

Yes. This John. is

on we million. as So about annual an about basis, talked $XXX

So, months, was for eight it million. the $XXX

was roughly per $XX.X it month. So, million

that's and So, performing the well. metrics very they're

Edward Caso

All right. Thank you.

John Kavanaugh

Sure.

Operator

ahead. Our Gautam from Cowen will question & Khanna Company. go come Please next with

Jeffrey Molinari

taking Good for Thanks evening, on Gautam. Molinari questions. is for gentlemen. my This Jeff

John Kavanaugh

Jeff. Hey

Jeffrey Molinari

on sales the the focus to increased like I'd Yes, EPS guidance. and Hey. drivers behind

$XX I low end, QX cited was guide So the the increased results. sales you million strong think and on

your asset how sale prior question was guidance? my the ACE from So large contribution the assumed is in

John Kavanaugh

is Sure. take Happy John. this to Yes. Hi, Jeff, that.

end to guidance increasing XX.XX to are XX.XX at we the said, the we've of okay. lower revenue As

the about IT at the was NASA, sale to and So contract services, understood transition original in awardee what guidance the per included always asset the knew the we we services. assets transition purchase the We to our guidance. certainly would required talked the relative be

embedded So in already our that was and included guidance.

and segments, operational the in said I pleased certainly we're very development with business my both results. the performance As prepared remarks,

Jeffrey Molinari

helpful. there? was drivers low other that a increase EPS is higher of Okay. the or result any $X.XX sales And that's on of for the end, there And the solely

John Kavanaugh

Yes.

did execution. again by We So we our good it again, feel about performance the in very increase $X.XX.

increase, that consistent about So, feel good with revenue we the performance.

what's it. driving yes, So that's

Jeffrey Molinari

margin in guess you first introduced, be that when the towards towards your then beginning – that going the you And said EBITDA I of for mid now of trending the – or…? range, the to middle were you range, is you're expectation the still

John Kavanaugh

the Again, very execution. three-year did takeout. seeing, performance Yes, strong I Yes. accelerated said cost We we uptick. got solid we're it. as an We and

So we middle right the now, and toward range. well of the are trending performing

Jeffrey Molinari

line Okay. and questions… in my hold Thanks. I back jump will

John Kavanaugh

Jeff. Thanks,

Operator

next Our go Instructions] ahead. question will with Please Parsons Gavin Sachs. [Operator from Goldman come

Gavin Parsons

everyone. Hey, evening, good

Mac Curtis

Hey, Gavin.

John Kavanaugh

Gavin. Hey,

Gavin Parsons

Hey. of you investigations. backlog appreciate when Mac, of some be little moderation kind John, I magnitude update and bit the weekly on any of that mentioned do you you that the investigations. expect us in the would seeing scheduled end the to ongoing Can a headwind and of back when helpful. peaked, headwind of kind on give idea

John Kavanaugh

It's Sure. Yes. question. a good

it in So, X. as last up we happened background on of mentioned at the call is I contracts think suitability as organization, this investigation the from has call stood in business, which functionality the that October OPM the call things DCSA that from migration to they its of the one the

happens that mission, now X.X is Gavin. pleased OPM. of investigations workforce mission couple one a just we've background that on larger previous the old not was the the that of It's And a the about that things, kind very of we're talked things it's now calls trusted much of about

value, continuous continuous supply this It a as evaluation, continuous composition insider protecting got as for chain. responsibility is for also responsibility background It's well investigation. trusted we've monitoring a is Now, threat. workforce and

now Agency DSS So and to just has Defense Counterintelligence this from blossomed. Security organization

the OTAs next the from of could that we because monitor. build go-forward wanted excited we're looks at to perspective, about continuous evaluation two system that And a do the

business. the we we've that trusted and imperatives. it's the So as this all workforce got a with things see really really growing strategic of algorithms to our focus one The is portfolio

talk in that let that script Now dig the that second. what's headwind – the But a what into it Let's well, may suitable? kind for me of about. a about with QX I mentioned talk we happened just is potential in

normal We're know XXX last that. as from went went backlog million to we to talked rate. back through a It about this XXX million. So year. XXX,XXX cases you roughly We've to run

to the customer contractors. inventory in QX as issue, on do with one out to we with looking the from on want best is looking things really kind work that's them methodology, Does may Not a about kind case dialogue uneven customer – of how it at OPM that the at help? DCSA and they're how going with and look it. to figure that things things the to that's It regards of basis for may to make mythologist. the case at that methodology we so one the of an is allocated to the little So way move is allocation a the at they look daily a cases or of the

Gavin Parsons

repeat...? That's great. additional I appreciate scope upsizing the what How much is? of is? provide NGEN And bit color if that. the Can little that the you a work around

Mac Curtis

Yes.

million a talked got So we about yes, so as extension. it. We've $XXX we – got

As since talked you recall May all we've XXXX. of about

roughly go they months potentially gives you maybe December, their and so May all need what what's it through as the from that's that process. So they the seven to happens take time regarding extension

hardware HPI, two. end Now is know split SMIT then and so contract, a EUH the and the I into recollect was – bid maybe took HPI, and which transport. and it they contract old that you Packard awarded, the about and awarded that's – was a was year or guess much user that month have NGEN the to EUH, ago. there's larger Incorporate, Hewlett as basically and integration they the

the So, XXXX January calendar our re-compete think one March. going for same. quarter of so first fourth sometime through quarter, the first We or NGEN to is the the done, it's holds be schedule still

a So that's and they've had good there. going job. much They kind very the process of They're been change schedule doing the not success. through

is things in near contract at up, it are very happen and it We're now mentioned having of start modern won't about wanted headwind they future one which have. competition that and HPI certainly potential – headwind some a is key will in QX feel point But a We to the still was hardware. we the that the moving where I strongly splitting selling with point script possible in ahead.

we Well, we under existing hardware, of hardware. starts couple to buy So we sell of the we a time do and months all contract, well, do HPI a services all the period over the for won't. –

what at services and re-compete but bigger the as of looked net that's we Does like additional truth contract kind What is the hardware. existing be forward engine that what we've they've the have as data a the added contract Now total network the is know contract historically of engine sense? we go currently. additional but with that's one at. said won't centers, so that will I make than lot, we're looking hardware,

Gavin Parsons

does. It Yes.

Mac Curtis

of kind that – very as of So great I this summarize We them the just is lot mentioned a these we've transparent. talked about. two A business. quarter. business in about we're tailwinds talk me had just points look let

positive. won forecasted, some have It which wasn't We business. is

is. we we We're about the billion excited headwinds big business evaluation deals. potential got script. But that in do where the We've brought some $XX in these have

informed. with out to just just as so that our we mobile, And is we're go inform here of to a job but not forward. dealing mountain But create

way that's think… at So the think I look it John, I we

John Kavanaugh

Yes. Yes. Exactly right, Mac.

the the on we higher toward So trending up see a lead addressing Mac XX% Again we on information. Mac feel exactly but performance SMIT so some based what to bit had want said. little to demand and that as XX% revenue there, talked the end NGEN, more to in about again about moderation we our good provide just Mac of the pent-up stated award, may been had as QX I

Gavin Parsons

Thanks. Great.

John Kavanaugh

Okay.

Operator

from Ladewig go Jon Stifel. be will questioner next Please Our ahead.

Jonathan Ladewig

Good evening. Good results. guys. Hey,

Mac Curtis

Hey, Jon.

Jonathan Ladewig

larger estate on the about of the this current government in if over such the is has elaborate fourth especially IT of as First items services? and now now guys DoD, of some the cloud can taking is kind JEDI awarded question have the talking customer opportunities that I you most

John Kavanaugh

Happy to that. Sure. Yes. do

I So think that. on going with knows a and everybody just on JEDI think what's I note

the call our strategic We of transformation migration initiative. one are digital cloud transformation. We the part is it number as

the won commercial, is enterprise contract as architecture. [indiscernible] GSA we is architecture, just enterprise It CIO enterprise COMET that And transformation. and transformation modernization,

it doing government. over we're So all the

I we think in agnostic DoD right. JEDI, the with – so are

– so do we We the to certainly have both. mission modernization to with we enabled will customers' and transformation, side, and work they are Knight cloud, and and the hit gold certified Microsoft on patented And are certified IP really from Point. and do, the will by focus what the they to architecture applications application there patent in our

So commercial. that's bit a of a

the are there. looking everybody IT lot as is of at a a I opportunities side, of But kind out there DoD enterprise on mean service.

the You is our something wheelhouse. estate think about in fourth that that's certainly

like of X] some such think transformation to and PCS [DOS additional things as start those. You about

are they along. coming So

DISA on what's DoD. SETI I the think that's it is of other regards this in IT other to systems some question We whole a transformation. agency looking of engineering – the with going That's DISA in contract. some like and at look

So about excited we're that.

lot in on DoD. a So going there's

up. I IT Force is fourth to really The a really as is out. estate be Navy that Army moving think is interesting. there service is NGEN contract. going Air moving is The The

service. plans has at Guard got If as about the branches, a IT place you look in think to DoD Coast the

small a And movement, large lot and contracts. contracts there's of so yes,

lot that mentioned. a got I $XX pipeline full, pipeline that we've just those our ones million of a is So

Jonathan Ladewig

Okay. there's your about here it the days over into to of you Thanks you pressure differentiate to these the doing to ship finding relative wants? the There's market And guys. are environment are guys the customer peers D.C. and curious what be Perspecta you? jump of in labor staff a labor. to to kind And join on overall to levels and Amazon pivoting been capital moving enticing then challenging labor a to of some region. And been talk just obviously just lot I'm strong

John Kavanaugh

are of Well, Yes. going – not give our some you on honestly phone. I'm to competitors because the listen

in of and And can I over competitive the XX% be our just workforce for in So, speak. here, is a that will is Washington or all the gets environment good sure. It – the about country remaining here most XX% cases. I

lot the is delivery here. of not a So

But so we our responsibility. That's And focusing part do we why much that's talk our social frankly veterans. differentiate talk look why on why about business. such referrals hiring of employee ourselves. we at an have we That's to important about being

accepted. north full-year, about So of employee from in our XXXX of FY our for of hires XX% referrals. about offers were XX% are And

doing We So program. that something means that our right. we're at look strategic certification

It's So what education, responsibility, I referral. hard hundreds certificates, a initiatives, of not do the would employees having tell social a in the single about initiative. multiple to employee Its it's you it's your culture, wall. continuing out the mall

pay bands not mean are thing. single important. I the a it's So,

in think that employees we really Virginia what is part gotten do have most in not as Amazon And I And on is industry right. mission. has I X,XXX think the cleared, of because an the there have an have we – that the here we a mission, yet we Maryland are have right. D.C., important that's we what area focuses have certainly and

bit So, I would else. do a detail to to it's of do, differentiate the like go everybody into we more on is things ourselves as we little lot try but a

we've think I successful. been pretty So

attrition. been we've successful certainly successful the always think question think we've it. to about It's recruiting and managing no been pretty with I regards in challenge a But I recruiting.

Jonathan Ladewig

Excellent. Thanks guys.

Mac Curtis

you. Thank Yep.

Operator

and from a ahead. Khanna Gautam is Please Cowen question with go next Our follow-up Company.

Jeffrey Molinari

for is This Thanks again. Hey. the Jeff follow-up.

So bookings have been pretty strong, particularly strong this quarter.

can pipeline like two quarters? the Can the forward, – does would you in look to bookings what Any next continue color you anticipate kind strength? that helpful. that Looking continue be look do like of you

John Kavanaugh

kind I it a so – through I'll about Yes. think project. got tough with one of here's But tell pipeline in that's just evaluation of slow you because a you think got billion We've quarter Christmas. a year, is It's way $XX billion you what to this XXXX. you've $XX last calendar Thanksgiving, is the now. got historically, when little Really about and it,

got hard hope protested. deals worth We've it's well frankly. at the where just protested because big you're it the that been out got about and we'll XXX-day we've awarded deals We've to there. other have of won't We be. a protest going couple $XXX million them because clears project was of clear, may march. Hopefully, So, some got one

So, pipeline. the about we were bullish

it's I This because hard to middle the – quarter it's is of November. tell it mean

You December. of about have and XX there's roughly not after activity lot of left days XX a the

I don't the it's And to think think as the industry fourth not calendar calendar you see quarter of do the third this in certainly So as quarter. project. hard in see And we'll of I the year. year as the general big quarter big as

think going of engine XXXX. we've through in awarded to the got we're quarter, our into worth fourth this is March FY I timeframe, supposed January of get QX hopeful. our billion $XX Again certainly

awarded. kind have but here about X.Xx in So I'm it's We enough hard what of you awarded. them I that. just got good the on visitation giving to pretty certainly a feel got we've pipeline. get But get think project We we ramp exactly book-to-bill. a We to TTM

Jeffrey Molinari

similar mix on margins those makes just on current what do then be a your price bids that? the are those That fixed in Okay. mix And lot with Are as waiting business? judged the of sense. to

John Kavanaugh

Yes.

of take kind our of So you is when XX% at pipeline, north price. look fixed a right

very we and Again play a an well in weighting price perform you'll more fixed over we to area with. like for see certainly So at time.

Jeffrey Molinari

percent The new one and Okay, this what then work? was in quarter, bookings last one.

Mac Curtis

new. million XX% $XXX was about About

John Kavanaugh

Yes. $XXX million.

Mac Curtis

out was the million new of billion. $XXX $X.X

Jeffrey Molinari

Okay. Thanks.

Operator

next a question Our from Please [Operator Goldman Sachs. go Gavin is ahead. with Parsons follow-up Instructions]

Gavin Parsons

did that update to learned why was initially able later DOS? Is Just is you process an you Thanks. work you're successful? provide there on Anything any... anything on about us

Mac Curtis

I yes much Gavin. give Well, too can't detail you

But than go a data. and think by of there want more cases not kind don't you stretch look company litigious don't when lot I more a do you you and We're And any more say protest. come you in the imagination. need look get some we of to out I – was put little you in. think think out I knowing than normally in just come you you out a see. look general go debrief to into

We don't often. very protest

protest I frivolous. warranted that this think the we felt received, wasn't I particular we feedback given

And think action its is way. corrective it's I I think on substantial.

happens. what the happened be given that things where see should we feel we'll so we And have But Gavin. all

don't the so role. think keep see we wants frivolous take going feel ends But it wasn't And where but action So long to I it then we'll a outcome see. to up. it's same far. collective so we'll time, about the good and

Gavin Parsons

if it just revenue if X.Xx year million back X.Xx awards. could bit. last I strong ask maybe Knight a from out looks then the million $XX but a of And duration organic of little year like I only trailing I be growth contribution this and it. you NEST and $XXX about mean, XX-months, Point, backlog would the Got the

gives And an of come Thanks. that duration that So what backlog? contribution? of organics through kind what's the you fully will confidence

Mac Curtis

I'm mean sure trying – yes. think phone, normally – I think so quite mean to mean try answer look Well But these five-year – come of just I I backlog that your mean contracts, not don't I we I'm there I at are. to John…? kind to that. I question you on was the right. the Well, it away obviously are historically

John Kavanaugh

Yes.

Let me more give color, bit right. you little a

right right position even backlog about $XX year-over-year, billion. sequentially. XX% up So up XX% That's roughly now is

example another that have development engine, of going, business okay. Just the performance momentum the we right

the a that guidance about So right the feel again we very of when the Obviously, feeling revenue you lower raised we tells we're how end take there you business. look, confident.

X% X% the little drive midpoint, to So we're Right right laser-focused about the growth. try to now, everything again, continuing right, – business. and at at over is going in the looking direction. a you're And

Gavin Parsons

about then? So is just I organic to correlating future not am book-to-bill about total I the think that way growth? should wrong So, thinking

John Kavanaugh

denominator important is at metric, need obviously, and numerator obviously but you an the selectively Book-to-bill, not look things the to all out. and Certainly. at pull

So trailing-twelve-month good we again, more the really importantly, future. feel the we good about feel performance feel overall and and we about about good

Mac Curtis

are And, think drive a other that points Gavin, helped I there couple growth.

$XX any contract, As all new that's We business just – one DIA don't is what – two had I one, over booked million, we think that's book us. at we well, for zero. and We that the book XX all years. – new what

million, the that, goes total are million, the $XX into million, in that today. you But orders. million, So anywhere $XX these appear right we $XX That million, backlog. in compete $XX contract task And task contract big $XX win and orders, go million. $XX for backlog doesn't these when

that's So, one I think certainly thing.

are on-contract at, contract these that cyber vehicles continue our we bringing million we're grow ceiling, like got $XXX to the call, work to what that. also We you've pretty year, good where growth, contract of XXX-plus-million for a where

also it not contributes. contract also that backlog contracts. se, to today, along in per It's attributes growth the So

It's necessarily the consider think, pieces drive a other of I are couple that would it pipeline. that the certainly growth. organic So in not helpful? just there of Is equation

Gavin Parsons

Yes.

John Kavanaugh

book-to-bill other that organic only obviously, from couple And the There One, it of time strength you're to things. trying revenue. add, a up ramp takes contracts. Gavin, these thing if to sometimes to I'd translate are is

thing that these issue in And important that the talked but and and is, is over. in we year-over-year we there some comparisons the what not frankly other past the in – business healthcare grow it we're the about underinvestment really of quarter, an it's having to was civilian for

of growth offset in that's some X.Xx helping some in that in And businesses. underinvested is book-to-bill reflected shrinkage the

Gavin Parsons

That all the makes Thanks for detail sense.

John Kavanaugh

Sure.

Sean, time I got one for that, here. we've question more think

Operator

right. All

Khanna question the from line final of Please Gautam Cowen be a with Our Company. will go ahead. and follow-up

Jeffrey Molinari

one for here guys. Thanks in with squeezing me more

likelihood and you, questions, for So, deals of the Mac, like? one kind pricing there guys? the the you assets what's kind the pricing And last general potential M&A pipeline another more for look of some the Thanks. – one of and

Mac Curtis

Yes.

about acquisitions that's capital tuck-in M&A, very a question, we do. And allocation, good Jeff. continue is think think and something we've again about that to to being us perspective we important since that's I So I thought talked it

it Knight I the is doing for that a wanted what we that deal was to Point and deal done, good it's think us So do.

And IP things. so can company. – additive that to its we're And other the these active. perspective things or out a a from capability pure and we're looking to We're for difference there make

think pipeline. decent it's I So a

is what it will this I pricing depends in the it space. think I never overpay.

You look at where we are right now.

at and et got got revolver, cetera. good from X.X about leverage and cash good sale Our the spot. XX, so we've XX the – the to a We of building a is some

is I looking So short are we the Jeff answer. think

would as where cyber with to start you set in is, electronic As and they warfare it. were at we whole services at DoD what an look wrapping look the at example around one looking methodology mission of

Now cyber is intricately linked into everything.

So that submissions we labs what and/or if there in be interesting. are be some they is with that that the a set understood that our that at prospective that would business that there skill something could integrate company would way do thought out defense had that

We're not we're buying doesn't grabbing interested and in it. – what just about. That that's not

going think an So the Jeff, on I to aggressive beginning year. think it's market. we'll be find of the I

lot to I think going of midsized a lot out companies. to see you're pop start things a of there,

think of double-digits. I look pricing at you when valuations it what to is, start is some in those

diligence an we're experienced an of got the of I legal have do the outside to We've So the think experienced quality team. you and earnings careful. We all due stuff ourselves team. do

continuing grow and expensive. capabilities. kind of business we're always a) the for in never too we looking interested add-on So by see we're looking we're They and overpay knowing: to they're what know will –

John Kavanaugh

we Okay. question. more now. have like no that for And Thank look questions you, does Sean, Jeff it

and on your appreciate help Perspecta. your today I interest in all So call for the thank call you on the really Sean,

Operator

This today's you disconnect. may presentation. will attending Thank for And conclude now today's conference. you

Perspecta (PRSP) 13 Nov 192020 Q2 Earnings call transcript