MANT - Earnings call transcript Q1 2019 | Mantech International Corp

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Operator

Ladies and gentlemen, good afternoon, and welcome to the ManTech First Quarter Fiscal Year 2019 Earnings Conference Call. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Stephen Vather, executive director, corporate development.

Stephen Vather

Welcome, everyone. Thanks for participating on ManTech's first quarter call. two have president president as and and Wagner, we Bjornaas, CEO; Matt call, Rick vice executive CFO; our today's Kevin and Phillips, Judy Tait On presidents. group as well

facts, results harbor are we of call, actual XXXX. Reform could differ made that address forward-looking make During subject the from that anticipated and the Private cause this are safe will thus to Act statements to of materially do factors These statements to not forward-looking historical provisions pursuant Litigation statements Securities results.

any and turn risk Form For on made entitled to the please discussion obligation to other Risk With of of call. a We Kevin. this update section and XX-K full factors I call the these and the forward-looking filings. would latest other to like risks no SEC uncertainties, statements Factors over that, our our in undertake refer to

Kevin Phillips

I'm XXXX. growth, ManTech the Good with solid afternoon, Stephen. with improved to combined consistent everyone. exhibited cash profitability and start flow Thanks, strong quarter, generation. pleased organic the In revenue

employees coupled dedicated contributions with continued the success driving the of the and our business. strategy of operational Our financial are

is position capabilities these of to success. civilian not and long-term to Solutions, our pleased of by bringing start. or only integration key already growth growth. for that but this goes $XX position I a opportunities The are capabilities, remains request and across on prior demand. be the in depth intelligence nation's The billion X% delivering Department intelligence It great combined and welcome of strategy $XX total talented beyond the rising capabilities of a forward that budget to focus customer, Shortly with in by and ManTech has customer year. for Government customer our the QX, I'm future federal to is Defense, aggregate. pipeline community strengthening steady, our intimacy, domains, expected intelligence Veterans performance competitive key look growth Kforce the president capitalizing is into the opportunity-rich $XXX on XXX but market customers year with for a for funding We're FY increase capabilities innovation over market differentiated across Furthermore, the market. expansion 'XX steadfast seeing space all however, and well-positioned a by breadth this the as acquisition ingredients billion released new in from across strong budgets the X% for in combination. the that company the customer mid-March, cyber. following government acquisition mission the budget over war the fifth we DoD. pervasive of the national request IDIQ FY portfolio closed focus knowledge just of to of cyber, of The business. relationships vehicle and in a KGS. federal family. also priority emerge follows federal ManTech consecutive core task as and Department off result and to marks particularly across to cyber on employees Affairs in is military leveraging grow at selective billion. the the strong unclassified The the 'XX budget enhances of leveraging our an the The evidenced The primarily remains the high Our fighting environment capabilities. our In

that differentiated sheet high on ManTech. accelerate balance continues us growth growth the flexibility focused enable us to companies with that in for are markets, We for Our offer to acquisitions. remain capabilities additional well-positioned acquiring

expansions Backlog ratio of In the of relatively extensions, quarter million XX% Turning the in at The we funded a source QX, classified book-to-bill bookings XX% quarter, awards of represented the and came continued the the approximately contract to sole at strong, work offerings. ManTech. resulting at outstanding $X in X.X majority new to sequentially ManTech's with and was $XXX for times. saw from development, in steady billion. quarter of business $X.X of end billion, customers a backlog remained Proposals appetite for who grew $X.X billion. exhibited awards,

billion. pipeline remains over well continues $XX Our and overall to track opportunity healthy

full-year. the continued We approximately have in proposals $XX expectation a billion of submitting for

Additionally, balance of this we contract activity and proposal see accelerating year. of adjudications throughout cadence both the an

and customers, their missions second, and in enriches best industry. as attract that aggressively develops The well very employees, challenging recipe Before I mission the the financial an our to thought, on capabilities and our our the turn let the to focus requirements; we and meet objectives: invest environment innovative call our the as over are two providing employees commitment to most this success. with ManTech's differentiated provide talent and to to first, for is me continuing their our with against solutions close Judy, customers

Now Judy our detail of and will specifics performance outlook. and the Judy? discuss financial

Judy Bjornaas

quarter million, line compared results to first quarter the closely surpassed the X% Revenue first of XXXX. up growth and tracks growth. Thanks, very for to to our our quarter labor strong organically in the expectations. The show Direct Kevin. financial top continued was $XXX

year X% fixed improvement increases These contracts contract Operating cost-plus, income improved growth quarter, a $XX.X margins. Net materials. XX% in represented and Quarterly was for prime by year price and million was X% quarter margin over was and income driven our XXXX. mix the share X% respectively. operating quarter, of our from XX% revenue per and were X% time XX-basis-point diluted of year, was first earnings up the revenues million year. of $X.XX $XX.X the approximately over and for XX% the For X.X%, up were quarter

cash on statements. flow Now the and to sheet balance

sheet showed cash debt $XXX April balance KGS, million at on million in pre-fund Our of our million $XX quarter-end closed to of and $XXX acquisition which Xst.

paid quarter, from cash was million to a authorized us operations improvement in of has $X.XX quarterly $XX be net maintain to three-day of dividend or board June. generated sequentially. The the we X.X days quarter, income. our per current DSO for times the During share XX

communicated. revised We're organic XXXX outlook, Now at previously now based of $X.XX rate revenue, date $X.XX acquisition compared are the for revenues on what growth on between of income per X% X% looking range we range our billion represent the KGS, to to to total our and The XX% performance maintains midpoint and growth we share and to net to diluted raising on the the revised guidance. which XXXX. billion, compared revenue earnings

be revenue balance up procurements, visibility pace continue new have on We recent high of end range the timing Achieving material and contingent well the of our as very will the contract the for as higher of XXXX. any of to the and awards. ramp

X.X% share $X.XX. X.X% for bottom we revenue expect X% between expenditures depreciation of XXXX. At margins expect operating to amortization expect between X% and be to capital line, related the diluted and net income $X.XX be between earnings continue million, to the and $XX.X and year. We for and per of $XX.X We and to million to still up X.X%

times fully remains shares. tax income million Our the XX.X between cash flow rate are into from diluted full-year for guidance Built operations and of full-year. effective X.X net a times and XX.X% count a our share estimate of X.X

defense speak Now federal to our business. Matt civilian and will

Matt Tait

civilian year. Judy. opportunity The to customers defense Thanks, services had federal robust. and set mission a and across is ManTech solutions good the our start

number mission are our of on stated coupled new Kevin meet technology on calls, As has the customers with speed innovation, insertion a focused of in to requirements.

As increased base. across we volume Authority, our utilized defense OTAs, customer a are being seeing result, an Transaction of Other

to am supporting provide on I engineering highlights. five-year, operational quick that and the Homeland won and to protection. pleased remain some supporting This homeland. to management to of program contract adds Security, we of and I new a Now contract to presence Department protecting customers million footprint services, strong expand with award customs our focused continuing report our border $XXX

innovation. in Secondly, and continue development to mentioned, systems laboratory R&D Crane look we are warfare opened Surface and Division to support the we research I Indiana an innovation quarter, to advanced support warfare continuing the forward In cyber people of our Center the weapons to capabilities. Warfare Naval how in in to we Kevin invest to our with you. over that strategic I line be across Rick, these family objectives. and ManTech not talent the new really adding to bring, integration KGS but to excited going only well, in are just reiterate efforts to efforts are mentioned company. wanted

Rick Wagner

remain IDIQ Army that customers' the others MCIS we cyber strong innovation report I'm quarter, a in our problems. that mid-XXXX, appetite labor cyber to quarter the award The over extensions robust we excited $XXX Warfare our continuing Executive retention I'm we awards and IT a winning and execute resulting work, expansions the quarter various schedule. re-competes, and that XX-year ramp of won ahead a and including: well new pleased the recent contract team large report and services won the and is cyber, of provide retaining to range program award to our continued -- recompetes, capabilities, had in showed and to RX the engineering to electronic Operationally, in agency won vehicle, with Matt. is Department direct of continue mission recruiting ManTech's $XXX form to contract full multiple focus healthy classified Furthermore, We're brings we customers Intelligence, we Office, contract. provide of million integration. on and the successful position a across and in challenging Thanks, ceiling solutions. Sensors with insider and contract a in threat, recent capabilities This the showcase warfare growth. awards on in portfolio. enterprise of systems for awards execution and Electronic and Defense million with ramping Program won

is acquisition. focused questions. demand, our strong. and our position. are enhancing and the summary, competitive remain ready recent your for are customer business With pipeline, growth market that, We In ManTech as contract environment on to ever remains awards strategic new based evidenced we continued excited take Lastly, by ManTech's about on well-positioned

Operator

Cowen [Operator you. And Khanna come the Thank Company. from our Gautam of question with and Instructions] will line first

is now line Your open.

Unidentified Analyst

[ph] on for Gautam. Lucy It's everyone. Hi,

Kevin Phillips

Hi.

Unidentified Analyst

least KGS baked -- the portion on what given the could revenue the it? but -- obviously. new acquisition, -- growth, hi, know is in, But organic a reflects question conservatism new just sounds of the it so bookings, a guidance, be strong terms it percentage work even I quarter much part is how that in can the year, it, as First of talked of the only and ramping of just up probably you're into you bookings to your on one increased like of we're at of also expecting it some business

Judy Bjornaas

Yes.

along basically, QX So of our kind came expectations. in

to think the kind I than X% top the more So the growth to of still range slightly, to but is point business, is operating the still a bottom of the or KGS. online, more -- the guidance we're up We year. about narrowed related midpoint your adjustment the show guidance ramp certainty for of just a majority little the about of new our organic rate moving

marching as just expected. So we're along

Unidentified Analyst

And so, through? given guidance. there you've margin shift bookings of that reiterated contract in you came mix the can mix foresee that just any Is

Judy Bjornaas

the as mentioned, yet contract, managed ramps. fix meaningful Rick contracts price. is Nothing that DoD That the services

becomes nothing in but bit, So it a as the with to quarter, little change that wins will more other some meaningful along that's been meaningful, date. shift a

Unidentified Analyst

these as That's can landscape? ManTech work. enterprise of address number maybe to IT competitive for type of There dollar the can participate know. good opportunities environment? service multibillion be to in just this And changing new How you a a seems

Kevin Phillips

Yes, it's Kevin.

in of them to and not scale. number that based we size are a others on and compete their that in are going we, can there compete frankly, So

process So customers having the IT recent said, that or that performance we and -- strong consolidating. already awards in cash out performance of level selectively with targeted of going are have think gone having to that there procurements and after services. on That based terms And use compete work. consistent have fairly that outcomes-based and the said, and the current passion companies to we're our go I to ones on any into contract outsourced we are

Unidentified Analyst

Thank will That's I pass it on. great. you.

Judy Bjornaas

Thanks.

Operator

Edward of question Thank come line our next And Fargo. from with Wells you. Caso will the

now is line Your open.

Edward Caso

between for bit side and supply the maybe trends equation, good ads? attrition? in talk like Hi, then to that What ability And a the seeing and retain evening. employees. targets separate employee little Thanks. your you you're attract How about your non-cleared people? are doing I'd to cleared of on

Kevin Phillips

Yes.

folks are our of majority First, cleared.

we So that. focus on heavily

it's two-thirds have over think of or folks our secret I clearances. above

that, to to move, order clearances speak but improve I'll continuing out. So overall that effort to around executive mainly the the came is

a have technical to and we time. these The on challenge. is talent veterans take talent programs be able to We're The see customers' reposition them, work And that. we to the internal our meet get we're So I contract internal who shifting And the those market the in in the longer-term, and on to remains why, to requirements. fields. think still ability into training going to work of degree position fairly for good where very remains higher a turnover to programs the demand need That's be interest, we will trusted do steady. improve just over increase and get have we frankly, focused fairly steady. talent the type based

Edward Caso

Was anything forward outsized quarter? the were Did impacted or revenue? And or out? revenue in pulled special that there there the margin pushed contract Thanks. any get any adjustments

Judy Bjornaas

significant. nothing No,

Edward Caso

you. thank Great,

Kevin Phillips

Yes.

Operator

Joseph with Thank will Loop you. And Capital. Vafi our next from line the of question come

Your line now open. is

Joseph Vafi

you other that were bids the quarter, quarter. a quarter. that up that about in the a bookings with on bookings the Or on the ended Obviously, the little line Hey, general, there thought parts the this bookings you guys. for Good we afternoon. not talk would just result with submitted? strong number? number moving bit in in quarter based seasonally on had March Was where thought ended the any I up we

Kevin Phillips

Yes.

of impacted delay those expecting quarter line and would So, variable, and the timing have bit that the to shutdown and of the we're that strong be line, variability -- of booking always going based Again, and shutdown one areas We in RFPs on awards. quarter. the two with submit say impacts to that. a strong but Joe, little the year generally the I timing timing government of of in generally, but is was

Joseph Vafi

from here is is kind and on And going to know intra-quarter, that forward. funded being kind Okay. up Or business backlog? -- intra-quarter it I backlog? type then it to business Fair is moving in and it positive off is enough. so backlog going be OTAs of show it the And you mentioned the for won How just show up and that curious of to mostly going driver of in burns that. the

Matt Tait

Sure.

Matt. is this So

On is experimental of we're in kind the customers way. really OTA what is side, this an using -- this our seeing

the so in the parts should leading direction, a they're could or revenue larger the if significant programs be just say. OTAs not So seeing that but decides to programs, beginning are of we're leading like of really the the to edge lot terms I of they of that start, that edge customer go

Joseph Vafi

Okay.

Kevin Phillips

the part that, of desire quickly them So for for at the innovation. real speed I'd important add, go the is to desire toward capabilities and

the to So that's those vehicle trends, are they're fairly capabilities strong the change within very toward, DoD move the rapidly. and trying in

Joseph Vafi

then the Or was Is finally to cadence any next pretty general sequentially. backlog? the quarters? the wanted funded few over line variability just the of backlog -- kind into I there I nice And Okay. top is of funded up it and read-through there know

Judy Bjornaas

variability. general just it's Mike,

dollars year. obligated just so I think got the it's are now, this they've for and getting confidence are shutdown past more they they fiscal

Joseph Vafi

Judy. Thanks, Okay.

Judy Bjornaas

Uh-huh.

Operator

Joseph our with you. from will question of Stifel. Thank the come line DeNardi next And

now line is open. Your

Joseph DeNardi

the evening. budget customer. kind good way of I kind know, attention from -- people your enough? of budget there that and supportive think aren't or anything that, the other don't across mentioned Hey, paying you being you're of to the out I where Is stood Kevin, the where one maybe positioned strategy

Kevin Phillips

space. cyber unclassified indicators, budget of domain about cyber with basically and in couple the FY to going focus an think things, restating stated continue a DoD is if the that warfare increasing those the a as are that, That will be important and budget. Just think you up 'XX along I

to And you that if the the within there's to about desire desires plays need for favorable. how And budget, closely stated are innovation. that out. we think FY those track rapid think also, So I 'XX as to be going

we core So this on demand in generally, to -- and customer based see that on next of do, the the are we excited demands do within and the about budget. that sets are being based next we're the that very what work types areas year we

Joseph DeNardi

Okay. in just terms strategy. the That's M&A helpful. then of And

the As think valuations you potential multiples, How at years of can a to uncertainty talk the you administration? few over market, political the you buyer? about a that risk changes and given about buyer and in think next as risk how about the kind the

Kevin Phillips

Sure.

at what and combination acquired, a ManTech after For into we merged the of of our company look most capabilities the as we to go it's procurements that own contractor. prime larger

trends, and the to overall based we sustain area capabilities -- to as going the current desire demand need cyber of that doesn't budgets look the only increase domain my the secure out-year is universal. So on. that's protect to what that of risk the and very the domain closely digital And aisle or on space interest digital view. for It matter risks side is you're at going overall to an I of maintain in think the itself the budgets,

in that think as federal about federal those are as our well select, to because you to if overall civilian stead are on we we're going the be think continuing agencies, civilian agencies regardless. I focus fairly So areas And portfolio, healthcare high-demand a good well regardless. federal as

So Congress the direction through good we to -- think any in either we're next grow few from position in the years. in a changes

Joseph DeNardi

you. Thank

Kevin Phillips

welcome. You're

Operator

Thank you.

line Credit Our from Suisse. will Robert of from next come question Spingarn the

Your line now open. is

Robert Spingarn

afternoon. Hi, good

Kevin Phillips

afternoon. Good

Robert Spingarn

going anything $XX increase, KGS, number other the I end and the that million with have end go to at Is $XX ways. year. direction you're in up it's the wanted $XXX increase? be there the that I low million, I high of went $XX -- and to against by of went But you up guess, in looked to guess, noticed guidance this a million. can the in by revenue sales, I a for going your back -- improvement. you've million with it about guide And XX% year

Judy Bjornaas

No.

strong a in new At the procurements our midpoint, think really position. to It that about customers timing down the very the of and amount we're we in existing on course the of and of ramp the XX% then year, comes material guide andd is think contracts. the over I backlog. the make

Kevin Phillips

from pick And that in proposal so that we just to how up, that terms I'd basically just shutdown the don't say in. -- let's it's delays factor will note activity, quickly know in delay, of back that

Robert Spingarn

year bookings, you did but this few pressured And given year, like little year the and Okay. year. QX just unpredictable? have contract this QX and maybe rising this a adjudications where Kevin, really ago And year a about QX QX the last then a see Do the accelerating with look should bit, were little you this asked shutdown the it about strength throughout maybe just or is is talk, minutes then you lighter?

Kevin Phillips

for fairly and next contract as the be well those more three on might but there be timeline I three ratable uncertainties protests bit awards a little next submits, are is quarters, over quarters. think it's the we ratable as delays, by the see. quarter awards that there But for desired might the

Robert Spingarn

wanted And this ask guess, touch civil to Okay. is here wanted the with contract, defense? road on that are, civil. trends And segmented to thing big Twenty-One down see toward other the I in versus I long-term talked, versus your is how contract, then civil -- maybe KGS' Transformation five defense? VA the you business years And about just what you view, you've I the more points the

Kevin Phillips

Sure.

that federal protection and going or need that So, of a that our ability be about And strong to side, the our can has participate Specific Department matters that it's okay growth for the itself. to us. you capabilities to to that and health veterans' in of our need the have citizens, technology into homeland a health in Matt of in that that remind think and speak be diplomats that market core capabilities lot transformation, to think that X% federal of federal security, be applied do are to of administration so going for in customer fronts, there's to half market, number able whether those. us. ManTech and favorable we broadly, continued are a only contract employees bring areas veterans, market. for we a as us in vehicle are and -- let IT Not State matters growth And to VA, KGS the the that about that's I'll so all a to our activities. but the very be X% growth civilian constituent core capabilities budget,

Matt Tait

we're clients civilian I our think market offerings the a see to bringing set that robust pretty what buy. federal market, the for we of is for want to -- that

we look we're going and a So the lot that a after. there when civilian, potential you robust there's federal at think of pipeline market, that

Robert Spingarn

Okay, thank you very much.

Kevin Phillips

you. Thank

Operator

with Thank will you. question Alliance of And the line our Brian Partners. Global from next Kinstlinger come

Your now open. line is

Brian Kinstlinger

VA and For percentage Can the of competitive share evening now opportunity of on is thanks. maybe to on What Great, how there acquisition? revenue view owning in are it, there? an many expand KGS? talk Good taking you ManTech of IDIQ? market my contracts is based questions. the example, about the landscape And your

Kevin Phillips

Yes.

has we and need to about at So for step of large wide-open and new owners right? the we're say vehicle, great enter same We our of hoping of are that nine And complete are as that there they for field that. the of space, understand capabilities, level the peers number tracking. I'd competitors levels us, billion that have XXXX. ceiling through goes basically, that have that or And technologies the vehicle we peers $XX be are many we There of the so a holders but able our are it's to of work.

Brian Kinstlinger

what can is better on you know you'll and and or guess, it? how think it much it do do them? was on XX% you well underperformed by Or access Are I contract owning they for performing understand, to you to better? it, more trying was a have them, I to understand but the think I'd just and you they can you vehicle I'm better? do underperforming like

Kevin Phillips

or any Like be that's Yes. IDIQ it's say every I performance may that underperformance. order contract, strong awarded, underperforming. there wouldn't task

capabilities. worth we're we billion that differentiation on provide of which pipeline into capability are that our $X.X years. bids market, within focused capabilities we about will we And over think on those that take say, we on that focused those next that the few -- based I'd offer have, We for

Brian Kinstlinger

can in revenue? have is the it you terms And confirm they largest -- of contract

Judy Bjornaas

level don't We give of that information, out Brian.

Brian Kinstlinger

has then growth the been year flat? And is, they two revenue have posting One in KGS two? last Have OK. I declining? or more been questions. Have been they

Judy Bjornaas

that. can't really on another future, think them public and for past. we not we Brian, disclosures company's the comment That's the I bought

Brian Kinstlinger

lastly just adjudication it, numbers then you plan it And I and get if -- missed down. Okay. can submissions? provide awaiting the awards didn't just I

Kevin Phillips

billion I for full-year we quarter. at guess, $XX of $X we're the this and about last proposals have expecting number billion of submits, end outstanding

Brian Kinstlinger

you. thank Great,

Kevin Phillips

Thank you.

Stephen Vather

time. that Brian, this have we as further it no appears questions

our on usual, As your your participation ManTech. today's Thank be you members for follow-up questions. any call in for of will available team all and senior interest

Operator

gentlemen, conference. your and conclude does participation, Ladies a you this for Thank today's wonderful and have evening.

You all disconnect. may

Mantech International (MANT) 3 May 192019 Q1 Earnings call transcript