MANT - Earnings call transcript Q2 2019 | Mantech International Corp

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Operator

Ladies and gentlemen, good afternoon, and welcome to the ManTech Second 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, Vice-President, Corporate Development and Investor Relations.

Stephen Vather

Welcome, everyone. Thanks for participating on ManTech's second 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 risk Form For on made entitled to please discussion obligation other Risk of of call. a We this update section and XX-K full factors the these and the forward-looking filings. latest other risks no SEC uncertainties, statements Factors our our in undertake refer to

let that, With to over hand call me Kevin. the

Kevin Phillips

strong Good growth, organic in performance the afternoon, second profitability healthy improved pleased and flow. I'm We of revenue another cash everyone. quarter ManTech’s delivered quarter. remarkable

to business efforts business strong awards recompetes. of generate Additionally, and retention development continued new

Our foremost, are and delivering our for with behind reputation and combined differentiated program innovation steadfast success. capabilities, strong drivers the the first people

Our energy and customer talent train requirements. to remains ways meet to on attract, mission necessary retain focused

invest to particular areas our of We make concerted robust the re-skilling continue to efforts workforce a demand. on with in focus towards

choice from institutions ManTech. of an competitive have of well employees. market, own we to percentage position a very demonstrates within an number Furthermore, strong the the or our our as talent we with labor attract increasing referrals a new ability from Despite are seeing recognized industry. This, employer to a received accolades of coupled hires

of and ManTech of exhibiting strong report and from bringing security the are customers and where to increasing efforts pleased is these am our demand growth. sustained that positioned talent support collectively well customer is all I speed

to $X.X resulting to a Contract billion $X.X In to quarter, year-over-year we grew backlog total increase awards X.X backlog drove awards, funded book-to-bill XXX contract times. XX% of of XX% won billion. in the million two and

our Rick contract key and Matt on to wanted I statistics details a of bookings. but highlight awards, our in further will go into couple

in I.T. First, new two were and differentiated approximately innovation customer. ManTech. the the thirds quarter over classified demand awards Nearly the from came that across federal the for and of of our set. of is XX% for and and for Cyber the What our statistics those from XX% work awards customer solutions is evident clear is market represent awards

for full healthy. development cyber, appetite customer solutions term, modernization, remains spectrum technology agile Long digital engineering and

well of current this said, to to result, opportunity near-term have proposal over remains quarter. That of opportunities, As than quarter XX which in lighter a billion. pipeline released be started due our the were many submissions timing expected in

that quarter continue proposals submissions after outstanding of to At opportunities, a we awards We and level similar quarter. strong last strong, had level. even wholesale a $X over end, year's to expect see near-term of billion in solid

choppy seeing occur are but reasonable timing perspective. pace, a We from somewhat at a awards

across an remains delivering and the our of federal rich leverage portfolio by focus capitalizing capabilities solutions thoughtful on broad on differentiated steadfast Our market. opportunity market,

Now budget at at Act X% year-over-year. civilian or Budget XXXX agreement the Congress The the representing year growth Last the over spending growth a sets representing XXX Federal fiscal to of XXXX. and from week, deal non-defense X% government two-year as for approximately Bipartisan the deal the year. environment. spending National administration current known set prior XXX billion budget billion, a announced was new Defense the

a We resolution out to is much the the developments, with but short, passage these finalize sort likely required it believe the may current of continuing remain We and fiscal too are that details. by left the on year bill. and vigilant encouraged in timing appropriations be that

at government the began early ManTech there's board benefit in serving attention expertise. to Corporate currently announcement previously serves no of He your career call the a Spatial as Officer over services excited to the of in Board energy include turn have several Solutions. directors. Peter as served LaMontagne adding Before Paradigm CEO I the CEO Judy, and Quantum the our the Peter Solutions to doubt his and we XXXXs. capacities to recent call as Novetta to on his in I'm to and want and from of Peter I of will

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

Judy Bjornaas

compared exceeded quarter with X% Thanks, team's and in the we $XXX are the quarter million expectations focused the was our results XXXX. Revenue second the of quarter second Kevin. pleased execution. to up The for

between in the with Labor growth also our Revenue top Direct revenue. growth. organic quarter line pace split acquisition was and evenly kept

quarter, prime the XX% Contract time our mix cost and and fixed approximately of contracts XX% plus was revenue. represented For price XX% XX% materials.

year-over-year. lower from Operating income as the of $XX.X basis improvement was quarter of second the award as for items. million Margins fees quarter from up the XX indirect than costs, in well operating quarter onetime strong margin benefited point was XX% X.X% a Quarterly some expected XXXX.

earnings XX% increases million were by our driven per the respectively. $X.XX quarter, revenue growth year-over-year was for share up improved These and diluted was income and Net $XX.X margins. XX% and

at quarter to Now $X of million in $XX showed statement, cash, debt. sheet on balance and balance end cash the and our flow million sheet

team four drive times generated net or represents X.X we a day to My of sequentially. XX dedicated quarter, million which their to $XX the DSO in the the from days thanks efforts During operations improvement and quarter, income. cash to

fully now government shutdown impact are collections the Cash in of from the QX. recovered

per level share Lastly, paid to be the current September. us in of quarterly authorized board has to dividend maintain $X.XX our

the outlook, diluted on the for net maintaining previously Now communicated range are our compared XXXX earnings income our revenue to range we share. and narrowing while guidance, revised per onto

X.XX which total growth organic Expected revenues rate of The and growth midpoint at maintains range between compared a a revenue to continue range to X% XX% to represents billion, guidance. the XXXX. X.XX X%

the year, range achieving higher contract the timing well as pace of as of and of have award. the timing the and recent our procurement revenue balance of material on the continue be to high the and any ramp We contingent visibility end for new will

margin of deliver the an year to moderated the fringe targeted ODCs, fourth the an track XX an on margin increased margin for improvement are level we operating second expectation of our is in proposal Embedded points be guidance in profitability, for XXXX. and increased will bid by as expect basis of margins as that for X.X% and incremental half spend, well quarter. And

into At a million diluted and fully guidance of the year and line, per XX.X% diluted between we $XX.X of effective Built million tax shares. increasing guidance, our count income and share $XX our XX.X bottom full net share $X.XX. of to $X.XX our rate to million earnings are

support cash the contract the managed revenue. as be support up expect of year still to items. flow Now expansion We capital internal of is for to X% This our infrastructure investments recent well contracts, services facility awards. our in as improvements expenditures to and

is expected be Related of revenue amortization for and depreciation to X.X% XXXX. approximately

We our X.X cash estimate times between times full are X.X income nudging up the flow for year. to and from net operations be

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

Matt Tait

retained software pleased SEC communications five want tactical Thanks, to am a Judy. We Software with totalling MSS engineering Army I million contract systems. report to Engineering quarter. CECOM recompetes in the provide year Center several sustainment the $XX and to support that

its continue scientific, Technology providing technical million support. Directorate on the the a to retains ManTech with also Security $XXX with Science programmatic and Department multi-award Homeland & IDIQ position of

development Orlando ManTech warriors. center continued XX a cyber future the advanced opened for cyber Army and [ph]. with Army year PTO persistent training we for QX, for cyber requirements generation for in deliver awarded a current Also cyber in million of environment three to next from capabilities shrine was OTA the

with pleased He am to MSS has civilian an to the forward and on spans deep the strong record customers to John him closely capitalize development to to lead joins which defense and the driving opportunity. team. for business knowledge of the markets. extensive look I of I John Lastly, growth. us market Boyle welcome federal efforts our Group, working

Rick over to you.

Rick Wagner

am and of Matt. had enterprise an a quarter. a seven won to year Department MCIS $XXX of services. Thanks, also We report the contract Defense I great to million IT agency new with provide cyber pleased that has

Command to Cyber OTA award along see the differentiation continues of win demonstrate with Offering. cyber This very $XXX and awards. strong continue particularly customers, recent our demand Solutions a of cyber with compelling ManTech's with MSSs to capabilities million given We existing Cyber for new number

in to deliver Additionally awards operations solutions we health the IT, intelligence cyber, contract quarter, won million of engineering over source sole primarily community systems mission variety a and of customers. $XXX to

excellence of Defense On the on our remain agency focus our mid-XXXX. and contract in our our in won steadfast execution across contract execute We programs. on recent that ramping Department front, was large operational schedule awards ramping remains

remains remain employees we to in focused well-positioned continue maximizing In With for questions. to us. market shareholders. opportunity of strong your that summary, on is are and capitalizing the We on our ManTech front ready take that, customers value

Operator

Tobey Thank SunTrust. with first Instructions] come question Summer our of will you. [Operator And the from line

line Your open. is now

Tobey Summer

Thanks.

mentioned you award your the pace think got Could a award got -- expectations something the pushed I the little [Indiscernible] final you've in Thanks. for about fiscal comment bit. of you out quarter federal activities? activities

Matt Tait

second of year. the Yes, Kevin. half I'll go for the

As just strong the what and communicated the that March year volume we a a I the is little basically second prior half mentioned proposal bit year, that the certainty opportunities, the loaded doing a for Richard after we're into that expected expecting but for year, full going those little bit. a more there's shifted this timing and Most we're year that work the is than new, of of has now. is lot about

So heavy quarter, volume year. the balance throughout proposal third the we a the expect between the fourth and of

Tobey Summer

for of the of have big – a with that that awards represent not that with budget, potential year as respect to boogey of off the to coming a kind man And fact time kind Is the a would contract same obstacle two spending etcetera. in a a Is we or does C.R. for past the be it agreement. C.R. we're an there has period it

Kevin Phillips

does good agreement of say complete. view negotiated a two. of matter is I’ll news. we When clear really well the here, just sequestration it That's a Yes, and is that, actually a procurement of order. It's getting that it month how markups continuity the maybe a really normal we're this provides issues that because lot timelines the through talking was

this It's might lead down we over lot October. it get get to a as issue. see So September, very to just of minimal into a

Tobey Summer

Kforce how acquisition efforts? services able recently, tangible the you Could a comment to results it that some consummated leverage you you before and get give on your might from long your us take be in expectations those to

Matt Tait

is So Matt. this

great with lot KGS Culturally, going the fit. like just well. with a have a is also us. They So veterans it's integration of

and the the we focused TXNG So the for integration, business anticipate do case much to so that pipeline the on we've excited and around mission us, put that us about coming. we KGS focused forth meet are very half we see the

Tobey Summer

Thank you very much.

Matt Tait

you. Thank

Operator

from the with Morgan of come will you. Thank question line Matt And next our Stanley. Sharpe

Your line is open. now

MattSharpe

Good quarter. just touch afternoon. revenues to I real here on wanted Nice quick.

year-over-year X% the break and could fourth So was quarter? down much growth that between maybe KGS what you contributed how organic

Judy Bjornaas

inorganic. about it half Yes, half was organic and and

MattSharpe

so to of should the And rate I think that growth? may two make Are the XX% of Okay. in based back the company midpoint the the ramping the a or half functions about has any then the the step on programs How some appears quarters we there uneven first cadence? implied think it growth half up specific it's year in hit about guide. back

Judy Bjornaas

there's as second the to up you step in a definitely say, be half.

that that as contract QX Rick ramping that a be of some we I a be see that start in occur. will of gets the definitely will start and quickly that clearance ramp to how how won can of we we discussed matter in particularly QX QX, programs the quickly matter transfers think

to of business. the contract the new other that the year. the of when as material and as those QX then, continues that's in XX to driver they'll over services And large So more And managed we to course procurements those in. tend hard of the ramp month predict then, COD and ramp had it's exactly the QX that balance well see come

MattSharpe

there's whether guys in I XX give the you might watching And bit say able needle it. color there little anything Thanks. for? just And on hoping to pipeline, to that be six was Got just any of be next movers over we the should months. a around then

Kevin Phillips

for there activities some Yes, win can't it’s the some them again Kevin. There of there in all. we new this and balance that year, a are is majority large of guarantee we sizable work that is volume

$XXX our million we're about So ability for more us see have of those expect market. But just we above, on successful submit the I on to what wait two we are look did we that the and play we And at and our to better years generally than that think be internal be million means. over as to target ago. proposals, years, or where out $XXX it'd excited above how we two if to last them

MattSharpe

it. Thanks. Got

Operator

will Cowen. from Khanna Thank you. question And with Gautam our next

Your line is now open.

Gautam Khanna

EBIT in it of Khanna it Yes. aggregate the than Thank just in Judy, some a the of first unusual margins terms – the little reported and in EBIT you, mean, in maybe of pace prepared activity your to just… was kind X.X% here. you in half. to margin quarter, a the foremost. ODC you're made just second comment -- Gautam just quarter. the But about I of up maybe seems implies better terms like on picking do the Good remarks guidance wanted in I

Judy Bjornaas

Yes.

I think.

especially that Kevin bit into well beating indirect gets big driver expected, was slipping I was rate in definitely some fringe was is QX of there little in we a as about bit now than as a comments as will high, margin lighter proposal factors a low. up That coming being A things So with cost lighter currently QX. pick QX, the as talked mentioned that in in couple worked. but little

And So half than items the did We the third quarter. I in probably half. indirects than first less then, say a will have strong would award differential. a onetime the definitely that's some higher really but there second of were be fee

Gautam Khanna

just time flush bid Okay, will this you expectations speaking a to already your slide helpful. some do of now Very right proposal for you've And QX seen? tapped to bookings on a down adjudication that that's activity, given the bit helpful. of the or the Budget have anticipate and

Kevin Phillips

majority years have of there in and a are into think a Gautam the I cycle customers, two strong a continuity. budget

periods we the on the the think but the through that procurements, So then less they general to clear that the still focused awards. my view is And timing on maybe have I within so cyclical that protest -- quarterly I'm on flush is cell, year-end less quarter.

and So half we half second the the second in accomplished what full.

Gautam Khanna

M&A Okay. hand? could the And wondering stands anything was if pipeline you of then you closer that's as on consequence Are at now. it I comment seeing maybe right

Kevin Phillips

flow There's kind about a it’s at little there. year excited drops the flow but a of this M&A would market we it I that out they that focus the we time of bit, what the have. for see based very strong balance are for still for we look acquire. on And what's normal about selective flow say in I year, the will opportunities And that expect very normal to this a

Gautam Khanna

Okay. in could comment, the have And feeling QX, QX just December maybe the a skewed one just that for trend. similar your bookings, you quarter one be Is last to it finer would QX, still quarter seasonal point it think like pretty on I last dramatically thought one actually you're Kevin, be earlier decent next. would was the

Kevin Phillips

potential fourth for quarter of just QX or option year. maintain this to healthy based still in think on success upcoming of this I timeline going Yes, everything a is the the

Gautam Khanna

appreciate Okay. you it. so much Thank I

Operator

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

Your is open. line now

Unidentified Analyst

[ph] It's and that hiring backlog Finnerty questions. you Justin taking for months? has have in its next now over by the NBIB reduced seen on half. plans about Can my significant maybe you Thank Ed. Hi. the XX your about talk And environment you any [ph] changes for

Rick Wagner

Rick This Yes. is talking.

it looking of of in is strong environment we're at board -- putting higher into some the still the very lot investment think but areas hiring the seeing a we're that that. I and across we're the remains cyber, difficult like

people. draw focus by into people made very really our in just technology the The analytics mission investment cloud, to we've is think three attracts recent starting automation, company. areas on around I that much

piece our investing engaging with referral. the lot we're employees, that and employee create to more a is And third starting managers drive in that's to

security terms In backlog. of clearances, the they're reducing

progress they a be we before of amount still though. people major it'll looks in that available of are think bit change But terms see through making time that good. I the little so of and a

Unidentified Analyst

then months of XX asset to you the past given managed I follow on that on And one the are taken appreciate IT the here, kind color you've up is higher margins offset service of my getting there. some those over additional the contracts new intensity?

Judy Bjornaas

Yes.

the will of the over life think I contract. we

think are in there's I startup lot the and sure appropriately the into going contract making more things a flow so. getting

of first contracts the up as so life in margins move year be the over then they or contract. those So to tend not profitable towards and higher the of

Unidentified Analyst

you. Thank

Operator

Credit come Spingarn question will you. our Rob Thank with of line next And the Suisse. from

now. Your is line

Robert Spingarn

Good afternoon. couple Judy. questions. I a start had we'll you. with may One for Judy, for One of Kevin.

trends your is get you. are to those versus DSOs Thank and latest Just on wanted heading the What opportunity just of working flow of best And sense some you, you LPTA then long on guidance. for working you on the term. where these capital, Kevin in capital see value some I gave there a cash trends days?

Judy Bjornaas

so I can best Yes, XXs on working your I on probably think near-term. given first is our mix, we current do mid think that capital, the customer question

made the and one pleased up improvements are goes or couple as the kind of DSO that We with since that of last is days. drives the the down we've cash of year, really thing end a flow

bit now the paperwork calendar is still the to the of end through I as we XXs cycle, But, first government. at is depending we are of their a spike Budget system. say to -- Their our with end on the target low where mid-XXs see year. would our the right a tend working at little quarter

Kevin Phillips

current sector. technologies. an the going is looking we're environment. They value to for are I think provide paths And procurement looking a looking that's the government solutions. be the that's for People importantly, for to do [Indiscernible] in time environment the is entire a definitely innovation. are are And They best supportive it now, on mandate Defense part and LPTA to right not Strategy fully for good of that. our that. And large based National for

Robert Spingarn

a around that, we've up that these that competitive mergers environment have you to found just big then And has seen all as Okay. environment, by the follow been impacted you. the at

the you. M&A necessarily So that giant these just doesn't strategic doing. more they are I'm talking contracts. going for or not impact about you've really It been companies, But larger

Kevin Phillips

playing go The can what to is customer field. worried that we're to being about, sure matters on procure positioned and how making we and And us. after the those things they compete

out there, other a for procurements do if super we're majority So of compete position companies of they larger think a the to with I good in that bundling things.

may that that not things just on of of us those profile, overall for our Some but procurements. or very I selective be see or our as a restriction may and on after, strategy don't based would by we set go that's the a large focus.

Robert Spingarn

for the color. Thanks Okay.

Operator

Thank next from with Stifel. our you. Joe will question And come Donato

Your line open. is now

Unidentified Analyst

Hey Joe. guys is this John on for

markets, various want Just when in you that think you kind growth quarter, capabilities good to the are growth, seeing of where and does how growth? say the about most to ManTech’s and align

Kevin Phillips

I'll Kevin. weigh say add in. and say I’m to something there and

is the a and maturation the with domain within concerns because of cyber that start growth It government of conflict. So area, a around that. of is the federal

straightforward on in. over about that's hand to is and things IT, benefit all that things that that so the factor to I'll defense Rick things Within the you are and our where and of cyber Matt we've spoken with focus So an now that's national weigh some the and important pretty strategy, that and based see it on headed. of

Rick Wagner

intelligence as IT of to creating towards automation, cloud obviously in opportunity lot cyber big as a community, that's move the that they also think us work there, well. I a but and for as growth portion they additional of the our monetization is Yes

Matt Tait

a in the are would national you where focused budgets as our security that I And like areas right are company aligning as strengths. say know

like not, in talk about So digital when right that bringing we're to mission budget. are seeing that other alignment in ways we the the things others now

Unidentified Analyst

is for given trends IT should cyber peers. leverage better where than and be we Is of it macro federal its side outperformance opportunity really attention where the And for Okay. peers perhaps going to ManTech government, the the their focus capabilities service government of real focus in industry? this modernization cyber, and -- ManTech kind its the our to civilian strong some kind of in of the the to in of broader

Kevin Phillips

out about There a outperform there market are we on so terms excited where we of are we lot the not. very or of opportunities in are whether

well each go collectively, that's and positioned market opportunity. think I how we after based on all ourselves the

we're I certainly us And So, is do. think just in now. that we in all market hope positive for those the focused be where of competitive right sector, the to that we

Unidentified Analyst

right. Thank guys. you All

Operator

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

Your line is now open.

Brian Kinstlinger

Great. Thanks.

and a procurements, revenue one be sounds hoping later on given on bit not was it Just solid question. I guidance. ramping of may means later than I XQ that some like wasn't it bookings thought. bookings, surprised on adjusted again also would you comment was you but you which the have XQ were will work expected you're the

thinking, So midpoint. you organic high but how you at acceleration an you're the are that? how about growth, not confident can confident still at maybe to you so about are X.X% talk maybe what the it's point with It is talk sounds me

Judy Bjornaas

Yes.

think really high I have we confidence.

midpoint is we've more the think got I backlog. than already in XX% of at that

said for talked people very there queue us. get other about light onboard. business the out matter that So We do like programs Kevin recompete as that a mentioned, have the quickly year it of new new Rick a really those is how we that to win some I program just it's in did

expect bookings plus think XX growth. the be work So percent the year, that continue the new balance will to that of we'll we for I potentially add

to get upper think me, solid. very, lower the then very ramp the and to And becomes get it above and materials I the the to end. So to

Brian Kinstlinger

Great.

you mind. one if up follow Just don't

ODCs, in often we times the there won't that backlog? or out typically about and talked come backlog, that materials see where of does You've is

Judy Bjornaas

in part, For the it's most backlog.

Brian Kinstlinger

Okay. much. Thanks so

Stephen Vather

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

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

Operator

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

You may now disconnect.

Mantech International (MANT) 31 Jul 192019 Q2 Earnings call transcript