MANT - Earnings call transcript Q4 2019 | Mantech International Corp

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Operator

Good day, ladies and gentlemen, and welcome to the ManTech's Fourth Quarter Fiscal Year 2019 Earnings Conference Call. At this time, all participants are on a listen-only mode. Later we'll conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Mr. Corporate Investor President, Vice Vather, Development Relations. and Stephen

Stephen Vather

and on quarter Kevin Tait, call. everyone. Vice President Thanks today's and fourth participating for President Executive two Bjornaas, have Welcome Rick On Wagner, as Group ManTech's call, CEO; Judy as our CFO; well and Presidents. Matt Phillips, we

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

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

call, provide performance in measures, as discuss today's be evaluated substitute some isolation on for will measures not financial non-GAAP GAAP for information These useful a non-GAAP we should Finally, believe measures. or we which investors.

can reconciliation of the call in non-GAAP You our fourth find earnings release. discussed on quarter measures a this

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

Kevin Phillips

by market discuss to outstanding Good I'm strong performance. afternoon, year everyone. excited and position. another of XXXX ManTech's results consecutive our enjoyed driven differentiated We consistent financial

in collected at on million continued EBITDA and stood EBITDA XX%, placing $XXX us to from margins our grew year, basis path the an X%, growth XX points. revenue for times, For We accelerated organic operations, growth. X.X expanded excellent book-to-bill cash and

performance. our are in customers constituents; those talented pleased employees, our resulted steadfast our customers, and and Overall, maximizing our all and excellent our across consistently that focused executing, I employees, missions their we growth strategy am value to to being support that this shareholders. want thank is I whose

contract awards QX, securing a times provides awards, awards X.X ManTech won of $XXX new was defense, the book-to-bill. XXXX contract of a $X.X In billion In we customers. in contract total million we continued foundation and growth in X.X beyond. year, federal times a which solid throughout civilian across for in and resulting book-to-bill, XXXX successful won intelligence, a in

up year total awards. over of XXXX made with billion, business approximately a up the $X backlog exited We New of XX% X%.

development sole business and our in IT, intelligence our evident success key competitive and bookings was a our recognized source Our indicates systems Nearly customer coupled which third across support. our basis, with ManTech's cyber, on wins customer differentiation. a of operations were capabilities engineering, base clearly

level to proposal are submits busy XXXX in a on We healthy front. on enjoyed path year and the that have another

our Our excess of outstanding qualified billion and pipeline over well in $X at proposals $XX billion. remains sits

ManTech's solutions. customer's innovative remains Our appetite strong for

a result, we strong growth As in are XXXX. projecting

combined as million Additionally, trajectory growth. strong XXXX, with in as award contract. won offers later bookings ManTech recently our a to This well speak award we the call. award details a in on healthy solid for additional this will pipeline single $XXX our us

With address our all required continues autonomy, increased to FY strong, and President budgets clear the and $XXX solutions in intelligence, bipartisan the well-positioned are funding the innovation funding aligned enacted 'XX budget for speed modernization, cyber, this solutions. set and nation, be deliver under There broad to requirements. artificial environment funding is strategically level operating all areas briefly which The appropriations for that. 'XX to of and and the appropriations. released threat and December. the awareness request, calls where innovative FY space, facing spending systems request to ManTech the in shifting customers the customer week, calls on maintains the of defense, in for critical-mission environment, Now, focused Last levels, remain market against customers of billion

is actions in that Lastly, policy well to in government-wide, supply cyber against the there threats defend as and driving is the as chain. focus security a on domain continued

and maintaining has of people I'm trusting team forward on fronts. look proud on for to the and all our delivering success. for what success us incredibly our accomplished our I'm customers thankful

solutions from Continued clear. appetite ManTech's is customer innovation and

such, we in advantage. and focused capabilities As investing competitive remain talent on and our sharpen strategically preserve to

walk our Now, the Judy will through financial performance XXXX of outlook. details and XXXX Judy?

Judy Bjornaas

pleased finish year. our Thanks, strong I'm the Kevin. report to to

primarily expectations Our up results $X.X exceeded XX%, the strategic the year and the our growth for new was X% wins, board. programs, This and growth contract acquisitions. billion, on high-end was across of driven our by organically. existing Revenue

direct XX% full-year For quarter the results. was Strong evident organic fourth on in quarter, revenue basis. million, both up and growth an XX%, the the labor was $XXX and

Lastly, quarter, an and of ups strong awards, our recent from contribution enjoyed uptick contract we in the fulsome ODCs. in ramp

year, our our of as XX% price the for and and work XX% XX% we performed or a X%. materials. For was margin mix approximately was an $XX comp of and EBITDA million, quarter time EBITDA contract prime, fixed XX% the plus

margin incremental and EBITDA EBITDA year, the Net per $X share a income up our XX was the XXXX, diluted improvement. points than for EPS more $XX margin X.X%, our XX%. million, up accomplishing was was $XXX targeted was and basis in For exceeding from QX. year expectations, million,

EPS result the net the the a full-year factors: meaningfully periods strong the up primary respective full-year, operational two both performance million pick-up. a For of to XXXX was compared as EPS and $X.XX. $XXX quarter discrete was tax-related Net and were and diluted for income income and

income resulting and QX, current approximately expense from to our and reassessment the In recorded $XX a development of tax of credits. year's we research million, prior tax reduction

EPS, demonstrated million of and XX.X% effective EPS tax healthy income the Excluding and amortization discrete the of acquired XX% net of of and in was as adjusted growth. diluted also R&D up impact tax intangibles, items the impact which the Adjusted $X.XX, had tax the we excludes as was XX% diluted adjusted net well $XX respectively. credits, QX, full-year. XX.X% for Adjusted an income and rate

EPS diluted million, For was adjusted net income $X.XX, XX% respectively. adjusted and XX% up the year, and $XXX was

for for We cash from At year. $XX on sheet and flow million maintaining distributed $XXX we Now, last of of net from million flow statements, steady improvement return the we to income. XX days $XX collected a at cash year, cash year-end, was in X.X in a robust DSO to a the in year-end, million times balance operations, the dividends million XX-day had debt. shareholders. $X cash year, and

current sheet $X.XX, and Given raise to cash flows, by the our $X.XX dividend yield $X.XX XX% us strength dividend levels. quarterly of of a increase the and or of This to be in balance dividend has a an equates will paid expected Board share to annualized authorized X.X%. March a from approximately our

range expect our net to to and billion business. growth, and million our and on is implies guidance, XX% revenue expected between $X.XX. The $X.XX and $XXX.X from midpoint guidance EPS more be recompetes million, $X.XXX to come from and of Adjusted balance $X.XXX of the X% diluted billion. and between revenue than adjusted with we Now, new between income current XXXX the backlog $XXX.X

Our contract awards including clear Kevin from year-to-date XXXX path with large earlier, wins, our to us coupled provides a XXXX the mentioned growth. with award,

BD, and in which Turning XX XX.X%, to be prior X.X% into the will the margins, given flow of near-term on share least an should innovation, driving line invest our growth, capitalize flat and improvement year, the guidance count top margin focused and fully sustains of significant shares. year, an We continue to is remain in for are $XXX talent XXXX. from guidance delivered million EBITDA for diluted Built market rate the to from a effective operations margin million year. opportunity. development Cash on of at our tax the

expenditures with quarterly of revenue expect more expenditures Longer capital trend to requirements. normalized program actual variability expect X% capital approximately we levels. We driven to by lower being term,

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

Matt Tait

XXXX, I retained driving the the year. look forward performance business recompetes. Throughout and team Corps ManTech $XX Command. with Judy. enjoyed technical new year, in Solutions recompete, pleased you, and securing to another am to for quarter, and successfully million providing the Systems support we Services In the five-year Thank a we scientific Mission Marine both success and in successful

forward performance and with is Overall, I the a pleased in momentum in year am key XXXX the carrying object. a

innovation sharp and a such, As ahead delivery demand, of driving program excellence. on customer focus have we ensuring

that the we [ph]. of the Before the you [Fedco] I release objective the wanted and reviewing award, and million about approval. forthcoming not program a or to contract in contract be is press bookings release specifics make the award contract $XXX over currently Rick, we to been detailed the press this government call size will QX I The upon note formal all backlog, given a the want though is by our have aware. of five-year Even in turn awarded to

you. to over Rick,

Rick Wagner

enterprise COD very in ManTech operating other the program, successfully Mission best keeping pertaining recompetes In quarter a contract Matt. the capability growth, in XXXX Solutions driving year, our commitments we won stellar enjoyed Intelligence earlier talent. hiring full fully delivered and provide differentiated to our awards our and to on particularly large four, customers. and Thanks, ramps Cyber IT

in expansions reduce demand differentiation The of the We of on I extension and the these [indiscernible]. of intelligence customer community our find our of half the source significant a contract are contract existing continuation extensions. call came trends particular customers in second, like enjoyed XXXX. we saw on a within and of value recompete that and customers There helps further our first, would form over trends in in solutions. prove your favorable XXXX sole to our two attention, number to programs increased Both risk that our awards basis,

we to customers people. will As the on to look both focus our and XXXX, we our rest continue of

focused program our developing innovation For coupled with on execution. customers, we and delivering strong remain

recruiting, front, talent. people we On highly developing, skilled the a retaining steadfast differentiated through on focus and growth have and

With back the that, closing call for to remarks. let me Kevin over hand

Kevin Phillips

let you performance we closing, we and XXXX jump that questions. want very are I our to key three into pleased In Rick. leave Thanks, reiterate before with with messages me

performs customers. the for at customer's is thankful much their heart We're our work steadfast that mission. First, ManTech of the very

to Second, the and and developing our and them be as our talented growing employees been has continue differentiation, key such, source priority. will management of a are

is differentiated of the our and deep unique ManTech's growth rooted story strength capabilities. and confidence customer talented much people, Finally, very in intact remains our relationships,

are your questions. we With that, take ready to

Operator

of Instructions] is Our from Gautam Khanna [Operator & Cowen Company. you. first Thank question

Your line is open.

Gautam Khanna

Good thanks. Hi, guys. afternoon,

Kevin Phillips

Hi.

Matt Tait

Hello.

Gautam Khanna

Hey, couple guidance. on questions the just a

intangibles that, from if implied new presentation then First, apples of in -- in the earnings, so of you to we specifically sales and relatedly, level just what is wondering was I the contemplated you was that on compare could apples? guidance, organic can excluded the know, number, frame adjusted amortizations earnings growth

Judy Bjornaas

Yes.

basis, end did an So, the and the first they both small. it in mid question did QX, were one relatively acquisition we we is organic at of and acquisitions QX, -- on one

-- as to of million yes, $XX it's in intangible, the the So, the think then, the similar total in inorganic see to 'XX release, [XXXX] growth be or that X% was to in [ph]. intangibles from is so, that can about relatively going it about and as far 'XX and press XXXX, we you

Gautam Khanna

Okay.

$X.XX So, would it's rough about or what work out the so, math be… is to

Judy Bjornaas

Yes.

Gautam Khanna

$XXX you to it a then, XXXX, say ramp and million ramp it cost you could how bit And the know, plus, is, little what sort you -- that quickly the know, of can of talk what profile, a about, Okay. or you as sort win, on as the a the anything contract is margin about in program? time might contribution transition

Matt Tait

Gautam, Sure. it's Hey, Matt.

Gautam Khanna

Yes.

Matt Tait

the say to contract an we this contracts, period. over about XX-month similar So, thing large one other expect that our can XX to to and ramp is we the

there. expectation on can your So, I all question that's the there. answer It's about

that So, helps. hopefully

Gautam Khanna

an Greenfield may be one transition XX to project, ask a be a an and it that I therefore, and extended incumbent on then, might might protest, -- there there different then, And or there to months? was perhaps a XX was

Kevin Phillips

is It and possible, it. we're protest end award Look, evaluation Kevin. we're our been size, why a the you on we're to knowledge, yet its been in has protested. our this near to it's could not has where for it's which period that, not it's knowledge award, important then be To it to protested. yet, communicating but communicate Yes, the of given it us timeline so

Gautam Khanna

was industry, comment? there work -- And the any to is is or it new it

Kevin Phillips

it is. Yes,

this new the work part, for For most is us. mostly

Gautam Khanna

Thank much, you very guys.

Kevin Phillips

Thanks.

Matt Tait

Thanks, Gautam.

Operator

you. Thank

from Edward comes Wells question Caso of Our next Fargo.

open. is line Your

Edward Caso

some Congrats evening. and I'm early, of Kevin, a good your on decision after, budget CR thoughts print 'XX, given timing Hey, the until say thoughts? the just I've curious, for election, curious on heard nice here. your say the some

Kevin Phillips

of regular will appropriations of hung call into order. up So, my funding. in, it, It timing election but process will general decision authorization The earlier, move after the the simply CR appropriations may my a though, is quickly, view may delayed. get from process, the view be authorizations is because move work could

Edward Caso

here, attrition Can employee about voluntary you talk attrition? bit a a little

Kevin Phillips

two years. say time last I continues fairly would on robust for that for important talent. a It's energy market consistently very the It's spend of for been lot running to the be that. us to and

things sure individuals and packages working all provide are attract the careers, in We in that these towards the retraining extremely in competitive we the future talent. investing two into company, to market making

Edward Caso

employee Can those and us much percent for two you your of you the and how much attrition that base how outside, area, of make in remind you greater have DC geographies? comment if total could

Kevin Phillips

the I matter ability employee a head, to you in It's don't the and I our that base customer's willingness work workforce the customers active discussion that. there's on little it's happened a and industry our our of geographies live, want where half with two is as everywhere. think based my and people and to on have and distribute know, has in competitive over region, a of

Edward Caso

you. thank Great,

Kevin Phillips

Ed. Thanks,

Operator

Thank you.

comes Joseph next of Stifel. Our from question DeNardi

open. is line Your

Joe DeNardi

evening. think all, you rate just investment it's not at you does environment think growth Thank the Kevin, growth what look on what continuing talk maybe the generating into that you better market, win you your about fair is and share, continues budget Yes. Can certainly win surprise this kind surprising start then, of driving rate, Hey, or surprising alignment? does to you that, XXXX, that it I They're bid you when to the to you are community, growth? good of year, moderate more coming sustain us. guys but kind you. rate the to is expect

Kevin Phillips

That's of lot questions. a

the have been been is customer. a analytics we where global the at we along we because on behaviors pathway FY budgets view driving headed, I around generally that got provide 'XX market we've that areas where 'XX I and that and capabilities IT, with sure a looking of in in focused they're if some pace, cycle, a certainty not and for there's us regular, think good towards and a in 'XX operations allow investing They're my looking that different on in that I customers I'll the are are type and The fair have and make procuring view cleared procure, all through, speed. wrap two-year that. the into can think those budget us and work. point support a greater cyber, capabilities intelligence threat environment rapid around what innovation, We're they for more Customers need toward have the placement think demand. to of a for the where that's depending So, the

Joe DeNardi

And to government expectation and for then, procurement year, you. behavior, seeing environment? means cycle it's slow kind down, your procurement accelerate, of what the election date fiscal are Thank what's activity with their the it, within customer you for

Kevin Phillips

to is expected heavy. procurement activity but last awards uncertainty, is be Timing heaviness or at Procurement of is year's levels. activities' above

Joe DeNardi

you. Thank

Operator

Sommer next Our Instructions] comes of [Operator from you. SunTrust. Tobey Thank question

Your line is open.

Tobey Sommer

Thanks.

inform to So that profile mix of could, the looks is what in there the wanted about pipeline in question your type, your margin I firm backlog ask changes any like? contract of a wins, -- maybe or new or are future

Judy Bjornaas

either haven't the think or towards today, around continue which significant do helping our mean, on I leading of shift. discussions a to and potentially performance. but more the little has side way to little backlog price, side all bit through on seeing flowed move more DoD the not fixed and towards today movement that I margin backlog to we wins the is We hear solution-based more seen Yes, a contracting,

Kevin Phillips

what customers, think else they the market in want prefer conversation. value-based seen and outcome-based while of we is solution-based what the I have Yes, a to and more is

from happening, So, the but type kind that's contract. of all those things of separate are

we having market it's conversations in two as you're different almost move forward. So the there that out that

Rick Wagner

side, moving thing, the it's type contracting, in Rick, we're beginning at but look look contract-by-contract not This a them they're IT see to of outcome-based and at more this, is especially quickly.

Tobey Sommer

bidding new There to takeaway kind or helpful. you about does amount the from win from when the you're does more your convey That's business think that are you And what like, the bid been win multiple you right that there. vectors and rate should think of rate, perspective? about what's your it to

Kevin Phillips

We Kevin. broader that's the recompete activity we're numbers, on ability in differentiate pleased our a with give been win we we market. a that compete ourselves have, solutioning happy investing a Look, think have we out. competitive very heavily overall so, winning scale I'm what and a position It's of against paying with our We're these and We'll wholesale but compete. new. It's specific dividends. I how we're and in in efforts, strong don't share. think fair to both it plays generally, solutioning we're rate lot pleased we're to doing and to see But

Tobey Sommer

is way, growth in different a Asked your in

about BD guidance or is and for there a this the the at growing your rate of is company that year difference?

Kevin Phillips

is to billion, to investments do can redirecting expand we going that, company. that The $XX we the we're our focus money, are proposal over higher and our to that volume we're afford feel because continue on to

Tobey Sommer

from you of requests. some areas in the top Thank you. where benefit several Last mentioned you plays the growth of President's the most? two to and areas are the spending question What a of stand company that request me, budget

Kevin Phillips

think making. the the that to you ourselves that ML of like speed cyber are advancement about decision AI, and differentiate make and need work sure whatever can call ManTech use Let's companies there automation areas that also globally play to it Those like that continue greater to to systems. around we to for we're new have to weapon building new more is systems, major that security right, the data systems the or be increased areas Hypersonics compete and we'll growth, don't developed can

Operator

you. Thank

Cowen. comes Khanna of Gautam from question next Our

Your line is open.

Gautam Khanna

win? that net thought outstanding to though, asking of sorry plus was keep the of questions. is asking $X the it million $XXX worth Hey, bids I billion

Kevin Phillips

It's had it. included a number in it that QX

Gautam Khanna

are through maybe is contract QX you be awarded. by the what have other by was Do year? to come curious, this I if and given do win, pacing lot seeing you a awards sense going you of quarter be the in QX, profile so to also will and this speak strong obviously, for of subsequently you just anticipate but awards Okay, definition been of it's a adjudications? could

Kevin Phillips

the It's can when evaluation can on really to the of visibility that or hard hard that something to But speak we speak not timing award, it's submittals. we to in consistency they're their requesting -- provide the is pacing, into. following

Gautam Khanna

out of terms same Understood, is kind it it of than before? moving is worse Or in things or the or?

Kevin Phillips

It stays budget, more Yes, more and but the now. a years, last around consistent the It's think there's pattern the activity, same. few seen certainly you've same. I it's

on depends timelines. totally And procurement is delays with shop the

Gautam Khanna

Got then larger pipeline, on you there pipeline, And kind ones? you're it. in can and opportunities, mid-size to M&A of promising sense for seeing? candidates, the the is it if so, any speak of? the scale targets What the Are what

Judy Bjornaas

I opportunities the and the sizes to all to with do of any a market gentlemen the with here around chime to I'll can mean, of is the active in, $XXX some properties. start opportunities now, yes, of tend up typical $XX larger other we right that active very is tuck-ins very pipeline M&A million then million, there me from

discipline market. to continuing and very capabilities we're sets pricing looking look, and to at strategy we're with talked maintain So, our our that still in focused an about trying expensive on Kevin maintaining disciplined customer

Kevin Phillips

continue our focused and we'll customers of And disciplines I on we're would our overall that M&A as maintain important forward. strategy, we part that that's and say as capabilities also

Gautam Khanna

to traditional non-Intel last emphasis core? pie mean, civilian point thoughts what expanding previously ManTech that kind any I tradition it's federal non-DoD, or there the from put agencies of into the on is ManTech Yes, for been is any greater

Kevin Phillips

are need demand we think homeland on DHS we equal security national and DoD Kevin. security to is It's Broadly, as focus continuing there. so and in

the on civilian selectively focus our their healthcare well overall to on requirements. as as active we federal other veterans our continue also look agencies based duty component into and for mission will We

Gautam Khanna

All right, thanks a lot guys.

Judy Bjornaas

Okay.

Operator

you. Thank

comes from Joseph question of next Stifel. Our DeNardi

line open. Your is

Joseph DeNardi

Yes, thanks.

apply agreements XXXX and one kind more, does you. for Or Just your XXXX? benefit XXXX Kevin, providing two-year and does you of mentioned good XXXX to that Thank you in budget the for that more backdrop all, you? a

Kevin Phillips

is budget the on mission was we're on and deal based what XX happens years, looking will at, volumes and I for months, the for what XXXX next cycles to think proposal and XXXX we'll think allow requirements requirements. based and see I that's on two to later election XXXX continue the prior XX and

Joseph DeNardi

Got it, you. thank

Operator

you. Thank

Stephen Vather

have we that no questions appears It this time. further at

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

Operator

Ladies and gentlemen, Thank for you participating, conference. have this today's day. concludes a wonderful

disconnect. all may You

Mantech International (MANT) 19 Feb 202019 Q4 Earnings call transcript