MANT - Earnings call transcript Q3 2020 | Mantech International Corp

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

Operator

Ladies and gentlemen, good afternoon and welcome to the ManTech Third Quarter Fiscal Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will 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 Stephen Vather, Vice President, Corporate Development and Investor Relations.

Stephen Vather

you. Thank thanks ManTech's and quarter participating for everyone, third on call. Welcome,

our today and and COO. is me Chairman, Matt Kevin our CFO; Joining our Phillips, CEO Bjornaas, President; Tait, Judy

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

On For discussion uncertainties, to latest obligation filings. full financial call, Factors some a section or of useful a SEC today's other these no discuss substitute our risks should please non-GAAP entitled update provide factors believe isolation any GAAP call. and measures, Form we for in be performance will the non-GAAP other undertake and investors. information These as for XX-K not measures of and refer the we on to We made in statements Risk forward-looking which evaluated this measures.

Kevin. this a hand find on measures the discussed let quarter in over With our the third call to non-GAAP can reconciliation earnings me of release. You call that, Kevin?

Kevin Phillips

in that ongoing steadfast good talented healthy. you growth this to quarterly our and the differentiated I to impressive is as team focus and demand strong We exhibiting want unprecedented awards. by safe strong set growth, and This on global and the and enduring for show an pandemic. trajectory of rooted national with revenue solutions and I'm quarter. pleased our Their another continue fact your of are customers our commitment organic by contract for deeply awards brought the perseverance EBITDA their ManTech's produced performance. afternoon, expansion, the Stephen, great customers we remaining that healthy backdrop, everyone. unwavering to momentum contract thank the flow delivered mission. for ManTech families and are Thanks, continued people sustaining the and that believe its well-positioned exceptional robust We services, are confidence hope and and cash resilience results. and business amidst evidenced

our a we the in As Judy for and which year, more narrowing performance, this discuss ranges will detail are guidance raising result shortly. of

me let thoughts to offer our environment. drivers some market Now important on

operating As many we of XX. continual until you December know, at a are least resolution under

Our will be current extended next the expectation is CR year. into that

However, National we progress as 'XX Act that appropriation. Defense are as towards hopeful finalizing resumes well FY the Authorization

reported XXXX. that pleased are in coverage was Act CARES CR the embedded We section extension under the for an

seen have the coverage, who operations. this some their critical reduction number the very values our retaining coverage. particularly intelligence to companies, Congress significant sustain remains the the continue necessity talent. community, those coverage individuals in in many to need We believe is a hope of must yet We this that important that It to utilize it of

government all awaits the near-peer final technology the and the the the of key technology as on shifting expect As either we conflict. to would such future threats, areas, focus for like election, missions to to of nation that I countering use domains advanced note bringing administration towards results in across of

We strategic these against our are to priorities. differentiated aligned well national provide offering

level times book-to-bill. some development We X.X a the offer which thoughts front. experienced this healthy me brief on quarter, Let in business a adjudications resulted of

Additionally, we quarter had strong submissions. a of proposal

threat across XXXX our set, criticality environment mission we demand our advanced for seeing consistent cyber, proposal the differentiated persistent is exceed and customer evident The will systems intelligent and to in analytics capabilities customer track on full and engineering. the submits demand solutions. of ManTech's that given are it remain believe We spectrum are steady, and global

ample relative to opportunity next healthy. to competitive with market, creates ManTech's very proposal market market our remain broader that positioning, is coupled additional year's view take should share. size current addressable Our volume the

ManTech the me five the the serving continued Before the I'm announced to and Co-Founder, since we to the and his company our was and role look in September ManTech decades news George I Pedersen Chairman ManTech. on in honored forward capacity. of today, this a of that company transition grateful his and regarding us call his Board. it guidance, humbled Judy, Chairman the Emeritus founded industry all is and the acknowledge leadership contribution of Board over is for ago. over and industry to Chairman Board named in pioneer George into to his and that want has forward to from in our I new turn leader grown Executive Chairman at the I'm look

and Now Judy performance revised will outlook. the financial QX of Judy? details our walk through

Judy Bjornaas

up all direct contract will held about Matt year-over-year was in at Thanks, for bedrock indirect translate and They healthy of X%. awards cost labor Revenue talented Kevin, in that expectations of a measures. our XX% across over foundational by excellent I XXXX. to growth. people. your I revenue echo quarter strong minutes are few The of and growth. all comments growth quarter Margins our that was continue steady continue financial performance discussed was virtually the build to and results the we QX exceptional am million, bolstered the XX%, topline EBITDA remains for continue EBITDA Kevin management. $XX be to $XXX key into our grew QX ManTech's truly on exceeded and and Direct the labor million produce. margin pleased for the organic.

tax was $XX was lower the Our $X.XX QX, for to solid operational cascaded growth X%. our EPS. than and million Net and up P&L. demonstrated strong only both revenue The XX.X% income execution $X.XX by through contributed expected of diluted EPS rate profitability healthy

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

sheet Now on flow and balance statements. cash to the

timely days and new no a end, basis, record quarter, X.X and a XX quarter we on in times last our cash flow cash At we in year. net end, operations, and DSO improvement debt. to For $XXX had $XXX quarter million continue company was Customers a compared from three-day pay to million the income. collected representing at

and quarterly candidates Our financial approach. great continue future Board cash on focused of in distributed quarter. that of to invest flow capital to be maintain organic will We X%. at and market level December. us M&A per cash for continues share key dividends dividend and and to sharpen has be allocation capability attractive to strong portfolio. approximately sheet million the provides growth, our our customer us paid $XX our for yield The $X.XX to position very components The in with flexibility authorized are returning we shareholders, value-enhancing to M&A The balance the remains active,

be ranges on revenue, the diluted Now raising adjusted adjusted the performance as income and $X.XX a strength to now billion, XX% XXXX which between At to to-date, net expect guidance. our year-over-year to little we organic $X.X represents We revised to growth. over guidance, revenue are narrowing billion compared our the growth. communicated to Based XX% our we of anticipating and XX% generate EPS midpoint on and previously for guidance. of are

beginning last point a an against the initial basis outperformance assumes year, EBITDA representing XX now guidance of at X.X% a our of year, significant the over expectations margin improvement for year. this Our

and to Act our of of influence material the our factors ramping revenue December and could and guidance. ability CARES include beyond XXXX the level margin awards, XX. and me revised lease They procurements Let note meet hiring coverage that contract the pace

XX.X% Although I adjusted EPS this diluted reliance between $X.XX bottom have million reemphasize adjusted rate between on on $XXX.X income of these and million would that line, the this million an share expect the $XXX.X of are at XX.X and diluted $X.XX. Shifting last and point, net a we coverage count guidance to limited time. shares. and fully ranges we effective tax Underlying

increase meaningfully We This from flow, from be expenditures capital operations cash are for now increasing to to the to of expectations at a flow for least our we prior guide. represents X% revenue. to year. $XXX our anticipate close Now be million cash XX%

highlights Matt on development cover operational business the Now quarter. to in to and the

Matt Tait

pleased Judy. resulting business with X.X am the Bookings a billion, in quarter. book-to-bill. development Thanks, performance in totaled $X.X I the

delivering efforts. the across and of contract driving demonstrate awards are of the awards cyber, market. with from and the on Nearly quarter we basis, to half to testament intelligent related were balance that federal Our analytics a a the robust our the systems modernization we contracts are of providing were awards sole differentiation systems two-thirds Approximately customers. satisfaction and contract of supporting in the missions source intelligent engineering our level innovation and

and want We won Lastly, of months, recent moments an over approximately new came of spend contract continue to last I to This analytics the threats effort is business. few a this that enhance highlighting CBP's awards with ability these program capability analytics awards. the the identify DHS recognizes contract federal half some from our XX within government, solutions the services excellence predictive to ManTech's and marquee area. a homeland. in providing and award analyze to

awarded assist capabilities. engineering analysis risk in new of an a million On spectrum effort the to existing developing the pair modernization we intelligent Navy security million but won to certainly nearly contracts across least, technical countermeasure and personnel a not of the the cyber cyber $XXX we technology front, to the system meaningfully to full their safeguard and threat additional of contract expanded an operating quarter, efforts with of of Last, Also Department platforms. services its Defense, globally. State totaling Department ours agency provide support were $XXX

has Defense to been of a systems how Department closely operate a model-based increasingly towards in effectively technology ManTech working digital the to with customers cyber engineering environment. apply demonstrate framework, systems and As onto kinetic to shifts more

funded at outstanding $X.X record approximately firm contract As $X.X a our these a backlog at of result X% $X our stood and total billion. backlog was up figure billion, stood Furthermore, sequentially billion. awards, proposals

delivering success outcomes people, development customers innovation every successful efforts without be business who are tireless of day. our would Our the talented our and possible for not

within remarks. the let back Kevin priority to developing that, such, With base our me over remains growing, satisfaction hand for for closing a and As driving us. talent key call

Kevin Phillips

Thanks, Matt.

take questions, you leave observations. let few with we me Before a

ability another our close We strong year demonstrates of clearly through a to path performance performance. unconventional out year-to-date on environment Our and great to resilience. complex remain financial with navigate

our the most mission-critical and mission service. for questions. for to current line impactful quality very further and to enhancing and and uncertainty, to employees, to systems it trust environment and demand. in prospective to given unwavering solutions. provide ManTech differentiated market analytics, We continued increasingly Customer address highest engineering. strong. in us modernize and capabilities demand shareholders value as the committed increased our and open remain unchanged customers, positioning portfolio persistent innovating, Our cyber, this services despite external growing and thank abating, and global our customers customers growth prospects fact, intelligent meet and digital solutions is multi-vector their to prospective is the market are the in We to well-positioned deliver current nation's growing, remains our with well threat not given need proposition battlefield. our please as and ManTech's Operator, is our

Operator

question of [Operator Instructions] Khanna first is Cowen. Gautam Our from

Your open. is line

Gautam Khanna

any I ask view level bookings wanted Any against to XXXX had you've if for Any all had you the and year? to recent given could sense preliminary for CR revenue potentially in the prolonged you just point it, contrast on ballpark next growth. quarters?

Judy Bjornaas

to Yes, those we you things mentioned, just now. that guidance giving be it's Gautam, think premature given a XXXX little

doing be call. that February we'll at So our

Gautam Khanna

Okay. bit you recompete the up months? a talk of Relatedly, business could the over percentage the next to about XX rebid little

Judy Bjornaas

that in XX% of year. be to revenue. start And seen it's of around looking We've decline close the Yes. from to the XXXX,

lighter end on of So average the year. an

Gautam Khanna

a you would opportunity Biden shifts of? that And anticipate that if be Okay. big administration? we aware is should I'm risk does it create just that or lastly, curious, any

Kevin Phillips

and Hey, support for staying advancing important. and threats all both see near-peer looking we national of Look, the is administrations, for platforms Gautam, is this activities, technology Kevin. security overall

priorities we'll and strong see the we support of So right sets, intelligence, wait to and both in and defense But customer we're composition federal again, think position in are which, civilian sectors. the come our executive branches out. how now, legislative a

Gautam Khanna

you. Thank

Operator

of is Your Louie DiPalma Blair. next question from William

Louie DiPalma

primarily And any of data as detail integrator the described are types Matt that many that Are there Judy, acting and you wondering, home-grown marquee? of analytics about custom $X in I you border could you contracts billion? ManTech's more are software? patrol you provide a evening. Stephen, described, pipeline Kevin, Or as offerings? contract think, of your for goo I using these commercial you at systems was

Matt Tait

Yes.

for thanks Louie, the So question.

people we're that work terms predictive very stopping - really the is the border. on is things from high in off, in bad and first focused bad analytics and across doing So this of

so But And if that's have talk the opportunities, ones so they probably this stand-alone analytics one about everybody us. we it, don't, of is they in for is have. you this one of wishes the definitely good the the, industry that key part

in business, though, federal there. of versus lot opportunity intel. this the out civilian where see mix not is in The opportunities of second lot there baked and but is a sector across aspect, but are these an area just is into a the we And a defense stand-alone,

And so of we some we're but some waiting that and that, a is that there mix are of on already in out have there. our to pipeline them,

and And that, on already of we're so pipeline in that our some adjudication an we waiting have from that some perspective. are of

Kevin Phillips

customers over And it's Kevin. we've in the what is technology allowing our to as and the terms R&D - the analytics consistent of is been offer I'll the add additional in In no us doing well side certain X in front that last investing fairly years, different. to as talent. technology capabilities we're

next with of to provide a help them. get the step to can that So view we how

as does include of it well. capabilities own So our some

Matt Tait

you. Thank question. that I part missed of the Yes.

Louie DiPalma

a And space talk competitive M&A if that missile wondering And about recent and has you guess, the area? your And of just the in on like on comment there. defense another I what Force's note, space August, services overall contract? you competitive that with been Can I area. lot I saw systems in was launch extended positioning for enterprise. providing there your contract and that positioning you And Air missile you're in could your

Kevin Phillips

level, Matt. high me then over it Let to briefly hand I'll

system of advantage the So aspects. a community be that space other to around we seeing intelligence and no in aspects is different. take and we're of and But propose engineering I'll components, and different to are to programs, that. specific able we systems space believe do the long to space, approach, speak lot the like work going within and physical We term Matt in that let DoD

Matt Tait

Yes.

So Florida. Cape and where Louie, talking you're and conducting some Canaveral out of we are in in ones California those actually the the are launches right programs about, Vandenberg, supporting that

are entrant the government We I'll some, are doing do interesting on those SpaceX, part We working of as as new just all there. origin, work a system system well the model-based engineering work with launch engineering we say, analytics so of And vehicles. launch work Blue as that also new vehicles, and work very actually model-based inhibition.

Operator

from is Mariana Bank of Our of next question Perez America.

Mariana Perez

the the capital first in to my available capital deployment. facility, credit So and With strategy is million deployment million revolving question $XXX in forward? cash what's related $XXX company's going

Judy Bjornaas

market as at be to on stay a be continue we Well, The companies that properties. We're we're active, in of that the things from just to going very standpoint. to in. and to And we're growth, focused going we IR&D talked looking to going we're on continue actively then number our M&A. a customer return is organic to And to and some capability additive things continuing invest about then to that focused disciplined are and of have to mechanism invest are dividend a Kevin shareholders. continue cash

the in going time being. to for those focused we're areas stay So

Mariana Perez

that ManTech will from other investing that that R&D. and that, you'll missions, the the grow mission done market and positioning sure good to job that security years? faster national next, stay with XX related you both, for than like has What relevant really call to the government perspective. technology it, U.S. technology, five make you'll addressable stay aligned priorities for are to key priorities areas in then you And Great. like today a

Matt Tait

Sure.

would on categories. focused put are we're areas. but So focus it X some main these There others, technology I into

capabilities, We're spectrum. is first right? the The of next-generation cybernet, developing cyber full

and second analytics. what call we AAA, intelligence automation, The is, that artificial in one

that's a enterprise large in. have data lot lot information which of do, work engineering, doing space system mission woven and The we that that's of with that And but model-based launch also some of engineering we're multitude but third edge. is a we're to where with agencies. a and doing we then a that intelligence very the actually category, And IT, of the is alluded tactical at at technology then technologies the systems I different

the tactical are So is at technology, and a in in feel in unique customers, we that mission, can in. successful more we the actually the that the bring awards digital with use now phrase actually to our way edge our customers we're be help they bringing can we right that what

Mariana Perez

Thank you helpful. very That's Great. much.

Matt Tait

Thank you.

Operator

question from Stifel. next of Our is DeNardi Joseph

open. is line Your

Joseph DeNardi

lumpy sorry that? your everybody. there addressed particularly or came And value something there pretty expanded your Good of remind us pipeline quarter-over-quarter Thanks. just already, that or bid you this but Kevin you $XX Matt, to growth evening, dollar period on markets? in to you if what over in the meaningfully billion. plan is broader do Can

Kevin Phillips

prime able million can we procurements our of Look, broadly. seeing focused provide do the how contractor, that customers $XXX we're on plus going and be and do are view success. investing speak I'll that, to Look, to a to after we

amount that. make and an bids increasing Our each goal is sure needs submit pipeline that we year to support of to

broadly, would I of focused the in it vast lumpy. technology anything we're are So on. I wouldn't say a say majority areas there's directionally,

six, mix the the about XX% in to to we're our excited core improvement highly are. And continue capability in where technology areas. seven world to because that years technology advanced in mission we're to is where a And of seen is our revenue we providing today last on going really focus critical. You've over sets about active that work

Joseph DeNardi

Okay.

call Okay. of end And growing that aligned there visibility just that single-digit much do as That's low share to markets those it, versus proves maybe much high you helpful. how been growth gain kind continue a of has organic But And with pure just in you're three that double-digit here, have markets. or follow-up, years how markets? growth grow?

Kevin Phillips

many demand. into And competing. did traditionally We're analytics, taking not contracts in have existing in you areas it's an areas, mix. share cyber I highest areas see us are that can market work because on also a have requirement. people customers that some expanding scope where existing in we they're see increasing It's mean adding the

So say of and of it's market those. capability. I share But all mission would and need where they get a the mix based talent the on is

Joseph DeNardi

Okay.

the strength could to Or off 'XX? sneak for in if continue Okay. just cash the baseline headwinds one of helpful? generally you that or kind answer in year. And to grow new your the of if payroll tax just as would to any considerations can you I that Judy, there that going - be that well, are are other tie in margins Is plus

Judy Bjornaas

Yes. with unusual have We that cash through. of DSOs. It lot was the items really flow really a don't a quarter strong

So driver. a can sustain the love DSO to and given seems, our some days, really is would sometimes say over customers little tight. bit that the go seems through we but I issues of they the XX

would term. of probably long good kind XX say I So a days target is to goal

think I So stick we'll of with operating that's the cash flow. where kind

Kevin Phillips

compared would can you I a CFO to about Judy the the flow, an job Steve, excellent trends though, have cash prior that see add, and company. of done improved

Joseph DeNardi

Congrats Thank on role. you. your new

Operator

is next Securities. from Sommer Truist Tobey of Your question

Your line is open.

Jasper Bibb

filling This for is Jasper Bibb, in Tobey.

your of the on benefit Could indirect third in the if you quarter, quarter, utilization. some in expense to comment peers to Some that all? mostly the extent of just and higher margins T&E benefited might at have related have kind your noted which

Judy Bjornaas

with a rates seeing business. And indirect cost the benefit also actually work that of other through benefit activities that plus to projects slight and QX, just improve only than that goes reinvested saving I percentage our actually of additional R&D a money QX. because lower saw government. of of think, in and it we in drop, it We we're the for QX were greater that, we of high took some kind into some In when

Jasper Bibb

a onboarding programs. some last hiring intelligence of and then some competitor in talent for And sided Excellent. week, issues their

on curious hiring of more view your And experience the broadly? front? how kind that Just has environment been what you

Matt Tait

competitive perspective. us, recruit our able So it's I COVID been it's able hire the but don't We've changed think this been different in no think for to to market, recruit I past. than in I mean, a we've environment from and

we're gotten competitive, say it's but I for or up wouldn't obviously that So challenge. It's more difficult. harder the still

Kevin Phillips

I and I down up. new add available that's during COVID, did the cleared, picking slow think that back will talent

bit little So of the into delay a community. our industry on new did cleared entrants see a

Jasper Bibb

has the Okay. intelligence company for Last pretty me. question presence The a in community. significant

seen business. pushes of it's Given some and of to expedite to things of momentum been past, was do if your the friendly manner, kind to but I I know wondering COVID, the the the in Class backlog more disruption narrow you've in related clearance there any some scope X a to activities? have

Kevin Phillips

make appropriate sure for our select with are where to where just safely expansion an more appropriate help facilities work and people facilities at and have mitigation industry, to So are working have to ManTech, there not environment. secured moves to on-site contractor done in unclassified afoot

have all term, to terms are being things see. out anything long we'll plays how of those add? in do it have considered. think But So to I Matt, you

Matt Tait

No, no, I think it. you nailed

Jasper Bibb

it. Got Thanks so Okay. much.

Operator

from Our of Robert is next Crédit Suisse. question Spingarn

line open. is Your

Unidentified Analyst

clarify Rob. up benefit Scott to expected following on the much payroll how for on this Joe's question, Judy, be just you is holiday can year? tax

Judy Bjornaas

not We're take advantage decided of to actually that. customers. getting by We paid our

advantage of So citizens we to in take of good are just continuing country, pay payroll to taxes. as and decided that our the

Unidentified Analyst

And Great. in of remarks, brought guide down I prior the then Okay. the low CapEx your to you range. end the think

a if coming that's elevate below pushout budget? CapEx if year's levels curious or in that's spend that next just of will Just

Judy Bjornaas

little a in X QX little QX, a and were and in low more came We elevated. bit

expect think right XXXX, So going number we I think good and get then for normalized QX, now. to into that's a long-term I more

Unidentified Analyst

it companies, solutions low to good Got talking we CACI margins higher, carries services it's Leidos, about the volume or then, drive involved you. thing getting nonetheless, about in generally And it's hardware niche, it. that after, revenue product hear Kevin, other bit one margin. more but space for they're it's and a One and they're hardware

that's for that? Or little focus curious margin if a strategy you is orthogonal at all? expansion your for a Just bit

Kevin Phillips

services. solutions on We're still and focused

that's own a prioritizing I a the taking We specific and delivery in now by government in already and hardware - available to have not the think we're supporting be go inventory. in fixed-price into assets our basis. where and best business being appropriate market good capabilities more don't prepared right

Matt Tait

Yes.

the being proven broker allegiances us. differentiation any customers we're seeing our for honest think with I strength having is we bring great to that without a solution be elsewhere has

Unidentified Analyst

Okay. It numbers. the see Certainly, makes sense. you. in Thank growth

Operator

Instructions] [Operator

Stephen Vather

Great. we no have Looks like questions. further

all and in thank call you today's ManTech. your participation for So on interest your

Have of senior good As our stay be please for usual, evening, team a questions. safe. available follow-up and will members any

Operator

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

You disconnect. may all now

Mantech International (MANT) 8 Nov 202020 Q3 Earnings call transcript