MANT - Earnings call transcript Q1 2021 | 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 First Quarter Fiscal Year 2021 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 call over to Stephen Vather, Vice President, Corporate Development and Investor Relations. ahead. go please Sir,

Stephen Vather

everyone. participating Welcome, quarter ManTech’s call. Thanks you. on for first Thank

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

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

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

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

Kevin Phillips

perform joining for call. afternoon, and everyone, Good thanks ManTech well continues the to overall.

results by share quarter as as steady our first well and demonstrated profitability, diluted evident strong per earnings Our margins. EBITDA, execution income which was and adjusted adjusted net our

on than pandemic While environment. a relative our choppy and created industry has others over a duration somewhat the and better fared year, its have basis past the company operating

the and was right. lighter to customer shifting quarterly result, growth revenue ODCs a by As procurements tempered

quarters. QX proposals likely proposals of The our market outstanding the for more made good is While procurement delays volume in persist progress and linger few environment in uneven a group. submitting to we in pockets,

fundamentals positioning the remains However, sound. business of the and long-term

billion still increasing technology budget $XXX $XXX budget request approximately over to look 'XX modernization of the a that enacted The abating for said, recently and for is view That are May for nondefense, of administration billion reinforced understanding increases physical proposed their and and there bound their persistent to customers of by later and threats details forward near the priorities. X% the critical-mission for details the is against market in that namely IT national the opportunities a which trends, hope the our of respectively. not administration's which FY is platforms funding released defense provide secular levels for an security requirements. It into with clarity seeing represents levels, realities. need the by calls fact confirm sufficient their Our convergence two. term our budget in XX% request, few that to the are associated with are both our provided We

Afghanistan by place continues fronts, on country's of on away Our shift decade depart priority increasing substantial September war an This a materializing threats, global decision on strategy security from strategy from to of a two a year. on national the deterring is centered is including number near-peer to strategy this terror. XX which the

national innovation. evolve to remains with and potential This positioning today capabilities we us was security through business of meet is to us on repurpose of modernization will that near-peer where the this from view and military the and delivering that focus top threats. have to pursuing new differentiated solutions ten low technology a years Many advance reminder, We much revenue, customers toward priority toward for ManTech's well drawdown execution recruiting Cyber business on been as a a begin bring Director you as cyber that journey National Agency, national priority. leader relatively prioritize as in opportunity in-country leaders annual the As different funds environment. recently named representing presence Cybersecurity and a the of digits remains the as Afghanistan exposure ago. breadth single small, continued adding our depth administration DOD more a team. to in enduring positions is an budget professionals solid its is for enduring Security us security not Shifting and highly challenge. key cleared and operate position round and national cyber thought potentially time. my Infrastructure have The talent. commentary out in noting this by well-experienced distinguished and Competitive market to I'll full-spectrum ManTech's rigid to market cyber and well to pressures our broader capabilities for attracting related, reputation growth gears an in labor

support are applaud the and CARES national its the the preserving with XXXX coverage September of extension most through talent Section of criticality and We Act scarcity critical steady security recent XX. missions recognizing pleased from in Congress supporting

highly Our reliance provision a industry steadily remains skilled many cleared highly But it relied declining critical by as normalized this operations. move retaining on in the has talent. been and customers toward upon in tool

they pandemic, employer to out, in we pleased the planning a is that I of Joe our Sticking the Barker Joe has working as December, seamlessly and since return Anna industry. attracting, alike. our differentiated operating last goal look CHRO as a employees for We Consistent choice Officer; Chief talent. will interim partners a safety bring we technologists normalized the new both and experience and the Anna being role served leadership and am of federal across rolled assuming advancing ManTech's and all the since closely operations drive with of progress and vaccination are tandem passion, reinforced working our the of hands-on and health initiatives tailoring in ManTech's start with that our utmost joined in supports normal and developing empower customers priority. their Julie retaining manner announce our our forward to national of with of are As the of ManTech's and we as and market. Julie growth Human our for is them the our customers the Officer. philosophy of in appointment and activities more in March, promotion to with sales Chief solutions Growth our team talent, operations. welcome be recognize Cubba I operating to us that leadership ranks approach Resources to with charter our employees, ManTech's

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

Judith Bjornaas

Thanks, Kevin.

We are $XXX XXXX. QX a on focus long-term to for generating reached the steadily compared quarter stakeholders. Revenue executing of up with for X% keen our million, value

Kevin lighter impact our most As profit cascaded metrics. and in labor procurement with and delays business our quarter. remains said, the P&L, growth conspicuous its That strong below new direct earlier, drove the expectations for ODCs mentioned throughout

of management. margin consistent which caused from higher-than-usual XX primarily XX% was year-over-year. improvement the the This the and shifted price; grew increased time for contracts quarter Our margins The breakout slightly prime our driven indirect structure an quarter. approximately of The contract contract points XX% mix cost QX, the materials. and comprised of XX% in of lighter by XX% resulted of basis XX% QX of ODCs were lower mix strength the our In shifted EBITDA cost-plus; revenue was of ODCs X.X%, labor in slippage $XX our two mix a and year-over-year. XXXX. by reflecting fixed and EBITDA million, margin cost-plus factors: pricing

up quarter, Adjusted lower execution. tax spending expectation return respectively. and will Net expected line EPS increased slightly rate normalized of income net from Our will XX% XXXX, eventually million adjusted in and was majority The with the XX% XX% ODCs profitability and from that strength be $XX million operational up QX, levels. to was just respectively, income from $XX the is the diluted and last QX those was XX% coming was procured X%, indirect $X.XX, diluted $X.XX EPS bottom for year. than was more and

the and cash to sheet on Now balance statements. flow

quarter, in showed of was attributable an operations This balance used of was XXXX. and end, $X cash days XX million million the the At debt. sheet increase end quarter the is $X DSO million. the $XX from in net quarter, For at the five-day uptick working of quarter in expected a to fourth cash exclusively capital.

be QX. Board in authorized $XX $X.XX in distributed cash which of us will has dividend in we to The quarterly per paid share, our maintain Additionally, million current dividends June.

financial provides for value-enhancing to organic ample cash future growth, shareholders. to position balance cash to Our continuing return with flow sheet invest strong and and M&A us flexibility

reviewing actively goals. opportunities, financial M&A and and on strategic our are to we'll potential We align execute those that

guidance. to on Now

the and as at procurements, We impact significant of are timing most communicated factors well all and ramping previously awards, business The our the the of on as impact are perform win rate direct new and we to hiring the within pace business, each, of and on our pandemic new particularly of able subsides. contract and reiterating material to which that guidance as provided of normalization recent measures. the retain utilization as having include ability the new we the labor the ranges successfully trends our level timing recompetes the the cadence see

from Just year-over-year guidance, represents on At we bit more the than and XX% a existing growth new X% recompetes expectations a the to here $X.XX February which expected revenue is the in fair revenue still plan refresh today, of we to from X%. little are billion, midpoint of of expect you with reaffirming to backlog to of set come and business. billion $X.XX the of

XX maintaining for X.X% for guidance improvement incremental EBITDA profitability X.X% assume up to to to margins, margin our points basis year-over-year. an For of continues of year, margin the the

to Turning our line. bottom

range share range We adjusted shares. XX% expect million an income of to EPS net diluted adjusted rate still of count effective These and approximately $XXX.X assume tax of an to a XX fully of $X.XX million diluted an and ranges $XXX.X million $X.XX.

Lastly, flow flow for least operations and of be still at expect year. X.X% from million use revenue around expect to we CapEx despite this cash our the of $XXX cash quarter,

I'll for to Matt cover quarter. and Now highlights the the over business development operational turn it to

Matt Tait

you, Thank Judy.

the Let X.X business awards, in $XXX of in QX. from won walk a -- quarter. X.X contract operational highlights resulting me We development the book-to-bill through million and

enterprise with $XXX and Our a long-standing in differentiated and these mission are million new contract customer, cyber, a Cybersecurity-as-a-Service won capabilities apparent We the systems intelligent IT awards. in engineering FBI.

capabilities our focused modernization and solid Navy subsystems. continue systems and We leverage with won and [indiscernible], performance innovative new million and strong wins to effort a platform EW new the customer radar into $XXX past on

$XX Technical technical Warfare a Directorate the and supporting Lastly, DoD's recompete Irregular we million Support secured analytical services. with

billion, $XX.X these funded. is Approximately at $X.X quarter which As backlog billion the our represents bookings, a of stood backlog of year-over-year. result growth X% exiting our

our stands at mentioned steadily submitting Kevin adjudications are earlier, awaiting billion. proposals, As we and $X proposals

position federal making DoD of leveraging Solution platform and in list routinely the We U.S. look are as use support partnerships for to recently a partnership both the commercial technology in months Hat the These innovative leveraging growing honor our have and of source in to Red training analytics were IT selected cases. further the date our we Google and cloud few for Cloud am and A pursue differentiators, announced cyber we spoken our Hat efforts. across strategic and, that demonstrates partnerships Best transformation were the use solutions. digital modernization of validation We partner pleased on have customers the frankly, we have our adds technology persistent their a ManTech's container the awarded this we to leading jointly customers new are cloud ago, sharpen with business investments Red Army's forward to opportunities of enjoyed hybrid Adding trusted environment. receiving I with and based success the open by quite OpenShift partners. providers market. to to to This federal We into our differentiation.

have We missions. Kevin for back the With that, closing leverage in and call to look made progress technologies the we are let over remarks. of customers support helping me forward commercial our to excited their continue with best-of-breed hand

Kevin Phillips

sheet innovating we developing are Thanks, long-term on attracting, we questions. to closing, team reiterate their that, strong and my customers shareholder thanks I and With emphasize executing their me retaining your customers; unwavering critical to Matt. talent; let the want missions. In leveraging balance for the to to and for value. take and commitment to our ready that deliver remain focused our

Operator

Gautam please of Our go [Operator comes Cowen. ahead. from question line Instructions] from Khanna Sir, the first

Kevin Phillips

Gautam, you are on?

Matt Tait

Gautam?

Gautam Khanna

mute that. there. about on was I Sorry

Kevin Phillips

important. it's it. very I a know I love

Gautam Khanna

Is the the of this that year? shortfall I so, was was kind when? one Is is you to if day. later QX? ask going-in up relative expect That be going on And of the to do to XXX% easiest of QX? your And made ODC shortfall what was whatever the there expectation? Hey, it dynamic, it

Judith Bjornaas

likely you to just the so problem order these of refrigerator point think but But there. a come with expect That's lumpy tried through are but some still with to quarter, it probably it I don't know more this the can't lately, it come when -- supply that's they made half, the Yes. and we materials, demand some year, next at whether you've be was in chain. they're to timing, expect is up. customers do The get if I fully things. we second

Gautam Khanna

missed did much And give may I it? if yes. specifically was it, you -- how a Judy, have you figure said for

Judith Bjornaas

No, we did No. not.

Gautam Khanna

you Okay. sequential decline would a the But could sales. what Maybe speak was ODCs you sequential have in increase expected quarter-to-quarter? in to

Judith Bjornaas

definitely Yes. I mean top greater were The down, line direct labor think, mid-single the ODCs was than I growth. total digits.

Gautam Khanna

you those give bookings those adjudicated phase that's color outstanding big and it like quarter when of to be a in terms and bids are do environment, a to the of helpful bulk they're kind of No, Is end. of expected, the $X as adjudicated? Okay. billion big over? just those then Or on sort on expected be when us of QX? the QX How of can any

Kevin Phillips

Gautam, this is Kevin.

we about we note is -- will over adjudicated as I but an when because terms proportion of the have that half that of I do half the be is increasing in it's is total there. choppiness, think color business, volume that to when uncertain recompete. would out so talk it's under much they new there's

their to to And as adjudications, get are the new see healthy quarter-to-quarter we how us been right that the how of the of recompeted to early that. they we have still and to of very some our And contingent can they And delay. next plays that predict. pipeline year going the if they we of more government, very this on a generally very workforce much hard noted, into business work kind second the prioritization, So in out But what half have things in quickly in things, year. for likely be in is prioritize. pushing not,

Gautam Khanna

you Thank

Operator

is And sir Suisse. Credit Sir, we do line our Spingarn from question your next have from Robert open.

Robert Spingarn

guide, what Thank growth the you. is Judy, the then afternoon. And guess, the sales at I Hi, what in the organic was good in quarter? midpoint? embedded

Judith Bjornaas

Yes. X% the the It's little is the quarter, midpoint over about and a guide of in X%. then

Robert Spingarn

Kevin, then, to you just improve? in the also that get Or the ODCs with have that reversal you you get X%? does hiring that, award and had pace there on to kind does Okay QX? and can of And in

Kevin Phillips

get for has The entire award improve in level. to our ManTech growth to that pace for and industry order to

not a constraint. think ODCs, be The I in hiring expect the that to is up we the caught end.

Robert Spingarn

Okay. Thanks so much. I'll jump back in.

Operator

next your Sommer Securities. Tobey from And sir question from Truist

Your line is open.

Jasper Bibb

is rolls first to you, This year you I that the track ODC morning. could impact, balance margins good Hey, on any following on the guess, the on of Bibb for the I color up expect as guess and give how cadence off? of margins Tobey. over Jasper quarter

Judith Bjornaas

Yes. year. the I full expecting mean, X.X% for we're X.X%, the

year as picks based up. So clearly, as it's spending course over up as ODCs pick going well of to the the on indirect trend down --

QX in drop then will it and normalize. think I So kind of

Jasper Bibb

total I top I market the about time, some change that company grown current President's how you've request 'XX? guess all we're line in wanted the at ask seeing about growth then is for thinking in above the environment. for addressable with trajectory defense to while And what does

Kevin Phillips

This behind I'll then to wants behind that if is to add Kevin. and color any that. speak or flavor Matt that

job How focus that out they for the as details of growth competition the it need federal administration FY 'XX have are that as as all where job position wait budget lands military technologies we've and well budgets competition. a DoD and will out, a within done technology-driven federal budget needs we can we when so a as POM 'XX to levels very proportion for as certain a sector within that within for think the I within we average higher around and to plays well see where the the will think and or think and above comes those the overall done I of be, that see company our So we continue whatever important be. we've be focused, where will to That said, good specifically think they positioning the are very of think good budget I all to to you on budgets track. the technology current economic

Jasper Bibb

just me. this on been recompete far so Last so do Could progressing how the left? for how year? recompete you question the us for has XX% have or update up schedule And year, this you initially much

Judith Bjornaas

Yes.

in, the timing the XX% backlog and seen and and definitely comments, outstanding the is the new, a over of we're waiting be awarded, loaded half As little balance came got to given a continued the recompete it's at have just I and we've few recompetes proposals for probably into then wins recompetes those and XXXX. of equally in said are in split decisions between the midpoint we and second a then lot but

Jasper Bibb

get Thanks I'll for in and back taking the the question queue.

Operator

Louis from your next our open. DiPalma Sir And William line is question Blair. from

Louis DiPalma

Great. and Stephen, good Kevin, afternoon. Judith

delays Has delays, also of recent procurement to ramp your Kevin wins? of your mentioned and Judy. contract been You there some large

Matt Tait

would I I mentioned, above like and the mentioned. that is our think line other all on along DL think, ramp-up. say relative you to right, that But growth the growth fine top programs, is are Judy So going just I ODCs

think overall, progressing we're think I are those -- So that I nicely.

Louis DiPalma

delays and there those COVID behind something biggest it that as administration taking relates as you is and to that's place? the Great else of you delays? drivers two some the cite referenced, procurement procurement the would Or change

Matt Tait

Yes.

obviously, -- terms those shift large there portion certain bit I workforce, that doing in mission large. our little of of then always areas at a both a happens. in of and there's right, COVID, is change is work are think valid seeing So what we're

or So less. priorities more reinforced get

everyone think is we're those things at the but all think that that bigger are two things those through, seeing macro and working I I we are are of working a level. So through

Louis DiPalma

it, relates has any been and witnessed? be And December both of as second April, half in the guess, the of to easing these from there Okay do I those year? to expect through there that improvement you've you variables of headwinds

Kevin Phillips

yes. and No

and move improvement funded the hasn't as and getting hopefully, there the the procurement decisions help things, operations are all but and as decisions been help in do because government within quarter, will normal So people with we back to of, in adjudicate to first pace well improvement that expect talent amounts. adjudicated getting to

Louis DiPalma

Awesome. Thanks Kevin, Stephen. Judith,

Operator

And Ma'am open. of Perez Mora our is from America. your Mariana next of line is Bank question

Matt Tait

Hello?

Judith Bjornaas

Hello?

Mariana Perez Mora

also task question, this -- growth hard first but choppiness short read should should So to to in backlog how know related how that it's How -- on current future, midterm? and the ordering. translate like to midterm predict organic I we the into funded

Judith Bjornaas

or Yes. We putting of is funded on of timing did which there's kind it. the different in funding see normal don't in QX, we've the anything -- an in unusual backlog funding. receiving of just our seen them uptick timing I think I think

changed So it from don't expectations. has really think I our anything

Mariana Perez Mora

deployment, Okay play buybacks priorities? share and in then like capital how those related appetite shareholder, market to and a strategy buybacks, an with increasing for deployment your role capital

Judith Bjornaas

at method to activity I continues a of our our on we M&A as of focus deployment know, the going We numerous Kevin our in from XX% always all and those. you and we're preferred mean continue and market options. seeing capital Yes. M&A to lot we're to this mentioned, look as be dividend year increased the almost conversations,

the it sense that. buybacks. most our like our at definitely -- So Chairman I from add But seemed look don't hasn't but for wants the we just we and we to perspective, at anything shareholders know think now, if we look that for esteemed Board us makes something

Kevin Phillips

our I active around there successful I bit very and markets aggressive properties we're market and do the our not, are because positioning review Look, around we little more M&A that Yes, priority those one still. we think it's it's of or that a a is it. whether that are that see of think out first

Mariana Perez Mora

for Perfect you in M&A and the what market? are looking

Kevin Phillips

engineering the very a from focus before customer we're the activity, right but market That's are industry. around We're areas in see areas federal of FY but a heavily advancement, of competitive, good active for now lot administration's in there and the where in for technologies on combination what it's out the both all mentioned their for M&A an 'XX important very growth -- technology market right certain have that components. technology businesses and in now. very we our looking of know we've budget. technical a details the We perspective we it's a tracking us are Well,

Mariana Perez Mora

in you. the one more right. Thank queue. have I of jump back All a

Operator

a Suisse. is question speakers, And Instructions] [Operator line we follow-up Spingarn open. from Sir Credit of your Robert have

Robert Spingarn

a of questions to is market? I are the on M&A. number that's that on changes So there Kevin. the of Thanks. the pipeline properties recently? the in One is, follow around to There's do coming up couple proposed wanted tax first question. more M&A, accelerate the So

Kevin Phillips

answer I something yes. a year thinking people believe, last through has -- certainly driver, The has that this as year is, has been It that's inferred options. about

Robert Spingarn

maybe addition hardware? Okay at in to to in those but to And hardware ago looking defense maybe in nondefense, areas so related or are of affects the how about like get or even the peers relative defense -- you the proposed have, the then your some in more have the companies that, markets and you possibly pandemic in we that? civilian that, trended then think a budget as when through valuations, year

Kevin Phillips

Yes.

of fairly So is market for quality in hot demand. the businesses, terms

federal at the where in are demand or the great value. think way the such above and declining That's view and not headed of So in budgets I high been. that's those they of where they've are any areas. multiples They're why terms are in high

at the the In as capability placement civilian nondefense. intelligence, well of terms in to business civilian see budget areas. but from lot do a time, market. federal yes, positioning, expand We same we a are as defense looking federal selectively, on of opportunity still focus into core cyber as But and we placement

Robert Spingarn

Judy, more question. then, one and Okay just

anticipated increase of working payments? does some said day five capital change the on that in it reverse? the kind progress Or you headwind Will Just DSOs, you reflect think in and here. I

Judith Bjornaas

an a over we don't payments. actually just is expect -- the we do It any of course or improvement and in were the improvement year another have QX year. timing issue. it's actual get day we over progress last an two should of It's where we No, that

Robert Spingarn

both you Thank

Operator

is Kinstlinger Global Sir And Brian your your Alliance question open. of Partners. next is from line

Kevin Phillips

Brian, you we cannot hear

Jacob Silverman

Sorry, can hear you me now?

Judith Bjornaas

Yes.

Jacob Silverman

Brian. SG&A benefits management This first you during of quarter? defense quantify to to on Can slightly in onetime lower activity the slow, any And with increase margins for that proposal is term? lead amount plan will operating Jacob then expected growth to on does the spending in the near

Judith Bjornaas

have I'll nothing a more answer was It had and so low. like question items. not any We specific the of the trade things shows items, part. and couple that, first really then the small in There's onetime spending second of just indirect your you pandemic, was of indirect onetime fab no major. still repeat kind timing

Kevin Phillips

And piece. second I'll it's your answer Kevin,

achieve all So fee the business If of to price But we're we overall profile going it. anticipating compete don't our when margin be competitive. or what we're to not lowering trying market we'll the we're compete. profile expect and win we business. that, to overall be changes change overall to after the certainly our order addressing to on approach in It's

Jacob Silverman

so right. much. All Thanks

Operator

Mariana have your we follow-up of question of Perez open. line speakers, Mora is Bank a America. from And Ma'am

Mariana Perez Mora

much. Thank you very

especially flow CapEx? color working about how it also free about rest burn cash So deployment flow. conversion my on cash this -- think should year and of follow-up capital on we And free and sorry, for capital the quarter? Any is the

Judith Bjornaas

income. for year, balance the of expect the cash mean the -- we Yes. -- net be the over think or to to full flow roughly equivalent I I for

the capital the course the of We up expect to the the as then balance year. just balance we drops and it working CapEx over the quarter pick next and year, of of modified the

Mariana Perez Mora

Thank you Okay. much. very

Operator

And question follow-up is speakers, one Gautam ask your from Please have Cowen. Sir, question. we your still open. Khanna line of

Gautam Khanna

Yes, thank you.

on Just recompetes. ask wanted to

the If percentage losses When recompete meaningful year what And to any most us sales those did have quarter? this in of for is could of remind occur? rebid? you again are you first expected up

Judith Bjornaas

it about a bit XX% of said XX% as of I So earlier, of recompete, or or of newer slightly of from probably obviously normalized approximately coming of recompetes. definitely XX-XX, It's XX%-ish it's the because the back-end little into guidance -- going XXXX so so so it's XXXX, a recompetes. revenue that from annualized is revenue higher loaded the still that's XX% actual and midpoint number

Gautam Khanna

was QX, there in consequence that and of anything lost? Okay was

Judith Bjornaas

No.

Gautam Khanna

much. very thank Okay, you

Stephen Vather

like looks we have questions. no further It

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

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

Operator

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

disconnect. may You now

Mantech International (MANT) 7 May 212021 Q1 Earnings call transcript