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spk00: ladies and gentlemen good afternoon and welcome to the man tech second quarter fiscal year 2021 earnings conference call at this time all participants on a listen only mode later we'll conduct a question and answer session and instructions will follow at that time if anyone should require assistance during the conference please press star then zero on your touchtone telephone as a reminder the conference call is being recorded i would now like to turn the conference over to your Over to Stephen Vather, Vice President, Corporate Development and Investor Relations.
spk10: Welcome, everyone. Thanks for participating on Mantec's second quarter call. Joining me today is Kevin Phillips, our Chairman, CEO, and President, Judy Bajornis, our CFO, and Matt Tate, our COO. During this call, we will make statements that do not address historical facts and thus are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to factors that could cause actual results to differ materially from anticipated results. For a full discussion of these factors and other risks and uncertainties, please refer to the section entitled Risk Factors in our latest Form 10-K and our other SEC filings. We undertake no obligation to update any of the forward-looking statements made on this call. On today's call, we will discuss some non-GAAP financial measures, which we believe provide useful information for investors. These non-GAAP measures should not be evaluated in isolation or as a substitute for GAAP performance measures. You can find a reconciliation of the non-GAAP measures discussed on this call in our second quarter earnings release. With that, let me hand the call over to Kevin.
spk06: Thanks, Stephen, and good afternoon, everyone. I'd like to start the call today by thanking the entire Mantec team for their unwavering dedication to our customers and their critical missions. This steadfast focus enabled another quarter of strong results including record profitability. We also saw strong Q2 bookings, which were driven by successful outcomes on the recompete front, as well as new awards and contract extensions and expansions. We exited the quarter with nearly $10 billion in proposals outstanding, another company record. This includes both a significant level of new business opportunities, but also a higher-than-average level of recompete. This activity demonstrates the healthy demand we are seeing from customers for our differentiated services and solutions across the business. The market environment remained uneven throughout most of the quarter. However, we are seeing signs of incremental improvement as customers are increasingly returning to normalized operations. Collectively, these trends reflect the impact from pandemic-related disruptions, which have created a choppy and somewhat slower pace of awards in year-to-date 2021. Exiting the quarter and through the balance of the year, we see and expect a robust level of proposal submissions, and the current velocity suggests that we may exceed last year's volume. The volume of adjudications combined with our ability to continue to take market share will be the key driver for our anticipated bookings and acceleration of revenue growth in the second half of 21 and into next year. Overall, we are seeing strong market demand across the majority of our business, and we expect that to continue throughout the second half of this year. Turning to the defense budget environment, Congress appears to be making good progress on the FY22 appropriations. However, given the fulsome legislative agenda, we expect to begin the year under a continuing resolution. Since our Q1 call, we have received the administration's detailed budget which continues to demonstrate clear alignment between national priorities and Mantec's areas of focus. This is a reflection of the actions we have taken to continuously position our business for success. For example, cyber remains a top priority in the budget calls for over $20 billion in unclassified spending across defense and federal civilian customers, which represents nearly 9% growth year over year. Cyber demand remains evident across a broad range of capabilities, We see a strong focus on zero-trust architectures and cyber operations, both areas where we have differentiated solutions and capabilities. The budget also calls for over $97 billion of unclassified IT modernization, representing 4% growth year-over-year. The continued IT modernization push across the federal government also aligns with Mantec's investments and capabilities in analytics, automation, data at the edge, and other key technologies enabling both mission and enterprise operations. Finally, intelligence community spending remains steady at nearly $86 billion, and we still have ample market opportunity in this area. Lastly, I want to note that the drawdown of U.S. military presence in Afghanistan remains on track. All Mantec personnel supporting DoD programs in that country have already shifted into other regions. Mantec has proudly supported the Department of Defense for multiple decades at the tactical edge. We look forward to continued support for our customers in their global missions and are monitoring how their needs are evolving and the implications that has for our programs and employees. Now, Judy will walk through details on our Q2 financial performance and outlook. Judy?
spk01: Thanks, Kevin. We continued our steady execution in the quarter with a focus on generating sustainable long-term value for our shareholders. Quarterly revenue grew to $649 million, up 3% compared to Q2 of 2020. Direct labor moderated some in the quarter with a return to normalized PTO usage and the impact of the additional federal holiday. For Q2, prime contracts comprised 93% of revenue and the breakout of contract pricing structure was approximately 69% cost plus, 18% fixed price, and 13% time and materials. Q2 EBITDA was $67 million, up 19% from Q2 of 2020. This resulted in an EBITDA margin of 10.4%, up 150 basis points year-over-year, as margins continued to benefit from stronger labor mix and continued lower indirect cost spending. Net income for the quarter was $37 million, and diluted EPS was 89 cents, up 22% and 20% from Q2 2020, respectively. Adjusted net income was $40 million, and adjusted diluted EPS was 99 cents, up 19 and 18 percent from last year. Her effective tax rate was 24.2 percent in the quarter, in line with expectations. Turning now to the balance sheet and cash flow statements, cash flow from operations of $75 million in the quarter represented two times net income. Day sales outstanding were 64 days, an increase of one day compared to Q2 of 2020. At quarter end, the balance sheet shows $65 million in cash and $30 million of debt. Additionally, we distributed $15 million in dividends in Q2, maintaining steady return of cash to shareholders. The Board has authorized us to continue our current cash dividend of 38 cents per share to be paid in September. We also recently amended and extended our $500 million revolving credit facility and added $600 million in capacity through a delayed draw term loan. Mantec is taking advantage of favorable debt capital markets and positioning the company with significant flexibility for capital deployment going forward. As consistently stated, our capital deployment remains focused on M&A, and we are continuing to actively review opportunities in a very busy market. We remain focused on transactions that bolster our capabilities, expand our customer portfolio, and that best position the company to generate long-term value. Moving on to guidance, we are reiterating our previously communicated revenue guidance and increasing our guidance for adjusted net income and adjusted diluted EPS. we will continue to evaluate our expected go-forward results, which we believe are most impacted by several factors. These include the rate at which we are able to successfully win new business and retain re-competes, as well as the timing of each, the pace of hiring and ramping new and recent contract awards, and the level and timing of material procurement, as well as the cadence of the normalization of the supply chains. Our revenue guidance remains $2.65 billion to $2.75 billion, representing 5% to 9% growth year-over-year. At the midpoint of guidance, a little over 90% of the revenue is expected to come from existing backlog. We are increasing the outlook for adjusted net income to be in the range of $146.5 million to $151.1 million, with adjusted diluted EPS of $3.57 to $3.68. We are also increasing our expected EBITDA margin for the year to be 9.3 to 9.4%, which represents a 20 to 30 basis point improvement over 2020. Year-to-date margins have been running higher than the full year guide, but we anticipate greater volume of lower fee-bearing ODCs, higher and more normalized indirect spending from the acceleration of expenses related to business development and M&A efforts, as well as increased travel and PTO utilization in the second half of 2021. The adjusted net income and adjusted diluted EPS ranges assume an effective tax rate of approximately 24% and a fully diluted share count of approximately 41 million shares. Finally, cash flow from operations is still expected to be at least $200 million, with capital expenditures expected to be around 2.5% of revenue for the year. Now I'll turn it over to Matt to cover the business development and operational highlights for the quarter.
spk04: Thank you, Judy. We achieved bookings of $813 million, resulting in a book to bill of approximately 1.3 times in Q2. Some specific highlights from the quarter include winning a $100 million contract to continue providing the Navy with range sustainability services for training and test ranges, to meet military readiness and environmental requirements. We also won an $86 million contract to continue providing cloud engineering, DevSecOps, and enterprise IT for the USCIS global enterprise. Finally, we secured a new $85 million contract to provide the State Department with enterprise IT training, technology deployment, and communication services to support global counselor affairs operations. These contract awards continue to demonstrate the differentiation and strength of Mantec's capabilities in mission and enterprise IT and systems engineering. Additionally, 55% of contract awards in the quarter came from classified customers. As a result of these bookings, Our total backlog was $10.2 billion at quarter end, representing 10% year-over-year growth, with funded backlog at $1.4 billion. We are pleased with the progress we have made during the quarter. We look forward to continuing to drive strong results in the back half of 2021 as we help our customers leverage best-of-breed commercial technologies in support of their missions. Our success and ability to deliver for customers remains squarely driven by talented employees. We have increased our commitment to attracting, developing, and retaining talent in what has become an even more competitive labor market. We have been hard at work ensuring we have best-in-class, highly skilled, and highly cleared talent in order to deliver our leading solutions. We remain focused on our objective to be the employer of choice in our industry, which is why we are evolving and improving how our team operates, advocating for flexibility to maximize employee success, satisfaction, and productivity in a new normal. Over the past few years, we have made significant investments, bolstering our capabilities and positioning the business in alignment with national priorities including cyber, enterprise IT, digital and platform modernization, analytics, and other key areas, all of which, as Kevin mentioned, are showing steady demand. Overall, I am confident that Mantech's service offerings across its various businesses have positioned us to continue to win. Our focus on driving continued innovation and differentiation is positioning Mantec to maximize pipeline conversion into revenue growth. We expect to harvest the benefit of those investments in the quarters to come. With that, let me hand the call back over to Kevin for closing remarks.
spk06: Thanks, Matt. In closing, our results this quarter reflect efforts by our team to drive strong program execution, innovation, and attract and develop best-in-class talent. At the same time, we remain focused on leveraging our strong balance sheet to deliver long-term shareholder value while supporting our customers and their critical missions. We are now ready to take your questions.
spk13: If you have a question at this time, please press the star, then one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. As a reminder, please limit yourself to one question and one follow-up. If you have additional questions, please re-enter the queue. Our first question is from Matt Akers of Wells Fargo. Please go ahead.
spk02: Hey, guys. Good afternoon. Thanks for the question. I wanted to just ask on the margins and, you know, if there's anything else behind sort of the uptick in margins. you know, ODCs are still off from kind of the normal pace a little bit. Was that all that it was, or was there anything sort of one-time that you would point to in that?
spk01: There were no real large one-time items. It continues to be the lower OEC volume and the reduced indirect spend is still not caught up back to kind of the pre-COVID levels.
spk02: Got it. Okay. And I guess, like, thinking about how that will trend here going over the next couple quarters, is it fair to assume that Q3 is kind of more back to normal than Q4 is kind of fully back, or just kind of like the way to think about the pacing of the rest of the year?
spk01: Yeah, you know, we're clearly projecting lower margins in the second half of the year. Some of that is, you know, a return to normal spend, and some of it is just because of our high, you know, percentage of cost plus we're actually trying to – uptick some of our R&D spending and other investments like that. That won't be necessarily recurring in nature, but are within our current indirect rate budgets for the year.
spk02: Okay, got it. I think that's helpful. If I could do one more, I guess. Can you touch on kind of the intelligence business in general, and I think some of your peers, it sounds like maybe have seen a little bit of a slowdown there recently, something that you guys are seeing as well?
spk04: So I think, at least for us, and maybe some of this question is also, I'll say, tied to some of the disruptions overall, but I'd say, you know, portions of our portfolio, you know, overall, you know, we're seeing a little bit of delays, you know, in the intel side of the business versus, say, the others in terms of defense and federal civilian. Just kind of I'd give you the overarching commentary there.
spk02: Got it. Okay. That's helpful. Thank you.
spk13: Thank you. Our next question comes from Matt Sharp of Morgan Stanley. Please go ahead.
spk11: Kevin, Judy, Matt, good afternoon, and thanks for taking my question. Judy, I just wanted to touch on the organic growth rate cadence here for a moment. I believe Q1 was about 1%. It looks like this quarter more or less was along those lines, and you reiterated the guidance range, which, correct me if I'm wrong, had 5% embedded in it at the midpoint. So looking out into Q3, Q4, is the inflection Q3, or is this more Q4 weighted? And sort of what's driving the back-end weighting profile, this ODC surge, or what can you tell me about it to get me comfortable with that inflection in the coming quarters?
spk01: Yeah, it's a combination of things. I would say the biggest is related to some of those ODC catch-ups, kind of ramping Q3, and then even more so in Q4, as well as just the volume of proposals outstanding. We're hopeful that the government will stay on pace and we'll see a good Q3 of adjudications that will potentially drive some growth in Q4 going into Q2. or into 2022.
spk06: Kevin, let me expand a little bit on that. If you look at the $10 billion of proposals outstanding, at the end of last year, that number was $6 billion for the company. And for the first half of this year, there's two trends that we've seen. One is an increasing demand, as well as resulting submissions of proposals by the customers, meaning that they're asked for us to provide and compete on bids. It's not going down, it's going up. At the same time, the amount of adjudications in raw dollars over the first six months of this year, has not stayed at the levels it did for the last two years. So that adjudication part is reflective of some delays that we think is from COVID, the choppiness. But you put those two together, there's just a lot of proposals out there that we think are nearing the end of their adjudication cycle. And we'll expect to see outcomes from those, both from Antec and across the industry as a result of that pickup.
spk11: Got it. That's very helpful. And then just on On the cash balance in M&A, it looks like if you did nothing else other than service the dividends as well as the remainder of the revolver outstanding, you'd end the year with more or less 150 million cash on the books. And I think with the revision to your credit facility, you've got another 1.1 or so in terms of dry powder. So how are you guys thinking about... M&A flow here in the coming quarters, and in particular, any commentary around deal size?
spk06: Yeah, I'll start, and then Judy can add. Generally, we've seen an uptick in assets that are available to the market this year at all sizes. It just feels very busy in 2021, and so we are active, but also, you know, the debt availability is there, and it's a very good time in very good terms to be able to be in position to have that capacity should we find the right fit. And we still stay disciplined. The multiples are fairly elevated, but it's a good time in the market to have that capacity available, which is why we worked that, and Judy did a great job on that. Yeah.
spk01: Thank you. As Kevin said, you know, it was time to kind of do the amend and extend. M&A market, crazy, lots of things. So we just felt like it was a good time to have extra capacity should we find the right larger opportunities that make sense. We'll be ready to go.
spk11: Got it. And then just one more, if I may. Kevin, I think you had mentioned that some of your forward deployed staff that were previously in Afghanistan might have been redeployed within the region. Can you just maybe tell us if you're seeing any opportunities associated with sort of an over-the-horizon capability or what you've been able to redeploy those bodies to?
spk04: So, Matt, this is Matt. I'll field it maybe initially here. And from a DOD perspective, Our presence within Afghanistan now is complete, and I can't really give you the specifics about where our folks have been redeployed, but they have been in support of the national security missions that we do support overseas.
spk06: And I'll add to that at a very high level. We're a mission and tactical edge company, and some of the investments we're making around R&D and technology relate to our ability to support deployed forces. deployed systems and and that's an area that's got a heavy amount of focus within the DoD writ large based on the change I'll call it a generational change in the strategy from priority counterterrorism to priority countering near-peer threats and how that plays out in terms of funding and activity will play out over time but there's a very real and compelling need and we can sense that in the customer so we'll see how it plays out in terms of our support but We've supported these locations for decades. We're proud to do that, and we'll continue to do that.
spk11: Got it. Thanks so much. I'll get back in the queue.
spk13: Thank you. Our next question comes from Gautam Khanna of Cohen. Your line is open.
spk03: Yes, thank you. I was wondering if – I know it's early, but would you mind giving us some color on what you think the medium-term or longer-term organic growth rate made trend to be for Mantec. I know we're coming off of a big year and we got the pass-through dynamic, but I'm just curious, like, based on what's in your pipeline, what you see the national security needs as being and just putting it all together. Is it a low to mid-single-digit organic business medium term, or how do you think about it?
spk01: Well, I think, you know, in general, the pipeline shows that we've got lots of opportunities out there that we're pursuing. As you said, it's early to start talking about longer term. Our goal is always to grow a little bit faster than the budget. And, you know, so we're feeling good about it, but it's, you know, there's $10 billion proposals out there and it's just going to depend on how many fall our way.
spk03: Judy, could you refresh us on sort of the re-competes? over the next 18 months as we think about the $10 billion?
spk01: Yeah, there's not a lot of impact remaining in 2021 from re-competes. We've got about 90% plus in the backlog with the balance kind of evenly split between re-compete and new. Next year, I think, in general, is a relatively average 20% to 25% recompete, but it's a little more front-end loaded in the year than we've seen the last few years.
spk03: Okay. Thank you.
spk13: Thank you. Our next question is from Robert Spengarn of Credit Suisse. Your line is open.
spk12: Hi. Thank you. You know, Kevin, you talked about Mantech Zero Trust capabilities, and this is obviously a big focus for this administration. Can you describe what Mantech brings to the table, and do you have any partnerships from the leading vendors there, maybe a CrowdStrike or a CloudFlare? I think that both of them have talked about ramping their federal business meaningfully.
spk06: Yeah, great question, and thanks. I'll talk about both. You know, we're We're supporting the federal government in operating in a contested cyber environment, right? That's got the full breadth of cyber operations to cyber defense. We've done that for a long time in terms of both sides of that, and policies have and will continue to change and focus on that. The cyber defense piece is moving towards zero trust architectures, moving to the cloud. There's a lot behind that through the executive order that came out. Now, we have within the cyber R&D and investments that we've made focused on zero trust as a core component. And within the business, as a business, we're also, I'd say, almost complete with the implementation of a zero trust architecture within our own environment, not planning execution. We're almost done with that. So you put those two together, we think that those combined offer at least a path for customers to know it can be done, how it can be done, and also we have strong capabilities that Matt can expand upon around how we would do that and with the clients and customers as well as partners that we have.
spk04: Yeah, and I would say that just to add on to Kevin's commentary, that we actually have – we don't typically talk about the specifics of the partnerships that we have, but we have a wide breadth of partnerships across the Zero Trust landscape. And, you know, we're involved in, I'll just say, you know, multiple areas of discussions with customers around zero trust. And this aligns, you know, it's a great question because it really aligns great with our, you know, the technical focus areas we have within our 2023 strategy and where we're investing. You know, to Kevin's point, it aligns with, you know, I'll say innovations that people are looking for, but also I'll say reasonable innovation where, you know, everyone gets sold the next best thing on zero trust. So it's us helping them as the independent technology agnostic partner to help sort that out to get to real solutions.
spk12: Do you see a particular time frame when this really ramps?
spk04: Oh, gosh. You know, I've never been good at prognosticating the pace of the federal government. But the one thing, Robert, that I would say is that, you know, the government is in earnest in these conversations where in the past, you know, it was more, it was, I would say, not as urgent a dialogue. So I think that there is a pace to which they want to act upon. And it's just, you know, and so I think the urgency is there and then we'll see in terms of it. But in terms of, this isn't a case of whether they want to do it or not. It's just a case of them getting through their own acquisition processes to make it happen.
spk06: It is, Kevin. I think if you read the executive order, the government has been very clear on what they suggested. agencies prioritize. And that guidance, as it relates to the response to the executive order, how it's going to flow, is very important, but it will also guide these different agencies as to how they're going to do it once funding is afforded and available. And you can see an attempt to establish more funding to make that available and make the changes necessary.
spk12: Okay. Well, thank you for that. Just a quick one for Judy. Really, on the EBITDA margin, I want to just look out a little bit to the right and see if you think the expansion can continue next year. Does the renormalization of some of the costs like PTO and travel kind of limit that opportunity relative to this year?
spk01: Yeah, I think we outperformed last year. We're on track to outperform this year. Clearly, it's something that we're focused on. Trying to continue to do, you know, we've said in the past 10, 15 basis points a year. Hard to say today, given the 2021 outperform that we'll be able to do that in 22, but it's clearly a focus.
spk12: Okay. Well, thank you for that. Appreciate the color.
spk13: Thank you. Our next question comes from Brian Kinslinger of Alliance Global Partners. Please go ahead.
spk08: Great. Thanks for taking my question. You mentioned you've got 90% of the midpoint of revenue guidance coming from backlog for the remainder of the year, I think. How does that compare to the past at this point in the year, and how was potential hiring difficulties, ramp delays, and I guess award delays factored into that?
spk01: Yeah. Hi, Brian. I think the – oh, yeah. Just to clarify, the 90% is for the full year, not the second half of the year. So obviously the first half of the year now is all in backlog. So if you're looking at just the second half of the year, it's a little bit higher percentage coming from new and re-compete. And as far as how it compares to prior years, it might be a little bit better off, but usually by this point in time, you know, you kind of have won what you're going to win that's going to have any kind of major impact on the revenue in the year. Right.
spk08: That was why I asked that. Okay. And the only other follow-up, a small number of questions. I missed if you said what new business was of that 800 and change of awards.
spk04: So this is Matt. You know, the recompete add-ons and contract extensions were the majority of the bookings for the quarter.
spk08: Got it. Okay. Thank you.
spk13: Thank you. Our next question comes from Toby Sommer of Truist Securities. Your line is open.
spk05: Hey, good evening, everyone. This is Jasper Bibbon for Toby. One of your competitors said last week they thought a majority of their employees would adopt some form of hybrid work over time. You know, I was just curious what you think your service delivery could look like long-term and what that would mean for your recruiting margins, et cetera.
spk04: Sure. So this is Matt. I'll just start off. So we've been doing, obviously, you know, the war on talent has not ended. So we're very sensitive to that. You know, we have our mobility program, which has, you know, hit record numbers this year in terms of career enablement of our folks. And I could spend 20 minutes talking to you about all the career enablement things we're doing. But the key for us is that, you know, and I mentioned in my comments just around flexibility and We have a wide variety of customers that some want, I'll say, 100% remote and others that want 100% on-site. And so we're working through that as well as for each of our employees in terms of what experience and career enablement they want to have. And I think the phrase that we really used to sum that up was we really want our folks to be the best version of themselves. And so we're going to be working with them to make sure that they can do that within the context of the pandemic and the things as our customers are, I'll say, changing their requirements or updating their requirements for remote work.
spk05: Thanks. And then I just want to get your thoughts on what wage inflation might mean for the business based on your contract mix. How might that impact margins? And is that potentially a tailwind for the cost plus portfolio if your customers are willing to pay up for the best IT or cyber talent?
spk01: Yeah, I mean, that's definitely an area where having the high percentage of cost plus work is to our benefit. So they are willing to pay those higher costs. But that said, you know, it's still a very competitive market, both on a bidding standpoint as well as a hiring standpoint.
spk05: Okay, last question for me. While this seems to be a pretty dynamic environment responding to Delta, have you seen any customers putting capacity limits back in place at skip work, or is there kind of any expectation that that might happen in the coming months?
spk06: Yeah, we are not seeing that. I think the general guidance is we want you to show up at work. We want to make sure you're vaccinated. We want to strongly encourage, as best we can, you're vaccinated, and if you're not, we're asking that you take a lot of precautions, and we're going to help you take those precautions in terms of not only doing masks, but testing. So we'll see how it all plays out, but the guidance generally is a fair amount of the citizens have at least one shot, but we still have a surge going on, and let's work through this and try not to to shut down things if we cannot all help it.
spk05: Got it.
spk06: Thanks for taking the questions.
spk13: Thank you. Our next question comes from Mariana Perez Mora of Bank of America. Your line is open.
spk07: Good afternoon, everyone. Hello. So my question is on cybersecurity. we see a lot of commentary about how cybersecurity is important to national security. We have seen cybersecurity funding included in most of the bills that we have seen recently. But then, how should I think about the timing from those actual ideas or funding to become, like, budget to become contracts and to actually become something that is reflected in your organic growth?
spk06: Yeah, that's a great question, and thanks. Look, there's a lot of Like any major change, it starts with policy-level changes, as well as incremental funding and reprioritization of funding, and basically in that order. And you can tell that there's a lot of policy-level discussion with the new National Cyber Director and all the activities that's going on that will inform where the funding goes. That said, there's already an increasing unclassified budget for cyber, so you can see there's beginning for prioritization, same thing for IT infrastructure renewal, And we think that that will be consistent, but it's hard to say where it will line up against other priorities. But directionally, I think that this ship is moving in one direction. It's a matter of when and how those priorities lay out over time.
spk07: But when you do your internal planning, do you see this as a short-term boost or more like it could be years for this to actually become top-line growth?
spk06: I think certain programs, it's going to be a short-term boost, but the bulk of it is going to be longer-term mission requirements and changes that have to be funded and procured. So it's a mixture of both. But more and more, this will be more persistent in terms of the obligation and allocations towards it.
spk07: Interesting. And then, have you seen, given these trends, like new entrants into the business, how hard is it to get, like,
spk04: We don't see a lot of new entrants in this. The areas that you're talking about are, I mean, it's a high bar of entry to be able to do this, the type of work that we do.
spk07: Perfect. And last one not related to this, more like next. opportunities, would you mind giving us some color on what is the new work that you mentioned in the qualified pipeline of public opportunities? What is that related? Where does it come from or timing that we should look at?
spk06: Yeah, appreciate the questions. So we have been positioning, as we mentioned, with our investments to be able to kind of predict where the market is and go after some of these procurements of all sizes, but more larger procurements as well as prime contractor. And we have been able to put together teams and compete and put in strong bids. I think that we're on a playing field competing for some of these larger deals across our different components of our business, intel, defense, and federal civilian. And so I can't point to any one specific area, But if you think about cyber, think about enterprise IT, analytics and automation, as well as remote compute and data edge-to-edge support, and systems engineering, all those are areas that we are expanding into and competing more routinely.
spk07: Great. Thank you very much.
spk13: Thank you. Again, to ask a question, please press star 1 on your touchtone telephone. Our next question comes from Louis DePalma of William Blair. Please go ahead.
spk09: Kevin, Judy, and Stephen, good afternoon. How are you doing? Great. Your bookings were... And Matt.
spk04: Louis, my feelings aren't hurt at all. You've got a demerit on that. Not hurt at all.
spk09: Okay, for you, Matt, your bookings were particularly strong from classified customers. I believe you and Kevin may have said that 55% of bookings came from classified. Would you say that the intelligence community demand for your services and general award activity is back to 2019 levels or almost back to 2019 levels after all of the disruption associated with the pandemic and the administration transition?
spk04: So I would say that there is still some delays in the Intel sector Not necessarily from the administration changes, but more from the pandemic. But there is funding there, but it's just a matter of, like Kevin talked about earlier, the pace of coming back en masse and getting things through. So it's a bit of a throughput issue that they're working through.
spk09: Sounds good. And also related to classified spending, the intelligence community seems to be accelerating investments in its cloud computing architecture with the Amazon C2S, the successor C2E that was awarded last year, and the recently awarded Wild and Stormy. From a high-level perspective, our migrations to the cloud are a significant growth area for Mantech in terms of classified and non-classified customers? And if Amazon, Microsoft, or others win a large federal contract as a prime, are you often involved as a subcontractor for these large cloud implementations?
spk04: Yeah, so writ large, while we didn't mention cloud specifically within the five technical focus areas, you know, it's like electricity for us, which is, you know, it's a part of all the things that you do. It's kind of hard not to do the types of work and the innovations that we want without, you know, being cloud enabled. And so we do work with, you know, all of the CSPs and do support, you know, a lot of the activities there. I know we've had recent press releases on certain relationships. So I think just unclass and class, that part of our go-to-market is not changing in a good way, meaning that we are investing in that. We do see opportunities across the patch. But we don't want to lead with cloud. We want to lead with solutions. Our customers really want us to solve their problems. And so these are enabling technologies that we are investing in to make sure that we can be technology agnostic and give them the right answer.
spk06: Yeah, and Kevin, I'll just follow on that briefly. There's tactical cloud support, there's mission and service or agency level cloud, and there's enterprise level. And all of those are focus areas for our customers and are going to be areas that we'll see concentrated movement over time in terms of just creating that foundational element. up and down the overall decision-making stack, if you want to call it.
spk09: Thanks, Kevin.
spk13: Thank you. At this time, I'd like to turn the call back over to Stephen Vather for closing remarks. Sir?
spk10: Thank you all for your participation on today's call and for your interest in Mantec. As usual, members of our senior team will be available for any follow-up questions. Have a good evening, and please stay safe.
spk13: Ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a wonderful evening. You may now all
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