ManTech International Corporation

Ladies and gentlemen, good afternoon, and welcome to the Mantec Third Quarter Fiscal Year 2021 Earnings Conference Call. At this time, all participants are on a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be brought at that time. If anyone should require assistance during the conference, please press star then zero on your touch-tone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Stephen Vetter, Vice President, Corporate Development and Investor Relations.

Welcome, everyone. Thanks for participating on Mantec's third quarter call. Joining me today is Kevin Phillips, our chairman, CEO, and president, Judy Bejornas, 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 third quarter earnings release. With that, let me hand the call over to Kevin.

Thanks, Stephen, and good afternoon, everyone. Mantec delivered exceptional profitability and cash flow in the third quarter. However, revenue growth and bookings fell short of expectations. We are navigating a complex and uneven industry operating environment, which is creating certain challenges for us. That said, the foundational drivers for our long-term growth remain favorable, and we are positioned in higher priority areas of the market. Operationally, we continue to feel the lingering impacts from the pandemic, namely on three fronts. The slower return to normal within our intelligence community customers, continuing supply chain challenges, and a tight labor market. Unfortunately, our expectations outpaced the recovery trajectories for both our intelligence business and the supply chain. We remain confident in the attractive fundamentals of serving hard-to-penetrate intelligence community customers and our position in that market. We see durable demand across our solutions in full-spectrum cyber, secure mission and enterprise IT, data analytics, and other key mission-focused offerings. However, in the near term, the intelligence component of our business continues to face meaningful pipeline and award delays, and we expect that a return to normal may take several more quarters. Mantec's higher relative exposure to Intel customers amplifies that impact, which is evident in our overall performance. Next, the supply chain. While customer demand is clear, the supply chain challenges become much less predictable, significantly impacting the timing and level of material procurements. Similarly, we expect this trend to linger, but are hopeful that a path to normal is on the near horizon. Finally, we are seeing the effects of a tightening labor market and have uncertainty about about what effects the executive order on requiring vaccinations among our workforce will have in the fourth quarter and entering 2022. We have made concerted efforts to comply with this mandate, but still have some work to close the remaining gap prior to the December deadline. Turning to the U.S. departure from Afghanistan, we are proud to have supported this overseas contingency operation over the last two decades and thank our employees for their dedication to that mission over the years. Withdrawal from Afghanistan marks what we see as a clear shift in national defense strategy around overseas counterterrorism operations and related support to one that is focused on near-peer threats. In the short term, this shift will create a low single-digit headwind in our overall revenue for the balance of the year and into 2022. Additionally, we anticipate and are beginning to see reductions in select CENTCOM-focused field support operations within the Army. MANTEC is a product of the Cold War. Over the course of greater than 50 years, we have well understood the need to adapt to evolving mission requirements. As the mission moves to near-peer focus, the vast majority of our portfolio is well aligned and we are pivoting the balance to this future mission. In aggregate, the factors discussed in my earlier remarks, coupled with natural program conclusions that occur every year, will constrain the level of near-term organic growth compared to the last few years. We are recalibrating our expectations for 2021 and 2022 as a result of our year-to-day performance, these headwinds, and uncertainties. Judy will review our revised outlook later on the call. Moving to a quick budget update, we began the government fiscal year under a continuing resolution, which currently lasts through early December. The congressional agenda remains focused on infrastructure, the debt ceiling, and other priorities that may cause appropriations to continue to shift to the right. Irrespective of the status of appropriations, our customers continue to have clearly defined priorities that align well with Mantec's core capabilities and investment roadmap. First, the growth of both cyber and space warfighting domains, partly driven by near-peer focus. Second, the need to modernize IT, software, and systems to meet the challenges of today and tomorrow. The needs within this trend are broad and complex, but notably we are seeing greater customer need for automation, analytics, and delivering data at the edge. Lastly, the full and rapid implementation of digital warfare into traditional operating technology missions is of increasing importance. Recently, we announced our intent to acquire Griffin Technologies for $350 million. The acquisition builds on our position within an important Department of Defense customers and adds enhanced digital and systems engineering capabilities. Demand for these capabilities has been robust, and we see this as a continued growth avenue organically as the near-peer focus ramps into higher gear. We look forward to welcoming Griffin's nearly 1,500 employees to the Mantec family. We intend to maintain an active posture for value-accretive M&A, and our balance sheet is certainly supportive of additional acquisitions. Judy will discuss how you should think about the pro forma business going into 2022. Now I'll turn it over to Matt to cover the business development and operational highlights for the quarter. Matt?