Science Applications International Corporation

Please stand by. Good day, and welcome to the SAIC Fiscal Year 2020 Second Quarter Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Shane Canestra, SAIC's Vice President of Investor Relations. Please go ahead, sir.

Good afternoon. My name is Shane Canestra, SAIC's Vice President of Investor Relations, and thank you for joining our Second Quarter Fiscal Year 2020 Earnings Call. Joining me today to discuss our business and financial results are Naza Kean, SAIC's Chief Executive Officer, Charlie Mathis, our Chief Financial Officer, and other members of our management team. This afternoon, we issued our earnings release, which we found at investors.saic.com, where you also find supplemental financial presentation slides to be utilized in conjunction with today's call. Both of these documents, in addition to our Form 10-Q to be filed soon, should be utilized in evaluating our results and outlook along with information provided on today's call. Please note that we may make forward-looking statements on today's call that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from statements made on this call. I refer you to our SEC filings for a discussion of these risks, including the risk factors section of our annual report on Form 10-K and quarterly reports on Form 10-Q. In addition, the statements represent our views as of today, and subsequent events may cause our views to change. We may elect to update the forward-looking statements at some point in the future, but we specifically disclaim any obligation to do so. In addition, we will discuss non-GAAP financial measures and other metrics, which we believe provide useful information for investors in both our press release and supplemental financial presentation slides, include reconciliations to the most comparable GAAP measures. It is now my pleasure to introduce our CEO, Nozick Keene.

Thank you, Shane, and good afternoon. SAIC took another positive step forward in the second quarter of fiscal 2020, keeping our attention on operational performance, progressing on the integration of the agility acquisition, and delivering strong financial and business development results. While Charlie will discuss the financial results in greater detail, our second quarter reflects strength in a contract portfolio that is aligned to key areas of our market, with strong profitability and free cash flow generation. The second quarter delivered revenues of $1.6 billion in line with our expectations and equating to a 43% total revenue growth from the prior year quarter. Strong adjusted EBITDA margins were 8.4% for the second quarter, up 90 basis points from last year. The cash generation profile of the company continues to be compelling. with second quarter and first half cash flow providing continued confidence in our full year target and enabling capital deployment for shareholder value creation. Net bookings for the quarter were approximately $1.9 billion, excluding about $400 million of single award IDIQ vehicles, translating to a quarterly book-to-bill of 1.2. On a pro forma basis, SAIC's trailing 12 months book-to-bill is 1.1. During the quarter, SAIC was awarded contracts and task orders valued at over $1 billion of re-compete and new business from U.S. national security and intelligence customers. These awards also demonstrate the intersection of two areas of significant opportunities for growth, space and IT modernization. It is very exciting to see the continuing build of momentum as a stronger SAIC goes to market with these important customers. Additionally, SAIC was awarded a Recompete contract valued at $117 million from NASA to continue providing a variety of IT services to support the National Center for Critical Information Processing and Storage. Also in the Recompete category was a $93 million contract award from the U.S. Navy to support electronic warfare activities. Awarded during the quarter but not immediately contributing to bookings was a new business award of $106 million single award IDIQ contract with the Defense Intelligence Agency to provide media management and analysis efforts across the science and technology directorate. SAIC continues to operate in a favorable market environment in the closing month of government fiscal year 19 and looking forward into fiscal 20. As appropriations are enacted, we do not expect significant shifts in budget priorities, and SAIC is well aligned in areas of national importance and funding, such as space-related missions, IT modernization, and readiness, among others. Although a few customers have expressed concerns around facing a potential continuing resolution to start the government fiscal year, for now, proposal activity remains strong, as demonstrated in the momentum we see in our business development activities. Customer demand and our pipeline of qualified pursuits is expanding, although we have also seen delays in some contract awards due to protests or new business that has not materialized. At the end of the second quarter, SAIC's total contract backlog stood at approximately $13.9 billion, up about 3% from the first quarter. Funded backlog was approximately $2.6 billion. The estimated value of SAIC's submitted proposals awaiting award is $13.4 billion up from the end of the first quarter. Approximately 75% of submitted proposals are for new business, an indicator of a favorable market environment, our low level of re-competes this fiscal year, and the potential for SAIC to accelerate growth over time. Before turning the call over to Charlie, I'd like to provide you an update on the integration of agility. As I mentioned in our June call, we have successfully achieved all of the year one cost synergies and are on track to realize year two synergy targets next year. In fact, we recently achieved another critical milestone, the successful integration of many business systems, which is key to achieving our year two cost synergies. This is a significant achievement in the integration process, and I believe one of the earliest acquisition-related systems integrations in our space. I want to personally thank the team for their tremendous effort and success in achieving this important milestone. Through the end of the year, we will focus on two additional integration milestones, harmonizing employee benefits and rationalizing our facility footprint. We have more work ahead of us, but I'm very proud of the newly combined team and what we've accomplished so far. Charlie, over to you for our financial results.