Science Applications International Corporation

Good afternoon and welcome to SAIC's fourth quarter and full fiscal year 2020 earnings call. At this time, I would like to turn the conference call over to Shane Kinestra, SAIC's Vice President of Investor Relations. Please go ahead, sir.

Good afternoon. My name is Shane Kinestra, SAIC's Vice President of Investor Relations, and thank you for joining our fourth quarter and full fiscal year 2020 earnings call. Joining me today to discuss our business and financial results are Naza Keen, SAIC's Chief Executive Officer, and Charlie Mathis, our Chief Financial Officer. This afternoon, we issued our earnings release, which can be found at investors.saic.com, where you'll 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-K 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, and 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.

Good afternoon, and thank you for joining us to discuss SAIC's fourth quarter and full fiscal year 2020 results. Our outlook for fiscal year 2021 and the execution of our strategy to continue providing value to all of our stakeholders. SAIC's full-year results reflect strong operational and financial performance as we've successfully implemented many strategic initiatives to position the company for sustained, profitable growth and long-term value creation. Charlie will provide details on the business development and financial results, but I would like to highlight a few areas of our strong performance in fiscal year 2020. SAIC delivered strong profitability and cash generation that met or exceeded the expectations that were set at the beginning of the year. Compared to fiscal year 2019, SAIC improved adjusted EBITDA margins by 80 basis points and increased our free cash flow by $281 million to $437 million, representing a 180% increase in the fiscal year. Additionally, we are on track to generate over half a billion dollars in free cash flow in fiscal year 22. We also had a very successful business development year with a book to bill of 1.2 times with strong third and fourth quarters of 1.4 and 1.5 respectively. Our work in the space and intelligence community has seen impressive re-compete and new business contract wins accelerated by the agility acquisition and integration. It's a great example of our team's ability to embrace the exciting, expanding opportunities that are available to SAIC, as well as our steadfast focus to bring mission-critical technologies and specialized expertise to our customers. Last year's business development results positioned the company well for growth in fiscal year 2021, while increasing our pipeline of opportunities in our strategic markets. This performance was accomplished while also integrating the agility acquisition and now further accelerating our strategy through the acquisition of Unisys Federal. It was a busy year on many fronts, and I'm very proud of SAIC's continued strong performance. Turning to the market environment, the past few weeks have been challenging for our global community. The spread of the COVID-19 virus has altered many aspects of our collective and individual lives. I'm confident that as a nation, we will remain resilient and will overcome this challenge. Our thoughts and sympathy is with all of those affected either directly or indirectly. Now specific to SAIC, due to the nature of our business, we have seen minimal impact to our operations to date and have proactively developed readiness plans should disruptions increase. We already maintain an infrastructure that accommodates remote work for a significant number of employees when needed, frequently allowing employees to support customer programs remotely. Specific to our business, the government services market is very resilient to challenges. Our federal government customer is largely less economically sensitive with a significant portion of the work we perform considered mission critical. This frequently minimizes the impact of these types of disruptions. We have honed our operational muscles from events like government shutdowns and weather-related disruptions. As the effects of COVID-19 continue to unfold, we are likely to see some impact to our business, but we expect the impact to be very manageable. The government services market has long-term contracts, a flexible operating model and cost structure, and customers with stable funding levels. As our team consistently meets and exceeds our customers' expectations, another key element of our continued success is our ability to execute on our strategy. We continue to focus on three strategic items that we have previously mentioned. First, With the successful integration of Agility largely completed, we have now pivoted to the successful integration of Unisys Federal. Second, we look to accelerate sustained profitable growth by focusing investments in key strategic areas, as well as leveraging new market access and capabilities from the Agility and Unisys Federal acquisitions. And third, every level of the organization is working diligently to win the war for talent. We have made improvements and investments in areas that directly enhance our employees' work lives and provide attractive benefits to attract and retain high demand technology talent. While the government works on fiscal year 2021 budgets, SAIC's balanced and diversified portfolio provides great stability in the event there are shifts in individual agency funding. The acquisition of Unisys Federal further balances and strengthens our customer base with increased federal civilian customer access. All indications point to the U.S. federal government continuing to allocate budget increases to areas where SAIC is a leader and is strongly positioned for future growth, such as space, mission engineering and integration, and IT modernization. As we have mentioned before, these are the focus areas of our long-term strategy. We are excited to have closed the acquisition of Unisys Federal on March 13th. We welcome the talented and mission driven Unisys Federal employees to SAIC. We are very excited to have you join the company and work with you to leverage a commercial style delivery model across our broad portfolio. SAIC is now a leading government services technology integrator in digital transformation with increased value creation through four dimensions. First, enhanced capabilities in government priority areas including IT modernization, cloud migration, managed services, and DevSecOps. Second, an expanded portfolio of intellectual property and technology-driven offerings enabling government-tailored, commercial-based solutions. Third, increased access to current and new customers with a strong pipeline of new business opportunities. And finally, an acquisition that is highly accretive across key financial metrics. We are very proud of our success in the agility integration and have tremendous confidence in the successful integration of Unisys Federal. Just like the agility acquisition, we have spent considerable effort planning for the integration of Unisys Federal, leveraging our experience and processes to ensure a smooth transition for employees and customers. Compared with the agility integration, there are not as many milestones to communicate, as it is a less complicated integration than agility, but we will communicate notable activities as they are accomplished. We're off to a very strong start, and we are very excited about the opportunities that are before us. I'd like to ask Charlie to share our business development and financial results before taking your questions.