Science Applications International Corporation

Good afternoon and welcome to SAIC's Q1 fiscal year 2021 earnings call. 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, and thank you for joining SAIC's first quarter fiscal year 2021 earnings call. My name is Shane Kinestra, Vice President of Investor Relations, and joining me today to discuss our business and financial results are Nazit Keen, SAIC's Chief Executive Officer, and Charlie Mathis, our Chief Financial Officer. Today we will discuss our results for the quarter ended May 1, 2020. 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-Q to be filed soon, should be utilized in evaluating our results and outlook, along with the 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.

Thank you, Shane, and good afternoon. While I am pleased to discuss SAIC's first quarter results and outlook, I want to first take a moment to extend my hope that each of you and your loved ones are healthy and managing through the disruptions in these unprecedented times. Each of us has been affected in some way, and it is my sincere wish that you and your families are well. I intend to cover several items that I know are of interest to you including the impact of COVID-19 on the business, an update on our completed acquisition of Unisys Federal, and a significant contract win in our AMCOM portfolio. Before discussing these items, let me touch briefly on our first quarter results. We included about seven weeks of Unisys Federal performance. Additionally, as our quarter ended on May 1st, the quarter contained roughly the same seven weeks of COVID-19 impact, a larger timeframe than those with the March quarter end. Charlie will provide more detailed information on the quarter and our outlook for the fiscal year. SAIC has started fiscal year 2021 on a very strong note, highlighted by revenue growth, consistent profitability, and healthy free cash flow. all while navigating this unprecedented business environment. These results are attributable to the dedication of our approximately 26,000 employees, and I want to thank our entire team for their resolve during this challenging time. I am so proud of the men and women of SAIC. Despite the modest impact of COVID-19 to first quarter revenues, SAIC achieved organic revenue growth of 3% as compared to the prior year quarter. Adjusting for the COVID-19 impact, organic revenue growth would have been 5%. Free cash flow was strong and reinforces the resiliency of our market and of SAIC, as well as continued confidence in our liquidity and rapid delivering plan. As for the impact of COVID-19, SAIC has been operating as an essential business in a very resilient market. We are fortunate the demand for our services is essentially unchanged. I am extremely proud that we can provide these vital services to our customers and support our country in a time of global crisis. SAIC has experienced only a modest financial impact. I would, however, like to talk about our focused response to this crisis in three areas, employees, customers, and shareholders. First and foremost, we immediately prioritized our employees' safety and well-being. In mid-March, we responded decisively and advised our employees where possible to work remotely. Our customers also adjusted quickly and have been very accommodating and supportive, allowing for remote work, alternative work schedules, or modified office environments to ensure social distancing. About 75% of our employees are currently working remotely, while others work at work sites following CDC and local guidelines. We are working very hard to support our employees when they need us most. We are advancing leave to employees who need more time to care for themselves and family members. Many SAIC employees are donating their accrued leave to fellow employees, and we are committed to providing all direct charge employees with paychecks at least through August 1st. In addition, SAIC is setting up a charitable foundation to further support employees, their families, and our communities that are struggling due to COVID-19 related financial or health setbacks. We've also increased our recruiting pace throughout this period as we continue to attract skilled, talented people who are looking for the opportunity to work and thrive in a stable business environment. You've often heard me talk about our deep commitment to our employees and SAIC's focus and priority in winning the war for talent. These priorities have never been more true than today and continues to inform the decisions we make, even more so in these trying times. Second, we are focused on ongoing high-quality customer performance to ensure continued mission execution through this pandemic. The level of customer demand for our core services is essentially unchanged, although we are seeing an increased interest in solutions that will help modernize the government and support the remote workforce of the future. We are developing and deploying solutions to meet those needs, initially with agencies that are already looking ahead to a post-COVID work environment, and we are here to support their digital transformation. I'm extremely proud of the work our teams have done to help the US government respond to the needs of our nation and our fellow Americans virtually overnight. As government employees quickly pivoted to work from home, SAIC provided virtual infrastructure engineering and help desk services to return agency employees to productivity. And through our mobile ops rapid deployment kit, we are deploying IT and communications infrastructure for use by temporary hospitals and medical test facilities, allowing them to become operational within 24 hours. To assist our healthcare heroes in their life-saving work, our data science and analytics services help produce high-quality predictive models for demand and supply of healthcare materials. Third, we have ensured the stability of the business and protected shareholder interests. I'm proud that our strategy to align our company to missions critical to our nation's priorities have allowed us to continue operating as an essential service and support our country in this time of crisis. While we successfully navigate a myriad of operational challenges and individual customer needs, we have managed a stable business for our shareholders. We continue to maintain an ample amount of liquidity, manage our cost profile, reallocate resources where necessary, and continue our focus on business development and growth for the long-term future of our company. While navigating through the pandemic, it should not be lost that during the first quarter, SAIC successfully completed the acquisition of Unisys Federal. While less complicated than the integration of Agility, the successful integration of Unisys Federal is an absolute priority for me and the enterprise. We are leveraging our previous integration experience and success into this integration and we're off to a great start and are on track. One of the first items that we accomplished was to hone the intellectual property and technology-driven offerings in our solutions and technology group and begin to leverage these assets in our business development efforts. Key leaders are working in their new roles and are looking to capitalize on the new customer access they now have. SAIC, through the Unisys Federal portfolio, was recently awarded a $630 million new business contract to provide Technology Application Development and Sustainment, or CADS, to support the U.S. Air Force Weather Agency. This award is a great early proof point of the value the Unisys Federal acquisition brings to our shareholders. Charlie will soon share our business development results, but I'm thrilled that after we closed the first quarter, we were awarded the first task order in the series of our U.S. Army Aviation and Missile Command, or AMCOM, re-competes. The task order valued at $2.9 billion over a five-year period of performance re-secures about $300 million of annual contract revenue and provides potential new business revenue in the $100 to $150 million range. This is the largest contract awarded to SAIC since the separation in 2013, and I couldn't be more proud of this exceptional team. Building off the deep relationship we have with our Amcom customer, our proposed systems engineering solutions was recognized as the best opportunity for Amcom to drive future digital transformation. The award of this task order significantly de-risks the AMCOM ReCompete portfolio and gives us confidence in the successful award of several remaining task orders. I'd like to ask Charlie to share our quarterly business development and financial results, as well as our outlook.