Science Applications International Corporation

Good day and welcome to the SAIC's second quarter fiscal year 2022 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 second quarter fiscal year 2022 earnings call. My name is Shane Canestra, Vice President of Investor Relations Joining me today to discuss our business and financial results are Naza Keen, SAIC's Chief Executive Officer, and Prabhu Natarajan, our Chief Financial Officer. Today, we will discuss our results for the second quarter of fiscal year 2022 that ended July 30th, 2021. 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. These documents, in addition to our Form 10Q 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 gap measures. It is now my pleasure to introduce our CEO, Nazik Keen.

Thank you, Shane, and good afternoon. Thank you all for joining us today. Before I begin our quarterly update, I would like to take a moment to share some great news on the leadership transition of an exceptional individual that many of you know very well. Those of you in the investment community have worked closely with Shane Kinestra over the past several years. Shane will be transitioning into a new assignment within the company, leading our corporate social responsibility and public relations function. I'm excited for Shane's continued growth in SAIC. This is a real-time example of our focus and investment in talent development. Joe DiNardi, who many of you also know, will be joining us to lead our investor relations function, bringing a wealth of experience from his prior role as a sell-side analyst. Joe and Shane will work closely over the next few weeks to ensure a smooth and seamless transition with our investment community. Now on to the business at hand. We are excited to discuss our quarterly results and updated outlook for the rest of fiscal year 2022. SEIC performed very well in the second quarter, delivering strong financial results while continuing to execute on our strategy for long-term shareholder value creation. During our second quarter, the team delivered strong revenue, increased organic growth, and outstanding profitability. Organic growth for the quarter was approximately 4%, our third consecutive quarter of organic revenue growth. Adjusted EBITDA margin was 10.1%, another all-time high after producing record margins last quarter. Free cash flow generation continued to be strong and in line with normal second quarter seasonality. We continue to allocate capital for long-term value creation through a balanced mix of accretive M&A, share repurchases, and dividends. We are proud of our accomplishment while remaining ever vigilant in driving performance into the future. SAIC is in a strong position as we focus on our tomorrow. We are strategically positioned with a balanced portfolio of business and capabilities. We've accelerated our investment in technology, talent, and solution development in critical areas, including digital transformation, artificial intelligence, and engineering innovation, while also enabling our customers to procure these solutions and services in newer acquisition and delivery models. For example, last quarter, we discussed our acquisition of Coverse, a key step in creating the artificial intelligence platform for our solutions. Our efforts with Coverse are off to a great start as we have seen an encouraging number of important new business opportunities. We are excited about the differentiation we can bring to our customers through the combination of our deep mission understanding and Coverse's unique technology platform utilizing artificial intelligence and machine learning on complex, sensitive data. This quarter, we launched another suite of technology solutions in CloudSend, our end-to-end suite of integrated cloud and digital tools. With CloudSend, we are able to systematically modernize customers' legacy systems with proven and repeatable processes and tools, immediately unlocking the value of the cloud. We're already seeing success from CloudSend in our work with an Army customer, where SAIC assessed, modernized and migrated 90 applications to a cloud environment by leveraging CloudSend. By migrating and rebuilding application components in the cloud and for the cloud, we strengthened cybersecurity, improved application performance, and delivered a lower total cost of ownership to our customer. Combined with our continued investments in areas such as zero trust and digital innovation, we are delivering significant value to our customers. our solution-focused investments and tools continue to accelerate, secure, and deliver our customers' mission needs through greater adoption of emerging technology. We've also made significant strides in the second quarter by expanding our presence in growing markets, specifically federal health. Our acquisition of Half Acre & Associates is off to a good start, performing well, and providing immediate access to strategic health sector customers. Early successes are being driven by the strategic intersection of the customer and contract vehicle access brought by Half Acre, combined with market-leading offerings and capabilities leveraged from the entire enterprise. With the full scale and breadth of SAIC now available to Half Acre, we are investing in further accelerating new business opportunities as one fully integrated team in the federal health market. It is also important to note the accomplishments we have made in our commitment to cultivating and attracting industry-leading talent, one of our strategic priorities. We recently announced the hiring of a chief climate scientist to advance SAIC's leadership, capabilities, and solutions in support of our customers as they address climate-related missions, a critically important priority for this administration. We remain committed to a culture that promotes the hiring, retention, and development of our largest asset, our exceptional talent. Talent is a critical element of our strategy, and I'm pleased with our ability to differentiate ourselves in a tight labor market, allowing SAIC to deliver the strongest teams to the most pressing customer challenges. Our continued investment in talent is a key differentiator and enabler of profitable growth in the market. The actions taken in the second quarter underscores our commitment to investing in mission-critical emerging technologies, expanding our customer base, and securing key talent. We will continue to share important technology and mission updates as we make progress in these areas. Let me now turn to what we're seeing in the market as we enter the last month of government fiscal year 21. Our customers continue planning for the future and making award decisions. While it is very likely that the government fiscal year 22 will start under a continuing resolution, our country's leaders are working through the budgeting process with indications that appropriations could be in place by the end of the calendar year. While not optimal, it is also not unusual, and SAIC knows how to successfully navigate this environment. We believe that federal budgets are shaping largely in line with the President's request and perhaps a bit more favorable than initially requested for the Department of Defense. While the process is still unfolding, we are encouraged by the recognition from our country's leaders on the importance of continued technological investment. Of course, the pandemic continues to be at the forefront of everyone's thoughts. The emergence of the Delta variant and a surge in cases has resulted in continued caution. SAIC continues to operate well, navigating the environment, but also looking forward to an eventual return to a new normal. Our plan is to continue in a hybrid work environment, recognizing some employees are required to be at SAIC or customer site, while others can work partially or fully remote. This approach aligns well with our objective to attract and retain high-quality talent by providing flexibility for our workforce. This will continue to open our aperture for talent as we recruit from a wider geographical area. Prabhu will now discuss the details of our second quarter results and financial outlook for the rest of the year.