Science Applications International Corporation

Hello and thank you for standing by. My name is Regina and I will be your conference operator today. At this time, I would like to welcome everyone to the SAIC first quarter fiscal year 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, press star 1 again. I would now like to turn the conference over to Joseph DiNardi, Vice President of Investor Relations and Strategic Ventures. Please go ahead.

Good morning, and thank you for joining SEIC's first quarter fiscal year 2024 earnings call. My name is Joe DiNardi, Vice President of Investor Relations and Strategic Ventures, and joining me today to discuss our business and financial results are Nazik Keen, our Chief Executive Officer, and Prabhu Natarajan, our Chief Financial Officer. Today, we will discuss our results for the first quarter of fiscal year 2024 that ended May 5th, 2023. Earlier this morning, we issued our earnings release, which can be found at investors.saic.com where you will also find supplemental financial presentation slides to be utilized in conjunction with today's call and a copy of management's prepared remarks. These documents, in addition to our Form 10Q to be filed later today, 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 discussion of these risks, including the risk factor 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 results 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. The non-GAAP measures should be considered in addition to and not a substitute for financial measures in accordance with GAAP. It is now my pleasure to introduce our CEO, Nozick Keen.

Thank you, Joe, and good morning to those joining our call. Earlier today, we reported strong results for the first quarter and increased our guidance for revenue and EPS for fiscal year 24. Our performance represents a strong start to the year, and we remain on track to deliver on the financial targets we provided to you at our Investor Day on April 11th. Before discussing our results in more detail, I want to continue my tradition of highlighting colleagues at SAIC for their contribution to our success. Though this quarter, there will be a slight twist, which I'll get to shortly. As many of you know, May is Military Appreciation Month, which is an especially meaningful time for SAIC given how foundational military personnel and their families are to our culture and our values. Over 30% of SAIC employees are military service members and veterans, and our Military and Veterans Employee Resource Group is SAIC's largest ERG. During the month of May, we recognize several important days for our country and our employees. VE Day on May 8th, Military Spouse Appreciation Day on May 12th, Armed Forces Day on May 20th, and of course, Memorial Day on May 29th. In addition, on May 10th, SAIC gifted its 14th home through its partnership with Building Homes for Heroes. For over 10 years, SAIC and Building Homes for Heroes have partnered to provide homes to deserving veterans and raised over $600,000 in the process. Here's where the twist comes in. We've included links in these prepared remarks and our earnings presentation slides where you can donate to support this outstanding cause and help fund future homes for our veterans. I want to recognize Mike Bramble, Stephanie Wall, and David Robinson for their leadership on this important program. Now on to a review of our financial results and outlook. As I mentioned, our performance in the first quarter positions us well to meet our goals for the year and is a solid first step towards achieving the long-term financial targets we provided in April. Our revenue of $2 billion represented pro forma growth of 3.5%. I remain encouraged by the performance we've delivered and expect revenue growth rates to further improve in both our second and third quarters. We delivered strong operating performance as reflected by our 9.3% adjusted EBITDA margin in the quarter. We remain on track to deliver at least 50 basis points of margin improvement in fiscal year 24 through a combination of our portfolio shaping and our organic initiatives. Our net bookings include $766 million from the DCSA One IT program, which was re-awarded to us in the quarter and on which we've begun to ramp up. However, our bookings do not include any contribution from the T-Cloud contract, which remains in the protest process. Looking ahead, our pipeline and backlog of submitted proposals remain strong, with solid growth overall and within our GTAs specifically. At the end of our first quarter, the value of our submitted proposals was $26 billion, an increase of 10% year over year, while our total qualified pipeline was up approximately 8% year over year. Importantly, our pipeline continues to skew favorably towards the higher margin areas of our portfolio, with approximately 50% of the contract award portion of our qualified pipeline aligning with our GTAs. Before turning the call over to Prabhu, I want to highlight some encouraging trends we have seen of late in both talent retention and acquisition. While we attribute some of this to an industry-wide improvement in labor metrics, we believe SAIC is performing well against the industry benchmark for turnover, and we are tracking ahead of our plan year-to-date on new hires and headcount. Obviously, there are a number of factors contributing to this, including some of the employee well-being initiatives we've discussed previously. I also believe that the leadership SAIC has shown in fostering a culture based on diversity, equity, and inclusion is a factor. It will continue to be a top priority for the company, as we believe it best serves all of our stakeholders. I will now turn the call over to Prabhu to discuss our results and improved outlook in greater detail.