Science Applications International Corporation

After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. I will now like to turn the conference over to Joe DiNardi, Senior Vice President of Investor Relations and Treasurer. Joe, you may begin your conference.

Good morning, and thank you for joining SAIC's first quarter fiscal year 2025 earnings call. My name is Joe Donardi, Senior Vice President of Investor Relations and Treasurer. And joining me today to discuss our business and financial results are Tony Towns-Whitley, our Chief Executive Officer, and Prabhu Natarajan, our Chief Financial Officer. Today we will discuss our results for the first quarter of fiscal year 2025 that ended May 3rd, 2024. 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 10-Q 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. 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. The non-GAAP measure 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, Tony Towns-Whitley.

Thank you, Joe, and good morning to everyone on our call. I'll start with a quick review of our first quarter results and then provide an update on our strategic priorities. Prabhu will then discuss our financial results and outlook in greater detail. We reported solid financial results in the quarter, 40 basis points of pro forma organic growth due to the ramp up on new and existing programs offset by a roughly five-point headwind from previously discussed recompete losses. First quarter adjusted EBITDA of $166 million resulted in an adjusted EBITDA margin of 9%, which reflects the impact of increased investment in the business. We expect the timing of certain program performance milestones in the second half of the year to improve margins. Transaction adjusted free cash flow of 21 million was ahead of plan as we continue to see good momentum on working capital efforts. I'll now provide an update on our strategic priorities. I want to again thank many of you for joining us at our April Investor Day where we outlined SAIC's multi-year growth strategy. As we discussed then, SAIC's expertise in integrating emerging technology positions the company to deliver profitable growth by serving our customers across five national imperatives, all-domain warfighting, next-generation space, citizen experience, border of the future, and undersea dominance. These imperatives represent drivers of long-term and enduring customer demand. In order to increase value to our customers' missions and grow more profitably across the five imperatives, we will work to progressively shift our portfolio and bid into four key growth vectors, integrated solutions, enterprise and mission IT, civilian and mission advisory. And finally, to enhance our competitive position in the market, and the value that we deliver to customers, we will prioritize investment in six portfolio differentiators. Secure multi-cloud, digital engineering, operational AI, secure data analytics, system of systems integration, and on-demand solution delivery. Four growth vectors across five national imperatives with six differentiators. The four fives. The implementation of our enterprise operating model, which is optimizing program execution and building a best-in-class business development organization, continues to progress on schedule. While our business sales cycle is such that it will likely take 12 to 18 months for our strategy to more fully impact our BD results, we are seeing encouraging year-to-date progress with indicators including bid selection, bid thresholds, and submit volume. Bid selection assesses the degree to which our pipeline leverages innovation factory capabilities to drive differentiation and aligns with our national imperatives, growth vectors, and optimal mix of deal size. Our win rate on programs with a TCV under 500 million have been quite strong in recent years. We are focused on ensuring that our pipeline reflects a proper mix of deals in this TCV zone with larger pursuits like our DCSA-1 IT and Department of Treasury T-Cloud program, providing measurable upside to our growth prospects. At present, our utilization of enterprise differentiators skews more heavily across our pipeline towards the higher TCV pursuits with less impact on midsize to smaller deals. Given the correlation we see between IF involvement and win rate, our strategy will increase IF utilization over time. Bid thresholds ensure that our pricing and profitability properly reflect the value and capability we're bringing to a program. Probably we'll discuss and share metrics on the improvement we have seen in recent quarters. Submit volume measures our ability to convert pipeline into submitted proposals and effectively reallocate internal investments as customer procurement schedules inevitably shift over time. We submitted proposals with a total value of over $8 billion in the first quarter. Our performance in first quarter and the progress we're seeing gives us confidence in reaching our targeted value of submissions of $22 billion in fiscal year 25 compared to $17 billion in fiscal year 24. Of the expected $22 billion in submit value for the year, roughly two-thirds represents new business. Similarly, in the first quarter, we delivered net bookings of 2.6 billion for a book-to-bill of 1.4, with roughly 60% of the awards representing new business. Our space and intelligence business group was a significant contributor to the strong bookings, with a $444 million new business award with the U.S. Space Force and a $350 million recompete win with NASA. Relative to the multi-year goal to increase bid volume to 30 billion by fiscal year 27, we see three primary drivers behind this. Greater organizational accountability to convert pipeline identified into pipeline bid. Adopting enterprise-wide processes to drive standardization and increased efficiency. And investment in BD resources and talent upgrades to drive greater quality and throughput. Importantly, we intend to drive higher bid volume while also improving shot selection and margin thresholds. In other words, we expect an improvement in the overall quality of our pipeline and submissions as we increase volume. Before turning the call over to Prabhu to discuss our financial results and outlook in detail, I want to thank the SAIC team for their contributions in the quarter and for their partnership in implementing our strategy. I recognize the heavy lift that many of our functions and business groups have endured in recent quarters and appreciate their dedication to our customers and shareholders. I am proud of the performance we delivered in the quarter and encouraged by the indicators of progress we are seeing. Clearly, we have some revenue and margin headwinds to overcome this year. We have taken ownership of this challenge and our business groups understand what is expected of them. We recognize that we must balance an intense focus on near-term execution with a commitment to our long-term plan. I believe this long-term plan will be a significant driver of value creation for our employees and shareholders. Prabhu, over to you.