Science Applications International Corporation

Good day and thank you for standing by. Welcome to SAIC's fiscal first quarter 2027 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to John Raviv, Vice President of Investor Relations. Please go ahead.

Good morning and thank you for joining SAIC's first quarter fiscal year 2027 earnings call. My name is John Raviv, Vice President of Investor Relations, and joining me today to discuss our business and financial results are Jim Regan, our Chief Executive Officer, and Prabhu Natarajan, our Chief Financial Officer and EBP of Enterprise Operations. Today we will discuss our results for the quarter ended May 1, 2026. 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. In addition, we will discuss non-GAAP financial measures and other metrics, which we believe provide useful information for investors. These non-GAAP measures should be considered in addition to, and not a substitute for, financial measures in accordance with GAAP. A more fulsome explanation of these measures can also be found in our SEC filings. It is now my pleasure to turn the call over to our CEO, Jim Regan.

Thank you, John, and good morning to everyone joining our call. I'm pleased to say that the year is off to a good start. I want to recognize our 23,000 employees whose relentless commitment to execution excellence made these results possible. Sustaining strong margins and industry-leading cash flow reflects the team's discipline and focus in a dynamic environment. This is operational excellence in action with our strong underlying results highlighting our potential to deliver double-digit margins on a sustainable basis. Since I accepted the permanent CEO job earlier this year, my focus has broadened beyond execution to include spending time with all of our stakeholders, our shareholders, customers, and employees. My shareholder meetings made it clear that we have work to do to regain trust by proving that we can grow organically on a sustained basis. This quarter's result is a step in the right direction, but I know this is a multi-quarter journey. My customer meetings focused on the value that we continue to bring to enable a wide variety of missions that are increasing in their complexity and velocity. It is also clear that our industry has to invest to keep pace in a fast-moving environment. Our flexible business model is well suited to these tasks, and we are excited to deliver on these commitments. And my employee meetings highlighted the distinct privilege I have to lead an exceptional group of people working to solve the nation's most critical challenges. I'm grateful to our team for their patience and determination in taking on new roles, responsibilities, and mindsets to address enduring customer demands and to create value for all of our stakeholders. So please turn to slide three for our key messages. First, we are built on a strong foundation and operate with an enduring purpose. We deliver critical capabilities to our customers to help them address their most complex challenges. And we do this by developing solutions that enable speed, capacity, and decision-making dominance. For decades, we have evolved with our customers as we anticipate their needs and operate at the speed of mission. This evolution requires us to continuously evaluate and refine the portfolio. Now, there's some natural portfolio realignment this year as we digest recompete losses, primarily in the large enterprise IT market. We're also actively controlling our future as we build a premier portfolio of integrated mission-critical capabilities more aligned to budget priorities and more insulated against the commoditization that we have seen in certain parts of the market. We have initiated a portfolio review and look forward to sharing more information on our December earnings call. You should expect to see a more agile SAIC built for the future underpinned by our mission depth and capability. And as we have shared previously, we initiated a pipeline review to refine our bidding strategy to more closely align with our differentiators and where we enjoy a higher probability of winning. Our qualified pipeline sits at about $85 billion and is more focused with enterprise IT now comprising a smaller share compared to last quarter. This reflects our selectivity in this part of the market. We're also pursuing opportunities earlier and more deliberately, leaning into key areas where we know we can deliver better and faster. This includes our mission and engineering businesses, which comprise a greater share of our pipeline and are outgrowing the rest of the portfolio due to recent wins and ongoing investments. These dynamics support further organic portfolio realignment. And we continue to evaluate potential additions and subtractions to the portfolio to accelerate growth, enhance margins, and further develop high-value areas where we're able to bring our investments to bear. As I said last quarter, I'm excited by what made SAIC great to begin with, delivering innovative science, technology, and engineering solutions in support of the security of the United States and its allies. And there's a lot going on in the world demanding our support. Elevated operational tempo is driving faster decision making in a variety of hardware and software platforms where we currently play a role. We continue to engage with customers to enhance capability and capacity. And we continue to leverage new tools that help us deliver more effectively and efficiently. In recent years, we have helped defense, intelligence, and civilian agencies establish data and knowledge standards, develop multimodal AI, and build secure data layers that underpin some of the nation's most sensitive missions. Today, we're applying AI to modernize legacy code, generate operational tasking orders, enhance human-machine teaming, strengthen data fusion, and harden cyber defenses. The opportunity ahead isn't about delivering an AI product. It's about how quickly we can integrate and operationalize these capabilities in real-world missions. I appreciate that we can only say so much about the opportunities, and in some cases the risk, that accompany rapid technological shifts. But at the end of the day, it comes down to our ability to put up continued performance as AI adoption increases. I look forward to delivering those results. And that brings me to top-line improvement. Appropriations are starting to flow from last year's legislation, albeit unevenly, and we expect another large appropriation for FY27. While our growth does not depend on a trillion-dollar-plus defense budget, it certainly helps. RFPs and submissions are still slowed by environmental factors, although we are on track for awards. Recompete win rates are stabilizing as we expect them to return to the 90 percent range. And new business win rates continue to perform well above 30 percent. And I'm encouraged by the modest organic growth that we saw this quarter despite our re-compete headwinds from last year. We also continue to build on our margin and cash momentum. Fiscal first quarter margin was a company record driven by strong program execution. While we could see this margin level offset through year end by key investments to support growth, these results demonstrate what we're capable of and support our full year guidance. And we saw another good quarter for cash, reflecting our strong execution. Maintaining this momentum relies partly on the enterprise transformation process we announced in February. Project Orbit will increase our agility and create more capacity for investments to support growth and margin expansion over time. We have sourced over 3,500 ideas from across the company, which our dedicated team is now analyzing and prioritizing for execution. We will have more information on these efforts on our next earnings call in September. Taken together, these results and our continued efforts reflect our focus on execution, controlling what we can control, and rebuilding our growth momentum. We have raised our guidance to account for some of this quarter's upside, although we're mindful of remaining investments, recompete roll-offs, and uncertainties that could impact the remaining quarters. And as I've said before, FY27 is a year of commitment. We're setting targets that we are confident that we can achieve. In closing, we see significant opportunity to drive value for our shareholders, create greater opportunities for our employees, and most importantly, continue the mission of supporting our customers and our country. Before turning the call over, I do want to address this morning's announcement that Srini Attili is leaving SAIC as we make a leadership change in our civilian business group to support our positive momentum. We thank Srini for his contributions and we wish him well. Our CFO and EVP of Enterprise Operations, Prabhu Natarajan, will serve as interim head of the civilian business while we identify a permanent replacement. Prabhu's experience running complex businesses and driving execution excellence makes him well-suited for this expanded role. He has my and the board's full confidence. Our civilian business delivers industry-leading capabilities to critical clients and is a strong performer in our portfolio. We are strongly committed to our efforts in this market and focused on keeping the momentum going. And with that, I'll turn the call over to Prabhu.