SAIC(US:SAIC)2023-09-07 18:48Financial Data and Key Metrics Changes - The company reported revenue growth of over 8% year-over-year, with adjusted EBITDA margins increasing by 70 basis points to 9.8% [114][132] - Adjusted diluted EPS rose by 17% year-over-year to $2.05, driven by strong operating performance and a decline in diluted weighted average share count [118] - Free cash flow for the quarter was $143 million, with year-to-date free cash flow reaching $219 million, indicating good traction on working capital improvement efforts [160] Business Line Data and Key Metrics Changes - The company expects first-half FY '25 revenues to be roughly flat year-over-year, with more meaningful growth anticipated in the second half of FY '25 [5] - The Logistics & Supply Chain Management divestiture is expected to impact revenue growth, but the company maintains visibility into growth opportunities in its pipeline [5][159] Market Data and Key Metrics Changes - The company won approximately $1.1 billion of work since the beginning of the third quarter, with roughly 60% being new business across multiple domains [161] - The updated revenue guidance for FY '24 is increased to a range of $7.2 billion to $7.25 billion, representing pro-forma organic growth of approximately 4.5% [162] Company Strategy and Development Direction - The company aims to sustain and improve upon its relative performance while adhering to an asset-light business model and returning substantial cash to shareholders [116] - The focus on profitable organic growth is emphasized, with a commitment to balance near-term margin improvement against long-term value creation [136] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the operating environment, including budget constraints and delays in award timing, but expressed confidence in the company's growth trajectory [11][27] - The transition of leadership is expected to be smooth, with confidence in the new CEO's ability to advance the company's priorities [8][137] Other Important Information - The company has a strong pipeline of opportunities, with expectations for improved award activity and submissions in the second half of the year [161] - The company is committed to maintaining a book-to-bill ratio comfortably over 1.0, despite recent challenges [54] Q&A Session Summary Question: What is driving the delays in awards and the impact on book-to-bill? - Management indicated that delays are not systemic and are part of the normal operating environment, with expectations for improved performance in the coming quarters [27][28] Question: How is the company managing labor costs and retention? - The company has seen improvements in employee retention and is effectively managing labor costs, which is expected to provide a tailwind to margins [60][61] Question: Can you provide an update on the recompete landscape? - Approximately 20% of the portfolio is up for recompete each year, with the Vanguard deal being significant, but the company expects to win its fair share [82][83]