SAIC(US:SAIC)2023-06-05 16:33Financial Data and Key Metrics Changes - The company reported revenue of $2.03 billion for Q1 2024, representing pro-forma growth of 3.5% year-over-year, or approximately 2% when excluding supply chain sales [8][43] - Adjusted EBITDA margin for the quarter was 9.3%, benefiting from solid execution and ongoing margin improvement initiatives [24][28] - Adjusted diluted earnings per share increased to $2.14, aided by stronger operating performance and a lower effective tax rate [28] - The company raised its adjusted diluted earnings per share guidance to a range of $7 to $7.20 due to improved operating performance and expectations for lower interest expenses [9] Business Line Data and Key Metrics Changes - The company’s net bookings included $766 million from the DCSA One IT program, which was re-awarded in the quarter [24] - The pipeline continues to skew favorably towards higher margin areas, with approximately 50% of the contract award portion of the qualified pipeline aligning with the company's GTAs [25] Market Data and Key Metrics Changes - The value of submitted proposals at the end of Q1 was $26 billion, an increase of 10% year-over-year, while the total qualified pipeline was up approximately 8% year-over-year [41][143] - The company expects to maintain a book-to-bill ratio comfortably over 1.0 for the year, with a solid pipeline and backlog [84][134] Company Strategy and Development Direction - The company is focused on maximizing long-term shareholder value while driving sustained profitable growth and increasing margins [46] - The leadership team emphasizes the importance of capital discipline and strategic investments to enhance ROIC over the next few years [72][79] - The company is committed to fostering a culture of diversity, equity, and inclusion, which is seen as beneficial for all stakeholders [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong start to the year and expects revenue growth rates to improve in the second and third quarters [8] - The company remains cautious about potential macro risks but is encouraged by its performance and outlook [43] - Management highlighted the importance of modernization in federal government systems, indicating a strong demand for their services despite potential short-term pressures [88] Other Important Information - The company announced the retirement of its CEO, Nazzic Keene, effective October 2, with Toni Townes-Whitley appointed as the next CEO [47] - The company is maintaining its free cash flow guidance of $460 million to $480 million and expects to repurchase approximately $350 million to $400 million in shares [45] Q&A Session Summary Question: Opportunities in the space arena - Management discussed the balanced exposure across civil, military, and intel space, indicating continued opportunities in IT modernization and systems integration [49][75] Question: Expectations on the Civil side of space - Management acknowledged potential impacts on modernization budgets but emphasized their strong position in legacy systems [62][65] Question: Impact of the debt ceiling deal - Management noted that the deal aligns with their long-term guidance and does not expect significant changes to their addressable market [80][82] Question: Book-to-bill expectations - Management expects the book-to-bill ratio to be comfortably over 1.0 for the year, supported by a healthy pipeline [84][134] Question: AI exposure and threats - Management highlighted the integration of AI in their solutions and acknowledged both opportunities and threats posed by AI advancements [127][132]