Q4 2019 Earnings Call
[music].
Thank you for joining us for the Vectrus fourth quarter 2019 earnings conference call and webcast today's call is being recorded.
My name is Darryl and I'll be the operator for today's call.
This time, all participants have placed been placed them in listen only mode. Following management's presentation I will open up the call for acuity session.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
And now I'll pass the call over to your host Mike Smith, Vice President of Investor Relations and corporate development at factors.
Thank you.
Good afternoon, everyone welcome to the Vectrus fourth quarter 2019 earnings conference call.
Joining us today, our truck broker President and Chief Executive Officer, and student much senior Vice President and Chief Financial Officer.
Slides for today's presentation are available on our Investor Relations website investors doctorates dot com.
Please turn to slide two.
During today's presentation manager will be making forward looking statements pursuant to the safe Harbor provisions of the federal Securities laws.
We view, our safe Harbor statements in our press release and presentation material for a description of some of the factor that may cause actual results could differ materially can result contemplated by these forward looking statement.
The company also assumes no obligation to update it forward looking statements.
Additionally, I'd like to point out that we'll be discussing and reporting adjusted non-GAAP metrics, including adjusted operating income margin adjusted EBITDA and margin adjusted net income and adjusted diluted earnings per share.
The definition of these non-GAAP metrics can be found in our presentation material press release and form 10-K.
At this time I'd like to turn the call over to truck roll.
Thank you Mike Good afternoon, everyone. Thank you for joining us on the call today.
Please turn to fly tree.
2019, with Europe continued strategic and financial momentum for Vectrus.
The progress toward our goal of making Vectrus the premier converged infrastructure company in our market.
Our momentum as reflected in our results.
Revenue grew 11% in the fourth quarter and 8% pretty here.
Supported by a strong organic growth of 7% in the fourth quarter and stick person for the year.
Organic growth was driven by expansion our core programs.
And continued phasing and performance.
$350 million of new business won in 2018.
And program one in 20 Nike.
Importantly through our continued focus on growth, we waited program and capability enhancements and 29 gene you want to approximately $1.2 billion of new business and protected our base by winning significant recompetes.
Well drive revenue growth in 2020 and beyond.
We continue to work for acquired portfolio and our revenue base by expanding our market share with the Navy and the Air Force.
The other clients new to Vectrus, including the department of state and our first foreign military quiet, Japan Ministry of Defense.
We anticipated we all can improve their profitability throughout the second half 2019.
At the recent New awards phase yet.
Adjusted EBITDA margin expanded to 4.9% in the fourth quarter.
The highest in our history.
The group fourth quarter, adjusted EPS by 27% and the full year by 6%.
We achieved the results despite continued investment in our business.
Including preparation for walkup, five and the execution of our enterprise wide performance improvement initiative.
Referred to as enterprises actress.
Enterprises Vectrus include the series a program operations and business advisory related initiatives, which include the implementation of new system.
Standardizing our core processes.
Now pushing our global supply chain other core competency and strengthening our global talent chain to name a few.
We expect the investments made in 2019 and continue to make to result in stronger EBITDA margin in 2020 and beyond.
As you know and 29 G., we were awarded the seat on the 82 billion dollar wall kept five I'd like you.
With task orders in the same calm and Endo Paycom, Hey, ours, the largest award in our company's history. This 10 your contract what's up and every time doing around the globe positioning vectrus to compete for additional future revenue growth and geographic expansion you know you ours.
We also expanded our strategic position as a converged marketplace leader through the acquisition of advanced or.
It's banter, well respected and leading integrated electronic security system offer practical solutions that are in demand in the marketplace and advanced Vectrus his position as an innovator in this market.
We're very pleased with as we enter at progress and integration efforts talented team into our business. This acquisition exemplifies our understanding of our clients the man for converged infrastructure services and solutions.
We continue to look for similar investments in the emerging converged infrastructure market to support our growth and our stated objective of being a to want to have they get dollar company with 7% EBITDA margins by the end of 2023.
In 2019.
We accelerated the pace of enterprise Vectrus and other internal investments in order to enhance our capability and foundation to support significant volume growth in 2020 and beyond.
The Vectrus team that we have assembled in the past several years has been instrumental to our success.
In 2019, we continue to enhance our leadership with strategic hires.
While continuing to invest into development of our people I'm pleased to report said in the last year, we internally promoted nearly 400 individuals around the globe and formerly watched our top talent mentoring program and enhanced our diversity and inclusion program globally I'm very proud of our talented team.
Wasn't 35% of which are veterans, who are uniformly aligned to our mission and do our strategy.
Our balance sheet remains strong and we're making progress towards putting in place and expanded credit facility.
It is better suited to Vectrus is business and growth strategy today, particularly as we align do operating and financial foundations in preparation for faster growth in the coming years.
The initial 2020 guidance that we are issuing today represent 7% to 10% revenue growth and 8% to 19% EPS growth from last year.
Yes, that's supported by our strong backlog of $2.8 billion.
Dan bids submitted for new business of $2.5 billion.
The midpoint of our 2020 guidance represents 8.5% revenue growth and 14% are an integral from 2019.
Our revenue guidance range reflects the current status of the Wildcat five protest process.
With regard to lock kept five protest we continue to have positive view of the status as evidenced by the army reaffirming its initial award on February stuff and by the court a federal claims denying three other for protests on February 21st.
The low end of our guidance reflects the conservative view a lot kept five with minimal revenue from the program in 2020.
Now I'd like to turn the call over to our Chief Financial Officer, Susan which for a review of the financials.
Thanks, Chuck and good afternoon, everyone turn with me now to slide four to discuss our fourth quarter result.
Fourth quarter, 2019 revenue was $365.3 million up $35.7 million or 11% year on year.
Organic revenue growth was 7% year on year, excluding the contribution from advanced War, which was acquired early in the third quarter.
Total revenues, those resulting from an increase of $17.2 million from our Middle East program.
And an increase of $18.7 million from U.S. program.
Finally, driven by the acquisition of a ban tour, which contributed $12.4 million.
Okay. Both contract contributed $127.1 million were 35% of total revenue in the fourth quarter.
Operating income for the fourth quarter of 2019 with $15.6 million, well, 4.3% margin compared to 3.8% fourth quarter of 2018.
Adjusted operating income for the fourth quarter, 2019 was $16 million for 4.4% margin compared to 3.8% in the fourth quarter 2018, adjusted operating income increased $3.4 million year on year due to an increase in revenue and improve program performance.
Adjusted operating income was up $1 million sequentially were 7% inline with our expectation for sequential improvement throughout the year.
Fourth quarter 2019 interest expense was $1.7 million.
I live in $7000 year on year, reflecting the financing of the advantage <unk> acquisition, that's short term working capital requirements.
Interest expense was down $248000 on sequential basis due to lower usage of our revolver.
Adjusted EBITDA for the fourth quarter 2019 with $18 million.
29% them last year adjusted EBITDA margin was 4.9% up 70 basis points from 4.2% last year and up 30 basis points from the third quarter 2019.
Which was in line with our expectations for sequential improvement.
Net income for the fourth quarter, 2019 was $10.6 million as compared to $10.1 million in a cost here.
She was fourth quarter was positively impacted by a one time tax deduction of $1.8 million associated with tax reform.
Under the tax cuts and jobs Act.
The effective tax rate in the fourth quarter 2019 increased to 23.9% the 9.6% in the fourth quarter 2018, primarily due to tax reform.
Adjusted net income was $10.9 million up 32% compared to prior year.
Diluted earnings per share for the fourth quarter 2019, with 91 cents compared to 89 cents into player you. Adjusted EPS was 93 said and was up 27% year on year and 11% on a sequential basis.
Turning now to slide thought to discuss our full year 2018 result.
2019 revenue was $1.38 billion, a couple of hundred $3.3 million were up 8% year on year.
Organic revenue growth was 6% year on year Lindy acquisition of Advanced War.
Well revenue growth resulted from increases in our middle East program, a $50 million and an increase in or U.S. program of $35.2 million, which includes $22.7 million from the acquisition of a ban torque and our European programs of $18.1 million.
Our K BOSSS contract contributed $495 million for 36% total revenue in 2019.
2019 revenue with the Navy grew by 45% <unk> Air Force grew by 22% from 2018 or work with intelligence and other federal clients increased 30% year on year.
2018, operating income was $51.6 million for 3.7% margin compared to 3.8% mortgages in 2018.
2019, adjusted operating income was $54.9 million or 4% margin compared to 3.9% margins in 2018.
The $5.1 million, increasing adjusted operating income was driven by a pen programs and formats, including investments in global operations throughout the year.
2019 interest expense was $6.5 million up from $5.1 million last year, reflecting the acquisition of advanced War and short term working capital requirements.
[laughter] doesn't 19, adjusted EBITDA was $61.4 million for full 0.4% compared to 4.2% last year and was in line with our expectation as we realized improved performance for the best me into our recently one program.
Defective tax rate in 2019 was 23.1% as compared to 18.4% in 2018.
The tax rate in 2018 was lower due to onetime tax benefits associated with tax reform.
Diluted earnings per share for 2000, my team was $2, a nine cents compared to $3 in 10 cents in 2018.
Adjusted earnings per share was $3.21 and was up 6% from $3 a four cents last year.
Turning now to slide six to discuss cash and liquidity.
Net cash generated from operating activities in 2018 was $27.6 million compared to $40.1 million in 2018.
During the fourth quarter, we experienced a temporary delay in cash collections with a handful of customers.
This matter has since been resolved that resulted in net cash usage from operation in the fourth quarter of $900000.
Going forward, we expect to return to over 100% cash conversion compared to net income.
Total debt at year end was $70.5 million down from $75 million at yearend 2018, the company's another Jewish I would 0.97 times and well below our covenant level of three times.
Cash at year end with approximately $35.3 million for net debt of approximately $35.2 million.
Yeah, good revolver was undrawn with $117 million of available borrowing capacity with the possibility to expand borrowings by an additional $100 million subject to lender consent.
In order to better support the growth of the business or future working capital needs and lower interest expense, we had begun to evaluate opportunities to update and extend our current credit facility.
Turning now to slide seven to discuss our backlog.
Fourth quarter 2018, total backlog was approximately $2.8 billion funded backlog was $707 million compared to $689 million last year and was down 12% sequentially due to the timing of awards in funding being added to contracts.
Total backlog includes both funded and unfunded backlog represents firm orders and potential option period.
Contracts are multiyear contracts and I'd like to exercise an option is that the sole discretion of the U.S. government or the prime contractor would we are a subcontractor.
Total backlog excludes potential orders under indefinite delivery indefinite quantity contracts and contract awards that are under protest.
Importantly, we were recently awarded $822 million six month extension on our Ondecks Walker program I expect an extension of approximately $275 million for cable TV issues very shortly.
We will also recently awarded a new 45 million dollar contract with the Navy in Romania.
It is important to note that both extensions and our recent maybe when would add $441 million to backlog. The company's trailing 12 month book to Bill ratio with 0.8 time as a reminder, our book to Bill does not reflect contracts under protest and in particular markets FID.
Our book to Bill reports the award timing associated with Ondecks Walker cable and the protest associated with Wildcat side.
Taking into account block applied Ondecks Walker cable and our recent maybe when our pro forma total backlog is $4.6 billion.
Turning now to slide eight we expect or a record of solid revenue and EPS growth to continue and Twentytwenty. We're establishing an initial revenue guidance range of 1.475 billion to $1.5 billion to $5 billion, reflecting 7% to 10% year over year growth.
Hello into this range reflects a conservative view on wall kept five timing that would equate to minimal revenue for the program and 2020.
Importantly, our expectations for overall growth on walk outside remain unchanged.
We continue to drive margin performance in our business and expect 2020 EBITDA margin in the range of 4.6% to 4.8%.
Compared to 4.2% in 2019.
Our 2020 EBITDA margin range compares to an adjusted 4.4% in 2019.
Our path to higher EBITDA margin by the end of 2023 includes a component evolving working with clients toward the more advantageous contract structures to include fixed price and as a service model.
Our first fixed price contracts generally have margin profiles that build overtime as process and technology insertion generate efficiencies.
We have continued to invest in our fixed price programs, which includes the over $200 million a new programs one in 2018.
The outcome of these investments is now starting to become visible in our financial results and 2020 guidance.
Our estimates a 2020 interest expense is $5.6 million down from $6.5 million in 2019, due to continued debt reduction and lower revolver usage.
Depreciation and amortization is anticipated to be $8.4 million up from $6.5 million in 2019 due to the acquisition of advantage that we estimate a 2020 tax rate of 23% flat with 2019.
Our 2020 diluted earnings per share guidance is in the range of $3.48 to $3.81.
The midpoint of our 2020 bps guidance represents a 14% growth from our 2019 adjusted diluted EPS.
Weighted average diluted shares Ltvs are estimated at 11.8 million shares.
We expect revenue and EBITDA margin as to demonstrate a similar cadence to what we saw last year and build sequentially through 2020.
In the first quarter, we expect margins to show year over year improvement the dip from the fourth quarter of 2019, lintas pay or 2020 revenue and earnings per share to be 40% weight in the first half and 60% and the second half.
For 2020, we expect net cash provided by operating activities to be $45 million to $55 million.
Representing 125% conversion at the midpoint.
Operational capital expenditure guidance is approximately $7 million compared to $10 million in 2019.
As a reminder program related capital expenditures are considered and contract pricing and will be recouped over the duration other contract.
Finally, 2020 mandatory debt payments or $6.5 million.
I'd like to now turn the call back over to Chuck. Thank you.
Thank you Susan now, let's move to slide nine to touch briefly on lot kept five.
As you are aware in April 2019 vector for the water position on the wall kept five contracts.
The Army to 82 billion dollar 10 year multiple award I'd like to contract.
We wanted to send calm and Endo Paycom AOR task orders.
Which carried at initial value of approximately $1.4 billion or 40% of the $3.5 billion total initial value of task orders awarded the all four winters.
The contract has been under protest since you award in April as I previously stated the quarter Federal Kwame denied three or four protest and we expect a ruling on the final protesting the coming days.
Just yesterday the court denied the remaining protested request for a temporary restrict screening order through March 11th we continue to anticipate revenue from these task orders will occur in 2020.
We are ready to proceed and to deliver on these critical missions for the army.
Let's move to slide 10 to discuss organic growth.
This table shows our update of contract wins from 2019 to date in the first quarter of 2020.
Vectren has received over $2.5 billion, an award by adhering to our commitment to deliver exceptional program performance to our clients and do our growth strategy of conducting targeted campaigns designed to communicate the value we deliver.
Additionally, we continue to make significant investments in our girls focus talent and capabilities to continue to extend our differentiation in the marketplace and support our growth in 2020 and beyond.
During the first quarter of 2020, our Navy growth campaign continue to pay off with two additional awards.
First we were awarded an eight year 45 million dollar contract to provide base operations support at the Naval station facility can divest flu Romania. The vessel is a first aegis ashore missile defense facility placed into operation providing support the Nato's overall holistic missile defense.
System.
This space is made up of approximately 200 personnel and is the first Navy base to be established since 1987.
Importantly, this award is fixed price and demonstrates how vectoring plans to increase its fixed price revenue base from which we can apply our program phase in process discipline and technology enhancements that will ultimately lead to higher margin and better client outcomes.
Second we want a two year 7 million dollar contract to provide concept in development prototype software.
To integrate disappeared onboard sensor feeds to support signal discovery and exploitation.
This one was based on our strong history of sensor integration, which are the key component and differentiator in our becoming a leader in the converged infrastructure market.
Please turn to slide 11 to discuss our new business pipeline.
Our award activity remain solid and our pipeline of new business opportunity supports continued growth in backlog and revenue.
We currently have approximately $2.5 billion in bid submitted for new business awaiting award, which includes protested contracts. Another high for this metric. Additionally, we have identified opportunities of over $9 billion that we plan to bid over the next 12 months.
Our growth focus activities have driven solid win rates today, and we are confident in our ability to successfully compete for business and our almost 12 billion dollar new business pipeline.
Let's move to slide 12 to discuss our strategic execution.
Over the past several years, we have made great progress delivering on our strategy three core elements enhance the foundation expand the portfolio and add more value to.
To capture or opportunity to transform vectrus into a larger scale higher value differentiated platform.
Transformation is all about understanding our clients need to move from where traditional way of operating their facilities supply chains and networks to a more instrumented and converged approach as we progress toward our five year objective. This converged approach the central to what we do.
We have significant we enhanced our client portfolio mix and successfully integrated two acquisitions that haven't improved our operating technology capability.
We are proving that the refinements to our growth focus efforts are working and we have expanded our share with current clients. We are now providing thought leadership to the marketplace on the installation to the future and have grown our talent to support strategic execution for future growth.
Looking ahead to the next 18 months or immediate priority is affecting a flawless walk kept five startup.
In both of Centcom and Endo Paycom yours.
Leveraging the investments we have made to support this growth and continuing to deploy capital on strategic M&A inorganic pursuits.
Additionally, through enterprise Vectrus, we will continue to advance our program processes at our internal system modernization initiative to better drive client outcome and lower costs.
We will continue to insert operational technologies into our new and existing programs as we take advantage of converged infrastructure.
Such as the perimeter security through advanced door and many other technology enabled solutions many of which can be viewed on our website.
We also leveraging advantage with capabilities into our existing client footprint that improved service delivery increased converged solutions of the future.
Increasing our addressable market and supporting our growth.
In terms of clients, we will focus on delivering seamlessly for the army. Additionally, we will advance our successful girlfriend campaign.
She has the Air Force Navy intelligence community and state Department to further expand or share while leveraging our presence around the globe to build and execute an international pipeline of opportunities.
In terms of M&A, we will continue to explore opportunities to make strategic acquisitions to expand clients sets and capabilities and to strengthen our leadership and the converged market.
Let's move to slide 13 to review our tracking toward our growth goals.
The near term priorities I, just discussed will advance our progress towards our objective for two and a half a billion dollars in revenue and 7% EBITDA margins.
Here is the updated scorecard that we used to track our progress towards our long term growth goals.
That's the first component volume of contract mix seeks to drive 80 basis points of margin improvement by revenue growth and working with our clients towards more advantageous contracting structures to.
To include fixed price and as a service models that drive operating leverage for 2019, our percentage of contracts that were fixed price was 24% up from 22% in 2018.
On a raw dollar basis or fixed price contracts stands at $336 million at 18% increase from last year in the near term every phase of walk Cadfive, which is cost plus our percentage mix could shift, but we're continuing to work aggressively with our clients to migrate to fix.
Price and as a service contract structures.
Second component enterprise Vectrus is planned to deliver another 80 basis points of margin expansion through increasing process discipline cost efficiency supply chain leverage and technology enhancements in both our programs and support functions.
The processes that we have harden in 2019 are now expected to contribute to EBITDA margins in 2020 and beyond.
The third component solutions and client mix is planned to contribute 130 basis points of margin expansion.
For example, we plan to take solution somewhere to advance or and do our current customer set.
Augment the capabilities we offer.
But the client mix side, we will continue to grow revenue with the Air Force. The Navy the state Department and the intelligence <unk> clients and our plan for 2020 is to further build our pipeline of opportunities within these clients.
2020 promises to be another strong year for Vectrus I want to thank our teams for their continued hard work and dedication in support of our servicemen and women and their critical missions around the world. Our aim is to transformed vectrus into a higher value and differentiated platform and together, we are making great progress.
Yes.
Now I'd like to open the call for questions operator.
Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
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You May press star too if you would like to remove yourself from the Q.
One moment, please while we poll for questions.
Our first questions come from the line of Joe Gomes of Noble capital. Please proceed with your question.
Good afternoon, and nice quarter and thanks for taking the questions.
Hi, Joe how are you doing.
Good My first question just to circle back on Logcap for a moment.
I think it was earlier this week or late last week that the G.A.O. announced.
Our put out a release that at least 100 I think it was floors arguments, let's say they would have ruled that there was a case.
Like I know it was for the for the KBR.
One of the KBR against KBR.
Do you see that having any potential impacts year, allowing some of the other people that have been denied coming back again for another bite at the Apple so to speak or do you see some of the recent rulings by the court as has stopped all of that.
And I asked me a little care of real careful here, obviously, but let me summarize the current state of play this way.
So we you know I understand what that ruling was an floors case.
You know that you know NSS moved into the next round, which was a quarter federal claims.
As we found out on the 21st three of the four cases at the quarter Federal claims were dismissed.
The one remaining case dying horse case is due to be.
Okay concluded kind of on our shortly after the 10th of April gets a final point too and that's literally happened while we were on the phone here today is that we were.
ER given a oh, that's thing has a stop work and an authorization to begin to transition planning aspects of the Oh, the logcap contract. So I would summarize by saying yeah, we're not completely.
You know out of the woods, yet from the legal processes, but we are certainly trending a in a very positive way and we really looks forward to.
Beginning to work with the the government and transition planning.
Okay, great. Thanks, Thanks for that and they just kind of one of the look.
On the the new business pipeline, you increased the amount of bids plan to submit.
To about 9.2 billion from a roughly 7.1 billion at the end of last quarter, just trying to get a little more color on you know how did that expand you know so much on a on a quarterly basis.
Well we are the proposal activity. We have is a direct result of the campaign that we have been executing overtime. So I really like the rate and pace of our organic growth related activities.
Now that as you know doesn't mean, the government is going to award any quicker than they normally do.
But we are seeing very.
Important and good opportunity for us in the marketplace.
The point that I would like to continue to make as well, which I guess further reinforces the point that I'm on here.
But other than the initially awarded task under a lot cap.
Our pipeline essentially include.
Essentially no additional work other than the five task we have already been awarded.
So once the army clear isn't it is you know ready to continue to issue additional additional task against Logcap, Oh, we see that as an additional demand stream that they've got to be.
Obviously very favorable far more from a pipeline perspective.
Okay.
Based on that well one last one I'll, let someone else asked some questions. When we talk about the strategic M&A to expand the client set of capabilities I Wonder if you could kind of give us a little more you'll drill down a little more to that as to what exactly are you guys. You know looking out of his specific areas that you feel.
The company you know needs to expand its capabilities in I mean, where we're kinda like wherever there's the focus or is it more you know as opposed to a rifle shot more of a shock Dawn you know looking at <unk>.
But much broader space of a client set some capabilities.
Yeah, I would I would ask your question based upon the two acquisitions, we've done in the past so the acquisition or Centel.
Introduced a new clients the intelligence community and a new set of capabilities I T capabilities around operational technology and spectrum management.
It backdoor as you know was all about a deepening and broadening.
Our operational technology solutions capabilities. So there are other assets in the marketplace today that will allow us to X band go wider than our existing client footprint.
And there are count was they're countless new technologies that will be additive to our operational technology portfolio.
Okay, great. Thank you very much and again, congratulations on the quarter new year.
Appreciate it good talking to you.
Next set of questions come from a line of Joe Denardi of Stifel. Please proceed with your question.
Hey, Thanks, guys. This is John on for Joe Good quarter real.
Thank you.
So I guess the first question I have thought type pertains to the army.
Guys mind updating us on on how the army's thinking about it supply and logistics management.
And specifically has to hold around the the boss work kind of been lifted and are they starting to get some proposals out there.
For you guys to pursue [noise].
[noise] yeah. They saw so the the Expeditionary Army the army essentially outside of the Continental E. U S is.
Largely.
Enabled by law Cadfive, because as you know logcap five.
Unlike log cat four is both for enduring as well as expeditionary emissions. So I would believe that once we move past.
The Oh, what the protest process, which it appears like where there are I would expect to see a significant new activities around the army of logistics and supply chains.
Our perspective, particularly a into that and don't pay calm A.O. or if you're a student of all that's which I know you are no there've been several articles written to that effect here over the last.
Six to nine months, so I really liked the op tempo of not only the army all of the services I think this whole notion of the installations of the future and how do we digitize supply chains from both the security and efficiency perspective.
It is right in line to the capabilities that we've been building and the messages that we have been sending to our clients.
Good.
Hey, one of the things that that's been coming up, especially in the news a lot has been obviously the corona virus I'm given your footprint in the middle East how are your customers responding to that and how is that a affecting vectrus is work there on the error.
Yes, it's a it's a complicated as you know subject.
Oh, we as Vectrus and the department of defense as an institution.
I have dealt with pandemics in the past that we've been working with our clients in terms of our procedures.
And as a provider to the military we worked very hard to keep our restrictions or of travel and our preparedness in line not only to the areas of responsibility, we have but really down to the country and base level.
So suffice it to say you know the number one priority as the safety of our people.
And that is you know that is.
Jointly with the Oh, the operational readiness that as a military provider we have to half so.
It's complicated we have people working it you know 24 seven around the clock and we are in more than daily probably hourly conversation with our clients to this effect.
Okay.
That's good then I guess, the last kind of part and just one more pivoting right. Again. This time is talking about the awards environment. We just kinda talk to touch base on around the Army Kinda talk about how the Navy in the Air Force is approaching 2019 awards.
Are they are they looking to get this stuff and the on contract faster I any color on that would be greatly appreciate it.
And then I'll call <unk>, Boston government contracting has always relative I'll preface my statements with that but if I look at our $9 billion plus of pipeline, how we are as balanced across a services.
As well as to our other strategic clients such as the intelligence community and the department of state and we ever have been.
The rate and pace by which awards happen are always very difficult to predict as you know.
But I will say that this whole notion of.
The installations of the future the digital <unk> digitization of infrastructures.
And trying to drive more efficiency out of the occur and no one m. dollars.
Our pervasive across our government clients. So again, we like how that direction has really playing.
To the capabilities and messages that we have been projecting into the marketplace now for two or three years.
All right.
As a reminder, if he would like to ask your question. Please press star one on your telephone keypad.
We have reached the end of the question and answer session I will now turn the call back over her Trump brown for any closing remarks.
Very good we appreciate everybodys time and attention today, and we look forward to updating you on our progress during the next quarter's call. Thank you very much.
This concludes todays conference you may disconnect. Your lines at this time. Thank you for your participation have a great day.