Q1 2020 Earnings Call
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Once again today, it's going to Frank is scheduled to begin shortly.
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[music].
Ladies and gentlemen, good afternoon, and welcome to the Mantech first quarter fiscal year 2020 earnings conference call.
At this time, all participants are in listen only mode.
Later, we'll conduct a question and answer session and instructions will follow at that time.
If anyone should require assistance during the conference. Please press Star then zero on your Touchtone telephone.
As a reminder, this conference call is being recorded.
I'd now like to turn the call over this even bother Vice President corporate development and Investor Relations.
Welcome everyone. Thanks for participating on Manitex first quarter coal.
I hope that everyone is healthy and remaining sake. During these uncertain times.
Your practicing good social distancing and as such we're utilizing a completely virtual approach to our earnings call. This afternoon.
Please bear with US if you experience any minor delays well mixed audio quality on the call.
Joining me on todays call, we have Kevin Phillips, President and CEO, Judy Bjornaas Executive Vice President and CFO as well as Matt Hey, Rick Wagoner or to the president.
This call will make statements that do not address historical facts and dots are forward looking statements made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act 1995.
Forward looking statements are subject to factors that could cause actual results to differ materially for me anticipated results.
For discussion of these actors and other risks and uncertainties. Please refer to the section entitled risk factors in our latest form 10-K, and a rather FCC filings.
No Kobin 19 has been included as a risk as it is uncertain, what the potential impact would be to our business and therefore, it could cause our future results to be different than our current estimate.
We undertake no obligation to update any of the forward looking statements made on this call.
On today's call, we will discuss some non-GAAP financial measures, which we believe provides useful information for investors.
Non-GAAP measures should not be evaluated in isolation or as a substitute for GAAP performance measures you can find a reconciliation of the non-GAAP measures discussed on this call in our first quarter earnings release.
Following prepared remarks, we will turn the call over to your question. We recognize there may be many questions. Please limit yourself to one question. If you have more than one. Please ask your most pressing question first and then reenter the queue with that let me hand, the call over to Kevin.
Thanks, Stephen Good every afternoon, everyone I'd like to begin to call that skus in the corporate Nike and its impact in how we're managing our business truth. This national emergency.
After that.
<unk> for an update Limitx quarterly performance, followed by some thoughts with a broader markets Indian Barb.
First I want to express or deep gratitude to the health care professionals first response.
From an official members of the military National Guard and many others thrown the frontline so badly exist in them.
Over the last few months the World has you unprecedented events as you can imagine hope crisis has become the key national priority for customers.
And it has been receiving our leadership team sports <unk>.
You've been proactive planning and response throughout this crisis or engagement with employees customers and partners is very.
Your regular communications habits after swiftly evolving conditions.
Rob This metric is an operating with two key priorities Mark first Consignors health safety and will be over employees and their families.
As well as those of our customers or partners.
Second Mckamy continuity in the critical support for our customers and they're important missions.
It's one of these two parties myth that gets taken the number actions stat strip search it doesn't seem that you're.
Hi, establish until the work for our employees to the maximum extent possible.
By placing restrictions on travel and in person meeting.
Your boss to establish Titan hygiene standards through increased awareness and by working closely with customers, which for safe work spaces and arrangements those unable to tell the work every customer missions.
As you know.
The defense industrial base is considered for critical infrastructure.
<unk> to help address your question fraternities during this crisis.
Along with those in our industry we.
Entered this national emergency sporting federal customers operating.
For your appropriations through September 30.
As it relates to our business your workforce in responding to this purchase.
You see in federal civilian customers had been able to expand the use of telework establish approaches to ship works and works.
That minimizes the impact of the cobot emergency.
Great.
It was customer admissions requirements, most affected by the need for stringent sourcing business measures.
Are those that require access to highly satisfied citizens and information.
Those were the work performed involve significant global national travel as well.
Well, we're supply chain issues may delay material purchases select programs.
Okay, just for some changes to how we operate.
It's impacting our business so furnace in relatively light.
Your thankful to our customers and the federal government large for recognizing the value in necessity.
Its industrial base National security.
Permissions and the cares last season acted in late March specifically sections 36 too.
And implementation of guidance provided by I wouldn't be Jody you know like DHL and others have made it clear.
Hi, good just to support and maintains its its industrial base.
The supporting critical infrastructure.
It was assistant Chief Federal Health and citizen services needs.
Highly skilled and I look forward workforce 40 intelligence community.
This guidance affords recovery of the cost related to our workforce that are unable to look like fulltime support.
Customer requirements due to workforce taking measures.
Looking forward, we're very to move towards a more normal operation in Barb.
This national crisis about subsides.
Currently the administration congressional focus appropriately remains on its crushing defeat then Nick and resulting economic implications.
As such our sense is that moving to full operational status will be Grad school.
Well, maybe operating in it its fortune 21, hundreds continuing resolution.
That said, we believe you redeploy onto your budget field should afford a sound framework for funding levels. Excluding additional funding that has established.
On the emergency funding Bill.
Now, let me get through our performance in the quarter.
On our last fall, we provided a strong financial health for the year, we delivered solid Q1 performance.
The quarter's performance was marked by healthy revenue growth of 22%.
EBITDA growth of 34%.
But the margin expansion at 80 basis points and steady operating cash flows a 43 million.
Additionally, we saw considerable Styria before with Onboarding being done virtually in the latter half of March.
I want to take the broader teens vigilance or customers missions, which enabled another quarter of outstanding performance.
That said, we're slightly tempering expectations for 2020.
Factors and uncertainties during this crisis.
Sure. If you will walk through the details of our financial performance in revised guidance a little later on the call.
We had a solid fourth quarter of contracts as well bookings totaled 1.1 billion, resulting in a 1.8 book to bill.
New business made up over 90% of Q1's awards in total backlog grew at night, two nice wait 3 billion, which was up 11%.
Funded backlog stood at 1.4 billion the durability longevity of our backlog gives us good visibility to our revenue.
In response to customer apartments Q1.
Proposal in business development activity remained elevated.
Our proposals outstanding figure of approximately 7 billion exiting the quarter was strong.
We've not seen material laser procurements for most of our business during Q1.
We're beginning to see signs that slippage may occur in some areas of the business in the coming quarters.
Our customers that's one thing in the Rick arbitrary make clear.
However, the Germany contracting process is needed to support near term covert 19 contracting actions.
Well as anticipated gradual phasing of work schedules back to normal state make all contribute to delays.
As a result, it's possible that you stations and bookings could experience greater variability.
Our company and tested leadership team has supported many urgent needs.
The environments before.
We're committed to 40 or customers needs through this crisis.
Judy will walk through the details of our Q1 financial performance revised outlook Judy.
Thanks, Kevin we had a strong financial start to the year and the results exceeded our expectations across all of our key measure.
Revenue for Q1 was $611 million up 22% with over two thirds of the growth coming organically.
The same customer demand in the form a new contract wins grills on existing programs as well as our strategic acquisitions continue to serve as the major drivers of our growth.
As Kevin mentioned, we had a healthy hiring Parker and as a result direct labor remain key to our overall top line growth.
In the quarter, he performed 91% of our work as a prime contractor and our contract mix. It was approximately 68% cost plus 20% fixed price and 12% China materials.
EBITDA for the quarter was $55 million and grew 34% over Q1, 2019th.
EBITDA margin of 9% outpaced our expectations and represented an 80 basis point improvement year over year.
Marching in the quarter, that's primarily driven by strong program performance that award fees efficient cost management and some nonrecurring items.
The bottom line was bolstered by our revenue growth and margin improvement of hampered slightly by a higher than expected tax rate.
Net income was $29 million a diluted EPS was 71 cents for Q1, both up meaningfully compared to last year.
The growth was also evident in our adjusted figures for the quarter. Adjusted net income was $33 million and adjusted diluted EPS was 81 cents up 33, 31% respectively.
Now onto the balance sheet and cash flow statements.
For the quarter, we collected $43 million and cash flow from operations, representing 1.5 times net income.
We do not see a major delay and ability to collect cash given most of our customers permit electronic invoicing and our dsos level improved from last year, a quarter, where we had a partial government shutdown.
Yes, I was 64 days at quarter end, a six day improvement from last year.
Consistent with prior communications, we distributed $13 million and dividends for the quarter.
At quarter end, we had $89 million in cash and $115 million of death.
Our net debt position remained similar to where we said at the end of last year I.
That's a cautionary liquidity measure we drew against our revolver to ensure the smooth lower cash to fund operations as we were monitoring the payment process for potential delays.
Despite the broader macro backdrop, our capital deployment strategy remains unchanged.
We continue to focus on deploying capital to fund the growth of the business.
Maintain our quarterly dividends and accelerating growth via strategic M&A.
The M&A market have slowed as a result of the cobot pandemic disruption, but that said, we anticipate M&A activity to increase as we recover from the pandemic.
We are in an excellent position to review opportunities as they arise I pristine balance sheet affords us great flexibility to capitalize on opportunities that fit our strategy.
Now onto our revised 2020 guide.
Compared to our previously communicated guidance, we are adjusting the ranges on revenue adjusted net income and adjusted diluted EPS Yeah.
Well, we have seen minimal impacts to our financial performance in Q1.
We are exercising prudence in a revised to view to take into account bearing scenarios and the time and approach we will collectively need to get back to normal operations.
We expect revenue to be between 2.35 billion and 2.45 billion.
Represents 6% to 10% growth over 29 team.
Our recent awards and robust backlog provide good visibility for the rest of the year.
However, the variability in our guidance will be driven by a number of factors, including the time it may take to get some of our employees with part of their work week in a mission ready state back to full time mission support.
The level of material procurement, the timing of new contract awards the ramp up of recent contract awards and our success in winning new and Recompete business.
Turning to margins our guidance assumes an EBITDA margin range of 8.7% to 8.8% for the year.
The revised margin range reflects the outperformance in the first quarter, which is being offset by the margin decreases related to the lack of fee recovery for our employees, who must spend part of their work week in a mission ready state.
However, this still represents a potential of up to 10 basis points improvement compared to last year.
At the bottom line, we are expecting adjusted net income between 120 point, Threemillion and 125.2 million and of adjusted diluted EPS between $2 or 95 cents on $3.07.
Underlying these guidance ranges on an effective tax rate of 25.2% kind of fully diluted share count as 40.8 million shares.
Note that we slightly modified our tax rate and so fully diluted share count assumptions to reflect actual was observed in two in Q1.
Now the cash flow, we continue to expect cash flow from operations to be at least $150 million for the year.
However, we expect capital expenditures to now range between 3% to 4% of revenue.
The increases in capital expenditures are onetime in nature.
Customers show higher demand on our managed services programs to accommodate remote work for their employees and secondly, we are accelerating facility investments to support anticipated expansion and near term facility needs for broader workforce distribution.
As discussed on our last call longer term expects capital expenditures to trend lower to more normalized levels now, Matt will speak to our defense and federal civilian business.
Thanks Judy.
MFS is off to a solid start to 2020, particularly in winning new work.
I'm excited to formally share with you additional details behind the $920 million five year contract award that we briefly discussed on our last call.
On this contract Mantech will modernize I saw an electronic intelligence capabilities on the Navy fleet of manned unmanned and persistence surveillance maritime petrol and reconnaissance aircraft as well as other quiet.
The breadth of the work we will be providing on this program span cyber.
Model based systems engineering platform integration and modernization.
All of which are key capabilities strengths for Mantech.
We are excited that naval surface warfare center occurring as trusted us with this important mission and are already working tirelessly to provide exceptional performance on this new effort.
As we do for all our customers.
Nick but where do you.
Thanks, Matt.
I'm pleased to report that end SAS had a good quarter as well.
Our people continue to be the key demand picks differentiation and their safety and well being remains our utmost priority.
As we all know this highly skilled highly cleared workforce is critical to national security.
An important to retain so they can meet our customers' needs once this national emergency as past.
As such we're continuing to work closely with our government partners to ensure we strike the right Bell.
While still delivering our important national security missions.
We're thankful to our customers in providing us great flexibility through teleworking arrangements and allowing for portions of our work where appropriate to be conducted on an unclassified basis.
We hope these structural trends continue in part long. After this crisis is resolved to better facilitate the steady flow of hard to find highly skilled differentiated salads towards critical national security missions.
I would note that the security clearance process is larger than functional for those with existing clearances.
Harbor challenged this in the processing as new clearances, which may cause hiring.
While there may be some near term disruptions our growth trajectory remains intact and driven largely by direct labor growth.
Within M.C. I ask you meant that we remain well positioned in the short medium and long term to support the needs of our customers.
With that let me hand, the call back over to Kevin for closing remarks.
Thanks, Rick.
Let me leave you with Threeq you thoughts before we take first.
First mystic is a national in Homeland Security company operating directly national emergency.
Security success, where nation stone digital to who Yardi business. It has been for over 50 years.
During this time, you're focused on the needs of our customers the health and wellbeing of employees and meet any of workforce critical national security.
Second our business is strong.
That concludes our balance sheet backlog workforce and mission filters, all of which positions us for future growth.
Third.
We have always invested with him right for the future and the growth that if rates.
We'll keep an eye towards the future.
While we help our customers, especially critical issues during this from precedence here.
It's hard Mantech family offers a heartfelt brief but those have been impacted by cobot, making first.
And we again after our gratitude all works that actually copier nation has its citizens surely the stuff.
With that we are ready to take your questions.
Thank you and ladies and gentlemen, easy I've a question that this time just press Star then one on your telephone keypad to withdraw your question festive pound or hash scheme.
Yes. Thank you please limit yourself to one question and one follow up if you have additional questions. Please reenter the queue I get to ask a question just press Star then one I first question is from Edward Caso with Wells Fargo. Please go ahead.
Great. Thanks, Congrats Tom I sprint courage to understand thinking.
Can you hear me.
Okay.
Yeah, I'm trying to understand the 36 10 section 36 10 process heater.
How much of it.
Normal business and how much are this is going to have to ask her equitable adjustments down the road Oh that that would that's my first question. Thanks.
So on on the services side.
Vast majority of is gonna be business as usual for any amount of time. After the 27 foot March where our peak were moved into a mission ready state.
There's a couple of weeks period before that.
Little bit maybe a month in half.
Customer set region.
People may have started the moving into a different mission ready state on an interim basis for that portion of it.
There may be some already a requirement the vast majority of it we will feel it's still on a regular cycle.
Cost.
People It appeared that 30 mission ready state the tenants your fourth.
Yep that's great.
Thank you.
<unk>.
I was just going to add add that I think you know again, because most of our work is.
The cost plus basis, I thought process for us will be relatively painless to bill.
Cover that Tobin cost I think if you have fixed price.
Contracts that were impacted that's going to be a little more difficult well probably require the are you guys.
Okay, Great just a simple one here on.
And in other words, it's cool among another 20 million in that number.
Yeah.
Are you were breaking up little bit could you say that again.
I'm sorry, just how much of the large 900 plus million dollar contractors and this quarter's awards.
Oh no is in Q1.
[noise] Paula thank you.
Thanks.
Thank you. Our next question comes from Brian Kinstlinger with Alliance Global.
Great. Thanks, so much if I think the run rate have your first quarter revenue you're already at the high into your guidance range show I.
I Wonder are you expecting fewer pass throughs I think you maybe talk about lower revenue maybe from programs were teleworking is not possible or is it more.
As project and programs like your 920 million dollar contract will be delayed in ramping given the current situation.
Yeah, I think it's its a combination of those things Brian I think the bigger impact is for new business to delay and then while we've seen good hiring.
Today, there clearly, it's it's a little bit harder to get people ramped up on new contracts. So there there could be some delays there.
Just the usual timing of material pastures.
Great and then my follow up would be you talked about the procurement cycle are you seeing.
Procurements get canceled where the customer says we're going to do a one year bridge, because it'll be easier and this time to stick with aren't incumbent and just wondering if that's a trend that's starting to materialize at all.
Well, it's Kevin it's very much good customer I would say that the proposal volume and request what's in the vast majority of businesses is continuing if there are delays it's more incremental so we're not seeing if anything we're seeing them continuing to push great aggressively on procurement process.
Yes.
On awards somebody from little delays just based on both the availability of people based on working remotely outside the exception to that is in the until yesterday, where people physically have to be onsite to be <unk> access to data.
From a customer side that is kind of create some deliveries and there might be some extensions. This result, but it's too early to tell.
Great. Thank you.
Sure.
Thank you. Our next question it sounds Gautam Khanna with Cowen. Please go ahead.
So Tom can you check your mute button.
With the Cana.
All right let alone for the next question from Robert Spingarn with Credit Suisse. Please go ahead.
Hi, good afternoon.
Oh, good numbers I wanted to ask you Kevin.
You alluded or maybe somebody else alluded to some some changes coming here in the early part of the second quarter. I was wondering we could just dig a little deeper into that how things are maybe a slowing.
We're changing as you moved from Q1 to Q2, and then I have another question after that.
Yeah, so on the proposal volume.
And the proposal volume is very high the timing of awards might be delayed.
Except for the intelligence community, where do you see proposal body might slow down because that's the physical on projects need to do the type work due to continued this procurements and generally.
Fast Madrid contracting officers have to get near term actions don't forget hope it related charging off set up on the programs and that you create a two way. So that's that's about it I except for the people who are working in Fourq type state and some of those folks you know the gradually going back full time to work and that's that's kind of.
The timing phase up to a judy built into guidance.
Okay and then just on the logistics. This you mentioned before obviously some of your people are teleworking.
And then some need to be onsite is there a way to quantify a is there a pie that we can chop up here in terms of whose eligible to tell her work and then on the back of that do you see some cost savings down the road here.
If as someone said earlier, you're able to continue to do the work remotely in the future is there are real estate footprint opportunity or anything else that Mike.
Benefit you in the future.
So oh very high level off like exception not from the warm.
Less than 20% of our workforce is basically in a position where they may not be just based on the access restrictions Oh, that's travel or clearances may not be older work full time off out of that let's say or many of those are actually working full time, because some type work.
And accommodations everybody beyond that is working telework, it's within that.
We have a number of or group of people, who are either working full time within that 20% 30 hours, a week or 20 hours, a week or 10 hours a week.
And those are the new baseline from which they are going to start gradually ramping back up so it's hard to give you a head count equivalent.
Because its variable, but generally less than 20% of our workforce.
In sum mission ready state for some portfolio their time that's helpful.
And then just on the cost side, a you know in the future the permanence of this.
Oh, Yeah, I'll, let Rick speak to sum up the activities you've seen in his customer. So it's hard for us know whether its permanent just based on that.
Variability this but Rick.
Yes, so typically the intelligence he does a lot of their work with inskip some special spaces.
Being able to do teleworking really creates some opportunity for us on the side of being able to hire people at different clearance levels. I don't think you'll see like big real estate reductions or things of that nature around and it'll just it'll it'll make it more efficient to do the work and could help relieve a little bit of the pressure.
Right.
Okay.
Thank you very much.
Thanks.
Thank you. Our next question is from Tobey Sommer Suntrust.
Thanks.
What changes he federal spending priorities do you anticipate.
At this juncture with you know incomplete information right acknowledged that.
And how do you plan on positioning the company against what could be shifting priorities.
Certainly as it relates to public health.
Thanks.
Yeah, So I'll speak to to sports news on that.
Federal health side, all that Matt.
And on this so.
Generally you know, we we see the F. why 20 budget to be a good harbinger of lots of 21 budget as well because those two your plans are already in place or there might be some timing as to when Congress can get to the 21 budget for aren't seeing anything that would say, there's a pretty direct.
Almost 21 budget. This morning additive set of requirements the responses to coated.
Based on the emergency fills a long term.
I think that.
The.
It's hard to tell but I would say that you can tell the discretionary budget within the federal government has a high demand and sometimes would it may not be invest it then.
And at point in time, when there's an emergency you can see where that is so we'll have to see how this all plays out just like we do for any emergency or any investments that the government makes it to make hard choices.
As to how they need to redirect, but I would just reinforce that this these these events or an example, when discretionary budget that drives the decision reacting kit capacity the federal government.
Basically show how the importance of it.
Matt you want to speak to the federal outside.
Yeah, Matt on the Federal Health side I think you know this is part of the reason why we have been focused on that aspect of the business Tobey is and we've already seen that that's going to be need from national Security mission set perspective. So you know you walk. So we actually are you know, we feel well positioned for where that's gonna be going from a priority.
Perspective.
And could you elaborate on the.
Well.
The only one that lost Toby.
Oh, the Coke you.
Well.
Okay.
Okay and our next question.
Yes.
Can you hear me.
And I'll be back I'm sure you yeah, Yeah, Oh, if I could thank you Oh, sorry about that I was going to ask about pension I perceive between two comments one was.
The increase near term investment in infrastructure and some degree of like kind of hopeful optimism that longer term dismayed changed the way your customers in your own staff.
Deliver service you. Thanks.
So Kevin I'll speak to that their order needs for distributed environment.
Were classified work and that's where our purpose.
There may be a potential.
Or is shifting work towards an unclassified portion of that overtime. It will allow for more work to be done outside of the secured facilities. So both are in play right now that we have to deal with.
When this sporting necessary distribution obscure. So these are the other is to allow for accommodate.
For a noncash my portion of work. So we can help scale that workforce as well it looks like it's certainly conflicting it's almost complimentary if it works to.
Understood is are those discussions for sort of a portion of unclassified work being done is that being conducted at the highest levels within the customers and with political support.
Those are certainly discussion that have been going on for sometime I think you will see as part of this process that we will wrap that up and try to try to work.
Work to get more.
Thank you very much.
Yes.
Thank you. Our next question, if <unk> muddy and outside of Florida with Bank of America. Please go ahead.
Good afternoon, everyone.
Okay. So.
So I know it sounds like TV services cost transformation is am I thinking waste in our space since the beginning of March you comment on Veeva CRM. The RFP award by on that you are experiencing you end up and then.
So award environment I'll speak to the proposal volume Little Gordon.
And then you can follow on it I missed anything so we have seen a significant amount of tolls requirements in the first quarter is very happy and that's reflected in our proposals outstanding.
We have seen I would say a little bit less.
Less than average adjudication, but not much.
But.
As a company we've won a higher portion of those adjudications that came true so we're not releasing or slowdown or any requirement except for those were the governments physically come back in it and do their job.
So the demand signals told there that we see this is a labor workforce issue more than an opportunity issue still which is why we're continuing focus on how to get right.
To me.
Okay, and then kind he also games and Nick I'm, calling our on any benefit that the department of defense is given to you because there has been a lot the menu it's about they accelerate its progress payments and other benefits on their didn't care thought is less.
The or how the services I think it's sometimes.
So.
Well I seem to be we as an industry are very grateful to the government. We're recognizing the need for this industrial base opt in opt to the Congress the executive branch the services and agencies. The purpose of all moved at a very quick speed to be offered to this crisis and so we're we're recognizing.
The deal D and the agencies have tried to work towards.
Dating and ability to push oximetry earlier to streamline payment processes.
We are potentially doable to streamline award decisions.
Because they know they have a lot of other things to do.
Relates to Koby crisis itself, so for us specifically in our industry I would say that they're more focused on protecting the workforce maintaining that cash flow reasonably not in advance because most of our workers proposal for advance payments.
What a reasonable cash flow in a we're making sure we flow about that helps you or industrial base and so contractors as well because it's very important that it gets.
Hi, Thank you very much like you think.
Thank you. Our next question is from Louie Dipalma with William Blair. Please go ahead.
Kevin Jude and even thank you for taking my question.
[laughter].
HM there has been a lot of M&A in this government I T series this space over the last three years and even.
The prior three months before the pandemic some of your peers have made scale deals and others have made product field I was wondering do you feel any need.
The increase Mantech scale to counter the increased scale and the increased product capability is of some of your competitors you have obviously done well with your strategy of small tuck in acquisitions, a mantech stock price has increased by more into.
2020 than any of its peers, but at the same time I was just wondering if you feel any need to react to your competitors on the M&A front.
Yeah. So from an M&A standpoint, we maintained the same posture that Ah first of all we want to prioritize M&A or use of cash what we also want to be selective.
Because cut our size and how the government procurers there are more than enough watch a white space Aries and capabilities that we can invest in income after 100 million dollar plus procurements are still kind of contract for and grow our business.
We have not.
As a company seeking a path or need to diversify into product or to work towards scale. There are some bids at the enterprise I T level that may restrict us in the future based on the size of those.
But they may not so the answer for the answer is no oh.
Oh longer answers, we thought it through we take when it gets fish.
Great. Thanks, and another one for me last year, you indicated that you intended to submit $10 billion and bids for calendar 2019 can you provide the amount that you intend to submit for this year.
We expect the current your proposal volume to beat that number it's not extended.
Okay and file one last quarter, you indicated that your pipeline was greater than 20 billion is it still approximately at that level, even though you have $7 billion and bids outstanding Yeah. It's consistent.
In terms of itself yes.
Thanks.
Yeah.
Thank you. Our next question is from Robert Spingarn with Credit Suisse.
Hi, I wanted to ask you a couple of more things Kevin just following on to Toby's question about redirected.
What I think was really looking forward to the the risk of a period of budget austerity as as other priorities surface your related to the cobot crisis. How do you avoid what happened a decade ago, just being surprised on the downside and I understand that was that was industry.
Did we it was a different set of circumstances, we were exiting a war we had to do president did it had a different view, but how how do you protect yourself.
Against the downside here and does it take a change in administration for this to happen or could we have it with the same administration.
So I would say that were much more diversity in our customer set than we were then our job is to support customer emissions when they go up and support our customers.
When those missions go down as well that said, our we have a much broader.
Customer sets a much broader set of capabilities or general view is that the mission people he needs for the technology transformation underway today.
May stay the same or expand if you think about all activities going on around needy distributed environments for communications. So.
We will have to see other federal budgets play out, but I would say that we're much better position from a risk mitigation standpoint.
Just on the distribution core customers the distribution works.
And the broad backlog, we have as well.
And and I think just got touched on earlier, but I I figured I'd I'd try to delve in a little bit deeper have you seen any early opportunities building here out of the federal government in a post pandemic.
Effort to prepare for next time, the next pandemic things that you could participate in.
Given that I think that you bring a lot of skill sets that might be applicable in such an effort.
Yeah. So this is not yeah, we actually are I'm seeing opportunities and actually are supporting certain aspects.
Of this current Pandemics I think that's definitely an area of opportunity.
That we already active.
Okay. Thank you.
Okay.
Thank you. Our next question is from Joe Denardi with Stifel.
Yes. This is John on for Joe Kevin, We're just kind of curious.
You previously talked that a 2020 would be kind of the usual year and kind of re competes or are you still thinking that and what's the customer telling you in regard to some of these we compete.
Yeah, I think concerned around the risk or are they thinking maybe that they can perhaps you know extend this work and push it out into 2021, you give some more color on that that'd be great.
Yeah, John It's Judy I'll give it up a first crack and then if Matt or Rick want to chime in about their business areas, but in general Yeah. We have seen some of the Rep go down over the last two quarters, especially in the Intel space.
Where they have done exactly what you mentioned is and then done in a number of multi year sole source extensions.
[noise], we still have on the books, you know a number of Recompete and the second half the year, but right now about 90, a little more than 90% the midpoint of our guide is already in backlog and I think just as we said there could be slippages from say.
Some of the new business that we were looking at it's quite possible that there could be delays on recompetes as the government you know gets their feedback under them in and response.
Got it has pandemic and gets back to business as usual it I don't think it would surprise us tremendously, but I don't know, Matt you've got quite a bit about recompete that's why.
What are your customers, saying about that.
Yeah, I think it's a it's a mix right I mean like Kevin kind of alluded to right. There are some things that are moving in the past that no where we yeah I'll say normal course, but then there are certain areas, where we're seeing a delay in terms of adjudications and.
I think you know that just kinda leads to more revenue assurance.
Awesome, and then just kind of a follow up here.
You are looking out at the current coordinating environment a specific to protests are you seeing any change in companies protesting and then delays there from the T.A.O.L. or it has as everybody kind of reset expectations around protesting and are we thinking that approach did you guys give.
Any color there that we also.
Yeah, no change in from fast offices, finding answered it does.
The search.
Thank you.
Thank you and ladies and gentlemen, I fell in line. There. If you have a question just press Star then one on your telephone keypad.
A guarantee the I've a question just press Star then one.
Our next question is how Tobey Sommer Suntrust.
Thanks, So I wanted to ask a follow up questions with respect to or the potential for intelligence customers to.
Sure to disaggregate and have some non classified work done before the classified piece finishes off.
One of them.
Causative potential outcomes of that for the company in industry and what are the risks, including potential margin risk. It's part of it doesn't require clearances.
Yeah, I think any movement, we see in that direction will be will be minimal clearly so start.
It would in my view will take a long time for the intelligence to me the change that model and to do a lot of work on classified.
So I think that I think the risk part is fairly small and as I said before I think the opportunity side is really on the ability to bring people into the intelligence community first and unclassified manner, and then upgrade their clearances and move them into the full capacity and so that that's the most promising thing that I see.
Thank you.
Thank you.
Oh, I don't even though we have no.
Good.
Sorry, I'm not showing any questions there.
Fantastic, Okay as usual members of our senior team will be available for any follow up questions. Thank you all for your participation on today's call and your interest in Mantech have a good evening and please stay safe.
Ladies and gentlemen. This does concludes today's conference. Thank you for your participation have a wonderful evening you may now all disconnect.
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