Q4 2020 CACI International Inc Earnings Call
[music].
Thank you for standing by and welcome to the T.I. International fourth quarter in full year fiscal year 2020 conference call.
Hey, Paul is being recorded at this time all lines are in August.
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At this time I would like to turn the conference every two data Blackbird Senior Vice President Investor Relations for T.I. International. Please go ahead Sir.
Thank you coal and good morning, everyone I'm, Dan Leckburg and thank you for joining US. This morning, we are providing presentation flying so let's move to slide number two please.
There will be segments in this call that do not address historical fact, and as such constitute forward looking statements under current law. These statements reflect our views as of today and are subject to important factors.
That could cause our actual results to differ materially from anticipated. Those factors are listed at the bottom of last Night's press release and are described in the company's SEC filings.
Our safe Harbor statement is included on this exhibit and should be incorporated as part of any transcript of this call.
I'd also like to point out that our presentation will include discussion of non-GAAP financial measures.
You should not be considered in isolation or as a substitute for performance measures prepared in accordance with gap, let's turn to slide three please.
And our discussion this morning, Here's Don Mcgeachy, President and Chief Executive Officer of C.I. Internet International job.
Thanks, Dan and good morning, everyone. Thank you for joining us to discuss our fourth quarter and fiscal year 2020 results as well as our fiscal year 2021 guidance with me. This morning, our Tom Mutryn, Our Chief Financial Officer, and Greg Bradford President of seats and limited who's joining us from the UK.
Before we get started Tom and I want to again expressed our hope that you and your families are healthy and safe during these unprecedent times.
We also want to reiterate how proud we our of our employees. The resilience as we all can front kobin 19, and their unwavering commitment to delivering critical expertise and technology to our customers.
Slide four please.
Last night, we released our fourth quarter and full year results for fiscal 2020, as well as our guidance for fiscal 2021, and I'm very pleased with our performance our fourth quarter with year over year growth of 9% in revenue and nearly 90% and net income 10.9% adjusted EBITDA margin.
And over 150 million in cash from operations was a strong finish to a great year.
A year in which we met or exceeded our financial commitments, even as we navigated the coping 19 pandemic.
For the full fiscal year 2020, we saw revenue growth of 15% with organic revenue growth accelerating from our initial 5.5% expectation, we expanded our adjusted EBITDA margins of 10%.
Earnings per share by 21% and delivered robust operating cash flow of over $500 million.
In addition, we booked a record 11.6 billion of contract Awards was 6.5 billion, representing new work to CAC.
Our awards successes, including the single largest contract and CCIX history. Our 1.5 billion dollar 10 year Tcs Award with a national Geospatial Intelligence Agency.
Half of that award is new work to see API, demonstrating our leading network and cyber security technology capabilities as well as our strong track record of delivery.
We also won the five year $1.1 billion Beagle award with DHS customs and border protection, leveraging our differentiated technology capabilities and agile software development.
And we won significant new Sci Fi Biostar work within the Army Futures command to provide expertise enhancing the cyber security the resiliency of army networks, including next generation Fiveg networks, notably the MGH Gcs and Army C. Five IAH Star Awards leverage there.
Capabilities and past performance a prior acquisitions, a key objective of our strategic M&A program.
Slide five please.
You've heard US discussed the three pillars of our strategy when new business drive operational excellence and deploy capital for growth.
Record contract awards demonstrate success in winning new business and our margin expansion and strong cash flow are indicative of driving operational excellence.
In terms of capital deployment M&A remains our top priority.
Through our strategic M&A program, we pursue high quality innovative companies that enhance our differentiation in critical areas of national security fill capability gaps and expand our customer set.
Yesterday afternoon, we announced the acquisition of ascent vision technologies or ABT accompany that exemplifies what we're looking for with our M&A program.
ABT as a high growth high margin company that brings a strong culture of innovation and best in class talent with over 70 engineers technicians and operational staff.
ABT expands our mission technology capabilities by adding best in class electro optical and infra red or EOL IR imaging technologies ABTS differentiated offerings include onboard digital video processing using artificial intelligence and machine learning algorithms, which is significantly.
More advanced then current analog capabilities in the market today.
ABTS, Eli our imaging technology opens up two large I asked our growth opportunities procedure.
First the growth expected from the increasing use of persistent sensors to automate current platform capabilities and second the technology refresh market of existing Nyrstar technology across multiple domains.
In addition, the combination of ABTS eel, why our technology and Cc ice industry, leading RF detection and non kinetic mitigation technology creates a best in class Conor you weigh us set of offerings in fact, as we announced earlier this week the Army's joint counter ULAE Us office.
Elected CAC ice Korean system as one of three fixed semi fixed counter yes systems for use by the deep.
The same office also selected the element of system, which utilizes ABTS, Eli our technology and command and control software as one of D.'s approved mounted mobile Conroy our systems. The combination of ABTS and CCIX technology will result in further enhanced products to serve the.
Conor you a national security market.
I'm also pleased to announce that ABTS founder and CEO, Tim Sheehy, who has a decorated veteran of 10 years in the military both as a Navy seal and Army Ranger well continue forward would see.
Leading the business.
Tim brings an unwavering commitment to customer missions and strong business skills that are crucial to leaving the company accustom to delivering cutting edge technology directly to the war fighter.
Slide six please.
Our performance and that's why 20 physician CAC for continued success in fiscal 2021.
The midpoint of our fight 21 guidance, we expect total revenue growth of about 7% continued adjusted EBITDA margin expansion of 40 basis points double digit EPS growth and robust cash flow generation.
Tom will provide details on those financial shortly.
Our fiscal year 21 financial outlook is consistent with our established performance goals of growth above our addressable market and continued margin expansion.
Slide seven please.
Despite increased attention recently to deficits and budget outlooks, we remain optimistic about our near and longer term prospects.
First the bunch of control Act of 2019 established a budget framework for government fiscal year 21, and thus far Congress. This following that framework.
Well, it's difficult to predict whether.
Government fiscal year 21, appropriations bills will be passed and signed on time or if we start the year and are continuing resolution. We continue to see bipartisan congressional support for defense and National security missions.
Second well authorization under section 36, 10 of the Cures Act is currently set to expire on September Thirtyth, it's clear that the covert 19 pandemic will not be over by then.
As a result, our industry is actively working to advocate for an extension of section 36, 10 to ensure that critical national security programs in jobs are protected.
In fact, the scientists draft of a second round of Cobot 19 legislation called the Heels Act.
Included a section 36 time extension for one year.
The house past their own version called the Heroes Act, which was also supportive of the defense industrial base, all indications from our interactions with lawmakers and staff on the Hill point to a bipartisan extension of section 36%.
Third as we think about future budgets, the ongoing reality of the global threat environment looms large adversaries and bad actors have not let up because of Coburn 19 in fact, just the opposite.
We believe both sides of the political aisle recognized this threat environment and then each continued to support national security priorities.
Finally, we have a large and growing addressable market over $230 billion.
Given our market share is a little over 2.5%, we have significant potential to grow the national security and monetization priorities of our customers are enduring well funded and procured under long term contracts, we remain confident that our alignment to national security priorities and cost saving Nike modernization as well.
So as our investments in differentiated capabilities will continue to position CAC well in almost any budget environment.
In closing I'm extremely pleased with our fourth quarter and full year performance. We continue to successfully execute our strategy driving growth margin expansion and strong cash flow, we manage our business to stay ahead of emerging high valued customer requirements and to continue generating long term shirt.
Holder value with that I'll turn the call over to Tom.
Thank you John and good morning, everyone. Please turn to slide number eight.
Our fourth quarter with an excellent closed two successful fiscal year, we generated revenue of $1.5 billion, representing overall growth of 9% inorganic growth of 8%.
Net income of $94 million increased significantly from a year ago, driven by increased revenue and margin expansion.
Adjusted EBITDA margin of the partnered with 10.9%.
Slide nine please.
For the full year, we generated more than $5.7 billion of revenue.
Representing growth of 15% with 8% organic growth despite the coping 19 impacts.
We continue to deliver margin expansion within adjusted EBIT margin of 10.0% up from last year's 9.4% margin.
Net income of over $321 million represents growth of 21%.
The direct coping Nike impact on our fiscal year 2020 revenue was around $68 million with an 18 million dollar impact to net income in line with our prior estimates.
Slide 10 please.
Fourth quarter operating cash flow was $154 million, excluding our accounts receivable purchase facilities, reflecting continued strong cash collection in the positive impact of the deferral of the employer payroll tax payment.
Dsos was at 57 days compared to 64 days at the end of fiscal year 19.
And we generated operating cash flow $511 million for the full year.
Both excluding the our purchase facility.
41% increase in cash flow was driven by overall growth.
Margin expansion efficient collections as well as $40 million associated with the payroll tax deferral.
We ended the year with net debt to trailing 12 month adjusted EBITDA of 2.3 times.
Turning to slide 11 in place.
As John noted yesterday, we announced the acquisition of the sent vision technology a successful in innovative company in both funded priority areas of mission technology.
For the remainder of our fiscal year 21 about head into half months, we expect ABT to generate about $50 million of revenue in $20 million of adjusted EBITDA, excluding certain onetime expenses.
ABT will provide a modest GAAP accretive in generated about 45 cents of accretion excluding noncash intangible amortization in one time expenses.
The purchase price of ABT was $350 million, which we funded with our revolving credit facility.
We expect to realize the tax asset valued at $40 million related to the acquisition.
I had a net basis this equates to a multiple of less than 12 times next month's adjusted EBITDA.
Post transaction, our adjusted leverage is 2.8 times, when we have over $700 million of unused capacity on our credit facility.
Bottom line, we acquired a differentiated high growth high margin company at what we consider an attractive price and we continue to have ample capacity for additional acquisitions.
Slide 12.
Now, let's turn to our fiscal year 21 guide.
As in prior years, our guidance is based on a program by program bottoms up planning process.
This process provide significant visibility and confidence in our outlook.
For fiscal year 21, we expect revenue to be between 6.0 and $6.2 billion in net income to be between 347 in $367 million.
This implies organic revenue expectations of around 5.5% at the midpoint, including expected coping 19 impacts.
We expect adjusted EBITDA margins of around 10.4% up 40 basis points driven by both core margin expansion in the contribution from Avi Chase.
Our healthy growth and margin expansion are driven by a new business wins in high valued areas of our addressable market on contract growth excellent program execution inefficiencies in enhancements at our structure.
We are expecting operating cash flows, though at least $580 million in fiscal year 2001. This includes $55 million from continued deferrals of the employer portion of the payroll tax, which currently runs from calendar year ready.
Capital expenditures are expected to be inline with last year at around $70 million, which includes growth focused investments for mission technologies in specialized facilities for number of direct programs.
Slide 13 place.
To help with modeling here are some additional expectations for fiscal year 21, which include the beauty acquisition.
Depreciation and amortization are expected to be approximately $130 million.
Interest expense should should be around $44 million.
We are expecting a full year effective tax rate of 22%.
With a materially lower tax rate in the second quarter due to the impact of vesting of stock awards, which were granted in prior years.
We are expecting a typical quarterly sequential increase in revenue and profitability with year over year comparisons in our first half impacted by coping 19 related revenue and profit reductions.
In our fiscal year 21 guidance assumes a revenue impact from coping 19 in the range of 102 $150 million in a net income impact of about $20 million to $30 million.
This assumes the impact of coated 19 continues through December it supporter under section 36 tendency Cures Act is extended strep reset period.
Slide 14 day.
Turning to our corporate indicators prospects remain strong for fiscal year 21, we expect 83% of our revenue to come from existing programs, 11% from Recompete and around 6% from new business.
We have 9 billion of submitted bids under evaluation with 80% of that for new business. The CCR.
We expect to submitted another $13.7 billion through calendar year bed with over 70% of that for new business as Steve.
In summary, we are expecting a note the year strong financial performance with healthy top and bottom line growth continued margin expansion and robust cash flow with that I'll turn the call back over to John.
Thank you Tom let's go to slide 15.
To reiterate CCBI performed exceptionally well in fiscal year 2020, and we remain confident in our prospects going forward.
We delivered record financial results for the year, including increased organic revenue growth continued margin expansion and robust cash flow, we want to record amount of contract awards and we expect healthy revenue growth continued margin expansion and robust cash flow again in fiscal 2021.
None of this as possible with our employees talent innovation and commitment to our customers missions. These are truly unprecedented times.
And how and I'm proud of how our entire team everyone is stepping up each and everyday critical national security and monetization challenges remain.
And Ccrfive will be there to help our country meet these challenges with that coal, let's open the call for questions.
And we will now begin the question and answer session.
You asked a question unit Press Star then one on your Touchtunes. So.
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And our first question today will come from Robert.
And going with credit Suisse. Please go ahead.
Hi, Good morning, nice not morning, Rob Thank you.
I wanted to ask you couple of product questions first.
You did discuss ABT in the prepared remarks, but how did their products differ from other Ito IR suppliers out there like and L. Three Harris in terms of capability target markets type contracts.
That you'll be going after.
Yes, Rob Thanks, So a couple or couple of pieces there I guess first one.
What what differentiates us I mean I I'm.
I'm never going to comment specifically on what our competitors do or.
The way they see the market but.
The differentiation is vast and it's so important enough that I don't want to go into too much detail here.
But what we see in Avi in ABT going going forward very advanced digital Eli our imaging technology, that's based on proprietary software that processes imaging data on the platform itself, so they're going to come down on the ground.
To get to get process, it's actually process within the Eli our system itself. That's a large differentiator. It also has.
Advanced artificial intelligence intuitive command control and explicit machine to machine learning algorithms and as well so very much like what we've been talking about as we built this mission technology quadrant out really looking at how do we find innovative technology that we can do.
You know software on any device, we have so and Eli our gimbal based surrogates imagery collection system is nothing different than a crack it in a base, which are two products delivered by massive Don and many of the other hardware type products that we have out there so what we.
While there is there's a broad trend to automate platform capability. So think automated vehicles automated weapons systems expanding precision the has to be digital in nature has have on more processing SMB able to find smaller things at faster rates and be able to tip into other Mitch.
One mission packages, what what I like.
Most about and the folks who have done some work looking up Avi ABT, you really read a lot about counter ULAE us, but I'm trying to get People's focus back on EOL IR.
Conor you I guess is a user of the ABT Eli our technology that they have today, what we're looking to do was combined that with the CAC commentary technology, and RF infigen and marry that with the Eagle IR and radar sensing so in a and an investor mining mindset looking at what we do.
In fixed.
Systems, and when ABT does in mobile systems, combining the technology. So it's all about the algorithms in the soft soft software delivering lower size weight power products out there and that in a nutshell is is how we differentiate far beyond what a typical EOL he'll IR supplier does today.
Okay, well. Thank you for that color and then on a separate note, but maybe also about differentiation could you delve into steel box, a little bit give us aside a sense of how big that opportunity is.
Yeah, Rob Thanks.
So.
We are looking the capabilities to steal box provides which is secure mobile voice and mobile text as well as sending emails I will present seem very strong interest in expanding user base, but it's not to the size Rob that were actually talking about number of agencies in now.
Number of users yet capabilities are in very high demand Colgate has slowed the contracting process down some money priorities do exist on those agent agencies, but make no mistake. They have a high need and a high used for this type of mission mission Tech, we've got a number of agencies across.
I'd and the federal civilian market.
All of those customers have expressed interest in scaling up over the next six months, we've got about 1000 users now Rob.
We're actually working on various subscription models with an initial users that will better inform and support our growth we look into something just under 20000 subscribers by Tommy get too.
The end of calendar year 2021, so.
Another product base mission Tech. It's another unique solution, where we invested ahead of ahead of me, we partnered with Black with Blackberry, who has some of the intellectual property, we combine some of our intellectual property with that.
And went out there far ahead of RF RF, our fees and ill now I'll never say as luck would have that when we talk about coated but we are a nation at times that doesn't buy something until something happens. So we would look for the next six to nine nine months driving even in Greece more more demand.
And of course, if it's a subscription base, it's going to come with a materially higher margins than what the though to the.
A normal CCC type of contract garners.
And our next question will come from Joseph Denardi with Stifel.
Hi, good morning.
More Tom can you provide a little bit more.
This clarity around the cash flow outperformance.
For this year and then the sustainability in the cash flow guidance for next year is that.
The new run rate for the business going forward. Thank you.
Sure. So if I turn to fight 20, Onest first and foremost to strong net income driven by 50% revenue growth in 40 60 basis points more kind of EBITDA margin is contributing DSL with that 57 days.
We ended this year versus 64 days at the end of last year. So a significant reduction in India. So each day of Dsos worth around 15 $16 million. So thats material in terms of operating cash flow into payroll and other tax deferral helps you to quite a bit.
When we last gave guidance we were concerned that through could possibly be a slowdown injuries payment offices are kind of related to co bid or invoices associated with the care sac, we'd be delayed or held up it turns out collections have remained robust stream.
Time period in our team is performing admirably you to focus on age receivables getting invoices out the door in the government is paying those and so we finished up by 21 quite strong.
Slide 20, we should have quite 20 quite strong fight 21 is a continuation of that starting with strong net income I. Some relatively large cash noncash items depreciation and amortization stock comp the value of the payroll tax.
Is driving a stronger cash flow you were assuming that your dsos will be comparable to the exit levels. The division of the era.
And so that will allow you to allow you to continue to remain at a somewhat stable level in that gets us to the.
Cash flow guidance, if alpha fight 21 that can help SAP.
Tom can you can you grow cash in 22 off of 521 or does the tax relief.
Make that make them more challenging.
Yes, so the I'll payroll tax relief.
Approximately $100 million viewed this as a loan from the governments.
We're showing up in operating cash flow in the way it should become a source of financing up.
From a practical in perspective, our so we're able to defer close to $100 million, we'll have to pay the government back it quite 22 in and fight Twentys rate. So that will be a head wind off and that's what we're trying to be transparent highlighting this and so it will set the right framework in.
Basis of underlying cash flow for 2021 22 in 23, so we'll be talking about this for the next few years.
And our next question will come from Edward Caso with Wells Fargo. Please go ahead.
Hi, good morning, Congrats on the results just curious about.
Your ability to to control a offering set now that it's going into different areas services products and one that appears to becoming more international.
Our ABTS searching last night's says there are so office opening in Australia other sales into Thailand men. How do you one manage product business into service company into how do you have managed yet what appears to be in expanding international footprint.
Ed Thanks, Scott.
Yes, So let me let me try to frame this with the four quadrants that we deliver in right we have.
Enterprise admission and we delever deliver expertise and tech technology into both.
On that on the technology side, that's what we're seeing the majority of our growth.
Doesn't mean that we still do not perform expertise business. It doesn't mean, we don't Walter and win large scale.
Expert expertise programs, but the lions share of our growth that we saw in 20 in continuing into 21 is going to be in that and that tech area. So most most specifically we think about mission Tech, it's really a focus on what technology do our military and.
Intelligence in fed civil customers need.
And how do we invest in a new way to deliver it.
How do we use the agility of accompany our size how do we in mass.
Software and algorithms that we can use across multiple mission needs. So then we get down to how do we manage to it it to us it's a portfolio of technology, we'd like to talk about products, but at the end today, it's everything which is foundational to that to that product.
So we can talk about.
Master Don Beeston cracking, we can talk about Elds Ella Ji asked we can talk about our skytracker in a Korean at the end they were managing mission tax. So all in intellectual property I will look at multiple missions multiple form factors out there and then how do I deliver ahead of me without a multiyear multi billion dollar.
Our development program, which the government is screaming for right now how can I get something that's close enough to what I need right Nita and needed now.
So specifically to Avi T.
They bring world class digital Eli R Tech they bring a great set of artificial intelligence algorithms and machine learning. So you can imagine on the in the imagery side, how can I look at things that I've seen in the past how do I quickly assesses that a good or bad assets is that a is that does that campfire is at a major.
Your fighter how do I take the individual out of that loop. So I can cut down Mishit mission time.
It is true ABT is not creating an office they have an office in Australia, there's about 30.
Top notch engineering folks there when you work with the Australians and delivered to the Australian Defense forces Heaven and indigenous a set of allow our workers there should be looked at no differently and what we have over in the UK underneath for AG Bradford. So you've heard me talk in the past around taken our mission technology portfolio.
Oil and sometimes that translates to products across the five ice countries. So we've been talking about the UK, we now have a.
A sufficient presence in Australia, which translates to New Zealand is as well or we can do hi, leading non algorithm development and take that software and put that into other products and other offerings out there. So long answer Ed, but love that love that question. So we're not out there trying to manage multiple products were actually try.
Turning to build center at synergies were all with all of that technology, and again mission taxes, where our growth is and every time, we grow a dollar revenue there we have grown a multiple of.
Earnings.
My other question is with the election upcoming and the key.
Government fourth quarter September for awards.
And what we're hearing is that there are so no lack of RF piece, but we're also starting to hear some slowness in decision, making so can you talk about what you're seeing in the key September quarter, particularly in the context of the upcoming election. Thank you.
Yes, Thanks said so.
On what we're seeing what we expect for that for the September quarter.
We have not seen a slowdown to your to your comments in RF piece for in awards.
Where we have already seen a slowdown in frankly at its more covert related it's not a distant election related lease fell say yet.
It's the it's the task orders from single award idea queues it's.
Less number of acquisition folks coming into the office each day. So that's slowing those kind of that kind of tasking is down and thats picked up in our covenant impact that we see.
Materially subsiding by the time, we get to the ended this calendar calendar year.
With the election coming up I mean, I think both sides.
Support don't defense, both President Trump and.
Candidate Biden.
Both Ben supportive of defense National so sort of security.
Both had been recipients at a presence daily brief before and they clearly know what the threat dynamics are at home and across the globe.
So from a from an RFP and our pace of awards, although I always say awards are lumpy.
We have not experienced a change in those types of awards again, what we've seen because a cobot is a slowing of tasks task orders and that we continue to work with our government customer to pick that pick that pace up.
And our next question will come from bad actors with Barclays. Please go ahead.
Hey, good morning, guys. Thanks for the question.
I Wonder if you could touched briefly on your latest long term thoughts on margins, where they can get to lets liking.
I think pretty pretty good pickup in fiscal 2001, even though this summer so covidien packed in there.
I guess any continuing to get kind of that tend to 30 basis points.
Uptick from there that you've talked about in the past.
Great. Thanks, Matt.
I'll start and Tom May want to add add something around margins.
So Matt we we are on a path and we had been on a path to.
Deliver revenue growth at a faster rate that our addressable markets growing.
And then second ever increasing margins, we should talk about 10 to 30 and thanks to you. All you guys have always asked me how come with that 10 to 30, so I decided that everything increasing margins.
Okay.
What is our plan going forward, it's exactly the same the same thing for for myself in time to get on these calls and talk with our.
Investors and talk about us having a resilient business, we have to prove that in what we deliver.
Even with coal than we are we are driving topline growth and we're driving margins what gets us that.
Confidence that we can continue to grow is even in our expertise Syria, we see margins moving slightly north but in the technology area that is where we always always believed that there was far more margin and as well as margin. There is far less breast because we can sign longer term contracts in in those areas. We can step in repeat if we.
Build a good arsenal with of intellectual property and away to get all of those all of the software into any type of device. So as long as we continue to grow on our technology side that is what fuels our bought our bottom our bottom line growth I'll also add in there that has the Gulf.
Women is moving more towards agile and getting solutions to the field faster we are a world leader in and it's rarely say that but we truly are a world leader and agile software development and how do we delivered develop and deliver software quicker with less defects, which at the end of the day in an E.W.
Hi, RF SIGINT World, where our Warfighters need solutions quickly the ability to do proven software development in a much more agile fashions.
Allows us to bid work and allows us to request slightly higher margins, because we're lowering the risk on our customer in any market on the planet, Okay lower risk to the buyer traditionally results in higher and higher margins to the to the seller Tom Yes, So kind of 2017, if any of four years ago are typically.
Our margins for 8.5%.
This year, we're guiding to give you kind of 10.4%, including that could impact excluding good we'd be heading north of unit attendant to half percent. So with 200 basis points shifted margin over a four year time period is in pretty significant in our minds to kind of turned the battleship had relatively quickly to do that.
And as John indicated you use some things on him work cut a tactical level you to making sure that were fully positions quickly in driving efficiencies in our cost structure, but fundamentally.
Our technology businesses coming at significantly higher margin than our enterprise business.
And we are growing our technology business at a faster rate books through acquisitions inorganically than our expertise business. Both businesses are important to what's been a disproportional growth in higher margin technology business and that is a kind of underlying trend that we expect to continue in if we continue to drive.
Higher technology growth both mission technology in enterprise technology that will allow us to increased margins in the foreseeable future. So in the that is the underlying.
The kind of dynamics at play.
Got it. Thanks, that's really helpful. Thanks, guys and then I guess one other one on some of these new wins.
Yes, yes in Beagle, how should we think about sort of the pacing as we go through the year.
Can you give any any color on how those programs ramp up and then I guess, it's yes, we do start the fiscal year under a CR.
Is there anything from kind of a new programs start.
Oh boy that potentially could be read at risk.
How do you feel by your ability to kind of manage.
[music].
Yes, Matt. Thanks, So I think the first quarter after about Gcs and then it was around beagles. So.
Tcs $1.5 billion award about half was Recompete work in half is new work and additional additional tasking.
So it's an overall tenure program. Thank you guys. Thank you Tom.
Yes, 10, 10 10 year program.
So.
If I if I were to have a split that up of course. The Recompete work continues on its the same for same pacing, but as you 75 million per year.
Will be incumbent upon us to us see the other half for the the 1.5 billion dollar.
Award I would expect and the next six to nine months to see additional task seems coming again, it's a national and geological spatial of agents agencies network.
The.
The customers on the intelligence IR are rethinking, how they do network build outs and what kind of capabilities those need to have I expect during Covidien then post covered those requirements do grow so I would see the of a ramp up gradual each and every year, Matt for the new the new portion Beagle legal has.
Is already already ramped and I would I would.
Say that we would expect Beagle again too.
Hits there.
Year out run rate by the end of this year.
And that's a five year award.
So a very very good work there that team worked judiciously to get all of the staffing for that job. We're just about 100% staffed happy happy customer a great program relationship there so off to a really really good good start.
I think last part was around.
Operating under SCR I mean.
We don't see any impact to our business in the short term from the CR I mean, we've seen many crs over many many years and at the other day, they havent materially impacted sea ice business. Our strategy is going to still be to focus on areas, where U.S. government needs to spend money on those usually come out of a CF out of a CR perfect purpose.
Perfectly well.
So we're going to continue to boy capital to support growth, there and I don't really see a material impact whether we start under CR, whether we don't thanks, Matt.
Your next question will come from Devon Parsons Goldman Sachs. Please go ahead.
Hey, good morning.
Morning, Kevin.
Just wanted to ask you about the drivers of the 5.5% organic growth in guidance just how you get there given no fourth quarter organic was a third quarter was and.
The implied cobot headwind in the first half of your fiscal 21 is about the same impacted there was in the fourth quarter and I had one goes away in the second half of fiscal 21, you want to ton a new work. Some of what you just talked about kind of the ramp up on which was hoping you could help bridge so five and a half from the eight you just reported kind of what what drives in blood slowdown. Thanks.
Yes, Kevin Thanks, Great question.
So let me start off by a.
Bye for saying I'm I'm very happy to see healthy in printable growth margin expansion is strong cash flow and are really difficult year.
So I tend to look at where we're headed with a full picture view.
So first off we delay our guidance.
To two today to get a better handle on all the cobot impacts will be could provide our most accurate guide I'm very happy that we did.
As as we're seeing changes in both the impacts and improvements that we've experienced.
Could have materially moved our guide around and there is nothing like guiding in June comeback fuel us after the first quarter, explaining what we just learned so I made that decision that said I wanted to wait and see how cold it played out first.
So let me answer your your five and a half versus what we came on last year as a in a couple different ways first of all the initial impacts that we saw with co bid was because what we call internally direct impacts. That's those are where we utilized 36 10 for reserve hours for our folks and our upcoming.
Contractors and Thats in revenue and a net income a reduction we've had lower travel costs discretionary LD OTI see purchases again.
Larger revenue impact smaller net and net income hit.
Now it's good to know that these reserve hours when Tom spoke to you all in the third in there in our third quarter call. You explained at about 10% of our billable hours for being covered by 36% in today, we've got that down to 5% that the material difference. So if you were asked me without the knowledge of some of the other cobot impacts that we.
That we've seen since.
May June and July we would have said that we're on a very very good passed so on direct impacts continues to improve.
What we what we have seen in the June July timeframe is our customers returning to work at a slower pace, which has started a have other impacts what we call indirect impacts so clearance to Jude adjudication not all the intelligence community clearance offices are open at full staff each and every week.
So that that delays us to be able to get people clear to go to get them on some of those new wins that we've had delays in passing on some of the I choose that we have.
Temporary deferrals of training training classes every international programs every program. We've won the has international international deployment component cannot get mill, there and they and they can't get their clearances move and we can't get final in the country training set up so.
Although covert is very transitory for now those indirect factors are going to have a real impact on organic revenue.
Today I can generate revenue on a new award when I can't get people cleared in the clearances are delayed and they can't they can't travel now I'm confident those are going to rebound Gavin before the end of the calendar year, but thus far progress has been slower floor. There so that in a qualitative way sort of connects us five and a half two acres.
Various number of.
Elements, there and I'll have Tom provide some additional data, but I don't want to leave this without without talking about what we can't Dell will be can't control every factor related to coated.
Pretty much impacting what our organic revenue growth is there's a lot. We can like margin expansion cash flow and awards, it's going very very well we remain focused on both on growing revenue and margin expansion. We're very pleased with our 21 outlook is consistent with these goals business mix is evolving exactly as we wanted to win.
Talking about this all over the last three to five years we're.
We're change in risk profile of our portfolio less expertise more tech, which means we're more immune to something like covert I'd look at Kogut like an extended government shutdown period from how our business looks AD growth. We've been doing everything we tend to be more immune to that our strategy is resilient and we continue to work through alcove itself.
With that timing what sort of work some on an additional bridging yes, so long.
Kevin what I would add to what John said is that you'll be provided a range of impact of quoted for unit by 21, a relatively broad range 100 $450 million revenue up there is some aspects of co bid, where we don't with a high degree of certainty what the impact is low.
Plus the odd Cures act hours in some have a higher degree of uncertainty a few of the unims such odd mentioned as part of the forecast process. We have the base for path. In then we have a set of risk in opportunities.
So in those risk with co bid kind of represented distribution of outcome for both kind of revenue with net income and we're trying to provide you with what we see each day bookends of those impacts of.
Our likely results will be in this range of revenue in the range of net income based on what we know now based on our judgment AWS as John said the situation continues to evolve off in that provide some details on co bit Isle you to intrusive cause of the overall credit organic growth you know a large amount of winds up you know.
As you do a book to Bill audit trailing 12 month basis is over two times senior unit performing quite well as an every year, we have a certain amount of work that goes away we complete tasks.
We complete or thus far on $600 million a share so there's a whole to fill and again not different than other years, the new business wins on contract growth up into wins that we expect to win this year will full and no. We provide a range of guidance. The midpoint, we talk about as five and a half a percent or.
And that growth, but again, there was a kind of range within that and so our goal is to exceed that of except that we cat and perhaps a little bit at that.
Okay, Great. That's helpful. In just a quick clarification the indirect coven impact you talked about is that encompassed in the 100 150 years that on top of that.
It's Corinthian question, it's all encompassing right.
Okay, Great and then obviously, it's really difficult to predict him longer term trajectory of the budget, especially given that the fiscal deficit today, but John I was hoping you could talk a little bit about maybe the factors that contributed to the.
Sure decline in organic growth as you saw last time, the budget declined and how many are positioning our exposures have changed today and.
So you can sustain your 100 to 400 basis points of growth target no matter what the environment.
Yes, Kevin so from a from a how this looks in the 2011 timeframe right versus.
Where we sit sit today.
I mean, a lot of things are different I guess the to answer the last part of your question first as a company we're very different company.
We have.
Added a technology dimension on the mission side, and we've expanded our enterprise technology technology to be a larger proportion of our business cc I've been doing expertise and technology for decades, which you which you've seen in in recent years is a focus all around.
GW in second and RF and into this model, where we invest I had a need where we own the intellectual property. We are able to go forward.
In the 2011 timeframe in every government shutdown.
We were we were constantly talking about 12% to 13% revenue in access our employees cannot get too.
The government office, where they have to perform their work we're not we're not having that discussion today. So major material difference that I see is how we're differently position today than we might have been back in 2011.
If I look at 2011 timeframe to talk about the government and the budget control Act.
As a nation, we under invested in defense and Nationals purity. The superior gap, we had in the context of great power conflict shrank or nearly went away completely.
It's not acceptable and I believe that many on both sides of the aisle believed that thats not us and acceptable solution and I think even our lawmakers realize that that was.
Immaterial mistake so.
I believe the spending environment, we see today was a direct response to address that issue I know, we have a lot of other bills to pay.
But I do believe that we'll see continued investment in the National Security space and also gives me great confidence that our customers are going to continue invest in defense nationals.
Purity at the same time, where they have to modernize and I think with additional funds that were put into the.
Coated Act Cures Act sorry.
There is some material dollars that are being spent to even further improve what we have when we've talked about that in the past today in 2000, 22021, where the kind of company. That's done 20 million of awards in in new funds around what was in that occurs I could have another 100 million that router per assuming that hasn't turned to revenue.
Yet, but it's all areas where customers are looking for good enough solutions are right now because they're trying to face.
Some very difficult technology needs. So.
Little different budget environment come not appropriate then we'll be out in 2011, and frankly, we're a very different company driving both top and bottom and bottom line growth.
Thanks, Kevin.
Our next question will come from the cable and rumor with Cowen. Please go ahead.
Super. Thank you very much quick follow up on how good your cobot assumption is that covidien impact will be greater.
In the first half in terms than the fourth quarter right and that you've talked of the 36 10 comes down indirect it's basically.
You will see improvement by year end. So so why is that number so big and secondly is it all lumped into the third quarter because most of the other companies we talk to talk about Q2 as the biggest impact.
Thank you.
Yes, so you I'll start out our high up in as I mentioned.
There are certain things in our forecast process, which we know with a high degree of certainty theres other ones, where we're trying to kind of risk assess how did the impact and.
We work very closely initiatives across the enterprise understanding what those indirect second over effects of Costar and.
We're trying to provide a range of outcomes.
In the.
Information that we provided for a flight 20, the 68 million of the 18 million those were those direct impact that we spoke about in theres, probably some indirect impacts associated with our quite 20 numbers, which we did not you articulated numerate.
And so the results would have been even higher if we went through that you know adjustment process.
And so based on a you know.
Desire to provide a kind of range of outcomes. We provided a relatively had a broader range of outcomes to law I'd help given the kind of unique set of circumstances, Ren given an ever evolving situation.
Thank you and then a quick follow up on the cash flow I. Thank you mentioned payroll.
Tax deferral 40 million in the fourth quarter 100 million. This year my understanding maybe incorrect is basically the first this calendar year you just for and then you pay back the next two years, but given that your fiscal year spans both 20 and 21.
100 million net benefit of payroll tax deferral. This year as that grows and then you have to pay some of that back inside.
Yes, you know I'm sorry, you may have missed.
Could've misstated it for fiscal year 20 on the payroll tax deferral was $40 million for fiscal year 21, which is really the time period from July 1st to December 30, Onest two payroll tax benefit is $55 million. So in total over the.
Hi, good read is close to $100 million that we will need to pay back in future periods have quite 22 enough fytwenty right.
To pay it back in the second half of fiscal 21.
Fiscal 220 to 22, the first half of fiscal 2002.
December 22 in December 23.
Got it.
And our next question will come from John busy with Citi. Please go ahead.
Thank you on the organic growth. So I'm just sort of following up on what happened was talking about.
Organic growth will be better if not for cove enough by 21, so it's reasonable to expect some kind of acceleration in 22, and then maybe because weve into their longer term thoughts around growth and it really around audio would oppose current of ours were looks like our customer needs shifting or even accelerating in light of pandemic and what is khaki want to see if you are doing to address.
Those specific challenges.
John Thanks.
I'm going to try to make it to the second month of fiscal 21, first but I will I do appreciate that question.
[laughter] luck. So this this is how we how we.
We've been through a lot of different budgets logical and budget cycles. Since we've been on this drive to drive top and bottom line growth.
Two areas that I think investors watch.
As well as cash.
For us to guide.
To the same level, we guided to last year.
In spite of Copas says that the awards that we have are beginning to deliver now we do have some indirect impacts that are sort of slowing that ramp up but make no mistake, we have revenue growth behind those awards.
Over the last two years, how those ramp up are all different we talked about Tcs and Beagle.
Earlier.
Those both have have different ramp up points. Some of the programs that we have are in the mission Tech space result in a product delivery.
So we'll get the we'll get to request will get the award and within 60 days were out are delivering product and since products come at such a a differentiated margin than the rest of our business. It does have a material impact for 6 billion dollar business.
What's our our ability to continue to ramp its and its very very strong.
We see a few things here, we've got one open protest out there that's probably worth another percent just on its own worth of organic growth that has slipped.
Into this fiscal year, so there's a lot a lot of moving moving parts.
We're very confident at the 5.5% organic and 7% overall at the mid the midpoint being one month into our fiscal year.
Things that we're going to do and things we have done we're investing ahead of out of need we're filling the right the right gaps where a judicious and.
Very experienced acquirer of capabilities and customer relationships, where we need to fill those gaps we've done over 80 at acquisitions.
You know, it's not something that we look at its something that we consistently do what's in the east coast of CAC to go look at how do we do acquisitions or investments or use partner partnership so.
We're very confident in our M&A strategy, we're very confident in the parts of the federal government, where we're doing our technology technology work, we're very confident with the kind of margins the that the operations team has actually bringing in.
And as we continue to roll folks out and we continue to ramp some of these larger programs up when we get further outside of coal bid that will portend, greater and greater growth rates as we go forward.
Okay. Thanks for that non F 122 guidance John.
[laughter] and then just going back to the quadrant I mean in September to almost a year ago. At this point you guys did talk about growing and interested each quarter, but of course on this call and what we've seen recently is a lot of growth is coming from technology and maybe the vision technology could you update doesn't always where sales stand by quadrant at this point.
And then also thinking about the enterprise side for a moment how might activity there matter. If the future is more marked with writing a lot larger deals in asking that question. The contracts that you guys not being noticeably involved and things like gizmo or engine.
Which are very good Gil just at Ccs Yeah there.
Yes, John I'll take the last part first and I'll have a contractor through sort of on how we look in that Quadro quadrant ma'am.
I mean, and Genting gizmo or two out of 100 large scale enterprise IP programs.
I would much rather have something like Beagle that has a.
A long term agile software development kind of look to it I'm not bound by one hundreds of millions of dollars of assets and putting those on a balance sheet and looking to sell those back a unit at that time, we're actually doing cutting edge software development and I completely new fashion, which is not only directly related both to our enterprise customers is very.
Weighted to our mission customers as well, we can do distributed software development in an agile manner, where our customers don't have to be side by side, we don't need large paper papered specs, we can work on six to eight week spirals.
And we've got to the largest agile software development programs out there. So I'm very confident in the portfolio, we have in the enterprise IP area.
Because it's also more automated as well.
We have 20 to 23000 phenomenal folks here, but as software development methods change those are going to go more towards agile that will then be more machine generated unlike any other technology out there.
It does it doesn't take 22 people in a production line to build a yoyo today right. It takes it takes one so same with software the element.
Less risks and exposure to things like Covis work that we can do add home in a two hour work manner.
So very excited about the enterprise tech skills, we have which very much component. We do on the mission side, Tom back on the quantity Augusto vision. If you are in fact about the quadrant for F. By 21, we're expecting the.
Hi expertise area to grow in the low single digits in the technology into double digits, you know that could just as a combined kind of growth that we've been talking about so would materially disproportionate growth the technology on okay, which is off in the technologies coming at kind of margins anywhere between three and four.
Hundred basis points higher than the expertise margins.
Makes a lot of said in some of the expertise not all of it but some of its more commodity like work on kind of lower margin level and argued that the technology is kind of differentiated in we command higher margins in so that into strategic focus on technology at higher margins is.
Helping to drive that margin expansion, which I mentioned earlier call.
And our next question will come from Greg Conrad with Jefferies. Please go ahead.
Hi, good morning.
Good morning, Greg.
Just a broad question I mean, you were awarded the contract.
Around open system design and software algorithm development in the quarter I mean, what are you seeing in the broader opportunity set around command and control and platform integration, which maybe historically, it's been a little bit more defense Prime base.
Yes, thanks, Greg So Ah yes.
JJ DC to in a BMS both.
Multi domain ops won't pay domain awareness programs. So we have a a respectable seat at the table.
Where we see command control going next and how do we use a predictive analytics and and AI.
You know, even even beyond what we're picking up with Avi ABT, we've been doing a lot of AI and machine machine learning for long before people call that AI and machine to machine learning.
In our classified satellite a ground world.
We do a material amount of command and control work.
Which has been continuously growing up but the newest area I think drill Frank would be in the country Oops area. I mean, if we look at what ABTS Don on on taking multiple sensors and building a mobile non fixed solution on behalf of the Marine Corps, which will be in the United States Air Force and Tory as well.
How do you become that single gooey that single interaction with the user and how do you build a C. Two system that allows other people to deliver applications and other technology and blend all those different sources of information to give the war the war fighter.
There are multiple courses of action. So I would say beyond what we're doing on on JVC to and what we believe we'll be doing on a BMS theres, a perhaps like satellite ground command control. There is counter yes, and the like in the more we can do that in an agile manner where customers can.
Hey, desperate systems and sort of combined combine those and allow our command control framework to be able to do that then we benefit from being part of our many many programs what do we provide the and technology or not.
[music].
And then just one clarification question I won't ask you about fiscal year 22 revenues, but you talked about some program roll off and we think about you know at the midpoint. The 125 million of revenue Chrysler from Corbett in each one I mean should we expect all those revenues to be recaptured in fiscal year 22.
I'm not sure.
Users will recapture but we will get to the normal steady state one level have you could envision a you trajectory of CCRI over the next five years I'm curious what we normally would be what we're seeing is a dip in that trend line due to kogut, but you do co. It is a temporary phenomenon.
Now I'm not sure how I can just by temporary how many months or partners associated with it but at some point in time, we're going to get back to that new trend line trajectory you had to cope with impacts are generally onetime in nature not long term stack.
Yes, Greg So think about ramp up if I've got to get 20 people.
Overseas and I wanted to get them overseas in June if I can get to over there in August in eight over there in September I sort of last June and July right. If it's getting softer development folks cleared I can use overtime hours to get that revenue back, but also I can sort of catch up on.
Of the contract with deliverables that we weren't able to do when we rank opened so some of Israel Coverable made up and then some of it isn't.
Your next question will come from Tobey Sommer with truth. Please go ahead.
Thanks could you comment on the due diligence process.
And.
And a mid colder than normal when you started the engagement, but curious about how that win with remote due diligence and.
You could kind of push out a larger deal across the finish line.
Mid this environment.
Sure.
Yes, Tobey thanks.
So yes, I think we talked about it right. When cobot started that we were going to take a short quote unquote hiatus right from executing acquisitions by I think I might have jokingly said, but good news as phone still work.
So are.
We did take a little time off so we can focus on some of the operational challenges of.
Covidien really to allow some time for covert implications to be better understood and what they really means to us is better inform due diligence diligence right because it was what a company could experienced pre cove. It then during covidien trying to guestimate, where they were going to be out of it is something different right.
So we had already I tend to find him and working with ABT abate back last year late summer in the fall timeframe, Yes, we were able to quickly pick up on the transaction, where we had left off we worked with the senior leadership team at ABT to conduct due diligence remotely at.
And we eliminate traveled to what was absolutely needed. We did take our management brief pre cobot. So knock on wood that that went well took a couple of trips out there as well to meet Tim in his senior at senior leaders.
So we were able to work through that well and frankly, it speaks really well.
Toby to the experienced that I mentioned earlier, we've got a streamline process across every functional area and across every technical competency to make certain that when we're talking about our Ats and 80 Onest 82nd Aquas acquisition.
We were able to do things very very well very very streamlined.
Data data room still works and the like so if we look forward.
Can we do a larger acquisition certainly I mean, it's about understanding where our gaps are first right strategy is a place where we come from so if we have gaps in all let's say in the enter enterprise area, both and expertise in the tech side. There was a company out there that could fill those yes, we will absolutely move move forward, it's a little more comp.
Allocated based on the kind of gaps that we're looking to.
Phil So it's more about what we're looking to fill not the actual revenue and net income values. Its more about how do they you know more fulsome, we fill the gap and also are they going to be a growing beyond coated and we like the the laid out growth rates for enabling ABT, we like what the what the is our ERP.
It looks like to us and.
We would see great things come pretty beauty or any other acquisition that we do during during this timeframe.
Thanks.
Given the evolving portfolio of the business, what do you peg the organic rate of growth of your markets to be and how does the 5.5% organic revenue growth guidance for this fiscal year stack up.
Yeah.
So 5.5% stack up into Europe, Colgate and one of the a generational pandemic i. I like where were city I like where we're sitting on our organic revenue growth like we're sitting on our 7% revenue growth as Tom mentioned, we have a lower range. We have an upper range, you know should coated Karl sooner or should we would.
And more awards that were ex expecting that takes some of that opportunity in risk model makes it different allows us to sort of moved US with this company forward I think five and a half from where we sit today is is slightly below where we would like to a band, but I'd like to not be experiencing cobot also so to the extent that we can continue to work.
Through this I've got 65% of my workforce teleworking today, we have the a 36 10 out there covenants on on the cost side might have to focus is making certain that we get into fly 21, and then a true up by 21 very confident with the guy that we put out there. So you don't know.
Excuses and no shame and a 5.5% or getting growth world with two years of Great Awards and.
I would fully expect us to continue to not only drive revenue growth, but be driving that income earnings cash and the like.
Your next question will come from Seth Seifman with JP Morgan. Please go ahead.
Hi, Thanks, very much good morning.
Good morning investments.
Oh, So just wanted to follow up on on.
One is that some of the earlier commentary you made about.
The different quadrants and enterprise IP I Wonder just.
Given the structure of that market right now the returns structure and the competitive structure.
If it even make sense to be pursuing big awards in that space given your goal of growing margin at the pace that you'd like to grow it I mean I think is it.
Correct me, if I'm wrong, but I think it's probably fair to assume that had you want and then we wouldn't be talking about margin expansion this year and and so whether those those whether in general those big contracts are kind of not really consistent anymore with.
Where where you're looking to go.
Yes. Thanks. Thanks that's.
Contracts there are a multitude of different enterprise type contracts as a lot of different ways for customers to buy.
There are some where it's more of a man is managed service and those will start with lower margins and then you would do it hopeful for time grow.
Yes, we see our business as four quadrants and that builds the portfolios have worked at this company has in some allow us to grow revenue some allow us to.
Use our rates in our direct labor growth to be able to sustain higher levels of I R&D and bid and bidding proposal funding. So I sort of looked at his folks who are doing business. Each of these four quadrants all deliver something to this company that as a.
Some is greater than it had been visual parts that allow us to go grow other areas. So we're going to consistently use a structured business development approach, which is have we shape. This program to the point.
That that favors us in a probability of wind have we tested solutions out with the customer and with the folks were going to make the.
DVD incision ended we established a preference for what we can deliver versus someone else. So our judicious look starts long before the RF RF RFP comes out so we're going to continue the bid on larger programs, we're going to continuing to bid on strategic programs and it happens to be it. There's a managed services program out there.
That is the right fit that we've got the right technological solution.
And we are balancing revenue growth with mark margin growth than than those are all fair game programs for US again, you know we're about long term growth.
So managing to each quarter in which one's going to hurt revenue versus help margin and I'll not how we're really.
Running a ship really looking at how we go after a long term growth business, whether that's on the under enterprise around the mission mission side.
Thanks.
That's helpful.
And then just maybe you can touch on on the home fund.
How that's been going with a pandemic going on.
I was thinking about headcount growth fiscal 21.
Yeah. Thanks so.
Yeah, I mean, our portfolios part expertise in part and protect so there are some elements that are less or more dependent on hiring levels.
Our hiring Onboarding has come out pretty much as expected.
A little a little bit dulled as you would expect but definitely in line to support how we finished 20 and how we expect to grow throughout Fytwenty 21.
And again, it's not so much today folks on issue account acquisition, it's just more about getting people cleared and getting them into the right facility or into the right country. So we continue to work through things. We are one of the only companies that are actually saw ahead of need and build a temporary skip space in our sand.
And tilley facility that helped to Intel customers allow us to bring more folks back. So we continue to work on more mission. So well go look at more and more ways for us to a get folks off a reserve hours, but at the end of the day, our hiring and our head count growth is a hit what we're looking for.
Again, it's not so much on the technology area and much more important on the <unk> on the expertise sorry.
Thank you.
And our next question will come from Louie Dipalma with William Blair. Please go ahead.
John time, and Dan Good morning, Thanks, or just wondering looking man.
But up here of your 9 billion dollar and pipeline submitted bids is there a skew towards I am sorry, and signals intelligence and are there many.
100 million dollar plus.
Opportunities available here and have you seen the pipeline significantly expand for these types of ABT like Mastodon design like Sixthree systems services.
Following the Saudi Aramco like drone attacks last September has it was that a watershed moment that.
Led to.
More robust demand that we seen.
Yes, what we saw him the first part of the question around what we see in our 9 billion you know I'll start off by saying Awards is awards are lumpy.
But.
A nice mix between new and Recompete, which is what we'd like to continue to see and a larger amount of.
Bids outstanding to be submitted in the technology area versus the expertise area.
So how does that drive growth in the future. It says it will continue to have more growth on the technology side versus the expertise side.
Onto that country way aside sure I mean every every.
Action gets a reaction right and not just that kind of thought Carnegie way Aesynt incident, you know we have a number of folks who are stationed over season. Our mission expertise area that are what most of US would say there on the long side of the wire from those forward operating bases, each and every day and real.
The dangers places around around the around the globe, we get sit wrapper imports weekly from what I'm a bad actors are out there doing and are you weigh asses are starting to play a more and more major major role there.
We do just south of a couple hundred million dollars worth the county left today at work and that's across the entire federal government, we'd expect to continue to do more when we bring additional technology choices in from LNG, Yes, when we get size weight power improvements from our folks out Im asked to Don and when we integrate all of the E O <unk>.
Our capabilities and.
Other technological work that Tim and his team are out there working we would see our county way AST business continued to grow out that every spectral margin. So a nice mix of of RF fees or were there does that are coming in now and bids were going to submit a and also.
I really like what we're seeing on the contrary last from me combining what DMD has selected one of three mobile providers and deal do you have slipped to one or three fixed site providers, Oh, I'm I'm I'm hungry to get into next week, when we sit down with the ABT pfos combine them with the other other technologists understand how do we make one.
Plus one equal you know three if not greater.
Sounds good thanks Don.
Eventually.
And our next question will come from many other for is more with Bank of America. Please go ahead.
Good morning, everyone.
Good morning, pointing to that.
[noise] reminding us what do we compete leaf far and wide anyone.
[noise] persons or were reacting recompete refer in fight 21, very similar to prior years into the amount of work coming up for Recompete is independently the 15 feet or could it 20 percentish range somewhere around there all in terms of kind of awards now in terms of.
Composition revenue.
21 can earlier on I said that 83% of our revenue is under our.
Yeah existing programs, 11%, Recompete and 6% for new business. So there are some kind of recompetes that will need to kind of when no recompete win rate enriching had been running kind in the 90% range for the last several years, we'd expected to continue.
So it was kind of levels as well as relatively off kind of stable portfolio.
Yeah, and then make one estimated to take some basic sand and you have any guidance and assumption that extended December how you match eating but if we don't see that extension.
Yes, so we pressure on if we if we get to December we don't see 36 10 extended you know so so how we see that is.
If we find that we get to October 1st frankly, and 36 10 hasn't been extended.
Then you know well, we'll have to work through or how we handle a those employees of ours that are not.
Going to be covered on on the Reserve Act again, Tom Tom mentioned in about 5% of our hours today billable hours are covered by a 36 10. So you know it's why were of working very very hard across the in the industry looking to have.
Jeff.
36, 10 extended so as I as a number we talk about about 100 and tighter $50 million with the Kogan impacts you look at 5% of our revenue base being a under the reserve reserves reserve status is probably in the $50 million to $60 million range per quarter.
But again, we are all across the in the industry feeling very confident that we will see 36 10 extended across the in this industry. This CCRI is and what we need is the ability to use that fly appropriations to cover those costs to be extended we're not looking for additional funds.
And it's just the ability to use already appropriated GF why 21 funds to be used for this purpose. So on all I believe cross up by 21, we have the responded.
And this will conclude our question and answer session I'd like to turn the conference back over to John maybe she for any closing remarks.
Thanks, Colin Thank you for your help on todays call, we'd like to thank everyone, who dialed in or listen to the webcast for their participation. We know that many of you will have follow up questions. Tom Mutryn, Dan let Bergen towards price are all available after today's call stay healthy and all my best to you in your families. This concludes our call.
Thank you all have a very good day.
The conference has now concluded. Thank you for attending today's presentation participants may now disconnect your lines at this time.
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