Q3 2021 Science Applications International Corp Earnings Call
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Good afternoon, and welcome Okay, I see this quarter 20.1 on call.
At this time I would like to turn the conference over to machine and that's true and on T. Vice President of Investor Relations. Please go ahead Sir.
Good afternoon, and thank you for joining <unk> third quarter fiscal year 2021 earnings call.
The machine can Astra Vice President of Investor Relations and joining me today to discuss our business and financial results, our non Vicki FDIC, Chief Executive Officer, and Charlie Mathis, Our Chief Financial Officer.
And Dave you will discuss the results for the quarter ended October Thirtyth 2020.
This afternoon, we issued our earnings release, which can be found that investors that and say I see dot com. We also find supplemental financial presentation slides to be utilized in conjunction with today's call.
Both of these documents in addition to our form 10-Q to be filed soon to be utilized and evaluating our results and outlook along with information provided on todays call.
Please note that we may make forward looking statements on today's call that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from statements made on this call and.
I refer you to our SEC filings for a discussion of these risks, including the risk factors section of our annual report on form 10-K, including reports on form 10-Q.
In addition, the statements represent our views as of today and subsequent events may cause our views to change.
We may elect to update the forward looking statements at some point in the future, we specifically disclaim any obligation to do so.
In addition, we will discuss non-GAAP financial measures and other metrics, we believe provide useful information for investors and both our press release and supplemental financial presentation slides include reconciliations to non most comparable GAAP measures.
And is now my pleasure to introduce our CEO and other key.
Thank you Shane and good afternoon and.
On a reported in our press release today FDIC third quarter results continue to reflect FDIC strong financial performance and the continued building and momentum through our second straight quarter of highest book to bill and backlog and our seven year history.
Over the past few months, we have focused on the health and welfare of our employees assisting our customers as a rapidly transition to a more virtual environment and continuing the strong program execution that FDIC is known for.
As these efforts continue we've also taken strategic organizational and leadership steps that are foundational to the long term success of FDIC.
We are building on our cash while positioning for the future.
I am very pleased with the progress we've made but before I discuss how we're shaping our future. Let me briefly discuss our third quarter results.
And say I see continued to deliver strong revenues and profitability.
Excellent cash flow generation and outstanding business development results.
Internal revenue growth for the third quarter, excluding the impact of COVID-19 was 3% our third consecutive quarter of organic growth and on.
Year to date basis again, if you exclude the temporary impact of the pandemic organic growth was 4%.
While balancing investments for the future and providing return for our shareholders. We delivered another strong quarter of profitability and cash generation.
Our record high book to Bill ratio and backlog was a result of the refreshed organic strategy, coupled with our ability to leverage the capabilities and market access from our recent acquisitions.
As we navigate the dynamics of both the recent presidential election, and the impact and the Corona virus and and we continue to serve and market that while not immune to change and pressures has proven over time to be very resilient.
Our customers need for technology solutions, and digital transformation is growing and we continue to win and deliver on large and attractive business opportunities.
FDIC portfolio of offerings are strategically aligned with the enduring requirements of our government.
Digital transformation is a critical component of our nation's security efficient operations and the ability of government to provide better services for the advancement of our collective interest it.
It will continue to be a priority and focus of the solutions that we provide for our customers.
The demand by our customers for digital transformation with a core strategic rationale for our acquisition of units is federal.
Speaking of Unisys Federal I should note that the integration continues to go very well and I and excited about the opportunities ahead, resulting from this very successful acquisition.
At the beginning of our next fiscal year and February we will complete one of the last integration milestone the conversion of the accounting system.
We have an experienced and talented team working on this transition having recently completed a successful conversion of agility system.
Government fiscal year 2021 continues to operate under a continuing resolution and we expect that it will be extended past its current exploration of December 11.
It is a continuation of customer budget levels from last fiscal year, which were robust and provided for investments by our customers.
Should there be substantial change to government spending and say I see us well positioned to meet a wide array of government priorities.
I mentioned earlier that we're building on our legacy while positioning for our future in that regard, we recently announced several key personnel and organizational changes designed to ensure our long term success.
In September we announced Jim scanning his decision to retire after 30 years of service to FDIC.
Jim recently led the company's defense systems group and was instrumental and shaping Sai seeds legacy he will be missed.
With the Jim's retirement, however, we took the opportunity to reevaluate our organizational structure to more closely align it to our strategy and growth priorities.
Effective at the beginning of our fourth quarter FDIC is transitioning to two operating sector defense.
Defense and civilian led by sector, President Barack Centre, and National Security and space led by sector President Michael the rich.
Additionally, we are realigning our horizontal market driven organization led by Didi health and Stein to align with our customers' most pressing current and future needs, including digital transformation in modernization digital engineering and artificial intelligence.
This streamlined organization will better enable our strategic imperative of driving profitable organic growth as we focus on effectively selling and efficiently delivering digital transformation solutions to the us government.
Our nation is facing evolving and more complex national security space defense and civilian needs and FDIC is now exceptionally well positioned to support these critical missions.
Charlie If you would now please discuss our third quarter results and financial outlook for the rest of the year.
Thank you, Nick and see I'd see delivered another quarter of strong performance across a variety of business development and financial measures, while continuing to build momentum for the next fiscal year and beyond.
Cmcs results for the third quarter fiscal year, 2021 reflect solid revenues strong profitability and free cash flow and another outstanding quarter on contract awards, resulting from the effective strategy execution and investments and customer priority areas.
Let me start with their strong business development and results net bookings for the third quarter were approximately $5 billion translating to a quarterly book to Bill on 2.7 sales.
Setting and other historically high book to Bill after setting an all time high last quarter of 2.6 times and.
His significant contributions to our quarterly bookings are noted in our press release today.
But I would also note and significant enough and new business Awards further approved for building business development momentum.
While producing exceptional bookings in the quarter contracts Submittals continue to increase as well on setting another record for an all time high and nothing else sees value of submitted proposals.
At the end and the third quarter the value of submitted proposals was $22.1 billion up $1.5 billion from the end of the second quarter on.
Also for the second consecutive quarter, we have the highest and now has submitted proposals and our history and approximately 80% of the value and submitted proposals is for new business opportunities.
At the end and the third quarter and FDIC fees total contract backlog stood at approximately $22.6 billion.
16% from the second quarter, and 55% from a year ago.
Let me now turn to financial results for the quarter.
Our third quarter revenues of approximately $1.8 billion and flat total revenue growth of 12%.
Generally flat year over year organic contraction of 1%.
On a year to date basis revenues reflect organic growth of 1%.
Negatively affecting third quarter revenues were approximately $60 million of program related COVID-19 headwinds.
Resulting from the same factors that impacted the first two quarters.
Excluding the Cove, and 19 headwinds organic revenues grew by 3% and the quarter and 4% year to date in line with our expectations for the year prior to the on soon and debt.
Third quarter, adjusted EBITDA was $164 million and adjusted EBITDA margins were 9% as a percentage of revenues.
For the quarter COVID-19 negatively impacted adjusted EBITDA margins by about $9 million on.
On a year to date basis, adjusted EBITDA margins are 8.8% up 50 basis points from the prior year nine month period.
Net income for the third quarter was $60 million and diluted earnings per share was one dollar and two cents.
Excluding $5 million and net acquisition and integration costs restructuring costs as well as amortization of intangibles. Our adjusted diluted earnings per share was one dollar and 62 cents per share for the third quarter.
The effective tax rate for the quarter was approximately 22% and we now believe there and full year expected tax rate to be approximately 23%.
Third quarter free cash flow was $222 million now standing quarter and strong cash generation.
On a year to date basis, we have generated $170 million and free cash flow.
Days sales outstanding at the in the quarter was 61 days, excluding the impact of accounts receivable sales facility.
During the third quarter, we deployed $239 million and capital consisting of $21 million and dividend and 18 and $200 million of mandatory and voluntary debt payment perspective.
We ended the quarter with a net leverage ratio of approximately 3.8 times ahead of our previously communicated wrap and leverage profile.
I should note that as announced in our press release today and board of Directors has approved quarterly cash dividend 37 cents a share payable on January 29, we share holders of record January 15.
Now turning to our forward outlook and.
As noted in our and press release, we are updating certain elements of our previously provided guidance for the full fiscal year 2021.
For fiscal year 2021 on revenue is expected to be between 7.1 and $7.15 billion.
Implying organic revenue growth of between one and 2%.
This continues to assume a full fiscal year program impact of approximately $250 million from Coke and 19.
Which is excluded would equate to about 9% of organic revenue growth this year.
With regards to profitability narrows, the expected range and raised the midpoint for adjusted diluted earnings per share based on year to date performance now expect between $5 to 95 cents and $6.05.
This includes and unchanged negative profit impact of approximately $35 million to adjusted EBITDA from Coke and 19.
Turning to free cash flow given our tremendous cash generation year to date and continued confidence we now expect free cash flow to be equal to or greater and $515 million, an increase of $15 million from our previous expectation.
As previously announced retirement and in fiscal year and this is my last earnings call for the company.
As part of an exceptional team and Im proud of what we've accomplished leaders together, but even more excited and felt with the future holds for us they see and it's highly talented people and.
Say I see as and bright future with wonderfully focused leadership and could not be happier and the direction and the company and more thankful for the opportunity over the last four years now.
And I'll turn it back to you for concluding remarks.
Thank you Charlie and.
Want to take just a moment to thank Charlie for his leadership over the past four years.
Charlie you tell transmission FDIC from a 4.5 billion dollar company. When you started to the over $7 billion company. It is today.
And our steady hand, and leadership, we are focused on our share holders and your partnership and guidance to may have been a true value to FDIC.
Wish you all the best and retirement.
Now focusing on our future, we recently announced the appointment of properties and not trash on as Charlie successor, as Chief Financial Officer effective January 4th.
We are extremely excited to have probably majority and leadership team given his impressive track record of success at the finance executive in the aerospace defense and technology markets as well as his proven ability to successfully execute on growth strategy.
He will bring tremendous value to our team as we execute our long term growth strategy advanced our positions and key market and provide value creation for our shareholders.
Operator, we're now ready to take questions.
So moving on.
To ask a question will need to press star one on new telephone to withdraw your question press the pound or cash they can buy loans compile the fuel losses.
Your first question comes from the line of Louie Dipalma with William Blair Your line open.
NASAAC, Charlie and flow and good afternoon.
Hello.
Non-GAAP year team has been on fire in terms of capturing four of the largest contract and the government agency services industry the bookings for eight.
Eight years were down by an average of 21% mild eurs were up by 127% and addition to.
The bookings that you mentioned in your prepared remarks, we learned that the army in November shows.
I'd say I see for the hotly contested $1.3 billion.
Revolutionary information.
Analogy services contract and you didn't mention Ms. Regts award and prepared remarks.
I have a two part question first are there any details that you are allowed to share for the army contract and on second lien.
Investors wanted to know how the strong bookings translate into like next year's growth outlook I think on last call. You provided some commentary about fiscal 2022, new style debt that you have any updated thoughts on the on official 22.
And your outlook that would be great.
Okay perfect. Thanks, Larry.
On that on on rich. Thanks for the question and we remain optimistic but still on open procurement at this time and I'd like to provide any more color commentary.
And your which I'm sure but.
Certainly remain optimistic on the thanks for that I haven't done the math on the.
On what's happening and the competitive environment.
Certainly we track ours very closely but we're very very proud and the business results that weve seen development and and.
It certainly provides a great foundation to go into next year with and so we were optimistic about next year for lots of reasons certainly the business development and this is part of that we're not going to provide the guidance as we think about next year. It's on the March call.
This is the cycle and which we know we do our annual planning and and we make some on the strategic decisions on.
On investments and.
And on working that up and and as strong fashion as we've shared some of the organizational design and strategy updates with you. So we'll give you more color on next year in March, but certainly the momentum that we're seeing and our ability to protect our re compete well and win new business gives us optimism going into next year.
Thanks, now that things and congratulations.
Thanks.
Your next question comes on the line of Sheila Kahyaoglu with Jefferies loans on.
Hey, good morning, and thanks, sorry, good afternoon, and thank you Greg on for Sheila.
Just.
I just want to follow up on your comment about de Levered and you mentioned you are kind of ahead of the 3.0 target that you set for next year I mean, how much more debt do you have to pay down and then are you thinking on capital deployment post delevering.
Thanks.
Good question there. So this year, we laid out and plan to begin year to.
On the $5 million mandatory debt repayment and $325 million voluntary payments.
We've made 50 million of the mandatory payments for Q3, and we paid all of the voluntary debt free and 25 million already. So we're ahead of schedule on that standpoint.
How many will certainly have capacity for other capital deployment activities and next year in addition to paying down debt.
And and cash flow continues to be strong as it has been this could happen sooner than previously expected.
And then just one kind of how.
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I'm sorry.
Sorry, just one quick housekeeping I mean, if we look at the growth.
Right and you talked about $250 million impact for the year I think you're at 160, and there is something that thats up and.
Q4 is that just a little bit of conservatism.
Yes, it's a little bit of being cautious due to the research and so the cases of Covance.
Sales.
Thank you Andy.
Your next question comes on the line and John level.
Loans.
Hey, Thanks, everyone and good evening on just following up on that question just looking at the full year sales guidance. It implies a pretty big organic step up and for Q.
You also have co the conservatism baked in there so trying to understand what takes you from negative organic growth to be a pretty good positive organic growth and for Q.
Well you are you are right that that is the expectation that Q.
Q4.
We'll have strong growth and their organically.
And.
As you see the the momentum has been building and I would just say that.
Yes.
We had some challenges as far as the revenue goes a few of the new business programs that we've won earlier and earlier in the year have not ramped up as fast as we expected.
There is a tremendous ongoing effort to transition and ramp up to its programs, but the debt.
Arm and with.
And challenging so.
We are not able to get to that higher.
Higher into that.
Revenue forecast that we're hoping to because of this slow ramp up.
Q4 to us.
The strong net sets up with all these bookings historical bookings.
And sets up next year or two.
Quite robust.
Thanks for that flight 23 and guidance and others.
And as a quick quick follow up on.
No it wouldn't be a and b Charlie's last call and I'll be asking about.
On the cash cadence into year end, but especially those multiyear cash flow goal that you talked about what's I'm sure you'll be speaking to probably about as well so I need to sort of any updated thoughts on how things are trending and thats why 22 and towards the.
Really sustainable on site.
On slide 15, thank you.
Thanks, Jonathan Rose I can say, we're very pleased with the cash generation to date 470 million only 30 million shy and full year target of five.
You talked about earlier.
I would say that as far as the expectations.
Billion dollars over the two years as of now that expectation has not changed.
Will be there.
Thanks, Charlie and congratulations.
Thank you John.
Your next question comes on the line with.
JP Morgan loans loans.
Thanks, Thanks, very much and good afternoon.
Really impressive growth and.
In the backlog.
Over the past two quarters, especially I guess and as you look into the backlog and you think about what's in there and what it means and in the future in terms of the mix of some of the things that you tell us in terms of the customer mix and in terms of the contract type mix and in terms of.
EBITDA John.
EBITDA margin of what embedded.
Embedded in there on.
What can you tell us about about those things on pace.
So the book of business, that's going on over the past six months.
And this is now back on track, but little bit of color.
This the specifics and how it all shapes up.
Actually for next year.
Our next fiscal year, we'll provide more value in the March timeframe, but and we think about where we've been winning business.
We've been holding business, it's really consistent with the strategy that we've outlined over the course of the last couple of years. So.
Our on our business development growth, our bookings have been fueled by our focused strategy and.
And diversification around our portfolio as well as what we do across both engineering and IP.
Fueled by the acquisitions that we've done the last couple of years and really strengthening our portfolio and our solution and so we're very pleased with the momentum that we're seeing and it is just very consistent with what.
Our focus and our core markets and our core areas driving our solution and I have to say you know just the incredible talent.
And I see as well.
Okay. Thanks.
And on kind of income.
Consistent with.
On a good margin and goal that you guys have laid out and the path.
I guess.
Again, we're not going to provide that guidance till we get to the March timeframe, but.
Others, it's a consistent portfolio.
Probably the best way to think about it.
Okay, Great and then just a quick.
Quick follow up.
For I guess, maybe for forever one.
On that those and we will fall on.
Maybe on until the second bar towards the middle of the year, where we see widespread vaccine and distribution on.
And we think about maybe.
Full quarter.
In another quarter of orders on.
Some impact from volume segments title and.
We'll move on from.
And more on there over the course of focal point.
Yes.
Yes. Good question. So we think it's a bit premature for us to sort of quantify any type.
Impact.
Cash this year I think Thats, where you are.
Yes.
Given the large number of cases Reis.
Not too much of a stretched and say that we do see it.
Going into next year.
You don't know how simple how long it will last but.
We will.
With go into next year.
And we're continuing to watch it closely.
Right, Okay, thanks, very much and.
Thank you.
Your next question comes on the line of Cai von Rumohr with problem loans.
Hi, everyone on the team Dan on for guide Thanks.
Thanks for the question.
And.
Would you mind updating us on the expected timing for.
Some of your bigger cutting recompetes, particularly what's left.
And.
Yes, and it said that guard.
Sure and this is not there so on on M. Com as you know we we won the first one out of the shoot for that Recompetes and very pleased about that and.
There's three significant ones remaining and we believe that.
First one of those three will be awarded in the December ish timeframe.
Hopefully.
The next few weeks and on the remaining two large ones will be in the January and March April timeframe is what we understand to be the case now so.
So those are certainly.
Big chunk of our Recompete portfolio for next year.
NASA next summer of 2021 that Weve got several months.
On there and the other big one is the Recompete and the PBM MRO and our supply chain portfolio those really on the most significant repeat as we go into 21 on fiscal year 21 will also be a lighter we can be here forever.
So every year.
And a little bit different profile. This is a more normative year. This day.
Well you are that we're in next year will be a little bit lighter so that and that's also.
Well for being able to invest and driving growth and the out years as well.
That answer your question.
Yes, yes, and Thats really helpful.
Just on that topic.
You would you be able to get some color on booking prospects.
For the fourth quarter, and and maybe into the next few quarters and just given that and it's been so strong is there a point, where it slows down and like.
Like are you guys, capturing more than you expected to earlier on.
Well I think on it I.
I guess, the way that and yes I.
I've talked about it is that bookings are lumpy, we all know that.
And so and that's just the nature of the business, although we are as Charlie indicated with the.
And number of proposals, we've been spending and and.
On the momentum that we have we still we still have.
I didn't about being able to see strong booking at least for the next couple of quarters.
Okay debt.
Your next question comes on the line and help incremental true security. Your line is open.
Thanks with respect to the cobot impact at this point with this.
And sort of and outlook for the virus to extend into.
Next year.
What are your updated thoughts on the interim interpret and looking at these the smaller impact and whether its demand destruction or demand deferral at this point and.
And how that might or might not be recouped at some point and the future. Thank you.
Thanks Toby.
So again, just reemphasize the areas that impact does continue to be a supply chain business and that's due to the reduced.
Operational tempo.
Whenever I get back debt debt.
I will turn around.
Reduce training throughout the day, and they are ready state and labors and telco.
And the three areas.
And.
Sure the impact on us and supply chain.
The area that has the biggest revenue tacked on.
And it's all related to the just operational tempo.
And as that starts to turn around it.
Get back to a more normalized.
Kind of run rate, but we think that would certainly probably a quarter. So into this next year.
And so.
If we look at your new.
Contract wins and could you talk about your ability to ramp those and the extent to which that ramp looks different.
In a in a pandemic scenario just important for us even though you're not guiding for next year, we're going to have to model. It. So any kind of comments you can give us about the ramping of those would be helpful.
Yeah. This is Mike I think what I can steal share and general Sims and things that we're seeing.
We are seeing in some cases, a little bit slower.
Ramp and little slower transition and.
Lately due to covance being able to have people, where they need to be when they need to be there to help facilitate the transition that we are seeing in some cases that take a little bit longer we saw that some this year I expect we'll see.
See that going into next year.
It's hard to quantify and every contract and a little bit different but I do think that as an anomaly that we're seeing more as a result of coated and some of these new wins to facilitate the trend and the trend transition timeframe and so.
I would I would just think about it from from that as an overarching reality of what we're dealing with.
Thanks last question from and now they could you could you give us an update on what Youre kind.
Kind of interesting areas are for acquisitions for the firm terms really we kind of hold and new capabilities that.
I'd like to add.
Yeah, absolutely so I was just.
As Charlie talked about capital deployment, we are laser focused on paying down debt and.
Still really great about what we've been able to accomplish this year and going into next year Corp.
But with that being said we continue to.
On a seat at the table when there's when there's activity and our industry, we want to make sure we pay attention.
But but it's probably consistent with what you've heard me talk about before.
And there's a couple areas not portfolio public sector health as an example, where where there is a tremendous opportunity and the and the federal government on an area, we have a big footprint.
We also believe it's an area that will be sustained driving growth over the course of the next several years and that would be an example.
Market and which if there was that the right acquisition and the right time at the right price and.
And all those rights come together could be interesting for us and the other would be income technology areas like AI.
It would be another example of an area, where we just the good news and we do we've got great skills, and competencies and a footprint there but to the extent that we get strength of that in today's market for tomorrow's market that could be interesting as well. There's a couple of examples for you but.
But we we are focused on page on our debt and.
Ensuring that we have that flexibility in the quarters to come.
Thank you.
Next question on the line of Joe Denardi.
The line income.
[noise] I think the good evening.
Oh and.
I'm going to try and ask the organic growth question, a little bit differently.
Some of your peers, who have been able to put up a two times book to Bill has converted that into.
Kind of double digit organic growth.
Is there anything about kind of the nature of your bookings, whether it be longer duration or more of it is skewed towards recompete that would that we should consider in terms of why Youre two times book to Bill should not eventually convert into double digit organic growth.
Well I guess, a couple comments one as whether it's after a competitor the bookings and the book to Bill are leading indicator of growth to come so.
So we feel very we feel very confident and optimistic about our bookings were very pleased with the areas and with that.
And protect our work as well as and takeaways or new work and we believe that that is a strong indicator for.
Several quarters are proceeding on a couple of years.
So certain.
Certainly agree with your analysis that size and indicator is the leading indicator and it does.
Suggest growth, what and I cant do at this time and we'll give you more color on March is any indication on what that is every contract and the different duration on every contract and has different ramp and.
And that's the work that we're doing today and we can provide for you all and March you know what that looks like for next year.
Okay and just to.
Two quick follow up.
Could you just maybe clarify what drove the reduction and revenue guidance, albeit modest and then if you back into kind of what the revenue contribution was from Unisys. The past couple of quarters, it looks to be flat to down a little bit it had been growing nicely. So can you just talk about what's driving that maybe overall how that business.
This is performed and thus far thank you.
Yes, So let me just to reemphasize about the revenue guidance. There. So again you have the new business programs that we won earlier in the year.
To wrap up.
And.
Good.
And it was.
And you can maybe attributed to those and we haven't attributed to Cove it.
There was a tremendous ongoing effort to transition and ramp up these programs. Some of these reported in the first quarter.
Second quarter orders.
And coated.
On to be challenging and we just didnt get it ramped up.
Fast enough for the revenue.
This year.
As far as Unisys true.
Gross Unisys federal has had.
Outstanding year as far as new wins as far as meeting the deal thesis when we purchase.
And the expectations.
Growth there.
With their capabilities.
On the long term so.
Phil.
Pretty good about.
Where we live and the outlook and the contribution that they.
Great.
Sure.
Hey, Joe This is Shane and if I could add just one thing to tag on which are on that.
Justice federal prior to and purchasing them.
But the contract and fairly sizable contract that day, those takedowns or something of that nature. So we knew that this year's profile and the second and third quarters would be more modest and the.
Fourth quarter because of the anniversary out of that loss. So that was a known at the acquisition. So your comment about kind of being flattish. If you will we're not reported the actuals.
But I would just day that the profile that we knew about with more best the back more about the back half of your and the anniversary on on that contract.
Very helpful. Thanks very helpful. Thank you.
Thank you and if you would like.
And your question Press Star one on telephone.
Your next question comes from the line of GAAP and Parsons with Goldman Sachs. Your line is open.
Hey, good evening.
Kevin.
So the pipeline is growing and even with your record bookings, so clearly the addressable market and expanding and then what you're bidding on is expanding but on a.
And I know you don't disclose your actual win rates, but I was wondering if you could comment on.
If you are winning at a higher rate as well as increasing that pipeline and theres a single or handful of most important factors you think are driving wins. Thanks.
Yeah and operate question I would say I guess and every quarter is different and bookings are lumpy, but yes. This year, we have accomplished.
Accomplished both so.
And able to bid more ahead.
Ahead of the quarters, obviously and our win rates are up.
Here today so.
I always had exceptionally strong win rate and our repeat and so that that's held it down which is foundational and our new business win rates have gone up as well and I would attribute that to a couple of things.
Certainly I touched on the strength and the value of the recent acquisition.
Giving us very strong past performance strong solutioning, great talent, and and market and customer access and so that's on that side.
Great impact on us.
We I think our focused strategy.
And very transparently areas that are important to us the areas and focusing and really being able to differentiate and bring compelling solutions to bear for our customers. So I.
I think it's a little it's a little bit of several thing.
Driven asked and been able to drive the success and bookings and and new wins and sorry.
Our intention to kind of keep that momentum and really they focus stay focused on our strategy.
Able to continue to deliver and the exit.
Fashion and FDIC always does which is just an underpinning to be able to win new business with the customer and and and bring compelling solutions to bear.
Great and I guess.
And then on.
We can be much instead, it's about 25%. So I just wanted to ask on visibility and the backlog has grown pretty quickly on what is the duration of your backlog relative to your current revenue base and expect that and we compete rates and decline over the next few years.
Yes, so just on for point of clarification practically your 22, which will be our next fiscal year. We've got about 15% of our revenues that are up for recompete submitted a little lighter year than normal.
And on that I just wanted to.
Table on.
I'm sorry, what was the second part of the question.
Sort of thought is for that.
I was asking if it's on backlog would reduce your EBIT rate going forward, but it sounds like it might have already done that.
Yes, certainly we had some significant ones this year and when we close out the recompetes and our successful and our Recompetes and Amcomp on.
After next and PVMRO that will retire most of our recompete risk for next year.
Great and then just one last question on revenue.
And I think the 250 and guidance and relative to 116 years and and so does that imply that you expect the larger covert headwind and Fort Hills, and you had this quarter or last quarter.
So let me let me just clarify that.
So again, we have.
And cautious here about the revenue impact in Q4.
Also when.
When we went back and looked at the.
The quarterly impacts.
Take the first quarter was probably like what we stated we've been running Kennett consistently and that 60 65 million impact per quarter.
Average it.
And so.
The slightly ahead of that and.
In Q4, but.
But part of that is.
It is going back to the Q1, when we announced it and there is probably 15 million that.
That was really attributed to Q1 Didnt change the overall balance sheet.
Shane can certainly go over the details with you.
As far as that goes but it's pretty consistent.
60 65 million range.
Got it okay, thanks and congrats.
Okay. Thanks.
Your next question on why.
And on John Mobile.
And Doug.
Hi, Thanks for letting me back on the call here.
On the deposit of the question and maybe we can wait for probably who's on the call as well, but just sort of your perspective on on bring and then I know you talked a little bit on your and your prepared remarks, when I think about him.
Income from Northrop Grumman.
On on the ground and is there any more of our products kind of from you guys have historically sort of not been interested and drilling said that your non interested in products on some of your peers are on.
He ran M&A over there.
On to certain expense.
You guys have been on episodic send it would just sort of like any I'd say.
Evolution and the way you're thinking about some of those things given his particular background with a large defense price.
No and I look forward to and you meet again and as we thought about probably true.
Only.
Certainly captured the cash.
The theme, where you're coming from and you've got a very broad background and and fair.
Services and technology.
And commercial as well as defense and aerospace. So it really is the diversification of the background that and it is compelling for us and I'm very confident that he will add tremendous value to FDIC and does not suggest they change on our strategy and any form or fashion.
Hi, Thank you very much.
Sure.
There are no further questions and.
And we'll turn the call back over to Mr., Okay. That's true.
Thank you very much for your participation and that's at the third quarter fiscal year 2021 earnings call. This concludes the call and we thank you for your continued interest and that day I see.
Ladies and gentlemen.
Today's conference on May now disconnect.
Hi.
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Yes.
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Okay.