Q4 2021 ManTech International Corp Earnings Call
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Good day, ladies and gentlemen, and welcome to the Mantech fourth quarter fiscal year 2021 earnings conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press Star then zero on your Touchtone telephone as a reminder, this conference call is being recorded I would now like to turn the comps.
Silver to steepen bathroom, Vice president of corporate development Investor Relations.
Welcome everyone. Thanks for participating Mantech fourth quarter earnings call. Joining me today is Kevin Phillips, our chairman CEO and President Judy be sure and it's our CFO and Matt Tait our CFO . During this call. We will make statements that do not address historical facts inductor forward looking statements made pursuant to the safe Harbor provisions of the private Securities litigation.
And Reform Act 19, 95% leased.
Forward looking statements are subject to factors that could cause actual results to differ materially from anticipated results for a full discussion of these factors and other risks and uncertainties. Please refer to the section entitled risk factors in our latest Form 10-K , and our other SEC filings, we undertake no obligation to update any of the forward looking statements made on this call.
Paul.
On today's call, we will discuss some non-GAAP financial measures, which we believe provide useful information for investors. These non-GAAP measures should not be evaluated in isolation or as a substitute for GAAP performance measures you can find a reconciliation of the non-GAAP measures discussed on this call in our fourth quarter earnings release with that let me hand, the call over to <unk>.
Kevin.
Thanks, Steven Good afternoon, everyone and thank you for joining the call.
We hope that you and your families remain safe and healthy.
I'd like to start by emphasizing how proud I am of Manitex business and people for their continued resilience during a dynamic here.
Throughout 2021, we successfully navigated the complex and uneven market environment driven.
Driven by the ongoing pandemic and rapidly evolving geopolitical situations among other factors.
I personally wanted to express my sincere gratitude to our employees for their incredible commitment to the critical missions of our customers.
Their unwavering support and agility to meet changing mission requirements is a testament to how they embody our mission first customer focused culture.
Before I discuss our financial results I wanted to acknowledge the announcement, we made today regarding torch Peterson's retirement from the board. After 50 years of contributions to Mantech since he co founded our company.
As you know in late 2017, we initiated a multiyear transition plan in which toward transition to CEO responsibilities to me and subsequently as chairman duties in late 2020.
Today's announcement is the next step in this multiyear process.
Georgia had an illustrious career a profound impact on this company and the industry.
On a personal note he has been a true mentor to me and many others you consistently instilled in us the core values of striving for excellence in all that we do.
Being a trusted partner to our customers caring for our people.
Offering our expertise in solutions and continually innovating and pushing the boundaries to advance customer relations.
George I'll build a tremendous team here and played an important part setting the strategy that will be the roadmap to guide us forward.
On behalf of all of Us at Mantech I want to thank George for his immense contributions and with that I'll now turn to our results.
Manitex 2021 financial results were consistent with our previously communicated guidance.
Cheap record backlog levels grew our key profit metrics expanded margins and sustained its strong cash flow generation.
Additionally, in the fourth quarter executed on our commitment to deploy capital for long term growth and completed two strategic acquisitions.
First our acquisition of Griffin closed in mid December .
Subsequent to that we announced our acquisition of <unk>, a small data engineering company, providing services to the intelligence community.
We welcome the talented employees at most Griffin technologies and T Mack to the family and look forward to driving growth and success together.
Our strong balance sheet continues to provide us with the financial flexibility to deploy capital to drive long term shareholder value creation.
Our medium to long term outlook remains solid however, we acknowledge the continuing near term uncertainties previously discussed with respect to timing of contract awards supply chain constraints and a more competitive labor market.
Adding to that lingering effects from an extended CR.
With respect to Covid specific impacts let me offer a brief update.
The most recent infectious various strains of the COVID-19 virus led to an uptick in absences.
Somewhat constrained direct labor levels in Q4 as well as in the early part of this current quarter.
We continue to closely monitor and take appropriate measures to mitigate spread and prioritize the safety of our employees.
Shifting to the market environment, we are pleased with the passage of the FY 'twenty two NDAA.
However, the government is still operating under a CR through March 11.
We are cautiously optimistic with the recent progress made in Congress to advanced appropriations and are hopeful that.
We avoid another full year CR.
It was evident that near peer threats continue to receive sharp national attention and there is an overwhelming bipartisan support countering these potential threats.
As a result, we are anticipating renewed emphasis in the upcoming 2022 national defense strategy and the FY 'twenty three budget request.
Mantech smart positioning strategy and investments are well aligned to the sustained focus.
Secular drivers of our long term growth remain intact, given the importance of advancing national cyber capabilities and the necessity of digital and systems modernization across the federal government, particularly within the D O D.
We are delivering differentiated solutions at speed with the necessary innovation flexibility and security to meet our customers' most challenging emissions across our national and homeland security customers.
Now Judy will walk through the details of our 2021 financial performance and 2022 outlook Judy.
Thanks, Kevin our strong financial results demonstrated the resilience of our business and our ability to leverage our differentiated position to drive long term value creation.
Quarterly revenue was $634 million, which was down 1% compared to Q4 of 2020 for the year annual revenue was 2.55 billion up 1% year over year.
Q4, and full year revenues were a touch lighter than our expectations due to greater than expected P. T O utilization largely driven by the unexpected increase in Covid cases from the omnicom bearing in Q4.
Thankfully the cases impacting our team or mild, but nonetheless drove lower in voluntary utilization in late 2021 and in early 2022. Unfortunately, we and the industry no longer have the benefit of 36 10 coverage to offset these are related impact.
Q4, EBITDA was $62 million up 5% from Q4 of 2020.
Full year, EBITDA with $264 million up 16% from last year.
Both Q4 and full year EBITA margins were robust.
EBITDA margin for the quarter was nine 8% and 10, 3% for the full year up an exceptional 50, and 120 basis points over the comparable prior year periods.
This was largely due to continued lower indirect spending stronger relative contribution of direct labor and a nonrecurring benefit related to a contract closeout for some international work.
On the bottom line, both GAAP and adjusted net income and diluted EPS were impacted by a significantly higher tax rate in the quarter compared to last year.
Despite the higher tax rate in the fourth quarter, our adjusted net income and adjusted diluted EPS performance were towards the top end of our guidance range.
Q4, net income was $30 million and diluted EPS was <unk> 73 down, 6% and 8% year over year.
Q4, adjusted net income was $34 million and adjusted diluted EPS was <unk> 83.
Both down 6% and 7% from last year.
For the full year net income was $137 million and diluted EPS was $3 35.
At 14, and 13% compared to 2020.
For the full year adjusted net income was $152 million and adjusted diluted EPS was $3 71.
Up, 11% and 10% compared to last year.
Turning now to the balance sheet and cash flow statement, we generated robust cash flow from operations of $212 million for the year, which represents one five times net income.
DSO was 68 days, a 12 day increase compared to last year, we expect to drive this back down in the near term as the uptick was largely due to the timing of our recent acquisitions.
In 2021, we invested $371 million in acquisitions, which reflects a consistent priority on leveraging the balance sheet to drive shareholder value creation through strategic M&A.
At quarter end, the balance sheet showed $53 million in cash and $300 million of debt, representing a net leverage ratio of <unk> nine times.
Additionally, we distributed $62 million in dividends in 2021, maintaining our steady return of cash to shareholders.
Our board has also authorized us to raise our quarterly dividend by three.
The <unk> 41 per share an 8% increase from current levels.
The dividend will be paid in March and equates to a new annualized dividend of $1 64, or a yield of 2%.
We remain committed to executing on our capital deployment strategy, which continues to prioritize M&A and dividend distributions to our shareholders.
Regarding M&A our goal is to evaluate opportunities that could accelerate our strategy and enhance our positioning across the federal market.
Moving to our view on 2022, the guidance that we're providing this afternoon aligns well with our Q3 preview and reflects the less linear operating environment with respect to the timing of awards.
By chain constraint, a more competitive labor market and the C. R.
We anticipate 2022 revenue to be between $2 6 billion and $2 7 billion, representing 2% to 6% growth.
At the midpoint of this guidance, we expect approximately 85% of revenue to come from backlog.
With the balance largely coming from add ons months, and Recompete as well as a smaller contribution from new business.
To help you with your modeling we are assuming revenue build incrementally in the second half as the supply chain normalizes and as contract expansions and new contract awards begin contributing to revenue.
Our expectation is that Q1 will be the lightest quarter of the year and likely resemble the fourth quarter of 2022, as we work off the lower in voluntary utilization, resulting from COVID-19 impacts and the snow days in January as well as the full impact from the reductions in Afghanistan operations support.
Moving to margins and profitability, our EBITDA margin is projected to be nine 6%, which accounts for the normalization of indirect spending and excludes nonrecurring tailwind enjoyed in 2021.
We expect adjusted net income between $141 3 million and $148 5 million and adjusted diluted EPS between $3 42 and.
And $3 60.
Underpinning these ranges as an effective tax rate assumption of 25, 2% and an estimated fully diluted share count of approximately 41 3 million shares.
We expect cash flow from operations to be at least $215 million for the year and it seems that the legislation requiring R&D capitalization over five years for tax purposes is deferred beyond 2022.
Capital expenditures are expected to be around one 5% of revenue representing a market decline from 2021 now.
Now I'll turn it over to Matt to cover the business development and operational highlights for the quarter.
Thank you Judy.
We booked $601 million in contract awards in Q4, and $2 7 billion for the full year, resulting in a book to Bill of <unk> nine in Q4 and $1 one times for the full year.
New business comprised approximately 25% of awards for the year in line with previously discussed expectations of slower adjudication with intelligence customers.
In Q4, we successfully secured recompete with the Marine Corps, Warfighting labs, and a pair of wins in the Navy for unmanned modernization and weapon systems software work.
These key wins help incrementally derisked, our recompete exposure in 2022.
As a result of these bookings our backlog has now reached a record level of $10 6 billion and our funded backlog was a respectable $1 6 billion, providing us with good visibility and a solid foundation to execute from.
We exited the year with a total qualified pipeline of over $30 billion with approximately $6 billion awaiting adjudication.
Our steadfast priority is on converting the pipeline into revenue.
We expect a healthy level of proposal activity in 2022 across our customers and capabilities for a mix of Recompete and new work.
We are pleased with our enhanced positioning resulting from our recent acquisitions.
The acquisition of Griffin technologies is already providing opportunities for growth and digital engineering with new customers in the Navy.
Additionally, T Max data engineering presence within the intelligence community offers inroads to expand our analytics offering into new areas.
The integration of both acquisitions is progressing smoothly and the remaining integration should be complete by the end of the first quarter I am delighted to see is already operating seamlessly as one.
Now, let me briefly touch upon an incredibly important topic for us.
<unk>.
Mantech compelling employee value proposition endures amidst an extremely competitive market for highly skilled and highly cleared talent.
We are rigorously optimizing our employee experience and are working to further empower our employees to drive desired outcomes for our customers and their careers.
We are concentrating on accelerating the hiring of attractive candidates and maximizing the retention of our talented employees.
Lastly, I want to congratulate Steve Dietz, who we promoted earlier this month to lead our federal civilian business Steve.
Steve has made significant contributions to the business over the last 10 years and I look forward to working with him in his new role.
With that let me hand, the call over to Kevin for closing remarks.
Thanks, Matt we take pride in our over 50 year legacy and reputation as a premier National Security company with a mission first and customer focus below philosophy.
We look forward to building upon the trust we have earned with our customers by delivering best of breed solutions to meet their most challenging mission needs.
Our strategic focus remains on driving long term value for our customers employees and shareholders.
Before we open up the line for questions I want to note that the purpose of today's call is to discuss our recent financial results and our 2022 Alpha.
We kindly ask that you keep focused on those questions and stay centered on these topics with that we're ready to take your questions.
Hello, Ladies and gentlemen, if you have a question or comment at this time. Mr. Star then the one key on your Touchtone telephone.
Question has been answered or you wish to move yourself.
Please press the pound key.
First question from Matt Akers with Wells Fargo.
Yeah. Good afternoon. Thanks for the question evening, Congrats George on the retirement.
Could you talk about <unk>, and how we sort of stand on those coming back and how that pacing well sort of.
One through the year, just curious how to think about how EBITDA margins.
We should think about sort of one step kind of reverted back to normal here.
Yeah, we definitely have built that into the full year guide. So we do have in it some.
Seasonality in the margins just because of the timing of fringe expenses. So it's not a huge shift quarter over quarter, but definitely you know the.
Depending on the timing of the quarters, but its come in it can it can impact the margins.
Oh great.
Is it virally.
A high level on the supply chain stuff, we do expect some pick up in the latter half of the year.
Yeah.
The elevated PTO that you talked about earlier is that return to kind of normal levels at this point.
Yeah, I think by the end of January we were pretty much back to normal operations.
Yeah, Okay, and I guess just last one.
And it's a really small tuck in acquisition.
Immaterial okay.
Okay. Thank you.
Our next question comes from Tobey Sommer with true Securities.
Yeah.
Hey, good afternoon. This is SaaS for bad bond for Tobey I wanted to ask how youre thinking about <unk> and the guide I know you had some moving pieces.
There last year and visibility might not be great, but just just wanted to see how you're kind of contemplating that as you look out through the year.
Yeah, We you know in the first quarter, we were not projecting a lot.
As we said they were looking at Q1 being very similar to Q4.
Then throughout the year I think it's definitely back half loaded.
But sometimes things accelerate forward in them, but I think I would say second half is where we're currently projecting the majority of that was to come in.
Thanks, and then I was hoping you could speak to increasing your fed says presence.
You highlighted the leadership change in the prepared remarks can you just talk about how you're prosecuting have offer kenzie and any early returns from that effort.
And so that was that was it.
A recent announcement by us.
In the month of February So we're excited to have Steve <unk>, who has been proven.
Winner of new work in the federal civilian arena. So we're excited to have him on board and starting to make a difference.
Okay got it if I could add another one on the acquisition contribution in the guide is about $20 million a months still kind of the right range to think about for Griffin for the full year and is there any kind of additional seasonality in that business beyond that.
No Theres no no seasonality on that and I think we said in the fourth quarter call that you know low to mid twenties.
And nothing's changed from that.
Okay.
Last question for me could you just contrast, how the market and your customers are responding to the CR versus your recent experiences.
Yeah, I know, we've had a lot of them in the last decade, or so but this one seems just to be a bit more disruptive.
In recent history.
Yes, I think mantech in the market has got the customers, but this one does feel a little bit different in terms of the procurement activity.
I think it's in part also with the Covid surge combine them, but we think that the.
The overall trend towards getting a federal budget in place is positive.
The budget is going to be higher than prior year once it's in place.
That will kind of push them for you.
Utilization of funds in the second half of the year as well.
Alright, thanks for taking the questions and I'll I'll add my congratulations for George as well.
Thanks.
Our next question you got some kind of with Cowen.
Hey, good afternoon guys.
Hello.
Hey, so first congratulations to both George and Steve.
We're going to Miss George He has quite a legend.
I Hope my hope you enjoy your retirement and good health.
Hmm.
Wanted to just Judy maybe could you be specific quantitatively on the.
The OTC that didn't happen in 2021 that you expect to recover in 2022, so sort of what is the arrears if you will that.
That AIDS the number and then.
Last quarter, we talked about a 5% growth number and.
That was not with Tam the new deal that you did.
At the midpoint implies under four.
Tire variance to Q1 Covid impact.
There are other things that are now kind of incremental to the prior statement. Thank you.
Yeah. So so I'm on the Ot CS I think yeah, where we're being much more moderated in our view in the guidance for 2022, so looking pretty flat to 2021 and said Wow. We think some of the ldcs that we were expecting in 'twenty one ROE in two.
You know Q2 Q3 of 'twenty two we haven't added on top of that.
And then as far as the growth I think you know it's it's.
Similar and in line with with what we expected that as I just said the T Mack.
Is very nominal.
And I think you know.
We're just building through the the Afghanistan impact that we had in Q4 through the balance of the year and some other headwinds.
And just trying to be very thoughtful.
Thoughtful in our guidance ranges.
Maybe Kevin for you just given the timing of the budget passage likely maybe.
Maybe calendar Q2, what do you think will happen with respect to bookings through the year do you think.
We're going to have an unusually large.
Calendar Q3 fiscal year rentals.
So the government do you think kind of a log jam starts to break in Q2, what what's your perspective on.
The cadence of bookings through the year, given the budget overhang right now.
Yeah, I'll I'll put it in a couple of pieces first I think the intelligence community customers are getting back to work and we will start seeing some uptick throughout the year on their activity, there's been a lot of catch up to do.
I also believe that if you follow the federal budgets from their place Panther obligate the money in here that can add to funding on existing programs or add to them moving quickly to new starts that have been outstanding I think.
The jury's out as to how quickly they'll get to the new starts.
But they do have a focus in our pace.
Within the Dod that I think will favor I've seen in line amount of proposal volume.
This year and we'll see how quickly the awards.
Awards start accelerating in the fall.
All of them.
Lots of them can be Kevin maybe can you opine I know, we're not talking about 23, yet but.
This year is a transition year on growth clearly given the Afghan headwinds and the other ones you've mentioned.
What do you think kind of a long term organic growth rate for mantech.
It would have been entitled to given kind of the pipeline.
From a concentration.
You have to keep that civil and the like do you think we're going to kind of rebound.
3% to 5%, 4% to 6%.
What do you think the long term kind of entitlement to the businesses.
Well I don't know about entitlements on that we have to earn or no.
Stripes every day, but that said.
The market is generally moving towards our strategy.
How quickly and how much funding moves in that direction, whether it's in 'twenty three 'twenty four.
I think it's positive.
Our approach over the last few years positioned the business will prove out very excited about that because as I think I've said before we're entering a digitally dominant battlefield and they're all things that come with that so we're very excited about that as well.
Hi.
I defer to Judy on what she views as long term organic growth I think that we have to wait and see how the procurement play out.
Within the backdrop of federal budgets, and Vod and Intel that I think are going to be up versus flat.
Just based on the overall.
Global environment for threat environment.
Yeah, I would say gotten like kind of the range as you were throwing out there and and then yeah mid single digit plus or minuses as well strategically.
Strategically, we're hoping that we will get back into that range.
Thank you for the clarity I appreciate it guys.
Our next question comes from Marine ammonia with bank.
You know how are you.
Good.
Yeah.
So first question is I don't know if you can give us some color on why are you confident in beta work environment. He's like hunting pros what are your conversations with customers on what has changed from last year.
So yeah. So I'll take that this is Matt yeah, we are seeing.
We are seeing activity in terms of the proposal activity with the.
Opportunities within the Intel segments now.
Now to.
To your point, we've got to make sure that that turns into adjudication, but we're seeing every indication that thats, where theyre heading so so we've had conversations but we're also seeing activity and so that's what we.
We factor that into the guide and tried to be measured about that.
Okay.
And then I know you mentioned you like just wanted to talk about the army announced a charge that being down from the board.
Could you help us understand how it's going to be the relation shave unnamed your line. So people didnt meet our shareholder and has he likes voting power.
Okay.
During the decision, making table, how should we think about that relationship going forward.
Sure look towards and subordinate all support of this strategy we have.
We're focused on debt remained focused on that as a guide for us all.
And we're very excited about how we approach the market.
The board.
Represent all shareholders and we're focused on providing generation and returns to everybody equally I think that George has confidence in our approach and when and where appropriate as we would do with any investor of this size and scale will reach out to him.
One of those decisions.
Our reported him in his role versus the broader investor base.
Okay. Thank you very much.
Our next question comes from Brian Kinsinger with Alliance Global.
Hi, Good afternoon. This is Matt in for Brian .
So you guys were talking about how new business was approximately 25% of our awards and I was wondering if any of that is <unk>.
The scope of work or is that separate and what the metrics are on that.
Yeah. So the business is trade and you start so the the balance of the bookings are either for recompete wins or extensions or add ons. So it's all all within that number we don't break those out separately.
Okay. Thank you and is there any is there any more color you can provide on the.
Talent shortage.
So yeah.
So I'll start there I think that.
So yeah.
First off it's real we're seeing especially in the classified spaces, where people have an opportunity to maybe go up.
Still work there is still get a good pay.
In a place that maybe they can work from home so.
So that's a that is definitely something we're seeing in the market. So it's not again not just the mantech thing, but an industry thing that I think we're all working very hard to to solve.
Yes, Kevin I'll of course that we have long supported and promoted the need to bring and grew the very best talent to meet Nestle security needs. Further that's improving security clearance reform, creating internal certification a degree programs, we will be persistent about that.
Because we think it's very much needed and.
And we're hopeful over time that the market will also start adapting to.
The opportunities are.
There are reported within our segment of the economy.
Great. Thanks, so much.
Our next question comes from Matt Sharpe with Morgan Stanley .
Kevin Judy Matt Good evening, and thanks for taking my question.
Maybe just a.
Starters here, Kevin and Matt one for you historically I think the intelligence exposure. The company has had it's been somewhere in the range of 40% to 50% of revenue obviously, there's been some downward pressure in that I see community.
Where does the exposure stand today and as you think about the company going forward what is the right mix.
Yeah look it holds.
That same range, it's it's more of an.
I'd say to lay on potential upside in terms of our approach to the market.
We're well positioned.
If you think about what the intelligence community does and what it has to do and how it does it from our use of Technology Award the application of cyber <unk> intelligence.
We needed to do their own.
We think there'll be persistent demand for that.
So I suspect that we're going to see an increase amount opportunity set of questions how that set of opportunities weighs against other opportunities that come in.
Against the defense and federal civilian sectors and that's one.
Excellent. Thank you.
Isn't it.
Okay, and then just maybe a question on the revenue guide for Judy with respect to the 2627 range can you give us some sense of what book to Bill is needed either over the first half or the first or the full year just support that.
Arrange and maybe are there any sort of larger bookings within that I think it was 15% of re competes that you need to get across the goal line to make this happen.
Yeah, We don't we don't really guide on bookings as we said about 85% of that midpoint is in backlog.
Most of the balance is re competes are extensions or add ons to those contracts with a less than 5% coming from new so.
Hum.
That's kind of what we provide as far as guidance on.
Growth and where it's coming from.
Got it fair enough and then maybe just one on leverage and M&A I think Judy you mentioned, you're at 0.9 packs are at the end of this past quarter can you remind us just.
Where are you comfortable taking that and and then maybe some color on the M&A pipeline are you are you seeing increased activity and maybe comment on your peers bidding behavior, so getting more aggressive less aggressive.
Yeah.
From a leverage standpoint, I think we've been pretty consistent over the years that two and a half to three times is the range that we would feel comfortable assuming we can find.
The right properties. Luckily we were very successful on Griffin, which is are you now larger than our average.
On M&A, and then I'll, let Kevin talk about the market.
So last year was a very heavy year I think the first half of this year will be a little bit lighter for opportunities as they come out.
From an acquisition standpoint, your use of capital outside of the dividend that we announced we were very much focused on deploying.
Deploying capital for acquisitions, and we will continue to be I'd say.
Aggressive but.
Measured in how we approach the market and what we want to do.
And where we want to be from an acquisition standpoint.
Really no got it. Thanks, that's helpful and then before I get back in the queue I'd be remiss if I didn't.
Wish George all the best he's been quite a leader for both Mantech in this industry.
Thank you. Thank you very much.
Again, ladies and gentlemen, if you have a question or a comment at this time. Please press. The Star then the one key on your Touchtone telephone.
Our next question comes from Brian Kinsinger with Alliance Global.
Hi, just looking for a little more color on employee turnover.
I forgot to mention that before but.
Has turnover increased stores their talent shortage.
Is that like increasing do you have metrics on that.
So so far what we're really seeing in the macro is it.
Returning to more pre pandemic levels.
As soon as we know we don't give specifics around that but that's essentially what we're saying.
But like what Kevin talked about as you know, we do have and I won't bore you I could talk to the next hour about all the programs that we have in place.
To drive drive and actually retain and improve.
The skills of our talent to meet National security needs.
Okay, great. Thank you.
Mhm.
And I'm not sure.
Go ahead Sir.
Fair enough well, thanks, Kevin It looks like we have no more questions.
I have one more that pop.
Often Kevin do you want to go ahead sure from Gautam Khanna with Cowen.
Oh, Hey, guys, sorry, I wanted to re queue I was.
Yes, Judy in the past you've talked about kind of mixing up the business to less cost plus.
I'm curious if you could talk about the deep pipeline and how that.
Compares to the current base of business in terms of cost plus versus TNF versus fixed price.
That might be economics on margins longer term.
Yeah I think.
It is our goal that's our desire to see our customers start to move towards more solution based on contracting which would give us the opportunity for higher margins.
But frankly right now I mean, we're about 68% cost plus which we've been over the last couple of years in that 68% to 70% range and don't see a major shift in any of our customer base moving away from that.
Okay, and then just if you could talk a little bit about longer term.
Our balance sheet deployment, you've talked obviously the company has been focused on M&A for a long time.
I'm just curious anything you would be visiting with respect to the dividend given the new board compensation, sorry composition with George now not on the board.
And any change to capital deployment strategy that you could maybe talk about.
No change.
We're confident with what we're doing and how we're deploying capital.
Thanks again guys.
Yeah. Thanks.
Our next question comes from Louie Dipalma with William Blair.
Good afternoon, Kevin Judy and Steven.
Any in the past.
You have highlighted mantech cloud capabilities and how did how you have a partnership with Google.
And you also.
Mentioned on today's call how you acquired.
Data analytic capabilities with your recent acquisitions and I was just wondering how is manpack.
Additionally for like Enterprise I T.
Type opportunities because it seems that traditionally mantech has excelled at more engineering.
Ivor and operations type capabilities, but it seems more recently you've tried to strengthen your enterprise piece I was just wondering how is mantech positioned within enterprise I T.
Absolutely this is Matt.
So far it.
So that all of the areas that you talked about yes, we are very well positioned in those and when you think about the five technical focus areas that we've talked on prior calls.
Michigan Enterprise I T is one of those funds and we're very fortunate to have some unique relationships across the spectrum to for us to be.
Attracting the right talent and then building that business or so so we feel you know that business is continuing to grow in the right direction with the rest.
In alignment with the.
The opportunity set in alignment with our customer needs.
Great. Thanks, and I was wondering is there any update to the wind down of the Afghanistan support.
Tracks and was there any like Afghanistan.
Related revenue that was recognized in the fourth quarter, that's still going to go away.
Yes, I think Q4 had a bulk of them.
Specific work draw down in that quarter. It was a combination of our support for various military requirements as well as state Department.
Because of the embassy being.
Being shut down.
Those are gone there is some legacy sustainment activities supporting the military that is reducing at the same time point out of Q4 into Q1.
But generally that's out and we have a very low.
Remaining presence in the middle East as a company.
And and Kevin can you provide a high level overview of any other types of like overseas.
Oh sure that Mantech has and is there the potential that that the contractors that you had there in Afghanistan or we're supporting Afghanistan from the United States that they can be deployed for other project.
We have a 50 year history of supporting National Security, We will go where our customers need us and we will call you. After the fact when we can.
And we expect to see.
Near peer threats.
Allocate needs across all of our industry and all of our sector for the long term.
Understandable. Thank you. Thank you, Kevin Matt Judy and Steven.
Okay.
Our next question comes from Gautam Khanna with Cowen.
Yeah, I just wanted to follow up on that last question.
I'm curious are there provisions within the existing contracts across the middle East that allow you to deploy.
A lot of our customers flexibility to deploy mantech personnel.
Tahira I'll call them.
Poland what have you to.
To deal with Paul.
Emerging kind of Ukraine, Russia conflict.
Hey, Adam This is Matt I think Kevin covered it pretty simply which is.
Our contracts.
We're here to support National security missions.
Ever and wherever that takes US we'll go and then we will.
Uh huh.
Perhaps you guys and you know after the fact.
As appropriate.
Okay and then Kevin can you also talk about the M&A pipeline are you seeing kind of more opportunities.
And if you could characterize the size of those opportunities.
So as I mentioned earlier, the first half of this year is going to be lighter compared to the prior year, we remain disciplined on what we looked at.
And expect from us more consistency on the level and range of businesses that we target.
Yeah.
Alright, Thank you guys.
Thanks Scott.
Okay, Kevin It looks like we have no further questions at this time as usual members of our senior team will be available for any follow up. Thank you all for your participation on today's call and your interest in Mantech.
Ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a wonderful day you may now disconnect.
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