Science Applications International Corporation (NYSE:SAIC) Q3 2023 Earnings Call Transcript

Operator: Your next question comes from the line of Cai von Rumohr from Cowen. Your line is open.

Cai von Rumohr: Yes. Thank you so much and nice results again.

Nazzic Keene: Thanks Cai.

Cai von Rumohr: So, maybe you could €“ yes, could you maybe give us some more color on some of the outstanding bids like the One IT protest Where are we with evolve, how many pieces, when do the bids come up and the PVRO?

Nazzic Keene: Yes. So, the One IT is back with the customer, going through their process. So, it’s come out of the protest, the formal protest window and it is back with the customer. So, I really don’t know much more than that. They will decide the timeline and they will work through their award process. As it relates to evolve or our Vanguard that will €“ we believe we will continue to develop their procurement strategy as we go into next year. I believe it’s a relatively low risk for us in the first part of the year, certainly, as they continue to advance their procurement opportunities and the way they are going to adjudicate and how they are going to award. We get more clarity as we get into next year. But some of that is certainly going through the change cycle right now. And I will let Prabu add any more color.

Prabu Natarajan: Cai, the only other comment on DCSA One IT is we do expect some clarification perhaps before the end of our fiscal year. And then we will take it from there. AOC Falconer, which was under protest a quarter or two quarters ago, that’s fully underway now, and we are on contract and the teams executing to what they need to do there. So, we have got some good momentum on the new business front, but I would say DCSA One IT has probably got the biggest impact potentially on FY €˜24.

Cai von Rumohr: Great. Thank you very much. And then you made the comment that you see the stronger growth in the second half of the year. And am I correct that the kind of the five-day fallout is basically in the fourth quarter, which would suggest that, that’s going to be a tougher compare. So, maybe walk us through the quarterly pattern and some of those factors?

Prabu Natarajan: Yes. Got it. Appreciate the question, Cai. So, for next year, as we sit here today, recognizing with all of the health warnings that, that calendar brings on us. Q2 and Q3 of next year is where we see the greatest level of growth potential for this company. Q1, we are likely to still see some headwinds from the NASA NEX program fully rolling off. It turns out, if you will, at the end of Q1. And Q4, of course, is sort of where we see the headwinds potentially from having five fewer working days relative to Q4 of this year. As we sort of estimated at the start of this year, we said Q1 would grow, Q2 and Q3 maybe small levels of contraction and Q4 will be growth. What this team has done and Nazzic and I are just incredibly proud of the work the team has done this year is for us to go out there and make sure that we can do a little bit better every quarter and then keep up that level of intensity.

So, as we sit here, that’s our estimate for next year, but recognize we have got three months left to the end of this year. And of course, we have got a whole bunch of to next year. So, we will continue to focus on making sure we are delivering ahead of internal plans, but that’s truly risks and opportunities driven and making sure we are doing as much as we can to ensure that we are delivering a smooth year for us and our shareholders.

Cai von Rumohr: Perfect. Good answer. Thanks so much.

Operator: Your next question comes from the line of Tobey Sommer from Truist Securities. Your line is open.