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

Tobey Sommer: Thanks. I was wondering if you could give us some color and describe your €“ where your space business ranks in your possible growth vectors. I think Nazzic, you said moderate-to-modest kind of growth opportunities across the portfolio, but how would you characterize space relative to the overall business?

Nazzic Keene: Space is as we have mentioned before, is certainly part of our growth strategy. And if we think about the intersection of our space business with the areas, the GTA areas that we focus on, it’s a great combination and a great opportunity for us to expand in both dimensions. So, certainly, in the systems integration and delivery space that area, that GTA, we see the opportunity to drive that in space. Obviously, as more applications, whether they are mission, especially mission go to the cloud, we see the opportunities there as well. So, I would just reiterate that space is an important domain for us. It is part of our growth strategy, and it is very complementary and directly interlocks with our GTAs.

Tobey Sommer: My follow-up, how do you juxtapose in sort of reconcile your strategy, which is focused on the sort of existing contract portfolio and extracting as much as you can out of that and in revitalizing organic growth with what seems to be a pretty steady externally and internally driven growth strategy among some of your industry competitors and at the end of a multiyear period of focus on sort of just more organic growth and less external. Is there any risk that the portfolio kind of won’t be positioned as you want it in 3 years, 4 years, 5 years?

Prabu Natarajan: Hi there. Prabu here. Maybe I will take this part of the question. Part of what’s in our space business is our restricted space work that is also a fair amount of SETA work that we do for the government. We think about growth inside of the space business in these two buckets, kind of the SETA work and the non-SETA work. The non-SETA work has the potential to grow at higher growth rates than the SETA work, not surprisingly. And therefore, the way we think about it is how do we sort of bring sort of legacy capabilities onto the development side in a way that allows us to gather market share on the non-SETA side, and that’s sort of how we think about the space market. And having said that, the SETA work is really good work, and it’s the legacy of this company.

And it gives us a fair amount of ability to allow us to continue to invest in the business and grow the business. But I would say overall, we think about the non-SETA business as sort of the area where there is real growth. And as we have disclosed over the course of the last year or so, we have won some restricted work on the development side of our space business, not SETA that has allowed us to continue to grow our market share. It is a solution-based offering that we are hopeful we can take to other parts of the market where we are not impacted by our SETA positioning. So, that’s how we think about the positioning inside of the portfolio. Now where it ranks relative to the peers and all the folks that have 100% development work, that’s I think proof’s going to be in the pudding, and we will see that over the course of the next several years.

Tobey Sommer: Thank you very much.

Prabu Natarajan: Sure.

Operator: And your next question comes from the line of Seth Seifman from JPMorgan. Your line is open.

Seth Seifman: Hi. Thanks very much and good morning.

Prabu Natarajan: Good morning.