SAIC Management Discusses Q1 2013 Results - Earnings Call Transcript


Q1 2013 Earnings Call

May 31, 2012 5:00 pm ET


Paul E. Levi - Senior Vice President of Investor Relations

John P. Jumper - Chief Executive Officer, President, Director and Member of Classified Business Oversight Committee

K. Stuart Shea - Chief Operating Officer

Mark W. Sopp - Chief Financial Officer and Executive Vice President


George A. Price - BB&T Capital Markets, Research Division

Timothy McHugh - William Blair & Company L.L.C., Research Division

Jason Kupferberg - Jefferies & Company, Inc., Research Division

Joseph Nadol - JP Morgan Chase & Co, Research Division

Cai Von Rumohr - Cowen and Company, LLC, Research Division

Richard Eskelsen - Wells Fargo Securities, LLC, Research Division

Michael S. Lewis - Lazard Capital Markets LLC, Research Division

Robert Spingarn - Crédit Suisse AG, Research Division

William R. Loomis - Stifel, Nicolaus & Co., Inc., Research Division



Good afternoon. My name is Deanna, and I'll be the conference facilitator today. Welcome to the SAIC's First Quarter Fiscal Year 2013 Earnings Conference Call. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Paul Levi, Senior Vice President of Investor Relations. Please proceed.

Paul E. Levi

Thank you, Deana, and good afternoon. I would like to welcome you to our First Quarter Fiscal Year 2013 Earnings Conference Call. Joining me today are John Jumper, our CEO; Stu Shea, our COO; and Mark Sopp, our CFO, along with other members of our leadership team.

During this call, we will make forward-looking statements to assist you in understanding the company and our expectations about its future financial and operating performance. These statements are subject to a number of risks that could cause actual events to differ materially, and I refer you to our SEC filings for discussion of these risks. In addition, these statements represent our views as of today. We anticipate that subsequent events and developments will cause our views to change. We may elect to update the forward-looking statements at some point in the future, but we specifically disclaim any obligation to do so.

I would now like to turn the call over to John Jumper, our CEO.

John P. Jumper

Thank you, Paul, and good afternoon, everyone. During today's call, I'll start by covering some of our quarterly performance, discuss market conditions, make some comments about my first 90 days in the seat. After that, I'll turn it over to our COO, Stu Shea, who will talk about business development results and project progress in our strategic growth areas, and he'll be followed by Mark Sopp who'll go into the financial details.

As reflected in our earnings release today, our performance reflects the dynamics of our marketplace, plus the impact of steps we are taking to prepare for the future. Even with market pressures, we are able to report revenue growth of 3%, of which 2% is internal growth. As we get deeper into these challenging times, our ability to leverage our strategic growth areas, while optimizing the performance and stress segments of our portfolio to generate internal growth, is a positive sign, especially when compared with our peer group. Our team's ability to leverage our wide range of technical capabilities across more and more of our client base is paying off. Our strategic growth areas of intelligence, surveillance reconnaissance, cybersecurity, energy, environment and infrastructure, logistics, readiness and sustainment and health grew internally by 7% in aggregate, with the remainder of our business contracting about 3%.

In these last few years, we've become adept at managing market uncertainties. We have a wide-ranging access to many contract -- wide-ranging business and access to many contract vehicles in a large and diverse customer base. We believe we can react to market pressures with greater agility than our competition, especially those with ties to specific platforms. As we face government fiscal year '13 and the looming potential of some form of sequestration, we'll be prepared to take timely and appropriate action to deal with the situation. With regard to sequestration, it's my personal view that it’s hard to imagine that our government will allow an automatic trigger to impose policy decisions deserving of the most profound public debate. In my discussions with many officials in the executive and legislative branches, they have all expressed the need to avoid sequestration, yet it's not clear how this is to be done. Despite the budget decisions ahead, there will remain a large National Security marketplace available to SAIC to compete, and we expect to be in good position to do so.

Since we spoke last on 20th of March, I visited our people in the field, our key customers, Capitol Hill representatives, the Pentagon and members of the financial community. With the help of Stu Shea, our leadership team has been able to establish the right battle rhythm to balance the daily demands of running the company with the work of planning for the future. This is a tribute to solid leadership, the focus of our group presidents and the ability of Stu, Mark Sopp and others in the leadership team and corporate staff to build momentum in the right direction. I'm convinced that we have the right strategy, the right leadership and the right people. As I have said, we just need to continue to execute. I also told you last quarter we were preparing an execution plan to accelerate implementation of our strategy. This plan will be briefed to the Board of Directors next month, and I expect we'll continue discussion with the board in the months that follow with a goal of charting our path for company growth into the future.

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