Science Applications International Corporation · NASDAQ:SAIC
Science Applications International — SAIC Gemini — Investor Day (September 2013)
50 slides from Science Applications International's investor day presentation, Sep 11, 2013
Slide 1: Investor Day Presentation
Investor Day Presentation September 11, 2013
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation contain or are based on "forward-looking" information within the meaning of the Private Litigation Reform Act of 1995. In some cases, you can identify forward-lookingstatements by words such as "expects,""intends," "plans," "anticipa
Slide 3: SAIC Investor Day – Wednesday, September 11
SAIC Investor Day –Wednesday, September 11 Start Stop Duration (mins) Topic 1:30 1:35 5 Opening Remarks and Introductions: Paul Levi, Investor Relations & Treasurer 1:35 2:15 40 Introduction and Company Overview: Tony Moraco, Chief Executive Officer (CEO) 2:15 2:45 30 Enterprise Information Technolo
Slide 4: Transaction Overview
Transaction Overview • On September 27, 2013, the Parent (to be renamed Leidos Holdings, Inc.) plans to spin-off the technical engineering and enterprise information technology business • The IRS issued a favorable ruling as to the tax-free nature of the transaction Distributing Company SAIC,Inc (NY
Slide 5: Company Overview
Company Overview Chief Executive Officer –Tony Moraco
Slide 6: SAIC Overview
SAIC Overview • Leading technology integrator specializing in technical engineering and enterprise IT services to the U.S. Government • Long term mission service delivery and customer relationships • 40+ year history of successful performance • Significant scale and diversified contract base, over $
Slide 7: Spin Enables Access to a Larger Federal Market
Spin Enables Access to a Larger Federal Market SAIC Addressable After Split ~$185B Total US Government Customer Addressable Spend SAIC Addressable Prior to Split Army $37B ~$160B Air Force $23B Navy/Marine Corps $30B New Unconstrained Addressable DoD Agencies / $35B ~$25B Defense Logistics Federal C
Slide 8: Enterprise Transformation to Create a Highly Aligned Organization
Enterprise Transformation to Create a Highly Aligned Organization Historical SAIC, Inc. Structure New SAIC Structure Corporate Army / Navy / Defense DoD Federal State &, Agencies Local, Air Marine Logistics Civilian Commercial Intelligence Commands Defense Surveillance Health, Energy & Force Corps A
Slide 9: Investment Highlights
Investment Highlights Focused on serving our customers leveraging both deep mission domain knowledge and the breadth of enabling IT solutions Enduring Customer Relationships And Mission-Orientation Strategic alignment with the enduring mission needs of our customers Long term relationships with all
Slide 10: Mission-Oriented Services Promote Enduring Revenue
Mission-Oriented Services Promote Enduring Revenue 10 SAIC.com V127 12noon © SAIC. All rights reserved.
Slide 11: Enduring Customer Relationships
Enduring Customer Relationships State, Local Navy/ Defense Logistics DoD Agencies & Federal Customer Army/Air Force Marine Corps Agency Commands Civilian and Commercial Relationship 30+ years 30+ years 30+ years 30+ years 20+ years 20+ years Strength Aviation & Missile Life Space & Naval Defense Log
Slide 12: Full Lifecycle Services & Solutions
Full Lifecycle Services & Solutions Mission Emerging IT & SETA Solutions DESIGN BUILD Engineering Develop & & Analysis Integrate Hardware Network Integration SAIC Integration Services & Solutions Training & Software Simulation Integration SUPPORT Operations & Maintenance Logistics & IT Managed Suppl
Slide 13: Significant Scale and Diversified Contract Base
Significant Scale and Diversified Contract Base Contract Type Revenue Mix Contract Concentration ID/IQ vs. Non-ID/IQ ID/IQ Cost Reimbursable Materials 86% Fixed Price Value Add Labor Top 5 38% 20% 33% 42% Contracts 35% Other Contracts 54% Top 6 – 10 Subcontractors Contracts Time & Materials 38% Non-
Slide 14: SAIC Competitive Landscape
SAIC Competitive Landscape OEM Defense Pure Play Diversified IT Contractors SETA & Government Services Services SAIC competes effectively across this landscape 14 SAIC.com © SAIC. All rights reserved.
Slide 15: Operating Model to Drive Growth
Operating Model to Drive Growth Customers Offerings Benefits Mission & SETA Hardware Integration Training & Simulation Logistics & Supply Chain Network Integration Software Integration IT Managed Services Emerging IT Addressable Market $60B $30B $3B $32B $60B $24B SAIC Market Position Protect/Expand
Slide 16: Workforce with Technical Expertise
Workforce with Technical Expertise Employee Demographics Distributed Employee Base • About 14,000 employees Emerging IT • 66% of employees deployed at Solutions Mission & 5% customer sites IT Managed SETA 21% Services • Over 65% of employees hold a security 19% clearance • Large percentage of workfo
Slide 17: Experienced Leadership Team
Experienced Leadership Team Anthony J. President, SAIC Government Solutions Group Moraco President, SAIC Intelligence, Surveillance, and Chief Reconnaissance Group Executive Officer Executive Vice President, SAIC Corporate Operations Former Acting President of SAIC’s Defense Solutions Group Senior V
Slide 18: SAIC Board of Directors
SAIC Board of Directors Edward J. Sanderson, Jr. (Chairman) * Robert A. Bedingfield Director sinceOctober 2002 Global Coordinating Partner at Ernst & Young LLP (Retired) Executive Vice President of Oracle (Retired) Aerospace & Defense Practice Leader at Ernst & Young President of Unisys Worldwide Se
Slide 19: Key Investments
Key Investments Enterprise Expanded Market Tailored Offerings Investments Share Key Investment Areas Internal Transformation Business Development Capabilities Efficient corporate center structure Pipeline expansion from OCI Investments in workforce subject designed to the new company’s elimination m
Slide 20: Strong Financial Position
Strong Financial Position Large, recurring revenue base; $4B+ “renewed”company Strong REVENUE & with significant scale and market position Revenue Base Revenue base provides significant investment capacity MARGIN Margin opportunities in leaner, focused organization With Margin Expansion Predictable
Slide 21: Performance Strategy Summary
Performance Strategy Summary Grow into • Protectour revenuebase Market Adjacencies - Excellent contract execution - Retain incumbent positions Expand with • Expandcurrent offerings to current Current customers Customers - Leverage existing service line portfolio to existing customers • Growinto “whi
Slide 22: Sector Overviews
Sector Overviews Sector President –Nazzic Keene
Slide 23: Sector Overviews
Sector Overviews Enterprise Information Technology Technical and Engineering • Deliver proven full systems lifecycle • Provide mission focused full life-cycle Information technology solutions and technical, engineering, and services professional services – Design, development, deployment, – Customer
Slide 24: Top Contracts & Programs
Top Contracts & Programs Period of Total Customer / Program Scope Performance Contract (POP) Value Supports IT services including data centers and U.S. Army/ITES-2S 2006 – 2016 $1.5B software development Provides enterprise-wide IT network State Dept / Vanguard 2011 – 2021 $2.6B infrastructure servi
Slide 25: Service Offerings
Service Offerings
Slide 26: Enterprise Information Technology Offerings
Enterprise Information Technology Offerings • Design and integration for Wide • Network security Network Area Networks and Local Area • Resiliency and redundancy Integration Networks • Certification and accreditation • IP telephony integration • Software application development • Mobile application
Slide 27: Technical and Engineering Offerings
Technical and Engineering Offerings • Mission support including base security and mission engineering • SETA support including high-end engineering support, assistance Mission & & advisory services, C4 systems, R&D support SETA • Program Support: Program management • In-service engineering support •
Slide 28: NASA Integrated Communications Services
NASA Integrated Communications Services Contract Details SAICOfferings • Contract Name: Integrated Communications Network Integration Services • Consolidates and manages Wide Area Networks and • Customer: National Aeronautics and Space Local Area Networks and provides a single, global Administration
Slide 29: Department of State Vanguard 2.2.1
Department of State Vanguard 2.2.1 Contract Details SAIC Offerings • Contract Name: Vanguard 2.2.1 Maintain and enhance enterprise-wide IT network and • Customer: Department of State services infrastructure for Department of State Bureau of Information Resource Management • POP: 2/2011 – 2/2021 IT M
Slide 30: AMCOM Express BPA
AMCOM Express BPA Contract Details SAIC Offerings • Contract Name: AMCOM Express BPA Mission & SETA • Customer: U.S. Army • C4ISR/Cyber analysis and test • POP: 2/2005 – 2/2015 • Air worthiness analysis for all special operations • Contract Value: $3.0 Billion helicopters, Army airplanes and unmanne
Slide 31: Department of Transportation: Expanding in the Federal Aviation Administration
Department of Transportation Expanding in the Federal Aviation Administration FY2012 FAA Addressable Market Traditional market New focus area for SAIC space for SAIC $3B • Air Traffic Control • Systems Acquisition Support • Telecom, Wireless services • Concept Development • Flight and Aviation Infor
Slide 32: Integrated Growth Strategy
Integrated Growth Strategy Recognized and valued by our customers as trusted and highly capable partner dedicated to their mission success – Dedicated client management team – Flawless execution of proven services and solutions Stable and PROTECT Maximize position in mission critical areas Predictab
Slide 33: Our Model Will Drive Operational Excellence & Growth
Our Model Will Drive Operational Excellence & Growth Services and Solutions Customer Centric Functional Alignment • Enhanced, innovative • Building on our 40+ year • A highly competitive cost capabilities and solutions history of serving our structure to bid and win through service group customers a
Slide 34: Financial Overview
Financial Overview Chief Financial Officer –John R. Hartley
Slide 35: Financial Objectives Post Spin
Financial Objectives Post Spin • Low single digit revenue growth in challenging market – Considering revenue base of approximately $4 Billion • Incremental operating margin improvement – Indirect cost structure efficiency, increased value added content, and solid program execution • Efficient free c
Slide 36: SAIC – Creating Shareholder Value
SAIC –Creating Shareholder Value Value Proposition Principles: • Understood and executed at every level Organizational alignment of the enterprise • Explicit and disciplined in how we Say what we do deliver value • Tangible metrics that measure our Do what we say progress • Well aligned incentives t
Slide 37: Financial Performance
Financial Performance Revenues (1) ($ in millions) Revenue Drivers • ~$400M loss of DGS contract • ~$100M OCO drawdown • ~$125M Sequestration/budget pressures Stable and Diversified Base $4,767 $4,690 $4,637 Expand Existing Customer $4,100 $3,850 Grow Underserved Agencies Revenue Performance Solid B
Slide 38: Aligned with Performance Measures
Aligned with Performance Measures Service Customer Organization Revenue Organization Revenue Army / Navy / Defense DoD Federal State, Local Air Force Marine Logistics Agencies & Civilian and Offerings Corps Agency Commands Commercial Benefits Mission & SETA Hardware Integration Training & Simulation
Slide 39: Backlog
Backlog • Continued increase in ID/IQ contracts Historical Backlog ($ in millions) • Award delays continuing • Growth in pending awards $8,711 $8,348 $7,764 $6,873 6,204 6,655 5,811 5,209 2,144 2,056 1,953 1,664 FY 2011 FY 2012 FY 2013 Q2 FY 2014 Funded Backlog Negotiated Unfunded Backlog Book to Bi
Slide 40: Financial Performance
Financial Performance Operating Income (Excluding Separation Expenses)(1) ($ in millions) Operating Income Drivers $400 8% Reduce indirect cost $329 $309 $299 $300 7% 6.9% Increase value add base 6.6% 6.4% $200 6% Leverage scale $100 5% Strong Program Execution $0 4% FY 2011 FY 2012 FY 2013 Operatin
Slide 41: Operating Income Drivers
Operating Income Drivers Increase Value Cost Optimization Leverage Scale Program Execution Added Base Current Current Current Current • Corporate organization • Incentives motivate designed for entire subcontract activities Costs structure motivates Decentralized business organization • Value added
Slide 42: Near-Term Cost Optimization Opportunities
Near-Term Cost Optimization Opportunities Organizational Facility Rationalization Benefit Alignment Strategic Sourcing Simplification Current Current Current Current Separate support functions Common across entire Separate vendor across the organization 118 locations occupying ~3.2 enterprise relati
Slide 43: Historical Net Income and Cash Flow Generation
Historical Net Income and Cash Flow Generation Historical Net Income Historical Operating Cash Flow ($ in millions) ($ in millions) $303 $280 $261 $208 $182 $182 FY 2011 FY 2012 FY 2013 Multiple of Net Income 1.3x 1.7x 1.5x FY 2011 FY 2012 FY 2013 • Operating cash flow generation of greater than 1.0
Slide 44: Capital Structure Overview
Capital Structure Overview Capitalization Debt Maturity Profile ($ in millions) ($ in millions) 5/3/2013 Pro Forma Cash $226 $362 (1) New Revolving Credit Facility -- New Term Loan Facility (Fixed Rate with Interest Rate Swap) $500 Capital Lease Obligations & Notes Payable 3 Total Debt $503 Total Bo
Slide 45: SAIC FY14 Guidance
SAIC FY14 Guidance • Revenue $3.85 Billion to $4.10 Billion • Diluted Earnings Per Share(1) (2) $0.34 to $0.38 • Operating Cash Flow Equal to or Greater Than $125 Million (1) Based upon SAIC, Inc. average effective share count of 343 Million at September 4, 2013, includes estimated transaction expen
Slide 46: Long Term Financial Targets FY14 to FY16
Long Term Financial Targets FY14 to FY16 Annual Organic Revenue Growth Low single-digit growth Target Operating Margin (for 3 to 5 years) Year-over-Year Increase Tax Rate 35% to 40% range Maximize cash flow generation, free cash flow to Deploy excess cash for shareholder exceed net income value crea
Slide 47: Capital Allocation Priorities
Capital Allocation Priorities • Dividend– Maintain relative portion of historical SAIC, Inc. current dividend • DebtReduction– Not intended in excessof required amortization • CapitalDeployment–Forshareholdervalue creation Capital deployment in excess of minimum operating cash level 47 SAIC.com V127
Slide 48: Closing Remarks
Closing Remarks Chief Executive Officer –Tony Moraco
Slide 49: Investment Highlights
Investment Highlights Enduring Customer Relationships and Mission-Orientation Full Lifecycle Offerings Significant Scale and Diversified Contract Base Tailored Operational Model and Competitive Structure Technical Experts Led by Experienced Management Solid Financial Position 49 SAIC.com V127 12noon
Slide 50: ONSHIPS _ EXPERIENCED LEADERSHIP
ONSHIPS _ EXPERIENCED LEADERSHIP ION TECHNOLOGY