Leidos Holdings, Inc. · NYSE:LDOS
Leidos — SAIC — Investor Day (October 2010)
71 slides from Leidos's investor day presentation, Oct 13, 2010
Slide 1: Welcome and Introduction
Welcome and Introduction Paul Levi October 13, 2010 Exhibit 99.1
Slide 2: Conference Materials
Conference Materials Conference materials will be available on SAIC’s Investor Relations web site – Management presentations – Presenter biographies – Acronym glossary
Slide 3: Agenda
Agenda Time Event Speaker 7:00 a.m. Breakfast 8:00 a.m. Welcome Paul Levi 8:05 a.m. Enterprise Strategy and Outlook Walt Havenstein 8:35 a.m. Introduction to Health and Energy Strategies Joe Craver 8:45 a.m. Energy Strategy JT Grumski 9:05 a.m. Health Strategy Clement Chen 9:25 a.m. C4: Mission Capa
Slide 4: Forward Looking Statements
Forward Looking Statements Certain statements in these presentations contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. The forward-looking statements involve a number of risks and uncertainties. A number of factors could cause our actual
Slide 5: Enterprise Strategy and Outlook
Enterprise Strategy and Outlook Walt Havenstein October 13, 2010
Slide 6: One Year Later Bullish on SAIC's Growth in our Large Markets
One Year Later Bullish on SAIC’s Growth in our Large Markets Market pressures developing as expected Industry responses are predictable Need for innovation greater than ever – including cross-enterprise Some missions will continue to grow/outperform Enduring needs will be just that Procurement envir
Slide 7: Strategy Articulation
Strategy Articulation Mission solutions add enduring value These markets value innovation in and integration of technology, and deliver on essential needs Our breadth and depth in this combination differentiates SAIC from the competition provides mission-oriented solutions for national security, ene
Slide 8: Evolving Market Focus
Evolving Market Focus FY06 FY07 FY08 FY09 FY10 FY11 Est* FY11 C4ISR Logistics, Readiness and Sustainment Cyber Energy Health C4 ISR Benham Atlan R. W. Beck Varec BPLG Acquisition/Investment $1.6B $2.5B $1.5B $0.7B $1.0B $0.4B SET CloudShield Reveal BD Systems C4ISR Denver CarScan * Annual Revenue in
Slide 9: SAIC's World Class Team
SAIC’s World Class Team Walt Havenstein Chief Executive Officer Mark Sopp EVP, CFO Jim Cuff EVP Business Development, Strategy & M&A Amy Alving Sr. Vice President Chief Technology Officer Joe Craver Group President Infrastructure, Energy, Health & Product Solutions $4.1B Stu Shea Group President Int
Slide 10: Major Accomplishments in FY11
Major Accomplishments in FY11 #4 Top 25 GSA Contractors Government Executive (August 2010) #3 Barron’s 500 Barron’s (May 2010) #3 World’s Most Admired Companies: Information Technology Services FORTUNE (March 2010) #5 Top 100 Government Contractors Washington Technology (June 2010) #5 Top 100 DHS Co
Slide 11: The Way Ahead
The Way Ahead INGENUITY To build solutions AGILITY To adapt to the markets GROWTH To grow value Changing environments require agility Substantial value creation potential from SAIC – Truly broad capabilities – Outstanding customer insight and affinity – Unlocking power of the enterprise The right te
Slide 12: Ingenuity Agility Growth
| INGENUHYAGILITY GROWTH 2010 SAIC INVESTOR CONFERENCE
Slide 13: Definition of Strategic Growth Areas
Definition of Strategic Growth Areas Strategic Growth Areas : these presentations, we provide revenue other performance data for the following strategic growth areas: ISR; Cyber; Energy; Logistics, Readiness & Sustainment; and Health. These are general market areas that we have determined to focus o
Slide 14: Introduction to Energy and Health
Introduction to Energy and Health Joe Craver October 13, 2010
Slide 15: Energy and Health
Slide 16: Health
Slide 17: Energy
Energy
Slide 18: Energy and Health Aligning for Future Growth
Energy and Health Aligning for Future Growth
Slide 19: Energy, Environment & Infrastructure
Energy, Environment & Infrastructure JT Grumski October 13, 2010
Slide 20: SAIC in the Energy Market
SAIC in the Energy Market Energy Management Services Energy Efficiency, Independent Engineering, Consulting, Climate Change SAIC’s Current Markets Energy Infrastructure & Renewables Smart Grid, T&D Engineering, IT Generation Trading Transmission Distribution Fuel production Energy Use Energy Environ
Slide 21: Overall Market Characteristics
Overall Market Characteristics Market Characteristics and SAIC Energy Management Services – Enduring energy efficiency market – Consulting fit with SAIC – Opportunity for long-term, close client relationships Smart Grid/T&D/IT – Convergence of engineering and information technologies and data – Endu
Slide 22: Relevant Drivers and Trends
Relevant Drivers and Trends Trends Across Our Offerings Energy Management Services Smart Grid/T&D Engineering/IT Energy Infrastructure & Renewables Drivers Energy Prices—Green House Gas—Economic Recovery—Financing Ability—Business Transformation Industry Enterprise approach Sustainability Solutions
Slide 23: Snapshot of Market Progress
Snapshot of Market Progress Energy Management Services Smart Grid/T&D Engineering/IT Energy Infrastructure & Renewables Solid Projects and Pipeline Across Diverse and Powerful Customer Set Industry Heavy Industry Refineries Commercial Financial Institutions Developers Automotive Utilities Electric a
Slide 24: SAIC Strategic Plan FY11
SAIC Strategic Plan FY11 IR&D Diversified energy portfolio across industrial, utility and government markets Acquisitions Investments Environment/ Water Energy Management Services Energy Infrastructure & Renewables Smart Grid/ Energy IT SAIC Today Acquisitions Investments Execute strategic plan IR&D
Slide 25: Health & Life Science Solutions
Health & Life Science Solutions Clement Chen October 13, 2010
Slide 26: Healthcare Drivers of Change
Healthcare Drivers of Change Information-Based Health Solutions - Key to the Future Information Rising costs Aging population Prevalence of chronic disease Advances in technology and medicine Data volume and use growth Systemic business model dysfunction American Recovery and Reinvestment Act (ARRA)
Slide 27: Total U.S. Healthcare Cost Summary
Total U.S. Healthcare Cost Summary 31% 26% 7% 10% 9% 6% 11% 41% 15% 20% 12% 12% 21% 23% 18% 38% Hospital care Other Admin / Private Health Insurance Prescription Drugs Nursing Homes / Home Health Other Professional Services Physician & Clinical Services Expenditures ~ $2.6T in 2010 (Est.) Payers - S
Slide 28: SAIC Health Solutions and Customers
SAIC Health Solutions and Customers • Patient Safety • Comparative Effectiveness • Health Data Repositories • Eligibility Determination • National Health Infrastructure • Health Information Exchanges • Grants Management • Pandemic and Bio Surveillance • Informatics, Disease Reporting • Epidemiology
Slide 29: Public and Private Sectors Driving Toward Integrated Healthcare System
Public and Private Sectors Together Driving Toward a Future Integrated Healthcare System Market Convergence Creating Opportunity Personal Health Record Services Health Information Exchanges State and Local Agencies University Medical and R&D Labs $ $ $ $ Federal Health Agencies CDC VA DoD SSA $ $ HH
Slide 30: Continuing to Pursue our Strategic Plan FY11
Continuing to Pursue our Strategic Plan FY11 SAIC Health Solutions at the Heart of Information-Based Healthcare Cyber Data Mining and Fusion Predictive Analytics Modeling and Simulation Situational Awareness Cloud Computing Systems Engineering and Integration Real Time Systems Health Sciences Public
Slide 31: C4: Mission Capability Integration
C4ISR C4: Mission Capability Integration Providing Integration, Innovation and Customer Value Deb Alderson October 13, 2010
Slide 32: Overall C4 Market Characteristics
Overall C4 Market Characteristics Market Characteristics and SAIC Market Trends Stable market CAGR C4 + ISR defines strength Command and Control Focus on Army and Air Force Joint will increase with DoD reorganizations Extending to the tactical edge Service oriented architectures/collaboration Modeli
Slide 33: C4 Strategy Components
C4 Strategy Components C4 Mission Capability Integrator $8.4 billion three-year pipeline; 46 opportunities > $100 million Joint C4 interoperability and service oriented architecture Strategic partnerships Distributed Networks $8.3 billion three-year pipeline; 25 opportunities >$100 million Enterpris
Slide 34: C4 Market Dynamics
C4 Market Dynamics Building it Differently Buying it Differently Using it Differently Customer Change Vectors SAIC Approach Imperatives Enabling Innovation in Doctrine and Organization The Network as the Platform for Innovation Mission Capability Integration Customer Change Vectors Irregular Warfare
Slide 35: C4 SAIC Approach Recent Accomplishments
C4 SAIC Approach Recent Accomplishments Building it Differently Buying it Differently Using it Differently Enabling Innovation in Doctrine and Organization The Network as the Platform for Innovation SE&I Agent Customer Change Vectors Market Evolution…Mission Capability Integration MRAP Integration &
Slide 36: Ground Forces Modernization
Ground Forces Modernization Building Upon MRAP/GCV Develop and Field New Capabilities Upgrade Capabilities and Recapitalization Integrate and Sustain Capabilities Continuous Modernization Through Sustainment … Full Life-Cycle Solutions Thought Leadership Platform Independence Technical Depth Domain
Slide 37: C4 Game Changers
C4 Game Changers Dept of State Vanguard II – Enterprise Network Solution Prime: $3B Special Operations Command IT & Enterprise Network Contract Prime: $300M Multi Year IDIQ Defense Information Systems Agency Global Services Management (GSM) Prime: $4B Air Force - Electronic Systems Center Operations
Slide 38: Cybersecurity
Cybersecurity Larry Cox October 13, 2010
Slide 39: Global Cyber Market
Global Cyber Market Global IT spending estimated at $3.2 trillion per year – Represents hundreds of billions of dollars in potential cyber opportunities U.S. market leading global investment in cyber Federal cyber center of gravity migrating to Maryland (I-95 corridor) Intelligence community is lead
Slide 40: Leveraging Intelligence Community Experience, CloudShield, IR&D, and M&A
Leveraging Intelligence Community Experience, CloudShield, IR&D, and M&A to Grow Federal & Commercial Business Security challenges are increasing – Greater sophistication, severity, and frequency of attacks – Heightened government and industry regulations Similarity in cyber threats drives similarit
Slide 41: SAIC Cybersecurity: Strategy to Serve Multiple Markets
SAIC Cybersecurity: Strategy to Serve Multiple Markets Core Consumers • U.S. Government • Other Governments Vertical Consumers • Telecommunications • Defense Industrial Base (DIB) Horizontal Consumers • Critical Infrastructure • Energy • Healthcare • Finance Cybersecurity Is a Strategic Enabler / Di
Slide 42: SAIC Cybersecurity Summary
SAIC Cybersecurity Summary SAIC’s cybersecurity business is well positioned for growth – $1.5 billion FY11 awards (including IDIQ) through October 2010 – Strategic internal investment CloudShield platform: ITS integration, cloud computing, and Center of Excellence application development Developing
Slide 43: Business Development / Mergers and Acquisitions
Business Development / Mergers and Acquisitions Jim Cuff October 13, 2010
Slide 44: Business Development Successes
Business Development Successes Energy | Environment | National Security | Health | Critical Infrastructure $ bookings and book-to-bill (BTB) tracking higher – Standard contracts* and task orders only – H1 bookings up 21 percent (FY11 vs. FY10) – H1 BTB is 1.1, compared with 0.9 a year ago $ submitta
Slide 45: FY11 $100M+ Wins
FY11 $100M+ Wins* Energy | Environment | National Security | Health | Critical Infrastructure Standard Contracts** and Task Orders (10 total) – Navy Joint Special Operations Sensors & Weapons ($351M) – Army Sustainment Command Distribution Management Center ($128M) – Navy Tactical Mobile Systems Eng
Slide 46: Business Development Initiatives
Business Development Initiatives Energy | Environment | National Security | Health | Critical Infrastructure Sharpening our focus on faster growing markets – Cyber – C4ISR – Logistics readiness and sustainment – Energy – Health Taking market share – Account management – Cross-selling – Differentiate
Slide 47: Organizational Conflict of Interest (OCI)
Organizational Conflict of Interest (OCI) Energy | Environment | National Security | Health | Critical Infrastructure Responding proactively Tailoring our OCI approach to individual customers and markets – Overarching strategy in our high growth markets mission oriented solutions provider vs. adviso
Slide 48: Mergers and Acquisitions
Mergers and Acquisitions CloudShield - Department of Homeland Security SET – Providing CounterBomber system technology Reveal – Leader in explosive detection systems CloudShield Benham Energy | Environment | National Security | Health | Critical Infrastructure Strategy-driven enterprise M&A focus –
Slide 49: Leveraging SAIC Market Position "One SAIC"
Leveraging SAIC Market Position “One SAIC” Energy | Environment | National Security | Health | Critical Infrastructure
Slide 50: Technology
Technology An enabler for growth Amy Alving October 13, 2010
Slide 51: The Current Environment
The Current Environment National Academy of Engineering “ Grand Challenges ” Energy | Environment | National Security | Health | Critical Infrastructure Funding is tight in all markets – DoD: fewer new-start programs Technology is needed to solve our toughest problems www.engineeringchallenges.org
Slide 52: Data Tsunami – Where We're Headed
Data Tsunami – Where We’re Headed Energy | Environment | National Security | Health | Critical Infrastructure Enduring realities – Data tsunami is here and getting worse: More resolution per sensor More sensors More sensors of different types Extended persistence – Available bandwidth is insufficien
Slide 53: Data Tsunami – The Path Forward
Data Tsunami – The Path Forward Exploitation Dissemination Energy | Environment | National Security | Health | Critical Infrastructure Architectural elements that support real-time operations: – On-board processing – Operationally informed workflow – Smart fusion – Cross-cueing sensors in real time
Slide 54: Next-Gen IT – Where Things are Headed
Next-Gen IT – Where Things are Headed Software as a Service Platform as a Service Compute Storage Network Infrastructure as a Service Virtualized Physical Infrastructure Enduring realities enabled by virtualization – More efficient asset utilization – New business model: pay “by the drink” – Elastic
Slide 55: Next-Gen IT – SAIC's Role
Governance / Management Software as a Service Platform as a Service Infrastructure as a Service Virtualized Physical Infrastructure Compute Storage Network Next-Gen IT – SAIC’s Role Cybersecurity and Privacy SAIC’s role: – Transition into cloud – Managed services – Governance – Cyber security – Doma
Slide 56: Financial Overview
Financial Overview Mark Sopp, Chief Financial Officer October 13, 2010
Slide 57: Guidance
Guidance FY10 FY11 Today we reaffirm this guidance for FY11 Revenues $10.85B 3% - 6% Internal Growth Operating Margin 8.0% 20 – 40 bps Improvement EPS* $1.24 14% - 18% Growth *Diluted EPS from Continuing Operations Issued on Q2 FY11 Earnings Call: 9/1/2010
Slide 58: Revenue Growth Trend
Revenue Growth Trend Key growth drivers – Redirect spend from G&A to growth initiatives – Business Development, B&P, IR&D – Bid larger programs – FY10 29 wins >$100M – FY11 YTD 21 wins* >$100M – Expand focus and resources to Strategic Growth Areas (SGA) *as of 10/7/2010 Internal Acquisitions Interna
Slide 59: Revenue Breakout
Revenue Breakout Attribute FY08 Revenue FY09 Revenue FY10 Revenue FY11 H1 Revenue Trend towards fixed price contracts Contract sources continue to migrate towards heavier ID/IQ mix Reporting Segment Government 94% 95% 96% 96% Commercial 6% 5% 4% 4% Group / Organization* Infrastructure, Energy, Healt
Slide 60: Enterprise Market Areas
Enterprise Market Areas* ISR Cyber Energy Logistics, Readiness & Sustainment Health 54% of revenue** in strategic growth areas*** Focus of investments Differentiated offerings Higher margins 32% of revenue** in core business Limited investments Create discretion to fund campaigns Significant overhea
Slide 61: Focus: Strategic Growth Areas
Focus: Strategic Growth Areas ISR Cyber Energy Logistics, Readiness & Sustainment Health Strategic Growth Areas (SGA) Core+C4 * Estimated revenue for SAIC FY11 Core C4 FY10 FY11E FY10 FY11E Total Revenue Growth* 9.5% 8.0% 5.8% 2.3% Internal Revenue Growth* 8.3% 5.2% 2.7% 0.8% Book to Bill: FY11 H1 1
Slide 62: Focus: Operating Margin Dynamics
Focus: Operating Margin Dynamics Still expect additional base margin improvements Factors FY11 bps Impact FY12 and Beyond Guidance issued on 3/30/2010 Margin Tailwinds - Project Alignment - Shift to FFP - Higher Revenues in SGA - Facilities and Real Estate Margin Headwinds - Amortization from acquis
Slide 63: Project Alignment: Sources and Uses of Savings
Savings FY09 – FY11 Streamlining Organizations Shared Services/ GBS Facilities Consolidation Business Process Reengineering Leveraged Spend Project Alignment is a catalyst for future margin improvement Project Alignment: Sources and Uses of Savings Savings FY12 – FY14 Streamlining Organizations Shar
Slide 64: Capital Deployment and Liquidity
Capital Deployment and Liquidity Capital Deployment ($M) FY08 FY09 FY10 FY11 H1 Energy | Environment | National Security | Health | Critical Infrastructure Strong, consistent free cash flow generation Greater than 90% of free cash flow since FY08 returned to shareholders through stock repurchases Co
Slide 65: Additional Debt Capacity: Acquisitions vs. Stock Repurchases
Additional Debt Capacity: Acquisitions vs. Stock Repurchases Reflective an indicative leverage ratio consistent with external rating agencies’ guidance. As an example, SAIC could borrow at most an additional $900 million for acquisitions and retain it’s A- rating (1.8x max) or $1.3 billion for a BBB
Slide 66: Financial Summary
Financial Summary Chart More emphasis and investment in Strategic Growth Areas (SGA) should drive enterprise-wide improvement in revenues and profitability – Higher FY11 H1 Book to Bill: 1.3x vs. 0.9x for non-SGA – Significantly higher projected FY11 internal revenue growth: SGA: 5.2% Non-SGA: 0.8%
Slide 67: Ingenuity Agility Growth
| INGENUHYAGILITY GROWTH 2010 SAIC INVESTOR CONFERENCE
Slide 68: Appendix
Appendix Energy | Environment | National Security | Health | Critical Infrastructure Definition of Strategic Growth Areas Reconciliation of Non-GAAP ROIC to GAAP Operating Income Reconciliation of Non-GAAP Free Cash Flow to GAAP Cash Flow from Operations
Slide 69: Definition of Strategic Growth Areas
Definition of Strategic Growth Areas : In these presentations, we provide estimates revenue and other performance data for the following strategic growth areas: ISR; Cyber; Energy; Logistics, Readiness & Sustainment; and Health. These are general market areas that we have determined to focus our inv
Slide 70: Reconciliation of Non-GAAP ROIC to GAAP Operating Income
Reconciliation of Non-GAAP ROIC to GAAP Operating Income Reconciliation of Return on Invested Capital FY08 FY09 FY10 H1 FY11 In this presentation, SAIC, Inc. refers to return on invested capital (ROIC) which is a non-GAAP financial measure that is reconciled to the most directly comparable financial
Slide 71: Reconciliation of Non-GAAP Free Cash Flow to GAAP Cash Flow from Operations
Reconciliation of Non-GAAP Free Cash Flow to GAAP Cash Flow from Operations Calculation of Free Cash Flow FY08 FY09 FY10 H1 FY11 Energy | Environment | National Security | Health | Critical Infrastructure Total cash flows provided by operations $346 $583 $620 $249 Less: Expenditures for property, pl