Perspecta Inc. (NYSE:PRSP) Q1 2020 Earnings Conference Call - Final Transcript

Aug 14, 2019 • 05:00 pm ET


Perspecta Inc. (NYSE:PRSP) Q1 2020 Earnings Conference Call - Final Transcript


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Good day, and welcome to the Perspecta Inc. First Quarter Fiscal Year 2020 Earnings Conference Call and Webcast. [Operator Instructions]

I would now like to turn the conference over to Mr. Stuart Davis, Vice President, Investor Relations and Strategy. Please go ahead, sir.

Stuart Davis

Thank you. Welcome everyone to today's quarterly earnings conference call. Presenting today are Mac Curtis, our CEO; and John Kavanaugh, our CFO. This call is being webcast on the Investor Relations portion of our website, where you'll also find the earnings release and financial presentation slides that we'll use for today's call.

Turning to Slide Two of the presentation. Please note that during this call we will make forward-looking statements that are subject to known and unknown risks and uncertainties that can cause actual results to differ materially from anticipated results. For a full discussion of these risks and uncertainties, please refer to our SEC filings, including our latest Form 10-K.

In addition, the statements represent our views as of today and subsequent events may cause our views to change. Though we may elect to update the forward-looking statements, we specifically disclaim any obligation to do so. Finally, as shown on Slide Three, we will discuss some non-GAAP financial measures that we believe provide useful information for investors. The slide deck for today's call includes reconciliations to the most closely comparable GAAP measures.

At this time, it's my pleasure to turn the call over to Mac, who will begin on Slide Four.

Mac Curtis

Thank you, Stuart. And thank you all for joining us this afternoon. A lot has happened since our last call. First, we had another strong quarter of operations with robust organic growth, strong margins and excellent free cash flow. Second, the President has signed a two-year budget framework that gives our customers the predictability they need to plan for and execute their critical missions. Third, we had another strong quarter of new business awards, and fourth, we made our first acquisition as a public company.

I'll now address each of these points in more detail. First, again we exceeded consensus estimates on all of our key financial metrics. Quarter-after-quarter, we delivered on our growth, margin, earnings and cash commitments. Revenue was up 1% sequentially and up 7% year-over-year on a pro forma basis, our fastest growth quarter yet. Controlling for last year's divestiture gain adjusted EBITDA was up 19% and adjusted diluted EPS was up 18%. Free cash generation was again stellar at 189% of adjusted net income. It just absolutely great execution by the entire team.

Second, the President signed the Bipartisan Act of 2019, which increases statutory spending limits by $323 billion in fiscals 2020 and 2021, and permanently ends the sequester threat. It will also suspends debt limit through July of 2021, avoiding the risk of a federal default on prepayments until after the next presidential election.

From government fiscal year '20, the defense budget will be $738 billion, which is up 3.1%, and the budget for civilian agencies will be $632 billion,