Perspecta Inc. (NYSE:PRSP) Q3 2020 Earnings Conference Call - Final Transcript

Feb 12, 2020 • 05:00 pm ET

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Perspecta Inc. (NYSE:PRSP) Q3 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Gavin Parsons of Goldman Sachs. Please go ahead.

Analyst
Gavin Parsons

Hey. Good evening, gentlemen.

Executive
Mac Curtis

Hey, Gavin.

Executive
John Kavanaugh

Hey, Gavin.

Analyst
Gavin Parsons

Thanks for all the color on NGEN. That's extremely helpful. The $70 million to $80 million free cash flow, is that the full impact that we should expect on medium-term free cash or are there dynamics of whether it be overhead allocation or changes in capex or D&A that make it more or less than that. Thanks.

Executive
John Kavanaugh

Yeah. So, Gavin, this is John. So, appreciate that again. Our intention here was to give you as much transparency as we can, okay. And obviously we're trying to ring-fence this scale and size. So, the $70 million to $80 million, it's effectively -- it's tax affected, it's overall adjusted free cash flow impact or contribution right from the SMIT component, okay. As you saw, for this year, we've raised or obviously adjusted free cash flow guidance metric. So, everything is fine.

Analyst
Gavin Parsons

Got it. And then just on the strength of the book-to-bill ex-NGEN at $1.6 billion, if I back into implied organic growth for the year, I think, it's slightly negative. So, can you just help reconcile how long it takes for that 1.6 times ex-NGEN book-to-bill to convert to organic growth or what we should expect that to drive growth ex-NGEN?

Executive
John Kavanaugh

Yeah. So, first of all, we are expecting right now you take a look at our revised revenue guidance, if you look at the mid-points roughly 5% growth, 3% of that is organic, okay. So, again, feeling really good about the great business development results, the momentum we're getting. You saw what we're doing relative to both within the quarter, and then more importantly, on a trailing 12 months, and we even provided you again the metrics excluding NGEN, okay, which is 1.6 times trailing 12-months and a significant amount of new effectively 72% new.

Analyst
Gavin Parsons

I mean, is there a certain amount of time that it takes for those bookings to convert to revenue or is it six months, 12 months, 18 months, I know it's all of them on a one by one basis, but there's...

Executive
Mac Curtis

Yeah. That's a good question, Gavin. It does depend on the type of contract it is and I can give a couple of examples, the Department -- the US Senate, which is a contract that we won. Probably I think in -- maybe 90 days ago, that's up and running, fully staffed up and running. So, the complexity associated with the Department of State Consular Affairs, which is a new piece of business. That's going to be over a period of time, right? And a lot of the transition is worked out with the customer. That could be a six-month kind of transition in Department of Labor. Probably a little less than that.

And a part of it, too is, we've got a lot of job openings and one of the things we