Please standby. Good day. And welcome to the SAIC Fiscal Year 2020 Q3 Earnings Call. Today’s conference is being recorded.At this time, I would like to turn the conference over to Shane Canestra, SAIC’s Vice President of Investor Relations. Please go ahead, sir.

Good afternoon. And thank you for joining SAIC’s third quarter fiscal year 2020 earnings call. My name is Shane Canestra, Vice President of Investor Relations and joining me today to discuss our business and financial results are Nazzic Keene, SAIC’s Chief Executive Officer; and Charlie Mathis, our Chief Financial Officer.This afternoon, we issued our earnings release, which can be found at investors.saic.com, where you will also find supplemental financial presentation slides to be utilized in conjunction with today’s call. Both of these documents, in addition to our Form 10-Q to be filed soon, should be utilized in evaluating our results and outlook along with information provided on today’s call.Please note that we may make forward-looking statements on today’s call that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from statements made on this call. I refer you to our SEC filings for a discussion of these risks, including the Risk Factors section of our annual report on Form 10-K and quarterly reports on Form 10-Q.In addition, the statements represent our views as of today and subsequent events may 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.In addition, we will discuss non-GAAP financial measures and other metrics, which we believe provide useful information for investors, and both our press release and supplemental financial presentation slides include reconciliations to the most comparable GAAP measures.It is now my pleasure to introduce our CEO, Nazzic Keene.

Thank you, Shane, and good afternoon. SAIC’s third quarter results reflect strong program performance and customer confidence in our ability to deliver solutions that advance their most critical mission priorities. We are pleased to report solid results, while we look towards a future with a refresh strategy that takes advantage of our expanded portfolio positioning us for sustained profitable growth.In our September call, I communicated three areas of my immediate focus and they are unchanged, the successful integration of Engility, accelerating profitable revenue growth and winning the war for talent. All three are integral parts of our refresh strategy and we made progress on these imperatives during the quarter.As we near the one year anniversary of the Engility acquisition, I am very pleased with the progress and success of our integration efforts and the exciting opportunities that our stronger business presents.We accelerated and achieved all of the year one net cost synergies of $38 million earlier this year and we are well on our way to achieve the year two target. We expect to achieve 85% of the full net cost synergy target of $75 million by the end of this fiscal year, well in advance of our initial plan.Employee fringe benefit harmonization and a successful conversion of our financial system, as well as several other back office systems have been completed. Facility consolidation is a last significant cost synergy milestone to be achieved.I would like to emphasize that our integration efforts and cost synergy achievement are being completed ahead of schedule and our combined workforce is focused on a single mission, serving our customers under the SAIC banner. SAIC is leveraging our increased capacity, capabilities and customer access resulted in greater pipeline development stronger recompete bids and new contract wins.During the quarter SAIC was awarded a task order for…

Thank you, Nazzic. SAIC has delivered results that reflect consistency in the business, while gaining momentum in contract awards and business development activities that will drive future revenue growth and create value for our shareholders.First let me cover our business development results. Net bookings for the third quarter were approximately $2.2 billion, translating to a quarterly book-to-bill of 1.4. As a testament to our diversified portfolio, net bookings were strong across all of our business segments, as well as being very balanced between winning new work on new awards, growing existing contract value through own contract growth and retaining our recompetes.On a pro forma basis, SAIC’s trailing 12 month book-to-bill is 1.1, included in this quarter’s booking were a total of $582 million in contracts to support space and intelligence community customers. These contracts serve customers in the intelligence community and classified space domain that rely on SAIC for highly specialized expertise and technology integration, engineering, IT modernization and mission operations.Notable in these awards was a previously announced National Geospatial Intelligence Agency award for the Innovative GEOINT Application Program. Other notable awards in the quarter included a U.S. Army awarded over a $41 million to modernize its IT infrastructure by migrating enterprise applications to a cloud environment.Approximately 24% of the total year-to-date gross contract awards of $6 billion has been for new business, and as Nazzic mentioned, we have $16 billion of submittals awaiting award with 75% being for new business opportunities.I would also like to point out that over $2 billion of new business contract value has been awarded to SAIC through our third quarter and has been protested by competitors. The favorable resolution of these new business awards before fiscal year end, which is expected based on normal timing for protest resolution would significantly increase our contract award…

Thank you. [Operator Instructions] We will go first to Jon Raviv with Citi.

Hey. Good afternoon, everyone. Charlie, you just mentioned the stronger bookings in 4Q good for a FY ‘21 growth. Could we just think about some of the moving pieces into fourth quarter and into FY ‘21, reiterated $3.2 billion this year implies low-single digits organic growth in Q4. Can you sort of speak to that? And then, I think, Nazzic you also mentioned your increased confidence in the acceleration of ‘21, if you lose 200 basis points of the dissynergies that would suggest potentially 4% to 5% in ‘21. How should we frame the acceleration of growth here after it’s been a couple of tough quarters here? Thank you.

Yeah. Hey, Jonathan. Thanks for the question. And let me give a little color just around the forward guidance, because I think that’s the essence of the question that you are asking about going forward or that’s what we are anticipating the questions will be.But right now going through the annual planning cycle and we were -- we will communicate our expectations for the fiscal ‘21 in the March timeframe as we historically have done so. But as I said in the remarks, the year-to-date bookings and the expected contract awards in Q4 give us great confidence in revenue growth going into next year and beyond. And we also expect to achieve 85% of the net cost synergies by the end of the year and realize the benefits over the course of the year.And I would add that we are focused on organic revenue growth and want to make sure we have the right balance of investments especially in the strategic growth areas that now Nazzic mentioned and that’s what we are going to in the planning cycle right now. I hope that addressed your question.

Yeah. Sure. And then on the margin synergies you talked about accelerated synergies. Just what is the flow between those synergies being accelerated versus the investments? I mean, is this something of the -- anything of a change from when you first hit the 9% target or that 9% target is still very much achievable and perhaps even doable sooner if the -- as you mentioned the benefits have been accelerated? Thank you.

Yeah. So, first of all, going back to where we are to-date, we are up 90 basis points over last year, a blending of the Engility portfolio and the cost synergies was achieved so far. By the end of the year we are anticipating 85%. That will reflect margin increase next year. And but as I said, we are going through the planning cycle now and we will be able to communicate more detail about the next year’s full year outlook in the March timeframe.

Okay. Thank you. I will hop back in the queue.

And we will go next to Matt Akers with Barclays.

Yeah. Hi. Thanks for the question. I want to ask about the sort of customer demand you saw in the quarter, last quarter, you talked a little bit about delays at couple of customers around the CR that is something you are still seeing or is that loosened up a little bit?

Yeah. This is Nazzic. Thanks for the question. Yeah. So, certainly, we are operating under a CR and there is a couple of specific cases where the customer cannot expand the work based on the CR situation.But it’s very minor. We don’t see a significant impact to the portfolio. We will continue to navigate it. We have navigated CRs many times in the past, have a good ability to do that. And so we don’t see it as a significant risk. But there are a couple of clients where it does provide a little bit of a headwind and we will just continue to work through that as we go forward.

Okay. Got it. And then, I guess, you talked about the Asset Forfeiture contract, are there any other big sort of recompete contracts coming up, which we keep an eye on that could be a risk?

Yeah. The two that I highlighted, certainly the Asset Forfeiture as you noted and that has gotten pushed out. We will continue to work through that with an award hopefully in the next couple of months. And -- but we are -- we continue to work and work under a bridge contract and our good position there.The other one that, I think, is worthy of mentioning is the AMCOM portfolio of works that we do for the army. And it is not a single task order or a single contracted, it’s bundled around several. But over the course of the next 12 months to 18 months that portfolio will go through a recompete cycle and so we will continue to navigate that.The positive news from our standpoint is that as they continue to refine their acquisition strategy, the opportunity actually exists for SAIC to expand its footprint and its work with this particular customer, but recognizing that we have to do a recompete on our work as well.So that’s the most significant one going into the next year. And -- but again it has probably pretty limited impact to next year’s financials, because it will go through the cycle and we expect that most of that work to be recompeted over the next 12 months to 18 months.

Okay. Got it. And I guess maybe last one just, what’s the right level of CapEx to think about going forward, it’s actually, obviously, come down a little bit this year?

Yes. This is Charlie. So we are still looking at $8 million to $10 million of CapEx per quarter. But this quarter it was -- there was minimal CapEx, some of that had to do with the timing of our systems conversion.And I would also say that, our new CIO is taking a different approach as far as what goes to the cloud, there will be more that goes to the cloud and so there or it could be lower CapEx going forward, not dramatically lower, but I would say in that, $8 million to $10 million range per quarter kind of a normal CapEx.

Got it. All right. Thank you.

And we will go next to Seth Seifman with JP Morgan.

Hi. Thanks very much and good afternoon. I wanted to ask maybe a follow-up little bit on Jon’s question and we think a little bit about some of this investment that you are talking about. What specifically might that be is this going to show up as kind of internal R&D expense or might it be future CapEx. How this is going to show up in the financials going forward, what specifically is it?

Well, as I mentioned, we are going through the annual planning cycle right now. But just want to be clear with one thing that, the total cost synergies that we talked about the $75 million we are on track to achieve that. And anything that we would look at as far as making investments in certain areas where we think there is potential for strong -- stronger revenue growth, strategic areas some those that Nazzic talked about, we will go through that process and evaluate it going into next year and we will look to make the right decision for our shareholders that we have a -- we have the right balance as far as margins growth and revenue growth.

Yeah. This is Nazzic. The other thing I will add is, certainly, we talked about investing to drive growth. In many cases it’s really focusing our dollars in a very focused and strategic way. So in some cases it’s just making sure that we are focused on the right acquisitions, the right business development efforts, the right solution development.And so, as Charlie referenced, we will certainly look at the opportunity. We will always weigh what we think is the right investment profile for us as a company. But also in addition to that analysis we also want to ensure that we are investing the dollars that we spend today in the absolute right areas consistent with our strategy to drive profitable growth.

All right. No. Okay. Thanks and that’s helpful. I guess, there’s a kind of looking to get a sense of is it that you might need a facility at some point, is it that you might have to invest in developing a certain type of software application or technology, what type of investments you are talking about?

Yeah. So again, as Charlie mentioned, we have not buttoned up every, every aspect of that investment profile as we go into next year. But for the most part, as I have talked about investments, it’s really investing in the talent and investing in the people and the -- I will use the word infrastructure, but not in the sense of facility to be able to capture, pursue and capture a business that is consistent with our strategy.So I would think about it in buckets of money like BNP and pre-BNP and investments to drive growth for the most part. We are a services business. So we would not, never say never, but our strategy doesn’t call for investment in facility or for infrastructure along those lines. Did that help?

Great. Great. Yeah. Absolutely. No. That’s what I thought. Thanks. And then just to put kind of a fine point on it, by fiscal ‘22 we are still looking for 9% adjusted EBITDA margin?

We -- nothing has changed different from what we have communicated previously as far as the three-year outlook. We have got great confidence in the value proposition that we set forth back and made the Engility acquisition. So nothing has changed from that. And certainly the $500 million of free cash flow that we stated there would be intact. Any type of investments we would look for return to come back to enhance this value proposition that we laid out earlier.

Great. Thank you very much.

We will go next to Edward Caso with Wells Fargo.

Hi. Good evening. Just some really clear on, over the three-years, I think, you are roughly $425 million for $480 million and then roughly $500 million in free cash outlook. Can you -- is that right, one and then, is there -- help us again on what the expectation is for shareholder return and differentiate that between M&A. So, I mean, is it -- if you M&A, does that take away from repurchase?

Yeah. So let me just go back and say that in general on average and over time, you are correct with the end point as far as the free cash flow goes. And I wouldn’t say that its $480 million next year will give you a better indication of what our free cash flow outlook is in the March quarter.I can say that, we always look to manage the cash flow effectively. The achievement of the $425 million of free cash flow was a tremendous accomplishment of our commitment that we made a year ago and we are still focused on this going forward. But I don’t want to commit to any numbers right now. Things do change after a year and will give you a better sense in the March timeframe.

And help us understand the return.

Yes. And so, as far as the capital deployment, returning cash to our shareholders is always our priority absent M&A opportunities. So that’s been the consistent theme for the last five years to six years and that’s consistent going forward. So that has not changed.

Okay. And then the other question, there is a significant amount of items in protest, can you remind us the big pieces, I guess, including the one, I assume the one that tripped up your guidance last quarter is in that number?

Yeah. So we do have a couple of billion dollars of awards and protest. But the significant ones are the CPE or Cloud One contract. We expect that, that’s going through the normal protest cycle to clear that cycle as we get towards the end of this calendar year. So that’s a significant one.EDIS is one that was -- has been in various stage of protests since early, very early this calendar year so that’s another significant one. And then we have seen a couple of them that -- one ones that was pre-award protest this is the one we just talked about earlier with the DoJ and that has come out of the pre-award protest and going through its cycle as we discussed earlier.

So none of the ones that are in protest have happened favorably yet, you are just in a sort of hopeful that they will fall your way this quarter?

That’s exactly right. Based on the …

Okay. Thank you.

… standard timings that we would expect.

Great. Thank you.

You are welcome.

And we will go next to Sheila Kahyaoglu with Jefferies.

Hi. Good afternoon, everyone, and thank you. Nazzic, you talked about or Charlie you might have said it, you talked about the pipeline being $16 billion, up 25% quarter-over-quarter. Can you talk about maybe your win rate in the current quarter and what drove that big increase and they are scattered across big programs or smaller ones? And then I have a follow-up related to that?

Okay. So we will try to tackle your questions. So, yes, we continue to see a great pipeline activity. We see it across the Board. And as we did reference, we continue to see a lot of the pipeline being populated with new business opportunities and new -- the ability to drive growth for new business. And so this was as to refresh your memory at relatively low recompete for us. So we have had the opportunity to invest in pipeline and submit that will drive growth in the out years.As far as the win rates, we don’t tend to talk specifically about those. What I can tell you is, we feel -- we always feel very confident about our recompete win rates and believe that we are certainly industry leading in that regard and then when it comes to new business, we have a very competitive win rate on our new business.And then certainly, one of the aspects of growth is on contract growth. So where we look for the opportunity, working with the customer, working with a contract vehicle to be able to expand our footprint and expand our presence to be able to deliver greater solutions to an existing customer, we continue to see good momentum and on contract growth as well.

Okay. And then just to clear it up a little bit, do you mind reminding us in terms of the current fiscal year, what impact the CR had, what impact protest had. And then, there was a slight shift with payroll, I am not sure if that impacted revenues at all. And then how do we expect that to transition into fiscal ‘21 and the organic growth that looks like what -- how much of the revenues get pushed out?

So, hey, Sheila, this is Charlie. Let me just -- as far as on the CR goes, my comments last quarter to the true -- proved to be true on those very, very few customers and they continue to be cautious. We are operating in the CR until December 20th. We don’t see any further impact this year due to the CR, if this CR moves out longer and it’s a much longer process than it’s possible we could see an impact to revenue and but it’s early to tell.As far as the protests, I think, we covered most of those and we do look for those to be resolved in the quarter. That’s why we expect our book-to-bill to be greater than any other book-to-bill in the quarter. And we are gaining momentum as far as that goes from a 0.9 to 1.2, 1.4s and we expect to fourth quarter book-to-bill would be even stronger that. So, I think, that translates into what we think is high level of confidence of revenue growth going into next year.

Okay. Thank you.

Thanks a lot.

Oh! Yeah. I am sorry. There was a question on payroll and that that has no impact on the revenue or the cash flow for the year. It’s merely syncing up the SAIC and the Engility payroll cycles, so that we are all on the same payroll now.So, the overall quarter to quarter cash flow impact is a bit pronounced that the differences are, because it was somewhat blended between SAIC and Engility, and now we are all synced up. So that’s why we have somewhat more of an impact in Q4 than the previous quarters.

Okay. Thank you very much.

And we will go next to Cai von Rumohr with Cowen & Company.

Yes. Thank you very much and nice job. So, obviously, you have got a lot of bookings coming in from the protests, but sometimes protests take a longer to clear than one expects. If none of those protests clears those the $2 billion, what kind of a book-to-bill can you still do 1.0.

Yeah.

Yeah. Hi. This is Nazzic. So you are absolutely right.

Hi.

We have most protests go through a pretty standard cycle, but you are absolutely right, somewhere elongated and we certainly are seeing that the EDIS is a great example of that. So what we are trying to do is give you some insight based on our best guess of what may happen, but certainly we can’t be 100% certain as the customer makes the ultimate decision.So, with that being said, we have a very strong pipeline, as we referenced we have very high submits as we referenced. And so to the extent that those decisions stay on track and stay in the quarter, I do believe that that we should demonstrate a strong bookings quarter. But you are absolutely right, we are -- when it comes to bookings the customer makes those decisions and so we will continue to navigate and watch that.

Okay.

But in addition to those and protests we also have other pretty significant pipeline opportunities that could close in the quarter.

Got it. And then you referenced $75 million run rate, 85% by year end, that’s the $16 million run rate you did $10 million of synergies in the third. Should we look for like $14 million, $15 million something like, I mean, that sort of what seem to be the trend line to get us to the $16 million?

Sorry, Cai, I am trying to follow you here on the numbers. I think…

Well, what you mentioned $75 million is your kind of synergy target and you expected to be at 85% of your target by year end.

Yeah.

85%...

Yeah.

…is $64 million. And if we do quarterly run rate of that is $16 million and yet you did $10 million of synergies in the third quarter. So the question is, does that mean, we should guess you do something like $14 million of synergies in the fourth quarter to get you to that run rate?

Let’s see, if that is the calculation that you are coming up with, Cai, I would say that, I would agree with you. The -- we are -- we will get to the 85% of the $75 million by the end of the year. I don’t quite track you to getting to that that exact number there, but assuming you are correct there then that would be the case and we are on track to do that.

Yeah.

The remaining part -- the remaining 15% of the net cost synergies would be achieved over the fiscal year ‘21 and then that full benefit would be realized in the next year. So they are in particularly relating to the facilities as Nazzic talked about. So there is some of that that carries over into next year until you get the full benefit of that.

Got it. And last one, so you mentioned AMCOM as an opportunity. If I recall correctly, you have got like $650 million in AMCOM business. So I assume you got a lot to kind of defend against. So can you give us a little color in terms of how is this going to be chopped up, how much business is available and so that we get some understanding as to how this is an opportunity for you?

Yeah. So, Cai, this is Nazzic. So you are right. I got the -- we do about $600 million-ish a year right now under various task orders with AMCOM. And the customer is still working through their acquisition strategy, but what we know to be true, is they are going to be acquiring through multiple acquisitions much greater than that run rate, because they are going to put together some other, other scopes of work and acquire in a bit different manner.So the way that we are looking at it is, is first and foremost we are going to protect the work that we have today. But we also have the opportunity to expand our footprint because of their acquisition strategy over the course of the next 12 months to 18 months.

Got it. I mean…

Is that answer your question or I miss something?

So -- no. No. That’s definitely very helpful. So basically there’s more available. What are some of the bigger chunks?

That’s exactly right.

Okay.

Yeah. That’s exactly right.

Okay. Great. Thank you very much.

We will go next to Joseph DeNardi with Stifel.

Yeah. Good evening. Charlie, sorry, to beat this to death. But if the protests to resolve favorably via Asset Forfeiture contract comes through. How much of that in total would you guys reflect in bookings and backlog just given your treatment of that? Thank you.

The -- I believe the Asset Forfeiture is a single award IDIQ and so just to refresh your memory, we don’t take that as a full booking. It’s just the way that we do it and so we would only book as it relates to a calculation to the book-to-bill ratio, whatever task order would happen to come with it. And it depends on how much they want to put on the task order, but it’s about $100 million a year -- $100 million to $140 million a year, but the customer could acquire it in a couple of different ways based on whatever task order structure they want to set up. Does it help?

And then in terms of what’s in protest would the whole $2 billion come in?

Yeah. So let me clarify as well Joe. So, because there is a difference between the contract awards and the single award IDIQs. The contract awards is the cloud one, the cloud computing environment that’s a $728 million. That’s a contract award.The EDIS is a single award IDIQ. FSA, as Nazzic said, a single award IDIQ, of which we get some of the task orders and there was one other one which was a supply chain at DLA FSG 80, it was $950 million close to a $1 billion over seven years.A competitor protested this and the customer themselves as handling the protest resolution, we expect a resolution in the next few weeks, but that one is also a single award IDIQ. The task order of that would get booked as well. Does that help? I kind of clarified some of that.

Yeah. A little bit. Charlie, you also mentioned something to the effect of, if the CR continues for any longer, I think, it could have an impact on revenue outlook. Were you referring to this year or more kind of next year, maybe just clarify what you meant by that? Thank you.

Yeah. That would be next year. We don’t see any impact this year. And it’s really, if it’s longer, I mean, much longer that’s full year CR something like that may impact the revenue, but it’s too early to tell right now how that’s going to work out.

Okay. And then, Nazzic, just kind of high level, when you look at your organic growth even adjusting for some of the dissynergies compared to maybe where the market is or some of your peers are. Could you just may be provide your perspective on the bridge between where you are and where they are as kind of end-market differences, is it win rates, and maybe when you think you can get to a level like that. I mean, it sounds like the strategic review that you guys have ongoing as a part of that, but maybe you just share your perspective on that? Thank you.

No. Absolutely. You are absolutely right. The strategic review is not just a part of it. It is absolutely our intent to step back and take a look at the opportunities that are in the industry to ensure that we are very, very well aligned to the areas that we can drive growth for the enterprise.And so, certainly, I am not going to speak to our competitors and their strategy. But at this point, I feel very good about the choices we are making, the investments and people and talent, and pipeline development and customer access that we are making and it is for that absolute purpose that you just mentioned and that is to drive profitable revenue growth as we look forward in the months and years to come.And so that is -- that’s our intent. That’s absolutely one of the top three priorities that I mentioned earlier. And the strategy refresh and the implementation of that strategy and the focus on the areas that I mentioned will drive the growth in the out years.

Thank you.

We will go next to Tobey Sommer with SunTrust.

Thanks. This is Jasper Bibb on for Tobey. I wanted to ask if you could provide any additional color on the Air Force CCE takeaway that was protested in the late September and could you size of award relative to previous cloud contracts?

Yeah. That’s one we touched on earlier, so it is still under protest and we look for it if it goes its normal cycle to come out of protest as we get towards the end of this calendar year and that’s really all I can say about the opportunity.

Okay. No worries. So just wondering -- yeah.

The size of it was roughly $700 million contract.

Okay. Do you have any way to think about the timeline as it did seem like a pretty strong one for the company?

Is it a strong what for the company?

Strong win timeline.

Yeah. Sure.

Yeah. We feel very confident.

Okay. Great. So I was wondering kind of how you are -- just wondering how you are thinking about additional.

I mentioned…

Go ahead.

No. Now you go ahead please.

Yeah. Just kind of wondering how you are thinking about additional M&A activity at this point. Do you see the company waiting until Engility is fully integrated before you are throwing your hat back in the ring?

Well, at this point, as Charlie mentioned and I referenced as well, we feel very good about the success of the Engility acquisition to-date. And for almost all of the major milestones that we put in place about a year ago as we were going into the acquisition we have either met or exceeded our expectations along the integration path.So we have good confidence in the Engility acquisition the integration has gone well, the cost synergies we touched on and so but with that being said, we have recognized there’s still some work to do and we touched on the real estate consolidation that will take place and provide the additional cost synergies next year.And then on the revenue synergy side we are seeing good momentum as we touched on with regard to the pipeline development, with regard to some of the key wins and we will continue to certainly put priority and navigate that.Now with that being said, we do want to keep the options open. We are very selective in our approach to M&A. We always have been. And we do not look to be a serial high volume acquirer of doing many transactions.But if there was a transaction that brought capabilities or market access or customer access that would support our strategy and support our priority of organic profitable revenue growth we certainly would look at that.And so I think that that’s the best way to frame it is that we believe we are in a good position. We have got a good balance sheet and we want to make sure that we capitalize on the market opportunities ahead of us, but certainly continuing to work the Engility acquisition is top of mind.

Okay. That’s helpful. Just last question from me, I believe you have a press release last week that announced almost $600 million in space and intelligence contract wins. Could you kind of highlight how the capabilities acquired in the Engility deal have been leveraging your recent bid and proposal activity?

Yeah. So certainly in that portfolio of wins, the themes were around space and the acquisition of Engility has strengthened the SAIC portfolio serving our space customers. And so we have got a great position in the space missions across both the civilian, the Intel community and the DOD. And so that combination of what Engility brought to the table, what SAIC had already in place has really strengthened our position in space and so I would say that was certainly one thing.And then the broader Intel community, the acquisition of Engility gave us great access to broader customers in the intelligence community and we continue to see excellent pipeline development and submits and now beginning to see the wins that come with that in that particular area as well, and I think those are the probably the two themes of that bundle of announcements.

All right. Thanks for the color.

You are welcome.

We will go next to Gavin Parsons with Goldman Sachs.

Hey. Thanks. Good afternoon, everyone.

Good afternoon.

Maybe just following up on kind of exactly that a year post Engility. Some of your peers have done large scale M&A, so it disrupt their bookings, obviously, a lot of time talking about how you did pre-integration work to make sure that wouldn’t happen -- book-to-bill is going little stop but it’s depending on the math add back these protests which was actually been pretty strong this year. So I guess the question is has the Engility acquisition disrupt the bookings at all or is that kind of on track with where you thought it would be before closing Engility booking was?

Great question. So I think the short answer it is not disrupting bookings at all that we -- as you mentioned, we did the early work to ensure that we had a very cohesive go-to-market strategy. The day that we closed that we had a very cohesive set of teams focused on the customers in the pipeline development and so we have seen the fruits of that over the course of the last couple of quarters really come to be.And so with the increase in submits the increase in our pipeline and certainly a strong bookings quarter this quarter and the opportunity to have a strong one next quarter. We believe that we are seeing the momentum that came from the integration and the acquisition of Engility and will continue to do so.

Yeah. So revenue synergies there are still momentum going forward that hasn’t been captured in bookings, but are in the pipeline that you spoke about?

That’s exactly right. Yeah.

Got it. Thanks. And then just what’s the total percentage of revenue that’s up recompete next year?

This is a normal -- kind of a normative range 20% to 25%.

Okay. Thank you.

This is a low year. Next year we see it to be more standard.

Okay. Thank you.

You are welcome.

We will go next to Jon Raviv with Citi.

Hey. Thanks for the follow up. Charlie, can you just clarify the expectations for fourth quarter organic and is this level first with the acquired sales or it looks like for Engility, I think, in fourth quarter last year you maybe had some added sales, so should the run rate for Engility’s contribution in fiscal fourth quarter be mainly closer to $400 million?

Hi. You are breaking up there a little bit. Jonathan, I think, you are asking about the revenue here and…

Yeah. What’s the Engility’s contribution going to be in fourth quarter, so the $1.6 billion of sales you do, that should be organic growth year-over-year, correct?

We don’t break out any longer the Engility portfolio versus the SAIC. So I couldn’t really tell you. I could just go back and give you an update on our guidance for the full year and that the second half is going to be similar to the first half.If you look at the first three quarters of the year, they were all right in that $1.6 billion range as far as revenue goes and that translated into about a 1.5% revenue contraction. If you take out the revenue dissynergies you get to about 1% revenue growth and fourth quarter should be fairly similar to the first three quarters.

From a total sales number perspective or from an organic growth perspective similarly, is that you are saying [ph]?

Yeah. Total sales organic and just keep in mind that fourth quarter is traditionally lowest revenue quarter due to -- as I stated in my remarks, due to holidays and vacation time in the time we have holidays and vacation time.

As well as in terms of dollars because then you could just suggest that $1.6 million each of the four quarters?

Yeah. I’d say in terms of dollars.

Okay. Nazzic on AMCOM, just a perspective, I know AMCOM went through a recompete process a few years ago, can you compare that process to this process and was that more of a replace and recompete or is now there’s more opportunity to open up the aperture and capture more, just in terms of, it feel like back then is, consider more of a risk where now you are talking about it being perhaps an opportunity?

Yes. And I am going to try to answer your question but ask me again if I don’t get it. You are breaking up this a bit. But, yes, the recompetes three years, four years ago, give or take was a -- what I would call more normative recompete, recompeting our work in a -- they took a different acquisition strategy as far as how they did it from an acquisition cycle. But in general, it was recompeting our work and not a lot of additional type work in those -- in that particular cycle.What we are saying now to your point is the opportunity over the course of the next 12 months to 18 months. So it’s going to be spread over the next year, year and a half, and what we understand to be the case is, they are going to do several acquisitions, where it does provide the opportunity for us to expand our footprint depending on our bid strategy. Did I capture your question?

Yeah. No. I appreciate that. And then just very last for me, appreciate the follow-up here. Just on the low CapEx that you guys posted, I mean, it is below peers, how do you think about that from a strategic perspective?

Well, it was an anomaly the CapEx -- the minimal CapEx is spending in the quarter. So keep that in mind. We do expect to return to a more normal level in Q4 and beyond. But again, as I mentioned, strategically, we are looking to do more in the cloud from -- on the IT CapEx side than we have done in the past and that should lower the CapEx spending in the future.

Okay. Thank you.

And at this time I will hand the call back over to Shane Canestra for any additional or closing remarks.

Thank you, Vicky. Thank you very much for your participation in SAIC’s third quarter fiscal year 2020 earnings call. This concludes the call and we thank you for your continued interest in SAIC.

That does conclude today’s conference. We thank you for your participation.