LDOS
#Right.
Let's see.
<UNK>, I'm sure, you could recount the history at Lockheed Martin.
And SETA ---+ yes, they had a large SETA organization up in Valley Forge called the Systems Integrator, I guess.
It was called Valley Forge and it was spun out as the Systems Integrator, which, I think, transformed into the company now called Vencore.
So, most of the SETA business had been spun out of Lockheed Martin.
To the best of our knowledge and we've been pretty thorough and had discussions with the team, there are only one or two contracts that we would describe as SETA, Systems Engineering and Technical Assistance, again, for those people on the call, which would create something called organizational conflict of interest, which would prohibit us from bidding on certain contracts.
And we see no impact at all from the single contract that we've identified or even if there is another contract or two contracts of a small nature.
Again, they had collected their SETA business and spun it out under the SI.
And we're really enthusiastic about how the strategic fit of where Lockheed had positioned IS&GS marries in with the philosophy that we have at Leidos that was promulgated at the time of the split where we spun out the company now, referred to as SAIC, which contained our SETA business.
And the more we learn, the more pleased we are about, if you will, architectural work that had been done in creating IS&GS and how well it matches with the work it was done here.
Thank you.
Sure.
Well, yes, this is <UNK>.
<UNK>, thanks for your question.
Through the past, I would call it 18 months since <UNK> arrived, we've been reshaping how we do business development, we've been increasingly careful about taking our B&P and our marketing spend and getting more yield out of it.
So we have a set of metrics that we internally follow that's very focused on win rates.
It's very focused on qualifying the pipeline earlier and making sure that we don't move forward with large expensive bids that are going to crowd out our ability to invest in growth.
So that has a lot to do with making sure that the yield for the money that we put into it gets us more.
We're very pleased with the results for bookings that we have for the first quarter.
And it certainly is one of the strongest Q1s we've seen in a long time.
And I think that when we think about where that sits relative to our peer group, we're feeling pretty good about it.
I would say that the other thing is that internally we target a full year book-to-bill at one or north of that.
And with that as our target and entering the year with a backlog that's roughly 2x our revenue plan, we're feeling good about the guidance that we've put out there and how we'll be achieving that and the growth plans that we have for the business.
Yes.
I think that we mentioned that in the script.
Yes, no.
That's okay.
The total bids outstanding at the end of the quarter was about $2.5 billion, about $2.6 billion.
And that's the Health and Infrastructure group.
Let me go back.
It's about $9.3 billion for National Security.
<UNK>, this is <UNK>.
One point that gets me excited is if you've been through the S-4, which is our registration statement, which I know many of the people on the line have gotten.
It's certainly available to everyone through EDGAR.
There is a pro forma number for the new company and shows $19.4 billion in backlog.
And as we get closer to the closing of the transaction, it's just a really powerful number and speaks to the strength of the company and really creates the excitement that we have around where this company is going to go.
Yes.
<UNK>, this is <UNK>.
I think that the way we think about that is that when we ---+ we've talked about run rate synergies of the business, so about $120 million.
That's gross $240 million.
And that comes from combining the two businesses and being able to spread a corporate cost structure over a larger base.
That will enable not only the business to be more competitive and to help bolster their pipeline and win rates, but also to help maintain their improved margin profile that you're seeing there.
So, that's how we've been thinking about the future of that business and what their margin profile will look like.
Yes.
<UNK>, in my earlier remarks, I mentioned that year-over-year, the commercial health business was down.
But what I probably should have added to that was that sequentially the business from Q4 into Q1 has actually had an uptick in revenue.
It's had an uptick in bookings and an uptick in profitability.
And while we don't talk about those numbers separately, I do think it's worth mentioning on this call that we have seen improved results there.
One quarter doesn't make a trend, and it's hard to declare us at a definite inflection point.
But the business pipeline, which operates on a much shorter sales cycle, the bid pipeline is showing some improvement.
And we're looking not only to bolster the core work that we do around system and EHR implementations, but looking at additional value add that we can bring to those same customers as we move up the value chain in that consultative sale.
Thank you, <UNK>.
Great.
Well, thanks.
And to everybody on the call, really appreciate your dialing in.
We know it's a busy day in the earnings front, and we appreciate you being able to be on the call.
We tried to go early.
Whenever a company is involved in a large transaction, I know from your perspective, you always are concerned that management will stay focused on running the core business.
And although one quarter doesn't make a year, we believe, at least in the first quarter we've demonstrated that we're going to keep our head down and focused on what we do here.
We talk about the Leidos platform and focusing on the people, the capabilities and the cost structure and moving the business forward.
And we will continue to do that through the transaction and post the transaction.
And just to better describe the way we're dealing with the merger, we have set up essentially an independent Integration Management Office.
Those people in the IMO have been, if you will, moved there on a permanent basis.
We have backfilled the individuals.
So the IMO is a standalone team and we have filled all of our other positions, we have talked about Tom Dove coming into the Business Development role.
And so Mike has chosen to lead the IMO.
He is doing a super job.
There is meetings every day on integration.
We're talking about systems and people and, as I mentioned, in culture.
But that really affords the rest of Leidos to stay very, very focused on what's going on in customers space to make sure we're delivering on our commitment.
We're executing to our contracts.
And we're going to continue that type of behavior all the way through closing.
And then essentially we will collapse the IMO and the IS&GS leadership team into the Leidos leadership team.
And we will operate post-closing as one entity.
So stay tuned.
And as we achieve milestone events in the merger, we will make announcements and put out 8-Ks.
But so far everything seems to be on track.
We've heard nothing that would cause us to think we're not going to be able to close near the end of the summer.
And we are all enthusiastically looking at the future of this new company that will be on the order of $10.5 billion, $10.7 billion in revenue and, as I said, $19.4 billion in backlog, which is really exciting to all of us.
Again, thanks for being on the call.
And we'll see you next quarter.
