ManTech International Corporation
Q4 2014 Earnings Call Transcript

Published: 19 Feb 2015

[Operator:]

Good day, ladies and gentlemen. And welcome to the ManTech Fourth Quarter Fiscal Year 2014 Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, today’s call will be recorded. I would now like to introduce your host for today’s conference Mr. Stuart Davis, Executive Vice President for Strategy. Sir, you may begin.

[Stuart Davis:]

Thank you, Amanda, and welcome, everyone. On today's call, we have George Pedersen, Chairman and CEO; Kevin Phillips, Executive Vice President and CFO; and Dan Keefe and Bill Varner, our two Group Presidents.

[Bill Varner:]

Hi.

[Stuart Davis:]

And Judy here with us in the room. During this call, we will make statements that do not address historical facts and thus are forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to factors that could cause actual results to differ materially from anticipated results. For a full discussion of these factors and other risks and uncertainties, please refer to the section entitled Risk Factors in our latest Form 10-K and our other SEC filings. We undertake no obligation to update any of the forward-looking statements made on this call. Now, I'd like to turn things over to George.

[George Pedersen:]

Good afternoon. Thank you for participating in today's call. In the fourth quarter, ManTech showed solid operating margin and bookings, which is consistent with our view that the market is returning to normal. ManTech’s revenue declined in 2014 as operational requirements in Afghanistan diminished, but we are returning to growth at this point in time in 2015. Last month, the government passed an omnibus bill to fund the Defense Department and almost all of the federal agencies through the end of the current fiscal year. This bill resolves much of the procurement uncertainty that comes with continuing resolution CR. Our customers are taking advantage and moving forward with their acquisition strategy. We ManTech have $4.6 billion in outstanding proposals at time point in time. This is a record for use of OCO opportunity. Earlier this month the President forward the FY16 budget request to the Congress. The proposed budget recognizes that the global security threats and emphasis the number of nations where ManTech provides critical support. The total base DoD budget request is $534 billion, which is up almost 8% from the FY15 final budget. With a $51 billion OCO request, the DoD budget is $565 billion, which is up 4.5%. Within the budget there are strong increases for operations, maintenance, IT and cyber. At this point, we do not know how the new Republican Congress will work with the President and the new Secretary of Defense. What is clear is that the leaders of the House and Senate Armed Services Committee put forward an expanded defense budget. We expect that we maybe able to get some measure of relief and that today is a further reduction in annual defense spending are behind us. If so, we would see stronger and more certain budget, greater workflow and a more rapid pickup in the government services market. With the market poised to rebound, companies who have invested smartly will have the -- will be the ones who prosper in our judgment. We believe that the investments we have made in 2014 will help drive ManTech as we move through the year, growth will come from proposals that we have already submitted or will submit shortly, that includes solutions that we have already built by virtue of our investment in R&D. For example, we submitted a $6.7 billion proposal -- we submitted $6.7 billion of proposals in 2014, an increase of 58% compared to 2013. We expect to submit volumes to maintain its elevated level in 2015 and continue that way. We will also use our balance sheet to fund our growth. Last year we invested all of our free cash flow that we had generated to acquire two companies that augmented our capabilities, customer presence and contract portfolio at the Department of Veterans Affairs and the Department of Homeland Security. The acquisition market is more active and with more than $60 million in cash in the bank today and a $500 million line of credit, we are in a strong position to make more acquisitions to grow the company as we have done in the past four decades for ManTech. Now Kevin will provide you the details of our financial performance and outlook.

[Kevin Phillips:]

Revenues for the fourth quarter were $411 million, compared to $492 million in the fourth quarter of last year and $447 million in the prior quarter. The revenue differences are mostly explained by the expected declines in Afghanistan-related contracts and pressures on the overall Army budget. The MRAP family of vehicle support work contributed $28 million in the quarter, down $45 million year-over-year and down $3 million from the prior quarter. Revenues for the S3 and SSES contracts with CECOM were $56 million in the quarter, down $51 million year-over-year and down $18 million in last quarter. Fourth quarter revenues were below guidance as a result of lower than anticipated material purchases across the business. For the year, revenues were $1.77 billion down $536 million from fiscal year 2013. As with the quarterly numbers the driver of the decline are MRAP and S3. For the quarter the percentage of work is a prime contractor and contract mix were essentially unchanged and performed 91% of our work as a prime and our contract mix was 72% cost-plus, 11% time and material and 17% fixed price. Operating income for the quarter was $24 million or an operating margin of 5.8%. Year-over-year, comparisons are impacted by the $118 million pre-tax goodwill impairment in 2013 in our defense business, primarily as a result of lowered army requirements, as well as reduced Overseas Contingency Operations support. Fourth quarter operating margin continued our overall expansion from the low point in the first quarter. In the quarter, we benefited from strong award fees, cost-control and excellent performance on fixed-price contract. Annual operating margin was 5.3%, though the quarterly margin was about 50 basis points higher, highlighting the positive margin trends. Our margins are typically higher in the second half but we looked more steady, year-over-year improvement in 2015 and beyond. Net income was $14.5 million for the quarter and $47.3 million for the full year, which led to diluted earnings per share of $0.39 for the quarter and $1.27 for the year. Tax rate was not a factor. It was in line with our history and expectations. Our positive operating margin improvement will provide solid earnings trends, as we move toward revenues growth throughout 2015. Now onto the balance sheet and cash flow statement. During the quarter, we used $23 million in cash flow to fund operations. DSOs were 83 days, which was one day better than the fourth quarter of 2013 but worse than last quarter. The fourth quarter is typically the most challenging to collect as a result of government holidays, but returning to DSOs in the mid 70s is a priority for us. For the year, cash performance was excellent with cash flow from operations of $127 million or 2.7 times net income. Free cash flow for the year was $115 million, given capital expenditures of a little over $11 million. During the year, we invested $126 million in the acquisitions of 7Delta and ATG and distributed $31 million in dividends, which reflects our intent first and foremost, grow the company while maintaining a steady return of cash to shareholders. At year-end, we had $24 million in cash and no debt after paying off our higher yield notes back in the second quarter of last year. We stand today with over $60 million in cash, our credit line and balance sheet are strong and they provide plenty of firepower for further acquisitions. Board has authorized us to continue our current dividend level of $0.21 per share to be paid in March. We expect to maintain the annual dividend of $0.84 for 2015. Turning to business development, the fourth quarter showed a reasonably pace of awards decisions in the quarter and for the part of our customers, consistent with stabilizing market. Bookings for the quarter were $361 million for book-to-bill ratio of 0.9 times. For the year, contract awards totaled $1.6 billion, again for a book-to-bill ratio of 0.9 times. For 2013, book-to-bill for the quarter and the year were 0.7 times. So, we are seeing some steady improvement. We expect to be above of 1 times this year, with bookings concentrated in the second, third quarters, as our customers work through a large number of pending proposals. Proposal activity remains high and we expect this year submit volume will remain at the same level, which was elevated last year for this year. Our total qualified pipeline is $19 billion and we have about $4.6 billion awaiting the adjudication. Backlog at the end of the quarter stood at $3.3 billion, of which $800 million was funded. Now to the forward outlook, for any acquisitions, we're calling for 2015 revenues of $1.725 billion, net income of $57.8 million and diluted earnings per share of a $1.54. We anticipate our OCO business to decline about $125 million compared to last year. In 2015, OCO related work, which of course both MRAP and C4ISR field sustainment efforts will be less than 5% of our revenue. Going forward, we will report OCO revenue, but we will no longer separately call out the MRAP or S3 contract. First quarter revenues will be in line with the fourth quarter and then build throughout the year, which would lead to organic growth year-over-year growth sometime in the second half of the year. The implied operating margin guidance for the year is 5.6%, or 30 basis points above 2014. Margins were also built over the year consistent with our normal pattern. Looking at long-term, we are targeting margins to increase 20 to 30 basis points each year until we reach about 6.5%. Net income and earnings per share are both expected to be up more than 20% from last year, benefiting from margin expansion from the reduced interest expense and paying down our debt. Cash flow from operations to be slightly above 1.5 times net income, built into our guidance for an effective rate of 39.2% and a fully diluted share count of 37.6 million shares. Overall, we are heartened by the improving market dynamics and look forward to reporting revenue and earnings growth as we progress through the year. Now, Dan will speak to our defense and fed civil business. Dan?

[Kevin Phillips:]

Thanks, Kevin. At mission solutions and services, we're excited about our prospects for this year, as we continue to reposition our business as our presence in Afghanistan declines. We began the year with two important additions to our leadership team. Steve Comber is now leading ManTech Health. He brings a superb knowledge of this market, gaining from running a broad-based, $800 million health business. The acquisition of 7Delta in 2014, when combined with our organic health business resulted in stronger performance in the sector than initially planned. Our customers and the Department of Veterans Affairs, Health and Human Services and the Defense Health Agency are well funded by the Government. And we see numerous opportunities that enable us to employ our capabilities and past performance to expand our presence in this market segment. With the addition of Steve Comber, we bring to the team more of the recognized leaders in the industry and demonstrate our commitment to invest in and grow a robust health business. Andy Twomey is now laying our Army business. Andy brings a wealth of knowledge gained through a distinguished army career as a Brigadier General, an extensive business acumen, having previously led a $300 million government service business. We are committed to committing to serve our army customers and moving at a higher level solution in services. Both Steve and Andy bring tremendous energy and capability and I’m excited about what they will deliver for ManTech and our customers in the years ahead. Finally, our acquisition in 2014 of the Advanced Technology Group, ATG has given us the contract vehicles, the customers and the capabilities to effectively grow our business in the critical Homeland Security market. And as George mentioned, we continue to aggressively pursue additional acquisitions in the healthcare and [indiscernible] markets. Bill?

[Bill Varner:]

Thanks Dan. The Mission, Cyber & Intelligence Solutions Group is positioned well within a robust market with significant opportunities in cyber, full spectrum security and IT consolidation. Earlier this year, the government resolved protest from some of the unsuccessful bidders on one of the procurements that we discussed on the last call, a blanket purchase agreement for cyber services at the FBI. The BPA consolidates several contracts including our work running the security operations centers for the FBI and the Department of Justice. We have already submitted task order proposals for our incumbent work as well as several new opportunities that fit well within our capabilities. We expect to hear on these task order award shortly. We have improved the business operations of our cyber products business and expect modest improvements in both the top and bottomline although we will continue to make net investments for the year. The team is currently upgrading the product set, including exporting it to a new platform for launch at the upcoming RSA conference. As George indicated the President’s FY ‘16 budget requests shows strong support for cyber with a proposed 10% increase to $14 billion. On the cyber front, we are well positioned as a prime on the DHS’ continuous diagnostics and mitigation contract to receive some of the $582 million and requested cyber funding for fiscal year ‘16 under that program. The administration has also been taking aggressive steps on the cyber front, announcing two major actions last week. First, the Director of National Intelligence will stand up a new Cyber Threat Intelligence Integration Center that will do for cyber what the National Counterterrorism Center does for terrorism. The center will coordinate cyber threat assessments and ensure that information is shared rapidly to support operators and policy makers with timing of the intelligence about the latest cyber threats and threat actors. Second, the President had issued an executive order directing the government and companies to share more information about the cyber security threats in response to cyber attacks. This order may spur Congress at last to pass legislation. All of these actions offer expanded opportunities for ManTech. George?

[George Pedersen:]

Thank you, Bill. In summary, our market has stabilized and we’ll return to growth over the next year. Our position within the market is strengthened based upon the growth in priority areas such as cyber, healthcare and the fading of the OCR overhang. Investments that we’ve made position us to take advantage of the improving market. We look forward to leveraging our strong balance sheet to accelerate our growth. With that, we are ready to take your questions.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Edward Caso with Wells Fargo Securities. Your line is open.

[Tyler Scott:]

Hello. This is actually Tyler Scott on for Ed. My first question is just, what was the inorganic revenue contribution in the quarter?

[George Pedersen:]

Inorganic revenue contribution in the quarter from acquisitions was $33 million.

[Tyler Scott:]

$33 million. Okay. And then, so for next year, that includes ATG and 7Delta. So how much is going to be for -- in 2015 guidance for inorganic?

[George Pedersen:]

For 2015, we’re building that as normal growth. The acquisitions for ATG happened early and the acquisitions for 7Delta happened in May. We’re expecting reasonable amount of growth for next year. So that can be a material component for the year-over-year comp.

[Tyler Scott:]

Okay. Non-material.

[George Pedersen:]

Yeah.

[Tyler Scott:]

All right. And so on the awards, how did the rest of the quarter after you guys reported Q3. How did that play out as expected -- did it play out as expected. I think you had $230 million in awards at the end of October and then there was $130 million in awards that were protested.

[George Pedersen:]

So $130 million in protest award, we’d expected some adjudication to happen in Q4 and get a little bit of revenue out of that. Over $100 million of that still had not been adjudicated by the time we rolled into Q1. We got maybe a little, maybe $50 million of that awarded to us. So it didn’t turn out favorably or unfavorably, just more delays.

[Tyler Scott:]

Just more delays, okay.

[George Pedersen:]

Just more delays on the decisions around that, and that in part impacted our Q4 revenue.

[Tyler Scott:]

Okay. Great. Thank you

[George Pedersen:]

Thank you.

[Tyler Scott:]

Yes. That’s great. Thank you very much.

[Operator:]

Our next question comes from Gautam Khanna with Cowen & Company. Your line is now open.

[Unidentified Analyst:]

Yes, hi. This is [Bill Lion] [ph] on for Gautam. A couple of quick ones. So can you size up the amount of the in-theater revenue in the quarter and then for fiscal '15 and '16?

[Kevin Phillips:]

I will do so for '15 and I will do so for quarter and the year. So when we talk about Overseas Contingency Operations support, it’s a combination of yield sustainment support people ask are under the S3 contract and a component of the MRAP work that’s done in-theater. They also have work under MRAP that’s done in U.S. as well. So it’s not a one-for-one when you look at the MRAP revenue or the S3 revenue. The revenue for the quarter, Q4, in-theater was $31 million and the co revenue overseas in-theater for 2014 was just under $200 million and we expect the revenue for OCO in 2015 to be about $75 million.

[Unidentified Analyst:]

Okay. Thank you. And then secondly on your capital deployment strategy, you said you mentioned you guys are looking at more healthcare deals. Can you talk about the acquisition environment currently and what you are looking at and what should we expect in 2015 and beyond?

[George Pedersen:]

I will make a comment there and it’s for other folks to put in. And if Dan wants to speak specific to health, he can do that. So there is a lot of potential activity out there. There has been sort of consolidation. There have been some acquisitions that have happened in the space. And I think there is an increased amount of potential activity based on what we’re seeing over the last three, six months and we are seeing higher volume at different levels of size. So I think that there is a good set of opportunities for us. The question is where they fit in and how quickly those happen within the market. Specific to health, there are businesses out there. I don’t think they are of the same scale. But I will let Dan to anything that he’s learned from…

[Dan Keefe:]

Yeas, I would say that -- I mean, we are well positioned in the three major health segments, the customers being Veterans Affairs, the Defense Health Agency and the Health of Human Services. And not to be understated, Steve Comber, who joined us in January, is really one of the experts in this market space and has given us a lot of insight into where the growth potential is. So it think it’s -- I mean other than that, I am not sure I can add. It’s certainly a market we are looking hard at.

[Unidentified Analyst:]

So as we think about capital deployment, is acquisition the primary driver or would you guys consider the buyback or…?

[Dan Keefe:]

No, we still consider acquisitions our primary use of capital, the dividend is the second component consistent with prior year’s distributions, but we think it’s a good time in the market to focus more around budgets. We have greater clarity around the prioritization of those budgets and it’s a good time for us to focus on acquisition.

[Unidentified Analyst:]

Okay. Thanks. And then one last quick one. How much of your revenue is up for recompete this year and what is that as a percent of total?

[Dan Keefe:]

So as a percentage of total, it’s a little bit less than the average run rate, that 17% of our business is that for recompete in 2015?

[Unidentified Analyst:]

Okay. Great. Thank you very much.

[Operator:]

Our next question comes from Bill Loomis, Stifel, Nicolaus & Company. Your line is now open.

[Bill Loomis:]

Hi. Thank you. My question is on the cyber side. It’s been a while since we got anything specific as far as how much cyber is as a percent of ManTech’s revenue and growth specifically on that. Can you --- OCO is dropping, is getting lower and lower, can you give us more specifics on the cyber side with how much business you are doing there and the growth you’ve achieved in '14 and expect to in '15 in your guidance? Thanks.

[Kevin Phillips:]

Yes. So we are not going to break out the cyber component specifically. It has been increasing as a percentage of our overall revenue. It has been growing slightly in the business even with the uncertainly in the market. I would say though that in the intelligence and cyber business over half -- a great proportion of the overall proposals that we are going after are in that market and that leads to the strength of our positioning to go after it. And I think that we are in a really position heading into 2015 to grow the combination of cyber and intelligence. I will ask Bill to provide any additional color on that.

[Bill Varner:]

Sure. Thanks, Kevin. And Bill, thank you for your question. 2014 really was a year where we submitted more proposals I believe than at least I have ever seen in my career. And most of those in my case of course were in the cyber and intelligence community. We do believe all of those proposals that are supposed to be awarded in 2015 will get awarded in 2015 and this will lead to some very nice, very exciting, very large opportunities for us.

[Bill Loomis:]

Okay. And then Bill just staying with your group on intelligence side, what are you seeing right now with your customers on the intelligence side. It looks like federal request for ‘16 was better than we’ve seen in several years. What are you seeing in terms of proposal activity not necessarily specific cyber but just generally on the intelligence side. Do you think that agency is bottomed this year on funding and given the transitions they’ve gone through?

[Bill Varner:]

Bill, that’s hard to tell and I -- a lot of people believe that I honestly have to say I have not asked any particular customers about that. So I am -- I really can’t answer that, but I -- what I can say is that I just mentioned that we had a huge proposal volume in 2014. Nothing has slowed down in 2015 so far. So we are still writing just as many proposals at the same rate as we wrote them in 2014.

[Bill Loomis:]

Okay. Great. Thank you.

[George Pedersen:]

You are welcome.

[Operator:]

[Operator Instructions] Our next question comes from Tobey Sommer with SunTrust Robinson Humphrey. Your line is now open.

[Unidentified Analyst:]

Hi. This is actually Michael [indiscernible] for Tobey. Most of my questions have been addressed but I am just wondering if you could provide any color on quarterly sales and EPS progression, anything you’d like to highlight in 2015 as we work through our models?

[George Pedersen:]

Sure. So I’ll give you -- broadly Q1 tends to be little bit harder on the bottom line based on the combination of number of mandates that are billable as well as the front loaded benefits cost and holidays as consistent with last year in terms of how it kind of drives down and then comes back up. So for modeling I would say Q1 on the bottom line maybe a little bit more different than that. And then we’ll start bringing back up forwards at or above operating margin that we are guiding to. It’s just to expand as it has this last year based on our growth and focus on improvements in contract awards frankly. We expect G&A to be, for the year, somewhere around 9% and our gross profit to be somewhere around 14.6% and that should give you a good guide to be referring your model.

[Unidentified Analyst:]

Excellent. Thank you.

[Operator:]

Our next question comes from Robert Spingarn with Credit Suisse. Your line is now open.

[Robert Spingarn:]

Good afternoon everybody. Just probably to go back, Kevin, to what you were talking about earlier in the Q&A and just nail down the organic growth expectation for ‘15 just based on truing up the acquisitions. And so I think it’s you are guiding down about 3% at the headline level. But what underlies that?

[Kevin Phillips:]

Yeah. It’s less than 5% organic growth that we have year-over-year. Is that helpful?

[Robert Spingarn:]

Negative 5?

[Kevin Phillips:]

Negative 5.

[Robert Spingarn:]

Negative. Okay, yes. That is that is helpful. And then a high-level question for George as a follow-on to that. George, when do you think we bottom here organically. When is the turning point, you talked about the budgets. I know there's a fair amount of uncertainty still. We don't yet have a sequester deal out there. But how do you think about that? Is that going to happen in one of the ‘15 quarters or is it sometime in ‘16?

[George Pedersen:]

I don't think you can identify precise actions that will happen or the exact timing. But I think it's important that the Congress in the White House appear to be trying to find a way to work together. They don't agree with one another, but they seem to be willing to work together.

[Kevin Phillips:]

I’d say its first half of ‘15. We are near that inflection point from a revenue standpoint that I think it's very close because the OCR overhang is gone lot of proposal activity. We are seeing uptick in those areas from a staffing standpoint. So I think that we are near that.

[George Pedersen:]

The other thing that is crucial here, as you know there’s been a lot of focus on the acquisition workforce in the department. And we are hearing words that they are seriously going to address those issues.

[Robert Spingarn:]

Okay. And then just, Kevin, adding on what you just said a minute ago, I think, you said there are $75 million in OCO related revenues in ’15 down from about $250, I get those number right?

[Kevin Phillips:]

Down from $214.

[Robert Spingarn:]

I am sorry, okay. Is the $75 a maintenance level or could we actually see that is -- you thinking about that eventually just going to zero?

[Dan Keefe:]

Yeah. This is Dan. No. I don’t see it eventually going to zero, as Kevin mentioned, we do have some corner space work in there. But it’s really dependent on what the nation does in Afghanistan, it certainly has the potential to go down, but I think we are close to a steady state but not there yet.

[Robert Spingarn:]

You are close. Okay. And then last question just for anybody on how completive things are getting, a lot of people have started focusing on specific businesses, healthcare being one, you are there? How should we think about margin trends going forward which of your businesses would you say has become the most price competitive or price sensitive?

[George Pedersen:]

Kevin I’ll provide some comment then let both Dan and Bill, because it’s very customer specific and very competency specific in my view. Obviously the Army work has trended down, I think, it’s still very competitive, I think, some of the traditional DoD work is staying competitive, stabilizing. But in much of the Intel space as well as some other spaces, there’s kind of a pushback on an LPTA concept as if its impact and I think it’ll be interesting to see how it plays out in procurements over the next six months to nine months. Dan, do you want to add anything?

[Dan Keefe:]

No. I think you hit it there, Kevin. I mean, I look at on my major markets of the Army and the Navy and certainly, we’ve seen the LPTA cost plus 60 contracts that certainly pressure margins. And then in some of other areas like civil, health and mine, I will let Bill comment on his markets that pressure is less. So it’s clearly some market segments that provide advantage from the margin improvement standpoint.

[Bill Varner:]

Yeah. This is Bill. And I can certainly concur with what Dan says. In my business area and the intelligence community and in the cyber area, we’re seeing -- I would have to say, we’re seeing very little LPTA type of activity. And I think we’re seeing a fewer protest in many cases maybe than we see in the general defense business.

[Robert Spingarn:]

Okay.

[Dan Keefe:]

And I’ll add to that for 2014, it’s not related to the environment but to our positioning. We spend a fair amount of time increasing talent, as well as improving our ability to go after bid. And I think, it’s going to play out over the next 12 to 18 months in terms of our positioning and just winning business and growing.

[Robert Spingarn:]

Okay. Thank you all.

[Stuart Davis:]

Rob, this is Stuart. I want to put a bow around some of that Kevin said and George said to make sure you, we’re all clear as the models are being built. We are expecting to get sequential revenue growth early in the year and but we’ll probably -- we expect to turn to organic year-over-year revenue growth in the back half of the year.

[Robert Spingarn:]

Back half of the year. Yeah. Okay. Stuart, thank you. Thank you all.

[Operator:]

Our next question comes from Steven Cahall with RBC Capital Markets. Your line is open.

[Steven Cahall:]

Yeah. Thank you. I was wondering if you could maybe talk a little bit about the cyber portfolio. So maybe the -- a couple of questions in there, first is, can you give us a sense of either on a percentage basis or a dollar basis, how much of the portfolio you would consider in that cyber and intelligence space for 2014 and/or 2015?

[George Pedersen:]

Yeah. Kevin, if you would take a current as a rough percentage, I’ll be happy to talk about the details just a little bit.

[Kevin Phillips:]

Okay. So, less than half of our business is in the intelligence and the cyber business. Again, we’re not going to provide a specific component of cyber but it is substantial piece of Bill’s business. It is one of the very important areas based on the fact that it’s pure cyber work and it supports very complex missions. But generally, our Bill’s business is less than half of the overall business that we have. Hey, Bill, any specifics on the program?

[Bill Varner:]

Sure. And just to give a little color to that. Many of the programs that we support especially, for some of the government intelligence agencies are what we would call flagship cyber development programs. They require very special people and we’re fortunate to have many of those very special people and the work is very, very complex and very important. And even though we can’t talk too much about it, you see everyday in the paper the results of some of the things that our people are doing.

[Steven Cahall:]

Okay. And then I think you’ve talked in the last couple of quarters about some large bids within this business area that are out there. Can you maybe give us an update on -- are those still awaiting adjudication? Have you had some on some? How’s the win ratio looking? Are there more coming up ahead, et cetera?

[Bill Varner:]

Yeah. I’d be happy to and the simple answer is we are still waiting on award on almost every one of those large programs we talked about. The largest bid, we have outstanding now as a matter of fact, one of the largest programs proposals that ManTech has ever submitted is a large information technology consolidation effort for several intelligence community agencies and we submitted that last fall and we are expecting award sometime in the late spring or early summer. The other one we mentioned, the FBI Blanket Purchase Agreement as I mentioned, we did win that. We’re now waiting for awards on the various task orders. So on many of these programs, which are basically IDIQs and definite quantity and definite delivery. You win a position on the vehicle and then, you have to submit task orders to win the real work. So, we have one multiple positions on vehicles. We’re waiting in almost all cases for task orders to either be released or for task orders that we've already submitted to be awarded.

[Steven Cahall:]

Great. And then maybe just a last one on cash and I apologize if I missed this as I joined a little late. Do we still expect 2015 to be a -- I think we call it a normalized year for cash conversion, maybe around that 140%? Was there any reason to think it will be more like ‘14 or less than that normalized rate?

[Kevin Phillips:]

It will be somewhere in the 150% to 170% conversion rate.

[Steven Cahall:]

Great. Thank you.

[George Pedersen:]

One of the things you have to remember too is we’re sitting today with a good cash balance, so we have a $500 million line of credit with the banks, not used that they are willing to take to a $1 billion. So from the financial point of view, we are really positioned to grow and grow drastically.

[Stuart Davis:]

Amanda, it appears that we have no further questions in the queue at this time. So as usual, members of our senior team will be available after the call for follow-up questions. I want to thank you for your participation on today's call and your interest in ManTech.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today's program. You may all disconnect. Everyone have a great day.