ManTech International Corp (MANT) 2015 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the ManTech fourth-quarter fiscal year 2015 earnings conference call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Judy Bjornaas, Deputy Chief Financial Officer. Please go ahead.

Thank you, Karen, 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 Chief Group Presidents.

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 would like to turn things over to George.

Good afternoon and thank you for participating in today's call. In the fourth quarter, ManTech showed solid operating margin and bookings, as well as consistent top-line growth in 2015. We received $396 million in contract awards in Q4, capping a very strong year of contract awards. This resulted in our highest book-to-bill since 2012. We had a record cash flow as well, collecting $154 million in cash from operations.

In December 2016, omnibus bill was approved. The FY 2016 enacted base budget provides $522 billion for defense, which is up 5% from FY 2015 final budget. Including the OCO requests, the DOD budget is $580 billion. The Congress also approved an increase in the Budget Control Act caps for 2017. Last week, the President released his administrative budget for FY 2017 of $583 billion.

As a result, we are in the strongest budgetary environment we've had in years. Our customers are moving forward with funding activities, our business opportunity pipeline remains healthy, and contract awards are now occurring routinely. We believe that our win rate improvement and the investment that we made in 2014/2015 will continue to drive growth for ManTech as we enter 2016.

We have over $41 million in cash and a $500 million line of credit. We are in a strong position to make more acquisitions to grow the Company.

Now Kevin will provide you with details on our financial performance outlook. Kevin?

Thank you, George. Revenues for the fourth quarter were $402 million, up $9 million or 2% compared to the prior quarter and down from $411 million in the fourth quarter of 2014. Our fourth-quarter revenues were up nearly 9% compared to Q1 of this year, reflecting strong quarterly trends and improving direct labor content.

For the year, revenues were $1.55 billion, down $224 million from fiscal year 2014. The revenue decline from 2014 is mostly explained by reduced requirements supporting C4ISR and MRAP system sustainment.

For the quarter, the percentage of work as a prime contractor and the contract mix were essentially unchanged. We performed 89% of our work in the prime, and our contract mix was 67% cost plus, 13% time on material and 20% fixed price.

Operating income for the quarter was $22.8 million for an operating margin of 5.7% and increased to 30 basis points compared to the third quarter. We benefited from reduced G&A expense and some one-time pickups on contract closeouts in Q4.

Our G&A expense of $34.3 million is down 7% sequentially and 12% year over year, reflecting continued focus on indirect cost efficiency.

For the year, operating income was $84.9 million, which was $9.9 million less than 2014 given the top-line declines, but operating margin improved to 5.5% compared to 5.3% in the full-year 2014.

Net income was $13.9 million for the quarter and $51.1 million for the full year, which led to diluted earnings per share of $0.37 for the quarter and $1.36 for the year. Our positive operating margin improvement will provide solid earnings as we continue our growth trends into 2016.

Now on to the balance sheet and cash flow statement.

During the quarter, we collected $7 million in cash flow from operations and $154 million for the full year or 3 times net income. DSOs were 68 days in the quarter, an improvement of one day from Q3 and a 15-day improvement from the fourth quarter of 2014.

Free cash flow from operations for the year was $148 million, given capital expenditures of approximately $6 million. During the year, we invested $102 million in the acquisitions of Welkin and KCG and distributed $32 million in dividends, which reflects our intent to first and foremost grow the Company through targeted acquisitions while maintaining a steady return of cash dividends to shareholders.

During the year, we also added a $10.4 million investment as we combine ManTech's cyber security software business in the CounterTack while retaining a minority interest position in that firm. At year end, we had $41 million in cash.

The 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 at $0.84 per share in 2016.

For the year, contract awards totaled a strong $2.5 billion, a book to bill ratio of 1.6 times. We continued to see the results of our investments in business development, certifications, and differentiated solutions, which we expect to continue in 2016. Bookings for the quarter were $396 million.

Almost half the awards were for the work, including an award with a Saudi partner to support the Royal Saudi Airports. Expanding into our field sustainment, Q4ISR, and cyber support, the US partner countries is one of the diversification efforts initiated in 2014 and 2015. Other awards for the quarter focused on systems engineering support for DOD customers.

Total backlog for the quarter stood at $4.1 billion, and funded backlog was slightly under $1 billion. We saw a 27% increase in our total backlog when compared to the end of 2014.

Proposal activity remains high. We submitted over $5 billion in bids in 2015 and expect to see the same or greater volume of requirements in 2016. Our total qualified pipeline is $15 billion, and we have about $3 billion awaiting adjudication.

Now to the forward outlook. Before any acquisitions, we're calling for 2016 revenues of $1.575 billion to $1.675 billion, net income of $52.5 million to $55.9 million, and diluted earnings per share of $1.38 to $1.47, all up from 2015. Approximately 80% of the guidance is expected to come from current backlog. We have a clear path to this growth spurred by our recent awards.

First-quarter revenues were projected to be below fourth-quarter 2015 revenues due to fewer billable work days and the impact of heavy snow in the DC region in January. It will then build through the year, which is expected to lead to organic year-over-year growth. The applied operating margin guidance for the year is [5.6%], reflecting improved G&A expenditure levels against a growing revenue and direct cost base.

Net income and earnings per share are both expected to be up 2% to 8% from last year, benefiting from revenue growth and margin expansion. Cash flow from operations should be between 1.7 and 2 times net income.

Built into our guidance are an effective tax rate of 40% and a fully diluted share count of 38 million shares.

Overall we are pleased with the improved market visibility and prioritization of needs within our customer requirements. Now Dan will speak to our defense and federal civilian business. Dan?

Good afternoon. As Kevin mentioned, we at ManTech Mission Solutions and Services are pleased to have ended 2015 with a strong book-to-bill. Notably, this included significant new work, as well as holding our base in re-competes.

Over the last two years, we took direct action to significantly upgrade our business development talent and processes for improved sales across our markets. MSS continued to increase investment in business development talent and consequently saw the fruits of those investments in our 2015 results.

In 2015, we focus on improving our quality of solutioning for our customers in order to move to higher end services. This was exemplified in our army business in which we successfully competed in the CECOM Software Engineering Center with two key awards amounting to $65 million.

Due to the continued delays in awards combined with the reduced term of some contract awards over the last few years, we expect 2016 to be a heavy year of re-competes in both our Navy and Army businesses.

That said, we are pleased with our enhanced focus on business development, our improving win rates, and knowledge of customer needs as we enter 2016.

In our health IT business, we continued to build momentum exemplified by a strong book to bill with awards in Veterans Affairs, the Defense Health Agency, and the Department of Health and Human Services.

We're also a key teammate on the recently awarded Defense Healthcare Management System Monetization or DHMSM 10-year, $4 billion contract supporting health IT in the Department of Defense.

Our overseas US government work achieved greater than expected revenue due to the administration's decision to maintain current forest levels through 2016 in Afghanistan. Consequently, we expect in 2016 our overseas US government work to sustain our 2015 level.

Beginning in late 2014, ManTech invested in expanding our business overseas with a focus on service contracts directly from foreign governments. ManTech has consistently shown the ability to operate worldwide, bringing talent and solutions to our customers. This investment resulted in our first major award in December of 2015 with an award of $175 million five-year contract supporting the Royal Saudi Air Force. With a strong pipeline, well-positioned on key IDIQs in our market space, and a continuing improving sales and line management team, I look forward to continuing this success in 2016.

Bill?

Thanks, Dan. The Mission, Cyber & Intelligent Solutions Group is positioned well within a robust market with significant opportunities in cyber, full-spectrum security, and IT consolidation. Cyber security is a key component of the President's FY 2017 budget request.

Outside of the DOD budget, the White House announced a new Cybersecurity National Action Plan, which will include a $19 billion request to improve the government's information security, which is a 35% increase from the FY 2016 request. The plan includes appointing a US Chief Information Security Officer within the Office of Management and Budget to better protect US government networks. Many of the items specifically called out in these budgets are right in NCIS's strongest capability areas. For example, IT modernizations and continuous monitoring.

We continued our trend of both re-compete and new business win rate improvement. We also continued our expansive efforts at competing and winning new businesses within the intelligence community and are pleased to have been awarded contracts in 2015 resulting in a book-to-bill of over 2 times for our group.

Entering 2016, we have less re-compete risks than in 2015 at the lower end of routine re-compete levels. We have over $1.4 billion in proposals outstanding and are engaged in a continued heavy level of proposal requirements for bids of all sizes.

As we are winning more work, we have increased our focus on our ability to attract and retain the strong talent needed to support our customer missions. We anticipate 2016 to be a year of continued strong demand for our services.

We're also very pleased with the added market positioning and capabilities we received from our acquisitions of KCG and Welkin, which enhance our positions in cyber defense in the Department of Homeland Security and systems engineering in the intelligence community respectively. They are both helping us to position for new work and ensure a long-term presence in some key client areas.

On the cost side of the house, our investments and business process improvement efforts are showing success. We're well-positioned for strong organic growth headed into 2016 and will continue our focused M&A effort. George?

In summary, our market is stable and showing positive growth over the next year. We look forward to leveraging our strong balance sheet to accelerate our growth.

With that, we are ready to take your questions.

(Operator Instructions) Tobey Sommer, SunTrust.

Hi, this is Kwan Kim on for Tobey. Thanks for taking my question. First off, could you talk about the M&A pipeline? Give us some color on what you're seeing and any comments on industry consolidation and adding scale? Thank you.

Yes, so the pipeline is -- I would say robust, but it has some gaps in it. There are some very large opportunities, and there are some smaller ones. The midsize ones are a little bit tempered, I guess, in terms of the volume, but there are some pretty decent properties out there that we are focused on. And on the consolidations, I will speak -- and if George wants to add, he is welcome to -- that I think it's a unique time in the industry for many companies to look at combinations. For us, though, our view is that combinations have to be one plus one equals three. They have to be a force multiplier, and they have to get us better presence in what we consider growth budget areas.

So we have a little bit different view on that. But that said, the potential for opportunities out there is there, and we still have a strong view that acquisitions are important to us.

Okay. And could you talk about growth and pricing on the cyber side? What you're seeing there? Any comments?

Well, in our 2016 view, I'll just speak to the growth. We are expecting the larger percentage of our organic growth to come from the intelligence and cyber arena based on the awards, and I'll hand it over to Bill to speak to that.

Yes, thank you. This is Bill Varner. What we're seeing actually is something that we have not seen in the last couple of years, and that's the ability to add cyber security to almost every one of our programs and I think I can say safely for both groups.

Cyber is a big deal. It's far beyond just information technology support, and we are seeing the -- every single customer is interested in cyber security, and we are in an ideal position to supply that to them.

Okay. Thank you for the color.

Brian Kintslinger, The Maxim Group.

I'm curious, the December revenue was at the low-end of your guidance range. Is that a function of projects that are slow to ramp, that have already been awarded, or are you seeing new pressures that are offsetting the new programs that you restarted?

It's not new pressures. There's definitely a slower ramp-up in the labor requirements for these programs. I think it's in part because customers were working to utilize funds they may have already obligated but also just the transitional planning. We did have some one-time OTC purchases that were expected that did not occur as well, but the majority of that is the ramp-up timing for some of the new work.

And then as I look at the 2016 guidance, the low end is a lower average than your fourth quarter for the run rate of each of the next four quarters. Is there anything outside of the first quarter that we should think about that's falling off or going away after you posted several quarters of sequential revenue growth? Just trying to understand the low end and what it would take to achieve that.

Okay. So we do expect year-over-year growth in our business, and we have strong contracts, award performance and a strong pipeline. The one factor in here we're trying to temper is a heavy re-compete year in the DOD side and how much of that work will be sustained or not. We are very confident in our position, but we want to factor in the fact that it's a heavy re-compete year end, and usually in the DOD side, they could reduce some of the requirements as they go through the process or some components could go small business, and we're trying to factor that in on the lower end.

I guess, as a follow-up, can you highlight at the low-end of revenue guidance how much I think you said was in backlog, but then also how much comes from re-competes and then from new revenue?

Yes, so at the midpoint -- and I will start at the midpoint -- at the $1.625 billion, depending on how well we do on our re-compete win rate, we would expect about 5% to 10% business from new business from that midpoint number.

And then 85%, that's what you were talking about for the existing backlog, is that right?

The existing backlog run rate is about $1.3 billion.

Yes. And then last question and I'll get back into queue, how should we think about pricing pressures? Is it impacting this year, or will it have more of an impact next year for the Army and the Navy that you've discussed?

Dan, do you want to answer that?

Yes, if you talking about in terms of what we're saying on the trend of LCTA, certainly seeing some of our customers especially in some of the higher end solutioning work that those are best value. I wouldn't say that we've turned the corner completely on LCTA, and it certainly is a pressure off their own pricing in the Department of Defense.

But we should see some impact this year. If you win them all, you would have some impact of lower pricing for 2016? Is that accurate or is that not accurate?

It depends on the procurement that we're going after. In some, there is still a supply and demand gap in the labor. In others, it's not. So I would say it's hit and miss, but there are some programs that are up for re-compete that we would continue to see pressures.

Great. Thanks. I'll get back into queue.

Gautam Khanna, Cowen and Company.

To follow up on that last question, what is the organic growth implied at the midpoint of the range? What are you assuming incrementally from the acquisitions year to year?

So the organic growth from the full range is slightly flat to 6%. The midpoint is between 3% and 4% organic.

Okay. And what is the -- can you quantify the headwind from OCO-related work?

We don't expect a headwind OCO. It is about the same amount that we will have incurred in 2015.

Flat year to year, okay. And George had made a comment, I think, at the beginning -- in the prepared remarks about contract awards happening maybe with more regularity. Could you characterize what you've seen thus far in the first month and a half of the quarter? Could we see an acceleration of bookings?

I think the month and a half isn't going to be directional. I would say that -- and then I can let Dan and Bill comment. But within the intelligence community over the last nine months, we've seen a more routine timeline, less delays, and the time to award has actually improved -- slightly but it's improved. On the DOD side, it's still hit and miss in terms of the timeline, but we are seeing more certainty around what the customers want to procure and the process around that. So we're trying to pack that in as well.

Dan, do you have anything specific in your area that you would like to add to that?

I would just echo -- the customers in DOD certainly have more certainty now that we have the Budget Control Act. These have been dealt with for 2016 going into 2017, and I would echo the first month and a half of the year, especially if there's no storms in that, it wouldn't be an indicator.

This is the most stable environment we've seen in some period of time. The organizations know how much funding there is. There's an agreement between the White House and the Congress on the amount of funding and how it will be allocated. The relationship there between the Congress and the White House is providing, I will call it, stability to our customers and knowing how much funding they have, when it will come, and what they have to do. It's the best environment we've seen a lot of years.

And perhaps, George, you could answer this one as well. With the balance sheet in the position it's in, which is very strong, and the cash generation being what it is, do you anticipate this is a year where we will see a larger, more transformative acquisition, or do you think it's going to be more of the Welkin type deals? Smaller tuck-ins?

I can't talk to the size. I will tell you that we've had a policy of we will not buy sales. If we look at an acquisition candidate, it has to bring new technology, new customers, new people, and it has to be accretive. We're not simply out there to raise the sales numbers. There's got to be these additional factors that are considered, particularly that they bring us new customers, new technology.

Do you see a pipeline of opportunities that meets that criteria that would be larger?

We see -- I would say this year it has been fewer acquisition candidates that have gotten to the -- I will call it the acceptable phase to us, but we think that's likely to change because there are companies out there that we know from talking to those in the market are considering selling their companies.

Okay. And last one, Kevin, just a clarification. The comment about the revenue guidance and 80% of it being in backlog, can you quantify for us how much is go get? Meaning you've got to go out and win some new business to actually hit the midpoint of the range.

Yes, again, based on the percentage of re-competes that actually occur in our win rate, that would be between 5% and 10%.

Okay. Thanks a lot, guys.

Amit Singh, Jefferies.

Hi, guys. Thank you for taking my question. Just quickly on guidance -- and I'm sorry for beating a dead horse -- the range, of course, is pretty wide. If I look at revenue growth range, it is 1.6% to 8.1%. And you talked about organic growth being 0% to 6%, so a midpoint around 3%-ish.

I think last quarter, you had provided a brief -- a general outlook that you are expecting organic growth around mid-single digits. So I guess here, it's a little lower than that. So if you could talk about what is the reason for that.

And second, I'm trying to understand more what is in the lower end of the guidance, I guess, if the ramp-up delays continue or your re-compete win rate and the new business win rate remains the same as last year, is that the lower end of the guidance, or if all that remains the same, that's in the middle part of the guidance?

Yes, that's great question, so hopefully I will answer it appropriately and well. So the strong contract awards we've had support decent organic growth, 3% to 6%, and our pipeline supports a 3% to 6% number.

The view of the operation is that, but we have to recognize that it is a little bit harder to find the high talent for some of the work we are winning, it's going to take a little bit longer, and we do also have to factor in within the DOD, there are re-competes, the factoring around LPGA is lessened, but it's still a highly competitive market. And we just want to reflect that in the range of potential outcomes, but we do have a good confidence factor that we can hit that midpoint of that range. So we're trying to range around that number to reflect some of the uncertainties in the market.

All right. Great.

If you look at the delays in ramp-ups that we had in the awards for Q2 and Q3 of last year, that's one of the factors. It's going to get there, but it may take a little bit longer than we expected.

Okay. Great. And just a quick follow-up on that, so what is the risk -- what could risk the lower end of revenue guidance?

And then the second thing related to -- which you spoke about -- what are the investments that you need to make to put people -- I know you talked about talent, but what other investments are required to now start capitalizing on bookings that you've had?

So the investments for us this year, as you know, the last couple of years have been very focused on business development, improving our solutioning. We are very focused right now on the recruiting and retention side of things so that we can increase the amount of work force that we had to support the programs. And again, on the lower end, is -- there could be small business, set aside risk, as that trend is still out there. I think it's lessening a little bit, but it's still out there. There could be bundling of programs. There just could be a higher effort by some to win. Some work that's in a very highly competitive area and we just want to factor that in on the lower end. But we do believe we are in a good position, and we've really focused in the last few years to improve our win rate and to improve where we are from an award standpoint.

All right. Thank you very much.

Bill Loomis, Stifel.

Can you just in the re-competes, what the revenue run rate of what's being re-competed? I know some will happen late in the year. It's not -- it's different from the -- what the contribution to the year will be. But just kind of wanted a rough idea of what the run rate revenues are going to be re-competed in 2016.

Yes, about 20% of our revenues are going to be in a re-compete mode -- the full-year revenues, and that's going to be ratable throughout the year. It's not going to be frontloaded or backloaded. The DOD side of it is a little bit backloaded in the second half, but it is more heavily weighted in terms of the potential amount of business that could be up for competition. And I would note -- and I have said this in other calls that the government's efforts over the last few years to reduce the amount of the term of contracts from maybe four or five years down to one to three has definitely put that part of the industry in a bind in terms of how quickly they can procure, but everything on paper is up for re-compete in a fairly short period of time based on that. And we hope that trend changes as they get to a more normalized procurement pattern.

Okay. And then what was the organic growth for the fourth quarter and then the full year of 2015?

Hang on. Organic growth for fourth quarter was down 6%, and for all of 2015, it was 16% now.

Okay. And then on the Saudi works, is the nature of that work different? Is it fixed price? Is it -- would you characterize it as higher, lower margin, higher, lower risk? What was -- how do you characterize that versus, say, an Air Force contract of a similar type?

Dan, would you like to answer that?

Yes, the Saudi work, it's directly with the Saudi government. As it's our first entry in the market, the margins are in the mid-single-digit range. So we took that approach to get into the market, and then -- and what was the last part of your question?

Just the nature of it. For example, was it fixed price with higher risk deliveries, or is it -- what would be the nature of the risk level versus a typical Air Force support contract?

It is fixed price, but it's a fairly steady workforce. It's work we've done. We've operated overseas a lot. We're very good at positioning people there, so I would tell you, although it is a firm fixed price contract, the risk is moderate.

Okay. Great. And then OCO work, what was the OCO overseas work for both the fourth quarter and for 2015 overall?

For fourth quarter, it was $28 million. It's $112 million for full-year 2015.

Okay. And then one final one. Kevin, you mentioned there is some benefit on some fees -- contract adjustments or fees. What does that amount to in the quarter? Was that unusually high, or was it typical?

Well, it's not -- it's a little bit above average, but I do think that the reason we are at a 5.6% margin expectation for 2016 is to build that in and down from the 5.7% return we got. But we are pleased with that return, and there is nothing highly unusual out of that, but it is a little bit more weighted in the quarter than we would have expected.

And the fourth quarter was higher than you expected?

Yes, just a little bit. That's what we had a 5.6% for the full-year 2016 as our estimate versus 5.7%.

Okay. Great. Thank you.

Edward Caso, Wells Fargo.

Hi. Good evening. It's Rick Eskelsen on for Ed. A question just first on enterprise IT. That's an area we've heard good things about demand wise. Just wondering if you could talk about the trends you are seeing for IT work with the government and your positioning to win that work moving forward?

Yes, this is Bill. You are correct that there is a lot of interest in IT enterprise work, particularly in what we would call IT consolidation. Many agencies consider that to be a major source of cost savings over the next few years for themselves and for their agencies. So we have done some strategic hiring over the last couple of years to make sure we are ready for IT modernization and indeed we are. We are bidding jobs -- I don't want to say all the time but frequently -- that call for IT modernization, IT consolidation, and we think we're in a great position to be able to help the government with those upcoming activities.

Thank you. Then just shifting over to the contract type, I know it's been pretty steady in terms of the mix of fixed price, T&M and cost plus. Is there any changes or meaningful changes to that in the work that you are bidding or expect to bid in 2016? Maybe just taking it up higher level, what are you seeing from your clients? Any shift in terms of the contract mix that they prefer?

It's Kevin. Generally, the contract mix is remaining stable. If we start expanding in some customer sets that have higher proportion of fixed price or T&M, then that will increase, and that's why I think you've seen some increase over time on the federal civilian side.

That said, there are more because of our focus on positions around solutions, there's potential for more fixed price type bids that we would go after, and if we're successful, which would be new to us, the net portion as we grow our top line may increase.

Thank you. Just last question, a numbers question. What was the Q4 diluted share count? Thank you.

[37.7].

Thank you.

Brian Ruttenbur, BB&T.

Yes, thank you very much. A lot of the questions have been asked, but on the quarterly breakdown, it appears that what you stated in first-quarter 2016 versus first-quarter 2015, we could see some weakness because of snow and weather. Is that correct? We may have a negative comparison in that first quarter.

I don't think it will be as low as the first-quarter 2015, but compared to the fourth-quarter 2015, it will be slightly down because of fewer mandates that are available in the first quarter and the impact of the snow.

Okay. Is there any other seasonality that you anticipate this year that is different than 2015?

No.

Great. Thank you very much.

Brian Kinstlinger, The Maxim Group.

Great. Thank you. I have a few. The first one is based off that question. First quarter, which is your easiest comparison, is going you think year over year up. If the rest of the quarters are going to be better, why would we assume potentially 0% organic growth? Is that just heavy pricing pressure in the second half of the year? I'm just still confused on how you get to that 0% potentially. What can happen?

There are some contracts that the win rate on the DOD side we may not be successful at winning. There are some that make up small business. We have one contract that we know when it comes up re-compete, it's not large, but it will go to small business. And there are also some procurement efforts in the C4ISR area that when they come out, they have reduced requirements. So we're trying to build those in on the lower end just reflect those factors as potential to get to that range.

Don't get me wrong. I like you guys to be conservative after a couple of years, there's no doubt about it.

I'm not used to answering any questions.

You are not used to your being too conservative, right? If we look at the industry re-compete win rates, they've changed over the last five years. Can you kind of take a stab at what you think they are today and if you are tracking above or below those?

So I had -- we had, I guess a year ago, statistical information. I can't remember what firm it was -- it could've been TSD or someone like that -- about the win rates. And the win rates I think in that report were somewhere in the 65% to 70%, and I would certainly say that we are trending above that. And the focus on the investments that we've made over the last two years in BD has certainly helped us with win rates in both new and re-compete work.

So I don't know how we compare to our peers on that, but I do think that we are focused on it in a way that we are getting comfortable that we are in a good position to compete.

Are you willing to share with us how much higher than maybe that 65% to 70% you are?

No, no. I would rather do that in the top-line growth, and you can --

Yes. And then I'm curious if there's any meaningful programs that you've been awarded in the last six months that are in protest?

No, not that I know of.

Great. Last one is, as you start growing, obviously your receivables will likely start to grow. Can you give us what is a more likely cash conversion ratio for your net income?

We are expecting 1.7 to 2 times. If you look at the D&A that's built into our -- the midpoint of our 2016 guidance, the $31 million plus the FAS -- the stock-option in stock expense, about 1.7 to 2 times.

We are expecting DSOs to stay in that upper 60s to lower mid-70s range --

Okay. Thanks so much, guys.

The other thing, they are taking a very conservative look at that. Please remember the cash we have in the bank today is only $30 million to $40 million cash in the bank, but more importantly, we have a $500 million line of credit with Bank of America. We have the ability to grow and do whatever we have to do.

Great. Thank you.

Thank you. And that concludes our question-and-answer session for today. I would like to turn the conference back over to ManTech for any additional comments.

No, I think as usual, members of our senior team will be available for follow-up questions. Thank you all for your participation in today's call and your interest in ManTech.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now log off and disconnect. Everyone have a good evening.