SAIC CEO discusses biggest drivers for enterprise solutions

Defense contractor SAIC (SAIC) has landed its first contract with the Pentagon, collaborating with GomSpace on the development of an AI-powered small satellite. On the company's investor day, SAIC CEO Toni Townes-Whitley joins the Morning Brief to talk about the company's future, especially as it integrates AI into its solutions.

"You will see us really pivot towards mission IT and enterprise IT, bringing services and solutions in that space. You will see us embedding more software in some of our more traditional offerings around engineering. And, quite frankly, you're going to see a commitment, and investors will hear today about a commitment to five national imperatives," Townes-Whitley tells Yahoo Finance.

She goes on to list what exactly these "five national imperatives" will address: "We're going to take a long-term commitment to drive imperatives that affect not only our customers, but this country. Those are around areas like multi-domain warfighting, those are around the border of the future, citizen services, next-generation space... and then we're going to talk about under-sea dominance..."

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This post was written by Luke Carberry Mogan.

Video Transcript

- Well, many analysts are seeing defense as potential sector for growth as tensions continue to rise overseas. While one company that could stand to benefit potentially is SAIC. The US Defense contractor just reached a deal with the Pentagon to integrate an AI-powered small satellite in its ongoing partnership with spacecraft manufacturer GomSpace. Now, SAIC is looking to strengthen its position in the small satellite market. For more on what this means here for the company and its role and the role that AI could play in future technology in their business is SAIC's CEO Toni Townes-Whitley.

Toni, it's great to have you here this morning. Thanks so much for taking the time to join us. I know you have a very busy day. Your investor day is about to get underway momentarily. So let's start there. What is your message to shareholders today?

TONI TOWNES-WHITLEY: So the shareholders are going to hear a message about an enterprise growth strategy, a multi-year sort of two-horizon strategy we've created over the last six months since I stepped in as CEO, with basically four pivots around our portfolio, how we go to market, some of our culture and our brand. And all of that's to accrue to a much more accelerated top line growth pattern that's going to drive, obviously, to our EBITDA growth. And we're going to continue our practice of converting to cash. We actually lead the market in that area.

And so the idea here is how we're growing the company through top line. And that's going to increase over the next few years.

- AI has been the hot topic, Toni, of the last 12 months-plus at this juncture. How do you see that unveiling and really unlocking the next leg of growth for SAIC?

TONI TOWNES-WHITLEY: Look, we've got a few things we have to get right. First in the area of the differentiation of our portfolio. We believe we've locked in, we have a new chief innovation officer coming out of the Air Force, former CIO of the Air Force, who is a former customer as well. But we have identified four fundamental differentiators around secure data, around a secure multi-cloud capability, around operational AI and digital engineering. And how we bring those to market in a systematic way is one aspect that's going to drive our growth going forward.

Second, quite frankly, we have got to get our business development processes upgraded. There's just some internal operational execution that has to be improved in how we go to market in a more consistent basis. So you'll hear about an enterprise operating model that we've established.

And finally, quite frankly, we're making investments, not only in our portfolio, in upskilling our talent across the organization. And fundamentally, looking up and out into the market where convergence is occurring from national security into the civilian and to the civilian market. What you announced at the beginning of this show, of this segment, is the kind of thing that we do as a mission integrator, the ability to integrate, evolving technology real-time, secure, and mission critical operations. That's our differentiator. That's our value proposition. And we've got to, quite frankly, substantiate it over the next three years.

- So, Toni, then it sounds like we should expect more of those types of deals going forward for SAIC, as you're looking to turn around the business and really what makes sense in terms of that future strategy of the company under your leadership.

TONI TOWNES-WHITLEY: You will see us really pivot towards mission IT and enterprise IT, bringing services and solutions into that space. You will see us embedding more software in some of our more traditional offerings around engineering. And quite frankly, you're going to see a commitment and the investors will hear today about a commitment to five national imperatives.

As a company, we're going to take a long-term commitment to drive imperatives that affect not only our customers, but this country. And those are around areas like multi-domain warfighting. Those are around the border of the future, citizen services, next generation space, which is consistent with the message we just spoke about. And then we're going to talk about undersea dominance, which is the support of our undersea efforts in the Navy.

We're committing to imperatives. We're going to invest, create solutions, drive thought leadership in those areas. And we'll be positioning again for the long-term.

- Toni, I'm curious. Walk me through how you're navigating a volatile environment when it comes to increased geopolitical risk. What that could potentially mean for your business. And then also take into account even what's happening here with the budget-- with the budget environment, which also remains unpredictable ahead of the election in November. How do you navigate what is a very uncertain time, it seems like, ahead for the next several months?

TONI TOWNES-WHITLEY: Well, listen, if you-- as you understand about the defense spending, that market, as the threat continues to increase the outlay environment, we obviously correlate to how we can grow in different aspects of that. But fundamentally, the challenge is the challenge our customers face, which is the budget instability. That volatility puts a significant dampening effect on their ability to look forward, understand the threat, and position for that threat, particularly with technology.

Now, to be fair, we got a budget in March that helped to solidify the situation. But as you know, in a continuing resolution environment, that really, with inflation, represents a cut for federal agencies, even though there's a CR in place. So we're hoping that starts to flatten out over time. SAIC's work and our demand signal continues to remain strong, somewhat independent of all of that volatility. There's enough going on within national security and across the civilian government that we feel fairly confident that we can drive an organic growth rate and accelerate that over the next few years.

- Toni Townes-Whitley, we really appreciate you taking the time. Best of luck today on the investor day. CEO of SAIC. Thanks so much.

TONI TOWNES-WHITLEY: Thank you.