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Science Applications International Corp (SAIC 0.30%)
Q3Â 2021 Earnings Call
Dec 3, 2020, 5:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good afternoon, and welcome to SAIC's Third Quarter 2021 Earnings Call.
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.
Shane Canestra -- Vice President of Investor Relations
Good afternoon, and thank you for joining SAIC's third quarter fiscal year 2021 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.
Today, we will discuss our results for the quarter ended October 30, 2020. This afternoon, we issued our earnings release, which can be found at investors.saic.com, where you'll 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, could 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.
Nazzic Keene -- Chief Executive Officer
Thank you, Shane, and good afternoon. As reported in our press release today, SAIC's third quarter results continue to reflect SAIC's strong financial performance and the continued building of momentum through our second straight quarter of highest book-to-bill and backlog in our seven-year history.
Over the past few months, we have focused on the health and welfare of our employees, assisting our customers as they rapidly transition to a more virtual environment and continuing the strong program execution that SAIC is known for. As these efforts continue, we've also taken strategic, organizational and leadership steps that are foundational to the long-term success of SAIC. We are building on our past while positioning for the future. I am very pleased with the progress we've made. But before I discuss how we're shaping our future, let me briefly discuss our third quarter results.
SAIC continues to deliver strong revenues and profitability, excellent cash flow generation and outstanding business development results. Internal revenue growth for the third quarter, excluding the impact of COVID-19 was 3%, our third consecutive quarter of organic growth. And on a year-to-date basis, again if you exclude the temporary impacts of the pandemic, organic growth was 4%. While balancing investments for the future and providing a return for our shareholders, we delivered another strong quarter of profitability and cash generation. Our record high book-to-bill ratio and backlog was a result of the refreshed organic strategy, coupled with our ability to leverage the capabilities and market access from our recent acquisitions.
As we navigate the dynamics of both the recent presidential election and the impacts of the coronavirus pandemic, we continue to serve a market that while not immune to change in pressures has proven over time to be very resilient. Our customers' need for technology solutions and digital transformation is growing and we continue to win and deliver on large and attractive business opportunities. SAIC's portfolio of offerings are strategically aligned with the enduring requirements of our government.
Digital transformation is a critical component of our nation's security, efficient operations and the ability of government to provide better services for the advancement of our collective interest. It will continue to be a priority and focus of the solutions that we provide for our customers. The demand by our customers for digital transformation was a core strategic rationale for our acquisition of Unisys Federal. Speaking of Unisys Federal, I should note that the integration continues to go very well and I'm excited about the opportunities ahead resulting from this very successful acquisition. At the beginning of our next fiscal year in February, we will complete one of the last integration milestones: the conversion of the accounting system. We have an experienced and talented team working on this transition, having recently completed the successful conversion of Engility system.
Government fiscal year 2021 continues to operate under a continuing resolution and we expect that it will be extended past its current expiration of December 11. It is a continuation of customer budget levels from last fiscal year, which were robust and provided for investments by our customers. Should there be substantial change to government spending, SAIC is well positioned to meet a wide array of government priorities.
I mentioned earlier that we're building on our legacy while positioning for our future. In that regard, we recently announced several key personnel and organizational changes designed to assure our long-term success. In September, we announced Jim Scanlon's decision to retire after 30 years of service to SAIC. Jim recently led the company's Defense Systems Group and was instrumental in shaping SAIC's legacy. He will be missed. With Jim's retirement, however, we took the opportunity to reevaluate our organizational structure to more closely align it to our strategy and growth priorities. Effective at the beginning of our fourth quarter, SAIC is transitioning to two operating sectors; Defense and Civilian, led by Sector President Bob Genter; and National Security and Space, led by Sector President Michael LaRouche. Additionally, we are realigning our horizontal, market-driven organization, led by Dee Dee Helfenstein, to align with our customers' most pressing current and future needs, including digital transformation, IT modernization, digital engineering and artificial intelligence. This streamlined organization will better enable our strategic imperative of driving profitable organic growth as we focus on effectively selling and efficiently delivering digital transformation solutions to the US government. Our nation is facing evolving and more complex national security space, defense, and civilian needs, and SAIC is now exceptionally well positioned to support these critical missions.
Charlie, if you would now please discuss our third quarter results and financial outlook for the rest of the year.
Charlie Mathis -- Executive Vice President and Chief Financial Officer
Thank you, Nazzic. SAIC delivered another quarter of strong performance across a variety of business development and financial measures while continuing to build momentum for the next fiscal year and beyond. SAIC's results for the third quarter of fiscal year 2021 reflects solid revenues, strong profitability, and free cash flow and another outstanding quarter of contract awards, resulting from effective strategy execution and investments in customer priority areas.
Let me start with our strong business development results. Net bookings for the third quarter were approximately $5 billion, translating to a quarterly book-to-bill of 2.7 times, setting another historically high book-to-bill after setting an all-time high last quarter of 2.6 times. The most significant contributions to our quarterly bookings are noted in our press release today, but I would also note the significant amount of new business awards, further proof of our building business development momentum.
While producing exceptional bookings in the quarter, contract submittals continued to increase as well, setting another record for an all-time high in SAIC's value of submitted proposals. At the end of the third quarter, the value of submitted proposals was $22.1 billion, up $1.5 billion from the end of the second quarter. Also, for the second consecutive quarter, we have the highest amount of submitted proposals in our history, and approximately 80% of the value of submitted proposals is for new business opportunities. At the end of the third quarter, SAIC's total contract backlog stood at approximately $22.6 billion, up 16% from the second quarter and 55% from a year ago.
Let me now turn to financial results for the quarter. Our third quarter revenues of approximately $1.8 billion reflect total revenue growth of 12% with generally flat year-over-year organic contraction of 1%. On a year-to-date basis, revenues reflect organic growth of 1%. Negatively affecting third quarter revenues were approximately $60 million of program-related COVID-19 headwinds, resulting from the same factors that impacted the first two quarters. Excluding the COVID-19 headwinds, organic revenues grew by 3% in the quarter and 4% year-to-date, in line with our expectations for the year prior to the onset of pandemic.
Third quarter adjusted EBITDA was $164 million and adjusted EBITDA margins were 9% as a percent of revenues. For the quarter, COVID-19 negatively impacted adjusted EBITDA margins by about $9 million. On a year-to-date basis, adjusted EBITDA margins are 8.8%, up 50 basis points from the prior year nine-month period.
Net income for the third quarter was $60 million and diluted earnings per share was $1.02. Excluding $5 million in net acquisition and integration costs, restructuring costs as well as amortization of intangibles, our adjusted diluted earnings per share was $1.62 per share for the third quarter. The effective tax rate for the quarter was approximately 22% and we now believe that our full year expected tax rate to be approximately 23%.
Third quarter free cash flow was $222 million, an outstanding quarter of strong cash generation. On a year-to-date basis, we have generated $470 million of free cash flow. Days sales outstanding at the end of the quarter were 61 days, excluding the impact of accounts receivable sale facility. During the third quarter, we deployed $239 million of capital, consisting of $21 million in dividends and $18 million and $200 million of mandatory and voluntary debt repayment, respectively. We ended the quarter with net leverage ratio of approximately 3.8 times, ahead of our previously communicated rapid delevering profile.
I should note that as announced in our press release today, our Board of Directors has approved quarterly cash dividend of $0.37 a share payable on January 29 to shareholders of record on January 15.
Now turning to our forward outlook. As noted in our press release, we are updating certain elements of our previously provided guidance for full fiscal year 2021. For fiscal year 2021, our revenue is expected to be between $7.1 billion and $7.15 billion, implying organic revenue growth of between 1% and 2%. This continues to assume a full fiscal year program impact of approximately $250 million from COVID-19, which, if excluded, would equate to about 9% of organic revenue growth this year.
With regards to profitability, we have narrowed the expected range and raised the midpoint for adjusted diluted earnings per share based on year-to-date performance, now expect between $5.95 and $6.05. This includes an unchanged negative profit impact of approximately $35 million to adjusted EBITDA from COVID-19.
Turning to free cash flow, given our tremendous cash generation year-to-date and continued confidence, we now expect free cash flow to be equal to or greater than $515 million, an increase of $15 million from our previous expectation.
As previously announced, I'm retiring at the end of the fiscal year, and this is my last earnings call for the company. As part of an exceptional team, I am proud of what we have accomplished here together but even more excited about what the future holds for SAIC and its highly talented people. SAIC has a bright future with wonderfully focused leadership. I could not be happier at the direction of the company and more thankful for the opportunity over the last four years.
Now I'll take it back to you for concluding remarks.
Nazzic Keene -- Chief Executive Officer
Thank you, Charlie. I want to take just a moment to thank Charlie for his leadership over these past four years. Charlie, you've helped transition SAIC from a $4.5 billion company when you started to the over $7 billion company it is today. Your steady hand in leadership, your focus on our shareholders, and your partnership and guidance to me have been a true value to SAIC. We wish you all the best in retirement.
Now focusing on our future. We recently announced the appointment of Prabu Natarajan as Charlie's successor as Chief Financial Officer, effective January 4. We are extremely excited to have Prabu join the leadership team given his impressive track record of success as a finance executive in the aerospace, defense and technology markets as well as his proven ability to successfully execute on growth strategy. He will bring tremendous value to our team as we execute our long-term growth strategy, advance our positions in key markets and provide value creation for our shareholders.
Operator, we're now ready to take questions.
Questions and Answers:
Operator
Certainly. [Operator Instructions]. Your first question comes from the line of Louie DiPalma with William Blair. Your line is open.
Louie DiPalma -- William Blair & Company -- Analyst
Nazzic, Charlie and Shane, good afternoon.
Nazzic Keene -- Chief Executive Officer
Hello.
Louie DiPalma -- William Blair & Company -- Analyst
Nazzic, your team has been on fire in terms of capturing four of the largest contracts in the government IT services industry. The bookings for your eight peers were down by an average of 21% while yours were up by 127%. In addition to the bookings that you mentioned in your prepared remarks, we learned that the Army in November chose SAIC for the hotly contested $1.3 billion Revolutionary Information Technology Services contract. You didn't mention this RITS award in your prepared remarks. So I have a two-part question. First, are there any details that you are allowed to share for the Army RITS contract? And secondly, investors want to just know how these strong bookings translate into like next year's growth outlook. I think on the last call, you provided some commentary about fiscal 2022. So just if you have any updated thoughts on the unofficial 2022 outlook, that would be great. Thanks.
Nazzic Keene -- Chief Executive Officer
Okay. Perfect. Thanks, Louie. So a couple of comments on RITS. Thanks for the question. We remain optimistic, but it's still an open procurement at this time, and so I'm not going to provide any more color or commentary at this particular juncture, but certainly remain optimistic. Thanks for the -- I haven't done the math on the -- on what's happening in the competitive environment. Certainly, we track ours very closely. But we're very, very proud of the business results that we've seen, the business development and it certainly provides a great foundation to go into next year with. And so we're optimistic about next year for lots of reasons. Certainly, the business development is part of that. We're not going to provide the guidance as we think about next year until the March call. This is a cycle in which we do our annual planning and we make some of the strategic decisions on investments and we're teeing that up in a strong fashion as we've shared some of the organizational design and strategy updates with you. So we'll give you more color on next year in March, but certainly the momentum that we're seeing in our ability to protect our recompetes as well as win new business gives us optimism going into next year.
Louie DiPalma -- William Blair & Company -- Analyst
Thanks Nazzic and congratulations.
Nazzic Keene -- Chief Executive Officer
Thanks.
Operator
Your next question comes from the line of Sheila Kahyaoglu with Jefferies. Your line is open.
Gregory Konrad -- Jefferies & Company, Inc. -- Analyst
Good afternoon. It's actually Greg on for Sheila. I just wanted to follow-up on your comments about deleveraging. You mentioned you were kind of ahead of the 3.0 target that you set for next year. I mean how much more debt do you have to pay down? And then how are you thinking about capital deployment post delevering?
Charlie Mathis -- Executive Vice President and Chief Financial Officer
Thanks. Good question there. So this year, we've laid out a plan at the beginning of the year to $75 million of mandatory debt repayment and $325 million of voluntary payments. We made $50 million of the mandatory payments through Q3 and we've paid all of the voluntary debt, $325 million, already. So we're ahead of schedule from that standpoint. The company will certainly have capacity for other capital deployment activities next year in addition to paying down debt. And if cash flow continues to be strong as it has been, this could happen sooner than previously expected.
Gregory Konrad -- Jefferies & Company, Inc. -- Analyst
And then just one kind of --
Charlie Mathis -- Executive Vice President and Chief Financial Officer
I'm sorry.
Gregory Konrad -- Jefferies & Company, Inc. -- Analyst
I'm sorry. Just one quick housekeeping. I mean if we look at the guidance, you talked about $250 million impact for COVID for the year. I think you're at $160 million. Is there something that steps up in Q4 or is that just a little bit of conservatism?
Charlie Mathis -- Executive Vice President and Chief Financial Officer
Yeah. It's a little bit of being cautious due to the resurgence of the cases of COVID that we've been seeing.
Gregory Konrad -- Jefferies & Company, Inc. -- Analyst
Thank you.
Operator
Your next question comes from the line of Jon Raviv with Citi. Your line is open.
Jonathan Raviv -- Citigroup -- Analyst
Hey, thanks everyone and good evening. Just following up on that question. Just looking at the full year sales guidance, it implies a pretty big organic step-up in 4Q. You also have COVID conservatism baked in there. So I'm trying to understand, like what takes you from negative organic growth to pretty good positive organic growth in 4Q?
Charlie Mathis -- Executive Vice President and Chief Financial Officer
Well, you are right that, that is the expectation that Q4 will have strong growth in there organically. And as you see, the momentum has been building. And I would just say that we had some challenges as far as the revenue goes. A few of the new business programs that we won earlier in the year have not ramped up as fast as we expected. There's a tremendous ongoing effort to transition and ramp up these programs, but the environment with COVID has been challenging. So we're not able to get to the higher end of that revenue forecast that we are hoping to because of this slow ramp-up. But Q4 does look to be strong, that sets up with all these bookings, historical bookings we have. It sets up next year to, I believe, be quite robust.
Jonathan Raviv -- Citigroup -- Analyst
Thanks for that FY '22 guidance. And then just a quick follow-up. It won't be Charlie's last call without me asking about some cash cadence into the year-end, but especially about the multiyear cash flow goal that you talked about, which I'm sure you'll be speaking to Prabu about as well. So any -- just sort of any updated thoughts on how things are trending in FY '22 and toward the really sustainable $550 million? Thank you.
Charlie Mathis -- Executive Vice President and Chief Financial Officer
Thanks, Jon. Well, I can say we're very pleased with the cash generation to-date, $470 million, only $30 million shy of the full year target of $500 million we talked about earlier. I would say that as far as the expectations of the $1 billion over the two years, as of now, that expectation has not changed. So we would still be there.
Jonathan Raviv -- Citigroup -- Analyst
Thanks, Charlie, and congratulations.
Charlie Mathis -- Executive Vice President and Chief Financial Officer
Thanks, Jon.
Operator
Your next question comes from the line of Seth Seifman with JPMorgan. Your line is open.
Seth Seifman -- JPMorgan Chase & Co. -- Analyst
Thanks very much and good afternoon. Really impressive growth in the backlog over the past two quarters especially. I guess as you look into the backlog and you think about what's in there and what it means in the future in terms of the mix of some of the things that you tell us in terms of the customer mix and in terms of the contract type mix and in terms of adjusted EBITDA margin of what's embedded in there, what can you tell us about those things based on what's the book of business that's grown over the past six months?
Nazzic Keene -- Chief Executive Officer
This is Nazzic. I'll try to provide a little bit of color. The specifics as to how it all shapes up especially for next year's -- our next fiscal year, we'll provide more of that in the March time-frame. But as we think about where we've been winning business, where we've been holding business, it's really consistent with the strategy that we've outlined over the course of the last couple of years. So our business development growth, our bookings have been fueled by our focused strategy in diversification around our portfolio as well as what we do across both engineering and IT. It has been fueled by the acquisitions that we've done in the last couple of years and really strengthening our portfolio and our solutions. And so we're very pleased with the momentum that we're seeing and it is just very consistent with our focus in our core markets and our core areas, driving our solutions. And I have to say just the incredible talent that sits in SAIC as well.
Seth Seifman -- JPMorgan Chase & Co. -- Analyst
Thanks. And kind of consistent with the margin goals that you guys have laid out in the past?
Nazzic Keene -- Chief Executive Officer
I guess we -- again, we're not going to provide that guidance until we get to the March time-frame but there's -- it's a consistent portfolio. It's probably the best way to think about it.
Seth Seifman -- JPMorgan Chase & Co. -- Analyst
Okay. Great. And then just as a quick follow-up for -- I guess maybe for everyone across all sectors as we look at -- maybe not until the second or toward the middle of the year where we see widespread vaccine distribution. Should we think about maybe your April quarter being another quarter where there's some impact from the virus and then start to move on from there over the course of fiscal '22?
Charlie Mathis -- Executive Vice President and Chief Financial Officer
Yes. It's a good question. So we think it's a bit premature for us to certainly quantify any type of impact of COVID for next fiscal year. I think that's what you're asking. Given the large number of cases recently, it's not too much of a stretch to say that we do see it going into next year. We don't know how soon or how well it will last, but it would go into next year, we believe and we're continuing to watch it closely.
Seth Seifman -- JPMorgan Chase & Co. -- Analyst
Okay, thanks very much.
Nazzic Keene -- Chief Executive Officer
Thank you.
Operator
Your next question comes from the line of Cai von Rumohr with Cowen. Your line is open.
Daniel Flick -- Cowen and Company -- Analyst
Hi everyone, this is Dan on for Cai. Thanks for the question. Would you mind updating us on the expected timing for some of your bigger upcoming recompetes, particularly what's left of AMCOM and NASA NICS and Vanguard?
Nazzic Keene -- Chief Executive Officer
Sure. This is Nazzic. So on AMCOM, as you know, we won the first one out of the chute for that recompete and very pleased about that. And there's three significant ones remaining and we believe that the first one of those three will be awarded in the December-ish time frame. So hopefully, over the course of the next few weeks and the remaining two of those large ones will be in the January into March, April time-frame. It's what we understand to be the case now. So those are certainly a big chunk of our recompete portfolio for next year. NASA NICS is summer of 2021. So we've got several months there. And the other big one is the recompete of the PB MRO and our supply chain portfolio. Those really are the most significant recompetes as we go into '21. Fiscal year '21 will also be a lighter recompete year for us. So every year has a little bit different profile. This was a more normative year this fiscal year that we're in. Next year will be a little bit lighter. So that also bodes well for being able to invest in driving growth in the out years as well.
Does that answer your question?
Daniel Flick -- Cowen and Company -- Analyst
Yeah, absolutely. That's really helpful. Just on that topic, would you be able to give some color on booking prospects for the fourth quarter and then maybe into the next few quarters as well just given the -- I mean it's been so strong. Is there a point where that slows down? Like, are you guys capturing more than you expected to earlier on?
Nazzic Keene -- Chief Executive Officer
Well, I think --
Daniel Flick -- Cowen and Company -- Analyst
Anything there.
Nazzic Keene -- Chief Executive Officer
I guess the way I'd talk about it is that bookings are lumpy. We all know that. And so -- and that's just the nature of the business. Although we are, as Charlie indicated, with the number of proposals we've been submitting and the momentum that we have, we still -- we feel confident about being able to see strong bookings at least for the next couple of quarters.
Daniel Flick -- Cowen and Company -- Analyst
Okay, excellent.
Operator
Your next question comes from the line of Tobey Sommer with Truist Securities. Your line is open.
Tobey Sommer -- Truist Securities -- Analyst
Thanks. With respect to the COVID impact, at this point with the sort of an outlook for the buyers to extend into next year, what are your updated thoughts on the -- interpreting and looking at these -- the small impact and whether it's demand disruption or demand deferral at this point and how that might or might not be recouped at some point in the future? Thank you.
Charlie Mathis -- Executive Vice President and Chief Financial Officer
Thanks, Tobey. So again, I will just reemphasize the areas that impact us, continue to be supply chain business, and that's due to the reduced operational tempo. Whenever that gets back, that will turn around, reduced training for FAA and then the ready-state labor in the intel community. Those are the three areas that are having the majority of the impact on us, and the supply chain is the area that has the biggest revenue impact on this. And it's all related to the reduced operational tempo. As soon as that starts to turn around, it will get back to a more normalized kind of run rate, but we think that would certainly probably be a quarter or so into this next year.
Tobey Sommer -- Truist Securities -- Analyst
So if we look at your new contract wins, could you talk about your ability to ramp those and the extent to which that ramp looks different in a pandemic scenario? Just important for us, even though you're not guiding for next year, we're going to have to model it. So any kind of comments you could give us about the ramping of those would be helpful.
Nazzic Keene -- Chief Executive Officer
Yeah. This is Nazzic. I think what I can do is share in general some things that we're seeing. We are seeing, in some cases, a little bit slower ramp and a little slower transition and greatly due to COVID being able to have people where they need to be, when they need to be there to help facilitate the transition. So we are seeing, in some cases, that take a little bit longer. We saw that some this year. I expect we'll see that going into next year. It's hard to quantify and every contract is a little bit different. But I do think that, that is an anomaly that we're seeing more as a result of COVID in some of these new wins to facilitate the transition time-frame. And so I would just think about it from that as an overarching reality of what we're dealing with.
Tobey Sommer -- Truist Securities -- Analyst
Thanks. Last question from me now. Could you give us an update on what your kind of interesting areas are for acquisitions for the firm in terms of any kind of hold or new capabilities that you'd like to add?
Nazzic Keene -- Chief Executive Officer
Yeah. Absolutely. So just as Charlie talked about, capital deployment, we're laser-focused on paying down the debt and just feel really great about what we've been able to accomplish this year going into next year, of course. But with that being said, we continue to have a seat at the table. When there's activity in our industry, we want to make sure that we pay attention. But it's probably consistent with what you've heard me talk about before. So there's a couple of areas in our portfolio. Public sector health is an example where there's a tremendous opportunity in the federal government. It's not an area we have a big footprint, but we also believe it's an area that will be sustained, driving growth over the course over the next several years. And so that would be an example of a market in which if there was the right acquisition at the right time at the right price and all those rights come together could be interesting for us.
The other would be in some technology areas like AI would be another example of an area where we just -- the good news is we do -- we've got great skills and competencies and a footprint there, but to the extent that we could strengthen that in today's market for tomorrow's market, that could be interesting as well. So those are a couple of examples for you, but we are focused on paying down our debt and ensuring that we have that flexibility in the quarters to come.
Tobey Sommer -- Truist Securities -- Analyst
Thank you.
Operator
Your next question comes from the line of Joseph DeNardi with Stifel. Your line is open.
Joseph DeNardi -- Stifel, Nicolaus & Company -- Analyst
Thanks. Good evening. I'm going to try and ask the organic growth question a little bit differently. Some of your peers who have been able to put up a 2 times book-to-bill have converted that into a kind of double-digit organic growth. Is there anything about kind of the nature of your bookings, whether it would be longer duration or more of it is skewed toward recompete that we should consider in terms of why your 2 times book-to-bill should not eventually convert into double-digit organic growth?
Nazzic Keene -- Chief Executive Officer
Well, I guess a couple of comments. One, as whether investor or a competitor, the bookings and the book-to-bill are a leading indicator of growth to come. So we feel very confident and optimistic about our bookings. We're very pleased with the areas in which we've been able to, again, protect our work as well as some takeaways or new work. And we believe that, that is a strong indicator for the next several quarters or foreseeable couple of years. So I certainly agree with your analysis that it's an indicator. It's a leading indicator, and it does suggest growth. What I can't do at this time, and we'll give you more color in March is give you an indication of what that is. Every contract has a different duration. Every contract has different ramps. And that's the work that we're doing today so that we can provide for you all in March what that looks like for next year.
Joseph DeNardi -- Stifel, Nicolaus & Company -- Analyst
Okay, great. And just two quick follow-ups. Could you just maybe clarify what drove the reduction in revenue guidance albeit modest? And then if you back into kind of what the revenue contribution was from Unisys in the past couple of quarters, it looks to be flat to down a little bit. It had been growing nicely. So can you just talk about what's driving that and maybe overall how that business is performing thus far? Thank you.
Charlie Mathis -- Executive Vice President and Chief Financial Officer
So let me just reemphasize about the revenue guidance there. So again, a few of the new business programs that we won earlier in the year that we expected to ramp up fast, that didn't happen. And it was -- again, you can maybe attribute it to COVID. We haven't attributed to COVID, but there was a tremendous ongoing effort to transition and ramp up these programs. Some of these, we won in the first quarter, second quarter, but the environment for COVID proved to be challenging, and we just didn't get it ramped up fast enough for the revenue to hit this year. As far as Unisys Federal goes, Unisys Federal has had an outstanding year as far as new wins, as far as meeting the deal thesis when we purchased the company and the expectations of growth there, capabilities over the long-term. So we feel pretty good about where Unisys Federal is and the outlook and the contribution that they will make in the future.
Shane Canestra -- Vice President of Investor Relations
Hey Joe, this is Shane. If I could add just one thing to tag on what Charlie said, Unisys Federal, prior to us purchasing them have bought the contract, a fairly sizable contract -- I believe it was called BEMS or something of that nature. So we knew that this year's profile in the second and third quarters would be more modest than the fourth quarter because of the anniversary-ing out of that loss. So that was a known at the acquisition. So your comment about kind of being flattish, if you will, we're not going to report the actuals, but I would just say that the profile that we knew about was more about the back half of the year as the anniversary out of that contract.
Joseph DeNardi -- Stifel, Nicolaus & Company -- Analyst
Very helpful. Thank you.
Operator
[Operator Instructions]. Your next question comes from the line of Gavin Parsons with Goldman Sachs. Your line is open.
Gavin Parsons -- Goldman Sachs Group -- Analyst
Hey, good evening.
Nazzic Keene -- Chief Executive Officer
Gavin.
Gavin Parsons -- Goldman Sachs Group -- Analyst
So the pipeline is growing even with your record bookings. So clearly, addressable market is expanding and then what you're bidding on is expanding. But I know you don't disclose your actual win rates, but I was wondering if you could comment on -- if you're winning at a higher rate as well as increasing that pipeline and if there's a single or handful of most important factors you think are driving wins. Thanks.
Nazzic Keene -- Chief Executive Officer
Yeah. No. Great question. I would say again, every quarter is different and bookings are lumpy, but this year we have accomplished both. So we've been able to bid more ahead of the quarters obviously and our win rates are up as we sit here today. So we've always had exceptionally strong win rates in our recompetes and so that's held its own, which is foundational. But our new business win rates have gone up as well. And I would attribute that to a couple of things. Certainly, I touched on the strength and the value of the recent acquisitions, giving us very strong past performance, strong solutioning, great talent and market and customer access. And so that's had a great impact on us.
I think our focused strategy -- so we've been very transparent in the areas that are important to us, the areas we're focusing and really being able to differentiate and bring compelling solutions to bear for our customers. So I think it's a little bit of several things that has driven us and been able to drive some of the success in bookings and new wins and it's our intention to kind of keep that momentum and really stay focused, stay focused on our strategy, be able to continue to deliver in the excellent fashion that SAIC always does, which is just an underpinning to be able to win new business with the customer, and then bring compelling solutions to bear.
Gavin Parsons -- Goldman Sachs Group -- Analyst
Great. Excellent. And then on recompete next year, I think you said it's about 25%. So I just wanted to ask on visibility. The backlog has grown pretty quickly. What is the duration of your backlog relative to your current revenue base? And should we expect that recompete rates to decline over the next few years?
Nazzic Keene -- Chief Executive Officer
Yeah. So just for a point of clarification. For our fiscal year '22, which will be our next fiscal year, we've got about 15% of our revenues that are up for recompete. So it is a little lighter year than normal. And so that's -- I just wanted to get that on the table. I'm sorry. What was the second part of the question?
Gavin Parsons -- Goldman Sachs Group -- Analyst
Sorry, apologies for that. That makes sense, the statement. I was just asking if your current backlog would reduce your recompete rate going forward, but it sounds like it might have already done that.
Nazzic Keene -- Chief Executive Officer
Yeah. Certainly, we had some significant ones this year. And when we close out the recompetes and are successful in our recompetes in AMCOM, NASA NICS and PB MRO, that will retire most of our recompete risk for next year.
Gavin Parsons -- Goldman Sachs Group -- Analyst
Great. And then just one last question on revenue. I think the $250 million in guidance is relative to $160 million year-to-date. So does that imply you expect a larger COVID headwind in 4Q than you had this quarter or last quarter?
Charlie Mathis -- Executive Vice President and Chief Financial Officer
Yeah. So let me just clarify that a little bit. So again, we have been cautious here about the revenue impact in Q4. Also when we went back and looked at the quarterly impacts, I think the first quarter was probably like what we stated. We've been running kind of consistently in that $60 million, $65 million impact per quarter when you average it. And so it's slightly ahead of that in Q4, but part of that is going back to Q1 when we announced it and there's probably $15 million that was really attributed to Q1. Didn't change the overall amount. Shane can certainly go over the detail with you as far as that goes, but it's pretty consistent in that $60 million, $65 million range.
Gavin Parsons -- Goldman Sachs Group -- Analyst
Got it. Okay, thanks. And congrats.
Nazzic Keene -- Chief Executive Officer
Thanks.
Charlie Mathis -- Executive Vice President and Chief Financial Officer
Thanks.
Operator
Your next question comes from the line of Jon Raviv with Citi. Your line is open.
Jonathan Raviv -- Citigroup -- Analyst
Hey, thanks for letting me back on the call here. Nazzic, just a bit of a question and maybe we can wait until Prabu is on the call as well, but just sort of your perspective on bringing him in. I know you talked a little bit about him in your prepared remarks. When I think about him, he's coming from Northrop Grumman. Northrop Grumman is a -- more of a product kind of firm. You guys have historically sort of not been interested, and it's really said that you're not interested in products while some of your peers are. He ran M&A over there. To a certain extent, you guys have been not episodic. So anyway, just sort of like any, I'd say, evolution in the way you're thinking about some of those things given his particular background with a large defense prime.
Nazzic Keene -- Chief Executive Officer
No. And I look forward to you meeting him. As we thought about Prabu, we certainly captured his incumbency and where he's coming from. But he's got a very broad background in services, in technology, in commercial as well as defense and aerospace. So it really is the diversification of his background that is compelling for us and I'm very confident that he will add tremendous value to SAIC. It does not suggest a change in our strategy in any form or fashion.
Jonathan Raviv -- Citigroup -- Analyst
All right. Thank you very much.
Nazzic Keene -- Chief Executive Officer
Sure.
Operator
There are no further questions at this time. I will turn the call back over to Mr. Canestra.
Shane Canestra -- Vice President of Investor Relations
Thank you very much for your participation in SAIC's third quarter fiscal year 2021 earnings call. This concludes the call, and we thank you for your continued interest in SAIC.
Operator
[Operator Closing Remarks]
Duration: 45 minutes
Call participants:
Shane Canestra -- Vice President of Investor Relations
Nazzic Keene -- Chief Executive Officer
Charlie Mathis -- Executive Vice President and Chief Financial Officer
Louie DiPalma -- William Blair & Company -- Analyst
Gregory Konrad -- Jefferies & Company, Inc. -- Analyst
Jonathan Raviv -- Citigroup -- Analyst
Seth Seifman -- JPMorgan Chase & Co. -- Analyst
Daniel Flick -- Cowen and Company -- Analyst
Tobey Sommer -- Truist Securities -- Analyst
Joseph DeNardi -- Stifel, Nicolaus & Company -- Analyst
Gavin Parsons -- Goldman Sachs Group -- Analyst
