Mantech International Corp Class A (MANT) Q3 2021 Earnings Call Transcript

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Mantech International Corp Class A (MANT)
Q3 2021 Earnings Call
Nov 2, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Gentlemen, good afternoon, and welcome to the ManTech Third Quarter Fiscal Year 2021 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Stephen Vather, Vice President, Corporate Development and Investor Relations.

Stephen Vather -- Vice President of M&A and Investor Relations and Executive Director of Corporate Development

Welcome, everyone. Thanks for participating on ManTech's third quarter call. Joining me today is Kevin Phillips, our Chairman, CEO and President; Judy Bjornaas, our CFO; and Matt Tait, our COO. During this call, we will make statements that do not address historical facts, and thus, their 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 the 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. On today's call, we will discuss some non-GAAP financial measures, which we believe provide useful information for investors. These non-GAAP measures should not be evaluated in isolation or as a substitute for GAAP performance measures. You can find a reconciliation of the non-GAAP measures discussed on this call in our third quarter earnings release. With that, let me hand the call over to Kevin.

Kevin M. Phillips -- Chairman, President & Chief Executive Officer

Thanks, Stephen, and good afternoon, everyone. ManTech delivered exceptional profitability and cash flow in the third quarter. However, revenue growth in bookings fell short of expectations. We are navigating our complex and uneven industry operating environment, which is creating certain challenges for us. That said, the foundational drivers for our long-term growth remains favorable, and we are positioned in higher priority areas of the market. Operationally, we continue to feel the lingering impacts from the pandemic, namely on three fronts. The slower return to normal within our intelligence community customers, continuing supply chain challenges and a tight labor market. Unfortunately, our expectations outpaced the recovery trajectories for both our intelligence business and the supply chain.

We remain confident in the attractive fundamentals of serving hard to penetrate intelligence community customers and our position in that market. We see durable demand across our solutions in full spectrum cyber, secure mission and enterprise IT, data analytics and other key mission-focused offerings. However, in the near term, the intelligence component of our business continues to face meaningful pipeline and award delays, and we expect that a return to normal may take several more quarters. ManTech's higher relative exposure to intel customers amplifies that impact, which is evident in our overall performance. Next, the supply chain. While customer demand is clear, the supply chain challenges become much less predictable, significantly impacting the timing and level of material procurements.

Similarly, we expect this trend to linger, but are hopeful that a path to normal is on the near horizon. Finally, we are seeing the effects of a tightening labor market and have uncertainty about what affects the executive order on requiring vaccinations among our workforce will have in the fourth quarter and entering 2022. We have made concerted efforts to comply with this mandate, but still have some work to close the remaining gap prior to the December deadline. Turning to the U.S. departure from Afghanistan. We are proud to have supported this overseas contingency operation over the last two decades and thank our employees for their dedication to that mission over the years. Withdrawal from Afghanistan in March is what we see as a clear shift in national defense strategy around overseas counterterrorism operations and related support to one that is focused on near peer threats. In the short term, this shift will create a low single-digit headwind in our overall revenue for the balance of the year and into 2022.

Additionally, we anticipate and are beginning to see reductions in selective SOCOM-focused field support operations within the Army. ManTech is a project of the cold war. Over the course of greater than 50 years, we have well understood the need to adapt to evolving mission requirements. As the mission moves to near peer focus, the vast majority of our portfolio is well aligned, and we are pivoting the balance to this future mission. In aggregate, the factors discussed in my earlier remarks, coupled with natural program conclusions that occur every year will constrain a level of near-term organic growth compared to the last few years. We are recalibrating our expectations for 2021 and 2022 as a result of our year-to-date performance, these headwinds and uncertainties. Judy will review our revised outlook later on the call. Moving to a quick budget update. We began the government fiscal year under a continuing resolution, which currently lasts through early December.

The congressional agenda remains focused on infrastructure, the debt ceiling and other priorities that may cause appropriations to continue to shift to the right. Irrespective of the status of appropriations, our customers continue to have clearly defined priorities that align well with ManTech's core capabilities and investment road map. First, the growth of both cyber and space warfighting domains partly driven by near-peer focus; second, the need to modernize IT, software and systems to meet the challenges of today and tomorrow. The needs within this trend are broad and complex, but notably, we are seeing greater customer need for automation, analytics and delivering data at the edge. Lastly, the full and rapid implementation of digital warfare and traditional -- into traditional operating technology missions is of increasing importance. Recently, we announced our intent to acquire Griffin Technologies for $350 million.

The acquisition builds on our position with an important Department of Defense customers and adds enhanced digital and systems engineering capabilities. Demand for these capabilities has been robust, and we see this as a continued growth avenue organically as the near peer focus ramps into higher gear. We look forward to welcoming Griffin's nearly 1,500 employees to the ManTech family. We intend to maintain an active posture for value-accretive M&A, and our balance sheet is certainly supportive of additional acquisitions. Judy will discuss how you should think about the pro forma business going into 2022. Now I'll turn it over to Matt to cover the business development and operational highlights for the quarter. Matt?

Matt Tait -- Chief Operating Officer

Thank you, Kevin. In the quarter, we booked $716 million in contract awards, resulting in a book-to-bill of approximately 1.1 times. Our last 12-month book-to-bill ratio also sits at 1.1 times, with a majority of the bookings for existing work. Bookings in the quarter were propelled by the retention of important recompetes as well as incremental on-contract growth. The major awards in the quarter include winning a $476 million contract to continue providing space force with launch enterprise systems engineering and integration as well as a $51 million contract to continue providing the Navy acoustic engineering services to support the naval, submarine and surface signature-silencing programs. These contract awards continue to demonstrate our capability strength in intelligence systems engineering. Furthermore, we are pleased with the outcome of a multiyear strategic pivot into resilient O&M and RDT&E priorities within the Navy, Air Force and other parts of the DoD.

That said, Q3 bookings were seasonally light and came in below our expectations. There were two principal drivers for that trend. First, as Kevin discussed earlier, we lacked meaningful adjudications within our intelligence community customers. To add a bit more color, over the last 18 months, intel bookings have comprised less than 1/4 of ManTech's overall bookings versus prior to the pandemic, it was averaging close to half of the company's total bookings. Second, we were less successful than desired on new, large business pursuits in our Federal Civilian Business. This is a part of our concerted effort to penetrate into new markets that will have persistent demand. We will continue to position ourselves to support existing intel, defense and homeland security customers while we make strategic moves to advance our expansion into other federal agencies. As a result of these bookings, our total backlog was $10.1 billion at quarter end, representing three percent year-over-year growth with funded backlog at $1.3 billion.

We exited the quarter with nearly $8 billion in proposals outstanding, which has a healthy mix of new business and recompete opportunities. We are continuing to prosecute our pipeline and are seeing steady proposal submissions. The volume, timing and competitive positioning on adjudications remain a key driver to the cadence of our quarterly bookings. We are continually fine-tuning our business development process to maximize optimal outcomes with respect to pipeline conversion. Before I turn the call over to Judy, I would like to take a minute to welcome the newest member of our leadership team. We are excited to have David Hathaway join us as the Head of our Defense business. David has significant experience leading high-performance teams, focused on bringing technology solutions to an array of defense missions. I look forward to leveraging his valuable expertise to further affect our strategic, operational and technology initiatives across our DoD customer base. With that, I'd like to turn it over to Judy to discuss our financial results in more detail.

Judith L. Bjornaas -- Executive Vice President & Chief Financial Officer

Thanks, Matt. Quarterly revenue was $638 million, which was flat compared to Q3 of 2020. Q3 revenue fell short of expectations, most notably due to the delays in ODCs that Kevin referenced earlier. Additionally, an uptick in PTO usage and increased turnover pressured direct labor contribution in the quarter. We also saw some programs come to their natural end in Q3. Q3 EBITDA was $73 million, up 27% from Q3 of 2020. This resulted in an EBITDA margin of 11.4%, up 240 basis points year-over-year as margins continue to benefit from stronger overall labor mix, continued indirect cost under spending and a onetime benefit related to a contract closeout for some international work. Net income for the quarter was $38 million and diluted EPS was $0.93, up 28% and 27% from Q3, respectively. Adjusted net income was $41 million and adjusted diluted EPS was $1.01, up 23% and 22% from last year, respectively. Our effective tax rate was higher than expected at 27.9% in the quarter.

Turning now to the balance sheet and cash flow statements. Cash flow from operations was a robust $139 million in the quarter, which represented 3.6 times net income and was driven by a strong DSO of 55 days. At quarter end, the balance sheet showed $145 million in cash and no debt. Additionally, we distributed $15 million in dividends in Q3, maintaining a steady return of cash to shareholders. The Board has authorized us to continue our current cash dividend of $0.38 per share to be paid in December. The acquisition of Griffin Technologies reflects our commitment to capital deployment for long-term value creation through M&A. As mentioned by Kevin earlier, we intend to remain active on M&A and are continuing to review opportunities that we view are additive to our competitive position. Following the acquisition of Griffin, we expect to have approximately 1.0 times leverage. Moving on to guidance. we are decreasing our previously communicated guidance for revenue and increasing our adjusted net income and adjusted diluted EPS to reflect year-to-date performance and likely outcomes for the remaining quarters, based on current market factors.

The drivers behind the revised guidance are continued impacts from delayed ODCs, pressures from a more competitive labor market and reduced new business contribution. Our revenue guidance is now $2.55 billion to $2.575 billion, representing a 1% to 2% growth year-over-year. We are increasing our outlook for adjusted net income to be in the range of $150.2 million to $152.2 million with adjusted diluted EPS of $3.66 to $3.71. We are also increasing our expected EBITDA margin for the year to be 10.2%, which represents a 110 basis point improvement over 2020. Many of the same tailwinds for the Q3 outperformance are responsible for the full year increase, which includes the lighter level of lower-margin ODCs, strong indirect cost management and some onetime contract closeout fee pickups. Year-to-date, margins continue to average higher than our full year guide, but there are known trends that will drive fourth quarter spend higher, primarily M&A-related expenses and greater PTO utilization.

In total, when adjusting for these factors, our normalized 2021 EBITDA margin would be approximately 9.4%, a nice uptick of 30 basis points from 2020. The adjusted net income and adjusted diluted EPS ranges assume a slightly higher effective tax rate of approximately 25% and a consistent, fully diluted share count of approximately 41 million shares. Finally, cash flow from operations is still expected to be at least $200 million, with capital expenditures expected to be a touch lighter than previously thought at less than 2.5% of revenue for the year. During this call, we have gone through a number of factors that will impact our expected financial performance for 2022. While it is premature to provide detailed 2022 guidance, we wanted to offer some directional commentary. We expect total revenue growth of at least 5%, which is inclusive of the full year contribution from Griffin.

We are considering a number of factors in our assessment of 2022, many of which are a continuation of the issues we are dealing with in the second half of 2021. Given the change in our expected near-term growth trajectory, I wanted to cross walk each of the major factors impacting our current view. As Matt mentioned earlier, the headwinds to growth include the fact that year-to-date bookings have been disproportionately related to existing programs versus new work; the full year impact of natural program conclusions, inclusive of but not limited to Afghan and certain field sustainment-related efforts; and a lingering uncertainty on the level and timing of intel new business efforts and the supply chain with respect to ODCs. Furthermore, it is our expectation that we will have another normal year of recompetes approaching 25% of revenue. Moving on to margins.

Our EBITDA margin expectations for next year are in the 9.4% to 9.5% range, which implies flat to potentially up 10 basis points against our normalized 2021 EBITDA margin. The business risks that we are closely monitoring, but are not fully factored into our guide, are the impact of the vaccination executive order and disruptions to the business from a potential extended lapse in government funding. Our 2022 preview is confined to the current visibility into the business and market factors. We expect to refine this preliminary guidance on our year-end earnings call in February. Let me hand the call back over to Kevin for some closing remarks.

Kevin M. Phillips -- Chairman, President & Chief Executive Officer

Thanks, Judy. In closing, our team is keenly focused on pipeline conversion, attracting and retaining talent, leveraging our recent acquisitions to drive growth and continuing to deploy capital to deliver long-term shareholder value. As discussed in great detail, we experienced a market shift in some areas of our work, but we are seeing greater demand toward more cyber and technology-enabled mission needs. Our differentiated portfolio of capabilities and customer sets are well aligned to national priorities. We're now ready to take your questions.

Questions and Answers:

Operator

[Operator Instructions]. Our first question is from Matt Akers from Wells Fargo. Your line is now open.

Matt Akers -- Wells Fargo -- Analyst

Yes. Hi. Thanks. Good afternoon. I wonder if you could comment a little bit more on kind of the slowdown in intel. And specifically, I guess, what do you think needs to happen for that business to start coming back again? I mean does your customer need to add staff to kind of get through some of those contracts or the new -- or funding? Or what do you think will lead us to sort of get out of that slowdown you're seeing?

Kevin M. Phillips -- Chairman, President & Chief Executive Officer

Yes. It's Kevin. I'll speak in and then if Matt wants to add, he can. The government and the Intel community has needs, they are persistent. But what we found is the timing of their ability to send out awards or make the adjudications continue to be impacted by a combination of COVID coming back open, coming back in and then having to shut down again when they physically have to be in the office to do that role as well as staffing constraints, within their organization. It's a little bit of both. It's not about the budget of the mission requirements. It's more about a combination of their ability to do their job and get outcomes in a timely fashion where that has definitely been disrupted in the intelligence community over the last 18 months.

Matt Akers -- Wells Fargo -- Analyst

Got it. And then I guess if I could do one more, just on Griffin. Are you able to comment kind of what multiple you paid for that? Or maybe just in general, sort of what -- how kind of competitive that deal is or what you're seeing just in terms of kind of multiples for M&A in the space in general?

Judith L. Bjornaas -- Executive Vice President & Chief Financial Officer

Yes. I think we paid a market multiple for comparable assets, and we're really focused on being able to leverage that -- the systems engineering, digital engineering capabilities across the enterprise.

Kevin M. Phillips -- Chairman, President & Chief Executive Officer

And I'll add. Look, we're excited about the combination of Griffin and match. We have a heavy Navy presence, but this is very complementary. The type of work they do are Naval surface and the combination of their investments about systems engineering, digital engineering and data analytics, along with what we've invested in, I think, offer a very compelling view of how we're going to support the Navy as the shift to the Pacific continues. So we're pretty excited about that coming together and what we can do going forward against the new near peer threat focus.

Matt Akers -- Wells Fargo -- Analyst

Great. Thank you.

Operator

Thank you. Our next question comes from the line of Matt Sharpe from Morgan Stanley. Your line is now open.

Matt Sharpe -- Morgan Stanley -- Analyst

Kevin, Judy, Matt. Good afternoon. Congrats on the Griffin deal. Judy, just a question on the revenue guide down of about $140 million. I was wondering if you could maybe parse that between how much is tied to, say, the Intel community and how much is tied to the supply chain? And is the revision reflective of a deterioration in your business environment? Or is it more just challenges that are persisting longer than expected?

Judith L. Bjornaas -- Executive Vice President & Chief Financial Officer

I think it's more the challenge is taking longer than we expected. I mean, the ODCs, we had fully expected those to return to the levels we were expecting in 2021 in the second half of the year, and we're just not seeing that. As far as bookings, we did see some adjudications in the Fed Civil Business for some of the larger bids we went after. And unfortunately, we were unsuccessful there, and we had assumed that the Intel market would return. So basically, any kind of new business we have built into the second half of the year. Now for the most part, we have derisked out of our guide. And then just I think the Afghan and sustainment work came on a little bit faster and was a little bit larger than we were expecting.

Kevin M. Phillips -- Chairman, President & Chief Executive Officer

It's Kevin. I'll add about persistence because there is one persistent area, and that's the military support around fuel up sustainment in Afghan. So that is fairly quick. In terms of the drawdown, that's the low single-digit. But there's also U.S.-based support for systems that have supported that region for a long time. And if you look from 2020 to 2022 over a two-year period, the OCO work as well as some of these systems that are going to be reducing significantly in terms of funding. They're, in total, high single-digit combination revenue headwinds, more heavily weighted toward the back half of this year and into next year. Now that's -- it's a good thing to support those programs. We've done that for decades. But you can see that the military is definitely shifting its focus as a result of that drawdown in terms of their support for some of these systems as well.

Matt Tait -- Chief Operating Officer

And I'll also add, Matt, we do think, though, that like the fundamental strategy that we have moved to in 2023, I mean those things are getting funded in the right way. We still see opportunities there to be able to grow our business long term.

Matt Sharpe -- Morgan Stanley -- Analyst

Got it. That's helpful. And then Kevin, just on some of your introductory remarks around COVID-19. I'd like to think you sort of alluded to the risk tied to the December eight vaccination mandate. Are you able to provide any context around what the risk might be to the back end of this year and into next year, either by way of a percentage of employees that are currently unvaccinated or otherwise? Or how should we think about the risk associated with the EO?

Kevin M. Phillips -- Chairman, President & Chief Executive Officer

That's a really hard thing to determine. We have over 85% of our workforce has received shots and is clear to the paperwork that's needed to do that. And it continues to trend in the right direction fairly quickly given that time line. That said, we don't have everybody we need yet. And how that plays out as we get closer to that date and what exemptions are allowed under what construct by each of our customers, all have to come together to get to the total risk. But if it's already a tight labor market, anything above zero is a risk that we think is important to note.

Matt Sharpe -- Morgan Stanley -- Analyst

Got it. Thanks. Got in pack to the Q.

Operator

Thank you. Our next question comes from the line of Gautam Khanna from Cowen. Your line is now open.

Gautam Khanna -- Cowen -- Analyst

Hi. I was wondering if you could put it all together on the known headwinds for next year. And so I heard about low single-digit decline from the withdrawal from Afghanistan. So whatever that is $50 million or something to the top line. And then I heard something about a high single-digit decline in some other related business. But I just wondered if you could aggregate the known headwinds. And then if you could also, in that five percent number for next year, how big is Griffin? How much of a backfill is that? And how large is it? Anything you can give us so we can model this correctly.

Kevin M. Phillips -- Chairman, President & Chief Executive Officer

Yes. It's me, Kevin, just a high level. So when I say the high single-digit, that's a combination of both Afghan and field sustainment work. So that's in total going into next year about traditional military sustainment work. We generally view that the ODC and supply chain risk in terms of the upward option around that as well as the new business from intelligence are likely going to be pushed to where the growth from them or the second half of the year. So we're being cautious about any growth from those in the first half. And then we have end-of-life programs. So those are in aggregate. And I think we're going to have to wait, and I think -- Judy, until February, to talk about the overall composition. Is that correct?

Judith L. Bjornaas -- Executive Vice President & Chief Financial Officer

Yes. We just wanted to kind of throw out some guardrails around 2022, given the headwinds and the acquisition to kind of level set and then in February, as Kevin just mentioned, we'll be able to go until that -- we'll have a lot clearer picture on what 2020 is going to look like.

Gautam Khanna -- Cowen -- Analyst

Okay. Could you give us a sense for how large Griffin is at the top line?

Judith L. Bjornaas -- Executive Vice President & Chief Financial Officer

Yes. I mean right now, we haven't projected it to be into -- in 2021 guidance. But if it were to close in early December, we would see low- to mid-20 revenue kind of on a monthly basis, if you want to look at that range for kind of a run rate into 2022.

Gautam Khanna -- Cowen -- Analyst

Okay. Thank you. I appreciate it.

Operator

Thank you. Our next question comes from the line of Brian Kinstlinger from Alliance Global Partners. Your line is now open.

Brian Kinstlinger -- Alliance Global Partners -- Analyst

Great. Thank you. Can you share any plan you have to fulfill positions? Obviously, the tight labor market, assuming the unvaccinated can't work on a program. The plan to replace them, how difficult is that? What is the wages like right now for hiring staff? And then can you keep employees if they can't be deployed into programs in order to protect margins?

Matt Tait -- Chief Operating Officer

Sure. This is Matt. I'll -- that's a kind of multi-threaded question there. But let me kind of start with what we're doing for our employees, which is we're -- everything is customer-based. So Federal Civilian versus defense versus Intel, all have unique requirements as we're going through that. So we're being very proactive with our employee population, trying to make sure that we're giving them every opportunity to be able to either get an accommodation or continue to work with ManTech. So we have plans in place to do that. We also have proactively placed -- we have analytics on our own staff, right? So we have proactively looked at certain areas where we're hiring maybe ahead of where there could be some issues from a hiring perspective. To answer your question around the wage inflation item.

I don't think we've really seen that yet. I mean, maybe just a hair, but I don't think that's -- our concern really, is really over the immediate future of the December eight date and trying to make sure we work through that. Although, we are fortunate in that we do have flexible customers who will work with us through these kinds of issues. And obviously, we have a majority of cost plus work. So in some ways that can benefit us and allow us to work through this maybe in a way that others cannot.

Brian Kinstlinger -- Alliance Global Partners -- Analyst

Great. My follow-up, first, you mentioned attrition being an issue. Where is attrition these days compared to historically? And then a follow-up on the Griffin. Is there EBITDA margin similar to ManTech's? Maybe just a quick comparison would be helpful. Thank you so much.

Matt Tait -- Chief Operating Officer

So I'll get the turnover and then Judy hand it over to you. So on the -- so what we're really just seeing is, I think, a turnover going back to what I would call pre-pandemic normal levels from a turnover perspective.

Judith L. Bjornaas -- Executive Vice President & Chief Financial Officer

And then from a margin standpoint, the full impact of Griffin is in that 94% to 95% range that it is the early look to 2022. And I would say, in general, the program margins are in line with our -- the rest of our DoD business.

Brian Kinstlinger -- Alliance Global Partners -- Analyst

Thank you.

Operator

Thank you. Our next question comes from the line of Tobey Sommer from Truist Securities. Your line is now open.

Tobey Sommer -- Truist Securities -- Analyst

Thank you. Similar in vein to some of the preceding questions. Could you talk to us about wage inflation, which is probably the primary aspect of inflation that's relevant to your business? And what a faster pace of wage inflation would mean to your ability to grow [Indecipherable] organically, either make it easier or harder? And preserve or expand margins, either make it harder or make it easier.

Kevin M. Phillips -- Chairman, President & Chief Executive Officer

It's Kevin, let me just make a comment and then if Matt wants to add. Look, when we have high demand for the right talent and the customer sets and wage inflation, if it does start increasing above an amount that can't be built in or is already built into escalation that we can manage between each program, we often go to customers and there's flexibility in going through those discussions because of the need for the talent. I mean that's something that we've mutually and across the industry come to learn to work through. It's a matter of how much that escalation is. So we'll have to see how it plays out. Again, Matt has mentioned that it really isn't something we've seen that is creating a level of concern that you would want us to speak to, but we are tracking it just given the overall market today and all -- there's also the potential impact of vaccination, if any.

Tobey Sommer -- Truist Securities -- Analyst

And could you comment about what you -- I guess I got -- we got some comments about your expectations into 2022. In the context of a continuing resolution, does your initial sort of, guardrails as you put it for 2022, does that contemplate a CR extending into the first quarter? And if so, how long into?

Judith L. Bjornaas -- Executive Vice President & Chief Financial Officer

Yes. I think we've kind of taken that into account, obviously, a government shutdown is not taken into account. But yes, I don't think given the timing that we're looking at for new business and things like that, that a CR continuing is not going to meaningfully change what we have thrown out for those guardrails.

Tobey Sommer -- Truist Securities -- Analyst

Okay. And then last question for me is sort of on the recruiting front, just kind of delving into that a little bit more. Are you doing anything different in your recruiting activities, either something that comes in like perhaps utilizing more outsourced providers to try to land the talents? Or is the recipe that you've historically used to attract and retain talent largely the same?

Matt Tait -- Chief Operating Officer

So I would say overall -- so we already will supplement with outside resources in certain areas where we need that. So we -- that's always something as a lever that we use. So I would say from -- while we might be doing more of that right now, I would say the processes that we are using and the approach is still the same.

Tobey Sommer -- Truist Securities -- Analyst

Okay. Thank you very much.

Operator

Thank you.Our next question comes from the line of Mariana Perez Mora from Bank of America. Your line is now open.

Mariana Perez Mora -- Bank of America -- Analyst

Good afternoon. My question is going to be regarding the Intel work environment. It's been 18 months. And what I would like to understand is from your point of view and your conversation with customers, how long do you think it will take for them to actually get back to normal, burn enough inventories or backlog of awards they have? And can any of the programs you are exposed to die or be obsolete by the time that we are able to award them?

Matt Tait -- Chief Operating Officer

So I think on this, we really don't expect them to really -- it's still going to be several quarters. I think the back half of 2022 is what we are anticipating for that, to answer your question.

Mariana Perez Mora -- Bank of America -- Analyst

And then what makes you feel comfortable that they'll get back there? And I know you have like -- you can give little bit information, but any color that you can provide us to understand why you feel comfortable that they'll get back to those levels, and this is not just a new normal?

Matt Tait -- Chief Operating Officer

Sure. Yes, without -- like you said, that's speaking on their behalf. I think the things that we are seeing is there are -- the return to the workforce because of the vaccine mandate is actually bringing more people into the business now. So there is an uptick in what I would call a normal workflow. Not that they're there yet, but that they're getting there. So that's why you are starting to see more signs of that.

Mariana Perez Mora -- Bank of America -- Analyst

Okay. And then I'll switch gears to the Federal Civilian segment. You mentioned that your win rate was lower than expected. Can you give us some color if it was like pricing capabilities? And what's the strategy going forward?

Matt Tait -- Chief Operating Officer

Sure. On Federal Civilian, so really, we've had a great win rate there over the last couple of years, and so we wanted to go after some bigger opportunities. And what we really need to do -- and so -- and those didn't pan out and what we really just need to do there is focus on our customer intimacy, I think. But we do have a good pipeline moving forward in Federal Civilian. It's just unfortunate that some of the competitive, new opportunities that new customers did not work out in our favor.

Mariana Perez Mora -- Bank of America -- Analyst

Okay. Thank you.

Operator

Thank you. [Operator Instructions] Our next question comes from Louie DiPalma from William Blair. Your line is now open.

Louie DiPalma -- William Blair -- Analyst

Kevin, Matt, Judyand Steven, good evening.

Matt Tait -- Chief Operating Officer

Good evening.

Louie DiPalma -- William Blair -- Analyst

Matt, you mentioned how your intelligence community bookings as a percentage of total bookings have recently only been 25%, whereas previously, they were approximately 50%. As it relates to this topic, are you maintaining your win rate and your prevailing market share? Or have you seen any fluctuations in that regard?

Matt Tait -- Chief Operating Officer

I think -- so I think the overall industry is seeing delays. So I think from a market share perspective, I don't feel like we're losing anything at this point. We feel -- we like the future of where the opportunity pipeline that we do have within Intel and that we expect to continue to retain the recompetes and be consistent with our win rates and market averages like they have been in the past.

Louie DiPalma -- William Blair -- Analyst

Great. And also related to the prior answer. On the business development commentary, you also mentioned that you were unsuccessful for several large civil program pursuits. Do you need to make more acquisitions to be successful on these larger programs? Was there anything specific that you were lacking? We know that Booz Allen obviously, recently acquired Liberty IT and they acquired like low-code, no-code talent for software development. Is there any particular skill set, whether it's data analytics, software development, artificial intelligence, cloud computing that you feel you are lacking? Or like was there any specific error analysis that you can point to for these awards? Thanks.

Matt Tait -- Chief Operating Officer

Sure. So I think -- so we were not lacking in any capabilities, and we will continue to leverage both organic investment and M&A as appropriate to advance our business within Federal Civilian as well as across the entire business. I think for us, these were newer customers. And so we are kind of refocusing and making sure we have better customer intimacy moving forward.

Louie DiPalma -- William Blair -- Analyst

Great. And for these large civil program pursuits, are they more price competitive? Is -- like could you point to the fact that like perhaps those vendors that won the programs were willing to take a lower margin? Or is there an intense price competition for like very large civil programs?

Matt Tait -- Chief Operating Officer

So I think there's always price competition within -- not just Federal Civilian, but across the market. So -- but that -- I would call that a normal competitive pressure, not something -- like if you're asking relative to LPTA, what we're really not seeing -- I mean we see that in a couple of places, but that -- the pendulum has not swung back to that within the market.

Louie DiPalma -- William Blair -- Analyst

Okay. Yes, I was just referring to how -- like it seems like as it relates to ultra large IT and cloud contracts that there's a lot of competition taking place between Leidos and General Dynamics IT and Peraton and SAIC and CACI, and it seems for these mega contracts that there's -- it's intensely price competitive, and it might be difficult for ManTech to break into those types of contracts, given how a lot of those providers have a lot of heritage with these mega IT/cloud contract. So I was wondering if there's like any deficiency in terms of scale or if it's just like the margins on those types of contracts are unappealing to you?

Matt Tait -- Chief Operating Officer

Sure. No, I think that from a -- I'll say, from a pricing perspective, we've been able to be competitive with all of those folks for those types of opportunity sets. And that's our expectation, it's to be a competitive in that -- within those environments as well as others. Within the Federal Civilian, we are -- as you said, right, we're looking to expand our footprint. But I think for us, what we have found is we do have the capabilities. The customers have recognized those. We do have the right pricing and capability there to be competitive. And for us, it's just -- like, to your point, these are newer areas that we are working to get into. And so that is where we're working on the customer intimacy aspect of that.

Kevin M. Phillips -- Chairman, President & Chief Executive Officer

I'll also add that we're more cautious on the mega enterprise IT deals in terms of how many we go after, to your point.

Matt Tait -- Chief Operating Officer

Right.

Louie DiPalma -- William Blair -- Analyst

Great.That make sense. Thanks.

Operator

Thank you. Our next question comes from the line of Gautam Khanna from Cowen. Your line is now open.

Gautam Khanna -- Cowen -- Analyst

Hi. Just a follow-up, if you don't mind. I was wondering this year, how far the ODC shortfalls were relative to the initial guidance? And then just -- because there are a lot of moving pieces like you mentioned. So how much was ODCs if you were to -- just ODCs? [Indecipherable] Just relative to last quarter, this quarter, next quarter.

Judith L. Bjornaas -- Executive Vice President & Chief Financial Officer

We're not going to go into the specifics of the number, but I do think -- as I mentioned, we were expecting it to accelerate in the second half of the year, and it didn't. So it's one of the components that resulted in the revision of the 2021 guidance.

Gautam Khanna -- Cowen -- Analyst

Judy, does it -- does the absence of ODCs, whether it be routers or whatever, impair the company's ability to actually ramp direct labor? Is there like a secondary impact because until you have the product, you can't execute the work? I'm just curious, like, is that also maybe one of the knock-on effects or not?

Judith L. Bjornaas -- Executive Vice President & Chief Financial Officer

Yes, I'll let Matt take a -- answer that.

Matt Tait -- Chief Operating Officer

Sure. I mean there is a little bit of labor that goes with that. But I think when we're expecting, Gautam, to your question, supply chain really is kind of in the later part of 2022, but that's because the revenue contribution is delayed by how we're putting this together. It's components from suppliers that we're kind of bringing together in unique ways. And so when we have some supply chain constraints, that's what's happening. That's how we're doing that work. So hopefully, that gives you a little bit more clarity because we're doing things that are on a platform level. And so that's what you need to kind of make it happen.

Gautam Khanna -- Cowen -- Analyst

Okay. And then you guys talked about the normal recompete year next year. Are there any kind of individually large ones that we should be monitoring?

Judith L. Bjornaas -- Executive Vice President & Chief Financial Officer

Yes, we don't have anything that's over five percent of our revenue.

Gautam Khanna -- Cowen -- Analyst

Thank you.

Operator

Thank you. Our next question comes from the line of Brian Kinstlinger from Alliance Global Partners. Your line is now open.

Brian Kinstlinger -- Alliance Global Partners -- Analyst

Yes. Just a couple of small numbers of questions. Realizing that most of your bookings were from existing work. Can you just give us that number for the September quarter of what was new and expansion of business as a percentage of the total?

Matt Tait -- Chief Operating Officer

Yes, I can do that, right? The quarterly bookings for this quarter, it was about 10% new, 90% recompete.

Brian Kinstlinger -- Alliance Global Partners -- Analyst

Great. And the other question is, you gave a lot of numbers that probably you could back into it. But for the third quarter, the nonrecurring benefits, I see a $2.5 million reversal for bad debts. I assume that helped, but also maybe what were the total nonrecurring benefits that include the contract closeouts in the quarter?

Judith L. Bjornaas -- Executive Vice President & Chief Financial Officer

Yes. I mean, I think that clearly was a big part of it. And then still -- so that's probably about half of it plus the indirect expense carrying forward.

Brian Kinstlinger -- Alliance Global Partners -- Analyst

So margins would have probably been more like the second quarter, if not for those benefits? Is that how I should think about it?

Judith L. Bjornaas -- Executive Vice President & Chief Financial Officer

Yes. I mean, again, we were kind of looking at it for the full year, kind of normalizing the revised guide of 10.2% down to the normalized 9.4%.

Brian Kinstlinger -- Alliance Global Partners -- Analyst

Okay. Alright. Thank you.

Operator

At this time, I'm showing no further questions. I would like to turn the call back over to Stephen Vather for closing remarks.

Stephen Vather -- Vice President of M&A and Investor Relations and Executive Director of Corporate Development

Thank you, Gigi. And for all of you for joining on today's call and for your interest in ManTech. As usual, the senior team and I will be available for any follow-up questions. Have a good evening.

Operator

[Operator Closing Remarks]

Duration: 47 minutes

Call participants:

Stephen Vather -- Vice President of M&A and Investor Relations and Executive Director of Corporate Development

Kevin M. Phillips -- Chairman, President & Chief Executive Officer

Matt Tait -- Chief Operating Officer

Judith L. Bjornaas -- Executive Vice President & Chief Financial Officer

Matt Akers -- Wells Fargo -- Analyst

Matt Sharpe -- Morgan Stanley -- Analyst

Gautam Khanna -- Cowen -- Analyst

Brian Kinstlinger -- Alliance Global Partners -- Analyst

Tobey Sommer -- Truist Securities -- Analyst

Mariana Perez Mora -- Bank of America -- Analyst

Louie DiPalma -- William Blair -- Analyst

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