CSRA Investor Day
Transcript of CSRA Investor Day
INVESTOR DAYNovember 5, 2015
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Forward-Looking Statements
All statements in this presentation that do not directly and exclusively relate to
historical facts constitute “forward-looking statements.” These statements
represent CSC’s and/or CSRA’s intentions, plans, expectations and beliefs, and
are subject to risks, uncertainties and other factors, many of which are outside the
control of either CSC or CSRA. These factors could cause actual results to differ
materially from such forward-looking statements. For a written description of these
factors, see the section titled “Risk Factors” in CSC’s Form 10-K for the fiscal year
ended April 3, 2015 and any updating information in subsequent SEC filings as
well as in CSRA’s Registration Statement on Form 10 including the information
statement included as an exhibit thereto. CSC and CSRA disclaim any intention or
obligation to update these forward-looking statements whether as a result of
subsequent event or otherwise, except as required by law.
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Non-GAAP Reconciliations
This presentation includes certain non-GAAP financial measures, such as
operating income, operating margin, Earnings Before Interest and Taxes (EBIT),
free cash flow, capital expenditures and capital intensity. These non-GAAP
financial measures are not meant to be considered in isolation or as a substitute
for results prepared in accordance with accounting principles generally accepted in
the United States (GAAP).
A reconciliation of non-GAAP financial measures included in this presentation to
the most directly comparable financial measure calculated and presented in
accordance with GAAP accompanies this presentation and is available at
www.csc.com/investorrelations. Our respective management teams believe these
non-GAAP financial measures provide useful information to investors regarding our
financial condition, cash flow and results of operations as they provide another
measure of our profitability and ability to service our debt, and are considered
important measures by financial analysts covering us and our peers.
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Agenda
PresentersTopic Time
Mike LawrieLarry Prior
Introducing CSRA 1:00 - 2:00 pm
Q&A 2:30 - 3:00 pm
David KefferFinancial Outlook and Capital Allocation
2:00 - 2:30 pm
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A. Introducing CSRA: A Three-Year Transformation
B. CSRA Key Investment Highlights
C. Financial Outlook and Capital Allocation
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To Accelerate Our Transformation, We Are Separating into Two Companies
Benefits for stakeholders
Leader in U.S. government IT & professional services
19KEmployees
$5.5BFY15 Revenue
14%Operating margin
Trusted IT partner for Fortune 500 companies
56K Employees
$8.1BFY15 Revenue
10%Operating margin
CSC:
Commercial
CSRA:
U.S. Public
Sector
Clients
• More focused IT innovation
• Best-in-class partners
• Global offerings
Investors
• Significant value creation opportunity
• Access to two pure-play companies in two different market segments
Employees
• Long-term stable environment
• Platform for next-gen skills
• Clarity of purpose
Partners
• Access to two significant segments of the IT services business
• Access to our broad customer base
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We Have Significantly Improved Our Public Sector BusinessOver the Last Three Years
Turnaround priorities
64.32015 Net Promoter
Score, up from 44.1
17%Increase in win rate,
by number of bids won
90%Recompete win
rate, up from 54%
>2xOperating margin
improvement
What we achievedFY12 FY15 FY17
Operating Margin 6.4% 8-9%
Prior targetsStarting point
14.7%
Institute transparent and accountable management system
Fix the foundation
Expand market coverage and drive demand
Move up the value chain
Scale next-gen offerings
Rationalize and standardize offerings
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Our Strategic Priorities Will Ensure CSRA’s Ongoing Success
Sustain best-in-class margins through our delivery excellence, favorable
contract mix, cost discipline, and synergy realization1
Efficiently allocate capital to quickly de-lever while investing in the
business and returning FCF in dividends and share repurchases
2
Invest in strengthening our industry-leading workforce
4
3
Capitalize on revenue growth opportunities through our broad array of
offerings, deep client understanding, and extensive partnerships
b. Leverage our uniquely diversified customer base to stay aligned with
the government’s funding priorities
a. Lead our clients on their digital journeys
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Introducing CSRA’s Executive Leadership
Mike LawrieChairman
Larry PriorPresident & CEO
David KefferEVP & CFO
30+ years in the intelligence community and defense sector
Leadership roles at BAE, SAIC, and ManTech
12 years in SRA’s finance, accounting, and growth functions
Prior experience with Navigant and Maden Tech
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A. Introducing CSRA: A Three-Year Transformation
B. CSRA Key Investment Highlights
C. Financial Outlook and Capital Allocation
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CSRA Key Investment Highlights
Clear Market Leader with Differentiated Next-Gen Capabilities in the Federal IT
Services Market1
Compelling Financial Profile with Attractive Contract Mix and Best-in-Class Margins
2 Balanced Portfolio with Uniquely Diversified Contract and Customer Base
3
Strong Position in Higher Growth Segments of the Federal IT Services Market4
Disciplined Growth Strategy Driven by Significant Backlog, Robust New Business
Pipeline, and Strict Operational Rigor5
Leadership Team with Proven Operational Track Record Supported by
Industry-Leading Talent6
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The CSRA Difference
We combine next-generation technologies with innovative solutions to help our public sector customers meet challenges in an evolving digital world
Strategic Intent Statement
To lead the industry in enabling public sector agencies to leverage IT technology and next-generation solutions to
exponentially improve the effectiveness and efficiency of mission-critical functions for our warfighters and our citizens
CSRA: Enabling the U.S. Federal Government
THE POWER OF CSRA
We have over 50 years of public sector experience with our commercially developed
best practices.
OUR PEOPLE
Passionate employees blend business process,
design, and technical capabilities.
THE BRANDS
Our Brands are a proven holistic approach to solving customer
business challenges, drawing on best practices across commercial and government industries.
NEXT GENERATION
We are leading innovation through next-
gen technology and solutions in cloud, big
data, mobility, and apps.
ALLIANCE PARTNERS
We have enhanced our technical and domain
expertise with strategic partnerships that deliver innovative end-to-end
solutions.
TECHNOLOGYINDEPENDENCE
Flexible and informed point of view
optimizes customers’ technology choices.
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Scale with Best-in-Class Margins Diverse Customers & End Markets
19,000
EMPLOYEES
4,700
U.S. VETERANS
100+
CONTRACT VEHICLES
2,000+
PROJECTS
$5.5
$5.3
16.6%
9.9%
CSRA
CSRA
Significant Scale
Best-in-Class EBITDA Margins
(Revenues in billions)
Hea
lth
Civ
ilIn
tel
Classified
Defe
ns
e
Nearest
Peer
Nearest
Peer
The Leading Pure-Play Federal IT Services Provider
Organizational Snapshot
We See Opportunity to Gain Market Share in a Large and Fragmented Market That Is Gradually Shifting to
Next-Gen Technologies, While Sustaining Best-in-Class Margins
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Differentiated Portfolio of Capabilities and Service Offerings
DEFENSE ITModernized and sustain one of the
world’s largest supply chains, streamlining military logistics, and
support for a major branch of the U.S. Armed Forces
CIVILProvide administrative, financial, human resources, and procurement services to employees, applicants, contractors, and
university partners for a major Civil agency
HOMELAND SECURITYProvide IT infrastructure
services to support a major agency’s
counterterrorism mission
We have commercially developed best practices and technologies with
next-gen partners
DEFENSE MISSIONManage and operate the largest
helicopter training facility in the world, using leading-edge flight simulators to
provide more than 70,000 hours of training to 1,100+ student pilots
annually
HEALTHCAREDeveloped the first public
multi-payer system for processing claims and
payments for Medicaid and other programs in the United States
INTELSupport the IntelligenceCommunity’s Information
Technology Enterprise strategywith seamless, secure solutions for its
applications and data analytics
TECHNOLOGY ENABLED MISSION SERVICES
SCIENCE AND THREATREDUCTION SOLUTIONS
ENTERPRISE SERVICES IT NEXT-GEN TECHNOLOGYMISSION SERVICES
APPLICATIONMODERNIZATION
AND OPTIMIZATION
APPLICATION INNOVATION SERVICES
CITIZEN SERVICEENABLEMENT
CLASSICAL SERVICES
CONVERGEDINFRASTRUCTURES
CSRA Is a Trusted Leader in Delivering Commercially Developed Practices to the Civil, Health, Defense & Intelligence Sectors
CYBER SECURITY
CLOUD POWEREDCOMMERCIAL SOLUTIONS
BIG DATA SCIENCE
CLOUD BROKERSERVICES
CUSTOMPLATFORMSERVICES
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Brands
Our Extensive Capabilities Align with Client Priorities
PartnersHigh growth brands
We take our clients on a
transformation journey to
hybrid cloud
Science& Threat
Reduction Solutions
DoD Mission
Converged Infra-
structures
Cloud Broker
Services
Custom Platform Services
Classical Services
Application Innovation Services
Big Data Science
ApplicationModernization & Optimization
Cyber
Citizen Service
Enablement
Cloud Powered
Commercial Solutions
Market Trends + Deep Client Intimacy + Aligned Capabilities = Opportunity for Growth
We have deep client
intimacy grounded in the
mission
We tailor our suite of
capabilities to client
needs
Next-Gen
Technology
Enterprise
Services IT
Mission
Services
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We Have Deep Client Understanding in Civil…
TSA Cyber SecurityDHS Stennis Data Center Operation
Long-Standing
Client Relationships
EPA Water Security Support NASA Shared Services Center
HHS CMS DECC Quality Systems VA Enterprise Veteran Self Service
Civil: $2.9B
DHS: 13 years,
since inception
CDC: 24 years
NIH: 20 years
Other HHS Op.
Divs: 21 years
Veterans Affairs:
20 years
EPA: 37 years
DOE: 25 years
DOS: 22 years
Homeland
Security
Health
Other Civil
Apps Mod; Cloud and Mobility Services Reduced Cost Infrastructure Support
24x7x365 Cyber security to TSA networks ISO 27001:2005 Certified
Consolidated support of IT services ServiceNow SaaS to NASA improves
productivity
Chemists, Microbiologists & Climate Change experts
Mobile apps for decision support tools
Agile software development Moving data packages to Amazon Cloud
Streamlined customer benefits interface Software dev, operations, and maintenance
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... And Defense & Intel to Lead Clients into the Digital Future
USEUCOM / USAFRICOM ITArmy Logistics Modernization
Eagle Alliance Classified IT Mission-Critical Classified IT
Army Flight School XXI Naval Sea Systems Command
Defense & Intel: $2.6B
Mission-Critical
Joint Unified
Combatant
Command
Support which
includes 5th
Signal Command
30+ year
relationships with
all DoD branches
Intel agencies:
30 years
Defense
IT
Defense
Mission
Intel
Major successful SAP implementation Extensive use of HANA for analytics
Enterprise IT services with next-gen offerings
IT collaboration and data sharing
Virtualized desktop environment and backend infrastructure
Developed private cloud for Intel Community
High fidelity low-cost training solution Turn-key helicopter virtual training services
System engineering & design service for major ship classes
Top services provider to NAVSEA
24x7x365 support for global operations Provide secure, mission-critical global
IT enterprise support
Long-Standing
Client Relationships
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Balanced Portfolio with Uniquely Diversified Contract and Customer Base
Balanced
Portfolio
Diversified
Contract Base
IT Infrastructure,
IaaS, PaaS
Apps,
SaaS,
Business Outcomes
Mission
Services
Medium contracts
$10M to $100M
Small contracts
<$10M Large contracts
>$100M
Deep Experience
Across Clients
Intel
Defense IT
Health
Homeland
Security
Other
Civil
Defense & IntelCivil
3xBacklog to Revenue
10 yearsAverage contract length
for Top 25 contracts
200%+Contract value versus original contract award
for Top 10 contracts
38%
38%
24%32%
44%
23%15%
21%
11%17%
20%
15%
Defense
Mission
Classified
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Brands, Partners, Achievements
Transition to leading edge
hybrid cloud environment
Develop business insights for
strategic planning and
decision-making
Operate in a
budget-constrained
environment
National aviation authority that regulates and oversees all aspects of American civil aviation
Case Study:Next-Gen Infrastructure and Workplace for FAA Leading our clients into the digital future
Started with DUATS
and TFMS apps
Transitioned FAA to cloud-based email on Microsoft Office 365
Data center consolidation and cloud migration
Real-time monitoring & cloud management with Agility Platform
Cloud brokerage model and tailored hybrid cloud with DR/COOP
Improved security posture with Horizon
Business growth potentialwith PaaS and SaaS
FAACloud
Services
55K accounts transitioned to cloud-based Office 365 email
Quarterly reviews to optimize for price, performance, and capabilities
Opportunity Our Engagement
Cloud Broker
Services
Custom Platform Services Cyber
Cloud Powered
Commercial Solutions
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Brands, Partners, Achievements
Opportunity Our Engagements
Case Study: Enabling Precision Medicinewith The Cancer Genome Atlas
Enable large-scale, automated solutions to
help combat cancer
Challenges:
Disparate
large data
sets with
few
standards
Existing
data sets
stored at
multiple
locations
NCI Needed:
Secure data
submission
processes
Increased
compute
capacity
Tools to
analyze
large
data
sets
Currently piloting a
Research Based
Computing, Storage,
and Analytic Platform
to bring robust compute
to support precision
medicine
Establish and operate a publicly
available, enterprise-level big data
submission and retrieval system
for cancer researchers across the
world
Provide life-cycle infrastructure
support across 9K+ NCI users
Extended data use with Cloud Pilot
storage and analytics
Leading our clients into the digital future Nation’s leader in cancer research
Classical Services
Cloud Powered
Commercial Solutions
Application Innovation Services Cyber
NIH’s The Cancer Genome Atlas (TCGA) Project –Winner of the “2015 Sammies People’s Choice Award for Service to America”
1,500 scientific publications using TCGA data
150TB of data stored
20TB distributed monthly
2.5PB of data in Google Cloud
Research Support
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Brands, Partners, Achievements
Enlisted by NY State to
develop state-based
exchange
High stakes for the state
given federal exchange
experience
2.1M New Yorkers enrolled as of Feb 2015
Opportunity Our Solution
Built flexible infrastructure that could ramp up and down with volume
demands
Deployed best-in-class Packaged and Open Source software solutions
Employed adaptive iterative processes to meet evolving requirements
Case Study:State-of-the-Art Health Benefits Exchange
Leading our clients into the digital future
Custom Applications Development
ApplicationModernization & Optimization Cyber
Citizen Service
Enablement
Widely recognized as model for health benefits exchange
To support millions of New Yorkers expected to purchase health insurance through the exchange
Delivered a high-profile, innovative solution that adhered to stringent security
(including HIPAA) and architecture needs
90% Enrollees satisfied with coverage
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Our Commercial Best Practices and Attractive Contract Mix Drive Superior and Sustainable Margins
Fixed Price
Cost Plus
Time &
Materials
FY15 (Percent of total)
Contract mix across sector
Focus on Fixed Price contracts
Sole-sourced incumbent on many large contracts
High concentration of IT services
Industry-leading expertise
Superior execution
Mission-focused employee base
18 19 20 21 27 34
36 20
25 10
25
29
46 60 55
69
48 37
CSRA
Today
42
21
37
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FY15 Revenue$ millions
The Value of Our Services and Attractive Contract Mix Is Reflected in Our Best-in-Class Financial Results
Adjusted EBITDA$ millions
Government
CSRA
Synergies $50-55M
$5,459
$5,275
$4,997
$4,070
$3,917
$3,354
$2,500
$1,692
$1,389
$909
$524
$441
$673
$297
$312
$245
$129
$183
16.6%
9.9%
8.8%
16.5%
7.6%
9.3%
9.8%
7.6%
13.2%
Adjusted EBITDA
Margin
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Key Investment Highlights: Taking CSRA Forward
Clear Market Leader with Differentiated Next-Gen Capabilities in the Federal IT
Services Market1
Compelling Financial Profile with Attractive Contract Mix and Best-in-Class Margins
2 Balanced Portfolio with Uniquely Diversified Contract and Customer Base
3
Strong Position in Higher Growth Segments of the Federal IT Services Market4
Disciplined Growth Strategy Driven by Significant Backlog, Robust New Business
Pipeline, and Strict Operational Rigor5
Leadership Team with Proven Operational Track Record Supported by
Industry-Leading Talent6
25
$345
$437
$467$476
$526
$598
$666 $659
$690 $687
$645
$577 $581
$559
$607 $610
$8
$9
$12
$13
$14
$16
$18
$20
$22
$23 $23
$21
$19 $20$20
$21
$0
$5
$10
$15
$20
$25
$30
$0
$100
$200
$300
$400
$500
$600
$700
$800
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Go
ve
rnm
ent S
erv
ices C
om
bin
ed
Re
ven
ue (U
SD
in b
illion
s)
De
part
men
t of D
efe
nse B
ud
get (
US
D in
billio
ns
)
Base Budget Iraq / Afghanistan Budget Government Services Combined Revenue
Government Services Revenues Returning to Growth After War-Driven Surge Period
Afghanistan Troop Surge
Iraq Troop Surge
26
We Understand the Operating Environments and Pressures That Our Clients Face
Public Sector IT Priorities
Execute in all budget and mission environments
Modernize
legacy IT
systems to
next-genEnsure
integration of
cyber security
across the
board
Enable digital
government
Invest in
healthcare IT
Global instability and security
threats
Broad-based public sector need for efficiency and
effectiveness
Changing demographics
Increasing expectations for web-enabled government
interactions
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IT Spending Across End Markets Returning to Growth
DoD IT Budget ($B) Non-Defense IT Budget ($B)National Intelligence Budget ($B)
$38.2 $37.3 $37.4 $36.3 $37.3
2012 2013 2014 2015 2016
$53.9
$49.0 $50.5 $49.4
$53.9
2012 2013 2014 2015 2016
$41.2 $41.3
$44.4
$47.9 $49.1
2012 2013 2014 2015 2016
IT Budgets Across All Key Departments Projected to Increase to Support Evolving IT Priorities
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Increased Focus on Next-Gen Capabilities and SolutionsSpend Shifting to Next-Gen$ billions
$3.1
$3.9
$4.8
$5.8
$2.0$2.3
$2.5$2.8
$9.2$9.7
$10.2$10.7
FY18FY17FY16 FY19
Cloud CyberBig Data
FY18FY17FY16 FY19FY18FY17FY16 FY19
Next-Gen Technology Offerings Such as Big Data, Cloud, and Cyber are
Key Drivers of Demand as Government Agencies Continue to Modernize Their IT Infrastructure
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CSRA’s Key Priorities for Achieving Disciplined Growth and Continued Industry Leadership
Extending Existing Business Backlog of $14B+ in awarded contracts
As contracts near end, become available for extension or recompete
Increase recompete win rates and earn the right to extend contracts
Driving New Business Pipeline of $23B in qualified new business opportunities
Scale business development for increased submittals
Increase new business win rate
Maintaining Competitive Cost Structure Business development efficiency
Reduced overhead
Flexible service model
Low-cost delivery
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Uniquely Positioned to Grow Existing Business Through Extensions and Recompetes
Supporting our core business is a total backlog
of $14B+ or roughly 2.6x our FY15 revenue
Multi-year extensions to increase scope and
tenure of current contracts
– Driven by complexity of work and
client satisfaction
Highly successful recompete strategy
– LTM recompete win rate of 88%
Existing Business Provides Strong Foundation for Growth
$14B+Current Backlog
88%LTM Recompete Win Rate
$2.4BBridges and Extensions
Awards since April 2014
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Robust New Business Pipeline of Actionable andNext-Gen Opportunities
Existing backlog is complemented
by a large qualified opportunity
pipeline
Significant amount of new business
awards pending adjudication
Established competitive intelligence
and price-to-win organization with
strong capture and proposal
support
New business win rate of 25%
New Business Initiatives to Drive Growth
Annual Qualified
New Business
Pipeline
$23B
LTM New
Business
Win Rate
25%
LTM Submittals
$10B
Today
32
Scaling Our New Business Growth Engine: Outlook
Business Development Priorities
New Business Initiatives to Drive Growth
Annual Qualified
New Business
Pipeline
$23B
LTM New
Business
Win Rate
25%
LTM Submittals
$10B
Today
Continue to Scale BD
Engine Through
Innovation and
Increased Efficiency
Apply Greater Rigor and
Discipline to Capture
Activities
Enhance Technical
Qualifications and
Resource Capacity
Annual Qualified
Pipeline
$25B
New Business
Target Win Rate
25%
Submittals
Target
$16B
Anticipated New
Business Awards
$4B
or $800M / year in New Business Revenue
Target
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Reduced Overhead
Low-Cost Delivery
Low-cost Integrated
Technology Center (ITC) in
Bossier City, LA
World-class program
management
Next-gen skills
Our Competitive Cost Structure Is Driven by Four Main Advantages, Which We Will Maintain Going Forward
Bossier City
-31%
9%
FY15
13%
3+ years of cost
discipline efforts
Continued supply
chain optimization
FY12
SG&A as a % of revenue
300+
1,500
FY18Today
FTEs at ITC
Business Development Efficiency
“Factory-like” approach utilizes
standardized solutions that can be tailored
based on customer unique requirements
Evaluating and working similar bids
together to leverage solutions and
strategies
2,200+ proposal artifacts developed and
accessed in a central repository
Flexible Service Models
• Outcome-based, as-a-service models
• Favorable pay-as-you-go economics
• Multi-channel contracting
• Rate structure aligned with bids
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Increased Use of Nearshore Low Cost Centers
Infrastructure
42six /
Data Science
Business
Process
Services
Applications
National
Security
Cyber &
Networks
AppWorks
On Demand Cyber
BDaaS
Custom Apps Development
Hybrid Cloud
Agility Platform
Oracle Apps
Federal WAN
Government Storage SaaS
Remote Mgmt
Government UCaaS
SAP Services
Office 365 Implementation
$39M for Building /
Data Center
Quality Jobs Program
(6% Rebate on Payroll)
~$10M for Relocation /
Recruiting
$14M Investment in
Universities
Digital Media Software
Development Incentive
(35% Rebate on Payroll)
LED FastStart
$116M in State Incentives
Bossier City, Louisiana
Secure Federal IT Service Delivery
300+ Employees Today / 1,500 by mid-FY18
Office (96K sq. ft.) / Data Center
Showcase Next-Gen Workplace
Workforce Development
Aggressive Hiring and Relocation
Unique Partnerships with LA Tech and Northwestern University
Integrated Capability Development
Bossier Parish Community College (9,000 students) for Assoc.
Degrees; IT Certification Training
Integrated Technology Center
Offerings
Delivery
Channels
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Our Engagement
Built state-of-the-art infrastructure monitoring and response
processes with continuous improvements
Cyber security to keep airport data secure
Managing servers and infrastructure in high-security testing facility
Technology to remotely manage equipment and prevent failures
Used low-cost Integrated Technology Center in Bossier City, LA
Bossier City: Ensuring Rapid Threat Response and Functioning Equipment for TSA
Delivering effective client solutions at low cost
No major outages for
several years
Improved threat
response times
Continuous 24x7x365
monitoring of the
worldwide environment
Low-cost solution
Opportunity
TSA needed continuous
operation and rapid
response abilities across
all airports
Critical systems going
down and not being
restored quickly enough
Budget pressures
necessitated a low-cost
solution
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Our People Are Committed to Our Clients’ Mission Success
People-First Approach Defines Our Culture of Honesty and Service
We Continue to Invest
in Our People and Skills
FY15 increase in
Solution Architects
10%
Professional certifications
14K+Our customers
are deeply
satisfied Top quartile
Net Promoter Scores
64.3High contract recompete /
extension win rate
90%
Our workforce is
devoted to
serviceU.S. Military Veterans
4,700Years of
government service
50+
With bachelor’s degrees
or higher
Security clearances
80%70%We have
industry-leading
talent
Client-focused Leadership Excellence in People and
Program Execution
Aspiration Results
Our values are
Partnering for
AWS training
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Our Strategic Priorities Will Ensure Our Ongoing Success
Sustain best-in-class margins through our delivery excellence, favorable
contract mix, cost discipline, and synergy realization1
Efficiently allocate capital to quickly de-lever while investing in the
business and returning FCF in dividends and share repurchases
2
Invest in strengthening our industry-leading workforce
4
3
Capitalize on revenue growth opportunities through our broad array of
offerings, deep client understanding, and extensive partnerships
b. Leverage our uniquely diversified customer base to stay aligned with
the government’s funding priorities
a. Lead our clients on their digital journeys
38
A. Introducing CSRA: A Three-Year Transformation
B. CSRA Key Investment Highlights
C. Financial Outlook and Capital Allocation
39
Financial Value Drivers
Return to revenue growth
Build on solid base of long-term contracts
Further invest in business development capabilities
Cross-sell broad suite of next-gen IT offerings
Leverage expanded contract vehicle portfolio
1 32Sustain best-in-class EBITDA margins
Continue to improve industry-leading contract mix
Build upon existing low-cost delivery methods
Continue to achieve additional back-office process and structural efficiencies
Realize cost synergies from SRA merger
Allocate capital in a disciplined manner
Reinvest in the business
Reduce debt and maintain solid credit profile
Consider small, strategic acquisitions
Return capital to shareholders through dividends and opportunistic share buybacks
4Continue to deliver strong cash flow
Build on track record of converting strong profitability to cash
Optimize tax structure
Manage working capital
Reduce non-project-related capex
40
Return to Revenue Growth1
$14B+ contract backlog
$2.4B in pending adjudications from extensions
and recompetes as of FY16 Q1
10-year average length of top 25 contracts
$23B of qualified new business pipeline as of
FY16 Q1
$6B of pending adjudication from new business
as of FY16 Q1
Commercial next-gen IT capabilities
Full portfolio of contract vehicles
across government
Spending across end markets returning
to growth
Diversity of customer base reduces impact of
priority changes from presidential election
Pipeline
Capabilities
Backlog
Market
Conditions
Targeting 2% - 3% Annual Revenue Growth Through FY19
Health
& Civil
Defense
& Intel
47%53%
Health
& Civil
Defense
& Intel
FY15: $5.5B FY19: $5.8 – $6.0BTarget
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Operational Efficiencies
Low-Cost Delivery
Expand FTEs by 4x over
3 years in low-cost delivery
center in Bossier City, LA
World-class program
management with carefully
crafted metrics & incentives
Service delivery
standardization
Bossier City
9%
FY15
13%
Continued focus on
back-office efficiency
3+ years cost discipline
efforts led to 31%
SG&A reduction in
CSRA since 2013
Maintain focus on
process and personnel
efficiencyFY12
SG&A as a % of revenue
Profitable Contract Mix Differentiated mix of customers, offerings,
and contract types
Diversification across government
sustains contract mix
Pipeline focused on Fixed Price and T&M
Focus on IT (~75% of revenue) a key
differentiator
Merger Cost Synergies
Estimated EBITDA benefit of
$50M - $55M
Detailed bottoms-up budgets
validate savings
Plan to capture all synergies in
6 - 18 months
Includes facilities, back office, and
go-to-market savings
Sustain Best-in-Class EBITDA Margins2
Business Groups
24%
Corp Costs44%
Facilities16%
Fringe Benefits
16%
Targeting 16% - 17% Adjusted EBITDA Margin
We intend to continue offsetting industry pricing pressures through a combination of direct cost efficiencies and back-office synergies:
Cost
Plus
37%
Time &
Materials
21%
Fixed
Price
42%
42
Continue to Yield Strong Free Cash Flow
Working Capital
Flexibility to pre-pay without penalty
Benefited by debt reduction
R&D credit
Target 39% or less tax rate
Transition to next-gen offerings with a lower capital expenditure profile
Improved collections
More favorable supplier terms
3
FCF 100% or More of Net Income Through FY19
Revenue growth acceleration
Maintain profitable mix of contracts and operational efficiency / low-cost delivery
Capex
Interest
Taxes
EBIT
43
Solid Capital Structure with Ample Liquidity and Flexibility
$300M+ cash at closing
$500M undrawn revolver capacity
$450M receivables financing facility
Annual Free Cash Flow$350M - $400M
$ millions
Target Net Debt / EBITDA of 2.5x or Lower
4
$700 RC
Debt Maturity Profile
$8
TLB
$1,160TLA2
$600TLA1
$700RC
$80 $80
$680
$80
$1,868
$8
$705
2016 2017 2018 2019 2020 2021 2022
$80
44
Allocate Capital in a Disciplined Manner
Reduce leverage and maintain solid credit profile
Return capital to shareholders through dividends and opportunistic share buybacks
Consider small acquisitions to strengthen portfolio
DebtRepayment
Capital Return to Shareholders
Targeted Acquisitions
50%
40%
10%
4
Next Three Years % of FCF Target
45
Targeting Industry-Leading Financial Performance
FY19
EBITDA 16% - 17% Margin Cost efficiencies and synergies
Revenue$5.8 - $6.0B
2% - 3% Annual Growth
Generate returns on BD investments and Next-Gen IT Offerings
Book-to-bill ratios > 1.0x
Diluted EPS$2.30 - $2.50
8% - 10% Annual Growth
EBITDA growth
Debt pay down
Share repurchases
Free Cash Flow 100%+ of Net Income Working capital efficiency
Optimize capex
46
CSRA Key Investment Highlights
Clear Market Leader with Differentiated Next-Gen Capabilities in the Federal IT
Services Market1
Compelling Financial Profile with Attractive Contract Mix and Best-in-Class Margins
2 Balanced Portfolio with Uniquely Diversified Contract and Customer Base
3
Strong Position in Higher Growth Segments of the Federal IT Services Market4
Disciplined Growth Strategy Driven by Significant Backlog, Robust New Business
Pipeline, and Strict Operational Rigor5
Leadership Team with Proven Operational Track Record Supported by
Industry-Leading Talent6