Q1 2023 CACI International Inc Earnings Call
Our ongoing shareholder value.
Thanks, John I'm very happy to join the team over the years I've watched caci's success with great admiration and respect.
Forward to helping us deliver continued profitable growth and strong cash flow.
Thanks, Jeff and now onto my commentary and then I'll turn the call over to Tom to cover the financials slide four please.
Last night, we released our first quarter results for fiscal year 2023.
I am pleased that our performance and the strong start to our fiscal year, we grew revenue, 8% with growth in both expertise and technology profitability and cash flow were also strong.
And we won $3 2 billion of contract awards of which more than 80% is new business to CACI.
That represents a two times book to Bill for the quarter and one three times on a trailing 12 month basis.
Tom will provide additional financial details shortly.
Slide five please.
Turning to the external environment as we look out over the next several years prospects remain positive.
In the immediate term we are operating under a CR through mid December .
While the timing of the government fiscal year 'twenty three appropriations is not clear.
What is clear is that we continue to see strong demand and bipartisan support for national security and modernization priorities.
From a customer perspective, there are favorable budget indications for sustained spending in defense intelligence and homeland security and.
And we see compelling opportunities in areas like digital solutions enterprise.
And <unk> ISR cyber and space.
This strong backdrop gives us confidence in our ability to drive long term growth and margin expansion and robust cash flow and shareholder value.
Slide six please.
As you've heard us say in the past we are focused on investing ahead of customer need to differentiate our technology offerings.
Some of our most recent examples and successes include those in the space domain, where we are investing in photonics capabilities acquired through Lgs NSA photonics.
The long term growth opportunity for our photonics is compelling with space based capabilities, a very high priority for many customers.
And we are already delivering these capabilities directly to our government customers and as a supplier to Oems on other programs.
We also continued to invest in other space based technology like assured precision navigation and timing and laser remote sensing or Lidar. These technology investments are already seen demand from the major government R&D agencies and prime space payloads.
Turning to <unk> for ISR, we continued to invest in a broad range of capabilities with software defined offerings of priority.
Leveraging these investments CCI was recently selected to provide advanced technology capabilities to the U S. Space Force. This win is a great example of our ability to deliver software define innovation and a fast agile manner to support critical national priorities evidenced in our software defined everything.
<unk> continues to pay off.
The enterprise.
Modernization is a key requirement.
<unk> D to improve cyber defense support and increasingly just force dispersed workforce consolidate and modernize legacy applications and networks for efficiency and realize the value of available data.
Here, we are investing and repeatable processes automation infrastructure is code and key partnerships with commercial technology providers, such as AWS service now you Ipass and juniper.
A great example of CCI differentiation is the recent $5 7 billion dollar enterprise.
Enterprise. It is a service wave one contract award by the United States Air Force.
Under this program CCI will deliver enterprise service management systems and processes across the entire department of Air Force as well as set the foundation for future waves. This program will leverage all of the it investments I mentioned earlier.
In addition to investing ahead of customer need we also invest in technology to provide better value to our expertise customers.
A recent example was a contract award within the intelligence community, where the customer was buying mission expertise.
To support their intelligence collections and analysis efforts.
Through investments we've made in AI based computer vision software, we differentiated caci's offering and demonstrated how we can make our offering more efficient effective and valuable to the customer by leveraging our technology.
This benefits both sides, our customer realizes enhanced capabilities and repeatable solutions with a reduced dependency on people and overall reduce cost.
And we realized benefits of differentiated in our bids reduced labor requirements in a constrained labor market and earning better margins.
All of these examples are proof positive that our technology strategy is working to not only grow our business, but also to enhance margins.
In summary, we delivered strong first quarter results and remain on track for the full year.
Demand in the budget environment are positive with continued bipartisan support for national security and modernization priorities.
We are successfully executing our strategy to invest ahead of need and leverage the synergy between expertise and technology to win in the marketplace with that I'll turn the call over to Tom.
Thank you John and good morning, everyone.
Before I turn to our results I want to thank John for the kind remarks in the support he has provided over the many years we have worked together.
I take pride in our many accomplishments and successes.
He has a strong financial performance and shareholder value creation, but also safe guard and strengthening our culture of integrity and innovation.
We are truly a great place for our employees to come to build their careers and we deliver value and operational excellence to our customers and our country.
I am grateful to have been part of this dynamic team I retired from CCI and knowing that the best for the company is yet to come.
And I wish John Jeff and the rest of the CCI team every success.
With that let's turn to our results.
Slide seven please our first quarter is a strong start to the fiscal year.
We generated revenue of $1 6 billion in the quarter, representing overall growth of seven 7% in.
Organic growth was four 3%.
First quarter adjusted EBITDA margin was 10, 6%.
Adjusted diluted earnings per share was up 3% from a year ago, driven by our higher revenue and associated profit.
Slide eight please first quarter operating cash flow, excluding our accounts receivable purchase facility was $143 million.
Reflecting healthy profitability and strong cash collection.
We reported Dsos of 48 days, a record low which represents hard work and diligence across our company.
Free cash flow was $130 million for the quarter.
We ended the quarter with net debt to trailing 12 month adjusted EBITDA at two three times.
Given our strong cash flow profile modest leverage and access to capital.
To have significant optionality to deploy capital and a flexible and opportunistic manner.
Good night.
We are reaffirming our fiscal year 'twenty three vital.
We expect revenue to grow between 4% to 575% with growth in both expertise and technology.
We expect acquired revenue of about $180 million and our full year EBITDA margin will be in the mid to high 10% range.
As a result of higher interest rates, we now expect interest expense in fiscal year 'twenty three to be around $75 million.
$14 billion higher than our original forecast.
Given the underlying strength of our business, we are maintaining our adjusted net income and free cash flow guidance.
As a reminder, we will make a final payment of $47 million in the second quarter to repay deferred payroll taxes under the cares Act.
In addition, as we previously discussed we are assuming the repeal or deferral of section 174, the tax code relating to R&D expense.
This does not occur or operating cash flow would be around $95 million lower for the year.
Recognize that 174 section only impact timing of cash taxes, not the absolute amount.
Slide 10 please.
Turning to our forward indicators prospects remained strong with $103 $2 billion of contract awards during the quarter driving backlog growth of 4% compared to last year.
<unk>.
It's approximately $2 billion from our large airports Enterprise Service award based on currently known scope there.
The difference between this and the headline value represents additional opportunity to drive even more innovation and modernization to the air force over the 10 year period.
For fiscal year 'twenty, three we now expect 90% of our revenue to come from existing programs.
<unk>, 5% from re competes and 5% from new business.
We have nearly $11 billion of submitted bids under evaluation over 70% of which is for new business to CACI.
And we expect to submit another $16 billion of bids over the next two quarters with over 90% of that for new business with that I'll turn the call back over to Tom.
Thank you Tom Let's go to slide 11. Please.
To wrap up Q1 was a great start to our fiscal year, we delivered strong revenue growth profitability cash flow and contract awards, we have a robust pipeline of additional opportunities.
Looking forward, we remain committed to delivering long term growth and margin expansion, while compounding those returns with a flexible and opportunistic capital deployment strategy.
All of this is driven by our commitment to grow free cash flow per share over the long term.
As is always the case, our success is driven by our employees talent innovation and commitment.
To everyone on the CACI team I'm extremely proud of what you do each and every day for our company and our nation.
And to our shareholders I. Thank you for your continued support of CACI with that Alex Let's open the call for questions.
Thank you as a reminder, if you'd like to ask.
A question you can press star one on your telephone keypad.
If you would like to withdraw your question you May Press Star two please.
Please ensure you're on mute locally when asking your question.
Please note for the study to limit yourself to one question and one follow up question.
Thank you.
First question for today comes from Tobey Sommer from tourists Securities.
Your line is now.
Thank you.
I was wondering if you could dig into and frame a little bit the opportunity in your photonics laser business.
Garnered via recent acquisitions, what the size and level of profitability is today versus what it may look like over some sort of medium term.
If successful thank you.
Yes, Tobey. Thanks look we're really happy with the position that we created for ourselves and for our shareholders.
The photonics market.
As well as within laser community commune communications.
We have production units that are in the space are involved in several several missions.
A couple of different types, what are the what I would call the the bespoke Geo and her and her plan a planetary ones.
We have laser terminals on satellites are going to be headed to the moon.
As part of the Artemis mission.
And then on the higher volume side as those proliferated Leo satellite constellations that everybody has.
I heard a lot on.
We've got we're starting to build manufacturing scale and capability to produce high volume small form factor devices.
And just to give.
Give a.
Our view of what we're talking about here, we're looking at.
Laser comp terminals and modems and optics that are anywhere from 46 pounds down to something the size of a great of a grapefruit that is able to.
<unk> satellite optical cross links.
We are partnered with most if not all of the satellite of Oems today, whether youre talking.
DARPA or larger scale production programs.
And we're also involved Toby and a number of imaging.
Con contracts in C ran activities and why that's important is those C ran activities help support the investments that we're making so we can extend our our capabilities in new markets.
The last part of your question as I mentioned, when we purchase lgs and NSA Photonics. We're looking at this market take you're taking off to more material growth in the fiscal year 2004 to 2025 timeframe. We still have some additional capital investments that we are making there we've opened up a second production.
<unk> in the state of the state of Florida. So.
One I'd like to positioning.
Where we are in photonics and the work in lgs.
And photonics is right in line with the way we've.
Atlanta.
And.
For my follow up I'd like to ask a question about the M&A market and higher interest expense clearly.
That is.
Will influence the trajectory of bottom line growth as rates move higher for a period of time.
Got it.
The changes in interest and available sort of leverage and financing influenced.
<unk>, if at all and if it hasnt yet do you expect it to kind of influencing your capital allocation. Thanks, Yeah, Yeah, Tobey, thanks, well look.
<unk> always talked about the fact that M&A is a very important use of our.
Capital, but as we've talked over a number of years not our only only one we continue to evaluate all capital deployment options based on the dynamics at the current current current time.
Our M&A strategy is always going to be strategically focused right. We're going to look to find areas that give us additional capabilities or different customer relationships that allow us to continue driving long term growth.
We're a disciplined acquirer.
Always looking for the right the right targeted at the right price and then of course with the right culture.
I mean M&A side.
Pipeline really hasn't materially changed from what we've been discussing over the last few quarters, it's not as robust, but we always continue to pursue our preemptive M&A strategy looking at a way for us to fill to fill gaps Tom I wanted to talk a little bit about rates.
<unk> yeah, yeah, yeah. Thanks, Tobey, so I would say.
That the higher interest rates do not have a material impact on the way we look at acquisitions in our first quarter. Our average interest expense was around three 5% now thats higher than where it was a year ago, but any long term historical.
Period, that's still is.
<unk> borrowing costs.
Slightly higher kind of weighted average cost of capital associated with it but.
I don't see us getting material alter the economics of proposed deals we're still a present value decision maker and the hurdle rates slightly higher but not meaningful at this point in time.
Thank you very much.
Thanks Ravi.
Thank you.
Question for today comes.
For my Gavin Parsons from Goldman Sachs. Devin Your line is now open.
Hey, good morning.
Hey, Kevin Tom and Jeff.
Thank you. Thank you.
Pretty good start in terms of revenue and bookings. So just wanted to get an update on just kind of the customer.
Labor environment.
Budget funding environment, if you would.
Yes, Kevin, let's let's take hiring first.
Look.
Market and you all have heard me say this many many times.
<unk> always been.
Very channel that is challenging for the past few years in it.
It remains so.
As we look at how we how we handle hiring and I'm going to call. It the cost of labor.
Because thats really how this plays out we are paying.
For top talent with specialized technology skills are the right certifications.
And the and the right clearances, so I hate to say I'm very happy to pay for top talent.
As any CEO would we are tracking the market and making sure that we are paying talent appropriately and that does a lot not only for the attraction of folks coming to CCI, but also for the way we've been able to retain.
A fair amount of our work force.
Now those additional labor costs.
Have really two different avenues for us 60% of our revenue was cost plus so higher wages do get passed along to the to the customer, but there again, our customer asked us to find the best and brightest and Thats, what the best the best and brightest costs.
Other 40% is susceptible to higher labor costs, but we've got many avenues for us too.
Keep those costs in check and allow us to still generate the right margins that we need.
First thing there is revenue is not necessarily linear to head head count in our business half of our revenue is in the expertise area, where it's nearly 100% focused on labor of the other.
Their portion is on the technology side, where we get to write the labor cabin categories.
<unk> reserved the full rate, who we're going to hire and how we're how we're going to pay them.
We are looking for efficiencies as well.
I've said, many many times software is a super superpower. It allows us to deliver so much more capability out there much.
Much higher product productivity potentially some lesser supply chain.
Issues as well.
Getting asked a lot higher and you also asked about the budget.
Look I, what I see out there is very very supportive board of budgets.
We've.
We've been very fortunate where in the national security space.
And I continually say the world is a dangerous place and we see that with what I call. The U B, Ukraine wake up wake up call.
But we also have China, we have other other other near peers out there and counterterrorism is still there.
We are moving into another fiscal year under a continuing resolution. So there is some we don't have FY 'twenty three appropriations today, but having said that we're heading into one of the largest.
Defense defense budgets, we're going to see increased spending in the intelligence community.
DHS on it modernization and within space and we're also spend an awful lot of time gap and looking at the role that <unk> is going to play in our future.
We're going to have to have a very solid immediate near peer defensive posture.
And that's great for us from anywhere from providing Intel analysts to SIGINT and cyber detect in.
<unk> Tec.
All in all very supportive budget.
And and.
In a reasonably good solid look at how we are heading into some of the hiring pressures.
If you marry the two of those for your customer has the contracting officer labor environment improves.
Moving more quickly on getting stuff awarded.
Yes.
It really varies by customer.
Think I have mentioned in the last couple of calls that every customer we have every customer we have has their own award in their own funding.
DNA.
Funding.
<unk> received.
The the normal type of funding awards in the first quarter.
And we believe that that will continue forward and be very supportive of our FY 'twenty three plan.
On the contracting officer side look there's everybody in the government knows that that is an issue and they're all working extremely hard.
At the end of the data is only so much work that add that those agencies can do we are seeing awards Gavin come out frankly pretty much the way we expected we have some customers again that you know.
Always deliver the award of 100 days. After we believe they are so we put that into our plan.
On the contracting officer site, it's going to continue to be tough I think youll see that trough throughout.
Our fiscal year, and maybe by the middle of 'twenty three that the hiring wheels will have gotten people to a price to a place to make that better I would also like to hope that.
Covid impacts that also.
Makes that a persistent issue.
We'll have at.
At some point receded to a point, where we can all get back to some sense of normal.
Thanks, Kevin.
Thank you.
Thank you.
Our next question comes from Matt Akers from Wells Fargo.
Your line is now open.
Yes, good morning.
Congrats.
I wanted to ask Jeff if I can.
Maybe just as your kind of your initial thoughts as you step into the CFO role just kind of biggest priority.
And maybe opportunity.
You take over.
Thanks for the question Matt.
Not to repeat myself, but again I'm really excited to be here and I look forward to working with John and the team.
To your question I would say that you really shouldnt expect major changes with this transition I think the company is in a great spot delivering growth margin expansion.
Tom has done a great job over the years, making a lot of improvements.
The capital structure in particular, we're in a great place for the current situation.
And I think you ought to look for for kind of refinement and evolution.
Okay, great. Thanks, and then.
Yes, if I could ask.
On the IP as a service win could you talk about the.
The headline number is pretty big I understand that contract a little bit differently can you just talk about how fast that kind of ramps up.
What kind of revenue contribution that we should expect from that.
Yes, so thank you you're welcome Gary.
Very large headline value theres, some small businesses, who should be getting a portion of that work will not flow to CCI as a prime so thats kind of not going to be reflected in our books.
We took a careful look at what to expect in came up with a $2 billion number which was appropriate for us to put into our.
The awards the ramp up is going to take some time, it's under protest as you know are not clear how long it will take that to be adjudicated.
So if anything a minimal contribution in FY 'twenty three.
When we were putting our plans together we knew this award was pending re factor kind of new business into our plan one of the reasons why we have ranges in our guidance because of the variability of new business timing of the like so I would look to next year FY 'twenty four for us to get into a more meat.
<unk> ramp up role Hey, Matt I'd also add this is John .
When we talk about.
Investments.
This has been about a two to three year road of making certain that we could show this customer the art of the possible and sort of taking them to somewhere new they have quite.
A large goal across the United States Air Force, we're extremely proud to have been selected awarded this contract, but it's very consistent with our long established goal to win longer longer duration larger and higher value contracts. So it's another.
The Cana just ask legal was just as the Army network build out program probe program was that the strategy is working our bid last win more go after larger programs, which means that we're not in the recompete stages, often as we may have been it allows us to bring technological advancements in.
That we can do step in Pete's on other.
Service wide jobs that are the size. So thank you for the question.
Yeah. That's helpful. Thank you.
Thank you next question comes from Scott <unk> from Jefferies.
Your line is now open.
Good morning, guys, Tom Congrats once again.
Don you have talked a lot about the space portfolio today, and just to get a little bit more into that I mean, how do you think about moving up the investment curve. There and is there any color you can provide about the return profile timing of investments that are being made today and if we think about some of the recent acquisitions you've done in this space. When do you think about really reaching that kind of.
Inflection point in the domain.
Yes, Scott Thanks.
I don't want to be a head.
Hesitant, but look we've we have.
<unk>.
Fair amount of investment dollars in Capex during our fiscal year 'twenty two upon the acquisition of Fsh Photonics.
And even back to fiscal year 19, 'twenty when we purchased all of the GFS.
And beyond and optics, we're looking at AEP and PMT is well within space, we're looking at space situational awareness.
So there is a broad.
Scope of work that we're looking.
Due to our throughout space. This is definitely one of those.
Perfect. Examples of investing ahead of customer need and we're doing that because it does take time with the with the acquisition of both Lgs and ESA Photonics, we are the largest U S provider of space base for <unk> optics and the like.
So that is that that is a.
Tremendous position for us to have gotten our ourselves.
Ourselves too we're going to continue to spend at a higher than normal amount of investments throughout fiscal year, 'twenty, three and into 2020 four when we see volumes pick up Scott. This is we've heard a lot about commercial proliferated leos, whether it's.
One web or am am Amazon another constellation there we're involved in all of the U S.
<unk> work within this within this area, so youre going to see us.
Focus more on the manufacturing side frankly on the algorithmic side.
We've cut some incredible.
Work that we've already done we've been working in the area of photonics for at least 10 to 15 years. So we understand what it takes to understand how to take.
Commercial wireless Tech tech not all of the technologies and move those types of technologies, and then space Harden them and then space qual them. So theres a lot of investment going on here margins look.
<unk> been focused we're looking to grow topline and bottomline as well.
These businesses will.
Do a lot towards pushing margins forward, when we get to FY 'twenty four and beyond.
That's super helpful. Thank you.
Yes, Thanks Scott.
Yes.
Thank you. Our next question for today comes from Colin Canfield from Barclays.
Your line is now open.
Hey, good morning, and thanks for the question.
Circling back on the capital deployment on asset how do you guys think about those thoughts effectiveness for an ASR versus the potential for a secondary offering appreciating the rate environment is not as material for capital deployment.
Working capital management in the quarter.
Hey, Don.
It looks somewhat similar to what you've done in previous quarters ahead of ASR. So just kind of want to hear your perspective on the stock.
Yes.
Look let.
Let me, let me sort of start that with.
There were two three times leverage we recognize that we're extremely proud of that we've been able to invest in internal needs increase our capex spending.
The increase spend around.
Inventory levels to support our mission Tech businesses and the like so first off we like where we're at we love we love the options and.
And frankly all options around the.
Table to drive shareholder value Olive heard me say many times its flexible and opportunistic we purposely don't use the word balanced.
And <unk> is going to remain at key word we're going to be looking at.
<unk> annual repurchases and internal investments and were evaluating all options based on the dynamics.
At the time, you mentioned valuation clearly.
Looking at where our valuation is in the market and it is a consistent watch item for us we're looking at continuing to invest in key technologies technology areas and we're also measuring.
<unk> long term growth top and bottom line success of focusing capital on internal investments, we have been a lot in agile software development develop development that wanted us legal which is a multibillion dollar.
Award is thrown off top and Bottomline growth AI based computer vision as I talked about in my prepared remarks, and then counter counter UAS. We continue to invest there. So again all options are on the tabletop.
I'll make the point that.
Yes.
There is.
Asymmetry of information here so people.
People looking at CCI kind of looking at leverage levels in may have some thoughts about how we should deploy our capital.
At any point in time, we have an acquisition pipeline looking at different opportunities in the Sunday.
Highly probable may be remote, but those are always in our mix and that helps inform our judgment as to how we deploy capital and I will underscore what John said this is something that we look at on a.
Kind of real time ongoing basis, both at the board level.
Company management level, So we would say.
Key focus of ours and the fact that it appears we're not taking any action does not imply that we're not paying very careful attention to this.
Very important matter.
Got it and then.
Maybe just talk about John some of your lessons that you've learned from Lockheed Martin with respect to kind of managing production costs.
More of a scale hardware strategy.
Okay.
Yes, sure look far more important than me me, calling is the team that we have in our <unk>.
And so we're getting the organization as we.
Began this journey.
It's one thing to strategically take a look at where I and our senior leadership team believe the market is going and going to go.
So I'm really focused where I sit on the strategic level and what is it that will drive long term growth and also get this company again more on to the technology. The technology side, and then within tech, whereas the government most apt to spend the majority of their new dollars in there.
Areas that.
CE CACI frankly can make assistant.
Bob Brian , but folks in from just about all of the major primes.
<unk> brought folks in that have got 30 to 40 years worth of.
Manufacturing production experience it is what allowed us to.
Build a second line in our optics business. We have we have one line outflows Scott OS we bought the second line in Florida.
You don't you don't do that with the size company, we are without bringing in people really under understand what good looks like frankly.
And then it's the it's the investment thesis.
What do we have to invest and then frankly somebody asked I think what Scott asked earlier right. There was a timing of some of these investments.
The fact that we are involved in so many new star imaging contracts with some of the primes out there was another indication that there's other uses for the optical.
<unk> and alike. So.
Wrapping it up but we brought some really good talent and we've grown some internal terminal talent.
We've got a great supply supply chain group.
Had to frankly create a whole supply chain system and an MRP system in all of those areas some of that came.
At a smaller quantity level, but really good thoughts from some of the other companies, we bought mastodon and EV <unk> and others. So they brought us some great innovative thoughts so not only from the big primes, but from the folks who actually created some some great smaller companies that are now part of CACI I'm really I'm very confident that.
We've got the right team and I'll stress team, making sure that we're able to scale. When the time comes thank you for asking that question.
Yes.
Right.
Thank you.
Anil question for today comes from Budd <unk> from Stifel. Your.
Your line is now open.
Yes. Thanks.
For the question and I'll, let go back congratulations to both Tom and Jeff.
Thank you. Thank you.
So maybe just thinking about the revenue environment outlays improved steadily through <unk> with a pretty strong growth on the O&M side of September .
Did you guys note a significant change in your revenue traction as you went through the quarter do you think that should continue in the current CR environment.
Yes.
Okay.
There's two issues one is revenue and one is.
Funding level a good portion of our revenue as you just had a very steady and dependable on our expertise business. We have employees come to work could be pay then we charge the government.
Is there a cost in there.
That is somewhat independent of fluctuations and cover image.
Outlays, we have steady funding for those types of programs.
In the latter part of last year, we referenced some challenges in funding and that was more tied to some of the shorter cycle mission technology.
Redo, where the government may be purchasing 510 20.
Worth of admission technology hardware and some of that got hung up in the contracting officer activity.
At this point in time as John mentioned funding levels in our first quarter or.
Generally at normalized levels.
Associated with.
Tom maybe just to clarify there.
I appreciate the expertise business tends to be steadier, but.
<unk> been rising I think it's fair to think that there is some on contract growth that I imagine you guys will be a part of so I guess I'm just trying to get a feel for if I.
Looked at July versus September for CACI.
<unk> trending the right direction and has that continued into October given the CR.
Yes, I would say that.
Kind of we're a growing company.
And we're expecting to see continued growth quarter after quarter, recognizing that there is a bit of a seasonality and some fluctuations.
What we're seeing in terms of both on contract growth and funding support.
Youre seeing a steady increase in Roe.
As we go forward.
I'd also add look our guidance does reflect many of the different assumptions and scenarios some of those that you're.
Sure.
Calling out as well theres a multitude of factors.
Look we are in another CR, we don't have FY 'twenty three appropriations, yet we got an election upcoming we have there the kayo situations.
But all I can tell you is it at all points along our guidance range, we expect organic organic growth.
I also believe from recent meetings that I've been sitting in.
Everyone on the government side understands numerous threats out there.
The ability for us to move ourselves through yet another year with a long and ECR.
I think there are far more people in the government that would rather not do that then would like to see that so and again nationals security is a very.
Large.
Bi partisan supported effort and I do believe that the 23 budget.
As well as when they are funding outlays come out to support us to fall the finished the year within our guidance.
Okay I appreciate the color maybe just to follow up on the line of space related questions.
Just for some context I know obviously the optics has been a big area of growth, but there's been a variety of products that I think.
I mean can you give any sort of high level view.
How much of your business you think is space related whether that would be 20% of sales or less or something along those lines.
Yes, but I'd, rather not go down that path.
No.
I like the position that we're in.
The reason why we're in that position. Some some areas is because we let the rest of the world know what we're doing after we've done it.
Alright.
I am very confident saying that we are the leading U S provider space based optics.
There's a lot of other areas of space that we can't talk about on an open line like this that we are involved in in our line of business that is very focused on that is doing an outstanding job of getting the right <unk>.
<unk> efforts in <unk> and the like in place we've got great relationships with the majority of the of the satellite primes are out there.
Got it great ground from station offering we do a lot of post processing of satellite feeds coming coming down to ground all the way through the individual Intel analysts so.
I always hesitate.
Hesitate to give percentage out because it's tough to understand where do you draw that line based on space space, but overall for our investors. We are in the right areas, where the right dollars have been spent and are going to continue to be spent and we have the right partnerships with the larger larger primes upon whose assets all of our technology.
We will be writing on so thanks Bert.
Yes, thanks very much.
Thank you.
No further questions. So that concludes today's conference call. Thank you all for joining you may now disconnect.
Yes.
Okay.