Q3 2024 CACI International Inc Earnings Call

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the CACI International Fiscal 2024 Third Quarter Conference Call. Today's call is being recorded. At this time, all lines are in a listen-only mode. Later we will announce the opportunity for questions, and instructions will be given at that time. If you should need any assistance during this call, please press star zero, and someone will help you. At this time, I would like to turn the conference call over to George Price, Senior Vice President, Investor Relations. Please go ahead.

Ladies and gentlemen, thank you for standing by and welcome to the CACI International fiscal 'twenty 'twenty four third quarter Conference call. Today's call is being recorded at this time all lines are in a listen only mode. Later, we will announce the opportunity for questions and instructions will be <unk>.

Given at that time.

If you should need any assistance during this call. Please press star zero and someone will help you.

At this time I would like to turn the conference call over to George Price Senior Vice President Investor Relations. Please go ahead.

George Price: Thanks Dennis, and good morning everyone. I'm George Price, Senior Vice President of Investor Relations for CACI International. Thank you for joining us.

Thanks, Dennis and good morning, everyone I'm, George price Senior Vice President of Investor Relations for CACI International. Thank you for joining US this morning, we.

George Price: We are providing presentation slides, so let's move to slide two. There will be statements in this call that do not address historical fact and, as such, constitute overlooking statements under current law. These statements reflect our views as of today and are subject to important factors that could cause our actual results to differ materially from those intended. Those factors are listed at the bottom of last night's press release and are described in the company's SEC filing.

George Price: We are providing presentation slides so let's move to slide two there will be statements in this call that do not address historical fact, and as such constitute forward looking statements under current law.

George Price: Statements reflect our views as of today and are subject to important factors that could cause our actual results to differ materially from anticipated. Those factors are listed at the bottom of last Night's press release and are described in the company's SEC filings.

George Price: Our Safe Harbor Statement is included on this exhibit and should be incorporated as part of any transcript of this call. I would also like to point out that our presentation will include a discussion of non-GAAP financial measures. These should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. Now, let's turn to slide three. To open our discussion this morning, here's John Mengucci, President and Chief Executive Officer of CACI International.

George Price: Safe Harbor statement is included on this exhibit and should be incorporated as part of any transcript of this call.

George Price: I would also like to point out that our presentation will include discussion of non-GAAP financial measures you should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.

George Price: Let's turn to slide three please.

George Price: To open our discussion this morning, Here's John <unk>, President and Chief Executive Officer of CACI International John.

John S. Mengucci: Thanks, George, and good morning, everyone. Thank you for joining us to discuss our third quarter fiscal year 24 results. With me this morning is Jeff MacLauchlan, our Chief Financial Officer. Move to slide four, please.

Okay.

John: Thanks, George and good morning, everyone. Thank you for joining us to discuss our third quarter fiscal year 2004 results with me. This morning is Chuck Mclaughlin, our Chief Financial Officer.

John: Moving to slide four please.

John S. Mengucci: CACI delivered outstanding third quarter results across the board. We grew revenue by 11% with contributions from both expertise and technology programs. EBITDA margins of 11.3% showed significant expansion from last year, consistent with our expectations of stronger margins in the second half, and we delivered healthy free cash flow of $102 million. In addition, our third quarter awards of $3.5 billion represented a 1.8 times book-to-bill for the quarter and drove trailing 12 months book-to-bill to 1.5 times.

John: CACI delivered outstanding third quarter results across the board.

Grew revenue by 11% with contributions from both expertise and technology programs.

John: EBITDA margin of 11, 3% showed significant expansion from last year.

John: Consistent with our expectations of stronger margins in the second half.

And we deliver healthy free cash flow of $102 million.

John: In addition, our third quarter awards of $3 5 billion Rep.

John: <unk> represents a one eight times book to Bill for the quarter and drove trailing 12 months book to Bill to one five times.

John: About half of our awards were for new work CACI and we continue to demonstrate excellent performance on our re competes as well.

John S. Mengucci: About half of our awards were for new works, CACI, and we continue to demonstrate excellent performance on our re-competes as well. Our third quarter results are well aligned with our value creation model, which focuses on long-term growth and free cash flow per share. As a result of our strong performance, we are again raising our full-year guidance. Slide five.

John: Our third quarter results are well aligned with our value creation model, which focuses on long term growth and free cash flow per share.

John: As a result of our strong performance, we are again, raising our full year guidance.

Slide five please.

John S. Mengucci: Let me provide a few thoughts on the macroenvironment. Recent passage of the government fiscal year 24 budget and supplemental is a positive development and removes an element of uncertainty for our customers. Budget levels and growth are very consistent with what was laid out last year by the debt ceiling agreement, and the supplemental could provide funding that would support additional growth of our counter-UAS technology. The proposed FY 25 budget is also in line with expectations, and like most years, we expect we'll begin with a continuing resolution, which typically does not have a material impact on our vision. One thing remains clear.

Speaker Change: Let me provide a few thoughts on the macro environment.

Speaker Change: The recent passage of the government fiscal year 'twenty for budget and supplemental is a positive development and removes an element of uncertainty for our customers.

<unk> levels and growth are very consistent with what was laid out last year by the debt ceiling agreement and the supplemental could provide funding that would support.

Speaker Change: Additional growth of our counter UAS technology.

Speaker Change: The proposed GFY 2020 budget is also in line with expectations. Unlike most years, we expect will begin with a continuing resolution, which typically does not having a material impact on our business.

Speaker Change: One thing remains clear.

John S. Mengucci: National security and IT modernization remain key focus areas for our government. As we've said many times before, the world is a dangerous place, and we continue to see clear demand signals driven by world events. GCI continues to be strategically positioned in enduring and well-funded areas that align with our nation's most important priorities. Slide six, please.

Speaker Change: National Security and it modernization remain key focus areas for our government.

Speaker Change: As we've said many times before the world is a dangerous place and we continue to see clear demand signals driven by world events.

GCI continues to be strategically position and enduring and well funded areas that align with our nation's most important priorities.

Speaker Change: Slide six please.

Speaker Change: A number of years ago, we undertook a strategy to become a more focused differentiated and resilient company. It was even better positioned to drive long term growth and shareholder value.

John S. Mengucci: A number of years ago, we undertook a strategy to become a more focused, differentiated, and resilient company that was in an even better position to drive long-term growth and shareholder value. This strategy has five key elements, focusing on key enduring priorities for national security and IT modernization. Leverage software to rapidly address critical needs, bid less, win more, and prioritize larger, longer-duration opportunities. Invest ahead of need to develop differentiated capabilities, and deploy capital in a flexible and opportunistic manner. All of these elements are focused on driving long-term growth, particularly in free cash flow per share, which we believe is the ultimate metric for long-term shareholder value creation. 5-7, please.

Speaker Change: This strategy has five key elements.

Speaker Change: Focus on key enduring and priorities for National security and it modernization.

Speaker Change: Leveraged software to rapidly address critical needs.

Speaker Change: Bid less when more and prioritize larger longer duration opportunities.

Speaker Change: Invest ahead of need.

Speaker Change: <unk> differentiated capabilities and deploying capital in a flexible and opportunistic manner.

Speaker Change: All of these elements are focused on driving long term growth, particularly in free cash flow per share, which.

Speaker Change: Which we believe is the ultimate metric for long term shareholder value creation.

Speaker Change: Slide seven please.

John S. Mengucci: Today you can see the successful execution of our strategy manifest in several ways. First, we are well-positioned to address key national security and IT modernization priorities of the federal government with agile software development methodologies and software-based technology. On the national security front, our capabilities in the electromagnetic spectrum are differentiated and in high demand. Every day, world events are demonstrating the increasing importance of signals collection, intelligence, geolocation, and electronic attack.

Speaker Change: Today, you can see the successful execution of our strategy manifest in several ways.

Speaker Change: First we are well positioned in key national security and it modernization priorities of the federal government with agile software development methodologies and software based technologies.

Speaker Change: On the National Security front, our capabilities in the electromagnetic spectrum are differentiated and in high demand every day world events are demonstrating the increasing importance of signals collection intelligence geolocation and electronic attack.

John S. Mengucci: Software enables us not only to provide these capabilities to our customers but also to adapt and update these capabilities with speed and agility as adversaries change their tactics. For example, on our U.S. Navy Spectral Program, we are working with our customers to modify and enhance what will be delivered when. This is made possible by our open architecture and software approach, which allows for contemplated changes in requirements. We are beginning discussions with the Navy in an effort to consider reusing elements of Spectral as a baseline for other systems, because that's one way to provide fleet-wide capability upgrades when and wherever required to keep pace with rapidly changing adversaries and technology. In addition, we are building out our ability to deliver our technology to Five Eyes countries, to Latin NATO countries, and other allies. We have already made deliveries to several of these countries.

Speaker Change: Software enables us not only to provide these capabilities to our customers, but also to adapt and update these capabilities with speed and agility as adverse series changed their tactics.

Speaker Change: On our USD spectral program, we are working with our customers to modify and enhance what will be delivered when.

Speaker Change: Made possible by our open architecture and software approach, which allows for a contemplated changes in requirements.

Speaker Change: And we are beginning discussions with the navy in an effort to consider reusing elements of spectral as a baseline for other systems, because that's one way to provide fleet wide capability upgrades, when and wherever required to keep pace with rapidly changing adversaries and technologies.

Speaker Change: In addition, we are building out our ability to deliver our technology to <unk> countries, so that NATO countries and other allies we've.

Speaker Change: We have already made deliveries to several of these countries.

John S. Mengucci: In fact, during the quarter, we received our first order from the Canadian government for our software-defined, man-portable, counter-OS technology called Beam. We are also providing our software-defined SIGINT technology, and we mount it on OEM UAVs to assist in signal collection missions. On the IT modernization front, last quarter, we discussed how our capabilities are addressing increasing demand for network monitors. In addition, we are also winning and delivering on other IT modernization requirements.

In fact during the quarter, we received our first order from the Canadian government, where our software defined man portable camera OIS technology L. B.

Speaker Change: We are also providing our software defined <unk> technology and the amounts of non OEM Uavs to assistant signal collection missions.

Speaker Change: On the it modernization front last quarter, we discussed how our capabilities are addressing an increasing demand for network monetization.

Speaker Change: In addition, we are also winning and delivering on other it modernization requirements.

John S. Mengucci: For example, this quarter, we want to re-compete IT work supporting both UCOM and AFRICOM, enabling our customers' missions as they respond to an ever-increasing list of critical world events. IT modernization using our Agile software development and DevSecOps capabilities has also recently helped the U.S. Marine Corps to achieve the first ever clean financial audit for a branch of the military. This highly visible achievement adds to our strong record of past performance and enhances our ability to pursue additional modernization opportunities across the U.S. government. Slide 8, please.

Speaker Change: For example, this quarter, we won a recompete of work supporting both new common africom, enabling our customers' missions and they respond to an ever increasing list of.

Speaker Change: Critical world events.

Speaker Change: It modernization using our agile software development and <unk> capabilities. Also also recently helped the U S. Marine Corps to achieve the first ever clean financial audit for a branch of the military.

Speaker Change: This highly visible achievement as to our strong record of past performance and enhances our ability to pursue additional modernization opportunities across the U S government.

Speaker Change: Slide eight please.

John S. Mengucci: Second, we're continuing to enhance the long-term visibility of CACI's business through disciplined bidding on larger, longer-duration opportunities. As I mentioned, we had yet another fantastic quarter for awards, and I'm very pleased with our business development organization's performance. We had three and a half billion dollars of awards in the quarter and a healthy mix of re-competes. And in several cases, we were able to expand those contracts. For the IT work I mentioned earlier, this supports both UCOM and AFRICOM.

Speaker Change: Second we're continuing to enhance the long term visibility of caci's business through disciplined bidding on larger longer duration opportunities.

Speaker Change: As I mentioned, we had yet another fantastic quarter for awards and I'm very pleased with our business development organizations performance or.

Our $3 $5 billion of awards in the quarter had a healthy mix of re competes.

Speaker Change: And in several cases, we were able to expand those contracts.

Speaker Change: On the it work I mentioned earlier this supports both new common africom.

John S. Mengucci: We've not only won our week for our recent peak, but we nearly doubled the size of that contract to well over a billion dollars. Successes like this drove our third quarter backlog to a record $28.6 billion, representing nearly four years of annualized revenue. The weighted average duration of awards that we've booked into backlog remains well above five years on a year-to-date basis.

Speaker Change: We not only want are weak for a recompete.

Speaker Change: We nearly doubled the size of that contract to well over $1 billion.

Speaker Change: Successes like this drove our third quarter backlog to a record $28 $6 billion, representing nearly four years of annualized revenue.

Speaker Change: The weighted average duration of awards that we booked into backlog remains well above five years on a year to date basis.

We continue to have a robust pipeline of new opportunities that allows us to be discriminating in the world can pursue.

John S. Mengucci: We continue to have a robust pipeline of new opportunities that allows us to be discriminating in the work we pursue. These wins and the delivery duration metrics provide visibility not only to support current year growth but future year growth as well. Bye-bye.

These wins and then delivery duration metrics provide visibility not only to support current year growth, but foods' future year growth as well.

Speaker Change: Slide nine please.

John S. Mengucci: Finally, we continue to invest ahead of need and deploy capital in a flexible and opportunistic way. I previously mentioned our agile software development and software-defined capabilities in the electromagnetic spectrum, two examples that illustrate investing ahead of need, as well as our organic investments in our photonics business, to name just a few. You may have also seen that we've made a few smaller acquisitions this year, both in the UK and here in the US, as our M&A pipeline continues to expand.

Speaker Change: We continue to invest ahead of need and deploy capital in a flexible and opportunistic manner.

Speaker Change: I previously mentioned, our agile software development and software defined capabilities and the electromagnetic spectrum. Two examples that illustrate investing ahead of need as well as our organic investments in our photonics business to name just a few.

Speaker Change: You also may have seen we've made a few smaller acquisitions. This year both in the U K and here in the U S. As our M&A pipeline continues to expand during.

John S. Mengucci: During the third quarter, we closed the acquisition of Quadrant, a provider of digital application modernization, primarily for the intelligence community. Quadrant brings specific customer relationships and past performance in the IC that are additive to our business, consistent with our M&A strategy, and the acquisition is a creative play in year one. By 10, please.

During the third quarter, we closed the acquisition of quadrant it provider of digital application modernization, primarily for the intelligence community.

Speaker Change: 500 brings specific customer relationships and past performance in the IC that are additive to our business consistent with our M&A strategy and the acquisition is accretive in year one.

Speaker Change: Slide 10 please.

John S. Mengucci: Overall, I am very pleased with our strong performance. We are seeing accelerating growth as the larger awards we've won over the past few years continue to ramp up, and we see contract growth in our existing portfolio. As a result, we are raising our full-year guidance, and Jeff will share the details with you shortly. In summary, we continue to successfully execute our strategy. Power Investments Ahead of Need, Differentiated Capabilities, Strong Execution, and Exceptional Business Development position CACI to drive top-line growth, strong margins, and increasing free cash flow per share. With that, I'll turn the call over to John.

Speaker Change: Overall I am very pleased with our strong performance, we are seeing accelerating growth as the larger awards. We've won over the past few years continue to ramp.

And we see on contract growth in our existing portfolio.

Speaker Change: As a result, we are raising our full year guidance and Jeff will share the details with you shortly.

Jeff: In summary, we continue to successfully execute our strategy.

Jeff: Our investments ahead of need differentiated capabilities strong execution and exceptional business development positions CACI to drive topline growth strong margins and increasing free cash flow per share.

Jeff: With that I'll turn the call over to Jeff.

Jeffrey D. MacLauchlan: Thank you, John. And good morning, everyone.

Jeff: Thank you John and good morning, everyone. Please turn to slide 11.

Jeffrey D. MacLauchlan: Please turn to slide 11. In the third quarter, we generated record revenue of over $1.9 billion, representing 11.1% growth, of which 10.2% was organic. The balance was generated by the three acquisitions we've made over the past 12 months. The third quarter EBITDA margin of 11.3% represents a sequential increase of 200 basis points, which is in line with our expectations and what we have communicated to you throughout the year. Adjusted diluted earnings per share of $5.74 were 17% higher than a year ago.

Jeff: In the third quarter, we generated record revenue of over $1 $9 billion representing.

Jeff: Representing 11, 1% growth of which 10, 2% was organic.

The balance was generated by the three acquisitions, we've made over the past 12 months.

Jeff: Third quarter EBITDA margin of 11, 3% represents a sequential increase of 200 basis points, which is in line with our expectations and what we have communicated to you throughout the year.

Jeff: Adjusted diluted earnings per share of $5 74.

Jeff: Were 17% higher than a year ago.

Jeffrey D. MacLauchlan: Greater operating income, along with a lower share count, more than offset a higher income tax provision and higher interest expense. Third quarter operating cash flow, excluding our accounts receivable from the purchase facility, was $114 million, reflecting strong profitability and cash collection. We reported a Day Sales Outstanding, DSO, of 50 days as we continue to efficiently manage working capital. Free cash flow of $102 million for the quarter represents good sequential and year-over-year increases. Slide 12, please.

Greater operating income along with a lower share count more than offset a higher income tax provision and higher interest expense.

Jeff: Third quarter operating cash flow, excluding our accounts receivable purchase facility was $114 million, reflecting strong profitability and cash collections.

Jeff: We reported a days sales outstanding DSO of 50 days as we continue to efficiently manage working capital.

Jeff: Free cash flow of $102 million for the quarter represents good sequential and year over year increases.

Jeff: Slide 12 please.

Jeffrey D. MacLauchlan: The healthy long-term cash flow characteristics of our business, our modest leverage of two times net debt to trailing 12 months EBITDA, and our access to capital provide us with significant optionality. As John mentioned, we made an acquisition in the third quarter, and we remain well positioned to deploy capital in a flexible and opportunistic manner to drive long-term growth in free cash flow per share and shareholder value. Slide 13, please.

Jeff: The healthy long term cash flow characteristics of our business, our modest leverage of two times net debt to trailing 12 months EBITDA and our access to capital provides us with significant optionality.

As John mentioned, we made an acquisition in the third quarter, and we remain well positioned to deploy capital in a flexible and opportunistic manner to drive long term growth and free cash flow per share and shareholder value.

Jeff: Slide 13 please.

Jeff: We're pleased to again raise our fiscal 2000 and for guidance as a result of our strong business performance, we're raising our revenue guidance to between $7 5 billion at seven $6 billion.

Jeffrey D. MacLauchlan: We're pleased to again raise our fiscal 24 guidance as a result of our strong business performance. We're raising our revenue guidance to between $7.5 billion and $7.6 billion. This represents growth of 11.9% to 13.4% for the year, with the organic component being 11.3% to 12.8%. We are also affirming our underlying EBITDA margin expectations in the high 10% range, which we now expect to be about 10.7% for FY24. Recall that this margin guidance excludes the previously discussed $200 million of material sales in the first half of the year, which equates to approximately 30 basis points of impact on the full year margin.

Jeff: This represents growth of 11, 9% to 13, 4% for the year with the organic component being 11, 3% to 12, 8%.

Jeff: We are also affirming our underlying EBITDA margin expectations in the high 10% range, where we now expect to be about 10, 7% for FY 'twenty four.

Jeff: Recall that this margin guidance excludes the previously discussed $200 million of material sales in the first half of the year, which equates to approximately 30 basis points of impact to the full year margin.

Jeff: As a result of our stronger revenue outlook, we are narrowing and increasing our FY 'twenty for adjusted net income guidance accordingly to be between $455 million of $465 million with an attendant increases in adjusted earnings per share to between $20 13 to $20 58.

Jeffrey D. MacLauchlan: As a result of our stronger revenue outlook, we're narrowing and increasing our FY24 adjusted net income guidance accordingly to be between $455 million and $465 million, with an intended increase in adjusted earnings per share to between $20.13 and $20.58 per share. And finally, we're maintaining our free cash flow guidance of at least $420 million. You will recall this assumes receipt of a $40 million tax refund related to prior year tax method changes. The IRS has accepted our treatment of the method change, though the timing of the payment is entirely up to the IRS.

Jeff: <unk> per share.

Jeff: And finally, we are maintaining our free cash flow guidance of at least $420 million.

Jeff: You will recall this assumes receipt of a $40 million tax refund related to prior year tax method changes.

Jeff: The IRS has accepted our treatment of the method change the timing of the payment is entirely up to the IRS.

Jeff: In addition, our free cash outflow in cash.

Jeffrey D. MacLauchlan: In addition, our free cash outflow outlook now assumes about $80 million in capital expenditures, down slightly from our prior expectation, as we're able to realize efficiencies in our capital spending. This is largely offset by slightly higher working capital usage from the higher revenue we expect through the end of the fiscal year. Please note that additional details or updated guidance have been included in our presentation to assist you with your modeling. Slide 14, please.

Jeff: Cash flow outlook now assumes about $80 million in capital expenditures down slightly from our prior expectation as we're able to realize efficiencies in our capital spending.

Jeff: This was largely offset by slightly higher working capital usage from the higher revenue, we expect through the end of the fiscal year.

Jeff: Please note that additional details of our updated guidance have been included in our presentation to assist you with your modeling.

Jeff: Slide 14 please.

Jeffrey D. MacLauchlan: Turning to our forward indicators, our prospects continue to be strong. Our trailing 12-month book-to-bill ratio of 1.5 times reflects strong performance in the marketplace. Our record backlog of $29 billion increased by over 13% from a year ago and represents just under four years of annual revenue. These metrics provide good long-term visibility into the strength of our business. For fiscal year 24, we now expect approximately 98% of our revenue to come from existing programs, with approximately 1% each from re-competes and new business.

Jeff: Turning to our forward indicators are prospects continue to be strong.

Jeff: Trailing 12 months book to Bill ratio of one five times reflect strong performance in the marketplace.

Jeff: Record backlog of $29 billion increased over 13% from a year ago and represents just under four years of annual revenue is.

Jeff: These metrics provide good long term visibility into the strength of our business.

For fiscal year 'twenty four we now expect approximately 98% of our revenue to come from existing programs with approximately 1% each from Recompete and new business.

Jeffrey D. MacLauchlan: Progress on these metrics reflects our successful business development and operational performance and yields increased confidence in our expectations for the year. In terms of our pipeline, we have $11 billion of bids under evaluation, over 70% of which are for new business to CACI. We expect to submit another $15 billion in bids over the next two quarters, with 90% of that for new business. Our ability to increase both of these metrics from last quarter, even while delivering a 1.8 times book to bill ratio, reflects the healthy demand, successful strategic positioning, differentiating capabilities, and disciplined bidding we have discussed.

Jeff: Progress on these metrics reflects our successful business development and operational performance and yields increased confidence in our expectations for the year.

Jeff: In terms of our pipeline, we have $11 billion of bids under evaluation over 70% of which are for new business to CACI.

Jeff: We expect to submit another $15 billion.

Jeff: <unk> over the next two quarters with 90% of that for new business.

Jeff: Our ability to increase both of these metrics from last quarter, even while delivering a one eight times book to Bill ratio reflects the healthy demand successful strategic positioning differentiated capabilities and disciplined bidding we have discussed.

Jeffrey D. MacLauchlan: In summary, we delivered outstanding third-quarter results. We continue to see good momentum in our business, and as a result, we are raising our full-year guidance for the third time this year. We are winning and executing high-value, enduring work that supports long-term growth, increased free cashflow per share, and additional shareholder value. And with that, I'll turn the call back over to John.

In summary, we delivered outstanding third quarter results, we continue to see good momentum in our business and as a result are raising our full year guidance for the third time this year.

Jeff: We are winning and executing high value enduring work that supports long term growth increased free cash flow per share and additional shareholder value.

And with that I will turn the call back over to John.

John S. Mengucci: Thank you, Jeff. Let's go to slide 15, please.

John: Thank you, Jeff Let's go to slide 15. Please.

John S. Mengucci: In closing, I'm very pleased with our strong third-quarter performance and our ability to again raise full-year revenue in our economy. At the start of this fiscal year and over the past several quarters, we have outlined our expectations of how and why our financial results would progress through the year. We discussed the fact that many of our larger technology awards would take time to ramp up.

John: In closing I am very pleased with our strong third quarter performance and our ability to again raise full year revenue and earnings guidance.

John: At the start of this fiscal year and over the past several quarters, we have outlined our expectations of how and why our financial results were progressed through the year.

John: We discussed the fact that many of our larger technology awards will take time to ramp.

Operator: And the timing of investments and deliveries would drive higher margins in the second half versus the first half. The stronger growth and increased profitability we've reported are entirely consistent with those expectations. We continue to successfully execute our strategy. It is a thoughtful and intentional strategy of focusing on current key enduring priorities, investing ahead of need, developing differentiated capabilities, and then deploying capital in a flexible and opportunistic manner. And it is a strategy that is driving higher visibility, long-term growth, increasing free cash flow per share, and shareholder value.

John: And the timing of investments in deliveries would drive higher margins in the second half versus the first half.

John: The stronger growth and increased profitability, we reported are entirely consistent with those expectations.

John: We continue to successfully execute our strategy.

It is a thoughtful and intentional strategy of focusing on current chicken during priorities investing ahead of need developing differentiated capabilities and then deploying capital in a flexible and opportunistic manner.

John: And it is a strategy that is driving higher visibility long term growth, increasing free cash flow per share and shareholder value.

As is always the case CCI success is driven by our employees talent innovative spirit and commitment to our customers' missions and to each other.

Operator: As is always the case, CACI's success is driven by our employees' talent, innovative spirit, and commitment to customers' missions and to each other. I'm immensely proud to lead such a capable and dedicated group of people. To everyone on the CACI team, thank you for what you do each and every day for our company and our nation. And to our shareholders, I want to thank you for your continued support of CACI. With that, Thomas.

John: I'm immensely proud to lead such a capable and dedicated group of people.

Speaker Change: To everyone on the CACI team. Thank you for what you do each and every day for our company and our nation.

Speaker Change: And to our shareholders I want to thank you for your continued support of CCI with.

Speaker Change: With that Dennis let's open the call for questions.

Dennis: Thank you we will now begin the question and answer session. If you have dialed in and would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.

Dennis: If you would like to withdraw your question simply press Star one again.

Robert Michael Spingarn: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via the loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Dennis: If you were called upon to ask a question and are listening via loudspeaker onboard device. Please pick up your handset and ensure that your phone is not on mute when asking your question.

Dennis: We do request for today's session that you. Please limit yourselves to one question and one follow up to allow sufficient time for all participants to submit their questions to our presenter panel.

Dennis: Your first question is from the line of Robert Spring with Melius Research. Please go ahead.

Robert Michael Spingarn: Hey, good morning.

Robert Michael Spingarn: Very nice quarter, John and Jeff and Jeff I've got a question for you and then the follow up for John.

Robert Michael Spingarn: We do request for today's session that you please limit yourselves to one question and one follow-up to allow sufficient time for all participants to submit their questions to our presenter panel. Your first question is from the line of Robert Spingarn with Mellius Research. Please go ahead.

Robert Michael Spingarn: But Jeff these margins in the quarter were quite strong in the implied margin for the fourth quarter as well and while I know you aren't yet ready to talk about fiscal 'twenty five.

For our modeling perspective should we think of this underlying 10, 7% margin has a good jumping off point.

Robert Michael Spingarn: Good morning. A very nice quarter, John and Jeff. Jeff, I've got a question for you and then a follow-up for John. But Jeff, these margins in the quarter were quite strong, and the implied margin for the fourth quarter as well. And while I know you aren't yet ready to talk about fiscal 25, from our modeling perspective, should we think of this underlying 10.7% margin as a good jumping-off point? Or should we, you know, be thinking about something in the low 11% range like you did in the third fiscal quarter?

Speaker Change: Where should we be thinking about something in the low 11% range like you didn't.

And in the third fiscal quarter.

Jeff: Well, you're right, we're not ready to talk about 25.

Jeff: Yeah.

Speaker Change: I think it's really probably more prudent to figure out the year as a whole.

Speaker Change: You talked about the fact that we manage and guide to the year. The profile. This year was such that it we thought it was meaningful enough to give you some kind of first half second half insight, but we really manage the business on an annual basis.

Jeffrey D. MacLauchlan: Well, you're right; we're not ready to talk about 25. I think it's really probably more prudent to think about the year as a whole. We talk about the fact that we manage and guide the year. The profile this year was such that we thought it was meaningful enough to give you some kind of first half and second half insight. But we really manage the business on an annual basis, and I would encourage you to think about it that way.

I would encourage you to think about it that way.

So let me try with this then Jeff it at the very least in the fixed price portion of your business, which I think is around 30% I don't know if the backlog is at 30% as well, but does the roll off of any scale pricing and that fixed price business at least give you. Some natural lift and then John I have one for you.

Robert Michael Spingarn: Well, let me try this then, Jeff, at the very least... In the fixed price portion of your business, which I think is around 30%, I don't know if the backlog is at 30% as well, but does the roll off of any stale pricing in that fixed price business at least give you some natural lift?

But I think.

Speaker Change: I think the premise of your question might be a little off I don't think you can necessarily equate fixed price with high margins and cost type with low margins, we've talked before about the fact that we have some.

Jeffrey D. MacLauchlan: And then John, I have

Jeffrey D. MacLauchlan: Well, I think the premise of your question might be a little off. I don't think you can necessarily equate fixed price with high margins and cost type with low margins. We've talked before about the fact that we have some, we have some very good margins. Unchained, very high-value added kind of cost-type work. So I think you ought to, I'm going to go back to what I said a few minutes ago. I would encourage you to think about the business kind of in total.

Speaker Change: We have some very good margins.

Speaker Change: Very.

Speaker Change: Very high value added out of cost type work.

Speaker Change: So I think you ought to.

Speaker Change: When I go back to what I said, a few minutes ago I would encourage you to think about.

Speaker Change: The business kind of in total.

Speaker Change: Hey, Jeff.

Speaker Change: This is John what I was going to say I'm sorry, John go ahead.

Jeffrey D. MacLauchlan: Hey, Rob. Oh, Jeb, I... What I was going to say, I'm sorry, John, go ahead.

Speaker Change: By law.

John: Jeff what I was getting at was inflation and so not so much whether margins in cost plus or higher or lower than fixed price, but just at the fixed price for a lot of companies in the backlog was priced pre inflation and as that rolls off you can reprice at better rates and does that.

Robert Michael Spingarn: Jeff, what I was getting at was inflation. And so, not so much whether margins and cost plus are higher or lower than fixed price, but just that the fixed price for a lot of companies in the backlog was priced pre-inflation. And as that rolls off, you can reprice at better rates. And does that provide some natural lift?

Provide some natural lift.

Jeff: I see.

Jeffrey D. MacLauchlan: Yeah, I see. Inflation is not really a major factor for us. A lot, particularly in the fixed price work, a great deal of it is kind of quicker turn task orders, and we really maintain a fairly current view of our cost structure as we're pricing those. So that's not really a big driver for us as it may be for others.

Jeff: Inflation is not really a major factor for us a lot, particularly in the fixed price work.

Great deal of it is kind of quicker turn task orders.

Jeff: So we really maintain fairly current view of our cost structure as we are pricing those so thats not really a big driver for us as it may be for others, Yeah, Rob on our software based technology deliveries.

John S. Mengucci: Transcripts provided by Transcription Outsourcing, LLC. You know, some of that software-based tech. So we're always keeping up with things like supply chain issues, right? And we spent a lot of time talking about that, as well as any type of inflationary costs, but we're always able to reprice those items in that part of our, that part of our portfolio. Our larger technology programs that are fixed price, you know, even over a three to five year range, labor, you know, we were, we're very, We're probably industry leading at making sure we can get talent with the right skills at the right price and being able to manage that, and also bring efficiency.

Jeff: A lot of a lot of those come in and go out in the same quarter right. So we're constantly.

Jeff: Some of that software based tax so we're we're always keeping up with things like supply chain issues right. When we were spending a lot of time talking about that.

Jeff: As well as any type of inflationary costs, but we're always able to.

Jeff: We re priced those items in that part of our.

Jeff: And that part of our portfolio, our larger technology programs that are fixed price.

Even over a three to five year range labor.

We're.

We're very.

Jeff: We're probably industry, leading at making sure we can get talent with the right skills at the right price and being able to manage that and also bringing efficiency. So on those longer term technology builds were constantly bringing in efficiencies and since most of our software base right, we're able to look for.

John S. Mengucci: So on those longer-term technology builds, we're constantly bringing in efficiencies, and since most are software-based, we're able to look for better and faster and cheaper ways to develop software, which then allows us to still deliver the plan.

Jeff: Or better and faster and cheaper ways to develop software, which then allow us to still deliver the plant margins.

Robert Michael Spingarn: Okay, then just, John, just real quickly, the one I had for you, you know, you did the two acquisitions, one was in the UK. You've had a presence in the UK all along, but are you looking to increase your international exposure or was that just strictly a technology-driven acquisition?

Jeff: Okay, and then just John just real quickly the one I had for you. When you did the two acquisitions one was in the U K.

Jeff: <unk> had a presence in the U K all along but are you looking to increase your international exposure or was that just strictly a technology driven acquisition.

John S. Mengucci: Strictly technology-driven. I will tell you that, as I alluded to in my opening comments, on the software-based technology side, we are looking at building ourselves out more broadly on the international front. You know, we're probably in the second or third inning there.

John: Strictly a technology driven I would tell you that as I alluded to in my opening comments on our software based technology side. We are looking at building ourselves out more broadly in the international front, we're probably in the second or third inning. There are really looking at.

Robert Michael Spingarn: Really looking at Most NATO countries are 5I countries that we already delivered to today. Canada was the last one that we added to that list. So we're going to continue to expand our reach of our software-based technology into the international market. One, it allows us to drive our addressable market for that technology. And then second, it is where the largest threat is. And I'm sure we'll talk more about that during our...

John: Most NATO countries are five I.

John: Countries you already delivered two today.

John: Canada was the last one that we added to that to that list. So we're going to continue to expand our reach of our software based technology technology into the international market.

John: One it.

John: Allows us to drive our addressable market for those for that technology, and then second it is where the largest threat is and we'll I'm sure we'll talk more about that.

John: The rest of the call so Rob thanks for your questions.

Robert Michael Spingarn: Great, thanks for the color.

Rob: Great. Thanks for the color.

Bert William Subin: Your next question is from the line of Bert Subin, Wood Steeple. Please go ahead.

Rob: Yeah.

Rob: Your next question is from the line of Bird Subban with Stifel. Please go ahead.

Bert William Subin: Hey, good morning, thank you for the question. Jeff Tone.

Hey, good morning, good morning.

Bert William Subin: If you have done.

Bert William Subin: Um, so maybe just, you know, sticking with the margin theme, you saw a nice step up, you know, going from, Um, you know, just from the first half to the third quarter, and I think part of that was investment related. Can you just walk us through what specific photonics-related investments you made in the quarter? to help push margins higher. And what's your general view on the lumpiness of margins on a go-forward basis? Do you think the cadence throughout the year will start looking flatter, or would you expect variability to remain on the back of tech sales time?

Bert William Subin: Maybe just.

Bert William Subin: Sticking with the margin theme you saw a nice step up you know going from.

Bert William Subin: You know just from the first half to the third quarter and I think part of that was investment related can you just walk us through what specific photonics related investments moderated in the quarter.

Bert William Subin: To help push margins higher and what's your general view on the Lumpiness of margins on a go forward basis do you think the cadence throughout the year, we'll start looking flatter or would you expect variability to remain on the back of tech sales timing.

Jeffrey D. MacLauchlan: Yeah, we've talked about these photonics investments in the past. We have several programs where we're, you know, sort of transitioning into, you know, more robust volume. And some of the investments associated with that have come to an end, as we've talked about in the last couple of quarters. I think we will always have some volatility in quarters based on our commitments to invest ahead of need. Those are always going to be prioritized, and they'll lead to some, some lumpiness, I expect, in the margin. John, do you want to add to that? Yeah, sure. Bert, look at our, on our software technology sales, right? Photonics is a part of all of our counter UAS systems.

Bert William Subin: We've talked about this photonics.

Bert William Subin: Investments in the past.

Bert William Subin: Several programs, where we are.

Bert William Subin: Sort of transitioning.

Bert William Subin: Into the into more robust volume and some of the investments associated with that have come to an end as we've talked about the last couple of quarters.

Bert William Subin: I think we will always have some variability in quarters based on our commitments to invest ahead of need those are always going to be.

Prioritize and they'll lead to some.

Speaker Change: Some lumpiness I expected margin John Yeah go ahead, yeah sure Bert look.

John: On our software technology sales right of which.

Photonics is a part of all of our key.

John: Counter UAS systems, all of our SIGINT collection systems everything that we're doing the EW electromagnetic spectrum area, you know as I started off with one of one of Rob's questions.

John S. Mengucci: EW, the Leather Magnetic Spectrum Area. You know, as I started off with one of Rob's questions, you know, those are, those have a highly variable sales cycle, right? Most are not really being driven by long-term backlog; they are, they are sort of book in turn work. So, you know, I believe we will for a long time look at, you know, ups and downs on quarterly margins, which is why we're really focused on the four-year margin. So why is that?

Those are those have a highly variable sales cycle right. Most are not really being driven by long term backlog. They are they are sort of book in turn work. So.

John: I believe we will for a long time look at ups and downs.

John: Clearly margins, which is why we're really focused on the full year margins. So why is that it is that way because we are the company in our sector that actually does deliver technology.

John S. Mengucci: It is that way because we are the company in the sector that actually does deliver technology. And when you deliver technology, it's not the same as, you know, delivering pure expertise, where your rollout and your margins are quite predictable quarter to quarter. And as the volume of technology is at a 55-45 match to expertise, it does bring some variability to, you know, quarter to quarter endpoints.

John: And when you deliver a technology, it's not the same as delivering purex expertise.

John: Where youre rollout and your margins are quite predictable quarter to quarter and as the volume of technology is at a $55 45.

John: <unk> expertise it does bring some variability to quarter to quarter end point so.

John S. Mengucci: So we will talk a lot about that, Bert, as we present our 25 guidance, because I think it's a very important thing to recognize. So, you know, it will not be uncommon for us to talk about, you know, beat, beat, miss, beat, high margins, because that's just how that more volatile but very positive higher margin work comes in. The second thing that I want to say on that is... Look, margins are a really important part of our value creation model. So it absolutely is our intention.

John: And we will talk a lot about that effort as we present, our 25 guidance because I think it's a very important thing to recognize so it will not be uncommon for us to talk about.

John: <unk> Mis beat on margin because that's just how that more volatile volatile, but very positive higher margin work comes in the second thing that I want to say not say on that is.

John: Look margins are.

John: A really important part of our value creation model. So it absolutely has our intention it's what we've been focused on but long term, there's going to be our focus.

John S. Mengucci: It's what we've been focused on, but the long term is going to be our focus. You know, Jeff talked about the photonics investments that have now ramped down. We're not going to short on investments that drive future growth, but we're not going to do unnatural acts to achieve, you know, a quarter, or a quarter point margin.

John: Jeff talked about the photonics investments that have now ramped down we're not going to short term investments to drive future growth.

Gonna do unnatural acts to achieve.

John: A quarter a quarter point margin.

John S. Mengucci: We love free cash flow per share because it brings in margin, it also brings in food and value-creating capital deployment, it brings in investing ahead of the head of need. It also brings in, you know, a longer-term view and a long-term approach to organic growth. So all of those things go into this, you know, soup. And what we would like to see over the long term, which we have experienced, is more visibility on the organic growth side, and then ever-increasing margins, but it's not going to be year over year. So hopefully, that that provides some additional color.

John: We love free cash flow per share.

John: Because it brings in margin. It also brings in food and value, creating capital deployment it brings in.

John: Investing ahead of ahead of need it also brings in a longer term view on our long term approach to organic organic growth. So all of those things go into this soup.

John: And what we would like to see come out over the long term, which is what we have ex experiences more visibility on the organic growth side.

Then ever increasing margins, but it's not going to be year over year. So hopefully that provides some additional color.

Bert William Subin: That does. I guess just as a follow-up, if we think about some of those tech items, I mean, you've had a lot of recent success on the contract front, you know, really across these, and I'm just curious if you had to rank photonics, you know, counter UAS, EW, SIGINT, and network security, all areas. You've had recent contract success. Just as growth drivers over the next couple of years, you know, how would you do that? You don't have to specifically rank them, but like, what's at the top of that list? Yeah, sure.

Speaker Change: That does I guess, just as a follow up if we think about some of the tax items I mean, you've had a lot of.

Speaker Change: Recent success on the contract front.

Speaker Change: You know really across these and I'm just curious if you had to rank photonics.

Speaker Change: Counter UAS EW, SIGINT and network security all areas.

Speaker Change: You've had recent contract success.

Speaker Change: Just as growth drivers over the next couple of years how.

Speaker Change: How would you do that you don't have to specifically ranked but like what's at the top of that list.

Speaker Change: Yes sure.

John S. Mengucci: Yeah, sure. Um, look, I, I, um, on the software-based technology work. That has been something we've been investing in over the years. It is a highly volatile market, which you should read as a positive, right?

Speaker Change: Look I.

Speaker Change: On the software base technology work that has been something we've been investing in over the years. It is a highly volatile market, which you should read as a part of the positive right.

Speaker Change:

John S. Mengucci: Folks who will look to do us harm change their tactics on an hourly basis, and the only way you can keep up with those threats is to make certain that your signals and your EW, or electromagnetic spectrum technology, keep up with them. We have proven that if you look at all of the issues that are out in today's press about drone strikes, all of that technology that we have fits exactly on top of those threats where drones are launched in 24, 48 hours, you know, tactics.

Speaker Change: Folks, who will look to do us harm changed their tactics on an hourly basis and the only way you can keep up with those threats is to make certain that sure signals in your EDW electro electronics spectrum.

Speaker Change: Technology stays up at that we have proven that if you look at all of the issues that are out in today's press about.

Speaker Change: Drone strikes all of that technology that we have fits exactly on top of those threats, where drones are launched in 24 48 hours you know tactics technology and procedures are changed and the government our customers and NATO allies as well need technology that can quickly.

John S. Mengucci: Technology and procedures are changing, and the government, our customers, and NATO allies, as well need technology that can quickly adapt. Photonics, we're going to hit volume there as we get through 2025 and into 2026. We'll always have investments there as we work on being able to work on producibility. But overall, I'd hate to rank one over the other, except to say photonics will hit a more compact volume sooner. But the high volume over a number of products that we have within this company is going to continue to drive tech, and technology, top line and bottom line growth.

Speaker Change: Adapt.

Speaker Change: Photonics for.

We're going to hit volume there.

Speaker Change: As we get through 'twenty, five and into 2026.

Speaker Change: We will always have investments there as we work on Vito able to work on produce produce stability, but overall.

Speaker Change: I hate to rank one over the other except to say.

Speaker Change: Photonics will hit a more compact volume sooner.

Speaker Change: But the high volume over a number of products that we have within this company, we're going to continue to drive type technology topline and Bottomline growth.

Speaker Change: Thanks, Sean.

Speaker Change: Sure.

Jan Engelbrecht: Your next question is from the line of Jan Engelbrecht with Baird. Please go ahead.

Speaker Change: Your next question is from the line of Jan <unk> with Baird. Please go ahead.

John S. Mengucci: Good morning John, Jeff, and George. I just wanted to talk about capital deployment. I know you've done some recent deals, and you've got plenty of headroom available on the current share repurchase program. Just talk to me about that. And obviously, the M&A pipeline is more attractive right now, but you also have a higher priority in terms of growing free cash flow per share over time.

Jan: Hi, Good morning, John Jeff and George.

Jan: I just wanted to talk about capital deployment I know you've done some recent deals.

Speaker Change: <unk> got plenty of headroom available under the current share repurchase program.

Jan: Just how should we think about that and obviously the M&A pipeline has been more attractive right now, but you also have a higher priority in terms of growing free cash we appreciate over time.

Speaker Change: Yeah, Yeah. Thanks for the question.

Jeffrey D. MacLauchlan: Yeah, thanks for the question. The observation you make about the M&A pipeline and the reference to our comments are correct. There are, We see some expanding opportunity lists. Even though we did not buy back shares in the quarter, I would remind you that since the second quarter of last year, we've repurchased 1.3 million shares. So we have bought in about 6% of our outstanding shares in the last four or five quarters. So even though we didn't buy any shares in the quarter, and we are continuing to evaluate both opportunities, we're very attentive to share repurchases.

Speaker Change:

Speaker Change: The observation you make about the M&A pipeline in reference to our comments is correct there are.

Speaker Change: We see some expanding opportunity list.

Speaker Change: Even though we did not buy back shares in the quarter.

Speaker Change: I would remind you that since the second quarter of last year, we've repurchased $1 3 billion shares. So we have.

Speaker Change: But in about 6% of our outstanding shares over the last four five quarters. So even though we didn't buy any shares in the quarter and we are.

Speaker Change: <unk> to evaluate both opportunities.

Speaker Change: We're very attentive to share repurchases and at a macro level, we're flexible and offer an opportunistic right and thats going to be based on the dynamics that we see we're going to evaluate a range of factors, we're going to look at some of the things that you mentioned looking at our M&A pipeline, we're going to stock price, we're looking at it.

John S. Mengucci: Yeah, Jan, and at a macro level, look, we're flexible and opportunistic, right? And that's going to be based on the dynamics that we see.

John S. Mengucci: We're going to evaluate a range of factors. We're going to look at some of the things that you mentioned. We're looking at our M&A pipeline, looking at stock price, we're looking at evaluation, leverage, interest rate, many, many things. All options are always on the table.

Speaker Change: Oh valuation leverage interest rate.

Speaker Change: Many many things all options are always on the table you heard we did a few smaller acquisitions.

John S. Mengucci: You heard we did a few smaller acquisitions that we have completed. The other thing I'd mention is that, you know, timing of future M&A candidates is a consideration in our capital deployment assessment as well, right? So it's not always when we're in leverage of X; we have Y number of different companies we'd like to make a future growth part of CACI. So there are a lot of moving pieces.

Speaker Change: Acquisitions that we completed.

Speaker Change: Thing I'd mentioned is the timing of the future M&A candidates is a consideration of our capital deployment assessment as well right. So it's not always when we're able to leverage leverage of X. We have Y number of different companies, we'd like to make a a.

Speaker Change: Future growth part of CCI. So there are a lot of a lot of moving.

Speaker Change: Pieces.

John S. Mengucci: Bottom line, we believe that either of those capital deployment actions is going to benefit shareholders in the near and in the long term, which is why we're focused on free cash flow for sure and really appreciate the question.

Speaker Change: Bottom line, we believe that either of those capital deployment actions are going to.

Speaker Change: Benefits shareholders in an era and then in the long term.

Speaker Change: Which is why our focus on free cash flow per share and really appreciate the questions.

Jan Engelbrecht: Perfect. Thank you. That's really helpful. And just a quick follow-up, just at a high level, if we look at some of your more recent sort of multi-billion dollar programs, can you just walk us quickly from a top line perspective, sort of the cadence on, maybe not each one, but if you could, sort of ethos and NSA and the Navy program, just sort of how the Ravens will win that peak over the next couple

Speaker Change: Perfect. Thank you.

Speaker Change: Helpful.

Speaker Change: A quick follow up just at a high level, if we look at.

Speaker Change: Some of your more recent sort of multibillion dollar programs can you just walk us quickly from a topline perspective.

Speaker Change: Cadence on maybe not each one but.

Speaker Change: If you could sort of VITAS and NSA and the Navy program sort of when the revenue when that peaks over the next couple of years.

John S. Mengucci: Yeah, sure. So look at our large Expertise Award, which is the Large Sizable Cyber Intel Award. You all know the name. I'm not allowed to say it.

Speaker Change: Yes sure.

Speaker Change: So look on our on our large.

Speaker Change: Expert expertise award.

Speaker Change: Which is the large sizable cyber Intel award you all know the name I'm not allowed to say it.

John S. Mengucci: Look, we've ramped ahead of plan. We've, and we will continue to ramp that at a reasonable rate as we go through 25. So, we'll get to full ramp when we get to start off our fiscal year 26. So, there are a number of items that are in our current scope that just started later after award. So, I like how we ramped that one up.

Speaker Change: Look we've ramped ahead of plan.

Speaker Change:

Speaker Change: We we will continue to ramp that.

Speaker Change: At a reasonable rate as we go through 'twenty five so we'll get to full ramp when we get to start off our fiscal year 2006. So there is a number of items that are in our current scope that just started later.

Speaker Change: After award so.

Speaker Change: How we ramp that one up.

John S. Mengucci: So, and really good positive feedback from our customers. On our ITAS, that also ramped ahead of plan. That's going to continue to ramp and grow in 25 and beyond. If you all remember, that was a VEPA. A total value of $5.7 billion over a 10-year period.

Speaker Change: So in really good positive feedback from our customer on our ipads that also ramps ahead of plan, that's going to continue to ramp and grow in 'twenty five and beyond if you all remember that was a V. P. A.

Speaker Change: Total value of $5 7 billion over a 10 year period, we recognized about $2 billion of that in the first quarter of 'twenty three.

John S. Mengucci: We recognized about $2 billion out of that in the first quarter of 2023. So, you know, that starts with upfront planning. We're doing some design work there, you know, to pitch a lower volume. But the customer did ask us to take over from the small-level incumbents, take their work over sooner, because they want to see that work improved. So we're able to do that as well. And, you know, customers are very, very pleased. The last one is Spectral, right?

Speaker Change: You know that starts our upfront planning.

Speaker Change: We're doing some design work there.

Speaker Change: Picture lower volume the customer did ask us to take over from the from the small level of incumbents take their workover sooner because they want to see that work improved so we're able to do that as well. So you know customer very very pleased on the last one is spectrum right.

Speaker Change: That's a.

John S. Mengucci: That's a real gem technology program. We did ramp up ahead of plan. Connected to my prepared remarks, you know, we're looking at what that first delivery looks like to the fleet. I spent some time during the last week with some of the Navy seniors talking about this program extensively, and they said that the threats are continually changing. And, you know, what refreshing discussions we had because we could talk about the threats changing, how do we make changes to this large technology program without the ACAT-1 kind of follow-on that's a four-year delay?

Speaker Change: That is a real gem technology program, we did ramp ahead of plan.

Speaker Change: Ah connected to my prepared remarks, we're looking at what that first delivery looks like two of the fleet spend some time during the last week with some of the Navy seniors talking about this program extensively the threats are continually changing.

Speaker Change: And you know what.

Speaker Change: What a refreshing discussions what professional discussions we had because we could talk about the threats changing how do we make changes to this large technology program.

Speaker Change: Without the cat one kind of follow on that's a four year delay.

John S. Mengucci: You know, we're sitting there working shoulder-to-shoulder, hip-to-hip with this customer, who frankly has the responsibility of protecting their surface fleet from the things that you're reading about in the news today. So, you know, great work there. We would definitely see future expansion into 25 and 20. So hopefully, that provides some of the color you were looking for, yeah. Perfect, thank you.

Speaker Change: We're sitting there working alongside shoulder to shoulder hip to hip with this customer frankly has the added responsibility of protecting their surface fleet from the things that you read about in the news today so great.

Speaker Change: Great work, there and we would see future expansion definitely and into 'twenty five 'twenty six.

Speaker Change: So hopefully that provides some color you were looking for you all.

Jan Engelbrecht: Perfect. Thank you. I'll jump back into the chair. I really appreciate it.

Speaker Change: Okay. Thank you I'll jump back in the queue really appreciate it. Thank you.

Mariana Perez Mora: Your next question is from the line of Mariana Perez Mora with Bank of America. Please go ahead.

Speaker Change: Your next question is from the line of Mariana Perez Mora with Bank of America. Please go ahead.

Mariana Perez Mora: Good morning, everyone. Good morning.

Speaker Change: Good morning, everyone.

Speaker Change: Morning.

Mariana Perez Mora: So my question is a follow-up on the international opportunities. And how should we think about M&A and partnerships there? I really think that AUKUS gives, particularly in Pillar 2 of AUKUS, you see opportunities for electronic warfare and C2 capabilities. Like, how do you think about positioning there? Kind of like going solo, partnering with someone in the region or even doing some acquisitions in strategic areas?

Speaker Change: My question is a follow up on the international opportunities and how should we think about M&A and partnerships there.

Speaker Change: I really think that.

Speaker Change: <unk>, particularly in the pillar two.

Speaker Change: Because you see opportunities for electronic warfare and seek to Cape.

Speaker Change: Capabilities like how do you think about positioning there kind of like Sola partnering with someone in the region or even doing some acquisitions in strategic areas.

John S. Mengucci: Thanks Mariana for asking for all of our secrets. All right, so let me try to unpack that. Look, on the international front, it's no secret that in the electromagnetic spectrum, given everything that we're seeing today, it's a very dangerous world, and everyone needs electronic warfare equipment. You know, many allies around the globe are talking about expanding their budgets. We, as I mentioned earlier, currently deliver technology to a number of Five Eyes countries.

Speaker Change: Thanks <unk>.

Speaker Change: And for all of our Secrets, Alright, So let me, let me try to unpack that a.

Speaker Change: Look on the international front, it's no secret that the electric the electromagnetic spectrum.

Speaker Change: Given everything that we're that we're seeing today.

Speaker Change: It's a very dangerous world and everyone needs.

Speaker Change: Electronic warfare and equipment.

Speaker Change: Many allies around the globe are talking about expanding their budgets, we as I mentioned earlier currently deliver technology to a number of <unk> countries.

John S. Mengucci: As we, quote-unquote, expand, you know, deeper into the Five Eyes and into NATO, Eastern Europe is going to be one of our absolute focus spots. We have made a number of trips with our software-based technology sales team to Poland, Latvia, Lithuania, Romania, and the like. And we have two of our folks who spent about 10 days in Ukraine, you know, buckled down in Kiev, frankly, talking to on-the-ground commanders about what they're seeing and what they need as we go forward.

Speaker Change: As we.

Speaker Change: Expand.

Speaker Change: Deeper into the five itunes and NATO Eastern Europe is going to be one of our absolute focus spots. We have made a number of trips with our software base technology sale of sales team.

Speaker Change: Poland lot.

Speaker Change: Lithuania, and Romania, and the like and we had two of our full spend about 10 days in Ukraine.

Speaker Change: Buckled down and keep frankly talking to on the ground commanders about what they're seeing and what they need as we go forward and it really related to the supplemental comment I made during my prepared remarks that we can have all the meetings, we light, but the supplemental house in addition.

John S. Mengucci: And that really related to the supplemental comment I made during my prepared remarks that, you know, we can have all the meetings we'd like, but the supplementary helps. In addition, a lot of those Eastern European companies are spending their own defense dollars, including in the Ukraine, to look for, you know, faster-paced solutions to what they're seeing.

Speaker Change: Lot of those eastern European companies are spending their own defense dollars, including in the Ukraine to look for.

Speaker Change: Faster paced solutions to what they're seeing you asked about M&A.

John S. Mengucci: You asked about M&A. I don't see us doing international-based M&A anymore. That's a tough one for us.

Speaker Change: Don't today see us doing international base.

Speaker Change: M&A.

Speaker Change: That's a tough one for us there's a lot of.

John S. Mengucci: There's a lot of different skill sets that we don't have today in our company, but we're able to reach all of those customer needs with international sales reps and our own sales team. I would mention that when we did the ABT acquisition, you mentioned AUKUS. We have a small branch of what was AVT in Australia. It does allow us to qualify in a different manner to go after Australian programs because we have indigenous [inaudible]. You know, we're going to drive all four of our sales channels for all those products through current programs or records, direct sales, and then in our international. So... I'm excited by that as we talk about 25. And as we go forward, we'll continue to be very transparent and share what we're looking for.

Speaker Change: Different skill sets that we today in our in our company don't have.

Speaker Change: But we're able to reach all of those customer needs with international sales reps and our own sales sales team.

Speaker Change: You mentioned when we did the <unk> acquisition you mentioned August.

Speaker Change: We have a small branch of what was <unk> in Australia.

Speaker Change: Australia, It does allow us to wildfire in a different manner to go after our Australian programs, because we have indigenous.

Speaker Change: Capabilities within the country, so a lot of avenues there.

Speaker Change: A lot of decisions, we're still in the middle of making Marianna.

Speaker Change: You know there and in other areas.

Speaker Change: To continue to drive growth.

Speaker Change: We're going to drive all four of our sales channels for all those products to current programs of records are direct sales and then in our international so.

Speaker Change: Excited by that is we're talking about 25 and as we go forward, we will continue to be very transparent and share what we're looking to do that.

Mariana Perez Mora: Thank you and sorry if I'm oversimplifying this, but is it fair to think that you will of like target international budgets and like the growth in international budgets mostly with your technology portfolio versus experts? Yes, we will address the international market.

Speaker Change: Thank you and sorry, if I'm oversimplifying this but like is it fair to think that you will.

Speaker Change: It sounds like Tar that they can turn national bad debts, and like the growth in international, but it's mostly with your technology portfolio versus expertise.

John S. Mengucci: Yes, we will address the international market with our technology portfolio. Now, at the same time, expertise informs tech. So a lot of the information we get about what other countries are doing, if you look at our expertise, which focuses on soft support, on, you know, folks out in the field on the wrong side of the wire, and a lot of these really dangerous countries, we do get a lot of expert information that then tells us who we should go target, where and in what order. And that is the beauty and the strength of delivering expertise and technology and how those two together can help those two

Speaker Change: Yes, we will address the international market with our technology portfolio now at the same time extra receipt expertise informs tech. So a lot of the information we get about what other countries are doing if you look at our expertise of focuses on soft support on folks out in the field on the longs.

Speaker Change: Side of the wire in a lot of these really dangerous countries.

Speaker Change: Do get a lot of expertise information that then tells US who we should go with target.

Speaker Change: Where and what.

Speaker Change: Order and that is the beauty and the strength of delivering expertise and tech and how those two parts of our business support each other basically.

Matthew Carl Akers: Your next question is from the line of Matt Akers with Wells Fargo. Please go ahead.

Matthew Carl Akers: Hey guys, good morning.

John S. Mengucci: Thanks for the question. I guess, John, how should we think about the kind of long-term growth rate for this? I think back when you guys did the Investor Day with the quadrants, you were kind of laying out a 4 or 5 percent kind of market growth, and you're doing more like double digits this year. It sounds like there's a lot still to come. So I'm just curious if that has accelerated a little bit.

Speaker Change: The question is right on.

Speaker Change: Thanks, so much.

Speaker Change: Your next question is from the line of Matt Akers with Wells Fargo. Please go ahead.

Matthew Carl Akers: Hey, guys. Good morning, Thanks for the question Matt.

Matthew Carl Akers: I guess, how should we think about kind of the long term growth.

Matthew Carl Akers: This new day I think back when you guys did the Investor day with a quadrant that you've kind of laying out like a four 5% kind of margins youre doing more more like double digits. This year. It sounds like there's a lot still to come and so I was just curious if that's accelerated a little bit.

John S. Mengucci: Yeah, look, we are at the point where we're a reliable, reliable, you know, mid single-digit growth company over the long term, right? You know, we're still in the 25th and future year of build out. So I don't want to, you know,

Speaker Change: Yeah look we are at the point, where we're a reliable reliable.

John S. Mengucci: Yeah, look, we are at the point where we're a reliable, reliable, mid single-digit growth company over the long term, right? You know, we're still in the 25 and future year build out. So I don't want to, you know, show too much because, frankly, that will end up.

Speaker Change: You know mid single digit growth company with a long term right.

Speaker Change: We're still in the 25 and future your build out so I don't want to show too much because frankly that will end up kind of changing but at a macro level look where our solid better than mid single digit growth company going forward and it really just harking back to how closely we watch free cash flow per share right. We all talked about margins.

John S. Mengucci: But at a macro level, look, we're a solid better than mid-single-digit growth company going forward. And it really does harken back to how closely we watch free cash flow per share, right? We've all talked about margins for a very long time, which was the right thing for us to be talking about because it takes an enormous amount of top-line growth to drive free cash flow-per-share when our EBITDA margins were, you know, sub-8 billion. Okay, we're excited that we're actually talking about high 10s, and you know, 10, 7, 10, 8, 10, 9, all count as high 10s.

Speaker Change: A very long time.

Speaker Change: Which was the right thing for us to be talking about because it takes an enormous amount of top line growth to drive free cash flow per share when our EBITDA margins. We're sub eight okay. We're excited that we're actually talking about high teens, and 10, 7%, 8% nine autonomous <unk>. So at a macro level, how we're driving the ship which is.

Matthew Carl Akers: So at a macro level, how we're driving the ship, which is long term, we're extremely excited and also encouraged from where we were, frankly, Matt, at 2019 Investor Day. What we're focused on, as you look at future investments and future growth, it's going to be near peers and the counterterrorism mission. You've heard me say so many times, folks, this was always going to be an and case, even though we tried to will it into an and case. It is an and.

Speaker Change: Long term.

Speaker Change: We're extremely excited and also encouraged from where we were frankly, Matt at that 2019.

Speaker Change: Investor Day, what's what we're focused on as you look at future investments in future growth.

Speaker Change: Gonna be near peer and the counterterrorism mission, you've heard me say so many times folks. This was always going to be in and case, even though we tried to will it into an or case.

Speaker Change: Is in and we're going to focus on network modernization, we talked about that in the very early early days. After the 2019 meeting we talked about the importance of electromagnetic spectrum SIGINT EW counter counter UAS turned that page five years later or everything you Miss a single a.

John S. Mengucci: We're going to focus on network modernization. We talked about that in the very early, early days after that 2019 meeting. We talked about the importance of electronic spectrum, SIG and EW, counter-counter-UAS, you know, turn that page five years later. Everything emits a signal.

Speaker Change: A signal.

Speaker Change: Near peer threats are going to drive urgency for increased speed and flexibility all our spectral we're leaning counter UAS provider out there today and the threats are in their infancy stage.

John S. Mengucci: Near peer threats are going to drive urgency for increased speed and flexibility, a la spectral. We're the leading counter-UAS provider out there today, and the threats are in their infancy stage. I'm not trying to sell fear, but fear is out there because it is a dangerous world.

Speaker Change: Not trying to sell sphere, but fear is out there because it is a dangerous world and that's what we all see.

Speaker Change: And then space right, we talked a lot about on the <unk>.

Speaker Change: <unk> size.

Speaker Change: We're starting to build backlog were the first to launch first two interface first to connect.

John S. Mengucci: And that's what we all see. And then there is space, right?

John S. Mengucci: We talk a lot about on the photonic side, and we started to build ACLOD. We're the first to launch, first to interface, first to connect, and the U.S. supplier that does design and production fully in the U.S. So, you know, as we look at how we go forward, there's plenty of room for us to grow a really nice addressable market for us. And so, if you take a look at where we started, a mid-single-digit, top-line growth company focused on margins, ultimately focused on pre-cash flow per share.

Speaker Change: And the U S supplier that does design and production fully in the U S. So as we look at how we go forward, there's plenty of room for us to grow a really nice.

Speaker Change: The addressable market for us and so if you think it'd take take a look at where we started.

Speaker Change: Mid single digit top line growth company focused on margins ultimately focused on free cash flow per share.

Speaker Change: Great. Thanks, that's helpful. And then I guess, one for Jeff just the Capex guide for the year $80 million I think implies a pretty big.

Matthew Carl Akers: Great, thanks. That's helpful. And I guess one for Jeff, just the CapEx guide for the year 80 million I think implies a pretty big lump in Q4. Just curious what's going on there.

Speaker Change: Lumpy in Q4, just curious whats going through there.

Jeff: Yes, there are a couple of things in there, Matt I would say that the preponderance of it is related to.

Speaker Change: Some some more.

Jeff: More efficient facility strategies footprint.

Jeffrey D. MacLauchlan: Yeah, there are a couple things in there, Matt. I would say that the preponderance of it is related to some more efficient facility strategies and some footprint. It's not at all related to program or growth-specific kinds of projects.

Jeff: It's holiday season.

Jeff: Management of our of our kind of physical infrastructure.

Jeff: Not not at all related to program where growth specific kind of projects.

Matthew Carl Akers: Great, great. Thank you both.

Speaker Change: Great. Okay. Thank you both.

Speaker Change: You bet.

Tobey O'Brien Sommer: Your next question is from the line of Tobey Sommer with Truist Securities. Please go ahead.

Speaker Change: Your next question is from the line of Tobey Sommer with the Truest Securities. Please go ahead.

Jasper James Bibb: Hey, good morning, this is Jasper Bibbon for Tobey. Really nice growth in the civil business this quarter. Last few quarters, I think that had been, I guess, flattened down with the transition in the background screening contract with DCSA. So just curious, I guess, what's driven the acceleration in civil now that it seems like the comps from that contract have rolled off?

Speaker Change: Hey, good morning. This is Jasper bibb on for Tobey.

Jasper Bibb: Really nice drawing from the civil business this quarter.

Jasper Bibb: Last few quarters, I think rather than I guess flat to down with the transition in the background screening contract in D. C. S. A so just curious I guess, what's driving the acceleration in civil amount of it seems like the comps from that contract the protocol.

John S. Mengucci: Yeah, sure. Yeah. Go ahead.

Jasper Bibb: Yeah.

Speaker Change: Yes sure yeah.

John S. Mengucci: You're talking about DOD versus Fed, Civ, and sort of how those parts move. You know, some of it is, if you all remember. A number of quarters back, the government reclassified our background investigation. Our DCSA program, that was a FedSiv program, and that transitioned to DEOD. So that was the majority of why you're seeing some of these deltas. You know, some of our longer, older recompete losses, even though that doesn't happen very often, TNTSA impact ramped down in the second half of 23, the anniversary is fourth quarter 24. So things like that, there isn't any one item or, you know, a difference in our strategies, how we do things.

Speaker Change: You're talking about John.

Speaker Change: G O G versus said Sim.

Speaker Change: And sort of how those move.

Speaker Change: Some of it is if you all remember.

Jasper Bibb: A number of quarters back.

Jasper Bibb: In government, we reclassified our background investigation work, our <unk> program that was a.

Jasper Bibb: Offensive program in that transition.

Jasper Bibb: So that was the majority of why Youre seeing some some entity deltas.

Jasper Bibb: You know some of our.

Jasper Bibb: Longer older Recompete losses, even though that doesn't happen very often but T. L. T N TSA impact ramped down in the second half of 'twenty three the anniversaries fourth quarter 24, so things like that there isn't any one item or a difference in our strategy. Our binney. So hopefully that provides some of the color you.

Jasper James Bibb: Yeah, no, that's helpful. And then you mentioned the new business pursuit target. So curious if there's been any change in how you manage bidding proposal activity recently, including potentially going after more international work. And then also, what does fiscal 25 look like from a repeat risk perspective?

Jasper Bibb: We're looking for.

Speaker Change: Yeah, No. That's helpful. And then you mentioned the new business pursuit target. So curious if theres been any change in how you manage.

Speaker Change: <unk> been in proposal activity recently include.

Speaker Change: Including potentially going after more international work and then also what those fiscal 'twenty five look like from a recruiting perspective.

Jasper James Bibb: Yeah, let me take a step up on that one.

Speaker Change: Yeah, Let me let.

John S. Mengucci: Yeah, let me take a step up on that one. Look, how we're focused in our business development organization, where we spend BNP and the like. It really starts at a different level. It starts with the fact that we have a very different strategy within our sector for how to grow this company. We are focused on investing to have a customer in need. Developing Differentiating Capabilities that then addressed critical enduring national security and modernization priorities. That statement in itself says that we approach how we do business, and how we approach a new business, with a very different lens, right? We're looking first at, what's going to grow the fastest?

Speaker Change: Let me take a step up on that one look.

Speaker Change: How we're focused in our business about modernization, where we spend the E&P.

Speaker Change: Mike.

Speaker Change: It really starts at a different level. It starts with the fact that we have a very different strategy within our sector on how to grow this company.

Speaker Change: We are focused on investing ahead of customer need.

Speaker Change: <unk> differentiated capabilities.

Speaker Change: The address critical enduring national security and modernization priorities.

Speaker Change: <unk> statement in itself since we approach how we do business.

Speaker Change: And how we.

Speaker Change: Approach new business with a very different lens right. We're looking at first what's going to grow the fastest and then second if that's where we're going to plant. That's got to be a 10 to 20 year old assets or be a narrow deep funding stream and I use that term many many times and that our strategy is technology.

John S. Mengucci: And then second, if that's where we're going to plant, that's gotta be a 10 to 20-year low. That has to be a narrow, deep funding stream, and I use that term many, many times. And then our strategy is technology and expertise versus just expertise. The days of trying to find just expertise work, and what is law, over the longest term, will be a commodity-based delivery, was not the way we believed, long term, we could grow this business. So that's why we built it.

Speaker Change: <unk> expertise versus just expertise the gains are trying to find just expertise work.

Speaker Change: And what is long over the longest term will be a commodity based delivery model with.

Speaker Change: It was not the way we believe long term we could grow this business. So that's why we built nearly from scratch a technology partners business that would be inextricably connected to the expertise side right. So we could understand what customers need and then develop it.

John S. Mengucci: Nearly From Scratch, a technology partners business that would be inextricably connected to the expertise side, right? So we could understand what customers need and then develop it. And then it really comes down to, you know, bid less and win more by Jasper. So, you know, giving you that comment, you know, so how do you, how do you bid less and win more? So there's a lot of people out there talking about, you know, retooling BD teams, or we're gonna go out there and say, hey, the model starts, what are you about? What are you gonna focus on?

Speaker Change: And then it really comes down to bid less and win more by Jasper. So, giving you that comment you know so how do you how you bid less and win more it's called focus so.

Speaker Change: There's a lot of people out there talking about retooling BD teams or we're going to go out there with the model starts what are you about what are you going to focus on how are you going to be very transparent with you as shareholders. How do you find patient shareholders over the long term.

John S. Mengucci: How are you gonna be very transparent with your shareholders? How do you find patient shareholders that, over the long term, are gonna be looking to us to provide that reliable long-term growth? So, you know, we align with customer needs, we invest ahead of need, we shake the heck out of things, which really means show the customer the art of the possible and really drive preference. Do not try Price Down.

Speaker Change: They're looking to us to provide that reliable long term growth. So we aligned with customer customer needs. We invest ahead of need we shape the heck out of things, which really means show the customer the art of the profit.

Speaker Change: Possible and really drive preference.

Speaker Change: Not tried price down.

John S. Mengucci: And then, at the end of the day, who doesn't like somebody who performs better than everybody? So that's the mix we have; that's the recipe we have in this company. So we're not sitting here worried about, do we spend more money on FedSiv versus DOD? We really say, does this fit the markets that we're in and the technology and expertise strategy? When it does, we will stop at nothing to win that business because the investments, both in BNP, IRAP, and in CapEx, as Jeff mentioned, are crucial to driving long-term growth.

Speaker Change: And then at the end of the day, you know who doesn't like somebody who performs better than I had everybody. So that's the mix. We have that's the recipe we have in this company. So we were not sitting here worried about do we spend more money in sensitive versus D. O D. With unique we really say does this fit the markets that we're in.

Speaker Change: Technology and expertise strategy when it does we will stop at nothing to win that business because the investments both in E&P, Iraq and Capex as Justin mentioned are crucial to driving long term growth on the 25, you know our view.

John S. Mengucci: On the 25 view, this year, Frankly, we went through a lot of re-competes. What you don't see is we have a lot of contract extensions. So those are customers who may have re-competed next year; they came to us during the last couple of quarters and said, hey, we want to take another three years, four years, two years. So there was a lot of work that we did to gain extensions, and then, Jeff, that drives potentially a lower re-compete rate as we move into 25 and 20.

Speaker Change: This year frankly, we went through a lottery E. Recompete well you don't see is we have a lot of contract extensions. So those are customers, who may have recompete next year. They came to us during the last couple of quarters is that if we wanted to take another three years four years. Two years. So you know there was a lot of work that we did again extensions and then Jess.

Speaker Change: That drives potentially.

Speaker Change: Lower recompete rate as we move into 'twenty five 'twenty six.

Speaker Change: I appreciate the detail there thanks for taking the questions guys.

Speaker Change: Thanks sure.

Speaker Change: Your next question is from the line of Seth <unk> with Jpmorgan. Please go ahead.

Jasper James Bibb: Appreciate the detail there. Thanks for taking the questions, guys. Thanks. Sure. Your next question is from the line of Seth Feisman with J.P. Morgan. Please go ahead. Good morning, this is Rocco on behalf of Seth. Good morning.

Speaker Change: Good morning, this is Ross on for Seth.

Ross: Good morning, good morning.

Ross: Building on the prior question what were the drivers of Khakis impressive awards in the quarter did the bidding trends shifting how is khaki thinking about bidding on future Awards also should we be thinking about the strong bookings will drive another strong revenue year in fiscal year 'twenty five above the long term growth rate mentioned earlier or is there more lagging These awards.

Seth Michael Seifman: Your next question is from the line of Seth Feisman with J.P. Morgan. Please go ahead.

John S. Mengucci: I love the last question, trying to crowbar it into 2045, but we will certainly be overly transparent when we get to 2025. But in the spirit of the first part of the question, look, yeah, we have had great wins. It's more about the culture, and it's more about the strong business development teams, solution architects, but also the deep bench that really knows how to win. This is not a one or two person-driven business development machine. They are absolutely connected to both business development and sales teams at the P&L Centers.

Ross: Loved the last question trying to trying to crowbar into 2020 five.

Speaker Change:

Speaker Change: But we will we will certainly be overly transparent when we get to 'twenty five.

Speaker Change: But in the spirit of the first part of the question.

Speaker Change: Yeah, we have had great wins.

Speaker Change: It's more about the.

Speaker Change: What about the culture and it's more of a strong business development team solution architects, but also the deep bench there.

Speaker Change: That really know how to win this is not a one or two person driven business development and machine. They are absolutely connected both business development and sales teams to the P&L centers.

John S. Mengucci: They are really looking at how we competitively position ourselves. The large win we had this quarter, the E-Light program, right, that was one where we spent an awful lot of time, you know, working with current customers, and you know, how do we do more for you given that the world's an even more dangerous place? So that is a two-year-ago plan. As these programs are being run, how do we merge what we do for them? That helps with unity of purpose. That helps supportability across those two commands.

Speaker Change: They are really looking at how do we competitively positioned ourselves.

Speaker Change: The large win we had this quarter are the E rate program right that was that was it was one where we spent an awful lot of time working with current customers. You know how do we do more for you given that the world and even more dangerous place. So that is a two year ago plan is so as these programs are.

Speaker Change: <unk> run how do we merge what we do for them that helps unity of purpose that helps portability across those two combatant commands.

John S. Mengucci: So it's a very involved, detailed process that is not in the hands of, you know, less than five people. It's in the hands of 150 people. They're actually focused each and every day on how we shape in. You know, we have this mantra within this company: we're going to go into 25, our entire FY 25 bidding lineup, most of that has already been bid in 24. The rest of that will be solutions in bid here shortly.

Speaker Change: It's a very involved detailed process that is not in the hands of less than five people. It's in the it's in the hands of a 150 people theyre actually focus each and every day is how do we shape.

Speaker Change: We have this mantra within this company.

Speaker Change: We're gonna go into 25, our entire FY 'twenty five.

Speaker Change: Adding lineup most of that has already been bid in 'twenty for the rest of that will be solutions and did here. Shortly so when we get into 'twenty five we're talking about how do we grow 26.

John S. Mengucci: So when we get into 25, we're talking about how we grow 26, from a, you know, wins and awards spot. That's why we've traditionally been, you know, a long number of quarters over 1.0, why we had a 1.8 book to bill, and why our, you know, trailing 12 months book to bill is always above 1.0. So it is in the ethos of this company to drive growth, but we're going to stay true to what it is we do well.

Speaker Change: Wins in an award spot that's why we've been traditionally.

Speaker Change: A long number of quarters, you know over one <unk> why do we had one eight book to Bill and why our trailing 12 month book to Bill is as always above 1.0. So it is in the ethos of this company how to go drive growth, but we're going to stay true to what we do well.

John S. Mengucci: We're not going to drop an anchor in some kind of work that we have no idea about doing and then chase that job based on price and promise you all we're going to get better. Great, thank you.

Speaker Change: We're not going to drop and drop an anchor in some some kind of work that we have no idea of doing and then chase that job based on price and promise you all were going to get better. We just don't operate that way, it's a long term strategy.

Speaker Change: Great. Thank you.

Connor Walters: Your next question is from the line of Connor Walters with Jeffries. Please go ahead. Hi guys. Good morning.

Speaker Change: But.

Speaker Change: Your next question is from the line of Conor Walters with Jefferies. Please go ahead.

Conor Walters: Hi, guys good morning.

Jeffrey D. MacLauchlan: And John will likely want to expand on this, but it's really pretty broad-based. I mean, we've talked about a couple of the major sort of franchise wins we've had over the last couple of years. Those are all ramping on or ahead of our expectations. We're really, the portfolio broadly is kind of hitting on all cylinders, really can't point to one or two or three programs and say it's this or that. So it's very broad-based. Yeah, I think so.

Conor Walters: Congrats on a great quarter. Thanks for taking my question.

Conor Walters: Trying to get back to the growth you had you know exiting this year, you're on a really strong organic growth trajectory here in the second half in the low double digit range curious if you could point to what some of the key drivers are here I don't know if it's all from the accelerated program ramps you touched on earlier, perhaps some share gains anything you'd point to would be great.

Speaker Change: John will John will likely want to expand on this.

Speaker Change: But it's really pretty broad based I mean, we've talked about a couple of the major <unk>.

John S. Mengucci: Yeah, I think, you know, you can look at the future programs we'll be talking about driving revenue, right, you know, during this year beyond ITAS and the large Intel expertise program. And, and ITAS, we'll be talking about GenMod and CipherMod and, you know, some of those items.

John: Sort of franchise wins, we've had over the last couple of years those are all ramping on or ahead of our expectation.

John: We're really.

Conor Walters: The portfolio broadly is kind of hitting on all cylinders.

Conor Walters: Really can't point to one or two or three programs and say, it's this or that.

Conor Walters: So it's very broad base.

Speaker Change: Yeah, and I think you can look at that.

Speaker Change: The future programs will be talking about driving revenue during this year and beyond.

John S. Mengucci: So we're, you know, we're not a one-program company; we're not a three-program one; we're looking to now get our stride. Now, if I say that, we also have technology programs that we actually do deliver, right? And when we deliver, that revenue goes away, right? And there's some sustainment.

Speaker Change: It has in the large Intel expertise program.

Conor Walters: And I will be talking about me like Gen modern Super modern.

Conor Walters: Some of those items. So we're you know we're not a we're not a one program company went out of three program. One will you know were looking to now hit our stride now if I say that we also have technology programs and we actually do deliver right and when we deliver that revenue goes away right and Theres some <unk>.

John S. Mengucci: But, you know, at a company that size, coming up, coming up on 8 billion, we are going to have programs that are going to sunset, which is a positive thing because it means we deliver everything we're supposed to deliver. And so that's why we're in the middle of building our 25 plan, right? What gives you the right range, so you can assess what are your most probable, likely cases. I'll also say, if you look back to where we were in August, folks, right, we were there, we gave you a growth rate, we also gave you a range, we said low end and high end. I invite you all to go back to what we presented to you all as the left end of the goalpost, as we used to say, at the right end, you know, five of the six things on the left end that would allow us And those were some pretty high standards.

Conor Walters: But you know.

Conor Walters: Any of this size, you know coming I'm coming up on $8 billion.

Conor Walters: We're gonna have programs that are going to Sun set which is a positive things means we deliver everything we're supposed to deliver.

Conor Walters: And so that's why we're in the middle of building our 25 plant right. What gives you the right range you can assess what are the most probable.

Conor Walters: Comparable cases.

Conor Walters: I'll also say you have to look back to where we were in August both right. We were there. We gave you a growth rate. We also gave you a range we set low end and high high and I invite you all to go back to what we presented to you all as the left side of the goalpost as we used to say in a right on.

Conor Walters: Five of the six things onto what would allow us to drive growth.

Conor Walters: Five of the six things on the high end, we're actually achieved.

Conor Walters: Those were some pretty high bars.

John S. Mengucci: But it proves, maybe not every single year. But you know, when things align, things align, awards are lumpy, right? So we can never count on an award coming in a specific quarter. And you all know, based on where our fiscal year is, and the government's fiscal year is, there are times when we're going to win great awards that are going to come too late to have any material difference in the current year that we're in respect to those questions.

Conor Walters: Crews, maybe not every single year, but when things align things align awards are lumpy right. So we can never ever kind of award coming in a specific quarter and you. All you all know based on where our fiscal year is in the government's fiscal year is there are times, where we're gonna win Great Awards are gonna come too late to have any material.

Conor Walters: In the current year that we're in respect those questions.

John S. Mengucci: But there are times when we have to say it's going to show up next next year. So it's this, you know, rubric of what's emerging and what's ending. And that really drives the reason why Jeff and I always say, we're gonna talk about 25. It's not to be flippant, frankly; it's just that we don't have a really good eyeball yet. And we're in the middle of, you know, stirring that soup, and absolutely when we get to August, we'll be in a really nice position to tell you how 24 buttoned up you got some great guides earlier today and what we expect for

Conor Walters: But there are times when we have to say, it's going to show up next next year. So it's this rubric of whats exiting whats ending.

Conor Walters: And and that really drives the reason why Jeff and I always say well I can talk about 25 is not to be flippant frankly, it's just that we don't have a really good eyeball, yet and we're in the middle of starting that soup in.

Speaker Change: Absolutely when we get to August we'll be in a really nice position until you're out 24, buttoned up you got some great guidance earlier today and what we expect for the future.

Speaker Change: Got it that's super helpful. Thanks, So much guys.

John S. Mengucci: Your next question is from the line of Louis DiPalma with William Blair. Please go ahead.

Speaker Change: Yeah.

Speaker Change: Your next question is from the line of Louis Dipalma with William Blair. Please go ahead.

Michael Louie D DiPalma: Good morning.

Michael Louie D DiPalma: I'm following up on the spectral comments. What is the progress in terms of installations across the Navy surface fleet?

Michael Louie D DiPalma: Following up on the following up on the spectral comment what is the progress in terms of installation across the Navy surface fleet.

John S. Mengucci: Yeah, thanks, Louie. So we are in the design phase now. Now, we've gone through a number of PDRs and CDRs, using really great system engineering and software engineering terms. So we are looking at how the program moves forward at a macro level. We are looking for, you know, a minimally viable product, which means what's that first spiral of capabilities is going to be delivered to this 200 plus, maybe a surface ship fleet closer to the end of this calendar year. And then, based on how that goes, we'd be looking at the end of next calendar year in 25 as to start to make deliveries to the fleet. That's a highly Fluids Schedule. Thanks, Jeff.

Michael Louie D DiPalma: Yeah. Thanks, Louise So we are in the design phase now we've gone through a number of <unk> and <unk> using really rates system engineering and software engineering terms.

Speaker Change: So we are looking at how the program moves forward at a macro level.

Speaker Change: We are looking for.

Louise: You know a minimally viable product, which means what's that for spiral of capabilities are going to be delivered to this 200 plus navy.

Speaker Change: Surface ship fleet.

Speaker Change: Closer to the you know.

Speaker Change: End of this calendar year.

Speaker Change: And then based on how that goes we'd be looking at the end of next calendar year in 'twenty five as to start to make deliveries to the fleet that's a highly.

John S. Mengucci: So, you know, we'll have a much better view when we get to August, but that's sort of the period we're in. We're in the development period now. We'll develop and deliver the product at the end of the calendar year and some later, which is why we've been talking about that we're in the design phase now, and RAP will actually start to show itself in 2025, and then clearly a number of ships as we go to 2025.

Speaker Change: Fluids casuals and shop.

Speaker Change: So we'll have much better view when we get to August, but that's sort of the rent when the development drilling now.

Speaker Change: We will develop and deliver product at the end of the calendar year and some later, which is why we've been talking about that were in design phase now and ramp will actually start to show itself in 'twenty five and then clearly N number of shifts as we go 2016.

Speaker Change: Yeah.

Speaker Change: Great and.

Michael Louie D DiPalma: For that software solution, the vision is that it would last for the entire useful life of the ship and that a significant component is software. And you've discussed the dynamic nature of the threat. And so do you have the ability to upgrade the software in response to the changing nature of the threat such that, you know, even as requirements change, your software allows your solution to change with those requirements so that the solution can last for decades rather than, I think the contract is only for seven years, but do you envisage that your software is going to last for decades and decades? Yeah, Louie, thanks.

Speaker Change: For the software solution and provision that it won't last for the Empire useful life.

Speaker Change: The shift in that.

Speaker Change:

Speaker Change: A significant component is software and you have discussed the dynamic nature of the.

Speaker Change: Threat and so do you have the ability to upgrade.

Speaker Change: The software and respond to the changing nature of the threat such that.

Speaker Change: Even as requirements change.

Speaker Change: Software is allowed to installation to change what those requirements are that the solution can last for.

Speaker Change: Gains rather than I think the contract is only for seven years, but do you envision that your software is going to last for.

John S. Mengucci: Yeah, so two key points. It's an open architecture solution. Many people claim it, but we actually deliver it. Okay, it's an open architecture.

Speaker Change: AIDS in decades.

John S. Mengucci: Yeah, Louie, thanks. Yeah, so there are two key points to that. It's an open architecture solution. Many people claim it, but we actually deliver it. Okay, it's open architecture because we want other companies who can decrypt different signals that they're finding with their gear to come up with what's the signature and then what is the effect you can apply to whatever that is, so that you can protect surface ships. So one, based on the open architecture, yes, we have a long history ahead.

Speaker Change: Yeah. Thanks, Yeah. So two two key points of that.

Speaker Change: As an open architecture solution on many people, claiming we actually deliberate it's open architecture, because we want other companies, who can decrypt different signals that they're finding their gear to come up with what's the signature and then what is the effect to peanut.

Speaker Change: Flight or whatever that is so that you can.

Speaker Change: Protect surface ships. So one based on the open architecture, yes, we have a long history head to the fact that we can make software changes based on that so that makes us a highly capable company as you go out into the future. We're having a lot of talks around counter UAS at all levels of the <unk>.

John S. Mengucci: Two, the fact that we can make software changes based on the threat makes us a highly capable company as you go out into the future. We're having a lot of talks around countering UAS at all levels of the DoD and the intelligence community. A lot of that work is based on a DOTS software baseline that the government owns. We created it for them over more than a couple of decades. We start with that, and we're continually adding to it.

Speaker Change: D O D and the intelligence.

Speaker Change: Community a lot of that work is based on a cots software baseline that the government owns we created for them over over more than a couple of decades, we start with that and we're continually adding to that so you know.

John S. Mengucci: So to your point, as the threat changes, as we've all witnessed, when those threats change, we're able to collect. Decrypt, put solutions in that can counter those within a matter of hours versus, you know, the old style was to take a surface ship into port, share the hardware out, put more racks of hardware in, do six or seven each year. You can't maintain a fleet given where the threats have gone. So we are. We are exactly where we want it to be, a software-based company. It is our superpower. We look to make it our customer's superpower as we'll start to continue

Speaker Change: You are to your point as the threat changes as we've all witnessed when those stretch change we were able to collect the crypt put solutions in that can counter those within a matter of hours versus the old style was take a take a surface ship into for.

Speaker Change: Sure the hardware out put more racks of hardware in do six or seven each year, you cant maintain a fleet given the where the attractive. So we are we are exactly where we want it to be a software based company. It is our superpower, we look to make it our customers superpower as we'll strive to continue to change it.

Michael Louie D DiPalma: And on this same topic of drone warfare, it is. CACI is involved in the official JED, C2 program on both the hardware and software side. In the past, you've discussed your role in several data analytics software programs with your Agile Solutions Factory, and you obviously provide many different types of signals, and intelligence sensors across many programs. And recently, the Department of Defense has been talking to Bloomberg about how they have their first version of Jet C2 with the Algorithm of Warfare. Are you involved in that program? A lot of folks are involved in JADC2 as it starts to build out.

Speaker Change: Thanks for that question.

Speaker Change: Hum.

Speaker Change: Same topic of <unk>.

Speaker Change: One one.

Speaker Change: Yes.

Speaker Change: CACI involved in the official Chad C. Two program.

Speaker Change: The hardware and software installed on the path you've discussed are on several data analytics software programs.

Speaker Change: Al Solutions factory, you, obviously provide many different types of signals intelligence.

Speaker Change: Many programs.

Speaker Change: Recently, the department of Defense has been.

Speaker Change: Bloomberg talking about how they have their first.

Speaker Change: As you know.

Speaker Change: Let's see two with algorithmic warfare are you involved them I'm not pump huh.

Speaker Change: Yes, there are a lot of folks who are involved in jet situate. It starts to build out and we all under I'm trying to understand it better you know I would say an ob won level, yes, we're absolutely and involved every sensor every shooter will at the end of the day.

John S. Mengucci: Library. We have a phenomenal team in Omaha that really works on DCGS air force. Spectral is an example.

Speaker Change: And Paul but its our belief there is a lot of building blocks that get the D. O D to that and then get to the cross service model D. C. D. C. G S. Whether it's D C. G S.

John S. Mengucci: A lot of those JADC2 components, right? How do you pull in data from other sensors that may have seen this threat in the past? It's flying over, you know, surface ship X. And how do we bring that signature and that exploit in quickly and provide that to the ship's commander? So, yes, we're very much connected on the technology side. It's all things JADC2, and it's at the building block level today. I'm certain that as more building blocks get added, we'll be a, you know, a key component of what DOD eventually is.

Speaker Change: Navy D C. <unk> D. C. D C. G S soft, which is where a lot of everything we know about us is put into this massively large library, we have a phenomenal team in Omaha that job that really works on D. C. G. S. Airforce spectral as an example, a lot of those chance Genesee two components.

Speaker Change: But how do you pull in from other sensors that may have seen this threatened in the past is flying over surface ship X and how do we bring that signature and then exploit and quickly and.

Michael Louie D DiPalma: Great, thanks so much.

Speaker Change: Provided that to the ship's commander so yes, we're very much connected on our technology side into all things JFK too and it's at the building block level today I'm certain that as more building blocks get at it will be a you know a.

John S. Mengucci: There are no further questions. I will now turn the conference back to John Mengucci for closing remarks.

John S. Mengucci: Thanks, Dennis, and thank you for your help on today's call. Look, we'd like to thank everyone who dialed in or listened to the webcast for their participation. We know that many of you will have follow-up questions, and John MacLauchlan, George Price, and Jim Sullivan are available after today's call. Please stay healthy, and all my best to you and your families. That concludes our call.

Speaker Change: A key component of what.

Speaker Change: Oh do you eventually flows.

Speaker Change: Great. Thanks, so much.

Speaker Change: There are no further questions I will now turn the conference back to Jonathan <unk> for closing remarks.

Jonathan: Thanks, Dennis and thank you for your help on today's call look we'd like to thank everyone, who dialed in or listened to the webcast for their participation. We know that many of you will have follow up questions and Jeff Mclaughlin towards price and Jim Sullivan are available. After today's call. Please stay healthy and all my best to you and your families that concludes our call.

Operator: This concludes today's conference call. We thank you all for participating, and you may now disconnect.

Speaker Change: This concludes today's conference call. We thank you all for participating and you may now disconnect.

Speaker Change:

Speaker Change: Yeah.

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Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.