Q4 2024 CACI International Inc Earnings Call

August 8, 2024

Speaker Change: Ladies and gentlemen, thank you for standing by. Welcome to the CACI International Fourth Quarter and Fiscal Year 2024 Earnings Conference Call.

Speaker Change: 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.

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

Operator: At this time, I would like to turn the conference call over to George Price, Senior Vice President of Investor Relations. Please go ahead. Thanks, Rochelle. And good morning, everyone. I'm George Price, Senior Vice President

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

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

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. 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 anticipated. Those factors are listed at the bottom of last night's press release and are described in our company's SEC filing.

George Price: Our safe harbor statement is included in 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 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.

Speaker Change: We are providing presentation slides, so let's move to slide two.

Speaker Change: There will be statements in this call that do not address historical fact and as such constitute forward-looking 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 anticipated.

Speaker Change: Those factors are listed at the bottom of last night's press release and are described in our company's SEC filings.

Speaker Change: Our Safe Harbor Statement is included in 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 discussion of non-GAAP financial measures.

Speaker Change: These should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. Let's turn to slide 3, please.

George Price: Let's turn to slide three. To open our discussion this morning, here's John Mengucci, President and Chief Executive Officer of CACI International. John? Thanks.

John Mengucci: To open our discussion this morning, here's John Mengucci, President and Chief Executive Officer of CECI International. John?

John Mengucci: Thanks George and good morning everyone. Thank you for joining us to discuss our fourth quarter and fiscal year 24 results as well as our fiscal 25 guidance. With me this morning is Jonathan MacLauchlan, our Chief Financial Officer. 5-4, please.

John Mengucci: Thanks George and good morning everyone. Thank you for joining us to discuss our fourth quarter and fiscal year 24 results as well as our fiscal 25 guidance. With me this morning is Jeffrey MacLauchlan, our Chief Financial Officer. Slide four, please.

John Mengucci: Thanks, George, and good morning, everyone. Thank you for joining us to discuss our fourth quarter and fiscal year 24 results, as well as our fiscal 25 guidance. With me this morning is Jeff MacLauchlan, our Chief Financial Officer.

Unknown Executive: 4th, quarter, and fiscal year 2024 earnings conference call. Today's call is being recorded. At this time, all lines are in a listen only mode.

John Mengucci: CACI delivered strong results in the fourth quarter, closing out an exceptional year by delivering 20% revenue growth during the quarter. For the full year, we delivered revenue growth of 14%, coming in ahead of our guidance, which we increased several times during the year. We delivered EBITDA of nearly $800 million, with an underlying EBITDA margin of 10.7%, consistent with our guidance. We also generated free cash flow of over $380 million. The free cash flow per share of $17, the latter an increase of 41% from last year.

John Mengucci: CACI delivered strong results in the fourth quarter, closing out an exceptional year by delivering 20% revenue growth during the quarter. For the full year, we delivered revenue growth of 14%, coming in ahead of our guidance, which we increased several times during the year. We delivered EBITDA of nearly $800 million, with an underlying EBITDA margin of 10.7%, consistent with our guidance. We also generated free cash flow of over $380,000. The free cash flow per share of $17, the latter an increase of 41% from last year.

John Mengucci: Slide four, please.

John Mengucci: CACI delivered strong results in the fourth quarter, closing out an exceptional year by delivering 20% revenue growth during the quarter.

Unknown Executive: 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.

John Mengucci: For the full year, we delivered revenue growth of 14%, coming in ahead of our guidance, which we increased several times during the year. We delivered EBITDA of nearly $800 million, with an underlying EBITDA margin of 10.7%, consistent with our guidance.

George Price: At this time, I would like to turn the conference call over to George Price, senior vice president of investor relations. Please go ahead, sir. Thanks for show. Good morning, everyone. I'm George Price, senior vice president of investor relations for CACI. Thank you for joining us this morning. 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 in such constitute or looking statements under current law.

George Price: These statements reflect our views as of today and are subject to important factors that could cause our actual results to different criteria we from anticipating. Those factors are listed at the bottom of last night's press release and are described in our company's SEC violence. Our safe harbor statement is included in 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 discussion of non-GAAP financial measures. You should not be considered an isolation or as a substitute for performance measures prepared an important swing gap. Let's turn to slide three, please.

John Mengucci: We also generated free cash flow of over $380 million.

John Mengucci: and free cash flow per share of $17, the latter an increase of 41% from last year.

John Mengucci: And we won over $14 billion in contract awards, the highest in company history, which represents a 1.9 times book to bill for the year. Nearly 60% of that award value is for new business to CACI. We continue to perform very well on our Slide 5.

John Mengucci: And we won over $14 billion of contract awards, the highest in company history, which represents a 1.9 times book to bill for the year.

John Mengucci: Nearly 60% of that award value is for new business to CACI. We continue to perform very well on our re-competes.

John Mengucci: The outstanding results we delivered in Fiscal 24 are a testament to our successful execution of a consistent, well-defined, and market-aligned strategy. A key enabler of our performance is business development. As you can see, our BD Team's performance has been exceptional. Our fourth quarter awards alone were $5.4 billion, representing a book-to-bill of 2.7 times.

John Mengucci: The outstanding results we delivered in Fiscal 24 are a testament to our successful execution of a consistent, well-defined, and market-aligned strategy. A key enabler of our performance is business development. As you can see, our VD Team's performance has been exceptional. Our fourth quarter awards alone were $5.4 billion, representing a book-to-bill of 2.7 times.

Speaker Change: Flight five, please.

Speaker Change: The outstanding results we delivered in Fiscal 24 are a testament to our successful execution of a consistent, well-defined, and market-aligned strategy.

Speaker Change: The key enabler of our performance is business development, and as you can see, our BD Team's performance has been exceptional.

Speaker Change: Our fourth quarter awards alone were $5.4 billion, representing a book-to-bill of 2.7 times.

John Mengucci: These awards add to an already impressive list of wins we have discussed in recent quarters. In fact, we have won seven awards of $1 billion or more in the past two years, which supports our ability to drive long-term growth as these programs ramp over multiple years. Our strategy of investing ahead of need, bidding less and winning more, focusing on larger and longer-term duration opportunities, and proactively shaping those opportunities enabled CACI to win significant new work in Fiscal 25.

John Mengucci: These awards add to an already impressive list of wins we have discussed in recent quarters. In fact, we have won seven awards of $1 billion or more in the past two years, which supports our ability to drive long-term growth as these programs ramp over multiple years. Our strategy of investing ahead of need, bidding less and winning more, focusing on larger and longer-term duration opportunities, and proactively shaping those opportunities, enabled CACI to win significant new work in FY20.

Unknown Executive: Open our discussion this morning.

John Mingucci: Here's John Minguchi, president and chief executive officer of CACI International. John, thanks George and good morning, everyone. Thank you for joining us to discuss our fourth quarter and fiscal year 24 results, as well as our fiscal 25 guidance.

Speaker Change: These awards add to an already impressive list of wins we have discussed in recent quarters. In fact, we have won seven awards of $1 billion or more in the past two years, which supports our ability to drive long-term growth as these programs ramp over multiple years.

Jeff McLaughlin: Let me this morning is Jeff McLaughlin, our chief financial officer. My four, please. CCI delivered strong results in the fourth quarter, posing out an exceptional year by delivering 20% revenue growth during the quarter. For the full year, we delivered revenue growth of 14% coming in ahead of our guidance, which we increased several times during the year. We delivered even top nearly 800 million with an underlying even top margin of 10.7% consistent with our guidance.

Speaker Change: Our strategy of investing ahead of need, bidding less and winning more, focusing on larger and longer-term duration opportunities, and proactively shaping those opportunities enabled CACI to win significant new work in FYSBA 24.

John Mengucci: In addition, our focus on superior execution, which is foundational to the culture and always a top priority, further supports our growth through sole source extensions and expanded regrowth. We are in the right markets, delivering high-value differentiated capabilities and executing at a superior level, all of which support our ability to grow free cash flow per share in order to benefit our customers and shareholders. Slide six, please.

Speaker Change: In addition, our focus on superior execution, which is foundational to the culture and always a top priority, further supports our growth through sole source extensions and expanded recompete.

Speaker Change: We are in the right markets, delivering high-value differentiated capabilities and executing at a superior level, all of which support our ability to grow free cash flow per share in order to value our customers and shareholders.

Jeff McLaughlin: We also generated free cashflow of over 380 million and free cashflow for share of $17 the latter and increase of 41% for last year. And we want over $14 billion of contract awards, the highest in company history, which represents a 1.9 times book to bill for the year. Nearly 60% of that award value is for new business to CACI. We continue to perform very well on our week.

John Mengucci: Let me highlight a few of our fourth quarter awards that bring the successful execution of our strategy into focus. First, we won the 8-year, $2 billion NASA Consolidated Applications and Platform Services Award, known as MCAP. ECI will deploy an Antelope Scale Delivery Model to standardize and centralize hyper-development for more than 200 systems across NASA, enhancing quality, efficiency, and speed of delivery.

John Mengucci: Let me highlight a few of our fourth quarter awards that bring the successful execution of our strategy into focus. First, we won the 8-year, $2 billion NASA Consolidated Applications and Platform Services Award, known as MCAP. DGI will deploy an Antelope Scale Delivery Model to standardize and centralize hyper-development for more than 200 systems across NASA, enhancing quality, efficiency, and speed of delivery.

Speaker Change: Slide 6, please.

Speaker Change: Let me highlight a few of our fourth quarter awards that bring the successful execution of our strategy into focus.

Speaker Change: First, we won the 8-year, $2 billion NASA Consolidated Applications and Platform Services Award, known as NCAPS.

John Mingucci: Slide five, please. Y'all standing results we deliver in fiscal 24 are a testament to our successful execution of a consistent, well-defined and market aligned strategy. The key enabler of our performance is business development. And as you can see, our VD teams performance has been exceptional. Our fourth quarter of awards alone for $5.4 billion representing a book to bill of 2.7 times. These awards add to an already impressive list of wins we have discussed in recent quarter.

Speaker Change: Each I will deploy.

Speaker Change: An excellent scale delivery model to standardize and centralize hyper-development for more than 200 systems across NASA. Enhancing quality, efficiency, and speed of delivery.

John Mengucci: These are critical outcomes for our customers, and we invested ahead of need years ago to develop industry-leading agile software capabilities, identify and shape the right opportunities, and show our customers the art of the process. With the NCAPS win, CACI is now executing the three largest agile programs in the U.S. government. And we see a healthy pipeline of additional opportunities where these capabilities will continue to be a differentiator. CACI was awarded a $100 million contract by the U.S. Army to provide signals intelligence and electronic warfare systems with a terrestrial layer system MANPAC program of record. Our MANPAD systems enable dismounted soldiers to conduct signal detection, direction finding, and electronic attack while on the move.

John Mengucci: These are critical outcomes for our customers, and we invested ahead of need years ago to develop industry-leading agile software capabilities, identifying and shaping the right opportunities to show our customers the art of the process. With the NCAPS win, CACI is now executing the three largest agile programs in the U.S. government. And we see a healthy pipeline of additional opportunities where these capabilities will continue to be a differentiator. CACI was awarded a $100 million contract by the U.S. Army to provide signals intelligence and electronic warfare systems with a terrestrial layer system MANPAC program of record. Our MANPADS systems enable dismounted soldiers to conduct signal detection, direction finding, and electronic attack while on the move.

Speaker Change: These are critical outcomes for our customers, and we invested ahead of need years ago to develop industry-leading agile software capabilities, identifying and shaping the right opportunities to show our customers the art of the possible.

Speaker Change: With the MCAPS win, CACI is now executing the three largest Agile programs in U.S. government. And we see a healthy pipeline of additional opportunities where these capabilities will continue to be a differentiator.

John Mingucci: In fact, we have won seven awards of 1 billion or more in the past two years which supports our ability to ride long-term growth as these programs ramp over multiple years. Our strategy of investing ahead of needs, bidding less and winning more, focusing on larger and longer term duration opportunities, and for actively shaping those opportunities, enabled CACI to win significant new work in fiscal 24. In addition, our focus on superior execution, which is foundational to the culture and always the top priority for this supports our growth through sole source extensions and expanded recompense.

Speaker Change: Second.

Speaker Change: CACI was awarded a $100 million contract by the U.S. Army to provide signals intelligence and electronic warfare systems with a terrestrial layer system MANPAC program of record.

Speaker Change: Our MANPAD systems enable dismounted soldiers to conduct signals detection, direction finding, and electronic attack while on the move, supporting the Army's multi-domain operations and helping to dominate the electromagnetic spectrum.

John Mengucci: Supporting the Army's multi-domain operations, helping to dominate the electromagnetic spectrum. As we have discussed before, this is an increasingly critical domain and one where the U.S. is still in the early stages of modernization and investment. This award also highlights the progression of a customer moving from purchase order awards to acquisition of our technology via a program of record that will contain larger volumes in a single award. This provides for a more consistent award basis and enhances the visibility of our business.

John Mengucci: Supporting the Army's multi-domain operations, helping to dominate the Electromagnetic Spectrum. As we have discussed before, this is an increasingly critical domain, and one where the U.S. is still in the early stages of modernization and investment. This award also highlights the progression of a customer moving from purchase order awards to acquisition of our technology via a program of record that will contain larger volumes in a single award. This provides for a more consistent award basis and enhances the visibility of our business.

Speaker Change: As we have discussed before, this is an increasingly critical domain, and one where the U.S. is still in the early stages of modernization and investment.

John Mingucci: We are in the right markets, delivering high-value differentiating capabilities, and executing at a superior level, all of which support our ability to grow free cash flow per share, and over a value of our customers and shareholders.

Speaker Change: This award also highlights the progression of a customer moving from purchase order awards to acquisition of our technology via a program of record that will contain larger volumes in a single award.

John Mingucci: Slide 6, please. Let me highlight a few of our fourth quarter award to bring this successful execution of our strategy to focus.

Speaker Change: This provides for a more consistent award basis and enhances the visibility of our business.

John Mengucci: Lastly, I'd like to highlight two new expertise awards that illustrate our deep domain and technical knowledge, our industry-leading talent, and the opportunity to inform our technology. We want a six-year, $239 million task order to provide intelligence analysis and operational support to the U.S. Army Commands in Europe and Africa. Every day, we see the headlines of how the U.S. and its allies face increasing national security challenges across these regions, which is driving Enduring Requirements and Residual Funding.

Speaker Change: Lastly, I'd like to highlight two new expertise awards that illustrate our deep domain and technical knowledge, our industry-leading talent, and the opportunity to inform our technology.

John Mingucci: First, we won the 8-year 2 billion dollar NASA Consolidated Applications and Platform Services Award, known as MCAPS. ETI will deploy an Antelope Scale delivery model to standardize and centralize suffered development for more than 200 systems across NASA, enhancing quality, efficiency, and speed of delivery. These are critical outcomes for our customers, and we invested ahead of many years ago to develop industry-leading antelope stopper capabilities, identifying and shape the right opportunities, ensuring customers they are impossible. With the MCAPS win, ETI is now executing the three largest agile programs in U.S, government, and we see a healthy pipeline of additional opportunities, but these capabilities will continue to be a different year.

Speaker Change: We want a six-year, $239 million task order to provide intelligence analysis and operational support to the U.S. Army Commands in Europe and Africa.

Speaker Change: Every day, we see the headlines of how the U.S. and its allies face increasing national security challenges across these regions, which is driving enduring requirements and resilient funding.

John Mengucci: DCI is uniquely positioned to assist the Army in anticipating and responding to these fast-evolving and complex threats. We also want to tender a contract worth up to $450 million to provide operations and technical support to the Joint Navigation Warfare Center, part of the U.S. Space Force that focuses on positioning, navigation, and timing, or PNT, for the U.S. and our allies.

Speaker Change: DCI is uniquely positioned to assist the Army in anticipating and responding to these fast-evolving and complex threats.

John Mengucci: We also want a 10-year contract worth up to $450 million to provide operations and technical support to the Joint Navigation Warfare Center, part of the U.S. Space Force that focuses on positioning, navigation, and timing, or PNT, for the U.S. and our allies. PNT capabilities are a critical national security priority, an area where we have invested ahead of need in both technology and talent. This new work with the Space Force provides opportunities for future expansion, as well as the potential to inform our technological investments over time.

Speaker Change: We also want to tender a contract worth up to $450 million to provide operations and technical support to the Joint Navigation Warfare Center, part of the U.S. Space Force that focuses on positioning, navigation, and timing, or PNT, for the U.S. and our allies.

John Mingucci: Second, ETI was awarded a 100 million dollar contract by the U.S. Army to provide signals intelligence and electronic warfare systems with a terrestrial layer system man-packed program of record. Our man-packed systems enable disemounted soldiers to conduct signals detection, direction-finding, and electronic attack while on the move, supporting the Army's multi-domain operations and helping to dominate the electromagnetic spectrum.

John Mengucci: PNT capabilities are a critical national security priority, an area where we have invested ahead of need in both technology and talent. This new work with the Space Force provides opportunities for future expansion, as well as the potential to inform our technological investments over time. By 7 Turning to the macro environment, we continue to see healthy demand and a strong pipeline of opportunity. Customer demand continues to be driven by the elevated global threat environment, the evolving capabilities of our adversaries, and the rapid pace of technology change with this significant need for modernization across government. CACI's expertise in technology is intentionally aligned with enduring well-funded national security priorities, including the electromagnetic spectrum and counter-UXS. Application and Network Modernization, Cloud Migration, Cyber, and Intelligence Analysis.

Speaker Change: P&T capabilities are a critical national security priority, an area where we have invested ahead of need in both technology and talent. This new work with the Space Force provides opportunities for future expansion, as well as the potential to inform our technology investments over time.

John Mengucci: 5, 7, Turning to the macro environment, we continue to see healthy demand and a strong pipeline of opportunity. Customer demand continues to be driven by the elevated global threat environment, the evolving capabilities of our adversaries, and the rapid pace of technology change with this significant need for modernization across governments. CACI's expertise in technology is intentionally aligned with enduring well-funded national security priorities, including the Electromagnetic Spectrum and Counter-UXS. Application and Network Modernization, Cloud Migration, Cyber, and Intelligence Analysis.

John Mingucci: As we have discussed before, this is an increasingly critical domain, and one where the U.S, is still in the early stages of modernization and investment. This award also highlights the progression of a customer moving from purchase order awards to acquisition of our technology via program of record that will contain larger volumes and a single award. This provides for a more consistent award basis and enhances the visibility of our business.

Mike Fetman: Fight same, please.

Mike Fetman: Turning to the macro environment, we continue to see healthy demand and a strong pipeline of opportunities.

Speaker Change: Customer demand continues to be driven by the elevated global threat environment, the evolving capabilities of our adversaries, and the rapid pace of technology change with a significant need for modernization across government.

Speaker Change: CACI's expertise in technology are intentionally aligned with enduring and well-funded national security priorities.

John Mingucci: Lastly, I'd like to highlight two new expertise awards that illustrate our deep domain and technical knowledge, our industry leading talent, and the opportunity to inform our technology. We want a six year or two or 39 million dollar tax order to provide intelligence, analysis, and operational support to the U.S. Army commands in Europe and Africa. Every day we see the headlines of how the U.S, and its allies face increasing national security challenges across these regions. Communications, which is driving enduring requirements and resilient funding. DCI is uniquely positioned to assist the Army in anticipating and responding to these fast evolving and complex threats.

Mike Fetman: including the Electromagnetic Spectrum and Counter-UXS, Application and Network Modernization, Cloud Migration, Cyber, and Intelligence Analysis.

John Mengucci: And this is true not just for the United States but for our allies as well. From a budget perspective, Government Fiscal Year 24 was supportive of CACI programs. We believe Government Fiscal Year 25 will be no different. We are monitoring the GFY 25 budget process, and overall, the budget is shaping up in line with our expectations. Like most years, we expect the coming year will bring, and will begin with, a continuing resolution. And as I said, this typically does not have a material impact on us, and we are very comfortable with the funding levels we see at this time.

Mike Fetman: And this is true not just for the United States, but for our allies as well.

Speaker Change: From a budget perspective, Government Fiscal Year 24 was supportive of CACI programs. We believe Government Fiscal Year 25 will be no different. We are monitoring the GFY 25 budget process, and overall the budget is shaping up in line with our expectations.

Mike Fetman: Like most years, we expect the coming year will begin with a continuing resolution. And as I've said, this typically does not have a material impact on our business, and we are very comfortable with the funding levels we see as tied.

John Mengucci: And, as I've said, this typically does not have a material impact on our business, and we are very comfortable with the funding levels we see at this time. Looking back on Fiscal 24, I'm very pleased with the execution of our strategy. Our exceptional contract awards and our strong operational and financial performance, combined with the constructive macro environment, this provides a great foundation for CACI as we enter the new year. With that in mind, in fiscal 25, we expect free cash flow per share growth of 11%. Revenue growth of 6% to 8.5% on an underlying basis, which excludes the not-recurring $200 million in materials last year.

John Mingucci: We also want to tenure a contract worth up to $450 million to provide operations and technical support for the Joint Advocation Warfare Center. Part of the US-based force focuses on positioning, navigation and timing or PNT for the U.S, and our allies. PNT capabilities are a critical national security priority, an area where we have invested ahead of the need to build technology and talent. This new work with the Space Force provides opportunities for future expansion as well as the potential to inform our technology investments over time.

John Mengucci: Looking back on Fiscal 24, I'm very pleased with the execution of our strategy. Our exceptional contract awards and our strong operational and financial performance, combined with the constructive macro environment, this provides a great foundation for CACI as we enter the new year. With that in mind, in fiscal 25, we expect free cash flow per share growth of 11% and revenue growth of 6% to 8.5% on an underlying basis, which excludes the not-recurring $200 million in materials. And he puts our margin in the high 10% range. Jeff will provide additional details on this guide in a short.

Mike Fetman: Slide eight, please.

Mike Fetman: Looking back on Fiscal 24, I'm very pleased with the execution of our strategy, our exceptional contract awards, and our strong operational and financial performance.

Mike Fetman: Combined with the constructive macro environment, this provides a great foundation for CACI as we enter the new year.

Mike Fetman: With that in mind, in fiscal 25, we expect free cash flow per share growth of 11%.

Mike Fetman: Revenue growth of 6% to 8.5% on an underlying basis, which excludes the non-recurring $200 million of materials last year.

John Mingucci: Flight 7, please. Turning to the macro-environment, we continue to see healthy demand and a strong pipeline of opportunities. Customer demand continues to be driven by the elevated global threat environment, the evolving capabilities of our adversaries and the rapid pace of technology change with this significant need for modernization across government. DCI's expertise and technology are intentionally aligned with enduring and well-funded national security priorities, including the Electromagnetic Spectrum and Conner UFS, Application of Network Modernization, Cloud Migration, Cyber and Intelligence Analysis.

John Mengucci: And he puts our margin in the high 10% range. Jeff will provide additional details on this guidance shortly. Our FY25 outlook is consistent with our value creation model, which is focused on driving long-term growth and free cash flow per share. In fact, I want to share that we are making changes to both our long-term incentive plan and our short-term annual bonus. Going forward, half of CACI's granted long-term incentive shares will be performance stock, tied to a three-year free cash flow target.

Mike Fetman: And he puts our margin in the high 10% range. Jeff will provide additional details on this guidance to our group.

John Mengucci: Our FY25 outlook is consistent with our value creation model, which is focused on driving long-term growth and free cash flow per share. In fact, I want to share that we are making changes to both our Long-Term Incentive Plan and our Short-Term Annual Bonus Plan. Going forward, half of CACI's granted long-term incentive shares will be performance stock, tied to a three-year free cash flow target. Additionally, we have added a cash collection component to our short-term bonus.

Jeff MacLauchlan: Our FY25 outlook is consistent with our value creation model, which is focused on driving long-term growth and free cash flow per share.

Speaker Change: In fact, I want to share that we are making changes to both our long-term incentive plan and our short-term annual bonus plan.

CECI: Going forward, half of CECI's granted long-term incentive shares will be performance stock units tied to a three-year free cash flow target.

John Mengucci: Additionally, we have added a cash collection component to our short-term bonus. The result is that we're focused and incentivized on delivering value for a short while. That is our commitment. I look forward to updating you all as we progress through the year.

John Mingucci: This is true not just for the United States but for our allies as well. From a budget perspective, government fiscal year 24 was supportive of CECI programs. We believe government fiscal year 25 will be no different. We are monitoring the GFY 25 budget process and overall the budget is shaping up in line with our expectations. Like most years, we expect the coming year will begin with a continuing resolution. And as I said, this typically does not have a material impact on our business and we are very comfortable with the funding levels we see inside.

Speaker Change: Additionally, we have added a cash collection component to our short-term bonus plan.

John Mengucci: The result is that we're focused and incentivized on delivering value for a short while. That is our commitment. I look forward to updating you all as we progress through the year. With that, I'll turn the call over to John. Thank you, John.

Mike Fetman: The result is that we're focused and incentivized on delivering value for our shareholders.

Mike Fetman: That is our commitment. I look forward to updating you all as we progress through the year.

Josh: With that, I'll turn the call over to Josh. Thank you, John. And good morning, everyone.

Jeffrey MacLauchlan: Thank you, John, and good morning, everyone. Please turn to slide 9. As Sean mentioned, we're very pleased with both our fourth quarter and fiscal year 24 performance. Not only is it continued strong performance, but it's very much in line with what we've communicated to you throughout fiscal year 24. In the fourth quarter, we generated revenue of $2 billion, representing nearly 20% year-over-year growth, with 19% of that being organic. The balance was generated by the four acquisitions we've made over the past 12 months.

Jeffrey MacLauchlan: Please turn to slide nine. As Sean mentioned, we're very pleased with both our fourth quarter and fiscal year 24 performance. Not only is this continued strong performance, but it's very much in line with what we've communicated to you throughout fiscal year 24. In the fourth quarter, we generated revenue of $2 billion, representing nearly 20% year-over-year growth, with 19% of that being organic. The balance was generated by the four acquisitions we've made over the past 12 months.

Mike Fetman: With that, I'll turn the call over to John . Thank you, John , and good morning, everyone. Please turn to slide 9.

Jeffrey MacLauchlan: The EBITDA margin was 11.5% in the quarter, consistent with our expectations and a 60 basis point increase year-over-year. Fourth quarter adjusted diluted earnings per share of $6.61 were 25% higher than a year ago; greater operating income and a lower share count more than offset a higher income tax provision.

Mike Fetman: As John mentioned, we're very pleased with both our fourth quarter and fiscal year 24 performance. Not only is it continued strong performance, but it's very much in line with what we've communicated to you throughout fiscal year 24.

Jeffrey MacLauchlan: The EBITDA margin was 11.5% in the quarter, consistent with our expectations and a 60 basis point increase year over year. Fourth quarter adjusted diluted earnings per share of $6.61 were 25% higher than a year ago; greater operating income and a lower share count more than offset a higher income tax provision.

John Mingucci: Flight 8, please. Looking back on fiscal 24, I'm very pleased with the execution of our strategy, our exceptional contract awards and our strong operational and financial performance. Providing with the constructive macro environment provides a great foundation for CECI as we enter the new year. With that in mind, in fiscal 25, we expect free cash flow per share growth of 11%. Revenue growth of 6% to 8.5% on an underlying basis, which excludes the non-recurring 200 million of materials last year. And he puts out margin in the high 10% range.

Speaker Change: In the fourth quarter, we generated revenue of $2 billion representing nearly 20% year-over-year growth, with 19% of that being organic. The balance was generated by the four acquisitions we've made over the past 12 months.

Mike Fetman: EBITDA margin was 11.5% in the quarter, consistent with our expectations, and a 60 basis point increase year-over-year.

Mike Fetman: Fourth quarter adjusted diluted earnings per share of $6.61 were 25% higher than a year ago. Greater operating income and a lower share count more than offset a higher income tax provision.

Jeff McLaughlin: Jeff will provide additional details on this guidance forward. Our FY 25 outlet is consistent with our value creation model, which focus which is focused on driving long term growth and free cash flow per share.

Jeffrey MacLauchlan: Operating cash flow for the fourth quarter reflects strong profitability and record day sales outstanding for DSO of 46 days as we continue to manage improvements in working capital. Free cash flow of $135 million for the quarter represents good sequential and year-over-year increases. Slide 10.

Mike Fetman: operating cash flow for the fourth quarter reflect strong profitability and record day sales outstanding for dso of forty-six days as we continue to manage improvements in working capital

John Mingucci: In fact, I want to share that we are making changes to both our long term incentive plan and our short term annual bonus plan. Going forward, half of CECI's granted long term incentive shares will be performance stock units tied with three year free cash flow target. Additionally, we have added a cash collection component to our short term bonus, of the plan. The result is that we're focused and incentivized on glaring value for shareholders.

Mike Fetman: freecash flow of one hundred thirty-five million dollars for the quarter represents good sequential and year-over-year increases slide ten please

Jeffrey MacLauchlan: Turning to full-year results, we delivered significant top-line growth, strong margins, and good cash flow. In Fiscal Year 24, we generated $7.7 billion of revenue, representing over 14% total growth and just under 14% organic growth. This performance was well ahead of our initial expectations. You may recall that when we provided our initial FY24 guidance last year, we discussed a number of factors that could drive results toward the upper end of that guidance. We outperformed on most of these factors, in particular stronger win rates on new work, faster ramp-up of our awards, and successfully defending our re-compete.

Jeffrey MacLauchlan: Turning to full-year results, we delivered significant top-line growth, strong margins, and good cash flow. In fiscal year 24, we generated $7.7 billion in revenue, representing over 14% total growth and just under 14% organic growth. This performance was well ahead of our initial expectations. You may recall that when we provided our initial FY24 guidance last year, we discussed a number of factors that could drive results toward the upper end of that guidance.

Mike Fetman: turning to full year results we delivered significant top line growth strong margins and good cash flow

Mike Fetman: in fiscal year twenty four we generated seven point seven billion dollars of revenue representing over fourteen percent total growth in just under fourteen percent organic growth this performance was well ahead of our initial expectations

John Mingucci: That is our commitment. I look forward to updating you all through progress through the year.

Jeff McLaughlin: With that, I'll turn the call over to John. Thank you, John. Good morning, everyone.

Mike Fetman: You may recall that when we provided our initial FY24 guidance last year, we discussed a number of factors that could drive results toward the upper end of that guidance.

Jeff McLaughlin: Please turn to slide 9. As John mentioned, we're very pleased with both our fourth quarter and fiscal year 24 performance. Not only is it continued strong performance, but it's very much in line with what we've communicated to you throughout fiscal year 24. In the fourth quarter, we generated revenue of $2 billion, representing nearly 20% year-over-year growth with 19% of that being organic. The balance was generated by the four acquisitions we've made over the past 12 months.

Jeffrey MacLauchlan: We outperformed on most of these factors, in particular stronger win rates on new work, faster ramp-up of our awards, and successfully defending our re-compete. The underlying EBITDA margin of 10.7% for the year was in line with our guidance, which, as a reminder, excludes the impact of non-recurring $200 million of no-margin material revenue recognized in the first half of FY24. Fiscal year 24 adjusted diluted earnings per share were $21.05, up 12% from the prior year despite both a $21 million increase in interest expense and a tax rate that was 250 basis points higher.

Mike Fetman: We outperformed on most of these factors. In particular, stronger win rates on new work, faster ramp-up of our awards, and successfully defending our re-competes.

Jeffrey MacLauchlan: Underlying EBITDA margin of 10.7% for the year was in line with our guidance, which, as a reminder, excludes the impact of non-recurring $200 million of no-margin material revenue recognized in the first half of FY24. Fiscal year 24 adjusted diluted earnings per share were $21.05, up 12% from the prior year, despite both a $21 million increase in interest expense and a tax rate that was 250 basis points higher. Delivering 12% year-over-year growth despite these headwinds underscores our robust operating execution.

Mike Fetman: Underlying EBITDA margin of 10.7% for the year was in line with our guidance, which, as a reminder, excludes the impact of non-recurring $200 million of no-margin material revenue recognized in the first half of FY24.

Jeff McLaughlin: EBITDA margin was 11.5% in the quarter, consistent with our expectations, and a 60 basis point increase year-over-year. Fourth quarter, adjusted deluded earnings per share of $6.61, with 25% higher than a year ago. Greater operating income at a lower share count, more than offset a higher income tax provision. Operating cash flow for the fourth quarter reflects strong profitability and record day sales outstanding for DSO of 46 days as we continue to manage improvements in working capital. Re-cash flow of $135 million for the quarter represents goods in financial and year-over-year increases.

Mike Fetman: Fiscal year 24 adjusted diluted earnings per share were $21.05, up 12% from the prior year, despite both a $21 million increase in interest expense and a tax rate that was 250 basis points higher.

Jeffrey MacLauchlan: Delivering 12% year-over-year growth despite these headwinds underscores our robust operating execution. Our operating cash flow for fiscal 24 also reflects strong profitability and cash collections that drove free cash flow of $384 million, which represents a 36% year-over-year increase. We did not receive the $40 million tax refund related to prior year tax method changes that we discussed with you last quarter and was in our fiscal 24 guidance. The IRS has accepted our treatment of the method change, and we now expect to receive the refund in fiscal year 25.

Mike Fetman: Delivering 12% year-over-year growth despite these headwinds underscores our robust operating execution.

Jeffrey MacLauchlan: Our operating cash flow for fiscal 24 also reflects strong profitability and cash collections that drove free cash flow of $384 million, which represents a 36% year-over-year increase. However, we did not receive the $40 million tax refund related to prior year tax method changes that we discussed with you last quarter.

Mike Fetman: Operating cash flow for Fiscal 24 also reflects strong profitability and cash collections that drove free cash flow of $384 million, which represents a 36% year-over-year increase.

Jeffrey MacLauchlan: It was in our fiscal 24 guidance. The IRS has accepted our treatment of the method change, and we now expect to receive the refund in fiscal year 25. Slide 11, please.

Mike Fetman: we did not receive the forty million doll tax refund related to prior year tax method changes that we discussed with you last quarter it was in our fiscal twenty-four guidance drs has accepted our treatment of the method change and we not expect to receive the refunding in fiscal year twenty-five

Jeff McLaughlin: Slide 10, please. Turning to full-year results, we delivered significant top-line growth, strong margins, and good cash flow. In fiscal year 24, we generated $7.7 billion of revenue representing over 14% total growth in just under 14% organic growth. This performance was well ahead of our initial expectations. You may recall that when we provided our initial FY24 guidance last year, we discussed a number of factors that could drive results toward the upper end of that guidance.

Jeffrey MacLauchlan: Slide 11, please. The healthy long-term cash flow characteristics of our business, our modest leverage of 1.8 times net debt to trailing 12 months EBITDA, and our access to capital provide us with significant optionality. We remain well positioned to deploy capital in a flexible and opportunistic manner, drive long-term growth, and free cash flow per share and shareholder value.

Jeffrey MacLauchlan: The healthy long-term cash flow characteristics of our business, our modest leverage of 1.8 times net debt to trailing 12 months EBITDA, and our access to capital provide us with significant optionality. 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 12, please.

Mike Fetman: Slide 11 please.

Mike Fetman: The healthy long-term cash flow characteristics of our business, our modest leverage of 1.8 times net debt, between only 12 months EBITDA, and our access to capital provide us with significant optionality.

Mike Fetman: 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.

Jeff McLaughlin: We outpreformed on most of these factors. In particular, stronger win rates on new work, faster ramp up of our awards, and successfully defending our equal fees. Underline EBITDA margin of 10.7% for the year was in line with our guidance, which is a reminder, exclusive impact of non-recurring $200 million of no-margin material revenue, recognized in the first half of FY24. In fiscal year 24, adjusted diluted earnings per share were $21.05, up 12% from the prior year, despite both a $21 million increase in interest expense, and a tax rate that was 250 basis points higher.

Jeffrey MacLauchlan: Now I'll provide some additional details on our fiscal year 2025 guidance. As is our practice, we undertake a bottoms-up, program-by-program forecast, plus our expectations for new business by specific opportunities. For fiscal year 2025, we expect revenue between $7.9 billion and $8.1 billion, which, as John mentioned, represents growth between 6% and 8.5% on an underlying basis, even though our margin is expected to be in the high 10% range

Speaker Change: l twelve please

Mike Fetman: Now I'll provide some additional details on our fiscal year 2025 guidance.

Speaker Change: as is our practice we undertake our bottoms up program by program forecast plus our expectations for new business by specific opportunity

Mike Fetman: fiscal year two thousand and twenty-five we expect revenue between seven point nine billion and eight point one billion dollars which is john mentioned represents growth between six and eight half percent on an underlying basis

Jeffrey MacLauchlan: We expect adjusted net income to be between $505 million and $525 million, which translates into adjusted diluted earnings per share of between $22.44 and $23.33 and does not contemplate any share repurchases or acquisitions that might occur during the year. And finally, we expect free cash flow of at least $425 million, which equates to free cash flow per share of about $18.89 and growth of approximately 11% from last year, based on our full year diluted share count assumption of 22.5 million shares. This free cash flow guidance reflects the influence of three factors.

Jeffrey MacLauchlan: We expect adjusted net income to be between $505 million and $525 million, which translates into adjusted diluted earnings per share of between $22.44 and $23.33 and does not contemplate any share purchases or acquisitions that might occur during the year. And finally, we expect free cash flow of at least $425 million, which equates to free cash flow per share of about $18.89 and growth of approximately 11% from last year, based on our full year diluted share count assumption of 22.5 million shares.

Speaker Change: even though our margin is expected to be in the high ten percent range

Speaker Change: We expect adjusted net income to be between $505 million and $525 million, which translates into adjusted diluted earnings per share of between $22.44 and $23.33.

Jeff McLaughlin: Delivering 12% year-over-year growth despite these headwinds underscores our robust operating execution. Operating cash flow for fiscal 24 also reflects strong profitability and cash collections that drove three cash flow of $384 million, which represents a 36% year-over-year increase. We did not receive the $40 million tax refund related to prior year tax method changes that we discussed with you last quarter, it was in our fiscal 24 guidance. The IRS has accepted our treatment of the method change, and we now expect to receive the refund in fiscal year 25.

Speaker Change: and does not contemplate any sharing purchases or acquisitions that might occur during the year.

Speaker Change: and finally we expect free cash flow of at least four hundred twenty five million dollars which acquaints to free cash flow per share value eighteen dollars in eighty nnineth cents

Mike Fetman: and growth of approximately 11% from last year based on our full year diluted share count assumption of 22.5 million shares.

Jeffrey MacLauchlan: This free cash flow guidance reflects the influence of three factors. Slightly higher DSO compared to our current record level. Inventory growth associated with ramping technology programs, and cash usage associated with Q4 accounts payable volume following that quarter's strong revenue growth. Additional details of our guidance have been included in our presentation to assist you with your modeling.

Jeffrey MacLauchlan: Slightly higher DSO compared to our current record level, inventory growth associated with ramping technology programs, and cash usage associated with Q4 accounts payable volume following that quarter's strong revenue growth. Additional details of our guidance have been included in our presentation to assist you with your modeling.

Speaker Change: This free cash flow guidance reflects the influence of three factors.

Unknown Executive: Slide 11, please.

Mike Fetman: Slightly higher DSO compared to our current record level.

Jeff McLaughlin: The healthy long-term cash flow characteristics of our business are modest leverage of 1.8 times net debt, the trailer 12 months even though, and our access to capital provide us with significant optionality.

Mike Fetman: inventory growth associated with ramping technology programs

Mike Fetman: and cash usage associated with Q4 accounts payable volume following that quarter's strong revenue growth.

Jeff McLaughlin: We remain well positioned to deploy capital in a flexible and opportunistic manner to have long-term growth in free cash flow per share and share older value. Slide 12, please.

Mike Fetman: Additional details of our guidance have been included in our presentation to assist you with your modeling. I would note that we again expect higher profitability in the second half of the year versus the first half.

Jeffrey MacLauchlan: I would note that we again expect higher profitability in the second half of the year versus the first half. In particular, we expect Q1 fiscal 25's EBITDA margin to be consistent with the first quarter of last year on an underlying basis, which was 10%. Similarly, we expect a steeper ramp-up of pre-cash flow during the year, and I will remind you that a myriad of factors can skew quarterly trends, such as the timing of material purchases and higher-margin technology delivery. Slide 13, please.

Mike Fetman: In particular, we expect Q1 fiscal 25 EBITDA margin to be consistent with the first quarter of last year on an underlying basis, which was 10%.

Jeff McLaughlin: Now, I'll provide some additional details on our fiscal year 2025 guidance. As is our practice, we undertake the bottoms-up program by program forecast plus our expectations for new business by specific opportunity. For fiscal year 2025, we expect revenue between $7.9 billion and $8.1 billion, which, as John mentioned, represents growth between 6 and 8.5% on an underlying basis. Even though our margin is expected to be in the high 10% range, we expect adjusted net income to be between $505 million or $525 million, which translates into adjusted diluted earnings per share.

Mike Fetman: Similarly, we expect a steeper ramp of pre-cash flow during the year, and I will remind you that a myriad of factors can skew quarterly trends, such as the timing of material purchases and higher-margin technology deliveries.

Jeffrey MacLauchlan: Turning to our forward indicators, our prospects continue to be strong. As John mentioned, FY24 awards were over $14 billion with a healthy mix of new work and re-competing. Our trailing 12-month book-to-bill ratio of 1.9 times reflects excellent performance in the marketplace. Our backlog of $32 billion increased 22% from a year ago and represents four years of annual revenue. The weighted average duration of awards that went into backlog in FY24 was nearly six years.

Mike Fetman: Slide 13 please.

Jeffrey MacLauchlan: As John mentioned, FY24 awards were over $14 billion with a healthy mix of new work and re-competing. Our trailing 12-month book-to-bill ratio of 1.9 times reflects excellent performance in the marketplace. Our backlog of $32 billion increased 22% from a year ago and represents four years of annual revenue. The weighted average duration of awards that went into backlog in FY24 was nearly six years. The longer weighted average duration equates to less revenue contributed in any one year, but together, these metrics provide good visibility into the long-term strength and cash generation potential of our business.

Mike Fetman: Turning to our forward indicators, our prospects continue to be strong.

John Mengucci: as john mentioned fiscal year twenty-four awards were over fourteen billion dollars for the healthy mix of new work and recompete

John Mengucci: Our trailing 12-month book-to-bill ratio of 1.9 times reflects excellent performance in the marketplace.

Jeff McLaughlin: Of between 2244 and 2333, and does not contemplate any sharing purchases or acquisitions that might occur during the year. And finally, we expect free cash flow of at least $425 million, which equates to free cash flow per share of value $18.89 and growth of approximately 11% from last year based on our full-year diluted share count assumption of 22.5 million shares. This free cash flow of guidance reflects the influence of three factors, slightly higher DSO compared to our current record level, inventory growth associated with ramping technology programs, and cash usage associated with Q4 accounts payable volume following that quarter strong revenue growth.

Speaker Change: Our backlog of $32 billion increased 22% from a year ago and represents four years of annual revenue.

John Mengucci: The weighted average duration of awards that went into backlog in FY24 was nearly six years.

Jeffrey MacLauchlan: The longer-weighted average duration equates to less revenue contributed in any one year, but together, these metrics provide good visibility into the long-term strength and cash generation potential of our business. As we enter fiscal year 25, we expect approximately 84% of our revenue to come from existing programs, with approximately 10% from re-competes, and 6% from new business. This is consistent with how we started FY24 as well. We continue to have a healthy pipeline of new opportunities.

John Mengucci: The longer weighted average duration equates to less revenue contributed in any one year, but together these metrics provide good visibility into the long-term strength and cash generation potential of our business.

Jeffrey MacLauchlan: As we enter fiscal year 25, we expect approximately 84% of our revenue to come from existing programs, with approximately 10% from re-competes, and 6% from new business. This is consistent with how we started FY24 as well. We continue to have a healthy pipeline of new opportunities. We have $9 billion in bids under evaluation, over 90% of which are for new business CACI. We expect to submit another $14 billion in bids over the next two quarters, with about 80% of that for new business.

Mike Fetman: As we enter fiscal year 25, we expect approximately 84% of our revenue to come from existing programs, with approximately 10% from re-competes and 6% from new business. This is consistent with how we started FY24 as well.

John Mengucci: We continue to have a healthy pipeline of new opportunities. We have $9 billion of bids under evaluation, over 90% of which are for new business to CACI.

Jeff McLaughlin: Additional details of our guidance have been included in our presentation to assist you with your modeling. I would note that we can expect higher profitability in the second half of the year versus the first half. In particular, we expect Q1 fiscal 25 EBITDA margin to be consistent with the first quarter of last year on an underlying basis, which was 10%. Similarly, we expect a steeper ramp of free cash flow during the year, and I want to remind you that a very good factors can stream quarterly trends, such as the timing of material purchases and higher margin technology deliveries.

Mike Fetman: We expect to submit another $14 billion in bids over the next two quarters with about 80% of that for new business.

Jeffrey MacLauchlan: We have $9 billion in bids under evaluation, over 90% of which are for new business CACI. We expect to submit another $14 billion in bids over the next two quarters, with about 80% of that for new business. In summary, we delivered outstanding fourth-quarter and fiscal year 24 results. As we look to fiscal 25, we expect another year of good performance with healthy growth in pre-cash flow, driven by good top-line growth and strong margins. We are winning and executing high-value, enduring work that supports increased free cash flow per share, long-term growth, and additional shareholder value. And with that, I'll turn the call back over to John.

Jeffrey MacLauchlan: In summary, we delivered outstanding fourth-quarter and fiscal year 24 results. As we look to fiscal 25, we expect another year of good performance with healthy growth and free cash flow, driven by good top-line growth and strong margins. We are winning and executing high-value enduring work that supports increased free cash flow per share, long-term growth, and additional shareholder value.

John Mengucci: Thank you, Jeff. Let's go to slide 14, please.

Mike Fetman: In summary, we delivered outstanding fourth quarter and fiscal year 24 results. As we look to fiscal 25, we expect another year of good performance with healthy growth in pre-cash flow, driven by good top-line growth and strong margins.

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

Jeff McLaughlin: Slide 13, please. Turning to our forward indicators, our prospects continue to be strong. As Strauss mentioned, fiscal year 24 awards were over $14 billion for the healthy mix of new work and recompense. Our trailing 12 months booked a bill ratio of 1.9 times reflects excellent performance in the marketplace. Our backlog of $32 billion increased 22% from a year ago and represents four years of annual revenue. The weighted average duration of awards that went into backlog in FY24 was nearly six years.

John Mengucci: Thank you, Jeff. Let's go to slide 14, please.

Mike Fetman: And with that, I'll turn the call back over to John .

John Mengucci: In summary, we had a fantastic Fiscal 24. In a volatile and rapidly changing world, CACI delivered expertise and technology that made a difference to our customers. We also deliver on our commitments to our shareholders. We want a significant amount of high-value new work delivered with excellence on our programs and successfully defend our region. We continue to invest ahead of need in both our capabilities and our talent. Our performance builds an increasingly strong foundation for growth in fiscal 25 and beyond.

John Mengucci: In summary, we had a fantastic Fiscal 24. In a volatile and rapidly changing world, CACI delivered expertise and technology that made a difference to our customers. We also deliver on our commitments to our shareholders. We continue to invest ahead of need in both our capabilities and our talent. Page PAGE of NUMPAGES www.verbalink.com Page PAGE of NUMPAGES www.verbalink.com, Our leverage of 1.8 times will allow us to deploy significant capital, and we will have meaningful benefits for our business and our shareholders over the long term. Finally, as is always the case, our company's success is driven by our employees' talent, innovation, and commitment, enabled by our culture of integrity and each and every CACI Thank you

John Mengucci: Thank you, Jeff. Let's go to slide 14, please. In summary, we had a fantastic fiscal 24. In a volatile and rapidly changing world, CACI delivered expertise and technology that made a difference to our customers.

John Mengucci: We also delivered on our commitments to our shareholders. We won a significant amount of high-value new work, delivered with excellence on our programs, and successfully defended our re-competes.

John Mengucci: We continue to invest ahead of need in both our capabilities and our talent.

Jeff McLaughlin: The longer-weighted average duration of place to less revenue contributed in any one year, but together these metrics provide good visibility into the long-term strength and cash generation potential of our business. As we enter fiscal year 25, we expect approximately 84% of our revenue to come from existing programs with approximately 10% for recompense in 6% from new business. This is consistent with how we started FY24 as well. We continue to have a healthy pipeline of new opportunities.

John Mengucci: Our performance builds an increasingly strong foundation for growth in fiscal 25 and beyond.

John Mengucci: We are further demonstrating alignment with our shareholders by focusing incentive compensation on free cash flow generation. The business we have built over the last 10 years, this group is well-positioned to deliver long-term growth and free cash flow per share and increase value for our shareholders. We've built a leading business development team, and they are winning in the marketplace, capturing larger, longer-duration awards. Page PAGE of NUMPAGES www.verbalink.com Page PAGE of NUMPAGES www.verbalink.com, Our leverage of 1.8 times will allow us to deploy significant capital, and we will have meaningful benefit for our business and our shareholders over the long term.

John Mengucci: We are further demonstrating an alignment with our shareholders by focusing incentive compensation on free cash flow generation.

John Mengucci: The business we have built over the last 10 years

John Mengucci: is well-positioned to deliver long-term growth and free cash flow per share and increasing value for our shareholders.

John Mengucci: We've built a leading business development team and they are winning in the marketplace, capturing larger, longer duration awards.

John Mengucci: We've driven significant improvements in margin and DSO with a continued focus on execution, working capital management.

Jeff McLaughlin: We have $9 billion of bids under evaluation, over 90% of which are for new business to CACI. We expect to submit another $14 billion of bids over the next two quarters, with about 80% of that for new business.

John Mengucci: Our leverage of 1.8 times will allow us to deploy significant capital, and we have meaningful benefit for our business and our shareholders over the long term.

John Mengucci: And trust me, we're not done yet. Finally, as is always the case, our company's success is driven by our employees' talent, innovation, and commitment, enabled by our culture of integrity. To each and every CACI employee, thank you. I could not be prouder of what you've done to contribute to our company and to our nation. To our shareholders, I thank you for your continued support of CACI. With that, Rochelle, let's open the call to questions.

John Mengucci: And trust me, we're not done yet.

Jeff McLaughlin: In summary, we delivered outstanding fourth quarter and fiscal year 24 results. As we look to fiscal 25, we expect another year of good performance with healthy growth and pre-cash flow driven by good top line growth and strong margins. We are winning and executing high value and during work that supports increased pre-cash flow per share, long-term growth and additional shareholder value.

John Mengucci: Finally, as is always the case, our company's success is driven by our employees' talent, innovation, and commitment, enabled by our culture of integrity and ethics.

John Mengucci: To each and every CACI employee, thank you.

Rochelle: I could not be prouder of what you've done to contribute to our company and to our nation. To our shareholders, I thank you for your continued support of CACI. With that, Rochelle, let's open the call for questions.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 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 loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question, and please limit yourself to one question and one follow-up. Your first question comes from the line of Bert Subin of Stifel. Your line is open.

John Mingucci: But with that, I'll turn the call back over to John. Thank you, Jeff.

Rochelle: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.

John Mingucci: Let's go to site 14, please. In summary, we had a fantastic fiscal 24. In a volatile and rapidly changing world, CCI delivered expertise and technology that made a difference to our customers. We also delivered on our commitments to our shareholders. We want a significant amount of high value new work delivered with excellence on our programs and successfully defended our recompense. We continue to invest and update both our capabilities on our talent.

Speaker Change: 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 loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

John Mengucci: and please limit to one question and one follow-up.

John Mingucci: Our performance builds an increasingly strong foundation for growth in just 25 and beyond. We are further demonstrating alignment with our shareholders by focusing the sentiment compensation on pre-cash flow generation. The business we have built over the last 10 years is well positioned to deliver long-term growth in pre-cash flow per share and increasing value for our shareholders. We built a leading business development team and they are winning in the marketplace, capturing larger, longer-duration awards.

Speaker Change: Your first question comes from the line of Bert Subin of Stifel. Your line is open.

Bert Subin: Hey, good morning, John. Morning, Bert. Good morning.

John Mengucci: Hey, good morning, John . Morning, Bert.

John Mengucci: Great, great quarter. I mean, pretty impressive to see almost 20% organic growth. So pretty unusual for this industry. As we think about FY25, I mean, you've won a ton of work in FY24, and some of that has come in, you know, as recently as this week, too, for FY25. Can you just give us a little bit of, you know, color on how you're thinking about the ramp-up for new work in FY25 and then maybe how you're going about ensuring execution is not going to be an issue? Obviously, a lot of work to be added just to go after the awards you've won. So I'm just curious how you're thinking about this. Yeah, Bert, thanks. So let's talk about WAMP.

Bert Subin: Great, great quarter. I mean, pretty impressive to see almost 20% organic growth, so pretty unusual for this industry. As we think about FY25, I mean, you've won a ton of work in FY24, and some of that has come in

Speaker Change: You know, as recently as this week, too, into FY25.

John Mingucci: We driven significant improvements in margin and DSO with a continued focus on execution, working capital management. Our leverage of 1.8 times will allow us to deploy significant capital that we have meaningful benefit for our business and our shareholders over the long term. And trust me, we're not done yet. Finally, as is always the case, our company's success is driven by our employees' talent and innovation and commitment, enabled by our culture of integrity and ethics. To each and every CSI employee, thank you. I cannot be proud of what you've done to contribute to our company and to our nation.

Speaker Change: Can you just give us a little bit of color on how you're thinking about the ramp-up for new work in 2025, and then maybe how you're going about ensuring execution is not going to be an issue? Obviously, a lot of

Speaker Change: labor to be added just to go after the words he wants. I'm just curious how you're thinking about those two things.

John Mengucci: Yeah, Bert, thanks. So let's talk about WAMP, but let's start that discussion around how we came out of 24, because I think it's instructive as to how we WAMP when we get to 25. If we look at our three major program wins... that played into our revenue growth in 24. Focus Fox, approximately 90% ramped up, that drove a material portion of our 24 growth. I-CAS and Spectral provided additional ramp-up, but better than we originally planned, which drove additional growth.

Bert Subin: Yeah, Bert, thanks. So let's talk about WAMP. But let's start that discussion around how we came out of 24. I think it's instructive as to how we WAMP when we get to 25, and that played into our revenue growth in 24. Focus Fox, approximately 90% ramped up, that drove a material portion of our 24 growth. I-CAS and Spectral provided an additional ramp, but better than we originally planned, which drove additional growth. And then on contract growth from all our other programs, we're a little more net positive over programs that were ending, and that provided the remainder of our 24 growth. So that's how 23 awards are unpacked in 24.

Bert Subin: Yeah, Bert, thanks. So let's talk about WAMP, but let's

Bert Subin: Yeah, Bert, thanks. So let's talk about RAMP, but let's start that discussion around how we came out of 24. I think it's instructive as to how we RAMP when we get to 25. If we look at our three major program wins...

John Mingucci: To our shareholders, I thank you for your continued support of CSI.

Speaker Change: that played into our revenue growth in 2024. Focus Blocks, approximately 90% ramped that drove a material portion of our 2024 growth.

Unknown Executive: With that, Rochelle, let's open a call for questions. Thank you. We will now begin the question and answer session. If you 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 one again.

Speaker Change: ITAS and Spectral provide additional ramp, but better than we originally planned, which drove additional growth.

Speaker Change: And then on contract growth from all our other programs, we're a little more net positive over programs that were ending, and that provided the remainder of our 20, our 24 growth. So that's how 23 awards are unpacked in 24.

Unknown Executive: If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your hand set and ensure that your phone is not on mute when asking your question, and please limit one question and one follow-up.

John Mengucci: And then on contract growth from all our other programs, we're a little more net positive over programs that were ending, and that provided the remainder of our 20, our 24 growth. So that's how 23 awards are unpacked in 24. If we look at... how we look at FY25 going forward, focus flocks, mostly in the base, a small incremental growth.

Speaker Change: If we look at...

Speaker Change: How we look at FY25 going forward. Focus flocks, mostly in the base, a small incremental growth.

Bert Subin: Your first question comes from the line of Bert Subin of Stiffle. Your line is open. Hey, good morning, John. Great, great quarter. I mean pretty impressive to see almost 20% organic growth, so pretty unusual for this industry. As we think about FY25, I mean, you've won a ton of work in FY24 and some of that has come in, you know, it's recently this week too into FY25. Can you just give us a little bit of, you know, color on how you're thinking about the ramp up for new work in 25 and then maybe how you're, how you're going about ensuring execution is not going to be an issue. Obviously, a lot of labor to be added just to go after the worthy ones. I'm just curious how you're thinking about those two things. Yeah, Bert, thanks.

John Mengucci: ITAS and Spectral, more material growth from 2024, with Spectral starting their LRIP phase, most likely during the third quarter; it's going to require higher than normal working capital. And then, look, we've talked a lot about the difference in wrap times of converting awards to revenue, as you've all asked, between expertise and technology programs. This should be the use case for what we mean every time we have the discussions around RAMP. So we can all model growth better in the future in fiscal 25, because technology programs do ramp over five, six, seven, eight years.

John Mengucci: I-TAS and Spectral, more material growth from 2024, which Spectral will be starting their LRIP phase most likely during the third quarter. It's going to require higher than normal working capital. And then, look, we've talked a lot about the difference in wrap times of converting awards to revenue, as you've all asked, between expertise and technology programs. This should be the use case for what we mean every time we have the discussions around RAMP so we can all model growth better in the future.

Speaker Change: I-TAS and Spectral, more material growth from 24. With Spectral, we'll be starting their LRIP phase most likely during the third quarter. It's going to require higher than normal working capital.

Speaker Change: And then, look, we've talked a lot about the difference in wrap times, converting awards to revenue, as you've all asked, between expertise and technology programs.

Speaker Change: This should be the use case on what we mean every time we have the discussions around RAMP, so we can all model growth better in the future. In fiscal twenty-five,

John Mengucci: In Fiscal 25... We have multiple technology programs ramping up in total to just above the ramp value of FocusFox when we went through 2044, and that fact should be very instructive because technology programs do ramp over 5, 6, 7, 8 years. So the fact that we have multiple technology wins in our $8 billion of awards, in total raising the same value that Focus Pox did, does show the difference between expertise and technology innovation.

Speaker Change: We have multiple technology programs ramping in total to just above the ramp value of FocusFox.

John Mingucci: So let's talk about ramp, but let's start that discussion around how they came out of 24. I think it's instructive as to how we ramp and we get to 25. If we look at our three major program wins that are played into our urban growth in 24 focus Fox, approximately 90% ramps that drove a material portion of our 24 growth. I cast a spectral provided additional ramp, but better than we originally planned, which drove additional growth.

Speaker Change: When we went through 2044. And that fact should be very instructive.

John Mengucci: So the fact that we have multiple technology wins in our $8 billion of awards, in total raising the same value that Focus Pox did, does show the difference between expertise and technology ramp. Now, clearly, technology jobs drive so many other positive areas, so they don't immediately go into the base, and that's what drives residual growth. You're seeing that with ITAS and spectral growing going forward. You also asked about execution, and it's a terrific question.

Speaker Change: Because technology programs do ramp over 5, 6, 7, 8 years.

Speaker Change: So the fact that we have multiple technology wins in our $8 billion.

Speaker Change: of awards, in total, ramping the same value of the Focus Pox bid.

John Mengucci: Now, clearly, technology jobs drive so many other positive areas, so they don't immediately go into the base, and that's what drives residual growth. You're seeing that with ITAS and spectral billing going forward. Let me also finish the ramp piece by saying that some of the $8 billion in rewards are software-driven types of technologies. I talked about the TLS ManPack job.

Speaker Change: does show the difference between expertise and a technology ramp. Now clearly, technology jobs drive so many other positive areas, so they don't immediately go into the base, and that's what drives residual growth. You're seeing that with ITAS and spectral billing going forward.

John Mingucci: And then on contract growth from all other programs, we're a little more in that positive over programs that were ending and that provided the remainder of our 24 growth. So that's how 23 awards on tax in 24. If we look at how we look at half white 25 going forward, focus Fox mostly in the base, small and equivalent growth. I cast a spectral more material growth from 24, which spectral will be starting their algorithm phase most likely during the third quarter.

Speaker Change: Let me also finish the ramp piece that

Speaker Change: Some of the eight billion dollars of rewards are software-driven technologies. I talked about the TLS LAMPAC job.

John Mengucci: That's going to have a higher percentage of working capital that's going to be required. I mean, frankly, we're going to support the maturation of our products, which is going to help drive even longer-term free cash flow. So what we should all hear about that is timing, the timing of when that free cash flow per share growth comes. And look, we did our best estimate of how this is going to unfold. Look, if timing accelerates or starts to unpack earlier in the year, then we get to the right goalpost, which is what we did in 24. If some unpack later or later in the year, there's the left goalpost.

Speaker Change: That's going to have a higher percentage of working capital that's going to be required. I mean, frankly, we're going to support the maturation of our products, which is going to help drive even longer-term pre-cash flow share. So what we should all hear in that is timing, timing of when that pre-cash flow per share growth comes.

Speaker Change: And look, we did our best estimate of how this is going to unpack, Bert. Look, if timing accelerates or starts to unpack sooner in the year, then we get to the right goal post, which is what we did in 24. If some unpack later or later in the year, there's the left goal post.

John Mingucci: It's going to require higher than normal working working capital. And then look, we've talked a lot about the difference in rap times converting the worst to revenue as you've all asked between expertise and technology programs. This should be the use case on what we mean every time we have the discussions around ramp. So we can all model growth better in the future. In fiscal 25, we have multiple technology programs ramping in total to just above the ramp value of focus Fox that when we went through 2024.

John Mengucci: Five of our major seven programs that we won, we won during the fourth quarter. So that's going to have that it's going to play into how that ramp changes. You also asked about execution, and it's a terrific question. What we have is a line organization that recognizes that we're getting larger and broader and that we need to continually ensure commonality of process so that we can reliably deliver. We have a stellar knock on wood track record of operational excellence throughout this company.

Speaker Change: Five of our major seven programs that we won, we won during the fourth quarter, so that's going to have, that's going to play into how that, how that ramp changes.

John Mengucci: What we've got is a line organization that recognizes that we're getting larger and broader and that we need to continually ensure commonality of process so that we can reliably deliver. We have a stellar knock on wood track record of operational excellence throughout this company. It truly, as my opening remarks stated, is in the culture of this company. Everything we bid comes with an eye on how we're going to execute this job.

Bert Subin: You also asked about execution, and it's a terrific question.

Bert Subin: We've got a line organization that recognizes that we're getting larger and broader, and that we need to continually ensure commonality of process.

John Mingucci: And that fact should be very instructive because technology programs do ramp over five, six, seven, eight years. So the fact that we have multiple technology wins are $8 billion of awards in total ramping the same value the focus Fox did does show the difference between expertise and technology ramp. Now clearly, technology jobs drive so many other positive areas. So they don't immediately go into the base and that's what drives residual growth.

Speaker Change: So that we can reliably deliver, we have a stellar, knock-on-wood track record of operational excellence throughout this company. It truly, as my opening remarks stated, it is in the culture of this company.

John Mengucci: It truly is, as my opening remarks stated, it is in the culture of this company. Everything we bid comes with an eye on how we're going to execute this job. And that gets into how we price and how we bid our large expertise jobs. It also gets into the terms and conditions we're willing to accept on our large technology jobs. As for staffing, you know, we just started fiscal year 25 with the top leaders, senior leader leadership off site, where our HR organization talked a lot about staffing and the fact that, you know, Zoomers are the new boomers.

John Mengucci: And that gets into how we price and how we bid our large expertise jobs. It also gets into the terms and conditions we're willing to accept on our large technology jobs. As for staffing, we just started fiscal year 25 with a top leaders, senior leader leadership off site, where our HR organization talked a lot about staffing, a lot about the fact that, you know, Zoomers are the new boomers.

Speaker Change: Everything we bid comes with an eye on how we're going to execute this job. And that gets into how we price and how we bid our large expertise jobs. It also gets into the terms and conditions we're willing to accept on our large technology jobs.

John Mingucci: You're seeing that with ITAS and spectral Let me also finish the ramp piece that some of the $8 billion of rewards are shock-driven technology is I talked about the TLS land-back job. That's going to have a higher percentage of working capital that's going to be required. I mean frankly, we're going to support the maturation of our products, which is going to help drive even longer-term free cash more share. So what we should all hear in that is timing, timing to win that free cash will for share growth comes.

Speaker Change: As for staffing, we just started our fiscal year 25 with the top leaders, senior leadership off-site, where our HR organization talked a lot about staffing, a lot about the fact that Zoomers are the new boomers.

John Mengucci: And, you know, how are we going to source talent, not only by degrees, but by the skills that they have? So part of it, Bert, is making certain that we're making changes in this business ahead of when we have to, to make sure that we can enhance the skills of our current employees and also look at skills-based hiring. So we're very confident in the execution piece. The one question mark is always how these things will happen.

Speaker Change: And, you know, how are we going to source talent?

Bert Subin: That's very helpful, John. Maybe just for my follow-up with Jeff.

Speaker Change: Not only by degrees.

Speaker Change: but by the skills that they have. We're making changes in this business ahead of when we have to to make sure that we can enhance skills of our current employees.

Speaker Change: and also look at skills-based hiring. So we're very confident on the execution piece. The one question mark always is how these things are passed.

John Mingucci: And look, we did our best estimate of how this is going to unpack. Look, if timing accelerates or starts to unpack sooner in the year, then we get to the right goal post, which is what we did in 24. If someone pack lighter or later in the year, there's the left goal post. Five of our major seven programs that we won. We won during the fourth quarter. So that's going to have that's going to play into how that ramp changes.

Bert Subin: That's very helpful, John. Maybe just for my follow-up question for Jeff. The balance sheet is in extremely good shape. I mean, on a trailing 12 basis, you're at 1.8, and on a forward basis, even lower. Can you think about, can you sort of help us understand how you're thinking about uses of the balance sheet? I believe, can you confirm that that's not included in your guide? So, you know, how are you thinking about that at FY25?

Bert Subin: The balance sheet is in extremely good shape. I mean, on a trailing 12 basis, you're at 1.8, and on a forward basis, it's even lower. Can you think about, can you sort of help us understand how you're thinking about uses of the balance sheet? I believe, can you confirm that that's not included in your guide? So, you know, how are you thinking about that at FY25?

Speaker Change: That's very helpful, John . Maybe just for my follow-up, for Jeff.

Speaker Change: Balance sheet is in extremely good shape. I mean, on a trailing 12 basis, you're at one eighth on a four basis, even lower. Can you think about it? Can you sort of help us understand how you're thinking about uses of the balance sheet? I believe, can you confirm that that's not included in your guide?

John Mingucci: You also asked about execution, and it's a perfect question. But we've got a line realization that recognizes that we're getting larger and broader, and that we need to continually ensure commonality of process. So that we can reliably deliver, we have a stellar knock on wood track record of operational excellence throughout this company. It truly is my open remarks dated. It is in the culture of this company. Everything we bid comes with an eye on how we're going to execute this job. And that gets into how we place and how we bid to our large expertise jobs. It also gets into the terms and conditions of allowing to accept on our large technology jobs.

Jeffrey MacLauchlan: Yeah, thanks for that. Thank you for that, Bert.

Jeffrey MacLauchlan: Yeah, thanks for that. Thank you for that, Bert. Yeah, our guide presumes no share repurchases and no acquisitions. You know, and we fully expect to do at least some of that.

Justin: So, you know, how are you thinking about that at FY25, Justin? Yeah, thanks for that. Thank you for that, Bert. Yeah, our guide presumes no share repurchases and no acquisitions. You know, and we fully expect to do, you know, at least some of that, obviously.

Jeffrey MacLauchlan: Yeah, our guide presumes no share repurchases and no acquisitions. You know, and we fully expect to do at least some of that. We've talked about this before. I mean, our key approach here is to be flexible and opportunistic. We keep a pretty close eye on the acquisition target pipeline. We are, you know, constantly evaluating those things. John may want to evaluate or may want to comment a little more on targets and evaluation.

Speaker Change: We've talked about this before. I mean, our key approach here is about being flexible and opportunistic.

Speaker Change: We keep a pretty close eye on the acquisition target pipeline.

Speaker Change: We are, you know, constantly evaluating those things.

Jeffrey MacLauchlan: But really, this is the result of, you know this, I think we've said it before, a pretty disciplined, rigorous analytical process. That part is science. The art is sort of marrying that with our view of what's in the pipeline and the rate at which things, you know, may happen or not happen. So I'll let John talk a little bit more about acquisition targets. But that's sort of the framework, which is no different from what we have done in the past. Yeah.

Speaker Change: John may want to evaluate, or may want to comment a little more on targets and evaluation, but it really, this is a result of, you know this, I think we've said it before, a pretty disciplined, rigorous analytical process.

Bert Subin: As for staffing, we just started our fiscal year 25 with the top leaders, senior leader leadership off site, where our HR organization talked a lot about staff, a lot about the fact that the zoomers are the new boomers. And how are we going to source talent not only by degrees, but by the skills that they have. So part of that burden is making certain, we're making changes in this business ahead of when we have to, to make sure that we can enhance skills of our current employees, and also look at skills-based hiring. So we're very confident on the execution piece. The one question Mark always is how these things look at that. That's very helpful, John.

John Mengucci: That part is science. The art is sort of marrying that.

Speaker Change: With our view of what's in the pipeline.

Speaker Change: and the rate at which things, you know, may happen or not happen, so.

Speaker Change: I'll let John talk a little bit more about acquisition targets, but that's sort of the framework, which is no different from what we have done in the past.

John Mengucci: Yeah, so look, we consistently get questions on how the M&A market works. I mean, we are a serial acquirer; we like to fill long-term gaps with other companies out there. You know, frankly, the M&A market's looking better. Some of the potential targets would provide the opportunity for us to fill long-term gaps based on our market strategies. Some are going to be in the electromagnetic spectrum area, some are going to be in the cloud and AI, and others are going to be in sort of the C4ISR and cyber areas, although I will admit that electronic warfare continues to sort of connect SIGINT with cyber, with EW, and with AI machine learning.

John Mengucci: Yeah, so look, we consistently get questions on how the M&A market works. I mean, we are a serial acquirer, we like to fill long-term gaps with other companies out there. You know, frankly, the M&A market's looking better.

Jeff McLaughlin: Maybe just for my follow-up for Jeff, balance sheet is an extremely good shape. I mean, on a trailing 12 base, which you're at 1A, it's on a 4 basis, even lower.

Speaker Change: Some of the potential targets would provide the opportunity for us to fill long-term gaps.

Jeff McLaughlin: Can you think about, can you sort of help us understand how you're thinking about the uses of the balance sheet? I believe we confirm that's not included in your guide. So how are you thinking about that at point 25, just there? Yeah, thanks for that. Thanks for that, Bert. Yeah, our guide presumed that no shared repurchases and no acquisitions. And we fully expect to do at least some of that, obviously. We've talked about this before. Our key approach here is about being flexible and opportunistic. We keep a pretty close eye on the acquisition target pipeline. We are constantly evaluating those things.

Speaker Change: Based on our market strategies.

Speaker Change: You know, some are going to be in the electromagnetic spectrum area, some are going to be in cloud and AI, others are going to be in sort of the C4ISR and cyber area, although I will admit that well, electronic warfare is, you know, continues to sort of connect SIGINT with cyber, with EW, with AI machine learning and all.

John Mengucci: Jeff already mentioned it, but I want to footstomp on it: we're a disciplined acquirer. We're not buying revenue. We're buying capabilities and customer relationships that will allow us to sit on these calls for a number of years talking about how that acquisition, you know, 1, 2, 3, 7, 10 years ago set us up very, very well. We're going to balance that with healthy leverage. And as Jeff said, a watchful eye on measurements of stock valuation and determine the best way for us to deploy capital, both in the short term and in the long term. So Bert, thank you for your question.

Speaker Change: Jeff already mentioned it, but I want to footstomp it. We're a disciplined acquirer. We're not buying revenue. We're buying capabilities, customer relationships that allow us to sit on these calls for a number of years talking about how that acquisition, you know, 1, 2, 3, 7, 10 years back set us up very, very well.

Speaker Change: We're going to balance that with a healthy leverage, and as Jeff said, a watchful eye on measurements of stock valuation, and determine the best way for us to deploy capital, both in the short term and in the long term. So Bert, thank you for your questions.

John Mingucci: John may want to evaluate or may want to comment a little more on targets and evaluation. But this is a result of, you know this, I think we've said it before, a pretty disciplined, rigorous, analytical process. That part is science. The art is sort of marrying that with our view of what's in the pipeline and the rate at which things may happen or not happen.

Cai von Rumohr: Your next question comes from the line of Cai Von Rumohr with T.D. Cowan. Your line is open.

Speaker Change: Your next question comes from the line of Cai Von Rumohr with TD Cowen. Your line is open.

Cai von Rumohr: Yes, thank you very much, and a spectacular book to build. So, John.

Speaker Change: Yes, thank you very much and spectacular book to bill.

Cai Rumohr: So, John, we were recompete. What percent of your sales up this year are recompetes? And secondly, you mentioned that, you know, the relative growth of tech and expertise. What should we look for for tech and expertise? If you kind of hit your sales goal, you know, how fast are each of them going to grow? Thank you.

John Mengucci: What is the, you know, 40% of your bookings, I guess, were, were recompeted. What percent of your sales up this year are recompeted? And secondly, you mentioned that, you know, the relative growth of tech and expertise. What should we look for for tech and expertise? If you kind of hit your sales goal, you know, how fast are each of them going to grow? Thank you. Yeah.

Speaker Change: So, John, what is the, you know, 40% of your bookings, I guess, were

John Mingucci: So I'll let John talk a little bit more about acquisition targets. But that's sort of the framework, which is no different from what we have done in the past. Yeah, so look, we consistently get questions on how the M&A market works.

Speaker Change: We're re-competes. What percent of your sales up this year are re-competes?

Speaker Change: And secondly, you mentioned that, you know, the relative growth of tech and expertise, what should we look for, for, you know, tech and expertise, if you kind of hit your sales goal, you know, how fast are each of them going to grow? Thank you.

John Mingucci: I mean, we are a cereal and a choir choirer. We like to fill long-term gaps with other companies out there. You know, frankly, the M&A market is looking better. Some of the potential targets would provide the opportunity for us to fill long-term gaps based on our market strategies. You know, some are going to be in the electromagnetic spectrum area. Some are going to be in cloud and AI. You know, there's going to be in sort of the C4ISR and cyber area, although I will admit that electronic warfare is, you know, continues to sort of connect, again, with cyber, with EW, with AI machine learning and all.

John Mengucci: Yeah, Cai, thanks. Yeah, so 40% of our last year's awards were AkinRica Beats. 10% of our revenue is based on winning 25 AkinRica Beats. I'll tell you, in 24, we were north of 90, 90, 90 percent. We did an outstanding job of, you know, protecting what is ours that we believe should still stay ours. So, that worked out. It worked out fine. When you talk about what you should expect in the future, around, I lost the question to the recording.

John Mengucci: Yeah, Cai, thanks. Yeah, so 40% of our last year's awards were AECA re-competes. 10% of our 25 revenue is based on winning 25 AECA re-competes. I'll tell you, in 24, we were north of 90%, and we did an outstanding job of protecting what is ours that we believe should still stay ours. So that worked out fine. When you talk about what you should expect in the future

Kai: Yeah, Kai, thanks. Yeah, so 40% of our last year awards were Eka Recon Beats. 10% of our 25 revenue is based on winning 25 Eka Recon Beats.

Speaker Change: I'll tell you, in 24, we were north of 90%, we did an outstanding job of, you know, protecting what is ours that we believe should still stay ours.

John Mingucci: Jeff already mentioned it, but I'm on a foot stop that we're disciplined to choir. We're not buying revenue. We're buying capabilities, customer relationships, and allow us to sit on these calls for a number of years talking about how that acquisition, you know, one, two, three, seven, ten years back, set a stuff very, very well. We're going to balance that with a healthy leverage. And as Jeff said, a watchful eye in measurements of stock valuation and determined the best way for us to deploy capital, open the short-term and in the long-term.

Bert Subin: So, Bert, thank you for your questions.

John Mengucci: The question was, what was the relative growth rate of growth this year between technology and expertise?

Speaker Change: i lost question to three

Speaker Change: the question was what were a relative growth of relative rate of growth this year between technology and expertise

John Mengucci: Yeah, so if we look at, from a revenue side, Cai, if you look at how 25 plays out, the larger percentage of our new business wins were in tech. But as I shared earlier, those are going to ramp up more slowly than our expertise wins. Very much similar, Cai, to the way 24 ramped, right?

Speaker Change: yes sort of if we look it from a revenue psi if you look at how twenty-five plays out

John Mengucci: The larger percentage of our new business wins were in tech, but as I shared earlier, those are going to ramp up more slowly than our expertise wins. Very much similar, Cai, to the way 24 ramped, right? We had a large ramp, a large, quick ramp of the large Intel program in 24. So the expertise wins in 25, we'll ramp up in the same manner. We're doing a great job of staffing.

Speaker Change: The larger percentage of our new business wins were in tech.

Kai Von Rumor: Your next question comes from the line of Kai Von Rumor with Tidi Kallen, your line is open. Yes, thank you very much and a spectacular book to build. So, John, what is the, you know, 40% of your bookings, I guess, were recompete? What percent of your sales up this year are recompete? And secondly, you mentioned the relative growth of tech and expertise. What should we look for for tech and expertise if you kind of hit your sales code?

Speaker Change: but as i shared earlier those are going to ramp up more slowly than our expertise wins very much similar kind of the way twenty four rampsped right we had a large ramp a large

John Mengucci: We had a large ramp, a large, quick ramp of the large Intel program in 24. So the expertise wins in 25, and we'll ramp up in the same manner. We're doing a great job of staffing.

Speaker Change: quick ramp up of the large intel program in twenty four so the expertise wins we end twenty five amp up in the same manner we're doinga greatjobis taping

Kai Von Rumor: So, how fast are each of them going to grow? Thank you. Yeah, Kai, thanks. So, 40%, 40% of our 25 revenue is based on winning 25 rate acre repubes. I'll tell you in 24, we were north in 90, 90, 90%, 90%. We didn't have any job of, you know, protecting what is ours that we believe can still stay ours. So, that worked out, worked out fine.

John Mengucci: On the technology side, we've got a number of new wins that are going to ramp up, you know, slowly, similar to what we saw in 2025 and in 2024. What I think I would guide you towards is sort of how we do our guidance, right? We've got to assess a lot of variables, both on how the customer acts and how the market acts. Um, you know, if we look at guidance, on how these new programs ramp up and how last year's ramped up.

Speaker Change: On the technology side, we've got a number of new wins that are going to ramp up, you know, slowly, similar to what we saw in 2025 and then 24. What I think...

Kai Von Rumor: When you talk about what you should expect in the future, around, I lost the question. The question was, what were the relative growth of relative rate of growth this year between technology and expertise? Yeah, so, if we look at, from a revenue side, Kai, if you look at how 25 plays out, the larger percentage of our new business wins were in tech. But as I shared earlier, those are going to ramp up more slowly than our expertise wins.

Speaker Change: i would guide towards is sort of how we do our guidance right we've got to assess a lot of very very variable hold on how the customer acts and how the market act if we look at

John Mengucci: We always look at win rates; are they lower or higher than what we assume a program is going to ramp more slowly or more rapidly? 24 is a perfect example where we put the guide right in the middle, and the majority of the things broke to the right goalpost versus the left goalpost. Funding, I believe, will still stay funded depending on how quickly customers issue RFPs. The other factor, Cai, is that 6% of our revenue in 25 will be based on new wins that we pick up in 25. Right?

John Mengucci: We always look at win rates. Are they lower or higher than what we assume a program is going to ramp more slowly or more rapidly? 24 is a perfect example where we put the guide right in the middle, and the majority of the things broke to the right goalpost versus the left goalpost.

Speaker Change: Guidance

Speaker Change: in how these new programs ramp in how lastyear's lam

Speaker Change: we always look at win rates are the lower higher than what we assume our programs going to ramp more slowly or more rapid rapidly twenty four appriate example where we put the guide right in the middle and ma join other other things broke to the right go both versus lem propos

John Mengucci: Funding, I believe, will still stay funded depending on how quickly customers issue RFPs. The other factor, Cai, is that 6% of our revenue in 2025 will be based on new wins that we pick up in 2025. That's going to force customers to get RFPs out and also make decisions in a timely manner. If they make timely decisions faster, then it will break more towards the right goalpost. We would expect that 2025 is going to be the same as 2024. We have an election year. We can talk a lot about budgets and all, but I like the hand that we have.

Speaker Change: Funding, I believe will still stay funded. How quickly customers issue RFPs.

Speaker Change: The other factor, CHI, is that 6% of our revenue in 2025 will be based on new wins that we pick up in 2025, right? So that's going to force customers to get our fees out and also make decisions in a timely manner.

John Mengucci: So that's going to force customers to get RFPs out and also make decisions in a timely manner. If they make timely decisions faster, then it'll break more towards the right goalpost. So, look, we would expect that 25 is going to play the same as 24. We have an election year, and we can talk a lot about budgets and all, but I like the hand that we have.

Speaker Change: if they make timely

Speaker Change: Decisions faster, then it'll break more towards the right goalpost. So, look, we would expect that 25 is going to play the same as 24. You know, we have an election year, we can talk a lot about budgets and all, but I like the hand that we have.

John Mengucci: Right, and maybe give us an update on where we are with photonics. I guess a big focus last year was on completing your investment, and this was going to be the harvest period. Where are we on that?

Unknown Attendee: Right, and maybe give us an update on where we are with photonics. I guess a big focus last year was on completing your investment, and this was going to be the harvest period. Where are we on that?

Kai Von Rumor: Very much similar, Kai, to the way 24 ramps, right? We had a large ramp, a large quick ramp of the large intel program in 24. So, the expertise wins, we in 25 will ramp up in the same manner, we're doing a great job of staffing. On the technology side, we've got a number of new wins that are going to ramp up, you know, slowly, similar to what we saw in 2025 in the 24.

Speaker Change: rightand maybe give us an update where we are with poomics i guess a big focus last year was on completing your investment and this was going to be the harvest period where are when we in that

John Mengucci: Yeah, Cai, so on previous calls, we I was quoted as saying we're sort of in the seventh inning of investments in the bottom of the first on delivery. Look, the majority of investments are complete, and that got us to a reliable design on our photonic optical terminals.

Speaker Change: Yeah, Cai, so I believe on previous calls, I was quoted as saying we were in the seventh inning of investments and in the bottom of the first on delivery. Look, the majority of investments are complete, and that got us to a reliable design on our photonic optical terminals.

Kai Von Rumor: What I think, I would guide you towards is sort of how we do our guidance, right? We've, we've got to assess a lot of very, very, very well, both on how the customer acts and how the market acts. You know, if we look at, Guidance in how these new programs ramp and how last year's ramp? We always look at win rates, are they lower or higher than what we assume? A program is going to ramp more slowly or more rapidly, 24 is a perfect example, where we put the guide right in the middle and the majority of the things go to the right goalpost versus the left goalpost.

John Mengucci: Look, we're always going to have investments in producibility and maturation that are going to continue to require both CapEx and, you know, working capital as we move forward. But I'm very pleased with the position that we're in. We delivered it in the mid-teens terminals during FY 24, Cai. We're looking to deliver six to eight times that volume during FY 2025. And that's going to take us somewhat up that curve of deliveries while we're still entertaining additional bids and, you know, other applications where we can take over products.

Speaker Change: but we're always going to have investments and producibability

Speaker Change: maturation that's going continue require both capex and working capitalism move forward but i'm very pleased with a there's that we're in

Speaker Change: We deliver it in the mid-teens.

Speaker Change: terminals during f y and twenty-four i we're looking to deliver six to eight times that volume during fy two thousand and twenty-five

Speaker Change: And that's going to take us somewhat up that curve of deliveries while we're still entertaining additional bids and, you know, other applications of where we can take products.

Kai Von Rumor: Funding, I believe, will still stay funded. How quickly customers issue our fees? The other factor, Cai is that 6% of our revenue in 25 will be based on new wins that we pick up in 25, right? That's going to force customers to get our fees out and also make decisions in a timely manner. If they make timely decisions faster, then it'll break more towards a right goalpost. So, look, we would expect that 25 is going to play the same as 24. You know, we have an election year, we can talk a lot about budgets and all, but I like the hand that we use to do that.

John Mengucci: You know, and I think that photonics is another example, as TLS MANPAC is, and the fact that we're going to move towards spectral production, most likely in the third quarter, those production-like programs really connects to Jeff's prepared remarks around additional use of working capital. You know, it should be clear now that the percentage growth in our business is not the predictor of working capital, but more importantly, as you always ask, how these programs ramp, the type of programs that we're delivering. Very little capital, very little capex around the expertise programs but, you know, materially more as we look at technology, as it should be, because that's going to be the larger group.

Speaker Change: you know and i think the photonics is im good example as t s manpack is and the fact that we're going to move towards spectral production most likeking the third third quarter those production like programs

Speaker Change: really connects to just for ared remarks

Speaker Change: around additional use of working capital. You know, it should be clear

Speaker Change: Now that the percentage growth in our business is not the predictor of working capital, but more importantly, as you always ask, how do these programs ramp?

Speaker Change: The type of programs that we're delivering. Very little capital.

Kai Von Rumor: Right, and maybe give us an update on where we are with Potomix. I guess a big focus last year was on completing your investment, and this was going to be the harvest period. Where are we in that? Yeah, Cai, so I believe in previous calls, I was quoted as saying, we were in the seventh inning of investments in the bottom of the first round of delivery. Look, the majority of investments are complete, and that got us to a reliable design on our photonic optical terminals.

Speaker Change: Very little CapEx around the expertise programs, but materially more as we look at technology, as it should be, because that's going to be the larger group.

Peter Arment: Your next question comes from the line of Peter Arment of Baird. Your line is open.

dri: thanks dri

Speaker Change: Your next question comes from the line of Peter Arment of Baird. Your line is open.

Peter Arment: Thanks. Good morning, John. Good morning, John, Jeff, George.

John Mengucci: Hey, John, just, you know, to echo everyone's results, terrific results, $14 billion in contract awards. And then we think about, you know, the pipeline of new bids. And you've got, I think in your charts, you had the next two quarters, you've got $14 billion of bids that potentially could be submitted for 80% of its new business. Do you think how do we think about your mix from a contract structure, either it's cost plus or fixed price, and or however you want to explain it via technology?

Peter Arment: Thanks. Good morning, John . Morning, John , Jeff, George. Hey, John , just, you know, to echo everyone's results, terrific results.

Speaker Change: 14 billion dollars contract awards, and then we think about, you know, pipeline of new bids, and you've got, I think in your charts you had, next two quarters you've got 14 billion dollars of bids that potentially, I guess, be submitted for 80% of its new business.

Kai Von Rumor: But we're always going to have investments in produce ability, maturation that's going to continue to require both CAPX and, you know, working capital is going to move forward, but I'm very pleased with the position that we're in. We deliver in the mid teams, terminals during FY 24, we're looking to deliver six to eight times that volume during FY 2025, and that's going to take us somewhat up that curve of deliveries while we're still entertaining additional bids and, you know, other applications are where we can take products.

Speaker Change: Do you think, how do we think about your mix from a contract structure, either it's cost plus or fixed price, or however you want to explain it via technology. When you look at this pipeline, do you see this kind of mix changing, or is a lot of it still in the same wheelhouse of where you've been in previous awards?

John Mengucci: Yeah, Peter, you know, every time I hear 14 billion, it's a record, right? I mean, it's quite awesome. You know, now what I'm going to make sure I say at least once on this call is that awards are lumpy. You know, you all know that I'm not fond of, you know, counting records. But I have to admit, it's an awesome delivery. Look, let me start with, I think, how we got here.

John Mengucci: Yeah, Peter, you know, every time we hear 14 billion, it's a record, right? I mean, it's quite awesome. Now, what I'm going to make sure I say at least once on this call is that awards are lumpy. You know, you all know that I'm not fond of, you know, counting records.

John Mengucci: When you look at this pipeline, do you see this kind of mix changing? Or is a lot of it still in the same wheelhouse of where you've been in previous Yeah, Peter, you know, every time I hear a $14 billion...

Peter Ma: yeah i peter ma fourteen billion it's a record gr it's quite awesome you know i i'm going to make sure i say le one on this call is it a wardser lumpy

Speaker Change: you all you wonall know that i'm not fond of ching a record but i have to admit it's an awesome delivery look

John Mengucci: But I have to admit, it's an awesome delivery. Look, let me let me start with, I think, how we got here. And I will talk about the mix between contract type and what you all can see. But I think it's important to sort of take a slight step back and just make sure we all understand, you know, the hand we're playing is not by accident. Our job is to ensure that we continue growth in everything that we definitely do.

Kai Von Rumor: You know, and I think that photonics is, for example, as TLS Man Pack is, and the fact that we're going to move towards spectral production, most liking the third quarter, those production like programs really connects to just preparing marks around additional use of working capital. You know, we should be clear now that the percentage growth in our business is not to predict your working capital, but more importantly, as you always ask how these programs ramp, the type of programs that we're delivering very little capital, very little CAPX around the expertise programs, but, you know, materially more as we look at technology as it should be, because that's going to be the larger group. Thanks, Ty.

John Mengucci: And I will talk about the mix between contract type and what you all can see. But I think it's important to sort of take a slight step back and just make sure we all understand, you know, the hand we're playing is not by accident.

Speaker Change: let me let me start with i think how we got here and i will talk about mix between me contract type and what you all can seeve i think it's important the sort of take to a site step back and just make sure we all understand you know the hand we're playing is not by an accident

Speaker Change: our job is to ensure we continue growth and everything that we do those awards our result of working really hard to stay focused on our long-term strategy

John Mengucci: Those awards are a result of working really hard to stay focused on our long-term strategy, which is really hitting your rear markers, and to me, they are the sign of a business that's intentional and not opportunistic. We can talk about where the drone threat is.

John Mengucci: We bought a company nine years ago to worry about the electromagnetic spectrum and where drones are going to end up. And yes, we bought maybe a little bit ahead of customer need. And we put in some worthy investments. That's the beauty of our M&A plan, right, is that we're looking for those long, narrow, deep streams of funding. We sit today where we can talk about great growth and, you know, great free cash flow per share.

Speaker Change: which is really hitting your year markers

Speaker Change: that to me are the sign of a business that's intentional and not opportunistic. We can talk about where the drone threat is.

Peter Arment: Your next question comes from the line of Peter are meant of bear your line is open. Thanks.

Speaker Change: we bought a company nine years ago to worry about a dramatic exctrum and where drones are going to end up and yes we bought being a little bit ahead of customer need and we put some wherere the investment nesta beauty of our emident plan right is that we're looking for those long neuro geep streams of funding

Peter Arment: Good morning, John. Good morning, John Jeff George. Hey, John, just, you know, tackle everyone's results, terrific results. 14 billion dollars contract awards, and then we think about, you know, pipeline of new bids, and you've got nice thinking your chart, you had next two quarters, you've got 14 billion dollars of bids that potentially, I guess, be submitted for 80% of the time. You think how do we think about like you, though, you're mixed from a contract structure, either it's cost plus or fixed price, or however you want to explain it via technology, when you look at this pipeline, do you see this kind of mix changing, or is it a lot of it still in the same wheelhouse of where you've been in previous. DeSort. Yeah Peter, you know each of my here 14 billion is a record right and it's it's quite awesome.

Speaker Change: Where we sit today, where we can talk about great growth and, you know, great free free cash flow per share.

John Mengucci: It's having a strategy that's intentional; we really try to find things that are at the nexus of the needs of the customer, that need software-based solutions that can keep pace with the threats that they're facing. The repeatable BD process is creating quality captures. And when we look at how that mix comes out, we expect it to be, you know, always more technology than expertise, but it's lumpy. Why do I say that?

Speaker Change: It's having a strategy that's intentional, we really try to find things that are at the nexus of the needs of the customer, that need software-based solutions that can keep pace with the threats that they're facing.

Speaker Change: The repeatable BD process...

Speaker Change: is creating quality captures

Speaker Change: And when we look at how that mix comes out, we expect it to be, you know, always more technology than expertise, but it's lumpy. Why do I say that? It doesn't mean that expertise work is not of interest to us. We've won some phenomenal jobs. It just means we can be much more selective.

John Mengucci: It doesn't mean that expert work is not of interest to us. We've won some phenomenal jobs. It just means we can be much more selective. And most of those expertise jobs, Peter, are going to be time and material jobs or cost-plus jobs because, in many instances, the customers sort of know the kind of support that they need, but that always changes, and the Technology Program. You know, a lot of the work is going to be a mix of cost plus and fixed price.

Peter Arment: You know now what I want I'm going to make sure I say at least one thing is called is that awards are lumpy you know you all you all know that I'm not fond of you know counting a record but I have to admit it's it's an awesome delivery look let me let me start with I think how we got here and I will talk about next week on type and what you all can see but I think it's important to sort of take a slight step back and just make sure we all understand you know the hand we're playing it's not by accident. Our job is to ensure we continue growth and everything that we do those awards are result of working really hard to stay focused on our long-term strategy which is really hitting your rear markers that to me are the sign of a business that's intentional and unoperative to this stick we can talk about where the drone threat is we bought a company nine years ago to worry about what we're going to expect from and where drones are going to end up and yes we bought maybe a little bit ahead of customer need and we put some worthy investment that's the beauty of our M&A plant right is that we're looking for those long neuro deep streams of funding.

Speaker Change: Okay, and most of those expertise jobs, Peter, are going to be time and material jobs or cost-plus jobs, because in many instances the customers sort of know the kind of support that they need, but that always changes.

Speaker Change: on the technology proams a lot of the work is going to be a mix of cost-plus and fixed price

John Mengucci: All right, and what we enjoy since our solutions are software-based, is that we let's get the design done under a cost-plus, and then we move to a fixed price production side. You know, when your production, quote-unquote production, is, I don't know, 60, 80% software-based... It's not as risky as bending any metal, right? You can make changes more swiftly. Spectral, a perfect example.

Speaker Change: All right, and what we enjoy since our solutions are software-based is that let's get the design done under a cost-plus framework.

Speaker Change: And then let's move to a fixed-price production side.

Speaker Change: You know, when your production, quote-unquote production, is, I don't know, 60-80% software-based...

Speaker Change: It's not as risky as bending any metal, right? You can make changes more swiftly. Spectral, perfect example.

John Mengucci: RFP, four years back, customer rewards it, the threat completely changes. You know, customers every day are more excited that they selected us over everybody else because we're able to use software to make changes to that program to actually stay with our original LRIP production schedule. So, I think you're going to see the contract mix move around. I think it will always be predominantly cost-plus feeder, but a nice product delivery model where we're delivering to purchase orders, and we should well deserve higher margins because that's our investment dollars, making sure that we're there to support our customers.

Speaker Change: r fe four years back customer of rewarwards that the threat completely changes customers every day more excited they selected us where everybody else

Speaker Change: because we're ableto use software to make changes to that program to actually stay with our original outrip production schedule so i think you'regoing to see the contract to make smoo move around i think it will always be predominantly cost plus beter

Peter Arment: We're we're we sit today where we can talk about great growth and you know great free potential for share it's a strategy that's intentional we really try to find things are the nexus of the needs of the customer. That needs software based solutions that can keep pace with the threat that they that they're facing the repeatable BD process is creating quality captures. And when we look at how that mix comes out we expect it to be you know always more technology than an expertise but it's lumpy.

Speaker Change: but a nice product delivery model where we're delivering to purchase orders and and we well should deserve higher margins because that's our investment dollars making sure that we're there to support our customers.

John Mengucci: The next question comes from the line of Mariana Perez Mora with Bank of America. Your line is open.

mariana parasmora: the next question comes from the line of mariana parasmora with bank of america your line is open

Peter Arment: Why do I say that doesn't mean that expertise work is not an interest job we want some phenomenal jobs it just means we can be much more selected. Okay and most of those expertise jobs theater are going to be time and material jobs or cost plus jobs because many instances the customers sort of know the kind of support that they need but that always changes on the technology programs you know a lot of the work is going to be a mix of cost plus and fixed price right in what what we enjoy since our solutions are software based is that let's get the design done under a cost.

Mariana Perez Mora: Hey, good morning. This is Samantha Styro. I'm from Mariana.

mariana parasmora: Hey, good morning. This is Samantha Styro, I'm from Mariana.

Samantha Styro: um i guess

Samantha Styro: Just double tapping on those submitted bid pipeline and what you're expecting to submit in the next two quarters.

Speaker Change: how should we be thinking about the winind rate on those new opportunities and then also kind of a breakdown are those new opportunities or like new new opportunities or takeaway contracts

Mariana Perez Mora: Um, I guess, just double tapping on the submitted bid pipeline and what you're expecting to submit in the next two quarters. How should we be thinking about the win rate on those new opportunities? And then also, kind of a breakdown? Are those new opportunities or like new, new opportunities or takeaway contracts? Gotcha.

Speaker Change: t you know one i would expect that the pipeline plays out

John Mengucci: Consistent with last year, you know, I'd love to be very predictive on wind rates and all, and if I was, I'd probably be able to...

Speaker Change: Consistent with last year, you know, I'd love to be very predictive on win rates and all, and if I was, I'd probably be in a different business.

Peter Arment: Plus framework and then let's move to a fixed price production side. You know when you're when your production quote unquote production is I don't know 60 80% software based it's it's not as risky as I need any metal right. You can make changes or swiftly spectral perfect example R.P. 4 years back customer awards it that threat completely changes you know customers every day more excited that they selected us for everybody else because we're able to use software to make changes to that program to actually stay with our original LRIP production schedule so I think you're going to see the track mix move around I think it will always be predominantly cost plus theater. But a nice part delivery model where we're delivering to purchase orders and and we will should deserve higher margins because that's our investment dollars. Thank you sure that we're there to support our customers.

John Mengucci: Gotcha. Um, you know, one, I would expect that the pipeline plays out, consistent with last year. I'd love to be very predictive on wind rates and all, and if I was, I'd probably be able to. But look, I think we're doing the right things. We're not bidding on things that are out of our sweet, sweet spot. It's all within the markets that we serve. There are so many factors, frankly, that go into win rate.

Speaker Change: But look, I think we're doing the right things. We're not bidding on things that are out of our sweet, sweet spot. It's all within the markets that we serve.

John Mengucci: I'll also tell you that a lot of this is timing. You know, we had $5.7 billion in rewards in the fourth quarter. By two weeks, we might have had $2 billion less then and $2 billion, you know, in the first quarter now.

Speaker Change: thereare so many factors frankly that goes in into win rate i also tell you that a lot of this asis time

Speaker Change: you know we had five point seven billion dollars of rewards in the fourth quarter you know be it the had p two weeks we might have had two billion less than and had two billion you know in the first quarter now so but i think what's what's important and foundational

John Mengucci: But I think what's important and foundational is when we share those numbers, it's not so much the numbers, it's the quality of things that we're out there chasing. You know, we're not getting really nice, strong win rates by accident. It actually is a function of a great line and business development team working together with our client-focused folks, making certain that what we're bidding on is a quality bid. So, take a look.

Speaker Change: When we share those numbers, it's not so much the numbers, it's the quality of things that we're out there chasing.

Speaker Change: we're not getting really nice strong win rates by accident it actually is a function on a great line and this is h team working together with our with our client focused folks making certain that what we're biding on is a vollet quality bit

John Mengucci: I like the odds of us winning more than not. What's what you feel confident about is we did some prudent work on what our potential win rates are. And that went into our current current guide. And again, if win rates improve, as they did in twenty four, from where we see their potential now, they will be at the upper end of the guide. If they're not there or they get delayed, then we can be slightly, you know, towards the left end. But a nice quality, similar type mix. More technology than expertise-based, and all focused on at or above the current margins that we produce today.

Mariana Perez-Mora: The next question comes from the line of Mariana Perez-Mora, with Bank of America, your line is open.

Speaker Change: So, look, um...

Speaker Change: I like the odds of us.

Speaker Change: We need more than not.

Speaker Change: What you feel confident about is...

Mariana Perez-Mora: Hey, good morning. This is Smith's style one for Mariana. I guess just double tapping on those submitted bid pipeline and what you're expecting to submit in the next two quarters. How should we be thinking about the win rate on those new opportunities and then also kind of a breakdown are those new opportunities or like new new opportunities or takeaway contracts? You know, one, I would expect that the pipeline plays out consistent with last year.

Speaker Change: We did some prudent work on what our potential win rates are, and that went into our current guide.

Speaker Change: And again, if win rates improve, as they did in 24, from where we see their potential now will be at the, you know, upper end of the guide, if they're not there, or they get delayed, then we can be slightly, you know, towards the left end, but nice quality, similar type mix.

Speaker Change: The second part of that question about the new content, the $9 billion under evaluation, about 90% of that is new to us.

John Mengucci: The 9 billion under evaluation, about 90% of that is new to us. The 14 that we 14 billion we expect to bid.

Mariana Perez-Mora: You know, I'd love to be very predictive on win rates and all, and if I was, I'd probably be into the business. But look, I think we're doing the right, the right things. We're not bidding on things that are out of our sweet, sweet spot. It's all within the markets that we serve. There's so many factors, frankly, that goes into win rate. I'll also tell you that a lot of this is timing.

John Mengucci: The $14 billion we expect to bid in the first half of FY25, 80% of that is due to us.

Speaker Change: The $14 billion we expect to bid in the first half of FY25, 80% of that is due to us.

John Mengucci: And then for those new contracts, what kind of gives you the confidence that CACI can win market share for any of those that are maybe a takeaway contract where there's a different incumbent now? Kind of what gives you that confidence?

Speaker Change: And then for those new contracts, what kind of gives you the confidence that CACI can win market share for any of those that are maybe a takeaway contract where there's a different incumbent now? Kind of what gives you that confidence?

Mariana Perez-Mora: You know, we have $5.7 billion of awards in the fourth quarter. You know, be it, be it by two weeks we might have had two billion less than and had two billion, you know, in the first quarter now. So, but I think what's important and foundational is when we share those numbers. It's not so much the numbers as the quality of things of the world that we're out there chasing. You know, we're not giving really nice, strong win rates by accident.

John Mengucci: Yeah, it gets back to the recipe we put in place a number of years ago and we continue to build on. You know, we're going to be involved in programs where we've spent a number of years shaping what we believe the art of the possible is for it. So a typical capture for us. Transcripts provided by Transcription Outsourcing, LLC.

Speaker Change: You know, we're going to be involved in programs where we've spent a number of years shaping what we believe the art of the possible is for a customer.

Mariana Perez-Mora: It actually is a function of a great line and business development team working together with our with our client focused folks, making certain that what we're bidding on is a quality bit. So look, I like the odds of us winning more than not. What's what you feel confident about is we did some proven work on what our potential win rates aren't that went into our current or in guide. And again, if win rates improve as they did in 24, but where we see their potential now will be at the, you know, upper end of the guide if they're not there or they get delayed and we can be slightly, you know, towards the left end.

Speaker Change: so a typical capture for us

Speaker Change: starts two to three years prior.

Speaker Change: When the RFP comes out, a great example is our NCAPS job, right? So we're very, very well steeped in agile software development and how we deliver and how we can rapidly update what our customer needs.

John Mengucci: So that was foundational to the uncapped job. The second piece was spending three years with the customer. How do you like the value that's being delivered to you today by whoever your current deliverer is? You know, if they say they're not extremely happy and that they'd like to take this somewhere else, then we sit with them and show them the art of the fossil. And then based on that, we'll invest ahead of customers, and we'll put investments in place to make certain that that customer gets comfortable with working with us. That's over a thousand days before the RFP closes.

John Mengucci: So that was foundational to the uncapped job. The second piece was spending three years with the customer. How do you like the value that's being delivered to you today by whoever your current deliverer is? If they say they're not extremely happy and that they'd like to take this somewhere else, then we sit with them and show them the art of the possible. And if we're to that point, then we have a pretty good idea of how the customer operates, the type of contract fee vehicle that works for them and us, and the level of budget that they have to plan for.

Speaker Change: So that was foundational on the Uncapped job. The second piece was spending three years with the customer.

Speaker Change: how do you like the value that's being delivered you today by whoever your current delivery is you know if they say they're not extremely happy and that they'd like to take this somewhere else that we sit with them you show them the art are possible

Mariana Perez-Mora: But nice quality, summer type mix, more technology than expertise based at all focused on at or above the current margins that we produce today. The second part of that question about the new content, the 9 billion under evaluation, about 90% of that is new to us. The 14 if we it's 40 billion, we expect to bid for the first half of FY 25 80% of that is new to us. And then for those new contracts, what kind of gives you the confidence that CACI can win market share for any of those that are maybe a takeaway contract where there's a different incumbent now.

Speaker Change: And then based on that, we'll invest ahead of customer need, and we'll put investments in place to make certain that that customer gets a comfort with working with us. That's over 1,000 days before the RFP comes out.

John Mengucci: And if we're to that point, then we have a pretty good idea of how the customer operates, the type of contract fee vehicle that works for them and us, the level of budget that they have to plan for. And then if you wrap that, you know, the sort of frosting is putting the right key personnel in place. That is the recipe for a Spectre win and a large Intel customer enterprise win, an expertise win.

Speaker Change: and if work to that point that we pro have a pretty good idea of how the customer operates

Speaker Change: The type of contract, the vehicle that works for them and us, the level of budget that they have to plan for, and then if you wrap that, you know, the sort of frosting is putting the right key personnel in place.

John Mengucci: And then if you wrap that, you know, the sort of frosting is putting the right key personnel in place. That is the recipe for a spectral win and a large Intel customer enterprise win, a fatigues win. And it was the recipe that brought $2 billion in multi-year end capital workouts. So we have some history here that doesn't always, always work, but it gives us the confidence that we're spending precious bid and proposal dollars on growing the business versus spending a lot of time rewinning stuff. It's already in our revenue.

Speaker Change: That is the...

Speaker Change: Recipe

Speaker Change: for a Spectrum win and a large Intel Customer Enterprise win, a Fertiz win. And it was the recipe that brought $2 billion.

John Mengucci: And it was the recipe that brought $2 billion, you know, multi-year end caps award to us. So we have some history here. It doesn't always, always work, but it gives us the confidence that we're spending precious bid and proposal dollars on growing the business versus spending a lot of time rewinning stuff.

Mariana Perez-Mora: Kind of what gives you that confidence? Yeah, it's back to the rest of the recipe we put in place a number of years ago and we continue to build on. You know, we're going to be involved in programs where we've spent a number of years shaping. Dean, what we believe the art of the possible is for a customer. So a typical capture for us stars 2 to 3 years prior when the art of people is out.

Speaker Change: You know, multi-year end caps award us. So, we have some history here that doesn't always, always work, but it gives us the confidence that we're spending precious bid and proposal dollars on growing the business versus spending a lot of time re-winning stuff that's already in our revenue.

Robert Spingarn: It's already in our revenue. Thanks for the questions. Your next question comes from the line of Robert Spingarn with Melius Research. Your line is open. Good morning, this is Scott Mikason on behalf of Robert Spingarn.

Robert Spingarn: Your next question comes from the line of Robert Spingarn with Melius Research. Your line is open. Good morning, this is Scott Mikason on behalf of Robert Spingarn.

Speaker Change: thank questions

Speaker Change: Your next question comes from the line of Robert Spingarn with Melius Research. Your line is open.

Unknown Attendee: Good morning, this is Scott Mikason on behalf of Rob Spingarn.

John Mingucci: The great example is our end cap shop. Right. So we're very, very well steeped and agile software development and how we deliver and how we can rapidly update where our customer needs. So that was foundational on the end cap shop. The second piece was spending 23 years with the customer. How do you like the value that's being delivered to you today by whoever your current deliver is? You know if they say they're not extremely happy.

Speaker Change: Good morning, this is Scott Mikason for Rob Spingarn.

Scott Mikason: John , I wanted to ask you a question. So Spectral was a big award for you guys that we normally would have expected to go to the large traditional defense primes, but you leveraged software to deliver a solution there.

Speaker Change: and northropan archix actually joined your team on that

Speaker Change: 'sjust woningif you elaborate on other opportunities where you think your soft w our capabilities can be a differentiatated when larger program that typically would go to the crimes

John Mingucci: And if they like to take this somewhere else and we sit with them and show them the art of the art of the possible. And then based on that, we'll invest ahead of customer G and we'll put investments in place to make certain that that customer gets a comfort with working with us. That's over a thousand days before the RFP comes out. And if we're to that point, then we pretty have a pretty good idea of how the customer operates the type of contract fee vehicle that works for them and us the level of budget that they have to plan for.

John Mengucci: Yeah, look, you know, one thing speaking of the, you know, primes, they're phenomenal companies. They all build eye-watering platforms, and we should be proud of everything that those companies do.

Unknown Executive: Yeah, look, you know, one thing speaking of the, you know, primes, they're phenomenal companies. They all build eye-watering platforms, and we should be proud of everything that those companies do.

Speaker Change: Yeah, look, one thing, speaking of the primes, they're phenomenal companies. They all build eye-watering platforms, and we should be proud of everything that those companies do. We just believe here that there's a level of mission.

John Mengucci: We just believe here that there's a level of mission that we can deliver more agilely and in a manner that allows customers to address threats at the speed of the fight, and I actually believe wholeheartedly that's a better value proposition for our customers who are facing uprisings all around this globe. So when we looked at software and the teaming, you know, look, we partnered with Northrop, and with our Atheon outstanding team, they sweetly augment our spectral delivery.

Speaker Change: that we can deliver

Speaker Change: more agilely and in a manner that allows customers to address

Speaker Change: Threats at the speed of the fight and I actually believe wholeheartedly that's a better value proposition to our customers who are facing uprisings all around this globe

John Mingucci: And then if you wrap that, you know, the sort of frosting is putting the right key personnel in place. That is the rest of recipe for a spectral wind and a large intel customer enterprise went I for I for TEEX went and it was the recipe that brought to a billion dollar, you know, multi year and capsule work. So we have some history here. It doesn't always always work, but it gives us the confidence that we're spending. I mean, pressure has been pulled with dollars on going to business versus playing a lot of time, re-wading stuff that's already in our, our revenue.

John Mingucci: Thanks for the questions.

Speaker Change: So when we looked at software and the teaming, you know, look, we partner with Northrop and with our AT&T outstanding team, they sweetly augment our spectral delivery.

John Mengucci: Okay, because they have expertise in areas that, you know, we don't, and that's what our customers want us to go do leave with the software, leave with agility, connect with partners who can provide the other pieces that we don't provide and then give them an experience and a set of outcomes that are absolutely eye-watering.

Speaker Change: okay because they have expertiseation areas that we don't and that's what our customers wantedus to go to go do leave it software le with agility

Speaker Change: Connect with partners who can provide the other pieces.

John Mengucci: I shared on CAPS that that's a customer that has, you know, 200 or so different systems and apps that need to be continuously updated in an agile manner across all of NASA. You can look at the counter-UXS threats. It's the same step and repeat, okay?

Speaker Change: that we don't provide.

Speaker Change: and then give them an experience and a set of outcomes that are absolutely eye-watering.

Robert Spingarn: Your next question comes from the line of Robert Spengarn with Melius research. Your line is open. Good morning. This is Scott Mike is on for Rob Spengarn. John, I wanted to ask you a question. The spectral was a big award for you guys that we normally would have expected to go to the large traditional defense primes, but you leverage software to deliver a solution there. And Northrop and RTX actually joined your team on that.

Speaker Change: I shared on CAPS, that's a customer that has...

Speaker Change: two hundred so different systems and apps that need to be continuously update it did it in the agile asl manter across all of nasa you can look at the counteru excess threats

John Mengucci: What we do on Spectral, you know, all software processing below the deck plate, taking threats and signals and what is that, how do I find it, and how do I rid myself of it, is similar to what the counter-UXS fights. You know, and frankly, there are a lot of companies that are looking at these level one and two drones that are not what's wreaking havoc across the world. Okay, these are, you know, these are, large country state actors, level three, four, and five drones that are very complex, that change their tactics, and their TTPs, you know, every every other hour.

Speaker Change: It's the same.

Speaker Change: step en repeat ok what we do on spectral you know all software processing below the deckly taking threats and signals and what is that how do i find it and how do i readid that of my world is similar to what the kind you excess fight this

John Mingucci: There's just wondering if you get elaborate on other opportunities where you think your software capabilities can be a differentiator to win larger programs that typically would go to the primes. Yeah, look, you know, one one of one thing speaking of the, you know, primes, they're phenomenal companies. They all build, I want to have platforms and we should be proud of everything that those companies do. We just believe here that there's a level of mission that we can deliver more agilely and in a manner that allows customers to address threats at the speed of the fight.

Speaker Change: in frankly there's a lot of companies that are looking at these level one in two drones there're not what's wecould ha that could cost the ro

Unknown Executive: We just believe here that there's a level of mission. Okay, these are, you know, these are: Where do we take things like ITEP? Where do we take things like IpsArmy?

Speaker Change: Okay, these are, you know, these are large country, state actors, level 3, 4, and 5 drones that are very complex, that change their tactics.

Speaker Change: And there are TTPs, you know, every other hour. So there's a large amount of work in the counter-UXS world. There is also, you know, where do we take things like Spectral?

John Mingucci: And I actually believe wholeheartedly that's a better value proposition to our customers who are facing uprisings all around the school. So when we looked at software and the teaming, you know, what we partner with Northrop and with or a young standing team, they sweetly augment our spectral delivery. Okay, because they have expertise in areas that, you know, we don't and that's what our customers want us to go to go do. Leave a software, leave with agility.

John Mengucci: So there's a large amount of work in the counter UXS world. There is also, you know, where do we take things like Spectrum? Where do we take things like ITEP? Where do we take things like IpsArmy?

John Mengucci: It's a step and repeat model. And once customers feel comfortable that a software-based solution is actually better and quite more of what this customer base needs, frankly, the opportunities are not our worry. The basis for us to select the right ones is there. And those are going to be with customers who are willing to change. You know, so and it's going to be changing how they buy. Having the army moved to a program of record, to buy you know exquisite actual electromagnetic spectrum technologies is a major step forward as investors and sell side analysts don't pass that because that is extremely important. That is called acceptance. And to wrap up, a customer like the United States Navy picking CACI, a software powerhouse bringing other traditional vendors along, is also another marker that says that that part of the market is ready to buy.

Speaker Change: Where do we take things like eye tests?

Unknown Executive: It's a step-and-repeat model, and once customers feel comfortable that a software-based solution is actually better and quite more of what this customer base needs, frankly, the opportunities are not our worry. The base is for us to select the right ones. And those are going to be with customers who are willing to change, to buy, you know, exquisite actual electromagnetic spectrum technologies. A major step forward as investors and sell-side analysts don't pass that because that is extremely important.

Speaker Change: where do we take things like it' army it's a stepparid repeat model and once customers feel comfortable that a softterare base solution is actually better and quite more in the current decade of what this customer based mes

Speaker Change: frankly the opportunities is not are worry the opportunities basis for us to select the right ones and those are going to be with customers who are willing to change

John Mingucci: Connect with partners who can provide the other pieces that we don't provide and then give them an experience and a set of outcomes that are absolutely eye-watering. I shared end caps, that's a customer that has 200 or so different systems and apps that need to be continuously updated in the Agile Encle matter across all of NASA. It's the same step in repeat. What we do on Spectral, all software processing below the deck plate, taking threats and signals and what is that, how do I find it, and how do I rid that of my world as similar to what the county UXS fight is.

Speaker Change: You know so and it's going to be changing how they how they buy having the army moved to a program of record

Speaker Change: So by, you know, exquisite, actual electromagnetic spectrum technologies is a major step forward. And as investors and sell-side analysts, don't pass that, because that is extremely important. That is called acceptance.

Unknown Executive: That is called acceptance. And to wrap up, a customer like the United States Navy picking CACI, a software powerhouse bringing other traditional vendors along, is also another marker that says that that part of the market is ready to buy.

Speaker Change: And to wrap up, a customer like the United States Navy picking CACI, a software powerhouse bringing other traditional vendors along, is also another marker that says that that part of the market is ready to buy and to build.

Matthew Akers: Your next question comes from the line of Matthew Akers with Wells Fargo. Your line is open.

John Mingucci: In frankly, there's a lot of companies that are looking at these level 1 and 2 drones that are not what we can have at the cost of the world. These are large country state actors, level 3, 4 and 5 drones that are very complex, that change their tactics and their TTPs every other hour. So there's a large amount of work in the counter UXS world. There is also, where do we take things like Spectral?

Speaker Change: Thanks. I'll stick with one question.

Speaker Change: All right, thanks so much.

Speaker Change: Your next question comes from the line of Matthew Akers with Wells Fargo. Your line is open.

Matthew Akers: Hey guys, good morning. Thanks for the question. I wanted to ask about pre-cash flow conversion. I think in the past, CACI has been kind of well above 100%. So, you know, you guys are a little bit below that this year. It makes sense to invest some of the working capital. But I guess, do we get back to that 100%, or is there something sort of different about some of this technology work that maybe needs a little bit more working capital?

Matthew Akers: hey guys good morning thanks for the question i wanted to ask about free cash flow conversion i think in the past

Matthew Akers: caci been kind of well above one hundred percent so you you gotys a little bit below that this year makes sen some of the working capital but i guess we get back to that one hundred percent or there something sort of different about some of the technology works that maybe a little bit more more working capital in tof

Unknown Executive: Now, thanks for the question, Matt. You should continue, in the longer term or even medium term, to think about us as 100% net income conversion. We happen to have a confluence of factors here in the ramp of new programs, as well as sort of finishing up a couple years of non-recruiting items that are kind of anomalous. And we're working through that phase of our cash profile. But steady state over time here, over the next year or two, we will fully expect to be back in that sort of a range. And that's the way you ought to model us for the longer term.

Jeffrey MacLauchlan: Now, thanks for the question, Matt. You should continue in the longer term or even medium term to think about us as 100% net income conversion. We happen to have a confluence of factors here in the ramp of new programs, as well as sort of finishing up a couple years of non-recruiting items that are kind of anomalous, and we're working through that phase of our cash profile. But steady state over time here, over the next year or two, we will fully expect to be back in that sort of a range, and that's the way you ought to model us in the longer term.

Speaker Change: Now, thanks for the question, Matt. You should continue in the longer term, or even medium term, to think about us as a 100% net income conversion.

John Mingucci: Where do we take things like ITES? Where do we take things like ITES Army? It's a step in repeat model. It wants customers feel comfortable that a software-based solution is actually better and quite more in the current decade of what this customer-based needs. Frankly, the opportunities is not our worry. The opportunities base is for us to select the right ones and those are going to be with customers who are willing to change.

Matthew Akers: we happen to have a confluence of factors here

Matthew Akers: In the ramp of new programs, as well as sort of finishing up a couple years of non-recruiting items that are kind of anomalous.

Matthew Akers: and we're working through the of that phase of our cash prw file but steady state over time here over the next year or two we will fully expect to be back in that sort of range and that's the way do out a modelus in the longer term

John Mingucci: It's going to be changing how they buy, having the Army move to a program of record, to buy exquisite, actual electromagnetic spectrum technology is a major step forward. And as investors and sales analysts, don't pass that because that is extremely important. That is called acceptance.

Matthew Akers: Got it. Thanks. That's helpful. And then I guess one more: just the O&M outlays data, which I think a lot of us look at every month. It's been pretty weak lately. Is there any, any kind of signs you're seeing from your customers that would explain it or any way you can help us sort of understand, you know, kind of the difference between that data and what seems to be pretty good growth for you guys? Yeah.

Unknown Executive: I got it. Thanks. Thanks. That's helpful. And then I guess one more just the, you know, the O&M outlays data that I think a lot of us look at every month. It's been pretty weak lately. Is there any, any kind of signs you're seeing from your customers that would explain it, or any way you can help us sort of understand, you know, kind of the difference between that data and what seems to be pretty good growth for you guys? Yeah,

Speaker Change: Got it. Thanks, that's helpful. And then I guess one more, just to...

Speaker Change: The O&M outlays data I think a lot of us look at every month. It's been pretty weak lately.

John Mingucci: And to wrap up a customer with United States Navy, picking CACI, a software powerhouse, bringing other traditional vendors along is also another marker that says that that part of the market is ready to buy to go. Thanks. I'll stick with one question. All right. Thanks so much.

Speaker Change: any kind of sign you're seeing from your customer that would would explain it or anyway you can help us sort to understand kind of difference between that data and to be pretty good grow that

John Mengucci: Yeah, look, a couple of things there. One is when we have an extended CR, as we had while we were in government fiscal year 24, what traditionally happens is that that spending is no greater than last year's spending rate. That really bottles up O&M spending early in the year. So you're going to see customers with more O&M spending towards the end of the year as they get to the end of September. And that's something that we're watching. We're a big modernization through sustainment company as well, and it's those O&M dollars that could bring some additional growth.

Speaker Change: Yeah, a couple of things there. One is when we have an extended CR, as we had while we were in government fiscal year 24, what traditionally happens

Matthew Akers: Your next question comes from the line of Matthew Acres with Wells Fargo. Your line is open. Hey guys, good morning. Thanks for the question. I wanted to ask about pre-cashable conversion. I think in the past CACI has been kind of well above 100%. So, you know, you guys a little bit below that this year, it makes sense, some of the working capital.

Speaker Change: is that that spend it no greater than last year's spending rate that really botles of all own oi'm spending early in the air so you're going to see customers and more om

Matthew Akers: for the end ofthe years they get to the end of se ptember that s something that we're watching know we're a big modernization through sustainment companies well and cellzona m dollars that could bring some additional growth

Jeff McLaughlin: But I guess do we get back to that 100% or is there something sort of different about some of this technology work that may be a little bit more more working capital. Now, thanks for the question, Matt. You should continue in the, in the, you know, longer term or even medium term to think about us as 100% that income conversion. We happen to have a confluence of factors here in in the ramp of new programs as well as sort of finishing up a couple years of non-recronaring items that are kind of anomalous. And we're working through that of that phase of our cash profile.

Unknown Executive: So, it's both of those things. It's nothing that's extraordinary, but what you'll see is that O&M dollars to be placed are going to be larger the longer you see ACR go forward. So, similar to other CR years, but, you know, a nice trend. It also allows customers to reappropriate funds.

John Mengucci: So, it's both of those things. It's nothing that's extraordinary, but what you'll see is that O&M dollars to be placed are going to be larger the longer you see ACR go forward. So, similar to other CR years, but, you know, a nice trend. It also allows customers to reappropriate funds. U.S. Department of Defense, Thanks, man. Your next

Matthew Akers: So it's both of those things. It's nothing that's

Matthew Akers: But steady state over time here, over the next year or two, we will fully expect to be back in that sort of rage and that's the way you ought to model us in the longer term. Got it. Thanks. That's helpful.

Matthew Akers: extraordinary, but what you'll see is that O&M dollars to be to be placed.

Matthew Akers: There's going to be larger the longer you see ACR go forward, so similar to other other CR years but you know a nice a nice trend. It also allows customers to re-appropriate funds.

Matthew Akers: to go after more urgent needs and you know I would I would put out there that in my lifetime there I've never seen a time when there's so many urgent urgent needs across numerous combat commander theaters where some of that end of the year on and when he may get make it placed towards defining some of those those threats.

John Mengucci: Your next question comes from the line of Tobey Sommer with Tourist Securities. Please ask your question. Yeah, hey, good morning. This is Jack Wilson on behalf of Tobey. Can we just double check?

Pat: Thanks, Pat.

Speaker Change: Your next question comes from the line of Tobey Sommer with Tourist Securities. Please ask your question.

Jeff McLaughlin: And then I guess one more, just the, you know, the O&M outlays data. I think a lot of us look at every month. It's been pretty weekly. Is there any, any kind of signs you're seeing from your customer that would explain it or any way you can help us sort of understand, you know, kind of the difference between that data and what seems to be pretty good growth. Yeah. Now, look couple of couple of things there.

Jack Wilson: Yeah, hey, good morning. This is Jack Wilson on for Tobey. Um, can we just double click on sort of what you're seeing in terms of recruiting for top tech and expertise talent, and if you've seen any sort of change in your retention or attrition in the past couple months?

Unknown Executive: Yeah, thanks. I made some reference to our senior leadership offsite earlier in our fiscal year, the second week of July, and I really talked about how the workforce is changing. There's nothing that's going to happen tomorrow afternoon at three, but it's going to be something that is starting to show its end. And a company like ours, it's very strategically based; we talk a lot about the markets we serve and investing ahead of customer need. But we also invest ahead of talent needs as well, right? Because you don't generate revenue with great awards if you don't have talent.

Tobey Sommer: Yeah, thanks. I made some reference to our senior leadership offsite earlier in our fiscal year, second week of July, and I really talked about how the workforce is changing. There's nothing that's going to happen tomorrow afternoon at three, but it's going to be something that is starting to show its end. And a company like ours, it's very strategically based; we talk a lot about the markets we serve and investing ahead of customer need. But we also invest ahead of talent needs as well, right? Because you don't generate revenue with great awards if you don't have talent.

Speaker Change: Yeah, thanks. You know, I made some, a reference to our senior leadership offsite earlier.

Jeff McLaughlin: One is when we haven't extended CR as we had, while we're in come with fiscal year 24, what traditionally happens is that that spend it no greater than, you know, last year spending rate that really bottles up on O&M spending early in the air. So you're going to see customers and more O&M was the end of the years. They get to the end of September. That's something that we're watching. You know, we're a big modernization through sustainment company as well. And it's those O&M. [inaudible] there that am I my lifetimes. I would put out there that am I my lifetimes.

Speaker Change: in our f cal year secondek

Speaker Change: of July and really talk about how the workforce is changing. You know, it's nothing that's going to happen tomorrow afternoon at 3, but it's going to be something that is starting to show its end.

Speaker Change: And a company like ours, it's very strategically based. We talk a lot about markets we serve, and investing ahead of customer need. We also invest ahead of talent needs as well, right? Because you don't generate revenue with great awards if we don't have talent. Look, we're very focused on

John Mengucci: Look, we're, we're very focused on How do we, as a company? I look at taking people into the company with a skill set that, frankly, across the majority of things that we do within five years, that skill set's not going to be robust enough to do the work that we need. So how do we internally, how do we build a program? It's not just about leadership training and some additional training. It really is about core skills upgrading. You know, we get folks in this company as Zoomers, and 20 years from now, everything that they come to the company with is gonna be completely different. Right?

Unknown Executive: Look, we're, we're very focused on how we do as a company, right? So, you know, the good news is we are a strategic company. Strategy is a place where we come from. And our HR department, you know, got all of us on board saying, here's how we're going to have to hire differently. Here's the kind of skill set programs.

Speaker Change: How do we, as a company, look at taking people into the company with a skill set that frankly across the majority of things that we do within five years, that skill set's going to be not fulsome enough to do the work that we need to do?

Speaker Change: so how do we internally how do we build a program it's not just about leadership training and some additional training it really is about core skills upgrading

Speaker Change: we get we get folks in this company as zomers and twenty years from now everything that they came to the company with is going to be completely different

Unknown Executive: Here are the changes in our internship program that we need to make, to make certain that even while folks get to us as a sophomore in college, you know, frankly, it'll be three years if they're part of our company, and their skill set is going to need to be online. How are we doing? About 50% of our world-class force comes from referrals, and about 25% of all the openings in our company are filled by someone else within the company.

John Mengucci: So, you know, the good news is we are a strategic company. Strategy is a place where we come from. And our HR department, you know, got all of us on board saying, here's how we're going to have to hire differently. Here's the kind of skill set programs.

Speaker Change: rightso good news is we are strategic company

Speaker Change: Strategy is a place where we come from in our HR department.

John Mengucci: Here are the changes in our internship program that we need to make to make certain that even while folks get to us as a sophomore in college, you know, frankly, it'll be three years if they're part of our company, and their skillsets are going to need to be online. How are we doing? About 50% of our world-class force comes from referrals. About 25% of all the openings in our company are filled by someone else within the company.

Speaker Change: You know, got all of us on board saying, here's how we're going to have to hire differently. Here's the kind of skill set programs.

Speaker Change: here's the changes in our internship program to make to make certain that even while folks to us as a stoofp one college frankly it'll be three years it's a part of our company still that's going to going to be on how are we doing about fifty percent of al worldfash force comes from referrals

Speaker Change: About 25% of all the openings in our company are filled by someone else within the company.

Unknown Executive: So I'm doing this today, I want to go do that tomorrow, maybe I need a skill set upgrade, you know, pull in, pull into the ramp and get your skill set training and go back out on the track doing different work for us.

John Mengucci: So I'm doing this today, and I want to go do that tomorrow. Maybe I need a skill set upgrade, you know, pull in, pull into the ramp and get your skill set training, and go back out on the track doing different work for us.

Speaker Change: So I'm doing this today. I want to go do that tomorrow. Maybe I need a skill set upgrade, you know, pull in pull into the

John Mingucci: I would put out there that am[inaudible] my my my my my Bill's, about 25% of all the openings in our company are filled by someone else within the company. So I'm doing this today. I want to go do that tomorrow, read it in a skill set upgrade. You know, pull in, pull into the ramp and get your skill set training and go back out on the track doing different work for us.

Unknown Executive: So look, I'm really happy and really confident. Retention is up, and attrition is down. Again, something else that doesn't happen by accident, great first line leaders, making certain that we're, you know, keeping folks here with us. And frankly, you win 14 billion dollars in awards, or last year, double digit awards on the things that matter in markets that matter that are well funded. If you're a younger employer, new to the workforce, I'm going to pick a company that's software minded because that implies change. And that change implies opportunities. I will, and we're willing to invest in them. Thanks.

John Mengucci: So look, I'm really happy and really confident. Retention is up, and attrition is down. Again, something else that doesn't happen by accident, great first line leaders, making certain that we're, you know, keeping folks here with us. And frankly, you win 14 billion dollars in awards, or last year double digit awards on the things that matter in markets that matter that are well funded. If you're a younger employer, new to the workforce, I'm going to pick a company that's software minded because that implies change. And that change implies opportunities. I'm willing and able to invest in them. Thanks. Yeah, thanks guys. I'll turn it over.

Speaker Change: to the ramp and get your skillset training and go back out on the track doing different work for us. So, look, I'm really happy and really confident.

Speaker Change: Retention is up. Attrition is down.

Speaker Change: Again, something else that doesn't happen by accident, great first line leaders.

Speaker Change: Making certain that we're, you know, keeping folks here with us. And frankly, you win 14 billion of awards or last year double-digit awards.

Speaker Change: On the things that matter, in markets that matter, that are well-funded, if you're a younger employee here, new to the workforce, I'm going to pick a company that's software-minded, because that implies change, and that change implies opportunities.

Speaker Change: I'm willing and we're willing to invest in this.

Speaker Change: no thanks

David Strauss: Your next question comes from the line of David Strauss with Barclays. Your line is open.

Speaker Change: Yeah, thanks guys, I'll turn it over.

Speaker Change: a basation

Speaker Change: Your next question comes from the line of David Strauss with Barclays. Your line is open.

David Strauss: Just on the, you know, the margin profile throughout the year. So, you know, last year without the material purchases, you were around the 10% level in the first half and, you know, 11 plus in the second half. Sounds like you're implying a similar profile this year.

David Strauss: Thanks. Good morning.

David Strauss: haron

Speaker Change: Just on the, you know, the margin profile throughout the year. So, you know, last year without the material purchases, you know, you were around the 10% level in the first half and, you know, 11 plus in the second half. Sounds like you're

Speaker Change: you're implying a similar profile this year what explains that is that vol just volumeers there somesomethingbody elseto explains that first half versus second half difference in margins

Unknown Executive: Yeah, thanks, David, for the question. We have, as you know, developed a pattern of having higher volume and higher margins in the back half of the year than in the first half. And it really relates to customer buying patterns. It's not, you know, it's not a mysterious thing. But we have certain customers and certain, particularly technology solutions that, you know, seem to that fall into those periods in the year. It's just, you know, it's customer buying behavior.

Jeffrey MacLauchlan: Yeah, thanks, David, for the question. We have, as you know, developed a pattern of having higher volume and higher margins in the back half of the year than in the first half. And it really relates to customer buying patterns. It's not, you know, it's not a mysterious thing. But we have certain customers and certain, particularly technology solutions that, you know, seem to that all into those periods in the year. It's just, you know, it's customer buying behavior.

David Strauss: What explains that? Is that just volume? Or is there something else that explains that, you know, first half versus second half difference in margin? Yeah, thanks, David.

David: Yeah, thanks, David, for

Speaker Change: Yeah, thanks, David, for the question. We have over, as you know, we have over the last couple years

Speaker Change: developed a pattern of having

Speaker Change: higher volume and higher margins in the back half of the year

Speaker Change: over the first half. And it really relates to customer buying patterns. It's not a, you know, it's not a mysterious thing. But we have certain customers and certain particularly technology

John Mingucci: So look, I'm really happy and really confident. I got them by accident, great first flying leaders making certain that we're keeping folks here with us. And frankly, you've been 14 billion awards or last year, double digit awards on the things that matter in markets that matter that are well funded. You're a younger employee here, due to the work of the workforce. I'm going to pick a company that's software minded because that that implies change and that change implies offer opportunities. I will, and we're going to invest in them.

John Mingucci: Thanks. Yeah, thanks.

Speaker Change: solutions that you know seem to that that fall into that those periods in the year.

Speaker Change: It's just, you know, it's customer buying behavior.

David Strauss: And on the, you know, to put a fire point on cash flow. So, Jeff, it looks like, you know, maybe you're assuming about $100 million of working capital usage for the year. Is that right? And then I guess a couple and then Section 174.

Unknown Executive: And on the, you know, to put a finer point on cash flow. So, Jeff, it looks like, you know, maybe you're assuming about 100 million dollars of working capital usage for the year. Is that right? And then I guess a couple of things and then section 174. Is this the last year for that impact? And I guess the last question I had was, you know, your book tax rate, which you're implying is a bit higher this year. You know, what's driving that change? Thanks.

Speaker Change: and on the you know to put a firepoint on on cash flow so

Speaker Change: Jeff, it looks like, you know, maybe you're assuming about $100 million of working capital usage for the for the year. Is that right? And then

Jeffrey MacLauchlan: Is this the last year for that impact? And I guess the last question I had was, you know, your book tax rate, you're implying a bit higher this year. You know, what's driving that change? Thanks.

Speaker Change: I guess a couple, and then section 174, is this the last year of that impact, and I guess the last question I had was, you know, your book tax rate, you're implying a bit higher this year, you know, what's driving that change. Thanks.

Unknown Executive: I'll turn it over. Thanks.

David Strauss: Your next question comes from the line of David Strauss with Barclays. Your line is open. Thanks.

Unknown Executive: So the working capital, I'm probably not going to get into the specific amounts, but it's sort of in that order, and it's split across the three things that I've mentioned in my prepared remarks.

David Strauss: So the working capital, I'm probably not going to get into the specific amounts, but it's sort of in that order. And it's split across the three things that I've mentioned in my prepared remarks. Then, let's see, what was the other one?

Speaker Change: Thank you. So the working capital, I'm probably not going to get into the specific amounts, but it's sort of on that order.

David Strauss: Good morning. Just on the, you know, the margin profile throughout the year. So, you know, last year without the material purchases, you know, you were around the time for some level in the first half and, you know, 11 plus in the second half sounds like you're, you're implying a similar profile this year. What, what, what explains that is that volume just volume or is there something else that explains that, you know, first half versus second half difference in margins.

Speaker Change: And it's split across the three things that I've mentioned in my prepared remarks.

Jeffrey MacLauchlan: The tax rate. The tax rate from the midpoint of our guidance range is about 160 basis points higher. It's driven by several things, but the two real drivers in it are a higher blended effective state tax rate, which is just the distribution of the income that we generate by state moving around a little bit to higher tax jurisdictions.

Speaker Change: Let's see, what was the other one? The tax rate. The tax rate from the midpoint of our guidance range is about 160 basis points up.

Speaker Change: It's driven by several things, but the two real drivers in it are a higher blended, effective state tax rate.

David Strauss: Thanks, David, for the question. It, we have over, as you know, we have over the last couple of years developed a pattern of having higher volume and higher margins in the back half of the year over the first half, and it really relates to customer buying patterns. It's not a, you know, it's not a mysterious thing, but we have certain customers and certain, particularly technology solutions that, you know, seem to that all into that those periods in the year.

Speaker Change: which is just the distribution of the income that we generate by state moving around a little bit to higher rate jurisdictions.

David Strauss: And then the second thing is last year's increase in the UK statutory rate we have now for a full year. I think we had it for like seven months last year. So now we have it for a full year. And then Section 174, no, it continues, although it's declining in accordance with the guidance we've given you before, I think about $20 million a year, but there are two more years of that to go.

Speaker Change: And then the second thing is last year's increase in the UK statutory rate we have now for a full year. I think we had it like seven months last year, so now we have it for a full year.

Speaker Change: And then the Section 174, no, it continues, although it's declining, in accordance with the guidance we've given you before, I think about $20 million a year, but there are two more years of that to go.

David Strauss: It's just, you know, it's customer buying behavior. And on the, you know, to put a fire point on cash flow. So Jeff, it looks like, you know, maybe you're assuming about a hundred million dollars of working capital usage for the, for the year is that right. And then I guess a couple, and then section 174, is this the last year of that impact? And I guess the last question I had was, you know, your book tax rate, you're implying a bit higher this year, you know, what's driving that change.

Seth Seifman: Thanks, David. Thank you. Your next question comes from the line of Seth Seifman with JP Morgan. Your line is open.

Seth Seifman: Your next question comes from the line of Seth Seifman with JP Morgan. Your line is open.

Speaker Change: debend

Speaker Change: thanks thank you

Speaker Change: Your next question comes from the line of Seth Seifman with JP Morgan. Your line is open.

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

Speaker Change: the cac had any work directly or like second order related to ukraine that could be at risk if the u s cut up funding and if so would you guys you all todecideze it

John Mengucci: Um, yeah, thanks. We have a non-material amount of work in terms of revenue that we're doing there. I really can't size it beyond that.

Unknown Executive: Um, yeah, thanks. We have a non-material amount of work in terms of revenue that we're doing there. I really can't size it beyond that, and I probably can't say much more than that other than know that you all know the kind of technology that we deliver and what we do, and I'll leave you to your assumptions there, but it's not from a revenue side, Rocco. It's not there. There are other international customers that are looking at what it is we deliver, and in future quarters, we'll be talking about how

David Strauss: Thanks. Thank you. So the working capital probably not going to get into this specific amount, but it's sort of on that order. And it split across the three things that I mentioned in my prepared remarks. Let's see what was the other one, the tax rate on the tax rate from the midpoint of our guidance range is about 160 basis points off. Distributed by several things, but the two wheel drivers in it are a higher blended effective state tax rate which is just the distribution of the income that we generate by state moving around a little bit to higher rate jurisdictions.

John Mengucci: And I probably can't say much more than that, other than know that you all know the kind of technology that we deliver and what we do. And I'll leave you to your assumptions there. But it's not a revenue side, Rocco. It's not there. There are other international customers that are looking at what it is we deliver. And in future quarters, we'll be talking about how we're building.

Unknown Executive: So I think that's probably all I can talk about.

John Mengucci: So I think that's probably all I can talk about. Okay, thank you.

Unknown Executive: Yeah, we've got about 200 programs that have some version of AI in them, as I've mentioned in the past.

John Mengucci: Yeah, we've got about 200 programs that have some form of AI in them, so as I've mentioned in the past.

David Strauss: And then the second thing is last year's increase in the UK statutory rate, we have now for a full year. I think we had it like seven months last year so we now we have it for a full year. And then the Section 174, no, it continues although it's declining in accordance with the guidance we've given you before, I think about 20 million a year, but there are two more years of that to go. Thanks David, thank you.

John Mengucci: Um, look, we're, we are, um... We are on the mission side of many of our customers. Since we're on the mission side, we're on the data side of many of our customers. We're well-versed in everything from visualization, to computer vision, to machine learning, and all the other, you know, elemental pracies around AI. It's, it's...

Unknown Executive: We are on the mission side of many of our customers. Since we're on the mission side, we're on the data side of many of our customers. We're well-versed in everything from visualization to computer vision to machine learning and all the other, you know, elemental P acrimons around AI. Uh, it's, it's, um.

Speaker Change: We are on the mission side of many of our customers.

Speaker Change: Since we're on the mission side more on the data side.

Speaker Change: <unk> of many of our customers, who are well versed everything from visualization to computer vision.

Speaker Change: <unk> machine learning and all the other elemental P ackman surround AI.

Speaker Change: It's it's.

John Mengucci: It's sufficient to say that the fact that we're software based, and on the highly technical side, and we actually deliver things that we like to call AI today versus advise on it. We've been pretty steeped in it. A lot of it is in the intelligence community, so we don't talk about it a lot.

Speaker Change: It's sufficient to say that the fact that we are software based.

Rocco Barbero: Your next question comes from the line of staff, Seatman with JP Morgan, your line is open. Good morning, this is Rocco on for set.

Unknown Executive: And on the highly technical side, and we actually deliver things that we like to call AI today versus advice on it. We've been pretty steeped in it. A lot of it is in the intelligence community, so we don't talk about it a lot.

Speaker Change: And on the highly technical side, and we actually deliver.

Speaker Change: Things that we like to call AI today versus advice on it.

Speaker Change: I've been pretty steeped in it a lot of it is in the intelligence community. So we don't talk about a lot, but you can only imagine given where the world threats are today. The fact that we are present in every combatant command. The fact that we're responsible for protecting troops in defending this nation. This is a company that actually uses and delivers.

John Mingucci: The CACI had any work directly or like second order related to Ukraine that could be at risk if the US cuts off funding. And if so, would you guys be able to size it? Yeah, thanks. We have a non-material amount of work in the terms of revenue that we're doing there. I really can't size up beyond that and I probably can't say much more than that other than know that you all know the kind of technology that we deliver and what will you do and you'll lead you to your assumptions there. But it's not of a revenue side, Rocco, it's not there.

John Mengucci: But you can only imagine given where the world's threats are today, the fact that we are present at every combatant command, the fact that we're responsible for protecting troops and defending this nation. This is a company that actually uses and delivers AI to the folks who are building and looking for mission technology to sort of get an informational advantage. So we've been in AI for a really long time, and we will continue to be in it for an extremely long time because everything we do at the mission level with our software-based technologies has demanded for decades that we understand how to do more with less and how to process more of our data faster. Well, thanks. Thanks, Rocco.

Unknown Executive: But you can only imagine, given where the world's threats are today, the fact that we are present at every combatant command, the fact that we're responsible for protecting troops and defending this nation. This is a company that actually uses and delivers AI to the folks who are building and looking for mission technology to sort of get an informational advantage. So, we've been in AI for a really long time, and we will continue to be in it for an extremely long time because everything we do at the mission level with our software-based technologies has demanded for decades that we understand how to do more with less and how to process more data faster. Well, thanks. Thanks, Rocco.

Speaker Change: Hi.

Speaker Change: To the folks who are building and looking for mission technology to sort of get an informational advantage. So we've been in AI for a really long time.

Speaker Change: We continue to be in its foreign extremely long time, because everything we do with emission level with our software based technologies have demanded for decades that we understand how to do more with less and how to process more data faster.

John Mingucci: There are other international customers that are looking at what it is we deliver and future quarters will be talking about how we're building out what our international strategy is there. But so I think that's probably all I can talk about. Okay, thank you. That's helpful.

Rocco: Thanks Rocco.

Sheila Kahyaoglu: We'll take the final question from Sheila Kahyaoglu. From Jeffreys, your line is open.

Speaker Change: Okay.

Sheila <unk>: We will take the final question from the line of Sheila <unk>.

Speaker Change: From Jefferies. Your line is open.

Unknown Attendee: Thank you guys, it's been a great quarter. John, Jeff, maybe two questions for you guys first on the top line, if that's okay. So, John, on the top line, you talked about the technology ramps as being a reason revenue growth is maybe slower and expertise ramps faster than the book to build might suggest. Why is that? Can you just distinguish that? Is it constrained by the customer or just the timing of that hiring, onboarding, or material receipts?

Sheila Kahyaoglu: Thank you guys, it's been a great quarter. John, Jeff, maybe two questions for you guys first on the top line, if that's okay. So, John, on the top line, you talked about the technology ramps as being a reason revenue growth is maybe slower and expertise ramps faster than the book to build might suggest. Why is that? Can you just distinguish that? Is it constrained by the customer or just the timing of that hiring, onboarding, or material receipts? If you could, talk about that a little bit, please. Yeah, sure.

Sheila: Thank you guys and great quarter.

John Mingucci: And then how is the ACI progressing on integrating AI into the contract award and execution processes? Yeah, we've got about 200 programs that has some version of AI in it. So as I mentioned in past look where we are. We are on the mission side of many of our customers since we're on the mission side we're on the data side of many of our customers or well versed everything from visualization to computer vision to machine learning and all the other.

John Mengucci: If you could, talk about that a little bit, please. Yeah, sure. So let's take

Sheila: Jeff maybe two questions for you guys first on top line if that's okay.

Sheila: So John on top line, you talked about the technology.

Speaker Change: The revenue growth is slower and expertise ramp faster.

Mike Fetman: The book to Bill, Mike and Jeff why is that can you just distinguish that.

Mike Fetman: Concerned by the customer or just timing of hiring onboarding or material.

Mike Fetman: Talk about that a little bit.

John Mengucci: Yeah, sure. So let's take the expertise side first, right? And I'll talk at an uber high level.

John Mengucci: Yeah, sure. So let's take the expertise side first, right? And I'll talk at an uber-high level. You know, when we win a large program that's on the expertise side, But at the end of the day, when we talk about expertise, the customer is procuring talent, or we used to call that labor output. It's also their expectation, right? There are many contracts we signed; it could be an eight-year expertise contract for a billion dollars with a 60 day startup.

John Mengucci: Yeah sure so let's take the extra the expertise side first right and I'll talk a uber.

John Mingucci: You know, elemental p-acraments around AI. It's it's it's sufficient to say that the fact that we're suffer based. And on the highly technical side and we actually deliver things that we like to call AI today versus advice on it. We've been pretty steep in it a lot of it is in the intelligence communities. We don't talk a lot. But you can only imagine, given where the world threats are today, the fact that we are present every combat and command the fact that we're responsible for protecting troops and defending this nation.

Mike Fetman: Our high level.

John Mengucci: You know, when we win a large program that's on the expertise side, It's traditionally work which is out there today that a customer may be adding some additional skill. But at the end of the day, when we talk about expertise, the customer is procuring talent, or we used to call that labor output, um, so you sort of get a leg up with the fact that you're going to look at folks who are currently on that previously held contract so you can immediately move people to start to build on that contract and address that cost. It's also their expectation, right?

Mike Fetman: You know when we win a large program that's on the expertise side.

Speaker Change: It has traditionally worked which is out there today that a customer may be adding some additional scope too but at the end of the day. When we talk about expertise the customer is procuring talent from used to call them labor hours.

Speaker Change: So you sort of get a leg up with the fact that youre going to look at folks who work currently on that previously all contract. So you can immediately move people to start to build to that contract and the trust that customers need. It's also a different expectation. There's many contracts we sign it could be an eight year expert expertise cant.

John Mingucci: This is a company that actually uses and delivers AI to the folks who are building and looking for mission technology to sort of get an information with an antage. So we've been in AI for a really long time. We continue to be in it for an extremely long time because everything we do at the mission level with our software based technologies have demanded for decades that we understand how to do more with less and how to process more of our data fast.

John Mengucci: There are many contracts we have signed; it could be an eight-year expertise contract for a billion dollars with a 60 day startup. So within 60 days, 90% of the job has to be staffed. And that's just the nature of how that works. When we look at a program like, let's use Spectral. You know, that is a design and development program, deep in technology, deep in software creation, first article testing, and then building kits beyond that.

Speaker Change: <unk> four $1 billion with a 60 day startup window. So within 60 days, 90% of job has to be stopped and that's just the nature of how that work works. When we look at a program like let's let's use a spectral.

John Mengucci: That is a design and development program a deep on technology deep on the software creation.

Speaker Change: First article testing and then building kits beyond beyond that just by its nature.

Sheila Kahyaoglu: We'll take the final question from the line of Sheila Kahyaoglu from Jeffrey. Your line is open. Thank you guys and great quarter. Bill might suggest why is that? Can you just distinguish that? Is it constrained by the customer or just timing of that hiring onboarding or material receipts? If you could just talk about that a little bit, please. Yes, sure.

John Mengucci: Just by its nature, you're not looking at labor hour buildup; you're actually looking at outcome and units of outcome. So those programs, even at your major primes, are gonna start off slower. And when you see a major fighter jet program, there are eight to 10 years of design work before you get to the larger revenue bill. So at a high level, that's how we see it. So when we announced more technology when Sheila did the expertise jobs, that should have been a huge clue that, okay, this is a longer duration, it's gonna ramp up more over time, which really gets to some of my introductory remarks that we have a number of programs that are technology wins that are gonna ramp up at the same revenue delta than a single large expertise job. But hopefully that's helpful.

Speaker Change: Looking at Labor hour buildup, you're actually looking at outcome and units are out of outcome. So those those programs even at your major primes are going to start off slower and you know there.

Bert Subin: You see a major fighter jet program, there's eight to 10 years of design work.

Speaker Change: Before you get to the larger.

Bill: Revenue Bill so at a high level, that's how we see it so when we announced more technology, when Sheila and expertise jobs that should be a huge flu that okay. This is longer duration is going to ramp up more over time, which really gets to some of my introductory remarks that we have a number of programs.

John Mingucci: So let's take the expertise side first. And I'll talk at an Uber high level. You know, when we win a large program that's on the expertise side, it's traditionally a work which is out there today that a customer may be adding some additional skill to. But the end of the day when we talk about expertise, the customer is procuring talent from you to call that labor hours. So you sort of get a lag off with the fact that you're going to look at folks who were currently on that previously held contract.

John Mingucci: So you can immediately move people to start to build that contract and trust that customer's needs. It's also their expectation, right? There's been a contract we signed. They could be an eight year expertise contract for a billion dollars with a 60 day startup window. So within 60 days, 90% of the job has to be staffed. And that's just the nature of how that work works.

John Mengucci: And our technology wins that are going to ramp up at the same revenue Delta.

John Mengucci: At a single large expertise chopped it that's all.

John Mengucci: Hopefully that's helpful.

Sheila Kahyaoglu: No, that really is. And then maybe just kind of adjacent to that and a bigger picture question on profitability for the industry. Obviously, you guys are demonstrating growth. The customer's changing, you know, the example of the Army buying software, acceptance of what they buy. Why isn't profitability for the industry better given the software offering? How come the, you know, how could you change how the customer buys from you? Yeah, well.

Speaker Change: That really is and then maybe just.

Speaker Change: Kind of plays into that in a bigger picture question on profitability for the industry. Obviously, you guys are demonstrating growth.

Speaker Change: Changing the example, with the army buying software acceptance of what they buy why isn't profitability for the industry better given the software offering how come that now how could you change how the customer buys from yeah.

John Mengucci: Yeah, well, look, I think we've done a good job of getting the customer to buy different, different Um, let me, let me, let me split it. I hear that may help. Um, when we talk about software-based, there's still a hardware element to it. But it's software-based. So when customers buy technology from us, they're looking for the ability to say, okay, so I bought the phone, but I wanted to put different apps on it for a really long time. I'll use a commercial reference there. When we hear about the government trying to buy software, today they buy licensed products; think commercial shrink-wrap software. It is a licensed model.

Speaker Change: Yeah, well look I think we've done a material job of getting the customer to buy different different separately.

Speaker Change: Let me let me, let me split I hear that May help.

Speaker Change: When we talk about software based Theres still a hardware element to it but it's software base. So when customers buy technology from us Theyre looking at the ability to say, okay. So I bought I bought the phone, but I wanted to put different apps on it for a really long time I'll use a marshall referenced there.

John Mingucci: When we look at a program like let's use Spectral. You know, that is a design and development program deep on technology, deep on software creation, first article testing and then building kits beyond beyond that. Just by nature, you're not looking at labor on our build up direction, looking at outcome and units of outcome. So those programs, even if your major crimes are going to start up slower, and when you see a major fighter jet program, there's eight to ten years of design work before you get to the larger revenue bill.

Speaker Change: When we hear about the government trying to buy software today. They buy licensed products think commercial shrink wrap software is a licensed model.

John Mengucci: We frankly don't believe in a licensed model because that puts our customer in a really rough spot. It may juice margins for a couple of quarters, but we're serving a mission that is, "How do I buy something that's going to be enduring that we continue to modify?" Our software delivery and the fact that we've left ahead of customer need and we deliver on a purchase order, those, for us, are the three elements that allow us to drive margin.

Speaker Change: We frankly don't believe in a license model because that puts our customer in a really rough spot and yeah. It make juice margins for you know a couple of quarters, but we're serving a mission that is how do I buy something that's gonna be enduring that we continue to continue to moderate to modify so our software delivery and the fact that we've got that.

John Mingucci: So at a high level, that's how we see it. So when we announce more technology when Sheila and the next for these jobs, that should be a huge clue that, okay, this is longer durations going to ramp up. You know, more over time, which really gets to some of my introductory remarks that we have a number of programs that are technology wins that are going to ramp up at the same revenue delta that a single large expertise job is. But so hopefully that's helpful. No, that that really is.

John Mengucci: The customer need and we deliver on a purchase order those for US are the three elements that allow us to drive margin.

Speaker Change: Look we've moved from eight ish percent margin to the high tens, where we're still consistently focused on how do we drive both top and Bottomline growth clearly free free cash flow per share benefits from either an door both of those.

John Mengucci: Look, we've moved from 80% margin to the high tens. We're still consistently focused on how we drive both top and bottom line growth, clearly free cash flow per share, benefits from either or both of those. That's what we're looking toward. Look, I have to give our customers credit that they are working through how they address today's threats more rapidly. Frankly, that gets you to an agile software model. The fact that there are very few people who do it well, differentiation drives margin. It makes the ask seem heavier.

John Mingucci: And then maybe just kind of adjacent to that and a bigger picture question on profitability for the industry, obviously you guys are demonstrating growth. The customers changing, you know, the example with the army buying software, acceptance of what they buy. Why is the profitability for the industry that are given the software offering? How come the, you know, how could you change what how the customer buys from you? Yeah, well, I think we've done a material job of getting the customer to buy different different differently.

John Mengucci: And that's what we're looking at looking toward so look I have to give our customers chops that they are working through how do they address today's threats more rapidly and frankly that that get yourself to a agile software model and the fact that there's very few people, who do it well right differentiation.

John Mengucci: Then some of the terms that we're willing to accept. The last lever is, are we doing some of our software in a perfect price manner? The answer is yes. We understand how to do it well. We're able to sell it in a slightly different way. I like how this company is set up for us to continue to drive bottom-line growth.

Speaker Change: Drives margin right. It makes the AST heavier.

Speaker Change: And then some of the terms that we're willing to accept in the last lever is already doing some of our software in a for a perfect place matter. The answer is yes, we understand how to do it well.

John Mingucci: Let me, let me, let me split I hear that may help. When we talk about software based, there's still a hardware element to it, what it's software based. So when customers buy technology from us, they're looking at the ability to say, okay, so I bought. I bought the phone, but I want to put different apps on it for a really long time. I'll use a virtual reference there. When we hear about the government having trying to buy software today, they buy licensed products, they commercial shrink wrap software.

Speaker Change: We're able to sell it in a slightly different different matter. So I like how this company is set up for.

Speaker Change: For us to continue to drive bottom line online growth.

Louis Dipalma: Thanks, Sheila. One moment. Thank you. One more question came in from the line of Louis DiPalma with William Blair. Please ask your question.

Sheila: Thanks Sheila.

Unknown Attendee: Thank you. One more question came in from the line of Louis DiPalma with William Blair. Please ask your question.

Speaker Change: Thank you one more question came in from the line of Louis Dipalma with William Blair. Please ask your question.

Louis Dipalma: John, Jeff, and George, good morning. Um, and this is rehashing several of the earlier questions, but the awards in the book to bill for this quarter were superlative, and 70% of the awards were for new work. Are you assuming a slow ramp for the new work? In terms of it taking several years to reach peak run rate, and also for the first year of the new work, is the margin initially dilutive? And so should we expect for these sets of contracts that the revenue run rate will increase in year two, and so will the margin?

Louis Dipalma: John, Jeff, and George, good morning. Good morning. Um, and this is rehashing several of the earlier questions, but the awards in the book to bill this quarter were superlative, and 70% of the awards were for new work. Are you assuming a slow ramp for new work?

Speaker Change: John Jacqueline George Good morning.

Louis Dipalma: Thanks.

Speaker Change: Hum and this is rehashing several of the earlier questions, but on the <unk>.

John Mingucci: It is a licensed model. I we frankly don't believe in a licensed model because that puts our customer in a really rough spot. And yeah, it made juice margins for, you know, a couple of quarters, but we're serving a mission that is how do I buy something that's going to be enduring that we continue to modify. So our software delivery and the fact that we've had a customer need, we deliver on a purchase order, those for also the three elements that allow us to drive margin.

Speaker Change: When the bump per BOE. This quarter were on Harlan is M, 70% of the awards were for <unk>.

Speaker Change: New work are you assuming.

Speaker Change: Slow ramp.

Speaker Change: The new work.

Speaker Change: Terms of.

Speaker Change: Taking several years to reach peak run rate also for the first year of the new work.

John Mingucci: Look, we move from, you know, 80% margin to the high tens where we're still the system we focused on, how do we drive both top and bottom line growth, clearly free cash flow per share benefits from either and or, you know, both of those. And that's what we're looking looking towards. So look, I have to give our customers chops that they are working through. How do they address today's threats more rapidly and frankly, that that gets yourself to a actual software model.

Speaker Change: Is the margin initially dilutive and so shall we expect for these sorts of contracts Paul.

Speaker Change: On a run rate will increase in year, two so well on margin.

John Mengucci: Yeah, Louie, so let's see, on the 70% new work, you know, how does that ramp up? As I mentioned earlier, the expertise work is going to ramp up quicker. There's a higher percentage of technology in our fourth quarter awards and our full year awards, as you mentioned. So that is going to ramp up slower. Based on the contract type really tells you how the bottom line ramps, you know, how profitability and EBIT are generated on the technology programs that have firm fixed price elements to them will be in an EAC model.

Speaker Change: Yes, Louie so let's see on the.

Speaker Change: On the 70% new work.

Speaker Change: How does how does that ramp.

Speaker Change: I mentioned earlier the expertise work is going to ramp up quicker there was a higher percentage of technology and our.

John Mingucci: And the fact that there's very few people who do it well, like differentiation, drives margin, right, it makes the ass heavier. And then some of the terms that we're willing to accept and that the last lever is, are we doing some of our software in a perfect price manner? The answer is yes. You know, we understand how to do it well. We're able to sell it in a slightly different different manner. So I like how this company has set up. First to continue to drive bottom line. Thank you.

Speaker Change: In our fourth quarter awards in our full year awards as you mentioned, so that is going to ramp up slower.

Speaker Change: Based on the contract type really tells you how the how the.

Unknown Executive: of the bottom line ramps, you know, how profitability and EBIT are generated on the technology programs that have firm fixed price elements to them will be in an EAC model. And yes, we will hold back some of those profit dollars based on risk. And it's a well-described process that's got backup as to how much risk we still have to burn off. But on the other technology work that we have, you know, I'll let Jeff make any comments, profits are going to follow revenue because, because it is, right? Yeah, I would also start by noting that

Speaker Change: On the bottom line ramps you know how how.

Jeff: Crop profitability and EBIT is generated.

Unknown Executive: On the technology programs that have firm fixed price elements to it will be in an E. C model and yes, we will hold back some of that.

John Mengucci: And yes, we will hold back some of that profit dollars based on risk. And it's a well, you know, a well-defined process that's got back up as to how much risk we still have to burn off. But on the other technology work that we have, you know, I'll let Jeff make make any comments, profits are going to follow, you know, revenue, because it because it is it is a cost plus ratio. Yeah, I

Jeff: $8 based on risks and so well you know a well defined process that that's got back up as to how much risk we still have to burn off.

Louis Dipalma: One more question came in from the line of Louis DiPalma with William Blair. Please ask your question. John, And 70% of the awards were for new work. Are you assuming a slow ramp for the new work in terms of it taking in several years to reach peak run rate. And also for the first year of the new work is the margin initially dilutive. And so should we expect for these sets of contracts that the revenue run rate will increase in year two and so will the margin.

Unknown Executive: But on the other technology work that we have you know I'll, let Jeff make make make any other comments profit is going to follow <unk>.

Jeff: Revenue because it would because it is a it is cost plus pressure.

Jeffrey MacLauchlan: Right. Yeah, I would also start by noting that it was 60% new, not seven. And I would just echo John's margin comments. I mean, the ramp, it's as you would expect. We are slow to, slower to, protect, in our early booking decisions, some, you know, some development work and the cost-type work, generally, you know, the margin is what it is right out of the gate.

Unknown Executive: I would also, Luis, start by noting that it was 60% new, not 7. You know, we protect, protect in our early booking decisions some, you know, some development work and the cost-type work, generally, you know, the margin is what it is right out of the gate.

Jeff: Yeah I would also do we start by noting that was 60% to 70.

Jeff: And I would just echo John's margin comments I mean, the ramp it's as you would expect we are slow to slower too.

Jeff: You know, we protect protecting our early booking decisions some.

Jeff: Development work and the cost type work generally.

Jeff: Margin is what it is right now.

Louis Dipalma: Great. That's it for me. Thanks, everyone.

Unknown Executive: Great.

Unknown Executive: Hum.

Operator: Thank you.

Luis: Excellent. Thank you.

John Mengucci: That concludes our Q&A session. I will now turn the conference back over to John Mengucci for the closing remarks.

Unknown Executive: Sure.

Speaker Change: Thank you that concludes our Q&A session I will now turn the conference back over to John Man Gucci for the closing remarks.

Louis Dipalma: Yeah, Louis, so let's see on the on the 30% new work, you know, how does that ramp, you know, as I mentioned earlier, the expertise work is going to ramp up quicker. There's a higher percentage of technology in our in our fourth quarter awards and our full year awards, as you mentioned. So that is going to ramp up slower based on the contract type really tells you how the how the bottom line ramps, you know, how, how profitability and you've been generated on the technology programs that have for fixed price elements to it will be in an EAC model.

George Price: Thanks, Rochelle, and thank you everyone for your help on today's call. We'd really like to thank everyone who dialed in or listened to the webcast for their participation. We know that many of you are going to have follow-up questions, so Jeff MacLauchlan, George Price, and Jim Sullivan are available after today's call. Please stay healthy, and all the best to you and your families. I pray this concludes our call. Thank you all, and have a fantastic day.

Operator: Thanks, Rochelle, and thank you everyone for your help on today's call. We'd really like to thank everyone who dialed in or listened to the webcast for their participation. We know that many of you are going to have follow-up questions, so Jeff MacLauchlan, George Price, and Jim Sullivan are available after today's call. Please stay healthy, and all the best to you and your families. I pray this concludes our call. Thank you all and have a fantastic day.

Unknown Executive: Thanks, Michelle and thank you everyone for your help on today's call.

George Price: We'd really like to thank everyone, who dialed in or listened to the webcast for their participation.

Speaker Change: Many of you are going to have follow up questions. So Chuck Mclaughlin George price and Jim Sullivan are available after today's call. Please stay healthy and all my best to you and your families. Operator. This concludes our call. Thank you all and have a fantastic day.

Operator: Ladies and gentlemen, that concludes the base call. Thank you all for joining us. You may now disconnect.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Operator:

Louis Dipalma: And yes, we will hold back some of that profit dollars based on risk. And it's a well, you know, a well defined process. That's got back up is due on which we still have to burn off. But on the other technology work that we have, you know, that just make me think in your comments, profits going to follow, you know, revenue because it's because it is and it is cost plus. Right.

Operator: Yeah.

Louis Dipalma: Yeah, I would also, we start by noting that was 60% new on 70. And I would just echo John's margin comments. I mean, the ramp hits as you would expect. We are slower to slower to, you know, we protect protecting our early booking decisions, some, you know, some development work and the cost type work generally, you know, the margin is what it is right out of the gate. Right.

Operator: Okay.

Operator: Yeah.

Unknown Executive: That's it for me. Thank you. That concludes your Q&A. Thank you.

Unknown Executive: That concludes our Q&A session.

John Mingucci: I will now turn the conference back over to John Mingucci for the closing remarks. Thanks, Michelle. And thank you everyone for your help on today's call. We really like to thank everyone who dialed in or listened to the webcast for their participation. We know that many are going to have follow questions or jump McLaughlin George Price and Jim Sullivan are available after today's call. Please stay healthy and on my best to you and your families.

Unknown Executive: I pray it just concludes our call. Thank you all and have a fantastic day.

Unknown Executive: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect

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