Q1 2025 CACI International Inc Earnings Call

Operator: Ladies and gentlemen, thanks for standing by and welcome to the CA CI International Fiscal 2025 first quarter conference call. Today's call is being recorded. At this time, all lines are in a listen-only mode.

Operator: Ladies and gentlemen, thanks for standing by and welcome to the CACI International Fiscal 2025 First Quarter Conference Call. Today's call is being recorded. At this time, all lines are in a listen-only mode.

Ladies and gentlemen, thank you for standing by and welcome to the CACI International fiscal 2025 first quarter conference call.

Today's call is being recorded.

This time all lines are in a listen only mode later, we will.

Operator: 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: Later, we will announce the opportunity for questions and instructions will be given at that If you should need any assistance during this call, please press star zero and someone will help.

We'll 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'd like to turn the conference call over to George Price, Senior Vice President, Investor Relations. Please go ahead.

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

Speaker Change: At this time I'd like to turn the conference call over to George Price Senior Vice President Investor Relations. Please go ahead Sir.

Operator: Thanks, Von D.

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

Speaker Change: Thanks, Ron and good morning, everyone I'm, George price Senior Vice President of Investor Relations for CACI International. Thank you for joining US. This morning, we are providing presentation slides so let's move to slide two.

George Price: Good morning, everyone. I'm George Price, Senior Vice President of Investor Relations for CACI International. Thank you for joining us this morning. We are providing presentation slides, so let's move to slide two.

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 anticipated. Those factors are listed at the bottom of last night's press release and are described in the company's SEC filing. Our Safe Harbor Statement is included on this exhibit and should be incorporated as part of any transcript of this call. I would also like to point out that our presentation will include discussion of non-GAAP financial measures.

George Price: There will be statements in this call that do not address historical fact in 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. Those factors are listed at the bottom of last night's press release and are described in the company's SEC filings. Our safe harbor statement is included on this exhibit and should be incorporated as any part of any transcript of this call.

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: These factors are listed at the bottom of last Night's press release and are described in the company's SEC filings. Our Safe Harbor statement is included on this exhibit and should be incorporated as any part.

Speaker Change: As part of any transcript of this call.

George Price: I would also like to point out that our presentation will include discussion of non-GAAP financial measures. These should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. Let's turn to slide three, please.

Speaker Change: 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, let's.

George Price: These should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.

Operator: Let's turn to slide 3.

Speaker Change: Let's turn to slide three please.

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

John Mengucci: To open our discussion this morning, here's John Munguchi, president and chief executive officer of CACI International. John. Thanks, George, and good morning, everyone. Thank you for your 25 results, as well as our updated fiscal 25 guidance. With me this morning is Jeff McLaughlin, our Chief Financial Officer.

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

John Mengucci: Thanks, George, and good morning, everyone. Thank you for joining us to discuss our first quarter fiscal year 25 results, as well as our updated fiscal 25 guidance. With me this morning is Jeff McLaughlin, our Chief Financial Officer. Let's go to slide four, please. Thank you.

John: Thanks, George and good morning, everyone.

John: Thank you for joining us to discuss our first quarter of fiscal year 'twenty five results as well as our updated fiscal 'twenty five guidance with me. This morning is Chuck Mclaughlin, our Chief Financial Officer.

John Mengucci: Let's go to slide four, please. Our first quarter results represent a great start to Fiscal 25. We delivered revenue growth of 11%, EBITDA margin of 10.5%, and solid free cash flow. In addition, we won over $3.3 billion of awards, which represents a 1.6 times book-to-bill for the quarter, and 1.8 times on a trailing 12-month basis. First quarter awards were a strong follow-up to our record Q4, and nearly 75% of our awards this quarter were for new work to CACI. During the quarter, we also executed purchase agreements for two strategic acquisitions, Azure Summit Technology and Applied Insight.

John: Let's go to slide four please.

John Mengucci: Our first quarter results represent a great start to Fiscal 25. We delivered revenue growth of 11%, EBITDA margin of 10.5%, and solid free cash flow. In addition, we won over $3.3 billion of awards, which represents a 1.6 times book-to-bill for the quarter, and 1.8 times on a trailing 12-months basis. First quarter awards were a strong follow-up to a record 2-4 and nearly 75% of our awards this quarter were for new work to CACI.

John: Our first quarter results represent a great start to fiscal 'twenty five.

John: We delivered revenue growth of 11% EBITDA margin of 10, 5% and solid free cash flow in.

John: In addition, we went over three 3 billion of awards, which represents a one six times book to Bill for the quarter at one eight times on a trailing 12 months basis.

John: First quarter awards were a strong follow up to a record Q4 and nearly 75% of our awards. This quarter were for new work to CACI.

John Mengucci: During the quarter, we also executed purchase agreements for two strategic acquisitions, Azure Summit Technology and Applied Insights. Azure Summit remains on track to close during our second quarter, while Applied Insight closed earlier this month. Both our strong first quarter organic performance and the addition of Applied Insight enables us to raise our FY25 guidance, and Jeff will provide the financial details shortly.

John: During the quarter, we also executed purchase agreements for two strategic acquisitions as there are some technology and applied insight.

John Mengucci: Azure Summit remains on track to close during our second quarter, while Applied Insight closed earlier this month.

John: Summit remains on track to close during our second quarter, while applied insight closed earlier this month.

John Mengucci: Both our strong first quarter organic performance and the addition of applied insight enable us to raise our Applied 25 guidance, and Jeff will provide the financial details shortly. CETI continues to be well positioned to drive long-term growth and free cash flow for share and shareholder value, thanks to our exceptional business development function, our strong execution, our strategy of investing ahead of need, and our flexible and opportunistic capital employment.

John: Both our strong first quarter organic performance.

John: And the addition of applied insight enables us to raise our FY 'twenty five guidance and Jeff will provide the financial details shortly.

John Mengucci: CACI continues to be well positioned to drive long-term growth and free cash flow per share and shareholder value thanks to our exceptional business development function, our strong execution, our strategy of investing ahead of need, and our flexible and opportunistic capital deployment. Slide 5, please. Our $3.3 billion of awards represents another strong quarter of business development performance. Let me briefly highlight a couple of the wins this quarter. We were awarded two separate contracts with the U.S. Navy. to provide engineering expertise and technology that focus on accelerating the implementation of new capabilities to the warfighter. First, a five-year task order valued at up to $805 million with Naval X, the innovation arm of the Navy and U.S.

John: CACI continues to be well positioned to drive long term growth and free cash flow per share and shareholder value. Thanks to our exceptional business development function, our strong execution. Our strategy of investing ahead of need and are flexible and opportunistic capital deployment.

John Mengucci: Department. Slide five, please. Our $3.3 billion of awards represents another strong quarter of business development performance. Let me briefly highlight a couple of the wins this quarter. We were awarded two separate contracts with the U.S. Navy to provide engineering expertise and technology that focused on accelerating the implementation of new capabilities to the war fighter. First, the five-year task order valued at up to $805 million with the Naval Acts, the innovation arm of the Navy and U.S. Marine Corps to support the development and deployment of new technologies in areas such as artificial intelligence, command and control, and cyber across their platforms and sensors.

John: Slide five please.

John: Our $3 3 billion of awards represents another strong quarter of business development performance. Let me briefly highlight a couple of the wins this quarter.

John: We were awarded two separate contracts with the U S. Navy to provide engineering expertise and technology and focus on accelerating the implementation of new capabilities to the Warfighter.

John: First the five year task order valued at up to $805 million with naval ex innovation arm of the Navy and U S. Marine Corps. This.

John Mengucci: Marine Corps to support the development and deployment of new technologies in areas such as artificial intelligence, command and control, and cyber across their platforms in the sense Second, a five-year task order, valued at up to $314 million with a Naval Undersea Warfare Center. Support Fleet Readiness, Accelerate Implementation of New Technology, and Enhance Cyber Resiliency for Undersea Workers. Flight six, please.

John: Support the development and deployment of new technologies in areas, such as artificial intelligence command and control and cyber across their platforms and sensors.

John Mengucci: Second, a five-year task order valued at up to $314 million with the Naval Undersea Warfare Center to support fleet readiness, accelerate implementation of new technology, and enhance several resiliencies for undersea warfare systems. Slide six, please. Our strong track record of awards is driven by our strategy to address critical and enduring national security priorities, invest ahead of need in differentiated capabilities, bid less to win more, and focus on larger, longer duration programs. Equally important is that the long-term success of our business is superior execution after those contracts from one. Strong execution, those at track record of past performance, which together with the other elements of our strategy creates sustainable differentiation and enduring competitive advantage.

Second a five year task floater valued at up to $314 million with enable undersea warfare Center.

John: To support fleet readiness accelerated implementation of new technology, and an enhanced cyber resiliency for undersea warfare systems.

John: Slide six please.

John Mengucci: Our strong track record of awards is driven by our strategy to address critical and enduring national security priorities. Invest Ahead of Need and Differentiated Capabilities. bid less and win more and focus on larger, longer duration programs. Equally important to the long-term success of our business is superior execution after those contracts are won. Strong Execution, those are track record of past performance. which together with the other elements of our strategy creates sustainable differentiation and enduring competitive advantage.

John: Our strong track record of awards is driven by our strategy to address critical and enduring national security priorities.

John: Invest ahead of need and differentiated capabilities bid.

John: Bid less and win more and focus on larger longer duration programs.

John: But equally important to the long term success of our business is superior execution after those contracts for one.

John: Strong execution, those a track record of past performance.

John: Which together with the other elements of our strategy for a sustainable differentiation and enduring competitive advantage.

John Mengucci: Let me share a few examples of just how CACI is consistently executing that scale on our large programs. First, the Army's Integrated Personnel and Pay System, which is referred to as IFS Army, is the largest and most complex PeopleSoft implementation in history. Since going live, the system has had over 1 million distinct users and supports more than 140,000 users per day. IFS Army, for the first time, provides online integrated HR capabilities across the entire Army and is recognized as the model agile program within the service. Next, our enterprise IT as a service program in the Air Force, known as ITAS, continues to scale.

John Mengucci: Let me share a few examples of just how CACI is consistently executing at scale on our large program. First, the Army's Integrated Personnel and Pay System, which is referred to as IPS Army, is the largest and most complex PeopleSoft implementation in history. Since going live, the system has had over 1 million distinct users and supports more than 140,000 users per day. Its Army, for the first time, provides online integrated HR capabilities across the entire Army and is recognized as the model Agile program within the service. Next, our Enterprise IT-as-a-Service program with the Air Force, known as ITAS, continues to scale.

John: Let me share a few examples of just how CACI is consistently executing at scale on our large programs.

John: First the Army's integrated personnel and pay system, which is referred to as its army as the largest and most complex peoplesoft implementation in history.

John: Since going live the system has had over $1 million distinct users and supports more than 140000 users per day.

John: If the army for the first time provides online integrated HR capabilities across the entire army and is recognized as the model agile program within the service.

John: Next our enterprise Ikea as a service program with the Air Force known as <unk> continues to scale, our new it service management system has been seamlessly deployed to replace their old system and we are now supporting over 400000 users exceeding the contract milestone by nearly 60% and tracking.

John Mengucci: Our new IT Service Management System has been seamlessly deployed to replace their old system. And we are now supporting over 400,000 users exceeding the contract milestone by nearly 60% and tracking to over 600,000 users by the end of this calendar year. And most importantly, customer feedback has been extremely positive on the value, the speed, and the responsiveness that we are delivering. In addition, we've met all milestones on our recent Network Modernization Awards, including DIA ECS-3, Army SIPRMOD, and Army GENMOD. CACI is designing and deploying faster, more secure, software-defined networks that not only enhance efficiency and reduce cyber vulnerabilities, but are also critical enablers of customer priorities like JET-C2 and AI.

John Mengucci: Our new IT service management system has been seamlessly deployed to replace their old system, and we are now supporting over 400,000 users, exceeding the contract milestone by nearly 60% and tracking to over 600,000 users by the end of this calendar year. And most importantly, customer feedback has been extremely positive on the value, the speed, and the responsiveness that we are delivering. In addition, we've met all milestones on our recent network modernization awards, including DIA, ECS-3, Army Supermod, and Army Genmod. CACI is designing the deploying faster and more secure software-defined networks that not only enhance efficiency and reduce cyber vulnerabilities, but are also critical on ableers of customer priorities like JADC2 and AI.

John: <unk> to over 600000 users by the end of this calendar year.

John: And most importantly customer feedback has been extremely positive on the value the speed and responsiveness that we are delivering.

John: In addition, we've met all milestones on our recent network modernization awards, including DAA ECS III are we separate mud and army Genmab.

John: <unk> is designing and deploying faster more secure software defined networks that not only enhance efficiency and reduce cyber vulnerabilities are also critical enablers of customer priorities like chassis to NII.

John Mengucci: And finally, we recently began ramping up and executing on our NASA NCAPS contract. We just work underway. CCI is now executing the three largest Agile software development programs in the U.S. Cover.

John Mengucci: And finally, we recently began ramping up and executing on our NASA NCAPS contract. With this work underway, CACI is now executing the three largest agile software development programs in the U.S. government.

John: And finally, we recently began ramping up in executing on our NASA <unk> contract.

John: With this work underway CCI is now executing the three largest agile software development programs in the U S government.

John Mengucci: We continue to see a healthy pipeline of additional opportunities as the government increasingly adopts Agile methodology. Slide seven, please. I'm also pleased with the increasing demand we're seeing for our software-defined RF technology.

John: We continue to see a healthy pipeline of additional opportunities as the government increasingly adopt agile methodologies.

John: Slide seven please.

John: I'm also pleased with the increasing demand we're seeing for our software defined RF technology.

John Mengucci: CACI has the right capabilities to meet our customers' critical needs in the current geopolitical environment today because we began to invest ahead of need over a decade ago. First, our spectral program for the Navy has successfully completed the design phase and has shifted to development and integration. This is a major milestone on a program critical to our country's national security strategy. The Navy's goal is to bring enhanced capabilities to the fleet faster, and CACI is making that possible. Next, on our TLS ManPAC program for the Army, we will begin deliveries against a previously announced $100 million IDIQ this quarter.

John: <unk> has the right capabilities to meet our customers critical needs in the current geopolitical environment today, because we began to invest ahead of need over a decade ago.

John: First our spectral program for the Navy to successfully completed the design phase and has shifted to development and integration.

John: This is a major milestone on our program critical to our country's national security strategy.

John: The Navy's goal is to bring enhanced capabilities to the fleet faster and CCI is making that possible.

John: Next on our Tos Manpack program for the Army, we will begin deliveries against our previously announced $100 million IV IQ this quarter.

John Mengucci: As a reminder, the TLS MANPAD system allows disrounded soldiers to conduct signals detection, direction finding, and electronic attack while on the move. CACI's technology enables the Army to dominate the electromagnetic spectrum, an increasingly critical domain on today's battlefield, and one where the U.S. is still in the early stages of modernization and investment. Our technology can also address counter-UAS threats, a capability that was not previously available at the individual soldier level. We expect additional orders in FY25 as these critical capabilities are in high demand by our customers.

John: As a reminder, the <unk> manpack system allows dismounted soldiers to conduct signals detection direction, finding and electronic attack while on the move.

John: <unk> technology enables the army to dominate the electromagnetic spectrum and increasingly critical domain on today's battlefield, and one where the U S is still in the early stages of modernization and investment our technology can also addressed counter UAS threats a capability that was not previously available at the individual soldier.

John: Level.

John: We expect additional orders in FY 'twenty five.

John: As these critical capabilities are in high demand by our customers.

John Mengucci: Through our strategy of focusing on differentiated software-defined technology, we are delivering speed and agility to our customers to address their most critical missions, and increasingly setting CACI apart from a wide range of competitors. Signing please.

Through our strategy of focusing on differentiated software defined technology, we are delivering speed and agility to our customers to address their most critical missions and increasingly setting CCI apart from a wide range of competitors.

John: Slide eight please.

John Mengucci: We continue to execute our flexible and opportunistic capital deployment strategy, where we evaluate M&A, sure repurchases, debt repayment, and other actions based on the dynamics we see at the time. Our M&A program focuses on filling gaps in our capabilities, our customer presence, and past performance. And on this front, we recently announced two fantastic acquisitions. First, in September, we announced a definitive agreement to purchase Azure Summit. Azure Summit is a provider of innovative, high-performance RF technology and engineering focused on the electromagnetic spectrum. Strategically, they add established and complementary technology and expand our customer presence. Financially, Azure Summit will be accretive to CACI's EBITDA margin, adjusted EPS, and free cash flow per share in the first year.

John: We continue to execute our flexible and opportunistic capital deployment strategy.

John: We evaluate M&A share repurchases debt repayment and other actions based on the dynamics, we see at the time.

John: Our M&A program focuses on filling gaps in our capabilities, our customer presence and past performance and on this front, we recently announced two fantastic acquisitions.

John: First in September we announced a definitive agreement to purchase Azure summit.

<unk> is a provider of innovative high performance RF technology and engineering focused on the electromagnetic spectrum.

John: <unk>, they have established and complementary technology and expand our customer presence.

John: Financially Azure summit will be accretive to CCI EBITA margin adjusted EPS and free cash flow per share in the first year.

John Mengucci: and they have strong cultural alignment with CACI and bring an exceptionally talented workforce.

John: And they have strong cultural alignment with CCI and bring an exceptionally talented workforce.

John Mengucci: In addition, and earlier this month, we completed the acquisition of Applied Insights. a company that fills gaps by enhancing our capabilities and customer presence around cloud migration and AI, particularly in the intelligence community. Applied Insight utilizes repeatable tools and technology that enable faster, more efficient cloud migration, particularly within classified cloud environments. They also have several existing contracts with intelligence community customers to provide AI and machine learning technology development. And financially, they are similarly accretive to CACI in the first year, like Azure Summit.

John: In addition, and earlier this month, we completed the acquisition of applied insight.

John: A company that fills gaps by enhancing our capabilities and customer presence around cloud migration and AI, particularly in the intelligence community.

John: Applied insight utilizes repeatable tools and technology that enable faster more efficient cloud migration, particularly within classified cloud environments.

John: They also have several existing contracts with intelligence community customers to provide AI and machine learning technology development.

John: And financially they are similarly accretive to CACI and the first year like.

John: Cash or summit.

John Mengucci: Slide 9. We continue to monitor the government fiscal year 25 budget process closely. As of most years... Government Fiscal Year 25 began under a continuing resolution, which lasts through December 20. be prepared for a number of scenarios, most of which we believe are addressed within our guidance. We typically do not see a material impact from CRs, though they can sometimes influence the quarter-to-quarter timing of shorter cycle revenue like our software-defined technology We continue to see customer demand being driven by geopolitical dynamics, the elevated global threat environment, and the pacing capabilities of our adversaries. National Security remains bipartisan, and budgets are healthy with an upward bias.

John: Slide nine please.

John: We continue to monitor the government fiscal year 'twenty five bunch of process closely.

John: As in most years.

John: Government fiscal year 'twenty five began under a continuing resolution, which last year December 20th.

John: We prepare them for a number of scenarios most of which we believe are addressed within our guidance range.

John: We typically do not see a material impact from Crs. So they can sometimes influenced quarter to quarter timing of shorter cycle revenue like our software defined technology deliveries.

John: We continue to see customer demand being driven by geopolitical dynamics, the elevated global threat environment and the pacing capabilities of our adversaries.

John: National Security remains bipartisan.

John: And budgets are healthy with an upward bias.

Jeff MacLauchlan: CACI is well positioned in areas of enduring demand with deep, resilient funding streams. With that, I'll turn the call over to Jeff. Thank you, John.

<unk> is well positioned in areas of enduring demand with deep resilient funding streams with that I'll turn the call over to Jeff.

Jeff: Thank you John Good morning, everyone. Please turn to slide 10.

Jeff MacLauchlan: Good morning, everyone. Please turn to slide 10. In the first quarter, we generated revenue of nearly $2.1 billion, representing 11.2% growth, of which 9.9% was organic. The balance was generated by the three acquisitions that we made in our fiscal 24. First quarter EBITDA margins of 10.5% represent a year over year increase of 110 basis points, which was driven primarily by business mix and timing. Adjusted diluted earnings per share of $5.93 were 36% higher than a year ago. Greater operating income, along with lower interest expense and a lower share count, more than offset a higher income tax provision.

Jeff: In the first quarter, we generated revenue of nearly $2 $1 billion.

Jeff: Representing 11, 2% growth of which nine 9% was organic.

Jeff: Alex was generated by the three acquisitions that we've made in our fiscal 'twenty four.

Jeff: First quarter EBITDA margins of 10, 5% represent a year over year increase of 110 basis points, which was driven primarily by business mix and timing.

Jeff: Adjusted diluted earnings per share of $5 93.

Jeff: We're 36% higher than a year ago.

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

Jeff MacLauchlan: First quarter operating cash flow, excluding our accounts receivable purchase facility, was $61 million, reflecting strong profitability and cash collections, partially offset by some of the working capital factors we discussed last quarter. Day Sales Outstanding or DSO of 47 days was a slight uptick from Q4's record low as we continue to efficiently manage work capital. Pre-cash flow of $49 million for the quarter was in line with our expectations.

Jeff: First quarter operating cash flow, excluding our accounts receivable purchase facility was $61 million, reflecting strong profitability and cash collections, partially offset by some of the working capital factors, we discussed last quarter.

Jeff: Days sales outstanding or DSO of 47 days was a slight uptick from Q4s record low as we continue to efficiently manage working capital.

Jeff: Free cash flow of $49 million for the quarter was in line with our expectations.

Jeff MacLauchlan: Slide 11, please. As John discussed, subsequent to the conclusion of the first quarter, we closed on the Applied Insight acquisition, and we remain on track to close Azure Summit during the quarter, as we previously indicated. Our pro forma leverage following the completion of both transactions will be 3.2 times. As we've demonstrated in the past, the healthy, long-term cash flow characteristics of our business allow us to quickly de-lever to our target range. This means that, as always, we remain well-positioned to continue deploying capital in a flexible and opportunistic manner to drive long-term growth in free cash flow per share and shareholder value.

Jeff: Slide 11 please.

Speaker Change: As John discussed subsequent to the conclusion of the first quarter, we closed on the applied insight acquisition and we remain on track to close Azure summit during the quarter as we previously indicated our pro forma leverage following the completion of both transactions will be three two times.

As we've demonstrated in the past the healthy long term cash flow characteristics of our business allow us to quickly delever to our target range.

Speaker Change: This means that as always we remain well positioned to continue deploying capital in a flexible and opportunistic manner to drive long term growth and free cash flow per share and shareholder value.

Jeff MacLauchlan: Slide 12, please. We're pleased to be raising our fiscal 25 guidance. This increase is due to the ongoing momentum of our organic business, as well as the recently completed acquisition of Applied Insight. We're raising our revenue guidance to be between 8.1 and 8.3 billion dollars. $75 million of this increase is driven by the organic performance of the business, while the balance is from the inclusion of applied insight. This represents growth of 8.6% to 11.3% on an underlying basis. In addition, we now expect Fiscal 25 EBITDA margin to be toward the upper end of the high 10s range we previously communicated, driven by the strength of the organic business, increased visibility of some of our software-defined technology sales, and the inclusion of applied insights.

Speaker Change: Slide 12 please.

Speaker Change: We're pleased to be raising our fiscal 'twenty five guidance. This increase is due to the ongoing momentum of our organic business as well as the recently completed acquisition of applied insight.

Speaker Change: We're raising our revenue guidance to be between eight one and $8 3 billion.

Speaker Change: $75 million of this increase is driven by the organic performance of the business, while the balances from the inclusion of applied insight.

Speaker Change: This represents growth of eight 6% to 11, 3% on an underlying basis.

Speaker Change: In addition, we now expect fiscal 'twenty five EBITDA margin to be towards the upper end of the high tens range. We previously communicated driven by the strength of the organic business increased visibility of some of our software defined technology sales and the inclusion of applied insight.

Jeff MacLauchlan: As a result of our updated revenue and EBITDA margin outlook, we're also increasing our FY25 adjusted net income guidance accordingly to be between $515,000,000 and $535,000,000 with an intended increase in adjusted EPS to be between $2,289,000 and $2,378,000 per share. And finally, we're increasing our free cash flow guidance to at least $435 million due to higher organic growth as well as the income contribution of Applied Insight, that of increased interest expense. Please note that additional details of our updated guidance have been included in our presentation to assist you with your modeling. Additionally, as previously mentioned, Azure Summit will be included in our guidance during our normal cadence once it has closed.

Speaker Change: As a result of our updated revenue and EBITA margin outlook. We're also increasing our FY 'twenty five adjusted net income guidance accordingly to be between $515 million and $535 million.

Speaker Change: With an attendant increase in adjusted EPS to be between $22 89, and $23 78 per share.

Speaker Change: And finally, we are increasing our free cash flow guidance to at least $435 million due.

Speaker Change: Due to higher organic growth as well as the income contribution of applied insight that of increased interest expense.

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

Speaker Change: Additionally, as previously mentioned has your subject will be included in our guidance during our normal cadence. Once it is closed we continue to work through the customary closing process and remain confident it will occur during the second quarter, most likely sooner rather than later.

Jeff MacLauchlan: We continue to work through the customary closing process and remain confident it will occur during the second quarter, most likely sooner rather than later.

Jeff MacLauchlan: Slide 13, please. Turning to forward indicators, our trailing 12-months book-to-bill ratio of 1.8 times reflects strong performance in the marketplace. Our record backlog of $32.4 billion increased over 21% from a year ago and represents just under four years of annual revenue. These metrics provide good long term visibility into the strength of our business. For fiscal 25, we now expect approximately 89% of our revenue to come from existing programs, with approximately 8% coming from re-competes and just over 3% from new business. Progress on these metrics reflects our successful business development and operational performance, and yields increased confidence in our expectations for the year.

Speaker Change: Slide 13 please.

Speaker Change: Turning to forward indicators are trailing 12 months book to Bill ratio of one eight times reflect strong performance in the marketplace. Our record backlog of $32 4 billion increased over 21% from a year ago and represents just under four years of annual revenue.

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

Speaker Change: For fiscal 'twenty five we now expect approximately 89% of our revenue to come from existing programs with approximately 8% coming for Recompete at just over 3% from new business.

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

Jeff MacLauchlan: In terms of our pipeline, we have $4 billion of bids under evaluation, around 80% of which are for new business CACI. We expect to submit another $13 billion in bids over the next two quarters, with over 70% of that being for new business.

Speaker Change: In terms of our pipeline, we have $4 billion of bids under evaluation around 80% of which are for new business to CACI.

We expect to submit another $13 billion.

Speaker Change: Bids over the next two quarters with over 70% of that being for new business.

Jeff MacLauchlan: In summary, we delivered outstanding first-quarter results and deployed capital in a flexible and opportunistic manner to bring additive capabilities and customer presence to CACI. We continue to win and execute high-value, enduring work that supports long-term growth, increased free cash flow per share, and additional shareholder value.

Speaker Change: In summary, we delivered outstanding first quarter results and deploying capital in a flexible and opportunistic manner to bring additive capabilities and customer presence to CACI we.

Speaker Change: We continue to win and execute high value enduring work that supports long term growth increased free cash flow per share and additional shareholder value.

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

Speaker Change: And with that I'll turn the call back over to Josh.

John Mengucci: Thank you, Jeff. Let's go to slide 14. Overall, this has been a great start to our fiscal year 25. We continue to successfully execute our strategy and are delivering strong performance as we ramp up large awards we've won over the past few years, along with strong on-contract growth from our existing program. We have added to our differentiated capabilities, customer access, and employee talent with our acquisition of Applied Insights. As a result, we are pleased to be in the position to raise our Fiscal 25 guidance. In addition, we look forward to closing the Azure Summit Acquisition shortly and welcoming them to CACI as well.

Josh: Thank you, Jeff Let's go to slide 14.

Josh: Overall this has been a great start to our fiscal year 'twenty five.

Josh: We continue to successfully execute our strategy and are delivering strong performance as we ramp up larger awards. We've won over the past few years, along with strong on contract growth from our existing programs.

Josh: We have added to our differentiated capabilities customer access and employee talent with our acquisition of applied insight.

Josh: As a result, we are pleased to be in a position to raise our fiscal 'twenty five guidance. In addition, we look forward to closing the Azure summit acquisition, shortly and welcoming them to CACI as well.

John Mengucci: We are well positioned in the right markets, with the right capabilities, and remain confident in our ability to drive long-term growth, increase free cash flow per share, and generate additional shareholder value.

Josh: We are well positioned in the right markets when the right capabilities and remain confident in our ability to drive long term growth increase free cash flow per share and generate additional shareholder value.

John Mengucci: I look forward to discussing our business, our strategy, and our longer-term financial outlook in more detail during our Investor Day at the New York Stock Exchange on November 8. As is always the case, our success is driven by our employees' talent, their innovation, and their commitment. To everyone on the team, on the CACI team, I'm proud of what you do each day and every day for our company and our nation. And to our shareholders, I continue to thank you for your support of CACI.

Josh: Look forward to discussing our business our strategy and our longer term financial outlook in more detail during our Investor day at the New York Stock Exchange on November eight.

Josh: As is always the case, our success is driven by our employees talent.

Josh: Through innovation and their commitment.

Josh: To everyone on the team and the CACI team I'm proud of what you do each day and every day for our company and our nation.

Josh: And to our shareholders I continue to thank you for your support of CCI.

Operator: With that, Mandeep, let's open the call for questions. Thank you. We will now begin the question and answer session.

Josh: With that money.

Josh: Open the call for questions.

Speaker Change: Thank you we will now begin the question and answer session can you delve in would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue, we'd like to withdraw your question simply press Star one again.

Operator: If you've dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you'd 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.

Speaker Change: You are called upon to ask your question or listening via loud speaker on their device. Please pick up your handset and ensure that your phone is not on mute when asking your question.

Operator: For today's session, we ask that you please limit yourself to one question and one follow up. Again, press star one to join the queue.

Speaker Change: For today's <unk> session. We ask that you. Please limit yourself to one question and one follow up again press star one to join the queue.

Scott Mikus: Our first question comes from the line of Scott Mikus with Melius Research. Please go ahead. Good morning, and great, great numbers.

Speaker Change: Our first question comes from the line of Scott Amicus with Melius Research. Please go ahead.

Scott Amicus: Good morning, and great great numbers.

John Mengucci: Thanks, Scott.

Operator: Good morning.

Scott Mikus: Thank John, Jeff, I wanted to ask, we saw Mineric had some production issues with their optical communications terminals. They're supposed to be supplying a number of contractors for the Space Development Agency's Tronch-1 satellites. So I was just wondering, have any of their customers reached out to you? And could this be an opportunity to gain share either on the Tronch-1 satellites, or is this more an opportunity for Tronch-2?

Speaker Change: Scott Good morning, Thank you.

Scott Amicus: John Jeff I wanted to ask we saw my near it had some production issues with their optical communications terminals, they're supposed to be supplying a number of contractors for the space development agencies tranche one satellite.

Scott Amicus: Just wondering have any of their customers reached out to you and could this be an opportunity to gain share either on the June one satellite or is this more of an opportunity for tranche two and beyond.

John Mengucci: Yeah, Scott, thanks. Look, in the area of photonics, you know, we're, we're seeing great success with our technology and strong demand from both government and primes. I'm not going to comment on where the other vendor is at today. I will share, though, that we have had discussions with other primes around that topic, but I'm not going to go into too many details there. What I would say is, and as we have been saying over the last six quarters, you know, we're that optical communication terminal provider that's proven we're deployed, operational, and tested in various, various orbits.

Speaker Change: Yes, Scott Thanks look in the area of our electronics.

Speaker Change: Where we're at.

Speaker Change: Seeing great success, with our technology and strong demand.

Speaker Change: From both government and prime so I'm not going to comment on.

Speaker Change: Where the other vendor is at today I will share a level that we have had discussions with other primes.

Speaker Change: On that topic, but I'm not going to go into too. Many details there what I would say is and as we have been saying over the last six quarters.

Speaker Change: That optical communication terminal provider, that's proven were deployed operational and tested and very various formats as.

John Mengucci: As we share with many of the primes, we're, our technology is the most mature. That's not our words. That's our customers' words and a number of our major OEM primes' words. They do come to us because we're the most mature and the lowest risk. And we're U.S. customer is well served.

Speaker Change: As we shared with many of the primes.

Speaker Change: Our technology is the most mature that's not our words, that's our customer's words and a number of our major OEM primes words.

Speaker Change: They do come to us because we're the most mature in the lowest risk and where U S. Designed in and then manufactured so we're still on track to.

Speaker Change: Two six to eight times number of deliveries that we did last year I think I ensure that during our guidance call.

Speaker Change: And we're still entertaining additional bids so there's.

Speaker Change: There's a long road ahead, and it's a very sizable ones.

Speaker Change: Profitable for us and it has always Scott we're going to.

Speaker Change: Keep an eye on keeping around where everybody else is that in.

Speaker Change: You don't have the discussions we need to make sure that the end customer is well served.

Scott Mikus: Okay, and then I wanted to ask about Azure Summit. It seems like it could open up a lot of new doors for CACI. So are any other products exportable and could this open up a pathway for foreign military sales? Yeah, Scott, look, we're we've been talking about what our international plan is. And you should think about Azure Summit, Switchblade and other products that they deliver to be similar to all everything we've shared on our software based RF tech products. Look, they they will be very applicable clearly immediately to all the five vice countries that we serve today.

Speaker Change: Okay, and then I wanted to ask now Azure. So it seems like you could open up a lot of new doors for khaki, so or any other products exploitable in conditional approval pathway for foreign military sales for Jackie.

Speaker Change: Yes, Scott look we're we've been talking about what our international.

Scott: Plan is and you should think about Azure summit Switchblade and other products that they do.

Scott: <unk> delivered to be a similar to everything we've shared on our software based RF Tech.

Scott: Tech products.

Scott: They they will be very applicable clearly immediately to all the five vice countries that we serve today.

John Mengucci: They are, they're also very involved in a number of platforms in the US government inventory. So the path to international partnerships there, Scott, is really how do we take our software defined tech, put it into their signal processing rack, and get that kit running well, and where we can provide much more capability to our US customers. And then the step forward there, of course, is how do we look at Five Eyes, NATO, NATO and Eastern European countries that not only sell our RF, RF tech, but also be selling Switchblade and other products. So it's, it's what drove it was one of the reasons that drove the, the acquisition, it is some of the gaps that Azure Summit fills.

Scott: They are they are also very involved in a number of platforms in the U S government in inventory so the path to international partnerships. There Scott is really how do we take our software defined tax cut it into their signal processing a rack.

Scott: Get back kept running well and where we can provide much more capability to our U S customers and then the step forward. There of course is how do we look at five eyes, Nato's and east on NATO and eastern European countries, but not only sell our RF RF tech, but also be selling switchblade and other products. So it's.

Scott: What drove that it was one of the reasons that drove the beat.

Scott: The acquisition is some of the gaps that Azure summit fills in.

John Mengucci: And, you know, they are coming with a large number of really mission focused, top notch engineering and technology technologists that will really set us, set us well, both in the domestic market for expansion there. And then as we slowly, but very aggressively work into the international market.

Scott: We're coming with a large number are really mission focused top notch.

Scott: Engineering and.

Scott: Technology technologists that we're really set us set us well both in the domestic market for expansion there and then as we slowly but.

Scott: Very aggressively working to the international market.

Scott Mikus: Thanks, Scott.

Operator: Perfect. Thanks for taking the questions.

Speaker Change: Thanks Scott.

Speaker Change: Perfect. Thanks for taking the questions.

Speaker Change: Yes.

Jan Engelbrecht: Our next question comes from a line of Jan Engelbrecht with Baird. Please go ahead. Good morning, John, Jeff and George, congrats on a set of strong results.

Speaker Change: Our next question comes from the line of Dan angle breath with Baird. Please go ahead.

Speaker Change: Good morning, John Jeff and George Congrats on another set of strong results I just wanted to revisit.

Jan Engelbrecht: I just want to revisit some of the comments you made on the on the business update call with Azure Summit and just your position that you'll have on the Spectral contract after that transaction closes and any potential sort of future content that you can expand there. I was just looking at the justification documents for the Navy and it looks like it's been Respect to a line item doubles from government fiscal year 25 to 29, so it looks attractive but just wanted to get your thoughts there. Yeah, Dan, thanks. So if you look at the work that's expected, at Azure Summit as today, they're on C increment F.

Speaker Change: Some of the comments you made on the on the business update call with us their summit in Gist.

Speaker Change: Position that you'll have on the spectral contract after that transaction closes and any potential future of content that you can expand there I was just looking at the justification documents with the Navy and it looks like essentially.

Speaker Change: With respect to a line item doubled from.

Speaker Change: Government fiscal year 'twenty five through 2009.

Speaker Change: It's attractive, but just wanted to get your thoughts there.

Speaker Change: Yeah, Dan Thanks.

Speaker Change: So if you look at the work this affects that.

Speaker Change: Azure summit yesterday.

They're on C increments F. So picture that as the next stage of the below deck signal suite that is on all U S. Navy surface ships. So they are doing the next.

John Mengucci: So, you know, picture that as the next stage of the below deck signal suite that is on all US Navy surface ships. So they are doing the next Modification to that kit. That is a prime program that they won from a major prime a couple of years back and they're doing just an exquisite job of beginning the production run-up and the delivery. And that production run goes for, you know, the next four to six years. Spectral then gets built on top of NCAF, and that's where a lot of AI and machine learning comes in. We're going to process many more signals, and Azure is a subcontractor to us on Spectral.

Speaker Change: Modern modification to that kept that as a prime program that they won from a major Brian a couple of years back and they are doing and.

Speaker Change: Just an exquisite job.

Speaker Change: Beginning the production run up and the delivery.

Speaker Change: And that production run goes for the next four to six years.

Speaker Change: Spectral then gets built on top of any cost and Thats, where.

Speaker Change: A lot of AI and machine learning comes in we're able to process. Many more signals and Azure is a subcontractor to us on spectrum. So if I zoomed up from those micro comments at a macro level. The next 10 years for surface ships below deck and you can do with signals Intel counter UAS and alike.

John Mengucci: So if I zoomed up from those, you know, micro-commons at a macro level, the next 10 years for surface ships below deck, anything to do with, you know, signals intel, counter UAS and the like, is going to come from the combination of CACI and what is now known as Azure Summit. We're very pleased with the work that we've done on Spectral. We just were successful in a minimally viable product demonstration and test with the United States Navy. We'll be moving into, you know, further development and then getting into the implementation, the integration, and the production stage.

It's going to come from the combination of CACI and what is now known as Azure Azure summit.

Speaker Change: We're very well.

Speaker Change: We are pleased with the work that we've done on spectral we just we're successful at it.

Speaker Change: And it will be via a viable product demonstration and test with the United States Navy will be moving into further development and then getting into the implementation of the integration and the production stage. Another 12 to 18 months from now.

John Mengucci: You know, another 12 to 18 months.

Jan Engelbrecht: Perfect. Thanks, John. That's really helpful.

Speaker Change: Perfect. Thanks, John that's very helpful. And then just a quick follow up.

Jan Engelbrecht: And then just a quick follow up. Is there any meaningful just changes over the next couple of quarters or maybe the next year or two in terms of the contract mix?

Speaker Change: Is there any meaningful changes over the next couple of quarters or maybe the next year or two in terms of the contract mix I know you previously called out is there so much.

John Mengucci: I know you previously called out, is there so much pricing, which is probably more fixed price versus the rest of CACI, but any large programs and backlog or new acquisitions that should close that we should think about in terms of fixed prices, the cost plus mix? Yeah, Dan, I mean, other other other than the fact that, you know, all of our software based technology is sold in a very similar manner to Azure. So to the extent that their revenue comes with direct tech sales, yeah, then we'll see some level of firm-priced price work come up.

Speaker Change: Probably similar to reduce probably more fixed price versus the rest of CACI, but any large programs in backlog or new acquisition that should close if we should think about in terms of fixed price cost plus mix.

Speaker Change: Yeah, Dan I mean other other other than the fact that you know all of our software based technology is sold in a very similar manner. The Ashford says so to the extent that their revenue comes with <unk>.

Speaker Change: Direct tech.

Speaker Change: Tech sales, yet and we will see some level of firm firm fixed price work come up we did move into a kind of a material phase.

Jeff MacLauchlan: We did move into a time and material phase on the ITAS program. So if you look behind the release, you'll see where time and material is a little bit higher, but that's what's driving that.

Speaker Change: On the on the Ipass program. So if you if you look behind the release, you'll see where.

Speaker Change: We our time material is a little a little bit higher, but thats whats driving that drop anything did you see no you got it in that in that particularly see my test PNM content will continue to ramp.

Jeff MacLauchlan: Jeff, anything? No, you got it. And that and that particularly the ITAS T&M content will continue to bring. Thanks, Dan.

Speaker Change: We expect.

Speaker Change: Thanks, Dan Thanks, guys I'll jump back in the queue.

Operator: Great. Thanks, guys.

Operator: I'll jump back in.

Mariana Perez Mora: Our next question comes from the line of Mariana Perez Mora with Bank of America. Please go ahead. Good morning, everyone. Great. So my question is around the election. And I think everyone is kind of used to a continual resolution that goes into the end of the calendar year. But if we were to think about more noise around the election, how do you prepare to a longer continual resolution probably going into next year? And how can that affect, I don't know, the awarding time or how fast some of the awards that you have? recently awarded or even the pipeline of opportunities that is like really exposed to new businesses and continual resolution caps kind of like the start of those new businesses.

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

Speaker Change: Good morning, everyone.

Speaker Change: Great.

Speaker Change: So my question is around the election.

Speaker Change: And I think everyone is kind of like used to a continuing resolution that goes into the end of the kind of an idea.

Speaker Change: If we were to think about more noise around the election and like how you prepare to add longer continuing resolution probably going into next year and how can that effect I don't know.

Speaker Change: Warning time or how fast some of the awards that you have.

Speaker Change: We have been awarded or even the pipeline of opportunities.

Really exposed to new businesses and continuing resolution caps kind of like a startup businesses, how should we think about that longer containment installation.

Mariana Perez Mora: How should we think about the impact of a longer continual resolution?

John Mengucci: Mariana, John, thank you. So when I hear election, I sort of think, after the election, and where do budgets go? And the fact that defense for as long as we've been a country, it's always been a bipartisan effort. So I sort of work our way through that noise and really focused on budget, because that's, that's what we're focused on. Look, I think it's safe to say that CRs in election year last longer than other CRs, but I've been surprised there in the past. You know, how it impacts our business, as I, as I tried to share in my previous remarks, is that it can impact some of our shorter cycle, purchase order based software product awards.

Speaker Change: Mariana This is John Thank you.

Speaker Change: So when I hear election, I sort of think.

John Jeff: After the election, and where do budgets go and the fact that defense for as long as we've been a country. There's always been a bipartisan effort. So I sort of work our way through that noise and really focus on budget because that's that's what we're focused on.

John Jeff: Look I think it's safe to say that CR is an election year last longer than other CRM fragrance surprise, there and they've been in the past.

John Jeff: How it impacts our business.

Speaker Change: As I tried to share in my prepared remarks.

Speaker Change: Is that it can impact some of our shorter cycle purchase order based.

Speaker Change: Software product.

John Mengucci: Now, having said that, let's take a look at where our customers have gone in that regard. As I, as we announced last quarter, and during our guidance call, Customers that were traditionally buying our software technology on purchase orders as funding became available have put in place IDIQs where they can do larger scale, larger bulk buys of that technology that we sell in a firm fixed price. A perfect example would be TLS MANPAC, right, where we're building a common software framework that allows dismounted soldiers to do the same kinds of things, you know, a single collection and the like, and all the way up to kinetic and non-kinetic attack.

Speaker Change: Awards now having said that lets take a take a look at where our customers have gone in that regard.

Speaker Change: As we announced last quarter and during our guidance call.

Speaker Change: Customers that were traditionally buying our software technology on purchase orders has funding became available have put in place IDI cues, where they can do.

Speaker Change: Larger scale.

Speaker Change: Larger bulk buys of that technology that we sell on a firm fixed price manner.

Speaker Change: A perfect example would be Tos manpack, right, where we're building a common software framework.

Speaker Change: That allows dismounted soldiers to do the same kinds of things Sandal collection.

Speaker Change: And the like and all the way up to Connecticut, non Connecticut attack, but.

John Mengucci: But the customer has put in place...

Speaker Change: The customer has put in place.

John Mengucci: and Jeff Bezos. And in the areas during my prepared remarks, we will look for additional volume or additional awards. Those are not underscore bold impacted by where this budget goes. At a macro level, I like to talk about it in the manner of, we are an $8 billion company with a $250 billion addressable market throughout the United States government. Not as deep on the federal civilian area, but very, very deep in the intelligence community and the Department of Defense. So a large portion of the market that we can address is very, very rich. It's more than enough to support our future growth.

Speaker Change: Buying structures, where it's not conservative in a new program.

And those programs have been adequately funded so in the areas. During my prepared remarks, where you heard me talk about we will look for additional volume or additional awards. Those are not underscore bold impacted by with us where the budget goes at a macro level.

Speaker Change: I like I like to talk about it in the matter of when.

Speaker Change: $8 billion company with a $250 billion customer market throughout the United States government.

Speaker Change: Not as steep on the federal civilian area, but very very deep in the in the intelligence community and the department of defense. So a large portion of the market. We can address is very very rich, it's more than enough to support our future growth I've said over and over we're and deepen enduring funding funding.

John Mengucci: I've said over and over, we're in deep and enduring funding streams, and there's still a tremendous opportunity for growth. So I don't see the budget going forward, whether it's the president's budget, whether it's a mark from either of the potential new presidents coming into the position. National security priorities are going to trump a lot of what we heard, no pun intended. And I think we'll be fine, but it could move some quarter.

Speaker Change: James and Theres still.

Speaker Change: This opportunity for growth so.

Speaker Change: I don't see the budget going forward, whether it's the president's budget, whether it's a mark from either of the.

Speaker Change: With new President's coming into the position National security priorities are going to.

Speaker Change: From a lot of what we heard no pun no pun intended.

Speaker Change: And I think we'll be.

Speaker Change: But it could move some quarter points around hopefully that gives you some additional color.

Mariana Perez Mora: Hopefully that gives you some additional power. Thank you.

Speaker Change: Thank you and then a little bit on M&A, if you could discuss like how is that.

Jeff MacLauchlan: And then a little bit on M&A, if you could discuss like, how is the competitive environment, if you have any deals, or attractive deals in the pipeline? And especially, like, you think there are any areas that you like to be exposed, like particular customers and products that you can actually use to penetrate with your software solutions? Or like, how should we think about that? Yeah, John will want to add to add to the strategy and the capability gaps a little bit, but we continue to see a really strong pipeline. We have a lot of opportunities and robust set of, you know, opportunities that we're working on.

Speaker Change: Negative environment.

Speaker Change: Have any bills alright attractive deals in the pipeline and like.

Speaker Change: Like do you think there are any areas that you'd like to be exposed or particular customer or some products that you can actually use to penetrate with yourself our solution or like how should we think about that.

Speaker Change: Yes, John would want to add to add to the strategy and the capability gaps a little bit, but we continue to see a really strong pipeline, we have a lot of opportunities.

Speaker Change: And robust set of.

Jeff MacLauchlan: We have mentioned for a year or so that we expected valuation multiples to contract a little bit, which is consistent with our recent experience. And, you know, I'm going to say somewhat mechanically, we're committed to remaining very patient and disciplined acquirers. We have a very rigorous evaluation criteria. We, you know, spend a lot of energy making sure we're applying our precious capital in the right places. And, you know, we continue to do so, but we see a good, rich, robust pipeline.

John Mengucci: I don't know about particular capabilities. Yeah, I mean, I think, you know, everything's going to be around thinking in EW, we talked about cyber and space. IT Modernization. I sort of look back and look at Azure Summit sort of covering down on the SIG and EW and cyber area. I look at Applied Insight covering down on the IT Modernization Just moving even more applications to the cloud at lightning speed at a much lower risk level. Look, anything that drives our expertise and our technology businesses, clearly we're very focused on the technology side. But really no other changes there.

John Mengucci: And I'll footstomp what Jeff mentioned. Disciplined and patient. are those words that we've been using over the last few years. And I know many of you have been asking, when is the next M&A coming? You know, it sort of comes when it when when the time the time is right. It's not highly predictable, but rest assured, we're always out there looking. We've looked at over 600 targets in the last 18 months. And, you know, we sort of call those down. We're an experienced, acquisitive company. We've been doing it for, you know, three or four decades.

Speaker Change: Inpatient.

Speaker Change: Are those words that we've been using over the last few years and I know menu of you have been asking when does the next M&A coming.

Speaker Change: You know it sort of comes when it when the time when the time is right.

Speaker Change: Not highly predictable.

Speaker Change: But rest assured we're always out there looking at we've looked at over 600 targets in the last 18 months.

Speaker Change: And we sort of call those down were inexperienced.

Speaker Change: Acquisitive company been doing it for.

Speaker Change: Three or four decades.

John Mengucci: And it works very, very well for us.

Speaker Change: And it works very very well.

Mariana Perez Mora: So, Mariana, thanks for the thanks for the question.

Speaker Change: For us so alright, thanks for the thanks for the question. Thank you.

Operator: Thank you.

Speaker Change: Yeah.

Alina Tobey Sommer: Our next question comes from Alina Tobey Sommer with Tourist Securities. Please go ahead. Hey, good morning.

Speaker Change: Our next question comes from the line of Tobey Sommer with tourists Securities. Please go ahead.

Speaker Change: Hey, good morning, this is Sid on for Tobey.

Alina Tobey Sommer: This is Sid on for Tobey. I'm hoping you can good morning. I'm hoping you can provide any details maybe on what your win rate has looked like recently. And maybe if you can call out anything specifically that might be driving it a little bit different than what you've seen historically. Yeah, you know, when we talk about win-win rates, we sort of get into a place where we don't like to talk about, right? But, you know, kind of provide some clarity there.

Speaker Change: Hoping you can.

Speaker Change: Hi, Good morning, I'm, hoping you can provide any details maybe on what your win rate has looked like recently and maybe if you can call out anything specifically that might be driving it a little bit different than what you've seen historically.

Speaker Change: Yeah, when we talk about win rates, we sort of get us into a place where we don't like to talk about right.

Speaker Change: Right.

Speaker Change: Some clarity there.

John Mengucci: Look, I'm going to start off with just how incredibly focused we are on re-competing with You know, we're not a fan of losing our current book of business. We're not a fan of losing current customers. Um, so we are, um... We are very, very focused on re-compete rates, and those traditionally are all greater than 90%. So we actually leak a smaller percentage of next year's growth dollars by losing rate. In fact, what we do more often than not, we win or we compete at larger values, at better rates, if it's right. frankly, around sort of the nuts and bolts of why this works and why we're different.

Speaker Change: To start off with.

Speaker Change: Just how incredibly focused we are on recompete win rates.

Speaker Change: You know, we're not a fan of losing our current book of business, we're not a fan of losing current customers.

Speaker Change: So we are.

Speaker Change: We are.

Speaker Change: Very very focused on recompete rates and those traditionally are all.

Speaker Change: Greater than 90%, so we actually lease.

Speaker Change: A smaller percentage of next year's growth dollars.

Re competes in fact, what we do more often than not we win the recompete that larger values that are at better rates episodic piece on the technology side, we find that we not only win all the book of business. We had what we traditionally in putting other People's book of business long, because we are performing exquisitely out there on the new business side.

Speaker Change: We always say that our overall win rate has to be north of 30 or 40% across everything we chase to be successful in.

Speaker Change: Any measure in the last six to seven years I said, we've been quite successful at.

Speaker Change: <unk> book to Bill ratios.

Speaker Change: At one or above.

John Mengucci: You know, we have a different strategy. We have this bid less and win more.

John Mengucci: We have focus on larger and longer duration programs. What we're looking to share with all of our shareholders is really, here's what happens when we say we're in seven markets, and here's strategically how we're focused, how that drives pipeline, and how that drives individual captures. We'll be talking about things like Spectra, we'll talk about electronic warfare, we'll be talking about network modernization, and sort of give you all that more detailed look at why we are successful there, and I know Jerry Parker is hungry to be giving that briefing to be able to show how we grow today, but also what's behind how we're going to grow into the future.

Louis Dipalma: All right, thank you. Our next question comes from the line of Louis DiPalma with William Blair. Please go ahead. Good. John, Jeff and George. Good morning. Morning, Lewis.

Jeff MacLauchlan: Um, was there any revenue from like zero margin materials that contributed to the gross margin being flat year over year? I think last year, there was $100 million in materials revenue, and the gross margin was 31%. And it was also 31%. Yeah, there was, there was a very small amount, but it was sort of at a routine level that we execute as part of larger programs, not not materially, it's more broadly probably attributable to mix, and some of the some of the better margin technology. areas that we talked about when we talked about the EBITDA margin more broadly.

Speaker Change: Broadly probably attributable to mix and some of the some of the better margin technology.

Speaker Change: Areas that we talked about when we talk about the EBITDA margin.

Speaker Change: Lee.

Louis Dipalma: Okay, great.

Speaker Change: Okay.

Louis Dipalma: And on the counter-UAS side of the business, and this is more of a strategy question, but there's been a ton of innovation related to the different geopolitical conflicts on the mitigation side of counter-UAS with high-powered microwaves, lasers, and interceptors. You have traditionally been more focused on the signals intelligence side. Do you feel a need to have a more end-to-end?

Speaker Change:

And on the counter UAS side of the business and this is more of a strategy question, but there has been.

Speaker Change: A ton of innovation related to the different geopolitical conflicts on the mitigation side of counter UAS with high powered microwaves lasers and interceptors.

Speaker Change: And you have traditionally been more focused on.

Speaker Change: On the signals intelligence side do you feel a need to have a more end to end system.

John Mengucci: Yeah, Louie, thanks. You know, so yeah, we've been in the kind of last business for a very long And what's equally as important as, you know, people read what's out there is we handle Group 1 through Group 5, and the real threats are Groups 3, 4, and 5. Those are the really hard ones. Those are the things that whose tactics and procedures and frequencies change every 24 hours. They are... larger in nature, they can carry more payload, they're much more dangerous.

Speaker Change: Yeah Louie thanks.

Speaker Change: So yeah, we've been in the kind of glass business for a very long time.

Speaker Change: And what is equally as important as what people read what's out there is we handle group won two group five and they're real threats. Our group's three four but those are really hard ones. Those are the things that whose tactic.

Speaker Change: Tactics in procedures and frequencies change every 24 hours they are larger.

Speaker Change: Larger in nature, they can carry more payload, but much more dangerous than there are those groups that have been involved in everything that you all have Brandon Washington news over.

John Mengucci: And they're that they're those groups that have been involved in everything that you all have read and watched the So, at the end of the day, the most exquisite and reliable way to detect problems is in the radio. Many drones are going to other methods to be able to launch and then be guided. Many are using wireless. Some are going to begin to use satellite. It's sort of, you know, I need, everybody needs a link at one point or not. Even dark drones require coordinates to be loaded to them. So I listen and I watch what's going on.

Speaker Change: So at the end of the day, the most explosive exquisite and reliable way to protect drones is in the radio frequency spectrum.

Speaker Change: Many drones or go into other methods to be able to launch and then be guided.

Speaker Change: Many are using wireless some are going to begin to use satellite it's sort of you know I need everybody needs a link at one point or not even dark drones require cordis to be loaded to them, So I listen and I watch what's going on and you would imagine we're very much engaged at a very very senior levels across the federal government around what we're seeing.

John Mengucci: And you would imagine we're very much engaged at very, very senior levels across the federal government around what we're seeing in all of the conflicts around the globe.

John Mengucci: So having said all that, we've been in this business for about We understand where the state of the art is going. We're not that company that's going to look at, you know, group one drones that you buy for $38. That used to be a focus many years back.

John Mengucci: That's not what's delivering the most destruction around the globe, which is why we're involved at levels that we don't speak about because we can't speak about it. But rest assured, when we talk about having exquisite county UAS capabilities, that is everywhere from a large scale system fixed site to mobile to man packable, which you heard about on someone else's question earlier in the call. We're that exquisite provider. There's different business models out there. We've investigated a lot of those different, different business models.

John Mengucci: At the end of the day, you know, our solutions come with a combatant commander stamp of approval and a long list of confirmed kills. And frankly, customers out there today that are less or less needing to use a million dollar missile to defeat a thousand dollar drone. So I can't comment on any specific company. We just talk about ourselves and how we go to market. But I believe we have a long, firm growth path in our county UAS.

Unknown Attendee: Business.

Louis Dipalma: Thanks for having me. And is there a lot of a lot more opportunities in the pipeline for counter UAS? I think you.

John Mengucci: Thanks, man. Is there a lot more opportunities in the pipeline for counter UAS? I think you suggested that there are more file-on orders expected for the man-pack program. But for the Navy, and you already have a practical, but are there other opportunities within the Navy for other platforms for you to be involved? Yeah, I think what you look at the Azure Summit acquisition and the platforms that they're on both airborne and C were that will expose those to even more platforms. We like to talk about counter UAS and other software technologies that we do by service, but the real magic is platforms within each service, right?

John Mengucci: suggested that there are more follow on orders expected for the MANPAC program, but for the Navy and You already have the spectral, but are there other opportunities within the Navy for other large platforms for you to be involved? Yeah, I think when you look at the Azure Summit acquisition, the platforms that they're on both airborne and Seaworthy. That will expose us to even more platforms. You know, we like to talk about ConorAS and other software technologies that we by service. But the real magic is platforms within each service, right? So it's what platforms can we get our common software baseline.

Speaker Change: That will expose us to even more platforms, we like to talk about economy us and other software technologies that we do by his service, but the real magic is platforms within each service right. So it's what platforms, we get our common software baseline and the last thing that I'll share what makes us extremely unique and you know.

John Mengucci: So it's what platforms can we get, how are common software baseline? And the last thing that I'll share with you, what makes us extremely unique and why we have other growth opportunities, not only in this year's pipeline, but you'll hear at an investor day, you know, a multi-year pipeline, is the fact that we share a common baseline. So every time we learn something, tap about drones and other unique signals that gets put into everybody's systems at one time, and nobody can match the speed and the power that we can deliver. That is why we talk about speed of the flight and speed of the fleet.

John Mengucci: And the last thing that I'll share what makes us extremely unique, and you know, why we have other growth opportunities, not only in this year's pipeline, but you'll hear at Investor Day, you know, a multi year pipeline is the fact that we share a common baseline. So every time we learn something about drones and other Unique Signals that gets put into everybody's systems at one time. Nobody can match the speed and the power that we can deliver that, which is why we talk about speed of the flight. So yeah, there's plenty of work in our pipeline out there.

Speaker Change: Why do we have other growth opportunity not only this year's pipeline, which youll hear at Investor Day, a multiyear pipe line is the fact that we share a common baseline. So every time, we learn something about drones and other.

Speaker Change: Our unique signals that gets put into everybody's systems at one time and.

Speaker Change: And nobody can match the speed and the power.

Speaker Change: That we can deliver that which is why we talk about the speed of the flight and speed of the fleet. So there's plenty of work in our pipeline.

John Mengucci: So yeah, there's plenty of work in our pipeline out there. I would assume by I'm almost assured that by next quarter you'll hear about some additional awards, but again, to get what to cover that, you know, and even more detail at the investor day coming up.

Speaker Change: Pipeline out there I would assume by I'm almost assured that by next quarter Youll hear about some additional awards.

John Mengucci: I would assume by, I'm almost assured that by next quarter, you'll hear about some additional awards.

John Mengucci: But again, to get ready to cover that, in even more detail at the investor day coming up. Thanks.

Speaker Change: But again to get ready to cover that.

Speaker Change: And even more detail at the Investor day coming up thankfully.

Unknown Attendee: Thanks, Louie. Great.

Louis Dipalma: Great. Thanks, John. Thanks, Jeff. Enjoy.

Unknown Attendee: Thanks, John.

Speaker Change: Great.

Unknown Attendee: Thanks, Justin.

Speaker Change: Thanks for talking to me.

Unknown Attendee: Thanks.

Speaker Change: Thanks.

Conor Walters: Our next question comes from the line of Conor Walters with Jeffries. Please go ahead. Hi, guys, and good morning. Thanks so much. Yeah, so I wanted to dig into your margins a little bit more.

Connor Walters: All right, the next question comes from the line of Connor Walters with Jeff, please. Please go ahead. Hi, guys, and good morning. Thanks so much for coming. Yeah, so I wanted to dig into your margins a little bit more, and the strong performance in the first quarter, your commentary on the second quarter, certainly de-risk the ramp through the remainder of the year, but it kind of suggests that the second half run rate could be, you know, down to end 20 basis points year over year. Just curious if that's really conservatism or any other quick and fix you want to call out there.

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

Speaker Change: Hi, guys. Good morning, Thanks, so much.

Conor Walters: Yeah. So I wanted to dig into your margins a little bit more on the strong performance in the first quarter your commentary around the second quarter. It certainly derisk the ramp through the remainder of the year, but it kind of suggests that the second half run rate could be down.

Jeff MacLauchlan: The strong performance in the first quarter, your commentary on the second quarter, it certainly de-risked the ramp through the remainder of the year, but it kind of suggests that the second half run rate could be, you know, down 10, 20 basis points year over year. Just curious if that's really conservatism or any other puts and takes you want to call it. Yeah, thanks for the question. There's a there's a condition here that we've seen the last couple years where our second half has been has been relatively flat quarter to quarter with higher margins than the first quarter or the first half rather the first and second And we see that same pattern continuing this year, although the disparity has become less pronounced.

Conor Walters: 20 basis points year over year, just curious if that's really a conservatism or any other puts and takes you want to call out there.

Jeff McLaughlin: Yeah, thanks for the question. There's a condition here that we've seen the last couple of years where our second half has been relatively flat quarter to quarter with higher margins than the first quarter are the first half run through the first and second quarter. And we see that same pattern continuing this year, although the disparity has become less pronounced. So we still have a stronger second half than the first half, but the first half of the year, the second quarter that is the balance of the first half, is probably, you know, somewhat flat-ish for where we are today, then a step up for the second half.

Speaker Change: Yeah. Thanks for the question.

Speaker Change: There is a there's a condition here that we've seen the last couple of years, where our second half.

Speaker Change: Has been has been relatively flat quarter to quarter with higher margins than the first quarter.

Speaker Change: Or the first half rather the first and second quarter and we see that same pattern continuing this year.

Jeff MacLauchlan: So we still have a stronger second half than first half. But the first half of the year, the second quarter, that is, the balance of the first half, is probably, you know, somewhat flattish from where we are today, and then a step up for the second half. That's helpful. Hopefully that gives you some insight. No, that's great. I appreciate that caller.

Connor Walters: If that's helpful, would not to hopefully that give you some insight. No, that's great.

Jeff McLaughlin: I appreciate that color, and maybe just a dig in a cache. I think last quarter we talked about how there was kind of an implied how it went to working capital around 100 million for the year, just curious if that's still a way to solve process and if you could provide any other color around how we bridge to this year versus your fiscal point for performance. Yeah, we continue to see we continue to see working capital demand. I mean, that's all factored in, of course, to our guide. But the change in nature of the portfolio, and if you think about some of the business that where we have growing volume, and this will this will you'll see this again following Azure acquisition, you're growing in places that require some amount of working capital for the growth.

Jeff MacLauchlan: And maybe just to dig into cash, I think, last quarter, we talked about how there was kind of an implied headwind of working capital around 100 million for the year, just curious if that's still the latest thought process, and if you could provide any other color around how we bridge to this year, versus your fiscal 2014 Yeah, we continue to see we continue to see working capital demand. I mean, that's all factored in, of course, to our guide. But the changing nature of the portfolio, if you if you think about some of the business that where we have growing volume, and this will this will, you'll see this again, following the Azure acquisition, you're growing in places that require some amount of working capital for the growth, certainly still a capital light business, by any kind of customary industrial standard.

Connor Walters: Certainly still a capital light business by any kind of customary industrial standard, but we do have, we do have inventory and working process in a way that the business has historically not had, so that is a factor in our in our cache guns. Okay, great. Thanks so much for taking my question. Yeah, you bet.

Jeff MacLauchlan: But we do have we do have inventory and working process in a way that the business has historically not had. So that is a factor in our in our cash guide. Okay, great. Thanks so much for taking my question.

David Strauss: and I'll be back. Our next question comes from a line of David Strauss with Barclays. Please go ahead. Come on, David. Hi, good morning.

David Strauss: Our next question comes from a line of David Strauss was Barclays. Please go ahead. David. Hi, good morning.

Josh Korn: This is actually Josh Korn on for David. I just wanted to ask about the the revenue guide. So we've had three straight quarters now of 10% or greater growth more with the materials purchases. So what, if anything, is decelerating over the balance of the year to get to get into the guidance range?

Josh Corn: This is actually Josh Corn on for David. I just wanted to ask about the revenue guide. So we've had three straight quarters now of 10% or greater growth, more with the materials purchases. So what, if anything, is decelerating over the balance of the year to get to get into the guidance range. Thanks. Yeah, David. Thanks. Look, when we did our original 25 guidance in as we spent a firm on the time during this last quarter doing this. I'll take a guidance. You know, we love to talk about guys with a low end in a high end scenario.

Josh Korn: Yeah, David, thanks. Look, when we did our original 25 guidance, and as we spent a fair amount of time during this last quarter, Updated Guidance. You know, we love to talk about guidance with a low-end and a high-end scenario. Look, we contemplate a number of different scenarios, and we really try to focus on what we can control. I think we're confidently executing our strategy, so that's a checkbox for the right-hand goalpost. But, you know, on that budget question earlier, you know, if we look at anything of an extended CR that can delay some software-defined tech awards, you know, if there's any other geopolitical or macro uncertainty that sort of enters in, those are sort of left-side of the goalpost markers.

John Mengucci: Look, we contemplated a number of different scenarios, and we really try to focus on what we can control. I think we're confidently executing our strategy. So that's a check box for the right-hand goal post. But you're on that on that budget question earlier. You know, if we if we look at anything of an extended CR, they can delay some software to find tech awards. You know, if there's any other geopolitical macro uncertainty, the sort of enters in those are sort of left side of the goal post markers. If we see volume pickup, if we see some additional awards during this year, which clearly we did 3.3 billion in the first quarter, then that sort of turns us through the towards the upper guy.

Speaker Change: In control.

Speaker Change: I think we're confidently executing our strategy. So that's a check box with Iranian goalpost.

Speaker Change: But on that on a bunch of question earlier.

Speaker Change: If we if we look at anything.

Speaker Change: An extended CR that can delay some software defined Tech awards.

Speaker Change:

Speaker Change: If there's any other geopolitical and macro uncertainty that sort of interest in those are sort of left side of the goalpost markers.

John Mengucci: If we see volume pick up, if we see some additional awards during this year, which clearly we did $3.3 billion in the first quarter, then that sort of turns us towards the upper guide. So, you know, I remind, we're 97 days into the fiscal year, you know, so we're at the end of the first quarter. So, those are just some macro dynamics as we look at guidance.

Speaker Change: If we see volume pick up if we see some.

Speaker Change: Additional awards during this year, which clearly we did $3 3 billion in the first quarter and that sort of trends is truly that towards the upper guidance. So.

Jeff McLaughlin: So, you know, I remind we're 97 days in to the fiscal year, you know, so we're at the end of the first quarter. So there's just some macro diet amics as we look at guidance.

Speaker Change: <unk> were 97 days in the fiscal year.

Speaker Change: We're at the end of the end of the first quarter. So there's just some macro dying amex as we look at guidance.

Jeff MacLauchlan: Yeah, I don't think I have a lot to add to that. I think you summarized it pretty well. I mean, we do think that we encompass most of the scenarios that we monitor and keep our eye on, and, you know, we're early in the year. We're encouraged by what we've seen so far here in the first quarter. You know, there's a lot of the game left.

Josh Corn: Yeah, I don't think I have a lot to add to that. I think you summarize it pretty well. I mean, we do think that we encompass most of the scenarios that we monitor and keep our eye on. And, you know, we're early in the year; we're encouraged by what we've seen so far here in the first quarter. You know, there's a lot of the game left. Thank you. Great, thanks. I'll stick to one. Thank you.

Speaker Change: Don't think I have a lot to add to that I think you summarized it pretty well I mean, we do think that we encompass most of the scenarios that we monitor and keep our eye on.

Speaker Change: We're early in the year, we're encouraged by what we've seen so far here in the first quarter.

Speaker Change: You know, there's a lot of the game left.

Josh Korn: Great, thanks.

Operator: I'll stick to one. Thank you.

Speaker Change: Great. Thanks, I'll stick to one.

Speaker Change: Thank you.

Speaker Change: Yeah.

Operator: That concludes our Q&A session.

John Mengucci: That concludes our Q&A session.

Speaker Change: That concludes our Q&A session I will now turn the conference back over to John <unk> for closing remarks.

John Mengucci: I will now turn the conference back over to John Mengucci for closing remarks. Thanks, Ron Diefen. Thank you for your help on today's call. I would like to thank everyone who dialed in or listened to the webcast for their participation. We know that many of you will have potential follow up questions. Jeff MacLauchlan, George Price, and Jim Sullivan are available after today's call.

John Mengucci: I will now turn the conference back over to John Mengucci for closing remarks. Thanks, Brian David. And thank you for your help on today's call.

John <unk>: Thanks, Ron Nathan. Thank you for your help on today's call I would like to thank everyone, who dialed in or listened to the webcast for their participation.

John Mengucci: I would like to thank everyone who dialed in or listed in a webcast for different participation. We know that many of you will have potential to follow questions, tap the Glockland, George Price, and Jim Sullivan, are available up to today's call.

John <unk>: Many of you will have potential following questions Chuck Mclaughlin towards price and Jim Sullivan are available. After today's call. Please stay healthy and all my best to you and your families.

John Mengucci: Please stay healthy and on my best to you and your families.

John Mengucci: Please stay healthy and all my best to you and your family.

Operator: This concludes our call. Thank you all, and have a great day.

Operator: This concludes our call. Thank you all and have a great day.

John <unk>: This concludes our call. Thank you all and have a great day.

Operator: This concludes today's conference call. You may now disconnect.

Operator: This concludes today's conference call.

This concludes today's conference call you may now disconnect.

Operator: You may now disconnect.

John <unk>: Yeah.

John <unk>: Yeah.

John <unk>: Hum.