Q3 2026 Science Applications International Corp Earnings Call

December 4, 2025

Speaker #1: Good day, and thank you for sending by. Welcome to the SAIC Fiscal Year 2026 Q3 earnings conference call. At this time, all participants are in listen-only mode.

Operator: Good day, and thank you for standing by. Welcome to the SAIC Fiscal Year 2026 Q3 earnings conference call. At this time, all participants are in listen-only mode. After this figures presentation, we'll open up for questions. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like to hand it over to your speaker today, Joseph DeNardi, Senior Vice President, Investor Relations, and Treasurer. Please go ahead.

Speaker #1: After this speaker's presentation, we'll open up for questions. To ask a question during the session, you will need to press star 11 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Speaker #1: I would like to hand over to your speaker today. Joseph DeNardi, Senior Vice President, Investor Relations, and Treasurer. Please go

Speaker #1: ahead. Good morning.

Joseph DeNardi: Good morning, and thank you for joining SAIC's third quarter fiscal year 2026 earnings call. My name is Joe DeNardi, Senior Vice President of Investor Relations and Treasurer. Joining me today to discuss our business and financial results are Jim Reagan, our interim Chief Executive Officer, and Prabhu Natarajan, our Chief Financial Officer. Today, we will discuss our results for the third quarter of fiscal year 2026 that ended 31 October 2025. Please note that we may make forward-looking statements on today's call that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from statements made on this call. I refer you to our SAIC filings for a discussion of these risks, including the risk factor section of our annual report on Form 10-K and our quarterly reports on Form 10-Q.

Speaker #2: Thank you for joining SAIC's third quarter fiscal year 2026 earnings call. My name is Joseph DeNardi, Senior Vice President of Investor Relations and Treasurer.

Speaker #2: And joining me today to discuss our business and financial results are Jim Reagan, our Interim Chief Executive Officer, and Prabu Natarajan, our Chief Financial Officer.

Speaker #2: Today, we will discuss our results for the third quarter of fiscal year 2026 that ended October 31, 2025. Please note that we may make forward-looking statements on today's call that are subject to known and unknown risks and uncertainties.

Speaker #2: That could cause actual results to differ materially from statements made on this call. I refer you to our SEC filings for a discussion of these risks.

Speaker #2: Including the risk factors section of our annual report on Form 10-K and our quarterly 10-Q. We may elect to update the reports on Form forward-looking statements at some point in the future, but we specifically disclaim any obligation to do so.

Joseph DeNardi: We may elect to update the forward-looking statements at some point in the future, but we specifically disclaim any obligation to do so. In addition, we will discuss non-GAAP financial measures and other metrics, which we believe provide useful information for investors, and both our press release and supplemental financial presentation slides include reconciliations to the most comparable GAAP measures. The non-GAAP measures should be considered in addition to, and not a substitute for, financial measures in accordance with GAAP. It is now my pleasure to introduce our interim CEO, Jim Reagan.

We may elect to update the forward-looking statements at some point in the future, but we specifically disclaim any obligation to do so. In addition, we will discuss non-GAAP financial measures and other metrics, which we believe provide useful information for investors, and both our press release and supplemental financial presentation slides include reconciliations to the most comparable GAAP measures. The non-GAAP measures should be considered in addition to, and not a substitute for, financial measures in accordance with GAAP. It is now my pleasure to introduce our interim CEO, Jim Reagan.

Speaker #2: In addition, we will discuss non-GAAP financial measures and other metrics, which we

Speaker #1: Presentation slides include reconciliations to the most GAAP measures . comparable The non-GAAP measures should be considered in addition to , and not a substitute for , financial measures in accordance with GAAP .

Speaker #1: It is now my pleasure to introduce our interim CEO , Jim Regan .

Speaker #2: Joe , and thank you Thank you , to everyone for joining our call . Before I begin , I want to take a moment and welcome Edge to SAIC Silver .

Jim Reagan: Thank you, Joe, and thank you to everyone for joining our call. Before I begin, I want to take a moment and welcome SilverEdge to SAIC. Having personally spent time with leaders at SilverEdge, I'm excited about the value we can create by combining their differentiated technology and commercial go-to-market approach with the breadth of SAIC. Building upon their success at bringing sought-after AI capabilities to life for the intelligence community, I expect strong continued growth as we deploy their incredibly talented people and solutions across the broader SAIC portfolio. This acquisition represents a good example of our ability to invest in differentiated IP capable of solving customer problems. I will begin with a brief review of our third quarter results and updated outlook, but we'll leave the more detailed walkthrough to Prabhu.

Speaker #2: Having personally spent with time leaders at Silver Edge , I'm excited about the value we can create by combining their differentiated technology and commercial go to market approach with the breadth of SAIC .

Speaker #2: Building upon their at bringing sought success after AI capabilities to life for the intelligence community , I expect strong continued growth as we deploy their incredibly talented people and solutions across the broader SAIC portfolio .

Speaker #2: This acquisition represents a good example of our ability to invest in differentiated IP , capable of solving customer problems will . begin I with a brief review of our third quarter results and updated outlook , but will leave the more detailed walkthrough to Prabhu .

Speaker #2: I will then discuss my top priorities as interim CEO and the compelling potential to create value for our shareholders . While investing to better serve our customers and create opportunities for our employees .

Jim Reagan: I will then discuss my top priorities as interim CEO and the compelling potential to create value for our shareholders while investing to better serve our customers and create opportunities for our employees. Q3 revenue of $1.87 billion declined 5.6% year over year and included a roughly one-point headwind related to the government shutdown. Adjusting for this impact, revenue results were modestly ahead of our prior guidance, as we've seen encouraging signs of stability across the market in recent months. Adjusted EBITDA of $185 million for a margin of 9.9% was driven by strong program execution. As I highlighted in the earnings release, and as I will discuss in more detail, I see meaningful opportunities to further improve margins in the coming years while increasing internal investments to drive profitable growth. Adjusted diluted EPS was $2.58, reflecting our strong margin performance and a favorable tax rate in the quarter.

I will then discuss my top priorities as interim CEO and the compelling potential to create value for our shareholders while investing to better serve our customers and create opportunities for our employees. Q3 revenue of $1.87 billion declined 5.6% year over year and included a roughly one-point headwind related to the government shutdown. Adjusting for this impact, revenue results were modestly ahead of our prior guidance, as we've seen encouraging signs of stability across the market in recent months. Adjusted EBITDA of $185 million for a margin of 9.9% was driven by strong program execution. As I highlighted in the earnings release, and as I will discuss in more detail, I see meaningful opportunities to further improve margins in the coming years while increasing internal investments to drive profitable growth. Adjusted diluted EPS was $2.58, reflecting our strong margin performance and a favorable tax rate in the quarter.

Speaker #2: Third quarter revenue of 1.87 billion declined 5.6% year over year , and included a roughly one point related to the headwind government shutdown .

Speaker #2: Adjusting for this impact, revenue results were modestly ahead of our prior guidance. As we've seen encouraging signs of stability across the market in recent months.

Speaker #2: Adjusted EBITDA of 185 million , for a margin of 9.9% , was driven by strong program execution . As I highlighted in the earnings release .

Speaker #2: And as I will discuss in more detail . I see meaningful opportunities to further improve margins in the coming years while increasing internal investments to drive profitable growth .

Speaker #2: Adjusted diluted EPs $2.58 , was strong reflecting our margin performance and a favorable tax rate in the quarter . Third quarter free cash flow of 135 million was strong , despite being impacted by the government shutdown , which resulted in certain collections moving into our fourth fiscal quarter .

Jim Reagan: Third quarter free cash flow of $135 million was strong despite being impacted by the government shutdown, which resulted in certain collections moving into our fourth fiscal quarter. Overall, the financial results we reported in the quarter were ahead of our prior guidance, but I firmly believe that we can deliver stronger revenue performance over the long term. Since being appointed Interim CEO by our board on 23 October, my top priority has been to drive increased focus across the company and take decisive action that will position SAIC for long-term shareholder value creation. My prior industry experience and time on the board have allowed me to hit the ground running, and I believe the actions we're taking will produce demonstrable results in the coming quarters. Let me provide greater detail and examples around what we're doing and how we're measuring impact. SAIC's legacy of innovation and commitment to US.

Third quarter free cash flow of $135 million was strong despite being impacted by the government shutdown, which resulted in certain collections moving into our fourth fiscal quarter. Overall, the financial results we reported in the quarter were ahead of our prior guidance, but I firmly believe that we can deliver stronger revenue performance over the long term. Since being appointed Interim CEO by our board on 23 October, my top priority has been to drive increased focus across the company and take decisive action that will position SAIC for long-term shareholder value creation. My prior industry experience and time on the board have allowed me to hit the ground running, and I believe the actions we're taking will produce demonstrable results in the coming quarters. Let me provide greater detail and examples around what we're doing and how we're measuring impact. SAIC's legacy of innovation and commitment to US.

Speaker #2: Overall, the financial results we reported in the quarter were ahead of our prior guidance, but I firmly believe that we can deliver stronger revenue performance over the long term.

Speaker #2: Since being appointed interim CEO by our board on October 23rd , my top priority has been to drive increased across the focus company and take decisive action that will position SAIC for long term shareholder value .

Speaker #2: My prior industry creation experience and time on the board have allowed me to hit the ground running , and I believe the actions we are taking will produce demonstrable results in the coming quarters .

Speaker #2: Let me provide greater detail and examples around what we're doing and how we're measuring impact. SAIC's legacy of innovation and commitment to U.S. national security is undeniable and represents an incredibly valuable asset for the company.

Jim Reagan: National security is undeniable and represents an incredibly valuable asset for the company. However, in recent years, we've struggled to convert this into revenue and EBITDA growth in line with the market due primarily to below-average business development and capture performance. The changes we have implemented over the past 24 months across business development are steps in the right direction and have contributed to our improved book-to-bill year to date. We're committed to building on this progress in three ways. First, sharpening our focus on execution to increase capacity for investment in the business. Second, more efficiently deploying our financial resources to drive growth. And third, prioritizing yield and bid quality across our business development function. We have discussed in the past that SAIC spends several hundred million dollars annually on indirect functions, including shared services, finance, human resources, marketing, communications, and others.

National security is undeniable and represents an incredibly valuable asset for the company. However, in recent years, we've struggled to convert this into revenue and EBITDA growth in line with the market due primarily to below-average business development and capture performance. The changes we have implemented over the past 24 months across business development are steps in the right direction and have contributed to our improved book-to-bill year to date. We're committed to building on this progress in three ways. First, sharpening our focus on execution to increase capacity for investment in the business. Second, more efficiently deploying our financial resources to drive growth. And third, prioritizing yield and bid quality across our business development function. We have discussed in the past that SAIC spends several hundred million dollars annually on indirect functions, including shared services, finance, human resources, marketing, communications, and others.

Speaker #2: However , in recent years , we've struggled to convert this into revenue and EBITDA growth in line with the market , due primarily to below average business development and capture performance .

Speaker #2: changes we have The implemented over the past 24 months across business development are steps in the right direction and have contributed to our improved book to bill year to date .

Speaker #2: We're committed to building on this progress in three ways. First, sharpening our focus on execution to increase capacity for investment in the business.

Speaker #2: Second , more efficiently deploying our financial resources to drive growth And third , . prioritizing yield and bid quality across our business development function .

Speaker #2: We have discussed in the past that SAIC spends several hundred million dollars annually on indirect functions , including shared services , finance , human resources , marketing , communications , and others .

Speaker #2: We're implementing efficiencies across this category of spending , including our recent organizational restructuring , and will savings to fuel redeploy and improve profitability .

Jim Reagan: We're implementing efficiencies across this category of spending, including our recent organizational restructuring, and we'll redeploy savings to fuel growth and improve profitability. We have identified over $100 million in annual spend that we're actively working to reinvest into higher ROI areas across our business and increase margins. This should result in a more efficient SAIC with increased investment directly driving growth and margins approaching 10% in the near term, with additional potential upside in FY27 as we drive further efficiency across the business. In addition, I see opportunities to refocus our attention on nearer-term execution and the aspects of our performance which we control. While there's value in aligning to a long-term corporate strategy, this needs to be balanced with a keen focus on executing to and delivering on our near-term commitments.

We're implementing efficiencies across this category of spending, including our recent organizational restructuring, and we'll redeploy savings to fuel growth and improve profitability. We have identified over $100 million in annual spend that we're actively working to reinvest into higher ROI areas across our business and increase margins. This should result in a more efficient SAIC with increased investment directly driving growth and margins approaching 10% in the near term, with additional potential upside in FY27 as we drive further efficiency across the business. In addition, I see opportunities to refocus our attention on nearer-term execution and the aspects of our performance which we control. While there's value in aligning to a long-term corporate strategy, this needs to be balanced with a keen focus on executing to and delivering on our near-term commitments.

Speaker #2: We have identified over 100 million in annual spend that we're actively working to reinvest into higher ROI areas across our business and increase margins .

Speaker #2: This should result in a more efficient SAIC, with increased investment directly driving growth and margins approaching 10% in the near term. With additional potential upside in FY 27, we will drive further efficiencies across the business.

Speaker #2: In addition , I see opportunities to refocus our on attention near-term execution and the aspects of our performance which we control . While there value in is aligning to a long term corporate strategy , this needs to be balanced with a keen focus on executing to and delivering on our near-term commitments .

Speaker #2: My impression during my first several weeks as interim CEO is that our leaders want and will embrace this shift in priorities . I'm challenging leaders across SAIC to focus on execution , make an on the business , impact and deliver results .

Jim Reagan: My impression during my first several weeks as Interim CEO is that our leaders want and will embrace this shift in priorities. I'm challenging leaders across SAIC to focus on execution, make an impact on the business, and deliver results, and I'm confident in their ability to step up. Lastly, we have shared with you our focus on increasing business development throughput and have shown strong progress against this, having increased submit volumes from $17 billion in FY 2024 to $28 billion in FY 2025. While I believe this is an appropriate level for a business our size, we must now focus our shift from targeting throughput to prioritizing quality and alignment with the markets where we have the strongest right to win. This will drive improved decision-making, more efficient resource allocation, and a stronger SAIC in the long run.

My impression during my first several weeks as Interim CEO is that our leaders want and will embrace this shift in priorities. I'm challenging leaders across SAIC to focus on execution, make an impact on the business, and deliver results, and I'm confident in their ability to step up. Lastly, we have shared with you our focus on increasing business development throughput and have shown strong progress against this, having increased submit volumes from $17 billion in FY 2024 to $28 billion in FY 2025. While I believe this is an appropriate level for a business our size, we must now focus our shift from targeting throughput to prioritizing quality and alignment with the markets where we have the strongest right to win. This will drive improved decision-making, more efficient resource allocation, and a stronger SAIC in the long run.

Speaker #2: And I'm confident in their ability to step up . Lastly , we have shared with you focus on increasing business our development , throughput and have shown strong progress against this .

Speaker #2: Having increased submit volumes from 17 billion in FY 24 to 28 billion in FY 25 . While I believe this is an appropriate level for a size , our now we must focus our shift from business , targeting throughput to prioritizing quality and alignment with the markets where we have the strongest right to win .

Speaker #2: This will drive decision more making , efficient improved allocation , resource and a stronger SAIC in the long run . As I look at some of the larger business development pursuits that have not gone our way in recent years , and the lessons learned there substantial value to be created from turning up the focus and attention on the core fundamentals of this business before turning the call over to Prabhu , I want to take a moment to thank Toni Townes Whitley , David Ray , Josh Jackson and Lauren Berger for their contributions and service to SAIC .

Jim Reagan: As I look at some of the larger business development pursuits that have not gone our way in recent years and the lessons learned, there's substantial value to be created from turning up the focus and attention on the core fundamentals of this business. Before turning the call over to Prabhu, I want to take a moment to thank Toni Townes-Whitley, David Ray, Josh Jackson, and Lauren Knausenberger for their contributions and service to SAIC. The recent changes we made were necessary to position the company for longer-term success but required difficult decisions impacting some very high-quality individuals. I also want to acknowledge the tremendous honor it is to lead SAIC, a company with a deep legacy of supporting our country.

As I look at some of the larger business development pursuits that have not gone our way in recent years and the lessons learned, there's substantial value to be created from turning up the focus and attention on the core fundamentals of this business. Before turning the call over to Prabhu, I want to take a moment to thank Toni Townes-Whitley, David Ray, Josh Jackson, and Lauren Knausenberger for their contributions and service to SAIC. The recent changes we made were necessary to position the company for longer-term success but required difficult decisions impacting some very high-quality individuals. I also want to acknowledge the tremendous honor it is to lead SAIC, a company with a deep legacy of supporting our country.

Speaker #2: recent The changes we made were necessary to position the company for longer term success , but required difficult decisions impacting some quality very high individuals .

Speaker #2: I also want to acknowledge the tremendous honor it is to lead SAIC , a company with a deep legacy of supporting our country .

Speaker #2: I look forward to serving in this interim capacity , working with the team to implement the priorities . I just leadership outlined and assisting the board in its search for a permanent CEO .

Jim Reagan: I look forward to serving in this interim capacity, working with the leadership team to implement the priorities I just outlined, and assisting the board in its search for a permanent CEO. We have begun that process, which is being led by a search committee comprised of board members working in conjunction with a leading external search firm. Our ideal candidate will be someone who shares this company's commitment to serving our nation and our customers and has a proven track record of operating excellence and value creation. I can speak for our board in saying that we see significant opportunity to drive value for our shareholders, greater opportunities for our employees, and improved outcomes for our customers, our nation, and its allies. With that, I'll now turn the call over to Prabu.

I look forward to serving in this interim capacity, working with the leadership team to implement the priorities I just outlined, and assisting the board in its search for a permanent CEO. We have begun that process, which is being led by a search committee comprised of board members working in conjunction with a leading external search firm. Our ideal candidate will be someone who shares this company's commitment to serving our nation and our customers and has a proven track record of operating excellence and value creation. I can speak for our board in saying that we see significant opportunity to drive value for our shareholders, greater opportunities for our employees, and improved outcomes for our customers, our nation, and its allies. With that, I'll now turn the call over to Prabhu.

Speaker #2: have We begun that process , which is being led by a search committee comprised of board members working in conjunction with a leading external search firm .

Speaker #2: ideal Our candidate will be someone who shares this company's commitment to serving our nation and our customers , and has a proven track record of operating excellence and value creation .

Speaker #2: can I speak for our board in saying that we see significant opportunity to drive value for our shareholders , greater opportunities for our employees , and improved outcomes for our customers .

Speaker #2: Our nation and its allies. And with that, I'll now turn the call over to Prabu.

Speaker #3: Jim , and good morning to those joining our call . I will our business development results in the quarter , followed by a review of our updated outlook , additional including some detail regarding the margin efforts that Jim improvement discussed .

Prabu Natarajan: Thank you, Jim, and good morning to those joining our call. I will discuss our business development results in the quarter, followed by a review of our updated outlook, including some additional detail regarding the margin improvement efforts that Jim discussed. As you can see on slide four, we delivered Q3 net bookings of $2.2 billion, resulting in a book-to-bill in the quarter and on a trailing 12-month basis of 1.2x. Our Q3 awards included a five-year recompete with the Air Force, with a total contract value of $1.4 billion, and on the new business side, a five-year $413 million contract with the U.S. Army for its Open Source Intelligence Enterprise, or OSINT, program. In the third quarter, we submitted proposals with a total contract value of approximately $3 billion, bringing our year-to-date submissions to approximately $21 billion.

Prabhu Natarajan: Thank you, Jim, and good morning to those joining our call. I will discuss our business development results in the quarter, followed by a review of our updated outlook, including some additional detail regarding the margin improvement efforts that Jim discussed. As you can see on slide four, we delivered Q3 net bookings of $2.2 billion, resulting in a book-to-bill in the quarter and on a trailing 12-month basis of 1.2x. Our Q3 awards included a five-year recompete with the Air Force, with a total contract value of $1.4 billion, and on the new business side, a five-year $413 million contract with the U.S. Army for its Open Source Intelligence Enterprise, or OSINT, program. In the third quarter, we submitted proposals with a total contract value of approximately $3 billion, bringing our year-to-date submissions to approximately $21 billion.

Speaker #3: As you can see on slide four , we delivered three new net bookings of 2.2 billion . Resulting in a book to bill in the quarter .

Speaker #3: a trailing 12 month And on basis of 1.2 x , our three Q awards included a five year recompete with the Air Force with a total value contract of 1.4 billion .

Speaker #3: And on the new business side , a five year , $413 million contract with the US Army for its open source intelligence enterprise , or Osint program .

Speaker #3: In the third quarter , we submitted proposals with a total contract value of approximately 3 billion , bringing our year to date submissions to approximately 21 billion .

Speaker #3: While the government shutdown has slowed our pace of proposal submissions, we expect this to normalize in the near term and continue to target submitting bids totaling over $30 billion in FY27.

Prabu Natarajan: While the government shutdown has slowed our pace of proposal submissions, we expect this to normalize in the near term and continue to target submitting bids totaling over $30 billion in FY27. The incremental investments we expect to fund out of our cost efficiency efforts will go towards strengthening our solutions and overall bid quality. I'll now turn to our updated outlook for FY26 and FY27. We are increasing our FY26 total revenue guidance to reflect the acquisition of SilverEdge and reaffirming our organic revenue growth guidance despite the roughly one-point impact to Q3 revenues from the government shutdown. Our guidance continues to assume a roughly four-point contraction in organic revenue growth in the fourth quarter. We are increasing our guidance for FY26 Adjusted EBITDA margin by 10 basis points due primarily to our strong program performance year to date.

While the government shutdown has slowed our pace of proposal submissions, we expect this to normalize in the near term and continue to target submitting bids totaling over $30 billion in FY27. The incremental investments we expect to fund out of our cost efficiency efforts will go towards strengthening our solutions and overall bid quality. I'll now turn to our updated outlook for FY26 and FY27. We are increasing our FY26 total revenue guidance to reflect the acquisition of SilverEdge and reaffirming our organic revenue growth guidance despite the roughly one-point impact to Q3 revenues from the government shutdown. Our guidance continues to assume a roughly four-point contraction in organic revenue growth in the fourth quarter. We are increasing our guidance for FY26 Adjusted EBITDA margin by 10 basis points due primarily to our strong program performance year to date.

Speaker #3: The incremental investments we expect to fund out of our cost efficiency efforts will go strengthening our towards solutions and overall bid quality . I'll now turn to our updated outlook for FY 26 and FY 27 .

Speaker #3: We are increasing our FY 26 total revenue guidance to reflect the acquisition of Silver Edge and reaffirming our organic revenue growth guidance . Despite the roughly one point impact to three Q revenues from the government shutdown .

Speaker #3: Our guidance continues to assume a roughly four point contraction in organic revenue growth in the fourth quarter . We are increasing our guidance for FY 26 adjusted EBITDA margin by ten basis points , due primarily to our strong program performance year to date increasing .

Speaker #3: We are our FY 26 adjusted diluted earnings per share guidance by $0.40 , largely due to the increased earnings and a lower tax rate .

Prabu Natarajan: We are increasing our FY26 adjusted diluted earnings per share guidance by $0.40, largely due to the increased earnings, and a lower tax rate as we now assume a roughly 10% effective tax rate for the year. We are maintaining our FY26 free cash flow guidance of greater than $550 million. For FY27, we are increasing our revenue guidance by approximately one point to include the acquisition of SilverEdge and are reaffirming our organic revenue growth guidance of 0% to 3%. This outlook reflects an assumed contribution from recent new business wins, including TENCAP, and OSINT, partially offset by known recompete headwinds of approximately 1% to 2%. As we've discussed, we are in the recompete phase for one of our largest programs, which represents just over 3% of annual revenue, with an expected award in the next few months.

We are increasing our FY26 adjusted diluted earnings per share guidance by $0.40, largely due to the increased earnings, and a lower tax rate as we now assume a roughly 10% effective tax rate for the year. We are maintaining our FY26 free cash flow guidance of greater than $550 million. For FY27, we are increasing our revenue guidance by approximately one point to include the acquisition of SilverEdge and are reaffirming our organic revenue growth guidance of 0% to 3%. This outlook reflects an assumed contribution from recent new business wins, including TENCAP, and OSINT, partially offset by known recompete headwinds of approximately 1% to 2%. As we've discussed, we are in the recompete phase for one of our largest programs, which represents just over 3% of annual revenue, with an expected award in the next few months.

Speaker #3: As we now assume a roughly tax 10% effective rate for the year . We are maintaining our FY 26 free cash flow guidance of greater than 550 million for FY 27 .

Speaker #3: We are increasing our revenue guidance by approximately one point to include the acquisition of Silver Edge and our reaffirming our organic revenue growth of guidance 0% to 3% .

Speaker #3: This outlook reflects an assumed contribution from recent new business wins, including ten cap hope, and is partially offset by known recompete headwinds of approximately 1% to 2%.

Speaker #3: discussed , in the we are Recompete phase for one of our largest programs , which represents just over 3% of annual revenue , with an expected award in the next few months .

Speaker #3: A favorable outcome would on this position us well in the 0% to 3% range . While a loss would likely make the lower end of the range more likely based on what we know today .

Prabu Natarajan: A favorable outcome on this would position us well in the 0% to 3% range, while a loss would likely make the lower end of the range more likely based on what we know today. We are increasing FY27 margin guidance by 20 basis points at the midpoint to a range of 9.7% to 9.9%. The key drivers behind this are the acquisition of SilverEdge, which adds roughly 10 basis points, and the initial 10 basis points impact from cost actions taken to date. Our bias for adjusted EBITDA margins in FY27 and beyond remains to the upside as we see meaningful opportunities to drive efficiency and improve performance, which are not reflected in our updated guidance. As we return to revenue growth in the coming quarters, we anticipate that the efficiency efforts being implemented now will strengthen our ability to increase EBITDA faster than revenue.

A favorable outcome on this would position us well in the 0% to 3% range, while a loss would likely make the lower end of the range more likely based on what we know today. We are increasing FY27 margin guidance by 20 basis points at the midpoint to a range of 9.7% to 9.9%. The key drivers behind this are the acquisition of SilverEdge, which adds roughly 10 basis points, and the initial 10 basis points impact from cost actions taken to date. Our bias for adjusted EBITDA margins in FY27 and beyond remains to the upside as we see meaningful opportunities to drive efficiency and improve performance, which are not reflected in our updated guidance. As we return to revenue growth in the coming quarters, we anticipate that the efficiency efforts being implemented now will strengthen our ability to increase EBITDA faster than revenue.

Speaker #3: We are increasing FY 27 margin guidance by 20 basis points at the midpoint to a range of 9.7% to 9.9% . The key drivers behind this are the acquisition of Silver Edge , which adds roughly ten basis points , and the initial ten basis points impact from cost actions taken to date .

Speaker #3: Our bias for adjusted EBITDA margins in FY 27 and beyond remains to the upside , as we see meaningful opportunities to drive efficiency and improve performance , which are not reflected in our updated guidance as we return to revenue growth in the coming quarters .

Speaker #3: We anticipate that the efficiency efforts being implemented now will strengthen our ability to increase EBITDA faster than revenue . We are increasing our FY 27 adjusted EPs guidance by $0.50 , reflecting the addition of Silver Edge , increased operating margins lower and a share count .

Prabu Natarajan: We are increasing our FY27 adjusted EPS guidance by $0.50, reflecting the addition of SilverEdge, increased operating margins, and a lower share count. We are maintaining our guidance for FY27 free cash flow of greater than $600 million, or approximately $13.50 per share. As a reminder, FY26 and FY27 free cash flow benefits from changes related to Section 174 under the One Big Beautiful Bill Act, which results in minimal cash taxes this year and next. Given our strong free cash flow, clear visibility into margin improvement, and a return to revenue growth, we see returning cash to shareholders via our repurchase program as a compelling investment and now expect to repurchase approximately $500 million in each of FY26 and FY27. This $1 billion of total share repurchases represents approximately 25% of our market value.

We are increasing our FY27 adjusted EPS guidance by $0.50, reflecting the addition of SilverEdge, increased operating margins, and a lower share count. We are maintaining our guidance for FY27 free cash flow of greater than $600 million, or approximately $13.50 per share. As a reminder, FY26 and FY27 free cash flow benefits from changes related to Section 174 under the One Big Beautiful Bill Act, which results in minimal cash taxes this year and next. Given our strong free cash flow, clear visibility into margin improvement, and a return to revenue growth, we see returning cash to shareholders via our repurchase program as a compelling investment and now expect to repurchase approximately $500 million in each of FY26 and FY27. This $1 billion of total share repurchases represents approximately 25% of our market value.

Speaker #3: We are maintaining our guidance for FY flow of 27 free cash greater than 600 million , or approximately $13.50 per share . As a reminder , FY 26 and FY 27 free cash flow from changes benefits related to section 174 under the One Big Beautiful Bill act , which results in minimal cash taxes .

Speaker #3: This year and next . Given our strong cash flow , clear visibility into margin improvement and a return to revenue growth , we see returning cash to shareholders via our repurchase program as a compelling investment .

Speaker #3: And now expect to repurchase approximately 500 million in each FY of 26 and FY 27 . This 1 billion of total share repurchases represents approximately 25% of our market value .

Speaker #3: As Jim indicated , we see opportunities to create significant value for shareholders and are acting decisively to execute on our plans . While we appreciate the market's awareness with some of the uncertainty facing our end market , our FY 26 revenue performance and our leadership transition , we have conviction in ability to further improve execution , deliver sustained , profitable growth , and create long term shareholder value .

Prabu Natarajan: As Jim indicated, we see opportunities to create significant value for shareholders and are acting decisively to execute on our plans. While we appreciate the market's weariness with some of the uncertainty facing our end market, our FY26 revenue performance, and our leadership transition, we have conviction in our ability to further improve execution, deliver sustained profitable growth, and create long-term shareholder value. Realizing the potential of SAIC requires focus and a commitment to delivering on what we say. I am confident that we can accomplish this and demonstrate clear progress against this in the coming quarters. I will now turn the call over for Q&A.

As Jim indicated, we see opportunities to create significant value for shareholders and are acting decisively to execute on our plans. While we appreciate the market's weariness with some of the uncertainty facing our end market, our FY26 revenue performance, and our leadership transition, we have conviction in our ability to further improve execution, deliver sustained profitable growth, and create long-term shareholder value. Realizing the potential of SAIC requires focus and a commitment to delivering on what we say. I am confident that we can accomplish this and demonstrate clear progress against this in the coming quarters. I will now turn the call over for Q&A.

Speaker #3: Realizing the potential of SAIC requires focus commitment to and a delivering on what we say , I am confident that we can accomplish this and demonstrate clear progress against this in the coming quarters .

Speaker #3: I will turn the now call over for Q&A .

Speaker #4: Thank you . And as a reminder to ask a question , you will need to press star one one on your telephone and wait for your name to be announced .

Operator: Thank you. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from Gautam Khanna from TD Cowen. Your line is open.

Speaker #4: To withdraw your question , please press star one . One again , please stand by while we compile the Q&A roster . One moment for our first question .

Speaker #4: Our first question will come from line of Gautam Khanna from Callan . Your line TD is open .

Speaker #5: Yeah. Thank you. I ask if you could maybe.

Speaker #1: Describe what you're seeing in the .

Speaker #5: Procurement environment . More broadly right now . Post the shutdown and you know , with respect to our incoming RFPs , pace of adjudication and the like .

Gautam Khanna: Yeah, thank you. I wanted to ask if you could maybe describe what you're seeing in the procurement environment more broadly right now post the shutdown and with respect to incoming RFPs, pace of adjudication, and the like.

Speaker #5: Sure .

Speaker #3: Hey good morning Gautham . Thank you for the question . Big picture . As we alluded to , the to the point on in the earnings script , I think we did see a in submit slowdown activity and a slowdown in the RFPs coming through the door as a result of the shutdown .

Prabu Natarajan: Sure. Hey, good morning, Gautam. Thank you for the question. In big picture, as we alluded to the point in the earnings script, I think we did see a slowdown in submit activity and a slowdown in the RFPs coming through the door as a result of the shutdown. We do expect that to normalize, I would say, over the course of the fourth quarter, recognizing that Q4 tends to be the softest Book-to-Bill quarter for the industry in general. So I would say it's getting back to normal. I don't think fundamentally, if you normalize for the shutdown, it hasn't materially changed from where it was in the Q2 timeframe, where award decisions are taking a little bit longer, but the RFP activity has stayed more or less on pace.

Jim Reagan: Sure. Hey, good morning, Gautam. Thank you for the question. In big picture, as we alluded to the point in the earnings script, I think we did see a slowdown in submit activity and a slowdown in the RFPs coming through the door as a result of the shutdown. We do expect that to normalize, I would say, over the course of the fourth quarter, recognizing that Q4 tends to be the softest Book-to-Bill quarter for the industry in general. So I would say it's getting back to normal. I don't think fundamentally, if you normalize for the shutdown, it hasn't materially changed from where it was in the Q2 timeframe, where award decisions are taking a little bit longer, but the RFP activity has stayed more or less on pace.

Speaker #3: We do expect that to normalize . I would say over the course of the fourth quarter , recognizing that Q4 tends to be the , you softest book to bill quarter for the industry in general .

Speaker #3: So I would say it's getting back to normal . I don't think fundamentally , if you normalize for the shutdown , it hasn't materially changed from where it was in in the Q2 time frame , where award decisions are taking a little bit .

Speaker #5: Gotcha. And also, I wanted to ask if there was any residual impact from Doge. I know it's been a while since we've talked about that, but Doge and just the pricing environment broadly.

Gautam Khanna: Gotcha. I also wanted to ask if there was any residual impact from DOGE. I know it's been a while since we've talked about that, but DOGE and just the pricing environment broadly.

Speaker #3: Yeah . On the Doge environ , I would say , you no material changes to what we've disclosed before . We said about 1% of full year revenues for this year .

Prabu Natarajan: Yeah, on the DOGE environment, I would say no material changes to what we've disclosed before. We said about 1% of full-year revenues for this year, so that really has not changed. And we also alluded to the broader DOGE effort, I would say, has morphed into sort of more mini DOGE reviews inside of the different agencies and the departments based on their funding situation. But that's a, frankly, a feeling that we're used to navigating, historically speaking. So I would say it has remained fairly stable, I would say. And so I would say not a lot. And in terms of pricing pressure, our margins were very healthy in Q3. We really have not seen a ton of pricing pressure either via the RFPs that are coming out.

Jim Reagan: Yeah, on the DOGE environment, I would say no material changes to what we've disclosed before. We said about 1% of full-year revenues for this year, so that really has not changed. And we also alluded to the broader DOGE effort, I would say, has morphed into sort of more mini DOGE reviews inside of the different agencies and the departments based on their funding situation. But that's a, frankly, a feeling that we're used to navigating, historically speaking. So I would say it has remained fairly stable, I would say. And so I would say not a lot. And in terms of pricing pressure, our margins were very healthy in Q3. We really have not seen a ton of pricing pressure either via the RFPs that are coming out.

Speaker #3: So that really has not changed . And we alluded also to , you know , the broader Doge effort , I would say has morphed into sort of more mini dose reviews inside of the different agencies in the departments based on their funding situation .

Speaker #3: But that's a frankly , a feeling that we're used to navigating , historically speaking . So I would say , you know , it has remained fairly would stable .

Speaker #3: I say . And and , you know , so I would say not a in terms lot . of And pricing pressure , you know , our margins were very healthy in Q3 .

Speaker #3: We really have not ton of seen a pricing pressure either via the RFPs that are coming out . We're seeing a little more fixed price in some areas , but I would not call that a trend .

Speaker #3: Broadly . But really have not seen a ton of pricing pressure at this point .

Prabu Natarajan: We're seeing a little more fixed price in some areas, but I would not call that a trend broadly, but really have not seen a ton of pricing pressure at this point.

We're seeing a little more fixed price in some areas, but I would not call that a trend broadly, but really have not seen a ton of pricing pressure at this point.

Speaker #5: Thank you .

Speaker #4: Thank you. One moment for our next question. Sure. Our next question comes from the line of Sheila Kahyaoglu from Jefferies. The line is open.

Gautam Khanna: Thank you.

Prabu Natarajan: Sure.

Jim Reagan: Sure.

Operator: Thank you. One moment for our next question. Our next question will come from Sheila Kahyaoglu from Jefferies. Your line is open.

Speaker #6: Good morning , guys , and thank you for the time and congratulations , Jim . Maybe just on Silver Edge as it becomes embedded into the portfolio .

Sheila Kahyaoglu: Good morning, guys, and thank you for the time. Congratulations, Jim. Maybe just on SilverEdge, as it becomes embedded into the portfolio, how do we think about the opportunity of SilverEdge and integration within SAIC?

Speaker #6: we think about the How do opportunity of of Silver Edge integration and SAIC ?

Speaker #7: Thanks for Yeah . the question , Sheila . It's good to hear from you . I would tell you , after being here for , you know , 9 or 10 weeks , I wildly am enthusiastic about what Silver Edge is going to be able to do .

Jim Reagan: Yeah, thanks for the question, Sheila. It's good to hear from you. I would tell you, after being here for 9 or 10 weeks, I am wildly enthusiastic about what SilverEdge is going to be able to do, not just as a standalone part of our business, but as we integrate it into the portfolio, what it can do to accelerate the differentiation of a lot of the bids that we have, not just within our intelligence community customers, but more broadly across the whole portfolio.

Speaker #7: just Not as a standalone part of our business , but as we integrate it into the What it portfolio . can do to the accelerate differentiation of a lot of the bids that we have , not just within our intelligence community customers , but more broadly across the whole portfolio .

Speaker #7: We expect that Silver Edge will be accretive next year , both on a it'll push our margins up a bit , but also be accretive on EPs and provide , I think that the broader of portfolio of opportunities company will give within our great opportunity , not just for us to to win more deliver better solutions , but and also great opportunities employees of Silver Edge that are now part of the for the family .

Jim Reagan: We expect that SilverEdge will be accretive next year, both on a it'll push our margins up a bit, but also be accretive on EPS and provide, I think, that the broader portfolio of opportunities within our company will give great opportunity, not just for us to win more and deliver better solutions, but also great opportunities for the employees of SilverEdge that are now part of the family.

We expect that SilverEdge will be accretive next year, both on a it'll push our margins up a bit, but also be accretive on EPS and provide, I think, that the broader portfolio of opportunities within our company will give great opportunity, not just for us to win more and deliver better solutions, but also great opportunities for the employees of SilverEdge that are now part of the family.

Speaker #6: Great. Thank you so much. And maybe if I could just ask about the civil growth or the civil decline in that quarter segment, which appears to be down 7% year on year.

Sheila Kahyaoglu: Great. Thank you so much. Maybe if I could just ask on the Civil growth or the Civil decline in the quarter, that segment appears to be down 7% year on year. Can you just provide more detail on those programs? Was it a few specific programs, or are you seeing across the board? How do you think about the trajectory over the next few quarters?

Speaker #6: Can you just provide more detail on those programs ? Was it a few specific programs or are you seeing across the board ? And how do you think about the trajectory over the next few quarters ?

Speaker #3: Hi Sheila here . Thank you for the question . I would say big picture . You know , I you know , within every quarter , I think you're going to have a little bit of seasonality that creates a little lumpiness .

Prabu Natarajan: Sheila, Prabhu here. Thank you for the question. I would say big picture, within every quarter, I think you're going to have a little bit of seasonality that creates a little bit of lumpiness. If you zoomed out a little and looked at the nine months for the first nine months of the year, our civil business has been roughly flat, and margins are up pretty materially. I would say there are no single program-related drivers in the civil business. I'd say the nine-month story is probably a better reflection of where that portfolio is rather than the three months because the three-month story is always, I think, harder to explain given changes in compute and store volume, etc. So I would just say, think of the nine months as a better reflection.

Prabhu Natarajan: Sheila, Prabhu here. Thank you for the question. I would say big picture, within every quarter, I think you're going to have a little bit of seasonality that creates a little bit of lumpiness. If you zoomed out a little and looked at the nine months for the first nine months of the year, our civil business has been roughly flat, and margins are up pretty materially. I would say there are no single program-related drivers in the civil business. I'd say the nine-month story is probably a better reflection of where that portfolio is rather than the three months because the three-month story is always, I think, harder to explain given changes in compute and store volume, etc. So I would just say, think of the nine months as a better reflection.

Speaker #3: If you zoomed out a little and looked at the nine months for the year, the first nine months of the year, our civil business has been flat and roughly up pretty materially.

Speaker #3: margins are I would say there are no single program related drivers in the civil business . I'd say the nine month story is probably a better reflection of where that portfolio is , rather than the three months , because the three month story is always , I think , harder to explain given , you know , changes in and store compute volume , etc.

Speaker #3: so I would just say think of the nine months as a better reflection . are in We agencies that are seeing some incremental funding , whether that's CBP , DHS , or frankly , the FAA .

Prabu Natarajan: We are in agencies that are seeing some incremental funding, whether that's CBP, DHS, or frankly, the FAA. I'm really proud of what the team is doing on margins. We said a couple of years ago that the mid-12% is probably the trough for this business and that we would expect to get the business back to the 14% range. They are driving hard towards it. They were having to make some hard decisions, but they are doing all the right things we want them to do to get this portfolio back growing again next year, but also getting margins back up to about 14%.

We are in agencies that are seeing some incremental funding, whether that's CBP, DHS, or frankly, the FAA. I'm really proud of what the team is doing on margins. We said a couple of years ago that the mid-12% is probably the trough for this business and that we would expect to get the business back to the 14% range. They are driving hard towards it. They were having to make some hard decisions, but they are doing all the right things we want them to do to get this portfolio back growing again next year, but also getting margins back up to about 14%.

Speaker #3: And and I'm really proud of what the team is doing on margins . We said a couple ago that the mid 12% is probably the trough for this business , and that we would expect to get the business back to the 14% range .

Speaker #3: And they are driving hard towards it . They are having to make some hard decisions , but they doing are all the right things .

Speaker #3: We want them to do to get this portfolio back . Growing again next year , but also getting margins back up to about 14% .

Speaker #6: Great . Thank you .

Speaker #3: Sure .

Speaker #4: You. Thank you. One moment for our next question. Our question comes from the line of Jonathan Sigman from Stifel. Your line is open.

Sheila Kahyaoglu: Great. Thank you.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Jonathan Seegman from Stifel. Your line is open.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Jonathan Siegmann from Stifel. Your line is open.

Speaker #5: Good morning . Thanks for taking my question . Hoping you could share thoughts on the Department of Wars , announced reforms about , and talk some of the available options the team has to pivot the be better business to aligned with those aspirations , and then to follow on that .

Jonathan Seegman: Good morning. Thanks for taking my question. Hoping you could share thoughts on the Department of Defense's announced reforms and talk about some of the available options the team has to pivot the business to be better aligned with those aspirations. Then, to follow on to that, just I would love to hear from you, Jim, just given how dynamic the environment is, what drove the decision to change direction of the company now, given all the moving pieces? Nice to engage with you again. Thank you.

Jonathan Siegmann: Good morning. Thanks for taking my question. Hoping you could share thoughts on the Department of Defense's announced reforms and talk about some of the available options the team has to pivot the business to be better aligned with those aspirations. Then, to follow on to that, just I would love to hear from you, Jim, just given how dynamic the environment is, what drove the decision to change direction of the company now, given all the moving pieces? Nice to engage with you again. Thank you.

Speaker #5: to Just I would love to hear from Jim . you , given how Just dynamic the environment is , what drove the decision to change direction in the company now , given all the moving pieces and nice to engage with you again .

Speaker #5: Thank you .

Speaker #7: Yeah , John , thanks for the question . First , you know , in terms of how Department of War has been making some announced changes and how it's going to do procurement , we are we are ready to help the Department of War implement the changes that it needs to make .

Jim Reagan: Yeah, John, thanks for the question. First, in terms of how the Department of Defense has been making some announced changes and how it's going to do procurement, we are ready to help the Department of Defense implement the changes that it needs to make. We welcome the opportunity to see greater speed in the procurement process, which is really their objective, to put the department more on a faster war footing to keep us ready for all adversaries. The use of different contracting vehicles, for example, OTAs, that's something that we have been doing for some time, and we're ready to expand the use of those kinds of alternative or innovative contracting vehicles that will provide greater speed of not just the procurement process, but greater speed of implementing solutions.

Speaker #7: We welcome the opportunity to see greater speed in the procurement process, which is really their objective: to put the department more on a faster war footing, to keep us ready for all adversaries.

Speaker #7: The use of different contracting vehicles , for example , OTAs . That's something that we have been doing for some , and we're ready to expand the use time of those kinds of or alternative innovative contracting vehicles that will provide speed greater , not just the procurement process , but greater speed of implementing solutions .

Speaker #7: You know , one of the things that's interesting that we've been hearing is in the interest of speed , you know , 80% , 90% adherence to requirements instead of 100% is becoming acceptable .

Jim Reagan: One of the things that's interesting that we've been hearing is, in the interest of speed, 80%, 90% adherence to requirements instead of 100% is becoming acceptable. Now, how they're going to implement that, there's a lot of guidance that still needs to be issued, but we're planning on spending a lot of time with our customers to help them implement this in a way that achieves their objectives of speed and efficiency. You also asked about the dynamic environment. We are ready, and I would say that the acquisition of SilverEdge is just one proof point of the things that we're doing to be ready for increased AI content in solutions that our customers are looking for. And we're always looking for ways to continue innovation in our business.

One of the things that's interesting that we've been hearing is, in the interest of speed, 80%, 90% adherence to requirements instead of 100% is becoming acceptable. Now, how they're going to implement that, there's a lot of guidance that still needs to be issued, but we're planning on spending a lot of time with our customers to help them implement this in a way that achieves their objectives of speed and efficiency. You also asked about the dynamic environment. We are ready, and I would say that the acquisition of SilverEdge is just one proof point of the things that we're doing to be ready for increased AI content in solutions that our customers are looking for. And we're always looking for ways to continue innovation in our business.

Speaker #7: Now , how they're going to implement that ? You know , there's a lot of guidance that still needs to be issued . But we're planning on spending a lot of time with customers to our help them implement this in a way that their achieves objectives of of speed and efficiency .

Speaker #7: You also asked about the dynamic environment we're ready for. And, you know, I would say that the acquisition of Silver Edge is just one proof point of the things that we're doing to be ready for increased AI content in solutions that our customers are looking for.

Speaker #7: And we're always looking for ways to continue innovation in our business to spend our spend on innovation is going to be more clearly mapped to opportunities in the pipeline .

Speaker #7: And what the customers are telling us they're looking for . And then the third thing I think you asked about was why change now ?

Jim Reagan: Our spend on innovation is going to be more clearly mapped to opportunities in the pipeline and what the customers are telling us they're looking for. And then the third thing I think you asked about was why change now? I think that the focus of this business and the marching orders that I've received from our board is to double down our focus on execution, not just execution in how we deliver solutions and our program results to customers, but also listening more carefully to customers so that when we submit a proposal, our likelihood of winning is higher and that our ability to accelerate growth into the next couple of years will be kind of a proof point coming out of that focus.

Our spend on innovation is going to be more clearly mapped to opportunities in the pipeline and what the customers are telling us they're looking for. And then the third thing I think you asked about was why change now? I think that the focus of this business and the marching orders that I've received from our board is to double down our focus on execution, not just execution in how we deliver solutions and our program results to customers, but also listening more carefully to customers so that when we submit a proposal, our likelihood of winning is higher and that our ability to accelerate growth into the next couple of years will be kind of a proof point coming out of that focus.

Speaker #7: I think that the the focus of this business in the marching orders that I've received from our board is to double down our focus on execution , not just execution and how we deliver solutions and our program results to in listening more carefully to customers so when we submit a proposal , our that likelihood of higher and winning is our that ability to accelerate growth into the next couple of years will be kind of a proof point coming out of that focus .

Speaker #5: Thank you for the .

Speaker #5: comments Thank you .

Speaker #7: Thank you , John .

Speaker #4: One moment for our

Speaker #4: next question . . Our next question will come from the line of Seth Seifman from JP Morgan . is Your line .

Jonathan Seegman: Thank you for the comments.

Jonathan Siegmann: Thank you for the comments.

Operator: Thank you.

Jim Reagan: Thank you, John.

Operator: One moment for our next question. Our next question will come from the line of Seth Seifman from J.P. Morgan. Your line is open.

Speaker #8: Hey , thanks very much and good morning , everyone . I wonder Jim or probably , you know , you mentioned the 100 million of savings that you were looking at .

Seth Seifman: Hey, thanks very much. And good morning, everyone. I wonder, Jim, or probably you mentioned the $100 million of savings that you were looking at. How should we think about how much of that gets diverted toward investment and new bids on work that should drive growth and be accretive to margin? How much of it should flow through to the bottom line? And how much of that contributed to the increase in the EBITDA expectation for next year?

Speaker #8: How think about should we how much of that gets diverted toward investment ? And , you know , new bids on work that should be drive growth and be accretive to margin .

Speaker #8: How much of it should flow through to the line bottom, and how much of that contributed to the increase in the EBITDA expectation for next year?

Speaker #7: I it's a great Seth , and thanks for question , asking it the way I would kind of take the the question that you've asked the part of last it .

Jim Reagan: It's a great question, Seth, and thanks for asking it. The way I would kind of take the question you've asked, the last part of it first, the guidance that we have in for next year reflects the work that we've already done to exit the current fiscal year at a lower cost run rate. Next year's number doesn't include more work that we think we need to do and are undertaking at the beginning of the calendar year. We're launching a new program in January that will continue the work that we've been doing around the consolidation of our business groups and taking out a lot of the overhead in connection with that. So the amount of reinvestment out of the $100 million number that we're talking about will be what does encode to improving margins.

Speaker #7: First , the guidance that we have in for next year the work that we've already done to exit the current fiscal year at a lower cost run rate .

Speaker #7: It does not . Next year's number doesn't include more work that we need to think we do and are undertaking at the beginning of of the calendar We're year .

Speaker #7: launching a program new in January that will continue the work that we've been doing around the consolidation of our business groups and taking out a lot of the overhead in in connection with that .

Speaker #7: So the the amount of reinvestment out of the $100 million number that we're talking about will be what doesn't go to improving margins .

Speaker #7: So, I would call it there. There will be a substantial amount of that $100 million that will go to resources that we need to add to the business around account management.

Jim Reagan: So, I would call it there will be a substantial amount of that 100 million that will go to resources that we need to add to the business around account management, more business development leadership, as well as some improvement that we want to fund in the actual process of developing winning proposals. I hope that answers your question.

So, I would call it there will be a substantial amount of that 100 million that will go to resources that we need to add to the business around account management, more business development leadership, as well as some improvement that we want to fund in the actual process of developing winning proposals. I hope that answers your question.

Speaker #7: More business development , leadership , as well as some improvement that we want to fund in the actual process of of developing winning proposals .

Speaker #7: I hope that that answers your question .

Speaker #8: Yeah , yeah , absolutely . That's that's helpful . And , you know , as a follow up , you know , I think you talked about business development and and execution as , as areas of improvement , I guess when you look at the portfolio and you think about the core competencies of of SAIC and , you know , the things that , you know , really can drive value in the business and the core of what's know , there , you what do you see that you like ?

Seth Seifman: Yeah, yeah. Absolutely. That's helpful. And as a follow-up, I think you talked about business development and execution as areas of improvement. I guess when you look at the portfolio and you think about the core competencies of SAIC and the things that really can drive value in the business and the core of what's there, what do you see that you like?

Speaker #7: You know what I see ? That I like is a lot of of very deep understanding of what the customer's pain points are in delivering mission science is part of our name , and we are a company of of strong scientists , strong application development and application integration capability .

Jim Reagan: You know what I see that I like is a lot of very deep understanding of what the customer's pain points are in delivering mission. Science is part of our name, and we are a company of strong scientists, strong application development and application integration capability, and people that understand mission. The passion for what we do runs deep in the 57-year history of our company, and it's something that I'm very proud of. So I think that, and I've already had some conversations with customers who acknowledge our ability to help them be successful.

Speaker #7: And people that understand mission . The passion for for what we do runs deep in 57 year history the of our company , and it's something that I'm very proud of .

Speaker #7: So I think , you know , I and I've already had some conversations with customers who acknowledge our ability to help them be successful .

Speaker #7: I think that what we can do better is , as I as I've said , get intense get a more focus on marrying the investments that we make in innovation , the investments that we make in R&D to the opportunities that our customers are putting in front of that us , we're going to be bidding on in the next 24 months .

Jim Reagan: I think that what we can do better is, as I've said, get a more intense focus on marrying the investments that we make in innovation, the investments that we make in R&D, to the opportunities that our customers are putting in front of us that we're going to be bidding on in the next 24 months. So we're going to improve that as well as doing a little bit better job of listening to our customers tell us not what they need today on programs that we're executing, but really, what are they going to look to us to do tomorrow that's different from what we're doing today. Everything we're capable of doing, but in listening to that, I need them to see our listening showing up in the proposals that we submit.

I think that what we can do better is, as I've said, get a more intense focus on marrying the investments that we make in innovation, the investments that we make in R&D, to the opportunities that our customers are putting in front of us that we're going to be bidding on in the next 24 months. So we're going to improve that as well as doing a little bit better job of listening to our customers tell us not what they need today on programs that we're executing, but really, what are they going to look to us to do tomorrow that's different from what we're doing today. Everything we're capable of doing, but in listening to that, I need them to see our listening showing up in the proposals that we submit.

Speaker #7: So we're going to improve that as well as doing a little customers tell us not what they need today . Programs that we're executing , but really , what are they going to look to us do to tomorrow ?

Speaker #7: That's different from what we're doing today . Everything we're capable of doing . But in but listening to that , I need them to see our listening , showing up in the in the proposals that we submit .

Speaker #8: Excellent . Great . Thanks very much .

Speaker #9: Thanks .

Speaker #4: One moment for our next question . Our next question will come from line Tobey of Sommer from Truist . Your line is open .

Seth Seifman: Excellent. Great. Thanks very much.

Operator: Thanks, Seth. One moment for our next question. Our next question will come from the line of Toby Sommer from Truist. Your line is open.

Speaker #10: Thank you . I'm curious if you and the board expect the pressure on federal civil spending to largely conclude in 2025 , or do you consider this a longer term headwind that you are planning for ?

Prabu Natarajan: Thank you. Curious if you and the board expect the pressure on federal civil spending to largely conclude in 2025, or do you consider this a longer-term headwind that you are planning for?

Tobey Sommer: Thank you. Curious if you and the board expect the pressure on federal civil spending to largely conclude in 2025, or do you consider this a longer-term headwind that you are planning for?

Speaker #7: I think that there's probably going to be continued pressure on civilian agency budgets . That's just , you , a fact of life that we see going forward as the the federal budget priorities do greater put emphasis on improving readiness and that'll show up in bigger budgets for the DoD .

Jim Reagan: I think that there's probably going to be continued pressure on civilian agency budgets. That's just a fact of life that we see going forward as the federal budget priorities do put greater emphasis on improving readiness, and that'll show up in bigger budgets for the DoD. That said, as Prabhu had mentioned a little bit earlier, we believe that we're kind of in the fast currents of the civilian agencies. The places we're at are the faster currents of civilian agency spend, are things like CBP and FAA, are the two good examples that Prabhu had mentioned earlier. So I feel really good about where we're placed within the civilian agency space, and I'm also very pleased at how we're executing there in terms of delivery of results for customers that are reflective of expanding margins.

Speaker #7: That said , as mentioned a little bit earlier , we believe that we're kind of in the fast current of the civilian agencies , the places we're at are the faster where the faster civilian currents of agency are spend like things CBP and and FAA .

Speaker #7: Are the two good examples that probably we mentioned earlier . So I feel really good about where we're placed civilian within the agency space .

Speaker #7: But and I'm also very pleased at how we're executing there in terms of delivery of delivery of results for are reflective customers that of of expanding margins .

Speaker #10: Thank you. Given that response, how do you feel about and think about portfolio shaping to increase the probability of being able to achieve your organic growth and margin objectives?

Prabu Natarajan: Thank you. Given that response, how do you feel about and think about portfolio shaping to increase the probability of being able to achieve your organic growth and margin objectives?

Tobey Sommer: Thank you. Given that response, how do you feel about and think about portfolio shaping to increase the probability of being able to achieve your organic growth and margin objectives?

Speaker #7: You know, there are always opportunities to shape the portfolio. And, you know, we've done that in a couple of cases in the last 3 or 4 years.

Jim Reagan: There's always opportunity to shape portfolio, and we've done that in a couple of cases in the last three or four years. I'm never going to say never. I wouldn't say that there's a target or that you can expect to hear us announcing a portfolio shaping move in the next couple of quarters, but we're always looking at opportunities to do that.

Speaker #7: And I'm never going to say never . I wouldn't say that there's a target you can or that expect to hear us announcing a portfolio shaping move in the next quarters .

Speaker #7: couple of But we're always looking at opportunities to do that .

Speaker #3: the only thing I And Toby , to would add that is that to the extent that , you know , we are reviewing the portfolio and looking at areas of the portfolio that are unable to be transformed .

Prabu Natarajan: And Toby, the only thing I would add to that is that, to the extent that we are reviewing the portfolio and looking at areas of the portfolio that are unable to be transformed, in other words, where they tend to be predominantly lower-end services oriented, I think that you will see us actively think about that conversation, because I think the capacity to transform is just as important to make sure the portfolio stays fresh. Last question, if I could sneak in a third one. Given the turbulence in the end markets and budget in this year and potentially going forward in civil, would you like to toggle the leverage down a bit over time, or are you going to stick with this leverage target? Because I think the group is down a bit over the last year and a half or so.

Prabhu Natarajan: And Toby, the only thing I would add to that is that, to the extent that we are reviewing the portfolio and looking at areas of the portfolio that are unable to be transformed, in other words, where they tend to be predominantly lower-end services oriented, I think that you will see us actively think about that conversation, because I think the capacity to transform is just as important to make sure the portfolio stays fresh.

Speaker #3: In other words , where they tend to be predominantly lower end services oriented . I think that you will see us about that actively think conversation because I think the capacity to transform is just as important to make sure the portfolio stays fresh .

Speaker #10: The last question if I could sneak given the in a third one in , the turbulence in the end markets and budget in this year and potentially going forward in civil , it , would you like to toggle the leverage down a bit over time , or are you going to stick with this leverage target ?

Tobey Sommer: Last question, if I could sneak in a third one. Given the turbulence in the end markets and budget in this year and potentially going forward in civil, would you like to toggle the leverage down a bit over time, or are you going to stick with this leverage target? Because I think the group is down a bit over the last year and a half or so.

Speaker #10: Because I group think the is down a bit over the last year and a half or so .

Speaker #3: Yeah , a fair question , Toby . I mean , look , we we actively talk about the leverage both inside the company as well as with our board .

Jim Reagan: Yeah, fair question, Toby. I mean, look, we actively talk about the leverage both inside the company as well as with our board. 3.0 is sort of a leverage area that we are roughly comfortable with. We try to stress test our assumptions on EBITDA and cash flow to ensure that we can deliver and stay at that 3.0. We routinely talk about whether deleveraging is an appropriate thing to do in the environment. I think I would say given the M&A market where I would say, by and large, it still has tended to be a seller's market, it is very hard, I think, to justify acquiring businesses at 12x, 13x, 14x when we're being traded at 8x, 9x, 10x. So I think you'll see us stay disciplined on that front. But frankly, I think we tend to be astute in the way we manage our capital.

Jim Reagan: Yeah, fair question, Tobey. I mean, look, we actively talk about the leverage both inside the company as well as with our board. 3.0 is sort of a leverage area that we are roughly comfortable with. We try to stress test our assumptions on EBITDA and cash flow to ensure that we can deliver and stay at that 3.0. We routinely talk about whether deleveraging is an appropriate thing to do in the environment. I think I would say given the M&A market where I would say, by and large, it still has tended to be a seller's market, it is very hard, I think, to justify acquiring businesses at 12x, 13x, 14x when we're being traded at 8x, 9x, 10x. So I think you'll see us stay disciplined on that front. But frankly, I think we tend to be astute in the way we manage our capital.

Speaker #3: 3.0 is , you know , sort of a leverage area that we are roughly comfortable with . We try to stress test our assumptions on EBITDA and cash flow to ensure that can deliver and stay at we that 3.0 .

Speaker #3: We routinely talk about whether deleveraging is an appropriate thing to do in the environment . I think I would say , you know , given the M&A market , where , you know , I would say by and large , it's still has tended to be a seller's market .

Speaker #3: very hard , I think , to It is justify , you know , acquiring businesses that , you know , 12 , 13 , 14 times when we're being traded at eight , nine , ten times .

Speaker #3: So I think you'll see us stay disciplined on that front . But but frankly , I think we we tend to , you know , be astute in the way we manage our capital , share repurchases are always market conditions permitting .

Speaker #3: And where we tend to see , you know , I'm going to say a higher return on the buybacks . We will see us capital deploy that way .

Jim Reagan: Share repurchases are always market conditions permitting. And where we tend to see, I'm going to say, a higher return on the buybacks, we will see us deploy capital that way. But where we think that the incremental return from that buyback is perhaps lower than maybe just levering down, you'll see us make that trade. The reality is we have to be nimble and agile. There's no formula to buybacks other than we are trying to generate as much value as we can for our shareholders. And fundamentally, we have incredible visibility into the cash flow. So that's what gives us confidence on the current capital allocation policy.

Share repurchases are always market conditions permitting. And where we tend to see, I'm going to say, a higher return on the buybacks, we will see us deploy capital that way. But where we think that the incremental return from that buyback is perhaps lower than maybe just levering down, you'll see us make that trade. The reality is we have to be nimble and agile. There's no formula to buybacks other than we are trying to generate as much value as we can for our shareholders. And fundamentally, we have incredible visibility into the cash flow. So that's what gives us confidence on the current capital allocation policy.

Speaker #3: But where we think that the incremental return buyback is from that, perhaps lower than maybe just you’ll see leveraging down, us make that trade.

Speaker #3: The reality we have to be nimble and agile . There's no formula to buybacks other than we are trying to generate as value as we can for our much shareholders .

Speaker #3: And fundamentally , we have incredible visibility into the cash flow . So that's what gives us confidence on the current capital allocation policy .

Speaker #11: Thank you .

Speaker #4: Thank you. One moment for our next question. Our next question will come from the line of Colin Canfield from Cantor. Your line is open.

Prabu Natarajan: Thank you.

Tobey Sommer: Thank you.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Colin Canfield from Cantor. Your line is open.

Speaker #12: Thank you for the question . Going back to maybe the portfolio shaping conversation , can you just maybe talk about how you think about either adding pairing or pieces in terms of the magnitude of portfolio shaping and then maybe kind of if you want to talk about kind of some of the larger private assets and that realm , how you think about maybe adding to larger defense and intelligence capabilities versus going after some of the more civil exposure and then and then just kind of within that construct , if you can maybe talk about kind of how you think defense about budget growth , not so much the outlays , right ?

Jim Reagan: Thank you for the question. Going back to maybe the portfolio shaping conversation, can you just maybe talk about how you think about either pairing or adding pieces in terms of the magnitude of portfolio shaping? And then maybe kind of if you want to talk about kind of some of the larger private assets and that realm, how you think about maybe adding to larger defense and intelligence capabilities versus going after some of the more civil exposure? And then just kind of within that construct, if you can maybe talk about kind of how you think about defense budget growth, not so much the outlays, right? The outlays are baked in, but the defense budget growth over the kind of multi-year period versus the civil budget growth and how you kind of weigh that risk-reward through the upcoming midterms. Thank you.

Colin Canfield: Thank you for the question. Going back to maybe the portfolio shaping conversation, can you just maybe talk about how you think about either pairing or adding pieces in terms of the magnitude of portfolio shaping? And then maybe kind of if you want to talk about kind of some of the larger private assets and that realm, how you think about maybe adding to larger defense and intelligence capabilities versus going after some of the more civil exposure? And then just kind of within that construct, if you can maybe talk about kind of how you think about defense budget growth, not so much the outlays, right? The outlays are baked in, but the defense budget growth over the kind of multi-year period versus the civil budget growth and how you kind of weigh that risk-reward through the upcoming midterms. Thank you.

Speaker #12: The outlays are baked in, but the defense budget growth over the kind of multiyear period versus the civil growth and how budget you kind of like weigh that risk-reward to the upcoming midterms.

Speaker #12: Thank you .

Speaker #7: Yeah , there's a lot to unpack in that Colin . I think the way I would start with is in your question about portfolio shaping , I think that that our appetite for portfolio shaping in terms of magnitude , it's going to be more on focused it .

Jim Reagan: Yeah, there's a lot to unpack in that question, Colin. I think the way I would start with is in your question about portfolio shaping. I think that our appetite for portfolio shaping in terms of magnitude; it's going to be more focused on anything that we do is going to be more focused on what opportunities got unlocked because we're refocusing the business in other areas or maybe taking out an area of the business that causes conflict in our ability to grow in other parts. It's hard for me to put a dollar figure on that at this point. And I'll ask Prabhu to also pile on with any thoughts that he's got.

Speaker #7: Could we do anything that is going to be more focused on what opportunities get unlocked , because we're refocusing the business in other areas and or maybe taking out , you know , an area of the business that causes conflict in our ability to grow in other parts .

Speaker #7: It's hard for me to put a dollar figure on that at this point . And I'll ask Prabhu to also pile on with thoughts that he's got .

Speaker #7: any just in But terms of where the defense budget is going , I think that stated the objectives and the ways that the current Department of War is , is , has articulated what it needs to be ready for , for the next , you know , 3 or 4 years is really going to put some upward pressure on the DoD d o or budget .

Jim Reagan: But just in terms of where the defense budget is going, I think that the stated objectives and the ways that the current Department of Defense has articulated what it needs to be ready for for the next three or four years is really going to put some upward pressure on the DoD budget. If you think about the budget as a percentage of GDP, even at the targets that have been announced, it really isn't too far out of line with what you've seen in the last 100 years. So it might feel like it's a big increase, but in terms of the needs that the department has today to increase readiness for where it sees the potential conflicts going over the next five, I think that there's going to be plenty of opportunity for us and our industry to be growing their businesses as a result.

But just in terms of where the defense budget is going, I think that the stated objectives and the ways that the current Department of Defense has articulated what it needs to be ready for for the next three or four years is really going to put some upward pressure on the DoD budget. If you think about the budget as a percentage of GDP, even at the targets that have been announced, it really isn't too far out of line with what you've seen in the last 100 years. So it might feel like it's a big increase, but in terms of the needs that the department has today to increase readiness for where it sees the potential conflicts going over the next five, I think that there's going to be plenty of opportunity for us and our industry to be growing their businesses as a result.

Speaker #7: If you think about the budget as percentage of of a GDP , it really , you know , even at the targets that have been announced , it really isn't too far out of line with what you've seen in the last hundred years .

Speaker #7: So it might feel like it's a big increase . But in terms of the needs that the department has today to increase readiness for where it sees the potential conflicts going over the next five , I think that there's going to be plenty of opportunity for and us and our industry to be growing their businesses as a result .

Speaker #3: Thank you , Jim . That was perfect . On the first part of the question , Colin , on PE owned assets . I mean , look , I think , you know , we have to demonstrate organically that we can grow this business .

Prabu Natarajan: Thank you, Jim. That was perfect. On the first part of the question, Colin, on PE-owned assets, I mean, look, I think we have to demonstrate that we can organically grow this business. As Jim said, the focus is tokens that can help us accelerate our growth rate. At this point, our cup runneth over in terms of M&A, and so I think we're just going to be astute in terms of what we're focused on there, and we are not looking at scale-based M&A at this point. On the DoD budget, the only thing I would add is base budget, flat to slightly up, and then we're going to need some reconciliation money to get closer to that $1 trillion. And how frequently that happens over this year and the next year is going to drive, I think, the health of the defense budgets.

Prabhu Natarajan: Thank you, Jim. That was perfect. On the first part of the question, Colin, on PE-owned assets, I mean, look, I think we have to demonstrate that we can organically grow this business. As Jim said, the focus is tokens that can help us accelerate our growth rate. At this point, our cup runneth over in terms of M&A, and so I think we're just going to be astute in terms of what we're focused on there, and we are not looking at scale-based M&A at this point. On the DoD budget, the only thing I would add is base budget, flat to slightly up, and then we're going to need some reconciliation money to get closer to that $1 trillion. And how frequently that happens over this year and the next year is going to drive, I think, the health of the defense budgets.

Speaker #3: As Jim said , the focus is tuck ins that can help us accelerate our growth rate point , . At this our cup runneth over in terms of M&A .

Speaker #3: And so I think we're just going to be astute in terms of what we're focused on there. And we are not looking at scale-based M&A at this point on the DoD budget.

Speaker #3: The only thing I would is , add you know , base budget , you know , flat to slightly up . And then we're going to need some reconciliation money to get closer to that $1 trillion .

Speaker #3: And how frequently that happens over this year and the next year is going to drive . I think the health of the defense budgets , I think to Jim's earlier comment , I think the which currency you're part of , whether that's fed or DoD is going to be a really important consideration .

Prabu Natarajan: I think to Jim's earlier comment, I think which currents you're part of, whether that's FETSIV or DOD, is going to be a really important consideration. We appreciate the fact that the US Department of Defense has given priority areas out there, whether they're tech areas or mission areas. We're just ensuring that the portfolio is as well aligned to those areas as we can possibly be over the next couple of years. But that's our prognosis. Our guidance for next year assumes that things don't change dramatically to the upside or the downside. Things are going to be stable, more stable than they have been this year.

I think to Jim's earlier comment, I think which currents you're part of, whether that's FETSIV or DOD, is going to be a really important consideration. We appreciate the fact that the US Department of Defense has given priority areas out there, whether they're tech areas or mission areas. We're just ensuring that the portfolio is as well aligned to those areas as we can possibly be over the next couple of years. Buct that's our prognosis. Our guidance for next year assumes that things don't change dramatically to the upside or the downside. Things are going to be stable, more stable than they have been this year.

Speaker #3: And we appreciate the fact that the Department of War has given priority areas out there , whether they're tech areas or mission areas .

Speaker #3: And we're just ensuring that the portfolio is as well aligned to those areas as we can possibly be over the next couple of years.

Speaker #3: But but that's our prognosis , our guidance for next year assumes that things don't change dramatically to the upside or the downside . And things are going to be stable , more stable than they have been this year .

Speaker #12: Got it , got it . And then in terms of the civil budget growth , how do you kind of think about FY 27 comparison to call it FY 19 ?

Jim Reagan: Got it. Got it. And then in terms of the civil budget growth, how do you kind of think about FY27's comparison to, call it, FY19, right, where it was initial kind of deficit hawk focus, taking a backseat to defense hawks, and then in order to get kind of key policy objectives done, the defense hawks working with kind of across the aisle to drive dollar-for-dollar deals of discretionary defense, and non-defense spending? So maybe just kind of a little bit on how you think about the multi-year civil budget growth outlook and how that's shaping where you're kind of approaching the savings plan. Thank you.

Colin Canfield: Got it. Got it. And then in terms of the civil budget growth, how do you kind of think about FY27's comparison to, call it, FY 2019, right, where it was initial kind of deficit hawk focus, taking a backseat to defense hawks, and then in order to get kind of key policy objectives done, the defense hawks working with kind of across the aisle to drive dollar-for-dollar deals of discretionary defense, and non-defense spending? So maybe just kind of a little bit on how you think about the multi-year civil budget growth outlook and how that's shaping where you're kind of approaching the savings plan. Thank you.

Speaker #12: Right . Where it was initial kind of deficit hawk taking a back seat to defense hawks . And then in order to get kind of key policy objectives done , the defense hawks working with kind across the aisle of to drive dollar for dollar deals of discretionary defense and non-defense spending .

Speaker #12: So maybe just kind of a little bit on how you think about the multiyear civil budget growth outlook and how that's shaping where you're kind of approaching the savings plan.

Speaker #12: Thank you .

Speaker #3: appreciate the Yeah , question . And it's a complex one , to be sure . And I'm going to leave some folks that are way better qualified to answer it .

Prabu Natarajan: Yeah. Appreciate the question, and it's a complex one, to be sure, and I'm going to leave some folks that are way better qualified to answer it. I think our baseline assumption is that civil budgets will continue to be pressured, and your level of pressure is going to be dependent on what baseline you use to compare. If you compared it to the 2019 baseline versus the 2024, 2025 baseline, you may get to a slightly different place. But our assumption is nothing changes in the near term, but civil budgets will be pressured, recognizing that there's real need for modernization within the civilian agencies. But I think in this environment, we just don't see a ton of opportunity for real budget growth.

Jim Reagan: Yeah. Appreciate the question, and it's a complex one, to be sure, and I'm going to leave some folks that are way better qualified to answer it. I think our baseline assumption is that civil budgets will continue to be pressured, and your level of pressure is going to be dependent on what baseline you use to compare. If you compared it to the 2019 baseline versus the 2024, 2025 baseline, you may get to a slightly different place. But our assumption is nothing changes in the near term, but civil budgets will be pressured, recognizing that there's real need for modernization within the civilian agencies. But I think in this environment, we just don't see a ton of opportunity for real budget growth.

Speaker #3: I think our baseline assumption is that civil budgets will continue to be pressured . And your level of pressure is going to be dependent on what baseline you use to compare .

Speaker #3: If you compare it to the 2019 baseline versus the 2024 baseline, you may be in a slightly different place. But our assumption is that nothing changes in the near term.

Speaker #3: That civil budgets will be pressured . You know , recognizing that there is real need for modernization within the civilian agencies . But I think in this environment , we just don't see a ton of opportunity for real budget growth .

Speaker #3: And whether the one for one happens , that's going to be a function of things that are way out of our control . And we're just going to go onto it and see goes .

Prabu Natarajan: And whether the one-for-one happens, that's going to be a function of things that are way out of our control, and we're just going to monitor it and see where it goes. But our assumption for next year is budgets will remain pressured. We are telling our teams internally that assume things will remain hard for the next 12 to 18 months on the budget front, and how can you consistently deliver good performance and on-contract growth? To me, it's going to be very much a blocking and tackling exercise because there are elements of this conversation that are beyond our ability to control. And the message coming into this call was focus on what we can control as an enterprise.

And whether the one-for-one happens, that's going to be a function of things that are way out of our control, and we're just going to monitor it and see where it goes. But our assumption for next year is budgets will remain pressured. We are telling our teams internally that assume things will remain hard for the next 12 to 18 months on the budget front, and how can you consistently deliver good performance and on-contract growth? To me, it's going to be very much a blocking and tackling exercise because there are elements of this conversation that are beyond our ability to control. And the message coming into this call was focus on what we can control as an enterprise.

Speaker #3: But our where it assumption for next year is budgets will remain pressured . We are telling our teams internally that things will assume remain hard for the next 12 to 18 months on the budget front , and how can you consistently deliver good performance ?

Speaker #3: And on contract growth? To me, it's going to be very much a blocking and tackling exercise because there are elements of this conversation that are beyond our ability to control. The message coming into the call was to focus on what we can control as an enterprise.

Speaker #12: Got it . Thank you for the color . And welcome back , Jim .

Speaker #7: Thank you very much , Colin .

Jim Reagan: Got it. Thank you for the color, and welcome back, Jim.

Colin Canfield: Got it. Thank you for the color, and welcome back, Jim.

Speaker #4: Thank you . And with that , this concludes the question and answer session . Thank you for your participation in today's conference . This does conclude the program .

Prabu Natarajan: Thank you very much, Colin.

Prabhu Natarajan: Thank you very much, Colin.

Operator: Thank you. And with that, this concludes the question-and-answer session. Thank you for your participation in today's conference. This does include the program. You may now disconnect. Everyone, have a great day.

Q3 2026 Science Applications International Corp Earnings Call

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