Okay, I think we're at time, so thank you all for coming. So our next company is CACI, and we're delighted to have with us Jeff MacLauchlan, CFO. He's to my right, and to his right is George Price, who's head of IR. So, Jeff, thanks for coming. Appreciate it, so- My pleasure. Your CACI strategy has been bid fewer, but bid bigger, and it seems like it's pretty successful with, you know, the large NSA award, EITaaS, Spectral. And you said on the December quarter, you won another billion-dollar job. What, what's that? I think the most recent award you're referring to is Gen Mod- Mm-hmm ... which is a network modernization job in our business related to digital migration and development. Mm-hmm. Of course, the jobs from earlier last year are all in the process of ramping up, so we're really on a nice organic trajectory. What is Gen Mod out of protest, and how's that expected to wrap? Gen Mod's at a protest. There have been several network modernization wins. The one you're referring to, Cai, is one of them. So we've been very successful in network modernization lately as well. But there are more than Gen Mod, Gen Mod? There have been three, in fact. DIA, which we've announced, and then there's another that just cleared protests that we haven't announced yet. Okay. So the next issue is, do we have... But you, you basically booked it, right? If you, if you want it, you book it, even if it's in protest? We do. Got it. So, are there other sizable bids that are, you know, coming up that could move...? I mean, because you had those EITaaS, you know, the NSA contract. I mean, any of the more of that size that could really move the needle? Well, we have some quite large opportunities in the pipeline. I think we have $11 billion or so to do- Yep ... in the next quarter, of submittals in the next quarter. Mm-hmm. I think $5 billion or $6 billion, where we expect decisions pending in the near term. There's not another EITaaS in there, but there are some very significant opportunities. Got it. And what about recompetes? What percentage of your revenues are up from recompete in the next 18 months? Yeah, we announced in our most recent earnings call that the recompete content of this year's revenue- Mm ... was a little less than 5%. It's actually about 2.5% today. Mm-hmm. So we continue to do. We're very happy with our recompete performance. I think we're approaching around 90%. Yeah, and Kai, you know, thinking about it from a, you know, the value of contracts coming up for recompete. You know, this year is pretty typical year, and the business development function's doing a great job, both on the new business awards and recompetes. Mm. You know, next year doesn't look anything. You know, it looks very, very normal- Mm. Very typical, nothing unusual from a recompete standpoint. So I've followed CACI for a long time. You used to be a service provider, mainly tactical Army missions. Now, you've got a broader focus, includes product. What, what-- walk us through your, you know, your key, well, product or product related, because I know software is important in there, initiatives like SIGINT, EW, C-UAS, you know, UAS. Yeah, the strategy that was undertaken a number of years ago was really focused on differentiation and on leveraging the expertise side of the business. Mm-hmm. While we have a portion of the business, the technology portion, does have some elements in it that are hardware, we really don't think of them as products in a traditional sense, and that's not just a semantic distinction. They're really software centric. Right. It's not something you just take off the shelf- Right. No, I hear that. And ship and leave it alone. It's got updates coming all the time. Mm-hmm. Mm-hmm. Access to our signals library- Mm-hmm ... and signal characterization algorithms are being updated all the time. Mm-hmm. It's a little different from a typical product business. Right, right in the mission The mission solution. Sustained involvement with it. Right. Right. So what% of your business is what I'd call mission solutions, you know, that has a product related to it? Rough percent. Yeah, we have moved away a little bit from the mission component. The technology and expertise is about 55-45 now, slightly more technology and, you know, probably half-ish of that would be in that category. So it's roughly 25%. Right, on that order. Got it. So, photonics really has pretty good potential, it would look like. What's your strategy for winning, you know, SDA transport and tracking layer business? How big could that be for you? Yeah, we, you'll appreciate we don't give kind of explicit guidance about the size, but the photonics business is a really exciting part of the portfolio. We are kind of nearing the end of the investment phase. The low rate initial production, some of the early contracts related to that are starting to deliver. We've opened a new facility that's focused on the production, and we're starting to deliver hardware. We have flying optical comm terminals on orbit and operating today. And really, an important part of our story over the next year, the balance of this fiscal year, and without getting ahead of our fiscal 2025 guidance, sort of extending into next year, will be transitioning that area into, you know, into some rate production levels. We've won quite a few SDA jobs, which you're aware of, through where we're generally subbed to primes. We have some contracts directly with SDA, and we also are some with DARPA, but it's a really exciting part of the portfolio. And I- And Kai, remember, too, there's the, you know, what you're talking about with SDA with respect to the higher volume, low SWaP- Yeah. You know, LEO, photonics technology. We also have the more bespoke photonics capabilities that we acquired with the LGS acquisition. And, you know, that's, that brings us some of the capability. I mean, that's- you have that with NASA on the, the Psyche probe, deep space optical communications. We have, you know, a terminal, you know, communicating, technology that's communicating from, you know, about, 19 million miles away at, at this point. I mean, doing some things that haven't been done before. And the point of that is simply that there's a, a significant amount of technology capability, and, and that also, that research, that capability factors into what we're doing across all of- Right ... photonics and a lot of the technical relevance. If we think about the SDA, the tracking, the transport layers- Yep ... Who, I mean, what do you sell to SDA? What do you sell to LHX or to Lockheed or, you know, how should we think about who's buying it, who's contracting with you? Well, to the satellite primes, we're selling the optical communication terminals. Mm-hmm. So it's a, you know, they're components and subsystems. Mm-hmm ... that are on the primes', platforms that they're integrating. I mean, one of those LEO satellites, Kai, for example, would have three or four optical communications terminals on each one. So is it, I mean, the great thing about LEO satellites is they don't last that long. Right. They last three to four years, and then you got to put them up again. Is this the kind of business like, if you're on tranche two for transport, you're gonna be on tranche three, if it's the same, they pick the same guys? Or are they likely to just... You're always gonna have to fight to get your position. Well, one of the requirements is for interoperability. Mm-hmm. That would suggest that, you know, there is some ongoing opportunity to compete. But that's actually not necessarily off-putting to us. I mean, we think we have a really good technology and a really good position, and find ourselves happily, probably ahead in the market, you know, currently. So we think we have a good position. You know, Kai, it's interesting that we have one of our primes, actually, these are their words, said ours is the most mature technology that they've seen, and they've obviously seen all the providers that are there. So we really look at ourselves as the lowest risk, most mature capability. We have actually, you know, terminals up in space that have connected, right? So, you know, that's an important element of how we're going to market and how we're differentiating ourselves. Are the terminals, because I guess Northrop had said on the latest tracking layer, that they basically, you know, decided not to bid, the one that Sierra Space kinda got on. I mean, is the pricing okay here? I mean, given your expertise and, you know, there's enough commonality, one to the other, that this, this is a good, profitable business, or is there risk still in, in the profitability? Well, I mean, there is no reward, obviously, without risk. Right. I mean, and we do have to transition into the rate production mode. But again, we are producing flying hardware, and we know it works, and we know what we have to do. You know, we know what we have to do next. We should be ramping over the next year. Yes. Got it. Got it. So, talk about agile software development, and I think you say you lead in the market. Why is it so important? Who are the biggest competitors? Yeah, George, will wanna amplify my answer here a little bit, but we have several, including the IPPS-A job, the Human Capital Management System for the Army, that are the largest agile contracts. And you're certainly familiar with the concept of agile and the efficiencies and the speed with which you sort of iterate requirements and develop and field it in portions and the advantages of that. So it is an important skill. It's a place where we've invested ahead of need, which we talk about a fair amount as part of our strategy. And we have an agile software factory, you know, which operates like a factory, and so we're very proud of our agile capability, and think it gives us a real discriminator. Yeah, I mean, Kai, you know, agile is really becoming more and more common, in fact, table stakes. And when you can go out there and say, you know, we've talked about Customs and Border Protection, CBP BEAGLE, right? BEAGLE, there's a large program, you know, with the Army. There's lots of other programs that we, that we execute using agile software development, but, you know, two of the largest and very successful, I mean, are, you know, we're very successful execution with our, our CBP customer on BEAGLE. You know, that performance, that reference ability, right, that track record, as this is becoming more and more common in RFPs, that puts us in a great spot, and we're very, you know, we're very happy about it. Right. So the next one is artificial intelligence becoming a priority, increasingly important, and when you talk to some other guys, you'd think that they invented it. But, how would you rate your capability versus, you know, folks like Booz, Leidos, and SAIC? Are you all comparable? Are you catching up? Are you ahead? You know, what's the difference? Yeah, certainly not catching up. I mean, if anything, ahead. I mean, artificial intelligence is something that, you know, we've been doing for a very long time. You know, some of the large language models are starting to get sort of some public attention, but the idea of artificial intelligence in intelligence data processing, in particular, you'll know is, you know, not a new thing. You know, we've been doing it for quite a long time. There's some exciting developments going on, and we're, you know, I think we're in the middle of those. But it's also an area with some real potential. Yeah, I mean, you know, Kai, I'm not—I don't think we want to try and get into, you know, comparing, you know, ourselves to somebody else about a technology tool that's becoming more pervasive. We had a similar thing happen with cyber, right? Mm. Everybody was touting cyber- Right ... and how big of your business is cyber? And, you know, the answer is it's hard to, you know, put a number to something like this, a tool that is becoming more and more ubiquitous. But, I think the thing that we would emphasize is that, you know, our capabilities are, are real, and deployed, and revenue-generating, whether it's, you know, it's optic, object recognition, you know, computer vision on, NGA's, SAFFIRE program, or, it's, you know, robotic process automation that we're executing, you know, in conjunction with a partner, ServiceNow, both internally and externally. Or, in fact, became aware that, you know, years ago, I think the current version of ChatGPT is- Mm ... has a 4 handle. It's $441, $442, maybe. Sorry if I got that wrong. Mm. I'm aware that in our cyber work, you know, we were working with ChatGPT version two- Mm-hmm ... for some of the work that we did. Obviously, I can't go into detail about what it was, but, you know, this is a capability that we use, like many other capabilities, in executing. But I think the point being is that, you know, it's not something that's aspirational or, "Hey, we're trying it out." We're actually using it to deliver, you know, real outcomes for our customers. Can you define it in terms of, like, what% of your workforce or folks that are mainly focused on AI, or what% of revenues, this is sort of like the prime component? Anything you can do there? Yeah, I'm not sure it really lends itself to that kind of analysis. Well, I mean, it's sort of in everything. Okay. If we've, you know, on the order of about 200 large programs, you know, it's in use probably in more than half. Okay. Okay, and, I mean, think about, think about something like maybe Spectral. Mm-hmm. That's absolutely gonna be using that technology. You get a signal, you know, you have a technology and a tool that helps you assess what that signal could be and what you should do about it. Got it. So, turning to the environment, what about... does it, I mean, election outcome, does it matter, Trump, Biden? Well, it's hard to say it doesn't matter, probably, but- Right. That's true. ... we've taken some care, you know, we think, to position ourselves in places that sort of transcend, you know, the current partisan debates. You know, the places where we are in the budget and the intersections, and markets, and customers to whom we devote our time and attention, you know, are generally enjoy pretty clear, you know, pretty clear support- Mm-hmm ... across the spectrum. We have also, those of us that have been doing this for a little while, know that the action, you know, sometimes lags rhetoric, too. So, even though a lot of things get said and talked about in the course of political campaigns, you know, the facts on the ground- Right ... kind of remain what they are. And, you know, it's difficult to imagine in the current environment, you know, that many of the things we do don't remain pretty important, no matter who's in the White House. Right. Of course. So, I guess all you guys are pretty experienced in handling CRs, but, what about a government shutdown? What sort of— Is there, some of the other folks who've kind of put numbers about wherever you have a shutdown, it's like, this is what the number is. How do you think about that as a risk? Yeah, I mean, it's a little, as I'm sure you know, it's a little bit of a difficult hypothetical because you have to sort of parse through the portfolio. You know, there are a great many activities that are identified as priorities. And in the run-up to the last several budget deadlines, you know, we've had customers, you know, make provisions for a lot of our activities, you know, to continue through various methods. We have a little bit of a challenge occasionally for things that we do on customer locations that may be not available. Mm-hmm. But, you know, much of our work is still able to be performed, and customers, you know, have routinely sort of, you know, indicated to us that they would continue to. Mm-hmm. So I'm being a little bit ambiguous about this because obviously, the specifics of whatever could happen in the future will, you know, will be what they will be. But it's, you know, it is a condition and a circumstance that, you know, we have some experience navigating. Got it. Yeah, and I think, you know, Kai, too, the, just the way things are appear to be trending on the Hill certainly is, you know, the outlook for appropriations seems to be, seems to have improved a little bit recently. You know, CR, we have a little bit more time, possibly, maybe you get another small CR to gap us to appropriations. But, it seems like the, you know, the potential for a shutdown is kind of receding, and ahead of ele- an election, I guess that would probably make a lot of sense. I don't- Right ... think there's a lot of interest in a shutdown ahead of an election. But that being said, to Jeff's point, you know, we do a lot of... This isn't the first time this kind of thing comes around, and so we do a lot of preparation in advance to make sure that, you know, the business is impacted as little as possible. So, you hiked your FY 2024 revenue guide, and you attributed bigger than expected ramp on EITaaS and Spectral. Are you setting up a tougher compare for yourself in 2025, or is this still just a—you know, qualitatively just a, you know, it's good news because you billed sooner, but, you know, you've got farther to go, and you got other programs or? Well, by definition, a higher 24 is a harder compare for 25. You know, but that's obviously being a little bit tongue in cheek here, but- Right ... obviously, we have big parts of the portfolio that are accelerating, where we see real sustained growth. Mm-hmm. And again, I don't want to front run our 25 guidance, which we're, you know, still obviously planning 25 at this point, but, you know, we have real vigor in the portfolio- Mm-hmm ... and some real acceleration of some important parts of the portfolio and the business. Got it. So you mentioned, you know, the length of your backlog as a competitive plus, but, you know, given that you have more kind of product-related type of things, is there a risk that there's any fixed price development in there, or would you say that's just all goodness because this stuff is gonna be nicely profitable? Well, I mean, as you point out, it has the potential to cut both ways. But most of the backlog and the longer visibility, much of that activity is in the enterprise side of the business. Mm-hmm. Much of it is cost type, whether it's enterprise or technology. I would say the places where we have the potential for some cost pressures are generally the quicker turn, shorter cycle parts of the business that, you know, aren't drivers of the backlog number. Mm-hmm. Got it. So, your 10-Q indicates you got a $67 million acquisition under LOI. Is this the M&A environment improving? It is. And as we talked a little bit in the call, we are seeing some signs of life. In fact, the acquisition to which you refer, we closed on February first, so that's, you know, operating now as part of the business. It is a, it is like all of our acquisitions, sort of a strategy-driven gap filler. Mm-hmm. In this particular case, in the enterprise portion of the portfolio, where we're focused on some human capital management capabilities with a customer set where we have not had a big presence. So this gives us an opportunity to take work that we know and well understand and give us access- Right ... you know, to a new part of the customer set. Got it. Got it. So, you know, historically, you guys have been active in M&A and done a good job. You also suggest an interest in share repurchase, you know, with cash flow improving. Like, how would you rank those two priorities? Yeah, we have a pretty, you won't be surprised to know, a pretty rigorous return-based process where we evaluate the pipeline and actionable opportunities that we see in the near future, and of course, the market and, Mm-hmm -share buybacks as an alternative. We do see some interesting possibilities in the acquisition pipeline, but you will also remember, I think, that we have about $337 million of our existing share repurchase authorization available to us. So we're very well situated to react quickly and opportunistically as opportunities develop and as the share price unfolds. So we're, you know, we're quickly ready to operate in either of those opportunities. We... We're about 2.2 times trailing twelve months EBITDA- Mm-hmm ... levered, which I probably don't want to get too much below that. Mm-hmm. So, you know, we look at the same things every morning that you do. So where would you want to go on the high end? I mean, I think you... I can't remember, who is it you tried to buy, and you didn't, but I mean, it would have put you up there, like at, I think, four or something, but, In today's environment, I think that's hard to see. Yep. That's a hard hypothetical, obviously, because it depends on the- Right. Right -target. But, you know, in today's world, you know, a short time, you know, in the mid-3s or something could- Mm-hmm Could make sense, but, you know, it's very- It depends on- Very situational dependent. Got it. You know, Kai, just to build on something Jeff said, you know, back a few years, you know, we deployed a little over $1 billion, made several acquisitions and also bought and did a $500 million ASR. Mm-hmm. So we did about, you know, half and half. So at the point where, you know, if the opportunity presents itself with the right characteristics, you know, we can do both. Got it. So, Jeff, I don't know whether this matters, but you come from a business development background at product-oriented companies, at Lockheed and Rockwell. Not that, I mean, product plus software. Yeah. But so is this whole product or sort of mission solution, whatever you wanna call it, where it's some hardware plus software, is that a key focus for you, I mean, given your background, or is that- Well, I think it- -doesn't matter? I think it's useful experience. Okay. You know, my career, I've been not working quite as long as you have- Right. But, uh, That's true. 40, 42 years or so, Yeah It's been split pretty evenly between operating finance roles and corporate development- Mm ... acquisition roles. So I think it's a useful skill to have in the quiver here. But I did at different times at Lockheed Martin, you may recall, was the CFO at different times of three of the five operating segments- Mm ... including a large part of what is today Leidos. Mm-hmm. So, you know, this is not new, not new perf for me. Got it. But I think given the company's strategic priorities and the things we're looking at and thinking about, I think my experience is useful. Because it certainly sounds like, I mean, looking at what you've done, that CACI used to be, like I said, you know, mainly army-related services, and now it's basically moving into so—whatever we're gonna call them, solutions, products— Yeah And it seems like that... So is that sort of the direction we should expect going forward? That, you know, that more of the focus is on that sort of a product- Yeah or sort of an area. I think John's been quite clear about that. I mean, I think the answer is yes. We are, we are interested in being wider, broader, focusing on differentiation. Mm Focusing on things that are stickier and longer-term, durable- Mm-hmm -customer and- Mm-hmm - franchise relationships. As well as, you know, as well as this whole idea of longer-term backlog, longer-term positions, you know, more visibility. Mm-hmm. Uh- So the second quarter, basically, the street was disappointed. You know, they felt the margins were a little bit light, and you said, "Well, we expected the second half to be stronger," and second half looks like it's a whole lot stronger. How come? I mean- Well, I- First versus second half. If you'll indulge me for a second, Please I'd like to first talk about the second quarter- Right ... which was the quarter where we did exactly what we said we were gonna do in the first quarter. Right, right. I appreciate that there were people that looked at that, and it wasn't what they expected. Right. It was pretty much exactly what we said we were gonna do. Mm-hmm. The second half, nevertheless, the second half will be stronger than the first half, really, for three sort of driving reasons... The first one is that the optical communication terminal business is nearing the end of its investment cycle. And we talked a little earlier, in our remarks here, 10 or 15 minutes ago- Mm-hmm. about the fact that we're ending, approaching the end of the development cycle. Right the investment and facilitation and ramping up to- Mm for production, which we expect to sort of really start to show results in the second half of the year and into next year. The second thing is that the several large programs that we won last year, ITAS and the intelligence job, and Spectral are ramping up on or ahead of our expectations. And that is driving a mix change in a favorable way, driving a mix change as those programs accelerate, some of them with above average margins. Mm-hmm Relative to our average. And then the third thing that happens, and those first two things are sort of specific to FY 2024. Mm-hmm. The third thing is probably a more repeatable pattern, which is that some of the technology solutions work that we talked about earlier in the, in this discussion, where we're doing sort of quicker turn, higher margin, software-centric- Mm-hmm -products, and technology solutions, has fallen into a pattern or has a pattern of being bought more in the third and fourth quarters- Mm-hmm of our fiscal year. Those are a result of. In fact, if you look last year, you'll see a similar pattern, although it was a little bit less pronounced because of the two things I mentioned a few minutes ago. Right. The third and fourth quarter do have a higher margin mix- Right in several of these businesses, which is really driven by customer buying patterns. So, but if you, if you take what you're saying, certainly the optical communications investment, presumably that's down, so that'll be down next year too, and it wasn't down in the first half. And ITAS, Spectral, and FocusedFox will be there in the first half, and so that mix benefits you next year. And, you know, I just assume the seasonal factor is the same; it happens in the second half. But doesn't that... I mean, that seems to point to better margins next year. We'll see when we get to talk about- Yeah -fiscal twenty-five. We'll see when we do 25 guidance. Okay. But I think even as we're finalizing and going through that planning process, there are some structural things that, without talking in absolute terms, there are some structural things that make the second half of the year- Mm-hmm higher margin than the first half. Right. Right. Right. And I suspect that those, I would expect those patterns to continue. Right. Right. Right. So as you look here, you know, what are the key things that could make, you know, the business this year and maybe into early next year, better than you think, or, you know, what are the bigger risks that could kind of derail you? You know, opportunities would probably come around, further acceleration of some of the program ramps that we talked about. Spectral, in particular, has some, you know, some geopolitical relevance to, you know, to naval activity. Mm-hmm. I would say some of the things that we're seeing in terms of our counter-UAS business, probably have some potential upside. You know, our SIGINT and electronic warfare businesses, you know, probably have some upside. You know, in terms of things that could slow the business down, I don't know that there's anything that I see that, you know, would be huge driver there. You know, there's always budget perturbations, things of that sort, but, I mean, what we see is, you know, generally more positive than not. Great. Great. So tech has changed really, you know, quite a bit, if you go back over 10 years, what you used to do. And, so where's the company, do you think, gonna be in 3 to 4 years? If it's—Is it different, gonna be different than today? Or, you know, in what respect would you say it's more likely to be different? Like, is there potential as you get to sort of these mission solutions or margins, that the profitability should be higher, or the mix is gonna... You know, how would you say we should think about it in 3 to 4 years? Yeah. I mean, I think generally, you'll probably see an extension of what we're seeing today. Mm-hmm. I mean, I think you see some potential for some greater acceleration. I think you'll probably see maybe a slightly higher technology mix, perhaps. Although that balance is an important part of the business, and, you know, we continue to believe that, you know, each part of the business is better because of the other than it- Right would be by itself. Mm. They really do inform each other and kind of move back and forth. You know, but I think there's some potential for, you know... Okay ... further growth there. And, and we're really focused. You mentioned margin, and of course, we, we continue to pay a lot of attention to and work on margin. Mm-hmm. But, but we've also sort of evolved that into paying really close attention, and we've always paid attention to it, but really focusing to an even greater extent on the whole free cash flow per share. Mm-hmm. So that to the extent we have accelerating organic growth, you know, at same or slightly increasing margins, and we're deploying capital, as we've talked about in a program that includes some amount of share repurchases, you have the potential for, obviously, accelerating free cash flow per share. Got it. That sounds pretty good. Thank you. That was a terrific interview. Thank you. Appreciate it. Thanks. Thanks, guy. Nice job.