Greetings. Welcome to Leidos' fourth quarter 2022 earnings call. At this time, all participants will be in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Stuart Davis from Investor Relations. Mr. Davis, you may now begin. Thank you, Rob. Good morning, everyone. I'd like to welcome you to our fourth quarter and fiscal year 2022 earnings conference call. Joining me today are Roger Krone, our Chairman and CEO, and Chris Cage, our Chief Financial Officer. Today's call is being webcast on the investor relations portion of our website, where you'll also find the earnings release and supplemental financial presentation slides that we're using today. Turning to slide twtwo of the presentation, today's discussion contains forward-looking statements based on the environment as we currently see it and as such, does include risks and uncertainties. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. Finally, as shown on slide three, we'll discuss GAAP and non-GAAP financial measures. A reconciliation between the two is included in today's press release and presentation slides. With that, let me turn the call over to Roger Krone, who will begin on slide four. Thank you, Stuart, and thank you all for joining us this morning. Oh, and by the way, Happy Valentine's Day. The fourth quarter marked a strong finish to a banner year for Leidos, with record revenue and non-GAAP diluted EPS driving us to the top end of our revenue guidance range and beyond our EPS guidance range for the year. Our performance validated that our diversified and resilient portfolio and our investments in technology and innovation are positioning us for growth in key customer missions, including digital modernization, cyber, hypersonics, and force protection. Each and every day, our 45,000 people are helping our customers execute on important missions and meet the world's most complex challenges. Against a challenging backdrop in 2022, we delivered on our financial commitments, allocated capital to deliver value for our shareholders, won multiple franchise programs that position us for future growth, and significantly grew our talent base. Let me provide more detail on each of these points. Number one, our strong financial performance in the fourth quarter enabled us to deliver on our financial commitments. Record revenue of $3.7 billion for the quarter and $14.4 billion for the year were up 6% and 5% respectively. Adjusted EBITDA margin of 10.7% in the quarter was up 40 basis points year-over-year, which helped drive adjusted non-GAAP diluted EPS to a record $1.83, which represents growth of 17%. For the year, adjusted EBITDA margin of 10.4% helped lead to non-GAAP diluted EPS of $6.60, which was well above our guidance. We generated $105 million of cash flow from operations in the quarter and free cash flow of $52 million. For the year, that translates to nearly $1 billion of cash flow from operations and $857 million in free cash flow, which were right at guided levels. These results came despite multiple headwinds, most notably a protracted continuing resolution to start the year, inflation, supply chain disruptions, and labor constraints. Even at industry-leading scale, we're nimble enough to pivot as needed, and I'm proud of how well the team pulled together and weathered these challenges. Number two, in 2022, we allocated capital to deliver value for our shareholders. Over the year, capital deployment was heavily weighted towards return to shareholders while still layering in strategic acquisition of the Australian airborne business and investing to grow our core business through capital expenditures and internal R&D. With our asset-light model, CapEx was just under 1% of revenues, with large investments in airborne ISR and Dynetics, and we're seeing those investments pay off in additional aircraft performing valuable missions and key wins in hypersonics. Which takes me to number 3, business development. This year, we won franchise programs in each segment that position us for growth. Programs like DES in Defense, Social Security Administration, IT in Health, and EGS in Civil contributed to performance in 2022 and have built the foundation for 2023 and beyond. They demonstrate our ability to take away work and target brand-new opportunities. In the fourth quarter, which is typically the weakest in our industry, we booked $3.7 billion of net awards for a book-to-bill ratio of 1.0. For the year, our book-to-bill ratio was 1.1. Total backlog at the end of the quarter stood at $35.8 billion, of which a record $8.4 billion was funded. Total backlog is up 4% and funded backlog is up 13% year-over-year. After a relatively slow start to the year across the industry, contract activity is improving. Most importantly, our submit volume picked up dramatically in the fourth quarter with $23 billion in submits, of which 92% was for new business. Taken together, the two Social Security Administration IT task orders that we spoke of last call were the largest award in the quarter. GAO dismissed the competitor's protest earlier than expected, and that program has fully ramped. We also won more than half a billion dollars in hypersonics awards, including Mayhem, our first major contract on the air-breathing side, and Wide Field of View Tranche 1, which is the backbone of the nation's hypersonics defense capability. We're pleased that so many of you were able to join us in Huntsville last December to get a clear picture of the opportunities that we see at Dynetics. Our independent research and development investments were critical to procuring these awards, just as they were for our landmark wins in digital modernization. In 2022, we invested $116 million in IR&D, and IRAD has grown at a compound annual rate of 23% over the last five years. We continually invest to develop proprietary tools and unique processes to drive competitive advantage. We've already deployed workflow transformations using the latest generation of AI based on large language models, and we're at the leading edge of combining artificial intelligence and cyber to enable our customers to achieve security levels that are beyond compliance. Speaking of cyber, earlier this month, we announced the latest version of our Zero Trust Readiness Level tool suite that simplifies zero trust adoption for government organizations, consolidating a 6-9 month planning process to less than 60 days. We drive digital innovations by working tightly with our product partners. For example, we've partnered with Intel Corp to demonstrate confidential computing through a hardware-based, independently attested, trusted execution environment. Just last month, we were recognized as the 2023 ServiceNow Americas Premier Partner of the Year. Number four, we significantly grew our talent base. We hired more than 2,400 people in the fourth quarter and more than 11,000 in 2022. Headcount was up 6% for the year, and attrition rates continue to subside. We've seen great synergy between our people engagement and technology investment initiatives. Employees in our technical upskilling programs have significantly higher retention, and we more than doubled participation in 2022 compared to 2021. Our technical upskilling programs are aligned with our technology strategy, and broad participation is enabling us to enhance our competitive position and deepen our culture of innovation. If you want to build your technical skills over a fulfilling career, Leidos is a great place to work. In 2022, we offered courses in artificial intelligence and machine learning, software, cyber, cloud, and digital engineering. In 2023, we're expanding with new offerings in cyber operations, secure rapid software development, and specialized learning paths in AI/ML. Two weeks from now, we'll launch our 7th annual AI Palooza Challenge, where employees around the company will engage with some of the newest AI/ML techniques in a creative and collaborative competition. Perpetual learning is part of our culture, and we make it fun. Before turning it over to Chris, I'll touch on the current budget environment. Demand trends are very positive for our business. Late last year, Congress overwhelmingly passed, and the President signed the omnibus appropriations bill funding the government through September. Budgets across the board saw healthy increases, including defense spending, which was up about 10%. The budget addressed the critical challenges we're facing as a nation, including national security concerns arising from China and Russia. Leidos is well-positioned to respond. Amidst a highly partisan backdrop, President Biden's calls in the State of Union address to support Ukraine, protect our country, and modernize our military to safeguard stability and deter aggression received strong bipartisan support. That said, we're anticipating a series of noisy debates over the coming months around the debt ceiling and the 2024 appropriations, given the razor-thin majorities and the deep divisions in Congress. As a matter of prudence, we're preparing contingency plans around a potential government shutdown. We built our 2023 guidance assuming a continuing resolution beginning in October and extending through the rest of the year with no government shutdown. We believe this is the most likely outcome. In summary, I'm pleased with the performance and the momentum of the company. In the fourth quarter, we posted record levels of revenue, non-GAAP diluted EPS, and funded backlog, as well as the highest adjusted EBITDA and adjusted EBITDA margin and lowest attrition rate for the year. We anticipate that 2023 will be another good year for Leidos, marked by strong hiring, important new wins, solid growth in revenue and operating income. With that, I'll turn the call over to Chris for more details on our results and our 2023 outlook. Thanks, Roger. Thanks to everyone for joining us today. Let me echo Roger and express my gratitude to the entire Leidos team for how we executed in 2022. We navigated many challenges throughout the year, including an unexpected adverse arbitration ruling in Q2, to deliver at the top end of our revenue guidance range and above our EPS guidance range for the year, all while delivering for our customers. Turning to slide five. Revenues for the quarter were $3.7 billion, up 6% compared to the prior year quarter. For the year, revenues were $14.4 billion, which was up 5% compared to 2021, despite a $107 million headwind from foreign currency movements, primarily from work in the U.K. and Australia in our Defense Solutions segment. 2022 revenue performance was in line with the targets that we laid out 16 months ago for 2022-2024. Turning to earnings. Adjusted EBITDA was $397 million for the fourth quarter for an adjusted EBITDA margin of 10.7%, our highest margin of the year and above expectations based on higher growth on more profitable programs, better performance on some large programs, and disciplined cost management. 2022 adjusted EBITDA was $1.49 billion, for a margin of 10.4%, or right at the midpoint of guidance that we've held all year. non-GAAP net income was $255 million for the quarter and $919 million for the year, which generated non-GAAP diluted EPS of $1.83 for the quarter and $6.60 for the year. Non-GAAP diluted EPS was up 17% for the quarter and essentially flat for the year as a result of some one-time events that we've talked about in the past. Looking at the key drivers below EBITDA, the non-GAAP effective tax rate for the quarter came in at 20.1%, which was below our expectation and added about $0.09 to EPS. The tax rate benefited from certain international tax credits and limitations, increases in our federal research tax credit and higher than planned stock compensation deductions. Net interest expense in the quarter increased to $51 million from $46 million in the fourth quarter of 2021. Finally, the weighted average diluted share count for the quarter was 138 million, compared to 142 million in the prior year quarter, primarily as a result of the $500 million accelerated share repurchase agreement implemented in the first quarter of fiscal year 2022. Now for an overview of our segment results and key drivers on slide six. Defense Solutions revenues in Q4 of $2.07 billion were essentially flat compared to the prior year quarter. 2022 Defense Solutions revenues of $8.24 billion were up 3% for the year. Civil revenues were $938 million in the quarter, up 17% compared to the prior year quarter. In 2022, revenues were $3.46 billion, up 10% compared to 2021. The primary driver for growth in the quarter and the year was the ramp on the NASA EGS program. We had good growth within our commercial energy business, as well as increased security products, sales and maintenance. Health revenues were $691 million for the quarter, an increase of 10% compared to the prior year quarter, driven primarily by performance on DHMSM and our new work on ITSSC. Health revenues were $2.69 billion for the year, up 5% over 2021, with the same drivers that I cited for the quarter, plus strong performance on the Military and Family Life Counseling program. On the margin front on slide 7, Defense Solutions and Civil posted their highest margins in more than a year based on mix and some excellent program performance. For the quarter Defense Solutions non-GAAP operating margin came in at 8.6%, up 40 basis points compared to the prior year quarter. Civil came in at 11.2%, up from 10% in the prior year quarter. Defense Solutions non-GAAP operating margin for the year was 8.3%, which was down 30 basis points from 2021, primarily from investments in new program startups. Civil non-GAAP operating margin for the year was 9.2%, down from 10.2% in the prior year, driven by legal matters that we've addressed in prior calls. A $26 million gain in 2021 and a $19 million expense in 2022. Health non-GAAP operating margin for the quarter was 14.3%, consistent with what we've been talking about for some time. Health non-GAAP operating margin for the year finished at 17.1%. Turning now to cash flow in the balance sheet on slide eight. Operating cash flow for the quarter was $105 million, and free cash flow, which is net of capital expenditures, was $52 million. For the year, operating cash flow was just shy of $1 billion, and free cash flow was $857 million for a 94% conversion rate. In the fourth quarter, we completed the acquisition of the Australian airborne business, which provides maritime surveillance operations for the Australian Border Force and search and rescue response capability for the Australian Maritime Safety Authority. Purchase consideration was approximately $190 million, net of $6 million of cash acquired. During the fiscal year 2022, Leidos returned $741 million to shareholders, including $199 million as part of its regular quarterly cash dividend program and $542 million in share repurchases. As of December 30th, 2022, the company had $516 million in cash and cash equivalents and $4.9 billion in debt. Roughly $1 billion of that debt will come due in this year, most of it in May. We expect to fully repay the remaining $320 million on the short-term loan originally tied to the Gibbs & Cox acquisition and then rolled over in support of the ASR program. We'll refinance the $500 million of maturing bonds as well as the bank term loan A, still tied to LIBOR, in an efficient and flexible manner. Interest expense will increase given the current rate environment. As we approach the debt market, we're pleased with the recent upgrade from Moody's to Baa2 credit rating, which signals their confidence in our financial stability and outlook. We're already benefiting from improved terms on our commercial paper borrowing and expect that to carry through on the debt transactions. As we close out the year, we remain committed to a target leverage ratio of three times. Our long-term balanced capital deployment strategy remains the same and consists of being appropriately levered and maintaining our investment grade rating, returning a quarterly dividend to our shareholders, reinvesting for growth, both organically and inorganically, and returning excess cash to shareholders in a tax-efficient manner. On to the forward outlook on slide nine. For 2023, we expect revenues between $14.7 billion-$15.1 billion, reflecting growth in the range of 2%-5% over fiscal year 2022. Demand remains strong as our customers execute robust budgets, and we enter 2023 with a number of programs that are ramping, but the procurement process is still protracted. We expect 2023 adjusted EBITDA margin between 10.3%-10.5%. The midpoint of the margin range is the same as 2022, and the top end is consistent with the target that we laid out at our October 2021 Investor Day. We're committed to long-term margin expansion, and we'll pull multiple levers to offset the impact of inflation and supply chain on our cost structure, as we demonstrated in the back half of 2022. We're closely managing our corporate costs with a special focus on real estate. GAAP net income in the quarter reflected impairment charges of $37 million from exiting and consolidating underutilized lease spaces. Since beginning our journey to optimize our real estate footprint post-COVID, we've exited over 2 million sq ft, which is about 25% of our office space. Getting out of that space improves our competitiveness and keeps corporate costs in check. We expect non-GAAP diluted earnings per share for 2023 between $6.40 and $6.80 on the basis of 138 million shares outstanding, which is unchanged from fourth quarter levels. To provide some context around that range, we expect 2023 net interest expense of approximately $225 million and a non-GAAP tax rate between 23% and 24%. These two items amount to an EPS headwind of about $0.20 for the year. Finally, we expect operating cash flow of at least $700 million. This guidance reflects approximately $300 million of additional cash taxes compared to fiscal year 2022, primarily related to the Tax Cuts and Jobs Act of 2017 provision requiring the capitalization and amortization of research and development costs. As we're awaiting potential congressional action, we didn't make any Section 174 related tax payments last year, so we'll need to make payments this year to cover both 2022 and 2023. We paid the 2022 Section 174 taxes in January, and we expect to pay the 2023 taxes in quarterly installments throughout the year. From a free cash flow perspective, we're targeting capital expenditures of approximately 1.5% of revenues based on the timing of some investments in Australian and U.S. airborne surveillance, as well as insourcing some of the security product supply chain. As is our usual pattern, cash generation will be back-end weighted in 2023. Along with the tax and debt payments in Q1 and Q2, this limits the ability to deploy capital for shareholders in the first half of the year. As a result, the EPS guidance range does not account for any repurchases, and we'll update you as we go throughout the year. With that, I'll turn the call over to Rob so we can take some questions. Thank you. At this time, we'll be conducting the question and answer session. If you'd like to ask a question today, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press Star two if you'd like to move your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Thank you. Our first question comes from the line of Robert Spingarn with Melius Research. Please proceed with your question. Hey, good morning. Hey, good morning. Good morning, Rob. Chris you know about the guidance, I wanted to ask you if you might not give us some more detail on a segment basis, for the you know what drives the 2%-5% growth across the segments, and then how do the margins look relative to the 22 performance on a segment basis? Well, Rob you know that we don't guide by segment, but I'll give you a little additional color commentary. First of all, we're planning on growth across all of our segments, and our leaders have signed up to that. We feel good about that. We're seeing you know strong demand in pipeline and bid opportunities really across all three segments, Defense Solutions, Civil, and Health. On the margin front you know we've been communicating this for some time. Health margins were overheated in 2020 and 2021. Those started to moderate down. You saw that in the fourth quarter that they're coming to a place that we believe is sustainable, and then we can build off of that going forward. What I would tell you is that's how we see Health playing out, is in the mid-teens, as we've communicated. We're very focused in the other two segments about continuing to drive margin expansion, Defense Solutions and Civil. That's generally how we see the year playing out. Hopefully, that gives you enough additional color commentary. Yeah. Roger, going back to the security, products business and the supply chain there, what parts of that might you bring in-house? Some of the manufacturing, we've used a contract manufacturer for you know if you think about it, for some of the lower level parts and then final assembly of some of the pieces of equipment. With the Dynetics organization and the expertise we now have, we're very, very comfortable with doing more of those operations internally, where we have more control, we can manage the supply chain, frankly, we think we can drive the cost down. You know that's been part of our strategy. You know we are having the conversations about a manufacturing center of excellence, which I think really is a great part of the evolution of the company. We can look at you know if you will, larger manufacturing like the ProVision system, which I'm sure you all go through, and be very confident that we can build that well in-house. Thanks so much. Yeah. Thanks, Rob. Our next question comes from the line of Sheila Kahyaoglu with Jefferies. Please proceed with your questions. Good morning, everyone, and thank you. Good morning. Just a follow-up, maybe on health, and I know you don't guide on a segment basis, but can you give us the moving pieces as we think about your growth rate? You mentioned SSA in the quarter starting to contribute RHRP. How do we think about that incremental contribution in 2023 and what you're seeing from burn pit and then the offset from DHMSM? Well, you nailed all the big players there, Sheila, so you're on top of it. First of all, I mean, the SSA team did an outstanding job and couldn't be happier with the transition. The fact that the customer did the right thing, let us get started in the fourth quarter, we're off and running, and we expect that to be a significant contributor to growth in 2023. So that is solid. RHRP, finally, we feel very confident that that will start to ramp up here really at the tail end of the first quarter. There'll be some activity in March, but think about that as building from Q2 onward through the rest of the year. That gives a solid growth momentum. PACT Act, it's still, again, early. I'd say the team is doing excellent work in QTC. You know, the story got a little complicated last year because some of the pre-discharge work went to multiple competitors. We also have the international work that we won that's ramping up this year. I'd say that's, you know, we expect growth in that area, but you know more color on that as we get a quarter or two down the road. Finally, DHMSM. You know this year there's I would say, towards the tail end of the year, we've got to continue to work to offset that ramp down on the deployment side. The teams have been doing excellent work to expand the capabilities within the software that's been deployed, we're continuing to find opportunities to do that. I don't know, Roger, if there's anything more you'd add there. No, not really. Although, Sheila, I'm sure you heard in the State of Union address that the President talked about burn pits and making sure that we took care of veterans. It has been slow but solid, and we would expect that momentum to continue throughout the year. That's more likely to affect volume than margin. We've seen, again, our volume hold up well in our exam business and you know look forward to another strong year. Okay. No, that's helpful. I wanted to talk about margins as well. Defense was solid in the quarter, but I think it was mainly Civil that you know in Q3 and Q4 have seen really good performance there. What's sort of going on? You mentioned larger programs, but I didn't think you had anything in particular there. How do we think about Civil margins going forward, and what's the driver of the better performance in the second half of the year? Civil, again, we you know talked a little bit about on the prepared remarks about the security products area seeing some ramp up and you know that will certain quarters will have more volume there, certain quarters will have less, but that is always a nice contributor. Steady performance in our commercial energy business that has grown nicely quarter- quarter. It's higher margin work. Team does an excellent job there. You know just on the digital modernization side. You know, EGA coming in, not a one of our higher margin programs, but it's great base. A lot of employees going to work that helps absorb costs elsewhere, helps make other programs more profitable. You know, we like the pipeline of additional digital modernization IT opportunities that we see in that unit as well. You know, lastly, everybody's been focused on cost management, Sheila. That was kind of the mantra across the company in the back half of the year. The Civil team gotta give them kudos. You know, they went above and beyond in finding opportunities where they could drive efficiency sustainably into the organization. We like how that performance is trending. Sheila, I would add, if I could, because I know you've followed us for a long time. What's been great about our Civil business is that it's growing, and we have a base of business in that segment that is sort of infrastructure support business. You know, we run Antarctica, we've got the Hanford contract, we do some other work for DOE. As great that work is, it traditionally does not carry the margin of the rest of the company. As Civil grows top line, you see the margin increase because we're adding new business sort of at the margin, and the mix is shifting in Civil. The more we grow Civil and we hold the infrastructure business constant, the more growth in margin you're gonna see. The team there has done a great job of growing. Great. Thank you very much. Yeah. Thank you. Our next question is from the line of Bert Subin with Stifel. Please proceed with your questions. Hey, good morning. Good morning. Good morning. Roger, or Chris, maybe if I follow up to an earlier question. If we look across the portfolio at Leidos in 2023 you know just a couple items, you've got the continued aviation security recovery. You guys noted the growth in commercial energy. You're gonna have the annualization of those SSA task orders. You have the PACT Act, Sentinel, DES, and this is just to name a few, all of which I would think would be mid-single growth, mid-single digit organic growth tailwinds. You know, what are the offsetting mechanisms there that puts you down to that 2%-5% range? You make it sound so easy, Bert. Yeah, you're right. There are a lot of tailwinds, no doubt about it. Yeah. We've always talked about the DHMSM program coming off the peak. You know, one of. By the way, I think one of the real marquee programs for the company. You know we're better than half done now, and we will start to slow down as we have talked about in the past. That program has just been such a, you know a great performance program for us, both top line and bottom line, and frankly, delivering on time and on schedule to our soldiers. That's one of the programs that's coming down. I would also point, there's a couple spots in our intel business that's been fairly public, the Focus Fox procurement process, and while that has some room to go ahead of it still to see how that fully plays out, that's an area that you know could be put some pressure on revenue growth if it doesn't go our way. We lost a program a year ago, and this is how long things take, called ITEMS UFS. The good news is the intel leadership team did a great job throughout 2022 to continue to support the customer during transition, but now we're fully rolled off that program. That's a little bit of a headwind. You know, by and large, we've had great success on our recompetes. Really love the team's performance there. There are a lot of tailwinds that are known, we also have seen customer behavior, you know, take longer, and especially if they're worried about the budget environment, you know, transitioning into government fiscal year 2024. Our hope is we'll build momentum through the year. We'll have some successes, and we'll be able to update you in a positive direction. Yeah. That's super helpful. Thanks, Chris. You know, maybe, you know, one item, Roger, that you had talked about before and I thought gave some good color was on DES. You know, obviously that has the ability to be, you know, a significant driver on the sales side, you know, for the company. You talked about that as being tens of millions of dollars in 2022 and then maybe doubling from that range in 2023 and then really starting to ramp by 2024. Is that still how you're looking at it? Or how should we think about the range of potential outcomes for that contract this year? Yeah. I think that's a good way to build your model. I was with a customer yesterday, actually. We had a long meeting on the program. We all wanna move fast. This is about transitioning non-combat support organizations to a new, what we call DoDNet. We wanna do it the right way. We wanna do it when we're ready, and we all wanna move fast because it will save money. It will help interoperability between all these support agencies, but we wanna do it the right way. We don't want to create a negative user experience for all the people that are supporting the military. You know, the discussion was, well, okay, can we move up some of the transformations and some of the transitions? We're looking at that. I think there is potential for it to be higher, but we're not guiding to that. We will, we'll talk to you quarter by quarter as to what our success has been and whether we've been able to increase the ramp. What I will tell you, we're very enthusiastic about it in 2024 and 2025 as it fully ramps and we're doing these conversions. How much more than what you described we can do in 2023, we have yet to see. I can tell you the customer wants to move fast, we want to move fast. We all know if you sometimes you move too fast and you create a negative user experience, you're really not serving the user well, and we don't wanna get ahead of ourselves. Thanks. Yep. Thanks, Bert. Our next question is coming from the line of Matt Akers with Wells Fargo. Please proceed with your questions. Yeah. Hey, guys. Good morning. Thanks for the question. Good morning, Matt. I wanted to ask about the cash flow guidance for '23. I think if you back out, you know, Section 174, I think it's kind of flattish year-over-year. I think the payroll tax goes away in '23. Is there any other sort of offsets to that or working capital maybe that are preventing that from being higher? Again, Matt, with the growth we've had and the growth that we see ahead of us, there are some investments, you know, modest investments in working capital for a few particular programs. You know, if we're able to win a program like FENS, for example, there's an initial amount of equipment that you have to procure and bring on board to support the customer. There's a few things like that in our pipeline that we're anticipating. You know, we finished the year at 58 days DSO, and, you know, that's good performance. I think there's opportunities to drive that even lower, and we're focused on that as a finance team with our lines of business leaders. You know, we thought we'd start the year at $700 million. I mean, it's not never a slam dunk, but our focus is to continue to build momentum on the cash side. Nothing out of the ordinary as it relates to working capital investment, but there are a few programs that we are anticipating needing some support as we win them and grow them. Got it. Thanks. I guess it sounds like you're doing some, sort of contingency planning around if there's a shutdown. Are you willing to share, you know, what kind of quantify the impact would be if we do get a shutdown? Well, first of all, no, because we really haven't. We haven't gotten to that level of planning where we've in order to have to quantify, we'd have to pick a date and then go through and figure out which programs would be deemed essential and which programs would not be deemed essential, and then how we would go mitigating. What we do, and unfortunately, we have done this way too many times, is we get our contracts organization and, we go through our 3,000 or so contracts and try to understand how each contract would perform in a government shutdown. You know, some are easy. They're deemed essential. We know those will continue. Some we know will not be deemed essential. As part of our preparation, we start to have conversations with contracting officers about things that might be in the middle and work with them on ways that we could mitigate a shutdown. It just behooves us to be prepared. By the way, we have learned the better prepared we are, the less likely it is we'll ever use the plan. We would never want to, you know, maybe McCarthy and the President have a meeting. I think they're going to meet again in two weeks. You know, if it comes out of that and, you know, we get to June and we're not prepared, then we haven't done our job to manage through a government shutdown as best we can. That's the process really that we have kicked off. Unfortunately, we have done this before, you know, so we have a pretty well developed playbook, and we have gotten our playbook out and dusted it off. Great. Thank you. Yeah. Thanks, Matt. Our next question is from the line of Peter Arment with Baird. Please proceed with your questions. Yeah. Good morning, Roger, Chris. Hey, good morning, Peter. Maybe you just update us on how Engine doing. I think we're kinda expected to hear kind of a steady state in 2023 in terms of a ramp. What's your thoughts on that? Engine? Yeah. Yeah. Well, it's pretty much fully ramped and really doing well. You know, we were in full possession of the network. You know, Peter, I know you know the program well, but, you know, our first task was to take the custodianship of the ashore network. Okay, we've done that. Now, the challenge is to transform that network to modern technology. We're in the process of, you know, keeping the call center up, maintaining the network, trying to get the quality of service up while we move to the new environment. There is opportunity, we believe this year for additional scope through special projects and on contract growth and task orders. We are starting to see some of that. I think we have talked in prior calls that was a little slow in coming. Mm-hmm. You know, we have talked to the Navy, and frankly, I've talked to our program manager and, you know, we're starting to see some of that break free. We see lots of opportunities where technology can add value to the user experience in the Navy. We're constantly making suggestions to the customer about things that can be done to improve the network and which would end up in growth for us, but more importantly, would end up in better quality of service for the user. I know, Chris, you want to add? No, I mean, first of all, we've got an outstanding team running that program, and it's our largest program, as you can imagine, we're only, you know, a year, 18 months into this thing, so the best days are ahead of it. To Roger's point, we're clearly identifying areas where there, we can help support the mission and the customer better, and that would lead to contractual actions and modifications. Let's just say, of course, you know, we're interested in pursuing that, but, at the pace that makes sense for the customer. We're hopeful that there's, you know, we'll continue to see growth and margin improvement around that program as it moves into next year and the year after. Appreciate that color. Hey, Roger, you mentioned technology kind of insertions and things that AI has obviously gained a lot in the press here recently with ChatGPT and other things. Are you seeing opportunities to really, you know, automate some parts of your business where you can really, you know, potentially improve margins? Absolutely. You know, Peter, we're all smiling because we actually do have ChatGPT in our environment, and we debated whether we ought to talk about it. It seems such a popular term now, you know, I guess Microsoft is gonna put it under Bing and really make a super search engine out of it. I think what everyone needs to understand is those technologies are available to anyone who wants to use them. I think the, you know, the benefit goes to those people who capitalize on not only the money we spend internally, but the billions of technology money that's spent outside the company. So we are very aggressively using things like ChatGPT and other modern language, you know, AI platforms. We've deployed, you know, robotic process automation in accounting, like in Chris's area. I mean, you know, we don't talk much about that. We're certainly doing it for customers. We're using it, like, to analyze images and all the applications that you can imagine. We're also using it internally in our functions to be able to, if you will, use computers to do what we call the dull, the dirty, and the dangerous, right? Free up the human, whether that be a financial analyst or an accountant or an imagery analyst or even a linguist, right, in our linguistics program, to do what the human does best, which is to add that cognitive discernment and then let the computers crunch through, you know, the gigabytes and petabytes and terabytes of data that we now collect. Appreciate the details. Thanks, Roger. Yeah. Thanks, Peter. The next question is from the line of Seth Seifman with J.P. Morgan. Please proceed with your questions. Hey, thanks very much. Good morning, everyone. Good morning. I was wondering maybe, if you could talk a little bit about the 2023 omnibus and kind of how that set up your expectations for the growth that should be coming in the Dynetics programs, particularly, you know, in the 2024 timeframe. Yeah, okay. Those are two, I would say, lightly linked subjects. Let me talk through them, and I'll have Chris clean up after me when I make a mistake. Given the year and what's going on on the Hill, I think the omnibus is about the best we can expect. You know, my hope and our plan is McCarthy and the President find a way to raise the debt ceiling long before the June date. You know, the debt is really paying for past years, for authorizations and appropriations that have already been made, commitments that the country has been made, and we're just funding the government. That will probably fund it, you know, we're hoping a little bit higher than the 2023 levels. I think we can count on that. As you know, it's always a discussion between defense and non-defense. If we raise defense, then there's a group of elected officials who wanna raise the non-defense budget at the equal amount. That may tamp down a little bit of the raise in defense, but we're coming off such a robust defense budget this year that I think we will all do okay. Now, how does that roll into Dynetics? Again, if you were down in Huntsville and, you know, I'll describe a little bit what you would have seen, is a lot of productions that are in low rate initial stage of the program. Where we're building, you know, the first 8 pre-production or production units that will be followed in 2024 by a fairly aggressive ramp and significant production. We're talking instead of, you know, one a month, you know, one a week, two a week. We could go through the different programs. I won't do that now. Those monies are pretty much already authorized and appropriated. Okay, not in every case. You know, I won't go program by program. If we get an omnibus, then the ramp that we talked about in December is certain, because the, you know, these are programs of records that will be fully funded. I won't go into all the scenarios if there's a debt ceiling or there's a rescission and all the things that the government could do, which is certainly within the realm of possible. We think the high probability is they'll get an omnibus. It will have some growth in it. There may be a Ukraine supplemental, depending upon how it goes, and it certainly doesn't appear to be lessening. They may cover those expenses with a supplemental as they have done, in the past. Then our production ramps in 2024, which are, We again, we're very pleased. I think they're very attractive. Those would be fully funded, and we would see significant growth in Dynetics in 2024. I'll let, you know, Chris add to that. Not a lot to add. I mean, Seth, obviously, you can tell from Roger's comments, which were mostly focused towards the future in 2024. We felt really good about how 2023 omnibus came out, and our Legislative Affairs team does an excellent job, and we clearly were making sure members understood the importance of some of our key programs. We like the way we came out. You don't get everything funded at the level that you'd like, but on balance, we thought we came out exceptionally well and well-protected with key programs and that sets us up nicely for this year. Mm-hmm. Cool. Excellent. Okay, I'll leave it there for this morning, but thanks very much. Thank you. Thanks, Seth. Next question is coming from the line of Ken Herbert with RBC Capital Markets. Please proceed with your questions. Yes. Hi, good morning. Hey, good morning. Hey, it may be, maybe for Chris or Roger. You did a really nice job sort of sequentially first half to second half in 2022 on the margins. I know you went through a number of items around, you know, your physical footprint, some insourcing, maybe some labor savings. It also sounds like from the guide that, and your comments that, you know, you're obviously not gonna keep all of this. My question would be: How do you view sort of incremental, sort of corporate level cost opportunities as you look at the business into 2023? How's the discussion with the customer in terms of, you know, how much you're able to keep, what's necessary to, you know, be competitive and win share in the marketplace? I mean, how do you view these dynamics into 2023, and where are the incremental opportunities at the corporate level from the cost side? Well, Ken, let me get started. Roger might pile on. First of all, very proud of the team. Second half of the year, as a team, you know, we really rallied and showed what we're capable of on the cost control margin improvement front. Quite honestly, that was despite the fact that, you know, we had some program areas where we could have done better. So, you know, I think that gives us some confidence and momentum going into 2023. Now, a couple things to keep in mind. The health group overall for the year finished still above 17% on margins, right? Fourth quarter was definitely more in line with what expectations are going forward. Earlier in the year, there was still, you know, some stronger performance from caseload and QTC and other things that drove that higher. That will still moderate down a bit, but we do intend to capture the savings and the margin upside that we've been able to realize in other parts of the business, and we're not done in Defense Solutions and in Civil, for sure. As we build our pricing, you know, we have a rigorous process with our competitive intelligence team to kind of keep us in tune with where we need to be on a price to win front. We factor that in and making sure that we can remain competitive while still trying to capture some of the margin upside. You know, the guidance is balanced for next year. Again, there's momentum there. I wouldn't say there's any super low-hanging fruit on the cost reduction side because we, you know, do focus on that continuously. There's still more that we can do and we're focused on hitting that 10.5% long-term margin target or greater by 2024. Yeah, I don't have much to add, Ken. I'll make a couple points that I'm not sure we got to foot stomp. You know, taxes and interest, which I wish I could control, but I don't. You know, that's like a $0.20 headwind on EPS. You know, we'll do all we can, and we've got a great tax department, and, you know, we'll see if we can mitigate that. Unfortunately, interest rates are up and, you know, the way we manage our balance sheet, you know, we're in the market. We're always replacing expiring, debt instruments and so that creates a headwind. Really, our philosophy is if we can grow revenue faster than we grow our indirect costs, then we get better every year. Growing the top line, you know, has really helped us control costs. We had really good growth in the second half. Again, we expect continuous growth for the rest of this year. The challenge is to control costs below revenue growth. We've found, like, we have some costs that grow with the number of people, right? One of our thoughts are, you know, we've had a business that was somewhat dependent on people to grow, right? You know, we've talked in the past about, well, we want a little bit more product mix. We wanted a little bit more diversity in our portfolio. You know, part of that is so that we can grow nonlinear with people. If we get to the ramp in Dynetics where we're building more products, we can leverage our terrific workforce, but it's not one-to-one, and that allows us to grow faster than our indirect rates. You can think about HR and benefits and all the things, you know, the training programs that we have with our people. That's just kind of our philosophy, and I think, you know, Chris did a good job of saying, you know, we got fixed price and cost-plus, and I'm sure you know how the mechanics are about what we have to give back based upon the contract type. Great. I'll stop there and pass it back. Thanks, Roger. Thanks, Chris. Yeah. Thanks, Ken. Our next question is from the line of Cai von Rumohr with Cowen and Company. Please proceed with your questions. Yes, thanks so much. I think early on you talked about 6% headcount growth I would have to assume wages go up about 3%, which would say payroll is up in the area of 9% and your revenues are up 2%-5%. Help us square those two items. Well, Cai, I mean, keep in mind, first of all, you know, half of our revenue is kind of Leidos content. We've got subcontractors, we've got materials, right? That's only a portion of the business that you're focused on the headcount growth. That headcount growth that Roger talked about, the 2,400 people that we brought on last year, was over the course of the year, right? We were adding them kind of pro rata throughout the year. It's not like that's gonna all be incremental, heading into 2023. That being said, you know, we have big plans around the additional heads that we plan on adding again this year. The, you know, the combination of factors, head count should be up. You're correct. There's payroll growth on top of that gives you some upside. You know, that immediately gets passed through on the cost reimbursable programs. You know, you don't necessarily get uplift immediately on your fixed price programs. You know, that's part of the equation too, that would suggest if we're successful, we don't have any major losses, and we continue to win our fair share. We like the momentum that we see on the growth side. Thanks. The second one is, you know, you have very strong bid submits. Roger, you mentioned, you know, we have a very strong FY 2023 budget, so there's lots of money available. Can you give us some color on what you expect your book-to-bill might be in 2023 and what that would, you know, suggest for 2024? Yeah, sure, Cai. Of course it's early, and we've got about $34 billion of submits pending awards. We had... I don't know whether our submits of $23 billion last quarter was a record or not. I think it probably was. We've got just a lot of things out there. We expect 2023 to be at or better where we were in 2022. You know us, it's so early, you know, we start leaning forward, and then we get hit with a protest, and the program gets pushed out of 2023 to 2024, which we've certainly seen happen in the past. We feel that 2023 is gonna be strong and, you know, at the 2022 levels or better. There's always a couple wild cards that says you will win. There are a couple, I would say, you know, maybe more sort of like one square over that we could win that would really fuel the top end. You know, we didn't really put those in our plans in our guide. What we're trying to do is to build a balanced guide around what we see in the portfolio, and, you know, again, clearly above one for the year again, as it has been for years and years and years. The potential for a very strong year. We'll just... You know, we've got, you know, FENS, which still hasn't been awarded, and we're hopeful that FENS will be awarded soon. I'll tell you, Cai, without going into the details, there's a program that has been under protest that we thought would be awarded in first quarter, and the customer just asked us to extend our pricing to next year. You know, there's As enthusiastic as we are, every once in a while we do get disappointed and the protest process and the Adjudication Court of Federal Claims tends to damp down some of our enthusiasm. In the first quarter, you know, we're gonna be thoughtful about what we put out there. You know, you know the numbers, 35, 36 in backlog, 34 awaiting award. Your strong submits. We'll have a very strong submit year in 2023 as well. Thank you very much. Yeah. Thanks, Cai. Our next question is from the line of Jason Gursky with Citigroup. Please proceed with your question. Hey, good morning, everybody. Just wanna follow up there with a kind of a follow-up question to the line of thinking that Cai had there on the bookings. You mentioned in your prepared remarks the quote, unquote, "protracted acquisition process" that's in place. That's something we've been hearing, you know, for quite some time now. Wondering if this is just kind of the normal environment now and, you know, what your assumptions are for the year. Are you expecting things to get better or worse on how quickly things can get, you know, out bid and then awarded? Yeah, I mean, I'll talk, you know, kind of top level, you know, Chris can add in, is, you know, this is just what I think. You know, everybody has their opinion. There's a lot that's being written. What I think I'm seeing is customers wanting to get things under contract before we end up in this argument over the debt ceiling. You know, with looming, you know, government shutdown, you know, who knows what comes out of those discussions. If you've got a customer and you've got appropriated funds, you're gonna really work hard to get those committed between, you know, now and June. We are seeing a little bit more activity, and we're hopeful that these folks will try to move a little faster and get these things under contract. Then we probably end up with, you know, an agreement on debt ceiling with some kind of a future trade on some kind of a top level budget constraint. I mean, I'm not smart enough to know what that will look like. You know, last time this happened, we got sequestered. I suspect it will be something, you know, just what I read about, you know, how McCarthy got, you know, got elected, as Speaker. There is some kind of a budget deal that's gonna be cut for the long term. That could be. By the way, I, and I don't really understand how you balance the budget in 10 years. Again, that's not my job, but I run the numbers, and it seems unbelievably difficult. That's gonna put a damper, perhaps, on what the budget could be. You're starting to talk now 2025, right? I suspect that if you have money and you have a program and you have a mission with requirements, you're gonna work as hard as you can to get those things committed in 2023. I think that speaks well. As you know, we get an award in 2023. That's a 2024, 2025, 2026 revenue. Mm-hmm. You know, again, our future, we think is still looks relatively bright. Plus the diversity in our portfolio. You know, the civil group has been growing very strongly. The health group has been growing very strongly. We've been working really hard to make Leidos somewhat resistant to the vagaries of what happens from our elected officials. I don't know, Chris, you wanna anything? No, I think you covered it well. I mean, the only thing I'd say, we wish customer contracting shops were more fully staffed. They're not, in many cases. One path that we think has been successful is more use of FEDSIM. FEDSIM runs a good acquisition process. You know, the rules are well-defined. We've had some success with our teams competing in that arena, and we see more customers going that direction. Mm-hmm. Great. Thanks. Thanks, Jason. Then just one quick clarification. Yeah, can I ask one clarification? You mentioned the CapEx at 1.5% this year, and I think you mentioned part of that is being driven by Australia. I'm just curious if that has to do with the recent acquisition and kinda what's going on down there specifically on. Yeah, no. Good question, Jason. It does. When we acquired that, you know, the Australian airborne business, we knew they were kind of halfway through a major investment in the mission management system software capability. We're continuing that investment, that'll be completed in 2023. That was fully factored in, you know, the valuation of the business. That's elevated for a period of time. As you know, I mean, just like the rest of airborne business, there will be some preventative maintenance, ongoing normal maintenance CapEx that we'll spend there over time. Think of that as slightly elevated in 2023 just to continue the full development of that capability. We've got additional CapEx in that number for our U.S.-based airborne business as we're, you know, acquiring more capability, fitting it out to run more mission. We're optimistic on some bids that we've put forward and some more that are on the pipeline there. Great. Thank you. Thanks, Jason. Hey, Rob, we're running a little bit over, but we have time for one quick question. Sure. That'll come, be coming from the line of Louie DiPalma with William Blair. Roger, Chris, Stuart, and Gabe, good morning. Hey, Louie. Good morning. Good morning, Louie. Good morning. The success of drones in Ukraine and more recently, surveillance balloons have increased Congress's focus on unmanned systems. Last summer, you won a $300 million contract to develop a medium unmanned undersea vehicle for the Navy. Your unmanned surface vessels, Sea Hunter and Seahawk, have participated in several successful demonstrations. Is there potential, Roger, for some of these Navy unmanned platforms to convert to programs of record or even for Leidos to provide surveillance as a service similar to the COCO model that you're doing in the U.S. and in Australia? Thanks. Yes. Wow, that's great. I mean, Louie, you really are following things well, and I think you really understand our programs. I would add to that, we have some unmanned vehicles that are made at Dynetics. By the way, we have some counter-drone programs that we probably exposed you a little bit to when you were down in Huntsville, where we actually have a radar on a Jeep, and we launch a drone, and it can go or attack another drone. We see exactly what you see is the use of uninhabited vehicles under the water, on the surface, in the air. We'll call it in the rare air, up between 60,000 and 80,000. First of all, I will tell you that it has been robust. There's been a lot of work already done. The MUUV is a program of record. We won that. That's a program of record. It's fully funded. The Sea Hunter and the autonomous vehicles in the Navy are not yet programs of record. The Navy is doing a lot of experimentation. They're doing some things in the Mid East that have really demonstrated some capabilities. As you have mentioned, we've done a lot with Sea Hunter, Seahawk, and Sea Innovator. You know, we believe there is a strong demand for those. I think for us, on the surface, the next thing for us may not be a full program of record, but they may buy additional vehicles to extend their experimentation, which they can do under an OTA. That would happen much, much faster. I believe that the Navy is committed to having a significant percentage of their fleet, both unmanned and optionally manned. You know, our autonomy software and the things that we have demonstrate really set us up well to capitalize on that and to bring them the capability that they need. There are a couple of other programs. There's MUSV, there's LUSV, that are out there, that are going through their development processes. To get all the way to the program of record, I think is years away. That doesn't mean that the Navy won't be spending funds to further their understanding and to experiment with unmanned capabilities, and we would be right in the middle of those activities. Louie, thanks for the question. Thanks, Louie. Thanks, Roger. Thanks, everyone. Yeah. At this time, I'll turn the floor back to Stuart Davis for closing remarks. Thank you, Rob, for your assistance on this morning's call, and thank you all for your time this morning and your interest in Leidos. We look forward to updating you again soon. Have a great day. Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.