Greetings. Welcome to Leidos' second quarter 2026 earnings conference call. A brief question and answer session will follow the formal presentation. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Stuart Davis from Investor Relations. Stuart, please go ahead, sir. Good morning. Welcome to our second quarter fiscal year 2026 earnings conference call. The presentation slides we'll be using are on our investor relations website. Turning to slide two, today's discussion contains forward-looking statements based on the environment as we currently see it and thus includes risks and uncertainties. Today's press release contains more information on the specific risk factors that could cause actual results to differ materially. Finally, 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, I'll turn the call over to CEO Tom Bell, who will begin on slide four. Thanks, Stuart. I'm pleased to report another strong quarter for Leidos. Second quarter revenue grew 7% year-over-year, 4% organically, to a record $4.6 billion. Adjusted EBITDA margin remained best in class at 13.8%. Operating cash flow reached a Q2 record of nearly $800 million. We booked $5 billion in net awards, delivering a solid 1.1 book-to-bill ratio. Customer procurement activity is beginning to accelerate, so we anticipate continued positive bookings momentum through the rest of this year. Our year-to-date financial performance indicates to us that our NorthStar 2030 growth strategy is working. As a result, I'm pleased we can raise the midpoint of our 2026 revenue guidance by $100 million, raise the midpoint of our EPS guidance by $0.05, and raise operating cash flow guidance by $50 million. Let me take a few moments to highlight some important developments in two of our segments that I know are top of mind for our investors, defense and health. In defense, our team delivered another exceptional quarter. Revenue growth accelerated, margins expanded, and award velocity is accelerating. Defense posted a 2.2 book-to-bill ratio in the second quarter. Over the trailing 12 months, this equates to a 1.9 book-to-bill ratio. This level of customer traction gives us continued confidence in this segment's robust business outlook as a part of Leidos. Importantly, these bookings do not yet reflect the benefit from several major defense tech programs begun this year. These include our over $1 billion framework agreement with the Department of Defense to deliver 3,000 Low-Cost Containerized Munitions by 2030. Our unique position in the testing phase of the Navy's next generation Medium Unmanned Surface Vessel. This positions us for a potential production award in Q4. Our recent award to provide the sensor payloads for an additional 18 missile warning and missile tracking satellites in support of Golden Dome. In addition to these hardware successes, our defense team continues to leverage the unique power of One Leidos, bringing together hardware and software, products and services to win in ways few competitors can match. To illustrate the power of this unique One Leidos capability, let me briefly highlight Leidos' role in the recent Operation Jailbreak Hackathon by the U.S. Army. There, engineers from our defense and digital businesses worked side by side to rapidly develop and deploy secure, open application programming interfaces that enabled our hardware to integrate seamlessly with the Army's evolving command and control architecture. Perhaps more importantly, we demonstrated those same capabilities on non-Leidos systems, validating secure interoperability using open and documented standards. Our team was among the first to complete the Army's technical sprint objectives. They consistently led the Operation Jailbreak's progress metrics by demonstrating the speed, agility, and success that today's software-defined battlefield demands. That performance reinforced Leidos' leadership role in open architectures, it represents a major step in helping the Pentagon rid themselves of a huge issue. That issue is the prevention of seamless battlefield understanding and seamless command and control due to proprietary software vendor lock. By bringing together advanced hardware, mission software, systems integration, and deep operational expertise. All housed within One Leidos, we deliver differentiated capabilities at the speed our customers require. We believe this truly positions us to lead in the defense tech of the future, our performance during this hackathon is garnering us more and more customer interaction and customer traction. Now in health, demand for our VBA medical disability exam business remained strong through the second quarter, we are now actively positioning this business for the customer's upcoming recompete. The VA recently advised that it is reviewing certain administrative aspects of the medical disability examination program. As a part of that review, the VA has decided to suspend incentive payments for all vendors for the rest of this year. In addition to embracing this customer decision, we've worked proactively with the VA to apply the real savings we've been able to achieve in our existing regions contract through focused insertion of technology and innovation across our pre-discharge and international contracts. Taken together, this now gives us a clear picture of the probable 2026 full-year performance for this business, that outlook is fully reflected in our enhanced 2026 guidance I mentioned earlier. Elsewhere in health, I'd like to clarify some recent reporting surrounding the next phase of MHS GENESIS. Under our original 10-year contract, Leidos successfully developed and deployed globally the Department of Defense Electronic Health Records system on time and under budget. We are very proud of this fact. Consistent with the original vision for this program, our execution now enables the Defense Health Agency to procure underlying software directly from commercial vendors if they so choose. As the DHA finalizes its long-term acquisition strategy for the new healthcare delivery solution program, we'll continue to support and enhance MHS GENESIS under a sole source bridge contract. Whatever structure comes next, we believe we are well-positioned to continue supporting both the DHA and MHS GENESIS. Also, while looking forward, we're leveraging our unique MHS GENESIS expertise for the My Service Treatment Record pilot program we discussed during last quarter's call. We're actively progressing this new program across both the Department of Defense and the VA and believe it can be a significant business driver for us in the future. Finally, on capital deployment, during the second quarter, we completed our previous 2022 board share repurchase authorization with a $66 million open market share repurchase. A new board authorization is now in place. We anticipate resuming repurchases as prudent when our trading window opens. In closing, our second quarter results once again demonstrate the strength and resilience of the Leidos portfolio and the value of our NorthStar 2030 strategy. We're seeing meaningful growth emerge across our defense tech, energy, and cyber growth pillars. Because of the benefits of our NorthStar 2030 strategy and the resilience of our portfolio, we can once again raise our full-year guidance. With that, I'll turn the call over to Chris now and then look forward to our conversation. Chris? Thank you, Tom. Thank you everyone for joining us today. Let's jump right into the results on slide five. As Tom highlighted, revenues for the quarter was $4.56 billion, up 7% in total and 4% organically year-over-year. Bottom-line performance remained strong. Adjusted EBITDA was $631 million for the second quarter for an adjusted EBITDA margin of 13.8%. Non-GAAP diluted earnings per share grew to $3.26. We were able to turn those earnings into cash at a record pace. In the quarter, we generated $793 million of cash flows from operating activities and $761 million of free cash flow. Turning to the segment-level view on slide six, Homeland led all segments with 32% total and 15% organic growth. Growth reflected robust demand in commercial energy infrastructure and domestic and international air traffic management, as well as some benefit from foreign exchange movements. Defense accelerated to 6% organic growth as we ramped up production on integrated air defense and counter-UAS programs. Intel and Digital maintained its robust growth rate from Q1, principally from strong intelligence community demand. As expected, health segment revenues contracted from the full incorporation of the fourth vendor on the VBA Medical Disability Examination Regions contract. Even so, we were able to maintain health margins through continued efficiencies enabled by technology insertion. Profitability increased significantly in Defense and Homeland from Q1 levels through strong program execution. Changes in estimates at completion were a tailwind in the quarter, consistent with our historical experience. In addition, margin benefited from prudent corporate cost management and excellent award and incentive fee performance. As shown on slide seven, we paid down the remaining $300 million of commercial paper tied to the ENTRUST acquisition and ended the quarter with a very strong balance sheet. At quarter end, we had $6 billion of debt and $748 million of cash and cash equivalents. Gross leverage fell to 2.5x. Finally, onto the forward outlook on slide eight. As Tom indicated, we're enhancing our guidance for revenues, earnings, and cash. Specifically, we're raising the lower end of our ranges for revenue by $200 million in non-GAAP diluted EPS by $0.10 and increasing our operating cash flow guidance by $50 million. We're now expecting CapEx to be closer to $250 million for the year, so the implied free cash flow guidance is up about $150 million. We're maintaining our adjusted EBITDA margin guidance of mid-13s%. This guidance excludes any impact from the pending SES joint venture with Analogic, which we still expect to close later this year. Importantly, we are diversifying the earnings power of the company, so we are able to raise guidance despite the VBA MDE changes that layer in over the third and fourth quarters this year. In fact, on an organic basis, we expect the rest of Leidos to grow approximately 7% in revenues and 19% in adjusted EBITDA in 2026. Diving a little deeper, we see health segment sustaining revenues around Q2 levels for the rest of the year with non-GAAP OI margins around 20%. Conversely, defense growth will accelerate and post high single-digit growth for the year. If you exclude the airborne ISR business, which is in a transition phase, defense will grow double digits in 2026, which is a better indicator of its launch point heading into 2027. With that, operator, we're ready to take questions. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In fairness to all, we ask that you please limit yourselves to one question and one follow-up. One moment while we compile our Q&A roster. Our first question is going to come from the line of Scott Mikus with Melius Research. Your line is open. Please go ahead. Morning, Tom and Chris. On DHMSM/MHS GENESIS, the reports indicate the next phase DHA, sorry, plans to do the integration internally. Did you get information from the customer on why they chose to go that route? Is this kind of a one-off situation, or do you expect other agencies to limit the role of systems integrators going forward? Thanks, Scott. Appreciate the question. I think, honestly, the trend here is that there is an interest in insourcing across many government agencies right now. What they're interested in insourcing is the systems integration, as you say, but also the acquisition of commercial technology per the aspirations of this administration. We see that trend continuing across many agencies. That being said, while that has been a value-added service for Leidos in the past, what we're able to do is transition our value-added services into higher-level mission systems integration capabilities. Just integrating the system was what got them to the place where they can now commercially acquire the software themselves and perhaps do some of the systems integration themselves. As you're seeing with MHS GENESIS, there's still a need for us to maintain the system, enhance the system, and partner with them in terms of making the system match fit for the future. While we see a lot of conversations around insourcing, and it's understandable why our customer would want to make sure that they have organic capability, it's difficult to see that they can insource it all and have the manpower necessary to do the whole work. We're seeing them also contract with us as their partner going forward. When you cut away from that and raise up back to the 30,000-foot level, you see that for all that's changed, very little has changed. There's a little bit of churn. There's a little bit of change in what our partnership looks like. In the end of the day, they're still looking for us to help them maintain, enhance, and make sure the system is working for the future. Scott, I'd just add that even in the case of DHMSM, ongoing negotiations are taking place around how we can continue to support them, even with the current set of activities. It's trending the way Tom talked about potentially, but at the same time, the customer doesn't necessarily have the capacity to jump in and do all the activities that Leidos has historically supported. There's a good chance that we perpetuate that as is, and then we'll play for the value-added piece as the future becomes more clear. Okay. I'll stick with one. Thank you. Thank you, Scott. Thank you. One moment as we move on to our next question. Our next question comes from the line of Matt Akers with BNP Paribas. Your line is open. Please go ahead. Yeah. Hey, good morning, guys. Thank you for the question. I just wanted to follow up on the VBA recompete commentary you gave in the opening remarks. I think you said the incentive payments going away in the rest of this year. Is there any conclusions we could draw from for 2027? Any more clarity there, or any thoughts on where margins could go in that health business? Sure. Thanks for the question, Matt. Not surprised, it's one of the first ones that is asked this morning. Yes, as I said in my prepared remarks, we were informed in late May that the customer was considering withdrawing the incentive scheme from all vendors for the medical disability exam business. We concurred with their decision there. As I said, that's driven by some administrative issues they have that their auditability and how those incentive payments have been given is in question. While they sort themselves out, they want to pause those incentive payments. It's been very clear that that's for this year only. I was just with the leadership of the Veterans Administration yesterday to seek clarity on where all this is going. It became clear in that conversation that while cost is one concern the Veterans Administration has, value, veteran experience, quality are still things that they are very, very keenly focused on. While we do not yet have a draft RFP for the recompete, and so we don't know the exact terms that will be a part of the next contract here, I'm pretty sure incentives will be a part of it, and that quality, timeliness, schedule, and cost will be another thing that they focus on incentivizing. Just like in the past, where we are very adroit at understanding the rules and working hard to delight our customer and therefore have a very good business as a result, we expect that whatever the RFP asks for, we'll be able to compete and win because we believe it's going to play to our strengths. At the same time, it's also clear that the customer is highly likely to extend the current contract at least through the first part of next year. As I said, they haven't issued a draft RFP yet for the regions contract, and so they're running out of time, as it's already August, to adjudicate the proposal process. We've been informed that they probably will extend the contract through a good part of the early part of next year. At the same time, for international and pre-discharge work we do, we've been informed that they plan to extend that for another year. You can already see bridges to that future working out through the first six, nine months of next year. We feel very strongly that our right to win and the things that have always distinguished Leidos QTC in this marketplace will continue to distinguish ourselves and give us a premier place in the future of the VBE work. All told, some changes going on, but very importantly, I want to foot stomp once again, Matt, that those changes for this year are fully enveloped in our improved guidance for 2026. We feel very confident that we understand how this business is going to perform as part of Leidos this year. We feel very strongly that the rise in the other growth pillars of our NorthStar 2030 strategy is going to help buoy the rest of the business so that we can improve our guidance on the year despite these changes in cost that are going to be layered in at the rest of this year. I hope that helps, Matt. Very helpful. Thanks. I'll leave it at one. Thank you. One moment for our next question. Our next question is going to come from the line of Colin Canfield with Cantor. Your line is open. Please go ahead. Hey, good morning. Thank you for the question. Good. As you think about the theme of other parts of the business, essentially offsiding the health margin dynamic and the health growth dynamic, can you perhaps talk about the free cash flow trends for the company? Essentially, what do you think are the key levers to get you back to high single-digit, low double-digit free cash flow growth, and where do you see the most risk? Yeah. Hey, Colin. Chris here. Thanks for that. First of all, extremely pleased with the Q2 numbers we just put up on free cash flow. Banner quarter, best ever in the second quarter, and second consecutive quarter we've raised guidance for the year. You might have picked up on the fact that we don't see a need now to spend the full amount of CapEx that we had signaled previously, prudently pulling back on that. That raises the full-year free cash flow outlook even further. I like the trajectory of the team's performance on free cash flow. I think that as you think about the investments required in some of the other growth pillars, yes, there will be some additional investments required to propel our defense tech business forward. That again fits within the framework that we've talked about historically, looking at 1%-1.5% of revenue as we see the landscape today. This is a cash-generating business. It will continue to be a cash-generating business. Beyond that, we've got our enterprise transformation office working hand in glove with my team on how do we take days out of our DSO performance. The benefit of that work is yet to be realized. Goodness there ahead of us as they complete some of those efforts. I think their trajectory on free cash flow performance will continue to be strong. I see this as an area that we'll be able to show upward momentum as we move forward. Hey, Colin, just to pick up a couple themes there that Chris breadcrumbed. What I hope you hear from Chris is that our philosophy as Leidos has never changed from being a low capital intensity business. While we are certainly leaning into certain aspects of the business, for instance, our defense tech business where some investment is required to jumpstart that engine of growth in the future, on the whole, we still see ourselves as a relatively low capital intensity business, and we plan to keep it that way. That's because the growth pillars we've identified, be it defense tech, energy, all we're doing in cyber, our digital modernization aspirations, things we're doing for the FAA and exciting opportunities there, opportunities to help transform TSA, and the airport experience for Americans. All these things are areas where it will perpetuate a low capital intensity, high cash return, high cash conversion business for Leidos that we expect to perpetuate into the future. That's great. Thank you. Then maybe one follow-up. If you could talk about the free cash flow per share algorithm and where you're seeing the greatest level of sponsor interest across all the sub-portfolio assets. Maybe if you could characterize the interest between sponsors and strategics. Thank you. Well, on the free cash flow per share, as Tom alluded to in his comments, you saw us repurchasing shares. You saw us re-up the share repurchase authorization. No commitment on quantum there, but I think our track record would suggest that has been an area of capital deployment. You'll see the share count reduce over time, and you'll see the free cash flow conversion remain strong. As it relates to M&A, I think that's where you're going with some of the comments on sponsor portfolios. I think there's areas that will look to complement our growth pillars over time. We've got a lot on our plate right now digesting what's going on with the ENTRUST integration, which is going exceedingly well. At the same time, the offloading of the Security Enterprise Solutions business into that joint venture, which we're still extremely excited about, and look forward to being able to provide more color on that once we get to closing later this year. Net net, an active dialogue and active surveilling of the landscape, and we'll continue to keep our powder dry for the right moves to make there as they present themselves. Thank you. Thank you. One moment for our next question. Our next question is going to come from the line of Seth Seifman with JPMorgan. Your line is open. Please go ahead. Thanks very much, good morning. I wanted to start off asking about the cadence of award activity, and I think you made some encouraging comments at the outset of the call. When we think about the intelligence and digital business, how does the bookings environment look through the end of the fiscal year on September 30th? Is there opportunity to exit the government fiscal year with a higher backlog in that business than what we saw at June 30? Thank you, Seth. I was rather forward in my comments that we are seeing customer activity pick up. I think that's evident in our book-to-bill ratio this quarter. More importantly, it's indicative of the backlog of awards we see awaiting adjudication in all of our customers' coffers, if you will. From a macro lens, this administration is obviously anxious to demonstrate to the public that it can deliver in advance of the November midterms. You hear Secretary Pete, for instance, projecting that the vast majority of his unobligated funds from the reconciliation budget of 2025 will be on contract before October 1st. You're hearing administration officials understand that they want to and need to put this money to work for the economy and put this money to work for the government, and we see indications that that's happening. As these obligations flow, we believe those are going to support our second half bookings, which are totally aligned with what this customer wants, be that a more intelligent intelligence community, a stronger defense community aligned with what we've said are our priorities, space, maritime, and now munitions. It's no surprise that we're seeing early indications of that flow through to our defense business with a book-to-bill ratio of greater than two. Tremendous opportunity for us to now capitalize on those bookings to deliver revenue into the future. We are seeing this occur. We're seeing customer activity pick up. We are confident that that will continue through the quarter we're now in, the third quarter of this year. We feel like there's every possibility that a good chunk of that $23 billion of proposals that we have in are going to be adjudicated over the next three, six, nine, 12 months. Okay, great. Then, maybe sticking with the intelligence and digital business, there's been some talk about trying to convert more of that work to fixed-price over time. How quickly do you see that evolving? How quickly would you expect that mix to change within that intelligence and digital segment? Yeah. We are in a lot of conversations with customers across all agencies about opportunities for fixed-price contracts. In fact, it's almost a weekly occurrence that a customer comes to us and says, "Could you give me an unsolicited to turn this work into fixed-price?" That's a conversation we welcome. In fact, that's a conversation sometimes we provoke because we know this administration is very keen to have fixed-price outcome-based results, and fixed-price outcome-based results are something that we feel very comfortable is in our wheelhouse. We're seeing that happen. It's certainly happening in the intelligence agency, but at the same time, I hope you've seen our very proactive moves to position ourselves for better service to the intelligence community coming on. Full-spectrum cyber has been something we've talked about as a growth pillar for Leidos for the last year and a half. It's something we leaned into with Kudu, and it's something that is paying tremendous dividends for us in terms of the customer appreciation for our value add as this country becomes more and more cyber savvy, if you will. We're very much leaning into that. Here recently, just last week, perhaps you caught the fact that we announced a major partnership with CoreWeave. That whole partnership is geared at positioning ourselves, positioning Leidos to be the preferred provider of secure cloud AI, sovereign AI for the intelligence community to include the Department of Defense, because we know that as the appetite for trusted mission AI solutions grows, the need for the intelligence agencies and the Department of Defense to have sovereign capabilities through which, at which they provide those capabilities is going to grow. That's right in our wheelhouse of knowing a thing or two about how to build a 705 compliance SCIF and ensure that the digits get from it to the point of use seamlessly, flawlessly, and in a cyber secure way. We're very eager to continue to lean into our cyber, intelligence, and national security objectives, and we feel very good that we're in a great position to do so. Chris, you have anything to add? Well, just to build on that, Seth, I would say that, again, you've seen the trend in fixed-price percentage of our work increase over time. It's something we know how to do. Encouragingly in this environment, as the customers ask for these fixed-price opportunities, it plays to our strength on rolling out new capabilities like Parcata. You might have seen another press release announcing a new software tool that we think is a game changer and differentiated, and it's the kind of thing that we do want to sell on a fixed-price outcome-based basis to our customers. As we roll out more capabilities like that, and more are coming, again, the environment where they're receptive to fixed-price contracting plays well to get those deals done. Excited about the trajectory we're seeing in that part of the business. Thank you. Thanks very much. Thank you. One moment for our next question. Our next question will come from the line of Tobey Sommer with Truist. Your line is open. Please go ahead. Thank you. Hoping to get your perspective on the defense business, not just the programs that you touched on in your prepared remarks, which you're getting some visibility into, but also what you may be seeing over the horizon in terms of opportunity and what the addition of more hardware in the mix bodes for margin in defense. Yeah. Thanks for that, Tobey. We're very bullish about our defense tech business, again, just to step back, when we announced our NorthStar 2030 growth strategy, we said that defense tech would be one of our growth pillars, the specific engines we selected under that growth pillar were space and maritime. We are now at the point where we're expanding the number of growth engines we see as plausible and probable in our defense business to include munitions and to include counter-UAS capabilities in keeping with some other things. We're very bullish about the suite of products we have in our defense tech business and the opportunities for them to be key enablers for macro programs like Golden Dome and macro needs like base defense and counter-UAS, which as we all see around the world, is growing in importance every day. On the munitions front, it's very important that we talk for just a minute about two programs in addition to the IFPC program we've talked about for years. IFPC is now a program that is hitting its full stride in production. We're delivering more and more units every year, every month, and it's a program that is hitting its test objectives and hitting its fielding objectives with the customers. We feel like that program is in full swing now. Quickly on the heels, we've got the small cruise missile, which has been named by the U.S. Air Force as AGM-190A, or recently renamed Havoc Spear by the customer. That program also is undergoing flight tests and actual deployment in exercises and in combat. We're very pleased that our small cruise missile has found great customer receptivity and the scaling in both the SOCOM and the U.S. Air Force is a conversation that is ongoing, in addition to scaling it to a family of systems. Part of that family of systems is what allowed us to have our LCCM framework that we announced earlier this year. That program is moving along very adroitly. We're ticking off critical milestones, and we have a production readiness and scaling review scheduled for later this month. You can see how quickly we're moving from rapid prototyping into scaled production. That means we're on track for full flight tests next summer and full rate production thereafter and 3,000 units before the end of this decade. All told, the addressable markets that we're talking about here, just for low cost and containerized munitions, is in excess of $44 billion over the next 10 years. When you combine what we're doing on IFPC, SCM, low-cost containerized munitions, you add our very specific, exquisite, some people call it Gucci capability in space sensing payloads. You add our prowess with Leidos, Gibbs & Cox, and our LAVA software for autonomy at sea, our whole autonomous vessels capability for what we all know is the future of the U.S. Navy. We feel very good about hitting our stride on a number of engines in this defense tech business, which leads us to the bullish outlook that I talked about before and what Chris talked about in his prepared remarks of double-digit profitability, and we can start to see double-digit CAGR of revenue growth. Very bullish on the opportunity for this growth pillar to pay tremendous dividends for us over the coming 5- 10 years. Chris, anything you'd add to that? Tobey, back to your question on margins, and Tom alluded to it. As we see these more maturity in some of the programs we've already fielded, IFPC being a great example, radar systems, we're seeing the profitability of those programs increase as you would expect. On our space payloads, every tranche has had higher profitability than the previous tranche, zero, one, two. Now we've announced our most recent win, and so again, more quantities, more maturity. You're seeing the trajectory exactly the way we want to see it, and therefore, again, continue to be very bullish around looking out to 2030, the margins in that part of the business really accelerating. Thank you. I just looked up my note here, and my notes say that we have a $12 billion pipeline of visual opportunities in the next 12 months. We are very excited about the opportunities in front of us here. Thanks, Tobey. Thank you. One moment for our next question. Our next question comes from the line of Sheila Kahyaoglu with Jefferies. Your line is open. Please go ahead. Good morning, guys, and thank you so much. Lots of helpful color on health and all the moving pieces. As we think about the removal of the incentive fees in Q2 and for the remaining part of the year, how do we think about, I guess, 2026 and 2027 with just the VBA overhang? What's a good baseline for profitability? I know it's hard because the RFP isn't out yet as it relates to VBA and DHMSM as we think about those two programs transitioning in 2026 on the revenue and margin side. Yeah. Thanks, Sheila. I'll start and then I'll ask Chris to pick up some details. We think that as these changes that the customer is requesting of us get layered in over the remainder of this year, over the next six months, that the fourth quarter performance of that business probably is a good jumping off point for what we're looking at for 2027. As I said in my prepared remarks with the VA administrator yesterday, the need for quality, the need for veteran experience, the need for capacity to do more exams quickly and more efficiently is a key for them. Also key for them is the partnership that we've had in the past. We feel like we've got a good jumping-off point. We are eager to see the draft RFP, the whole point of a draft RFP is to have a dialogue about the law of unintended consequences and what it incents us to do. The conversations that we're having with the Veterans Administration is, we look forward to the dialogue around that RFP to ensure that it continues to incentivize the behavior that the veterans and the taxpayer would expect this administration to put at the forefront. We think that plays to our strengths. We think that means this will continue to be a viable, strong business for us in the future. There's so much, Sheila, that is focused on this specific one element of our value add to what we do in managed health. I'd like to maybe broaden the aperture a little bit beyond that. The fact is, while that's one part of what we do, this is a market that is looking to grow annually from $13 billion today to about $15 billion by the 2030s. In behavioral health, an area of focus for us to grow in, and rural health, two of our growth engines we've talked about before, that market is expected to grow by 4.3% and 4.5% respectively on a CAGR basis. We expect to continue to have our MDE business, which also is projected to grow at about a 2%-2.1% level. We look at that as a base of business from which we continue to grow our managed health pillar. We expect to grow our managed health pillar by leaning into the very large rural health network we have, our proprietary capability of providing rural health around the whole of the U.S., and our already premier place in behavioral health. Again, we talked last call about Military OneSource and that takeaway that we were awarded for that program. A huge testament to our capability to help the Department of Defense and the Veterans Administration with behavioral health that is so required for these communities. We see the fourth quarter as the probable sustaining feature for this MDE business over the long run. We also look to grow things like MySTR, things like Military OneSource, things like the Military and Family Life Counseling program that we do, and our rural health business that is a tremendous opportunity for us to grow into the future. Understand why MDE gets so much heat and light, there are growth engines beyond it that we're focused on also. Chris, anything to add? Yeah, Tom, you covered it well. I'd say that, yes, Sheila, obviously job one is to resecure this franchise, and as Tom pointed to, the rules of engagement are becoming clearer. We're partnering with the customer, we're absorbing the headwinds that the back half of this year will have because of the changes in those conditions. The strength of the portfolio is shining through, that we're overcoming that. Q4 run rate, resecure the recompete, anticipate some level of efficiencies that we just priced into pre-discharge and international ripple into that recompete when it is secured at some point next year. That's job one. Beyond that, I'd only highlight, we've added a lot of additional talent in health because there are so many good things going on as Tom talked about. New growth officer, a new chief product officer in health, bringing a lot of expertise to how we take not only MySTR, but the whole rural campaign to the next level. You have to appreciate that Leidos, through our QTC subsidiary, has a network of more than 15,000 providers, 90 clinics. We do 2.8 million examinations annually. You think about the activity level that we're putting through here, there's a massive platform at scale here that we can leverage for so much more in this domain. That's the game we're playing. That's the opportunity that's ahead of us, transitioning to resecure this recompete and then building from there. Okay, awesome. Thank you, guys. Yeah. Thank you, Sheila. Thank you. One moment for our next question. Our next question will come from the line of Ken Herbert with RBC. Your line is open. Please go ahead. Hi, good morning, Tom and Chris. I just wanted to take a minute and see if you could talk about the guide for this year. It looks like organically you're guiding in the second half to call it 4%, maybe 4.5% growth. As you look at the various segments after really strong bookings through the first half of the year, where do you see the most conservatism, maybe across the segments, and maybe can you just talk about what's embedded in the top-line guide relative to risk associated with the CR or other timing around contracting activity? Hey, Ken, thanks. Chris here. Obviously the guide, the conversation we just had about what's going on in health, is fully incorporated in that back half, right? The health run rate kind of staying at the Q2 levels on the top line. Meanwhile, building momentum in other parts of the portfolio. Certainly you saw a robust quarter in Q2 out of Homeland, and there's an opportunity to continue to see that tick up over the back half. The growth rate won't be as robust, but the absolute dollars of revenues increase. Great news about that business is you're not at risk significantly from any shutdown or even CR implications, because predominantly it's driven by what's going on internationally and what's going on with our energy business. We see that Defense obviously is going to continue to accelerate on the top line. There are some new program starts in there that are anticipated. They have modest contributions for the year. We think the ranges that we provided allow for that, and if things break our way, you'd see us certainly trending towards the top end of that. In Intel and Digital, those are probably the areas that are most vulnerable if there are some continued disruptions at year-end. We don't anticipate a shutdown. At the same time, we'll get a continuing resolution of some kind and then let this play out after the midterms are resolved. I think there's opportunities for more acceleration in Defense. I think we're pretty range-bound on what we talked about in health, and Homeland continues to excel. If we get the FAA program broke our way, which is a massive opportunity, again, there's some upside there as well. I think the guidance gives you a good range of outcomes that we fully expect to deliver on. Long and short, Ken, is we've got our Wheaties out here at Leidos, and we're never going to stop working. Appreciate that. I'll stop there. Thank you. Thank you. One moment for our next question. Our next question will come from the line of Gavin Parsons with UBS. Your line is open. Please go ahead. Thank you. Good morning. Hey, Gavin. Appreciate all the color on VBA. I apologize if I missed your expectation for the timing of the RFP. Are you still expecting that this year, and is that what you need to have full visibility into financials on that program going forward? Yeah, sure, Gavin. Yes, no apology necessary. We expect the draft RFP any day. Then we hope that that will turn into a formal RFP, let's call it 30, 45, 60 days later, and then you're in the bid process. Any way you slice that, given it's August 4th today, means that you're probably not submitting formal bids until close to the end of the year, and that means they're making decisions early next year in all likelihood. That's why what I said, Gavin, about clear indications from the customer that we can expect an extension of our current domestic regions contract for up to six months. That's a contractual clause that is in the contract that they have now. We fully expect that they'll be exercising that option in the coming months, which will perpetuate the current contract into next year, possibly as far as mid-next year. For the pre-discharge and international, we've also gotten indications or commitments from the customer that they expect to exercise the one year of two-year extensions enabled to them in the next month so that that contract doesn't stop at the end of September. What you're starting to see here is the draft RFP will come into focus over the coming next couple few months. By the time we talk on our next earnings call, I expect to have a firm RFP and understand exactly what that business is going to look like going forward. In the meantime, even the runway for 2027 is starting to clear up because we see the international and pre-discharge probably extended through September of 2027. We see the regions contract probably extended through the better part of next year. Regardless of what happens with the RFP for the domestic regions contract, you're talking about a half a year or so of implementation on that program. We're starting to see the clouds part. We can start to see our way very clearly through the end of this year and starting to see what next year looks like. We'll await to see the actual RFP in the next two, three months to give an indication of how that looks for us in the future going forward. Okay. Thanks. That's very helpful. As you can tell, everybody's worried about the margins on that program. You guys performed pretty well on the current iteration. Appreciating you don't have full financial visibility yet, would you anticipate having the opportunity, if there is a margin reset, to invest and then prove that margin over time? Yeah. A lot is said about our margin in this business. The fact is our margins are good in that business because we have invested in that business to be the technology leader, to be the volume leader, and to be the quality leader. Again, in conversations that I had with the VA just yesterday, quality, the need for us to maintain a focus on veteran quality is key. As Chris was just articulating, our presence around the whole of the nation is not to be trivialized. It's a tremendous presence we have built up over the years, which gives us the capacity to lean in to help this administration continue to serve veterans differentially. Add to that the 12 mobile units we use that go to the veteran to serve them where they are. We're going to continue to lean in to invest in this business to serve the veterans disproportionately. As a result of that, we think that we are in a reasonably good place from a right-to-win standpoint. Once we see the RFP, we'll play the tune that the piper calls. We will lean in to continue to differentiate ourselves, and we think that differentiating ourselves in the market, especially in this administration, which is so interested in outcome-based contracting, we can play a very strong game in outcome-based contracting that delivers for the veteran, delivers for the taxpayer, and delivers for our shareholders. Thank you. Thank you. One moment for our next question. Our next question will come from the line of John Godyn with Citi. Your line is open. Please go ahead. Hey, guys. Thanks for taking my question. Couple of the themes from the call, upward momentum in free cash flow and a healthy balance sheet. I just wanted to revisit how you're balancing growth investments versus M&A versus repurchases, and maybe just get a little bit more detail on that thought process. Yeah. We've always had, John, a balanced approach to capital allocation. That's been a hallmark for Chris and I in our leadership of this corporation. You can expect that to continue. Obviously, we have leaned in this year from a capital expense standpoint to make sure we are seizing the moment in our defense tech business. As I indicated earlier, that's not a sustained expectation. That's a point-in-time expectation. A 1.5 capital intensity is something that you should assume is more of the norm. The board authorized a new $20 million share repurchase program on Friday. You can expect us to continue to deploy capital equally around the pitch. M&A targets right now are very expensive, and our valuation is not. You wouldn't expect me to lean into a very high-priced M&A at this point with my valuation where it is right today. We're going to continue to be the business leaders you expect us to be. We're going to deploy capital intelligently and prudently, for all of our stakeholders and all of our shareholders, while at the same time, we remain laser-focused on fully supporting every aspect of this administration's national security agenda. Our priority is always going to be investing in the capacity and the needs of our nation's war fighters. Once we've satisfied that, we're going to continue to grow the business intelligently through organic and inorganic and share repurchase and dividend type of activities. Got it. Very helpful, and I completely appreciate the logic behind balance. As you mentioned, the valuation is now at multi-year lows and, at different times in the past on the M&A side, you've made very bold moves. I'm just curious if there's appetite to make a bold move on the repurchase to take advantage of market conditions. Well, again, John, we wouldn't want to tip our hand there, but again, the reauthorization's in place. I think you've seen over the last couple of years that we've been active when there's no other demands on the capital. The great news is there's a lot of capacity to put to work, and we don't intend on just sitting around on that. We hear you. We also agree that the valuation isn't where it should be, and we're working hard to correct that. All right. Thanks, guys. Michelle, it looks like we have time for one more question. All right. Our last question is going to come from the line of Mariana Pérez Mora with Bank of America. Your line is open. Please go ahead. Good morning, everyone. Thank you for taking my question. Hi, Mariana. Tom, you just mentioned a couple of questions before, $12 billion in the pipeline for digital opportunities. Could you mind discussing the nature of those opportunities? Are there new opportunities for Leidos? Are there recompete opportunities? What kind of duration they are? Are they time and material type of contracts or more about fixed price and higher margin opportunities for you guys? Yes. Thanks for that, Mariana. Yes. Again, to put that in context, you have to step back. Look, our defense tech business has, as I said, $5 billion in awards year- to- date. That includes things like Common Hypersonic Glide Bodies, Army Macro II, Air Combat Command Intelligence, IFF PICP Mobile, I mentioned that in my comments, and ALPS, our Wide Area Passive Sensor production. We also, if you look back 18 months, we've got $10 billion of awards in that business. Very clear that momentum is moving. Obviously, 5- 10 means we had five over the last year, five in the year to date, six months. We're very excited about the trajectory we've got going on here. What we're assuming in that pipeline of opportunities is things like the opportunity in front of us at the Navy's Medium Unmanned Surface Vessel program, where we're leaning into designing the DDG(X) battleship. We anticipate that there are opportunities for us in this pipeline for Small Cruise Missile, as I mentioned, and LCCM production contracts. That pipeline over the next 12 months includes most of the things you know and follow-ons to programs that we have right now. I didn't talk a lot about counter-UAS, Mariana, but that's an area that this administration is very keen to understand Leidos' capabilities in. Obviously, we have some very exquisite capabilities when it comes to sensing unmanned aerial vehicles, but we also have some robust capabilities when it comes to non-kinetic effects against unmanned aerial vehicles. The $12 billion of pipelines we see over the next 12 months includes follow-on contracts, new contracts for production of materials that we've talked about before, and then perhaps things like our presence in the counter-UAS. All told, we're talking about growing our Huntsville workforce by leaps and bounds. We've grown that workforce by 13% from the beginning of this year, and 33% of that is manufacturing people. We're very much a growth engine for the Huntsville economy. Our defense tech business is something we're leaning into and expecting to grow into the future. This pipeline and the robust nature of it is indicative of how positive we see about it in the future. Thanks, Mariana. Michelle, I want to thank you for your participation and help on today's call. A thank you to all those that joined in. We look forward to continuing the dialogue over the next quarter. This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.