Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Joseph DeNardi, Vice President of Investor Relations. Please go ahead. Good morning, and thank you for joining SAIC's first quarter FY 2027 earnings call. My name is Joseph DeNardi, Vice President of Investor Relations, and joining me today to discuss our business and financial results are Jim Reagan, our Chief Executive Officer, and Prabu Natarajan, our Chief Financial Officer and EVP of Enterprise Operations. Today, we will discuss our results for the quarter ended May 1st, 2026. Please note that we may make forward-looking statements on today's call that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from statements made on this call. I refer you to our SEC filings for a discussion of these risks. In addition, we will discuss non-GAAP financial measures and other metrics, which we believe provide useful information for investors. These non-GAAP measures should be considered in addition to, and not a substitute for, financial measures in accordance with GAAP. A more fulsome explanation of these measures can also be found in our SEC filings. It is now my pleasure to turn the call over to our CEO, Jim Reagan. Thank you, Joe, and good morning to everyone joining our call. I'm pleased to say that the year is off to a good start. I want to recognize our 23,000 employees whose relentless commitment to execution excellence made these results possible. Sustaining strong margins and industry-leading cash flow reflects the team's discipline and focus in a dynamic environment. This is operational excellence in action with our strong underlying results highlighting our potential to deliver double-digit margins on a sustainable basis. Since I accepted the permanent CEO job earlier this year, my focus has broadened beyond execution to include spending time with all of our stakeholders, our shareholders, customers, and employees. My shareholder meetings made it clear that we have work to do to regain trust by proving that we can grow organically on a sustained basis. This quarter's result is a step in the right direction, I know this is a multi-quarter journey. My customer meetings focused on the value that we continue to bring to enable a wide variety of missions that are increasing in their complexity and velocity. It is also clear that our industry has to invest to keep pace in a fast-moving environment. Our flexible business model is well suited to these tasks, and we are excited to deliver on these commitments. In my employee meetings, I highlighted the distinct privilege I have to lead an exceptional group of people working to solve the nation's most critical challenges. I'm grateful to our team for their patience and determination in taking on new roles, responsibilities, and mindsets to address enduring customer demands and to create value for all of our stakeholders. Please turn to slide 3 for our key messages. First, we are built on a strong foundation and operate with an enduring purpose. We deliver critical capabilities to our customers to help them address their most complex challenges, and we do this by developing solutions that enable speed, capacity, and decision-making dominance. For decades, we have evolved with our customers as we anticipate their needs and operate at the speed of mission. This evolution requires us to continuously evaluate and refine the portfolio. There's some natural portfolio realignment this year as we digest re-compete losses, primarily in the large enterprise IT market. We're also actively controlling our future as we build a premier portfolio of integrated mission-critical capabilities more aligned to budget priorities and more insulated against the commoditization that we have seen in certain parts of the market. We have initiated a portfolio review and look forward to sharing more information on our December earnings call. You should expect to see a more agile SAIC built for the future, underpinned by our mission depth and capability. As we have shared previously, we initiated a pipeline review to refine our bidding strategy to more closely align with our differentiators and where we enjoy a higher probability of winning. Our qualified pipeline sits at about $85 billion and is more focused, with enterprise IT now comprising a smaller share compared to last quarter. This reflects our selectivity in this part of the market. We're also pursuing opportunities earlier and more deliberately, leaning into key areas where we know we can deliver better and faster. This includes our mission and engineering businesses, which comprise a greater share of our pipeline and are outgrowing the rest of the portfolio due to recent wins and ongoing investments. These dynamics support further organic portfolio realignment. We continue to evaluate potential additions and subtractions to the portfolio to accelerate growth, enhance margins, and further develop high-value areas where we're able to bring our investments to bear. As I said last quarter, I'm excited by what made SAIC great to begin with. Delivering innovative science, technology, and engineering solutions in support of the security of the United States and its allies. There's a lot going on in the world demanding our support. Elevated operational tempo is driving faster decision-making in a variety of hardware and software platforms where we currently play a role. We continue to engage with customers to enhance capability and capacity. We continue to leverage new tools that help us deliver more effectively and efficiently. In recent years, we have helped defense, intelligence, and civilian agencies establish data and knowledge standards, develop multimodal AI, and build secure data layers that underpin some of the nation's most sensitive missions. Today, we're applying AI to modernize legacy code, generate operational tasking orders, enhance human-machine teaming, strengthen data fusion, and harden cyber defenses. The opportunity ahead isn't about delivering an AI product. It's about how quickly we can integrate and operationalize these capabilities in real-world missions. I appreciate that we can only say so much about the opportunities, and in some cases, the risks that accompany rapid technological shifts. At the end of the day, it comes down to our ability to put up continued performance as AI adoption increases. I look forward to delivering those results. That brings me to top-line improvement. Appropriations are starting to flow from last year's legislation, albeit unevenly. We expect another large appropriation for FY 2027. While our growth does not depend on a trillion-dollar-plus defense budget, it certainly helps. RFPs and submissions are still slowed by environmental factors, although we are on track for awards. Recompete win rates are stabilizing as we expect them to return to the 90% range, and new business win rates continue to perform well above 30%. I'm encouraged by the modest organic growth that we saw this quarter, despite our recompete headwinds from last year. We also continue to build on our margin and cash momentum. Fiscal first quarter margin was a company record driven by strong program execution. While we could see this margin level offset through year-end by key investments to support growth, these results demonstrate what we're capable of and support our full year guidance. We saw another good quarter for cash, reflecting our strong execution. Maintaining this momentum relies partly on the enterprise transformation process we announced in February. Project Orbit will increase our agility and create more capacity for investments to support growth and margin expansion over time. We have sourced over 3,500 ideas from across the company, which our dedicated team is now analyzing and prioritizing for execution. We'll have more information on these efforts on our next earnings call in September. Taken together, these results and our continued efforts reflect our focus on execution, controlling what we can control, and rebuilding our growth momentum. We have raised our guidance to account for some of this quarter's upside, although we're mindful of remaining investments, recompete roll-offs, and uncertainties that could impact the remaining quarters. As I've said before, FY 2027 is a year of commitment. We're setting targets that we are confident that we can achieve. In closing, we see significant opportunity to drive value for our shareholders, create greater opportunities for our employees, and most importantly, continue the mission of supporting our customers and our country. Before turning the call over, I do want to address this morning's announcement that Srinivas Attili is leaving SAIC as we make a leadership change in our civilian business group to support our positive momentum. We thank Srini for his contributions, and we wish him well. Our CFO and EVP of Enterprise Operations, Prabu Natarajan, will serve as interim head of the civilian business while we identify a permanent replacement. Prabu's experience running complex businesses and driving execution excellence makes him well-suited for this expanded role. He has my and the board's full confidence. Our civilian business delivers industry-leading capabilities to critical clients and is a strong performer in our portfolio. We are strongly committed to our efforts in this market and focused on keeping the momentum going. With that, I'll turn the call over to Prabu. Thank you, Jim. I appreciate the opportunity to support the civilian segment during this transition period while continuing my other responsibilities. There are strong teams in place in our civilian segment, in finance, and in Enterprise Operations. I'm grateful for their dedication to the mission and to SAIC, and I'm confident in our ability to continue delivering for all stakeholders. As our Q1 performance reflects, the civil segment is operating from a position of strength, delivering leading technology solutions, supporting a variety of critical missions. This includes our enterprise IT capabilities, where we operate largely under outcome-based contracts that are creating value for SAIC and for our customers. I'm excited about our opportunities in this business and for continued margin strength. One key opportunity is the Vanguard recompete, which we have been closely engaged in for years. As we previously shared, Vanguard supports the Department of State's global IT infrastructure and generates roughly $250 million of annual sales at above-average margins. The new program, Evolve, is a multi-award contract vehicle with a $10 billion ceiling over seven years. It is bigger and broader than Vanguard as it consolidates work beyond our current scope. We look forward to competing on the task orders as we incrementally de-risk this recompete over the course of the next several quarters. We have delivered excellence for 15 years. We look forward to many more with Evolve, supporting this highly critical mission and customer. Let's get into the results. Turning to slide 4. We reported first quarter revenue of $1.9 billion, representing organic growth of 50 basis points, better than expected due to timing of materials and the RITS extension. We are encouraged by this result as we see the growth environment improving, although it's still uneven. As a result, we remain cautious around the unknown unknowns that could still impact the year as they did in FY 2026. We reported robust Adjusted EBITDA of $222 million in the quarter. Adjusted EBITDA margin reflects strong program execution, some benefit from our ongoing cost efficiency efforts, and a $12 million gain associated with the IPO of a venture investment. Our venture strategy is to back early-stage innovators that accelerate our long-term growth. Although we have divested our ownership position, we continue the commercial relationship with the company in line with our objective of bringing enhanced capability to the government market. The sale added 60 basis points to our EBITDA margin in the quarter and approximately $0.20 to EPS. Adjusted diluted earnings per share was $3.23 in the quarter, benefiting from better margins and a lower share count. Free cash flow was $118 million in the quarter, a strong result as we remain focused on maintaining our peer-best cash conversion and deploying that capital to maximize long-term value for all stakeholders. Net leverage is within our target range down to 3.1x this quarter. We expect to continue to naturally de-lever as EBITDA improves in the years ahead. Please turn to slide 5 to review our forward indicators. As Jim mentioned, our pipeline is now more focused on our differentiators. While customer disruptions continue to pressure submissions, as was the case in FY 2026, the environment is now improving, and our BD teams are on target for the year as we plan to accelerate submissions. We are encouraged to see submits and awards recovering even with a smaller pipeline, highlighting the benefits of our enhanced focus. Net bookings of 2.1 billion reflected a mix of new and recompete, including an important $200 million recompete win in our DHS business, where we integrate our software expertise with purpose-built hardware to support safer and more efficient ports of entry. This resulted in a quarterly book-to-bill of 1.1x or 1.0x on a trailing 12-month basis. We are encouraged by the momentum we're already seeing in the current quarter, and we expect to achieve our annual targets. Please turn to slide 6. This quarter's organic growth of 0.5% was better than expected. While we acknowledge that our comps get easier as the year progresses, we are maintaining our sales guidance as we continue to take a measured approach to the year, appreciating that there were timing benefits this quarter and that there are still uncertainties in a dynamic environment. A key driver of our sales trajectory this year is the unsuccessful RITS recompete, which we expected would be a $200 million headwind in FY 2027 as it rolled off in F2Q. However, our protest was only recently adjudicated, so RITS will likely now roll off in F3Q. Partially offsetting our recompete headwinds this year is on contract growth or OCG, which we expect will remain at 2%-3% in FY 2027. This is in line with what we saw in FY 2026 and is below the 6%-8% we saw in FY 2024 and FY 2025. We are encouraged by the improved OCG we saw in F1Q, although some of this was timing. Roughly half of this year's planned OCG comes from a handful of programs we won over the last two years that ramped slower than expected last year. As I said last quarter, those programs generated $350 million last year, and we are planning for $500 million this year. We're on track as these programs are currently running at an annualized rate of about $400 million through F1Q. As we continue to position the company for long-term growth, we are making targeted investments in several high-priority mission areas where customer demand and strategic relevance continue to accelerate. This includes advancing next-generation command and control capabilities to enable faster, data-driven multi-domain decision-making, modernizing legacy radar capabilities to support evolving needs, and expanding our work with loitering munitions and other autonomous systems by establishing domestic production lines to broaden the industrial-based capacity. We continue to take a disciplined approach to these efforts, focused on where we can earn the most appropriate returns. Please turn to slide 7. We are maintaining our sales guidance since it is still early in the year. We also want to account for recompete headwinds and environmental uncertainties. However, we expect to finish at or slightly above the midpoint of our sales guidance due to the RITS extension. We will revisit our sales guidance on our next call, but we are well-positioned to meet our sales commitments. We are increasing our EBITDA guidance to account for the venture investment gain and other performance items that benefited F1Q, which adds 20 basis points to the full year margin guidance, which we now see at 10.1%-10.3%. As previously mentioned, we continue to see meaningful opportunities to improve margins in the future while also investing in growth. We also see upside on tax rate as a few outstanding issues resolve in our favor. As a result, our adjusted EPS guidance increases by approximately 4% to a range of $9.90-$10.10. Our free cash flow outlook of greater than $600 million is unchanged even as we plan to invest in discrete opportunities in support of growth. We continue to see at least $14 free cash flow per share this year and at least $13 of free cash flow per share next year in FY 2028 as historical tax assets roll off. We know that an increasingly favorable budget backdrop is only relevant if we can improve enterprise-wide performance. We are off to a good start, but there's more work to do. I'm confident that our efforts will continue to translate into significant value creation for our stakeholders in the coming years. With that, I'll turn the call over for Q&A. As a reminder, if you'd like to ask a question at this time, please press star one one on your touchtone phone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we complile the Q&A roster. Our first question comes from John Godyn with Citigroup. Hey, guys. Thank you for taking my question and great quarter. I'd love to just revisit and dig into the organic growth outlook a little bit. You had mentioned that there were some timing benefits in the fiscal first quarter, some business rolling off later in the year, but you were encouraged by the momentum you're already seeing. Just that great chart on slide 6 with the positive organic growth on the toughest comp of the quarter, it just makes it hard to bridge to -2% to -4% for the full year. There might be conservatism. It's been a choppy backdrop, so I don't think anybody would hold that against you guys. I was hoping we could just kind of dialogue about the shape of the year, how you see it, and whether there's upside to that guide. It seems maybe a little bit obvious that there may be. Hey, John. Good morning. Prabu here. Thanks for the question. Big picture, obviously, we're pleased with the way Q1 turned out. We also recognize that Q1 had by far the tougher comps relative to last year, where we actually grew the business about 3%. I think really big picture, as you began to allude to it, John, I think we are being, I would say, cautious given what we saw last year and just the volatility we saw between the quarters. I'd say I would not probably quarrel with the math that a -2% to -4% becomes harder to comprehend given the solid start we had to the year. I think we're just firmly got our conservative hat on right now on the revenue guide, recognizing that there's nine months left in the year, and there was enough choppiness last year that if anything, we've learned the lessons from the last couple of years and recognize that we're in a relatively solid place on guidance. As we said in the script, we'll revisit guidance on the organic growth side on the second quarter call. John, we also added in the script, as you might have noticed, the view that we expect sort of revenue to be sort of closer to the midpoint, maybe a little bit ahead of the midpoint on the guide. We are nudging it up, I would say, qualitatively inside of the current guide, but recognize there's probably some tailwinds here. Q1 really benefited from strong on-contract growth at 5%. Last year's Q1, just to be clear, was about 8%, and then we saw OCG tail off over the course of the year last year. Our view is given we don't have full insight into what might happen over the next two or three quarters, let's take it slow and revisit the guide in Q2, but would not quarrel with the math that 4% contraction certainly looks like an outlier at this point. Got it. Okay. That's super helpful color. Appreciate it. Jim, in your prepared remarks, you had mentioned portfolio review, possibility of additions and subtractions to the portfolio. I'm sort of asking the question very high level, but I'd love it if you could just kind of elaborate on the thoughts there. Sure. Thanks for your question. When I took the job back in October, I was really focused as an interim CEO on just the tactics, thinking that strategy could be left for the person that came in to be permanent. That person's now me. For the past couple of months, we've been really focused on strategy. Part of that is going to mean that we're going to look at the opportunities where we can meet customer needs that the customers are coming to us for speed, they're coming at us for agility both of which we are well suited to deliver on. We've signaled already that we're probably not going to continue investing quite as heavily in the more commoditized enterprise IT areas. That's just one example. We're going through the entire portfolio in a refresh of our strategy to look at the areas where customer needs probably don't show up in the fast current anymore, and we're going to try to make sure that the emphasis that we put on where we're investing is going to be, whether it's internal and organic growth, what we're looking at investing in our bid pipeline, but also as we think about what M&A looks like for the next 12 to 18 months, making sure that we're aligned with the speed that the customers are looking for, areas where we can round out our capabilities as well as customer penetration for the coming investment cycle. Hopefully it helps, John. That's great color. Thanks, guys. Appreciate it. Sure. Our next question comes from Jonathan Siegmann with Stifel. Good morning, Jim, Prabu, and Joe. Thanks for taking my question. Morning, Jon. Good morning, Jon. Hey, maybe just to talk a little bit about appropriations starting to flow and on-contract growth improving. Can you talk a little bit about where you're seeing specifically the areas where that improvement's occurring, and are there areas where it's not that we should note? Thank you. Hey, Jon. Appreciate the question. Prabu here. Let me maybe paint the color here inside of the defense market. I would say really big picture, I think we are starting to see appropriations flow inside of our Navy business. I think they continue to see that tailwind from appropriations. As you all know, we have a Navy business that's over $1 billion and continues to grow nicely for us. I think we're actually starting to see within pockets of the Army, some of that increased appropriations. I think we're especially think about the next gen command and control programs. Think loitering munitions on the Navy side, think M-SHORAD Increment 4 on the Army side. We are seeing a handful of different areas where we're seeing that money start to flow through, recognizing we've not seen much, if any, of the big, beautiful bill reconciliation yet. There's certainly some upside there. Space and intel, I would say we're seeing a little more in the way of appropriations money coming on the, I would say, digital range modernization program. We are seeing some of the benefit come through our GMASS radar sustainment program, where we are continuing to see some really top-notch performance on our sustainment work on the legacy PARCS and UEWR radar. We are seeing some real value creation there for the customers. We are seeing in a couple of different pockets. I think part of the reason, and I recognize this is probably a little bit of a derivative of the first question we got, is, since we're starting to see some of that benefit, we are cautiously optimistic that we will continue to see that flow. One of the key goalposts that we're looking for is by, let's call it midsummer this year, where are the agencies and the departments relative to the full-year monies that they need to spend? We think, I'm cautiously optimistic that there's probably more to come in the second half of the year. I think the caution is we're in an election year, heading towards some uncertainty there. We just want to be appropriately thoughtful and prudent in the way we're thinking about it. Broad-based, I'm going to say, movement on the appropriations fund. The reality is we're just taking it one month at a time right now, and hopefully we continue to see this trend sustain. Jim, would you add anything to that? No, I think you covered it well, thanks. Thank you. Maybe just on capital allocation. $188 million in share repurchases, large relative to last year's quarterly run rate. Just wondering if uses of cash is under scope of the portfolio review. Thank you. Well, I think that the buybacks we did were, I think, timely and prudent. In the absence of other things to invest in, the best place that we thought we could invest is in ourselves. That said, we're actively looking at some opportunities in the market that are aligned to our strategy and opportunities to round out capabilities where we see customer demand. Also opportunities to move into customer areas that an acquisition would accelerate our strategy versus trying to do it organically. Thank you, Jim. Jon, the one thing I would add to that is our view that we want to be generally very disciplined about our CapEx deployment has not really changed. We are focused on the internal investments we're making. The reality is, I think the investments we're making in key partnerships, and the tuck-in M&A that Jim referred to, and not to mention kind of the opportunities we see within certain of the domains that we're operating in, I think there's probably plenty of opportunity for us to continue to invest in the business. Our buyback program has always been opportunistic. When we saw the kind of dislocation to the stock price, I think it's really our fiduciary duty to do the right thing for our shareholders, which we did. We've not changed our full-year buyback plan of, let's call it roughly $400 million. You will see some change in the buyback volume in the second half of the year, especially if the stock continues to trade up the way it has today. Again, very opportunistic. I would say we are continuing to actively invest inside the company around digital infrastructure and obviously the AI-related investments we're making inside of the company. The last comment I would make is relative to Project Orbit that Jim referred to in the earnings script. Part of the thesis behind Project Orbit is to free up investment capacity. We recognize that running EBITDA margins at over 10%, it's hard to, I'm going to say, invest at scale out of profit. We are creating investment capacity inside the company so we can actually improve the capabilities we can bring to the war fighter. I think that's probably the ultimate driving force behind Project Orbit. As we said on the call, we'll provide you all a more detailed update on the second quarter call. Think of that as a way that is going to allow us to invest more in the business in a way that no amount of CapEx or profit ever could. We are managing about $7 billion of costs across the enterprise. Even if we can get a small sliver of that to go back into reinvestment for customers, I think that's probably the most bullish signal we can send, because we are not waiting for funding to be available. We are creating the resources to be able to fund the business. Good answer. Thank you. Our next question comes from Matt Akers with BNP. Hey. Good morning, everybody. Thanks for the question. I want to kind of follow up on the portfolio questions or your hardware and how big that could become as a share of SAIC. Kind of hasn't been a big focus, I heard you guys talk about command and control and radars, loitering munitions. Just how big do you think you can get, and is that more of a organic growth opportunity or something you could invest into to maybe partner with somebody else? Thanks. Sure. Thanks for the question, Matt. We have always had a very disciplined capital-light approach, to how we deploy, including investments in the kinds of things that you just mentioned. We do great work in places like Crane, Indiana, where we support the production of the Mark 48 torpedo, the loitering munitions work that we do in Charleston and in other places. That kind of work is going to continue to be part of what we deliver to customers and deliver on their needs. Now, that said, I don't think that you should be looking for us to make huge, large-scale investments in building new large plants. We are certainly ready, and we actually have proposals in front of customers to upscale the production rates on the kinds of things that I just mentioned. We're prepared to invest more to meet those customer demands. I think that what you're really going to see is a lot more in rapid prototyping, upscaling the kind of work that we're doing, and meeting the customer needs for a much elevated operational tempo given the conflicts that are currently ongoing. Thank you, Jim. Hey, Matt, if I can add to that. I think we do a fair amount of work touching hardware. I think, as Jim correctly pointed out, operating at that intersection of hardware and software is where, historically, the engineering strength of this company has been. You should expect to see us do that. I think the segue into that kind of work comes typically out of some of the sustainment work we're doing. For example, radars we called out because we won the GMASS radar sustainment program, and our engineering teams really have delivered some phenomenal performance out of those legacy radars with software. Our capacity to understand hardware architecture along with, I'm going to say, software-defined hardware, and given all the software chops we bring and given the infusion of AI into the software, we're actually moving a little more quickly, and it has given us a real opportunity to differentiate ourselves. The Mark 48 heavyweight torpedo, the work that we do there for the U.S. Navy, it began as a small sustainment contract and has grown into a large production contract. We're going to be really disciplined about where we want to touch hardware, but I think of this as a way for us to begin in services or sustainment and move upmarket or up the vertical stack, if you will, on hardware. As Jim said, don't expect us to become a hardware prime. I think we know our sweet spot, and we know what we're good at, and we have to stay disciplined. No, great. Thank you for that. If I could ask on the margins, I guess, Q1 EBITDA margin, even if I back out the $12 million gain on sale, were quite strong. Just curious how you're thinking about that and could that maybe persist for the rest of the year? Thanks. Yeah. Hey, Matt. Appreciate the question. I think as you pointed out, ex the sale of the venture investment, margins were, I'm going to say, comfortably mid to upper 10%, and what's implied in the guide is probably mid to upper 9%. The teams have done a fabulous job so far, just putting their heads down and executing. Our objectives have not changed. As I would point out, our incentive comp metric does reward outsized EBITDA margin rate performance. That was one of the changes we made this year. I think the incentives are aligned for the teams to continue to drive. Again, I would say, just recognizing we're still early in the year, we want the teams to have the elbow room to go execute and do the right things. The reality is, when we set aggressive targets early in the year and the teams are chasing, you end up taking on some bad business. This start has allowed us to be very measured about the kinds of work we want to do over the course of the year and into next year. I would not argue with the math that we should do better than perhaps what's implied in the guide, but we have to go deliver. Every day, every week here, brings a level of uncertainty that we hadn't seen before. We just have to be measured and give the teams the room to go operate, because obviously they are the ones delivering frontline performance, and we want to make sure they have the room to operate. Great. Thank you very much. Sure, Matt. Our next question comes from Seth Seifman with JP Morgan. Hey, thanks very much, and good morning. Morning, Seth. Morning. Just a little bit more granularity about the margin. The benefit from the sale of the venture investment, assuming that that was in the corporate section. We saw, I guess, some particularly strong results in each of the segments. Is there anything you'd highlight that was particularly unique about the operational performance in either of the segments this quarter? I think this is the highest civil margin that we've seen, that we have data for. Yeah. I appreciate the question, Seth. I'm able to start with the civil part of this. Really big picture, we saw broad-based outperformance across the portfolio. That's including our defense intel business as well as our civil business. Maybe I'll start with the civil commentary first, maybe perhaps a little selfishly. A couple of years ago, this business was operating at about [12.5%]. What we said at the time was, expect that mid 12% to be the trough for that business, that we would expect this business to operate consistently at 15% or so. Here we are at 15% in the second quarter, and I think the team continues to exceedingly well-perform. As you know, the vast majority of the T&M and fixed price work in the portfolio sits in our civil business, and the team's done a fabulous job, I think, really executing. We're really hoping to execute to that continued margin momentum. On defense and intel, I would just say, over the last, I would say three, four, maybe even five years, we have consistently moved the bar on margin rate performance inside the business. We constantly revisit thresholds that we want the businesses to bid at. We are always looking at the pipeline to say, "Is the work accretive or dilutive to the enterprise?" Every year in the last three to five years, we've actually moved the required thresholds for work, even on cost-plus programs. In other words, we were expecting, and we've talked about this in the past on prior calls around just bidding to more profitable elements of the portfolio, and we're starting to see some of that benefit come through. Again, I don't want to get too Pollyannish on a single quarter's performance. The reality is, we have to sustain this momentum. If we do end up performing better than what's implied in our guide, as Jim said and as I've said, there are opportunities for real investment in the business that we can now have the, I'm going to say, quote-unquote, "luxury" of investing more in the business and hopefully secure some important, not just recompetes, but also new work that's out there. Again, this is the benefit of giving yourself the operational levers to be able to outperform. We've not really had that the last couple of years or so. What I personally love about this quarter is that we've got some more levers this year that we didn't have the last couple of years. All good, but we have work to do, Seth, and I'm never going to get ahead of where the reported results are. All right. Great. Thanks. Then maybe as a follow-up, Jim, I think there's a perception that there are some competitive headwinds emerging for services across the industry, that the administration is a bit ambivalent about the role of services for the government. Can you talk a little bit about the types of the feedback that you've been getting from customers, kind of where you see opportunities now? Also maybe to the extent that we do see strong budget growth in FY 2027, does that kind of bring the industry and SAIC along with it? Is there a world where there's really robust growth in appropriations in FY 2027 and the company does not participate in that? Well, I think as I said during the prepared remarks, the direction that the budget's going, whether you believe a trillion, one and a quarter trillion, or even a trillion and a half, any of those scenarios give us opportunity for growth. Where we see the opportunities where the government is clearly not ambivalent about the role of a company like SAIC, it's in the areas where it's not just radar sustainment but radar modernization. There's plenty of opportunity, for example, there. We've talked about areas of munitions, the Mark 48 torpedo program as an example, loitering munitions that we mentioned in the prepared remarks as well, just by way of giving you some ideas. Also our intimate knowledge with how the customer operates give us the opportunities we are executing on now around data fusion, data integration, battle space management. The acceleration of decision-making in areas of, I would say, battle space execution are a few of the examples where I don't think that the government is showing us any signs of ambivalence. I think that the areas where we want to. Scale back a bit, and we've talked about on the last call, and we're reiterating it here, is anything that's commoditized on the IT side where customer loyalties are more focused on price than they are execution and capabilities is where we're probably going to spend a little bit less emphasis on. Just one thing to add there, Jim. Yeah. That was really good. I think, Seth, this business has always seen, I'd say, good competition. We would say the administration's call for companies to put more skin in the game is probably exactly the right thing to do. There are plenty of opportunities for us to invest in the DIB, and we are doing that. Technology, and to some extent AI, can be deflationary. What we have to do is, as we've done over multiple decades, is ensure that we can do more with less using technology to drive our performance. I think part of why we've always said the move to outcome-based contracts is a good thing for the sector is because we have demonstrated the capacity to deliver strong margins in an outcome-oriented environment. I think all of those things on the macro side are good. I think the other thing that Jim was alluding to is just as important. I think we want to be at the intersection where the systems are converging and legacy distinctions between Title 10, Title 50, Title 18, they're all starting to merge. To be operating in the data layer where the data is not owned by individual companies, but it's fully democratized, so we can bring the best of the tools that are available to get the most out of the architectures in place, as well as the data that's being generated. There's a unique role for companies like SAIC to operate sort of at this hybrid, I'm going to say, hardware-software intersection. I'm going to say a platform data intersection that's really unique and somewhat exciting, and I think that's where our focus is. Ultimately, we run these systems for the government. We believe the government owns the data to these systems, and delivering the best value for these programs remains our topmost priority. Great. Thank you very much. Our next question comes from Sheila Kahyaoglu with Jefferies. Good morning, Jim, Prabu, and John. Thank you so much. I was feeling lucky, six questions in and no one asked about civil margins crushing it, but Seth killed it. Prabu, I appreciate how you talked about a few years ago, they were at trough levels at 12%, and now they're at 15%. Maybe if you could give a little bit more detail. I know you're great at costs and controlling everything. How are you thinking about that in terms of civil and these margins? What customers are driving it? Maybe if you could talk about the specific contracts. Yeah. Sheila, appreciate the question. Really big picture, I would say the civil portfolio has had, I'd say, broad-based improvement on the margin front over the last few years, and I really want to acknowledge the hard work that the team's done to put us in this position. I would say, because that portfolio is almost 100% fixed price and T&M work, the reality is they have more levers that our defensive intel business simply does not have, given their preponderance of cost-plus work. I'd probably start there at the biggest level. The civil business, DOGE was hard in the industry, but the civil business has actually held their own the last couple of years on top line, and they have not seen the contraction we saw in the rest of the market, but it is not what I would call a growth-supportive environment right now. Now, we are hopeful that that changes, and our message to the teams internally is, at this point, you could go chase a dollar of revenue where the Pwin or the P get, if you will, is not very high, or you can put your energy to work at delivering a margin of a dollar of EBITDA. The teams have actually done a really nice job, and it's that focus that we want to continue to drive inside the business and position ourselves for when that growth starts to inflect in the portfolio. The work we do at Department of State, the work that we do at DHS, patents, Department of Commerce, Interior, they all tend to be good contracts that are delivering good-sized EBITDA growth for us, and that's what the team's focused on and not chasing top line. The message internally has also been that to the extent top line starts to inflect up and we are delivering more growth out of the civil business, then let that growth drive margins down and that's an okay trade to make over time because you're ultimately growing EBITDA dollars there. That's how we've approached it. Again, it's come together really well this quarter, but I don't want to get too far ahead of what the rest of the year brings. Okay. No, that's super helpful. If I could ask maybe one more big picture one. As you thought about setting your FY 2027 guidance, you talked about the low-margin enterprise IT work, kind of removing that from your pipeline and submits and then your revenue. How do we think about it impacting those three as we think about it progressing through the quarters this year? How do we think about that impact? Do we think about it impacting your pipeline and submits at all as well? Yeah. Big picture, Sheila, I think our pipeline's come down, I would say, from this time last year by about 25%. The vast majority of that contraction has been in our enterprise IT portfolio. I want to be really crisp about how we say this. I think we're not saying that that market is not an important market for us. I think we simply want to say that we're going to be very calibrated and selective. Yeah. On the opportunities we chase inside of that market. Our civil business is predominantly enterprise IT work. We know how to do that work well, but chasing enterprise IT work in the more commoditized parts of the market, where it's cost-plus and not outcome oriented, is not the right Venn diagram that we are trying to strike here. That's where the focus is. As we cycle through the remainder of the year, I think, our expectation would be that enterprise IT will always be an important part of it, but probably not the predominant driver of the quality of the portfolio in this company. Yeah, exactly. Just to reiterate, the enterprise IT work done for our civilian customers, because the contract formats are more outcome-based, they give us opportunity to drive better results for our customers, lower cost for our customers, but also higher margins for us. That would be a great model if we could have it everywhere, but we can't, at least not in the short run. We're going to be, again, emphasizing the parts of the enterprise IT market where we have an opportunity to perform well, get rewarded by our customers, and see higher recompete win rates, quite honestly. Where, in some parts of it, because it's so commoditized, that gets really hard. Great. Thank you so much. Sure. Our next question comes from Tobey Sommer with Truist Securities. Thank you. I was hoping you could comment on what you're hearing and seeing from your NASA customer amid some news of potential insourcing. Then over the medium term for civil, do you anticipate significant Department of War spending increases as pressuring the civil side, given that we're already in a relatively stretched fiscal condition? Hey, Tobey, let me maybe take a first crack at this. I think, really big picture, I would say, civil funding right now is at a trough. I would say if we had to bet, we would say it's probably not going to materially deteriorate from here. I think we're going to see some modest changes here and there, but our view, at least, is that it's going to have a material reduction at the funding levels for the civilian agencies. The question on does DOD funding pressure civil, look, I think that's always a trade that gets made sometimes. I do think that these critical systems, this critical infrastructure has to be maintained, has to be robust, and especially with the threats posed by AI, to have the right architectures in place and the right, I'm going to say cyber hygiene, they're all critical to the national security. I think it would be our expectation that funding remains relatively flat. At some point, it will inflect up when the threat actors recognize where the vulnerabilities are, and we have to work to counteract that. Big picture, that's our view on where the budgets are right now. Yeah. Again, I think we're fortunate to be placed in the civilian market. We're well-placed with the things that have enduring need. We have great positions in Homeland Security with Customs and Border Protection, providing critical infrastructure for supporting the mission of people that are keeping the bad guys out at the border. We also have great positions in work that we do with the FAA and, for example, Department of Treasury. These are the kinds of areas, as Prabu said, have enduring need. Probably we're fortunate that we're not in the places that are going to see the lion's share of any kind of budgetary pressure on civilian agencies. Thank you. Then, as a follow-up, I'd love to ask a question on the great margin performance in civil. Do you think that that kind of profitability is sustainable over time? Hey, Tobey. Appreciate the question. Look, I think is 11.6 sustainable for this business where it sits today? No. We've said that our expectation is that over time, we will drive this business to mid to upper 10s bordering 11%. That is where we want to take this portfolio. Couple of years ago, three years ago to be precise, we were mid to upper 8%, and that kind of organic change takes time. If you took the time to get this right, it will not require you to do irrational things, starving the business development and capture machine. We're trying to do it the right way. I do think that this portfolio, there's no reason. If I look at the fee we earn on the labor component of our business, that would imply that our margins should get to mid-to-upper 10s, but it's going to be a multi-year journey, and we want to balance that against the investments we are making in the business. Tobey, I realize I didn't answer the first question on NASA. I think reality is we have a very little of a NASA business that's left, for better or for worse. Obviously, could that happen in other agencies? Sure. I think it's a possibility, but we're going to have to navigate it and take it agency by agency. Again, historically, the government's not being effective in sourcing critical capabilities, but that's a pendulum that swings back and forth. We're going to have to see where that plays out in certain agencies. Obviously, we're committed to doing the right thing for our government, and we'll work with our customers to figure out the right solution for them and for us. Thank you. Yeah. Goodbye. As a reminder if you'd like to ask a question at this time, please press star one one on your touch. In the interest of time, we ask that you limit yourself to one question. Our next question comes from Gautam Khanna with TD Cowen. Good morning. I was wondering if you could characterize the bookings environment since the quarter end, so in the last month, and also if you could help us quantify the sequential headwind on RITS in the third quarter relative to the second and in the fourth quarter relative to the third. Thank you. Hey, Gautam. Maybe I'll try to take the first part of the question. If you think about the bookings environment, I would say there's a good amount of proposal activity going on right now. I would say there's probably increased up-tempo, and I just have to go down to the fourth floor of our building and our teams are incredibly busy working on proposals. We do expect a very healthy level of submissions, both in the second quarter and the third quarter this year, before perhaps starting to tail off, which is a typical pattern we see just given the seasonality of this business. That feels like it's the right tempo for us to get to our submissions number of $25 billion-$28 billion for the full year. That's sort of how we are seeing it. In terms of the decisions, I think for the larger awards, we're seeing maybe those take a little bit longer as those awards go through multiple levels of review inside of the government. They are starting to break through in the system, and we are hoping to see that volume stabilize in terms of decisions, which is why we feel good about the 1.1 book-to-bill in the first quarter, and we do expect to complete the year comfortably over 1.0, I would say, on net book-to-bill. I think on the RITS impact and the seasonality impact, I would say we start to see some impacts from the RITS recompete tailing off starting, I would say, Q3, maybe towards the end of Q2 into Q3. Think of the headwind as sort of being in the circa 3% range for organic growth in each of Q3 and Q4. Think of it as roughly level-loaded in the second half of the year at about 3%. We contracted about 6% in the second half of this year. Think of RITS as being approximately half of that, so we should apples to apples contract about three. Given on contract growth performance, ramp on new, those become the, I would say, the inputs to determine what organic growth looks like in the second half of the year. Hope that helps. Our next question comes from Max Miller with UBS. Good morning. This is Max Miller on for Gavin Parsons. Hey, Max. I was hoping to get a little bit more information about the new State Department Evolve vehicle. Obviously, a lot of competitors across a few different buckets there, but also more than just Vanguard rolled up into that contract. I was hoping you could talk about how much of the increased scope is addressable relative to the previous run rate. Maybe what to assume the guidance and I guess timing around when you expect task orders to start rolling through on that vehicle. Hey, Max. Prabu here. Appreciate the question. On Vanguard, the run rate's about $250 a year, and we set above average margins right now on that program. If you took the total value of the ceiling of that Evolve program, that's about $10 billion over seven years. That would imply, if the funding is there, that the run rate on the new Evolve program is over $1 billion a year. Safe math. I think for us, there are five work streams in Evolve. We have bid and won a seat at the table on four of the five work streams. We did not bid one of the five because of certain organization conflict of interest issues. We have been selected, and you've seen some of our peers talk about it. I think we are very much in the same boat as them with the capacity to bid and win new work. To be clear, as the interim head of the civil business, I would say my expectation and that of my leadership team is we would love to hold on to the work we have on Vanguard in terms of volume, but there's a real opportunity for us to improve on that capacity. Again, we will take this one task order at a time. There is some upside as well as some downside on that program. The way we've calibrated our guidance is it's probably unlikely to have any material impacts to guidance this year. It's more of a next year, which is why in the script we said we'd like to de-risk Vanguard Evolve over the course of the next several quarters. That's our approach to it. Again, there's some downsides. There's also some upside. We just have to see how all of this plays out, but it does open up some areas that we are not currently in, and hopefully they represent some upside. Right now, I think heads down and keeping as much of the work we have is our number one priority. That concludes today's question and answer session. This concludes today's conference call. Thank you for participating. You may now disconnect.