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Ladies and gentlemen, thank you for standing by. Welcome to the CACI International Fiscal 2024 Third Quarter Conference Call. Today's call is being recorded. At this time, all lines are in a listen-only mode. Later, we will announce the opportunity for questions and instructions will be given at that time. [Operator Instructions] At this time, I would like to turn the conference call over to George Price, Senior Vice President, Investor Relations. Please go ahead.

Thanks Dennis, and good morning, everyone. I'm George Price, Senior Vice President of Investor Relations for CACI International. Thank you for joining us this morning. We are providing presentation slides, so let's move to Slide 2. There will be statements in this call that do not address historical fact, and as such constitute forward-looking statements under current law. These statements reflect our views as of today, and are subject to important factors that could cause our actual results to differ materially from anticipated. Those factors are listed at the bottom of last night's press release and are described in the company's SEC filings. Our Safe Harbor statement is included on this exhibit and should be incorporated as part of any transcript of this call. I would also like to point out that our presentation will include discussion of non-GAAP financial measures. These should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. Let's turn to Slide 3, please. To open our discussion this morning, here's John Mengucci, President and Chief Executive Officer of CACI International. John?

Thanks George, and good morning, everyone. Thank you for joining us to discuss our third quarter fiscal year '24 results. With me this morning is Jeff MacLauchlan, our Chief Financial Officer. Move to Slide 4, please. CACI delivered outstanding third quarter results across the board. We grew revenue by 11% with contributions from both expertise and technology programs. EBITDA margin of 11.3% showed significant expansion from last year, consistent with our expectations of stronger margins in the second half. And we delivered healthy free cash flow of $102 million. In addition, our third quarter awards of $3.5 billion represents a 1.8 times book-to-bill for the quarter and drove trailing 12-months book-to-bill to 1.5 times. About half of our awards were for new works at CACI, and we continue to demonstrate excellent performance on our recompetes as well. Our third quarter results are well-aligned with our value-creation model, which focuses on long-term growth and free cash flow per share. As a result of our strong performance, we are again raising our full-year guidance. Slide 5, please. Let me provide a few thoughts on the macro environment. Recent passage of the government fiscal year '24 budget and supplemental is a positive development and removes an element of uncertainty for our customers. Budget levels and growth are very consistent with what was laid out last year by the debt ceiling agreement, and the supplemental could provide funding that would support additional growth of our Counter-UAS technology. The proposed GFY '25 budget is also in-line with our expectations and like most years, we expect we'll begin with a continuing resolution, which typically does not have a material impact on our business. One thing remains clear, national security and IT modernization remain key focus areas for our government. As we've said many times before, the world is a dangerous place and we continue to see clear demand signals driven by world events. CACI continues to be strategically positioned in enduring and well-funded areas that align with our nation's most important priorities. Slide 6, please. A number of years ago, we undertook a strategy to become a more focused, differentiated and resilient company. It was even better-positioned to drive long-term growth and shareholder value. This strategy has five key elements. Focus on key enduring priorities for national security and IT modernization, leverage software to rapidly address critical needs, bid less, win more and prioritize larger, longer duration opportunities, invest ahead of need to develop differentiated capabilities, and deploy capital in a flexible and opportunistic manner. All of these elements are focused on driving long-term growth, particularly in free cash flow per share, which we believe is the ultimate metric for long-term shareholder value creation. Slide 7, please. Today, you can see the successful execution of our strategy manifest in several ways. First, we are well-positioned in key national security and IT modernization priorities with the Federal Government, with agile software development methodologies and software-based technologies. On the national security front, our capabilities in the electromagnetic spectrum are differentiated and in high demand. Every day, world events are demonstrating the increasing importance of signals collection, intelligence, geolocation and electronic attack. Software enables us not only to provide these capabilities to our customers, but also to adapt and update these capabilities with speed and agility as adversaries change their tactics. On our US Navy Spectral program, we are working with our customer to modify and enhance what will be delivered when, made possible by our open architecture and software approach, which allows for contemplated changes and requirements. And we are beginning discussions with the Navy in an effort to consider reusing elements of Spectral as a baseline for other systems, because that's one way to provide fleet-wide capability upgrades when and wherever required to keep pace with rapidly changing adversaries and technologies. In addition, we are building out our ability to deliver our technology to Five Eyes countries, select NATO countries and other allies. We have already made deliveries to several of these countries. In fact, during the quarter, we received our first order from the Canadian government, for our software-defined, man-portable Counter-UAS technology called BEAM. We are also providing our software-defined SIGINT technology being mounted on OEM UAVs to assist in signal collection missions. On the IT modernization front, last quarter, we discussed how our capabilities are addressing increasing demand for network modernization. In addition, we are also winning and delivering on other IT modernization requirements. For example, this quarter, we won our recompete of IT work supporting both EUCOM and AFRICOM, enabling our customers' missions as they respond to an ever-increasing list of critical world events. IT modernization using our Agile software development and DevSecOps capabilities also recently held the US Marine Corps to achieve the first-ever clean financial audit for a branch of the military. This highly visible achievement adds to our strong record of past performance and enhances our ability to pursue additional modernization opportunities across the US government. Slide 8, please. Second, we're continuing to enhance the long-term visibility of CACI's business through disciplined bidding on larger, longer duration opportunities. As I mentioned, we had yet another fantastic quarter for awards and I'm very pleased with our business development organization's performance. Our $3.5 billion of awards in the quarter had a healthy mix of recompetes. And in several cases, we were able to expand those contracts. On the IT work I mentioned earlier, this supports both EUCOM and AFRICOM. We not only won our week for our recompete, we nearly doubled the size of that contract to well over $1 billion. Successes like this drove our third quarter backlog to a record $28.6 billion, representing nearly four years of annualized revenue. The weighted-average duration of awards that we booked into backlog remains well above five-years on a year-to-date basis. We continue to have a robust pipeline of new opportunities that allows us to be discriminating in the work we pursue. These wins in the delivery duration metrics provide visibility not only to support current year growth, but future year growth as well. Slide 9, please. Finally, we continue to invest ahead of need and deploy capital in a flexible and opportunistic manner. I previously mentioned our Agile software development and software-defined capabilities in the Electromagnetic Spectrum, two examples that illustrate investing ahead of need as well as our organic investments in our Photonics business to name just a few. You also may have seen, we've made a few smaller acquisitions this year, both in the UK and here in the US as our M&A pipeline continues to expand. During the third quarter, we closed the acquisition of Quadrint, a provider of digital application modernization primarily for the intelligence community. Quadrint brings specific customer relationships and past performance in the IC that are additive to our business. Consistent with our M&A strategy, the acquisition is accretive in year one. Slide 10, please. Overall, I am very pleased with our strong performance. We are seeing an accelerating growth as the larger awards we've won over the past few years continue to ramp. And we see on-contract growth in our existing portfolio. As a result, we are raising our full-year guidance and Jeff will share the details with you shortly. In summary, we continue to successfully execute our strategy, our investments ahead of need, differentiated capabilities, strong execution and exceptional business development, position CACI to drive topline growth, strong margins and increasing free cash flow per share. With that, I'll turn the call over to Jeff.

Thank you, John, and good morning, everyone. Please turn to Slide 11. In the third quarter, we generated record revenue of over $1.9 billion, representing 11.1% growth, of which 10.2% was organic. The balance was generated by the three acquisitions we've made over the past 12 months. Third quarter EBITDA margin of 11.3% represents a sequential increase of 200 basis points, which is in-line with our expectations and what we have communicated to you throughout the year. Adjusted diluted earnings per share of $5.74 were 17% higher than a year ago. Greater operating income, along with a lower share count, more than offset a higher income tax provision and higher interest expense. Third quarter operating cash flow, excluding our accounts receivable purchase facility was $114 million, reflecting strong profitability and cash collections. We reported Days Sales Outstanding, DSO of 50 days as we continue to efficiently manage working capital. Free cash flow of $102 million for the quarter represents good sequential and year-over-year increases. Slide 12, please. The healthy long-term cash-flow characteristics of our business, our modest leverage of two times net debt to trailing 12-months EBITDA and our access to capital provide us with significant optionality. As John mentioned, we made an acquisition in the third quarter and we remain well positioned to deploy capital in a flexible and opportunistic manner to drive long-term growth in free cash flow per share and shareholder value. Slide 13, please. We're pleased to again raise our fiscal '24 guidance as a result of our strong business performance. We're raising our revenue guidance to between $7.5 billion and $7.6 billion. This represents growth of 11.9% to 13.4% for the year with the organic component being 11.3% to 12.8%. We are also affirming our underlying EBITDA margin expectations in the high 10% range, where we now expect to be about 10.7% for FY'24. Recall that this margin guidance excludes the previously discussed $200 million of material sales in the first half of the year, which equates to approximately 30 basis points of impact to the full-year margin. As a result of our stronger revenue outlook, we're narrowing and increasing our FY'24 adjusted net income guidance accordingly to be between $455 million and $465 million, with an intended increase in adjusted earnings per share to between $20.13 per share and $20.58 per share. And finally, we're maintaining our free cash flow guidance of at least $420 million. You will recall this assumes receipt of a $40 million tax refund related to prior year tax method changes. The IRS has accepted our treatment of the method change, though timing of the payment is entirely up to the IRS. In addition, our free cash flow outlook now assumes about $80 million in capital expenditures, down slightly from our prior expectation as we're able to realize efficiencies in our capital spending. This is largely offset by slightly higher working capital usage from the higher revenue we expect through the end of the fiscal year. Please note that additional details of our updated guidance have been included in our presentation to assist you with your modeling. Slide 14, please. Turning to our forward indicators, our prospects continue to be strong. Our trailing 12 months book-to-bill ratio of 1.5 times reflects strong performance in the marketplace. Our record backlog of $29 billion increased over 13% from the year ago and represents just under four years of annual revenue. These metrics provide good long-term visibility into the strength of our business. For fiscal year '24, we now expect approximately 98% of our revenue to come from existing programs with approximately 1% each from recompetes in new business. Progress on these metrics reflects our successful business development and operational performance and yields increased confidence in our expectations for the year. In terms of our pipeline, we have $11 billion of bids under evaluation, over 70% of which are for new business to CACI. We expect to submit another $15 billion in bids over the next two quarters with 90% of them for new business. Our ability to increase both of these metrics from last quarter, even while delivering a 1.8 times book-to-bill ratio reflects the healthy demand, successful strategic positioning, differentiating capabilities and disciplined bidding we have discussed. In summary, we delivered outstanding third quarter results. We continue to see good momentum in our business, and as a result are raising our full-year guidance for the third time this year. We are winning and executing high-value enduring work that supports long-term growth, increased free cash flow per share and additional shareholder value. And with that, I'll turn the call back over to John.

Thank you, Jeff. Let's go to Slide 15, please. In closing, I'm very pleased with our strong third quarter performance and our ability to again raise full-year revenue and earnings guidance. At the start of this fiscal year and over the past several quarters, we have outlined our expectations of how and why our financial results would progress through the year. We discussed the fact that many of our larger technology awards would take time to ramp, and the timing of investments in deliveries would drive higher margins in the second half versus the first half. The stronger growth and increased profitability we've reported are entirely consistent with those expectations. We continue to successfully execute our strategy. It is a thoughtful and intentional strategy of focusing on current key enduring priorities, investing ahead of need, developing differentiated capabilities and then deploying capital in a flexible and opportunistic manner. And it is a strategy that is driving higher visibility, long-term growth, increasing free cash flow per share and shareholder value. As is always the case, CACI's success is driven by our employees' talent, innovative spirit and commitment to customers' missions and to each other. I'm immensely proud to lead such a capable and dedicated group of people. To everyone on the CACI team, thank you for what you do each and every day for our Company and our nation. And to our shareholders, I want to thank you for your continued support of CACI. With that, Dennis, let's open the call for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question is from the line of Robert Spingarn with Melius Research. Please go ahead.

Hey, good morning.

Good morning, Robert.

Very nice quarter, John and Jeff. And Jeff, I've got a question for you and then a follow-up for John. But Jeff, these margins in the quarter were quite strong and the implied margin for the fourth quarter as well. And while I know you aren't yet ready to talk about fiscal '25, for our modeling perspective, should we think of this underlying 10.7% margin as a good jumping off point? Or should we, you know, be thinking about something in the lower 11% range like you did in the third fiscal quarter?

Well, you're right. We're not ready to talk about '25. I think it's really probably more prudent to think about the year as a whole. We talk about the fact that we manage and guide to the year, the profile this year was such that we thought it was meaningful enough to give you some kind of first half, second half insight. But we really manage the business on an annual basis and I would encourage you to think about it that way.

Well, let me try with this then, Jeff. At the very least, in the fixed price portion of your business, which I think is around 30%, I don't know if the backlog is at 30% as well, but does the roll-off of any stale pricing in that fixed price business at least give you some natural lift? And then, John, I have one for you.

Well, I think the premise of your question might be a little off. I don't think you can necessarily equate fixed price with high margins and cost type with low margins. We've talked before about the fact that we have some very good margins on some very high value-added kind of cost type work. So I think you ought to -- I'm going to go back to what I said a few minutes ago. I would encourage you to think about the business kind of in total.

Hey, Rob. This is John.

What I was going to say, I'm sorry, John. Go ahead.

No, go ahead, Rob.

Jeff, what I was getting at was inflation. And so, not so much whether margins and cost plus are higher or lower than fixed price, but just that the fixed price for a lot of companies in the backlog was priced pre-inflation, and as that rolls off, you can reprice at better rates. And does that provide some natural lift?

Yeah, I see. Inflation is not really a major factor for us. A lot, particularly in the fixed price work, a great deal of it is kind of quicker turn task orders. And we really maintain fairly current view of our cost structure as we're pricing those. So that's not really a big driver for us as it may be for others.

Yeah, Rob, on our software-based technology deliveries, a lot of those come in and go out in the same quarter, right? So, we're constantly repricing some of that software-based tech. So, we're always keeping up with things like supply chain issues, right? And we were spending a lot of time talking about that as well as any type of inflationary cost. But we're always able to reprice those items in that part of our portfolio. Our larger technology programs that are fixed price, even over a three-year to five-year range, labor, we're very -- we're probably industry-leading at making sure we can get talent with the right skills, at the right price, and being able to manage that, and also bringing the efficiency. So, on those longer-term technology builds, we're constantly bringing in efficiencies. And since most are software-based, right, we're able to look for better and faster and cheaper ways to develop software, which then allow us to deliver the planned margin.

Okay. And then, John, just real quickly, the one I had for you, you know, you did the two acquisitions, one was in the UK. You've had a presence in the UK all along. But are you looking to increase your international exposure or was that just strictly a technology-driven acquisition?

Strictly a technology-driven. I will tell you that, as I alluded to in my opening comment, on our software-based technology side, we are looking at building ourselves out more broadly in the international front. You know, we're probably in the second or third inning there, really looking at most NATO countries, our Five Eye countries you already delivered to today. Canada was the last one that we added to that list. So we're going to continue to expand our reach of our software-based technology into the international market. You know, one, it allows us to drive our addressable market for those, for that technology. And then, second, it is where the, you know, largest threat is. And we'll I'm sure, we'll talk more about that during the rest of the call. So, Rob, thanks for your question.

Great. Thanks for the color.

Your next question is from the line of Bert Subin with Stifel. Please go ahead.

Hey, good morning. Thank you for the question.

Hi, Bert.

Good morning.

Hey, Jeff, John. So, maybe just, you know, sticking with the margin theme, you saw a nice step up, you know, going from, you know, just from the first half to the third quarter, and I think part of that was investment-related. Can you just walk us through what specific photonics-related investments moderated in the quarter to help push margins higher? And what's your general view on the lumpiness of margins on a go-forward basis? Do you think the cadence throughout the year will start looking flatter or would you expect variability to remain on the back of, you know, tech sales timing?

Yeah, we've talked about this photonics investments in the past. We have several programs where we're, you know, sort of transitioning into the -- into, you know, more robust volume, and some of the investments associated with that have come to an end as we've talked about the last couple of quarters. I think we will always have some variability in quarters based on our commitments to invest ahead of need. Those are always going to be prioritized and they'll lead to some lumpiness I expect in margin. John, do you want to add too?

Yeah, sure. Bert, look, on our software technology sales, right, of which photonics is a part of all of our Counter-UAS systems, all of our SIGINT collection systems, everything that we do in the EW, electromagnetic spectrum area, you know, and I started off with one of Rob's questions, you know, those are -- those have a highly variable sales cycle, right? Most are not really being driven by long-term backlog. They are sort of book-in-turn work. So, you know, I believe we will, for a long time, look at, you know, ups and downs on quarterly margins, which is why we're really focused on the four-year margins. So, why is that? It is that way because we are the company in the sector that actually does deliver technology. And when you deliver technology, it's not the same as, you know, delivering pure expertise, where your rollout and your margins are quite predictable quarter-to-quarter. And as the volume of technology is at a 55-45, you know, match to expertise, it does bring some variability to, you know, quarter-to-quarter endpoints. So, we will talk a lot about that, Bert, as we present our '25 guidance, but I think it's a very important thing to recognize. So, you know, it will not be uncommon for us to talk about, you know, beat, beat, miss, beat on margins because that's just how that more volatile, but very positive higher margin work comes in. The second thing that I want to say on that is, look, margins are a really important part of our value creation model. So, it actually has our intention. It's what we've been focused on, but long-term it's going to be our focus. You know, Jeff talked about the photonics investments that have now ramped down. We're not going to short-arm investments that drive future growth, but we're not going to do unnatural acts to achieve you know a) quarter-to-quarter point margin. We love free cash flow per share because it brings in margin, it also brings in food and value creating capital deployment. It brings in investing ahead of need. It also brings in, you know, longer-term view and a long-term approach to organic growth. So all of those things go into this, you know, soup. And what we would like to see come out over the long-term, which is what we have experienced is more visibility on the organic growth side, and then ever-increasing margins, but it's not going to be year-over-year. So, hopefully that provides some additional color.

That does. I guess just as a follow-up, if we think about some of the tech items, I mean, you've had a lot of recent success on the contract front, you know, really across these. And I'm just curious if you had to, you know, rank photonics, the -- you know, Counter-UAS, EW, SIGINT, and network security, all areas where you've had recent contract success, just as growth drivers over the next couple of years, you know, how would you do that? You don't have to specifically rank them, but like what's at the top of that list?

Yeah, sure. Look, on the software-based technology work, that has been something we've been investing in over the years. It is a highly volatile market, which you should read as a positive, right? Folks who look to do us harm change their tactics on an hourly basis. And the only way you can keep up with those threats is to make certain that your signals and your EW, electromagnetic spectrum technology stays up with that. We have proven that if you look at all of the issues that are out in today's press about drone strikes, all of that technology that we have fits exactly on top of those threats where drones are launched in 24, 48 hours, you know, tactics, technology, and procedures are changed, and the government, our customers, and NATO allies as well need technology that can quickly adapt. Photonics for, you know, we're going to hit volume there as we get through 2025 and into 2026. You know, we'll always have investments there as we work on being able to work on producibility. But overall, you know, I hate to rank one over the other, except to say photonics will hit a more compact volume sooner, but the high volume over a number of products that we have within this company are going to continue to drive technology topline and bottom line growth.

Thanks, John.

Thanks, Bert.

Your next question is from the line of Jan Engelbrecht with Baird. Please go ahead.

Hi. Good morning, John, Jeff, and George. I just wanted to talk about capital deployment. I know you've done some recent deals, and you've got plenty of headroom available on the current share repurchase program. So just how should we think about that? And obviously, the M&A pipeline is more attractive right now, but you also have a higher priority in terms of growing free cash flow per share over time.

Yeah. Thanks for the question. We, the observation you make about the M&A pipeline in reference to our comments is correct. There are, we see some expanding opportunity lists. Even though we did not buy back shares in the quarter, I would remind you that since the second quarter of last year, we've repurchased 1.3 million shares. So we have bought in about 6% of our outstanding shares in the last four or five quarters. So even though we didn't buy any shares in the quarter, and we are continuing to evaluate both opportunities, we're very attentive to share repurchases.

Yeah, John, and at a macro level, look, we're flexible and opportunistic, right? And that's going to be based on the dynamics that we see. We're going to evaluate a range of factors, we're going to look at some of the things that you mentioned. We're looking at our M&A pipeline, we're looking at stock price, we're looking at valuation, leverage, interest rate, many, many things. All options are always on the table. You heard we did a few smaller acquisitions that we have completed. The other thing I'd mention is that timing of the future M&A candidates is a consideration in our capital deployment assessment as well, right? So, it's not always when we're in leverage of X, we have Y number of different companies we'd like to make a future growth part of CECI. So there are a lot of moving pieces. Bottom line, we believe that either of those capital deployment actions are going to benefit shareholders in the near and in the long-term, which is why we're focused on free cash flow per share and really appreciate the question.

Perfect. Thank you. And that's really helpful. And just a quick follow-up, just at a high level, if we look at some of your more recent sort of multibillion dollar programs, can you just walk us quickly from a topline perspective, sort of the cadence on maybe not each one, but if you could, sort of EITaaS and NSA and the Navy program, just sort of how the revenue went that peak over the next couple of years?

Yeah, sure. So look, on our large expertise award, which is the large sizable cyber intel award, you all know the name, I'm not allowed to say it. Look, we've ramped ahead of plan. We will continue to ramp that at a reasonable rate as we go through '25. So we'll get to full ramp when we get to start off our fiscal year '26. So there is a number of items that are in our current scope that just started later after award. So, I like how we ramped that one up and really good positive feedback from our customer. On our EITaaS, that also ramped ahead of plan. That's going to continue to ramp and grow in 2025 and beyond. If you all remember, that was a BPA, total value of $5.7 billion over a ten-year period. We recognized about $2 billion of that in the first quarter of '23. So that starts with upfront planning. We're doing some design work there, you know, a picture of lower volume. The customer did ask us to take over from the small-level incumbents, take their work over sooner because they want to see that work improved. So we're able to do that as well. So, you know, customers are very, very pleased. Last one is Spectral, right? That's a real gem technology program, we did ramp ahead of plan. Connected to my prepared remarks, you know, we're looking at what that first delivery looks like to the fleet. I spent some time during the last week with some of the Navy seniors talking about this program extensively, that the threats are continually changing. And, you know, what a refreshing discussions -- what refreshing discussions we had, because we could talk about the threats changing, how do we make changes to this large technology program, you know, without the ACAT I kind of follow-on that's a four-year delay. You know, we're sitting there working alongside shoulder-to-shoulder, hip-to-hip with this customer who frankly has the responsibility of protecting their surface fleet from the things that you're reading about in the news today. So, you know, great work there. We would see future expansion definitely into '25 and '26. So hopefully that provides some of the color you were looking for, Jan.

Perfect. Thank you. I'll jump back in the queue. Really appreciate it. Thank you.

Your next question is from the line of Mariana Perez Mora with Bank of America. Please go ahead.

Good morning, everyone.

Good morning.

So, my question is a follow-up on the international opportunities and how should we think about M&A and partnerships there. I really think that AUKUS gives, particularly in the Pillar II of AUKUS, you see opportunities for electronic warfare and C2 capabilities. Like how do you think about positioning there, kind of like going solo, partnering with someone in the region, or even doing some acquisitions in strategic areas?

Thanks, Mariana. Asking for all of our secrets. All right. So, let me try to unpack that. Look, on the international front, it's no secret that on the electromagnetic spectrum, given everything that we're seeing today, it's a very dangerous world and everyone needs electronic warfare equipment. Many allies around the globe are talking about expanding their budgets. We, as I mentioned earlier, currently deliver technology to a number of Five Eyes countries. As we expand go deeper into the Five Eyes, into NATO, Eastern Europe is going to be one of our absolute focus spots. We have made a number of trips with our software-based technology sales team, Poland, Latvia, Lithuania, Romania and the like. And we had two of our folks spend about ten days in Ukraine, buckled down in Kyiv, frankly, talking to on the ground commanders about what they're seeing and what they need as we go forward. And it really related to the supplemental comment I made during my prepared remarks that we can have all the meetings we'd like, but the supplemental helps. In addition, a lot of those Eastern European companies are spending their own defense dollars, including in the Ukraine, to look for faster-paced solutions to what they're seeing. You asked about M&A. I don't today see us doing international-based M&A. That's a tough one for us. There's a lot of different skill sets that we today in our company don't have. But we're able to reach all of those customer needs with international sales reps and our own sales team. I would mention when we did the AVT acquisition, you mentioned AUKUS, we have a small branch of what was AVT in Australia. It does allow us to qualify in a different manner to go after Australian programs because we have indigenous capabilities within the country. So, a lot of avenues there, a lot of decisions we're still in the middle of making, Mariana. But there, and in other areas, we're going to continue to drive growth. We're going to drive all four of our sales channels for all those products through current programs or records, direct sales, and then international. So, excited by that. As we talk about '25, and as we go forward, we'll continue to be very transparent and share what we're looking to do there.

Thank you. And sorry if I'm oversimplifying this, but like, is it fair to think that you will, kind of like, target the international budgets and like the growth in international budgets mostly with your technologies portfolio versus expertise?

Yes, we will address the international market with our technology portfolio. Now, at the same time, expertise informs tech. So, a lot of the information we get about what other countries are doing, if you look at our expertise that focuses on SOF support on folks out in the field on the wrong side of the wire in a lot of these really dangerous countries, we do get a lot of expertise information that then tells us who we should go target, where and in what order. And that is the beauty and the strength of delivering expertise and tech and how those two parts of our business support each other. Thanks for the questions, Mariana.

Thanks so much.

Your next question is from the line of Matt Akers with Wells Fargo. Please go ahead.

Hey, guys. Good morning. Thanks for the question.

Good morning, Matt.

I guess, John, how should we think about kind of the long-term growth rate for this business? I think back when you guys did the Investor Day with the quadrant that you're kind of laying out like a 4% or 5% kind of market growth, and you're doing more like double-digits this year, it sounds like there's a lot still to come. So I was just curious if that's accelerated a little bit.

Yeah. Look, we are at the point where we're a reliable mid-single-digit growth company over the long-term, right? We're still in the '25 and future year build out. So I don't want to show too much, because frankly, that will end up kind of changing. But at a macro level, look, we're a solid better than mid-single-digit growth company going forward. And it really does harken back to how closely we watch free cash flow per share, right? We all talked about margins for a very long time, which was the right thing for us to be talking about, because it takes an enormous amount of topline growth to drive free cash flow per share when our EBITDA margins were sub 8%, okay? We're excited that we're actually talking about high 10s. And 10.7%, 10.8%, 10.9% all count as high-10s. So at a macro level, how we're driving the ship, which is long term, we're extremely excited and also encouraged from where we were, frankly, Matt, at that 2019 Investor Day. What we're focused on as you look at future investments and future growth, it's going to be near-peer and the counter-terrorism mission. You've heard me say so many times, folks, this was always going to be an and case, even though we tried to will it into an or case. It is an and. We're going to focus on network modernization. We talked about that in the very early, early days after that 2019 meeting. We talked about the importance of electromagnetic spectrum, SIGINT, EW, counter, Counter-UAS. Turn that page five years later, everything, it's a signal -- a signal. Near-peer threats are going to drive urgency for increased speed and flexibility Spectral. We're the leading Counter-UAS provider out there today, and the threats are in their infancy stage. I'm not trying to sell fear, but fear is out there because it is a dangerous world, and that's what we all see. And then, space, right? We talked a lot about on the photonic side, we'll start to build backlog. We're the first to launch, first to interface, first to connect, and the US supplier that does design and production fully in the US. So, you know, as we look at how we go forward, there's plenty of room for us to grow a really nice addressable market for us. And so, if you take a look at where we've started, mid-single-digit, topline growth company, focused on margins, ultimately focused on free cash flow per share.

Great. Thanks. That's helpful. And I guess one for Jeff, just the CapEx guide for the year, $80 million, I think implies a pretty big lump in Q4. Just curious what's going through there.

Yeah, there are a couple of things in there, Matt. I would say that the preponderance of it is related to some more efficient facility strategies and some footprint consolidation and management of our kind of physical infrastructure. It's not at all related to program or growth specific kind of projects.

Great. Thank you both.

You bet.

Your next question is from the line of Tobey Sommer with Truist Securities. Please go ahead.

Hey, good morning. This is Jasper Bibb on for Tobey.

Hi, Jasper.

Really nice growth in the civil business this quarter. Last few quarters, I think that has been, I guess, flat to down with the transition in the background screening contract with DCSA. So, just curious, I guess, what's driven the acceleration in civil now that it seems like the comps from that contract have rolled off?

Yeah, sure.

Yeah. Go ahead.

You're talking about DoD versus Fed/Civ and sort of how those parts move. Some of it is, if you all remember a number of quarters back, the government, we reclassified our background investigation work. Our DCSA program, that was a Fed/Civ program and that transitioned to DoD. So that was the majority of why you're seeing some of these deltas. Some of our longer, older re-compete losses, even though that doesn't happen very often, TSA impact ramped down in the second half of '23, the anniversary is the fourth quarter of '24. So things like that, there isn't any one item or a difference in our strategies, how we're bidding. So, hopefully, that provides some of the color you were looking for.

Yeah. No, that's helpful. And then you've mentioned the new business pursuit targets. So curious if there's been any change in how you manage bidding proposal activity recently, including potentially going after more international work. And then also, what does fiscal '25 look like from a re-compete risk perspective?

Yeah. Let me take a step up on that one. Look, how we're focused in our business development organization, where we spend BNP and the like, it really starts at a different level. It starts with the fact that we have a very different strategy within our sector on how to grow this company. We are focused on investing to have a customer need, developing differentiating capabilities that then address critical enduring national security and modernization priorities. That statement in itself says that we approach how we do business win -- how we approach a new business with a very different lens, right, we're looking at first, what's going to grow the fastest? And then second, if that's what we're going to plan, that's got to be a ten-year to 20-year look. That has to be a narrow, deep funding stream. And I use that term many, many times. And then our strategy is technology and expertise versus just expertise. The days of trying to find just expertise work and what is over the longest term will be a commodity based delivery model, was not the way we believe long-term we could grow this business. So that's why we built nearly from scratch a technology part of this business that would be inextricably connected to the expertise side, right? So we could understand what customers need and then develop it. And then it really comes down to you know, bid less and win more, right, Jasper? So, you know giving you that comment, you know, so how do you bid less and win more? It's called focus. So there's a lot of people out there talking about, you know, retooling BD teams that we're going to go out there and win, hey, the model starts, what are you about? What are you going to focus on? How you're going to be very transparent with your shareholders? How do you find patient shareholders that over the long term are going to be looking to us to provide that reliable long-term growth? So, you know, we align with customer needs, we invest ahead of need, we shake the heck out of things which really means show the customer the art of the possible and really drive preference, not drive price down. And then at the end of the day, you know who doesn't like somebody who you know performs better than everybody? So that's the mix we have that's the recipe we have in this company. So we're not sitting here worried about do we spend more money in Fed/Civ versus, you know, DoD. We really say, does this fit the markets that we're in, and a technology and expertise strategy. When it does, we will stop at nothing to win that business because the investments both in BNP, IRAD and in CapEx as Jeff mentioned are crucial to driving our long-term growth. On the '25 view, you know this year frankly, we went to a lot of recompetes. What you don't see is we have a lot of contract extensions. So those are customers who may have recompeted next year. They came to us during the last couple of quarters and said if you want to take another three years, four years, two years, so, you know, there was a lot of work that we did to gain extensions and then, Jasper, that drives potentially a lower recompete rate as we move into '25 and '26.

I appreciate the detail there. Thanks for taking the questions guys.

Thank you.

Your next question is from the line of Seth Seifman with JPMorgan. Please go ahead.

Good morning. This is Rocco on for Seth.

Good morning.

Good morning.

Building on the prior question, what were the drivers of CACI's impressive awards in the quarter? Did the bidding trend shift and how is CACI thinking about bidding on future awards? Also should we be thinking about that the strong bookings will drive another strong revenue year in fiscal year '25 above the long-term growth rate you mentioned earlier? Or is there more lag in these awards?

Love the last question trying to crowbar into 2025, but we will -- we will clearly be overly transparent when we get to '25. But on the spirit of the first part of the question, look, yeah, we have had great win. It's more about the more about the culture and it's more about the strong business development team, solution architects, but also the deep bench that really know how to win. This is not a one or you know two person driven business development machine. They are absolutely connected both business development and sales teams to the P&L centers. They are really looking at how do we competitively position ourselves? The large win we had this quarter the ELITE program right that was -- that was one where we spent an awful lot of time, you know working with current customers, you know, how do we do more for you given that the world is still even more dangerous place. So that is a two-year ago plan is to as these programs are being run, how do we merge what we do for them that helps unity of purpose, that helps supportability across those two combatant commands, so it's a very involved, detailed process that is not in the hands of, you know, less than five people. It's in the hands of 150 people that are actually focused each and every day as how do we shape. And you know we have this mantra within this company we're going to go into '25, our entire FY'25 bidding lineup, most of that is already been bid in '24. The rest of that will be solutions in bid here shortly. So when we get into '25, we're talking about how do we grow '26? From a, you know, wins and award spot. That's why we've been traditionally, you know, a long number of quarters you know over 1.0, why we had a 1.8 book-to-bill and why our you know trailing 12-month book-to-bill is always above 1.0. So, it is in the ethos of this company how to go drive growth, but we're going to stay true to what is we do well, we're not going to drop an anchor and some kind of work that we have no idea doing and then chase that job based on price and promise you all we're going to get better. We just don't operate that way. It's a long-term strategy.

Great. Thank you.

You bet.

Your next question is from the line of Conor Walters with Jefferies. Please go ahead.

Hi guys. Good morning. Congrats on a great quarter. Thanks for taking my question. Trying to get back to the growth you had, you know exiting this year, you're on a really strong organic growth trajectory here in the second half in the low double-digit range, curious if you could point to what some of the key drivers are here. I don't know if it's all from the accelerated program ramps, you touched on earlier, perhaps some share gains anything you'd point to would be great.

John will likely want to expand on this. But it's really pretty broad-based, I mean we've talked about a couple of the major sort of franchise wins we've had over the last couple of years. Those are all ramping on or ahead of our expectation. We're really, you know, the portfolio broadly is kind of hitting on all cylinders. Really, can't point to one or two or three programs and say it's this or that. It's very broad-based.

Yeah, I think you know, you can look at the future programs we'll be talking about driving revenue, right? You know, during this year beyond EITaaS and the large Intel expertise program and EITaaS, we'll be talking about ELITE, GENMOD and [indiscernible] and you know some of those items. So we're -- you know, we're not a one program company, we're not a three program one. Well, you know, we're looking to now get our stride. Now as I say that, we also have, you know, technology programs that -- and we actually do deliver, right? And when we deliver that revenue goes away, right? And there's some sustainment there. But you know at a company of this size, you know coming up on $8 billion, you know, we are going to have programs that are going to sunset, which is a positive thing, means we deliver everything we're supposed to deliver. And so and that's why we're in the middle of building our '25 plan, right? What gives you the right range so you can assess what our most probable cases. I'll also say, if you look back to where we were in August, folks, right, we were there, we gave you a growth rate, we also gave you a range. We said low-end and high-end. I invite you all to go back to what we presented to you all as the left end of the goalposts as we used to say in the right end. You know five of the six things on the what would allow us to drive growth, five of the six things on the high end were actually achieved. And those were some pretty high bars, but it proves maybe not every single year, but you know when things align, things align, awards are lumpy, right? So we can never count on a war coming in a specific quarter and you all -- you all know based on where our fiscal year is, and the government's fiscal year is, there are times when we're going to win great awards that are going to come too late to have any material difference in the current year that we're in. We expect those questions, but there are times when we have to say it's going to show up in the next year. So it's this, you know rubric of what's exiting what's ending? And that really drives the reason why Jeff and I always say, we're not going to talk about '25 is not to be flippant frankly it's just that we don't have a really good eyeball yet, and we're in the middle of, you know, stirring that soup and absolutely when we get to August we'll be in a really nice position to tell you how '24 buttoned up. You got some great guides earlier today, and what we expect for the future.

Got it. That's super helpful. Thanks so much guys.

You bet.

Your next question is from the line of Louie DiPalma with William Blair. Please go ahead.

Good morning.

Good morning, Louie.

Following up on the Spectral comments, but what is the progress in terms of installations across the Navy surface fleet?

Yeah, thanks, Louie. So, we are in the design phase now. We've gone through a number of PDRs and CDRs using really great system engineering and software engineering terms. So, we are looking at how the program moves forward. At a macro level we are looking for, you know a minimally viable product which means what's that first spiral of capabilities are going to be delivered to this 200 plus Navy surface ship fleet, closer to the -- you know end of this calendar year. And then based on how that goes, we'd be looking at end of next calendar year in '25, as to start to make deliveries to the fleet. That's a highly fluid schedule. So you know, we'll have much better view when we get to August, but that's sort of the period we're in. We're in the development period now. We'll develop and deliver product at the end of the calendar year and some later which is why we've been talking about that we're in design phase now and ramp will actually start to show itself in '25, and then clearly N number of ships as we go '26 and beyond.

Great. And for the software solution, is the vision that it would last for the entire useful life of the ship and that a significant component is software and you've discussed the dynamic nature of the threat. And so do you have the ability to upgrade the software in response to the changing nature of the threat such that you know even as requirements change your software allows your solution to change with those requirements so that the solution can last for decades rather than I think the contract is only for seven years, but do you envision that your software is going to last for decades and decades?

Yeah, Louie, thanks. Yeah, so two key points to that. It's an open architecture solution. Many people claim it. We actually deliver it, okay. It's open architecture because we want other companies who can decrypt different signals that they're finding with their gear to come up with what's the signature and then what is the effect you can apply to whatever that is, so that you can protect surface ships. So one, based on the open architecture, yes, we have a long history ahead. Two, the fact that we can make software changes based on the threat makes us a highly capable company as you go out into the future. We're having a lot of talks around Counter-UAS at all levels of the DoD and the intelligence community. A lot of that work is based on the GOTS software baseline that the government owns. We created it for them over -- over more than a couple of decades. We start with that and we're continually adding to that. So, you know, to your point as the threat changes as we've all witnessed, when those threats change we're able to collect, decrypt, put solutions in that can counter those within a matter of hours versus, you know, the old style was take a surface ship into port, share the hardware out, put more racks of hardware in, do six or seven each year, you can't maintain a fleet given that where the threat is gone. So, we are exactly where we wanted to be, a software-based company. It is our super power, we look to make it our customer's super power as we'll start to continue to change it. Thanks. Thanks for that question.

Great. And on this same topic of drone warfare, is CACI involved in the official JADC2 program, on both the hardware and software side? In the past you've discussed your role on several data analytics software programs with your Agile solutions factory and you obviously provide many different types of signals intelligence sensors across many programs. And recently the Department of Defense has been on Bloomberg talking about how they have their first version of JADC2 with algorithmic warfare. Are you involved in that program?

Yes, there are a lot of folks who are involved in JADC2 as it starts to build out and we all understand it better. You know, I would say an OV-1 level, yes we're absolutely involved right every sensor, every shooter, will at the end of the day be involved. But it's our belief there's a lot of building blocks that get the DoD to that, and then get to the cross service model. DC -- DCGS, whether it's DCGS, Navy DCGS, Air Force DCGS-SOF, which is where a lot of everything we know about is put into this massively large library. We have a phenomenal team in Omaha that really works on DCGS Air Force. Spectral is an example of a lot of those JAD, JADC2 components. But how do you pull in from other sensors that may have seen this threat in the past? It's flying over, you know surface ship X and how do we bring that signature and then exploit in quickly and provide that to the ship's commander. So yeah, so we're very much connected on our technology side. It's all things JADC2 and it's at the building block level today. I'm certain that as more building blocks get added, we'll be a -- you know, a key component of what DoD eventually delivers.

Great. Thanks so much.

There are no further questions. I will now turn the conference back to John Mengucci for closing remarks.

Thanks, Dennis, and thank you for your help on today's call. Look, we'd like to thank everyone who dialed-in or listened to the webcast for their participation. We know that many of you will have follow-up questions and Jeff MacLauchlan, George Price and Jim Sullivan are available after today's call. Please stay healthy and all my best to you and your families. That concludes our call.