CACI International Inc (CACI) Earnings Call Transcript & Summary

Okay. So next up, we've got CACI. We've got John Mengucci, the CEO of the company. So John, thanks a lot.

Thanks for having us, Matt. Appreciate it.

Maybe just to kick it off high level, could you give us a quick overview of CACI, what do you guys do, markets you serve, that sort of thing.

Yes. So government services sector, $6.7 billion company, industry-leading margins, deliver expertise and technology to our national security customers across the U.S. government. We have a small group over in the U.K., but predominantly U.S. and intel community and DoD supplier, everything from IT modernization to signals intelligence, electronic warfare, space, cyber. And we're quite unique in the space in that about half of our portfolio is where we deliver expertise or labor-hours people, and the other half of that is delivering higher-end tech. And I'm sure we'll talk about that as we get through the discussion. So thanks.

Yes. I guess maybe just thinking about defense demand first. So we just got through the debt ceiling deal, how do you think that sort of supports growth here for the next couple of years for CACI?

Yes. I mean I think it's -- I would never like to say that good things come out of a debt agreement. However, the fact that first time in a long time, we have some perfect insight into our -- the government's FY '24 and '25 budgets, about a 3% growth for '24, another percent in '25, so nice penalties if our elected officials can't get to an agreement to get the 12 bills passed. We'll probably have 3 months of a CR, the first 3 months of next government fiscal year only because it takes time when they pass the budgets. But what's great for our industry is clarity. When our customers understand the budgets that they have and they have near-term knowledge of when they're authorized to go spend those budgets, a lot of good things happen. And the fact that the areas that we're in are in really nicely funded areas, like they're on very deep streams of funding. I like what our growth prospects are given where we are with the budget, so a very supported budget.

Yes. One of the questions I'm getting in at, so I guess the top line defense is capped a little bit. There's some things that they obviously left out of the initial request, I think things that they'd add them back. And so they're trying to just -- what has to come out of this? So I guess how do you think sort of O&M, I guess, is probably the big funding line item, and how that maybe stands up as we go through kind of the markup?

Yes. We're both an O&M and, a lesser extent, an RDT&E company. Well, look, I think at the end of the day, we're a 61-year-old company, defense, national intel's always a bipartisan supported part of the budget. How they get there, they get there in masterfully bizarre ways. But look, we're just under $7 billion company, it's $1-point-some trillion government spend. We have about a $250 billion addressable market. So we've got plenty of areas to go grow and, frankly, areas that are very well funded. So there's always plus-ups. There's always going to be something whether it's Ukraine or some other national security challenge. That will be balanced by political views and venues as we get later on in the upcoming government fiscal year. But again, notwithstanding the kind of position we're in today, it's bipartisan support in the majority of time. So again, I really like how the next couple of years is being set up, and it's very much in the 5 market areas that we support.

Yes, sure. I guess maybe one more follow-up on that. Civil side of the budget, a little bit more pressure there. Can you remind us how big of a part of your business that is?

Yes. I clearly don't -- we're maybe 25% is our federal civilian piece. How we manage our business is really looking at where we provide expertise and where we provide tech. And whether we provide it to the federal civilian customers, DoD or the intelligence community, it really doesn't stop how we manage our overall business but 25%.

Got it. That's civilian. Okay. Kind of, I guess, moving on. A string of kind of nice contract wins you guys had lately: EITaaS, FocusedFox, the background investigations contract. Can you talk about sort of what went into those, how you won them, that sort of thing?

Yes. So fundamentally, in our sector, a very different setup, right? We're focused on expertise. We're focused on tech. On the first job, it's a long -- it's a rather large technology job. It's IT modernization for the U.S. Air Force. We've been very much focused on winning larger jobs and making sure that we're shaping it. And how we shape this, we spend about 2 years with the Air Force customers showing them the art of the possible. So we invest ahead of customer need so they can actually see the latest technologies out there and how they can solve the issues that they have. . We've got a long, long history of performance, a long, very long history of making sure that we are enhancing all of our customers' missions. So that job was more about shaping, making sure the customer knew what they should be asking for. And then by the time the RFP comes out, we sort of know what they enjoy. We know where their price points are. And as any good shaping the organization is, you sort of lay that table out ahead of everybody else, and I believe that the customer has the best value solution. It is one that we'll start to ramp in FY '24. It's a 10-year, $2.5 billion program that provides a long-term stability to our top line and our bottom line growth goals. The second one is, and we said -- you almost got me to say the program name, it's a rather large program for an Intel customer. It was a takeaway bid, but we've been doing intel analysis and cyber work for a long number of years. We shape that pursuit very, very well. Customer's looking for different. Customer was looking to make certain that as the cyber threats change, that the folks we delivered and the mission that we owned would be much better served as it had been in the past. How did we win the job? To use our customers' words, a superior technical solution, superior value, superior enhancements to what they were currently getting and that mission is still the same. It's still very high-end cyber work, both domestically and internationally. So yes, so both of those jobs were terrific wins. Together, they're both driving about a 1.4x book-to-bill trailing 12. So a really nice build, a really nice backlog as well, in the coming weeks or months later some other larger awards that we've won as well.

Okay. Great. So you touched on that a little bit, sort of this shift toward winning some of the bigger awards has been a big focus for you guys. Can you talk about just the advantages of that? Are the economics any different? Sort of how do you think about that?

Yes. So I mean CACI is a strategy-based company. So strategy is a place where we come from. But we're not chasing any type of quarter-to-quarter point measure, we actually are a long-term investment, a 61-year-old company. And we really embarked about 8 years back, Matt, to restructure our business development and our entire senior leadership team thinking around let's bid less and win more, let's win larger business. The first thesis does not allow us to get distracted with low-margin work which, on the expertise side of the business, it's -- at least half of the RFPs that are out there are very commodity-driven. It's just price-sensitive. You can't drive a 60-year-old company another 60 years if you're worried about winning awards that last 18 to 24 months and you spend a lot of investment dollars rebidding on it again. So we were the first and the only company in the sector to sort of move to let's stop this race to the bottom. Let's reset rates. Let's invest versus cutting costs. And things that look like a commodity in business school you learned are sort of a commodity, right, it's only going to differentiate on price. So we changed what we go after. So we changed how we go about bidding those. And then again, we've got so many parts of our organization pricing, capture lead folks, they're pretty much fixed cost. So this whole theory of bid less and win more is we can only write so many really good blue, top-notch proposals a year. It doesn't matter how many things our business development team finds, they're still pushing them through a knothole that is a pretty much a fixed size. The last area is, I don't want to spend our precious investment dollars rewinning work that's already in my book of business today. So the fact that we're a mid-single-digit top line growth company and ever increasing margins, you only get that way by sticking to what you're really, really good at. You're not out there bidding low-end margin jobs. And all you win is you win the opportunity 2 months later to bid at even a lower margin. So it's a very disciplined growth plan. We're not going to be the highest, top line grower in the sector, I don't desire to. Because when you aim for that, you end up you aim too high and you pick up margins that are too low. And the fact that we're industry leading on the margin side, quality of revenue to us matters. It drives great free cash flow per share. And so it's been a complete mindset change within the company. And the more we stay to that plan, the better off we are.

Yes. Sure. How do you think your customers sort of think about this? I mean going years back, we had LPTA and there's focus on cost. And I think we've moved away from that. But the only data we get to look at is like a few protest reports and occasionally seeing one person [ undercover ]. But are you seeing more pricing pressure? Are you seeing more...

Yes, I'm watching more pricing pressure. I read the same reports that you do. I just don't like to be in them, frankly. There's so much to be out there chasing, right? We're a $6.7 billion company, we're a $250 billion addressable market and well over $1.5 trillion budget, if we can't find enough really good things to go after to sort of keep us focused on what we do very, very well. We don't subcontract our core, which means if it's core to us, we're going to go after it, but it has an awful lot of parameters that it has to meet, right? It's got to be a longer-term duration contract. . The one measure for us is -- the average time a contract spent in our backlog 7 years ago was 33 months. It's at 66 months now, a much clearer picture of what's out there to be forward bid on and really tells us the amount of money I have to spend each outside year to go rewin the same work I have. Message there, it's used to be under 3 years, now it's over 6, right? So we're becoming stickier. And the fact that we look at expertise and technology very, very differently, we love them both, expertise informs tech, and we bring tech in to win more expertise work. So if we keep that model right, we don't get ourselves drifting into areas where we're going to go and trying to win on price. In fact, in most areas, we won't win on price, we're going to win on value because those are the jobs that customers remember. And since there's such a large addressable market, if we're not chasing a couple of quarters away revenue, the better off for us, and they're much longer, longer-term jobs.

Got it. Are you trying to compete against similar competitors as you sort of move up the food chain or different players in that?

Yes. We have a chart in our investor deck, or we used to, we talk about our business in expertise and tech for a very specific reason, is that there's well over 50,000 companies, believe it or not, in the federal government space that bid on expertise contracts. Now the government spend is ginormous there. But if you look at showing up each and every day and trying to come up with -- you can't do the right technical solution because that's not looked at very much on the expertise side. So it's really -- on the LPTA jobs, it is price. So where we've sort of shifted, where we want to go after, is we just believe that on the expertise side, there's work that we'll leave for others to go do; and on the technology side, we can differentiate. The expertise side, I think, everybody else in the government services space and 49,992 other companies are out there. On the technology space, I don't see anybody in the government services sector at all. So I'm competing -- we're looking at the major aerospace and defense primes. And they're fantastic companies. I used to be at one for a long number of years. They do fantastic work. It's just that my belief is, as the threats change in the U.S. and as aerospace and defense companies spend time, which they should do, on building the exquisite platforms that they do, software was going to be needed because the threats are changing consistently. So those platforms are nothing without mission packages on them. And I believe that over time, they'd be more software-defined versus hardware built. And if software is truly going to be our super power on the technology side that I'm going to face companies like General Dynamics and Northrop and Lockheed and Boeing, all phenomenal companies, what else I believe would happen is we would become competitive mates, which is where we would be bidding work with them, either as their sub or them as our sub. And that's what we've done in the electronic warfare world, in the signals collection world, cyber world. There's some great relationships there that's very sticky business. It's clearly higher-margin business, and that's why we run our business in that manner. And I should say that our technology margins on -- our average margins on our tech side is about 300 to 500 bps higher than it is on the expertise work. And you can sort of see that in our investor presentation. Many, many companies, more things going on price in the expertise area and then very exquisite software tech products and the like, which actually demand higher margins because there's less people out there doing it, it's much more of a higher risk.

Yes, sure. I guess could you remind us just recompetes, anything big coming up over the next year or 2, we should watch for.

No. The last large, big deal we had we actually got all the way in this past fiscal year, was our background investigator contract. So we cleared that off. That was $1 billion or $1.5 billion win over a 5-year period. So that's been cleared off. So we usually recompete 10% to 15% of our business each year. This coming year, we're more on the lower end because we've gotten a lot of our recompetes out of the way, which is great for us because that's more investment dollars we can throw at new business.

Right. That makes sense. Okay. Could you talk a little bit about the capital allocation policy? I think historically, all M&A shifted a little bit. What do you think of sort of the priorities now? And how do you kind of balance?

Yes. So capital deployment for us is towards flexible, opportunistic. The word we didn't choose to put in there was balanced because balanced to me is I'm sort of laying that out there ahead of when I know where the market is going. So it must be flexible and opportunistic. Yes, we're a 60-some-year-old company, we've done 89 acquisitions since the founding of the company, a majority of those in the last 20 to 25 years. So to me, a differentiator in the sector is we're an acquisitive company, we know how to find capability and customer relationship companies that can give us longer-term growth. We know how to sustain value and not destroy value when we actually bring those companies in. So we're very, very focused on that side of the business. . We are looking for the right opportunities to return capital to shareholders in any [ card ]. We're a long-term M&A company, but we buy capabilities and customer relationships. We don't buy revenue. So I can tell you, we have never bought $1 of revenue. If I'm going to buy something that looks like I am, I'll just beat you in the marketplace. It's just easier, and it's actually more -- it's more fun, frankly. So the fact that the last couple of years, we haven't done any M&A because there's no capability or customer relationship we want to fill that gap on given the number of companies that are out there looking to be purchased, so less M&A activity. That's just a place where [ we need ] to come from. We'll buy down debt. We'll invest internally. We'll do ASRs. We'll do open market repurchases. We just changed that with this last authorization, we had $250 million ASR we went forward with January 1, sometime in the August time frame. We're out in the market buying today and that's another example of how we become more flexible and more opportunistic. We would -- we had never in the history of the company done an open market purchase. That was a next step for us. So it's not balanced. It's not overly predictable, but we have a pretty good understanding the best place for us to return capital, and our share price over a number of years has shown that.

Yes, sure. Well, I guess the deals that come across your desk, where have they fallen short? Are they too expensive? Is it just not the right strategic fit? Kind of what are you seeing in the market?

Yes. What's actually, the great point about agility, in the 11 years I've been at CACI, I've seen 1 bid, period. So it's more about pushing knowledge. Here's a strategic vision, here's where we're going to go. At times what happens is we'll have people still come in to say, "I know this doesn't look like what we do but it's really strategic. And I'm a trend person and a numbers person." Okay. Quantitatively, show me where the strategy is. Like, show me where it's strategic. Show me how at least if something is larger, right, that's less repeatable, that gives me a higher barrier to entry to everybody else. So those are the ones that we're still out there working on. But for the most part, I really enjoy the jobs that we've won. We're winning much larger jobs. We're punching well above our weight in the mission technology space, and budgets out there are really supported.

Yes. Could you talk a little bit about, I guess, when you have done M&A in the past, I think you guys have been a little bit more targeted. You haven't overpaid for a lot of stuff. Can you just talk about your strategy of creating value? Because I think in this space, it's tough to produce a lot of cost synergies, right? Like, a lot of your savings go back to the government. Just how do you sort of think about that process?

Yes. So we -- strategy's a place where we come from is more than just a simple comment. It really is about we serve 5 markets in the federal government, it's a $250 billion addressable market. So we're sort of good. I always tell people, "We've got plenty of room to grow there, don't bring me some commercial opportunity that's going to disrupt or distract the entire company." Like, it's how we hire, how we retain employees, how we go to the market sort of focused on what we're really, really good at. But in a much broader scale, we are looking at companies that bring us a capability or a customer relationship on the M&A side. They have to do those 2. The third thing is they have to have a pretty good culture that sort of matches with us. So a lot of the acquisitions we do at times are called tuck-ins, but they're really just filling in capability and customer gaps that allow us to get long-term growth, okay? So you're absolutely right. You can do a cost synergy, 50% of your business is cost-plus. 60% of those savings go back to the government. Now I'd like the other 40%, right? I like the 100% I get in every dollar from fixed-price work that we do. But it's the revenue synergy piece that we focus so much on because that's what drives long-term growth, right? There's always been a good balance of organic and inorganic growth. I'll live through the 1 year that is inorganic and everybody in the world will remind me, hey, 10 bps of your growth is actually inorganic. Thanks, good to hear. We're all on the same page. But I'm really looking to try to drive new capabilities to get our addressable market even larger. Every time I bring a capability in, it's not just getting ourselves $100 million of additional revenue, it's really -- if I took that capability and put it with what we have, how I move from expertise to tech. Tech comes 300, 500 basis points better dollar-for-dollar, pound-for-pound worth of margin. So how do I take an expertise job to get a customer to provide -- to buy that as tech? Every time I do that, my customer wins because they're going to pay less. So the price to our customers is going to be less. But our profit dollars are going to be more. And I always tell customers you won't complain about how less you're going to spend with me as long as you don't complain about how much more money I'm going to make. If we can just look at value on both sides. And I focused on the 2 wins we have, even though on the large intel job, there's talk about where there's lower price. We should never go to the fact lower price meant it was a price dive. Our model is completely different. So if you'd like to bid lower and win and have better margins that's sort of the coin of the realm, right? And I think that that's where we want to always be at, and that's really showed its way in the last 2 wins.

Great. Could you talk about international? It's never been a huge focus, it's a small part of your business. But you have U.K. exposure. I think we've heard from a lot of companies yesterday and today just strong international demand in Europe. Any chance that could grow? Or do you still think U.S. will be the focus?

Yes. So we have like a $200 million business in the U.K. we have for 40-some years. That's a really good mix between supporting the U.K. Ministry of Defense there and their intelligence world. And the other half of it is sort of a Software-as-a-Service business. And it's been growing fantastically year-over-year. It's nice margins. And it's sort of -- it's pretty much self-contained. I think where we go next is, if you look at our mission tech business, if you look at the fact that the world is a dangerous place, then how do we take some of our tech and how do we get that into other countries. We already deliver to the Five Eyes countries today on a very small scale. But I think you have to look at the eastern flank, you got to look at Poland and Latvia and the like given some of the current bad areas around the globe today. Those countries are raising their defense budgets. Clearly, we like a piece of that on the mission tech piece side of it. And we're starting to put some of the infrastructure in place to be able to reach that. Some of that may or may not be through NATO because it's working there once and then selling on both direct foreign commercial and FMS work. So I wouldn't tell you we're going to make a large foray into that place. But the fact that we have exquisite tech that is top of class, the fact that we delivered to some of the U.S. agency, that's creating that push into other countries. So I think more to follow there.

Got it. Any questions from the audience? Could you touch on the Photonics business, part of the business you acquired, just upcoming milestones there. How big do you think that could be?

Yes. So we just launched 16 optical terminals on a SpaceX launch on Monday and everything made it to the space. So first do no harm, let's get it up there. That's perfect. But it's just a fantastic area, and it really is a great example across the company of strategy's a place where we come from. About 2017, we looked at space. I said, "What should we do in space?" We're providing people to space. We're doing ground stations. We're processing a lot of satellite data coming down. So in this [ significant role ], we're a national asset that actually taken signals from space and turning that into -- this is a rocket launcher. This is a cellphone. This is where it is. This is what it is. Here's how you can counter that. We said, "But where is the next funding stream?" Well, cyber, right? It used to be for so many decades U.S. owned space. And now, frankly, we don't. And it's very risky and it's able to be jammed. And if you've got satellite-to-satellite links, and you got ground-to-satellite links, those RF, I can jam those. Satellites aren't going to help you any. So we did a rather large acquisition in 2019 called LGS. They had a bespoke photonics business. And bespoke is, think of building these optical terminals that take light and they put a frequency in it, waveform, and you can transmit data. And it's nearly impossible to jam. But it's really hard to do. So picture 2 satellites, 22,000 miles up in the air, traveling at 3,000 or 4,000 miles an hour, no matter where they're spinning, you got to be able to keep this link open. It's really hard to do. And they'd spent about 10 to 15 years doing the software side of that. So now we picked up SA Photonics, which is the higher rate production, slightly less capable but more modular solutions. So it's my perfect example of peanut butter and chocolate, right? I want to put those 2 together and say, "Now how do we make our optical terminals be the #1?" Well, first of all, we got about a 15-year head start on the software to make these links connect. We did the hard stuff first. So as we go to more higher rate production or less stressful missions and then into the commercial LEO constellation market, they have to be less reliable but better cost point. And so we've got both ends of those markets covered. We are the leading U.S. provider, and that's out of a list of about 2. And I like our odds there because our belief is under the national security missions, which is we're delivering to today, I don't see the U.S. government in these very high and national security missions picking any other international vendor that they're going to want those links being covered by a U.S. company. So already launched, like the odds, highly software, large barrier to entry, own all the intellectual property and launching things today with a great sign-up list, a great list of prime satellite providers who have selected us as their optical terminal providers. So more to come there. But that is a perfect example of a strategy. Do a couple of acquisitions, bring in some internal investments, own the intellectual property, go after a really deep stream of funding. So that drives a mid-single-digit top line growth company, ever increasing margins and allows us to get into stickier and stickier work and more depth and shape.

Got it. No, that's helpful. Could you -- you touched on free cash flow. So there's been some very big moving pieces this year and last year. As we move in -- so you guys, I think, will give guidance in August as we get into next year, I think, sort of look a little bit more steady state.

Yes. So if you look at our last -- I think it was our last earnings call, you'll find a chart in there that tries to normalize free cash flow for the company. There's actually a lot of good stuff in there. Trust me, it has been sort of bumpy but 3 different, major pieces. One was CARES Act. So in our payroll taxes, savings 2 years and then pay it off 2 years later, so that sort of caused some bumpiness. We did a tax asset -- tax methodology change that created a lot of perturbations. Short story to that, we could restate taxes, and we have a large gain, and we have a couple of years we had to pay out. So there's a lot of messy moving parts. . And then the third is Section 174, right, the R&D tax credit that did not continue. So that keeps getting less and less as that 5-year depreciation window gets built into our annual plan. Long story short, you should see us in FY '24, as we'll talk about August getting back to more of the $0.5 billion of free cash flow each year as we were before, some of these changes were out there, we'll give more specific data and more specific details beginning of August. But that helps normalize it. So a lot of great tailwinds coming out in '23, getting us to a much more normal lay down. And I probably just confused you more, but it's going from a messier to clearer.

Yes. No, it seems like it will be a lot simpler into next year. Could you talk about artificial intelligence? Obviously, a big topic, how the government might deploy, how you might be situated to be part of that.

Huge. Yes. I mean we sort of can't spell CACI without A and I, right? But look, this is where I see -- a couple of angles here. One is we're predominantly a national security provider. So the fact we can use AI to find the cheapest blouse in the mall is really cool. But on the national security side, it's between life and death. And it will be a long time before we take a machine and connect it to something that's actually going to create some kind of effect. Having said that, we've been in the AI business, and you can put -- under AI, you can put machine learning, you can put RPA, you can put computer vision. We've been at it for 20-or-so years. And usually, the next question is how much AI does the company have? And tough for me to count. Most of our tech work has some piece of AI in it. But a real-life example that's worth hundreds of millions of dollars is on the computer vision side, we've been doing it for a long number of years. If I'm looking at overhead intel information and I've got analysts who have to look at every single frame of data and start to circle things and mark up things, this is a missile silo, this is the top of a Christmas tree, this is a moving -- whatever there is, we, about 15 to 20 years back said, "Can we take all the stuff that we could process?" About 10% to 12% of all the overhead asset imagery that comes down actually can get used because you just can't keep that many eyeballs on all this information. And our driving force over the last 15 to 20 years was, "Let me run it through machines, and let me teach and train it." Who knew that, that was going to be called machine learning, right? We just said, "Hey, let a computer process it." So we've got a pretty big head start there, won 2 large NGA contracts around computer vision, bringing that technology in. So I would say from that side of AI, our customer uptake, where it will impact the defense world and the intelligence world, is to what level can it be trusted and where can I use it, how can I get more efficiencies from it. Beyond that, in the space that we serve, there's a lot of hype and a lot of things that it could actually do. Can ChatGPT write software? We're already doing low-code, no-code work today where software is our superpower. We do it in an agile manner. We get more lines of code written per person today. Could another turn of AI make that more efficient? That's great. But oddly enough, it actually plays into the methodology we had when we restructured the company going forward, which was let's use technology so we can change the face of expertise. Let's stop customers tell me I need 200 people to write software for a ground station. How about you just tell me I need a ground station built. And what if I deliver 30 people, I do the rest of that with low-code, no-code software, does that work? And it sort of ties into that model of tech drives better outcomes on the expertise side, and expertise supports tech. So AI is another tech. We've been doing it for a really long time. We'll look at where this generative AI goes next, but there's already 4 forms of AI out there. They've been useful, and we make great use of them. I think it will only help to continue to grow our business.

No, that's great. Maybe last one because we're almost out of time. But could you remind us of sort of what share of your business is actually kind of physical products versus services? And how you sort of think about those 2 businesses being together?

Yes. When we embarked on the next 10, 15 years of this company, if I use expertise and tech, 80% of our revenue came from expertise and 20% came from technology. After 7 short years, we're pretty much at 50-50, expertise and the tech side. Our margins have gone to just under 8% EBITDA margins to just under 11% in 7 years. Not 20 or 30, but in 7. It has really revectored where our company goes. On the technology side, we do have products. We have software-definable products. A great example of that is today, in any soft warriors' rucksack, there's a device that finds signals. There's a device that says now that I found it, where is it. There's a device that says now that I heard one and I found one, how do I -- what do I have to do with it. We've taken all that and put it into something the size of an iPhone and wrote apps for it. So software-definable everything. We're not the company that's going to go against some major providers and say I deliver 400,000 units of x. I'm not looking to do that. You can put on any hardware you want, in fact, you can buy the box or the handset from someone else. Just buy the software that allows me to hear a signal, find it, geolocate it and then, on the cyber side, give the operator an opportunity, do I attack that device, do I put a cyber payload on it. And there's a number of things you can do with that. And at the actual product side, maybe a few hundred million dollars of our entire mission tech area, Matt, is on that side. But what's most important is all of the tech that we're out there delivering so differentiates us within this marketplace. And it actually allows our company to focus on good revenue growth and ever-increasing margins, making sure that we're relevant to the fight, making sure the programs that we win in this sector are much longer term, therefore, I can spend less money winning the work that's in my current book of business today, take that money and go out and generate new awards that are even longer term. And that's the growth cycle we're on, which is why it's really unique in the sector. If we get the sector to value both free cash flow per share and we get them to value top and bottom line growth, I'm absolutely convinced that we're the best company out there.

That's great. Maybe it's a good place to end on. So yes, John, thanks a lot for the time.

Yes. Thanks so much, Matt. Appreciate it. Thanks, everybody.