CACI International Inc (CACI) Earnings Call Transcript & Summary

All right. I think we're going to go and kick off. I'm Bert Subin, senior research analyst covering aerospace defense at Stifel. Today, we have the pleasure speaking with John Mengucci from CACI. John, it's been -- I guess, we've been doing this probably the fourth year in a row we are doing it together.

Yes.

And this year, I think we're coming into it with -- like we just recently put out an assessment of all of the major contract wins across the contractors. And I think we needed like 2 pages to get all of your $100 million-plus contracts on there.

So maybe if we can start, just maybe a quick overview of the company, what you're doing, but maybe what you're doing that's changing because you've seen some pretty serious momentum in the last 6 to 12 months on the contracts side.

Yes. So government services company, but when you're done with the next half hour, you realize it doesn't sound like a local government services company. We deliver expertise and technology across the federal government. We'll be 63 years old this July. Fiscal year is July to June. We've built out a pretty strong technology business over the last 10 years. 55% of our business is technology and 45% is expertise, and there's inextricable connection between those two parts of our business. We strongly believe that the expertise part of our business drives the technology that our complete customer set needs. And then we deliver technology into expertise programs, basically get people to buy less hours and more outcomes. And if we're able to do that, that helps you drive a really growing business, also does miraculous things for margins. It was our belief about 10 years back that with better buying power and sequestration that the government services world's selling hours was going to be hit harder and steeper and sooner. And why wouldn't it be, right? If you ask me how much 100 people cost, and every time I asked you, it got lower, you'd probably never stop asking. That's what the recompete cycle is. Best of vicious spiral that some companies still find themselves in today from 2012 is that they've made a race to have the lowest rates, but you can never keep up with that game because the customer will always buy something that's less if it's just a person. Because those people are fungible across the entire federal government, and they'll move around. So what's made us very successful in what we're now getting off a lot of eyes on is we know how to win business. We know how to win profitable business. We know how to win a lot of profitable business. So how do we do that? We serve 7 markets across the federal government. So those are things that we're really good at. It's things we really will subcontract. Because my philosophy, you never subcontract, which is core to you. So don't ever create another competitor by giving some of your work away. So let's make certain everything that we bid on, we can perform on, whether that's an expertise job or whether that's a technology job. We built a business development ethos. It's more than just the current business development sales team we have today, it's the methodology about how you go about driving growth in the company. We are a strategic-based company. Strategy is a place where we come from. We talked about research in 7 markets. We bid within those 7 markets. There's no great 8th market. There's no great bluebird opportunity that's going to come in. And hey, we just threw a couple of million dollars at that. We go bid that one, then the world's going to be better. World's going to be horrifically worse. So we have a relentless and a maniacal focus on staying within what is core to us. We also have a large bench of solution architects, who know how to write about what it is that we do. So we put great training in place, with a really strong business development and sales team. And then we invest ahead of customer need. And that may be new for some, but it's not new for us. We invest ahead of customer need. We can -- we know that our customer is going to want to go somewhere else in the next few years. We'll be the company in there on our nickel, talking to them about the art of the possible. Because what happens in the federal government space is the government buys what they know about. They rarely will take that risky move, but risky isn't really risk if you teach them about it. So we work with customers across our 7 markets, whether there's electromagnetic spectrum, enterprise IT, digital application, missile support -- mission support space, cyber. So they're essentially art of the possible. And I don't think it happens if you do that for an 18-month, 24-month period. Customers built a relationship with them. So show that you have the technology to address their needs, to write the RFP that looks more like what you've talked to them in the last 2 years. Some say that's not fair. I say it's a great investment. And then we'll bid on that job, and we will win that job. So our book-to-bill for a long period of time, longer than I can remember, trailing 12 months is 1.5. We'll have some quarters that are 3, we'll have some quarters that are 1. [ Can't remember being ] below 1 in a really long time. Then you start adding that up. And we also bid less and win more. So only bid on what you can bid responsibly and only bid what you can consume. We have a talent pool that am sure we'll talk about. So it's a whole methodology that really comes down to just bid what's core, invest ahead of customer need, build that preference towards you and then give them the right price that matches that. And over year-over-year, you do that and you sort of make a business that was a large government services company into a much larger expertise in tech company that rivals some of the primes. So hopefully, we'll talk about that, too.

Sure. So maybe if we distill that down in some areas. You've made that investment over the last decade. I mean it's been counter-UAS. It's been cyber. It's been dark web. It's been CSfC. It's been electronic warfare signals intelligence. And there's been some AI components to all of that. I think that really sort of showed up when you want Spectral, at least, in terms of here's a greater-than-$1 billion contract, where you're being sort of tasked on something that you typically think of a prime in that seat. Can you maybe give us sort of an assessment of what Spectral meant to CACI? Do you see other awards like that out there? And how important has that been for sort of the pace of what you're doing in EW?

Yes. So the program that we're first talking about is Spectral. It is the below-detect plate EW SIGINT decision system for all Navy surface ships. You would, in the last 20 years, associate that job with large aerospace and defense primes. You would associate that with a large hardware solution and very little software, hopefully none, if possible. We'd also associate that with [indiscernible], which means if you want to make an upgrade to it, you know who you have to call. We showed art of the possible for about 3 years, in this case, to the Navy about what art of the possible was. When you show art of the possibility, you got to be responsible. I've been in national security space for 41 years, so I know what responsible is. Responsible means that this nation is going to come under attack, either here or abroad, in a manner that we've never seen. And if you think about electromagnetic spectrum, we invested there first. Because electromagnetic spectrum is everything in the RF. Every signal comes from every device you've ever had that has a battery or a power cord to it. Okay. Image signals. So can we be the national asset that knows how to collect more than everybody else, faster than everybody else can? And then can we not only realize there's something there? Can we find it? Can we fix it? Can we finish it? Can we do BDA, even though you don't hear something go boom? Can we take it out nonkinetic -- kinetically? And more importantly, in the Navy's case, can we give the operator courses of action? So instead of looking at a scope and trying to figure out what this RF pattern means, the system uses AI, machine learning, as all of our systems have for a long number of years, that says, "This looks most closely to these 3 signals, and here's 3 courses of actions you can go take." And when a customer gets to see that for 36 months straight, they actually start to believe that what they were told the last 20 years probably wasn't really valid. And it's not that the government doesn't know how to buy software, they're afraid to buy it because nobody sells them the software solution. Because a hardware solution is where a hardware vendor makes real dollars. You sell hardware. Nothing gets any of those companies I used to work for, and one, they're phenomenal companies. I just have always believed that the mission packages to do the actual mission on all those platforms should be done in a software. Why is that? Another level of responsibility is because the threat is going to change faster than you can get that ship to shore. So you want to be in the middle of the Red Sea and you want to say, "I wish I had that counter-UAS thing. Let's get the ship, let's turn around. I'd like to shore, wait a month and go back out there again. Wrong. Let's wait 24 hours and get the latest update. And the Navy believed in that, and they hit the I believe button. So against a majority of the other aerospace defense companies, we were selected as the prime contractor. So why is that huge for us? It was a proof point to the company. The proof point to the company is that any company can hire really smart people from the best schools. It's a proof point that anybody can go into a hardware-dominated world and deliver software and win hands down. It was a proof point that other prime contractors decided to take their prime position out and join a government services only because the geeks code tells you guys, that's what we're called, and actually allow them to align with us. So we have 3 Tier 1 clients who are subs to us today delivering the next version of Spectral. That will then be repeated because, along the way, you have to believe we went to the Air Force, too, and to the Army and said, "We had this kind of system. You have signals, too. How do we make this work for you?" Software is reusable. And as long as you do in an open architecture manner, it was another proof point that said you can make money delivering an open architecture solution. Why exactly? That's what your customer wants. If your customer wants, they'll help meet you there. They'll help with financials. They'll help with margins. They'll help with increased scope because they are going to get a much better and better value for their dollars. And we measure against what the company was, we would have essentially provided people to go sit on the scope. I wanted to deliver what the scope used to do. So it was that proof point internal for, I think, to a lot of the prime contractors out there that I guess we had to be taken for real. One will tell if it was too late or not. I think it's -- that ship's already left, no pun intended, but anyways.

In terms of maybe like what -- just trying to assess like what changed? Because all of a sudden, I mean, you've been investing in this for a while. This is not an overnight thing. You talk about the software as long as I've known you. And it seemed like, maybe with EITaaS, which, I guess, would have been like announced in '22 and sort of out of by '23. That sort of started this wave. So it was EITaaS. There was an NSA award. There was additional work on your screening contract.

Network mods.

That of Spectral, network modernization, and it all sort of started to flow after that. Is that coincidental? Is there something that happened? Was it better funding environment? Like what changed to take the company from 3% growth to 11%?

Yes. So once you have a customer base that believes in that model, you start to be introduced to other potential programs that are out there. Again, that proof point internally was we know how to win a better-than-$1 billion job not delivering hours. And when you do that to a sales and a business development team, they start to hunt differently, almost immediately. They start to hunt things that are larger. I always say you can't feed an elephant a peanut at a time. But with a size company, you need to be fed with much larger jobs that are longer term. From an investor point of view, what changed and we explained to everybody in the company, how an investor sees us, frankly, okay? And that's around that point of we wanted a very transparent backlog that would build, and we can share the information with you as we continue to grow. And you can understand why that backlog is highly relevant to the potential growth coming up. Expertise jobs, jobs where you deliver hours, those have a very different ramp-up curve. Those start immediately. If it's a takeaway from someone else, it's a badge flip. You can go from 0 to $200 million in revenue rather than -- or quickly to $200 million-a-year job. You're just putting last year's people in there but with your badge on it. But that sort of the growth element of that ends, and you just get sustained revenue. But technology program starts up slower. You've got designs, you've got customer back and forth, then you finally get to your first article, then you deliver it. And it really was more about we have finally hit our stride in over a 3-year period. Investing ahead of customer need in our 7 markets are going to drive multibillion-dollar jobs. So you're right, we've had EITaaS, which is a technology job across the entire United States Air Force to consolidate that work, consolidate help desk, bringing in automation, basically return the air person, the airmen or the air woman back to doing their job and not modernizing networks and keeping things up. And our network modernization business was another one. A lot of funding came around. We weren't there by accident. We were there because a number of years ago, we said, strategically, we want to be involved in network modernization. How do we get involved in that? Let's do the right acquisitions. We're a highly acquisitive company. Let's get the right capabilities and customers together, and let's go out there and show our customer the art of the possible. As we got larger, we're able to do more of those invest ahead of customer needs, so we don't disrupt margins, and therefore, we're going after a higher-margin business. And the entire look of this company has changed, and we're just in the early innings of that.

Where are we in the life cycle? I mean if we think about EITaaS and some of these other major wins, some of them, I think the NSA one is more or less fully ramped, and EITaaS is certainly still early days. It sounds like Spectral is still early days. Like how long does that ramp process? Does that get you through '25? Is that going into '26? Or is it sort of, by then, you're thinking about the next generation of jobs?

Yes. I mean, what's nice is we'll go into our fiscal '25, which starts July 1. We're working on the fiscal year '26 captures now. The '25 captures are already pretty much bid. So we're waiting. That's what a company understands what we're going to bid on. We get there early, get those things in the can, wait for those to award. On the large Intel expertise program, that program start up in '24. So most of the growth you would have seen in '24, now you'll see a rather large sustained run rate going forward. EITaaS, which is a $7 billion Air Force job over 10 years, we'll really start to see that ramp in '25. Spectral job will be in the design phase still as we get towards the middle of '25. So you'll see a little bit of that '25, rest of that will be '26 and beyond. The network modernization jobs, the $1.3 billion DIA job and a recompete to do the majority of the IT infrastructure for AFRICOM and EUCOM that want to start up in the middle of '25. So they're all starting to stack up and start to drive growth as we go forward.

What's the upper limit on growth? And I asked because I think you did tad -- just over 10% organic. I think the guide would imply a little more than that in the fiscal fourth quarter. I now know you're less reliant on head count, but there's still an element to that in your expertise business. I mean is there -- if you wanted to grow more, just given the success you've had, I mean, is that feasible?

We also want to grow faster.

Yes.

Yes, we've done a pretty good job at understanding talent. We like to talk about people. We like to talk about -- obviously, talk about people, we like to talk about talent because it really is what we're looking for. How do we stay ahead of that hiring curve, right? Look, we have 3 programs that really drive how our talent acquisitions work. One, it's a pretty unique program. It's a referral program. It's great people and other great people. 47% of last year's openings came from a referral. That means I can do it in a much more cost-effective manner. And the other Lucky Strike extra there is that if you referred somebody, you don't think about leaving. And when you just referred, you stay longer, not because it's such a horrid place. It's a phenomenal place, and the culture is awesome. But it does let people focus on what they really do enjoy. And some of those Friday bumps don't really hurt as it's been. So that referral program works out extremely well. We have a 300% in an internship program. Again, any company can hire great talent from great schools. We like to drive at least 80% of those to full-time hires. So we are a company that needs a lot of clearances, whether they're public trust, all the way up through SAP. And we actually look to get students going back to school, their junior year, with at least a secret clearance. They get to like school, they're senior with an offer from us. So I wish I had that opportunity before my senior year, not after. And so that also gets word of mouth as well. So that primes the pump at our 8 to 10 top schools. So that's another source of folks. And then about 20% of our openings come from people who work for the company today. And you say, "Wait, they already work for you." Yes, but they -- in our company, we have a program called #MakingMoves, which means if you're with a job or with a customer for a few years, you want to do something different, you're adult leader. You're the second adult. The potential hiring manager said the company is 1/3 adult. You put them on a room and you say, so and so wants to leave the job they're doing and go do something else. And the way I'd like to explain it to leaders is you have 2 choices. At the end of that, we'll either have 1 opening or we'll have 2. Because we, as people, are really stubborn. If you want to go do something different, you're going to go do something different. I just want you to do something different in my company. So about 20% of the openings we have today get filled from somebody else, and that gives us additional time to go backfill those people. Those 3 elements allow us to find world-class talent. Even when the tech boom was high and salaries were up, and now the tech boom busted, it's a little easier to get those folks. And from a cost point of view, a large amount of our work is cost plus. Our customers want us to hire the best and the brightest. So those salary differences people think are margin squeezers, those are actually -- it's not the way I'd like to grow revenue, but we will pay for the right talent given that the market rate of -- and sharing computer science folks is up.

So it doesn't sound like necessarily you think squeezed at that side. I mean, I guess, the reason I asked is the funding environment over the last 6 weeks has certainly gotten better. In the first quarter, you had O&M outlays flattish. But then you had the budget appropriated in March, and then you had supplemental spending package this past April. So presumably, the funding environment should be pretty strong through at least September. And so if you're thinking about the potential to, I guess, go after potentially additional on-contract growth, I mean, one, do you think that opportunity exists in this funding environment? And two, it sounds like you think you could staff it as needed?

Yes. Let me unpack that quickly. On the growth side, look, as part of a CR budget, there is O&M funds that keep getting pushed forward until they finally have to obligate those. The government can move those from 1-year money to 2-year money, or they can spend it. We're always around the sink, around the coffee pot looking for additional dollars. But that's something we've done every year. So I don't see a large bump there, but it is how we do get additional O&M spending that we may not, not have gotten. The fact that we were in a CR, I think -- I've been in business for 41 years. I think 39 in my years, I've been a professional. We've been under a continuing resolution of some sort. So we all sort of know how to operate under that. And for outlays, other than a single quarter when the contracting workforce in the government was depleted just after COVID, we don't see anything different in outlays or funding or spending or anything at all. It's just -- we believe we're in the right markets. Still, we always have strong deep funding streams and plenty of opportunities for us to go after.

Maybe separating it out, I think something that's unique about you, at least, in the public world, there's one that's now private, is your exposure to intelligent spending. I think people would agree that intelligence is going to continue to get funded at a pretty healthy rate. Can you walk us through a little bit maybe what you're doing on that side, the least that you can talk about? How much of that flows into the technology side? How much flows into the expertise side?

Yes, a lot of it flows into the technology side because it really defines itself in the electromagnetic spectrum camp. So for all of you who have been tracking what's going on, the atrocities in The Ukraine and the Israeli-Hamas conflict and other nations getting involved in that, who's launching drones. Everybody's watched the nightly news, so we can talk about that. We're involved in a lot of not the launching but -- and a lot of the work that goes towards finding them. And that market is only going to get larger. That is electromagnetic spectrum. We hear about drones, it's electromagnetic spectrum. When you hear about taking $1,000 drone out with the $2 million missile, we're working through how non-kinetic works just as well as kinetic. So guess what, I can find your signal no matter what signal that is. And we can find a way to normalize that signal. We can find a way to cause whatever it is to not go to where it is, whether it's a large-scale munition or it's a simple $1,000 drone, then that's a better economic kill ratio. So we're working that a lot, and we added our sweet spot. We've been doing counter-UAS for a long time. I never say world-class. I had a boss once that said somebody else has to call you world-class. But we're pretty d*** and actually, finding signals, understanding how you can handle those, so I would expect that to get additional funding as we go forward. And the world's a dangerous place. You can like that or not. But the fact is -- the fact is, it is a really dangerous place. And the more you know it, the more you see each day in the intelligence community, and a lot across DoD, there's a lot of new threats that are out there. And having absolute control and command of how jamming works, how electromagnetic spectrum works is a war-fighting advantage for this nation to play it right. And so we're not by there by accident. Our growth and the market trend are intentional. So we're not lucky, we're just good. And we actually planned where the market was going to grow and faced that. Everything that you all see new has a device. It's got a quarter of a battery. It all emits a signal. Even when you think you're quiet, you're not quiet. So there's always something being put out there that we'll be able to find.

Maybe tying this back to some of the tech you invested in. You mentioned the network security jobs. I think that part of that came from some -- an acquisition you did in the CSfC side. Maybe how did that migrate into that arena? And how does all of this tie into cyber? Because I feel like people bring up cyber a lot, and we've been talking about it for a while. And it's grown a lot over the last decade. And so maybe where do you think we are in that life cycle? And where does network security, well, sit?

Yes. Let me try to tie that all into one bundle. When you hear the government want to upgrade networks, that's usually a signal for potentially vulnerable to cyber attacks, right? So there's no secret in that. You put those 2 dots together. When you hear network modernization, you don't hear, "Let's do something cool." You're actually hearing that, "I have to rearchitect my network because it is more prone to cyber threats." Because, again, those threats move faster. It's not in the old days. And when I started in this marketplace, you had a threat, you put an ACAT 1 program in place. You gave one company $15 billion. You waited 8 years. They came up with a solution. It was great. Now you've got people changing tactics every 60 seconds. So how do you address that? So we went after network modernization because we're an acquisitive company. We wanted to ensure that we could rearchitect networks that could handle all [indiscernible] classification of data. But what we didn't think the government was going far enough funding, they didn't look at the last mile or the last inch. So I can build the network up, but you have to connect to a network with something. You all have laptops and notebooks out. That has to connect in. And if that's got all different types of data, how do make sure you only see information that you should see and not that anybody else can see. There were 2 solutions to that. There's a hardware solution, which is out in the market today. There's our software solution, which is called Archon. We picked that up in an acquisition about 3 years back. We gave them additional funding. So they have a software solution. So if you come into a government network, the software recognizes you, it knows who you are. And the software allows the network lead to go manage what you can see and not see, and also turn it on and turn it off. You may take your laptop to a place you shouldn't be looking at top secret data. So you won't have the ability to do that. We believe the right holistic solution for the nation was to provide a [indiscernible] or two from a network core, all the way to the end device, and then that is the way you upgrade the networks. We then took that into some customers. We won super mod in Chiang Mai, which are both large-scale Army network modernization jobs. We won the DIA network job. We continue to win more. So that's how we look at a marketplace and see if we're going to want to own that marketplace, make sure we got all their technologies and let's make sure we show customers art of the possible. And then go out there and solve or even over solve that so that a 2-year program becomes a 12-year program, to make certain that we're there and a majority of our solutions are software. Software is our superpower. That's something that we formed our entire company around on the technology side. It has to be software-defined in some manner because software is the only thing that can change at the speed of a threat.

So I want to get to the financials. But maybe before we do that, we talked about network security. We talked about cyber. We talked about EW. And the thing we haven't talked about is photonics. And I know that's a bet that you guys have made, and it seems to be getting to a position where maybe getting through sort of the latter innings on investment and getting closer to where production could start to spool up and that could certainly be a tailwind for the company. I guess, firstly, if you had to rank these things, EW, SIGINT, photonics, network security, cyber, like how are you thinking about that? Are they all sort of similar? Is there one that's sort of ahead? Is EW winning? And then two, what should we be watching on the photonics side? Could that be meaningful? Or is that still years out?

So they all have a growth rate, oddly, it is like 0.1% equal to the other ones. So they're all going to grow exactly the same amount. We have guidance coming out in August, so I'm trying to be a little bit hidden. Let's see, optical comms, that's our play in space. We looked to the space market in 2018. I believe that the government is going to spend much more in space. We all knew that. We all read about that. We didn't predict space force, but we did predict they were going to actually spend more in space. . And we heard about was resiliency, which is, again, cyber. We don't own the last frontier. We don't own space anymore. A lot of nation's own space. And we watched as the way to solve a space resiliency issue or satellite protection was to launch more satellites against a satellite somebody else launched. What if we got on RF and went to optics? Then we can stop launching satellites to stop somebody else from jamming RF. We could go to optics, and we can move data from ground to satellite, between satellites and satellites down. It wasn't my idea. It actually was the government's idea, and we were just quick to pivot. We're an acquisitive company, so we had to buy capabilities that got us into space. We bought LGS, which we actually went after because it understands how a cellular network operates [indiscernible] to signals. So if you want to use a cellular network and hide in the cellular network, how is it that we can find you even though you're doing your best to hide? But they had enough small bespoke photonics business that spent a couple of decades of investments on all the software and the algorithms on how do you make 2 lasers who are pushing data connect. No matter how fast you're going where and how much you're spending, how do I hold that link together? SA Photonics was an acquisition in the middle of '21 that we bought as a dilutive acquisition. Wicked, patient investors. First, be transparent. We didn't buy it at the hype of the curve. We bought it down in the bottom of the curve. But they knew -- they came from the wireless world. So how do you build simple things cheaper and add volume if they're expendable? What, you're going to put satellites up in LEO? How long does a LEO satellite last? About 3 years. They're going to continually to replace those. So how do you take -- I'd like to say peanut butter and chocolate. How do you put that thing together and actually build optical terminal at the right price point that has exquisite algorithms in it and software to make sure that they can do its job? So we're very excited by that. We're in about the eighth inning of investment. We're in the first inning of development. We have a respectable backlog today. We're a merchant supplier in this market. So any of the satellite builders out there, the majority of them, if not all of them, we're a sub to them, providing those terminals. And it's a 5- to 10-year burgeoning market. And if you look at Kuiper and other commercial constellations being launched, 800 to 1,000 satellites that are going to be replaced every 3 years, I liked those market dynamics than I liked others. So electromagnetic spectrum, first; optic, second; network modernization, third, if I had to actually pick an order.

So maybe wrapping this all up, I think if we go back, you used to talk about ever-increasing margins. And you still talk about that, but I think the shift has been more return on invested capital, more free cash flow per share. As we think further out, like certainly, some of these technology investments are still early innings. Is it not reasonable to think over a long enough period of time that it still is ever-increasing margins, and that's just one of the tools that gets you to free cash growth?

Yes. I think there's a lot of tools to get us to free cash [ growth ], right? There's higher -- years of higher top line growth. There's margins that move 20, 30 bps. If I'm growing at 10%, my margins are high 10s. If I grow at 6%, my margins are slightly higher because I have a richer content of sales during that year, which have higher gross margin products in it. Then those sort of average out. So we're not so myopically focused on, I got to have top line growth of x, and I got to be growing margins. We'll always grow margins because we always have grown margins. And the quality of our revenue is going to continue to grow as the shift of our business goes from -- a lot of which is selling expertise, which a lot of times is a commodity. It's just where a price point you're willing to sell them before versus really exquisite technology in a manner we can differentiate from the primes. The key thing here is to make sure that we're competing with them. We can differentiate from them because that allows us to continue to grow mission packages instead of building outer mod line things. I want to build planes. I want to build satellites. And I want to build ships. I want to build tanks. I want build Strykers. I have people to build those all day long. Just when you want to do something with them, please come to us, and let it be software-based and let us be able to make changes on the fly. Combined, based on the contract type, over the long term, should we be able to continue to grow margins? Absolutely so. Okay. It's just not every quarter. And sometimes we're going to have a few flat spots as we continue to invest and then step off. We will always drive margins, but I will not do it at the expense of short-arming investments. That's the short term, this quarter number game. Been around for 62 years, 63rd year starting, that long-term growth model works. Just plan for the future and continue to step your business forward. So when I came to CACI, we slide to $58.21. So we got a h*** lot more growth.

Just maybe last question. You've done something like, I guess, now it's 91 deals in your history. You talked about a lot of the capabilities you now have. Is there anything you feel like missing? Or do you think it's just a matter of you're in a good position from an organic standpoint and you build out capabilities?

Yes. So our capital deployment strategy is really focused on 2 things, flexible and opportunistic. There're going to be times -- and we were previously a very highly M&A house. But I don't say balanced because it should never be balanced because it should sort of ebb and flow with where the market takes you. So we've done a lot of share buybacks recently. On the M&A front, the valuations of companies that could add great capabilities and customer relationships to us are getting more into a normalized area, where we think those are valuable assets. We're always looking at electromagnetic spectrum. It's a pretty big spectrum, right? And we're looking to fill things, network modernization, IT modernization, anything that gets us to move apps to the cloud faster. We actually have moved more applications in the Intelligence Community Cloud than the next 5 companies combined have. But there's still ways you can do it faster. Only 3% of the apps in the federal government have been moved to the cloud. So that's a nice marker out there of future growth. We can buy companies that give us those capabilities to let us be bigger and allow us to continue to grow while we're driving margins. So that's a great acquisition opportunity for us.

Well, I will leave it there, John. Thanks so much, CACI.

Thanks, Bert. Thanks, everybody.