CACI International Inc (CACI) Earnings Call Transcript & Summary

Good morning. All right. I am George Price, Senior Vice President of Investor Relations for CACI, and I'm really, really pleased to welcome you all here this morning, both everybody in the room and those who are attending the event virtually. We very much appreciate your time and your interest. So no investor event is complete without the forward-looking statements, the most exciting part of the day. So indulge me for one moment. There will, of course, be statements in our presentation 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 described in the company's most recently filed 10-Q and 10-K with the SEC. 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 presentations will include discussion of non-GAAP financial measures. These should not be considered in isolation or as a substitute to performance measures prepared in accordance with GAAP. So with that being said, we have a very fulsome day or half day here for you. You'll be hearing about our strategy, about what we do and kind of the setup for the next several years. You'll be hearing about business development, right, how we win. And we've been having great success in that area now. After we win, you'll hear about how we execute, right, because the 2 things are very important. You'll hear about the focus on talent because you can't win and you can't execute without talent. And you'll hear about the importance of software and also how do we utilize AI. Those here in person will also see exhibitions of some of our technology capabilities. That will involve a curated circuit a little bit later in the day, in the morning. You'll be divided in groups, and we'll rotate you around, and I'll be back later to talk about the logistics of how that's going to work. We'll finish off with the financial presentation and a Q&A session and some closing remarks. And then after that, we will have some lunch and the exhibitions will also continue to be open if you want to go back and take a look at something. So let me briefly introduce the CACI team here today. The top row is -- are the folks who will be making the formal presentation. So Jerry Parker, our EVP of Business Development; DeEtte Gray, our President of U.S. Operations; Angie Combs, our Chief Human Resources Officer; Glenn Kurowski, who many of you know, our CTO; of course, Jeff MacLauchlan , our CFO. The bottom row here are the folks that will be leading our technology exhibition briefings. So Jason Bales; Jason is VP and a Technology Group lead. He'll be heading the Electromagnetic Spectrum Station -- or Exhibition, excuse me. Dave Wilson, VP of Enterprise Network Solutions, will be leading our network modernization exhibit. Linda Braun, our VP of Photonics, will lead our Photonics exhibition and yours truly. We also have a number of other CACI executives I'd like to note here today who help support the event. Lorraine Corcoran, our EVP of Corporate Communications; Mike Lewis, our Chief Development Officer; Dan Walsh, Senior Vice President of Government and Industry Relations; Marcie Small, our SVP of Talent Acquisition, works closely with Angie. John Bergeron, our Senior Vice President of Spectrum Superiority. That's one of our markets. You'll be hearing more about our markets from John shortly. Dan Leckburg, who many of you probably is familiar to many of you and is now the Senior Vice President of C3i, which is another one of our markets; and my colleague and partner in Investor Relations, Jim Sullivan. So with that, I'm going to introduce John Mengucci, our President and CEO. John joined CACI in 2012 as President of U.S. Operations and COO. You remember he was appointed CEO -- President and CEO in 2019. Shortly after that, we did our first -- or our Investor Day back in 2019. John has over 3 decades of experience, both here and across other leading companies in our broader industry. Extensive community involvement, including recently being appointed the Vice Chair of the Board of Trustees that is on Clarkson and obviously, a number of industry accolades. And so with that, John, over to you.

All right. Good morning. Welcome. And thanks for those of you here in person. Thanks for taking the unusual Friday drive in. We will try to get you all out of here at a reasonable time. I think probably 3 or 3:30, I guess. But look, for those here and those out on the web, to those who are new to our story and those who could probably tell our story, welcome, and we're all very honored to be with you today. George shared a little bit about depth and breadth of the team that runs this company. And one of my personal hopes is that you're able to meet those folks today and get an even better feeling about what the leadership team here is about and the way we run this company. You're going to hear a lot of words like strategy and focus, integrity, discipline, decisiveness, performance, quality, software. You get that from a 62-year-old company, a company with a purpose, a company that's founded on character, integrity and ethics, a company that delivers expertise and technology, a company that breathes mission each and every day. And with that all, a company whose best days are still forward. So I want to talk about the objectives. I always talk -- start with the end first. So when you are all sitting down later on today and you're capturing your thoughts and you're putting ink to paper, my hope is that we've achieved these objectives. To really have a great idea about the markets we serve, the opportunities we see, the differentiation we provide and the financial goals we target. I'll talk a little bit about markets during my section. But as George mentioned, Jerry, DeEtte, Angie and Glenn are going to provide a lot of information on the opportunities that we see and how we differentiate. So Jerry is going to talk about how business development thrives on opportunities and pursuits that are, in my words, heavily curated. We're not out there just going on whatever is out there. We don't have the anything that moves strategy. We don't have the third quarter is looking like, what are we going to go out there and capture in the first quarter. It actually comes with an absolute myopic focus of what it is we're going to do going forward. And most importantly, you're going to understand how our capture process differentiates. So many of you ask me, how do you win all the time - because we're different. Everyone else is going to put the same thing in place. They're 10 years behind. And Jerry will walk you through exactly the steps that we take to ensure that we continue to drive that outstanding book-to-bill number that you all have become very accustomed to. DeEtte's then going to walk you through what it means to perform with excellence. She's going to talk about how we execute programs and how that execution starts before we win that program. Everything we do beforehand and the machine we have that ensures that we're consistently delivering. And at the end of the day, the secret sauce is making certain that in every program we have, something that we love to call on-contract growth, a lot of the inside baseball on reasons why customers keep us around a little bit longer and longer than that and ask us to do more and more for them. We're going to look at Angie's area around talent. A lot of you ask me about talent. The expert on talent, we have 2 of them in the room. Angie, Angie Combs. Angie makes certain that we have a vital and a vibrant talent, 24,000 folks. And Marcie Small is the individual who makes sure we acquire talent at the pace we absolutely need to, given our growth. Last but not least, Glenn Kurowski talking about how we differentiate in software because you all know, I said it 100 times, software is our superpower, okay? It may sound corny. It keeps everybody aligned. Everything we do in the technology space has got to be software-driven because that's what allows folks like us to meet the changing mission needs and the time lines that our customers absolutely demand. And Glenn will talk through that. I'll also talk a little bit about AI because I know that AI is top of mind with everybody's head today. At the end of the day, I hope that you'll be able to write about and talk to other investors about the fact that this is a compelling investment opportunity for you all in the room. So my dad always said that which gets measured gets worked. And so this is a quick scorecard. If we look at 2019 and before we go forward, I thought it would be useful to do just a quick review of what this company has achieved since we last met. That was 2019. I talked to some of you earlier. We had a fantastic opportunity yesterday to ring the closing bell. You'll be happy to know that I was an individual who closed the Street on March 12, 2020, if you rewind your watches and you do some searches, probably the worst day you could possibly want to bang the gavel. So we came back again to sort of wipe that slate, slate clean. But I did want to bring you back to the last time we had our Investor Day and put 5 areas there, 5 areas that you know us well for today and sort of show how we performed against each of those. We had an estimate of compound annual growth rate of our addressable market of 4%. We achieved 7%. Margins from the mid-9s to the high 10s. Cash, $2.3 billion collections, free cash flow. Win new business, book-to-bill, always going to be greater than 1, always building backlog, 1.6x. Eleven $1 billion-plus awards and programs that went into our backlog at a weighted average duration of 6 years versus 5 years ago, it was 4. Vision. Let's talk about vision. 5 statements that drive where we go and how we run this company, 24,000 people, one company, one 5-statement vision. First of all, we're going to talk about be the partner the national security customers depend upon, depend upon us each and every day. And the only way you drive dependency is through performance. We are not building search engines to find the cheapest red golf shirt at the mall. We're actually writing search engines to find people who want to do us harm and make sure that we're able to provide commanders with courses of action. And when we perform, this company, I can tell you, performs better than everyone because I talk to customers who are my customers today and my competitors' customers today. And 8 times out of 10, we're leaving offices like that with additional ideas how we can go grow scope. Differentiation and expertise and technology. That's what we look to do. If you're in this market today and you have the growth trajectory that we have been on, you have to always be pinpoint focused on differentiation because that's the difference between shaping a customer's mind, sharing with them what the art of the possible is and making certain that just not in the proposal, but all those days and years before the idea comes to what they believe they need to make sure that we've deposited a lot of really good treasure and talk about the art of the possible. Here's the threats that you face and make certain that through our expertise and our technology programs, we're always differentiating. Deliver better than fair market returns, that's what we're all here about today. We can talk about the technology we deliver. We can talk about the talent and the skill sets we have. But at the end of the day, as far as I'm concerned, for the investment community, it's our job to deliver better than fair market returns, and I believe we have. I want you to keep this in mind throughout the day as we discuss our business. You're really going to appreciate why that everything we do has its roots here. You've heard me say at least 100 times, strategy is a place we come from. It's the start to everything this company does. It's why when we get asked, hey, we heard about this, what do you think about that? We're strategically driven. We update our strategic plans for our 7 markets a couple of times a year. We look at those and we drive forward. It does handle interrupts, but doesn't handle bluebirds. Somebody coming in and saying, hey, I heard customer X has this job, somebody is not performing, we should go after it. That has no place inside of CACI. Focused, driven and decisive. So when we say strategy is a place where we come from, the focus is on key enduring priorities, those narrow deep funding streams where we leverage software to address critical national security needs. We invest ahead of customer need with differentiated capabilities. And a lot of time, that is truly just to show the customer the art of the possible. Have you thought about this? Do you know that with this type of solution, you can get to that? Did you know you can get to that many years ahead of what others are out there telling you? That's where we start to drive customer differentiation, and we start to drive customer focus where we want that to be driven. Bid less, win more. You're going to hear a lot about that today and focus on larger and longer. That's what drives an industry-leading book-to-bill quarter after quarter, year after year. That's what drives eleven $1 billion-plus awards. It's the absolute drive to be driven by strategy and make certain that, that's in the forefront in all we do. If we do all that right, the strategy supports the goal of increasing free cash flow per share and adding tremendous shareholder value. Our market strategies. Let's talk about how we build those. First off, we start with the federal government budget. We start with all of their needs. And then we move forward and think through 5 different areas. The first one is voice of the customer, right? If you really want to know what someone is thinking, it's tough to hear them when all you're doing is talking. So we're really good at listening. We're really good at asking the right questions and sitting back, putting pen to paper, understand what that customer needs and the types of budgets that they're willing to put forward because every once in a while, a customer absolutely needs this built for them, but the budget doesn't quite match that story. What waste of time if we were to go down that path? Where we believe we know what the war fighter needs best, we start building things. Customer says, I will never use that. I used to call it the IRAD museum. A lot of one-off pieces that people just absolutely believe that we could build it, the customer would eventually come. That's not a good investment model for us. So we take things like voice of the customer. Here's some outstanding quotes. They all happen to be true. A lot of them talk about velocity. Some of them talk about software. Some of them talk about you need to perform because I can't afford to have things that aren't going to perform. How many of you own an iPhone today? How many of you have 100% of your calls connect? If you're in country X and you only have one call to make to extract you and your brigade combat team, getting a busy signal, getting a no signal doesn't count. So we'll talk a little bit about -- when I get asked how about commercial companies coming into the space, as long as you don't mind mean time between failures of under 50%, it's an awesome idea, okay? Do you want to buy something that is cheap and drives even greater margins to commercial companies, I don't want to be the person on the other end of that line. There's increasing pace of change. There's a level of urgency that, frankly, in my 40-year career, I haven't seen. And -- but that's exactly where CACI is positioning to address that better than others. So back to market strategies. We look at market size. We do a capability self-assessment. We look at the competitive landscape and the financial measures, exactly what you would think we would do. When you were in business school and they talked about putting a strategy in place, these 5 bullets might be awarded something different. But Assurance Health is still about understand where you're going to go next, get the lay of the land, bring as much information in and then come up with a market strategy across our 7 markets and do it exquisitely well. It drives 4 outputs. Our pursuit pipeline, what's worth spending a dollar on to go secure. It comes with metrics. How are we doing? Making certain that as we're measuring ourselves as we always should, the best measurement of a successful strategy is to make certain you're continually measuring it. And we share that in a very transparent manner. The addressable market, $250 billion and growing, given we just closed Applied Insight, we just closed Azure Summit. That will push that market, the addressable market even greater. We'll talk about how it moves us from just software-defined devices technology into an amalgamation of that technology to make sure we can move up the technology stack. We also identify gaps, capabilities, customers and past performance. What do we do with that? We'll either invest, we'll either partner or we'll acquire. If I have a customer who wants to move their apps to the cloud, I can spend $1.2 trillion and build on my own cloud or I can partner with Amazon or my Microsoft, commodity-type folks who give you a good solution for what it is we need to go build upon. We will partner. What we won't do is partner with somebody who believes they have the same skill set as ours. We will never partner or subcontract our core. I learned a long time ago. When you subcontract what your core understanding and knowledge and value prop is, you create another competitor. So that's why we love to self-perform an awful lot of work. I've watched a lot of metrics around revenue per employee, why is your so low? I'm thinking it's not low enough. Because I can juice that number by subcontracting an awful lot of work across this company. We won't do that. We're going to preserve what we know how to do very well, and we're going to drive growth with the talent we have. Then the question is, do we invest or do we acquire? And the element we think through is time. Trust me, if we had the best ideas first before anybody else in the market who's a small to midsized company, and we could create that technology on our own, I don't know about you all, I'd rather invest in that than take hard-earned cash and do an acquisition. But sometimes, somebody else gets to the idea first, and that's outstanding for us. A differentiator in this sector is we are an incredible company that acquires other companies. We're highly acquisitive. We're very, very focused and very deterministic in that. But that gives us an avenue for us to bring capabilities, talent, customer relationships and past performance into the company quicker. So at the end of the day, we fill gaps in capabilities, customers and past performance, and we do that by partnering, investing and acquiring. The markets we serve, 7 markets where we actually have the ability to differentiate, to drive our past performance forward and understand really well the customers that operate within these 7 markets, and it clearly is not delivering across the entire federal government. Trillions of dollars in a budget, $250 billion addressable market, 7 markets, an $8.5-or-so billion company. We have plenty of room to grow in what we do really, really well. We get asked many, many times. I heard about this. Are you going to go after that? You can get through a few questions with us, tying back to one of these 7 set of markets on that slide. Chances are [ 99 and 12/9 percent ] of the time that if it doesn't fit into one of those markets, we're not doing it. And it's for a good reason because strategy is a place where we come from. From our C3I market that includes development, integration, modernization, sustainment of capabilities that enable our customers' decision-making all the way through cyber, space, enterprise IT to the spectrum superiority, which is really about providing capabilities that enable our customers to dominate operations in electromagnetic spectrum by disrupting our adversaries. And you'll hear a lot in the exhibitions outside from kilohertz to gigahertz, the capabilities to sense, make sense and take action kinetically or nonkinetically. Across these 7 markets, we really believe it allows us to focus on our investments, allows us to focus on our differentiation and it makes certainly that we're going to deliver better than most. It's an Investor Day. Also looking forward, the future of M&A. What are we going to invest in next? I'd love to tell you. So -- but I won't tell you discretely, but I will give you a few areas that sort of redefine and really build on where we have been. You'll learn after -- by the end of the day, if you don't already know about us, network modernization, electromagnetic spectrum and cyber are crucial areas for us. As crucial areas for this nation, they have a multitude of narrow deep funding stream. That's why you see us there all the time. What we're looking to do next is over the next few years, evolve ourselves to combine a number of the capabilities that are software-defined into a sensor information suite that can be packaged onto numerous platforms. That's moving up the technology stack, making certain that we can take our software-defined technology, make that with others and deliver that at a platform level, perhaps as a merchant supplier, similar to what we're doing in our optical communications terminals. And then last but certainly not least, I firmly believe that near peer Intel, narrow deep funding streams are being spent right now to make sure we really understand who our near peers are and how they operate. And that's an area that's a gap for us today. I believe that will be the source of additional funding as we go forward. Our strategic assessments tells us that's another area that we're not part of today, but it's definitely within the crosshairs of our cyber market and our C3I market. So those are the 3 areas. broad brush, large areas where we're looking to continue our outstanding string of adding capabilities, customer relationships and past performance to this company. So I want to talk about other questions that we get all the time. So I'm going to spend a little bit of time talking to you about OEM primes, government services companies and commercial. This is a discussion about us, but I can't talk about how we differentiate unless I talk about them. So here's how they're built. We can look at OEM primes that have the 6 characteristics that are written under here. For where the customers are going, some work, some frankly don't. Government services companies. The traits, some of us possess and all of us possess. Some of these work as the world moves forward and our customers buy and some of them don't. We can talk about commercial. They're nirvana of gross margins. We can talk about if a company can build shrink wrap software, they can definitely do what the government needs. If it's on a desktop, but if it's on a handheld, or in a rack, or on a card, or in a system, mobile, deployed, dropped from the C-130, set up in 35 minutes, I'm not quite sure that would be the business model I would hear from a CEO on the commercial side. So our job is to take a look and take these items in red and tell you who we've built. We've built a company that takes the best of all 3 potential competitors out there. We can throw a lot of mission knowledge in that. We can bring a lot of agility. We're software-based. Anybody can hire really smart software folks from colleges and universities across this nation. Other -- anybody in the marketplace can hire experienced professionals. And our job was to build the company that's purpose-built that helps us win, that helps us grow and it will generate increasing free cash flow per share as we move forward. How many folks remember this? I remember after we put this quad chart out, I remember other company CEOs saying, I'm not in the right quadrant. It was great to be Gartner. It was just amazing what you can do to put this quadrant out. And I appreciate all of you have followed along this journey with us. This is old school now, but it introduced you to CACI. It provided you a path or rubric, how we're going to move from strategic to tactical that we have exhaustively measured ourselves against, sometimes painfully, but we're big on transparency. Character, integrity and ethics are more than just words for us. So when we miss and we misguided ourselves, we misread a market, you hear it second. I usually hear it first. You're all going to hear it next. But this provided true north for the growth of CACI. Let's talk about new school, a rubric that's crisp, clean and now proven. Where we deliver expertise, we think about this as inputs of talent to perform under government direction and technology, outputs driven by statement of works, statements of work and specifications, each with well-understood measures of merit. Expertise, barriers to entry, different than those on the technology side. So we all have the rubric right, high is better, low worse. On the investment requirements, low is okay, medium-to-high is exciting because you don't get greater returns, you don't get greater value unless you're willing to place different bets than from where we were actually born. And our margin, lower-to-mid, mid, mid-to-high. What's great about these, both are important to grow this company forward. They are not exclusive. In fact, what really drives the growth in talking about expertise and technology is the interplay between both. You've heard me say these kind of phrases on many earnings calls. It's like putting peanut butter together with chocolate. Tastes great. It works really, really well, and you really can't separate one from the other. Expertise informing technology. Think about somebody who's forward deployed, who can provide us the night after the mission is done on technology that would best support the fight. In some police stations, they call that a clue, embedded folks coming back from their midnight mission, sending messages back to the technologists in CACI talking about here's the software-defined fill in the blank that could have made this mission work better. That happens every single week in this company. Technology-enabling expertise. Think of technology that we can introduce to our expertise customers in an effort to get more outcomes, to drive more efficiencies, to lower cost and yes, drive our margins. If we can continually provide customers with what they need, for a smaller overall price that guarantees us better margins and allows them to take their savings and buy even more, everybody wins in that model. Everybody wins. And that's what we look to do by expertise-informing technology and technology-enabling expertise. You're also here today to hear a little bit more than what we traditionally share. We're an annual operating plan company. You've heard us so many calls, so many July and so many August. We put together our annual plan. We've done it bottom, bottom, bottoms up. We've been doing that for decades, bottoms up with the best information we have for the upcoming year. We recently added a long-range plan. That comes because we now have the advantage of having much clearer and crisper visibility into our backlog, into the long-term growth of this company and making certain that we can make even better, well-informed investment decisions to understand where we're going to go next. Jeff is going to discuss the results, I want to make sure here at this Investor Day, we're rolling out the fact that we believe we have a good clear picture to the next 3 years. 5, too cloudy. Three is sort of like putting sugar in your coffee, right, provides a little bit of cloudiness. Five years from the kind of world that we sit in today is like pouring cream. I'm not quite sure we can see all the way at the bottom of the cup. So we're going to go with a 3-year long-range plan. It's been well instituted in the company over the last year, ready to be measured, ready to support us finding gaps and making sure that we can talk about our financial targets as we go forward. The value creation model, you've seen this, flexible and opportunistic capital deployment. Jeff is going to spend an awful lot of time on that. We get there via a number of levers, right? Predictable, differentiated capabilities, enduring funding streams, a BD machine that wins far more than when we don't. Profitability, investing ahead of need, investing in talent, managing our costs. Efficient capital management, which includes efficient capital management of working capital, CapEx and a capital structure. And last, flexible and opportunistic capital deployment in 1 of 3 manners: share repurchases, M&A and debt repayment. At the end of the day, this is how we are evaluated by you. This is our investment thesis, and this is our output on behalf of you. Everything you hear and see and I talked about today are going to be focused on delivering even more of this as we move forward. We really do feel good about what we have achieved. We should; 24,000 people in the same direction by an outstanding leadership team. I had a boss once that said, you can never call yourself world-class until somebody else does. So I'll call it best-in-class. We've got a long way to go. We got so much more growth ahead. I want to thank you all again for coming here on the webcast and here in person. And with that, I want to turn things over to Jerry Parker, who's our Head of Business Development. Thank you all very much.

All right. Thank you, John, and thank you, everybody, for being here today with me. I'm absolutely thrilled to talk about our BD engine. And it's interesting because I don't know where I got the clicker here. Here we go. All right. It's interesting because I get asked, like John said, what is the secret to the recent success that we've had with all these contract awards we've had, right? And I usually don't give too much of a detailed answer, but I'd like to start with a little bit of a history lesson. I'd like to rewind the clock a little bit because when you look back 10, 12 years ago, we decided to transform the company into something that was more based in technology, the things that John had talked about. And back then, while we had really good BD processes for what the business was, it wasn't going to get us to where we wanted to be. And we needed something that was reliable, repeatable and more scalable. We are a different kind of company, and we needed a different type of growth engine. So what I'd like to do is I draw the analogy to a professional football team, where, when you think about it, professional football teams, they have a playbook, right? And out of that playbook, they draw plays up into a game plan that's different for all of their opponents, okay? So in our case, we're no different, right? But we needed a playbook that we could extract from and build a game plan around different opportunities in our markets. Now 2 things make a good team separate from a bad team, okay? And they are discipline and structure. Now in our case, there's a third element, and it's time. Now what do I mean by that? Time, what I refer to as, is the time before that official request for proposal comes out. I call it working left of bang, where bang being that RFP drop, right? So we work years before that RFP comes out to shape the customer's perception, to shape our future and create demand. So discipline, structure and time. That combination makes us different. And I'll explain that in detail as we go through. Now the discipline is primarily driven by our market strategies that John touched on, right? That's the guiding principles, the guiding like the north star he said, right? That gives us the direction on which opportunities we're going to go after and what investments we make, and it's tightly coupled to that BD process. But let's talk about structure now. And I'm going to show you how a typical government contractor goes through their business development process. So picture a funnel. What they do is they take their addressable market and dump it into the top. And they call that the identified pipeline. Now in many cases, that's huge and quite honestly, unrealistic. Then they'll qualify some of those opportunities. They'll wait for the opportunity to come out that RFP. They'll read it. And if they can write to it, they bid it. So they get a lot of throughput, right? No discipline, no discipline. Just in the top, out the bottom. I'll draw a similar example to what we do. Okay. So we start with the addressable market, same thing, right? But in our case, we use those market strategies as a filter, okay? So that we look at how does that addressable market, those opportunities that are out there align to those strategies. And that defines, like I said, those opportunities and the investments, okay? Then we get into shaping the RFP. And it comes in 2 different flavors. We look for ways to be disrupted through demand creation. And then we pursue and influence the output, okay? So then ultimately, like everybody else, we write a proposal, right? We have a really good proposal shop, and we'll talk a little bit about that. Well, another piece that makes us unique is that after we submit the proposal, we don't just stop there, right? We plan for success, and DeEtte is going to talk a little bit more about that. But at the output of that, is what John talked about, is those well curated opportunities, well-shaped. So it's not this huge throughput, right? We bid less, but win more, win bigger opportunities. So let's deep dive into the model just a little bit more. Yes, all right. We got our addressable market. We throw it through the filter, okay? That's the opposite we go after, that's the investments we make. We start way left of bang, okay? And that market strategy is tightly coupled. This is where it all comes together, okay? And it goes right into ways to be disruptive. We try to look for ways to create demand around those investments that we make, okay? We look for ways to be new, innovative and novel, how to solve problems differently, how to look at the problem differently and then socialize that with key stakeholders. This is the initial stages of our shaping process. This is the initial stages where we make those big investments. This is where investment ahead of need starts. And then that sets the conditions for what we call the pursue and influence phase, okay? Going back to the football analogy, this is where we run the bulk of those plays in the playbook, okay? Now this is where we put that game plan together because now we have focus. There's our opportunity. How do we shape it to favor our solution? And it's everything from IRAD investments, building relationships. We look for ways to make key hires, and De is going to talk a little bit more about that and the importance on people. We look to build prototypes. A lot of times, you can't just show up with what we call PowerPoint engineering, right? You actually have to build it and show it to the customers to see how it plays into their mission environment. And then when we get to the actual RFP, it's white paper after white paper after white paper, giving them recommendations on how to buy something new, novel and innovative. Then, of course, we write about it. We put pens and paper about all those things that are different about it, why that value is more important of our solution than our competitors. And we're really good at putting pen to paper here. And then, of course, like I said, we plan for success. And it's everything from day 1 transition activities to investments in facilities, whatever. We plan to be successful because our win rates are pretty high. Okay. So when you lay it all out, you get a real appreciation for the time element that I talked about, right? We're working 3, 5, 7 years left of bang to shape those opportunities for success. The whole time, a whole time, as we're shaping, we're investing, we're continuing to put money into it. We're maturing the technology along the way. So let's see how we actually put this playbook into action on a couple of opportunities. Now you heard us talk about Spectral. Spectral is pretty near and dear to my heart, but what I'm going to show you is how we created demand for a revolutionary sophisticated electronic warfare system based on a novel software-defined approach, the software that John talked about, based on a market strategy to be disruptive in the electronic warfare market. Okay, let's set the stage. Guided by our market strategies, we saw that U.S. weapon systems were being outpaced by countries like Russia and China. The market was ripe for disruption. So what did we do? We knew that we could revolutionize the industry and electronic warfare by blurring the line between signals intelligence, signals collection, some of the stuff you'll see out in the exhibits area, blur the line between that signals collection, electronic attack and cyber, offensive cyber capability. So before, they were all siloed independent areas. We could blur the line there by taking a more software-centric approach that could be easily upgraded in response to those threats by those near-peer states, something that's never been done before. So the first thing we did, we invested in the experts. Going back to Angie's importance on people. We went out and found former Navy cryptologist that knew how the current system worked, knew what their current workflow was and how long it took to collect signals and do something about it. We took those naval experts with our DSP engineers, our software engineers, our PhDs, our scientists, and we created tiger teams on what the art of the possible is? How could we build something different that could operate more effectively? Then we invested in an open software architecture, open being the key word because you can't do it with a closed system, that OEM model that John talked about, we're open. We want more people coming into our ecosystem. And we leveraged signals intelligence libraries and micro services and other software components from acquisitions like Six3 Systems and LGS Innovations that we made. So what do we do? We wrapped hardware around it. We designed and built a signals collection and processing environment, think RF receivers, high-performance servers, amplifiers, antennas, stuff that you'll see outside, around that open architecture and built that first prototype, an actual working prototype years in advance of any RFP coming up. So what do we have to do? We had to create buzz about why that's so important, why that's so new? So how do we do that? So we had to go and meet with everybody. We met with all the stakeholders in the Navy, everybody from Deputy Assistant Secretary of the Navy, through the program executive offices, through the intelligence components of the Navy, the programs people, the budget people, everybody that had a stake in the game, we went to go see. We needed to get their heads around this new way of doing business. Next, we published white papers and articles and did media interviews. We wanted to create a dialogue that buzz, that made it part of the everyday vernacular. We were creating demand. People started using our lingo in everyday conversations. The government was using our briefings in their briefings around these new concepts. So we knew we were on the right track. So next, we have to shape the actual acquisition. So what did we do? We had to show them what good look like in an operational environment. So we took our system and put it in true mission exercises, how the system detects signals out of the air? How it does the collection? How the signals are processed, demodulated, decrypted? How that data gets to other weapon systems for action? What was the workflow of the sailors using the system? Showing them an advanced user interface that was like using their iPhone. So much different than the old system. We even showed them how we could ingest new capability on the fly while they were working on the system with no user engagement, and they just got new capabilities. It's like updating an app on your iPhone in the background. Wow, it just came in, amazing, never been done before. The best part about giving these demonstrations was that we were getting feedback along the way. They started telling us, "Oh, we want this. We want this. Can it do this?" Sure. Absolutely. We were getting early buy-in on the concept. So next, we focus on the actual RFP, that RFP that comes out that gives the description of what the customer wants to buy, right? So we did everything from shaping in requirements about the software maturity, the installability of the system into the secure areas on the ship. We even coined the term mission value threads that described incremental capability updates. And that mission value thread statement actually showed up in the RFP. They were using our words back to industry. And then we shaped in, bring a prototype, bring something that worked, don't just show up with vaporware. So we knew when all those elements showed up, we know we're on the right track. So at the end of it all, think about it, okay? We saw a real threat to national security years and years ago. We looked at the problem differently, and we identified customers that had a stake in the game. We created demand for a new way of performing that mission. We invested way ahead of need, put our own money on the table and built the system way ahead to show them what the art of the possible was and got early buy-in. That level of shaping took 5 years before the RFP, 5 years, not something that happens overnight. Now the Spectral program is a 7-year contract, $1.2 billion, but the tail on that is going to go long into the future. Next, I'm going to talk about the NASA NCAPs award. That's the consolidated applications and platform services work, that we just -- we're going to hear a little bit more about. Now the story behind this one is a little bit different, right? We were building industry-leading past performance for years before this came out. So the art of this one was to create demand around that methodology that was the basis for winning all those other programs. It was the roots in that Agile software development that we do. So again, when you rewind the clock, going back to the market strategies, we saw that waterfall software development was expensive and took too much time to field. Now if any of you guys know what software -- waterfall software development is, it's where you write a bunch of code over the course of years and then you deliver it at the end, and in many cases, the requirements have changed. So it fails to meet expectations, and you got to do a lot of rework, right? So we knew there had to be a better way. So when we looked back and said, the way that mobile applications are being developed, right, on your phones. And remember, rewind the clock just a long time ago. They were using an Agile software development model. So we went all in. We put all the chips on, changing all of our software approach to doing it in a more Agile-type environment. The bottom line is we used our market strategies to be the best-in-class in Agile software development at the enterprise level. And we've built this up over time, okay? So when we start talking about building that past performance, what did we do? We went all in with Agile software, but we had to get customer buy-in right? So we shopped around to a lot of our customers. One of the first customers to really lean in with us was the National Reconnaissance Office, the NRO. Through their partnership, we were able to revamp our coding strategy around the FADE program. Now we were able to put the first Agile software development drop back in 2010, long before anybody else in the federal government was using Agile. So we've got early adoption. Based on that early adoption, we invested more into what we call the Agile Solutions Factory. Now this is where we perform -- not only perform a lot of the coding, but we're able to show customers how they can come in and see the process firsthand, how code requirements start, goes through the process and comes out the other end, defect-free, in smaller chunks, right? And they get a real feel for how they can partner with us through that whole development and production process. So the ASF was a key differentiator for us to win an early program called RCAs with the Army. Introducing that RCAs customer to DHS led to the [ BEAGLE ] contract award and then a subsequent number of wins, GCSS with the Marine Corps, F3I with the Air Force and then Sapphire with the National Geospatial Agency. So that past performance over time gave us instant credibility with NASA. So when we looked at that NASA opportunity, we know that their incumbent contract was coming to an end. So we put together a 3-year campaign left of bang to influence them to show them what they art of the possible using this new construct. So those early engagements with NASA were really fruitful. And it was clear that their incumbent contractor was struggling. So early in the process, we brought them down to the ASF, and we showed them firsthand, like, "Hey, here's how it works." You come in here with us, and we have billboards, active screens that show, "Hey, there's something coming into the pipeline. It's coming out tomorrow. It does regression testing. We're going to integrate it back in. You can be part of the process." And what was interesting is on that -- those screens that we have, we have real-time metrics. What's coming in, cost savings, the time to code, packets of code coming out the other end, things that they had no visibility into before and things that they always wanted out of their current contractor, but didn't get. So they became enamored with that new methodology. And over the course of 3 years, we had over 50 stakeholder engagements with NASA, introducing them to even other customers to validate what we were saying, and show them firsthand that where we were doing works in other people's mission environments. And we got instant credibility. Our customers sing our praises all the time. So they're our best BD people. But we also learned a lot about the NASA culture, and we wind up opening up an office right there with them to commit to that early partnership. We met with local small businesses, folks that they already trusted and loved, and we got them on our team. So that relationship that we built over that 3 years gave us the ability to shape in things like, you've got to bring a lot of past performance at this scale into the RFP. We showed them how to put in oral presentations in this, so you can show and describe what your software methodology is, things that we're good at. We even shaped in small business participation so we can get credit for building that little ecosystem in the local environment. Again, set the bar so high that the incumbent contractor didn't even make the initial down select. So when you rewind the clock and you start to think about it, we invested early in a brand-new way of developing software. We introduced this new methodology to the government way ahead of everybody else. We invested in it organically and through acquisitions, and we built industry-leading past performance over years. And we also built partnerships, with not just our customers, but with the community itself. And now we are the largest Agile software development house in the federal government. And Glenn is going to talk a little bit more about that. So think about this. This is more of that lather, rinse, repeat methodology. This is a playbook that we can run time and time again whenever there's those large-scale software development efforts that come up. Like John said, focusing on those bigger opportunities allows us to bid less, but win more. So how do I quantify that statement? Let me show you a couple of charts here, right? So when you look back at the numbers, you can see that we had a 45% reduction in the number of bids submitted from FY '21 to last year, 45%. At the same time, we went from $9 billion in awards to over $14 billion of awards. So I think we've had half the amount of bids going in and almost double the output, right? Proof is in the pudding. So what does that allow us to do? That allows us to focus on those higher value opportunities. We're not distracted by those pop-ups. It allows us to increase our proposal quality, that proposal engine that we have right? They're focused as well. They're not distracted by having juggling 10 different jobs. We'll optimize our resources to drive down the cost per bid and that focuses us on being the best in the industry that John talked about. Now Jeff will foot stomp this when he comes up. But linking back to the previous chart, you can see that our average bid size from FY '16 to last year has more than tripled, tripled in size. Again, through our shaping, we're also able to show our customers, "Hey, you know what, you can buy these things for a longer duration." So the time that period of performance that we have with the customers has gone up from basically 4 years to over 6 years. So we get a lot more time with the customer. So what does that do? That allows us to have lower number of recompetes. So we're not refreshing the business every year or every 2 years. Now it's a 7-year, 6-year cycle. We can take those cost savings and those resources and apply to shaping and pursuing new business. And we have greater continuity of our workforce. When you're on a program for a long time, you have stability, right, which is important for our people, and Angie will talk a little bit more about that. Okay. What are the quick takeaways, discipline, structure and time. That's what makes us different. The discipline based on the market strategies, means we don't get distracted by things that are outside of our strike zone, right? The structure is all about the playbook, right, running the plays. And then 2 things with respect to time. You heard me say one. You know we work left of bang. We work years in advance, right, to shape those opportunities. But the other thing about time is that you don't just create this overnight, it takes time to put something like this into place. And we've created this growth flywheel now. And like all flywheels, it takes time to get them rolling. But the momentum that they carry can be sustainable long into the future. Okay. So now I'm going to hand it off to my friend and colleague, DeEtte Gray, and she's going to talk about that plan for execution, that left of contract award and how we're so successful on that side of the equation. So DeEtte?

So winning new business starts with outstanding execution. When we meet our customers' commitments, we build that strong past performance that we need to win that business. Like Jerry said, the capture team starts really early in the process to shape the proposal, shape that capture. The execution team also starts during that process. We're all involved to the proposal process. But what the execution team is really focused on is what do we need to execute this on day 1? So we're involved to that planning process. And really, that proposal that we submit becomes our initial plan for execution. So we start early on and then we can jump in. So let's talk about what makes us different. So what makes us different from our competition in execution is our culture, our discipline and our performance. And I'm going to walk through each one of these and explain these a little bit more. So one, it starts with our culture. Our culture is the foundation of everything we do at CACI. We meet our commitments to our customers, and that's what builds that strong past performance and gets customers to come back to us. Customers want to do business with companies that they trust and that they can rely on to deliver to them. And that's what we do to them. They constantly come back to us to help them solve their toughest problems. Customer engagement is paramount in everything we do. Engaging with our customers at all levels is absolutely important, and we do that with our customers. We've spent many years building a culture of transparency. That's both inside the company, within our teams and also externally with our customers. We're transparent about what we do, and we're doing within our programs. That's really important because it gives the leadership teams the ability to quickly adapt if issues come up. Issues will come up on a program. It also gives our customers the ability to adapt at the same time. And that way, they can help customers and help the program teams to adjust and solve those issues come -- before they become derailers on the programs. But when we meet our commitments, we engage with our customers, and we're transparent with those customers and that provides predictable outcomes for both us and for our customers. The second aspect that makes us different in execution is our disciplined execution model, which we call Delivery Plus. Delivery Plus provides us, if you think -- Jerry said playbook, the instructions from how we initiate a program, transition to program all the way through contract closeout. We use this across all of our programs, no matter what size the program is. All of our program management and program teams, frankly, are trained on this. We really focus to make sure our program managers have very strong business acumen. They understand their contract. They have the right leadership skills. It's all about discipline. Each month, our programs go through program management -- monthly reviews, excuse, program monthly reviews, just like a normal business review you would do across the whole entire portfolio. In those program reviews, they focus on all aspects of the program. It doesn't matter what type of program it is, whether it's an expertise program or a technology program, we look at all those different aspects. And we look at cost, we look at scope, schedule, customer satisfactions, the quality of what we're delivering to those customers. And if we have all the right staff or the staff we need, the resources we need on that program. Each of those have standard metrics that we use across all those programs. That gives us a really good baseline to understand how our programs are performing. For example, on customer satisfaction, one of the scores we look at is CPARS, which is an industry standard. And I'm really happy that with our CPARs -- over the years, our CPARs have been continued to increase, but they are above most of the industry average. And so that's a good metric that we use to baseline those programs. We also look at award fee scores. The other thing we look at each month is the risk on the program, and that could be a risk of technical risk or financial risk. And then lastly, we really look at opportunities, and this is really focused on, on-contract growth, growing our programs. We really ask our program teams and frankly, our BD team sometimes, too, to get involved with the customers to what can we do to grow that program. We've been very, very successful with this over the last few years. A lot of the growth that you've seen has not just been from new business that Jerry and the team win, it's also about on-contract growth, which, frankly, is so much stronger. If we can win our -- we can grow our programs and continue to expand with those customers, that gives us a long legacy of work with that customer. One of the things we've also done in the way of discipline is we've automated much of the work that we -- much of the data that we use every day to run the business. And some of these same areas, cost, schedule, customer satisfaction, how we're doing on recruiting, how are we doing on staffing. We've automated all those into dashboards that all of the program managers can see. It has done a couple of things. One, it's given us insight into the data. So a program manager doesn't have to go to a finance person and say, "Can you go run me this report." They can go look at any time of the day or night into their data to see where they are on their performance. We also use the exact same data that I look at as the Head of U.S. Operations across all of our programs, the whole entire portfolio, I can see everything down to -- drill down to the program to how it all rolls up. And I can see that the performance of the business, and we're looking at the same data right out of the system. That's been a really game changer for us because, one, we're saving time not making charge, but we also have that insight so we can fix problems quickly. So our process has been around for 6 decades. We've invested -- continued to divest -- invest -- continue to invest in our Delivery Plus processes. We refined them over the time as we've taken on more technology business. We've added new capabilities into that. It's continue -- and we'll continue to do that. But it's really about -- it's a reliable system, it's repeatable, and it's scalable, and we've used it over and over again. So let me give you an example of using our culture and our discipline in action. So you've heard about our [ ITES ] program. We started up in May of 2023. This is a program with the Air Force, where we're building now or modernizing their IT service delivery for their modernization. Huge, huge program for us. So this program was actually protested twice. When the government finally came back and denied the competitor's protest for the second time, we were ready to get started. But during that time, our program teams continued to build out their schedule, really worked out their resources and planning during that process. So we went to the customer kickoff meeting, and the first thing the customer said was, "Can you go faster? We've lost 200 days. What can you do to go faster?" Because the team using our processes built out their schedule and was very detailed, they could quickly adapt to building out parallel pass for this customer. So we build out parallel pass instead of 1 milestone after another, we actually ended up doing about 4 different milestones at the same time. But since then, we have stood up a brand-new call center for the Air Force. We've built out a new ITSM system, a ServiceNow application, brand new. We've actually shut down their legacy application, and we've been rolling and taking over the different air bases for -- now we have -- we're servicing 480,000 airmen and women through this call center. And by March of 2025, we will have taken over -- we will be servicing all 800,000 airmen and women. And so the March of 2025 -- and that's 6 months ahead of schedule. That just shows where the discipline in that process -- following that process and schedule really gave us an opportunity. So the last area is about performance. This is performing with excellence. And this is really where we're doing the work. So performing in excellence enables us to bring technology to customers, which enables us to bring on-contract growth, growing our programs because when customers trust you and you deliver those customers, they want you to help them solve more of their problems. It's a great recipe. Performing with excellence also enables us to increase profitability. I talked about our program managers being trained and about their business acumen. So our program managers are constantly looking, and we challenge them on how can you increase your profitability. And it depends on the program type. If it's a firm fixed price program, it's all about optimizing that program, and we're really good at this. If it's a program where it's an expertise, it's about balancing your resources and upscaling those -- our employees. And of course, if its award fee program, it's about maximizing your worthy score, so delivering on schedule and on quality. So this increased profitability. And last, when we perform with excellence, it builds us that past performance that we need to go win other business and, frankly, to win our recompetes on the current work we have. So let me give you 2 examples of this at work. So Jerry talked about Spectral -- on the Spectral program. When we started the program, the -- it took the Navy 2 years longer than they had originally expected to get this program off the ground. And so what we've done with this customer is we were very agile, we had very good scale. We built confidence at first in the proposal, but we had a very strong schedule, and the teams are very adaptable to be able to get software to them faster. So what that has done is we built -- we've now delivered our first minimum viable product. So we demonstrated that to the customer. And the feedback that we've gotten from the fleet is that the interface that we've built is so much better than the legacy application that they have now. And what that has enabled now is to bring us more of our technology. And so now we're developing -- we're going to deploy a Spectral-enabling kit, which I think is a deployable kit. While we're still building the core system that Jerry showed you earlier, it enables us to bring that technology so it's a carry-on case that we can take to the Navy into the fleet, which gives them that capability faster than it's going to take to deploy the full of system, but a great example of performing with excellence. The last one is the NCAPs program. NCAPs, as Jerry mentioned, it was based off of our past performance. It was very much based off of what we did on BEAGLE. We won and started up BEAGLE 5 years ago, and that was taking over all of the Customs and Border Protections applications across their enterprise and then moving them to an Agile software development model across all of their enterprise. That's the same thing that the NASA program customer wanted. And so we've done that. We just finished our transition. Just last week, actually, we just had transitioned over 200 applications across the NASA enterprise, and that's -- there are 10 NASA centers, the major centers. The next step is to follow what we learned on BEAGLE and move them to an Agile process across our enterprise. We learned a lot through the BEAGLE program that we've built into our transition and helped us be successful on NCAPs. So last, as I said, performing with excellence gives us the opportunity to improve our profitability, improve our growth on our programs, to win new business by winning, building out past performance. But our recipe for that is our culture, it's a disciplined approach we use, and it's performing. And that's what gets us growth on our programs and across the business. But you can't do any of this without the right talent. But up now is Angie Combs to talk to you about our talent.

Thank you, DeEtte. The flawless execution that DeEtte just described requires great talent, and that's what I'm going to talk about today, including how we get that great talent and also how we keep that great talent. And I'll begin with our employee value proposition, our EVP, because this really gets to the heart of who we are, for me. An EVP, an employee value proposition, describes the give and the get. It is what employees get in an organization for their hard work and dedication, what they get in return. And in my experience, many companies who develop employee propositions, it's a little bit of fluff. It's aspirational. So when we developed ours at CACI, we wanted it to be real. I wanted it to be real. So we went to our employees. We went to the source, and we asked them, what brought you to CACI. And why do you stay with us? What's your experience like? And they told us that they very much appreciate and value our culture. They experienced it as a culture of innovation and integrity and that that's not just lip service to them that they really do experience that on a day in and day out basis. They also value our total rewards compensation and benefits, but also flexibility. Flexibility is really important to them, and they get that in our company, and I'll talk about that a little bit more in a moment. And finally, they love the fact that we're a 62-year-old company with great success, a great track record. And to them, that means that they can have a long-standing career with us and they get to do interesting challenging work. Over the years, we've honed our thinking around talent. We are relentlessly talent-centric and future focused. And that's a simple statement. But to me, it's really powerful. And it describes the way we view our talent. We don't view our talent as a workforce or headcount. We view them as extremely talented professional people. And as we have developed our strategies around talent -- our talent strategies, we've learned to take a very disciplined approach to it. So it's very deliberate, it's dynamic. We're always sensing and shifting. We call it listen act, listen, act, and we want to be different. So we go bold with many of our talent strategies. And speed is our friend. The faster we can implement great talent strategies, the more we can get out of them and the more we can be different than what's happening in the market. And it works. Our strategies work. The proofs in the results, and I'll show you some of those today. But we also know the world is changing, and I'll share some sobering trends that we're seeing in the market. But we're not concerned about those trends. We're not anxious about those trends because we do believe that we're open to change, and that change is an advantage for us. So in order to grow our talent we need to do 2 things really well. We need to acquire great talent, and we need to keep them in the organization. We call those our 2 levers for growth. And one of our top strategies for acquiring great talent is through our referral programs, bringing people into the company that are referred from other employees. And the reason this strategy is so important to us is because oftentimes, we're going after talent that's really hard to find with high-level clearances, very technical individuals and they don't advertise themselves. They kind of go below the radar a little bit. They're taught to do that because of their clearance status. So our employees, we leverage our employees to shepherd them to us, to bring them to us often before they're even really looking for a role. And the other great thing about using referrals to bring talent in, is that they tend to be stickier. In other words, they tend to stay with us longer, which leads me to our next strategy around retention. So that's the second lever. And what we've learned over the years is that our great talent really wants opportunity. They want to learn and grow. They want to change roles within the company. And back in 2018, we didn't do a stellar job at that. And we would talk to people who might be leaving and they said, why are you leaving CACI? It's so great here. Well, I found another opportunity and my thinking was we have thousands of opportunities. Why aren't they finding them here. So we developed this campaign. We call it #makingmoves to really influence our leaders to encourage their employees, which sounds a little counterintuitive, encourage them to find other jobs in the company. But we knew if we didn't do that, they would go elsewhere. And it took some time, but our leaders really caught on to this in a great way. And we also helped our employees find other jobs in the company using technology, so matching them to open positions, making it really easier for them to move around. And as you can see, we've improved our internal placement rate by a great deal. We're filling almost 1/3 of our employees by -- with internal candidates, which is great. And everyone in our company knows what #makingmoves is all about. It's part of our culture now. These next 2 strategies, talent strategies, I'm going to share were developed to solve specific challenges in our organization. And this first 1 is around performance management. Performance management is when we ask leaders to sit down with employees and give them feedback about their performance. Most companies do this. And most companies find it to be a pain point because most companies do it today the way we used to do it, which is to sit them down just once a year, provide feedback, but also give them a rating. And once our employees heard the rating they stop listening to the feedback because they just were thinking, "Why didn't I get the top rating? What did I -- this rating is different than last year? What happened? And it wasn't -- feedback is supposed to be a gift. This approach wasn't a gift for our employees. So we got a small group of our employees together, and we said, help us solve this problem and they did. They came up with this approach. It's called touch backs, touch points, sorry. Touch points. And it's a quarterly feedback mechanism that's a little bit more informal and they don't get a rating. They really look forward to these discussions. And they talk about what's going well, what they could do better. And they also talk about what they want their next assignment to be getting back to #makingmoves. So we were an early innovator in this feedback approach. And now we're starting to see other companies follow suit as they say, imitation is the sincerest form of flattery. And the last talent strategy that I'll share with you this morning is around paid time off. And this is also a bold strategy that we put in place. It's around -- it's called flexible time off or FTO. And the way this works is instead of coming into our organization as a new employee and having to wait to accrue time off over that first year and not be able to take it for a while. We blew that up. We said no more accruals. Come in, we'll treat you like a responsible adult. We'll trust you, take time off when you need it. Now it's not the Wild West. They still have to get approval to take time off, but they're empowered to take time off as they need it without an accrual-based approach. And we did this because we really wanted to attract the workforce of the future. And we wanted people to come to us and not worry about not being able to take care of themselves or the families. And it's been a game changer for us. So it really has. We surveyed all of the people that we hired in the last year, and we asked them, did FTO have any bearing on your decision to join CACI and 75% of them said that yes, it had an impact on their decision to come join us. So if that isn't a game changer in our ability to attract talent in the future, I don't know what would be really pleased with that. So how do we know our talent approaches work? Well, we look at what our employees tell us and what the general public tells us, and with our employees, we survey them an engagement survey every 2 years because we think engagement is extremely important. And engagement goes beyond satisfaction. Engagement, the way we define it is an emotional connection to the company that results in increased discretionary effort. So in other words, it's when our employees connect with us, and because of that, they want to go above and beyond to solve our customers' most challenging problems. And that's exactly what we want, exactly what we want. And we know that companies with high engagement have better business results. Research has proven that. So we do our survey every 2 years and we compare ourselves to benchmarks, as you can see. And these are companies that use the same survey, so we're comparing apples to apples, their results to our results. The first group benchmark is just the U.S. -- companies in the U.S. who use the same survey. You can see over time how that's gone. We also benchmark ourselves against technology -- high-technology organizations. And then finally, we benchmark ourselves against the cream of the crop, which are these high-performing norms. And these are companies that have sustained high engagement scores and strong financial performance over time. And as you can see, that's us on the top line. We're killing it, we're killing it. I love this chart. I have this chart on my wall in my office and it warms my heart. So we've really distanced ourselves from the pack. And again, engagement means business results. That's why it matters. We also look at voluntary attrition or as we call it, when employees vote with their feet and leave the company, we don't want that. And our strategies have really proven to be effective in that you can see how our voluntary attrition has had a downward trend over the last 5 or so years. And this isn't by accident. In addition to the broad talent strategies that we put in place, we also look at each program individually because we know each program is different and the challenges that they face are different. So we developed we develop retention strategies for each and every program in our organization. And finally, we believe our results speak for themselves. We've been fortunate to receive a number of great awards over the years. And we don't pay for these awards by putting ads out or anything like that, they come to us. And we think it's really a reflection of our ongoing commitment to our workforce. So great results, now what? Well, we know the world is changing, and we believe that the best time to innovate is when you're on top. We have to remain ever vigilant. So there are 3 macro trends that we're watching closely, and we're pivoting to address. And the first is around the significant shifts that we're seeing in the labor market. Population growth in the U.S. is almost at a standstill. And that's because birth rates are declining in the United States. It's predicted that by 2040, deaths will exceed births in the U.S. And prime age workers, the people we're going after, that population is declining as well. In fact, the only growth we're really seeing in the U.S. is due to immigration. And as you all know, with our need for advanced clearances, that population doesn't really support our industry all that well. We're also seeing shifts in skills. The skills we're needing are changing at breakneck speed -- breakneck speed because technology is changing so fast. So new skills are emerging faster and they're becoming obsolete faster. 1/3 of the skills that were needed in job descriptions that were posted to try to get employees in 2019 are no longer in the job description postings we're seeing today. And the half-life of skills along the relevant technology skills is about 2.5 years now, so not very long. All that impacts supply and demand, and we're pivoting to address that. And then the final trend that we're watching closely and have done a lot of research on are how demands of what employees need and want these days. And what employees need and want changes over time. You probably remember a long time ago when employees wanted to smoke in the workplace and they did. Thankfully, that's not a need that they have any longer. At least it's not something we allow them to do. But as the boomers are retiring and the newer generations are entering the workforce, generations X, Y and Z, becoming a much larger percentage of the populations in our workforce. They want different things. it's not bad or good, it just is. Many of them select companies to join based on how their values coincide and they look at how we are in terms of ESG and those things. They expect well-being initiatives to be in place in an organization. They want employers to care about their well-being. So these are things we need to pay attention to as we continue to develop our talent strategies. And we are shifting to make sure we're considering all those macro trends that I just described. And the first thing we're doing is we're broadening our talent pools. We're really leveraging the success we've had with our internship programs and our university relation programs and creating and going after those talent pools in those communities so that we can really get the best and the brightest talent going forward. And we're creating programs to make sure our employees are ready for those changing skill needs, mainly through certifications where we encourage employees to get new certifications, and we offer financial support to do that as well. We're even standing up a team to look at what skills are coming down the pike. And these are technical leaders in our organization married with -- paired with HR folks to really look at what's happening so that we can get ahead of it and make better make buy decisions going forward. We're also leaning into emerging technology and AI to obtain informed talent insights. And this talent intelligence has a lot of applications for us, including better sourcing as well as better matching of employees to jobs internally back to that #makingmoves. And we're experimenting with predictive models around turnover, so we can predict where we might see attrition and impact it before it happens. In addition, our employee offerings will continue to evolve. We will continue to be relentlessly talent-centric and future focused in all of the offerings that we put forward. In fact, recently, we've looked at and implemented some financial wellness initiatives. We now offer certified financial planners for all of our employees and their family members in order to help them navigate some of those financial challenges in life. And that one is a bold one that we don't see with other organizations. And then as you know, our industry is unique and that sometimes our customers dictate the hiring guidelines. So in certain parts of our business, they establish requirements for both years of experience and education. And that's not where the world at large is headed outside of our industry. Many companies are not now hiring for skills -- specific skills, instead of experience requirements or education requirements. So in other words, can this person code in XYZ language and hiring them for their ability to do that. And we're also seeing that young people are less inclined to want to get a 4-year degree. Maybe they don't want to take all those classes. They just want to take the technical classes that interest them. And we've had some success in influencing our customers to do away with those blanket experience and education requirements, and we'll be doubling down on those efforts to influence both our customers as well as public policy going forward. So I will leave you with the Employee Value Proposition that I started this discussion with and the tagline that came out of that value proposition, which is one of the things we use to entice people to join our organization. It is "your potential is limitless and so is ours." Thank you.

Let's go ahead now and take a quick break, 10-minute break. So it's about -- it's just a little bit before 10:30. So let's be back if we can 10:35. [Break]

All right, everybody. We're going to go ahead and get started again. It's my pleasure to now turn the floor over to our Chief Technology Officer, Glenn Kurowski. Glenn?

Welcome back. John talked about the importance of software in his opening remarks, talked about the need that we could move rapidly across all our markets with software. So I'm going to spend the next 20 minutes, really trying to give you a feel for how we think we differentiate, how we know we differentiate with software. Now I know that term software means different things to different people. So I'm going to put it into 2 categories that when we talk about it, what it is. The first category I can easily relate to your industry, Goldman Sachs, as you know, has a proprietary trading software. That's their application to do their business, okay? That's what we're doing for our customers. Our customers are doing different. They have their own sets of applications to run their mission or their enterprise function. So it's not like software from a Salesforce or Microsoft perspective, it's software of -- it's the applications that our customers run, okay? They come in lots of different shapes and sizes. Some of them are citizen facing, some of them are agent or analysts facing, some are war fighter facing at the edge. Some of them can be quite complex. It can be an enterprise-wide financial management system. Sometimes our customers come to us and they give us a portfolio of applications to take over. So NASA NCAPS is coming to us and giving us 200 of their applications. We will take over the maintenance of those and advancing those and modernizing those as well as new applications they have. So it's the portfolio. Okay. The second -- the second category of software we developed is a software that powers our software-defined technology. Different missions, so again counter unmanned systems, electronic warfare. Jason is going to talk to some of that in the electromagnetic spectrum exhibition out front. But think of it as the software that powers the software-defined technology. That technology goes on to ships, goes on to planes, goes on to vehicles, goes on to humans and backpacks, okay? And what's unique about doing software defined is that when the threat changes, when the mission has to change, it's a software update over the air. It can happen very quickly, okay. It's super-fast. We don't have to go to the platform. We don't have to modify the hardware that's on the platform. That's a very expensive and very slow process. In fact, if we looked at how it's been done for decades, I could stand here for 6 months and some of those upgrades wouldn't be done. It means literally taking a ship back into port, sometimes putting in a dry dock. Sometimes means actually cutting a hole on the hole to put new hardware on board because it doesn't fit through the hatch. It means bringing an aircraft back on the tarmac or into the hanger and breaking it down, okay? So what we're doing is we've completely changed the game from updates that take months, if not years, months to minutes, in terms of how we can do the software updates over the year, big differentiator. So those are the 2 categories. When we say software, when we say software is our superpower, when we say software development is our superpower. When our customers say, coming to CACI for software, it's a category of doing their customer applications, we're doing the software that runs on our software technology. And when it comes to those categories, our customers are remarkably clear in what their priorities are. And it is because of where they came from. They came from decades of waterfall, which is a development model that's been used in the duty and the government for many, many years for decades, okay? It's a process. It starts with defining all the requirements upfront, a series of design reviews, the contractor goes off for a period of time, typically measured in a large number of months, if not years, comes back with something that meets those requirements. It's been tested and typically, it may meet the requirements, but the requirements have changed, okay, which then requires expensive rework, okay? It's monolithic. It's slow. It's expensive. Customers want velocity. They want speed. They want to be -- they want fast delivery of capability to meet the speed of need, the #1 driving thing that they want different than what they've gotten for decades. The second thing they want is efficiency. It's a different value equation for money. They want the cost of capability to go down over time, and they want the capability velocity to go up over time. That is the opposite of what they get from most contractors today. The third thing they want is, of course, quality, 100% of the time, it has to work. It's national security or it's citizen facing. The fourth thing customers want is they want transparency. They want to be part of the process. They just -- they don't want to wait till the end of say, waterfall and here it is. They want to be part and parcel to the entire process. They know their requirements are changing. And they've asked us to accommodate that in the software development approach that we come up with. The last thing they want is they want choice. They want a more open model, a model that could enable third-party innovation at any time in the software development. They want the speed and innovation of Silicon Valley, but they don't want the heavy proprietary license cost and the vendor lock that comes with it. Those 5 things together, it's what they want out of their software. It's what we put into our software development approach that we've honed for over a decade. Three main parts to our approach. One is open architecture. I'll tell you what that is. The second is an agile-based delivery execution model. It's putting structure around agile in a DevSecOps platform. So taking the first 1 on open architecture. So the cube -- if you take the metaphor, take that cube on the board up there, that's a monolithic application, everything tightly bound together. If you want to make an update to it, great, you can make an update, but you got to recompile the whole thing and retest the whole thing before you deploy very slow, very monolithic. So the first step in doing anything open architecture is to break that up into component parts, okay. Then you can update those parts asynchronously, the TAN boxes. You can create velocity because you're working on smaller pieces, which by the way, is one of the principles of Agile. And if you publish the interfaces, then third parties can innovate because they're just going to program to the interfaces and you can drop that in. That's the green box. You can put this whole thing in motion continually, which is what we do on our programs, and you get velocity you actually drive efficiency, you can drive down the cost and the speed of capability up and you get choice, okay? When Jerry and DeEtte both talked about spectral, okay? This was what the Navy realized extremely early in the process that they were going to be able to get capability at the need -- at the speed of need with this type of an architecture, which they did not have and had never seen before. Agile-based delivery execution model, okay? Agile is a wonderful thing. If you go and Google the agile manifesto you will see all the characteristics of agile. But what you won't really get out of that is something that fits the government of -- the government actually has to manage work. They have to measure work, okay? So what we did was we put some structure around agile, turned it into a delivery execution model. One that is completely enabled by agile principles and one that completely engages the customer for transparency, completely supports the concept of requirements variability. Basically, this is a machine. Okay? This is a machine that just turns out high-quality software at an incredible pace, the velocity of what our customers need. We do this at scale today, not 1 program, not 2 programs, across portfolio programs, 100 agile teams producing 1,000 releases a year, okay? There are proof points. They can be seen. The third part is the DevSecOps platform. Think of this as a tool stack. Think of this as an AI-enabled tool suite that's used by the entire workforce across the software development life cycle and the customer can participate in this, they do. They're part and parcel to the platform, give them access. We base ours on GitLab. I'm going to talk a little bit more about them later in my briefing. Now if you're going to claim, you have a delivery execution model, which I told you has structured, you have to be able to measure it after all, metrics are proof points, okay? So someone says they do agile, ask how they measure it. Many will say, well, well, it can't be measured you. The requirements are changing. How can I measure it? That's a very waterfall style response. Others will say, well, I'm doing incremental delivery, which is a very spiral development style response. The fact is you actually can measure agile. We have for years. We can show our customers here are the metrics for years. So why am I putting this in front of you, the investment community? Why do you care? I'm talking about this. First off, this is how you get new customers. Customers who are not experiencing that today who want that. It's also how we keep our existing customers is how our customers want to expand their work because the trust and confidence we build is incredible. So I'm not here to turn you into an agile expert and to teach you what metrics are. I'm happy to talk about it at lunch if you're really interested, okay? But we can measure efficiency. We can measure the cost over time of the units of capability work. okay? And that trends down. And it trends down across a portfolio of programs. We can measure velocity. The speed from the time of the idea comes out to the time the idea is created to the time the idea comes out of that machine in deployable software, okay? In fact, we instrument the entire delivery execution model to be able to detect losses and velocity because from the very first time that you're brainstorming the idea to when you put it into road maps to when you plan for it in your sprints to when you develop it, test it and deploy it. And we can show our customers. Here's where we're losing time. Sometimes it's their fault, sometimes it's our fault, okay. Obviously, you can measure quality. We all understand defects in a piece of code that's released. But we try to move that detection all the way back to the left. We all inherently know the earlier you find a flaw the better, okay. And we show our customers those metrics. We bring them in and say, here are our proof points. Typically, that is followed by, that's exactly what I've been trying to get from my contractor and I can't get, okay. Proof points. Hard to replicate. You don't wake up 1 day and say, I'm going to have metrics, okay? You have to have instrument. In fact, you have to have a delivery execution model to start with, and then you have to have instrumented that up and down it and you have to have collected metrics for a period of time to make it actually relevant, and we have all that. So it's great when customers come in. It's great when we can bring NASA in and they have that reaction. And we show them here, you can sit here is our dashboard. You can sit here is this. They get a lot of confidence in that. And it's, again, why you care is because that's how we win business. I'll give you some examples of the software we developed, just so you get a little bit of feel for it, okay? Why again, why important to put in front of you, this is how we use software to grow our business, okay? The ending of this movie is this collection of applications started as 1 task order for $750,000. 10 -- 15 years ago, it is now over $1 billion of contract value as a franchise set of apps. That's how you do, if you do software right, becomes a franchise and you just keep adding to it, adding to it. Okay? The applications I'm going to show you are in use today by tens of thousands of analysts around the world every day. They are performing intelligence analysis. They are coordinating and executing actual live missions worldwide. The first application is called FADE. FADE is used by 50,000 analysts on classified networks, 24/7 around the globe. As I said, it's a visualization platform. Basically, lets you look back in time, visually at data, at sensor data. It ingests 600 million records a day, 2 petabytes in its master database -- sources, there are 300-plus different types of ingest streams. You can see some to the left here, you'll recognize, you may know the terms, OSINT, open-source intelligence, human intelligence, SIGINT, signals intelligence, go all the way down to the types of sensors that we can collect this from, from the different regions in the world all the way down to HF, high-frequency signals, VHF, very high -- those are types of RF sensors that are deployed on assets in theater. All that data comes in. It's AI-enhanced for georeferencing. It's mapped to the globe because that's how analysts want to look at. I'll put some things in motion here so you can get a little bit of a feel for what shows up on the screen. We'll map some maritime sensor data, some airborne data. You can see some of the predictability in some of the airborne flights that are on this, okay? The analysts love the visualization. They can temporarily analyze data back over a year to see what else have we seen at these kind of events. They also like the fact that we present it to them in a way they can consume it. That circle in the upper right, that's looking at sensor density over -- on a 24-hour clock, 24 time zones analysts around the world, it's how they think, that's how they operate. It's the common reference Zulu Time so they can be talking to each other around the world. We do that by bringing the analysts into the development process. That's part of the transparency. We call it for the analyst by the analysts. They are part and parcel to the development process. This is also a really good example of an application that has choice. It's on open source. There is no heavy licensing. There's no vendor lock, it's an open architecture and it scales in the cloud. It's also extremely high in velocity because as you think 50,000 analysts prosecuting the missions were involved in around the world, a lot of changing requirements. We updated literally daily, their updates going out. That's the power of an open architecture. That's Netflix style, by the way, in terms of a commercial comparator. The second application is BODHI, okay? Whereas FADE is this retrospective looking back in time at the data, okay, discovering things that happened in the past, BODHI is all about global situation awareness, what's happening right now, 20,000 analysts. On the classified networks around the world, you walk into an operations center. This is what's up on the big screen, okay? Now I also told you this is always classified. I am not putting a map up of anything else in the U.S. because I don't want anybody to interpret it. I'm showing you something that's classified, okay? And I'll just use wildfires. So the idea is you get a map. All the data is referenced on to the globe as they think about it. I'll sit this in motion. They can drill down into the map to an area of interest, in this case, a particular fire. It's called a feature card, pulled up. Here's where a fire is burning, okay? If you look also on here, there's situational awareness about what types of sensors may be in the area. The Turquoise triangle with the white thing coming out up to the east. That's an airborne asset. They can click on that, they can bring up the live feed from the actual overhead sensor. So now use your imagination. It's your imagination for some conflict in the world. That global situation awareness tied into every active sensor we have access to in the region being able to pulled up. Pretty cool. You can collaborate on all those applications with other analysts around the world on different classification networks. We built something called Chat-Surfer that allows operators in multiple classified networks by that, I mean unclass, secret, top secret coalition, those are the different networks that our allies use, okay, to allow them to collaborate. 80,000 users, 24/7 around the globe, 50 million chat messages a month in Chat-Surfer, 1,000 -- over 1,000 chat rooms across 6 different networks. We basically build a scalable social media platform, but for classified networks. So imagine trying to take X or Twitch or something. And not only do you have to address all of the classification rules to make sure that we don't have a spill of information across boundaries, okay? You have to know the mission. You have to live the mission. You have to give them the data. You have to -- georeference everything that is commented on here, click on it and pull up the area of operations, so you know exactly what's going on in the ground, okay? That's why John mentioned, commercial is really good, but sometimes it doesn't fit the operational model of folks who are doing life and death decisions every hour, every minute, okay? The last application or last examples I want to talk to you about is we introduced some artificial intelligence into FADE many, many years ago. It was pretty clear that analysts on FADE were looking at a lot of overhead imagery, sifting through overhead imagery, trying to find things that have changed or trying to find different objects. We knew we could use AI for that. Of course, we had to get them to trust it, right, because these folks are -- they're designing the mission packages. Their lives are at stake, okay? We needed to build something that would be more of a digital assistant, sort of a tipping and queuing that they could look at but not have necessarily rely on. You get an example of like if you have -- if with AI, you can find an object, tell them the probability that you believe you have and give them the ability to drill down into the actual imagery that led to that conclusion. That is transparent and explainable AI. Given the ability to draw a watch box around an area of operation and specify what would you like us, what would you the AI would you like us to tip and queue you on, perhaps looking at a certain peer, looking for a certain ship type, arriving at a certain window at time. They get a pop-up alert and they can drill into that. Okay? That's building trust in how to use AI. Again, a long time ago before AI was really being talked about much. It's kind of funny. But we use this to grow the business, I said. So we did this before there was a data strategy in place. Now NGA, the National Geospatial Agency, did ultimately develop a data strategy for overhead imagery, okay? They created a program called SAFFIRE to go off and build it, to build their structured object management of all their data. Because we had been using this data for so many years and already applying high technology to it, we help shape that competition. As Jerry said, left of bang, the tools that we had developed and deployed that were operational. It made sense for those tools to actually be part of that acquisition. We convinced them to do that. So now we have scope in the competition that we already had that we had already proven ourselves on. And of course, we were very successful in winning that competition. Okay. By the way, it wasn't the only use of AI. We've also used generative AI in the Chat-Surfer. If you're an analyst coming on shift, the first thing you do is you got to see what's important, what chat rooms are hot, what issues, give me a summary of the last 8 hours of chat, so I'm up to speed. Gen AI is a wonderful tool for that, again, real stuff. So hopefully, that gives you a little bit of a feel for the complex missions, some of the user community, but more importantly, how we're using software to go from a really small task order to a franchise set of applications, hard to replicate that. It's only one example of where we use that. We use this approach across our portfolio, Customs and Border Protection, BEAGLE, double-digit percentage growth every year, okay, just with them adding more applications after we started with that trust and confidence of delivery. Their cloud initiatives started with 60 applications and grew to 140 in just 18 months. That's what having software development as a superpower can bring you in terms of the business. So we took on the left, we took their 5 priorities, clearly stated. There are some goodness things in waterfall. The rigor and measurability of waterfall is important to our world. And there are some good things in commercial. And we took those things together, and that's what we're providing with that open architecture, DevSecOps and agile-based delivery execution model, the foundation of our approach that gives them the 5 things while not hooking them into data rights issues, not hooking them into really expensive licenses and not hooking them into vendor lock. On the programs I showed you, we gave them velocity, right? Fade deliveries every day, efficiency, quality. We've actually never rolled back a release on that program, which is astonishing considering the number of moving parts. We gave them transparency. The end users were engaged. They were part of the for the analysts, by the analyst. And we gave them choice, open architecture, choice without license costs and lock in. That's how you build enduring and growing positions. Now that last part of the software approach was the DevSecOps platform, that AI-enabled tool stack. We built ours around GitLab. This is the Gartner Magic Quadrant. I think most of you are probably familiar with the axis ability to execute completeness of vision. It's great that GitLab is in the upper quadrant. We were actually teaming with them before they went public, okay, because we knew that they were by far the most forward thinking. So rather than me [indiscernible], we actually went to them and said, "Hey, you're selling around the world, millions of users. How do you think we're doing?" Here's Ashley who tell us that.

Hi, Glen. Thanks for having me speak at your Investor Day. I'm Ashley Kramer, Chief Revenue Officer and Chief Marketing and Strategy Officer at GitLab. More than 40 million registered users and over 50% of the Fortune 100 trust GitLab to enable them to ship better, more secure software [indiscernible]. Today, I work closely with our customers and in the executive sponsor on many enterprise accounts. I'm responsible for setting GitLab's long-term strategy in all revenue-generating and go-to-market functions. In my role, I have a unique perspective of how many organizations conduct software development. Because of that perspective, I see differentiation in how CACI does software development at scale for the federal government. They are an industry leader in modern agile software development at scale, fully embracing the power of our GitLab platform to drive their software velocity, quality and security. Their implementation and rollout across their programs are also best-in-class. And we've had them speak at our company all-hands event and with our developers. In fact, CACI was our first public sector partner, and we chose them for 3 important reasons. First, they release software rapidly and efficiently, which keeps customers happy because they can quickly address evolving customer needs and generate cost savings. Second, their executive team is committed to common methods and tools so they can quickly field our new GitLab platform features. For example, CACI has been involved in early pilots for generative AI ahead of their peers and before the word even became popular. Third, CACI focuses on outcomes. Their organization embodies agile, which prioritizes consistently delivering software faster. The U.S. government continues its modernization journey, adopting agile and DevSecOps, and we're pleased to partner with CACI to be a catalyst and inspiration for accelerating adoption. To the CACI team, thank you for your continued partnership and congratulations on your big software development win at NASA. I hope you enjoy the rest of your Investor Day.

They're a great partner. I've sat with our CEO, Sid a couple of times and I've described to him our adoption of their platform and how fast we roll forward with the new releases. He shook his head, very technical guy. I love talking to him. He goes, "nobody is doing that fast. Nobody in your sector for sure. He says, nobody else in commercial is doing it that fast. Nobody internationally is doing that fast." So it's great when folks who have that wide purview give us the kind of feedback as opposed to just making the claim. So if you ever have a chance to talk to these guys, really, really creative company. As we always say, don't just take our word for it, listen to our customers speak. We didn't really use the word superpower until we were hearing it from our customers. It's an earned designation. Years, years and years of customer feedback to perfect what we do in that software development approach. Years of delivering proof points for velocity, efficiency, quality, years of perfecting how to involve customers, that transparency piece that's so important to them. Years of listening to our customers, I want the speed of Silicon Valley, but ensure I have choice without a heavy license costs and data rights and closed architectures. It is the center of our success, which is the center of winning things like NASA NCAPS, okay? So now let me dive into something completely different, artificial intelligence. I know it's a term you're unfamiliar with. There's nothing in the media about it. No one is claiming they're doing anything. So we're all going to fly underneath the radar, right? All right. So first, can you give me an AI oath that we are not going to treat this like a condiment that we just sprinkle on everything and suddenly data is better, and programs are better, and companies are better, okay? At the end of the day, AI is a hammer. It is a technology, okay? A wonderful technology. But my gosh, industry talks so much about the hammer, okay? As John said, appraising the IRAD museum pieces, appraising the hammer itself. In your personal life, you know you need to match the hammer to the job. It's about the nail. We're about the nail. We're about the problems, okay? And there are lots of different hammers out there. So we've been shifting the conversation across our customer base too. Let's talk about the nails, okay? If all you have is a hammer, it's all you going to talk about and everything looks like a nail. We're shifting the conversation all around. Let's talk about the problems. Let's talk about the improved outcome we can enable with an open architecture. The ideal conversation starts with that problem. And I think the combination of our expertise and technology gives us unique insight into those problems. We really understand the data. You can't do AI without data. A lot of times, it's our technology that's creating the data. Or if not, it's our expertise involved in where the data is created. And then we can imagine the better outcomes that we can get with technology. It may or may not be AI that's needed, okay? And then applying the talent and the technology. The great thing about where we've come with AI is the complexity of implementing AI, has really been abstracted away. So across our teams, we're able to adopt AI. We do not need to organize into an organization that does AI or a central group. It's actually across our portfolio, and it is driving on contract growth. It is driving new business. So before I go further, just a little bit more on lexicon, so I don't talk past you or you don't talk past me. I think we all understand the big picture word of artificial intelligence, the ability of a machine to mimic human intelligence. You'll remember the Alan Turing test that's been around since the late '50s gang, okay. Two big groups of AI is, symbolic AI and machine learning. Again, been around decades and decades, okay? One is basically using rules and logic or say, rules-based decision-making. The other is using data, training data. And as we got more economical means to do machine learning, so the compute, the graph processing, the storage, along came neural networks, and that allowed explosive growth in natural language processing, Siri, for example, computer vision, object recognition and more recently, generative AI, the creation of unique content from a user prompt, okay? So what's the message on the chart? It's not just about generative AI, okay? AI is all these things. And a ton of what everybody does is symbolic AI and have been for decades. The second message is generative AI hit the mainstream in late 2022 with ChatGPT. But the technology behind it, the transformers models, the large learning models that are unique to that, that wasn't the day they were invented. We were using that technology in 2016 and '17 on a DARPA research program. That DARPA research program subsequently became a program of record, meaning it's operational with the DoD Cyber Crime Center. It was used to create unique information for cyber honeypots. The cyber honeypot is something that you put out there, so your adversary goes after it, spends time and energy to collect it and actually, they can't, actually end up in the end using the data. It's fake data, okay? All that went live, all that went operational before ChatGPT even became known. So again, don't let the media sort of lure you into, it's all new, it's all better, okay? So some examples. So let me start with the problem. Our customers said, I don't have room. I don't have size, weight and power on my platform to do the processing that AI requires, okay? So think about an airplane that's going to -- you're going to hang a gimbal off of a wing to be able to mount something like this. It's got an electro-optical and infrared camera in it, and you're obviously going to look down, you want to do object recognition, okay? We can do that. We build -- we design that gimbal. I don't know how big it is. Pull on my hand, 260 grams about the weight of a billiard ball. All the processing happens on that gimble in addition to the cameras and all that comes back in the aircraft is the feed of those pictures with the objects identified and tracked. Customers like, thank goodness because they didn't have room to put anything else on the aircraft. Just one example of showing we can do this stuff at the edge. Second example, and Fade had the same challenge, right? You have analysts who have very high important jobs of creating things that do not trust the technology, okay? It turns out, we have been making maps from overhead imagery for many, many, many years. Extreme precision required, okay? Marking roads, bridges, ingress, egress points for mission use, navigation, change detection, being able to show something that changed on a map in the last 12 months. Do you think those analysts were interested in AI? We've been doing it for a long time. It's mission-critical. There's no way. So again, built a capability that tipped and queued them and said, here's what we think. We think these are the roads you want to mark. Click, yes, yes, yes, you missed one. Train the model. Thank you. No, got it wrong, Train the model. Thank you, okay? We deployed this 2.5 years ago. Incredible game-changing throughput. And we've run the table on the task orders in this area for the last 2.5 years. Good use of putting it together. Last example, okay? A lot of intelligence work involves hundreds, if not thousands of hours to try to find a needle in a stack of needles. Okay? Think about what happens on the dark web. Somebody is going to be involved in an illicit transaction. They're going to have a crypto wallet ID that is not going to be associated with a name. It's an anonymous crypto wallet ID having -- and you can truly say it -- you can't connect that to an illegal transaction. You can't connect it to a person. We're now using generative AI to sift through all the data we pull in from the dark web as well as data we pull in from the open web to de-anonymize that and actually associate it with an individual. That in itself is astonishing, but not useful to an analyst, to an agent because they have to prosecute the case. What they need is the entire stack of evidentiary evidence, the locations. So how do you reach that conclusion that they can then go and prosecute as a case and track this person down. Nobody else is building that. That's what we build. That's what the benefit of knowing how to do mission when you apply technology, okay? It's much different than companies that offer up a really cool tool and the opportunity for that customer to buy a bunch of professional services who don't know the mission to be spent to come up with something. Big difference between us, and I think you used the word they earlier, John, us and they. We're using AI internally at the company. The first place that we're using is for prediction. To do prediction like, can I predict someone is going to attrit. You need a lot of data. You need a lot of years of data. We started this effort before COVID, which turns out as quite a while in our rearview mirror, okay? We pulled data from dozens of our internal systems to build a data lake, and then built with the data scientists, predictive models to do things just like that. Can I predict the likelihood of someone attritting? Can I predict -- can I go to Jerry's playbook? And can I predict that the probability of winning an opportunity is lagging and then give the clues as to why that is, so that action can be taken in the capture pursuit. Can I predict planning bias in the financials, okay? All about the data lake. Second area is applying AI within the world of decision support. DeEtte used the word operational insights. Can we put the data in the hands of the decision-maker because what's important, speed and accuracy of decisions or running programs, running an organization, speed and accuracy. We can get that data in dashboards, get that data available to them, enhance that data so they can move between it. It's an amazing thing for someone that -- first, I've worked in this industry for decades. It's amazing to watch a monthly operating review or a program management review have no paper, but just be live data and go through that. It's an amazing thing that we've done across the excellence in performance, okay? And the last area is can we use AI to have -- improve some efficiencies internally. Can we automate the mundane, right? Nice thing about automation is it does the same thing over and over, so it's really accurate, can be more efficient. And we can put the human beings brains to work on something that's a higher-level task in the company, which is exactly what we're doing, okay? We also -- we work in a world of a lot different set of rules than commercial. We can't go out to ChatGPT. Some company in our domain says they're doing that, I question their understanding of the government's rules and regulations for security. So we built internal to our -- a similar service, a CACI Chat, which gives all of our employees access to Gen AI at their desktop for writing assistance, for summation, for sentiment, okay? And we built that on an open architecture, which means that we can plug in the latest model. We just plugged in Cloud 3.5, which is a great model. Once we got that in the government's GovCloud, into AWS Gov Cloud, where we have to operate, okay? We asked a consulting company, well known and respected. They have a really strong AI practice. We said, how are we doing? Okay? They said Well, in the area that, hey, you are in the upper quartile on your data lake. And we don't know anybody who's doing the predictive work you're doing. On the data warehouse, they said best practice, great. We actually haven't seen someone take it so far as to remove all the paper and do dynamic insights on their reviews. That's a best practice. They were pretty impressed. On the AI-enabled efficiencies, they sort of said, good direction, can do more. That was what we needed, a little kick to move a little bit faster and a little bit more aggressively on it. But they really liked what we had done around CACI Chat because they didn't see anybody else doing that. And of course, it doesn't have lock-ins. We don't not paying a subscription fee. We're not paying costs like that. Last piece, internal and external, another media giant, right? Let's do code with AI. We're being handed 200 applications from NASA. We're not writing code. We're learning how the code works. The first thing you need to do and the best use of generative AI around software development is code explanation. It turned out GitLab's research is identical to ours, and that's actually where they have focused. It is great for a developer to take a piece of code and ask what does this do? Oh, that's -- it's building a table like this, and it's got 5 variables, okay? We use it. We -- you're hearing the focus? We focus where velocity and efficiency come out of doing software development. At some point, it will be great for code generation. But right now, the bang for the buck is in code explanation, the bang for the buck is in the software process. Velocity and efficiency. Last piece is on responsible use, really important to our customers. They want to ensure that what we do is ethical, explainable, accountable, meets privacy requirements. We put this in place. It's probably important to you and the companies you invest in that when someone is adopting AI, they're doing so within a set of guardrails. They understand what those guardrails need to be, so they don't get themselves in trouble legally, don't get themselves in trouble contractually or inadvertently bring bias into their operation. We use it for everything we do for our customers. We use it for every tool that we take a look at using. We asked General Jack Shanahan, who was the first director of the DoD's CIO, Joint AI Center, the Jake. We said, sir, what do you think? Good to him come back and said, this is perfect. He actually -- he said it was the first time he had never been able to offer suggestions. That was a really nice remark on his point. But we hit the nail on the head with a good, executable policy that didn't bring a lot of bureaucracy. So summary. We're leveraging all types of AI, that whole chart that I put in front of you. What makes us different is we understand the data. We bring the right hammer. We're open in our implementations. We provide the government the model. I'm moving so fast. It's not a competitive disadvantage, okay? Avoid the heavy license cost, data rights, vendor lock. We're leveraging it for ourselves, prediction, insights, efficiencies. We're doing it inside our security boundary, really important. The government is moving to tell us to attest to the veracity of our software development that our software supply chain is secure. You have to do things inside your security boundary. I think like over other overhyped technologies, so those of you that were around 2008, 2011, remember when cyber was everything, and you were asking questions, what's your cyber strategy? How much of your revenue is derived from cyber? How many of your programs have cyber in it? And we come to realize they weren't good questions because when the hype sort of blew away, it was part of everything. The same is true for AI. For us, it already is, part of what we're doing across our portfolio. So software is our superpower, awesome to hear customers say it. We're developing, delivering, deploying every day. Same for artificial intelligence, developing, delivering, deploying every day. So now I'm going to bring George back up to introduce the time we get to spend in the technology exhibitions. Thank you.

Okay. Glenn, great job. Great job. So now we are going to start our circuit for our technology exhibitions. And so the 3 exhibitions that we have for you today, 3 areas that we've discussed with you often and 3 areas that you often ask about, the electromagnetic spectrum, network modernization and photonics. And the exhibitions are going to be detailed briefings by one of the subject matter experts that I introduced earlier. They will include a graphic presentation as well as the physical technology and pointing out the physical technology. So they're going to provide deeper insight into these areas, and they're going to -- they're really going to make it real as to how CACI is special and CACI is different, okay? Just wanted to point out the location of the exhibitions. The electromagnetic spectrum exhibition, most of you probably saw is right outside the door here in the entry hall just outside Freedom Hall here. Down the hall toward where you checked in and to the right, okay, you go down that hallway. And then on the left, there's the Hamilton room. There's 2 exhibitions in there, the photonics and the network modernization exhibition, okay? So just so you know where those are. And here's how we're going to kind of run this. We've divided you into 2 groups. So if you look -- there should be a card in your name badge and you might have taken it out, but please find that. It's going to have either an A or a B. A is going to be black, B is going to be gray. We've divided you all into 2 groups, right? You have based on the letter and the color there. We're going to have a group leader with a sign sort of rotate you around to the different exhibitions based on the time frame that we've allocated for them. Each exhibition is going to last about 12 minutes, okay? Please hold questions for the Q&A session after the event because we're basically intending to use that entire set of time. We want to make it very deep, but keep it also very concise and punchy. And we want to use that time for the exhibition, and then we'll have time to answer questions in the Q&A session. And again, the exhibitions will remain open after the formal presentations have concluded. So if you want to go back and spend a little time, you can do that. After the exhibition, the group leaders will sort of rotate you around to the next spot. So they'll help get you around to the right place at the right time. So please stay with your group. And then after you've seen all 3 of the exhibitions, come on back here for the financial review for the Q&A session and just for us to wrap up. If I didn't say it before, please keep the mobile phone silent, but I haven't heard any. So it looks like you're ahead of me there. The first group, Group A is going to accompany Stephanie. Stephanie in the back raise the Group A sign, okay? So if you're Group A, please head back with Stephanie, you are going to start in Photonics in Hamilton, okay? Group B, hang out for just a second. Group B, we're going to take -- you're going to take a break just hanging out in the entry hall just outside the room here once Group A gets going. Each group is going to see all of the exhibitions and is also going to have a short break as well before we end up back here, okay? And then we'll see you all back here in about 50 minutes. It looks like Group A is heading out. Group B, you can go ahead and head out to the entry hall there, take a short break. We'll come on out and keep the company. And then at the appropriate time, Darlene, who is also in the back and has Group B will take you around to where you're supposed to be. Thank you. [Break]

Okay, everybody. Let's go ahead and get started. A couple of things. So before I introduce our CFO, Jeff MacLauchlan, for our financial review, I just want to make everybody aware. Obviously, those in the room see that we've provided Jeff's financial presentation in hard copy form. Those who have not seen it -- those who are virtual and have not seen it, it is also posted on our website under the Events section of our IR website. So Jeff's financial presentation is out there and disseminated and available for everyone to see. And so with that, let me introduce Jeff MacLauchlan.

Well, good afternoon. Ready for some good stuff? All right. A few snickers. I thought you guys have been out walking around, got the cobwebs knocked off. All right. So I'm not going to read this again. It's the same one you saw earlier. It's only included here because this portion of the presentation is produced separately. So to the extent you pass it on or it finds itself somehow disconnected from the broader presentation, you'll still know that there are forward-looking statements in here. So hopefully, the last couple of hours have been productive. It sounds during the breaks like it has been. Several of you have commented on the fact that you've seen a little more, particularly in the exhibitions. But you've seen now this morning, John has shared some ideas on our strategy. Jerry has given you a little insight into what about our business development process is different. We've talked about execution, some with DeEtte and Angie. Glenn has hopefully whetted your appetite a little bit on technology. And hopefully, several of you have a sense from the technology exhibitions that maybe you didn't before. One of the classic issues, of course, in this sort of a business is it's hard to kind of make some of these things tangible. And so one of our objectives here today was to do that. So I promise you we've just scratched the surface, but you've seen now 3 of scores and scores of things that hopefully gives you a little bit better sense of what we do. So let's talk about how that all comes together. I'm going to start with our value creation model, and I'm going to use this to frame my remarks over the next 10 or 15 minutes. Many of you will be familiar with it from earlier IR communications. We often include it as part of the context and framework in our earnings call. So nothing new here. But there are 4 pillars to our value creation model that we're going to spend a minute on here and talking about some things as we move forward. Predictability, obviously, is key to planning, and we're going to talk a little bit more about what that means in terms of larger and longer duration contracts and the attendant visibility that, that brings and how we're able to use that for ourselves and also how to share some of that with you to assist in your own analysis. We're also going to talk about profitability in a little bit more detail. Profitability is obviously very important and sort of foundational to the generation of free cash flow, which is the point of all this that we do. It's also important to our ability to continue to invest, which we're also going to talk about a little bit more. We're also going to talk about optimizing the capital that it takes to operate the business. And that really means CapEx. It means working capital. It means using our precious resources in the most efficient and highest leverage kind of way. And then we're going to conclude by talking about the flexible and opportunistic cash deployment decisions, capital deployment decisions that we get to make because we did the other things. So we're going to come back and share some of the things that we've done and how we think about that going forward as well. So this is Jerry's chart. And Jerry did his usual great job of explaining to you why this is important to bid efficiency, why it's important to shot selection, why it's important to our win rate. But it's actually in the context that we're going to talk about it now, it's important because it also gives us visibility into the business that we haven't historically had. And what that means is that we now have a book of business, you will all be familiar with this statistic that has about 4 years revenue and backlog and everybody looks at that and we do at least and say, okay, well, that feels pretty good. I like the way that looks. But the real important thing about that is that if you look at our FY '26 revenue, over 75% of that revenue is in backlog today, programs awarded and ramping and being executed, which is not historically visibility that we've had. And that gives us a lot of advantages in terms of thinking about investment decisions, thinking about the day-to-day operation of the business and obviously gives us much greater visibility than we would typically have in a portfolio of smaller, shorter duration programs. So that increased visibility is a great advantage, but you have also probably gotten a sense this morning that not all these programs are exactly alike. And we've talked about technology and expertise. They have some different profiles. We're going to talk about here in a minute. But you also have a sense, hopefully, from the technology exhibitions about some of the software-defined technology, and you'll appreciate as you think about some of the things that you saw that they even have often yet a different ramping profile. So let's talk about that a little bit more. This profile would roughly follow or this profile would follow an expertise job, a new win expertise job, which generally ramps fairly quickly. Often it involves picking up an incumbent workforce to some degree. It's a different sort of talent acquisition strategy, and it is -- it ramps relatively quickly. All of you will appreciate. New technology job often ramp somewhat more slowly. This can be for a couple of reasons. Sometimes the early phase of the program is design and development, and it leads to a later higher volume phase. Sometimes the beginning of the program is planning the balance of the program, somewhat like our ITaaS Enterprise IT as a Service for the Air Force. But they ramp a little bit more slowly even though they ultimately likely may be larger. And then finally, you've gotten a little bit of a taste this morning of some of our short duration technology solutions, which often get ordered and make their way to revenue relatively quickly. So if you think about some of the things that you have -- some of the things that you've seen this morning, you will appreciate, for instance, we have a TLS IDIQ contract where we're getting orders for those all the time. We have a couple of other technology programs, Beast, Kraken, handheld devices that are very quick turn. They're either sold from a limited amount of inventory or they're short duration assembly, and they turn relatively -- convert to revenue relatively quickly. So as a practical matter, what that means, I'm going to call your attention here to years 2 and 3. You'll see the -- whatever color that is, burgundy colored bar is a ramping expertise job. And you'll see that in year 2, it's actually larger than 5 stacked technology jobs next to it. Even though by the time you get to year 3, the technology jobs are actually larger in total. So this differential in ramp rates makes it -- presents a modeling challenge to all of us. And we attempt to be mindful of it when we give you guidance. But sometimes if you find yourself scratching your head when we give you guidance, it will have something to do with this phenomenon. An increasingly diverse program base has different characteristics. So let's go to the second pillar and talk a little bit about profitability and investment. It's true at some level that investment and profitability and earnings are a trade-off. But we do know that they do not have to be mutually exclusive. There is a virtuous cycle of bidding and winning larger, more differentiated work and with those enhanced returns, enabling the pursuit of even more longer duration and differentiated work. And we think that, that's the -- very much the pattern that we're on. So to put that in terms about investment, you can see here the correlation or you can see here the simultaneous increasing margin and increasing investment. So in the last decade, we've improved margins from the mid-8s to the high 10s, while we have also increased investment in IRAD, R&D and B&P, bid and proposal threefold from about $40 million annually to $130 million. So they do go together and they are a mutually reinforcing phenomenon. Efficient capital management. This is a similar story in that it tells -- it kind of outlines the journey that CACI has been on for the last number of years. You can see days sales outstanding. A decade ago, we were in the mid-60s. The last couple of reporting periods, we've been in the high 40s, a tremendous advantage in cash generation, freeing up investment in receivables on the balance sheet. At the same time, if you look at the graph on the right, the changing composition of the portfolio that we talked about a chart or 2 ago has also driven a little bit of modest working capital usage. And you can see that in the right, that's largely inventory, but this changing rotation still leaving us with a relatively light capital business is using some capital and is somewhat offsetting the benefit of the reduction in the days sales outstanding, both of which obviously we continue to devote a lot of attention to. When we turn this into a function of revenue, the prior chart for working capital was dollars, this is a percentage of revenue, you can see that the similar trend exists, but you still see the slight tail up, although it's mitigated somewhat by the growth in the revenue base, you can still see the slight tail up in the last several years, 2 years or so related to the working capital usage. You can also see that we have a modest increase in working -- in CapEx, excuse me, but still a very capital-light business by nearly any metric, relatively low investment needed to support the portfolio that you're seeing today. So flexible and opportunistic capital deployment. We obviously are still relatively modestly leveraged at 3.2x. That gives us the opportunity to continue to be flexible and opportunistic. Although most of you will be aware of the fact that our pattern has been to lever up for acquisitions like our recent Azure one and then quickly delivered with the cash flow, which is our plan. But leaving us the opportunity to be flexible and opportunistic. We also learned as part -- well, we knew this, but it was underscored for us as part of the Azure Summit financing that we enjoy really great access to capital. Most of you will be aware of the fact we recently undertook a $750 million Term Loan B, that was significantly oversubscribed. We went back and improved the terms. The book came down a little bit, but we were still about $2.4 billion relative to the $750 million that we wanted to borrow -- that we did borrow. And we were successful in improving the terms to a spread of 175 basis points and an OID of 99.75. That's the best terms that a debut high-yield issuer has had since 2021. So we were quite happy with the terms where we ended up, but we're also quite happy with the response and the willingness of lenders to join the group. So let's talk a little bit more about being flexible and opportunistic. I'm going to talk on the next chart a little bit more about M&A and share repurchases. But for those of you that may not have been focusing on it, I'd like to point out, we're particularly proud of the fact that we've repurchased about 12% of our outstanding shares in the last -- since fiscal '21. We have about $337 million authorization remaining outstanding, but it's a great accomplishment in the middle of this growth. And a significant acquisition program to have been able to retire about 12% of our outstanding shares. Let's see -- so M&A. This is sort of a highlight of some of our more significant acquisitions in recent history. The bar on the far right, that is not over a year, is related to the capability that the acquisitions grew, fed into. So you heard John earlier say that we're strategically focused and focused on filling in gaps in capability and customer footprint. And you can see here that we have been quite disciplined in ensuring that the acquisition targets that we focused on fit into one of the areas that we've identified. You also heard John say during his remarks, that our acquisition program is in a little bit of an evolutionary state and that we are looking for adjacent ways to move into the technology stack and perhaps even some convergence in these areas on the right. And so we're thinking about this somewhat differently than we have historically, but still very much focused on the things we talked about, very much oriented to staying in places that we know with customers that we know, capabilities that we know and having a strong software-defined element at its core. I would also point out that for those of you that have listened to several of our recent earnings calls, we've talked about the fact that valuation acquisition multiples have not reacted the way we would have expected over the last 2 or 3 quarters. And I'm happy to point out in both the Applied Insight and Azure Summit acquisitions, that we were able to successfully conclude transactions at multiples that we thought were a little more buyer-friendly and a little bit more appropriate for the businesses that we're in. So that has also been -- also been satisfying development over the last couple of quarters. So, based on what I've just said and based on what you heard John say earlier, this will continue to be an area of focus for us, and we have every intention of continuing to be serial and disciplined acquirers. I alluded earlier to the fact that we have a historical practice here of levering up, making an acquisition and then moving back into our target range. Our view of our target range is not different. The high 2, 2.5 to high 2s is where we'd like to be as a function of trailing 12-month EBITDA. That lets us move into the low or mid 3s for the right opportunities, but is a very comfortable balance between the benefit we get to our weighted average cost of capital and balancing that with the flexibility that we have of being able to jump up for the right opportunistic reasons. I'm going to expand a little bit on the share repurchase comments that I made a few slides earlier. You can see here that over -- a little over $900 million, I think $933 million of capital that we invested, retiring those 12% of the outstanding shares since FY '21, I would note that the average price we paid across that period was a little bit over $275. So I think this has been a particularly canceled use of capital and shareholder-friendly investment. Some of you may have come here thinking you were going to get to see multiyear targets today. The increased visibility that we've been talking about this morning gives us the opportunity to share with you that we have today a fairly confident view of the next 3 years and that we see top-line revenue growth in the high single digits, mid 11% EBITDA margin and that we expect to generate over $1.6 billion of free cash flow. And that's a free cash flow per year growth of 15% per year, a compound annual growth rate. I would also call your attention to the fact, maybe most importantly, that our sharing of this view doesn't reflect any benefit from the deployment of that $1.6 billion. So whether those are additional acquisitions, and/or additional share repurchases. Those are not reflected here. So this is our view going forward for the book of business that we're operating today. And because of that, I think you could reasonably assume some benefit to the deployment of $1.6 billion. Just because I happen to be in the business of giving financial -- sharing financial insight, our purpose today here has been to talk about the longer-range view for CACI. But recognizing that we have just closed on Azure Summit and our last guidance that we gave in our earnings call included Applied Insight, which we had closed on at that point but not Azure Summit, which we had not, we wanted to give you an update here on our outlook for the current year, including Azure. So we now see revenue in the range of $8.37 billion to $8.57 billion. That's revenue growth, topline of 12.2% to 14.9%. Adjusted net income in the $523 million to $543 million range, yielding a diluted EPS of $23.24 to $24.13 and a slight increase to our cash flow guidance of $445 million, at least $445 million. And the reason for that, of course, as you study the chart here for a few minutes, is that we have some meaningful additional interest expense. So the incremental earnings are greater than the incremental interest expense, but that's the reason that you don't see it all fall through. I should also point out that we still see our quarter 2 EBITDA margin in the mid-10s. This is consistent with what we said before. There -- and that would reflect the inclusion of Azure Summit for the portion of the quarter. We also made some changes to our management compensation structure for FY '24, consistent with -- while we have always been focused on cash flow, we wanted to drive it a little bit further into the organization and have it more closely aligned to shareholder objectives for all of the members of our leadership team. So there are 3 basic elements of our incentive compensation structure that are sort of cash-centric. We added cash collections and free cash flow in FY '24. Every participant now in our annual bonus plan and our long-term incentive program has at least 2 of these 3 elements of their compensation. And I would like particularly to note that every line CACI leader, every program manager, every LOB leader, has an element of his or her goals that is tied directly to a cash collection target. So in summary, we have a disciplined strategy and execution model. I hope we've conveyed that to you well this morning, focused very much on free cash flow generation. We have a very refined and developed framework for shaping, bidding and winning, and executing long-duration, high-value work. That makes us more efficient and successful as bidders, and it also yields a backlog that gives us visibility that lets us make, we think, better investment decisions and also share some of those insights with you to help you make better investment decisions. And I'd also like to point out, again, that greater returns mean more free cash flow that yields more investment and more growth. And finally, hopefully, I've left you with a conviction that we are maniacal managers of capital, both the resources that we use to operate the business, but also disciplined and analytically based approach to deploying the free cash flow that we generate. So I think we have Q&A.

So while we just bring up another stool for John, and ask John to come up and join Jeff to conduct our Q&A session. We have a couple -- we should have a couple of microphones that will be making their way around the room. And if you have questions, go ahead and raise your hand. I will give Jeff a second to get situated. If you have a question, go ahead and raise your hand. And please if you will -- please, if you will, identify, if you can give your name and your firm, before asking your question, we would appreciate it very much. And with that...

Seth Seifman from JPMorgan. Just a quick clarification and then a question. On the clarification, the 3 years we're including in the target here is that's '25, '26, '27?

That's right.

Okay. Cool. And then as a question, I guess, you've laid out the investment and you talked about being more technology oriented, doing more investment. I think one of the ways that people have thought about businesses in this submarket of defense historically is that there's very high ROIC because the IC is very low. The denominator is very low. So can you talk a little bit about the way that you target return on investment now that you're investing more and the steps that you take to make sure that, that reaches an adequate level?

So I was actually having this discussion the break with one of your colleagues. Even though this is slightly more investment than you would see in a classic expertise business. It is still by any traditional metric, a capital-light sort of business. You saw some products this morning -- sorry, I wasn't supposed to say products. You saw some things this morning that require some inventory and are necessary to deliver the solution, but this is about software. And to the extent you see something tangible that you can pick up and look at, it's electronics assembly integration test. It's a light -- it's a light investment model in any sort of classical business paradigm. I don't know if you probably want to add to that or not.

Mariana Perez Mora from Bank of America. First, I'm going to do a follow-up to the investment. Is there any way we think about IRAD R&D or even investment in training towards having the capabilities to actually be able to execute on these things? Is there a measure on an amount of sales you spend there? How should we think about that?

John will -- want to add to this, I'm sure. But I mean it's -- the investment is really driven by the anticipated return if it meets return hurdles and makes strategic sense to deserve investment. If I understand your question correctly.

Yes, I think I'd also add that, as we look to best manage investment dollars, there's a number of those dollars that are in our rates. So as long as we're staying rate neutral to not drive additional cost towards our customer set, that's one thing that we watch. The second thing is that we are always each and every year looking to take costs out of the business so we can redeploy it in. This past year, we look to reimagine how we support the entire business, as we get larger looking at how does our line organization and our staff organization take everything to the next level. So part of that was a reduction, in spend, in certain areas and now pushing that towards training programs, training all of our PMs. We're now in 3 different things that we deliver. We deliver on technology jobs, you deliver expertise jobs and also soon larger-scale production jobs. So how do we provide upfront training to all of our PMs to make certain we've got the right workforce to be able to keep up with not only the level of growth but where we're going to see that growth? We will continue to drive our recompete rates up because as Jerry mentioned, for every $1 million, I don't have to spend at replenishing the current book of business we have, the better off we are. And since our rates can sustain that level of B&P and IRAD spend, how do we take dollars that were traditionally spent to rewin work and recompete less and go after more new business? So it's a sort of a 6-sided rubric that we continually watch. But for the last number of years, I'd say since 2019, we've been able to live within the rate structure that we're looking, we're looking for. So we know have margins, but we are able to continually invest in areas that we haven't previously invested.

Another one on M&A. So twofold. One, if you can tap on like exactly or give us more color on what could be the next capabilities you're looking for? And the second one, doing acquisitions is not easy, and you have proven that actually worked, what do you do differently for actually be able to acquire those companies, retain talent, expand those capabilities to different customers? What is the secret sauce there?

Let's see, the first question was around -- what was the first part again -- yes. So I try to touch a little bit during my remarks and sort of reframe sort of the evolution of where I see us going in the M&A world. Look, we are never buying revenue. We are buying capabilities, customer relationships and past performance gap -- gap fillers because we believe that our M&A plan is to drive long-term growth, share buybacks shorter term. So if we looked at where we want to head next, I still believe there's a great market, a large market because we're just introducing ourselves to this, which is in the software-defined technology marketplace. We're going to start to see continued growth as we go out through the next 3 years and then beyond. But what's quickly becoming evident because software at its base level is far more -- it's driving a much bigger change, not only at the software-defined technology level, but at the mission package level and above that level. So it shouldn't be a surprise that a company has done a great job at bringing software-defined technology to the market that we wouldn't look at how do we combine 3 or 4 or 5 of those elements together and start to provide mission packages, whether it's on ships, planes, tanks and the like Azure Summit was the next step. So you should all see Azure as a company that really understands the mission, really understands electromagnetic spectrum, really understand software-driven capabilities out there, but they also provide signal processing and chassis that we can put on to other platforms where we can bring additional software to that. Picture going beyond the chassis level and get into full-fledged mission packages, roll-on roll-offs. Jason talked about being able to look at unmanned systems. How do we take a number of the software-defined technologies we have and sort of daisy chain those together? So at some point, in somebody's UAS is out there as we are with a couple of UAS vendors, providing a SIGINT collection package, a drone detection and [ defeat ] package and ELINT package. So how do we become that next-level integrator for lack of a better word that puts us onto many more platforms? I think your second question was around as we continue to buy different-looking companies, the one thing that remains consistent is we get great talent, both applied insights in the digital transformation world, cloud, some phenomenal talent -- talent there. We're always talking about talent. We had Angie come here to Investor Day, which I don't think there's a lot of CEOs out there that bring their CHRO to tell the talent story. But we bring Angie and her team here because it's very differentiating. So Azure, another 200, 250 folks who understand the mission, understand software development skills, both embedded and not. So you should see us continue to do that. And we have been able to sufficiently move forward, whether we've done complex acquisitions or "very, very simple ones." But I still think that, that small to midsized company fits us best. I would not say in the next 3 years, unless times change, you would see us lining ourselves up for a near-peer acquisition. That's just not what we're looking for today.

Maybe if we could start with the targets. Thanks guys for technology exhibits. But Jeff, on the EBITDA margins to start, but just given the portfolio is changing and evolving and you're offering more value to the customer and some of your platforms are taking off, it's not only one program. The EBITDA margin target is relatively modest in terms of enhancement and what we've seen over the last 5 years. So what would you say is contributing to that?

Well, that's -- it's an interesting question. I think actually, if you look at the Azure Summit margins that we talked about in the acquisition announcement and if you look at their weighting as part of the portfolio for a full year, that ought to be the sort of the size of the increase. If you look for the partial year in FY '25, it's -- we said low 11s, but it's 20 or 30 bps versus 50 or 60 for full year. So I don't know, there may be -- I think as we get into the business and we understand more, our view of that might change. But that's the range that we're planning for, and we feel comfortable communicating to you at this point.

Yes, I'd also add, these are 3-year targets. We're not going to give you guidance over the next 3 years from what we can see today. I think mid-11s is a good target for us from where we sit today. As Jeff mentioned, Azure might add because it's $400 million and an $8.5 billion portfolio, maybe it adds 20 bps, perhaps. If you look at high 10s to mid-11s over the next 3 years, that's materially EBITDA margin growth. It would continue to put us top of class in a non-adjusted EBITDA margin. And again, I've said many, many times that I'm not willing to short our investments to hit a one-quarter or a one-year EBITDA margin number, so I can say we have the best in the sector because sector is going to continue to change. So over a 3-year window, I think mid-11s is fantastic, for where the company sits now. And it is that target point that we'll be looking to achieve? And as we move out, we'll be doing additional 3-year looks, and we'll see where we rest.

Can I ask on the top line as well, if that's possible on the 3-year target, the high single digit? It includes maybe 3 points from acquisitions. So how do you think about the underlying market growth versus CACI and how you're gaining share?

Yes. It obviously includes the Azure Summit and Applied Insight in the takeoff point. They obviously anniversary in the 3-year period. But we've given fairly specific indication around the size of those 2 businesses and some good insight into the growth. So I think you could you could model it as you choose to. But obviously, by the end of the 3-year window, it's all organic.

Matt Akers from Wells Fargo. Could you talk -- I guess, kind of following up on that last point, the high single-digit growth. Can you talk about what budget growth you're kind of assuming in that? And how sensitive are you to that given you've got some better visibility on some of these programs? And along with that, I guess, specifically some of the overseas supplemental funding, Kind of can you talk about your exposure to that?

Yes. So let's take the last one first. Look, we're not a large overseas budget consumer today. We would like to believe that we have a greater percentage 3 years from now than we do today. I've been sharing about we're going to be a slow and cautious international market grower. We'll look at Poland. We'll look at Eastern Europe. We're already delivering software-defined tech to all of the 5 Eyes countries. So that's a nice start for us. Doing international business is very, very risky, and it costs an awful lot of money. So we're going to be very, very judicious and very strategic in how we build that out. The first part of your question, was around -- remind me again that.

Just what budget growth you're assuming within the high single digit?

Look, I've said many, many times. When people ask me if the DoD budget is $800 billion or if it's $865 billion, what happens to us? Absolutely nothing, okay? We're in very narrow deep funding streams with our programs very well-funded. The type of work that we're going after, would most likely be modernization through sustainment funds. I think you'll see spectral budgets grow. I think you see a lot of the current technology programs that we have grown. And we're in those areas that are extremely important. They're not nice to have areas. They're actually extremely important. Whether it's network modern -- modernization at the enterprise IT level, the federal government today spends between $80 billion and $85 billion a year. And that's an area that you have networks that sort of look like that cabinet that Dave showed you. We're also looking at modernizing networks for the government to get cost of but then also add additional capability so they can take their enterprise networks and the mission networks and they can merge those together, carrying multiple levels of SFI data over those. Those are not program dollars that traditionally are talked about at a macro level. We're not building large-scale platforms. We're not looking at 3 subs versus 1 and 7 surface ships versus 2 and 48 fighters versus 2024. They are really large portions of other companies' budgets. The markets that we're in will remain funded. It sort of looks at that 2% to 3% nominal growth rate, which is the same as our addressable market grows, and as long as budgets hold there, we're not looking at any issues as we look at budgets going forward.

David Strauss from Barclays. Just wanted to ask on the cumulative free cash flow. If I'm doing the math right, it looks like a conversion rate on EBITDA at around 50%. Why wouldn't this be a business that converts higher than that given low capital requirements?

Yes. It's really related to the working capital growth associated with some of the programs that we highlighted this morning or that type of program, not the specific program. But there is some working capital appetite in the business that will consume some amount of capital.

What have you seen for -- What have you assumed for working capital in that forecast over the next couple of years?

Yes. I don't think we've -- I think we probably aren't going to give any specific modeling assumptions there. You would probably reasonably draw some conclusions from the data that I did show in the current period related to the growth that you can see. But I think that's probably all the specificity we we're going to be comfortable giving at this point.

Any questions are on the line?

Scott Mikus from Melius Research. John, Jeff, I have a question about the optical communications terminal link. You mentioned space to air, space to ground. Just wondering is there anything that prohibits air-to-air, air-to-ground and then long term -- well, those optical communications terminals eventually replace Link 16.

Probably won't be able to touch much on the end of it, but I can probably call on Linda to talk about that. Look, we've been very successful at doing space to space, space to ground, space to air, okay, which is -- which has got us fully consumed today. And over the last couple of years, we've delivered a couple of dozen terminals. We're looking to do 6 to 8x towards that. Maybe you can talk a little bit about a few more pieces of information on the [ ELINT ] application of where we're going ahead.

Yes. So there is nothing that prevents you from doing air-to-air or air-to-ground, it would be a slightly different design likely because it would have to be optimized for those applications. So -- but we have a good basis from which to start our designs and in order to do those types of applications.

Anything online? Okay. If you want to go ahead and make some closing remarks.

I want to sort of come full circle and close how we opened. Look, we have a clear and consistent strategy that focuses on 7 markets. Cumulatively, these markets drive a $250 billion-plus addressable market for our now $8.5 billion company. Plenty of room in just about any foreseeable budget or political environment. These markets represent areas of compelling bipartisan and enduring national security needs. Importantly, we're doing so with differentiated expertise and technology. We approach those needs in fundamentally new and different ways that address the need for speed, agility, and innovation that the geopolitical environment is now driving. Can you all go back one slide, please? We don't have a reverse button here, I don't think. Thank you. We're well positioned to execute against what the market is asking us for. We've got the right talent, got the right strategy. We're in the right markets. We differentiate well. Our execution, our talent, all of those enable us to hit our 3-year financial objectives. So we are a long-term focused company, and our growth strategy is very different than others. I don't measure others' growth. We're not trying to match somebody else's growth strategy. I frankly don't watch anybody else's growth strategy. We tend on our own. We make certain we're measuring and driving the growth given the strategy that we have laid out. We measure ourselves on a fiscal year boundary. We do have things move from quarter to quarter. That's fine. Nothing to be concerned about, but that is another measure of why we're different in the government services sector. We don't talk about days in the quarter. We don't talk about billing days. We don't talk about implied costs of a bench set of labor that we discount or remove from our revenue, and we surely don't adjust our EBITDA margin going forward. We actually look different because we are different. The lowest risk approach for us is to grow and do exactly what we did and what we shared in 2019. That's to continue to deliver on what we have today. Our expertise and our technology. Truly a pleasant mix of both. Every time we have a 7% growth in expertise and a 5% growth in technology, we get questions, don't you wish technology could grow faster? I wish they both could grow faster. At the end of the day, it is the right mix. It's the right balance between what expertise provides to technology, what technology provides to our expertise work. We're going to continue to drive programs like #MakingMoves and our referral program. And just like we can redeploy investment where we recompete less so we can bid on new business more, we get to redeploy talent acquisition assets because the more #MakingMoves works and the more that our referral program works, the less dollars we have to spend acquiring talent. And we allow our talent acquisition team to focus on setting new ways forward. I hope that you saw today that our leadership team is deep. It is a pure pleasure for me to lead this company with a team of some of the folks that you were able to meet during this morning's briefings. Half a century as a publicly traded company with a strong track record and performance, and we're still not done. So I want to thank everybody who is out on the web today, all of you who took those drives in on a Friday morning to actually spend the morning with us to understand where this great company goes next. I can assure you that we're not done yet. And the fact that we are starting to put 3-year targets out there should give you a much more -- a much clearer picture as to what the future of this company is going to be. With that, thank you all very much for coming today.

Everyone, thank you very much for attending today. We really appreciate your time and your attention. A couple of brief items. First of all, if you have any additional questions, please do not hesitate to reach out to Jim Sullivan and myself. We're happy to assist. We do have some lunch down the hall. The exhibitions are also open for a little while longer if you have any follow-up questions or wanted to go back for another look. We will be around as well for a little bit. If you have any additional questions, just let us know. But again, thank you very much for your time. I hope everybody has a great weekend. This concludes our event.