CACI at Raymond James Conference: Strategic Focus Amid Defense Budget Concerns

On Tuesday, 04 March 2025, CACI International Inc. (NYSE: CACI) participated in Raymond James & Associates’ 46th Annual Institutional Investors Conference. The company’s leadership addressed investor concerns regarding defense budget volatility while emphasizing strategic initiatives that underscore CACI’s resilience and growth prospects. Despite potential budget cuts, CACI remains optimistic, highlighting its differentiated expertise in high-end technology and cyber operations.

Key Takeaways

• CACI is strategically focusing on high-end expertise areas like electronic warfare and cyber operations to mitigate price competition.
• The company has a strong backlog of $32 billion and has booked $5 billion in awards in the last two quarters.
• CACI’s leadership is confident in achieving high single-digit growth rates and maintaining margins in the 11% range over the next three years.
• The impact of defense budget cuts and the DOGE initiative on CACI is minimal, with only a small fraction of revenue affected.
• CACI is proactively transitioning towards commercial-like software processes to stay competitive.

Financial Results

CACI outlined a robust financial position with a diversified revenue stream:

• 55% of revenue comes from pure technology, while 45% is from added expertise.
• 6% of revenue is generated from the federal civilian space.
• The company has a four-year backlog valued at $32 billion.
• 98% of fiscal year 2025 revenue is already secured, with only 2% reliant on new business.
• CACI projects $1.6 billion in free cash flow over the next three years.

Operational Updates

CACI continues to differentiate itself through strategic operational initiatives:

• Focus on high-end cyber operations and intelligence analysis.
• Significant presence in delivering enterprise IT solutions and network modernization.
• 1,300 personnel are embedded within the intelligence community, safeguarding critical networks.
• Secured a multi-billion dollar contract with NASA to consolidate applications across 11 centers.
• The Azure acquisition is fueling growth in the Spectral program.

Future Outlook

CACI is poised for continued growth and strategic advancements:

• A $12 billion backlog of bids awaiting adjudication, with an additional $13 billion in bids to be submitted soon.
• Trailing twelve-month book-to-bill ratio stands at 1.7 times.
• Focus on fiscal year 2026 growth, with an emphasis on reducing government reliance on personnel through technological solutions.
• The NASA NCAPS program is expected to accelerate in the coming year.

DOGE and Budget Impact

Minimal impact from budget adjustments and the DOGE initiative:

• Two programs on the DOGE list, with one valued at $1 million annually over three years.
• Assumed a full-year continuing resolution in fiscal year 2025 guidance.

Q&A Highlights

Key insights from the leadership during the Q&A session:

• Jeff McLaughlin emphasized the long-term nature of contracts and the importance of backlog in revenue stability.
• John Manguchi highlighted strategic moves made to inoculate the company against budget fluctuations.
• Manguchi also noted the importance of adapting systems quickly to maintain a competitive edge.

In conclusion, CACI’s strategic focus on high-end technology and its robust financial outlook position it well to navigate potential challenges. For more detailed insights, refer to the full transcript below.

Full transcript - Raymond James & Associates’ 46th Annual Institutional Investors Conference 2025:

Brian Giswali, Senior Analyst, Raymond James: Well, good morning, everyone. I’m Brian Giswali, Senior Analyst at Raymond James covering CACI. Timing couldn’t be better to be here, address a lot of these edge points that we’ve been hearing a lot about and some of the volatility in the stock and the overall sector. John’s been a great sport about this because we’re coming with some hardball questions and he’s got it lined up.

Really have the company’s Chief Financial Officer here, Jeff McLaughlin, as well as John Manguchi, the CEO. And welcome gentlemen, and thank you everyone for joining us.

John Manguchi, CEO, CACI: Thanks for having us, Brian.

Jeff McLaughlin, CFO, CACI: Thank you.

Brian Giswali, Senior Analyst, Raymond James: Hey, John, I want to maybe start off with just level setting the audience to who KAKI is, how the business has really transformed because I think there’s a really significant transformation element to what the business is today versus what it was ten or fifteen years ago.

John Manguchi, CEO, CACI: Yes. Thanks, Brian. Look, CACI, I’ve been in business for over sixty years, really focused on delivering expertise in technology to the federal government. 55% of our revenue is in pure technology, 45% is added in expertise. I know we’re going to talk a lot about differentiation.

I figured I’d hit differentiation right up front. Yes, it does sound similar. Everybody delivers hours, got it wrong. There’s a way you can differentiate in how you deliver expertise to the federal government. We look for those parts of the expertise market that you can differentiate on things other than price.

We went through sequestration in LPTA, low price technically acceptable as well as a lot of government shutdowns about eight to ten years back. So we took a look at where we were at and said, how do we inoculate ourselves against that going forward? And we made a few very, very specific moves. One is the kind of work that we do. We are in electronic warfare.

We’re in cyber operations. We’re in everything in the electromagnetic spectrum. We’re very heavy in delivering enterprise IT solutions and network modernization. You can look up a lot of the contracts that we have, a lot of large ones that we’ve won. But how you differentiate in expertise is you actually go after things that very few companies can provide.

And that’s what I look at as differentiation. If we’re differentiating on price, we’re now a commodity and we look just like everybody else does. So some examples, high end cyber operations folks, 1,300 people inside the intelligence community protecting a major portion of the intel communities network globally. That you don’t differentiate that on price. You differentiate that on capability.

You can look at a lot of the intel analysts. These are intelligence analysts who look at overhead imagery data, and they provide to the command commander, here’s the best course of action to get that person versus the other 200 of them. That’s not something that you learn in a two year school at night. That’s not something that you buy a low price technically acceptable for. So the market is very, very the way the market set up is sustains our growth rate when we take what delivering expertise to the federal government means and bring that up many, many levels.

The good news is we started doing that eight years ago, foreseeing that there would be a time when the government would want to buy in a very different manner. The last thing where we differentiate on is 6% of our revenue is in the federal civilian space. It doesn’t make those agencies bad, but they have a couple of very key characteristics to it. First, they rarely garner bipartisan support when it comes time for budget. DoD, intelligence community, DHF, DHS, garner bipartisan support for those budgets.

I know we’re going to talk about budgets. I talked to Brian, we always talk about our budgets. So a very differentiated company delivering technology and expertise. Technology you can touch, you can feel if you came to our Investor Day, if you look at the videos on our website, there is true software based technology. And I’ll leave it with this, software based because the threats that we’re going to face are exactly the threats that you would expect.

They’re different what they were in World War II, they’re different what they were in Vietnam, they’re different what they were in Iraq and Afghanistan as well. The pace of the enemy changing their tactics has gone from months to hours. And the only way, one of the only ways you can sustain your lethal advantage is to have systems that change faster than the enemy changes. And software is the only thing you can send over the air. How many of you own a mobile phone?

How many of you use the United app? How many times you’ve been in line boarding and your United app says you got the wrong one, it has to update? Do you wait sixty five days or you wait sixty five seconds? That’s what the government needs. We set this company on that course eight years ago.

So it’s sort of peanut butter meat and jelly now. We’re sort of at that point, we get to talk about that.

Brian Giswali, Senior Analyst, Raymond James: So we’re at the chocolate and peanut butter phase.

Jeff McLaughlin, CFO, CACI: Chocolate and

John Manguchi, CEO, CACI: peanut butter phase.

Brian Giswali, Senior Analyst, Raymond James: There we go. Okay, perfect. Let’s zoom out a question that’s been on just about every investor’s mind that I’ve talked to are going to be a little bit more macro in nature before we drill down. Help us with the defense budget and what’s going on in D. C.

Reconcile the 8% decline that HEGSETH calls for, the House bill that calls for incremental defense spending and substantial increases. And then really what we’re going to do with the shutdown coming up here as Congress negotiates over the next couple of weeks.

John Manguchi, CEO, CACI: Yes. So a lot there on the pack. Thank you. Let’s start off with the easy stuff first. Let’s talk about the memo that the new SECDEF put out.

And it was around looking to take 8% out of the defense budget every year, the next five years, right? That was walked back about a day after it went out. I’m sure you all heard that piece, right? That’s sort of 8% in FY ’twenty six coming up. The second piece that was walked back, but very little attention was paid to that is the reason for the 8% is that the last administration, not a political comment, the last administration got an OMB target number.

And the Defense Department was told just plan what you need. What they rolled up was 8% greater than the OMB number. So the SECDEF sent a letter out basically saying we’re living within the OMB target number. So we didn’t take $50,000,000,000 to spend against what we spend at today. They’re being asked to operate at the target number that they were given by OMB.

So we’re going to talk a lot about signal and noise. A lot of the earlier talk was noise. The signal is it’s going to get DoD to their OMB target number. World’s a really dangerous place. And it’s shocking how we can talk about defense budgets dropping when this administration’s highest priorities are peace through strength and protecting the border.

So it’s not unusual to see that the House and the Senate both of their bills. One is a beautiful bill. One may be a couple of other beautiful bills. But at the end of the day, they both have roughly $300,000,000,000 additional DoD, Intel Community and DHS spend. So quite unusual from administration that is saying, I want to cut defense.

I don’t believe that we’re going to see a defense cut. So if you look at $300,000,000,000 additional being spent in those areas, 90% of our revenue was in those areas. We talked about remaking the company to drive more commercial like software processes and we’ve been doing that for eight years. We could spend the rest of the day today talking about the customers who are already buying in that manner. I’m not focused on budgets at the top line.

So we’re not a top line budget company. I’ve been asked this for the last n number of years, which is what defense budget goes from $850,000,000,000 to $800,000,000,000 But if it goes from $850,000,000,000 to $400,000,000,000 My question back is top line, got it. Where are the cuts going to be? Because that’s the important talk. That’s the signal and all the noise about top line budgets.

Okay? A company like ICOS who are in very deep resilient funding streams with a number of capabilities that I’m sure we will talk about before I get off of this stage. It’s really about where’s the government at a micro level going to make cuts and where they’re going to continue to spend on more time to talk through that. Full year CR, our last guide that we gave in the second quarter, which was the January, right in the middle of where a lot of this noise started, we assumed a full year CR for the rest of our government fiscal year 2025. We’re a July 1 to June 30 company.

So we already got the CR baked in. I’d also say that this company has grown in great top line growth budgets and flat budgets and declining budgets. Budgets moved, budgets changed during the year. Things happened during the year. They’re not a static point.

And I do think you really need I’m going to finish again where I started, which is a $300,000,000,000 additional FY ’twenty five not FY ’twenty six. FY ’twenty five reconciliation, we look at that more as a supplemental because people understand what that concept is. It’s additional spend. So I’m not concerned about the size of the overall defense budget as we move forward as it pertains to growth for this company. Really helpful color there.

Brian Giswali, Senior Analyst, Raymond James: Let’s pivot into DOGE. I know a lot of you in the room have DOGE fatigue. John, I’m sure you have a little Doge fatigue. I think it’s natural at that seventy five days post election here. But I want to stick get away from the philosophy of Doge and really talk about as you did kind of a deep dive on your contract base.

Has anything been shut down from a contract standpoint? And are things that you’re considerably worried about? Given your national security footprint, I wouldn’t imagine there’s very much of anything.

John Manguchi, CEO, CACI: Yes. So 6% of our revenue is in Federal Civilian. No one of those customers have greater than 1% revenue impact on our business. The largest portion of Fed Civil is NASA. For those of you who follow us tightly, we won a multi billion dollar award from NASA and that was around taking all the applications after 11 NASA centers and consolidating those.

So they could get much faster updates to the applications that they need to go run the entirety of NASA. So that is a that’s digital apps. That is work that is based on commercial software practices where you put new things and you build a little, you test it all and then you deliver sort of what goes on your mobile phone. The government is already able to buy that today from us, and that’s how a number of customers have continued to buy. Doge fatigue, I’m sort of I’ll give you this company’s view.

I won’t give you John’s personal view. The company’s view is if you were on my shoulder and you walked around the company one hundred and twenty days ago or yesterday, there’s not a lot of people talking about Doge. Not a lot of people talking about where the budget is going to end because a lot of that’s noise. A lot of it is noise and a lot of it changes, okay? Specifically to this company, we have two programs that are on the Doge recommendation list, two.

One is $1,000,000 a year over a three year period. I should probably share where $6,500,000,000 company been in business for sixty two years. So that’s one that juries out, right, because Doge doesn’t have the authorization to cancel the program, they can make a recommendation. So that’s a $1,000,000 program time three. So there’s $3,000,000 of total contract value over the next three years.

The second one that just appeared yesterday, unfortunately, that program ended a number of months ago. I don’t know how you get savings from a program that ended a number of months back. So as for the DOGE watch list, there’s nothing that has hit us yet. Could it in the future? Of course, we’re not all the way through there.

While we’re on that topic, we’ll also share that the latest GSA contract, but you all read that in the press, right? You read all the news about it, tracked down everybody who does any work there. We have actually have six programs. Talk about transparency. We have six programs around that watch list.

Dollars 151,000,000 total contract value, 92 percent of that work is done with two highly classified customers that if they really had to put one word down that they were allowed to put down in a memo saying why that job is, they can talk to people and explain why those two contracts aren’t going to end. That leaves $11,000,000 that’s open to be questioned. So of all the noise, the signal is to CACI, National Security Company, delivers expertise in technology. I think if you add that up $15,000,000 total contract value for $8,500,000,000 dollars So do we watch it? Yes.

Are we paying attention to it? Yes. Are we being flippant about it? No. But are we going to change the way we run this company?

Absolutely not. Because the corrections we needed to guide through what we see today were made seven and eight years back because there’s some elements of sequestration LPTA that really upended that market. And we were that company that looked backwards and said, what caused so much angst during that time period? And let’s stop doing that work because the market’s broad enough. Dollars 8,500,000,000.0 company, dollars $250,000,000,000 addressable market, There’s plenty of room for us to grow.

Did I think Nail

Brian Giswali, Senior Analyst, Raymond James: goes I’ll let them speak, but that’s exactly the way I had expected the answer and really appreciate the color. Let’s maybe double click on some metrics and talk about some opportunities here, right? You replenished your pipeline last quarter. This I think is indicative of how you’ve targeted and segmented the market and proactively bid on stuff early. So maybe talk about that and what that creates for you.

John Manguchi, CEO, CACI: Yes. So what gives us confidence towards growth? Backlog of 4,000,000,000

Jeff McLaughlin, CFO, CACI: Four years.

John Manguchi, CEO, CACI: Four years of backlog, dollars 32,000,000,000, a lot of numbers. So a four year backlog, the majority of the programs that we put into our backlog over the next over the last few years were between five and six years long. We didn’t say eighteen months, we didn’t say two years, we didn’t say two months, okay, which transcends to our trailing twelve month book to bill over the last decade is the number we watch. I probably said that on 40 earnings calls now in thousands of one on one meetings. Trailing 12 book to bill is what’s germane to this company.

It is because awards are lumpy. It’s not a financial term. They’re just lumpy, okay? Predicting when awards are going to come in is about as good as predicting which popcorn in your popcorn maker is not going to pop, right, which kernel is not going to pop. We get a guidance.

That’s why we give everybody a range. We don’t say we’re going to be an $8,500,000,000 company, $8,400,000,000 to $8,600,000,000 based on many, many factors. So if we look at where we’re at today, we are well positioned for continued growth. We have won many multiple billion dollar jobs in the last two to three years. I’m going to let Jeff share about, again, how those programs ramp up and the fact that we still have a lot of programs we won in ’twenty four and early in ’twenty five that are going to contribute going forward.

Jeff, do you want to talk a little bit about those?

Jeff McLaughlin, CFO, CACI: Yes. Before I do that, I’d like to take a second and say just another observation or two about the backlog. You are all kind of collecting and processing data and you’re going to conclude about us what you will. But if you think about the portfolio rotation that John talked about, which I sense from our own Q and A meetings, isn’t necessarily widely understood. The backlog and the book to bill metrics are particularly important metrics and artifacts related to that portfolio rotation.

We are not putting year or two contracts in backlog. We’re not worried about book to bill providing revenue a quarter or two from now. This this is a different kind of business, And I think the backlog is a particularly powerful artifact as you think about that. We have really good visibility into the next half a dozen quarters or so, which I think is not like some of the people to whom we’re often compared that are selling consulting and services kind of businesses. I mean, it’s a tangible data point that is not that.

So profiles and ramp ups. For those of you that may have seen our Investor Day pitch last fall, any of those charts, I had a couple of profiles. The one in particular relates to some of the expertise work that John started talking about where we won recently a large year before last, won a very large program with a classified customer managing their global networks. That contract ramped relatively quickly. We got a fairly large incumbent workforce.

And as we’ve said to many of you in our one on one sessions that that got to steady state last year and is a healthy, stable contributing program. We won a number of large programs, however, that are still on that ramp. And if you think back to those profiles that we talked about, some of these ramped for six to eight quarters. Our ITAS work for the Air Force, Enterprise IT as a Service. Spectral is in that category.

NASA NCAPS is in that category. And so we have those are three particularly notable large ones. But we have a number of programs that are in backlog that are still accelerating into the next four to six quarters. So hopefully, that helps. Yes.

John Manguchi, CEO, CACI: So how that rounds out is 98% of our FY ’twenty ’5 revenue is already in house. We have 2% left worth of new business. Last two quarters, we booked $5,000,000,000 of awards. So to get that last 2% of FY ’twenty five, which, by the way, has got two quarters of beaten rays behind it, is not our focus. We’re working on FY ’twenty six today.

FY ’twenty five will settle itself out. There’s no one program or not any collection of things are going to take us off our increased plan. We did the January after new administration was announced, after we didn’t have a lot of view of Doge. But you have to believe a public company CEO and CFO aren’t going to raise guidance twice if we really believe that there’s a fearful factor out there waiting to hit us. It’s just not.

A lot of noise, the signal for this company is 25% is just about in the books. We’re working on how do we drive 26% growth going forward.

Brian Giswali, Senior Analyst, Raymond James: That’s a great segue into let’s talk a little bit more about backlog. Most investors I talk with kind of look at backlog as a leading indicator to future growth. That one point zero book to bill or growing backlog is critical for kind of investor psyche. Your backlog is up 10%. Are you going to grow be able to grow backlog given the pipeline and all the noise out there over the next twelve months?

John Manguchi, CEO, CACI: Yes, terrific question. So look, today some more facts and figures. Dollars 12,000,000,000 of bids that are waiting to be adjudicated across the federal government. I’ll come back to that number. And we’re in the middle of submitting another $13,000,000,000 of bids over the next six months.

There’s probably four months left in that six month window. We’re on track on the $13,000,000,000 We’re still looking at awards on the $12,000,000,000 number. What’s very important is that our trailing twelve month book to bill is 1.7 times, okay? We started off this discussion around a 0.25 does not a year or next two years make. So I’ve said on many open mic calls, if we have a multibillion dollar award and it awards on June 1, later in the year versus January 1, it really doesn’t matter because my current year is already in the books.

So I’m looking for future growth. And again, all of those different contracts that come in ramp at different levels. We know when we submit an expertise job, it’s going to ramp quickly. It’s going to give you an earlier pop of revenue growth. A technology job that’s long term is going to ramp in a slower manner is going to provide growth out.

We talk about it’s not just the backlog number, it’s the analysis of the duration of these programs and where they are on their ramp up that gives us four to six months worth of visibility. So we’re on track to be supporting things. Now break, break, doge, new administration, people getting fired. If you don’t think the human being and the federal government isn’t going to spend a little more time at the coffee pot talking to folks, we’re all crazy, okay? The human element is that people are scared.

And public company CEO who needs those people to not be scared and get these awards out, most likely you’re going to be focused on something at least one other thing other than getting that award out. Does that cause an alarm? No, for us. I can’t answer for everybody else. But frankly, when I read things around, well, the quarter point is that’s a great talk of a pure commercial, of a pure government services group who sells people, who I need to have the award before I can deliver these people.

Our build out and the fact that over half of our workforce is fungible to any program out there, okay? If you do our sales to employee, right, we don’t show up well. We self perform the majority. Want to get a higher number there, subcontract more of your work, give more of your knowledge away. So those metrics don’t enter into how we manage this business.

So $12,000,000,000 awards. I do think in the near term, possibly, perhaps the next ninety days, I tried doing on a quarterly thing. Are we still going to see nervousness in the federal government? You have to answer that. And if you think the answer is yes, then I think awards are going to come out a little more slowly.

If you think the world is fine and that has settled out, awards are going to go back to their normal pace. Doesn’t mean the programs have been canceled, and it doesn’t mean that this company needs that award to come in next quarter. I don’t have a lot of insight into next quarter. If I had it, I wouldn’t be sharing that here, right, sort of way ahead of when the quarter ends. I like where we’re sitting today.

And again, trailing twelve months, one point seven percent that sustains an awful lot of growth for a number of years until some sense of normalcy comes back.

Brian Giswali, Senior Analyst, Raymond James: The calendar is a little bit in your favor too, right? We’ve been pretty conditioned to seeing strong September year ends, right? So I think you do benefit a little bit from that. I want to pivot to organic growth now. You’re guiding a really robust 7% to 10% this year.

It seems like you’ve discussed having an awful lot of visibility in that number via backlog and awards and pipeline and everything else. The stock has languished though. And I believe there’s a large group of investors that believe CACI and the rest of this sector is going to compress. I don’t share that view and I don’t think you do. Can you talk about your organic growth and how confident you are in that three year guide that you put out at your Analyst Day?

John Manguchi, CEO, CACI: Yes. I’ll give a couple of comments and Jeff feel free to add in. So our last earnings call was January. We had plenty of time to not beat and raise. We had plenty of time in November not to go forward with three year numbers.

We had plenty of options to sort of back away from the market and the fear of what the new administration and Doge was going to bring up. A lot of noise. The signal is we didn’t do that. The signal is we put out $1,600,000,000 of free cash flow in the next three years. We put up high single digit growth rate for the next three years.

We also put up margins that are in the 11% s. And of course, you all know this, great revenue growth and great margin growth drives awesome free cash flow. To us, the ultimate shareholder metric there is. Is. Everything else is an input to it.

So we had our chance to go change those numbers. We’re not sitting here saying, darn it, maybe we should have done something different, because the data in front of us, we run the company. We have perfect data, tells us we’re still on a nice growth curve. Curve. And that’s why you’re seeing now when you lump that type of company into a number of others who do not have that portfolio, then it looks as if everybody is the same.

Again, I do think that at some point, we’re going to have a government that has less employees in it. You can vote whether that’s good or bad. I’m sure there’s people who have perfect knowledge like I have of my company. Somebody in the government has perfect knowledge of the size of government and what works and what doesn’t, okay? And I think that’s a fair assessment as a taxpayer.

We should be looking at that. In fact, you all on a quarterly basis, if my overhead rate or my G and A rate goes up by 0.02, it’s a fair question. What happened? That’s fair. So I think the government does need to take a look at it.

Not all of those layoffs will need to be replaced by somebody in our sector and that’s fine. Okay. We deliver expertise to an extent that we can get the customer to eventually buy technology to actually have to depend on less people. That’s the model that works. It’s been working the last eight years, it’s going to continue to work.

And that model for me to say, I’d like the government to buy less people than more people means I must have another way to grow and that’s through technology. But sometimes you got to win the expertise job to run alongside that customer, to have the audience to explain, here’s why a technologically solution is better for you as we move forward. And you should be comfortable with less people.

Jeff McLaughlin, CFO, CACI: Yes. I would add two specific examples to that if you want something a little more tangible. NASA end caps, which we won at the very end of last year, is in that list of programs that I mentioned was accelerating. It’s actually accelerating the most because it’s basically starting. So the others are established and they’re growing.

NASA NCAPS is basically a cold start for the year, very large high profile program. And the other is related to our Azure acquisition, which will anniversary here sometime early next year, but is growing, itself. So not only is it inorganic, but it is growing itself. But more importantly, it is enabling some significant, growth and acceleration on our spectral program. We recently got through a very key milestone, MVP, minimum viable product, which sounds kind of underwhelming.

But the exciting thing about it is it sort of says we’ve met the initial objectives and we have what we need to move forward. And that has enabled some spectral enabling kits, which has let us take that capability from Azure, the acquisition, and move it back into Spectral and accelerate the adoption of that important ramping program already to ramp even more quickly going forward. So those are two particularly salient examples, I think, of John’s general comment.

Brian Giswali, Senior Analyst, Raymond James: Absolutely appreciate that. And so lots of visibility, you’re going to grow, you’re positioned where you want to be. Maybe one thing on comparing and addressing current CACI with the current budget, with a historical reference point. I think a lot of folks are looking to sequestration as the guide. I don’t think that’s the best example.

And I think it’s also not the same CACI that went through sequestration. Maybe just put a finer point on how you’re thinking about history, current CACI and current conditions?

John Manguchi, CEO, CACI: Yes. Thanks, Brian. Look, people are trying to find some parallel, right? So how do I find the right path out from where we are? How How do we predict where that puck is going?

I think some of it is similar to sequestration of OPTA, a small amount of it is. But don’t forget the driving force there was that the elected officials couldn’t figure out how to get to a budget. So they were given the formula. Whatever that grows at, that has to grow at and spend has to come down. Everybody just signs up to that.

And the fact that it was easier to cut people dollar spend than it was major program spend, Services were cut more harshly and heavier, okay? If you were in that same position and you had eight months to cut an awful lot of cost, would you shut down a master production line? Would you stop a major software development job? Or would you find a way to go with less people? Well, the answer was because it was a long, long time ago, they decided to go with less people, okay?

Some of that was probably good, some of it most of it wasn’t because a lot of that work came back. Like the following year when the budget came back, everything came in. So we were a company as I started off with, we had exposure to a few areas. Federal civilian, the largest one. You have people embedded with your customer.

Your customer is shut down. They can’t come to the office. You can’t bill labor hours. What do you do with the people? They sit on your books, okay?

We’re down to 6% of that kind of work. And trust me, in that 6%, it’s highly differentiated. It’s not on the lowest price technically acceptable solution. So it was there, and we checked that box. If you look at the kind of work that we do today, it’s materially different, okay?

We were 20% technology and 80% expertise when we were in that world. We’re 55% technology and 45% expertise. What do those words mean? Technology, I can step and repeat. It’s all software based.

It’s catching up to where the threat’s going to lead us. We are now at that precipice where software is going to be the way we’re going to be able to change capabilities of this nation’s national security assets and not merely doing a block change that’s a twelve year ACAT one program. The world can’t handle that. Platforms can be on that, but every mission system, everything below that has to be on a much more rapid thing. We weren’t even talking about that.

We weren’t in those circles. What else is different is we have gone out up against the larger OEMs, and they’re phenomenal companies. There’s not many people in the nation who can build jets, planes, points on the front, flame out of the back. That is a talent all onto itself. We believe that mission systems, things that go into those platforms to deliver the effects that our warfighters need and what our border folks do, was they need to be coming from a different company with a different pace.

And that has been proven. The last eight years of growth in this company have give you eight years of proven growth, how we’re going to grow both top line and bottom line from an 8% margin to low 11s in eight years, okay, with the federal government, okay? So there’s a lot of differences from where we were and where we are today. That’s what gives us confidence in our three year plan.

Brian Giswali, Senior Analyst, Raymond James: That’s great. That’s all the time we have for today. John and Jeff are going to join us in the breakout session. I’m sure there’s going to be a lot more interesting discussion to go. Thanks for taking the hard questions head on.

John Manguchi, CEO, CACI: Thanks for having me.

Brian Giswali, Senior Analyst, Raymond James: Appreciate it.

John Manguchi, CEO, CACI: Thanks.

Brian Giswali, Senior Analyst, Raymond James: Thank you, everybody.

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