Leidos (LDOS) 2 Aug 222022 Q2 Earnings call transcript

Greetings. Welcome to the Leidos Second Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator instructions] Please note, that today's conference is being recorded. now President, conference Investor I'll Davis, to time, Vice Senior Relations. this turn over the Stuart At Mr. Davis, you may begin.

earnings quarter Thank you, welcome year second to I'd everyone. XXXX fiscal Rob, and you good to morning, conference call. like our

that the me financial of CEO; Chris use and you'll our we'll Today's is website, Cage, our the presentation on find Officer. and being Financial where are webcast call. Krone, earnings Chief Investor today's Joining supplemental today call Chairman slides release Roger and our Relations during also portion

the Turning to risks contains cause could it the we slide refer more two presentation. to specific results include Today's actual on press see uncertainties. and of environment risk materially. forward-looking discussion the our factors and currently does for to on that statements such, differ Please as based release as information

and as four. we'll call today's reconciliation the during will two shown is measures. slide Roger begin I'll Krone, over discuss who to GAAP release slides. three, on in A Finally, non-GAAP financial turn the between presentation on the included call With that, slide and press

award modernization solutions contract Thank and across on our you, The year across Defense the for thank Stuart, solid services strong portfolio. demonstrates by joining for business digital Services technology our of track Government diversified the in core with growth leadership Office Accountability demand organic and another affirmation morning. federal Leidos of all us government, our profitability. for this and our remains Enclave business you

our our up quarter four expand bottom hiring. with to was compete for for these disciplined points. now for capital are was shareholder and EBITDA And $X.X Revenues an Non-GAAP organically margin of allocation performance were of to balanced ahead up in consensus strategy on and Number We top X% successfully proving lines. drive XX.X%. continue $X.XX, value. of also EPS another I'll to one, the of the at billion on strong, quarter to up total X% we financial talent with the robust our execute X.X% year-over-year. and both quarter diluted ability adjusted

from operating two, also million to of $X.X our the this We $XX and year. cash billion generate net cash the are business track achieved a ratio book-to-bill flow X.X. least strong of at operations development results in $X bookings government Number of marketplace. on in our positioning technology billion quarter, representing demonstrate We of generated flow

with billion, the backlog are backlog basis, billion Over at stood the X.X. $XX.X net On a bookings quarter is book-to-bill past XX which and up of end the up $XX.X was million higher. X% currency months, of Total constant $X.X at year-over-year billion, $XXX X%. backlog was funded

XXXX awards of Most in few You billion the revenue affirmed our IT expanding quarter. the services growing at $XX.X highlight should DISA's materially will to by several profitability, press or scale program GAO can providing read the This of earnings. and but not in solutions. about consolidating mission me Leidos. the developments cost-effective by runway a enterprise let award year DES standardized to global but a revenue release, support responsive a have add and some importantly and We'll

significantly under two business task Security on We awardee both the an in SSA were And ITSSC-X expanded task IT sole position. all Social orders. outcome role. as We its known Administration the of also our large IDIQ outstanding had recompeted The services work orders. our we on primary

telecommunications, data we'll work operations, infrastructure, including the modernize networks for data and of center, services. SSA's us. On the And all user new and manage this cloud, IT first, is

we mission previously work other of that software all and application the On providers. the second, we'll with now split perform development

top revenue at XX protested prevail, program. we ITSSCX As a could were should But and week. expected, awards our last both of double we make the SSA

baggage some we've Punta Republic's, upgrade all airport B checkpoint. Cana people of indications Airport the International improving and lanes Terminal initial landscape. to at Finally, were both by We seen Dominican the screening screening an security selected within

scale first getting increased great has half offerings meaningfully cyber compared and addition, And In differentiate our we're the by broader XXXX. to Leidos when of volume feedback to ability bringing protection. capabilities bid like bid our on

this lines Although, environment we're to extend. development strength compared book-to-bill positive true overall continue ratio, fiscal to until in XXXX, screening our recovery outlays for has SSA for the awards. higher Still, example quarter, government DoD a it year-to-date procurement includes not it's X% fiscal protested are full been the the DES, airport here. down expecting nothing in business performance challenging, of budget. the good and said, understates year bookings XXXX, trends despite some business That as the as see time a to the

and remain improved procurements the environment. match pick rates win summit Our and budget we volumes three. expect to high up will Number

talked customary about Australia's rating, $XXX end executed of entered to tax-efficient for about The being investment-grade conditions that. we agreement reinvesting Aviation QX, expect million. our Our manner. transaction Special to regulatory Cobham a to of to accelerated close and quarterly and we've investment levered repurchase. all subject in our acquire a And a other Aviation and we and approach allocation and cash of to by million just both returning closing share In US$XXX excess a Mission approval capital the year. appropriately We've returning into core And is shareholders definitive dividend, for thesis. is growth, maintaining Services, doing business organically the part a inorganically we're

business force to surveillance and diversifies services element the rescue non-GAAP safety our expect a search Affairs maritime Australia's national XX The security. Homeland into and immediately and airborne and critical Australian to both acquisition and aircraft, Australian This the Government of modified owns operates Maritime border Federal providing We the acquisition be Defense programs. with to and accretive mission portfolio capability work, EPS.

well to is Number and risk we for support talented Leidos how already simultaneously quarter, nearly destination surveillance integration people. In four, hired attractive we airborne and is is an success. leadership do local know Finally, have And program Family a that five the and X,XXX second X,XXX what more manageable, strong Counseling when talent infrastructure acquisition only to because people, hired staffing we than demonstrated years. Leido's is strength. we've people. Life and were NGEN we've we number surpassed that's we Quarter-after-quarter, program. Military the core Year-to-date, Navy in once the a

with and challenges peaked, to for we by QX the Even about in skills we companies. On both are remain software talked as demand tech engaged people. developers focused on call, critical and talent remains such for have attrition retention. high around engineers seems us, as non-tech voluntary though our Competition keeping

our retention that we're came and many session. implementing was of on offsite the ideas In focused now June that leadership fact, out of

House Q&A a mix visit better drivers with an Alabama of if event attending. Hypersonic's, of request. Before over culture the for of in investors which The finally, hosting threats. Expect reach end will Dynetics that with come to 'XX our which recommended to in recognizes investing Chris. a announce nominal for Indirect Dynetics and including key urgency of Huntsville President's healthy dinner should marketplace. pleased increases site turning let federal appropriations Protection The and the also be Please growth before the landscape. team investor be turn of missile should national government versions to Year Senate underway call November budget and an with the face on Armed value approved the is of the we touch of with defense committees with Services fiscal to the for at the a X. 'XX National year a start I'll Act. key Fiscal a levels, that Chris, will the December important the facilities fiscal leadership increases now you're to the out fall. The Dynetics on tours global Congress over process and of in in differentiator of security interested to team much it this Defense Both XXth Stuart the proposition Fire me Capability our Authorization the production the part fully to And in continuing and briefings on year I'm result expect that programs. us but begin resolution space-based is XXXth understanding security Congress. XXXX resolved we'll the in away with the significant

thanks for Roger joining Thanks to everyone us and today.

Non-GAAP The period. of Second fiscal was to compared in quarter of to the for $X.X and income Net million decreased XXXX was and borrowing count factors of prior year-over-year. given X. drive Slide share quarter up the current average recent as a hiring program. EBITDA part robust pieces expense in retirement I three performance for increased results starting of prior Revenues number of solid second the quarter the adjusted to were that $XX and weighted the up worth XX.X% quarter. of stable. across was X.X% XXXX. million are for benefits from compared year $XXX all moving to the was want on were immaterially segments, XXX Adjusted are EPS settlement the non-GAAP the with quarter cover quarter margin of shares compared business interest this year which the morning, diluted the The wins. couple share very second final which the the rise $XX grew year million positive $X.XX And overall. to base second in XX.X% rates. and $XXX quarter quarter was noting. of quarter. billion, up EPS is interest from statement diluted the The fiscal million up reportable the for there And income with Revenues higher was second organically million count the below the quarter from X% X.X% A over same XXX year-over-year EBITDA ASR our to XXX,XXX EBITDA million program net for

prior Defense our purchases an X.X% on ramps more material drivers for Solutions by end year Slide results drivers support were and revenues supporting Now NGEN and compared and reduced offset growth the overview the hypersonics increased which programs. The Six. than of contracts IFPC the key to largest Afghanistan of quarter. our segment

revenues strengthening represented Defense the point. rate Australia year increased a year Civil the programs, Solutions from NASA compared year the and compared a quarter margin addition, about to for demand $XX the our X quarter as In energy in was AEGIS primarily to non-GAAP X.X% Lockheed million a headwind compared X.X% the lowered and was to and margin $XX out expense, ruling UK about Civil existing the in the which year-over-year non-GAAP dollar start-up of by to the prior result of for came X.X% in on to increased which operating related including X.X% commercial segment the million to quarter, growth driven businesses of business program prior at our by unchanged which quarter. of Martin prior providers. of led Hanford arbitration engineering arising support acquisition support an dispute additional operating a XXXX. IS&GS the adverse the to income

arbitration been quarter. have revenues this up over the Civil increased X.X%. X.X% Excluding year margins Health write-down, sequentially prior would to

the program the Family nice from benefit year-over-year based timing. had deployment to DHMSM Life continue ramp the We a and on Military on Counseling and increase

expected. as we from We incurred matter in result the the costs year half improve to addition, receive million second the to a anticipated non-GAAP than had XX.X% payment to XX.X% so this this COVID-XX had to year, we're resolve In the $XX of quarter. equitable earlier pleased to cover of which operating caused originally margin adjustment in pandemic prior a

Turning now capital and cash million. was free to on $XX flow is flow cash flow balance million was which operating slide and the of cash for expenditures $XX quarter the sheet net X,

of which down million targeting anticipated the we that of days in three of over our in with is the DSOs consistent historical quarter came week collections While during in year DSO back two $XXX July. half the We're days first improvement to XX, came of QX pattern. another sequentially the

dividend second our quarter shareholders, we program. the through During $XX million primarily to returned ongoing

lock Aviation in of expect acquisition equivalents The commercial to price will in acquisition & quoted. million of We for the hedge With and outstanding. $XXX cash in we Aviation we debt, also AUDXXX million and we're standard came over outlook, organic the in approach us paper had maintaining slide quarter small billion purchase May. allocation which the at Mission our due and leverage impact end as capital On of does $XXX rolled share Cox Special the acquisition expected including balance the million the notes for the backdrop that Australian on picture purchase which fiscal momentum was XXXX follow guidance Roger this big to The X Gibbs the to be loan when cash trending together shown that $XXX with view, Cobham year. the At towards Taking the XXXX. price for repurchases forward related not that our term put million, million $X.X build we $XXX should a inorganic had XXXX, investments, growth our the to year the we plan of against year. guidance three for dividends, relatively times. acquisition we include ratio a of ranges through

driven expenses legal Our foreign margin. guidance of we're pressuring the and the be and more through half the we're the experiencing half. rates in of number unexpected first ahead the and I gives But confidence relationships. the there issues revenue, calls I'll And elements. where expected expense. as upper EBITDA performance growth exchange increased in and a individual ruling in On over economic the arbitration other Increased that perspective. interest from year, EPS of from being stemming recent and to for we by half the of are that address trusted through of including half coming from our us revenues, walk broader customer are into wins factors on-contract the build-out guidance larger-than-expected with range. in headwind shift second a This Part is line first EPS EBITDA revenue a

the margin In the most perform of actions and control. nature programs. on addition, midpoint more it to Even factors items than some cargo taking we've challenging from margin though had or EBITDA be the will above in are ranges. start-up the our transitory within of Accordingly, of at newer dilution we're anticipated EPS

our margins. changed haven't We long-term view of

arbitration that deliver our I to in a in commitment. flow confidence cash million will Finally, The on of ability our but ruling maintaining we're offset operating payment guidance cash to least at $XX payment. result We'll billion. cash $X team's have the have

do With over to remains the to deferred we this realized year. monitor by make payable Jobs and At will this the tax I'll tax to million rules. payments turn for our the Cuts to any Act the federal increase income net potential time effective in fiscal provision of Tax the not tax new costs the continue date amortization research We on we Congress capitalization cost research act research to related If will we expect of place, cost XXXX expect negative take taxes $XXX and assets in in the some approximately related be impact and capitalization can fiscal cash each so XXXX. that, questions. to call XXXX Rob,

Instructions] We'll question-and-answer now [Operator you. you. Thank be a session. conducting Thank

the first Our comes questions. Peter of Please question Arment with Baird. your from with line proceed

you're revenues longer I but I could giving know not morning, wins color we're some that any Good think Thanks. your picture? you think the backdrop. look that a -- if we just to in guidance accelerate as term the color? you Roger about I at longer gave appreciate guess it the just given Hey, Chris. to plus-ups. Roger actually wondering high-level you've way term the was budget and ability on had seeing Do us the begin XXXX Yes. you I

We're the about areas comment the I don't long-term, the past. better gotten budget And the see all Chris York has last really we anything think both We and years. that differentiated. better and Yeah. together in changes conversation I focused and actually where in still the out since were optimistic the that made in environment had we've we fall, New frankly we're that

still the on So very I am future. bullish

of of think something just the follow-up. attention. that It as to to a that's lot like seems continues quick a of -- program in Anything record terms then gaining I And be highlight was outlook? Dynetics

hypersonic the support. The board. programs strong across Well, it's really exciting

And this, chose are visit missile has high-powered how course We things And the wait with of the can't to we'll Fires And really, I supported. are program, three that's I quarter there. there's some through meet the that developments about laser, to with down it one The a we we strongly the team talk one with don't And all worked one actually overemphasize out. Enduring the have of fall. and walk and are but want let with that you for plant great a there. in microwave. able that to pleased be those really why hopefully you next really we're business, -- space

you'll excited be I too. really think

Appreciate the detail. Thanks.

Yeah.

The next Sheila question proceed line comes of from Jefferies. the with Kahyaoglu your Please question. with

Hey, and good morning thank you.

Hi. Good Sheila. morning,

your Roger count was on at morning. we of look retention Good focus. head comments X%. your talent appreciate I hiring organic and year-over-year XX% up I it your with believe growth When

could that a So bit. maybe square disconnect for you us little if

complicated. to emphasis really our very little it is to we an how got labor bit -- of important try Direct us. absorb make a It's I'll simple. costs. We've to lot

we for so have can direct And that's if a revenue positive under same bucket us. the higher labor

the work the So Leidos' across we're trying content to the of increase we have board.

it's content Now month-to-month I'll we to long-term work day. part effort great our is know as the increase quarter-to-quarter going a also fluctuate. you And tell every significant you But our that Sheila our content. do of to people have

And so that we're seeing faster are revenue, retaining as than the And need That positive. view means having in a implementing we successful. to we and that grow our attracting be strategy. us help actually people success headcount we

could What Modernization And Cerner currently there thoughts to potentially then and opportunity the again. be EHR it's your and incremental that the paused for business? second the maybe your medical facing some how And on I to wanted Okay. Thank very has then about specific the been pit with two hurdles burn think ask you good. how do how program, you. are with it business opportunities Senate, And VA and their in currently about Leidos?

ongoing told QX I'll we on increased Health with VA successfully performance. Maybe their Yeah. had important, And very there the can that you in team the Obviously, of that introduced on program. recompete competition was we're Sheila pleased comment this that an had started. a amount won is we Roger and although that was critically get Chris. program.

We also international. won work new some on

of those ramp-up on dynamics might international pre-discharge and shaking both pressure their see the we'll out So to legacy on and we are see some continue way the work. side

about hourly that's Obviously, hoped there will You carefully. from would we're soon. legislation that burn by had increase some we watching news expected is monitoring demand have hope that in We're team significant something daily, good The come that. and talked we a that now. and very pit passed have believes to

that volume in work amount year So is than through the modest of that might in of there half And Roger that things And quickly. where coming if through. back with we'll a position VA. think increased that's do be a the on better we could associated something comment hopefully we the

the thanks Yes. VA program Obviously, we closely. And Sheila. watch very

have program. Oracle movement program. data and software of a Cerner a relatively think supporting Oracle, the Cerner role small the be Oracle to to We going There's strong on management. Cloud. The very strong company, real positive I for is a is in the

Again, and military, supportive just But I to DHMSM of I VA see and paused to are stand they reassess we're Leidos with their will for a team, active need with the know think sit VA, they of it record interoperability We and those. of they're and plan. we'll I know Cerner, system ready all have needs go-forward healthcare VA. the the members support both while and Oracle, of organizations the strongly the those that our paused. that best be the one favorable frankly, they electronic back single of develops. any how

Thank much. you very

You’re welcome.

with Research. Robert the with next is questions. from line proceed question Melius of your Our Please Spingarn

Hey, good morning.

Good morning.

Hey, Rob. morning. Good

for defense. we thing in why sequential happened to flat just with just Roger, quarter March? why? that And ask, the from the I noticing didn't given in quarter, concluded sales numbers we're that out slow -- wanted a of in to the acquisition it going uptick also on? see activity What's And and sequential Booz, June your March but one CR Pentagon? the Is today

activity. ramp acquisition slow a It's slow is won. It that programs on Yes. the we've

down. tell that going the of Outlays acquisition the authorized talk money. spend you year. although head we they got fully Research. really programs further the of Of won the so are intend And They pushed in got in what's can't course, they've on -- why And actually can't the officials, into I -- I got protested, the do we and money the head to appropriated. Pentagon, to Pentagon Acquisition of some

like everyone bit a remote. little talent a that still They're working retired. of they're think lot their I

budget we'll just line. lot both And that's That's important delayed these from project defined are forecast noticed half really doing things statement a This contract and the you we're uncertainty. something really contracts. project work a we gosh, bottom because taking and longer. cautious that? we of then, second year. top is, we're what So of things? you're to beneficial of line to see of other us, the in of says, our special is work base a to that why customer where more call have that you a And Chris' the a do And us got could optimistic on the that with in remarks. But Well, as it, work

So I good news. overall there's think

short-term, think of the running them again just and it's I spend the getting getting to machine, money. kind

Is on or are it larger of delayed? anything delayed? the that just are about more that being types awards being the of for be orders to the and delayed common particular is there size Well, awards that, back task

-- I'm thinking It a was of and... looking at question. Chris kind good of

think larger, to would the that's complicated we typically EM, I competitors, more process. see, what evaluation evaluate, longer multiple

do more different, existing are and often hope growth we the no that is government consolidation on-contract the we've year-end. that. in vehicles leading the of fall best seen into mean complicated quarter procurements again, larger is different the case. there's up through I where I that more come more but seen fiscal -- But think -- the competition. agencies There's in -- see vehicles. And this on we'll you've

cycle. things can And procurement those push to the so out tend

Yes.

Okay.

customer program the a a be Yes. process I runs And but knowledge Rob, an I that the $X with there'll would And is comment. protest. billion, if the acquisition over think this absolute, is

letter, review either happening think and in ensure in right acquisition the the security that kind avoid the We've I almost be now been more it hasn't more to time they think protest our to I sourcing now got us writing and like to obviously protested will taking which the the large the both quarter or that It opinion award in get they're the the win. every peer So I in upheld. program, of are And again. protest. happens think likely is a government to normal the and bigger the social protest, almost

That's a Okay. very helpful. clarification the I hiring. just wanted on you to ask

You fewer is the said are guess ask attrition is way tech coming the down. tech Is that I into people going that because – slowing it. hiring best to

Yes.

I on mean both course, why. and I are Of speculating you

a think I there's economy. the about concern

tech big of their slowed hiring. Some has

all Some of has are announced And It's people change we're before. a There on of a cycle our here to long-term not. layoffs. awards some people in It or just actually I made spike and a summer vacation and hope seeing the a But March. people few lot back. we've seasonality Very incentive sort people leave leave when are is like big in tech before and been when trend. stay. could

back We levels. are still not pre-COVID to

although, recession maybe growth. I which I do but I some view So little to but toning bit in the not forecasting about am I'm economy. attrition have forecasting started a in as favorable down a moderation little see worry we And

I So jobs. we for – great think of a and lot people have

pay salaries. mean we really I work. We great have great

really cool benefited some gosh, get I to that from that to our they has I that and want gotten start attract people. here we're We that. able we has stuff message fantastic do once we think to some And really they to and think doing do great and the stuff employees And of that. through I go do, have they

Very helpful. Thank you.

Yes.

Our with next Parsons of line Gavin the is question from Goldman Sachs.

morning. good Hey,

Good morning, Gavin.

be how didn't your in program? I or DES. that you any But future ultimately think XX could just that for on for expectations top Roger, much that anything ramp or the update contribute look whether could what book and could not said a you like

DES, And quarter been first for small. Yes. on task very turned which we've the is

describe We XX are the – spend let XX, least to me at seconds program.

So then work once we create we architecture will ONE-Net. in DoD XX-some-odd architecture a called with migrate the DISA new established And to DES to federal that agencies architecture. common we've

So a to partner define we number DISA of first months. with and a have customer. on really And go working for work hard with but customer in thing going to is do architecture. people our is the that's And the that partnership small

really line. I So think as to or I to numbers be going low. bottom we it's said impact not don't significant line I put out. But think top

Next migrations. And migration. more the then even we year started right, do to we year third do in

in said I we'll believe then a so agencies over It maybe to XX will because quarter So when government have has to it slow – it's and IDIQ now. a was more there. and DoD be this people will years billion going again be program. Whether I think guess significant and very the last a ramp But tune from we clear that will and we'll is potential to that $XX.X we want ever it But cybersecurity savings to advantageous the – into going to ramp. the the it while the achieve of the the do ONE-Net even to efficiency cost we this take of architecture migrate to new customers time. that get increased value

Civil, segments through was like helpful. give from it that the kind Okay. look looks and of what trajectories of like in just the horn maybe us what like? quarter looks maybe these those the rest Defense could of by just with Maybe if the margins. And the charges. Health, you in down around year It X.X% terms levels excluding That's elevated

again, will expect couple segment burn We love by it pit it program, front point legislation. ramp a expect Yes, moderate a about be help of in again Health going this that will margins And Health. some Gavin. there the end that we dynamics range. start. to about. team's are to There a program Civil been We it still the we lower brand run earlier legal at levels a an I to and one-timers talked charges We've got because fine We in would But is at I AEGIS of lot program continue the But margin could been you've be down. Civil signaling not case. to performance. of on new that won't we on absorbed of that put was area was multiyear that talked QX too the us. I the knew also but think there's these QX We think up. where certainly But is right.

So those we business back security want to but that margins. -- I a that's our margins area some profitability the be of We half Civil don't ourselves of spoke improved see overall. than first I'd products about And ahead is half will say get Roger on an in trending and the well-run stronger business. better. activity areas

something mean yet that about So moderated speak right But the -- I at side seeing in that will think volume. margin this that very the is trajectory for that That's honestly it trend love work for probably that the down. and There a the catalyst Defense, is be higher about future. we to pursuing. current near defense Afghan transition. then little The higher. margin growth now, us. change catalyst see in great of on talked that the the something Roger therefore TBD, some don't near over opportunities -- And hope I'd year's bit will half is the a some will back that There's we'd project quite anticipate say these along on a I is this be work term. come term. team to That not special and We're Civil time, higher. probably performance should in Whether the occurs airborne

Okay. Thank you.

Thanks, Gavin.

the is The with Please of question proceed with your Canfield line from next Colin question. Barclays.

exposure Tying And be good together growth that time seem you TBD it bigger Hey, of defense pieces I going count obviously, Rob's of kind morning. aero have drivers the returns adding some perhaps hardware like and are to I It added it's traffic. Can still just XXXX. you a question. commercial Peter lift. of the understand next head takes year's discuss sounds guys Dynetics the of widebody the acceleration? outsized get to given to all guess and in to

you maybe uplifters biggest your together into tie year? what next kind of So if could are

we're more favorable. seeing next we early that Therefore, the guidance. on backdrop speak be and the detail get continues is I strong bidding Roger talked that about get we're But And certainly favorable. I and XXXX, in Colin, again, to to of things mean, about point Yeah. about think to as that's we'll and year's right? foundational volume starting a budget

XXXX. side, also be moderating, programs absolutely defense ramping cycle up. hardware and getting There's as some some that ,there into likely transition are be of that of. will production more opportunities completing we've a capability And one a the will CXISR a more which probably towards opportunities proof be I will programs is some hopefully so, in in Dig opportunities we've in throughput activity of where defense more that is airborne opportunities. MOD interested Dynetics that mentioned seeing demonstrated hopefully we customer concept, more award seen lot the great demos

levels, And fine. probably so digital see we again, the the trends we're that agency should but pre-COVID accelerating the there. wildcard And pursuing. continue civil modernization be bid are those do to not on hardware but Health. all and is aviation opportunities back positive to growth, And Civil more things would

we've spoke big year won originally one out a on in program we up that had the in program. of over big about and this Now Reserve any ramp It for It's waiting delayed. we've see nicely that XXXX. year's a contribution expectation. for as Readiness the already now We But fully that now. XXXX. should catalyst that was is been That been Health

So of more about to we get as come the that year. in we'll mind. detail talk those things to XXXX time that a again, are But few

back question. Got economy talking then you how and cyclical count about strategic and population preparing US But statistics, labor growth you a and you freeing head shrinking. population the to it. But environment? a can And head are count. IT is longer-term force close Both kind isn't coming if the about at benefits just the almost softer talk business for Booz up participation look structurally impaired a of you're

So you are business kind how that structuring the if about environment? of think guys you around

think be going have where about problem. all just the structural call to time on are realize I we all bit. touch we we an there enough era a are people. jobs I'm But we're to I'll it it's Colin, more not on doing. things I Hey, that sure little fundamental talk than the mean, in a

look and If at grads source. college you where we can

And and and work long take value-added knowledge into so multiple leadership and how can worker RPAs them career. then of them the can administrative they and our standpoint to functional how grow automate, time? we look this gates And in up, put from right so long-term new have them create okay, hire a steps and what long-term our what we that our that and it's we them our multiple provide team, how free we a services talking over customers? people then we organizations talent HR with And view is strategy their to And our industry? can labor our goods in and retain like do so want and upskill about

college, from up Python. they credentials. a language. master's graduate Thunkable up computer come stretch They they So, here another They add they pick get pick They degree. some

that up to continue we salary. place growing And my and I want where and what about I'm we be that opportunities we to invest I'm company terrific partners with do move professionally. we growing. longer to realize and making And growth thoughtful the to go and career automation. want no doing But to for And grow be grew do They them. what world we wow work. We see people. our frankly continue maybe where We're competitive have very a And the to we're advancing great do to in management. at in they with hiring is that's and here. people I want put

the less security the happening And business. we've what's some products talking with in that growth only But happening businesses that catalysts What's count-dependent. clearly see of our thing of these we as some I'd head been businesses. Dynetics are to is add again about

but again, So, becoming larger portfolio they're not time. portfolio a they'll huge the increasingly part over part of of the

color. Got it. Thanks for the

Thank you. Good questions.

the proceed your from comes Please Cowen. question question. of next line von with Cai Rumohr with Our

Thank Yes. you.

we've trends weak some get similar; I bookings cash you strong get quarter fundings that and the into super although incongruity had we very forward, in a the how going of blowout is understand bookings could that two give the funding very to we on going which or funding. strong and don't next color to very which could, Maybe those some quarter. bookings then is by us anemic discussed September were be you that the the And there are you that sales Booz still got very issues all have together; and see looking slips slowed So, we how Roger?

Yes.

super I Cai quarter the will I think blowout. don't next see the So, but better, be

saw payments get first $XXX quarter that Again, over of just just while happen opportunities protest, out right? a in I bid We're in same think quarter. until we not a process being across the And in the of is we the I get first get are companies all the really and right? facing in a quarter all in than I And not likely the entire we then of win I in protests social issues. don't our the July. a turn about of or We our from can those. A got same, lot we which protest. and the -- would plan didn't second acquisition were book-to-bill. pointed probably about all about third to I our or There thought that value to kind a to We -- that Booz competitors we I'll prevail more million. -- lot is won't that the couple don't as provided some think week cash the clearly we and same going fourth customer other stream. But surprise. Things but and of point work around speak Leidos, moved the Every you were rates slow. Chris the And hurt canceled, in And once the right. we programs a got industry. security something make quarter. lose is it's other back our we that know of talked quarter we in go protest which two paid but wasn't

be a end year that's ramp it us not third year. problems going from the lift But should think much we slower this and really is stronger. give I in quarter. of the So, Again to earlier it budget that last had

the awards about line awards year-end government we're just mega cycle. talking don't And those third I increasingly with is the up Cai the fiscal think larger often quarter

see bigger we had quarter. the could you time any So, like first quarters a great

It's a that they've I funding always funded. think of previous again funding that's contract you mean dollars decision to side, already new the easy to officer incremental going On for process. prior a awarded unfunded whole same versus to give I procurement awards something follow make That's not action conversion on the cycle. and

much it's like But read decisions. activities can backlog into you think to don't our We take versus place funded So, see when award great. brand-new too to me, improving. the those I cycle around

Yes Cai.

program in we network I sort which program infrastructure it we for call this happened FAA. is quarter first it year. FENS, got think half thought is first of A example would and quarter a have a second ago, the good to the the of delayed year

I make a it's award, Now even we bit the can little count when on think uncertain, to almost protest. they're going a

that have XXXX. So more we've award that or have perhaps extended of the quarter if behavior just than over past quarter, seen make more of trend, of kind the the they third be of that that and And we into in couple we uncertainty. well years. fourth could And

seeing what terms are just us any give is pickup, you color, can quick you at on some And it of being you same in still are you. there What July? there? Is seeing Thank level? or the

a July. From in good was cash Well, war...

to be happening. that We able talk have wins. of a about couple We'll strategic

Yes, think every we yet. quite great I Well, wins. have -- did. announceable, not always They're month, not we they're well

about to of most So we we'll that tens score, talk in there I there's mega me. -- Probably, probably we FAA our excited big FENS programs July that have mean be quarter. IDIQ And probably is it's sort next get the that -- award. there make win wins, those win sometimes technology and some might But that's a no the the able on print, just July. they're the there's I'm in biggest about of fight strategic horizon, involved. but because couple next was for had to program. of in And There's then don't a

Thank you very much.

you. Thank

Our of next the Fargo. with line your question Wells comes Matt with Please Akers question from proceed

for guys. questions. Thanks morning, Hi. Good

morning, Good Matt.

did the are I -- So about on comment on Australia. spending if talking in international acquisition business? your could allies could defense. you of wonder, you more lot you a our Obviously,

in could future. be the of business the Just part that if bigger a curious,

Listen, Whys. XX%, come international work. And very US, right? And under tend from little dollars follow we're be in our we're selective. by revenue pleased five of outside really but that to a we're We US, with the going the to --

fought, every of in of we're in I by the the way, they and always So States. strong ally the century. has US, terrific And United traditionally Australia a been a the strong war for the alongside UK since market They are think have turn the us.

in maybe in a think move infrastructure But a the then is country right be as growing more want critical country want that We to use going country, to regionally. us. growing in of for us we're we and way country. grow by So to priority of have in definitely mass, grow enough large and kind Australia, to where

specs the have big -- I some not is going competitors, be some mix to US. nice then the airports we're within by country. be uniform. are The whole the It different of in at I our priorities just global, a a and international, relatively both mean, requirements, way transportable. that with its could it's enough the business, SES But can And where easily We countercyclical, way into are the -- borders. that we of machines think nature our and offices works business, put the like portfolio. every we By which ports security the in business our and is category, the are

US, US for provision then you Hong put setter. the as in manufactured And provision around the And in that mods. it with we to at the Kong you a can small looks world. usually the equipment a Dulles, standard us and around can If put is, world, export

service business, So another maintenance appropriate absolutely field mission well for us of you is XXX people for every become in Australia, It's we're in that probably your is have our to necessarily that airport. and real about We're I feel strategy. the organization country, in those really you part the already We're positive. more okay, really Australia, business. in global a We tell business of is doing is We And might we a excited in SES it global. which an a larger large be anomaly of bought would tech have And we doesn't think today, But question sell I understood in to to have Australian countries. a a more support. critical we mean, about growing government. might couple isn't and business, the countries. that and going

fall. is was margins? That's, also think coming up from more one long-term you but about on much of I and not just guess, we growth the any potential And of, that should from only great. that that, -- that dilution gave standpoint, guess, years? kind Day, as guys at targets the I in ramps How DES then, the contract last a And over DES included Investor kind program

the near get program you that on don't tell term the expect corporate above would we margins or that I the average. to Matt, won't at -- Well, that certainly in

So there's some investment. we recognize initial

is quite protest PMO was In getting what process, of while ahead were we're of They the team fact out staff. seeing that's building year the the transition in honestly are we this working jump-start. part

than I spending and just tell so, long-term we'll I XXXX. continue DES, we're on picture big So a of that a a would on we're be more to to significant expect because do contribution taking that. view money XXXX you

adoption. of story exactly part this of you got the by on should spoke ramp-up that and more a be about. give lot XXXX, a us. early we've can't for timing significant so But customer certainly we it precision So It's Roger the growth

you. Thank Great.

Thank you.

proceed Please the The of Subin is Stifel. with from next question question. line with Bert your

thank the morning good you time. and Hey, for

morning. Hey, good

Bert. morning, Good

will Roger SD&A XXXX. until you recover noted that not

go forward the now? are XXXX on path it track, we it in You sales? annual LX. had thinking of or growth we did that think Does previously terms that get really to XXXX to sales should guided pro guess, you for back with margins I teens, low to you back forma SD&A that early about business, when How deal expanding about if just back with sort of

that will passenger drive demand a and path be significant because it's COVID. is, and both then business as recover seeing too, we versus we the old where the know of hit the business, secondly, bought is this No. And to The growth is had I fentanyl, has airports that we've most continue a one trough huge In business but their meth where for in we our detect. touchless we now double-digit all XX equipment, hit that are beyond evolving then it would And in was forecast a before we lane machines rest call touchless know at there's bottom. and demand. modernizing our And And and age, deal we from it the as the we'll the that right? it able start we technology in to and way XXXX, nice threat, to it look emerging other airports now margin touchless just in was and -- the we it walk through. What signed a new affected which will that seen go still year-over-year. because will level is the to US we down although, big at the end continue pre-COVID of I revenue chemicals, world have to chemicals, we years experience grow of that in margin is not. the when couldn't expect one, up airports

at a think I huge improved look right deal. Well, throughput which is

efficiencies. And

back. we the area compete and during are comes -- sort been So heavily in we this business as to ready technology so investing have that of troughed

that. know relation or security going clarification are some business, completely a what demand. any products there's and there like doing that lot of they you might this future fit you have seems border does question a to Where that in? separate? Just Does Australia to in on acquisition be have be in I

completely separate. They're Yes.

this So business that boats through, much our and boats -- in shouldn't pretty water are littoral airplanes with there. where blue flying is a literally business for over maybe sensors other is that looking through. a distress and truck you more Australia water are And drive the drive be you car

railcars the business. do at then and We have of screening. a we go Mexican border through rail the our We're personnel machine where one

very, -- when go we but way business. top I SES a organization So crossover the The business, It very of And different. in different not probably to customer. is are is Australia, to think that same of you the you carbon were it's interested the a they're customer right. in our because

is likely to yield. process The then Got follow-up appropriations And quick it. just I a may. if

pretty defense thinking Roger just a of the request. spending. have earlier that higher total view? mentioned you think in both. you I budget that's than is likely to in your similar on terms non-defense I to initial outcome about Is exposure put But know good pressure

Yes.

what think if -- let do an First going I think I all, and -- I what want then me of you use of tell too. happen is that to editorial you

defense. in I will the the get an same omnibus don't you non-defense without that moving move with think think non-defense I budget direction.

the think what years. past seen couple of I we've that's in

done Civil. across will and And we Health that non-defense this to Congress Defense is will will happen our Intel year. on. going omnibus. think good will defense think are which get move we for to our and will in we what be that's And people in think get duck I comes to I the I what our this an It of lockstep board happen whether do lame the move sort Leidos business, the is in before and next want and both business going

ask Now the good it's the good, company. way, if think me I for by if that's you

and future source revenue federal shareholders. sometime times our expect environment for government. I another the healthy when this three-year-old from a going tax be the increase us wonder for an very standpoint I investor to Leidos have or and a employees that we're And back. in from means there very, maybe our distant standpoint, to of the where to years. are kids budget there's for good I for have But it's think I pay

Chris. Thanks, Roger. Thanks,

Bert. Okay,

next Seth question your is the Our JPMorgan. from with proceed questions. Please of line Seifman with

Hey, and.. thanks very much

Tobey. Hi,

Seth. Its Hi.

of with in for Just activity a mentions there, supply we've defense. keep or a Dynetics scheduled chain sort quick one including release the that intake to as as from short. that morning me Does is it Aerojet? like of similar driver in materials do reduction some this the at of companies have a more the changes Raytheon industry issue at and seen in kind across areas But

Yes.

issue program. here Seth hypersonics for there. is plan, we factor a that expected chain following of course and cycle the particular that it to. So But supply we're production it obviously, It's kind – was seeing schedule the in that

the funding more some help program. for could hopeful a that we're perspective Now authorizations from

right not although a major that still something quarter. that's various a on But big out to attention us relates a chain business. growth we're in of from it component as not to. certain catalyst been the of As in would parts supply But a for bottleneck this I that hasn't say paying XXXX woods factor now parts we're the issue it there's

Right.

Okay.

you. Thank

Thanks. one to today. will I stick

Appreciate Great. it.

Sommer your line final question the The proceed Tobey Securities. coming you. from Thank with question. is with Truist Please of

Thanks actually morning. questions. on Bibb taking Hi. Tobey. for is This Good for our Jasper

Civil So I about margins in wanted segment. to just ask the

segment expect you return a ramps bit normalized you you level? But color there. and more XXXX-XXXX can provide profitability that think contract more when to to the highlighted SG&A I on

And side the Certainly, certainly SES commercial have and on is those our of strategy. Civil of within to or team. some other to that's longer-term mission support there's that part a starts. side wins anchor lot subject nice environment are discussion continuing new a on catalysts whether that's big a been side. honestly. to something grow with contracts, in the FAA will that business on margin be part margin our defense of That's customers And well for a the the of ongoing we we've do see FAA ops is the budget mentioned -- although strong smaller with on Yes. the program we well the We And DOE has digital really it's our business the margin leadership the business. transportation, I've the with of We're Where the had margin some quite Civil. portfolio. -- catalyst lower MNO energy near-term. tend in do on aviation be margins program lower modernization the

undertaking after back some would Mod in small in the near-term portfolio rebound, is with of the the we improvements a more get to and multiyear and So but say those other as parts team. portfolio I what see to probably to Dig SES execute we look win levels or

So that's see in right how Jasper we near-term. it the now

Okay. my I appreciate Thanks the detail. taking for questions, guys.

Okay. Great. Thank you.

Davis to question-and-answer now our I closing And Thank of back floor for you. remarks. We the reach end session. turn the Stuart will

all Leidos. call. your And Have for great interest joining for you your to this updating assistance morning you look Thank and you you, and on thank day. thank today's a Rob again in We soon. forward us

today's conclude will conference. This

may a have and your lines disconnect this wonderful your day. time. at off Log You webcast