Jeffrey MacLauchlan: Yeah. The driver of that is our background investigation work, which is a long standing established franchise. It has been administered for a number of years through the Office of Personnel Management, OPM, you’ll know, as a civil agency and it transitioned a year or so ago to DCSA, Defense Contractor Services Agency. So while it is a change on the chart, it’s not really a substantive change to the business. There have been a few other small changes, but the driver is that.
John Mengucci: Josh, I’ll also add to the part of your question that was looking forward. We’re in five markets out there today. We’re actually structured around markets. Think about that as capabilities where we run every single customer through it. So from time to time, those numbers are going to move around based on where we win network modernization work one quarter maybe with DHS, which is in [indiscernible] and that may have one ramp-up period. And then in other areas like Army, DIA, and other areas, we’re out there winning network modernization work as well. We sort of look at that year to year. It’s in those different quarter, quarter points. Things move around. Think of other examples. You look at the commercial work yeah, maybe over one quarter, that work sort of moves around because something got delayed or something came in early. But if it were two quarters, it’s sort of flat. But thanks.
Josh Corn: Okay, thank you. That’s all for me. Thanks.
John Mengucci: Thanks, Josh. Thanks.
Operator: Your next question comes from the line of Matt Akers of Wells Fargo. Your line is open.
Matt Akers: Hey, guys, good morning. Thanks for the question. I wanted to just ask quick on just hiring trends, headcount, any color you can give there on sort of how you’re doing year to date?
John Mengucci: Yeah, Matt, thanks. Look, hiring, you guys think I’m just this broken record. The demand for talent remains high. Given all of our recent wins, our talent acquisition team has been doing an outstanding job. We set a goal each year across the entire company as to how well all of us, because we’re all involved in talent acquisition, is working. It’s working extremely well. We continue to strive to be the employer of choice. All three of our programs, our hashtag making move program, our referral program, great people know other great people. And our employee value for opposition around your potential is limitless. So is ours. They’re all contributing to strong hiring. And the flip side of that piece, Matt, is that our retention numbers across the company are at exceptionally strong levels.
Not to share what those numbers are, but it suffices to say it’s a material level below what we saw prior to COVID. We’ve expanded our internship program. We’re making sure our employees know the value, diversity, and inclusion. We’re engaging regularly with all of our employees, and it’s sort of working. We continue to win numerous best places to work awards. And again, these are based on employee surveys, not what the CEO believes. And we’re able to find talent. Part of what drives that talent pipeline are our employee referral program and our intern program, right? Both of those are bringing large numbers of folks in. And the referral program just under 50%. So think about that. 50% of the people this company brings in come through referrals.
And that has a double positive effect, folks. One is it gets us employees faster than are proven. Secondly, on the retention side, people who refer somebody statistically stay materially longer than those who don’t, right? Because who leaves a company after they’ve referred some great talent, and that talent that was referred stays longer because they, quote-unquote, look up to and owe it to somebody who’s already in the company that has referred them. So it’s really working extremely well. That ties back to the culture of this company. A 62-year-old company deeply involved in mission, very closely coupled to a customer, 38% veterans. It has all the right mix in it, and I hate to say it makes the job easier, but it makes it easier for us to continue to be the employer of choice.
Matt Akers: Got it. Thanks. And then I guess if I could do one more on margins, just, I guess a lot of sort of noise in the EBITDA margin this year first half versus second half. Is there a way to think about kind of going forward, the starting point for fiscal ’25, does that look more like the ’24 average? Does it look more like what the back half is implied? Just anyway, you can sort of frame that for us?
Jeffrey MacLauchlan: Yeah, we’re not going to kind of front-run our ’25 guidance at this point. I mean, you’ll appreciate that that’s still kind of actively at work. I don’t know that there’s a lot to add to the earlier question. I mean, we have a couple of areas where we’re investing in the first half, and we see that sort of winding down as we achieve a number of milestones and we got good visibility into the backlog, and there’s some timing in mix there as well. So I don’t think there’s a lot to add to what we’ve already said about it.
Operator: Your next question comes from the line of Seth Seifman of JPMorgan. Your line is open.
Seth Seifman: Hey, thanks very much, and good morning. I wanted to ask one more question about the M&A pipeline, and you talked about things maybe loosening up a little bit, and I wonder if it’s stuff that you see more that might be kind of almost like an investment in a technology or R&D to help build out capabilities, maybe more on the product side, or if you see more opportunities for companies that might be — that have a solid earnings stream now and might be more accretive to earnings and cash flow in the near term?
Jeffrey MacLauchlan: It really goes across the spectrum. We talk about the fact that our program is grounded in strategy and filling gaps. Sometimes that’s a technology gap. Sometimes it’s a mature position with a customer or an area that we see a need to add to the portfolio. It really runs the spectrum. It’s really across the board. I don’t know, John?
John Mengucci: No, I think, Jeff is absolutely right. It’s capability, customer relationships. We’ve done a number of acquisitions that actually bolster customer relationships. So, in that examples that, we’ve got a strong hand in Sigint and we’re not deeply in customer X. And some other company has got great relationships there. They’ve got a long term mature delivery track record, past performance is strong, cultures match, and what way to better step and repeat with the capability we have in order to customer set and to sort of bring those kind of customer relationships in. So we sort of take customer relationship plus a core CACI capability, as well as add what the incoming company has. And that allows us to really focus our pipeline more efficiently, allows us to continue this long history of successful M&As that are driving top and bottom line growth.
Seth Seifman: Okay, very good. I’ll stick to one this morning. Thanks very much.
John Mengucci: Thank you, Seth.
Operator: Your next question comes from the line of Mariana Perez Mora with Bank of America. Your line is open.
John Mengucci: Hi, Mariana.
