Mariana Perez Mora: Good morning, everyone. So I would like to dig deeper on pipeline of opportunities. When I see the bids expected to be submitted in the next two quarters, they raised to $14 billion from just like $10 billion last quarter. Is that — or that significant increase is just a seasonal trend or is indicative of any changes in like strengthening our war environment, evolving CACI strategy, and or new opportunities?
John Mengucci: Mariana, thanks. So, when we look at the pipeline, I actually look at visitor under eval and ones that are going to be submitted. So $25 billion in total and maybe a little more color here for folks on the line comes down in my mind to two or three elements. I hate to say three because then I’ll forget when I’ll end up with two. But the first is size, right? We always have said as we rebuilt the business development machine here is bid less and win more. And if given the choice, always bid larger, right? Because larger portends longer duration, which although it may not ramp up as fast as some of you would likely win some of these programs, we’re looking at that four, five, six-year dependable growth stream that we have out there.
So one is going to be size. There’s several billion dollar opportunities in the pipeline across a number of our markets. And these and other long duration ones provide confidence in our long term growth. The second one I sort of would put in a bucket called location, network monetization, cloud, Sigint software, Agile software development, well-funded, right? So back in our milestone, zero process of seven different milestones, when we submit and get awarded a bid, is this the right size? Can we differentiate? Have we invested, have a customer need? Is it in the sort of zip code of work that we do very, very well? And then the last piece is what I would call, is it mission tight? Is it related to the work we do well we do today? Is it a nice stepping and repeat?
Are we doing work with the Navy that we want to introduce the Army to? Spectral would be a perfect example. How do we build something to win like Spectral for the Navy? How do we take all that technology and look right to a 20 year customer in army Trojan and bring some of that capability forward? So the pipeline is built years ahead of when we actually have to execute it, because we want time to build the relationship. We want time to invest and show the customer the art of the possible. So our pipeline today is made up of a lot of those opportunities. We can’t win all of them, but we like to make certain that we’re sort of stacking the odds in our favor as we put things into the pipeline and we all collectively follow those through the bid, through the eval, and then through the ramp-up cycle.
So hopefully that provides you some additional color.
Mariana Perez Mora: Yeah, that’s great color. And you mentioned and you have been working on this bid less win more strategy for quite time now. What is the target win rate that you are like that you want to achieve when you do these bid proposals, and how is that trending lately?
John Mengucci: We’ve been around 100%, no. Look, I hate to get into sharing really valuable market data, but we like our Recompete rates year-over-year, most shares than not over 90%. And if you take our collective win rate, it’ll be in the 40%-ish, 50 some years, 30 and others. But we’re very well in tune with what’s in the pipeline. We don’t have a lot of bluebird bids. They come in two months before the bids do and somebody else has shaped that win. But we want to get our — a bid submitted number up. They really are methodically thought out. They go through a very rigorous process. So I think we have a respectable win rate. Again, you can manage a business out of business driving for a much higher win rate because you only bid on things you think you have 100% chance of winning.
So it’s a tough question to give a pinpoint answer to, but look, over the last seven to nine, 10 years, I’m really impressed with the changes we made in our business development organization. Depth of understanding how to do that in our BD organization is extremely deep below the sector level into all of our BD leads, which includes our technology sales team as well. So thank you.
Operator: Your next question comes from the line of Sheila Kahyaoglu with Jefferies. Your line is open.
John Mengucci: Sheila?
Sheila Kahyaoglu: Oh, sorry, guys. Thank you for the time. Appreciate it. Lots of questions on margins, first half over second half. So I was wondering if we could talk about the Photonics investments because you mentioned that quite a few times. Can you talk about maybe the impact in H1? But also like how do we think about this investment, what program opportunities it could open up as well?
Jeffrey MacLauchlan: Yeah, I don’t think we’re going to get into any of the specifics, but it’s generally related to the Photonics programs that John mentioned, related to a family of SDA programs that you’d be familiar with, and a number of our other Photonics product, as opposed to the bespoke solutions, the Photonics products business. I think we’ve been pretty open about our win rates there and the programs that we’re on our position with a couple primes, we have some DARPA contracts, just an accelerating portion of the business where we’re focused on produceability and transitioning from development to production kind of mode.
John Mengucci: Yeah, Sheila, a little extra color there. In our Photonics business, if you remember when we did the SA Photonics acquisition, combined that with the Photonics business of LGS as well as our own capabilities. I mentioned that for that business we would be investing through fiscal year ’24. As we saw volume starting to pick up sooner than we expected on the producibility side, we decided to double down on our investments more now as we look at it in hindsight, more in the first half of the year versus the second half. So one that provides us with some produceability enhancements that gives us more confidence in ’25 and beyond we can deliver in a timely fashion. And then two, just that delta between what was spent in the first quarter — first half shows up as positive to margin in the second half.
Sheila Kahyaoglu: Yeah. No, thank you. I appreciate that color. And maybe one more if I could ask you, you announced that new $525 million gen mod contract this quarter. How do we think about that program as a driver of growth in fiscal ’24 and any additional color you could provide on what you’re doing there?
John Mengucci: Yeah, I mean it’s a fantastic program. It’s another network modernization job and we’ve got others in our pipeline, things that we’re looking for award. Look, it’s going to unpack similar to other larger network modernization technology jobs. We’ve got a lot of unpacking of things as we’ve won a lot. They’re all come in at different rates. So on that one, it’s going to unpack more into ’25 and beyond based on timing of when we won that job. But there are other programs out there that are doing an outstanding job of actually ramping up out of plan. We’ve got high EITaaS which is ramping up ahead of plan. We’ve got additional work. We mentioned it would start with upfront planning and design. Teams done an outstanding job.
