Carey Smith: Yeah. Thanks, Noah. So to your point, the debt limit did set in place a cut, and that cut would occur at the start of April. So, the new House Speaker has said he’s looking at continuing resolutions. One option is to run until January. One option is to run until April. But he is definitely factoring in that 1% cut as he makes those decisions. I would say, again, when you look at the parts of the budget, where we focus is growing between 5% to 12% compound annual growth rate. The areas that we play cyber and intelligence space and missile defense and critical infrastructure protection are very likely to be the last areas that are going to get cut, given the global tensions that are occurring right now around the world.
Noah Poponak: Okay. Does the growth of this year being so strong, just set up a situation for you next year where the compares are so tough that the growth rate decelerates significantly? Or with the growth rate that high for one year and the amount of new business wins you have, do you not expect — or should we not be anticipating that significant of a base effect next year?
Matt Ofilos: I’d say, Noah, that when we look at the longer-term planning at the Investor Day, we talked about 4% to 6% growth. And so, the baseline we’ve been telling folks is go off the updated guide and assume the same kind of growth rates. Obviously, 20%-plus is a little bit bullish going into 2024. But we’re still comfortable that the range of guide provided at the Investor Day of the new base is appropriate.
Carey Smith: We plan in February of next year to provide updated long-term targets. And I would say one of the big focuses is keeping up our competitive win rates, which have been close to 70% throughout the year, and if we can continue that type of performance. But to Matt’s point, we’ve clearly had a great year.
Noah Poponak: Okay. And then, Matt, just on margins. If I kind of go to the high end of the new EBITDA range and assume CI adjusted is kind of flat sequentially around that 8% would imply Federal Solutions closer to 9%. Is that kind of what you’re looking for in the fourth quarter? And then I guess, just run rating from here, are we still thinking FS is over 9%? And can CI just kind of keep moving higher from this quarter? Or will that maybe step down again before it then sustainably is high single digits?
Matt Ofilos: I’d say our goal, of course, is double-digit margins for CI within a few years. I think that’s a little bit of — a couple of years still as we get through these challenged programs. We did have a little bit of a helper in Q3 related to a change — a positive change order. So, to your question, on the Federal margin, for the total year, we’re still expecting mid-9%s, which infers like 8.9% at the — 9%s at the high end and then 8.9% at the midrange, so for Q4 specifically. So to your point, I think we still expect Federal to be kind of low 9%s to mid-9%s, long-term goals being mid-9% for federal. And then for CI specifically, we’re still expecting margins to continue to expand. We really like seeing Q3 at almost 10%, and that is kind of our long-term goal.
Noah Poponak: Okay. Sorry. And did you quantify in just an absolute millions of dollars, the item in CI in the quarter?
Matt Ofilos: We did. It’s about $10 million.
Noah Poponak: Okay. Thank you so much.
Matt Ofilos: We had a couple of quarters where there was a lower margin change order. This was the offsetting upper — the higher-margin change order this quarter, it was about $10 million.
Noah Poponak: Got it. Super helpful. Thank you.
Matt Ofilos: Thanks, Noah.
Carey Smith: Thanks, Noah.
Operator: [Operator Instructions] Our next question comes from Sheila Kahyaoglu with Jefferies. Your line is open.
Sheila Kahyaoglu: Good morning, guys, and thank you. Great quarter. I think I’m going to ask Noah’s questions, but in a slightly more positive light. So, obviously, this growth is super phenomenal and industry-leading. What would you say you attribute it to? Carey, you alluded to, you’ve been competitively winning 70% of your contracts. So, as we think about that, like how do you think that translates into growth for 2024? I know you’re still not even in your planning process yet, but these are your one of contracts that are just starting that are competitive wins, and that’s how we should think about it? Or can you shed some light there?
Carey Smith: Thanks, Sheila. So I would say, yes, we’ve had strong competitive win rates. We’re also again in six growing markets, which is really nice across the portfolio, across the two segments. All four of the business units have been growing with particular strong growth out of Mobility Solutions and Engineered Systems. We’ve done a great job continuing to win what I call new and emerging contracts, be able to win large single-award contracts that have ceilings that we can drive task orders to. And then we’re really just at the very start of the United States infrastructure spend, and we’re facing a Middle East spend that’s going to last for decades. So I would say those are the areas that I attribute to the growth. And I think it’s terrific that the team has been able to capitalize on all the tailwinds that we’re facing in our end markets.
Matt Ofilos: And Sheila, one thing I would add is with all the success we’ve had, we have the $8.8 billion in backlog, plus we have $14 billion of awarded not booked. So again, that number continues to grow, and we’re really happy with the continued to execute on the existing jobs and the potential ceiling that will come from those.
Sheila Kahyaoglu: Thank you. And then maybe if I could ask another question, both for CI and Federal Solutions. How do we think about the unfortunate events in Israel and Gaza? And what’s going on there? And how that could potentially impact your business through intel awards or infrastructure are also negatively impacted depending on the location?
Carey Smith: Yeah. So first, I’d say we’re very saddened by what’s occurred in the Middle East and the tremendous loss of life. We are staying very close to what’s transpiring. President Biden, for example, I just had a call with Prime Minister of Saudi Arabia on October 24. They’re very much aligned in how they’re looking at things, which is how do we establish security in the region? How do we support humanitarian assistance? And so, I would say our job, whether it’s in Critical Infrastructure or in Federal Solutions is to provide the necessary support to our customers, and make sure that whatever we do helps out the region. We have a strong presence there. The work that we do there will continue. It’s very important to those nations. So I don’t see any downside impact. But I would say, again, our objective is really to do what we can to provide stability.
