Prabu Natarajan: I appreciate the question, Bert. And we’ve signaled for a couple of years now for a company with between $22 billion and $23 billion of backlog, there’s oodles of sealing left that we can go deliver growth on. One of the things that we’ve been laser focused on over the last couple of years is instead of chasing the shiny rabbit, let’s focus on the things that have ceiling that are right in front of us because the P-win on filling up the ceiling is far greater than the P-win on any new business or any sort of new ventures out there. So to me, that’s been the focus. It has proven to be a source of tailwind to organic growth over the last couple of years. I would characterize that tailwind as between 1% to 3% higher than our initial plan expectations for any given year.
And I recognize that there’s always a balance between more on contract growth, offset by maybe less in the way of new business growth. And therefore, when you sort of work your way through the dynamics of new business competition and your win rates are higher. And on top of that, you’re beginning to deliver better on contract growth organically because you have ceiling ahead of you that actually does create a pretty favorable dynamic. Again, it’s our commitment that we need to go fill out the ceiling, and that’s what the team is laser focused on doing. And I would say, hopefully, the team’s going to continue to execute the way we’ve done it in the first half of the year and deliver some upside here for the full-year and hopefully next year as well.
But we’ve got work to do. And we — as we always remind the team internally, dialing it up in our PowerPoint chart is good, but that’s just the first step of actual real execution with focus and intent and that’s what we’ve done.
Nazzic Keene: Yes. I want to add a little color on that because I think that’s a great question. It’s one of the areas that as I look back and reflect on where we sit today and where we sat even two or three years ago, the focus on on-contract growth is actually oddly enough, relatively new. And so as we looked at opportunities to strengthen our culture and to look, again, ingrain the drive for profitable organic growth really ensuring that we have the people, the talent, the leadership at the program, the portfolio level that can focus on this was paramount. And so a lot of work has been done to actually accomplish great success in the on-contract growth. Again, I think it’s an area we can continue to focus on. But that’s an area to your earlier question, Bert, around where I’ve seen changes. That is absolutely an area that I believe is fundamentally different and better than it was just a few years ago.
Bert Subin: Great. Very helpful. Thanks and congratulations again, Nazzic.
Nazzic Keene: Thanks so much.
Operator: Your next question comes from the line of Cai von Rumohr with TD Cowen. Please go ahead.
Cai von Rumohr: Yes. Thanks so much and Nazzic, again, I’d like to join everybody a job well done. Probably not to beat a dead horse, but historically, Q3 is your biggest book-to-bill quarter. And certainly, I think unobligated O&M funds are kind of at an all-time high. And so the outlays have been strong. So — and you mentioned you got $1.1 billion of bookings. So what are we looking for book-to-bill as a range in this quarter. You got a $1.1 billion, certainly not all of that was — is under — in — still in the protest window. What should we be looking for the bookings book-to-bill in this quarter?
Prabu Natarajan: Yes, Cai. So let me try and answer it a little bit differently. Maybe in response to earlier question, in order to support the growth aspirations of this organization, as outlined at Investor Day, which is 2% to 4%, we said we want book-to-bill to be comfortably over 1.0. It’s not a great indicator any one quarter. We’re off to a really good start at Q3, but I would expect that number to be 1.0 or better in Q3, but recognize that we don’t always control the timing of things like protests that may be out there. And therefore, we’re just going to navigate it one quarter at a time, but recognize that, on average, over time, we want book-to-bill to be comfortably over 1.0. That’s the objective for the team.
Cai Von Rumohr: Okay. And then so the pattern you’ve laid out for the third and fourth quarter. So the first — the second quarter, you beat consensus on revenues by $100 million. And if we look at the third quarter, actually, your revenue number is higher than I would have guessed. And then we get a very big stepdown in the third, and I recognize you have $135 million impact from five fewer days. But help us understand why is it so sharp? You mentioned that Oms kind of drops out. How big is the sequential drop in Oms from the third to the fourth. I mean, I would assume with T-Cloud and with One IT building that you would not have had such a severe drop off sequentially?
Prabu Natarajan: Right. Thank you, Cai. I appreciate the question. And look, I think it was important for us to give you all a perspective on how we think sitting here today, the second-half to play out. And we’ve signaled approximately mid-single-digit growth rate in Q3 and roughly flat in Q4. Our assumption right now is that Oms will exit the portfolio at the very end of the third quarter. So to me, the obvious bridge from Q3 into Q4 is predominantly Oms-driven, big picture. The second variable is that Q4 tends to be the weakest revenue quarter in a year, just given seasonality, not just the working days, component of this but also just the productive labor hours that we typically calculate in Q4. So to me, those are probably the two variables.
Again, our performance year-to-date has been very pleasing to us, and the team has done a stellar job. And as we sit here today, we are starting to see that flattening trend, which is really important for us. And for those that have interacted with Nazzic and with me know that we try to be as transparent as we can about the next two or three quarters. It’s a little bit unusual for us to talk about forecast into the second-half of this year or even into the first half of next year, typically, but given the transition we thought it was just as important, if not more important, to give you some additional color as we see the second half rolling out here. So to me, that’s the sort of the more important drivers on Q3 versus Q4, but recognize that the performance year-to-date has been stellar, and we want to make sure we keep the momentum up because we recognize the exit velocity out of this year is going to inform how we think about H1 of next year.
And hopefully, a couple of months from now when we’re doing our Q3 earnings call, we’ll give you an update on where things are.
Cai Von Rumohr: Okay, thank you very much.
Operator: Your next question will come from the line of Tobey Sommer with Truist Securities. Please go ahead.
Tobey Sommer: Thank you. I was wondering if you could quantify what the changes in employee retention have — how that has impacted growth and contributed to the acceleration in organic growth. I mean some of that, of course, is internal actions, but some of it’s also changes in the labor market broadly? And how does employee retention compare to pre-COVID levels and some context around the current snapshot of figures?
Nazzic Keene: Yes. Tobey, I’ll give you the macro view. So I actually don’t have the specific numbers in front of me, probably who may have them memorized. I’m certainly does. But I will tell you that as we sit here today, our ability to retain the employees, which is the opposite is what’s the turnover rate is certainly a couple of points better than it was at least a year ago, give or take, and probably much more in line with what it was pre-COVID. And so certainly, any impact or movement in our ability to retain people, just helps retain our base and allows us then to focus on hiring for new roles, new talent. And so that, coupled with the ability to — some of the things that I mentioned earlier in our ability to hire, retain and attract new folks has given us really a great opportunity to, as you mentioned, to drive revenue where we can.
And so that’s certainly been a component of that to bring in some new talent in some key areas in which we’re growing the business so we can strengthen our talent base. But it really is the combination of being able to retain the labor that we have as well as some of the great work that the hiring teams have done across the company and being able to add and attract and retain new talent. In general, and we track this on a regular basis, our turnover is below our industry turnover, and we see that as a very positive sign. Prabu, any specifics?
