Gavin Parsons: Got it. Thank you, both.
Nazzic Keene: Thank you.
Operator: Your next question comes from the line of Bert Subin from Stifel. Your line is open.
Bert Subin: Hey, good morning. Maybe to follow-up, maybe more of a €“ hey, good morning, Nazzic. Follow-up maybe a near-term question, one thing people have been watching is outlays, and we saw some really good traction in August, September, and that seemed to come off in October. It probably expect some volatility through the CR. Your fiscal quarter ends in October. I’m just curious if you could comment on maybe what you saw as the cadence through the quarter in terms of activity from your customers and ability to capture opportunities?
Nazzic Keene: Yes. Let me start a little bit and then if Prabu wants to add some color always. But I think in general, we haven’t seen a very significant change in buying behavior over the course of the last year or so. And given the elections, given the CR, given the future, as we sit here today, we don’t see anything that is radically different in the future either. So for us, it’s very much been business as usual. There is always some short-term opportunities and some contracts to do some pickups, but that’s really a normal practice for us. So from my perspective, I haven’t seen anything that’s really fundamentally different over the last few months nor do we see it going into the next few months. Prabu, you’ve got anything to add?
Prabu Natarajan: Thank you, Nazzic. The only other thing I would add, Bert, is that our book-to-bill was our 1.1x, our trailing 12-month book-to-bill has been 1.1x. I think we are demonstrating that there is a way to a robust, healthy book-to-bill metric that does not rely overly on large awards. And I think in this environ, if you’re relying on large awards, I think you’re likely to see some delays there. And thankfully, we’re not in that boat. And I think that’s probably the other source of a healthy book-to-bill trend.
Nazzic Keene: Yes, good point.
Bert Subin: Yes, that’s great color. Thank you, both. Maybe just for my follow-up question on the margin side, I appreciate all the color you gave on your initial outlook for next year. Prabu, as we think about the 9% range relative to where the peer group is probably closer to 10%, do you think there is something that you guys can do to get to narrow that range? And could you maybe just walk us through what you think the largest contributors to margin expansion are going to be when you start to see that perhaps in the next year or so?
Prabu Natarajan: Yes. I appreciate the question, Bert. And I think we reflected on this particular topic on our last earnings call and acknowledge the fact that we do see that difference between us and our peers on margin rate. We’ve been consistent in the way we thought about margin and communicated that story to say that we do see over time a path for us to continue to bridge the gap between where we are and where our peers are. Now having said that, we do see that as a substantial opportunity to create shareholder value over time, and we do expect to make progress against this target over time. Our incentive comp and our metrics are aligned to improving the margin performance from the underlying business. Look, it’s early days for FY €˜24.
We wanted to get a baseline view for where we see margins for next year. And we are always seeking to balance improving margins against the needs of the business to make sure that we are taking a balanced view of that investment potential against the backdrop of improving margins over time. So I think that’s the balance we’re striving to always, I think, bring into the equation. And the last but not least, I’d say over the last maybe 1 year to 2 years, inflation has been maybe more of a factor. While it hasn’t improved or it hasn’t impacted the margin performance of the business, the reality is it is keeping a little bit of a check on underlying margin improvement because we are seeing escalating costs on the labor side. So if you sort of combine all of these factors together, we do see the potential for margin to improve.
And what you have there is our initial baseline view for FY €˜24 and recognize that Nazzic and I are committed to improving the underlying margin performance of the business, and that’s where the focus is going to be for the team.
Bert Subin: Yes. Just to clarify something, I guess I could ask us better because I know I’ve sort of asked about margins before. Do you think the opportunity is more to get rid of overhead load or is it portfolio mix shaping or is it the combination? I’m just curious if there is one thing that stands out is this is going to be an easy opportunity for us to get margin expansion?
