Prabu Natarajan: Sure. I appreciate the question, Sheila. So on free cash flow, look, we outlined that we’re going to grow free cash flow by about 10% this year. And we said we are intending to grow free cash flow by another 10% next year. I think for better or for worse, there is been a view out there that we are over earning on our cash tax assets. And Chart 15 is intended to I think address the specific question on are we actually over earning on our tax assets or not? As you could see, it’s just a modest level of decretion, if you will, on the cash tax side, and there is good visibility on the cash tax assets inside of the portfolio. As we think about specifically working capital, there are a handful of things that we are doing coming into this year and that we are going to continue to focus on that includes everything from DSO management to DPO management to inventory management to terms and conditions on our prime contracts to terms and conditions on our contracts with our subs to make sure that we are getting as much benefit out of the working capital management side of this as we can.
At the end of the day, as you think about the free cash flow potential growth for this company over the next several years, we think working capital tends to be less of a driver to improving free cash flow in the outer years. We do believe that based on just the demonstrated growth that we’ve shown over the last couple of years into next year that if the business grew between 2% and 3% a year and we had modest margin improvement of about 10 basis points. there is plenty of potential for us to offset and grow free cash flow, offset the headwinds from the tax assets and grow free cash flow. So as we think about it with a very nominal set of assumptions, we think we can continue to very nicely grow the free cash flow, recognizing, of course, as we caveat it, this is not intended to be free cash flow guidance for the next 3 or 4 years, but it’s a directional view for where we think the potential for this company is in terms of being able to generate the free cash flow and then deploy the cash flow effectively over the next several years.
Sheila Kahyaoglu: Great. Thank you so much.
Prabu Natarajan: Of course.
Operator: Your next question comes from the line of David Strauss from Barclays. Your line is open.
David Strauss: Thanks. Good morning.
Nazzic Keene: Good morning.
David Strauss: So the 3% to 3.5% growth that you’re talking about sustaining beyond €˜24, it sounds like you’re implying that you’ll grow maybe a little bit above the underlying budget. How do you think you’ll grow relative to your peer group? Do you think that will €“ do you think you can outgrow your peer group? Does that 3% to 3.5% plus translate to above peer group growth?
Prabu Natarajan: Yes. So let me take that one. So very big picture as we think about sort of what the nominal view for next year looks like. We said at the midpoint, it’s about 1.5%. If you adjust it for the 5 fewer working days next year, in the fourth quarter, but 4 days overall, we think that translates to a growth rate of about 3% to 3.5%. I think there are probably two key dependencies here: one, continuing to recover and restore our recompete win rates back to where they were. That’s a key assumption. I think we are demonstrating good progress internally on the recompetes. So I think Nazzic and I are both encouraged by the trend, early trend that we are seeing in that regard; two, we are winning a higher percentage of our new business pursuits this year.
I think it’s important for us to continue that trend. I think the basics are working really effectively. As for the budget question and the peer question, look, I think €“ we think about this as a relative game. We see the projections out there that we get from some of our peers as well as the models that are out there. I think we are targeting growth rates that are sort of in that circa 3% to 3.5%. And I think with the right mix of investments tied to a healthy pipeline and good execution, there is no reason that this business could not generate that 3% to 4%, 3% to 3.5% underlying organic growth. It doesn’t mean it is going to be linear. Let me be doubly clear on it. You will always have a recompete that will cause a bottleneck along the way, and you will have a new business win that creates extra growth.
So, to me, as I step back and sort of step aside from the noise of the recompete wins and losses and the new business wins and losses, there is an underlying growth rate that we are targeting for this business, and we are encouraged by the progress we have made, but we recognize this is one quarter at a time, and we have to keep up the level of intensity on our execution.
