That's great. All right, folks, thanks a lot for joining us. My name is Gautam Khanna. I'm the Research Analyst at Cowen, who covers CACI and the government services, names among others. And we're very pleased to have with us John Mengucci, President and CEO of CACI. And of course, many of you know Jeff, CFO. This is meant to be kind of an interview style. And at the end, if we have time, I will certainly open it up for audience questions. First off, welcome, guys. Appreciate you making it.
Thanks for having us.
Our pleasure.
Nice warm day out. Lovely.
Exactly. Yep. The perils of having this in the Northeast in February. But, you know, just big picture, obviously the topic du jour has been sort of your thoughts on the new administration, how things may change. We hear a lot about DOGE. But so I'm going to leave it open-ended and let you take it where you want to take it. But what are your initial impressions?
Yeah, look, first of all, thanks for having us. New administrations, new ideas, new concepts. One might say this administration may have a number more concepts than others, perhaps. I'll talk as high level as I absolutely can in all of this. We have an administration who wants to achieve peace through strength. You get that way by having the strongest national security systems and solutions that we can field. They want to make government more efficient. They would like to work on things like overhead and G&A, which is what we all work on. So maybe they have too many employees in specific areas. They'd like to have their employees return back to their office. They'd like to root out waste and fraud and abuse. They have goals and a focus around our borders. They would like budgets to be in alignment with things that matter.
They like government agencies who spend taxpayer money to be able to account for it. I mean, so far, it sounds pretty good to me. They like our enterprise IT networks to be more resilient and maybe get some additional funding. They're concerned about networks in the state of some of the networks, and they'd like to see those be enhanced and modernized. And so there's a lot of great things in that. And to us as a company who does a lot of that, a lot of potential upside. But I think it's also opened up the room for a lot of misinterpretations and misunderstandings. I'm sure we'll talk about some of that as we go forward here. But from a national security company CEO, it really lays in well to where CACI has been at.
We've had a lot of market movement and market displacement and the like, and our business fundamentals, they're still the same. I'm sure it's nothing you've ever heard from a public company CEO. But it doesn't cause alarm. It actually causes, yeah, there's some pretty good things in there. I think our border should be more secure. I think we should get back to achieving peace through strength. I think companies should have to deliver. I think that there are things in the infrastructure of this nation that have been neglected for a while. I think we like to talk about cyber, but to spend the amount of money you need to, to really cyber and harden your networks, that's a different thing. I think that's something that the government wants to go forward for, but not.
So overall, it's just a new administration, and we're going to take some days or months to get used to it. And we'll move forward, and we'll get beyond what the press talks about on X, and we'll get back to just delivering what it is we're supposed to deliver. So that's sort of how I see where we are today. We're a 64-year-old company, so we've seen at least 16 elections and seen different people come into office in different administrations. And it actually is quite calming. It's nothing to get excited over. And just that's sort of the world that we live in today.
So obviously, the markets had this, they view it as a threat to the industry, right? The new changes that might be coming down the pike. And I'm curious, what do you think actually has the most potential to change? Because what you described were sort of enduring priorities of the U.S. DOD and the federal government broadly.
Yeah, so you know a couple of things. I think one is there's a lot of talk around what does cost plus do and what's firm fixed price and how do all these things work and what's fixed unit price. And I sort of look at it as you can buy inputs or you can expect outcomes, right? And I heard the very end of Dr. LaPlante's talk about the two-page heralded spec that went to the B-21. And if we just don't have any change for 18 years, can we actually build something that works, so on and so forth? Look, I think that where we sit today, driving more contractual actions to be more outcome-based is a positive for us. It's an upside.
I think if I look at the reconciliation process, which I'll call it a 25 supplemental, for lack of a better term, we're hearing numbers, $150 billion, $175 billion in defense, $150 billion to $75 billion in DHS, a lot of that towards the borders. We do an awful lot of customs and border work. So I look at any kind of budget movement there as being upside to what CACI delivers today. Yeah, there's been a lot of market changes and a lot of market concern. I just don't think a lot of it is founded, frankly. It just doesn't match with what it is companies do, and it doesn't match with where this government's trying to take it. So anything you want to add to that, Jeff?
No, I think that pretty well covers it.
So one of the questions we get is, is there anything actually happening? I mean, it's early in this new administration, but are they asking CACI to look at some of the work you're doing and identify if there are any things that are climate or whatever the buzzwords are that the administration's trying to move away from? Is there any of that going on that's disruptive?
I actually don't feel a lot of it in that regard in the business. We obviously had some activity associated with complying with the executive orders, but in terms of the normal day-to-day operation of the business, billing, collection, contract, change traffic, all those things are happening exactly as they were in October.
Okay.
Yeah, we've had, look, we've had discussions with the administration. We've had discussions with DOGE. A lot of it is around how things work, how things operate. I haven't had a discussion yet about how to not pay a person who's 152 years old Social Security still. I haven't had time to address that one yet.
Yes, that's fine.
I'm sure somebody will figure that out. But look, I'll focus on two areas. One is audit, right? As a taxpayer, do you believe that an agency who spends money should be able to audit themselves and show you what they spend it on? Yes, clearly, obviously. That's not a political answer. That's just a fact. Okay? We have delivered a system over 11, 12 years to the government that is a software as a service model that has proven to be highly, highly effective at assisting all government agencies to get through a yearly financial audit. It's a pretty simple thing. I rarely will say simple. I don't say always and never, but it's relatively simple.
If you have a system that only lets you bin cost into three different bins and you've got to pick one of the three, it pretty much tells you by the end of that year, you can tell somebody where everything went, so we did have some discussions on DOGE and submitted a couple of white papers around how that would be. We've answered a lot of the questions like, why doesn't everybody use it? I don't know that. I'm not part of how the government runs. But if you wanted to get more people to pass it, perhaps you could have been directed to use the system. It would do wonders for them. We've talked about the threat and the fact that the speed of the threat has completely changed, and in some areas, it may have just surpassed people who've been in government for a long, long time.
Okay? In World War II, if the enemy was going to change, you had a lot of time to address it. Here, when the Houthis, who don't have a country, can change their tactics in four hours and put different chipsets on drones and attack you in a totally different manner, that's not laughable anymore. That actually happens. It happens every day, every four hours, so what we have to understand is that software is the only thing that we have, pretty much one of the only things that can address change that quickly, and I always try to bring it back to something you use every day. Many of you fly. Most of you have a cell phone. The majority of you have an airline app. Imagine, as a lot of us do, we change our flights at the last minute.
You're standing in line and you say, "United just said you have the wrong version of the United App to get your boarding pass from." I'm going to spend a little time on this because it's so simple. It's where the market has gone in a different direction to where fact is. Software is that your United App changes. You give it about 15 seconds to download the new version, or that boarding pass isn't going to be there. You can't go through TSA. You can't get on the flight. Everybody understands that. Happens each and every day. Okay? So now Houthis change tactics every four hours on their drones. And what used to be able to find them can no longer find them. And probably isn't going to ever find them because in under four hours, they're going to change those one more time.
The way you procure and buy a system that's going to continuously change is very different than how most modern systems are purchased within the U.S. government today. There's the plane, there's the ship, there's the tank, and then there's everything that goes on inside of it. And how does it become more and more lethal? Okay? That is where everybody struggles. And somehow we've jumped from that concept to the only people who can build things that change quickly are commercial companies. Okay? So we looked at this about eight years ago.
And CACI's strategy going forward was to make certain we took the best of aerospace and defense, the best of companies who've been around for 60 or 70 years as we have, who understand the mission, and then took a look at all commercial practices and said, how can we, as somebody who serves the federal government, delivering expertise and technology, how do we change ourselves to make certain we can deliver software-based technology to them? That has been key to our growth. It's been extremely, extremely key to our growth the last seven years. And the fact is we can all find that happy medium that works. So you can look for drones using software-based systems, and as things change, you can update that software.
So there's plenty of things that we can do to be much more resilient and much more cost-effective, which is what this administration would like to see. But to sort of move ourselves to we have to go to all new companies to deliver that, you're going to gain five minutes in velocity. You're going to lose 60 years of mission experience. It seems like an overstep. Everybody's going to have their own vote on that. I'm not here to tell you how to vote. It's just, I think, we as a nation have to take a look at that. The threats are going to change and they're going to continually change. And how do we address those going forward?
So you've mentioned a couple of interesting points on maybe where DOGE could actually save money. One is outcome-based procurement. It sounds like that could be something. Where else do you see fat, if you will, in the procurement process for buying stuff from CACI?
Yeah, I mean, look, DOGE is about making government more efficient, right? They've got their own issues to go solve. I'm not an expert to tell them where to go dig out fat. The government knows where the fat is. I think a different question is how do we collectively look at what works for the government on the procurement side and what doesn't? Okay? There's so many areas we could be talking about beyond 150-year-old non-living person is still getting paid Social Security. Look, this is around how do we move forward. The fact that we rarely get a full-year budget for a full government year would be one place to start. A second place, maybe if we don't think that's going to happen, okay, is sort of going back to sequestration.
We could potentially say, hey, perhaps two-year money instead of one-year money is the way to provide acquisition professionals who are in the national security world trying to protect the nation. Let's maybe use two-year money versus one. Therefore, they can continually keep programs funded and not starting to stop programs because the government fiscal year ended. We could talk about the cost accounting standard, right? The fact that Jeff and his team have to submit an expense account that has coffee on it, whether you had oat milk or whether you had skim milk, I don't think it matters. The fact that coffee costs $7 and seems reasonable to have breakfast and lunch and one cup of coffee, and we can agree that that's a reasonable cost. So there's so many other areas, and there are people working on those things, but it's difficult. It's tough, right?
It's an 8,000-ton ship, and you've got to sort of turn it a nudge at a time. But the world's not ending, okay? The fact is a lot of great things happen within this nation. A lot of great things get delivered. And I think Dr. LaPlante talked a little bit about it. When you make a change, there's a time to make a change and there's a time not to make any change. It's not tied to aerospace and defense or government services at all. It's just that when I'm building a house and I have a house built and I find a tile person who's phenomenal at doing tile and I go to the general contractor, has their bathrooms been tiled? and said, "I really like this tile guy," I don't think he's going to listen to it.
I think he's going to say, "It's already tiled.
Or you're going to pay for it.
Yeah, or you're going to have to pay for that change. So there's a lot of areas, but enough on DOGE.
No, well, I'm going to just round out DOGE for a second. One of the things that doesn't get brought up that I think is sort of interesting is the small business set-aside dollars that go to the services contractors, 22%-23%, whatever it is. And a lot of them are kind of protected classes, if you will, veteran-owned, disabled, what have you. Is there any movement afoot that you're hearing of maybe lowering the thresholds on that set-aside work? Would that be constructive to folks at CACI or?
No, look, for us, I mean, and by the way, it doesn't go to government services. It goes to all.
Oh, both.
Yeah, all of aerospace and defense as well. At some point, you have to support small businesses or small businesses don't become larger, right? So there's a lot of ways you can do that. I'm not the nation's expert on how to go about doing that. We easily meet all of our small business goals and the other things and still deliver with perfection. So I mean, there may be something. There's just not something that we're focused on.
Gotcha. It's not coming up in your conversations.
Not anymore.
With the DOGE folks. The other question we often get is there's now a back-to-office mandate for federal workforce that we think that will go through. Does that have any disruptive effect on the pace of contract awards? I just wonder if it's going to gum up the system in any way that would affect CACI's bid pipeline.
Yeah, again, that's a great government question. I mean, we've gone around this a lot. I mean, we haven't seen anything yet, but I don't know if everybody has returned to work yet. I mean, every time you move the location of an employee or you change a shift, it takes some time to sort of settle things out, right? I think it's a new administration. There's a lot of priorities being pushed on people all at the same time. Everybody's human, right? Everybody has a family. Everybody has to think through things. The rational business leader looks at this and says, "Okay, there's going to be some little bit of delays perhaps in getting an award out." Our battle rhythm is not based on, "I need an award by Thursday so I can generate revenue on Friday." We're six months to our fiscal year. We're well set up.
We've done two beaten raises. We'll have a fantastic year this year. We're already doing FY26 planning. And then along the way, somebody says the employees have to return back to work who are government employees. Okay, you guys will work that out. Let me know when everybody's back or whatever I have to, whatever impacts me. The majority of what we do, because we're differentiating in the government services areas, we deliver a lot of technology. So we get to decide where we're going to do that work from. So we're not impacted by whether they're in work or whether they're in Toledo.
Okay. And just to be clear, at the end of the quarter, you guys had quite a bit of outstanding bids. And you're not seeing any. There's been no incremental slowdown that you've noticed.
No, not at all. No. It's been a pretty normal year for us. But we look at the environment that we're in, and it would be unrealistic, I think, that if I'm an acquisition official, that I'm not going to dot the i 100 more times and cross the t 200 more times and make absolutely certain I have the funding before I'm going to say yes. Okay? So again, we manage our year on a full-year basis. I know a lot of folks love quarter points. It's awesome if you love the quarter point. I like the sum of four quarters equals the year. We've got four and a half years' worth of backlog, and most of our programs are five-plus years in duration. So when an award comes in, April 1st looks just like March 30th to us. So I don't see any other impact.
No, I mean, not explicitly. It is, though, to John's point, almost impossible to not acknowledge that there's some distraction. I mean, people are hyper-focused, as John says, on dotting I's and crossing T's. But we haven't felt any real explicit delay in anything as a result of that.
Yeah. Again, it's all this perception versus reality. And that's why I'm going over the same thing time and again here. I wanted to get at your impressions of the fiscal 2026 budget. To your point, do you have a view on the $150 billion? We're hearing big numbers. Do you guys have any sense either way?
Yeah, look, I mean, we're partway through the government fiscal 2025. We're still under a CR, right? So the first step is, are we going to finish 2025 under a CR? Perhaps. I don't really know. I look at it from what I have to worry about, and that's that our FY 2025 recent raise of our guide pretty much assumes we're in a CR the rest of the year. But why is that? It's because we're six months through. We're seven months of revenue through our year. 95% of our revenue is already in-house. We got a couple of percent worth of new business that we can easily cover in other manners. It's not like the government's not going to award anything more through the end of the year. So at a macro level, is the full year covered? Yes.
The number of bids that we're about to submit is, as you already mentioned, very, very large, very supportive for FY26 and beyond. 55% of our revenue is generated from technology deliveries, 45% from expertise. And the fact that 90% of our work is through national security agencies. So DOD, the intelligence community, and Department of Homeland Security, less some commercial and some international work that leaves us 6% of our entire $9 billion book of business is in the pure federal civilian area, which is where you're hearing a lot of these audits being done and looks and paying people that are 150 years old and the fact that Julie was at an EPA farm the other day. Do we really need Julie? That's all. Those are strategic decisions companies make. We don't have a very deep federal civilian book of business. And times like this is exactly why.
Because it changes so often. There's so many views of what's right and what's not. And the one thing that's consistent and it's very bipartisan is national security is the important thing when people think about what the government should be doing. And that's why this company is almost myopically focused in that market.
I would add, even within the 6% that John mentioned, the biggest single piece of that is NASA's new NCAPS program, where we're doing application and network modernization work, which is exactly aligned with the government's new initiatives.
Actually, I wanted to just touch on you mentioned in the federal civil space, you also do border protection. And I think it's. I remember the BEAGLE contract. Was that what it was called? Maybe if you could elaborate on what the opportunity set is.
Yeah. So look, where the government found itself five to seven years ago was they did see the software was going to be much more important. So how do we update all these apps we have? The way the government contracts for you to update software is they will ask you to provide three or four hundred people to come in and be directed by a government PM and then go update all these software applications that an agency uses. We went to Customs and Border Protection almost five years ago, if not six years ago, and said, "Hey, here's how commercial does app updates. It's agile. We do spirals. You can update these things at any time. You can add things. You can remove things." The software folks, the whole process does not matter. And we put that in place.
On DHS alone, we do about 1,000 releases a year versus four that they were used to before we were selected. We deliver 99% defect-free code against an 81% number that they were used to paying for. And it costs about a third of the cost. Okay?
Wow. Yeah.
So when you asked, did we talk to DOGE? We talked to the administration. Is this possible? Yes. Okay. We're actually running the three largest agile software development programs across the federal government now. It does work. And it sort of works like the customer pays less, and I'm going to make a little bit more. And that's okay because I've taken the risk off of you, and I now have that risk, which is why I'm good with outcome-based contracting. Okay? It does work, and it can work. And that model is what we brought to NASA. In fact, the DHS customer took it to NASA and said, "This is possible. Here's what we've been able to save. Here's what we've been able to do." So we won a multi-billion dollar job a few quarters ago with NASA.
Two ago, I think.
Yeah. And that's on its way. It's fully staffed. It's fully running. And what it does is it allows me as a contractor not to find 500 people. I may find 30. It depends on what I have to get upgraded. It depends on what that model is. It's more of a commercial buying model. And it works very, very well. And we do have the three largest programs across the United States government, which is what's driving a lot of our growth, both top and bottom line.
Yeah, that makes a lot of sense. I wanted to switch because we only have about 15 minutes left to talk about M&A for a second, the recent acquisitions you guys have done. Maybe if you could give us your early impressions of Azure and Applied Insight, how integration's gone, how the cultural fit's been, and if you're seeing kind of the bid pipeline expand as a result of the combined capabilities?
Yeah. Look, they're both doing very well. We're a highly acquisitive company, as you're well aware. We're a strategically based company. Strategy is a place where we come from, and we're always looking for gaps, and when we find those gaps, we either invest internally, we'll partner, or we will acquire, and Azure and Applied Insight are the next two just great ones. On the Applied Insight, we're involved in many more movements across the intelligence community as they continue to move apps to the cloud, so that's been an outstanding acquisition. Those folks have done a really good job, fully integrated, running fine. On the Azure front, another outstanding acquisition. They are fully integrated. They were larger and had production work as well, so that was a little bit more involved in doing the integration. We're fully integrated now, and they're performing extremely well on their Navy work.
I know we'll talk about Spectral. I would hope at some point we'll connect there.
Jeff, anything?
No, it's been a great accelerant to Spectral and to the migration from Azure's CENC to Spectral deployment. It's been a great benefit.
Yeah, there are both companies that were software-based, believed that we could do much more with less, believed that the next generation systems that go onto surface ships should be racks of memory and processing power and nothing hardware-specific and allow us to process signals that are going to come at any surface ship around the globe. And make absolutely certain that as changes came to that ship and things that they were seeing that they needed to be attacked or better understand, that we can make those software enhancements and electronically send those software upgrades to the ship. So they didn't have to come into port and receive new racks of equipment, which is the old-style way to upgrade surface ships.
The mission combat system on all of these ships is all going to be majority software-based, which allows us to change things in a much more efficient manner. Azure was doing that in one part of the Navy. We were doing it in another part of the Navy. In some areas, we were doing it one right behind another. And we thought that on behalf of the customer and on behalf of both of us, we could get around the same table and make certain that we could drive this even faster. Because it's clear that an Indo-Pacific fight is going to require that all surface ships have this new software-based model.
Yeah. Can you actually talk about Spectral? I mean, it's a fascinating concept. I mean, that you can actually update this stuff real-time. You can push the software upgrades in. Just maybe if you could talk about it, the Navy's reaction to your ownership of Azure?
Yeah. First of all, Navy, this was customers can't direct you who to buy and then who to come in here and sort of make this, but we go and see customers before we between signing and closing to make certain that there's no performance issues and no other issues there, and they were highly, highly supportive of this acquisition happening. So, one, customer loves this.
They often need to sort of be sold a little too. Like, "Here's the reason we're doing this. Here's why you should like it." This was a case where they were delighted right off the bat.
So the concept of what Azure Summit won from a large aerospace defense company who had the topside signals-based mission system. The Azure view was this should be programmable hardware, and then the rest of it should be software-based. So the CENC, the first ENC was, "Let's modernize the equipment on the ship." And then with Spectral, let's bring the software and the enhancements and machine learning, the AI, and the ability to live send updated software feeds to that platform. That is very different than the mission systems on most platforms today. Whether it's a ship, a tank, if a mission system has to be changed, that unit is going to land, it's going to go to port, it's going to be a two- to three-month retrofit effort, retesting, and send that asset back out. Okay?
Back to United Airlines app model, the Navy and the Army and the DOD warfighter can't afford that timeline. They just can't, so Spectral and CENC is the Navy's version of making everything software above the deck plate of a surface ship to make certain that they are as active and they're on point and they're on target 24 hours a day without having to bring ships in. We're well down the path. Azure is starting their production runs now and getting kits delivered to the field, and we'll be ready to go as we bid in 2021 that in calendar year 2026, we'd be ready to do full rate or limited rate production. And we're on schedule there, so software-based system, things over the head of a surface ship in the middle of the Red Sea change. We get that picture. We do those updates.
48 hours, we're pushing new software out, and they're ready to continue the fight. That's the pace of what the new administration is asking for, is velocity of change, needs to be faster.
The payment terms, I presume, are better than typical services work? Or is it fixed price? I'm just curious how.
Yeah. It's all fixed.
It's a MAC.
It's a MAC.
Yeah. It's cost clustering, some of the development, then it becomes fixed price when you deliver the kits. And the fact that it's agile, so the customer can make changes all along the way. You don't have this issue of, "You got to stop production. I need a two-year mod put in," and then you can go back. It's not. It's a 15-minute contract action. And then over the next number of months, we'll make those changes, and we'll just tell you, "You got version 1.7, you need 1.10," and they'll download 1.10, and everything's done.
Makes sense. Maybe we could talk about photonics as well. And so how is that progressing?
That business is coming along well. That's a lot about moving communications in space, space to ground, ground to space, space to space, get it out of RF because RF can be jammed. And we are not the only nation playing in space today. In fact, I'd say we're the second or third lesser nation playing in space today based on volume. So optics is a way that we can push data much further distances in a much more protected manner and get out of the RF spectrum. So those programs are going very, very well. We're delivering optical communication terminals to SDA, to the Space Force, to NASA, and to just about every prime satellite OEM vendor today. So in that world, we're a merchant supplier. We have the only U.S. designed, produced, and manufactured optical communications terminal. This sort of gets us back to the Huawei model, right?
This is sort of a router in space. I think this time we may want to vote that that's a U.S.-made device because a lot of classified, unclassified data is going to be pushing over those links. I'm not quite sure why we want to buy that out on the open market. So we've checked all of those boxes. All the engineering is behind us. We're into production now, making deliveries now, and we're well on our path to drive about a six- to eight-fold increase in the number of production units we delivered in 2024 by the time we get to the end of our fiscal year 2025.
Okay. Gotcha. You know, obviously, you guys did a couple of acquisitions, and then the sentiment in the group kind of took the stock down. I'm just curious, your views on M&A right now, buybacks, given the leverage?
Is this a capital deployment question?
It is.
Yeah, capital deployment.
So we have talked for quite a while about the fact that we wanted to run the company in a two and a half to three times leverage posture. We've also said that we were prepared for compelling opportunities to perhaps go up as high as the mid-threes for brief periods. So we've reached the conclusion that probably our most compelling opportunity these days is our own shares. So we are initiating an open market repurchase program. Those of you that follow us more closely might recall we have about $337 million of a prior authorization still outstanding, and we will begin repurchasing shares as early as today. So thank you. Thank you for giving me the opportunity of the webcast to make that clear to everybody.
For those of you that we met earlier today, I apologize for not being able to say anything then, but I know everyone understands too.
Gotcha. So to the mid-threes in terms of leverage, is where your comfort zone is?
Yeah. I don't know exactly where we're going to end up. There are a lot of dynamics here in the market and other variables, obviously. But we have sort of gotten to the top end of our leverage target, and we'll tick up a little bit here and take advantage of what we think is a pretty compelling opportunity.
Gotcha. And just big picture, when you look out over the next couple of years, again, what you described are a lot of enduring trends, drivers, administration to administration. It doesn't seem to matter. Is your view of the long-term growth of CACI, top line, bottom line, any different than it was six months ago?
No. As I said, we're pretty strategically based. We do three-year planning windows. On our last investor day, we just shared our three-year plan looking out forward. No, if anything, what we see and what we hear of budgets going forward are going to be spent in the areas that we believe there should be additional funds spent. We should make sure we have modernized networks. We should make sure enterprise IT works all the time. We should make certain that the programs that are required beyond building ships and planes, this is the mission systems and the packages that go below them. We really believe that those should be enhanced, and we should be pushing funding there. We should be asking the contracting community to do that in a different manner. We invest ahead of customer need.
We're that company in government services that invests a lot ahead of customer need, which really is sitting down with customers talking about the art of the possible. Because the more they understand what the art of the possible is, they can ask for things. At the end of the day, that does advantage us. That's what all companies do, right? You go out there and talk about what it is your product can do, and you sort of set that preference for it. We've been in the marketplace for 64 years. We understand how this market works. We understand what mission is. And we've sort of put the strategy in place that now is being met with the right-sized budget. So our strategic focus going forward does not change. What's nice to see is some enhanced budgeting that's being done within this layer of what our warfighter needs.
It's very supportive to continue top and bottom line growth.
Yeah, I agree 1,000%. To the extent we're better informed today than we were six months ago, it's better. I mean, it's demand signal in places where we are. And even contracting methods, acquisition, outcome-based contracting, those things also are positives. So I think we see an opportunity to have better business in places where we're well positioned.
And obviously, you guys just described the three and a half times leverage or what have you with buybacks. But in this environment, I imagine you're going to see more willing sellers, I would think, better valuations perhaps for stuff you could acquire. Can you talk about what you're thinking with respect to the M&A pipeline? If the right deal comes along that wasn't available two years ago but finally is in the next six months, your ability to.
I mean, that's all part of flexible and opportunistic, right? So I mean, today, as we sit here, we see an opportunity in our own shares. We like that as an investment option, obviously. The M&A pipeline is suffering a little bit currently, immediately, from the same kind of uncertainty that we're all feeling. But as things become clearer and settle down a little bit, there may well be things that become more interesting. And that's what flexible and opportunistic is. As things develop, we'll adjust and we'll make the later decisions later.
Yeah, I think given where we are today, right? I mean, who could have predicted this one? But what you're hearing is the government wants to do things more efficiently, right? What's being talked about is the government wants to cut people. Government services companies deliver people. That must be bad. Okay? Not everybody can have their own opinion. A little deeper than that. Okay? So we are still delivering. I don't think anybody has cut their guidance. I don't think anybody is missing their numbers. I don't think anybody's short of getting awards. Still, I think they're still budgeted out there to support everybody. So this is another inflection point where the world goes one direction while we're going another. And that's fine. And we'll go pick up our own shares when the market presents that to us, which is awesome.
Then we'll go back to picking up whatever else we need to do. It's what flexible and opportunistic is about. We can change course quickly. We've got a strong 2025 to finish up here and some really nice posting as we go forward between 2026 and 2027.
Very much appreciated, Jeff and John. Thank you so much.
Thanks so much.
Thank you.
Thanks, everybody.