So I don’t want to get too far ahead of sort of our current view of FY25 or FY26, but trust that Toni and the leadership team here is just singularly focused on making sure we’re putting metrics out there and we are outlining a path internally for the team to deliver outsized EBITDA growth and cash from there. So to me, that’s where the focus is. And we happen to be having, I think, a phenomenal year this year. But it’s really important to make sure that we don’t get too far ahead of ourselves for next year, and I want the teams internally to hear that as well. So I think next year is a new year and we’re going to have to start all over again. Thank you, Bert.
Bert Subin: Just a follow-up question as you think about ’25, maybe more on the contract side, NASA NCAP is looking to be a pretty competitive bid, and it’s type of contract that would seem to put you on the positive end of your organic growth targets as we head into FY25 and26 if you secure it. What are you watching on that contract? And if it were to not pan out how do you feel about growth potential in the fiscal year where outlays are likely to slow down quite a bit?
Toni Townes-Whitley: Well, Bert, let me give you a few couple of responses here, and then I’ll let Prabu add to that. Look, we’re performing well on this program and we’ve got those inputs that we are performing well. The potential for this program is to double. We pulled about $100 million a year on this program, it may double with the new procurement up to as much as $200 million per year. We’re expecting an award to be announced in roughly six months and we’re going to continue that solid program execution through that time. It’s a significant program that we know could be super accretive as we look forward to an award statement positive for SAIC. You mentioned what’s the downside. Obviously, the downside is the $100 million annual hold that it would produce if we were not successful. Prabu any other thoughts?
Prabu Natarajan: Yes, that was perfect, Toni. The only thing, Bert, I would add to that is, as Toni said, we’re performing really well on the current program. And I would remind you and everybody else listening that our backlog is sitting at right now about $23 billion, $24 billion. And therefore, we’ll have our work cut out for us on contract growth to make sure we feel whatever deficit we have if we have a deficit on NCAPs. But as Toni said, we’re probably about six months away from a decision it sounds like. The proposals is in, there’s nothing we can do about it right now other than watch the space right now. But our commitment is making sure we’re dialed up on contract growth to offset any pressures we may see, but we’re cautiously optimistic.
Operator: Your next question comes from the line of Cai von Rumohr from TD Cowen.
Cai von Rumohr: So Toni, now you talked about major focus on accelerating growth and mentioned some changes in incentive comp to sort of encourage that. Can you talk a little bit about what sort of changes do you intend on incentive comp? I mean you may not have all the specifics, but any color you could give would be terrific.
Toni Townes-Whitley: Well, I can talk about it in terms of — and thanks for the question, Cai. I could talk about it in terms of both the design and execution of incentive compensation for specific audiences. We’re focused, particularly, let me give you an example for — within our business development function, which I’ve mentioned has been a priority, ensuring that we’ve got the incentive compensation lined up both in the short and long term, that incents our capture and business development leaders to bring the very best performance and hold them accountable for their bid volume, the quality of the bids that are in our pipeline, the way that we progress back to the appropriate win rates. Right now, we’ve got incentives in place.
We’re going to look at future and increased incentives to ensure that they get to participate in the upside for the short and long term. So that would be one audience that we’re looking at. Similarly, for our program managers on contract growth is a critical part of how we grow this business and making sure they are also incentivized for growing their contracts beyond the initial scope and contract metrics. And so that’s another area, that’s another audience that I’m looking at for tightening up and increasing sort of our incentive opportunities for that population.
Prabu Natarajan: And Cai, to me, the other part of the philosophy around incentive comp is, for a couple of years now, we’ve made a set of changes that have effectively created more skin in the game for the management team. I think what you’re hearing from Toni and the leadership team is that, that trend is likely to continue. That means more upside for good performance and just as importantly, downside for poor performance. That philosophy is unlikely to change. So for example, this year’s performance graded on next year’s curve is unlikely to yield this year’s score on incentive comp. That to me is about as simple as it gets on the design of the incentive comp plan. Obviously, as you know, Cai, we’re going to have those discussions.
Toni will, with the comp committee here, over the course of the next couple of months. So we don’t want to get ahead of those discussions other than to reiterate that, pay for performance and making sure we have skin in the game, to make it just uncomfortable enough for people to not stay in the same place. I think those are key design elements. And I think we’re going to keep reiterating it and maybe even up the ante a little.
Cai von Rumohr: And then I don’t know who this is for, but unlike many other companies, in your presentation, you have forecasted Q4 awards, looks like it’s $2.3 billion, which based on your revenue guide would work out to like 1.3 to 1.4 in terms of book-to-bill, and your fourth quarter historically has been kind of all over the place. And you also have a value of contract submissions with sort of a light gray area kind of suggesting contracts that have moved into ’25. Give us some color on how do we get to such good numbers and also have submissions that move out into next year?
Prabu Natarajan: We have a chart in our earnings package where we are signaling potentially up to in contract awards, somewhere between circa $2 billion and $2.5 billion in Q4. I think as you exactly correctly pointed out, Q4 book-to-bill trends are hard to predict. It is historically at least the slowest book-to-bill quarter to begin the government’s fiscal year in Q4. I think we’re actually in the chart demonstrating that there is a shift between blue to gray in Q4, representing awards that could slip out of Q4 into our Q1 FY25. So we’re signaling a possibility that while we’d love for awards to be in that circa 2.3 range for Q4, there is a good likelihood that some of it may be even up to 40% to 50% of that might slip from Q4 of this year into Q1.
Now this is contract awards. Separate from that, we have IDIQs that come in and get booked by the drink, if you will, on a quarterly basis. To me, that’s not represented on the chart. But I think your skepticism is well founded. I think we’re not suggesting book-to-bill is going to be well over 1.0 in Q4. I think we’re simply signaling that we’re seeing some slowness and that trend is likely to continue from Q4 into Q1. So hopefully that was helpful.
