Ladies and gentlemen, thank you for standing by. Welcome to the CACI International Q4 and Year End FY '18 Earnings Conference Call. Today's call is being recorded. At this time, all lines are in a listen-only mode. Later we will announce the opportunity for questions and instructions will be given at that time. [Operator Instructions] At this time, I would like to turn the conference over to Dave Dragics, Senior Vice President of Investor Relations for CACI International. Please go ahead, sir.

Thanks, Allison, and good morning, ladies and gentlemen. I'm Dave Dragics, Senior Vice President of Investor Relations of CACI International and we're very pleased that you're able to participate with us today. And as is our practice, we are providing presentation slides. So let's move to Slide number 2. Now about our written and oral disclosures and commentary, there will be statements in this call that do not address historical fact and as such, constitute forward-looking statements under current law. These statements reflect our views as of today and are subject to important factors that could cause our actual results to differ materially from anticipated results. Factors that could cause our actual results to differ materially from those we anticipate are listed at the bottom of last evening's earnings release and are also described in the company's Securities and Exchange Commission filings. And our Safe Harbor statement is included on this exhibit and should be incorporated as part of any transcript of this call. I'd also like to point out that our presentation today will include discussion of non-GAAP financial measures and these non-GAAP measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. So let's turn to Slide 3, and now here's our President and CEO, Ken Asbury. Ken?

Well, thank you, Dave, and good morning to everyone. Thank you for joining us to discuss our fiscal year 2018 fourth quarter and full year results. With me this morning are John Mengucci, our Chief Operating Officer; Tom Mutryn, our Chief Financial Officer; DeEtte Gray, the President of our U.S. Operations; and Greg Bradford, the President of CACI Limited, who is joining us from the U.K. Before we jump into the meat of our call, I want to pass along or share some news about two remarkable CACI professionals who have made us all incredibly proud, they are Tony Dunne and Ray Seabolt, who earlier this week had the honor of being awarded the Secretary of Defense's medal for valor for their heroic actions in supporting U.S. Military operations. For those of you who are not aware of this medal, the medal of valor is the highest civilian award given by the Department of Defense and there have been just 17 recipients since the medals were instituted as a result of actions on 09/11/2001. John Mengucci, DeEtte Gray, and I had the honor of attending the medal ceremonies at the Pentagon Hall of Heroes on Tuesday. And I can personally tell you it was a stirring reminder of the bravery of our Military men and women and the outstanding professionals who work with them shoulder to shoulder. We cannot be prouder of Tony and Ray at their dedication to America's most critical national security missions. Please turn to Slide 5, now turning to our earnings, last night we released our first quarter and full year earnings for fiscal 2018. We delivered recorded… [Technical Difficulty] Yes so, that looks – we had a technical issue. I'm going to turn to earnings. Last night we released our fourth quarter and full year…

Yes, thank you, Ken and good morning everyone. Please turn to Slide number 9. Our fourth quarter revenue was $1.2 billion, 2.9% greater than last year with 2.1% organic growth. Full year revenue was $4.5 billion, up 2.6% with 2.1% organic growth. Net income for the quarter was $51.8 million, up 17% driven primarily by lower tax rates. Pretax income was up 3.9% with strong program performance partially offset by indirect costs. Excluding fringe on direct labor, higher bonus expense, and shared services implementation costs, indirect costs were down around 1% to 2% from this last year. Full year net income was up 84% from last year. Adjusting for the impact of tax reform, net income would have been $198 million, 21% greater than last year. These results were driven by strong program performance, several non-recurring positive third quarter items, continued focus on indirect efficiencies and were partially offset by costs associated with the Shared Services Center implementation and acquisition pursuits. Full year EBITDA margin closed at 9.2% up 70 basis points over last year. Adjusting for $12 million of net one-time cost of benefits during the year which we spoke about during our third quarter call, EBITDA margin would have been 9.0% or 50 basis points above last year. Firm fixed price contract performance in indirect cost controls were the major driver of the margin expansion. Please turn to Slide number 10, we generated $325 million of operating cash flow for the full year with DSO at about 60 days. Operating cash flow was up 16% compared to last year and was more than 160% of net income after adjusting for the impact of tax reforms. As Ken mentioned, we closed on several strategic acquisitions since the start of fiscal year 2018 deploying about $160 million of capital including…

Thanks Tom. Let's go to Slide 14 please. I'm very pleased with our team's ability to deliver organic revenue growth, margin expansion and strong contract awards in the fourth quarter and full fiscal year 2018. Revenue growth was driven by both new business wins and plus ups to existing programs. Margin expansion is a result of the type of work we're winning with heavier solutions contents under firm fixed price contract arrangements. It is also reflective of our team's ability to deliver efficiently and CACI's culture of operational excellence. Turning to contact awards, we won more than $1.5 billion during the quarter with about 70% of that new business to CACI. For the full year we won over $5.2 billion with approximately 50% of that for new business. Our total backlog now stands at $11.3 billion well over two years of revenue at our current run rates. Two notable awards during the fourth quarter were, the DHS Continuous Diagnostics and Mitigation or CDM contract with a ceiling value of $407 million to architect, engineer and integrate advanced cyber solution, security tools and processes across the department. This is a great win with significant potential to expand the initial award into additional areas such as security operation center tool consolidation, enterprise mobile solutions, and cloud based configurable resource management. We also won a contract with a ceiling value of $122 million to develop advanced electronic communications systems for the Naval Air Warfare Center. On this contract we are providing rapid designs, development and deployment of interruptible communications technologies for CONUS and OCONUS emergency response. In addition to strong contract awards, I would like to highlight three other notable accomplishments that differentiates CACI within our enterprise IT and business systems markets. First, CACI was named the premier consulting partner in the Amazon…

Well, thank you, John and Tom. I appreciate your comments this morning. So I'll turn to slide 17 please. In closing, I'm encouraged by our prospects, both near and long-term. We're investing in growth and employees while expanding our margins nicely. Our business development engine continues to win with a focus on solution and fixed price contracts. Our operations organization is delivering with quality and profitability. We generate significant levels of cash and are deploying that capital to accelerate growth through M&A. Bottom line is our strategy is working and we remain focused on driving long-term shareholder value. I'd like to also say, how incredibly proud I am of our employees. It is their talent, innovation, and commitment to our customers' missions that drives our success. In 2018 CACI was ranked by Fortune Magazine as the world's most admired company for the seventh time and fifth worldwide in the IT services industry. This is a direct result of the high caliber talent we enjoy at CACI. And I thank each and every one of you for what you do. Now before I open the call for questions, I want to highlight a significant milestone and express our company's appreciation for many years of service and contribution. Dave Dragics, our Senior Vice President of Investor Relations plans to retire this coming October. This is after 20 years of dedicated service to CACI. Dave joined the company in 1998 when we had less than $500 million worth of revenue and the stock traded at $8. 20 years later, we're generating north of $4.5 billion of revenue and traded at approximately $180. During that time, Dave guided the investment community through changes in our company, the market, technologies, government buying behavior, and countless others, with unwavering transparency and clarity. Dave, you've taught me a great deal over the last several years and I know you had a significant impact on many others. Dave's contributions are not only to CACI. He has been active in the National Investor Relations Institute or NIRI where he serves in leadership roles and frequently presents on topics such as proxy access, disclosure, corporate governance and financial analysis. Dave also represents CACI and other issuers on the Listed Company Advisory Board or LCAB at the New York Stock Exchange. With both NIRI and the NYSE Dave has participated in advocacy efforts in front of the Security Exchange Commission and Congress. David you are a true professional and represent both CACI and the Investor Relations profession with character, competence and leadership. Thank you from all of us for everything you have done. Now with that Allison, let's open the call up for some questions.

Thank you, Sir. [Operator Instructions] Our first question today will come from Jon Raviv with Citi. Please go ahead.

Good morning everyone and I echo Ken's words. Thank you very much Dave. On M&A, I know you bought a couple small firms last year and you just disclosed on the GD business, how are you thinking about the sort of small tuck-ins versus much larger properties? It seems like the CD deal is more in keeping with your historical behavior, but I know you've also open to lots of things as well, is there any go up side for both that is small things and also larger things?

Yes, Jon this is Ken. I think the point about – we've evolved our M&A program to where we're looking at the market through the lens of the 12 markets that we support and whenever we find something that adds to capability that adds – that puts us in a new customer space, then that's going to be something that we execute on, whether it's a small cyber company or if it's buying a contract in that place that we know where the customer is going to be doing some nearly [ph] modern – making modernization activities and we're not represented there at this point in time. But I will tell you it spans the gamut, there was a time and a place I think we probably waited to see what was for sale, that is no longer our premise. We look each - one of our market strategies has a set of gaps or identified gaps and we regularly approach small, medium, and large companies in some cases about how to do it. If we go back to the CSRA deal, CSRA was very interesting to us because it accelerated our notion about where we want to be in solutions. They had some of the most creative business models that have ever been done in government IT contracting and we wanted to get our hands on it because we felt that this was a really good time to be able to do it. But I will note that while we took a shot at it, we were also quite disciplined to withdraw at a point when it just no longer financially made sense despite the fact that the strategy was compelling. I think you'll see if you look at the history of all of the ones that we've made in the recent - in very recent past and maybe throughout the history of the company, everything's added, it's been accretive to the kinds of things that were we're doing. So there's no rhyme or reason on a daily basis other than the discipline that we come to - that we bring to looking at each one of our strategies and seeing market strategies and seeing how we can improve that. Hopefully that helps.

Yes, that’s helpful. And then a follow up on the topic, I guess plainly is there another CSRA out there so to speak since you talked about needing to identify gaps and the fact you pursue that capability suggests that there is a gap you still would like to fill?

Yes, so I mean, each company is going to be different. Just to give you the case of the opportunity that we just filed last night. What we saw here was a parallel to our RV Systems engineering business that we've had for many years and we've done a variety of things for communications, night vision, sensor systems, long range sit in shape abilities and all and the like. When we found this, when we saw that GD was going to sell this portion of what they acquired with CSRA, we saw an absolute parallel at a time when we’re pouring a lot of money or the government will be pouring a lot of money into shipbuilding and modernization of platforms, we see that as a time when our sink in [ph] systems or our counter UAS systems, our electronic warfare systems, our data visualization, our situational awareness platforms, now we have another customer that we can introduce to those in a much easier fashion because we are sitting side by side with them as with the Navy is and responsible for all their - they are the systems integrators for ships and all the systems that go on it and we’re going to provide the engineering talent, now we’re that much closer to them. And then if history is any predictor of the future and I think in certain cases it is, we’re now enjoying a much different relationship with the Army with regard to CACI solutions, not just CACI passed in contracting that we’re doing with them and that is where we saw the opportunity here. As to what is into the future? We are going to continue to, we are going to be an acquisitive company, with organic growth being our first priority acquiring companies is our second, particularly from a capital deployment point of view, whether there is another CSRA out there, we probably wouldn’t comment until we told you that we did it or didn’t do it, but just know that we will remain an acquisitive strategic integrator.

The next question will come from Joe DeNardi of Stifel. Please go ahead.

Hey guys, this is John [indiscernible] for Joe. Again congrats Dave on a wonderful career and I hope you enjoy your time back home in Annapolis. First question I have for everyone here is, we're halfway through the government’s fourth quarter, can you kind of share with us what the procurement environment looks like and has the pace improved or protracted [ph] decline?

Yes, John, this is John. As everyone knows, we have been on about four-year strategy of pursuing larger programs and over time have more of those fee solutions under FFB contractual arrangements and on that front we continue to make progress. The flow of awards continues to support, I believe our 10th consecutive quarter of greater than $1 billion worth of orders. If we were to look at where the government spending is, it more than supports the awards plans that we have. We believe we have the right plan going forward to support our FY 2019 revenue growth plan. What is of importance to us is if you look at the list of recompetes we have coming into FY 2019, those recompetes contain only 6% solutions. So that is another indicator of the advantage of solutions were being part of an ever increasing part of our portfolio because we are able to spend less CMP funds on recompetes and more on new business. You mentioned something about bridges, in any given year about 10% to 15% of our current year revenue is recompeted and last quarter we again saw about half of our recompetes bridge, so we’re going to come out of FY 2018 with about 35% of our recompetes being bridged. And I think regardless of the new budgetary environment we have, I think we’re going to see that behavior continue, but what is also important to note is that that activity does not impact revenue or earnings, but it will impact level of backlog in awards, as we book only the incremental duration of that bridge not a full recompete win value. So if you looked at the bridges of FY 2018 we had about a $1.03 billion of recompete work bridge and there aren’t really 90% win rate on recompetes that $5.2 billion number of awards would be somewhere north of 6.

Okay. You guys have talked a lot about your movement to solutions type work, should we be concerned at all about the company’s fixed price work as a percent of sales?

Short answer is no, but let’s talk about that for a little bit. Our performance does indicate more solutions and better FFP performance. So I think on the bottom line what you’re seeing the results of our long term strategy frankly and the type of work that we’re out there chasing that is not only growing top line, but it’s also allowing us to grow bottom line as well. So on a percentage of revenue measures, I wouldn’t focus on a quarter-to-quarter fluctuation. It’s not that I will measure bottom line growth, it’s really more of a measure of the mix of programs that actually generate revenue within that quarter. What is important though is that we have had 30 basis points increase in firm fixed price revenue in FY 2018 over FY 2017, but again it’s the individual performance John, on each of our firm fixed price or fixed unit price programs it’s really making our difference and both 2017 and 2018 our level of operational excellence has been outstanding.

Yes, John this is Ken. I would tell you that over - as we look into the future, we want to see the percentage of firm fixed price or fixed unit price kind of work increase. So probably, I think at some point in time we should be targeting something like 50% or the content of our business maybe even higher.

Our next question will come from Krishna Sinha of Vertical Research Partners. Please go ahead.

Hi thanks guys, I just think Ken you should come up with the Jack London medal of Valor and give that to Colonel Dragics over there.

Well done, Krishna.

So just a question on margins, if I look at your peer group and I look at your operating history, it seems like you’re coming up against maybe the top end of what your portfolio can generate in terms of margins, if I was just looking at the service piece obviously it’s a different kind of ball game with the solutions piece on top of that. But I’m just trying to gauge maybe where you think you are in terms of innings and where you can see the margin growing from here? Obviously you've got the 10 to 30 bps target out there, you've well exceeded that over the last two years. So do you think that the margin acceleration will come in towards the lower end in the intermediate term of that 10 to 30 bps range or do you still see a lot of opportunity to increase it 30 or 40 or 50 bps in the intermediate term?

Yes, Krishna I think our kind of business is evolving into one that should be in the low to mid-teens as a business, as a portfolio. It takes a while to shift it to that point. That is why we put the goals in place of how we want to grow top and bottom line simultaneous. So it has the sort of psychological effect internally of going after certain quality of business. But I do believe that we – I think we'll do it pretty well, as to how it is going to shape up for 2019, look all the budget things are very good. We have a lot of tailwinds to this business. We will see what 20 brings us because we don’t have a really clear picture. But what I will tell you historically about when we get past the bottom of the curve and we start to ascend in the country and makes the decision and we've got to reinvest in capabilities and national defense and homeland defense, that's usually a five to seven-year cycle. So during that period of time there's two things happening, there is this notion that we've got to fix the readiness issues that have happened as a result of finding a particular kind of war, and then we have to make investments in technologies and capabilities and processing that allow us to gain ground if you will on certain adversaries from a technical capability, and both things are happening at the same time. For a business like us it’s sort of positioned where the aspirations of being a good service provider at the high end, such as the business that we just bought from GD or to providing very eloquent solutions for and very fast solutions for an array of very frankly data processing and decision making products, I really like where we sit. So that has a commercial in the background there is nothing that will stop in the near term us getting to the middle teens. It is just not, I mean we could see some crazy item thing happen to the budget, but I don’t think it is likely given all the indicators we see at the moment.

And you’ve had a lot of success with your solutions work to-date, can you kind of give us indication of what you’re doing? You had SkyTracker that seemed to be a success, what's the incremental solutions functions you are going to try and develop going forward and what’s the kind of market opportunity there in the intermediate term and the margin profile for that?

Yes, Krishna, this is John. I guess following up on your earlier question first, we're all watching the percentage of our business that is firm fixed price and also at what is booked in our firm for a fixed price, but there are two other areas that for many years to come should support this 10 to 30 basis point growth. One is that we are working with customers to convert more our cost plus programs to from fixed price, so at least gets us the opportunity to expand margins. Secondly it’s the level of performance. So we’re after bidding firm fixed price jobs at let's say hypothetically 20% margin through the lifecycle of that program we may be at a booking rate of 10% to 12% to 14% until we're able to build, burn that risk down and then at the end of the program we're able to drop more to margin as we have mitigated all of our risks. So it's not only the percentage of business that is from fixed price, percentage of our revenue that has been done for a fixed price that's our performance levels. And so some of my earlier remarks, FY '17, FY '18 the operational excellence of this company has been outstanding. We count on not slowing that down and then to continue to perform because that is the key on fixed enterprise firm fixed price jobs. So now, you asked about solutions and I'll sort of focus into three areas; you mentioned one with our SkyTracker product. Yes, we have had great success there. Given this administration's involvement and some recent legislation changes that really supports the high tech non-interference solutions that only [indiscernible] we'd like to believe that that plus the U.S. Navy's $49 million contract to us to expand…

The next question will come from Joseph Vafi of Loop Capital. Please go ahead.

Hey guys, good morning, and Dave truly great, great run, congratulations. So just may be one for Tom here, does the adoption of the new accounting standards change materially anything going on, on margin progression you think in fiscal 2019? And then I have a followup.

Yes, Joe, no we tucked in that [ph]. The ASC 606 will require us to recognize the work these kind of during the time period in which the work is performed as opposed to doing it episodically which we do today. Today we have some lumpiness it turns out historically our second and fourth quarters have higher work days and so historically we've had higher margins. But for the full year the number should be unaffected by the award fees kind of bottom line, the total amount of awards piece flowing through our P&L for the full year for both FY '18 and '19 is somewhat comparable with a slight increase in FY '19 due to some growth in programs.

Okay, great and then maybe one for John on the new awards in the quarter, I know that the majority of the awards this quarter were new, may be it would be helpful to get a little color on is that brand new program starts, is it extra funding on existing vehicles now that may be perhaps the funding environments are a little bit better or were there some actual takeaways out there as well in that mix and is that takeaway number moving around? Thanks a lot.

Yes, sure Joe. I would say if we looked at things that were on contract growth and the new business which includes takeaways, I would say it's somewhere in the 50-50 range. In fact if you look at the markets we've got growth in all flow [ph] our markets both in FY '19 revenue as well as our expected awards. Our FY '19 growth plan is going to be centered on our intelligence services, intelligence systems, businesses, and enterprise IT from a revenue standpoint. And our FY '19 awards are going to be built on those four markets. One example of a new, new is the DHS CDM job. That's the program that I spoke about during my prepared remarks, $407 million protecting the entire department and all of their sister agencies some very severe cyber threats. That is an example of a new-new that was a new government requirement. So but, overall a supportive win rate to our FY '19 revenue plan and again we got a lot of FY '18 awards that are driving growth in ’19 as well. The other area is as you win new business a lot of very select partnerships we've been able to put it place as well. We always talk about AWS, but are we going to see some new jobs out there Joe that deal with continuity of operations and secure communications, whether it's on the battlefield or whether it's here domestically. So working with partners such as Blackberry and Samsung, how do we address that unclassified, but secure secret communications issue that the government faces today. So I would expect some new awards in that arena as well.

Our next question will come from Edward Caso of Wells Fargo. Please go ahead.

Good morning. I’ll pass along my congrats to Dave and hopes that he's got time to work on his golf game here. I'm curious about win rates and where they've been, where do you think they're heading, what's implied in guidance, particularly in the context of this going big, going for bigger contracts? Thanks.

Yes, this is Ken. I think we're very steady on recompete rates in the low 90s. On win rates over the last several years for new or takeaway kind of work, I would say we've been as - we're in the 30s to 50 range. Over the last several years, as we go after it's been, and I think we've discussed this in a couple earlier calls, as we go after things that are bigger and more complex we have to be that much sharper. And we're sharpening our skills all the time. We're very selective on the things that we're bidding. We could drive win rate to a different level, but then it might take us out of being able to drive margin and top line at the same time. So I'm really better invest, I’m really interested in our team looking at a lower top line growth rate, but making sure that we're doing the quality kinds of things that are getting us into enduring contracts. Five years ago we would go after a lot of pass through kind of things and a lot of the - there are still some of that in our work, but I think as time goes on, as we get better at everything that we write is blue instead of green and blue and then I think you'll see the win rates go up. Right now, they're doing what we want. This year as John mentioned as well. We've probably, in terms of work that we still have existing work, we're probably closer to $6 billion in overall awards is simply because of the bridging that we've seen. With all the extra money coming into the last two mid-years, part of the thing that we’ve seen as contracting officers putting more money on existing contracts because they don't have the time to put new procurements out. So all-in all we're very pleased, we're pleased with the direction and the growth at top and bottom line and I think over time you'll see us get, our win rates will get up. I think on an annual basis on new stuff we should be winning in the 35% to 40% range.

Great, thank you. And my other question is on the continuing resolution, though Congress is making progress, I believe most assume we're going to start the year under CR, is that's what's embedded in your guidance and at what point does the length of the CR impact your guidance?

Yes, Ed, we've been, thank you for the question. We haven’t put any CR sort, we still put sort of protest delays and that sort of thing in our roll up. But given the bipartisan budget act which was sort of a two-year deal and the early appropriations and just I mean, I think this is the first time the NDAA in the last 14 years has been signed this early in a cycle. I've noted there are some discussions going on about closing things down and that sort of thing, but I see remarkable amount of activity in a bipartisan way on behalf of Congress right at the moment to get these budgets put into place. So I'm less concerned about a CR. There may be one of the appropriations bills that doesn’t make it. We may see some sort of partial CR activity, but that's not baked into our calculations.

The next question will come from Robert Spingarn of Credit Suisse. Please go ahead.

Hi this is Audrey Preston on for Rob. And I just want to join everyone else in congratulating Dave on the next step and on his fantastic career. So we've been noticing a contract mix towards the DoD even before the acquisition announced today. And so, should we be thinking of this more as a tactical or strategic shift? And then following up on that, you also announced a number of contracts with the Navy, again before the acquisition and so this should broaden out your naval exposure pretty significantly? Do you have any idea of what the potential size of the opportunity with the Navy could end up being something maybe on par with say the Army as you mentioned earlier?

Yes, sure this is John. I guess on your first question, I think each quarter we put out tables that show how much work is done DoD and civil and the like. As we mentioned in the past, we're not managing the business by those numbers, those numbers are a result of the business that we're also capturing. The fact that we're in 12 markets where we can deliver solutions and capabilities across the expanse of the federal government, how those happen to lay in is how they happen to lay in on any given quarter set of awards. There is not one customer that is more profitable than others, there is not one customer that is easier to sell to than others, that's part of the magic of being market aligned is that if we’re going to deliver enterprise IT solutions, we're going to invest once and deliver multiple times which is what also helps us drive bottom line growth. I think the second part of your question was, with this current acquisition where does that drive us in the Navy as it relates to some of our Army centric business? When we - long before we were a strong Army business, we did work on some high end professional services work and also took some subcontract positions, mostly so we can understanding how that customer works, what's that customer mission set, so that we could leave the professional services to understand the customer's missions and needs and follow that up with as we’ve grown more and more solutions with solutions work. I think what you'll see going forward is with the acquisition of the Navy Systems Engineering business that Ken spoke about earlier, that is our next step within the Navy for us to understand PEO ships and shipbuilding, but more importantly how does that open us up to systems and solutions that we build that help those ships deliver all of their mission capability. So I would look at this growth on the Navy side as the first step, and as Ken said, it's a multi-year plan that over time we will understand what some of those Naval missions are better and that will allow us to make more, more internal investments. So we're able to then move to solutions in a firm fixed price realm to be able to grow top and bottom line with the Navy as well as other potential new customers.

The next question will come from Josh Sullivan of Seaport Global. Please go ahead.

Hey good morning and thank you, Dave. You’re certainly going to be missed here. Excuse me if I miss this, but with regard to the GD acquisition this morning, what is the overlap of the new Shared Service Center, was that a material driver of the interest and is the shared service center assisting or changing the M&A strategy in any way?

Yes, Josh this is Tom. I will start out. We undertook the Shared Service Center for number of reasons and one of the reasons was if we do acquisitions, we should be able to relatively easily integrate those businesses into CACI. A variety of the transaction kind of related processes can easily be scalable at the Shared Service Center. As John mentioned, we opened in July you know things are going quite well so far. And one of the attractions of the GD acquisition is we’re able to bring the kind of revenue in direct cost over to the business with bringing very little of the General Dynamics in direct expense or overhead to the business. We could absorb that relatively easily at CACI with the transaction piece going into the Shared Service Center and hence we're able to generate EBITDA margins with the acquired business approximately in line with CACI's businesses.

Okay, got it. And then just the enhanced employee retention programs you mentioned, is there any way to quantify the impact you expect, have you seen an uptick in employment or retention? And then is there any risk you have to that you see to maybe continue to raise these programs outside of what's encompassed in the guidance for 2019?

Yes, Josh this is Ken. We've just rolled them out, but let's look at the macro. So we don't - we're not seeing a great deal of results yet other than we're getting sort of the goodwill from our employee population that says, wow you guys listened to us when we did the employee preferences survey and the feedback around that is very strong. The feedback that we want to see is that it adds 500 more people a month to hiring and we lose and we don't lose anybody on a monthly basis, we're some percentage of that. So it's all about attraction and retention. There's a lot of things that we're non-economic around how we wanted the employee experience to change at CACI because it's a reflection on what people are looking for in companies these days. With regard to, I think the second part of your question if I got it was, do we see other things that we could be doing here? We saved a lot of money going to the Shared Service Center and most of that poured back into two different areas; one investing in our people and we've upped some of our technology programs that John has talked about. In fact we've done some of that rather significantly because we see that as a near term benefit from a solutions point of view. But there I think there are other benefits that we need to go investigate how they fit. And what we're able to do is we’re able to do this now and keep our rate structure at or slightly below what it has been year-over-year. So for us this is thus far it's new. To be frank, we were so happy with it because we haven't seen that many issues as in terms of starting it up, that we think it was absolutely the right choice to do. But it needs some time before I think we can begin to tell you that it's had a measurable impact on our retention or a measurable impact on our ability to attract. The next question will come from Brian Ruttenbur of Drexel Hamilton. Please go ahead.

Great, thank you very much. So three sets of questions. First of all on guidance, you just go over your internal long-term growth I think you had mentioned 3% and 10 to 30 basis points long-term, along with that if there is any kind of guidance that you give on a quarterly basis this year is it going to be weighted through the second half of the year more so than the first, any kind of quarterly guidance that you can give us directionally and the long-term guidance? Then I have a followup.

Yes, Brian this is Tom. We provided initial guidance in June guiding to revenue and net income and then we provided some additional details on interest and depreciation and amortization and couple of other key variables which allows people to kind of build their kind of models and associated with it. We have not given quarterly guidance and we do not plan to, but I will make the comment that historically we had lumpy award fees with the second and the fourth quarter being higher award fee periods, higher margins than the first and third quarters. That will no longer exist as recon as award fees proportionately. So that would be the only guidance we're able give with regards to quarterly numbers.

Okay. And then in terms of your long-term guidance, the 3% and 10 to 30 basis points, I know it's been talked about some, but that's still very much in place. And then also my second part of the question was going to be about recompetes, is this a normal year of roughly 15% of your business up from recompetes despite you mentioning all the bridges?

Yes Josh, this is Ken. With regard to the 3%, we actually see that accelerating not in FY 2019. Our plan for 2019 is in the 3% to 3.4%, somewhere like that organic. We see additional growth coming from some of the inorganic activities including the one today that Tom described and I think the overall growth rate for 2019 in our adjusted guidance is closer - at the mid-point is closer to 7% to 7.5%. From an organic point of view, we don't see a change as a result of the acquisition. We may update that as the year goes on depending on what we see in award activity and but our best judgment right now is that's a really solid number. We do see growth in our addressable market into the next year maybe of an additional point. So the future may be different than 3, but for right now in FY '19 we're going to keep it there. And the second part of your question was around recompetes I think we're at what 14% this year, that's a - I would say that on a five-year, I'm sorry 12, that's probably a low number. We should be in the 15%, 20% if you think about most contracts being on five-year centers. So we will lean more heavily into new business in FY '19 while we try to secure that 12% of existing business.

The next question will come from Cai Von Rumohr of Cowen. Please go ahead.

Yes, let me join the chorus saying how much we'll miss David. He's been terrific. So we're in a pretty strong business environment. Can you comment on two things; first, which customers have to commit their funding by the end of September and which can kind of roll it over because I know that I think DoD is going to have some ability to kind of roll over this huge FY '18 team budget and others are in a different situation? And secondly, you talked about your strategy of kind of going after large takeaways, maybe give us what some color you can, is that increasing, what sort of things are you looking at, obviously you're not going to tell us which takeaways you're targeting, but sort of is it, it's some of the characteristics of the types of things you're going after? Thanks so much.

You bet Cai. This is Ken. With regard to customers that are rolling over, I sort of - I know DoD has asked for some more flexibility and I think that's been granted. I haven't heard about other customers. I don't know that anything has changed there. So I would think the real answer to your question is, we'll see some more flexibility at the Department of Defense level, and maybe some different kind of contracting activity associated with other customers that are not under that congressional if you will waiver for how they’re counting their money. I think we've said this a number of times, why we're not, we don't have any ability to qualify it. Again, coming short of later in the year for the rest of government fiscal year ’18, we'll probably see a lot more on contract growth and the movement of money into places where there's a lot of different, there's a broad scope of work because that's what I think helps the acquisition community be able to deal with ’19 should be somewhat slender [ph] from a government fiscal year point of view so with that. Now with regard to your question about things that we're looking at, I would put our future, that if you will the elephant hunting part of our business in two categories. There are some that are going to be where we're observing or we've had communication from a positioning point of view where customers are not satisfied with an existing provider. And so, that's sort of the traditional recompete market which is the largest piece I would say of the government services or government IT and services market, where there are existing requirements that have gone on for some number of years. And it's being selective about what…

Thank you very much.

[Operator Instructions] Showing no further questions, this will conclude our question and answer session. I'd like to turn the conference back over to Mr. Ken Asbury for any closing remarks.

Well, Allison thank you very much, I appreciate your help a lot today. We'd like to thank everybody who logged on to the webcast for their participation as well. We know that many of you will have followup questions. Tom and Dave Dragics and Dan Leckburg are available for calls this afternoon and I do want to extent in my appreciation to all of you who said great things about Dave. I’m going to miss him as a mentor, but we'll figure out a way to keep him around for a little bit. So this concludes our call. I want to thank all of you. Thank you for your interest in CACI. Have a very good day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.