Greetings and welcome to Leidos Q3 2018 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kelly Hernandez, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Brock, and good morning, everyone. I'd like to welcome you to our third quarter 2018 earnings conference call. Joining me today are Roger Krone, our Chairman and CEO; Jim Reagan, our Chief Financial Officer; and other members of the Leidos management team. Today, we will discuss our results for the quarter ending September 28, 2018. Roger will lead off the call with notable highlights from the quarter as well as comments on the market environment and our company's strategy. Jim will follow with a discussion of our financial performance and our guidance expectations. After these remarks from Roger and Jim, we'll open the call for your questions. Today's discussion contains forward-looking statements based on the environment as we currently see it and as such does include risks and uncertainties. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. Finally, during the call, we will discuss GAAP and non-GAAP financial measures. A reconciliation between the two is included in the press release that we issued this morning and is also available in the presentation slides. The press release and presentation, as well as the supplementary financial information file are provided on the Investor Relations section of our website at ir.leidos.com. With that, I'll turn the call over to Roger Krone.

Thank you, Kelly, and thank you all for joining us this morning for our third quarter 2018 earnings conference call. Our results in the quarter demonstrate a continued build of our growth trajectory, both in the short term and in the long term, as evidenced by revenue and bookings strength. Revenues grew 1.8% sequentially and inflected to growth on a year-over-year basis as well, up 2.9%. Awards were very strong in the quarter, with $4.6 billion of net bookings in the quarter, resulting in a book-to-bill of 1.8, the highest level we've had in the last three years. We ended the quarter with a record total backlog position of more than $20 billion, up 15% from the prior year quarter. Margins remained comfortably above our long-term target, with adjusted EBITDA margins of 10.8% in the quarter, bringing our year-to-date levels to 10.6%. Our commitment to translating our revenue and profit growth into cash, together with ongoing efforts to optimize our balance sheet assets allowed for a very strong quarter in cash generation, well ahead of our expectations. This higher level of cash generation resulted in a strong ending cash and cash equivalents position of $515 million exiting the quarter, and has not only given us confidence to raise our expectations for cash from operations for the year, but also allowed us to return more excess cash to our shareholders. During the quarter, we repurchased an additional $62 million of shares, bringing our year-to-date total to $162 million. Year-to-date, we have deployed close to $400 million of cash in a combination of share repurchase, dividend payment and debt payments. Of the cash deployed, nearly half was directed to share repurchases. We remain committed to deploying our excess cash in this thoughtful and disciplined manner as we have done in the past.…

Thank you, Roger, and thanks, everyone, for joining us on the call today. I'll start by adding some context to our consolidated results, the highlights of which Roger has already shared with you. The sequential and year-over-year increase in consolidated revenues were driven by the ramp up of recent program wins, most notably ITEMS USF (sic) [ITEMS UFS], ACE-IT and the SENS3 takeaway programs. This growth reflects our ability to quickly capture and activate new hires to drive volumes on these new programs. Adjusted EBITDA margin in the quarter of 10.8% was fairly consistent, decreasing just 10 basis points compared to both the prior quarter and prior year. The stable consolidated margins primarily reflect a higher level of program write-ups in our Civil segment, offset by lower margin levels on the new program ramps as we have discussed previously. On a year-to-date basis, our adjusted EBITDA margin of 10.6% keeps us comfortably above our guidance range and our long-term target of over 10%. Net interest expense of $35 million was largely in line with our expectations. Non-GAAP diluted EPS from continuing operations was $1.14, up 20% from the prior year, primarily reflecting the lower corporate tax rate. Weighted average share count declined 1 million shares from the prior quarter to 153 million, reflecting our share repurchase activity. Share count exiting the quarter was 152 million fully diluted shares. Cash flow from operations during the quarter was very strong at $371 million, reflecting 200% conversion of non-GAAP net income to free cash. In addition to higher profits, stable collections and some balance sheet monetization all drove the strong cash. Days sales outstanding remained in line with the prior quarter's level at 64 days, reflecting the strong collections at the end of the government fiscal year as expected. Additionally, during the quarter…

Thank you, sir. At this time, we will be conducting a question-and-answer session. The first question today comes from Cai von Rumohr of Cowen & Company. Please go ahead. Cai von Rumohr - Cowen & Co. LLC: Yes. Thanks so much and great performance guys. So, maybe give us a little bit more color on the revenue delays, which programs it was, when you expect those to pick up, with specific reference perhaps to the GENESIS program?

Great. Hey, thanks, Cai. So our compliant – our guidance, as Jim said, sort of implies flat full year to full year. But as I'm sure you noticed, we're showing growth in Q3 and the implied guidance for Q4 is significantly higher, frankly above 5%. What we found is we've reached our inflection point, we've got growth in third and fourth quarter, but lower level of government outlays resulted in slower ramps on programs, all right, and those would be programs that were new, right, some scheduled delays on existing programs, and I know you're always interested in GENESIS, so I'll come back to that. And then, as I said in my remarks, we probably are starting to see a little bit of tightening in the job market, although we're really being pleased with our hiring, we just need to think about that going forward whether we can hire, continue to hire at that rate. And that's why we elected to lower our guidance a bit. On the DHS GENESIS program, we did begin the wave deployment in Q3 at new sites and I'm sure you read about that. But despite that, there have been some delays in the program as a result of customer decisions to ensure that the IT infrastructure in some of the DHA sites is ready for deployment. They're going to be thoughtful in creating their rollout schedule. They will convert all of their sites as they anticipated in the program. The size of the program, the funding on the program is still intact. We're proud of our performance. There's always reports that come out, we had an IOT&E report that came out during the quarter, which is very similar to the report that we had earlier, which reiterated that change is hard and installing new IT systems in older environments is the challenge that we all thought it was. Frankly, we really like getting these reports. It's good data for us, as we get ready to deploy more broadly across the DHA environment. And I would highlight it usually doesn't come out in these reports that the benefits and enhancements delivered to customers as a result of the GENESIS program, improved patient care, they're seeing more patients, improvement in clinical efficiencies. For instance, there were 1,300 duplicative lab orders that were caught by the DHA's GENESIS system, and improvements in safety, which we're excited about. We increased the new fill on prescriptions in the pharmacies at those facilities. So again, Cai, we're confident about what 2019 looks like and excited about next year. And although we didn't fully anticipate some of these changes in activities and slowdowns in the quarter, we do expect deployment on DHMSM to ramp up in 2019 and beyond, as we always have, and we expect the flow through of our book-to-bill and our backlog to give us a very, very nice fiscal year 2019. Thanks for your question. Cai von Rumohr - Cowen & Co. LLC: Thank you.

The next question comes from Robert Spingarn of Credit Suisse. Please go ahead. Robert M. Spingarn - Credit Suisse Securities (USA) LLC: Hi. Good morning.

Good morning, Rob. Robert M. Spingarn - Credit Suisse Securities (USA) LLC: Thanks, Roger. Hi. Wanted to follow-up on Cai's question there. So what's the right way to calibrate 40% growth implied and the year-to-date 1.4 book-to-bill to revenue growth next year, if that's the right period for those bookings to fall, obviously, there's a longer duration to those awards, but what's the rule of thumb?

It's a great question. And, of course, we don't necessarily give that kind of detail guidance. And Rob, you're really good at taking our book-to-bill and making an estimate of what the duration is and building that into your model. I just like to point to the macro environment; you can't have a book-to-bill greater than 1 quarter-over- quarter and not print growth. The average duration in our backlog is in the couple years, right, so again, you've got a great model and you flow it through. But I would, I think, emphasize maybe for some of those who haven't followed us, is it's not instantaneous. So we win a program and we're able to book it into backlog, especially if it's a new win or takeaway that we need to go, transfer people in the program, hire new people, often move into a new facility and the ramp-up can be six months to a year. And so, having a great third quarter implies things well beyond first quarter in 2019.

Yeah, and Rob, I would add to that the fact that – just to reemphasize, the second and third quarter in terms of just the trend of the makeup of the new awards that comprise book-to-bill have been increasingly moving away from some recompetes that were part of kind of the normal schedule award cycle, but more into new work to Leidos as well as takeaways from competitors. And that improves our own visibility into our growth targets for next year. Previously, we have talked about our growth rates beyond 2018 being above 3%. And the numbers that we're looking at for Q3 awards and our year-to-date number certainly point to higher confidence in achieving or overachieving on those numbers. We'll have more details on that in our fourth quarter call. The one other thing I would tell you is that the duration of our backlog has shortened slightly which points to a bit of a faster burn rate on the existing backlog. Robert M. Spingarn - Credit Suisse Securities (USA) LLC: Yeah, I don't want to put pressure on you, because it sounds like a 3% hurdle at some point here is pretty doable. The other thing I wanted to ask you about the backlog and you've touched on this earlier, but from a margin standpoint, how do you think about the business you're putting into the backlog, and if you could reflect on the labor tightening element of that as well?

Yeah. So the work that's going into backlog, there is a lot of work that is confidently in the double-digit margin area. We are able to shape more contract awards into fixed unit price. But I would also – to be clear, there's still a lot of work that's being awarded in the high-single-digit margin area. So when we take a look at the balance of existing and new work, we're still talking about work that on an EBITDA basis balances out to north of 10%. We're continuing our work around optimizing our cost structure, which will translate into continuing a pretty competitive cost structure for new bidding and also our ability to continue driving margins competitively above 10%. Robert M. Spingarn - Credit Suisse Securities (USA) LLC: Okay. And then just one quick housekeeping one, the $60 million interest rate swap expiration that you'd contemplated in your previous OCF guidance, is that the main driver of the increased guide?

Yeah. Well, that's one part of it, but we're also doing, I think, a great job of optimizing our billing process. As you know, I have to give credit to the people that run the back office and have done a great job of putting us on to a single billing platform from the four different platforms we had as we came together with IS&GS. So good program performance means that customers pay you faster. And when you bill them faster, those things combine to good OCF performance. But I do have to tell you that monetizing that cash – the interest rate swap was not contemplated in our original guidance and that's part of the driver for the bump up of $100 million. Robert M. Spingarn - Credit Suisse Securities (USA) LLC: Right. Okay. Okay, thanks for clarifying.

Thanks, Rob.

The next question comes from Ed Caso of Wells Fargo Securities. Please go ahead.

Hey, good morning. It's Rick Eskelsen on for Ed. Roger, I was hoping you can go back and talk just a little bit more about your comment that clients kind of underspent the budgets and that the outlays have been a little bit slower, maybe you can just talk more broadly about client behavior and whether you think that changes now as we enter the next government fiscal year with the national budget in place and it seems like clients have been more confident entering this year than in past years?

Well, overall, they are more confident and they are upbeat. Rick, but I think you have to look at it customer by customer because it's really different within the Department of Defense versus outside the Department of Defense. And we found DoD probably more confident and more willing to spend to their authorized and appropriated levels. And we have been talking about this throughout the year. Those agencies outside of DoD, as they looked at the effect of sequester and are trying to predict what will happen to them in 2019 and frankly in 2020, I think they have been more reticent to spend to their fully obligated levels and indeed, we saw evidence of that in the third quarter. Now, that means, they're spending about flat to past year, which is still good for us. And in the areas where we compete, modernization of infrastructure, IT, O&M, the spending has been solid, but not at the level of the top line growth in their budget. And we don't – I don't really expect to see a big change in that in 2019. We will all be informed a little bit here in two weeks as we get through the election and we understand what the administration is going to do as they look beyond 2019 to 2020. The good news is we got a lot of bills passed at the end of fiscal year 2018, and so for many, many of our agencies, they've got certainty for 2019. So we don't have the CR overhang that we usually have. I think that will help, but we're trying to temper that enthusiasm with reality of how the budgeting process works for our customer.

Thank you. It's very helpful. Just a follow-up on the – also you've talked about the hiring impact, it sounds like you guys still feel like you're doing okay on the hiring, but you're seeing maybe signs of tightening. I'm, I guess, curious if that has anything to do with security clearances and maybe if you can go a little bit more into sort of what you're doing on the hiring front? I know in the past you've talked about external referrals and things like that. Thanks.

Yeah. Okay. A couple of questions there; let me start with the one that is an industry-wide initiative. This is on security clearances and we have engaged with AIA and PSC and our associated companies in open discussion with both OPM and the Department of Defense and the Intel community. And I know that Deputy Secretary Shanahan is taking this on as a personal initiative. We are cautiously optimistic that certainly on renewals, if not on initial clearances, that things will get better. But it is still a problem and it takes a long time, especially like for a college hire to get them through the clearance process. And for many of our programs that require a clearance, it does make it more difficult to hire. We would say, overall, we're still pleased with the number of people who want to come to work at Leidos. We're very pleased with our percentage of offers that are actually accepted, but it's a workflow process from when we write a requisition to when we actually have that person on site working on a program is a period of better than a couple of months. And so as we have got to get our reqs (00:37:48) written in anticipation of the programs, we've got to hand that to our staffing organization, by the way which does a great job. And as you mentioned, we are looking at all opportunities, employee referrals, bonuses for hiring your friend and things like that, things that you're probably seeing in the industry writ large. And our hiring has continued even in October at a very, very nice clip. We just look at the economy writ large and what's going on to employment, and we want to pass on that. There is a bit of concern, we're about at structurally zero unemployment, and that's going to at some point make it more difficult for us to hire or hire at the rate at which we've been.

Thank you very much.

You're welcome.

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

Hi, thanks. So just to kind of simplify the math here, if I look at your guidance, your sales guidance, you pulled that down by about $250 million at the midpoint. Can you just talk about how much of that you're expecting to flow through in 4Q and how much of that overflows into 2019?

Well, hi, Krishna, this is Jim. The way we think about the fourth quarter is that – certainly a piece of that will flow into 4Q, although the run rate is a little bit lower than what was implicit in our prior guidance. With that said, about 5.5% year-over-year growth in Q4 is something that we're pointing at and what we're pleased with as well as the sequential growth that we're seeing there. Adding to that record backlog and book-to-bill for the past quarter, when we think about what we've said before, what our aspirations are for 2019, while we haven't been specific about what the growth rate is, saying that it's north of 3%, we're more than confident about being able to achieve that objective.

Yeah, Krishna, I think your question was of the $250 million, is that lost or is it deferred, and what we said in our prepared remarks and we reiterate here is it's primarily timing, is it's not associated with programs that we thought we're going to win, that we have lost, it might have been the case a couple of years ago. What we see here are slower ramps, customers who have the money, have the top line and are not spending it. And so we're pleased about the implication that that has for 2019. But I would also comment that although we have a lower top line, our bottom line has continued to stay very strong. And, of course, that's led to terrific cash generation in the quarter as well.

Okay. And kind of to that point, Roger, I mean, you talked about, I think last quarter you talked about a 7% go-get target to hit the revenue guidance for – that you had set out previously, obviously that didn't happen because of the timing. But how did you perform on that 7% go-get target through 3Q?

Yeah, I'll give a summary, and then Jim can touch on the numbers. I think on our go-get, our win, we actually exceeded that. I mean, I think we're really, really pleased that our capture efforts performed better than expected, where the disappointment is, we won the program, we had an expectation of when that program would start to turn into revenue and how fast it would ramp up. And in point of fact, although we may have won the program, the customer may have delayed by a couple of weeks when they want to start the program. And the – if you will, the rate of growth in the program. So we did talk about our need to win and we're very, very pleased with our team and their ability to win the programs. We are disappointed is that customers have not been as enthusiastic about starting those programs and increasing the level of spend.

Okay. And just one more question on cash flow, obviously, you had a good cash flow result and you pulled the guidance up for the year. It looks like some of that cash flow just dropped through to the balance sheet. And I'm wondering if it – it sounds like you're pretty aggressive on the buyback or you want to be, why didn't we see more buyback in the quarter since the cash flow was so strong in the quarter? And what's the kind of level of balance sheet cash that you want to maintain going forward?

Krishna, this is Jim. When we think about the amount of cash that we want to hold onto the balance sheet, for operations, it's a roughly $200 million number. And then as we think about – in addition to that, if we have near-term M&A targets in mind, we might squirrel away some of that. With that said, I think that if we had stronger visibility into the cash flush that was going to happen at the end of the quarter from the government, if that had happened sooner, we probably would have had a little bit more buyback. And – but as you know, around the middle of September, we end up kind of going into a blackout on stock buyback. And with that said, we would have been precluded from doing anything at the end of September. I think that what you're hearing from us is that with the cash that we've got, we're confident that we will be able to get back into the market sometime during the fourth quarter.

Okay. That's great. I'll jump back in the queue. Thanks.

Thanks.

The next question is from Jon Raviv of Citigroup. Please go ahead.

Hey. Good morning, team.

Good morning, Jon.

Just on the cash flow, the new guidance, $775 million, you mentioned that it benefits from a couple things, the interest – the swap and also the AIT cost. Just sort of big picture, how do you see that? What do you think is sort of sustainable operating cash flow for this business going forward? To what extent should operating cash flow grow with earnings next year or not? And related to that is, how do you see CapEx trending going forward? Thank you.

Well, we'll certainly be very specific on what we're thinking of operating cash flow when we have our Q4 call. But the way to think about how to model that Jon is that, we'd like to think that 100% of the non-GAAP net income will end up in the operating cash flow number. And simply put, it's EBITDA less interest and CapEx, and the level of CapEx that we were seeing for 2018, we expect will come down in 2019, absent some potential one-time items relate to specific programs. We are always thinking about how to reduce the investment non-cash working capital, reducing our investment in real estate and things that aren't directly connected to generating new business.

And Jon, I would add to that and I'm sure you've read that in the press releases, we're pretty much through the integration cash.

Okay.

And that is really exciting for us. That ends up, if you will, accumulating now on the balance sheet. And so as we've tried to in past calls is to say IS&GS integration is behind us and we're now to more normative levels, which we would have talked about a couple of years ago, and our ability to convert our operations to cash from operations. And so we're really excited about what 2019 looks like.

Thanks. I'll stick to one.

The next question is from Noah Poponak of Goldman Sachs. Please go ahead. Gavin Parsons - Goldman Sachs & Co. LLC: Hey, so it's Gavin on for Noah. Good morning, everyone.

Hey, Gavin. Gavin Parsons - Goldman Sachs & Co. LLC: Just wanted to follow on Jon's questions there. Obviously, there are a couple of one-time tailwinds to free cash this year. You got the interest swap settlement. But I think you're building some working capital ahead of growth, looks like head count might even be up more than revenue, DSOs and DPOs are a little bit better, but not a ton. But you've got that $60 million of transaction and integration that doesn't repeat and higher level of CapEx. So kind of what if that doesn't reverse or kind of what of those a tailwind versus a headwind next year?

Well, in terms – did you say headwind instead of tailwind for next year? Gavin Parsons - Goldman Sachs & Co. LLC: Yeah. Which of those are headwinds versus tailwinds and it kind of seems like you'd have more tailwinds than headwinds going into next year?

Well, one thing we've been able to do through the back end of this year and will probably help us more into the early part of next year is continued optimization of our tax position. So, on a GAAP basis, you'll see that our effective tax rate is pretty low in the quarter. And some effective tax planning is helping us there. And so, you'll see us kind of moving some non-cash working capital out of the deferred tax accounts and into the bank account for the early part of next year, that's one tailwind. We're also working and this will not be necessarily working capital, but as we continue to optimize our real estate portfolio, we'll be selling some assets there, and using that cash to consolidate real estate facilities in the Washington area, and fund some of the build-out of our new facility right here in Reston. So we're doing those things, then you won't see those in the operating cash flow number, you'll see those down in the investing cash flow numbers in Q4 and early into next year to help us, again, take less productive assets off the balance sheet. Gavin Parsons - Goldman Sachs & Co. LLC: Okay, great. And then on the government customer kind of hesitant to spend dollars, what does it take for them to actually really ramp up and spend more? And are they concerned about mid-terms or sequestration that they just not have the infrastructure to spend the dollars and kind of what does it take for them to actually really get to the authority increase amount?

Yeah, Gavin, it's I think a bit of all of the above. And I think it will – the appropriations will get released as they check off each one of those, let's get through the mid-terms, let's get an understanding of what 2020 is going to start to look like. The President will come out with a skinny budget right after the first of the year. If you're an agency head, you don't want to spend up in 2019 to see sequester comes back – sequester caps come back in 2020. So as becomes more clear what the 2020 budget will look like, then they will lead spend in 2019 into an expected budget in 2020. And no, your last comment was do they have the infrastructure and look, they're happy to start a new program, they need to have a program manager and they need to step up a contracts office and things like that. There's probably a little bit of that. I think most of this is, they probably didn't completely anticipate with the raising of the sequester caps, the defense and non-defense would see the increase in budget. And so, they've been a little thoughtful in actually spending to that level to make sure that it was real and that it was sustainable through 2019 and 2020. Gavin Parsons - Goldman Sachs & Co. LLC: Do you get a bit of a sense that there is going to be a dollar shift from readiness towards modernization?

Not – I think it's going to continue to be balanced. I've heard – we concluded in the quarter the Air Force Association event and we just finished the Association of the United States Army and so we get to interface with the high level customers. And their mission-capable rate, the availability of their hardware to do mission on any given day isn't where they want it to be. And so, we are seeing increased spending in operations and maintenance, while they are thinking through their longer term recapitalization efforts. And of course, in the Air Force, they're buying – they're going to be buying F-35s. They just released the contract for T-X. The Navy is going through their fleet modernization thoughts. They have a new submarine program which they're investing in, right, and the Army continues to look at their vehicle programs. So, I think they're going to balance that hardware with increased spend in O&M. And the good news for us in that is where do they create obligation authority and they do it by making their operations more efficient, by spending on IT modernization, digital transformation and move to the cloud. And that's really good for us because that's in among the O&M and the other things we do in R&D helping our customers operate more efficiently is center in our wheelhouse. Gavin Parsons - Goldman Sachs & Co. LLC: Great. Thanks so much.

Thank you.

Our next question comes from Sheila Kahyaoglu of Jefferies. Please go ahead.

Hi. Good morning, guys.

Hi, Sheila.

Hi, Sheila.

Good morning.

Just one question, just make sure it has 15 parts to it. So, can you just touch upon the F-16 sustainment contract and Social Security win, were these part of the takeaway wins you mentioned earlier in your prepared remarks, and just given the fairly sizable task order value kind of the contract step up? And if you could just touch upon the two recompetes you have in 2019, please?

Sure. Sheila, this is Jim. I'll start with the SSA win. The SSA win is actually work that we are already doing. It was one that was targeted to be taken away by a competitor, we held onto it. We're pleased with that outcome. The F-16 work, that was a takeaway from a competitor, and it was a work for our Air Force customer and we're really pleased to be taking away something that really exploits our technical capabilities very, very well. In terms of what that means for next year, obviously, with that takeaway as well as the other ones, it points to, like I said before, better than 3% growth, and we'll get more specific about that. Let me say one more thing, to foot stomp, the fact that we are continuing to be very pleased with the level of win rate, win rates that we're experiencing on these takeaways and new business awards, we are feeling like it's a proof point to the changes that we've made in business development, in our cost structure that we're getting what we think is probably at least, if not better than our fair share of these takeaways and new business. Thanks, Sheila.

Can you just touch upon the recompetes, is that possible?

Yeah. We do have a couple of large recompetes next year. As we've said before, probably our largest one is the work with the Department of Energy up at Hanford. That RFP is dropped. We're working on that proposal, and we're confident that given the past performance that we're experiencing there in our relationship with the customer that we'll be able to retain that work. But we're not taking anything for granted. We're working very hard to make sure that we're delivering innovation and competitive cost structure for that deal.

Great, thanks.

Okay.

The next question is from Joe DeNardi of Stifel. Please go ahead. Jonathan G. Ladewig - Stifel, Nicolaus & Co., Inc.: Hey, guys. This is Jon Ladewig for Joe DeNardi.

Hi, Jon. Jonathan G. Ladewig - Stifel, Nicolaus & Co., Inc.: First – hey, guys. Given some of the recent commentary from President Trump calling for lower government spending in FY 2020, both on the civilian and on the defense side, does that change your view on how long this defense cycle lasts? How do you guys kind of interpreted these comments?

See, appreciate the question, kind of one that we thought someone might ask. I think you need to do the math on what was base budget in OCO and what the administration is trying to do is to drive to a base budget without the OCO. But I think what he is trying to do, as much as I can interpret his words, is to set an expectation that it's – it can't grow at the level that it did in 2018 and 2019 forever. And I would tell you from our standpoint, we've always sort of took that into account and a more metering of top line is what was in our expectations. If you do the math, you look at debt, you look at where the federal budget is going, being fiscally thoughtful I think is actually a good thing, it's a good thing for the country and by the way the budget is certainly significantly big enough for many companies like Leidos to be successful at the current funding level. Jonathan G. Ladewig - Stifel, Nicolaus & Co., Inc.: The only other question I would kind of ping you guys with is, what's your win rate?

We don't like talking about specifics on win rates. We're very happy to talk about what those trends look like, though, and especially in light of how many competitors that we see on some of these big programs that we've been awarded, you would think that those win rates on new or takeaway work would be in – on a good day in the 30s, but we're experiencing better than win rates – better than a number like that in both of those categories. And certainly the trend, I think that the upward trend that we're seeing on win rates is what is translating into the book-to-bill that you're seeing here. And again, it comes back to first and foremost delivering a proposal with innovation in it and delivering a proposal that has – because we can innovate, we can provide a cost point that is also competitive. Jonathan G. Ladewig - Stifel, Nicolaus & Co., Inc.: All right. Thank you, guys.

Thank you.

Thank you, Jon.

Our next question is from Joseph Thompson of SunTrust. Please go ahead.

Hey guys. This is Joseph Thompson on for Tobey Sommer at SunTrust. I have one question about the platform and product related work. How much did this type of work contribute in the third quarter and how much do you expect they can contribute going into 2019? Thank you.

It is really hard to answer that question to be fair, Joe. I think I'm hearing you asked, well, what's related to platforms. We think of it more along our set of technical core competencies. And I think that, for example, the new work we're doing for the Air Force on the F-16 program is a little bit different from – and refreshingly different from kind of our biggest power alley in IT modernization. But clearly, our ability and our competitiveness in IT modernization is probably the biggest single driver of our growth prospects and book-to-bill for the coming year. Roger, do you have anything to add to that?

No. I would just reiterate, Jim, what you said is that we tend to classify our work against our technical core competencies which are differentiators and we don't – unlike maybe one of the large OEMs that look at platform and services, we don't manufacture a lot of platforms. We do some. We tend to cut our business and think about our pursuits more from a capability standpoint, so. Thanks, Joe.

That's all the time we have for questions today. I would now like to turn the call back to Kelly Hernandez for closing remarks.

Thank you, Brock, and thank you all for your interest in Leidos. We look forward to updating you again on our next call. Thanks and have a great day.

This concludes today's conference. You may now disconnect your lines at this time. Thank you for your participation.