Gavin Eric Parsons

Gavin Eric Parsons asked about the implications of higher U.S. military OPTEMPO for CACI, specifically how it changes the opportunity set, and inquired about the flow and conversion cadence of CACI's bid pipeline given recent government shutdown impacts.

Answer

CEO John S. Mengucci explained that current OPTEMPO is favorable for CACI, driving demand for mission technology at speed, particularly in electronic warfare (EW) with requirements for resiliency, speed, optionality, and commercial acquisition models (FAR Part 12). He noted that CACI's solutions deliver strong EBITDA. Regarding the pipeline, CEO John S. Mengucci and CFO Jeffrey D. MacLauchlan acknowledged slower activity post-shutdown but expressed confidence in the pipeline refilling, visible in planned submissions over the next 180 days, and referred to historical performance for conversion expectations.

Gavin Eric Parsons (UBS) inquired about the implications of a higher U.S. military operational tempo for CACI, specifically how it alters the company's opportunity landscape, and later asked about the flow and conversion cadence of CACI's bid pipeline following the government shutdown.

Answer

CEO John S. Mengucci highlighted that the current op tempo favors CACI due to demand for mission technology at speed, emphasizing resiliency, software-defined solutions, rapid enhancements, optionality (handheld, mobile, fixed), and commercial acquisition models (FAR Part 12) driving EBITDA. He also noted that the protracted shutdown delayed acquisition processes, but the pipeline is expected to fill up, with the CFO Jeff McLaughlin adding that historical performance can guide conclusions on win rates.

Gavin Eric Parsons asked if Hexcel's margins in 2026 could exceed those of 2024, assuming higher commercial aerospace revenue. He also questioned Hexcel's contingency plans if destocking by OEMs were to continue longer than anticipated.

Answer

Tom Gentile, CEO, Chairman, and President, confirmed that 2026 margins could be higher, though efforts are needed to offset natural inflation. He explained that Hexcel manages destocking by deliberately lagging hiring decisions until demand materializes and by utilizing existing inventory as a buffer for unexpected increases.