Toby Sommer

Toby Sommer asked about the expected seasonal patterns for the balance of the year across different segments following Q1. He also sought clarity on how to interpret news flow regarding the $600 million strike revenue, specifically if the amount would change if strikes end earlier or continue longer. Finally, he questioned AMN Healthcare's expectations for bill rates and the relationship between contingent travel nurses and full-time equivalents, given studies showing cost parity and potential full-time compensation increases from strikes.

Answer

CFO Brian Scott outlined expected Q1 to Q2 sequential declines for Nurse and Allied due to winter orders, while Physician and Leadership, and Language Services are expected to see growth. He noted the $600 million strike revenue is based on current visibility, and the amount could change if strikes continue or end earlier, but it's dynamic. CEO Cary Grace added that data suggests cost parity between full-time and contingent labor, making contingent labor attractive. She expressed a desire to see consistent increases in bill rates in 2026 to reflect underlying wage expectations.

Toby Sommer asked for more details on the "green shoots" GFL is observing for volume growth in 2026, both in the core business and potentially ES. He also inquired about the timeline, hurdles, and decisions involved in GFL's pursuit of U.S. equity index inclusion following its headquarters relocation.

Answer

CFO Luke Pelosi clarified that green shoots refer to GFL's core business, citing turning PMI/PPI indices, increased capital plans from large customers, and unexpected Q4 special waste activity as leading indicators. He noted that Q1 2026 volume might be tough due to severe snow. Regarding index inclusion, Luke Pelosi explained that GFL is now eligible for Russell indices, with evaluation in April and inclusion by mid-year (June), potentially adding mid-single digits to GFL's float. Further steps for S&P inclusion would require U.S. GAAP conversion and filing as a domestic issuer, with preparations underway for Q1 2027 readiness, aiming to close a significant gap in passive demand compared to peers.

Toby Sommer asked about any 'green shoots' GFL is observing regarding volume recovery in 2026 for both the core business and ES, and the timeline and hurdles for GFL's inclusion in various U.S. equity indices.

Answer

CFO Luke Pelosi noted some positive macro indicators and customer capital plans suggesting potential volume upside, citing unexpected special waste activity in Q4 2025 as a leading indicator. He detailed that GFL is eligible for Russell Index inclusion by mid-2026, with further steps like U.S. GAAP conversion needed for other major U.S. indices (CRISPS, S&P 400/500) by early 2027, which could drive significant incremental passive demand.

Toby Sommer (Truist Securities) asked if CACI anticipates another strong year of defense spending growth in fiscal year 2027, given recent presidential indications, and later inquired about the remaining incremental program ramp from large marquee contract wins over the past few years that will support future growth.

Answer

CEO John S. Mengucci acknowledged the $1.5 trillion defense spending indication for FY27 but noted it's early and unclear if it has appropriator support, reiterating CACI's focus on its $300 billion total addressable market regardless of top-line budget fluctuations. CFO Jeff McLaughlin and Mr. Mengucci explained that many longer-term wins, like ITAS, NASA, NCAPS, and Spectral, have ramp profiles that reach their maximum contribution 3-4 years into the program, indicating significant remaining growth potential from past awards, with Spectral awaiting a Milestone C decision for production ramp.

Toby Sommer asked if the pressure on federal civil spending is expected to conclude in 2025 or if it's a longer-term headwind. He also questioned SAIC's approach to portfolio shaping for organic growth and margin objectives, and whether the company plans to toggle down its leverage target given market turbulence.

Answer

Interim CEO Jim Reagan anticipates continued pressure on civilian agency budgets, with greater emphasis on DoD, but feels SAIC is well-placed in faster-growing civilian areas like CBP and FAA. He noted that portfolio shaping opportunities are always considered, but no immediate announcements are expected. CFO Prabu Natarajan added that SAIC reviews areas of the portfolio unable to be transformed. Regarding leverage, Prabu Natarajan stated SAIC is comfortable around 3.0x, remains disciplined in M&A due to high valuations, and will deploy capital via share repurchases or deleveraging based on market conditions and return on investment, confident in cash flow visibility.