Ladies and gentlemen, thank you for standing by. Good morning, and welcome to Amentum's Second Quarter Fiscal Year 2026 Earnings Conference Call. Today's call is being recorded. The operator provided instructions to callers. I would like to turn the call over to Joe DeNardi, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, and good morning, everyone. We hope you've had an opportunity to read our earnings release, which we issued yesterday afternoon and is posted on our Investor Relations website. We have also provided presentation slides to facilitate today's call. So let's move to Slide 2. Please note that this morning's discussion will contain forward-looking statements that are subject to important factors that could cause actual results to differ materially from anticipated results. I refer you to our SEC filings for a discussion of these factors, including the Risk Factors section of our annual report on Form 10-K. The statements represent our views as of today, and subsequent events may cause our views to change. We may elect to update the forward-looking statements at some point in the future, but specifically disclaim any obligation to do so, except as required by applicable law. In addition, we will discuss non-GAAP financial measures, which we believe provide useful information for investors. Both our earnings release and supplemental presentation slides include reconciliations to the most comparable GAAP measures. We do not provide reconciliations of forward-looking non-GAAP financial measures due to the inherent difficulty in forecasting and quantifying certain significant items. These non-GAAP financial measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. Our safe harbor statement included on this slide should be incorporated as part of any transcript of this call. With me today to discuss our business and financial results are John Heller, Chief Executive Officer; and Travis Johnson, Chief Financial Officer. We are also joined by other members of management, including Steve Arnette, Chief Operating Officer. With that, moving to Slide 3, it's my pleasure to turn the call over to our CEO, John Heller.

Thank you, Joe, and thank you, everyone, for joining us today. I want to begin today's call by recognizing the incredible work our employees do every day in support of our customers around the world. Their dedication, technical expertise and innovation are what enable us to consistently deliver for our customers in the moments that matter most. In particular, I want to recognize our teams in the Middle East and the families who support them. In these environments, our employees are working side-by-side with our customers to deliver reliable outcomes and high consequence missions. Their safety and well-being remain our top priority, and we greatly appreciate what they do for Amentum and our country. I also want to congratulate NASA, our Amentum employees and other industry partners on the successful Artemis II mission, an extraordinary achievement that represents the very best of human ingenuity and perseverance. The success of Artemis II showcases our multi-decade relationship as a trusted partner to NASA, where we look forward to continuing to deliver the engineering, innovation, operational excellence and mission-critical performance required to advance NASA's long-term goals. Now let's turn to second quarter performance. Amentum delivered another period of solid results across all key metrics and continued momentum in business development with strong net bookings and robust submit activity. Financial performance highlights, which Travis will cover in more detail shortly, include revenue of $3.5 billion, reflecting normalized growth of 3%, adjusted EBITDA of $275 million with solid margins of 7.9%, adjusted diluted earnings per share of $0.60, up 13% year-over-year and free cash flow of $220 million. Turning to Slide 4. Execution of our growth strategy continues to translate into tangible results. We delivered net bookings of $4 billion, resulting in a quarterly and last 12 months book-to-bill of 1.2x. And ending backlog of nearly $48 billion, up 7% from the prior year quarter and an all-time high for Amentum. Our funded backlog was $6.9 billion, reflecting a 20% year-over-year increase. We also continue to see robust demand across our diverse end markets with over $20 billion in first half submits, putting us on track to exceed our fiscal year 2026 target of $35 billion. In addition, we ended the quarter with $26 billion in proposals awaiting award with approximately 65% being new business to Amentum. With that, let me highlight a few notable second quarter awards. First, Great British Nuclear awarded a 14-year, $406 million contract to an Amentum-led joint venture to deliver advanced solutions in support of the commissioning of small modular reactors or SMRs in the United Kingdom. This award reinforces our position as a trusted partner in complex nuclear programs and our role in supporting the global expansion of nuclear capacity. Also within our nuclear portfolio, the European Commission Joint Research Center awarded an Amentum-led joint venture, a 2-year, $112 million contract to provide decommissioning and waste management solutions. In aviation, the California Department of Forestry and Fire Protection, or CALFIRE, awarded Amentum a 5-year, $425 million contract. This program will be delivered in an outcomes-based model, leveraging predictive analytics and data-driven tools to optimize fleet sustainment, reduce downtime and streamline supply chain and repair cycles. In our intelligence portfolio, Amentum was awarded multiple contracts totaling over $300 million, which aligned with national security priorities and will deliver a range of innovative mission-focused solutions. Finally, in our critical digital infrastructure accelerating growth market, Amentum received over $600 million in awards to provide advanced engineering and technology solutions to a broad range of telecom, hyperscaler and national security customers. Under these agreements, Amentum will deploy advanced wireless networks, expand secure connectivity solutions and retrofit legacy data centers to support AI-driven workloads. These awards reflect the alignment of our portfolio with enduring drivers of demand across defense, commercial and global energy markets. Looking ahead, domestically, we are encouraged by the President's government fiscal year '27 budget request and see alignment with key priorities, including enhancement of capabilities in readiness and deterrence, space, missile defense and counter-UAS, just to name a few. We are also seeing sustained momentum across international markets, particularly in nuclear alongside strong commercial demand driven by AI and digital infrastructure. Turning to our growth framework on Slide 5. As demonstrated by this quarter's awards, we remain steadfast in driving performance in our core markets. At the same time, we are strategically positioned to capitalize on accelerating growth in emerging markets. Over the past two quarters, we've highlighted our global nuclear energy and space systems and technologies markets, both of which continue to represent substantial opportunities for Amentum. Today, we will focus on critical digital infrastructure or CDI, and how we are strategically positioned to benefit from this rapidly evolving area. Moving to Slide 6. You can see that CDI is a large and growing market with multi-decade tailwinds driven by increasing demand for AI, data and mission-critical applications in both commercial and government environments. In particular, data center demand, which is expected to grow 29% annually, is increasing requirements for compute, power and connectivity. At the same time, global mobile data traffic is expected to quadruple in the coming years and is driving the need for scalable low-latency networks. And finally, at the edge, where the market is expected to grow 36% annually through 2030, there is an expanding need for distributed compute and real-time processing. Taken together, these trends are creating a unique and expanding set of opportunities for companies like Amentum who offer integrated infrastructure solutions across data centers, networks and edge environments. With that, let's turn to Slide 7 to discuss how Amentum is well positioned to capitalize on this demand and help enable advancement in connectivity in the new AI and digitally-driven world. In CDI, Amentum focuses on three primary areas. First, in smart commercial infrastructure and data centers, Amentum supports the full life cycle from engineering and design through development and construction to operations, maintenance and ongoing optimization, including power, cooling, controls and automation solutions to enhance performance and efficiency. In the front end, an example where we have seen recent increasing demand is the work we do to support hyperscalers and retrofitting legacy data centers for AI workloads, where Amentum brings differentiated expertise, positioning us for follow-on work as capacity expands. Beyond data centers, Amentum provides innovative solutions to several marquee Fortune 500 companies in areas such as advanced manufacturing to maximize uptime in mission-critical settings. Second, a next-generation digital connectivity, we engineer, design and deploy large-scale networks, including wireless and fiber infrastructure enabling secure real-time data movement across complex environments. Amentum's offerings span from supporting major telecom providers with national 5G deployments to more regional efforts such as supporting state transportation departments with deployment of fiber optic networks for connected vehicle systems, traffic management and public safety communications. And third, in cyber and network defense, we embed security across all of our solutions, while also delivering stand-alone capabilities in highly sensitive conditions. Our differentiation lies in our ability to secure both IT and operational technology environments, protecting not only data but the physical systems that underpin critical infrastructure. For example, we support intelligence community customers through advanced systems engineering and modeling capabilities to assess vulnerabilities, secure facilities and prepare for both cyber and physical threats. In aggregate, these areas represent a significant addressable market for Amentum, which is expected to grow 10% or more annually over the next several years. When combined with our other accelerating growth markets: global nuclear energy, and space systems and technology. Amentum has over $4 billion in annual revenue at accretive margins, aligned with end markets expected to see significant long-term growth. We believe the value of this aspect of our portfolio is particularly underappreciated by the market. Our focus as a leadership team is to invest and execute to capture this opportunity, and maximize long-term value for our shareholders. With that, I'll turn the call over to Travis.

Thank you, John, and good morning, everyone. I'm pleased to discuss with you today Amentum's second quarter financial results, which reflect underlying growth across all key metrics and a notable rebound in cash flow. I will also cover the successful enhancement of our capital structure after quarter end and our views on performance for the remainder of the year. Building on John's remarks, our second quarter performance, the business development results in particular, reflect the continued strength of our execution, disciplined operational focus and measurable progress against our strategic and financial priorities. With that, let's begin with an overview of our financial performance on Slide 8. Revenue in the second quarter totaled $3.5 billion, reflecting underlying growth of 3% as the impact from joint venture transitions and divestitures previously discussed was positively offset by the ramp-up of new contract awards in our accelerating growth markets. Adjusted EBITDA of $275 million benefited from a 20 basis point year-over-year increase in adjusted EBITDA margins to 7.9%. The continued margin improvement represents tangible progress on our strategic focus to prioritize higher-margin work and realize benefits from our cost synergy initiatives. Adjusted diluted earnings per share of $0.60 was up 13% from a year ago as a result of the strong operational performance and lower interest expense from our debt reduction initiatives. Moving to our reportable segment results on Slide 9. Digital Solutions delivered revenue of $1.5 billion, representing 10% growth, driven by the continued ramp-up of new contract awards in our critical digital infrastructure and space systems and technologies markets. Adjusted EBITDA of $105 million was slightly lower year-over-year due to the fiscal year '25 divestiture, timing factors related to new program starts, and higher net write-ups in the prior year quarter. These impacts were partially offset by the higher revenue volume, resulting in adjusted EBITDA margins of 7.2%. Turning to Global Engineering Solutions. Revenue was $2 billion, reflecting impacts from the JV transitions, the divestiture and the expected ramp down of certain historical programs, all of which were partially offset by contributions from new contract awards. Adjusted EBITDA of $170 million benefited from a 100 basis point year-over-year increase in adjusted EBITDA margin to 8.5%. This strong performance in the quarter was driven by continued focus on higher-margin growth opportunities, including more fixed price work and disciplined program execution. Now turning to Slide 10 to cover our cash flow and capital structure highlights. Free cash flow in the second quarter totaled $220 million and benefited from the recovery of collections consistent with our remarks on the first quarter earnings call. First half free cash flow of $78 million is in line with our expectations and puts us on track to meet our full year free cash flow guidance. From a capital structure perspective, in the weeks after quarter end, leveraging our improving financial profile, we took deliberate action to enhance the structure in terms of our debt. We issued a new $1.4 billion Term Loan A facility and utilized the proceeds to pay down and reprice our Term Loan B. We also increased our revolving credit capacity to $1 billion. These actions, coupled with benefits from the Moody's rating upgrade in December, have reduced our weighted average cost of debt by approximately 50 basis points and strengthened our overall capital structure as we remain on track to achieve net leverage below 3x by the end of the fiscal year, enabling greater financial flexibility and opportunistic deployment. On Slide 11, let's now turn to our fiscal year 2026 full year outlook. As a result of our first half performance, continued business development momentum and with 97% of revenues expected to come from existing and recompete business, we are reaffirming our fiscal year '26 guidance. We continue to expect revenues in the range of $13.95 billion to $14.3 billion, adjusted EBITDA between $1.1 billion and $1.14 billion, adjusted diluted earnings per share between $2.25 and $2.45, and free cash flow between $525 million and $575 million. From a timing perspective, we expect approximately 48% of remaining revenue and profit in our third quarter and a sequential increase in the fourth quarter, which benefits from an additional working day, the timing of already funded project work and contributions from new awards. Further, we expect cash flow will follow a normal seasonality with the majority generated in the fourth quarter as a result of payroll timing and strong collections given our alignment with the government fiscal year-end. Wrapping up on Slide 12. Our first half performance reflects disciplined execution, continued growth and sustained demand across the business. As a result, we are well positioned to deliver on our fiscal year '26 objectives, and remain focused on driving long-term value for our customers, employees and shareholders. With that, operator, please open the line for questions.

The operator opened the line for questions. Your first question comes from the line of Greg Parrish from Morgan Stanley.

Congrats on the quarter. Great to be on the call here with you. So I wanted to talk about bookings strength, a really good quarter for bookings, up sequentially, up meaningfully from last year. I appreciate the slide on the wins seem pretty broad-based. I guess maybe just help us with the second half award environment. Do you expect bookings to continue to trend higher sequentially? How should we think about bookings in the second half?

Yes. Taking a step back, Amentum had a strong second quarter. The company continues to execute at a very high level across our portfolio, with solid bookings and a healthy book-to-bill. It’s not just the quarter — our trailing 12-month book-to-bill is about 1.2x, or 1.3x on an imputed basis if you include our joint ventures, so our backlog is strong. Demand is being driven by long-term secular trends in AI, data, and national security that are fueling our accelerated growth markets. At the same time, our core business continues to lead, perform well, and generate strong free cash flow, which is another source of excitement across the portfolio. Performance to date includes bids greater than $20 billion thus far, and we set a goal of bidding over $35 billion this year after bidding roughly $35 billion last year. We’re well on track to do that. Given the scale of our business and our end-to-end capabilities, we’re winning our fair share. We have the capabilities our customers need to perform their missions, whether in accelerating growth markets like space systems and technology, global nuclear energy, and CDI, or in our core markets. We believe our growth rates will remain consistent, and with our bidding focus we’re feeling strong about bidding over $35 billion this year and maintaining the book-to-bill levels we’ve sustained since we became a public company. We feel good about new business and recompete prospects for the second half of the year, and much of what we’re doing this year is focused on setting up a strong 2027.

Yes. Great. Maybe just to click on margin here. Engineering specifically expanded even further in the quarter. I think last quarter it benefited from a little bit from the government shutdown. So maybe we thought there would be a little bit of a step down. I think you called out focusing on higher-margin work, fixed price as well. So is there any timing or onetime things to think about in the quarter? Or is this the right level to think about the second half for engineering margin?

Yes, Greg. Really pleased with the continued strong margin performance in our Global Engineering Solutions business specifically. Just to dive a little bit deeper to expand on what I said in the prepared remarks, it is a mix of things that are driving it, most of which we believe to be sustainable. Certainly, we're going to have the timing of program write-ups and performance from quarter-to-quarter that could vary a little bit. But it's more fundamental what we're seeing in that business. So we mentioned our focus to continue to prioritize and go after higher-margin work. Obviously, we view fixed price work as a potential to be accretive, and that's been part of our strategy since we came out with our margin expansion initiatives at Capital Markets Day back in August of 2024. So we are seeing a higher mix of fixed price work. And we're starting to see the customer in some areas where they would have traditionally procured on a cost-plus basis, procure on a T&M or fixed price basis. And you'll see that in our contract mix statistics in the 10-Q that's going to come out later today. So we welcome that. Obviously, the recent executive order is another example of where the customer is looking to do more of that. So we'll continue to work with them to support that initiative as well. And then also, we're seeing strong performance from our joint ventures. The equity income is a little bit higher this quarter than it was in the second quarter of last year. That's also driving some of the margin expansion. And then obviously, disciplined program execution, as we mentioned. And then you're really starting to see the fruits of all the efforts we put into our cost synergy initiatives flow through the P&L. So a lot of good activity really driving that 100 basis point improvement that you saw year-over-year.

Your next question comes from the line of Tobey Sommer from Truist.

As we think about your underlying rate of growth and this year and dovetail some of the better growth you're seeing in the growth areas that you've highlighted, are there any other puts and takes that you would point us to at this point as we think about growth in fiscal '27 and '28?

Tobey, I'll start and then John can add or Steve as well. So the midpoint of our guidance for FY '26 implies normalized growth if you account for the joint venture transitions, the divestitures, and obviously, we had an extra week in the fourth quarter of 3%. And we had the impact from the government shutdown in the first quarter. So that's roughly an additional percent. So we're at underlying growth of roughly 4% at the midpoint of our guidance. That's exactly where we thought we would be at this point in our journey of bringing the merger together and going public and our long-term growth objectives of a 4% to 6% CAGR by FY '28. And then obviously, in John's prepared remarks and what he said in response to the first question and how we feel about the growth trajectory of the business and what we're seeing in performance there in terms of a 1.2x book-to-bill on an LTM basis and how we view the second half of the year setting up with over $26 billion worth of awards pending and roughly 2/3 of that being new business to Amentum. We certainly are excited about what the potential could be headed into '27 and '28. We'll obviously have to see how the pending awards get adjudicated and see how '27 progresses, but certainly look forward to keeping you updated there.

Yes. And I would say just our strategy in general. And a lot of it, we're just the company at the right time in many respects. We have the strength in the accelerating growth markets that we've talked a lot about and AI is driving demand for electricity, driving data center expansion, network infrastructure. But the other side, and you said like are there any things that are popping up, well, the defense budget increase, we didn't necessarily see that coming when we go back 1.5 years, but it's aligned really well with strength areas in our core markets as well. When you think of readiness, the budget request is proposing a 20% increase from 2026 that really aligns well with areas like platform sustainment, training, logistics, where Amentum is really strong and the leader in the market. Second, space and missile defense, where our work, Missile Defense Agency, Space Force, Air Force align really well if we see continued expansion of investment in those areas. And then finally, really in the drone counter-UAV, counter drone technologies where the budget request has approximately $70 billion earmarked to expanded investment in those areas. And Amentum has been for decades, a leader in helping develop and sustain the unmanned and now counter unmanned technologies. And to think of contested logistics and tactical operations that unmanned technology could support it just aligns extremely well with Amentum's core markets. So we both believe our core markets are at the right place. Our accelerating markets have great tailwinds that can provide the future growth that we've been talking about.

And I was wondering to dovetail and build on that, if you could comment on what you're seeing in your NASA customer as well as how you see the company applying capital proactively to shape and accelerate growth as you reach your leverage target in just a couple of months or quarters?

Tobey, I'll take the NASA question and then Travis may want to chime in on the second part of your follow-up. Right now we're still very thrilled about, as John mentioned in his prepared remarks, the outcome of the Artemis II mission. That was a great achievement, not only for our Amentum team in partnership with NASA, but for the nation, marking the first crewed mission in more than 50 years to send astronauts beyond the moon and return them safely. It was a banner day, and our teams are already working on processing hardware for Artemis III. The overriding priority is the National Space Policy, formulated by President Trump and Administrator Isaacman, which has a laser-focus on achieving its goals: returning to the Moon to stay and preparing to venture to Mars. We're very excited about the upcoming campaign of Artemis missions. There is also the NASA workforce directive, in which they've decided to incrementally in-source expertise to expand their core capabilities. We are, of course, working with NASA to understand their objectives and how this will impact our Amentum portfolio of contracts and programs that support NASA. Based on discussions and the indicative input we've received so far, we believe the impact on FY'26 will be immaterial. We estimate about a 1% impact to revenue in FY'27, with the impact to EBITDA slightly smaller. Given the modest impact we expect, this does not change our excitement about Amentum's forward trajectory.

Yes. And then on the second part of that question, Tobey. I guess building on John's remarks and really, he touched on what we're seeing from a growth perspective, I touched a little bit on the margin expansion trajectory that we're on and both of those being on track where we thought we would be. The one area that I'll just add to that is on free cash flow. Obviously, what we've been able to do from a deleveraging perspective to date is accelerated relative to what we initially thought bringing the companies together and going public. And then recently, obviously, this quarter, what we're able to do from a refinancing perspective will only further benefit that, in our ability to generate free cash flow at a growth rate of 10% or greater from now to FY '28. And that puts us in a good point to your question on capital deployment, right? So we're really looking forward to getting to that place, where we achieve our net leverage target of less than 3x by the end of this year. Obviously, we should be in the high 2s based on the trajectory that we're on. And we're committed to maintaining a prudent capital structure that will allow us to deploy capital in a flexible and opportunistic way. And we'll evaluate the options as that comes up, whether it's high return on investment, organic opportunities, accretive M&A, it could be continued debt reduction or capital return to shareholders when we think the share price is trading below its intrinsic value. So all that said, our goal will be to look at things to make sure that we're maximizing free cash flow per share and delivering strong compounding returns for our shareholders.

Your next question comes from the line of Andre Madrid from BTIG.

This is actually Ned Morgan on for Andre. I saw Japan is investing $40 billion in SMR development in the U.S. I was just wondering, are you guys positioned to benefit from this funding at all?

Yes. There is a lot happening in the U.S. nuclear market, and we are really excited about the activity this administration has focused on, building partnerships that bring capital from various sources to support these projects. The funding you mentioned is targeted at a significant project that we are discussing, and we are engaged with multiple opportunities across the U.S. Many of these involve SMR technologies and SMR vendors. With our expertise and our partnership with Rolls-Royce, we support both large gigawatt construction and engineering and design work as well as SMR development across Europe. We are one of the key partners in the U.S. with that capability, especially given the limited progress in nuclear over the last 30 years. Amentum brings a scale of capability in the U.S. that is practically unmatched, and it is real. We have a history of supporting nuclear projects that our competitors do not have hands-on experience with for new builds. We are excited about that particular project and many others being contemplated in the U.S. As I mentioned last quarter, progress is continuing, and we fully expect in the second half of this year and into 2027 to see a number of projects come to light, secure funding and support, and form partnerships that will allow them to move from design and theory to practical construction.

Got it. And then another just on Digital Solutions margins. I know there's some new start work there, specifically within space. That Space Force Range Contract, how should we think about the margins of that moving forward as the program kind of ramps and where DS margins will trend throughout the year?

Yes. Thanks, Ned. So the Digital Solutions segment obviously had a really nice quarter and a nice year-to-date performance on revenue growth. So It had 10% reported growth in the second quarter and bring that to 8.0% year-to-date. So nice growth in that segment. Obviously, when you're growing that fast and you're ramping up new programs, we have a couple of new program starts. One is in our space business, but another one is in our critical digital infrastructure business. It's not uncommon for margins to start off more modest and grow over time. And that's certainly what we expect on those programs that are ramping up. And that obviously is contributing to what you're seeing in the Digital Solutions margin dynamics this quarter and year-to-date. And the other element there, just to mention is the timing of program write-ups those can vary from quarter-to-quarter, but over any kind of normalized period, say, over a year, they're kind of steady, right? So while the performance was more modest this quarter and year-to-date in Digital Solutions, we do expect over time that there's opportunity for margin expansion. And so for the rest of this year, I'd say we expect it to be relatively consistent with first half performance. And then going FY '27 and beyond is when those programs will get into full year and other initiatives that we're running from a margin expansion perspective will start to benefit the segment.

Your next question comes from the line of Trevor Walsh from Citizens Bank.

It's Ethan Frost on for Trevor. I was wondering about the CDI opportunity — can you give a rough long-term sense of how that customer mix could develop between commercial and government customers?

Yes. Maybe I'll start, and John and Travis may want to add context. The first point I would make is that we are not a new entrant in this market. This is a business we've been building for more than a decade. From a historical perspective, I'll focus for a moment on the communications and telecom part of the market. That's a part of the business we've been growing for more than a decade, and we're excited about it because structurally it gives us advantages. What we do is help major telcos match capacity to demand. Whether it's 4G, 5G, or even early work on 6G, we diagnose where additional capacity is needed, engineer and deploy that capacity to enable stable system performance and to respond to dynamic demand. We're proud to partner with them on this critical aspect of their businesses and to be a core partner. That business has continued to grow, and it's concentrated in the nation's population centers, the Eastern Seaboard, the West Coast, Chicago, and other major cities where we help provide solutions. That gives us a structural advantage in critical digital infrastructure because we have geographically distributed teams ready to design, integrate, and deploy these solutions. We can now shift that capacity to work with data centers and other types of projects. Telecom is a foundational piece, and now we're growing that business into other areas. John, maybe you want to comment on the data center part.

Yes. In terms of growth, demand for critical digital infrastructure is being driven by long-term trends, primarily the rapid scaling of AI and data workloads. We showed in our presentation that this demand is focused in the edge AI markets, and the applications being developed are accelerating rapidly. Businesses and consumers using AI tools are increasing data traffic, which in turn pushes telcos to build more infrastructure and drives the need for greater data center computing power to run edge AI products. Our focus is supporting telco capabilities to transmit that data and helping hyperscalers expand data center capacity by applying engineering and technical resources we've developed over decades working with government. We are leveraging established capabilities rather than building entirely new ones, because AI is creating massive demand. In addition to transmission and data center capacity, cybersecurity is essential: all this data creates significant risk, so you need the ability to secure networks, identify threats and respond to incidents. These are services we've provided to government and can bring to commercial enterprises as AI demand and risk exposure grow. We're very excited about these three areas and the growth they can represent for Amentum going forward.

And then just one quick one. In terms of using the existing experience and space, any crossover with just like telecom and network communication like moving into orbit, is there like a way to capture that opportunity as well?

Yes. It's a great concept, and we actually are very much seeing that come to life. Just building on the examples John talked about with critical digital infrastructure, it's interesting how much of our expertise truly is dual use. It is critical to national security missions with government customers as well as commercial missions. One example we were thinking about the other day is there's so much acceleration in activity in the government customer space trying to better utilize 5G and some of the more elaborate capabilities of 5G for government missions, which heretofore have been primarily a commercial venture. We are very much taking advantage of that dual use. And then the other thing I would say is that the government has always been a leader in terms of data security and cybersecurity, IT, OT and those kinds of things. Increasingly, as John alluded, commercial networks and commercial applications are increasingly interested in operational technology, cyber and these kinds of things. So we very much see that it crosses from government to commercial applications. And to your point about space communications, there is so much work going on in the government and national security space, and we certainly work with customers like the Missile Defense Agency and the Space Force to pioneer next-generation ground-to-space communications that are more efficient, more rapid, and reduce latency. Some of those exact areas of expertise will absolutely cross over into future commercial applications as you build out the data center core, connectivity and edge so that all of that works more efficiently. There is a true convergence there. So I very much appreciate the question.

Your last question comes from the line of Kevin Liu from RBC Capital Markets.

Congrats on the strong quarter. As you guys look at your portfolio today, obviously, you guys have done a few divestitures over recent quarters. Where are you guys today in terms of further portfolio pruning? Or how do you look at your portfolio today? And do you see any other opportunities to divest and get rid of noncore work?

We've been very happy with the overall portfolio over the last 18 months. Our book-to-bill has been very strong. We've seen opportunities in our core markets and in these emerging, accelerating growth markets, which are settling in and starting to deliver on expectations. But of course we'll always look strategically at what and where the real key growth drivers are, where we can drive margin expansion, and we'll assess different parts of our portfolio to see if they are aligned with our strategic objectives. We go through a normal strategic planning process and will brief the Board later this year, closer to September. As part of that review we'll look at the overall portfolio, what's happening in our growth areas, where the strong tailwinds are, and whether there are opportunities to shape the portfolio to help drive investment in markets we think have greater growth potential or greater potential to drive margin. That's a normal evaluation we'll go through this year. But overall, so far, we've been pretty happy with the entire portfolio and what it's doing.

There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.