During the third-quarter earnings call, Chairman, CEO and President Horacio Rozanski confirmed that CFO Matt Calderone will depart on February 1 after more than 23 years, with COO Kristine Martin Anderson stepping in as interim CFO. Rozanski emphasized three strategic imperatives introduced in October: rigorous cost reduction, accelerating the shift to outcome-based contracts and product offerings, and targeting investments toward high-growth areas such as cyber, national security partnerships and artificial intelligence. The company completed actions that will lower run-rate spending by about $150 million, with most benefits expected to flow through in the next fiscal year rather than the quarter just reported.

Revenue for the quarter totaled $2.6 billion, down approximately 10% year-over-year and 7% on an ex-billables basis. Adjusting for approximately $60 million of national security billable expense shifts caused by the prolonged government shutdown, the decline was closer to 6%. Adjusted EBITDA reached $285 million, yielding a margin of 10.9%, consistent with the first three quarters. Net income rose 7% to $200 million, while adjusted net income climbed 9% to $215 million. Diluted EPS advanced 12% to $1.63, and adjusted diluted EPS increased 14% to $1.77, driven by a lower effective tax rate and reduced share count, partially offset by slightly higher interest expense. A $7 million pre-tax gain from the divestiture of DARPA SETA work was excluded from non-GAAP results.

Third-quarter net bookings totaled $888 million, producing a book-to-bill ratio of 0.3x for the quarter and 1.1x on a trailing-12-month basis. Funded backlog declined 10% year-over-year due to a 32% drop in funded awards, but total backlog at year-end reached a record $38 billion, up 2% from the prior year. Management reported a meaningful pickup in award activity in December as customers cleared shutdown delays. The qualified pipeline for fiscal 2027 stood at nearly $53 billion as of December 31, reflecting broad-based growth of 12% in national security and 10% in civil markets.

The firm closed the quarter with $882 million in cash and a net leverage ratio of 2.5x adjusted EBITDA. Free cash flow was $248 million, supported by $261 million of operating cash flow and $13 million of capex. Capital deployment included $125 million in share repurchases, $67 million in dividends and $3 million in venture investments. The board approved a quarterly dividend of $0.59 per share. Interim CFO Kristine Martin Anderson narrowed full-year revenue guidance to $11.3 billion–$11.4 billion, adjusted EBITDA to $1.195 billion–$1.215 billion, adjusted EPS to $5.95–$6.15 and free cash flow to $825 million–$900 million, reflecting continued funding delays from the shutdown but stronger margin and EPS outlook.