LDOS
#I think that what we are seeing right now is that it will reach a positive growth rate during the year.
It is possible that it will ---+ one scenario that we have got is that it will be up on a full-year basis.
But right now it is kind of ---+ it is part of the range of scenarios, <UNK>.
We are liking what we see.
The one thing that I probably should note that I meant to mention during my response to <UNK>'s question is that the more and more we see the benefits of the integration of these businesses, we have them operationally together today, it is going to be a little more difficult for us to calculate growth rate on the legacy IS&GS business.
Because we are making choices on where to bid new work between legacy Leidos and legacy IS&GS based on capabilities, cost structure, competitive rate structure, etc.
And so, we can give you some flavor on that in the short run, but it is going to be a little bit cloudier later in the year and certainly into next year.
And as a reminder, we are going to come up with a new segmentation in our Q1 call that we'll be describing during that call and that will actually be a segment structure that is based on how we are running the business starting this year.
I think that on the domestic side, <UNK>, we don't view it as being a situation where it is turning around.
And in fact we are seeing consistent strength in the bid pipeline, the win rate that is consistent with kind of how the budget and outlays are looking out of our customer set.
So we are viewing that as being a business that will grow at or hopefully with a more competitive cost structure going beyond 2017 better than the budget growth rate.
Once again, we are kind of waiting and seeing.
We are thrilled that Shulkin was unanimously approved as the VA administrator, which ---+ and I didn't check any records, but it may be unprecedented that someone has been unanimously approved.
And we obviously knew him from before all the way back to DHA.
And he walks into the VA with clearly some mandates and some things he has to get done.
How VA provides healthcare is ---+ by the way, they provide some of the best healthcare in the world.
And they work on an old EHR EMR system called AHLTA VistA which runs on an old database system called MUMPS.
And I think the issues at VA are not uniquely around the EMR EHR but really have to do with their IT backbone writ large, which includes scheduling and it includes a sort of an ERP view, electronic health records is part of that.
And Shulkin did mention ---+ we have a program that came over as part as IS&GS which has to do with scheduling in the VA and Shulkin did address that in his confirmation hearing, that he was going to put some energy behind that program.
And we have seen a small task order get funded really just since the beginning of the year.
But it is small numbers.
Let me speak in a bigger generality.
I think that we will see emphasis in VA, that the government will spend more money to take care of our veterans, as I think we all believe they should.
I think Shulkin will try to drive efficiencies into the VA system and that probably is good for us and good for other contractors like us that have a strong services support position to the agency.
Well, let's see, depreciation for the full year I believe is going to be about [$45 million].
And then the amortization relative to the deal for the full year about $272 million.
About 20%.
That is about a normal number.
And it makes sense when you think about our average contract length being roughly five years.
We are looking at something close to 3 ---+ about 3.0.
And as we said before, we are really pleased with the velocity that we are delevering.
We weren't planning on making the level of debt pay down in the back end of 2016 that we did.
And that is partly because we are able to squeeze some more cash out of the balance sheet, but also because the business is performing really well.
And with the restructuring of the debt, as I mentioned earlier, it gives us an opportunity to reevaluate ways to reduce our cost of capital.
We don't talk in detail about win rates because they ---+ it is really hard for you to glean anything meaningful out of them as a single data point.
What I will tell you though is that just in the back end of the year we have seen some very positive signs in win rates for new work, which has historically been some of the toughest places to have win rates that are up in the 30% to 40% range.
The other thing is takeaways.
One of the things that we are looking at increasingly are opportunities to take work away from our competitors that wouldn't be possible without the improvement that we have got to our cost structure and our bid structure.
So, the improvement that we have seen just in 2016, the backend of 2016 on the win rate on takeaways has been very encouraging.
And so, as we start to see those through the $28 billion that we have got in evaluation today, as well as the things that we are going to be submitting, we are feeling pretty good about it.
Well, I think that in the past we have talked about them as though there is an order and that was very deliberate.
I think that now that we have got our debt down to a blended rate of about 4% and we are making very strong progress toward getting down to 3.0%, there is certainly some opportunity for us to set our sights on any other accretive transactions that would be either M&A or stock buyback at the right time.
And so, we are already starting to map out a strategy that could involve any of those.
And for the right thing we would not be completely closed to doing something material before we are down at a 3.0% level.
It just depends on what it is and where that opportunity is on the accretion horizon.
No, just to be clear, those are flattening out.
Those had been a big ---+ they had been great growth drivers.
We are looking for those to flatten, as I said, and then for the growth to be coming from the existing ---+ or the pipeline of opportunities that I just spoke about.
Yes, I think the point there was a year ago we ---+ on a quarter-to-quarter basis, now we are looking a year back where we had a full quarter of those programs.
And so year-over-year we are not seeing the growth that we would have seen a year ago under those two programs, but they are both still very strong programs and doing quite well.
And don't forget that ---+ remember we do have the heavy construction business that we divested in 2016 that contributed roughly $100 million worth of revenue.
Which will be out of 2017.
Thanks, Rob, and thank you all for joining us on the call this morning.
We look forward to sharing more updates with you on our Q1 call.
Thanks.
