Equity Research

Industry Update — November 25, 2024

Aerospace & Defense

Government Services

A&D Weekly: WWD Earnings

Equity Analyst(s)
Our Call
What's next in A&D? WWD Q4 results initial guidance Monday. For FY25 we are slightly Matthew Akers, CFA
Equity Analyst | Wells Fargo Securities, LLC
ahead in Aero with 10% growth (consensus HSD), and our Industrial EBIT outlook is below
on China OH, though lower gas price could support a strong start to the year. Luke Leone
Associate Equity Analyst | Wells Fargo Securities, LLC

Further to run in aerospace: We prefer the suppliers over BA as the impact of slower
737/787 rate ramps is limited, the aerospace cycle is still years away from peak, and
aftermarket likely holds up well on strong flying demand and an attractive mix of older
aircraft in the fleet. We are OW-rated on GE, HWM, HXL, and RTX, and are UW on BA
where we see peak FCF in the coming years driven by new aircraft investment with further
risk to cash flow.

Cautious on defense/Fed IT: Spending remains capped by the debt ceiling deal, another
debt ceiling negotiation is coming up in January, and spending trends look unlikely to
change post election. Margins could start to improve beyond 2024. For services, we are
skeptical that DOGE will result in meaningful spending cuts, and estimate the stocks
now price in flat to lower spending. We are OW-rated on BAH, CACI, LDOS, and LHX in
defense/Fed IT.

Still Too Early in Space: We see a strong multi-year growth outlook for space, although
many companies must first survive years of cash outflows. Within Space, we are Equal
Weight on RKLB, Underweight on SPCE.

All estimates/forecasts are as of 11/24/2024 unless otherwise stated. 11/25/2024 4:00:00EST. Please see page 13 for rating definitions, important disclosures and required analyst certifications.
Wells Fargo Securities, LLC does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could
affect the objectivity of the report and investors should consider this report as only a single factor in making their investment decision.
Industry Update Equity Research

Exhibit 1 - Wells Fargo A&D Coverage Forced Ranking

Price Upside /
Stock Rating Price Target Downside Rationale

•2025 consensus margins look low to us, with incrementals in the low 30s
Most •Limited capex need over coming years with strong FCF conversion of >100% through at least 2026
HXL OW $61 $78 27%
Preferred •Aerospace composite is likely to grow 6x compared to commercial aero at 2-3x as next generation
narrowbodies use much more composite

•GTF-powered aircraft peaked in Q2, and investors should start to look past the near-term GTF
costs
RTX OW $121 $140 16% • Defense margin recovery as Raytheon breakeven EACs add ~250bps (to 11.5%) while returning to
pre-merger EAC level adds ~450bps (to 13%)
•Defense business should improve on program transitions and better international mix

•Upside to growth outlook if exam volumes come through in Health/Civil

LDOS OW $166 $230 39%
•Further upside to relative valuation if company can continue to execute under new CEO Tom Bell

•Differentiated business model should continue to drive growth above peers

BAH OW $149 $206 38%
•We think BAH historical premium vs peers is justified
•Should benefit from OE, widebody strength in later part of post-COVID recovery (vs aftermarket,
narrowbody earlier benefit)
HWM OW $118 $129 9% •Gaining content from engine durability issues driving higher volume of spares and increased
content on upgrades
•Wheels remains softer on lower truck builds

•OSI's security segment (~80% of profits) is poised for strong growth in addition to potential market
share gain from Smiths Group and LDOS as peers focus on other areas
OSIS OW $165 $172 4% •We see margin expansion opportunity as revenue shifts towards services vs OE. Longer term, OSIS
turnkey product offerings and new software should come in at accretive margins
•Potential benefiary of border security spending under new Trump Administration

•Highest margin upside in our coverage from EACs returning to normal (~10% to EPS).
•Guidance looks beatable in 2024 as margins improve on LHX Next savings, better mix, improving
LHX OW $248 $295 19%
EACs
•Divestiture of CAS business pulls forward deleveraging by ~6 months

•Highest aftermarket exposure in the group which drives strong pricing/margins and less downside
if macro slows
GE OW $181 $210 16%
•Strong management team with a clean balance sheet provides flexible capital deployment
•Opportunity to cut costs by 300-500 bps of SG&A in coming years

•FY25 growth likely comes in ahead of expectations on EITaaS, Spectral, optical comms ramps
CACI OW $469 $637 36%
•Mix should benefit margins as CACI pursues more profitable technology work

•Tracking below 2024 guidance on G700 deliveries, unclear when Marine supply chain issues clear.
GD EW $282 $322 14% •Hard to see upside to consensus Gulfstream 2025-26 unlesss orders meaningfully accelerate.
•Strong cash into 2025 on G700 inventory and AJAX contract receivable

•Company has done a nice job managing guidance/investor expectations, now a consistent
beat/raise story
SAIC EW $124 $157 26%
•Capital deployment to become more of a factor with leverage at target level
•Needs to fix its recompete win rate, which has weighed on growth in recent years

•Industrial business appears to be improving on recent operational improvement initiatives

WWD EW $176 $177 1% •China natural gas truck visibility remains limited, but could be upside to guidance
•Guided munitions business close to trough

•Highly differentiated business model with potential M&A upside

TDG EW $1,260 $1,500 19% •Leverage at the low end of historical range provides plenty of capital to deploy
•Beneficiary of lower interest rates as TDG carries some floating rate debt
•Likely the best growth portfolio in large cap defense, but margin recovery appears slower than
expected as inflation hits B-21 and other programs
NOC EW $497 $565 14%
•Significant profit and FCF growth in later part of the decade as large programs transition to
production

•Modest growth in coming years verus peers

LMT EW $542 $602 11% •Consensus doesn't appear to fully factor in 2025-26 MFC classified program impacts
•Pension contributions restart in 2025, however the company may prepay these early in 2024.

•Established launch/space infrastructure provider with significant growth potential

RKLB EW $23.26 $13.5 -42% •Neutron rocket (2025 launch) could open up a much larger launch TAM
•Sentiment could improve as breakeven approaches in 2025+

•BA missed its generational FCF opportunity due to delays and additional costs. We now see FCF
peaking in 2027 due to new aircraft investment.
•Further share dilution is likely with current debt levels consuming all cash through 2030.
BA UW $149 $85 -43%
•SPR integration, softening airlines yields, FAA pressure, 777x delays, and Starliner issues may
weigh on cash.
•Asset sales could help accelerate balance sheet repair.

Least •Getting to breakeven with cash on hand looks difficult

SPCE UW $7.15 $1.00 -86%
Preferred •Likely to remain volatile with breakeven years away

Source: FactSet and Wells Fargo Securities, LLC. Prices as of 11/22/2024.

2 | Equity Research
A&D Weekly: WWD Earnings Equity Research

Recent Research
Fed IT Selloff Looks Overdone, But Bear Case Hard To Disprove
Takeaways from Our Debt Restructuring Expert Call
A&D Implications from a Trump Victory
Examining Credit Metrics Post Raise; How Much Can Asset Sales Help?
Sentiment Improves On Offer #3, Still ~80/20 Against
Capital Raise Covers Near-Term Liquidity Needs, Further Work to Do Beyond
Pre-Announcement Gives Short-Term Cash Reprieve
Union Talks Break Off Again—Equity Raise on the Way
Reviewing BA Equity Raise/Cost Cut Scenarios and Supplier Impact
Boeing Strike Thoughts—Market Could Still Be Underestimating Risks
No Longer an Operations Story — Debates on Our Downgrade and Union Deal Thoughts
Cash Opportunity out the Door—Downgrade to Underweight
A&D Rate Cut Analysis—Most Positive for NOC/SAIC/LHX/BAH/TDG
Election Implications for A&D—Negative for BA, Still Tough for Defense
A&D Day 2 Takeaways from the 2024 Wells Fargo Industrials Conference
A&D Day 1 Takeaways from the 2024 Wells Fargo Industrials Conference
Defense & Fed IT: Looking for Reasons to Get Positive in Defense
HXL: Upside to Numbers, CEO Fears Overdone—Upgrade to OW
Aerospace:
Aftermarket Survey: Lower in November as Volumes Slow
Production Tracker: Slowdown in Effect Across Commercial Aero
September Passenger Traffic +7% YOY, Still 23% Below Pre-COVID Trend
Bizjet Traffic Continues to Drift Lower
Fleet Monitor: Deliveries, Retirements Still Low, Parked Planes Back to Pre-COVID Range
GTF Recall Tracker—AOGs Tick Lower Again
Tracking 777X Flight Test Progress
Takeaways from Aero Engines Expert Call — Positive for GE, RTX, HWM
SPR Offer Probably Good Enough; Removes One of Many Overhangs on Stock
Expert Call Takeaways: Election Probably Won't Save Defense
GE: Cost Opportunity Likely 2x+ Company Target — Raising Estimates/PT
RTX: Potential Upside Beyond the Recall; Upgrade to OW
GE: Deep Dive into Commercial Aero Engines: GE Aero Deserves a Higher Multiple
Defense/Services:
Fed IT Monthly: DoD Outlays Better than Civil in Q3
Finds Another Attractive Acquisition at a Good Price
Defense: Senate Markup Analysis - GD/LMT Win Again
Defense: House Markup Boosts LMT/GD Programs, Trims RTX/BA/NOC

Equity Research | 3
Industry Update Equity Research

D.C. Bus Tour Takeaways - CACI/LMT/NOC

Deep Dive into DoD's Spending Projections Through FY29
Fed IT Protest Monitor: Pricing Opportunity Remains for CACI/LDOS
FY25 Budget: FRA Caps Hit F-35, B-21, VA Class Funding

4 | Equity Research
A&D Weekly: WWD Earnings Equity Research

Exhibit 2 - WF vs Consensus Estimates

WF Estimates Consensus Difference
This This Next This This Next This This Next
Metric Qtr Year Year Qtr Year Year Qtr Year Year Differences
Aerospace
BA FCF ($3.7B) ($13.9B) ($3.3B) ($4.0B) ($14.3B) ($3.4B) NM NM NM Slower delivery ramp
HWM EPS $0.66 $2.60 $3.05 $0.71 $2.67 $3.19 -7.4% -2.8% -4.6%
HXL EPS $0.52 $2.03 $2.61 $0.51 $2.02 $2.51 +2.2% +0.6% +4.0% Ahead on margins
GE EPS $1.12 $4.39 $5.14 $1.05 $4.32 $5.24 +6.4% +1.8% -2.0% Worse mix in'25 (OE vs AM)
RTX EPS $1.42 $5.62 $6.27 $1.38 $5.58 $6.07 +3.1% +0.8% +3.3%
TDG EBITDA $1.15B $4.17B $4.72B $1.05B $4.17B $4.70B +9.6% - +0.5%
WWD EPS $1.26 $5.97 $5.60 $1.28 $5.98 $5.84 -1.0% -0.2% -4.1% Assuming lower '25 China OH Sales
Defense
GD EPS $4.26 $13.75 $15.98 $4.46 $13.94 $16.00 -4.4% -1.4% -0.1% Assume miss 2024 G700 Target
LHX EPS $3.43 $13.11 $14.33 $3.45 $13.09 $14.30 -0.7% +0.2% +0.2% Cost savings/EAC benefit into 2025
LMT EPS $6.61 $26.65 $27.63 $6.61 $26.66 $27.81 +0.0% -0.0% -0.6%
NOC EPS $6.50 $26.18 $28.10 $6.35 $26.00 $28.05 +2.3% +0.7% +0.2%
Services
BAH EBITDA $0.32B $1.33B $1.45B $0.32B $1.33B $1.44B +0.2% +0.6% +0.5%
CACI EBITDA $0.22B $0.97B $1.05B $0.22B $0.96B $1.06B +2.9% +0.8% -0.5%
LDOS EBITDA $0.52B $2.16B $2.23B $0.48B $2.13B $2.15B +7.3% +1.7% +3.6% Better growth in '25
OSIS EPS $2.16 $9.27 $10.12 $2.36 $9.15 $10.06 -8.3% +1.3% +0.6%
SAIC EBITDA $0.18B $0.69B $0.71B $0.18B $0.72B $0.76B +1.5% -3.7% -5.9% Below on margin

Source: FactSet and Wells Fargo Securities, LLC Estimates

Stock Performance and Valuation

Exhibit 3 - 2024 YTD Stock/Index Performance

24% S&P 500

265% RKLB
119% HWM
76% GE
51% LDOS
45% RTX
40% CACI
35% TDG
27% WWD
20% LMT
18% LHX
14% BAH
10% GD
6% NOC
0% SAIC
-20% HXL
-44% BA
-86% SPCE

-150% -100% -50% 0% 50% 100% 150% 200% 250% 300%

Source: FactSet and Wells Fargo Securities, LLC . Prices as of 11/21/2024.

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Industry Update Equity Research

Exhibit 4 - 2023 Stock/Index Performance

24% S&P 500

96% GE
47% RKLB
38% HWM
37% BA
34% TDG
29% WWD
26% HXL
13% CACI
7% GD
5% LDOS
4% LHX
-1% SAIC
-2% BAH
-4% LMT
-13% NOC
-14% RTX
-30% SPCE

-40% -20% 0% 20% 40% 60% 80% 100% 120%

Source: FactSet and Wells Fargo Securities, LLC

Exhibit 5 - A&D Estimate Revisions
FY1 Revisions FY2 Revisions
Metric 1y 6m 3m 1m 1y 6m 3m 1m

Aerospace
BA FCF NM NM NM NM NM NM NM NM
GE EPS 18% 5% 3% 2% 10% 1% 1% 0%
HWM EPS 24% 12% 4% 3% 23% 10% 2% 2%
HXL EPS -18% -9% -4% -1% -22% -16% -10% -5%
TDG EPS 5% 4% 2% 1% -1% -3% -7% -5%
WWD EPS 18% 0% 0% 0% 0% -7% -2% 0%

Defense
GD EPS -7% -4% -4% -2% -2% -2% -2% -2%
LHX EPS -1% 1% 0% 0% -1% 1% 0% 0%
LMT EPS 0% 2% 1% 1% -1% 0% -2% -2%
NOC EPS 7% 5% 3% 3% 2% 2% 1% 1%
RTX EPS 3% 3% 2% 2% -4% 0% 0% 0%

Government Services
BAH EPS 15% 7% 4% 4% -2% 5% 6%
CACI EPS 6% 2% 3% 3% 8% 5% 5% 5%
LDOS EPS 31% 16% 10% 10% 24% 13% 10% 9%
SAIC EPS 7% 1% 2% 0% 5% 0% 1% 0%
Source: FactSet

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A&D Weekly: WWD Earnings Equity Research

Exhibit 6 - A&D Comp Sheet

Market P/E EV/EBITDA P/FCF PE ex Pension
Company Ticker Rating Price Cap (B) 2024E 2025E 2024E 2025E 2024E 2025E 2024E 2025E

Commercial Aero 28.0x 20.0x 12.9x 10.4x 32.1x 22.5x

Allegheny Technologies ATI n/a $58.16 $8.3 25.5x 20.0x 13.6x 11.9x 48.9x 26.9x
Boeing BA UW $143.41 $109.2 n/a 25.1x n/a n/a n/a n/a
Bombardier BBD n/a $100.81 $9.5 16.8x 10.7x 8.6x 7.2x 34.1x 7.7x
CAE CAE n/a $23.31 $7.2 26.8x 22.7x 11.8x 10.7x 23.2x 19.9x
Dassault AM n/a $15.78 $7.4 19.1x 15.8x 10.2x 9.7x 10.4x 9.7x
Embraer ERJ n/a $38.82 $7.0 17.9x 18.9x 11.1x 9.7x 24.0x 22.8x
HEICO HEI n/a $277.35 $33.2 75.9x 64.9x 34.6x 31.5x 54.2x 46.4x
Hexcel HXL OW $59.52 $4.7 29.3x 22.8x n/a n/a 28.3x 18.9x
Howmet Aerospace HWM OW $116.98 $48.0 45.1x 38.4x n/a n/a 54.0x 39.5x
Moog MOG n/a $220.32 $6.9 28.2x 26.7x 16.3x 14.7x 150.3x 41.8x
TransDigm TDG EW $1,240.13 $72.7 37.0x 33.7x 22.1x 19.4x 38.5x 32.4x
Woodward WWD EW $172.54 $10.3 28.9x 30.8x 18.4x 17.4x 30.1x 24.7x

A&D Multi-Industry 23.5x 21.4x 17.9x 15.0x 30.5x 22.5x

Carpenter Technology CRS n/a $180.71 $9.0 38.1x 26.6x 19.6x 15.0x 50.3x 30.9x
Honeywell HON n/a $226.09 $147.4 22.2x 20.5x 16.4x 15.0x 27.6x 23.0x
General Electric GE OW $178.70 $192.6 41.4x 34.1x 24.1x 21.5x 33.5x 30.3x
Raytheon Technologies RTX OW $120.53 $158.6 21.4x 19.2x n/a n/a 33.9x 21.9x 24.4x 20.9x
Teledyne TDY n/a $480.22 $21.9 24.7x 22.4x 17.9x 16.6x 22.8x 21.3x
Textron TXT n/a $83.96 $15.2 15.2x 12.6x 10.3x 9.9x 22.2x 15.9x

Large-Cap Defense 19.8x 17.6x 12.4x 11.5x 22.9x 21.6x 23.2x 20.5x
BAE Systems BA-LN n/a £66.97 £49.67 19.3x 17.0x 11.8x 10.6x 23.9x 21.2x
General Dynamics GD EW $279.93 $77.0 20.4x 17.5x n/a n/a 21.8x 15.2x 23.2x 19.6x
L3Harris Technologies LHX OW $246.60 $46.3 18.9x 17.0x 12.9x 12.5x 19.2x 18.0x 21.9x 18.9x
Lockheed Martin LMT EW $542.01 $126.7 20.3x 19.6x n/a n/a 20.3x 22.9x 27.9x 24.8x
Raytheon Technologies RTX OW $120.53 $158.6 21.4x 19.2x n/a n/a 33.9x 21.9x 24.4x 20.8x
Northrop Grumman NOC EW $496.41 $71.7 19.0x 17.7x n/a n/a 32.0x 23.2x 20.9x 20.5x

Small/Mid-Cap Defense 40.5x 38.7x 30.9x 26.1x 89.1x 54.8x

Aerovironment AVAV n/a $194.26 $5.6 55.7x 46.3x 36.6x 30.3x 124.9x 55.2x
BWX Technologies BWXT n/a $133.28 $11.9 41.4x 38.7x 25.7x 23.7x 48.6x 42.6x
Leonardo DRS DRS n/a $35.70 $9.2 39.7x 33.9x 24.0x 21.1x 49.5x 40.3x
Elbit Systems ESLT n/a $249.31 $11.1 35.4x 30.5x n/a n/a n/a 141.0x
Huntington Ingalls HII n/a $195.30 $7.4 13.9x 12.8x 11.2x 10.2x 139.8x 14.4x
Kratos Defense & Security KTOS n/a $26.24 $3.8 56.0x 44.6x 36.1x 30.4x n/a 169.3x
Mercury Systems MRCY n/a $39.98 $2.3 n/a 114.6x 299.0x 28.5x 89.1x 54.8x
OSI Systems OSIS OW $165.33 $2.7 20.3x 18.3x 13.1x 12.5x n/a 10.0x

Government Services 25.6x 22.1x 14.4x 12.7x 24.6x 22.2x

Amentum AMTM n/a $24.76 $5.5 47.9x 17.6x 8.9x 8.6x n/a 10.7x
Booz Allen Hamilton BAH OW $149.88 $18.4 27.3x 23.6x 18.3x 16.1x 95.9x 19.3x
CACI International CACI OW $475.48 $10.2 n/a n/a n/a n/a n/a n/a
Jacobs Solutions J n/a $135.43 $16.5 25.6x 22.1x 16.4x 13.4x 50.0x 33.2x
KBR KBR n/a $60.23 $7.7 18.5x 15.7x 11.7x 10.2x 17.8x 26.4x
Leidos LDOS OW $164.69 $21.6 16.0x 15.3x 11.8x 11.4x 16.6x 16.4x
Palantir PLTR n/a $61.36 $135.5 162.3x 132.1x 120.0x 95.6x 126.9x 105.5x
Parsons PSN n/a $99.39 $10.1 29.3x 25.5x 17.8x 15.7x 24.6x 22.2x
Science Applications Int'l SAIC EW $124.78 $6.1 n/a n/a 12.5x 12.1x n/a n/a
Vectrus VEC n/a $61.16 $2.0 14.7x 13.0x 9.8x 9.2x 12.8x 10.7x

Space
Planet Labs PL n/a $3.32 $0.9 n/a n/a n/a 46.2x 3.4x 2.9x
Rocket Lab RKLB EW $22.41 $10.1 n/a n/a n/a n/a n/a n/a
Virgin Galactic SPCE UW $6.72 $0.2 n/a n/a n/a n/a n/a n/a

Source: FactSet and Wells Fargo Securities, LLC estimates. Consensus estimates for stocks outside our
coverage. Prices as of 11/21/2024.

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Industry Update Equity Research

Company End-Market Breakdown

Exhibit 7 - Company End Market Exposure (% of Sales)
Commercial Commercial Business Defense/Space Defense Civil
Company Other
Aero OE Aero AM Jets Manufacturing Services Services
Aerospace
BA 43% 16% 41%
GE 22% 52% 26%
HWM 39% 10% 15% 36%
HXL 60% 30% 10%
RTX 47% 18% 35%
TDG 22% 32% 39% 7%
WWD 22% 19% 20% 39%
Defense
GD 20% 60% 9% 11%
LMT 99% 1%
LHX 89% 4% 7%
NOC 99% 1%
Government Services
BAH 64% 34% 3%
CACI 72% 23% 5%
LDOS 57% 37% 5%
SAIC 48% 50% 2%
Source: Company reports and Wells Fargo Securities, LLC. Financials based on latest annual reports or earnings/
investor presentation.

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A&D Weekly: WWD Earnings Equity Research

Aerospace
Exhibit 8 - IATA Traffic Recovery vs. Pre-COVID Trend
160
140
120
100
80
60
40
20
0
2017 2018 2019 2020 2021 2022 2023 2024 2025

Traffic Index (2019 = 100) Pre-COVID Trend Recovery Path

Source: IATA and Wells Fargo Securities, LLC estimates

Exhibit 9 - Domestic Traffic vs. Pre-COVID Trend
160
140
120
100
80
60
40
20
0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Source: IATA and Wells Fargo Securities, LLC Estimates

Exhibit 10 - International Traffic vs. Pre-COVID Trend
160
140
120
100
80
60
40
20
0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Source: IATA and Wells Fargo Securities, LLC Estimates

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Industry Update Equity Research

Defense
Exhibit 11 - Wells Fargo Defense Budget Forecast ($B)
1,200

1,000

800

600

400

200

0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025E
2026E
2027E
2028E
2029E
Source: DoD and Wells Fargo Securities, LLC estimates. Based on 051 DoD discretionary funding and includes
supplemental appropriations.
Exhibit 12 - L12M Defense Growth vs Modernization Outlays
12% 18%

Modernization Outlays
10% 15%
Defense Growth

8% 12%
6% 9%
4% 6%
2% 3%
0% 0%
-2% -3%
-4% -6%
Jul-20

Jul-21

Jul-22

Jul-23

Jul-24
Jan-20

Jan-21

Jan-22

Jan-23

Jan-24
Apr-20

Oct-20

Apr-21

Apr-22

Apr-23

Oct-23

Apr-24

Oct-24
Oct-19

Oct-21

Oct-22

Defense Growth Modernization Outlays

Source: DoD, Company Reports and Wells Fargo Securities, LLC estimates

10 | Equity Research
 -10%
5%

0%

-5%
15%

10%
-40%
-20%
0%
60%

20%
40%

-15%
-10%
5%
0%
-5%
15%
25%

10%
20%
Oct-18 Oct-18 Oct-18

Source: DoD
Source: DoD
Jan-19 Jan-19 Jan-19
Apr-19 Apr-19 Apr-19
Jul-19 Jul-19 Jul-19
A&D Weekly: WWD Earnings

Oct-19 Oct-19 Oct-19

Jan-20 Jan-20 Jan-20

Government Services
Apr-20 Apr-20 Apr-20

Exhibit 15 - O&M Outlays Growth

Jul-20 Jul-20 Jul-20
Oct-20 Oct-20 Oct-20

Source: DoD and Wells Fargo Securitites, LLC

Jan-21 Jan-21 Jan-21
Exhibit 13 - Modernization Outlays Growth

Civil
Apr-21 Apr-21 Apr-21

Growth - YOY
Growth - YOY
Jul-21 Jul-21 Jul-21
Oct-21 Oct-21 Oct-21

Exhibit 14 - Civil vs Defense O&M Outlays Growth (L3M)

Jan-22 Jan-22 Jan-22
Apr-22 Apr-22 Apr-22

Defense O&M
Jul-22 Jul-22 Jul-22

Growth - L3M
Oct-22 Oct-22 Oct-22
Growth - L3M

Jan-23 Jan-23 Jan-23

Apr-23 Apr-23 Apr-23
Jul-23 Jul-23 Jul-23
Oct-23 Oct-23 Oct-23
Jan-24 Jan-24 Jan-24
Apr-24 Apr-24 Apr-24
Jul-24 Jul-24 Jul-24
Oct-24 Oct-24 Oct-24

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Industry Update Equity Research

Exhibit 16 - Key Civil Agency Outlays Growth

20%
15%
10%
5%
0%
-5%
-10%
Oct-18

Oct-20

Oct-21

Oct-23

Oct-24
Jan-19
Apr-19

Oct-19
Jan-20
Apr-20

Jan-21

Jan-22
Apr-22

Oct-22
Jan-23
Apr-23

Jan-24
Jul-19

Jul-20

Apr-21
Jul-21

Jul-22

Jul-23

Apr-24
Jul-24
Growth - YOY Growth - L3M

Source: DoD. Includes DHS, FAA, NASA, NIH, NSF, VA.

Exhibit 17 - LinkedIn Head Counts (Indexed to 100 in December 2020)
143
138
133
128
123
118
113
108
103
98
Feb-21

Feb-23

May-23

Feb-24
May-21

May-22

May-24
Feb-22
Nov-21

Aug-22

Nov-22

Nov-23

Nov-24
Aug-21

Aug-23

Aug-24

BAH CACI LDOS SAIC

Source: LinkedIn and Wells Fargo Securities, LLC

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A&D Weekly: WWD Earnings Equity Research

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