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REVENUE | 6 Months Ended
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Jul. 03, 2026
Revenue from Contract with Customer [Abstract] |
REVENUE | REVENUE Remaining Performance Obligations Remaining performance obligations represent firm orders by the customer and exclude potential orders under indefinite delivery and indefinite quantity (IDIQ) contracts, unexercised contract options and contracts awarded to us that are being protested by competitors with the U.S. Government Accountability Office (GAO) or in the U.S. Court of Federal Claims (COFC) for which a stop work order has been received by the Company. The level of order activity related to programs can be affected by the timing of government funding authorizations and their project evaluation cycles. Year-over-year comparisons could, at times, be impacted by these factors, among others. The Company's contracts are multi-year contracts and typically include an initial period of one year or less with annual one year (or less) option periods. The number of option periods varies by contract, and there is no guarantee that an option period will be exercised. The right to exercise an option period is at the sole discretion of the U.S. government when the Company is the prime contractor or of the prime contractor when the Company is a subcontractor. The Company expects to recognize a substantial portion of its performance obligations as revenue within the next 12 months. However, the U.S. government or the prime contractor may cancel any contract at any time through a termination for convenience, including by not exercising its renewal option, or for cause. Substantially all the Company's contracts have terms that would permit recovery of all or a portion of the Company's incurred costs and fees for work performed in the event of a termination for convenience. Remaining performance obligations are presented in the following table:
|  |  |  | As of
|  |  |  | July 3, |  |  |  | December 31,
(In millions) |  |  |  | 2026 |  |  |  | 2025
Performance Obligations |  |  |  | $ | 3,731 |  |  |  |  | $ | 3,375 |
As of July 3, 2026, the Company expects to recognize approximately 53% of the remaining performance obligations as revenue in 2026 and the majority of the remainder of the balance as revenue in 2027 and 2028. Contract Estimates The impact of adjustments in contract estimates on the Company's operating income can be reflected in either revenue or cost of revenue. Cumulative adjustments for the three months ended July 3, 2026 and June 27, 2025 increased operating income by $1.8 million and $1.4 million, respectively. Cumulative adjustments for the six months ended July 3, 2026 and June 27, 2025 increased operating income by $0.7 million and $5.6 million, respectively. For the three and six months ended July 3, 2026, the net adjustments to operating income increased revenue by $2.8 million and $5.4 million, respectively. For the three and six months ended June 27, 2025, the net adjustments to operating income increased revenue by $4.9 million and $19.7 million, respectively. Revenue by Category Generally, the sales price elements for the Company's contracts are cost-plus, cost-reimbursable, firm-fixed-price and time-and-materials, all of which are commonly identified with a single contract. On a cost-plus contract, the Company is paid allowable incurred costs plus a profit, which can be fixed or variable depending on the contract’s fee arrangement, up to funding levels predetermined by the Company's customers. On cost-plus contracts, the Company does not bear the risks of unexpected cost overruns, provided that incurred costs do not exceed the predetermined funded amounts. Most of the Company's cost-plus contracts also contain a firm-fixed-price element. Cost-plus contracts with award and incentive fee provisions are primarily variable contract fee arrangements. Award fees provide for a fee based on actual performance relative to contractually specified performance criteria. Incentive fees are based on the relationship between total allowable and target cost. Most of the Company's contracts include a cost-reimbursable element to capture costs of consumable materials required for the program. Typically, these costs do not bear fees. On a firm-fixed-price contract, the Company agrees to perform the contractual statement of work for a predetermined contract price. A firm-fixed-price contract typically offers higher profit margin potential than a cost-plus contract, which is commensurate with the greater levels of risk assumed on a firm-fixed-price contract. Although a firm-fixed-price contract generally permits retention of profits if the total actual contract costs are less than the estimated contract costs, the Company bears the risk that increased or unexpected costs may reduce profit or cause the Company to sustain losses on the contract. Although the overall scope of work required under the contract may not change, profit may be adjusted as experience is gained and as efficiencies are realized or costs are incurred. On a time-and-materials contract, the Company is reimbursed for labor at fixed hourly rates and generally reimbursed separately for allowable materials, costs and expenses at cost. For this contract type, the Company bears the risk that labor costs and allocable indirect expenses are greater than the fixed hourly rate defined within the contract. Revenue by contract type is as follows:
|  |  |  | Three Months Ended |  | Six Months Ended |  |  |  |
|  |  |  |  |  |  |  | July 3, |  | June 27, |  | % |  | July 3, |  | June 27, |  | % |  |  |  |  |  |  |  |  |  |  |  |
(In thousands) |  |  |  |  |  |  |  | 2026 |  | 2025 |  | Change |  | 2026 |  | 2025 |  | Change |  |  |  |  |  |  |  |  |  |  |  |
Cost-plus and cost-reimbursable |  |  |  |  |  |  |  | $ | 735,218 |  |  | $ | 647,582 |  |  | 13.5 | % |  | $ | 1,487,623 |  |  | $ | 1,270,653 |  |  | 17.1 | % |  |  |  |  |  |  |  |  |  |  |  |
Firm-fixed-price |  |  |  |  |  |  |  | 389,650 |  |  | 405,091 |  |  | (3.8) | % |  | 762,409 |  |  | 769,177 |  |  | (0.9) | % |  |  |  |  |  |  |  |  |  |  |  |
Time-and-materials |  |  |  |  |  |  |  | 131,775 |  |  | 25,657 |  |  | 413.6 | % |  | 260,739 |  |  | 54,423 |  |  | 379.1 | % |  |  |  |  |  |  |  |  |  |  |  |
Total revenue |  |  |  |  |  |  |  | $ | 1,256,643 |  |  | $ | 1,078,330 |  |  |  |  | $ | 2,510,771 |  |  | $ | 2,094,253 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenue by geographic region in which the contract is performed is as follows:
|  |  |  | Three Months Ended |  | Six Months Ended |  |  |  |
|  |  |  |  |  |  |  | July 3, |  | June 27, |  | % |  | July 3, |  | June 27, |  | % |  |  |  |  |  |  |  |  |  |  |  |
(In thousands) |  |  |  |  |  |  |  | 2026 |  | 2025 |  | Change |  | 2026 |  | 2025 |  | Change |  |  |  |  |  |  |  |  |  |  |  |
United States |  |  |  |  |  |  |  | $ | 797,512 |  |  | $ | 632,357 |  |  | 26.1 | % |  | $ | 1,608,066 |  |  | $ | 1,209,815 |  |  | 32.9 | % |  |  |  |  |  |  |  |  |  |  |  |
Middle East |  |  |  |  |  |  |  | 324,550 |  |  | 320,317 |  |  | 1.3 | % |  | 638,883 |  |  | 638,662 |  |  | — | % |  |  |  |  |  |  |  |  |  |  |  |
Asia |  |  |  |  |  |  |  | 86,566 |  |  | 76,793 |  |  | 12.7 | % |  | 162,703 |  |  | 152,771 |  |  | 6.5 | % |  |  |  |  |  |  |  |  |  |  |  |
Europe |  |  |  |  |  |  |  | 48,015 |  |  | 48,863 |  |  | (1.7) | % |  | 101,119 |  |  | 93,005 |  |  | 8.7 | % |  |  |  |  |  |  |  |  |  |  |  |
Total revenue |  |  |  |  |  |  |  | $ | 1,256,643 |  |  | $ | 1,078,330 |  |  |  |  | $ | 2,510,771 |  |  | $ | 2,094,253 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenue by contract relationship is as follows:
|  |  |  | Three Months Ended |  | Six Months Ended |  |  |  |
|  |  |  |  |  |  |  | July 3, |  | June 27, |  | % |  | July 3, |  | June 27, |  | % |  |  |  |  |  |  |  |  |  |  |  |
(In thousands) |  |  |  |  |  |  |  | 2026 |  | 2025 |  | Change |  | 2026 |  | 2025 |  | Change |  |  |  |  |  |  |  |  |  |  |  |
Prime contractor |  |  |  |  |  |  |  | $ | 1,206,600 |  |  | $ | 1,008,340 |  |  | 19.7 | % |  | $ | 2,404,062 |  |  | $ | 1,972,086 |  |  | 21.9 | % |  |  |  |  |  |  |  |  |  |  |  |
Subcontractor |  |  |  |  |  |  |  | 50,043 |  |  | 69,990 |  |  | (28.5) | % |  | 106,709 |  |  | 122,167 |  |  | (12.7) | % |  |  |  |  |  |  |  |  |  |  |  |
Total revenue |  |  |  |  |  |  |  | $ | 1,256,643 |  |  | $ | 1,078,330 |  |  |  |  | $ | 2,510,771 |  |  | $ | 2,094,253 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenue by customer is as follows:
|  |  |  | Three Months Ended |  | Six Months Ended |  |  |  |
|  |  |  |  |  |  |  | July 3, |  | June 27, |  | % |  | July 3, |  | June 27, |  | % |  |  |  |  |  |  |  |  |  |  |  |
(In thousands) |  |  |  |  |  |  |  | 2026 |  | 2025 |  | Change |  | 2026 |  | 2025 |  | Change |  |  |  |  |  |  |  |  |  |  |  |
Army |  |  |  |  |  |  |  | $ | 422,112 |  |  | $ | 457,443 |  |  | (7.7) | % |  | $ | 862,226 |  |  | $ | 899,579 |  |  | (4.2) | % |  |  |  |  |  |  |  |  |  |  |  |
Navy |  |  |  |  |  |  |  | 375,172 |  |  | 354,282 |  |  | 5.9 | % |  | 758,093 |  |  | 700,394 |  |  | 8.2 | % |  |  |  |  |  |  |  |  |  |  |  |
Air Force |  |  |  |  |  |  |  | 215,190 |  |  | 107,822 |  |  | 99.6 | % |  | 383,023 |  |  | 206,948 |  |  | 85.1 | % |  |  |  |  |  |  |  |  |  |  |  |
Other |  |  |  |  |  |  |  | 244,169 |  |  | 158,783 |  |  | 53.8 | % |  | 507,429 |  |  | 287,332 |  |  | 76.6 | % |  |  |  |  |  |  |  |  |  |  |  |
Total revenue |  |  |  |  |  |  |  | $ | 1,256,643 |  |  | $ | 1,078,330 |  |  |  |  | $ | 2,510,771 |  |  | $ | 2,094,253 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contract Balances The timing of revenue recognition, billings, and cash collections results in billed and unbilled accounts receivable (contract assets) and customer advances and deposits (contract liabilities) on the Condensed Consolidated Balance Sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms at periodic intervals (e.g., biweekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company may receive advances or deposits from its customers before revenue is recognized, resulting in contract liabilities. These advance billings and payments are not considered significant financing components because they are frequently intended to ensure that both parties are in conformance with the primary contract terms. These assets and liabilities are reported on the Condensed Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. As of July 3, 2026 and December 31, 2025, the Company had contract assets of $649.1 million and $628.5 million, respectively. Contract assets primarily consist of unbilled receivables which represent rights to consideration for work completed but not billed as of the reporting date. The balance of unbilled receivables consists of costs and fees that are: (i) billable immediately; (ii) billable on contract completion; or (iii) billable upon other specified events, such as the resolution of a request for equitable adjustment. Refer to Note 4, Receivables for additional information regarding the composition of the Company's receivable balances. As of July 3, 2026 and December 31, 2025, contract liabilities, included in other accrued liabilities in the Condensed Consolidated Balance Sheets, were $97.8 million and $100.7 million, respectively. As of January 1, 2025, the Company had contract assets of $620.5 million and contract liabilities of $98.7 million.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 7 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-7 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 9 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-9 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-10 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-15 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-13 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 606 -Publisher FASB -URI https://asc.fasb.org/606/tableOfContent + Details
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