Record first quarter revenue of $1.07
billion, up 30.5 percent
Net income of $36.7 million, up 5.9
percent
Contract awards of $1.9 billion
Reiterates FY17 annual guidance
CACI International Inc (NYSE:CACI), a leading information
solutions and service provider to the federal government, announced
results today for its first fiscal quarter ended September 30,
2016.
CEO Commentary and Outlook
Ken Asbury, CACI’s President and CEO, said, “I am pleased with
our first quarter performance and results and the strong start to
our fiscal year. We benefited from increased material purchases,
accelerated contract modifications, and excellent contract
performance. We won significant awards across all markets, with key
wins, this quarter alone, that will drive growth in six of our
eleven market areas. National Security Solutions (NSS) continues to
be a strong contributor to our performance. We are reiterating our
Fiscal 2017 guidance.”
First Quarter Results
(in millions except per-share data) Q1, FY17
Q1, FY16 % Change Revenue
$1,073.3 $822.4 30.5% Operating income
$69.7 $64.5 8.0% Net
income $36.7 $34.6 5.9%
Diluted earnings per share $1.47 $1.40
5.0%
Revenue, operating income, and net income for the first quarter
of Fiscal Year 2017 (FY17) increased compared to the first quarter
of Fiscal Year 2016 (FY16) driven by revenue of $254.3 million from
the NSS acquisition. The higher than planned operating and net
income was due primarily to core CACI contract performance, and the
timing of certain contract actions. Cash provided by operations in
the quarter was $57.8 million.
Additional Financial Metrics
Q1, FY17 Q1, FY16
% Change Adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA), a non-GAAP measure (in
millions) $88.2 $79.3
11.3% Diluted adjusted earnings per share, a non-GAAP measure
$2.07 $1.87 10.7% Days
sales outstanding 59 58
First Quarter Awards, Contract Funding Orders, and Other
Highlights
Our contract awards in the quarter were $1.9 billion, which
excludes ceiling values of multi-award indefinite delivery,
indefinite quantity (IDIQ) contracts. Approximately 20 percent of
our awards were for new business.
Key awards in the quarter included:
- A $144 million prime contract award
with a classified customer.
- A $93 million prime contract to provide
tactical communications engineering and maintenance support
services to the U.S. Immigration and Customs Enforcement (ICE).
This four-and-a-half-year contract expands both the scope and size
of CACI’s ICE support and increases the company’s business in its
Communications market area.
- A prime position on a multiple-award
IDIQ contract to provide background investigation fieldwork
services to the Office of Personnel Management (OPM). The five-year
contract represents continuing work for CACI’s Investigation and
Litigation Support market area.
- A prime position in the Full-Motion
Video functional area of the $978 million Multi-Intelligence
Analytical and Collection Support Services multiple-award IDIQ with
the National Geospatial-Intelligence Agency. CACI has also received
the first task order to be awarded under the IDIQ, a five-year, $29
million contract to deliver full-motion video analysis. This is new
work for CACI in its Intelligence Services market area.
- A prime position on a $480 million
multiple-award IDIQ contract for the Office of the Assistant
Secretary of Defense for Special Operations and Low Intensity
Conflict supporting Counter Narcotics and Global Threats. This
four-year contract represents new work for CACI in multiple market
areas, primarily Intelligence Systems and Support.
- Five IDIQs worth a combined ceiling
value of approximately $495 million with another classified
customer, and on which CACI has already won more than $44 million
in task orders.
- A single-award IDIQ contract, with a
ceiling value of $77 million, to provide communications systems,
satellite communications, and network support services to the Space
and Naval Warfare Systems Center Atlantic in support of the U.S.
Special Operations Command and other joint combat commands. The
four-year contract represents continuing work in CACI’s
Communications market area.
Not included in the awards received in the quarter is the $446
million Consolidated AFSCN Modifications, Maintenance and
Operations (CAMMO) contract to provide operations, maintenance, and
sustainment of the U.S. Air Force Satellite Control Network
(AFSCN). The single-award, seven-year contract represents new work
for CACI, expanding the company’s presence in its Command and
Control market area. This award was originally made in the fourth
quarter of our FY16, protested, and successfully resolved in our
favor.
Contract funding orders in the first quarter were $1.2 billion.
Our total backlog at September 30, 2016 was $11.5 billion compared
with $11.0 billion at the end of the fourth quarter of FY16. Funded
backlog at September 30, 2016 was $2.4 billion compared with $2.3
billion at June 30, 2016.
We enhanced our management team by adding two key leaders:
- Jennifer Mehall as Senior Vice
President leading CACI’s Background Investigations team supporting
OPM. Ms. Mehall is well known in the OPM community and brings a
strong track record of successful support for this customer.
- Antoine (Tony) Azar as Senior Vice
President leading CACI’s Health team. Mr. Azar brings proven
leadership experience in managing large-scale health services
organizations in support of CACI’s expanding Health market
business.
CACI Board of Directors member William L. Jews was named among
the Most Influential Black Corporate Directors, the definitive
listing of African-American executives, influencers, and achievers
proactively impacting corporate America, by Savoy Magazine.
CACI, the Association of Old Crows, and the Center for Security
Policy sponsored the well-attended Ninth Annual Asymmetric Threat
Symposium: “Offset Strategies to Prevail Against Asymmetric
Threats.” A report will also be published with highlights of the
proceedings.
CACI Reiterates Its FY17 Guidance
We are reiterating the FY17 revenue and net income guidance we
issued on August 17, 2016, and we are adjusting our guidance for
diluted earnings per share and diluted weighted average shares. The
table below summarizes our FY17 guidance ranges and represents our
views as of October 26, 2016:
(In millions except for tax rate and
earnings per share)
Current Fiscal Year 2017
Guidance
Previous Fiscal Year 2017
Guidance
Revenue $4,050 - $4,250 $4,050 - $4,250
Net income $150 - $160 $150 - $160
Effective corporate tax rate 37.5%
38.0% Diluted earnings per share $5.98 - $6.37
$6.02 - $6.43 Diluted weighted average shares
25.1 24.9
Conference Call Information
We have scheduled a conference call for 8:30 AM Eastern Time
Thursday, October 27, 2016 during which members of our senior
management team will be making a brief presentation focusing on
first quarter results and operating trends followed by a
question-and-answer session. You can listen to the conference call
and view the accompanying exhibits over the Internet by logging on
to our homepage, www.caci.com, at the scheduled time, or you may
dial 1-888-771-4371 and enter the confirmation code 43443847. A
replay of the call will also be available over the Internet and can
be accessed through our homepage (www.caci.com) by clicking on the
CACI Investor Info button.
CACI provides information solutions and services in support of
national security missions and government transformation for
Intelligence, Defense, and Federal Civilian customers. A Fortune
magazine World’s Most Admired Company in the IT Services industry,
CACI is a member of the Fortune 1000 Largest Companies, the Russell
2000 Index, and the S&P SmallCap600 Index. CACI’s sustained
commitment to ethics and integrity defines its corporate culture
and drives its success. With approximately 20,000 employees
worldwide, CACI provides dynamic career opportunities for military
veterans and industry professionals to support the nation’s most
critical missions. Join us! www.caci.com.
There are statements made herein which do not address historical
facts and, therefore, could be interpreted to be forward-looking
statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such statements are subject to
factors that could cause actual results to differ materially from
anticipated results. The factors that could cause actual results to
differ materially from those anticipated include, but are not
limited to, the following: regional and national economic
conditions in the United States and globally; terrorist activities
or war; changes in interest rates; currency fluctuations;
significant fluctuations in the equity markets; changes in our
effective tax rate; failure to achieve contract awards in
connection with re-competes for present business and/or competition
for new business; the risks and uncertainties associated with
client interest in and purchases of new products and/or services;
continued funding of U.S. government or other public sector
projects, based on a change in spending patterns, implementation of
spending cuts (sequestration) under the Budget Control Act of 2011,
or any legislation that amends or changes discretionary spending
levels under that act; changes in budgetary priorities or in the
event of a priority need for funds, such as homeland security;
government contract procurement (such as bid protest, small
business set asides, loss of work due to organizational conflicts
of interest, etc.) and termination risks; the results of government
audits and reviews conducted by the Defense Contract Audit Agency,
the Defense Contract Management Agency, or other governmental
entities with cognizant oversight; individual business decisions of
our clients; paradigm shifts in technology; competitive factors
such as pricing pressures and/or competition to hire and retain
employees (particularly those with security clearances); market
speculation regarding our continued independence; material changes
in laws or regulations applicable to our businesses, particularly
in connection with (i) government contracts for services, (ii)
outsourcing of activities that have been performed by the
government, and (iii) competition for task orders under Government
Wide Acquisition Contracts (GWACs) and/or schedule contracts with
the General Services Administration; the ability to successfully
integrate the operations of our recent and any future acquisitions;
our own ability to achieve the objectives of near term or long
range business plans; and other risks described in our Securities
and Exchange Commission filings.
CACI-Financial
Selected Financial Data CACI
International Inc Condensed Consolidated Statements of
Operations (Unaudited) (Amounts in thousands, except per share
amounts)
Quarter Ended 9/30/2016
9/30/2015 % Change Revenue $ 1,073,280 $ 822,442 30.5% Costs
of revenue Direct costs 728,221 537,424 35.5% Indirect costs and
selling expenses 257,338 205,700 25.1% Depreciation and
amortization 18,063 14,811 22.0% Total costs of
revenue 1,003,622 757,935 32.4% Operating income
69,658 64,507 8.0% Interest expense and other, net 12,489
9,182 36.0% Income before income taxes 57,169 55,325 3.3%
Income taxes 20,506 20,693 -0.9% Net income $ 36,663
$ 34,632 5.9% Basic earnings per share $ 1.51 $ 1.43 5.3%
Diluted earnings per share $ 1.47 $ 1.40 5.0% Weighted
average shares used in per share computations: Basic 24,340 24,208
Diluted 24,928 24,721
Statement of Operations Data
(Unaudited) Quarter Ended 9/30/2016
9/30/2015 % Change Operating income margin 6.5% 7.8% Tax
rate 35.9% 37.4% Net income margin 3.4% 4.2% Adjusted
EBITDA* $ 88,239 $ 79,269 11.3% Adjusted EBITDA margin 8.2% 9.6%
Adjusted net income $ 51,522 $ 46,170 11.6% Diluted adjusted
earnings per share $ 2.07 $ 1.87 10.7%
* See Reconciliation of Net Income to Earnings before Interest,
Taxes, Depreciation and Amortization and to Adjusted Net Income on
page 9.
Selected Financial Data (Continued)
CACI International Inc Condensed Consolidated
Balance Sheets (Unaudited) (Amounts in thousands)
9/30/2016 6/30/2016 ASSETS: Current assets
Cash and cash equivalents $ 49,668 $ 49,082 Accounts receivable,
net 727,182 803,817 Prepaid expenses and other current assets
83,850 68,939 Total current assets 860,700 921,838
Goodwill and intangible assets, net 2,846,504 2,860,715
Property and equipment, net 83,602 81,362 Other long-term assets
121,403 123,426 Total assets $ 3,912,209 $ 3,987,341
LIABILITIES AND SHAREHOLDERS' EQUITY: Current
liabilities Current portion of long-term debt $ 53,965 $ 53,965
Accounts payable 55,016 95,270 Accrued compensation and benefits
216,848 228,362 Other accrued expenses and current liabilities
176,275 187,579 Total current liabilities 502,104
565,176 Long-term debt, net of current portion 1,344,716
1,402,079 Other long-term liabilities 420,268 412,773
Total liabilities 2,267,088 2,380,028
Shareholders' equity 1,645,121 1,607,313 Total
liabilities and shareholders' equity $ 3,912,209 $ 3,987,341
Selected Financial Data (Continued)
CACI International Inc Condensed Consolidated Statements
of Cash Flows (Unaudited) (Amounts in thousands)
Three Months Ended 9/30/2016 9/30/2015 CASH
FLOWS FROM OPERATING ACTIVITIES: Net income $ 36,663 $ 34,632
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 18,063 14,811 Amortization of
deferred financing costs 1,128 577 Loss on disposal of fixed assets
727 - Stock-based compensation expense 4,897 3,638 Provision for
deferred income taxes 11,846 7,885 Equity in earnings from
unconsolidated ventures (103 ) 49
Changes in operating assets and
liabilities, net of effect of business acquisitions:
Accounts receivable, net 63,292 48,190 Prepaid expenses and other
assets (13,012 ) (10,869 ) Accounts payable and accrued expenses
(41,642 ) (9,945 ) Accrued compensation and benefits (11,418 )
(6,949 ) Income taxes receivable and payable (14,421 ) (785 ) Other
liabilities 1,757 (1,931 ) Net cash provided
by operating activities 57,777 79,303
CASH FLOWS FROM INVESTING ACTIVITIES: Capital
expenditures (11,235 ) (4,479 ) Purchase of business, net of cash
acquired (2,921 ) (2,767 ) Proceeds from net working capital refund
of acquired business 13,619 - Proceeds from equity method
investments 4,681 - Other 481 (765 ) Net cash
provided by (used in) investing activities 4,625
(8,011 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments under credit facilities (58,491 ) (74,741 ) Proceeds
from employee stock purchase plans 1,182 801 Repurchases of common
stock (1,085 ) (794 ) Payment of taxes for equity transactions
(2,848 ) (2,340 ) Other - 4 Net cash
used in financing activities (61,242 ) (77,070 )
Effect of exchange rate changes on cash and cash equivalents
(574 ) (587 ) Net increase (decrease) in cash and cash
equivalents 586 (6,365 ) Cash and cash equivalents, beginning of
period 49,082 35,364 Cash and cash
equivalents, end of period $ 49,668 $ 28,999
Selected Financial Data (Continued)
Revenue by Customer Type (Unaudited) Quarter
Ended (dollars in
thousands)
9/30/2016 9/30/2015
$ Change
% Change
Department of Defense $ 692,203 64.5 % $ 543,519 66.1 % $ 148,684
27.4 % Federal Civilian Agencies 313,793 29.2 % 225,423 27.4 %
88,370 39.2 % Commercial and other 67,284 6.3
% 53,500 6.5 %
13,784 25.8 % Total $ 1,073,280
100.0 % $ 822,442 100.0 %
$
250,838 30.5 %
Revenue by Contract
Type (Unaudited) Quarter Ended
(dollars in thousands)
9/30/2016
9/30/2015 $ Change
% Change Cost reimbursable $ 534,582 49.8 % $ 387,998
47.2 %
$
146,584 37.8 % Fixed price 343,313 32.0 % 289,301 35.2 % 54,012
18.7 % Time and materials 195,385 18.2 %
145,143 17.6 %
50,242 34.6 % Total $ 1,073,280
100.0 % $ 822,442 100.0 %
$ 250,838 30.5 %
Revenue Received as
a Prime versus Subcontractor (Unaudited) Quarter Ended
(dollars in thousands)
9/30/2016 9/30/2015
$ Change % Change Prime $
996,457 92.8 % $ 742,578 90.3 % $ 253,879 34.2 % Subcontractor
76,823 7.2 % 79,864
9.7 % (3,041 )
-3.8 % Total $ 1,073,280 100.0 % $
822,442 100.0 % $ 250,838
30.5 %
Contract Funding Orders Received (Unaudited)
Quarter Ended
(dollars in thousands)
9/30/2016
9/30/2015 $ Change
% Change Contract Funding Orders $ 1,162,891 $
1,128,476 $ 34,415 3.0 %
Direct Costs by Category (Unaudited) Quarter
Ended (dollars in
thousands)
9/30/2016 9/30/2015
$ Change % Change Direct
labor $ 334,928 46.0 % $ 270,464
50.3 % $ 64,464 23.8 % Other
direct costs 393,293 54.0 %
266,960 49.7 % 126,333
47.3 % Total direct costs $ 728,221
100.0 % $ 537,424 100.0 %
$ 190,797 35.5 %
Selected Financial
Data (Continued) Reconciliation of Net Income
to Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) and to Adjusted Net Income
(Unaudited)
The Company views Adjusted EBITDA,
Adjusted EBITDA margin, Adjusted Net Income and Diluted Adjusted
Earnings Per Share, all of which are defined as non-GAAP measures,
as important indicators of performance, consistent with the manner
in which management measures and forecasts the Company’s
performance. Adjusted EBITDA is a commonly used
non-GAAP measure when comparing our results with those of other
companies. We define Adjusted EBITDA as GAAP net income
plus net interest expense, income taxes, depreciation and
amortization, and earnout adjustments. We consider
Adjusted EBITDA to be a useful metric for management and investors
to evaluate and compare the ongoing operating performance of our
business on a consistent basis across reporting periods, as it
eliminates the effect of non-cash items such as depreciation of
tangible assets, amortization of intangible assets primarily
recognized in business combinations, as well as the effect of
earnout gains and losses, which we do not believe are indicative of
our core operating performance. Adjusted EBITDA margin
is adjusted EBITDA divided by revenue. We define
Adjusted Net Income as GAAP net income plus stock-based
compensation expense, depreciation and amortization, amortization
of financing costs, and earnout adjustments, net of related tax
effects. We believe Adjusted Net Income is an important
measure of long-term value and is used by investors to measure our
performance. This measure in particular assists readers
in further understanding our results and trends from
period-to-period by removing certain non-cash items that do not
impact the cash flow performance of our
business. Diluted Adjusted Earnings Per Share is
Adjusted Net Income divided by diluted weighted-average shares, as
reported. Adjusted EBITDA and Adjusted Net Income as
defined by us may not be computed in the same manner as similarly
titled measures used by other companies. These non-GAAP
measures should not be considered in isolation or as a substitute
for performance measures prepared in accordance with GAAP.
Quarter Ended (dollars in thousands)
9/30/2016 9/30/2015 % Change Net
income $ 36,663 $ 34,632 5.9 % Plus: Income taxes 20,506
20,693 -0.9 % Interest expense, net 12,489 9,182 36.0 %
Depreciation and amortization 18,063 14,811 22.0 % Earnout
adjustments 414 - Other 104 (49 )
-312.2 % Adjusted EBITDA $ 88,239 $ 79,269
11.3 %
Quarter Ended (dollars in
thousands)
9/30/2016 9/30/2015 %
Change Revenue, as reported $ 1,073,280 $ 822,442 30.5 %
Adjusted EBITDA $ 88,239 $ 79,269 11.3
% Adjusted EBITDA margin 8.2 % 9.6 %
Quarter Ended (dollars in thousands)
9/30/2016 9/30/2015 % Change Net
income $ 36,663 $ 34,632 5.9 % Plus: Stock-based compensation 4,897
3,638 34.6 % Depreciation and amortization 18,063 14,811 22.0 %
Amortization of financing costs 1,128 577 95.5 % Earnout
adjustments 414 - Less: Related tax effect (9,643 )
(7,488 ) 28.8 % Adjusted net income $ 51,522
$ 46,170 11.6 %
Quarter Ended
(shares in thousands)
9/30/2016 9/30/2015
% Change
Diluted weighted average shares, as
reported
24,928 24,721 Diluted earnings per share $ 1.47 $
1.40 5.0 % Diluted adjusted earnings per share $ 2.07
$ 1.87 10.7 %
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CACI International IncCorporate Communications and Media:Jody
Brown, Executive Vice President, Public
Relations703-841-7801jbrown@caci.comorInvestor Relations:David
Dragics, Senior Vice President, Investor
Relations866-606-3471ddragics@caci.com
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