Record third quarter revenue, operating
income, and net income
Revenue of $1.12 billion, up 3.5
percent
Operating income of $104.8 million, up 55.8
percent
Net income of $64.5 million, up 59.8
percent
Diluted EPS of $2.56
Contract awards of $1.4 billion
Operating cash flow of $98.7 million
CACI International Inc (NYSE: CACI), a leading information
solutions and service provider to the federal government, announced
results today for its third fiscal quarter ended March 31,
2018.
CEO Commentary and Outlook
Ken Asbury, CACI’s President and CEO, said, “Our fiscal third
quarter results continue to affirm our long-term strategy. We
delivered another strong quarter of organic revenue growth,
profitability, awards and cash flow. There is momentum across the
business which is delivering exceptional outcomes for our customers
and gives us continued confidence in our ability to deliver on our
long-term commitment to grow revenue organically and expand
margins. In addition, the improving budget backdrop should enhance
our ability to grow and generate shareholder value.”
Third Quarter Results as
Reported
(in millions except per-share data)
Q3, FY18 Q3, FY17
% Change Revenue $1,124.1
$1,086.4 3.5% Operating income
$104.8 $67.3
55.8% Net income $64.5
$40.4 59.8% Diluted earnings per
share $2.56 $1.61
59.0%
Third Quarter Results Excluding the
Impact of Tax Reform(1)
(in millions except per-share data)
Q3, FY18 Q3, FY17
% Change Revenue $1,124.1
$1,086.4 3.5% Operating income
$104.8 $67.3
55.8% Net income, excluding the impact of tax
reform(1) $58.8 $40.4
45.6% Diluted earnings per share excluding the
impact of tax reform(1) $2.33
$1.61 44.9%
(1) See Reconciliation of Net Income
to Non-GAAP Net Income excluding the impact of tax reform page
11.
Revenue for the third quarter of Fiscal Year 2018 (FY18)
increased compared to the third quarter of Fiscal Year 2017 (FY17),
driven primarily by on-contract growth of existing work and new
business wins. The higher operating income was due primarily to
improved program execution, particularly on fixed price programs,
one-time incentive fees and other one-time items. The increase in
net income was due to the factors noted above and the impact of the
passage of tax reform legislation. Cash provided by operations in
the quarter was $98.7 million.
Additional Financial Metrics
Q3, FY18
Q3, FY17 % Change
Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA), a non-GAAP measure (in millions)(1)
$122.9 $85.5
43.7% Days sales outstanding 62
58
(1) See Reconciliation of Net Income to
Earnings before Interest, Taxes, Depreciation and Amortization on
page 10.
Third Quarter Awards and Contract Funding Orders
Our contract awards in the quarter were $1.4 billion, which
excludes ceiling values of multi-award, indefinite delivery,
indefinite quantity (IDIQ) contracts. Approximately 40 percent of
our awards were for new business.
- A $145 million task order to support
the U.S. Army Intelligence and Security Command (INSCOM) Counter
Insurgency Targeting Program. The three-and-a-half-year,
single-award contract was awarded under INSCOM’s Global
Intelligence Support Services contract vehicle.
- A $94 million award to provide
enterprise IT solutions and services for a classified customer and
a $92 million award to support deployed intelligence efforts.
- A three-year, $85 million task order to
provide multi-capable systems integration support and quick
reaction capabilities to address urgent requirements from the
battlefield and support ground forces.
- A single-award, three-year contract,
with a ceiling value of $60 million, to provide advertising and
marketing support to the Army National Guard State Media Services
Program.
- A one-year task order, with a potential
value of approximately $41.5 million, to provide engineering
support services for the U.S. Army Intelligence and Information
Warfare Directorate’s Commercial Based Technology Analysis
program.
- $522 million in previously unannounced
classified awards on contracts with customers in the Intelligence
Community.
- A prime position on a 10-year,
multiple-award IDIQ contract, with a ceiling value of $17.5
billion, to support the Defense Information Systems Agency’s ENCORE
III information technology solutions program.
Contract funding orders in the third quarter were $1.1 billion.
Our total backlog at March 31, 2018 was $11.0 billion. Funded
backlog at March 31, 2018 was $1.9 billion.
Other Highlights
- CACI will establish a Shared Services
Center (SSC) in Oklahoma City, Oklahoma in July 2018. We will
optimize the delivery of company-wide support services, primarily
in the areas of contracts, procurement, human resources, finance,
information systems, and security. With the location’s cost
advantages and high-quality talent, the SSC will further enhance
CACI’s competitiveness and benefit our company, customers, and
shareholders.
- Chief Operating Officer John Mengucci
has been named to the FCW 2018 Federal 100, an elite list of
government and industry leaders who have positively transformed
federal IT. Mr. Mengucci was selected for his strategic leadership
and insight which were integral to CACI’s record-setting FY17
financial performance and our positioning for continued
growth.
- CACI Board of Directors member William
Scott Wallace, USA (Ret.) was honored with the Distinguished
Graduate Award from the U.S. Military Academy at West Point. The
award is conferred upon graduates who embody West Point’s motto:
“Duty, Honor, Country.”
- Dr. J.P. (Jack) London, CACI Executive
Chairman and Chairman of the Board, was named a National
Association of Corporate Directors (NACD) Governance Fellow. The
NACD is the premier organization and authority for boardroom
practices and advancing exemplary board leadership. NACD’s
Fellowship program is the association’s highest credential for
corporate directors and governance professionals.
Nine Months Results as Reported
(in millions except per-share data)
Nine Months,
FY18
Nine Months,
FY17
% Change Revenue $3,297.8
$3,217.2 2.5% Operating
income $260.4 $217.2
19.9% Net income $249.3
$119.4 108.8% Diluted
earnings per share $9.88
$4.77 107.1%
Nine Months Results Excluding the
Impact of Tax Reform(1)
(in millions except per-share data)
Nine Months,
FY18
Nine Months,
FY17
% Change Revenue $3,297.8
$3,217.2 2.5% Operating
income $260.4 $217.2
19.9% Net income excluding the impact of tax
reform(1) $151.4 $119.4
26.7% Diluted earnings per share excluding the
impact of tax reform(1) $6.00
$4.77 25.7%
(1) See Reconciliation of Net Income to
non-GAAP Net Income excluding the impact of tax reform on page
11
Revenue in the nine months of FY18 increased compared to the
year earlier period due primarily due to on-contract growth of
existing work and new business wins. Operating income increased
primarily due to higher profitability in existing work and new
business, higher award fees, one-time incentive fees and the other
items we already noted. Net income increased primarily due to the
factors noted above and the impact of the passage of tax reform
legislation. Net cash provided by operations in the nine months of
FY18 was $254.5 million, 17.6 percent higher than net cash provided
by operations in the nine months of FY17. Adjusted EBITDA, a
non-GAAP measure, for the nine months of FY18 was $312.3 million,
14.6 percent higher than adjusted EBITDA of $272.5 million for the
nine months of FY17.
CACI Reiterates its FY18 Annual Guidance
We are reiterating the FY18 guidance we revised on March 18,
2018. Investors are reminded that the recent tax reform legislation
is expected to add approximately $100 million to net income, which
was incorporated in our previous guidance and is also reflected in
the current guidance. The table below summarizes our FY18
expectations and represents our views as of May 2, 2018.
(In millions except for tax rate and
earnings per share)
Fiscal Year 2018
Guidance
Revenue $4,400 - $4,500 Net income
$285 - $291 Effective corporate tax rate
-3.4% Diluted earnings per share
$11.26 - $11.50 Diluted weighted average shares
25.3
Conference Call Information
We have scheduled a conference call for 8:30 AM Eastern Time
Thursday, May 3, 2018 during which members of our senior management
team will be making a brief presentation focusing on third 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
http://investor.caci.com/news/#upcomingevent, at the scheduled
time. 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 Relations tab.
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 18,600 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: legal, regulatory, and political change
as a result of transitioning to a new presidential administration
that could result in economic uncertainty; changes in U.S. federal
agencies, current agreements with other nations, foreign events, or
any other events which may affect the global economy; 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
potential impact of the announcement or consummation of a proposed
transaction and our 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 Nine Months
Ended 3/31/2018 3/31/2017 % Change
3/31/2018 3/31/2017 % Change Revenue $ 1,124,100
$ 1,086,418 3.5 % $ 3,297,774 $ 3,217,228
2.5 % Costs of revenue Direct costs 728,444 732,224 -0.5 %
2,195,282 2,165,766 1.4 % Indirect costs and selling expenses
273,145 269,237 1.5 % 788,569 780,397 1.0 % Depreciation and
amortization 17,717 17,703 0.1 %
53,563 53,898 -0.6 % Total costs of revenue
1,019,306 1,019,164 0.0 %
3,037,414 3,000,061 1.2 % Operating income
104,794 67,254 55.8 % 260,360 217,167 19.9 % Interest expense and
other, net 10,566 12,107 -12.7 %
32,769 36,921 -11.2 % Income before income
taxes 94,228 55,147 70.9 % 227,591 180,246 26.3 % Income taxes
29,729 14,790 101.0 % (21,749 )
60,806 -135.8 % Net income $ 64,499 $ 40,357
59.8 % $ 249,340 $ 119,440 108.8 %
Basic earnings per share $ 2.62 $ 1.65 58.3 % $ 10.14 $ 4.90 107.0
% Diluted earnings per share $ 2.56 $ 1.61 59.0 % $ 9.88 $ 4.77
107.1 % Weighted average shares used in per share
computations: Basic 24,656 24,419 24,588 24,382 Diluted 25,234
25,106 25,229 25,034
Statement of Operations Data
(Unaudited) Quarter Ended Nine Months
Ended 3/31/2018 3/31/2017 % Change
3/31/2018 3/31/2017 % Change Operating income margin
9.3 % 6.2 % 7.9 % 6.8 % Tax rate 31.6 % 26.8 % -9.6 % 33.7 % Net
income margin 5.7 % 3.7 % 7.6 % 3.7 % Adjusted EBITDA* $
122,927 $ 85,515 43.7 % $ 312,326 $ 272,547 14.6 % Adjusted EBITDA
Margin 10.9 % 7.9 % 9.5 % 8.5 % *See Reconciliation of Net
Income to Earnings before Interest, Taxes, Depreciation and
Amortization on page 10.
Selected Financial Data (Continued) CACI
International Inc Condensed Consolidated Balance Sheets
(Unaudited) (Amounts in thousands)
3/31/2018 6/30/2017 ASSETS: Current assets
Cash and cash equivalents $ 55,970 $ 65,539 Accounts receivable,
net 820,042 757,341 Prepaid expenses and other current assets
77,335 57,022 Total current assets 953,347 879,902
Goodwill and intangible assets, net 2,853,234 2,812,806
Property and equipment, net 100,756 91,749 Other long-term assets
140,063 126,625 Total assets $ 4,047,400 $ 3,911,082
LIABILITIES AND SHAREHOLDERS' EQUITY: Current
liabilities Current portion of long-term debt $ 94,438 $ 53,965
Accounts payable 138,597 62,874 Accrued compensation and benefits
234,532 239,741 Other accrued expenses and current liabilities
160,104 170,164 Total current liabilities 627,671
526,744 Long-term debt, net of current portion 989,462
1,177,598 Other long-term liabilities 372,192 413,019
Total liabilities 1,989,325 2,117,361
Shareholders' equity 2,058,075 1,793,721 Total
liabilities and shareholders' equity $ 4,047,400 $ 3,911,082
Selected Financial Data
(Continued) CACI International Inc Condensed
Consolidated Statements of Cash Flows (Unaudited) (Amounts in
thousands)
Nine Months Ended 3/31/2018
3/31/2017 CASH FLOWS FROM OPERATING ACTIVITIES: Net
income $ 249,340 $ 119,440
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 53,563 53,898 Amortization of
deferred financing costs 3,311 3,371 Loss on disposal of fixed
assets - 975 Stock-based compensation expense 18,183 16,114
(Benefit) provision for deferred income taxes (69,405 ) 6,773
Equity in earnings from unconsolidated ventures - (167 ) Other -
(1,545 )
Changes in operating assets and
liabilities net of effect of business acquisitions
Accounts receivable, net (53,410 ) 62,360 Prepaid expenses and
other assets (11,916 ) (3,895 ) Accounts payable and accrued
expenses 68,505 (31,706 ) Accrued compensation and benefits (12,047
) (7,013 ) Income taxes receivable and payable (572 ) (4,082 )
Other liabilities 8,945 1,955 Net cash
provided by operating activities 254,497
216,478
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (31,810 ) (34,941 ) Purchases of businesses,
net of cash acquired (50,368 ) (5,786 ) Proceeds from net working
capital refund of acquired business - 13,619 Proceeds from equity
method investments - 4,681 Other (38 ) 1,597
Net cash used in investing activities (82,216 )
(20,830 )
CASH FLOWS FROM FINANCING ACTIVITIES: Net
payments under credit facilities (150,974 ) (178,474 ) Payment of
contingent consideration (11,553 ) - Proceeds from employee stock
purchase plans 3,673 3,334 Repurchases of common stock (3,802 )
(3,367 ) Payment of taxes for equity transactions (20,692 )
(10,580 ) Net cash used in financing activities
(183,348 ) (189,087 ) Effect of exchange rate changes on
cash and cash equivalents 1,498 (1,272 ) Net
(decrease) increase in cash and cash equivalents (9,569 ) 5,289
Cash and cash equivalents, beginning of period 65,539
49,082 Cash and cash equivalents, end of period $
55,970 $ 54,371
Selected
Financial Data (Continued) Revenue by Customer Type
(Unaudited) Quarter Ended
(dollars in thousands)
3/31/2018
3/31/2017
$ Change
% Change Department of Defense $ 747,203 66.5
% $ 700,212 64.4 % $ 46,991 6.7 % Federal Civilian Agencies 299,309
26.6 % 320,269 29.5 % (20,960 ) -6.5 % Commercial and other
77,588 6.9 % 65,937 6.1 %
11,651 17.7 % Total $ 1,124,100
100.0 % $ 1,086,418 100.0 % $ 37,682
3.5 %
Nine Months Ended
(dollars in thousands)
3/31/2018
3/31/2017
$ Change
% Change Department of Defense $ 2,181,495
66.1 % $ 2,077,088 64.5 % $ 104,407 5.0 % Federal Civilian Agencies
902,075 27.4 % 942,115 29.3 % (40,040 ) -4.3 % Commercial and other
214,204 6.5 % 198,025 6.2
% 16,179 8.2 % Total $ 3,297,774
100.0 % $ 3,217,228 100.0 % $ 80,546
2.5 %
Revenue by Contract Type
(Unaudited) Quarter Ended
(dollars in thousands)
3/31/2018
3/31/2017
$ Change
% Change Cost reimbursable $ 558,937 49.7 % $
526,350 48.4 % $ 32,587 6.2 % Fixed price 368,491 32.8 % 349,722
32.2 % 18,769 5.4 % Time and materials 196,672
17.5 % 210,346 19.4 % (13,674 )
-6.5 % Total $ 1,124,100 100.0 % $ 1,086,418
100.0 % $ 37,682 3.5 %
Nine Months Ended
(dollars in thousands)
3/31/2018 3/31/2017
$ Change
% Change Cost reimbursable $ 1,662,066 50.4 %
$ 1,556,012 48.4 % $ 106,054 6.8 % Fixed price 1,092,871 33.1 %
1,054,176 32.7 % 38,695 3.7 % Time and materials 542,837
16.5 % 607,040 18.9 %
(64,203 ) -10.6 % Total $ 3,297,774
100.0 % $ 3,217,228 100.0 % $ 80,546
2.5 %
Revenue Received as a Prime versus
Subcontractor (Unaudited) Quarter Ended
(dollars in thousands)
3/31/2018
3/31/2017
$ Change
% Change Prime $ 1,053,017 93.7 % $ 1,007,952
92.8 % $ 45,065 4.5 % Subcontractor 71,083 6.3
% 78,466 7.2 % (7,383 )
-9.4 % Total $ 1,124,100 100.0 % $ 1,086,418
100.0 % $ 37,682 3.5 %
Nine
Months Ended (dollars
in thousands)
3/31/2018 3/31/2017
$ Change
% Change Prime $ 3,085,992 93.6 % $ 2,989,051
92.9 % $ 96,941 3.3 % Subcontractor 211,782
6.4 % 228,177 7.1 % (16,395 )
-7.2 % Total $ 3,297,774 100.0 % $ 3,217,228
100.0 % $ 80,546 2.5 %
Selected Financial Data (Continued)
Contract Funding
Orders Received (Unaudited) Quarter Ended
(dollars in thousands)
3/31/2018
3/31/2017
$ Change
% Change Contract Funding Orders $ 1,099,394 $ 1,138,263 $
(38,869 ) -3.4 %
Nine Months Ended
(dollars in thousands)
3/31/2018
3/31/2017
$ Change
% Change Contract Funding Orders $ 3,322,097 $ 3,052,857 $
269,240 8.8 %
Reconciliation of Net Income to Adjusted
Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA)(Unaudited)
The Company views Adjusted EBITDA and Adjusted EBITDA margin,
both 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. These non-GAAP measures should not be
considered in isolation or as a substitute for performance measures
prepared in accordance with GAAP.
Quarter Ended Nine Months Ended
(dollars in thousands)
3/31/2018
3/31/2017 % Change 3/31/2018
3/31/2017 % Change Net
income $ 64,499 $ 40,357 59.8 % $ 249,340 $ 119,440 108.8 % Plus:
Income taxes 29,729 14,790 101.0 % (21,749 ) 60,806 -135.8 %
Interest income and expense, net 10,566 12,170 -13.2 % 32,769
37,088 -11.6 % Depreciation and amortization 17,717 17,703 0.1 %
53,563 53,898 -0.6 % Earnout adjustments 416
495 -16.0 % (1,597 )
1,315 -221.4 % Adjusted
EBITDA $ 122,927 $ 85,515
43.7 % $ 312,326 $ 272,547
14.6 %
Quarter Ended Nine Months Ended
(dollars in thousands)
3/31/2018
3/31/2017 % Change 3/31/2018
3/31/2017 % Change
Revenue, as reported $ 1,124,100 $ 1,086,418 3.5 % $ 3,297,774 $
3,217,228 2.5 % Adjusted EBITDA 122,927
85,515 43.7 % 312,326
272,547 14.6 % Adjusted
EBITDA margin 10.9 % 7.9 %
9.5 % 8.5 %
Selected Financial Data (Continued)
Reconciliation of Net Income Excluding the
Impact of Tax Reform(Unaudited)
The Company views Net Income excluding the impact of Tax Reform,
a non-GAAP measure, as an important indicator of performance,
consistent with the manner in which management measures and
forecasts the Company’s performance. Net Income excluding the
impact of Tax Reform is defined as GAAP Net Income adjusted to
exclude the impact of Tax Reform. We believe this is an important
calculation to show company performance without the benefits of Tax
Reform. Management is incented to perform via metrics without the
impact of Tax Reform. This non-GAAP measure should not be
considered in isolation or as a substitute for performance measures
prepared in accordance with GAAP.
Three
Months Nine Months (Amounts in thousands, except per
share amounts)
3/31/2018 3/31/2018 Net
Diluted Net Diluted Income
EPS Income EPS Net
Income, as reported $ 64,499 $ 2.56 $ 249,340 $ 9.88 Tax reform
benefit from lower tax rate and other items (5,729 )
(0.23 ) (12,829 ) (0.50 )
Net Income before remeasurement and
transition tax reform adjustments
$ 58,770 $ 2.33 $ 236,511 $ 9.38 Remeasurement of deferred tax
liabilities - - (94,831 ) (3.76 ) Transition tax on foreign
earnings - - 9,676
0.38 Net income, excluding
impact of tax reform $ 58,770 $ 2.33 $
151,356 $ 6.00
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180502006516/en/
CACI International IncCorporate Communications and Media:Jody
BrownExecutive Vice President, Public Relations(703)
841-7801jbrown@caci.comorInvestor Relations:David DragicsSenior
Vice President, Investor Relations(866)
606-3471ddragics@caci.com
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