Revenue of $1.5 billion, +15.9%
year-over-year
Net income of $80.6 million, +18.2%
year-over-year
Robust cash flow from operations
Contract awards of $1.4 billion
Reiterates Fiscal 2020 Guidance
CACI International Inc (NYSE: CACI), a leading provider of
expertise and technology to government enterprise and mission
customers, announced results today for its third fiscal quarter
ended March 31, 2020.
CEO Commentary and Outlook
John Mengucci, CACI’s President and CEO, said, “As our nation
navigates the COVID-19 pandemic, CACI is focused on taking all
necessary actions to ensure the health and safety of our employees,
to continue our unwavering commitment to our customers, to continue
to operate the company in a fiscally responsible manner, and to
support the communities in which we work and live.”
Mr. Mengucci continued, “Our third quarter financial results
were strong with robust revenue growth, strong profitability,
healthy cash flow, and high levels of contract awards. We are
well-positioned in a large addressable market, serving stable
government customers with enduring national security priorities
under long-term contracts. We remain confident in delivering on our
commitments of organic growth, margin expansion, and creating
enduring shareholder value.”
COVID-19: Impact and Resiliency
We estimate the impact from COVID-19 in our third quarter was
approximately $10 million of revenue, $6 million of operating
income, and $4.5 million of net income. This was driven primarily
by CACI employees and subcontractors unable to access facilities
due to COVID-19 and who could not telework.
Despite challenges from COVID-19, CACI’s business remains
operationally and financially resilient. CACI has a healthy balance
sheet, holds appropriate debt levels at 2.8 times our trailing
twelve-months EBITDA, and generates strong cash flow. In addition,
CACI has access to significant liquidity of about $835 million
through its credit facility with very manageable covenants.
Third Quarter Results
(in millions except earnings per
share and DSO)
Q3, FY20
Q3, FY19
% Change
Revenue
$1,465.6
$1,265.0
15.9%
Operating income
$113.7
$94.9
19.8%
Net income
$80.6
$68.1
18.2%
Diluted earnings per share
$3.16
$2.69
17.6%
Net cash provided by operating
activities excluding MARPA1
$124.7
$113.3
10.1%
Adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA), a non-GAAP
measure2
$141.4
$118.0
19.9%
Days sales outstanding (DSO)3
57
66
(1)
Third quarter FY19 and third
quarter FY20 net cash provided by operating activities exclude
CACI’s Master Accounts Receivable Purchase Agreement (MARPA). For
more details, see the Reconciliation of Net Cash Provided by
Operating Activities to Net Cash Provided by Operating Activities
Excluding MARPA on page 9 of this release.
(2)
See the Reconciliation of Net
Income to Adjusted Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA) on page 9 of this release.
(3)
The DSO calculations for third
quarter FY19 and third quarter FY20 exclude the impact of the
Company’s MARPA, which was 9 days and 8 days, respectively.
The year-over-year increase in Q3 FY20 net income was due to
higher revenue and operating income, partially offset by higher
interest expense and a higher effective tax rate. The increase in
cash from operations, excluding MARPA, was driven by higher net
income and lower DSO as a result of enhanced billing and
collections processes.
Third Quarter Contract Awards
Contract awards in Q3 FY20 totaled $1.4 billion. Approximately
50% of contract award value is for new business to CACI. These
awards exclude ceiling values of multi-award, indefinite delivery,
indefinite quantity (IDIQ) contracts. Some notable awards during
the quarter were:
- A six-year, single-award task order, with a ceiling value of
nearly $249 million, to provide mission expertise to U.S. Africa
Command (AFRICOM) for operations, planning, and training
support.
- A five-year, single-award task order, awarded under the
SeaPort-NxG contract vehicle, with a ceiling value of more than $83
million, by the U.S. Navy to provide expanded mission expertise,
including engineering, technical, and planning expertise to the
Portsmouth Naval Shipyard in Kittery, Maine.
- A prime position on a multiple-award, indefinite
delivery/indefinite quantity contract, with a ceiling value of $249
million, by the Naval Sea Systems Command, to provide mission
expertise related to analyses and initiatives that improve
effectiveness, efficiency, and affordability in ship design,
manufacturing, and lifecycle support.
- A five-year, six-month, if all options are exercised, single
award, indefinite-delivery/indefinite-quantity contract, with a
ceiling value of more than $199 million, to provide the U.S. Navy
with mission expertise to support special operations communications
systems, satellite communications and network support
services.
- In March 2020, CACI’s team assisted the Army in completing the
first deployment of the Integrated Personnel and Pay System-Army
(IPPS-A) application to the Army National Guard, bringing the total
number of users to more than 340,000. CACI has also begun to build
the next release of the IPPS-A application for the Reserve and
Active Duty Soldiers, which will increase the number of users to
approximately 1,200,000.
Total backlog as of March 31, 2020 was $19.9 billion compared
with $14.9 billion a year ago, an increase of 34%. Funded backlog
as of March 31, 2020 was $3.0 billion compared with $2.9 billion a
year ago, an increase of 3%.
Additional Highlights
- CACI appointed Susan M. "Sue" Gordon to CACI's Board of
Directors. Ms. Gordon has served in senior leadership positions
across numerous intelligence organizations. She brings more than 30
years of leadership across a broad spectrum of complex issues, most
notably in the development of innovative technology and
transformative outcomes for the Intelligence Community.
- CACI was honored by The Global M&A Network with two awards
for the successful acquisition of LGS Innovations: the M&A
Atlas award for Corporate Deal of the Year in the Large Market
category for its completion, and the Corporate Growth Dealmaker
Award for CACI Executive Vice President and Chief Development
Officer Michael Lewis for his role in its execution.
- Fortune magazine recognized CACI as one of the World's Most
Admired Companies for 2020, CACI's ninth time appearing on the
list. CACI ranked seventh among Information Technology Services
companies worldwide.
- CACI named Daniel Walsh, who most recently served as White
House Deputy Chief of Staff, a Corporate Strategic Advisor and
Senior Vice President to support the development of CACI's national
defense and homeland security business strategy. Mr. Walsh will
help to enhance CACI's position in the national security market and
help to expand key client relationships.
Reiterating FY20 Guidance
CACI’s business continues to perform well despite the COVID-19
pandemic. While there are some impacts and uncertainties as a
result of COVID-19, we believe these effects are reflected in our
previously-provided guidance ranges. The table below summarizes our
FY20 guidance and represents our views as of April 29, 2020.
(in millions except earnings per
share)
Current Fiscal Year 2020
Guidance
Previous Fiscal Year 2020
Guidance
Revenue
$5,600 - $5,800
$5,600 - $5,800
Net income
$305 - $325
$305 - $325
Diluted earnings per share
$11.91 - $12.70
$11.91 - $12.70
Diluted weighted average
shares
25.6
25.6
Net cash provided by operating
activities
at least $430
at least $430
Conference Call Information
We have scheduled a conference call for 8:30 AM Eastern Time
Thursday, April 30, 2020 during which members of our senior
management 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 webcast and view
the accompanying exhibits on CACI’s investor relations website at
http://investor.caci.com/news/#upcomingevent at the scheduled time.
A replay of the call will also be available on CACI’s investor
relations website at http://investor.caci.com/.
About CACI
CACI’s 23,000 talented employees are vigilant in providing the
unique expertise and distinctive technology that address our
customers’ greatest enterprise and mission challenges. Our culture
of good character, innovation, and excellence drives our success
and earns us recognition as a Fortune World’s Most Admired Company.
As a member of the Fortune 1000 Largest Companies, the Russell 1000
Index, and the S&P MidCap 400 Index, we consistently deliver
strong shareholder value. Visit us at www.caci.com.
There are statements made herein that 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 risk
factors that could cause actual results to be materially different
from anticipated results. These risk factors include, but are not
limited to, the following: our reliance on U.S. government
contracts, which includes general risk around the government
contract procurement process (such as bid protest, small business
set asides, loss of work due to organizational conflicts of
interest, etc.) and termination risks; significant delays or
reductions in appropriations for our programs and broader changes
in U.S. government funding and spending patterns; legislation that
amends or changes discretionary spending levels or budget
priorities, such as for homeland security or to address global
pandemics like COVID-19; legal, regulatory, and political change
from successive presidential administrations 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, including the impact of global
pandemics like COVID-19; 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; competitive factors such as pricing pressures
and/or competition to hire and retain employees (particularly those
with security clearances); failure to achieve contract awards in
connection with re-competes for present business and/or competition
for new business; regional and national economic conditions in the
United States and globally, including but not limited to: terrorist
activities or war, changes in interest rates, currency
fluctuations, significant fluctuations in the equity markets, and
market speculation regarding our continued independence; our
ability to meet contractual performance obligations, including
technologically complex obligations dependent on factors not wholly
within our control; limited access to certain facilities required
for us to perform our work, including during a global pandemic like
COVID-19; changes in tax law, the interpretation of associated
rules and regulations, or any other events impacting our effective
tax rate; changes in technology; 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 ability to achieve the objectives of
near term or long-term business plans; the effects of health
epidemics, pandemics and similar outbreaks may have material
adverse effects on our business, financial position, results of
operations and/or cash flows; and other risks described in our
Securities and Exchange Commission filings.
CACI-Earnings Release
CACI International Inc Condensed Consolidated Statements
of Operations (Unaudited) (Amounts in thousands, except per
share amounts)
Quarter Ended
Nine Months Ended
3/31/2020
3/31/2019
% Change
3/31/2020
3/31/2019
% Change
Revenue
$
1,465,600
$
1,264,958
15.9%
$
4,224,461
$
3,612,463
16.9%
Costs of revenue Direct costs
953,630
824,024
15.7%
2,737,378
2,397,633
14.2%
Indirect costs and selling expenses
371,135
324,828
14.3%
1,081,175
859,262
25.8%
Depreciation and amortization
27,159
21,198
28.1%
81,888
58,797
39.3%
Total costs of revenue
1,351,924
1,170,050
15.5%
3,900,441
3,315,692
17.6%
Operating income
113,676
94,908
19.8%
324,020
296,771
9.2%
Interest expense and other, net
14,087
13,466
4.6%
45,612
31,773
43.6%
Income before income taxes
99,589
81,442
22.3%
278,408
264,998
5.1%
Income taxes
19,012
13,297
43.0%
50,659
49,424
2.5%
Net income
$
80,577
$
68,145
18.2%
$
227,749
$
215,574
5.6%
Basic earnings per share
$
3.21
$
2.74
17.2%
$
9.11
$
8.69
4.8%
Diluted earnings per share
$
3.16
$
2.69
17.6%
$
8.94
$
8.50
5.2%
Weighted average shares used in per share computations:
Basic
25,078
24,866
25,012
24,819
Diluted
25,478
25,348
25,481
25,369
Statement of Operations Data
(Unaudited)
Quarter Ended
Nine Months Ended
3/31/2020
3/31/2019
3/31/2020
3/31/2019
% Change
% Change
Operating income margin
7.8%
7.5%
7.7%
8.2%
Tax rate
19.1%
16.3%
18.2%
18.7%
Net income margin
5.5%
5.4%
5.4%
6.0%
Adjusted EBITDA*
$
141,432
$
117,966
19.9%
$
410,645
$
357,983
14.7%
Adjusted EBITDA Margin
9.7%
9.3%
9.7%
9.9%
* See Reconciliation of Net Income to Adjusted Earnings
before Interest, Taxes, Depreciation and Amortization on page 9
Selected Financial Data (Continued) CACI
International Inc Condensed Consolidated Balance Sheets
(Unaudited) (Amounts in thousands)
3/31/2020
6/30/2019
ASSETS: Current assets Cash and cash equivalents
$
77,156
$
72,028
Accounts receivable, net
839,135
869,840
Prepaid expenses and other current assets
158,075
89,652
Total current assets
1,074,366
1,031,520
Goodwill and intangible assets, net
3,829,084
3,772,194
Property and equipment, net
169,378
149,676
Operating lease right-of-use assets
339,292
0
Other long-term assets
134,355
133,453
Total assets
$
5,546,475
$
5,086,843
LIABILITIES AND SHAREHOLDERS' EQUITY: Current
liabilities Current portion of long-term debt
$
46,920
$
46,920
Accounts payable
174,641
118,917
Accrued compensation and benefits
287,570
290,274
Other accrued expenses and current liabilities
270,034
235,611
Total current liabilities
779,165
691,722
Long-term debt, net of current portion
1,464,664
1,618,093
Other long-term liabilities
739,016
405,562
Total liabilities
2,982,845
2,715,377
Shareholders' equity
2,563,630
2,371,466
Total liabilities and shareholders' equity
$
5,546,475
$
5,086,843
Selected Financial Data (Continued) CACI
International Inc Condensed Consolidated Statements of Cash
Flows (Unaudited) (Amounts in thousands)
Nine Months Ended
3/31/2020
3/31/2019
CASH FLOWS FROM OPERATING ACTIVITIES: Net income
$
227,749
$
215,574
Reconciliation of net income to net cash provided by operating
activities: Depreciation and amortization
81,888
58,797
Non-cash lease expense
54,493
-
Amortization of deferred financing costs
1,762
1,796
Stock-based compensation expense
22,204
18,351
Deferred income taxes
39,527
(1,193
)
Changes in operating assets and liabilities, net of effect of
business acquisitions: Accounts receivable, net
36,433
85,995
Prepaid expenses and other assets
(35,461
)
(13,284
)
Accounts payable and other accrued expenses
27,638
101,473
Accrued compensation and benefits
(4,522
)
(18,536
)
Income taxes payable and receivable
(42,383
)
(1,945
)
Operating lease liabilities
(56,240
)
-
Long-term liabilities
4,737
5,813
Net cash provided by operating activities
357,825
452,841
CASH FLOWS FROM INVESTING ACTIVITIES: Capital
expenditures
(54,331
)
(29,545
)
Cash paid for business acquisitions, net of cash acquired
(102,437
)
(1,071,023
)
Other
-
1,875
Net cash used in investing activities
(156,768
)
(1,098,693
)
CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings
(payments) under credit facilities
(155,190
)
693,424
Payment of contingent consideration
(8,700
)
(616
)
Proceeds from employee stock purchase plans
5,463
4,265
Repurchases of common stock
(5,584
)
(4,310
)
Payment of taxes for equity transactions
(30,616
)
(18,837
)
Net cash provided by (used in) financing activities
(194,627
)
673,926
Effect of exchange rate changes on cash and cash equivalents
(1,302
)
(462
)
Net increase in cash and cash equivalents
5,128
27,612
Cash and cash equivalents, beginning of period
72,028
66,194
Cash and cash equivalents, end of period
$
77,156
$
93,806
Selected Financial Data (Continued) Revenue
by Customer Type (Unaudited)
Quarter Ended
(dollars in thousands)
3/31/2020
3/31/2019
$ Change
% Change
Department of Defense
$
1,037,242
70.8%
$
887,030
70.1%
$
150,212
16.9%
Federal Civilian Agencies
361,320
24.7%
318,374
25.2%
42,946
13.5%
Commercial and other
67,038
4.6%
59,554
4.7%
7,484
12.6%
Total
$
1,465,600
100.0%
$
1,264,958
100.0%
$
200,642
15.9%
Nine Months Ended
(dollars in thousands)
3/31/2020
3/31/2019
$ Change
% Change
Department of Defense
$
2,965,263
70.2%
$
2,540,093
70.3%
$
425,170
16.7%
Federal Civilian Agencies
1,067,342
25.3%
898,491
24.9%
168,851
18.8%
Commercial and other
191,856
4.5%
173,879
4.8%
17,977
10.3%
Total
$
4,224,461
100.0%
$
3,612,463
100.0%
$
611,998
16.9%
Revenue by Contract Type (Unaudited) Quarter
Ended (dollars in thousands)
3/31/2020 3/31/2019
$ Change % Change Cost reimbursable
$
852,700
58.2%
$
704,627
55.7%
$
148,073
21.0%
Fixed price
405,736
27.7%
374,006
29.6%
31,730
8.5%
Time and materials
207,164
14.1%
186,325
14.7%
20,839
11.2%
Total
$
1,465,600
100.0%
$
1,264,958
100.0%
$
200,642
15.9%
Nine Months Ended
(dollars in thousands)
3/31/2020
3/31/2019
$ Change
% Change
Cost reimbursable
$
2,418,891
57.3%
$
2,003,204
55.5%
$
415,687
20.8%
Fixed price
1,212,579
28.7%
1,055,384
29.2%
157,195
14.9%
Time and materials
592,991
14.0%
553,875
15.3%
39,116
7.1%
Total
$
4,224,461
100.0%
$
3,612,463
100.0%
$
611,998
16.9%
Revenue Generated as a Prime
versus Subcontractor (Unaudited)
Quarter Ended
(dollars in thousands)
3/31/2020
3/31/2019
$ Change
% Change
Prime
$
1,344,315
91.7%
$
1,153,599
91.2%
$
190,716
16.5%
Subcontractor
121,285
8.3%
111,359
8.8%
9,926
8.9%
Total
$
1,465,600
100.0%
$
1,264,958
100.0%
$
200,642
15.9%
Nine Months Ended
(dollars in thousands)
3/31/2020
3/31/2019
$ Change
% Change
Prime
$
3,849,561
91.1%
$
3,335,427
92.3%
$
514,134
15.4%
Subcontractor
374,900
8.9%
277,036
7.7%
97,864
35.3%
Total
$
4,224,461
100.0%
$
3,612,463
100.0%
$
611,998
16.9%
Selected Financial Data (Continued) Contract
Awards Received (Unaudited)
Quarter Ended
(dollars in thousands)
3/31/2020
3/31/2019
$ Change
% Change
Contract Awards
$
1,448,035
$
2,665,317
$
(1,217,282
)
-45.7
%
Nine Months Ended
(dollars in thousands)
3/31/2020
3/31/2019
$ Change
% Change
Contract Awards
$
8,176,742
$
6,512,352
$
1,664,390
25.6
%
Reconciliation of Net Cash Provided by
Operating Activities to Net Cash Provided by Operating
Activities Excluding MARPA (Unaudited)
The Company defines net cash provided by operating activities
excluding CACI’s Master Accounts Receivable Purchase Agreement
(MARPA) as net cash provided by operating activities calculated in
accordance with GAAP, adjusted to exclude net cash received from
CACI’s MARPA for the sale of certain designated eligible U.S.
government receivables. Under the MARPA, the Company can sell
eligible receivables, including certain billed and unbilled
receivables up to a maximum amount of $200.0 million. The Company
provides net cash provided by operating activities excluding MARPA
to allow investors to more easily compare current period results to
prior period results and to results of our peers. This non-GAAP
measure should not be considered in isolation or as a substitute
for performance measures prepared in accordance with GAAP.
Quarter
Ended
Quarter
Ended
(dollars in thousands)
3/31/2020
3/31/2019
Net cash provided by operating activities
$
120,800
$
313,301
Cash used (provided) by MARPA
3,938
(200,000
)
Net cash provided by operating activities excluding MARPA
$
124,738
$
113,301
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 expense, including depreciation
within direct costs, 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)
3/31/2020
3/31/2019
% Change
3/31/2020
3/31/2019
% Change
Net income
$
80,577
$
68,145
18.2%
$
227,749
$
215,574
5.6%
Plus: Income taxes
19,012
13,297
43.0%
50,659
49,424
2.5%
Interest income and expense, net
14,087
13,466
4.6%
45,612
31,773
43.6%
Depreciation and amortization expense, including depreciation
within direct costs
27,656
21,958
25.9%
83,625
60,912
37.3%
Earnout adjustments
100
1,100
-90.9%
3,000
300
900.0%
Adjusted EBITDA
$
141,432
$
117,966
19.9%
$
410,645
$
357,983
14.7%
Quarter Ended
Nine Months Ended
(dollars in thousands)
3/31/2020
3/31/2019
% Change
3/31/2020
3/31/2019
% Change
Revenue, as reported
$
1,465,600
$
1,264,958
15.9%
$
4,224,461
$
3,612,463
16.9%
Adjusted EBITDA
141,432
117,966
19.9%
410,645
357,983
14.7%
Adjusted EBITDA margin
9.7%
9.3%
9.7%
9.9%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200429005882/en/
Corporate Communications and Media: Jody Brown, Executive Vice
President, Public Relations (703) 841-7801, jbrown@caci.com
Investor Relations: Dan Leckburg, Senior Vice President,
Investor Relations (703) 841-7666, dleckburg@caci.com
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