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CACI Reports Results for Its Fiscal 2020 Second Quarter and Raises Annual Guidance

January 29, 2020 4:15 PM

Revenue of $1.4 billion, +18.1% year-over-year

Net income of $79.2 million, +15.5% year-over-year

Adjusted EBITDA margin of 10.1%

Robust cash flow from operations

Strong contract awards of $2.7 billion

ARLINGTON, Va.--(BUSINESS WIRE)-- CACI International Inc (NYSE: CACI), a leading provider of expertise and technology to government enterprise and mission customers, announced results today for its second fiscal quarter ended December 31, 2019.

CEO Commentary and Outlook

John Mengucci, CACI’s President and CEO, said, “CACI again delivered strong financial performance across the board. We grew revenue, including accelerating organic growth, and generated significant profitability and cash flow. Our success in winning business and executing on our growing backlog is driving increasing organic growth. As a result, we are raising our guidance for Fiscal Year 2020 and remain confident in our ability to deliver value to our customers and shareholders.”

Second Quarter Results

(in millions except earnings per share and DSO)

Q2, FY20

Q2, FY19

% Change

Revenue

$1,395.5

$1,181.6

18.1%

Operating income

$110.2

$102.3

7.7%

Net income

$79.2

$68.6

15.5%

Diluted earnings per share

$3.11

$2.71

15.0%

Net cash provided by operating activities1

$133.8

$56.4

137.1%

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP measure2

$140.9

$123.0

14.6%

Days sales outstanding (DSO)3

51

73

(1)

Second quarter FY20 net cash provided by operating activities includes 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 calculation for Q2 FY20 includes the impact of the Company’s MARPA, which was 9 days. The DSO calculation for Q2 FY19 excludes amounts related to the Navy Systems Engineering business acquired during Q1 FY19.

The year-over-year increase in Q2 FY20 net income was due to higher revenue and operating income and a lower tax rate, partially offset by higher interest expense. The increase in cash from operations was driven by enhanced billing and collections processes as well as the Company’s MARPA.

Second Quarter Contract Awards

Contract awards in Q2 FY20 totaled $2.7 billion, a year-over-year increase of 108%. Approximately 60% 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:

Total backlog as of December 31, 2019 was $20.3 billion compared with $12.6 billion a year ago, an increase of 61%. Funded backlog as of December 31, 2019 was $2.8 billion compared with $2.5 billion a year ago, an increase of 14%.

Additional Highlights

Raising FY20 Guidance

We are raising our FY20 guidance to account for the Company’s strong operating performance. The table below summarizes our FY20 guidance and represents our views as of January 29, 2020.

(in millions except earnings per share)

Current Fiscal Year
2020 Guidance

Previous Fiscal Year
2020 Guidance

Revenue

$5,600 - $5,800

$5,550 - $5,750

Net income

$305 - $325

$298 - $318

Diluted earnings per share

$11.91 - $12.70

$11.64 - $12.42

Diluted weighted average shares

25.6

25.6

Net cash provided by operating activities

at least $430

at least $420

Conference Call Information

We have scheduled a conference call for 8:30 AM Eastern Time Thursday, January 30, 2020 during which members of our senior management will be making a brief presentation focusing on second 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 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 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; 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-Earnings Release

Selected Financial Data
CACI International Inc
Condensed Consolidated Statements of Operations (Unaudited)
(Amounts in thousands, except per share amounts)
Quarter Ended Six Months Ended

12/31/2019

12/31/2018

% Change

12/31/2019

12/31/2018

% Change

Revenue

$

1,395,469

$

1,181,641

18.1%

$

2,758,861

$

2,347,505

17.5%

Costs of revenue
Direct costs

904,867

790,849

14.4%

1,783,748

1,573,609

13.4%

Indirect costs and selling expenses

352,448

269,677

30.7%

710,040

534,434

32.9%

Depreciation and amortization

27,967

18,852

48.4%

54,729

37,599

45.6%

Total costs of revenue

1,285,282

1,079,378

19.1%

2,548,517

2,145,642

18.8%

Operating income

110,187

102,263

7.7%

210,344

201,863

4.2%

Interest expense and other, net

14,714

9,421

56.2%

31,525

18,307

72.2%

Income before income taxes

95,473

92,842

2.8%

178,819

183,556

-2.6%

Income taxes

16,278

24,246

-32.9%

31,647

36,127

-12.4%

Net income

$

79,195

$

68,596

15.5%

$

147,172

$

147,429

-0.2%

Basic earnings per share

$

3.16

$

2.76

14.5%

$

5.89

$

5.95

-0.9%

Diluted earnings per share

$

3.11

$

2.71

15.0%

$

5.78

$

5.81

-0.6%

Weighted average shares used in per share computations:
Basic

25,065

24,856

24,979

24,796

Diluted

25,435

25,338

25,483

25,381

Statement of Operations Data (Unaudited)

Quarter Ended

Six Months Ended

12/31/2019

12/31/2018

12/31/2019

12/31/2018

% Change % Change
Operating income margin

7.9%

8.7%

7.6%

8.6%

Tax rate

17.1%

26.1%

17.7%

19.7%

Net income margin

5.7%

5.8%

5.3%

6.3%

Adjusted EBITDA*

$

140,902

$

122,951

14.6%

$

269,213

$

240,017

12.2%

Adjusted EBITDA Margin

10.1%

10.4%

9.8%

10.2%

*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)

12/31/2019

6/30/2019

ASSETS:
Current assets
Cash and cash equivalents

$

68,645

$

72,028

Accounts receivable, net

828,795

869,840

Prepaid expenses and other current assets

126,629

89,652

Total current assets

1,024,069

1,031,520

Goodwill and intangible assets, net

3,848,376

3,772,194

Property and equipment, net

168,786

149,676

Operating lease right-of-use assets

347,515

-

Other long-term assets

137,950

133,453

Total assets

$

5,526,696

$

5,086,843

LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities
Current portion of long-term debt

$

46,920

$

46,920

Accounts payable

135,125

118,917

Accrued compensation and benefits

294,444

290,274

Other accrued expenses and current liabilities

292,902

235,611

Total current liabilities

769,391

691,722

Long-term debt, net of current portion

1,550,809

1,618,093

Other long-term liabilities

697,916

405,562

Total liabilities

3,018,116

2,715,377

Shareholders' equity

2,508,580

2,371,466

Total liabilities and shareholders' equity

$

5,526,696

$

5,086,843

Selected Financial Data (Continued)
CACI International Inc
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Amounts in thousands)
Six Months Ended

12/31/2019

12/31/2018

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income

$

147,172

$

147,429

Reconciliation of net income to net cash provided by
operating activities:
Depreciation and amortization

54,729

37,599

Non-cash lease expense

35,850

-

Amortization of deferred financing costs

1,176

1,156

Stock-based compensation expense

14,499

12,047

Deferred income taxes

14,104

9,123

Changes in operating assets and liabilities, net of
effect of business acquisitions:
Accounts receivable, net

51,458

(136,177)

Prepaid expenses and other assets

(28,921)

(2,739)

Accounts payable and other accrued expenses

8,121

110,007

Accrued compensation and benefits

1,529

(27,116)

Income taxes payable and receivable

(21,384)

(10,781)

Operating lease liabilities

(37,989)

-

Long-term liabilities

(3,319)

(1,008)

Net cash provided by operating activities

237,025

139,540

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures

(41,035)

(17,813)

Purchases of businesses, net of cash acquired

(102,056)

(91,151)

Other

-

1,876

Net cash used in investing activities

(143,091)

(107,088)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) under credit facilities

(68,460)

(8,460)

Payment of contingent consideration

-

(616)

Proceeds from employee stock purchase plans

3,665

2,827

Repurchases of common stock

(3,596)

(2,756)

Payment of taxes for equity transactions

(29,083)

(18,039)

Net cash provided by (used in) financing activities

(97,474)

(27,044)

Effect of exchange rate changes on cash and cash equivalents

157

(874)

Net increase (decrease) in cash and cash equivalents

(3,383)

4,534

Cash and cash equivalents, beginning of period

72,028

66,194

Cash and cash equivalents, end of period

$

68,645

$

70,728

Selected Financial Data (Continued)
Revenue by Customer Type (Unaudited)
Quarter Ended
(dollars in thousands) 12/31/2019 12/31/2018 $ Change % Change
Department of Defense

$

990,381

71.0%

$

834,797

70.6%

$

155,584

18.6%

Federal Civilian Agencies

342,029

24.5%

287,915

24.4%

54,114

18.8%

Commercial and other

63,059

4.5%

58,929

5.0%

4,130

7.0%

Total

$

1,395,469

100.0%

$

1,181,641

100.0%

$

213,828

18.1%

Revenue by Contract Type (Unaudited)
Quarter Ended
(dollars in thousands) 12/31/2019 12/31/2018 $ Change % Change
Cost reimbursable

$

818,477

58.7%

$

657,050

55.6%

$

161,427

24.6%

Fixed price

388,867

27.9%

337,374

28.6%

51,493

15.3%

Time and materials

188,125

13.5%

187,217

15.8%

908

0.5%

Total

$

1,395,469

100.0%

$

1,181,641

100.0%

$

213,828

18.1%

Revenue Generated as a Prime versus Subcontractor (Unaudited)
Quarter Ended
(dollars in thousands) 12/31/2019 12/31/2018 $ Change % Change
Prime

$

1,268,993

90.9%

$

1,091,956

92.4%

$

177,037

16.2%

Subcontractor

126,476

9.1%

89,685

7.6%

36,791

41.0%

Total

$

1,395,469

100.0%

$

1,181,641

100.0%

$

213,828

18.1%

Contract Awards Received (Unaudited)
Quarter Ended
(dollars in thousands) 12/31/2019 12/31/2018 $ Change % Change
Contract Awards

$

2,711,484

$

1,303,553

$

1,407,931

108.0%

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.

(dollars in thousands)

Quarter
Ended
12/31/2019

Net cash provided by operating activities

$

133,821

Cash used (provided) by MARPA

(16,334)

Net cash provided by operating activities excluding MARPA

$

117,487

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
(dollars in thousands)

12/31/2019

12/31/2018

% Change

Net income

$

79,195

$

68,596

15.5%

Plus:
Income taxes

16,278

24,246

-32.9%

Interest income and expense, net

14,714

9,421

56.2%

Depreciation and amortization expense, including depreciation within direct costs

28,615

19,488

46.8%

Earnout adjustments

2,100

1,200

75.0%

Adjusted EBITDA

$

140,902

$

122,951

14.6%

Quarter Ended
(dollars in thousands)

12/31/2019

12/31/2018

% Change

Revenue, as reported

$

1,395,469

$

1,181,641

18.1%

Adjusted EBITDA

140,902

122,951

14.6%

Adjusted EBITDA margin

10.1%

10.4%

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

Source: CACI International Inc

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