Press Release

CACI Reports Results for Its Fiscal 2017 Third Quarter

Company Release - 5/3/2017 4:15 PM ET

Record third quarter revenue of $1.09 billion, up 11.2 percent

Net income of $40.4 million, up 18.3 percent

Cash from operations of $81 million

Record third quarter contract awards of $1.4 billion

Raises FY17 annual guidance

ARLINGTON, Va.--(BUSINESS WIRE)-- CACI International Inc (NYSE: CACI), a leading information solutions and services provider to the federal government, announced results today for its third fiscal quarter ended March 31, 2017.

CEO Commentary and Outlook

Ken Asbury, CACI’s President and CEO, said, “Our third quarter results reflect excellent performance across the company with record revenue and contract awards as well as strong cash flow and net income. As a result, we are further raising our guidance for FY17, and remain confident we will meet our FY18 objectives of one to four percent organic growth above our addressable market and 10 to 30 basis points of margin improvement.”

Third Quarter Results

(in millions except per-share data)   Q3, FY17   Q3, FY16   % Change
Revenue   $1,086.4   $977.3   11.2%
Operating income   $67.3   $63.7   5.6%
Net income   $40.4   $34.1   18.3%
Diluted earnings per share   $1.61   $1.38   16.9%

Revenue for the third quarter of Fiscal Year 2017 (FY17) increased compared to the third quarter of Fiscal Year 2016 (FY16), driven primarily by revenue of $88 million from the NSS acquisition. The increase in operating income was due to the NSS contribution, program performance, and the absence of acquisition-related expenses which occurred in the third quarter of FY16. These were partially offset by pre-tax expenses of $3.1 million related to facility reductions and $4.7 million of long-term incentive compensation expense. The increase in net income was due to the factors noted above and research and development (R&D) tax credits for FY16 and FY17 of $3.9 million. Cash provided by operations in the quarter was $81.1 million.

Additional Financial Metrics

    Q3, FY17   Q3, FY16   % Change
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP measure (in millions)   $85.5   $80.6   6.1%
Adjusted net income, a non-GAAP measure (in millions)   $55.4   $47.8   15.9%
Days sales outstanding   58   64    

Third Quarter Awards, Contract Funding Orders, and Other Highlights

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.

Key awards during the quarter included:

  • A $190 million task order to support the Department of Defense Joint Service Provider (JSP) Information Technology Service Delivery Support Requirement program. The three-year, six-month task order, originally won under the Alliant contract vehicle in the fourth quarter of CACI’s Fiscal Year 2016, represents new business in the company's Enterprise IT market area.
  • A $48 million prime contract to provide IT support services for the Army Architecture, Operations, Networks, and Space Directorate of the U.S. Army Chief Information Officer/G-6. The five-year award represents new business in CACI’s Enterprise IT market area.
  • A prime position on a $47 million multiple-award IDIQ to support the U.S. Army Night Vision and Electronic Sensors Directorate’s development and delivery of solutions to tactical commands worldwide. The two-year contract represents new work for CACI in its Surveillance and Reconnaissance market area.
  • Approximately $102 million in awards on classified contracts with federal government customers. The work represents business primarily in CACI’s Intelligence Services, Intelligence Systems and Support, and Cyber Security market areas.

Contract funding orders in the third quarter were $1.1 billion. Our total backlog at March 31, 2017 was $11.8 billion compared with $11.0 billion at the end of the fourth quarter of FY16. Funded backlog at March 31, 2017 was $2.0 billion compared with $2.3 billion at June 30, 2016.

Other highlights in the quarter included:

  • Combating Asymmetric Threats: Offset Strategies to Prevail Against Asymmetric Threats, a report from the ninth symposium in the Asymmetric Threat symposia series co-sponsored by CACI, the Association of Old Crows, and the Center for Security Policy was released. Summarizing discussions and comments from the symposium, the report considers how offset strategies position the U.S. to prevail against resurging global power competition, multiregional conflicts, and cross-domain challenges.

Nine Months Results

(in millions except per-share data)   Nine Months, FY17   Nine Months, FY16   % Change
Revenue   $3,217.2   $2,630.2   22.3%
Operating income   $217.2   $183.7   18.2%
Net income   $119.4   $99.2   20.4%
Diluted earnings per share   $4.77   $4.01   19.1%

Revenue in the nine months of FY17 increased compared to the year earlier period due to the NSS acquisition. Operating income increased due primarily to the NSS acquisition, program performance, and the absence of acquisition-related expenses which occurred in FY16. Net income increased due to the above operating income factors noted and the impact of the R&D tax credits. Net cash provided by operations in the first three quarters of FY17 was $216.5 million.

Additional Financial Metrics

   

Nine Months,
FY17

 

Nine Months,
FY16

 

%
Change

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP measure (in millions)   $272.5   $230.3   18.3%
Adjusted net income, a non-GAAP measure (in millions)   $164.7   $136.7   20.5%

CACI Raises Its FY17 Guidance

We are raising our FY17 guidance we issued on February 1, 2017. The table below summarizes our FY17 guidance and represents our views as of May 3, 2017:

 

(In millions except for tax rate and earnings per share)

 

Current Fiscal Year
2017 Guidance

 

Previous Fiscal Year
2017 Guidance

Revenue   $4,275 - $4,350   $4,150 - $4,300
Net income   $157 - $163   $155 - $162
Effective corporate tax rate   34.3%   37.5%
Diluted earnings per share   $6.25 - $6.49   $6.18 - $6.45
Diluted weighted average shares   25.1   25.1

Conference Call Information

We have scheduled a conference call for 9:00 AM Eastern Time Thursday, May 4, 2017 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 our homepage, www.caci.com, at the scheduled time, or you may dial 1-888-317-6016, confirmation code CACI International. 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 19,000 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: 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 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 Nine Months Ended
3/31/2017 3/31/2016 % Change 3/31/2017 3/31/2016 % Change
Revenue $ 1,086,418   $ 977,274   11.2 % $ 3,217,228   $ 2,630,153   22.3 %
Costs of revenue
Direct costs 732,224 647,489 13.1 % 2,165,766 1,732,053 25.0 %
Indirect costs and selling expenses 269,237 249,477 7.9 % 780,397 668,321 16.8 %
Depreciation and amortization   17,703     16,632   6.4 %   53,898     46,113   16.9 %
Total costs of revenue   1,019,164     913,598   11.6 %   3,000,061     2,446,487   22.6 %
Operating income 67,254 63,676 5.6 % 217,167 183,666 18.2 %
Interest expense and other, net   12,107     11,115   8.9 %   36,921     28,477   29.7 %
Income before income taxes 55,147 52,561 4.9 % 180,246 155,189 16.1 %
Income taxes   14,790     18,445   -19.8 %   60,806     55,989   8.6 %
Net income $ 40,357   $ 34,116   18.3 % $ 119,440   $ 99,200   20.4 %
 
Basic earnings per share $ 1.65 $ 1.41 17.6 % $ 4.90 $ 4.09 19.7 %
Diluted earnings per share $ 1.61 $ 1.38 16.9 % $ 4.77 $ 4.01 19.1 %
 
Weighted average shares used in per share computations:
Basic 24,419 24,277 24,382 24,243
Diluted 25,106 24,801 25,034 24,769
 
Statement of Operations Data (Unaudited)
Quarter Ended Nine Months Ended
3/31/2017 3/31/2016 % Change 3/31/2017 3/31/2016 % Change
Operating income margin 6.2 % 6.5 % 6.8 % 7.0 %
Tax rate 26.8 % 35.1 % 33.7 % 36.1 %
Net income margin 3.7 % 3.5 % 3.7 % 3.8 %
 
Adjusted EBITDA* $ 85,515 $ 80,600 6.1 % $ 272,547 $ 230,308 18.3 %
Adjusted EBITDA Margin 7.9 % 8.2 % 8.5 % 8.8 %
 
Adjusted net income* $ 55,442 $ 47,821 15.9 % $ 164,741 $ 136,705 20.5 %
 

**See Reconciliation of Net Income to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization and to Adjusted Net Income on page 10.

 

Selected Financial Data (Continued)    
 
CACI International Inc
Condensed Consolidated Balance Sheets (Unaudited)
(Amounts in thousands)
3/31/2017 6/30/2016
ASSETS:
Current assets
Cash and cash equivalents $ 54,371 $ 49,082
Accounts receivable, net 726,327 803,817
Prepaid expenses and other current assets   73,702   68,939
Total current assets 854,400 921,838
 
Goodwill and intangible assets, net 2,818,250 2,860,715
Property and equipment, net 90,666 81,362
Other long-term assets   126,058   123,426
Total assets $ 3,889,374 $ 3,987,341
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities
Current portion of long-term debt $ 53,965 $ 53,965
Accounts payable 68,088 95,270
Accrued compensation and benefits 214,567 228,362
Other accrued expenses and current liabilities   183,939   187,579
Total current liabilities 520,559 565,176
 
Long-term debt, net of current portion 1,226,976 1,402,079
Other long-term liabilities   403,356   412,773
Total liabilities   2,150,891   2,380,028
 
Shareholders' equity   1,738,483   1,607,313
Total liabilities and shareholders' equity $ 3,889,374 $ 3,987,341

 
Selected Financial Data (Continued)
 
CACI International Inc
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Amounts in thousands)
 
Nine Months Ended
3/31/2017 3/31/2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 119,440 $ 99,200
Reconciliation of net income to net cash provided by
operating activities:
Depreciation and amortization 53,898 46,113
Amortization of deferred financing costs 3,371 2,101
Loss on disposal of fixed assets 975 -
Stock-based compensation expense 16,114 13,329
Provision for deferred income taxes 6,773 14,212
Equity in earnings from unconsolidated ventures (167 ) (229 )
Gain on sale of assets (1,545 ) -
Changes in operating assets and liabilities
net of effect of business acquisitions
Accounts receivable, net 62,360 42,184
Prepaid expenses and other assets (3,895 ) (9,773 )
Accounts payable and accrued expenses (31,706 ) (4,020 )
Accrued compensation and benefits (7,013 ) (10,099 )
Income taxes receivable and payable (4,082 ) (892 )
Other liabilities   1,955     (2,750 )
Net cash provided by operating activities   216,478     189,376  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (34,941 ) (13,232 )
Purchases of businesses, net of cash acquired (5,786 ) (587,821 )
Proceeds from net working capital refund of acquired business 13,619 -
Proceeds from equity method investments 4,681 -
Other   1,597     151  
Net cash used in investing activities   (20,830 )   (600,902 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments) borrowings under credit facilities (178,474 ) 419,737
Proceeds from employee stock purchase plans 3,334 2,289
Repurchases of common stock (3,367 ) (2,400 )
Payment of taxes for equity transactions (10,580 ) (7,479 )
Other   -     457  
Net cash( used in) provided by financing activities   (189,087 )   412,604  
Effect of exchange rate changes on cash and cash equivalents   (1,272 )   (1,629 )
Net increase (decrease) in cash and cash equivalents 5,289 (551 )
Cash and cash equivalents, beginning of period   49,082     35,364  
Cash and cash equivalents, end of period $ 54,371   $ 34,813  

Selected Financial Data (Continued)
           
Revenue by Customer Type (Unaudited)
Quarter Ended      
(dollars in thousands) 3/31/2017   3/31/2016  

$ Change

  % Change  
Department of Defense $ 700,212 64.4 % $ 637,395 65.2 % $62,817 9.9 %
Federal Civilian Agencies 320,269 29.5 % 279,526 28.6 % 40,743 14.6 %
Commercial and other   65,937   6.1 %   60,353   6.2 % 5,584     9.3 %
Total $ 1,086,418   100.0 % $ 977,274   100.0 % $109,144     11.2 %
 
Nine Months Ended      
(dollars in thousands) 3/31/2017   3/31/2016  

$ Change

  % Change  
Department of Defense $ 2,077,088 64.5 % $ 1,724,631 65.6 % $352,457 20.4 %
Federal Civilian Agencies 942,115 29.3 % 737,721 28.0 % 204,394 27.7 %
Commercial and other   198,025   6.2 %   167,801   6.4 % 30,224     18.0 %
Total $ 3,217,228   100.0 % $ 2,630,153   100.0 % $587,075     22.3 %
 
Revenue by Contract Type (Unaudited)
Quarter Ended      
(dollars in thousands) 3/31/2017 3/31/2016

$ Change

  % Change  
Cost reimbursable $ 526,350 48.4 % $ 483,796 49.5 % $42,554 8.8 %
Fixed price 349,722 32.2 % 318,059 32.5 % 31,663 10.0 %
Time and materials   210,346   19.4 %   175,419   18.0 % 34,927     19.9 %
Total $ 1,086,418   100.0 % $ 977,274   100.0 % $109,144     11.2 %
 
Nine Months Ended      
(dollars in thousands) 3/31/2017 3/31/2016

$ Change

  % Change  
Cost reimbursable $ 1,556,012 48.3 % $ 1,266,219 48.1 % $289,793 22.9 %
Fixed price 1,054,176 32.8 % 896,243 34.1 % 157,933 17.6 %
Time and materials   607,040   18.9 %   467,691   17.8 % 139,349     29.8 %
Total $ 3,217,228   100.0 % $ 2,630,153   100.0 % $587,075     22.3 %
 
Revenue Received as a Prime versus Subcontractor (Unaudited)
Quarter Ended      
(dollars in thousands) 3/31/2017 3/31/2016

$ Change

  % Change  
Prime $ 1,007,952 92.8 % $ 893,321 91.4 % $114,631 12.8 %
Subcontractor   78,466   7.2 %   83,953   8.6 % (5,487 )   -6.5 %
Total $ 1,086,418   100.0 % $ 977,274   100.0 % $109,144     11.2 %
 
Nine Months Ended      
(dollars in thousands) 3/31/2017 3/31/2016

$ Change

  % Change  
Prime $ 2,989,051 92.9 % $ 2,394,235 91.0 % $594,816 24.9 %
Subcontractor   228,177   7.1 %   235,918   9.0 % (7,741 )   -3.3 %
Total $ 3,217,228   100.0 % $ 2,630,153   100.0 % $587,075     22.3 %

Selected Financial Data (Continued)
       
Contract Funding Orders Received (Unaudited)
Quarter Ended      
(dollars in thousands)   3/31/2017   3/31/2016

$ Change

  % Change  
Contract Funding Orders $ 1,138,263 $ 1,322,977 $ (184,714 )   -14.0 %
Nine Months Ended      
(dollars in thousands)   3/31/2017   3/31/2016

$ Change

  % Change  
Contract Funding Orders $ 3,052,857 $ 2,992,811 $ 60,046     2.0 %
           
Direct Costs by Category (Unaudited)
Quarter Ended      
(dollars in thousands) 3/31/2017 3/31/2016

$ Change

  % Change  
Direct labor $ 333,555 45.6 % $ 322,612 49.8 % $ 10,943 3.4 %
Other direct costs   398,669   54.4 %   324,877   50.2 %   73,792   22.7 %
Total direct costs $ 732,224   100.0 % $ 647,489   100.0 % $ 84,735   13.1 %
 
Nine Months Ended      
(dollars in thousands) 3/31/2017 3/31/2016

$ Change

  % Change  
Direct labor $ 992,968 45.8 % $ 852,911 49.2 % $ 140,057 16.4 %
Other direct costs   1,172,798   54.2 %   879,142   50.8 %   293,656   33.4 %
Total direct costs $ 2,165,766   100.0 % $ 1,732,053   100.0 % $ 433,713   25.0 %

Selected Financial Data (Continued)

Reconciliation of Net Income to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and to Adjusted Net Income

(Unaudited)

The Company views Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income, 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 assists management and investors in further understanding our results and trends from period-to-period by removing certain non-cash items. 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 Nine Months Ended
(dollars in thousands) 3/31/2017 3/31/2016 % Change 3/31/2017 3/31/2016 % Change
Net income $ 40,357 $ 34,116 18.3 % $ 119,440 $ 99,200 20.4 %
Plus:
Income taxes 14,790 18,445 -19.8 % 60,806 55,989 8.6 %
Interest income and expense, net 12,170 11,246 8.2 % 37,088 28,706 29.2 %
Depreciation and amortization 17,703 16,632 6.4 % 53,898 46,113 16.9 %
Earnout adjustments   495     161   207.5 %   1,315     300   338.3 %
Adjusted EBITDA $ 85,515   $ 80,600   6.1 % $ 272,547   $ 230,308   18.3 %
 
Quarter Ended Nine Months Ended
(dollars in thousands) 3/31/2017 3/31/2016 % Change 3/31/2017 3/31/2016 % Change
Revenue, as reported $ 1,086,418 $ 977,274 11.2 % $ 3,217,228 $ 2,630,153 22.3 %
Adjusted EBITDA   85,515     80,600   6.1 %   272,547     230,308   18.3 %
Adjusted EBITDA margin   7.9 %   8.2 %     8.5 %   8.8 %  
 
Quarter Ended Nine Months Ended
(dollars in thousands) 3/31/2017 3/31/2016 % Change 3/31/2017 3/31/2016 % Change
Net income $ 40,357 $ 34,116 18.3 % $ 119,440 $ 99,200 20.4 %
Plus:
Stock-based compensation 5,557 4,856 14.4 % 16,114 13,329 20.9 %
Depreciation and amortization 17,703 16,632 6.4 % 53,898 46,113 16.9 %
Amortization of financing costs 1,119 949 17.9 % 3,371 2,101 60.4 %
Earnout adjustments 495 161 207.5 % 1,315 300 338.3 %
Less:
Related tax effect   (9,789 )   (8,893 ) 10.1 %   (29,397 )   (24,338 ) 20.8 %
Adjusted net income $ 55,442   $ 47,821   15.9 % $ 164,741   $ 136,705   20.5 %

CACI International Inc
Corporate Communications and Media:
Jody Brown, Executive Vice President,
Public Relations
703-841-7801
jbrown@caci.com
or
Investor Relations:
David Dragics, Senior Vice President,
Investor Relations
866-606-3471
ddragics@caci.com

Source: CACI International Inc