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CACI Reports Results for Its Fiscal 2021 Second Quarter

·18-min read

Revenue of $1.5 billion, +5.2% year-over-year

Net income of $106.5 million, +34.5% year-over-year

Robust cash flow from operations

Contract awards of $2.1 billion

Reaffirms Fiscal Year 2021 Guidance

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, 2020.

CEO Commentary and Outlook

John Mengucci, CACI’s President and CEO, said, "We delivered solid organic growth, and our focus on delivery and operational excellence again drove strong profitability and robust cash flow. We also won a healthy level of contract awards in what is typically a seasonally light quarter. We are confident in our ability to continue to deliver value to our customers and shareholders."

Second Quarter Results

(in millions except earnings per share and DSO)

Q2, FY21

Q2, FY20

% Change

Revenue

$1,468.7

$1,395.5

5.2%

Operating income

$141.5

$110.2

28.5%

Net income

$106.5

$79.2

34.5%

Diluted earnings per share

$4.18

$3.11

34.4%

Net cash provided by operating activities excluding MARPA1

$189.8

$117.5

61.6%

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

$174.6

$140.9

23.9%

Days sales outstanding (DSO)3

53

60

(1)

Second quarter FY21 and second 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 10 of this release.

(2)

See the Reconciliation of Net Income to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) on page 10 of this release.

(3)

The DSO calculations for second quarter FY21 and second quarter FY20 exclude the impact of the Company’s MARPA, which was 10 days and 9 days, respectively.

Revenue in Q2 FY21 increased 5.2% year-over-year as reported and 4.3% organically. The year-over-year increase in operating income was driven by higher revenue, strong operating performance, favorable fixed-price contract performance, and lower indirect costs. The year-over-year increase in net income was due to higher operating income and lower interest expense, partially offset by a higher effective tax rate. The increase in cash from operations, excluding MARPA, was driven by higher net income and favorable working capital management.

Second Quarter Contract Awards

Contract awards in Q2 FY21 totaled $2.1 billion. These awards exclude ceiling values of multi-award, indefinite delivery, indefinite quantity (IDIQ) contracts. Some notable awards during the quarter were:

  • A four-and-a-half year task order, with a ceiling value of $160 million, by the U.S. Air Force Central Command’s (AFCENT) Network Operations and Security Center (NOSC) to provide enterprise expertise including networking, technical, and cyber support to multiple deployed AFCENT NOSC sites through U.S. Central Command (CENTCOM).

  • A five-year single award contract, with a ceiling value of $447 million, to provide acquisition mission technology.

  • A seven-year task order, with a ceiling value of $376 million, to provide mission technology to modernize a federal customer’s web-based supply chain system.

  • A three-year task order, with a ceiling value of $96 million, to provide engineering and logistics expertise for the U.S. Army’s Medical Communications for Combat Casualty Care (MC4) Program.

  • A six-and-a-half year indefinite delivery/indefinite quantity contract, with a ceiling of $1.5 billion, to continue providing automated litigation support services to federal agencies.

Total backlog as of December 31, 2020 was $22.4 billion compared with $20.3 billion a year ago, an increase of 10%. Funded backlog as of December 31, 2020 was $2.9 billion compared with $2.8 billion a year ago, an increase of 3%.

Additional Highlights

  • CACI announced the delivery of a flight model laser communications transmitter to the NASA Jet Propulsion Laboratory (JPL) for use on-board the Psyche spacecraft, whose mission is to study the origin of planetary cores in the asteroid belt.

  • CACI Board Member, The Honorable Susan M. "Sue" Gordon, the former Principal Deputy Director of National Intelligence (PDDNI), will receive the Intelligence and National Security Alliance’s (INSA) 2021 William Oliver Baker Award on September 25, 2021, in recognition of her extraordinary contribution to U.S. intelligence and national security affairs.

  • CACI Vice President and Army Client Executive Major General (Ret.), Randolph (Randy) Strong was inducted into the Army’s Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance, and Reconnaissance (C5ISR) Hall of Fame. The event highlighted Mr. Strong’s military career and specifically his service as Commanding General of the United States Army Communications-Electronics Command (CECOM) from 2009 to 2012.

  • CACI received multiple accolades for veteran efforts this quarter including a Best Company for Veterans by Monster and Military.com, a Best Employer for Veterans by Forbes.com, and received the 2020 Northern Virginia Technology Council (NVTC) Veterans Employment Initiative (VEI) Veteran Service Award for the company’s longstanding commitment of both hiring and supporting military veterans, their families, and the military community.

Reaffirming FY21 Guidance

The table below summarizes our FY21 guidance and represents our views as of January 27, 2021.

(in millions except earnings per share)

Current Fiscal Year
2021 Guidance

Revenue

$6,050 - $6,250

Net income

$372 - $392

Diluted earnings per share

$14.47 - $15.25

Diluted weighted average shares

25.7

Net cash provided by operating activities

at least $600

Conference Call Information

We have scheduled a conference call for 8:30 AM Eastern Time Thursday, January 28, 2021 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 approximately 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

Selected Financial Data

CACI International Inc

Condensed Consolidated Statements of Operations (Unaudited)

(Amounts in thousands, except per share amounts)

Three Months Ended

Six Months Ended

12/31/2020

12/31/2019

% Change

12/31/2020

12/31/2019

% Change

Revenue

$

1,468,711

$

1,395,469

5.2%

$

2,928,217

$

2,758,861

6.1%

Operating costs and expenses:

Costs of revenue

947,131

904,867

4.7%

1,887,065

1,783,748

5.8%

Indirect costs and selling expenses

347,807

352,448

-1.3%

702,811

710,040

-1.0%

Depreciation and amortization

32,234

27,967

15.3%

62,378

54,729

14.0%

Total operating expenses

1,327,172

1,285,282

3.3%

2,652,254

2,548,517

4.1%

Operating income

141,539

110,187

28.5%

275,963

210,344

31.2%

Interest expense and other, net

9,087

14,714

-38.2%

19,067

31,525

-39.5%

Income before income taxes

132,452

95,473

38.7%

256,896

178,819

43.7%

Income taxes

25,974

16,278

59.6%

56,774

31,647

79.4%

Net income

$

106,478

$

79,195

34.5%

$

200,122

$

147,172

36.0%

Basic earnings per share

$

4.22

$

3.16

33.6%

$

7.95

$

5.89

35.0%

Diluted earnings per share

$

4.18

$

3.11

34.4%

$

7.86

$

5.78

36.1%

Weighted average shares used in per share computations:

Basic

25,225

25,065

25,162

24,979

Diluted

25,451

25,435

25,469

25,483

Statement of Operations Data (Unaudited)

Three Months Ended

Six Months Ended

12/31/2020

12/31/2019

12/31/2020

12/31/2019

% Change

% Change

Operating income margin

9.6

%

7.9

%

9.4

%

7.6

%

Tax rate

19.6

%

17.1

%

22.1

%

17.7

%

Net income margin

7.2

%

5.7

%

6.8

%

5.3

%

Adjusted EBITDA*

$

174,580

$

140,902

23.9%

$

340,016

$

269,213

26.3%

Adjusted EBITDA Margin

11.9

%

10.1

%

11.6

%

9.8

%

* See Reconciliation of Net Income to Adjusted 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)

12/31/2020

6/30/2020

ASSETS:

Current assets

Cash and cash equivalents

$

102,114

$

107,236

Accounts receivable, net

747,845

841,227

Prepaid expenses and other current assets

145,747

137,423

Total current assets

995,706

1,085,886

Goodwill and intangible assets, net

4,141,597

3,813,995

Property and equipment, net

180,258

170,521

Operating lease right-of-use assets

374,310

330,767

Other long-term assets

159,614

141,303

Total assets

$

5,851,485

$

5,542,472

LIABILITIES AND SHAREHOLDERS' EQUITY:

Current liabilities

Current portion of long-term debt

$

46,920

$

46,920

Accounts payable

60,683

89,961

Accrued compensation and benefits

379,978

338,760

Other accrued expenses and current liabilities

285,223

293,518

Total current liabilities

772,804

769,159

Long-term debt, net of current portion

1,371,222

1,357,519

Other long-term liabilities

823,180

754,484

Total liabilities

2,967,206

2,881,162

Shareholders' equity

2,884,279

2,661,310

Total liabilities and shareholders' equity

$

5,851,485

$

5,542,472

Selected Financial Data (Continued)

CACI International Inc

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Amounts in thousands)

Six Months Ended

12/31/2020

12/31/2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

200,122

$

147,172

Reconciliation of net income to net cash provided by operating activities:

Depreciation and amortization

62,378

54,729

Non-cash lease expense

38,436

35,850

Amortization of deferred financing costs

1,163

1,176

Stock-based compensation expense

15,041

14,499

Deferred income taxes

(6,311

)

14,104

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

Accounts receivable, net

94,292

51,458

Prepaid expenses and other assets

(20,605

)

(28,921

)

Accounts payable and other accrued expenses

(30,087

)

8,121

Accrued compensation and benefits

39,461

1,529

Income taxes payable and receivable

11,107

(21,384

)

Operating lease liabilities

(37,916

)

(37,989

)

Long-term liabilities

15,206

(3,319

)

Net cash provided by operating activities

382,287

237,025

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(31,873

)

(41,035

)

Cash paid for business acquisitions, net of cash acquired

(355,127

)

(102,056

)

Other

-

-

Net cash used in investing activities

(387,000

)

(143,091

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Net borrowings (payments) under credit facilities

12,540

(68,460

)

Proceeds from employee stock purchase plans

4,664

3,665

Repurchases of common stock

(4,420

)

(3,596

)

Payment of taxes for equity transactions

(18,649

)

(29,083

)

Net cash used in financing activities

(5,865

)

(97,474

)

Effect of exchange rate changes on cash and cash equivalents

5,456

157

Net decrease in cash and cash equivalents

(5,122

)

(3,383

)

Cash and cash equivalents, beginning of period

107,236

72,028

Cash and cash equivalents, end of period

$

102,114

$

68,645

Selected Financial Data (Continued)

Revenue by Customer Group (Unaudited)

Three Months Ended

(dollars in thousands)

12/31/2020

12/31/2019

$ Change

% Change

Department of Defense

1,012,875

68.9%

990,381

71.0%

$

22,494

2.3%

Federal Civilian Agencies

390,034

26.6%

342,029

24.5%

48,005

14.0%

Commercial and other

65,802

4.5%

63,059

4.5%

2,743

4.3%

Total

1,468,711

100.0%

1,395,469

100.0%

$

73,242

5.2%

Six Months Ended

(dollars in thousands)

12/31/2020

12/31/2019

$ Change

% Change

Department of Defense

2,017,070

68.9%

1,928,021

69.9%

$

89,049

4.6%

Federal Civilian Agencies

780,213

26.6%

706,022

25.6%

74,191

10.5%

Commercial and other

130,934

4.5%

124,818

4.5%

6,116

4.9%

Total

2,928,217

100.0%

2,758,861

100.0%

$

169,356

6.1%

Revenue by Contract Type (Unaudited)

Three Months Ended

(dollars in thousands)

12/31/2020

12/31/2019

$ Change

% Change

Cost-plus-fee

843,584

57.5%

818,477

58.6%

$

25,107

3.1%

Fixed price

440,821

30.0%

388,867

27.9%

51,954

13.4%

Time and materials

184,306

12.5%

188,125

13.5%

(3,819)

-2.0%

Total

1,468,711

100.0%

1,395,469

100.0%

$

73,242

5.2%

Six Months Ended

(dollars in thousands)

12/31/2020

12/31/2019

$ Change

% Change

Cost-plus-fee

1,667,193

56.9%

1,566,191

56.8%

$

101,002

6.4%

Fixed price

874,635

29.9%

806,843

29.2%

67,792

8.4%

Time and materials

386,389

13.2%

385,827

14.0%

562

0.1%

Total

2,928,217

100.0%

2,758,861

100.0%

$

169,356

6.1%

Revenue by Prime or Subcontractor (Unaudited)

Three Months Ended

(dollars in thousands)

12/31/2020

12/31/2019

$ Change

% Change

Prime

1,327,025

90.4%

1,266,655

90.8%

$

60,370

4.8%

Subcontractor

141,686

9.6%

128,814

9.2%

12,872

10.0%

Total

1,468,711

100.0%

1,395,469

100.0%

$

73,242

5.2%

Six Months Ended

(dollars in thousands)

12/31/2020

12/31/2019

$ Change

% Change

Prime

2,653,863

90.6%

2,501,760

90.7%

$

152,103

6.1%

Subcontractor

274,354

9.4%

257,101

9.3%

17,253

6.7%

Total

2,928,217

100.0%

2,758,861

100.0%

$

169,356

6.1%

Revenue by Expertise or Technology (Unaudited)

Three Months Ended

(dollars in thousands)

12/31/2020

12/31/2019

$ Change

% Change

Expertise

732,276

49.9%

742,034

53.2%

$

(9,758)

-1.3%

Technology

736,435

50.1%

653,435

46.8%

83,000

12.7%

Total

1,468,711

100.0%

1,395,469

100.0%

$

73,242

5.2%

Six Months Ended

(dollars in thousands)

12/31/2020

12/31/2019

$ Change

% Change

Expertise

1,472,959

50.3%

1,464,387

53.1%

$

8,572

0.6%

Technology

1,455,258

49.7%

1,294,474

46.9%

160,784

12.4%

Total

2,928,217

100.0%

2,758,861

100.0%

$

169,356

6.1%

Selected Financial Data (Continued)

Contract Awards Received (Unaudited)

Three Months Ended

(dollars in thousands)

12/31/2020

12/31/2019

$ Change

% Change

Contract Awards

$

2,129,108

$

2,711,484

$

(582,376)

-21.5%

Six Months Ended

(dollars in thousands)

12/31/2020

12/31/2019

$ Change

% Change

Contract Awards

$

3,963,866

$

6,728,707

$

(2,764,841)

-41.1%

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.

Three Months Ended

Three Months Ended

(dollars in thousands)

12/31/2020

12/31/2019

Net cash provided by operating activities

$

205,387

$

133,821

Cash used (provided) by MARPA

(15,553)

(16,334)

Net cash provided by operating activities excluding MARPA

$

189,834

$

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.

Three Months Ended

Six Months Ended

(dollars in thousands)

12/31/2020

12/31/2019

% Change

12/31/2020

12/31/2019

% Change

Net income

$

106,478

$

79,195

34.5%

$

200,122

$

147,172

36.0%

Plus:

Income taxes

25,974

16,278

59.6%

56,774

31,647

79.4%

Interest income and expense, net

9,087

14,714

-38.2%

19,067

31,525

-39.5%

Depreciation and amortization expense, including amounts within direct costs

33,041

28,615

15.5%

64,053

55,969

14.4%

Earnout adjustments

-

2,100

-100.0%

-

2,900

-100.0%

Adjusted EBITDA

$

174,580

$

140,902

23.9%

$

340,016

$

269,213

26.3%

Three Months Ended

Six Months Ended

(dollars in thousands)

12/31/2020

12/31/2019

% Change

12/31/2020

12/31/2019

% Change

Revenue, as reported

$

1,468,711

$

1,395,469

5.2%

$

2,928,217

$

2,758,861

6.1%

Adjusted EBITDA

174,580

140,902

23.9%

340,016

269,213

26.3%

Adjusted EBITDA margin

11.9%

10.1%

11.6%

9.8%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210127005924/en/

Contacts

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