CACI International Inc (NYSE: CACI), a leading information solutions and services provider to the federal government, announced results today for its fourth fiscal quarter and full year ended June 30, 2017.

CEO Commentary and Outlook

Ken Asbury, CACI’s President and CEO, said, “CACI’s record Fiscal Year 2017 results were driven by strong performance on our programs and contribution from our National Security Solutions acquisition. I’m also very proud to report that for the third consecutive year, we were voted a Washington Post Top Workplace by our employees, highlighting our ethical culture and innovative solutions and services. We generated record cash from operations and reduced debt to build our capacity to invest in future growth. Our second half performance provides momentum as we enter FY18 to continue delivering top- and bottom-line organic growth. Going forward, we are confident that we will deliver on our stated goals of one to four percent organic revenue growth above our addressable market and 10 to 30 basis points of margin expansion annually, which will deliver enhanced shareholder value.”

Fourth Quarter Results

                   
(in millions except per-share data)     Q4, FY17     Q4, FY16     % Change
Revenue     $1,137.4     $1,113.9     2.1%
Operating income     $80.1     $81.1     -1.2%
Net income     $44.2     $43.6     1.4%
Diluted earnings per share     $1.76     $1.75     0.4%
           

Revenue for the fourth quarter of Fiscal Year 2017 (FY17) increased compared to the fourth quarter of Fiscal Year 2016 (FY16). Cash provided by operations in the quarter was $64.8 million.

Additional Financial Metrics

             
(in millions except days sales outstanding data)   Q4, FY17   Q4, FY16   % Change
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP measure   $97.4   $100.1   -2.7%
Adjusted net income, a non-GAAP measure   $58.9   $58.6   0.5%
Days sales outstanding   59   62    
See reconciliation of Net Income to Earnings before Interest, Taxes, Depreciation and Amortization and to Adjusted Net Income on page 10.
 

Fourth Quarter Awards, Contract Funding Orders, and Other Highlights

Our contract awards in the quarter were $1.1 billion and $6.0 billion for the year, which excludes ceiling values of multi-award indefinite delivery, indefinite quantity (IDIQ) contracts. Approximately 60 percent of our awards in the quarter and in the year were for new business.

Key awards during the quarter included:

  • A prime position on a $94 million indefinite delivery/indefinite quantity contract to provide full-service automated testing system support services to the U.S. Air Force under the Automated Test System Sustainment Initiative. The five-year award represents both new and continuing work in the company’s Logistics and Material Readiness market area.
  • A $40 million task order to provide services and support for the Naval Sea Systems Command that will help improve organizational efficiencies and effectiveness, and will assist in developing the command’s workforce. This five-year award was issued under the SeaPort-e contract vehicle and represents new work for CACI in its Logistics and Material Readiness market area.
  • A $21 million task order to provide cyber security systems support to the Naval Facilities Engineering Command to enhance the security of industrial control systems important to America’s critical infrastructure. The two-year task order, awarded under the SPAWAR Integrated Cyber Operations contract vehicle, represents continuing business for CACI.
  • Approximately $856 million in classified and other awards, both new and recompete, where we do not yet have permission from the customers to announce them.

Contract funding orders in the fourth quarter were approximately $1.1 billion and $4.1 billion for FY17. Total backlog at June 30, 2017 increased 1.9 percent to $11.2 billion compared with $11.0 billion at the end of FY16. Funded backlog at June 30, 2017 was $1.9 billion.

Other highlights in the quarter included:

  • CACI and American Cyber, Inc. received the prestigious Nunn-Perry Award from the Department of Defense (DoD) for excellence in the DoD Mentor-Protégé Program (MPP). The Nunn-Perry Award, named in honor of former Senator Sam Nunn and former Secretary of Defense William Perry, recognizes outstanding mentor-protégé teams in the MPP.
  • CACI was named to The Washington Post’s 2017 Top Workplaces in the Large Company category for the third consecutive year. The list is based on employee surveys from more than 300 Greater Washington, D.C. area companies. Employees evaluated their companies on factors such as leadership, culture, and effectiveness.

Twelve Months Results

                   
(in millions except per-share data)    

Twelve Months,
FY17

   

Twelve Months,
FY16

    % Change
Revenue     $4,354.6     $3,744.1     16.3%
Operating income     $297.3     $264.8     12.3%
Net income     $163.7     $142.8     14.6%
Diluted earnings per share     $6.53     $5.76     13.4%
           

Revenue in FY17 increased compared to FY16 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 a lower effective tax rate. Net cash provided by operations in FY17 was $281.3 million.

Additional Financial Metrics

             
(in millions)  

Twelve Months,
FY17

 

Twelve Months,
FY16

  % Change
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP measure   $369.9   $330.4   12.0%
Adjusted net income, a non-GAAP measure   $223.7   $195.3   14.5%
See reconciliation of Net Income to Earnings before Interest, Taxes, Depreciation and Amortization and to Adjusted Net Income on page 10.
 

CACI Reiterates Its FY18 Guidance

We are reiterating the FY18 guidance we issued on June 21, 2017. The table below summarizes our FY18 guidance ranges and represents our views as of August 16, 2017:

       

 

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

   

Fiscal Year 2018
Guidance

Revenue     $4,350 - $4,500
Net income     $165 - $173
Effective corporate tax rate     36.5%
Diluted earnings per share     $6.52 - $6.84
Diluted weighted average shares     25.3
   

Conference Call Information

We have scheduled a conference call for 8:30 AM Eastern Time Thursday, August 17, 2017 during which members of our senior management team will be making a brief presentation focusing on fourth 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. 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 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 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 Twelve Months Ended
6/30/2017 6/30/2016 % Change 6/30/2017 6/30/2016 % Change
Revenue $ 1,137,389   $ 1,113,900   2.1 % $ 4,354,617   $ 3,744,053   16.3 %
Costs of revenue
Direct costs 769,038 755,580 1.8 % 2,934,804 2,487,633 18.0 %
Indirect costs and selling expenses 270,395 258,597 4.6 % 1,050,792 926,918 13.4 %
Depreciation and amortization   17,862     18,639   -4.2 %   71,760     64,752   10.8 %
Total costs of revenue   1,057,295     1,032,816   2.4 %   4,057,356     3,479,303   16.6 %
Operating income 80,094 81,084 -1.2 % 297,261 264,750 12.3 %
Interest expense and other, net   11,721     12,661   -7.4 %   48,642     41,138   18.2 %
Income before income taxes 68,373 68,423 -0.1 % 248,619 223,612 11.2 %
Income taxes   24,142     24,824   -2.7 %   84,948     80,813   5.1 %
Net income $ 44,231   $ 43,599   1.4 % $ 163,671   $ 142,799   14.6 %
 
Basic earnings per share $ 1.81 $ 1.79 0.9 % $ 6.71 $ 5.89 14.0 %
Diluted earnings per share $ 1.76 $ 1.75 0.4 % $ 6.53 $ 5.76 13.4 %
 
Weighted average shares used in per share computations:
Basic 24,459 24,319 24,401 24,262
Diluted 25,172 24,900 25,069 24,802
 
Statement of Operations Data (Unaudited)
Quarter Ended Twelve Months Ended
6/30/2017 6/30/2016 % Change 6/30/2017 6/30/2016 % Change
Operating income margin 7.0 % 7.3 % 6.8 % 7.1 %
Tax rate 35.3 % 36.3 % 34.2 % 36.1 %
Net income margin 3.9 % 3.9 % 3.8 % 3.8 %
 
Adjusted EBITDA* $ 97,357 $ 100,057 -2.7 % $ 369,904 $ 330,365 12.0 %
Adjusted EBITDA Margin 8.6 % 9.0 % 8.5 % 8.8 %
 
Adjusted net income* $ 58,911 $ 58,591 0.5 % $ 223,652 $ 195,296 14.5 %
 

* See Reconciliation of Net Income to 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)
 
  6/30/2017   6/30/2016
ASSETS:
Current assets
Cash and cash equivalents $ 65,539 $ 49,082
Accounts receivable, net 757,341 803,817
Prepaid expenses and other current assets   57,022   68,939
Total current assets 879,902 921,838
 
Goodwill and intangible assets, net 2,812,806 2,860,715
Property and equipment, net 91,749 81,362
Other long-term assets   126,625   123,426
Total assets $ 3,911,082 $ 3,987,341
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities
Current portion of long-term debt $ 53,965 $ 53,965
Accounts payable 62,874 95,270
Accrued compensation and benefits 239,741 228,362
Other accrued expenses and current liabilities   170,164   187,579
Total current liabilities 526,744 565,176
 
Long-term debt, net of current portion 1,177,598 1,402,079
Other long-term liabilities   413,019   412,773
Total liabilities   2,117,361   2,380,028
 
Shareholders' equity   1,793,721   1,607,313
Total liabilities and shareholders' equity $ 3,911,082 $ 3,987,341
 

 

Selected Financial Data (Continued)

 

CACI International Inc

Condensed Consolidated Statements of Cash Flows (Unaudited)
(Amounts in thousands)
   
Twelve Months Ended
6/30/2017 6/30/2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 163,671 $ 142,799

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

Depreciation and amortization 71,760 64,752
Amortization of deferred financing costs 4,484 3,234
Loss on disposal of fixed assets 1,025 -
Stock-based compensation expense 21,945 17,919
Provision for deferred income taxes 15,148 13,568
Equity in earnings from unconsolidated ventures (167 ) (204 )
Gain on sale of assets (1,545 ) -

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

Accounts receivable, net 46,158 (105 )
Prepaid expenses and other assets (5,221 ) (8,408 )
Accounts payable and accrued expenses (47,777 ) (7,204 )
Accrued compensation and benefits 12,048 4,320
Income taxes payable and receivable (9,954 ) 14,868
Other liabilities   9,675     (2,962 )
Net cash provided by operating activities   281,250     242,577  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (43,268 ) (20,835 )
Purchases of businesses, net of cash acquired (7,276 ) (587,821 )

Proceeds from net working capital and other refunds of acquired business

19,287 -
Proceeds from equity method investments 4,681 -
Other   1,772     1,069  
Net cash used in investing activities   (24,804 )   (607,587 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments) borrowings under credit facilities (228,965 ) 389,245
Proceeds from employee stock purchase plans 4,316 3,086
Repurchase of common stock (4,386 ) (3,230 )
Payment of taxes for equity transactions (10,951 ) (8,045 )
Other   -     451  
Net cash (used in) provided by financing activities   (239,986 )   381,507  
Effect of exchange rate changes on cash and cash equivalents   (3 )   (2,779 )
Net increase in cash and cash equivalents 16,457 13,718
Cash and cash equivalents, beginning of period   49,082     35,364  
Cash and cash equivalents, end of period $ 65,539   $ 49,082  
 

 
Selected Financial Data (Continued)
 
Revenue by Customer Type (Unaudited)
  Quarter Ended        
(dollars in thousands) 6/30/2017   6/30/2016  

$ Change

   % Change
Department of Defense $ 752,217   66.1 %   $ 714,698   64.1 %   $ 37,519   5.2 %
Federal Civilian Agencies 317,097 27.9 % 324,787 29.2 % (7,690 ) -2.4 %
Commercial and other   68,075   6.0 %     74,415   6.7 %     (6,340 )   -8.5 %
Total $ 1,137,389   100.0 %   $ 1,113,900   100.0 %   $ 23,489     2.1 %
 
Twelve Months Ended        
(dollars in thousands) 6/30/2017   6/30/2016  

$ Change

   % Change
Department of Defense $ 2,829,305 65.0 % $ 2,439,329 65.1 % $ 389,976 16.0 %
Federal Civilian Agencies 1,259,212 28.9 % 1,062,508 28.4 % 196,704 18.5 %
Commercial and other   266,100   6.1 %     242,216   6.5 %     23,884     9.9 %
Total $ 4,354,617   100.0 %   $ 3,744,053   100.0 %   $ 610,564     16.3 %
 
Revenue by Contract Type (Unaudited)
Quarter Ended        
(dollars in thousands) 6/30/2017   6/30/2016  

$ Change

   % Change
Cost reimbursable $ 572,051 50.3 % $ 551,704 49.5 % $ 20,347 3.7 %
Fixed price 353,233 31.1 % 349,026 31.3 % 4,207 1.2 %
Time and materials   212,105   18.6 %     213,170   19.2 %     (1,065 )   -0.5 %
Total $ 1,137,389   100.0 %   $ 1,113,900   100.0 %   $ 23,489     2.1 %
 
Twelve Months Ended        
(dollars in thousands) 6/30/2017   6/30/2016  

$ Change

   % Change
Cost reimbursable $ 2,128,063 48.9 % $ 1,817,923 48.5 % $ 310,140 17.1 %
Fixed price 1,407,409 32.3 % 1,245,269 33.3 % 162,140 13.0 %
Time and materials   819,145   18.8 %     680,861   18.2 %     138,284     20.3 %
Total $ 4,354,617   100.0 %   $ 3,744,053   100.0 %   $ 610,564     16.3 %
 
Revenue Received as a Prime versus Subcontractor (Unaudited)
Quarter Ended        
(dollars in thousands) 6/30/2017   6/30/2016  

$ Change

   % Change
Prime $ 1,056,907 92.9 % $ 1,027,582 92.3 % $ 29,325 2.9 %
Subcontractor   80,482   7.1 %     86,318   7.7 %     (5,836 )   -6.8 %
Total $ 1,137,389   100.0 %   $ 1,113,900   100.0 %   $ 23,489     2.1 %
 
Twelve Months Ended        
(dollars in thousands) 6/30/2017   6/30/2016  

$ Change

   % Change
Prime $ 4,045,958 92.9 % $ 3,421,817 91.4 % $ 624,141 18.2 %
Subcontractor   308,659   7.1 %     322,236   8.6 %     (13,577 )   -4.2 %
Total $ 4,354,617   100.0 %   $ 3,744,053   100.0 %   $ 610,564     16.3 %
 

 
Selected Financial Data (Continued)
 
Contract Funding Orders Received (Unaudited)
  Quarter Ended        
(dollars in thousands) 6/30/2017   6/30/2016  

$ Change

   % Change
Contract Funding Orders $ 1,067,786   $ 1,133,098   $ (65,312 )   -5.8 %
Twelve Months Ended        
(dollars in thousands) 6/30/2017   6/30/2016  

$ Change

   % Change
Contract Funding Orders $ 4,120,643   $ 4,125,910   $ (5,267 )   -0.1 %
     
Direct Costs by Category (Unaudited)
  Quarter Ended
(dollars in thousands) 6/30/2017   6/30/2016  

$ Change

  

% Change

Direct labor $ 324,608   42.2 %   $ 344,927   45.7 %   $ (20,319 )   -5.9 %
Other direct costs   444,430   57.8 %     410,653   54.3 %     33,777     8.2 %
Total direct costs $ 769,038   100.0 %   $ 755,580   100.0 %   $ 13,458     1.8 %
 
Twelve Months Ended
(dollars in thousands)

6/30/2017

   6/30/2016  

$ Change

  

% Change

Direct labor $ 1,317,576 44.9 % $ 1,197,838 48.2 % $ 119,738 10.0 %
Other direct costs   1,617,228   55.1 %     1,289,795   51.8 %     327,433     25.4 %
Total direct costs $ 2,934,804   100.0 %   $ 2,487,633   100.0 %   $ 447,171     18.0 %
 

 

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   Twelve Months Ended
(dollars in thousands) 6/30/2017   6/30/2016   % Change   6/30/2017   6/30/2016   % Change
Net income $ 44,231   $ 43,599   1.4 % $ 163,671   $ 142,799   14.6 %
Plus:
Income taxes 24,142 24,824 -2.7 % 84,948 80,813 5.1 %
Interest income and expense, net 11,721 12,636 -7.2 % 48,809 41,342 18.1 %
Depreciation and amortization 17,862 18,639 -4.2 % 71,760 64,752 10.8 %
Earnout adjustments   (599 )     359     -266.9 %     716       659     8.6 %
Adjusted EBITDA $ 97,357     $ 100,057     -2.7 %   $ 369,904     $ 330,365     12.0 %
 
Quarter Ended   Twelve Months Ended
(dollars in thousands) 6/30/2017   6/30/2016   % Change   6/30/2017   6/30/2016   % Change
Revenue, as reported $ 1,137,389 $ 1,113,900 2.1 % $ 4,354,617 $ 3,744,053 16.3 %
Adjusted EBITDA $ 97,357     $ 100,057     -2.7 %   $ 369,904     $ 330,365     12.0 %
Adjusted EBITDA margin   8.6 %     9.0 %         8.5 %     8.8 %    
 
Quarter Ended   Twelve Months Ended
(dollars in thousands) 6/30/2017   6/30/2016   % Change   6/30/2017   6/30/2016   % Change
Net income $ 44,231 $ 43,599 1.4 % $ 163,671 $ 142,799 14.6 %
Plus:
Stock-based compensation 5,831 4,590 27.0 % 21,945 17,919 22.5 %
Depreciation and amortization 17,862 18,639 -4.2 % 71,760 64,752 10.8 %
Amortization of financing costs 1,113 1,133 -1.8 % 4,484 3,234 38.7 %
Earn-out adjustments (599 ) 359 -266.9 % 716 659 8.6 %
Less:
Related tax effect   (9,527 )     (9,729 )   -2.1 %     (38,924 )     (34,067 )   14.3 %
Adjusted net income $ 58,911     $ 58,591     0.5 %   $ 223,652     $ 195,296     14.5 %