Net income of $30.3 million, up 23.1
percent
Revenue of $830.4 million, up 1.8
percent
Cash from operations of $56.2
million
Closes the acquisition of National Security
Solutions
Raises FY16 annual guidance
CACI International Inc (NYSE MKT: CACI), a leading information
solutions and services provider to the federal government,
announced results today for its second fiscal quarter ended
December 31, 2015.
CEO Commentary and Outlook
Ken Asbury, CACI’s President and CEO, said, “I am proud that our
team delivered solid performance, with positive organic revenue and
net income growth for the second consecutive quarter. Our cash flow
was strong, and we maintained our backlog at a high level. Earlier
this week, we closed on our purchase of National Security Solutions
(NSS) – the largest acquisition in our history. NSS broadens and
deepens our customer relationships within Enterprise IT,
Intelligence Services and other key market areas. It also expands
our capabilities and brings outstanding credentials to help us
pursue and win large, next generation IT contracts across the
federal marketplace. We are raising our FY16 guidance to reflect
the contribution from the NSS business. Looking ahead, we are
confident that our market-driven focus on delivering innovative
solutions and services to support critical national security
missions will deliver long-term value for our shareholders.”
Second Quarter Results
(in millions
except per-share data) Q2, FY16 Q2, FY15 %
Change Revenue $830.4 $815.4 1.8% Operating
income $55.5 $47.5 16.7% Net income
attributable to CACI $30.3 $24.6 23.1% Diluted
earnings per share $1.23 $1.01 21.3%
Revenue for the second quarter of Fiscal Year 2016 (FY16)
increased compared to the second quarter of Fiscal Year 2015
(FY15), driven by growth on existing contracts, new business, and
acquired revenue. The higher operating income was due to the above
factors for the increase in revenue and lower depreciation and
amortization expense offset by $4.1 million of one-time
acquisition-related expenses. The increase in net income was due to
the factors noted above as well as lower net interest expense and a
lower effective tax rate in the quarter. Cash provided by
operations in the quarter was $56.2 million.
Additional Financial Metrics
Q2,
FY16 Q2, FY15 % Change Earnings before interest,
taxes, depreciation and amortization (EBITDA), a non-GAAP measure
(in millions) $70.4 $64.7 8.9% Diluted
adjusted earnings per share, a non-GAAP measure $1.73
$1.54 12.2% Days sales outstanding 60 67
Second Quarter Awards, Contract Funding Orders, and Other
Highlights
Our contract awards were $671 million in the second quarter of
FY16. Over 40 percent of our awards in the quarter were for new
business. Two of our key awards during the quarter included:
- A $199 million, five-year contract to
provide operations and maintenance support and enhancements for the
U.S. Department of Agriculture’s Web-Based Supply Chain Management
system. This award represents new work in our Business Systems and
Logistics and Material Readiness market areas.
- A $56.3 million, five-year contract to
provide systems engineering and software development and
sustainment services and solutions for the U.S. Army Program
Executive Office for Command, Control, Communications – Tactical
Project Director Network Enablers. This award represents both new
and continuing work in our Communications market area.
Contract funding orders in the second quarter were $541 million.
Our total backlog at December 31, 2015 was $10.4 billion, an
increase of 6.2 percent, compared with $9.8 billion at the end of
the second quarter of FY15. Funded backlog at December 31, 2015 was
$2.0 billion, an increase of 5.8 percent, compared with $1.9
billion at December 31, 2014.
In response to the need by a number of government customers
during the quarter to address the increasing threat posed by
unmanned aircraft systems (UAS), we are rapidly deploying
SkyTracker™. This proprietary system accurately and reliably
detects, identifies, tracks, and mitigates UAS threats.
CACI’s Board of Directors chartered the Culture, Character,
Integrity, and Ethics Committee to oversee the company’s efforts to
institutionalize its culture of good character and company-wide
commitment to ethics and integrity. The Committee is chaired by Dr.
J.P. London, Executive Chairman and Chairman of the Board. The
introduction of the Culture, Character, Integrity and Ethics
Committee continues CACI’s vigilance and leadership efforts to
uphold the highest standards of honesty and excellence in achieving
its customers’ critical missions and growth as a business.
Six Months Results
(in millions
except per-share data)
Six Months,FY16
Six Months,FY15
% Change Revenue $1,652.9 $1,630.1 1.4%
Operating income $120.0 $107.6 11.5% Net
income attributable to CACI $64.1 $55.8 15.0%
Diluted earnings per share $2.60 $2.30 12.9%
Revenue increased compared to revenue for the first half of FY15
due to growth on existing contracts, new business, and acquired
revenue. The higher operating and net income in the first half of
FY16 was due primarily to the above factors for the increase in
revenue and lower depreciation and amortization expense offset by
one-time acquisition-related expenses. Net cash provided by
operations in the first half of FY16 was $134.7 million.
Additional Financial Metrics
Six Months,FY16
Six Months,FY15
% Change Earnings before interest, taxes, depreciation and
amortization (EBITDA), a non-GAAP measure (in millions)
$149.7 $141.9 5.5% Diluted adjusted earnings per
share, a non-GAAP measure $3.57 $3.35 6.6%
Closing of Transaction for L-3’s National Security Solutions
Division
On February 1, 2016, we closed on our acquisition of NSS, which
we announced on December 8, 2015, for $550 million in cash. NSS is
a prime mission partner to the Department of Defense, intelligence
agencies, and the U.S. Federal Civilian Government. The largest
acquisition in CACI’s history, NSS has approximately 4,000
employees worldwide. The acquisition significantly expands
opportunities in our Enterprise IT, Intelligence Services and other
key market areas, and allows us to offer a broader array of
solutions to our customers. It is expected to be accretive in FY16,
excluding one-time transaction expenses, and at least 10 percent
accretive to both our Fiscal Year 2017 GAAP and diluted adjusted
earnings per share.
CACI Updates Its FY16 Guidance
We are updating the FY16 guidance we issued on October 28, 2015
to include the effects of the acquisition of NSS, including
one-time transaction expenses. The table below summarizes our FY16
guidance ranges and represents our views as of February 3,
2016:
(In millions except for earnings per
share)
Current Fiscal Year2016
Guidance
Previous Fiscal Year2016
Guidance
Revenue $3,700 - $3,900 $3,300 - $3,500 Net income
attributable to CACI $133 - $143 $130 - $140
Effective corporate tax rate 38.5% 38.5% Diluted
earnings per share $5.37 - $5.77 $5.24 - $5.65
Diluted weighted average shares 24.8 24.8
Following are the key factors related to our updated FY16
guidance:
- We expect that the acquisition of NSS
will generate $400 million to $450 million in revenue and $10
million to $15 million of net income before $6-$7 million of
one-time, after-tax acquisition-related costs in the second half of
FY16. In addition, we incurred about $3 million of one-time,
after-tax acquisition expenses in our first half.
- Depreciation and intangible
amortization is now expected to be approximately $65 million.
- Net interest expense is now expected to
be approximately $42 million.
- We expect that operating cash flow will
be in excess of $225 million.
Conference Call Information
We have scheduled a conference call for 8:30 AM Eastern Time
Thursday, February 4, 2016 during which members of our senior
management team 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 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 1-888-771-4371 and enter the confirmation code 41539249. 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 SmallCap 600 Index. CACI provides
dynamic careers for over 20,000 employees worldwide. Visit
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: 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;
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-Financial
Selected Financial
Data CACI International Inc Condensed
Consolidated Statements of Operations (Unaudited) (Amounts in
thousands, except per share amounts)
Quarter Ended
Six Months Ended 12/31/2015
12/31/2014 % Change
12/31/2015
12/31/2014 % Change Revenue $ 830,437 $
815,423 1.8 % $ 1,652,879 $ 1,630,149 1.4 %
Costs of revenue Direct costs 547,140 546,694 0.1 % 1,084,564
1,083,298 0.1 % Indirect costs and selling expenses 213,144 204,406
4.3 % 418,844 405,233 3.4 % Depreciation and amortization
14,670 16,795 -12.7 % 29,481
34,031 -13.4 % Total costs of revenue 774,954
767,895 0.9 % 1,532,889
1,522,562 0.7 % Operating income 55,483 47,528 16.7 %
119,990 107,587 11.5 % Interest expense and other, net 8,180
8,600 -4.9 % 17,362
17,680 -1.8 % Income before income taxes 47,303 38,928 21.5
% 102,628 89,907 14.1 % Income taxes 16,965
14,292 18.7 % 38,488 34,014 13.2
% Net income 30,338 24,636 23.1 % 64,140 55,893 14.8 %
Noncontrolling interest - 6 -
(121 ) Net income attributable to CACI $ 30,338
$ 24,642 23.1 % $ 64,140 $ 55,772 15.0
% Basic earnings per share $ 1.25 $ 1.03 21.3 % $ 2.65 $
2.35 12.6 % Diluted earnings per share $ 1.23 $ 1.01 21.3 % $ 2.60
$ 2.30 12.9 % Weighted average shares used in per share
computations: Basic 24,246 23,890 24,227 23,728 Diluted 24,681
24,314 24,655 24,210
Statement of Operations Data
(Unaudited) Quarter Ended Six Months Ended
12/31/2015 12/31/2014
% Change
12/31/2015 12/31/2014
% Change
Operating income margin 6.7 % 5.8 % 7.3 % 6.6 % Tax rate 35.9 %
36.7 % 37.5 % 37.9 % Net income margin 3.7 % 3.0 % 3.9 % 3.4 %
Adjusted EBITDA* $ 70,439 $ 64,657 8.9 % $ 149,708 $ 141,904
5.5 % Adjusted EBITDA Margin 8.5 % 7.9 % 9.1 % 8.7 %
Adjusted net income attributable to
CACI*
$ 42,600 $ 37,411 13.9 % $ 87,940 $ 81,002 8.6 % Diluted adjusted
earnings per share $ 1.73 $ 1.54 12.2 % $ 3.57 $ 3.35 6.6 %
*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)
12/31/2015 6/30/2015
ASSETS: Current assets Cash and cash equivalents $ 68,997 $
35,364 Accounts receivable, net 561,091 596,155 Prepaid expenses
and other current assets 45,570 44,941
Total current assets 675,658 676,460 Goodwill and intangible
assets, net 2,386,752 2,384,998 Property and equipment, net 59,441
63,689 Other long-term assets 131,434 131,969
Total assets $ 3,253,285 $ 3,257,116
LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities
Current portion of long-term debt $ 38,965 $ 38,965 Accounts
payable 65,817 56,840 Accrued compensation and benefits 168,369
185,830 Other accrued expenses and current liabilities
126,156 118,046 Total current liabilities
399,307 399,681 Long-term debt, net of current portion
955,491 1,029,335 Other long-term liabilities 353,644
347,828 Total liabilities 1,708,442
1,776,844 Shareholders' equity
1,544,843 1,480,272 Total liabilities and
shareholders' equity $ 3,253,285 $ 3,257,116
Selected Financial Data (Continued) CACI
International Inc Condensed Consolidated Statements of Cash
Flows (Unaudited) (Amounts in thousands)
Six Months
Ended 12/31/2015 12/31/2014
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $
64,140 $ 55,893
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 29,481 34,031 Amortization of
deferred financing costs 1,152 1,378 Stock-based compensation
expense 8,473 6,194 Provision for deferred income taxes 12,045
15,355 Undistirbuted earnings of unconsolidated joint ventures (98
) (407 ) Changes in operating assets and liabilities Accounts
receivable, net 35,216 (7,443 ) Prepaid expenses and other assets
(7,170 ) 630 Accounts payable and accrued expenses 11,870 16,543
Accrued compensation and benefits (16,998 ) (9,945 ) Income taxes
receivable and payable (2,768 ) (18,318 ) Other liabilities
(647 ) (635 ) Net cash provided by operating activities
134,696 93,276
CASH FLOWS
FROM INVESTING ACTIVITIES: Capital expenditures (7,642 ) (7,330
) Purchases of businesses, net of cash acquired (15,578 ) -
Investment in unconsolidated joint venture - 460 Other (684
) 636 Net cash used in investing activities
(23,904 ) (6,234 )
CASH FLOWS FROM FINANCING
ACTIVITIES: Net payments under credit facilities (74,494 )
(115,528 ) Proceeds from employee stock purchase plans 1,577 1,745
Repurchases of common stock (1,689 ) (1,776 ) Payment of taxes for
equity transactions (2,560 ) (6,401 ) Other 1,395
2,600 Net cash used in financing activities
(75,771 ) (119,360 ) Effect of exchange rate changes on cash
and cash equivalents (1,388 ) (1,269 ) Net increase
(decrease) in cash and cash equivalents 33,633 (33,587 ) Cash and
cash equivalents, beginning of period 35,364
64,461 Cash and cash equivalents, end of period $ 68,997
$ 30,874
Selected Financial Data (Continued) Revenue by
Customer Type (Unaudited) Quarter Ended
(dollars in thousands)
12/31/2015
12/31/2014
$ Change
% Change Department of Defense $ 543,716 65.5 % $
548,160 67.2 % $ (4,444 ) -0.8 % Federal Civilian Agencies 232,773
28.0 % 213,378 26.2 % 19,395 9.1 % Commercial and other
53,948 6.5 % 53,885 6.6 %
63 0.1 % Total $ 830,437 100.0 % $
815,423 100.0 % $ 15,014 1.8 %
Six Months Ended (dollars in
thousands)
12/31/2015 12/31/2014
$ Change % Change Department of Defense
$ 1,087,235 65.8 % $ 1,102,458 67.6 % $ (15,223 ) -1.4 % Federal
Civilian Agencies 458,196 27.7 % 421,623 25.9 % 36,573 8.7 %
Commercial and other 107,448 6.5 %
106,068 6.5 % 1,380 1.3 % Total
$ 1,652,879 100.0 % $ 1,630,149 100.0 %
$ 22,730 1.4 %
Revenue by Contract Type
(Unaudited) Quarter Ended
(dollars in thousands)
12/31/2015 12/31/2014
$ Change % Change Cost
reimbursable $ 394,425 47.5 % $ 376,197 46.1 % $ 18,228 4.8 % Fixed
price 288,883 34.8 % 294,239 36.1 % (5,356 ) -1.8 % Time and
materials 147,129 17.7 % 144,987
17.8 % 2,142 1.5 % Total $ 830,437
100.0 % $ 815,423 100.0 % $ 15,014
1.8 %
Six Months Ended
(dollars in thousands)
12/31/2015
12/31/2014 $ Change %
Change Cost reimbursable $ 782,423 47.3 % $ 750,339 46.0 % $
32,084 4.3 % Fixed price 578,184 35.0 % 586,349 36.0 % (8,165 )
-1.4 % Time and materials 292,272 17.7 %
293,461 18.0 % (1,189 ) -0.4 %
Total $ 1,652,879 100.0 % $ 1,630,149 100.0 %
$ 22,730 1.4 %
Revenue Received as a
Prime versus Subcontractor (Unaudited) Quarter Ended
(dollars in thousands)
12/31/2015 12/31/2014 $
Change % Change Prime $ 758,336 91.3 % $
726,310 89.1 % $ 32,026 4.4 % Subcontractor 72,101
8.7 % 89,113 10.9 % (17,012 )
-19.1 % Total $ 830,437 100.0 % $ 815,423
100.0 % $ 15,014 1.8 %
Six
Months Ended (dollars in thousands)
12/31/2015 12/31/2014 $
Change % Change Prime $ 1,500,914 90.8 % $
1,452,289 89.1 % $ 48,625 3.3 % Subcontractor 151,965
9.2 % 177,860 10.9 % (25,895 )
-14.6 % Total $ 1,652,879 100.0 % $ 1,630,149
100.0 % $ 22,730 1.4 %
Selected Financial Data (Continued)
Contract Funding Orders Received (Unaudited)
Quarter Ended (dollars in
thousands)
12/31/2015
12/31/2014
$ Change
% Change Contract Funding Orders $ 541,358
$ 570,753 $ (29,395 ) -5.2 %
Six
Months Ended (dollars in
thousands)
12/31/2015
12/31/2014
$ Change
% Change Contract Funding Orders $ 1,669,834
$ 1,920,649 $ (250,815 ) -13.1 %
Direct Costs by Category
(Unaudited) Quarter Ended (dollars in thousands)
12/31/2015 12/31/2014
$ Change
% Change Direct labor $ 259,835 47.5 % $ 257,275 47.1
% $ 2,560 1.0 % Other direct costs 287,305 52.5 %
289,419 52.9 % (2,114 )
-0.7 % Total direct costs $ 547,140 100.0 % $ 546,694
100.0 % $ 446 0.1 %
Six
Months Ended (dollars in thousands)
12/31/2015
12/31/2014
$ Change
% Change Direct labor $ 530,299 48.9 % $ 515,394 47.6
% $ 14,905 2.9 % Other direct costs 554,265 51.1 %
567,904 52.4 % (13,639 )
-2.4 % Total direct costs $ 1,084,564 100.0 % $
1,083,298 100.0 % $ 1,266 0.1 %
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, Adjusted Net Income and Diluted Adjusted
Earnings Per Share as important indicators of
performance, consistent with the manner in which management
measures and forecasts the Company’s
performance. EBITDA is a commonly used non-GAAP
measure when comparing our results with those of other
companies. We believe Adjusted Net Income is a
significant driver of long-term value and is used by investors to
measure our performance. This measure in particular
assists readers in further understanding our results and trends
from period-to-period by removing certain non-cash items that do
not impact the cash flow performance of our
business. Adjusted EBITDA is defined by us as GAAP net
income attributable to CACI plus net interest expense, income
taxes, depreciation and amortization, and earn-out
adjustments. Adjusted EBITDA margin is adjusted EBITDA
divided by revenue. Adjusted Net Income is defined by us
as GAAP net income attributable to CACI plus stock-based
compensation expense, depreciation and amortization, amortization
of financing costs, non-cash interest expense, and earn-out
adjustments net of related tax effects. Diluted Adjusted
Earnings Per Share is Adjusted Net Income divided by diluted
weighted-average shares, as reported. 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 Six Months Ended
(dollars in thousands)
12/31/2015
12/31/2014 % Change
12/31/2015 12/31/2014
% Change Net income attributable to CACI $
30,338 $ 24,642 23.1 % $ 64,140 $
55,772 15.0 % Plus: Income taxes 16,965 14,292 18.7 % 38,488
34,014 13.2 % Interest income and expense, net 8,327 8,928 -6.7 %
17,460 18,087 -3.5 % Depreciation and amortization 14,670 16,795
-12.7 % 29,481 34,031 -13.4 % Earn-out adjustments 139
- 139
- Adjusted EBITDA $
70,439 $ 64,657 8.9 % $ 149,708
$ 141,904 5.5 %
Quarter
Ended Six Months Ended (dollars in thousands)
12/31/2015 12/31/2014
% Change 12/31/2015
12/31/2014 %
Change Revenue, as reported $ 830,437 $ 815,423 1.8 % $
1,652,879 $ 1,630,149 1.4 % Adjusted EBITDA $ 70,439
$ 64,657 8.9 % $ 149,708 $
141,904 5.5 % Adjusted EBITDA margin 8.5 %
7.9 % 9.1 %
8.7 %
Quarter Ended Six
Months Ended (dollars in thousands)
12/31/2015
12/31/2014 %
Change 12/31/2015
12/31/2014 % Change Net income
attributable to CACI $ 30,338 $ 24,642 23.1 % $ 64,140 $ 55,772
15.0 % Plus: Stock-based compensation 4,835 3,574 35.3 % 8,473
6,194 36.8 % Depreciation and amortization 14,670 16,795 -12.7 %
29,481 34,031 -13.4 % Amortization of financing costs 575 687 -16.3
% 1,152 1,378 -16.4 % Earn-out adjustments 139 - 139 - Less:
Related tax effect (7,957 ) (8,287 ) -4.0 % (15,445 ) (16,373 )
-5.7 %
Adjusted net income attributable to
CACI
$ 42,600 $ 37,411 13.9 % $
87,940 $ 81,002 8.6 %
Quarter
Ended Six Months Ended (shares in thousands)
12/31/2015 12/31/2014
% Change 12/31/2015
12/31/2014 %
Change
Diluted weighted average shares, as
reported
24,681 24,314 24,655 24,210 Diluted earnings per share $ 1.23
$ 1.01 21.3 % $ 2.60
$ 2.30 12.9 % Diluted adjusted earnings per
share $ 1.73 $ 1.54 12.2 % $
3.57 $ 3.35 6.6 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160203006539/en/
CACI International IncCorporate Communications and Media:Jody
Brown, Executive Vice President,Public
Relations703-841-7801jbrown@caci.comorInvestor Relations:David
Dragics, Senior Vice President,Investor
Relations866-606-3471ddragics@caci.com
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