Record second quarter contract awards of
$1.88 billion, up 162 percent
Record backlog of $9.8 billion, up 29
percent
Reiterates FY15 annual guidance
CACI International Inc (NYSE: CACI), a leading information
solutions and services provider to the federal government,
announced results today for its second fiscal quarter ended
December 31, 2014.
CEO Commentary and Outlook
Ken Asbury, CACI’s President and CEO, said, “Our results for the
second quarter were in line with our expectations. We received
record contract awards for the quarter, solid contract funding, and
our backlog grew significantly as we continued to execute our
strategy of winning business and delivering operational excellence.
We also completed the substantial ramp-up associated with the
significant growth of our background investigation work for the
Office of Personnel Management (OPM). While the associated costs
materially impacted our operating and net income for the quarter,
we are reiterating our FY15 guidance as we will see the benefit of
these investments in the second half of the year, in particular our
fourth quarter.
“We are confident in our competitive position and our ability to
continue to meet the needs of our customers through the delivery of
our innovative, affordable solutions and services. The first half
of our fiscal year has provided us with a solid foundation for a
strong finish in FY15 which gives us confidence in reiterating our
guidance.”
Second Quarter Results
(in millions
except per-share data) Q2, FY15 Q2, FY14 %
Change Revenue $815.4 $894.2 -8.8% Operating
income $47.5 $66.5 -28.5% Net income
attributable to CACI $24.6 $35.0 -29.5%
Diluted earnings per share $1.01 $1.38 -26.7%
Revenue for the second quarter of Fiscal Year 2015 (FY15)
decreased 8.8 percent compared to the second quarter of Fiscal Year
2014 (FY14). The decline in revenue was primarily due to a
reduction of other direct costs resulting from in-theater
reductions and federal government budget-related activities that
were partially offset by increased direct labor. The decrease in
operating and net income in the quarter was driven by start-up
costs associated with the growth of background investigation work
for the Office of Personnel Management (OPM). The lesser decrease
in diluted earnings per share as compared to the decrease in net
income was due to fewer diluted shares as a result of paying off
our convertible notes in May 2014.
For the second quarter Six3 generated $91 million of revenue.
For calendar year 2014 the Six3 acquisition generated 5 percent
accretion in GAAP earnings per share and 13 percent in diluted
adjusted earnings per share, excluding transaction expenses.
Additional Financial Metrics
Q2,
FY15 Q2, FY14 % Change Earnings before interest,
taxes, depreciation and amortization (EBITDA), a non-GAAP measure
(in millions) $64.7 $83.2 -22.3% Diluted
adjusted earnings per share, a non-GAAP measure $1.54
$2.05 -24.8% Days sales outstanding 67 67
Second Quarter Awards and Contract Funding Orders
Our contract awards were $1.88 billion in the second quarter of
FY15, 162 percent higher than the $717 million of contract awards
in the second quarter of FY14. Approximately 50 percent of our
awards in the quarter were new business.
Contract funding orders in the second quarter were $571 million
compared with $599 million in the year earlier quarter. Our total
backlog at December 31, 2014 was $9.8 billion. Funded backlog at
December 31, 2014 was $1.9 billion.
Second Quarter Highlights and Recognition
- CACI entered into a cooperative
partnership with Appcelerator® that will enable customers,
particularly in the Department of Defense and the Intelligence
Community, to rapidly develop and deploy secure smartphone and
tablet apps at lower development cost. The partnership of CACI and
Appcelerator will provide an end-to-end solution set to deliver
secure, reliable, and cost-effective mobile apps to support federal
agencies’ critical missions.
- In December CACI appointed Jerry
Briggs, former Chief Operating Officer, Health & Public Service
North America of Accenture, the world’s largest consulting firm, as
Executive Vice President and Business Group Manager of Healthcare,
Litigation & Enterprise IT. Mr. Briggs is an experienced
industry veteran who for 30 years led a $3 billion dollar
healthcare and public service business and brings a strong track
record of profitable growth in federal services. He will continue
CACI’s aggressive expansion in the healthcare sector.
- Executive Chairman and Chairman of the
Board Dr. J.P. (Jack) London was named one of the “100 Most
Influential People in Business Ethics” for 2014 by the Ethisphere
Institute. The annual list recognizes people who have made a
positive material impact on the world of business ethics. Dr.
London’s inclusion in this list underscores CACI’s commitment to
ethics and integrity in delivering our services and solutions to
our customers.
Six Months Results
Six Months,
Six Months, (in millions except per-share data)
FY15 FY14 % Change Revenue $1,630.1
$1,758.5 -7.3% Operating income $107.6
$127.6 -15.7% Net income attributable to CACI $55.8
$68.0 -17.9% Diluted earnings per share $2.30
$2.71 -15.0%
Revenue decreased 7.3 percent compared to revenue for the first
half of FY14 due to reductions in subcontract labor and other
direct costs resulting from in-theater reductions and federal
government budget-related activities. The decrease in operating and
net income in the first half of FY15 was due primarily to start-up
costs associated with the significant growth of background
investigation work for OPM. The lesser decrease in diluted earnings
per share as compared to the decrease in net income was due to
fewer diluted shares as a result of paying off our convertible
notes in May 2014. Net cash provided by operations in the first
half of FY15 was $93.3 million.
Additional Financial Metrics
Six Months,
Six Months, FY15 FY14 %
Change Earnings before interest, taxes, depreciation and
amortization (EBITDA), a non-GAAP measure (in millions)
$141.9 $157.4 -9.8% Diluted adjusted earnings per
share, a non-GAAP measure $3.35 $3.85 -13.1%
CACI Reiterates Its FY15 Guidance
We are reiterating the FY15 guidance we issued on October 29,
2014. The table below summarizes our FY15 guidance ranges and
represents our views as of January 28, 2015:
FY 2015
(In millions except for tax rate and earnings per share)
Guidance
Revenue $3,300 - $3,600 Net income attributable to CACI
$125 - $135 Effective corporate tax rate 38.1%
Diluted earnings per share $5.14 - $5.56 Diluted weighted
average shares 24.3
Conference Call Information
We have scheduled a conference call for 8:30 AM Eastern Time
Thursday, January 29, 2015 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 877-303-9143 and enter the confirmation code 45343421. 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 16,300 employees in 120 offices 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: actual revenue and earnings realized by
Six3 Systems, and the performance of the Six3 Systems business;
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 and the Bipartisan Budget Act of 2013; 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 12/31/2014 12/31/2013 %
Change
12/31/2014 12/31/2013 % Change Revenue
$ 815,423 $ 894,186 -8.8 % $ 1,630,149 $
1,758,451 -7.3 % Costs of revenue Direct costs 546,694
606,672 -9.9 % 1,083,298 1,208,094 -10.3 % Indirect costs and
selling expenses 204,406 204,830 -0.2 % 405,233 393,540 3.0 %
Depreciation and amortization 16,795 16,230
3.5 % 34,031 29,181 16.6 % Total
costs of revenue 767,895 827,732 -7.2 %
1,522,562 1,630,815 -6.6 % Operating
income 47,528 66,454 -28.5 % 107,587 127,636 -15.7 % Interest
expense and other, net 8,600 9,456 -9.1
% 17,680 16,844 5.0 % Income before
income taxes 38,928 56,998 -31.7 % 89,907 110,792 -18.9 % Income
taxes 14,292 22,088 -35.3 %
34,014 42,490 -19.9 % Net income 24,636 34,910
-29.4 % 55,893 68,302 -18.2 % Noncontrolling interest 6
52 (121 ) (348 ) Net income
attributable to CACI $ 24,642 $ 34,962 -29.5 % $
55,772 $ 67,954 -17.9 % Basic earnings per
share $ 1.03 $ 1.49 -30.9 % $ 2.35 $ 2.91 -19.2 % Diluted earnings
per share $ 1.01 $ 1.38 -26.7 % $ 2.30 $ 2.71 -15.0 %
Weighted average shares used in per share computations: Basic
23,890 23,433 23,728 23,374 Diluted 24,314 25,297 24,210 25,066
Statement of Operations Data (Unaudited) Quarter
Ended Six Months Ended 12/31/2014
12/31/2013 % Change
12/31/2014 12/31/2013 %
Change Operating income margin 5.8 % 7.4 % 6.6 % 7.3 % Tax rate
36.7 % 38.7 % 37.9 % 38.5 % Net income margin 3.0 % 3.9 % 3.4 % 3.9
% EBITDA* $ 64,657 $ 83,248 -22.3 % $ 141,904 $ 157,401 -9.8
% EBITDA Margin 7.9 % 9.3 % 8.7 % 9.0 % Adjusted net income*
$ 37,411 $ 51,770 -27.7 % $ 81,002 $ 96,485 -16.0 % Diluted
adjusted earnings per share $ 1.54 $ 2.05 -24.8 % $ 3.35 $ 3.85
-13.1 % *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)
12/31/2014 6/30/2014
ASSETS: Current assets Cash and cash equivalents $ 30,874 $
64,461 Accounts receivable, net 619,332 615,580 Prepaid expenses
and other current assets 63,838 55,808 Total current
assets 714,044 735,849 Goodwill and intangible assets, net
2,389,849 2,418,979 Property and equipment, net 63,611 68,485 Other
long-term assets 132,871 135,825 Total assets $
3,300,375 $ 3,359,138
LIABILITIES AND SHAREHOLDERS'
EQUITY: Current liabilities Current portion of long-term debt $
41,563 $ 41,563 Accounts payable 90,628 55,811 Accrued compensation
and benefits 172,247 183,361 Other accrued expenses and current
liabilities 121,394 141,852 Total current liabilities
425,832 422,587 Long-term debt, net of current portion
1,123,822 1,238,728 Other long-term liabilities 346,444
338,657 Total liabilities 1,896,098 1,999,972
Shareholders' equity 1,404,277 1,359,166 Total
liabilities and shareholders' equity $ 3,300,375 $ 3,359,138
Selected Financial Data (Continued) CACI
International Inc Condensed Consolidated Statements of Cash
Flows (Unaudited) (Amounts in thousands)
Six
Months Ended 12/31/2014 12/31/2013 CASH
FLOWS FROM OPERATING ACTIVITIES: Net income $ 55,893 $ 68,302
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 34,031 29,181 Non-cash interest
expense - 6,769 Amortization of deferred financing costs 1,378
5,245 Stock-based compensation expense 6,194 5,785 Provision for
deferred income taxes 15,355 14,957
Undistributed earnings of unconsolidated
joint ventures
(407 ) (947 ) Changes in operating assets and liabilities Accounts
receivable, net (7,443 ) (6,178 ) Prepaid expenses and other assets
630 (6,504 ) Accounts payable and accrued expenses 16,543 (49,913 )
Accrued compensation and benefits (9,945 ) (21,816 ) Income taxes
receivable and payable (18,318 ) (4,545 ) Other liabilities
(635 ) 4,241 Net cash provided by operating
activities 93,276 44,577
CASH
FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (7,330 )
(7,143 ) Purchases of businesses, net of cash acquired - (835,684 )
Investment in unconsolidated joint venture 460 -
Other
636 (893 ) Net cash used in investing
activities (6,234 ) (843,720 )
CASH FLOWS
FROM FINANCING ACTIVITIES: Net (payments) borrowings under
credit facilities (115,528 ) 836,778 Proceeds from employee stock
purchase plans 1,745 1,849 Repurchases of common stock (1,776 )
(1,884 ) Payment of taxes for equity transactions (6,401 ) (7,936 )
Other
2,600 3,026 Net cash (used in) provided
by financing activities (119,360 ) 831,833
Effect of exchange rate changes on cash and cash equivalents
(1,269 ) 1,146 Net (decrease) increase in cash and
cash equivalents (33,587 ) 33,836 Cash and cash equivalents,
beginning of period 64,461 64,337 Cash
and cash equivalents, end of period $ 30,874 $ 98,173
Selected Financial Data (Continued)
Revenue by Customer Type (Unaudited) Quarter
Ended (dollars in thousands)
12/31/2014 12/31/2013
$ Change
% Change Department of Defense $ 548,160 67.2
% $ 650,303 72.7 % $ (102,143 ) -15.7 %
Federal Civilian Agencies 213,378 26.2 % 186,875 20.9 % 26,503 14.2
% Commercial and other 53,885 6.6 %
57,008 6.4 % (3,123 ) -5.5 % Total $
815,423 100.0 % $ 894,186 100.0 % $
(78,763 ) -8.8 %
Six Months Ended
(dollars in thousands)
12/31/2014
12/31/2013
$ Change
% Change Department of Defense $ 1,102,458 67.6 % $
1,267,952 72.1 % $ (165,494 ) -13.1 % Federal Civilian Agencies
421,623 25.9 % 383,028 21.8 % 38,595 10.1 % Commercial and other
106,068 6.5 % 107,471 6.1 %
(1,403 ) -1.3 % Total $ 1,630,149 100.0
% $ 1,758,451 100.0 % $ (128,302 ) -7.3
%
Revenue by Contract Type (Unaudited) Quarter
Ended (dollars in thousands)
12/31/2014 12/31/2013
$ Change
% Change Cost reimbursable $ 376,197 46.1 % $ 443,125
49.5 % $ (66,928 ) -15.1 % Fixed price 294,239 36.1 % 274,273 30.7
% 19,966 7.3 % Time and materials 144,987 17.8 %
176,788 19.8 % (31,801 )
-18.0 % Total $ 815,423 100.0 % $ 894,186
100.0 % $ (78,763 ) -8.8 %
Six Months
Ended (dollars in thousands)
12/31/2014 12/31/2013
$ Change
% Change Cost reimbursable $ 750,339 46.0 % $ 864,135
49.1 % $ (113,796 ) -13.2 % Fixed price 586,349 36.0 % 536,728 30.5
% 49,621 9.2 % Time and materials 293,461 18.0 %
357,588 20.4 % (64,127 )
-17.9 % Total $ 1,630,149 100.0 % $ 1,758,451
100.0 % $ (128,302 ) -7.3 %
Revenue
Received as a Prime versus Subcontractor (Unaudited) Quarter
Ended (dollars in thousands)
12/31/2014 12/31/2013
$ Change
% Change Prime $ 726,310 89.1 % $ 805,235 90.1 % $
(78,925 ) -9.8 % Subcontractor 89,113 10.9 %
88,951 9.9 % 162 0.2 %
Total $ 815,423 100.0 % $ 894,186 100.0 %
$ (78,763 ) -8.8 %
Six Months Ended
(dollars in thousands)
12/31/2014 12/31/2013
$ Change
% Change Prime $ 1,452,289 89.1 % $ 1,577,994 89.7 %
$ (125,705 ) -8.0 % Subcontractor 177,860 10.9 %
180,457 10.3 % (2,597 )
-1.4 % Total $ 1,630,149 100.0 % $ 1,758,451
100.0 % $ (128,302 ) -7.3 %
Selected
Financial Data (Continued) Contract Funding Orders
Received (Unaudited) Quarter Ended
(dollars in thousands)
12/31/2014
12/31/2013
$ Change
% Change Contract Funding Orders $ 570,753 $
598,748 $ (27,995 ) -4.7 %
Six Months Ended
(dollars in thousands)
12/31/2014 12/31/2013
$ Change
% Change Contract Funding Orders $ 1,920,649 $
1,909,320 $ 11,329 0.6 %
Direct
Costs by Category (Unaudited) Quarter Ended
(dollars in thousands)
12/31/2014 12/31/2013
$ Change
% Change Direct labor $ 257,275 47.1 %
$ 244,907 40.4 % $ 12,368 5.1 % Other direct
costs 289,419 52.9 % 361,765
59.6 % (72,346 ) -20.0 % Total direct costs $
546,694 100.0 % $ 606,672 100.0 % $
(59,978 ) -9.9 %
Six Months Ended (dollars in
thousands)
12/31/2014 12/31/2013
$ Change
% Change Direct labor $ 515,394 47.6 % $ 493,681 40.9
% $ 21,713 4.4 % Other direct costs 567,904 52.4 %
714,413 59.1 % (146,509 )
-20.5 % Total direct costs $ 1,083,298 100.0 % $
1,208,094 100.0 % $ (124,796 ) -10.3 %
Selected Financial Data (Continued)
Reconciliation of Net Income to Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) and to Adjusted Net
Income (Unaudited)
The Company views EBITDA, 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. EBITDA is
defined by us as GAAP net income attributable to CACI plus net
interest expense, income taxes, and depreciation and amortization.
EBITDA margin is 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, and non-cash interest expense, net
of related tax effects. Diluted Adjusted Earnings Per Share is
Adjusted Net Income divided by diluted weighted-average shares, as
reported. 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)
12/31/2014 12/31/2013
% Change 12/31/2014
12/31/2013 % Change Net income attributable to
CACI $ 24,642 $ 34,962 -29.5 % $ 55,772
$ 67,954 -17.9 % Plus: Income taxes 14,292 22,088 -35.3 %
34,014 42,490 -19.9 % Interest income and expense, net 8,928 9,968
-10.4 % 18,087 17,776 1.7 % Depreciation and amortization
16,795 16,230 3.5 %
34,031 29,181 16.6 %
EBITDA $ 64,657 $ 83,248 -22.3 %
$ 141,904 $ 157,401 -9.8 %
Quarter Ended Six Months Ended (dollars in
thousands)
12/31/2014 12/31/2013 %
Change 12/31/2014 12/31/2013
% Change Revenue, as reported $ 815,423 $ 894,186 -8.8 % $
1,630,149 $ 1,758,451 -7.3 % EBITDA $ 64,657 $ 83,248
-22.3 % $ 141,904 $ 157,401
-9.8 % EBITDA margin 7.9 % 9.3 %
8.7 % 9.0 %
Quarter Ended Six Months Ended (dollars
in thousands)
12/31/2014 12/31/2013
% Change 12/31/2014 12/31/2013
% Change Net income attributable to CACI $ 24,642 $
34,962 -29.5 % $ 55,772 $ 67,954 -17.9 % Plus: Stock-based
compensation 3,574 3,301 8.3 % 6,194 5,785 7.1 % Depreciation and
amortization 16,795 16,230 3.5 % 34,031 29,181 16.6 % Amortization
of financing costs 687 4,736 -85.5 % 1,378 5,245 -73.7 % Non-cash
interest expense - 3,409 -100.0 % - 6,769 -100.0 % Less: Related
tax effect (8,287 ) (10,868 ) -23.8 %
(16,373 ) (18,449 ) -11.3 %
Adjusted net income $ 37,411 $ 51,770
-27.7 % $ 81,002 $ 96,485 -16.0
%
Quarter Ended Six Months Ended
(shares in thousands)
12/31/2014 12/31/2013
% Change 12/31/2014
12/31/2013 % Change
Diluted weighted average shares, as
reported
24,314 25,297 24,210 25,066 Diluted earnings per share $ 1.01
$ 1.38 -26.7 % $ 2.30
$ 2.71 -15.0 % Diluted adjusted earnings per
share $ 1.54 $ 2.05 -24.8 % $
3.35 $ 3.85 -13.1 %
CACI International IncCorporate Communications and Media:Jody
BrownExecutive Vice President, Public
Relations703-841-7801jbrown@caci.comorInvestor Relations:David
DragicsSenior Vice President, Investor
Relations866-606-3471ddragics@caci.com
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