- Operating cash flow of $97
million
- Contract funding orders of $965
million, 22 percent higher year over year
- Contract awards of $687 million,
nearly $5 billion year-to-date
- Funded backlog of $2.1 billion, 29
percent higher year over year
CACI International Inc (NYSE MKT: CACI), a leading information
solutions and services provider to the federal government,
announced results today for its third fiscal quarter ended March
31, 2015.
CEO Commentary and Outlook
Ken Asbury, CACI’s President and CEO, said, “During the third
quarter of Fiscal Year 2015, we continued to win new business,
deliver operational excellence, and deploy capital for growth
opportunities. We had strong contract awards and funding orders
despite continued delays in award decisions and protests which
impacted the start of new work and our financial performance. Our
work for the Office of Personnel Management (OPM) continues to grow
and is on track with our expectations. We also acquired LTC
Engineering Associates which deepens our bench of highly skilled
professionals, expanding our offerings in the C4ISR and Cyber
market areas. We are confident in our competitive posture and in
our solutions that support our customers enduring critical missions
to counter threats at home and around the world. We are confident
in our strategy and believe we are well positioned for a solid
fourth quarter and the start of FY16.”
Third Quarter Results
(in millions
except per-share data) Q3, FY15 Q3, FY14 %
Change Revenue $817.8 $900.4 -9.2% Operating
income $53.7 $60.5 -11.3% Net income
attributable to CACI $29.0 $30.8 -5.8% Diluted
earnings per share $1.18 $1.19 -0.2%
Revenue for the third quarter of Fiscal Year 2015 (FY15)
decreased 9.2 percent compared to the third quarter of Fiscal Year
2014 (FY14). We maintained our direct labor base during the
quarter, and direct costs declined due to a reduction of
subcontract labor and other direct costs resulting from general
federal government budget-related activities. The decrease in
operating income was a result of the aforementioned budget-related
activities offset by lower indirect costs and selling expenses
occurring from ongoing cost control actions. 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. Cash provided by operations in
the quarter was $97.1 million.
Additional Financial Metrics
Q3,
FY15 Q3, FY14 % Change Earnings before interest,
taxes, depreciation and amortization (EBITDA), a non-GAAP measure
(in millions) $70.0 $78.7 -11.1% Diluted
adjusted earnings per share, a non-GAAP measure $1.69
$1.78 -5.1% Days sales outstanding 61 62
Third Quarter Awards and Contract Funding Orders
Our contract awards were $687 million in the third quarter of
FY15, compared with $700 million of contract awards in the third
quarter of FY14. Approximately 40 percent of our awards in the
quarter were new business. Contract awards through the first nine
months of FY15 were nearly $5.0 billion. Some of the awards in the
quarter included:
- An $86 million, three-year task order
to provide engineering and technical support to the U.S. Army’s
Software Engineering Center. This is new work for us and expands
our presence in the C4ISR and Logistics and Material Readiness
market areas.
- A $43 million, one-year task order to
continue to provide engineering support, including modeling and
simulation and sensor development, for the U.S. Army’s Night Vision
and Electronic Sensors Directorate. This work sustains our business
in the C4ISR market area.
- A $38.5 million, five-year contract to
provide rapid prototyping and technology insertion support to the
U.S. Army’s Communications-Electronics Research Development and
Engineering Center. This is a continuation of work, reinforcing our
business in the C4ISR market area.
- A $38 million, five-year contract to
provide weapons systems support, including test, evaluation, and
information assurance services, to the Naval Surface Warfare Center
Dahlgren Division. This is new work for us, further growing our
presence in the C4ISR market area.
- A $32 million, five-year contract to
support the Electronic Claims Case Adjudication and Processing
Environment for the Office of Medicare Hearing and Appeals within
the Department of Health and Human Services. This is new work in
our Healthcare market area.
Contract funding orders in the third quarter were $965 million
compared with $794 million in the year earlier quarter. Our total
backlog at March 31, 2015 was $9.7 billion. Funded backlog at March
31, 2015 was $2.1 billion.
Third Quarter Highlights and Recognition
- Fortune magazine ranked CACI among the
most admired companies in the world in the IT services industry and
in the Commonwealth of Virginia for the second consecutive year.
The list, described as the “definitive report card on corporate
reputations,” affirms CACI’s position as a top IT innovator
supporting our customers’ most challenging missions with character
and integrity.
- We announced a cooperative partnership
with Appcelerator®, provider of a leading mobile engagement
platform, to offer a unique solution set to the federal market,
particularly the Department of Defense and Intelligence Community.
The partnership will enable customers to quickly deploy mobile apps
at a decreased cost and for a higher return on investment.
Nine Months Results
Nine
Months, Nine Months, (in millions except per-share
data) FY15 FY14 % Change Revenue
$2,447.9 $2,658.8 -7.9% Operating income
$161.3 $188.2 -14.3% Net income attributable to CACI
$84.8 $98.8 -14.1% Diluted earnings per share
$3.49 $3.89 -10.4%
Revenue decreased 7.9 percent compared to revenue for the nine
months of FY14. We increased our direct labor base during the first
nine months of FY15, and direct costs declined 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 income in the first nine months of FY15 was
primarily a result of the aforementioned reductions, budget-related
activities, and ramp-up costs associated with the significant
growth of background investigation work for the 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. Cash provided by operations
in the first nine months of FY15 was $190.4 million.
Additional Financial Metrics
Nine
Months, Nine Months,
%
FY15 FY14
Change
Earnings before interest, taxes, depreciation and amortization
(EBITDA), a non-GAAP measure (in millions) $211.9
$236.1 -10.3% Diluted adjusted earnings per share, a
non-GAAP measure $5.04 $5.53 -8.9%
Subsequent Event
On April 1, 2015, we announced that we had acquired LTC
Engineering Associates, Inc., a highly specialized provider of
technical engineering solutions and services to the Intelligence
and Department of Defense communities in the areas of software
engineering, cybersecurity, signals intelligence (SIGINT),
communications intelligence (COMINT), and digital signal
processing. The acquisition expands our capabilities in the C4ISR,
Intelligence, and Cyber market areas.
CACI Narrows FY15 Guidance Ranges
We are narrowing the FY15 guidance ranges for revenue, net
income, and diluted earnings per share. The table below summarizes
the changes and represents our views as of April 29, 2015:
Current FY 2015
Previous FY 2015
(In millions except for tax rate and earnings per share)
Guidance
Guidance
Revenue $3,300 - $3,350 $3,300 - $3,600 Net income
attributable to CACI $125 - $130 $125 - $135
Effective corporate tax rate 37.6% 38.1% Diluted
earnings per share $5.12 - $5.33 $5.14 - $5.56
Diluted weighted average shares 24.4 24.3
Conference Call Information
We have scheduled a conference call for 8:30 AM Eastern Time
Thursday, April 30, 2015 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 877-303-9143 and enter the confirmation code 94732795. 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 16,700 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: 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
Nine Months Ended 3/31/2015 3/31/2014 % Change
3/31/2015 3/31/2014 % Change Revenue $ 817,797
$ 900,393 -9.2 % $ 2,447,946 $ 2,658,844 -7.9
% Costs of revenue Direct costs 542,841 605,780 -10.4 % 1,626,139
1,813,874 -10.3 % Indirect costs and selling expenses 205,174
216,164 -5.1 % 610,407 609,704 0.1 % Depreciation and amortization
16,067 17,917 -10.3 % 50,098
47,098 6.4 % Total costs of revenue
764,082 839,861 -9.0 % 2,286,644
2,470,676 -7.4 % Operating income 53,715 60,532 -11.3
% 161,302 188,168 -14.3 % Interest expense and other, net
8,473 11,480 -26.2 % 26,153
28,324 -7.7 % Income before income taxes 45,242
49,052 -7.8 % 135,149 159,844 -15.4 % Income taxes 16,185
18,043 -10.3 % 50,199
60,533 -17.1 % Net income 29,057 31,009 -6.3 % 84,950 99,311
-14.5 % Noncontrolling interest (18 ) (181 )
(139 ) (529 ) Net income attributable to CACI $ 29,039
$ 30,828 -5.8 % $ 84,811 $ 98,782 -14.1
% Basic earnings per share $ 1.20 $ 1.31 -8.5 % $ 3.55 $
4.22 -15.8 % Diluted earnings per share $ 1.18 $ 1.19 -0.2 % $ 3.49
$ 3.89 -10.4 % Weighted average shares used in per share
computations: Basic 24,165 23,473 23,871 23,406 Diluted 24,527
25,973 24,313 25,368
Statement of Operations Data
(Unaudited) Quarter Ended Nine Months Ended
3/31/2015 3/31/2014 % Change
3/31/2015
3/31/2014 % Change Operating income margin 6.6 % 6.7 % 6.6 %
7.1 % Tax rate 35.8 % 36.9 % 37.2 % 38.0 % Net income margin 3.6 %
3.4 % 3.5 % 3.7 % EBITDA** $ 69,967 $ 78,739 -11.1 % $
211,871 $ 236,140 -10.3 % EBITDA Margin 8.6 % 8.7 % 8.7 % 8.9 %
Adjusted net income** $ 41,537 $ 46,343 -10.4 % $ 122,539 $
140,328 -12.7 % Diluted adjusted earnings per share $ 1.69 $ 1.78
-5.1 % $ 5.04 $ 5.53 -8.9 %
**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)
3/31/2015 6/30/2014 ASSETS: Current assets
Cash and cash equivalents $ 33,552 $ 64,461 Accounts receivable,
net 594,148 615,580 Prepaid expenses and other current assets
69,032 55,808 Total current assets 696,732 735,849
Goodwill and intangible assets, net 2,376,200 2,418,979
Property and equipment, net 63,477 68,485 Other long-term assets
131,916 135,825 Total assets $ 3,268,325 $ 3,359,138
LIABILITIES AND SHAREHOLDERS' EQUITY: Current
liabilities Current portion of long-term debt $ 41,563 $ 41,563
Accounts payable 114,780 55,811 Accrued compensation and benefits
175,019 183,361 Other accrued expenses and current liabilities
122,045 141,852 Total current liabilities 453,407
422,587 Long-term debt, net of current portion 1,036,152
1,238,728 Other long-term liabilities 350,693 338,657
Total liabilities 1,840,252 1,999,972
Shareholders' equity 1,428,073 1,359,166 Total
liabilities and shareholders' equity $ 3,268,325 $ 3,359,138
Selected Financial Data (Continued)
CACI International Inc Condensed Consolidated Statements
of Cash Flows (Unaudited) (Amounts in thousands)
Nine
Months Ended 3/31/2015 3/31/2014 CASH FLOWS
FROM OPERATING ACTIVITIES: Net income $ 84,950 $ 99,311
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 50,098 47,098 Non-cash interest
expense - 10,245 Amortization of deferred financing costs 2,062
2,178 Loss on extinguishment of debt - 4,116 Stock-based
compensation expense 10,051 8,890 Provision for deferred income
taxes 25,682 17,420 Undistributed earnings of unconsolidated joint
ventures (610 ) (1,420 ) Changes in operating assets and
liabilities Accounts receivable, net 15,774 61,700 Prepaid expenses
and other assets (5,605 ) (10,641 ) Accounts payable and accrued
expenses 40,486 (71,638 ) Accrued compensation and benefits (6,644
) (23,261 ) Income taxes receivable and payable (25,538 ) (489 )
Other liabilities (298 ) 2,793 Net cash
provided by operating activities 190,408
146,302
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13,128 ) (11,636 ) Purchases of businesses,
net of cash acquired - (838,427 ) Investment in unconsolidated
joint venture 542 - Other 793 (1,020 ) Net
cash used in investing activities (11,793 ) (851,083
)
CASH FLOWS FROM FINANCING ACTIVITIES: Net
(payments) borrowings under credit facilities (203,507 ) 696,632
Payment of contingent consideration - (3,294 ) Proceeds from
employee stock purchase plans 2,499 2,681 Proceeds from exercise of
stock options 691 - Repurchases of common stock (2,587 ) (2,804 )
Payment of taxes for equity transactions (7,168 ) (9,493 ) Other
2,899 3,752 Net cash( used in) provided
by financing activities (207,173 ) 687,474
Effect of exchange rate changes on cash and cash equivalents
(2,351 ) 1,339 Net decrease in cash and cash
equivalents (30,909 ) (15,968 ) Cash and cash equivalents,
beginning of period 64,461 64,337 Cash
and cash equivalents, end of period $ 33,552 $ 48,369
Selected Financial Data (Continued)
Revenue by Customer Type
(Unaudited) Quarter Ended
(dollars in thousands)
3/31/2015 3/31/2014
$ Change
% Change
Department of Defense $ 538,289 65.8 % $ 656,407 72.9 % $ (118,118
) -18.0 % Federal Civilian Agencies 229,589 28.1 % 188,857 21.0 %
40,732 21.6 % Commercial and other 49,919 6.1 %
55,129 6.1 % (5,210 )
-9.5 % Total $ 817,797 100.0 % $ 900,393 100.0
% $ (82,596 ) -9.2 %
Nine Months Ended
(dollars in thousands)
3/31/2015
3/31/2014
$ Change
% Change
Department of Defense $ 1,640,747 67.0 % $ 1,924,359 72.4 % $
(283,612 ) -14.7 % Federal Civilian Agencies 651,212 26.6 % 571,885
21.5 % 79,327 13.9 % Commercial and other 155,987 6.4
% 162,600 6.1 % (6,613 )
-4.1 % Total $ 2,447,946 100.0 % $ 2,658,844
100.0 % $ (210,898 ) -7.9 %
Revenue by
Contract Type (Unaudited) Quarter Ended
(dollars in thousands)
3/31/2015
3/31/2014
$ Change
% Change
Cost reimbursable $ 377,119 46.1 % $ 439,957 48.9 % $ (62,838 )
-14.3 % Fixed price 295,855 36.2 % 283,151 31.4 % 12,704 4.5 % Time
and materials 144,823 17.7 % 177,285
19.7 % (32,462 ) -18.3 % Total $
817,797 100.0 % $ 900,393 100.0 % $
(82,596 ) -9.2 %
Nine Months Ended
(dollars in thousands)
3/31/2015
3/31/2014
$ Change
% Change Cost reimbursable $ 1,127,458 46.1 % $
1,304,092 49.1 % $ (176,634 ) -13.5 % Fixed price 882,204 36.0 %
819,879 30.8 % 62,325 7.6 % Time and materials 438,284
17.9 % 534,873 20.1 %
(96,589 ) -18.1 % Total $ 2,447,946 100.0 % $
2,658,844 100.0 % $ (210,898 ) -7.9 %
Revenue Received as a Prime versus Subcontractor (Unaudited)
Quarter Ended (dollars in
thousands)
3/31/2015 3/31/2014
$ Change
% Change Prime $ 733,207 89.7 % $ 804,570 89.4 % $
(71,363 ) -8.9 % Subcontractor 84,590 10.3 %
95,823 10.6 % (11,233 ) -11.7 %
Total $ 817,797 100.0 % $ 900,393 100.0 %
$ (82,596 ) -9.2 %
Nine Months Ended
(dollars in thousands)
3/31/2015
3/31/2014
$ Change
% Change Prime $ 2,185,496 89.3 % $ 2,382,563 89.6 %
$ (197,067 ) -8.3 % Subcontractor 262,450 10.7 %
276,281 10.4 % (13,831 )
-5.0 % Total $ 2,447,946 100.0 % $ 2,658,844
100.0 % $ (210,898 ) -7.9 %
Selected
Financial Data (Continued)
Contract Funding Orders Received (Unaudited) Quarter
Ended (dollars in thousands)
3/31/2015 3/31/2014
$ Change
% Change Contract Funding Orders $ 964,637 $
794,158 $ 170,479 21.5 %
Nine Months Ended
(dollars in thousands)
3/31/2015 3/31/2014 $
Change % Change Contract Funding Orders
$ 2,885,286 $ 2,703,478 $ 181,808 6.7 %
Direct Costs by
Category (Unaudited) Quarter Ended (dollars in
thousands)
3/31/2015 3/31/2014
$ Change
% Change Direct labor $ 271,162 50.0 % $ 270,405 44.6
% $ 757 0.3 % Other direct costs 271,679 50.0 %
335,375 55.4 % (63,696 )
-19.0 % Total direct costs $ 542,841 100.0 % $
605,780 100.0 % $ (62,939 ) -10.4 %
Nine Months Ended (dollars in thousands)
3/31/2015
3/31/2014
$ Change
% Change Direct labor $ 786,556 48.4 % $ 764,086 42.1
% $ 22,470 2.9 % Other direct costs 839,583 51.6 %
1,049,788 57.9 % (210,205 )
-20.0 % Total direct costs $ 1,626,139 100.0 %
$ 1,813,874 100.0 % $ (187,735 ) -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 Nine
Months Ended (dollars in thousands)
3/31/2015
3/31/2014 % Change 3/31/2015
3/31/2014 % Change Net income
attributable to CACI $ 29,039 $ 30,828 -5.8 % $ 84,811
$ 98,782 -14.1 % Plus: Income taxes 16,185 18,043 -10.3 %
50,199 60,533 -17.1 % Interest income and expense, net 8,676 11,951
-27.4 % 26,763 29,727 -10.0 % Depreciation and amortization
16,067 17,917 -10.3 %
50,098 47,098 6.4 %
EBITDA $ 69,967 $ 78,739 -11.1 %
$ 211,871 $ 236,140 -10.3 %
Quarter Ended Nine Months Ended (dollars in
thousands)
3/31/2015 3/31/2014 %
Change 3/31/2015 3/31/2014
% Change Revenue, as reported $ 817,797 $ 900,393 -9.2 % $
2,447,946 $ 2,658,844 -7.9 % EBITDA 69,967
78,739 -11.1 % 211,871
236,140 -10.3 % EBITDA margin
8.6 % 8.7 % 8.7 %
8.9 %
Quarter Ended
Nine Months Ended (dollars in thousands)
3/31/2015
3/31/2014 % Change
3/31/2015 3/31/2014 % Change Net
income attributable to CACI $ 29,039 $ 30,828 -5.8 % $ 84,811 $
98,782 -14.1 % Plus: Stock-based compensation 3,857 3,105 24.2 %
10,051 8,890 13.1 % Depreciation and amortization 16,067 17,917
-10.3 % 50,098 47,098 6.4 % Amortization of financing costs 684
1,049 -34.8 % 2,062 2,178 -5.3 % Non-cash interest expense - 3,476
-100.0 % - 10,245 -100.0 % Less: Related tax effect (8,110 )
(10,032 ) -19.2 % (24,483 )
(26,865 ) -8.9 % Adjusted net income $ 41,537
$ 46,343 -10.4 % $ 122,539
$ 140,328 -12.7 %
Quarter
Ended Nine Months Ended (shares in thousands)
3/31/2015 3/31/2014 % Change
3/31/2015 3/31/2014 %
Change
Diluted weighted average shares, as
reported
24,527 25,973 24,313 25,368 Diluted earnings per share $ 1.18
$ 1.19 -0.2 % $ 3.49
$ 3.89 -10.4 % Diluted adjusted earnings per
share $ 1.69 $ 1.78 -5.1 % $
5.04 $ 5.53 -8.9 %
CACI International IncCorporate Communications and Media:Jody
Brown, 703-841-7801Executive Vice President, Public
Relationsjbrown@caci.comorInvestor Relations:David Dragics,
866-606-3471Senior Vice President, Investor
Relationsddragics@caci.com
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