Net income of $34.0 million, up 17.2
percent
Revenue of $977.3 million, up 19.5
percent
Cash from operations of $53.6
million
Contract awards of $1.2 billion
Record backlog of $12.9 billion, 33.9
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, 2016.
CEO Commentary and Outlook
Ken Asbury, CACI’s President and CEO, said, “I am quite pleased
with our performance this quarter. Despite delays in the pace
and timing of contract awards, our team delivered revenue and net
income that were higher year-over-year, due to strong contract
performance and a significant contribution from our acquisition of
L-3’s National Security Solutions (NSS) business. Cash flow,
contract awards and contract funding orders also were all
strong. The integration of NSS, our largest acquisition
to-date, is in excellent shape and the added value of their
enterprise IT capabilities is exceeding our expectations. We
are confident that our market-focused strategy, our robust pipeline
of opportunities and our strategic M&A program will continue to
deliver long-term value to our customers and shareholders.”
Third Quarter Results
(in millions except per-share data) Q3, FY16
Q3, FY15 % Change Revenue
$977.3 $817.8 19.5% Operating income
$63.7 $53.7 18.5% Net
income attributable to CACI $34.0 $29.0
17.2% Diluted earnings per share $1.38
$1.18 16.3%
Revenue for the third quarter of Fiscal Year 2016 (FY 16)
increased compared to the third quarter of Fiscal Year 2015 (FY 15)
driven by acquired revenue from the acquisition of National
Security Systems (NSS). The higher operating income was due to the
contribution of the NSS acquisition and contract performance,
partially offset by approximately $9 million of various
acquisition-related expenses. The increase in net income was due to
the factors noted above as well as a lower effective tax rate in
the quarter. Cash provided by operations in the quarter was $53.6
million.
During our third quarter, NSS generated $171.9 million of
revenue and $5.6 million of net income. NSS’s net income includes
$1.7 million of acquisition-related intangible amortization.
Approximately $3.2 million of the $9 million of pre-tax acquisition
expenses recognized in the quarter are reflected in the NSS
performance.
Additional Financial Metrics
Q3, FY16 Q3, FY15
% Change Adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA), a non-GAAP measure (in
millions) $80.6 $70.0
15.2% Diluted adjusted earnings per share, a non-GAAP measure
$1.93 $1.69 14.0% Days
sales outstanding 64 61
Third Quarter Awards, Contract Funding Orders, and Other
Highlights
Our awards in the quarter were $1.2 billion, excluding the
ceiling values of indefinite delivery/indefinite quantity (IDIQ)
contracts on which we were awarded a prime position. Approximately
25 percent of our awards in the quarter were for new business. Key
awards during the quarter included:
- A prime position on a $22.3 billion
ten-year, multiple award, IDIQ contract to provide information
technology services and solutions to the Department of Veterans
Affairs. This contract represents growth and continuing work in our
Health market area.
- A prime position on an $809 million
five-year, multiple award, IDIQ contract to support business
systems at the Naval Supply Systems Command Business Systems
Center. This contract represents new work in our Business Systems
market area.
- A $180 million five-year contract to
provide Joint Geospatial Analytic Support Services to U.S. Special
Operations Command. This contract represents new work in our
Intelligence Services market area. This award was received in the
second quarter of FY15 with its protest resolved during our third
quarter of FY16.
Contract funding orders in the third quarter were a record $1.3
billion. Our total backlog at March 31, 2016 was a record $12.9
billion, an increase of 33.9 percent, compared with $9.7 billion at
the end of the third quarter of FY15. Funded backlog at March 31,
2016 was a record $2.7 billion, an increase of 33.0 percent,
compared with $2.1 billion at March 31, 2015. Our backlog includes
$2.3 billion of pre-closing backlog from the acquisition of NSS, of
which $0.4 billion was funded.
CACI’s U.S. Operations re-validated and expanded its Capability
Maturity Model Integration (CMMI®) Maturity Level 3 (ML 3), adding
ML 3 for Services to its ML 3 for Development. These appraisals
confirm the strength of CACI's organizational commitment to
providing its customers with reliable, predictable processes that
deliver software and engineering solutions and services at
industry-recognized levels of excellence.
CACI announced a partnership with the Hume Center at Virginia
Tech to support their programs in cyber security, with a special
emphasis on unmanned aerial systems. This partnership represents a
continuation of CACI’s long-standing support for Science,
Technology, Engineering, Math education and future talent
development.
CACI was named to the Fortune “Most Admired Companies” list for
the third consecutive year. The list identifies companies that are
perceived as the most successful and effective worldwide.
Nine Months Results
(in millions except per-share data)
Nine Months,
FY16
Nine Months,
FY15
% Change Revenue $2,630.2
$2,447.9 7.4% Operating income $183.7
$161.3 13.9% Net income attributable to
CACI $98.2 $84.8 15.7%
Diluted earnings per share $3.98 $3.49
14.1%
The higher revenue, operating and net income in the nine months
of FY16 was due primarily to the contribution of the NSS
acquisition, offset by one-time acquisition-related expenses of
$13.5 million. Net cash provided by operations in the nine months
of FY16 was $188.3 million.
Additional Financial Metrics
Nine Months,
FY16
Nine Months,
FY15
% Change Adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA), a non-GAAP measure (in
millions) $230.3 $211.9
8.7% Diluted adjusted earnings per share, a non-GAAP measure
$5.50 $5.04 9.1%
CACI Narrows Its FY16 Guidance
We are narrowing the FY16 guidance range for revenue, net
income, and providing an updated effective corporate tax rate. The
table below summarizes the change and represents our view as of
April 27, 2016.
(In millions except for tax rate and
earnings per share)
Current FY 2016
Guidance
Previous FY 2016
Guidance
Revenue $3,700 - $3,800 $3,700 - $3,900
Net income attributable to CACI $133 - $140
$133 - $143 Effective corporate tax rate 37.6%
38.5% Diluted earnings per share $5.37
- $5.65 $5.37 - $5.77 Diluted weighted average shares
24.8 24.8
Conference Call Information
We have scheduled a conference call for 8:30 AM Eastern Time
Thursday, April 28, 2016 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 1-888-771-4371 and enter the confirmation code 41861203. 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,
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-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
3/31/2016 3/31/2015 % Change
3/31/2016
3/31/2015 % Change Revenue $ 977,274 $ 817,797
19.5 % $ 2,630,153 $ 2,447,946 7.4 % Costs of revenue
Direct costs 647,489 542,841 19.3 % 1,732,053 1,626,139 6.5 %
Indirect costs and selling expenses 249,477 205,174 21.6 % 668,321
610,407 9.5 % Depreciation and amortization 16,632
16,067 3.5 % 46,113 50,098
-8.0 % Total costs of revenue 913,598
764,082 19.6 % 2,446,487 2,286,644
7.0 % Operating income 63,676 53,715 18.5 % 183,666 161,302
13.9 % Interest expense and other, net 11,115
8,473 31.2 % 28,477 26,153 8.9 %
Income before income taxes 52,561 45,242 16.2 % 155,189 135,149
14.8 % Income taxes 18,533 16,185 14.5
% 57,021 50,199 13.6 % Net income
34,028 29,057 17.1 % 98,168 84,950 15.6 % Noncontrolling interest
- (18 ) - (139 ) Net
income attributable to CACI $ 34,028 $ 29,039 17.2 %
$ 98,168 $ 84,811 15.7 % Basic earnings per
share $ 1.40 $ 1.20 16.6 % $ 4.05 $ 3.55 14.0 % Diluted earnings
per share $ 1.38 $ 1.18 16.3 % $ 3.98 $ 3.49 14.1 % Weighted
average shares used in per share computations: Basic 24,277 24,165
24,243 23,871 Diluted 24,716 24,527 24,675 24,313
Statement of Operations Data (Unaudited) Quarter
Ended Nine Months Ended 3/31/2016
3/31/2015 % Change
3/31/2016 3/31/2015 %
Change Operating income margin 6.5 % 6.6 % 7.0 % 6.6 % Tax rate
35.3 % 35.8 % 36.7 % 37.2 % Net income margin 3.5 % 3.6 % 3.7 % 3.5
% Adjusted EBITDA* $ 80,600 $ 69,967 15.2 % $ 230,308 $
211,871 8.7 % Adjusted EBITDA Margin 8.2 % 8.6 % 8.8 % 8.7 %
Adjusted net income attributable to CACI* $ 47,733 $ 41,537 14.9 %
$ 135,673 $ 122,539 10.7 % Diluted adjusted earnings per share $
1.93 $ 1.69 14.0 % $ 5.50 $ 5.04 9.1 %
* 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)
3/31/2016 6/30/2015 ASSETS: Current
assets Cash and cash equivalents $ 34,813 $ 35,364 Accounts
receivable, net 765,506 596,155 Prepaid expenses and other current
assets 72,756 34,591 Total current assets 873,075
666,110 Goodwill and intangible assets, net 2,896,379
2,384,998 Property and equipment, net 81,799 63,689 Other long-term
assets 128,165 127,233 Total assets $ 3,979,418 $
3,242,030
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities Current portion of long-term debt $ 53,965 $
38,965 Accounts payable 112,065 56,840 Accrued compensation and
benefits 214,000 185,830 Other accrued expenses and current
liabilities 163,359 118,046 Total current liabilities
543,389 399,681 Long-term debt, net of current portion
1,431,437 1,024,599 Other long-term liabilities 432,546
337,478 Total liabilities 2,407,372 1,761,758
Shareholders' equity 1,572,046 1,480,272 Total
liabilities and shareholders' equity $ 3,979,418 $ 3,242,030
Selected Financial Data (Continued)
CACI International Inc Condensed
Consolidated Statements of Cash Flows (Unaudited) (Amounts in
thousands)
Nine Months Ended 3/31/2016
3/31/2015 CASH FLOWS FROM OPERATING ACTIVITIES: Net
income $ 98,168 $ 84,950
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 46,113 50,098 Amortization of
deferred financing costs 2,101 2,062 Stock-based compensation
expense 13,329 10,051 Provision for deferred income taxes 14,212
25,682 Undistributed earnings of unconsolidated joint ventures (229
) (610 ) Changes in operating assets and liabilities, net of effect
of acquisitions Accounts receivable, net 42,184 15,774 Prepaid
expenses and other assets (9,773 ) (5,605 ) Accounts payable and
accrued expenses (4,020 ) 40,486 Accrued compensation and benefits
(10,099 ) (6,644 ) Income taxes receivable and payable (892 )
(25,538 ) Other liabilities (2,750 ) (298 ) Net cash
provided by operating activities 188,344
190,408
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13,232 ) (13,128 ) Purchases of businesses,
net of cash acquired (587,821 ) - Investment in unconsolidated
joint venture - 542 Other 151 793 Net
cash used in investing activities (600,902 ) (11,793
)
CASH FLOWS FROM FINANCING ACTIVITIES: Net
borrowings (payments) under credit facilities 419,737 (203,507 )
Proceeds from employee stock purchase plans 2,289 2,499 Proceeds
from exercise of stock options - 691 Repurchases of common stock
(2,400 ) (2,587 ) Payment of taxes for equity transactions (7,479 )
(7,168 ) Other 1,489 2,899 Net cash
provided by ( used in) financing activities 413,636
(207,173 ) Effect of exchange rate changes on cash and cash
equivalents (1,629 ) (2,351 ) Net decrease in cash
and cash equivalents (551 ) (30,909 ) Cash and cash equivalents,
beginning of period 35,364 64,461 Cash
and cash equivalents, end of period $ 34,813 $ 33,552
Selected Financial Data (Continued)
Revenue by Customer Type (Unaudited)
Quarter Ended
(dollars in thousands)
3/31/2016
3/31/2015
$ Change
% Change Department of Defense $ 637,395 65.2
% $ 538,289 65.8 % $ 99,106 18.4 % Federal Civilian Agencies
279,526 28.6 % 229,589 28.1 % 49,937 21.8 % Commercial and other
60,353 6.2 % 49,919
6.1 % 10,434
20.9 % Total $ 977,274 100.0 % $
817,797 100.0 % $ 159,477
19.5 %
Nine Months Ended
(dollars in thousands)
3/31/2016 3/31/2015
$ Change
% Change Department of Defense $ 1,724,631
65.6 % $ 1,640,747 67.0 % $ 83,884 5.1 % Federal Civilian Agencies
737,721 28.0 % 651,212 26.6 % 86,509 13.3 % Commercial and other
167,801 6.4 % 155,987
6.4 % 11,814
7.6 % Total $ 2,630,153 100.0 %
$ 2,447,946 100.0 % $ 182,207
7.4 %
Revenue by Contract Type
(Unaudited) Quarter Ended
(dollars in thousands)
3/31/2016 3/31/2015
$ Change
% Change Cost reimbursable $ 483,796 49.5 % $
377,119 46.1 % $ 106,677 28.3 % Fixed price 318,059 32.5 % 295,855
36.2 % 22,204 7.5 % Time and materials 175,419
18.0 % 144,823 17.7 %
30,596 21.1 % Total $ 977,274
100.0 % $ 817,797 100.0 %
$ 159,477 19.5 %
Nine
Months Ended
(dollars in thousands)
3/31/2016
3/31/2015
$ Change
% Change Cost reimbursable $ 1,266,219 48.1 %
$ 1,127,458 46.1 % $ 138,761 12.3 % Fixed price 896,243 34.1 %
882,204 36.0 % 14,039 1.6 % Time and materials 467,691
17.8 % 438,284
17.9 % 29,407 6.7 % Total
$ 2,630,153 100.0 % $ 2,447,946
100.0 % $ 182,207 7.4 %
Revenue Received as a Prime versus Subcontractor
(Unaudited) Quarter Ended
(dollars in thousands)
3/31/2016 3/31/2015
$ Change
% Change Prime $ 893,321 91.4 % $ 733,207 89.7
% $ 160,114 21.8 % Subcontractor 83,953 8.6 %
84,590 10.3 %
(637 ) -0.8 % Total $ 977,274
100.0 % $ 817,797 100.0 %
$ 159,477 19.5 %
Nine Months
Ended
(dollars in thousands)
3/31/2016
3/31/2015
$ Change
% Change Prime $ 2,394,235 91.0 % $ 2,185,496
89.3 % $ 208,739 9.6 % Subcontractor 235,918
9.0 % 262,450 10.7 %
(26,532 ) -10.1 % Total $ 2,630,153
100.0 % $ 2,447,946 100.0
% $ 182,207 7.4 %
Selected Financial Data (Continued)
Contract Funding Orders
Received (Unaudited) Quarter Ended
(dollars in thousands)
3/31/2016
3/31/2015
$ Change
% Change Contract Funding Orders $ 1,322,977
$ 964,637 $ 358,340 37.1
%
Nine Months Ended
(dollars in thousands)
3/31/2016
3/31/2015
$ Change
% Change Contract Funding Orders $ 2,992,811
$ 2,885,286 $ 107,525 3.7
%
Direct Costs by Category (Unaudited)
Quarter Ended (dollars in thousands)
3/31/2016
3/31/2015
$ Change
% Change Direct labor $ 322,612
49.8 % $ 271,162 50.0 % $
51,450 19.0 % Other direct costs 324,877
50.2 % 271,679
50.0 % 53,198 19.6 % Total
direct costs $ 647,489 100.0 % $
542,841 100.0 % $ 104,648
19.3 %
Nine Months Ended (dollars in thousands)
3/31/2016 3/31/2015
$ Change
% Change Direct labor $ 852,911 49.2 % $
786,556 48.4 % $ 66,355 8.4 % Other direct costs 879,142
50.8 % 839,583
51.6 % 39,559 4.7 % Total direct
costs $ 1,732,053 100.0 % $ 1,626,139
100.0 % $ 105,914 6.5 %
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, and depreciation, amortization and earnout
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, 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. 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
Nine Months Ended (dollars in thousands)
3/31/2016
3/31/2015 % Change
3/31/2016 3/31/2015
% Change Net income attributable to CACI $ 34,028 $
29,039 17.2 % $ 98,168 $ 84,811 15.7 % Plus: Income taxes 18,533
16,185 14.5 % 57,021 50,199 13.6 % Interest income and expense, net
11,246 8,676 29.6 % 28,706 26,763 7.3 % Depreciation and
amortization 16,632 16,067 3.5 % 46,113 50,098 -8.0 % Earnout
adjustments 161 -
300
- Adjusted EBITDA $
80,600 $ 69,967 15.2 %
$ 230,308 $ 211,871
8.7 %
Quarter Ended
Nine Months Ended (dollars in thousands)
3/31/2016
3/31/2015 % Change
3/31/2016 3/31/2015
% Change Revenue, as reported $ 977,274 $ 817,797
19.5 % $ 2,630,153 $ 2,447,946 7.4 % Adjusted EBITDA 80,600
69,967 15.2 %
230,308 211,871
8.7 % Adjusted EBITDA margin 8.2 %
8.6 %
8.8 % 8.7 %
Quarter Ended Nine Months
Ended (dollars in thousands)
3/31/2016
3/31/2015 % Change
3/31/2016 3/31/2015 %
Change Net income attributable to CACI $ 34,028 $ 29,039 17.2 %
$ 98,168 $ 84,811 15.7 % Plus: Stock-based compensation 4,856 3,857
25.9 % 13,329 10,051 32.6 % Depreciation and amortization 16,632
16,067 3.5 % 46,113 50,098 -8.0 % Amortization of financing costs
949 684 38.7 % 2,101 2,062 1.9 % Earn-out adjustments 161 - 300 -
Less: Related tax effect (8,893 )
(8,110 ) 9.7 % (24,338 )
(24,483 ) -0.6 % Adjusted net income
attributable to CACI $ 47,733 $ 41,537
14.9 % $ 135,673 $
122,539 10.7 %
Quarter Ended
Nine Months Ended (shares in thousands)
3/31/2016 3/31/2015 %
Change 3/31/2016
3/31/2015 % Change Diluted weighted
average shares, as reported 24,716 24,527 24,675 24,313 Diluted
earnings per share $ 1.38 $ 1.18
16.3 % $ 3.98 $ 3.49
14.1 % Diluted adjusted earnings per share $
1.93 $ 1.69 14.0 %
$ 5.50 $ 5.04 9.1
%
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160427006607/en/
CACI International IncCorporate Communications and Media:Jody
Brown, Executive Vice President,Public Relations(703)
841-7801jbrown@caci.comorInvestor Relations:David Dragics, Senior
Vice President,Investor Relations(866)
606-3471ddragics@caci.com
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