MRO Magazine

CACI Reports Results for Its Fiscal 2015 Fourth Quarter and Full Year


August 12, 2015
By Business Wire News

ARLINGTON, Va.

CACI International Inc (NYSE MKT: CACI), a leading information solutions and services provider to the federal government, announced results today for its full year and fourth fiscal quarter ended June 30, 2015.

CEO Commentary and Outlook

Ken Asbury, CACI’s President and CEO, said, “Our results for the quarter were in line with our expectations. We continued to win a significant amount of contract awards and generated good cash flow. Overall, in our fiscal year 2015, we achieved a record level of contract awards, a record level of backlog, and increased our cash flow to $223 million.

“By transforming our business development approach and more closely aligning our organization to key market areas, we have put in place a solid foundation to deliver organic revenue and net income growth in FY16. We will continue executing our strategy to meet our customers’ requirements and build long-term shareholder value.”

Fourth Quarter Results

                   
(in millions except per-share data)     Q4, FY15     Q4, FY14     % Change
Revenue     $865.5     $905.7     -4.4%
Operating income     $75.1     $69.2     8.4%
Net income attributable to CACI     $41.4     $36.5     13.3%
Diluted earnings per share     $1.68     $1.49     12.8%
           

Revenue for the fourth quarter of Fiscal Year 2015 (FY15) decreased 4.4 percent compared to the fourth quarter of Fiscal Year 2014 (FY14). We grew our direct labor base during the quarter, while other direct costs declined due primarily to a reduction of subcontract labor resulting from general federal government budget-related activities. The increase in operating income was a result of increased work on a number of existing contracts, new business, stronger award fees, an extra billing day, and lower depreciation and amortization expense. Cash provided by operations in the quarter was $32.8 million.

Additional Financial Metrics

                   
      Q4, FY15     Q4, FY14     % Change
Earnings before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP measure (in millions)     $91.4     $87.5     4.4%
Diluted adjusted earnings per share, a non-GAAP measure     $2.19     $2.05     6.6%
Days sales outstanding     60     59      
           

Fourth Quarter Awards and Contract Funding Orders

Our contract awards were $777 million in the fourth quarter of FY15, 11.3 percent higher than the $698 million of contract awards in the fourth quarter of FY14. Approximately 20 percent of our awards in the quarter were new business. Contract awards for all of FY15 were $5.8 billion, 46.3 percent higher than the $3.9 billion of contract awards in all of FY14. Some of the awards in the quarter included:

  • A $61 million contract to continue support for the Defense Medical Logistics Standard Support (DMLSS) system at the Joint Medical Logistics Functional Development Center. This contract further expands CACI’s work in our Health Solutions market area.
  • A $59.8 million four-year task order to provide modeling and analysis support services for the U.S. Space and Naval Warfare Systems Command and Naval Warfare Systems Center Atlantic Business Portfolios. This work sustains our business in the Logistics and Material Readiness market area.
  • A $48 million four-year, eight-month contract to provide operational support services for the Office of the Under Secretary of Defense (Comptroller) (OUSD(C)). CACI will continue providing a full spectrum of on-site operational support in modernizing the critical information systems of OUSD(C). The contract represents continuing work in our Business Systems market area.
  • A $46 million contract to provide software engineering support for the U.S. Army’s Program Executive Office Enterprise Information Systems. This work maintains our business for this customer in our Business Systems market area.
  • Two five-year task orders with a combined value of $29.8 million to provide legal support services for the U.S. Securities and Exchange Commission. This new work expands our business in the Investigation and Litigation Support market area.
  • A multi-million dollar contract to provide systems engineering support to the U.S. Army Communications-Electronics Research, Development, and Engineering Center’s (CERDEC) Flight Activity. This contract increases the size and scope of CACI’s work for this customer and expands the company’s business in our Intelligence Systems and Support market area.
  • A multi-million dollar task order contract to continue providing rapid response technical forensics and exploitation support for the U.S. Army CERDEC Intelligence and Information Warfare Directorate. This contract expands the size and scope of work we provide for this customer in our Intelligence Systems and Support Services market area.
  • A prime position on a multiple-award indefinite delivery, indefinite quantity contract with a nearly $1 billion dollar ceiling value to continue our support for the U.S. Army’s CERDEC Intelligence and Information Warfare Directorate. The multiple-year Technical Information Engineering Services contract positions CACI for continued growth in its Intelligence Services and Intelligence Systems and Support market areas.

Contract funding orders in the quarter were $871 million compared with $907 million in the year earlier quarter. For all of FY15, contract funding orders were $3.8 billion, 4.0 percent higher than the $3.6 billion received in FY 14. Our total backlog at June 30, 2015 was $9.6 billion, 35 percent higher than our total backlog of $7.1 billion at June 30, 2014. Funded backlog at June 30, 2015 was $2.0 billion, 29.6 percent higher than funded backlog of $1.6 billion at the end of FY14.

Fourth Quarter Recognition

  • The Washington Post named CACI to its ranking of 2015 Top Workplaces in the greater Washington, DC area. The rankings are based on surveys in which employees were asked to evaluate their companies on such factors as the quality of leadership, pay and benefit practices, and work-life balance issues.

Twelve Months Results

                   
(in millions except per-share data)    

Twelve Months,

FY15

   

Twelve Months,

FY14

    % Change
Revenue     $3,313.5     $3,564.6     -7.0%
Operating income     $236.4     $257.4     -8.2%
Net income attributable to CACI     $126.2     $135.3     -6.7%
Diluted earnings per share     $5.17     $5.38     -3.8%
           

Revenue decreased 7.0 percent compared to revenue for the twelve months of FY14. This decrease in revenue was primarily attributable to lower subcontractor costs and other direct costs resulting from the drawdown in Southwest Asia and federal government budget-related activities. The decrease in operating income in FY15 was primarily a result of budget-related activities, and ramp-up costs associated with the significant growth of background investigation work for the Office of Personnel Management. Cash provided by operations in FY15 was $223.2 million, 12.4 percent higher than the $198.6 million of cash provided by operations in FY14.

Additional Financial Metrics

                   
     

Twelve Months,

FY15

   

Twelve Months,

FY14

    % Change
Earnings before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP measure (in millions)     $303.2     $323.6     -6.3%
Diluted adjusted earnings per share, a non-GAAP measure     $7.23     $7.58     -4.6%
           

CACI Reiterates Its FY16 Guidance

We are reiterating the FY16 guidance we issued on June 24, 2015. The table below summarizes our FY16 guidance ranges and represents our views as of August 12, 2015:

         

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

     

Fiscal Year 2016

Guidance

Revenue       $3,300 – $3,500
Net income attributable to CACI       $130 – $140
Effective corporate tax rate       38.5%
Diluted earnings per share       $5.24 – $5.65
Diluted weighted average shares       24.8
     

Conference Call Information

We have scheduled a conference call for 8:30 AM Eastern Time Thursday, August 13, 2015 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, or you may dial 877-303-9143 and enter the confirmation code 82120077. 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 EndedTwelve Months Ended
6/30/20156/30/2014 % Change6/30/20156/30/2014 % Change
Revenue $ 865,506   $ 905,718   -4.4 % $ 3,313,452   $ 3,564,562   -7.0 %
Costs of revenue
Direct costs 567,446 612,646 -7.4 % 2,193,585 2,426,520 -9.6 %
Indirect costs and selling expenses 206,996 205,754 0.6 % 817,403 815,458 0.2 %
Depreciation and amortization   15,985     18,083   -11.6 %   66,083     65,181   1.4 %
Total costs of revenue   790,427     836,483   -5.5 %   3,077,071     3,307,159   -7.0 %
Operating income 75,079 69,235 8.4 % 236,381 257,403 -8.2 %
Interest expense and other, net   8,605     9,834   -12.5 %   34,758     38,158   -8.9 %
Income before income taxes 66,474 59,401 11.9 % 201,623 219,245 -8.0 %
Income taxes   25,128     22,793   10.2 %   75,327     83,326   -9.6 %
Net income 41,346 36,608 12.9 % 126,296 135,919 -7.1 %
Noncontrolling interest   38     (74 )   (101 )   (603 )
Net income attributable to CACI $ 41,384   $ 36,534   13.3 % $ 126,195   $ 135,316   -6.7 %
 
Basic earnings per share $ 1.71 $ 1.55 10.1 % $ 5.27 $ 5.78 -8.8 %
Diluted earnings per share $ 1.68 $ 1.49 12.8 % $ 5.17 $ 5.38 -3.8 %
 
Weighted average shares used in per share computations:
Basic 24,180 23,498 23,948 23,429
Diluted 24,613 24,517 24,388 25,155
 
 
Statement of Operations Data (Unaudited)
 
Quarter EndedTwelve Months Ended
6/30/20156/30/2014 % Change6/30/20156/30/2014 % Change
Operating income margin 8.7 % 7.6 % 7.1 % 7.2 %
Tax rate 37.8 % 38.4 % 37.4 % 38.1 %
Net income margin 4.8 % 4.0 % 3.8 % 3.8 %
 
EBITDA** $ 91,366 $ 87,482 4.4 % $ 303,237 $ 323,622 -6.3 %
EBITDA Margin 10.6 % 9.7 % 9.2 % 9.1 %
 
Adjusted net income** $ 53,867 $ 50,312 7.1 % $ 176,405 $ 190,640 -7.5 %
Diluted adjusted earnings per share $ 2.19 $ 2.05 6.6 % $ 7.23 $ 7.58 -4.6 %
 

** 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)
 
6/30/20156/30/2014
ASSETS:
Current assets
Cash and cash equivalents $ 35,364 $ 64,461
Accounts receivable, net 596,155 615,580
Prepaid expenses and other current assets   44,941   55,808
Total current assets 676,460 735,849
 
Goodwill and intangible assets, net 2,384,998 2,418,979
Property and equipment, net 63,689 68,485
Other long-term assets   131,969   135,825
Total assets $ 3,257,116 $ 3,359,138
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities
Current portion of long-term debt $ 38,965 $ 41,563
Accounts payable 56,840 55,811
Accrued compensation and benefits 185,830 183,361
Other accrued expenses and current liabilities   118,046   141,852
Total current liabilities 399,681 422,587
 
Long-term debt, net of current portion 1,029,335 1,238,728
Other long-term liabilities   347,828   338,657
Total liabilities   1,776,844   1,999,972
 
Shareholders’ equity   1,480,272   1,359,166
Total liabilities and shareholders’ equity $ 3,257,116 $ 3,359,138
 
 
Selected Financial Data (Continued)
       
CACI International Inc
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Amounts in thousands)
 
Twelve Months Ended
6/30/20156/30/2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 126,296 $ 135,919

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

Depreciation and amortization 66,083 65,181
Non-cash interest expense 11,421
Amortization of deferred financing costs 2,639 2,940
Loss on extinguishment of debt 272 4,116
Stock-based compensation expense 14,072 11,557
Provision for deferred income taxes 27,022 15,559
Undistributed earnings of unconsolidated joint ventures (874 ) (1,656 )

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

Accounts receivable, net 18,889 91,010
Prepaid expenses and other assets (2,057 ) (4,666 )
Accounts payable and accrued expenses (25,807 ) (121,148 )
Accrued compensation and benefits 2,776 (20,416 )
Income taxes receivable and payable (3,630 ) 6,710
Other liabilities   (2,466 )   2,116  
Net cash provided by operating activities   223,215     198,643  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (17,444 ) (15,279 )
Purchases of businesses, net of cash acquired (14,972 ) (839,050 )
Investment in unconsolidated joint venture 391 3,550
Other   629     (876 )
Net cash used in investing activities   (31,396 )   (851,655 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments) borrowings under credit facilities (213,451 ) 660,850
Payment of contingent consideration (3,294 )
Proceeds from employee stock purchase plans 3,287 3,527
Proceeds from exercise of stock options 691
Repurchase of common stock (3,400 ) (3,653 )
Payment of taxes for equity transactions (7,378 ) (9,764 )
Other   1,390     3,836  
Net cash (used in) provided by financing activities   (218,861 )   651,502  
Effect of exchange rate changes on cash and cash equivalents   (2,055 )   1,634  
Net (decrease) increase in cash and cash equivalents (29,097 ) 124
Cash and cash equivalents, beginning of period   64,461     64,337  
Cash and cash equivalents, end of period $ 35,364   $ 64,461  
 
 
Selected Financial Data (Continued)
 
Revenue by Customer Type (Unaudited)
Quarter Ended        
(dollars in thousands)6/30/2015  6/30/2014  

$ Change

 % Change
Department of Defense $ 576,284   66.6 %   $ 653,665   72.2 %   $ (77,381 )   -11.8 %
Federal Civilian Agencies 236,979 27.4 % 199,777 22.1 % 37,202 18.6 %
Commercial and other   52,243   6.0 %     52,276   5.7 %     (33 )   -0.1 %
Total $ 865,506   100.0 %   $ 905,718   100.0 %   $ (40,212 )   -4.4 %
 
Twelve Months Ended        
(dollars in thousands)6/30/2015  6/30/2014  

$Change

 % Change
Department of Defense $ 2,217,031 66.9 % $ 2,578,024 72.4 % $ (360,993 ) -14.0 %
Federal Civilian Agencies 888,191 26.8 % 771,662 21.6 % 116,529 15.1 %
Commercial and other   208,230   6.3 %     214,876   6.0 %     (6,646 )   -3.1 %
Total $ 3,313,452   100.0 %   $ 3,564,562   100.0 %   $ (251,110 )   -7.0 %
 

Revenue by Contract Type (Unaudited)

Quarter Ended        
(dollars in thousands)6/30/2015  6/30/2014  

$Change

 % Change
Cost reimbursable $ 407,407 47.1 % $ 440,867 48.7 % $ (33,460 ) -7.6 %
Fixed price 296,935 34.3 % 275,570 30.4 % 21,365 7.8 %
Time and materials   161,164   18.6 %     189,281   20.9 %     (28,117 )   -14.9 %
Total $ 865,506   100.0 %   $ 905,718   100.0 %   $ (40,212 )   -4.4 %
 
Twelve Months Ended        
(dollars in thousands)6/30/2015  6/30/2014  

$Change

 % Change
Cost reimbursable $ 1,534,864 46.3 % $ 1,744,959 49.0 % $ (210,095 ) -12.0 %
Fixed price 1,179,139 35.6 % 1,095,449 30.7 % 83,690 7.6 %
Time and materials   599,449   18.1 %     724,154   20.3 %     (124,705 )   -17.2 %
Total $ 3,313,452   100.0 %   $ 3,564,562   100.0 %   $ (251,110 )   -7.0 %
 

Revenue Received as a Prime versus Subcontractor (Unaudited)

Quarter Ended        
(dollars in thousands)6/30/2015  6/30/2014  

$Change

 % Change
Prime $ 780,187 90.1 % $ 809,376 89.4 % $ (29,189 ) -3.6 %
Subcontractor   85,319   9.9 %     96,342   10.6 %     (11,023 )   -11.4 %
Total $ 865,506   100.0 %   $ 905,718   100.0 %   $ (40,212 )   -4.4 %
 
Twelve Months Ended        
(dollars in thousands)6/30/2015  6/30/2014  

$Change

 % Change
Prime $ 2,965,683 89.5 % $ 3,191,939 89.5 % $ (226,256 ) -7.1 %
Subcontractor   347,769   10.5 %     372,623   10.5 %     (24,854 ) -6.7 %
Total $ 3,313,452   100.0 %   $ 3,564,562   100.0 %   $ (251,110 )   -7.0 %
 
 
Selected Financial Data (Continued)
       
Contract Funding Orders Received (Unaudited)
Quarter Ended        
(dollars in thousands)6/30/2015  6/30/2014  

$Change

 % Change
Contract Funding Orders $ 871,345   $ 906,836   $ (35,491 )   -3.9 %
Twelve Months Ended        
(dollars in thousands)6/30/2015  6/30/2014  

$Change

 % Change
Contract Funding Orders $ 3,756,631   $ 3,610,314   $ 146,317     4.1 %
 
 
Direct Costs by Category (Unaudited)
 Quarter Ended
(dollars in thousands)6/30/2015  6/30/2014  

$Change

 % Change
Direct labor $ 276,326   48.7 %   $ 263,959   43.1 %   $ 12,367   4.7 %
Other direct costs   291,120   51.3 %     348,687   56.9 %     (57,567 )   -16.5 %
Total direct costs $ 567,446   100.0 %   $ 612,646   100.0 %   $ (45,200 )   -7.4 %
 
Twelve Months Ended
(dollars in thousands)6/30/2015  6/30/2014  

$Change

 % Change
Direct labor $ 1,062,882 48.5 % $ 1,028,045 42.4 % $ 34,837 3.4 %
Other direct costs   1,130,703   51.5 %     1,398,475   57.6 %     (267,772 )   -19.1 %
Total direct costs $ 2,193,585   100.0 %   $ 2,426,520   100.0 %   $ (232,935 )   -9.6 %
 

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 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 plus stock-based compensation expense, depreciation and amortization, and amortization of financing costs, 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      Twelve Months Ended    
(dollars in thousands)6/30/2015  6/30/2014  % Change  6/30/2015  6/30/2014  % Change
Net income, as reported $ 41,384   $ 36,534   13.3 %   $ 126,195   $ 135,316   -6.7 %
Plus:
Income taxes 25,128 22,793 10.2 % 75,327 83,326 -9.6 %
Interest income and expense, net 8,869 10,072 -11.9 % 35,632 39,799 -10.5 %
Depreciation and amortization  

15,985

      18,083     -11.6 %     66,083       65,181     1.4 %
EBITDA $ 91,366     $ 87,482     4.4 %   $ 303,237     $ 323,622     -6.3 %
 
Quarter Ended      Twelve Months Ended    
(dollars in thousands)6/30/2015  6/30/2014  % Change  6/30/2015  6/30/2014  % Change
Revenue, as reported $ 865,506 $ 905,718 -4.4 % $ 3,313,452 $ 3,564,562 -7.0 %
EBITDA $ 91,366     $ 87,482     4.4 %   $ 303,237     $ 323,622     -6.3 %
EBITDA margin   10.6 %     9.7 %         9.2 %     9.1 %    
 
Quarter Ended      Twelve Months Ended    
(dollars in thousands)6/30/2015  6/30/2014  % Change  6/30/2015  6/30/2014  % Change
Net income, as reported $ 41,384 $ 36,534 13.3 % $ 126,195 $ 135,316 -6.7 %
Plus:
Stock-based compensation 4,021 2,667 50.8 % 14,072 11,557 21.8 %
Depreciation and amortization 15,985 18,083 -11.6 % 66,083 65,181 1.4 %
Amortization of financing costs 577 762 -24.3 % 2,639 2,940 -10.2 %
Non-cash interest expense 1,176 -100.0 % 11,421 -100.0 %
Less:
Related tax effect   (8,100 )     (8,910 )   -9.1 %     (32,584 )     (35,775 )   -8.9 %
Adjusted net income $ 53,867     $ 50,312     7.1 %   $ 176,405     $ 190,640     -7.5 %
 
Quarter Ended      Twelve Months Ended    
(shares in thousands)6/30/2015  6/30/2014  % Change  6/30/2015  6/30/2014  % Change

Diluted weighted average shares, as reported

24,613 24,517 24,388 25,155
Diluted earnings per share, as reported $ 1.68     $ 1.49     12.8 %   $ 5.17     $ 5.38     -3.8 %
Diluted adjusted earnings per share $ 2.19     $ 2.05     6.6 %   $ 7.23     $ 7.58     -4.6 %

CACI International Inc
Corporate Communications and Media:
Jody Brown, 703-841-7801
Executive Vice President, Public Relations
jbrown@caci.com
or
Investor Relations:
David Dragics, 866-606-3471
Senior Vice President, Investor Relations
ddragics@caci.com