CACI International CACI reported solid first-quarter fiscal 2020 (ended Sep 30, 2019) results, wherein both earnings and revenues beat estimates.
Earnings were $2.66 per share, down 14.2% year over year. The bottom line, however, beat the Zacks Consensus Estimate of $2.63. Rise in interest expenses due to increased debt levels associated with recent acquisitions, and higher effective tax rate were an overhang.
Revenues were $1.36 billion, up 16.9% from the year-ago quarter. The rise was primarily attributable to new business wins, acquired contracts and on-contract growth, which aided organic expansion. The top line also outpaced the consensus estimate of $1.35 billion.
CACI International, Inc. Price, Consensus and EPS Surprise
CACI International, Inc. price-consensus-eps-surprise-chart | CACI International, Inc. Quote
Contract awards in the reported quarter were worth $4 billion, up a whopping 58% year over year, of which approximately 60% came from new businesses. Revenues from contract awards excluded ceiling values of multi-award, indefinite delivery, indefinite quantity contracts.
Total backlog as of Sep 30, 2019 was $19.5 billion, 50% higher than the prior-year quarter. Funded backlog at the end of September was $3.3 billion, up 21%.
In terms of customer mix, the Department of Defense accounted for about 68.8% of total revenues in the quarter. Federal Civilian Agencies contributed about 26.7% while Commercial and other customers accounted for 4.5% of revenues.
During the quarter, CACI secured several notable contracts. These included a five-year, $907 million task order to provide intelligence operations and analytic support to the U.S. Army; and a five-year, $443 million task order to efficiently respond to commercial-based technology threats and support U.S. Army.
On Sep 20, CACI expanded its presence in the Texas Technology Corridor by opening a new office in Port San Antonio, which will be used to collaborate with the U.S. Air Force and other regional government agencies to provide research and development of full-spectrum cybersecurity and cyberspace solutions. It also announced that it intends to create new space in the Capital Factory technology incubation hub in Austin.
Moreover, CACI and BlackBerry BB joined forces to provide the secure and certified government multi-tenant mobile communications app for voice and text messaging on both iOS and Android devices that exceeds federal requirements.
Operating income for the quarter came in at $100.2 million, up 0.6% from the year-ago quarter. Exceptionally strong results last year due to product sales timing and other one-time benefits made the year-over-year comparison difficult.
Operating income margin contracted 120 basis points (bps) to 7.3%.
Adjusted EBITDA for the fiscal first quarter increased 9.6% year over year to $128.3 million. Adjusted EBITDA margin of 9.4% contracted 60 bps.
Balance Sheet and Cash Flow
At the quarter end, CACI had cash and cash equivalents of $83.2 million compared with $72 million in the previous quarter.
Total long-term (net of current portion) debt was $1.55 billion.
Cash flow from operations as of Sep 30, 2019, was $114.6 million compared with $555.3 million in the previous quarter.
CACI raised guidance for fiscal 2020. Revenues are now expected in the range of $5.55 billion to $5.75 billion, up from previously guided $5.50-$5.70 billion.
Net income is now expected in the range of $298-$318 million compared with earlier expected $295-$315 million.
Earnings per share are expected to be between $11.64 and $12.42, up from previous forecasted range of $11.52 - $12.30.
Moreover, net cash provided by operating activities of almost $420 million is expected compared with upto $400 million estimated earlier.
The LGS and Mastodon buyouts, when combined with CACI’s capabilities, are expected to allow the company to offer products and solutions that address requirements in the areas of signals intelligence and spectrum management, electronic warfare, communications, C4ISR and cyber defense.
CACI completed three acquisitions for total of $105 million in October, adding mission expertise and technology capabilities to its business. The acquisitions are expected to add about $50 million to the top line and $3 million of net income to full-year fiscal 2020 results.
The company expects accelerating organic revenue growth and continued margin expansion throughout 2020.
Zacks Rank and Key Picks
CACI currently has a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the broader technology sector are Five9, Inc. FIVN and Benefitfocus, Inc. BNFT, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Five9 and Benefitfocus is 10% and 20%, respectively.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our just-released Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
Download Free Report Now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Benefitfocus, Inc. (BNFT) : Free Stock Analysis Report
Five9, Inc. (FIVN) : Free Stock Analysis Report
CACI International, Inc. (CACI) : Free Stock Analysis Report
BlackBerry Limited (BB) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research