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CACI Plunges 5% as Q3 Earnings and Revenues Miss Estimates

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CACI International’s CACI shares plunged 4.8% in Wednesday’s extended trading session after the company reported lower-than-expected results for the third quarter of fiscal 2022. The national security-related IT solutions and services provider reported non-GAAP earnings of $4.64 per share, missing the Zacks Consensus Estimate of $4.79. Also, the bottom line declined by 12.1% from the year-ago quarter’s figure of $5.28 per share.

This decline in earnings was primarily due to lower operational income, high interest expenses and tax rates, partially offset by a reduced number of shares outstanding. The reduction in shares outstanding can be attributed to the stock buyback worth $500 million under the accelerated share repurchase program announced in March 2021.

In the third quarter of fiscal 2022, CACI reported revenues of $1.58 billion, missing the Zacks Consensus Estimate of $1.65 billion. However, the top line increased 2.1% from the prior-year quarter, primarily driven by acquisitions completed earlier this year. Organic revenues declined by 2% on a year-over-year basis.

CACI International, Inc. Price and EPS Surprise

CACI International, Inc. Price and EPS Surprise
CACI International, Inc. Price and EPS Surprise

CACI International, Inc. price-eps-surprise | CACI International, Inc. Quote

Quarterly Details

Contract awards during the third quarter totaled $1.2 billion, with approximately 45% for the new business. Revenues from contract awards excluded the ceiling values of multi-award, indefinite-delivery indefinite-quantity contracts.

CACI ended the quarter with a backlog of $23.5 billion, up 5% on a year-over-year basis. As of Mar 31, 2022, the funded backlog decreased by 7% to $3 billion.

In terms of the customer mix, the Department of Defense contributed 70.7% to total revenues in the reported quarter. Federal Civilian Agencies made up 24%, while Commercial and other customers accounted for 5.3% of revenues.

Revenues generated as a prime contractor and a subcontractor accounted for 89.6% and 10.4% of total revenues, respectively.

In terms of the contract type, cost-plus-fee type contracts, fixed-price contracts and time and material type contracts contributed 56.1%, 31.8% and 12.1%, respectively, to total revenues.

Revenues generated as ‘Expertise’ and ‘Technology’ accounted for 45.2% and 54.8% of total revenues, respectively.

Operating Details

The operating income for the quarter amounted to $125.4 million, down 17.2% year over year. The operating margin contracted by 190 basis points (bps) to 7.9%. Adjusted EBITDA slumped by 12.1% year over year to $161.5 million. The adjusted EBITDA margin contracted by 160 bps to 10.2%.

The company cited an abnormally high profit margin in the prior-year quarter as the primary reason behind this decline. In the year-ago quarter, the company’s margins benefited from higher profitability due to the favorable fixed-price contract performance and lower indirect costs amid the pandemic.

Balance Sheet & Cash Flow

As of Mar 31, 2022, CACI had cash and cash equivalents of $125.1 million compared with the previous quarter’s $124.1 million. Total long-term (net of the current portion) debt was $1.82 billion, down from $2.08 billion as of Dec 31, 2021.

The company generated an operating cash flow (excluding MARPA) of $314.1 million during the third quarter, improving by 145% from the year-ago quarter. During the first three quarters of fiscal 2022, CACI generated $617.4 million of operating cash flow (excluding MARPA).

Free cash flow was $296.9 million during the quarter under review and $578.6 million in the first three quarters of fiscal 2022.

Guidance Update

CACI updated its fiscal 2022 guidance. The company now projects revenues between $6.2 billion and $6.25 billion compared with the prior range of $6.300-$6.400 billion. Adjusted earnings are forecast between $17.51 and $17.93 per share compared with the earlier guidance of $18.14-$18.57 per share.

The company now expects a fiscal 2022 net income in the range of $415-425 million compared with the prior range of $430-440 million. However, it estimates free cash flow to be at least $720 million.

Zacks Rank & Key Picks

CACI currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology sector are Yelp YELP, Gogo GOGO and Analog Devices ADI. Yelp and Gogo each sport a Zacks Rank #1 (Strong Buy), while Analog Devices carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Yelp's first-quarter 2022 loss has been revised a couple of cents southward to 11 cents per share over the past 60 days. For 2022, earnings estimates have moved north by 53.6% to $1.06 per share in the past 60 days.

Yelp's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 632.9%. Shares of YELP have fallen 20.2% in the past year.

The Zacks Consensus Estimate for Gogo's first-quarter 2022 earnings has been revised downward by a penny to 13 cents per share over the past 30 days. For 2022, Gogo's earnings estimates have moved north by 25% to 65 cents per share in the past 60 days.

Gogo's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 65%. Shares of GOGO have soared 68.9% in the past year.

The Zacks Consensus Estimate for Analog Devices' second-quarter fiscal 2022 earnings has been revised upward by 4 cents to $2.12 per share over the past 30 days. For fiscal 2022, earnings estimates have moved north by 11 cents to $8.43 per share in the past 30 days.

Analog Devices' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6%. Shares of ADI have decreased 2.8% in the past year.


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