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CACI Reports Results for Its Fiscal 2019 Second Quarter and Raises Annual Guidance

ARLINGTON, Va.--(BUSINESS WIRE)--

Record second quarter revenue of $1.18 billion, up 8.6 percent

Record second quarter operating income of $102.3 million, up 15.9 percent

Net income of $68.6 million

Contract awards of $1.3 billion, up 16.4 percent

Contract funding orders of $1.0 billion, up 33.6 percent

CACI International Inc (NYSE: CACI), a leading information solutions and service provider to the federal government, announced results today for its second fiscal quarter ended December 31, 2018.

CEO Commentary and Outlook

Ken Asbury, CACI’s President and CEO, said, “We delivered another record quarter of revenue and operating income and won $1.3 billion of contract awards. We are also thrilled to announce our two most recent acquisitions, which, combined with CACI, will deliver differentiated, high-value, cutting-edge signals intelligence, electronic warfare, and cyber operations products and solutions. We are raising full-year revenue and net income guidance to account for the strong performance in our core business and reflect the contribution of our new acquisitions. We are confident in our ability to deliver our long-term organic revenue growth and margin expansion commitments while continuing to generate value for our customers and shareholders.”

Second Quarter Results as Reported

             
(in millions except per-share data)   Q2, FY19   Q2, FY18   % Change
Revenue   $1,181.6   $1,087.9   8.6%
Operating income   $102.3   $88.3   15.9%
Net income   $68.6   $142.8   -52.0%
Diluted earnings per share   $2.71   $5.66   -52.2%
     

Second Quarter Results Assuming Tax Reform was in Place for Fiscal 2018

             
(in millions except per-share data)   Q2, FY19   Q2, FY18   % Change
Revenue   $1,181.6   $1,087.9   8.6%
Operating income   $102.3   $88.3   15.9%
Net income, including the impact of Tax Reform(1)   $68.6   $60.0   14.4%
Diluted earnings per share including the impact of Tax Reform(1)   $2.71   $2.38   13.9%
     
(1)  

See Reconciliation of FY18 Net Income to Non-GAAP Net Income Assuming a Full Year of Tax Reform on page 11.

 

Revenue for the second quarter of Fiscal Year 2019 (FY19) increased compared to the second quarter of Fiscal Year 2018 (FY18) driven by new business wins, on-contract growth, and acquired contracts. Operating income growth was driven by strong program performance and indirect cost control. GAAP net income and diluted earnings per share decreased due to the impact of the passage in December 2017 of the Tax Cut and Jobs Act (“Tax Reform”) on the second quarter of FY18 net income and diluted earnings per share. In the year earlier period, net income and diluted earnings per share benefited from a reduction in our net deferred tax liability of $94.8 million due to the lower tax rate, partially offset by a tax expense of $9.7 million associated with cumulative foreign earnings. For a more meaningful comparison of our second quarter FY19 net income, see page 11 of this release for a reconciliation of second quarter FY18 results assuming a full year of Tax Reform. Based on this adjusted comparison, net income growth for the quarter was driven by the same factors which drove operating income.

Net cash provided by operations in the second quarter of FY19 was $56.4 million. Operating cash flow was impacted by normal fluctuations as well as lower collections due to closures of some government payment offices in the last few days of the quarter. The lower cash collections increased our accounts receivable balances as well as our Days Sales Outstanding (DSO).

Additional Financial Metrics

             
    Q2, FY19   Q2, FY18   % Change
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP measure (in millions) *   $122.3   $105.4   16.1%
Days sales outstanding **   73   61    
     
*See Reconciliation of Net Income to Earnings before Interest, Taxes, Depreciation and Amortization on page 10.
**The calculation of Days Sales Outstanding for Q2 FY19 excludes amounts related to the Navy Systems Engineering business acquired during our first fiscal quarter
 

Second Quarter Awards and Contract Funding Orders

Our contract awards in the quarter were $1.3 billion, which excludes ceiling values of multi-award, indefinite delivery, indefinite quantity (IDIQ) contracts, and approximately 16% higher than the same period last year. Approximately 70 percent of our awards were for new business. Some notable awards during the quarter were:

  • A five-year task order, with a ceiling value of $318 million, to deliver new electronic warfare and signals intelligence systems to a Department of Defense customer.
  • A five-year, $125 million task order to design, develop, implement, and maintain logistics systems for the U.S. Navy’s Military Sealift Command.
  • A five-year, $73 million prime contract to support systems and computer engineering, research and development, integration, and deployment of surface warfare systems for the Naval Surface Warfare Center. The award is a result of CACI’s acquisition of the Systems Engineering and Acquisition Support Services Business Unit.
  • A 30-month, $31.5 million prime contract to optimize and sustain the Defense Enterprise Accounting and Management System (DEAMS), the Air Force enterprise-wide financial solution. CACI will integrate legacy Air Force financial management systems into a single system capable of delivering accurate, reliable, timely and auditable financial management information that complies with directives from the secretary of defense.
  • A prime position on the nine-year, multiple-award Information Technology Enterprise Solutions-3 Services (ITES-3S) IDIQ contract, with a ceiling value of $12 billion, to offer a broad range of end-to-end enterprise IT services to the U.S. Army.

Contract funding orders in the quarter were $1.0 billion, 33.6 percent higher than the year earlier quarter. Total backlog at December 31, 2018 was $12.6 billion, a 15.7 percent increase over the year earlier. Funded backlog at December 31, 2018 was $2.5 billion, 29.3 percent higher than the year earlier.

Other Highlights:

  • CACI was ranked by Fortune magazine as a 2019 World’s Most Admired Company, our eighth time on the list. The ranking identifies companies that enjoy the strongest reputations as business leaders that deliver innovative solutions and services with high ethics and integrity. CACI ranked sixth among IT Services companies worldwide.
  • Chief Operating Officer John Mengucci was named to WashingtonExec’s Top 25 Execs to Watch. Mr. Mengucci was recognized as the driving force in CACI’s market-based strategy and growth into products and solutions.
  • CACI’s SkyTracker® Technology Suite was named “Best-in-Class” among Industry Innovators at Washington Technology’s Government Innovation Awards. The awards recognize IT companies that apply ingenuity and creativity in meeting their customers’ critical challenges.
  • CACI was ranked second on Monster and Military.com’s Best Companies for Veterans List for its strong percentage of veteran hiring (47 percent of 2018 new hires), veterans in the workforce (37+ percent), and focus on assisting veterans as they transition into the corporate world.
  • Dr. Warren R. Phillips, Lead Director on CACI’s Board of Directors, was honored as a member of the National Association of Corporate Directors Directorship 100 list of exemplary corporate directors, reflecting the Board’s highly-credentialed leadership and ethical governance.
  • CACI appointed Christopher A. Voci as Senior Vice President and Corporate Controller, responsible for all aspects of accounting, financial reporting, and Sarbanes-Oxley compliance.

Six Months Results as Reported

             
(in millions except per-share data)  

Six Months,
FY19

 

Six Months,
FY18

  % Change
Revenue   $2,347.5   $2,173.7   8.0%
Operating income   $201.9   $155.6   29.8%
Net income   $147.4   $184.8   -20.2%
Diluted earnings per share   $5.81   $7.33   -20.7%
     

Six Months Results Assuming Tax Reform was in Place for Fiscal 2018

             
(in millions except per-share data)  

Six Months,
FY19

 

Six Months,
FY18

  % Change
Revenue   $2,347.5   $2,173.7   8.0%
Operating income   $201.9   $155.6   29.8%
Net income including the impact of Tax Reform(1)   $147.4   $106.9   37.9%
Diluted earnings per share including the impact of Tax Reform(1)   $5.81   $4.24   37.0%
     
(1)  

See Reconciliation of FY18 Net Income to Non-GAAP Net Income Assuming a Full Year of Tax Reform on page 11.

 

Revenue in the first half of FY19 increased compared to the year earlier period due primarily to new business wins, on-contract growth, and acquired contracts. Operating income increased primarily due to the factors noted above. GAAP net income decreased due to the impact of Tax Reform in FY18. Net cash provided by operations in the first half of FY19 was $139.5 million. For a more meaningful comparison of our first half FY19 net income, see page 11 of this release for a reconciliation of first half FY18 results assuming a full year of Tax Reform. Based on this comparison, net income growth for the first half was driven by the same factors which drove operating income plus additional tax savings. Adjusted EBITDA, a non-GAAP measure, for the first half of FY19 was $238.7 million, 26.0 percent higher than adjusted EBITDA of $189.4 million for the first half of FY18.

Subsequent Event

On January 30, 2019, we announced that we had entered into an agreement to acquire LGS Innovations, a leading provider of signals intelligence (SIGINT), electronic warfare (EW) and cyber products and solutions to the Intelligence Community and Department of Defense with a legacy back to Bell Labs; and acquired Mastodon Design, experts in the rapid design of rugged SIGINT, EW, and cyber operations equipment. The acquisitions will enable us to leverage their integrated technology and capabilities to create scalable SIGINT, EW, and cyber products and solutions providing advanced operational capabilities to our customers addressing emerging near-peer threats.

CACI Raises its FY19 Annual Guidance

We are increasing and narrowing our revenue guidance range to reflect improved performance in the core CACI business and an approximate $125 million revenue contribution from the two acquisitions. We are also revising our FY19 Net Income guidance primarily due to expectations for increases in the core CACI business profitability in the second half of FY19, as well as stronger than anticipated second quarter results and positive contributions of the two acquisitions. These will be partly offset by approximately $13 million of one-time transaction costs, net of tax.

The table below summarizes these changes and represents our views as of January 30, 2019:

         

 

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

 

Current Fiscal Year
2019 Guidance

 

Previous Fiscal Year
2019 Guidance

Revenue   $4,875 - $5,025   $4,700 - $4,900
Net income   $255 - $265   $250 - $260
Effective corporate tax rate   21.2%   21.7%
Diluted earnings per share   $9.96 - $10.35   $9.77 - $10.16
Diluted weighted average shares   25.6   25.6
   

Conference Call Information

We have scheduled a conference call for 6:00 PM Eastern Time Wednesday, January 30, 2019 during which members of our senior management team will be making a brief presentation focusing on second 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 http://investor.caci.com/news/#upcomingevent, at the scheduled time. 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 Relations tab.

CACI provides information solutions and services in support of national security missions and government transformation for Intelligence, Defense, and Federal Civilian customers. A Fortune World’s Most Admired Company, CACI is a member of the Fortune 1000 Largest Companies, the Russell 2000 Index, and the S&P MidCap 400 Index. CACI’s sustained commitment to ethics and integrity defines its corporate culture and drives its success. With approximately 20,000 employees worldwide, CACI provides dynamic career opportunities for military veterans and industry professionals to support the nation’s most critical missions. Join us! 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: legal, regulatory, and political change successive presidential administrations that could result in economic uncertainty; changes in U.S. federal agencies, current agreements with other nations, foreign events, or any other events which may affect the global economy; 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 potential impact of the announcement or consummation of a proposed transaction and our 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-Earnings Release

 
Selected Financial Data
 
CACI International Inc
Condensed Consolidated Statements of Operations (Unaudited)
(Amounts in thousands, except per share amounts)
           
Quarter Ended Six Months Ended
12/31/2018 12/31/2017 % Change 12/31/2018 12/31/2017 % Change
Revenue $ 1,181,641   $ 1,087,860   8.6% $ 2,347,505   $ 2,173,674   8.0%
Costs of revenue
Direct costs 790,849 727,160 8.8% 1,573,609 1,466,838 7.3%
Indirect costs and selling expenses 269,677 254,180 6.1% 534,434 515,424 3.7%
Depreciation and amortization   18,852     18,258   3.3%   37,599     35,846   4.9%
Total costs of revenue   1,079,378     999,598   8.0%   2,145,642     2,018,108   6.3%
Operating income 102,263 88,262 15.9% 201,863 155,566 29.8%
Interest expense and other, net   9,421     10,956   -14.0%   18,307     22,203   -17.5%
Income before income taxes 92,842 77,306 20.1% 183,556 133,363 37.6%
Income taxes   24,246     (65,489 ) -137.0%   36,127     (51,478 ) -170.2%
Net income $ 68,596   $ 142,795   -52.0% $ 147,429   $ 184,841   -20.2%
 
Basic earnings per share $ 2.76 $ 5.80 -52.4% $ 5.95 $ 7.53 -21.0%
Diluted earnings per share $ 2.71 $ 5.66 -52.2% $ 5.81 $ 7.33 -20.7%
 
Weighted average shares used in per share computations:
Basic 24,856 24,622 24,796 24,555
Diluted 25,338 25,211 25,381 25,228
 
Statement of Operations Data (Unaudited)
 
Quarter Ended Six Months Ended
12/31/2018 12/31/2017 % Change 12/31/2018 12/31/2017 % Change
Operating income margin 8.7 % 8.1 % 8.6 % 7.2 %
Tax rate 26.1 % -84.7 % 19.7 % -38.6 %
Net income margin 5.8 % 13.1 % 6.3 % 8.5 %
 
Adjusted EBITDA* $ 122,315 $ 105,389 16.1% $ 238,662 $ 189,399 26.0%
Adjusted EBITDA Margin 10.4 % 9.7 % 10.2 % 8.7 %
 
*See Reconciliation of Net Income to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization on page 10.
 
 
Selected Financial Data (Continued)
 
CACI International Inc
Condensed Consolidated Balance Sheets (Unaudited)
(Amounts in thousands)
  12/31/2018   6/30/2018
ASSETS:
Current assets
Cash and cash equivalents $ 70,728 $ 66,194
Accounts receivable, net 1,016,968 806,871
Prepaid expenses and other current assets   69,717   58,126
Total current assets 1,157,413 931,191
 
Goodwill and intangible assets, net 2,890,305 2,862,590
Property and equipment, net 107,125 101,140
Other long-term assets   135,775   139,285
Total assets $ 4,290,618 $ 4,034,206
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities
Current portion of long-term debt $ 46,920 $ 46,920
Accounts payable 197,225 82,017
Accrued compensation and benefits 232,550 259,442
Other accrued expenses and current liabilities   160,361   150,602
Total current liabilities 637,056 538,981
 
Long-term debt, net of current portion 1,008,116 1,015,420
Other long-term liabilities   388,713   372,918
Total liabilities   2,033,885   1,927,319
 
Shareholders' equity   2,256,733   2,106,887
Total liabilities and shareholders' equity $ 4,290,618 $ 4,034,206
 
 

Selected Financial Data (Continued)

 
CACI International Inc    
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Amounts in thousands)
 
Six Months Ended
12/31/2018 12/31/2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 147,429 $ 184,841

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

Depreciation and amortization 37,599 35,846
Amortization of deferred financing costs 1,156 2,212
Stock-based compensation expense 12,047 12,389
Deferred income taxes 9,123 (83,212 )

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

Accounts receivable, net (136,177 ) 7,367
Prepaid expenses and other assets (2,739 ) (13,774 )
Accounts payable and accrued expenses 110,007 15,190
Accrued compensation and benefits (27,116 ) (11,126 )
Income taxes receivable and payable (10,781 ) (3,796 )
Long-term liabilities   (1,008 )   6,157  
Net cash provided by operating activities   139,540     152,094  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (17,813 ) (22,013 )
Cash paid for business acquired, net of cash acquired (91,151 ) (45,565 )
Other   1,876     3,484  
Net cash used in investing activities   (107,088 )   (64,094 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) under credit facilities (8,460 ) (81,983 )
Payment of contingent consideration (616 ) (3,630 )
Proceeds from employee stock purchase plans 2,827 2,459
Repurchase of common stock (2,756 ) (2,463 )
Payment of taxes for equity transactions   (18,039 )   (12,656 )
Net cash used in financing activities   (27,044 )   (98,273 )
Effect of exchange rate changes on cash and cash equivalents   (874 )   1,062  
Net increase (decrease) in cash and cash equivalents 4,534 (9,211 )
Cash and cash equivalents, beginning of period   66,194     65,539  
Cash and cash equivalents, end of period $ 70,728   $ 56,328  
 
 
Selected Financial Data (Continued)
 
Revenue by Customer Type (Unaudited)
  Quarter Ended        
(dollars in thousands) 12/31/2018   12/31/2017  

$ Change

 

% Change

Department of Defense $ 834,797   70.6 %   $ 733,838   67.5 %   $ 100,959   13.8 %
Federal Civilian Agencies 287,915 24.4 % 296,265 27.2 % (8,350 ) -2.8 %
Commercial and other   58,929   5.0 %     57,757   5.3 %     1,172     2.0 %
Total $ 1,181,641   100.0 %   $ 1,087,860   100.0 %   $ 93,781     8.6 %
 
Six Months Ended        
(dollars in thousands) 12/31/2018   12/31/2017  

$ Change

 

% Change

Department of Defense $ 1,653,063 70.4 % $ 1,461,717 67.3 % $ 191,346 13.1 %
Federal Civilian Agencies 580,117 24.7 % 602,836 27.7 % (22,719 ) -3.8 %
Commercial and other   114,325   4.9 %     109,121   5.0 %     5,204     4.8 %
Total $ 2,347,505   100.0 %   $ 2,173,674   100.0 %   $ 173,831     8.0 %
 
Revenue by Contract Type (Unaudited)
Quarter Ended        
(dollars in thousands) 12/31/2018   12/31/2017  

$ Change

  % Change
Cost reimbursable $ 657,050 55.6 % $ 549,400 50.5 % $ 107,650 19.6 %
Fixed price 337,374 28.6 % 365,090 33.6 % (27,716 ) -7.6 %
Time and materials   187,217   15.8 %     173,370   15.9 %     13,847     8.0 %
Total $ 1,181,641   100.0 %   $ 1,087,860   100.0 %   $ 93,781     8.6 %
 
Six Months Ended        
(dollars in thousands) 12/31/2018   12/31/2017  

$ Change

  % Change
Cost reimbursable $ 1,298,577 55.3 % $ 1,103,129 50.7 % $ 195,448 17.7 %
Fixed price 681,378 29.0 % 723,283 33.3 % (41,905 ) -5.8 %
Time and materials   367,550   15.7 %     347,262   16.0 %     20,288     5.8 %
Total $ 2,347,505   100.0 %   $ 2,173,674   100.0 %   $ 173,831     8.0 %
 
Revenue Received as a Prime versus Subcontractor (Unaudited)
Quarter Ended        
(dollars in thousands) 12/31/2018   12/31/2017  

$ Change

  % Change
Prime $ 1,091,956 92.4 % $ 1,016,769 93.5 % $ 75,187 7.4 %
Subcontractor   89,685   7.6 %     71,091   6.5 %     18,594     26.2 %
Total $ 1,181,641   100.0 %   $ 1,087,860   100.0 %   $ 93,781     8.6 %
 
Six Months Ended        
(dollars in thousands) 12/31/2018   12/31/2017  

$ Change

 

% Change

Prime $ 2,181,828 92.9 % $ 2,026,919 93.2 % $ 154,909 7.6 %
Subcontractor   165,677   7.1 %     146,755   6.8 %     18,922     12.9 %
Total $ 2,347,505   100.0 %   $ 2,173,674   100.0 %   $ 173,831     8.0 %
 
 
Contract Funding Orders Received (Unaudited)
  Quarter Ended        
(dollars in thousands) 12/31/2018   12/31/2017  

$ Change

  % Change
Contract Funding Orders $ 1,002,591   $ 750,330   $ 252,261   33.6 %
Six Months Ended        
(dollars in thousands) 12/31/2018   12/31/2017  

$ Change

  % Change
Contract Funding Orders $ 2,684,493   $ 2,222,703   $ 461,790   20.8 %
     
 
Reconciliation of Net Income to Adjusted Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA)
(Unaudited)
 
The Company views Adjusted EBITDA and Adjusted EBITDA margin, both of which are defined as non-GAAP measures, as important indicators of performance, consistent with the manner in which management measures and forecasts the Company’s performance. Adjusted EBITDA is a commonly used non-GAAP measure when comparing our results with those of other companies. We define Adjusted EBITDA as GAAP net income plus net interest expense, income taxes, depreciation and amortization, and earnout adjustments. We consider Adjusted EBITDA to be a useful metric for management and investors to evaluate and compare the ongoing operating performance of our business on a consistent basis across reporting periods, as it eliminates the effect of non-cash items such as depreciation of tangible assets, amortization of intangible assets primarily recognized in business combinations, as well as the effect of earnout gains and losses, which we do not believe are indicative of our core operating performance. Adjusted EBITDA margin is adjusted EBITDA divided by revenue. These non-GAAP measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.
 
   
Quarter Ended   Six Months Ended
(dollars in thousands) 12/31/2018   12/31/2017   % Change   12/31/2018   12/31/2017   % Change
Net income $ 68,596   $ 142,795   -52.0 % $ 147,429   $ 184,841   -20.2 %
Plus:
Income taxes 24,246 (65,489 ) -137.0 % 36,127 (51,478 ) -170.2 %
Interest income and expense, net 9,421 10,956 -14.0 % 18,307 22,203 -17.5 %
Depreciation and amortization 18,852 18,258 3.3 % 37,599 35,846 4.9 %
Earnout adjustments   1,200       (1,131 )   -206.1 %     (800 )     (2,013 )   -60.3 %
Adjusted EBITDA $ 122,315     $ 105,389     16.1 %   $ 238,662     $ 189,399     26.0 %
 
Quarter Ended   Six Months Ended
(dollars in thousands) 12/31/2018   12/31/2017   % Change   12/31/2018   12/31/2017   % Change
Revenue, as reported $ 1,181,641 $ 1,087,860 8.6 % $ 2,347,505 $ 2,173,674 8.0 %
Adjusted EBITDA   122,315       105,389     16.1 %     238,662       189,399     26.0 %
Adjusted EBITDA margin   10.4 %     9.7 %         10.2 %     8.7 %    
 
 

Selected Financial Data (Continued)

 
Reconciliation of FY18 Adjusted Net Income Assuming a
Full Year of Tax Reform
(Unaudited)
 
The Company views FY18 Adjusted Net Income Assuming a Full Year of Tax Reform, a non-GAAP measure, as an important indicator of performance, consistent with the manner in which management measures and forecasts the Company’s performance. FY18 Adjusted Net Income Assuming a Full Year of Tax Reform is defined as GAAP net income excluding (1) the one-time net benefit from Tax Reform consisting of the remeasurement of deferred taxes, partially offset by transition tax on cumulative foreign earnings, and including (2) the application of the new lower federal tax rate of 21% to all of FY18 as if the rate was in effect at that time. We believe that FY18 Adjusted Net Income Assuming a Full Year of Tax Reform is useful to investors as it allows investors to more easily compare FY19 results and guidance to FY18 results with a normalized tax rate. This non-GAAP measure should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.
 
       
Q1 Q2 Q3 Q4
9/30/2017 12/31/2017 3/31/2018 6/30/2018
(Amounts in thousands, except per share amounts)

Net
Income

 

Diluted
EPS

Net
Income

 

Diluted
EPS

Net
Income

 

Diluted
EPS

Net
Income

 

Diluted
EPS

Net income, as reported $ 42,046 $ 1.67 $ 142,795 $ 5.66 $ 64,499 $ 2.56 $ 51,831 $ 2.05
Remeasurement of deferred taxes - - (94,831 ) (3.76 ) - - (1,438 ) (0.06 )
Transition tax on foreign earnings - - 9,676 0.38 - - - -
Impact of tax rate change for full year 4,853 0.19 2,347 0.10 6,737 0.26 3,716 0.15

 

               

FY18 Adjusted Net Income Assuming a Full Year of Tax Reform

$ 46,899 $ 1.86 $ 59,987   $ 2.38   $ 71,236   $ 2.82   $ 54,109   $ 2.14  
 
Three Months Ended Six Months Ended

Nine Months Ended

Twelve Months Ended
9/30/2017 12/31/2017 3/31/2018 6/30/2018
(Amounts in thousands, except per share amounts)

Net
Income

Diluted
EPS

Net
Income

Diluted
EPS

Net
Income

Diluted
EPS

Net
Income

Diluted
EPS

Net income, as reported $ 42,046 $ 1.67 $ 184,841 $ 7.33 $ 249,340 $ 9.89 $ 301,171 $ 11.93
Remeasurement of deferred taxes* - - (94,831 ) (3.76 ) $ (94,831 ) (3.76 ) (96,269 ) (3.81 )
Transition tax on foreign earnings - - 9,676 0.38 9,676 0.38 9,676 0.38
Impact of tax rate change for full year 4,853 0.19 7,200 0.29 13,937 0.55 17,653 0.70

 

               

FY18 Adjusted Net Income Assuming a Full Year of Tax Reform

$ 46,899 $ 1.86 $ 106,886   $ 4.24   $ 178,122   $ 7.06   $ 232,231   $ 9.20  
* Amounts may not add due to rounding
 

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