Financial Data and Key Metrics Changes - CACI reported revenue of $2.2 billion for Q2 2026, reflecting a year-over-year growth of 5.7%, with organic growth of 4.5% [15] - EBITDA margin increased by 70 basis points year-over-year to 11.8% [15] - Adjusted diluted earnings per share rose by 14% to $6.81 compared to the previous year [15] - Free cash flow for the quarter was $138 million, driven by strong profitability and effective working capital management [15] Business Line Data and Key Metrics Changes - The technology segment has grown to represent nearly 60% of total revenue, with significant contributions from electronic warfare and agile software development [5][7] - Electronic warfare alone generated approximately $2 billion in revenue [7] - The company won $1.4 billion in awards during the quarter, resulting in a book-to-bill ratio of 0.65 for the quarter and 1.3 on a trailing 12-month basis [6][19] Market Data and Key Metrics Changes - 90% of CACI's revenue comes from national security customers, with a backlog of $33 billion, which increased by 3% year-over-year [12][19] - Funded backlog grew by 7% over the same period [19] - The company expects 95% of its revenue for FY 2026 to come from existing programs, with 3% from recompetes and 2% from new business [19] Company Strategy and Development Direction - CACI's strategy focuses on expanding national security capabilities and investing in technology to meet customer needs [4][5] - The company aims to differentiate itself through software-defined technology and agile development methodologies [11][22] - The recent acquisition of ARCA is part of CACI's strategy to enhance its technology portfolio and position in the space market [13][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a dynamic operating environment and drive long-term shareholder value [6][23] - The company raised its fiscal 2026 guidance, expecting revenue growth of 8%-10% and free cash flow of at least $725 million [12][18] - Management noted that reconciliation funds are beginning to flow, positively impacting border security programs and other areas [42] Other Important Information - CACI's leverage at the end of Q2 was 2.4 times net debt to trailing 12-month EBITDA, expected to rise to 4.3 times post-ARCA acquisition [16][17] - The company has a strong track record of quickly deleveraging after acquisitions [17] Q&A Session Summary Question: What does higher U.S. military op tempo mean for CACI? - Management indicated that the current operational tempo is favorable for CACI, as it aligns with the demand for mission technology that traditional companies may not provide [27][28] Question: How is the pipeline of submitted bids expected to flow? - Management acknowledged that the protracted government shutdown affected the pace of acquisition processes but noted that the pipeline is filling back up [32] Question: Can you provide an update on the recent protest win? - Management confirmed that the JTMS protest was denied, allowing the company to ramp up on the program, which is expected to benefit growth in 2027 and 2028 [40] Question: How does reconciliation funding impact CACI? - Management stated that reconciliation funding is expected to positively impact various programs, including border security and modernization efforts [42] Question: What is the status of the Federal Acquisition Regulation reform? - Management noted that CACI is aligned with the ongoing acquisition reform and is well-positioned to support the government's shift towards more commercial models [48] Question: How does CACI view the competitive landscape with L3Harris? - Management emphasized that CACI continues to see strong demand for its technology and is focused on delivering value, regardless of competitors' actions [66] Question: What is the outlook for defense spending growth in 2027? - Management expressed caution regarding the fiscal year 2027 budget but remains confident in CACI's growth potential within its $300 billion total addressable market [75] Question: What are the drivers behind the strong margins this quarter? - Management attributed the strong margins to favorable technology revenue acceleration and effective management of indirect costs [86]

Core Insights - Booz Allen Hamilton Holding Corporation (BAH) is a management and information technology consulting firm primarily serving the U.S. government in defense, intelligence, and civil markets [1] - BAH competes with firms such as Leidos Holdings, CACI International, and Science Applications International Corporation, which offer similar consulting and technology services [1] Financial Performance - BAH's Return on Invested Capital (ROIC) is 17.85%, significantly higher than its Weighted Average Cost of Capital (WACC) of 5.09% [2][5] - The ROIC to WACC ratio for BAH is 3.50, indicating that it generates returns well above its cost of capital [2][5] Peer Comparison - Leidos Holdings has a ROIC of 14.48% and a WACC of 6.37%, resulting in a ROIC to WACC ratio of 2.27, showing lower efficiency compared to BAH [3] - CACI International has a ROIC of 8.62% and a WACC of 6.11%, leading to a ROIC to WACC ratio of 1.41, indicating lower efficiency than BAH [3] - Science Applications International Corporation (SAIC) has a ROIC of 12.41% and a WACC of 5.24%, resulting in a ROIC to WACC ratio of 2.37, but still lower than BAH's ratio [4]

Financial Data and Key Metrics Changes - CACI reported revenue of nearly $2.3 billion, representing an 11.2% year-over-year growth, with 5.5% being organic growth [14] - EBITDA margin increased to 11.7%, a year-over-year increase of 120 basis points, driven by strong program execution and higher-margin software-defined technology deliveries [14] - Free cash flow for the quarter was $143 million, supported by strong profitability and effective working capital management [14][15] - Adjusted diluted earnings per share were $6.85, reflecting a 16% increase compared to the previous year [14] Business Line Data and Key Metrics Changes - CACI won $5 billion in contract awards during the quarter, resulting in a book-to-bill ratio of 2.2 times for the quarter and 1.3 times on a trailing 12-month basis [4][16] - The funded backlog grew nearly 26% year-over-year, indicating strong demand and preparation for essential programs amid the government shutdown [17] - The company expects over 92% of its revenue for fiscal year 2026 to come from existing programs, with less than 4% from recompetes and 4% from new business [17] Market Data and Key Metrics Changes - The federal government is currently operating under a shutdown, but CACI's business remains resilient due to its focus on national security, with most work funded and deemed essential [5][6] - The company is seeing good demand signals from customers and prospects for a healthy funding environment for national security priorities [5] - CACI's record backlog of $34 billion represents nearly four years of annual revenue, reflecting strong market positioning [17] Company Strategy and Development Direction - CACI is focused on critical national security priorities, with a strategic portfolio that is 90% aligned with national security [24] - The company is investing in software-defined technology and agile software development processes to enhance efficiency and effectiveness in delivering solutions [12][20] - CACI aims to leverage its differentiated capabilities in counter-UAS, counter-space, network modernization, and digital application modernization to drive long-term growth [10][11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance and three-year financial targets despite the government shutdown [4][20] - The company anticipates continued growth in areas such as electromagnetic spectrum, software-defined technology, and border security, supported by bipartisan funding [24] - Management noted that the current environment allows for flexibility and opportunistic capital deployment to drive long-term growth and shareholder value [15][16] Other Important Information - CACI's ability to reaffirm guidance amidst a government shutdown demonstrates the resilience of its business model and strategic investments made over the years [6][20] - The company is expanding its use of AI tools to enhance the speed and efficiency of its agile software development processes [12] Q&A Session Summary Question: Expectations for FY2027 request - Management highlighted a focus on critical national security priorities with bipartisan support, indicating room for growth despite potential budget cuts [24] Question: Agile contracting approach for counter-UAS - Management noted a shift in U.S. government purchasing methods, with increased use of OTAs and commercial-like purchasing processes [26][29] Question: Impact of government shutdown on business - Management indicated minimal disruption from the shutdown, with some cash collection delays but overall confidence in meeting guidance [44][66] Question: International opportunities in NATO budgets - Management acknowledged the potential for growth in international markets, particularly in response to NATO budget increases [84]

Financial Data and Key Metrics Changes - For fiscal year 2025, the company achieved revenue growth of 16% on an underlying basis, with an EBITDA margin of 11.2% and free cash flow of $442 million, reflecting a 16% increase in free cash flow per share [9][24][26] - In Q4, revenue reached $2.3 billion, representing a 13% year-over-year growth, with an EBITDA margin of 11.5% [22][24] - Adjusted diluted earnings per share for Q4 were $8.4, a 27% increase from the previous year [22] Business Line Data and Key Metrics Changes - The company won $10 billion in contract awards for the year, resulting in a book-to-bill ratio of 1.1x [10][32] - The company reported 10% organic growth for the full year, driven by strong customer demand for its differentiated technology [24][26] Market Data and Key Metrics Changes - The company generates 90% of its revenue from national security customers, benefiting from government funding initiatives such as the One Big Beautiful Bill Act, which allocates over $150 billion for defense [18][32] - The company has a healthy pipeline with $16 billion in bids under evaluation, 80% of which are for new business [34] Company Strategy and Development Direction - The company has positioned itself in well-funded areas aligned with national security priorities, focusing on software-based capabilities and modernization [11][19] - The company anticipates revenue growth of nearly 8% for fiscal year 2026, with an EBITDA margin in the mid-11% range and free cash flow per share growth of over 60% [19][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current operating environment, highlighting strong customer demand and a robust pipeline of opportunities [17][19] - The company is closely monitoring the fiscal year 2026 budget process, indicating comfort in operating under a continuing resolution if necessary [18][19] Other Important Information - The company completed three strategic acquisitions and repurchased $150 million of shares during the year [28] - The company has a modest leverage ratio of 2.9x net debt to trailing twelve-month EBITDA, providing significant optionality for future capital deployment [28] Q&A Session Summary Question: Concerns about the competitive landscape and pipeline - Management clarified that the majority of their $16 billion pipeline consists of new work to CACI, with over half being new customer work, indicating a focus on value bids rather than traditional government services [41][44] Question: Impact of ceiling reduction on iTask program - Management confirmed that the ceiling reduction from $5.7 billion to $5 billion does not impact revenue or margins, and the program continues to execute well [47][49] Question: Budget outlook and potential for organic growth - Management indicated that a quicker budget process could lead to achieving the higher end of organic growth guidance, emphasizing a robust process for setting guidance [54][56] Question: Award environment and contracting officer availability - Management noted some modest impacts on award decisions but emphasized their ability to operate effectively in the current environment, with expectations of extended current work due to tighter procurement bandwidth [68][70] Question: Updates on space optical terminals and Golden Dome initiative - Management reported strong demand for their technology and ongoing success in the space optical terminal market, with investments on track despite some production delays [78][80] Question: Federal civilian exposure and budget outlook - Management stated that only 6% of revenue comes from federal civilian work, with a strategic focus on defense and intelligence sectors, minimizing exposure to federal civilian budget fluctuations [92][94]

Company Performance - CACI International reported quarterly earnings of $6.23 per share, exceeding the Zacks Consensus Estimate of $5.53 per share, and up from $5.74 per share a year ago, representing an earnings surprise of 12.66% [1] - The company posted revenues of $2.17 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.75%, and an increase from $1.94 billion year-over-year [2] - CACI has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Stock Movement and Outlook - CACI shares have increased approximately 4.6% since the beginning of the year, contrasting with a -10.1% decline in the S&P 500 [3] - The future performance of CACI's stock will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The current consensus EPS estimate for the upcoming quarter is $6.90 on revenues of $2.33 billion, and for the current fiscal year, it is $23.94 on revenues of $8.62 billion [7] Industry Context - The Computer - Services industry, to which CACI belongs, is currently ranked in the top 27% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]