CACI International Conference Call Summary Company Overview - **Company**: CACI International (NYSE:CACI) - **Industry**: Aerospace and Defense Key Points Differentiation from Peers - CACI emphasizes its differentiation from peers through technology application rather than traditional expertise models, focusing on larger contracts that leverage technology [2][4][3] - The company has been successful in positioning itself uniquely within the government IT services sector, despite being perceived as homogeneous [3][4] AI and Technology Integration - AI is viewed as a significant opportunity rather than a threat, enhancing efficiency in areas like intelligence analysis [6][9] - CACI has a long history of utilizing AI across various domains, including computer vision and analytics, to improve operational outcomes [8][9] Organic Growth and Market Trends - CACI is focused on mega trends in defense, particularly in areas like counter-UAS (Unmanned Aerial Systems) and network modernization, which are expected to drive growth [10][12][13] - The company has a strong backlog of contracts, averaging 3.7 years of revenue, which provides visibility and stability for future growth [32][33] International Growth Opportunities - CACI is exploring international markets, particularly within the Five Eyes countries and NATO, while maintaining a focus on domestic business [21][22] Technology vs. Expertise Revenue - Technology revenue is growing faster than expertise revenue, which is central to CACI's strategic evolution [25][26] - The company has about 1,400 employees embedded in combatant commands, enhancing its ability to leverage expertise for technology applications [27][28] Prime Contracting Position - CACI is the prime contractor on over 90% of its contracts, which strengthens customer relationships and provides direct access to evolving needs [29][30] Budget Outlook and Strategic Positioning - CACI's strategy is designed to withstand budget volatility, focusing on areas with durable demand such as electronic warfare and cyber capabilities [35][36] - The total addressable market (TAM) is estimated at $300 billion, with CACI's revenue around $9.5 billion, indicating significant growth potential [38] Acquisition of ARKA - The acquisition of ARKA is seen as transformational, enhancing CACI's capabilities in space and multi-intelligence [56][60] - ARKA is expected to be accretive to growth and EBITDA margins, with a strong focus on leveraging synergies post-acquisition [61][62] Margin Performance - CACI has consistently improved margins, driven by increased technology content, which has higher average margins compared to expertise [45][49] - The company prioritizes free cash flow per share as a key metric for decision-making [48] Executive Order on Underperforming Contractors - CACI is not on the underperforming contractor list and is well-positioned in relation to the recent executive order aimed at improving contractor performance [81][82] Additional Insights - CACI's focus on long-term investments and mission-critical expertise positions it well to address evolving threats in national security [41][42] - The company is committed to maintaining relevance in its investments by continuously monitoring market needs through its deployed personnel [41][42]

Core Insights - The ARPEGE surface-to-air RADAR threat simulation system, developed by Eviden, was deployed during a NATO Tactical Leadership Program exercise in November 2026 at Los Llanos Air Base in Spain [1][2] - The ARPEGE system has been operational since 2022 and is designed to meet the specific needs of NATO's armed forces in high-intensity environments [2][4] - The system includes a central command post and remote light vehicles that simulate radar threats, allowing for realistic training scenarios for fighter pilots [2][3] Company Overview - Eviden, part of the Atos Group, generates approximately €1 billion in revenue and operates in 36 countries, focusing on mission-critical systems and advanced technologies [7] - The company employs over 4,500 professionals and holds more than 2,100 patents, providing innovative solutions in AI, computing, security, and data applications [7] - Avantix, a business unit of Eviden, specializes in electronic warfare and signals intelligence solutions for various operational environments [8][9] Product Details - The ARPEGE system is part of the Mobile Radar Threat Simulator (MRTS) portfolio, which is scalable and adaptable to next-generation radar signals and systems [4] - The modular design of the ARPEGE system allows for quick deployment and operation across different training areas, enhancing its flexibility [3][4] - The system's capabilities include simulating real-world radar emissions that trigger aircraft self-protection systems, allowing for comprehensive pilot assessments during training [2][5]

Anything is hard to find out in the ocean, even a great big submarine. That's why NATO constantly practices the complex science of anti-ubmarine warfare. Russia has ramped up its submarine activity in the Arctic, and these are the NATO forces preparing to hunt them down.It's a complex exercise involving ships, helicopters, special planes, and other resources using some of the Military Alliance's most advanced equipment to uh detect submarines, to locate them once they are detected and to be able to track th ...

Core Insights - CACI International Inc has been awarded a five-year task order valued at up to $250 million to enhance spectrum dominance for the U.S. Army Capability Program Executive – Intelligence, Electronic Warfare & Sensors [1] Group 1: Company Overview - CACI is a national security company with 26,000 employees focused on expanding national security limits [3] - The company is recognized as a Fortune World's Most Admired Company and is part of the Fortune 500, Russell 1000 Index, and S&P MidCap 400 Index [3] Group 2: Strategic Initiatives - CACI is making significant investments in software-defined electronic warfare (EW) solutions to maintain an advantage over adversaries [2] - The company aims to empower warfighters to achieve and maintain spectrum dominance in contested environments [2] - CACI will utilize its expertise for the integration and sustainment of technology to enhance the Army's multi-domain EW capabilities [2]

Financial Data and Key Metrics Changes - The company reported revenue of $2.2 billion for the second quarter, reflecting a year-over-year growth of 5.7%, with 4.5% being organic growth [26] - EBITDA margin increased to 11.8%, a rise of 70 basis points year-over-year [26] - Free cash flow for the quarter was $138 million, driven by strong profitability and effective working capital management [26][28] - Adjusted diluted earnings per share reached $6.81, marking a 14% increase compared to the previous year [27] 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 [9][13] - Electronic warfare alone generated approximately $2 billion in revenue, showcasing the company's leadership in this area [13] - 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 [12] Market Data and Key Metrics Changes - 90% of the company's revenue is derived from national security customers, with increasing visibility into funding streams from reconciliation funds [22][23] - The backlog increased by 3% year-over-year to $33 billion, with a funded backlog growth of 7% [34] - The company expects 95% of its revenue for fiscal year 2026 to come from existing programs, indicating strong operational performance [35] Company Strategy and Development Direction - The company emphasizes a strategy focused on expanding national security capabilities and investing ahead of customer needs [7][8] - Recent acquisitions, including ARKA, are part of a strategy to enhance technology-driven growth and expand into critical markets like space [13][39] - The company aims to maintain a flexible capital deployment strategy to support long-term growth and shareholder value [30][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a dynamic operating environment and achieve long-term shareholder value [11][39] - The macro environment remains constructive, with good demand signals from customers despite some unevenness post-government shutdown [22] - The company raised its fiscal 2026 guidance, expecting revenue growth of 8%-10% and free cash flow of at least $725 million [23][31] Other Important Information - The company is strategically positioned to benefit from ongoing acquisition reforms and the shift towards firm-fixed-price contracts [72] - The acquisition of ARKA is expected to increase leverage to 4.3 times net debt to trailing 12-month EBITDA, but management is confident in returning to lower leverage levels post-acquisition [28][30] - The company is actively engaging in the counter-UAS market, which is expected to see significant growth due to increased funding and demand [90][92] Q&A Session Summary Question: Impact of higher U.S. military OPTEMPO on CACI - Management indicated that the current OPTEMPO is favorable for CACI, as it aligns with the demand for mission technology and software-defined solutions [45][46] Question: Pipeline and bid conversion expectations - Management acknowledged a slower ramp-up post-shutdown but expressed confidence in filling the pipeline and returning to pace [49][50] Question: Update on recent protest win - The JTMS protest was denied, allowing the company to ramp up on the program, which is expected to contribute to growth in 2027 and 2028 [58][59] Question: Reconciliation funding impact - Management noted that reconciliation funds are starting to flow, positively impacting border security programs and other areas [62][65] Question: Federal Acquisition Regulation reform - Management stated that the company is well-aligned with acquisition reforms and is positioned to support the government's shift towards more commercial models [68][72] Question: Scalability of ARCA acquisition - The acquisition of ARCA is expected to enhance the company's capabilities in intelligence services and align with long-term growth funding streams [78][82] Question: Addressable market from reconciliation bill - Management highlighted that reconciliation funding will significantly expand the addressable market, particularly in electronic warfare and counter-UAS [89][90] Question: Defense spending growth in 2027 - Management expressed cautious optimism regarding defense spending growth, emphasizing the company's strong market position regardless of budget fluctuations [114][116] Question: Margins and indirect costs - Management attributed strong margins to favorable technology mix and effective management of indirect costs during growth [126][129] Question: Pentagon's reaction to acquisition scale - Management indicated that there have been no barriers to smart acquisitions that support national security, and the company remains focused on driving shareholder value [131][132]

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 - Huntington Ingalls Industries (HII) has doubled the size of its unmanned systems facility in Portchester, U.K., enhancing its support capacity for the U.K. Royal Navy and European operators of REMUS unmanned underwater vehicles (UUVs) [2][10] Group 1: Facility Expansion and Capabilities - The expanded Portchester facility strengthens HII's presence in the U.K. and Europe, increasing support for unmanned systems, maintenance, training, logistics, and sustainment for REMUS UUV operators [3][10] - The facility is set to prepare for the deployment of the ROMULUS family of unmanned surface vessels starting in 2026, serving as a European hub for HII's Mission Technologies division [3][10] - Advanced capabilities supported by the expansion include artificial intelligence, C5ISR, electronic warfare, and fleet modernization, ensuring effective program execution through collaboration with global teams [4] Group 2: Market Outlook and Demand - The unmanned sea systems market is projected to grow at a CAGR of 13.78% from 2025 to 2030, driven by rising investments in undersea combat capabilities, positioning HII to benefit significantly as the world's largest UUV manufacturer [5] - HII has delivered REMUS UUVs to 30 countries, including 14 NATO members, supporting critical naval missions such as intelligence, surveillance, reconnaissance, and mine countermeasures [6] Group 3: Opportunities for Other Stocks - Other companies that may benefit from the expanding Unmanned Sea Systems market include BAE Systems, Leidos Holdings, and General Dynamics [7] - BAE Systems' Riptide UUV-12 has a long-term earnings growth rate of 14.57%, with 2026 sales estimated at $44.09 billion, indicating a rise of 54.9% [8] - Leidos' Sea Dart is designed for a wide range of missions, with a long-term earnings growth rate of 11.62% and 2026 sales estimated at $17.80 billion, indicating a rise of 3.4% [9] - General Dynamics' Bluefin-9 UUV has a long-term earnings growth rate of 13.16%, with 2026 sales estimated at $54.11 billion, indicating a rise of 4.1% [11] Group 4: Stock Performance - HII shares have increased by 25.1% over the past month, outperforming the industry's growth of 5.3% [12]

Core Insights - Mercury Systems, Inc. is participating in the AOC 2025 International Symposium, showcasing its electronic warfare capabilities and insights on future electromagnetic spectrum operations [1][2] Company Overview - Mercury Systems is a global technology company focused on mission-critical processing for aerospace and defense, with products deployed in over 300 programs across 35 countries [6] Product Innovations - The company will unveil the DRF4581L module, a Direct RF digital signal processing product that digitizes radio frequency signals directly at the antenna, leading to reductions in size, weight, power, cost, and latency [3][4] - The DRF4581L module features a compact design of 1 inch in height and less than 3 inches in width, powered by the Intel Agilex 9 SoC FPGA, capable of converting signals at 64 Gigasamples per second across four channels [4] Event Participation - At AOC 2025, Mercury will demonstrate RF signal transmission using the DRF4580L module, which is currently in production for various customer programs [5] - Key sessions will include discussions on the future of electronic warfare and how emerging technologies can enhance defense capabilities [7]

joining us uh to take a look at defense and aerospace stocks. Tony Bankrooft, uh Gabelli Funds portfolio manager. He's also a former lieutenant colonel uh in the US Marines.Aren't you still a lieutenant colonel. Can Can I still I want to call you that. I am.>> It's great to have you on. It's a special day today, too, isn't it. >> Sure is.250th birthday of the United States Marine Corps. >> That's a good reason to have to have you on here. Um >> and tomorrow's Veterans Day tomorrow.It's kind of a >> easy to ...

Security and Defense - The drone wall concept is being welcomed due to experiences with drone attacks, highlighting the need for cooperation among European countries [2][3] - There's a readiness to share expertise in drone capabilities, with cooperation already established with Ukraine [3][4] - Hybrid attacks and airspace interference are increasing, potentially indicating Russia's shift in tactics due to battlefield difficulties [4][5] - Drones are becoming cheaper weapons, necessitating readiness and deterrence on European soil [6] - NATO needs to adjust its tactics to address electronic warfare and drone threats, including underwater drones [8][9] - The establishment of the Eastern Flank Sentry, with increased NATO forces in the Baltics and Poland, serves as a deterrent [11] - Discussions are ongoing regarding the deployment of more air power and enhanced drone attack preparedness [11] - The need for cheaper counter-drone technologies and broader NATO security measures is emphasized [15][16] Financial and Political Considerations - Progress is being made on utilizing frozen Russian assets, with the European Commission presenting proposals and Belgium seeking guarantees [17][18] - Discussions are ongoing regarding guarantees for Belgium concerning immobilized asset amounts [18][19] - Latvia plans to allocate 5% of its spending to defense next year, with a portion directed towards purchasing equipment from the United States [23] - The debate on transitioning from unanimity to qualified majority voting within the EU is complex, with potential implications for smaller countries [28][29]