CACI(US:CACI)2022-10-27 19:02Financial Data and Key Metrics Changes - Revenue for Q1 2023 was $1.6 billion, representing an overall growth of 7.7% and organic growth of 4.3% [23] - Adjusted EBITDA margin for the first quarter was 10.6% [23] - Adjusted diluted earnings per share increased by 3% year-over-year due to higher revenue and associated profits [23] - Operating cash flow, excluding accounts receivable and purchase facility, was $143 million, reflecting strong profitability and cash collection [24] - Free cash flow for the quarter was $130 million, with a record low Days Sales Outstanding (DSO) of 48 days [24] Business Line Data and Key Metrics Changes - The company won $3.2 billion in contract awards during the quarter, with over 80% being new business, resulting in a book-to-bill ratio of 2 times for the quarter [9] - The company expects revenue growth from both expertise and technology segments, with acquired revenue projected at about $180 million for the fiscal year [26] Market Data and Key Metrics Changes - The company anticipates that 90% of its revenue for fiscal year 2023 will come from existing programs, with 5% from recompetes and 5% from new business [30] - There are nearly $11 billion of submitted bids under evaluation, with over 70% for new business [31] Company Strategy and Development Direction - The company is focused on investing ahead of customer needs to differentiate its technology offerings, particularly in the space domain and C4ISR [12][14] - Recent investments include photonics capabilities and enterprise IT modernization, with a significant contract award of $5.7 billion from the U.S. Air Force [16] - The strategy emphasizes leveraging technology to enhance margins and grow the business [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth prospects due to strong demand and bipartisan support for national security and modernization priorities [10][11] - The company is navigating a continuing resolution environment but expects increased spending in defense, intelligence, and IT modernization [46][48] Other Important Information - The company reaffirmed its fiscal year 2023 guidance, expecting revenue growth between 4.5% and 7.5% [26] - The company is maintaining its adjusted net income and free cash flow guidance despite higher interest expenses [27] Q&A Session Summary Question: Opportunity in photonics and laser business - Management highlighted a strong position in the photonics market with ongoing production units in space and partnerships with satellite OEMs, expecting material growth in fiscal year 2024 to 2025 [35][37] Question: Impact of higher interest rates on M&A - Management stated that higher interest rates do not materially impact acquisition strategies, maintaining a disciplined approach to M&A [39][40] Question: Update on customer labor and budget funding environment - Management noted a challenging labor market but emphasized supportive budgets in national security, with expectations for increased spending in defense and intelligence [42][46] Question: Initial thoughts on stepping into the CFO role - The new CFO indicated no major changes are expected, focusing on refinement and evolution of existing strategies [53][54] Question: Revenue contribution from IT-as-a-Service contract - Management clarified that the large contract will have minimal contribution in FY '23, with a more meaningful ramp-up expected in FY '24 [56][57] Question: Investment curve in the space portfolio - Management discussed significant investments in space capabilities and the expectation of improved margins in FY '24 and beyond [63] Question: Capital deployment strategy - Management emphasized a flexible and opportunistic approach to capital deployment, considering M&A, stock buybacks, and internal investments [68][70] Question: Revenue traction and funding levels - Management confirmed steady revenue growth and normalized funding levels, with no major concerns impacting guidance [78][82]