CACI(US:CACI)2025-04-24 19:03Financial Data and Key Metrics Changes - CACI reported revenue growth of 12% for Q3 2025, with total revenue reaching $2.2 billion, of which 5.6% was organic growth [9][32] - EBITDA margin improved to 11.7%, reflecting a year-over-year increase of 40 basis points [32] - Free cash flow for the quarter was $188 million, showing strong sequential and year-over-year increases [35][40] - Adjusted diluted earnings per share increased by 9% year-over-year to $6.23 [33] Business Line Data and Key Metrics Changes - The company won $2.5 billion in awards during the quarter, resulting in a book-to-bill ratio of 1.2 times for the quarter and 1.5 times on a trailing twelve-month basis [9][42] - The backlog increased by 10% year-over-year to $31 billion, representing nearly four years of annual revenue [42] Market Data and Key Metrics Changes - Demand signals from customers remain strong, driven by geopolitical realities and a supportive funding environment for national security spending [12][17] - The company has seen a constructive funding environment with healthy budgets and an upward bias in national security spending [12][17] Company Strategy and Development Direction - CACI's strategy focuses on software-defined capabilities, aligning with the new administration's priorities for national security [13][14] - The company is positioned to benefit from increased defense budgets and bipartisan support for national security initiatives [30][39] - CACI continues to invest ahead of customer needs, which has proven to be a successful strategy in winning contracts [29][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving three-year financial targets and driving long-term growth and shareholder value [10][30] - The macro environment is seen as favorable, with expectations of continued demand for national security solutions [12][30] - Management noted that while there may be some slower decision-making, the overall business performance remains strong [9][12] Other Important Information - CACI initiated an open market share repurchase program, buying back 436,000 shares at an average price of approximately $344 per share [35][36] - The company raised its fiscal year 2025 guidance for revenue, adjusted EPS, and free cash flow due to strong business performance [38][40] Q&A Session Summary Question: How has contract growth trended since the change in administration? - Management indicated no slowdown in on-contract growth measures and noted a strong level of RFPs being responded to [54][56] Question: How much revenue is already in the backlog for FY '26? - Management stated that no single program accounts for more than 5% of revenue and that the backlog is building well [57][58] Question: What are the implications of the DOD memo about insourcing or updating acquisition for tech? - Management sees the executive orders as a net positive for CACI, aligning with their software-defined capabilities strategy [61][64] Question: Can you discuss the budget cadence and outlay mechanics? - Management highlighted that the full-year continuing resolution allows for new starts and provides good visibility for national security spending [75][80] Question: What specific areas of incremental funding represent the biggest opportunities? - Management identified electronic warfare, border security, and DOD IT modernization as key areas for future growth [88][92] Question: Can you provide an update on the development and ramp of production for your optical communications business? - Management confirmed they are on track to deliver six times the volume of optical communications terminals compared to FY 2024 [96][98] Question: How is CACI positioned regarding the ongoing GSA review? - Management stated they are not part of the top 10 contractors but have been proactive in discussions about cost savings and agile development [140][144]