CACI(CACI) - 2026 Q1 - Earnings Call Transcript

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]