CACI(US:CACI)2024-04-25 19:37Financial Data and Key Metrics Changes - The company reported adjusted diluted earnings per share of $5.74, which is 17% higher than the previous year, driven by greater operating income and a lower share count, offsetting higher income tax provision and interest expense [6][63] - Revenue for the third quarter reached over $1.9 billion, representing an 11.1% growth, with 10.2% being organic growth [85][100] - The EBITDA margin for the third quarter was 11.3%, showing a significant expansion from the previous year, consistent with expectations of stronger margins in the second half [51][96] Business Line Data and Key Metrics Changes - The company achieved $3.5 billion in awards during the quarter, resulting in a trailing 12-month book-to-bill ratio of 1.5 times, with about half of the awards being for new work [77][99] - The backlog reached a record $28.6 billion, representing nearly four years of annualized revenue, driven by successful recompetes and contract expansions [94][99] Market Data and Key Metrics Changes - The company expects approximately 98% of its revenue for fiscal year '24 to come from existing programs, with about 1% from recompetes in new business [7][63] - The proposed GFY '25 budget aligns with expectations, and the company anticipates beginning with a continuing resolution, which typically does not materially impact business [79] Company Strategy and Development Direction - The company focuses on key enduring priorities for national security and IT modernization, leveraging software to address critical needs, and prioritizing larger, longer-duration opportunities [55][80] - The strategy includes investing ahead of need to develop differentiated capabilities and deploying capital in a flexible and opportunistic manner [9][83] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong third-quarter performance and the ability to raise full-year revenue and earnings guidance, reflecting successful execution of their strategy [8][100] - The management highlighted the importance of adapting to changing threats and maintaining a focus on long-term growth and free cash flow per share as key metrics for shareholder value creation [91][150] Other Important Information - The company has made three acquisitions over the past 12 months, including Quadrint, which enhances its capabilities in digital application modernization [4][114] - The company maintains a free cash flow guidance of at least $420 million, assuming receipt of a $40 million tax refund related to prior year tax method changes [98] Q&A Session All Questions and Answers Question: How does the roll-off of stale pricing in fixed-price business provide natural lift? - Management acknowledged that the roll-off of stale pricing allows for repricing at better rates, potentially providing a natural lift [12][14] Question: Are there plans to increase international exposure through acquisitions? - Management indicated that while they are not currently pursuing international-based M&A, they are looking to expand their international sales efforts and capabilities [30][36] Question: What is the outlook for bidding proposal activity and recompete risk for fiscal '25? - Management noted that they are actively managing bidding proposal activity and expect to continue focusing on larger, longer-duration opportunities, with a disciplined approach to recompete risks [27][40] Question: What are the drivers behind the recent growth in the civil business? - Management explained that the growth is attributed to the transition of certain contracts and the successful recompete of IT work supporting EUCOM and AFRICOM, which nearly doubled in size [42][43] Question: How should investors think about capital deployment and share repurchases? - Management emphasized their focus on free cash flow per share and noted that they have repurchased 1.3 million shares since the second quarter of last year, indicating a commitment to returning value to shareholders [145][146]