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CACI International (CACI) Q2 Earnings Top Estimates, View Up

Zacks Equity Research

CACI International CACI reported solid second-quarter fiscal 2020 (ended Dec 31, 2019) results, wherein both earnings and revenues beat estimates.

Earnings were $3.11 per share, up 15% year over year. The bottom line also beat the Zacks Consensus Estimate of $2.78.

Revenues were $1.4 billion, up 18.1% from the year-ago quarter. The rise was primarily attributable to new business wins, acquired contracts and on-contract growth, which aided organic expansion. The top line also outpaced the consensus mark of $1.37 billion.

CACI International, Inc. Price, Consensus and EPS Surprise

CACI International, Inc. Price, Consensus and EPS Surprise

CACI International, Inc. price-consensus-eps-surprise-chart | CACI International, Inc. Quote

Quarter Details

Contract awards in the reported quarter were worth $2.7 billion, up a whopping 108% year over year, of which approximately 60% came from new businesses. Revenues from contract awards excluded ceiling values of multi-award, indefinite-delivery, indefinite-quantity contracts.

Total backlog, as of Dec 31, 2019, was $20.3 billion, 61% higher than the prior-year quarter. Funded backlog at the end of December was $2.8 billion, up 14%.

In terms of customer mix, the Department of Defense accounted for about 71% of total revenues in the quarter. Federal Civilian Agencies contributed about 24.5%, while Commercial and other customers accounted for 4.5% of revenues.

Revenues generated as a prime contractor and a subcontractor accounted for 90.9% and 9.1% of total revenues, respectively.

During the quarter, CACI secured several notable contracts. These included a five-year, $1.1-billion task order to provide advanced and full lifecycle information technology support to enterprise and mission technology.

Margins

Operating income for the quarter came in at $110.19 million, up 7.7% from the year-ago quarter.

Operating income margin contracted 80 basis points (bps) to 7.3%. Higher interest expenses were an overhang on margins.

Adjusted EBITDA for the fiscal second quarter increased 14.6% year over year to $140.9 million. Adjusted EBITDA margin of 10.1% contracted 30 bps.

Balance Sheet and Cash Flow

At the quarter-end, CACI had cash and cash equivalents of $68.6 million compared with $83.2 million in the previous quarter.

Total long-term (net of current portion) debt was $1.55 billion.

Cash flow from operations, as of Sep 30, 2019, was $237 million compared with $114.6 million in the previous quarter. The increase was driven by growth in billing and collections processes as well as the company’s Master Accounts Receivable Purchase Agreement (MARPA).

Guidance

CACI raised guidance for fiscal 2020. Revenues are now expected in the range of $5.60-$5.80 billion, up from the previously guided $5.55-$5.75 billion.

Net income is now expected in the range of $305-$325 million compared with the earlier expectation of $298-$318 million.

Earnings per share are expected between $11.91 and $12.70, up from the previously forecasted range of $11.64-$12.42.

Moreover, net cash provided by operating activities is expected to be at least $430 million compared with up to $420 million estimated earlier.

The company expects accelerating organic revenue growth and continued margin expansion throughout 2020.

Zacks Rank & Other Key Picks

The company currently has a Zacks Rank #2 (Buy).

A few top-ranked stocks in the broader technology sector are CEVA, Inc. CEVA, SYNNEX SNX and Silicon Motion Technology Corporation SIMO, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for CEVA, SYNNEX and Silicon Motion is currently pegged at 20%, 10.37% and 7%, respectively.

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