CACI Reports Results for its Fiscal 2013 Second Quarter and Revises Fiscal Year 2013 Guidance

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CACI Reports Results for its Fiscal 2013 Second Quarter and Revises Fiscal Year 2013 Guidance

Diluted EPS increased 24.5 percent over FY12 adjusted diluted EPS

Net income increased 7.4 percent over FY12 adjusted net income


Contract funding orders increased 3.4 percent for the quarter

ARLINGTON, Va.--(BUSINESS WIRE)-- CACI International Inc (NYS: CACI) , a leading information solutions and services provider to the federal government, announced results today for its second fiscal quarter ended December 31, 2012:

  • Revenue of $931.6 million
  • Operating income of $69.6 million
  • Net income attributable to CACI of $39.7 million
  • Diluted earnings per share of $1.69

CEO Commentary and Outlook

Dan Allen, CACI's President and CEO, said, "CACI's second quarter results demonstrate continued progress in executing our market-driven strategy. During the quarter, we delivered solid net income, secured a record level of second quarter funding, maintained a strong backlog position, and expanded our new business pipeline of opportunities. We experienced growth in four of our addressable markets. We also completed two acquisitions this quarter that expand our presence in the Healthcare market. Emergint Technologies and IDL Solutions bring new customers and increase our capabilities in the federal civilian healthcare and health insurance areas with more cost-effective business processes, enhanced customer service, and improved patient care.

"We began our Fiscal Year 2013 (FY13) with a planning assumption that the government would be operating under a continuing resolution (CR) for our entire fiscal year. In the back half of our second quarter, we began to see our customers take a more cautious approach to spending as well as awarding contracts, driven by the uncertainties around sequestration. As we look to the second half of our fiscal year, we expect our customers' behavior to continue with fewer contract awards than planned. Given these conditions, we are revising our guidance for the remainder of this fiscal year.

"We remain confident in our strategy to focus on the government's high priority missions. We continue to see new business opportunities and our pipeline remains strong. Our strategic mergers and acquisitions program is focusing on markets in which we see the potential for growth. We are confident that our ability to execute on a disciplined, balanced strategy will enable us to identify competitive positions in our large addressable market that will deliver long-term value to our shareholders."

Second Quarter Comparisons

When analyzing our performance, we believe better insight and a more meaningful comparison of our FY13 results with those of Fiscal Year 2012 (FY12) can be made by adjusting for three material one-time items that positively impacted our results last year. The one-time item that impacted our second quarter FY12 results, which we discussed when we released both our second quarter FY12 results and our FY13 annual guidance, is greater-than-expected profitability on a large fixed-price contract that generated $4.1 million in additional net income in the second quarter of FY12 and $7.1 million during the full year of FY12.

Results for the second quarter of FY13 compared with results for the second quarter of FY12, excluding the item described above, are shown below:

   
(in millions except per share data) Q2, FY13 

Q2, FY12
As Adjusted
(see page 13)

 % Change
Revenue $931.6 $973.2 -4.3%
Operating income $69.6 $67.9 2.5%
Net income attributable to CACI $39.7 $36.9 7.4%
Diluted earnings per share $1.69 $1.35 24.5%

Revenue decreased 4.3 percent from revenue for the second quarter of FY12 due to anticipated lower other direct costs pass-throughs in C4ISR and Intelligence as a result of the draw down in Afghanistan. We experienced growth in four of our markets, with strong growth in Integrated Security Solutions and Investigation and Litigation Support. Operating income increased primarily as a result of a 5.1 percent growth in direct labor and cost control. Net income attributable to CACI in the second quarter of FY13 was $39.7 million, or $1.69 diluted earnings per share, an increase of 7.4 percent over adjusted net income attributable to CACI of $36.9 million, or $1.35 adjusted diluted earnings per share, for the same period in FY12. The larger increase in diluted earnings per share was due to share repurchase activity in FY12. Net cash provided by operations in the quarter was $23.8 million. (See Reconciliation of Revenue, Operating Income, Net Income, and Diluted Earnings Per Share to Adjusted Amounts on page 13.)

For a comparison of our FY13 results to FY12 results reported in accordance with generally accepted accounting principles (GAAP), see the income statement on page 7 of this release.

Additional Financial Metrics

  
      
  Q2, FY13 

Q2, FY12
As Adjusted

% Change

Earnings before interest, taxes, depreciation and amortization (EBITDA),
a non-GAAP measure (in millions)

 $83.5 $82.71.0%
Diluted adjusted earnings per share, a non-GAAP measure $2.22 $1.8520.1%
Days sales outstanding 59 61 

Second Quarter Awards and Contract Funding Orders

During the second quarter, which is a seasonal period of lower levels of contracting activity, we experienced the effects of our clients operating under a continuing resolution (CR) and the threat of sequestration. As a result, contract awards for the quarter were $512 million. Awards were received in all ten of our markets, led by Business Systems, C4ISR, Enterprise IT, Integrated Security Solutions, and Intelligence. FY13 year-to-date awards totaled $2.3 billion, led by Business Systems, C4ISR, Intelligence, Investigation and Litigation Support, and Logistics and Material Readiness.

Contract funding orders in the second quarter were $625 million, and $2.0 billion year-to-date. Our total backlog at December 31, 2012 was $7.6 billion. Funded backlog at December 31, 2012 was $2.1 billion.

During the quarter we continued to expand our inventory of indefinite delivery, indefinite quantity (IDIQ) contract vehicles by being awarded prime positions on new multiple and single award contracts, bringing our combined total to over 160 of these vehicles. IDIQ contract vehicles support our growth plans across our ten markets and provide us the flexibility to deliver on our customers' mission-critical requirements. Awards during the quarter included:

  • A $10 billion, five-year multiple-award to develop, field, and sustain turnkey telecommunications solutions on the U.S. Army Global Tactical Advanced Communications System contract. This is new work for both the Department of Defense (DoD) and civilian agencies that expands our strong presence in the C4ISR market.
  • A $5.6 billion, five-year multiple-award contract supporting the Defense Intelligence Agency's Solutions for Intelligence Analysis (SIA) II program. This is follow-on work to the original SIA program awarded to us in 2008. This work further expands our business in the Intelligence market in the critical area of analysis.
  • Within our C4ISR market, an $899 million, five-year multiple-award to support the U.S. Navy's SPAWAR Battlespace Awareness program. This new work further expands our presence in the C4ISR market.

Other Second Quarter Highlights

  • We completed the acquisition of Emergint Technologies, Inc., a premier provider of emerging technology solutions, including health data integration and analysis and data and records management, that are focused on the data driven needs of national health organizations. Emergint brings to CACI relationships with key health-focused agencies, including the Centers for Disease Control and Prevention, the National Institutes of Health, and the U.S. Food and Drug Administration. This acquisition builds upon our healthcare IT capabilities and expands our presence in the growing healthcare market.
  • We also completed the acquisition of IDL Solutions, Inc., a leading provider of information solutions, applications, data analytics and mission-critical systems support to healthcare clients and other civilian agencies. The company brings us relationships with the Centers for Medicare and Medicaid Services and the Food and Drug Administration. IDL complements our acquisition of Emergint Technologies and further expands our presence in support of affordable healthcare and the federal health insurance area.

Second Quarter Recognition

  • CACI's recruiting organization earned significant recognition for our industry-leading programs recruiting, hiring, and developing career opportunities for military veterans:

    • We won Best Industry Veteran Hiring Program from the Coalition for Government Procurement, a national trade association whose members account for 70 percent of commercial services and products sold through GSA schedules.
    • We were selected for the Top 100 Companies Recruiting Veterans list by U.S. Veterans magazine, a print and online publication focusing on minority, disabled, and transitioning veterans.
  • CACI was listed as the 18th largest public company in revenue in the Washington Post's Top 200 local companies, advancing from 20th last year.

Six Months Results

The following are our results for the first six months of our FY13:

  • Revenue of $1.86 billion
  • Operating income of $134.3 million
  • Net income attributable to CACI of $75.4 million
  • Diluted earnings per share of $3.17

Six Months Comparison

As mentioned on page 1 of this release, we believe better insight and a more meaningful comparison of our FY13 results with those of FY12 can be made by adjusting for three material one-time items that positively impacted our results last year. These items, which we discussed when we released both our six months FY12 results and our FY13 annual guidance, are:

  • A large commercial product sale that generated $12.0 million of revenue and $6.1 million of net income in the first quarter of FY12
  • Greater-than-expected profitability on a large fixed-price contract that generated $4.7 million in additional net income in the first six months of FY12 and $7.1 million during the full year of FY12
  • A $0.4 million increase in net income in the first quarter of FY12 associated with a reduction in the fair value of contingent consideration related to a prior year acquisition

Results for the first six months of FY13 compared with results for the first six months of FY12, excluding the items described above, are shown below:

   
(in millions except per share data) Six Months, FY13 

Six Months,
FY12
As Adjusted
(see page 13)

 % Change
Revenue $1,862.9 $1,885.6 -1.2%
Operating income $134.3 $132.0 1.8%
Net income attributable to CACI $75.4 $72.0 4.6%
Diluted earnings per share $3.17 $2.52 25.8%

Revenue decreased 1.2 percent from adjusted revenue for the first half of FY12 due to anticipated lower other direct costs pass-throughs in C4ISR and Intelligence as a result of the draw down in Afghanistan. We experienced growth in five of our markets, with strong growth in Business Systems, Healthcare, and Investigation and Litigation Support. Operating income increased primarily as a result of a 5.8 percent growth in direct labor. Net income attributable to CACI in the first six months of FY13 was $75.4 million, or $3.17 diluted earnings per share, an increase of 4.6 percent over adjusted net income attributable to CACI of $72.0 million, or $2.52 adjusted diluted earnings per share, for the same period in FY12. The larger increase in diluted earnings per share was due to two share repurchase programs largely executed in FY12. Net cash provided by operations in the first half of FY13 was $91.5 million, an increase of 7.3 percent over the year earlier period and a record for the first half. (See Reconciliation of Revenue, Operating Income, Net Income, and Diluted Earnings Per Share to Adjusted Amounts on page 13.)

For a comparison of our FY13 results to FY12 results reported in accordance with GAAP, see the income statement on page 7 of this release.

Additional Financial Metrics

   
  

Six
Months,
FY13

 

Six Months,
FY12 As
Adjusted

 % Change

Earnings before interest, taxes, depreciation and amortization (EBITDA),
a non-GAAP measure (in millions)

 $161.6 

$160.6

 0.7%
Diluted adjusted earnings per share, a non-GAAP measure $4.19 $3.43 22.3%

CACI Revises Its FY13 Guidance

We are revising the FY13 guidance we issued on October 31, 2012. Our previous guidance assumed that we would be operating in a CR environment throughout our fiscal year. During our second quarter, we saw greater than expected declines in contracting activity and spending levels significantly below those of a typical CR environment. As we look to the second half of our FY13, we expect this pattern of behavior to continue. The table below summarizes our FY13 guidance ranges:

(In millions except for tax rate and earnings per share) 

FY 2013
Guidance

Revenue $3,700 - $3,900
Net income attributable to CACI $157 - $163
Diluted earnings per share $6.54 - $6.79

We are now assuming a lower effective tax rate of 38 percent as a result of non-taxable gains in our deferred compensation plan and certain tax credits. We are also reducing the number of diluted weighted average shares to 24.0 million for FY13, mainly due to equity award exercises and forfeitures. This information represents our views as of January 30, 2013.

Conference Call Information

We have scheduled a conference call for 8:30 AM Eastern Time Thursday, January 31, 2013 during which members of our senior management team will be making a brief presentation focusing on second quarter results and operating trends followed by a question-and-answer session. You can listen to the conference call and view the accompanying exhibits over the Internet by logging on to our homepage, www.caci.com, at the scheduled time, or you may dial 877-303-9143 and enter the confirmation code 78657433. A replay of the call will also be available over the Internet beginning at 1:00 PM Eastern Time Thursday, January 31, 2013 and can be accessed through our homepage (www.caci.com) by clicking on the CACI Investor Info button.

CACI provides information solutions and services in support of national security missions and government transformation for Intelligence, Defense, and Federal Civilian clients. A member of the Fortune 1000 Largest Companies and the Russell 2000 Index, CACI provides dynamic careers for approximately 15,500 employees working in over 120 offices worldwide. Visit www.caci.com.

There are statements made herein which do not address historical facts and, therefore, could be interpreted to be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.Such statements are subject to factors that could cause actual results to differ materially from anticipated results.The factors that could cause actual results to differ materially from those anticipated include, but are not limited to, the following: regional and national economic conditions in the United States and globally (including the impact of uncertainty regarding U.S. debt limits and actions taken related thereto); terrorist activities or war; changes in interest rates; currency fluctuations; significant fluctuations in the equity markets; changes in our effective tax rate; failure to achieve contract awards in connection with re-competes for present business and/or competition for new business; the risks and uncertainties associated with client interest in and purchases of new products and/or services; continued funding of U.S. government or other public sector projects, based on a change in spending patterns, implementation of spending cuts (sequestration) under the Budget Control Act of 2011, changes in budgetary priorities or in the event of a priority need for funds, such as homeland security or the war on terrorism; government contract procurement (such as bid protest, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks; the results of government investigations into allegations of improper actions related to the provision of services in support of U.S. military operations in Iraq; the results of government audits and reviews conducted by the Defense Contract Audit Agency, the Defense Contract Management Agency, or other governmental entities with cognizant oversight; individual business decisions of our clients; paradigm shifts in technology; competitive factors such as pricing pressures and/or competition to hire and retain employees (particularly those with security clearances); market speculation regarding our continued independence; material changes in laws or regulations applicable to our businesses, particularly in connection with (i) government contracts for services, (ii) outsourcing of activities that have been performed by the government, and (iii) competition for task orders under Government Wide Acquisition Contracts (GWACs) and/or schedule contracts with the General Services Administration; the ability to successfully integrate the operations of our recent and any future acquisitions; our own ability to achieve the objectives of near term or long range business plans; and other risks described in our Securities and Exchange Commission filings.

CACI-Financial

Selected Financial Data
       
CACI International Inc
Condensed Consolidated Statements of Operations (Unaudited)
(Amounts in thousands, except per share amounts)
 
Quarter EndedSix Months Ended
12/31/201212/31/2011% Change12/31/201212/31/2011% Change
Revenue$931,627 $973,243 -4.3%$1,862,863 $1,897,638 -1.8%
Costs of revenue
Direct costs639,649679,398-5.9%1,285,2861,314,329-2.2%
Indirect costs and selling expenses209,068204,5412.2%416,691404,8232.9%
Depreciation and amortization 13,328  14,598 -8.7% 26,567  28,126 -5.5%
Total costs of revenue 862,045  898,537 -4.1% 1,728,544  1,747,278 -1.1%
Operating income69,58274,706-6.9%134,319150,360-10.7%
Interest expense and other, net 6,231  6,538 -4.7% 13,013  12,138 7.2%
Income before income taxes63,35168,168-7.1%121,306138,222-12.2%
Income taxes 23,371  26,888 -13.1% 45,336  54,829 -17.3%
Net income including portion attributable
to noncontrolling interest in earnings
of joint venture39,98041,280-3.1%75,97083,393-8.9%
Noncontrolling interest in earnings
of joint venture (304) (219) (586) (192)
Net income attributable to CACI$39,676 $41,061 -3.4%$75,384 $83,201 -9.4%
 
Basic earnings per share$1.74$1.5511.8%$3.29$3.019.3%
Diluted earnings per share$1.69$1.5112.0%$3.17$2.918.9%
 
Weighted average shares used in per share computations:
Basic22,85226,45022,94227,683
Diluted23,53727,27023,75828,556
 
Statement of Operations Data (Unaudited)
Quarter EndedSix Months Ended
12/31/201212/31/2011% Change12/31/201212/31/2011% Change
Operating income margin7.5%7.7%7.2%7.9%
Tax rate37.1%39.6%37.6%39.7%
Net income margin4.3%4.2%4.0%4.4%
 
Adjusted EBITDA*$83,499$82,6821.0%$161,619$160,5700.7%
Adjusted EBITDA Margin9.0%8.5 Read Full Story

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