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Revenue increased 8.7 percent to $473.1 million
Contract funding orders of $577 million, up 18 percent
Contract awards total $896 million, up 40 percent
Operating cash flow of $50.3 million in the quarter
ARLINGTON, Va., May 2 /PRNewswire-FirstCall/ -- CACI International Inc
(NYSE: CAI), a leading information technology and network solutions
provider to the federal government, announced results today for its third
fiscal quarter and first nine months ended March 31, 2007. CACI provides
innovative solutions to meet America's needs in national security,
intelligence, homeland security, and the transformation of government, and
is a leading strategic consolidator in its market space.
Third Quarter Results
For the third quarter of Fiscal Year 2007 (FY07) the Company reported
record revenue of $473.1 million, up 8.7 percent over third quarter of
Fiscal Year 2006 (FY06) revenue of $435.4 million, driven by acquisitions
made in FY06. Operating income for the quarter was $34.5 million versus
operating income of $36.8 million in the year earlier quarter, a decrease
of 6.4 percent. The Company's operating margin in the quarter was 7.3
percent compared with 8.5 percent in the year earlier quarter. This
decrease was driven primarily by higher other direct costs as a percent of
revenue during the period. The effective tax rate for the quarter was 37.6
percent versus 34.2 percent in the third quarter of FY06. Net income for
the third quarter was $18.4 million, or $0.59 per diluted share, down 13.6
percent from $21.4 million, or $0.69 per diluted share, for the third
quarter of FY06. Operating cash flow for the quarter was $50.3 million,
compared with $46.8 million in the year earlier quarter.
Third Quarter Highlights
Major highlights and accomplishments during the third quarter of FY07
include:
-- Contract awards totaling approximately $896 million, up 40 percent over
the same period a year ago. Over 50 percent of the estimated value of
these awards is for new work. Contract awards for the first nine
months of FY07 total approximately $2.3 billion, up 39 percent over the
first nine months of FY06. The awards in the quarter include:
-- The five-year, $330 million Systems Engineering and Technical
Assistance (SETA) services contract by the U.S. Navy as part of
a joint venture.
-- Approximately $281 million in awards on the U.S. Army Strategic
Services Sourcing (S3) contract.
-- Contract funding orders totaling approximately $577 million, an
increase of 18 percent over $489 million in the third quarter of FY06.
Contract funding orders for the first nine months of FY07 total
approximately $1.7 billion, 32 percent higher than the approximately
$1.3 billion received in the first nine months of FY06.
-- Days sales outstanding at the end of the quarter were 67 compared with
73 days at the end of the third quarter in FY06.
CEO Commentary
Commenting on the results for the third quarter, Dr. J.P. (Jack)
London, CACI's Chairman, President, and CEO said, "Our results for the
quarter were in line with our January expectations and were delivered in a
challenging market environment. Our financial fundamentals remain solid,
supported by a continuing healthy cash flow from our operations that will
provide a good base to finance acquisitions. We had another strong quarter
of awards, bringing in more new work and winning every recompeted
opportunity. We continued to receive contract funding orders at a strong
pace. The combination of awards and funding orders is a positive indication
of our customers' confidence in CACI's ability to meet their critical
needs. More importantly, it underscores our customers' focus on their
longer-term needs and their recognition of the value of CACI's services and
solutions. We believe this reflects the long-term growth opportunity in the
marketplace once the current conditions of this very challenging
environment begin to ease."
"We also continue to build our management team to facilitate our
growth. This quarter, our acting Chief Financial Officer (CFO) Tom Mutryn
was appointed as our CFO and Treasurer. His ability to help our team
deliver successful M&A results will be especially valuable. M&A continues
to be a core competency and critical component of our future growth, and we
intend to continue to drive our acquisition strategy and ensure we have the
proper capital structure to support it. CACI also announced the appointment
of Dale Luddeke as Executive Vice President of our Business Development
organization. Dale brings 27 years of experience in federal information
technology and will further expand our business development in our core
market areas of national security, intelligence, homeland security, and
government transformation. His Tier 1 experience complements CACI's
existing strengths and gives us additional capabilities in sustaining our
current client base and targeting new opportunities for faster, profitable
growth."
"Another positive step for CACI and our shareholders this quarter was
the addition of General Hugh Shelton and Dan Bannister to CACI's Board of
Directors. Both have been leaders on a national scale and bring solid
credentials and integrity to our team. General Shelton was Chairman of the
Joint Chiefs of Staff from 1997 to 2001. For the last five years he has
served on the boards of several public companies. Dan joins us as a highly
respected veteran of the federal information technology industry, whose
executive skills guided DynCorp's outstanding growth and success."
Nine Months FY07 Results
For the first nine months of FY07, revenue increased 10.9 percent to
$1,417.6 million versus revenue of $1,278.0 million for the same period of
FY06. Operating income for the first nine months was $108.0 million, 1.4
percent lower than the $109.5 million reported a year earlier. The
Company's operating margin was 7.6 percent for the first nine months of
FY07 compared with 8.6 percent for the first nine months of FY06. The
effective tax rate for the first nine months of FY07 was 36.9 percent
compared with 35.8 percent for the first nine months of FY06. Net income
for the first nine months was $57.7 million, or $1.84 per diluted share,
8.0 percent lower than net income of $62.8 million, or $2.02 per diluted
share, for the first nine months of FY06. Operating cash flow for the first
nine months of FY07 was $120.7 million compared with $93.9 million in the
first nine months of FY06.
CACI Updates Guidance
The Company issued its revised guidance for its fourth fiscal quarter
of FY07 and all of FY07. This guidance excludes the revenue or earnings
from future acquisitions that may be completed prior to the end of FY07.
4th Quarter Total Year
(In millions except for earnings
per share)
Revenue $465 - $495 $1,883 - $1,913
Diluted earnings per share $0.60 - $0.68 $2.44 - $2.52
Diluted weighted average shares 31.5 31.4
Commenting on the updated guidance, Paul Cofoni, CACI's President of
U.S. Operations, said, "Our guidance for the fourth fiscal quarter of FY07
reflects many of the factors of the challenging market environment. With
the continuing uncertainty of the passing of the FY07 supplemental, actions
are being taken within the Department of Defense and, specifically, the
U.S. Army to slow spending. At this time, we cannot precisely estimate the
specific impact these actions will have on our operations. We will update
our guidance if there is any material change between now and the end of the
June quarter."
"While we anticipate that a supplemental for FY07 will ultimately be
signed into law, we expect uncertainty surrounding the level of DoD funding
will continue into our next fiscal year as the FY08 defense appropriations
and supplemental are considered by Congress. As a result, we have less
visibility into our next fiscal year than we normally would have at this
point in the year. However, we do anticipate that continuing budget issues
will impact our organic growth and that the nature of our work will not
materially change in terms of CACI direct labor content and margin
opportunity. We have identified a number of acquisition candidates which
meet our strategic and financial objectives, and are optimistic that, with
these activities and our ongoing efforts to meet our customers' needs, we
will continue to deliver value to our shareholders."
This guidance represents our views as of May 2, 2007. Investors are
reminded that actual results may differ from these estimates for the
reasons described below and in our filings with the Securities and Exchange
Commission. As announced on November 1, 2006, beginning with our Fiscal
Year 2008 (FY08), we will issue only annual guidance with quarterly
updates.
Conference Call Information
The Company has scheduled a conference call for 8:30 AM Eastern Time
Thursday, May 3rd, during which management will be making a brief
presentation focusing on third quarter results, operating trends, and its
expectations. A question-and-answer session will follow to allow further
discussion of the results and the Company's future expectations. Interested
parties can listen to the conference call and view the accompanying
exhibits over the Internet by logging on to CACI's homepage,
http://www.caci.com, at the scheduled time, or they may dial 1-800-289-0529
and enter the confirmation code 4927321. A replay of the call will also be
available over the Internet beginning at 1:00 PM Eastern Time Thursday, May
3rd, and can be accessed through CACI's homepage (http://www.caci.com) by
clicking on the CACI Investor Info button.
About CACI
CACI International Inc provides the IT and network solutions needed to
prevail in today's new era of national security, intelligence, and e-
government. From systems integration and managed network solutions to
knowledge management, engineering, simulation, and information assurance,
we deliver the IT applications and infrastructures our federal customers
use to improve communications and collaboration, secure the integrity of
information systems and networks, enhance data collection and analysis, and
increase efficiency and mission effectiveness. Our solutions lead the
transformation of defense and intelligence, assure homeland security,
enhance decision- making, and help government to work smarter, faster, and
more responsively. CACI has been named to the Fortune 1000 Largest
Companies of 2006 and the Russell 1000 index. CACI provides dynamic careers
for approximately 10,000 employees working in over 120 offices in the U.S.
and Europe. CACI is the IT provider for a networked world. Visit CACI on
the web at http://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 the United Kingdom, including
conditions that result from terrorist activities or war; changes in
interest rates; currency fluctuations; failure to achieve contract awards
in connection with recompetes 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 in the event of a priority need
for funds, such as homeland security, the war on terrorism or rebuilding
Iraq; 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; 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; 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.
For investor information contact: For other information contact:
David Dragics, Senior Vice Jody Brown, Executive Vice
President, Investor Relations President, Public Relations
(703) 841-7835, ddragics@caci.com (703) 841-7801, jbrown@caci.com
(Financial tables follow)
Selected Financial Data
CACI International Inc
Condensed Consolidated Statements of Operations (Unaudited)
(Amounts in thousands, except per share amounts)
Quarter Ended
3/31/2007 3/31/2006 % Change
Revenue $473,055 $435,359 8.7%
Costs of revenue
Direct costs 307,688 279,142 10.2%
Indirect costs and selling
expenses 121,201 111,281 8.9%
Depreciation and amortization 9,687 8,118 19.3%
Total costs of revenue 438,576 398,541 10.0%
Operating income 34,479 36,818 -6.4%
Interest expense, net 4,934 4,346 13.5%
Income before income taxes 29,545 32,472 -9.0%
Income taxes 11,103 11,115 -0.1%
Net income $18,442 $21,357 -13.6%
Basic earnings per share $0.60 $0.71 -15.4%
Diluted earnings per share $0.59 $0.69 -14.3%
Weighted average shares used in per
share computations:
Basic 30,835 30,226
Diluted 31,410 31,159
Nine Months Ended
3/31/2007 3/31/2006 % Change
Revenue $1,417,587 $1,277,995 10.9%
Costs of revenue
Direct costs 919,879 820,759 12.1%
Indirect costs and selling
expenses 360,482 324,108 11.2%
Depreciation and amortization 29,247 23,595 24.0%
Total costs of revenue 1,309,608 1,168,462 12.1%
Operating income 107,979 109,533 -1.4%
Interest expense, net 16,505 11,736 40.6%
Income before income taxes 91,474 97,797 -6.5%
Income taxes 33,766 35,047 -3.7%
Net income $57,708 $62,750 -8.0%
Basic earnings per share $1.88 $2.08 -9.8%
Diluted earnings per share $1.84 $2.02 -8.9%
Weighted average shares used in per
share computations:
Basic 30,719 30,142
Diluted 31,376 31,081
Statement of Operations Data (Unaudited)
Quarter Ended Nine Months Ended
3/31/2007 3/31/2006 3/31/2007 3/31/2006
Operating profit margin 7.3% 8.5% 7.6% 8.6%
Tax rate 37.6% 34.2% 36.9% 35.8%
Net profit margin 3.9% 4.9% 4.1% 4.9%
Selected Financial Data (Continued)
CACI International Inc
Condensed Consolidated Balance Sheets (Unaudited)
(Amounts in thousands)
3/31/2007 6/30/2006
ASSETS:
Current assets
Cash and cash equivalents $123,729 $24,650
Accounts receivable, net 362,171 392,013
Other current assets 35,526 33,166
Total current assets 521,426 449,829
Goodwill and intangible assets, net 820,116 832,184
Property and equipment, net 22,298 25,082
Other long-term assets 67,879 60,995
Total assets $1,431,719 $1,368,090
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities
Notes payable $3,545 $3,543
Accounts payable 48,590 44,921
Accrued compensation and
benefits 90,789 93,398
Other current liabilities 68,594 69,503
Total current liabilities 211,518 211,365
Notes payable, long-term 336,658 364,317
Other long-term liabilities 52,412 47,049
Total liabilities 600,588 622,731
Shareholders' equity 831,131 745,359
Total liabilities and shareholders'
equity $1,431,719 $1,368,090
Selected Financial Data (Continued)
CACI International Inc
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Amounts in thousands)
Nine Months Ended
3/31/2007 3/31/2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $57,708 $62,750
Reconciliation of net income to net
cash provided by operating activities:
Depreciation and amortization 29,247 23,595
Amortization of deferred
financing costs 1,065 1,065
Stock-based compensation expense 9,959 12,635
Deferred income tax expense 1,952 1,859
Changes in operating assets and
liabilities, net of effect of
business acquisitions:
Accounts receivable, net 30,448 17,794
Other assets (4,045) (2,050)
Accounts payable and accrued expenses (1,730) (12,605)
Accrued compensation and benefits (3,501) 1,919
Income taxes payable and receivable (5,184) (19,720)
Other liabilities 4,795 6,679
Net cash provided by operating activities 120,714 93,921
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (5,593) (7,620)
Purchases of businesses, net of cash
acquired (4,629) (175,853)
Other (1,240) (4,151)
Net cash used in investing activities (11,462) (187,624)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under
line of credit (27,657) 22,245
Proceeds from employee stock transactions 4,437 5,758
Proceeds from exercise of stock options 8,261 7,635
Repurchase of common stock (3,661) (5,849)
Other 7,707 5,252
Net cash (used in) provided by
financing activities (10,913) 35,041
Effect of changes in currency rates
on cash 740 (387)
Net increase (decrease) in cash and
equivalents 99,079 (59,049)
Cash and cash equivalents, beginning
of period 24,650 132,965
Cash and cash equivalents, end of
period $123,729 $73,916
Selected Financial Data (Continued)
Revenue by Customer Type (Unaudited)
(dollars in Quarter Ended
thousands) 3/31/2007 3/31/2006 $ Change % Change
Department of
Defense $339,651 71.8% $320,064 73.5% $19,587 6.1%
Federal Civilian
Agencies 105,241 22.3% 91,049 20.9% 14,192 15.6%
Commercial 23,409 4.9% 18,131 4.2% 5,278 29.1%
State and Local
Governments 4,754 1.0% 6,115 1.4% (1,361) -22.3%
Total $473,055 100.0% $435,359 100.0% $37,696 8.7%
(dollars in Nine Months Ended
thousands) 3/31/2007 3/31/2006 $ Change % Change
Department of
Defense $1,016,752 71.7% $934,600 73.1% $82,152 8.8%
Federal Civilian
Agencies 319,639 22.6% 272,119 21.3% 47,520 17.5%
Commercial 66,508 4.7% 53,020 4.2% 13,488 25.4%
State and Local
Governments 14,688 1.0% 18,256 1.4% (3,568) -19.5%
Total $1,417,587 100.0% $1,277,995 100.0% $139,592 10.9%
Revenue by Contract Type (Unaudited)
(dollars in Quarter Ended
thousands) 3/31/2007 3/31/2006 $ Change % Change
Time and materials $252,421 53.4% $220,412 50.6% $32,009 14.5%
Cost reimbursable 127,429 26.9% 128,167 29.5% (738) -0.6%
Fixed price 93,205 19.7% 86,780 19.9% 6,425 7.4%
Total $473,055 100.0% $435,359 100.0% $37,696 8.7%
(dollars in Nine Months Ended
thousands) 3/31/2007 3/31/2006 $ Change % Change
Time and materials $735,154 51.9% $666,889 52.2% $68,265 10.2%
Cost reimbursable 390,515 27.5% 357,765 28.0% 32,750 9.2%
Fixed price 291,918 20.6% 253,341 19.8% 38,577 15.2%
Total $1,417,587 100.0% $1,277,995 100.0% $139,592 10.9%
Revenue Received as a Prime versus Subcontractor (Unaudited)
(dollars in Quarter Ended
thousands) 3/31/2007 3/31/2006 $ Change % Change
Prime $388,022 82.0% $356,057 81.8% $31,965 9.0%
Subcontractor 85,033 18.0% 79,302 18.2% 5,731 7.2%
Total $473,055 100.0% $435,359 100.0% $37,696 8.7%
(dollars in Nine Months Ended
thousands) 3/31/2007 3/31/2006 $ Change % Change
Prime $1,158,941 81.8% $1,055,705 82.6% $103,236 9.8%
Subcontractor 258,646 18.2% 222,290 17.4% 36,356 16.4%
Total $1,417,587 100.0% $1,277,995 100.0% $139,592 10.9%
Selected Financial Data (Continued)
Contract Funding Orders Received (Unaudited)
Quarter Ended
(dollars in thousands) 3/31/2007 3/31/2006 $ Change Change
Contract Funding Orders $576,912 $488,987 $87,925 18.0%
Nine Months Ended
(dollars in thousands) 3/31/2007 3/31/2006 $ Change Change
Contract Funding Orders $1,667,359 $1,260,495 $406,864 32.3%
Reconciliation of Total Revenue Growth and Organic Revenue Growth
(Unaudited)
The Company has presented organic revenue growth to reflect the effect
of acquisitions on total revenue growth. Revenue generated from the date a
business is acquired through the first anniversary of that date is
considered acquired revenue growth. All remaining revenue growth is
considered organic. The Company believes that this non-GAAP financial
measure provides investors with useful information to evaluate the growth
rate of the Company's core business. This non-GAAP measure should not be
considered in isolation or as a substitute for performance measures
prepared in accordance with GAAP.
Quarter Ended
(dollars in thousands) 3/31/2007 3/31/2006 % Change
Revenue, as reported $473,055 $435,359 8.7%
Less:
Acquired revenue 38,753 -
Organic revenue $434,302 $435,359 -0.2%
Twelve Months Ended
(dollars in thousands) 3/31/2007 3/31/2006 % Change
Revenue, as reported $1,894,916 $1,707,773 11.0%
Less:
Acquired revenue 202,700 -
Organic revenue $1,692,216 $1,707,773 -0.9%
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