Caci reports results for its fiscal 2023 third quarter
Reston, va.--(business wire)--caci international inc (nyse: caci), a leading provider of expertise and technology to government enterprise and mission customers, announced results today for its fiscal third quarter ended march 31, 2023. john mengucci, caci president and chief executive officer, said, “our third quarter results demonstrate the continued successful execution of our strategy. we delivered double-digit revenue growth, strong profitability, and solid cash flow. caci is winning and executing in the marketplace with differentiated technology and expertise, growing our backlog, and pursuing a strong pipeline of additional opportunities. given our year-to-date performance and strong position, we are raising our fiscal year 2023 revenue and earnings guidance.” third quarter results three months ended (in millions, except earnings per share and dso) 3/31/2023 3/31/2022 % change revenues $ 1,744.3 $ 1,584.0 10.1 % income from operations $ 155.0 $ 125.4 23.7 % net income $ 100.7 $ 95.4 5.6 % adjusted net income, a non-gaap measure1 $ 114.5 $ 109.6 4.4 % diluted earnings per share $ 4.33 $ 4.04 7.2 % adjusted diluted earnings per share, a non-gaap measure1 $ 4.92 $ 4.64 6.0 % adjusted earnings before interest, taxes, depreciation and amortization (ebitda), a non-gaap measure1 $ 191.8 $ 161.5 18.8 % net cash provided by operating activities excluding marpa1 $ 56.1 $ 314.1 -82.1 % free cash flow, a non-gaap measure1 $ 41.0 $ 296.9 -86.2 % days sales outstanding (dso)2 53 51 (1) this non-gaap measure should not be considered in isolation or as a substitute for measures prepared in accordance with gaap. for additional information regarding this non-gaap measure, see the related explanation and reconciliation to the gaap measure included below in this release. revenues in the third quarter of fiscal year 2023 increased 10 percent year-over-year, driven entirely by organic growth. the increase in income from operations was driven by higher revenue and gross profit. diluted earnings per share and adjusted diluted earnings per share increased due to higher operating income, partially offset by higher interest expense and a higher tax rate. net cash provided by operating activities excluding marpa and free cash flow decreased primarily as a result of tax benefits from method changes in the year ago quarter. third quarter contract awards contract awards in the third quarter totaled $1.1 billion, with approximately 50 percent for new business to caci. awards exclude ceiling values of multi-award, indefinite delivery, indefinite quantity (idiq) contracts. some notable awards during the quarter were: caci was awarded a $100 million extension to continue mission software development support for the air force distributed common ground system (dcgs) program. dcgs is the air force’s primary intelligence, surveillance and reconnaissance (isr) planning and direction, collection, processing and exploitation, analysis and dissemination (pcpad) weapon system. the system employs a global communications architecture that connects multiple intelligence platforms and sensors. the contract extension allows caci to continue to enhance and modernize system capabilities with tools that enable warfighters to process and disseminate intelligence data. caci was awarded a $46 million single-award task order to provide mission expertise and analysis in science, technology, engineering, and mathematics (stem) categories to support the department of defense (dod) and intelligence community (ic). total backlog as of march 31, 2023 was $25.3 billion compared with $23.5 billion a year ago, an increase of 8 percent. funded backlog as of march 31, 2023 was $3.4 billion compared with $2.8 billion a year ago, an increase of 21 percent. additional highlights caci was awarded top workplace usa 2023 by employee engagement technology partner energage, llc for the third consecutive year. honorees are chosen based solely on employee feedback gathered through a confidential employee engagement survey, issued by energage. results are calculated by comparing the survey's research-based statements, that evaluate factors such as leadership, culture, and benefits that are proven to predict high performance, against industry benchmarks. caci was recognized by fortune magazine as a world's most admired companies for 2023 commemorating caci's 6th consecutive year on the list and its 12th appearance since the list's inception. caci received top rankings in fortune's survey criteria for the quality of its technology and expertise offerings and management. caci was also recognized for its long-term investment value. caci was chosen from among approximately 1,500 global companies considered by fortune. thirteen caci employees were honored for their excellence in science, technology, engineering, and math (stem) at the 37th annual global competitiveness conference for the black engineer of the year awards (beya), including one who accepted the coveted community service award. caci is a supporter of beya's mission and a corporate sponsor of the conference. as part of its diversity and inclusion efforts, caci partners with beya to help expand the company's networking, recruitment, and career development opportunities. caci signed a five-year cooperative research & development agreement (crada) with the u.s. army space and missile defense technical center (usasmdc-tc) to further the development of advanced payload technologies, space sensor applications, and resilient positioning, navigation & timing (pnt). the payload includes two software-defined technology applications that enable precise, resilient pnt and tactical signals intelligence (tacisr) capabilities while in low earth orbit (leo). caci successfully demonstrated its spectral sieve and pit viper low-size, weight, and power (swap) intelligence, surveillance, and reconnaissance (isr) and electronic warfare (ew) technologies for small to medium unmanned aircraft systems (uas) at the u.s. army's project convergence technology gateway. caci delivered real-time situational awareness and targeting information for commanders through direction-finding, geolocation, and active cyber effects. the intelligence and national security alliance (insa) named todd probert, caci president of national security and innovative solutions, to its board of directors. probert will serve a three-year term, effective january 1, 2023. insa is the leading nonpartisan, nonprofit forum for driving public-private partnerships to advance intelligence and national security priorities. fiscal year 2023 guidance the table below summarizes our fiscal year 2023 guidance and represents our views as of april 26, 2023. free cash flow guidance reflects the delay of a $40 million tax refund related to the previously-disclosed tax method changes. (in millions, except earnings per share) fiscal year 2023 current guidance prior guidance revenues $6,675 - $6,750 $6,475 - $6,675 adjusted net income, a non-gaap measure1 $425 - $440 $420 - $440 adjusted diluted earnings per share, a non-gaap measure1 $18.09 - $18.72 $17.65 - $18.49 diluted weighted average shares 23.5 23.8 free cash flow, a non-gaap measure2 at least $280 at least $320 (1) adjusted net income and adjusted diluted earnings per share are defined as gaap net income and gaap diluted eps, respectively, excluding intangible amortization expense and the related tax impact. this non-gaap measure should not be considered in isolation or as a substitute for measures prepared in accordance with gaap. for additional information regarding this non-gaap measure, see the related explanation and reconciliation to the gaap measure included below in this release. (2) free cash flow is defined as net cash provided by operating activities excluding marpa, less payments for capital expenditures (capex). this non-gaap measure should not be considered in isolation or as a substitute for measures prepared in accordance with gaap. fiscal year 2023 free cash flow guidance assumes $95 million in tax payments related to section 174 of the tax cuts and jobs act of 2017. for additional information regarding this non-gaap measure, see the related explanation and reconciliation to the gaap measure included below in this release. conference call information we have scheduled a conference call for 8:00 am eastern time thursday, april 27, 2023 during which members of our senior management will be making a brief presentation focusing on third quarter results and operating trends, followed by a question-and-answer session. you can listen to the webcast and view the accompanying exhibits on caci’s investor relations website at http://investor.caci.com/events/default.aspx at the scheduled time. a replay of the call will also be available on caci’s investor relations website at http://investor.caci.com/. about caci caci’s approximately 22,000 talented employees are vigilant in providing the unique expertise and distinctive technology that address our customers’ greatest enterprise and mission challenges. our culture of good character, innovation, and excellence drives our success and earns us recognition as a fortune world's most admired company. as a member of the fortune 1000 largest companies, the russell 1000 index, and the s&p midcap 400 index, we consistently deliver strong shareholder value. visit us at www.caci.com. there are statements made herein that 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 risk factors that could cause actual results to be materially different from anticipated results. these risk factors include, but are not limited to, the following: our reliance on u.s. government contracts, which includes general risk around the government contract procurement process (such as bid protest, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks; significant delays or reductions in appropriations for our programs and broader changes in u.s. government funding and spending patterns; legislation that amends or changes discretionary spending levels or budget priorities, such as for homeland security or to address global pandemics like covid-19; legal, regulatory, and political change from successive presidential administrations that could result in economic uncertainty; changes in u.s. federal agencies, current agreements with other nations, foreign events, or any other events which may affect the global economy, including the impact of global pandemics like covid-19; 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; competitive factors such as pricing pressures and/or competition to hire and retain employees (particularly those with security clearances); failure to achieve contract awards in connection with re-competes for present business and/or competition for new business; regional and national economic conditions in the united states and globally, including but not limited to: terrorist activities or war, changes in interest rates, currency fluctuations, significant fluctuations in the equity markets, and market speculation regarding our continued independence; our ability to meet contractual performance obligations, including technologically complex obligations dependent on factors not wholly within our control; limited access to certain facilities required for us to perform our work, including during a global pandemic like covid-19; changes in tax law, the interpretation of associated rules and regulations, or any other events impacting our effective tax rate; changes in technology; the potential impact of the announcement or consummation of a proposed transaction and our ability to successfully integrate the operations of our recent and any future acquisitions; our ability to achieve the objectives of near term or long-term business plans; the effects of health epidemics, pandemics and similar outbreaks may have material adverse effects on our business, financial position, results of operations and/or cash flows; and other risks described in our securities and exchange commission filings. caci international inc condensed consolidated statements of operations (unaudited) (in thousands, except per share data) three months ended nine months ended 3/31/2023 3/31/2022 % change 3/31/2023 3/31/2022 % change revenues $ 1,744,270 $ 1,583,980 10.1 % $ 4,999,445 $ 4,560,656 9.6 % costs of revenues: direct costs 1,143,781 1,022,181 11.9 % 3,293,867 2,970,370 10.9 % indirect costs and selling expenses 410,235 402,227 2.0 % 1,180,619 1,114,310 6.0 % depreciation and amortization 35,220 34,216 2.9 % 106,255 99,484 6.8 % total costs of revenues: 1,589,236 1,458,624 9.0 % 4,580,741 4,184,164 9.5 % income from operations 155,034 125,356 23.7 % 418,704 376,492 11.2 % interest expense and other, net 23,570 9,084 159.5 % 59,705 30,491 95.8 % income before income taxes 131,464 116,272 13.1 % 358,999 346,001 3.8 % income taxes 30,722 20,855 47.3 % 82,031 72,176 13.7 % net income $ 100,742 $ 95,417 5.6 % $ 276,968 $ 273,825 1.1 % basic earnings per share $ 4.37 $ 4.08 7.1 % $ 11.87 $ 11.67 1.7 % diluted earnings per share $ 4.33 $ 4.04 7.2 % $ 11.76 $ 11.56 1.7 % weighted average shares used in per share computations: basic 23,055 23,409 -1.5 % 23,329 23,457 -0.5 % diluted 23,277 23,616 -1.4 % 23,546 23,687 -0.6 % caci international inc condensed consolidated balance sheets (unaudited) (in thousands) 3/31/2023 6/30/2022 assets current assets: cash and cash equivalents $ 106,789 $ 114,804 accounts receivable, net 1,004,733 926,144 prepaid expenses and other current assets 197,120 168,690 total current assets 1,308,642 1,209,638 goodwill 4,066,260 4,058,291 intangible assets, net 524,445 581,385 property, plant and equipment, net 197,549 205,622 operating lease right-of-use assets 285,746 317,359 supplemental retirement savings plan assets 96,434 96,114 accounts receivable, long-term 12,653 10,199 other long-term assets 159,827 150,823 total assets $ 6,651,556 $ 6,629,431 liabilities and shareholders’ equity current liabilities: current portion of long-term debt $ 38,281 $ 30,625 accounts payable 323,346 303,443 accrued compensation and benefits 344,039 405,722 other accrued expenses and current liabilities 358,790 287,571 total current liabilities 1,064,456 1,027,361 long-term debt, net of current portion 1,765,210 1,702,148 supplemental retirement savings plan obligations, net of current portion 103,023 102,127 deferred income taxes 202,755 356,841 operating lease liabilities, noncurrent 278,344 315,315 other long-term liabilities 148,128 72,096 total liabilities 3,561,916 3,575,888 total shareholders’ equity 3,089,640 3,053,543 total liabilities and shareholders’ equity $ 6,651,556 $ 6,629,431 caci international inc condensed consolidated statements of cash flows (unaudited) (in thousands) nine months ended 3/31/2023 3/31/2022 cash flows from operating activities: net income $ 276,968 $ 273,825 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization 106,255 99,484 amortization of deferred financing costs 1,688 1,712 loss on extinguishment of debt — 891 non-cash lease expense 52,293 51,449 stock-based compensation expense 30,564 23,085 deferred income taxes (84,794 ) 2,813 changes in operating assets and liabilities, net of effect of business acquisitions: accounts receivable, net (80,116 ) 66,953 prepaid expenses and other assets (42,137 ) (27,227 ) accounts payable and other accrued expenses 62,116 23,056 accrued compensation and benefits (62,522 ) (84,466 ) income taxes payable and receivable 28,825 201,112 operating lease liabilities (58,667 ) (54,575 ) long-term liabilities 5,481 14,901 net cash provided by operating activities 235,954 593,013 cash flows from investing activities: capital expenditures (40,844 ) (38,742 ) acquisitions of businesses, net of cash acquired — (615,769 ) other 1,626 923 net cash used in investing activities (39,218 ) (653,588 ) cash flows from financing activities: proceeds from borrowings under bank credit facilities 2,384,000 2,087,095 principal payments made under bank credit facilities (2,314,969 ) (1,965,386 ) payment of financing costs under bank credit facilities — (6,286 ) proceeds from employee stock purchase plans 7,638 7,398 repurchases of common stock (270,449 ) (7,301 ) payment of taxes for equity transactions (14,115 ) (14,685 ) net cash (used in) provided by financing activities (207,895 ) 100,835 effect of exchange rate changes on cash and cash equivalents 3,144 (3,217 ) net change in cash and cash equivalents (8,015 ) 37,043 cash and cash equivalents at beginning of period 114,804 88,031 cash and cash equivalents at end of period $ 106,789 $ 125,074 revenues by customer group (unaudited) three months ended (in thousands) 3/31/2023 3/31/2022 $ change % change department of defense $ 1,298,700 74.4 % $ 1,118,665 70.7 % $ 180,035 16.1 % federal civilian agencies 355,612 20.4 % 380,837 24.0 % (25,225 ) -6.6 % commercial and other 89,958 5.2 % 84,478 5.3 % 5,480 6.5 % total $ 1,744,270 100.0 % $ 1,583,980 100.0 % $ 160,290 10.1 % nine months ended (in thousands) 3/31/2023 3/31/2022 $ change % change department of defense $ 3,554,080 71.1 % $ 3,155,806 69.2 % $ 398,274 12.6 % federal civilian agencies 1,179,467 23.6 % 1,166,398 25.6 % 13,069 1.1 % commercial and other 265,898 5.3 % 238,452 5.2 % 27,446 11.5 % total $ 4,999,445 100.0 % $ 4,560,656 100.0 % $ 438,789 9.6 % revenues by contract type (unaudited) three months ended (in thousands) 3/31/2023 3/31/2022 $ change % change cost-plus-fee $ 1,008,688 57.8 % $ 889,624 56.1 % $ 119,064 13.4 % fixed-price 529,786 30.4 % 503,174 31.8 % 26,612 5.3 % time-and-materials 205,796 11.8 % 191,182 12.1 % 14,614 7.6 % total $ 1,744,270 100.0 % $ 1,583,980 100.0 % $ 160,290 10.1 % nine months ended (in thousands) 3/31/2023 3/31/2022 $ change % change cost-plus-fee $ 2,896,778 58.0 % $ 2,672,695 58.6 % $ 224,083 8.4 % fixed-price 1,520,915 30.4 % 1,344,169 29.5 % 176,746 13.1 % time-and-materials 581,752 11.6 % 543,792 11.9 % 37,960 7.0 % total $ 4,999,445 100.0 % $ 4,560,656 100.0 % $ 438,789 9.6 % revenues by prime or subcontractor (unaudited) three months ended (in thousands) 3/31/2023 3/31/2022 $ change % change prime contractor $ 1,556,733 89.2 % $ 1,419,805 89.6 % $ 136,928 9.6 % subcontractor 187,537 10.8 % 164,175 10.4 % 23,362 14.2 % total $ 1,744,270 100.0 % $ 1,583,980 100.0 % $ 160,290 10.1 % nine months ended (in thousands) 3/31/2023 3/31/2022 $ change % change prime contractor $ 4,467,882 89.4 % $ 4,097,210 89.8 % $ 370,672 9.0 % subcontractor 531,563 10.6 % 463,446 10.2 % 68,117 14.7 % total $ 4,999,445 100.0 % $ 4,560,656 100.0 % $ 438,789 9.6 % revenues by expertise or technology (unaudited) three months ended (in thousands) 3/31/2023 3/31/2022 $ change % change expertise $ 812,300 46.6 % $ 716,199 45.2 % $ 96,101 13.4 % technology 931,970 53.4 % 867,781 54.8 % 64,189 7.4 % total $ 1,744,270 100.0 % $ 1,583,980 100.0 % $ 160,290 10.1 % nine months ended (in thousands) 3/31/2023 3/31/2022 $ change % change expertise $ 2,288,123 45.8 % $ 2,105,554 46.2 % $ 182,569 8.7 % technology 2,711,322 54.2 % 2,455,102 53.8 % 256,220 10.4 % total $ 4,999,445 100.0 % $ 4,560,656 100.0 % $ 438,789 9.6 % contract awards (unaudited) three months ended (in thousands) 3/31/2023 3/31/2022 $ change % change contract awards $ 1,059,095 $ 1,222,723 $ (163,628 ) -13.4 % nine months ended (in thousands) 3/31/2023 3/31/2022 $ change % change contract awards $ 7,793,551 $ 5,563,364 $ 2,230,187 40.1 % reconciliation of net income to adjusted net income and diluted eps to adjusted diluted eps (unaudited) adjusted net income and adjusted diluted eps are non-gaap performance measures. we define adjusted net income and adjusted diluted eps as gaap net income and gaap diluted eps, respectively, excluding intangible amortization expense and the related tax impact as we do not consider intangible amortization expense to be indicative of our core operating performance. we believe that these performance measures provide management and investors with useful information in assessing trends in our ongoing operating performance, provide greater visibility in understanding the long-term financial performance of the company, and allow investors to more easily compare our results to results of our peers. these non-gaap measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with gaap. (in thousands, except per share data) three months ended nine months ended 3/31/2023 3/31/2022 % change 3/31/2023 3/31/2022 % change net income, as reported $ 100,742 $ 95,417 5.6 % $ 276,968 $ 273,825 1.1 % intangible amortization expense 18,585 19,297 -3.7 % 56,808 54,944 3.4 % tax effect of intangible amortization1 (4,813 ) (5,074 ) -5.1 % (14,712 ) (14,446 ) 1.8 % adjusted net income $ 114,514 $ 109,640 4.4 % $ 319,064 $ 314,323 1.5 % three months ended nine months ended 3/31/2023 3/31/2022 % change 3/31/2023 3/31/2022 % change diluted eps, as reported $ 4.33 $ 4.04 7.2 % $ 11.76 $ 11.56 1.7 % intangible amortization expense 0.80 0.82 -2.4 % 2.41 2.32 3.9 % tax effect of intangible amortization1 (0.21 ) (0.22 ) -4.5 % (0.62 ) (0.61 ) 1.6 % adjusted diluted eps $ 4.92 $ 4.64 6.0 % $ 13.55 $ 13.27 2.1 % fy23 current guidance range (in millions, except per share data) low end high end net income, as reported $ 369 --- $ 384 intangible amortization expense 75 --- 75 tax effect of intangible amortization1 (19 ) --- (19 ) adjusted net income $ 425 --- $ 440 fy23 current guidance range low end high end diluted eps, as reported $ 15.71 --- $ 16.34 intangible amortization expense 3.19 --- 3.19 tax effect of intangible amortization1 (0.81 ) --- (0.81 ) adjusted diluted eps $ 18.09 --- $ 18.72 (1) calculation uses an assumed full year statutory tax rate of 25.9% and 26.3% on non-gaap tax deductible adjustments for march 31, 2023 and 2022, respectively. note: numbers may not sum due to rounding. reconciliation of net income to adjusted earnings before interest, taxes, depreciation and amortization (ebitda) (unaudited) the company views adjusted ebitda and adjusted ebitda margin, both of which are defined as non-gaap measures, as important indicators of performance, consistent with the manner in which management measures and forecasts the company’s performance. adjusted ebitda is a commonly used non-gaap measure when comparing our results with those of other companies. we define adjusted ebitda as gaap net income plus net interest expense, income taxes, depreciation and amortization expense (including depreciation within direct costs), and earnout adjustments. we consider adjusted ebitda to be a useful metric for management and investors to evaluate and compare the ongoing operating performance of our business on a consistent basis across reporting periods, as it eliminates the effect of non-cash items such as depreciation of tangible assets, amortization of intangible assets primarily recognized in business combinations, as well as the effect of earnout gains and losses, which we do not believe are indicative of our core operating performance. adjusted ebitda margin is adjusted ebitda divided by revenue. these non-gaap measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with gaap. three months ended nine months ended (in thousands) 3/31/2023 3/31/2022 % change 3/31/2023 3/31/2022 % change net income $ 100,742 $ 95,417 5.6 % $ 276,968 $ 273,825 1.1 % plus: income taxes 30,722 20,855 47.3 % 82,031 72,176 13.7 % interest income and expense, net 23,570 9,084 159.5 % 59,705 30,491 95.8 % depreciation and amortization expense, including amounts within direct costs 36,771 36,095 1.9 % 111,584 103,924 7.4 % adjusted ebitda $ 191,805 $ 161,451 18.8 % $ 530,288 $ 480,416 10.4 % three months ended nine months ended (in thousands) 3/31/2023 3/31/2022 % change 3/31/2023 3/31/2022 % change revenues, as reported $ 1,744,270 $ 1,583,980 10.1 % $ 4,999,445 $ 4,560,656 9.6 % adjusted ebitda 191,805 161,451 18.8 % 530,288 480,416 10.4 % adjusted ebitda margin 11.0 % 10.2 % 10.6 % 10.5 % reconciliation of net cash provided by operating activities to net cash provided by operating activities excluding marpa and to free cash flow (unaudited) the company defines net cash provided by operating activities excluding marpa, a non-gaap measure, as net cash provided by operating activities calculated in accordance with gaap, adjusted to exclude cash flows from caci’s master accounts receivable purchase agreement (marpa) for the sale of certain designated eligible u.s. government receivables up to a maximum amount of $200.0 million. free cash flow is a non-gaap liquidity measure and may not be comparable to similarly titled measures used by other companies. the company defines free cash flow as net cash provided by operating activities excluding marpa, less payments for capital expenditures. the company uses these non-gaap measures to assess our ability to generate cash from our business operations and plan for future operating and capital actions. we believe these measures allow investors to more easily compare current period results to prior period results and to results of our peers. free cash flow does not represent residual cash flows available for discretionary purposes and should not be used as a substitute for cash flow measures prepared in accordance with gaap. three months ended nine months ended (in thousands) 3/31/2023 3/31/2022 3/31/2023 3/31/2022 net cash provided by operating activities $ 28,864 $ 284,248 $ 235,954 $ 593,013 cash used in (provided by) marpa 27,272 29,811 (14,905 ) 24,360 net cash provided by operating activities excluding marpa 56,136 314,059 221,049 617,373 capital expenditures (15,174 ) (17,110 ) (40,844 ) (38,742 ) free cash flow $ 40,962 $ 296,949 $ 180,205 $ 578,631 (in millions) fy23 current guidance net cash provided by operating activities $ 360 cash used in (provided by) marpa — net cash provided by operating activities excluding marpa 360 capital expenditures (80 ) free cash flow $ 280
