CACI Reports Results for Its Fiscal 2017 Third Quarter

CACI International Inc (NYSE: CACI), a leading information solutions and services provider to the federal government, announced results today for its third fiscal quarter ended March 31, 2017.

CEO Commentary and Outlook

Ken Asbury, CACI’s President and CEO, said, “Our third quarter results reflect excellent performance across the company with record revenue and contract awards as well as strong cash flow and net income. As a result, we are further raising our guidance for FY17, and remain confident we will meet our FY18 objectives of one to four percent organic growth above our addressable market and 10 to 30 basis points of margin improvement.”

Third Quarter Results

Revenue for the third quarter of Fiscal Year 2017 (FY17) increased compared to the third quarter of Fiscal Year 2016 (FY16), driven primarily by revenue of $88 million from the NSS acquisition. The increase in operating income was due to the NSS contribution, program performance, and the absence of acquisition-related expenses which occurred in the third quarter of FY16. These were partially offset by pre-tax expenses of $3.1 million related to facility reductions and $4.7 million of long-term incentive compensation expense. The increase in net income was due to the factors noted above and research and development (R&D) tax credits for FY16 and FY17 of $3.9 million. Cash provided by operations in the quarter was $81.1 million.

Additional Financial Metrics

Third Quarter Awards, Contract Funding Orders, and Other Highlights

Our contract awards in the quarter were $1.4 billion which excludes ceiling values of multi-award indefinite delivery, indefinite quantity (IDIQ) contracts. Approximately 40 percent of our awards were for new business.

Key awards during the quarter included:

• A $190 million task order to support the Department of Defense Joint Service Provider (JSP) Information Technology Service Delivery Support Requirement program. The three-year, six-month task order, originally won under the Alliant contract vehicle in the fourth quarter of CACI’s Fiscal Year 2016, represents new business in the company's Enterprise IT market area.
• A $48 million prime contract to provide IT support services for the Army Architecture, Operations, Networks, and Space Directorate of the U.S. Army Chief Information Officer/G-6. The five-year award represents new business in CACI’s Enterprise IT market area.
• A prime position on a $47 million multiple-award IDIQ to support the U.S. Army Night Vision and Electronic Sensors Directorate’s development and delivery of solutions to tactical commands worldwide. The two-year contract represents new work for CACI in its Surveillance and Reconnaissance market area.
• Approximately $102 million in awards on classified contracts with federal government customers. The work represents business primarily in CACI’s Intelligence Services, Intelligence Systems and Support, and Cyber Security market areas.

Contract funding orders in the third quarter were $1.1 billion. Our total backlog at March 31, 2017 was $11.8 billion compared with $11.0 billion at the end of the fourth quarter of FY16. Funded backlog at March 31, 2017 was $2.0 billion compared with $2.3 billion at June 30, 2016.

Other highlights in the quarter included:

• Combating Asymmetric Threats: Offset Strategies to Prevail Against Asymmetric Threats, a report from the ninth symposium in the Asymmetric Threat symposia series co-sponsored by CACI, the Association of Old Crows, and the Center for Security Policy was released. Summarizing discussions and comments from the symposium, the report considers how offset strategies position the U.S. to prevail against resurging global power competition, multiregional conflicts, and cross-domain challenges.

Nine Months Results

Revenue in the nine months of FY17 increased compared to the year earlier period due to the NSS acquisition. Operating income increased due primarily to the NSS acquisition, program performance, and the absence of acquisition-related expenses which occurred in FY16. Net income increased due to the above operating income factors noted and the impact of the R&D tax credits. Net cash provided by operations in the first three quarters of FY17 was $216.5 million.

Additional Financial Metrics

CACI Raises Its FY17 Guidance

We are raising our FY17 guidance we issued on February 1, 2017. The table below summarizes our FY17 guidance and represents our views as of May 3, 2017:

Conference Call Information

We have scheduled a conference call for 9:00 AM Eastern Time Thursday, May 4, 2017 during which members of our senior management team 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 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 1-888-317-6016, confirmation code CACI International. A replay of the call will also be available over the Internet 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 customers. A Fortune Magazine World’s Most Admired Company in the IT Services industry, CACI is a member of the Fortune 1000 Largest Companies, the Russell 2000 Index, and the S&P SmallCap600 Index. CACI’s sustained commitment to ethics and integrity defines its corporate culture and drives its success. With approximately 19,000 employees worldwide, CACI provides dynamic career opportunities for military veterans and industry professionals to support the nation’s most critical missions. Join us! 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: legal, regulatory, and political change as a result of transitioning to a new presidential administration 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; regional and national economic conditions in the United States and globally; 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, or any legislation that amends or changes discretionary spending levels under that act; changes in budgetary priorities or in the event of a priority need for funds, such as homeland security; 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 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-Earnings Release

Selected Financial Data (Continued)

Reconciliation of Net Income to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and to Adjusted Net Income

(Unaudited)

The Company views Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income, all 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, 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. We define Adjusted Net Income as GAAP net income plus stock-based compensation expense, depreciation and amortization, amortization of financing costs, and earnout adjustments, net of related tax effects. We believe Adjusted Net Income is an important measure of long-term value and is used by investors to measure our performance. This measure assists management and investors in further understanding our results and trends from period-to-period by removing certain non-cash items. Adjusted EBITDA and Adjusted Net Income as defined by us may not be computed in the same manner as similarly titled measures used by other companies. These non-GAAP measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.

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