CACI International Inc (NYSE: CACI), a leading professional
services and information technology solutions provider to the
federal government, announced results today for its fourth fiscal
quarter and full fiscal year ended June 30, 2011.
Fourth Quarter Results
The following table summarizes results computed in accordance
with Generally Accepted Accounting Principles (GAAP), including the
positive effect on operating income, net income and diluted
earnings per share of earn-out adjustments.
(in millions
except per share data) Q4, FY11 Q4, FY10 %
Change Revenue $963.2 $848.7 13.5% Operating
income $78.1 $54.0 44.7% Net income
$45.9 $29.9 53.5% Diluted earnings per share
$1.44 $0.96 49.3%
We are pleased to report record fourth quarter Fiscal Year 2011
(FY11) revenue of $963.2 million, an increase of 13.5 percent from
the fourth quarter of Fiscal Year 2010 (FY10). The revenue increase
was driven primarily by organic growth of 11.5 percent, reflecting
continued growth in our C4ISR Solutions and Services, Cyber
Solutions, Enterprise IT Management, and Program Management and
SETA Services core competencies.
Pro Forma Fourth Quarter Results
In FY10, we completed two domestic acquisitions with
acquisition-related contingent consideration, or earn-outs, which
represent potential additional purchase consideration based on the
acquired company’s performance post-acquisition. The fair values of
the expected earn-outs were recorded as liabilities on the balance
sheet as of each acquisition date, and are re-measured each
quarter, with any change in the fair values of the liabilities
reflected in the income statement. In the fourth quarter of our
FY11, the liabilities decreased $8.2 million, with a corresponding
increase to operating income, due to reductions in the fair values
of the earn-out liabilities. In the fourth quarter of FY10, the
liabilities decreased, and operating income increased, by $2.7
million. To provide a comparison of our results excluding these
earn-out adjustments, pro forma results for the fourth quarter of
FY11 and FY10 are shown below.
(in millions
except per share data) Q4, FY11 Q4, FY10 %
Change Revenue $963.2 $848.7 13.5% Pro forma
operating income, a non-GAAP measure $69.9 $51.3
36.3% Pro forma net income, a non-GAAP measure $40.9
$28.3 44.8% Pro forma diluted earnings per share, a
non-GAAP measure $1.28 $0.91 40.9%
Pro forma operating income grew 36.3 percent over the prior year
period to a record $69.9 million, driven by strong growth in direct
labor and continued cost control. We also benefitted from a lower
than expected tax rate. Pro forma net income for the fourth quarter
of FY11 was a record $40.9 million, or $1.28 pro forma diluted
earnings per share, an increase of 44.8 percent over pro forma net
income of $28.3 million, or $0.91 pro forma diluted earnings per
share, for the same period in FY10. Net cash provided by operations
in the quarter was $79.1 million. (See Reconciliation of Operating
Income, Net Income and Diluted Earnings Per Share to Pro Forma
Amounts on page 14.)
CEO Commentary and Outlook
Paul Cofoni, CACI's President and CEO, said, "In Fiscal 2011, we
delivered on our financial goals of mid- to high-single-digit
organic revenue growth and double-digit earnings growth. We
achieved record results in revenue, operating income, EPS, and cash
flow, and our strong funding orders for the year – the highest in
CACI’s history – give us confidence that we will sustain our top
and bottom line growth into the future. Our Board of Directors has
replaced our $175 million share repurchase authorization with an
authorization to repurchase up to 4 million shares, and we fully
expect to implement a corresponding repurchase plan which is
expected to deliver further value to our shareholders.”
Mr. Cofoni added, “Our strong performance results are directly
attributable to our growth strategy to pursue high-priority,
well-funded markets; our operational excellence; our success in
capitalizing on opportunities in emerging markets; and our ability
to compete for and win new business. We believe the government is
committed to achieving a balanced deficit reduction that will not
put national security at risk, and we continue to see growth
opportunities and funding in our strategic focus areas of defense,
intelligence, homeland security, cybersecurity, and IT
modernization and transformation of government.
"Persistent threats to our national security continue to create
strong demand for CACI's innovative C4ISR solutions and services,
and federal budgetary constraints are increasing the demand for our
IT modernization and government transformation capabilities that
can reduce costs, increase productivity, and provide improved
service to taxpayers. Our momentum is accelerating in the
high-growth cyber arena with FY11 cybersecurity awards totaling
over $120 million while our acquisition of Pangia Technologies and
planned purchase of Paradigm Holdings offer additional significant
cybersecurity capabilities. We also expect growth as a result of
our significant inroads into the healthcare IT market in FY11,
including our recent prime position on the Department of Veterans
Affairs $12 billion Transformation Twenty-One Total Technology IDIQ
contract.
“We are celebrating our 50th year of serving clients with
excellence, delivering value to our shareholders, and providing
opportunities for our diverse employee team to be the best. Our
Fiscal Year 2011 achievements and forward momentum give us the
confidence to raise our guidance for Fiscal Year 2012. We look
forward to another year of meeting our financial goals while
creating new value for our clients and our shareholders."
Additional Financial Metrics
(in millions
except per share data) Q4, FY11 Q4, FY10 %
Change Pro forma earnings before interest, taxes, depreciation and
amortization (EBITDA), a non-GAAP measure $84.4 $65.1
29.7% Pro forma diluted adjusted earnings per share, a
non-GAAP measure $1.71 $1.50 13.8% Days sales
outstanding 52 55
Fourth Quarter Contract Funding Orders and Awards
- Contract funding orders in the fourth
quarter were $871.5 million compared with $895.4 million in the
year earlier quarter. Contract funding orders for FY11 were $3.6
billion, a 5.0 percent increase over FY10.
- Funded backlog at June 30th was $1.8
billion compared with $1.9 billion at June 30, 2010. Total backlog
at June 30th was $6.8 billion, the same as a year ago.
- During the fourth quarter, we won
contract awards with an estimated value of $550 million.
Approximately one-half of these awards were for new business.
Fourth quarter awards included:
- Approximately $183 million in awards
under the Strategic Services Sourcing (S3) contract.
- Approximately $136 million in
previously unannounced national security-related awards.
- Not included in the above estimated
value of awards in the quarter is:
- Our prime position on the Department of
Veterans Affairs five-year, multiple award, IDIQ Transformation
Twenty-One Total Technology contract with a $12 billion ceiling.
This award is for new work.
Other Significant Fourth Quarter Highlights
- In May 2011, we announced a $175
million share repurchase authorization. In August 2011, this
authorization was replaced by a Board authorization to repurchase
up to 4 million shares of our stock.
- We completed the $50 million share
repurchase program initiated in August 2010. Under this program, we
repurchased a total of 966,116 shares at an average price of $51.74
per share.
- We entered into a definitive agreement
to acquire Pangia Technologies, LLC, a software engineering company
that provides technical solutions in the areas of computer network
operations, information assurance, mission systems, software and
systems engineering, and IT infrastructure support. This
acquisition broadens CACI's cybersecurity solutions capabilities.
The transaction closed on July 1, 2011.
Fourth Quarter Recognition
- CACI advanced to 14th on Washington
Technology’s list of Top 100 Federal Prime Contractors, up from
16th.
- CACI achieved its third consecutive win
as one of CivilianJobs.com's Most Valuable Employers (MVE) for
Military. The 2011 MVE recognition honors employers whose
recruiting, training and retention plans provide outstanding
support for career-seeking veterans.
- CACI’s Recruiting and Workforce
Planning team won the ERE Recruiting Excellence Award for
Recruiting Department of the Year. ERE (the Electronic Recruiting
Exchange) is the world’s largest online community and forum for
recruiting professionals.
Subsequent Event
On July 25, 2011, we announced that we had signed a definitive
agreement to acquire Paradigm Holdings, Inc., the parent of
Paradigm Solutions Corporation. This acquisition, which we expect
to close in the Fall of 2011, will expand our cybersecurity
capabilities and continue to increase our strong presence in
supporting national security missions.
Twelve Month Results
The following table summarizes GAAP results, including the
positive effects of earn-out adjustments.
(in millions
except per share data) 12 Months, FY11 12 Months,
FY10 % Change Revenue $3,577.8 $3,149.1
13.6% Operating income $251.4 $194.8 29.1% Net
income $144.2 $106.5 35.4% Diluted earnings
per share $4.61 $3.47 32.7%
Revenue in FY11 grew 13.6 percent to a record $3.6 billion.
Revenue in all of our core competencies grew in FY11, led by our
C4ISR Solutions and Services core competency, followed by increases
in our Data, Information and Knowledge Management and Program
Management and SETA Services core competencies. Organic revenue
growth for FY11 was 11.6 percent.
Pro Forma Twelve Month Results
In FY10, we completed two domestic acquisitions with
acquisition-related contingent consideration, or earn-outs, which
represent potential additional purchase consideration based on the
acquired company’s performance post acquisition. The fair values of
the expected earn-outs were recorded as liabilities on the balance
sheet as of each acquisition date, and are re-measured each
quarter, with any change in the fair values of the liabilities
reflected in the income statement. During FY11, the liabilities
decreased $10.1 million with a corresponding increase to operating
income, due to reductions in the fair value of the earn-out
liabilities. During FY10, the liabilities decreased, and operating
income increased, by $2.1 million. To provide a comparison of our
results excluding these earn-out adjustments, pro forma results for
FY11 and FY10 are shown below.
(in millions
except per share data) 12 Months, FY11 12 Months,
FY10 % Change Revenue $3,577.8 $3,149.1
13.6% Pro forma operating income, a non-GAAP measure $241.3
$192.7 25.3% Pro forma net income, a non-GAAP measure
$138.1 $105.2 31.2% Pro forma diluted earnings
per share, a non-GAAP measure $4.41 $3.43
28.6%
Pro forma operating income increased 25.3 percent in FY11 to
$241.3 million, primarily as a result of a 9.5 percent growth in
direct labor and ongoing cost control. Pro forma net income for
FY11 was $138.1 million, or $4.41 diluted earnings per share, an
increase of 31.2 percent over pro forma net income of $105.2
million, or $3.43 pro forma diluted earnings per share, in FY10.
Net cash provided by operations in FY11 was $226.0 million, an
increase of 7.9 percent over FY10 net cash provided by operations
of $209.3 million. Revenue, pro forma operating income, pro forma
net income and operating cash flow all reached record levels in
FY11 (See Reconciliation of Operating Income, Net Income and
Diluted Earnings Per Share to Pro Forma Amounts on page 14.)
Additional Financial Metrics
12 Months,
12 Months, (in millions except per share data)
FY11 FY10 % Change Pro forma earnings before
interest, taxes, depreciation and amortization (EBITDA), a non-GAAP
measure $298.2 $245.0 21.7% Pro forma diluted
adjusted earnings per share, a non-GAAP measure $6.12
$5.34 14.5%
Key FY11 Contract Awards and Highlights
- During FY11, contract awards were $3.2
billion, a 56 percent increase over FY10. Of these awards, $499
million were previously unannounced and received during the first
nine months of FY11, and were not included in our previous
year-to-date estimated total. Key FY11 contract awards included:
- Approximately $1.1 billion in awards on
the S3 contract. Since March 2006, we have been awarded
approximately $3.5 billion in task orders on this vehicle.
- A $91 million, five-year prime contract
to support the Department of Veterans Affairs Virtual Lifetime
Electronic Record (VLER) initiative. This award was for new
work.
- A $75 million, four-and-one-half year
prime contract to support the U.S. Military Entrance Processing
Command’s Virtual Interactive Processing System (VIPS). This award
was for new work.
- Not included in the estimated value of
awards for FY11 above are:
- A prime position on an eight-year,
multiple-award, IDIQ contract with a $30 billion ceiling to support
the Federal Bureau of Investigation Information Technology Supplies
and Support Services program. This award was for new work.
- A prime position on a 10-year,
multiple-award, IDIQ contract with a $16.4 billion ceiling to
support the U.S. Army Communications and Electronics Command
(CECOM) Rapid Response – Third Generation (R2-3G) program. This
award was new work for us.
- A prime position on a six-and-one-half
year, multiple-award, IDIQ contract with a $1.1 billion ceiling to
support the Department of Justice Information Technology Support
Services 4 program. This award was for new work.
- A prime position on a 10-year,
multiple-award, IDIQ contract with a $1 billion ceiling to support
the Centers for Disease Control and Prevention’s (CDC) IT
infrastructure work under the CDC Information Management Services
contract. This award was for new work.
- A prime position on a seven-year,
multiple-award, IDIQ contract with a ceiling value of $460 million
to support the U.S. Air Force Network Centric Solutions-2
(NETCENTS-2) Enterprise Integration and Service Management
contract. This award was for new work.
- We completed the acquisition of
TechniGraphics, Inc. and Applied Systems Research Inc., both
leading providers of geospatial and technical services to the
Intelligence Community. These acquisitions further our growth in
these disciplines and reinforce our commitment to providing
end-to-end intelligence solutions.
Other FY11 Recognition
- CACI Chairman of the Board, Dr. J.P.
(Jack) London, was inducted as a laureate into the Washington
Business Hall of Fame. This lifetime achievement award recognizes
Dr. London's accomplishments in growing CACI from a small
consulting firm into a worldwide professional services and IT
company.
- Two of our teams achieved industry
recognition for excellence in customer service. CACI’s Industrial
Consulting and Systems Division received the Software Engineering
Institute's highest Capability Maturity Model Integration for
Development Maturity Level 5 rating for software and systems
engineering excellence; and CACI's Global Enterprise Network
Services team was certified ISO 20000 for best practices in quality
and continuous improvement.
- CACI placed fifth in G.I. Jobs
magazine's list of the nation's Top 100 Military-Friendly
Employers, up from 31st last year. This award, drawn from a pool of
an estimated 5,000 eligible companies, honors CACI's outstanding
support for hiring former military and Guard/Reserve
personnel.
- CACI was ranked 12th among Military
Times Edge’s Best for Vets employers, reflecting the dedication to
military hiring shown in our recruiting resources, training,
reserve policies, and corporate culture.
- CACI was recognized for Excellence in
Innovation by the Profiles in Diversity Journal as part of the
publication's Innovations in Diversity Awards competition. The
awards honor corporations, organizations, and institutions that
have developed innovative solutions for diversity and inclusiveness
in the workplace.
CACI Raises Its FY12 Guidance
We are raising our Fiscal Year 2012 (FY12) guidance which we
issued on June 29, 2011 due to expected stronger operating
performance and the acquisition of Pangia Technologies. The table
below summarizes the new guidance ranges for FY12 based on expected
GAAP results:
(In millions except for earnings
New
Previous
per share)
FY 2012
FY 2012
Guidance
Guidance
Revenue $3,750 - $3,950 $3,750 - $3,950 Net income
$147 - $153 $144 - $150 Effective corporate tax rate
39.5% 39.5% Diluted earnings per share $4.70 -
$4.90 $4.60 - $4.80 Diluted weighted average shares
31.3 31.3
This guidance represents our views as of August 17, 2011.
Investors are reminded that actual results may differ for the
reasons described herein and in our filings with the Securities and
Exchange Commission.
Conference Call Information
We have scheduled a conference call for 8:30 AM Eastern Time
Thursday, August 18, 2011 during which members of our senior
management team will be making a brief presentation focusing on
fourth quarter and full year 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
72779040. A replay of the call will also be available over the
Internet beginning at 1:00 PM Eastern Time Thursday, August 18,
2011 and can be accessed through our homepage (www.caci.com)
by clicking on the CACI Investor Info button.
About CACI
Celebrating our 50th year in business, CACI sustains an
exceptional record of success by providing professional services
and IT solutions needed to prevail in the areas of defense,
intelligence, homeland security, and IT modernization and
government transformation. We deliver enterprise IT and network
services; data, information, and knowledge management services;
business system solutions; logistics and material readiness; C4ISR
solutions and services; cyber solutions; integrated security and
intelligence solutions; and program management and SETA support
services. CACI solutions help federal clients provide for national
security, improve communications and collaboration, secure
information systems and networks, enhance data collection and
analysis, and increase efficiency and mission effectiveness. A
member of the Fortune 1000 Largest Companies and the Russell 2000
index, CACI provides dynamic careers for approximately 13,900
employees working in over 120 offices in the U.S. and Europe. Visit
CACI on the web at www.caci.com and www.asymmetricthreat.net.
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: 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; valuation of contingent
consideration in connection with business combinations; 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, based on a change in spending
patterns, or in the event of a priority need for funds, such as
homeland security, the war on terrorism, or an economic stimulus
package; 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 government 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 the company’s
Securities and Exchange Commission filings.
(Financial Tables follow)
Selected Financial Data CACI International
Inc Condensed Consolidated Statements of Operations
(Unaudited) (Amounts in thousands, except per share amounts)
Quarter Ended
Twelve Months Ended 6/30/2011 6/30/2010 %
Change
6/30/2011 6/30/2010 % Change Revenue $ 963,162
$ 848,717 13.5 % $ 3,577,780 $ 3,149,131
13.6 % Costs of revenue Direct costs 685,250 602,726 13.7 %
2,528,660 2,207,574 14.5 % Indirect costs and selling expenses
185,680 177,887 4.4 % 741,652
693,736 6.9 % Depreciation and amortization 14,148
14,133 0.1 % 56,067 53,039
5.7 % Total costs of revenue 885,078
794,746 11.4 % 3,326,379 2,954,349
12.6 % Operating income 78,084 53,971 44.7 % 251,401 194,782
29.1 % Interest expense and other, net 5,646
5,479 3.0 % 23,144 26,353 -12.2
% Income before income taxes 72,438 48,492 49.4 % 228,257 168,429
35.5 % Income taxes 26,324 18,198 44.7
% 83,105 61,171 35.9 %
Net income before noncontrolling interest
in earnings of joint venture
46,114 30,294 52.2 % 145,152 107,258 35.3 %
Noncontrolling interest in earnings of
joint venture
(213 ) (394 ) -45.9 % (934 ) (743 )
25.7 % Net income attributable to CACI $ 45,901 $ 29,900
53.5 % $ 144,218 $ 106,515 35.4 % Basic
earnings per share $ 1.52 $ 0.99 53.9 % $ 4.76 $ 3.53 34.8 %
Diluted earnings per share $ 1.44 $ 0.96 49.3 % $ 4.61 $ 3.47 32.7
% Weighted average shares used in per share computations:
Basic 30,162 30,241 30,281 30,138 Diluted 31,895 31,022 31,300
30,676
Statement of Operations Data
(Unaudited) Quarter Ended Twelve Months
Ended 6/30/2011 6/30/2010 % Change
6/30/2011 6/30/2010 % Change Operating income margin
8.1 % 6.4 % 7.0 % 6.2 % Tax rate 36.4 % 37.8 % 36.6 % 36.5 % Net
income margin 4.8 % 3.5 % 4.0 % 3.4 % Proforma EBITDA* $
84,395 $ 65,074 29.7 % $ 298,209 $ 245,020 21.7 % Proforma EBITDA
Margin 8.8 % 7.7 % 8.3 % 7.8 % Proforma adjusted net income*
$ 54,494 $ 46,572 17.0 % $ 191,540 $ 163,915 16.9 %
Proforma diluted adjusted earnings per
share
$ 1.71 $ 1.50 13.8 % $ 6.12 $ 5.34 14.5 %
* See Reconciliation of Net Income to Pro
Forma Earnings before Interest, Taxes, Depreciation and
Amortization and to Pro Forma Adjusted Net Income on page 13.
Selected Financial Data (Continued)
CACI International Inc Condensed Consolidated Balance
Sheets (Unaudited) (Amounts in thousands)
6/30/2011 6/30/2010 ASSETS: Current assets
Cash and cash equivalents $ 164,817 $ 254,543 Accounts receivable,
net 573,042 531,033 Prepaid expenses and other current assets
44,219 55,170 Total current assets 782,078 840,746
Goodwill and intangible assets, net 1,374,387 1,270,159
Property and equipment, net 62,755 58,666 Other long-term assets
100,911 75,195 Total assets $ 2,320,131 $ 2,244,766
LIABILITIES AND SHAREHOLDERS' EQUITY: Current
liabilities Current portion of long-term debt $ 7,500 $ 278,653
Accounts payable 98,893 98,421 Accrued compensation and benefits
173,586 152,790 Other accrued expenses and current liabilities
157,242 128,559 Total current liabilities 437,221
658,423 Long-term debt, net of current portion 402,437
252,451 Other long-term liabilities 170,857 160,737
Total liabilities 1,010,515 1,071,611
Shareholders' equity 1,309,616 1,173,155 Total
liabilities and shareholders' equity $ 2,320,131 $ 2,244,766
Selected Financial Data (Continued)
CACI International Inc
Condensed Consolidated Statements of
Cash Flows (Unaudited)
(Amounts in thousands)
Twelve Months Ended 6/30/2011 6/30/2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income before noncontrolling interest
in earnings of joint venture
$ 145,152 $ 107,258
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 56,067 53,039 Non-cash interest
expense 11,235 10,499 Amortization of deferred financing costs
2,785 2,356 Stock-based compensation expense 17,915 30,750
Provision (benefit) for deferred income taxes 7,587 (4,703 )
Undistributed earnings of unconsolidated joint venture (1,755 ) -
Changes in operating assets and
liabilities, net of effect of business acquisitions:
Accounts receivable, net (23,624 ) (49,291 ) Prepaid expenses and
other assets (18,391 ) (11,628 ) Accounts payable and accrued
expenses (7,585 ) 49,765 Accrued compensation and benefits 13,085
9,423 Income taxes receivable and payable 8,590 3,288 Other
liabilities 14,903 8,588 Net cash
provided by operating activities 225,964
209,344
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (14,388 ) (22,503 ) Purchases of businesses,
net of cash acquired (133,034 ) (87,943 ) Investment in
unconsolidated joint venture, net (5,964 ) (2,428 ) Other
798 (3 ) Net cash used in investing activities
(152,588 ) (112,877 )
CASH FLOWS FROM FINANCING
ACTIVITIES: Net payments under credit facilities (138,425 )
(53,600 )
Proceeds from employee stock purchase
plans
4,116 4,501 Proceeds from exercise of stock options 22,077 5,589
Repurchases of common stock (53,647 ) (3,496 ) Other 1,546
(7 ) Net cash used in financing activities
(164,333 ) (47,013 ) Effect of exchange rate changes on cash
and cash equivalents 1,231 (3,399 ) Net
(decrease) increase in cash and cash equivalents (89,726 ) 46,055
Cash and cash equivalents, beginning of period 254,543
208,488 Cash and cash equivalents, end of
period $ 164,817 $ 254,543
Selected Financial Data
(Continued) Revenue by Customer Type (Unaudited)
Quarter Ended (dollars in
thousands)
6/30/2011 6/30/2010
$ Change
% Change
Department of Defense $ 779,851 81.0 % $ 663,617 78.2 % $ 116,234
17.5 % Federal Civilian Agencies 138,436 14.4 % 142,059 16.7 %
(3,623 ) -2.6 % Commercial 40,787 4.2 % 39,752 4.7 % 1,035 2.6 %
State and Local Governments 4,088 0.4 %
3,289 0.4 % 799 24.3 % Total $
963,162 100.0 % $ 848,717 100.0 % $
114,445 13.5 %
Twelve Months Ended
(dollars in thousands)
6/30/2011
6/30/2010
$ Change
% Change Department of Defense $ 2,858,721 79.9 % $
2,450,463 77.8 % $ 408,258 16.7 % Federal Civilian Agencies 537,687
15.0 % 535,467 17.0 % 2,220 0.4 % Commercial 166,966 4.7 % 146,839
4.7 % 20,127 13.7 % State and Local Governments 14,406
0.4 % 16,362 0.5 % (1,956
) -12.0 % Total $ 3,577,780 100.0 % $
3,149,131 100.0 % $ 428,649 13.6 %
Revenue by Contract Type (Unaudited) Quarter
Ended (dollars in thousands)
6/30/2011 6/30/2010
$ Change
% Change Time and materials $ 340,549 35.3 % $
384,228 45.3 % $ (43,679 ) -11.4 % Cost reimbursable 387,941 40.3 %
285,240 33.6 % 102,701 36.0 % Fixed price 234,672
24.4 % 179,249 21.1 % 55,423
30.9 % Total $ 963,162 100.0 % $
848,717 100.0 % $ 114,445 13.5 %
Twelve Months Ended (dollars in
thousands)
6/30/2011 6/30/2010
$ Change
% Change Time and materials $ 1,423,184 39.8 % $
1,467,556 46.6 % $ (44,372 ) -3.0 % Cost reimbursable 1,277,326
35.7 % 1,033,480 32.8 % 243,846 23.6 % Fixed price 877,270
24.5 % 648,095 20.6 %
229,175 35.4 % Total $ 3,577,780 100.0 %
$ 3,149,131 100.0 % $ 428,649
13.6 %
Revenue Received as a Prime versus Subcontractor
(Unaudited) Quarter Ended
(dollars in thousands)
6/30/2011 6/30/2010
$ Change
% Change Prime $ 851,910 88.4 % $ 721,625 85.0 % $
130,285 18.1 % Subcontractor 111,252 11.6 %
127,092 15.0 % (15,840 ) -12.5 %
Total $ 963,162 100.0 % $ 848,717 100.0 %
$ 114,445 13.5 %
Twelve Months
Ended (dollars in thousands)
6/30/2011 6/30/2010
$ Change
% Change Prime $ 3,114,428 87.0 % $ 2,677,553 85.0 %
$ 436,875 16.3 % Subcontractor 463,352 13.0 %
471,578 15.0 % (8,226 ) -1.7 %
Total $ 3,577,780 100.0 % $ 3,149,131 100.0 %
$ 428,649 13.6 %
Selected
Financial Data (Continued)
Contract Funding Orders Received (Unaudited) Quarter
Ended (dollars in thousands)
6/30/2011 6/30/2010
$ Change
% Change Contract Funding Orders $ 871,527 $
895,373 $ (23,846 ) -2.7 %
Twelve Months Ended
(dollars in thousands)
6/30/2011
6/30/2010
$ Change
% Change Contract Funding Orders $ 3,592,915 $
3,422,206 $ 170,709 5.0 %
Direct Costs by Category
(Unaudited) Quarter Ended (dollars in thousands)
6/30/2011 6/30/2010
$ Change
% Change
Direct labor $ 231,886 33.8 % $ 211,760 35.1 % $ 20,126 9.5 % Other
direct costs 453,364 66.2 % 390,966
64.9 % 62,398 16.0 % Total direct costs
$ 685,250 100.0 % $ 602,726 100.0 % $
82,524 13.7 %
Twelve Months Ended (dollars in
thousands)
6/30/2011 6/30/2010
$ Change
% Change
Direct labor $ 888,035 35.1 % $ 810,643 36.7 % $ 77,392 9.5 % Other
direct costs 1,640,625 64.9 % 1,396,931
63.3 % 243,694 17.4 % Total direct
costs $ 2,528,660 100.0 % $ 2,207,574 100.0 %
$ 321,086 14.5 %
Reconciliation of Total Revenue Growth
and Organic Revenue Growth
(Unaudited)
We are presenting 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. We believe that this non-GAAP
financial measure provides investors with useful information to
evaluate the growth rate of our 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 Twelve Months
Ended (dollars in thousands)
6/30/2011
6/30/2010 % Change 6/30/2011
6/30/2010 % Change Revenue, as reported
$ 963,162 $ 848,717 13.5 % $ 3,577,780
$ 3,149,131 13.6 % Less: Acquired revenue 16,805
64,155
Organic revenue $ 946,357 $ 848,717
11.5 % $ 3,513,625 $ 3,149,131 11.6 %
Selected Financial Data (Continued)
Reconciliation of Net Income to Pro Forma Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA) and
to Pro Forma Adjusted Net Income (Unaudited)
The Company views EBITDA, EBITDA margin,
Adjusted Net Income and Diluted Adjusted Earnings Per Share as
important indicators of performance, consistent with the manner in
which management measures and forecasts the Company’s performance.
EBITDA is a commonly used non-GAAP measure when comparing our
results with those of other companies. We believe Adjusted Net
Income is a significant driver of long-term value and is used by
investors to measure our performance. This measure in particular
assists readers in further understanding our results and trends
from period-to-period by removing certain non-cash items that do
not impact the cash flow performance of our business. We are
presenting EBITDA, EBITDA margin, Adjusted Net Income and Diluted
Adjusted Earnings Per Share on a pro forma basis, to remove the
impact of the earn-out adjustments as we believe these pro forma
measures are a better indicator of our ongoing, recurring
operations. Pro forma EBITDA is defined by us as GAAP net income
plus net interest expense, income taxes, and depreciation and
amortization, and less the earn-out adjustment described on page 1.
Pro forma EBITDA margin is pro forma EBITDA divided by revenue. Pro
forma Adjusted Net Income is defined by us as GAAP net income plus
stock-based compensation expense, depreciation and amortization,
and amortization of financing costs, and less the earn-out
adjustment described on page 1; net of related tax effects computed
using an assumed marginal tax rate of 39.3 percent. Pro forma
Diluted Adjusted Earnings Per Share is Pro forma Adjusted Net
Income divided by diluted weighted-average shares, as reported. Pro
forma EBITDA and Pro forma 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.
Quarter Ended Twelve Months Ended
(dollars in thousands)
6/30/2011
6/30/2010 % Change
6/30/2011 6/30/2010
% Change Net income, as reported $ 45,901 $
29,900 53.5 % $ 144,218 $ 106,515 35.4
% Plus: Income taxes 26,324 18,198 44.7 % 83,105 61,171 35.9 %
Interest income and expense, net 6,214 5,549 12.0 % 24,899 26,423
-5.8 % Depreciation and amortization 14,148 14,133 0.1 % 56,067
53,039 5.7 % Less: Earn-out adjustment (8,192 )
(2,706 ) 202.7 % (10,080 )
(2,128 ) 373.7 % Pro forma EBITDA $ 84,395
$ 65,074 29.7 % $ 298,209
$ 245,020 21.7 %
Quarter Ended
Twelve Months Ended (dollars in thousands)
6/30/2011 6/30/2010
% Change 6/30/2011
6/30/2010 % Change Revenue, as
reported $ 963,162 $ 848,717 13.5 % $ 3,577,780 $ 3,149,131 13.6 %
Pro forma EBITDA $ 84,395 $ 65,074 29.7
% $ 298,209 $ 245,020 21.7 % Pro
forma EBITDA margin 8.8 % 7.7 %
8.3 % 7.8 %
Quarter Ended Twelve Months Ended (dollars in
thousands)
6/30/2011
6/30/2010 % Change
6/30/2011 6/30/2010
% Change Net income, as reported $ 45,901 $ 29,900
53.5 % $ 144,218 $ 106,515 35.4 % Plus: Stock-based compensation
4,806 12,800 -62.5 % 17,915 30,750 -41.7 % Depreciation and
amortization 14,148 14,133 0.1 % 56,067 53,039 5.7 % Amortization
of financing costs 511 537 -4.8 % 2,785 2,356 18.2 % Non-cash
interest expense 2,876 2,688 7.0 % 11,235 10,499 7.0 % Less:
Earn-out adjustment (8,192 ) (2,706 ) 202.7 % (10,080 ) (2,128 )
373.7 % Related tax effect (5,556 ) (10,780 )
-48.5 % (30,600 ) (37,116 )
-17.6 % Pro forma adjusted net income $ 54,494
$ 46,572 17.0 % $ 191,540 $
163,915 16.9 %
Quarter Ended
Twelve Months Ended (shares in thousands)
6/30/2011 6/30/2010
% Change 6/30/2011
6/30/2010 % Change
Diluted weighted average shares, as
reported
31,895 31,022 31,300 30,676 Diluted earnings per share, as reported
$ 1.44 $ 0.96 49.3 % $ 4.61
$ 3.47 32.7 % Pro forma diluted
adjusted earnings per share $ 1.71 $ 1.50
13.8 % $ 6.12 $ 5.34 14.5
%
Selected Financial Data (continued)
Reconciliation of Operating Income, Net Income and Diluted
Earnings Per Share to Pro Forma Amounts
(Unaudited)
As described on page 1, the Company is
presenting pro forma Operating Income, Net Income and Diluted
Earnings per Share to present results excluding the impact of
earn-out adjustments recorded during the fiscal years ended June
30, 2010 and 2011. During its fiscal year ended June 30, 2010, the
Company completed two domestic acquisitions with acquisition
related contingent consideration, or earn-outs, which represent
additional purchase consideration based on the acquired company's
performance post-acquisition. The fair values of the expected
earn-outs were recorded as liabilities on the balance sheet as of
each acquisition date, and are remeasured each quarter, with any
change in the fair value of the liabilities reflected in the income
statement. In each period presented, the estimated earn-out
liability was reduced, resulting in an increase to net income. The
reduction in the earn-out liability in each period presented,
reflected in the tables below as the "Earn-out adjustment," was
recorded in the income statement as a reduction in indirect costs
and selling expenses. The Company believes that presenting the key
measures of Operating Income, Net Income, and Diluted Earnings per
Share without the impact of these reductions in indirect costs and
selling expenses provides readers a better indicator of our
ongoing, recurring operations. These non-GAAP measures should not
be considered in isolation or as a substitute for performance
measures prepared in accordance with GAAP.
Quarter Ended Twelve Months Ended
(dollars in thousands)
6/30/2011
6/30/2010 % Change
6/30/2011 6/30/2010
% Change Operating income, as reported $ 78,084
$ 53,971 44.7 % $ 251,401 $ 194,782
29.1 % Less: Earn-out adjustment (8,192 )
(2,706 ) 202.7 % (10,080 )
(2,128 ) 373.7 % Pro forma operating income $ 69,892
$ 51,265 36.3 % $ 241,321
$ 192,654 25.3 %
Quarter
Ended Twelve Months Ended (dollars in thousands)
6/30/2011 6/30/2010
% Change 6/30/2011
6/30/2010 % Change Net
income, as reported $ 45,901 $ 29,900 53.5 % $ 144,218 $ 106,515
35.4 % Less: Earn-out adjustment (8,192 ) (2,706 ) 202.7 % (10,080
) (2,128 ) 373.7 % Plus: Related tax effect* 3,217
1,063 202.6 % 3,958
836 373.4 % Pro forma net income
$ 40,926 $ 28,257 44.8 % $
138,096 $ 105,223 31.2 %
Quarter Ended Twelve Months Ended (shares in
thousands)
6/30/2011
6/30/2010 % Change
6/30/2011 6/30/2010
% Change
Diluted weighted average shares, as
reported
31,895 31,022 31,300 30,676 Diluted earnings per share, as reported
$ 1.44 $ 0.96 49.3 % $ 4.61
$ 3.47 32.7 % Pro forma diluted
earnings per share $ 1.28 $ 0.91 40.9 %
$ 4.41 $ 3.43 28.6 % *
Computed using an assumed marginal tax rate of 39.3 percent.
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