News Column

CACI Posts Results for Its Fiscal 2014 Second Quarter and Updates Fiscal Year 2014 Guidance

February 3, 2014

CACI International Inc , an information solutions and services provider to the federal government, announced results for its second fiscal quarter ended December 31, 2013 . Ken Asbury , CACI's President and CEO, said, "Our results reflect solid execution of our strategy during a difficult period for our customers and our industry. During the quarter, we secured significant contract awards, received solid contract funding, and grew CACI net income by 8 percent, excluding Six3 Systems . We completed the acquisition of Six3 Systems, Inc. , which positions CACI as a leader in advanced intelligence and cyber security offerings to our national security customers. Six3 brings a unique set of signals intelligence and cyber capabilities that are increasingly essential to protecting our country against growing international threats. "We remain focused on those factors that we control, which contribute to profitability and build and deliver future shareholder value: winning new business, delivering consistent value to our customers, and using our capital to make investments that improve our future performance." In a release on January 29 , the Company noted that second quarter results (in millions except per-share data) Q2, FY14 Q2, FY13 percent Change Revenue $894.2 $931.6 -4.0 percent Operating income $66.5 $69.6 -4.5 percent Net income attributable to CACI $35.0 $39.7 -11.9 percent Diluted earnings per share $1.38 $1.69 -18.0 percent Revenue for the second quarter of Fiscal Year 2014 (FY14) decreased 4.0 percent compared to the second fiscal quarter of Fiscal Year 2013 (FY13). The decrease in revenue in the second quarter was driven primarily by federal government budget-related activities and the 16-day government shutdown in October. The decrease in operating income in the quarter was due primarily to $9.7 million of one-time acquisition-related expenses for Six3 Systems ( Six3 ). Interest expense increased in the quarter as a result of $2.6 million of interest incurred on the additional debt associated with the acquisition of Six3 . Net income attributable to CACI in the second quarter was $35.0 million , or $1.38 diluted earnings per share. The greater decrease in diluted earnings per share as compared to the decrease in net income is due to the dilutive effect of our convertible notes which mature in May 2014 . Net cash provided by operations in the quarter was $17.3 million . From the date of acquisition through December 31, 2013 , Six3 generated $48.9 million of revenue and $0.1 million of net income. Six3's net income includes $2.8 million of acquisition-related intangible amortization and $0.8 million of retention bonus related expenses. Second Quarter Awards and Contract Funding Our contract awards were $717 million in the quarter, 39.8 percent higher than the $512 million of the year earlier period, and we received awards in all ten of our markets. Approximately 25 percent of our awards in the quarter were new business while over 60 percent were recompete wins. Some of our new business and recompete contract awards during the quarter included: -Approximately $300 million in new and recompete task order awards under the Department of Justice Mega 4 contract. This work reinforces our continued strong presence in our Investigation and Litigation Support market area. -A $28 million , five-year award to provide software and systems engineering support for the U.S. Transportation Command's Defense Personal Property System. This new work expands our presence in the Business Systems Solutions market area. Contract funding orders in the second quarter were $599 million . Our total backlog at December 31, 2013 was $7.6 billion . Funded backlog at December 31, 2013 was $1.8 billion . Backlog does not incorporate any contribution from Six3 as we have yet to complete our analysis as part of the integration of their operations into CACI . We added to our inventory of indefinite delivery, indefinite quantity (IDIQ) contract vehicles during the quarter. IDIQ contract vehicles support our growth plans across our ten markets and provide us the flexibility to deliver on our customers' mission-critical requirements. During the quarter we received the following IDIQ award: -An $899 million , five-year multiple award to support Transport and Computing Infrastructure (TCI) for the Space and Naval Warfare (SPAWAR) Atlantic Business Portfolio. This new work is the fifth "Pillar" contract that we have been awarded, and provides full system lifecycle support for mission areas within the TCI portfolio for SPAWAR Systems Center Atlantic. It expands our business in the Enterprise IT market area. Second Quarter Highlights -On November 15, 2013 , we closed on our acquisition of Six3 Systems . The largest acquisition in CACI's history, Six3 brings approximately 1,600 new employees. Six3 adds distinctive cyberspace, C4ISR, and intelligence capabilities to our solutions and services, deepens our current customer base, and brings us new customers. Six3 positions us as a leader in mission-critical national and tactical intelligence, as well as operations and intelligence fusion. -Dr. J.P. ( Jack) London , CACI Executive Chairman and Chairman of the Board, was honored with the Admiral of the Navy George Dewey Award from the Naval Order of the United States . The award recognizes Dr. London's achievements in continually advancing the interests of the U.S. and the U.S. Navy . This includes both his personal accomplishments as well as leading CACI's support for Navy missions ranging from developing better logistics processes in the 1970s to delivering solutions for some of the Navy's most complex information technology and intelligence, surveillance and reconnaissance challenges today. - CACI placed 20th in The Washington Post's annual ranking of the top 200 public companies in the Washington, D.C. metropolitan area. This ranking reflects our continuing status as an industry leader and formidable competitor among federal government contractors. -Our recruiting team continued to be recognized for support of military hiring. - CACI received the Optimas Award from Workforce Magazine , a multimedia publication dedicated to human resources, for mobile recruiting technology that has improved our recruiting intelligence and analytics and introduced cost-savings. -We ranked 22nd among the top 100 military-friendly employees in GI Jobs magazine , the premier publication for military transitioning to civilian employment, in honor of our outstanding support for hiring military veterans and Guard/Reserve members. -We received the Veteran Hiring "Continue the Commitment" Award from the Coalition for Government Procurement , a national trade association focused on federal acquisition, for our leadership in providing military-friendly recruitment opportunities and support programs. Revenue decreased 5.6 percent compared to revenue for the first half of FY13 due to the expected reduction in material purchases and subcontract labor resulting from the drawdown in Southwest Asia , federal government budget-related activities, and the government shutdown in October. The decrease in operating income in the first half of FY14 was due primarily to $11.4 million of one-time acquisition-related expenses for Six3 . Net income attributable to CACI in the first half of FY14 was $68.0 million , or $2.71 diluted earnings per share. The greater decrease in diluted earnings per share as compared to the decrease in net income was due to the dilutive effect of our convertible notes which mature in May 2014 . Net cash provided by operations in the first half of FY14 was $44.6 million . CACI Updates Its FY14 Guidance We are updating the FY14 guidance we issued on October 29, 2013 to include the effects of the acquisition of Six3 Systems , including one-time transaction expenses. Following are the key factors related to our updated FY14 guidance: -We expect that the acquisition of Six3 will generate $275 million to $325 million in revenue in FY14. -We expect that our direct labor costs will now be 3 percent to 6 percent higher when compared with FY13. Other direct costs will now be 1 percent to 4 percent lower when compared with FY13. -We expect that our indirect costs and selling expenses will now be 1 percent to 3 percent higher when compared with FY13. -Depreciation and intangible amortization is now expected to be approximately $66 million . -Net interest expense is now expected to be approximately $38 million . -We expect that our diluted share count will now be 25.4 million shares, based on a $78 share price. CACI provides information solutions and services in support of national security missions and government transformation for Intelligence, Defense, and Federal Civilian customers. More information: caci.com ((Comments on this story may be sent to newsdesk@closeupmedia.com ))


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