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Why Is CACI International (CACI) Down 11.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for CACI International (CACI - Free Report) . Shares have lost about 11.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CACI International due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
CACI’s Q2 Earnings Top Estimates, View Up
CACI reported solid second-quarter fiscal 2020 (ended Dec 31, 2019) results, wherein both earnings and revenues beat estimates.
Earnings were $3.11 per share, up 15% year over year. The bottom line also beat the Zacks Consensus Estimate of $2.78.
Revenues were $1.4 billion, up 18.1% from the year-ago quarter. The rise was primarily attributable to new business wins, acquired contracts and on-contract growth, which aided organic expansion. The top line also outpaced the consensus mark of $1.37 billion.
Quarter Details
Contract awards in the reported quarter were worth $2.7 billion, up a whopping 108% year over year, of which approximately 60% came from new businesses. Revenues from contract awards excluded ceiling values of multi-award, indefinite-delivery, indefinite-quantity contracts.
Total backlog, as of Dec 31, 2019, was $20.3 billion, 61% higher than the prior-year quarter. Funded backlog at the end of December was $2.8 billion, up 14%.
In terms of customer mix, the Department of Defense accounted for about 71% of total revenues in the quarter. Federal Civilian Agencies contributed about 24.5%, while Commercial and other customers accounted for 4.5% of revenues.
Revenues generated as a prime contractor and a subcontractor accounted for 90.9% and 9.1% of total revenues, respectively.
During the quarter, CACI secured several notable contracts. These included a five-year, $1.1-billion task order to provide advanced and full lifecycle information technology support to enterprise and mission technology.
Margins
Operating income for the quarter came in at $110.19 million, up 7.7% from the year-ago quarter.
Operating income margin contracted 80 basis points (bps) to 7.3%. Higher interest expenses were an overhang on margins.
Adjusted EBITDA for the fiscal second quarter increased 14.6% year over year to $140.9 million. Adjusted EBITDA margin of 10.1% contracted 30 bps.
Balance Sheet and Cash Flow
At the quarter-end, CACI had cash and cash equivalents of $68.6 million compared with $83.2 million in the previous quarter.
Total long-term (net of current portion) debt was $1.55 billion.
Cash flow from operations, as of Sep 30, 2019, was $237 million compared with $114.6 million in the previous quarter. The increase was driven by growth in billing and collections processes as well as the company’s Master Accounts Receivable Purchase Agreement (MARPA).
Guidance
CACI raised guidance for fiscal 2020. Revenues are now expected in the range of $5.60-$5.80 billion, up from the previously guided $5.55-$5.75 billion.
Net income is now expected in the range of $305-$325 million compared with the earlier expectation of $298-$318 million.
Earnings per share are expected between $11.91 and $12.70, up from the previously forecasted range of $11.64-$12.42.
Moreover, net cash provided by operating activities is expected to be at least $430 million compared with up to $420 million estimated earlier.
The company expects accelerating organic revenue growth and continued margin expansion throughout 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, CACI International has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise CACI International has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is CACI International (CACI) Down 11.1% Since Last Earnings Report?
A month has gone by since the last earnings report for CACI International (CACI - Free Report) . Shares have lost about 11.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CACI International due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
CACI’s Q2 Earnings Top Estimates, View Up
CACI reported solid second-quarter fiscal 2020 (ended Dec 31, 2019) results, wherein both earnings and revenues beat estimates.
Earnings were $3.11 per share, up 15% year over year. The bottom line also beat the Zacks Consensus Estimate of $2.78.
Revenues were $1.4 billion, up 18.1% from the year-ago quarter. The rise was primarily attributable to new business wins, acquired contracts and on-contract growth, which aided organic expansion. The top line also outpaced the consensus mark of $1.37 billion.
Quarter Details
Contract awards in the reported quarter were worth $2.7 billion, up a whopping 108% year over year, of which approximately 60% came from new businesses. Revenues from contract awards excluded ceiling values of multi-award, indefinite-delivery, indefinite-quantity contracts.
Total backlog, as of Dec 31, 2019, was $20.3 billion, 61% higher than the prior-year quarter. Funded backlog at the end of December was $2.8 billion, up 14%.
In terms of customer mix, the Department of Defense accounted for about 71% of total revenues in the quarter. Federal Civilian Agencies contributed about 24.5%, while Commercial and other customers accounted for 4.5% of revenues.
Revenues generated as a prime contractor and a subcontractor accounted for 90.9% and 9.1% of total revenues, respectively.
During the quarter, CACI secured several notable contracts. These included a five-year, $1.1-billion task order to provide advanced and full lifecycle information technology support to enterprise and mission technology.
Margins
Operating income for the quarter came in at $110.19 million, up 7.7% from the year-ago quarter.
Operating income margin contracted 80 basis points (bps) to 7.3%. Higher interest expenses were an overhang on margins.
Adjusted EBITDA for the fiscal second quarter increased 14.6% year over year to $140.9 million. Adjusted EBITDA margin of 10.1% contracted 30 bps.
Balance Sheet and Cash Flow
At the quarter-end, CACI had cash and cash equivalents of $68.6 million compared with $83.2 million in the previous quarter.
Total long-term (net of current portion) debt was $1.55 billion.
Cash flow from operations, as of Sep 30, 2019, was $237 million compared with $114.6 million in the previous quarter. The increase was driven by growth in billing and collections processes as well as the company’s Master Accounts Receivable Purchase Agreement (MARPA).
Guidance
CACI raised guidance for fiscal 2020. Revenues are now expected in the range of $5.60-$5.80 billion, up from the previously guided $5.55-$5.75 billion.
Net income is now expected in the range of $305-$325 million compared with the earlier expectation of $298-$318 million.
Earnings per share are expected between $11.91 and $12.70, up from the previously forecasted range of $11.64-$12.42.
Moreover, net cash provided by operating activities is expected to be at least $430 million compared with up to $420 million estimated earlier.
The company expects accelerating organic revenue growth and continued margin expansion throughout 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, CACI International has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise CACI International has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.