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CACI International Inc. (CACI - Analyst Report) reported strong fiscal 2013 second quarter results (ended Dec 31, 2012) with earnings of $1.69 per share compared to $1.51 in the year-earlier quarter. The reported earnings marginally beat the Zacks Consensus Estimate by a penny.

However, net income for the reported quarter decreased 3.4% year over year to $39.7 million as the year-ago quarter was positively affected by a one-time incremental net income of $4.1 million due to a large fixed-price contract.

Revenue came in at $931.6 million, down 4.3% year over year due to continued troubles in Afghanistan. However, the company registered strong growth in Integrated Security Solutions, and Investigation and Litigation Support. As of Dec 31, 2012, total funded backlog was $2.1 billion, while total backlog amounted to $7.6 billion.

In terms of a customer mix, the Department of Defense accounted for about 75.5% of total revenue in the reported quarter. Federal Civilian Agencies contributed about 18.9%, while Commercial customers accounted for 5.2% and State and Local Governments added 0.4% to total revenue.

Significant Quarter Developments

CACI received $512 million worth of contract awards in the quarter, bringing its year to date tally to $2.3 billion. The company also procured a $10 billion, five-year multiple-award to develop, field, and sustain turnkey telecommunications solutions on the U.S. Army Global Tactical Advanced Communications System contract. This is expected to augment its presence in the C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance) market.  

In addition, CACI received a $5.6 billion, five-year multiple-award contract supporting the Defense Intelligence Agency’s Solutions for Intelligence Analysis (SIA) II program. The company also obtained an $899 million, five-year multiple-award to support the U.S. Navy’s SPAWAR Battlespace Awareness program in order to further supplement its foothold in the C4ISR market.

During the reported quarter, CACI completed two acquisitions to expand its footprint in the Healthcare market. These include Emergint Technologies, Inc., a premier provider of emerging technology solutions for national health organizations, and IDL Solutions Inc., a leading provider of information solutions and data analytics for healthcare clients and other civilian agencies. While bringing on board new customers, the acquired companies increase CACI’s capabilities in the federal civilian healthcare and health insurance areas with superior cost-effective business processes and improved patient care.

Balance Sheet and Cash Flows

The company ended the quarter with cash and cash equivalents of $37.5 million. Long-term debt totaled $695.2 million, up from $527.3 million at fiscal-end 2012.

In the second quarter of fiscal 2013, net cash provided by operating activities was $91.5 million versus $85.3 million in the previous year period.


With a continued decline in contracting activity and spending levels, management has revised its guidance for fiscal 2013. The company presently expects net income to be within the range of $157 million to $163 million, down from the prior expectations of $160 million to $167 million. Revenues are projected to be between $3,700 million and $3,900 million, down from the earlier projections of $3,800 million and $4,000 million. Earnings are expected to be within $6.54 and $6.79 compared to the previous range of $6.64 and $6.93 per share.

At the same time, the company needs to be wary of tough competition from other players in the industry such as Ebix Inc. (EBIX), Innodata Inc. (INOD - Snapshot Report), and ICF International Inc. (ICFI - Snapshot Report), each carrying a Zacks Rank #2 (Buy). CACI presently has a Zacks Rank #4 (Sell).

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