CACI International (CACI Quick QuoteCACI - Free Report) reported second-quarter fiscal 2022 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same.

The company reported non-GAAP earnings of $4.39 per share surpassing the Zacks Consensus Estimate of $3.99 per share. The bottom line declined 6.4% from the year-ago quarter’s figure of $4.69 per share.

This decline in earnings was primarily due to lower operational income, high interest expenses and tax rates partially offset by a reduced number of shares outstanding. Reduction in shares outstanding can be attributed to the stock buyback worth $500 million under the accelerated share repurchase program announced in March 2021.

In the second quarter fiscal 2022, CACI reported revenues of $1.49 billion, missing the Zacks Consensus Estimate of $1.53 billion. However, the top line increased 1.2% from the prior-year quarter. Organic revenues improved 1% on a year-over-year basis.

Quarterly Details

Contract awards during the second quarter totaled $1.95 billion. The figure decreased 8.3% on a year-over-year basis. Revenues from contract awards exclude ceiling values of multi-award, indefinite-delivery, indefinite-quantity contracts.

CACI ended the quarter with a backlog of $24.1 billion, up 8% on a year-over-year basis. As of Dec 31, 2021, the funded backlog increased 7% to $3.1 billion.

In terms of customer mix, the Department of Defense contributed 69.8% to total revenues in the reported quarter. Federal Civilian Agencies made up 25%, while Commercial and other customers accounted for 5.2% of revenues.

Revenues generated as a prime contractor and a subcontractor accounted for 89.9% and 10.1% of total revenues, respectively.

In terms of contract type, cost-plus-fee type contracts, fixed-price contracts, and time and material type contracts contributed 59.9%, 28.3% and 11.8% to total revenues, respectively.

Revenues generated as ‘Expertise’ and ‘Technology’ accounted for 46.2% and 53.8% of total revenues, respectively.

Operating Details

Operating income for the quarter amounted to $124 million, down 12.3% year over year. Operating margin contracted 120 basis points (bps) to 8.4%. The company cited abnormally high profit margin in the prior-year quarter as the primary reason behind this decline. The downside was due to the pandemic-led lower travel & medical expenses and reduced delivery costs under the fixed price program last year.

Adjusted EBITDA slumped 9.5% year over year to $158 million. Adjusted EBITDA margin of 10.6% fell 130 bps.

Balance Sheet & Cash Flow

As of Dec 31 2021, CACI had cash and cash equivalents of $124.1 million compared with the previous quarter’s $104.4 million. Total long-term (net of current portion) debt was $2.08 billion, up from $1.65 billion as of Sep 30, 2021.

The company generated an operating cash flow (excluding MARPA) of $128.9 million during the second quarter, plunging 32.1% from the year-ago quarter. The decline was due to a $21 million gain from payroll tax deferral in the year-ago quarter under the CARES Act and a $47 million deferred payroll tax repayment in the current quarter.

During the first half of fiscal 2022, CACI generated $303.3 million of operating cash flow (excluding MARPA).

Free cash flow was $117.4 million during the quarter under review and $281.7 million in the first half of fiscal 2022.

Guidance Update

CACI updates its fiscal 2022 guidance. The company now projects revenues between $6.300 billion and $6.400 billion compared with the prior range of $6.200-$6.400 billion. Adjusted earnings are forecast between $18.14 and $18.57 per share compared with the earlier guidance of $18-$18.83 per share.

The company now expects a fiscal 2022 net income of $430-440 million compared with the prior range of $430-450 million. However, it still estimates free cash flow to be at least $720 million.

It continues to anticipate solid organic revenue growth and continued margin expansion throughout 2022.

Zacks Rank & Other Key Picks

CACI currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks from the broader computer and technology sector include the largest global Customer Relationship Management vendor Salesforce (CRM Quick QuoteCRM - Free Report) flaunting a Zacks Rank #1 (Strong Buy), the graphic processing unit maker NVIDIA Corporation (NVDA Quick QuoteNVDA - Free Report) and Advanced Micro Devices (AMD Quick QuoteAMD - Free Report) , both carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Salesforce’s fourth-quarter fiscal 2022 earnings has been revised downward by 7.6% to 73 cents per share over the past 60 days. For fiscal 2022, earnings estimates have moved upward by 0.43% to $4.68 per share in the last 60 days.

Salesforce’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 44.2%. CRM stock has depreciated 6.1% in the past year.

The Zacks Consensus Estimate for NVIDIA’s fourth-quarter fiscal 2022 earnings has been revised upward by 13 cents to $1.22 per share over the past 90 days. For fiscal 2022, earnings estimates have moved north by 19 cents to $4.33 per share in the past 90 days.

NVIDIA’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 7.7%. Shares of NVDA have soared 76.3% in the past year.

The Zacks Consensus Estimate for Advanced Micro Devices’ fourth-quarter 2021 earnings has been revised upward by 7 cents to 75 cents per share over the past 90 days. For 2021, earnings estimates have moved north by 0.38% to $2.65 per share in the last 60 days.

Advanced Micro Devices’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 14%. Shares of AMD have rallied 24.6% in the past year.