It has been about a month since the last earnings report for CACI International (
CACI Quick Quote CACI - Free Report) . Shares have lost about 5.9% 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 its most recent earnings report in order to get a better handle on the important catalysts.
CACI Q3 Earnings and Revenues Surpass Estimates, Up Y/Y
CACI International reported overwhelming third-quarter fiscal 2023 results, wherein earnings and revenues both beat the respective Zacks Consensus Estimate and registered significant year-over-year growth as well.
The national security-related IT solutions and services provider reported non-GAAP earnings of $4.92 per share, beating the Zacks Consensus Estimate of $4.64. Moreover, the bottom line increased 6% from the year-ago quarter’s figure of $4.64 per share. This rise in earnings was primarily driven by higher revenues and operating income, partially offset by increased interest expenses and a higher tax rate. In the third quarter of fiscal 2023, CACI reported revenues of $1.74 billion, surpassing the Zacks Consensus Estimate of $1.65 billion. Moreover, the top line increased 10% from the prior-year quarter, primarily driven by the successful execution of its strategy. The company also noted that the increase in revenues was entirely driven by organic growth. Quarterly Details
In the third quarter, contract awards totaled $1.1 billion, with approximately 50% for the new business. Revenues from contract awards excluded the ceiling value of multi-award, indefinite-delivery indefinite-quantity contracts.
CACI ended the quarter with a backlog of $25.3 billion, up 8% on a year-over-year basis. As of Mar 31, 2023, the funded backlog increased by 21% to $3.4 billion. In terms of the customer mix, the Department of Defense contributed 74.4% to total revenues in the reported quarter. Federal Civilian Agencies made up 20.4%, while Commercial and other customers accounted for 5.2% of revenues. Revenues generated as a prime contractor and a subcontractor accounted for 89.2% and 10.8% of the total revenues, respectively. In terms of contract type, cost-plus-fee-type contracts, fixed-price contracts, and time and material-type contracts contributed 57.8%, 30.4% and 11.8%, respectively, to total revenues. Revenues generated as ‘Expertise’ and ‘Technology’ accounted for 46.6% and 53.4% of the total revenues, respectively. The operating income for the quarter amounted to $155 million, up 23.7% year over year. The operating margin expanded by 100 basis points (bps) to 8.9%. Adjusted EBITDA increased 18.8% year over year to $191.8 million. The adjusted EBITDA margin expanded by 80 bps to 11%. Balance Sheet & Cash Flow
As of Mar 31, 2023, CACI had cash and cash equivalents of $106.8 million compared with the previous quarter’s $114.7 million. The total long-term (net of the current portion) debt was $1.77 billion, up from $1.53 billion as of Dec 31, 2022.
The company generated operating cash flow (excluding mini-automatic radar plotting aid or MARPA) of $56.1 million in the third quarter, declining by 82.1% from the year-ago quarter. Free cash flow was $41 million during the quarter under review. In the first nine months of fiscal 2023, CACI generated operating cash flow (excluding MARPA) and free cash flow of $221 million and $180 million, respectively. CACI Raises Fiscal 2023 Guidance
Buoyed by a strong third-quarter performance, CACI raised its guidance for fiscal 2023. The company now projects revenues between $6.675 billion and $6.75 billion in fiscal 2023, up from the previous range of $6.475-$6.675 billion. Adjusted earnings are now projected in the range of $18.09-$18.72 per share, up from the earlier projected band of $17.65-$18.49 per share.
CACI now expects the fiscal 2023 adjusted net income in the range of $425-$440 million, instead of the previous projection in the band of $420-$440 million. However, it lowered the forecast for free cash flow to at least $280 million from the at least $320 million guided earlier. How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
Currently, CACI International has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CACI International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.