CACI International (CACI Quick QuoteCACI - Free Report) reported mixed fourth-quarter fiscal 2023 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues fell short of the same. However, the fourth-quarter top and bottom lines registered a year-over-year improvement.

The national security-related IT solutions and services provider reported non-GAAP earnings of $5.30 per share, beating the Zacks Consensus Estimate of $4.85. Moreover, the bottom line increased 16.7% from the year-ago quarter’s figure of $4.54 per share. This rise in earnings was primarily driven by higher revenues, increased operating income and a lower share count, partially offset by increased interest expenses.

In the fourth quarter of fiscal 2023, CACI reported revenues of $1.70 billion, marginally falling short of the Zacks Consensus Estimate of $1.72 billion. However, the top line increased 3.7% 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 fourth quarter, contract awards totaled $2.3 billion, with approximately 70% 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 $25.8 billion, up 11% on a year-over-year basis. As of Jun 30, 2023, the funded backlog increased by 16% to $3.7 billion. Our estimates for the total backlog and the funded backlog were pegged at $24.4 billion and $3.4 billion, respectively.

In terms of the customer mix, the Department of Defense contributed 74.2% to total revenues in the reported quarter. Federal Civilian Agencies made up 20.8%, while Commercial and other customers accounted for 5% of revenues. Our estimates for the Department of Defense, Federal Civilian Agencies, and Commercial and Other customers’ contributions toward total revenues were pegged at 71.1%, 23.6% and 5.3%, respectively.

Revenues generated as a Prime Contractor and a Subcontractor accounted for 88.4% and 11.6% of the total revenues, respectively. Our model estimates suggested contributions from the Prime Contractor and the Subcontractor of 89.4% and 10.6%, respectively.

In terms of contract type, cost-plus-fee-type contracts, fixed-price contracts, and time and material-type contracts contributed 58.8%, 29.5% and 11.7%, respectively, to total revenues. Our model estimates suggested contributions from cost-plus-fee-type contracts, fixed-price contracts, and time and material-type contracts of 58.4%, 29% and 12.5%, respectively.

Revenues generated as ‘Expertise’ and ‘Technology’ accounted for 47.2% and 52.8% of the total revenues, respectively. Our estimates for Expertise and Technology contributions toward total revenues were pegged at 45.9% and 54.1%, respectively.

The operating income for the quarter amounted to $148.8 million, up 24.2% year over year. The operating margin expanded by 140 basis points (bps) to 8.7%.

Adjusted EBITDA increased 18.2% year over year to $185.7 million. The adjusted EBITDA margin expanded by 130 bps to 10.9%.

Balance Sheet & Cash Flow

As of Jun 30, 2023, CACI had cash and cash equivalents of $115.8 million compared with the previous quarter’s $106.8 million. The total long-term (net of the current portion) debt was $1.65 billion, down from $1.77 billion as of Mar 31, 2023.

The company generated operating cash flow (excluding mini-automatic radar plotting aid or MARPA) of $124.8 million in the fourth quarter, declining by 18.1% from the year-ago quarter. Free cash flow was $101.9 million during the quarter under review. In fiscal 2023, CACI generated operating cash flow (excluding MARPA) and free cash flow of $345.8 million and $282.1 million, respectively.

Fiscal 2024 Guidance

For fiscal 2024, CACI now projects revenues between $7 billion and $7.2 billion. Adjusted earnings are projected in the range of $19.13-$20.22 per share.

CACI expects the fiscal 2024 adjusted net income in the range of $440-$465 million. It forecast to generate free cash flow of at least $400 million during the fiscal.

Zacks Rank & Key Picks

Currently, CACI carries a Zacks Rank #3 (Hold). Shares of CACI have rallied 18.6% year to date (YTD).

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