A month has gone by since the last earnings report for CACI International (CACI Quick QuoteCACI - Free Report) . Shares have added about 10% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is CACI International due for a pullback? 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 drivers.

CACI International Q2 Earnings Miss, Revenues Match

CACI International reported mixed second-quarter fiscal 2024 results, wherein earnings missed the Zacks Consensus Estimate while revenues matched the same.

The national security-related IT solutions and services provider reported non-GAAP earnings per share of $4.36, which missed the Zacks Consensus Estimate of $4.50. However, the bottom line improved 1.9% on a year-over-year basis as the benefits from higher operating income, lower taxes and share repurchases were offset by increased interest expenses.

In the second quarter of fiscal 2024, CACI International reported revenues of $1.83 billion, which came in line with the Zacks Consensus Estimate. The top line increased 11.2% from the prior-year quarter, primarily driven by organic growth. CACI's top line was boosted by the inclusion of revenues from acquired companies, including the U.K.-based digital transformation agency Cyber-Duck, which it took over in November 2023.

Quarterly Details

In the fiscal second quarter, contract awards totaled $2.2 billion, with approximately 55% for the new business. Revenues from contract awards excluded the ceiling value of multi-award, indefinite-delivery indefinite-quantity contracts.

The company ended the quarter with a backlog of $26.9 billion, up 2% on a year-over-year basis. As of Dec 31, 2023, the funded backlog increased 16% to $3.7 billion. Our estimates for the total backlog and the funded backlog were pegged at $27.5 billion and $4.2 billion, respectively.

In terms of the customer mix, the Department of Defense contributed 74% to total revenues in the reported quarter. Federal Civilian Agencies made up 21.3%, while Commercial and other customers accounted for 4.7% of revenues. Our estimates for the Department of Defense, Federal Civilian Agencies, and Commercial and Other customers’ contributions toward total revenues were pegged at 73%, 21.9% and 5.1%, respectively.

The Prime Contractor and Subcontractor accounted for 89.2% and 10.8% of total revenues, respectively. Our model estimates suggested contributions from the Prime Contractor and Subcontractor of 88.8% and 11.2%, respectively.

In terms of contract type, cost-plus-fee-type, fixed-price, and time and material-type contracts contributed 60.1%, 28.3% and 11.6%, respectively, to total revenues. Our model estimates suggested contributions from cost-plus-fee-type, fixed-price, and time and material-type contracts of 59.5%, 29.1% and 11.4%, respectively.

Expertise and Technology accounted for 46.3% and 53.7% of total revenues, respectively. Our estimates for Expertise and Technology contributions toward total revenues were pegged at 46.5% and 53.5%, respectively.

The operating income for the quarter amounted to $133.3 million, up 1.9% year over year. However, the operating margin contracted 66 basis points (bps) to 7.27%.

Adjusted EBITDA increased 1.5% year over year to $170.9 million. However, the adjusted EBITDA margin deteriorated 90 bps to 9.3%.

Balance Sheet & Cash Flow

As of Dec 31, 2023, CACI had cash and cash equivalents of $128.8 million compared with the previous quarter’s $125.5 million. The total long-term (net of the current portion) debt was $1.71 billion, which declined from $1.74 billion as of Sep 30, 2023.

The company generated operating cash flow (excluding mini-automatic radar plotting aid or MARPA) of $83.3 million in the fiscal second quarter, up 278.8% from the year-ago quarter. Free cash flow was $67.8 million during the quarter under review.

Updated Fiscal 2024 Guidance

CACI International has raised its guidance for fiscal 2024. The company now projects revenues between $7.3 billion and $7.5 billion, up from the earlier guidance range of $7.2-$7.4 billion. It now forecasts adjusted earnings per share between $19.91 and $20.58 compared with the previous expectations of $19.38-$20.48.

It now expects to generate a free cash flow of $420 million during fiscal 2024, up from the earlier anticipation of $410 million. CACI expects fiscal 2024 adjusted net income in the range of $450-$465 million, revised from $440-$465 million in the previous forecast.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

Currently, CACI International has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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.