CACI International (CACI - Free Report) has been awarded a four-year plus task order by the U.S. Army Fixed Wing Project Office to provide technical and training solutions to the latter’s special electronic mission aircraft flight operations worldwide.
The contract value is capped at $197 million, and requires the company to offer 24/7 surveillance and reconnaissance support to U.S. and NATO forces deployed abroad.
Notably, the award falls in the RS3 contract vehicle, which is a multiple award indefinite delivery, indefinite quantity (IDIQ) performance-based services contract, providing tailored solutions to a diverse group of organizations.
CACI Rides High on Contract Wins
CACI has been winning record level of awards, which reflects its disciplined business development actions, consistent operational excellence and high customer satisfaction. The company’s reliability with contracts makes it a preferred choice among contractors.
Notably, contracts in the last reported quarter were worth $3.74 billion, up a whopping 142.6% year over year, of which, approximately 61% came from new businesses.
Several notable contracts secured during the June quarter included a seven-year, $880 million task order to provide IT and engineering services to the U.S. Army; and a five-year, $645 million task order to provide IT services in support of U.S. European and African Commands.
CACI has a large pipeline of new projects and continues to win deals at regular intervals. Notably, as of Jun 30, 2019, its total backlog was $16.9 billion. These back-to-back contract wins are the key catalysts driving success perennially for the company.
CACI’s strategy of winning high-value contracts, delivering excellence to its customers and deploying capital for growth is expected to help it achieve newer heights.
Relationship With DoD Bodes Well
A leader in IT outsourcing for the U.S. federal government, CACI International has ample exposure to the rapidly growing DoD and Department of Homeland Security budgets. A strong defence procurement environment is a tailwind for the company.
In terms of customer mix, during the last reported quarter, the DoD accounted for about 69.1% of total revenues.
Prospects Bright Despite Competition
Competition from Science Applications (SAIC - Free Report) in the IT services space remains steady. It continues to win high-value contracts, and received contracts worth $812 million to support several U.S. government national security and intelligence activities in July this year.
In the IT services industry, CACI also competes with IBM (IBM - Free Report) and Accenture (ACN - Free Report) , which are considered among the top IT service providers in the world.
Nonetheless, we believe that the company is comfortably positioned in this space, given its favored relationship with the DoD. Moreover, cyber-attacks are creating increased awareness, leading to more demand for cyber solutions.
Per a study by Market Watch, the global IT Services market is expected to witness a CAGR of 2.6% in terms of revenues over the next five years. The global market is anticipated to reach $1.15 trillion by 2024, up from $1.01 trillion expected in 2019. This forecast bodes well for CACI, which is a key supplier in the global IT services market.
CACI currently carries a Zacks Rank of #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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