CACI International (CACI - Free Report) has recently been awarded a five-year task order, under the SeaPort-e contract vehicle, to provide technological support to the U.S. Navy in assessing weapons and integrated combat systems.
The contract value is capped at $70 million, and requires the company to continue boosting the Naval Surface Warfare Center Corona Division with engineering and IT expertise, including combat systems acquisition readiness and performance assessment support.
Notably, CACI’s technology had improved the critical safety situation at the Navy’s warfare center by enhancing personnel protection during weapon testing. This was part of the Navy’s “Clear Decks Initiative” last year.
Contracts Keep Flowing
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.
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 wins are the key catalysts driving success perennially for the company.
Last month, the company was awarded a four-year plus task order, capped at $197 million, by the U.S. Army Fixed Wing Project Office to provide technical and training solutions to its special electronic mission aircraft flight operations worldwide.
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 has ample exposure to the rapidly growing DoD and Department of Homeland Security budgets. A strong defense 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 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.
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