CACI International Inc.
) reported first-quarter fiscal 2014 (ended Sep 30, 2013)
earnings of $33.0 million or $1.33 per share, down from $35.7
million or $1.49 a share in the year-earlier quarter. The
year-over-year decline in earnings was primarily attributable to
the fall in top line. However, the reported earnings well
exceeded the Zacks Consensus Estimate of $1.25.
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On a non-GAAP basis, adjusted earnings in the reported quarter
stood at $1.80 per share versus $1.98 in the year-ago quarter.
Continued uncertainty related to budgetary constraints and
sequestration dragged the quarterly revenues down by 7.2% year
over year to $864.3 million. The revenues were also adversely
affected by a reduction of material purchases and subcontract
labor resulting from the drawdown in Southwest Asia. The
quarterly revenues missed the Zacks Consensus Estimate of $879
Contract funding orders aggregated $1.3 billion in the quarter,
bringing the tally for total backlog at quarter-end to $7.8
billion with funded backlog at $2.1 billion.
In terms of customer mix, the Department of Defense accounted for
about 71.5% of total revenue in the reported quarter. Federal
Civilian Agencies contributed about 22.7%, while Commercial and
other customers accounted for 5.8% of total revenue.
Operating income stood at $61.2 million in the reported quarter
versus $64.7 million in the year-ago quarter, a year-over-year
decrease of 5.5% primarily due to a $7 million decline on a
fixed-price contract. Earnings before interest, taxes,
depreciation and amortization (EBITDA) stood at $74.2 million
versus $78.1 million in the year-ago quarter.
CACI International received $1.8 billion worth of contract awards
in the quarter. During the reported quarter, CACI International
procured awards in all 10 markets with about one-third of them
being new businesses.
Balance Sheet and Cash Flows
The company ended the quarter with cash and cash equivalents of
$102.7 million. Long-term debt (net of current portion) totaled
Net cash provided by operating activities during the quarter
aggregated $27.3 million versus $71.3 million in the prior-year
Subsequent to the quarter-end, CACI International inked a
definitive agreement to acquire Six3 Systems, Inc. for $820
million in cash in one of the largest transactions of its kind in
its history. With approximately 1,600 employees and expected
revenues of $470 million in 2013, the acquisition expands CACI
International's addressable market by approximately $15 billion.
Furthermore, Six3 Systems adds distinctive cyberspace, C4ISR
(Command, Control, Communications, Computers, Intelligence,
Surveillance and Reconnaissance), and intelligence capabilities
to CACI International solutions and services and augments its
customer base. CACI International expects the acquisition to be
at least 5% and 10% accretive to GAAP and adjusted earnings per
share, respectively, for calendar year 2014.
The company reiterated its guidance for fiscal 2014. The outlook
is derived at by factoring the risks stemming from the
challenging macroeconomic environment and does not take into
account the Six3 Systems acquisition. Moving ahead, CACI
International expects to diligently focus on its operating plans
to reward its shareholders with attractive risk-adjusted returns.
For fiscal 2014, CACI International expects revenues to be in the
range of $3.5 billion to $3.7 billion with earnings of $142
million to $152 million or $5.70 to $6.10 per share. Operating
cash flow is expected to be approximately $225 million without
assuming any impact of future acquisitions.
CACI International intends to drive operational excellence by
intensively focusing on its organic and inorganic growth strategy
and strengthening its existing customer relationships while
building newer ones. In addition, the company anticipates to
significantly benefit from its cost-reduction program. CACI
International also remains focused on its strategy to grow in
larger markets, drive operational excellence, and leverage
mergers and acquisitions to further increase its market share and
create long-term value for its shareholders.
CACI International currently has a Zacks Rank #4 (Sell). Other
stocks that look promising and are worth considering in the
Edgewater Technology Inc.
Computer Sciences Corporation
), each carrying a Zacks Rank #2 (Buy).