Technical service provider
CACI International Inc.
) reported relatively modest third quarter fiscal 2014 results
with a focused market-driven strategy and strong cash flow.
Adjusted earnings in the reported quarter stood at $1.78 per
share versus $2.08 in the year-ago quarter. Although the non-GAAP
earnings for third quarter fiscal 2014 decreased year over year,
it was in line with the company's expectations and comfortably
beat the Zacks Consensus Estimate of $1.23.
On a GAAP basis, third quarter fiscal 2014 earnings were $30.8
million or $1.19 per share, down from $38.4 million or $1.62 a
share in the year-earlier quarter. The year-over-year decline was
primarily attributable to a reduction in revenue and a full
quarter of amortization of intangibles associated with the
acquisition of Six3 Systems. Earnings per share were also
adversely affected by the dilutive effect of convertible notes
scheduled to mature on May 1, 2014.
Quarterly revenues were down 0.6% year over year to $900.4
million due to delays in planned awards, lower run rates on
professional services contracts, and reductions in
Afghanistan-related material purchases. Revenues for third
quarter fiscal 2014 marginally missed the Zacks Consensus
Estimate of $901 million.
Contract funding orders aggregated $794 million in the quarter
and were up 21.2% year over year. This brought the total backlog
tally to $7.3 billion as of Mar 31, 2014 with a funded backlog of
In terms of customer mix, the Department of Defense accounted for
about 72.9% of total revenues in the reported quarter. Federal
Civilian Agencies contributed about 21.0%, while Commercial and
other customers accounted for 6.1% of total revenues.
Operating income stood at $60.5 million in the reported quarter
versus $68.6 million in the year-ago quarter. The year-over-year
decrease in operating income was primarily due to amortization
expenses related to the Six3 Systems acquisition. Earnings before
interest, taxes, depreciation and amortization (EBITDA) decreased
to $78.7 million from $83.1 million in the year-ago quarter.
EBITDA margin for the quarter was 8.7% compared with 9.2% in the
CACI International received total contracts worth $700 million in
the quarter - up 26.1% year over year. The company received
awards in all 10 markets, one-third of which were in high-growth
markets. Approximately 27% of total awards were in new
During the reported quarter, CACI International received
indefinite delivery, indefinite quantity (IDIQ) contracts worth
$137 million. This included a $95 million five-year award for
operations and maintenance support services for the Business
Integration Office at the Department of Interior. The company
also received a three-year multiple-award contract worth $42
million to provide lifecycle sustainment, integration,
acquisition, and technical support for Naval Electronic
Surveillance Systems to the U.S. Navy's Space and Naval Warfare
Systems Center Pacific Security Systems Branch.
Balance Sheet and Cash Flow
The company ended the quarter with cash and cash equivalents of
$48.4 million. Long-term debt (net of current portion) totaled
Net cash provided by operations for the first nine months of
fiscal 2014 was $146.3 million compared with $148.0 million in
the year-ago period.
For fiscal 2014, CACI International reiterated its previous
guidance. Fiscal 2014 revenues are expected within $3,500 million
and $3,600 million. Net income is expected in the range of $130
million to $140 million. Earnings per share are expected within
$5.12 and $5.51.
Moving ahead, CACI International expects to diligently focus on
its operating plans to reward its shareholders with attractive
risk-adjusted returns. The company also remains on track to fully
integrate Six3 Systems with its operations.
CACI International intends to drive operational excellence by
intensively focusing on its organic and inorganic growth
strategies and strengthening its existing customer relationships
while building newer ones. CACI International is also 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
Other Stocks to Consider
CACI International currently has a Zacks Rank #4 (Sell).
Stocks that look promising and are worth considering in the
), each carrying a Zacks Rank #2 (Buy).
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