CACI International (CACI) 31 Jan 192019 Q2 Earnings call transcript

Company Profile

Participants

Dan Leckburg	Senior Vice President of Investor Relations
Ken Asbury	President and Chief Executive Officer
John Mengucci	Chief Operating Officer
Thomas Mutryn	Chief Financial Officer
DeEtte Gray	President of U.S. Operations
Greg Bradford	President of CACI Limited U.K.
Krishna Sinha	Vertical Research Partners
Jon Raviv	Citigroup
Joe DeNardi	Stifel
Robert Spingarn	Credit Suisse
Cai Von Rumohr	Cowen and Company
Greg Konrad	Jefferies
Joseph Thompson	SunTrust
Josh Sullivan	Seaport Global
Edward Caso	Wells Fargo

Call transcript

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the CACI International Second Quarter Fiscal Year 2019 Earnings Conference Call. Today's call is being recorded. At this time, all lines are in a listen-only mode. the that questions time. announce be instructions will at given we opportunity and for will Later [Operator like conference to At turn instructions] this the over time, to we would Mr. International. President Relations Senior of Leckburg, Vice for Dan CACI Investor Please go ahead, sir.

Dan Leckburg

Thanks, I Senior Relations President Leckburg, am Vice for you good joining Phil, International evening. of and evening, and CACI I Dan everyone. for thank Investor us this

in written our there so forward-looking We our move These to are as statements the our filings. presentation will bottom reflect X.About to cause commentary, actual and slides, subject results release are and let's of call this to listed at statements evening's not and providing from statements do today described disclosures SEC as factors are Number oral facts law. that Company's address this be views earnings in differ the Slide under and Those historical current could important factors and constitute that materially of anticipated. such,

included be like Our also prepared incorporated of measures. GAAP. or in of measures would Safe I include Harbor statement presentation that this a call. will performance isolation not any These on this part for our financial of as should measures discussion and point transcript considered out be to in non-GAAP should exhibit as non-GAAP is substitute with accordance

open Executive this evening, discussion Asbury, Chief please. here our and CACI Officer of Now To let's International. X, to turn Ken President Ken? Slide is

Ken Asbury

you flexibility us acquisitions. I'd fiscal Well, two recent and XXXX to results you joining thank second our thanks, for us to Dan and year tonight. all discuss in our evening, good Thank your everyone. most joining for like quarter

this an fulsome call, coinciding all evening with rather to until for morning. waiting possible as And our discussion a the opportunity wanted tomorrow soon you we as questions, acquisitions than With earnings provide President and Chief of Mengucci, of Mutryn, Operations; and Operating tonight Officer; Gray, Bradford, President our Greg the me who us U.K. is U.S. Officer; joining Financial our DeEtte are from Tom CACI John Limited with with Chief

X turn quarter evening, please. acquisitions. Slide to two fiscal Let's take John will second related as revenue acquisitions, very to Earlier and our and turn We year released the income second XXXX. our to to Tom delivered which we well. through like comment for minute quarter this quarter, the a I'd then operating on in to walk our XXXX and exciting announced fiscal earnings highlights record

growth XX% of top new we while We time. revenue of at with On that, expanding the continue business contract of awards that that to worth billion $X.X generate same CACI. is organic margins won to

nature you to impact the know, open. the In national a and result saw now January, the of very minimal missions, shutdown As fully given the there down of and our We other was shut partial government second in defense, partially or concentration and business profit impacts a of January which revenue security outlook fully much our in no quarter. as funded. for were that was we essential have

income net excuse to going XXXX I are our are to operational for for which guidance raising reflecting comment turn recent incorporating two performance on and and and we am business our remaining – continuing we revenue strong our Lastly, now. acquisitions, me, fiscal core

acquisition high-end employees, which, invention, the Laboratories. the engineers, of back and combination company X, a proprietary with over Bell hold XX% clearances. And of security have manufacturing and yesterday, Slide and and of LGS sophisticated January lightweight, of of innovation scientists Innovations. power products to are a security is They factor, Mastodon for to much going given of solutions. basis. on products small our cyber almost and turn modular acquire contracted less a revenue designs SIGINT, mission their on January agreement buyers. of and operations form is original Let's X,XXX provides number On we their unique a and national signed to the consume LGS of supporting please. very a Their to sole-source rugged Government provide the Federal Mastodon warfare, and solutions, Friday, XX, of technology electronic Design. rapid Tuesday, design nature we closed On an mission flexibility a cutting-edge majority XX, legacy

as While combination powerful both Mastodon the the truly LGS, companies stand-alone, be are will and a of CACI, market. impressive in

future utilize Mastodon acquisition solutions requirements. greatly can capabilities and the context into EW, the to set strategy. cyber photonics intelligence, and Mastodon expanding manufacturing CXISR will highly products cyber. CACI's their in integrate and and of CACI laser and differentiated spectrum solutions will of and of produce of to the base. CACI be solutions and truly we a take frame We access both and LGS again, in Likewise, analysis Mastodon. customer to Combined, technologies provide will real-time LGS warfare, electronic signals signals while address capabilities to able relevant and products current Current communications, and products LGS their like our and our management, offerings exploitation, long-term moment to I'd

years, several to has capital been M&A priority our add for high-value, highly capabilities. deployment past the relevant Over

requirements. years challenges this Our the to companies ability a six they areas continuation of our five as specific acquisition strategy and by that growth, aligned broader ago of started market our about Slide LGS markets. difficult or we to opportunities and gaps Mastodon will required X, most and the of customer and each solve contribute to our margin fill emerging expansion in of SixX important customers' please. our with are

a for $XXX for a price combined We $XXX worth also net purchase of XX of a value on is Mastodon value times There transaction present asset of and the on expectations, tax forward asset. with tax the EBITDA $XXX about net about associated Based a million are LGS this million. of purchasing $XXX multiple represents combined basis. million million our

by an one-time net and first to in all-cash The LGS growth, utilizing March excluding facility. and customary We close margins expect is acquisition transaction approvals regulatory credit accretive the X, our existing is be to income XXXX. EBITDA year, the combined is to subject This costs. contributions top-line to expected transaction

Slide to drive to customers. transaction to Let's our value significant X, turn and capability please. is combined This going

Our software unified of market great be security offerings software-defined, hardware together our the a supply chain. to. area companies and customers our highly differentiated strengthens is within attention key the putting and will that are architecture open paying risk these deal of This a

that And customer the growth commitment importantly, access development unlock for say and I’ll in research values, resources will employees will and and and to customer We potential development, already combined shareholders. will LGS a missions. and training, addition, significant see Mastodon Our and combination have employees to professional share enhanced base. value the broader integrity our

excited John? accretive While to will dive a about transactions. bit expect months, we the be combination. turn the it the long-term this that, we of value into the call John, I'll are deeper next most With twelve over who over to

John Mengucci

Thanks, Ken, good and evening, everyone.

Let's Slide X, to go please.

these at of noted, and disruptive technologies, and in Ken company companies unique two are both growth products their unique relevant extremely high-margin opportune portfolio Mastodon an high-growth, solutions product provider a capability, is time a As exciting. are agile acquisitions phases. a array LGS, with established acquired manufacturing an of technology respective with

high-value The cyber LGS companies these areas greater long-term. in Together, will combination and flexibility and confident position increased products Mastodon CACI, mission shareholder warfare deliver will and of the and both will intelligence, solutions capability, are sophisticated and drive value of near forefront electronic customers. our functionality, our to We accelerate to and significant signals value operations. of the we

ever simple counter just slow is customers. about and faster traditional mission pulling us This afford and hardware-centric combination It's must downtime. value upgrades Let capability talking The threats. speed. slow, real-time than is our uncomfortably cumbersome. costly out really new me This agility, by deployed the are too creates acquisition to these procure for for tell precious be transactions and as new to to cycles platform capability looking Capability this is model and emerge What be multi-year of spend without and in as value execution. shine. with threats development customers where That need too cannot a today fact and They too near before. the they downtime of few flexibility, quickly customers resources budgeting to model are efforts. handcuffed requiring minutes platform is, is long deploy also

software-defined before. to Slide ever combined and push capability SIGINT value agile understand one X, manufacturing than see will new provides. and capabilities needs of quicker Our please. the each combination, expertise EW company our To customers to out the what

more high-end algorithms comprehensive has inventory frequency RF, factor LGS radio engineering. detection and capability customer can efficient, and more will Slide Combining proprietary This in process market continues can integration EW We with game-changing. presence operations products solutions CACI's capabilities, brings data these advanced and that signal smaller, devices. Mastodon platform our and and Specifically, and offer programs, cyber signals EW will of please. SIGINT processing, small be differentiate are expertise XX, SIGINT to sets more now simultaneously. form and what we expands access and offer. or target can advanced

increased is address will provide of in devices, companies product LGS a array currently products end smaller Today, from this and of that current SkyTracker missions the and of The XX, Counter-UAS signal factor small Attack Let the can products our device examples many Slide adds superior threats. within current capability Battlespace multiple with capabilities benefit capability. an ability the EW portable called collectively. programs sensors capacity, more unmanned of much adding With immediately me and offers to more addressed shrink family that greater we two specific result combination some not handheld CACI significantly while SIGINT, models. Module. perform please. Mastodon's and form

to enhance and Just joint each as own and future capabilities, both their provides offerings. ways companies product solutions on flexibly company provide grow

CACI one those create for of environments, expertise level communications fighters. encrypted handheld Combining two communications combining a Mastodon space with SIGINT radio customers available are capable adds two software for solutions. top-secret provides and and our contested into which includes features a features optimized Mastodon. is RF The with radio the in set asking basically devices that first multi-mission Today, a security for today. enhanced will device secured war

a independent integrated SIGINT, further just LGS. provide are few With provide intelligence for greater of thus solutions is total in and these addressable and and acquisitions offerings will EW future. our need terrestrial multi-domain offering aerial a systems, operations solutions. communications to which companies products known our single enhanced their combination additional the into into markets. solutions growth, mission eye relevant highly communications space high-value an our for similar of with in towards Integrating these the space and the many capabilities. layers SIGINT for reducing second cyber, effectiveness, The expand will joint customers CACI provides These examples layer market solutions. currently layered is in LGS the of

nation acquisition places the the national began over our to us increasing in to business more establish Department described of years threat global position products intelligence those the of provide actors, over investments revenues supporting that, and as a state needs. near-peer the last and and both Given environment emergence position, demands. and SixX those meet with three to which potential of of LGS I'll for of aligns and to and such community, envious XX% turn Defense EW with the to Tom. call security the our I solutions in well customers threat budget extremely With to most priorities, we pressing meet require the an SIGINT products the Mastodon's and solutions CACI, And discussions

Thomas Mutryn

good everyone. to Number XX. Thank you, and John, Please evening, turn Slide

$XXX a represent million. transactions total purchase the mentioned, of price Ken As

As period, the the of present value from to economic net over transaction, income effectively realize basis. our $XXX on to part a benefit price tax million. benefit purchase ability million year a expect deduct taxes portion reflects This the price lowering of a XX we to a purchase $XXX

X%. benefit XX%, EBITDA multiple times. Over $XX around significantly margin, value the million of the the transaction adjusted of CACI's expect next pre-tax acquisitions represents north of million. generate and will twelve just to these margin adjusted $XX EBITDA of This which acquisitions excluding above an is the an expected The months, This tax of revenue EBITDA the multiple in includes of we core one-time of million have $XXX ten net synergies. around cost

amortization Over expense. of additional next months, $XX and the interest $XX we million expense twelve of depreciation and expect million additional

These amortization We deal-driven include one-time months, growth will right recently $X.XX purchased already add under We the are high-quality properties facility the $X.XX expect expanded contracted non-cash, GAAP of under to twelve these at costs. facility substantial borrowed earnings credit hand. $X.XX combination share with also Mastodon LGS. finance borrow time for and in in over our all, All next to to the the excluding expense. to numbers around per we

of expect of pursue will $XXX transaction capacity lowers net allowing It million for remaining times multiple benefits. we It as us EBITDA at month debt be up facility into it our opportunities. we Pro to to lower In points accounts leverage twelve for post debt to beginning expected the the for receivables. our is LIBOR to move to quicker. agreement when sell and down pricing acquisitions We receivable pay grid calculated This calculated our plus additional March XXX to effectively to borrow increased adequate trailing provides forma entered closing basis credit X.X December, for – and purchase capacity as at closes. future cost. the our pricing allows at to facility an LGS us facility have has

realize one-time of as of flow receivables to equal at in the a the the increase receivables, quarter. amount cash will a the of operating turn XX. GAAP we that Please to note of Slide Let me end sold sale quarter third result

and over last the our We than provide I for last organic the million, billion revenue, by we X.X%, Please ago, organic payment our XX. on ended earnings like strong year, of tax Slide comparisons, twelve results trailing the collections closure X.X three last million generated at quarter. year's to the operating help Pretax within payment $XX net reconciling DSO quarter release consecutive in income what We business with to Before quarter the you income to would times. details flow To they the XX, debt and of make program $X.X I year eighth last controls. assuming of XX% over appropriate year reform. continued as million, as turn we of growth all been GAAP adjusted call quarter a well full was Ken, to was for which fluctuations, the was and our a last provided This would reform tax what in performance back growth, higher place table have cash turn presentation generated contract with higher higher to offices of second strong quarter. than days quarter. new acquired due at certain XX a to year. a very wins $XX days. in to the X.X% of growth month was timing contracts, income, of cost due XX% net please. Slide driven than Net EBITDA the increase was assumes on $XX quarter

during to million, our We no earlier. expect levels result, turn year AR collections the to of which least our more flow was $XXX as facility the fiscal year return cash of operating mentioned excluding there for to Please impact of and forecast the to Slide I a XX. at purchase normalized change

indicators forward Our strong. to continue be

come new from of As X% December, will of X% and now recompetes from revenue from end our the existing XX% business. of planned business,

was XX% quarter than than year in backlog a higher $XX was nearly ago. Fund year of $X.X the billion, end at ago. the billion, backlog nearly higher a Our XX%

pipeline Slide these end billion of nearly bids almost businesses. It $X.X of now Our the from stands of of Mastodon submit expect those and XX, of June of or now we $XX.X opportunities the LGS. the new bids billion at business increased between of from and new include last XX% yet quarter. to with contribution for those end for submitted another XX% numbers None with please. of

contribution CACI our revenue fiscal an acquisitions. approximate performance the increasing $XXX range narrowing reflect business million guidance in guidance, in the to two are year Turning and revenue from to we improved core our

increases XXXX, be income second increasing billion With $XX due and These to and net partially in back fiscal the results primarily one-time the the $X.XXX call revenue We approximately billion I'll fiscal contribution now net in $XXX by to million million. core of transaction costs. positive that, offset profitability the also of million $X.XXX Ken. income the anticipated of to tax-effective guidance, business between than acquisitions. $XXX our turn year We half expect second between for over stronger CACI XXXX fiscal will of XXXX expectations are and two quarter of

Ken Asbury

you, appreciate comments and John. your this thank I Well, Tom, evening.

to turn XX, Slide all Let's please.

by we year complex the are are for I second LGS quarter. pursue solutions products remainder The the for acquisitions pursuing. most to revenue continuation of commentary and growth, as Mastodon we our are side high-single-digit both of twelve and during organic excited that our are and our These awards valuable we combination capabilities our customers' profitability company, single-digit our CACI, the and are of and months about again areas. the overall performance think the over an rest XXXX are critical pleased high-growth as strategy expect our And government's overall accretive adding and prospects basis be our to of growth strong are – the you very can marketplace with They a of needs. delivered in well on the companies, differentiated LGS truly of forward fiscal the in contract growth, invest our thereafter. with robust will and that that business financial in adjusted strong quarter and years both the tell We investment our performance we and acquisitions Mastodon. next line most for

team Before have with forward great make the of their customers' unwavering up I is Mastodon to combination I of powerful we welcome will their companies we and together. the a three on welcoming about I'd our commitment their teams' deal great anticipation to expertise know going and missions. X.We or I look accomplishments to of cutting-edge The and both innovation, be CACI, to open look forward questions, LGS will call like to March for for employees to the the respect

So welcome.

execute CACI to quarter. strategy the of like to With expansion. Lastly, and growth deliver for be Phil, margin call to our impressed for open to employees that, questions. another great the deliver thank for I I'd let's and quality your continue by up performance customers ability you. Thank our

Operator

go Partners. first Krishna comes The with Research question Please ahead. from instructions] Vertical [Operator Sinha

Krishna Sinha

of product Hi, was thanks, of you would guys. can us the solutions SixX, your consider Ken, how and how acquisitions? remarks your you to growth bit. this alluded would of is Like, before include years pro be about what talk traditional solutions, revenue new little revenue But your last I kind of your much your IT trajectory forma and now of these will from work? to what five the services the over what once now, solutions in to much what's a business compared consider you product-oriented you or maybe mix,

Ken Asbury

this for Ken. Krishna, the Yes, question. is Thanks

I we result six if remain we acquisitions that So, go some professional years, and us. of company a as came back we largely things – services-oriented a that had were with did still

that others need product SystemWare We six to several went When were been – another that Control marketplace. the Act we couple were and have we ago, did, find that Budget of years decided acquisition in lines more period always XXXX, to place they have be the we really like which we part enduring a services-based. about of through largely a

some little this started XXXX, basis fine very and service of Control they or services little solutions was and business. business, low a associated then of would the a mix that bit products double-digit through saw Over time, mix with attended has professional the we while where to then and a overall were that maybe services bit services. that continued grow of some tell in So seeing SixX business was during you some high-end beginning of solution - and they to did we high-single companies Budget of of looking that for companies. of that Act the I a two core solutions – XXXX a that period at degradation product with

were So rate higher that added not that mentioned, business. has to that add smaller grow stayed business steady we've that to have because we things a continued normal growing, and at even other than they and they which the some

the with price, – but we is, engineering million cost look of or largely and we plus sometimes that on to fixed hundred added just mix As XX a because on do want what dollars measure versus you basis. that cost-plus worth forth it was back couple naval on this we we o of can't

at overall closer get terms things this we'll and So, and that if solutions can to of products. start going would call in XX-XX that be look we to forward, probably a services XX% we mix

We the two haven't of quite those completely. differentiated

I for we are going we our unique are is, intellectual property we characteristic now. get or the sets because So to of people of a we using both together have expect should to skill to either that lumped as as fully higher keep them would integrate return bring those sets. we a to it, of and But how better drive value LGS, and say forward. particular And customer in picture going – Mastodon we'll

Krishna Sinha

there, companies then that mean and follow-up capabilities these defense the a sounds we portion in Okay just substantially would the of I side I line it higher than more are consider mean like are what the electronics the they a margins are almost solutions with like on And prime. double. bringing of core CACI,

that of So set what's companies business, to, the Mastodon you an we should that or look integrator somebody software should and looking kind kind comparable the part of melding business? that's Is at the of Harris? at together now the – Or be more what's portion set and companies as that of be this like comparing LGS comparable at hardware the to a of piece. least this of really we the

John Mengucci

can is is mentioned, within thanks. solutions offerings will share our differentiate all we there products those John. products, of the believe some what some electronics A&D This what companies. and of larger parts you the But of not different certain Krishna, the as I and I companies domains. out am

up products those, actually solutions, we our of from solutions. because terminology not mentioned, Ken in both are As breaking are

software-definable disrupting products and marketplace at We and looking been can capability add really functionality hardware solutions, we are has with quickly. what always full-scale where a

carrying which function. a devices, the at every is very fighter's multiple device business much device missions a a make not and the at margin software with is sold, with per looking on hardware take download business model. simple will our hands. are model war of pricing in Again, lessen it on very to multi-use but different device a burden We looking putting They can go-forward

training use easier to With taken less and in the Mastodon devices and Intel to requirements, and them domain. frankly, allows make high-level of create the this reduced IP utilize devices, expertise signals LGS same us additional in

model isn't for assembly So it's in a our done It's trying companies very are is you the look because we smart at take mentioned to the the compare to what devices tough solutions product simple constructed the space at manufacturing. – smaller-scale us business going more side. some to really mission of the do and in large-scale test what of software are, where to simply

device companies we market. CACI So, predominantly together and to was hardware about disruptive which what a with these actually bringing a force we've two very think within talked actually provides differentiated

Krishna Sinha

in jump queue. the back I'll

Operator

from question Please with Jon Citi. The comes ahead. next Raviv go

Jon Raviv

am Greg. Greg, question to if good this for I time. especially Hey, evening, everyone, a I sorry, you have don't

Greg Bradford

Jon. Thanks,

Jon Raviv

That though. happens. are well hope I you

in from on you currently manufacturing this a have mean, current how does potentially your anything know, you how manufacturing that’s kind of And today, manufacturing I Thanks. this facility. products of you don't dovetailing sounds – right even idea, – perspective? Sort many about I that create word, the capacity insource, the could brings? much acquisition is like And adding are Do point you of like business? a Krishna's it that that

Ken Asbury

for start picked on things card-level manufacturing of Ken. is that a work it. But I'll we John - from A probably some been lot scale SixX to this add and a John, the want quite of has manufacturing. reasonable sometimes will Yes, sort up a on we've to time.

than a with are with manufacturing design. of that. We a of fitting genius that really other The of Mastodon is – capabilities certain not that something we're people of an is assembled are lot They in A that facility, going wonderful couple you out around wonderful whole talking they and to at cloth be the form about a contract will, the lot are What assembly original of is company. designing. if for done have at things we example, factors. into the in Mastodon, not creating

We made And the have supported by be and us. then tested stuff will that team. it'll assembled, then Mastodon for

So this – is straying not not we not are into – it's brand-new territory.

we it counter-UAS. coming would this already company, us do coming it have across to and with of kind our, of with capability call more terms I either software signals that of our up is allowing to are with actually a are customer change give to into always solutions They collection software, a what up electronic begin bring, the In order we warfare really now up strengthening can that intelligence. that instance, software your firmware a They're coming to in in to ship upgrade don't way your for you out have to signals shore system. factories

upgrade heading of we are iOS believe with your these it where kinds think So, technologies. we is of as

John Mengucci

here. are is is, what a The that is to the if add I growing digital think would believe space factory software about of we from what spend, we sort John, Hey, we is of unionized model pure kind look going of so cost processor signal also at a CapEx we which engineers we when versus a grow this talk this large-scale to way in products have, is, number don't a manufacturing about materially facility.

Washington Mastodon post and to Colorado area, the the Northern pick going of we although addition some up of to both digital going and York. D.C., are we're and engineers up New in signal Virginia is news with good Jersey LGS, processor and in hundreds So, are New the pick Rochester,

over this and years, DIPFB model. talented double that the highly more mention we last transforms heard the Ds and few beachfronts Ken create engineers As of you've I and these software really

So "manufacturing" not in the software hardware. bending of in the actual piece the is

Jon Raviv

Is are a for to and the you multi-year Thank that margin as targets sales between number of which always once margin Great. going idea, to put the then, right base expansion? certain laid up, and to done, you've hit a business. to deals use also market a out Ken, outperforming continue number off certain And those are the up you. entire follow these the

Thomas Mutryn

get guidance, that revenue XXXX, operate about but acquisitions, into made higher of function kind to those about These will we kind will after we of of to give the expand and no do plan two a we step if expansion. us we But grow provide and terms we continue this. basis, that, mistake basis. deploying still margin expansion want make and think they As beyond in to it - we function step

Operator

from Joe comes DeNardi Stifel. The next question with go Please ahead.

Joe DeNardi

everybody. evening, good Hey,

Wondering used us of get is you I if it businesses you thought next comfortable how just process, during whether years? three and of due what sort about for share diligence about talk could the five you Tom. Thank that could valuation, Just sustainability? process growth you these longer-term valuation the you. or if with to think on question assumptions this with the to margin sales over be kind

Thomas Mutryn

Yes, well, good.

So, we look at rationale first when look at we a in with market and strategic foremost, focus. acquisitions, strategy our our fit consistent

good forecast three for pipeline a two, provides. extensive what that years of And once particular we one, for historical fidelity this those the the as economics important the Typically, hit both us that that, we look buy. And screen, company performance, of for the financial as have of is is next well right the the is very reviews is then there part So to reviews company next step as like. amount in forecasts.

I the three, apply in and present capital a expertise cases, internal past or these pay undertake growth we customers hand present both return. the transactions, growth sufficient particular, five, that. than the our return We have and for orders value to that LGS, demand future Based on. performance, and of say independent we in the to the our hopefully, own the prospects excess we rates kind and in are will many of basis, actually of return and judgment both pay well funded has from internal our best will these that, exceeds backlog use our of the it products. weighted value we will is average on to excess which various cost willing that understand can support we kind less In and in have us models transactions those we comfortably we in something positive to on that, as forecast profit maximum think years based capital we of to rates a after can, a two, of and so analysis, generate for what internal are one, revenue four, for based that had on markets

Ken Asbury

this Joe, is Ken. And

back-office you that amount consider I done happens modest reducing with think synergies organizations to for of that another the we've with when put really this extent are you associated is, of some together. kind duplication of thing a

in worked anything of We believe pursuing we've an -- have also might in think due evaluating we because related had potential value kind spent the ongoing revenue we we've terms we at for jointly believe with to to some have that. offset relationship because pretty good taking of modeled this. prime we firmly We which and diligence, very of look with time any But missed sub-teaming expect something don't over were we risk the of with a years not a synergies that period did of We've in of opportunities the LGS. them. that instance, strengthens I that also

Joe DeNardi

margins I see hard grow as Ken with thanks you benefit to answer a want with it's the you you guess, more about, and perhaps. I'll Can process. businesses of from quickly margin thank top-line Yes, quantify that some guess, businesses for you what these lower assume were. businesses color I argue as on your as from that just could assumptions you of the Tom, don't whether talk a that your high standpoint? to for

bit? So, little just dynamic a that about could you talk

Thomas Mutryn

Yes.

So off. I'll start

than question we terms are, these companies have growth, customers huge both in that demand, for I to companies, for implied demand that are top-line in companies expect the and the these sure want. CACI of and these high-margin that higher base grow base greater high-margin solutions to both increasing kind neither – kind CACI. and of grow that's you than companies it's And companies types think if So, products is margins of a am not harder but of the I there are case.These the

expand of have core CACI. to revenue continue margins greater them I expect So strong both than kind to and

John Mengucci

the allow sold that of customers a more as solution such products we play knowledge of LGS goods to drive as that manufacturing and also SkyTracker lower will into tried into to sell our prepared potentially capabilities and would our I would some and remarks, help product Joe, will Mastodon us some cost that at level, explain also and which in both the as add, margins of of well.

Operator

ahead. with comes from Suisse. question Spingarn go Credit Robert Please next The

Robert Spingarn

guys. well things two to couple a as on I on Hi, here. of your deals wanted ask these. as Congrats

sizes Obviously, other, First, contributions. three this has sense many if the the purchase than or relative could get employees got we company some more one times price. of but

opportune at And you're Maybe products? Corps So What these make companies you, are Army to the toward you I two primarily the these oriented is budget acquiring John. that then, reconcile very point, that trends that. time. behind and for are to mentioned Marine type more that this a and wanted these products

John Mengucci

Okay.

start me Let with first. the questions last

customer – budget Rob, been two we yes, has them the the at capabilities at of set different type there. and foundations to has put many are all groups. It Tusk, going on we community in Mastodon. So DoD Their side the they that CACI sort Labs have well-established LGS, way sells that at the our customers. Bell same back out products I'll of today the are at across company. trend, look look more look and If like we look across of to that solutions If and more that Intel core

of what Sort gave our you there, was codename Rob.

budget… so, And

Robert Spingarn

That's good know. to

John Mengucci

Yes, great.

Ships, bring Destroyers, Marine today. or Army, the form customers programs the looking sits Navy Navy of creating small-scale Corps, and radios. are Intel and clearly where Navy, electromagnetic any additional their of trends to warfare this that signal DoD and budget into Surface factor spectrum programs are of all are budget Intel those And products large-scale for intelligence So single Combat the where power electronic there actual

neglected we sorry. I'm all where a most in been – an Army, the and see the quite growing. We see that market of area is been the decades Intel for communities spending has going areas. So, of U.S. money within this these forces has This We see lot DoD all

can many there actors. electromagnetic talk talk where about out spectrum as You too lower-level the well can We conflicts others, and don't We read very nation-state is global to the about important. Chinese as have Russians.

So Counter-UAS, capability budget Intel, share signals us a have way dollars. to that we of get faster, should software-defined grab we budgets those larger out Cyber, are there growing and consistently there allow a which to believe

Ken Asbury

you then to how counterinsurgency, this in missions of multi-mission air, up is simpler going all future a capable We've you time. your this believe be. an do – sensor silos which to a picture. integrated buying, at they this the Think Force, a Navy, and to need a of it's they cyber, getting counterterrorism if We're all every what the that as – threat, integrated the into all things going do at services – We land, decide, How they just you of a will, complex magic it's at a much from improve be the as everything battle whether there that's point that space they environment have lot their putting Air be domain. Rob, it's a of take To what's and have do and your about, and in buying that is to more for devices. courses use Because to service friend, less is software are do going you that ways. hardware if the it those look very long analyze become one with behind about you tip a action of to the of are of Ken. environment, where in going or are to determine from that priorities in chunk, talking be almost and And you your the to that on in deal bring it's the as that is software sea, we Army, how do looking take speed give friend fought wristwatch. where they the been finding can see

have a on is we again a you above, either power on or that potentially policy had If that on to to land, today. national different in security the based nation a going of need we integrate all air to completely lethality go these than large you are having a and then capabilities all conflict manner

of are to So in portfolio. the kinds having of good all of and joint of companies kinds to time a in these integration, notion is really driving our companies have – this we think be these I

Robert Spingarn

the kind growth, the last way X.X%, Tom, of and was type as just organic of And it think, several been Okay. quarter X% for the I questions for that the it's quarters. low in

some think that growth, We of neighborhood. that speaking and mid-single-digit in the are organic direction? up seeing again, you peers I am into inflect When more you about might do

Thomas Mutryn

Yes, thank you.

all XXXX. and approximately grow to at X% So into along X% the and as the we kind we at committed market process X.X% our greater XXXX plan looking FY of we grow market we very, said mid-to-early addressable the are get to addressable of to stage that than we expect

market twelve that the realize committed in in the both it's process still point would those early when I that have I at and will at that to we've So time, us to we levels to. look bids on submitted, potential Again, review, we've the expect out growth trailing support point awards bids planning of of of. of basis, kind do a that kind spoke as been as robust what a a of I month set book-to-bill receiving, well X.X those times very under kind opportunities,

Operator

Company. from comes and Cowen question next The Rumohr Cai with Von

Cai Von Rumohr

exciting Yes, thank and guys. much very acquisitions you

Ken Asbury

Cai. you, Thank

Cai Von Rumohr

us customers? of revenues of some do of can both they you these And with? compete what who and specifics the give are Intel companies So, of DoD with percent

John Mengucci

going and group predominant are of sort mix of me off business. start your firm fixed some price, your I let to Cai, with special If at the purpose Yes, customers operations predominantly special Tusk, look of teams. be

The of Our more who reach devices. a price, time and of imagine work where community green just DoD, long-standing multi-use unique units that they and is hit to LGS, you mix one, into are against getting the they special then into strategy for across over business future are predominantly with groups growth very first find need because Intel radio signals two, defend to is product would that firm customer, as focused. these growth of army that some those trajectory relationships. they the every more about fixed really of

Some of their But cost of XX% deep work, which long. the sole-sourced knowledge domains their serve. is plus, much it's of three cost, business them of two on About decades more based they and Cai. that is

will is higher-margin continue talk lower-level the business, material time business the cost firm of even demand about engagements. their fixed at and price to some of we type plus, So, of rest customers. mix than a a The CPF in past when work fee of cost, that higher

services, like to service Very minimal other we managed and business revenue. professional is talk way our services work. about The solutions professional

Some of deliver. field it out products they in that supporting the

of So in future, all companies remaining considered for and the today about revenue solutions work. will, all just the both be

Cai Von Rumohr

even is you you it, of that like are guys Terrific. view What question so farther business head-to-head acquisitions? guys really Thank win and second do are two you've then, product at these business is cultural the And than like, LGS. the you. guys And fit? new who go And compete before? these kind the this – to do of you cultural guys these question, because done a a with think the So, with fit, into I guys – first who mean, as what with? part couple asked what step you have a I that mentioned you do looks worked

John Mengucci

me cultural Yes, first. on touch the let fit so

many leadership the right the companies, with are. is The team customers. led innovative in a other culture. is easier going tell way beyond a a into strategy their go companies more go-to decades a then to the is and innovative I going looking. that serving We M&A much much Tusk at very team in the company by a serve think have I Tom look that look earlier, for They devices over are that our companies a customers, the mentioned they saw they LGS, what can that to stuff. leading-edge view, unique products. and believe mainstream in solutions of future we companies, fit." that software-defined companies for the company path buy management "cultural We working a you fact we and our customers really capabilities, wireless. had has and creative product both from are at being They agile years and

of similar solutions, years problems. product culture engineering this, something Software solutions – into set that into solving A to long When brought side, we most some history us nation's step long next excellence. to Very path. challenging where the of mentioned the it's today. get the you see that's the going we SixX us may have this further this the actually beyond as

and I a integration, created to the five more for SkyTracker. commercial-like products. complementary our in DoD development LGS to programs that for and put signals think solutions our some SixX be their complementary be CACI's into path platform these highly both of years, actually domain are last the the earlier, like in on higher-end heritage intelligence lot perfect and that honestly programs I SixX and very believe In to area we've community. SixX mean, the Ken just of mentioned solutions started the those and that up more taken differentiated in solutions Mastodon We

So, the pound-for-pound, of we we see began the culture both extending in what solutions companies space. already

more price those solutions more firm-fixed FFP be business. going are are to and Some some products of to be going solutions

Ken Asbury

will will see of have other would device Harris very some from effectively low – We've business. that probably to very larger going the to smaller, the are side or we we high-single, manufacturers five similar in high-tech, The side, some Thales last very, divisions some of and see at we competitive for some the pretty LGS of been companies to of that of up on Ken, our is had go and focused businesses. years. the kinds against. SixX very this our six competitions using Cai, business But that grow able the the – and business smaller to double-digit is we

have little more a now more We expect maybe even because bit bulk. and bit that little we

do we few can laboratories our We where have a more own work in.

a geographic footprint. a both larger customer have and We

business. our that So of and excited joining about I am prospect Mastodon LGS

Operator

question Jefferies. Please The next comes Kahyaoglu ahead. go Sheila with from

Greg Konrad

Sheila. in margin on Greg Was how actually some quarter of quarter after just QX. in It's about from think going apologize wanted But anything And the in the not time to should asking we I deal. forward evening. that the a forward? having unusual for pull margins there perspective? Good up for ahead trended about

Thomas Mutryn

Yes, there nothing is unusual.

I was of straightforward. it think pretty kind

a was nice of it quarter. margin kind So

we the believe, for guidance, kind points so core are basis kind one-time year, of effects sticking full margin and I XXXX. was the the of of XX percent-ish. We think to EBITDA some nine CACI above had XXXX, for original approximately I to that. kind we business, XX for adjusted

margins getting last levels. those quarters be should were quarters. of nice we particular couple The So within margin

Greg Konrad

then, you. And Thank one just follow-up.

revenue is Is quickly can include talk at about that deals, the looking the bit of but you don't You maybe effect some when businesses. mentioned sales this talked sales cycle? synergies little that a about these You something the the synergies cycle longer? you across can take fairly or

Ken Asbury

I going may or going group this at are much variety a been last jobs, discriminators probably in Aberdeen. Yes, there guys looked very is is and now is other, complex some couldn't on working we competitive am and being which quarter. Obviously, little pursuing, those reasons. things to there probably probably name working too larger that then And cycle that technology won for is get too much, have Greg, and begun going and beyond sort I now of of just is side we've working or know to one large are what folks on. at entire that thrust we scientists the our vary. mean, be as a warfare sales them things electronic come deals SixX deals to maybe people and our in – the have The engineers we're that's of BITS out But each see not of – Army the to there already I and wouldn't – whole has Ken. into that working bringing successful our deals in going some those traditional after between collaboratively I our brilliant of of

taking on sense look them I honest community in where we've better. But akin to like going not investment putting financially. reducing us look I’ve don't appraisal can this deal for for all And of this we forward we But screens a that could the and revenue deal doesn't to we the just that want forward-looking a a revenue work tell that little synergies in done make tell So, them, because having a a synergies, or or not have whether purpose. at is make include an beginning difference one – financials already together in make you risk. that’s – together, do to to worked they they mentioned are or any our to

Operator

Sommer The next ahead. Please Tobey with question comes SunTrust. from go

Joseph Thompson

seeing shutdown an increase has tonight. pool is you Thank skilled for to this to the with in labor the Hi, the laborers My shutdown. clearance push related Tobey in is you on Thompson looking my for D.C. taking sector? question private to Joseph first Are line question. and the How the area? the security affected

Ken Asbury

been at month anything and that I that. know we Joseph, a like Yes, we've it to don't observe going are

a of case, And folks let's In were is X was all again, week, than really less which that I the maybe go any even – about about. or of we through I it use to industry we've impact, revenue through that think frankly, good haven't was an been before, on the week being but again may were go into always dependable drove government Budget talent something there some job XXX on folks there's this, off of division it because I that and like then sudden, on sure a then that parts our have been a million cycle us. lot from a government to into you that, as something to Control depending a and less concern. a When shutdown. is hypothetical. heard the of Act, other million industry, am you X.X or a coming it these was like talking it a

again there. a of I it back was quite came we was on kind in as lot there do de resurgence believe we as were budgets and in spending the ascendancy national had the a minimis. So, security of and interest

happens talk If the again could I month then we sometime going lasts of a make know that about have big is one difference. that effect? long it So maybe an it and it to future. ought to at don't a time, in

Joseph Thompson

And you. to Okay. mentioned follow-up a quick Thank just then, you something earlier.

regions. – employees mentioned that excuse just had to further LGS those employees expand other and you in plans locating you other guys for regions both me, specific companies? expand Do in You or have are where Mastodon

Ken Asbury

Well, going to in love had not footprint idea, there to honest. that. they disturb a this that we and actually case, are already are We that be

to the we not or fishing the country and to other pond digital So like also of always Folks signal processing in engineers. parts trade are to here engineers Delmarva region systems there in in universities And here. are the in particular live same always a another love ones set people we us of from that, like the really, go that than that foundation rather that really are living different areas. gives smart because recruit

us our taking the fantastic way. in where see one one, we the we spoken than there where it a of that do moving we in facilities, and less Oklahoma want diversify Central people about Colorado locations comes we to and We last future. base maybe and the labor Center technical in took the a pockets. is where Shared over very some love there believe things our conference As to classified resources we group want some there. we've I can thinking of what and of doing to just software large about about with of City that that CACI now in live We from months, calls agile hired thinking are mine United helped into couple that States our always about, two to to are Services as to

servers to in our us we We or any be our environment. if to don't allows that capability and living the our to fact network some We stuff, need that anywhere. including have cloud close now of development the are for be of

for sense invest geography is to to book strategy in of we've of a make there got of us. just to and us – for So, enough it. got sort to new it business It for have a

John Mengucci

to would us infuse talent. the space access CACI program in acres LGS, add, actually which even Ph.D., New Joe, the connection be And a and of and that's an give with larger there able I company Jersey, into two university to higher scientists will relations level to we got to land also engineering ever-growing is folks of

Operator

from next The with Seaport question comes Sullivan Please ahead. Josh Global. go

Josh Sullivan

Good little origin how a Can Just acquiring? and background they here. tax the deals give us on of created. evening you the assets are you just congratulations understand trying were on the to

Thomas Mutryn

Yes.

So, we not Josh, are tax asset. a acquiring

tax So for is that The example. creating acquisition loss carry-forwards, tax asset. have companies these not did

That when So, a they is straight-line acquire LLCs years. of depreciation over the corporations purposes. over kind portion law of companies, or purchase S to of federal tax federal allows XX certain price the depreciate time for kind tax

to changes, savings which present for depreciation, additional and million. is assuming material of laws tax we do certainty, tax approximately tax realize of that degree high $XXX years not value the into have with planning are so, And turns XX

us of provisions take structure the advantage of tax those the to allow the code. So, transactions of

Josh Sullivan

leverage? advantage the will looking leverage, then do it. M&A to think? be targets strategy of bring IP going Do And at forward, of you this you you got any of think taking the do you Okay, headroom and manufacturing just have focus And want the do think forward, more some down owning to still going commercial then, model the you deals? do that

Ken Asbury

Ken. is this Josh, Yes,

something at I X.X, I we'll about, what, times, are think X.X think like levered with we this be one, that. when done

to That is deployment M&A dry our continue. powder going have bit little forward. priority and going that'll we capital of a So first is for of change. not the

active very the are in space. We

to here, the from to answer it cycle not to was because mission. there. being that we've and I onto But been company cut we a the If days that towards wanted business other They the the what moving from that five we and where where reason by effect major mission-oriented, build at in want this, itself. had we Control if we in. budget came As the was or on a are in more we past that they M&A Budget going mission have years maintenance. fill markets short been nobody been is really because business and But be add eight saw logistics. cut Act. gaps I capabilities I business with mean, be to enacted a strategically, the it presents are the cut more the we have sole been away evolve and yes, a the six before I since have They John changes a get always has to place over would training. doing that's the impacted they look opportunity cuts They cut going to

So moving spaces space, has are the we gets moving where that more strategy. into with their realized into make proposition been sitting more value sure mission side-by-side to the customer

of So, business is that where a elements other there resident. are our

there by we like if way, an is this the opportunity, space. So

more What are capacity. business, business, does, near cyber capability it our and... nowhere by our space intelligence in We our us gives solutions this

John Mengucci

Our communications.

Ken Asbury

communications, of Our whole notion and the CXISR. sorry,

up. something in itself it really pick thing. couldn't that systems good - I but if is And a and presents business mumbling was John Sorry,

that for been big us it's business over years. We the and as a see a also business good

spent to one. the this $X of slightly So, of we features tax be close or less acquisitive. we've Obviously, will because billion

companies the bought are here, that but We incredibly will have eye two we happy up. we our with

Operator

The next question comes from Edward Caso with go Fargo. Wells ahead. Please

Edward Caso

month annual falls implicit your Tables bit much it if the on Tom, gave XX? Hi, parse XX you I that forward much congrats But of on thanks how D&A of could that is how the in guidance that view, here, on deal. the twelve interest little and of and XX. instead disclosure for a Table

Thomas Mutryn

Yes.

into just let up XX. to pull me So, Table

know to. I think I which one referring you're

Edward Caso

know. Yes, the it's want just with guide. to I annual

year? it figure trying falls was a this offered twelve forward to You how on basis. I much out month

Thomas Mutryn

Yes.

linearly it be would So just relatively pro-rated.

say approximately would one for I FY So transaction, into will fourth-twelfths XXXX. fall

Edward Caso

month a there Is that's all they Because by about off are right. in why. Okay. the timing, on – closing

Thomas Mutryn

Yes.

is enough. four close probably So

X.X than times. the it company maybe like would smaller One is So other. be

$XXX $XXX million $XXX Mastodon LGS. or million closed million or we So for

preponderance So, intangible interest that's the of and the amortization.

I should be is sufficient. four-twelfths So think,

Edward Caso

payment you are think meaningfully didn't nice So for of Does the a to of am on bit the didn't offering you higher flow some last number. guidance. businesses the – is just is increase OCF that you But you cash fudge – do higher-margin or bringing curious going the change here, EBITDAs. why I thing are you sort partial longer a shutdown? operating that

Thomas Mutryn

having one-time employment-related Yes, fees, margin, cost The kind deal. transaction we of these the sure. enterprises, did the with various kind fees, and two the attorney's of is, positive costs net-net, do on material our associated What have of pieces not banking operating and besides we increase top so contribution the $X we our that would enough the so increased suggest that but cash bottom-end range think we million and to the considering was flow all I of guidance. moving

Edward Caso

you. Thank Great.

Operator

Citi. go Jon follow-up [Operator ahead. with from instructions] The next question a Raviv is Please

Jon Raviv

Hey guys. going for Thanks late tonight.

Ken Asbury

Jon. bet, You

Jon Raviv

at some how just you competitive, Ken deal, well simultaneous, something can time or are acquisitions that two and sure precedent you for? integration Thank or you. proprietary of some, from offer some that these to offer – some companies last have make you two the on John, just just same the just had or can the the near in anyone, background time then experience you also prepared had is sizable and

Ken Asbury

question Jon, seems picking like are you second on us. Yes, your now

on we can't recall when have So, did I we deals that, just once. at these. was two the happened It way so been that working

two close one, I on think years. for to

And So, Neither We an in both think, are at a at them. it close started competitive. option with us a great LGS examination that panel of for and I or they offer of a think your for appreciation [Indiscernible] businesses, an so, very, of that the about Jon, detail. we've also or deal we any in for going for are months, was remind eighteen being good deep, them discussion CACI. strategically I months I that to great took sense very a of nine question. cases able were rich time. the made to the your a have of each with a I be deal associated I fit of Kevin both these ago Suffolk me been think them years And interest. looking how first Mastodon, to Kelly But on two we've and served and of lost three good – individuals, afforded companies deep have how and – issues

Jon Raviv

them. you No, you. of both Thank hit no,

Ken Asbury

Okay, very good.

Operator

questioners conference the to Okay. I this any to Seeing queue, back Ken Asbury remarks. over in turn concludes closing no question-and-answer our like would the session. further for

Ken Asbury

like to Tom many Dan and Well, after thank for given know We well. the hour. day and the as We logged Leckburg and of participation you questions. who that will to be your Mutryn you, would are thank on available everybody in thanks Phil, call. help throughout webcast getting follow-up call for today for that all witching it this the immediately is tomorrow have the their

our interest We Thank to got to all many shown us thank for your will tonight, of all. we CACI that this sure you. concludes tonight make as that each message appropriately we have in out you call. flexibly the you as of and but we really appreciate This do you to can

you thank So that. for

We'll done. again. that, So are see with you we

Operator

concluded. The today’s for presentation. attending conference now is you Thank

disconnect. now may You

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