CACI - Earnings call transcript Q4 2019

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Operator

Welcome to CACI International Q4 and Year-End FY 2019 Earnings Conference Call. Today’s call is being recorded. [Operator instructions]

At this time, I would like to turn the conference over to Dan Leckburg, Senior Vice President of Investor Relations for CACI International. Please go ahead, sir.

Dan Leckburg

and everyone. Nicole, you, thank good morning, Well, I’m for for CACI, Senior Vice joining Investor Relations President of and this Dan morning. Leckburg, us I thank you

We slides. providing are presentation

to move So, number let’s Slide X.

in will as statements are and forward-looking reflect of this There views constitute could materially statements call do listed of historical that such, law. not factors SEC current cause night’s under bottom subject as that statements from our facts, address at These and Those be important results company’s differ our and/or to to release are anticipated. factors the the described today last press actual in filings.

is part Our statement included Safe as this be of exhibit Harbor of and transcript incorporated should any on call. this

point discussion will to accordance prepared should our I with as isolation These measures. measures would of financial be substitute out include considered not in in GAAP. a or like presentation that performance non-GAAP for also

Slide please. John? this turn Let’s International. our President is CACI John discussion here morning, X, Chief of Mengucci, to and Executive To open

John Mengucci

and good morning fiscal UK. Mutryn, joining us our Chief Tom discuss quarter morning and Dan XXXX Officer the Bradford, President this Limited, you Greg CACI who Thank Financial is fourth me to full-year year us and our for are of from results. everyone. With Thanks, joining

several results delivered up to space Slide We won. $X.X new our levels. income, of XXXX, fiscal awards for and record best full-year incumbents accomplishments operations, our booked released from our revenue, staffing billion I year business. and against performance. $XX.X including and that turn market in best awards, record in the Let’s pleased cash operating of record the quarter X competitors for please. We we We during Last went fourth record billion record am and with the night, significant

of SIGINT growth recompetes and of secure fact, detail. beachheads for cyber. new billion of competitions which warfare, new nearly areas excess communications, $X.X in XXXX XX.X% of finished the revenue EBITDA on awards. more won were and successful expansion business cover commitment, our in XX We delivering In and in electronic we will every seven our XX% margin in establish Tom the year We of

center exceptionally our and services further XXXX, margins. which in is initiatives, also rates invest We in and growth expand us deliver to commitment opened our July and shared well on maintain performing enables long-term competitive to employee

adding market. We our are our new to across utilizing further by and M&A addressable program customers differentiate capabilities

Slide X please.

this of work, Management CACI’s is our our five factory. first development has Agile an is execute and contracts technology, for $XXX to seven-year continued the expansion. order larger, which Systems on We successfully credentials utilizing this recompetes awards these software with re-won organic Army’s In to Agile this incumbent develop growth task revenue we million deliver. and enduring our value the innovation examples will to strategy the sustain testament A a a focus business, both people, to development performance, are margin in which the more win of Force few time, software software a and

awarded Force vital offering. two is modernize, an differentiated with to our contract develop, basis in sustain electronic intelligence systems. CACI And Air programs and given It deliver, signals also on and won was won United This our $XXX CACI transportable States and security. the million national quarter. warfare the work mobile source large and a control command sole to also

our making our critical to contract. illustrate technologies distinctive delivers the enhance five-year to is in a deploy CACI differentiated $XXX cybersecurity. The capabilities awards areas and $XXX customer’s five-year these to new awards solve warfare the are technology and second, were customers design most and signals intelligence, Both pressing requirements. first the contract, investments a million electronic and million These

please. X Slide

in growth long-term in invest a to continue broad sense. We

signals multi-domain terms real-time of operations R&D, and at capabilities stay threats. electromagnetic warfare, we provide software-defined where within capability convergence the to our developing These to in are dynamic to agility spectrum, fielding we of solutions and trends. and electronic technology in counter are the internal of customer demand First, intelligence, ahead technology highly cyber set communications. near

ideas address the laser In situational space-based are awareness tools delivering in we’re domain, space contested other photonic critical we investing environment. communications. to and now a And include innovative to

brightest. We’re This ensuring work experiences training in certification we and benefits retain and best and also base, growth of attract talent life and includes the investing extensive and the enhanced programs. the

employees’ seven across as Our the a a top efforts addition Workplace cities Washington, CACI in D.C. rankings evaluating to our U.S. feedback These surveys, This from culture kind as are and paying being recognition are in off was Top our recently the workplace for named Post recognized as greatly CACI’s year. in the the Washington hiring supports third-party fifth leadership, of on efforts. based benefits. consecutive

take to levels. And to focused we new the lastly, of this our growth remain leadership company team on

continued strategic many added XXXX, areas across growth our for with During senior of These and vision fiscal several to and we areas experience hires year drive success CACI. right important leaders are of the business.

please. priority development. M&A capital our remains Slide for X

to to customers’ fill and quality gaps differentiation capability companies pursue and our further most critical continue areas. investment We drive

platform the performing Systems and cycle demands. Navy all gives navy CACI which it’s It During fleet the insight well. long-term revitalization role life business, into provider very we Engineering nation’s is technology nearly of and naval support future premier operations leading in and and fiscal engineering XXXX, acquire to the building, ship the a

a we and security. of National company in signals highly priority areas UK would our in growing of to exquisite the Community, national capabilities the LGS in In communications quarter, in areas And June, we and presence our companies differentiated which analytic and provide acquired electronic data our third Mastodon, intelligence, acquired operations, Security warfare, Ministry UK proprietary address to two cyber. small Defense software

in in As our demand. are these areas increasing you awards, of contract saw record priority

right in very with expectations. line the During performing nicely CACI, first LGS months are and four at our Mastodon

as combined businesses expect continue a EBITDA We XXXX. look fiscal at year margins XX% to the deliver we to

of a deliveries, of Given Mastodon that and few the and naturally the just provide part Tom of business will deliveries, on level its will schedule profitability higher in the year additional a minutes. color increase during nature with

X Slide please.

Turning to budget. the government federal

very areas recently-signed particularly creating We the and non-defense to providing suspends customers, CACI XXXX capabilities. stability. cuts two-year aligned the in defense spending encouraged agreement agreement fiscal with for budget by and debt-ceiling healthy levels through are sequester much needed This dispenses

our modernization, and warfare, of to electronic consistency, spending space, with areas are in plan, our passed, priorities bills appropriation visibility progress to customers’ but is encouraging, which encouraging customers XX CACI and and need very capabilities. invest is program all allowing with While are cyber and greater be more still what’s infrastructure aligned like system the long-term

we to continue won mix us we and well awards drive within amount and with and during to success success the delivered contract record of capabilities margins grow number disrupt. relevant look over reflecting closing, highly in continue on upon achieved to We will technology to market. distinctions content. XXXX differentiate year, as record we We year to and our acquisitions of mind. provide performance with offerings nothing have of closed in backlog, financial the invest in the in business. areas next they four In beyond. a successes continue CACI’s but XXXX which that in now star these We fiscal EBITDA a expanded to continue we awards These higher-quality market the of fiscal several differentiated serve XXXX, adding will years. technology gross record strategic high

in we double have achieved organic with growth leading XXXX. financial approximately plan, an growth the We industry levels XX.X% top-line

income expect by We by EBITDA basis to X.X grow and XX.X%. from adjusted points XX.X margins net XXX to

also are come than growth. the spend spending We made and about sufficient pursuing. $XX federal years And we larger a technology market plan past that $XXX IRAD in and higher we billion with million of into levels materially our that’s B&P than the partnerships business investments, are of indicative plan to to support our by and year a budget addressable acquisitions, more and

turn With Tom. I’ll that, over call the to

Tom Mutryn

Slide everyone. and John you, X. Please good turn to number Thank morning

from X.X% acquisition. fourth in $X.X last greater our Our revenue with XX.X% is year growth quarter strong billion, organic performance than

the for $XX Net performance of strong line expectations was with tapping our year million, the off and and in income quarter of exceptionally guidance.

note are year’s to earnings last. fourth quarter to in there comparing As items call, we our this noted may two when

spreading fourth quarter the we First, year which the of by XXXX, effect in the had XXXX fiscal throughout fees year. fees million XXX award in XXXX. ASC of when adopted award the to $X reduced This compared

efficiency of increased for for $XX of Second, systems some and development we million drive of robust quarter given and IT and HR fourth pipeline for to one-time initiatives. a investments IR&D security enhanced made opportunities business in the XXXX

EBTIDA margin they expectations. Mastodon a contribution as around were during million months XX%. of to combined with with and four quarter part consistent the and our revenue CACI, the added $XXX LGS’s of of five

first will create continue XX in deliveries forecast margins coming in our batches. expect into the XX% highly we products and results very specialized, EBTIDA the months. Given street mastodon, with for of are timing margins, to from and high pipeline, margins which orders product for and but quarter-to-quarter. orders Their profit fluctuations

that confident significant mastodon are value. We will drive

in driven year was year assuming fiscal on tax billion; income earnings X.X% XXXX program Net a fiscal million was year, for $X also year is Please turn than full $XXX revenue XX.X% reform to Slide strong performance. was detailed XXXX, our XX. XX.X% with last of organic greater release. full Net up year which income growth. by

more a for line year-over-year EBITDA margins meaningful it normalize expand to items. is to commitments. for comparison, long-term two with continue We helpful in our

First, transaction of associated and $XX acquisition with Mastodon. expenses EBITDA the fiscal non-recurring adjusted year XXXX LGS million includes of

of Adjusting even for of fiscal growth XXXX, Second, net in EBITDA year million about in fiscal conversely which year reflects year. spoke includes these last $XX benefits, healthier one-time profits items we XXXX. adjusted in

X.X our acquisition days contingent third capacity Slide it full to sales XX the showing days XX% year-end, A/R the excluding over debt trailing times facility, improvement from net to quarter. cash last year. adjusted XX-month year Days million generated at turn potential ended year facility, ample excluding debt operating about at flow XX the for We to with XX. the please of the opportunities. EBITDA outstanding fund having the in purchase $XXX increased We

without to let turn errors merit. have August, appropriate filed informed line, me taxes. related matter. and CACI liens employment another IRS payable these administrative related Bottom were taxes results the all guidance, time against we In are paid tax XXXX to and that on discussing liens the several of we before various

reorganization, various background undertook legal All internal from Inc.-Federal. paid employees were subsidiaries several As of various by an CACI – thousand to XXXX, a subsidiaries in our structure payroll just taxes appropriate streamlined transferring the we CACI, from entity.

that recognized the the ceased IRS, filed million not by it employee entities. to these in liens personnel subsidiary makes $XXX fact against subsequently immediately with The

and the evidence appropriate all to communication with them documentation. with We are in and IRS provided this resolve matter

that and confident without highly are financial We be will favorably resolved this any consequences. issue

XX Slide please.

which guidance, XX. XXXX provided year We are fiscal reiterating we on our June

to continue accelerating earnings expansion. revenue with We revenue expect growth organic margin in growth strong and

modeling, To first the help earlier pretax XXXX. of color feature than let quarter you in $XX activities disclosed last first quarter we some of In me million on occurring expected. years associated year, sales with the profit fiscal give of

XX%. the effective rate year in was tax quarter last first the In addition, low

As to be around at a of are date. our result of at the the tax effective than expecting prices XX%. higher year, we vesting rate first grant quarter benefits this stock tax

timing Normalizing around revenue the million are expected accretion offset of first acquisitions for will perspective such improvement $XX we from an XXXX Mastodon EPS the growth contribute intangible interest to XXXX modest neutral about with income quarter in and $XX net tax million. amortization expect for in applying EBITDA expense, rate in year, and net sequential as additional year the This over level and this a quarter be will by the reduced the net higher around normalized income that be LGS by expect quarter. the we income quarter. progresses. first

please. slide XX

from Our forward revenue guidance, recompetes XX% we midpoint existing from from XX% healthy. business. expect of our come contracts, the of the At and indicators X% our now remain will new

bid of for new business are now bids expect Our that with business committed new at the with during billion for $X.X we awards at CACI. remainder billion other the CACI. pipeline And XX% of of calendar of $XX.X about around year metrics debt strong pending worth submitting XX% the around

And over to with turn call that, John. let me the back

John Mengucci

Thank you, Tom.

performance generating our our go Let’s results XXXX the record year, pleased fiscal confident sustained going and XX. in Slide for in We I year revenue organic financial delivered including with revenue XXXX. We margin to organic contract awards closing, am very we of of won prospects forward. record growth growth in continued profitable market throughout expansion. amount areas expect will and and continue in our and a margin growth that expansion accelerating

deliver on me None gives without of the in our ability execution XXXX strategy, commitments in our successful beyond. this element year our of team’s and great this every to confidence happens of fiscal by customers’ say commitment for day. and and I’d proud each our employees. you am, how I what innovation I every to incredibly like thank all and our you do to missions talent,

Nicole, let’s call open for With that, questions. the up

Operator

you. Thank

begin Please go first We session. question [Operator from ahead. Sachs. of Instructions] now comes Goldman question-and-answer Gavin will the Our Parsons

Gavin Parsons

Hey, good morning everyone.

John Mengucci

Good morning, Gavin.

Gavin Parsons

at year, the kind you guys the revenue on you and You year, strong for you deal, budget the you’d bookings look the two-year obviously right goalpost. have if call, end that be growth a the in a in got guidance had quarter and think really of mentioned I towards growth of the think

growth. kind risks just the maybe, what update an revenue on organic the are to upside So of kind of of range

John Mengucci

thanks. Gavin, Yes,

next we two-year the So, that things the very one haven't was past in solid budget. had of a

business to as at risk going don't look awards timely some which end, we strong planned is at FY sooner. allow the starting that we get pulled awarded technology-based larger high what to we on us forward. the our our awards. If these would to the of start left, basis, haven't are any within were We risk FY program And development of guidance, plan, hitting some with a we if the those look – we XXXX see with if XXXX our

our in pertains and the the we folks, product there to need the year. our is budgets now in planned only due see that due We some to for have that that that any near-term the we already contractual place. we if to Mastodon move it see right view orders are vehicles As don't risk of of the

help So we're coming side. and momentum the guidance. keep awards our we very us Should closer right forward of confident on get the would our somewhere able finish sooner, to midpoint some be that in to

Gavin Parsons

organically, group the I as years, versus the public the the it market been little the target stronger. about think maybe, a X.X% the outgrow the then been you've at it But wouldn't past looking for. peer the midpoint, fast case And hasn't to as few be are bookings as lot

innings to off market? and products the of forward of next pivot far solutions. do years think the you're booking, what see do as the think outgrowth that you're accelerate of but versus do you as kind So the kind kind paying Obviously, what we of couple over kind you maybe, towards inning in – of in strategy going it's

John Mengucci

Yes, Gavin, thanks.

areas. growth bottom-line we've fact looking done on on sustainable as for to XX drive two last this One So, focus I’ll also and company top focus is on years, the our long-term, focus growth. are the that both we

of turns to, during where three certain ahead other we very, ready So our months. it us book during of made when at read which to customer was our we have, with those contract business budgets of need every is to I the of billion. of over are to arrive, relationships We're the looking lot is with business did look so that customers. years, If CACI wouldn't awards deliver. to were three of very making our contractual is technology-driven mean to four a years. XXXX, growth. who on line of longer-term LPTA we actually to markets on serve at closer too six also back that XX representative that proud I some of the We're being that investments actually focused moving to time, expertise, we last of was the majority the year, that And $XX.X IR&D today, strategy five But top were the

don't organic year time, So margins. the of to At we to double growth. three-year grow the a have coming plan same we're nearly looking this level

margins. now, able points exceed to to two going we shareholders for to grow only points And basis future. in XX being XX last plan the be for years, looking We have to is a what basis year-over-year believe but are not

Operator

Our next von ahead. of Rumohr Cowen. question from go comes Cai Please

Cai von Rumohr

Yes. good Thanks quarter. and so much

special in more give in kind each mentioned. a was Where is color the the are So, us you fourth the quarter, the items doing FY investment considering $XX little what more percent And P&L? investments about in of of XXXX? you million it to

Tom Mutryn

Yes.

in the So, you can't terms – give I details. specific of

terms our by which and magnitude, let through the initiatives. item initiatives, on was a that unique out HR B&T In expense either order line point followed And the in HR ongoing of the the all are followed by in had variety activities kind those. P&L. other of of largest IT it internal IR&D And me are but sustainable, will there's certain more these to of investments, flow jump-start indirect associated activities with we – kind

John Mengucci

XXXX. year when any what some at prudent the When guidance looks there growth you looking we – like. we for of our we're of of early plan fourth FY XXXX and those ranges investments to asked We quarter FY for for within FY long-term the is third in special some in Cai, also of the all in plan were full us it XXXX, in quarter the investments found those investments, make XXXX. around this announced company fourth, special we our did the

we that. XXXX, if will in As happen areas at do we likely be the thing? will two FY same look most exact do to we It

but is we're say structure. investments. living certain and we prudent them, while focus folks, continue ongoing will need, making have Some not customer need and only or to additional – of ahead always investment to hit retaining we will of brightest our technology an has, within not may customer investing the rate that for investments we make require CACI and and will best us may I plans attracting the competitive the to be that very ahead hit that in the of all

investments We're balancing push So actually rates and looking cost spend. not greater. we're then to our at making

Cai von Rumohr

four with months XX% function a to that last just for exit would is products next the Mastodon that LGS, deliver? XX%. of be Mastodon imply, that you. sequential XX% build, sustainable I the XX% the going one and margin year Thank the don't know, And which in rate's to EBITDA Terrific. or Is when

Tom Mutryn

deliveries talk at the now, again, fluctuation, premature Yes. to I certainly sustainable, kind our this be and XXXX. going steady will be aspirations. point think that's to you, with given some create that But and of latter those others orders some, higher our performance are little quarters goal could hope product that time, would bit associated kind margins your for to a in – and Cai. us thank comment some Right it’s about state. than in of this nobody is I of

So we of get of margins, will higher I point aspirationally Mastodon are margin than the kind inside, higher kind materially of the LGS. one characteristics out and that

I what the when we disclosed think we've acquisition. that's purchased

to that productive disproportionately, going so would markets forward. And grow that can organization the to that, extent be very

John Mengucci

Can scale color? When Yes. add But right. talk Mastodon, about about little talk a large company. production earn MD&A more also we they a company, I product-based we

look first margins where more that So as orders at units, even we really or on XX margins. of production get unique the not create, the they deliver. is products XX once than they for It it's kind respectable what we'll quarter-to-quarter that we greater through see model, technology

So and finish that will in pleased rest are and with us But XXXX. CACI, very of the promise a very we time. greater they we're came where to FY we'll materially time from mix change of – of Tom into mentioned, to very, products pleased with as margins

Operator

Morgan from ahead. comes next Matt go Please Stanley. question of Our Sharpe

Matt Sharpe

Good morning, gentlemen.

John Mengucci

Good morning, Matt. Welcome.

Matt Sharpe

you. Thank

we've as there this indirect but thus then and in forward? that XXXX year infrastructure, bit a higher of the the know think I throughout as will should be discussed revenue wanted how a as about be touch, early does a carries Or level of to far, tail higher just Will continued it goes investment into the we So, R&D percentage on? relatively year? consistent fiscal off sort of and the sort I

John Mengucci

Yes, Matt.

recompetes go IRAD those to look these before have Army differentiated type the were place. two have sustain. program, looking years So, large-scale what after when or in at investments, on recompete, in we at the we we to did When at star distinctions really as we different areas, where put those invest it technologies we we looked cash to of about are two areas we those

So very delivering of both to that electronic our warfare, continued change. of the market. that's dynamic and bend. investments in place, was have, have an and a we albeit investments. LGS continue into business to one so model certain going continuous are we investment to Those that dangerous more signals communications the very that We're make are And increase like, intelligence, that business our some that's of the to to able brought and retain a Mastodon is technology

modeling at looking kind guidance, I IRAD So, say bidding to some we're full-year would provide proposal of in really investments.

knock greater of more we see again, continue a that looking solutions investments. make year-over-year, rates, where get we means. out busting think innovative then But to We to I are on wood, level within XXXX, are us you'll as point drive continue really which our never less our grow to dollars means FY competitive. technology grow to

Tom Mutryn

problems that's Yes. level just fourth million level where John requires be going And we'll indirect XXXX. somewhat as requirements. and are rates. kind of trying forward in wrap The in wrap of kind at materially solution in value-add quarter good pay a willing items, to mentioned, technology of And people of of news smart some to customer able indirect those a advance higher for higher I'll looking in solve average revenue, problems percentage of indicative embellish, customer that, to of areas $XX higher of support, that as than to the IR&D, that spend command rates excluding advance are customers the laboratories, we're solve is those

customers spend we money, for the still the and and increasing them, increasing can deliver pay so margin profitability. And

Matt Sharpe

a the CACI. CapEx it's and – relatively How profile usually was Obviously, XQ quarter we on about then here? on related Got side. from light for it. that And think a of the sort should note high,

back at going X.X%? you're again, are think just are the or forward? a you sub-X% solutions-based? down towards gravitate revert that And acquisitions of given or the pressure it current towards do seeing that how just upward traditionally little that bit level about some the Does product So, we more

Tom Mutryn

Yes.

X% guided The for approximately large just some to for So, we kind some revenues, of kind support – seen of a past, billion. organization. X% level two other we than of revenue CapEx $X.X buckets, is IT, approximately full have $XX to in internal year XXXX, the absolute of infrastructure million large kind of higher and

bucket other expense. we investments And facilities. for oftentimes we be programs is The we facility need make locations, in extent these to as CACI programs, to facilities And those at performed the new need that to win need those facilities.

Some of those spaces, are facilities more secured require skits even or which expensive.

And that some X% absolute type numbers forward, think of dollars the about so would I CapEx. higher that driving of of CACI, program, kind is seems of borrowing require CapEx. of material that be any going reasonable which unusual would for to set

John Mengucci

need always But CapEx will type higher going to are – I we the but certain you also their tell won't able within a that that be of add were the own there, win. almost level technology-driven that spend level programs the likely to of that that of require continue to by we I’ll quarter, have type investment given of programs those a most be we business by CapEx plan. be out can predict to that I'm unique right

Operator

Our go comes Stifel. DeNardi of ahead. Joseph question next from Please

Joseph DeNardi

out Or backdrop, months? FY had XX can there, type of of that last the in very should maintain Thanks the of the the of opportunities, book-to-bill you some XXXX? the expectations look that kind timing the of moderates your some much. budget pipeline may the Yes. be that, for you expectation be you John, of kind bigger awards when that at

John Mengucci

XX, time award customer versus We looks Yes, long when see that really It book-to-bill? add lumpy. we book-to-bill we tell couple the And we awards. And question too place. in can Joe, far have so and had. that the of been business back focused. where two the the actually I'll development come it's discipline absolute of always thanks. drove we can different strategies, team took into words, crazy. changes we years We celebrate our and a success and they than Xnd XXXX maintain that to July We answer award can focus. anything or right FY in market six were don't in maintain disciplined the were, talent. in we development level I every June business this different we highs, I've what slightly five when wasn't business as you maintain. a other I

to So, to would win internally. than of better, continue we wins, XX%, us don't. recompete I expect expect to bring us I more frankly, continue to our not would back if

XXX% an we have We absolute our happy. And not recompetes. – when of we're don't, we goal went of

pace. investments, those at if So that look look the the FY XXXX look support, if now to budget plays the that of I if very path right at the recompetes in, government I on budget we I at and business the CACI we at of areas federal feel are I confident continue will new win

Joseph DeNardi

number I that nature for I and size the I type because of terms mean does that's maintaining think guys been support? support in of it you recently. Does tailwind pipeline mean, the be Okay. duration a strong a expectations that to you of duration may bit the it's guys. book-to-bill? Or little because Just set down how given successful, even will for if just changed? been trying you're come

John Mengucci

Sure.

the our there programs type Given business larger is pretty are and of to win. confident pipeline, we're nature go us which that the for in of continually there, we finding out

Okay.

formula the right honestly that there. we've got I believe So,

product like that going a cycle. is that years, really company a to you're is change which is and of to maybe, pipeline because last – XX-day bit, also little delivery probably Now XX- bringing couple it the has deliveries Mastodon, a trick

ever you, some that's multi-dollar bid feel have we So to submitted more choppy shorter confident as we've as tell term business. of got that But I kind we had.

our can for So guidance. time will business very is awards new you our are I much plans support tell, FY XXXX tell that what but

Operator

Please ahead. from next go Our question of Robert comes Credit Suisse. Spingarn

Robert Spingarn

morning. Hi, good

John Mengucci

morning, Rob. Good

Robert Spingarn

your your Just the look in following before and in I XXXX fiscal relative But I'm at budgets, up be this answer in others. in peaked which surge government the I on in XXXX. do wondering that going big is appreciate to budget, fiscal your your if XXXX surge when your the big performance the that, backlog – fiscal to reflects consistent, performance

And so this this of is this this through year, slows the your these money and that's XXXX kind XXXX. money fiscal it's orders? Is budget into coffers coming deal? onetime Because clearly, a

John Mengucci

thanks. Rob, Yes,

clearly that in let I XXXX, is angles. up clearly, the and FY if different – So to try at go FY from right, FY answer I that XXXX as absolutely the But budget. helps, as much we a budget to Budget think isn't couple flat, get folks forward in helps. our of me looked look are different, budget in XXXX CACI as What when those a we business we I for with what technology-based we is the that towards longer out fully have is funded. they What against does going as move than and that are term backlog today? more there potentially present and think, sort awards, other that and it's measure CACI

So awards. we these to at look Those $XXX seven-year are awards. fully million, million $XXX five funded

program look had track, different very fact to that market. very like when software program, we development seven-year you are also intensive. five us just So also that technology is would hard on it a to that long-term tell technology at change that a course to you it's addressable really allows production I the a

and So, that in CACI fist although out grow. more than a of fluctuating, what there be can capabilities go budgets may with capture making kind

flat company. a $X.X funded, So even addressable we're a environment, budget which market, $XXX is billion billion fully

go all and market are we forward ample time there out invest $XXX the saying, things and team there is in and win. look So billion, our at go can if I our addressable in

confident the years or same large on three it strategy percentage, budget invest to believe areas or not, are has and of in term be really not, we're but are the investment in. for areas So our growing will over perhaps that budget very been began we long the ago what four

Robert Spingarn

just a on then of And the Okay. want to take Mastodon. LGS on and couple acquisitions things

acquired of I orders this if downside, there, like added where us terms to in coming are or of wanted are nicely. on of what that the was or I for with? last of companies Tom at upside how idea of downside And margins so Possible was backlog In been get and the that there you've this wanted the Is to the the upside time, you much you with can for could time like but he just part out outlook Thank and expansion there the that. But is in clarify us acquisition. M&A you. expand the an product-based? surprised funded and sounds business then just told these forth ask that more companies

John Mengucci

bet, Rob. Thanks. You

second. the Tom and handle So, I'll let have take the me question. third Look. first

hasn't LGS are well. and has gone So about how so then well, Mastodon gone and do feel and what we where what

the and close me Look, time. exact company, it the reached acquisitions let what same because the out we, to is struggling well, the stretched not with On I'm so hasn't time ourselves as a – start with at first it's gone well. two

we're single a inside normally or when most we we acquisition. leader is, we are functional because forgotten we employees likely a those and my we the my do Mastodon of And that. you're about incoming weren't months most if So as CHRO sharp that. some stressed areas, CACI, five really in stretched employees frankly, IT of LGS and folks, in have good The from news as

competes. we've happy, really the the $XXX On operate qualitative integration. does it of And to the already updated that the folks, that's also contributed million continue business with to over to really the proved for a a don't folks. couple that you million million part collaboration sole level Mastodon they part core LGS did business LGS of of mean prior CACI a statements side, for give as $XXX across triple It's give where to because positive acquisition. of more of me just much. months, five I'll dollar has examples, and an I'm with award, Rob, you source, our last seen – case

more wrap comment M&A the plan with Tom, initial that want the all portion? EXI also, and watching single second our where is that, comment award exciting the on those. that customer's M&A. IDIQs by be spoke talk able delivery about CACI, cycle, a Mastodon Technology we know-how to we're we and where On And combining spend up see on spend I'll see about those that us than earlier, have, on award of with technology for the into what's to was. was job in put CACI capabilities, the that we being won we're most enhancing to what I LGS, you

Tom Mutryn

kind Yes. numbers assume that results. relative added to market the that the to I has Thank those the in don't to their it's the or have size. awards. you. think backlog added specific number And or third reasonable end their is reflected was of LGS I We Mastodon backlog of at the and our quarter, that

of ratio. CACI kind XX:X course, LGS versus a Of is

given hard it’s So, numbers And while number. parts are driving or backlog say, be organizations, that driver going the to or CACI, I a it’s kind the LGS forward, of it of subscribe CACI contributing, mentioned, huge going both should is of John the wins of fact kind credentials overall as in not to backlog

John Mengucci

our strategies sticking review our So strategy ad, creating. year look SIGINT, look Enterprise business communications We that we then call, Cyber in know our Development that with LGS new started where XX – Mastodon. in eroded already look that has We that focus to and know was systems I we months We Corporate other very for and on they closer had with to for no that In and markets solutions. as then everyone technology-centric, back. each great from team market-based We on that and it’s then SixX M&A our and we to SixX, mean Rob, But be what build be on area. going the piece, customer the are upon vis-à-vis LGS everything went M&A supporting did secret EW, to the are, saw to We IT going what powers, creative they’re continually enterprise-wide areas, CACI that to to and We serve. and look, really we’ve new are. rebuilt. about needs and the much our past. for turn the gaps, for very properties. twice areas Mastodon

properties areas. – other are there are niche that out There that could potentially fill other

in, knew this sitting I’m they I in the of more meetings tell pleased and us, For that been we areas extremely have world, in learning LGS frankly, covered. you, coming but everything EW/SIGINT/Cyber even about in I’ve the with to

us see the in for targets, long-term involved always I more we’re always think the M&As, looking for strategic we’re of in you’ll future. the and and those same So near the continue to long-term

Operator

Our next question comes from go Jon Raviv Please Citi. ahead. of

Jon Raviv

morning. good Hey,

and all, organic numbers organic but now slides X.X% on growth. first XXXX out that the to in last just a two growth question please? just on me, programs to you of just the rolling those revenue do FY organic bridge off Can X% organic growth, growth? The in that are of know, How there. XXXX X% I comment can and/or prove you to accelerated give It’s the a Just growth. FY clarification here support of the FY were some for markets headwinds month any you sense Thank a to us X%? you. XXXX. had the don’t and get in And

Tom Mutryn

Yes.

midpoint mathematically which those midpoint So we was a organic XXXX than growth. guidance, the provided of of FY we numbers. from be a higher XXXX of I’ll XXXX of bit start. FY guidance, the We’ll kind closing kind midpoint guided X.X% When to guidance initial

getting if a X% so you simply all using you’re a using point intact, will is you XXXX I estimate that caution number. point estimate. keep And

and We revenue the range. revenue, perhaps insufficient the the with be range, it’s to X.X%, upper the have perhaps end I of lower that a say range inorganic of will given think part X%, of more less

numbers. think of – I will that’s those kind clarify the hopefully, set of, So that

In John terms the organic areas areas of growth, kind of that in are where growth the higher a of supporting lot the mentioned. of

of awards. We’re winning a number large

Enterprise are areas areas, out Intelligence solutions, of say of of supporting the kind communication, CXISR processing, growth. awards number continue warfare, to would that broad Our communication, we kind a be electronic put those Services. IT of larger signal talks of IT digital all and kind systems, information that warfare, electronic business secured about I kind Enterprise work, and intelligence

John Mengucci

And us nonorganic. focus john, it differentiate I would organic will to also on become tough I’d is growth. for versus quickly add that What

against about award, We’re to that which communications that there’s is secure long-term programmed we award, current $XXX An example $XXX deliveries. of growth. our the M&As very visible do in of about is million-some million drive clear that

other The that word IDIQ of $XXX funded seemingly. million single is

done nonorganic, I for Mastodon. have and capabilities at customer. with at our it’s or whether and outstanding look solutions, So the growth we that enhanced LGS organic $XXX more in and even of when of could LGS Frankly, could better they I deliver even and that I capability as spend more million not we’d count had come look up Mastodon that had that how

Jon Raviv

M&A, do net you mentioned of being the ample Great. you and a on it you kind Would What follow-up deal to And you capacity. X.X maybe remarks, bit size Thanks and EIT terms the terms smaller ample fair also then SIGINT, on do capacity market when the size? and M&A in have what mentioned times call, you characterize size? perspective. that approach the in for This EW, deal systems is of leverage, at think your is terms on, prepared of in that of John, biz buckets the being bigger bit first Cyber. a two also second and a as in then be

John Mengucci

thanks. Yes. Jon,

much systems, a at two if us, business that’s buckets, look addressable those if larger we total the So Enterprise for I today. at that, look IT market, and market

there. long-term clearly have experience decade’s of worth We

So larger smaller total that’s rate. market, but a a addressable growth

you be So in. deals size, customer would out that’s of be interested fill gaps, they becomes if like expect there a just us, okay? potentially what to find companies capability volume like I we’ll that’s in this area where someone If buy, that and not

share any in look the will could be companies that traditionally, we’re we’re are larger as On looking the I of small, fact, for some right companies probably I have taking kind not that think of at. won’t say I share those what SIGINT/EW/Cyber all that – bucket, comms, I a they’re capabilities. second well. wouldn’t

fill likely gaps. Some will even of they’re players, more most the larger

meet we on then that – provides that only of to can companies investment a our fit fills cultural someone hopefully, small have have the as criteria, they four Tom, And, some if leverage? that fill light. one to smaller So have well. right But it’s our find each, sort toss-up versus to gaps four

Tom Mutryn

capacity. Yes,

south price and of kind acquired four of we purchase of kind margin acquisition could reasonable of of couple while the maintaining a companies, purchase undertake a price billion assuming times. $X leverage So

leverage So than, if capacity. slightly take even up want is to higher more you there

look can feel pretty we variety a kind all-cash wide companies small for of independent-type of So that comfortable with a we deal.

Operator

go of question next Fargo. Edward Please comes Wells ahead. from Caso Our

Justin Donati

on Donati taking for Ed. It’s Justin Thank for my question. you

John Mengucci

You bet.

Justin Donati

been the one first XX on just new had, The you’ve has over I from months, how on-contract growth versus award the to takeaways? that XX won last of much that

John Mengucci

off is top number Yes, it to in there this, only – I explain future for that someone’s That’s single is realized don’t term and out John. the growth. pertains Single contract. Justin, mind, will that may of where don’t forward I to be as folks you that. I Earlier a have what understand CACI the customer used further going going a a– tell This awards large IDIQs there IDIQ word word question, we how are but

We well. have as ceilings been very successful. shaping large It’s

be book what’s worth we creative that very to although So on-contract can that’s $XXX growth. $XXX $XXX current there of of may of an but ceiling, won business us million guaranteed job, million million see, is a we

years. few have over do an the absolute we focus So last

make growth. focus put good deliver. sign We what we to grow One at customers, CEO fiber is continue the on going is down we’re focus that. a into with start we our doubling role coming things to is What right, on-contract with to really stronger we’re contract how we areas my when do on even and an broadband of

If actual won deliver about little investment, you to the on. right? very think already for it, vehicle it takes We’ve us

next We’re all six-year task to not competing against five- orders. the

I healthy So your answering it’s forward. you, while growth can question, one that but a mix, going and I’m specific tell not it’s supports

Justin Donati

of bids today any talked and provide solutions, has about you more much to technology been can one ago. here that today versus then, color helpful. inserted you’ve just two That’s And more into how on as years maybe

John Mengucci

Yes. Thanks, Justin.

but say expert I our and Ken and level of solutions. vision CACI both it’ll ahead a weight. where that be forward, in, my when at What means was, we’re I SixX about – actually would we get let’s some as an not is technology we’re and Over we this and brought talk trying of vision had weight, people technology expertise that going do of the our – know vision punch the so last how enhance provider of to our what to punching spending, above government’s

delivery we’re materially would There’s So say services, XX? I dollars. to years, only out that center, technological will offerings our it true the we’re why drives as programs who our offerings drive expertise than a those in really have at five people a their going there of it’s today, professional of margins. as forward, really over customer the of the a there is but are they if you materially isn’t were discriminators, It that XX addition couple driving back. in well. maybe different, we needs everything not If put technology or to today customer continually win-win. looks different bidding. where years repurposes like and to if last technological It wants look And have LGS our Even showing operation Mastodon, an differentiators bid technologies on

Tom Mutryn

bid bids to ago, probably on Yes. underlying And in universe in not the the the didn’t criteria, I were able because we investments we will criteria well evaluation years those had add, – technology the have five those capabilities.

And changed has given so investments. our those aperture materially

ago. years things five were after go today after of XX And so go we lot it’s – a we that can qualified to not to

Operator

of go Konrad question Jefferies. ahead. next Our comes from Greg Please

Greg Konrad

Good morning.

John Mengucci

morning, Good Greg.

Greg Konrad

a strategy. I mean, a broadly competition like in the aspect M&A the from change are services to the noticeable market? any more seen last have an overall either Just of some companies pursuit to I on questions. it of speaking, M&A seems market, or product-focused mean you lot maybe the more overall follow-up just pursuing

John Mengucci

it at nature are government to technology solve competitors really predominantly the who a lot business competitive and When Greg. area. sort we it is Yes. of very some customer’s part Thanks. There’s maybe focused of of think mission about me technology delivered traditional look what after, the different our there, providers going about from talk makes of our we different a services of we’re really that as defined that six us different. pertains made What on changed expertise very, go delivering tell these that’s products. we technology has The of ago, and desire it is towards types very technology. to the you and brought place I at move calls the mission-type what with a in conversation towards looked this will SixX years competitors where company’s very going. are to where And

those be are of companies. larger and to aerospace the Some going defense

to greatly need. heard machine harkening talk AI I learning And about I XXXX done back call believe trying very up just what assets artificial XX going company, didn’t first trying we’ve heard to are get we’ve haven’t chain growth we’ve conversation that firms been frankly, What it move because, great technology with take often been is this involved so as of We’ve out Some the that you to that. be in space-based customers that that and overused, are plan years doing government FY intelligence tech and us job cyber. certain the some back – out, support when learning of budget. X.X We think those making to of CEO we niche of for our to a building our about have been those as maybe a food machine been on or terms there supporting decades.

being take to companies attacking delivered device as means that that market are customer put at that problems able it And larger scale we’re back can and So in on build to product, definable. our technological this same to what with system technology can at and mobile software, going a software be the I our that to get device. fixed both such a put are. up their is site be much larger a looking set looking who also I coverage software

a So one capabilities, with it than uniqueness does, who any, national there the there’s word to the – competitors what times better out do asset most clearly, comes few, then that what that LGS they and do, lot what mind. and learned And can we’ve can of times, them. no if do

Greg Konrad

year what been around would then was as solution a market? headcount-based change XXXX? talent fiscal or part And business. just you’re kind count around any you. Thank And less the head a two-part. there up, competition of then in One, follow assume I probably that, of Has any what it’s growth HR in of as seeing in grows, as organic initiatives terms for color

John Mengucci

Thanks. Great. Yes.

was was sort think the have maybe expertise – moved probably how in business, six going a moved we I and future. back of where So it a four guide company, delivering of in actually technology, away mix we, as noses because to is both it it as where a from quarters CACI our – many as or really misleading we to it’s

Now to into And growth answer bring our this FY direct XXXX additional more rates. FY it XXXX we’re folks successful to than your very supported business. during question,

we absolutely look you’re forward, As right.

us the that you’re there our to to solutions-based property work hopefully, to of once, with doesn’t that folks. we where many sell high out defined as hopefully, delivering allows move solutions own shouldn’t say many Especially or Some looking an can model times investment folks build we having take intellectual over. definable, software quality we I can as

there. So side, that’s on say solutions would I what that

Washington, Your labor time. over talent. in collaboratively six six we D.C. work across there’s branched competitive cities last look have different area cities. the enough, you of If other But the sources more area s what even where, about get folks people competitive. at question aren’t Washington, and eight D.C. the years, done was where out that those hear universities it’s other these have all there oddly the a around Look, four I actually can talk we still to to we’ve eight market, major out to phenomenal cleared is

and helps FY system about us bring in. So talked investments. engineers Earlier, addition it XXXX great we software

of eight different going because to work do development are, Some we’re penalize the do we not those area. to co-development in Washington ourselves only do sites, across investments how greater

to infrastructure. there So information. government that out There’s many their and laws great takes IT protect a new regs

do source how we in full different so can cities. advantage infrastructure put of place to sooner candidates numerous being in So take able we

on work packages is looking we current how and for place reward upcharge to program in overall, employees different We in with in. benefits So bringing our more put continually and referral challenge. people be to always talent going a

that So thank for question. you

Operator

is question Our from DeNardi go Please Joseph follow-up a of Stifel. next ahead.

Joseph DeNardi

you Or Thanks mean, some that here. additional the need about and to if planned us confidence to think want meet exceed of investments the how the me the of to before FY of Is we you. and FY John, to obviously, had consider confidence of forward and guys the forward pull about should think commentary to make you pull That gave Yes. you in on I this exceeded investments? would and to making just kind investments? XXXX? right making EPS kind would plan revenue that to the provided back for give Tom go guidance well squeezing Thank you that you’ve kind you’re some guidance, year. about XXXX you way investments. you additional additional that? that What’s enough

Tom Mutryn

out. I guess Yes, start I’ll

a balancing know, As it’s always act. you

is because yes. care to we wanting earnings, long-term term about prospects and being invest we’re the in and do believe investments the answer of we That kind in nature. are – about our quarterly So long said, do earnings care absolutely annual in the We business.

balancing particular those acts. making of kind so And

versus the commitments particular and additional has on have kind billing government what that our billing plan, to will addition, the maintain year. the spending And In to of watch maintain be make commitments want we and We the rates, margins. increase also take we rates. rates. the rates if an those beginning we those we impact for of seriously. At we submit our to year, And

our reflected way and levels will continue that, be of a it give reasonable which would to investments, we I is would in we make beyond the anything all consideration. plan, think characterize I So will

going We’re well We undertake not to good the in it’s not plan. be decisions. by, can bound

but decisions, take we seriously. those do here We’re make good commitments to

John Mengucci

network I and go if FY won earlier right area, in We of the fight one would around us people. third quarter make a we a those sounds is sat the in I have to Washington for answer, somewhat all my couple of to example saying, and table XXXX, quite specialized technology-based Joe, back It and large we of time number thicker the extremely alone also need we now. out the locations we can these real jobs even harken like is there. but say, in for talent seven

thicker and business, to of we up, team we’re go make rate want footprint people on So to that ramp seven the focus in we’ve sites in. the technology got able really those broader to came how got do the the be awards the this was because jobs even winning to quickly to we have said, entire bring and leadership a

it Is one help? So did that only Certainly. on we Was it were factor factor yes, No. though? it plan? the

really give of actually doing you end in We for the current can’t color XXXX. have I So the things XXXX. times, the current year to just at wait Most the we’re toward year.

be always spending spend we when So always talk comes we time will will what our up transparent, – Tom about is we’re indirect on.

Joseph DeNardi

Got it. That’s helpful. Thank you.

John Mengucci

Yes. Thanks, Joe.

Operator

any Mengucci would conference to turn remarks. [Operator Instructions] This John to closing like concludes over I session. our back question-and-answer for the

John Mengucci

your thank and for We help have webcast know thank their like on today. listen Thanks, that in many and and of all, you help who questions. follow-up your We’d for the thank you call that participation. – Nicole, for you, to to everyone the dialed will on

Mutryn, and George available Tom Leckburg call. So Dan Price are today’s after

Before that of our we customers’ you going on some missions. absolutely innovative that to critical we’re and be which opportunity our hold capabilities is York. remind a differentiates to see CACI’s perfect Investor are disconnect, September I to about everyone with what aligned New like of This in would We’ll CACI. today presenting next most talked Tuesday, Day, XX,

shareholder additional time with all to also We term to really continue expect September. over how you be our in value. and forward deliver to and spending we long We look the growth to discussing will drive plans profitability

Thank concludes have And this great day. our you. that, a With call.

Operator

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

You may now disconnect.

CACI International (CACI) 15 Aug 192019 Q4 Earnings call transcript