CACI International (CACI) 1 Feb 202020 Q2 Earnings call transcript

Company Profile

Participants

Dan Leckburg	Senior Vice President, Investor Relations
John Mengucci	President and CEO
Tom Mutryn	Chief Financial Officer
Greg Bradford	President, CACI Limited
Gavin Parsons	Goldman Sachs
Edward Caso	Wells Fargo
Ben Arnstein	J.P. Morgan
Joseph DeNardi	Stifel
Scott Forbes	Jefferies
Colin Canfield	Citi
Matt Akers	Barclays
Josh Sullivan	Benchmark Company
Jasper Bibb	SunTrust Robinson and Humphrey
Dan Flick	Cowen and Company
Louie DiPalma	William Blair

Call transcript

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the CACI International Quarter Two Fiscal Year ‘20 Earnings Conference Call. Today’s call is being recorded. At this time, all lines are in a listen-only mode. Later we will announce the opportunity for questions and instructions will be given at that time. instructions] [Operator

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

Dan Leckburg

am Thank Dan Investor you, for and us for International thank CACI morning, this Chuck. everyone. morning. Relations Leckburg, Vice President Good Senior of you joining I I

We presentation slides, number please. are so slide providing two, let’s move to

current address law. be important in our statements are forward-looking this historical not fact materially differ statements do constitute and and results anticipated. will actual views There statements factors our that under These reflect today cause as such as call to from that of could to subject

company’s listed Those night’s bottom release SEC at last the of filings. the factors and are press in are described

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

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

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

John Mengucci

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

robust the with we performance. Board, across four, flow. profitability night, and results please. released slide strong am fiscal to growth accelerating Last delivered organic and revenue financial CACI I our second move pleased and growth, our XXXX cash Let’s significant for again very results quarter

to new These awards billion value, our $X.X fiscal XX% for half a of results CACI. won business approximately great that with first out also XXXX. We contract of round representing

acceleration margin with to growth revenue the beginning organic organic to expansion. reflect income and ongoing net guidance fiscal we and of year, the raising guided Today, further expansion. revenue we accelerating At margin are

please. five, Slide

We margin see healthy trends across demand growth market, and our expansion. continue addressable revenue to supporting both

illustrate awards this this Let quarter. demand from me with

First, mission and including mission enterprise and CACI contract the won portfolio, a five-year extensive to $X.X cloud customers’ modernize billion migration. business applications technology

one is federal award which won development our development innovative government’s our Agile capabilities Agile unique we and leveraging by Agile largest performance programs, the software cash largest This two winning now on CACI solutions government’s the of of the programs. of delivers factory.

offering field And security mission represents critical community $XXX LGS. won work CACI technology side, and communications their recompete unique leveraging new, the technologies, R&D intelligence for by CACI. won and sole-sourced a to missions. contract national an This enable million intelligence We opportunity new contract with this of customer innovation

duration just contracts are six, value Slide and enduring organic longer we examples awards growth backlog. few please. and a These are of larger, our to of These drivers expansion. margin high adding consistently are the

BNP a In past a to than duration average results contract rather simply maintaining on and This that than items our fact, in is years. the today, over three as base longer additional contracts of we the focus years investment business we weighted won are those dependable via us winning such allows recompetes. X.X revenue book have growth

have long-term now seeing that are several high are efforts something quarters. we are discussed complex a Many development What past more growth slowly, delivering. but these initially ramped the on provide also of technology focused quality, is contracts we we

volume contracts organic deliver higher successfully we accelerating on are enter phases, and As driving these growth. we

materially six we up now fiscal from organic at In XXXX about when X%, ago of fact, guided to least months just X.X%. we expect growth

Slide seven, please.

about December, what in fiscal funding appropriations budget than see. of in we levels followed we bills government agreement government X% very Turning ‘XX to to the back two-year signed at passage by fiscal market higher be environment, was late by continue August the the ‘XX. The government encouraged

to CACI’s markets. investment multi-year billion priorities, we against plans important our of we the these absolute customers. map us When $XXX the across More capabilities addressable our are levels see budget than tremendous opportunity

business, In investing heavily are business and our modernizing enterprise and electronic customers cyber, IT are business, applications. Within infrastructure mission intelligence, warfare, space. customers in our communications signals

alignment market areas future enabled these our confidence Our in growth. to and ability critical us gives take to share our

to CACI emerging future please. we eight, address growth. to continue To Slide ensure invest remains customers’ needs, for ready our

When program. differentiation, our customers differentiated deliver on developing more are we value demand our research through and ahead and shareholders. technologies of our We we customer development to win

including a name technologies training, our of to balance CACI on of sustainable and Our people, will few. certifications business talent. growth This retain life establish broader who trends, ahead our customers strategic testing work and like advisory best we and ready in growth General consistently development leadership continues and and industry the win group and benefits the operations opportunities, developing competitive experts opportunities and just to are highly to leaders side, solutions industry’s customer Nagata, market pursuit ensure of strategic we Mike continue offer will and remains our right retired attract in that long-term with organizations a are to investing the people provide

our future excellence with successful I support has business, capital that new and us win second so growth. operational deploy committed deliver to closing, In very quarter am performance. strategy We well, pleased our remain served to

value that focused and very growth levels this add confident strategic customers’ across long-term, and on margin and flow. forward. remain cash acquired investment critical deploy over strategy growth areas. then generates capabilities cash looking of drives successfully of the and expansion, which cash combination the organic has organization to We we generation This shareholder increasing Relentless compounded

to call over With will the turn Tom. that, I

Tom Mutryn

turn John, number everyone. nine. good Thank to you, and slide Please morning,

XX% up Organic our Our to second from awards greater $X.X deliver. new than organic as was billion, continue year, the with revenue existing quarter growth. business accelerated programs ramped last and first quarter X.X% growth

that to higher the had profit last for tax income rate. in we able effective than from up XX.X% lower quarter was quarter set is a expectations Net we the This operating ago. drive as year higher million, $XX.X a were

XX, Slide please.

sales continue which to were of outstanding receivable million accounts generate lower reduction cash of from with result days, days in put quarter. the driver is We down as purchase flow AR year. facility with second XX of in $XXX major MARPA, strong XXXX. cash last a Day in operating One flow we the XX the January place

X.X have trailing we in addition, acquisition our to net undertake continued drive adjusted ended and provides times. to high a to We strategic efficiencies EBITDA processes. additional This In to the value quarter add ample debt collection debt capabilities. with second capacity XX-month at billing

please. XX, Slide

well for a now our FY’XX raising lower by organic expectations guidance, to fiscal guidance least fiscal reflect rate. awards performance, when growth up We provided our initial in are strong tax a XXXX ‘XX, year We from as and program we be expect year X.X% driven contract at strong to performance. operating as X%

the anniversaries growth LGS the Mastodon January at As a organic of reminder, end of at for and end February. purposes,

tax XX%. guidance well an price this of Drivers of assumes with the associated equity down increased higher of Our XX%, grants approximately original include effective credits. vesting as expectations performance, tax given stock benefits rate as of from our strong

impact MARPA EBITDA be excluding the increasing around our guidance fiscal expect We continue XX.X% at ‘XX cash to to adjusted facility. any and operating flow of are margin be $XXX we to least year million,

Slide XX, please.

indicators remain Our forward healthy.

the quarter, John in coming had level more the we last contract double year. achieved at again As than $X.X we mentioned, strong in second billion, awards

to our this drove billion, and basis, versus $XX last XX-month trailing backlog increased up a times of On book-to-bill X.X XX% record year.

billion for remain that billion, healthy quarter. business with June new pipeline with CACI. of and expect of reported worth Submitted the metrics CACI quarters, we awards are business Our during of levels over that new at to we March over XX% another XX% $X bids admirable $XX.X for last bids submit pending to and to

of expect our XX% our from come contracts, from now we revised new midpoint X% guidance, of from revenue X% business. the at will recompetes and existing Finally,

John. back turn will I call that, the With to over

John Mengucci

The our this of Tom, first shareholder and year growth, deliver performance you, let’s the long-term. strength XX. go expansion of this over the of employees. the our margin to None through without positions talent, value and innovation commitment fiscal and continued slide to us happens of half Thank

I each and company. every to deliver mission make of our and I great all a thank CACI the to you technology expertise and am customers and day for do you incredibly proud we enterprise what

on character and good right to conduct culture to way and foundational that their companies culture business is our culture relying embrace people our the of their factor, innovation to success. define as Great to a success

our and success. Fortune company Magazine’s recent worldwide drives most listing that XX of CACI company as as recognizes a the technology culture our services information world��s admired top

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

Operator

you. Instructions] Sachs. Goldman Please Gavin first come ahead. Thank from [Operator our Parsons question go of will And

Gavin Parsons

Hey. Good morning, gentlemen.

John Mengucci

Gavin. morning, Good

Gavin Parsons

have to backlog do slow but and say, for So in ton, we execute this I now. class not we they is at have to-high enough the won We make just a mutually you to years what problem are single-digit want pretty mean, winning a mid- growth won have a point have, is say to you we it what high exclusive? on or sure that few can down on drive,

John Mengucci

both slowing very I it on the Yeah. actually a years many Gavin, plan started, on thanks. you now we a margin sacrifice kind growing of get we seeing to substantial to that you quite was commitment and today. made with call down. and We clearly, don’t bottomline. as And Yeah. are guess, several back never on that growth top will of specific know, strategy focus the a

time the belief the that us to profit to organic. way is shareholder cash and to foundational really over best be value that that’s some it’s growing And generate flow because going was of and

to Some be through of acquisitions. was that going our

growth what have equal what point talking for your peers -- We around it of surpass now and it does to up does time some at quite then and does see how organic it it. time at when some been show

the in real pleased are larger because If term going and to areas potential am longer dollars. consistently I the won at organic spend we FY’XX, confident and business of really growth we where have look customers

over able three years. to been have We maintain the rates last

our So not pushing customers. are on of cost our to investments we

cost managing We strong basis. are just very a a

are do we of I when of as continuing B&P I what larger duration, and plowing means, maintain Then which actually more longer am years, less When a if we the we -- I to this that larger, far money a win. we I to calling couple business winning into awards. duration, am efficiency, that, book longer get generate spending am win

three part execution and actually your coming So slow strategy. focus back -- when on do to down are we just

-- first business, the The job. an two is BD win working extremely outstanding new The machine the team has which parts, done first well.

team don’t happy you sight. get really across and unless are revenue see as deliver, our generating has second, don’t we the job and so done delivering, we on are very outstanding we Board, in margin then and end an all gain we once awards, know, because any And the

Gavin Parsons

you from amount sense. can can lot on good next of over to continue free are you and guidance just look help What this that implies the the you even similar the conversion XXX%. few cash few lot you think, free a years improve I last appreciate years? a down and bridge makes if the rate That’s Thanks. growing grow conversion, walk faster. That Tom, I a to year? at But cash like flow about a does

Tom Mutryn

Thanks, Yeah. Gavin.

things that had obviously previously and in a follow we we last of having. of is note that making result The capital had One so numbers spending direct of the I in a the the higher so in a couple that or are that investments is the have we I the capital impacts we you will are articulated. spending year wins buckets. than

internal CACI times, that -- relatively expensive of the locations, so facility, facilities, customized laboratories often and work skip is in is have some work have, win oftentimes, test that space, expensive at which we CapEx, have new and some spaces need provided of some we we those internal equipment a driving that’s assembly As conversion.

that, walk net kind cash of down operating than straightforward relatively income to from Other flow.

expense, good of intangible depreciation, a items, number have non-cash compensation stock We amortizations.

levels expect going with be you level consistent of somewhat that to that So CapEx. articulated the we forward

Gavin Parsons

Thank you.

Operator

Edward question Wells our will from go Please of And Fargo. come next Caso ahead.

Edward Caso

hump? current to and it’s give here the then does award the Good after cycle. upcoming party? a into weave maybe and before sense decisions that, morning. And How the back talk administration commentary Congratulations. Thank other maintained that on extended duration election you help over your or impact whether in you. here that and you us around your sort may the history and change Can both of

John Mengucci

Thanks, Yeah. Ed.

have we sets, have various and So, for like say We do years they can in fared year’s I’d has -- clearly divergent won’t been this that whether well, to look, we field county we but business under we in priorities. here. XX even administrations, different more debate

mission nation is, Ed, there’s capabilities have numerous and our that expertise whether strong enterprise at we our a D leading and Part we portfolio regardless have the we got continuing offerings. see and business we coming well-balanced pretty we got and and of of R why growth the I mean customers or look some if a have, technology

if around our and business. So discussion this we business enterprise mission talk

On the we mission national mean, well and are areas. aligned security side, to I critical defense

always dangerous very sort federal budgets highly of have place say, You world and of have historically a the defense part budget. bipartisan a the the is been government

that So there. well we are we covered believe

enterprise every the side, we both more systems really estimates civil cost drives looking funding infrastructure making their programs On and savings. social technological time and updating that long-term are to the fed, and move around side the modernize defense different and always and

we to that going weave portion with less do, some budget customers, susceptible today, high-end much -- the years, very then our larger services So maybe because maybe of mentioned as a nature Monday kind business, I are we business of five work you and in that portfolio pure our believe and it’s mission immune is afternoon cuts. back in more of to those technology is

the this and EW also budget always and our of to some at the company and the has capabilities terrorism go position eroded less. missions. an where competition going end those their day, So power the have to government continues to and dollars we counter a great to At be fight is strategy to been spend focus that least era has of

spends. is The that the the out business votes of Congress believe we which regardless. who will the are of looking reelected to and budgets gets so and there, are at that election. day, fills we and we on are end allocate election And forward or continue to actually who that grow that the It kind is that role

Edward Caso

Thanks.

the is Can there sense other margins? cost implications, of is. a had of future more you. is you a give cost short-term here in us plus of The plus in this the on in an what and question is or pipeline, sort uptick work are sort around, your you what’s therefore, Thank phenomenon

John Mengucci

of plus LGS material, and that, movements price you when portion one time watching. a that’s their we when in always is work as large so are see versus Ed, cost those the we leadership of fixed minor Yeah. things and team, acquisition, a plus. But cost did

plus have work driven when the that of So in we brought percentage that acquisition would up. cost

as the we There’s there of are mix. be and that minor business will work we products winning. We is begins Ed, up our macro At the a on a more are winning, rest is The pipeline. spin movements fixed really price XX-XX. more out there different of sort awards work the level, at technology of looked of split for that that expertise the to sort

margins be to cost going knob the are wrong mix, of have like should so only and that therefore, direction. there dial we that driving nothing inferred be to go work, that course, winning we type or will contract margins, it continue So more is plus are that one we but watch to

Edward Caso

you. Thank Great.

John Mengucci

Yeah. Thanks, Ed.

Operator

Morgan. of go Seth ahead. question next Seifman will come Please J.P. Our from

Ben Arnstein

actually Hey. Ben Good for is morning. Seth. on This

John Mengucci

morning, Ben. Good

Ben Arnstein

hoping you at is is could upside more color quadrants on stemming there you from out the this four enterprise one Day? broad-based had was in Is the something the little organic of either Investor the I or a laid mission portfolio the that growth. or the or that across add something

John Mengucci

dollar truly larger that of in see all it is and are longer benefits plan much growth, organic now value. multi-year that in the awards that you our at look duration that we generating to If are Thanks. Yeah. a are of function starting

X.X%. out we guided we year. came were last to X.X% of when When We think at I -- we

mix mix more We see have is, part you the of term of to are at longer which up. those other side, on business, ramp is based When the the business term that are starting question. your And of is the longer a what X%. are technology programs towards

expertise win, talent, that will the for ramp six much we award. quicker possibly you see have months where to that we delivering So And those months, later, after start more nine a are growth up. three months, jobs

up speak, and if on expertise are so sustained those programs and in Across going revenue side, the put level of quadrant holds the up that then their deliver starts it four I to start technology slower quicker growth. quadrants, and to were to a

sort that at both our no back the businesses. have far of and to that The the months. book-to-bills we of are broad future of Gavin’s beyond is the to think to X.X X, across our now and growth down. win, nature multi-year and a slowing X.X of train combination intention mission the enterprise end we we trailing more At growth XX far mix I work continue really of on and organic the day, The question, driving

Tom Mutryn

management I there’s number also of growth base discipline I we program think, will value existing seeing open business types large scope positions programs and existing of potential a existing And one quicker of everything and labor-based we at on kind I fill activities of provide add, Yeah. on looked A power work. have which that whereby we comment are on working. do on more on, strong to

that’s organic growth So source forward. going of another

Ben Arnstein

like, of Got you on in strong being it. to this year with X multiples. to space front. This the with deals -- build maybe willing I Gavin’s you go a we or Thanks. out any you M&A a maybe down so But X closer this number leverage your space elevated bit the Is little be little on growth comment times? on can a to deals get focus the willingness at -- pursue are and maybe is lofty pretty and the question. pretty in little and organic at more there cash your would or And guess, have strategy bit a piggybacking here, seen times M&A leverage, of

John Mengucci

Thanks. Yeah.

I leverage is So the at of talk around Look, I capital be is a to and we start based will just somewhere grows a priority deployment, levels. Tom let how strategy us M&A always and organic and are we way key look beyond company. growth will going M&A for it

gaps we next space in, government we three place that from. is spend five have areas years, strategy nine consistently years. the to materially capability the any We years, that So we we but going believe any no come over a year, white look at have where seven one where is or new year, of

ones. just powder, the We whether from in couple have So M&A ones are smaller strategic value. come provide acquisitions fill to come create we others, where it to growth we but long-term came frame. dry with on absolutely The then time we the got has did still acquisition’s value. to a three to that doing gaps customer up of It transformational or with relationships long-term large it they shareholder March side, need for capability needs and has or

are sold they us, You when we around come the additional in that books their be elevated at for but we of are integrated get get employees. fact they to with at something looking lot see that looking multiples. mentioned enjoy we working additional CACI, delighted and time, here, perhaps. companies growth in also relationships aren’t and Yeah, that build today, of the majority and over to the with inside the them all opportunities look What look an somewhat awful but

prudent done it comes the yeah, watching shareholders these out properties, disciplined company. of to that’s is and focused mean, deal drive buyers and along numbers. long-term of the a this we very So of sort have number to our again, been we that fundamental very of I that growth multiple has some and other are after Again,

Tom Mutryn

is we on and that both the And multiples of once it’s and it’s decisions on we referenced. present look our and will of right kind of of that. think base analysis comment Yeah. you cash kind of kind flow, the at we value a acquisitions, elevated kind leverage enterprise the establish, I an When we discounted company strategic so I value future

which time growth expected of are kind trying for just flows. accurately are prices which forecast to spent companies grow need higher But cash It’s going mathematically. to companies We than a lot kind materially future have no of to task. of flow command cash easy a

certain and which in does the extent, you multiple a be company higher have simply would higher a get materially we growth you to for we paid potential, to So because have what acquisitions, oftentimes, identified. willing pay

will delever, inexpensive leverage, of X.X absence investing times we capital In today’s else that. debt target and there’s would relatively acquisitions, markets, In rates terms being to but no delever, we equal, prefer comfortable for money with acquisitions. the today, via are success long-term set of borrowing in everything given business we the at

to a of allow not us shareholder is utilize leverage to we constraint us it were and for of kind effectively grow going to So value. kind

Ben Arnstein

Thank Got you it.

John Mengucci

Thanks.

Operator

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

Joseph DeNardi

I ago can. Good little about bit guys It since stock the in everybody. want has question was put if morning, John, Hey. stock and a that M&A of for almost bid that would ask I doubled to two a lot then. you have differently, a CSRA involved years your

at able transactions. Thank other doing larger over to you or if M&A size? the stock. you have are your way if smaller influences you about been smaller-ish agnostic that transactions the you. it as influences way think you that keep using type Do working transactions want to you find to be a experience just wondering to scale that that am look You in period I for seem

John Mengucci

thanks. Yeah. Joe,

niche are I on -- very ones. small we focused we think, are

been transaction. on that that We transformational transformational fill have acquisitions relationships some the an multiple which one have is we the -- And are ones on gaps single a calling capabilities that really I what with can we asset and see -- just gap. focused way focused fills customer are word

but We believe we we one. them have and believe acquisition about, and would talked all. companies our I that that not win views have value that on would CSRA did and the down to helped believe both that, have am still we probably going go recognized the own we had path we we unfortunately, that can’t

we can. last the getting as that our end paying going question at of best very spender the to there are absolutely of out lot companies multiples, there folks we certain are the a mentioned. we day, the cash disciplined out make of a high are that and are There be There But today. value

transformational really, it’s we So does capability a use. have asset versus out can not an small. there, It’s that

investing intellectual day, property. now a company Now at the have generate far we internally the more become end to own of our that’s

on I have look can a and acquisitions, So I at if we needs and that spend much that enough out the kind much there. of I’d and gap, would our cases property that early coming, the we solution. that those in the intellectual meet invest way R&D go rather we time I see rather funds gas customer gap where see will we line didn’t find do

have So am When edict we an large. certain worth dollar we have indifferent don’t I towards small sort to acquisitions value something, of year. of versus a each do don’t

strategically really based. So it is

the tell have, like. and LGS gaps filled look a at the of XG lot knowledge you at some that intellectual property communications the will on if I has and of that they we

build the are to which open of kind history and we you continue successful Tom, of upon out M&As. companies all want anything to add? to there very very, long will the So doing

Tom Mutryn

decision, will I follow-on shareholder it ultimate The a value. a will only is, or comment. buy one The just company we drive long-term not thing kind add should of

value will acquisition of of with the measure without We we our performed the than and shareholder long-term stock the that’s see end kind better how the day. at acquisition

goes the equity determining what larger, this with once consummate establish do for are economic. And capitalists, have debt to of ultimately transaction How future it’s on a the and only as acquisition. not may appropriate previous would the capital we of this rely then but then my that flows I of consistent very operating we we am equity, comments, cognizant be. higher as on with using and And as cost form financing fit, associated is our we acquisitions capital consideration future our cash gets and into purchase consideration focus

Joseph DeNardi

Tom, kind Thank you those? for gaps Do fill the or leverage end transaction? you would that perspective. if had to Yeah. still want still Do the at exist could are you do the just getting what that you comfortable with those remind fill. capabilities hoped high to And you CSRA us of the

Tom Mutryn

on I CACI. Well, start that will

John Mengucci

[Inaudible]

Tom Mutryn

is the in X.X that have relatively We kind leverage comfortable doing cash flow -- we said that be strong times to we free recognizing delever past, performance. getting something able to would quickly of are be would you given

And points feel maximum maybe XX your basis of so X.X-ish thereafter, kind kind of leverage, in that’s or basis comfortable. think but we generally, XX would times mind, points where I of

John Mengucci

Yes. deal Joe, away. years trying services end since on day, the your and looking three in other At managed been things question, were CSRA to area some the past we the of doing and finished. shake has at in the that

have We come those up with capabilities.

We are out jobs. there winning managed services

we filled have that So gap.

the there it, to on largest thanks. having to we and are actually performing own the out closed two Agile. software all If on are at Agile we we have would quote-unquote now we at seeing that where in in the the doing of actually award and did -- on like that we front, are so there million we without We the look acquisitions. out you million of software sort healed $XX say billion programs development grow that growth that areas $XXX were nicely $X.X range, we I’d are the five-year

Joseph DeNardi

very you Thank Yeah. much.

John Mengucci

bet. You you. Thank

Operator

Our next of question come go Forbes Jefferies. will from Scott Please ahead.

Scott Forbes

Hey. guys. mean Good like… morning, I looks it

John Mengucci

morning. Good

Scott Forbes

anything products have and there’s one-time am Thanks. guys a in ramp call of of product terms items? and I there efficiencies just out second any a or wondering half …you if margin mix, to in bit the

Tom Mutryn

Yeah.

if call can quarters of unique particular other sometimes or are It is quarters, higher the will first in singular you there’s this product to back out. quarter back some awards, expense fluctuate year. are timing margin driving EBITDA the One which over for events which calculation. are higher award a incentive Like to you or full between XX.X% particular we fees margin, that So of performance half kind the we see deliveries, past which Nothing half sometimes to lumpy that several of some guiding margin that implies is do is go are than that. that items.

that driving and to new in and it up larger, take lastly, that. items get as John seeing Underlying margins productive kind that’s work indirect we spread ramping So on higher of as any mentioned. I And portfolio, specific well. would across costs not over our both we probably, to margins momentum are work broader we existing call are to base out able and that’s driving positive the a

Scott Forbes

the up opportunities? new I then, seems environment of any just that And picked or Thanks. and you any challenges guys protest have mean, are coming seeing from to recently delay

John Mengucci

Today have a actually always Yeah. ambient from Thanks, challenges, been one us awarded It to Scott. last quarter there’s two out fourth No of awards on that that we level year, nothing pause, was one sustaining and back last quarter. to there. have that no track were the few protests amazing tested. I outcomes quite gives I on CACI our been expect years, over awards would think, the fiscal this has these to going different. record But be us

Scott Forbes

guys. Thanks,

John Mengucci

You bet. you. Thank

Operator

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

Colin Canfield

This guys. Colin Raviv. Canfield is morning, Good Jon for

John Mengucci

morning. Good

Colin Canfield

the of Following competitive flow that competitors up scaling for bids a Can traditional and on work? up to bid months has to more little how also the talking and of on the environment. months talk impacted bids to protest both services bit XX environment the of margins competitiveness the kind sort shifting through kind the then you XX your of

John Mengucci

Sure. Yeah.

business. still are new to XX% on win We XX% looking at rates

about So I to time. like XX am a market share. I spending the money take odds of when It’s

are We successful.

odds the continue and that invest those I when favor odds me like to So level. will to I

-- our technology for side our expertise also talent far impact at that risk for with we the delivering versus and sort there’s margins, has the work competitors model. work factors have and along of that risk an X getting and if It’s to on on margins different our true back by more go a quadrant. X slightly As expertise the the look does

We continue our expertise slightly looking even lower are grow to the to those elements be at though a may margin. of business,

business growth. end If within our to are higher to because our part we technology we going the those the at be -- of look margins that part and accelerate of are the we to growth looking drive bottom of what line use side, at day,

customers of we bidders differentiate going customer’s down. we when after solve kind which and ones, of seeing the out we So are problem larger smaller the based the buy Clearly, versus for the we also are to that technology contracts going the on on number continually are is our narrowed and margins looking and which way the work that there. potential are value, we bidding,

lay we for we And drives property investing in that gives because deliver on to great our need. reason intellectual us else, we that value than faster the that the are also everyone decision, of ask higher table best ways ahead a margin customer can

day, differentiate the else, we customers more the people find of when this of time win want drive everybody others the that longer every than the bottom margin business. a higher they us and wanting with line on CACI more At continues of time jobs we come technology over end and We versus that of growth. to

Colin Canfield

LGS on little at example, Got context of you maybe the going if and it. And Thanks Can up about for transition fixed think timing there. that, talk we on transition for if you just the price mid-teens and just about within price transition, bit of look then fixed margin? the aspirational that of say, in following happens the how a color. timing that the right? And that’s

John Mengucci

Thanks. Yeah. it’s been probably out by that by there way work I been at we have have the contract Colin. kind type, look of it Thanks, is we not more and but winning. -- the

more expertise Now are all bottomline to provide growth out press you awards there where we we or our all and to sort top going. whether information, have of our model program, augmented are of releases because technology a our with allows it’s trying

is programs, some Those take facility think technology and build-outs. technology the time programs for closest, to which firm Mastodon price On work. relating fixed LGs to of Colin, the I

got You material to that’s We material to in labs put we with the requirements finalizing are that’s quote-unquote, those a got And working six-month delay, awards. place. in additional seeing three-month customer. purchases. delay usually And from on our revenue also

a win, ramp margins longer So better up period. the more protracted it technology has work the but there that we are,

last you to months. What if and in seeing now margin the programs nine at we of those looked look they quarter technology won then you are work are kind they of and whether those now last So you won the generate to six backlog are or core We starting growth. we revenue LGs the higher growing, of won year those levels have are fourth our are CACI. in months

Colin Canfield

Got the it. appreciate I color.

John Mengucci

Thanks, Colin.

Operator

ahead. will Matt go Please come next Our of question Barclays. from Akers

Matt Akers

to Hey. think run? Good how in morning, and capital ask working of where I the quarter. much about of should talked could guys guys. to wanted about kind Thanks for that in runway kind there the question. the about and more we go strong is you of the go kind there collections long How

John Mengucci

Yeah.

on the invoicing we of driving closely So been to of kind the doing DSO. invoices very working quicker agents promptly lower government sure with paying of are for on improvement of door accurately. opportunities is time, make kind off bills kind collections There’s the cash of kind that getting job sure a done continuous have timely making focusing good

XXX% fairly which us We which oftentimes complicated for invoicing invoices to it’s not time the rejected. to take programs, accurate have ensure in requirements, several were that have get and if

contracting Going are upstream, requirements. to that with various level of to government it detail kind working rethink necessary invoicing Is support really this the in backup those organizations we to and for of have invoices. of some

those DSO. continue dialogues our there answer opportunities often having some we are terms the of those try nature some In and so no to payment to lower is quicker belief, drive of to in kind and change the requirements to facilitate to payment is cases, processes

Matt Akers

update we about, an those year ramp and the through at up talked going? that’s And as Thanks. kind start LGS on on then, think, just how I of kind two it. of doing? Mastodon just you go could of maybe Got comment guess, are the on new so I how You acquisitions, a the year,

John Mengucci

with was had overall, one Look, talking bring we meetings. a in and quarter core performance extremely from point, are would now And our and of proof Matt. last folks customer Thanks, I LGS technology they some as some quarter, and CACI Mastodon beginnings Yeah. pleased those where we meetings both having of their the later. about on quarter

LGS getting response requirements those that device a very why with from of of of sit bought so see some us and being consolidate easy on and provide or the we great been continue the technology have us invest so one, both work we with, of your take going future and front that the we fact a of core vendors we by to us three our they from this those reason for needs, to -- ahead technology, and better continue that much rig to say how can in to sort a may then four also with library support Mastodon of these in can is technology couple we have and other address to customers mission done you And they want some of great facts, on well.

they well and in lumpiness it out. in as that are with we some mentioned an of long-term doing with earlier, be basis, understanding annual deliveries in quarter of an will expect deliveries smooth the line or that Tom any both on result quarter itself Financially, are in over can their the period, product lumpiness, business again, margin, on but our running expectations nature we

large our going my that And the That a prepared customers. during remarks. rather to front, is awards one then mentioned was support on award I award intelligence LGS the that

are given what Mastodon. we see they from fact delivering what moving the customers forward, CACI it’s have the up on and we whether So rate and take LGS

that long-term, nice successful a integrated win company, and of be that their to financially $XXX out ability are check the their would a as while over I doing. out box leadership I in under team, two assets those sole-source into fully being positive million job come a is there very point as sort punctuation check this would

Matt Akers

Great. Thank you.

John Mengucci

Thanks. bet. You

Operator

Company. Sullivan Benchmark Please from question next Our will of come Josh go ahead.

Josh Sullivan

Hey. Good morning.

John Mengucci

Good morning, Josh.

Josh Sullivan

talked into tech Can reports some give you think, front? the growth headcount there. I on also hubs you acquisitions headcount. the some us in of any light strategy can talk in push out might metrics you Mastodon, mean, on smaller looks Any about just these areas, the to regionally, I metrics about be that like Just, there’s quadrupling

John Mengucci

Yeah. Sure. Yeah.

was a and technology done. we to I mentioned now, dispersed lot programs of our five So years leverage started, we some think, or workforce something probably have years software more get to six development a trying around which of back

gates. It’s number the excited. but what going extremely Actually, sharing of well. have Rochester have it area, it’s clearance in the for work important technology Because like customers’ Josh, more quadruple out, this programs processing, information, employees. the model folks look at the the Mastodon hear do our -- doubled maybe are you is to mean, we today we I’d background that when at you in very I we we on of up competition that Virginia outside look Northern talent the front less our win,

they talent we many Rochester Sarasota can in area, many, locations the to of we delivering. works two Denver, to they report those a well They raise can where and Springs, like the and mission that out there technology the So move and Colorado folks we really that for Florham really area, Tampa, Park, live that work to fact the are work check in some us. great when want family boxes, the can

beachhead And relationships help they infrastructure also more as new well. that place. university do us have So and got have acquisitions in as we more and the we university

us quicker. So allows better that even to and we obtain the more are the dispersed our to relationships technology able hire workforce is,

Josh Sullivan

And is duration, on that. side? CACI appreciate then defense or in on seeing the IT are I that broader Do think the term you the contracts. a general and of to that’s you reality it Got contracting longer with just unique the

John Mengucci

we and our growth, addressable speak we Yeah. We my can and same talked in I else I thing market. and within driving shareholder want bottomline I it’s be to probably weekly, billion $XXX can’t tell what want you for about are drive a sector. is everyone value. the to to top team But

deals set customer shape right for in was just real we the So our takes to and go, sense and that that thing changed shareholders. discipline focus company the the our it for that the this make

offerings and I So into to more than new share. much go to enjoy That’s there’s investment those because re-win new value always re-winning already capital. market new won been work just and I jobs. that money rather next technologies I’d every plow spending I dollars have. what or taking I grab up to am tend gather last year, larger time year dollar

model how question. do to This for train pursuits. So off we to as mean, be patience, And very focused is This actually to Gavin’s get There’s are works. to us to not I with It’s off in are been and the well are on to it’s longer actually we larger know first a how the $XXX we don’t back jobs. see in market. pays plenty and fact we of. we billion know we new billion want everybody’s starting of that I after company, a addressable if business duration trend selective going sector. that things $X.X trend go how a can

Tom Mutryn

of I don’t Yeah. industry, a would the and but pretty saying of statistics size is kind function confident across have the say, the fruits those the ago of awards. in that And And am longer broad the tenants of differentiated those to I duration in capabilities are our development I in the of that. years and we are awards multiple business within place seeing the we the put

Josh Sullivan

you. Thank it. Appreciate Good.

John Mengucci

Thanks, Josh.

Operator

question Our come from Humphrey. Please SunTrust next will of Tobey ahead. go Robinson Sommer and

Jasper Bibb

Bibb for This Good Tobey. morning. is on Hey. Jasper

wrap single award. intelligence to contract into a seems that have capabilities it view increasingly agency cyber our customers from So looked

So I on dynamic comment that CACI? could might was impact that how you and hoping

John Mengucci

Yeah. Sure.

items what to those into mean, customer, gets I them collapsing up customers one. customers are our there who less on also we delivered. gives is and out taking there’s actually free takes and someone going multiple power One, to to that from that have our So, work and multiple they customer assist to contracting vehicles it looking in ensure other are delivery contractual

customers. We So our at move. combining if They to many contracts. support that you intelligence are look various

to price those plus of fixed support and customers cost a technology from an a helping from We expertise more one contractual delivery to arrangement type buying in a work also outcomes. talent move

looking very company are become customer at technology gives a We they that good a that the for. have outcome delivering

that. seen we have So

are that doing of as DHS work contracts. well. Josh, some combining there, is they out

that customer combined the of our where XX different had over we the awards have or years was DTRA, contract last with five FS/DE XX largest One contracts. the

some also drive and Tom levels organic there have customer that as they relationship does great for our us have them allows to bring with gotten on-contract help with out that XX one-on-one and a drive to to growth is our there are allows gaps higher contractors us would customer on that Board growth. that productivity earlier, more us, different What buying, they out mentioned what as drives, within folks sees than

Jasper Bibb

provide Thanks. quarter? on I can think and touched And update Mastodon, then we smaller the an acquisitions on you but LGS from last

Tom Mutryn

Yeah.

kind So we of Century, Linndustries and did well. a performing DeepX. kind They of few kind are of all Next

Next Century was the largest one.

other what The everything small, said we to track capabilities year and deliver acquisitions two they ‘XX. were for deliver three relatively fiscal on but those for important were is going to

Jasper Bibb

detail. Yeah. Appreciate the

John Mengucci

Jasper. Thanks, Yeah.

Operator

Our question and come ahead. next Cowen Company. from will Rumohr Von of Please Cai go

Dan Flick

guys. morning, This Good is on Hey. Dan Flick for Cai.

John Mengucci

Hi, Dan.

Dan Flick

should $X.X one assume just in should like, fair So expect call, described, quarter, earlier look Agile is a Agile few the this contracts the larger this this that quarter moving the so included on on we looks, it have tax we from ramp of the that seen? like continue the order to scale you in of it ones was Thanks. to task sounds and full backlog was points forward, billion this that

John Mengucci

Yeah. Sure.

little in beyond revenue, a a our a programs. we $XXX means first each will probably next because six-month quarters at two more ramp point then from assisting we material just our some this level. our and for very The It’s fourth, the and year. the yes, in ramp of So, the but $X.X assuming more is million it into quarter, backlog about three-month and clearly, to which as every see the mission expertise contract get third is both technology billion year to see we and similar that us will in ramp,

boy, in I of contracts I nature Agile think the hope your question software other of the is part sites, these so.

are shaping actually customers. We

in It’s extensive a the functional layout have lay same We of well. you where Ashburn, an back and quite we have picture our for down hardware develop pitching we Virginia. as solutions is software factory, Agile factory delivering a if line, made building about investment type product years X us to

are attention. it, there drives refine touch any done delivering they see feel you that software. lot it, and they error can much out line, Xs a two can once the metrics that free better it That Customers and of and are you can they witness it, being production like can XX

continue. that customers are pleased buying you would and expect the happy contractor multiple enthused largest and they seeing we development very and that governments need are consolidating those specific from that are applications what So work we they on and trend and of very two and taking we are to one are performing is software those and

Dan Flick

Great. Thanks.

John Mengucci

bet. You

Operator

of Our Louie from go next question will Please ahead. Blair. come William DiPalma

Louie DiPalma

Good morning, John and team.

John Mengucci

morning. Good

Louie DiPalma

software that function to your and development didn’t larger you been how What exist aren’t always enabled and takeaway of Is previously at right? been these programs strong have has development these these large wins mostly has it and sauce deals? billion-dollar a move software market win secret up you

John Mengucci

Correct.

years fill shaping and what those development filled our line So, customers. part have as four of those back have it once outstanding we do is team years of business gaps job leadership and focused to gaps to how three do do then we our we and an

possible. they how or location so shaping mean them to buy And a meetings, what it through what customers the they What of CACI really come showing being is directing the isn’t customers to buy. able the and art numerous by we

help but we augmentation not the today, solved. to what you mission of to is So make get selling investments have here the willing just are we your

not really from that outcome to they outcome. buy the buys of customer intentional intentional an just is When us, meetings investment lot what believe they are we an able by customer a but a have actually So need drive the it and to they seen that differentiate.

this term using I’d that need. differentiate are something can the Then price on, XX% in that lot truly my customers If focused actually cheaper. X% have or matters. fixed it on on we cost the so make model We they on aren’t getting been better, during and a in that side a deliver faster, technology because they call plus focused absolutely

them capability start then in We go go let’s which quiver, invest next internally to we the our transformational way is this sooner. and are So years acquisitions the arrow overnight. back wanted those to. we to investments few some paying didn’t Those didn’t But give us at out looked this larger off. there a

So end are we At we the our trend going more of have the larger make believe we of jobs. like the to scale that would day, of customers built our and be buying own to these more we anytime profitable business, to disciplined we win I better the going will stay stop soon. the as and we successes isn’t be, more train on earlier, this larger, how and focused off and mentioned

Tom Mutryn

and I in And -- with everyone a will the strong really in good prepared it to Yeah. I go, add same rowing about that, of having it to It’s vision culture. with want starts that. starts with you John, a where character talked your company mean is we remarks, direction.

give people And the processes and you technology. then

place blocks some organization a very highly throughout So success. that have consistent which with processes, that some motivated and confidence right talented the we us gives people the building in for

Louie DiPalma

internally Do to to vertically you platforms capabilities? leading obviously one need over develop a of the Gremlins. and recently are singles you to intelligence acquired years, drone this single guys sensors. of several Raytheon past a of providers intelligence or topic on versus And capabilities, via M&A in integrate Leidos own Okay. drone position feel that internal Two and key you warfare sensor other providers acquired the in order and expand differentiation their investments, further sensor platform FLIR electronic your

John Mengucci

Yeah. Thanks, Louie.

we We very very the focused market careful on see and are where going.

our provider. far. step. another now platform have very a intention around it’s a to be too We vocal been Right That’s is step

how out that I an in where do large We companies to companies mission bend there as are there. the and really part some aerospace IMA these that at to platforms. the defense are They we go. think all have metal package looking and know outstanding of But won there that job build of platforms outstanding

it’s at need, that out we we it. a we more to signal a how around the understand much single the only or on If that ability through what battlefield find need need to customers mitigate it, they reverse the outcomes so way can that that but had is capabilities the signal detect platforms, to manner can that at communicate outlook not have not engineered in an look in our new that a

write dollars So we technology the that that longer larger believe the on are those platforms. packages term in far

our from when algorithm Intel signal address comes capability. new shared So our up, shared and help needs. manner a drone this and don’t new is What are that I work a a both need these really -- new a customers multiple DoD in vendors for need them I looking can

those intelligence, electronic to dynamically, so up and processing folks So and we are going a leading people some and warfare, so solved spectrum is and be and solved the going this singles faster believe in are algorithms are and with company, digital within CACI, more core LGS It’s with with signals. ability elegant power of to that on world platforms that footprint better platforms. on that the not be we amazing a changes but we picked the the nation’s the understanding Mastodon have

where is we end And to issues. build will growth fire the coming ability so how of our spot It’s stay war platform going a believe actually time, that’s at the the day, the quickly is a and be We some us that’s to solution turn is signal. can where to part a for sweet greatest we the, around where not and from. to

Louie DiPalma

color. for Thanks the

John Mengucci

Thanks, Yeah. Louie.

Operator

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

Joseph DeNardi

a the from as but out to should narrative see get or slowing It how time translate doesn’t that’s much few that is as Thanks very think, factors asked your slowing for defense that time, trends growth you I really so you much. your years, you a market, number, next there’s growth a like slow not? that whole, do addressable at number look the markets into topline view the seem business. topline there you budget into and your Tom, question

Tom Mutryn

Yeah.

capabilities, a currents. mixing that I So have very am which spots. of sweet are which focused lanes, a are areas billion on of capabilities, $XXX kind my we We probably kind swim here, robust. we The mentioned are kind market. mission faster of addressable got metaphors enterprise

realize not do or revenue foreseeable we margins for that, the given an simultaneously. of increasing be to the budget increasing kind see and impediment civilian our goals budget And of organic to federal us defense

key very feel we role world, a our services are dangerous those a play So providing that and alluded John we just in areas. technology technology well-positioned to in

Joseph DeNardi

Thank you.

Operator

Our question follow-up Instructions] next a Sachs. Parsons is from of [Operator Goldman also Gavin

Gavin Parsons

me Thanks for squeezing in. Hey.

Matt’s… Just on a quick follow-up one a

John Mengucci

Yeah.

Gavin Parsons

percent from Thanks. of do …question think you a year of your of will current kind earlier. now? What outstanding some bids and submitted that be include capability LGS where form

John Mengucci

the don’t ask more sure clearly, that, I kind that think to I response. my be number of in in off I involved you question involved It tip that at Yeah. would tongue. less a tomorrow. you What am Gavin, tell didn’t it’s will get of on follow-up is today. genius

But LGS business. with a of on those. book nice came to perform They really continue

awards parcel CACI coming there. algorithms over really customers build of we they our I provides and the quarters, to Mastodon devices that pulling see on and technology, the a our the as the core requirements that strength larger percentage think that of out intelligence be LGS will part

would more the and LGS electronic we electronic that warfare, Intel, extent single Mastodon both roles. domain, expect at are I see the To in play anything looking prominent to

Gavin Parsons

Thanks, again.

John Mengucci

Yeah.

Operator

like This concludes closing question-and-answer any back I the Mengucci to ahead. to John over go remarks. session. our for would Please turn conference

John Mengucci

for you thanks, to would concludes today’s after on a This and know Thank take help that Price and call. questions great thank their who Tom have day. Chuck, today’s call. your the Leckburg and available are of call Well, our participation. to like will everyone your and you or Mutryn, have Dan George follow-up in call. We thank We you to many webcast everyone listen dialed for

Operator

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

now may disconnect. You

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