CACI Reports Results for Its Fiscal 2016 Second Quarter

CACI International Inc (NYSE MKT: CACI), a leading information solutions and services provider to the federal government, announced results today for its second fiscal quarter ended December 31, 2015.

CEO Commentary and Outlook

Ken Asbury, CACI’s President and CEO, said, “I am proud that our team delivered solid performance, with positive organic revenue and net income growth for the second consecutive quarter. Our cash flow was strong, and we maintained our backlog at a high level. Earlier this week, we closed on our purchase of National Security Solutions (NSS) – the largest acquisition in our history. NSS broadens and deepens our customer relationships within Enterprise IT, Intelligence Services and other key market areas. It also expands our capabilities and brings outstanding credentials to help us pursue and win large, next generation IT contracts across the federal marketplace. We are raising our FY16 guidance to reflect the contribution from the NSS business. Looking ahead, we are confident that our market-driven focus on delivering innovative solutions and services to support critical national security missions will deliver long-term value for our shareholders.”

Second Quarter Results

Revenue for the second quarter of Fiscal Year 2016 (FY16) increased compared to the second quarter of Fiscal Year 2015 (FY15), driven by growth on existing contracts, new business, and acquired revenue. The higher operating income was due to the above factors for the increase in revenue and lower depreciation and amortization expense offset by $4.1 million of one-time acquisition-related expenses. The increase in net income was due to the factors noted above as well as lower net interest expense and a lower effective tax rate in the quarter. Cash provided by operations in the quarter was $56.2 million.

Additional Financial Metrics

Second Quarter Awards, Contract Funding Orders, and Other Highlights

Our contract awards were $671 million in the second quarter of FY16. Over 40 percent of our awards in the quarter were for new business. Two of our key awards during the quarter included:

• A $199 million, five-year contract to provide operations and maintenance support and enhancements for the U.S. Department of Agriculture’s Web-Based Supply Chain Management system. This award represents new work in our Business Systems and Logistics and Material Readiness market areas.
• A $56.3 million, five-year contract to provide systems engineering and software development and sustainment services and solutions for the U.S. Army Program Executive Office for Command, Control, Communications – Tactical Project Director Network Enablers. This award represents both new and continuing work in our Communications market area.

Contract funding orders in the second quarter were $541 million. Our total backlog at December 31, 2015 was $10.4 billion, an increase of 6.2 percent, compared with $9.8 billion at the end of the second quarter of FY15. Funded backlog at December 31, 2015 was $2.0 billion, an increase of 5.8 percent, compared with $1.9 billion at December 31, 2014.

In response to the need by a number of government customers during the quarter to address the increasing threat posed by unmanned aircraft systems (UAS), we are rapidly deploying SkyTracker™. This proprietary system accurately and reliably detects, identifies, tracks, and mitigates UAS threats.

CACI’s Board of Directors chartered the Culture, Character, Integrity, and Ethics Committee to oversee the company’s efforts to institutionalize its culture of good character and company-wide commitment to ethics and integrity. The Committee is chaired by Dr. J.P. London, Executive Chairman and Chairman of the Board. The introduction of the Culture, Character, Integrity and Ethics Committee continues CACI’s vigilance and leadership efforts to uphold the highest standards of honesty and excellence in achieving its customers’ critical missions and growth as a business.

Six Months Results

Revenue increased compared to revenue for the first half of FY15 due to growth on existing contracts, new business, and acquired revenue. The higher operating and net income in the first half of FY16 was due primarily to the above factors for the increase in revenue and lower depreciation and amortization expense offset by one-time acquisition-related expenses. Net cash provided by operations in the first half of FY16 was $134.7 million.

Additional Financial Metrics

Closing of Transaction for L-3’s National Security Solutions Division

On February 1, 2016, we closed on our acquisition of NSS, which we announced on December 8, 2015, for $550 million in cash. NSS is a prime mission partner to the Department of Defense, intelligence agencies, and the U.S. Federal Civilian Government. The largest acquisition in CACI’s history, NSS has approximately 4,000 employees worldwide. The acquisition significantly expands opportunities in our Enterprise IT, Intelligence Services and other key market areas, and allows us to offer a broader array of solutions to our customers. It is expected to be accretive in FY16, excluding one-time transaction expenses, and at least 10 percent accretive to both our Fiscal Year 2017 GAAP and diluted adjusted earnings per share.

CACI Updates Its FY16 Guidance

We are updating the FY16 guidance we issued on October 28, 2015 to include the effects of the acquisition of NSS, including one-time transaction expenses. The table below summarizes our FY16 guidance ranges and represents our views as of February 3, 2016:

Following are the key factors related to our updated FY16 guidance:

• We expect that the acquisition of NSS will generate $400 million to $450 million in revenue and $10 million to $15 million of net income before $6-$7 million of one-time, after-tax acquisition-related costs in the second half of FY16. In addition, we incurred about $3 million of one-time, after-tax acquisition expenses in our first half.
• Depreciation and intangible amortization is now expected to be approximately $65 million.
• Net interest expense is now expected to be approximately $42 million.
• We expect that operating cash flow will be in excess of $225 million.

Conference Call Information

We have scheduled a conference call for 8:30 AM Eastern Time Thursday, February 4, 2016 during which members of our senior management team will be making a brief presentation focusing on second quarter results and operating trends followed by a question-and-answer session. You can listen to the conference call and view the accompanying exhibits over the Internet by logging on to our homepage, www.caci.com, at the scheduled time, or you may dial 1-888-771-4371 and enter the confirmation code 41539249. A replay of the call will also be available over the Internet and can be accessed through our homepage (www.caci.com) by clicking on the CACI Investor Info button.

CACI provides information solutions and services in support of national security missions and government transformation for Intelligence, Defense, and Federal Civilian customers. A Fortune magazine World’s Most Admired Company in the IT Services industry, CACI is a member of the Fortune 1000 Largest Companies, the Russell 2000 Index, and the S&P SmallCap 600 Index. CACI provides dynamic careers for over 20,000 employees worldwide. Visit www.caci.com.

There are statements made herein which do not address historical facts and, therefore, could be interpreted to be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. The factors that could cause actual results to differ materially from those anticipated include, but are not limited to, the following: regional and national economic conditions in the United States and globally; terrorist activities or war; changes in interest rates; currency fluctuations; significant fluctuations in the equity markets; changes in our effective tax rate; failure to achieve contract awards in connection with re-competes for present business and/or competition for new business; the risks and uncertainties associated with client interest in and purchases of new products and/or services; continued funding of U.S. government or other public sector projects, based on a change in spending patterns, implementation of spending cuts (sequestration) under the Budget Control Act of 2011; changes in budgetary priorities or in the event of a priority need for funds, such as homeland security; government contract procurement (such as bid protest, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks; the results of government audits and reviews conducted by the Defense Contract Audit Agency, the Defense Contract Management Agency, or other governmental entities with cognizant oversight; individual business decisions of our clients; paradigm shifts in technology; competitive factors such as pricing pressures and/or competition to hire and retain employees (particularly those with security clearances); market speculation regarding our continued independence; material changes in laws or regulations applicable to our businesses, particularly in connection with (i) government contracts for services, (ii) outsourcing of activities that have been performed by the government, and (iii) competition for task orders under Government Wide Acquisition Contracts (GWACs) and/or schedule contracts with the General Services Administration; the ability to successfully integrate the operations of our recent and any future acquisitions; our own ability to achieve the objectives of near term or long range business plans; and other risks described in our Securities and Exchange Commission filings.

CACI-Financial

*See Reconciliation of Net Income to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization and to Adjusted Net Income on page 10.

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