CACI INTERNATIONAL INC /DE/ Q1 FY2025 earnings call

• First quarter results were a great start to fiscal 2025 with 11% revenue growth, 10.5% EBITDA margin, and solid free cash flow. Won over $3.3 million of awards with a 1.6 times book-to-bill for the quarter and 1.8 times trailing 12 months. - Executed purchase agreements for 2 strategic acquisitions: Azure Summit on track to close in second quarter, Applied Insight closed earlier this month. - Highlighted wins like two contracts with the US Navy for engineering expertise and technology. - Discussed strong execution on large programs such as IPPS Army, EITaaS, network modernization awards, and NASA NCAS contract. - Software defined RF technology progress including spectral program for Navy and TLS Manpack program for Army. - Flexible and opportunistic capital deployment strategy focusing on M&A, share repurchases, etc.

In the first quarter, CACI generated revenue of nearly $2.1 billion, representing 11.2% growth, with 9.9% organic growth. The balance was from acquisitions made in fiscal 2024. First quarter EBITDA margins were 10.5%, a year-over-year increase of 110 basis points. Adjusted diluted earnings per share were $5.93, 36% higher than the previous year. Operating cash flow excluding accounts receivable purchase facility was $61 million, and free cash flow was $49 million. Revenue contribution: organic growth was 9.9%, with acquisitions contributing the remaining. EBITDA margin was 10.5%, adjusted diluted EPS was $5.93, etc.

• Raised fiscal 2025 revenue guidance to between $8.1 billion to $8.3 billion, with $75 million from organic performance and the rest from Applied Insight. - Expect fiscal 2025 EBITDA margin toward the upper end of the high 10s range. - Increased adjusted net income guidance to between $515 million to $535 million and adjusted EPS to between $22.89 and $23.78 per share. - Increased free cash flow guidance to at least $435 million. - Azure Summit will be included in guidance once closed, expected during second quarter.

• Government fiscal 2025 budget process with continuing resolution lasting through December '20 can influence quarter-to-quarter timing of shorter cycle revenue like software-defined technology deliveries. - Geopolitical dynamics, elevated global threat environment, and pacing capabilities of adversaries can impact business.

Q: Scott Mikus from Melius Research asked about production issues with optical communications terminals and opportunity for CACI in Tranche 1/2 satellites.

A: John Mengucci said CACI's optical communication terminal technology is mature, deployed, operational, and tested, with strong demand, and they're still on track for deliveries and entertaining additional bids.

Q: Scott Mikus asked about Azure Summit and foreign military sales.

A: John Mengucci said Azure Summit's products are applicable to international markets and can help in expanding into international partnerships in areas like Five Eyes, NATO, etc.

Q: Jan Engelbrecht from Baird asked about Azure Summit's contract content and contract mix changes.

A: John Mengucci said Azure Summit is involved in spectral program, and Jeff MacLauchlan added ITAs T&M content will continue to ramp.

Q: Mariana Perez Mora from Bank of America asked about election and longer continuous resolution impact.

A: John Mengucci said defense is bipartisan, CRs can impact short cycle software product awards but customers have adjusted buying structures, and national security priorities will drive budgets. Jeff MacLauchlan added on M&A pipeline being robust and disciplined.

Q: Sid from Truist Securities asked about win rate.

A: Jeff MacLauchlan said focused on recompete win rates over 90%, overall win rate north of 30%-40%, and will talk at Investor Day about strategy behind success.

Q: Louie DiPalma from William Blair asked about zero margin materials and counter UAS opportunities.

A: Jeff MacLauchlan said small amount of zero margin materials, John Mengucci said CACI has strong counter UAS capabilities with combatant commander approval and long growth path, and there are opportunities in pipeline including via Azure Summit acquisition.

Q: Conor Walters from Jefferies asked about margins and cash.

A: Jeff MacLauchlan said second half has been relatively flat with higher margins than first half, and working capital demand is factored in with growing portfolio requiring some working capital.

Q: Josh Korn from Barclays asked about revenue guide deceleration.

A: John Mengucci said contemplate different scenarios, including impact of extended CR and geopolitical uncertainty, but confident in executing strategy and potentially trending toward upper guide