CACI International [CACI] on Wednesday posted a strong fourth quarter driven by solid double-digit revenue growth and soaring net income, results that matched its fiscal year 2011.
Net income increased 54 percent in the quarter to $45.9 million, $1.44 earnings per share (EPS), versus $29.9 million (96 cents EPS) a year ago, soundly topping consensus estimates of $1.17 EPS. CACI did benefit from not having to pay earn outs on two acquisitions completed in FY ’10, which boosted operating income by $8.2 million. Excluding the unexpected boost to earnings, pro forma net income still rose 45 percent to a record $40.9 million.
The strong income gains were driven by a 170 basis point improvement in operating margins to 8.1 percent. CACI said it benefited from strong growth in direct labor, continued cost control, and a lower than expected tax rate.
Sales in the quarter grew to a record $963.2 million, up nearly 14 percent from $848.7 million a year ago, with organic growth nearly 12 percent. The company attributed its growth to work on C4ISR solutions and services, cyber solutions, enterprise information technology management, program management, and systems engineering and technical assistance services.
CACI said its position supporting the intelligence community is serving it well, as intelligence-related revenues in the quarter grew 26 percent and made up 45 percent of overall sales. The intelligence business will be a “mainstay of the business for years to come,” Bill Fairl, president of CACI’s United States operations, said on yesterday’s earnings call.
Free cash flow in the quarter was a very strong $74 million and CACI said its directors have replaced a three-month old $175 million share repurchase program with a new one to buy up to 4 million of the company’s shares, which represents 13 percent of the outstanding shares, Paul Cofoni, CACI’s president and CEO, said on the earnings call.
Bookings in the quarter were $871.5 million, representing less than 1 on a book-to-bill basis, off about $24 million from a year ago. Company officials say that despite a constrained federal spending environment, opportunities in certain market areas remain strong. Key growth markets the company continues to focus on are ISR, full spectrum cyber operations, business transformation efforts for federal customers, and healthcare information technology, Fairl said.
CACI has $5.7 billion worth of potential business in submitted proposals and expects to have more than $8.5 billion in new proposals by the end of December.
For FY ’12, CACI raised its earnings guidance by a dime to between $4.70 to $4.90 EPS, with the recent acquisition of Pangia Technologies accounting for four cents of the uptick. The rest is due to growth in direct labor. Sales guidance was left intact at between $3.8 billion and $4 billion.
While defense industry officials have been expressing concerns about further cuts to future defense budgets stemming from federal deficit reduction efforts by the Obama administration and Congress, Cofoni has a sanguine view of things.
“We believe the government is committed to achieving a balanced deficit reduction that will not put national security at risk, and we continue to see growth opportunities and funding in our strategic focus areas of defense, intelligence, homeland security, and IT modernization and transformation of government,” Cofoni said in a statement.
As for FY ’11 results, CACI’s net income increased 35 percent to $144.2 million ($4.61 EPS) from $106.5 million ($3.47 EPS). Sales grew nearly 14 percent to a record $3.6 billion from $3.1 billion, with 12 percent of the gain organic.
Funded backlog at the end of the fiscal year stood at $1.8 billion, down $100 million from the prior year, while total backlog remained flat at $6.8 billion.