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Why Is CACI International (CACI) Up 3.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for CACI International (CACI - Free Report) . Shares have added about 3.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CACI International due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
CACI Q3 Earnings and Revenues Miss Estimates
CACI International reported lower-than-expected results for the third quarter of fiscal 2022. The national security-related IT solutions and services provider reported non-GAAP earnings of $4.64 per share, missing the Zacks Consensus Estimate of $4.79. Also, the bottom line declined by 12.1% from the year-ago quarter’s figure of $5.28 per share.
This decline in earnings was primarily due to lower operational income, high interest expenses and tax rates, partially offset by a reduced number of shares outstanding. The reduction in shares outstanding can be attributed to the stock buyback worth $500 million under the accelerated share repurchase program announced in March 2021.
In the third quarter of fiscal 2022, CACI reported revenues of $1.58 billion, missing the Zacks Consensus Estimate of $1.65 billion. However, the top line increased 2.1% from the prior-year quarter, primarily driven by acquisitions completed earlier this year. Organic revenues declined by 2% on a year-over-year basis.
Quarterly Details
Contract awards during the third quarter totaled $1.2 billion, with approximately 45% for the new business. Revenues from contract awards excluded the ceiling values of multi-award, indefinite-delivery indefinite-quantity contracts.
CACI ended the quarter with a backlog of $23.5 billion, up 5% on a year-over-year basis. As of Mar 31, 2022, the funded backlog decreased by 7% to $3 billion.
In terms of the customer mix, the Department of Defense contributed 70.7% to total revenues in the reported quarter. Federal Civilian Agencies made up 24%, while Commercial and other customers accounted for 5.3% of revenues.
Revenues generated as a prime contractor and a subcontractor accounted for 89.6% and 10.4% of total revenues, respectively.
In terms of the contract type, cost-plus-fee type contracts, fixed-price contracts and time and material type contracts contributed 56.1%, 31.8% and 12.1%, respectively, to total revenues.
Revenues generated as ‘Expertise’ and ‘Technology’ accounted for 45.2% and 54.8% of total revenues, respectively.
Operating Details
The operating income for the quarter amounted to $125.4 million, down 17.2% year over year. The operating margin contracted by 190 basis points (bps) to 7.9%. Adjusted EBITDA slumped by 12.1% year over year to $161.5 million. The adjusted EBITDA margin contracted by 160 bps to 10.2%.
The company cited an abnormally high profit margin in the prior-year quarter as the primary reason behind this decline. In the year-ago quarter, the company’s margins benefited from higher profitability due to the favorable fixed-price contract performance and lower indirect costs amid the pandemic.
Balance Sheet & Cash Flow
As of Mar 31, 2022, CACI had cash and cash equivalents of $125.1 million compared with the previous quarter’s $124.1 million. Total long-term (net of the current portion) debt was $1.82 billion, down from $2.08 billion as of Dec 31, 2021.
The company generated an operating cash flow (excluding MARPA) of $314.1 million during the third quarter, improving by 145% from the year-ago quarter. During the first three quarters of fiscal 2022, CACI generated $617.4 million of operating cash flow (excluding MARPA).
Free cash flow was $296.9 million during the quarter under review and $578.6 million in the first three quarters of fiscal 2022.
Guidance Update
CACI updated its fiscal 2022 guidance. The company now projects revenues between $6.2 billion and $6.25 billion compared with the prior range of $6.300-$6.400 billion. Adjusted earnings are forecast between $17.51 and $17.93 per share compared with the earlier guidance of $18.14-$18.57 per share.
The company now expects a fiscal 2022 net income in the range of $415-425 million compared with the prior range of $430-440 million. However, it estimates free cash flow to be at least $720 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, CACI International has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, CACI International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is CACI International (CACI) Up 3.8% Since Last Earnings Report?
It has been about a month since the last earnings report for CACI International (CACI - Free Report) . Shares have added about 3.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CACI International due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
CACI Q3 Earnings and Revenues Miss Estimates
CACI International reported lower-than-expected results for the third quarter of fiscal 2022. The national security-related IT solutions and services provider reported non-GAAP earnings of $4.64 per share, missing the Zacks Consensus Estimate of $4.79. Also, the bottom line declined by 12.1% from the year-ago quarter’s figure of $5.28 per share.
This decline in earnings was primarily due to lower operational income, high interest expenses and tax rates, partially offset by a reduced number of shares outstanding. The reduction in shares outstanding can be attributed to the stock buyback worth $500 million under the accelerated share repurchase program announced in March 2021.
In the third quarter of fiscal 2022, CACI reported revenues of $1.58 billion, missing the Zacks Consensus Estimate of $1.65 billion. However, the top line increased 2.1% from the prior-year quarter, primarily driven by acquisitions completed earlier this year. Organic revenues declined by 2% on a year-over-year basis.
Quarterly Details
Contract awards during the third quarter totaled $1.2 billion, with approximately 45% for the new business. Revenues from contract awards excluded the ceiling values of multi-award, indefinite-delivery indefinite-quantity contracts.
CACI ended the quarter with a backlog of $23.5 billion, up 5% on a year-over-year basis. As of Mar 31, 2022, the funded backlog decreased by 7% to $3 billion.
In terms of the customer mix, the Department of Defense contributed 70.7% to total revenues in the reported quarter. Federal Civilian Agencies made up 24%, while Commercial and other customers accounted for 5.3% of revenues.
Revenues generated as a prime contractor and a subcontractor accounted for 89.6% and 10.4% of total revenues, respectively.
In terms of the contract type, cost-plus-fee type contracts, fixed-price contracts and time and material type contracts contributed 56.1%, 31.8% and 12.1%, respectively, to total revenues.
Revenues generated as ‘Expertise’ and ‘Technology’ accounted for 45.2% and 54.8% of total revenues, respectively.
Operating Details
The operating income for the quarter amounted to $125.4 million, down 17.2% year over year. The operating margin contracted by 190 basis points (bps) to 7.9%. Adjusted EBITDA slumped by 12.1% year over year to $161.5 million. The adjusted EBITDA margin contracted by 160 bps to 10.2%.
The company cited an abnormally high profit margin in the prior-year quarter as the primary reason behind this decline. In the year-ago quarter, the company’s margins benefited from higher profitability due to the favorable fixed-price contract performance and lower indirect costs amid the pandemic.
Balance Sheet & Cash Flow
As of Mar 31, 2022, CACI had cash and cash equivalents of $125.1 million compared with the previous quarter’s $124.1 million. Total long-term (net of the current portion) debt was $1.82 billion, down from $2.08 billion as of Dec 31, 2021.
The company generated an operating cash flow (excluding MARPA) of $314.1 million during the third quarter, improving by 145% from the year-ago quarter. During the first three quarters of fiscal 2022, CACI generated $617.4 million of operating cash flow (excluding MARPA).
Free cash flow was $296.9 million during the quarter under review and $578.6 million in the first three quarters of fiscal 2022.
Guidance Update
CACI updated its fiscal 2022 guidance. The company now projects revenues between $6.2 billion and $6.25 billion compared with the prior range of $6.300-$6.400 billion. Adjusted earnings are forecast between $17.51 and $17.93 per share compared with the earlier guidance of $18.14-$18.57 per share.
The company now expects a fiscal 2022 net income in the range of $415-425 million compared with the prior range of $430-440 million. However, it estimates free cash flow to be at least $720 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, CACI International has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, CACI International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.