CACI INTERNATIONAL CLA 2027 Q1 Earnings Call

Please go ahead, sir. Thanks, Morgan, and good morning, everyone.

I'm George Price, Senior Vice President of Investor Relations for CACI International. Thank you for joining us this morning. We are providing presentation slides, so let's move to slide 2. There will be statements in this call that do not address historical fact, and as such, constitute forward-looking statements under current law. These statements reflect our views as of today and are subject to important factors that could cause our actual results to differ materially from anticipated. Those factors are listed at the bottom of last night's press release and are described in the company's SEC filings. Our Safe Harbor statement is included on this exhibit and should be incorporated as part of any transcript of this call. I would also like to point out that our presentation will include discussion of non-GAAP financial measures.

These should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. Let's turn to slide 3, please. To open our discussion this morning, here's John Mengucci, President and Chief Executive Officer of CACI International.

John. Thanks, George, and good morning, everyone.

Thank you for joining us to discuss our first-quarter fiscal year 2027 results. With me this morning is Jeff MacLauchlan, our Chief Financial Officer. Slide 4, please. Before turning to our results, I want to remind you that CACI is a technology-first national security company executing a clear and consistent strategy. The key elements of that strategy are, first, focus on enduring national security priorities with narrow, deep funding streams. Second, utilize our deep mission knowledge in the markets we serve to truly understand what our customers need. Third, invest ahead of customer need, informed by that deep mission knowledge. Fourth, deliver software-defined technology to address critical needs with the speed, agility, and efficiency our customers demand. Finally, deploy capital in a flexible and opportunistic manner to create value for our customers and our shareholders.

This strategy is the driving force behind our strong and consistent results. Slide 5, please. We had an excellent start to fiscal year 2027. First-quarter revenue grew 8%, EBITDA margin reached 13.3%, adjusted diluted EPS increased 12%, and we generated $133 million in free cash flow. We also won $4.8 billion in awards, producing a 2 times book to bill for the quarter. We have a large and growing backlog, and our funded backlog grew double digit year-over-year for the seventh time in the last eight quarters. Our margin performance stands out. It reflects superior execution and a higher mix of differentiated technology we delivered this quarter. We are raising our revenue and earnings guidance for the year, and Jeff MacLauchlan will share our additional details shortly. Our results, awards, backlog, and pipeline give us a strong foundation for the fiscal year and support our increased guidance. Slide 6, please. Let me discuss some more details, some highlights from the quarter, and the demand that we are seeing that are driving our results and position us for continued success.

I will start with two fantastic awards for technology-enabled operational support that exemplify our enduring commitment to national security. First, our Apollo award, where CACI will enable CENTCOM to carry out critical intelligence and information warfare missions. Our success in winning this new work for CACI stems from our deep mission knowledge, our exceptional business development, and our superior ability to utilize and combat AI in the information domain. The second award is SOFETOPS 2, a five-year follow-on contract supporting the Army's Special Operations Command. It reflects the trust we have built through years of work with this customer and extends our role helping special operators plan for and respond to evolving threats using our technology-first approach.

Our electronic warfare portfolio continues to see strong demand. That is certainly true in the counter-UAS market, a significant and growing opportunity for CACI. Beyond protecting our war fighters, the growing threat to military facilities and critical infrastructure is driving demand for precision non-kinetic counter-UAS capabilities like SkyValor. SkyValor leverages nearly two decades of proven counter-UAS deployments, industry-leading cellular detect and defeat capabilities, and enables detection up to 75 kilometers so operators have more time to make critical decisions. Our prospective counter-UAS customer base is expanding across the U.S. government and internationally. A great example is our $500 million domestic shield award from JIATF-401, which also included an initial funded task order. We are also seeing increased demand for our BEAM manpackable counter-UAS systems from U.S. customers and allies across Europe and the Pacific Theater.

BEAM is the most technically capable system of its kind on the market with over a decade of proven performance and important discriminator for prospective customers. In the critical space domain, we are capitalizing on increasing demand as a leading merchant supplier of optical imaging and optical communications payloads. CACI was recently selected by Vantor, a commercial provider of satellite-based intelligence, to supply advanced optical imaging payloads for their Pulse satellite fleet. That work is an example of taking ARKA's exquisite sensor capabilities developed for national security missions and applying them to a more proliferated commercial market, which is exactly what the U.S. National Security Strategy calls for. ARKA has a number of other sensitive opportunities in the national security space domain that are moving forward and are expected to contribute financially in fiscal year 2027. We are also making progress in optical communications.

We expect to complete SDA Tranche 1 deliveries later this calendar year and begin work on Tranche 2. CACI was also one of three companies selected to advance to phase III of the Space Force's Enterprise Space Terminal program, where we are developing the next generation optical communication terminal to support critical multi-orbit initiatives like the Space Data Network. Consistent with our merchant supplier strategy, multiple primes bidding on the SDN have selected our EST technology for their solution. We also continue to win and execute other classified optical communications programs, and our successful contribution to the Artemis II mission has helped demonstrate the capability of our technology for future human spaceflight. Finally, demand remains healthy for modernization of mission networks and digital applications. Many critical customer priorities, including AI adoption, border security, and financial accountability, are dependent on modern, secure, integrated networks and applications for success.

CACI is a leader in modernization because we do it differently, differentiating through speed of delivery, use of outcome-based models, and demonstrated success deploying AI-based software. Programs such as BEAGLE, ITAS, and NASA NCAPS are real-world examples of where we are applying AI and agile delivery methods to drive customer modernization faster and more efficiently. Leveraging AI translates into reduced costs for customers and better margins for us, and we consistently see customers reinvest cost savings and additional scope to CACI. Across all areas of our business, our technology-first approach is directly contributing to our financial performance by driving on-contract growth and new business wins from customers who are committed to transforming at the speed of mission. Slide seven, please. In order to meet strong demand we're seeing for our software-defined technology, we are actively investing to scale our production capacity.

Our first step was to open our manufacturing center of excellence for defense electronics in Rochester, New York. The additional 61,000 square foot facility significantly increases our manufacturing space and expands our capacity to develop, test, assemble, and deliver defense electronics such as TLS Manpack, BEAM, and others. We plan to open additional manufacturing centers of excellence for space and for integrated systems, and we'll share more about these initiatives in the coming months. These investments will enable us to deliver advanced technology faster, at greater scale, and more efficiently, supporting continued revenue growth and additional margin expansion. Slide eight, please. Turning to the macro environment, budgets and funding remain healthy in our key areas of focus. With 90% of our revenue coming from national security customers, the priorities we focus on are well-funded and continue to exhibit strong demand signals because they are needs that must be addressed.

A continuing resolution, or CR, is currently in place until December 11th. Regardless of how this dynamic plays out, it's an environment we've navigated successfully for many years. As we've demonstrated year in and year out, CRs do not have a material impact on our business, given our large backlog, longer duration awards, and the critical capabilities that our customers depend on us to deliver. From an awards perspective, our strong book to bill shows some improvement in award activity, though the pace of decision-making is not fully normalized and is still sluggish in some areas. As our customers continue to evolve their relationships with industry through non-traditional procurement methods, our key differentiators of investing ahead of customer need, software-defined capabilities, and outcome-based pricing are all resonating extremely well because they drive increased speed, efficiency, and lethality. Slide nine, please. Before turning the call over to Jeff, I wanted to discuss a few other updates.