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CACI Reports Results for Its Fiscal 2019 Second Quarter and Raises Annual Guidance

January 30, 2019

ARLINGTON, Va.--(BUSINESS WIRE)--Jan 30, 2019--CACI International Inc ( NYSE: CACI ), a leading information solutions and service provider to the federal government, announced results today for its second fiscal quarter ended December 31, 2018.

CEO Commentary and Outlook

Ken Asbury, CACI’s President and CEO, said, “We delivered another record quarter of revenue and operating income and won $1.3 billion of contract awards. We are also thrilled to announce our two most recent acquisitions, which, combined with CACI, will deliver differentiated, high-value, cutting-edge signals intelligence, electronic warfare, and cyber operations products and solutions. We are raising full-year revenue and net income guidance to account for the strong performance in our core business and reflect the contribution of our new acquisitions. We are confident in our ability to deliver our long-term organic revenue growth and margin expansion commitments while continuing to generate value for our customers and shareholders.”

Second Quarter Results as Reported

Second Quarter Results Assuming Tax Reform was in Place for Fiscal 2018

Revenue for the second quarter of Fiscal Year 2019 (FY19) increased compared to the second quarter of Fiscal Year 2018 (FY18) driven by new business wins, on-contract growth, and acquired contracts. Operating income growth was driven by strong program performance and indirect cost control. GAAP net income and diluted earnings per share decreased due to the impact of the passage in December 2017 of the Tax Cut and Jobs Act (“Tax Reform”) on the second quarter of FY18 net income and diluted earnings per share. In the year earlier period, net income and diluted earnings per share benefited from a reduction in our net deferred tax liability of $94.8 million due to the lower tax rate, partially offset by a tax expense of $9.7 million associated with cumulative foreign earnings. For a more meaningful comparison of our second quarter FY19 net income, see page 11 of this release for a reconciliation of second quarter FY18 results assuming a full year of Tax Reform. Based on this adjusted comparison, net income growth for the quarter was driven by the same factors which drove operating income.

Net cash provided by operations in the second quarter of FY19 was $56.4 million. Operating cash flow was impacted by normal fluctuations as well as lower collections due to closures of some government payment offices in the last few days of the quarter. The lower cash collections increased our accounts receivable balances as well as our Days Sales Outstanding (DSO).

Additional Financial Metrics

Second Quarter Awards and Contract Funding Orders

Our contract awards in the quarter were $1.3 billion, which excludes ceiling values of multi-award, indefinite delivery, indefinite quantity (IDIQ) contracts, and approximately 16% higher than the same period last year. Approximately 70 percent of our awards were for new business. Some notable awards during the quarter were:

A five-year task order, with a ceiling value of $318 million, to deliver new electronic warfare and signals intelligence systems to a Department of Defense customer. A five-year, $125 million task order to design, develop, implement, and maintain logistics systems for the U.S. Navy’s Military Sealift Command. A five-year, $73 million prime contract to support systems and computer engineering, research and development, integration, and deployment of surface warfare systems for the Naval Surface Warfare Center. The award is a result of CACI’s acquisition of the Systems Engineering and Acquisition Support Services Business Unit. A 30-month, $31.5 million prime contract to optimize and sustain the Defense Enterprise Accounting and Management System (DEAMS), the Air Force enterprise-wide financial solution. CACI will integrate legacy Air Force financial management systems into a single system capable of delivering accurate, reliable, timely and auditable financial management information that complies with directives from the secretary of defense. A prime position on the nine-year, multiple-award Information Technology Enterprise Solutions-3 Services (ITES-3S) IDIQ contract, with a ceiling value of $12 billion, to offer a broad range of end-to-end enterprise IT services to the U.S. Army.

Contract funding orders in the quarter were $1.0 billion, 33.6 percent higher than the year earlier quarter. Total backlog at December 31, 2018 was $12.6 billion, a 15.7 percent increase over the year earlier. Funded backlog at December 31, 2018 was $2.5 billion, 29.3 percent higher than the year earlier.

Other Highlights:

CACI was ranked by Fortune magazine as a 2019 World’s Most Admired Company, our eighth time on the list. The ranking identifies companies that enjoy the strongest reputations as business leaders that deliver innovative solutions and services with high ethics and integrity. CACI ranked sixth among IT Services companies worldwide. Chief Operating Officer John Mengucci was named to WashingtonExec’s Top 25 Execs to Watch. Mr. Mengucci was recognized as the driving force in CACI’s market-based strategy and growth into products and solutions. CACI’s SkyTracker ® Technology Suite was named “Best-in-Class” among Industry Innovators at Washington Technology’s Government Innovation Awards. The awards recognize IT companies that apply ingenuity and creativity in meeting their customers’ critical challenges. CACI was ranked second on Monster and Military.com’sBest Companies for Veterans List for its strong percentage of veteran hiring (47 percent of 2018 new hires), veterans in the workforce (37+ percent), and focus on assisting veterans as they transition into the corporate world. Dr. Warren R. Phillips, Lead Director on CACI’s Board of Directors, was honored as a member of the National Association of Corporate Directors Directorship 100 list of exemplary corporate directors, reflecting the Board’s highly-credentialed leadership and ethical governance. CACI appointed Christopher A. Voci as Senior Vice President and Corporate Controller, responsible for all aspects of accounting, financial reporting, and Sarbanes-Oxley compliance.

Six Months Results as Reported

Six Months Results Assuming Tax Reform was in Place for Fiscal 2018

Revenue in the first half of FY19 increased compared to the year earlier period due primarily to new business wins, on-contract growth, and acquired contracts. Operating income increased primarily due to the factors noted above. GAAP net income decreased due to the impact of Tax Reform in FY18. Net cash provided by operations in the first half of FY19 was $139.5 million. For a more meaningful comparison of our first half FY19 net income, see page 11 of this release for a reconciliation of first half FY18 results assuming a full year of Tax Reform. Based on this comparison, net income growth for the first half was driven by the same factors which drove operating income plus additional tax savings. Adjusted EBITDA, a non-GAAP measure, for the first half of FY19 was $238.7 million, 26.0 percent higher than adjusted EBITDA of $189.4 million for the first half of FY18.

Subsequent Event

On January 30, 2019, we announced that we had entered into an agreement to acquire LGS Innovations, a leading provider of signals intelligence (SIGINT), electronic warfare (EW) and cyber products and solutions to the Intelligence Community and Department of Defense with a legacy back to Bell Labs; and acquired Mastodon Design, experts in the rapid design of rugged SIGINT, EW, and cyber operations equipment. The acquisitions will enable us to leverage their integrated technology and capabilities to create scalable SIGINT, EW, and cyber products and solutions providing advanced operational capabilities to our customers addressing emerging near-peer threats.

CACI Raises its FY19 Annual Guidance

We are increasing and narrowing our revenue guidance range to reflect improved performance in the core CACI business and an approximate $125 million revenue contribution from the two acquisitions. We are also revising our FY19 Net Income guidance primarily due to expectations for increases in the core CACI business profitability in the second half of FY19, as well as stronger than anticipated second quarter results and positive contributions of the two acquisitions. These will be partly offset by approximately $13 million of one-time transaction costs, net of tax.

The table below summarizes these changes and represents our views as of January 30, 2019:

Conference Call Information

We have scheduled a conference call for 6:00 PM Eastern Time Wednesday, January 30, 2019 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 http://investor.caci.com/news/#upcomingevent, at the scheduled time. 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 Relations tab.

CACI provides information solutions and services in support of national security missions and government transformation for Intelligence, Defense, and Federal Civilian customers. A Fortune World’s Most Admired Company, CACI is a member of the Fortune 1000 Largest Companies, the Russell 2000 Index, and the S&P MidCap 400 Index. CACI’s sustained commitment to ethics and integrity defines its corporate culture and drives its success. With approximately 20,000 employees worldwide, CACI provides dynamic career opportunities for military veterans and industry professionals to support the nation’s most critical missions. Join us! 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: legal, regulatory, and political change successive presidential administrations that could result in economic uncertainty; changes in U.S. federal agencies, current agreements with other nations, foreign events, or any other events which may affect the global economy; 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, or any legislation that amends or changes discretionary spending levels under that act; 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 potential impact of the announcement or consummation of a proposed transaction and our 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-Earnings Release

View source version on businesswire.com:https://www.businesswire.com/news/home/20190130005799/en/

CONTACT: Corporate Communications and Media:

Jody Brown, Executive Vice President, Public Relations

(703) 841-7801,jbrown@caci.comInvestor Relations:

Dan Leckburg, Senior Vice President, Investor Relations

(703) 841-7666,dleckburg@caci.com

KEYWORD: UNITED STATES NORTH AMERICA DISTRICT OF COLUMBIA VIRGINIA

INDUSTRY KEYWORD: TECHNOLOGY DATA MANAGEMENT NETWORKS SOFTWARE SECURITY MANUFACTURING AEROSPACE DEFENSE OTHER DEFENSE

SOURCE: CACI International Inc

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PUB: 01/30/2019 04:16 PM/DISC: 01/30/2019 04:16 PM

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