CACI International Inc

Ladies and gentlemen, thank you for standing by, and welcome to the CACI International Fourth Quarter and Full Year, Physical Year 2020 Conference Call. Today's call is being recorded. At this time, all lines are in a listenable mode. Later, we will announce the opportunity for questions and instructions will be given up at time. Should you need assistance during this call, please press star then zero, and an operator will help you. At this time, I would like to turn the conference over to Dan Leckberg, Senior Vice President of Investor Relations for CACI International. Please go ahead, sir.

Thank you, Cole, and good morning, everyone. I'm Dan Lechberg, and thank you for joining us this morning. We are providing presentation slides, so let's move to slide number two, please. 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 three, please. To open our discussion this morning, here's John Mangucci, President and Chief Executive Officer of CACI International. John.

Thanks, Dan, and good morning, everyone. Thank you for joining us to discuss our fourth quarter and fiscal year 2020 results, as well as our fiscal year 2021 guidance. With me this morning are Tom Mutren, our Chief Financial Officer, and Greg Bradford, President of CHCI Limited, who's joining us from the UK. Before we get started, Tom and I want to again express our hope that you and your families are healthy and safe during these unprecedented times. We also want to reiterate how proud we are of our employees, their resilience as we all confront COVID-19, and their unwavering commitment to delivering critical expertise and technology to our customers. Slide four, please. Last night, we released our fourth quarter and full year results for fiscal 2020, as well as our guidance for fiscal 2021, and I am very pleased with our performance. Our fourth quarter, with year-over-year growth of 9% in revenue and nearly 90% in net income, 10.9% adjusted EBITDA margin, and over $150 million in cash from operations was a strong finish to a great year, a year in which we met or exceeded our financial commitments, even as we navigated the COVID-19 pandemic. For the full fiscal year 2020, we saw revenue growth of 15%, with organic revenue growth accelerating from our initial 5.5% expectation. We expanded our adjusted EBITDA margin to 10%, grew earnings per share by 21%, and delivered robust operating cash flow of over $500 million. In addition, we booked a record $11.6 billion of contract awards, with $6.5 billion representing new work to CACI. Our award successes included the single largest contract in CACI's history, our $1.5 billion 10-year TCS award with the National Geospatial Intelligence Agency. Half of that award is new work to CACI, demonstrating our leading network and cybersecurity technology capabilities, as well as our strong track record of delivery. We also won the five-year $1.1 billion Beagle Award with DHS Customs and Border Protection, leveraging our differentiated technology capabilities in agile software development. And we won significant new C5ISR work within the Army Futures Command, to provide expertise enhancing the cybersecurity and resiliency of Army networks, including next generation 5G networks. Notably, the NGATCS and Army C5ISR awards leverage the capabilities and past performance of prior acquisitions, a key objective of our strategic M&A program. Slide five, please. You've heard us discuss the three pillars of our strategy, win new business, drive operational excellence, and deploy capital for growth. Our record contract awards demonstrate success in winning new business, and our margin expansion and strong cash flow are indicative of driving operational excellence. In terms of capital deployment, M&A remains our top priority. Through our strategic M&A program, we pursue high-quality, innovative companies that enhance our differentiation in critical areas of national security, fill capability gaps, and expand our customer set. Yesterday afternoon, we announced the acquisition of Ascent Vision Technologies or AVT, a company that exemplifies what we're looking for with our M&A program. AVT is a high-growth, high-margin company that brings a strong culture of innovation and best-in-class talent with over 70 engineers, technicians, and operational staff. AVT expands our mission technology capabilities by adding best-in-class electro-optical and infrared, or EOIR, imaging technologies. AVT's differentiated offerings include onboard digital video processing using artificial intelligence and machine learning algorithms, which is significantly more advanced than current analog capabilities in the market today. AVT's EOIR imaging technology opens up two large ISR growth opportunities for CACI. First, the growth expected from the increasing use of precision sensors to automate current platform capabilities. And second, the technology refresh market of existing ISR technology across multiple domains. In addition, the combination of ABT's EOIR technology and CECI's industry-leading RF detection and non-kinetic mitigation technology creates a best-in-class counter UAS set of offerings. In fact, As we announced earlier this week, the Army's Joint Counter UAS Office selected CACI's Corian system as one of three fixed, semi-fixed counter UAS systems for use by the DoD. The same office also selected the Elmatis system, which utilizes AVT's EOIR technology and command and control software as one of DoD's approved mounted mobile counter UAS systems. The combination of AVT's and CACI's technology will result in further enhanced products to serve the counter UAS national security market. I'm also pleased to announce that AVT's founder and CEO, Tim Sheehy, who is a decorated veteran of 10 years in the military, both as a Navy SEAL and Army Ranger, will continue forward with CACI leading the business. Tim brings an unwavering commitment to customer missions and strong business skills that are crucial to leading a company accustomed to delivering cutting-edge technology directly to the warfighter. Slide six, please. Our performance in FY20 positions CACI for continued success in fiscal 2021. At the midpoint of our FY21 guidance, we expect total revenue growth of about 7%, continued adjusted EBITDA margin expansion of 40 basis points, double-digit EPS growth, and robust cash flow generation. Tom will provide details on those financials shortly. Our fiscal year 21 financial outlook is consistent with our established performance goals of growth above our addressable market and continued margin expansion. Slide 7, please. Despite increased attention recently to deficits and budget outlooks, we remain optimistic about our near and longer-term prospects. First, the Budget Control Act of 2019 established a budget framework for government fiscal year 21, and thus far, Congress is following that framework. While it's difficult to predict whether government fiscal year 21 appropriations bills will be passed and signed on time, or if we start the year under a continuing resolution, we continue to see bipartisan congressional support for defense and national security missions. Second, While authorization under Section 3610 of the CARES Act is currently set to expire on September 30th, it's clear that the COVID-19 pandemic will not be over by then. As a result, our industry is actively working to advocate for an extension of Section 3610 to ensure that critical national security programs and jobs are protected. In fact, the Senate's draft of a second round of COVID-19 legislation called the HEALS Act included a Section 3610 extension for one year. The House passed their own version, called the HEROES Act, which was also supportive of the defense industrial base. All indications from our interactions with lawmakers and staff on the Hill point to a bipartisan extension of Section 3610. Third, as we think about future budgets, the ongoing reality of the global threat environment looms large. Adversaries and bad actors have not let up because of COVID-19. In fact, just the opposite. We believe both sides of the political aisle recognize this threat environment and the need to continue to support national security priorities. Finally, we have a large and growing addressable market of over $230 billion. Given our market share is a little over 2.5%, we have significant potential to grow. The national security and modernization priorities of our customers are enduring, well-funded, and procured under long-term contracts. We remain confident that our alignment to national security priorities and cost-saving IT modernization, as well as our investments in differentiated capabilities, will continue to position CACI well in almost any budget environment. In closing, I'm extremely pleased with our fourth quarter and full-year performance. We continue to to successfully execute our strategy, driving growth, margin expansion, and strong cash flow. We manage our business to stay ahead of emerging high-value customer requirements and to continue generating long-term shareholder value. With that, I'll turn the call over to Tom.