CACI International Inc

ladies and gentlemen thank you for standing by welcome to the caci international physical 2022 fourth quarter and full year earnings and physical 2023 guidance call today's call is being recorded at this time all lines are in a listen only mode later we will announce the opportunity for questions and instructions will be given at that time if you should need any assistance during this call please press star zero and someone will help you At this time, I would like to turn the conference call over to Dan Lechberg, Senior Vice President of Investor Relations for CACI International. Please go ahead, sir.

Well, thank you, and good morning, everyone. I'm Dan Lechberg, 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 number two. There will be statements in this call that do not address historical facts, 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 Noguchi, 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 22 results. as well as our fiscal 23 guidance. With me this morning is Tom Mutren, our Chief Financial Officer. Slide four, please. In July, CACI celebrated our 60th year of business. I'd like to start this morning's call with a quick moment of reflection on this milestone. Back in 1962, our two founders started CACI with modest means, a park bench, and a telephone booth for an office. What they lacked in resources, they made up for in ingenuity, confidence, and shared tenacity. That spirit survives today and is foundational to our culture. Today, we generate more than $6 billion of revenue and support some of the most critical missions that keep our nation and the world safe. Our founders would be astonished and proud of what CACI has become, especially the positive impact we've had on countless customers employees, families, communities, and shareholders over the last six decades. We are all truly honored to carry on this legacy started over 60 years ago. So, on to our results. Slide five, please. Last night, we released our fourth quarter and full year results for fiscal year 2022. Our results were in line with our expectations. For the full year, we delivered revenue growth of 3%, adjusted EBITDA margins of 10.3%, and strong free cash flow of nearly $700 million. And we also won $7.1 billion of contract awards, of which nearly 60% is new business to CACI. That represents a 1.1 times book to build for the year with a good mix of re-compete wins to support our base and new awards to drive future growth. Slide six, please. Turning to the external environment, as we look out over the next several years, prospects are positive. Demand is strong, and there continues to be bipartisan support for national security priorities. A favorable government fiscal year 23 budget is currently moving through Congress with higher spending in defense, the intelligence community, and homeland security, and in particular, in key addressable areas like digital solutions, enterprise IT, and C4ISR cyber and space. This strong backdrop gives us confidence in our ability to drive long-term growth and margin expansion, robust cash flow, and additional shareholder value. Slide seven, please. We continue to invest ahead of need in differentiated expertise and technology to address key priorities that will drive long-term customer demand and spending. Let me give you some examples. Within digital solutions, we are modernizing applications and consolidating disparate systems across the federal government to drive efficiency, improve data accessibility, and enhance cybersecurity posture. As an industry leader in agile software development scale, including executing two of the federal government's largest agile programs, we are seeing increasing customer interest and pipeline opportunities to leverage agile software development, DevSecOps, and open architectures to enable digital application modernization. In enterprise IT, network modernization is the key trend. Agencies need to improve cyber defense, support an increasingly dispersed workforce, and consolidate and modernize legacy networks for efficiency. In addition, real-time multi-domain integrated data and communications won't be available for efforts like JASC2 without modern network infrastructure. To address these challenges, we bring deep capabilities and fast performance. And we are making investments in new technologies, like commercial solutions for classified, or CSFC, to enable access to classified networks from commercial devices from anywhere in the world. Broad modernization of both digital solutions and enterprise IT across the federal government will drive healthy spending for the foreseeable future and is an area CECI is well positioned with both capabilities and past performance. Turning to C4ISR and cyber, the electromagnetic spectrum remains critical for intelligence collection and modern warfare. For more than a decade, we have invested to address critical priorities in the electromagnetic spectrum, including signals intelligence, electronic warfare, counter UAS, and secure communications. For example, we provide software-defined capabilities to detect signals used by our adversaries, determine their location, and degrade, deceive, or deny their use, as well as protect our own use of the spectrum. In the context of the global threat environment and near-care adversaries, These are even more critical and are gaining traction with customers recognizing the necessity. Lastly, in the increasingly important space domain, we are leaning forward to position CECI in areas where we see the opportunity for decade-long technology-driven growth. In photonics, we're very excited about our continued progress in optical communications in both the higher-volume LEO market and the more bespoke geo- and interplanetary markets. Our photonics capabilities have been successfully demonstrated in space, not just in a lab, and continue to generate interest and opportunities for government customers and space platform providers. In fact, we recently made our first production delivery of optical communication systems to one of our OEM partners. We also remain on track to put an upgradable software-defined Assured Precision Navigation and Timing, or APNT, payload into low Earth orbit early next year. This payload will demonstrate a unique technology, qualify its capabilities in space, and prove an alternative to the existing vulnerable GPS systems, a vulnerability that needs to be addressed. Slide eight, please. As you all know, a number of years ago, we embarked on our purposeful strategy to create a different company within our market. We made significant investments in both expertise and technology to try to differentiate and ultimately increase the quality of our revenue. As we stand here today, our EBITDA margins are more than 200 basis points higher than they were earlier in this journey. We delivered sustained, durable, long-term margin expansion over those years. And even with this success, we remain committed to continue long-term margin expansion. Revenue, growth, plus margin expansion compounded by effective capital deployment, drives our leading free cash flow per share growth, and ultimately shareholder value. With that in mind, I'll turn to our fiscal 23 guidance. We expect revenue growth of between 4.5% and 7.5%, and just an EBITDA margin in the mid to high 10% range. In addition, we expect to continue generating healthy cash flow, and Tom will provide additional details on all elements of our guidance shortly. To wrap things up, we remain committed to our stated performance goals of long-term growth and margin expansion. CACI will continue to assess the head of customer need to drive future growth and differentiation. As we've discussed many times before, our goal is to drive free cash flow per share, and our commitment remains consistent to utilize CACI's strong cash flow in a flexible and opportunistic manner to deliver the greatest long-term shareholder value. With that, I'll turn the call over to Tom.