CACI International Inc

Ladies and gentlemen, thank you for standing by. Welcome to the CACI International Fiscal 2024 Third Quarter Conference 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 George Price, Senior Vice President, Investor Relations. Please go ahead.

Thanks, Dennis, 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 two. 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, George, and good morning, everyone. Thank you for joining us to discuss our third quarter fiscal year 24 results. With me this morning is Jeff McLaughlin, our Chief Financial Officer. Move to slide four, please. JCI delivered outstanding third quarter results across the board. We grew revenue by 11% with contributions from both expertise and technology programs. EBITDA margin 11.3% showed significant expansion from last year, consistent with our expectations of stronger margins in the second half. And we delivered healthy free cash flow of $102 million. In addition, our third quarter awards of $3.5 billion represents a 1.8 times book-to-bill for the quarter and drove trailing 12 months book-to-bill to 1.5 times. About half of our awards were for new works at CACI, and we continue to demonstrate excellent performance on our re-competes as well. Our third quarter results are well aligned with our value creation model. which focuses on long-term growth and free cash flow per share. As a result of our strong performance, we are again raising our full-year guidance. Slide five, please. Let me provide a few thoughts on the macro environment. Recent passage of the government fiscal year 24 budget and supplemental is a positive development and removes an element of uncertainty for our customers. Budget levels and growth are very consistent with what was laid out last year by the debt ceiling agreement, and the supplemental could provide funding that would support additional growth of our counter UAS technology. The proposed GFY 25 budget is also in line with expectations, and like most years, we expect we'll begin with a continuing resolution, which typically does not have a material impact on our business. One thing remains clear, national security and IT modernization remain key focus areas for our government. As we've said many times before, the world is a dangerous place, and we continue to see clear demand signals driven by world events. GCI continues to be strategically positioned in enduring and well-funded areas that align with our nation's most important priorities. Slide six, please. A number of years ago, we undertook a strategy to become a more focused, differentiated, and resilient company it was even better positioned to drive long-term growth in shareholder value. This strategy has five key elements. Focus on key enduring priorities for national security and IT modernization. Leverage software to rapidly address critical needs. Bid less, win more, and prioritize larger, longer-duration opportunities. Invest ahead of need to develop differentiated capabilities and deploy capital in a flexible and opportunistic manner. All of these elements are focused on driving long-term growth, particularly in free cash flow per share, which we believe is the ultimate metric for long-term shareholder value creation. Slide seven, please. Today, you can see the successful execution of our strategy manifest in several ways. First, we are well positioned in key national security and IT modernization priorities of the federal government with agile software development methodologies and software-based technologies. On the national security front, our capabilities in the electromagnetic spectrum are differentiated and in high demand. Every day, world events are demonstrating the increasing importance of signals collection, intelligence, geolocation, and electronic attack. Software enables us not only to provide these capabilities to our customers, but also to adapt and update these capabilities with speed and agility as adversaries change their tactics. On our U.S. Navy Spectral program, we are working with our customer to modify and enhance what will be delivered when, made possible by our open architecture and software approach, which allows for contemplated changes and requirements. We're beginning discussions with the Navy in an effort to consider reusing elements of Spectral as a baseline for other systems, because that's one way to provide fleet-wide capability upgrades when and wherever required. to keep pace with rapidly changing adversaries and technologies. In addition, we are building out our ability to deliver our technology to Five Eyes countries, to NATO countries, and other allies. We have already made deliveries to several of these countries. In fact, during the quarter, we received our first order from the Canadian government for our software-defined man-portable counter-OAS technology called BEAN. We are also providing our software-defined SIGINT technology to be mounted on OEM UAVs to assist in signal collection missions. On the IT modernization front, last quarter, we discussed how our capabilities are addressing increasing demand for network modernization. In addition, we are also winning in delivering on other IT modernization requirements. For example, this quarter, we won our re-compete of IT work supporting both UCOM and AFRICOM, enabling our customers' missions as they respond to an ever-increasing list of critical world events. IT modernization using our Agile software development and DevSecOps capabilities also recently helped the U.S. Marine Corps to achieve the first-ever clean financial audit for a branch of the military. This highly visible achievement adds to our strong record of past performance and enhances our ability to pursue additional modernization opportunities across the U.S. government. Slide 8, please. Second, we're continuing to enhance the long-term visibility of CACI's business through disciplined bidding on larger, longer-duration opportunities. As I mentioned, we had yet another fantastic quarter for awards, and I'm very pleased with our business development organization's performance. Our $3.5 billion of awards in the quarter had a healthy mix of re-competes, And in several cases, we were able to expand those contracts. On the IT work I mentioned earlier, this supports both UCOM and AFRICOM. We not only won our week for our re-compete, we nearly doubled the size of that contract to well over a billion dollars. Successes like this drove our third quarter backlog to record $28.6 billion, representing nearly four years of annualized revenue. The weighted average duration of awards that we've booked into backlog remains well above five years on a year-to-date basis. We continue to have a robust pipeline of new opportunities that allows us to be discriminating in the work we pursue. These wins and the delivery duration metrics provide visibility not only to support current year growth, but future year growth as well. By nine, please. Finally, we continue to invest ahead of need and deploy capital in a flexible and opportunistic manner. I previously mentioned our agile software development and software-defined capabilities in the electromagnetic spectrum, two examples that illustrate investing ahead of need, as well as our organic investments in our photonics business, to name just a few. You also may have seen we've made a few smaller acquisitions this year, both in the UK and here in the US. as our M&A pipeline continues to expand. During the third quarter, we closed the acquisition of Quadrant, a provider of digital application modernization, primarily for the intelligence community. Quadrant brings specific customer relationships and past performance in EIC that are additive to our business, consistent with our M&A strategy, and the acquisition is accretive in year one. Slide 10, please. Overall, I am very pleased with our strong performance. we are seeing accelerating growth as the larger awards we've won over the past few years continue to ramp. And we see on-contract growth in our existing portfolio. As a result, we are raising our full-year guidance, and Jeff will share the details with you shortly. In summary, we continue to successfully execute our strategy. Our investments ahead of need, differentiated capabilities, strong execution, and exceptional business development position CECI to drive top-line growth strong margins, and increasing free cash flow per share. With that, I'll turn the call over to John.