No. 17: CACI hits its stride

Paul Cofoni can look back on his first year aschief executive officer at CACI InternationalInc. with a sense of accomplishment, highlightedby the company's four acquisitions in 10months.The government contractor, based inArlington, Va., recorded $1.3 billion in primecontracting revenue in 2007 compared toabout $1 billion the previous year. This year,CACI lands at No. 17 on the Top 100 list.CACI's acquisitions of Dragon DevelopmentCorp., Athena Innovative Solutions Inc.,Wexford Group International and the Institutefor Quality Management Inc. added about$260 million in revenue and between 800 and900 new employees in 2007, Cofoni said.CACI's business plans for the four companiesare being successfully implemented, he said."We're actually seeing that they're beating projectionsin terms of financialperformance. That's reallyrewarding because we werevery careful in looking forcompanies that would contributehigher revenuegrowth and earningsgrowth."Cofoni said attracting andretaining qualified informationtechnology professionals,especially those with high-level securityclearances, has been a struggle during the pastseveral years. "But in the last year, we've turnedthe corner on that, and we had our best-everhiring year, with a net [organic] growth ofalmost 800 people."CACI will continue to seek annual growthrates of 15 percent to 20 percent andmake additional acquisitions in the areasof intelligence and security services, hesaid, although those companies are expensivebecause they are in high demand."That's where our last four acquisitionshave been," Cofoni added. "It is the primaryfocus area for us.""Intelligence is a good market to be in,"said Philip Finnegan, director of corporateanalysis at Teal Group Corp., a provider ofaerospace and defense industry marketintelligence in Fairfax, Va."The customer is very loyal to companiesit employs," he said. "Intelligence agenciesdon't like to change the companies theyare dealing with. That creates a high barrierof entry for competitors." And that isgood for profit margins, he added."We're quite pleased to see that thecompany has a well-defined initiative toincrease its intelligenceexposure," saidMichael Lewis, senior vicepresident at BB&T CapitalMarkets Inc. "We've essentiallyseen it double over thepast two years, and I anticipatethat we will continueto see the acquisition strategyfocused more in thatarea than elsewhere.""CACI's growth strategy appears sound, andthey've done a really good job of hitting theirrevenue targets in the past and making goodacquisitions," Finnegan said.The company has also set its sights onexpanding its services into the health care, energyand environmental markets, but not immediately."We're continuing to look at those threeareas," Cofoni said. But until there are strongnational policies to support and expand thoseareas, "it's hard to start implementing things."Lewis said he is also "pleasantly surprisedthat the company has been very successful inholding on to current contracts and when theyare up for re-compete seeing, most importantly,an expansion in scope" of services.He said CACI's management team has awell-defined strategy to grow into a larger ITservices firm. "Over the last two years, therehave been some significant speed bumps thathave gotten in the way," Lewis said, which havecaused the stock price to decline. "However, Ibelieve that Paul has corrected these issues."