Contract wins, acquisitions offer bright spots for CACI

There are several things not to like about CACI International’s quarterly report:

• Revenue is down ($894.2 million compared to $941.6 million)
• Operating income is down ($66.5 million versus $69.6 million)
• Net income attributable to CACI is down ($35 million versus $39.7 million)

But CEO Ken Asbury points to other statistics that he says put the company on good footing going forward, particularly its contract wins.

The value of its contract wins in the company’s second quarter is up 40 percent compared to the same quarter a year earlier. That follows a first quarter where the number also was up from the first quarter a year ago.

While those values haven’t translated into revenue yet, they set the stage for future growth, he said.

“If we set sustain that going forward and we have a stable budget, I like what the future holds for us,” he said.

The contract wins included a lot of recompetes, but 25 percent were new business, and in this market, that means taking work away from incumbents, Asbury said.

Winning the recompetes, taking business from competitors and making the Six3 Systems acquisition show how CACI’s strategy has come together since Asbury became CEO in February 2013, he said.

“Some of the strategies we put in place a year ago converged here in this quarter,” he said.

Those strategies include a focus on business development. The company has a two pronged approach. Donald Fulop was brought in from Lockheed Martin as executive vice president of business development. He runs day-to-day BD operations.

Suzan Zimmerman came from QinetiQ North America to be senior vice president of business development.

She’s focused on pursuing large projects that any single CACI business unit couldn’t pursue on its own. Most of these are single-award type projects in the $600 million to $2 billion range.

“We are identifying ones where the customer is looking to do something different,” Asbury said.

Currently, the company is starting to work on one such project, a large infrastructure job. CACI has responded to a request for information and is putting a team together.

He declined to identify it because he doesn’t want to tip off competitors yet.

The merger and acquisition portion of CACI’s strategy obviously was active in the last quarter with the $820 million purchase of Six3 Systems, the largest M&A transaction in company history.

Analysts have questioned the high price CACI paid the company, but Asbury expressed no regrets.

The company has always said that the acquisition would be accretive in the second half of CACI’s fiscal year 2014, and so far, it is on target, Asbury said.

The company also is diving deeper into Six3’s capabilities in ways it couldn’t before the deal closed in November.

“The more we see of it the more we love it,” he said.

The company’s goal is to try to get ahead of its customers emerging needs, and with its cyber and signal intelligence capabilities, Six3 does that, Asbury said.

“We can look at the market in a different and exciting way now and that’s the part I’m thrilled about,” he said.

Six3’s acquisition also will help CACI show revenue growth for the year, but organic growth will continue to be hard in 2014, Asbury said.

“I think in the relatively short term we can see a return to organic growth, so I’m cautiously optimistic for 2015,” he said.