What is not in CACI's product play

CACI International’s emphasis on products as part of its broader service offerings has a large element of software and some specialized hardware that grew through last year’s acquisitions of LGS Innovations and Mastodon Design.

Not included on the hardware front in that push are the kind of physical platforms made by the largest aerospace-and-defense companies.

On CACI’s fiscal second quarter earnings call Thursday, CEO John Mengucci told investors that the company is instead focusing on digital capabilities that can augment those platforms instead of building them.

“We’re really looking at the mission package as part of where all these platforms go,” Mengucci said. “If we look at the outcomes and the capabilities that our customers need, it’s not so much they need more platforms. What they need is an ability to have a single way to find a new signal out in the battlefield and have it reverse engineered in a manner that we can not only detect it but understand how to mitigate around that signal or communicate through it.”

That comment harkens back to how Mengucci and his predecessor Ken Asbury have described to us their views of where CACI is going and how they see the market evolving. The push into products emphasizes software-defined hardware to continually upgrade and iterate platforms so they can be deployed faster and stay in the field longer.

Also consider how LGS and Mastodon brought with them intellectual property and patents for the mission technology component of CACI’s growth strategy, which continued in October with three more acquisitions.

Mengucci told Wall Street analysts on the call that CACI sees the kind of longer-term, larger-valued contracts it has focused on in recent years as being “in the technology packages that ride on those platforms.”

“How quickly can we turn around a solution to a signal that’s going to be our warfighters’ issues, that’s where we believe the sweet spot is and that’s where we’ll stay parked for some time,” Mengucci said. “The ability to build a platform to us is not where, at the end of the day, the greatest growth is coming from.”

Arlington, Virginia-based CACI will likely not be the only company in that space.

“Our (Defense Department) intelligence customers are really looking for shared work from multiple vendors that can help them address these needs,” Mengucci said.

In its financial release, CACI lifted revenue guidance for its current fiscal year to $5.6 billion-$5.8 billion from the previous $5.55 billion-$5.75 billion range, with net income expectations also bumped to $305 million-$325 million from the prior $298 million-$318 million forecast.

That forecast includes organic growth of at least 7 percent for the full year to exclude the LGS and Mastodon contributions, plus those of the three companies CACI acquired in October.

Revenue for the second quarter ended Dec. 31 grew 18.1 percent year-over-year to $1.39 billion with 8.1 percent of that increase on an organic basis.

CACI reported a book-to-bill ratio of 2.4 times on a trailing 12-month basis to signal the company is growing the contract backlog faster than drawing down from it to book sales.

Net income climbed 15.5 percent to $79.2 million. CACI also posted a 14.6 percent increase to $140.9 million in adjusted EBITDA -- earnings before interest, taxes, depreciation and amortization expenses