How CACI puts together teams for its tech programs

CACI International's long-standing push into more product content was never about building the kind of platforms and systems made by the blue chip defense hardware companies.

The potential seven-year, $1.2 billion Navy contract CACI booked in June called Spectral is another key signpost in how the company approaches technology in a software-centric way and especially when it starts to touch hardware.

During CACI's fourth quarter and fiscal year end earnings call with investors Thursday, chief executive John Mengucci described Spectral as primarily about "software processing below the deck plate" so operators can take in threats and signals.

Spectral will most likely enter the low-rate initial production phase during the third quarter of CACI's new fiscal year that started July 1, Mengucci said. CACI is working with the Navy to develop and roll out new systems for shipboard signals intelligence, electronic warfare and information operations.

The Navy also is taking an open architecture and continuous software update approach for this program, and this is where the government market's constant conversation around teaming comes into play.

CACI's teammates for Spectral are Northrop Grumman, Raytheon Technologies, BAE Systems, Sierra Nevada Corporation and Dell Technologies. That's three blue chip defense hardware makers, followed by one of the largest privately-held space companies and a global commercial tech player.

Like in any teaming arrangement, CACI set up the Spectral partnership in a way that lets it focus on its core offering and brings in others who have something different to offer.

"When we looked at software and the teaming, we partnered with Northrop and Raytheon, an outstanding team, they sweetly augment our Spectral delivery because they have expertise in areas that we don't," Mengucci told analysts. "That's what our customers want us to go to go do: lead with software, lead with agility, connect with partners who can provide the other pieces that we don't provide, and then give them an experience and a set of outcomes that are absolutely eye-watering."

Leading with software means being able to make changes swiftly and stay on schedule for the program's upcoming LRIP phase, Mengucci said. LRIP typically is the first step in transitioning from initial prototypes to the final mass-produced end product, which is made under different contracts.

How could Reston, Virginia-headquartered CACI look at opportunities to win larger programs that would typically go to the group of companies known as "the primes?"

"They're phenomenal companies. They all build eye-watering platforms, and we should be proud of everything that those companies do," Mengucci told analysts. "We just believe here that there's a level of mission that we can deliver more agilely, and in a manner that allows customers to address threats at the speed of the fight."

Fiscal fourth quarter revenue of $2 billion was up 19.7% from the prior year period and the organic growth rate was 18.5%, while profit of $234.9 million showed a 26.5% year-over-year increase in EBITDA (earnings before interest, taxes, depreciation and amortization).

Full fiscal year revenue of $7.6 billion was up 14.3% from the prior year period and the organic growth rate was 13.7%, while EBITDA of $798 million showed an 11.5% year-over-year increase.

CACI's initial outlook for its 2025 fiscal year that started July 1 has revenue in the range of $7.9 billion-to-$8.1 billion on an EBITDA margin in the "high-10% range."

Total backlog as of June 30, 2024 was $31.6 billion to show a year-over-year increase of 22%. Funded backlog as of that same date was $3.8 billion to show an increase of 3%.