CACI International Inc.

04/23/2026 | Press release | Distributed by Public on 04/23/2026 13:01

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations is provided to enhance the understanding of, and should be read together with, our unaudited condensed consolidated financial statements and the notes to those statements that appear elsewhere in this Quarterly Report on Form 10-Q.
Information Relating to Forward-Looking Statements
There are statements made herein that do not address historical facts and, therefore, could be interpreted to be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are subject to risk factors that could cause actual results to be materially different from anticipated results. These risk factors include, but are not limited to, the following:
•our reliance on United States (U.S.) government contracts, which includes general risk around the government contract procurement process (such as bid protest, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks;
•significant delays or reductions in appropriations for our programs and broader changes in U.S. government funding and spending patterns;
•legislation that amends or changes discretionary spending levels or budget priorities, such as for homeland security;
•legal, regulatory, and political change from successive presidential administrations that could result in economic uncertainty;
•changes in U.S. federal agencies, current agreements with other nations, foreign events, or any other events which may affect the global economy;
•the results of government audits and reviews conducted by the Defense Contract Audit Agency, the Defense Contract Management Agency, or other governmental entities with cognizant oversight;
•competitive factors such as pricing pressures and/or competition to hire and retain employees (particularly those with security clearances);
•failure to achieve contract awards in connection with re-competes for present business and/or competition for new business;
•regional and national economic conditions in the U.S. and globally, including but not limited to: terrorist activities or war, changes in interest rates, currency fluctuations, significant fluctuations in the equity markets, and market speculation regarding our continued independence;
•our ability to meet contractual performance obligations, including technologically complex obligations dependent on factors not wholly within our control;
•limited access to certain facilities required for us to perform our work;
•changes in tax law, the interpretation of associated rules and regulations, or any other events impacting our effective tax rate;
•changes in technology;
•the potential impact of the announcement or consummation of a proposed transaction and our ability to successfully integrate the operations of our recent and any future acquisitions;
•our ability to achieve the objectives of near term or long-term business plans; and
•the effects of health epidemics, pandemics and similar outbreaks may have material adverse effects on our business, financial position, results of operations and/or cash flows.
The above non-inclusive list of risk factors may impact the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, other risk factors include, but are not limited to, those described in "Item 1A. Risk Factors" within our Annual Report on Form 10-K. The forward-looking statements contained in this Quarterly Report on Form 10-Q are as of the date of its filing.
Overview
The Company provides distinctive Expertise and differentiated Technology to customers in support of national security.
•Expertise - CACI delivers talent with the specific technical and functional knowledge to support agency operations. Examples include individuals with talents such as software development, data and business analysis, operations support, naval architecture, engineering, life cycle support, intelligence and special operations support, and network exploitation analysis.
•Technology - CACI provides technology that addresses our customers' most challenging needs. This includes agile software development using open modern architectures and DevSecOps; advanced data platforms, applications, and analytics augmented by Artificial Intelligence (AI), Enterprise Resource Planning systems, electromagnetic spectrum capabilities, space-based sensors and ground site processors, photonics, and network modernization. CACI invests ahead of customer need with research and development to create unique and differentiated technology addressing critical national security needs.
Budgetary Environment
We carefully follow federal budget, legislative and contracting trends and activities and evolve our strategies to take these into consideration. While future levels of defense and non-defense spending may vary and are difficult to project, we believe that there continues to be bipartisan support for defense and national security-related spending, particularly given the heightened current global threat environment.
While we view the budget environment as constructive and believe there is bipartisan support for continued investment in the areas of defense and national security, it is uncertain when (and if) in any particular government fiscal year (GFY) that appropriations bills will be passed. During those periods of time when appropriations bills have not been passed and signed into law, government agencies operate under a continuing resolution (CR), a temporary measure that typically allows the government to continue operations at prior year funding levels.
Depending on their scope, duration, and other factors, CRs can negatively impact our business due to delays in new program starts, delays in contract award decisions, and other factors. When a CR expires, unless appropriations bills have been passed by Congress and signed by the President, or a new CR is passed and signed into law, the government must cease operations, or shutdown, except in certain emergency situations or when the law authorizes continued activity. We continuously review our operations in an attempt to identify programs potentially at risk from CRs or shutdowns so that we can consider appropriate contingency plans.
On May 2, 2025, President Trump submitted the GFY26 Presidential Budget Request (PBR) to Congress, which held defense spending at the GFY25 enacted level (a full-year CR) of $893 billion. On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), which provides additional funding above and beyond the PBR. The OBBBA is a reconciliation bill, which is separate from the usual government funding legislation passed by Congress. The OBBBA provides immediate funding for specified parts of the government, including approximately $156 billion in defense funding (including $25 billion for the Golden Dome initiative). In addition, the OBBBA provides approximately $170 billion for border security and immigration. Since this is direct funding authorized by reconciliation outside the normal budget process, these funds will be available in GFY26 and beyond whether normal appropriations or a CR is passed, or even in the event of a shutdown.
On October 1, 2025, the U.S. government entered a shutdown. On November 12, 2025, President Trump signed a CR ending the government shutdown and restoring operations across all federal agencies. The CR extended funding for most of the federal government at GFY25 levels until midnight on January 30, 2026. A partial shutdown occurred following January 30, 2026, and on February 3, 2026, President Trump signed five of the six remaining GFY26 full year appropriations bills, as well as a two-week CR for the Department of Homeland Security. The defense appropriations bill was passed, providing full year funding for the Department of Defense (DoD) with a topline of $838.7 billion, approximately $8.4 billion above the President's defense budget request for GFY26. On February 14, 2026, the CR funding the Department of Homeland Security ended, and the department entered a shutdown. While DHS currently remains in a shutdown, portions of the department's operations have continued due to funding from the OBBBA.
Market Environment
We provide Expertise and Technology to government customers. We believe that the total addressable market for our offerings is sufficient to support the Company's plans and is expected to continue to grow over the next several years. Approximately 78% of our revenue comes from DoD and Intelligence Community (IC) customers, with additional revenue coming from federal civilian agencies and commercial and other customers.
We continue to align the Company's capabilities with well-funded budget priorities and take steps to maintain a competitive cost structure in line with our expectations of future business opportunities. In light of these actions, as well as the budgetary environment discussed above, we believe we are well positioned to continue to win new business in our large addressable market. We believe that the following trends will influence the U.S. government's spending in our addressable market:
•A stable-to-higher U.S. government budget environment, particularly in national security-related areas (defense, intelligence, and border security);
•Increased focus on cyber, space, and the electromagnetic spectrum as key domains for national security;
•Increased investments in advanced technologies (e.g., AI), particularly software-based technologies;
•Increased spending on network and application modernization and enhancements to cyber security posture;
•Increasing focus on near-peer competitors and other nation state threats;
•Increasing focus on application of technologies to defend the homeland;
•Continued focus on counterterrorism, counterintelligence, and counter proliferation as key U.S. security concerns; and
•Increased demand for innovation and speed of delivery.
We believe that our customers' use of lowest price/technically acceptable procurements, which contributed to pricing pressures in past years, has moderated, though price still remains an important factor in procurements. We also continue to see protests of major contract awards and delays in U.S. government procurement activities. In addition, many of our federal government contracts require us to employ personnel with security clearances, specific levels of education, and specific past work experience. Depending on the level of clearance, security clearances can be difficult and time-consuming to obtain and competition for skilled personnel in the industry is intense. Additional factors that could affect U.S. government spending in our addressable market include changes in set-asides for small businesses and budgetary priorities.
Results of Operations for the Three and Nine Months Ended March 31, 2026 and 2025
Our results of operations were as follows (dollars in thousands):
Three Months Ended March 31, Nine Months Ended March 31,
2026 2025 Change 2026 2025 Change
Revenues $ 2,351,002 $ 2,166,982 $ 184,020 8.5 % $ 6,858,722 $ 6,323,680 $ 535,042 8.5 %
Costs of revenues:
Direct costs 1,553,169 1,434,735 118,434 8.3 4,595,374 4,251,384 343,990 8.1
Indirect costs and selling expenses 510,182 480,917 29,265 6.1 1,448,623 1,375,524 73,099 5.3
Depreciation and amortization 58,774 54,961 3,813 6.9 167,104 139,264 27,840 20.0
Total costs of revenues 2,122,125 1,970,613 151,512 7.7 6,211,101 5,766,172 444,929 7.7
Income from operations 228,877 196,369 32,508 16.6 647,621 557,508 90,113 16.2
Interest expense and other, net 52,267 45,117 7,150 15.8 143,390 113,153 30,237 26.7
Income before income taxes 176,610 151,252 25,358 16.8 504,231 444,355 59,876 13.5
Income taxes 46,217 39,392 6,825 17.3 125,173 102,380 22,793 22.3
Net income $ 130,393 $ 111,860 $ 18,533 16.6 % $ 379,058 $ 341,975 $ 37,083 10.8 %
Revenues. The increase in revenues for the three and nine months ended March 31, 2026, was partially attributable to organic growth of 6.8% and 5.6%, respectively, which included new contract awards and growth on existing programs.
The following table summarizes revenues by customer type with related percentages of revenues for the three and nine months ended March 31, 2026 and 2025, respectively (dollars in thousands):
Three Months Ended March 31, Nine Months Ended March 31,
2026 2025 Change 2026 2025 Change
DoD $ 1,295,628 $ 1,180,820 $ 114,808 9.7 % $ 3,627,406 $ 3,387,095 $ 240,311 7.1 %
IC 582,235 552,796 29,439 5.3 1,717,704 1,614,883 102,821 6.4
Federal civilian agencies 373,582 350,044 23,538 6.7 1,223,944 1,068,005 155,939 14.6
Commercial and other 99,557 83,322 16,235 19.5 289,668 253,697 35,971 14.2
Total $ 2,351,002 $ 2,166,982 $ 184,020 8.5 % $ 6,858,722 $ 6,323,680 $ 535,042 8.5 %
•DoD revenues include Expertise and Technology provided to various DoD customers, excluding IC.
•IC revenues include Expertise and Technology provided to the 18 intelligence customers defined as the IC by the Office of the Director of National Intelligence.
•Federal civilian agencies revenues include Expertise and Technology provided to non-DoD and non-IC agencies and departments of the U.S. federal government, including the Departments of Homeland Security, Justice, Agriculture, Health and Human Services, and State.
•Commercial and other revenues primarily include Expertise and Technology provided to U.S. state and local governments, commercial customers, and certain foreign governments and agencies through our International Operations.
Direct Costs. Direct costs include direct labor, subcontractor costs, materials, and other direct costs. The increase in direct costs for the three and nine months ended March 31, 2026, compared to the prior year periods, was primarily attributable to the increase in revenues. As a percentage of revenue, direct costs were 66.1% and 67.0% for the three and nine months ended March 31, 2026, respectively, and 66.2% and 67.2% for the three and nine months ended March 31, 2025, respectively.
Indirect Costs and Selling Expenses. The increase in indirect costs and selling expenses for the three months ended March 31, 2026, compared to the prior year period, was primarily attributable to an increase in acquisition related expenses. The increase in indirect costs and selling expenses for the nine months ended March 31, 2026, compared to the prior year period, was primarily attributable to increases in fringe benefit expenses and overhead costs associated with a larger labor base, acquisition-related expenses, and other indirect costs. As a percentage of revenue, indirect costs and selling expenses were 21.7% and 21.1% for the three and nine months ended March 31, 2026, respectively, and 22.2% and 21.8% for the three and nine months ended March 31, 2025, respectively.
Depreciation and Amortization. The increase in depreciation and amortization for the three months ended March 31, 2026, compared to the prior year period, was due to the amortization of intangible assets acquired in the third quarter of fiscal 2026. The increase in depreciation and amortization for the nine months ended March 31, 2026, compared to the prior year period, was due to the timing of intangible assets acquired in fiscal 2025.
Interest Expense and Other, Net. The increase in interest expense and other, net for the three and nine months ended March 31, 2026, compared to the prior year periods, was primarily due to higher outstanding debt balances in the current year resulting from borrowings used to finance acquisitions completed in both periods.
Income Tax Expense. The Company's effective income tax rates were 26.2% and 24.8% for the three and nine months ended March 31, 2026, respectively, and 26.0% and 23.0% for the three and nine months ended March 31, 2025, respectively. The effective tax rates for the three and nine months ended March 31, 2026 and 2025 differ from the statutory rate of 21.0% primarily due to state income taxes offset by research and development tax credits.
Contract Backlog
The Company's backlog represents the value on existing contracts that has the potential to be recognized as revenues as work is performed. The Company includes unexercised option years in its backlog and excludes the value of task orders that may be awarded under multiple award indefinite delivery/indefinite quantity vehicles until such task orders are issued.
The Company's backlog as of the period end is either funded or unfunded:
•Funded backlog represents contract value for which funding has been appropriated less revenues previously recognized on these contracts.
•Unfunded backlog represents estimated values that have the potential to be recognized as revenue from executed contracts for which funding has not been appropriated and unexercised priced contract options.
As of March 31, 2026, the Company had total backlog of $33.4 billion, compared to $31.4 billion a year ago, an increase of 6.4%. Funded backlog as of March 31, 2026 was $5.0 billion. The total backlog consists of remaining performance obligations (see Note 5) plus unexercised options.
There is no assurance that all funded or potential contract value will be recognized as revenue in the future. The Company continues to monitor its backlog, which is subject to changes due to execution of new contracts, contract modifications or extensions, government deobligations, early terminations, or other factors. Based on this analysis, an adjustment to the period end balance may be required.
Liquidity and Capital Resources
Existing cash and cash equivalents and cash generated by operations are our primary sources of liquidity, as well as sales of receivables under our Master Accounts Receivable Purchase Agreement (MARPA) and available borrowings under our revolving credit facility (the Revolving Facility), which permits renewable borrowings of up to $2,000.0 million. The Revolving Facility also has sub-facilities of $150.0 million for same-day swing line loan borrowings and $25.0 million for stand-by letters of credit.
The Company has a $3,250.0 million senior secured credit facility (the Credit Facility), which consists of the Revolving Facility and a $1,250.0 million term loan (the Term Loan). As of March 31, 2026, the Company had $1,072.0 million of undrawn capacity under the Revolving Facility and no borrowings on the swing line and stand-by letters of credit.
A summary of the change in cash and cash equivalents is presented below (in thousands):
Nine Months Ended March 31,
2026 2025
Net cash provided by operating activities $ 508,444 $ 391,027
Net cash used in investing activities (2,685,142) (1,677,305)
Net cash provided by financing activities 2,230,319 1,374,474
Effect of exchange rate changes on cash and cash equivalents (1,806) 1,740
Net change in cash and cash equivalents $ 51,815 $ 89,936
Net cash provided by operating activities increased by $117.4 million for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025, primarily due to higher net income and the deduction of domestic research and development costs pursuant to tax provisions enacted by the OBBBA.
Net cash used in investing activities increased by $1,007.8 million for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025, primarily due to higher cash used for acquisitions in the current year.
Net cash provided by financing activities increased by $855.8 million for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025, primarily due to an increase in net borrowings under the Credit Facility, the Term Loan B-2, and the 2033 Notes-2 offset by a decrease in stock repurchase activity.
We believe that the combination of cash and cash equivalents on hand, internally generated funds, and available bank borrowings will provide the required liquidity and capital resources necessary to fund on-going operations, customary capital expenditures, debt service obligations, and other working capital requirements over the next twelve months. We may in the future seek to borrow additional amounts under existing debt instruments or new debt instruments. Over the longer term, our ability to generate sufficient cash flows from operations necessary to fulfill our long-term debt obligations and any other indebtedness we may incur will depend on our future financial performance which will be affected by many factors outside of our control, including current worldwide economic conditions and financial market conditions.
Critical Accounting Policies
There have been no significant changes to the Company's critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended June 30, 2025.
Off-Balance Sheet Arrangements and Contractual Obligations
The Company has no material off-balance sheet financing arrangements.
CACI International Inc. published this content on April 23, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 23, 2026 at 19:01 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]