SEC Form 10-Q filed by CACI International Inc.

10/24/24 1:07:41 PM ET

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caci-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-Q

_________________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-31400

__________________________________

CACI International Inc

(Exact name of registrant as specified in its charter)

____________________________________


Delaware						54-1345888
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

12021 Sunset Hills Road, Reston, VA 20190

(Address of principal executive offices)

(703) 841-7800

(Registrant’s telephone number, including area code)

__________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	CACI	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of October 13, 2024, there were 22,408,154 shares outstanding of CACI International Inc’s common stock, par value $0.10 per share.

CACI INTERNATIONAL INC


		PAGE
PART I:	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Operations	3

	Condensed Consolidated Statements of Comprehensive Income	4

	Condensed Consolidated Balance Sheets	5

	Condensed Consolidated Statements of Cash Flows	6

	Condensed Consolidated Statements of Shareholders’ Equity	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19

Item 4.	Controls and Procedures	19

PART II:	OTHER INFORMATION	21

Item 1.	Legal Proceedings	21

Item 1A.	Risk Factors	23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 3.	Defaults Upon Senior Securities	23

Item 4.	Mine Safety Disclosures	23

Item 5.	Other Information	23

Item 6.	Exhibits	24

	Signatures	25

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)


	Three Months Ended September 30,
	2024		2023
Revenues	$	2,056,889	$	1,850,147
Costs of revenues:
Direct costs	1,414,424		1,272,918
Indirect costs and selling expenses	427,946		404,633
Depreciation and amortization	34,678		35,247
Total costs of revenues	1,877,048		1,712,798
Income from operations	179,841		137,349
Interest expense and other, net	23,970		25,571
Income before income taxes	155,871		111,778
Income taxes	35,694		25,731
Net income	$	120,177	$	86,047
Basic earnings per share	$	5.39	$	3.80
Diluted earnings per share	$	5.33	$	3.76
Weighted-average basic shares outstanding	22,304		22,647
Weighted-average diluted shares outstanding	22,539		22,894

See Notes to Unaudited Condensed Consolidated Financial Statements

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)


	Three Months Ended September 30,
	2024		2023
Net income	$	120,177	$	86,047
Other comprehensive income (loss):
Foreign currency translation adjustment	16,170		(9,201)
Change in fair value of interest rate swap agreements, net of tax	(17,676)		5,432
Total other comprehensive loss, net of tax	(1,506)		(3,769)
Comprehensive income	$	118,671	$	82,278

See Notes to Unaudited Condensed Consolidated Financial Statements

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)


	September 30, 2024		June 30, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	440,706	$	133,961
Accounts receivable, net	1,069,611		1,031,311
Prepaid expenses and other current assets	236,781		209,257
Total current assets	1,747,098		1,374,529
Goodwill	4,166,015		4,154,844
Intangible assets, net	457,087		474,354
Property, plant and equipment, net	191,379		195,443
Operating lease right-of-use assets	339,748		305,637
Supplemental retirement savings plan assets	101,909		99,339
Accounts receivable, long-term	14,130		13,311
Other long-term assets	165,697		178,644
Total assets	$	7,183,063	$	6,796,101
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	61,250	$	61,250
Accounts payable	263,535		287,142
Accrued compensation and benefits	242,059		316,514
Other accrued expenses and current liabilities	434,254		413,354
Total current liabilities	1,001,098		1,078,260
Long-term debt, net of current portion	1,761,623		1,481,387
Supplemental retirement savings plan obligations, net of current portion	119,906		111,208
Deferred income taxes	156,933		169,808
Operating lease liabilities, noncurrent	380,480		325,046
Other long-term liabilities	111,417		112,185
Total liabilities	$	3,531,457	$	3,277,894
COMMITMENTS AND CONTINGENCIES (NOTE 9)
Shareholders’ equity:
Preferred stock $0.10 par value, 10,000 shares authorized, no shares issued or outstanding	$	—	$	—
Common stock $0.10 par value, 80,000 shares authorized; 43,045 shares issued and 22,305 outstanding at September 30, 2024 and 43,042 shares issued and 22,301 outstanding at June 30, 2024	4,305		4,304
Additional paid-in capital	645,917		631,191
Retained earnings	4,480,717		4,360,540
Accumulated other comprehensive loss	(14,028)		(12,522)
Treasury stock, at cost (20,740 and 20,740 shares, respectively)	(1,465,305)		(1,465,306)


Total shareholders’ equity	3,651,606		3,518,207
Total liabilities and shareholders’ equity	$	7,183,063	$	6,796,101

See Notes to Unaudited Condensed Consolidated Financial Statements

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Three Months Ended September 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	120,177	$	86,047
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	34,678		35,247
Amortization of deferred financing costs	549		547


Stock-based compensation expense	15,391		10,024
Deferred income taxes	(7,086)		(7,812)
Changes in operating assets and liabilities, net of effect of business acquisitions:
Accounts receivable, net	(35,770)		(111,159)
Prepaid expenses and other assets	(40,308)		(37,343)
Accounts payable and other accrued expenses	(10,561)		154,469
Accrued compensation and benefits	(75,614)		(90,511)
Income taxes payable and receivable	30,609		23,803

Operating lease liabilities and assets, net	(1,054)		(868)
Long-term liabilities	3,650		7,644
Net cash provided by operating activities	34,661		70,088
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(11,476)		(13,991)
Acquisitions of businesses	(251)		(347)
Other	—		1,974
Net cash used in investing activities	(11,727)		(12,364)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under bank credit facilities	1,289,000		732,500
Principal payments made under bank credit facilities	(1,009,313)		(640,156)

Proceeds from employee stock purchase plans	3,098		3,156
Repurchases of common stock	(3,242)		(140,364)
Payment of taxes for equity transactions	(187)		(697)
Net cash provided by (used in) financing activities	279,356		(45,561)
Effect of exchange rate changes on cash and cash equivalents	4,455		(2,393)
Net change in cash and cash equivalents	306,745		9,770
Cash and cash equivalents, beginning of period	133,961		115,776
Cash and cash equivalents, end of period	$	440,706	$	125,546
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for income taxes, net of refunds	$	8,563	$	5,989
Cash paid during the period for interest	$	20,894	$	22,219
Non-cash financing and investing activities:
Accrued share repurchases	$	—	$	12,426
Accrued capital expenditures	$	185	$	568
Landlord sponsored tenant incentives	$	2,515	$	1,039

See Notes to Unaudited Condensed Consolidated Financial Statements

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Shareholders’ Equity
	Shares	Amount								Shares	Amount
Balance at June 30, 2024	43,042	$	4,304	$	631,191	$	4,360,540	$	(12,522)	20,740	$	(1,465,306)	$	3,518,207
Net income	—	—		—		120,177		—		—	—		120,177
Stock-based compensation expense	—	—		15,391		—		—		—	—		15,391
Tax withholdings on restricted share vestings	3	1		(567)		—		—		—	—		(566)
Other comprehensive loss, net of tax	—	—		—		—		(1,506)		—	—		(1,506)
Repurchases of common stock	—	—		(144)		—		—		8	(3,098)		(3,242)
Treasury stock issued under stock purchase plans	—	—		46		—		—		(8)	3,099		3,145
Balance at September 30, 2024	43,045	$	4,305	$	645,917	$	4,480,717	$	(14,028)	20,740	$	(1,465,305)	$	3,651,606

Balance at June 30, 2023	42,923	$	4,292	$	546,334	$	3,940,616	$	(4,916)	20,126	$	(1,261,992)	$	3,224,334
Net income	—	—		—		86,047		—		—	—		86,047
Stock-based compensation expense	—	—		10,024		—		—		—	—		10,024
Tax withholdings on restricted share vestings	6	1		(598)		—		—		—	—		(597)
Other comprehensive loss, net of tax	—	—		—		—		(3,769)		—	—		(3,769)
Repurchases of common stock	—	—		39,087		—		—		585	(193,744)		(154,657)
Treasury stock issued under stock purchase plans	—	—		38		—		—		(8)	2,613		2,651
Balance at September 30, 2023	42,929	$	4,293	$	594,885	$	4,026,663	$	(8,685)	20,703	$	(1,453,123)	$	3,164,033

See Notes to Unaudited Condensed Consolidated Financial Statements

CACI INTERNATIONAL INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of CACI International Inc and subsidiaries (CACI or the Company) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and include the assets, liabilities, results of operations, comprehensive income and cash flows for the Company, including its subsidiaries and ventures that are majority-owned or otherwise controlled by the Company. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. All intercompany balances and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and amounts included in other current assets and current liabilities that meet the definition of a financial instrument approximate fair value because of the short-term nature of these amounts. The fair value of the Company’s debt outstanding as of September 30, 2024 under its bank credit facility approximates its carrying value. The fair value of the Company’s debt under its bank credit facility was estimated using Level 2 inputs based on market data of companies with a corporate rating similar to CACI’s that have recently priced credit facilities.

In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments and reclassifications (all of which are of a normal, recurring nature) that are necessary for the fair presentation of the periods presented. It is suggested that these unaudited consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s latest annual report to the SEC on Form 10-K for the year ended June 30, 2024. The results of operations for the three months ended September 30, 2024 are not necessarily indicative of the results to be expected for any subsequent interim period or for the full fiscal year.

Note 2 – Recent Accounting Pronouncements

Accounting Standards Updates Issued but Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Improvements to Reportable Segment Disclosures, which requires disclosure of significant segment expenses and other segment items in annual and interim periods. The ASU will be effective beginning with our annual fiscal 2025 financial statements, and requires retrospective application to all prior periods presented in the financial statements. We are currently evaluating the impacts of the new standard on our segment disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about an entity’s effective tax rate reconciliation as well as information on income taxes paid. The ASU will be effective beginning with our annual fiscal 2026 financial statements, and should be applied prospectively. Retrospective application is permitted. We are currently evaluating the impacts of the new standard on our income tax disclosures.

Accounting Standards Updates Adopted

There have been no recently adopted accounting pronouncements that are material to the Company's consolidated financial statements.

Note 3 – Acquisitions

On September 10, 2024, CACI entered into an agreement to acquire all of the equity interests of Azure Summit Technology, Inc. (Azure Summit) for purchase consideration of approximately $1,275.0 million in cash, subject to adjustments for working capital and certain other items. Azure Summit advances DoD mission outcomes with its portfolio of high-performance radio frequency technology and engineering talent focused on the electromagnetic spectrum. The acquisition is expected to be completed during the second quarter of fiscal 2025.

On September 29, 2024, CACI entered into an agreement to acquire all of the equity interests of AI Corporate Holdings, Inc. and Applied Insight Holdings, LLC (Applied Insight) for purchase consideration of approximately $320.0 million in cash, subject to adjustments for working capital and certain other items. Applied Insight delivers proven cloud migration, adoption, and transformation capabilities, coupled with intimate customer relationships across the DoD and intelligence communities. The acquisition was completed during the second quarter of fiscal 2025. The Company funded the acquisition with cash on hand and borrowings under its revolving credit facility.

Note 4 – Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for the three months ended September 30, 2024 are as follows (in thousands):


	Domestic		International		Total
Balance at June 30, 2024	$	3,974,823	$	180,021	$	4,154,844
Goodwill acquired (1)	—		74		74
Foreign currency translation	636		10,461		11,097
Balance at September 30, 2024	$	3,975,459	$	190,556	$	4,166,015

__________________________________________________

(1)Includes goodwill initially allocated to new business combinations as well as measurement period adjustments, when applicable.

There were no impairments of goodwill during the periods presented.

Intangible Assets

Intangible assets consisted of the following (in thousands):


	September 30, 2024						June 30, 2024
	Gross carrying value		Accumulated amortization		Net carrying value		Gross carrying value		Accumulated amortization		Net carrying value
Customer contracts and related customer relationships	$	697,112	$	(363,603)	$	333,509	$	695,944	$	(353,159)	$	342,785
Acquired technologies	271,381		(147,803)		123,578		271,285		(139,716)		131,569
Total intangible assets	$	968,493	$	(511,406)	$	457,087	$	967,229	$	(492,875)	$	474,354

Amortization expense related to intangible assets was $18.0 million and $18.4 million for the three months ended September 30, 2024 and 2023, respectively.

Note 5 – Revenues and Contract Balances

Disaggregation of Revenues

The Company disaggregates revenues by contract type, customer type, prime vs. subcontractor, and whether the solution provided is primarily Expertise or Technology. These categories represent how the nature, amount, timing, and uncertainty of revenues and cash flows are affected.

Disaggregated revenues by contract type were as follows (in thousands):


	Three Months Ended September 30, 2024						Three Months Ended September 30, 2023
	Domestic		International		Total		Domestic		International		Total
Cost-plus-fee	$	1,280,010	$	—	$	1,280,010	$	1,134,435	$	—	$	1,134,435
Fixed-price	439,240		36,016		475,256		467,216		34,861		502,077
Time-and-materials	277,071		24,552		301,623		193,517		20,118		213,635
Total	$	1,996,321	$	60,568	$	2,056,889	$	1,795,168	$	54,979	$	1,850,147

Disaggregated revenues by customer type were as follows (in thousands):


	Three Months Ended September 30, 2024						Three Months Ended September 30, 2023
	Domestic		International		Total		Domestic		International		Total
Department of Defense	$	1,534,533	$	—	$	1,534,533	$	1,352,306	$	—	$	1,352,306
Federal civilian agencies	439,371		—		439,371		407,344		—		407,344
Commercial and other	22,417		60,568		82,985		35,518		54,979		90,497
Total	$	1,996,321	$	60,568	$	2,056,889	$	1,795,168	$	54,979	$	1,850,147

Disaggregated revenues by prime vs. subcontractor were as follows (in thousands):


	Three Months Ended September 30, 2024						Three Months Ended September 30, 2023
	Domestic		International		Total		Domestic		International		Total
Prime contractor	$	1,826,763	$	53,656	$	1,880,419	$	1,601,091	$	48,271	$	1,649,362
Subcontractor	169,558		6,912		176,470		194,077		6,708		200,785
Total	$	1,996,321	$	60,568	$	2,056,889	$	1,795,168	$	54,979	$	1,850,147

Disaggregated revenues by expertise or technology were as follows (in thousands):


	Three Months Ended September 30, 2024						Three Months Ended September 30, 2023
	Domestic		International		Total		Domestic		International		Total
Expertise	$	956,496	$	31,769	$	988,265	$	857,196	$	20,898	$	878,094
Technology	1,039,825		28,799		1,068,624		937,972		34,081		972,053
Total	$	1,996,321	$	60,568	$	2,056,889	$	1,795,168	$	54,979	$	1,850,147

Changes in Estimates

Aggregate net changes in estimates for the three months ended September 30, 2024 reflected an increase to income before income taxes of $3.7 million ($0.12 per diluted share), compared with $2.4 million ($0.08 per diluted share), for the three months ended September 30, 2023. The Company uses its statutory tax rate when calculating the impact to diluted earnings per share.

Revenues recognized from previously satisfied performance obligations were not material for the three months ended September 30, 2024 and 2023, respectively. The change in revenues recognized from previously satisfied performance obligations generally relates to final true-up adjustments for estimated award or incentive fees in the period in which the customer’s final performance score was received or when it can be determined that more objective, contractually-defined criteria have been fully satisfied.

Remaining Performance Obligations

As of September 30, 2024, the Company had $11.8 billion of remaining performance obligations and expects to recognize approximately 42% and 61% as revenue over the next 12 and 24 months, respectively, with the remainder to be recognized thereafter.

Contract Balances

Contract balances consisted of the following (in thousands):


Description of Contract Related Balance	Financial Statement Classification	September 30, 2024		June 30, 2024
Billed and billable receivables	Accounts receivable, net	$	906,720	$	885,552
Contract assets – current unbilled receivables	Accounts receivable, net	162,891		145,759
Contract assets – current costs to obtain	Prepaid expenses and other current assets	6,505		6,142
Contract assets – noncurrent unbilled receivables	Accounts receivable, long-term	14,130		13,311
Contract assets – noncurrent costs to obtain	Other long-term assets	14,327		12,310
Contract liabilities – current deferred revenue and other contract liabilities	Other accrued expenses and current liabilities	(158,624)		(139,745)
Contract liabilities – noncurrent deferred revenue and other contract liabilities	Other long-term liabilities	(4,624)		(4,607)

During the three months ended September 30, 2024, we recognized $64.1 million of revenues, compared with $64.4 million of revenues for the three months ended September 30, 2023, that was included in a previously recorded contract liability as of the beginning of the period.

Note 6 – Inventories

Inventories consisted of the following (in thousands):


	September 30, 2024		June 30, 2024
Materials, purchased parts and supplies	$	74,889	$	77,743
Work in process	15,084		13,331
Finished goods	37,341		27,365
Total	$	127,314	$	118,439

Inventories are stated at the lower of cost (average cost or first-in, first-out) or net realizable value and are included in prepaid expenses and other current assets on the accompanying consolidated balance sheets.

Note 7 – Sales of Receivables

On December 20, 2023, the Company amended its Master Accounts Receivable Purchase Agreement (MARPA) with MUFG Bank, Ltd. (Purchaser), for the sale of certain designated eligible U.S. government receivables. The amendment extended the term of the MARPA to December 20, 2024. Under the MARPA, the Company can sell eligible receivables, including certain billed and unbilled receivables up to a maximum amount of $250.0 million. The Company’s receivables are sold under the MARPA without recourse for any U.S. government credit risk.

The Company accounts for receivable transfers under the MARPA as sales under ASC 860, Transfers and Servicing, and derecognizes the sold receivables from its balance sheets. The fair value of the sold receivables approximated their book value due to their short-term nature.

The Company does not retain an ongoing financial interest in the transferred receivables other than cash collection and administrative services. The Company estimated that its servicing fee was at fair value and therefore no servicing asset or liability related to these receivables was recognized as of September 30, 2024. Proceeds from the sold receivables are reflected in operating cash flows on the statement of cash flows.

MARPA activity consisted of the following (in thousands):


	As of and for the Three Months Ended September 30,
	2024		2023
Beginning balance:	$	250,000	$	200,000
Sales of receivables	959,019		695,260
Cash collections	(985,229)		(718,427)
Outstanding balance sold to Purchaser: (1)	223,790		176,833
Cash collected, not remitted to Purchaser (2)	(96,953)		(80,542)
Remaining sold receivables	$	126,837	$	96,291

__________________________________________________

(1)For the three months ended September 30, 2024 and 2023, the Company recorded a net cash outflow of $26.2 million and a net cash outflow of $23.2 million in its cash flows from operating activities, respectively, from sold receivables. MARPA cash flows are calculated as the change in the outstanding balance during the fiscal year.

(2)Includes the cash collected on behalf of but not yet remitted to Purchaser as of September 30, 2024 and 2023. This balance is included in other accrued expenses and current liabilities as of the balance sheet date.

Note 8 – Debt

Long-term debt consisted of the following (in thousands):


	September 30, 2024		June 30, 2024
Bank credit facility – term loans	$	1,117,812	$	1,133,125
Bank credit facility – revolver loans	710,000		415,000
Principal amount of long-term debt	1,827,812		1,548,125
Less unamortized discounts and debt issuance costs	(4,939)		(5,488)
Total long-term debt	1,822,873		1,542,637
Less current portion	(61,250)		(61,250)
Long-term debt, net of current portion	$	1,761,623	$	1,481,387

Bank Credit Facility

On December 13, 2021, the Company amended its credit facility (the Credit Facility) primarily to extend the maturity date, increase borrowing capacity, and improve pricing. As amended, the Company’s $3,200.0 million Credit Facility consists of a $1,975.0 million revolving credit facility (the Revolving Facility) and a $1,225.0 million term loan (the Term Loan). The Revolving Facility has subfacilities of $100.0 million for same-day swing line loan borrowings and $25.0 million for stand-by letters of credit.

The Revolving Facility is a secured facility that permits continuously renewable borrowings of up to $1,975.0 million. As of September 30, 2024, the Company had $710.0 million outstanding under the Revolving Facility and no borrowings on the swing line. The Company pays a quarterly facility fee for the unused portion of the Revolving Facility.

The Term Loan is a five-year secured facility under which principal payments are due in quarterly installments of $7.7 million through December 31, 2023 and $15.3 million thereafter until the balance is due in full on December 13, 2026. As of September 30, 2024, the Company had $1,117.8 million outstanding under the Term Loan.

The interest rates applicable to loans under the Credit Facility are floating interest rates that, at the Company’s option, equal a base rate or a Secured Overnight Financing Rate (SOFR) rate plus, in each case, an applicable margin based upon the Company’s consolidated total net leverage ratio. For the three months ended September 30, 2024, the effective interest rate, including the impact of the Company’s floating-to-fixed interest rate swap agreements and excluding the effect of amortization of debt financing costs, for the outstanding borrowings under the Credit Facility was 4.99%.

The Credit Facility requires the Company to comply with certain financial covenants, including a maximum total leverage ratio and a minimum interest coverage ratio. The Credit Facility also includes customary negative covenants restricting or limiting the Company’s ability to guarantee or incur additional indebtedness, grant liens or other security interests to third parties, make loans or investments, transfer assets, declare dividends or redeem or repurchase capital stock or make other distributions, prepay subordinated indebtedness and engage in mergers, acquisitions or other business combinations, in each case except as expressly permitted under the Credit Facility. As of September 30, 2024, the Company was in compliance with all of the financial covenants. A majority of the Company’s assets serve as collateral under the Credit Facility.

All debt issuance costs are being amortized from the date incurred to the expiration date of the Credit Facility.

Cash Flow Hedges

The Company periodically uses derivative financial instruments as part of a strategy to manage exposure to market risks associated with interest rate fluctuations. The Company has entered into several floating-to-fixed interest rate swap agreements for an aggregate notional amount of $1,000.0 million which hedge a portion of the Company’s floating rate indebtedness. The swaps mature at various dates through 2028. The Company has designated the swaps as cash flow hedges. Unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. The interest rate swap agreements are highly correlated to the changes in interest rates to which the Company is exposed. Realized gains and losses in connection with each required interest payment are reclassified from accumulated other comprehensive income or loss to interest expense. The Company does not hold or issue derivative financial instruments for trading purposes.

The effect of derivative instruments in the consolidated statements of operations and accumulated other comprehensive loss for the three months ended September 30, 2024 and 2023 is as follows (in thousands):


	Three Months Ended September 30,
	2024		2023
Gain (loss) recognized in other comprehensive income	$	(11,621)	$	12,173
Amounts reclassified to earnings from accumulated other comprehensive loss	(6,055)		(6,741)
Other comprehensive income (loss), net of tax	$	(17,676)	$	5,432

Note 9 – Legal Proceedings and Other Commitments and Contingencies

Legal Proceedings

The Company is involved in various claims, lawsuits, and administrative proceedings arising in the normal course of business, none of which, based on current information, are expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Government Contracting

Payments to the Company on cost-plus-fee and time-and-materials contracts are subject to adjustment upon audit by the Defense Contract Audit Agency (DCAA) and other government agencies that do not utilize DCAA’s services. The DCAA has completed audits of the Company’s annual incurred cost proposals through fiscal year 2022. The Company is still negotiating the results of prior years’ audits with the respective cognizant contracting officers and believes its reserves for such are adequate. Adjustments that may result from these audits and the audits not yet started are not expected to have a material effect on the Company’s financial position, results of operations, or cash flows and the Company has accrued its best estimate of potential disallowances. Additionally, the DCAA continually reviews the cost accounting and other practices of government contractors, including the Company. In the course of those reviews, cost accounting and other issues may be identified, discussed and settled.

Note 10 – Earnings Per Share

Earnings per share and the weighted-average number of diluted shares are computed as follows (in thousands, except per share data):


	Three Months Ended September 30,
	2024		2023
Net income	$	120,177	$	86,047
Weighted-average number of basic shares outstanding during the period	22,304		22,647
Dilutive effect of equity awards	235		247
Weighted-average number of diluted shares outstanding during the period	22,539		22,894
Basic earnings per share	$	5.39	$	3.80
Diluted earnings per share	$	5.33	$	3.76

Note 11 – Income Taxes

The Company is subject to income taxes in the U.S. and various state and foreign jurisdictions. Tax statutes and regulations within each jurisdiction are subject to interpretation and require the application of significant judgment. The Company is currently under examination by the Internal Revenue Service for fiscal 2017 through 2021 and one state jurisdiction for fiscal 2019 and 2020. The Company does not expect resolution of these examinations to have a material impact on its results of operations, financial condition or cash flows.

During fiscal 2023, a provision of the Tax Cuts and Jobs Act of 2017 (TCJA) went into effect that eliminated the option to deduct domestic research and development costs in the year incurred and instead requires taxpayers to capitalize and amortize such costs over five years. Based upon our interpretation of the law as currently enacted, we estimate that the fiscal 2025 impact will result in increases of $52.7 million to both our income taxes payable and net deferred tax assets. The future impact of this provision will depend on any guidance issued by the Treasury Department regarding the identification of appropriate costs for capitalization, and the amount of future research and development expenses paid or incurred (among other factors). For the three months ended September 30, 2024, the Company recognized a $12.1 million increase in income taxes payable, with a corresponding increase to net deferred tax assets.

The Organisation for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2). While it is uncertain whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. We do not expect Pillar 2 to have a material impact on our effective tax rate or our consolidated results of operation, financial position, and cash flows.

The Company’s effective income tax rate was 22.9% and 23.0% for the three months ended September 30, 2024 and 2023, respectively. The effective tax rates for the three months ended September 30, 2024, and 2023 were reduced by research and development tax credits.

Note 12 – Business Segments

The Company reports operating results and financial data in two segments: domestic operations and international operations. Domestic operations provide Expertise and Technology primarily to U.S. federal government agencies. International operations provide Expertise and Technology primarily to international government and commercial customers.

The Company evaluates the performance of its operating segments based on net income. Summarized financial information for the Company’s reportable segments is as follows (in thousands):


	Three Months Ended September 30,
	2024		2023
Revenues:
Domestic	$	1,996,321	$	1,795,168
International	60,568		54,979
Total revenues	$	2,056,889	$	1,850,147

Net income:
Domestic	$	102,111	$	76,544
International	18,066		9,503
Total net income	$	120,177	$	86,047

Note 13 – Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and categorizes the inputs used in measuring fair value as follows: observable inputs such as quoted prices in active markets (Level 1); inputs other than quoted prices in active markets that are observable, either directly or indirectly, or quoted prices that are not active (Level 2); and unobservable inputs in which there is little or no market data which requires development of assumptions that market participants would use in pricing the asset or liability (Level 3).

The financial instruments measured at fair value on a recurring basis consist of the following (in thousands):


Description of Financial Instrument	Financial Statement Classification	Fair Value Hierarchy	September 30, 2024		June 30, 2024
			Fair Value
Contingent consideration	Other accrued expenses and current liabilities	Level 3	$	(3,621)	$	(3,061)
Contingent consideration	Other long-term liabilities	Level 3	$	(5,323)	$	(13,737)

Interest rate swap agreements	Other long-term liabilities	Level 2	$	(3,825)	$	—
Interest rate swap agreements	Prepaid expenses and other current assets	Level 2	$	1,312	$	—
Interest rate swap agreements	Other long-term assets	Level 2	$	12,188	$	33,327

The Company uses interest rate swap agreements to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves.

The Company recognized contingent consideration liabilities in connection with certain acquisitions, representing potential earnout payments and other contingent payments. The fair values of these liabilities were determined using a valuation model which included an assessment of the most likely outcome, assumptions related to projected earnings of the acquired company and the application of a discount rate when applicable. Fair value of contingent consideration is reassessed quarterly, including an analysis of the significant inputs used in the evaluation, as well as the accretion of the discount. Changes in the fair value of contingent consideration are reflected within indirect costs and selling expenses and were $8.7 million and zero for the three months ended September 30, 2024 and 2023, respectively.

Item 2. 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 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 or to address global pandemics like COVID-19;

•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, including the impact of global pandemics like COVID-19;

•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 United States 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, including during a global pandemic like COVID-19;

•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 internal agency operations. Examples include functional software development expertise, data and business analysis, IT operations support, naval architecture, engineering, and life cycle support intelligence and special operations support, and network and exploitation analysis.

•Technology – CACI provides technology that addresses our customer's most challenging needs. This includes agile software development using open modern architectures and DevSecOps; advanced data platforms and applications augmented by Artificial Intelligence (AI), Enterprise Resource Planning (ERP) systems, Electromagnetic Spectrum (EMS) capabilities, photonics and network modernization. CACI invests ahead of customer need with research and development to generate unique intellectual property 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. For the government fiscal year (GFY) ending September 30, 2023 (GFY23), defense and nondefense funding levels represented increases of approximately 10% and 6%, respectively, over GFY22 enacted levels. On June 3, 2023, the President signed into law legislation that suspended the federal debt limit until January 2025 and capped discretionary spending in GFY24 and GFY25. Specifically, GFY24 defense spending is capped at $886 billion, an increase of 3% and in-line with the President’s GFY24 budget request, and GFY24 nondefense spending is capped at levels similar to GFY22 (though after various adjustments would essentially be flat with GFY23 levels). For GFY25, discretionary spending growth (both defense and nondefense) is capped at 1%. On March 23, 2024, the President signed into law an appropriations bill that funds the federal government for GFY24, generally consistent with the terms set forth in the debt limit legislation signed in June 2023. Earlier in March, the President released his GFY25 budget request that was also generally consistent with the terms set forth in the debt limit legislation signed in June 2023. While future levels of defense and nondefense 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, including the conflict in Ukraine.

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 in any particular 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 allowing the government to continue operations at prior year funding levels. On September 27, 2024 the President signed a CR for GFY25 that extends funding for all 12 spending bills through December 20, 2024.

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 so that we can consider appropriate contingency plans.

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 75% of our revenue comes from defense-related customers, including those in the Intelligence Community (IC), with additional revenue coming from non-defense IC, homeland security, and other federal civilian 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 USG’s spending in our addressable market:

•A stable-to-higher USG budget environment, particularly in defense and intelligence-related areas;

•Increased focus on cyber, space, and the electromagnetic spectrum as key domains for National Security;

•Increased spend on network and application modernization and enhancements to cyber security posture;

•Increased investments in advanced technologies (e.g., Artificial Intelligence), particularly software-based technologies;

•Increasing focus on near-peer competitors and other nation state threats;

•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 (LPTA) 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 USG 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 information technology services industry is intense. Additional factors that could affect USG spending in our addressable market include changes in set-asides for small businesses, changes in budget priorities, and budgetary priorities limiting or delaying federal government spending in general.

Results of Operations for the Three Months Ended September 30, 2024 and 2023

The following table provides our results of operations (in thousands):


	Three Months Ended September 30,
	2024		2023		Change
	Dollars						Percent
Revenues	$	2,056,889	$	1,850,147	$	206,742	11.2	%
Costs of revenues:
Direct costs	1,414,424		1,272,918		141,506		11.1
Indirect costs and selling expenses	427,946		404,633		23,313		5.8
Depreciation and amortization	34,678		35,247		(569)		(1.6)
Total costs of revenues	1,877,048		1,712,798		164,250		9.6
Income from operations	179,841		137,349		42,492		30.9
Interest expense and other, net	23,970		25,571		(1,601)		(6.3)
Income before income taxes	155,871		111,778		44,093		39.4
Income taxes	35,694		25,731		9,963		38.7
Net income	$	120,177	$	86,047	$	34,130	39.7

Revenues. The increase in revenues for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily attributable to new contract awards and growth on existing programs.

The following table summarizes revenues by customer type with related percentages of revenues for the three months ended September 30, 2024 and 2023, respectively (in thousands):


	Three Months Ended September 30,
	2024		2023		Change
	Dollars						Percent
Department of Defense	$	1,534,533	$	1,352,306	$	182,227	13.5	%
Federal Civilian Agencies	439,371		407,344		32,027		7.9
Commercial and other	82,985		90,497		(7,512)		(8.3)
Total	$	2,056,889	$	1,850,147	$	206,742	11.2	%

•DoD revenues include Expertise and Technology provided to various Department of Defense customers.

•Federal civilian agencies’ revenues primarily include Expertise and Technology provided to non-DoD agencies and departments of the U.S. federal government, including intelligence agencies and 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 reportable segment.

Direct Costs. The increase in direct costs for the three months ended September 30, 2024, as compared to the prior year period, was primarily attributable to direct labor and materials costs from organic growth on existing programs. As a percentage of revenue, direct costs were 68.8% for the three months ended September 30, 2024 and 2023, respectively. Direct costs include direct labor, subcontractor costs, materials, and other direct costs.

Indirect Costs and Selling Expenses. As a percentage of revenue, indirect costs and selling expenses were 20.8% and 21.9% for the three months ended September 30, 2024 and 2023, respectively, driven by cost efficiencies across the Company. The increase in indirect costs and selling expenses for the three months ended September 30, 2024, as compared to the prior year periods, was primarily attributable to increased expenses due to a larger workforce, resulting in increased fringe benefits.

Depreciation and Amortization. Depreciation and amortization for the three months ended September 30, 2024 was consistent with the prior year periods.

Interest Expense and Other, Net. The decrease in interest expense and other, net for the three months ended September 30, 2024, as compared to the prior year period, was primarily attributable to lower outstanding debt balances.

Income Tax Expense. The Company’s effective income tax rate was 22.9% and 23.0% for the three months ended September 30, 2024 and 2023, respectively. The effective tax rates for the three months ended September 30, 2024, and 2023 were reduced by research and development tax credits.

Contract Backlog

The Company’s backlog represents value on existing contracts that has the potential to be recognized into 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 (“IDIQ”) vehicles until such task orders are issued.

The Company’s backlog as of 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 into revenue from executed contracts for which funding has not been appropriated and unexercised priced contract options.

As of September 30, 2024, the Company had total backlog of $32.4 billion, compared with $26.7 billion a year ago, an increase of 21.3%. Funded backlog as of September 30, 2024 was $4.3 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 result in revenues being recognized. The Company continues to monitor backlog as it is subject to change from 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 MARPA (as defined and discussed in Note 7) and available borrowings under our Credit Facility (as defined in Note 8).

The Company has a $3,200.0 million Credit Facility, which consists of a $1,975.0 million Revolving Facility and a $1,225.0 million Term Loan. The Revolving Facility is a secured facility that permits continuously renewable borrowings and has subfacilities of $100.0 million for same-day swing line borrowings and $25.0 million for stand-by letters of credit. As of September 30, 2024, we had $710.0 million outstanding under the Revolving Facility and no borrowings on the swing line.

The Term Loan is a five-year secured facility under which principal payments are due in quarterly installments of $7.7 million through December 31, 2023 and $15.3 million thereafter until the balance is due in full on December 13, 2026. As of September 30, 2024, $1,117.8 million was outstanding under the Term Loan.

The interest rates applicable to loans under the Credit Facility are floating interest rates that, at our option, equal a base rate or a SOFR rate plus, in each case, an applicable margin based upon our consolidated total net leverage ratio.

The Credit Facility requires us to comply with certain financial covenants, including a maximum total leverage ratio and a minimum interest coverage ratio. The Credit Facility also includes customary negative covenants restricting or limiting our ability to guarantee or incur additional indebtedness, grant liens or other security interests to third parties, make loans or investments, transfer assets, declare dividends or redeem or repurchase capital stock or make other distributions, prepay subordinated indebtedness and engage in mergers, acquisitions or other business combinations, in each case except as expressly permitted under the Credit Facility. Since the inception of the Credit Facility, we have been in compliance with all of the financial covenants. A majority of our assets serve as collateral under the Credit Facility.

To provide additional financial flexibility for the Company, in connection with the Azure Summit acquisition, the Company entered into a commitment letter (the “Commitment Letter”), dated September 10, 2024, with JPMorgan Chase Bank, N.A. (“JPMorgan”), pursuant to which JPMorgan committed to provide the entire principal amount of a senior secured bridge loan facility in an aggregate principal amount of up to $750.0 million. As of September 30, 2024, no amounts were funded pursuant to the Commitment Letter. During the second quarter of fiscal 2025 the Company expects to complete a new senior secured Term Loan B facility in an aggregate principal amount of $750.0 million, which will effectively terminate the Commitment Letter. The Term Loan B is a seven-year facility under which principal payments are due in quarterly installments of $1.9 million from March 2025 until the balance is due in full at maturity in October 2031. The interest rates applicable to the Term Loan B facility are floating interest rates that, at the Company’s option, equal a base rate or a term SOFR rate plus an applicable margin.During fiscal 2023, a provision of the TCJA went into effect that eliminated the option to deduct domestic research and development costs in the year incurred and instead requires taxpayers to capitalize and amortize such costs over five years. This provision is expected to decrease fiscal 2025 cash flows from operations by $52.7 million. The future impact of this provision will depend on any guidance issued by the Treasury Department regarding the identification of appropriate costs for capitalization, and the amount of future research and development expenses paid or incurred (among other factors).

A summary of the change in cash and cash equivalents is presented below (in thousands):


	Three Months Ended September 30,
	2024		2023
Net cash provided by operating activities	$	34,661	$	70,088
Net cash used in investing activities	(11,727)		(12,364)
Net cash provided by (used in) financing activities	279,356		(45,561)
Effect of exchange rate changes on cash and cash equivalents	4,455		(2,393)
Net change in cash and cash equivalents	$	306,745	$	9,770

Net cash provided by operating activities decreased $35.4 million for the three months ended September 30, 2024, when compared to the three months ended September 30, 2023, primarily due to $75.1 million in net unfavorable changes in working capital driven by increased vendor disbursements, offset by lower days sales outstanding. These activities were partially offset by $39.7 million of higher earnings after adding back non-cash adjustments.

Net cash used in investing activities decreased by $0.6 million for the three months ended September 30, 2024, when compared to the three months ended September 30, 2023, primarily due to lower capital expenditures.

Net cash provided by financing activities increased $324.9 million for the three months ended September 30, 2024, when compared to the three months ended September 30, 2023, primarily as a result of a $187.3 million increase in net borrowings under our Credit Facility and a $137.1 million decrease in repurchases of our common stock.

We believe that the combination of internally generated funds, available bank borrowings, and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund on-going operations, customary capital expenditures, debt service obligations, share repurchases, and other working capital requirements over the next twelve months. In the future we may seek to borrow additional amounts under a long-term debt security. Over the longer term, our ability to generate sufficient cash flows from operations necessary to fulfill the obligations under the Credit Facility 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 worldwide economic 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, 2024.

Off-Balance Sheet Arrangements and Contractual Obligations

We have no material off-balance sheet financing arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The interest rates on both the Term Loan and the Revolving Facility are affected by changes in market interest rates. We have the ability to manage these fluctuations in part through interest rate hedging alternatives in the form of interest rate swaps. We have entered into floating-to-fixed interest rate swap agreements for an aggregate notional amount of $1,000.0 million related to a portion of our floating rate indebtedness. All remaining balances under our Term Loan, and any additional amounts that may be borrowed under our Revolving Facility, are currently subject to interest rate fluctuations. With every one percent fluctuation in the applicable interest rates, interest expense on our variable rate debt for the three months ended September 30, 2024 would have fluctuated by approximately $1.6 million.

Approximately 2.9% and 3.0% of our total revenues during the three months ended September 30, 2024, and 2023, respectively, were derived from our international operations headquartered in the U.K. Our practice in our international operations is to negotiate contracts in the same currency in which the predominant expenses are incurred, thereby mitigating the exposure to foreign currency exchange fluctuations. It is not possible to accomplish this in all cases; thus, there is some risk that profits will be affected by foreign currency exchange fluctuations. As of September 30, 2024, we held a combination of euros and pounds sterling in the U.K. and the Netherlands equivalent to approximately $89.0 million. This allows us to better utilize our cash resources on behalf of our foreign subsidiaries, thereby mitigating foreign currency conversion risks.

Item 4. Controls and Procedures

As of the end of the three-month period covered by this report, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. The effectiveness of a system of disclosure controls and procedures is subject to various inherent limitations, including cost limitation, judgments used in decision making, assumptions about the likelihood of future events, the soundness of internal controls, and fraud. Due to such inherent limitations, there can be only reasonable, and not absolute, assurance that any system of disclosure controls and procedures will be successful in preventing all errors or fraud, or in making all material information known in a timely manner to appropriate levels of management.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were operating and effective at September 30, 2024.

The Company reports that no changes in its internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended September 30, 2024.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

Al Shimari, et al. v. L-3 Services, Inc. et al.

Reference is made to Part I, Item 3, Legal Proceedings in the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2024 for the most recently filed information concerning the suit filed in the United States District Court for the Southern District of Ohio. The lawsuit names CACI International Inc, CACI Premier Technology, Inc. and former CACI employee Timothy Dugan as Defendants, along with L-3 Services, Inc. Plaintiffs seek, inter alia, compensatory damages, punitive damages, and attorney’s fees.

In 2015, Defendant CACI Premier Technology, Inc. moved to dismiss Plaintiffs’ claims based upon the political question doctrine. On June 18, 2015, the Court issued an Order granting Defendant CACI Premier Technology, Inc.’s motion to dismiss, and on June 26, 2015 entered a final judgment in favor of Defendant CACI Premier Technology, Inc.

On July 23, 2015, Plaintiffs filed a Notice of Appeal of the district court’s June 2015 decision. On October 21, 2016, the Court of Appeals vacated and remanded the District Court’s judgment with instructions for the District Court to make further determinations regarding the political question doctrine. The District Court conducted an initial status conference on December 16, 2016. On June 9, 2017, the District Court dismissed Plaintiff Rashid without prejudice from the action based upon his inability to participate. On July 19, 2017, CACI Premier Technology, Inc. filed a motion to dismiss the action on numerous legal grounds. The Court held a hearing on that motion on September 22, 2017, and denied the motion pending issuance of a written decision. On January 17, 2018, CACI filed a third-party complaint naming the United States and John Does 1-60, asserting claims for contribution, indemnification, exoneration and breach of contract in the event that CACI Premier Technology, Inc. is held liable to Plaintiffs, as Plaintiffs are seeking to hold CACI Premier Technology, Inc. liable on a co-conspirator theory and a theory of aiding and abetting. On February 21, 2018, the District Court issued a Memorandum Opinion and Order dismissing with prejudice the claims of direct abuse of the Plaintiffs by CACI personnel (Counts 1, 4 and 7 of the Third Amended Complaint) in response to the motion to dismiss filed by CACI on July 19, 2017, and denying the balance of the motion to dismiss. On March 14, 2018, the United States filed a motion to dismiss the third party complaint or, in the alternative, for summary judgment. On April 13, 2018, the Court held a hearing on the United States’ motion to dismiss and took the matter under advisement. The Court subsequently stayed the part of the action against John Does 1-60.

On April 13, 2018, the Plaintiffs filed a motion to reinstate Plaintiff Rashid, which CACI opposed. On April 20, 2018, the District Court granted that motion subject to Plaintiff Rashid appearing for a deposition. On May 21, 2018, CACI filed a motion to dismiss for lack of subject matter jurisdiction based on a recent Supreme Court decision. On June 25, 2018, the District Court denied that motion. On October 25, 2018, the District Court conducted a pre-trial conference at which the District Court addressed remaining discovery matters, the scheduling for dispositive motions that CACI intends to file, and set a date of April 23, 2019 for trial, if needed, to start. On December 20, 2018, CACI filed a motion for summary judgment and a motion to dismiss based on the state secrets privilege. On January 3, 2019, CACI filed a motion to dismiss for lack of subject matter jurisdiction. On February 15, 2019, the United States filed a motion for summary judgment with respect to CACI’s third-party complaint. On February 27, 2019, the District Court denied CACI’s motion for summary judgment and motions to dismiss for lack of subject matter jurisdiction and on the state secrets privilege. On February 28, 2019, CACI filed a motion seeking dismissal on grounds of derivative sovereign immunity.

On March 22, 2019, the District Court denied the United States’ motion to dismiss on grounds of sovereign immunity and CACI’s motion to dismiss on grounds of derivative sovereign immunity. The District Court also granted the United States’ motion for summary judgment with respect to CACI’s third-party complaint. On March 26, 2019, CACI filed a Notice of Appeal of the District Court’s March 22, 2019 decision. On April 2, 2019, the U.S. Court of Appeals for the Fourth Circuit issued an Accelerated Briefing Order for the appeal. On April 3, 2019, the District Court issued an Order cancelling the trial schedule and holding matters in abeyance pending disposition of the appeal. On July 10, 2019, the U.S. Court of Appeals for the Fourth Circuit heard oral argument in Spartanburg, South Carolina on CACI’s appeal. On August 23, 2019, the Court of Appeals issued an unpublished opinion dismissing the appeal. A majority of the panel that heard the appeal held that rulings denying derivative sovereign immunity are not immediately appealable even where they present pure questions of law. The panel also ruled, in the alternative, that even if such a ruling was immediately appealable, review was barred because there remained disputes of material fact with respect to CACI’s derivative sovereign immunity defenses. The Court of Appeals subsequently denied CACI’s request for rehearing en banc. CACI then filed a motion to stay issuance of the mandate pending the filing of a petition for a writ of certiorari. On October 11, 2019, the Court of Appeals, by a 2-1 vote, denied the motion to stay issuance of the mandate. CACI then filed an application to stay issuance of the mandate with Chief Justice Roberts in his capacity as Circuit Justice for the U.S. Court of Appeals for the Fourth Circuit. After CACI filed that application, the Court of Appeals issued the mandate on October 21, 2019, returning jurisdiction to the district court. On October 23, Chief Justice Roberts denied the stay application “without prejudice to applicants filing a new application after seeking relief in the district court.” CACI then filed a motion in the district court to stay the action pending filing and disposition of a petition for a writ of certiorari. On November 1, 2019, the district court granted CACI’s motion and issued an Order staying the action until further order of the court. On November 15, 2019, CACI filed a petition for a writ of certiorari in the U.S. Supreme Court. On January 27, 2020, the U.S. Supreme Court issued an Order inviting the Solicitor General to file a brief in the case expressing the views of the United States. On August 26, 2020, the Solicitor General filed a brief recommending that CACI’s petition for a writ of certiorari be held pending the Supreme Court’s disposition of Nestle USA, Inc. v. Doe, cert. granted, No. 19-416 (July 2, 2020), and Cargill, Inc. v. Doe, cert. granted, No. 19-453 (July 2, 2020). The United States’ brief recommended that if the Supreme Court’s decisions in Nestle and Cargill did not effectively eliminate the claims in Al Shimari, then the Supreme Court should grant CACI’s petition for a writ of certiorari. On June 17, 2021, the Supreme Court issued its decision in the Nestle and Cargill cases, holding that the allegations of domestic conduct in the cases were general corporate activity insufficient to establish subject matter jurisdiction. As a result, the Supreme Court remanded the cases for dismissal. On June 28, 2021, the Supreme Court denied CACI’s petition for a writ of certiorari.

On July 16, 2021, the District Court granted CACI’s consent motion to lift the stay of the action, and ordered the parties to submit status reports to the District Court by August 4, 2021. On July 23, 2021, CACI filed a motion to dismiss the action for lack of subject matter jurisdiction based on, among other things, the recent Supreme Court decision in the Nestle and Cargill cases. On August 4, 2021, the parties submitted status reports to the District Court.

On September 10, 2021, the Court conducted a hearing on CACI’s motion to dismiss for lack of subject matter jurisdiction and took the motion under advisement. The Court issued an Order directing the plaintiffs to provide the Court with a calculation of specific damages sought by each plaintiff. In response, plaintiffs advised the Court that, if the case is tried, they do not intend to request a specific amount of damages.

On October 1, 2021, the plaintiffs filed an estimate of compensatory damages between $6.0 million and $9.0 million ($2.0 million to $3.0 million per plaintiff) and an estimate of punitive damages between $23.5 million and $64.0 million.

On July 18, 2022, CACI filed a second motion to dismiss for lack of subject matter jurisdiction based on recent decisions by the Supreme Court. On September 16, 2022, the District Court conducted a hearing on that motion and took the matter under advisement.

On July 31, 2023, the District Court denied the July 23, 2021 motion to dismiss and the July 18, 2022 motion to dismiss. On September 7, 2023, CACI filed a petition for a writ of mandamus with the U.S. Court of Appeals for the Fourth Circuit, asserting that the District Court had disregarded binding precedent and asking the Court of Appeals to dismiss the action for lack of subject matter jurisdiction. On September 13, 2023, the Court of Appeals issued an Order requiring the plaintiffs to respond to the petition. On September 25, 2023, the plaintiffs filed their response to CACI’s petition, opposing the relief sought. On October 2, 2023, the District Court entered an Order setting the case for a jury trial on April 15, 2024. On November 2, 2023, the Court of Appeals denied without opinion the petition for a writ of mandamus. Trial commenced on April 15, 2024. During trial, the plaintiffs abandoned their claim of war crimes. On May 9, 2024, the jury notified the District Court that it was deadlocked and could not reach a unanimous verdict on any claim. The District Court then dismissed the jury and declared a mistrial.

On May 16, 2024, plaintiffs filed a motion for a new trial, and CACI filed a motion for judgment as a matter of law. On June 14, 2024, the District Court granted plaintiffs’ motion, denied CACI’s motion, and proposed dates in October 2024 for a new trial. The District Court subsequently scheduled the new trial to start on October 30, 2024.

Abbass, et al v. CACI Premier Technology, Inc. and CACI International Inc, Case No. 1:13CV1186-LMB/JFA (EDVA)

Reference is made to Part I, Item 3, Legal Proceedings in the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2024 for the most recently filed information concerning the suit filed in the United States District Court for the Eastern District of Virginia. The lawsuit names CACI International Inc and CACI Premier Technology, Inc. as Defendants. Plaintiffs seeks, inter alia, compensatory damages, punitive damages, and attorney’s fees.

Since the filing of Registrant’s report described above, the case remains stayed pending the outcome in the Al Shimari appeal.

We are vigorously defending the above-described legal proceedings, and based on our present knowledge of the facts, believe the lawsuits are completely without merit.

On September 13, 2021, the Court issued an Order directing plaintiffs’ counsel to file a report advising the Court of the status of each plaintiff, and indicating that any plaintiff whom counsel is unable to contact may be dismissed from the action. On October 4, 2021, plaintiffs’ counsel filed a memorandum stating that the action was brought by forty-six plaintiffs, and that plaintiffs’ counsel was in contact with many of the plaintiffs but needed additional time to provide the Court with a final report. On October 4, 2021, the Court entered an Order extending plaintiffs’ response to October 25, 2021. On October 25, 2021, plaintiffs’ counsel filed a memorandum stating that he was in communication with 46 plaintiffs or their representatives.

On June 21, 2024, CACI filed a motion to lift the stay. Plaintiffs filed an opposition to that motion on June 26, 2024. On June 28, 2024, the District Court denied CACI's motion without prejudice. CACI subsequently filed a Notice of Appeal to the U.S. Court of Appeals for the Fourth Circuit, as well as a Petition for a Writ of Mandamus in the Court of Appeals, asking the Court of Appeals to issue an order requiring the District Court to lift the stay. The Court of Appeals denied the petition for a Writ of Mandamus, but subsequently issued a briefing schedule for CACI’s appeal.

Item 1A. Risk Factors

Reference is made to Part I, Item 1A, Risk Factors, in the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2024. There have been no material changes from the risk factors described in that report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides certain information with respect to our purchases of shares of CACI International Inc’s common stock:


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
July 2024	7,580	$	427.66	7,580	797,292
August 2024	—	—		—	797,292
September 2024	—	—		—	797,292
Total	7,580	$	427.66	7,580

__________________________________________________

(1) Number of shares determined based on the closing price of $504.56 as of September 30, 2024.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

During the fiscal quarter ended September 30, 2024, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

Item 6. Exhibits

Incorporated by Reference

Exhibit No.

Description

Filed with this Form 10-Q

Form

Filing Date

Exhibit No.

2.1

Purchase and Sale Agreement by and among Azure Summit Technology, Inc. and CACI, Inc. - Federal dated September 10, 2024.

8-K

September 16, 2024

Exhibit 2.1

10.1

Commitment Letter dated September 10, 2024, by and among CACI International Inc, JPMorgan Chase Bank, N.A. and each of the lenders named therein.

31.1

Section 302 Certification John S. Mengucci

31.2

Section 302 Certification Jeffrey D. MacLauchlan

32.1

Section 906 Certification John S. Mengucci

32.2

Section 906 Certification Jeffrey D. MacLauchlan

101.INS

XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	CACI International Inc
	Registrant

Date: October 24, 2024	By:	/s/ John S. Mengucci
		John S. Mengucci President, Chief Executive Officer and Director (Principal Executive Officer)

Date: October 24, 2024	By:	/s/ Jeffrey D. MacLauchlan
		Jeffrey D. MacLauchlan Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

Date: October 24, 2024	By:	/s/ Eric F. Blazer
		Eric F. Blazer Senior Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer)

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Date	Price Target	Rating	Analyst
8/5/2024		Outperform → Mkt Perform	Raymond James
1/5/2024	$365.00 → $380.00	Hold → Buy	Stifel
1/3/2024	$375.00 → $350.00	Buy → Hold	Jefferies
7/12/2023	$405.00	Hold → Buy	Jefferies
1/3/2023	$325.00 → $355.00	Equal-Weight → Overweight	Morgan Stanley
7/21/2022	$335.00	Outperform	Robert W. Baird
4/13/2022	$304.00 → $336.00	Buy → Neutral	Goldman
3/18/2022	$305.00	Hold	Stifel

SEC Form 10-Q filed by CACI International Inc.

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