CACI INTERNATIONAL INC /DE/ - Quarter Report: 2024 December (Form 10-Q)

Total shareholders’ equity Total liabilities and shareholders’ equity$ $

See Notes to Unaudited Condensed Consolidated Financial Statements

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

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	Six Months Ended December 31,
	2024	2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	$
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Amortization of deferred financing costs
Stock-based compensation expense
Deferred income taxes	()	()
Changes in operating assets and liabilities, net of effect of business acquisitions:
Accounts receivable, net	()	()
Prepaid expenses and other assets	()	()
Accounts payable and other accrued expenses	()
Accrued compensation and benefits	()	()
Income taxes payable and receivable
Operating lease liabilities and assets, net	()	()
Long-term liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	()	()
Acquisitions of businesses, net of cash acquired	()	()
Other
Net cash used in investing activities	()	()
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under bank credit facilities
Principal payments made under bank credit facilities	()	()
Payment of financing costs under bank credit facilities	()
Proceeds from employee stock purchase plans
Repurchases of common stock	()	()
Payment of taxes for equity transactions	()	()
Net cash provided by (used in) financing activities		()
Effect of exchange rate changes on cash and cash equivalents	()
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period	$	$
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for income taxes, net of refunds	$	$
Cash paid during the period for interest	$	$
Non-cash financing and investing activities:
Total estimated consideration	$

The goodwill is primarily associated with future customer relationships and an acquired assembled work force. All of the goodwill recognized is tax deductible.

The estimated fair value attributed to intangible assets of $ million consists of customer relationships of $ million and technology of $ million. The fair value attributed to intangible assets is being amortized over to years for customer intangibles and over to years for technology. The fair value attributed to the intangible assets acquired was based on assumptions and other information compiled by management, including independent valuations that utilized established valuation techniques.

From the October 30, 2024 acquisition date through December 31, 2024, Azure Summit generated $ million of revenues and $ million of net income recognized within the Domestic reportable segment. Azure Summit's net income includes the impact of $ million of intangible amortization from the acquisition date through December 31, 2024. Pro forma results of operations for this acquisition are not presented because the acquisition is not material to the Company's consolidated results of operations.

For the six months ended December 31, 2024, total acquisition-related costs of $ million were reported in indirect costs and expenses.

Note 4 –

$ $ Goodwill acquired (1) Foreign currency translation()()()Balance at December 31, 2024$ $ $

__________________________________________________

(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.

$()$ $ $()$ Acquired technologies () () Total intangible assets$ $()$ $ $()$

Amortization expense related to intangible assets was $ million and $ million for the three and six months ended December 31, 2024, respectively, and $ million and $ million for the three and six months ended December 31, 2023, respectively.

Note 5 –

$ $ $ $ $ Fixed-price Time-and-materials Total$ $ $ $ $ $

Three Months Ended December 31, 2023

Six Months Ended December 31, 2023

Domestic

International

Total

Domestic

International

Total

Cost-plus-fee

Fixed-price

Time-and-materials

Total

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

Three Months Ended December 31, 2024

Six Months Ended December 31, 2024

Domestic

International

Total

Domestic

International

Total

Department of Defense

Federal civilian agencies

Commercial and other

Total

Three Months Ended December 31, 2023

Six Months Ended December 31, 2023

Domestic

International

Total

Domestic

International

Total

Department of Defense

Federal civilian agencies

Commercial and other

Total

$ $ $ $ $ Subcontractor Total$ $ $ $ $ $

Three Months Ended December 31, 2023

Six Months Ended December 31, 2023

Domestic

International

Total

Domestic

International

Total

Prime contractor

Subcontractor

Total

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

Three Months Ended December 31, 2024

Six Months Ended December 31, 2024

Domestic

International

Total

Domestic

International

Total

Expertise

Technology

Total

Three Months Ended December 31, 2023

Six Months Ended December 31, 2023

Domestic

International

Total

Domestic

International

Total

Expertise

Technology

Total

Changes in Estimates

Aggregate net changes in estimates for the three and six months ended December 31, 2024 reflected an increase to income before income taxes of $ million ($ per diluted share) and $ million ($ per diluted share), respectively, compared with $ million ($ per diluted share) and $ million ($ per diluted share), for the three and six months ended December 31, 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 material for the three and six months ended December 31, 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 December 31, 2024, the Company had $ billion of remaining performance obligations and expects to recognize approximately % and % as revenue over the next and months, respectively, with the remainder to be recognized thereafter.

$ Contract assets – current unbilled receivablesAccounts receivable, net Contract assets – current costs to obtainPrepaid expenses and other current assets Contract assets – noncurrent unbilled receivablesAccounts receivable, long-term Contract assets – noncurrent costs to obtainOther long-term assets Contract liabilities – current deferred revenue and other contract liabilitiesOther accrued expenses and current liabilities()()Contract liabilities – noncurrent deferred revenue and other contract liabilitiesOther long-term liabilities()()

During the three and six months ended December 31, 2024, we recognized $ million and $ million of revenues, respectively, compared with $ million and $ million of revenues for the three and six months ended December 31, 2023, that was included in a previously recorded contract liability as of the beginning of the period.

Note 6 –

$ Work in process Finished goods Total$ $

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 –

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 December 31, 2024. Proceeds from the sold receivables are reflected in operating cash flows on the statement of cash flows.

$ Sales of receivables Cash collections()()Outstanding balance sold to Purchaser: (1) Cash collected, not remitted to Purchaser (2)()()Remaining sold receivables$ $

__________________________________________________

(1)For the six months ended December 31, 2024 and 2023, the Company recorded a net cash inflow of $ million and a net cash outflow of $ 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 December 31, 2024 and 2023. This balance is included in other accrued expenses and current liabilities as of the balance sheet date.

Note 8 –

$ Bank credit facility – revolver loans Term loan B facility Principal amount of long-term debt Less unamortized discounts and debt issuance costs()()Total long-term debt Less current portion()()Long-term debt, net of current portion$ $

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 $ million Credit Facility consists of a $ million revolving credit facility (the Revolving Facility) and a $ million term loan (the Term Loan). The Revolving Facility has subfacilities of $ million for same-day swing line loan borrowings and $ million for stand-by letters of credit.

The Revolving Facility is a secured facility that permits continuously renewable borrowings of up to $ million. As of December 31, 2024, the Company had $ million outstanding under the Revolving Facility and 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 secured facility under which principal payments are due in quarterly installments of $ million through December 31, 2023 and $ million thereafter until the balance is due in full on December 13, 2026. As of December 31, 2024, the Company had $ 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 December 31, 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 %.

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 December 31, 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.

million. No amounts were funded pursuant to the Commitment Letter.

On October 30, 2024 the Company completed a new senior secured Term Loan B facility in an aggregate principal amount of $ million, which effectively terminated the Commitment Letter. The Term Loan B facility is a facility under which principal payments are due in quarterly installments of $ 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.

The Company recognized $ million of debt discount and debt issuance costs related to the Term Loan B financing, which were recorded as an offset against the carrying value of debt and are being amortized to interest expense over the life of the Term Loan B facility using the effective interest method.

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 $ 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.

$()$ $()Amounts reclassified to earnings from accumulated other comprehensive loss()()()()Other comprehensive income (loss), net of tax$ $()$()$()

Note 9 –

million judgment against the Company in an ongoing civil suit alleging that the Company’s employees had conspired with the US military, which lead to acts of wrongdoings committed by the US military against the plaintiffs. On November 25, 2024, the Company filed a motion for dismissal as a matter of law, enumerating numerous grounds. On January 10, 2025, the motion was denied, and the Company filed a notice of appeal to the U.S. Court of Appeals. The Company is vigorously defending the proceedings and continues to believe that the plaintiffs’ position is completely without merit. No amounts have been recognized in our consolidated financial statements.

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 2023. 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 –

$ $ $ Weighted-average number of basic shares outstanding during the period Dilutive effect of equity awards Weighted-average number of diluted shares outstanding during the period Basic earnings per share$ $ $ $ Diluted earnings per share$ $ $ $

Note 11 –

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 six months ended December 31, 2024, the Company recognized a $ 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.

% and % for the three and six months ended December 31, 2024, respectively, and % and % for the three and six months ended December 31, 2023, respectively. The effective tax rates for the three and six months ended December 31, 2024, and 2023 differ from the statutory rate of 21.0% primarily due to research and development tax credits and stock-based compensation.

Note 12 –

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.

$ $ $ International Total revenues$ $ $ $ Net income: Domestic$ $ $ $ International Total net income$ $ $ $

Note 13 –

)$()Contingent considerationOther long-term liabilitiesLevel 3$()$()

CACI INTERNATIONAL INC /DE/ - Quarter Report: 2024 December (Form 10-Q)

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