10-Q 1 caci-20231231.htm 10-Q caci-20231231
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________
FORM 10-Q
_________________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2023
OR
oTRANSITION 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)
____________________________________
Delaware54-1345888
(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 classTrading Symbol(s)Name of each exchange on which registered
Common StockCACINew 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 filerxAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
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 January 11, 2024, there were 22,285,108 shares outstanding of CACI International Inc’s common stock, par value $0.10 per share.



CACI INTERNATIONAL INC
PAGE
2


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 December 31,Six Months Ended December 31,
2023202220232022
Revenues$1,833,934 $1,649,416 $3,684,081 $3,255,175 
Costs of revenues:
Direct costs1,255,251 1,094,314 2,528,169 2,150,086 
Indirect costs and selling expenses409,355 388,303 813,988 770,384 
Depreciation and amortization36,023 35,932 71,270 71,035 
Total costs of revenues1,700,629 1,518,549 3,413,427 2,991,505 
Income from operations133,305 130,867 270,654 263,670 
Interest expense and other, net27,519 19,942 53,090 36,135 
Income before income taxes105,786 110,925 217,564 227,535 
Income taxes21,916 23,824 47,647 51,309 
Net income$83,870 $87,101 $169,917 $176,226 
Basic earnings per share$3.76 $3.71 $7.56 $7.51 
Diluted earnings per share$3.74 $3.68 $7.50 $7.44 
Weighted-average basic shares outstanding22,28223,50622,46423,463
Weighted-average diluted shares outstanding22,40723,67622,65023,677
See Notes to Unaudited Condensed Consolidated Financial Statements
3


CACI INTERNATIONAL INC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Net income$83,870 $87,101 $169,917 $176,226 
Other comprehensive income (loss):
Foreign currency translation adjustment11,446 17,123 2,245 (366)
Change in fair value of interest rate swap agreements, net of tax(19,222)(1,516)(13,790)14,013 
Total other comprehensive income (loss), net of tax(7,776)15,607 (11,545)13,647 
Comprehensive income$76,094 $102,708 $158,372 $189,873 
See Notes to Unaudited Condensed Consolidated Financial Statements
4


CACI INTERNATIONAL INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
December 31,
2023
June 30,
2023
ASSETS
Current assets:
Cash and cash equivalents$128,851 $115,776 
Accounts receivable, net947,452 894,946 
Prepaid expenses and other current assets227,501 199,315 
Total current assets1,303,804 1,210,037 
Goodwill4,106,113 4,084,705 
Intangible assets, net474,964 507,835 
Property, plant and equipment, net190,199 199,519 
Operating lease right-of-use assets309,084 312,989 
Supplemental retirement savings plan assets97,559 96,739 
Accounts receivable, long-term12,409 11,857 
Other long-term assets164,310 177,127 
Total assets$6,658,442 $6,600,808 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt$61,250 $45,938 
Accounts payable298,544 198,177 
Accrued compensation and benefits248,187 372,354 
Other accrued expenses and current liabilities378,145 377,502 
Total current liabilities986,126 993,971 
Long-term debt, net of current portion1,713,413 1,650,443 
Supplemental retirement savings plan obligations, net of current portion112,514 104,912 
Deferred income taxes55,293 120,545 
Operating lease liabilities, noncurrent323,919 329,432 
Other long-term liabilities231,553 177,171 
Total liabilities$3,422,818 $3,376,474 
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; 43,027 shares issued and 22,285 outstanding at December 31, 2023 and 42,923 shares issued and 22,797 outstanding at June 30, 2023
4,303 4,292 
Additional paid-in capital602,613 546,334 
Retained earnings4,110,533 3,940,616 
Accumulated other comprehensive loss(16,596)(5,051)
Treasury stock, at cost (20,742 and 20,126 shares, respectively)
(1,465,364)(1,261,992)
Total CACI shareholders’ equity3,235,489 3,224,199 
Noncontrolling interest135 135 
Total shareholders’ equity3,235,624 3,224,334 
Total liabilities and shareholders’ equity$6,658,442 $6,600,808 
See Notes to Unaudited Condensed Consolidated Financial Statements
5


CACI INTERNATIONAL INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended December 31,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$169,917 $176,226 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization71,270 71,035 
Amortization of deferred financing costs1,095 1,126 
Non-cash lease expense33,835 34,909 
Stock-based compensation expense22,949 20,196 
Deferred income taxes(25,770)(48,320)
Changes in operating assets and liabilities, net of effect of business acquisitions:
Accounts receivable, net(50,642)55,518 
Prepaid expenses and other assets(28,703)(30,322)
Accounts payable and other accrued expenses90,769 28,157 
Accrued compensation and benefits(124,640)(59,917)
Income taxes payable and receivable2,879 (5,110)
Operating lease liabilities(38,206)(40,050)
Long-term liabilities17,099 3,642 
Net cash provided by operating activities141,852 207,090 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(29,410)(25,670)
Acquisitions of businesses, net of cash acquired(10,869) 
Other1,974  
Net cash used in investing activities(38,305)(25,670)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under bank credit facilities1,531,500 1,101,500 
Principal payments made under bank credit facilities(1,454,313)(1,269,813)
Proceeds from employee stock purchase plans5,848 5,288 
Repurchases of common stock(155,765)(5,286)
Payment of taxes for equity transactions(18,061)(13,269)
Net cash used in financing activities(90,791)(181,580)
Effect of exchange rate changes on cash and cash equivalents319 94 
Net change in cash and cash equivalents13,075 (66)
Cash and cash equivalents, beginning of period115,776 114,804 
Cash and cash equivalents, end of period$128,851 $114,738 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for income taxes, net of refunds$60,381 $100,400 
Cash paid during the period for interest$46,986 $27,654 
Non-cash financing and investing activities:
Accrued capital expenditures$1,769 $736 
Landlord sponsored tenant incentives$2,693 $1,908 
See Notes to Unaudited Condensed Consolidated Financial Statements
6


CACI INTERNATIONAL INC
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)
Common Stock
Shares   Amount
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury Stock
Shares     Amount
Total CACI
Shareholders’
Equity
Noncontrolling
Interest
Total
Shareholders’
Equity
Balance at September 30, 202342,929$4,293 $594,885 $4,026,663 $(8,820)20,703 $(1,453,123)$3,163,898 $135 $3,164,033 
Net income— — 83,870 — — — 83,870 — 83,870 
Stock-based compensation expense— 12,925 — — — — 12,925 — 12,925 
Tax withholdings on restricted share vestings98 10 (17,341)— — — — (17,331)— (17,331)
Other comprehensive loss, net of tax— — — (7,776)— — (7,776)— (7,776)
Repurchases of common stock— 12,144 — — 48 (14,932)(2,788)— (2,788)
Treasury stock issued under stock purchase plans— — — — (9)2,691 2,691 — 2,691 
Balance at December 31, 202343,027$4,303 $602,613 $4,110,533 $(16,596)20,742$(1,465,364)$3,235,489 $135 $3,235,624 
Balance at September 30, 202242,826$4,283 $579,511 $3,645,006 $(33,036)19,404 $(1,047,329)$3,148,435 $135 $3,148,570 
Net income— — 87,101 — — — 87,101 — 87,101 
Stock-based compensation expense— 11,757 — — — — 11,757 — 11,757 
Tax withholdings on restricted share vestings858 (12,679)— — — — (12,671)— (12,671)
Other comprehensive income, net of tax— — — 15,607 — — 15,607 — 15,607 
Repurchases of common stock— (143)— — 10 (2,496)(2,639)— (2,639)
Treasury stock issued under stock purchase plans— 24 — — (10)2,497 2,521 — 2,521 
Balance at December 31, 202242,911$4,291 $578,470 $3,732,107 $(17,429)19,404 $(1,047,328)$3,250,111 $135 $3,250,246 
Balance at June 30, 202342,923$4,292 $546,334 $3,940,616 $(5,051)20,126 $(1,261,992)$3,224,199 $135 $3,224,334 
Net income— — 169,917 — — — 169,917 — 169,917 
Stock-based compensation expense— 22,949 — — — — 22,949 — 22,949 
Tax withholdings on restricted share vestings10411 (17,939)— — — — (17,928)— (17,928)
Other comprehensive loss, net of tax— — — (11,545)— — (11,545)— (11,545)
Repurchases of common stock— 51,231 — — 633 (208,676)(157,445)— (157,445)
Treasury stock issued under stock purchase plans— 38 — — (17)5,304 5,342 — 5,342 
Balance at December 31, 202343,027$4,303 $602,613 $4,110,533 $(16,596)20,742 $(1,465,364)$3,235,489 $135 $3,235,624 
Balance at June 30, 202242,820$4,282 $571,650 $3,555,881 $(31,076)19,404 $(1,047,329)$3,053,408 $135 $3,053,543 
Net income— — 176,226 — — 176,226 — 176,226 
Stock-based compensation expense— 20,196 — — — 20,196 — 20,196 
Tax withholdings on restricted share vestings919 (13,115)— — — (13,106)— (13,106)
Other comprehensive income, net of tax— — — 13,647 — 13,647 — 13,647 
Repurchases of common stock— (325)— — 19 (4,961)(5,286)— (5,286)
Treasury stock issued under stock purchase plans— 64 — — (19)4,962 5,026 — 5,026 
Balance at December 31, 202242,911$4,291 $578,470 $3,732,107 $(17,429)19,404 $(1,047,328)$3,250,111 $135 $3,250,246 
See Notes to Unaudited Condensed Consolidated Financial Statements
7


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.
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 December 31, 2023 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, 2023. The results of operations for the three and six months ended December 31, 2023 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. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. We are currently evaluating the impacts of the new standard.
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. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and should be applied prospectively. Retrospective application is permitted. We are currently evaluating the impacts of the new standard.
Accounting Standards Updates Adopted
There have been no recently adopted accounting pronouncements that are material to the Company's consolidated financial statements.
Note 3 – Acquisition
During the second quarter of fiscal 2024, CACI Limited completed the acquisition of a digital transformation business in the United Kingdom that provides user experience, software development and digital optimization expertise to government and commercial organizations. The purchase consideration was approximately $25.5 million, net of cash acquired, which includes initial cash payments, deferred consideration, and estimated contingent consideration. The Company preliminarily recognized fair values of the assets acquired and liabilities assumed and allocated $19.9 million to goodwill and $3.6 million to intangible assets. At December 31, 2023, the Company had not finalized the determination of fair values allocated to assets and liabilities.
8


Note 4 – Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill for the six months ended December 31, 2023 are as follows (in thousands):
Domestic International Total
Balance at June 30, 2023$3,940,064 $144,641 $4,084,705 
Goodwill acquired (1) 19,280 19,280 
Foreign currency translation418 1,710 2,128 
Balance at December 31, 2023$3,940,482 $165,631 $4,106,113 
__________________________________________________
(1)Includes goodwill initially allocated to new business combinations as well as measurement period adjustments, when applicable. The final purchase price allocations for our fiscal 2024 and 2023 acquisitions remain open as of December 31, 2023.
There were no impairments of goodwill during the periods presented.
Intangible Assets
Intangible assets consisted of the following (in thousands):
December 31, 2023June 30, 2023
Gross carrying valueAccumulated
amortization
Net carrying
value
Gross carrying
value
Accumulated
amortization
Net carrying
value
Customer contracts and related customer relationships$659,629 $(333,206)$326,423 $655,877 $(313,745)$342,132 
Acquired technologies276,746 (128,205)148,541 277,180 (111,477)165,703 
Total intangible assets$936,375 $(461,411)$474,964 $933,057 $(425,222)$507,835 
Amortization expense related to intangible assets was $18.4 million and $36.8 million for the three and six months ended December 31, 2023, respectively, and $19.1 million and $38.2 million for the three and six months ended December 31, 2022, 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 December 31, 2023Six Months Ended December 31, 2023
DomesticInternationalTotalDomesticInternationalTotal
Cost-plus-fee$1,102,474 $ $1,102,474 $2,236,909 $ $2,236,909 
Fixed-price485,086 34,458 519,544 952,302 69,319 1,021,621 
Time-and-materials192,448 19,468 211,916 385,965 39,586 425,551 
Total$1,780,008 $53,926 $1,833,934 $3,575,176 $108,905 $3,684,081 
Three Months Ended December 31, 2022Six Months Ended December 31, 2022
DomesticInternationalTotalDomesticInternationalTotal
Cost-plus-fee$953,344 $ $953,344 $1,888,090 $ $1,888,090 
Fixed-price478,201 31,155 509,356 926,763 64,366 991,129 
Time-and-materials173,630 13,086 186,716 349,217 26,739 375,956 
Total$1,605,175 $44,241 $1,649,416 $3,164,070 $91,105 $3,255,175 

9


Disaggregated revenues by customer type were as follows (in thousands):
Three Months Ended December 31, 2023Six Months Ended December 31, 2023
DomesticInternationalTotalDomesticInternationalTotal
Department of Defense$1,358,509 $ $1,358,509 $2,710,815 $ $2,710,815 
Federal civilian agencies389,942  389,942 797,286  797,286 
Commercial and other31,557 53,926 85,483 67,075 108,905 175,980 
Total$1,780,008 $53,926 $1,833,934 $3,575,176 $108,905 $3,684,081 
Three Months Ended December 31, 2022Six Months Ended December 31, 2022
DomesticInternationalTotalDomesticInternationalTotal
Department of Defense$1,160,060 $ $1,160,060 $2,255,380 $ $2,255,380 
Federal civilian agencies399,768  399,768 823,855  823,855 
Commercial and other45,347 44,241 89,588 84,835 91,105 175,940 
Total$1,605,175 $44,241 $1,649,416 $3,164,070 $91,105 $3,255,175 
Disaggregated revenues by prime vs. subcontractor were as follows (in thousands):
Three Months Ended December 31, 2023Six Months Ended December 31, 2023
DomesticInternationalTotalDomesticInternationalTotal
Prime contractor$1,588,589 $47,788 $1,636,377 $3,189,680 $96,059 $3,285,739 
Subcontractor191,419 6,138 197,557 385,496 12,846 398,342 
Total$1,780,008 $53,926 $1,833,934 $3,575,176 $108,905 $3,684,081 
Three Months Ended December 31, 2022Six Months Ended December 31, 2022
DomesticInternationalTotalDomesticInternationalTotal
Prime contractor$1,420,367 $40,472 $1,460,839 $2,827,821 $83,328 $2,911,149 
Subcontractor184,808 3,769 188,577 336,249 7,777 344,026 
Total$1,605,175 $44,241 $1,649,416 $3,164,070 $91,105 $3,255,175 
Disaggregated revenues by expertise or technology were as follows (in thousands):
Three Months Ended December 31, 2023Six Months Ended December 31, 2023
DomesticInternationalTotalDomesticInternationalTotal
Expertise$830,647 $18,894 $849,541 $1,687,843 $39,792 $1,727,635 
Technology949,361 35,032 984,393 1,887,333 69,113 1,956,446 
Total$1,780,008 $53,926 $1,833,934 $3,575,176 $108,905 $3,684,081 
Three Months Ended December 31, 2022Six Months Ended December 31, 2022
DomesticInternationalTotalDomesticInternationalTotal
Expertise$725,503 $16,117 $741,620 $1,443,153 $32,670 $1,475,823 
Technology879,672 28,124 907,796 1,720,917 58,435 1,779,352 
Total$1,605,175 $44,241 $1,649,416 $3,164,070 $91,105 $3,255,175 
Changes in Estimates
Aggregate net changes in estimates for the three and six months ended December 31, 2023 reflected an increase to income before income taxes of $14.6 million ($0.49 per diluted share) and $17.0 million ($0.56 per diluted share), respectively, compared with $5.8 million ($0.18 per diluted share) and $11.5 million ($0.36 per diluted share), for the three and six months ended December 31, 2022. 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 and six months ended December 31, 2023 and 2022, 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.
10


Remaining Performance Obligations
As of December 31, 2023, the Company had $9.8 billion of remaining performance obligations and expects to recognize approximately 45% and 65% 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 BalanceFinancial Statement ClassificationDecember 31, 2023June 30, 2023
Billed and billable receivablesAccounts receivable, net$792,647 $763,547 
Contract assets – current unbilled receivablesAccounts receivable, net154,805 131,399 
Contract assets – current costs to obtainPrepaid expenses and other current assets5,684 5,163 
Contract assets – noncurrent unbilled receivablesAccounts receivable, long-term12,409 11,857 
Contract assets – noncurrent costs to obtainOther long-term assets10,598 8,294 
Contract liabilities – current deferred revenue and other contract liabilitiesOther accrued expenses and current liabilities(128,861)(138,469)
Contract liabilities – noncurrent deferred revenue and other contract liabilitiesOther long-term liabilities(5,393)(5,522)
During the three and six months ended December 31, 2023, we recognized $30.0 million and $94.4 million of revenues, respectively, compared with $7.6 million and $58.1 million of revenues for the three and six months ended December 31, 2022, 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):
December 31, 2023June 30, 2023
Materials, purchased parts and supplies$93,506 $78,691 
Work in process14,142 21,894 
Finished goods30,905 30,006 
Total$138,553 $130,591 
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 December 31, 2023. Proceeds from the sold receivables are reflected in operating cash flows on the statement of cash flows.
11


MARPA activity consisted of the following (in thousands):
As of and for the
Six Months Ended December 31,
20232022
Beginning balance:$200,000 $157,785 
Sales of receivables1,518,549 1,460,825 
Cash collections(1,553,194)(1,418,648)
Outstanding balance sold to Purchaser: (1)165,355 199,962 
Cash collected, not remitted to Purchaser (2)(55,492)(59,827)
Remaining sold receivables$109,863 $140,135 
__________________________________________________
(1)For the six months ended December 31, 2023 and 2022, the Company recorded a net cash outflow of $(34.6) million and a net cash inflow of $42.2 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 December 31, 2023 and 2022. 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):
December 31, 2023June 30, 2023
Bank credit facility – term loans$1,163,750 $1,179,063 
Bank credit facility – revolver loans617,500 525,000 
Principal amount of long-term debt1,781,250 1,704,063 
Less unamortized discounts and debt issuance costs(6,587)(7,682)
Total long-term debt1,774,663 1,696,381 
Less current portion(61,250)(45,938)
Long-term debt, net of current portion$1,713,413 $1,650,443 
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 December 31, 2023, the Company had $617.5 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 December 31, 2023, the Company had $1,163.8 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. As of December 31, 2023, 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 4.96%.
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, 2023, 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.
12


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 $1,100.0 million which hedge a portion of the Company’s floating rate indebtedness. The swaps mature at various dates through 2028. The Company has designated the swaps as cash flow hedges. Unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. The interest rate swap agreements are highly correlated to the changes in interest rates to which the Company is exposed. Realized gains and losses in connection with each required interest payment are reclassified from accumulated other comprehensive income or loss to interest expense. The Company does not hold or issue derivative financial instruments for trading purposes.
The effect of derivative instruments in the consolidated statements of operations and accumulated other comprehensive loss for the three and six months ended December 31, 2023 and 2022 is as follows (in thousands):
Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Gain (loss) recognized in other comprehensive income$(12,295)$904 $(122)$16,490 
Amounts reclassified to earnings from accumulated other comprehensive loss(6,927)(2,420)(13,668)(2,477)
Net current period other comprehensive income (loss)$(19,222)$(1,516)$(13,790)$14,013 
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 December 31,Six Months Ended December 31,
2023202220232022
Net income$83,870 $87,101 $169,917 $176,226 
Weighted-average number of basic shares outstanding during the period22,282 23,506 22,464 23,463 
Dilutive effect of RSUs after application of treasury stock method125 170 186 214 
Weighted-average number of diluted shares outstanding during the period22,407 23,676 22,650 23,677 
Basic earnings per share$3.76 $3.71 $7.56 $7.51 
Diluted earnings per share$3.74 $3.68 $7.50 $7.44 
Share Repurchases
On January 26, 2023, the Company’s Board of Directors authorized a share repurchase program of up to $750.0 million of the Company’s common stock (the "2023 Repurchase Program").



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On January 30, 2023, CACI entered into an Accelerated Share Repurchase (ASR) Agreement with Citibank, N.A (Citibank). Under the ASR Agreement, we paid $250.0 million to Citibank and received an initial delivery of approximately 0.7 million shares of our common stock, which became treasury shares. On August 4, 2023, the ASR was completed and an additional 0.1 million shares of common stock were received which became treasury shares. In total, 0.8 million shares were repurchased at an average price per share of $303.57.
In addition to the ASR, during the six months ended December 31, 2023, CACI repurchased 0.5 million shares of its outstanding common stock for $150.0 million on the open market at an average share price of $318.99 including commissions paid. The total remaining authorization for future common share repurchases under the 2023 Repurchase Program was $337.3 million as of December 31, 2023.
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 years 2017 through 2021 and a state jurisdiction for fiscal years 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 year 2023, a provision of the Tax Cuts and Jobs Act of 2017 (TCJA) went into effect which 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 2024 impact will result in increases of $75.3 million to both our income taxes payable and net deferred tax assets. We also estimate a fiscal 2024 increase to our liability for unrecognized tax benefits of $72.9 million, with a corresponding increase to net deferred tax assets. Although it is possible that Congress amends this provision, potentially with retroactive effect, we have no assurance that Congress will take any action with respect to this provision. For the six months ended December 31, 2023, the Company recognized a $35.8 million increase in our liability for unrecognized tax benefits and a $36.9 million increase in income taxes payable, with corresponding increases to net deferred tax assets.
The Company’s effective income tax rate was 20.7% and 21.9% for the three and six months ended December 31, 2023, respectively, and 21.5% and 22.5% for the three and six months ended December 31, 2022, respectively. The effective tax rates for the three and six months ended December 31, 2023, and 2022 were favorably impacted by research and development tax credits, partially offset by the unfavorable impacts of certain executive compensation.
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 December 31,Six Months Ended December 31,
2023202220232022
Revenues:
  Domestic$1,780,008 $1,605,175 $3,575,176 $3,164,070 
  International53,926 44,241 108,905 91,105 
Total revenues$1,833,934 $1,649,416 $3,684,081 $3,255,175 
Net income:
  Domestic$74,759 $80,362 $151,303 $160,915 
  International9,111 6,739 18,614 15,311 
Total net income$83,870 $87,101 $169,917 $176,226 
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Note 13 – Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and categorizes the inputs used in measuring fair value as follows: observable inputs such as quoted prices in active markets (Level 1); inputs other than quoted prices in active markets that are observable, either directly or indirectly, or quoted prices that are not active (Level 2); and unobservable inputs in which there is little or no market data which requires development of assumptions that market participants would use in pricing the asset or liability (Level 3).
The financial instruments measured at fair value on a recurring basis consist of the following (in thousands):
Description of Financial Instrument Financial Statement
Classification
Fair Value
Hierarchy
December 31, 2023June 30, 2023
Fair Value
Contingent considerationOther accrued expenses and current liabilitiesLevel 3$(2,546)$ 
Contingent considerationOther long-term liabilitiesLevel 3$(8,327)$ 
Interest rate swap agreementsOther long-term liabilitiesLevel 2$(250)$ 
Interest rate swap agreementsPrepaid expenses and other current assetsLevel 2$1,438 $17 
Interest rate swap agreementsOther long-term assetsLevel 2$23,600 $43,283 
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 its current year acquisition, 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 are reflected within indirect costs and selling expenses.
Note 14 – Subsequent Event
On January 11, 2024, the Company entered into an agreement to acquire a business for a purchase price of approximately $67.0 million. The transaction is expected to close during the third quarter of fiscal 2024.
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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 and government modernization.
Expertise – We deliver talent with the specific technical and functional knowledge to support internal agency operations. Examples include functional software development expertise, data and business analysis, and IT operations support. We deliver talent with technical and domain knowledge to support the execution of an agency’s mission. Examples include engineering expertise such as naval architecture, marine engineering, and life cycle support; and mission support expertise such as intelligence and special operations support, and network and exploitation analysis.

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Technology – CACI provides software development at scale using open modern architectures, DevSecOps, and agile methodologies; and advanced data platforms, data operations and analyst-centric analytics including application of Artificial Intelligence and multi-source analysis. We provide Network and IT modernization; Commercial Solutions for Classified (CSfC); the customization, implementation, and maintenance of commercial-off-the-shelf (COTS) and enterprise resource planning (ERP) systems including financial, human capital, and supply chain management systems; and cyber security active defense and zero trust architectures. We develop and deploy multi-domain offerings for signals intelligence, resilient communications, free space optical communications, electronic warfare including Counter-UAS, cyber operations, and Radio Frequency (RF) spectrum awareness, agility and usage. CACI invests ahead of customer need with research and development to generate unique intellectual property and differentiated technology addressing critical national security and government modernization needs.
Budgetary Environment
We carefully follow federal budget, legislative and contracting trends and activities and evolve our strategies to take these into consideration. On December 29, 2022, the President signed into law the omnibus appropriations bill that provided full-year funding for the government fiscal year (GFY) ending September 30, 2023 (GFY23). Of the total approximately $1.7 trillion in discretionary funding, approximately $858 billion was for national defense and approximately $773 billion was for nondefense, as well as an additional $47 billion of supplemental funding for Ukraine. The defense and nondefense funding levels represent increases of approximately 10% and 6%, respectively, over GFY22 enacted levels. On March 9, 2023, the President released his budget request for GFY24, which called for an increase in defense spending of approximately 3% and an increase in nondefense spending of approximately 8% over GFY23 levels. On June 3, 2023, the President signed into law legislation that suspends the federal debt limit until January 2025 and caps 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 budget request, and GFY24 nondefense spending is capped at levels similar to GFY22 (though after various adjustments may be essentially flat with GFY23 levels). For GFY25, discretionary spending growth (both defense and nondefense) is capped at 1%. While future levels of defense and nondefense spending are difficult to project, particularly given ongoing budget negotiations in Congress, we believe that there continues to be bipartisan support for defense and national security-related spending, particularly given the heightened current global threat environment.
While we view the budget environment as constructive and believe there is bipartisan support for continued investment in the areas of defense and national security, it is uncertain when 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.
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. Were a shutdown to occur, it could have adverse consequences to our business and our industry. We continuously review our operations in an attempt to identify programs potentially at risk from CRs and shutdowns 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 70% 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, 5G), 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.
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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 and six Months Ended December 31, 2023 and 2022
The following table provides our results of operations (in thousands):
Three Months Ended December 31,Six Months Ended December 31,
20232022Change20232022Change
DollarsPercentDollarsPercent
Revenues$1,833,934 $1,649,416 $184,518 11.2 %$3,684,081 $3,255,175 $428,906 13.2 %
Costs of revenues:
Direct costs1,255,251 1,094,314 160,937 14.7 2,528,169 2,150,086 378,083 17.6 
Indirect costs and selling expenses409,355 388,303 21,052 5.4 813,988 770,384 43,604 5.7 
Depreciation and amortization36,023 35,932 91 0.3 71,270 71,035 235 0.3 
Total costs of revenues1,700,629 1,518,549 182,080 12.0 3,413,427 2,991,505 421,922 14.1 
Income from operations133,305 130,867 2,438 1.9 270,654 263,670 6,984 2.6 
Interest expense and other, net27,519 19,942 7,577 38.0 53,090 36,135 16,955 46.9 
Income before income taxes105,786 110,925 (5,139)(4.6)217,564 227,535 (9,971)(4.4)
Income taxes21,916 23,824 (1,908)(8.0)47,647 51,309 (3,662)(7.1)
Net income$83,870 $87,101 $(3,231)(3.7)$169,917 $176,226 $(6,309)(3.6)
Revenues. The increase in revenues for the three and six months ended December 31, 2023, as compared to the three and six months ended December 31, 2022, 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 and six months ended December 31, 2023 and 2022, respectively (in thousands):