CACI

CACI International Inc. - 10-K Summary (Fiscal Year Ended June 30, 2026)

Business Context and Reporting Period

This Annual Report on Form 10-K covers the fiscal year ended June 30, 2026. CACI International Inc. is a leading provider of differentiated Technology and distinctive Expertise to U.S. federal government agencies (primarily Department of War and Intelligence Community) and international customers. The company operates through two segments: Domestic Operations (96.8% of revenue) and International Operations (3.2% of revenue). Key market areas include C3I, Cyber, Digital Solutions, Enterprise IT, Mission and Engineering Support, Space, and Spectrum Superiority.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Driven by 7.2% organic growth and strategic acquisitions. Fixed-price contracts increased to 30.4% of revenue (from 26.3% in 2025), while cost-plus-fee contracts decreased to 56.0% (from 60.5%).
• Acquisitions: Completed two major acquisitions in fiscal 2026, most notably ARKA Group L.P. for approximately $2.64 billion, enhancing capabilities in the space domain. Total acquisition-related costs were $22.5 million.
• Debt Levels: Significant increase in long-term debt to finance acquisitions. Outstanding debt rose from ~$2.94 billion to ~$4.93 billion, including new Term Loan B-2 ($800M) and 2033 Notes-2 ($500M).
• Tax Rate: Effective income tax rate increased to 23.9% from 17.4%, primarily due to state income taxes and the absence of a one-time benefit from a federal tax audit resolution in the prior year.
• Legal Proceedings: A jury verdict in Al Shimari v. L-3 Services, Inc. resulted in a $42 million judgment against CACI. The Court of Appeals affirmed this judgment in March 2026. CACI is seeking reversal based on a recent Supreme Court decision (Cisco Systems, Inc. v. Doe).

Outlook, Risks, and Management Commentary

• Budgetary Environment: Management notes a stable-to-higher budget environment for national security, though subject to government shutdowns and Continuing Resolutions (CRs). The "One Big Beautiful Bill Act" (OBBBA) provided significant mandatory funding for defense and border security.
• Strategic Focus: Continued investment in AI, cyber, space, and electromagnetic spectrum capabilities. The company aims to grow organic revenues and maintain strong profitability.
• Risks:
  • Government Dependency: 95.6% of revenue comes from federal government contracts, exposing the company to budget cuts, shutdowns, and termination for convenience.
  • Legal Contingency: The pending appeal regarding the Al Shimari case remains a material uncertainty, though CACI believes the plaintiffs' position is without merit.
  • Debt Service: Increased leverage requires significant cash flow to service debt obligations. Covenants restrict additional debt, dividends, and stock repurchases.
  • Acquisition Integration: Risks associated with integrating ARKA and other recent acquisitions, including potential goodwill impairment.

Investor Verification Checklist

• Legal Outcome: Monitor the status of the Al Shimari appeal and the impact of the Cisco Supreme Court decision on the $42 million judgment.
• Debt Covenants: Verify continued compliance with financial covenants given the increased debt load from the ARKA acquisition.
• Backlog Conversion: Assess the funded vs. unfunded backlog ratio ($5.4B funded vs. $26.6B unfunded) and the risk of unfunded work not being appropriated.
• Acquisition Synergies: Review future earnings releases for the realization of expected synergies and revenue growth from the ARKA and Datalynx acquisitions.
• Fixed-Price Exposure: Evaluate the margin impact of the increasing mix of fixed-price contracts (30.4%) in an inflationary environment.