Business context and reporting period
CACI International provides technology and professional expertise to U.S. defense, intelligence, civilian, and international customers. This is its Form 10-K for the fiscal year ended June 30, 2023—not a standalone 2022 fourth-quarter report. The company derived 97.2% of revenue from domestic operations and 94.8% from U.S. government customers.
Key financial metrics
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Revenue | $6.703 billion | $6.203 billion | +8.1% |
| Income from operations | $567.5 million | $496.3 million | +14.3% |
| Operating margin | 8.5% | 8.0% | +0.5 percentage points |
| Net income | $384.7 million | $366.8 million | +4.9% |
| Diluted EPS | $16.43 | $15.49 | +6.1% |
| Operating cash flow | $388.1 million | $745.6 million | Down $357.5 million |
Revenue growth was attributed primarily to 6.1% organic growth and acquisitions completed in FY2022. DoD revenue rose to $4.817 billion (71.9% of total), while federal civilian revenue fell to $1.533 billion (22.9%). Cost-plus contracts generated 58.1% of revenue, fixed-price 30.2%, and time-and-materials 11.7%.
At June 30, 2023, cash was $115.8 million and total debt principal was $1.704 billion ($1.179 billion term loan and $525 million revolver). The $3.2 billion credit facility matures December 2026; the company reported covenant compliance. The reported effective borrowing rate, including swaps, was 4.67%. Cash and cash equivalents plus current assets were $1.210 billion, against current liabilities of $994.0 million.
Backlog was $25.8 billion, up 10.7% year over year, including $3.7 billion funded. Remaining performance obligations were $9.2 billion; CACI expected to recognize approximately 48% within 12 months and 72% within 24 months. Backlog includes unfunded work and unexercised options and is not assured revenue.
Material changes versus the prior comparable period
- Revenue and operating income increased, with operating margin improving; net income grew more slowly as interest expense and taxes rose.
- Interest expense and other, net more than doubled to $83.9 million, primarily due to higher interest rates.
- Operating cash flow fell substantially, reflecting $341.3 million more cash paid for income taxes, higher interest payments, and unfavorable timing in operating assets and liabilities. The company also cited a $95 million FY2023 operating-cash-flow reduction from required capitalization and amortization of domestic R&D costs for tax purposes.
- Investing cash outflow declined to $75.7 million from $689.1 million, largely because acquisition spending fell. Financing cash outflow rose to $316.1 million, including $273.2 million of share repurchases.
- Effective tax rate increased to 20.4% from 19.3%. Net income remained below FY2021’s $457.4 million, while FY2023 diluted EPS was $16.43 versus $18.30 in FY2021.
Outlook, management commentary, risks and unusual items
Management characterized the federal budget environment as constructive, citing bipartisan support for defense and national security and expected demand in cyber, space, electronic warfare, modernization, and advanced technologies. It noted enacted spending caps, continuing-resolution risks, and procurement delays. The filing does not provide a clear numerical company revenue or earnings forecast.
- Federal customer concentration, appropriations and contract-option decisions, bid protests, and contract terminations expose results to government budget and procurement changes.
- Fixed-price work (30.2% of revenue) carries cost-overrun exposure; inflation, labor availability, security-clearance requirements, and contract mix may pressure profitability.
- Floating-rate debt remains partly exposed despite $1.2 billion of interest-rate swaps; management estimated a 1 percentage-point rate movement would change annual interest expense by about $9.8 million.
- Goodwill was $4.085 billion, and goodwill plus intangible assets represented 69.6% of total assets. No goodwill impairment was identified in the FY2023 annual assessment.
- Unrecognized tax benefits rose to $153.9 million, including $96.9 million associated with R&D tax capitalization. The company also had IRS examinations for FY2017–FY2021 and one state examination; management did not expect a material impact from those examinations.
- In the Al Shimari litigation, the district court denied CACI’s motions to dismiss on July 31, 2023, in a decision under seal. The company said it was vigorously defending the lawsuits; plaintiffs had previously estimated compensatory damages of $6–$9 million and punitive damages of $23.5–$64 million. Management assessed the broader legal matters as not expected to have a material adverse effect.
- The financial-statement auditor issued an unqualified opinion and found internal control over financial reporting effective. Revenue recognition over time was identified as a critical audit matter.
Most important facts for investors to verify
- Whether funded backlog converts to revenue on schedule, and the extent to which options, unfunded work, or IDIQ opportunities ultimately produce awards.
- Cash conversion and the future cash-tax effect of R&D cost capitalization, along with the resolution of the related tax positions.
- Debt costs, refinancing and covenant capacity as floating rates and the December 2026 facility maturity approach.
- Execution, cost estimates, and margins on fixed-price contracts; staffing and clearance capacity; and exposure to government funding delays.
- Developments and potential financial exposure in the Al Shimari and Abbass cases, including updates to the sealed ruling.
- Acquisition integration and the carrying value of goodwill and acquired intangible assets.