CACI International Inc. 10-Q Summary: Q1 2026 (Ended Sept 30, 2025)
Business Context and Reporting Period
This report covers the first quarter of CACI International Inc.'s fiscal year 2026, ended September 30, 2025. CACI is a leading provider of expertise and technology to U.S. federal government agencies (Defense, Intelligence, Civilian) and international customers. The company operates in a budgetary environment characterized by a full-year Continuing Resolution (CR) for FY25 and a subsequent government shutdown beginning October 1, 2025, which impacts new program starts but allows for continued work on funded contracts.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 | Change |
|---|---|---|---|
| Revenues | $2,287.6 million | $2,056.9 million | +11.2% |
| Net Income | $124.8 million | $120.2 million | +3.9% |
| Diluted EPS | $5.63 | $5.33 | +5.6% |
| Operating Income | $212.3 million | $179.8 million | +18.0% |
| Operating Margin | 9.3% | 8.7% | +60 bps |
| Net Cash from Operations | $171.1 million | $34.7 million | +394% |
| Total Debt (Principal) | $2,800.9 million | $2,942.6 million (Jun 2025) | -4.8% (QoQ) |
| Cash & Equivalents | $133.0 million | $106.2 million (Jun 2025) | +25.2% (QoQ) |
Material Changes vs. Prior Period
- Revenue Growth: Driven by 5.5% organic growth and new contract awards. Growth was broad-based across customer types: DoD (+8.5%), Intelligence Community (+11.6%), Federal Civilian (+16.9%), and Commercial/Other (+20.2%).
- Cost Structure: Direct costs rose 9.4% but improved as a percentage of revenue (67.6% vs 68.8%). Depreciation and amortization increased 56.6% due to intangible assets from recent acquisitions (notably Azure Summit Technology).
- Interest Expense: Increased 92.6% to $46.2 million, primarily due to higher outstanding debt balances and interest rates.
- Cash Flow: Operating cash flow surged $136.4 million year-over-year, driven by higher earnings and favorable working capital changes (specifically decreased vendor disbursements).
- Acquisitions: Finalized purchase consideration for Azure Summit Technology, resulting in a $1.5 million increase to goodwill. Also acquired Identity E2E for $58.9 million.
Outlook, Risks, and Contingencies
- Backlog: Total backlog stands at $33.9 billion (up 4.6% YoY), with $5.4 billion funded. Remaining performance obligations are $13.1 billion, with 44% expected to be recognized in the next 12 months.
- Government Shutdown: The U.S. government entered a shutdown on October 1, 2025. CACI is continuing work on mission-essential programs and contracts funded by prior appropriations, but new program starts and contract awards may be delayed.
- Legal Proceedings: A significant contingency involves the Al Shimari lawsuit. A jury returned a $42 million judgment against CACI in November 2024. CACI has appealed, and oral arguments were heard in September 2025. No amounts have been accrued as the company believes the plaintiffs' position is without merit.
- Market Risks: Exposure to interest rate fluctuations on variable-rate debt (hedged via $900 million in swaps) and foreign currency exchange rates (approx. 3.4% of revenue from international operations).
Investor Verification Checklist
- Shutdown Impact: Monitor the duration of the government shutdown and its effect on new contract awards and revenue recognition in Q2.
- Legal Resolution: Track the outcome of the Al Shimari appeal, as a final adverse ruling could result in a $42 million liability plus legal costs.
- Debt Servicing: Verify the impact of rising interest rates on future earnings, given the 92.6% increase in interest expense and $2.8 billion in total debt.
- Acquisition Integration: Assess the revenue contribution and integration progress of the Azure Summit Technology acquisition.
- Working Capital Trends: Confirm if the significant improvement in operating cash flow ($171M) is sustainable or driven by temporary vendor payment timing.