CACI International Inc at TD Cowen Aerospace & Defense Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gautam Khanna - TD Cowen - Analyst : Exactly. Yeah, the perils of having this in the Northeast in February. But just big picture, obviously, the topic du jour has been your thoughts on the new administration, how things may change. We hear a lot about Doge. But -- so I'm going to leave it open-ended and let you take it where you want to take it, but what are your initial impressions?

Question: Gautam Khanna - TD Cowen - Analyst : So obviously, the market said this -- they view it as a threat to the industry, right, the new changes that might be coming through the pipe. And I'm curious like what do you think actually has the most potential to change because what described were enduring priorities of the US DOD and the federal government broadly?

Question: Gautam Khanna - TD Cowen - Analyst : Well, so one of the questions we get is, is there anything actually happening? I mean it's early in this new administration, but are they asking CACI to look at some of the work you're doing and identify if there are any things that -- or climate or whatever the buzzwords are that the administration is trying to move away from. Is there any of that going on that's disruptive?

Question: Gautam Khanna - TD Cowen - Analyst : So you've mentioned a couple of interesting points on maybe where Doge could actually save money. One is outcome-based procurement. It sounds like that could be something. Where else do you see like fat, if you will, in the procurement process for buying stuff from CACI?

Question: Gautam Khanna - TD Cowen - Analyst : No, well, I'm going to just round out Doge for a second. One of the things that doesn't get brought up that I think is interesting is the small business set aside dollars that go from the -- to the services contractors, 22%, 23%, whatever it is. And a lot of them are protected classes, if you will, veteran-owned, disabled, what have you. Is there any movement of foot that you're hearing of maybe lowering the thresholds on that set-aside work? Would that be constructive to folks at CACI or --

Question: Gautam Khanna - TD Cowen - Analyst : Got you. It's not coming up in your conversations --

Question: Gautam Khanna - TD Cowen - Analyst : The other question we often get is there's now a back-to-office mandate for federal workforce that we think that will go through. Does that have any disruptive effect on the pace of contract awards? Is it -- I just wonder if it's going to gum up the system in any way that would affect CACI's --

Question: Gautam Khanna - TD Cowen - Analyst : Okay. And just to be clear, at the end of the quarter, you guys had quite a bit of outstanding bids. And you're not seeing any -- there's been no incremental slowdown that you've noticed.

Question: Gautam Khanna - TD Cowen - Analyst : Yeah. Again, it's all this perception versus reality, and that's why I was going over the same thing time and again here. I wanted to get your impressions of the fiscal '26 budget. To your point, do you have a view on the -- we're hearing big numbers. Do you guys have any sense either way?

Question: Gautam Khanna - TD Cowen - Analyst : Actually, I wanted to just touch on -- you mentioned in the Fed civil space, you also do border protection. And I think it's the -- I remember the BEAGLE's contract or what was it called. Maybe if you could elaborate on like what the opportunity set is.

Question: Gautam Khanna - TD Cowen - Analyst : Yeah, that makes a lot of sense. I wanted to switch because we only have about 15 minutes left on -- talk about M&A for a second, the recent acquisitions you guys have done. Maybe if you could give us your early impressions of Azure and Applied Insight, how integration has gone, how the culture has been and if you're seeing kind of the bid pipeline expand as a result of the combined capabilities.

Question: Gautam Khanna - TD Cowen - Analyst : Yeah. Can you actually talk about Spectral? I mean it's a fascinating concept. I mean that you can actually update this stuff real time, you can push the software upgrades in. Just maybe if you could talk about the Navy's reaction to your ownership of Azure --

Question: Gautam Khanna - TD Cowen - Analyst : And the payment terms, I presume, are better than typical services work? Or is it fixed price? Is it -- I'm just curious like how...

Question: Gautam Khanna - TD Cowen - Analyst : It's a mix.

Question: Gautam Khanna - TD Cowen - Analyst : Makes sense. Maybe we could talk about photonics as well. And so how is that progress?

Question: Gautam Khanna - TD Cowen - Analyst : Okay. Got you. Obviously, you guys did a couple of acquisitions and then the sentiment in the group kind of took the stock down. I'm just curious your views on M&A right now, buybacks, given the leverage. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 3:45PM, CACI.N - CACI International Inc at TD Cowen Aerospace & Defense Conference

Question: Gautam Khanna - TD Cowen - Analyst : So to the mid-threes in terms of leverage is where your comfort zone is --

Question: Gautam Khanna - TD Cowen - Analyst : Got you. And just big picture, when you look out over the next couple of years, again, what you described were a lot of enduring trends, drivers, administration to administration. It doesn't seem to matter. Is your view of the long-term growth of CACI top line, bottom line, any different than it was six months ago?

Question: Gautam Khanna - TD Cowen - Analyst : And obviously, we -- you guys just described the 3.5 times leverage or what have you with buybacks. But in this environment, I imagine you're going to see more willing sellers, I would think, better valuations perhaps for stuff you could acquire. Can you talk about what you're thinking with respect to the M&A pipeline? Is that like if the right deal comes along that wasn't available two years ago, but finally is in the next six months, your --