CACI International Inc to Discuss a Pending Acquisition on Conference Call Transcript

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

Question: Peter Arment - Robert W. Baird & Co. Inc. - Analyst : Good morning, John and Jeff. Congratulations on the deal. Hey, John, maybe if you could just talk a little bit about either programs of record or backlog, whatever you feel like is the best way to kind of highlight how Azure has done. It sounds like they've continued to be very disruptive from a technology standpoint. And maybe you want to, just as a follow up, speak about the SIGINT opportunity that you think about the combination? Thanks.

Question: Peter Arment - Robert W. Baird & Co. Inc. - Analyst : Appreciate the details. Thanks.

Question: Matt Akers - Wells Fargo Securities, LLC - Analyst : Hey. Good morning, guys. Thanks for the question. I just wanted to ask about how you're sort of thinking about the balance sheet, 3.1 times after the deal. I think you said in the past, you're comfortable even higher than that, but just curious if you pay down a little bit more debt after this deal? Or are you still thinking about it as a pretty flexible option in front of you?

Question: Matt Akers - Wells Fargo Securities, LLC - Analyst : Great. Thank you. And I guess just your numbers in the presentation imply kind of 25% margins from the company contribution this year. I think, Jeff, you said maybe there's some anything related to the deal included in that. But just curious how sustainable that is and how they're able to get that high margin?

Question: Matt Akers - Wells Fargo Securities, LLC - Analyst : Great. Thanks, and congrats on the deal. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 16, 2024 / 12:30PM, CACI.N - CACI International Inc to Discuss a Pending Acquisition on Conference Call

Question: Tobey Sommer - Truist Securities - Analyst : Thank you. From a timing perspective, is there a particular customer opportunity coming together at this juncture that prompted this? Or is this a sort of a union that you think could have happened at many or any point in time?

Question: Tobey Sommer - Truist Securities - Analyst : Thank you very much. [Cheers to hitting the century mark sometime].

Question: Seth Seifman - JPMorgan Chase & Co. Inc. - Analyst : Thanks very much, and good morning. I wanted to ask if there's maybe a little bit more you could say about the anticipated growth rate. You mentioned in the slides it should be accretive to the overall revenue growth rate of the company and just even some more qualitative commentary compared to the underlying growth rate that you guys talked about for the organic business. How do you think about the growth rate here?

Question: Seth Seifman - JPMorgan Chase & Co. Inc. - Analyst : Excellent. Thanks very much. That's helpful. And then maybe just as a quick follow up, is there anything you could add about just kind of the genesis of the deal, how it came about and what the process was?

Question: Seth Seifman - JPMorgan Chase & Co. Inc. - Analyst : Very helpful. Thank you.

Question: Mariana Perez Mora - BofA Securities Inc. - Analyst : Good morning, everyone. So my question is going to be about timing and approvals. Is there anything particular that we have to pay attention to in terms of regulatory approvals?

Question: Mariana Perez Mora - BofA Securities Inc. - Analyst : Okay, so not any significant overlap on a contract or a customer that could take more time than usual?

Question: Mariana Perez Mora - BofA Securities Inc. - Analyst : Perfect. And then on the leverage, how much of that incremental that you are taking today, and how much you'll take upon the deal being approved? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 16, 2024 / 12:30PM, CACI.N - CACI International Inc to Discuss a Pending Acquisition on Conference Call

Question: Mariana Perez Mora - BofA Securities Inc. - Analyst : Perfect. And last, if I may, more on the qualitative arena. When you have highlighted across the call, it's like software-defined expertise that they are bringing to the table. Were you more excited about to actually put these engineers to work with CACI engineers and actually expand these capabilities?

Question: Mariana Perez Mora - BofA Securities Inc. - Analyst : Thank you.

Question: David Strauss - Barclays Bank PLC - Analyst : Thanks. Good morning. Congratulations. Pretty much all my questions have been asked except for one. I guess, everything you've described here sounds terrific, company growing quickly, great margin accretive, and all that. I guess, how do you do a deal like this for 10 times? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 16, 2024 / 12:30PM, CACI.N - CACI International Inc to Discuss a Pending Acquisition on Conference Call

Question: David Strauss - Barclays Bank PLC - Analyst : Okay. There's nothing unusual in that EBITDA number that you disclosed today other than kind of acquisition-related costs? I guess, nothing unusual from an Azure side of things?

Question: David Strauss - Barclays Bank PLC - Analyst : Okay. Terrific. Congratulations again.

Question: Louie DiPalma - William Blair & Company LLC - Analyst : John, Jeff, and George, good morning. CACI with this deal built its IP portfolio and becomes more like an L3 Harris-type technology provider. From a big picture pro forma for this deal, are you able to estimate what percentage of CACI's revenue is related now to, or when the deal closes, would be related to signals intelligence, including both products and services? Would it be 25% or so?

Question: Louie DiPalma - William Blair & Company LLC - Analyst : And following up on that, you referenced how software-defined radios have proven very strategic on the battlefield in Ukraine with drones being hit with electronic warfare attacks, and GPS-guided missiles also being vulnerable, and these software-defined radios are important in order to evade these electronic warfare attacks. You've discussed in the past how you've provided very small form factor payloads onto Group 1 and Group 2 drones. Can you just discuss the SWITCHBLADE as it relates to size, weight, and power, and how you may be able to like shrink these software-defined radios to be deployed on to some of the smaller drones that are out there in the marketplace and are being used in Ukraine and the Red Sea and Israel conflicts?

Question: Louie DiPalma - William Blair & Company LLC - Analyst : Thanks.

Question: Cai Von Rumohr - TD Cowen - Analyst : Thanks so much. Congratulations on a good deal. Can you give us a little more color on the financials, for example, what's the split between hardware and software? And where do they make their money? Do they make it on OE sales? Do they make it on aftermarket support? What's the split between fixed price and cost plus?

Question: Cai Von Rumohr - TD Cowen - Analyst : Thank you very much. And then as a follow up, you mentioned the synergies. Can you give us any quantitative -- what kind of order of magnitude could the financial synergies be by year two? And secondly, are there any financial dis-synergies? You mentioned that they're a partner on Spectral. Are they a subcontracting partner or are they a full partner? Thanks.

Question: Cai Von Rumohr - TD Cowen - Analyst : So just to be clear, so the $440 million in revenues and $110 million of EBITDA are essentially standalone numbers for Azure?

Question: Cai Von Rumohr - TD Cowen - Analyst : Got it. Thank you.

Question: Ellen Page - Jefferies Group LLC - Analyst : Hi, guys. Thanks for the question. Just on Azure's growth from here, are there any large recompetes outstanding that we should be aware of? And kind of related to that, can you talk about any times that you would have bid directly against them in the past?

Question: Ellen Page - Jefferies Group LLC - Analyst : Thanks. I'll leave it there.