CACI International Inc Q2 2025 Earnings Call Summary

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

Question: Scott Mikus - Melius Research - Analyst : John, I just want to take a quick high-level question you've been your experience in the industry. So the CEO of [Ultra Harris] wrote a letter to DOGE with recommendations to make the acquisition process for the government more efficient. So I'm just curious if you had a meeting with the incoming administration. And if you were to make recommendations to them, what would they be and why?

Question: Scott Mikus - Melius Research - Analyst : Okay. And then Jeff, a quick question for you, or I guess, John as well, there's been a derating in valuations for government contractor stocks at least in the public markets. Has that changed valuation shown up in the M&A pipeline or maybe cause some companies that were thinking about selling to maybe wait until valuations improve? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / 1:00PM, CACI.N - Q2 2025 CACI International Inc Earnings Call

Question: Peter Arment - Baird - Analyst : Nice result. John, so -- in the spirit of the kind of a DOGE question, there's a lot of talk around that they view the civilian side within the national security space to be kind of a bloated workforce. And if we start seeing reductions there, does that become an opportunity for someone like CACI in terms of either deploying technology or your software or just being -- getting more potential outsourced work? How do you think about that?

Question: Peter Arment - Baird - Analyst : I appreciate all the color. It seems like you're really well positioned there. And then just a quick one for Jeff. Is -- can you remind us what the target leverage is kind of where you want to be before you resume any potential repurchases?

Question: Mariana Perez Mora - Bank of America - Analyst : Thank you for that introduction showing the DOGE impact and how your portfolio is. So it's a question related to that. How do you think of what's your appetite to actually expand into civilian? Is this like DOGE initiative will actually be able would be focused on like a team -- financial management and all those like added efficiencies in a more like civilian type of like agencies? What is CACI's appetite to go towards those type of opportunities?

Question: Mariana Perez Mora - Bank of America - Analyst : Following one if like -- to both of you. There has been investor concerns about what is like appetite for more like commercial terms could mean for like cost-plus contracts and were like about like 60% of your contracts under cost plus. What are the challenges and opportunities you see if the government were to focus on more like commercial terms, fixed price type of contracts?

Question: Tobey Sommer - Truist Securities - Analyst : I'm curious about what the mandate to go back to the office five days a week on the government's part means for CACI in the services industry? So what percentage of your employees are remote or hybrid that maybe Uncle Sam to be working on prem in the future?

Question: Tobey Sommer - Truist Securities - Analyst : That was helpful. What proportion of the company's revenue is priced on outcomes? And should efficiency be the mantra of the four-year term? Where's the upper bound on where that could go as a proportion of the company?

Question: Gautam Khanna - TD Cowen - Analyst : I apologize if you addressed this. I joined a little late. I was curious if you expect any sort of slowdown in the contract award adjudication pace over the next couple of quarters, given just the administration transition and -- well, the flag officers that get replaced and the like at the various DoD agencies. Any view on that?

Question: Gautam Khanna - TD Cowen - Analyst : And just as a follow-up, if there's any sort of reduction in the [up tempo] Ukraine, Israel, what have you. What is, if any, impacts to CACI?

Question: Sheila Kahyaoglu - Jefferies - Analyst : Jeff, maybe if you could just talk about margins to start off with. I understand the product commit you guys talked about in Q3. Exit rate does seem to imply Q4 closing in around the 12% mark. Maybe if you could talk about the potential how we think about that as you enter your next fiscal year to start off with.

Question: Sheila Kahyaoglu - Jefferies - Analyst : Great. And then maybe if I could ask one, and you guys talked about this a little bit, just if you could provide an update on Spectral and how it's going, just given the development work here and how Azure is contributing. And I think you mentioned in the Q&A as there one another follow-on. Do we think about that as incremental revenues heading into fiscal '26?

Question: Joshua Korn - Barclays - Analyst : This is Josh Korn on for David. Just wanted to ask about capital deployment. And given the pullback in the stock, is there any more appetite for share buyback than historically going forward?

Question: Louie DiPalma - William Blair - Analyst : You -- CACI, you're the leading provider or one of the leading providers in Counter-UAS detection, and you mentioned the New Jersey incidents. Are domestic Counter-UAS opportunities, is that something that you are pursuing? And do you view that as a viable market for CACI?

Question: Louie DiPalma - William Blair - Analyst : And John, I think you mentioned as it relates to Spectral that it would be possible to use that same system on other Navy platforms. And how much work would it take, and like has there been any indicators of interest that the Navy is looking to also modernize the other platforms?