CACI International Inc.

10/22/2026 | Press release | Distributed by Public on 10/22/2026 09:58

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations is provided to enhance the understanding of, and should be read together with, our unaudited condensed consolidated financial statements and the notes to those statements that appear elsewhere in this Quarterly Report on Form 10-Q.
Information Relating to Forward-Looking Statements
There are statements made herein that do not address historical facts and therefore could be interpreted as forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are subject to risk factors that could cause actual results to be materially different from anticipated results. These risk factors include, but are not limited to, the following:
•our reliance on U.S. government contracts, which includes general risk around the government contract procurement process (such as bid protest, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks;
•significant delays or reductions in appropriations for our programs and broader changes in U.S. government funding and spending patterns;
•legislation that amends or changes discretionary spending levels or budget priorities, such as for homeland security;
•legal, regulatory, and political change from successive presidential administrations that could result in economic uncertainty;
•changes in U.S. federal agencies, current agreements with other nations, foreign events, or any other events which may affect the global economy;
•the results of government audits and reviews conducted by the Defense Contract Audit Agency, the Defense Contract Management Agency, or other governmental entities with cognizant oversight;
•competitive factors such as pricing pressures and/or competition to hire and retain employees (particularly those with security clearances);
•failure to achieve contract awards in connection with re-competes for present business and/or competition for new business;
•regional and national economic conditions in the U.S. and globally, including but not limited to: terrorist activities or war, changes in interest rates, currency fluctuations, significant fluctuations in the equity markets, and market speculation regarding our continued independence;
•our ability to meet contractual performance obligations, including technologically complex obligations dependent on factors not wholly within our control;
•limited access to certain facilities required for us to perform our work;
•changes in tax law, the interpretation of associated rules and regulations, or any other events impacting our effective tax rate;
•changes in technology;
•the potential impact of the announcement or consummation of a proposed transaction and our ability to successfully integrate the operations of our recent and any future acquisitions;
•our ability to achieve the objectives of near term or long-term business plans; and
•the effects of health epidemics, pandemics and similar outbreaks may have material adverse effects on our business, financial position, results of operations and/or cash flows.
The above non-inclusive list of risk factors may impact the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, other risk factors include, but are not limited to, those described in "Risk Factors" in Part I, Item 1A, in the Registrant's Annual Report on Form 10-K. The forward-looking statements contained in this Quarterly Report on Form 10-Q are as of the date of its filing.
Overview
The Company provides differentiated Technology and distinctive Expertise to customers in support of national security.
•Technology - CACI provides technology that addresses our customers' most challenging needs. This includes agile software development using open modern architectures and DevSecOps; advanced data platforms, applications, and analytics augmented by Artificial Intelligence (AI), Enterprise Resource Planning systems, electromagnetic spectrum capabilities, space-based sensors and ground site processors, photonics, and network modernization. CACI invests ahead of customer need with research and development to create unique and differentiated technology addressing critical national security needs.
•Expertise - CACI delivers talent with the specific technical and functional knowledge to support agency operations.
Budgetary Environment
We closely monitor U.S. federal budget, legislative and contracting developments, and we adjust our business strategies to account for these trends. Although future levels of defense and non-defense spending are difficult to predict, we believe there continues to be bipartisan support for defense and national security programs, particularly given the heightened global threat environment.
While we view the current budget environment as constructive, the timing and passage of annual appropriations remain uncertain in any given government fiscal year (GFY). During periods when Congress has not enacted full-year appropriations, federal agencies operate under a continuing resolution (CR). A CR typically authorizes agencies to continue operating at prior year funding levels and may restrict new program starts or delay contract awards.
The scope and duration of CRs can negatively affect our business by delaying new programs, contract awards, or other customer decisions. If a CR expires without the enactment of full-year appropriations or an extension via a new CR, the federal government must cease non-essential operations (a "government shutdown"), except where continuing activities are authorized by law. We evaluate our portfolio on an ongoing basis to identify areas potentially at risk from CRs or shutdowns and to develop appropriate contingency plans.
On May 2, 2025, the President submitted the GFY26 Presidential Budget Request (PBR), which proposed holding defense spending at the GFY25 enacted (full-year CR) level of $893 billion. On July 4, 2025, the President signed the One Big Beautiful Bill Act (OBBBA), a reconciliation bill providing additional mandatory funding outside the regular annual appropriations process. The OBBBA made immediately available approximately $156 billion in defense funding (including $25 billion for the Golden Dome initiative) and approximately $170 billion for border security and immigration. Because these funds were authorized through the reconciliation process, they remain available in GFY26 and beyond regardless of whether Congress enacts full-year appropriations, passes a CR, or enters a government shutdown.
On October 1, 2025, the federal government entered a shutdown. On November 12, 2025, the President signed a CR that ended the shutdown and restored government operations, extending funding for most agencies at GFY25 levels through January 30, 2026. Following the expiration of that CR, a partial shutdown occurred. On February 3, 2026, the President signed five of the six remaining GFY26 full year appropriations bills, alongside a two-week CR for the Department of Homeland Security (DHS). The enacted defense appropriations bill provided full year funding for the Department of War (DoW) with a topline of $838.7 billion, approximately $8.4 billion above the GFY26 PBR.
On February 14, 2026, the temporary funding for DHS expired, and the department entered a shutdown. Portions of DHS operations continued due to the availability of mandatory OBBBA funding. On April 30, 2026, Congress passed full-year GFY26 funding for DHS, excluding funding for Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP), both of which continued to rely on OBBBA funding. On June 9, 2026, Congress passed the Secure America Act (Reconciliation 2.0), providing $70 billion primarily allocated to ICE and CBP. Because this funding was enacted through reconciliation, it remains available through September 30, 2029.
On April 3, 2026, while the GFY26 appropriations process was still being finalized, the President submitted the GFY27 Presidential Budget Request (PBR). The GFY27 PBR proposes $1.15 trillion in discretionary defense spending, $350 billion in mandatory defense spending through a separate reconciliation bill, and $63 billion in discretionary spending for homeland security. On September 2, 2026, the President signed a CR to fund GFY27 through December 11, 2026.
Market Environment
We provide Technology and Expertise to government customers. We believe that the total addressable market for our offerings is sufficient to support the Company's plans and is expected to continue to grow over the next several years. 79% of our revenue comes from DoW and Intelligence Community (IC) customers, with additional revenue coming from federal civilian agencies and commercial and other customers.
We continue to align the Company's capabilities with well-funded budget priorities and take steps to maintain a competitive cost structure in line with our expectations of future business opportunities. In light of these actions, as well as the budgetary environment discussed above, we believe we are well positioned to continue to win new business in our large addressable market. We believe that the following trends will influence the U.S. government's spending in our addressable market:
•A stable-to-higher U.S. government budget environment, particularly in national security-related areas (defense, intelligence, and border security);
•Increased focus on cyber, space, and electronic warfare as key domains for national security;
•Increasing focus on application of technologies to defend the homeland, such as those associated with the Golden Dome program and Counter UxS Defense systems;
•Increased investments in advanced technologies, particularly software-based technologies, including AI;
•Increased spend on network and application modernization and enhancements to cyber security posture;
•Increasing focus on near-peer competitors and other nation state threats;
•Continued focus on counterterrorism, counterintelligence, and counter proliferation as key U.S. security concerns; and
•Increased demand for innovation and speed of delivery.
We believe that our customers' use of lowest price/technically acceptable procurements, which contributed to pricing pressures in past years, has moderated, though price still remains an important factor in procurements. We also continue to see protests of major contract awards and delays in U.S. government procurement activities. In addition, many of our federal government contracts require us to employ personnel with security clearances, specific levels of education, and specific past work experience. Depending on the level of clearance, security clearances can be difficult and time-consuming to obtain and competition for skilled personnel in the industry is intense. Additional factors that could affect U.S. government spending in our addressable market include changes in set-asides for small businesses and budgetary priorities.
Results of Operations
Our results of operations were as follows (dollars in thousands):
Three months ended September 30,
2026 2025 Change
Revenues $ 2,474,597 $ 2,287,623 $ 186,974 8.2 %
Costs of revenues:
Direct costs 1,597,689 1,547,194 50,495 3.3
Indirect costs and selling expenses 550,113 473,856 76,257 16.1
Depreciation and amortization 79,267 54,298 24,969 46.0
Total costs of revenues 2,227,069 2,075,348 151,721 7.3
Income from operations 247,528 212,275 35,253 16.6
Interest expense and other, net 73,240 46,173 27,067 58.6
Income before income taxes 174,288 166,102 8,186 4.9
Income taxes 43,921 41,292 2,629 6.4
Net income $ 130,367 $ 124,810 $ 5,557 4.5 %
Revenues. The increase in revenues was attributable to growth from acquisitions and organic growth of 2.1%, including new contract awards and growth on existing programs.
Revenues by customer type with related percentages of revenues were as follows (dollars in thousands):
Three months ended September 30,
2026 2025 Change
DoW $ 1,354,257 $ 1,179,626 $ 174,631 14.8 %
IC 611,977 596,429 15,548 2.6
Federal civilian agencies 396,398 411,730 (15,332) (3.7)
Commercial and other 111,965 99,838 12,127 12.1
Total $ 2,474,597 $ 2,287,623 $ 186,974 8.2 %
•DoW revenues include Technology and Expertise provided to various DoW customers, excluding IC.
•IC revenues include Technology and Expertise provided to the 18 intelligence customers defined as the IC by the Office of the Director of National Intelligence.
•Federal civilian agencies revenues include Technology and Expertise provided to non-DoW and non-IC agencies and departments of the U.S. federal government, including Homeland Security, Justice, Agriculture, Health and Human Services, and State.
•Commercial and other revenues primarily include Technology and Expertise provided to U.S. state and local governments, commercial customers, and certain foreign governments and agencies through our International Operations.
Direct Costs. Direct costs include direct labor, subcontractor costs, materials, and other direct costs. Direct costs as a percentage of revenue decreased from 67.6% for the three months ended September 30, 2025 to 64.6% for the three months ended September 30, 2026. This change was attributable to a favorable shift in revenue mix.
Indirect Costs and Selling Expenses. The increase in indirect costs and selling expenses for the three months ended September 30, 2026, compared to the prior year period, was attributable to increases in fringe benefit expenses and other indirect costs, each associated with a larger labor base. As a percentage of revenue, indirect costs and selling expenses were 22.2% and 20.7% for the three months ended September 30, 2026 and 2025, respectively.
Depreciation and Amortization. The increase in depreciation and amortization for the three months ended September 30, 2026, compared to the prior year period, was due to the timing of intangible assets acquired in fiscal 2026.
Interest Expense and Other, Net. The increase in interest expense and other, net for the three months ended September 30, 2026, compared to the prior year period, was primarily due to higher outstanding debt balances in the current year.
Income Tax Expense. The Company's effective income tax rates were 25.2% and 24.9% for the three months ended September 30, 2026 and 2025, respectively. The effective tax rates for the three months ended September 30, 2026 and 2025 differ from the statutory rate of 21.0% primarily due to state income taxes offset by research and development tax credits.
Contract Backlog
The Company's backlog represents the value on existing contracts that has the potential to be recognized as revenues as work is performed. The Company includes unexercised option years in its backlog and excludes the value of task orders that may be awarded under multiple award indefinite delivery/indefinite quantity vehicles until such task orders are issued.
The Company's backlog as of the period end is either funded or unfunded:
•Funded backlog represents contract value for which funding has been appropriated less revenues previously recognized on these contracts.
•Unfunded backlog represents estimated values that have the potential to be recognized as revenue from executed contracts for which funding has not been appropriated and unexercised priced contract options.
As of September 30, 2026, the Company had total backlog of $34.0 billion, compared to $33.9 billion a year ago, an increase of 0.3%. Funded backlog as of September 30, 2026 was $6.2 billion. The total backlog consists of remaining performance obligations plus unexercised options. See "Note 5 - Revenues" in the Notes to the Financial Statements of this Quarterly Report on Form 10-Q for additional information.
There is no assurance that all funded or potential contract value will be recognized as revenue in the future. The Company continues to monitor its backlog, which is subject to changes due to execution of new contracts, contract modifications or extensions, government deobligations, early terminations, or other factors. Based on this analysis, an adjustment to the period end balance may be required.
Liquidity and Capital Resources
Existing cash and cash equivalents and cash generated by operations are our primary sources of liquidity, as well as sales of receivables under our Master Accounts Receivable Purchase Agreement and available borrowings under our revolving credit facility (the Revolving Facility), which permits renewable borrowings of up to $2,000.0 million. The Revolving Facility also has sub-facilities of $150.0 million for same-day swing line loan borrowings and $25.0 million for stand-by letters of credit.
The Company has a $3,250.0 million senior secured credit facility (the Credit Facility), which consists of the Revolving Facility and a $1,250.0 million term loan. As of September 30, 2026, the Company had $1,395.0 million of undrawn capacity under the Revolving Facility and no borrowings on the swing line and stand-by letters of credit.
The following table summarizes cash flow information for the periods presented (in thousands):
Three months ended September 30,
2026 2025
Net cash provided by operating activities $ 161,314 $ 171,065
Net cash used in investing activities (6,359) (1,214)
Net cash used in financing activities (67,134) (142,238)
Effect of exchange rate changes on cash and cash equivalents (188) (774)
Net change in cash and cash equivalents $ 87,633 $ 26,839
Net cash provided by operating activities decreased by $9.8 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to the timing of disbursements for working capital.
Net cash used in investing activities increased by $5.1 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025.
Net cash used in financing activities decreased by $75.1 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, due to borrowings and debt service.
We believe that the combination of cash and cash equivalents, internally generated funds, and available bank borrowings will provide the required liquidity and capital resources necessary to fund on-going operations, customary capital expenditures, debt service obligations, and other working capital requirements over the next twelve months. We may in the future seek to borrow additional amounts under existing or new debt instruments. Over the longer term, our ability to generate sufficient cash flows from operations necessary to fulfill our long-term cash requirements will depend on our future financial performance.
Our future financial performance will be affected by many factors outside of our control, including current worldwide economic conditions, financial market conditions, and regulatory factors.
Critical Accounting Policies
There have been no significant changes to the Company's critical accounting policies as disclosed in the Company's Annual Report on Form 10-K for the year ended June 30, 2026.
Off-Balance Sheet Arrangements and Contractual Obligations
The Company has no material off-balance sheet financing arrangements.
CACI International Inc. published this content on October 22, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 22, 2026 at 15:58 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]