CACI International Inc.

01/22/2026 | Press release | Distributed by Public on 01/22/2026 12:15

Quarterly Report for Quarter Ending December 31, 2025 (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 to be 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 United States (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 "Item 1A. Risk Factors" within our 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 distinctive Expertise and differentiated Technology to customers in support of national security.
•Expertise- CACI delivers talent with the specific technical and functional knowledge to support agency operations. Examples include individuals with talents such as software development, data and business analysis, operations support, naval architecture, engineering, life cycle support, intelligence and special operations support, and network exploitation analysis.
•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 and applications augmented by Artificial Intelligence (AI), Enterprise Resource Planning systems, electromagnetic spectrum capabilities, 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.
Budgetary Environment
We carefully follow federal budget, legislative and contracting trends and activities and evolve our strategies to take these into consideration. While future levels of defense and non-defense spending may vary and are difficult to project, we believe that there continues to be bipartisan support for defense and national security-related spending, particularly given the heightened current global threat environment.
While we view the budget environment as constructive and believe there is bipartisan support for continued investment in the areas of defense and national security, it is uncertain when (and if) in any particular government fiscal year (GFY) that appropriations bills will be passed. During those periods of time when appropriations bills have not been passed and signed into law, government agencies operate under a continuing resolution (CR), a temporary measure that typically allows the government to continue operations at prior year funding levels.
Depending on their scope, duration, and other factors, CRs can negatively impact our business due to delays in new program starts, delays in contract award decisions, and other factors. When a CR expires, unless appropriations bills have been passed by Congress and signed by the President, or a new CR is passed and signed into law, the government must cease operations, or shutdown, except in certain emergency situations or when the law authorizes continued activity. We continuously review our operations in an attempt to identify programs potentially at risk from CRs or shutdowns so that we can consider appropriate contingency plans.
On March 15, 2025, President Trump signed a CR that extended government funding through September 30, 2025, the remainder of GFY25 (a full-year CR). This is the first time that the Department of Defense (DoD) has been funded by a full-year CR, and this latest CR has some anomalies included that make it different than a typical CR, including (i) new appropriation levels were established rather than using the GFY24 levels (e.g., defense spending raised to $893 billion, which is just under the $895 billion President Biden requested for GFY25), (ii) DoD is allowed to start certain new programs, and (iii) DoD was given expanded transfer authority to reallocate funding between different accounts.
On May 2, 2025, President Trump submitted the GFY26 Presidential Budget Request (PBR) to Congress, which held defense spending at the GFY25 enacted level (a full-year CR) of $893 billion. On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), which provides additional funding above and beyond the PBR. The OBBBA is a reconciliation bill, which is separate from the usual government funding legislation passed by Congress. The OBBBA provides immediate funding for specified parts of the government, including approximately $156 billion in defense funding (including $25 billion for the Golden Dome initiative). In addition, the OBBBA provides approximately $170 billion for border security and immigration. Since this is direct funding authorized by reconciliation outside the normal budget process, these funds will be available in GFY26 and beyond whether normal appropriations or a CR is passed, or even in the event of a shutdown.
On October 1, 2025, the U.S. government entered a shutdown. On November 12, 2025, President Trump signed a CR ending the government shutdown and restoring operations across all federal agencies. The CR extended funding for most of the federal government at GFY25 levels until midnight on January 30, 2026.
Market Environment
We provide Expertise and Technology 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. Approximately 77% of our revenue comes from defense-related customers, including those in the Intelligence Community (IC), with additional revenue coming from non-defense IC, homeland security, and other federal civilian agencies.
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 the electromagnetic spectrum as key domains for national security;
•Increased spend on network and application modernization and enhancements to cyber security posture;
•Increased investments in advanced technologies (e.g., AI), particularly software-based technologies;
•Increasing focus on near-peer competitors and other nation state threats;
•Increasing focus on application of technologies to defend the homeland;
•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 for the Three and Six Months Ended December 31, 2025 and 2024
Our results of operations were as follows (dollars in thousands):
Three Months Ended December 31, Six Months Ended December 31,
2025 2024 Change 2025 2024 Change
Revenues $ 2,220,097 $ 2,099,809 $ 120,288 5.7 % $ 4,507,720 $ 4,156,698 $ 351,022 8.4 %
Costs of revenues:
Direct costs 1,495,011 1,402,225 92,786 6.6 3,042,205 2,816,649 225,556 8.0
Indirect costs and selling expenses 464,585 466,661 (2,076) (0.4) 938,441 894,607 43,834 4.9
Depreciation and amortization 54,032 49,625 4,407 8.9 108,330 84,303 24,027 28.5
Total costs of revenues 2,013,628 1,918,511 95,117 5.0 4,088,976 3,795,559 293,417 7.7
Income from operations 206,469 181,298 25,171 13.9 418,744 361,139 57,605 16.0
Interest expense and other, net 44,950 44,066 884 2.0 91,123 68,036 23,087 33.9
Income before income taxes 161,519 137,232 24,287 17.7 327,621 293,103 34,518 11.8
Income taxes 37,664 27,294 10,370 38.0 78,956 62,988 15,968 25.4
Net income $ 123,855 $ 109,938 $ 13,917 12.7 % $ 248,665 $ 230,115 $ 18,550 8.1 %
Revenues. The increase in revenues for the three and six months ended December 31, 2025, was partially attributable to organic growth of 4.5% and 5.0%, respectively, which included new contract awards and growth on existing programs.
The following table summarizes revenues by customer type with related percentages of revenues for the three and six months ended December 31, 2025 and 2024, respectively (dollars in thousands):
Three Months Ended December 31, Six Months Ended December 31,
2025 2024 Change 2025 2024 Change
DoD $ 1,152,152 $ 1,118,987 $ 33,165 3.0 % $ 2,331,778 $ 2,206,275 $ 125,503 5.7 %
IC 539,040 527,744 11,296 2.1 1,135,469 1,062,087 73,382 6.9
Federal civilian agencies 438,632 365,742 72,890 19.9 850,362 717,961 132,401 18.4
Commercial and other 90,273 87,336 2,937 3.4 190,111 170,375 19,736 11.6
Total $ 2,220,097 $ 2,099,809 $ 120,288 5.7 % $ 4,507,720 $ 4,156,698 $ 351,022 8.4 %
•DoD revenues include Expertise and Technology provided to various DoD customers, excluding IC.
•IC revenues include Expertise and Technology provided to the 18 intelligence customers defined as the IC by the Office of the Director of National Intelligence.
•Federal civilian agencies revenues include Expertise and Technology provided to non-DoD and non-IC agencies and departments of the U.S. federal government, including the Departments of Homeland Security, Justice, Agriculture, Health and Human Services, and State.
•Commercial and other revenues primarily include Expertise and Technology 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. The increase in direct costs for the three and six months ended December 31, 2025, compared to the prior year period, was primarily attributable to the increase in revenues. As a percentage of revenue, direct costs were 67.3% and 67.5% for the three and six months ended December 31, 2025, respectively, and 66.8% and 67.8% for the three and six months ended December 31, 2024, respectively.
Indirect Costs and Selling Expenses. The decrease in indirect costs and selling expenses for the three months ended December 31, 2025, compared to the prior year period, was primarily attributable to acquisition costs incurred in fiscal 2025 offset by increases in other indirect costs. The increase in indirect costs and selling expenses for the six months ended December 31, 2025, compared to the prior year period, was primarily attributable to an increase in fringe benefit expenses on a higher labor base offset by a decrease in acquisition related expenses. As a percentage of revenue, indirect costs and selling expenses were 20.9% and 20.8% for the three and six months ended December 31, 2025, respectively, and 22.2% and 21.5% for the three and six months ended December 31, 2024, respectively, driven by cost efficiencies across the Company.
Depreciation and Amortization. The increase in depreciation and amortization for the three and six months ended December 31, 2025, compared to the prior year period, was due to the amortization of intangible assets acquired in fiscal 2025.
Interest Expense and Other, Net. The increase in interest expense and other, net for the three and six months ended December 31, 2025, compared to the prior year period, was primarily attributable to higher outstanding debt balances during the current year offset by lower interest rates.
Income Tax Expense. The Company's effective income tax rate was 23.3% and 24.1% for the three and six months ended December 31, 2025, respectively, and 19.9% and 21.5% for the three and six months ended December 31, 2024, respectively. The effective tax rates for the three and six months ended December 31, 2025 and 2024 differ from the statutory rate of 21.0% primarily due to state income taxes offset by research and development tax credits and stock-based compensation.
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 December 31, 2025, the Company had total backlog of $32.8 billion, compared to $31.8 billion a year ago, an increase of 3.1%. Funded backlog as of December 31, 2025 was $4.4 billion. The total backlog consists of remaining performance obligations (see Note 5) plus unexercised options.
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 (MARPA) 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 facility (the Term Loan). As of December 31, 2025, there were no outstanding borrowings under the Revolving Facility, swing line, and stand-by letters of credit.
The Company also has the secured term loan (the Term Loan B Facility) and the senior unsecured notes (the 2033 Notes), with principal amounts of $750.0 million and $1,000.0 million, respectively.
To provide additional financial flexibility for the Company, in connection with the ARKA Group L.P. acquisition, the Company entered into a commitment letter (the Commitment Letter), dated December 19, 2025, with Wells Fargo Bank, National Association (Wells Fargo), pursuant to which Wells Fargo committed to provide a senior secured bridge loan facility in an aggregate principal amount of up to $1,300.0 million. As of December 31, 2025, no amounts were funded pursuant to the Commitment Letter.
A summary of the change in cash and cash equivalents is presented below (in thousands):
Six Months Ended December 31,
2025 2024
Net cash provided by operating activities $ 325,260 $ 160,703
Net cash used in investing activities (17,100) (1,588,378)
Net cash provided by financing activities 9,284 1,473,315
Effect of exchange rate changes on cash and cash equivalents (649) (3,894)
Net change in cash and cash equivalents $ 316,795 $ 41,746
Net cash provided by operating activities increased by $164.6 million for the six months ended December 31, 2025, compared to the six months ended December 31, 2024, primarily due to the earnings increase of $107.2 million after adding back non-cash adjustments and $57.4 million of net favorable changes in working capital driven by increased cash collections.
Net cash used in investing activities decreased by $1,571.3 million for the six months ended December 31, 2025, compared to the six months ended December 31, 2024, primarily due to higher cash used in acquisitions in the prior year.
Net cash provided by financing activities decreased by $1,464.0 million for the six months ended December 31, 2025, compared to the six months ended December 31, 2024, primarily due to higher proceeds from borrowings in the prior year.
We believe that the combination of internally generated funds, available bank borrowings, and cash and cash equivalents on hand 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 debt instruments or new debt instruments. Over the longer term, our ability to generate sufficient cash flows from operations necessary to fulfill the obligations under the Credit Facility, Term Loan B Facility, 2033 Notes, and any other indebtedness we may incur will depend on our future financial performance which will be affected by many factors outside of our control, including current worldwide economic conditions and financial market conditions.
Critical Accounting Policies
There have been no significant changes to the Company's critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended June 30, 2025.
Off-Balance Sheet Arrangements and Contractual Obligations
The Company has no material off-balance sheet financing arrangements.
CACI International Inc. published this content on January 22, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on January 22, 2026 at 18:15 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]